Reviewer corpo

1. REQUISITES OF INCORPORATORS

RCC now allows one (1) person to register a business as a corporation by

oneself, thus, removing the requirement of minimum 5 incorporators.
Moreover, while the old Corporation Code required incorporators to be natural
persons, the RCC provides that incorporators may be any person,
partnership, association or corporation.
2. Merger or Consolidation. 
Additional information such as the carrying amounts and fair values of the
assets and liabilities of the parties to the merger or consolidation as of the
agreed cut-off date, method of merger or consolidation of accounts, and
provisional or pro-forma values as merged or consolidated, are now required
to be included in the articles of merger or consolidation.

3. Dissolution. 

For voluntary dissolutions where no creditors are affected, the RCC now requires only a
majority vote of the board of directors and the vote of the stockholders owning at least
majority of the outstanding capital stock. Previously, affirmative votes of stockholders
owning 2/3 of the outstanding capital stock are required.

However, the RCC added strict requirements for dissolution such as the need for a
verified request for dissolution, stating: the reason for the dissolution; the form, manner,
and time when notices were given; names of those stockholders and directors who
approved the dissolution; date, place and time of the meeting in which the vote was
made; and the details of publication.

4.Emergency boards. 

EMERGENCY BOARD — A CASE OF SUCCESSION PLANNING

Sec. 28 provides when the vacancy prevents the remaining directors from
constituting a quorum and emergency action is required to prevent grave,
substantial and irreparable loss or damage to the corporation, the vacancy
may be temporarily filled from among the officers of the corporation by the
unanimous vote of the remaining directors or trustees. The action of the
designated director-trustee shall be limited to the emergency action only
and his term shall cease within a reasonable time from termination of the
emergency or upon election of the replacement director, whichever comes
earlier. A report to the SEC is to be given upon termination of the
emergency. The nature of an emergency board whereby a corporate officer
is selected to be a temporary director during an emergency is aligned with
corporate governance in the sense that it is a form of succession planning
for the corporation.
When vacancy prevents the remaining directors from constituting a quorum
and there is a need for emergency action to prevent damage to the
corporation, the remaining directors may fill up the vacancy from among the
officers of the corporation by unanimous vote of the remaining directors or
trustees. However, the action by the designated director or trustee shall be
limited to the emergency action necessary, and the term shall cease within a
reasonable time from the termination of the emergency or upon election of the
replacement, whichever comes earlier. A notification for the creation of
emergency board must be done with SEC within 3 days from creation of the
emergency board.
5. what do you understand by piercing the corporate veil of corporate
entity?
The doctrine that a corporation is a juridical entity with a separate and
distinct personality from the persons composing it. It is a theory introduced or
and a judicial remedy introduced for the purposes of convenience and to
serve the ends of justice. But when the veil of a corporate fiction is used as a
shield to, to defeat public convenience, or used as a vehicle for the evasion of
existing obligation; perpetuate fraud to justify wrong or to defend crime. Also,
where the corporation is a mere alter ego, adjunct or business conduit of a
person or where the corporation is so organized and controlled and its affairs
are so conducted as to make it merely an instrumentality, agency, conduit or
adjunct of another corporation, then this fiction or the separate personality
shall be disregarded. The courts will treat the corporation as mere aggrupation
of persons and the liability will directly attach to them. The legal fiction of a
separate corporate personality in the aforementioned instances, for reasons of
public policy and in the interest of justice, will justifiable set aside and the
individuals composing it will be treated identically and will be made liable. P
174 rev

