TITLE II: Incorporation and Organization of Private Corporations
Commission if one can barely differentiate it form
A corporation with only one stockholder is
referred to as One-P Corporation.
Incorporator, the signatory of the AoI, present
at the time when the corporation was formed,
will remain as such even his shares are sold
Steps in Creation of a Corporation
 Promotion, done by the promoter for
the founding and organizing of the
business or enterprise
 Incorporation, Executing the AoI and
eventually filing the same to the SEC.
 Commencement and Formal
Organization, which involves, adoption
of by-laws, election of BoD and Payment
of shares.
Common Elements of the AoI:
 Name of the corporation
 Purpose and the address
 Pertinent details about the incorporators
and directors and/or trustees.
 Authorized capital, indicate whether par
or non-par
AoI, contains the charter and the contractual
relationship among or between the corporation
and the state. The same is binding to its
shareholders to the corporation and even
between the formers.
Amendments can be done with the
following guidelines:
 Purpose must be legitimate, not
contradicting to the code
 Approval of the majority of the BoD
 Written assent of the shareholders
holding 2/3 of the outstanding shares or
2/3 of all members
 Contain necessary law and be it set out
in the AoI.
 Shall be under the oath of the corporate
secretary and majority of the BoD
 Approval of the SEC
Each incorporator shall hold at least one share in
the corporation. Member, at formation, shall not
exceed 15 members.
Corporators, those who enter the corporation
subsequent to its formation, may not be a
signatory and will cease to be a shareholder
upon selling his shares.
Entity with profession as its primary activity will
not be allowed by law to form a corporation.
Corporation is, generally, dissolved upon the
expiration of certain terms and period
specified in the AoI. But it can be amended by
filing the original AoI with supplemented changes
in the contract. Though even expired already, it
can apply for the revival of its existence.
Subscription, a contract to pay the subscribed
number of shares at a later date with the same
issue price.
Paid-up Capital, shares subscribed and
subsequently paid for the subscribers which
become the shareholders upon full payment.
Name of the Corporation, shall not be
deceptively the same to that of the existing name
already registered in SEC. Putting Inc., OPC,
Corporation is mandated. The name can be
amended by filing amended AoI.
Amended AoI may be denied with the
following grounds:
 If the content is not substantially in
accordance with the form drawn down
the AoI when it was initially filed
 If the purpose is patently
unconstitutional , illegal, immoral or
contradicting to the rules
 If upon certification, subscribed and paid
capital stock turns out to be false
 The required Filipino ownership of the
Constitution has not been complied with
Corporate name shall not be allowed by the
other names already reserved or protected by
law
The name is not distinguishable if there is: The name of the corporation shall be treated
 The word corporation, company, as prominent as the very existence of the
incorporated, limited or an abbreviation corporation itself.
of such
 Punctuations, articles, conjunction, This is very crucial in the events when the
contractions, prepositions, abbreviations, company tends to sue or get sued.
different tenses, spacing or number of
the same word.
Upon receiving the certificate the De Facto Corporation, means due
incorporation, provided that the SEC finds its incorporation of a corporation claiming in good
corporate name distinguishable, the juridical faith to be such, to enforce its rights and powers,
personality of the corporation begins. shall not be inquired in a lawsuit. Solicitor
General is the only one who can made inquiry
through qou warranto.
Corporation by Estopppel, one whose its With the concept of estoppel, the injured or
members or corporators act as a corporation damaged 3rd party shall hold these members or
though in reality, they do not form a corporation. shareholders as liable as general partners with all
the transactions they enter into.
Lack of corporate personality as a result of Corporation will be placed under delinquent
non-compliance with written agreement like AoI, status by the commission if it does not operate
cannot be used as a defense against the 3rd party for at least 5 consecutive years.
Illustration: Delinquent Status and Revocation of certificate of Incorporation
Dobre Brothers, a duly registered corporation in the Philippines, started its manufacturing of men’s
apparel in 2020 as soon as they received the certificate of incorporation. However, due to worldwide
financial crisis caused by the financial scandal committed by the Lehman’s Brothers at the end of
2022, Dobre Brothers became inoperative at the beginning of 2023. The operation remained
unprofitable and suffered significant loss since the emergence of the biggest financial scandal in the
world. They remained stagnant from year 2023 to 2027 and such condition came to the knowledge of
the state. Beginning 2027, the commission declared the Dobre Brothers under delinquent status and
was given a minimum of two (2) years to resume operation and comply with all the requirements
prior to resumption. In the mid-2028, President Duterte signed a law that aims to provide sufficient
additional capital for business enterprises affected by the crisis for recovery purposes. Upon
complying with the commission, the Dobre Brothers came back to normal operation at the beginning
of 2029.