Partnership

NOTES

1. Characteristics of a partnership:
a. Consensual
b. Onerouscontribution of money, property, or industry into a common
fund
c. NominateDesignated Name
d. PreparatoryIts organization is followed by other contracts to carry out
its purpose
e. PrincipalIt can stand alone
f. Bilateral or multilateral2 or more persons
g. Agencyeach partner is an agent to partnership and to each other
2. Professional partnership has no legal personality. Legal personality means that a
partnership can sue and be sued, enter into contracts, acquire property in its own
name, can incur obligations.
3. A partnership can be a partner in another partnership or a stockholder in a
corporation because it has a juridical personality to enter into contracts
4. Even if a partner transfers all interests to another, the transferee does not become
a partner unless all other partners consent. This is based on the principle of
delectus personarum (principle of mutual trust and confidence).
5. Limited partner would be liable as a general partner if he include his surname in
the partnership name and takes part in the control of business
6. General-limitedliable up to personal assets but subject to reimbursement
7. In a general partnership, insanity of a general partner does not result in the
automatic dissolution of the partnership but only serves as a ground for the
application for judicial dissolution
8. Death, retirement, insanity or civil interdiction (DRICI) of a general partner in a
limited partnership, automatically dissolves the partnership. But civil interdiction
of a limited partner does not so.
9. Acts of a partner who is insolvent, does not have a right to wind up the affairs of
the partnership and the business is unlawful doesnt bound the partnership.
10. If the partner who acts after dissolution and at fault, he alone ultimately liable to
the creditors. The partners can seek reimbursement from the partner who is guilty.
11. New creditor is deemed to have knowledge of the dissolution. He is not therefore,
protected by law. Partnership is not bound
12. A partnership begins from the moment of execution of the contract but there can
be stipulation otherwise.
13. Contract of co-ownership- no intention of using the asset for business purposes
14. A partnership cannot be formed for a charitable purpose
15. Corporation's legal personality commences from the time it is issued a certificate
of incorporation by the SEC
16. Corporation's nationality is determined by the nation's whole laws for which it
was created.
17. Death of the president or chairman does not dissolve the firm

18. Partnership is governed by the Civil Code of the Philippines while corporation is
under corporation code of the Philippines
19. Corporation can only be dissolved by the consent of the state
20. A contract of partnership may be made in any form or manner except if a specific
form is required by law for its validity or enforceability
21. It may be made orally or in private instrument if the total contribution of money
or other personal property is less than 3,000. If it is more than 3,000 or more, it
shall be recorded in the SEC. Noncompliance of which does not make the contract
void. However, if immovable property or real rights are contributed, it must be
made in public instrument.
22. A limited partnership must be registered with the SEC, otherwise, it is deemed to
be a general partnership
23. Universal partnership of all profitsany property belonging to them at the time of
the execution of the contract belongs to them but the usufruct( use and enjoyment)
of such property belongs to the partnership. Only the fruits of the property as well
as whatever property acquired by the partners through industry during the
existence of the contract, are contributed to the common fund.
24. Partnership de facto- a partnership in fact but not in law. It is still valid
partnership although it lacks certain requirements for its legality
25. A husband and wife cannot enter into a contract of universal partnership because
this has the effect of donation and there are prohibited from giving donation to
each other. They can enter into a particular partnership but not to govern thair
property relations.
26. The liability of an industrial partner is always that of a general partner
27. A person may be a general partner and a limited partner in the same partnership at
the same time, provided this fact is stated in the certificate of a limited partnership
28. A limited partner cannot contribute services hence it is always a capitalist and a
silent partner
29. A capitalist partner will be obliged to sell his interest to the other partners when in
case of imminent loss of the business of the partnership he refuses to give
additional contribution
30. capitalist partner cannot engage in the same or similar business of the firm unless
permitted by all others
31. Cannot engage in any kind of business unless permitted to do so. All his industry
is supposed to be contributed to the firm
32. Industrial partner is exempted as to losses between partners but is liable to
strangers but with right to be reimbursed from the capitalists
33. An agreement that even the industrial partner shall be liable for losses is
permissible
34. If a partner gives a receipt for the firm, it is the firm's credit that has been
collected. If it his own receipt, payment of the debtor will be pro-rated between
the firm and the partner receiving the payment
35. A partner has the right to be reimbursed by the partnership for the amount
disbursed on behalf of the partnership and the right to ask for dissolution of the
firm at the proper time