1. Identity doctrine- if the plaintiff can show there was such a unity
interest and ownership that the independence of the corporations had in
effect ceased or had never begun, and adherence to the fiction of separate
identity would serve only to defeat justice and equity by permitting the
economic entity to escape liability arising out of an operation of one
corporation for the benefit of the whole enterprise.
2. instrumentality rule- control test requisites, there must be a
confluence of these elements
a. control, not mere majority or complete stock control, but complete
domination, not only of finances but of policy and business practice in
respect to the transaction attached so that the corporate entity as to
this transaction had at a time no separate mind, will or existence of its
own;
b. such control must have been used to commit fraud or wrong, to
perpetuate violation of a statutory or other positive legal duty, or
dishonest or unjust act in contravention of plaintiff’s legal right;
c. the aforesaid control and breach of duty must proximately cause
the injury or unjust loss complained of. The absence of any of these
elements will prevent the application of the doctrine of ‘piercing the
corporate veil’
3. alter ego doctrine- it must be shown that there is unity of interest
and ownership that the separate personalities of the corp and the individual
no longer exist and that if the acts are treated as those of the corp alone,
an inequitable will follow..where a corp is a dummy, is unreal or sham and
serves no business purpose and is intended only as a blind, the corporate
form may be ignored for a law cannot countenance a form that is bald and
a mischievous fiction.
6.Piercing the veil of corporate fiction vs Limited liability rule
 Stockholders of a corporation are liable for the debts of the corporation
up to the extent of their unpaid subscriptions. They cannot invoke the veil of
corporate identity as a shield from liability.
Applying the doctrine of piercing the veil of corporate fiction, the entire
obligation maybe enforced against a stockholder while under the limited
liability rule- only up to the extent of the unpaid subscription.
7. grandfather rule and control test
Grandfather rule-a method of determining nationality of corporation which
in turn is owned by another corporation by breaking down the equity
structure of the shareholders of the corporation. The percentage of Filipino
equity in the corp is computed y attributing the nationality of the 2 nd or even
subsequent tier of ownership to determine the nationality of the corporate
shareholder. It involves the computation of Filipino ownership of a
corporation in which corporation is partly Filipino and partly foreign equity
owns capital stock. The percentage of shares held by the 2nd corp in the 1st is
multiplied by the latter’s own Filipino equity, and the product of these
percentages is determined to be the ultimate Filipino ownership of the
subsidiary corporation.
Control test- a corporation shall be considered a Filipino corp if the Filipino
ownership of its capital is at least 60% and where the 60-40 Filipino-alien
shareholding is not in doubt.
8. what is a stock corporation?
Corporations which have capital stock divided into shares and are
authorized to distribute to the holders of such shares dividends, allotments
and surplus profits on the basis of the shares held are stock corporations.

9. CORPORATION SOLE P 79 SEC 108

For the purpose of administering and managing, as trustee, the affairs,
property and temporalities of any religious denomination, sect or church, a
corporation sole may be formed by the chief archbishop, bishop, priest,
minister, rabbi, or other presiding elder of such religious denomination, sect,
or church.
10. CLASSES OF CORP
De jure corp- a corporation organized in accordance with the requirements
of law
De facto- a corporation that is formed where there exists a flaw in its
incorporation but there is corable compliance with the requirements of law
SEC. 19. De facto Corporations. – The due incorporation of any
corporation claiming in good faith to be a corporation under this Code,
and its right to exercise corporate powers, shall not be inquired into
collaterally in any private suit to which such corporation may be a
party. Such inquiry may be made by the Solicitor General in a quo
warranto proceeding
Corporation by estoppels- a group of persons which holds itself out as a
corporation and enters into a contract with a third person on the strength of
such appearance cannot be permitted to deny such existence in an action
under said contract
 SEC. 20. Corporation by Estoppel. – All persons who assume to act as
a corporation knowing it to be without authority to do so shall be liable
as general partners for all debts, liabilities and damages incurred or
arising as a result thereof: Provided, however, That when any such
ostensible corporation is sued on any transaction entered by it
11. GOVT OWNED OR CONTROLLED CORP GOCC
Any agency organized as stock or non-stock corporation vested with
functions relating to public needs whether governmental or proprietary in
nature, and owned by the govt directly or through its instrumentalities either
wholly or where applicable as in the case of stock corporations to the xtent
of at least 51% of its capital stock
Requisites of gocc
a. There must be an agency organized as a stock or non-stock corp
b. The corp must be vested with functions relating to public needs
whether governmental or proprietary in nature; and
c. The corp must be owned directly by the govt or throught its
instrumentalities either wholly, or where applicable as in the case of
stock corporations, to the extent of at least 51% of its capital stock.
12. Share
It is a unit into which he proprietary interests in the corp is divided. It
is the intangible interest or right which an owner has in the management,
profit and assets of the corporation.
It comprise what is known as the capital stock.
Capital stock consists of all classes of shares issued to stockholders,
that is, common shares as well as preferred shares, which may have
different rights, priviliges or restrictions as stated in the aoi.
13. Doctrine of equality of shares
All stocks issued by the corporation are presumed to be equal with the
same priviliges and liabilities, provided that the aoi is silent on such
differences. Sec 6
If the AOI do not provide for any distinction of the shares of stocks of
the corporation, all shares shall enjoy the same rights and privileges. All the
shares are to be treated equal.
The BOD cannot provide preference or addl rights if nothing in the AOI
is provided,
14. INCORPORATION AND ORGANIZATION OF PRIVATE
CORPORATIONS
Incorporation
It is the performance of conditions, acts, deeds, and writings by
incorporators, and the official acts, certification or records, which give the
corporation its existence.
SEC. 10. Number and Qualifications of Incorporators. –
Any person, partnership, association or corporation, singly or jointly
with others but not more than fifteen (15) in number, may organize a
corporation for any lawful purpose or purposes: Provided, That natural
persons who are licensed to practice a profession, and partnerships or
associations organized for the purpose of practicing a profession, shall not
be allowed to organize as a corporation unless otherwise provided under
special laws.
Incorporators who are natural persons must be of legal age. Each
incorporator of a stock corporation must own or be a subscriber to at least
one (1) share of the capital stock. A corporation with a single stockholder is
considered a One Person Corporation as described in Title XIII, Chapter III
of this Code

