I. Introduction

A corporation is one of the principal vehicles for doing business, holding property, conducting charitable work, operating schools, organizing religious institutions, and carrying out public or quasi-public functions in the Philippines. It is a juridical person created by operation of law and endowed with a personality separate and distinct from its stockholders, members, directors, trustees, officers, or incorporators.

The governing law is primarily the Revised Corporation Code of the Philippines, or Republic Act No. 11232, which replaced the old Corporation Code. Other special laws also regulate particular corporations, such as banks, insurance companies, public utilities, educational institutions, non-stock organizations, government-owned or controlled corporations, cooperatives, and foreign corporations doing business in the Philippines.

In Philippine law, corporations may be classified in several ways: by purpose, ownership, capital structure, nationality, manner of creation, relation to the State, number of persons involved, and special regulatory treatment. These classifications often overlap. A corporation may be, for example, a domestic stock corporation, a close corporation, and a foreign-equity corporation at the same time.

II. Basic Concept of a Corporation

A corporation is an artificial being created by law. It has:

Separate juridical personality;
Right of succession;
Powers, attributes, and properties expressly authorized by law or incidental to its existence; and
Limited liability, as a general rule, for its stockholders or members.

The doctrine of separate juridical personality means that the corporation’s obligations are generally its own. Stockholders are not personally liable for corporate debts beyond their investment, unless exceptional circumstances justify piercing the corporate veil.

III. Corporation Distinguished from Other Business Forms

A. Corporation vs. Sole Proprietorship

A sole proprietorship is owned by one natural person. It has no separate juridical personality from the owner. The owner is personally liable for its obligations.

A corporation, by contrast, has separate legal personality. Its debts are generally not the personal debts of its stockholders.

B. Corporation vs. Partnership

A partnership is formed by agreement among partners and is governed mainly by the Civil Code. Partners may be personally liable for partnership obligations, depending on the type of partnership.

A corporation exists only by authority of law and is regulated by the Revised Corporation Code and special laws. Its owners are usually shielded from personal liability.

C. Corporation vs. Cooperative

A cooperative is a separate juridical entity organized under the Philippine Cooperative Code. Although it may resemble a corporation in having juridical personality, democratic governance, and limited liability, it is not primarily governed by the Revised Corporation Code.

IV. Principal Classifications of Corporations in the Philippines

A. Stock Corporations

A stock corporation is one that has capital stock divided into shares and is authorized to distribute dividends or surplus profits to its stockholders.

This is the most common form for business enterprises.

Essential Features

A stock corporation has:

Capital stock divided into shares;
Stockholders;
Authority to distribute dividends; and
A profit-oriented purpose, generally speaking.

Common Examples

Stock corporations include:

Trading companies;
Manufacturing corporations;
Real estate companies;
Holding companies;
Technology companies;
Restaurants and retail businesses;
Construction companies;
Lending and financing companies;
Banks and insurance companies, subject to special regulation.

Shares of Stock

Shares may be:

Common shares;
Preferred shares;
Voting shares;
Non-voting shares, subject to statutory limitations;
Par value shares;
No-par value shares, except where prohibited by law;
Redeemable shares;
Treasury shares;
Founders’ shares, subject to legal restrictions.

Rights of Stockholders

Stockholders generally have the right to:

Vote in corporate matters;
Elect directors;
Receive dividends when declared;
Inspect corporate books and records;
Participate in residual assets upon liquidation;
Exercise appraisal rights in certain cases;
Sue derivatively on behalf of the corporation when warranted.

Liability of Stockholders

As a rule, stockholders are liable only to the extent of their unpaid subscriptions. They are not personally liable for corporate obligations merely because they own shares.

B. Non-Stock Corporations

A non-stock corporation is one that does not issue shares of stock and does not distribute dividends to members.

It is usually organized for religious, charitable, educational, cultural, fraternal, civic, scientific, social, or similar purposes.

Essential Features

A non-stock corporation has:

No capital stock divided into shares;
Members instead of stockholders;
No distribution of profits as dividends;
Purpose other than profit distribution.

Common Examples

Non-stock corporations include:

Foundations;
Associations;
Religious organizations;
Civic organizations;
Charitable institutions;
Professional associations;
Homeowners’ associations, subject to special laws;
Clubs;
Alumni associations;
Chambers of commerce;
Non-governmental organizations.

