The document discusses the formation and incorporation of private corporations under Philippine law. It defines a certificate of stock and notes that a corporation is created by law, not by agreement of parties. There are three theories on corporate formation: concession theory, where a corporation is formed upon receiving a certificate of incorporation; contract theory, where incorporation involves contracts among members and between members and the state; and theory of corporate enterprise, where a corporation is a business unit rather than just an artificial being. The three steps of incorporating a private company are promotion, incorporation through filing articles of incorporation with the SEC, and formal organization once the certificate of incorporation is issued.
The document discusses the formation and incorporation of private corporations under Philippine law. It defines a certificate of stock and notes that a corporation is created by law, not by agreement of parties. There are three theories on corporate formation: concession theory, where a corporation is formed upon receiving a certificate of incorporation; contract theory, where incorporation involves contracts among members and between members and the state; and theory of corporate enterprise, where a corporation is a business unit rather than just an artificial being. The three steps of incorporating a private company are promotion, incorporation through filing articles of incorporation with the SEC, and formal organization once the certificate of incorporation is issued.
The document discusses the formation and incorporation of private corporations under Philippine law. It defines a certificate of stock and notes that a corporation is created by law, not by agreement of parties. There are three theories on corporate formation: concession theory, where a corporation is formed upon receiving a certificate of incorporation; contract theory, where incorporation involves contracts among members and between members and the state; and theory of corporate enterprise, where a corporation is a business unit rather than just an artificial being. The three steps of incorporating a private company are promotion, incorporation through filing articles of incorporation with the SEC, and formal organization once the certificate of incorporation is issued.
The document discusses the formation and incorporation of private corporations under Philippine law. It defines a certificate of stock and notes that a corporation is created by law, not by agreement of parties. There are three theories on corporate formation: concession theory, where a corporation is formed upon receiving a certificate of incorporation; contract theory, where incorporation involves contracts among members and between members and the state; and theory of corporate enterprise, where a corporation is a business unit rather than just an artificial being. The three steps of incorporating a private company are promotion, incorporation through filing articles of incorporation with the SEC, and formal organization once the certificate of incorporation is issued.
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PAGES 128 - 129
Thus, Aquino (2014) defines a certificate of stock as a written acknowledgment of the
corporation of the interest, right and participation of a person in the management, profits and assets of a corporation. It merely represents a distinct undivided share or interest in the common property of the corporation. As a rule, a certificate of stock may not be issued unless the subscription is fully paid.
Lesson 5. Formation, Incorporation and Organization of a
Private Corporation De Leon (2005) emphasizes that a corporation is created by law or by operation of law. This means that corporations cannot come into existence by mere agreement of the parties as in the case of partnerships. For emphasis, under the Revised Corporation Code of the Philippines, a corporation is created by operation of law and this refers to private corporations, and does not include public corporations which are created by special laws.
Theories on Formation of a Corporation
The first one is Concession Theory which is also known as “Flat Theory”, “Government Paternity Theory”, or Franchise Theory ”. Under the Concession Theory, a corporation comes into existence upon the issuance of the certificate of incorporation. It is discussed that then and only then will a corporation acquire juridical personality to sue and be sued, enter into contracts, hold or convey property or perform any legal act in its own name (Ladia, Corporation Code of the Philippines [Annotated], 2001 ed., p. 5). A corporation is an artificial creature without any existence until it has received the imprimatur of the estate acting according to law, through the SEC (Tayag v. Benguet Consolidated, Inc., GR No. L-23145, Nov. 29, 1968).
Meanwhile, under the Contract Theory, incorporation is deemed to involve contracts:
among the members, (2) between the members and the corporation and the State (Aquino, 2014). Thus, a corporation is entitled to right against impairment of contracts (International Express Travel & Tour Services, Inc. vs. CA, G.R No. 119002, October 19, 2000). The State cannot likewise take the life of the corporation without due process.
Another one is the Theory of Corporate Enterprise or Economic Unit wherein the corporation is not merely an artificial being, but more of an aggregation of persons doing business, or an underlying business unit (Aquino, 2014). PAGES 128 - 129
There are three (3) steps in the creation of a private corporation are (1) promotion; (2) incorporation; and (3) formal organization and commencement of business operations. (De Leon, 2005).
Promotion of Corporations Promoters are persons who bring about or cause to bring about the formation and organization of a corporation by bringing together the incorporators or persons interested in the business, procuring subscriptions or capital for the corporation which leads to the incorporation of the private corporation itself. (De Leon, 2005)
A corporation, however, may be formed and organized by the incorporators themselves
without getting the services of the promoters. (De Leon, 2005)
Incorporation and Organization of a Private Corporation
The next step according to De Leon (2005) is incorporation which includes the following procedures:
(1) Drafting and execution of the articles of incorporation by the incorporators. In this connection, the person chosen as temporary treasurer pending incorporation must also execute an affidavit regarding the capital subscribed and paid up; (2) Filing with the Securities and Exchange Commission (SEC) of the articles of incorporation together with the other documentary requirements; (3) Payment of fees; and (4) The issuance by the SEC of the Certificate of Incorporation after verification and examination.
