INCORPORATION AND ORGANIZATION

OF PRIVATE CORPORATIONS

INCORPORATION
- means the performance of conditions, acts, deeds, and writings by incorporators, and the
official acts, certification or records, which give the corporation its existence.
- Generally, the steps in the creation of a corporation are as follow: Promotion,
Incorporation and Commencement of the Business.

EFFECT IF NOT INCORPORATED

- It is only through incorporation and registration that the corporation can acquire juridical
personality under the Corporation Code. However, incorporation is not necessary for an
association to function. The members can perform acts but subject to the provisions concerning
corporation by estoppel.

Documentary Requirements for Incorporation

- The application together with the supporting documents shall be filed by the incorporators
with the SEC. The life of the corporation starts from the issuance of the Certificate of Incorporation
by the SEC.

- The supporting papers required for Stock Corporation are as follows:

a. Name Verification Slip
b. Articles of Incorporation and By- Laws
c. Treasurer’s Affidavit
d. Affidavit of incorporator or director undertaking to change corporate name
e. Registration Data Sheet
f. Proof of Payment of Subscription like Bank Certificate of Deposit if the paid-up
capital is in cash
g. Indorsements/clearances from other government agencies if applicable

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

INCORPORATORS
- The basic qualifications are as follows:
(1) They must be natural persons. By way of exception, according to the Rural
Banks Act of 1992, cooperatives may be incorporators of rural banks.
(2) There must be not less than 5 nor more than 15 except Corporation Sole.
(3) They must all be of legal age.
(4) The majority must be residents of the Philippines; and
(5) If the corporation is a stock corporation, each incorporator must own or be a
subscriber to at least 1 share.

Citizenship requirement.
- There is no such requirement. The rule however is subject to the requirements of pertinent
nationalization laws.

Accomplished Fact.
 - An incorporator remains to be an incorporator even if he will later on cease to be a
corporator or shareholder. Thus, he will still be an incorporator even if he already transferred all his
shares to another. Being an incorporator is an accomplished fact.

Sec. 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 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 Exchange
Commission.

Basic Rules
(1) The corporate term is not more than fifty (50) years.
(2) The corporate term may be shortened or may be extended.
(3) No extension can be made earlier than five (5) years prior to the original or subsequent
expiry dates.
(4) Extension cannot be sought after the expiration of the term. There is no more term to
extend in such a case.

DOCTRINE OF RELATIONS.
- The filing and recording of a certificate of extension after the term cannot relate back to
the date of the passage of the resolution of the stockholders to extend the life of the corporation.
However, the doctrine of relation or relating back doctrine applies if the failure to file the application
for extension within the term of the corporation is due to the neglect of the officer to whom the
certificate is required to be filed or to a wrongful refusal on his part to receive it.

Sec. 12. Minimum capital stock required of stock corporations. - 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.

Sec. 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.

Minimum Authorized Capital

- There is no minimum requirement provided under the law But, considering that the law
requires a minimum paid-up capital of P5,000 then we can say that initial authorized capital cannot
be less than such amount.

Authorized Capital Stock

- the amount fixed in the AOI available for subscription by the stockholders of the
corporation
Subscribed Capital
- portion of the Authorized Capital Stock that is covered by subscription agreements
whether full paid or not

Paid-Up Capital
- amount of outstanding capital stock and additional paid-in capital or premium paid over
the par value of the shares

Outstanding Capital Stock

- total shares of stock issued to subscribers, whether or not full or partially paid except
treasury shares, so long as there is a binding subscription agreement

Capital
- includes properties and assets of the corporation that are used for its business operation

INITIAL SUBSCRIBED AND PAID-UP CAPITAL

- Section 13 requires the minimum subscribed capital be 25% of the ACS; the minimum
paid-up capital be 25% of the SCS and must not be less than P5,000. However the limitation does
not prevent subscribers from paying fully their respective subscription.

- Subscriptions made by foreign non- residents must be fully paid unless there is a guaranty
made by a domestic resident subscriber.

