V - Every Corporation

c c 6.
The time for holding the annual

election of directors of trustees and

V
- Every corporation the mode or manner of giving notice
formed under this Code must, within one (1) month thereof;
after receipt of official notice of the issuance of its 7. The manner of election or
certificate of incorporation by the Securities and appointment and the term of office
Exchange Commission, adopt a code of by-laws for its of all officers other than directors or
government not inconsistent with this Code. For the trustees;
adoption of by-laws by the corporation the 8. The penalties for violation of the
affirmative vote of the stockholders representing at by-laws;
least a majority of the outstanding capital stock, or of 9. In the case of stock corporations,
at least a majority of the members in case of non- the manner of issuing stock
stock corporations, shall be necessary. The by-laws certificates; and
shall be signed by the stockholders or members 10. Such other matters as may be
voting for them and shall be kept in the principal necessary for the proper or
office of the corporation, subject to the inspection of convenient transaction of its
the stockholders or members during office hours. A corporate business and affairs. (21a)
copy thereof, duly certified to by a majority of the
V
- The board of
directors or trustees countersigned by the secretary directors or trustees, by a majority vote thereof, and
of the corporation, shall be filed with the Securities the owners of at least a majority of the outstanding
and Exchange Commission which shall be attached to capital stock, or at least a majority of the members of
the original articles of incorporation. a non-stock corporation, at a regular or special
Notwithstanding the provisions of the preceding meeting duly called for the purpose, may amend or
paragraph, by-laws may be adopted and filed prior to repeal any by-laws or adopt new by-laws. The owners
incorporation; in such case, such by-laws shall be of two-thirds (2/3) of the outstanding capital stock or
approved and signed by all the incorporators and two-thirds (2/3) of the members in a non-stock
submitted to the Securities and Exchange corporation may delegate to the board of directors or
Commission, together with the articles of trustees the power to amend or repeal any by-laws or
incorporation. adopt new by-laws: Provided, That any power
In all cases, by-laws shall be effective only upon the delegated to the board of directors or trustees to
issuance by the Securities and Exchange Commission amend or repeal any by-laws or adopt new by-laws
of a certification that the by-laws are not inconsistent shall be considered as revoked whenever
with this Code. stockholders owning or representing a majority of the
The Securities and Exchange Commission shall not outstanding capital stock or a majority of the
accept for filing the by-laws or any amendment members in non-stock corporations, shall so vote at a
thereto of any bank, banking institution, building and regular or special meeting.
loan association, trust company, insurance company, Whenever any amendment or new by-laws are
public utility, educational institution or other special adopted, such amendment or new by-laws shall be
corporations governed by special laws, unless attached to the original by-laws in the office of the
accompanied by a certificate of the appropriate corporation, and a copy thereof, duly certified under
government agency to the effect that such by-laws or oath by the corporate secretary and a majority of the
amendments are in accordance with law. (20a) directors or trustees, shall be filed with the Securities

J
- Subject to the and Exchange Commission the same to be attached
provisions of the Constitution, this Code, other to the original articles of incorporation and original
special laws, and the articles of incorporation, a by-laws.
private corporation may provide in its by-laws for: The amended or new by-laws shall only be effective
1. The time, place and manner of upon the issuance by the Securities and Exchange
calling and conducting regular or Commission of a certification that the same are not
special meetings of the directors or inconsistent with this Code. (22a and 23a)
trustees; c c
2. The time and manner of calling c
and conducting regular or special
- Meetings of directors,
meetings of the stockholders or trustees, stockholders, or members may be regular or
members; special. (n)
3. The required quorum in meetings

of stockholders or members and the - Regular meetings of
manner of voting therein; stockholders or members shall be held annually on a
4. The form for proxies of date fixed in the by-laws, or if not so fixed, on any
stockholders and members and the date in April of every year as determined by the
manner of voting them; board of directors or trustees: Provided, That written
5. The qualifications, duties and notice of regular meetings shall be sent to all
compensation of directors or stockholders or members of record at least two (2)
trustees, officers and employees; weeks prior to the meeting, unless a different period
is required by the by-laws.
Special meetings of stockholders or members shall be

held at any time deemed necessary or as provided in - In case of pledged or mortgaged
the by-laws: Provided, however, That at least one (1) shares in stock corporations, the pledgor or
week written notice shall be sent to all stockholders mortgagor shall have the right to attend and vote at
or members, unless otherwise provided in the by- meetings of stockholders, unless the pledgee or
laws. mortgagee is expressly given by the pledgor or
Notice of any meeting may be waived, expressly or mortgagor such right in writing which is recorded on
impliedly, by any stockholder or member. the appropriate corporate books. (n)
Whenever, for any cause, there is no person Executors, administrators, receivers, and other legal
authorized to call a meeting, the Secretaries and representatives duly appointed by the court may
Exchange Commission, upon petition of a stockholder attend and vote in behalf of the stockholders or
or member on a showing of good cause therefor, may members without need of any written proxy. (27a)
issue an order to the petitioning stockholder or
| -
member directing him to call a meeting of the In case of shares of stock owned jointly by two or
corporation by giving proper notice required by this more persons, in order to vote the same, the consent
Code or by the by-laws. The petitioning stockholder of all the co-owners shall be necessary, unless there is
or member shall preside thereat until at least a a written proxy, signed by all the co-owners,
majority of the stockholders or members present authorizing one or some of them or any other person
have been chosen one of their number as presiding to vote such share or shares: Provided, That when the
officer. (24, 26) shares are owned in an "and/or" capacity by the

D holders thereof, any one of the joint owners can vote
- Stockholders' or members' meetings, said shares or appoint a proxy therefor. (n)
whether regular or special, shall be held in the city or
| - Treasury
municipality where the principal office of the shares shall have no voting right as long as such
corporation is located, and if practicable in the shares remain in the Treasury. (n)
principal office of the corporation: Provided, That
D - Stockholders and members may
Metro Manila shall, for purposes of this section, be vote in person or by proxy in all meetings of
considered a city or municipality. stockholders or members. Proxies shall in writing,
Notice of meetings shall be in writing, and the time signed by the stockholder or member and filed before
and place thereof stated therein. the scheduled meeting with the corporate secretary.
All proceedings had and any business transacted at Unless otherwise provided in the proxy, it shall be
any meeting of the stockholders or members, if valid only for the meeting for which it is intended. No
within the powers or authority of the corporation, proxy shall be valid and effective for a period longer
shall be valid even if the meeting be improperly held than five (5) years at any one time. (n)
or called, provided all the stockholders or members
| - One or more stockholders of
of the corporation are present or duly represented at a stock corporation may create a voting trust for the
the meeting. (24 and 25) purpose of conferring upon a trustee or trustees the

å - Unless otherwise right to vote and other rights pertaining to the shares
provided for in this Code or in the by-laws, a quorum for a period not exceeding five (5) years at any time:
shall consist of the stockholders representing a Provided, That in the case of a voting trust specifically
majority of the outstanding capital stock or a majority required as a condition in a loan agreement, said
of the members in the case of non-stock voting trust may be for a period exceeding five (5)
corporations. (n) years but shall automatically expire upon full

payment of the loan. A voting trust agreement must
- Regular meetings of the board of directors be in writing and notarized, and shall specify the
or trustees of every corporation shall be held terms and conditions thereof. A certified copy of such
monthly, unless the by-laws provide otherwise. agreement shall be filed with the corporation and
Special meetings of the board of directors or trustees with the Securities and Exchange Commission;
may be held at any time upon the call of the otherwise, said agreement is ineffective and
president or as provided in the by-laws. unenforceable. The certificate or certificates of stock
Meetings of directors or trustees of corporations may covered by the voting trust agreement shall be
be held anywhere in or outside of the Philippines, canceled and new ones shall be issued in the name of
unless the by-laws provide otherwise. Notice of the trustee or trustees stating that they are issued
regular or special meetings stating the date, time and pursuant to said agreement. In the books of the
place of the meeting must be sent to every director corporation, it shall be noted that the transfer in the
or trustee at least one (1) day prior to the scheduled name of the trustee or trustees is made pursuant to
meeting, unless otherwise provided by the by-laws. A said voting trust agreement.
director or trustee may waive this requirement, The trustee or trustees shall execute and deliver to
either expressly or impliedly. (n) the transferors voting trust certificates, which shall

m - The be transferable in the same manner and with the
president shall preside at all meetings of the directors same effect as certificates of stock.
or trustee as well as of the stockholders or members, The voting trust agreement filed with the corporation
unless the by-laws provide otherwise. (n) shall be subject to examination by any stockholder of
the corporation in the same manner as any other
corporate book or record: Provided, That both the 6. Outstanding shares exchanged for
transferor and the trustee or trustees may exercise stocks in the event of reclassification
the right of inspection of all corporate books and or conversion.
records in accordance with the provisions of this Where the consideration is other than actual cash, or
Code. consists of intangible property such as patents of
Any other stockholder may transfer his shares to the copyrights, the valuation thereof shall initially be
same trustee or trustees upon the terms and determined by the incorporators or the board of
conditions stated in the voting trust agreement, and directors, subject to approval by the Securities and
thereupon shall be bound by all the provisions of said Exchange Commission.
agreement. Shares of stock shall not be issued in exchange for
No voting trust agreement shall be entered into for promissory notes or future service.
the purpose of circumventing the law against The same considerations provided for in this section,
monopolies and illegal combinations in restraint of insofar as they may be applicable, may be used for
trade or used for purposes of fraud. the issuance of bonds by the corporation.
Unless expressly renewed, all rights granted in a The issued price of no-par value shares may be fixed
voting trust agreement shall automatically expire at in the articles of incorporation or by the board of
the end of the agreed period, and the voting trust directors pursuant to authority conferred upon it by
certificates as well as the certificates of stock in the the articles of incorporation or the by-laws, or in the
name of the trustee or trustees shall thereby be absence thereof, by the stockholders representing at
deemed canceled and new certificates of stock shall least a majority of the outstanding capital stock at a
be reissued in the name of the transferors. meeting duly called for the purpose. (5 and 16)
The voting trustee or trustees may vote by proxy
J -
unless the agreement provides otherwise. (36a) The capital stock of stock corporations shall be
c c divided into shares for which certificates signed by
c c the president or vice president, countersigned by the

