USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II

UNIVERSITY OF SAN JOSE – RECOLETOS

COLLEGE OF LAW

TITLE II
CORPORATION
LAW
REVIEWER
TOMILAP, BHENZ BRYLE NINO
PEPITO, VICTORIA ASHLEY

ATTY. HAZEL ESPINA

CORPORATION LAW (LLB 322 | 7029 CLASS)
COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO Page 1
 USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II

1.) Q : The performance of 7.) Q : Under Sec. 10 of the RCCP,

conditions, acts, deeds, and writings who are those persons precluded
by incorporators and official acts from organizing a corporation?
which give the corporation its a.) Natural persons licensed to practice
existence. a profession;
A: Incorporation b.) Partnerships/associations organized
for the purpose of practicing a
2.) Q : Which government entity has profession.
power to vest corporate existence to Exc: Unless otherwise provided by
an applicant-corporation? special laws.
A: Security and Exchange Commission
(SEC) 8.) Q : Each incorporator of a stock
corporation must own at least how
much share in the capital stock?
3.) Q : When shall the life of a
A: Each must own at least one share in
corporation commence?
the capital stock
A: From the time SEC issues a
Certificate of Incorporation.
9.) Q : Enumerate the basic
qualifications of incorporators (Sec.
4.) Q : How much is the amount of
10, RPPC).
contributions required for a non-
1.) The incorporator must be a
stock corporation to start its
natural/juridical entity;
operation?
2.) There must not be more than 15
A: There is no fixed amount of
incorporators;
contribution required but only such
3.) An incorporator must be of legal age
reasonable amount as the
if he/she is a natural person;
incorporators/trustees may deem.
4.) Each incorporator must be a
subscribe of at least one share of the
5.) Q : Is the rule indicated in Item
capital stock.
No. 4 absolute?
A: No. Such rule does not apply in case
10.) Q : Who are qualified as
of foundations which must have a
incorporators?
minimum contribution of at least P
a.) Natural persons
1,000,00.00.
b.) Corporations
c.) Partnerships
6.) Q : How many incorporators are
d.) Associations
required by the RCCP for a
corporation?
11.) Q : Can local government units
A: There is no minimum required by the
(LGUs) organize corporations?
RCCP, as long as the incorporators do
A: Yes. However, they are subject to
not exceed 15.
the limitations under the Local
COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO Page 2
 USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II
Government Code of 1991 and the
Code of Conduct and Ethical Standards
for Public Officials and Employees.
12.) Q : Can a non-resident be an
incorporator in the Philippines?
A: Yes. Philippine residence is not
required for incorporators under the
RCCP.
13.) Q : What is the corporate term
provided for under the RCCP?
A: There is no fixed term provided for. A
corporation shall have perpetual
existence, unless its articles of
incorporation provide otherwise.
14.) Q : Should a corporation resort
with a fixed term, how may such term
be extended or shortened?
A: It is done so by amending the articles
of incorporation, provided that such
extension cannot be made earlier than 3
years prior to the original or subsequent
expiry date/s, unless there is a justifiable
reason for an earlier extension (as
determined by the Commission).
15.) True or False: The filing and
recording of a certificate of extension
after the expiration of the fixed
corporate term cannot relate back to
the date of the passage of the
resolution of the stockholders to
extend the life of a corporation.
A: True
16.) Q : A doctrine in Corporation
Law which applies if the failure to file
the application for extension within
the term of a corporation is due to the
COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO
neglect of the SEC officer with whom
the certificate is required to be filed.
A: The Doctrine of Relation/Relating
Back Doctrine. In effect, the general rule
is set aside and the fixed corporate term
may be allowed to relate back to the
date of passage of the resolution to
extend the corporation’s life.
17.) Q : What is the remedy provided
for under the RCCP for corporations
whose term already expired?
A: Revival of corporate existence. The
corporation concerned may apply for a
revival of its corporate existence,
together with all the rights and privileges
under its certificate of incorporation,
subject to all duties, debts, and liabilities
existing prior to its revival.
Upon approval by SEC, the
corporation shall be deemed revived
and a certificate of revival of corporate
existence shall be issued in its favor.
18.) Q : It is the amount fixed in the
articles of incorporation to be
subscribed and paid by the
stockholders of a corporation.
A: Authorized Capital Stock
19.) Q : It is the portion of the
authorized capital stock that is
covered by subscription agreements,
regardless if paid or not.
A: Subscribed Capital
20.) Q : Differentiate “capital” and
“stated capital.”
A: Capital refers to the properties and
assets of a corporation used for its
business/operations.
Page 3
 USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II
On the other hand, stated capital
refers to the sum of the part value of all
issued par value shares.
21.) Q : Differentiate “paid up
capital” from “paid-in capital.”
A: Paid up capital is the portion of the
authorized capital that has been
subscribed and paid.
Paid-in capital is the amount of
outstanding capital stock and additional
paid-in capital or premium paid over the
par value of the shares.
22.) Q : What is the “Accomplished
Fact Doctrine?”
A: It means that an incorporator
remains in such status even if he ceases
to be a corporator or shareholder of the
corporation where he once was an
incorporator. Being an incorporator is an
accomplished fact.
23.) Q : For the purposes of defining
the requirements for an incorporator
under Section 10 of the RCCP, what
does the term “capacity” refer to?
A: It refers to the capacity to act, or
24.) True or False: In order to qualify
as an incorporator, an applicant must
be a Filipino citizen.
A: False. Neither does the RCCP
require that majority of the incorporators
be citizens of the Philippines. However,
it is subject to nationalization laws. If the
law requires for a particular industry or
business that all stockholders be Filipino
citizens, then such law prevails.
COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO
25.) Q : It is a document that defines
the charter of the corporation, stating
its name, purpose/s, capital stock,
and the description of its governing
board.
A: Articles of Incorporation
26.) True or False: Corporations must
always strictly comply with the form
prescribed by Articles 13 and 14 of
the RCCP.
A: False. Sec. 13 only provides that the
Articles of Incorporation must contain
“substantially” the matters indicated
therein. Hence, mere substantial
compliance will not affect the de jure
existence of the corporation.
27.) True or False: The RCCP requires
that a corporation’s name must
always reflect the purpose of the
corporation.
A: False. The purpose of indicating a
name in the Articles is for identification
and not to give an indication of its
purpose.
28.) Q : It is a clause that must be
positively indicated in the Articles of
Incorporation to assure that persons
who invest in corporate entities
would be aware of the business the
corporation is designed to engage in.
A: Purpose Clause
29.) True or False: The Primary as
well as Secondary Purpose of a
corporation must only be one.
A: False. The Primary Purpose must
only be one but the Secondary Purpose
