RFBT

• Implied Powers


  Those inferred from or reasonably necessary for the exercise of provided powers of the Corporation
• Incidental or Inherent Powers


  Powers that attached to a corporation at the moment of its creation without regard to its expressed powers or particular primary purposes
• No corporation shall possess or exercise corporate powers other than those conferred by this Code or by its articles of incorporation and except as necessary or incidental to the exercise of the powers conferred
• Effects of Ultra Vires Acts

  • Executed Contract - Voidable. Courts will not set aside or interfere with such contracts
  • Executory contracts - Unenforceable. No enforcement even at the suit of either party
  • Partly executed and partly executory - principle of unjust enrichment at the expense of another shall apply
  • Ultra vires ats which are illegal per se - null and void
  • Ultra vires for being outside the primary and secondary purpose - voidable on the part of the other party
  • Corporate officer exceeded authority or unauthorized - unenforceable
• Doctrine of Apparent Authority

  If a corporation knowingly permits its officer, or any other agent to perform acts within the scope of an apparent authority, holding him out to the public as possessing power to do those acts, the corporation will, as against any person who has dealt in good faith with the corporation through such an agent, be estopped from denying such authority
• Tests to Determine Nationality of Corporation

  • Incorporation Test - the nationality of a corporation follows that of the country under whose laws it was incorporated
  • Business Domiciliary Test - the country where it is principal business is conducted
  • Control Test - nationality of the corporation follows that of the stockholder owning the controlling interest
  • Grandfather Rule - is a method by which the percentage of Filipino equity in corporations engaged in nationalized and/or partly nationalized areas of activities, provided for under the Philippine Constitution and other nationalization laws, is accurately computed and the diminution of such equity is prevented
• Classes of Corporations


  • Stock Corporation - one that has capital stock divided into shares and are authorized to distribute to holders such shares dividend or allotments of the surplus profits on the basis of the shares held
  • Non-stock Corporation - one no part of the income which is distributable as dividends to its members, trustees or officers
  • Domestic Corporation - incorporated under Philippine laws
  • Foreign Corporation - formed, organized and existing under any laws other those of the Philippines and whose laws allows Filipino citizens and corporations to do business in its own country or State
  • Corporation Aggregate - composed of more than one corporator
  • Corporation Sole - composed of only one person
  • Public Corporation - organized for the government of a portion of the State
  • Private Corporation - formed for a private purpose or end
  • Quasi-public Corporation - organized for profits which are granted a franchise by the State to perform public service
  • Ecclesiastical Corporation - formed for a religious purpose
  • Lay Corporation - formed for a purpose other than ecclesiastical or religious
  • Eleemosynary Corporation - organized for public charity
  • Civil Corporation - organized for business or profit
  • Parent or Holding Corporation - one which owns the share of another corporation having the power, directly or indirectly, over the latter including the election of the directors thereof
  • Subsidiary Corporation - one whose shares of stock are owned by another corporation, called the parent corporation
  • Affiliate - corporation which is a member of a group of companies
  • Close Corporation - one which is limited to selected persons or members of the family
  • Open Corporation - one which is open to any person who may wish to become a stockholder or member thereto
  • Corporation by Prescription - one which has exercised corporate powers for such a length of time without interference from the State and which, by fiction of law, is given the status of a corporation
  • Corporation by Estoppel - one which is not in reality a corporation but is considered as one with respect to those who are precluded by their admission or conduct from denying its existence
  • De jure Corporation - one that has been created in strict compliance with all the legal requirements and whose right to exist as a corporation cannot be successfully attacked in a direct proceeding for that purpose by the State
  • De facto Corporation - one that is defectively created but there is is an actual exercise of corporate rights and franchise resulting from an attempt in good faith to incorporate on the part of the members
• Requisites of De facto Corporation

  • Organized under a valid law
  • Attempt in good faith to form a corporation according to the requirements of the law (colorable compliance)
  • Use of corporate powers
• Who may be incorporators

  • Natural Person
  • Partnership
  • Association
  • Corporation
• Number of Incorporators


  • Ordinary Corporation - two (2) or more persons, but not more than fifteen (15)
  • One Person Corporation - only one incorporator is required who is also the single stockholder and sole director
• Qualifications of Incorporators


  • Stock Corporation - each incorporator must own, or be a subscriber to at least one (1) share of capital stock
  • Non-stock Corporation - each incorporator must be a member of the corporation
  • Incorporators who are natural persons must be of legal age and must sign the articles of incorporation
• Incorporation may be a combination of the incorporators under the RCC, as well as foreign corporation/s
• Corporate Term


  A corporation shall have perpetual existence unless its articles of incorporation provide for a specific corporate term. Corporations with certificates of incorporation issued prior to the effectivity of this Code (February 23, 2019), and which continue to exist - shall have perpetual existence, without further action. If continues to elect its corporate term - shall notify the Commission after it is approved by a vote of its stockholders representing a majority of its outstanding capital stock. Any change in the corporate term is without prejudice to the appraisal right of dissenting stockholders
• Promoter