15. Q: Must all incorporators and directors be residents of the Philippines?

16. CORPORATE NAME CASE
Is Industrial Refractories Corporation of the Philippines confusingly similar
with Refractories Corporation of the Philippines?
A: YES. To fall within the prohibition of the law, two requisites must be
proven, to wit: (1) that the complainant corporation acquired a prior right
over the use of such corporate name; and (2) the proposed name is either:
(a) identical, or (b) deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law; or (c) patently
deceptive, confusing or contrary to existing law. In this case, RCP was
incorporated on October 13, 1976 and since then has been using the
corporate name “Refractories Corp. of the Philippines”. Meanwhile, IRCP was
incorporated on August 23, 1979 originally under the name “Synclaire
Manufacturing Corporation”. It only started using the name “Industrial
Refractories Corp. of the Philippines” when it amended its Articles of
Incorporation on August 23, 1985, or nine (9) years after respondent RCP
started using its name. Thus, being the prior registrant, respondent RCP has
acquired the right to use the word “Refractories” as part of its corporate
name. (Industrial Refractories Corporation of the Philippines v. CA, et al.,
G.R. No. 122174, October 3, 2002)

17. A corporation that changes its corporate name is not

considered as a new corporation
A corporation that changes its corporate name is not considered as a
new corporation. It is the same corporation with a different name, and its
character is in no respect changed. (Republic Planters Bank v. CA, G.R. No.
93073, December 21, 1992)
18. SEC. 18. Registration, Incorporation and Commencement of
Corporate Existence. –
A person or group of persons desiring incorporate shall submit the
intended corporate name to the Commission for verification. If the
Commission finds that the name is distinguishable from a name already
reserved or registered for the use of another corporation, not protected by
law and not contrary to law, rules and regulations, the name shall be
reserved in favor of the incorporators.
The incorporators shall then submit their articles of incorporation and
bylaws to the Commission. If the Commission finds that the submitted
documents and information are fully compliant with the requirements of this
Code, other relevant laws, rules and regulations, the Commission shall issue
the certificate of incorporation.
A private corporation organized under this Code commences its
corporate existence and juridical personality from the date the Commission
issues the certificate of incorporation under its official seal and thereupon
the incorporators, stockholders/members and their successors shall
constitute a body corporate under the name stated in the articles of
incorporation for the period of time mentioned therein, unless said period is
extended or the corporation is sooner dissolved in accordance with law.
19. SEC. 16. Grounds When Articles of Incorporation or
Amendment may be Disapproved. –
The Commission may disapprove the articles of incorporation or any
amendment thereto if the same is not compliant with the requirements
of this Code: Provided, That the Commission shall give the incorporators,
directors, trustees, or officers a reasonable time from receipt of the
disapproval within which to modify the objectionable portions of the
articles or amendment.
The following are grounds for such disapproval:
(a)The articles of incorporation or any amendment thereto is not
substantially in accordance with the form prescribed herein;
(b)The purpose or purposes of the corporation are patently
unconstitutional, illegal, immoral or contrary to government rules and
regulations;
(c)The certification concerning the amount of capital stock subscribed
and/or paid is false; and
(d)The required percentage of Filipino ownership of the capital stock
under existing laws or the Constitution has not been complied with.
No articles of incorporation or amendment to articles of
incorporation of banks, banking and quasi-banking institutions,
preneed, insurance and trust companies, NSSLAS, pawnshops, and
other financial intermediaries shall be approved by the Commission
unless accompanied by a favorable recommendation of the
appropriate government agency to the effect that such articles or
amendment is in accordance with law.

20. PROXY SOLICITATION

20.2 Proxies shall be in writing, signed and filed, by the stockholder or
member, in any form authorized in the bylaws and received by the corporate
secretary within a reasonable time before the scheduled meeting.
20.3 Unless otherwise provided in the proxy form, it shall be valid only
for the meeting for which it is intended. No proxy shall be valid and effective
for a period longer than five (5) years at any one time.
20.4 No broker or dealer shall give any proxy, consent or
authorization, in respect of any security carried for the account of costumer,
to a person other than the costumer, without the express written
authorization of such costumer.
 20.5 a broker or dealer who holds or acquires the proxy for at least
10% or such percentage as the commission may prescribe of the
outstanding share of the issuer, shall submit a report identifying the
beneficial owner within 10 days after such acquisition, for its own account or
costumer, to the issuer of the security, to the exchange where the security is
traded and to the commission.