may be several. Purposes not allied to
Page 4
 USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II
the primary purpose should be classified
as secondary purposes.
30.) Q : What is the significance of
determining whether a corporation is
stock or non-stock, vis-à-vis the
allowance of having a purpose that is
contradictory to a corporation’s
nature?
A: Non-stock corporations are precluded
from including a purpose that would
contradict or change its nature as such,
as provided under Sec. 13 of the RCCP,
while stock corporations aren’t. This is
what makes identification of a A: False. Lawful money contemplates
corporation’s classification important in
ensuring that no infractions with regard
to purpose is committed.
31.) Q : It is considered as a
corporation’s place of residence
which must be indicated in the
Articles of Incorporation. It is
important, for instance, for tax
purposes, for determining the venue
in cases, or in determining where
notices should be served.
A: Principal Office
32.) True or False: An Articles of
Incorporation unacknowledged
before the notary public will, in effect,
not create a de facto corporation.
A: True. The Articles of Incorporation is
defective if not all incorporators
acknowledged the same before the
notary public. All incorporators must sign
and acknowledge the Articles together
with the treasurer. Non-compliance is a
fatal defect and will not create a de facto
COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO
corporation with colorable compliance of
law.
33.) True or False: Directors of
corporations, like incorporators, can
either be natural or juridical persons.
A: False. Directors must always be
natural persons.
34) True or False: In stating the
capital stock and the par value of
shares, it must always be stated in
the lawful money of the Philippines,
meaning, in Philippine peso.
any lawful currency acknowledged in the
Philippines, not just Philippine peso.
35.) Q : A provision that must be
included for corporations engaged in
any business that is fully or partly
reserved for Filipino citizens.
A: “No transfer of interest which will
reduce the ownership of Filipino citizens
to less than the required percentage of
the capital shall be allowed or permitted
to be recorded in the proper books. This
restriction shall be printed in all the stock
certificates of the corporation.
36.) Q : The Philippine Constitution
reserves ownership to these
corporations to Filipinos
A: Mass media.
37.) Q : For the purposes of
ascertaining whether Filipino
reservation is applicable against a
Corporation under the Constitution,
what does “mass media” mean?
A: Mass media means gathering,
Page 5
 USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II
transmission of information, messages,
signals, and forms of written, oral, and
all visual communication, and shall
embrace the print medium, radio,
television, film, movies, wire, and radio
communication and advertising in all its
phases.
38.) Q : May a corporation composed
entirely of aliens be organized and
incorporated in the Philippines?
(1970 Bar)
A: Yes, but only if nationalization laws
do not require ownership by Filipinos.
The RCCP does not provide for a
citizenship requirement. There are
businesses that are allowed to be
owned by foreigners. However, there
are corporations where the
Constitution/special laws require that at
least 60% or higher of the outstanding
capital stock be owned by Filipino
citizens, such as public utilities and
corporations that own land.
39.) Q : Who can question
amendments to the Articles of
Incorporation and By-Laws?
A: Amendments can be questioned only
by a real-party-in-interest, like a
shareholder or a member.
40.) Q : Silence or failure to object
cannot be construed as approval by
stockholders with respect to
amendments of the Articles of
Incorporation.
A: True. The law requires express
approval of the stockholders through an
affirmative vote or an assent that is in
writing.
COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO
41.)Q: It is an instrument or authority
from the sovereign power bestowing
the right or privilege to be and act as
a corporation.
A:Charter
42.)Q: What are the three-fold nature
contracts of an incorporation?
A: A contract between the state and the
corporation, a contract between the
corporation and its stockholders and the
contract between the stockholders inter
se.
43.)Q: Can the Congress change or
amend the charter of a private
corporation for the operation of
public utility?
A:Yes.It is expressly reserved by
Section 11, Article XII of the Constitution
which provides that: “Neither shall any
such franchise or right for the operation
of a public utility be granted except
under the condition that it shall be
subject to amendment,alteration or
repeal by the Congress when the
common good so requires.
44.)Q: Can a Corporation be
dissolved without a cause?
A:No.Such dissolution without just cause
is void as it impairs the obligation of a
contract between the incorporators and
the Ste.
45.)Q: The meeting of the
stockholders or members is
necessary if the amendment consists
Page 6
 USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II
in extending or shortening the
`corporate term or increasing or
decreasing the capital stock.(True or
False)
A:True
46.)Q: What is required for a foreign
corporations authorized to transact
business in the Philippines?
A: They are required to file within 60
days after the amendment to the articles
of incorporation becomes effective,with
the Securities and Exchange
Commission and in proper cases, with
the appropriate government agency, a
duly authenticated copy of the articles of
incorporation for record purposes.The
filing thereof,however,shall not of itself
enlarge or alter the purpose or purposes
for which such corporation is authorized
under its license to transact business in
the Philippines.
47.)Q: They are required to give the
incorporators reasonable time within
which t correct or modify the
objectionable portions of the articles
of incorporation or amendment when
the same is rejected or disapproved
for non-compliance with the
requiremments of the code.
A: The Securities and Exchange
Commission
48.) Q: In what instance wherein the
articles of incorporation or
amendment shall not be accepted or
approved by the Securities and
Exchange Commission unless
accompanied by a favorable
COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO
recommendation of the appropriate
government agency that such articles
or amendments is in accordance with
law.
A;It is when the corporation is governed
by special laws such as banks,
insurance companies,and educational
institutions.
49.)Q: The Securities and Exchange
Commission shall accept the articles
of incorporation of any stock
corporation unless accompanied by a
sworn statement of the treasurer
elected by the subscribers showing
the amount of the capital stock
subscribed and paid.(True or False)
A:True
50.)Q: What kind of power is
exercised in the action of the
Commission in approving or rejecting
the articles of incorporation or any
amendment thereto.
A:Discretionary Power
51.)Q: What corporate name cannot
be used?
A:No corporate name may be allowed
by the SEC if the proposed name is
identical or deceptively or confusingly
similar to that of any existing corporation
or to any other name already protected
by law or is patently deceptive,
confusing or contrary to existing laws.
When a change in the corporate name is
approved, the Commission shall issue
an amended certificate of incorporation
under the amended name. In short, the
Page 7
 USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II