Treatment of Income

A non-stock corporation may earn income. What it cannot do is distribute profits to its members as dividends. Any income must generally be used to further its stated purposes.

Members’ Rights

Members may have the right to:

Vote, unless limited by the articles or bylaws;
Elect trustees;
Inspect records;
Participate in meetings;
Receive remaining assets upon dissolution only if legally and structurally allowed, subject to restrictions.

For charitable, religious, or public-benefit entities, remaining assets may need to be transferred to another organization with similar purposes.

C. One Person Corporation

A One Person Corporation, or OPC, is a corporation with a single stockholder.

This was introduced by the Revised Corporation Code and is one of the most important reforms in Philippine corporation law.

Nature

An OPC allows one person to enjoy the benefits of incorporation without needing nominee incorporators merely to meet a minimum number requirement.

Who May Form an OPC

Generally, a natural person, trust, or estate may form an OPC.

However, certain entities cannot organize as OPCs, including:

Banks;
Quasi-banks;
Pre-need companies;
Trust companies;
Insurance companies;
Public and publicly listed companies;
Non-chartered government-owned or controlled corporations;
Certain professionals who are not allowed to practice their profession through an OPC unless permitted by special law.

Corporate Name

The corporate name must indicate that it is an OPC, usually by including “OPC” or “One Person Corporation.”

Governance

An OPC has a single stockholder who is also the sole director and president. However, it must appoint:

A corporate secretary;
A treasurer; and
A nominee and alternate nominee, who will manage the corporation in case of the single stockholder’s death or incapacity.

The single stockholder cannot be the corporate secretary but may be the treasurer, subject to required undertaking.

Advantages

The OPC is useful for:

Solo entrepreneurs;
Consultants;
Family businesses;
Holding companies;
Professionals where legally allowed;
Small and medium enterprises.

Liability

The OPC has separate juridical personality. However, the single stockholder must be careful to maintain corporate separateness. Failure to distinguish personal and corporate assets may expose the single stockholder to personal liability.

D. Close Corporations

A close corporation is a stock corporation whose shares are held by a limited number of persons and whose structure resembles a private partnership.

Characteristics

A close corporation typically has:

A limited number of stockholders;
Restrictions on transfer of shares;
No public offering of shares;
Shareholders who are often also directors or officers.

Under Philippine law, a close corporation must generally be expressly classified as such in its articles of incorporation.

Restrictions

The articles of incorporation may restrict the transfer of shares, subject to legal requirements. These restrictions are designed to keep ownership within a small group.

Management Flexibility

Close corporations may operate with less formal separation between ownership and management. Stockholders may directly participate in management arrangements.

Common Uses

Close corporations are useful for:

Family corporations;
Small businesses;
Joint ventures among a few persons;
Professional or technical ventures;
Private holding companies.

Limitations

Certain corporations cannot be close corporations, including:

Mining companies;
Oil companies;
Stock exchanges;
Banks;
Insurance companies;
Public utilities;
Educational institutions;
Corporations declared to be vested with public interest.

E. Ordinary Stock Corporations

An ordinary stock corporation is a regular stock corporation that is neither an OPC nor a close corporation nor a special corporation subject to special statutory classification.

This is the default corporate form for many businesses in the Philippines.

Governance

It is governed by a board of directors elected by the stockholders. Corporate powers are exercised by the board, except for matters reserved to stockholders by law, the articles, or bylaws.

Uses

Ordinary stock corporations are used by:

Medium and large businesses;
Startups with multiple founders;
Companies seeking outside investors;
Real estate developers;
Manufacturing companies;
Service providers;
Holding companies.

F. Corporations Vested with Public Interest

Certain corporations are treated as vested with public interest because their activities affect the public, the economy, investors, consumers, or regulated sectors.

Examples

These may include:

Publicly listed companies;
Banks;
Quasi-banks;
Non-stock savings and loan associations;
Pawnshops;
Corporations engaged in money service business;
Pre-need companies;
Insurance companies;
Public utilities;
Other corporations classified by law or regulation as imbued with public interest.

Consequences

Corporations vested with public interest may be subject to stricter requirements, such as:

Independent directors;
Higher governance standards;
Greater disclosure obligations;
More stringent reportorial requirements;
Regulatory supervision by the SEC or other agencies;
Restrictions on related-party transactions;
Fit-and-proper rules for directors and officers.

V. Classification According to Place of Incorporation

A. Domestic Corporations

A domestic corporation is incorporated under Philippine law.