- Any contract for the secretary or assistant secretary, and sealed with the
acquisition of unissued stock in an existing seal of the corporation shall be issued in accordance
corporation or a corporation still to be formed shall with the by-laws. Shares of stock so issued are
be deemed a subscription within the meaning of this personal property and may be transferred by delivery
Title, notwithstanding the fact that the parties refer of the certificate or certificates endorsed by the
to it as a purchase or some other contract. (n) owner or his attorney-in-fact or other person legally

D
- A authorized to make the transfer. No transfer,
subscription for shares of stock of a corporation still however, shall be valid, except as between the
to be formed shall be irrevocable for a period of at parties, until the transfer is recorded in the books of
least six (6) months from the date of subscription, the corporation showing the names of the parties to
unless all of the other subscribers consent to the the transaction, the date of the transfer, the number
revocation, or unless the incorporation of said of the certificate or certificates and the number of
corporation fails to materialize within said period or shares transferred.
within a longer period as may be stipulated in the No shares of stock against which the corporation
contract of subscription: Provided, That no pre- holds any unpaid claim shall be transferable in the
incorporation subscription may be revoked after the books of the corporation. (35)
submission of the articles of incorporation to the
- No certificate
Securities and Exchange Commission. (n) of stock shall be issued to a subscriber until the full

J - Stocks shall not be amount of his subscription together with interest and
issued for a consideration less than the par or issued expenses (in case of delinquent shares), if any is due,
price thereof. Consideration for the issuance of stock has been paid. (37)
may be any or a combination of any two or more of
-
the following: Any director or officer of a corporation consenting to
1. Actual cash paid to the the issuance of stocks for a consideration less than its
corporation; par or issued value or for a consideration in any form
2. Property, tangible or intangible, other than cash, valued in excess of its fair value, or
actually received by the corporation who, having knowledge thereof, does not forthwith
and necessary or convenient for its express his objection in writing and file the same with
use and lawful purposes at a fair the corporate secretary, shall be solidarily, liable with
valuation equal to the par or issued the stockholder concerned to the corporation and its
value of the stock issued; creditors for the difference between the fair value
3. Labor performed for or services received at the time of issuance of the stock and the
actually rendered to the par or issued value of the same. (n)
corporation;
-
4. Previously incurred indebtedness Subscribers for stock shall pay to the corporation
of the corporation; interest on all unpaid subscriptions from the date of
5. Amounts transferred from subscription, if so required by, and at the rate of
unrestricted retained earnings to interest fixed in the by-laws. If no rate of interest is
stated capital; and
fixed in the by-laws, such rate shall be deemed to be shall be credited as paid in full in the books of the
the legal rate. (37) corporation. Title to all the shares of stock covered by

D - the subscription shall be vested in the corporation as
Subject to the provisions of the contract of treasury shares and may be disposed of by said
subscription, the board of directors of any stock corporation in accordance with the provisions of this
corporation may at any time declare due and payable Code.
to the corporation unpaid subscriptions to the capital
m ÷ - No action to
stock and may collect the same or such percentage recover delinquent stock sold can be sustained upon
thereof, in either case with accrued interest, if any, as the ground of irregularity or defect in the notice of
it may deem necessary. sale, or in the sale itself of the delinquent stock,
Payment of any unpaid subscription or any unless the party seeking to maintain such action first
percentage thereof, together with the interest pays or tenders to the party holding the stock the
accrued, if any, shall be made on the date specified in sum for which the same was sold, with interest from
the contract of subscription or on the date stated in the date of sale at the legal rate; and no such action
the call made by the board. Failure to pay on such shall be maintained unless it is commenced by the
date shall render the entire balance due and payable filing of a complaint within six (6) months from the
and shall make the stockholder liable for interest at date of sale. (47a)
the legal rate on such balance, unless a different rate
J
of interest is provided in the by-laws, computed from - Nothing in this Code shall prevent the corporation
such date until full payment. If within thirty (30) days from collecting by action in a court of proper
from the said date no payment is made, all stocks jurisdiction the amount due on any unpaid
covered by said subscription shall thereupon become subscription, with accrued interest, costs and
delinquent and shall be subject to sale as hereinafter expenses. (49a)
provided, unless the board of directors orders
Ê - No delinquent stock
otherwise. (38) shall be voted for be entitled to vote or to

A - The board of directors representation at any stockholder's meeting, nor
may, by resolution, order the sale of delinquent stock shall the holder thereof be entitled to any of the
and shall specifically state the amount due on each rights of a stockholder except the right to dividends in
subscription plus all accrued interest, and the date, accordance with the provisions of this Code, until and
time and place of the sale which shall not be less than unless he pays the amount due on his subscription
thirty (30) days nor more than sixty (60) days from with accrued interest, and the costs and expenses of
the date the stocks become delinquent. advertisement, if any. (50a)
Notice of said sale, with a copy of the resolution, shall
- Holders of
be sent to every delinquent stockholder either subscribed shares not fully paid which are not
personally or by registered mail. The same shall delinquent shall have all the rights of a stockholder.
furthermore be published once a week for two (2) (n)
consecutive weeks in a newspaper of general
- The following
circulation in the province or city where the principal procedure shall be followed for the issuance by a
office of the corporation is located. corporation of new certificates of stock in lieu of
Unless the delinquent stockholder pays to the those which have been lost, stolen or destroyed:
corporation, on or before the date specified for the 1. The registered owner of a certificate of
sale of the delinquent stock, the balance due on his stock in a corporation or his legal
subscription, plus accrued interest, costs of representative shall file with the corporation
advertisement and expenses of sale, or unless the an affidavit in triplicate setting forth, if
board of directors otherwise orders, said delinquent possible, the circumstances as to how the
stock shall be sold at public auction to such bidder certificate was lost, stolen or destroyed, the
who shall offer to pay the full amount of the balance number of shares represented by such
on the subscription together with accrued interest, certificate, the serial number of the
costs of advertisement and expenses of sale, for the certificate and the name of the corporation
smallest number of shares or fraction of a share. The which issued the same. He shall also submit
stock so purchased shall be transferred to such such other information and evidence which
purchaser in the books of the corporation and a he may deem necessary;
certificate for such stock shall be issued in his favor. 2. After verifying the affidavit and other
The remaining shares, if any, shall be credited in favor information and evidence with the books of
of the delinquent stockholder who shall likewise be the corporation, said corporation shall
entitled to the issuance of a certificate of stock publish a notice in a newspaper of general
covering such shares. circulation published in the place where the
Should there be no bidder at the public auction who corporation has its principal office, once a
offers to pay the full amount of the balance on the week for three (3) consecutive weeks at the
subscription together with accrued interest, costs of expense of the registered owner of the
advertisement and expenses of sale, for the smallest certificate of stock which has been lost,
number of shares or fraction of a share, the stolen or destroyed. The notice shall state
corporation may, subject to the provisions of this the name of said corporation, the name of
Code, bid for the same, and the total amount due the registered owner and the serial number
of said certificate, and the number of shares Any officer or agent of the corporation who shall
represented by such certificate, and that refuse to allow any director, trustees, stockholder or
after the expiration of one (1) year from the member of the corporation to examine and copy
date of the last publication, if no contest has excerpts from its records or minutes, in accordance
been presented to said corporation regarding with the provisions of this Code, shall be liable to
said certificate of stock, the right to make such director, trustee, stockholder or member for
such contest shall be barred and said damages, and in addition, shall be guilty of an offense
corporation shall cancel in its books the which shall be punishable under Section 144 of this
certificate of stock which has been lost, Code: Provided, That if such refusal is made pursuant
stolen or destroyed and issue in lieu thereof to a resolution or order of the board of directors or
new certificate of stock, unless the registered trustees, the liability under this section for such
owner files a bond or other security in lieu action shall be imposed upon the directors or
thereof as may be required, effective for a trustees who voted for such refusal: and Provided,
period of one (1) year, for such amount and further, That it shall be a defense to any action under
in such form and with such sureties as may this section that the person demanding to examine
be satisfactory to the board of directors, in and copy excerpts from the corporation's records and
which case a new certificate may be issued minutes has improperly used any information
even before the expiration of the one (1) secured through any prior examination of the records
year period provided herein: Provided, That or minutes of such corporation or of any other
if a contest has been presented to said corporation, or was not acting in good faith or for a
corporation or if an action is pending in court legitimate purpose in making his demand.
regarding the ownership of said certificate of Stock corporations must also keep a book to be
stock which has been lost, stolen or known as the "stock and transfer book", in which
destroyed, the issuance of the new must be kept a record of all stocks in the names of
certificate of stock in lieu thereof shall be the stockholders alphabetically arranged; the
suspended until the final decision by the installments paid and unpaid on all stock for which
court regarding the ownership of said subscription has been made, and the date of
certificate of stock which has been lost, payment of any installment; a statement of every
stolen or destroyed. alienation, sale or transfer of stock made, the date
Except in case of fraud, bad faith, or negligence on thereof, and by and to whom made; and such other
the part of the corporation and its officers, no action entries as the by-laws may prescribe. The stock and
may be brought against any corporation which shall transfer book shall be kept in the principal office of
have issued certificate of stock in lieu of those lost, the corporation or in the office of its stock transfer
stolen or destroyed pursuant to the procedure agent and shall be open for inspection by any director
above-described. (R. A. 201a) or stockholder of the corporation at reasonable hours
c c on business days.
c No stock transfer agent or one engaged principally in

