Professional Documents
Culture Documents
Q: What is partnership?
A: A contract whereby two or more persons bind
themselves to contribute money, property, or
industry to a common fund, with the intention of
dividing the profits among themselves.
CORPORATION LAW
Q: What is a corporation?
A: An artificial being created by operation of law
having the right of succession, and the powers,
attributes and properties expressly authorized by
law and incident to its existence. (Sec. 2)
Q: What are the attributes of a corporation?
A:
It is an artificial being
It is created by operation of law
It enjoys the right of succession
It has the powers, attributes and properties
expressly authorized by law or incident to its
existence
GSIS
SSS
MAYNILAD
SMC
ASIA BREWERY
NESTLE
TANDUAY DISTILLERS
WYETH SUACO
SUMIDEN
CITY GOVT OF CABUYAO
Q: What are the classifications of corporation?
A:
1. As to Corporation Code:
a. STOCK CORPORATION one which have
capital stock divided into shares and are
authorized to distribute to the holders of such
shares dividends or allotments or the surplus
profits on the basis of the shares held. ( Sec 3 )
b. NON STOCK CORPORATION is one which
do not issue shares and are created not for profit
but for public good and welfare and where no part
of its income is distributable as dividends to its
members, trustees, or officers. (Sec 87)
2. As to the number of persons who compose
them:
a. Corporation aggregate corporation consisting
of more than one member or corporator;
b. Corporation Sole religious corporation which
consists of one member or corporator only and his
successor.
3. As to whether they are for religious purpose or
not:
a. Ecclesiastical corporation one organized for
religious purpose
b. Lay corporation one organized for a purpose
other than for religion.
4. As to whether they are for charitable purpose or
not:
a. Eleemosynary one established for religious
purposes
b. Civil one established for business or profit
5. As to state or country under or by whose laws
they have been created:
a. Domestic one incorporated under the laws of
the Philippines
b. Foreign one formed, organized, or existing
under any laws other than those of the Philippines
and whose laws allow Filipino citizens and
corporations to do business in its own country or
state. (Sec 123)
6. As to their legal right to corporate existence:
a. De jure one existing both in fact and in law
b. De facto one existing in fact but not in law
7. As to whether they are open to the public or
not:
a. Close one which is limited to selected persons
or members of the family. (Sec 96 105)
b. Open one which is open to any person who
may which to become a stockholder or member
thereto
8. As to their relation to another corporation
a. Parent or Holding one which is related to
another corporation that it has the power either,
directly or indirectly to, elect the majority of the
director of such other corporation
b. Subsidiary one which is so related to another
corporation that the majority of its directors can be
elected either, directly or indirectly, by such other
corporation
9. As to whether they are corporations in a true
sense or only in a limited sense:
a. True one which exists by statutory authority
b. Quasi one which exist without formal legislative
grant.
o i. Corporation by prescription one which has
exercised corporate powers for an indefinite
period without interference on the part of the
sovereign power and which by fiction of law, is
given the status of a corporation;
o ii. Corporation by estoppel one which in reality is
not a corporation, either de jure or de facto,
because it is so defectively formed, but is
considered a corporations in relation to those only
who, by reason of theirs acts or admissions, are
precluded from asserting that it is not a
corporation.
10. As to whether they are for public (government)
or private purpose:
a. Public one formed or organized for the
government or a portion of the State
b. one formed for some provate purpose, benefit
or end
Corporations Created by Special Laws /
Charters
Steps in Incorporation
Verification with SEC of the name to be used. No
corporate name shall be allowed if the proposed
name is:
o Identical or deceptively similar to any existing
corporation or any other name protected by law
o Patently deceptive, confusing or contrary to
existing laws.
Drafting and execution of articles of incorporation
signed by the incorporators.
Q: Briefly discuss the doctrine of corporate
opportunity (2005)
A: It is where a director, by virtue of his office,
acquires for himself a business opportunity
which should belong to the corporation,
thereby obtaining profits to the prejudice of
such corporation In such a case, a director
shall refund to the corporation all the profits
he realizes on a business opportunity which:
1. The corporation is financially able to
undertake; 2. From its nature, is in line with
corporations business and is of practical
advantage to it; and 3. The corporation has an
interest or a reasonable expectancy, unless
the act has been ratified by a vote of the
stockholders owning or representing at least
two-thirds of the outstanding capital stock.
