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CORPORATION

LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA

ARTICLES OF INCORPORATION

located, which must be within the Philippines;


4. The term for which the corporation is to exist;
5. The names, nationalities and residences of the incorporators;
6. The number of directors or trustees, which shall not be less
than five (5) nor more than fifteen (15);


I. Nature of Charter: The charter is in the nature of a contract between
the corporation and the government. Government of P.I. v. Manila
Railroad Co., 52 Phil. 699 (1929).

7. The names, nationalities and residences of persons who shall


act as directors or trustees until the first regular directors or
trustees are duly elected and qualified in accordance with this
Code;
8. If it be a stock corporation, the amount of its authorized
capital stock in lawful money of the Philippines, the number of
shares into which it is divided, and in case the share are par

The articles of incorporation has been described as one that


defines the charter of the corporation and the contractual
relationships between the state and the corporation, the
stockholders and the State, and between the corporation and its
stockholders. Lanuza v. Court of Appeals, 454 SCRA 54 (2005).


II. Procedure and Documentary Requirements (Section 14 and 15)

value shares, the par value of each, the names, nationalities


and residences of the original subscribers, and the amount
subscribed and paid by each on his subscription, and if some or
all of the shares are without par value, such fact must be
stated;
9. If it be a non-stock corporation, the amount of its capital, the
names, nationalities and residences of the contributors and

Section 14. Contents of the articles of incorporation.


All corporations organized under this code shall file with the Securities
and Exchange Commission articles of incorporation in any of the
official languages duly signed and acknowledged by all of the
incorporators, containing substantially the following matters, except
as otherwise prescribed by this Code or by special law:
1. The name of the corporation;
2. The specific purpose or purposes for which the corporation is
being incorporated. Where a corporation has more than one
stated purpose, the articles of incorporation shall state which
is the primary purpose and which is/are he secondary purpose
or purposes: Provided, That a non-stock corporation may not
include a purpose which would change or contradict its nature
as such;
3. The place where the principal office of the corporation is to be

the amount contributed by each; and


10. Such other matters as are not inconsistent with law and which
the incorporators may deem necessary and convenient.

The Securities and Exchange Commission shall not accept the articles
of incorporation of any stock corporation unless accompanied by a
sworn statement of the Treasurer elected by the subscribers showing
that at least twenty-five (25%) percent of the authorized capital stock
of the corporation has been subscribed, and at least twenty-five (25%)
of the total subscription has been fully paid to him in actual cash


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)

CORPORATION LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA


and/or in property the fair valuation of which is equal to at least
twenty-five (25%) percent of the said subscription, such paid-up
capital being not less than five thousand (P5,000.00) pesos.

stockholders or members as long as they are not incorporators.1

A. As to Number and Residency of Incorporators (Section 10)


own or be a subscriber to at least one (1) share of the capital stock of


the corporation.

corporations to the capital stock of a corporation in the


process of incorporation be fully paid due to their
limited liability capacity; 3 but after incorporation,
corporations may subscribe without having to fully pay
their subscription under the premise that the risk of
insolvency no longer exist at that point.4

It is possible for a business to be wholly owned by one


individual, and the validity of its incorporation is not affected
when he gives nominal ownership of only one share of stock to
each of the other four incorporators. This arrangement is not
necessarily illegal, but it is valid only between and among the
incorporators privy to the agreement. It does not bind the
corporation which will consider all stockholders of record as the
lawful owners of their registered shares. As between the
corporation on the one hand, and its stockholders and third
persons on the other, the corporation looks only to its books for
the purpose of determining who its shareholders are. Nautica
Canny Corp. v. Yumul, 473 SCRA 415 (2005).

In practice, the SEC would allow the incorporation of a


corporation which would have as original stockholder in the
articles of incorporation, as long as the minimum number of
individual incorporators appear.
o In one opinion, the SEC has posited that both domestic
and foreign corporations, if allowed by their charters,
may be initial subscribers to the capital stock of a
corporation, but their subscription will not be
considered in the computation of the 25% requirement
for incorporation.2
o The SEC also requires that the subscription of

Section 10. Number and qualifications of incorporators.


Any number of natural persons not less than five (5) but not more than
fifteen (15), all of legal age and a majority of whom are residents of
the Philippines, may form a private corporation for any lawful purpose
or purposes. Each of the incorporators of s stock corporation must

Only natural persons can be incorporators. However, the law


does not preclude corporations and partnership from becoming

The Corporation Code maintains the requirement that at least


five (5) individuals must be incorporators of a corporation for
perhaps a more practical reason.

