Articles of incorporation.

If however, the exercise of such

power was necessary and incidental to the continued operation
in the business purpose of the corporation, then such act will not
be considered as an ultra vires act. So the long and short of it,
don't be so fixated. That when the act is not among those
provided for by law, not in the articles of incorporation, in the
by laws that is ultra vires act NO. No. Look at that remaining
portion in the law necessary and incidental for the existence of
the corporation. If that is satisfied, then the app cannot be
considered as ultra vires act.

We move forward. We also need to distinguish between an

illegal act from an ultra vires act.

There is a distinction between corporate acts that are considered

illegal and ultra vires . The Supreme court said at distinction
should be made between corporate acts or contracts, which are
illegal, and those which are merely ultra vires act. The former
contemplates the doing of an act, which is contrary to law,
illegal act contrary to law to public policy or public duty and
are like similar transactions between individuals considered
void.

They cannot serve as basis for court action nor acquire validity
by performance ratification or estoppel. The Supreme court said
mere ultra vires act on the other hand are those which are not
illegal or void AB Initio, but are not merely within the scope of
the articles of incorporation are merely voidable and may
become binding and enforceable when ratified by that
stockholders.
I only want to highlight that distinction between what is illegal
acts of the corporation as opposed to an ultra vires act of the
corporation, which is more palatable, which is more acceptable
it is the ultra vires act because in case of an ultra vires act, it
may not be authorized by law or by the bylaws or the corporate
documents of the entity, but nonetheless it is not considered
illegal.

Okay, because it may be, it may be some sort of, it may have
some sort of deficiency not being expressly provided for by law,
not being included in the bylaws, but they are Not per se
prohibited.

As opposed to an illegal act which is in violation of the law,

which may be contrary to public policy order in that particular
regard. And illegal act of the corporation is not susceptible to
ratification, not susceptible to validation by the stockholders, no
matter what the stockholders would do. An illegal act remains to
be illegal, cannot be enforced. It is not enforce it is null and
void. A mere ultra vires act even if it is on its face
unenforceable because it has no basis, nonetheless, it can be
subject of ratification by the stockholder and when ratified, it
becomes a valid act of the corporation, which circumstance will
not apply if the act is an illegal.

So take note of that distinction between an illegal act of the

corporation, as opposed to an o ultra vires act of the corporation.

So stock holders and members.

In the stockholders and members, it is imperative that you must
have an idea of the basic rights of stock holders and members.
There are rights that are that can be exercised only by
stockholders like appraisal.

But as a general rule, these rights should be applicable to both

stock holders and members.

Okay, let's start with the right to vote. This right to vote is of
course applicable both the stock holders and members. It is the
right of a stockholder to conform or to object to a proposed
action of the corporation.

It represents the right of the stockholders to participate in the

control and management of the corporation. The reason why
only the stockholder was mentioned him because it pertains to
the case of a stock corporation.

Rule on the exercise of the right to vote stockholders, right to

vote may be exercised through a vote in person by proxy or by
remote communication where it is allowed.

So a Stockholder there, one thing to participate in a stockholders

meeting and vote for the board of directors. Can do so by him
personally appearing in the venue, casting his vote, he may do
so by filling up a proxy form, sometimes there is also this voting
trust agreement that can be issued in favor of the Proxy.

Incorporated under the RCC by the use of remote

communication, but only in cases where it is allowed now in
particular, even if it is not in the bylaws, if the corporation is a
listed corporation, then the right to vote remotely can be
exercised now.
We move forward there for proxy voting. The following rules
should be observed.
1. It should be in writing
2. and it should be signed and filled up by the stockholder or
member in any form authorized by the bylaws. The bylaws
should also indicate the manner by which the stockholder
can allow another to vote in his favor their template of the
proxy voting form.

It should also be received by the corporate secretary within a

reasonable time efore the scheduled meeting, unless provided by
the proxy form, it shall be valid only for the meeting for which it
was intended. And the proxy shall be valid and effective for a
period not longer than five years in any given time, section 57 of
the law.