It is registered with the Securities and Exchange Commission and governed primarily by the Revised Corporation Code, its articles of incorporation, bylaws, and applicable special laws.

Examples

A corporation formed and registered in the Philippines to operate a restaurant, technology company, school, or foundation is a domestic corporation.

B. Foreign Corporations

A foreign corporation is formed, organized, or existing under laws other than those of the Philippines.

A foreign corporation may do business in the Philippines only if it obtains the required license from the Securities and Exchange Commission, unless its activities do not amount to “doing business” under Philippine law.

Doing Business in the Philippines

Activities that may constitute doing business include:

Maintaining an office or branch;
Appointing representatives or distributors who habitually conclude contracts;
Participating in management or supervision of local operations;
Soliciting business continuously;
Performing acts that imply continuity of commercial dealings.

Acts That May Not Constitute Doing Business

Isolated transactions, mere investment, or appointing an independent distributor may not necessarily constitute doing business, depending on the circumstances.

Consequences of Doing Business Without a License

A foreign corporation doing business in the Philippines without a license may be barred from maintaining or intervening in court actions in the Philippines, although it may still be sued.

Forms of Presence

A foreign corporation may operate in the Philippines through:

Branch office;
Representative office;
Regional or area headquarters;
Regional operating headquarters, subject to applicable law;
Subsidiary corporation;
Joint venture;
Licensing or distribution arrangements.

VI. Classification According to Nationality and Foreign Equity

Corporate nationality is important because the Philippine Constitution and statutes reserve certain activities to Filipinos or impose foreign ownership limits.

A. Filipino Corporations

A corporation is considered Filipino for certain nationalized activities if the required percentage of its capital is owned by Filipino citizens.

For example, some businesses require:

100% Filipino ownership;
At least 60% Filipino ownership;
At least 70% Filipino ownership;
Other ratios depending on the industry.

Common Nationality Restrictions

Foreign ownership restrictions may apply to:

Land ownership;
Public utilities;
Mass media;
Advertising;
Educational institutions;
Exploration, development, and utilization of natural resources;
Certain professions;
Private security agencies;
Retail trade, subject to statutory thresholds;
Financing and lending in certain regulated contexts;
Other nationalized or partly nationalized industries.

60-40 Rule

Many partly nationalized industries require at least 60% Filipino ownership and allow up to 40% foreign ownership.

This is commonly associated with landholding corporations, public utilities, and natural resource-related activities, although the exact rule depends on the specific activity.

B. Foreign-Owned Domestic Corporations

A corporation incorporated in the Philippines may be wholly or partly foreign-owned if the business activity is not subject to nationality restrictions.

Thus, a corporation may be:

100% Filipino-owned;
Majority Filipino-owned;
Minority foreign-owned;
Majority foreign-owned;
100% foreign-owned.

The legality depends on the activity, applicable laws, paid-in capital requirements, and regulatory approvals.

C. Philippine Subsidiary of a Foreign Corporation

A foreign corporation may establish a Philippine subsidiary. The subsidiary is a domestic corporation because it is incorporated under Philippine law, even if foreign-owned.

It has a personality separate from its parent company.

VII. Classification According to Purpose

A. Private Corporations

A private corporation is organized for private purposes, whether profit or non-profit.

Most corporations registered with the SEC are private corporations.

Examples:

Business corporations;
Foundations;
Associations;
Schools organized by private persons;
Hospitals organized as private entities;
Clubs;
Homeowners’ associations.

B. Public Corporations

A public corporation is created for political or governmental purposes.

Examples include:

Provinces;
Cities;
Municipalities;
Barangays;
Other local government units.

These are generally governed by public law, especially the Constitution and the Local Government Code, not by the Revised Corporation Code in the same manner as private corporations.

C. Quasi-Public Corporations

A quasi-public corporation is privately organized but performs functions affected with public interest.

Examples may include:

Public utilities;
Transportation companies;
Water concessionaires;
Electric distribution utilities;
Telecommunications companies;
Certain infrastructure operators.

They remain private corporations but are subject to public regulation because their services affect the public.

VIII. Classification According to Manner of Creation

A. Corporations Created Under the Revised Corporation Code

Most private corporations are created by registration with the Securities and Exchange Commission under the Revised Corporation Code.

These include ordinary stock corporations, non-stock corporations, OPCs, and close corporations.