p - the business of registering transfers of stocks in
Every corporation shall keep and carefully preserve at behalf of a stock corporation shall be allowed to
its principal office a record of all business operate in the Philippines unless he secures a license
transactions and minutes of all meetings of from the Securities and Exchange Commission and
stockholders or members, or of the board of directors pays a fee as may be fixed by the Commission, which
or trustees, in which shall be set forth in detail the shall be renewable annually: Provided, That a stock
time and place of holding the meeting, how corporation is not precluded from performing or
authorized, the notice given, whether the meeting making transfer of its own stocks, in which case all
was regular or special, if special its object, those the rules and regulations imposed on stock transfer
present and absent, and every act done or ordered agents, except the payment of a license fee herein
done at the meeting. Upon the demand of any provided, shall be applicable. (51a and 32a; B. P. No.
director, trustee, stockholder or member, the time 268.)
when any director, trustee, stockholder or member
- Within ten
entered or left the meeting must be noted in the (10) days from receipt of a written request of any
minutes; and on a similar demand, the yeas and nays stockholder or member, the corporation shall furnish
must be taken on any motion or proposition, and a to him its most recent financial statement, which
record thereof carefully made. The protest of any shall include a balance sheet as of the end of the last
director, trustee, stockholder or member on any taxable year and a profit or loss statement for said
action or proposed action must be recorded in full on taxable year, showing in reasonable detail its assets
his demand. and liabilities and the result of its operations.
The records of all business transactions of the At the regular meeting of stockholders or members,
corporation and the minutes of any meetings shall be the board of directors or trustees shall present to
open to inspection by any director, trustee, such stockholders or members a financial report of
stockholder or member of the corporation at the operations of the corporation for the preceding
reasonable hours on business days and he may year, which shall include financial statements, duly
demand, writing, for a copy of excerpts from said signed and certified by an independent certified
records or minutes, at his expense. public accountant.
However, if the paid-up capital of the corporation is two-thirds (2/3) of the outstanding capital stock or of
less than P50,000.00, the financial statements may be two-thirds (2/3) of the members of each of the
certified under oath by the treasurer or any constituent corporations. Such plan, together with
responsible officer of the corporation. (n) any amendment, shall be considered as the
c c ! agreement of merger or consolidation. (n)
c
V - After

D - Two or the approval by the stockholders or members as
more corporations may merge into a single required by the preceding section, articles of merger
corporation which shall be one of the constituent or articles of consolidation shall be executed by each
corporations or may consolidate into a new single of the constituent corporations, to be signed by the
corporation which shall be the consolidated president or vice-president and certified by the
corporation. secretary or assistant secretary of each corporation
The board of directors or trustees of each setting forth:
corporation, party to the merger or consolidation, 1. The plan of the merger or the plan of
shall approve a plan of merger or consolidation consolidation;
setting forth the following: 2. As to stock corporations, the number of
1. The names of the corporations proposing shares outstanding, or in the case of non-
to merge or consolidate, hereinafter referred stock corporations, the number of members;
to as the constituent corporations; and
2. The terms of the merger or consolidation 3. As to each corporation, the number of
and the mode of carrying the same into shares or members voting for and against
effect; such plan, respectively. (n)
3. A statement of the changes, if any, in the
Ê - The
articles of incorporation of the surviving articles of merger or of consolidation, signed and
corporation in case of merger; and, with certified as herein above required, shall be submitted
respect to the consolidated corporation in to the Securities and Exchange Commission in
case of consolidation, all the statements quadruplicate for its approval: Provided, That in the
required to be set forth in the articles of case of merger or consolidation of banks or banking
incorporation for corporations organized institutions, building and loan associations, trust
under this Code; and companies, insurance companies, public utilities,
4. Such other provisions with respect to the educational institutions and other special
proposed merger or consolidation as are corporations governed by special laws, the favorable
deemed necessary or desirable. (n) recommendation of the appropriate government

- Upon agency shall first be obtained. If the Commission is
approval by majority vote of each of the board of satisfied that the merger or consolidation of the
directors or trustees of the constituent corporations corporations concerned is not inconsistent with the
of the plan of merger or consolidation, the same shall provisions of this Code and existing laws, it shall issue
be submitted for approval by the stockholders or a certificate of merger or of consolidation, at which
members of each of such corporations at separate time the merger or consolidation shall be effective.
corporate meetings duly called for the purpose. If, upon investigation, the Securities and Exchange
Notice of such meetings shall be given to all Commission has reason to believe that the proposed
stockholders or members of the respective merger or consolidation is contrary to or inconsistent
corporations, at least two (2) weeks prior to the date with the provisions of this Code or existing laws, it
of the meeting, either personally or by registered shall set a hearing to give the corporations concerned
mail. Said notice shall state the purpose of the the opportunity to be heard. Written notice of the
meeting and shall include a copy or a summary of the date, time and place of hearing shall be given to each
plan of merger or consolidation. The affirmative vote constituent corporation at least two (2) weeks before
of stockholders representing at least two-thirds (2/3) said hearing. The Commission shall thereafter
of the outstanding capital stock of each corporation proceed as provided in this Code. (n)
in the case of stock corporations or at least two-
Ê - The
thirds (2/3) of the members in the case of non-stock merger or consolidation shall have the following
corporations shall be necessary for the approval of effects:
such plan. Any dissenting stockholder in stock 1. The constituent corporations shall become a single
corporations may exercise his appraisal right in corporation which, in case of merger, shall be the
accordance with the Code: Provided, That if after the surviving corporation designated in the plan of
approval by the stockholders of such plan, the board merger; and, in case of consolidation, shall be the
of directors decides to abandon the plan, the consolidated corporation designated in the plan of
appraisal right shall be extinguished. consolidation;
Any amendment to the plan of merger or 2. The separate existence of the constituent
consolidation may be made, provided such corporations shall cease, except that of the
amendment is approved by majority vote of the surviving or the consolidated corporation;
respective boards of directors or trustees of all the 3. The surviving or the consolidated
constituent corporations and ratified by the corporation shall possess all the rights,
affirmative vote of stockholders representing at least privileges, immunities and powers and shall
be subject to all the duties and liabilities of a If within a period of sixty (60) days from the date the
corporation organized under this Code; corporate action was approved by the stockholders,
4. The surviving or the consolidated the withdrawing stockholder and the corporation
corporation shall thereupon and thereafter cannot agree on the fair value of the shares, it shall
possess all the rights, privileges, immunities be determined and appraised by three (3)
and franchises of each of the constituent disinterested persons, one of whom shall be named
corporations; and all property, real or by the stockholder, another by the corporation, and
personal, and all receivables due on whatever the third by the two thus chosen. The findings of the
account, including subscriptions to shares and majority of the appraisers shall be final, and their
other choses in action, and all and every award shall be paid by the corporation within thirty
other interest of, or belonging to, or due to (30) days after such award is made: Provided, That no
each constituent corporation, shall be payment shall be made to any dissenting stockholder
deemed transferred to and vested in such unless the corporation has unrestricted retained
surviving or consolidated corporation without earnings in its books to cover such payment: and
further act or deed; and Provided, further, That upon payment by the
5. The surviving or consolidated corporation shall be corporation of the agreed or awarded price, the
responsible and liable for all the liabilities and stockholder shall forthwith transfer his shares to the
obligations of each of the constituent corporations in corporation. (n)
the same manner as if such surviving or consolidated
Ê -
corporation had itself incurred such liabilities or From the time of demand for payment of the fair
obligations; and any pending claim, action or value of a stockholder's shares until either the
proceeding brought by or against any of such abandonment of the corporate action involved or the
constituent corporations may be prosecuted by or purchase of the said shares by the corporation, all
against the surviving or consolidated corporation. The rights accruing to such shares, including voting and
rights of creditors or liens upon the property of any of dividend rights, shall be suspended in accordance
such constituent corporations shall not be impaired with the provisions of this Code, except the right of
by such merger or consolidation. (n) such stockholder to receive payment of the fair value
c c! thereof: Provided, That if the dissenting stockholder
c is not paid the value of his shares within 30 days after