This shall apply notwithstanding the fact that
the director risked his own funds in the
venture (Sec 34, CCP).
Q: What are bylaws?
A: Rules and regulations or private laws enacted
by the corporation to regulate, govern and control
its own actions, affairs and concerns and of its
stockholders or members and directors and
officers in relation thereto and among themselves
in their relation to it.
Q: What are the requisites for the validity of
bylaws?
A:
Must be consistent with the Corporation Code,
other pertinent laws and regulations
Must not be contrary to morals and public policy
Must not impair obligations and contracts or
property rights of stockholders
Must be consistent with the charter or articles of
incorporation
Must be reasonable
Must be of general application and not directed
against a particular individual
Q: What are the contents of bylaws?
A:
Time, place and manner of calling and conducting
regular or special meetings of directors or trustees
Time and manner of calling and conducting
regular or special meetings of the stockholder or
members
The required quorum in meeting of stockholders
or members and the manner of voting therein
The form for proxies of stockholders and members
and the manner of voting them
The qualification, duties and compensation of
directors or trustees, officers and employees
Time for holding the annual election of directors or
trustees and the mode or manner of giving notice
thereof
Manner of election or appointment and the term of
office of all officers other than directors or trustees
Penalties for violation of the bylaws
In case of stock corporations, the manner of
issuing certificates
Such other matters as may be necessary for the
proper or convenient transaction of its corporate
business and affairs. (Sec. 47)
Q: What are the kinds of powers of
corporation?
A:
Express powers Granted by law, Corporation
Code, and its Articles of Incorporation or Charter,
and administrative regulations
Inherent/incidental powers Not expressly stated
but are deemed to be within the capacity of
corporate entities.
Implied/necessary powers Exists as a necessary
consequence of the exercise of the express
powers of the corporation or the pursuit of its
purposes as provided for in the Charter
Q: What are the general powers of a
corporation?
A: SuSuCoABSPMEDPO
To SUe and be sued
Of SUccession
To adopt and use of Corporate seal
To amend its Articles of Incorporation
To adopt its Bylaws
For Stock corporations: issue and sell stocks
to subscribers and treasury stocks; for
nonstock corporations: admit members
To Purchase, receive, take or grant, hold,
convey, sell, lease, pledge, mortgage and deal
with real and personal property, securities and
bonds;
8. To Enter into merger or consolidation
9. To Make reasonable Donations for public
welfare, hospital, charitable, cultural,
scientific, civic or similar purposes, provided
that no donation is given to any
a. Political party,
b. Candidate and
c. Partisan political activity.
10. To establish Pension, retirement, and other
plans for the benefit of its directors, trustees,
officers and employees basis of which is the
labor code
11. To exercise Other powers essential or
necessary to carry out its purposes.
Q: What are the specific powers of a
corporation?
A:
Power to extend or shorten corporate term. (Sec.
37)
Increase or decrease corporate stock. (Sec. 38)
Incur, create, or increase bonded indebtedness.
(Sec. 38)
Deny preemptive right. (Sec. 39)
Sell, dispose, lease, encumber all or substantially
all of corporate assets. (Sec. 40)
Purchase or acquire shares. (Sec. 41)
Invest corporate funds in another corporation or
business for other purpose other than primary
purpose .(Sec. 42)
Declare dividends out of unrestricted retained
earnings. (Sec. 43
Enter into management contract with another
corporation (not with an individual or a partnership
within general powers) whereby one corporation
undertakes to manage all or substantially all of the
business of the other corporation for a period not
longer than five (5) years for any one term. (Sec.
44)
Amend Articles of Incorporation. (Sec. 16)
Q: What are the procedural requirements in
extending/shortening corporate term?
A:
Majority vote of the BOD or BOT;
Ratification by 2/3 of the SH representing
outstanding capital stock or by at least 2/3 of the
members in case of nonstock corporation;
Written notice of the proposed action and of the
time and place of the meeting shall be addressed
to each stockholder or member at his place of
residence as shown on the books of the
corporation and deposited to the addressee in the
post office with postage prepaid, or served
personally;
Copy of the amended AOI shall be submitted to
the SEC for its approval; and
In case of special corporation, a favorable
recommendation of appropriate government
agency. (Sec. 37)
Q: What are the procedural requirements in
increasing or decreasing capital stock?