B. Corporations Created by Special Law or Charter

Some corporations are created directly by statute or special charter.

Examples include certain government-owned or controlled corporations, public authorities, universities, and special agencies.

Chartered GOCCs

A government-owned or controlled corporation with an original charter is created by a special law. It may exercise powers granted by its charter.

Non-Chartered GOCCs

A non-chartered GOCC is usually organized under the Corporation Code but owned or controlled by the government.

IX. Government-Owned or Controlled Corporations

A government-owned or controlled corporation, or GOCC, is a corporation owned or controlled by the government.

GOCCs may be:

Chartered GOCCs; or
Non-chartered GOCCs.

A. Chartered GOCCs

These are created by special law. Their powers, functions, capitalization, and governance structure are defined by their charters.

Examples may include government financial institutions, development authorities, and public service entities created by statute.

B. Non-Chartered GOCCs

These are incorporated under general corporation law but owned or controlled by the government.

They are generally subject to corporate law, but also to special rules on public accountability, audit, compensation, procurement, and governance.

C. Public Accountability

GOCCs may be subject to:

Commission on Audit jurisdiction;
Governance Commission for GOCCs oversight;
Public procurement rules;
Civil service or public officer rules in some contexts;
Special compensation and reporting requirements.

X. Special Types of Non-Stock Corporations

A. Educational Corporations

Educational corporations are organized to operate schools, colleges, universities, training centers, or other educational institutions.

They may be stock or non-stock, depending on the structure, but many private educational institutions are non-stock corporations.

Regulation

Educational corporations are subject to regulation by agencies such as:

Department of Education;
Commission on Higher Education;
Technical Education and Skills Development Authority;
Securities and Exchange Commission;
Local government units, where applicable.

Nationality Requirements

The Constitution imposes Filipino ownership and control requirements for educational institutions, subject to exceptions provided by law.

Board Structure

The Revised Corporation Code contains provisions on trustees of non-stock educational corporations, including terms and classification of trustees.

B. Religious Corporations

Religious organizations may incorporate to hold property, manage affairs, and conduct religious activities.

There are generally two important forms:

Corporation sole; and
Religious society or aggregate religious corporation.

1. Corporation Sole

A corporation sole is formed by the chief archbishop, bishop, priest, minister, rabbi, imam, or other presiding elder of a religious denomination, sect, or church.

It allows religious property to be held in a continuing legal personality despite changes in the person occupying the religious office.

Purpose

The purpose is usually to administer and manage the temporalities or properties of the religious organization.

Succession

When the officeholder dies, resigns, or is replaced, the successor assumes corporate powers without need for transfer of title.

2. Religious Societies

Religious societies may also incorporate through trustees or representatives of the religious group.

This form is suitable for churches or religious organizations governed by a board or group rather than a single religious officeholder.

C. Foundations

A foundation is usually a non-stock, non-profit corporation organized for charitable, educational, scientific, cultural, religious, social welfare, or similar purposes.

Key Characteristics

A foundation usually:

Has no stockholders;
Has members or trustees;
Does not distribute profits;
Uses funds for public or charitable purposes;
May receive donations and grants;
May seek tax incentives or donee institution status if qualified.

Regulatory Concerns

Foundations are subject to scrutiny because they may receive donations, grants, and public funds. They must comply with SEC reportorial requirements and, where applicable, tax and anti-money laundering rules.

D. Associations and Clubs

Associations and clubs are typically non-stock corporations formed for mutual benefit, social, civic, professional, cultural, or recreational purposes.

Examples:

Sports clubs;
Social clubs;
Alumni associations;
Professional associations;
Trade associations;
Cultural organizations;
Civic leagues.

They may collect dues, own property, employ staff, and conduct activities consistent with their purposes.

E. Homeowners’ Associations

Homeowners’ associations are often non-stock entities formed to manage subdivisions, villages, condominiums, or residential communities.

They may be subject to special housing and land-use regulations, and in some cases to the jurisdiction of housing regulatory agencies.

Their powers may include:

Collecting dues;
Maintaining common areas;
Enforcing community rules;
Managing security and utilities;
Representing residents.

XI. Special Types of Stock Corporations

A. Publicly Listed Corporations

A publicly listed corporation is a corporation whose shares are listed and traded on a stock exchange.

