Presented by:

Companiados, Jorgelyn Trix D.

Añonuevo, Baby Jane
 WHAT IS
CORPORATION?
CORPORATION
Artificial being created by operation of law, having the right
of succession and the powers, attributes and properties
expressly authorized by law or incident to its existence.
(Batas Pambansa Bldg. 68, Section 2)

Requires five to fifteen natural persons of legal age and

majority of whom are residents of the Philippines. (Sec. 10 /
Art. 1767)

A corporation begins to have corporate existence and

juridical personality only from the date of the issuance of the
certificate of incorporation by the Securities and Exchange
Commission under its official seal. (Sec. 19/ Art. 1784)
CORPORATION
In a stock corporation, the stockholders are
liable only to the extent of their investments as
represented by the shares subscribed or owned
by them. (Art. 1816)

The power to manage the affairs of the

corporation is vested in the board of directors or
trustees. (Sec. 23 / Art. 1803)
A corporations has right of succession
A corporation may not be
formed for a term in excess of
50 years extendible to not more
than 50 years at any instance.
(Sec. 11 / Art. 1767 & 1785)

A corporation can only exercise the powers

expressly granted by law or implied from those
granted or incident to its existence.
(Sec. 2 / Art. 1306)
CORPORATION
Additional stockholder,
In a stock
death, insolvency,
corporation, a
incapacity, or sale of
stockholder has the
investment of a
right to transfer his
stockholder does not
shares without the
dissolve the corporation. It
prior consent of the
can only be dissolved with
other stockholders.
the consent of the State.
(Sec. 63 / Art. 1812 &
(Sec. 117-122 / Art. 1828-
1814)
1830)
A corporation is
governed by
the Corporation
Code.
Attributes of a Corporation
1. Corporation as an artificial being – a corporation is a
legal or juridical person with a personality separate and
different from its individual members or shareholders
who are joined together in the corporate body. It is not a
person but the law treats it as though it is a person.
 Attributes of a
Corporation
Consequences of the doctrine of separate entity:

a. A corporation is not liable for the b. A corporation may possess,

debts of its
shareholders or members, and the
shareholders or members
are not individually liable for the
corporation’s debts.
acquire and own property of all
kinds; it may incur obligations; it
can sue and be sued (civil and
criminal actions) in its own name in
the same manner as a natural person

c. All agreements or contracts entered into in its

name by its officers who hold office and agents
are the contracts of the corporation and not those
of the shareholders or members.
Attributes of a
Corporation
2. Corporation as a creation of law or by operation of law

– the general law which governs the creation of private corporations is

Batas Pambansa, Blg. 68, otherwise known as “The Corporation Code
of the Philippines”.

- Private corporations owned or controlled by the government or

any subdivision or instrumentality thereof are created by special
laws.