A:
o Majority vote of the BOD;
o Ratification by stockholders representing 2/3 of
the outstanding capital stock;
o Written notice of the proposed increase or
diminution of the capital stock and of the time and
place of the stockholders meeting at which the
proposed increase or diminution of the capital
stock must be addressed to each stockholder at
his place of residence as shown on the books of
the corporation and deposited to the addressee in
the post office with postage prepaid, or served
personally
4. A certificate in duplicate must be signed by a
majority vote of the directors of the corporation
and countersigned by the chairman and the
secretary of the stockholders meeting, setting
forth:
a. That the foregoing requirements have been
complied with;
b. The amount of increase or diminution of the
capital stock;
c. If an increase of the capital stock, the amount of
capital stock or number of shares of no par stock
actually subscribed, the names, nationalities and
residences of the persons subscribing, the amount
of capital stock or number of no par stock
subscribed by each, and the amount paid by each
on his subscription in cash or property, or the
amount of capital stock or number of shares of no
par stock allotted to each stockholder if such
increase is for the purpose of making effective
stock dividend authorized;
d. The amount of stock represented at the
meeting; and
e. The vote authorizing the increase or diminution
of the capital stock
Q: What is preemptive right?
A: It is the preferential right of shareholders to
subscribe to all issues or disposition of shares
of any class in proportion to their present
shareholdings. (Sec. 39)
Q: What is the purpose of preemptive right?
A: To enable the shareholder to retain his
proportionate control in the corporation and to
retain his equity in the surplus.
POWER TO SLEMPO
Q: What are the procedural requirements?
A:
Majority vote of the BOD or BOT
Ratification by stockholders representing at least
2/3 of the outstanding capital stock or by at least
2/3 of the members in case of nonstock
corporation
Written notice of the proposed action and of the
time and place of the meeting addressed to each
stockholder or member at his place of residence
as shown on the books of the corporation and
deposited to the addressee in the post office with
postage prepaid, or served personally. (Sec. 40)
POWER TO ACQUIRE OWN SHAREXS
Q: Can a corporation acquire its own shares?
A:
GR: In the absence of statutory authority, the
corporation cannot acquire its own shares
XPN: SEC Opinion, Oct. 12, 1992, imposed the
following conditions on its exercise:
o The capital of the corporation must not be
impaired;
o Legitimate and proper corporate objective is
advanced;
o Condition of the corporate affairs warrants it;
o Transaction is designed and carried out in good
faith
o Interest of creditors not impaired, that is, not
violative of the trust fund doctrine.
INVEST IN BUSINESS OTHER THAN THE
PRIMARY PURPOSE
Q: What are the requirements?
A:
Approval by the majority vote of the BOD or BOT
Ratification by stockholders representing at least
2/3 of the outstanding capital stock or by at least
2/3 of the members in case of nonstock
corporation
Ratification must be made at a meeting duly called
for the purposes, and
Prior written notice of the proposed investment
and the time and place of the meeting shall be
made addressed to each stockholder or member
by mail or by personal service.
Q: What are the requirements?
A:
Existence of unrestricted retained earnings
Resolution of the board
In case of stock dividend, resolution of the board
with the concurrence of votes representing 2/3 of
outstanding capital.
ENTER IN A MANAGEMENT CONTRACT
Q: What are the requirements?
A:
1. Contract must be approved by the majority of
the BOD or BOT of both managing and managed
corporation;
2. Ratified by the stockholders owning at least the
majority of the outstanding capital stock, or
members in case of a nonstock corporation, of
both the managing and the managed corporation,
at a meeting duly called for the purpose
3. Contract must be approved by the stockholders
of the managed corporation owning at least 2/3 of
the outstanding capital stock entitled to vote, 2/3
members when:
a. Stockholders representing the same interest in
both of the managing and the managed
corporation own or control more than 1/3 of the
total outstanding capital stock entitled to vote of
the managing corporation;
b. Majority of the members of the BOD of the
managing corporation also constitute a majority of
the BOD of the managed corporation.
Q: What is the Doctrine of Individuality of
Subscription?
A: A subscription is one entire and indivisible
whole contract. It cannot be divided into
portions. (Sec. 64)
Q: What is the doctrine of equality of shares?
A: Where the articles of incorporation do not
provide for any distinction of the shares of
stock, all shares issued by the corporation are
presumed to be equal and enjoy the same
rights and privileges and are also subject to
the same liabilities. (Sec. 6)
Q: What is the trust fund doctrine?
