CORPORATE POWERS

Precisely because the corporation is

such a prevalent and dominating
factor in the business life of the
country, the law has to look carefully
into the exercise of powers by these
artificial persons it has created.
Reynoso IV v. Court of Appeals, 345 SCRA 335 (2000).
 CORPORATE POWERS
• Corporation Code in Art. 2, defining
the “Corporation,” it has powers,
attributes, and properties expressly
authorized by law or incident to its
existence.
 CORPORATE POWERS
• In Art. 45, no corporation under this
Code shall possess or exercise any
corporate powers, EXCEPT:
• those CONFERRED by this Code or by
its articles of incorporation and
• except such as are NECESSARY, or
• INCIDENTAL to the exercise of the
powers so conferred.
 CORPORATE POWERS
DOCTRINE OF LIMITED CAPACITY
• The enumeration of corporate powers
implies the EXCLUSION OF ALL OTHER
POWERS except when they are
INCIDENTAL or IMPLIED in conformity
with the generally accepted principle
of statutory construction "expressio
unius est exclusio alterius.“
 CORPORATE POWERS
ULTRA VIRES
Corporate acts that are outside those
express definitions under the law or
articles of incorporation or those
"committed outside the object for which
a corporation is created" are ULTRA
VIRES. (University of Mindanao v. BSP, G.R. No. 194964-65,
January 11, 2016; Republic v. Acoje Mining Company, Inc.,
117 Phil. 379, 383 (1963)
CLASSES OF CORPORATE POWERS
(1)EXPRESS - those conferred by this
code or by-laws: SSS-AID-EEE
•Sue and be sued
•Succession
•Use of Corporate Seal
•Amend and Adopt by-laws
•Issue or sell stocks
•Deal with (or manage its) properties
•Enter into Merger or Consolidation
•Establish plans
•Exercise such other powers
CLASSES OF CORPORATE POWERS
(2) IMPLIED –
Those that are reasonably necessary,
to execute or carry out purpose for
which the corporation is formed (De
Leon), and to carry out its duties of
administering and managing the
affairs, properties and temporalities of
the corporation, provided that such
powers are not inconsistent with the
law and the Constitution.
 CLASSES OF CORPORATE POWERS
(3) NECESSARY, INCIDENTAL, INHERENT–
• Incidental or inherent powers are powers which a
corporation can exercise by the mere fact of its
being a corporation or powers which are
necessary to corporate existence and are,
therefore, impliedly granted. (Sec. 36[11].) As
powers inherent in the corporation as a legal
entity, they exist independently of the express
powers, (see Sec. 45.)
 STATUTORY POWERS AND
LIMITATIONS ON ITS EXERCISE
AMENDMENT OF ARTICLES OF
INCORPORATION
• Approved by majority of vote of
BOD/BOT
• Written assent of stockholders, 2/3 of
the OCS/Members
• Articles, underscoring the changes,
shall be submitted to SEC
• Take effect upon approval or 6
months if not acted upon
 STATUTORY POWERS AND
LIMITATIONS ON ITS EXERCISE
INCREASE/DECREASE
OF CAPITAL STOCK
• Signed by majority of BOD/BOT, setting forth:
R-AAB-AAV
• Requirements
• Amount of increase/diminution
• Amount of capital stock or number of shares
• Bonded indebtedness
• Actual indebtedness
• Amount of stock represented in the meeting
• Vote
• Condition: 25-25 rule
• For non-stock 2/3 of members
 STATUTORY POWERS AND
LIMITATIONS ON ITS EXERCISE
SALE DISPOSITION OF ASSETS
• Majority of votes
• Authorized by 2/3 OCS or Members
 STATUTORY POWERS AND
LIMITATIONS ON ITS EXERCISE
ACQUISITION OF CORPORATE SHARES
• Eliminate fractional shares
• Compromise an indebtedness
• Pay dissenting or withdrawing
stockholders entitled to payment of
their shares under the provision of this
Code.