following are not allowed: the entity but in the officials thereof as
well. Furthermore, only the word
[a] Identical names; "House" appears in both names but as
[b] Deceptively similar names; this word is generic or one of general
[c] Confusingly similar names; application, it cannot be exclusively
[d] Names protected by law; appropriated as a corporate name.
[e] Patently deceptive names;
[f] Confusing names; and 55.)Q: Is the corporate name "Tropiflora,
[g] Illegal names. Inc." confusingly similar to "Tropical
Flora (Philippines)" considering that the
52.)Q: Until when does a corporate two entities are engaged in the same
name cannot be used by any other line of business?
group?
A: Yes. "Tropiflora" is derived from the
A:For as long as a corporation s existing words "tropical flora," meaning "of, in or
regardless of whether or not it is in characteristic of the tropics, very hot."
operation Tropic is either of two circles of the
celestial sphere parallel to the equator.
53.)Q: It is a kind of test wherein the Flora refers to the plants of a specified
right to the exclusive use of a region or time. "Tropiflora" is nothing but
corporate name with freedom from a contraction of the words "Tropical
infringement is determined by priority Flora." The former is merely a
adoption. combination of the latter. The similarity
A:Test of Infringement between the two names is too obvious
to be overlooked. (Benedict Investment
54.)Q: "House of Investments, Inc.," Realty Corp. vs. Tropiflora, Inc., SEC
a corporation engaged in Case No. 2570, Jan. 10,1985.)
investments, protested the adoption
of the name "House of Insurance, 56.) Q:The name of an internationally
Inc." by a proposed corporation known corporation or similar to may not
which shall engage in insurance. Is be used by a domestic corporation
there a similarity between the two unless it is subsidiary and that the
names as to cause confusion in the parent company has consented to such
minds of the public regarding the use.(True or False)
identities of said corporations? A:True
A: None. The two corporations have 57.)Q:What is needed to obtain if the full
different main objectives and both cater name of a person forms part of the
generally to people of means who, as a corporate name?
rule, exercise careful scrutiny of the
identity of the corporation with which A:The consent of such person or his
they deal and are interested not only in heirs

COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO Page 8
 USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II
58.)Q:Explain the Doctrine Of
Secondary Meaning
A:This doctrine originated in the field of
trademark law. Its application has,
however, been extended to corporate
names since the right to use a corporate
name to the exclusion of others is based
upon the same principle which underlies
the right to use a particular trademark or
trade name.
59.)Q: It is a name or surname,firm
name,device or work used by
manufacturers,industrialists,merchan
ts and others to identify their
businesses,vocations,or
occupations.
A:Trade name
60.)Q: When does a change of name
is deemed effective?
Answer: On the date of the
Commission’s approval of the amended
articles or from the date of filing with it if
not acted upon 6 months from the date
of filing for a cause not attributable to
the corporation.
61.)Q: What is the general rule as to
the misnomer of a corporation?
A:The misnomer of a corporation in a
bond,note,or other deed or contract
does not render the same invalid or
inoperative..
62.)Q: What is the maximum term of
a corporation?
A:Under the Revised Corporation
Code,the maximum term of a corporate
COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO
existence has been removed.The
Philippines now adopts the doctrine of
perpetual corporate existence.
63.)Q: They cannot exercise the
powers,rights and privileges
expressly granted by the Corporation
Code to registered corporations and
its status is that of an ordinary
association which has no separate
juridical personality.
A:Unregistered Organization
64.)Q: When does a corporation
must formally organized and
commenced the transactions of its
business or the construction of its
works?
A:Within 2 years from the date of its
incorporation or, otherwise,its corporate
powers shall cease and it shall be
deemed dissolved.
65.)Q: What is the rule in filing the
articles of incorporation in the case
of religious corporations?
A:The Revised Corporation Code does
not require the Securities and Exchange
Commission to issue a certificate of
incorporation.In fact,Section 112 clearly
states that from and after the filing with
the Commission of the articles of
incorporation.
66.)Q: When does a cooperative
acquires juridical personality?
A:Upon registration with the
Cooperatives Development Authority.It
Page 9
 USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II

need not to be registered again with the 70.)Q: What are the requisites of a de
Securities and Exchange Commission. facto corporation?