A: The subscribed capital stock of the
corporation is a trust fund for the payment of
debts of the corporation which the creditors
have the right to look up to satisfy their
credits, and which the corporation may not
dissipate. The creditors may sue the
stockholders directly for the latters unpaid
subscription.
Q: How does one become a shareholder in a
corporation?
A: A person becomes a shareholder the
moment he:
Enters into a subscription contract with an existing
corporation (he is a stockholder upon acceptance
of the corporation of his offer to subscribe whether
the consideration is fully paid or not),
Purchase treasury shares from the corporation, or
Acquires shares from existing shareholders by
sale or any other contract.
Q: What are the rights of stockholders?
A:
1. Management Right
a. To attend and vote in person or by proxy at a
stockholders meetings. (Secs. 50, 58)
b. To elect and remove directors. (Secs. 24, 18)
c. To approve certain corporate acts. (Sec. 58)
d. To compel the calling of the meetings. (Sec. 50)
e. To have the corporation voluntarily dissolved.
(Sec. 118, 119)
f. To enter into a voting trust agreement. (Sec. 59)
g. To adopt/amend/repeal the bylaws or adopt
new bylaws. (Secs. 46, 48)
2. Proprietary rights
a. To transfer stock in the corporate book. (Sec.
63)
b. To receive dividends when declared .(Sec. 43)
c. To the issuance of certificate of stock or other
evidence of stock ownership. (Sec. 63)
d. To participate in the distribution of corporate
assets upon dissolution. (Sec. 118, 119)
e. To preemption in the issue of shares. (Sec. 39)
3. Remedial rights
a. To inspect corporate books. (Sec. 74)
b. To recover stock unlawfully sold for
delinquency. (Sec. 69)
c. To demand payment in the exercise of
appraisal right. (Secs. 41, 81)
d. To be furnished recent financial statements or
reports of the corporations operation (Sec. 75);
e. To bring suits (derivative suit, individual suit,
and representative suit).
Q: Who is entitled to receive dividends?
A:
GR: Those stockholders at the time of
declaration. Dividends belong to the person
who owns the stock when the dividend is
declared.
XPN:
In case a record date is provided for. A record
date is the future date specified in the resolution
declaring dividend that the dividend shall be
payable to those who are stockholders of record
on such specified future date or as of the date of
the meeting declaring such dividends.
Unpaid Subscribers. Section 72 provides that
holders of shares not fully paid which are not
delinquent shall have all the rights of a stock holde
Q: What is Preemptive right?
A: It is the preferential right of shareholders to
subscribe to all issues or disposition of shares
of any class in proportion to their present
shareholdings. (Sec. 39)
Q: What are the obligations of stockholders?
A: The stockholders have the following
obligations:
Obligation to pay the corporation for the unpaid
subscription including interest therein;
Obligation to pay the creditors of the corporation
to the extent of their subscription if the corporate
assets are not sufficient
MEETINGS
REGULAR MEETING
Annually on date fixed in the bylaws; or
2. If there is no date in the bylaws any date in
April as determined by the board.
Venue: In the city or municipality where the
principal office is located
NOTICE
Within the period provided in the bylaws
In the absence of provision in the bylaws 2
weeks prior to the meeting.
SPECIAL MEETING
Any time deemed necessary; or
As provided in the bylaws
Venue: Principal office
NOTICE
Within the period provided in the bylaws
If no provision in the bylaws 1 week prior to the
meeting
(1) Merger (A + B = A)
(2) Consolidation (A + B = C)
Exchange of stocks
In this method, all or substantially all the
stockholders of the "acquired" corporation are
made stockholders of the acquiring corporation.
With the exchange, the acquired corporation
becomes a subsidiary of the acquiring
corporation. Although this method does not
combine the 2 businesses under a single
corporation as in merger and sale of assets, from
the point of view of the acquiring (parent)
corporation, there is hardly any difference
between owing the acquired corporation's
business directly and operating it through a
controlled subsidiary. In fact, the parent
corporation would have the power to buy all the
subsidiary's assets and dissolve it, achieving the
same result as in the other methods of
combination. (Campos & Campos)
2016
BPI Direct Savings Bank Inc. has merged
with BPI Globe BanKO Inc., A Savings Bank to
form BPI Direct BanKO Inc., A Savings Bank.
Effective date of merger was December 29, 2016.