- Any the award, his voting and dividend rights shall
stockholder of a corporation shall have the right to immediately be restored. (n)
dissent and demand payment of the fair value of his
m - No demand
shares in the following instances: for payment under this Title may be withdrawn
1. In case any amendment to the unless the corporation consents thereto. If, however,
articles of incorporation has the such demand for payment is withdrawn with the
effect of changing or restricting the consent of the corporation, or if the proposed
rights of any stockholder or class of corporate action is abandoned or rescinded by the
shares, or of authorizing preferences corporation or disapproved by the Securities and
in any respect superior to those of Exchange Commission where such approval is
outstanding shares of any class, or of necessary, or if the Securities and Exchange
extending or shortening the term of Commission determines that such stockholder is not
corporate existence; entitled to the appraisal right, then the right of said
2. In case of sale, lease, exchange, stockholder to be paid the fair value of his shares
transfer, mortgage, pledge or other shall cease, his status as a stockholder shall
disposition of all or substantially all thereupon be restored, and all dividend distributions
of the corporate property and assets which would have accrued on his shares shall be paid
as provided in the Code; and to him. (n)
3. In case of merger or consolidation.
m - The costs and
(n) expenses of appraisal shall be borne by the

X - The appraisal right corporation, unless the fair value ascertained by the
may be exercised by any stockholder who shall have appraisers is approximately the same as the price
voted against the proposed corporate action, by which the corporation may have offered to pay the
making a written demand on the corporation within stockholder, in which case they shall be borne by the
thirty (30) days after the date on which the vote was latter. In the case of an action to recover such fair
taken for payment of the fair value of his shares: value, all costs and expenses shall be assessed against
Provided, That failure to make the demand within the corporation, unless the refusal of the stockholder
such period shall be deemed a waiver of the appraisal to receive payment was unjustified. (n)
right. If the proposed corporate action is
0
implemented or affected, the corporation shall pay to - Within ten (10) days after demanding payment for
such stockholder, upon surrender of the certificate or his shares, a dissenting stockholder shall submit the
certificates of stock representing his shares, the fair certificates of stock representing his shares to the
value thereof as of the day prior to the date on which corporation for notation thereon that such shares are
the vote was taken, excluding any appreciation or dissenting shares. His failure to do so shall, at the
depreciation in anticipation of such corporate action. option of the corporation, terminate his rights under
this Title. If shares represented by the certificates
Ê - Unless
bearing such notation are transferred, and the otherwise provided in the articles of incorporation or
certificates consequently canceled, the rights of the the by-laws, the board of trustees of non-stock
transferor as a dissenting stockholder under this Title corporations, which may be more than fifteen (15) in
shall cease and the transferee shall have all the rights number as may be fixed in their articles of
of a regular stockholder; and all dividend distributions incorporation or by-laws, shall, as soon as organized,
which would have accrued on such shares shall be so classify themselves that the term of office of one-
paid to the transferee. (n) third (1/3) of their number shall expire every year;
and subsequent elections of trustees comprising one-
c c! third (1/3) of the board of trustees shall be held
" c c annually and trustees so elected shall have a term of

A - For the purposes of this Code, a three (3) years. Trustees thereafter elected to fill
non-stock corporation is one where no part of its vacancies occurring before the expiration of a
income is distributable as dividends to its members, particular term shall hold office only for the
trustees, or officers, subject to the provisions of this unexpired period.
Code on dissolution: Provided, That any profit which No person shall be elected as trustee unless he is a
a non-stock corporation may obtain as an incident to member of the corporation.
its operations shall, whenever necessary or proper, Unless otherwise provided in the articles of
be used for the furtherance of the purpose or incorporation or the by-laws, officers of a non-stock
purposes for which the corporation was organized, corporation may be directly elected by the members.
subject to the provisions of this Title. (n)
The provisions governing stock corporation, when
D - The by-laws may provide
pertinent, shall be applicable to non-stock that the members of a non-stock corporation may
corporations, except as may be covered by specific hold their regular or special meetings at any place
provisions of this Title. (n) even outside the place where the principal office of

D - Non-stock corporations may be the corporation is located: Provided, That proper
formed or organized for charitable, religious, notice is sent to all members indicating the date, time
educational, professional, cultural, fraternal, literary, and place of the meeting: and Provided, further, That
scientific, social, civic service, or similar purposes, like the place of meeting shall be within the Philippines.
trade, industry, agricultural and like chambers, or any (n)
combination thereof, subject to the special provisions
of this Title governing particular classes of non-stock #$%&
' " c (c ) c
corporations. (n) " c c
#$%&
' "
- In case dissolution of

- The right of the members of a non-stock corporation in accordance with the
any class or classes to vote may be limited, provisions of this Code, its assets shall be applied and
broadened or denied to the extent specified in the distributed as follows:
articles of incorporation or the by-laws. Unless so 1. All liabilities and obligations of the
limited, broadened or denied, each member, corporation shall be paid, satisfied
regardless of class, shall be entitled to one vote. and discharged, or adequate
Unless otherwise provided in the articles of provision shall be made therefore;
incorporation or the by-laws, a member may vote by 2. Assets held by the corporation
proxy in accordance with the provisions of this Code. upon a condition requiring return,
(n) transfer or conveyance, and which
Voting by mail or other similar means by members of condition occurs by reason of the
non-stock corporations may be authorized by the by- dissolution, shall be returned,
laws of non-stock corporations with the approval of, transferred or conveyed in
and under such conditions which may be prescribed accordance with such requirements;
by, the Securities and Exchange Commission. 3. Assets received and held by the

0
- corporation subject to limitations
Membership in a non-stock corporation and all rights permitting their use only for
arising therefrom are personal and non-transferable, charitable, religious, benevolent,
unless the articles of incorporation or the by-laws educational or similar purposes, but
otherwise provide. (n) not held upon a condition requiring

c - Membership return, transfer or conveyance by
shall be terminated in the manner and for the causes reason of the dissolution, shall be
provided in the articles of incorporation or the by- transferred or conveyed to one or
laws. Termination of membership shall have the more corporations, societies or
effect of extinguishing all rights of a member in the organizations engaged in activities in
corporation or in its property, unless otherwise the Philippines substantially similar
provided in the articles of incorporation or the by- to those of the dissolving
laws. (n) corporation according to a plan of
#$%&
' "c( c )) distribution adopted pursuant to this
Chapter;
4. Assets other than those The provisions of this Title shall primarily govern
mentioned in the preceding close corporations: Provided, That the provisions of
paragraphs, if any, shall be other Titles of this Code shall apply suppletorily
distributed in accordance with the except insofar as this Title otherwise provides.
provisions of the articles of
V - The articles of
incorporation or the by-laws, to the incorporation of a close corporation may provide:
extent that the articles of 1. For a classification of shares or
incorporation or the by-laws, rights and the qualifications for
determine the distributive rights of owning or holding the same and
members, or any class or classes of restrictions on their transfers as may
members, or provide for be stated therein, subject to the
distribution; and provisions of the following section;
5. In any other case, assets may be 2. For a classification of directors
distributed to such persons, into one or more classes, each of
societies, organizations or whom may be voted for and elected
corporations, whether or not solely by a particular class of stock;
organized for profit, as may be and
specified in a plan of distribution 3. For a greater quorum or voting
adopted pursuant to this Chapter. requirements in meetings of
(n) stockholders or directors than those

D - A plan provided in this Code.
providing for the distribution of assets, not The articles of incorporation of a close corporation
inconsistent with the provisions of this Title, may be may provide that the business of the corporation
adopted by a non-stock corporation in the process of shall be managed by the stockholders of the
dissolution in the following manner: corporation rather than by a board of directors. So
The board of trustees shall, by majority vote, adopt a long as this provision continues in effect:
resolution recommending a plan of distribution and 1. No meeting of stockholders need
directing the submission thereof to a vote at a regular be called to elect directors;
or special meeting of members having voting rights. 2. Unless the context clearly requires
Written notice setting forth the proposed plan of otherwise, the stockholders of the
distribution or a summary thereof and the date, time corporation shall be deemed to be
and place of such meeting shall be given to each directors for the purpose of applying
member entitled to vote, within the time and in the the provisions of this Code; and
manner provided in this Code for the giving of notice 3. The stockholders of the
of meetings to members. Such plan of distribution corporation shall be subject to all
shall be adopted upon approval of at least two-thirds liabilities of directors.
(2/3) of the members having voting rights present or The articles of incorporation may likewise provide
represented by proxy at such meeting. (n) that all officers or employees or that specified
officers or employees shall be elected or appointed
c c! by the stockholders, instead of by the board of
c directors.