Government of the Philippine Islands v. El Hogar Filipino, 50 Phil. 399, 460-461


(1929).
2
SEC Opinion, 23 May 1967, SEC FOLIO 1960-1976, at p. 284; Also, SEC Opinion,
14 November 1978.
3
SEC Opinion, 23 May 1967, SEC FOLIO 1960-1976, at p. 284.
4
SEC Opinion, 29 June 1976, SEC FOLIO 1960-1976, at p. 936.


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)

CORPORATION LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA

Our jurisdiction recognizes the existence of promoter's


contracts, or contracts entered into on behalf of a
corporation still in the process of organization. Indeed,
transactions may already be pursued with the parties
aware that the corporation is still under registration
proceedings. If anything goes wrong with the

incorporation process, and there may have been


liabilities created at the time of incorporation, then the
existence of five individual incorporators allows the
public or injured party to run after the persons who
cannot hide behind a corporate fiction or who can avail
of limited liability features. In addition, there must still
indeed be individuals, who can be held criminally liable,

wish to establish a foreign brand in the Philippines, they


will either reside in the Philippines or ask people to act
as incorporators (who are usually their lawyers).
Incorporators are not at all times the promoters
or majority stockholders. This is not necessarily
illegal, although it brings out the problem
whereby the incorporators are not necessarily

for acts done relating to incorporation process. Such


remedies would be unavailing or would be meaningless
if the incorporators are themselves juridical entities.

the people who should be held responsible


since they are not the promoters.
Atty. Hofilea in case of public utilities, the company
must be 60% owned and controlled. As such, if the
incorporators own only one share, then the company
cannot be a public utility.
People v. Quasha at the time of the

If only two incorporators are residents of the Philippines a


corporation still exists a de facto corporation provided that at
least five (5) incorporators must sign the articles of
incorporation.1
o This however does not prevent the existence of the so-
called one-man corporation, where business is actually
owned by one individual, it is still possible for him to
incorporate by giving nominal ownership of only one

establishment of the company, it is not


necessary that the company be Filipino.
However, if they want to get a franchise to
operate as a public utility, then they must first
meet the requirement of the 60% citizenship
requirement of the law.

share of stock to each of 4 other personsthis is not


necessarily illegal.

There is no general requirement of Philippine


citizenship only a majority of the incorporators must be
residents of the Philippines. However, there are some
areas of business and industry wherein ownership is
reserved, wholly or partially to Filipinos.
Atty. Hofilea if there are 5 American citizens who

SEC Opinion, 11 October 1971, SEC FOLIO 1960-1976, at p. 495.


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)

An incorporator will always retain his status as the incorporator


of the corporation because such status is acquired by the mere

CORPORATION LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA


fact of being one of the persons who originally composed the
corporation.
o He may cease to be a stockholder or a member, he may
lose all his rights and interest in the corporation, but he
will always be known as the incorporator. The articles of
incorporation cannot therefore be amended to delete

the name of an incorporator and substitute it with that


of another, the latter not being an incorporator.1
You cannot remove an original incorporator
from the charter.
Atty. Hofilea can a person sue an incorporator who
is no longer involved with the company (let go of his
share)? NO.

Where there is a change in the initial directors (indicated in the


articles of incorporation), there is no need to amend the articles
of incorporation.


B. Corporate Name (Sections 18, 14(1) and 42)

Section 18. Corporate name.
No corporate name may be allowed by the Securities and Exchange
Commission if the proposed name is identical or deceptively or
confusingly similar to that of any existing corporation or to any other


Section 42. Power to invest corporate funds in another corporation or
business or for any other purpose.
Subject to the provisions of this Code, a private corporation may invest
its funds in any other corporation or business or for any purpose other
than the primary purpose for which it was organized when approved
by a majority of the board of directors or trustees and ratified by the
stockholders representing at least two-thirds (2/3) of the outstanding
capital stock, or by at least two thirds (2/3) of the members in the case
of non-stock corporations, at a stockholder's or member's meeting
duly called for the purpose. Written notice of the proposed investment
and the time and place of the meeting shall be addressed to each
stockholder or member at his place of residence as shown on the
books of the corporation and deposited to the addressee in the post
office with postage prepaid, or served personally: Provided, That any
dissenting stockholder shall have appraisal right as provided in this
Code: Provided, however, That where the investment by the
corporation is reasonably necessary to accomplish its primary purpose
as stated in the articles of incorporation, the approval of the
stockholders or members shall not be necessary. (17 1/2a)

name already protected by law or is patently deceptive, confusing or


contrary to existing laws. When a change in the corporate name is
approved, the Commission shall issue an amended certificate of
incorporation under the amended name.

