1. What is a corporation?

a. Organized under a valid law;

A corporation is an artificial being created by operation of b. Attempt in good faith to form a corporation
law, having the right of succession and the powers, according to the requirements of the law; and
attributes and properties expressly authorized by law or c. Use of corporate powers.
incident to its existence.
8. Can the existence of a de facto corporation be
2. Common shares can be differentiated from attacked collaterally?
preferred shares in the following:
No, it cannot be attack collaterally. The Revised
a. Common shares have voting rights while preferred Corporation Code provides that the existence of a de
shares are generally not entitled to vote save in certain facto corporation may be inquired by the Solicitor
exemptions provided by law; General in a quo warranto proceeding.
b. Common shares are the holders of residual interest
in the corporation while preferred shares enjoys preference in RCC: SEC. 19. De facto Corporations. – The due
the distribution of dividends or distribution of assets in case of incorporation of any corporation claiming in good faith to
liquidation; be a corporation under this Code, and its right to exercise
c. Preferred shares can only be issued with par value corporate powers, shall not be inquired into collaterally in
while common shares may be issued without par value; any private suit to which such corporation may be a
party. Such inquiry may be made by the Solicitor
3. Preferred shares are allowed to vote in the General in a quo warranto proceeding.
following;
9. Case; ABCDE acting like a corporation even without
a) Amendment of the articles of incorporation; the actual existence of such. They claimed they
b) Adoption and amendment of bylaws; cannot be liable because they are not a
c) Sale, lease, exchange, mortgage, pledge, or other corporation?
disposition of all or substantially all of the corporate property;
d) Incurring, creating, or increasing bonded
No, their defense will not prosper because they are
indebtedness;
estopped from claiming that they are not a corporation.
e) Increase or decrease of authorized capital stock;
A, B, C, D and E are solidary liable to X as they are
f) Merger or consolidation of the corporation with
considered as general partners. In such case their
another corporation or other corporations;
separate properties may be liable to X.
g) Investment of corporate funds in another corporation
or business in accordance with this Code; and
SEC. 20. Corporation by Estoppel. – All persons who
h) Dissolution of the corporation.
assume to act as a corporation knowing it to be without
authority to do so shall be liable as general partners for
4. Par value shares can be distinguished from no par
all debts, liabilities and damages incurred or arising as a
value shares in the following:
result thereof: Provided, however, That when any such
ostensible corporation is sued on any transaction entered
a. Par value shares have a fixed value stated in the
by it as a corporation or on any tort committed by it as
articles of incorporation and in stock certificate while the
such, it shall not be allowed to use its lack of corporate
value of no par shares is not fixed;
personality as a defense. Anyone who assumes an
b. Par value shares can be issued even if it is only
obligation to an ostensible corporation as such cannot
partially paid while no par value shares are deemed fully
resist performance thereof on the ground that there was
paid;
in fact no corporation.
c. Par value shares cannot be issued at less than par
while no par shares may be issued for consideration not less
10. Case: The rule regarding self-dealing director
than P5.00;
applies in this case. The contract is voidable unless
d. Preferred shares can only be issued with par value.
it is shown that the following is present:
5. What is trust fund doctrine?
a. That the presence of Mr. Reyes was not required to
constitute quourum in the meeting when the contract was
The subscribed capital stock of the corporation is a
approved;
trust fund for the payment of debts of the
b. The vote of Mr. Reyes was not required to approve
corporation which the creditors have the right to look
the contract; and
up to satisfy their credits and which the corporation
c. The contract is fair and reasonable under the
may not dissipate. The creditors may sue the stock
circumstances.
holders directly from the latter’s unpaid subscription.
Section 31. It is a contract of the corporation with one
6. What is a treasury share?
or more of its directors or trustees or officers. It is
voidable at the option of the corporation unless all the
SEC. 9. Treasury shares. – Treasury shares are shares of
following conditions are present:
stock which have been issued and fully paid for, but
subsequently reacquired by the issuing corporation
a) The presence of such director or trustee in the board
through purchase, redemption, donation, or some other
meeting in which the contract was approved was not
lawful means. Such shares may again be disposed of for
necessary to constitute a quorum for such meeting;
a reasonable price fixed by the board of directors.
a. The vote of such director or trustee was not
necessary for the approval of the contract;
SEC. 56. Voting Right for Treasury Shares. – Treasury
b. The contract is fair and reasonable under the
shares shall have no voting right as long as such shares
circumstances;
remain in the Treasury.
c. In case of corporations vested with public interest,
material contracts are approved by at least two-thirds
Comm. Vs. Maning – a corporation cannot in any proper
(2/3) of the entire membership of the board, with at least
sense be a stockholder in itself and shares of its own
a majority of the independent directors voting to approve
stock, therefore held by it cannot be voted or be entitled
the material contract; and
to vote for otherwise the directors could be able to
d. In case of an officer, the contract has been
perpetuate control of the corporation.
previously authorized by the board of directors.
7. What is a corporation de facto and its element?
Where any of the first three (3) conditions set forth in the
preceding paragraph is absent, in the case of a contract
A corporation de factor is one which actually exists for all
with a director or trustee, such contract may be ratified
practical purposes as a corporation but which has no
by the vote of the stockholders representing at least two-
legal right to corporate existence as against the estate.
thirds (2/3) of the outstanding capital stock or of at least
two-thirds (2/3) of the members in a meeting called for
The following are the elements of a de facto corporation:
the purpose: Provided, That full disclosure of the adverse

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 interest of the directors or trustees involved is made at
such meeting and the contract is fair and reasonable
under the circumstances.
11. Case: The shipping contract is voidable. The interest of
Mr. Reyes in Stanfilco is nominal while his interest in said
shipping is substantial. Absence in showing that all the
requirements of the rule regarding self-dealing directors
have been complied, the shipping contract shall be
considered voidable.
A contract between corporations or two or more
corporations having interlocking directors shall not be
invalidated on that ground alone, provided:
a. The contract is not fraudulent;
b. Contract is affair and reasonable under the
circumstances;
c. If the interest of the interlocking director in one
corporation does not exceed 20% of the outstanding capital
stock, or is nominal, he shall be subject to the provisions of
Sec. 31 of the Revised Corporation Code insofar as the latter
corporation or corporations are concerned.
SEC. 10. Number and Qualifications of Incorporators. –
Any person, partnership, association or
corporation, singly or jointly with others but not
more than fifteen (15) in number, may organize a
corporation for any lawful purpose or purposes:
Provided, That natural persons who are licensed to
practice a profession, and partnerships or associations
organized for the purpose of practicing a profession, shall
not be allowed to organize as a corporation unless
otherwise provided under special laws. Incorporators who
are natural persons must be of legal age. Each
incorporator of a stock corporation must own or be a
subscriber to at least one (1) share of the capital stock.
18. Can a corporation be an incorporator?
Yes, please refer to number 17.
19. What is a Doctrine of Equity of shares?
Doctrine of Equity of shares is enunciated under Sec. 6 of
the RCC which states that:

12. Advantages of a corporation: Except as otherwise provided by the articles of

incorporation and in the certificate of stocks, each share
a. Capacity to act as a legal unit; shall be equal in all respects to every other shares.
b. Easy capital generation;
c. Limitation or exception of the liability of the 20. The Grand Father Rule – It is a test of determining the
shareholders; nationality of a corporation. Its purpose is to ensure
d. Continuity of existence; and compliance with the constitutional limitations of
e. Transferability of shares. corporation engaging nationalized activities.

