Corporations

• A corporation is said to be have a strong juridical personality because of its inherent attribute that it has the right of succession
• The piercing of the corporate veil is used to reach the persons forming it, instead of reaching the corporations formed by persons liable. This principle also applies to One Person Corporations (OPCs).
• A corporation has the constitutional rights to due process, equal protection, and against unreasonable search and seizure.
• A corporation sole has no nationality.
• The Roman Catholic Church is a corporation by prescription.
• An ultra vires act is not necessarily an illegal act, but an illegal act is always an ultra vires act.
• If a corporation aims to amend its articles of incorporation to change its corporate name, the dissenting stockholders cannot exercise their appraisal right.
• Incorporators of a corporation may be natural or juridical persons.
• There is no minimum paid up capital for corporations.
• Authorized capital stock >= issued shares >= outstanding shares
• n case of increase of authorized capital, the 25%-25% rule must be based on the net increase.
• A postdated check cannot be considered as a valid consideration for shares of stocks.
• For services to be a valid consideration for shares of stocks, it must have already been rendered
• Advances for future subscription are not covered by the trust fund doctrine. They cannot be used to pay the creditors of the corporation
• Foreigners can incorporate a corporation
• In the absence of any denial of voting right in the articles of incorporation, holders of preferred shares and redeemable shares are entitled to vote in the similar manner as the holders of common shares.
• All matters where a stockholder’s right of appraisal is available, require 2/3 vote of the stockholders holding outstanding capital stock.
• In matters which has important or significant consequences to the corporation and its stockholders, holders of nonvoting shares are entitled to vote.
• Directors and trustees can never vote by proxy in directors’ or trustees’ meeting.
• A proxy form can be valid for just one meeting or for a period not exceeding 5 years.
• A voting trust agreement can be valid for more than 5 years if it is executed as required in a loan agreement, but it shall be automatically terminated upon full payment of said loan.
• The 10% (of prior year’s net income before taxes) ceiling limiting the compensation given to directors in their capacity as directors does not apply to compensation given to them in other capacity (e.g. when the director is also a Vice President with compensation, his compensation as VP is not considered for purposes of computing the 10% ceiling).
• Tenure refers to the period of time an incumbent actually holds office. It is different from “term”
• A President cannot be the Secretary or Treasurer at the same time. But in case of OPCs, a President can also be the Treasurer, provided that he posts a bond.
• A Vice President can be the Secretary or Treasurer at the same time.
• A person can be both the Secretary and Treasurer at the same time.
• Between the President, Secretary, and Treasurer, only the President is required to be a director
• Between the President, Secretary, and Treasurer, only the Secretary is required to be a citizen and resident of the Philippines.
• A buyer of shares of a corporation does not become the owner of the said shares as far as the corporation is concerned until and after the sale is registered in the books of the corporation and the buyer is recorded as the owner.
• If the foreign corporation not having a license to do business in the Philippines is the one being sued before Philippine courts, its lack of standing can no longer be attacked.
• The power to amend or repeal any by-laws or adopt a new by-laws may be delegated to the board of directors or trustees by 2/3 vote, and revoke such delegation by majority vote.
• When a director or trustee is removed, the resulting vacancy can be filled up by the stockholders or members.
• An amended or new by-laws shall only be effective upon the issuance by the SEC of a certification that the same are not inconsistent with the Corporation Code.
• When a holdover director or trustee resigns, the resulting vacancy can only be filled up by the stockholders or members.
• When a director or trustee dies or resigns, the resulting vacancy may be filled up by the remaining directors or trustees still constituting majority.
• A stockholder can only be considered delinquent when he fails to pay the subscription price in full within the period given by the board of directors when called to pay.
• A delinquent stockholder may not vote or be voted upon, but still has the right to receive dividends
• When the board of directors declare stock dividends, it requires the 2/3 vote of the outstanding stockholders. If cash or property dividends are declared, it does not require stockholders’ approval
• When treasury shares are distributed as dividends, it is considered as property dividends
• An independent director is still required to own at least one share of stock where he is supposed to sit as independent director