ST PAUL UNVERSITY SURIGAO

St. Paul University System

8400, Surigao City, Philippines

ARTICLES THAT ARE

NOT FOUND IN THE
OLD CORPORATION
CODE OF THE
PHILIPPINES

By

VIDAL, JEAMS
ESCOPETE, DEBBIE JANE L.
SAMACO, KOBE ROBERT E.
GROUP-7
Section Corporation Code of the Revised Corporation Code of the Remarks
Philippines Philippines
1 Title of the Code. - This
Title of the Code.— This Code shall be Title of the Code.— This Code shall be known
Code shall be known as
"The Corporation Code of known as the “Revised Corporation as the “Revised Corporation Code of the
the Philippines". Code of the Philippines” Philippines”.

3 Classes of corporations. -
Corporations formed or
organized under this Code
may be stock or non-stock
corporations.
Corporations which have
capital stock divided into
shares and are authorized
to distribute to the holders
of such shares dividends
or allotments of the
surplus profits on the
basis of the shares held
are stock corporations. All
other corporations are
non-stock corporations.
5 Corporators and
incorporators,
stockholders and
members. - Corporators
are those who compose a
corporation, whether as
stockholders or as
members. Incorporators
are those stockholders or
members mentioned in the
articles of incorporation as
originally forming and
composing the
corporation and who are
signatories thereof.
Corporators in a stock
corporation are called
stockholders or
shareholders. Corporators
in a non-stock corporation
are called members.
6 Classification of shares. -
The shares of stock of
stock corporations may be
divided into classes or
series of shares, or both,
any of which classes or
series of shares may have
such rights, privileges or
restrictions as may be
stated in the articles of
incorporation: Provided,
That no share may be
deprived of voting rights
except those
classified and issued as
"preferred" or
"redeemable" shares,
unless otherwise provided
in this Code: Provided,
further, That there shall
always be a class or series
Classes of Corporations.—
Corporations formed or organized
under this Code may be stock or
nonstock corporations. Stock
corporations are those which have
capital stock divided into shares and are
authorized to distribute to the holders of
such shares, dividends, or allotments of
the surplus profits on the basis of the
shares held. All other corporations are
nonstock corporations.
Corporators and Incorporators,
Stockholders and Members.—
Corporators are those who compose a
corporation, whether as stockholders or
shareholders in a stock corporation or
as members in a nonstock corporation.
Incorporators are those stockholders or
members mentioned in the articles of
incorporation as originally forming and
composing the corporation and who are
signatories thereof.
Classification of Shares.— The
classification of shares, their
corresponding rights, privileges, or
restrictions, and their stated par value,
if any, must be indicated in the articles
of incorporation. Each share shall be
equal in all respects to every other
share, except as otherwise provided in
the articles of incorporation and in the
certificate of stock.
The shares in stock corporations may
be divided into classes or series of
shares, or both. No share may be
deprived of voting rights except those
classified and issued as “preferred” or
“redeemable” shares, unless otherwise
provided in this Code: Provided, That
Classes of Corporations.— Corporations
formed or organized under this Code may be
stock or non-stock corporations. Stock
corporations are those which have capital
stock divided into shares and are
authorized to distribute to the holders of
such shares, dividends, or allotments of the
surplus profits on the basis of the shares
held. All other corporations are nonstock
corporations.
Corporators and Incorporators, Stockholders
and Members.—Corporators are those who
compose a corporation, whether as
stockholders or shareholders in a stock
corporation or as members in a nonstock
corporation. Incorporators are those
stockholders or members mentioned in the
articles of incorporation as originally
forming and composing the corporation and
who are signatories thereof.
Classification of Shares.— The classification
of shares, their corresponding rights,
privileges, or restrictions, and their stated
par value, if any, must be indicated in the
articles of incorporation. Each share shall
be equal in all respects to every other share,
except as otherwise provided in the articles
of incorporation and in the certificate of
stock.
The shares in stock corporations may be
divided into classes or series of shares, or
both. No share may be deprived of voting
rights except those classified and issued as
“preferred” or “redeemable” shares, unless
otherwise provided in this Code: Provided,
That there shall always be a class or series
of shares which have
complete voting rights.
Any or all of the shares or
series of shares may have
a par value or have no par
value as may be provided
for in the articles of
incorporation: Provided,
however, That banks, trust
companies, insurance
companies, public
utilities, and building and
loan associations shall not
be permitted to issue no-
par value shares of stock.
Preferred shares of stock
issued by any corporation
may be given preference
in the distribution of the
assets of the corporation
in case of liquidation and
in the distribution of
dividends, or such other
preferences as may be
stated in the articles of
incorporation which are
not violative of the
provisions of this Code:
Provided, That preferred
shares of stock may be
issued only with a stated
par value. The board of
directors, where
authorized in the articles
of incorporation, may fix
the terms and conditions
of preferred shares of
stock or any series
thereof: Provided, That
such terms and conditions
shall be effective upon the
filing of a certificate
thereof with the Securities
and Exchange
Commission.
Shares of capital stock
issued without par value
shall be deemed fully paid
and nonassessable and the
holder of such shares shall
not be liable to the
corporation or to its
creditors in respect
thereto: Provided; That
shares without par value
may not be issued for a
consideration less than the
value of five (P5.00)
pesos per share: Provided,
further, That the entire
consideration received by
the corporation for its no-
par value shares shall be
treated as capital and shall
not be available for
distribution as dividends.
there shall always be a class or series of of shares with complete voting rights.
shares with complete voting rights.
Holders of nonvoting shares shall
Holders of nonvoting shares shall nevertheless be entitled to vote on the
nevertheless be entitled to vote on the following matters:
following matters:
(a) Amendment of the articles of
(a) Amendment of the articles incorporation;
of incorporation;
(b) Adoption and amendment of
(b) Adoption and amendment bylaws;
of bylaws;
(c) Sale, lease, exchange, mortgage,
(c) Sale, lease, exchange, pledge, or other disposition of all or
mortgage, pledge, or other substantially all of the corporate
disposition of all or substantially property;
all of the corporate property;
(d) Incurring, creating, or
(d) Incurring, creating, or increasing bonded indebtedness;
increasing bonded indebtedness;
(e) Increase or decrease of
(e) Increase or decrease of authorized capital stock;
authorized capital stock;
(f) Merger or consolidation of the
(f) Merger or consolidation of corporation with another corporation
the corporation with another or other corporations;
corporation or other
(g) Investment of corporate funds
corporations;
in another corporation or business in
(g) Investment of corporate accordance with this Code; and
funds in another corporation or
business in accordance with this (h) Dissolution of the corporation.
Code; and
Except as provided in the immediately
(h) Dissolution of the preceding paragraph, the vote required
corporation. under this Code to approve a particular
corporate act shall be deemed to refer only
Except as provided in the to stocks with voting rights.
immediately preceding paragraph, the
vote required under this Code to The shares or series of shares may or may
approve a particular corporate act shall not have a par value: Provided, That banks,
be deemed to refer only to stocks with trust, insurance, and preneed companies,
voting rights. public utilities, building and loan
associations, and other corporations
The shares or series of shares may or authorized to obtain or access funds from
may not have a par value: Provided, the public, whether publicly listed or not,
That banks, trust, insurance, and shall not be permitted to issue no-par value
preneed companies, public utilities, shares of stock.
building and loan associations, and
other corporations authorized to obtain Preferred shares of stock issued by a
or access funds from the public, corporation may be given preference in the
whether publicly listed or not, shall not distribution of dividends and in the
be permitted to issue no-par value distribution of corporate assets in case of
shares of stock. liquidation, or such other
preferences: Provided, That preferred
Preferred shares of stock issued by a shares of stock may be issued only with a
corporation may be given preference in stated par value. The board of directors,
the distribution of dividends and in the where authorized in the articles of
distribution of corporate assets in case incorporation, may fix the terms and
of liquidation, or such other conditions of preferred shares of stock or
 A corporation may, preferences: Provided, That preferred any series thereof: Provided, further, That
furthermore, classify its shares of stock may be issued only with such terms and conditions shall be effective
shares for the purpose of a stated par value. The board of upon filing of a certificate thereof with the
insuring compliance with
directors, where authorized in the Securities and Exchange Commission,
constitutional or legal
requirements. articles of incorporation, may fix the hereinafter referred to as the
Except as otherwise terms and conditions of preferred “Commission”.
provided in the articles of shares of stock or any series
incorporation and stated thereof: Provided, further, That such Shares of capital stock issued without par
in the certificate of stock, terms and conditions shall be effective value shall be deemed fully paid and
each share shall be equal upon filing of a certificate thereof with nonassessable and the holder of such shares
in all respects to every shall not be liable to the corporation or to
the Securities and Exchange
other share.
Commission, hereinafter referred to as its creditors in respect thereto: Provided,
Where the articles of
incorporation provide for the “Commission”. That no-par value shares must be issued for
non-voting shares in the a consideration of at least Five pesos (₱5.00)
cases allowed by this Shares of capital stock issued without per share: Provided, further, That the entire
Code, the holders of such par value shall be deemed fully paid consideration received by the corporation
shares shall nevertheless and nonassessable and the holder of for its no-par value shares shall be treated
be entitled to vote on the such shares shall not be liable to the as capital and shall not be available for
following matters:
corporation or to its creditors in respect distribution as dividends.
1. Amendment of the
articles of incorporation; thereto: Provided, That no-par value
shares must be issued for a A corporation may further classify its
2. Adoption and
amendment of by-laws; consideration of at least Five pesos shares for the purpose of ensuring
3. Sale, lease, exchange, (₱5.00) per share: Provided, further, compliance with constitutional or legal
mortgage, pledge or other That the entire consideration received requirements.
disposition of all or by the corporation for its no-par value
substantially all of the shares shall be treated as capital and
corporate property;
shall not be available for distribution as
4. Incurring, creating or
increasing bonded dividends.
indebtedness;
5. Increase or decrease of A corporation may further classify its
capital stock; shares for the purpose of ensuring
6. Merger or consolidation compliance with constitutional or legal
of the corporation with requirements.
another corporation or
other corporations;
7. Investment of corporate
funds in another
corporation or business in
accordance with this
Code; and
8. Dissolution of the
corporation.
Except as provided in the
immediately preceding
paragraph, the vote
necessary to approve a
particular corporate act as
provided in this Code
shall be deemed to refer
only to stocks with voting
rights.
7 Founders' shares. -
Founders’ Shares.— Founders’ shares Founders’ Shares.— Founders’ shares may be
Founders' shares classified
as such in the articles of may be given certain rights and given certain rights and privileges not
incorporation may be privileges not enjoyed by the owners of enjoyed by the owners of other stocks.
given certain rights and other stocks. Where the exclusive right Where the exclusive right to vote and be
privileges not enjoyed by to vote and be voted for in the election voted for in the election of directors is
the owners of other of directors is granted, it must be for a granted, it must be for a limited period not
stocks, provided that limited period not to exceed five (5) to exceed five (5) years from the date of
where the exclusive right
years from the date of incorporation: Provided, That such
to vote and be voted for in
the election of directors is incorporation: Provided, That such exclusive right shall not be allowed if its
 granted, it must be for a
limited period not to
exceed five (5) years
subject to the approval of
the Securities and
Exchange Commission.
The five-year period shall
commence from the date
of the aforesaid approval
by the Securities and
Exchange Commission.
8
Redeemable shares. -
Redeemable shares may
be issued by the
corporation when
expressly so provided in
the articles of
incorporation. They may
be purchased or taken up
by the corporation upon
the expiration of a fixed
period, regardless of the
existence of unrestricted
retained earnings in the
books of the corporation,
and upon such other terms
and conditions as may be
stated in the articles of
incorporation, which
terms and conditions must
also be stated in the
certificate of stock
representing said shares.
10 Number and qualifications
of incorporators. - Any
number of natural persons
not less than five (5) but
not more than fifteen (15),
all of legal age and a
majority of whom are
residents of the
Philippines, may form a
private corporation for
any lawful purpose or
purposes. Each of the
incorporators of s stock
corporation must own or
be a subscriber to at least
one (1) share of the capital
stock of the corporation.
exclusive right shall not be allowed if
its exercise will violate Commonwealth
Act No. 108, otherwise known as the
“Anti-Dummy Law”; Republic Act No.
7042, otherwise known as the “Foreign
Investments Act of 1991”; and other
pertinent laws.
Redeemable Shares.— Redeemable
shares may be issued by the corporation
when expressly provided in the articles
of incorporation. They are shares which
may be purchased by the corporation
from the holders of such shares upon
the expiration of a fixed period,
regardless of the existence of
unrestricted retained earnings in the
books of the corporation, and upon
such other terms and conditions stated
in the articles of incorporation and the
certificate of stock representing the
shares, subject to rules and regulations
issued by the Commission.
Number and Qualifications of
Incorporators.— Any person,
partnership, association or corporation,
singly or jointly with others but not
more than fifteen (15) in number, may
organize a corporation for any lawful
purpose or purposes: Provided, That
natural persons who are licensed to
practice a profession, and partnerships
or associations organized for the
purpose of practicing a profession, shall
not be allowed to organize as a
corporation unless otherwise provided
under special laws. Incorporators who
are natural persons must be of legal
age.
must own or be a subscriber to at least one (1)
Each incorporator of a stock share of the capital stock.
corporation must own or be a
subscriber to at least one (1) share of
the capital stock. considered a One Person Corporation as
described in Title XIII, Chapter III of this
A corporation with a single Code.
stockholder is considered a One Person
Corporation as described in Title XIII,
exercise will violate Commonwealth Act No.
108, otherwise known as the “Anti-Dummy
Law”; Republic Act No. 7042, otherwise
known as the “Foreign Investments Act of
1991”; and other pertinent laws.
Redeemable Shares.— Redeemable shares
may be issued by the corporation when
expressly provided in the articles of
incorporation. They are shares which may be
purchased by the corporation from the holders
of such shares upon the expiration of a fixed
period, regardless of the existence of
unrestricted retained earnings in the books of
the corporation, and upon such other terms and
conditions stated in the articles of
incorporation and the certificate of stock
representing the shares, subject to rules and
regulations issued by the Commission.
Number and Qualifications of
Incorporators.— Any person, partnership,
association or corporation, singly or jointly
with others but not more than fifteen (15) in
number, may organize a corporation for
any lawful purpose or purposes: Provided,
That natural persons who are licensed to
practice a profession, and partnerships or
associations organized for the purpose of
practicing a profession, shall not be allowed
to organize as a corporation unless
otherwise provided under special laws.
Incorporators who are natural persons
must be of legal age.
Each incorporator of a stock corporation
A corporation with a single stockholder is

11 Corporate term. - A
corporation shall exist for
a period not exceeding
fifty (50) years from the
date of incorporation
unless sooner dissolved or
unless said period is
extended. The corporate
term as originally stated in
the articles of
incorporation may be
extended for periods not
exceeding fifty (50) years
in any single instance by
an amendment of the
articles of incorporation,
in accordance with this
Code; Provided, That no
extension can be made
earlier than five (5) years
prior to the original or
subsequent expiry date(s)
unless there are justifiable
reasons for an earlier
extension as may be
determined by the
Securities and Exchange
Commission.
Chapter III of this Code.
Corporate Term.— A corporation shall Corporate Term— A corporation shall have
have perpetual existence unless its perpetual existence unless its articles of
articles of incorporation provides incorporation provides otherwise.
otherwise.
Corporations with certificates of
Corporations with certificates of incorporation issued prior to the effectivity
incorporation issued prior to the of this Code, and which continue to exist,
effectivity of this Code, and which shall have perpetual existence, unless the
continue to exist, shall have perpetual corporation, upon a vote of its stockholders
existence, unless the corporation, upon representing a majority of its outstanding
a vote of its stockholders representing a capital stock, notifies the Commission that
majority of its outstanding capital it elects to retain its specific corporate term
stock, notifies the Commission that it pursuant to its articles of
elects to retain its specific corporate incorporation: Provided, That any change in
term pursuant to its articles of the corporate term under this section is
incorporation: Provided, That any without prejudice to the appraisal right of
change in the corporate term under this dissenting stockholders in accordance with
section is without prejudice to the the provisions of this Code.
appraisal right of dissenting
stockholders in accordance with the A corporate term for a specific period
provisions of this Code. may be extended or shortened by amending
the articles of incorporation: Provided, That
A corporate term for a specific period no extension may be made earlier than
may be extended or shortened by three (3) years prior to the original or
amending the articles of subsequent expiry date(s) unless there are
incorporation: Provided, That no justifiable reasons for an earlier extension
extension may be made earlier than as may be determined by the
three (3) years prior to the original or Commission: Provided, further, That such
subsequent expiry date(s) unless there extension of the corporate term shall take
are justifiable reasons for an earlier effect only on the day following the original
extension as may be determined by the or subsequent expiry date(s).
Commission: Provided, further, That
such extension of the corporate term A corporation whose term has expired
shall take effect only on the day may apply for a revival of its corporate
following the original or subsequent existence, together with all the rights and
expiry date(s). privileges under its certificate of
incorporation and subject to all of its duties,
A corporation whose term has debts and liabilities existing prior to its
expired may apply for a revival of its revival. Upon approval by the Commission,
corporate existence, together with all the corporation shall be deemed revived
the rights and privileges under its and a certificate of revival of corporate
certificate of incorporation and subject existence shall be issued, giving it perpetual
to all of its duties, debts and liabilities existence, unless its application for revival
existing prior to its revival. Upon provides otherwise.
approval by the Commission, the
corporation shall be deemed revived No application for revival of certificate of
and a certificate of revival of corporate incorporation of banks, banking and quasi-
existence shall be issued, giving it banking institutions, preneed, insurance
perpetual existence, unless its and trust companies, non-stock savings and
application for revival provides loan associations (NSSLAs), pawnshops,
otherwise. corporations engaged in money service
business, and other financial intermediaries
No application for revival of shall be approved by the Commission unless
certificate of incorporation of banks, accompanied by a favorable
banking and quasi-banking institutions, recommendation of the appropriate

12 Minimum capital stock
required of stock
corporations. - Stock
corporations incorporated
under this Code shall not
be required to have any
minimum authorized
capital stock except as
otherwise specifically
provided for by special
law, and subject to the
provisions of the
following section.
13 Amount of capital stock to
be subscribed and paid for
the purposes of
incorporation. - At least
twenty-five percent (25%)
of the authorized capital
stock as stated in the
articles of incorporation
must be subscribed at the
time of incorporation, and
at least twenty-five (25%)
per cent of the total
subscription must be paid
upon subscription, the
balance to be payable on a
date or dates fixed in the
contract of subscription
without need of call, or in
the absence of a fixed date
or dates, upon call for
payment by the board of
directors: Provided,
however, That in no case
shall the paid-up capital
be less than five Thousand
(P5,000.00) pesos.
preneed, insurance and trust companies, government agency.
non-stock savings and loan associations
(NSSLAs), pawnshops, corporations
engaged in money service business, and
other financial intermediaries shall be
approved by the Commission unless
accompanied by a favorable
recommendation of the appropriate
government agency.
Minimum Capital Stock Not Required
of Stock Corporations.— Stock
corporations shall not be required to
have a minimum capital stock, except
as otherwise specifically provided by
special law.
Contents of the Articles of
Incorporation.— All corporations shall
file with the Commission articles of
incorporation in any of the official
languages, duly signed and
acknowledged or authenticated, in such
form and manner as may be allowed by
the Commission, containing
substantially the following matters,
except as otherwise prescribed by this
Code or by special law:
(a) The name of the
corporation;
(b) The specific purpose or
purposes for which the
corporation is being formed.
Where a corporation has more
than one stated purpose, the
articles of incorporation shall
indicate the primary purpose and
the secondary purpose or
purposes: Provided, That a
nonstock corporation may not
include a purpose which would
change or contradict its nature as
such;
(c) The place where the
principal office of the
corporation is to be located,
which must be within the
Philippines;
(d) The term for which the
Minimum Capital Stock Not Required of Stock
Corporations.— Stock corporations shall not
be required to have a minimum capital
stock, except as otherwise specifically
provided by special law.
Contents of the Articles of Incorporation.—
All corporations shall file with the
Commission articles of incorporation in any
of the official languages, duly signed and
acknowledged or authenticated, in such
form and manner as may be allowed by the
Commission, containing substantially the
following matters, except as otherwise
prescribed by this Code or by special law:
(a) The name of the corporation;
(b) The specific purpose or
purposes for which the corporation is
being formed. Where a corporation
has more than one stated purpose,
the articles of incorporation shall
indicate the primary purpose and the
secondary purpose or
purposes: Provided, That a nonstock
corporation may not include a
purpose which would change or
contradict its nature as such;
(c) The place where the principal
office of the corporation is to be
located, which must be within the
Philippines;
(d) The term for which the
corporation is to exist, if the
corporation has not elected perpetual
existence;
(e) The names, nationalities, and
residence addresses of the
 corporation is to exist, if the
corporation has not elected
perpetual existence;
(e) The names, nationalities,
and residence addresses of the
incorporators;
(f) The number of directors,
which shall not be more than
fifteen (15) or the number of
trustees which may be more than
fifteen (15);
(g) The names, nationalities,
and residence addresses of
persons who shall act as
directors or trustees until the first
regular directors or trustees are
duly elected and qualified in
accordance with this Code;
(h) If it be a stock corporation,
the amount of its authorized
capital stock, number of shares
into which it is divided, the par
value of each, names,
nationalities, and residence
addresses of the original
subscribers, amount subscribed
and paid by each on the
subscription, and a statement
that some or all of the shares are
without par value, if applicable;
(i) If it be a nonstock
corporation, the amount of its
capital, the names, nationalities,
and residence addresses of the
contributors, and amount
contributed by each; and
(j) Such other matters
consistent with law and which
the incorporators may deem
necessary and convenient.
An arbitration agreement may be
provided in the articles of incorporation
pursuant to Section 181 of this Code.
The articles of incorporation and
applications for amendments thereto
may be filed with the Commission in
the form of an electronic document, in
accordance with the Commission’s
rules and regulations on electronic
filing.
incorporators;
(f) The number of directors, which
shall not be more than fifteen (15) or
the number of trustees which may be
more than fifteen (15);
(g) The names, nationalities, and
residence addresses of persons who
shall act as directors or trustees until
the first regular directors or trustees
are duly elected and qualified in
accordance with this Code;
(h) If it be a stock corporation, the
amount of its authorized capital
stock, number of shares into which it
is divided, the par value of each,
names, nationalities, and residence
addresses of the original subscribers,
amount subscribed and paid by each
on the subscription, and a statement
that some or all of the shares are
without par value, if applicable;
(i) If it be a nonstock corporation,
the amount of its capital, the names,
nationalities, and residence addresses
of the contributors, and amount
contributed by each; and
(j) Such other matters consistent
with law and which the incorporators
may deem necessary and convenient.
An arbitration agreement may be
provided in the articles of incorporation
pursuant to Section 181 of this Code.
The articles of incorporation and
applications for amendments thereto may
be filed with the Commission in the form of
an electronic document, in accordance with
the Commission’s rules and regulations on
electronic filing.
14 Contents of the articles of
incorporation. - All
corporations organized
under this code shall file
with the Securities and
Exchange Commission
articles of incorporation in
any of the official
languages duly signed and
acknowledged by all of
the incorporators,
containing substantially
the following matters,
except as otherwise
prescribed by this Code or
by special law:
1. The name of the
corporation;
2. The specific purpose or
purposes for which the
corporation is being
incorporated. Where a
corporation has more than
one stated purpose, the
articles of incorporation
shall state which is the
primary purpose and
which is/are he secondary
purpose or purposes:
Provided, That a nonstock
corporation may not
include a purpose which
would change or
contradict its nature as
such;
3. The place where the
principal office of the
corporation is to be
located, which must be
within the Philippines;
4. The term for which the
corporation is to exist;
5. The names,
nationalities and
residences of the
incorporators;
6. The number of directors
or trustees, which shall
not be less than five (5)
nor more than fifteen (15);
7. The names,
nationalities and
residences of persons who
shall act as directors or
trustees until the first
regular directors or
trustees are duly elected
and qualified in
accordance with this
Code;
8. If it be a stock
corporation, the amount of
its authorized capital stock
in lawful money of the
Philippines, the number of
shares into which it is
Form of Articles of Incorporation.— Form of Articles of Incorporation.— Unless
Unless otherwise prescribed by special otherwise prescribed by special law, the
law, the articles of incorporation of all articles of incorporation of all domestic
domestic corporations shall comply corporations shall comply substantially
substantially with the following form: with the following form:
Articles of Incorporation Articles of Incorporation
of of
____________________ ____________________
(Name of Corporation) (Name of Corporation)
The undersigned The undersigned incorporators, all
incorporators, all of legal age, of legal age, have voluntarily agreed
have voluntarily agreed to form to form a (stock) (nonstock)
a (stock) (nonstock) corporation corporation under the laws of the
under the laws of the Republic of Republic of the Philippines and
the Philippines and certify the certify the following:
following:
First: That the name of said
First: That the name of said corporation shall be
corporation shall be “_______________, Inc., Corporation
“_______________, Inc., or OPC”;
Corporation or OPC”;
Second: That the purpose or
Second: That the purpose or purposes for which such corporation
purposes for which such is incorporated are: (If there is more
corporation is incorporated are: than one purpose, indicate primary
(If there is more than one and secondary purposes);
purpose, indicate primary and
secondary purposes); Third: That the principal office of
the corporation is located in the
Third: That the principal City/Municipality of
office of the corporation is _______________, Province of
located in the City/Municipality _______________, Philippines;
of _______________, Province
of _______________, Fourth: That the corporation shall
have perpetual existence or a term of
Philippines;
_____ years from the date of issuance
Fourth: That the corporation of the certificate of incorporation;
shall have perpetual existence or
a term of _____ years from the Fifth: That the names,
date of issuance of the certificate nationalities, and residence addresses
of incorporation; of the incorporators of the
corporation are as follows:
Fifth: That the names,
nationalities, and residence Name Nationality
addresses of the incorporators of
the corporation are as follows: _______________ _______________
Name Nationality Residence
_______________ _______________
_______________ _______________ _______________
_______________ _______________
_______________ _______________ _______________
_______________ _______________
_______________ _______________ _______________
_______________ _______________
divided, and in case the _______________ _______________ _______________
Sixth: That the number of
share are par value shares,
the par value of each, the directors or trustees of the
names, nationalities and _______________ corporation shall
_______________ be _____; and the
_______________
residences of the original names, nationalities, and residence
subscribers, and the addresses of the first directors or
amount subscribed and Sixth: That the number of
trustees of the corporation are as
paid by each on his directors or trustees of the
follows:
subscription, and if some corporation shall be _____; and
or all of the shares are the names, nationalities, and
without par value, such Name Nationality
residence addresses of the first
fact must be stated; directors or trustees of the
9. If it be a non-stock _______________ _______________
corporation are as follows:
corporation, the amount of
its capital, the names,
nationalities and Name Nationality _______________
Residence _______________
residences of the
contributors and the
_______________ _______________ _______________
_______________ _______________
amount contributed by
each; and
10. Such other matters as _______________ _______________ _______________
_______________ _______________
are not inconsistent with
law and which the
incorporators may deem _______________ _______________ _______________
_______________ _______________
necessary and convenient.
The Securities and _______________ _______________ _______________
Seventh: That the authorized
Exchange Commission
capital stock of the corporation is
shall not accept the
articles of incorporation of _______________ _______________
_______________ _______________PESOS
any stock corporation (₱__________), divided into
unless accompanied by a _______________ shares with the par
Seventh: That the authorized
sworn statement of the value of _______________ PESOS
Treasurer elected by the capital stock of the corporation
(₱__________) per share. (In case all
subscribers showing that is _______________ PESOS
the shares are without par value):
at least twenty-five (25%) (₱__________), divided into
That the capital stock of the
percent of the authorized _______________ shares with
capital stock of the corporation is _______________
the par value of
corporation has been shares without par value.
_______________ PESOS
subscribed, and at least
(₱__________) per share. (In (In case some shares have par value
twenty-five (25%) of the
total subscription has been case all the shares are without and some are without par value):
fully paid to him in actual par value): That the capital stock That the capital stock of said
cash and/or in property of the corporation is corporation consists of
the fair valuation of which _______________ shares _______________ shares, of which
is equal to at least twenty- without par value. _______________ shares have a par
five (25%) percent of the
said subscription, such value of _______________ PESOS
(In case some shares have par
paid-up capital being not (₱__________) each, and of which
value and some are without par
less than five thousand _______________ shares are without
value): That the capital stock of
(P5,000.00) pesos. par value.
said corporation consists of
_______________ shares, of Eighth: That the number of shares
which _______________ shares of the authorized capital stock above-
have a par value of stated has been subscribed as follows:
_______________ PESOS
(₱__________) each, and of Name of No. of Shares
which _______________ shares Subscriber Nationality Subscribed
are without par value.

