SEC 21. CORPORATION BY ESTOPPEL All persons who assume to act as a corp.

knowing it to have no authority to shal l be liable as GENERAL partners for all debts, liabilities and damages incurred. Provided that when any such ostensible corp. is sued on any transaction etc., it cant use its lack of corporate personality as a defense. One who has an obligation to an ostensible corp. cant resist performance on groun ds that theres no corp. Estoppel to deny corporate existence: (1) Stockholders or members (individually liable) (2) Third persons (3) All persons not stockholders or members who assume to act as a corp. A corp. by estoppel has no real existence in law (neither de jure or de facto) a mere fiction existing for the particular case Exists only among those pretending Existence of corp. by estoppel may be attacked by anyone except if he is estoppe d to treat it as one SEC 22. EFFECTS OF NON-USE OF CORPORATE CHARTER AND CONTINUOUS INOPERATION OF A CORP If a corp. does not formally organize and commence transaction o f business WITHIN 2 YEARS from date of INCORPORATION, corp. shall be deemed diss olved. But if it has commenced business operations but later on becomes continuously inoperative for a period of AT LEAST 5 YEARS, it will face same gr ound for suspension or revocation of corporate franchise or cert of incorp. EXCEPTION TO THIS: if inability to operate/commence is due to CA USES BEYOND CORPS CONTROL (as determined by SEC) Statutory Requirements Non-compliance will prevent creation of de jure corp. Strict compliance even with mandatory provisions (conditions precedent) are not required Law requires only substantial compliance Mandatory Provisions o Prescribe formalities for incorporation designed to protect public Directory Provisions o Regarded as relatively inconsequential (failure to comply with will not be fatal) Conditions Precedent o Non-compliance prevents legal existence o Ex. Filing of Articles of Incorp. Issuance of Certificate of Incorp by SEC Conditions Subsequent o Complied with after acquiring corporate existence so that corp. may lega lly continue Formal Organization and Commencement of Business (1) Acts constituting formal organization (2) Acts constituting commencement of business (3) Effect of subsequent continuous inoperation TITLE III BOARD OF DIRECTORS/TRUSTEES/OFFICERS SEC 23. BOARD OF DIRECTORS OR TRUSTEES Unless otherwise provided in this Code, corporate powers formed under th is Code shall be exercised, all business conducted and all property of such corp

orations controlled and held by BODs or trustees shall: (1) Hold office for 1 year and until successors are elected and qualified (2) Must own at least 1 share of capital stock of corp (Shall be in his name . If he ceases to own one, he ceases to be a director) (3) Majority must be residents of the Phil.