Академический Документы
Профессиональный Документы
Культура Документы
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
CORPORATION
LAW
REVIEWER
(2013-‐2014)
ATTY.
JOSE
MARIA
G.
HOFILEÑA
meeting
duly
called
for
the
purpose.
corporation
must
not
only
comply
with
the
provisions
of
Section
38,
but
also
with
the
provisions
of
Section
16
of
the
Code
Bonds
issued
by
a
corporation
shall
be
registered
with
the
Securities
governing
the
amendment
of
the
articles
of
incorporation.
and
Exchange
Commission,
which
shall
have
the
authority
to
o Atty.
Hofileña
à
decrease
of
capital
stock
is
not
allowed
determine
the
sufficiency
of
the
terms
thereof.
(17a)
when
it
would
prejudice
creditors.
Creditors
deal
with
the
corporation
that
there
would
be
a
specific
capital
to
• Despite
the
board
resolution
approving
the
increase
in
capital
help
back
the
debt
incurred.
stock
and
the
receipt
of
payment
on
the
future
issues
of
the
2. Appraisal
Rights
Issues
shares
from
the
increased
capital
stock,
such
funds
do
not
• The
policy
embodied
in
Section
38
of
the
Corporation
Code
constitute
part
of
the
capital
stock
of
the
corporation
until
therefore,
although
it
recognizes
that
an
increase
in
authorized
approval
of
the
increase
by
SEC.
Central
Textile
Mills,
Inc.
v.
capital
stock
redefines
the
contractual
relations
in
the
corporate
NWPC,
260
SCRA368
(1996).
setting
as
it
requires
the
approval
of
stockholders
owning
or
• A
reduction
of
capital
to
justify
the
mass
layoff
of
employees,
representing
two-‐thirds
(2/3)
of
the
outstanding
capital
stock,
especially
of
union
members,
amounts
to
nothing
but
a
does
not
include
the
appraisal
right
on
the
part
of
the
dissenting
premature
and
plain
distribution
of
corporate
assets
to
obviate
stockholders,
in
the
sense
that
every
stockholder
should
come
a
just
sharing
to
labor
of
the
vast
profits
obtained
by
its
joint
into
the
corporate
setting
fully
aware
that
the
expediencies
of
efforts
with
capital
through
the
years,
and
would
constitute
corporate
life
may
require
that
eventually
the
corporation
may
unfair
labor
practice.
Madrigal
&
Co.
v.
Zamora,
151
SCRA
355
need
to
increase
capitalization
to
fund
its
operations
or
(1987).
expansions,
and
needs
to
look
primarily
into
its
equity
investors
1. Nature
of
Power1
to
fund
the
same.
• The
power
to
increase
or
decrease
capital
stock
is
not
an
3. Effectivity
of
Increase
in
Capital
Stock
inherent
power
of
the
corporation,
not
only
because
it
touches
• Prior
to
SEC
approval
of
the
increase
in
the
authorized
capital
upon
an
item
expressly
required
to
be
provided
for
in
the
stock
of
the
corporation,
and
despite
the
board
resolution
articles
of
incorporation,
but
also
the
capital
stock
of
a
approving
the
increase
in
capital
stock,
and
the
receipt
of
corporation
is
governed
by
common
law
doctrines,
such
as
the
payment
on
the
future
issues
of
the
shares
from
the
increased
trust
fund
doctrine,
and
pre-‐emptive
rights.
Therefore,
in
capital
stock,
such
funds
do
not
constitute
part
of
the
capital
increasing
or
decreasing
the
capital
stock
of
the
corporation,
the
stock
of
the
corporation
until
approval
of
the
increase
by
the
SEC.
1
Villanueva,
C.
L.,
&
Villanueva-‐Tiansay,
T.
S.
(2013).
Philippine
Corporate
Law.
(2013
ed.).
Manila,
Philippines:
Rex
Book
Store.
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)
CORPORATION
LAW
REVIEWER
(2013-‐2014)
ATTY.