Eighth: That the number of

shares of the authorized capital
stock above-stated has been
subscribed as follows:
Name of No. of Shares
Subscriber Nationality Subscribed
(Modify No. 8 if shares are
with no-par value. In case the
corporation is nonstock, Nos. 7
and 8 of the above articles may
be modified accordingly, and it
is sufficient if the articles state
the amount of capital or money
contributed or donated by
specified persons, stating the
names, nationalities, and
residence addresses of the
contributors or donors and the
respective amount given by
each.)
Ninth: That
____________________ has
been elected by the subscribers
as Treasurer of the Corporation
to act as such until after the
successor is duly elected and
qualified in accordance with the
bylaws, that as Treasurer,
authority has been given to
receive in the name and for the
benefit of the corporation, all
subscriptions, contributions or
donations paid or given by the
subscribers or members, who
certifies the information set forth
in the seventh and eighth clauses
above, and that the paid-up
portion of the subscription in
cash and/or property for the
benefit and credit of the
corporation has been duly
received.
Tenth: That the incorporators
undertake to change the name of
the corporation immediately
upon receipt of notice from the
Commission that another
Amount Amount
Subscribed Paid
(Modify No. 8 if shares are with no-
par value. In case the corporation is
nonstock, Nos. 7 and 8 of the above
articles may be modified accordingly,
and it is sufficient if the articles state
the amount of capital or money
contributed or donated by specified
persons, stating the names,
nationalities, and residence addresses
of the contributors or donors and the
respective amount given by each.)
Ninth: That
____________________ has been
elected by the subscribers as
Treasurer of the Corporation to act
as such until after the successor is
duly elected and qualified in
accordance with the bylaws, that as
Treasurer, authority has been given
to receive in the name and for the
benefit of the corporation, all
subscriptions, contributions or
donations paid or given by the
subscribers or members, who
certifies the information set forth in
the seventh and eighth clauses above,
and that the paid-up portion of the
subscription in cash and/or property
for the benefit and credit of the
corporation has been duly received.
Tenth: That the incorporators
undertake to change the name of the
corporation immediately upon
receipt of notice from the
Commission that another
corporation, partnership or person
has acquired a prior right to the use
of such name, that the name has been
declared not distinguishable from a
name already registered or reserved
for the use of another corporation, or
that it is contrary to law, public
morals, good customs or public
policy.
Eleventh: (Corporations which will
engage in any business or activity
reserved for Filipino citizens shall
provide the following):

15 Forms of Articles of
Incorporation. - Unless
otherwise prescribed by
special law, articles of
incorporation of all
domestic corporations
shall comply substantially
with the following form:
corporation, partnership or
person has acquired a prior right
to the use of such name, that the
name has been declared not
distinguishable from a name
already registered or reserved for
the use of another corporation, or
that it is contrary to law, public
morals, good customs or public
policy.
Eleventh: (Corporations which
will engage in any business or
activity reserved for Filipino
citizens shall provide the
following):
“No transfer of stock or
interest which shall reduce the
ownership of Filipino citizens to
less than the required percentage
of capital stock as provided by
existing laws shall be allowed or
permitted to be recorded in the
proper books of the corporation,
and this restriction shall be
indicated in all stock certificates
issued by the corporation.”
IN WITNESS WHEREOF, we
have hereunto signed these
Articles of Incorporation, this
__________ day of __________,
20_____ in the
City/Municipality of
_______________, Province of
_______________, Republic of
the Philippines.
____________________
____________________
____________________
____________________
____________________
(Names and signature
Amendment of Articles of
Incorporation.— Unless otherwise
prescribed by this Code or by special
lawr, and for legitimate purposes, any
provision or matter stated in the articles
of incorporation may be amended by a
majority vote of the board of directors
“No transfer of stock or interest
which shall reduce the ownership of
Filipino citizens to less than the
required percentage of capital stock
as provided by existing laws shall be
allowed or permitted to be recorded
in the proper books of the
corporation, and this restriction shall
be indicated in all stock certificates
issued by the corporation.”
IN WITNESS WHEREOF, we
have hereunto signed these Articles
of Incorporation, this __________
day of __________, 20_____ in the
City/Municipality of
_______________, Province of
_______________, Republic of the
Philippines.
____________________ __
____________________ __
____________________ __
____________________ __
____________________ __
(Names and signature
____________________
____________________
____________________
____________________
____________________
Amendment of Articles of Incorporation.—
Unless otherwise prescribed by this Code
or by special lawr, and for legitimate
purposes, any provision or matter stated in
the articles of incorporation may be
amended by a majority vote of the board of
directors or trustees and the vote or written
ARTICLES OF or trustees and the vote or written assent of the stockholders representing at
INCORPORATION assent of the stockholders representing least two-thirds (2⁄3) of the outstanding
OF at least two-thirds (2⁄3) of the capital stock, without prejudice to the
_____________________
outstanding capital stock, without appraisal right of dissenting stockholders in
_____
(Name of Corporation) prejudice to the appraisal right of accordance with the provisions of this Code.
KNOW ALL MEN BY dissenting stockholders in accordance The articles of incorporation of a nonstock
THESE PRESENTS: with the provisions of this Code. The corporation may be amended by the vote or
The undersigned articles of incorporation of a nonstock written assent of majority of the trustees
incorporators, all of legal corporation may be amended by the and at least two-thirds (2⁄3) of the members.
age and a majority of vote or written assent of majority of the
whom are residents of the
trustees and at least two-thirds (2⁄3) of The original and amended articles
Philippines, have this day
the members. together shall contain all provisions
voluntarily agreed to form
a (stock) (non-stock) required by law to be set out in the articles
corporation under the laws The original and amended articles of incorporation. Amendments to the
of the Republic of the together shall contain all provisions articles shall be indicated by underscoring
Philippines; required by law to be set out in the the change or changes made, and a copy
AND WE HEREBY articles of incorporation. Amendments thereof duly certified under oath by the
CERTIFY: to the articles shall be indicated by corporate secretary and a majority of the
FIRST: That the name of
underscoring the change or changes directors or trustees, with a statement that
said corporation shall be
"......................................... made, and a copy thereof duly certified the amendments have been duly approved
....., INC. or under oath by the corporate secretary by the required vote of the stockholders or
CORPORATION"; and a majority of the directors or members, shall be submitted to the
SECOND: That the trustees, with a statement that the Commission.
purpose or purposes for amendments have been duly approved
which such corporation is by the required vote of the stockholders The amendments shall take effect upon
incorporated are: (If there or members, shall be submitted to the their approval by the Commission or from
is more than one purpose, the date of filing with the said Commission
Commission.
indicate primary and
if not acted upon within six (6) months from
secondary purposes);
THIRD: That the The amendments shall take effect the date of filing for a cause not attributable
principal office of the upon their approval by the Commission to the corporation.
corporation is located in or from the date of filing with the said
the City/Municipality of Commission if not acted upon within
.......................................... six (6) months from the date of filing
..., Province of for a cause not attributable to the
..........................................
corporation.
........, Philippines;
FOURTH: That the term
for which said corporation
is to exist is ................
years from and after the
date of issuance of the
certificate of
incorporation;
FIFTH: That the names,
nationalities and
residences of the
incorporators of the
corporation are as follows:
NAME
NATIONALITY
RESIDENCE
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
SIXTH: That the number
of directors or trustees of
the corporation shall be
.............; and the names,
nationalities and
residences of the first
directors or trustees of the
corporation are as follows:
NAME
NATIONALITY
RESIDENCE
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
SEVENTH: That the
authorized capital stock of
the corporation is
..........................................
....... (P......................)
PESOS in lawful money
of the Philippines, divided
into ............... shares with
the par value of
...................................
(P.......................) Pesos
per share.
(In case all the share are
without par value):
That the capital stock of
the corporation is
........................... shares
without par value. (In case
some shares have par
value and some are
without par value): That
the capital stock of said
corporation consists of
........................ shares of
which .......................
shares are of the par value
of ..............................
(P.....................) PESOS
each, and of which
................................
shares are without par
value.
EIGHTH: That at least
twenty five (25%) per
cent of the authorized
capital stock above stated
has been subscribed as
follows:
Name of Subscriber
Nationality No of Shares
Amount
Subscribed Subscribed
..................................
....................
........................
.......................
..................................
....................
........................
.......................
..................................
....................
........................
.......................
..................................
....................
........................
.......................
..................................
....................
........................
.......................
NINTH: That the above-
named subscribers have
paid at least twenty-five
(25%) percent of the total
subscription as follows:
Name of Subscriber
Amount Subscribed Total
Paid-In
...................................
......................................
...............................
...................................
......................................
...............................
...................................
......................................
...............................
...................................
......................................
...............................
...................................
......................................
...............................
(Modify Nos. 8 and 9 if
shares are with no par
value. In case the
corporation is non-stock,
Nos. 7, 8 and 9 of the
above articles may be
modified accordingly, and
it is sufficient if the
articles state the amount
of capital or money
contributed or donated by
specified persons, stating
the names, nationalities
and residences of the
contributors or donors and
the respective amount
given by each.)
TENTH: That
.......................................
has been elected by the
subscribers as Treasurer
of the Corporation to act
as such until his successor
is duly elected and
qualified in accordance
with the by-laws, and that
as such Treasurer, he has
been authorized to receive
for and in the name and
for the benefit of the
corporation, all
subscription (or fees) or
contributions or donations
paid or given by the
subscribers or members.
ELEVENTH:
(Corporations which will
engage in any business or
activity reserved for
Filipino citizens shall
provide the following):
"No transfer of stock or
interest which shall reduce
the ownership of Filipino
citizens to less than the
required percentage of the
capital stock as provided
by existing laws shall be
allowed or permitted to
recorded in the proper
books of the corporation
and this restriction shall
be indicated in all stock
certificates issued by the
corporation."
IN WITNESS
WHEREOF, we have
hereunto signed these
Articles of Incorporation,
this ................... day of
.............................., 19
........... in the
City/Municipality of
........................................,
Province of
..........................................
......., Republic of the
Philippines.
..........................................
..
..........................................
...
..........................................
..
..........................................
...
..........................................
......
(Names and signatures of
the incorporators)
SIGNED IN THE
PRESENCE OF:
..........................................
 ..
..........................................
...
(Notarial
Acknowledgment)
TREASURER'S
AFFIDAVIT
REPUBLIC OF THE
PHILIPPINES )
CITY/MUNICIPALITY
OF ) S.S.
PROVINCE OF )
I, ....................................,
being duly sworn, depose
and say:
That I have been elected
by the subscribers of the
corporation as Treasurer
thereof, to act as such
until my successor has
been duly elected and
qualified in accordance
with the bylaws of the
corporation, and that as
such Treasurer, I hereby
certify under oath that at
least 25% of the
authorized capital stock of
the corporation has been
subscribed and at least
25% of the total
subscription has been
paid, and received by me,
in cash or property, in the
amount of not less than
P5,000.00, in accordance
with the Corporation
Code.
.......................................
(Signature of Treasurer)
SUBSCRIBED AND
SWORN to before me, a
Notary Public, for and in
the City/Municipality of
..................................
Province of
..........................................
, this ............. day of
........................., 19 ........;
by
..........................................
.. with Res. Cert. No.
..................... issued at
................. on
......................, 19 ..........
NOTARY PUBLIC
My commission expires
on ..........................., 19
........
Doc. No. ...............;
Page No. ...............;
Book No. ..............;
Series of 19..... (7a)
16 Amendment of Articles of
Grounds When Articles of Grounds When Articles of Incorporation or
Incorporation. - Unless
otherwise prescribed by Incorporation or Amendment May be Amendment May be Disapproved.— The
 this Code or by special
law, and for legitimate
purposes, any provision or
matter stated in the
articles of incorporation
may be amended by a
majority vote of the board
of directors or trustees and
the vote or written assent
of the stockholders
representing at least two-
thirds (2/3) of the
outstanding capital stock,
without prejudice to the
appraisal right of
dissenting stockholders in
accordance with the
provisions of this Code, or
the vote or written assent
of at least two-thirds (2/3)
of the members if it be a
non-stock corporation.
The original and amended
articles together shall
contain all provisions
required by law to be set
out in the articles of
incorporation. Such
articles, as amended shall
be indicated by
underscoring the change
or changes made, and a
copy thereof duly certified
under oath
by the corporate secretary
and a majority of the
directors or trustees
stating the fact that said
amendment or
amendments have been
duly approved by the
required vote of the
stockholders or members,
shall be submitted to the
Securities and Exchange
Commission.
The amendments shall
take effect upon their
approval by the Securities
and Exchange
Commission or from the
date of filing with the said
Commission if not acted
upon within six (6)
months from the date of
filing for a cause not
attributable to the
corporation.
17 Grounds when articles of
incorporation or
amendment may be
rejected or disapproved. -
The Securities and
Exchange Commission
may reject the articles of
incorporation or
Disapproved.— The Commission may
disapprove the articles of incorporation
or any amendment thereto if the same is
not compliant with the requirements of
this Code: Provided, That the
Commission shall give the
incorporators, directors, trustees, or
officers a reasonable time from receipt
of the disapproval within which to
modify the objectionable portions of
the articles or amendment. The
following are grounds for such
disapproval:
(a) The articles of
incorporation or any amendment
thereto is not substantially in
accordance with the form
prescribed herein;
(b) The purpose or purposes of
the corporation are patently
unconstitutional, illegal, immoral
or contrary to government rules
and regulations;
(c) The certification
concerning the amount of capital
stock subscribed and/or paid is
false; and
(d) The required percentage of
Filipino ownership of the capital
stock under existing laws or the
Constitution has not been
complied with.
No articles of incorporation or
amendment to articles of incorporation
of banks, banking and quasi-banking
institutions, preneed, insurance and
trust companies, NSSLAs, pawnshops,
and other financial intermediaries shall
be approved by the Commission unless
accompanied by a favorable
recommendation of the appropriate
government agency to the effect that
such articles or amendment is in
accordance with law.
Corporate Name.— No corporate name
shall be allowed by the Commission if
it is not distinguishable from that
already reserved or registered for the
use of another corporation, or if such
name is already protected by law, or
when its use is contrary to existing law,
Commission may disapprove the articles of
incorporation or any amendment thereto if
the same is not compliant with the
requirements of this Code: Provided, That
the Commission shall give the
incorporators, directors, trustees, or
officers a reasonable time from receipt of
the disapproval within which to modify the
objectionable portions of the articles or
amendment. The following are grounds for
such disapproval:
(a) The articles of incorporation or
any amendment thereto is not
substantially in accordance with the
form prescribed herein;
(b) The purpose or purposes of the
corporation are patently
unconstitutional, illegal, immoral or
contrary to government rules and
regulations;
(c) The certification concerning the
amount of capital stock subscribed
and/or paid is false; and
(d) The required percentage of
Filipino ownership of the capital
stock under existing laws or the
Constitution has not been complied
with.
No articles of incorporation or
amendment to articles of incorporation of
banks, banking and quasi-banking
institutions, preneed, insurance and trust
companies, NSSLAs, pawnshops, and other
financial intermediaries shall be approved
by the Commission unless accompanied by
a favorable recommendation of the
appropriate government agency to the
effect that such articles or amendment is in
accordance with law.
Corporate Name.— No corporate name shall
be allowed by the Commission if it is not
distinguishable from that already reserved
or registered for the use of another
corporation, or if such name is already
protected by law, or when its use is contrary
disapprove any rules and regulations. to existing law, rules and regulations.
amendment thereto if the
same is not in compliance A name is not distinguishable even if A name is not distinguishable even if it
with the requirements of it contains one or more of the contains one or more of the following:
this Code: Provided, That
following:
the Commission shall give
(a) The word “corporation”,
the incorporators a
reasonable time within (a) The word “corporation”, “company”, “incorporated”,
which to correct or “company”, “incorporated”, “limited”, “limited liability”, or an
modify the objectionable “limited”, “limited liability”, or abbreviation of one of such words;
portions of the articles or an abbreviation of one of such and
amendment. The words; and
following are grounds for (b) Punctuations, articles,
such rejection or (b) Punctuations, articles, conjunctions, contractions,
disapproval: conjunctions, contractions, prepositions, abbreviations, different
1. That the articles of
prepositions, abbreviations, tenses, spacing, or number of the
incorporation or any
amendment thereto is not different tenses, spacing, or same word or phrase.
substantially in number of the same word or
accordance with the form phrase. The Commission, upon determination
prescribed herein; that the corporate name is: (1) not
2. That the purpose or The Commission, upon distinguishable from a name already
purposes of the determination that the corporate name reserved or registered for the use of another
corporation are patently is: (1) not distinguishable from a name corporation; (2) already protected by law;
unconstitutional, illegal, already reserved or registered for the or (3) contrary to law, rules and
immoral, or contrary to
use of another corporation; (2) already regulations, may summarily order the
government rules and
regulations; protected by law; or (3) contrary to law, corporation to immediately cease and desist
3. That the Treasurer's rules and regulations, may summarily from using such name and require the
Affidavit concerning the order the corporation to immediately corporation to register a new one. The
amount of capital stock cease and desist from using such name Commission shall also cause the removal of
subscribed and/or paid if and require the corporation to register a all visible signages, marks, advertisements,
false; new one. The Commission shall also labels, prints and other effects bearing such
4. That the percentage of
cause the removal of all visible corporate name. Upon the approval of the
ownership of the capital
stock to be owned by signages, marks, advertisements, labels, new corporate name, the Commission shall
citizens of the Philippines prints and other effects bearing such issue a certificate of incorporation under
has not been complied corporate name. Upon the approval of the amended name.
with as required by the new corporate name, the
existing laws or the Commission shall issue a certificate of If the corporation fails to comply with the
Constitution. incorporation under the amended name. Commission’s order, the Commission may
No articles of hold the corporation and its responsible
incorporation or
If the corporation fails to comply directors or officers in contempt and/or
amendment to articles of
incorporation of banks, with the Commission’s order, the hold them administratively, civilly and/or
banking and quasi- Commission may hold the corporation criminally liable under this Code and other
banking institutions, and its responsible directors or officers applicable laws and/or revoke the
building and loan in contempt and/or hold them registration of the corporation.
associations, trust administratively, civilly and/or
companies and other criminally liable under this Code and
financial intermediaries, other applicable laws and/or revoke the
insurance companies,
registration of the corporation.
public utilities,
educational institutions,
and other corporations
governed by special laws
shall be accepted or
approved by the
Commission unless
accompanied by a
favorable
recommendation of the
appropriate government
agency to the effect that
such articles or
amendment is in
 accordance with law.
18 Corporate name. - No
Registration, Incorporation and Registration, Incorporation and
corporate name may be
allowed by the Securities Commencement of Corporate Commencement of Corporate Existence.— A
and Exchange Existence.— A person or group of person or group of persons desiring to
Commission if the persons desiring to incorporate shall incorporate shall submit the intended
proposed name is submit the intended corporate name to corporate name to the Commission for
identical or deceptively or the Commission for verification. If the verification. If the Commission finds that
confusingly similar to that Commission finds that the name is the name is distinguishable from a name
of any existing
distinguishable from a name already already reserved or registered for the use of
corporation or to any
other name already reserved or registered for the use of another corporation, not protected by law
protected by law or is another corporation, not protected by and is not contrary to law, rules and
patently deceptive, law and is not contrary to law, rules and regulations, the name shall be reserved in
confusing or contrary to regulations, the name shall be reserved favor of the incorporators. The
existing laws. When a in favor of the incorporators. The incorporators shall then submit their
change in the corporate incorporators shall then submit their articles of incorporation and bylaws to the
name is approved, the
articles of incorporation and bylaws to Commission.
Commission shall issue an
amended certificate of the Commission.
incorporation under the If the Commission finds that the
amended name. If the Commission finds that the submitted documents and information are
submitted documents and information fully compliant with the requirements of
are fully compliant with the this Code, other relevant laws, rules and
requirements of this Code, other regulations, the Commission shall issue the
relevant laws, rules and regulations, the certificate of incorporation.
Commission shall issue the certificate
of incorporation. A private corporation organized under
this Code commences its corporate
A private corporation organized existence and juridical personality from the
under this Code commences its date the Commission issues the certificate of
corporate existence and juridical incorporation under its official seal and
personality from the date the thereupon the incorporators,
Commission issues the certificate of stockholders/members and their successors
incorporation under its official seal and shall constitute a body corporate under the
thereupon the incorporators, name stated in the articles of incorporation
stockholders/members and their for the period of time mentioned therein,
successors shall constitute a body unless said period is extended or the
corporate under the name stated in the corporation is sooner dissolved in
articles of incorporation for the period accordance with law.
of time mentioned therein, unless said
period is extended or the corporation is
sooner dissolved in accordance with
law.

19 Commencement of
De facto Corporations.— The due De facto Corporations.— The due
corporate existence. - A
private corporation incorporation of any corporation incorporation of any corporation claiming
formed or organized under claiming in good faith to be a in good faith to be a corporation under this
this Code commences to corporation under this Code, and its Code, and its right to exercise corporate
have corporate existence right to exercise corporate powers, shall powers, shall not be inquired into
and juridical personality not be inquired into collaterally in any collaterally in any private suit to which such
and is deemed private suit to which such corporation corporation may be a party. Such inquiry
incorporated from the date
may be a party. Such inquiry may be may be made by the Solicitor General in
the Securities and
Exchange Commission made by the Solicitor General in a quo a quo warranto proceeding.
issues a certificate of warranto proceeding.
incorporation under its
official seal; and
thereupon the
incorporators,
stockholders/members
 and their successors shall
constitute a body politic
and corporate under the
name stated in the articles
of incorporation for the
period of time mentioned
therein, unless said period
is extended or the
corporation is sooner
dissolved in accordance
with law.
20 De facto corporations. -
The due incorporation of
any corporation claiming
in good faith to be a
corporation under this
Code, and its right to
exercise corporate powers,
shall not be inquired into
collaterally in any private
suit to which such
corporation may be a
party. Such inquiry may
be made by the Solicitor
General in a quo warranto
proceeding.
21 Corporation by estoppel. -
All persons who assume
to act as a corporation
knowing it to be without
authority to do so shall be
liable as general partners
for all debts, liabilities
and damages incurred or
arising as a result thereof:
Provided, however, That
when any such ostensible
corporation is sued on any
transaction entered by it
as a corporation or on any
tort committed by it as
such, it shall not be
allowed to use as a
defense its lack of
corporate personality.
On who assumes an
obligation to an ostensible
corporation as such,
cannot resist
Corporation by Estoppel.— All persons
who assume to act as a corporation
knowing it to be without authority to do
so shall be liable as general partners for
all debts, liabilities and damages
incurred or arising as a result
thereof: Provided, however, That when
any such ostensible corporation is sued
on any transaction entered by it as a
corporation or on any tort committed by
it as such, it shall not be allowed to use
its lack of corporate personality as a
defense. Anyone who assumes an
obligation to an ostensible corporation
as such cannot resist performance
thereof on the ground that there was in
fact no corporation.
Effects of Non-Use of Corporate
Charter and Continuous Inoperation.—
If a corporation does not formally
organize and commence its business
within five (5) years from the date of its
incorporation, its certificate of
incorporation shall be deemed revoked
as of the day following the end of the
five (5)-year period.
However, if a corporation has
commenced its business but
subsequently becomes inoperative for a
period of at least five (5) consecutive
years, the Commission may, after due
notice and hearing, place the
corporation under delinquent status.
A delinquent corporation shall have a
period of two (2) years to resume
operations and comply with all
requirements that the Commission shall
prescribe. Upon compliance by the
corporation, the Commission shall issue
an order lifting the delinquent status.
Failure to comply with the
requirements and resume operations
within the period given by the
Commission shall cause the revocation The Commission shall give reasonable
of the corporation’s certificate of notice to, and coordinate with the
Corporation by Estoppel.— All persons who
assume to act as a corporation knowing it to
be without authority to do so shall be liable
as general partners for all debts, liabilities
and damages incurred or arising as a result
thereof: Provided, however, That when any
such ostensible corporation is sued on any
transaction entered by it as a corporation or
on any tort committed by it as such, it shall
not be allowed to use its lack of corporate
personality as a defense. Anyone who
assumes an obligation to an ostensible
corporation as such cannot resist
performance thereof on the ground that
there was in fact no corporation.
Effects of Non-Use of Corporate Charter and
Continuous Inoperation.— If a corporation
does not formally organize and commence
its business within five (5) years from the
date of its incorporation, its certificate of
incorporation shall be deemed revoked as of
the day following the end of the five (5)-year
period.
However, if a corporation has
commenced its business but subsequently
becomes inoperative for a period of at least
five (5) consecutive years, the Commission
may, after due notice and hearing, place the
corporation under delinquent status.
A delinquent corporation shall have a
period of two (2) years to resume operations
and comply with all requirements that the
Commission shall prescribe. Upon
compliance by the corporation, the
Commission shall issue an order lifting the
delinquent status. Failure to comply with
the requirements and resume operations
within the period given by the Commission
shall cause the revocation of the
corporation’s certificate of incorporation.
 incorporation. appropriate regulatory agency prior to the
suspension or revocation of the certificate of
The Commission shall give incorporation of companies under their
reasonable notice to, and coordinate special regulatory jurisdiction.
with the appropriate regulatory agency
prior to the suspension or revocation of
the certificate of incorporation of
companies under their special
regulatory jurisdiction.

22 Effects on non-use of
corporate charter and
continuous inoperation of
a corporation. - If a
corporation does not
formally organize and
commence the transaction
of its business or the
construction of its works
within two (2) years from
the date of its
incorporation, its
corporate powers cease
and the corporation shall
be deemed dissolved.
However, if a corporation
has commenced the
transaction of its business
but subsequently becomes
continuously inoperative
for a period of at least five
(5) years, the same shall
be a ground for the
suspension or revocation
of its corporate franchise
or certificate of
incorporation.
This provision shall not
apply if the failure to
organize, commence the
transaction of its
businesses or the
construction of its works,
or to continuously operate
is due to causes beyond
the control of the
corporation as may be
determined by the
Securities and Exchange
Commission.
The Board of Directors or Trustees of a
Corporation; Qualification and
Term.— Unless otherwise provided in
this Code, the board of directors or
trustees shall exercise the corporate
powers, conduct all business, and
control all properties of the corporation.
Directors shall be elected for a term
of one (1) year from among the holders
of stocks registered in the corporation’s
books, while trustees shall be elected
for a term not exceeding three (3) years
from among the members of the
corporation. Each director and trustee
shall hold office until the successor is
elected and qualified. A director who
ceases to own at least one (1) share of
stock or a trustee who ceases to be a
member of the corporation shall cease
to be such.
The board of the following corporations
The board of the following vested with public interest shall have
corporations vested with public interest independent directors constituting at least
shall have independent directors twenty percent (20%) of such board:
constituting at least twenty percent
(20%) of such board:
(a) Corporations covered by
Section 17.2 of Republic Act
No. 8799, otherwise known as
“The Securities Regulation
Code”, namely those whose
securities are registered with the
Commission, corporations listed
with an exchange or with assets
of at least Fifty million pesos
(₱50,000,000.00) and having
two hundred (200) or more
holders of shares, each holding
at least one hundred (100) shares
of a class of its equity shares;
(b) Banks and quasi-banks,
NSSLAs, pawnshops,
corporations engaged in money
service business, preneed, trust
and insurance companies, and
other financial intermediaries;
The Board of Directors or Trustees of a
Corporation; Qualification and Term.—
Unless otherwise provided in this Code, the
board of directors or trustees shall exercise
the corporate powers, conduct all business,
and control all properties of the
corporation.
Directors shall be elected for a term of
one (1) year from among the holders of
stocks registered in the corporation’s books,
while trustees shall be elected for a term not
exceeding three (3) years from among the
members of the corporation. Each director
and trustee shall hold office until the
successor is elected and qualified. A
director who ceases to own at least one (1)
share of stock or a trustee who ceases to be
a member of the corporation shall cease to
be such.
(a) Corporations covered by
Section 17.2 of Republic Act No.
8799, otherwise known as “The
Securities Regulation Code”, namely
those whose securities are registered
with the Commission, corporations
listed with an exchange or with assets
of at least Fifty million pesos
(₱50,000,000.00) and having two
hundred (200) or more holders of
shares, each holding at least one
hundred (100) shares of a class of its
equity shares;
(b) Banks and quasi-banks,
NSSLAs, pawnshops, corporations
engaged in money service business,
preneed, trust and insurance
companies, and other financial
intermediaries; and
(c) Other corporations engaged in
businesses vested with public interest

23 The board of directors or
trustees. - Unless
otherwise provided in this
Code, the corporate
powers of all corporations
formed under this Code
shall be exercised, all
business conducted and
all property of such
corporations controlled
and held by the board of
directors or trustees to be
elected from among the
holders of stocks, or
where there is no stock,
and similar to the above, as may be
determined by the Commission, after
(c) Other corporations taking into account relevant factors
engaged in businesses vested which are germane to the objective
with public interest similar to the and purpose of requiring the election
above, as may be determined by of an independent director, such as
the Commission, after taking the extent of minority ownership,
into account relevant factors type of financial products or
which are germane to the securities issued or offered to
objective and purpose of investors, public interest involved in
requiring the election of an the nature of business operations,
independent director, such as the and other analogous factors.
extent of minority ownership,
type of financial products or An independent director is a person who,
securities issued or offered to apart from shareholdings and fees received
investors, public interest from the corporation, is independent of
involved in the nature of management and free from any business or
business operations, and other other relationship which could, or could
analogous factors. reasonably be perceived to materially
interfere with the exercise of independent
An independent director is a person judgment in carrying out the
who, apart from shareholdings and fees responsibilities as a director.
received from the corporation, is
independent of management and free Independent directors must be elected by
from any business or other relationship the shareholders present or entitled to
which could, or could reasonably be vote in absentia during the election of
perceived to materially interfere with directors. Independent directors shall be
the exercise of independent judgment in subject to rules and regulations governing
carrying out the responsibilities as a their qualifications, disqualifications, voting
director. requirements, duration of term and term
limit, maximum number of board
Independent directors must be memberships and other requirements that
elected by the shareholders present or the Commission will prescribe to strengthen
entitled to vote in absentia during the their independence and align with
election of directors. Independent international best practices.
directors shall be subject to rules and
regulations governing their
qualifications, disqualifications, voting
requirements, duration of term and term
limit, maximum number of board
memberships and other requirements
that the Commission will prescribe to
strengthen their independence and align
with international best practices.
Election of Directors or Trustees.— Election of Directors or Trustees.— Except
Except when the exclusive right is when the exclusive right is reserved for
reserved for holders of founders’ shares holders of founders’ shares under Section 7
under Section 7 of this Code, each of this Code, each stockholder or member
stockholder or member shall have the shall have the right to nominate any
right to nominate any director or trustee director or trustee who possesses all of the
who possesses all of the qualifications qualifications and none of the
and none of the disqualifications set disqualifications set forth in this Code.
forth in this Code.
At all elections of directors or trustees,
At all elections of directors or there must be present, either in person or
trustees, there must be present, either in through a representative authorized to act
person or through a representative by written proxy, the owners of majority of
from among the members
of the corporation, who
shall hold office for one
(1) year until their
successors are elected and
qualified.
Every director must own
at least one (1) share of
the capital stock of the
corporation of which he is
a director, which share
shall stand in his name on
the books of the
corporation. Any director
who ceases to be the
owner of at least one (1)
share of the capital stock
of the corporation of
which he is a director
shall thereby cease to be a
director. Trustees of non-
stock corporations must
be members thereof. a
majority of the directors
or trustees of all
corporations organized
under this Code must be
residents of the
Philippines.
authorized to act by written proxy, the the outstanding capital stock, or if there be
owners of majority of the outstanding no capital stock, a majority of the members
capital stock, or if there be no capital entitled to vote. When so authorized in the
stock, a majority of the members bylaws or by a majority of the board of
entitled to vote. When so authorized in directors, the stockholders or members may
the bylaws or by a majority of the board also vote through remote communication
of directors, the stockholders or or in absentia: Provided, That the right to
members may also vote through remote vote through such modes may be exercised
communication or in in corporations vested with public interest,
absentia: Provided, That the right to notwithstanding the absence of a provision
vote through such modes may be in the bylaws of such corporations.
exercised in corporations vested with
public interest, notwithstanding the A stockholder or member who
absence of a provision in the bylaws of participates through remote communication
such corporations. or in absentia shall be deemed present for
purposes of quorum.
A stockholder or member who
participates through remote The election must be by ballot if
communication or in absentia shall be requested by any voting stockholder or
deemed present for purposes of member.
quorum.
In stock corporations, stockholders
The election must be by ballot if entitled to vote shall have the right to vote
requested by any voting stockholder or the number of shares of stock standing in
member. their own names in the stock books of the
corporation at the time fixed in the bylaws
In stock corporations, stockholders or where the bylaws are silent, at the time
entitled to vote shall have the right to of the election. The said stockholder may:
vote the number of shares of stock (a) vote such number of shares for as many
standing in their own names in the persons as there are directors to be elected;
stock books of the corporation at the (b) cumulate said shares and give one (1)
time fixed in the bylaws or where the candidate as many votes as the number of
bylaws are silent, at the time of the directors to be elected multiplied by the
election. The said stockholder may: (a) number of the shares owned; or (c)
vote such number of shares for as many distribute them on the same principle
persons as there are directors to be among as many candidates as may be seen
elected; (b) cumulate said shares and fit: Provided, That the total number of votes
give one (1) candidate as many votes as cast shall not exceed the number of shares
the number of directors to be elected owned by the stockholders as shown in the
multiplied by the number of the shares books of the corporation multiplied by the
owned; or (c) distribute them on the whole number of directors to be
same principle among as many elected: Provided, however, That no
candidates as may be seen delinquent stock shall be voted. Unless
fit: Provided, That the total number of otherwise provided in the articles of
votes cast shall not exceed the number incorporation or in the bylaws, members of
of shares owned by the stockholders as nonstock corporations may cast as many
shown in the books of the corporation votes as there are trustees to be elected but
multiplied by the whole number of may not cast more than one (1) vote for one
directors to be (1) candidate. Nominees for directors or
elected: Provided, however, That no trustees receiving the highest number of
delinquent stock shall be voted. Unless votes shall be declared elected.
otherwise provided in the articles of
incorporation or in the bylaws, If no election is held, or the owners of
members of nonstock corporations may majority of the outstanding capital stock or
cast as many votes as there are trustees majority of the members entitled to vote are
to be elected but may not cast more not present in person, by proxy, or through
than one (1) vote for one (1) candidate. remote communication or not voting in
Nominees for directors or trustees absentia at the meeting, such meeting may
be adjourned and the corporation shall
 receiving the highest number of votes proceed in accordance with Section 25 of
shall be declared elected. this Code.