36. A partner has the right in a specified partnership property to use it for business
purposes only
37. The right to inspect and copy books is not available to the partnership pending
dissolution nor in one already dissolved
38. As a rule, no formal account is demandable until after dissolution. This is because
partners have access to the books. But if a partner is wrongfully excluded from
the business, he can demand it at any reasonable time
39. Joint management arises when two or more partners are appointed managers with
an agreement that one cannot act without the consent of the others. The approval
of all the managers is necessary for the validity of one's act.
40. Solidary management takes place when 2 or more appointed managers may
separately execute all acts of administration. But if one of them should oppose the
acts of the others, the decision of the majority shall prevail. In case of a tie, the
matter shall be decided by the controlling partners.
41. Participation in the selection of the managing partner is held by law as taking part
in the control of the business
42. General or limited partner partners may exercise some rights not available in the
general partnership, if the same are given and indicated in the certificate such as
the remaining general partners may continue the business even upon death,
retirement, civil interdiction of a general partner or the limited partner to demand
and receive property other than cash in return for his contribution
43. If the firm upon dissolution is not solvent, a limited partner does not enjoy the
same preference as an outside creditor.
44. A limited partner who is held liable as a general partner does not however get the
rights of the latter
45. Insanity, incapability, prejudicial conduct of a partner, unfair competition, the
business can only be carried at a loss are only grounds for the petition of a partner
in the court to dissolve the firm
46. Civil Interdiction is an accessory penalty imposed on a convict when the crime
committed is punishable from 12 years and 1 day to 30 years that deprives the
convict of his rights of parental authority, guardianship, marital authority, the right
to manage his property and of the right to dispose of his property.
Corporation
1. A copy of the articles filed which is returned with the certificate of incorporation
issued by the commission under its official seal becomes its corporate charter.
2. A corporation created by special law has no articles of incorporation
3. A corporation has the power of succession by its corporate name. Character of a
corporation is not necessarily determined by its name.
4. The purposes should be stated definitely. The main purpose and secondary
purposes shall be distinguished from each other. Main purpose must be specified.
5. A nonstock corporation may not include a purpose which would change or
contradict its nature
6. The purposes, where there are more than one, must be capable of being lawfully
combined. Thus, banks which are governed by the general banking law of 2000

are prohibited from directly engaging in non-banking activities such as insurance.

Similarly, Insurance companies are not allowed to engage in banking operations.
7. The main reason for stating the purpose of the corporation is to determine whether
the acts performed by the corporation are authorized or beyond its powers. In the
latter case, they will be known as ultra vires acts.
8. The principal place must be within the Philippines (city or town).
9. The place of principal office does not necessarily mean the place where the
business of the corporation is transacted but the place where its books and records
are ordinarily kept and its officers usually meet for the purpose of managing the
affairs and transacting the business of the corporation.
10. If the new address is located within the same city or municipality, no corporate
document is required to be filed with the SEC except a notice regarding the
change of address.
11. The incorporating directors or trustees shall hold office until their successors are
duly elected and qualified. They are intended to hold office for one year when the
corporation is organized
12. Every director must have at least one share of capital stock of the corporation of
which he is director.
13. If some or all of the shares are without par value, such fact shall be stated in the
articles
14. If the shares have par value, the amount of the authorized capital stock in pesos is
specified in the articles, but if they have no par value, no amount of capital stock
is specified in the articles which need only state the number of shares into which
said capital stock is divided. The reason is that the price of no-par value shares
may vary from to time and therefore the total amount of the capital stock cannot
be known until all the shares are issued.
15. Corporations which will engage in any business or activity reserved for Filipino
citizens shall provide in their articles of incorporation the restriction against the
transfer of stock or interest which will reduce the ownership of Filipino citizens to
less than the required percentage of the capital stock as provided by existing laws.
16. The general amendment may also be effected by the written assent of the
stockholders representing 2/3 of the outstanding capital stock or 2/3 of its
members, meaning that such action need not be taken at a meeting and upon a
vote.
17. If the amendment consists in extending or shortening the corporate term, a
meeting of the stockholders or members is necessary.
18. The amendments shall take effect only upon their approval of the SEC
19. In banking institutions covered by special law, the amendments must be
accompanied by a favorable recommendation of the appropriate government
agency with respect to it that it is in accordance with law.
20. Corporations must formally organize their affairs within 2 years, otherwise,
deemed dissolved. If becomes continuously inoperative for 5 years after its
organization, temporarily suspended or revoked.
21. When a change of name is approved, it is required that the commission must issue
an amended certificate of incorporation under the amended name.