SEC Opinion, 7 January 1974, VIII SEC QUARTERLY BULLETIN 21 ( No. I, Jan. 1974).


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)

1. Corporate Name Guidelines

Similarity in corporate names between two corporations would


cause confusion to the public especially when the purposes
stated in their charter are also the same type of business.
Universal Mills Corp. v. Universal Textile Mills Inc., 78 SCRA 62
(1977).
o Atty. Hofilea NOT DECEPTIVE PER SE. Latitude is
given to someone in terms of determining whether a

CORPORATION LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA


name is deceptive. Where a name is deceptive per se, it
will be disallowed by the SEC.
The use of Inc. in required under Section 15
The use of a persons name in the corporation
name is allowed only where the person is a
shareholder or he has a significant position in

intent, may be prevented by the corporation having a prior


right. Ang Mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus v.
Iglesia ng Dios Kay Dristo Jesus, 372 SCRA 171 (2001).

The name of a corporation is essential not only for its existence


as a juridical person, but also in manner of dealing with it, and in

the Approval of Corporate and Partnership Names, two


requisites must be proven, to wit: (a) That the complainant
corporation acquired a prior right over the use of such
corporate name; and (b) the proposed name is either: (i)
identical, or (ii) deceptively or confusingly similar to that of any
existing corporation or to any other name already protected by

the exercise of its juridical capacities; it cannot be changed


except in the manner provided for by law. Red Line Trans. v.
Rural Transit, 60 Phil. 549 (1934).

law; or (iii) patently deceptive, confusing or contrary to existing


laws. Philips Export B.V. v. Court of Appeals, 206 SCRA 457, 463
(1992)

the corporation or he is neither but has his


consent.

Section 18 of Corporation Code expressly prohibits the use of a


corporate name which is identical or deceptively or confusingly
similar to that of any existing corporation or to any other name
already protected by law or is patently deceptive, confusing or
contrary to existing laws. The policy behind the foregoing
prohibition is to avoid fraud upon the public that will occasion
to deal with the entity concerned, the evasion of legal
obligations and duties, and the reduction of difficulties of
administration and supervision over corporations. Industrial
Refractories Corp. v. Court of Appeals, 390 SCRA 252 (2002).1

Incorporators must choose a name at their peril; and the use of


a name similar to one adopted by another corporation, whether
a business or a nonprofit organization, if misleading or likely to
injure the exercise of its corporate functions, regardless of

To fall within the prohibition of the law Revised Guidelines in

Also Lyceum of the Philippines v. Court of Appeals, 219 SCRA 610, 615 (1993).


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)

A corporation has no right to intervene in a suit using a name,


not even its acronym, other than its registered name, as the law
requires and not another name which it had not registered.
Laureano Investment and Dev. Corp. v. Court of Appeals, 272
SCRA 253 (1997).

There would be no denial of due process when a corporation is

sued and judgment is rendered against it under its unregistered


trade name: A corporation may be sued under the name by
which it makes itself known to its workers. Pison-Arceo Agri.
Dev. Corp. v. NLRC, 279 SCRA 312 (1997).
2. Change in Corporate Name

A corporation may change its name by the amendment of its


articles of incorporation, but the same is not effective until
approved by the SEC. Phil. First Insurance Co. v. Hartigan, 34
SCRA 252 (1970).

CORPORATION LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA

A change in the corporate name does not make a new


corporation, and has no effect on the identity of the

corporation, or on its property, rights, or liabilities. Republic


Planters Bank v. Court of Appeals, 216 SCRA 738 (1992).1
3. SEC Jurisdiction Over Issues Involving Corporate Names

SEC has quasi-judicial powers to hear and decide a controversy


C. Purpose Clauses (Sections 14(2) and 42)

organized to illegally avoid the provisions on land reform and to


avoid the payment of estate taxes, as being prohibited collateral
attack. Gala v. Ellice Agro-Industrial Corp., 418 SCRA 431
(2003).