If no election is held, or the owners The directors or trustees elected shall

of majority of the outstanding capital perform their duties as prescribed by law,
stock or majority of the members rules of good corporate governance, and
entitled to vote are not present in bylaws of the corporation.
person, by proxy, or through remote
communication or not voting in
absentia at the meeting, such meeting
may be adjourned and the corporation
shall proceed in accordance with
Section 25 of this Code.

The directors or trustees elected shall

perform their duties as prescribed by
law, rules of good corporate
governance, and bylaws of the
corporation.

24 Election of directors or
Corporate Officers.— Immediately Corporate Officers.— Immediately after
trustees. - At all elections
of directors or trustees, after their election, the directors of a their election, the directors of a corporation
there must be present, corporation must formally organize and must formally organize and elect: (a) a
either in person or by elect: (a) a president, who must be a president, who must be a director; (b) a
representative authorized director; (b) a treasurer, who must be a treasurer, who must be a resident; (c) a
to act by written proxy, resident; (c) a secretary, who must be a secretary, who must be a citizen and
the owners of a majority citizen and resident of the Philippines; resident of the Philippines; and (d) such
of the outstanding capital
and (d) such other officers as may be other officers as may be provided in the
stock, or if there be no
capital stock, a majority of provided in the bylaws. If the bylaws. If the corporation is vested with
the members entitled to corporation is vested with public public interest, the board shall also elect a
vote. The election must be interest, the board shall also elect a compliance officer. The same person may
by ballot if requested by compliance officer. The same person hold two (2) or more positions concurrently,
any voting stockholder or may hold two (2) or more positions except that no one shall act as president and
member. In stock concurrently, except that no one shall secretary or as president and treasurer at
corporations, every
act as president and secretary or as the same time, unless otherwise allowed in
stockholder entitled to
vote shall have the right to president and treasurer at the same this Code.
vote in person or by proxy time, unless otherwise allowed in this
the number of shares of Code. The officers shall manage the corporation
stock standing, at the time and perform such duties as may be
fixed in the by-laws, in his The officers shall manage the provided in the bylaws and/or as resolved
own name on the stock corporation and perform such duties as by the board of directors.
books of the corporation, may be provided in the bylaws and/or
or where the by-laws are as resolved by the board of directors.
silent, at the time of the
election; and said
stockholder may vote
such number of shares for
as many persons as there
are directors to be elected
or he may cumulate said
shares and give one
candidate as many votes
as the number of directors
to be elected multiplied by
the number of his shares
shall equal, or he may
distribute them on the
same principle among as
many candidates as he
shall see fit: Provided,
That the total number of
 votes cast by him shall not
exceed the number of
shares owned by him as
shown in the books of the
corporation multiplied by
the whole number of
directors to be elected:
Provided, however, That
no delinquent stock shall
be voted. Unless
otherwise provided in the
articles of incorporation or
in the by-laws, members
of corporations which
have no capital stock may
cast as many votes as
there are trustees to be
elected but may not cast
more than one vote for
one candidate. Candidates
receiving the highest
number of votes shall be
declared elected. Any
meeting of the
stockholders or members
called for an election may
adjourn from day to day
or from time to time but
not sine die or indefinitely
if, for any reason, no
election is held, or if there
not present or represented
by proxy, at the meeting,
the owners of a majority
of the outstanding capital
stock, or if there be no
capital stock, a majority of
the member entitled to
vote.
25 Corporate officers,
Report of Election of Directors, Report of Election of Directors, Trustees and.
quorum. - Immediately
after their election, the Trustees and. Officers, Non-holding of Officers, Non-holding of Election and
directors of a corporation Election and Cessation from Office.— Cessation from Office.— Within thirty (30)
must formally organize by Within thirty (30) days after the days after the election of the directors,
the election of a president, election of the directors, trustees and trustees and officers of the corporation, the
who shall be a director, a officers of the corporation, the secretary, or any other officer of the
treasurer who may or may secretary, or any other officer of the corporation, shall submit to the
not be a director, a
corporation, shall submit to the Commission, the names, nationalities,
secretary who shall be a
resident and citizen of the Commission, the names, nationalities, shareholdings, and residence addresses of
Philippines, and such shareholdings, and residence addresses the directors, trustees and officers elected.
other officers as may be of the directors, trustees and officers
provided for in the by- elected. The non-holding of elections and the
laws. Any two (2) or more reasons therefor shall be reported to the
positions may be held The non-holding of elections and the Commission within thirty (30) days from
concurrently by the same reasons therefor shall be reported to the the date of the scheduled election. The
person, except that no one Commission within thirty (30) days report shall specify a new date for the
shall act as president and
from the date of the scheduled election. election, which shall not be later than sixty
secretary or as president
and treasurer at the same The report shall specify a new date for (60) days from the scheduled date.
time. the election, which shall not be later
The directors or trustees than sixty (60) days from the scheduled If no new date has been designated, or if
and officers to be elected date. the rescheduled election is likewise not held,
shall perform the duties the Commission may, upon the application
enjoined on them by law If no new date has been designated, of a stockholder, member, director or
and the by-laws of the or if the rescheduled election is trustee, and after verification of the
 corporation. Unless the
articles of incorporation or
the by-laws provide for a
greater majority, a
majority of the number of
directors or trustees as
fixed in the articles of
incorporation shall
constitute a quorum for
the transaction of
corporate business, and
every decision of at least a
majority of the directors
or trustees present at a
meeting at which there is
a quorum shall be valid as
a corporate act, except for
the election of officers
which shall require the
vote of a majority of all
the members of the board.
Directors or trustees
cannot attend or vote by
proxy at board meetings.
26 Report of election of
directors, trustees and
officers. - Within thirty
(30) days after the
election of the directors,
trustees and officers of the
corporation, the secretary,
or any other officer of the
corporation, shall submit
to the Securities and
Exchange Commission,
the names, nationalities
and residences of the
directors, trustees, and
officers elected. Should a
director, trustee or officer
die, resign or in any
manner cease to hold
office, his heirs in case of
his death, the secretary, or
any other officer of the
corporation, or the
director, trustee or officer
himself, shall immediately
report such fact to the
Securities and Exchange
Commission.
likewise not held, the Commission unjustified non-holding of the election,
may, upon the application of a summarily order that an election be held.
stockholder, member, director or The Commission shall have the power to
trustee, and after verification of the issue such orders as may be appropriate,
unjustified non-holding of the election, including orders directing the issuance of a
summarily order that an election be notice stating the time and place of the
held. The Commission shall have the election, designated presiding officer, and
power to issue such orders as may be the record date or dates for the
appropriate, including orders directing determination of stockholders or members
the issuance of a notice stating the time entitled to vote.
and place of the election, designated
presiding officer, and the record date or Notwithstanding any provision of the
dates for the determination of articles of incorporation or bylaws to the
stockholders or members entitled to contrary, the shares of stock or membership
vote. represented at such meeting and entitled to
vote shall constitute a quorum for purposes
Notwithstanding any provision of the of conducting an election under this section.
articles of incorporation or bylaws to
Should a director, trustee or officer die,
the contrary, the shares of stock or
resign or in any manner cease to hold office,
membership represented at such
meeting and entitled to vote shall the secretary, or the director, trustee or
constitute a quorum for purposes of officer of the corporation, shall, within
conducting an election under this seven (7) days from knowledge thereof,
section. report in writing such fact to the
Commission.
Should a director, trustee or officer
die, resign or in any manner cease to
hold office, the secretary, or the
director, trustee or officer of the
corporation, shall, within seven (7)
days from knowledge thereof, report in
writing such fact to the Commission.
Disqualification of Directors, Trustees Disqualification of Directors, Trustees or
or Officers.— A person shall be Officers.— A person shall be disqualified
disqualified from being a director, from being a director, trustee or officer of
trustee or officer of any corporation if, any corporation if, within five (5) years
within five (5) years prior to the prior to the election or appointment as
election or appointment as such, the such, the person was:
person was:
(a) Convicted by final judgment:
(a) Convicted by final
(1) Of an offense punishable
judgment:
by imprisonment for a period
(1) Of an offense exceeding six (6) years;
punishable by
imprisonment for a period (2) For violating this Code;
exceeding six (6) years; and
(2) For violating this (3) For violating Republic
Code; and Act No. 8799, otherwise known
as “The Securities Regulation
(3) For violating Code”;
Republic Act No. 8799,
otherwise known as “The (b) Found administratively liable
Securities Regulation for any offense involving fraudulent
Code”; acts; and
(b) Found administratively (c) By a foreign court or equivalent
 liable for any offense involving
fraudulent acts; and
(c) By a foreign court or
equivalent foreign regulatory
authority for acts, violations or
misconduct similar to those
enumerated in paragraphs (a)
and (b) above.
The foregoing is without prejudice to promotion of good corporate governance or
qualifications or other disqualifications, as a sanction in its administrative
which the Commission, the primary proceedings.
regulatory agency, or the Philippine
Competition Commission may impose
in its promotion of good corporate
governance or as a sanction in its
administrative proceedings.
27 Disqualification of
Removal of Directors or Trustees.—
directors, trustees or
officers. - No person Any director or trustee of a corporation
convicted by final may be removed from office by a vote
judgment of an offense of the stockholders holding or
punishable by representing at least two-thirds (2⁄3) of
imprisonment for a period the outstanding capital stock, or in a
exceeding six (6) years, or nonstock corporation, by a vote of at
a violation of this Code
least two-thirds (2⁄3) of the members
committed within five (5)
years prior to the date of entitled to vote: Provided, That such
his election or removal shall take place either at a
appointment, shall qualify regular meeting of the corporation or at
as a director, trustee or a special meeting called for the
officer of any corporation. purpose, and in either case, after
previous notice to stockholders or
members of the corporation of the
intention to propose such removal at the
meeting. A special meeting of the
stockholders or members for the
purpose of removing any director or
trustee must be called by the secretary
on order of the president, or upon
written demand of the stockholders
representing or holding at least a
majority of the outstanding capital
stock, or a majority of the members
entitled to vote. If there is no secretary,
or if the secretary, despite demand, fails
or refuses to call the special meeting or
to give notice thereof, the stockholder
or member of the corporation signing
the demand may call for the meeting by
directly addressing the stockholders or
members. Notice of the time and place
of such meeting, as well as of the
intention to propose such removal, must
be given by publication or by written
notice prescribed in this Code. Removal
may be with or without
cause: Provided, That removal without
foreign regulatory authority for acts,
violations or misconduct similar to
those enumerated in paragraphs (a)
and (b) above.
The foregoing is without prejudice to
qualifications or other disqualifications,
which the Commission, the primary
regulatory agency, or the Philippine
Competition Commission may impose in its
Removal of Directors or Trustees.— Any
director or trustee of a corporation may be
removed from office by a vote of the
stockholders holding or representing at
least two-thirds (2⁄3) of the outstanding
capital stock, or in a nonstock corporation,
by a vote of at least two-thirds (2⁄3) of the
members entitled to vote: Provided, That
such removal shall take place either at a
regular meeting of the corporation or at a
special meeting called for the purpose, and
in either case, after previous notice to
stockholders or members of the corporation
of the intention to propose such removal at
the meeting. A special meeting of the
stockholders or members for the purpose of
removing any director or trustee must be
called by the secretary on order of the
president, or upon written demand of the
stockholders representing or holding at
least a majority of the outstanding capital
stock, or a majority of the members entitled
to vote. If there is no secretary, or if the
secretary, despite demand, fails or refuses
to call the special meeting or to give notice
thereof, the stockholder or member of the
corporation signing the demand may call
for the meeting by directly addressing the
stockholders or members. Notice of the time
and place of such meeting, as well as of the
intention to propose such removal, must be
given by publication or by written notice
prescribed in this Code. Removal may be
with or without cause: Provided, That
removal without cause may not be used to
deprive minority stockholders or members
of the right of representation to which they
may be entitled under Section 23 of this
 cause may not be used to deprive Code.
minority stockholders or members of
the right of representation to which they The Commission shall, motu proprio or
may be entitled under Section 23 of this upon verified complaint, and after due
Code. notice and hearing, order the removal of a
director or trustee elected despite the
The Commission shall, motu disqualification, or whose disqualification
proprio or upon verified complaint, and arose or is discovered subsequent to an
after due notice and hearing, order the election. The removal of a disqualified
removal of a director or trustee elected director shall be without prejudice to other
despite the disqualification, or whose sanctions that the Commission may impose
disqualification arose or is discovered on the board of directors or trustees who,
subsequent to an election. The removal with knowledge of the disqualification,
of a disqualified director shall be failed to remove such director or trustee.
without prejudice to other sanctions
that the Commission may impose on
the board of directors or trustees who,
with knowledge of the disqualification,
failed to remove such director or
trustee.

28 Removal of directors or
trustees. - Any director or
trustee of a corporation
may be removed from
office by a vote of the
stockholders holding or
representing at least
twothirds (2/3) of the
outstanding capital stock,
or if the corporation be a
non-stock corporation, by
a vote of at least two-
thirds (2/3) of the
members entitled to vote:
Provided, That such
removal shall take place
either at a regular meeting
of the corporation or at a
special meeting called for
the purpose, and in either
case, after previous notice
to stockholders or
members of the
corporation of the
intention to propose such
removal at the meeting. A
special meeting of the
stockholders or members
of a corporation for the
purpose of removal of
directors or trustees, or
any of them, must be
called by the secretary on
order of the president or
on the written demand of
the stockholders
representing or holding at
least a majority of the
outstanding capital stock,
or, if it be a non-stock
corporation, on the written
Vacancies in the Office of Director or
Trustee; Emergency Board.— Any
vacancy occurring in the board of
directors or trustees other than by
removal or by expiration of term may
be filled by the vote of at least a
majority of the remaining directors or
trustees, if still constituting a quorum;
otherwise, said vacancies must be filled
by the stockholders or members in a
regular or special meeting called for
that purpose.
When the vacancy is due to term
expiration, the election shall be held no
later than the day of such expiration at a
meeting called for that purpose. When
the vacancy arises as a result of
removal by the stockholders or
members, the election may be held on
the same day of the meeting authorizing
the removal and this fact must be so
stated in the agenda and notice of said
meeting. In all other cases, the election
must be held no later than forty-five
(45) days from the time the vacancy
arose. A director or trustee elected to
fill a vacancy shall be referred to as
replacement director or trustee and
shall serve only for the unexpired term
of the predecessor in office.
However, when the vacancy prevents
the remaining directors from
constituting a quorum and emergency
action is required to prevent grave,
Vacancies in the Office of Director or
Trustee; Emergency Board.— Any vacancy
occurring in the board of directors or
trustees other than by removal or by
expiration of term may be filled by the vote
of at least a majority of the remaining
directors or trustees, if still constituting a
quorum; otherwise, said vacancies must be
filled by the stockholders or members in a
regular or special meeting called for that
purpose.
When the vacancy is due to term
expiration, the election shall be held no
later than the day of such expiration at a
meeting called for that purpose. When the
vacancy arises as a result of removal by the
stockholders or members, the election may
be held on the same day of the meeting
authorizing the removal and this fact must
be so stated in the agenda and notice of said
meeting. In all other cases, the election must
be held no later than forty-five (45) days
from the time the vacancy arose. A director
or trustee elected to fill a vacancy shall be
referred to as replacement director or
trustee and shall serve only for the
unexpired term of the predecessor in office.
However, when the vacancy prevents the
remaining directors from constituting a
quorum and emergency action is required
to prevent grave, substantial, and
irreparable loss or damage to the
corporation, the vacancy may be
temporarily filled from among the officers
 demand of a majority of
the members entitled to
vote. Should the secretary
fail or refuse to call the
special meeting upon such
demand or fail or refuse to
give the notice, or if there
is no secretary, the call for
the meeting may be
addressed directly to the
stockholders or members
by any stockholder or
member of the corporation
signing the demand.
Notice of the time and
place of such meeting, as
well as of the intention to
propose such removal,
must be given by
publication or by written
notice prescribed in this
Code. Removal may be
with or without cause:
Provided, That removal
without cause may not be
used to deprive minority
stockholders or members
of the right of
representation to which
they may be entitled under
Section 24 of this Code.
29 Vacancies in the office of
director or trustee. - Any
vacancy occurring in the
board of directors or
trustees other than by
removal by the
stockholders or members
or by expiration of term,
may be filled by the vote
of at least a majority of
the remaining directors or
trustees, if still
constituting a quorum;
otherwise, said vacancies
must be filled by the
stockholders in a regular
or special meeting called
for that purpose. A
director or trustee so
elected to fill a vacancy
shall be elected only or
the unexpired term of his
predecessor in office.
A directorship or
trusteeship to be filled by
reason of an increase in
the number of directors or
trustees shall be filled
substantial, and irreparable loss or of the corporation by unanimous vote of the
damage to the corporation, the vacancy remaining directors or trustees. The action
may be temporarily filled from among by the designated director or trustee shall
the officers of the corporation by be limited to the emergency action
unanimous vote of the remaining necessary, and the term shall cease within a
directors or trustees. The action by the reasonable time from the termination of the
designated director or trustee shall be emergency or upon election of the
limited to the emergency action replacement director or trustee, whichever
necessary, and the term shall cease comes earlier. The corporation must notify
within a reasonable time from the the Commission within three (3) days from
termination of the emergency or upon the creation of the emergency board, stating
election of the replacement director or therein the reason for its creation.
trustee, whichever comes earlier. The
corporation must notify the Any directorship or trusteeship to be
Commission within three (3) days from filled by reason of an increase in the
the creation of the emergency board, number of directors or trustees shall be
stating therein the reason for its filled only by an election at a regular or at a
special meeting of stockholders or members
creation.
duly called for the purpose, or in the same
Any directorship or trusteeship to be meeting authorizing the increase of
filled by reason of an increase in the directors or trustees if so stated in the
number of directors or trustees shall be notice of the meeting.
filled only by an election at a regular or
at a special meeting of stockholders or In all elections to fill vacancies under this
members duly called for the purpose, or section, the procedure set forth in Sections
in the same meeting authorizing the 23 and 25 of this Code shall apply.
increase of directors or trustees if so
stated in the notice of the meeting.
In all elections to fill vacancies under
this section, the procedure set forth in
Sections 23 and 25 of this Code shall
apply.
Compensation of Directors or Compensation of Directors or Trustees.— In
Trustees.— In the absence of any the absence of any provision in the bylaws
provision in the bylaws fixing their fixing their compensation, the directors or
compensation, the directors or trustees trustees shall not receive any compensation
shall not receive any compensation in in their capacity as such, except for
their capacity as such, except for reasonable per diems: Provided, however,
reasonable per That the stockholders representing at least
diems: Provided, however, That the a majority of the outstanding capital stock
stockholders representing at least a or majority of the members may grant
majority of the outstanding capital directors or trustees with compensation and
stock or majority of the members may approve the amount thereof at a regular or
grant directors or trustees with special meeting.
compensation and approve the amount
thereof at a regular or special meeting. In no case shall the total yearly
compensation of directors exceed ten
In no case shall the total yearly percent (10%) of the net income before
compensation of directors exceed ten income tax of the corporation during the
percent (10%) of the net income before preceding year.
income tax of the corporation during
the preceding year. Directors or trustees shall not participate
in the determination of their own per diems
Directors or trustees shall not or compensation.
participate in the determination of their
own per diems or compensation. Corporations vested with pub he interest
shall submit to their shareholders and the
 only by an election at a
regular or at a special
meeting of stockholders
or members duly called
for the purpose, or in the
same meeting authorizing
the increase of directors or
trustees if so stated in the
notice of the meeting.
30 Compensation of
directors. - In the absence
of any provision in the by-
laws fixing their
compensation, the
directors shall not receive
any compensation, as such
directors, except for
reasonable pre diems:
Provided, however, That
any such compensation
other than per diems may
be granted to directors by
the vote of the
stockholders representing
at least a majority of the
outstanding capital stock
at a regular or special
stockholders' meeting. In
no case shall the total
yearly compensation of
directors, as such
directors, exceed ten
(10%) percent of the net
income before income tax
of the corporation during
the preceding year
31 Liability of directors,
trustees or officers. -
Directors or trustees who
willfully and knowingly
vote for or assent to
patently unlawful acts of
the corporation or who are
guilty of gross negligence
or bad faith in directing
the affairs of the
corporation or acquire any
personal or pecuniary
interest in conflict with
their duty as such
directors or trustees shall
be liable jointly and
severally for all damages
resulting there from
suffered by the
corporation, its
stockholders or members
and other persons.
When a director, trustee or
officer attempts to acquire
or acquires, in violation of
Corporations vested with pub he Commission, an annual report of the total
interest shall submit to their compensation of each of their directors or
shareholders and the Commission, an trustees.
annual report of the total compensation
of each of their directors or trustees.
Liability of Directors, Trustees or
Officers.— Directors or trustees who
willfully and knowingly vote for or
assent to patently unlawful acts of the
corporation or who are guilty of gross
negligence or bad faith in directing the
affairs of the corporation or acquire any
personal or pecuniary interest in
conflict with their duty as such
directors or trustees shall be liable
jointly and severally for all damages
resulting therefrom suffered by the
corporation, its stockholders or
members and other persons.
A director, trustee or officer shall not
attempt to acquire, or acquire any
interest adverse to the corporation in
respect of any matter which has been
reposed in them in confidence, and
upon which, equity imposes a disability
upon themselves to deal in their own
behalf; otherwise, the said director,
trustee or officer shall be liable as a
trustee for the corporation and must
account for the profits which otherwise
would have accrued to the corporation.
Dealings of Directors, Trustees or
Officers with the Corporation.— A
contract of the corporation with one (1)
or more of its directors, trustees,
officers or their spouses and relatives
within the fourth civil degree of
consanguinity or affinity is voidable, at
the option of such corporation, unless
all the following conditions are present:
(a) The presence of such
director or trustee in the board
meeting in which the contract
was approved was not necessary
to constitute a quorum for such
meeting;
(b) The vote of such director
or trustee was not necessary for
the approval of the contract;
(c) The contract is fair and
Liability of Directors, Trustees or Officers.—
Directors or trustees who willfully and
knowingly vote for or assent to patently
unlawful acts of the corporation or who are
guilty of gross negligence or bad faith in
directing the affairs of the corporation or
acquire any personal or pecuniary interest
in conflict with their duty as such directors
or trustees shall be liable jointly and
severally for all damages resulting
therefrom suffered by the corporation, its
stockholders or members and other
persons.
A director, trustee or officer shall not
attempt to acquire, or acquire any interest
adverse to the corporation in respect of any
matter which has been reposed in them in
confidence, and upon which, equity imposes
a disability upon themselves to deal in their
own behalf; otherwise, the said director,
trustee or officer shall be liable as a trustee
for the corporation and must account for
the profits which otherwise would have
accrued to the corporation.
Dealings of Directors, Trustees or Officers
with the Corporation.— A contract of the
corporation with one (1) or more of its
directors, trustees, officers or their spouses
and relatives within the fourth civil degree
of consanguinity or affinity is voidable, at
the option of such corporation, unless all
the following conditions are present:
(a) The presence of such director or
trustee in the board meeting in which
the contract was approved was not
necessary to constitute a quorum for
such meeting;
(b) The vote of such director or
trustee was not necessary for the
approval of the contract;
(c) The contract is fair and
reasonable under the circumstances;
 his duty, any interest
adverse to the corporation
in respect of any matter
which has been reposed in
him in confidence, as to
which equity imposes a
disability upon him to
deal in his own behalf, he
shall be liable as a trustee
for the corporation and
must account for the
profits which otherwise
would have accrued to the
corporation.
32 Dealings of directors,
trustees or officers with
the corporation. - A
contract of the corporation
with one or more of its
directors or trustees or
officers is voidable, at the
option of such
corporation, unless all the
following conditions are
present:
1. That the presence of
such director or trustee in
the board meeting in
which the contract was
approved was not
necessary to constitute a
quorum for such meeting;
2. That the vote of such
director or trustee was nor
necessary for the approval
of the contract;
3. That the contract is fair
and reasonable under the
circumstances; and
4. That in case of an
officer, the contract has
been previously
reasonable under the
circumstances;
(d) In case of corporations
vested with public interest,
material contracts are approved
by at least two-thirds (2⁄3) of the
entire membership of the board,
with at least a majority of the
independent directors voting to
approve the material contract;
and
(e) In case of an officer, the
contract has been previously
authorized by the board of
directors.
Where any of the first three (3)
conditions set forth in the preceding
paragraph is absent, in the case of a
contract with a director or trustee, such
contract may be ratified by the vote of
the stockholders representing at least
two-thirds (2⁄3) of the outstanding
capital stock or of at least two-thirds
(2⁄3) of the members in a meeting
called for the purpose: Provided, That
full disclosure of the adverse interest of
the directors or trustees involved is
made at such meeting and the contract
is fair and reasonable under the
circumstances.
Contracts Between Corporations with
Interlocking Directors.— Except in
cases of fraud, and provided the
contract is fair and reasonable under the
circumstances, a contract between two
(2) or more corporations having
interlocking directors shall not be
invalidated on that ground
alone: Provided, That if the interest of
the interlocking director in one (1)
corporation is substantial and the
interest in the other corporation or
corporations is merely nominal, the
contract shall be subject to the
provisions of the preceding section
insofar as the latter corporation or
corporations are concerned.
Stockholdings exceeding twenty interlocking directors.
percent (20%) of the outstanding
capital stock shall be considered
substantial for purposes of interlocking
directors.
(d) In case of corporations vested
with public interest, material
contracts are approved by at least
two-thirds (2⁄3) of the entire
membership of the board, with at
least a majority of the independent
directors voting to approve the
material contract; and
(e) In case of an officer, the
contract has been previously
authorized by the board of directors.
Where any of the first three (3) conditions
set forth in the preceding paragraph is
absent, in the case of a contract with a
director or trustee, such contract may be
ratified by the vote of the stockholders
representing at least two-thirds (2⁄3) of the
outstanding capital stock or of at least two-
thirds (2⁄3) of the members in a meeting
called for the purpose: Provided, That full
disclosure of the adverse interest of the
directors or trustees involved is made at
such meeting and the contract is fair and
reasonable under the circumstances.
Contracts Between Corporations with
Interlocking Directors.— Except in cases of
fraud, and provided the contract is fair and
reasonable under the circumstances, a contract
between two (2) or more corporations having
interlocking directors shall not be invalidated
on that ground alone: Provided, That if the
interest of the interlocking director in one (1)
corporation is substantial and the interest in
the other corporation or corporations is merely
nominal, the contract shall be subject to the
provisions of the preceding section insofar as
the latter corporation or corporations are
concerned.
Stockholdings exceeding twenty percent
(20%) of the outstanding capital stock shall be
considered substantial for purposes of
 authorized by the board of
directors.
Where any of the first two
conditions set forth in the
preceding paragraph is
absent, in the case of a
contract with a director or
trustee, such contract may
be ratified by the vote of
the stockholders
representing at least two-
thirds (2/3) of the
outstanding capital stock
or of at least two-thirds
(2/3) of the members in a
meeting called for the
purpose: Provided, That
full disclosure of the
adverse interest of the
directors or trustees
involved is made at such
meeting: Provided,
however, That the
contract is fair and
reasonable under the
circumstances.
33 Contracts between
Disloyalty of a Director.— Where a Disloyalty of a Director.— Where a director,
corporations with
interlocking directors. - director, by virtue of such office, by virtue of such office, acquires a business
Except in cases of fraud, acquires a business opportunity which opportunity which should belong to the
and provided the contract should belong to the corporation, corporation, thereby obtaining profits to
is fair and reasonable thereby obtaining profits to the the prejudice of such corporation, the
under the circumstances, a prejudice of such corporation, the director must account for and refund to the
contract between two or director must account for and refund to latter all such profits, unless the act has
more corporations having
the latter all such profits, unless the act been ratified by a vote of the stockholders
interlocking directors
shall not be invalidated on has been ratified by a vote of the owning or representing at least two-thirds
that ground alone: stockholders owning or representing at (2⁄3) of the outstanding capital stock. This
Provided, That if the least two-thirds (2⁄3) of the outstanding provision shall be applicable,
interest of the interlocking capital stock. This provision shall be notwithstanding the fact that the director
director in one corporation applicable, notwithstanding the fact that risked one’s own funds in the venture.
is substantial and his the director risked one’s own funds in
interest in the other
the venture.
corporation or
corporations is merely
nominal, he shall be
subject to the provisions
of the preceding section
insofar as the latter
corporation or
corporations are
concerned.
Stockholdings exceeding
twenty (20%) percent of
the outstanding capital
stock shall be considered
substantial for purposes of
interlocking directors.
34 Disloyalty of a director. -
Executive, Management, and Other Executive, Management, and Other Special
Where a director, by
virtue of his office, Special Committees.— If the bylaws so Committees.— If the bylaws so provide, the
acquires for himself a provide, the board may create an board may create an executive committee
business opportunity executive committee composed of at composed of at least three (3) directors.
which should belong to least three (3) directors. Said committee Said committee may act, by majority vote of
the corporation, thereby may act, by majority vote of all its all its members, on such specific matters
obtaining profits to the members, on such specific matters within the competence of the board, as may
 prejudice of such
corporation, he must
account to the latter for all
such profits by refunding
the same, unless his act
has been ratified by a vote
of the stockholders
owning or representing at
least two-thirds (2/3) of
the outstanding capital
stock. This provision shall
be applicable,
notwithstanding the fact
that the director risked his
own funds in the venture.
within the competence of the board, as
may be delegated to it in the bylaws or
by majority vote of the board, except
with respect to the: (a) approval of any
action for which shareholders’ approval
is also required; (b) filling of vacancies
in the board; (c) amendment or repeal
of bylaws or the adoption of new
bylaws; (d) amendment or repeal of any
resolution of the board which by its
express terms is not amendable or
repealable; and (e) distribution of cash
dividends to the shareholders.
The board of directors may create
special committees of temporary or
permanent nature and determine the
members’ term, composition,
compensation, powers, and
responsibilities.
be delegated to it in the bylaws or by
majority vote of the board, except with
respect to the: (a) approval of any action for
which shareholders’ approval is also
required; (b) filling of vacancies in the
board; (c) amendment or repeal of bylaws
or the adoption of new bylaws; (d)
amendment or repeal of any resolution of
the board which by its express terms is not
amendable or repealable; and (e)
distribution of cash dividends to the
shareholders.
The board of directors may create special
committees of temporary or permanent
nature and determine the members’ term,
composition, compensation, powers, and
responsibilities.

