Professional Documents
Culture Documents
Corporation
By operation of law
5 ~ 15 (except in corporation sole)
True
Only those expressly authorized by
law/ incident to its existence
Management
Liability for debts
Board of Directors
Not liable for
corporation
Date of issuance
incorporation
True, even without
stockholders
50 years
False, must have
State
debts
of
the
of certificate of
consent of other
consent by the
Partnership
Mere agreement of partners
2 or more
False
No limit provided not contrary to law,
morals, good customs, public order
or public policy.
General Partners
Liable with their separate assets for
partnership debts
Execution of partnership contract
True, if only with consent by other
partners
Indefinite life
True, by stipulation by partners
Classification of Corporations
1. Stock Corporation. Corporations which have capital stock divided into shares and are authorized to distribute to
the holders of shares dividends or allotments of the surplus profits on the basis of the shares.
2. Non Stock Corporation. Corporations where no part of its income is distributable as dividends to its members,
trustees or officers.
3. Domestic Corporation. One incorporated under Philippine laws.
4. Foreign Corporation. One formed, organized and existing under any laws other than those of the Philippines and
whose laws allow Filipino citizens and corporations to do business in the Philippines.
Consideration: At least 60% of Filipinos should comprise the capital structure of the company.
5. Corporation Aggregate. One composed of more than one corporator.
6. Corporation Sole. One composed of only one person. [ex. Roman Catholic Church]
7. Public Corporation. One that is organized for the government of a portion of the State [ex. Caloocan City]
8. Private Corporation. One that is formed for a private purpose. [ex. San Miguel Corporation]
9. Ecclesiastical Corporation. One formed for a religious purpose [ex. Iglesiani Cristo]
10. Lay Corporation. One formed for a purpose other than religious.
11. Eleemosynary Corporation. One formed for charity.
12. Civil Corporation. One formed for business or profit.
13. De Jure Corporation. One that has been created in strict compliance with all the legal requirements of the law.
14. De Facto Corporation. One that is defectively created but there is an exercise of corporate rights and franchise
resulting from an attempt in good faith to incorporate on the part of its partners.
15. Parent Corporation. One who owns shares of another corporation and having power (control) over the latter
including the election of officers thereof.
16. Subsidiary Corporation. One whose shares are owned by another corporation.
17. Close Corporation. One whose shares is limited to a few people and not listed in any stock exchange.
18. Open Corporation. One whose shares are offered to public and is listed to any stock exchange.
19. Corporation by Prescription. One who has exercised corporate powers for such a length of time without
interference by the State.
20. Corporation by Estoppel. One which is in reality not a corporation but is considered as one with respect to those
who are precluded by their admission from denying its existence.
Corporations Created by Special Laws / Charters
Corporations may be also formed by virtue of special laws or charters, and shall be governed primarily by the provisions
applicable to them.
Examples:
Social Security System (SSS), a government-owned and controlled corporation is formed by
virtue by Republic Act 1161 (Social Security Law), and as amended by Republic Act 8282 (Social
Security Act of 1997), and is not covered by the Corporation Code of the Philippines
Components of a Corporation
1. Corporators. Those who comprise thecorporation, including stockholders, members, incorporators, et cetera.
2. Incorporators. Those stockholders or members mentioned in the articles of incorporation as originally forming and
composing the corporation and who are signatories thereof.
3. Stockholders. Corporators of a stock corporation.
4. Members. Corporators of a non-stock corporation.
5. Promoters. A person (juridical or natural) who usually discovers a prospective business and brings persons
interested to invest in it through formation of a corporation.
Capital Stock Terms
1. Capital stock. Amount specified in the articles of incorporation paid in for carrying on of the business of the
corporation.
a. Authorized capital stock. Total amount of shares which a corporation is allowed to issue if shares have a
par value.
b. Subscribed capital stock. Part of capital stock which is subscribed, whether paid or unpaid
c. Outstanding capital stock. Total shares of stock issued to subscribers/stockholders, whether or not fully or
partially paid, except treasury shares.
d. Paid up capital stock. Part of subscribed stock paid to the corporation.
e. Unissued capital stock. Part of capital stock which is not issued nor subscribed.
2. Legal capital. Total par value of all issued par value shares or total cash/consideration received for all issued no
par value shares.
Example Problem:
The articles of incorporation of Pol Corporation provide for an authorized capital stock of PHP 10,000,000 divided into
10,000 shares each. At the time of incorporation, 25% of the authorized capital stock was subscribed of which 25% was
paid.
