And Paid For The Purposes of Incorporation: Section 2. Corporation Defined
And Paid For The Purposes of Incorporation: Section 2. Corporation Defined
And Paid For The Purposes of Incorporation: Section 2. Corporation Defined
Section 2. Corporation defined Provided, however, That banks, trust companies, insurance
A corporation is an artificial being created by operation of law, companies, public utilities, and building and loan associations
having the right of succession and the powers, attributes and shall not be permitted to issue no-par value shares of stock.
properties expressly authorized by law or incident to its
existence. (2) Preferred shares of stock issued by any corporation may be
given preference in the distribution of the assets of the
Section 3. stock corporations corporation in case of liquidation and in the distribution of
Corporations which have capital stock divided into shares and dividends, or such other preferences as may be stated in the
are authorized to distribute to the holders of such shares articles of incorporation which are not violative of the
dividends or allotments of the surplus profits on the basis of the provisions of this Code: Provided, That preferred shares of stock
shares held are stock corporations. All other corporations are may be issued only with a stated par value. The board of
non-stock corporations. directors, where authorized in the articles of incorporation, may
fix the terms and conditions of preferred shares of stock or any
Section 87. non-stock corporation series thereof: Provided, That such terms and conditions shall
Non-stock corporation is one where no part of its income is be effective upon the filing of a certificate thereof with the
distributable as dividends to its members, trustees, or officers, Securities and Exchange Commission.
subject to the provisions of this Code on dissolution: Provided,
That any profit which a non-stock corporation may obtain as an Shares of capital stock issued without par value shall be deemed
incident to its operations shall, whenever necessary or proper, fully paid and non-assessable and the holder of such shares shall
be used for the furtherance of the purpose or purposes for not be liable to the corporation or to its creditors in respect
which the corporation was organized, subject to the provisions thereto: Provided; That shares without par value may not be
of this Title. issued for a consideration less than the value of five (P5.00)
pesos per share: Provided, further, That the entire
Section 6. Classification of shares. – The shares of stock of stock consideration received by the corporation for its no-par value
corporations may be divided into classes or series of shares, or shares shall be treated as capital and shall not be available for
both, any of which classes or series of shares may have such distribution as dividends.
rights, privileges or restrictions as may be stated in the articles A corporation may, furthermore, classify its shares for the
of incorporation: Provided, That no share may be deprived of purpose of insuring compliance with constitutional or legal
voting rights except those classified and issued as "preferred" or requirements.
"redeemable" shares, unless otherwise provided in this Code: Except as otherwise provided in the articles of incorporation
Provided, further, That there shall always be a class or series of and stated in the certificate of stock, each share shall be equal in
shares which have complete voting rights. Any or all of the all respects to every other share.
shares or series of shares may have a par value or have no par Where the articles of incorporation provide for non-voting
value as may be provided for in the articles of incorporation: shares in the cases allowed by this Code, the holders of such
shares shall nevertheless be entitled to vote on the following assets and property unless the stringent requirements therefor
matters: are complied with.
1. Amendment of the articles of incorporation;
POWERS OF CORPORATIONS
2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other
Sec. 36. Corporate powers and capacity.
disposition of all or substantially all of the corporate
Sec. 37. Power to extend or shorten corporate term.
property;
(Appraisal Right, in case of extension; 2/3(
4. Incurring, creating or increasing bonded indebtedness;
Sec. 38. Power to increase or decrease capital stock;
5. Increase or decrease of capital stock;
incur, create or increase bonded indebtedness. (2/3
6. Merger or consolidation of the corporation with another
vote)
corporation or other corporations;
Sec. 39. Power to deny pre-emptive right. (2/3 vote)
7. Investment of corporate funds in another corporation or
Sec. 40. Sale or other disposition of assets. (Appraisal right;
business in accordance with this Code; and
2/3 vote)
8. Dissolution of the corporation.
Sec. 41. Power to acquire own shares.
Sec. 42. Power to invest corporate funds in another
Except as provided in the immediately preceding paragraph, the
corporation or business or for any
vote necessary to approve a particular corporate act as provided
other purpose. (Appraisal Right;(2/3 vote)
in this Code shall be deemed to refer only to stocks with voting
Sec. 43. Power to declare dividends. (In case of stock
rights. (5a)
dividends, 2/3 vote)
Sec. 44. Power to enter into management contract.
Section 12. Minimum capital stock required of stock
corporations. – Stock corporations incorporated under this Code (majority, 2/3 vote)
shall not be required to have any minimum authorized capital
EXPRESS - Section 36, Section 45
stock except as otherwise specifically provided for by special
POWER TO SUE
law, and subject to the provisions of the following section.
