Business Allowed in the Philippines

1. Partnerships
2. Corporations

Under PH Law: If there is prohibition to create another type of business other than
the above-mentioned ?

Answer: NO prohibition

Gen. Rule:
Veil of Corporate Fiction

Cases:
Creese vs CA 93 SCRA 487, 1979
Mambulao Lumber vs PNB 22 SCRA 359 1968
China Banking Corp vs Dyne-Semi Electronics Corp 494 SCRA 49 2006
Yutivo Sors vs CTA 1 SCRA 168 1961
Tan Boon vs Jarercio 169 SCRA 153 1988
Umali vs CA 189 SCRA 529 1998

Not awarded of Moral Damages except having a good reputation as decided by SC

in Mambulao Lumber vs PNB

Not all corporation are created by law

Ex. Roman Catholic Church
For the RC Church of Dumaguete or Cebu to attain a legal personality must register
with the SEC.
But the Church as a whole need not registered.

Corporation by prescription are not created by Law but because of a long existence
then such set-up is considered or acknowledged as a corporation

Only Incorporators
President
Treasurer
Secretary

Vice President are not prohibited in assuming other functions

Can corpo be a director in another corporation?

Only Natural Persons

Can Corpo cannot be a guarantor?

False, because the no corpo can be a guarantor as a general rule except when the
corpo is creditor and it promotes the business

The self-dealing acts of directors, voidable?

True, general rule
Sec. 32

Redeeming Shares Sec. 41, Corp cannot re-acquire issued shares of stock, there
must be unrestricted retained shares/ earnings

February 9, 2017
Foreigners may be a director in a corporation
The corpo is acted upon by the

Majority votes of those the majority of the present which is the quorum
Removal of Directors must be in a regular or special meeting for a removal 2/3 of
the outstanding capital stock

General Rule: Can be removed with or without except those voted by the minority
without cause

Vacant Positions The remaining majority may appoint provided that the vacancy is
not cause by the removal of the 2/3 stockholders or an expiration of the term

Liability of Directors not personality because of separate corporate personality,

unless it is joint and solidary liability or knowingly and unlawful or conflict of interest
is solidarily liable or on his own personality liable

Can stockholders ratify the action of the director?

Yes

Liability of a Director: Sec. 34 (Disloyalty of a Director) can be ratified by the

outstanding Capital Stock

Directors, Trustees and Officers Sec. 31, cannot be ratified

Self Dealings of Director General Rule is voidable and can be ratified by the
stockholders or board of directors
Elements: Refer to Sec. 32
Sec. 33. Interlocking Directors: Valid,

1. Contract is Fair
2. Nominal
3. Interest is less than 20%
Doctrine of Corporate Opportunity, Sec. 34

Sec. 35
Executive Committee must be created under the By-laws and not less than three
members of the board to be appointed.

Sec. 29
Filling of Vacancies

Powers of the Corporation

Title IV
Sec. 36

Withdraw from Corporation by exercising the right of appraisal?

Sec. 81 and
Expands or Invents in another corporation other than the proposed purpose
Shortening or Expanding the Life of the Corporation

Limitations Pg. 675-676

Price: Fair Value of the Shares

Three Disinterested Persons

Real Estate Appraisers
One chosen by the Stock Holder
One chosen by the Corporation
One chosen by the stock holder and corporation

As a general rule it is the corpo or instances the stockholder pay the purchase price

Non-Stock
For non-profit
For a purpose

Political Party not included because it is not included to what is provided for by law

Non-stock not allowed to engage in business but allowed profit incidental to its
operation

Close Corporation
Stock Holders manages or are board of directors
A maximum of 20 persons
An incorporated partnership and treated as a close corporation by the law
3 elements

Stocks are not listed in the stock exchange

Ordinary: Officers are appointed by the board

Close: Officers are appointed by the stockholders

Close there is a restriction to transfer shares and must be approved by the

stockholders

Restriction to be valid must appear in the by-laws and certificate of stock

Non-Stock to become Stock must be dissolved first then apply for a stock
corporation