Sec. 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
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);
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 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 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 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.

Sec. 15. Forms of Articles of Incorporation. - Unless otherwise prescribed by special

law, articles of incorporation of all domestic corporations shall comply substantially
with the following form:

ARTICLES OF INCORPORATION
OF
__________________________
(Name of Corporation)

KNOW ALL MEN BY THESE PRESENTS:

The undersigned incorporators, all of legal age and a majority of whom are
residents of the Philippines, have this day voluntarily agreed to form a (stock) (non-
stock) corporation under the laws of the Republic of the Philippines;
AND WE HEREBY CERTIFY:

FIRST: That the name of said corporation shall be

".............................................., INC. or CORPORATION”;

SECOND: That the purpose or purposes for which such corporation is incorporated
are: (If there is more than one purpose, indicate primary and secondary purposes);

THIRD: That the principal office of the corporation is located in the City/Municipality
of............................................, Province of................................................., Philippines;

FOURTH: That the term for which said corporation is to exist is............... years from
and after the date of issuance of the certificate of incorporation;
FIFTH: That the names, nationalities and residences of the incorporators of the
corporation are as follows:
NAME NATIONALITY RESIDENCE
_____ ____________ ___________

SIXTH: That the number of directors or trustees of the corporation shall be............;
and the names, nationalities and residences of the first directors or trustees of the
corporation are as follows:
NAME NATIONALITY RESIDENCE
 _____ ____________ __________

SEVENTH: That the authorized capital stock of the corporation

is................................................ (P......................) PESOS in lawful money of the
Philippines, divided into.............. shares with the par value of..................................
(P.......................) Pesos per share.
(In case all the share are without par value):
That the capital stock of the corporation is.......................... shares without par value.
(In case some shares have par value and some are without par value): That the
capital stock of said corporation consists of....................... shares of
which...................... shares are of the par value of............................. (P.....................)
PESOS each, and of which............................... shares are without par value.

EIGHTH: That at least twenty five (25%) per cent of the authorized capital stock
above stated has been subscribed as follows:
Name of Subscriber Nationality No of Shares Subscribed Amount Subscribed
_________________ _________ _____________________ _________________

NINTH: That the above-named subscribers have paid at least twenty-five (25%)
percent of the total subscription as follows:
Name of Subscriber Amount Subscribed Total Paid-In
________________ _________________ __________
(Modify Nos. 8 and 9 if shares are with no par value. In case the corporation is non-
stock, Nos. 7, 8 and 9 of the above articles may be modified accordingly, and it is
sufficient if the articles state the amount of capital or money contributed or donated
by specified persons, stating the names, nationalities and residences of the
contributors or donors and the respective amount given by each.)

TENTH: That...................................... has been elected by the subscribers as

Treasurer of the Corporation to act as such until his successor is duly elected and
qualified in accordance with the by-laws, and that as such Treasurer, he has been
authorized to receive for and in the name and for the benefit of the corporation, all
subscription (or fees) or contributions or donations paid or given by the
subscribers or members.

ELEVENTH: (Corporations which will engage in any business or activity reserved

for Filipino citizens shall provide the following):
"No transfer of stock or interest which shall reduce the ownership of Filipino
citizens to less than the required percentage of the capital stock as provided by
existing laws shall be allowed or permitted to recorded in the proper books of the
corporation and this restriction shall be indicated in all stock certificates issued by
the corporation."
IN WITNESS WHEREOF, we have hereunto signed these Articles of Incorporation,
this.................. day of............................., 19.......... in the City/Municipality
of......................................., Province of................................................, Republic of the
Philippines.