21. TRUST FUND DOCTRINE

Under the trust fund doctrine, the subscribed capital stock of the
corporation is a trust fund for the payment of debts of the corporation which
the creditors have the right to look up to satisfy their their credits. The
corporation may not dissipate this and the creditors may sue stockholders
directly for the unpaid subscription.
However, the tfd is not limited to the unpaid portion of the subscribed
capital, The capital stock, property and other assets of the corp are regarded
as equity in trust for the payment of the corp creditors.
The SC held that the tfd is not limited to reaching the stockholder’s
unpaid subscriptions. The scope of the doctrine when the corp is insolvent
encompasses not only the capital stock, but also other property and assets
generally regarded in equity as a trust fund in payment of the corp debts.
All assets and property belonging to the corp held in trust for the
benefit of the creditors that were distributed or in the possession of the
stockholders, regardless of full payment of their subscriptions, may be
reached by the creditor In satisfaction of its claim.
trust fund doctrine is violated in the ff instances
1. when the corp condones or releases payment of the unpaid
subscription and the stockholder has no right to demand the refund
of his investment
2. when there is payments of dividends w/o unrestricted
retained earnngs
3. When properties are transferred in fraud of creditors
4. when properties are disposed or when undue preference is
given to creditors even if the corp is insolvent
5. when the capital stock is decreased relieving the
stockholders of the obligation to pay their respective subscription.
Under the tfd, a corp has no legal capacity to release an
original subscribers to its capital stock from the obligation of paying
of his shares, in whole or in part, w/o a valuable consideration, or
fraudulently, to the prejudice of creditors.

22. Basic requirements for the registration and issuance of a certificate of

incorporation of a stock corporation
1. Name verification slip;
2. AOI and by-laws;
3. Treasurer’s affidavit;
23. By-laws
By-laws are rules and regulations or private laws enacted by the corporation
to regulate, govern and control its own actions, affairs and concerns and of
its stockholders or members and directors and officers in relation thereto
and among themselves in their relation to it
By-laws are relatively permanent and continuing rules of action adopted by
the corporation for its for its own government and that of individuals
composing of it and those having the direction, management, and control of
its affairs, in whole or in part, in the management and control of its affairs
and activities.

24. A corporation sole is not governed by by-laws A corporation sole is not

governed by by-laws. It is instead governed by Rules, Regulations and
Discipline of its religious denomination which already contain the provisions
embodied in the bylaws of ordinary corporations.

25 CORPORATE POWERS
1. Express powers – granted by law, the Corporation Code, and its Articles
of Incorporation or Charter, and administrative regulations;
2. Inherent/incidental powers – not expressly stated but are deemed to be
within the capacity of corporate entities;
3. Implied/necessary powers – exists as a necessary consequence of the
exercise of the express powers of the corporation or the pursuit of its
purposes as provided for in the Charter.

Exercise of corporate powers

The Corporation Code of the Philippines vests in the board of directors the
exercise of the corporate powers of the corporation, save in those instances
where the Code requires stockholders’ approval for certain specific acts.
Did Filport’s Board of Directors act within its powers in creating the executive
committee and the positions of AVPs for Corporate Planning, Operations,
Finance and Administration, and those of the Special Assistants to the
President and the Board Chairman, each with corresponding remuneration?
A: YES. The governing body of a corporation is its board of directors. Section
23 of the Corporation Code explicitly provides that unless otherwise provided
therein, the corporate powers of all corporations formed under the Code
shall be exercised, all business conducted and all property of the corporation
shall be controlled and held by a board of directors. Thus, with the exception
only of some powers expressly granted by law to stockholders (or members,
in case of non-stock corporations), the board of directors (or trustees, in
case of non-stock corporations) has the sole authority to determine policies,
enter into contracts, and conduct the ordinary business of the corporation
within the scope of its charter, i.e., its articles of incorporation, by-laws and
relevant provisions of law. Verily, the authority of the board of directors is
restricted to the management of the regular business affairs of the
corporation, unless more extensive power is expressly conferred. In the
present case, the board’s creation of the subject positions was in accordance
with the regular business operations of Filport as it is authorized to do so by
the corporation’s by-laws, pursuant to the Corporation Code. (Filipinas Port
Services, Inc., v.