Regulation

It is subject to stricter regulation by:

Securities and Exchange Commission;
Philippine Stock Exchange;
Corporate governance rules;
Securities regulation laws;
Disclosure rules;
Insider trading rules;
Public float requirements.

Characteristics

Publicly listed corporations typically have:

Numerous shareholders;
Publicly traded shares;
Higher disclosure obligations;
Independent directors;
Audit committees and governance committees;
More complex reporting obligations.

B. Public Companies

A public company may refer to a company with assets and shareholders reaching thresholds set by securities regulations, even if not listed on an exchange.

Such companies may be subject to public reporting and corporate governance requirements.

C. Banks and Quasi-Banks

Banks are stock corporations engaged in banking and financial intermediation. They are subject to special regulation by the Bangko Sentral ng Pilipinas and other laws.

Types of Banks

Banks may include:

Universal banks;
Commercial banks;
Thrift banks;
Rural banks;
Cooperative banks;
Islamic banks, where applicable;
Digital banks, subject to BSP regulation.

Special Features

Banks are subject to:

Minimum capital requirements;
Fit-and-proper rules;
Restrictions on directors and officers;
Limits on loans and credit exposure;
Anti-money laundering rules;
Prudential supervision;
Receivership and liquidation rules.

D. Insurance Corporations

Insurance companies are corporations engaged in insurance business and are regulated by the Insurance Commission.

They may include:

Life insurance companies;
Non-life insurance companies;
Reinsurance companies;
Mutual benefit associations, subject to special rules;
Pre-need companies, separately regulated.

Insurance corporations must comply with capitalization, solvency, investment, reserve, and consumer protection requirements.

E. Lending Companies

A lending company grants loans from its own capital funds or from funds sourced in accordance with law. It is usually organized as a stock corporation and regulated by the SEC.

Lending companies are subject to:

Registration requirements;
Disclosure requirements;
Interest and fee rules;
Fair collection practices;
Anti-money laundering obligations, where applicable;
Restrictions against abusive lending practices.

F. Financing Companies

A financing company extends credit facilities, leases, factoring services, installment financing, and similar financing arrangements.

It is generally subject to SEC regulation and special statutory requirements.

G. Investment Companies

Investment companies pool funds from investors and invest in securities or other financial assets. They are subject to securities regulation.

Examples may include mutual funds and similar collective investment structures.

H. Real Estate Corporations

Real estate corporations may engage in:

Landholding;
Development;
Leasing;
Brokerage, if licensed;
Property management;
Condominium development;
Subdivision development.

Landholding corporations are subject to constitutional nationality restrictions because private land ownership is generally reserved to Filipino citizens and corporations at least 60% Filipino-owned.

I. Public Utility Corporations

Public utility corporations operate services affected with public interest.

Examples:

Electricity distribution;
Water distribution;
Public transportation;
Telecommunications, depending on classification;
Other regulated utility services.

Public utilities are subject to constitutional nationality restrictions, franchise requirements, rate regulation, and regulatory supervision.

XII. Classification According to Legal Existence

A. De Jure Corporations

A de jure corporation is one that has fully complied with all legal requirements for incorporation.

It has valid corporate existence against the State and third persons.

B. De Facto Corporations

A de facto corporation exists where there is:

A valid law under which a corporation may be formed;
A bona fide attempt to incorporate;
Actual use of corporate powers.

Even if there is some defect in incorporation, a de facto corporation may be recognized to protect third persons and commercial dealings.

C. Corporation by Estoppel

A corporation by estoppel arises when persons represent themselves as a corporation and deal with others as such, even if no corporation legally exists.

The doctrine prevents parties from denying corporate existence when doing so would prejudice those who relied on the representation.

Example

If a group signs contracts as “ABC Corporation” even though it was never incorporated, those who acted as or represented the corporation may be personally liable.

XIII. Classification According to Number and Identity of Members

A. Corporation Aggregate

A corporation aggregate consists of more than one person.

Most corporations are corporations aggregate, including ordinary stock corporations, non-stock corporations, and close corporations.

B. Corporation Sole

A corporation sole consists of one person and that person’s successors in a particular office, usually religious in nature.

It is different from a One Person Corporation. An OPC is a business corporation with one stockholder. A corporation sole is usually a religious corporation designed for succession in office.

XIV. Classification According to Capital Structure

A. Corporations with Par Value Shares

Par value shares have a stated value in the articles of incorporation.

The par value affects subscription price and stated capital rules.

