REVIEWER: CORPORATION LAW
Sec. 1. Title of the Code. – This Code shall
be known as “The Corporation Coder of the
Philippines”.
Corporation Code of the Philippines –
B.P. 68:
 Was enacted on March 1, 1906
 Approved on April 1, 1906
 Took effect on May 1, 1906
What happened to existing corporations
after the enactment of the law?
All corporations created before B.P.
68 were given two years to comply with the
provisions of the law. Thus, all corporations
established before and after enactment of
B.P. 68 shall be governed by such law.
Note: The provisions of the Civil Code
regarding AGENCY is suppletory to B.P.
68.
Sec.2. Corporation defined. - A corporation
is an 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.
Attributes of a Corporation:
1. It is an artificial being.
2. It created by operation of law.
3. It enjoys the rights of succession.
4. It has the powers, attributes and
properties expressly authorized by
law or incident to its existence.
A corporation is contract between:
1. The corporation and the state
2. The corporation and its stockholders
or members
3. The stockholders and members
among themselves; and
4. The corporation and 3rd persons
Constitutional rights of a corporation:
1. Due process
2. Equal protection of the law
3. Protection against unreasonable
searches and seizures
Concession Theory – a corporation is an
artificial creature without any existence until
it has received the approval of the state
acting according to law through the
Securities and Exchange Commission.
Doctrine of Separate Personality – a
corporation has a juridical personality
separate and distinct from that of its
stockholders or members.
Doctrine of Piercing the Veil Doctrine –
requires the court to see through the
protective shroud which exempts its
stockholders from liabilities that they would
ordinarily be subject to, or distinguishes a
corporation from a seemingly separate one,
were it not for the existing corporate fiction.
Legal fiction is disregarded when:
The corporation is being used as a cloak to
cover for:
1. Fraud or illegality
2. Defeating public convenience
3. Protecting a fraud; or
4. Defending a crime
Sec.3. Classes of corporations. –
Corporations formed or organized under this
Code may be stock or non-stock
corporations. Corporations which have
capital stock divided into shares and are
authorized to distribute to the holders of
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such shares dividends or allotments of the 5-15 number

surplus profits on the basis of shares held are
stock corporations. All other corporations Must have May be such through
are non-stock corporations. contractual capacity a guardian

Sec.3. Classes of corporations. –

Sec.4. Corporations created by special laws Corporations formed or organized under this
or charters. – Corporations created by Code may be stock or non-stock
special laws or charters shall be governed corporations. Corporations which have
primarily by the provisions of the special capital stock divided into shares and are
law or charter creating them or applicable to authorized to distribute to the holders of
them, supplemented by the provisions of this such shares dividends or allotments of the
Code, insofar as they are applicable. surplus profits on the basis of shares held are
stock corporations. All other corporations
Sec.5. Corporators and incorporators, are non-stock corporations.
stockholders, and members. – Corporators
are those who compose a corporation, Components of a corporation:
whether as stockholders or members.
a. Board of Trustees/Directors
Incorporators are those stockholders or
b. Members/Shareholders
members mentioned in the articles of
c. Corporate Officers
incorporation as originally forming and
composing the corporation and who are 1. Corporators – are those who composing
signatories thereof. a corporation, whether as stockholders of
members. The term includes incorporators,
Corporators in a stock corporation are called
stockholders or members.
stock-holders or shareholders. Corporators
in a non-stock corporation are called 2. Incorporators – are those stockholders or
members. members mentioned in the articles of
incorporation as originally forming and
Incorporators Corporators
Signatory to the Stockholder (stock composing the corporation and who are
Articles of corporation) or signatories thereof.
Incorporation member (non-stock
corporation) 3. Stockholders or shareholders – are
those corporators in a stock corporation.
Fait Accompli; They may cease to
accomplished fact be such if they 4. Members – are those corporators in a
(the Articles of subsequently lose non-stock corporation.
Incorporation cannot their qualification
be amended to Sec.6. Classification of shares. – The shares
replace them) of stock of stock corporations may be
divided into classes or series of shares, or
Number is limited to No restriction as to both, any of which classes or series of shares
REVIEWER: CORPORATION LAW
may have such rights, privileges or
restrictions as may be stated in the articles of
incorporation: Provided, That no share may
be deprived of voting rights except those
classified and issued as “preferred” or
“redeemable” shares, unless otherwise
provided in this Code: Provided, further,
That there shall always be a class or series
of shares which have complete voting rights.
Any or all of the shares or series of shares
may have a par value or have no par value as
may be provided for in the articles of
incorporation: Provided, however, that
banks, trust companies, insurance
companies, public utilities, and building and
loan associations shall not be permitted to
issue no-par value shares of stock.
Preferred shares of stock issued by any
corporation may be given preference in the
distribution of the assets of the corporation
in case of liquidation and in the distribution
of dividends, or such other preferences as
may be stated in the articles of incorporation
which are not violative of the provisions of
this Code: Provided, That preferred shares
of stock may be issued only with a stated par
value. The board of directors, where
authorized in the articles of incorporation,
may fix the terms and conditions of
preferred shares of stock or any series
thereof: Provided, That such terms and
conditions shall be effective upon the filing
of a certificate thereof with the Securities
and Exchange Commission.
Shares of capital stock issued without par
value shall be deemed fully paid and
nonassessable and the holder of such shares
shall not be liable to the corporation or to its
creditors in respect thereto: Provided; That
shares without par value may not be issued
for a consideration less than the value of five
(P5.00) pesos per share: Provided, further,
That the entire consideration received by the
corporation for its no-par value shares shall
be treated as capital and shall not be
available for distribution as dividends.
A corporation may, furthermore, classify its
shares for the purpose of insuring
compliance with constitutional or legal
requirements.
Except as otherwise provided in the articles
of incorporation and stated in the certificate
of stock, each share shall be equal in all
respects to every other share. Where the
articles of incorporation provide for non-
voting shares in the cases allowed by this
Code, the holders of such shares shall
nevertheless be entitled to vote on the
following matters:
1. Amendment of the articles of
incorporation.
2. Adoption and amendment of by-laws.
3. Sale, lease, exchange, mortgage, pledge
or other disposition of all or substantially all
of the corporate property.
4. Incurring, creating or increasing bonded
indebtedness.
5. Increase or decrease of capital stock.
6. Merger or consolidation of the
corporation with another corporation or
other corporations.
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7. Investment of corporate funds in another

corporation or business in accordance with
this Code.

8. Dissolution of the corporation.

Except as provided in the immediately

preceding paragraph, the vote necessary to
approve a particular corporate act as
provided in this Code shall be deemed to
refer only to stocks with voting rights.

DEFINITIONS:

A “stock” or share of stock – is one of the

units into which the capital stock has been
divided. It represents the interest or right
that the holder of the stock or stockholder
has in the corporation.

A stock certificate – certifies that one is a

holder or owner of a certain number of
shares of stock in the corporation. It is a
mere documentary evidence of the holder’s
ownership of shares and a convenient
instrument for the transfer of title.

It is a written acknowledgment by the

corporation of the inter

Incorporation – is the performance of

conditions, acts, deeds, and writings by
incorporators, and the official acts,
certification or records, which give the
corporation its existence.

Grandfather Rule –

Domestic Corporations – one incorporated

under the laws of the Philippines.

Foreign Corporation – one formed and

organized under any laws other than those of
the Philippines.