History of Corporation Law in the Philippines
Old Corporation Code - Batas Pambansa Blg. 68
Took effect on May 1, 1980.
Revised Corporation Code – Republic Act No. 11232
Took effect on February 23, 2019.
Salient Features:
- Introduction of the One-Man Corporation.
- Removal of the Fifty-Year Limit Rule (Corporations now can have perpetual existence,
unless limited in the Articles of Incorporation).
- Treasurer’s affidavit is no longer required for incorporation.
- No longer any minimum subscribed and paid-up capital.
- No more minimum capital requirement of ₱95,000.
Definition of a Corporation
A corporation is an artificial being created by operation of law, having the right of
succession and powers, attributes, and properties expressly authorized by law or incident
to its existence.
The statutory definition refers only to private corporations organized under the Corporation
Code.
Attributes of a Corporation:
1. It is an artificial being.
2. It is created by operation of law.
3. It has the right of succession.
4. It has only the powers, attributes, and properties expressly authorized by law or incident
to its existence.
Corporation as an Artificial Personality
- A corporation is a legal or juridical person with a personality separate and apart from its
stockholders or shareholders (stock corporation) or individual members (non-stock
corporation).
- Not in fact and reality a person, but the law treats it as a person.
- The stockholders or members compose the corporation but they are not the corporation.
- The debts of the corporation are not the debts of the shareholders or members.
Corporation as a Creation of Law or by Operation of Law
- General rule: Special authority or grant by the state is required. A corporation cannot
come into existence by mere agreement of the parties.
- A corporation is created either by special law which directly creates the corporation, or by
means of incorporation through the SEC.
Right of Succession of a Corporation
A corporation has the capacity for continuous existence irrespective of the death,
withdrawal, insolvency, or incapacity of the stockholders, and regardless of the transfer of
their shares of stock.
Under the Revised Corporation Code, a corporation shall have perpetual existence unless
its Articles of Incorporation provide otherwise. The 50-year maximum rule no longer
applies.
Powers, Attributes, and Properties of the Corporation
- A corporation may exercise only such powers as are granted by the law of its creation.
- All powers which may be derived from those expressly provided by law and those which
are incidental or essential to the corporation’s existence may also be exercised.
Difference Between a Partnership and a Corporation
Partnership
• The general partners are liable personally and subsidiarily for partnership debts to third
party
• A partner cannot transfer his interest in the partnership so as to make the assignee a
partner in the partnership
• A partnership maybe dissolved at anytime by the will of any or all the partners
• A partnership is governed by the civil code
Corporation
• The stockholders are liable only to the extent of their investment.
• A stockholder has the right to transfer his shares to anyone w/o the prior consent of the
other Stockholder
• A corporation can only be dissolve with the consent of the state
• A corporation is governed by the Revised Corporation Code
Classifications of Corporations
1. Stock Corporation
The ordinary business corporation created and operated for the purpose of making a
profit. Such profit may be distributed in the form of dividends to stockholders on the basis
of their invested capital. Dividends may be in the form of money, property, or additional
stocks.
2. Non-stock Corporation
Not created for profits. It does not issue stocks. Its purpose is for public good and welfare.
Capital is sourced from contributions and donations.
Other Classifications of Corporations:
1. As to the State or Country Under or by Whose Laws They Have Been Created:
- Domestic Corporation: A corporation incorporated under the laws of the Philippines.
- Foreign Corporation: A corporation formed, organized, or existing under any laws other
than those of the Philippines.
2. As to Their Legal Rights to Corporate Existence:
- De Jure Corporation: A corporation existing in fact and in law.
- De Facto Corporation: A corporation existing in fact but not in law.
3. As to Whether They Are Open to the Public or Not:
- Close Corporation: One which is limited to selected persons or members of a family.
- Open Corporation: One which is open to any person who may wish to become a
stockholder or member.