The significance of the purpose clause in the articles of


incorporation is that it confers, as well as limits, the powers
which a corporation may exercise.2
o The statement of the primary purpose in the articles of
incorporation is means to protect shareholders so they
will know the main business of the corporation and file
derivative suits if the corporation deviates from the

primary purpose. Uy Siuliong v. Director of Commerce


and Industry, 40 Phil. 541 (1919).
Some of the other reasons for indicating purpose in the
charter of the corporation are so that:
(a) Prospective investors shall know the kind of
business the corporation deals with;
(b) Management shall know the limits of its
actions;

P.C. Javier & Sons, Inc. v. Court of Appeals, 462 SCRA 36 (2005).
Villanueva, C. L., & Villanueva-Tiansay, T. S. (2013). Philippine Corporate Law.
(2013 ed.). Manila, Philippines: Rex Book Store.
2

The best proof of the purpose of a corporation is its articles of


incorporation and by-laws. The articles of incorporation must
state the primary and secondary purposes of the corporation,
while the by-laws outline the administrative organization of the
corporation, which, in turn, is supposed to insure or facilitate
the accomplishment of said purpose. Therefore, the Court
brushed aside the contention that the corporations were

between two corporation as to who has a better right to the use


of a particular corporate name. Industrial Refractories Corp. v.
Court of Appeals, 390 SCRA 252 (2002).

(c) A third-party can know whether his dealing


with the corporation are with corporate
functions and powers.

The SEC has ruled that the rules governing the construction of
charters of corporations are, for the most part, the same as
those which govern the construction and interpretation of
statutes, contracts and other written instruments.3


D. Corporate Term (Section 11)

Section 11. Corporate term.
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 as originally stated in the
articles of incorporation may be extended for periods not exceeding

SEC Opinion, 26 January 1994, XXVIII SEC QUARTERLY BULLETIN 46 (No. 2, June
1994), citing 7A FLETCHER, Section 3640, and 6 FLETCHER CYC. CORP., Section 2483.


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)

CORPORATION LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA


fifty (50) years in any single instance by an amendment of the articles
of incorporation, in accordance with this Code; Provided, That no
extension can be made earlier than five (5) years prior to the original
or subsequent expiry date(s) unless there are justifiable reasons for an
earlier extension as may be determined by the Securities and

be held in the city or municipality where the principal office of the


corporation is located, and if practicable in the principal office of the
corporation: Provided, That Metro Manila shall, for purposes of this
section, be considered a city or municipality.

Exchange Commission.

Notice of meetings shall be in writing, and the time and place thereof
stated therein.

All proceedings had and any business transacted at any meeting of the
stockholders or members, if within the powers or authority of the
corporation, shall be valid even if the meeting be improperly held or
called, provided all the stockholders or members of the corporation

No extension of term can be effected once dissolution stage has


been reached, as it constitutes new business. Alhambra Cigar v.
SEC, 24 SCRA 269 (1968).

Article 605 of Civil Code clearly limits any usufruct constituted


in favor of a corporation or association to 50 years. A usufruct is
meant only as a lifetime grant. Unlike a natural person, a
corporation or associations lifetime may be extended
indefinitely. The usufruct would then be perpetual. This is
especially invidious in cases where the usufruct given to a
corporation or association covers public land. NHA v. Court of
Appeals, 456 SCRA 17 (2005).

are present or duly represented at the meeting. (24 and 25)


Atty. Hofilea The corporation takes a loan that is payable in


10 years, but it expires in 5 years. Although not illegal, it is a
question of wisdom on the part of the loaning entity.
o 50 years from filing the corporate life is shortened.
o 50 years counted beginning from the issuance of
the certificate of incorporation.


E. Principal Place of Business (Section 51)

Section 51. Place and time of meetings of stockholders or members.
Stockholders' or members' meetings, whether regular or special, shall


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)

Although the Rules of Court do not provide that when the


plaintiff is a corporation, the complaint should be filed in the
location of its principal office as indicated in its articles of
incorporation, jurisprudence has, however, settled that the
place where the principal office of a corporation is located, as
stated in the articles, indeed establishes its residence. This
ruling is important in determining the venue of an action by or
against a corporation, as in the present case. Hyatt Elevators
and Escalators Corp. v. Goldstar Elevators, Phils., Inc., 473
SCRA 705 (2005), citing VILLANUEVA, PHILIPPINE CORPORATE
LAW (1998), p. 162.
o Corporate Residence for Intra-Corporate Disputes
Section 1, Rule 1 of the Interim Rules of
Procedure for Intra-Corporate Controversies,
provides that when the articles of incorporation

CORPORATION LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA

indicate that the principal place of business is


Metro Manila, then the action must be filed in
the city where the head office is actually located
Corporate Residence for Corporate Recovery Cases
Action must be filed in the regional trial court
which has jurisdiction over the principal office.

