Intro to Law- Commercial Law

8/6/2019 Intro to Law- Commercial Law

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By means of a special charter orfranchise whereby the legislaturegrants a body of persons corporateexistence or

By fulfilling the conditions prescribedby a general law for the acquisition ofcorporate existence.


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Art. XIV, Sec. 7

- Our Constitution prohibitsCongress from providing for theformation of private corporations

by special act, unless suchcorporations are owned orcontrolled by the Government or

any of its subdivisions orinstrumentalities.


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Corporation Law- the general law

which prescribes the procedure and theconditions for the formation of privatecorporations.

It provides that five or more persons,not exceeding fifteen, a majority ofwhom are residents of the Philippinesmay form a private corporation for anylawful purpose or purposes by filing with the Securities and ExchangeCommission articles of incorporation.


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The articles of incorporation must setforth(Corporation Law, Sec. 6; RepublicAct No. 2055):

1. The name of the corporation;

2. Its purpose or purposes;

3. The place of its principal office, whichmust be in the Philippines;

4. Its duration, which must not exceedfifty years;

5. The names and residences of theincorporators;


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6. The number of directors, which must

not be less than five nor more thaneleven;

7. The amount of its capital stock and the

number of shares into which it isdivided if it be a stock corporation;

8. The amount of capital stock or number

of shares of no-par stock actuallysubscribed and the number of sharesand the amount paid by eachsubscriber.


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Upon the filing of the articles ofincorporation in accordance with law,the Securities and Exchange

Commissioner shall issue a certificateto that effect and from that momentthe corporation acquires juridical

personality and legal existence.(Corporation Law, Sec. 11)


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The Corporation Law requires everycorporation to have a board of directors of

not less that five nor more than elevendirectors to be elected from among thestockholders or members. The board ofdirectors is the supreme governing body of

the corporation in the management of theregular and ordinary business affairs, limitedin its powers only by its articles ofincorporation and by its by-laws.


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Corporation Law, Sec 13; Act No. 35181. Of succession, that is, the power to prolong its

existence beyond the natural life of themembers composing it;

2. To sue and be sued;3. To transact its business and to accomplish its

purpose;4. To have a seal;

5. To purchase, hold, convey, sell, lease, let,mortgage, encumber, and otherwise deal withreal and personal property subject to thelimitations set by law;


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6. To appoint and dismiss subordinateofficers or agents;

7. To make by-laws for its government,not inconsistent with any existing law;

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o admit members and to issue andsell stock;

9. To enter into contracts;

10.To purchase, encumber or sell sharesof other corporations, subject to thelimitations provided by law.


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Under our law, a corporation may be dissolved:1. By the expiration of the period for which it was

created;

2. By legislative enactment;

3. By judicial decree of dissolution or forfeiturefor violation of the Corporation Law;

4. By voluntary surrender of its charter by the

stockholders;5. By failure to organize and commence business

within two years from the date of itsincorporation.


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By foreign corporation is meant acorporation which owes its existenceto the laws of another country, or acorporation formed, organized orexisting under any laws other than

those of the Philippines.(Corporation Law, Sec. 68)


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No Foreign Corporation may bepermitted to transact business in thePhilippines until it shall have a licensefor that purpose from the Securities andExchange Commission. (Corporation

Law, Sec. 68; Republic Act No. 2055) The Corporation Law further provides

that no foreign corporation which has

not obtained such prescribed licensemay maintain any suit for the recovery ofany debt, claim, or demand whatever.

(Corporation Law, Sec. 69)


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Republic Act No. 5186, declares it a policy ofthe state to encourage both Filipino and

foreign investments in preferred areas of theeconomy and to welcome foreign capital inestablishing pioneer enterprises that arecapital intensive and would utilize a

substantial amount of domestic rawmaterials, in joint venture with substantialFilipino capital whenever available.


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The policy is sought to be realized byassuring certain guarantees and incentives to

investors. It is made explicit that they areentitled to the basic rights provided in theConstitution. Among the guarantees theGovernment recognizes under the Act are:

1. The right of foreign investors to repatriatethe entire proceeds of liquidatedinvestments and to remit earnings in the

currency in which the investment wasoriginally made and at the exchange rateprevailing at the time of repatriation orremittance;


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2. The right to remit payments of interest andprincipal on foreign loans and other obligations

at the exchange rate prevailing at the time ofremittance;

3. Freedom from expropriation of the propertyrepresented by investments or property of the

enterprises, except for public use or in theinterest of national welfare and defense andupon payment of just compensation;

4. Freedom from government requisition of theinvestment or property, except for a limitedduration in the event of war or nationalemergency and upon payment of just

compensation.

Intro to Law- Commercial Law

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