• directors if not derivative suit
Section 13. Amount of capital stock to be subscribed and paid for • failure to attach Secretary’s
the purposes of incorporation. – At least twenty-five percent Certificate of Board Resolution
(25%) of the authorized capital stock as stated in the articles of authorizing the filing of Petition
incorporation must be subscribed at the time of incorporation, is fatal
POWER TO SELL, LEASE, DISPOSE or ENCUMBER - Section
and at least twenty-five (25%) per cent of the total subscription
23, Section 36
must be paid upon subscription, the balance to be payable on a
POWER OF SUCCESSION
date or dates fixed in the contract of subscription without need
of call, or in the absence of a fixed date or dates, upon call for POWER TO EXTEND CORPORATE TERM
payment by the board of directors: Provided, however, That in POWER TO INCREASE DECREASE CAPITAL STOCK
no case shall the paid-up capital be less than five Thousand (Section 38) APPRAISAL RIGHT
POWER TO INCUR, CREATE OR INCREASE BONDED
(P5,000.00) pesos. (n)
INDEBTEDNESS (Section 38)
The Trust Fund Doctrine, first enunciated by this Court in the IMPLIED - flow from the nature of the underlying
1923 case of Philippine Trust Co. vs. Rivera, provides that business enterprise; discretionary authority to
subscriptions to the capital stock of a corporation constitute a enter into contracts necessary for business.
fund to which the creditors have a right to look for the
satisfaction of their claims. i.e., non-realty corporation has the implied
This doctrine is the underlying principle in the procedure for the power to lease out idle property’ invest money
distribution of capital assets, embodied in the Corporation Code, at the best possible returns
which allows the distribution of corporate capital only in three
POWER TO BORROW MONEY except Section
instances:
38
(1) amendment of the Articles of Incorporation to reduce
the authorized capital stock, INCIDENTAL - flow from the nature of the
(2) purchase of redeemable shares by the corporation, corporation as a juridical person
regardless of the existence of unrestricted retained
earnings, and Sec. 36. Corporate powers and capacity. - Every
(3) dissolution and eventual liquidation of the corporation incorporated under this Code has the
corporation. power and capacity:
Furthermore, the doctrine is articulated in Section 41 on the 1. To sue and be sued in its corporate name;
power of a corporation to acquire its own shares and in Section
122 on the prohibition against the distribution of corporate
2.Of succession by its corporate name for the period of the corporate property and assets as provided in
of time stated in the articles of incorporation and the the Code; and
certificate of incorporation;
3. In case of merger or consolidation
3. To adopt and use a corporate seal;
Section 1. Derivative action. — A stockholder or member may
4. To amend its articles of incorporation in bring an action in the name of a corporation or association, as
accordance with the provisions of this Code; the case may be, provided, that:
5. To adopt by-laws, not contrary to law, morals, or (1) He was a stockholder or member at the time the acts or
public policy, and to amend or repeal the same in transactions subject of the action occurred and the time
accordance with this Code; the action was filed;
6. In case of stock corporations, to issue or sell stocks (2) He exerted all reasonable efforts, and alleges the same with
to subscribers and to sell stocks to subscribers and to particularity in the complaint, to exhaust all remedies
sell treasury stocks in accordance with the provisions available under the articles of incorporation, by-laws, laws
of this Code; and to admit members to the or rules governing the corporation or partnership to
corporation if it be a non-stock corporation; obtain the relief he desires;
7. To purchase, receive, take or grant, hold, convey, (3) No appraisal rights are available for the acts or acts
sell, lease, pledge, mortgage and otherwise deal with complained of; and
such real and personal property, including securities
and bonds of other corporations, as the transaction of (4) The suit is not a nuisance or harassment suit.
the lawful business of the corporation may
reasonably and necessarily require, subject to the In case of nuisance of harassment suit, the court shall forthwith
limitations prescribed by law and the Constitution; dismiss the case.
8. To enter into merger or consolidation with other An individual stockholder is permitted to institute a derivative
corporations as provided in this Code; suit on behalf of the corporation wherein he holds stocks in
order to protect or vindicate corporate rights, whenever the
9. To make reasonable donations, including those for officials of the corporation refuse to sue, or are the ones to be
the public welfare or for hospital, charitable, cultural, sued, or hold the control of the corporation.
scientific, civic, or similar purposes: Provided, That
no corporation, domestic or foreign, shall give In such actions, the suing stockholder is regarded as a nominal
donations in aid of any political party or candidate or party, with the corporation as the real party in interest.
