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By

means of a special charter or franchise whereby the legislature grants a body of persons corporate existence or By fulfilling the conditions prescribed by a general law for the acquisition of corporate existence.

Art. XIV,
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Sec. 7

Our Constitution prohibits Congress from providing for the formation of private corporations by special act, unless such corporations are owned or controlled by the Government or any of its subdivisions or instrumentalities.

Corporation

Law- the general law which prescribes the procedure and the conditions for the formation of private corporations. It provides that five or more persons, not exceeding fifteen, a majority of whom are residents of the Philippines may form a private corporation for any lawful purpose or purposes by filing with the Securities and Exchange Commission articles of incorporation.

articles of incorporation must set forth(Corporation Law, Sec. 6; Republic Act No. 2055): 1. The name of the corporation; 2. Its purpose or purposes; 3. The place of its principal office, which must be in the Philippines; 4. Its duration, which must not exceed fifty years; 5. The names and residences of the incorporators;
The

6.

7.

8.

The number of directors, which must not be less than five nor more than eleven; The amount of its capital stock and the number of shares into which it is divided if it be a stock corporation; The amount of capital stock or number of shares of no-par stock actually subscribed and the number of shares and the amount paid by each subscriber.

Upon

the filing of the articles of incorporation in accordance with law, the Securities and Exchange Commissioner shall issue a certificate to that effect and from that moment the corporation acquires juridical personality and legal existence. (Corporation Law, Sec. 11)

The Corporation Law requires every corporation to have a board of directors of not less that five nor more than eleven directors to be elected from among the stockholders or members. The board of directors is the supreme governing body of the corporation in the management of the regular and ordinary business affairs, limited in its powers only by its articles of incorporation and by its by-laws.

1.

2. 3. 4. 5.

Corporation Law, Sec 13; Act No. 3518 Of succession, that is, the power to prolong its existence beyond the natural life of the members composing it; To sue and be sued; To transact its business and to accomplish its purpose; To have a seal; To purchase, hold, convey, sell, lease, let, mortgage, encumber, and otherwise deal with real and personal property subject to the limitations set by law;

To appoint and dismiss subordinate officers or agents; 7. To make by-laws for its government, not inconsistent with any existing law; 8. To admit members and to issue and sell stock; 9. To enter into contracts; 10. To purchase, encumber or sell shares of other corporations, subject to the limitations provided by law.
6.

1. 2. 3. 4. 5.

Under our law, a corporation may be dissolved: By the expiration of the period for which it was created; By legislative enactment; By judicial decree of dissolution or forfeiture for violation of the Corporation Law; By voluntary surrender of its charter by the stockholders; By failure to organize and commence business within two years from the date of its incorporation.

By

foreign corporation is meant a corporation which owes its existence to the laws of another country, or a corporation formed, organized or existing under any laws other than those of the Philippines. (Corporation Law, Sec. 68)

No

Foreign Corporation may be permitted to transact business in the Philippines until it shall have a license for that purpose from the Securities and Exchange Commission. (Corporation Law, Sec. 68; Republic Act No. 2055) The Corporation Law further provides that no foreign corporation which has not obtained such prescribed license may maintain any suit for the recovery of any debt, claim, or demand whatever. (Corporation Law, Sec. 69)

Republic Act No. 5186, declares it a policy of the state to encourage both Filipino and foreign investments in preferred areas of the economy and to welcome foreign capital in establishing pioneer enterprises that are capital intensive and would utilize a substantial amount of domestic raw materials, in joint venture with substantial Filipino capital whenever available.

The policy is sought to be realized by assuring certain guarantees and incentives to investors. It is made explicit that they are entitled to the basic rights provided in the Constitution. Among the guarantees the Government recognizes under the Act are: 1. The right of foreign investors to repatriate the entire proceeds of liquidated investments and to remit earnings in the currency in which the investment was originally made and at the exchange rate prevailing at the time of repatriation or remittance;

2.

3.

4.

The right to remit payments of interest and principal on foreign loans and other obligations at the exchange rate prevailing at the time of remittance; Freedom from expropriation of the property represented by investments or property of the enterprises, except for public use or in the interest of national welfare and defense and upon payment of just compensation; Freedom from government requisition of the investment or property, except for a limited duration in the event of war or national emergency and upon payment of just compensation.