Nationality of a corporation must be determined by

13. The disadvantages of a corporation: ascertaining if 60% of the investing corporation’s
outstanding stock is owned by Filipino citizens or as
a. Prone to double taxation; interpreted by natural or individual Filipino citizens.
b. Subject to greater governmental regulation
and control; 21. SEC. 13. Contents of the Articles of Incorporation. –
c. Harder to maintain and control; All corporations shall file with the Commission articles of
d. Harder to organize; incorporation in any of the official languages, duly signed
e. Credit is weakened by the limited liability of and acknowledged or authenticated, in such form and
shareholders. manner as may be allowed by the Commission,
containing substantially the following matters, except as
14. otherwise prescribed by this Code or by special law:

Industry Filipino Foreign a. The name of the corporation;

Mining 100% 0%
Mass media 100% 0% b. The specific purpose or purposes for which the
Public utility 60% 40% corporation is being formed. Where a corporation has
Retail Trade 100% 0% more than one stated purpose, the articles of
Banking 60% 40% incorporation shall indicate the primary purpose and the
Sauna Bath 60% 40% secondary purpose or purposes: Provided, That a
nonstock corporation may not include a purpose which
Employment and 75% 25%
would change or contradict its nature as such;
Recruitment
Financial Corporation 40% 60%
c. The place where the principal office of the
Cockpits 100% 0%
corporation is to be located, which must be within the
Security agency 100% 0%
Philippines;
15. Case: Yes, Freddie Roach is entitled to dividends d. The term for which the corporation is to exist, if the
based on his subscription of 100 shares. It is immaterial that corporation has not elected perpetual existence;
he paid only half of what he is supposed to pay. If it is a cash
dividend and Roach is a delinquent stockholder, the dividend e. The names, nationalities, and residence addresses of
shall first be applied to his unpaid balance on plus costs and the incorporators;
expenses. He is therefore still considered to be entitled to
such dividends. f. The number of directors, which shall not be more
than fifteen (15) or the number of trustees which may be
Under the law shareholders are entitled to dividends. more than fifteen (15);
Furthermore, the Section 42 of the RCC states that any
cash dividends due on delinquent stock shall first be g. The names, nationalities, and residence addresses of
applied to the unpaid balance on the subscription plus persons who shall act as directors or trustees until the
costs and expenses. first regular directors or trustees are duly elected and
qualified in accordance with this Code;
16. Case: No, the corporation cannot vote on the 50 shares h. If it be a stock corporation, the amount of its
in the election of the Board of Directors. What shares are authorized capital stock, number of shares into which it is
involved in this case are treasury shares because they divided, the par value of each, names, nationalities, and
were previously issued and reacquired by the residence addresses of the original subscribers, amount
corporation. subscribed and paid by each on the subscription, and a
statement that some or all of the shares are without par
SEC. 56. Voting Right for Treasury Shares. – Treasury value, if applicable;
shares shall have no voting right as long as such shares
remain in the Treasury. i. If it be a nonstock corporation, the amount of its
capital, the names, nationalities, and residence addresses
17. Who can be incorporators? of the contributors, and amount contributed by each; and

