Legal entity with a separate juridical personality from its owners (stockholders), providing limited liability. Registered with the SEC, requiring at least two incorporators (or one for OPC).
A corporation is the most formal and protective business structure in the Philippines. As a separate juridical entity, it can own property, enter contracts, and be sued — independently of its stockholders. Stockholders' liability is generally limited to the amount they invested (the value of their shares); their personal assets are protected.
Under the Revised Corporation Code of 2019, a stock corporation can be incorporated with as few as two incorporators (previously five). A corporation is managed by a Board of Directors elected by the stockholders. For income tax, corporations file BIR Form 1702 annually and pay 25% corporate income tax (or 20% for domestic corporations with taxable income up to ₱5,000,000 and total assets not exceeding ₱100,000,000).
In practice: Five friends incorporate "Pumayag Tech Solutions, Inc." to develop fintech apps. They each contribute ₱200,000 for a total paid-in capital of ₱1,000,000. If the company later faces a lawsuit for ₱5,000,000, each friend's personal exposure is limited to their ₱200,000 investment — not their personal bank accounts or property.
Why it matters: Corporations offer the strongest liability protection and are the most credible business structure for dealing with large clients, securing bank financing, and eventually attracting investors. The tradeoff is administrative complexity — SEC registration, annual general meetings, corporate secretary obligations, audited financial statements, BIR Form 1702, and regular SEC reportorial requirements.
Stock dividends paid to Filipino stockholders from domestic corporations are subject to 10% Final Withholding Tax. This is the "double taxation" concern in corporations — income is taxed at the corporate level, then dividends are taxed again when distributed to stockholders.