22. In the case of religious corporations, the code does not require the SEC to issue a
certificate of incorporation. From and after the filing of articles, the chief
archbishop shall become a corporation sole.
23. De facto is the one that has not complied with all the requirements necessary to be
a de jure corporation but has complied sufficiently to be accorded corporate status
as against third parties although not against the state
24. A corporation by estoppel has no real existence in law. It is neither de jure nor a
de facto corporation, but does a mere fiction exist for the particular case. It exists
only between the persons who misrepresented their status and the parties who
relied on the misrepresentation.
25. Mandatory provisions prescribe formalities for incorporation which are designed
to protect the public.
26. Stockholders have indirect control of the corporation through their votes.
27. Acts of stockholders are not binding on the corporation. A corporation can act
only through the BOD.
28. BOD cannot perform constituent acts involving fundamental or major changes in
the corporation such as amendment of the articles of incorporation
29. BOD hold a fiduciary relation (trust and confidence) to the corporation and the
stockholders or members they represent. They are required to discharge their
duties in good faith and with diligence, care and skill. They are liable if they
breach their fiduciary duty.
30. For BOD to exercise their powers, they must meet as directors or trustees and act
at a meeting at which there is a quorum
31. Directors are not agents of the corporation and thus have no power acting
individually to bind the corporation
32. In a close corporation, any action by the directors without a meeting or at a
meeting improperly held is deemed valid or ratified.
33. A corporation is expressly allowed to enter into a management contract under
which it delegates the management of its affairs to another corporation for a
certain period of time. BOD can also delegate its power, impliedly or expressly to
other officers and agents
34. One disadvantage of corporation is that stockholders have little voice in the
conduct of the business.
35. Under the doctrine of piercing the veil of corporate entity, the corporation and the
persons composing it will be treated as one and identical person (instances such as
fraud, tax evasion, and avoiding obligation).
36. In nonstock corporation, minimum members are 5 and may be more than 15.
Number of members must be multiple of 5. No part of income shall be distributed
as dividends to members.
37. Civil Corporation is one organized for profit. Eleemosynary is for charitable
38. In close corporation, stockholders shall not exceed 20persons.
39. A partnership can be a corporator in a corporation but a corporation cannot
be a partner in a partnership
40. A corporation can subscribe after another corporations incorporation but not if
made before.

41. A corporation can be a corporator but never an incorporator in another

corporation except in rural bank law
42. A married woman can be an incorporator with the consent of the husband if it
involves conjugal or absolute community property. If it involves her exclusive
property, consent is not required
43. Majority must be residents of the Philippines to form a private corporation.
44. By-laws need not be notarized but required to be signed by the incorporators and
stockholders and filed with SEC. It is mandatory. It shall be effective upon
issuance of the SEC of certificate certifying that the by-laws are not inconsistent
with the code.
45. Articles of Incorporation are adopted by the incorporators as CHARTER of the
corporation while by-laws are for their internal government
46. Regular meetings- it shall be held annually on a date fixed in the by-laws or if not
so fixed, on any date in April of every year
47. Special meetings shall be held at any time necessary or as provided in the bylaws, provided however that at least one week written notice shall be sent to all
stockholders
48. Place of meetings must be held in the principal place of the corporation. Any
provision changing such place is illegal
49. The quorum of board meetings shall be majority of all members of the BOD or
board of trustee.
50. Every corporation must have at least a BOD, President, Treasurer, Secretary
51. A president must be a director
52. A secretary must be a resident and a citizen of the Philippines
53. Any 2 or more positions may be held concurrently by the same person except a
president and secretary or treasurer at the same time
54. Straight votinga stockholder may vote his number of shares for as many
persons as there are directors to be elected.
55. Cumulative voting for one candidatea stockholder cumulates/concentrates all
his shares and gives one candidate as many votes as the number of directors to be
elected multiplied by the number of his shares
56. Cumulative voting by distributiondistributes shares among as many candidates
he sees fit.
57. One stock is equal to 1 vote
58. Only the stockholders can remove a director. 2/3 of the outstanding capital stock
or members is required
59. Vacancy in the BOD is filled up by the remaining directors constituting a quorum
(majority shall remain) if the cause of vacancy is other than removal, expiration of
term or increase in the number of directors or trustees. If not, such vacancy will
be filled up by the stockholders.
60. Regular meetings of the board shall be held monthly
61. Special meetings may be held at any time upon the call of the president
62. Place of meetings may be anywhere
63. Directors or trustees are not allowed to vote or attend by proxy and they do not
receive compensation in the absence of any provision in the by-laws fixing their
salary