Find for:
1. Authorized capital stock PHP 10,000,000
2. Subscribed capital stock PHP 2,500,000 (10M x 25%)
3. Outstanding capital stock PHP 2,500,000
25%
50%
75%
25% of the authorized capital stock has been subscribed
25%
50%
75%
25% of the subscribed capital stock has been paid
8. Names of subscribers, nationalities, shares subscribed, amount subscribed and amount paid in. (must not be
lower than PHP 5,000)
9. Other matters
10. Name of temporary treasurer elected, notarial acknowledgement, and affidavit
Amendment of Articles of Incorporation
Votes required for amendment
1. Majority vote of directors
2. Vote or written assent of 2/3 of the outstanding capital stock or members
Effectivity
Upon approval by SEC or from the date of filing with Commission if not acted within 6 months
Non-use of corporate charter for:
Two years shall be deemed dissolved unless the same is due to causes beyond the control of the corporation
as may be determined by SEC.
Continuous non-operation of corporation for:
Five years shall be grounds for revocation of its corporate franchise or certificate of incorporation, unless the
same is due to causes beyond the control of the corporation as may be determined by SEC.
1. The contracts between a corporation and third persons must be made by or under the authority of its
a. Board of directors
b. Stockholders
c. President
d. General manager
2. Statement 1: An incorporator ceases to be an incorporator once he sells his share of stock.
Statement 2: A corporation can be an incorporator of another corporation.
a. True, True
b. True, False
c. False, True
d. False, False
3. Statement 1: Treasury shares have no right to vote in the meetings of the corporation
Statement 2: The Board of Trustees is the body which controls the corporate affairs of a stock corporation
a. True, True
b. True, False
c. False, True
d. False, False
4. Statement 1: What is the minimum requirement of shares of stock of a certain corporation that must be owned
and controlled by Filipino citizens under the 1987 Constitution?
a. 25%
b. 50%
c. 60%
d. 70%
5. Statement 1: A minor as a rule can be an incorporator of another corporation
Statement 2: A corporation is created by the mere consent of the contracting parties
a. True, True
b. True, False
c. False, True
d. False, False
6. A proposed corporation may be legally incorporated if in relation to its authorized capital stock,
a. 25% of the authorized capital stock shall be subscribed, and 25% thereof should be paid
b. 25% of the authorized capital stock shall be subscribed, and 20% thereof should be paid
c. 20% of the authorized capital stock shall be subscribed, and 25% thereof should be paid
d. 20% of the authorized capital stock shall be subscribed, and 20% thereof should be paid
7. The juridical personality of a corporation begins from
a. The filing of the articles of incorporation to the SEC
b. The issuance by the SEC of the certificate of incorporation
c. The signing by the incorporators of the articles of incorporation
d. The notarization of the articles of incorporation
8. Statement 1: Issued treasury shares are considered part of outstanding shares.
Statement 2: A director individually and as such can bind the corporation since he is an agent of the corporation.
a. True, True
b. True, False
c. False, True
d. False, False
9. Statement 1: All incorporators can be corporators, and all corporators can be also incorporators
Statement 2: A stockholder can transfer his/her shares to another person without the consent of the other
stockholders
a. True, True
b. True, False
c. False, True
d. False, False
10. What is the maximum life of a corporation?
a. 25 years
b. 40 years
c. 50 years
d. None of the above, as the life of a corporation is indefinite.
11. Statement 1: Watered stocks are those which were not issued with adequate consideration.
Statement 2: The outstanding capital stock is the total shares of stock issued and fully paid to the stockholders.
a. True, True
b. True, False
c. False, True
d. False, False
12. Statement 1: The due existence of a de facto corporation may be attacked collaterally in a proceeding
Statement 2: A corporation may be formed for more than one purpose.
a. True, True
b. True, False
c. False, True
d. False, False
13. The articles of incorporation of JoyceCorporation provide for an authorized capital stock of PHP 8,000,000with a
par value of P10.00 per share. At the time of incorporation, 25% of the authorized capital stock was subscribed of
which 25% was paid. How many shares were unissued after the subscription and payment of the stocks?
a. 0
b. 200,000
c. 600,000
d. 800,000
14. The articles of incorporation of Mariz Corporation provide for an authorized capital stock of PHP 5,000,000 with a
par value of P25.00 per share. At the time of incorporation, 25% of the authorized capital stock was subscribed of
which 25% was paid. How many shares were considered part of the paid-in capital?
a. 0
b. 12,500
c. 37,500
d. 50,000
15. These are shares of stock which have been issued and fully paid for, but subsequently reacquired by the issuing
corporation by purchase, redemption, donation, and through some other lawful means.
a. Voting shares
b. Non-voting shares
c. Founders shares
d. Treasury shares
16. Statement 1: The stockholders are the corporators of a stock corporation
Statement 2: An eleemosynary corporation is one formed for a religious purpose.
a. True, True
b. True, False
c. False, True
d. False, False
17. Which of the following will not cause the automatic dissolution of a general partnership?
a. Death of a capitalist partner
b. Insolvency of a capitalist partner
COMPLIED BY:
ASSOCIATION OF TAXATION AND LAW STUDENTS
University of the East Caloocan
Contact #:
(0915) 210-12-85
E-mail Address: atlas.ue2012@yahoo.com
Website:
http://atlasuecal.weebly.com
Academics Department
Contact #:
(0915) 104-90-90