................................................
(Names and signatures of the incorporators)
SIGNED IN THE PRESENCE OF:

……………………………………………
 (Notarial Acknowledgment)

TREASURER'S AFFIDAVIT
REPUBLIC OF THE PHILIPPINES )
CITY/MUNICIPALITY OF ) S.S.
PROVINCE OF )
I,..................................., being duly sworn, depose and say:
That I have been elected by the subscribers of the corporation as Treasurer thereof,
to act as such until my successor has been duly elected and qualified in accordance
with the by-laws of the corporation, and that as such Treasurer, I hereby certify
under oath that at least 25% of the authorized capital stock of the corporation has
been subscribed and at least 25% of the total subscription has been paid, and
received by me, in cash or property, in the amount of not less than P5,000.00, in
accordance with the Corporation Code.
.......................................
(Signature of Treasurer)

SUBSCRIBED AND SWORN to before me, a Notary Public, for and in the City/
Municipality of................................. Province of........................................., this............
day of........................, 19.......; by........................................... with Res. Cert.
No..................... issued at................ on....................., 19.........

NOTARY PUBLIC
My commission expires on.........................., 19.......
Doc. No...............;
Page No...............;
Book No..............;
Series of 19..... (7a)

Nature of Articles of Incorporation

- The AIO is considered as the charter or the constitution of a corporation. It defines the
contractual relationships between the State and the corporation, the State and the stockholders
and the corporation and the stockholders.

Treasurer’s Affidavit
- The TA that accompanies the AOI relates to the minimum subscribed capital and the
minimum paid-up capital. Thus, the treasurer may be made liable if the corporation does not
comply with the requirements of law; he may even be prosecuted for perjury.

CONTENTS OF ARTICLES OF INCORPORATION

(1) NAME- The name of the corporation is necessary for identification purposes. It is
essential therefore to its existence. The right to use its name is, just like other privileges, part of the
franchise granted to the corporation.
- The Supreme Court explained in the case of Western Equipment and Supply Co.
vs. Reyes, 51 Phil 115, that a corporation’s right to use its corporate and trade name is a property
right, a right in rem, which it may assert and protect against the whole world.

LIMITATIONS IN THE USE OF CORPORATE NAME

Sec. 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 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.

Basic Policy
- A corporation cannot use a name that belongs to another even as a trade name. In
Lyceum of the Philippines, Inc. vs. Court of Appeals, the Supreme Court explained that the
purposes of the prohibitions under Section 18 are (1) avoidance of fraud to the public; (2) evasion
of legal duties and obligations; and (3) reduction of difficulties of administration and supervision
over the corporations.

What must be Proved by the Oppositor

- A corporation seeking to prevent another corporation from using its name under Section
18 must prove that:
(1) The corporation has acquired a prior right over the use of such corporate name.
This means that priority in registration is equivalent to priority in rights.
(2) It is any of the cases mentioned in Sec. 18. i.e, identical, deceptively similar,
contrary to law, etc.

- Injunction may be availed of as remedy.

DOMINANCY TEST
- there will be infringement if the mark contains the dominant feature of the mark of a
trademark belonging to another.
- E.g “Big Mac” vs “Big Mak”; Universal Mills Corporation vs Universal Textile Mill, Inc.

CHANGE OF CORPORATE NAME

- A general power to alter or amend the charter of a corporation necessarily includes the
power to alter the name of the corporation.
- The corporation, upon the change of its name is in no sense a new corporation or the
successor of the original corporation. It is the same corporation with a different name, and its
character is in no respect changed.

(2) PURPOSE CLAUSE- The purpose clause is included in order that the person who
intends to invest his money in the business will know where and in what kind of business or activity
his money will be invested. It also enables the directors and officers to be informed regarding the
scope of business they are authorized to act. Finally, it allows third persons to be aware if the
transaction he has with the corporation is within the authority of the corporation.

PRIMARY vs. SECONDARY PURPOSE

- The Primary Purpose must only be one, but the Secondary purpose may be several.
Other purposes not allied or incidental to the Primary Purpose should be classified as Secondary
Purposes.
- It is necessary to specify the two kinds of purposes in order to determine which
investment of corporate funds would require the authority of both the Board of Directors and
Stockholders under Section 42.