35 . Executive committee. -
Corporate Powers and Capacity.— Corporate Powers and Capacity.— Every
The by-laws of a
corporation may create an Every corporation incorporated under corporation incorporated under this Code
executive committee, this Code has the power and capacity:
composed of not less than
three members of the
board, to be appointed by
the board. Said committee
may act, by majority vote
of all its members, on
such specific matters
within the competence of
the board, as may be
delegated to it in the by-
laws or on a majority vote
of the board, except with
respect to: (1) approval of
any action for which
shareholders' approval is
also required; (2) the
filing of vacancies in the
board; (3) the amendment
or repeal of by-laws or the
adoption of new by-laws;
(4) the amendment or
repeal of any resolution of
the board which by its
express terms is not so
amendable or repealable;
and (5) a distribution of
cash dividends to the
shareholders.
has the power and capacity:
(a) To sue and be sued in its (a) To sue and be sued in its
corporate name; corporate name;
(b) To have perpetual (b) To have perpetual existence
existence unless the certificate of unless the certificate of incorporation
incorporation provides provides otherwise;
otherwise;
(c) To adopt and use a corporate
(c) To adopt and use a seal;
corporate seal;
(d) To amend its articles of
(d) To amend its articles of incorporation in accordance with the
incorporation in accordance with provisions of this Code;
the provisions of this Code;
(e) To adopt bylaws, not contrary
(e) To adopt bylaws, not to law, morals or public policy, and
contrary to law, morals or public to amend or repeal the same in
policy, and to amend or repeal accordance with this Code;
the same in accordance with this
Code; (f) In case of stock corporations, to
issue or sell stocks to subscribers and
(f) In case of stock to sell treasury stocks in accordance
corporations, to issue or sell with the provisions of this Code; and
stocks to subscribers and to sell to admit members to the corporation
treasury stocks in accordance if it be a nonstock corporation;
with the provisions of this Code;
and to admit members to the (g) To purchase, receive, take or
corporation if it be a nonstock grant, hold, convey, sell, lease,
corporation; pledge, mortgage, and otherwise deal
with such real and personal property,
(g) To purchase, receive, take including securities and bonds of
or grant, hold, convey, sell, other corporations, as the transaction
lease, pledge, mortgage, and of the lawful business of the
otherwise deal with such real corporation may reasonably and

36 Corporate powers and
capacity. - Every
corporation incorporated
under this Code has the
power and capacity:
1. To sue and be sued in
its corporate name;
2. Of succession by its
corporate name for the
period of time stated in
the articles of
incorporation and the
certificate of
incorporation;
3. To adopt and use a
corporate seal;
4. To amend its articles of
incorporation in
accordance with the
provisions of this Code;
5. To adopt by-laws, not
contrary to law, morals, or
and personal property, including
securities and bonds of other
corporations, as the transaction
of the lawful business of the
corporation may reasonably and
necessarily require, subject to
the limitations prescribed by law
and the Constitution;
(h) To enter into a partnership,
joint venture, merger,
consolidation, or any other
commercial agreement with
natural and juridical persons;
(i) To make reasonable
donations, including those for
the public welfare or for
hospital, charitable, cultural,
scientific, civic, or similar
purposes: Provided, That no
foreign corporation shall give
donations in aid of any political
party or candidate or for
purposes of partisan political
activity;
(j) To establish pension,
retirement, and other plans for
the benefit of its directors,
trustees, officers, and
employees; and
(k) To exercise such other
powers as may be essential or
necessary to carry out its
purpose or purposes as stated in
the articles of incorporation.
Power to Extend or Shorten Corporate
Term.— A private corporation may
extend or shorten its term as stated in
the articles of incorporation when
approved by a majority vote of the
board of directors or trustees, and
ratified at a meeting by the stockholders
or members representing at least two-
thirds (2⁄3) of the outstanding capital
stock or of its members. Written notice
of the proposed action and the time and
place of the meeting shall be sent to
stockholders or members at their
respective place of residence as shown
in the books of the corporation, and
must be deposited to the addressee in
the post office with postage prepaid,
served personally, or when allowed in
the bylaws or done with the consent of
necessarily require, subject to the
limitations prescribed by law and the
Constitution;
(h) To enter into a partnership,
joint venture, merger, consolidation,
or any other commercial agreement
with natural and juridical persons;
(i) To make reasonable donations,
including those for the public welfare
or for hospital, charitable, cultural,
scientific, civic, or similar
purposes: Provided, That no foreign
corporation shall give donations in
aid of any political party or candidate
or for purposes of partisan political
activity;
(j) To establish pension, retirement,
and other plans for the benefit of its
directors, trustees, officers, and
employees; and
(k) To exercise such other powers
as may be essential or necessary to
carry out its purpose or purposes as
stated in the articles of incorporation.
Power to Extend or Shorten Corporate
Term.— A private corporation may extend
or shorten its term as stated in the articles
of incorporation when approved by a
majority vote of the board of directors or
trustees, and ratified at a meeting by the
stockholders or members representing at
least two-thirds (2⁄3) of the outstanding
capital stock or of its members. Written
notice of the proposed action and the time
and place of the meeting shall be sent to
stockholders or members at their respective
place of residence as shown in the books of
the corporation, and must be deposited to
the addressee in the post office with postage
prepaid, served personally, or when allowed
in the bylaws or done with the consent of
the stockholder, sent electronically in
accordance with the rules and regulations
 public policy, and to the stockholder, sent electronically in of the Commission on the use of electronic
amend or repeal the same accordance with the rules and data messages. In case of extension of
in accordance with this regulations of the Commission on the corporate term, a dissenting stockholder
Code;
use of electronic data messages. In case may exercise the right of appraisal under
6. In case of stock
corporations, to issue or of extension of corporate term, a the conditions provided in this Code.
sell stocks to subscribers dissenting stockholder may exercise the
and to sell stocks to right of appraisal under the conditions
subscribers and to sell provided in this Code.
treasury stocks in
accordance with the
provisions of this Code;
and to admit members to
the corporation if it be a
non-stock corporation;
7. To purchase, receive,
take or grant, hold,
convey, sell, lease, pledge,
mortgage and otherwise
deal with such real and
personal property,
including securities and
bonds of other
corporations, as the
transaction of the lawful
business of the
corporation may
reasonably and
necessarily require,
subject to the limitations
prescribed by law and the
Constitution;
8. To enter into merger or
consolidation with other
corporations as provided
in this Code;
9. To make reasonable
donations, including those
for the public welfare or
for hospital, charitable,
cultural, scientific, civic,
or similar purposes:
Provided, That no
corporation, domestic or
foreign, shall give
donations in aid of any
political party or
candidate or for purposes
of partisan political
activity;
10. To establish pension,
retirement, and other
plans for the benefit of its
directors, trustees, officers
and employees; and
11. To exercise such other
powers as may be
essential or necessary to
carry out its purpose or
purposes as stated in the
articles of incorporation.
37 Power to extend or
Power to Increase or Decrease Capital Power to Increase or Decrease Capital Stock;
shorten corporate term. -
A private corporation may Stock; Incur, Create or Increase Incur, Create or Increase Bonded
extend or shorten its term Bonded Indebtedness.— No corporation Indebtedness.— No corporation shah
as stated in the articles of shah increase or decrease its capital increase or decrease its capital stock or
incorporation when
approved by a majority
vote of the board of
directors or trustees and
ratified at a meeting by
the stockholders
representing at least two-
thirds (2/3) of the
outstanding capital stock
or by at least two
thirds (2/3) of the
members in case of non-
stock corporations.
Written notice of the
proposed action and of the
time and place of the
meeting shall be
addressed to each
stockholder or member at
his place of residence as
shown on the books of the
corporation and deposited
to the addressee in the
post office with postage
prepaid, or served
personally: Provided, That
in case of extension of
corporate term, any
dissenting stockholder
may exercise his appraisal
right under the conditions
provided in this code. (n)
stock or incur, create or increase any
bonded indebtedness unless approved
by a majority vote of the board of
directors and by two-thirds (2⁄3) of the
outstanding capital stock at a
stockholders’ meeting duly called for
the purpose. Written notice of the time
and place of the stockholders’ meeting
and the purpose for said meeting must
be sent to the stockholders at their
places of residence as shown in the
books of the corporation and served on
the stockholders personally, or through
electronic means recognized in the
corporation’s bylaws and/or the
Commission’s rules as a valid mode for
service of notices.
of the directors of the corporation and
A certificate must be signed by a countersigned by the chairperson and
majority of the directors of the secretary of the stockholders’ meeting,
corporation and countersigned by the setting forth:
chairperson and secretary of the
stockholders’ meeting, setting forth:
(a) That the requirements of
this section have been complied
with;
(b) The amount of the increase
or decrease of the capital stock;
(c) In case of an increase of
the capital stock, the amount of
capital stock or number of shares
of no-par stock thereof actually
subscribed, the names,
nationahties and addresses of the
persons subscribing, the amount
of capital stock or number of no-
par stock subscribed by each,
and the amount paid by each on
the subscription in cash or
property, or the amount of
capital stock or number of shares
of no-par stock allotted to each
stockholder if such increase is
for the purpose of making
effective stock dividend therefor
authorized;
(d) Any bonded indebtedness
to be incurred, created or
increased;
(e) The amount of stock
represented at the meeting; and
(f) The vote authorizing the
increase or decrease of the
incur, create or increase any bonded
indebtedness unless approved by a majority
vote of the board of directors and by two-
thirds (2⁄3) of the outstanding capital stock
at a stockholders’ meeting duly called for
the purpose. Written notice of the time and
place of the stockholders’ meeting and the
purpose for said meeting must be sent to the
stockholders at their places of residence as
shown in the books of the corporation and
served on the stockholders personally, or
through electronic means recognized in the
corporation’s bylaws and/or the
Commission’s rules as a valid mode for
service of notices.
A certificate must be signed by a majority
(a) That the requirements of this
section have been complied with;
(b) The amount of the increase or
decrease of the capital stock;
(c) In case of an increase of the
capital stock, the amount of capital
stock or number of shares of no-par
stock thereof actually subscribed, the
names, nationahties and addresses of
the persons subscribing, the amount
of capital stock or number of no-par
stock subscribed by each, and the
amount paid by each on the
subscription in cash or property, or
the amount of capital stock or
number of shares of no-par stock
allotted to each stockholder if such
increase is for the purpose of making
effective stock dividend therefor
authorized;
(d) Any bonded indebtedness to be
incurred, created or increased;
(e) The amount of stock
represented at the meeting; and
(f) The vote authorizing the
increase or decrease of the capital
stock, or the incurring, creating or
increasing of any bonded
indebtedness.
Any increase or decrease in the capital
stock or the incurring, creating or
 capital stock, or the incurring,
creating or increasing of any
bonded indebtedness.
Any increase or decrease in the
capital stock or the incurring, creating
or increasing of any bonded
indebtedness shall require prior
approval of the Commission, and where
appropriate, of the Philippine
Competition Commission. The
application with the Commission shall
be made within six (6) months from the
date of approval of the board of
directors and stockholders, which
period may be extended for justifiable
reasons.
Copies of the certificate shall be kept
on file in the office of the corporation
and filed with the Commission and
attached to the original articles of
incorporation. After approval by the
Commission and the issuance by the
Commission of its certificate of filing,
the capital stock shall be deemed
increased or decreased and the
incurring, creating or increasing of any
bonded indebtedness authorized, as the
certificate of fifing may
declare: Provided, That the
Commission shall not accept for filing
any certificate of increase of capital
stock unless accompanied by a sworn
statement of the treasurer of the
corporation lawfully holding office at
the time of the filing of the certificate,
showing that at least twenty-five
percent (25%) of the increase in capital
stock has been subscribed and that at
least twenty-five percent (25%) of the
amount subscribed has been paid in
actual cash to the corporation or that
property, the valuation of which is
equal to twenty-five percent (25%) of
the subscription, has been transferred to
the corporation: Provided, further, That
no decrease in capital stock shall be
approved by the Commission if its
effect shall prejudice the rights of
corporate creditors.
Nonstock corporations may incur,
create or increase bonded indebtedness
when approved by a majority of the
board of trustees and of at least two-
thirds (2⁄3) of the members in a meeting
duly called for the purpose.
increasing of any bonded indebtedness shall
require prior approval of the Commission,
and where appropriate, of the Philippine
Competition Commission. The application
with the Commission shall be made within
six (6) months from the date of approval of
the board of directors and stockholders,
which period may be extended for
justifiable reasons.
Copies of the certificate shall be kept on
file in the office of the corporation and filed
with the Commission and attached to the
original articles of incorporation. After
approval by the Commission and the
issuance by the Commission of its certificate
of filing, the capital stock shall be deemed
increased or decreased and the incurring,
creating or increasing of any bonded
indebtedness authorized, as the certificate
of fifing may declare: Provided, That the
Commission shall not accept for filing any
certificate of increase of capital stock unless
accompanied by a sworn statement of the
treasurer of the corporation lawfully
holding office at the time of the filing of the
certificate, showing that at least twenty-five
percent (25%) of the increase in capital
stock has been subscribed and that at least
twenty-five percent (25%) of the amount
subscribed has been paid in actual cash to
the corporation or that property, the
valuation of which is equal to twenty-five
percent (25%) of the subscription, has been
transferred to the
corporation: Provided, further, That no
decrease in capital stock shall be approved
by the Commission if its effect shall
prejudice the rights of corporate creditors.
Nonstock corporations may incur, create
or increase bonded indebtedness when
approved by a majority of the board of
trustees and of at least two-thirds (2⁄3) of
the members in a meeting duly called for
the purpose.
Bonds issued by a corporation shall be
registered with the Commission, which shall
have the authority to determine the
sufficiency of the terms thereof.
 Bonds issued by a corporation shall
be registered with the Commission,
which shall have the authority to
determine the sufficiency of the terms
thereof.

38 Power to increase or
Power to Deny Preemptive Right.— All Power to Deny Preemptive Right.— All
decrease capital stock;
incur, create or increase stockholders of a stock corporation stockholders of a stock corporation shah
bonded indebtedness. - No shah enjoy preemptive right to enjoy preemptive right to subscribe to all
corporation shall increase subscribe to all issues or disposition of issues or disposition of shares of any class,
or decrease its capital shares of any class, in proportion to in proportion to their respective
stock or incur, create or their respective shareholdings, unless shareholdings, unless such right is denied
increase any bonded such right is denied by the articles of by the articles of incorporation or an
indebtedness unless
incorporation or an amendment amendment thereto: Provided, That such
approved by a majority
vote of the board of thereto: Provided, That such preemptive right shall not extend to shares
directors and, at a preemptive right shall not extend to issued in compliance with laws requiring
stockholder's meeting shares issued in compliance with laws stock offerings or minimum stock
duly called for the requiring stock offerings or minimum ownership by the public; or to shares issued
purpose, two-thirds (2/3) stock ownership by the public; or to in good faith with the approval of the
of the outstanding capital shares issued in good faith with the stockholders representing two-thirds (2⁄3)
stock shall favor the
approval of the stockholders of the outstanding capital stock, in exchange
increase or diminution of
the capital stock, or the representing two-thirds (2⁄3) of the for property needed for corporate purposes
incurring, creating or outstanding capital stock, in exchange or in payment of a previously contracted
increasing of any bonded for property needed for corporate debt.
indebtedness. Written purposes or in payment of a previously
notice of the proposed contracted debt.
increase or diminution of
the capital stock or of the
incurring, creating, or
increasing of any bonded
indebtedness and of the
time and place of the
stockholder's meeting at
which the proposed
increase or diminution of
the capital stock or the
incurring or increasing of
any bonded indebtedness
is to be considered, must
be addressed to each
stockholder at his place of
residence as shown on the
books of the corporation
and deposited to the
addressee in the post
office with postage
prepaid, or served
personally.
A certificate in duplicate
must be signed by a
majority of the directors
of the corporation and
countersigned by the
chairman and the
secretary of the
stockholders' meeting,
setting forth:
(1) That the requirements
of this section have been
complied with;
(2) The amount of the
increase or diminution of
the capital stock;
(3) If an increase of the
capital stock, the amount
of capital stock or number
of shares of no-par stock
thereof actually
subscribed, the names,
nationalities and
residences of the persons
subscribing, the amount of
capital stock or number of
no-par stock subscribed
by each, and the amount
paid by each on his
subscription in cash or
property, or the amount of
capital stock or number of
shares of no-par stock
allotted to each
stockholder if such
increase is for the purpose
of making effective stock
dividend therefor
authorized;
(4) Any bonded
indebtedness to be
incurred, created or
increased;
(5) The actual
indebtedness of the
corporation on the day of
the meeting;
(6) The amount of stock
represented at the
meeting; and
(7) The vote authorizing
the increase or diminution
of the capital stock, or the
incurring, creating or
increasing of any bonded
indebtedness.
Any increase or decrease
in the capital stock or the
incurring, creating or
increasing of any bonded
indebtedness shall require
prior approval of the
Securities and Exchange
Commission.
One of the duplicate
certificates shall be kept
on file in the office of the
corporation and the other
shall be filed with the
Securities and Exchange
Commission and attached
to the original articles of
incorporation. From and
after approval by the
Securities and Exchange
Commission and the
issuance by the
Commission of its
certificate of filing, the
capital stock shall stand
increased or decreased
 and the incurring, creating
or increasing of any
bonded indebtedness
authorized, as the
certificate of filing may
declare: Provided, That
the Securities and
Exchange Commission
shall not accept for filing
any certificate of increase
of capital stock unless
accompanied by the sworn
statement of the treasurer
of the corporation
lawfully holding office at
the time of the filing of
the certificate, showing
that at least twenty-five
(25%) percent of such
increased capital stock has
been subscribed and that
at least twenty-five (25%)
percent of the amount
subscribed has been paid
either in actual cash to the
corporation or that there
has been transferred to the
corporation property the
valuation of which is
equal to twenty-five
(25%) percent of the
subscription: Provided,
further, That no decrease
of the capital stock shall
be approved by the
Commission if its effect
shall prejudice the rights
of corporate creditors.
Non-stock corporations
may incur or create
bonded indebtedness, or
increase the same, with
the approval by a majority
vote of the board of
trustees and of at least
two-thirds (2/3) of the
members in a meeting
duly called for the
purpose.
Bonds issued by a
corporation shall be
registered with the
Securities and Exchange
Commission, which shall
have the authority to
determine the sufficiency
of the terms thereof. (17a)
39 Power to deny pre-
Sale or Other Disposition of Assets.— Sale or Other Disposition of Assets.—
emptive right. - All
stockholders of a stock Subject to the provisions of Republic Subject to the provisions of Republic Act
corporation shall enjoy Act No. 10667, otherwise known as the No. 10667, otherwise known as the
pre-emptive right to “Philippine Competition Act”, and “Philippine Competition Act”, and other
subscribe to all issues or other related laws, a corporation may, related laws, a corporation may, by a
disposition of shares of by a majority vote of its board of majority vote of its board of directors or
any class, in proportion to directors or trustees, sell, lease, trustees, sell, lease, exchange, mortgage,
their respective
shareholdings, unless such
right is denied by the
articles of incorporation or
an amendment thereto:
Provided, That such pre-
emptive right shall not
extend to shares to be
issued in compliance with
laws requiring stock
offerings or minimum
stock ownership by the
public; or to shares to be
issued in good faith with
the approval of the
stockholders representing
two-thirds (2/3) of the
outstanding capital stock,
in exchange for property
needed for corporate
purposes or in payment of
a previously contracted
debt.
exchange, mortgage, pledge, or pledge, or otherwise dispose of its property
otherwise dispose of its property and and assets, upon such terms and conditions
assets, upon such terms and conditions and for such consideration, which may be
and for such consideration, which may money, stocks, bonds, or other instruments
be money, stocks, bonds, or other for the payment of money or other property
instruments for the payment of money or consideration, as its board of directors or
or other property or consideration, as its trustees may deem expedient.
board of directors or trustees may deem
expedient. A sale of all or substantially all of the
corporation’s properties and assets,
A sale of all or substantially all of the including its goodwill, must be authorized
corporation’s properties and assets, by the vote of the stockholders representing
including its goodwill, must be at least two-thirds (2⁄3) of the outstanding
authorized by the vote of the capital stock, or at least two-thirds (2⁄3) of
stockholders representing at least two- the members, in a stockholders’ or
thirds (2⁄3) of the outstanding capital members’ meeting duly called for the
stock, or at least two-thirds (2⁄3) of the purpose.
members, in a stockholders’ or
members’ meeting duly called for the In nonstock corporations where there are
no members with voting rights, the vote of
purpose.
at least a majority of the trustees in office
In nonstock corporations where there will be sufficient authorization for the
are no members with voting rights, the corporation to enter into any transaction
vote of at least a majority of the trustees authorized by this section.
in office will be sufficient authorization
for the corporation to enter into any The determination of whether or not the
transaction authorized by this section. sale involves all or substantially all of the
corporation’s properties and assets must be
The determination of whether or not computed based on its net asset value, as
the sale involves all or substantially all shown in its latest financial statements. A
of the corporation’s properties and sale or other disposition shall be deemed to
assets must be computed based on its cover substantially all the corporate
net asset value, as shown in its latest property and assets if thereby the
financial statements. A sale or other corporation would be rendered incapable of
disposition shall be deemed to cover continuing the business or accomplishing
substantially all the corporate property the purpose for which it was incorporated.
and assets if thereby the corporation
would be rendered incapable of Written notice of the proposed action and
continuing the business or of the time and place for the meeting shall
accomplishing the purpose for which it be addressed to stockholders or members at
was incorporated. their places of residence as shown in the
books of the corporation and deposited to
Written notice of the proposed action the addressee in the post office with postage
and of the time and place for the prepaid, served personally, or when allowed
meeting shall be addressed to by the bylaws or done with the consent of
stockholders or members at their places the stockholder, sent
of residence as shown in the books of electronically: Provided, That any dissenting
the corporation and deposited to the stockholder may exercise the right of
addressee in the post office with appraisal under the conditions provided in
postage prepaid, served personally, or this Code.
when allowed by the bylaws or done
with the consent of the stockholder, After such authorization or approval by
sent electronically: Provided, That any the stockholders or members, the board of
dissenting stockholder may exercise the directors or trustees may, nevertheless, in
right of appraisal under the conditions its discretion, abandon such sale, lease,
provided in this Code. exchange, mortgage, pledge, or other
disposition of property and assets, subject
After such authorization or approval to the rights of third parties under any
by the stockholders or members, the contract relating thereto, without further