- Corporation can not come into existence by mere agreement

of the parties as in the case of partnership. They require special
authority or grant from the State.
Attributes of a
Corporation
3. Right of succession of a corporation – a corporation shall exist for a
period not exceeding fifty (50) years from the date of incorporation
unless sooner dissolved or unless said period is extended.
- the corporate term may be extended for periods not
exceeding fifty (50) years in any single instance by an amendment of the
Articles of Incorporation, in accordance with the Code. (Section 11, Batas
Pambansa Blg. 68)
- it has a capacity of continuous existene irrespective of
the withdrawal, incapacity or death of the individual shareholders or
members and regardless of the transfer of their interest or shares of stock.
- Corporations created by special laws have the right of
succession for the term provided in the laws creating them.
Attributes of a
Corporation
4. Powers, attributes, and properties of a corporation –
a corporation, being a mere creation of law, may
exercise only such powers as are granted by the law of
its creation. These include:
- powers expressly granted by law
- powers inherent to corporate existence
and implied powers.
Attributes of a
Corporation
Every Corporation incorporated under the Corporation Code has the
power and capacity:
a. To sue and be sued in its corporate seal;
b. Of succession by its corporate name for the period of time stated in
the Articles of Incorporation and the certificate of incorporation;
c. To adopt a corporate seal;
d. To amend its Articles of Incorporation in accordance with the
provisions of the Code;
e. To adopt by laws, not contrary to law, morals, or public policy, and
to amend or repeal the same in accordance with the Code;
f. In case of stock corporations, to issue or sell stocks to subscribers
and to sell treasury stocks in accordance with the provisions of the Code; and to
admit members to the corporation if it be a non-stock corporation;
Attributes of a
Corporation
g. To purchase, receive, take or grant, hold, convey, sell, lease,
pledge, mortgage and otherwise deal with such real and personal
property;
h. To adopt any plan or merger or consolidation as provided in
the Code;
i. To make reasonable donations. Provided, that no corporation,
domestic of foreign, shall give donations in aid of any political party or
candidate or for purposes of partisan political activity;
j. To establish pension, retirement, and other plans for the
benefit of its directors, trustees, officers and employees; and
k. To exercise such other powers as may be essential or
necessary to carry out its purpose or purposes as stated in its Articles of
Incorporation.
Intra vires, ultra vires, and
illegal acts defined
Intra Vires – are acts Ultra vires – are
or contracts of a acts or contracts of a
corporation made corporation made
within the powers beyond the powers
expressly or impliedly expressly or impliedly
granted upon the granted upon the
corporation. corporation.
Illegal acts – are
acts or contracts of a
corporation made
contrary to law,
morals, good custom,
public order or public
policy.
Advantages of a business
corporation
1. Larger amount of capital can be
raised considering the great
number of individuals and firms
investing to the corporation.
2. The shareholder’s liability is
limited only up to the amount of
his investment in corporation.
3. Transferability of ownership
interest. The shares of stocks can
be sold or transferred to owners
without the consent of the other
stockholders.
Advantages of a business
corporation
4. The corporation has continuity
of existence. Legally a
corporation can exist for 50
years, and it is renewable for
periods not exceeding 50 years
in any one instance.
5. The management is centralized
in the board of directors.
Disadvantages of a
business corporation
1. A corporation is subject to more
legal requirements or government
regulations.
2. It entails relatively high cost of
formation and operation;
3. Corporation’s profit is subject to
corporate tax of 30%.
4. Double taxation. Dividends
received by the stockholders are
subject to final tax.
5. The minority shareholders have
little voice in the conduct of the
business.
CLASSIFICATION
OF
CORPORATION
 CLASSIFICATION OF
CORPORATION
1. Corporations formed or organized under the Code may
be stock or non-stock corporation. (Section 3)
a. Stock corporation – a. Non-stock corporation – all
corporations which have capital other private corporations are
stock divided into shares and non-stock corporations (sec. 3).
are authorized to distribute to A non-stock corporation is one
the holders of such shares where no part of its income is
dividends or, allotments of the distributed as dividends to its
surplus profits on the basis of members, trustees, or officers
the shares held are stock subject to the provision of the
corporations. Code on dissolution.
 CLASSIFICATION OF
CORPORATION
2. As to whether they are for private or public
purpose.
The Corporation Code eliminated the
classification of corporations into public or private
obviously for the reason that it applies only to
private corporations.
CLASSIFICATION OF
CORPORATION
a. Private – private corporations or those formed for some
private purpose, or benefit; it may be either a stock or
non-stock corporation.
Government-owned or
Quasi-public corporations or
government-controlled
corporations or those directly those which have accepted from
created by special law (Sec. 4). They the State the grant of a franchise
may be stock or non-stock, and or contract involving the
performing governmental or rendition or performance of
proprietary functions (Pres. Decree some public duties or service,
No. 2029). These corporations are but which are organized for
private not public corporations
profit. Also known as “public
because they are not established for
the government or a portion of the utilities” or “public service
State. corporation.”
CLASSIFICATION OF
CORPORATION
b) Public – public corporations or those formed or
organized for the government or a portion of the State.
In the Philippines, the public corporations are the
provinces, cities, municipalities, and barangays.
- the Constitution mandates the creation of
autonomous regions in Muslim Mindanao and the
Cordilleras. These local units are also called municipal
corporations or local governments.
CLASSIFICATION OF
CORPORATION
3. As to what country or whose laws they have been
created.

a. Domestic - a b. Foreign – a foreign

domestic corporation is corporation is one
one incorporated under formed or organized
the laws of the under the laws of some
Philippines. other state or country.
CLASSIFICATION OF
CORPORATION
4. As to whether they are open to the public or not.

b. Close – a close
a. Open – an open corporation is one which is
corporation is one limited to selected persons.
which is open to any All of the corporation’s
person who may wish issued stock of all classes,
to become a exclusive of treasury shares,
is held by not more than
stockholder or member. 20persons. (Sec. 96)
CLASSIFICATION OF
CORPORATION
5. As to their legal right to corporate existence.

b. De facto – is a
corporation existing in
a. De jure – is fact but not in law; has
corporation existing in accorded corporate
fact and in law. status against third
parties but not against
the estate (Sec. 20).
CLASSIFICATION OF
CORPORATION
6. As to their relation to another corporation.
a. Parent or holding – a
corporation which is related
to another corporation that it
has the power, directly or
indirectly, to elect the
majority of the directors of
another corporation.
b. Subsidiary – a
corporation which is related
to another corporation
(parent or holding) that the
majority of its directors are
elected by the parent or
holding corporation.
COMPONENTS
of
CORPORATION
 2. INCORPORATORS- are
1. those stockholders or
members mentioned in the
CORPORATORS articles of incorporation as
– are those who originally forming and
compose a composing the corporation
and who are signatories
corporation, thereof. All incorporators in a
whether as stock corporation must own
stockholders or as or at least be a subscriber to
at least one share of the
members. (Sec. 5) capital stock of such
corporation. (Sec. 5 / 10)

3. STOCKHOLERS or
SHAREHOLDERS-
corporators in a stock
4. MEMBERS- corporation are called
stockholders or
corporators in a shareholders. They are
non-stock the owners of the
corporation are corporation. Stockholders
may be natural or juridical
called persons but only natural
members. (Sec. persons can be
5) incorporators. (Sec. 5)