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j. Such other matters consistent with law and which
the incorporators may deem necessary and convenient.
An arbitration agreement may be provided in the articles
of incorporation pursuant to Section 181 of this Code.
Page 6 of 73 The articles of incorporation and
applications for amendments thereto may be filed with
the Commission in the form of an electronic document, in
accordance with the Commission’s rules and regulations
on electronic filing.
22. Procedure for the amendment of the Articles of
Incorporation:
i. The amendment must be for legitimate purposes
and must not be contrary to other provisions of
the CC and special laws
ii. Approved by majority of BOD/BOT
iii. Vote or written assent of stockholders
representing 2/3 of the outstanding capital stock
or 2/3 of members
iv. The original and amended articles together shall
contain all provisions required by law to be set
out in the AOI. Such articles, as amended, shall
be indicated by underscoring the change/s made
v. Certification under oath by corporate secretary
and a majority of the BOD/BOT stating the fact
that said amendment/s have been duly
approved by the required vote of the
stockholders or members, shall be submitted to
the SEC
vi. Must be approved by SEC (Sec. 16, CC)
vii. Must be accompanied by a favourable
recommendation of the appropriate government
agency in cases of:
a. Banks
b. Banking and quasi-banking institutions
c. Building and loan associations
d. Trust companies and other financial
intermediaries
e. Insurance companies
f. Public utilities
g. Educational institutions
h. Other corporations governed by special laws
(Sec. 17 [2], CC)
23. Define a merchant under the Code of Commerce?
A merchant is a natural person or juridical person with
legal capacity who habitually engage in the business of
selling goods and services for profit.
24. Article XII, Section 16. The Congress shall not, except by
general law, provide for the formation, organization, or
regulation of private corporations. Government-owned or
controlled corporations may be created or established by
special charters in the interest of the common good and
subject to the test of economic viability.
25. What is piercing the veil of Corporate Fiction?
The doctrine of piercing the corporate veil is the doctrine
that allows the State to disregard, for certain justifiable
reasons, the notion that a corporation has a personality
separate and distinct from the persons composing it.
Where it appears that business enterprises are owned,
conducted and controlled by the same parties, law and
equity will disregard the legal fiction that these
corporations are distinct entities and shall treat them as
one. This is in order to protect the rights of third persons
26. The NLRC cannot apply the doctrine of piercing the veil of
corporation fiction. It is the regular courts who have the
license to exercise such power.
27. No, the claim for payment of interest is invalid. The
denial for payment to a stockholder is not binding on the
corporation unless the stockholder is a director or officer
of the corporation.
One of the attributes of a corporation is that it is a legal
person having separate and distinct personality.
28. St. Joseph Hospital’s contention is incorrect since the
procurement of the services of Dr. Danghag is considered
to be incidental to the existence of an hospital. They may
procure services of resident physician because of the
nature of the services they provide.
Furthermore, hospital businesses are imbued with public
interest and are required to observe extra-ordinary
diligence.
Section 2 of the RCC provides that a corporation powers,
attributes, and properties expressly authorized by law or
incidental to its existence.
29. What is a par value share?
Is one with a specific money value fixed in the articles of
incorporation and appearing in the certificate of stock for
each share of stock of the same issue.
30. What is a no par value share?
It is one without any stated or par value appearing on
the face of the certificate of stocks. In other word, it is a
stock which does not state how much money it
represents.
31. What corporations are not allowed to issue a no par
value share?
i. Banking companies
ii. Trust companies
iii. Insurance companies
iv. Preeneed companies
v. Public utilities
vi. Building and loan associations
vii. Other corporation authorized to obtain or access
funds from the public, wheter publicly listed or not.
32. Is a one man corporation possible?
Yes, a one man corporation is possible.
Section 10 of the RCC does not require a minimum
number of incorporators. It only provides for a maximum
of 15 incorporators. Furthermore, it states that a
corporation with a single stockholder is considered a One
Person Corporation.
Requirements: (not sure if mao ni pero basaha nalang
base ni sa codal)
1. Only a natural person, trust, or an estate may form a
One Person Corporation.
2. Banks and quasi-banks, pre-need, trust, insurance,
public and publicly-listed companies, and non-
chartered government-owned and -controlled
corporations may not incorporate as One Person
Corporations:
3. That a natural person who is licensed to exercise a
profession may not organize as a One Person
Corporation for the purpose of exercising such
profession except as otherwise provided under
special laws.
4. It is not be required to have a minimum authorized
capital stock except as otherwise provided by special
law.
5. It shall file articles of incorporation in accordance
with the requirements under Section 14 of this Code.
6. It is not required to submit and file corporate bylaws.
7. A One Person Corporation shall indicate the letters
“OPC” either below or at the end of its corporate
name.
8. The single stockholder shall be the sole director and
president of the One Person Corporation.
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 9. Within fifteen (15) days from the issuance of its
certificate of incorporation, the One Person
Corporation shall appoint a treasurer, corporate
secretary, and other officers as it may deem
necessary, and notify the Commission thereof within
five (5) days from appointment.
10. The single stockholder may not be appointed as the
corporate secretary.
11. A single stockholder who is likewise the self-
appointed treasurer of the corporation shall give a
bond to the Commission in such a sum as may be
required.
33. Case: It is based on 1000 shares. Mr. Santos subscribed
to such number of shares in Petroleum corporation
payable in 5 years. He paid 500 shares already, which is
an indication that he will pay. Furthermore, he is not
considered as a delinquent because the shares are
payable in 5 years.
Dividends when declared by a corporation is proportioned
to the number of shares subscribed by the stockholders,
even though not fully paid provided not declared as
delinquent.
SEC. 71. Rights of Unpaid Shares, Nondelinquent. –
Holders of subscribed shares not fully paid which are not
delinquent shall have all the rights of a stockholder.
34. Case: No, he has no legal right to demand issuance of
certificate of stock for the amount he has paid. Mr.
Fernandez cannot demand from the corporation the
issuance of certificate of stock equivalent to 500 shares
that are equal to the amount he has paid because the law
is clear that the number of subscribed shares must be
paid in full or in this case 1,000 shares shall be paid
before he can be issued the certificate of stock. The
obligation is indivisible as provided by the law, hence he
must pay the whole value of his subscribed shares before
he can demand the issuance of the certificate of stock.
SEC. 63. Issuance of Stock Certificates. – No certificate
of stock shall be issued to a subscriber until the full
amount of the subscription together with interest and
expenses (in case of delinquent shares), if any is due,
has been paid.
35. No, the derivative suit against Mr. Dalisay will not
prosper because he is not a shareholder of Ace
corporation. He must be a stockholder not only at the
time the cause of action arose but also at the time the
action was filed.
A derivative suit is one brought by one or more
stockholders or members in the name and on behalf of
the corporation to redress wrongs committed against it or
to protect or vindicate corporate rights, whenever the
officials of the corporation refuse to sue or are the ones
to be sued or hold control of the corporation.
36. Acts which are considered as doing or transacting
business in the Philippines for foreign corporations
(2002 Bar)
1. Soliciting orders, entering into service contracts, and
opening offices, whether called “liason” offices or
branches.
2. Appointing representatives, distributors domiciled in the
Philippines or who stay for a period or periods totaling
180 days or more.
3. Participating in the management, supervision or control
of any domestic business, firm, entity, or corporation in
the Philippines.
4. Any act or acts that imply a continuity of commercial
dealings or arrangements, and contemplate to some
extent the performance of acts or works or the exercise
of some functions normally incident to and in progressive
prosecution of, the purpose and object of its
organization.
37. Acts which are not considered doing business
under the Foreign Investment Act (R.A. 4072)
1. Mere investment as a shareholder by a foreign entity in a
foreign corporation duly registered to do business;
2. The exercise of rights as a stock investor and
3. Having a nominee director or officer to represent its
interest in such corporation;
4. Appointing a representative or distributor domiciled in the
Philippines which transacts business in its own name and
for its own account;
5. Publication of general advertisement through any print or
broadcast media; 6. Maintaining a stock of goods in the
Philippines solely for the purpose of having the same
processed by another entity in the Philippines
6. Consignment by a foreign entity of equipment with a
local company to be used in the processing of products
for export; and
7. Performing services auxiliary to an existing isolated
contract of sale which are not on a continuing basis, such
as installing in the Philippines machinery it has
manufactured or exported to the Philippines, servicing
the same, training domestic workers to operate it and
similar incidental services.
38. What is a pre-incorporation subscription?
SEC. 60. Pre-incorporation Subscription. – A
subscription of shares in a corporation still to be
formed shall be irrevocable for a period of at least
six (6) months from the date of subscription, unless
all of the other subscribers consent to the
revocation, or the corporation fails to incorporate
within the same period or within a longer period
stipulated in the contract of subscription. No pre-
incorporation subscription may be revoked after the
articles of incorporation is submitted to the
Commission.
39. C has a better right because it is clear that the sale by A
to B was not registered in the books of the corporation.
Therefore, the transaction is inexistent as far as the
corporation is concerned. However, this does not mean