for purposes of partisan political activity;
A derivative action is a suit by a shareholder to enforce a
10. To establish pension, retirement, and other plans corporate cause of action.
for the benefit of its directors, trustees, officers and
employees; and The corporation is a necessary party to the suit. And the relief
which is granted is a judgment against a third person in favor of
11. To exercise such other powers as may be essential the corporation.
or necessary to carry out its purpose or purposes as
stated in the articles of incorporation. Cram down
Section 64.Creditor Approval of Rehabilitation Plan. – The
APPRAISAL RIGHT Section 81. Instances of appraisal right. – rehabilitation receiver shall notify the creditors and
Any stockholder of a corporation shall have the right to dissent stakeholders that the Plan is ready for their examination. Within
and demand payment of the fair value of his shares in the twenty (2Q) days from the said notification, the rehabilitation
following instances: receiver shall convene the creditors, either as a whole or per
class, for purposes of voting on the approval of the Plan. The
1. In case any amendment to the articles of Plan shall be deemed rejected unless approved by all classes of
incorporation has the effect of changing or creditors w hose rights are adversely modified or affected by the
restricting the rights of any stockholder or class of Plan. For purposes of this section, the Plan is deemed to have
shares, or of authorizing preferences in any been approved by a class of creditors if members of the said
respect superior to those of outstanding shares of class holding more than fifty percent (50%) of the total claims
any class, or of extending or shortening the term of of the said class vote in favor of the Plan. The votes of the
corporate existence; creditors shall be based solely on the amount of their respective
claims based on the registry of claims submitted by the
2. In case of sale, lease, exchange, transfer, mortgage, rehabilitation receiver pursuant to Section 44 hereof.
pledge or other disposition of all or substantially all
Notwithstanding the rejection of the Rehabilitation Plan, the (d) The grounds upon which the petition is based;
court may confirm the Rehabilitation Plan if all of the following
circumstances are present: (e) Other information that may be required under
this Act depending on the form of relief requested;
(a)The Rehabilitation Plan complies with the
requirements specified in this Act. (f) Schedule of the debtor's debts and liabilities
including a list of creditors with their addresses,
(b) The rehabilitation receiver recommends the amounts of claims and collaterals, or securities, if
confirmation of the Rehabilitation Plan; any;
(c) The shareholders, owners or partners of the (g) An inventory of all its assets including receivables
juridical debtor lose at least their controlling interest and claims against third parties;
as a result of the Rehabilitation Plan; and
(h) A Rehabilitation Plan;
(d) The Rehabilitation Plan would likely provide the objecting
class of creditors with compensation which has a net present (i) The names of at least three (3) nominees to the
value greater than that which they would have received if the position of rehabilitation receiver; and
debtor were under liquidation.
(c) The specific relief sought pursuant to this Act; Section 76. Petition by Debtor. - An insolvent debtor, by itself or
jointly with any of its creditors, may file a verified petition with
the court for the approval of a pre-negotiated Rehabilitation (c) It must be approved by creditors representing at
Plan which has been endorsed or approved by creditors holding least seventy-five percent (75%) of the unsecured
at least two-thirds (2/3) of the total liabilities of the debtor, obligations of the debtor; and
including secured creditors holding more than fifty percent
(50%) of the total secured claims of the debtor and unsecured (d) It must be approved by creditors holding at least
creditors holding more than fifty percent (50%) of the total eighty-five percent (85%) of the total liabilities,
unsecured claims of the debtor. The petition shall include as a secured and unsecured, of the debtor.
minimum:
Insolvent
(a) a schedule of the debtor's debts and liabilities;
Rehabilitation
(b) an inventory of the debtor's assets;
Liquidation
(c) the pre-negotiated Rehabilitation Plan, including
the names of at least three (3) qualified nominees for PATENT (Sec. 21)
rehabilitation receiver; and Any technical solution of a problem in any field of human
activity which is new, involves an inventive step and is
(d) a summary of disputed claims against the debtor industrially applicable shall be patentable. It may be, or
and a report on the provisioning of funds to account may relate to, a product, or process, or an improvement of
for appropriate payments should any such claims be any of the foregoing.
ruled valid or their amounts adjusted.
COPYRIGHT (Sec. 171.1)
A right over literary and artistic works which are original
Section 84. Minimum Requirements of Out-of-Court or Informal
intellectual creations in the literary and artistic domain
Restructuring Agreements and Rehabilitation Plans.- For an out-
protected from the moment of creation.
of-court or informal restructuring/workout agreement or
Rehabilitation Plan to qualify under this chapter, it must meet TRADEMARK (Sec. 121.1)
the following minimum requirements: Any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise
(a) The debtor must agree to the out-of-court or and shall include a stamped or marked container of
informal restructuring/workout agreement or goods.
Rehabilitation Plan;