TITLE IV:

Powers of
Corporations
SECTION 35-44
Sec 35: Corporate Powers and Capacity

Powers of a corporation refers to the right or capacity of a corporation to perform all acts or things, except those
forbidden by law
Every corporation incorporated under this Code has the power and capacity:
(a) To sue and be sued in its corporate name;

(b) To have perpetual existence unless the certificate of incorporation provides otherwise;

(c) To adopt and use a corporate seal;

(d) To amend its articles of incorporation in accordance with the provisions of this Code;

(e) To adopt bylaws, not contrary to law, morals or public policy, and to amend or repeal the same in accordance with this Code;
(f) In case of stock corporations, to issue or sell stocks to subscribers and to sell treasury stocks in
accordance with the provisions of this Code; and to admit members to the corporation if it be a nonstock
corporation;
(g) 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;
(h) To enter into a partnership, joint venture, merger, consolidation, or any other commercial agreement
with natural and juridical persons;
(i) 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;
(j) To establish pension, retirement, and other plans for the benefit of its directors, trustees, officers, and
employees; and
(k) To exercise such other powers as may be essential or necessary to carry out its purpose or purposes as
stated in the articles of incorporation.
 Classification of Corporate Powers
1. Those expressly granted or authorized by law
2. Those that are necessary to the exercise of the express or incidental powers
3. Those incidental to its existence

Express Powers
• The powers expressly conferred upon the corporation by law

Implied Powers
• The powers which are reasonably necessary to exercise the express powers and to accomplish or
carry out the purpose for which the corporation was formed.
 Incidental or Inherent Powers
• These are powers which a corporation can exercise by the mere fact of its being a corporation or
powers which are necessary to corporate existence and are, therefore, impliedly granted.

Power to Sue and be Sued

This power is an incident to corporate existence. Suits are to be brought by or against the corporation
in its own name.
1. Corporations de facto may sue or be sued
2. A corporation which has been dissolved after the expiration of the three (3) year winding-up period ceases to exist de
jure or de facto and, therefore, it cannot sue nor be sued
3. A corporation not duly registered in accordance with law has no legal capacity to sue as such
4. Neither can a foreign corporation which transacts business in the Philippines without the necessary license from the
SEC sue in the Philippine courts
5. An artificial person like a corporation cannot experience physical suffering, mental anguish, besmirched reputation,
wounded feelings, moral shock, social humiliation and similar injury
 Power to Adopt and Use a Corporate Seal
Seal – a device used to identify or replace the signature of an individual or organization an to
authenticate written matter purportedly emanating from such individual or organization
Certificate of stock issued by corporations are required to be sealed with the seal of the corporation.
The use of corporate seal in certificate of stock is deemed merely directory rather than mandatory
 Sec 36: Power to Extend or Shorten Corporate Term

The corporate term of a private corporation may be extended or shortened by an amendment of the
articles of incorporation approved by the majority vote of the board of directors or trustees.
It should be ratified at a meeting of the stockholders representing at least 2/3 of the outstanding
capital stock or by at least 2/3 of the members in case of a non-stock
Sec 37: Power to Increase or Decrease Capital Stock;
Incur, Create or Increase Bonded Indebtedness
•No corporation shall increase or decrease its capital stock or incur, create or
increase any bonded indebtedness unless approved by a majority vote of the
board of directors and by two-thirds (2/3) of the outstanding capital stock at a
stockholders’ meeting duly called for the purpose.
•Written notice of the time and place of the stockholders’ meeting and the purpose
for said meeting must be sent to the stockholders at their places of residence as
shown in the books of the corporation and served on the stockholders personally,
or through electronic means recognized in the corporation’s bylaws and/or the
Commission’s rules as a valid mode for service of notices.
•A certificate must be signed by a majority of the directors of the corporation and countersigned by
the chairperson and secretary of the stockholders’ meeting, setting forth:
◦ (a) That the requirements of this section have been complied with;
◦ (b) The amount of the increase or decrease of the capital stock;
◦ (c) In case of an increase of the capital stock, the amount of capital stock or number of shares of no-par
stock thereof actually subscribed, the names, nationalities and addresses 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 the
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 therefor
authorized;
◦ (d) Any bonded indebtedness to be incurred, created or increased;
◦ (e) The amount of stock represented at the meeting; and
◦ (f) The vote authorizing the increase or decrease of the capital stock, or the incurring, creating or increasing
of any bonded indebtedness.
•Any increase or decrease in the capital stock or the incurring, creating or increasing of any
bonded indebtedness shall require prior approval of the Commission, and where appropriate, of
the Philippine Competition Commission.
•The application with the Commission shall be made within six (6) months from the date of
approval of the board of directors and stockholders, which period may be extended for
justifiable reasons.
•Copies of the certificate shall be kept on file in the office of the corporation and filed with the
Commission and attached to the original articles of incorporation.
•Nonstock corporations may incur, create or increase bonded indebtedness when approved by a
majority of the board of trustees and of at least two-thirds (2/3) of the members in a meeting duly
called for the purpose.