A c - A close
|
corporation, within the meaning of this Code, is one - Restrictions on the right to transfer shares must
whose articles of incorporation provide that: (1) All appear in the articles of incorporation and in the by-
the corporation's issued stock of all classes, exclusive laws as well as in the certificate of stock; otherwise,
of treasury shares, shall be held of record by not the same shall not be binding on any purchaser
more than a specified number of persons, not thereof in good faith. Said restrictions shall not be
exceeding twenty (20); (2) all the issued stock of all more onerous than granting the existing stockholders
classes shall be subject to one or more specified or the corporation the option to purchase the shares
restrictions on transfer permitted by this Title; and (3) of the transferring stockholder with such reasonable
The corporation shall not list in any stock exchange or terms, conditions or period stated therein. If upon
make any public offering of any of its stock of any the expiration of said period, the existing
class. Notwithstanding the foregoing, a corporation stockholders or the corporation fails to exercise the
shall not be deemed a close corporation when at option to purchase, the transferring stockholder may
least two-thirds (2/3) of its voting stock or voting sell his shares to any third person.
rights is owned or controlled by another corporation
Ê
which is not a close corporation within the meaning d
of this Code. 1. If stock of a close corporation is
Any corporation may be incorporated as a close issued or transferred to any person
corporation, except mining or oil companies, stock who is not entitled under any
exchanges, banks, insurance companies, public provision of the articles of
utilities, educational institutions and corporations incorporation to be a holder of
declared to be vested with public interest in record of its stock, and if the
accordance with the provisions of this Code. certificate for such stock
conspicuously shows the applicable warranty, express or
qualifications of the persons entitled implied.
to be holders of record thereof, such
V -
person is conclusively presumed to 1. Agreements by and among
have notice of the fact of his stockholders executed before the
ineligibility to be a stockholder. formation and organization of a
2. If the articles of incorporation of a close corporation, signed by all
close corporation states the number stockholders, shall survive the
of persons, not exceeding twenty incorporation of such corporation
(20), who are entitled to be holders and shall continue to be valid and
of record of its stock, and if the binding between and among such
certificate for such stock stockholders, if such be their intent,
conspicuously states such number, to the extent that such agreements
and if the issuance or transfer of are not inconsistent with the articles
stock to any person would cause the of incorporation, irrespective of
stock to be held by more than such where the provisions of such
number of persons, the person to agreements are contained, except
whom such stock is issued or those required by this Title to be
transferred is conclusively presumed embodied in said articles of
to have notice of this fact. incorporation.
3. If a stock certificate of any close 2. An agreement between two or
corporation conspicuously shows a more stockholders, if in writing and
restriction on transfer of stock of the signed by the parties thereto, may
corporation, the transferee of the provide that in exercising any voting
stock is conclusively presumed to rights, the shares held by them shall
have notice of the fact that he has be voted as therein provided, or as
acquired stock in violation of the they may agree, or as determined in
restriction, if such acquisition accordance with a procedure agreed
violates the restriction. upon by them.
4. Whenever any person to whom 3. No provision in any written
stock of a close corporation has agreement signed by the
been issued or transferred has, or is stockholders, relating to any phase
conclusively presumed under this of the corporate affairs, shall be
section to have, notice either (a) that invalidated as between the parties
he is a person not eligible to be a on the ground that its effect is to
holder of stock of the corporation, make them partners among
or (b) that transfer of stock to him themselves.
would cause the stock of the 4. A written agreement among some
corporation to be held by more than or all of the stockholders in a close
the number of persons permitted by corporation shall not be invalidated
its articles of incorporation to hold on the ground that it so relates to
stock of the corporation, or (c) that the conduct of the business and
the transfer of stock is in violation of affairs of the corporation as to
a restriction on transfer of stock, the restrict or interfere with the
corporation may, at its option, discretion or powers of the board of
refuse to register the transfer of directors: Provided, That such
stock in the name of the transferee. agreement shall impose on the
5. The provisions of subsection (4) stockholders who are parties thereto
shall not applicable if the transfer of the liabilities for managerial acts
stock, though contrary to imposed by this Code on directors.
subsections (1), (2) of (3), has been 5. To the extent that the
consented to by all the stockholders stockholders are actively engaged in
of the close corporation, or if the the management or operation of the
close corporation has amended its business and affairs of a close
articles of incorporation in corporation, the stockholders shall
accordance with this Title. be held to strict fiduciary duties to
6. The term "transfer", as used in each other and among themselves.
this section, is not limited to a Said stockholders shall be personally
transfer for value. liable for corporate torts unless the
7. The provisions of this section shall corporation has obtained reasonably
not impair any right which the adequate liability insurance.
transferee may have to rescind the
m
transfer or to recover under any - Unless the by-laws provide
otherwise, any action by the directors of a close
corporation without a meeting shall nevertheless be directing or prohibiting any act of the corporation or
deemed valid if: its board of directors, stockholders, officers, or other
1. Before or after such action is persons party to the action; (4) requiring the
taken, written consent thereto is purchase at their fair value of shares of any
signed by all the directors; or stockholder, either by the corporation regardless of
2. All the stockholders have actual or the availability of unrestricted retained earnings in its
implied knowledge of the action and books, or by the other stockholders; (5) appointing a
make no prompt objection thereto provisional director; (6) dissolving the corporation; or
in writing; or (7) granting such other relief as the circumstances
3. The directors are accustomed to may warrant.
take informal action with the A provisional director shall be an impartial person
express or implied acquiescence of who is neither a stockholder nor a creditor of the
all the stockholders; or corporation or of any subsidiary or affiliate of the
4. All the directors have express or corporation, and whose further qualifications, if any,
implied knowledge of the action in may be determined by the Commission. A provisional
question and none of them makes director is not a receiver of the corporation and does
prompt objection thereto in writing. not have the title and powers of a custodian or
If a director's meeting is held without proper call or receiver. A provisional director shall have all the
notice, an action taken therein within the corporate rights and powers of a duly elected director of the
powers is deemed ratified by a director who failed to corporation, including the right to notice of and to
attend, unless he promptly files his written objection vote at meetings of directors, until such time as he
with the secretary of the corporation after having shall be removed by order of the Commission or by
knowledge thereof. all the stockholders. His compensation shall be

D
- determined by agreement between him and the
The pre-emptive right of stockholders in close corporation subject to approval of the Commission,
corporations shall extend to all stock to be issued, which may fix his compensation in the absence of
including reissuance of treasury shares, whether for agreement or in the event of disagreement between
money, property or personal services, or in payment the provisional director and the corporation.
of corporate debts, unless the articles of
m
incorporation provide otherwise. - In addition and without prejudice to

V - other rights and remedies available to a stockholder
Any amendment to the articles of incorporation under this Title, any stockholder of a close
which seeks to delete or remove any provision corporation may, for any reason, compel the said
required by this Title to be contained in the articles of corporation to purchase his shares at their fair value,
incorporation or to reduce a quorum or voting which shall not be less than their par or issued value,
requirement stated in said articles of incorporation when the corporation has sufficient assets in its
shall not be valid or effective unless approved by the books to cover its debts and liabilities exclusive of
affirmative vote of at least two-thirds (2/3) of the capital stock: Provided, That any stockholder of a
outstanding capital stock, whether with or without close corporation may, by written petition to the
voting rights, or of such greater proportion of shares Securities and Exchange Commission, compel the
as may be specifically provided in the articles of dissolution of such corporation whenever any of acts
incorporation for amending, deleting or removing any of the directors, officers or those in control of the
of the aforesaid provisions, at a meeting duly called corporation is illegal, or fraudulent, or dishonest, or
for the purpose. oppressive or unfairly prejudicial to the corporation

A - Notwithstanding any contrary or any stockholder, or whenever corporate assets are
provision in the articles of incorporation or by-laws or being misapplied or wasted.
agreement of stockholders of a close corporation, if c c!
the directors or stockholders are so divided c
respecting the management of the corporation's #$%&
' "*+$&,-.$/-'%-'$&,-.0
business and affairs that the votes required for any
- Educational corporations
corporate action cannot be obtained, with the shall be governed by special laws and by the general
consequence that the business and affairs of the provisions of this Code. (n)
corporation can no longer be conducted to the
D
- Except
advantage of the stockholders generally, the upon favorable recommendation of the Ministry of
Securities and Exchange Commission, upon written Education and Culture, the Securities and Exchange
petition by any stockholder, shall have the power to Commission shall not accept or approve the articles
arbitrate the dispute. In the exercise of such power, of incorporation and by-laws of any educational
the Commission shall have authority to make such institution. (168a)
order as it deems appropriate, including an order: (1)
p - Trustees of educational
canceling or altering any provision contained in the institutions organized as non-stock corporations shall
articles of incorporation, by-laws, or any not be less than five (5) nor more than fifteen (15):
stockholder's agreement; (2) canceling, altering or Provided, however, That the number of trustees shall
enjoining any resolution or act of the corporation or be in multiples of five (5).
its board of directors, stockholders, or officers; (3)
Unless otherwise provided in the articles of to be filled, according to the rules,
incorporation on the by-laws, the board of trustees of regulations or discipline of the
incorporated schools, colleges, or other institutions religious denomination, sect or
of learning shall, as soon as organized, so classify church to which he belongs; and
themselves that the term of office of one-fifth (1/5) 5. The place where the principal
of their number shall expire every year. Trustees office of the corporation sole is to be
thereafter elected to fill vacancies, occurring before established and located, which place
the expiration of a particular term, shall hold office must be within the Philippines.
only for the unexpired period. Trustees elected The articles of incorporation may include any other
thereafter to fill vacancies caused by expiration of provision not contrary to law for the regulation of the
term shall hold office for five (5) years. A majority of affairs of the corporation. (n)
the trustees shall constitute a quorum for the

transaction of business. The powers and authority of - The articles of incorporation must be verified,
trustees shall be defined in the by-laws. before filing, by affidavit or affirmation of the chief
For institutions organized as stock corporations, the archbishop, bishop, priest, minister, rabbi or
number and term of directors shall be governed by presiding elder, as the case may be, and accompanied
the provisions on stock corporations. (169a) by a copy of the commission, certificate of election or
letter of appointment of such chief archbishop,
#$%&
' " ( c bishop, priest, minister, rabbi or presiding elder, duly