that the parties are deprived of any remedy. B can still
sue C for the purchase price or for the delivery of the
shares there being a valid sale already.
Under the RCC, if there are shares of stock sold by a
stockholder to a third person, the sale must be reflected
in the books of the corporation. Otherwise, the sale is
inexistent as far as the corporation is concerned.
SEC. 97. Validity of Restrictions on Transfer of Shares. –
Restrictions on the right to transfer shares must appear
in the articles of incorporation, in the bylaws, as well
as in the certificate of stock; otherwise, the same shall
not be binding on any purchaser in good faith. Said
restrictions shall not be more onerous than granting the
existing stockholders or the corporation the option to
purchase the shares of the transferring stockholder with
such reasonable terms, conditions or period stated. If,
upon the expiration of said period, the existing
stockholders or the corporation fails to exercise the
option to purchase, the transferring stockholder may sell
their shares to any third person.
40. Mr. Malic is the lawful owner of the shares.
In order for the shares to be transferred validly, the
transferor must be the lawful owner. The title could not
pass if the certificate was indorsed in blank but stolen
because there was never an intent to transfer the title.
As such, Mr. Cruz could not purchase a better right than
what Mr. Guzman had, even if he was a purchaser for
value and in good faith.
41. No, A is not entitled to look at the bank deposit.
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 A’s contention is misplaced because he confuses the Bank
Secrecy law and the Corporation Code. While it may be
true that being a stockholder he may look into the books
of account of the corporation, this does not extend to
bank accounts for they are covered by the Bank Secrecy
Law. Therefore, it cannot be said that the bank deposits
may be opened by the stockholders.
42. No, he may not because there was no amendment nor
were the rates changed. What was merely delegated to
the Board was the power to declare dividends within the
given range. Absent any justifiable reason, or
arbitrariness on the part of the Board, there is no reason
to object. However, if he does insist, he may order the
return of the value of his shares and terminate his
relationship with the corporation.
SEC. 80. When the Right of Appraisal May Be Exercised.
– Any stockholder of a corporation shall have the right to
dissent and demand payment of the fair value of the
shares in the following instances:
a. In case an amendment to the articles of
incorporation has the effect of changing or restricting
the rights of any stockholder or class of shares, or of
authorizing preferences in any respect superior to
those of outstanding shares of any class, or of
extending or shortening the term of corporate
existence;
b. In case of sale, lease, exchange, transfer, mortgage,
pledge or other disposition of all or substantially all
of the corporate property and assets as provided in
this Code;
c. In case of merger or consolidation; and (d) In case
of investment of corporate funds for any purpose
other than the primary purpose of the corporation.
43. No, the contention lacks merit. It may be true that the
stockholders have already resolved to dissolve the
corporation; there is still the winding up of the affairs. In
this process, the corporation will liquidate its assets and
thus, it may sue its debtors, including Y.
Section 31 of the RCC states that every corporation
whose charter expires pursuant to its articles of
incorporation, is annulled by forfeiture, or whose
corporate existence is terminated in any other manner,
shall nevertheless remain as a body corporate for three
(3) years after the effective date of dissolution, for the
purpose of prosecuting and defending suits by or against
it and enabling it to settle and close its affairs, dispose of
and convey its property, and distribute its assets, but not
for the purpose of continuing the business for which it
was established.
44. The first way the corporation may liquidate its assets is
to sell the property and the proceeds will be divided
among the shareholders pro rata.
The second way is for the property be granted to one
stockholder, and the latter will give o the others their
pro-rata share in the balance of the value of the
property.
45. No, the offset is not in accordance with the law. Members
of non-stock corporations do not receive money from the
corporation as a payment for the debt. It is an
honorarium. As such, the members are not creditors of
the corporation and the contribution is not a debt.
Under the law, offsetting is allowed only when two or
more parties stand as debtor and creditor of each other.
In cases such as these, the amount will be offset. If there
is a balance, then it will be paid to the proper creditor.
46. Under the law, a vacancy in the Board of Trustees
may be filled in either manner:
i. If the board still constitutes a quorum, the may
make the selection among themselves;
ii. If not, the members may, by a majority vote, in a
meeting duly called for the purpose, make the
selection.
In this case, there are 5 trustees who have been
reduced to two because one died and the two have
resigned. There is no more quorum. Thus, the
members will have to select among themselves.
Whoever will be elected must be elected by a
majority vote.
47. Disqualification of stockholder who is also a
director or stockholder.
The ground to disqualify a stockholder who is also a
director or stockholder of a competing business is invalid.
In fact, such a situation is expressly allowed by our CC.
A stockholder of one corporation may be elected as a
director in another corporation as long the latter is a
dominant corporation for which said stockholder has
bigger shares owned. That is with regards to its validity.
However, in this case, GK, a majority stockholder of a
competitor corporation seeks to be a director of MS
corporation which is the minority corporation. He should
not be allowed to be a director of the MS corporation in
order to avoid conflict of interest as he is a majority
stockholder of a competitor. He cannot serve as such
director w/o doing any possible prejudice.
48. Distinction between VOTING TRUST AGREEMENT
and PROXY :
1. VTA is irrevocable while Proxy is generally revocable;
2. In the former, legal title is transferred to the trustee,
whereas, in the latter, there is no such transfer;
3. In VTA, the certificate of stocks shall be cancelled
and transferred to the trustee; but in proxy there is
no such cancellation;
4. The VTA must be notarized , while a proxy need not
be; and
5. The Trustee in the voting trust may vote by proxy,
but in “proxy” cannot further delegate his right to
vote to another and must therefore vote in person.
49. SEC 76.
In merger, a constituent corporation it absorbed by
another corporation( which shall be regarded as the
surviving corporation), and which shall retain its identity
and name. There is, in effect an absorption of a
corporation by another, in which case the latter is called
a surviving corporation which shall retain its identity,
with the added powers, rights and liabilities.
Whereas, in the consolidation of corporation, there is a
formation of a new corporation by the joining of
constituent corporations.
50. Non-stock Corporation.
No, a non-stock corporation cannot be outrightly
converted into a stock corporation by amending its AOI.
The CC defines a non-stock corporation as one which no
part of its income is distributed to its members, trustees,
or officers. One distinct feature of such corporation is
that it does not have a capital stock to be divided into
shares.
What is more, a non-stock corporation is incorporated for
the following purpose: Charitable, religious educational,
professional, cultural , fraternal, literary, scientific, social
civic services, and similar purposes such as trade and
industry, and agricultural, and a combination of any of
the foregoing. Hence, a non-stock corporation cannot be
converted into a stock corporation without first totally
changing its AOI and its corresponding objectives, and
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 without first obtaining the approval and issuance of the
SEC.
51. Requisites of a Close corporation.
A close corporation is one whose AIO provide that :
1. All the corporations issued stocks of all classes, exclusive
of the treasury shares, are held of record by a specified
number of people, not exceeding 20;
2. All the issued stocks of all classes are subject to one or
more specified restrictive permitted by the Title XII of the
CC; and
3. That the corporation shall not list any shares in the stock
exchange, or make any offer of any of its shares, of any
class.
52. Foreign Corporation.
A foreign corporation, as defined by the CC, is one that is
formed, organized, and existing under any laws other
than that of the Philippines, and whose laws allow Filipino
citizens and corporations to transact business in its own
county.
53. Cram Down Doctrine.
It means that any award or decision by the management
committee or corporation receiver applies to all who are
affected by the Rehabilitation of the Company, regardless
if they were parties or not.
54. Activities of a foreign corporation not considered as
doing business.
1. Filipino national importing from a foreign national
based in his own country;
2. Foreign corporation instituting an action, on a single
transaction here in the PH;
3. Commercial act or transaction consummated outside
of PH territory;
4. Foreign Corporation subscribing to shares of
domestic corporation and receiving the benefits
therefore.
5. (kang JONI ni.) Mere investment buy a foreign
corporation to a domestic corporation duly registered
to do business;
6. Having a nominee to represent its right;
7. Appointment of a representative or distributor who
transacts business in the representatives or
distributors own name and account;
8. Maintaining a stock of goods in the PH but solely for
purposes of having the same to be processed by
another entity; and
9. Collecting of information in the PH.
55. Resident Agent of a Foreign Corporation.
A resident agent of a foreign corporation is usually a
person designated by such foreign corporation to receive
summons and other legal processes in an action or
proceeding where the foreign corporation is a party. And
to be a resident agent one must be :
1. A resident of the PH ;
2. OF good moral character ;
3. And with sound financial background.
4. in case of a domestic corporation who will act as
a resident agent, it must likewise be of sound
financial standing and must show proof that it is
of good standing as certified by the commission
(new)
56. The motion to dismiss by X company must be set
aside.
While it is a rule that a foreign company not doing
business in the PH and not having a license to do
business in this country shall not be allowed to initiate a
litigation in the PH, this involves a unique case of
infringement of a trade mark which is internationally
known and recognized.
The brand “Levis” is an international brand which has