Under Section 11, Rule 14 of the 1997 Rules of Civil Procedure


of the Philippines, if the defendant in a suit is a corporation
organized under the laws of the Philippines, service may be
made on the President, general manager, secretary, treasurer,
or in-house counsel.1

Place of residence of the corporation is the place of its principal


office. Clavecilla Radio System v. Antillon, 19 SCRA 379 (1967)
o The residence of its president is not the residence of the
corporation because a corporation has a personality
separate and distinct from that of its officers and
stockholders. Sy v. Tyson Enterprises, Inc., 119 SCRA
367 (1982).

Stock corporations incorporated under this Code shall not be required


to have any minimum authorized capital stock except as otherwise
specifically provided for by special law, and subject to the provisions
of the following section.

Atty. Hofilea the principal address is necessarily just one


otherwise it would not be principal. It is also necessary for
regulation purposes of the government.


F. Minimum Capitalization (Section 12): Why is maximum
capitalization required to be indicated?

In normal practice, SEC will not allow a corporation to be


organized with P5,000 minimum paid-up capital because it is
too thinly capitalized. More likely SEC would require a higher
paid-up amount for incorporation. SEC can do this because as an
administrative body it can make rules.2


G. Subscription and Paid-up Requirements (Section 13)

Section 13. Amount of capital stock to be subscribed and paid for the
purposes of incorporation.
At least twenty-five percent (25%) of the authorized capital stock as
stated in the articles of incorporation must be subscribed at the time
of incorporation, and at least twenty-five (25%) per cent of the total
subscription must be paid upon subscription, the balance to be
payable on a date or dates fixed in the contract of subscription
without need of call, or in the absence of a fixed date or dates, upon
call for payment by the board of directors: Provided, however, That in
no case shall the paid-up capital be less than five Thousand (P5,000.00)
pesos.

Section 12. Minimum capital stock required of stock corporations.

The entries in the articles of incorporation of the original


issuances of shares of stock has a stronger weight that the stock

Villanueva, C. L., & Villanueva-Tiansay, T. S. (2013). Philippine Corporate Law.


(2013 ed.). Manila, Philippines: Rex Book Store.

Villanueva, C. L., & Villanueva-Tiansay, T. S. (2013). Philippine Corporate Law.


(2013 ed.). Manila, Philippines: Rex Book Store.


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)

CORPORATION LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA


and transfer book in determining the validity and issuance of
such shares. Lanuza v. Court of Appeals, 454 SCRA 54 (2005).
o The ACS and Subscribed stocks are found in the articles
of incorporation.
o For Paid-in Capital, you can look at Certificate of
Deposits, and verify via bank accounts.

"Capital Stock" is the amount fixed in the articles of


corporation procured to be subscribed and paid-in. It is settled
that shares issued in excess of the authorized capital stocks are
void.

"Outstanding Capital Stock" is the total shares of stock issued


to subscribers or stockholders, whether or not fully or partially
paid (as long as there is a binding subscription agreement),
except treasury shares.

"Subscribed Capital Stock" is that portion of the capital stock


subscribed (i.e. procured to be paid) whether or not fully paid.

"Subscription" is the mutual agreement of the corporation


and subscriber to take and pay for the stock a corporation.

The subscription must be paid upon demand of the Board of


Directors, or on the date that you have promised to pay.


H. Steps and Documents Required in SEC
1. Certificate of Deposit

SEC Guidelines require that a bank certificate covering the


deposit of the paid-up capital, in accordance with a prescribed

form under oath by a responsible official of the bank, must


accompany the incorporation papers.1
2. Letter of Authority to examine bank deposit

In addition, a letter of authority authorizing the SEC to examine

not only the bank deposit but also the corporations books of
accounts and supporting records to determine the existence
and utilization of the paid-up capital stock must also be
submitted. The letter of authority shall be binding upon the
corporation even if there is a change of corporate officers.2
3. Written Undertaking to Change Corporate Name

The SEC also requires that incorporators are required to submit


a written undertaking to change their partnership or corporate
name in case there is another person, firm or entity with a prior
right to the use of the said name or one similar to it.3