64. Should the stockholders representing the majority grant them compensation; such
total yearly compensation shall not exceed ten percent of income before tax of the
corporation during the preceding year.
65. You cannot be a director in 2 or more corporations. One cannot serve 2 masters at
the same time
66. 3 corporate powers: (1)express (2)implied (3) incidental
67. Most of the decision by majority of the directors require approval or ratification
by at least 2/3 outstanding capital stock. This is true in case of any amendment to
articles of incorporation
68. A corporation engaged in transportation cannot engage in any other business alien
to transportation
69. Corporations engaged in agriculture are prohibited from having any other interest
in any other corporation engaging in agriculture
70. Private corporations engaged in retail trade and rural banking must be 100 percent
Filipino-owned. For Public Utility development and exploitation of natural
resource must be atleast 60%filipino owned. For pawnshop, at least 70%
71. Ultra vires act may be ratified by approval. If fully or partially executed can bind
the parties. An illegal act can never be binding to the corporation.
72. Stated value of no-par value shares shall not be less than 5
73. At least 25 percent of the authorized must be subscribed. Paid-up capital upon
incorporation shall not be less than 25 percent of the subscribed capital.25-25 rule
74. Founders shareright to vote and be voted in the election of directors must be
for a limited period not to exceed 5 years.
75. Non-voting shares: (1) preferred (2) redeemable (3) treasury. They nevertheless
have two rights: Amendment of articles of incorporation and adoption and
amendment of by-laws.
76. Preferred share is always a par-value share
77. Shares of stock are deemed issued from the moment subscription is accepted
whether fully paid or not(incorporation)
78. Subscribers become stockholders upon subscription whether fully paid or not
(incorporation).
79. Certificate of Stock is a personal property and may be mortgaged or pledged or
transferred
80. A subscriber is entitled to all the rights of a fully paid stockholder for as long as
he has not been declared delinquent
81. Transferror has the right to vote
82. After incorporation, full payment is required for purchasers to become
stockholders.
83. Persons convicted by final judgment of an offense punishable by imprisonment
for a period exceeding six years and guilty of violation the Code within 5 years
prior to the date of election or appointment shall be disqualified to be a director,
trustee or officer
84. Removal of directors or trustees may be with or without cause. Removal without
cause may not be used to deprive minority stockholders of the right of
representation in the board of directors. Otherwise, the basic purpose of

cumulative voting which is to allow minority stockholders to unite and elect their
representative in the board will be rendered useless.
85. A director elected to fill a vacancy shall serve only for the unexpired portion of
the term of his predecessor in office
86. It is on the presumption that directors and trustees render service gratuitously and
that the return upon their shares adequately furnishes the motives for service,
without compensation.
87. They are entitled only to compensation if it is fixed in the by-laws or when the
giving of compensation is approved by the stockholders representing at least a
majority of the outstanding capital stock. Board approval is sufficient
88. Directors are liable to the corporation, stockholder or members or other persons
who suffer damages. Nature of liability is solidary.
89. A special meeting of the stockholders for the purpose of removal of directors or
trustees must be called by the secretary on order of the president or on the written
demand of the stockholders (only the majority is required). In removal of
directors, 2/3 is required.
90. Stockholders or members who have removed a director or trustee are also given
the power to choose his replacement at the same meeting.
91. A director can quit any time but by reason of fiduciary nature of the position they
occupy, he cannot resign as part of a fraudulent scheme to prejudice the
corporation. He should repair and make good such loss in case of loss of profits.
92. Where a director accepts a position in which his duties are incompatible with
those as such director, it is presumed that he has abandoned his office as director
93. Stockholders may be filled by stockholders if the cause is removal, increase in the
number of directors or the expiration of term. Also if other than removal or
expiration if the remaining directors do not constitute a quorum
94. Only the majority is required to authorize compensation of directors.
95. A director is entitled to be reimbursed for legitimate expenses incurred in behalf
of the corporation.
96. A private corporation is authorized to provide in its by-laws for the compensation
of directors or trustees.
97. The per diems granted to the directors should not be included in their total yearly
compensation for purposes of the 10 percent limitation
98. The agents of the corporation are the directors.
99. A contract of the corporation with one or more of its directors/trustees or officers
is voidable at the option of such corporation unless all the condition enumerated
in sec 32 are all present. In the case of a contract with a director or trustee, only
that the contract is fair and reasonable, if the contract is ratified the 2/3
100. It is a valid contract between 2 or more corporation which have interlocking
directors as long as there is no fraud and the contract is fair and reasonable under
circumstances.
101. The guilty director will only be exempted from liability to the corporation if his
disloyal act is ratified by 2/3
102. The executive committee must be provided for in the by-laws and composed of
not less than 3 members of the board. The committee may act on specific matters
within the competence of the board, as may be delegated to it by the board or in the