been known to the public worldwide. Under the
intellectual property code, a foreign corporation in a case
of trade mark infringement of an international brand can
protect its rights and interest and may initiate suit
against said violator of trademark infringement. This is
true notwithstanding the fact that it dies not conduct
business or have license to do business in our country.
Page 681 of book.
57. The validity of the De Jure Corporation cannot be
questioned. The validity of a De facto corporation cannot
be attacked collaterally. It can only be attacked directly
through a quo warranto proceeding by the Solicitor
General.
There is a De jure corporation when there is complete
compliance of all the requirements under the law for a
corporation. In De facto corporation, not all the
requirements of the law are complied. There is only
colorable compliance.
In de jure corporation there is legal existence of the
rights while in de facto corporation it may only act for all
practical purpose.
A de jure corporation cannot be sued while a de facto
corporation be sued by the state.
58. The Business judgment Rule provides the BOD may
exercise the powers of the corporation. It has control of
the corporations businesses and properties. This means
that in administrative cases, the BOD has authority to
decide on such matters, free from the intervention of the
court. The court cannot reverse or impose its judgment
on the Board or the corporation.
Moreover, the Board has the power to exercise
management and execute policies.
This should not be disturbed by the court. The court may
only be allowed to intervene on matters handled by the
board if its acts are oppressive and unconscionable that it
would result to damage to third parties.
59. The following are the requisite for foreign and domestic
corporation to be covered by the Code of corporate
Governance :
a. When it involves the sale of debts and
securities;
b. When the assets of the corporation exceed
P5 million and the stockholders have at least
200 or more shareholders with 100 shares of
a class of its equity;
c. When listed in exchange of foreign
exchange;
d. In case of grant of license agreement. (p248
book)
60. Stockholders Primacy Theory is also called the wealth
maximization theory. This provides that the main
objective of corporations is to gain and increase profits
that are to be divided by the stockholders. Profits equal
money.
Stakeholders theory on the other hand places importance
on the role of a corporation in the development of its
stakeholders could be the directors, trustee, officers,
employees, creditors, other business enterprise and even
the public. The corporation goal is not only to gain profits
but also to contribute to the welfare of its stakeholders.
6
61. Independent Directors are those individuals who may
have shares in the corporation but are not engaged in
private enterprise or business endeavors. They are hired
by the corporation in order for them to share their skill
and expertise in the operation and management of the
corporation. Before becoming an independent director,
he/she must previously served as a member of the BOD
of the same corporation.
Independent directors are usually needed in;
a. Investment houses;
b. “ companies;
c. Financial companies;
d. Pre-need co.;
e. Companies whose share are listed in FOR EX;
f. Other companies w/c need their services.
62. 3 powers of a CORPORATION.
a. EXPRESS – these powers are expressly worded in the
law, or by-laws of the corporation.
b. IMPLIED – these powers which can be derived
without need of specific express words, an example is the
power to issue stock carries with it the power to collect
payments.
c. INCIDENTAL - powers that result from other powers
arising from the corporation’s existence. An example: An
agricultural company has the power to purchase
agricultural land.
63. Corporation enter into a contract of partnership
requisites;
a. The corporation is only a limited partner;
b. It is allowed in the by-laws of the
corporation;
c. There is approval of the SEC;
d. THE business of the Partnership is in line
with that of the corporation.
64. The sale of “substantially all” of the assets of a
corporation does not refer to the sale of all the
assets of a corporation.
This means that the sale of Substantially all of the assets
would mean the discontinuance of the operation of the
business of the corporation or the non-achievement of
the purpose of the corporation.
An example of the sale of Substantially all assets of a
corporation would be the sale of a candle factory of all its
machines that would make the candles.
Without these, the corporation could no longer continue
its operations and attain its purpose of making candles
for profits.
The sale of assets must not be in violation of the BULK
sales Sale.
65. The following are requisites of a founder’s share:
a. It must be described as such in the Articles
of Incorporation;
b. The right to vote or to be voted as director of
the corporation shall not exceed for the
period of five years;
c. It must be approved by the securities and
exchange commission;
d. The five year term shall commence from the
date of the approval of the SEC; and
e. Exercise of such shall not be allowed if it will
violate the Anti-Dummy Law or Foreign
Investment Act of 1991.
66. Requisites of Redeemable shares;
a. It must be expressly provided in the Articles
of Incorporation;
b. It must be issued by the corporation;
c. It must be redeemed for a fixed period or at
the option of the subscriber of a redeemable
share;
d. The existence of an unrestricted earnings in
the books of the corporation will not bar the
redemption of the redeemable share;
e. In case of mandatory redeemable shares, a
sinking fund must be established;
f. The terms and conditions of redemption
stated in the articles of incorporation and
certificate of stocks which the share
represent must be complied; and
g. It must comply with the rules issued by the
commission.
67. The following are requirements of incorporators of
a stock corporation under the corporation code:
a. Majority must be a resident of the
Philippines;
b. Any person, partnership, association or
corporation, singly or jointly;
c. Must not be more than 15;
d. If a natural person, he must be of legal age;
e. All must be a subscriber of atheist one share;
and
f. All must have a capacity to act.
68. No, it is not legally possible. Incorporators of the
corporation stated in the articles of incorporation are
matters that are considered as an accomplished fact.
It is well-settled that an accomplished fact in the articles
of incorporation may not be a subject of any amendment.
Therefore, it is not legally possible.
69. No, the lawyers may not validly form a stock corporation
for the practice of their profession as lawyers. If such be
allowed, the directors of said corporation cannot establish
an attorney-client relationship which is personal in
nature.
Only general partnership of lawyers is allowed because all
the partners manage the partnership.
Section 10 of the RCC states that, natural persons who
are licensed to practice a profession, and partnerships or
associations organized for the purpose of practicing a
profession, shall not be allowed to organize as a
corporation unless otherwise provided under special laws.
Incorporators who are natural persons must be of legal
age.
70. If I am the judge, I would rule in favor of the heirs of the
victim. Rabbit Transit Corporation is a corporation by
estoppel because they made it known to the public that
they are a duly organized corporation. Their
representation as such bars them from raising the
defense that they are not a corporation.
Corporation by estoppel as provided under the
corporation code is where one represent himself to be a
corporation knowing that it is not, shall be liable as
general partners.
Moreover, the rules of court provides that a complaint
may be filed in the name which they are known if the
defendant is a corporation by estoppel.
71. Under the Law Mr. Tan has two options to wit:
1. Straight voting – every stockholder “may vote such
number of shares for as many persons as there are
directors” to be elected.
2. Cumulative voting for one candidate – a
stockholder is allowed to concentrate his votes and “give
7
 one candidate, as many votes as the number of directors
to be elected multiplied by the number of his shares shall
equal.”
3. Cumulative voting by distribution – a stockholder
may cumulate his shares by multiplying the number of
his shares by the number of directors to be elected and
distribute the same among as many candidates as he
shall see fit.
72. No, the resolution is voidable because the contract
between the corporations is with a self-dealing director.
Moreover, the self-dealing director’s presence in the
meeting duly called for that purpose is necessary to
constitute a quorum and that his vote is necessary to
approve the said contract.
73. Yes, it can be ratified provided that at least 2/3 of the
outstanding capital stock of cyber data corporation
ratifies the resolution. Provided further that full disclosure
was made to its shareholders and that said contract is
fair and reasonable under the circumstances.
Section 31 of the RCC states that, where any of the first
three (3) conditions set forth in the preceding paragraph
is absent, in the case of a contract with a director or
trustee, such contract may be ratified by the vote of the
stockholders representing at least two-thirds (2/3) of the
outstanding capital stock or of at least two-thirds (2/3) of
the members in a meeting called for the purpose:
Provided, That full disclosure of the adverse interest of
the directors or trustees involved is made at such
meeting and the contract is fair and reasonable under the
circumstances.
74. To make the ratification possible the corporation
code requires that :
a. There must be a full disclosure of the facts to
the shareholders;
b. That the contract is fair and reasonable
under the circumstances; and
c. That it must be ratified by a vote of at least
2/3 of the outstanding capital stock or 2/3 of
its members.
75. The following business are not allowed to form a
close corporation:
a. Oil companies
b. Mining companies
c. Banking companies
d. Insurance companies
e. Educational companies
f. Public utility companies
g. And those imbued with public interest as
provided under the law.
76. Yes, the refusal is valid. Mang Amboy under the law is
conclusively presumed to have knowledge of the
restriction provided under the Articles of Incorporation or
the certificate of stock it represents. In this case he
conclusively presumed to have knowledge that only those
who are agricultural graduate must be a shareholder.
The corporation code provides that if the certificate of
share of a close corporation provides for a qualification
for a qualification required of a holder of such share, such
holder shall be conclusively deemed to have knowledge
of such restriction which can be validly denied
registration by the corporation.7 respect superior to
those of outstanding shares of any class, or of extending
or shortening the term of corporate existence;
