Accounting for Corporations - Introduction and Legal Framework Flashcards

Vocabulary practice flashcards covering fundamental corporate law concepts, Philippine legal frameworks, doctrines, attributes, classifications, and governance structures from Chapter 1 through Chapter 8.

Republic Act 11232

The Revised Corporation Code of the Philippines, signed into law by President Duterte, which took effect in February 2019 and serves as the current general law governing private corporations.

Batas Pambansa Blg. 68

The previous Corporation Code of the Philippines signed into law by President Ferdinand E. Marcos, which took effect on May 1, 1980.

Corporation Law of 1906

The early Philippine law passed in 1906 during the American regime that introduced the American corporation as a commercial entity and abolished various former associations.

Private Corporation

An artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incidental to its existence under Section 2 of the Revised Corporation Code.

Government-Owned or Controlled Corporation (GOCC)

A corporation created by special law rather than the general corporation code to perform specific public or social functions (e.g., SSS, GSIS, PDIC).

Doctrine of Separate Entity

The legal principle that a corporation possesses a juridical personality separate and distinct from its individual stockholders, members, or other connected corporate entities.

Doctrine of Limited Liability

The principle stating that stockholders are not personally liable for corporate obligations beyond the amount of their agreed capital contributions, including paid-up capital and unpaid subscriptions.

Right of Succession

The attribute enabling a corporation to continue its legal existence uninterrupted despite changes in its stockholders, board composition, or capital structure.

Perpetual Existence

The default lifespan granted to corporations under Republic Act 11232 unless a specific limited term is expressly elected in the Articles of Incorporation.

Doctrine of Limited Capacity

The principle that a corporation, as a mere creature of law, can only exercise powers expressly granted by law or its charter, implied powers, and powers incidental to its existence.

Express Powers

Corporate powers specifically granted by the general corporation law or explicitly defined in the corporation's Articles of Incorporation.

Implied Powers

Corporate powers that are reasonably necessary or proper to execute and carry out the express powers granted to the corporation.

Incidental Powers

Powers that naturally attach to a corporation upon its creation by virtue of being a legal entity without requiring explicit statutory mention.

Ultra Vires Act

An act committed by a corporation that lies beyond the express, implied, or incidental powers authorized by its charter or by law.

Articles of Incorporation (AOI)

The primary charter document executed by incorporators and filed with the Securities and Exchange Commission (SEC) defining the corporation's creation, organization, and powers.

Centralized Management

The corporate operational principle where authority to manage the corporate business and control corporate property is primary vested in the Board of Directors or Board of Trustees.

Stock Corporation

A corporation whose capital stock is divided into shares and is authorized to distribute dividends or surplus profits to share owners on the basis of shares held.

Non-Stock Corporation

A corporation where no part of its income is distributable as dividends to its members, and any profit earned is purely incidental to its primary non-profit purpose.

One Person Corporation (OPC)

A corporation formed by a single stockholder introduced under Section 116 of Republic Act 11232.

Corporation Sole

A special class of religious corporation consisting of a single member or corporator (such as a bishop or archbishop) and their official successors.

Corporation Aggregate

A corporation composed of a group or body of multiple members or stockholders.

Domestic Corporation

A corporation organized and formed under the laws of the Philippines.

Foreign Corporation

A corporation formed under the laws of another country whose laws allow Filipino citizens and corporations to do business in that foreign state under reciprocity rules.

De Jure Corporation

A corporation created in strict and substantial compliance with statutory incorporation requirements, whose legal right to exist cannot be attacked by any party.

De Facto Corporation

A corporation existing in fact due to good faith colorable compliance with incorporation laws despite a non-fatal defect, whose legal existence can only be challenged directly by the state.

Quo Warranto Proceeding

A direct legal action brought by the Solicitor General of the Philippines on behalf of the state to question or annul the corporate status of a de facto corporation.

Corporation by Prescription

An entity that has exercised corporate powers for an indefinite period without sovereign interference, granted corporate status by legal fiction (e.g., Catholic Church in the Philippines).

Corporation by Estoppel

An entity that is not legally a corporation but is barred from denying its corporate existence against third parties due to its misrepresentations and actions as a corporate body.

Public Corporation

A corporation organized for the governance of a portion of the state, such as a city, municipality, or province.

Corporator

A general term referring to any person who composes a corporation, serving as a stockholder in a stock corporation or a member in a non-stock corporation.

Incorporator

A person originally forming the corporation who signs the Articles of Incorporation.

Independent Director

A board member independent of management and free from business relationships that could impair objective judgment, mandated to constitute at least 20% of the board in corporations vested with public interest.

Preemptive Right

The right of existing stockholders to subscribe to all new share issues or dispositions of any class in proportion to their current holdings before the shares are offered to outside investors.

Appraisal Right

The right of a dissenting stockholder to demand payment of the fair value of their shares after voting against major corporate changes, such as a merger or consolidation.