J - Religious certified to be correct by any notary public.
corporations may be incorporated by one or more From and after the filing with the Securities and
persons. Such corporations may be classified into Exchange Commission of the said articles of
corporations sole and religious societies. incorporation, verified by affidavit or affirmation, and
Religious corporations shall be governed by this accompanied by the documents mentioned in the
Chapter and by the general provisions on non-stock preceding paragraph, such chief archbishop, bishop,
corporations insofar as they may be applicable. (n) priest, minister, rabbi or presiding elder shall become

J - For the purpose of a corporation sole and all temporalities, estate and
administering and managing, as trustee, the affairs, properties of the religious denomination, sect or
property and temporalities of any religious church theretofore administered or managed by him
denomination, sect or church, a corporation sole may as such chief archbishop, bishop, priest, minister,
be formed by the chief archbishop, bishop, priest, rabbi or presiding elder shall be held in trust by him
minister, rabbi or other presiding elder of such as a corporation sole, for the use, purpose, behalf
religious denomination, sect or church. (154a) and sole benefit of his religious denomination, sect or

V - In order to church, including hospitals, schools, colleges, orphan
become a corporation sole, the chief archbishop, asylums, parsonages and cemeteries thereof. (n)
bishop, priest, minister, rabbi or presiding elder of
V -
any religious denomination, sect or church must file Any corporation sole may purchase and hold real
with the Securities and Exchange Commission articles estate and personal property for its church,
of incorporation setting forth the following: charitable, benevolent or educational purposes, and
1. That he is the chief archbishop, may receive bequests or gifts for such purposes. Such
bishop, priest, minister, rabbi or corporation may sell or mortgage real property held
presiding elder of his religious by it by obtaining an order for that purpose from the
denomination, sect or church and Court of First Instance of the province where the
that he desires to become a property is situated upon proof made to the
corporation sole; satisfaction of the court that notice of the application
2. That the rules, regulations and for leave to sell or mortgage has been given by
discipline of his religious publication or otherwise in such manner and for such
denomination, sect or church are time as said court may have directed, and that it is to
not inconsistent with his becoming a the interest of the corporation that leave to sell or
corporation sole and do not forbid it; mortgage should be granted. The application for
3. That as such chief archbishop, leave to sell or mortgage must be made by petition,
bishop, priest, minister, rabbi or duly verified, by the chief archbishop, bishop, priest,
presiding elder, he is charged with minister, rabbi or presiding elder acting as
the administration of the corporation sole, and may be opposed by any
temporalities and the management member of the religious denomination, sect or
of the affairs, estate and properties church represented by the corporation sole:
of his religious denomination, sect or Provided, That in cases where the rules, regulations
church within his territorial and discipline of the religious denomination, sect or
jurisdiction, describing such church, religious society or order concerned
territorial jurisdiction; represented by such corporation sole regulate the
4. The manner in which any vacancy method of acquiring, holding, selling and mortgaging
occurring in the office of chief real estate and personal property, such rules,
archbishop, bishop, priest, minister, regulations and discipline shall control, and the
rabbi of presiding elder is required
intervention of the courts shall not be necessary. organization of a religious denomination, sect or
(159a) church;

ë - The successors in 2. That at least two-thirds (2/3) of its
office of any chief archbishop, bishop, priest, membership have given their written consent
minister, rabbi or presiding elder in a corporation sole or have voted to incorporate, at a duly
shall become the corporation sole on their accession convened meeting of the body;
to office and shall be permitted to transact business 3. That the incorporation of the religious
as such on the filing with the Securities and Exchange society or religious order, or diocese, synod,
Commission of a copy of their commission, certificate or district organization desiring to incorporate
of election, or letters of appointment, duly certified is not forbidden by competent authority or by
by any notary public. the constitution, rules, regulations or
During any vacancy in the office of chief archbishop, discipline of the religious denomination, sect,
bishop, priest, minister, rabbi or presiding elder of or church of which it forms a part;
any religious denomination, sect or church 4. That the religious society or religious order,
incorporated as a corporation sole, the person or or diocese, synod, or district organization
persons authorized and empowered by the rules, desires to incorporate for the administration
regulations or discipline of the religious of its affairs, properties and estate;
denomination, sect or church represented by the 5. The place where the principal office of the
corporation sole to administer the temporalities and corporation is to be established and located,
manage the affairs, estate and properties of the which place must be within the Philippines;
corporation sole during the vacancy shall exercise all and
the powers and authority of the corporation sole 6. The names, nationalities, and residences of the
during such vacancy. (158a) trustees elected by the religious society or religious

A - A corporation sole may be order, or the diocese, synod, or district organization
dissolved and its affairs settled voluntarily by to serve for the first year or such other period as may
submitting to the Securities and Exchange be prescribed by the laws of the religious society or
Commission a verified declaration of dissolution. religious order, or of the diocese, synod, or district
The declaration of dissolution shall set forth: organization, the board of trustees to be not less than
1. The name of the corporation; five (5) nor more than fifteen (15). (160a)
2. The reason for dissolution and c c!
winding up; (c
3. The authorization for the
[ - A corporation
dissolution of the corporation by the formed or organized under the provisions of this
particular religious denomination, Code may be dissolved voluntarily or involuntarily. (n)
sect or church;
|
4. The names and addresses of the - If dissolution of a corporation does not
persons who are to supervise the prejudice the rights of any creditor having a claim
winding up of the affairs of the against it, the dissolution may be effected by majority
corporation. vote of the board of directors or trustees, and by a
Upon approval of such declaration of dissolution by resolution duly adopted by the affirmative vote of the
the Securities and Exchange Commission, the stockholders owning at least two-thirds (2/3) of the
corporation shall cease to carry on its operations outstanding capital stock or of at least two-thirds
except for the purpose of winding up its affairs. (n) (2/3) of the members of a meeting to be held upon

- Any religious society or call of the directors or trustees after publication of
religious order, or any diocese, synod, or district the notice of time, place and object of the meeting
organization of any religious denomination, sect or for three (3) consecutive weeks in a newspaper
church, unless forbidden by the constitution, rules, published in the place where the principal office of
regulations, or discipline of the religious said corporation is located; and if no newspaper is
denomination, sect or church of which it is a part, or published in such place, then in a newspaper of
by competent authority, may, upon written consent general circulation in the Philippines, after sending
and/or by an affirmative vote at a meeting called for such notice to each stockholder or member either by
the purpose of at least two-thirds (2/3) of its registered mail or by personal delivery at least thirty
membership, incorporate for the administration of its (30) days prior to said meeting. A copy of the
temporalities or for the management of its affairs, resolution authorizing the dissolution shall be
properties and estate by filing with the Securities and certified by a majority of the board of directors or
Exchange Commission, articles of incorporation trustees and countersigned by the secretary of the
verified by the affidavit of the presiding elder, corporation. The Securities and Exchange
secretary, or clerk or other member of such religious Commission shall thereupon issue the certificate of
society or religious order, or diocese, synod, or dissolution. (62a)
district organization of the religious denomination,
|
sect or church, setting forth the following: - Where the dissolution of a corporation
1. That the religious society or religious order, or may prejudice the rights of any creditor, the petition
diocese, synod, or district organization is a religious for dissolution shall be filed with the Securities and
Exchange Commission. The petition shall be signed by
a majority of its board of directors or trustees or distribute its assets, but not for the purpose of
other officers having the management of its affairs, continuing the business for which it was established.
verified by its president or secretary or one of its At any time during said three (3) years, the
directors or trustees, and shall set forth all claims and corporation is authorized and empowered to convey
demands against it, and that its dissolution was all of its property to trustees for the benefit of
resolved upon by the affirmative vote of the stockholders, members, creditors, and other persons
stockholders representing at least two-thirds (2/3) of in interest. From and after any such conveyance by
the outstanding capital stock or by at least two-thirds the corporation of its property in trust for the benefit
(2/3) of the members at a meeting of its stockholders of its stockholders, members, creditors and others in
or members called for that purpose. interest, all interest which the corporation had in the
If the petition is sufficient in form and substance, the property terminates, the legal interest vests in the
Commission shall, by an order reciting the purpose of trustees, and the beneficial interest in the
the petition, fix a date on or before which objections stockholders, members, creditors or other persons in
thereto may be filed by any person, which date shall interest.
not be less than thirty (30) days nor more than sixty Upon the winding up of the corporate affairs, any
(60) days after the entry of the order. Before such asset distributable to any creditor or stockholder or
date, a copy of the order shall be published at least member who is unknown or cannot be found shall be
once a week for three (3) consecutive weeks in a escheated to the city or municipality where such
newspaper of general circulation published in the assets are located.
municipality or city where the principal office of the Except by decrease of capital stock and as otherwise
corporation is situated, or if there be no such allowed by this Code, no corporation shall distribute
newspaper, then in a newspaper of general any of its assets or property except upon lawful
circulation in the Philippines, and a similar copy shall dissolution and after payment of all its debts and
be posted for three (3) consecutive weeks in three (3) liabilities. (77a, 89a, 16a)
public places in such municipality or city. c c!
Upon five (5) day's notice, given after the date on ) c
which the right to file objections as fixed in the order
A
has expired, the Commission shall proceed to hear - For the purposes of this Code, a
the petition and try any issue made by the objections foreign corporation is one formed, organized or
filed; and if no such objection is sufficient, and the existing under any laws other than those of the
material allegations of the petition are true, it shall Philippines and whose laws allow Filipino citizens and
render judgment dissolving the corporation and corporations to do business in its own country or
directing such disposition of its assets as justice state. It shall have the right to transact business in
requires, and may appoint a receiver to collect such the Philippines after it shall have obtained a license to
assets and pay the debts of the corporation. (Rule transact business in this country in accordance with
104, RCa) this Code and a certificate of authority from the