(b) In case of sale, lease, exchange, transfer, mortgage,
pledge or other disposition of all or substantially all of the
corporate property and assets as provided in this Code;
(c) In case of merger or consolidation; and
(d) In case of investment of corporate funds for any
purpose other than the primary purpose of the
corporation.
77. Under Section 17 of the RCC, a corporate name to
be allowed by the SEC if:
1. distinguishable from that already reserved or registered
for the use of another corporation; or
2. Such name is already protected by law; or
3. When its use is contrary to existing law, rules and
regulations.
78. SEC. 26. Disqualification of Directors, Trustees or
Officers. – A person shall be disqualified from being a
director, trustee or officer of any corporation if, within
five (5) years prior to the election or appointment as
such, the person was:
(a) Convicted by final judgment:
(1) Of an offense punishable by imprisonment
for a period exceeding six (6) years;
(2) For violating this Code; and
(3) For violating Republic Act No. 8799,
otherwise known as “The Securities Regulation
Code”;
(b) Found administratively liable for any offense
involving fraudulent acts; and
(c) By a foreign court or equivalent foreign
regulatory authority for acts, violations or
misconduct similar to those enumerated in
paragraphs (a) and (b) above.
79. SEC. 33. Disloyalty of a Director. – Where a director,
by virtue of such office, acquires a business opportunity
which should belong to the corporation, thereby obtaining
profits to the prejudice of such corporation, the director
must account for and refund to the latter all such profits,
unless the act has been ratified by a vote of the
stockholders owning or representing at least two-thirds
(2/3) of the outstanding capital stock. This provision shall
be applicable, notwithstanding the fact that the director
risked one’s own funds in the venture.
80. The following are the rules on non-use of corporate
charter of the corporation:
a. If a corporation does not formally organize and
commence its business within five (5) years from
the date of its incorporation, its certificate of
incorporation shall be deemed revoked as of the day
following the end of the five (5)-year period.
b. if a corporation has commenced its business but
subsequently becomes inoperative for a period of at
least five (5) consecutive years, the Commission
may, after due notice and hearing, place the
corporation under delinquent status.
c. A delinquent corporation shall have a period of two
(2) years to resume operations and comply with all
requirements that the Commission shall prescribe.
Upon compliance by the corporation, the
Commission shall issue an order lifting the
delinquent status. Failure to comply with the
requirements and resume operations within the
period given by the Commission shall cause the
revocation of the corporation’s certificate of
incorporation.
d. The Commission shall give reasonable notice to, and
coordinate with the appropriate regulatory agency
prior to the suspension or revocation of the
certificate of incorporation of companies under their
special regulatory jurisdiction.
81. Who is an independent director?
An independent director is a person who, apart from
shareholdings and fees received from the corporation, is
8
independent of management and free from any business or
other relationship which could, or could reasonably be
perceived to materially interfere with the exercise of
independent judgment in carrying out the responsibilities as a
director.
Independent directors must be elected by the
shareholders present or entitled to vote in absentia during the
election of directors. Independent directors shall be subject to
rules and regulations governing their qualifications,
disqualifications, voting requirements, duration of term and
term limit, maximum number of board memberships and
other requirements that the Commission will prescribe to
strengthen their independence and align with international
best practices.
82. SEC. 73. Books to be Kept; Stock Transfer Agent. –
Every corporation shall keep and carefully preserve at its
principal office all information relating to the corporation
including, but not limited to:
(a) The articles of incorporation and bylaws of the
corporation and all their amendments;
(b) The current ownership structure and voting
rights of the corporation, including lists of
stockholders or members, group structures, intra-
group relations, ownership data, and beneficial
ownership;
(c) The names and addresses of all the members of
the board of directors or trustees and the executive
officers;
(d) A record of all business transactions;
(e) A record of the resolutions of the board of
directors or trustees and of the stockholders or
members;
(f) Copies of the latest reportorial requirements
submitted to the Commission; and
(g) The minutes of all meetings of stockholders or
members, or of the board of directors or trustees.
83. SEC. 140. Definition and Rights of Foreign
Corporations. – For purposes of this Code, a foreign
corporation is one formed, organized or existing under
laws other than those of the Philippines’ and whose laws
allow Filipino citizens and corporations to do business in
its own country or State. It shall have the right to
transact business in the Philippines after obtaining a
license for that purpose in accordance with this Code and
a certificate of authority from the appropriate
government agency.
84. What is Cram Down Doctrine?
It provides that the rehabilitation plan approved by the
court is binding to the debtor or any person affected by
it, including the creditor whether or not the party is
present or opposed said rehabilitation plan or that there
is already a schedule of settlement.
85. Yes, the stockholders are liable. They cannot successfully
put up a defense by raising the doctrine of separate
personality. As stockholders of a close corporation, they
are also its managers and being such, they are personally
liable for the torts committed by the corporation which in
this case is the omission of the duty to pay an employer’s
separation pay.
It is well-settled rule that stockholders who are managers
of a close corporation are personally liable for the tortious
acts done by the corporation.
86. What is a close corporation?
Section 95 - A close corporation, within the meaning of
this Code, is one whose articles of incorporation provide
that:
(1) All the corporation’s issued stock of all classes,
exclusive of treasury shares, shall be held of record by
not more than a specified number of persons, not
exceeding twenty (20);
(2) all the issued stock of all classes shall be subject to
one or more specified restrictions on transfer permitted
by this Title; and
(3) The corporation shall not list in any stock exchange or
make any public offering of any of its stock of any class.
Notwithstanding the foregoing, a corporation shall not be
deemed a close corporation when at least two-thirds
(2/3) of its voting stock or voting rights is owned or
controlled by another corporation which is not a close
corporation within the meaning of this Code.
87. The defense is not valid. The dissolution is not yet
approved, thus the existence and its rights arising
therefrom are not yet extinguished. Even assuming for
the sake of the argument that it is already approved, still
the corporation has 3 years to wind up its business which
includes suing Y for the collection of sums of money.
Section 139 - The law provides that a corporation’s
corporate existence ceases only when its dissolution is
approved by the SEC. However, they shall nevertheless
remain as a body corporate for three (3) years after the
effective date of dissolution, for the purpose of
prosecuting and defending suits by or against it and
enabling it to settle and close its affairs, dispose of and
convey its property, and distribute its assets, but not for
the purpose of continuing the business for which it was
established.
88. Ways of dissolving a corporation
A corporation may be dissolved in two ways, either
voluntarily or involuntarily.
Voluntary dissolution can be done in the
following:
1. By the vote of the board of the board of
directors/trustees and adopted by the
affirmative vote of the majority of the
outstanding capital stock or majority of its
members (2/3);
2. By judgment of the SEC after hearing of the
petition of the majority of the BOD/BOT and
affirmed by 2/3 of the outstanding capital stock;
3. By amending the Articles of incorporation to
shorten the corporate term;
4. In case of corporation sole, by submitting to the
SEC a verified declaration of dissolution for
approval
While Involuntary dissolution can be done in
the following manner:
1. Expiration of the term provide for in the articles
of incorporation;
2. By legislative enactment;
3. Failure to formally organize and commence the
transaction of tis business within 5 years from
the date of incorporation;
4. By order of the SEC.
89. I will advise the creditors that their cases may still be
pursued because their money claims are already pending
prior to the last day of the corporate existence of the
corporation. The corporation’s dissolution will not result
into the outright dismissal of the said pending civil
actions. Further, the creditors’ lawyer may be deemed a
trustee in such pending civil actions if it will not be
resolved within the period allocated for the winding up.
90. What is doctrine of attribution of knowledge?
It is premised on the separate juridical entity of a
corporation which can only act through its duly
authorized agents. It provides that as a general rule, that
knowledge attributed to stockholders of a corporation
cannot be attributed to the corporation itself and vice-
versa.
9
 However, as a matter of exception, if case of duly
authorized agent or representatives acting within the
scope of their delegated authority or acting intra-vires,
knowledge attributable to them in the conduct of their
functions may be attributed to the corporation even if
they did not inform the corporation about such fact.
91. Yes, equitable bank is legally obliged to hire the 4.
employees of the Philippine Savings Bank because the
contrary would violate the employee’s security of tenure 5.
which the 1987 Philippine Constitution protects.
Jurisprudence provides that employee’s security of tenure
provided under the constitution is superior to the
provision of the Corporation Code.
95.
92. What is an executive committee?
shown in the books of the corporation and deposited
to the addressee in the post office with postage
prepaid, served personally, or sent electronically in
accordance with the rules and regulations of the
Commission on the use of electronic data message,
when allowed by the bylaws or done with the consent
of the stockholders:
That any dissenting stockholder shall have appraisal
right as provided in this Code:
That where the investment by the corporation is
reasonably necessary to accomplish its primary
purpose as stated in the articles of incorporation, the
approval of the stockholders or members shall not be
necessary.
Can a corporation enter into a management
agreement? Yes!!