40 Sale or other disposition
of assets. - Subject to the
provisions of existing
laws on illegal
combinations and
monopolies, a corporation
may, by a majority vote of
its board of directors or
trustees, sell, lease,
exchange, mortgage,
pledge or otherwise
dispose of all or
substantially all of its
property and assets,
including its goodwill,
upon such terms and
conditions and for such
consideration, which may
be money, stocks, bonds
or other instruments for
the payment of money or
other property or
consideration, as its board
of directors or trustees
may deem expedient,
when authorized by the
vote of the stockholders
representing at least two-
thirds (2/3) of the
outstanding capital stock,
or
in case of non-stock
corporation, by the vote of
at least to two-thirds (2/3)
of the members, in a
stockholder's or member's
meeting duly called for
the purpose. Written
notice of the proposed
board of directors or trustees may,
nevertheless, in its discretion, abandon
such sale, lease, exchange, mortgage,
pledge, or other disposition of property
and assets, subject to the rights of third
parties under any contract relating
thereto, without further action or
approval by the stockholders or
members.
Nothing in this section is intended to
restrict the power of any corporation,
without the authorization by the
stockholders or members, to sell, lease,
exchange, mortgage, pledge, or
otherwise dispose of any of its property
and assets if the same is necessary in
the usual and regular course of business
of the corporation or if the proceeds of
the sale or other disposition of such
property and assets shall be
appropriated for the conduct of its
remaining business.
Power to Acquire Own Shares.—
Provided that the corporation has
unrestricted retained earnings in its
books to cover the shares to be
purchased or acquired, a stock
corporation shall have the power to
purchase or acquire its own shares for a
legitimate corporate purpose or
purposes, including the following
cases:
(a) To eliminate fractional
shares arising out of stock
dividends;
(b) To collect or compromise
an indebtedness to the
corporation, arising out of
unpaid subscription, in a
delinquency sale, and to
purchase delinquent shares sold
during said sale; and
(c) To pay dissenting or
withdrawing stockholders
entitled to payment for their
shares under the provisions of
this Code.
action or approval by the stockholders or
members.
Nothing in this section is intended to
restrict the power of any corporation,
without the authorization by the
stockholders or members, to sell, lease,
exchange, mortgage, pledge, or otherwise
dispose of any of its property and assets if
the same is necessary in the usual and
regular course of business of the
corporation or if the proceeds of the sale or
other disposition of such property and
assets shall be appropriated for the conduct
of its remaining business.
Power to Acquire Own Shares.— Provided
that the corporation has unrestricted
retained earnings in its books to cover the
shares to be purchased or acquired, a stock
corporation shall have the power to
purchase or acquire its own shares for a
legitimate corporate purpose or purposes,
including the following cases:
(a) To eliminate fractional shares
arising out of stock dividends;
(b) To collect or compromise an
indebtedness to the corporation,
arising out of unpaid subscription, in
a delinquency sale, and to purchase
delinquent shares sold during said
sale; and
(c) To pay dissenting or
withdrawing stockholders entitled to
payment for their shares under the
provisions of this Code.
action and of the time and
place of the meeting shall
be addressed to each
stockholder or member at
his place of residence as
shown on the books of the
corporation and deposited
to the addressee in the
post office with postage
prepaid, or served
personally: Provided, That
any dissenting stockholder
may exercise his appraisal
right under the conditions
provided in this Code.
A sale or other disposition
shall be deemed to cover
substantially all the
corporate property and
assets if thereby the
corporation would be
rendered incapable of
continuing the business or
accomplishing the
purpose for which it was
incorporated.
After such authorization
or approval by the
stockholders or members,
the board of directors or
trustees may,
nevertheless, in its
discretion, abandon such
sale, lease, exchange,
mortgage, pledge or other
disposition of property
and assets, subject to the
rights of third parties
under any contract
relating thereto, without
further action or approval
by the stockholders or
members.
Nothing in this section is
intended to restrict the
power of any corporation,
without the authorization
by the stockholders or
members, to sell, lease,
exchange, mortgage,
pledge or otherwise
dispose of any of its
property and assets if the
same is necessary in the
usual and regular course
of business of said
corporation or if the
proceeds of the sale or
other disposition of such
property and assets be
appropriated for the
conduct of its remaining
business.
In non-stock corporations
where there are no
members with voting
 rights, the vote of at least
a majority of the trustees
in office will be sufficient
authorization for the
corporation to enter into
any transaction authorized
by this section. (28 1/2a)
41 Power to acquire own
shares. - A stock
corporation shall have the
power to purchase or
acquire its own shares for
a legitimate corporate
purpose or purposes,
including but not limited
to the following cases:
Provided, That the
corporation has
unrestricted retained
earnings in its books to
cover the shares to be
purchased or acquired:
1. To eliminate fractional
shares arising out of stock
dividends;
2. To collect or
compromise an
indebtedness to the
corporation, arising out of
unpaid subscription, in a
delinquency sale, and to
purchase delinquent
shares sold during said
sale; and
3. To pay dissenting or
withdrawing stockholders
entitled to payment for
their shares under the
provisions of this Code.
(n)
42 Power to invest corporate
funds in another
corporation or business or
for any other purpose. -
Subject to the provisions
of this Code, a private
corporation may invest its
funds in any other
corporation or business or
for any purpose other than
the primary
purpose for which it was
organized when approved
by a majority of the board
Power to Invest Corporate Funds in
Another Corporation or Business or for
Any Other Purpose.— Subject to the
provisions of this Code, a private
corporation may invest its funds in any
other corporation, business, or for any
purpose other than the primary purpose
for which it was organized, when
approved by a majority of the board of
directors or trustees and ratified by the
stockholders representing at least two-
thirds (2⁄3) of the outstanding capital
stock, or by at least two-thirds (2⁄3) of
the members in the case of nonstock
corporations, at a meeting duly called
for the purpose. Notice of the proposed
investment and the time and place of
the meeting shall be addressed to each
stockholder or member at the place of
residence as shown in the books of the
corporation and deposited to the
addressee in the post office with
postage prepaid, served personally, or
sent electronically in accordance with
the rules and regulations of the
Commission on the use of electronic
data message, when allowed by the
bylaws or done with the consent of the
stockholders: Provided, That any
dissenting stockholder shall have
appraisal right as provided in this
Code: Provided, however, That where
the investment by the corporation is
reasonably necessary to accomplish its
primary purpose as stated in the articles
of incorporation, the approval of the
stockholders or members shall not be
necessary.
Power to Declare Dividends.— The
board of directors of a stock
corporation may declare dividends out
of the unrestricted retained earnings
which shall be payable in cash,
property, or in stock to all stockholders
on the basis of outstanding stock held
by them: Provided, That any cash
dividends due on delinquent stock shall
first be applied to the unpaid balance on
the subscription plus costs and
expenses, while stock dividends shall
Power to Invest Corporate Funds in Another
Corporation or Business or for Any Other
Purpose.— Subject to the provisions of this
Code, a private corporation may invest its
funds in any other corporation, business, or
for any purpose other than the primary
purpose for which it was organized, when
approved by a majority of the board of
directors or trustees and ratified by the
stockholders representing at least two-
thirds (2⁄3) of the outstanding capital stock,
or by at least two-thirds (2⁄3) of the
members in the case of nonstock
corporations, at a meeting duly called for
the purpose. Notice of the proposed
investment and the time and place of the
meeting shall be addressed to each
stockholder or member at the place of
residence as shown in the books of the
corporation and deposited to the addressee
in the post office with postage prepaid,
served personally, or sent electronically in
accordance with the rules and regulations
of the Commission on the use of electronic
data message, when allowed by the bylaws
or done with the consent of the
stockholders: Provided, That any dissenting
stockholder shall have appraisal right as
provided in this Code: Provided, however,
That where the investment by the
corporation is reasonably necessary to
accomplish its primary purpose as stated in
the articles of incorporation, the approval
of the stockholders or members shall not be
necessary.
Power to Declare Dividends.— The board of
directors of a stock corporation may
declare dividends out of the unrestricted
retained earnings which shall be payable in
cash, property, or in stock to all
stockholders on the basis of outstanding
stock held by them: Provided, That any cash
dividends due on delinquent stock shall first
be applied to the unpaid balance on the
subscription plus costs and expenses, while
stock dividends shall be withheld from the
delinquent stockholders until their unpaid
 of directors or trustees and
ratified by the
stockholders representing
at least two-thirds (2/3) of
the outstanding capital
stock, or by at least two
thirds (2/3) of the
members in the case of
non-stock corporations, at
a stockholder's or
member's meeting duly
called for the purpose.
Written notice of the
proposed investment and
the time and place of the
meeting shall be
addressed to each
stockholder or member at
his place of residence as
shown on the books of the
corporation and deposited
to the addressee in the
post office with postage
prepaid, or served
personally: Provided, That
any dissenting stockholder
shall have appraisal right
as provided in this Code:
Provided, however, That
where the investment by
the corporation is
reasonably necessary to
accomplish its primary
purpose as stated in the
articles of incorporation,
the approval of the
stockholders or members
shall not be necessary. (17
1/2a)
43 Power to declare
dividends. - The board of
directors of a stock
corporation may declare
dividends out of the
unrestricted retained
earnings which shall be
payable in cash, in
property, or in stock to all
stockholders on the basis
of outstanding stock held
by them: Provided, That
any cash dividends due on
delinquent stock shall first
be applied to the unpaid
balance on the
subscription plus costs
and expenses, while stock
dividends shall be
withheld from the
delinquent stockholder
until his unpaid
subscription is fully paid:
Provided, further, That no
stock dividend shall be
issued without the
approval of stockholders
be withheld from the delinquent
stockholders until their unpaid
subscription is fully
paid: Provided, further, That no stock
dividend shall be issued without the
approval of stockholders representing at
least two-thirds (2⁄3) of the outstanding
capital stock at a regular or special
meeting duly called for the purpose.
Stock corporations are prohibited
from retaining surplus profits in excess
of one hundred percent (100%) of their
paid-in capital stock, except: (a) when
justified by definite corporate
expansion projects or programs
approved by the board of directors; or
(b) when the corporation is prohibited
under any loan agreement with
financial institutions or creditors,
whether local or foreign, from declaring
dividends without their consent, and
such consent has not yet been secured;
or (c) when it can be clearly shown that
such retention is necessary under
special circumstances obtaining in the
corporation, such as when there is need
for special reserve for probable
contingencies
Power to Enter into Management
Contract.— No corporation shall
conclude a management contract with
another corporation unless such
contract is approved by the board of
directors and by stockholders owning at
least the majority of the outstanding
capital stock, or by at least a majority
of the members in the case of a
nonstock corporation, of both the
managing and the managed
corporation, at a meeting duly called
for the purpose: Provided, That (a)
where a stockholder or stockholders
representing the same interest of both
the managing and the managed
corporations own or control more than
one-third (1⁄3) of the total outstanding
capital stock entitled to vote of the
managing corporation; or (b) where a
majority of theMnembers of the board
of directors of the managing
corporation also constitute a majority of
the members of the board of directors
of the managed corporation, then the
management contract must be approved
by the stockholders of the managed
subscription is fully paid: Provided, further,
That no stock dividend shall be issued
without the approval of stockholders
representing at least two-thirds (2⁄3) of the
outstanding capital stock at a regular or
special meeting duly called for the purpose.
Stock corporations are prohibited from
retaining surplus profits in excess of one
hundred percent (100%) of their paid-in
capital stock, except: (a) when justified by
definite corporate expansion projects or
programs approved by the board of
directors; or (b) when the corporation is
prohibited under any loan agreement with
financial institutions or creditors, whether
local or foreign, from declaring dividends
without their consent, and such consent has
not yet been secured; or (c) when it can be
clearly shown that such retention is
necessary under special circumstances
obtaining in the corporation, such as when
there is need for special reserve for
probable contingencies
Power to Enter into Management
Contract.— No corporation shall conclude
a management contract with another
corporation unless such contract is
approved by the board of directors and by
stockholders owning at least the majority of
the outstanding capital stock, or by at least
a majority of the members in the case of a
nonstock corporation, of both the managing
and the managed corporation, at a meeting
duly called for the purpose: Provided, That
(a) where a stockholder or stockholders
representing the same interest of both the
managing and the managed corporations
own or control more than one-third (1⁄3) of
the total outstanding capital stock entitled
to vote of the managing corporation; or (b)
where a majority of theMnembers of the
board of directors of the managing
corporation also constitute a majority of the
members of the board of directors of the
managed corporation, then the
management contract must be approved by
the stockholders of the managed
corporation owning at least two-thirds (2⁄3)
of the total outstanding capital stock
entitled to vote, or by at least two-thirds
 representing not less than
two-thirds (2/3) of the
outstanding capital stock
at a regular or special
meeting duly called for
the purpose. (16a)
Stock corporations are
prohibited from retaining
surplus profits in excess
of one hundred (100%)
percent of their paid-in
capital stock, except: (1)
when justified by definite
corporate expansion
projects or programs
approved by the board of
directors; or (2) when the
corporation is prohibited
under any loan agreement
with any financial
institution or creditor,
whether local or foreign,
from declaring dividends
without its/his consent,
and such consent has not
yet been secured; or (3)
when it can be clearly
shown that such retention
is necessary under special
circumstances obtaining
in the corporation, such as
when there is need for
special reserve for
probable contingencies.
(n)
corporation owning at least two-thirds
(2⁄3) of the total outstanding capital
stock entitled to vote, or by at least
two-thirds (2⁄3) of the members in the
case of a nonstock corporation.
These shall apply to any contract
whereby a corporation undertakes to
manage or operate all or substantially
all of the business of another
corporation, whether such contracts are
called service contracts, operating
agreements or otherwise: Provided,
however That such service contracts or
operating agreements which relate to
the exploration, development,
exploitation or utilization of natural
resources may be entered into for such
periods as may be provided by pertinent
laws or regulations.
No management contract shall be
entered into for a period longer than
five (5) years for any one (1) term.
(2⁄3) of the members in the case of a
nonstock corporation.
These shall apply to any contract whereby a
corporation undertakes to manage or
operate all or substantially all of the
business of another corporation, whether
such contracts are called service contracts,
operating agreements or otherwise:
Provided, however That such service
contracts or operating agreements which
relate to the exploration, development,
exploitation or utilization of natural
resources may be entered into for such
periods as may be provided by pertinent
laws or regulations.
No management contract shall be entered
into for a period longer than five (5) years
for any one (1) term.

44 Power to enter into Ultra Vires Acts of Corporations.— No Ultra Vires Acts of Corporations.— No
management contract. – corporation shall possess or exercise corporation shall possess or exercise
No corporation shall corporate powers other than those corporate powers other than those
conclude a management conferred by this Code or by its articles conferred by this Code or by its articles of
contract with another of incorporation and except as incorporation and except as necessary or
corporation unless such necessary or incidental to the exercise incidental to the exercise of the powers
contract shall have been of the powers conferred. conferred.
approved by the board of
directors and by
stockholders owning at
least the majority of the
outstanding capital stock,
or by at least a majority of
the members in the case of
a non-stock corporation,
of both the managing and
the managed corporation,
at a meeting duly called
for the purpose: Provided,
That (1) where a
stockholder or
stockholders representing
the same interest of both
the managing and the
managed corporations
own or control more than
one-third (1/3) of the total
outstanding capital stock
 entitled to vote of the
managing corporation; or
(2) where a majority of
the members of the board
of directors of the
managing corporation also
constitute a majority of
the members of the board
of directors of the
managed corporation, then
the management contract
must be approved by the
stockholders of the
managed corporation
owning at least two-thirds
(2/3) of the total
outstanding capital stock
entitled to vote, or by at
least two-thirds (2/3) of
the members in the case of
a non-stock corporation.
No management contract
shall be entered into for a
period longer than five
years for any one term.

The provisions of the next

preceding paragraph shall
apply to any contract
whereby a corporation
undertakes to manage or
operate all or substantially
all of the business of
another corporation,
whether such contracts are
called service contracts,
operating agreements or
otherwise: Provided,
however, That such
service contracts or
operating agreements
which relate to the
exploration, development,
exploitation or utilization
of natural resources may
be entered into for such
periods as may be
provided by the pertinent
laws or regulations. (n)
45 Ultra vires acts of Adoption of Bylaws.— For the Adoption of Bylaws.— For the adoption of
corporations. – No adoption of bylaws by the corporation, bylaws by the corporation, the affirmative
corporation under this the affirmative vote of the stockholders vote of the stockholders representing at
Code shall possess or representing at least a majority of the least a majority of the outstanding capital
exercise any corporate outstanding capital stock, or of at least stock, or of at least a majority of the
powers except those a majority of the members in case of members in case of nonstock corporations,
conferred by this Code or nonstock corporations, shall be shall be necessary. The bylaws shall be
by its articles of necessary. The bylaws shall be signed signed by the stockholders or members
incorporation and except by the stockholders or members voting voting for them and shall be kept in the
such as are necessary or for them and shall be kept in the principal office of the corporation, subject
incidental to the exercise principal office of the corporation, to the inspection of the stockholders or
of the powers so subject to the inspection of the members during office hours. A copy
conferred. (n) stockholders or members during office thereof, duly certified by a majority of the
hours. A copy thereof, duly certified by directors or trustees and countersigned by
a majority of the directors or trustees the secretary of the corporation, shall be
and countersigned by the secretary of filed with the Commission and attached to
the corporation, shall be filed with the the original articles of incorporation.
 Commission and attached to the
original articles of incorporation.
Notwithstanding the provisions of the
preceding paragraph, bylaws may be
adopted and filed prior to
incorporation; in such case, such
bylaws shall be approved and signed by
all the incorporators and submitted to
the Commission, together with the
articles of incorporation.
In all cases, bylaws shall be effective
only upon the issuance by the
Commission of a certification that the
bylaws are in accordance with this
Code.
The Commission shall not accept for
filing the bylaws or any amendment
thereto of any bank, banking institution,
building and loan association, trust
company, insurance company, public
utility, educational institution, or other
special corporations governed by
special laws, unless accompanied by a
certificate of the appropriate
government agency to the effect that
such bylaws or amendments are in
accordance with law.
46 Adoption of by-laws. -
Contents of Bylaws.— A private Contents of Bylaws.— A private corporation
Every corporation formed
under this Code must, corporation may provide the following may provide the following in its bylaws:
within one (1) month after in its bylaws:
receipt of official notice
of the issuance of its (a) The time, place and
certificate of manner of calling and special meetings of the directors or
incorporation by the conducting regular or special
Securities and Exchange meetings of the directors or
Commission, adopt a code
trustees;
of by-laws for its
government not
(b) The time and manner of
inconsistent with this
Code. For the adoption of calling and conducting regular or stockholders or members thereof;
by-laws by the special meetings and mode of
corporation the notifying the stockholders or
affirmative vote of the members thereof;
stockholders representing
at least a majority of the (c) The required quorum in
outstanding capital stock, meetings of stockholders or
or of at least a majority of
members and the manner of
the members in case of
non-stock corporations, voting therein;
shall be necessary. The
by-laws shall be signed by (d) The modes by which a
the stockholders or stockholder, member, director,
members voting for them or trustee may attend meetings
and shall be kept in the and cast their votes;
principal office of the
corporation, subject to the (e) The form for proxies of
inspection of the stockholders and members and
stockholders or members
the manner of voting them;
during office hours. A
copy thereof, duly
(f) The directors’ or trustees’
certified to by a majority
of the directors or trustees qualifications, duties and maximum number of other board
countersigned by the responsibilities, the guidelines representations that an independent
secretary of the for setting the compensation of
corporation, shall be filed directors or trustees and officers, shall, in no case, be more than the
Notwithstanding the provisions of the
preceding paragraph, bylaws may be
adopted and filed prior to incorporation; in
such case, such bylaws shall be approved
and signed by all the incorporators and
submitted to the Commission, together with
the articles of incorporation.
In all cases, bylaws shall be effective only
upon the issuance by the Commission of a
certification that the bylaws are in
accordance with this Code.
The Commission shall not accept for filing
the bylaws or any amendment thereto of
any bank, banking institution, building and
loan association, trust company, insurance
company, public utility, educational
institution, or other special corporations
governed by special laws, unless
accompanied by a certificate of the
appropriate government agency to the
effect that such bylaws or amendments are
in accordance with law.
(a) The time, place and manner of
calling and conducting regular or
trustees;
(b) The time and manner of calling
and conducting regular or special
meetings and mode of notifying the
(c) The required quorum in
meetings of stockholders or members
and the manner of voting therein;
(d) The modes by which a
stockholder, member, director, or
trustee may attend meetings and cast
their votes;
(e) The form for proxies of
stockholders and members and the
manner of voting them;
(f) The directors’ or trustees’
qualifications, duties and
responsibilities, the guidelines for
setting the compensation of directors
or trustees and officers, and the
director or trustee may have which
 with the Securities and
Exchange Commission
which shall be attached to
the original articles of
incorporation.
Notwithstanding the
provisions of the
preceding paragraph, by-
laws may be adopted and
filed prior to
incorporation; in such
case, such by-laws shall
be approved and signed
by all the incorporators
and submitted to the
Securities and Exchange
Commission, together
with the articles of
incorporation.
In all cases, by-laws shall
be effective only upon the
issuance by the Securities
and Exchange
Commission of a (j) In the case of stock
certification that the by-
laws are not inconsistent
with this Code.
The Securities and
Exchange Commission
shall not accept for filing
the by-laws or any
amendment thereto of any
bank, banking institution,
building and loan
association, trust
company, insurance
company, public utility,
educational institution or
other special corporations
governed by special laws,
unless accompanied by a
certificate of the
appropriate government
agency to the effect that
such by-laws or
amendments are in
accordance with law.
(20a)
47 Contents of by-laws. -
Subject to the provisions
of the Constitution, this
Code, other special laws,
and the articles of
incorporation, a private
corporation may provide
in its by-laws for:
1. The time, place and
manner of calling and
conducting regular or
special meetings of the
directors or trustees;
2. The time and manner of
calling and conducting
regular or special
meetings of the
stockholders or members;
and the maximum number of
other board representations that
an independent director or
trustee may have which shall, in
no case, be more than the
number prescribed by the
Commission;
(g) The time for holding the
annual election of directors or
trustees and the mode or manner
of giving notice thereof;
(h) The manner of election or
appointment and the term of
office of all officers other than
directors or trustees;
(i) The penalties for violation
of the bylaws;
corporations, the manner of
issuing stock certificates; and
(k) Such other matters as may
be necessary for the proper or
convenient transaction of its
corporate affairs for the
promotion of good governance
and anti-graft and corruption
measures.
An arbitration agreement may be
provided in the bylaws pursuant to
Section 181 of this Code.
Amendment to Bylaws.— A majority of
the board of directors or trustees, and
the owners of at least a majority of the
outstanding capital stock, or at least a
majority of the members of a non-stock
corporation, at a regular or special
meeting duly called for the purpose,
may amend or repeal the bylaws or
adopt new bylaws. The owners of two-
thirds (2⁄3) of the outstanding capital
stock or two-thirds (2⁄3) of the
members in a non-stock corporation
may delegate to the board of directors
or trustees the power to gimend or
repeal the bylaws or adopt new
number prescribed by the
Commission;
(g) The time for holding the annual
election of directors or trustees and
the mode or manner of giving notice
thereof;
(h) The manner of election or
appointment and the term of office of
all officers other than directors or
trustees;
(i) The penalties for violation of the
bylaws;
(j) In the case of stock
corporations, the manner of issuing
stock certificates; and
(k) Such other matters as may be
necessary for the proper or
convenient transaction of its
corporate affairs for the promotion of
good governance and anti-graft and
corruption measures.
An arbitration agreement may be
provided in the bylaws pursuant to Section
181 of this Code.
Amendment to Bylaws.— A majority of the
board of directors or trustees, and the
owners of at least a majority of the
outstanding capital stock, or at least a
majority of the members of a non-stock
corporation, at a regular or special meeting
duly called for the purpose, may amend or
repeal the bylaws or adopt new bylaws. The
owners of two-thirds (2⁄3) of the
outstanding capital stock or two-thirds (2⁄3)
of the members in a non-stock corporation
may delegate to the board of directors or
trustees the power to gimend or repeal the
bylaws or adopt new bylaws: Provided, That
any power delegated to the board of
 3. The required quorum in bylaws: Provided, That any power directors or trustees to amend or repeal the
meetings of stockholders delegated to the board of directors or bylaws or adopt new bylaws shall be
or members and the trustees to amend or repeal the bylaws considered as revoked whenever
manner of voting therein;
or adopt new bylaws shall be stockholders owning or representing a
4. The form for proxies of
stockholders and members considered as revoked whenever majority of the outstanding capital stock or
and the manner of voting stockholders owning or representing a majority of the members shall so vote at a
them; majority of the outstanding capital regular or special meeting.
5. The qualifications, stock or majority of the members shall
duties and compensation so vote at a regular or special meeting. Whenever the bylaws are amended or
of directors or trustees, new bylaws are adopted, the corporation
officers and employees; Whenever the bylaws are amended or shall file with the Commission such
6. The time for holding
new bylaws are adopted, the amended or new bylaws and, if applicable,
the annual election of
directors of trustees and corporation shall file with the the stockholders’ or members’ resolution
the mode or manner of Commission such amended or new authorizing the delegation of the power to
giving notice thereof; bylaws and, if applicable, the amend and/or adopt new bylaws, duly
7. The manner of election stockholders’ or members’ resolution certified under oath by the corporate
or appointment and the authorizing the delegation of the power secretary and a majority of the directors or
term of office of all to amend and/or adopt new bylaws, trustees.
officers other than
duly certified under oath by the
directors or trustees; The amended or new bylaws shall only be
8. The penalties for corporate secretary and a majority of
the directors or trustees. effective upon the issuance by the
violation of the by-laws;
9. In the case of stock Commission of a certification that the same
corporations, the manner The amended or new bylaws shall is in accordance with this Code and other
of issuing stock only be effective upon the issuance by relevant laws.
certificates; and the Commission of a certification that
10. Such other matters as the same is in accordance with this
may be necessary for the Code and other relevant laws.
proper or convenient
transaction of its corporate
business and affairs. (21a)
48 Amendments to by-laws. -
Kinds of Meetings.— Meetings of Kinds of Meetings.— Meetings of directors,
The board of directors or
trustees, by a majority directors, trustees, stockholders, or trustees, stockholders, or members may be
vote thereof, and the members may be regular or special. regular or special.
owners of at least a
majority of the
outstanding capital stock,
or at least a majority of
the members of a non-
stock corporation, at a
regular or special meeting
duly called for the
purpose, may amend or
repeal any by-laws or
adopt new by-laws. The
owners of two-thirds (2/3)
of the outstanding capital
stock or two-thirds (2/3)
of the members in a non-
stock corporation may
delegate to the board of
directors or trustees the
power to amend or repeal
any by-laws or adopt new
by-laws: Provided, That
any power
delegated to the board of
directors or trustees to
amend or repeal any by-
laws or adopt new by-
laws shall be considered
as revoked whenever
stockholders owning or
 representing a majority of
the outstanding capital
stock or a majority of the
members in non-stock
corporations, shall so vote
at a regular or special
meeting.
Whenever any
amendment or new by-
laws are adopted, such
amendment or new by-
laws shall be attached to
the original by-laws in the
office of the corporation,
and a copy thereof, duly
certified under oath by the
corporate secretary and a
majority of the directors
or trustees, shall be filed
with the Securities and
Exchange Commission
the same to be attached to
the original articles of
incorporation and original
by-laws.
The amended or new by-
laws shall only be
effective upon the
issuance by the Securities
and Exchange
Commission of a
certification that the same
are not inconsistent with
this Code. (22a and 23a)
49 Kinds of meetings. -
Regular and Special Meetings of Regular and Special Meetings of
Meetings of directors,
trustees, stockholders, or Stockholders or Members.— Regular Stockholders or Members.— Regular
members may be regular meetings of stockholders or members meetings of stockholders or members shall
or special. (n) shall be held annually on a date fixed in be held annually on a date fixed in the
the bylaws, or if not so fixed, on any bylaws, or if not so fixed, on any date after
date after April 15 of every year as April 15 of every year as determined by the
determined by the board of directors or board of directors or trustees: Provided,
trustees: Provided, That written notice That written notice of regular meetings
of regular meetings shall be sent to all shall be sent to all stockholders or members
stockholders or members of record at of record at least twenty-one (21) days prior
least twenty-one (21) days prior to the to the meeting, unless a different period is
meeting, unless a different period is required in the bylaws, law, or
required in the bylaws, law, or regulation: Provided, further, That written
regulation: Provided, further, That notice of regular meetings may be sent to all
written notice of regular meetings may stockholders or members of record through
be sent to all stockholders or members electronic mail or such other manner as the
of record through electronic mail or Commission shall allow under its
such other manner as the Commission guidelines.
shall allow under its guidelines.
At each regular meeting of stockholders
At each regular meeting of or members, the board of directors or
stockholders or members, the board of trustees shall endeavor to present to
directors or trustees shall endeavor to stockholders or members the following:
present to stockholders or members the
following: (a) The minutes of the most recent
regular meeting which shall include,
(a) The minutes of the most among others:
recent regular meeting which
shall include, among others:
(1) A description of the
voting and vote tabulation
procedures used in the
previous meeting;
(2) A description of the
opportunity given to
stockholders or members
to ask questions and a
record of the questions
asked and answers given;
(3) The matters
discussed and resolutions
reached;
(4) A record of the
voting results for each
agenda item;
(5) A list of the
directors or trustees,
officers and stockholders
or members who attended
the meeting; and
(6) Such other items
that the Commission may
require in the interest of
good corporate
governance and the
protection of minority
stockholders;
(b) A members’ list for
nonstock corporations and, for
stock corporations, material
information on the current
stockholders, and their voting
rights;
(c) A detailed, descriptive,
balanced and comprehensible
assessment of the corporation’s
performance, which shall include
information on any material
change in the corporation’s
business, strategy, and other
affairs;
(d) A financial report for the
preceding year, which shall
include financial statements duly
signed and certified in
accordance with this Code and
the rules the Commission may
prescribe, a statement on the
(1) A description of the
voting and vote tabulation
procedures used in the
previous meeting;
(2) A description of the
opportunity given to
stockholders or members to
ask questions and a record of
the questions asked and
answers given;
(3) The matters discussed
and resolutions reached;
(4) A record of the voting
results for each agenda item;
(5) A list of the directors or
trustees, officers and
stockholders or members who
attended the meeting; and
(6) Such other items that the
Commission may require in
the interest of good corporate
governance and the protection
of minority stockholders;
(b) A members’ list for nonstock
corporations and, for stock
corporations, material information
on the current stockholders, and
their voting rights;
(c) A detailed, descriptive, balanced
and comprehensible assessment of
the corporation’s performance,
which shall include information on
any material change in the
corporation’s business, strategy, and
other affairs;
(d) A financial report for the
preceding year, which shall include
financial statements duly signed and
certified in accordance with this Code
and the rules the Commission may
prescribe, a statement on the
adequacy of the corporation’s
internal controls or risk management
systems, and a statement of all
external audit and non-audit fees;
(e) An explanation of the dividend
policy and the fact of payment of
dividends or the reasons for
nonpayment thereof;
(f) Director or trustee profiles
 adequacy of the corporation’s which shall include, among others,
internal controls or risk their qualifications and relevant
management systems, and a experience, length of service in the
statement of all external audit corporation, trainings and continuing
and non-audit fees; education attended, and their board
representations in other
(e) An explanation of the corporations;
dividend policy and the fact of
payment of dividends or the (g) A director or trustee attendance
reasons for nonpayment thereof; report, indicating the attendance of
each director or trustee at each of the
(f) Director or trustee profiles meetings of the board and its
which shall include, among committees and in regular or special
others, their qualifications and stockholder meetings;
relevant experience, length of
service in the corporation, (h) Appraisals and performance
trainings and continuing reports for the board and the criteria
education attended, and their and procedure for assessment;
board representations in other
corporations; (i) A director or trustee
compensation report prepared in
(g) A director or trustee accordance with this Code and the
attendance report, indicating the rules the Commission may prescribe;
attendance of each director or
trustee at each of the meetings of (j) Director disclosures on self-
the board and its committees and dealings and related party
in regular or special stockholder transactions; and/or
meetings;
(k) The profiles of directors
(h) Appraisals and nominated or seeking election or
performance reports for the reelection.
board and the criteria and
procedure for assessment; A director, trustee, stockholder, or
member may propose any other matter for
(i) A director or trustee inclusion in the agenda at any regular
compensation report prepared in meeting of stockholders or members.
accordance with this Code and
the rules the Commission may Special meetings of stockholders or
prescribe; members shall be held at any time deemed
necessary or as provided in the
(j) Director disclosures on bylaws: Provided, however, That at least one
self-dealings and related party (1) week written notice shall be sent to all
transactions; and/or stockholders or members, unless a different
period is provided in the bylaws, law or
(k) The profiles of directors regulation.
nominated or seeking election or
reelection. A stockholder or member may propose
the holding of a special meeting and items
A director, trustee, stockholder, or to be included in the agenda.
member may propose any other matter
for inclusion in the agenda at any Notice of any meeting may be waived,
regular meeting of stockholders or expressly or impliedly, by any stockholder
members. or member: Provided, That general waivers
of notice in the articles of incorporation or
Special meetings of stockholders or the bylaws shall not be
members shall be held at any time allowed: Provided, further, That attendance
deemed necessary or as provided in the at a meeting shall constitute a waiver of
bylaws: Provided, however, That at notice of such meeting, except when the
least one (1) week written notice shall person attends a meeting for the express
be sent to all stockholders or members, purpose of objecting to the transaction of
unless a different period is provided in any business because the meeting is not
the bylaws, law or regulation. lawfully called or convened.