B. Corporations with No-Par Value Shares

No-par value shares have no stated par value but must be issued for consideration fixed by the corporation according to law.

Certain corporations cannot issue no-par value shares, such as banks, trust companies, insurance companies, public utilities, and building and loan associations, among others.

C. Corporations with Preferred Shares

Preferred shares give holders certain preferences, such as priority in dividends or liquidation.

Preferred shares may be:

Voting or non-voting;
Cumulative or non-cumulative;
Participating or non-participating;
Convertible or non-convertible;
Redeemable, if allowed.

D. Corporations with Redeemable Shares

Redeemable shares may be bought back by the corporation according to their terms, even without unrestricted retained earnings in certain cases, subject to legal requirements.

E. Corporations with Founders’ Shares

Founders’ shares may grant special rights to founders, including exclusive voting rights for a limited period, subject to statutory restrictions.

XV. Classification According to Liability and Veil Protection

A. Corporations with Limited Liability

Most corporations provide limited liability to stockholders or members. This means corporate creditors generally proceed against corporate assets, not personal assets of stockholders.

B. Piercing the Corporate Veil

Courts may disregard the separate personality of a corporation when it is used to:

Defeat public convenience;
Justify wrong;
Protect fraud;
Defend crime;
Evade obligations;
Confuse legitimate issues;
Circumvent the law.

Common Grounds

The veil may be pierced in cases of:

Fraud;
Alter ego or instrumentality;
Undercapitalization in bad faith;
Commingling of funds;
Use of corporation to evade obligations;
Parent-subsidiary abuse;
Sham or dummy corporations.

Piercing the corporate veil is exceptional. Mere ownership of all or most shares is not enough.

XVI. Classification According to Relationship with Parent or Affiliates

A. Parent Corporation

A parent corporation owns or controls another corporation.

B. Subsidiary Corporation

A subsidiary is controlled by another corporation, usually through share ownership.

A subsidiary has separate juridical personality from its parent unless grounds exist to pierce the corporate veil.

C. Affiliate Corporation

Affiliates are corporations related by common ownership, control, or management.

D. Holding Corporation

A holding corporation primarily owns shares in other corporations.

It may be used for:

Group structuring;
Estate planning;
Investment management;
Corporate control;
Tax and administrative efficiency, subject to law.

E. Operating Corporation

An operating corporation directly conducts business activities, produces goods, renders services, or earns operating revenue.

XVII. Classification According to Regulatory Status

A. Ordinary SEC-Registered Corporations

These are corporations registered with the Securities and Exchange Commission and subject mainly to regular reportorial requirements.

B. Regulated Corporations

Regulated corporations are subject to additional supervision by specialized agencies.

Examples:

Type of Corporation	Principal Regulator
Banks	Bangko Sentral ng Pilipinas
Insurance companies	Insurance Commission
Publicly listed companies	SEC and PSE
Financing and lending companies	SEC
Schools	DepEd, CHED, TESDA
Public utilities	Relevant utility regulators
Hospitals	Department of Health
Real estate developers	DHSUD and other agencies
Mining corporations	DENR and MGB
Telecommunications entities	NTC
Energy companies	DOE and ERC

XVIII. Classification According to Term of Existence

Under the Revised Corporation Code, corporations generally have perpetual existence unless their articles of incorporation provide otherwise.

A. Perpetual Corporations

These corporations exist indefinitely unless dissolved according to law.

B. Fixed-Term Corporations

A corporation may provide a specific corporate term in its articles of incorporation.

Upon expiration, it may extend its term, subject to legal procedures.

XIX. Formation of Corporations

A. Incorporators

Incorporators are the persons who originally form the corporation and sign the articles of incorporation.

Under the Revised Corporation Code, corporations may generally be formed by one or more persons, subject to rules on OPCs and other classifications.

B. Articles of Incorporation

The articles of incorporation are the corporation’s basic charter.

They usually include:

Corporate name;
Purpose;
Principal office;
Term of existence, if not perpetual;
Names and details of incorporators;
Names of directors or trustees;
Capital structure for stock corporations;
Membership structure for non-stock corporations;
Other required provisions.

C. Bylaws

Bylaws govern internal corporate management.

They commonly cover:

Meetings;
Quorum;
Voting;
Election of directors or trustees;
Duties of officers;
Stock certificates;
Membership rules;
Committees;
Conflict-of-interest procedures;
Other internal governance matters.