by-laws except those to which only the board duly called and assembled as such can
act upon.
103. The restrictions on the power of the executive committee may be enlarged by the
board to cover other matters. The executive committee may amend or repeal any
resolution of the board.
104. Committee cannot delegate its authority even to one of its members since it can
only bind the corporation through majority of votes
105. All members of an executive committee must be directors of the corporation.
However if all acts of the committee will be merely recommendatory in nature and
shall not be carried out without the formal of the BOD, some members may not be
directors.
106. Doctrine of limited capacityonly those that are express, implied or incidental
107. Intra viresacted within the powers
108. A corporation may not engage in a business different from that for which it was
created as a regular and a permanent part of its business. This is especially true in
banking and insurance companies organized under special laws.
109. The use of corporate seal in certificates of stock must be deemed directory rather
than mandatory. A corporation may exist even without a seal. Any seal adopted and
used by the corporation may be altered by it at its pleasure.
110. Power to acquire and convey property has always been regarded as an incident to
every corporation
111. A stockholder has absolute right to use, enjoy and dispose of his properties, to
perform all acts and to make all contracts without any restriction except when they are
prohibited by law.
112. A corporation cannot do acts not expressly or impliedly given by law
113. Implied powers are those powers which are reasonably necessary to exercise the
express powers and to accomplish or carry out the purposes for which the corporation
was formed.
114.A corporation which has been dissolved after the expiration of the 3-year winding up
period ceases to be de jure de facto and therefore it cannot sue or be sued
115. A corporation must be first duly registered in accordance with law to have the power
to sue
116. A seal is a device used to identify or replace the signature of an individual or
organization and to authenticate written matter
117. Purchasing or holding real and personal property, to adopt and use a corporate seal ,
to contract and make by-laws are incidental powers
118. A corporation may not hold alienable lands of a public domain except by lease for a
period not exceeding 25 years, renewable for not more than 25 years and not to exceed
1,000 hectares in area.
119. Natural resources belong to the state and cannot be alienated to corporations. Their
exploration and development and utilization shall be under the full control and
supervision of the State
120. If a corporation acquires shares or securities of other corporation and it is done in
pursuance of its purpose for which it was created, the approval of the stockholders is not
needed unless it is done solely for investment.
121. Appraisal right applies only to a stockholder of a stock corporation