A stockholder or member may Whenever for any cause, there is no

propose the holding of a special person authorized or the person authorized
meeting and items to be included in the unjustly refuses to call a meeting, the
agenda. Commission, upon petition of a stockholder
or member on a showing of good cause
Notice of any meeting may be therefor, may issue an order, directing the
waived, expressly or impliedly, by any petitioning stockholder or member to call a
stockholder or member: Provided, That meeting of the corporation by giving proper
general waivers of notice in the articles notice required by this Code or the bylaws.
of incorporation or the bylaws shall not The petitioning stockholder or member
be allowed: Provided, further, That shall preside thereat until at least a
attendance at a meeting shall constitute majority of the stockholders or members
a waiver of notice of such meeting, present have chosen from among
except when the person attends a themselves, a presiding officer.
meeting for the express purpose of
objecting to the transaction of any Unless the bylaws provide for a longer
business because the meeting is not period, the stock and transfer book or
lawfully called or convened. membership book shall be closed at least
twenty (20) days for regular meetings and
Whenever for any cause, there is no seven (7) days for special meetings before
person authorized or the person the scheduled date of the meeting.
authorized unjustly refuses to call a
meeting, the Commission, upon petition In case of postponement of stockholders’
of a stockholder or member on a or members’ regular meetings, written
showing of good cause therefor, may notice thereof and the reason therefor shall
issue an order, directing the petitioning be sent to all stockholders or members of
stockholder or member to call a record at least two (2) weeks prior to the
meeting of the corporation by giving date of the meeting, unless a different
proper notice required by this Code or period is required under the bylaws, law or
the bylaws. The petitioning stockholder regulation.
or member shall preside thereat until at
least a majority of the stockholders or The right to vote of stockholders or
members present have chosen from members may be exercised in person,
among themselves, a presiding officer. through a proxy, or when so authorized in
the bylaws, through remote communication
Unless the bylaws provide for a or in absentia. The Commission shall issue
longer period, the stock and transfer the rules and regulations governing
book or membership book shall be participation and voting through remote
closed at least twenty (20) days for communication or in absentia taking into
regular meetings and seven (7) days for account the company’s scale, number of
special meetings before the scheduled shareholders or members, structure, and
date of the meeting. other factors consistent with the protection
and promotion of shareholders’ or
In case of postponement of members’ meetings.
stockholders’ or members’ regular
meetings, written notice thereof and the
reason therefor shall be sent to all
stockholders or members of record at
least two (2) weeks prior to the date of
the meeting, unless a different period is
required under the bylaws, law or
regulation.

The right to vote of stockholders or

members may be exercised in person,

50 Regular and special
meetings of stockholders
or members. - Regular
meetings of stockholders
or members shall be held
annually on a date fixed in
the by-laws, or if not so
fixed, on any date in April
of every year as
determined by the board
of directors or trustees:
Provided, That written
notice of regular meetings
shall be sent to all
stockholders or members
of record at least two (2)
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 the by-laws:
Provided, however, That
at least one (1) week
written notice shall be
sent to all stockholders or
members, unless
otherwise provided in the
bylaws.
Notice of any meeting
may be waived, expressly
or impliedly, by any
stockholder or member.
Whenever, for any cause,
there is no person
authorized to call a
meeting, the Secretaries
and Exchange
Commission, upon
petition of a stockholder
or member on a showing
of good cause therefor,
may issue an order to the
petitioning stockholder or
member directing him to
call a meeting of the
corporation by giving
proper notice required by
through a proxy, or when so authorized
in the bylaws, through remote
communication or in absentia. The
Commission shall issue the rules and
regulations governing participation and
voting through remote communication
or in absentia taking into account the
company’s scale, number of
shareholders or members, structure, and
other factors consistent with the
protection and promotion of
shareholders’ or members’ meetings.
Place and Time of Meetings of
Stockholders or Members.—
Stockholders’ or members’ meetings,
whether regular or special, shall be held
in the principal office of the corporation
as set forth in the articles of
incorporation, or, if not practicable, in
the city or municipality where the
principal office of the corporation is
located: Provided, That any city or
municipality in Metro Manila, Metro
Cebu, Metro Davao, and other
Metropolitan areas shall, for purposes
of this section, be considered a city or
municipality.
Notice of meetings shall be sent the bylaws, which notice shall state the time,
through the means of communication place and purpose of the meetings.
provided in the bylaws, which notice
shall state the time, place and purpose
of the meetings.
Each notice of meeting shall further
be accompanied by the following:
(a) The agenda for the
meeting;
(b) A proxy form which shall
be submitted to the corporate
secretary within a reasonable
time prior to the meeting;
(c) When attendance,
participation, and voting are
allowed by remote
communication or in
absentia the requirements and
procedures to be followed when
a stockholder or member elects
either option; and
(d) When the meeting is for
the election of directors or
trustees, the requirements and
procedure for nomination and
Place and Time of Meetings of Stockholders
or Members.— Stockholders’ or members’
meetings, whether regular or special, shall
be held in the principal office of the
corporation as set forth in the articles of
incorporation, or, if not practicable, in the
city or municipality where the principal
office of the corporation is
located: Provided, That any city or
municipality in Metro Manila, Metro Cebu,
Metro Davao, and other Metropolitan areas
shall, for purposes of this section, be
considered a city or municipality.
Notice of meetings shall be sent through
the means of communication provided in
Each notice of meeting shall further be
accompanied by the following:
(a) The agenda for the meeting;
(b) A proxy form which shall be
submitted to the corporate secretary
within a reasonable time prior to the
meeting;
(c) When attendance, participation,
and voting are allowed by remote
communication or in absentia the
requirements and procedures to be
followed when a stockholder or
member elects either option; and
(d) When the meeting is for the
election of directors or trustees, the
requirements and procedure for
nomination and election.
All proceedings and any business
transacted at a meeting of the stockholders
or members, if within the powers or
authority of the corporation, shall be valid
even if the meeting is improperly held or
 this Code or by the by-
laws. The petitioning
stockholder or member
shall preside thereat until
at least a majority of the
stockholders or members
present have been chosen
one of their number as
presiding officer. (24, 26)
election. called: Provided, That all the stockholders
or members of the corporation are present
All proceedings and any business or duly represented at the meeting and not
transacted at a meeting of the
one of them expressly states at the
stockholders or members, if within the beginning of the meeting that the purpose of
powers or authority of the corporation, their attendance is to object to the
shall be valid even if the meeting is transaction of any business because the
improperly held or called: Provided, meeting is not lawfully called or convened.
That all the stockholders or members of
the corporation are present or duly
represented at the meeting and not one
of them expressly states at the
beginning of the meeting that the
purpose of their attendance is to object
to the transaction of any business
because the meeting is not lawfully
called or convened.

51 Place and time of

Quorum in Meetings.— Unless Quorum in Meetings.— Unless otherwise
meetings of stockholders
or members. - otherwise provided in this Code or in provided in this Code or in the bylaws, a
Stockholders' or members' the bylaws, a quorum shall consist of quorum shall consist of the stockholders
meetings, whether regular the stockholders representing a majority representing a majority of the outstanding
or special, shall be held in of the outstanding capital stock or a capital stock or a majority of the members in
the city or municipality majority of the members in the case of the case of nonstock corporations.
where the principal office nonstock corporations.
of the corporation is
located, and if practicable
in the principal office of
the corporation: Provided,
That Metro Manila shall,
for purposes of this
section, be considered a
city or municipality.
Notice of meetings shall
be in writing, and the time
and place thereof stated
therein.
All proceedings had and
any business transacted at
any meeting of the
stockholders or members,
if within the powers or
authority of the
corporation, shall be valid
even if the meeting be
improperly held or called,
provided all the
stockholders or members
of the corporation are
present or duly
represented at the
meeting. (24 and 25)
52 Quorum in meetings. -
Regular and Special Meetings of Regular and Special Meetings of Directors or
Unless otherwise provided
for in this Code or in the Directors or Trustees; Quorum.— Trustees; Quorum.—Unless the articles of
bylaws, a quorum shall Unless the articles of incorporation or incorporation or the bylaws provides for a
consist of the stockholders the bylaws provides for a greater greater majority, a majority of the directors
representing a majority of majority, a majority of the directors or or trustees as stated in the articles of
the outstanding capital trustees as stated in the articles of incorporation shall constitute a quorum to
stock or a majority of the incorporation shall constitute a quorum transact corporate business, and every
members in the case of
to transact corporate business, and decision reached by at least a majority of
non-stock corporations.
(n) every decision reached by at least a the directors or trustees constituting a
 majority of the directors or trustees quorum, except for the election of officers
constituting a quorum, except for the which shall require the vote of a majority of
election of officers which shall require all the members of the board, shall be valid
the vote of a majority of all the as a corporate act.
members of the board, shall be valid as
a corporate act. Regular meetings of the board of
directors or trustees of every corporation
Regular meetings of the board of shall be held monthly, unless the bylaws
directors or trustees of every provide otherwise.
corporation shall be held monthly,
unless the bylaws provide otherwise. Special meetings of the board of directors
or trustees may be held at any time upon
Special meetings of the board of the call of the president or as provided in
directors or trustees may be held at any the bylaws.
time upon the call of the president or as
provided in the bylaws. Meetings of directors or trustees of
corporations may be held anywhere in or
Meetings of directors or trustees of outside of the Philippines, unless the bylaws
corporations may be held anywhere in provide otherwise. Notice of regular or
or outside of the Philippines, unless the special meetings statirtg the date, time and
bylaws provide otherwise. Notice of place of the meeting must be sent to every
regular or special meetings statirtg the director or trustee at least two (2) days
date, time and place of the meeting prior to the scheduled meeting, unless a
must be sent to every director or trustee longer time is provided in the bylaws. A
at least two (2) days prior to the director or trustee may waive this
scheduled meeting, unless a longer time requirement, either expressly or impliedly.
is provided in the bylaws. A director or
trustee may waive this requirement, Directors or trustees who cannot
either expressly or impliedly. physically attend or vote at board meetings
can participate and vote through remote
Directors or trustees who cannot communication such as videoconferencing,
physically attend or vote at board teleconferencing, or other alternative modes
meetings can participate and vote of communication that allow them
through remote communication such as reasonable opportunities to participate.
videoconferencing, teleconferencing, or Directors or trustees cannot attend or vote
other alternative modes of by proxy at board meetings.
communication that allow them
reasonable opportunities to participate. A director or trustee who has a potential
interest in any related party transaction
Directors or trustees cannot attend or
must recuse from voting on the approval of
vote by proxy at board meetings. the related party transaction without
prejudice to compliance with the
A director or trustee who has a
requirements of Section 31 of this Code.
potential interest in any related party
transaction must recuse from voting on
the approval of the related party
transaction without prejudice to
compliance with the requirements of
Section 31 of this Code.
53 Regular and special Who Shall Preside at Meetings.— The Who Shall Preside at Meetings.— The
meetings of directors or chairman or, in his absence, the chairman or, in his absence, the president
trustees. - Regular president shall preside at all meetings shall preside at all meetings of the directors
meetings of the board of of the directors or trustees as well as of or trustees as well as of the stockholders or
directors or trustees of the stockholders or members, unless the members, unless the bylaws provide
every corporation shall be bylaws provide otherwise. otherwise.
held monthly, unless the
bylaws provide otherwise.
Special meetings of the
board of directors or
trustees may be held at
any time upon the call of
the president or as
 provided in the by-laws.
Meetings of directors or
trustees of corporations
may be held anywhere in
or outside of the
Philippines, unless the by-
laws provide otherwise.
Notice of regular or
special meetings stating
the date, time and place of
the meeting must be sent
to every director or trustee
at least one (1) day prior
to the scheduled meeting,
unless otherwise provided
by the by-laws. A director
or trustee may waive this
requirement, either
expressly or impliedly. (n)
54 Who shall preside at
Right to Vote of Secured Creditors and Right to Vote of Secured Creditors and
meetings. - The president
shall preside at all Administrators.— In case a stockholder Administrators.— In case a stockholder
meetings of the directors grants security interest in his or her grants security interest in his or her shares
or trustee as well as of the shares in stock corporations, the in stock corporations, the stockholder-
stockholders or members, stockholder-grantor shall have the right grantor shall have the right to attend and
unless the by-laws to attend and vote at meetings of vote at meetings of stockholders, unless the
provide otherwise. (n) stockholders, unless the secured secured creditor is expressly given by the
creditor is expressly given by the stockholder-grantor such right in writing
stockholder-grantor such right in which is recorded in the appropriate
writing which is recorded in the corporate books.
appropriate corporate books.
Executors, administrators, receivers, and
Executors, administrators, receivers, other legal representatives duly appointed
and other legal representatives duly by the court may,attend and vote in behalf
appointed by the court may,attend and of the stockholders or members without
vote in behalf of the stockholders or need of any written proxy.
members without need of any written
proxy.

55 Right to vote of pledgors,

Voting in Case of Joint Ownership of Voting in Case of Joint Ownership of Stock.—
mortgagors, and
administrators. - In case of Stock.— The consent of all the co- The consent of all the co-owners shall be
pledged or mortgaged owners shall be necessary in voting necessary in voting shares of stock owned
shares in stock shares of stock owned jointly by two jointly by two (2) or more persons, unless
corporations, the pledgor (2) or more persons, unless there is a there is a written proxy, signed by all the co-
or mortgagor shall have written proxy, signed by all the co- owners, authorizing one (1) or some of them
the right to attend and owners, authorizing one (1) or some of or any other person to vote such share or
vote at meetings of
them or any other person to vote such shares: Provided, That when the shares are
stockholders, unless the
pledgee or mortgagee is share or shares: Provided, That when owned in an “and/or” capacity by the holders
expressly given by the the shares are owned in an “and/or” thereof, any one of the joint owners can vote
pledgor or mortgagor such capacity by the holders thereof, any one said shares or appoint a proxy therefore.
right in writing which is of the joint owners can vote said shares
recorded on the or appoint a proxy therefore.
appropriate corporate
books. (n)
Executors, administrators,
receivers, and other legal
representatives duly
appointed by the court
may attend and vote in
behalf of the stockholders
or members without need
 of any written proxy.
(27a)
56 Voting in case of joint Voting Right for Treasury Shares.— Voting Right for Treasury Shares.— Treasury
ownership of stock. - In Treasury shares shall have no voting shares shall have no voting right as long as
case of shares of stock right as long as such shares remain in such shares remain in the Treasury.
owned jointly by two or the Treasury.
more persons, in order to
vote the same, the consent
of all the co-owners shall
be necessary, unless there
is a written proxy, signed
by all the co-owners,
authorizing one or some
of them or any other
person to vote such share
or shares: Provided, That
when the shares are
owned in an "and/or"
capacity by the holders
thereof, any one of the
joint owners can vote said
shares or appoint a proxy
therefor. (n)
57 Voting right for treasury
Manner of Voting; Proxies.— Manner of Voting; Proxies.— Stockholders
shares. - Treasury shares
shall have no voting right Stockholders and members may vote in and members may vote in person or by proxy
as long as such shares person or by proxy in all meetings of in all meetings of stockholders or members.
remain in the Treasury. stockholders or members.
(n) When so authorized in the bylaws or by a
When so authorized in the bylaws or majority of the board of directors, the
by a majority of the board of directors, stockholders or members of corporations may
the stockholders or members of also vote through remote communication or in
corporations may also vote through absentia : Provided, That the votes are
remote communication or in received before the corporation finishes the
absentia : Provided, That the votes are tally of votes.
received before the corporation finishes
the tally of votes. A stockholder or member who participates
through remote communication or in
A stockholder or member who absentia shall be deemed present for purposes
participates through remote of quorum.
communication or in absentia shall be
deemed present for purposes of The corporation shall establish the
quorum. appropriate requirements and procedures for
voting through remote communication and in
The corporation shall establish the absentia taking into account the company’s
appropriate requirements and scale, number of shareholders or members,
procedures for voting through remote structure and other factors consistent with the
communication and in absentia taking basic right of corporate suffrage.
into account the company’s scale,
number of shareholders or members, Proxies shall be in writing, signed and filed,
structure and other factors consistent by the stockholder or member, in any form
with the basic right of corporate authorized in the bylaws and received by the
suffrage. corporate secretary within a reasonable time
before the scheduled meeting. Unless
Proxies shall be in writing, signed otherwise provided in the proxy form, it shall
and filed, by the stockholder or be valid only for the meeting for which it is
member, in any form authorized in the intended. No proxy shall be valid and effective
bylaws and received by the corporate for a period longer than five (5) years at any
secretary within a reasonable time one time.
before the scheduled meeting. Unless
otherwise provided in the proxy form, it
shall be valid only for the meeting for
 which it is intended. No proxy shall be
valid and effective for a period longer
than five (5) years at any one time.

58 Proxies. - Stockholders
Voting Trusts.— One or more Voting Trusts.— One or more stockholders of
and members may vote in
person or by proxy in all stockholders of a stock corporation may a stock corporation may create a voting trust
meetings of stockholders create a voting trust for the purpose of for the purpose of conferring upon a trustee or
or members. Proxies shall conferring upon a trustee or trustees the trustees the right to vote and other rights
in writing, signed by the right to vote and other rights pertaining pertaining to the shares for a period not
stockholder or member to the shares for a period not exceeding exceeding five (5) years at any time: Provided,
and filed before the five (5) years at any time: Provided, That in the case of a voting trust specifically
scheduled meeting with
That in the case of a voting trust required as a condition in a loan agreement,
the corporate secretary.
Unless otherwise provided specifically required as a condition in a said voting trust may be for a period exceeding
in the proxy, it shall be loan agreement, said voting trust may five (5) years but shall automatically expire
valid only for the meeting be for a period exceeding five (5) years upon full payment of the loan. A voting trust
for which it is intended. but shall automatically expire upon full agreement must be in writing and notarized,
No proxy shall be valid payment of the loan. A voting trust and shall specify the terms and conditions
and effective for a period agreement must be in writing and thereof.
longer than five (5) years
notarized, and shall specify the terms
at any one time. (n) A certified copy of such agreement shall be
and conditions thereof.
filed with the corporation and with the
A certified copy of such agreement Commission; otherwise, the agreement is
shall be filed with the corporation and ineffective and unenforceable. The certificate
with the Commission; otherwise, the or certificates of stock covered by the voting
agreement is ineffective and trust agreement shall be cancelled and new
unenforceable. The certificate or ones shall be issued in the name of the trustee
certificates of stock covered by the or trustees, stating that they are issued
voting trust agreement shall be pursuant to said agreement. The books of the
cancelled and new ones shall be issued corporation shall state that the transfer in the
in the name of the trustee or trustees, name of the trustee or trustees is made
stating that they are issued pursuant to pursuant to the voting trust agreement.
said agreement. The books of the
corporation shall state that the transfer The trustee or trustees shall execute and
in the name of the trustee or trustees is deliver to the transferors, voting trust
made pursuant to the voting trust certificates, which shall be transferable in the
agreement. same manner and with the same effect as
certificates of stock.
The trustee or trustees shall execute
and deliver to the transferors, voting The voting trust agreement filed with the
trust certificates, which shall be corporation shall be subject to examination by
transferable in the same manner and any stockholder of the corporation in the same
with the same effect as certificates of manner as any other corporate book or
stock. record: Provided, That both the trustor and the
trustee or trustees may exercise the right of
The voting trust agreement filed with inspection of all corporate books and records
the corporation shall be subject to in accordance with the provisions of this Code.
examination by any stockholder of the
corporation in the same manner as any Any other stockholder may transfer the
other corporate book or shares to the same trustee or trustees upon the
record: Provided, That both the trustor terms and conditions stated in the voting trust
and the trustee or trustees may exercise agreement, and thereupon shall be bound by
the right of inspection of all corporate all the provisions of said agreement.
books and records in accordance with
the provisions of this Code. No voting trust agreement shall be entered
into for purposes of circumventing the laws
Any other stockholder may transfer against anti-competitive agreements, abuse of
the shares to the same trustee or dominant position, anti-competitive mergers
trustees upon the terms and conditions and acquisitions, violation of nationality band
capital requirements, or for the perpetuation of
 stated in the voting trust agreement, and fraud.
thereupon shall be bound by all the
provisions of said agreement. Unless expressly renewed, all rights granted
in a voting trust agreement shall automatically
No voting trust agreement shall be expire at the end of the agreed period. The
entered into for purposes of voting trust certificates as well as the
circumventing the laws against anti- certificates of stock in the name of the trustee
competitive agreements, abuse of or trustees shall thereby be deemed cancelled
dominant position, anti-competitive and new certificates of stock shall be reissued
mergers and acquisitions, violation of in the name of the trustors.
nationality band capital requirements,
or for the perpetuation of fraud. The voting trustee or trustees may vote by
proxy or in any manner authorized under the
Unless expressly renewed, all rights bylaws unless the agreement provides
granted in a voting trust agreement otherwise.
shall automatically expire at the end of
the agreed period. The voting trust
certificates as well as the certificates of
stock in the name of the trustee or
trustees shall thereby be deemed
cancelled and new certificates of stock
shall be reissued in the name of the
trustors.

The voting trustee or trustees may

vote by proxy or in any manner
authorized under the bylaws unless the
agreement provides otherwise.

59 Voting trusts. - One or

Subscription Contract.— Any contract Subscription Contract.— Any contract for the
more stockholders of a
stock corporation may for the acquisition of unissued stock in acquisition of unissued stock in an existing
create a voting trust for an existing corporation or a corporation corporation or a corporation still to be formed
the purpose of conferring still to be formed shall be deemed a shall be deemed a subscription within the
upon a trustee or trustees subscription within the meaning of this meaning of this Title, notwithstanding the fact
the right to vote and other Title, notwithstanding the fact that the that the parties refer to it as a purchase or
rights pertaining to the parties refer to it as a purchase or some some other contract.
shares for a period not
other contract.
exceeding five (5) years at
any time: Provided, That
in the case of a voting
trust specifically required
as a condition in a loan
agreement, said voting
trust may be for a period
exceeding five (5) years
but shall automatically
expire upon full payment
of the loan. A voting trust
agreement must be in
writing and notarized, and
shall specify the terms and
conditions thereof. A
certified copy of such
agreement shall be filed
with the corporation and
with the Securities and
Exchange Commission;
otherwise, said agreement
is ineffective and
unenforceable. The
certificate or certificates
of stock covered by the
voting trust agreement
shall be canceled and new
ones shall be issued in the
name of the trustee or
trustees stating that they
are issued pursuant to said
agreement. In the books of
the corporation, it shall be
noted that the transfer in
the name of the trustee or
trustees is made pursuant
to said voting trust
agreement.
The trustee or trustees
shall execute and deliver
to the transferors voting
trust certificates, which
shall be transferable in the
same manner and with the
same effect as certificates
of stock.
The voting trust
agreement filed with the
corporation 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
transferor and the trustee
or trustees may exercise
the right of inspection of
all corporate books and
records in accordance
with the provisions of this
Code.
Any other stockholder
may transfer his shares to
the same trustee or
trustees upon the terms
and conditions stated in
the voting trust
agreement, and thereupon
shall be bound by all the
provisions of said
agreement.
No voting trust agreement
shall be entered into for
the purpose of
circumventing the law
against monopolies and
illegal combinations in
restraint of trade or used
for purposes of fraud.
Unless expressly renewed,
all rights granted in a
voting trust agreement
shall automatically expire
at the end of the agreed
period, and the voting
trust certificates as well as
the certificates of stock in
the name of the trustee or
trustees shall thereby be
deemed canceled and new
 certificates of stock shall
be reissued in the name of
the transferors.
The voting trustee or
trustees may vote by
proxy unless the
agreement provides
otherwise. (36a)
60 . Subscription contract. -
Pre-incorporation Subscription.— A Pre-incorporation Subscription.— A
Any contract for the
acquisition of unissued subscription of shares in a corporation subscription of shares in a corporation still to
stock in an existing still to be formed shall be irrevocable be formed shall be irrevocable for a period of
corporation or a for a period of at least six (6) months at least six (6) months from the date of
corporation still to be from the date of subscription, unless all subscription, unless all of the other subscribers
formed shall be deemed a of the other subscribers consent to the consent to the revocation, or the corporation
subscription within the revocation, or the corporation fails to fails to incorporate within the same period or
meaning of this Title,
incorporate within the same period or within a longer period stipulated in the
notwithstanding the fact
that the parties refer to it within a longer period stipulated in the contract of subscription. No pre-incorporation
as a purchase or some contract of subscription. No pre- subscription may be revoked after the articles
other contract. (n) incorporation subscription may be of incorporation is submitted to the
revoked after the articles of Commission.
incorporation is submitted to the
Commission.

61 Pre-incorporation
Consideration for Stocks.— Stocks Consideration for Stocks.— Stocks shall not be
subscription. - A
subscription for shares of shall not be issued for a consideration issued for a consideration less than the par or
stock of a corporation still less than the par or issued price thereof. issued price thereof. Consideration for the
to be formed shall be Consideration for the issuance of stock issuance of stock may be:
irrevocable for a period of may be:
at least six (6) months (a) Actual cash paid to the
from the date of (a) Actual cash paid to the corporation;
subscription, unless all of corporation;
the other subscribers (b) Property, tangible or intangible,
consent to the revocation, (b) Property, tangible or actually received by the corporation and
or unless the
intangible, actually received by necessary or convenient for its use and
incorporation of said
corporation fails to the corporation and necessary or lawful purposes at a fair valuation equal
materialize within said convenient for its use and lawful to the par or issued value of the stock
period or within a longer purposes at a fair valuation equal issued;
period as may be to the par or issued value of the
stipulated in the contract stock issued; (c) Labor performed for or services
of subscription: Provided, actually rendered to the corporation;
That no pre-incorporation (c) Labor performed for or
subscription may be (d) Previously incurred indebtedness
services actually rendered to the
revoked after the of the corporation;
submission of the articles corporation;
of incorporation to the
(d) Previously incurred (e) Amounts transferred from
Securities and Exchange
Commission. (n) indebtedness of the corporation; unrestricted retained earnings to stated
capital;
(e) Amounts transferred from
unrestricted retained earnings to (f) Outstanding shares exchanged for
stated capital; stocks in the event of reclassification or
conversion;
(f) Outstanding shares
exchanged for stocks in the (g) Shares of stock in another
event of reclassification or corporation; and/or
conversion;
(h) Other generally accepted form of
(g) Shares of stock in another consideration.
corporation; and/or
Where the consideration is other than actual
 (h) Other generally accepted cash, or consists of intangible property such as
form of consideration. patents or copyrights, the valuation thereof
shall initially be determined by the
Where the consideration is other than stockholders or the board of directors, subject
actual cash, or consists of intangible to the approval of the Commission.
property such as patents or copyrights,
the valuation thereof shall initially be Shares of stock shall not be issued in
determined by the stockholders or the exchange for promissory notes or future
board of directors, subject to the service. The same considerations provided in
approval of the Commission. this section, insofar as applicable, may be used
for the issuance of bonds by the corporation.
Shares of stock shall not be issued in
exchange for promissory notes or future The issued price of no-par value shares may
service. The same considerations be fixed in the articles of incorporation or by
provided in this section, insofar as the board of directors pursuant to authority
applicable, may be used for the conferred by the articles of incorporation or
issuance of bonds by the corporation. the bylaws, or if not so fixed, by the
stockholders representing at least a majority of
The issued price of no-par value the outstanding capital stock at a meeting duly
shares may be fixed in the articles of called for the purpose.
incorporation or by the board of
directors pursuant to authority
conferred by the articles of
incorporation or the bylaws, or if not so
fixed, by the stockholders representing
at least a majority of the outstanding
capital stock at a meeting duly called
for the purpose.

62 Considering for stocks. -

Stocks shall not be issued
for a consideration less
than the par or issued
price thereof.
Consideration for the
issuance of stock may be
any or a combination of
any two or more of the
following:
1. Actual cash paid to the
corporation;
2. Property, tangible or
intangible, actually
received by the
corporation and necessary
or convenient for its use
and lawful purposes at a
fair valuation equal to the
par or issued value of the
stock issued;
3. Labor performed for or
services actually rendered
to the corporation;
4. Previously incurred
indebtedness of the
corporation;
5. Amounts transferred
from unrestricted retained
earnings to stated capital;
and
6. Outstanding shares
exchanged for stocks in
the event of
Certificate of Stock and Transfer of
Shares.— The capital stock of
corporations shall be divided into
shares for which certificates signed by
the president or vice president,
countersigned by the secretary or
assistant secretary, and sealed with the
seal of the corporation shall be issued
in accordance with the bylaws. Shares
of stock so issued are personal property
and may be transferred by delivery of
the certificate or certificates indorsed
by the owner, his attorney-in-fact, or
any other person legally authorized to
make the transfer. No transfer,
however, shall be valid, except as
between the prties, until the transfer is
recorded in the books of the corporation
showing the names of the parties to the
transaction, the date of the transfer, the
number of the certificate or certificates,
and the number of shares transferred.
The Commission may require
corporations whose securities are traded
in trading markets and which can
reasonably demonstrate their capability
to do so to issue their securities or
shares of stocks in uncertificated or
scripless form in accordance with the
Certificate of Stock and Transfer of Shares.—
The capital stock of corporations shall be
divided into shares for which certificates
signed by the president or vice president,
countersigned by the secretary or assistant
secretary, and sealed with the seal of the
corporation shall be issued in accordance with
the bylaws. Shares of stock so issued are
personal property and may be transferred by
delivery of the certificate or certificates
indorsed by the owner, his attorney-in-fact, or
any other person legally authorized to make
the transfer. No transfer, however, shall be
valid, except as between the prties, until the
transfer is recorded in the books of the
corporation showing the names of the parties
to the transaction, the date of the transfer, the
number of the certificate or certificates, and
the number of shares transferred. The
Commission may require corporations whose
securities are traded in trading markets and
which can reasonably demonstrate their
capability to do so to issue their securities or
shares of stocks in uncertificated or scripless
form in accordance with the rules of the
Commission.
No shares of stock against which the
corporation holds any unpaid claim shall be
 reclassification or rules of the Commission. transferable in the books of the corporation.
conversion.
Where the consideration is No shares of stock against which the
other than actual cash, or corporation holds any unpaid claim
consists of intangible
shall be transferable in the books of the
property such as patents
of copyrights, the corporation.
valuation thereof shall
initially be determined by
the incorporators or the
board of directors, subject
to approval by the
Securities and Exchange
Commission.
Shares of stock shall not
be issued in exchange for
promissory notes or future
service.
The same considerations
provided for in this
section, insofar as they
may be applicable, may be
used for the issuance of
bonds by the corporation.
The issued price of no-par
value shares may be fixed
in the articles of
incorporation or by the
board of directors
pursuant to authority
conferred upon it by the
articles of incorporation or
the by-laws, or in the
absence thereof, by the
stockholders representing
at least a majority of the
outstanding capital stock
at a meeting duly called
for the purpose. (5 and 16)
63 Certificate of stock and
Issuance of Stock Certificates.— No Issuance of Stock Certificates.— No certificate
transfer of shares. - The
capital stock of stock certificate of stock shall be issued to a of stock shall be issued to a subscriber until
corporations shall be subscriber until the full amount of the the full amount of the subscription together
divided into shares for subscription together with interest and with interest and expenses (in case of
which certificates signed expenses (in case of delinquent shares), delinquent shares), if any is due, has been
by the president or vice if any is due, has been paid. paid.
president, countersigned
by the secretary or
assistant secretary, and
sealed with the seal of the
corporation shall be
issued in accordance with
the by-laws. Shares of
stock so issued are
personal property and may
be transferred by delivery
of the certificate or
certificates endorsed by
the owner or his attorney-
in-fact or other person
legally authorized to make
the transfer. No transfer,
however, shall be valid,
except as between the
parties, until the transfer
is recorded in the books of
 the corporation showing
the names of the parties to
the transaction, the date of
the transfer, the number of
the certificate or
certificates and the
number of shares
transferred.
No shares of stock against
which the corporation
holds any unpaid claim
shall be transferable in the
books of the corporation.
(35)
64 Issuance of stock
Liability of Directors for Watered Liability of Directors for Watered Stocks.— A
certificates. - No
certificate of stock shall Stocks.— A director or officer of a director or officer of a corporation who: (a)
be issued to a subscriber corporation who: (a) consents to the consents to the issuance of stocks for a
until the full amount of issuance of stocks for a consideration consideration less than its par or issued value;
his subscription together less than its par or issued value; (b) (b) consents to the issuance of stocks for a
with interest and expenses consents to the issuance of stocks for a consideration other than cash, valued in excess
(in case of delinquent consideration other than cash, valued in of its fair value; or (c) having knowledge of
shares), if any is due, has
excess of its fair value; or (c) having the insufficient consideration, does not file a
been paid. (37)
knowledge of the insufficient written objection with the corporate secretary,
consideration, does not file a written shall be liable to the corporation or its
objection with the corporate secretary, creditors, solidarily with the stockholder
shall be liable to the corporation or its concerned for the difference between the value
creditors, solidarily with the received at the time of issuance of the stock
stockholder concerned for the and the par or issued value of the same.
difference between the value received
at the time of issuance of the stock and
the par or issued value of the same.

