SEC. 31. Dealings of Directors, Trustees or Officers with the Corporation.

– A contract of the corporation with (1) one or more of its directors,

trustees, officers or their spouses and relatives within the fourth civil
degree of consanguinity or affinity is voidable, at the option of such
corporation, unless all the following conditions are present:
(a) The presence of such director or trustee in the board meeting in
which the contract was approved was not necessary to constitute a
quorum for such meeting;
(b) The vote of such director or trustee was not necessary for the
approval of the contract;
(c) The contract is fair and reasonable under the circumstances;
(d) In case of corporations vested with public interest, material
contracts are approved by at least two-thirds (2/3) of the entire
membership of the board, with at least a majority of the independent
directors voting to approve the material contract; and
(e) In case of an officer, the contract has been previously
authorized by the board of directors.

Where any of the first three (3) conditions set forth in the
preceding paragraph is absent, in the case of a contract with a
director or trustee, such contract may be ratified by the vote of
the stockholders representing at least two-thirds (2/3) of the
outstanding capital stock or of at least two-thirds (2/3) of the
members in a meeting called for the purpose: Provided, That full
disclosure of the adverse interest of the directors or trustees
involved is made at such meeting and the contract is fair and
reasonable under the circumstances.
SEC. 32. Contracts Between Corporations with Interlocking
Directors. – Except in cases of fraud, and provided the contract is
fair and reasonable under the circumstances, a contract between
two (2) or more corporations having interlocking directors shall not
be invalidated on that ground alone: Provided, That if the interest of
the interlocking director in one (1) corporation is substantial and the
interest in the other corporation or corporations is merely nominal,
the contract shall be subject to the provisions of the preceding
section insofar as the latter corporation or corporations are
concerned.
Stockholdings exceeding twenty percent (20%) of the outstanding
capital stock shall be considered substantial for purposes of
interlocking directors.
SEC. 33. Disloyalty of a Director. – Where a director, by
virtue of such office, acquires a business opportunity
which should belong to the corporation, thereby
obtaining profits to the prejudice of such corporation,
the director must account for and refund to the latter all
such profits, unless the act has been ratified by a vote of
the stockholders owning or representing at least
twothirds (2/3) of the outstanding capital stock. This
provision shall be applicable, notwithstanding the fact
that the director risked one’s own funds in the venture.
SEC. 34. Executive, Management, and Other Special Committees. – If
the bylaws so provide, the board may create an executive committee
composed of at least three (3) directors. Said committee may act, by
majority vote of all its members, on such specific matters within the
competence of the board, as may be delegated to it in the bylaws or
by majority vote of the board, except with respect to the: (a) approval
of any action for which shareholders’ approval is also required; (b)
filling of vacancies in the board; (c) amendment or repeal of bylaws or
the adoption of new bylaws; (d) amendment or repeal of any
resolution of the board which by its express terms is not amendable or
repealable; and (e) distribution of cash dividends to the shareholders.
The board of directors may create special committees of temporary or
permanent nature and determine the members’ term, composition,
compensation, powers, and responsibilities.
SEC. 35. Corporate Powers and Capacity. – Every corporation
incorporated under this Code has the power and capacity:
(a) To sue and be sued in its corporate name;
(b) To have perpetual existence unless the certificate of
incorporation provides otherwise;
(c) To adopt and use a corporate seal;
(d) To amend its articles of incorporation in accordance with
the provisions of this Code;
(e) To adopt bylaws, not contrary to law, morals or public
policy, and to amend or repeal the same in accordance with
this Code;
(f) In case of stock corporations, to issue or sell stocks to
subscribers and to sell treasury stocks in accordance with the
provisions of this Code; and to admit members to the
corporation if it be a nonstock corporation;
(g) To purchase, receive, take or grant, hold, convey, sell, lease,
pledge, mortgage, and otherwise deal with such real and
personal property, including securities and bonds of other
corporations, as the transaction of the lawful business of the
corporation may reasonably and necessarily require, subject to
the limitations prescribed by law and the Constitution;
(h) To enter into a partnership, joint venture, merger,
consolidation, or any other commercial agreement with natural
and juridical persons;
(i) To make reasonable donations, including those for the
public welfare or for hospital, charitable, cultural, scientific,
civic, or similar purposes: Provided, That no foreign
corporation shall give donations in aid of any political party
or candidate or for purposes of partisan political activity;
(j) To establish pension, retirement, and other plans for the
benefit of its directors, trustees, officers, and employees;
and
(k) To exercise such other powers as may be essential or
necessary to carry out its purpose or purposes as stated in
the articles of incorporation.
SEC. 36. Power to Extend or Shorten Corporate Term. – A private
corporation may extend or shorten its term as stated in the articles of
incorporation when approved by a majority vote of the board of directors
or trustees, and ratified at a meeting by the stockholders or members
representing at least two-thirds (2/3) of the outstanding capital stock or of
its members. Written notice of the proposed action and the time and place
of the meeting shall be sent to stockholders or members at their
respective place of residence as shown in the books of the corporation,
and must either be deposited to the addressee in the post office with
postage prepaid, served personally, or when allowed in the bylaws or done
with the consent of the stockholder, sent electronically in accordance with
the rules and regulations of the Commission on the use of electronic data
messages. In case of extension of corporate term, a dissenting stockholder
may exercise the right of appraisal under the conditions provided in this
Code.
Add a subheading
SEC. 38. Power to Deny Preemptive Right. – All stockholders of a
stock corporation shall enjoy preemptive right to subscribe to
all issues or disposition of shares of any class, in proportion to
their respective shareholdings, unless such right is denied by
the articles of incorporation or an amendment thereto:
Provided, That such preemptive right shall not extend to shares
issued in compliance with laws requiring stock offerings or
minimum stock ownership by the public; or to shares issued in
good faith with the approval of the stockholders representing
two-thirds (2/3) of the outstanding capital stock, in exchange for
property needed for corporate purposes or in payment of a
previously contracted debt.
Add a subheading
SEC. 40. Power to Acquire Own Shares. – Provided that the
corporation has unrestricted retained earnings in its books to cover
the shares to be purchased or acquired, a stock corporation shall
have the power to purchase or acquire its own shares for a
legitimate corporate purpose or purposes, including the following
cases:
(a) To eliminate fractional shares arising out of stock dividends;
(b) To collect or compromise an indebtedness to the corporation,
arising out of unpaid subscription, in a delinquency sale, and to
purchase delinquent shares sold during said sale; and
(c) To pay dissenting or withdrawing stockholders entitled to
payment for their shares under the provisions of this Code.