122. Excess stock issued is void even in the hands of a bonafide purchaser for value
123. Any incurring, creating, or increasing by the corporation of any bonded
indebtednessis subject to prior approval of the Securities and Exchange Commission. The
bonds issued by the corporation have to be registered with the corporation
124. Preemptive right is not absolute
125. Shareholders cannot be compelled to subscribe to a class different. A stockholder
whose pre-emptive right is violated may maintain an action to compel the corporation to
give him that right. If the denial is by an amendment to the articles of incorporation, he
may exercise his appraisal right
126. The vote of the majority of the trustees in office will be sufficient authorization for
the corporation to enter into any transaction because there are no members with voting
rights.
127. Any disposition which does not involve all or substantially all of the corporate assets
made in the ordinary course of business does not require the approval of the stockholders
and would not entitle any dissenting stockholders to exercise his appraisal right. It can
only exercise the same if it is on the sale of all or substantially all of the corporate assets
as such which would render the corporation incapable of continuing the business or
accomplishing the purpose for which it was incorporated.
128. The acquisition of shares shall be for legitimate purposes, its capital is not impaired,
in good faith without prejudice to the rights of the stockholders and creditors and that
there is an unrestricted retained earnings to cover the shares acquired.
129. Section 41 does not authorize a corporation to arbitrarily purchase the shares it
issued to any of its stockholders indebted to it for the purpose of applying the proceeds
for the satisfaction of its claim against them.
130. Redeemable shares may be purchased by the corporation regardless of the existence
of the unrestricted retained earnings in the books of the corporation
131. In view of trust fund doctrine, buyback of shares or distribution of assets among
stockholders is a fraud against creditors and therefore void.
132. A corporation may invest its funds in another business which is incident or auxiliary
to its primary purpose as stated in the articles of incorporation without the approval of the
stockholders. In such case, dissenting stockholders shall have no appraisal right.
133. Stock dividend shall not be issued without the approval of 2/3. The board may
declare dividends other than stock without need of stockholders approval.
134. A corporation cannot make a valid contract to pay dividends other than from
retained earnings or profits and an agreement to pay such dividends out of capital is
unlawful and void.
135. Stockholders should only receive dividends from their investment and not from their
investment itself.
136. As a rule, dividends cannot be declared out of borrowed money for borrowed money
is not profits; but money may be borrowed temporarily for the purpose of paying
dividends if the corporation has used its surplus assets to make improvements for which it
might have borrowed money.
137. Dividends may not be declared so long as deficit exists
138. The directors are the judges on how and when to spend corporate funds.

139. The corporation may be compelled by the SEC to declare dividends to its
stockholders if it retains surplus profits in excess of 100percent of their paid-in capital
stock
140. Payment of subscription from dividends (stock, cash, to be declared) is illegal for
it obligates the subscriber to pay nothing for the shares except as dividends may accrue
upon the stock.
141. The stockholder is still entitled to receive cash dividends due on delinquent stock but
the dividends shall first be applied to the unpaid balance on the subscription plus costs
and expenses while stock dividends shall be withheld from the delinquent
stockholder until his unpaid subscription is fully paid.
142. Some courts take the view that unlawful dividends received in good faith by the
stockholders may not be recovered if the corporation is solvent.
143. In the absence of a record date, the dividend belongs to the person who is the owner
of the shares of stock at the time of declaration.
144. Declaration of stock dividends may be rescinded at any time before the actual
issuance.
145. The participation of each stockholder in the earnings of the corporation is based on
his total subscription. The reason is that stockholders entire subscription represents his
holdings in the company for which he pays interest on any unpaid portion.
146. Only in cases where a stockholder is delinquent in the payment of his unpaid
subscription that he loses his privilege in a corporation where he has holdings, except his
right to receive cash dividends, which however shall first be applied to his unpaid balance
on the subscription plus cost and expenses.
147. The contract must be approved by a majority of the quorum of BOD and prescribed
vote of the stockholders of both the managing and the managed corporation. The period
of the contract must not be longer than 5 years for any one term.
148. Upon the issuance of the certificate of incorporation, the corporation comes into
existence but not yet organized.
149. By-laws shall be adopted within one month after receipt of official notice of the
issuance of its certificate of incorporation by the SEC. Nevertheless, by-laws may be
adopted and filed prior to incorporation with the articles of incorporation. Failure to file a
code of by-laws within one month from the date of incorporation with the SEC shall
render the corporation liable to the revocation of its registration
150. By-laws must be general and uniform in their operation and not directed against
particular individuals, and must not be discriminatory.
151. By-laws are not binding to a party who doesnt have knowledge of its provision.
152. At least 2 directors must be residents of the Philippines.
153. Corporation cannot provide in the by-laws for the manner of election and the term of
office of directors or trustees which are already regulated by law.
154. The power to make and repeal by-laws can only be exercised at a regular or special
meeting duly called for the purpose. It can be delegated (2/3) to directors. But the power
to amend the articles of incorporation lies with the stockholders members and cannot be
delegated to directors.
155. To revoke the delegated power, the law merely requires the vote of majority of the
outstanding capital stock.

