LAW ON PARTNERSHIP
CORPORATION is 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.
 CORPORATE POWERS
1) EXPRESS POWERS — those expressly authorized by the Corporation
Code and other laws, and its Articles of Incorporation
a) GENERAL POWERS (Theory of General Capacity):
i) To sue and be sued in its corporate name;
ii) To have perpetual existence unless the certificate of incorporation
provides otherwise;
iii) To adopt and use a corporate seal;
iv) To amend its Articles of Incorporation (AOI) in accordance with
the provisions of the RCC;
v) To adopt bylaws, not contrary to law, morals or public policy, and
NOTE: Payment or reduction of bonded indebtedness does not
require approval of stockholders/members.
NOTE: Any increase or decrease in the capital stock or the incurring,
creating or increasing of any bonded indebtedness shall require prior
approval of the SEC, and where appropriate, of the Philippine
Competition Commission.
iv) To Deny Pre-emptive Right
(1) Pre-emptive Right — power to subscribe to all issues or
disposition of shares of any class, in proportion to their
respective shareholdings (including unissued shares and
shares held in the treasury).
(2) Denial of the Power — must be provided in the AOI. The
power to deny
(3) Cases when Pre-emptive Right is NOT APPLICABLE — shall
not extend to:
(a) shares issued in compliance with laws requiring stock
offerings or minimum stock ownership by the public; or
(b) shares issued in good faith with the approval of the
stockholders representing 2/3 of the outstanding
capital stock, in exchange for property needed for
corporate purposes or in payment of a previously
contracted debt.
to amend or repeal the same in accordance with the RCC;
vi) In case of stock corporations, to issue or sell stocks to subscribers
and to sell treasury stocks in accordance with the provisions of
the RCC; and to admit members to the corporation if it be a
nonstock corporation;
vii) To purchase, receive, take or grant, hold, convey, sell, lease,
pledge, mortgage, and otherwise deal with such real and
personal property, including securities and bonds of other
corporations, as the transaction of the lawful business of the
corporation may reasonably and necessarily require, subject to
the limitations prescribed by law and the Constitution;
viii) To enter into a partnership, joint venture, merger,
consolidation, or any other commercial agreement with natural
and juridical persons; NOTE: Under the old Corporation Code (BP
68), generally, a corporation has no power to enter into
partnership. It can only form joint venture where the nature of
the venture is in line with the business authorized by its charter.
ix) To make reasonable donations, including those for the public
welfare or for hospital, charitable, cultural, scientific, civic, or
similar purposes: Provided, that no foreign corporation shall give
donations in aid of any political party or candidate or for purposes
of partisan political activity; NOTE: Domestic corporations are
now allowed to make donations to political party.
x) To establish pension, retirement, and other plans for the benefit
of its directors, trustees, officers, and employees; and
xi) To exercise such other powers as may be essential or necessary
to carry out its purpose or purposes as stated in the AOI.
b) SPECIFIC POWERS (Theory of Specific Capacity):
i) To Extend or Shorten Corporate Term
 (if corporation’s term is not perpetual)
 approved by majority vote of BOD/BOT, and ratified by 2/3 of the
outstanding capital stock or of members.
ii) To Increase or Decrease Capital Stock
 approved by majority vote of BOD, and ratified by 2/3 of the
outstanding capital stock.
 The SEC shall not accept the Certificate to Increase or Decrease
Capital Stock unless accompanied by sworn statement of the
treasurer showing at least 25% of the increase in capital stock has
been subscribed and that at least 25% of the amount subscribed has
been paid.
NOTE: No decrease in capital stock shall be approved by the SEC if it
is prejudicial to the rights of corporate creditors.
iii) To Incur, Create or Increase Bonded Indebtedness
 approved by majority vote of BOD/BOT, and approved by 2/3 of
the outstanding capital stock or of members.
v) To Sell, or dispose, lease, encumber all or substantially all of
corporate Assets
(1) approved by majority vote of BOD/BOT, and authorized by
2/3 of the outstanding capital stock or of members.
NOTE: After authorization, the BOD/BOT, in its discretion, may
abandon such sale or other disposition subject to the rights of
third parties under any contract relating thereto, without further
action from the stockholders or members.
(2) Substantial Disposition — a sale or other disposition shall
be deemed to cover substantially all the corporate property
and assets if thereby the corporation would be rendered
incapable of continuing the business or accomplishing the
purpose for which it was incorporated.
(3) Nonstock corporations where members have no voting
rights — the vote of at least a majority of the BOT is
sufficient authorization.
NOTE: the sale or disposition is subject to RA 10667 or the
Philippine Competition Act.
NOTE: Dissenting stockholders may exercise their right of
appraisal
vi) To Acquire Own Shares
(1) Requirement - must have unrestricted retained earnings
(2) Purpose of reacquisition of own shares:
a) To eliminate fractional shares arising from stock dividend;
b) To purchase delinquent shares;
c) To pay dissenting or withdrawing stockholders
(3) Redeemable shares - may be purchased by the corporation
from the holders upon the expiration of a fixed period,
regardless of the existence of unrestricted retained
earnings.