D. Certificate of Incorporation

A corporation comes into existence upon issuance by the SEC of the certificate of incorporation, unless otherwise provided by law.

XX. Corporate Powers

Corporations have express, implied, and incidental powers.

A. Express Powers

Express powers are those granted by law, articles of incorporation, bylaws, or special statute.

These include power to:

Sue and be sued;
Have perpetual existence unless limited;
Adopt and use a corporate seal;
Amend articles and bylaws;
Issue shares;
Acquire and dispose of property;
Enter into contracts;
Incur obligations;
Make donations, subject to restrictions;
Establish pension or benefit plans;
Exercise powers necessary to carry out corporate purposes.

B. Implied Powers

Implied powers are those reasonably necessary to accomplish corporate purposes.

C. Incidental Powers

Incidental powers are those naturally connected with corporate existence.

XXI. Governance of Corporations

A. Board of Directors

Stock corporations are managed by a board of directors.

Directors must generally own at least one share, unless otherwise provided by law or applicable rules.

B. Board of Trustees

Non-stock corporations are managed by a board of trustees.

Trustees may have terms and classifications depending on the nature of the corporation.

C. Corporate Officers

Common officers include:

President;
Treasurer;
Corporate secretary;
Compliance officer, when required;
Other officers provided in the bylaws.

Certain offices have legal qualifications. For example, the corporate secretary must generally be a resident and citizen of the Philippines.

D. Fiduciary Duties

Directors, trustees, and officers owe fiduciary duties to the corporation.

These include:

Duty of obedience;
Duty of diligence;
Duty of loyalty;
Duty to avoid conflicts of interest;
Duty not to usurp corporate opportunities;
Duty to act in good faith.

XXII. Meetings and Voting

A. Stockholders’ Meetings

Stockholders act through meetings or written assent where allowed.

Matters requiring stockholder approval may include:

Election of directors;
Amendment of articles;
Amendment of bylaws in certain cases;
Increase or decrease of capital stock;
Merger or consolidation;
Sale of substantially all assets;
Investment in another business outside primary purpose;
Dissolution;
Other fundamental corporate acts.

B. Board Meetings

Corporate powers are generally exercised by the board. Directors act as a body, not individually.

C. Remote Communication

The Revised Corporation Code allows participation through remote communication and voting in absentia, subject to legal and internal requirements.

XXIII. Fundamental Corporate Acts

Certain acts require approval by both the board and stockholders or members.

Examples include:

Amendment of articles of incorporation;
Extension or shortening of corporate term;
Increase or decrease of capital stock;
Incurring, creating, or increasing bonded indebtedness;
Sale or disposition of all or substantially all assets;
Investment in another corporation or business outside the primary purpose;
Declaration of stock dividends;
Merger or consolidation;
Dissolution.

These acts often require higher voting thresholds.

XXIV. Dissolution and Liquidation

Corporations may be dissolved voluntarily or involuntarily.

A. Voluntary Dissolution

Voluntary dissolution may occur:

Where no creditors are affected;
Where creditors are affected;
By shortening the corporate term;
Through other modes allowed by law.

B. Involuntary Dissolution

A corporation may be dissolved involuntarily for causes such as:

Serious misrepresentation;
Fraud in incorporation;
Continuous inoperation;
Failure to organize and commence business within the period required by law;
Violation of law;
Regulatory grounds;
Court order.

C. Liquidation

After dissolution, the corporation continues for purposes of winding up, including:

Collecting assets;
Paying debts;
Settling obligations;
Distributing remaining assets;
Prosecuting and defending suits.

XXV. Tax Considerations by Corporate Type

A. Stock Corporations

Stock corporations are generally subject to corporate income tax and other applicable taxes.

They may also be subject to:

Value-added tax;
Percentage tax;
Withholding taxes;
Documentary stamp tax;
Local business taxes;
Real property tax;
Capital gains tax, depending on transaction.

B. Non-Stock Non-Profit Corporations

Non-stock status alone does not automatically mean tax exemption.

A non-stock non-profit corporation may be tax-exempt only if it qualifies under the Constitution, tax laws, and administrative regulations.

Income from activities conducted for profit may be taxable, even if the corporation is non-stock.

C. Foundations and Charitable Institutions

Foundations may qualify for donee institution status or tax incentives if they meet legal requirements. They must comply with documentary, operational, and reporting obligations.

