HIGHLIGHTS OF READING ASSIGNMENT

CORPORATION LAW, March 25, 2020

A. Executive Committee
1. The rationale for the creation of the executive committee is that the BOD/BOT shall delegate
its corporate powers to assure prompt and speedy action and solution to important matters.
2. The creation of the executive committee must be provided for in the bylaws. In the absence
of such bylaw provision, the board cannot create the executive committee.
3. See the four (4) exceptions to the powers that the board may delegate to the executive
under Sec. 34, RCC.
B. Corporate Powers
1. See the Doctrine of Limited Capacity
2. Three (3) classes of powers
a. Express powers
b. Those necessary to the exercise of the express or incidental powers (implied power)
c. Those incidental to its existence
C. Sources of Power
1. Special charter or articles of incorporation
2. Statutes relating to corporations
3. General statutes

D. Express powers distinguished from Implied powers

1. Express powers have to do with the main business, object or purpose of the corporation
2. Implied power – has to do with the means and method of attaining those objects and
purpose
E. Construction of Powers Granted
1. A charter by legislation shall be construed strictly against the corporation and in favor of the
public.
2. Provisions of a general incorporation law will apply to corporations under special laws as to
the conduct/government of such corporations for which no specific provision has been
made.
F. Corporate Seal – is not required for validity of any corporate acts.
G. New Amendments of Sec. 35, RCC on corporate powers and capacity
a. 1. Para. h, Sec. 35 – Corporations can enter into partnerships and joint ventures or any
other commercial agreement with natural and juridical persons.
Under jurisprudence on the old CCP, corporations as a general rule could not enter into
joint ventures or partnerships, except where the purpose for which the joint venture
was made is related to the purposes of the parties.
 b. Para. b, Sec. 35 – A corporation has a perpetual existence. Under the old CCP. The
corporate term was limited to 50 years but subject to renewal. The power of succession
has been deleted.
c. Para. i. Sec. 35 - Domestic corporations have been deleted from the prohibition to give
donations in aid of any political party or candidate or for partisan political purposes.
Under the RCC, only foreign corporations are expressly covered by the prohibition and
domestic corporations can now make political contributions to political parties or
candidates. While there had been an express prohibition under the old CCP. It had been
a practice of large corporations, although not acknowledged publicly, but they may have
been covered by the reportorial requirements of candidates on their campaign funds.
under election laws.
H. Power establish pension, retirement and other plans
1. Many large corporations grant a pension/retirement plan in addition to the statutory
benefits from the GSIS and SSS.
I. Power to Act as Guarantor
1. The general rule is that no corporation has the power to be a guarantor or surety or
otherwise lend its credit to another person or corporation.
J. Power to Extend or Shorten the Corporate Term – Sec. 36, RCC
1. The provision has been amended to add a mode of notice given to the
stockholders/members of the stockholders’ meeting or meeting of the general membership
to be done electronically in accordance with the SEC rules and regulations on the matter.
2. Unless there are transitory provisions under the RCC, the SEC may have to issue its rules and
regulations to treat existing corporations with a 50- year corporate term which wish to avail
of this provision in the light of the provision that allows corporations to exist in perpetuity.
K. Power to Increase or Decrease Capital Stock – Sec. 37, RCC
1. The following are the amendments –
a. The electronic mode of service of notice has been added
b. The approval of the Philippine Competition Commission is required in addition to the
approval of the SEC.
L. Three (3) Ways to Increase/ Decrease Capital
1. Increasing/decreasing the number of shares authorized to be issued, without
increasing/decreasing the par value
2. Increasing/decreasing the par value of shares authorized to be issued without
increasing/decreasing the number of shares
3. Increasing/decreasing both the number of shares authorized to be issued and the par value
of the shares