(3) PRINCIPAL OFFICE- The AOI must state the City or Municipality where the principal
office is to be established,which must be within the Philippines. The specifics such as the street
number, street name, barangay, city or municipality must be included.

IMPORTANCE OF PRINCIPAL OFFICE

 - important for tax purposes
- determination of venue in cases
- summons

(4) TERM

(5) INCORPORATORS

(6) DIRECTORS- Section 14 requires a statement of the number of directors or trustees,

which shall not be less than five (5) nor more than fifteen (15). Exception to this is in the case of
merger of banks which allows 21 directors.

(7) CAPITAL STOCK

(8) PAID-UP CAPITAL

(9) FOREIGN EQUITY

(10) OTHER PROVISIONS may be inserted as long as they are not contrary to law, morals,
good customs, public order and public policy. For example, a non-compete clause or the grant of
the right of first refusal.

Sec. 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.

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 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.

AMENDMENTS UNDER SECTION 16

- Section 16 of the Corporation Code pertains to amendments in general. For example,
amendment in the Articles of Incorporation to change the corporate name, the place of the principal
office and the purpose of the corporation. Other provisions may provide special rules on the
amendment of specific provisions.

REQUIREMENTS
(1) The amendment must be for legitimate purposes and must not be contrary to other
provisions of the Corporation Code and Special Laws;
 (2) The amendment must be approved by a majority vote of the Board of Directors or
Trustees
(3) There must be a vote or written assent of the stockholders representing at least two-
thirds (2/3) of the outstanding capital stock, or the vote or written assent of at least two- thirds (2/3)
of the members if it be a non-stock corporation.
(4) 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;
(5) A copy thereof duly certified under oath by the corporate secretary and a majority of the
directors or trustees stating the fact that the said amendment/s have been duly approved by the
required vote of the stockholders or members. shall be submitted to the Securities and Exchange
Commission;
(6) The amendment must be approved by the SEC.

EXPRESS VS IMPLIED APPROVAL OF SEC

- The amendments shall take effect upon their approval by the SEC. There is express
approval upon issuance of Certification by SEC that the AOI is not contrary the provisions of the
Corporation Code and special laws. On the other hand, implied approval is exhibited when, upon
filing of the AOI, the SEC did not act on it within 6 months from the date of its filing. In such a case,
it is deemed approved from the time of filing.

WRITTEN ASSENT OF STOCKHOLDERS

- The law does not require that the approval of the stockholders is made in a meeting duly
called for the purpose. Written assent solicited by the board even without a meeting is sufficient.

APPRAISAL RIGHT
- Appraisal right refers to the right of the stockholder to demand payment of the fair value of
his shares, after dissenting from a proposed corporate action involving a fundamental change in
the corporation in the cases provided by law.

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

Ministerial Duty
- The SEC’s duty to approve an application for registration is ministerial provided that all the
requirements of law are complied with. The SEC must approve the AOI if the applicant has
substantially complied with the requirements of the Corporation Code.
- However, Sec. 17 recognizes the power of the SEC to reject the AOI or any proposed
amendment thereto if the provisions of the Corporation Code are violated. The SEC should give
the incorporators a reasonable time within which to correct or modify the objectionable portions of
the articles or amendment.

Sec. 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 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.

CERTIFICATE OF INCORPORATION
- The issuance of the certificate of incorporation by the SEC marks the commencement of
the corporate term of corporations incorporated under the Corporation Code. Hence, we can say
that such certification is an indispensable requirement before corporate life can ensue.
- If a corporation is one created by a special law that does not impose such certification as
a condition precedent then corporate existence commences as soon as the law takes effect.

PROMOTER
- A promoter is a person who, acting alone or with others, takes initiative in founding and
organizing the business or enterprise of the issuer and receives consideration therefor. The
general rule, is that the acts of the promoter are not binding on the corporation that will be
organized.

PRE- SUBSCRIPTION AGREEMENT

- irrevocable for six months

UNDERWRITER
- A person who guaranteed on a firm commitment and/or declared best effort basis the
distribution and sale of securities of any kind by another.