65 Liability of directors for

Interest on Unpaid Subscriptions.— Interest on Unpaid Subscriptions.—
watered stocks. - Any
director or officer of a Subscribers to stocks shall be liable to Subscribers to stocks shall be liable to the
corporation consenting to the corporation for interest on all corporation for interest on all unpaid
the issuance of stocks for unpaid subscriptions from the date of subscriptions from the date of subscription, if
a consideration less than subscription, if so required by and at so required by and at the rate of interest fixed
its par or issued value or the rate of interest fixed in the in the subscription contract. If no rate of
for a consideration in any subscription contract. If no rate of interest is fixed in the subscription contract,
form other than cash,
interest is fixed in the subscription the prevailing legal rate shall apply.
valued in excess of its fair
value, or who, having contract, the prevailing legal rate shall
knowledge thereof, does apply.
not forthwith express his
objection in
writing and file the same
with the corporate
secretary, shall be
solidarily, liable with the
stockholder concerned to
the corporation and its
creditors for the difference
between the fair value
received at the time of
issuance of the stock and
the par or issued value of
the same. (n)
66 Interest on unpaid
Payment of Balance of Subscription.— Payment of Balance of Subscription.— Subject
subscriptions. -
Subscribers for stock shall Subject to the provisions of the to the provisions of the subscription contract,
pay to the corporation subscription contract, the board of the board of directors may, at any time,
interest on all unpaid directors may, at any time, declare due declare due and payable to the corporation
 subscriptions from the
date of subscription, if so
required by, and at the
rate of interest fixed in the
by-laws. If no rate of
interest is fixed in the by-
laws, such rate shall be
deemed to be the legal
rate. (37)
and payable to the corporation unpaid
subscriptions and may collect the same
or such percentage thereof, in either
case, with accrued interest, if any, as it
may deem necessary.
Payment of unpaid subscription or
any percentage thereof, together with
any interest accrued, shall be made on
the date specified in the subscription
contract or on the date stated in the call
made by the board. Failure to pay on
such date shall render the entire balance
due and payable and shall make the
stockholder liable for interest at the
legal rate on such balance, unless a
different interest rate is provided in the
subscription contract. The interest shall
be computed from the date specified,
until full payment of the subscription. If
no payment is made within thirty (30)
days from the said date, all stocks
covered by the subscription shall
thereupon becoihe delinquent and shall
be subject to sale as hereinafter
provided, unless the board of directors
orders otherwise.
unpaid subscriptions and may collect the same
or such percentage thereof, in either case, with
accrued interest, if any, as it may deem
necessary.
Payment of unpaid subscription or any
percentage thereof, together with any interest
accrued, shall be made on the date specified in
the subscription contract or on the date stated
in the call made by the board. Failure to pay
on such date shall render the entire balance
due and payable and shall make the
stockholder liable for interest at the legal rate
on such balance, unless a different interest rate
is provided in the subscription contract. The
interest shall be computed from the date
specified, until full payment of the
subscription. If no payment is made within
thirty (30) days from the said date, all stocks
covered by the subscription shall thereupon
becoihe delinquent and shall be subject to sale
as hereinafter provided, unless the board of
directors orders otherwise.

67 Payment of balance of
subscription. - Subject to
the provisions of the
contract of subscription,
the board of directors of
any stock corporation may
at any time declare due
and payable to the
corporation unpaid
subscriptions to the
capital stock and may
collect the same or such
percentage thereof, in
either case with accrued
interest, if any, as it may
deem necessary.
Payment of any unpaid
subscription or any
percentage thereof,
together with the interest
accrued, if any, shall be
made on the date specified
in the contract of
subscription or on the date
stated in the call made by
the board. Failure to pay
on such date shall render
the entire balance due and
payable and shall make
the stockholder liable for
interest at the legal rate on
such balance, unless a
different rate of interest is
provided in the by-laws,
Delinquency Sale.— The board of Delinquency Sale.— The board of directors
directors may, by resolution, order the may, by resolution, order the sale of
sale of delinquent stock and shall delinquent stock and shall specifically state the
specifically state the amount due on amount due on each subscription plus all
each subscription plus all accrued accrued interest, and the date, time and place
interest, and the date, time and place of of the sale which shall not be less than thirty
the sale which shall not be less than (30) days nor more than sixty (60) days from
thirty (30) days nor more than sixty the date the stocks become delinquent.
(60) days from the date the stocks
become delinquent. Notice of the sale, with a copy of the
resolution, shall be sent to every delinquent
Notice of the sale, with a copy of the stockholder either personally, by registered
resolution, shall be sent to every mail, or through other means provided in the
delinquent stockholder either bylaws. The same shall be published once a
personally, by registered mail, or week for two (2) consecutive weeks in a
through other means provided in the newspaper of general circulation in the
bylaws. The same shall be published province or city where the principal office of
once a week for two (2) consecutive the corporation is located.
weeks in a newspaper of general
circulation in the province or city where Unless the delinquent stockholder pays to
the principal office of the corporation is the corporation, on or before the date specified
located. for the sale of the delinquent stock, the balance
due on the former’s subscription, plus accrued
Unless the delinquent stockholder interest, costs of advertisement and expenses
pays to the corporation, on or before the of sale, or unless the board of directors
date specified for the sale of the otherwise orders, said delinquent stock shall
delinquent stock, the balance due on the be sold at a public auction to such bidder who
former’s subscription, plus accrued shall offer to pay the full amount of the
interest, costs of advertisement and balance on the subscription together with
expenses of sale, or unless the board of accrued interest, costs of advertisement and
 computed from such date
until full payment. If
within thirty (30) days
from the said date no
payment is made, all
stocks covered by said
subscription shall
thereupon become
delinquent and shall be
subject
68 Delinquency sale. - The
board of directors may, by
resolution, order the sale
of delinquent stock and
shall specifically state the
amount due on each
subscription plus all
accrued interest, and the
date, time and place of the
sale which shall not be
less than thirty (30) days
nor more than sixty (60)
days from the date the
stocks become delinquent.
Notice of said sale, with a
copy of the resolution,
shall be sent to every
delinquent stockholder
either personally or by
registered mail. The same
shall furthermore be
published once a week for
two (2) consecutive weeks
directors otherwise orders, said
delinquent stock shall be sold at a
public auction to such bidder who shall
offer to pay the full amount of the
balance on the subscription together
with accrued interest, costs of
advertisement and expenses of sale, for
the smallest number of shares or
fraction of a share. The stock so
purchased shall be transferred to such
purchaser in the books of the
corporation and a certificate for such
stock shall be issued in the purchaser’s
favor. The remaining shares, if any,
shall be credited in favor of the
delinquent stockholder who shall
likewise be entitled to the issuance of a
certificate of stock covering such
shares.
Should there be no bidder at the
public auction who offers to pay the
full amount of the balance on the
subscription together with accrued
interest, costs of advertisement, and
expenses of sale, for the smallest
number of shares or fraction of a share,
the corporation may, subject to the
provisions of this Code, bid for the
same, and the total amount due shall be
credited as fully paid in the books of
the corporation. Title to all the shares of
stock covered by the subscription shall
be vested in the corporation as treasury
shares and may be disposed of by said
corporation in accordance with the
provisions of this Code.
When Sale May be Questioned.— No
action to recover delinquent stock sold
can be sustained upon the ground of
irregularity or defect in the notice of
sale, or in the sale itself of the
delinquent stock, unless the party
seeking to maintain such action first
pays or tenders to the party holding the
stock the sum for which the same was
sold, with interest from the date of sale
at the legal rate. No such action shall be
maintained unless a complaint is filed
within six (6) months from the date of
sale.
expenses of sale, for the smallest number of
shares or fraction of a share. The stock so
purchased shall be transferred to such
purchaser in the books of the corporation and a
certificate for such stock shall be issued in the
purchaser’s favor. The remaining shares, if
any, shall be credited in favor of the
delinquent stockholder who shall likewise be
entitled to the issuance of a certificate of stock
covering such shares.
Should there be no bidder at the public
auction who offers to pay the full amount of
the balance on the subscription together with
accrued interest, costs of advertisement, and
expenses of sale, for the smallest number of
shares or fraction of a share, the corporation
may, subject to the provisions of this Code,
bid for the same, and the total amount due
shall be credited as fully paid in the books of
the corporation. Title to all the shares of stock
covered by the subscription shall be vested in
the corporation as treasury shares and may be
disposed of by said corporation in accordance
with the provisions of this Code.
When Sale May be Questioned.— No action to
recover delinquent stock sold can be sustained
upon the ground of irregularity or defect in the
notice of sale, or in the sale itself of the
delinquent stock, unless the party seeking to
maintain such action first pays or tenders to
the party holding the stock the sum for which
the same was sold, with interest from the date
of sale at the legal rate. No such action shall be
maintained unless a complaint is filed within
six (6) months from the date of sale.
in a newspaper of general
circulation in the province
or city where the principal
office of the corporation is
located.
Unless the delinquent
stockholder pays to the
corporation, on or before
the date specified for the
sale of the delinquent
stock, the balance due on
his subscription, plus
accrued interest, costs of
advertisement and
expenses of sale, or unless
the board of directors
otherwise orders, said
delinquent stock shall be
sold at public auction to
such bidder who shall
offer to pay the full
amount of the balance on
the subscription together
with accrued interest,
costs of advertisement and
expenses of sale, for the
smallest number of shares
or fraction of a share. The
stock so purchased shall
be transferred to such
purchaser in the books of
the corporation and a
certificate for such stock
shall be issued in his
favor. The
remaining shares, if any,
shall be credited in favor
of the delinquent
stockholder who shall
likewise be entitled to the
issuance of a certificate of
stock covering such
shares.
Should there be no bidder
at the public auction who
offers to pay the full
amount of the balance on
the subscription together
with accrued interest,
costs of advertisement and
expenses of sale, for the
smallest number of shares
or fraction of a share, the
corporation may, subject
to the provisions of this
Code, bid for the same,
and the total amount due
shall be credited as paid in
full in the books of the
corporation. Title to all
the shares of stock
covered by the
subscription shall be
vested in the corporation
as treasury shares and
may be disposed of by
 said corporation in
accordance with the
provisions of this Code.
69 When sale may be
Court Action to Recover Unpaid Court Action to Recover Unpaid
questioned. - No action to
recover delinquent stock Subscription.— Nothing in this Code Subscription.— Nothing in this Code shall
sold can be sustained shall prevent the corporation from prevent the corporation from collecting
upon the ground of collecting through court action, the through court action, the amount due on any
irregularity or defect in amount due on any unpaid subscription, unpaid subscription, with accrued interest,
the notice of sale, or in the with accrued interest, costs and costs and expenses.
sale itself of the expenses.
delinquent stock, unless
the party seeking to
maintain such action first
pays or tenders to the
party holding the stock the
sum for which the same
was sold, with interest
from the date of sale at the
legal rate; and no such
action shall be maintained
unless it is commenced by
the filing of a complaint
within six (6) months
from the date of sale.
(47a)
70 Court action to recover Effect of Delinquency.— No delinquent Effect of Delinquency.— No delinquent stock
unpaid subscription. - stock shall be voted for, be entitled to shall be voted for, be entitled to vote, or be
Nothing in this Code shall vote, or be represented at any represented at any stockholder’s meeting, nor
prevent the corporation stockholder’s meeting, nor shall the shall the holder thereof be entitled to any of
from collecting by action holder thereof be entitled to any of the the rights of a stockholder except the right to
in a court of proper rights of a stockholder except the right dividends in accordance with the provisions of
jurisdiction the amount to dividends in accordance with the this Code, until and unless payment is made by
due on any unpaid provisions of this Code, until and the holder of such delinquent stock for the
subscription, with accrued unless payment is made by the holder amount due on the subscription with accrued
interest, costs and of such delinquent stock for the amount interest, and the costs and expenses of
expenses. (49a) due on the subscription with accrued advertisement, if any.
interest, and the costs and expenses of
advertisement, if any.
71 Effect of delinquency. -
Rights of Unpaid Shares, Rights of Unpaid Shares, Nondelinquent.—
No delinquent stock shall
be voted for be entitled to Nondelinquent.— Holders of subscribed Holders of subscribed shares not fully paid
vote or to representation shares not fully paid which are not which are not delinquent shall have all the
at any stockholder's delinquent shall have all the rights of a rights of a stockholder.
meeting, nor shall the stockholder.
holder thereof be entitled
to any of the rights of a
stockholder except the
right to dividends in
accordance with the
provisions of this Code,
until and unless he pays
the amount due on his
subscription with accrued
interest, and the costs and
expenses of
advertisement, if any.
(50a)
72 Rights of unpaid shares. -
Lost or Destroyed Certificates.— The Lost or Destroyed Certificates.— The
Holders of subscribed
shares not fully paid following procedure shall be followed following procedure shall be followed by a
which are not delinquent by a corporation in issuing new corporation in issuing new certificates of stock
shall have all the rights of certificates of stock in lieu of those in lieu of those which have been lost, stolen or
a stockholder. (n) which have been lost, stolen or destroyed:
destroyed:
(a) The registered owner of a
 (a) The registered owner of a
certificate of stock in a
corporation or such person’s
legal representative shall file
with the corporation an affidavit
in triplicate setting forth, if
possible, the circumstances as to
how the certificate was lost,
stolen or destroyed, the number
of shares represented by such
certificate, the serial number of
the certificate and the name of
the corporation which issued the
same. The owner of such
certificate of stock shall also
submit such other information
and evidence as may be deemed
necessary; and
(b) After verifying the
affidavit and other information
and evidence with the books of
the corporation, the corporation
shall publish a notice in a
newspaper of general circulation
in the place where the
corporation has its principal
office, once a week for three (3)
consecutive weeks at the
expense of the registered owner
of the certificate of stock which
has been lost, stolen or
destroyed. The notice shall state
the name of the corporation, the
name of the registered owner,
the serial number of the
certificate, the number of shares
represented by such certificate,
and shall state that after the
expiration of one (1) year from
the date of the last publication, if
no contest has been presented to
the corporation regarding the
certificate of stock, the right to
make such contest shall be
barred and the corporation shall
cancel the lost, destroyed or
stolen certificate of stock in its
books. In lieu thereof, the
corporation shall issue a new
certificate of stock, unless the
registered owner files a bond or
other security as may be
required, effective for a period of
one (1) year, for such amount
and in such form and with such
sureties as may be satisfactory to
the board of directors, in which
certificate of stock in a corporation or
such person’s legal representative shall
file with the corporation an affidavit in
triplicate setting forth, if possible, the
circumstances as to how the certificate
was lost, stolen or destroyed, the
number of shares represented by such
certificate, the serial number of the
certificate and the name of the
corporation which issued the same. The
owner of such certificate of stock shall
also submit such other information and
evidence as may be deemed necessary;
and
(b) After verifying the affidavit and
other information and evidence with the
books of the corporation, the
corporation shall publish a notice in a
newspaper of general circulation in the
place where the corporation has its
principal office, once a week for three
(3) consecutive weeks at the expense of
the registered owner of the certificate of
stock which has been lost, stolen or
destroyed. The notice shall state the
name of the corporation, the name of
the registered owner, the serial number
of the certificate, the number of shares
represented by such certificate, and
shall state that after the expiration of
one (1) year from the date of the last
publication, if no contest has been
presented to the corporation regarding
the certificate of stock, the right to
make such contest shall be barred and
the corporation shall cancel the lost,
destroyed or stolen certificate of stock
in its books. In lieu thereof, the
corporation shall issue a new certificate
of stock, unless the registered owner
files a bond or other security as may be
required, effective for a period of one
(1) year, for such amount and in such
form and with such sureties as may be
satisfactory to the board of directors, in
which case a new certificate may be
issued even before the expiration of the
one (1) year period provided herein. If a
contest has been presented to the
corporation or if an action is pending in
court regarding the ownership of the
certificate of stock which has been lost,
stolen or destroyed, the issuance of the
new certificate of stock in lieu thereof
shall be suspended until the court
renders a final decision regarding the
ownership of the certificate of stock
 case a new certificate may be which has been lost, stolen or
issued even before the expiration destroyed.
of the one (1) year period
provided herein. If a contest has Except in case of fraud, bad faith, or
been presented to the corporation negligence on the part of the corporation and
or if an action is pending in court its officers, no action may be brought against
regarding the ownership of the any corporation which shall hpve issued
certificate of stock which has certificate of stock in lieu of those lost, stolen
been lost, stolen or destroyed, or destroyed pursuant to the procedure above-
the issuance of the new described.
certificate of stock in lieu thereof
shall be suspended until the
court renders a final decision
regarding the ownership of the
certificate of stock which has
been lost, stolen or destroyed.

Except in case of fraud, bad faith, or

negligence on the part of the
corporation and its officers, no action
may be brought against any corporation
which shall hpve issued certificate of
stock in lieu of those lost, stolen or
destroyed pursuant to the procedure
above-described.

73 Lost or destroyed
certificates. - The
following procedure shall
be followed for the
issuance by a corporation
of new certificates of
stock in lieu of those
which have been lost,
stolen or destroyed:
1. The registered owner of
a certificate of stock in a
corporation or his legal
representative shall file
with the corporation an
affidavit in triplicate
setting forth, if possible,
the circumstances as to
how the certificate was
lost, stolen or destroyed,
the number of shares
represented by such
certificate, the serial
number of the certificate
and the name of the
corporation which issued
the same. He shall also
submit such other
information and evidence
which he may deem
necessary;
2. After verifying the
affidavit and other
information and evidence
with the books of the
corporation, said
corporation shall publish a
notice in a newspaper of
Books to be Kept; Stock Transfer
Agent.— Every corporation shall keep
and carefully preserve at its principal
office all information relating to the
corporation including, but not limited
to:
(a) The articles of
incorporation and bylaws of the
corporation and all their
amendments;
(b) The current ownership
structure and voting rights of the
corporation, including lists of
stockholders or members, group
structures, intra-group relations,
ownership data, and beneficial
ownership;
(c) The names and addresses
of all the members of the board
of directors or trustees and the
executive officers;
(d) A record of all business
transactions;
(e) A record of the resolutions
of the board of directors or
trustees and of the stockholders
or members;
Books to be Kept; Stock Transfer Agent.—
Every corporation shall keep and carefully
preserve at its principal office all information
relating to the corporation including, but not
limited to:
(a) The articles of incorporation and
bylaws of the corporation and all their
amendments;
(b) The current ownership structure
and voting rights of the corporation,
including lists of stockholders or
members, group structures, intra-group
relations, ownership data, and
beneficial ownership;
(c) The names and addresses of all
the members of the board of directors or
trustees and the executive officers;
(d) A record of all business
transactions;
(e) A record of the resolutions of the
board of directors or trustees and of the
stockholders or members;
(f) Copies of the latest reportorial
requirements submitted to the
Commission; and
(g) The minutes of all meetings of
general circulation
published in the place
where the corporation has
its principal office, once a
week for three (3)
consecutive weeks at the
expense of the registered
owner of the certificate of
stock which has been lost,
stolen or destroyed. The
notice shall state the name
of said corporation, the
name of the registered
owner and the serial
number of said certificate,
and the number of shares
represented by such
certificate, and that after
the expiration of one (1)
year from the date of the
last publication, if no
contest has been presented
to said corporation
regarding said certificate
of stock, the right to make
such contest shall be
barred and said
corporation shall cancel in
its books the certificate of
stock which has been lost,
stolen or destroyed and
issue in lieu thereof new
certificate of stock, unless
the registered owner files
a bond or other security in
lieu thereof as may be
required, effective for a
period of one (1) year, for
such amount and in such
form and with such
sureties as may be
satisfactory to the board
of directors, in which case
a new certificate may be
issued even before the
expiration of the one (1)
year period provided
herein: Provided, That if a
contest has been presented
to said corporation or if an
action is pending in court
regarding the ownership
of said certificate of stock
which has been lost,
stolen or destroyed, the
issuance of the new
certificate of stock in lieu
thereof shall be suspended
until the final decision by
the court regarding the
ownership of said
certificate of stock which
has been lost, stolen or
destroyed.
Except in case of fraud,
bad faith, or negligence on
(f) Copies of the latest
reportorial requirements
submitted to the Commission;
and
(g) The minutes of all
meetings of stockholders or
members, or of the board of
directors or trustees. Such
minutes shall set forth in detail,
among others: the time and place
of the meeting held, how it was
authorized, the notice given, the
agenda therefor, whether the
meeting was regular or special,
its object if special, those present
and absent, and every act done
or ordered done at the meeting.
Upon the demand of a director,
trustee, stockholder or member,
the time when any director,
trustee, stockholder or member
entered or left the meeting must
be noted in the minutes; and on a
similar demand, the yeas and
nays must be taken on any
motion or proposition, and a
record thereof carefully made.
The protest of a director, trustee,
stockholder or member on any
action or proposed action must
be recorded in full upon their
demand.
Corporate records, regardless of the
form in which they are stored, shall be
open to inspection by any director,
trustee, stockholder or member of the
corporation in person or by a
representative at reasonable hours on
business days, and a demand in writing
may be made by such director, trustee
or stockholder at their expense, for
copies of such records or excerpts from
said records. The inspecting or
reproducing party shall remain bound
by confidentiality rules under
prevailing laws, such as the rules on
trade secrets or processes under
Republic Act No. 8293, otherwise
known as the “Intellectual Property
Code of the Philippines”, as amended,
Republic Act No. 10173, otherwise
known as the “Data Privacy Act of
2012”, Republic Act No. 8799,
otherwise known as “The Securities
Regulation Code”, and the Rules of
stockholders or members, or of the
board of directors or trustees. Such
minutes shall set forth in detail, among
others: the time and place of the
meeting held, how it was authorized,
the notice given, the agenda therefor,
whether the meeting was regular or
special, its object if special, those
present and absent, and every act done
or ordered done at the meeting. Upon
the demand of a director, trustee,
stockholder or member, the time when
any director, trustee, stockholder or
member entered or left the meeting
must be noted in the minutes; and on a
similar demand, the yeas and nays must
be taken on any motion or proposition,
and a record thereof carefully made.
The protest of a director, trustee,
stockholder or member on any action or
proposed action must be recorded in
full upon their demand.
Corporate records, regardless of the form in
which they are stored, shall be open to
inspection by any director, trustee, stockholder
or member of the corporation in person or by a
representative at reasonable hours on business
days, and a demand in writing may be made
by such director, trustee or stockholder at their
expense, for copies of such records or excerpts
from said records. The inspecting or
reproducing party shall remain bound by
confidentiality rules under prevailing laws,
such as the rules on trade secrets or processes
under Republic Act No. 8293, otherwise
known as the “Intellectual Property Code of
the Philippines”, as amended, Republic Act
No. 10173, otherwise known as the “Data
Privacy Act of 2012”, Republic Act No. 8799,
otherwise known as “The Securities
Regulation Code”, and the Rules of Court.
A requesting party who is not a stockholder
or member of record, or is a competitor,
director, officer, controlling stockholder or
otherwise represents the interests of a
competitor shall have no right to inspect or
demand reproduction of corporate records.
Any stockholder who shall abuse the rights
granted under this section shall be penalized
under Section 158 of this Code, without
prejudice to the provisions of Republic Act
No. 8293, otherwise known as the “Intellectual
Property Code of the Philippines”, as
amended, and Republic Act No. 10173,
otherwise known as the “Data Privacy Act of
the part of the corporation
and its officers, no action
may be brought against
any corporation which
shall have issued
certificate of stock in lieu
of those lost, stolen or
destroyed pursuant to the
procedure above-
described. (R. A. 201a)
Court. 2012”.
A requesting party who is not a Any officer or agent of the corporation who
stockholder or member of record, or is shall refuse to allow the inspection and/or
a competitor, director, officer, reproduction of records in accordance with the
controlling stockholder or otherwise provisions of this Code shall be liable to such
represents the interests of a competitor director, trustee, stockholder or member for
shall have no right to inspect or demand damages, and in addition, shall be guilty of an
reproduction of corporate records. offense which shall be punishable under
Section 161 of this Code: Provided, That if
Any stockholder who shall abuse the such refusal is made pursuant to a resolution
rights granted under this section shall or order of the board of directors or trustees,
be penalized under Section 158 of this the liability under this section for such action
Code, without prejudice to the shall be imposed upon the directors or trustees
provisions of Republic Act No. 8293, who voted for such refusal: Provided, further,
otherwise known as the “Intellectual That it shall be a defense to any action under
Property Code of the Philippines”, as this section that the person demanding to
amended, and Republic Act No. 10173, examine and copy excerpts from the
otherwise known as the “Data Privacy corporation’s records and minutes has
Act of 2012”. improperly used any information secured
through any prior examination of the records
Any officer or agent of the or minutes of such corporation or of any other
corporation who shall refuse to allow corporation, or was not acting in good faith or
the inspection and/or reproduction of for a legitimate purpose in making the demand
records in accordance with the to examine or reproduce corporate records, or
provisions of this Code shall be liable is a competitor, director, officer, controlling
to such director, trustee, stockholder or stockholder or otherwise represents the
member for damages, and in addition, interests of a competitor.
shall be guilty of an offense which shall
be punishable under Section 161 of this If the corporation denies or does not act on a
Code: Provided, That if such refusal is demand for inspection and/or reproduction, the
made pursuant to a resolution or order aggrieved party may report such denial or
of the board of directors or trustees, the inaction to the Commission. Within five (5)
liability under this section for such days from receipt of such report, the
action shall be imposed upon the Commission shall conduct a summary
directors or trustees who voted for such investigation and issue an order directing the
refusal: Provided, further, That it shall inspection or reproduction of the requested
be a defense to any action under this records.
section that the person demanding to
examine and copy excerpts from the Stock corporations must also keep a stock
corporation’s records and minutes has and transfer book, which shall contain a record
improperly used any information of all stocks in the names of the stockholders
secured through any prior examination alphabetically arranged; the installments paid
of the records or minutes of such and unpaid on all stocks for which
corporation or of any other corporation,subscription has been made, and the date of
or was not acting in good faith or for apayment of any installment; a statement of
legitimate purpose in making the every alienation, sale or transfer of stock
demand to examine or reproduce made, the date thereof, by and to whom made;
corporate records, or is a competitor, and such other entries as the bylaws may
director, officer, controlling
prescribe. The stock and transfer book shall be
stockholder or otherwise represents the kept in the principal office of the corporation
interests of a competitor. or in the office of its stock transfer agent and
shall be open for inspection by any director or
If the corporation denies or does not stockholder of the corporation at reasonable
act on a demand for inspection and/or hours on business days.
reproduction, the aggrieved party may
report such denial or inaction to the A stock transfer agent or one engaged
Commission. Within five (5) days from principally in the business of registering
receipt of such report, the Commission transfers of stocks in behalf of a stock
 shall conduct a summary investigation
and issue an order directing the
inspection or reproduction of the
requested records.
Stock corporations must also keep a
stock and transfer book, which shall
contain a record of all stocks in the
names of the stockholders
alphabetically arranged; the
installments paid and unpaid on all
stocks for which subscription has been
made, and the date of payment of any
installment; a statement of every
alienation, sale or transfer of stock
made, the date thereof, by and to whom
made; and such other entries as the
bylaws may prescribe. The stock and
transfer book shall be kept in the
principal office of the corporation or in
the office of its stock transfer agent and
shall be open for inspection by any
director or stockholder of the
corporation at reasonable hours on
business days.
corporation shall be allowed to operate in the
Philippines upon securing a license from the
Commission and the payment of a fee to be
fixed by the Commission, which shall be
renewable annually: Provided, That a stock
corporation is not precluded from performing
or making transfers of its own stocks, in which
case all the rules and regulations imposed on
stock transfer agents, except the payment of a
license fee herein provided, shall be
applicable: Provided, further, That the
Commission may require stock corporations
which transfer and/or trade stocks in
secondary markets to have an independent
transfer agent.

A stock transfer agent or one

engaged principally in the business of
registering transfers of stocks in behalf
of a stock corporation shall be allowed
to operate in the Philippines upon
securing a license from the
Commission and the payment of a fee
to be fixed by the Commission, which
shall be renewable annually: Provided,
That a stock corporation is not
precluded from performing or making
transfers of its own stocks, in which
case all the rules and regulations
imposed on stock transfer agents,
except the payment of a license fee
herein provided, shall be
applicable: Provided, further, That the
Commission may require stock
corporations which transfer and/or trade
stocks in secondary markets to have an
independent transfer agent.