On the voting trust agreement, the grant of voting trust for the
purpose of conferring upon the trustee or trust is the right to vote
will be governed by the following rules.
1. the voting trust agreement must be in writing very much like
a proxy for but this one, it should be notarized. It should
specify the terms and conditions of the grant.
3. They are agreement conferring upon the trustee or process
the right to vote and other rights pertaining to the shares is
limited for a period, not exceeding five years at any given
time.
4. a certified copy of such a agreement shall be filled with the
corporation should be filed there with the corporation and
with the sec, that is actually the principle distinction
between Proxy form and a voting trust agreement. The
 agreement, of course, there is a a formal requirement of a
notarization or voting trust agreement in proxy form
Notarization is not required. Most importantly is the
submission of this voting trust agreement we normally call it
the SEC.
5. And then the voting trust agreement filed by the with the
corporation shall be subject to examination. Made the stock
holder of the corporation in the same manner as other
corporate books and records, and
6. Voting trust agreement shall not be entered into for the
purpose of circumventing the law against anti-competitive
agreements, abuse of dominant position, anti-competitive
mergers and acquisitions by relation and capital
requirements, or for perpetration of fraud. The voting trust
agreement should not be entered into for the purpose of
violating in particular, the provisions of the Philippine
competition act,
7. Unless expressly renewed all rights, granted in a voting trust
agreement shall automatically expire at the end of the
period.

The inspection of the corporation's books and records is based

on their ownership of the assets. And and therefore an incident
to the ownership of the corporate property, whether this
ownership interest term as equitable ownership or beneficial
ownership or quasi ownership.

So meaning to say the right to inspect is actually a basic right of

the Stockholder there to information on matters relating to the
corporation. What is the foundation of this right to inspect in the
old case of Gokongwei versus SEC the Supreme court said the
stockholders right of inspection of the corporation's books and
records is premise on the ownership of the assets and property of
the corporation.

It is therefore an incident of ownership of the corporate

property, whether, this ownership B interest or equitable
ownership beneficial ownership or quasi ownership. Most
importantly is the right of the stock. Hold them to be informed
of what is going on in the corporation. And particular the right is
designed to protect the minority stock holder.

The exercise of the right inspection of the corporate books and

records requires the following element to be present.
1. the director trustee stock holder or member has made a prior
demand in writing. Okay. For a copy of the excerpts of the
corporation's records or minutes, it is not proper for the
demanding stock holder or demanding a director or a
trustee to simply appear Immediately in a particular office of
the corporation and demand the production of the records.
There must be a prior notice and opportunity for the
corporation to prepare these documents being
demanded.
8. And any officer or agent of the corporation concern who
refuse to allow the set director holder or member of the
corporation to examine and and copy said excerpts, if such a
refusal is made pursuant to the resolution or order of the
board of directors of trustees the lay ability under these a
section or for such other action shall be imposed upon
directors of trustees who voted for such refusal or failure or
refusal to allow inspection.
9. And then where the officer or agent of the corporation sets
up the defense that the person demanding to examine that
and copy the excerpts of the corporation's records and
minutes has improperly.

The demanding stock holder has used the information

previously obtained improperly then the Supreme court said
that such improper use of the information previously
obtained is sufficient basis to deny the stock, hold them or
peace demand to examine the corporate books and records.

Now can a petition for injunction, be filed by a corporation

to prevent inspection, think of a situation where the corporation
doesn't want to allow inspection. And so when the stock holder
has in fact demanded inspection, the corporation immediately
went to the court and asked for an injunction to prevent the stock
holder from demanding his right to inspect corporate books. So
something the Supreme court, no, the petition for injunction is a
preemptive action unjustly in intended to impede in the restraint,
the stockholders, right. If the stakeholder demands the
inspection of the corporate books, the corporation could refuse
to hit such demand.

When the corporation treats officer denies the stockholder of

such right the latter could go to court and enforce their rights.

Supreme court said the proper remedy available for the

informant of the right to inspection is undoubtedly the writ of
mandamus to be filed by the Stockholder. Not a petition for
injunction