67.)Q: What is a De Jure A: (1) A valid law under which a

Corporation?
A: A de jure corporation is one created
in strict or substantial conformity with the
mandatory statutory requirements for
incorporation and the right of which to
exist as a corporation cannot be
successfully attacked or questioned by
any party even in a direct proceeding for
that purpose by the State.
68.)Q: What is a de facto
corporation?
corporation with powers assumed might
be incorporated;
(2) A bona fide attempt to organize a
corporation under such law; and
(3) Actual user or exercise in good faith
of corporate powers conferred upon it by
law. Stockholders of a de facto
corporation enjoy exemption from
personal liability for corporate
obligations as do stockholders of de jure
corporations.

A:A de facto corporation is one which 71.)Q: What are the defects which
actually exists for all practical purposes will preclude the creation of even a
as a corporation but which has no legal de facto corporation?
right to corporate existence as against
the State. A: (a) Absence of articles of
incorporation;
69.)Q : A corporation was created by
a special law.Later,the law creating it (b) Failure to file articles of
was declared invalid.May such incorporation with the Securities and
corporation claim to be a de facto Exchange Commission (Cagayan
corporation? Fishing Dev. Co. vs. Sandiko, 60 Phil.
223 [1934].); and
A:No, such a corporation created by an
invalid special law cannot claim to be a (c) Lack of certificate of incorporation
de facto corporation for two reasons. from the Securities and Exchange
Commission.
First, an invalid law creates no office, 72.) Q: What kind of proceeding that
confers no rights and imposes no a state must bring against the
obligation. It is not a source of anything corporation to oust it from the
because it is void. exercise of corporate powers
usurped by it and to have it
Second, for there to be a de facto dissolved?
corporation, there must be an apparently
valid statute under which the corporation A:Quo Warranto
with its purposes may be formed.

COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO Page 10
 USJR SCHOOL OF LAW [ CORPORATION LAW REVIEWER –]TITLE II

73.) Q: It is a kind of attack whereby A: Regular Courts

the state, in a proceeding brought for
that purpose, attacks the existence of
an association claiming to be a
corporation.It can only be instituted
by the government through the
solicitor general by quo warranto
proceeding.
A: Direct Attack
78.)Q: What is the liability to
taxation of a de facto corporation?
A:It is subject to taxation in the same
manner as though it were a de jure
corporation and under the statutes
relative to the taxation of corporations of
the latter class.

74.) Q: It is a kind of attack whereby 79.)Q: What is the rationale behind

the corporate existence is questioned the corporation by estoppel?
in some incidental proceedings not A: It is founded on the principles of
provided by law for the express equity and is designed to prevent
purpose of attacking the corporate injustice and unfairness.
existence.
80.)Q: Is a corporation by estoppel a
A:Collateral Attack de jure or de facto corporation?
75.)Q: What is the general rule A:It is neither a de jure nor a de facto
against collateral attack upon corporation, but is a mere fiction existing
corporate existence? for the particular case, and vanishing
A:It should be based on the ground,not where the element of estoppel is absent.
of equitable estoppel, but of public
policy.

76.)Q: What is the liability as

partners in a corporation?

A:If neither a de jure nor a de facto

corporation results, the incorporators
should be held liable as partners
together with stockholders who
subscribed to stocks showing the failure
of the attempted incorporation of the
business.

77.)Q: Who has the jurisdiction over

disputes or controversies among the
liabilities of partners in a
corporation?

COMPILED BY: BHENZ BRYLE TOMILAP & VICTORIA ASHLEY PEPITO Page 11