A - appropriate government agency. (n)
A voluntary dissolution may be effected by amending
V
the articles of incorporation to shorten the corporate - Every foreign corporation which on
term pursuant to the provisions of this Code. A copy the date of the effectivity of this Code is authorized
of the amended articles of incorporation shall be to do business in the Philippines under a license
submitted to the Securities and Exchange therefore issued to it, shall continue to have such
Commission in accordance with this Code. Upon authority under the terms and condition of its license,
approval of the amended articles of incorporation of subject to the provisions of this Code and other
the expiration of the shortened term, as the case may special laws. (n)
be, the corporation shall be deemed dissolved
V - A foreign
without any further proceedings, subject to the corporation applying for a license to transact business
provisions of this Code on liquidation. (n) in the Philippines shall submit to the Securities and

- A corporation Exchange Commission a copy of its articles of
may be dissolved by the Securities and Exchange incorporation and by-laws, certified in accordance
Commission upon filing of a verified complaint and with law, and their translation to an official language
after proper notice and hearing on the grounds of the Philippines, if necessary. The application shall
provided by existing laws, rules and regulations. (n) be under oath and, unless already stated in its articles

J - Every corporation of incorporation, shall specifically set forth the
whose charter expires by its own limitation or is following:
annulled by forfeiture or otherwise, or whose 1. The date and term of
corporate existence for other purposes is terminated incorporation;
in any other manner, shall nevertheless be continued 2. The address, including the street
as a body corporate for three (3) years after the time number, of the principal office of the
when it would have been so dissolved, for the corporation in the country or state
purpose of prosecuting and defending suits by or of incorporation;
against it and enabling it to settle and close its affairs, 3. The name and address of its
to dispose of and convey its property and to resident agent authorized to accept
summons and process in all legal
proceedings and, pending the application for license to transact business in the
establishment of a local office, all Philippines shall be accepted by the Securities and
notices affecting the corporation; Exchange Commission without previous authority
4. The place in the Philippines where from the appropriate government agency, whenever
the corporation intends to operate; required by law. (68a)
5. The specific purpose or purposes
- If the Securities and
which the corporation intends to Exchange Commission is satisfied that the applicant
pursue in the transaction of its has complied with all the requirements of this Code
business in the Philippines: Provided, and other special laws, rules and regulations, the
That said purpose or purposes are Commission shall issue a license to the applicant to
those specifically stated in the transact business in the Philippines for the purpose or
certificate of authority issued by the purposes specified in such license. Upon issuance of
appropriate government agency; the license, such foreign corporation may commence
6. The names and addresses of the to transact business in the Philippines and continue
present directors and officers of the to do so for as long as it retains its authority to act as
corporation; a corporation under the laws of the country or state
7. A statement of its authorized of its incorporation, unless such license is sooner
capital stock and the aggregate surrendered, revoked, suspended or annulled in
number of shares which the accordance with this Code or other special laws.
corporation has authority to issue, Within sixty (60) days after the issuance of the license
itemized by classes, par value of to transact business in the Philippines, the license,
shares, shares without par value, except foreign banking or insurance corporation, shall
and series, if any; deposit with the Securities and Exchange Commission
8. A statement of its outstanding for the benefit of present and future creditors of the
capital stock and the aggregate licensee in the Philippines, securities satisfactory to
number of shares which the the Securities and Exchange Commission, consisting
corporation has issued, itemized by of bonds or other evidence of indebtedness of the
classes, par value of shares, shares Government of the Philippines, its political
without par value, and series, if any; subdivisions and instrumentalities, or of government-
9. A statement of the amount owned or controlled corporations and entities, shares
actually paid in; and of stock in "registered enterprises" as this term is
10. Such additional information as defined in Republic Act No. 5186, shares of stock in
may be necessary or appropriate in domestic corporations registered in the stock
order to enable the Securities and exchange, or shares of stock in domestic insurance
Exchange Commission to determine companies and banks, or any combination of these
whether such corporation is entitled kinds of securities, with an actual market value of at
to a license to transact business in least one hundred thousand (P100,000.) pesos;
the Philippines, and to determine Provided, however, That within six (6) months after
and assess the fees payable. each fiscal year of the licensee, the Securities and
Attached to the application for license shall be a duly Exchange Commission shall require the licensee to
executed certificate under oath by the authorized deposit additional securities equivalent in actual
official or officials of the jurisdiction of its market value to two (2%) percent of the amount by
incorporation, attesting to the fact that the laws of which the licensee's gross income for that fiscal year
the country or state of the applicant allow Filipino exceeds five million (P5,000,000.00) pesos. The
citizens and corporations to do business therein, and Securities and Exchange Commission shall also
that the applicant is an existing corporation in good require deposit of additional securities if the actual
standing. If such certificate is in a foreign language, a market value of the securities on deposit has
translation thereof in English under oath of the decreased by at least ten (10%) percent of their
translator shall be attached thereto. actual market value at the time they were deposited.
The application for a license to transact business in The Securities and Exchange Commission may at its
the Philippines shall likewise be accompanied by a discretion release part of the additional securities
statement under oath of the president or any other deposited with it if the gross income of the licensee
person authorized by the corporation, showing to the has decreased, or if the actual market value of the
satisfaction of the Securities and Exchange total securities on deposit has increased, by more
Commission and other governmental agency in the than ten (10%) percent of the actual market value of
proper cases that the applicant is solvent and in the securities at the time they were deposited. The
sound financial condition, and setting forth the assets Securities and Exchange Commission may, from time
and liabilities of the corporation as of the date not to time, allow the licensee to substitute other
exceeding one (1) year immediately prior to the filing securities for those already on deposit as long as the
of the application. licensee is solvent. Such licensee shall be entitled to
Foreign banking, financial and insurance corporations collect the interest or dividends on the securities
shall, in addition to the above requirements, comply deposited. In the event the licensee ceases to do
with the provisions of existing laws applicable to business in the Philippines, the securities deposited
them. In the case of all other foreign corporations, no as aforesaid shall be returned, upon the licensee's
application therefor and upon proof to the only as provide for the creation, formation,
satisfaction of the Securities and Exchange organization or dissolution of corporations or those
Commission that the licensee has no liability to which fix the relations, liabilities, responsibilities, or
Philippine residents, including the Government of the duties of stockholders, members, or officers of
Republic of the Philippines. (n) corporations to each other or to the corporation.

m - A resident (73a)
agent may be either an individual residing in the
V
Philippines or a domestic corporation lawfully
- Whenever the
transacting business in the Philippines: Provided, That articles of incorporation or by-laws of a foreign
in the case of an individual, he must be of good moral corporation authorized to transact business in the
character and of sound financial standing. (n) Philippines are amended, such foreign corporation