156. Revocation is valid notwithstanding that no previous notice was given to

stockholders or members of the intention to propose such revocation.
157. Articles of incorporation constitutes the charter or fundamental law of the
corporation. The filing of articles of incorporation is a condition precedent to corporate
existence, while the filing of by-laws is a condition subsequent.
158. The president shall preside at all meetings of directors or trustees and of the
stockholders or members, even where the chairman of the board is present, unless
otherwise provided in the by-laws.
159. The directors or trustees are not a corporate body; they are, when acting as a board,
agents of the corporation.
160. In the absence of provision in the by-laws, the meeting may be called by a director
or trustee or by an officer entrusted with the management of the corporation.
170. A stockholder may make the call on order of the SEC whenever for any cause, there
is no person authorized to call a meeting.
171. The special meeting for the removal of directors may be called by the secretary of
the corporation or by a stockholder.
172. Whether regular or special, notice must be given when required by the law or by the
by-laws of the corporation.
173. Written notice of even regular meetings must be sent to stockholders or members at
least 2 weeks before the meeting pr at least 1 week for special meetings. However, notice
of any meetings may be waived expressly or impliedly, by a stockholder or member. In
meetings ordered by the SEC, It is evident that notice is necessary.
174. Any business transacted at any meeting of stockholders shall be valid even if the
meeting be improperly held or called provided that acts are not ultra vires and that all the
stockholders are present or represented at the meeting
175. Unless otherwise provided in the by-laws or in the code, a quorum shall consist of
the stockholders representing a majority of the outstanding capital stock or a majority of
the members in the case of nonstock corporation. A majority vote, in the absence of
express provision in the by-laws and unless the vote of a greater number is required by
law, is sufficient to decide any question properly presented.
176. To amend the articlesmajority vote of BOD and vote or written assent of 2/3
177. To elect directorsmajority
178. To remove directors2/3 of the outstanding stock or of members entitled to vote
179. To ratify a contract of director or officer2/3
180. To extend or shorten corporate termmajority of BOD and 2/3
181. To increase or decrease the capital stockmajority of BOD and 2/3
182. To incur, create, or increase bonded indebtednessa majority of BOD and 2/3
183. To sell, lease, exchange, mortgage or otherwise dispose all or substantially all of the
corporate assetsmajority of BOD and 2/3
184. To invest corporate funds in another corporation or business or for any purpose other
than the primary purposemajority vote of BOD and 2/3
185. To issue stock dividendsmajority of the quorum of BOD and 2/3. The approval of
stockholders is not required with respect to other dividends such as cash and bond
dividends.
186. To enter into management contractmajority of the quorum of BOD and a majority
of the outstanding capital stock of both managing and managed corporations and in some

cases, 2/3 of the total outstanding capital stock entitled to vote or of the members, with
respect to the managed corporation.
187. To adopt by-lawsa majority of the outstanding capital stock or of the members.
188. To fix the issued price of no par value sharesa majority of the quorum of BOD if
authorized by the articles of incorporation or in the absence of such authority, by a
majority of the outstanding capital stock.
189. To effect or amend a plan of merger or consolidationa majority of vote of BOD
and 2/3 of the outstanding capital stock or of the members of the constituent corporation
190. To dissolve the corporationa majority vote of BOD and 2/3 of the outstanding
capital stock or of the members
191. To adopt a plan of distribution of assets of a nonstock corporationa majority vote
of trustees and 2/3 of the members having voting rights.
192. A corporation may prescribe a greater voting requirement for the approval of any of
the above corporate acts in its articles of incorporation and/or by-laws in order to protect
the rights of minority stockholders
193. Notice of a regular meeting need not be given if the articles of incorporation or bylaws specify the time of the meeting (except when it is to be held at another place). A
director trustee may waive the requirement of notice of any meeting, expressly or
impliedly
194. If the presiding officer is not present at the time for a meeting to convene, a
stockholder who takes the floor may temporarily preside at the meeting of stockholders
pending the selection of the presiding officer. Unless the contrary is provided by the bylaws, the presiding officer may be selected by the vote of the stockholders present.
195. One cannot vote if he does not appear to be a stockholder in the books of the
corporation
196. Each member, regardless of class, shall be entitled to one vote
197. Pledgees or mortgagees of shares in stock corporation have the right to attend and
vote at meetings of stockholders only when expressly given such right in writing by the
pledgor or the mortgagor as the latter remains the owner of the stock pledged or
mortgaged. The authorization is required by the code to be recorded on the appropriate
corporate books by such pledgor or mortgagor.
198. A proxy may refer to a person or a formal written authority
199. The right to vote by proxy is a special form of agency. No proxy shall be valid and
effective for a period longer than 5 years.
200. Directors cannot attend or vote by proxy at board meetings
201. Proxies are irrevocable at any time unless made irrevocable by the giver. It becomes
irrevocable when the holder of proxy has given or promised a stockholder a consideration
or interest (loan of money in return for irrevocable proxy.
202. In voting trust agreement(must be in writing, notarized and filed with SEC), a
stockholder of a corporation parts with the voting power only but retains the beneficial
ownership of stock. A voting trustee is only a share owner vested with legal title for the
sole purpose of voting upon stock that he does not own. New certificate is issued to the
trustee.
203. Trustee is the legal title holder or owner of the shares so transferred under the
agreement. Hence, he is qualified to be a director.
204. The ultimate control of the corporation depends upon the votes of the stockholders