  A person, natural or juridical, who usually discovers a prospective business and brings person interested to invest in it through the formation of a corporation
• Promoter's role


  1. Bringing together the incorporators or the persons interested in the enterprise

  2. Procuring subscriptions or capital for the corporation

  3. Setting in motion the machinery which leads to the incorporation of the corporation itself
• If corporation was never formed


  The promoter remains personally liable
• If the corporation was formed

  Promoter remains liable until the corporation ratifies or adopts such contracts, or releases him from liability
• Subscription Contract


  Any contract for the acquisition of unissued stock in an existing corporation or a corporation still to be formed
• Subscription Contract


  • It is considered as such notwithstanding the fact that the parties refer to it as a purchase or some other contract
  • A subscription contract is indivisible (Doctrine of Individuality)
  • No particular form is required
  • Payment of subscription contract cannot be condoned by a corporation
  • Stockholder is entitled to the rights pertaining to shares of stock although not fully paid
• Promoter


  Person responsible for (1) Raising subscriptions or capital for the corporation; and (2) Setting in motion the machinery which leads to the incorporation of the corporation itself
• If corporation was never formed


  Promoter remains personally liable
• Doctrine of Individuality (Indivisibility) of Subscription

  • A subscription contract is indivisible
• No particular form is required for a Subscription Contract
• Payment of subscription contract cannot be condoned by a corporation
• Stockholder is entitled to the rights pertaining to shares of stock although not fully paid
• Subscription


  May be made before or after incorporation, covers unissued stock, not covered by the Statute of Frauds, subscriber becomes a stockholder even if he has not paid the subscription
• Purchase


  May be made only after incorporation, covers issued stock, in purchase amounting to P500, the Statute of Frauds apply, buyer does not become a stockholder until the fulfillment of the terms of the sale and registration thereof in the books of the corporation
• Pre-incorporation Subscription


  Entered into before incorporation, shall be irrevocable for a period of at least six (6) months from the date of subscription, except if all other subscribers consent to the revocation or the corporation fails to incorporate within the same period or within a longer period stipulated in the contract of subscription
• Post-incorporation Subscription


  Entered into after incorporation, may not be revoked after its acceptance by the corporation so as to release the subscriber from liability unless consented to by all stockholders
• Par value shares


  Should not be less than its par value as stated in the Articles of Incorporation
• No par value shares


  Should not be less than the issued price
• Consideration for Stocks


  • Actual cash paid to the corporation
  • Property, tangible or intangible, actually received by the corporation and necessary or convenient for its use and lawful purposes at a fair valuation equal to the par or issued value of the stock issued
  • Labor performed for or services actually rendered to the corporation
• Articles of Incorporation


  • Amendment must be for a legitimate purpose, requires majority of the Board of Directors or Trustees and the vote or written assent of two-thirds (2/3) of the outstanding capital stock in the case of stock corporation, or two-thirds (2/3) of the members in the case of non-stock corporation, the original and amended articles shall contain all provisions required by law to be set out in the Articles of Incorporation, the amendment shall indicate by underscoring the change/s made, and a copy thereof duly certified under oath by the corporate secretary and majority of the directors or trustees, with a statement that the amendments have been duly approved by the required vote of the stockholders or members, shall be submitted to SEC
• Effectivity of Amendments


  Upon approval by the SEC, or from the date of filing with the SEC if not acted upon within six (6) months from the date of filing for a cause not attributable to the corporation
• Grounds when Articles of Incorporation or amendment may be disapproved

  • Provided under Section 16 of the Revised Corporation Code
• Non-amendable Items in the Articles of Incorporation

  • Names of incorporators
  • Names of original subscribers to the capital stock
  • Names of the original directors
  • Treasurer elected by the original subscribers
  • Members who contributed to the initial capital of the non-stock corporation
  • Witnesses to and acknowledgment with Articles of Incorporation
• Corporate Name


  • Distinguishable from that already reserved or registered for the use of another corporation, should not already protected by law, should not be contrary to existing law, rules and regulations
• The Commission determines the corporate name is not allowed


  May summarily order the corporation to immediately cease and desist from using such name and require the corporation to register a new one, shall also cause the removal of all visible signages, marks, advertisements, labels, prints and other effects bearing such corporate name
• Registration, Incorporation, and Commencement of Corporate Existence

  1. Application for use of corporate name

  2. Submission of Articles of Incorporation

  3. If the Commission finds that the submitted documents and information are fully compliant, the Commission shall issue the certificate of incorporation
• Effect of Issuance of Certificate of Incorporation

  Commences its corporate existence and juridical personality from the date the Commission issues the certificate of incorporation under its official seal and thereupon the incorporators, stockholders/members and their successors shall constitute a body corporate under the name stated in the articles of incorporation for the period of time mentioned therein, unless said period is extended or the corporation is sooner dissolved in accordance with law