III. Grounds for Disapproval (Section 17)

Section 17. Grounds when articles of incorporation or amendment
may be rejected or disapproved.
The Securities and Exchange Commission may reject the articles of
incorporation or disapprove any amendment thereto if the same is not
in compliance with the requirements of this Code: Provided, That the
Commission shall give the incorporators a reasonable time within
which to correct or modify the objectionable portions of the articles or
amendment. The following are grounds for such rejection or

Section 1, SEC GUIDELINES FOR THE VERIFICATIONS OF THE PAID-UP CAPITAL (CASH) OF
CORPORATIONS (1976).
2
Section 2, ibid.
3
SEC GUIDELINES IN THE APPROVAL OF CORPORATE AND PARTNERSHIP NAMES (1977).


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)

CORPORATION LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA


benefit of the residents, the object is unlawful and the articles
can be denied registration. Asuncion v. De Yriarte, 28 Phil. 67
(1914).

disapproval:

1. That the articles of incorporation or any amendment thereto is not
substantially in accordance with the form prescribed herein;

articles of incorporation, is lawful, then the SEC has no authority


to inquire whether the corporation has purposes other than
those stated, and mandamus will lie to compel it to issue the
certificate of incorporation. Gala v. Ellice Agro-Industrial
Corp., 418 SCRA 431 (2003).

2. That the purpose or purposes of the corporation are patently


unconstitutional, illegal, immoral, or contrary to government rules and
regulations;

3. That the Treasurer's Affidavit concerning the amount of capital
stock subscribed and/or paid if false;

4. That the percentage of ownership of the capital stock to be owned
by citizens of the Philippines has not been complied with as required
by existing laws or the Constitution.

No articles of incorporation or amendment to articles of incorporation
of banks, banking and quasi-banking institutions, building and loan
associations, trust companies and other financial intermediaries,
insurance companies, public utilities, educational institutions, and
other corporations governed by special laws shall be accepted or
approved by the Commission unless accompanied by a favorable
recommendation of the appropriate government agency to the effect
that such articles or amendment is in accordance with law.

When the proposed articles show that the object is to organize


a barrio into a separate corporation for the purpose of taking
possession and having control of all municipal property within
the incorporated barrio and administer it exclusively for the

It is well to note that, if a corporations purpose, as stated in the

The SECs function is merely ministerial because they are


required to issue the certificate of incorporation.
o There is room for the exercise of discretion in that it
may dismiss an application for incorporation, but
otherwise, it has no other right to exercise discretion.
o

You can compel the SEC to approve the articles of


incorporation.


IV. Amendments to the Articles of Incorporation (Section 16).

Section 16. Amendment of Articles of Incorporation.
Unless otherwise prescribed by this Code or by special law, and for
legitimate purposes, any provision or matter stated in the articles of
incorporation may be amended by a majority vote of the board of
directors or trustees and the vote or written assent of the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock,
without prejudice to the appraisal right of dissenting stockholders in
accordance with the provisions of this Code, or the vote or written
assent of at least two-thirds (2/3) of the members if it be a non-stock
corporation.


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)

CORPORATION LAW REVIEWER (2013-2014)

ATTY. JOSE MARIA G. HOFILEA



The original and amended articles together shall contain all provisions
required by law to be set out in the articles of incorporation. Such
articles, as amended shall be indicated by underscoring the change or
changes made, and a copy thereof duly certified under oath by 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.

corporate secretary and a majority of the directors or trustees stating


the fact that said amendment or amendments have been duly
approved by the required vote of the stockholders or members, shall
be submitted to the Securities and Exchange Commission.

The amendments shall take effect upon their approval by the
Securities and Exchange Commission or from the date of filing with the
said Commission if not acted upon within six (6) months from the date
of filing for a cause not attributable to the corporation.

Typically, meetings do take place to pass upon an amendment.


o

Although the law does not expressly provide that a


meeting be made where the votes will be cast and the
written assents made.


V. Commencement of Corporate Existence (Section 19).

Section 19. Commencement of corporate existence.
A private corporation formed or organized under this Code
commences to have corporate existence and juridical personality and
is deemed incorporated from the date the Securities and Exchange
Commission issues a certificate of incorporation under its official seal;
and thereupon the incorporators, stockholders/members and their
successors shall constitute a body politic and corporate under the


NOTES BY RACHELLE ANNE GUTIERREZ (UPDATED APRIL 3, 2014)