Sec. 20. De facto corporations. - The due incorporation of any corporation claiming
in good faith to be a corporation under this Code, and its right to exercise corporate
powers, shall not be inquired into collaterally in any private suit to which such
corporation may be a party. Such inquiry may be made by the Solicitor General in a
quo warranto proceeding.

Requisites of a De Facto Corporation

(1) A valid law under which the corporation is organized;
(2) An attempt in good faith to incorporate; and
 (3) An assumption of corporate powers

VALID LAW
- No de facto corporation will result if there is no law under which the corporation is
organized even if the components thereof assume corporate powers.

GOOD FAITH
- means there must be colorable compliance with the law.
- There can be no claim of attempt in good faith to incorporate if no Certificate of
Incorporation is issued by SEC.

ASSUMPTION OF POWERS
- It is also required that there is use of corporate powers.

NATURE AND STATUS OF DE FACTO CORPORATION

- The only difference between a de jure and de facto corporation is that the latter may have
its existence inquired and forfeited by the State.
- With respect to the rights and liabilities of stockholders in a de facto corporation, it is just
the same with de jure only that again the existence of the former may be questioned in a quo
warranto proceeding.

Sec. 21. Corporation by estoppel. - All persons who assume to act as a corporation
knowing it to be without authority to do so shall be liable as general partners for all
debts, liabilities and damages incurred or arising as a result thereof: Provided,
however, That when any such ostensible corporation is sued on any transaction
entered by it as a corporation or on any tort committed by it as such, it shall not be
allowed to use as a defense its lack of corporate personality.
One who assumes an obligation to an ostensible corporation as such, cannot
resist performance thereof on the ground that there was in fact no corporation.

IMPORTANT POINTS:
(1) All persons who assume to act as a corporation knowing it to be without authority to do
so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a
result thereof
(2) When any such ostensible corporation is sued on any transaction entered by it as a
corporation or on any tort committed by it as such, it shall not be allowed to use as a defense its
lack of corporate personality.
(3) One who assumes an obligation to an ostensible corporation as such, cannot resist
performance thereof on the ground that there was in fact no corporation.
(4) When there is no third person involved and the conflict arises only among those
assuming or acting to be a corporation then there is no corporation by estoppel.

Sec. 22. Effects on non-use of corporate charter and continuous inoperation of a

corporation.- If a corporation does not formally organize and commence the
transaction of its business or the construction of its works within two (2) years from
the date of its incorporation, its corporate powers cease and the corporation shall
be deemed dissolved. However, if a corporation has commenced the transaction of
its business but subsequently becomes continuously inoperative for a period of at
least five (5) years, the same shall be a ground for the suspension or revocation of
its corporate franchise or certificate of incorporation.
 This provision shall not apply if the failure to organize, commence the
transaction of its businesses or the construction of its works, or to continuously
operate is due to causes beyond the control of the corporation as may be
determined by the Securities and Exchange Commission.

Meaning of Organization.
- Organize or organization as used in reference to corporations has a well understood
meaning, which is the election of officers, providing for the subscription and payment of capital
stock, adoption of by-laws and uch other similar steps.

Failure to organize within two years

from incorporation
- The law states that the corporate powers cease and the corporation shall be deemed
dissolved. It was observed, however, that the dissolution is not automatic.

Effect of Non-Operation
- ground to revoke or suspend the franchise

REFERENCES:

• De Leon, Hector S. The Law on Partnership and private corporations. 2016 ed.
Manila, Philippines: Rex Bookstore

• Aquino, Timoteo B. Philippine Corporate Law Compendium. 2014 ed. Manila,

Philippines: Rex Bookstore

• Sundiang, Jose R. and Aquino, Timoteo B. Reviewer on Commercial Law.

2014 ed. Manila, Philippines: Rex Bookstore

• UST Golden Notes for Commercial Law. 2014 ed.

HOMEWORK FOR NEXT MEETING:

(1) Section 23-35 of the Corporation Code. Be ready for recitation.