205. Voting trust agreement, if validly executed is irrevocable while a proxy must be
coupled with interest before it becomes irrevocable.
206*. The stockholders have the power to fill vacancy in the BOD if the cause is any of
the ff: (1) removal (2) Expiration of term (3) Increase in the number of directors
207*. BOD can fill the vacancy if the cause of vacancy is other than removal, expiration
of term or increase in the number of director and the remaining directors still constitute a
quorum
208*. Directors are entitled to compensation if the giving of compensation is fixed in the
by-laws, approved by the stockholders representing at least a majority of the outstanding
capital stock or when the compensation refers to reasonable per diem
209. A contract of the corporation with one or more its directors or trustees is voidable
unless all the ff conditions are present: (1) that the presence of such director is not
necessary to constitute a quorum (2) that the vote of such director was not necessary for
the approval of the contract (3) that the contract is fair and reasonable under the
circumstances.. When any of the first two conditions is absent, such contract may be
ratified by the vote of 2/3. Full disclosure of the adverse interest of the director involved
must be made at such meeting.
210. There is interlocking directorate when a director holds seats in the board of directors
of 2 or more corporations. There is no prohibition in the corporation code regarding this.
However, law provides for requisites when 2 corporations with interlocking directors
contract with each other. The requisites are (if the interest of the director is substantial,
20percent and nominal in the other): (1) there is no fraud (2) the contract is fair and
reasonable (3) the presence is not required for a quorum and approval, vote. If the interest
is both nominal or substantial, requirement (3) is no longer required.
211. The doctrine of corporate opportunity prohibits directors from acquiring business
opportunities for his personal gain at the expense of the corporation (breaches his
fiduciary duty). He must first disclose to the corporation the opportunity and if the latter
refuses to take it, he can take it. If breached, he must account to the corporation the
profits by refunding the same.
212. Executive committee is composed of not less than 3 directors and whose creation is
provided in the by-laws. It acts on routine matters or on those which do not require board
meeting because it is difficult to convene due to quorum requirement. Thus small number
is appointed among them. It cannot repeal or adopt by-laws and cannot fill vacancies in
the board.
213. A donation must be for a public welfare and not for political purpose
214. Specific express powers are to shorten or extend corporate life, increase or decrease
capital stock, power to incur create or increase bonded indebtedness and power to deny
preemptive right.
215. All stockholders must give their consent for the ratification of an ultra vires act.
216. A corporator in a stock corporation must be a stockholder. Honorary membership in
a business corporation is not allowed by law
217. Private corporation may be organized by private or by the state or both for private
ends, aims, benefits or purpose
218. In political law, public corporations are commonly referred as to municipal
corporation

219. Government created private corporation to augment its income. The corporation is
then subject to the rules of the law governing private corporation. Examples are: GSIS,
PNR, LRT, PNB, NAWASA, NAPOCOR
220. Quasi-public corporationare in reality organized as private corporation but
performs public functions. Examples: PLDT, MERALCO, PAL, WG and A
221. Pre-incorporation subscription shall be irrevocable within 6 months from
subscription

-jkyap
Source: De Leon and Judge Betonio