SEC. 34. Executive, Management, and Other Special
Committees. – If the by-laws so provide, the board may
create an executive committee composed of at least three (3)
directors.
Said committee may act, by majority vote of all its members,
on such specific matters within the competence of the board,
as may be delegated to it in the bylaws or by majority vote of
the board, except with respect to the:
(a) approval of any action for which shareholders’
approval is also required;
(b) filling of vacancies in the board;
(c) amendment or repeal of bylaws or the adoption
of new bylaws;
(d) amendment or repeal of any resolution of the
board which by its express terms is not amendable
or repealable; and
(e) distribution of cash dividends to the
shareholders.
The board of directors may create special committees of
temporary or permanent nature and determine the members’
term, composition, compensation, powers, and
responsibilities.
93. What are the powers and capabilities of a corporation
under the corporation code?
1. To sue and be sued under its corporate name;
2. It has right of succession;
3. To adopt and use a corporate seal;
4. To amend any provisions of the articles of
incorporation;
5. To enter into merger or consolidation with other
corporations or other corporations;
6. Issuance of dividends;
7. To purchase, receive, take, or grant, hold, covey,
lease, pledge, mortgage and deal real property in its
own name subject to the limitations of the
constitution and existing laws;
8. To enter into a contract;
9. To adopt by-laws
10. To make reasonable donations;
11. To exercise powers that are essential and necessary
to carry out its purposes.
94. Rules on corporation investing funds in another
corporation?
SEC. 41. Power to Invest Corporate Funds in Another
Corporation or Business or for Any Other Purpose. –
Subject to the provisions of this Code, a private corporation
may invest its funds in any other corporation, business, or for
any purpose other than the primary purpose for which it was
organized, provided that:
1. It is approved by a majority of the board of directors
or trustees and ratified by the stockholders
representing at least two-thirds (2/3) of the
outstanding capital stock,
2. or by at least two-thirds (2/3) of the members in the
case of non-stock corporations, at a meeting duly
called for the purpose.
3. Notice of the proposed investment and the time and
place of the meeting shall be addressed to each
stockholder or member at the place of residence as
SEC. 43. Power to Enter into Management Contract.
– No corporation shall conclude a management contract
with another corporation unless such contract is
approved by the board of directors and by stockholders
owning at least the majority of the outstanding capital
stock, or by at least a majority of the members in the
case of a nonstock corporation, of both the managing and
the managed corporation, at a meeting duly called for the
purpose: Provided, That (a) where a stockholder or
stockholders representing the same interest of both the
managing and the managed corporations own or control
more than one-third (1/3) of the total outstanding capital
stock entitled to vote of the managing corporation; or (b)
where a majority of the members of the board of
directors of the managing corporation also constitute a
majority of the members of the board of directors of the
managed corporation, then the management contract
must be approved by the stockholders of the managed
corporation owning at least two-thirds (2/3) of the total
outstanding capital stock entitled to vote, or by at least
two-thirds (2/3) of the members in the case of a
nonstock corporation.
These shall apply to any contract whereby a corporation
undertakes to manage or operate all or substantially all
of the business of another corporation, whether such
contracts are called service contracts, operating
agreements or otherwise: Provided, however, That such
service contracts or operating agreements which relate to
the exploration, development, exploitation or utilization
of natural resources may be entered into for such periods
as may be provided by pertinent laws or regulations.
No management contract shall be entered into for a
period longer than five (5) years for any one (1) term.
a.
96. Rules a to place and time of meeting of stockholders:
As to when
Regular Meetings - shall be held annually on a
date fixed in the bylaws, or if not so fixed, on any
date after April 15 of every year as determined by
the board of directors or trustees
Special meetings of stockholders or members -
shall be held at any time deemed necessary or as
provided in the bylaws: Provided, however, That at
least one (1) week written notice shall be sent to
all stockholders or members, unless a different
period is provided in the bylaws, law or
regulation.
As to place:
Stockholders’ or members’ meetings, whether
regular or special, shall be held in the principal office
of the corporation as set forth in the articles of
incorporation, or, if not practicable, in the city or
municipality where the principal office of the
corporation is located: Provided, That any city or
municipality in Metro Manila, Metro Cebu, Metro
Davao, and other Metropolitan areas shall, for
purposes of this section, be considered a city or
municipality.
97. Voting by proxies.

