POWER

 Corporate power means the power and authority of a Business Entity, under the
terms of its Governing Documentation and applicable law, to enter into, and
become bound by, the terms of any particular transaction.
CLASSIFICATIONS OF POWERS

 1. Those expressly granted or authorized by law.

 2. Those that are necessary to the exercise of the express or incidental powers.
 3. Incidental to its existence
SECTION 35

Every corporation incorporated Under this code has the power and capacity
1. To sue and be sued in its corporate name;

 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 be sue or be sued.
2. A corporation which has been dissolved after the expiration of the (3) three year winding – up period ceases
to exist de facto or de jure and therefore, it cannot be 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 foreign corporation which transacts business in the Philippines without 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, humiliation and similar injury.
2. To have perpetual existence unless the certificate of
incorporation provides otherwise;

 A corporation shall have unlimited life unless its articles of incorporation

provides for a specific period of existence, in which case, its life can only be
extended through an amendment of the articles of incorporation.
3. To adopt and use a corporate seal

 Seal – A device used to identify or replace the signature of an individual or organization

and to authenticate written matter purportedly emanating from such individual or
organization.
 The use of corporate seal in certificate of stock is
 deemed merely directory rather than mandatory.

Where do you put a company seal ?

 When company documents are signed the stamp
is affixed near the signatures on the document.
4. To amend its Articles of Incorporation in
accordance with the provisions of the RCC;

 The meeting of the stockholders must first take place and the issue of the
amendment must be assented to by stockholders representing at least 2/3 of the
outstanding capital stock. Thereafter, it must be approved by at least a majority of
the board of directors and duly certified by the Corporate Secretary.
5. To adopt by laws, not contrary to law, morals or
public policy, and to amend or repeal the
same in accordance with this Code;

 Requisites:
1. The affirmative vote of the stockholders representing at least a majority of the outstanding capital
stock,
2. or of at least a majority of the members in case of non-stock corporations

Amendment to by-laws. - The board of directors or trustees, by a majority vote thereof, and the
owners of at least a majority of the members of a non-stock corporation, at a regular or special
meeting duly called for the purpose, may amend or repeal any by-laws or adopt new by-laws.
6. 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;

 Treasury stocks (also known as treasury shares) are the portion of shares that a company keeps in its own
treasury.

What happens when a corporation buys treasury stock?

 When treasury stock is purchased, the number of shares issued remains unchanged, but the number of shares
outstanding decreases. When treasury stock is purchased, the Treasury Stock account is debited for the
number of shares purchased times the purchase price per share.
7. 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;

 Acting as guarantor or surety furthers the interests of the corporation if the corporation obtains some
benefits under the contract of guaranty or suretyship. Hence, for its validity, the following should be
considered:
1. There is no express restriction in the articles of incorporation or by-laws.
2. The purpose of the guaranty is legal.
3. The consent of all corporate creditors and shareholders must be secured.
4. The transaction is not used as a scheme to defraud or prejudice corporate creditors, or result in infringement
of the trust fund doctrine.
5. The guaranty will not hamper the continuous business operation of the corporation.
6. The parent company is financially solvent and capable of paying the creditor.
8. To enter into partnership, joint venture, merger, consolidation,
or any other commercial agreement with natural
and juridical persons;

The Commission provided the conditions to be satisfied in order that a

corporation may enter into a partnership:
GENERAL RULE:
A corporation cannot enter into a
• The authority to enter into a partnership relations is expressly provided for
partnership with natural persons or
in the articles of incorporation;
other corporations. In contrast, it is
• The business of the partnership is in line with the purpose or purposes in
generally accepted that a
the articles of incorporation.
corporation may enter into a joint
• The articles of partnership provide that all partners manage the partnership
venture with another , where the
and stipulate that all of them are jointly and severally liable for the
venture is in accordance with its
obligations of the partnership.
corporate purpose or purposes.
• If it is a foreign corporation, it must obtain a license to do in the Philippines
Joint Venture

 A joint venture is a form of partnership and should thus be governed by the law of partnership.
 The requires prior PCC approval when the “ joint venture” meets the prescribed notifications threshold. In addition
to the standard size of person test and size of transaction test the PCC’s implementing regulations adopt ex post
joint control test in determining whether the transaction requires prior PCC approval. Ex post joint control broadly
refers to the entity’s contractually stipulated veto right over the sensitive business actions of the venture.

 A corporation may enter into a joint venture with another corporation provided:
1. It is sanctioned by its charter.
2. The venture is consistent with its purpose or purposes.
9. To make reasonable donations, including those for
the public welfare or for hospital, charitable, cultural,
scientific, civic or similar purposes.
 10. To establish pension, retirement, and
other plans for the benefit of its directors,
trustees, officers,and employees.
11. 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.

 The extent of these powers is the “logical relation of the act to the corporate purpose expressed in
the charter.
 If the act is one which is lawful in itself, and not otherwise prohibited, is done for the promotion
of those ends, in a substantial, and not in a remote and fanciful, sense, it may fairly be considered
within charter powers.
 The test to applied is whether the act in question is in direct and immediate furtherance of the
corporation’s business, fairly incident to the express powers and reasonably necessary to their
exercise.