- The shall, within sixty (60) days after the amendment
Securities and Exchange Commission shall require as becomes effective, file with the Securities and
a condition precedent to the issuance of the license Exchange Commission, and in the proper cases with
to transact business in the Philippines by any foreign the appropriate government agency, a duly
corporation that such corporation file with the authenticated copy of the articles of incorporation or
Securities and Exchange Commission a written power by-laws, as amended, indicating clearly in capital
of attorney designating some person who must be a letters or by underscoring the change or changes
resident of the Philippines, on whom any summons made, duly certified by the authorized official or
and other legal processes may be served in all actions officials of the country or state of incorporation. The
or other legal proceedings against such corporation, filing thereof shall not of itself enlarge or alter the
and consenting that service upon such resident agent purpose or purposes for which such corporation is
shall be admitted and held as valid as if served upon authorized to transact business in the Philippines. (n)
the duly authorized officers of the foreign
V - A foreign corporation
corporation at its home office. Any such foreign authorized to transact business in the Philippines
corporation shall likewise execute and file with the shall obtain an amended license in the event it
Securities and Exchange Commission an agreement changes its corporate name, or desires to pursue in
or stipulation, executed by the proper authorities of the Philippines other or additional purposes, by
said corporation, in form and substance as follows: submitting an application therefor to the Securities
"The (name of foreign corporation) does hereby and Exchange Commission, favorably endorsed by the
stipulate and agree, in consideration of its being appropriate government agency in the proper cases.
granted by the Securities and Exchange Commission a (n)
license to transact business in the Philippines, that if
[
at any time said corporation shall cease to transact D - One or
business in the Philippines, or shall be without any more foreign corporations authorized to transact
resident agent in the Philippines on whom any business in the Philippines may merge or consolidate
summons or other legal processes may be served, with any domestic corporation or corporations if such
then in any action or proceeding arising out of any is permitted under Philippine laws and by the law of
business or transaction which occurred in the its incorporation: Provided, That the requirements on
Philippines, service of any summons or other legal merger or consolidation as provided in this Code are
process may be made upon the Securities and followed.
Exchange Commission and that such service shall Whenever a foreign corporation authorized to
have the same force and effect as if made upon the transact business in the Philippines shall be a party to
duly-authorized officers of the corporation at its a merger or consolidation in its home country or state
home office." as permitted by the law of its incorporation, such
Whenever such service of summons or other process foreign corporation shall, within sixty (60) days after
shall be made upon the Securities and Exchange such merger or consolidation becomes effective, file
Commission, the Commission shall, within ten (10) with the Securities and Exchange Commission, and in
days thereafter, transmit by mail a copy of such proper cases with the appropriate government
summons or other legal process to the corporation at agency, a copy of the articles of merger or
its home or principal office. The sending of such copy consolidation duly authenticated by the proper
by the Commission shall be necessary part of and official or officials of the country or state under the
shall complete such service. All expenses incurred by laws of which merger or consolidation was effected:
the Commission for such service shall be paid in Provided, however, That if the absorbed corporation
advance by the party at whose instance the service is is the foreign corporation doing business in the
made. Philippines, the latter shall at the same time file a
In case of a change of address of the resident agent, it petition for withdrawal of it license in accordance
shall be his or its duty to immediately notify in writing with this Title. (n)
the Securities and Exchange Commission of the new
A - No
address. (72a; and n) foreign corporation transacting business in the

- Any foreign corporation Philippines without a license, or its successors or
lawfully doing business in the Philippines shall be assigns, shall be permitted to maintain or intervene in
bound by all laws, rules and regulations applicable to any action, suit or proceeding in any court or
domestic corporations of the same class, except such administrative agency of the Philippines; but such
corporation may be sued or proceeded against before
m -
Philippine courts or administrative tribunals on any Subject to existing laws and regulations, a foreign
valid cause of action recognized under Philippine corporation licensed to transact business in the
laws. (69a) Philippines may be allowed to withdraw from the

- Without prejudice Philippines by filing a petition for withdrawal of
to other grounds provided by special laws, the license license. No certificate of withdrawal shall be issued
of a foreign corporation to transact business in the by the Securities and Exchange Commission unless all
Philippines may be revoked or suspended by the the following requirements are met;
Securities and Exchange Commission upon any of the 1. All claims which have accrued in the Philippines
following grounds: have been paid, compromised or settled;
1. Failure to file its annual report or 2. All taxes, imposts, assessments, and
pay any fees as required by this penalties, if any, lawfully due to the Philippine
Code; Government or any of its agencies or political
2. Failure to appoint and maintain a subdivisions have been paid; and
resident agent in the Philippines as 3. The petition for withdrawal of license has been
required by this Title; published once a week for three (3) consecutive
3. Failure, after change of its weeks in a newspaper of general circulation in the
resident agent or of his address, to Philippines.
submit to the Securities and
Exchange Commission a statement c c!
of such change as required by this (
Title;
* - The
4. Failure to submit to the Securities term "outstanding capital stock", as used in this Code,
and Exchange Commission an means the total shares of stock issued under binding
authenticated copy of any subscription agreements to subscribers or
amendment to its articles of stockholders, whether or not fully or partially paid,
incorporation or by-laws or of any except treasury shares. (n)
articles of merger or consolidation
A - The
within the time prescribed by this provisions of specific provisions of this Code to the
Title; contrary notwithstanding, non-stock or special
5. A misrepresentation of any corporations may, through their articles of
material matter in any application, incorporation or their by-laws, designate their
report, affidavit or other document governing boards by any name other than as board of
submitted by such corporation trustees. (n)
pursuant to this Title;
- The
6. Failure to pay any and all taxes, Securities and Exchange Commission is hereby
imposts, assessments or penalties, if authorized to collect and receive fees as authorized
any, lawfully due to the Philippine by law or by rules and regulations promulgated by
Government or any of its agencies or the Commission. (n)
political subdivisions;
-
7. Transacting business in the Pursuant to the duties specified by Article XIV of the
Philippines outside of the purpose or Constitution, the National Economic and
purposes for which such corporation Development Authority shall, from time to time,
is authorized under its license; make a determination of whether the corporate
8. Transacting business in the vehicle has been used by any corporation or by
Philippines as agent of or acting for business or industry to frustrate the provisions
and in behalf of any foreign thereof or of applicable laws, and shall submit to the
corporation or entity not duly Batasang Pambansa, whenever deemed necessary, a
licensed to do business in the report of its findings, including recommendations for
Philippines; or their prevention or correction.
9. Any other ground as would render Maximum limits may be set by the Batasang
it unfit to transact business in the Pambansa for stockholdings in corporations declared
Philippines. (n) by it to be vested with a public interest pursuant to

- Upon the provisions of this section, belonging to individuals
the revocation of any such license to transact or groups of individuals related to each other by
business in the Philippines, the Securities and consanguinity or affinity or by close business
Exchange Commission shall issue a corresponding interests, or whenever it is necessary to achieve
certificate of revocation, furnishing a copy thereof to national objectives, prevent illegal monopolies or
the appropriate government agency in the proper combinations in restraint or trade, or to implement
cases. national economic policies declared in laws, rules and
The Securities and Exchange Commission shall also regulations designed to promote the general welfare
mail to the corporation at its registered office in the and foster economic development.
Philippines a notice of such revocation accompanied In recommending to the Batasang Pambansa
by a copy of the certificate of revocation. (n) corporations, business or industries to be declared
vested with a public interest and in formulating officers, nor any liability incurred by any such
proposals for limitations on stock ownership, the corporation, stockholders, members, directors,
National Economic and Development Authority shall trustees, or officers, shall be removed or impaired
consider the type and nature of the industry, the size either by the subsequent dissolution of said
of the enterprise, the economies of scale, the corporation or by any subsequent amendment or
geographic location, the extent of Filipino ownership, repeal of this Code or of any part thereof. (n)
the labor intensity of the activity, the export
- Except as expressly
potential, as well as other factors which are germane provided by this Code, all laws or parts thereof
to the realization and promotion of business and inconsistent with any provision of this Code shall be
industry. deemed repealed. (n)

V - Every
- Should any
corporation, domestic or foreign, lawfully doing provision of this Code or any part thereof be declared
business in the Philippines shall submit to the invalid or unconstitutional, the other provisions, so
Securities and Exchange Commission an annual far as they are separable, shall remain in force. (n)
report of its operations, together with a financial
V - All
statement of its assets and liabilities, certified by any corporations lawfully existing and doing business in
independent certified public accountant in the Philippines on the date of the effectivity of this
appropriate cases, covering the preceding fiscal year Code and heretofore authorized, licensed or
and such other requirements as the Securities and registered by the Securities and Exchange
Exchange Commission may require. Such report shall Commission, shall be deemed to have been
be submitted within such period as may be authorized, licensed or registered under the
prescribed by the Securities and Exchange provisions of this Code, subject to the terms and
Commission. (n) conditions of its license, and shall be governed by the

J provisions hereof: Provided, That if any such
- All interrogatories propounded by the Securities and corporation is affected by the new requirements of
Exchange Commission and the answers thereto, as this Code, said corporation shall, unless otherwise
well as the results of any examination made by the herein provided, be given a period of not more than
Commission or by any other official authorized by law two (2) years from the effectivity of this Code within
to make an examination of the operations, books and which to comply with the same. (n)
records of any corporation, shall be kept strictly
Ê - This Code shall take effect
confidential, except insofar as the law may require immediately upon its approval.
the same to be made public or where such
interrogatories, answers or results are necessary to
be presented as evidence before any court. (n)

ÊJ - The Securities and Exchange
Commission shall have the power and authority to
implement the provisions of this Code, and to
promulgate rules and regulations reasonably
necessary to enable it to perform its duties
hereunder, particularly in the prevention of fraud and
abuses on the part of the controlling stockholders,
members, directors, trustees or officers. (n)

|J - Violations of any of
the provisions of this Code or its amendments not
otherwise specifically penalized therein shall be
punished by a fine of not less than one thousand
(P1,000.00) pesos but not more than ten thousand
(P10,000.00) pesos or by imprisonment for not less
than thirty (30) days but not more than five (5) years,
or both, in the discretion of the court. If the violation
is committed by a corporation, the same may, after
notice and hearing, be dissolved in appropriate
proceedings before the Securities and Exchange
Commission: Provided, That such dissolution shall not
preclude the institution of appropriate action against
the director, trustee or officer of the corporation
responsible for said violation: Provided, further, That
nothing in this section shall be construed to repeal
the other causes for dissolution of a corporation
provided in this Code. (190 1/2 a)

V - No right or remedy
in favor of or against any corporation, its
stockholders, members, directors, trustees, or

V - Every Corporation

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c c 6.

The time for holding the annual

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