10
 Religious corporation which consists of one member
SEC. 57. Manner of Voting; Proxies. – Stockholders which is the head of the religious sect or corporator
and members may vote in person or by proxy in all only and his successor.
meetings of stockholders or members, provided:
SEC. 108. Corporation Sole. – For the purpose of
When so authorized in the bylaws or by a majority of the administering and managing, as trustee, the affairs,
board of directors, the stockholders or members of property and temporalities of any religious
corporations may also vote through remote denomination, sect or church, a corporation sole may
communication or in absentia: Provided, That the be formed by the chief archbishop, bishop, priest,
votes are received before the corporation finishes minister, rabbi, or other presiding elder of such
the tally of votes. religious denomination, sect or church.

A stockholder or member who participates through 103. Outstanding Capital Stock – is the portion of the
remote communication or in absentia shall be deemed capital stock which is issued by and held by persons
present for purposes of quorum. other than the corporation itself.

The corporation shall establish the appropriate
requirements and procedures for voting through remote
communication and in absentia, taking into account the
company’s scale, number of shareholders or members,
structure and other factors consistent with the basic right
of corporate suffrage.
Proxies shall be in writing, signed and filed, by the
stockholder or member, in any form authorized in the
bylaws and received by the corporate secretary within a
reasonable time before the scheduled meeting.
Unless otherwise provided in the proxy form, it shall be
valid only for the meeting for which it is intended. No
proxy shall be valid and effective for a period longer than
five (5) years at any one time.
98. Voting Trust Agreement
A voting trust agreement (VTA) is an agreement whereby
one or more stockholders transfer their shares of stocks
to a trustee, who thereby acquires for a period of time
the voting rights (and/or any other specific rights) over
such shares; and in return, trust certificates are given to
the stockholder/s, which are transferable like stock
certificates, subject, to the trust agreement.
99. NON-STOCK CORPORATION – one which:
1. does not issue shares;
2. is not created for profit but for public good and
welfare; and
3. one where no part of its income is distributable as
dividends to its members.
ESSENTIAL REQUISITES OF A NON-STOCK
CORPORATION:
1. It does not have a capital stock dividend into shares;
2. No part of its income is distribuatable as dividens to
its members; and
3. Non-stock corporation must be formed or organized
for Charitable, Literary, Scientific, Social, Civic
service, Or similar purposes, like trade, industry,
agricultural and like chamber or any combination
thereof.
104. Unrestricted Retained Earnings –
It represents the surplus profits of the corporation. It is
determined by subtracting the liabilities (L), the Capital
Stock (CS) and the Restricted Retained Earnings (RRE)
from the assets (A) of the corporation (URE = A – (L +
CS+ RRE)).
Unrestricted Retained Earnings shall include accumulated
profits and gains realized out of the normal and
continuous operations of the company after deducting
therefrom distributions of stockholders and transfers to
capital stock or other accounts. It does NOT include:
1. Funds appropriated by its BOD for corporate
expansion projects or programs;
2. Funds covered by a restriction for dividend
declaration under a loan agreement; and
3. Funds required to be retained under special
circumstances obtaining in the corporation such as
when there is a need for a special reserve for
probable circumstances.
105. Yes, the meeting is valid even if it was not conducted
in the principal office of the corporation. This is because
there was 100% attendance in the meeting. Such fact
constitutes waiver of the requirements laid down under
the Revised Corporation Code.
106. No, the request of Mr. De Castro is in violation of the
requirement provided by law. Such request is not valid
because Mr. De Castro has not yet paid his balance
covered by the subscription.
Subscription under the Revised Corporation Code is an
agreement condition sine qua non for the issuance

100. STOCK CORPORATION – one which capital stock is

divided into shares and are authorize to distribute to the
holders of such shares dividends or allotments or the
surplus profits on the basis of the shares held.

It is created and operated for the purpose of making a

profit.

Requisites for the formation of a stock corporation:

1. A capital stock divided into shares and

2. An authority to distribute to the holders of such
shares, dividends or allotments of the surplus profits
on the basis of the shares held.

101. Two classes of religious corporation:

1. Corporation sole; and

2. Religious societies.

102. What is a corporation sole?

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