JOSE
MARIA
G.
HOFILEÑA
4. Special
Rules
on
Listed
Shares
1
power
of
the
Board
of
Directors
under
the
doctrine
of
• The
SEC
Rules
in
the
case
of
corporations
whose
securities
are
centralized
management
and
would
not
require
listed
in
the
stock
exchange
or
registered
under
the
then
stockholders’
ratification.
Revised
Securities
Act
(now
covered
by
the
Securities
Regulation
o The
power
to
incur
and
create
indebtedness
under
Code),
is
that
no
announcement
of
an
offer
of
rights
to
acquire
Section
40
of
the
Code
provides
that
an
encumbrance
of
share
or
to
issue
stock
dividends
to
stockholders
shall
be
made
all
or
substantially
all
of
the
assets
of
the
corporation
after
an
increase
of
capital
stock
without
a
definite
fixed
date
would
require
stockholders’
ratification.
for
the
exercise
of
such
right
or
issuance
of
stock
dividends.
1. Nature
of
a
Bond
3
o The
rule
is
meant
to
avoid
delays
in
the
issuance
of
• In
one
opinion,
the
SEC
has
limited
the
term
"bonded
rights
or
distribution
of
stock
dividends
after
an
increase
indebtedness"
to
cover
only
indebtedness
of
the
corporation
of
capital
stock.
which
are
secured
by
mortgage
on
real
or
personal
property,
as
• Atty.
Hofileña
à
regardless
of
the
status
of
the
ACS,
you
can
distinguished
from
"debentures"
which
are
unsecured
apply
for
an
increase.
corporate
indebtedness.
o The
law
does
not
require
that
the
unissued
shares
first
• Debentures
are
issued
on
the
basis
of
the
general
credit
of
the
be
released
before
the
corporation
can
increase
its
corporation
and
are
not
secured
by
collaterals,
and
therefore
do
authorized
capital
stocks.
not
constitute
bonded
indebtedness
and
will
not
require
approval
of
the
stockholders.
D.
Incur,
Create
or
Increase
Bonded
Indebtedness
(Section
38)
2
• Atty.
Hofileña
à
“Public
indebtedness”;
not
similar
to
debts
• Differentiate
between
Article
38
or
Article
40
secured
for
the
ordinary
course
of
business.
o The
power
to
incur,
create
and
increase
bonded
2. Nature
of
Power
indebtedness
governed
by
Section
38
of
the
Civil
Code
• Ordinarily,
the
incurring,
creating
or
increasing
of
indebtedness
should
be
analyzed
from
the
fact
that
it
constitutes
an
really
does
not
go
into
or
amend
the
corporate
contractual
aspect
of
the
inherent
power
of
every
corporation
to
relationship
between
and
among
the
members
of
the
corporate
borrow
or
to
incur
loan
obligations.
Ordinarily,
this
family.
However,
when
it
comes
to
bonded
indebtedness,
exercise
to
borrow
falls
within
the
business
judgment
Section
38
imposes
the
same
procedural
requisites
as
the
increase
or
decrease
of
capital
stock,
since
they
create
special
1
Section
1,
Rules
Requiring
Definite
Dates
for
the
Exercise
of
Pre-‐Emptive
or
3
Other
Rights
or
For
the
Issuance
of
Stock
Dividends
(1973).
SEC
Opinion,
29
April
1987,
XXI
SEC
QUARTERLY
BULLETIN
21-‐22
(No.
3,
Sept.
2
Villanueva,
C.
L.,
&
Villanueva-‐Tiansay,
T.
S.
(2013).
Philippine
Corporate
Law.
1987).
See
also
SEC
Opinion,
6
April
1990,
XXIV
SEC
QUARTERLY
BULLETIN
28-‐29
(2013
ed.).
Manila,
Philippines:
Rex
Book
Store.
(No.
3,
Sept.
1990).
NOTES
BY
RACHELLE
ANNE
GUTIERREZ
(UPDATED
APRIL
3,
2014)