D. Foreign Corporations

Foreign corporations may be taxed differently depending on whether they are:

Resident foreign corporations doing business in the Philippines; or
Non-resident foreign corporations earning Philippine-sourced income.

XXVI. Common Legal Issues by Type of Corporation

A. Stock Corporations

Common issues include:

Shareholder disputes;
Deadlocks;
Dilution;
Non-payment of subscriptions;
Unauthorized issuance of shares;
Dividends;
Intra-corporate controversies;
Breach of fiduciary duty;
Minority oppression;
Corporate rehabilitation or insolvency.

B. Non-Stock Corporations

Common issues include:

Membership disputes;
Validity of elections;
Misuse of funds;
Authority of trustees;
Expulsion of members;
Dissolution and asset distribution;
Tax-exempt status;
Donor restrictions.

C. OPCs

Common issues include:

Commingling personal and corporate funds;
Failure to appoint nominees;
Succession upon death or incapacity;
Personal liability due to alter ego use;
Compliance with reportorial requirements.

D. Close Corporations

Common issues include:

Deadlock among stockholders;
Restrictions on share transfers;
Buy-sell arrangements;
Minority rights;
Management disputes;
Succession in family corporations.

E. Foreign Corporations

Common issues include:

Whether activities constitute doing business;
Need for SEC license;
Appointment of resident agent;
Tax exposure;
Enforceability of contracts;
Access to Philippine courts;
Nationality restrictions.

XXVII. Choosing the Proper Corporate Type

The proper corporate type depends on purpose, ownership, control, taxation, regulation, and long-term plans.

A. For a Regular Business

A stock corporation is usually appropriate.

B. For a Solo Entrepreneur

An OPC may be appropriate, provided the business is allowed to operate as an OPC.

C. For a Family Business

A close corporation or ordinary stock corporation with carefully drafted bylaws and shareholders’ agreements may be appropriate.

D. For Charitable or Civic Purposes

A non-stock non-profit corporation or foundation may be appropriate.

E. For Religious Purposes

A corporation sole or religious non-stock corporation may be appropriate.

F. For Foreign Investors

A domestic subsidiary, branch office, representative office, or joint venture may be considered, subject to foreign equity restrictions.

G. For Publicly Funded or Government-Controlled Activities

A GOCC or special-purpose public corporation may be involved, depending on the enabling law.

XXVIII. Summary Table of Major Corporation Types

Type	Stock or Non-Stock	Main Purpose	Owners or Members	Key Feature
Ordinary stock corporation	Stock	Profit	Stockholders	Default business corporation
Non-stock corporation	Non-stock	Non-profit or mutual purpose	Members	No dividends to members
One Person Corporation	Stock	Usually business	Single stockholder	Corporation with one owner
Close corporation	Stock	Private business	Limited stockholders	Restricted share transfers
Educational corporation	Stock or non-stock	Education	Stockholders or members	Subject to education laws
Religious corporation sole	Non-stock/special	Religious property administration	Religious officeholder	Succession through office
Foundation	Non-stock	Charitable/public benefit	Members/trustees	Uses assets for stated purpose
Foreign corporation	Depends on foreign law	Foreign entity operating locally	Foreign shareholders/members	Needs license if doing business
GOCC	Stock or non-stock/special	Public or governmental purpose	Government	Public accountability rules
Publicly listed corporation	Stock	Business/investment	Public shareholders	Subject to securities regulation
Bank	Stock	Banking	Stockholders	BSP-regulated
Insurance corporation	Stock/special	Insurance	Stockholders or members	Insurance Commission-regulated
Public utility corporation	Usually stock	Public service	Stockholders	Heavily regulated, nationality limits

XXIX. Conclusion

Philippine corporation law recognizes many types of corporations, each serving a different legal and economic function. The most basic division is between stock and non-stock corporations, but the full landscape includes One Person Corporations, close corporations, educational corporations, religious corporations, foreign corporations, public corporations, quasi-public corporations, GOCCs, publicly listed corporations, banks, insurance companies, lending companies, financing companies, foundations, associations, and corporations vested with public interest.

The choice of corporate form affects ownership, governance, taxation, liability, nationality compliance, reportorial obligations, regulatory supervision, and succession. While incorporation gives the powerful benefit of separate juridical personality, that benefit carries corresponding duties: compliance with law, observance of corporate formalities, faithful governance, proper accounting, and respect for the corporation’s separate legal existence.