74 Books to be kept; stock

transfer agent. - Every
corporation shall keep and
carefully preserve at its
principal office a record
of all business
transactions and minutes
of all meetings of
stockholders or members,
or of the board of
directors or trustees, in
which shall be set forth in
Right to Financial Statements.— A Right to Financial Statements.— A
corporation shall furnish a stockholder corporation shall furnish a stockholder or
or member, within ten (10) days from member, within ten (10) days from receipt of
receipt of their written request, its most their written request, its most recent financial
recent financial statement, in the form statement, in the form and substance of the
and substance of the financial reporting financial reporting required by the
required by the Commission. Commission.
At the regular meeting of At the regular meeting of stockholders or
stockholders or members, the board of members, the board of directors or trustees
detail the time and place directors or trustees shall present to shall present to such stockholders or members
of holding the meeting, such stockholders or members a a financial report of the operations of the
how authorized, the notice financial report of the operations of the corporation for the preceding year, which shall
given, whether the
corporation for the preceding year, include financial statements, duly signed and
meeting was regular or
special, if special its which shall include financial certified in accordance with this Code, and the
object, those present and statements, duly signed and certified in rules the Commission may prescribe.
absent, and every act done accordance with this Code, and the
or ordered done at the rules the Commission may prescribe. However, if the total assets or total liabilities
meeting. Upon the of the corporation are less than Six hundred
demand of any director, However, if the total assets or total thousand pesos (₱600,000.00), or such other
trustee, stockholder or liabilities of the corporation are less amount as may be determined appropriate by
member, the time when
than Six hundred thousand pesos the Department of Finance, the financial
any director, trustee,
stockholder or member (₱600,000.00), or such other amount as statements may be certified under oath by the
entered or left the meeting may be determined appropriate by the treasurer and the president.
must be noted in the Department of Finance, the financial
minutes; and on a similar statements may be certified under oath
demand, the yeas and nays by the treasurer and the president.
must be taken on any
motion or proposition, and
a record thereof carefully
made. The protest of any
director, trustee,
stockholder or member on
any action or proposed
action must be recorded in
full on his demand.
The records of all
business transactions of
the corporation and the
minutes of any meetings
shall be open to inspection
by any director, trustee,
stockholder or member of
the corporation at
reasonable hours on
business days and he may
demand, writing, for a
copy of excerpts from said
records or minutes, at his
expense.
Any officer or agent of the
corporation who shall
refuse to allow any
director, trustees,
stockholder or member of
the corporation to
examine and copy
excerpts from its records
or minutes, in accordance
with the provisions of this
Code, shall be liable to
such director, trustee,
stockholder or member for
damages, and in addition,
shall be guilty of an
offense which shall be
punishable under Section
144 of this Code:
Provided, That if such
refusal is made pursuant
to a resolution or order of
the board of directors or
trustees, the liability under
this section for such
action shall be imposed
upon the directors or
trustees who voted for
such refusal: and
Provided, further, That it
shall be a defense to any
action under this section
that the person demanding
to examine and copy
excerpts from the
corporation's records and
minutes has improperly
used any information
secured through any prior
examination of the records
or minutes of such
corporation or of any
other corporation, or was
not acting in good faith or
for a legitimate purpose in
making his demand.
Stock corporations must
also keep a book to be
known as the "stock and
transfer book", in which
must be kept a record of
all stocks in the names of
the stockholders
alphabetically arranged;
the installments paid and
unpaid on all stock for
which subscription has
been made, and the date
of payment of any
installment; a statement of
every alienation, sale or
transfer of stock made, the
date thereof, and by and to
whom made; and such
other entries as the by-
laws may prescribe. The
stock and transfer book
shall be kept in the
principal office of the
corporation or in the
office of its stock transfer
agent and shall be open
for inspection by any
director or stockholder of
the corporation at
reasonable hours on
business days.
No stock transfer agent or
one engaged principally in
the business of registering
transfers of stocks in
behalf of a stock
corporation shall be
allowed to operate in the
Philippines unless he
secures a license from the
Securities and Exchange
Commission and pays a
fee as may be fixed by the
Commission, which shall
be renewable annually:
 Provided, That a stock
corporation is not
precluded from
performing or making
transfer of its own stocks,
in which case all the rules
and regulations imposed
on stock transfer agents,
except the payment of a
license fee herein
provided, shall be
applicable. (51a and 32a;
B. P. No. 268.)
75 Right to financial
statements. - Within ten
(10) days from receipt of a
written request of any
stockholder or member,
the corporation shall
furnish to him its most
recent financial statement,
which shall include a
balance sheet as of the end
of the last taxable year
and a profit or loss
statement for said taxable
year, showing in
reasonable detail its assets
and liabilities and the
result of its operations.
At the regular meeting of
stockholders or members,
the board of directors or
trustees shall present to
such stockholders or
members a financial
report of the operations of
the corporation for the
preceding year, which
shall include financial
statements, duly signed
and certified by an
independent certified
public accountant.
However, if the paid-up
capital of the corporation
is less than P50,000.00,
the financial statements
may be certified under
oath by the treasurer or
any responsible officer of
the corporation. (n)
76 Plan or merger of
consolidation. - Two or
more corporations may
merge into a single
corporation which shall be
one of the constituent
corporations or may
consolidate into a new
single corporation which
Plan of Merger or Consolidation.—
Two (2) or more corporations may
merge into a single corporation which
shall be one of the constituent
corporations or may consolidate into a
new single corporation which shall be
the consolidated corporation.
The board of directors or trustees of corporation, party to the merger or
each corporation, party to the merger or consolidation, shall approve a plan of merger
consolidation, shall approve a plan of or consolidation setting forth the following:
merger or consolidation setting forth
the following:
(a) The names of the
corporations proposing to merge
or consolidate, hereinafter
referred to as the constituent
corporations;
(b) The terms of the merger or
consolidation and the mode of
carrying the same into effect;
(c) A statement of the
changes, if any, in the articles of
incorporation of the surviving
corporation in case of merger;
and, in case of consolidation, all
the statements required to be set
forth in the articles of
incorporation for .corporations
organized under this Code; and
(d) Such other provisions with
respect to the proposed merger
or consolidation as are deemed
necessary or desirable.
Stockholders’ or Members’ Approval.—
Upon approval by a majority vote of
each of the board of directors or
trustees of the constituent corporations
of the plan of merger or consolidation,
the same shall be submitted for
approval by the stockholders or
members of each of such corporations
Plan of Merger or Consolidation.— Two (2)
or more corporations may merge into a single
corporation which shall be one of the
constituent corporations or may consolidate
into a new single corporation which shall be
the consolidated corporation.
The board of directors or trustees of each
(a) The names of the corporations
proposing to merge or consolidate,
hereinafter referred to as the constituent
corporations;
(b) The terms of the merger or
consolidation and the mode of carrying
the same into effect;
(c) A statement of the changes, if
any, in the articles of incorporation of
the surviving corporation in case of
merger; and, in case of consolidation,
all the statements required to be set
forth in the articles of incorporation for
.corporations organized under this
Code; and
(d) Such other provisions with
respect to the proposed merger or
consolidation as are deemed necessary
or desirable.
Stockholders’ or Members’ Approval.— Upon
approval by a majority vote of each of the
board of directors or trustees of the constituent
corporations of the plan of merger or
consolidation, the same shall be submitted for
approval by the stockholders or members of
each of such corporations at separate corporate
meetings duly called for the purpose. Notice of
 shall be the consolidated
corporation.
The board of directors or
trustees of each
corporation, party to the
merger or consolidation,
shall approve a plan of
merger or consolidation
setting forth the
following:
1. The names of the
corporations proposing to
merge or consolidate,
hereinafter referred to as
the constituent
corporations;
2. The terms of the merger
or consolidation and the
mode of carrying the same
into effect;
3. A statement of the
changes, if any, in the
articles of incorporation of
the surviving corporation
in case of merger; and,
with respect to the
consolidated corporation
in case of consolidation,
all the statements required
to be set forth in the
articles of incorporation
for corporations organized
under this Code; and
4. Such other provisions
with respect to the
proposed merger or
consolidation as are
deemed necessary or
desirable. (n)
at separate corporate meetings duly such meetings shall be given to all
called for the purpose. Notice of such stockholders or members of the respective
meetings shall be given to all corporations in the same manner as giving
stockholders or members of the notice of regular or special meetings under
respective corporations in the same Section 49 of this Code. The notice shall state
manner as giving notice of regular or the purpose of the meeting and include a copy
special meetings under Section 49 of or a summary of the plan of merger or
this Code. The notice shall state the consolidation.
purpose of the meeting and include a
copy or a summary of the plan of The affirmative vote of stockholders
representing at least two-thirds (2⁄3) of the
merger or consolidation.
outstanding capital stock of each corporation
The affirmative vote of stockholders in the case of stock corporations or at least
representing at least two-thirds (2⁄3) of two-thirds (2⁄3) of the members in the case of
the outstanding capital stock of each nonstock corporations shall be necessary for
corporation in the case of stock the approval of such plan. Any dissenting
corporations or at least two-thirds (2⁄3) stockholder may exercise the right of appraisal
of the members in the case of nonstock in accordance with this Code: Provided, That
corporations shall be necessary for the if after the approval by the stockholders of
approval of such plan. Any dissenting such plan, the board of directors decides to
stockholder may exercise the right of abandon the plan, the right of appraisal shall
appraisal in accordance with this be extinguished.
Code: Provided, That if after the
approval by the stockholders of such Any amendment to the plan of merger or
plan, the board of directors decides to consolidation may be made: Provided, That
abandon the plan, the right of appraisal such amendment is approved by a majority
vote of the respective boards of directors or
shall be extinguished.
trustees of all the constituent corporations and
Any amendment to the plan of ratified by the affirmative vote of stockholders
merger or consolidation may be representing at least two-thirds (2⁄3) of the
made: Provided, That such amendment outstanding capital stock or of two-thirds (2⁄3)
is approved by a majority vote of the of the members of each of the constituent
respective boards of directors or corporations. Such plan, together with any
trustees of all the constituent amendment, shall be considered as the
corporations and ratified by the agreement of merger or consolidation.
affirmative vote of stockholders
representing at least two-thirds (2⁄3) of
the outstanding capital stock or of two-
thirds (2⁄3) of the members of each of
the constituent corporations. Such plan,
together with any amendment, shall be
considered as the agreement of merger
or consolidation.

77 Stockholder's or member's
approval. - Upon approval
by majority vote of each
of the board of directors
or trustees of the
constituent corporations
of the plan of merger or
consolidation, the same
shall be submitted for
approval by the
stockholders or members
of each of such
corporations at separate
corporate meetings duly
called for the purpose.
Notice of such meetings
Articles of Merger or Consolidation.—
After the approval by the stockholders
or members as required by the
preceding section, articles of merger or
articles of consolidation shall be
executed by each of the constituent
corporations, to be signed by the
president or vice president and certified
by the secretary or assistant secretary of
each corporation setting forth:
(a) The plan of the merger or
the plan of consolidation;
Articles of Merger or Consolidation.— After
the approval by the stockholders or members
as required by the preceding section, articles
of merger or articles of consolidation shall be
executed by each of the constituent
corporations, to be signed by the president or
vice president and certified by the secretary or
assistant secretary of each corporation setting
forth:
(a) The plan of the merger or the plan
of consolidation;
(b) As to stock corporations, the
 shall be given to all (b) As to stock corporations, number of shares outstanding, or in the
stockholders or members the number of shares case of nonstock corporations, the
of the respective outstanding, or in the case of number of members;
corporations, at least two
nonstock corporations, the
(2) weeks prior to the date
number of members; (c) As to each corporation, the
of the meeting, either
personally or by registered number of shares or members voting for
mail. Said notice shall (c) As to each corporation, the or against such plan, respectively;
state the purpose of the number of shares or members
meeting and shall include voting for or against such plan, (d) The carrying amounts and fair
a copy or a summary of respectively; values of the assets and liabilities of the
the plan of merger or respective companies as of the agreed
consolidation. The (d) The carrying amounts and cut-off date;
affirmative vote of fair values of the assets and
stockholders representing (e) The method to be used in the
liabilities of the respective
at least two-thirds (2/3) of
companies as of the agreed cut- merger or consolidation of accounts of
the outstanding capital
stock of each corporation off date; the companies;
in the case of stock
corporations or at least (e) The method to be used in (f) The provisional or pro forma
two-thirds (2/3) of the the merger or consolidation of values, as merged or consolidated,
members in the case of accounts of the companies; using the accounting method; and
non-stock corporations
shall be necessary for the (f) The provisional or pro (g) Such other information as may be
approval of such plan. forma values, as merged or prescribed by the Commission.
Any dissenting
consolidated, using the
stockholder in stock
corporations may exercise accounting method; and
his appraisal right in
accordance with the Code: (g) Such other information as
Provided, That if after the may be prescribed by the
approval by the Commission.
stockholders of
such plan, the board of
directors decides to
abandon the plan, the
appraisal right shall be
extinguished.
Any amendment to the
plan of merger or
consolidation may be
made, provided such
amendment is approved
by majority vote of the
respective boards of
directors or trustees of all
the constituent
corporations and ratified
by the affirmative vote of
stockholders representing
at least two-thirds (2/3) of
the outstanding capital
stock or of two-thirds
(2/3) of the members of
each of the constituent
corporations. Such plan,
together with any
amendment, shall be
considered as the
agreement of merger or
consolidation. (n)
78 Articles of merger or
Effectivity of Merger or Effectivity of Merger or Consolidation.— The
consolidation. - After the
approval by the Consolidation.— The articles of merger articles of merger or of consolidation, signed
stockholders or members or of consolidation, signed and certified and certified as required by this Code, shall be
as required by the as required by this Code, shall be submitted to the Commission for its
 preceding section, articles
of merger or articles of
consolidation shall be
executed by each of the
constituent corporations,
to be signed by the
president or vice-president
and certified by the
secretary or assistant
secretary of each
corporation setting forth:
1. The plan of the merger
or the plan of
consolidation;
2. As to stock
corporations, the number
of shares outstanding, or
in the case of non-stock
corporations, the number
of members; and
3. As to each corporation,
the numbe
submitted to the Commission for its
approval: Provided, That in the case of
merger or consolidation of banks or
banking institutions, loan associations,
trust companies, insurance companies,
public utilities, educational institutions,
and other special corporations governed
by special laws, the favorable
recommendation of the appropriate
government agency shall first be
obtained. If the Commission is satisfied
that the merger or consolidation of the
corporations concerned is consistent
with the provisions of this Code and
existing laws, it shall issue a certificate
approving the articles and plan of
merger or of consolidation, at which
time the merger or consolidation shall
be effective.
If, upon investigation, the
Commission has reason to believe that
the proposed merger or consolidation is
contrary to or inconsistent with the
provisions of this Code or existing
laws, it shall set a hearing to give the
corporations concerned the opportunity
to be heard. Written notice of the date,
time, and place of hearing shall be
given to each constituent corporation at
least two (2) weeks before said hearing.
The Commission shall thereafter
proceed as provided in this Code.
approval: Provided, That in the case of merger
or consolidation of banks or banking
institutions, loan associations, trust companies,
insurance companies, public utilities,
educational institutions, and other special
corporations governed by special laws, the
favorable recommendation of the appropriate
government agency shall first be obtained. If
the Commission is satisfied that the merger or
consolidation of the corporations concerned is
consistent with the provisions of this Code and
existing laws, it shall issue a certificate
approving the articles and plan of merger or of
consolidation, at which time the merger or
consolidation shall be effective.
If, upon investigation, the Commission has
reason to believe that the proposed merger or
consolidation is contrary to or inconsistent
with the provisions of this Code or existing
laws, it shall set a hearing to give the
corporations concerned the opportunity to be
heard. Written notice of the date, time, and
place of hearing shall be given to each
constituent corporation at least two (2) weeks
before said hearing. The Commission shall
thereafter proceed as provided in this Code.

79 Effectivity of merger or
Effects of Merger or Consolidation.— Effects of Merger or Consolidation.— The
consolidation. - The
articles of merger or of The merger or consolidation shall have merger or consolidation shall have the
consolidation, signed and the following effects: following effects:
certified as herein above
required, shall be (a) The constituent (a) The constituent corporations
submitted to the Securities corporations shall become a shall become a single corporation
and Exchange single corporation which, in case which, in case of merger, shall be the
Commission in of merger, shall be the surviving surviving corporation designated in
quadruplicate for its
corporation designated in the the plan of merger; and, in case of
approval: Provided, That
in the case of merger or plan of merger; and, in case of consolidation, shall be the
consolidation of banks or consolidation, shall be the consolidated corporation designated
banking institutions, consolidated corporation in the plan of consolidation;
building and loan designated in the plan of
associations, trust consolidation; (b) The separate existence of the
companies, insurance constituent corporations shall cease,
companies, public (b) The separate existence of except that of the surviving or the
utilities, educational the constituent corporations shall consolidated corporation;
institutions and other
cease, except that of the
special corporations
surviving or the consolidated (c) The surviving or the
governed by special laws,
the favorable corporation; consolidated corporation shall
recommendation of the possess all the rights, privileges,
appropriate government (c) The surviving or the immunities, and powers and shall be
agency shall first be consolidated corporation shall subject to all the duties and liabilities
obtained. If the possess all the rights, privileges, of a corporation organized under this
Commission is satisfied
 that the merger or
consolidation of the
corporations concerned is
not inconsistent with the
provisions of this Code
and existing laws, it shall
issue a certificate of
merger or of
consolidation, at which
time the merger or
consolidation shall be
effective.
If, upon investigation, the
Securities and Exchange
Commission has reason to
believe that the proposed
merger or consolidation is
contrary to or inconsistent
with the provisions of this
Code or existing laws, it
shall set a hearing to give
the corporations
concerned the opportunity
to be heard. Written notice
of the date, time and place
of hearing shall be given
to each constituent
corporation at least two
(2) weeks before said
hearing. The Commission
shall thereafter proceed as
provided in this Code. (n)
80 Effects or merger or
consolidation. - The
merger or consolidation
shall have the following
effects:
1. The constituent
corporations shall become
a single corporation
which, in case of merger,
shall be the surviving
corporation designated in
the plan of merger; and, in
case of consolidation,
shall be the consolidated
corporation designated in
the plan of consolidation;
2. The separate existence
immunities, and powers and
shall be subject to all the duties
and liabilities of a corporation
organized under this Code;
(d) The surviving or the
consolidated corporation shall
possess all the rights, privileges,
immunities and franchises of
each constituent corporation; and
all real or personal property, all
receivables due on whatever
account, including subscriptions
to shares and other choses in
action, and every other interest
of, belonging to, or due to each
constituent corporation, shall be
deemed transferred to and vested
in such surviving or consolidated
corporation without further act
or deed; and
(e) The surviving or
consolidated corporation shall be
responsible for all the liabilities
and obligations of each
constituent corporation as
though such surviving or
consolidated corporation had
itself incurred such liabilities or
obligations; and any pending
claim, action or proceeding
brought by or against any
constituent corporation may be
prosecuted by or against the
surviving or consolidated
corporation. The rights of
creditors or liens upon the
property of such constituent
corporations shall not be
impaired by the merger or
consolidation.
When the Right of Appraisal May Be
Exercised.— Any stockholder of a
corporation shall have the right to
dissent and demand payment of the fair
value of the shares in the following
instances:
(a) In case an amendment to
the articles of incorporation has
the effect of changing or
restricting the rights of any
stockholder or class of shares, or
of authorizing preferences in any
respect superior to those of
Code;
(d) The surviving or the
consolidated corporation shall
possess all the rights, privileges,
immunities and franchises of each
constituent corporation; and all real
or personal property, all receivables
due on whatever account, including
subscriptions to shares and other
choses in action, and every other
interest of, belonging to, or due to
each constituent corporation, shall be
deemed transferred to and vested in
such surviving or consolidated
corporation without further act or
deed; and
(e) The surviving or consolidated
corporation shall be responsible for
all the liabilities and obligations of
each constituent corporation as
though such surviving or
consolidated corporation had itself
incurred such liabilities or
obligations; and any pending claim,
action or proceeding brought by or
against any constituent corporation
may be prosecuted by or against the
surviving or consolidated
corporation. The rights of creditors
or liens upon the property of such
constituent corporations shall not be
impaired by the merger or
consolidation.
When the Right of Appraisal May Be
Exercised.— Any stockholder of a corporation
shall have the right to dissent and demand
payment of the fair value of the shares in the
following instances:
(a) In case an amendment to the
articles of incorporation has the effect
of changing or restricting the rights of
any stockholder or class of shares, or of
authorizing preferences in any respect
superior to those of outstanding shares
of any class, or of extending or
shortening the term of corporate
 of the constituent outstanding shares of any class, existence;
corporations shall cease, or of extending or shortening the
except that of the term of corporate existence; (b) In case of sale, lease, exchange,
surviving or the transfer, mortgage, pledge or other
consolidated corporation;
(b) In case of sale, lease, disposition of all or substantially all of
3. The surviving or the
consolidated corporation exchange, transfer, mortgage, the corporate property and assets as
shall possess all the rights, pledge or other disposition of all provided in this Code;
privileges, immunities and or substantially all of the
powers and shall be corporate property and assets as (c) In case of merger or
subject to all the duties provided in this Code; consolidation; and
and liabilities of a
corporation organized (c) In case of merger or (d) In case of investment of corporate
under this Code; consolidation; and funds for any purpose other than the
4. The surviving or the primary purpose of the corporation.
consolidated corporation
(d) In case of investment of
shall thereupon and
thereafter possess all the corporate funds for any purpose
rights, privileges, other than the primary purpose
immunities and franchises of the corporation.
of each of the constituent
corporations; and all
property, real or personal,
and all receivables due on
whatever account,
including subscriptions to
shares and other choses in
action, and all and every
other interest of, or
belonging to, or due to
each constituent
corporation, shall be
deemed transferred to and
vested in such surviving
or consolidated
corporation without
further act or deed; and
5. The surviving or
consolidated corporation
shall be responsible and
liable for all the liabilities
and obligations of each of
the constituent
corporations in the same
manner as if such
surviving or consolidated
corporation had itself
incurred such liabilities or
obligations; and any
pending claim, action or
proceeding brought by or
against any of such
constituent corporations
may be prosecuted by or
against the surviving or
consolidated corporation.
The rights of creditors or
liens upon the property of
any of such constituent
corporations shall not be
impaired by such merger
or consolidation. (n)
81 Instances of appraisal
How Right is Exercised.— The How Right is Exercised.— The dissenting
right. - Any stockholder
of a corporation shall have dissenting stockholder who votes stockholder who votes against a proposed
the right to dissent and against a proposed corporate action corporate action may exercise the right of
 demand payment of the
fair value of his shares in
the following instances:
1. In case any amendment
to the articles of
incorporation has the
effect of changing or
restricting the rights of
any stockholder or class
of shares, or of
authorizing preferences in
any respect superior to
those of outstanding
shares of any class, or of
extending or shortening
the term of corporate
existence;
2. In case of sale, lease,
exchange, transfer,
mortgage, pledge or other
disposition of all or
substantially all of the
corporate property and
assets as provided in the
Code; and
3. In case of merger or
consolidation. (n)
Sec. 82. How right is
exercised. - The appraisal
right may be exercised
82 How right is exercised. -
The appraisal right may
be exercised by any
stockholder who shall
have voted against the
proposed corporate action,
by making a written
demand on the
corporation within thirty
(30) days after the date on
which the vote was taken
for payment of the fair
value of his shares:
Provided, That failure to
make the demand within
such period shall be
may exercise the right of appraisal by
making a written demand on the
corporation for the payment of the fair
value of shares held within thirty (30)
days from the date on which the vote
was taken: Provided, That failure to
make the demand within such period
shall be deemed a waiver of the
appraisal right. If the proposed
corporate action is implemented, the
corporation shall pay the stockholder,
upon surrender of the certificate or
certificates of stock representing the
stockholder‘s shares, the fair value
thereof as of the day before the vote
was taken, excluding any appreciation
or depreciation in anticipation of such
corporate action.
If, within sixty (60) days from the
approval of the corporate action by the
stockholders, the withdrawing
stockholder and the corporation cannot
agree on the fair value of the shares, it
shall be determined and appraised by
three (3) disinterested persons, one of
whom shall be named by the
stockholder, another by the corporation,
and the third by the two (2) thus
chosen. The findings of the majority of
the appraisers shall be final, and their
award shall be paid by the corporation
within thirty (30) days after such award
is made: Provided, That no payment
shall be made to any dissenting
stockholder unless the corporation has
unrestricted retained earnings in its
books to cover such
payment: Provided, further, That upon
payment by the corporation of the
agreed or awarded price, the
stockholder shall forthwith transfer the
shares to the corporation.
Effect of Demand and Termination of
Right.— From the time of demand for
payment of the fair value of a
stockholder’s shares until either the
abandonment of the corporate action
involved or the purchase of the said
shares by the corporation, all rights
accruing to such shares, including
voting and dividend rights, shall be
suspended in accordance with the
provisions of this Code, except the right
of such stockholder to receive payment
of the fair value thereof: Provided, That
if the dissenting stockholder is not paid
appraisal by making a written demand on the
corporation for the payment of the fair value
of shares held within thirty (30) days from the
date on which the vote was taken: Provided,
That failure to make the demand within such
period shall be deemed a waiver of the
appraisal right. If the proposed corporate
action is implemented, the corporation shall
pay the stockholder, upon surrender of the
certificate or certificates of stock representing
the stockholder‘s shares, the fair value thereof
as of the day before the vote was taken,
excluding any appreciation or depreciation in
anticipation of such corporate action.
If, within sixty (60) days from the approval
of the corporate action by the stockholders, the
withdrawing stockholder and the corporation
cannot agree on the fair value of the shares, it
shall be determined and appraised by three (3)
disinterested persons, one of whom shall be
named by the stockholder, another by the
corporation, and the third by the two (2) thus
chosen. The findings of the majority of the
appraisers shall be final, and their award shall
be paid by the corporation within thirty (30)
days after such award is made: Provided, That
no payment shall be made to any dissenting
stockholder unless the corporation has
unrestricted retained earnings in its books to
cover such payment: Provided, further, That
upon payment by the corporation of the agreed
or awarded price, the stockholder shall
forthwith transfer the shares to the corporation.
Effect of Demand and Termination of Right.—
From the time of demand for payment of the
fair value of a stockholder’s shares until either
the abandonment of the corporate action
involved or the purchase of the said shares by
the corporation, all rights accruing to such
shares, including voting and dividend rights,
shall be suspended in accordance with the
provisions of this Code, except the right of
such stockholder to receive payment of the fair
value thereof: Provided, That if the dissenting
stockholder is not paid the value of the said
shares within thirty (30) days after the award,
the voting and dividend rights shall
 deemed a waiver of the the value of the said shares within thirty immediately be restored.
appraisal right. If the (30) days after the award, the voting
proposed corporate action and dividend rights shall immediately
is implemented or
be restored.
affected, the corporation
shall pay to such
stockholder, upon
surrender of the certificate
or certificates of stock
representing his shares,
the fair value thereof as of
the day prior to the date
on which the vote was
taken, excluding any
appreciation or
depreciation in
anticipation of such
corporate action.
If within a period of sixty
(60) days from the date
the corporate action was
approved by the
stockholders, the
withdrawing stockholder
and the corporation cannot
agree on the fair value of
the shares, it shall be
determined and appraised
by three (3) disinterested
persons, one of whom
shall be named by the
stockholder, another by
the corporation, and the
third by the two thus
chosen. The findings of
the majority of the
appraisers shall be final,
and their award shall be
paid by the corporation
within thirty (30) days
after such award is made:
Provided, That no
payment shall be made to
any dissenting stockholder
unless the corporation has
unrestricted retained
earnings in its books to
cover such payment: and
Provided, further, That
upon payment by the
corporation of the agreed
or awarded price, the
stockholder shall
forthwith transfer his
shares to the corporation.
(n)
83 Effect of demand and
When Right to Payment Ceases.— No When Right to Payment Ceases.— No demand
termination of right. -
From the time of demand demand for payment under this Title for payment under this Title may be
for payment of the fair may be withdrawn unless the withdrawn unless the corporation consents
value of a stockholder's corporation consents thereto. If, thereto. If, however, such demand for payment
shares until either the however, such demand for payment is is withdrawn with the consent of the
abandonment of the withdrawn with the consent of the corporation, or if the proposed corporate
corporate action involved corporation, or if the proposed action is abandoned or rescinded by the
or the purchase of the said
corporate action is abandoned or corporation or disapproved by the Commission
shares by the corporation,
 all rights accruing to such rescinded by the corporation or where such approval is necessary, or if the
shares, including voting disapproved by the Commission where Commission determines that such stockholder
and dividend rights, shall such approval is necessary, or if the is not entitled to the appraisal right, then the
be suspended in
Commission determines that such right of the stockholder to be paid the fair
accordance with the
provisions of this Code, stockholder is not entitled to the value of the shares shall cease, the status as the
except the right of such appraisal right, then the right of the stockholder shall be restored, and all dividend
stockholder to receive stockholder to be paid the fair value of distributions which would have accrued on the
payment of the fair value the shares shall cease, the status as the shares shall be paid to the stockholder.
thereof: Provided, That if stockholder shall be restored, and all
the dissenting stockholder dividend distributions which would
is not paid the value of his
have accrued on the shares shall be paid
shares within 30 days
after the award, his voting to the stockholder.
and dividend rights shall
immediately be restored.
(n)
84 When right to payment
Who Bears Costs of Appraisal.— The Who Bears Costs of Appraisal.— The costs
ceases. - No demand for
payment under this Title costs and expenses of appraisal shall be and expenses of appraisal shall be borne by the
may be withdrawn unless borne by the corporation, unless the fair corporation, unless the fair value ascertained
the corporation consents value ascertained by the appraisers is by the appraisers is approximately the same as
thereto. If, however, such approximately the same as the price the price which the corporation may have
demand for payment is which the corporation may have offered offered to pay the stockholder, in which case
withdrawn with the to pay the stockholder, in which case they shall be borne by the latter. In the case of
consent of the
they shall be borne by the latter. In the an action to recover such fair value, all costs
corporation, or if the
proposed corporate action case of an action to recover such fair and expenses shall be assessed against the
is abandoned or rescinded value, all costs and expenses shall be corporation, unless the refusal of the
by the corporation or assessed against the corporation, unless stockholder to receive payment was
disapproved by the the refusal of the stockholder to receive unjustified.
Securities and Exchange payment was unjustified.
Commission where such
approval is necessary, or
if the Securities and
Exchange Commission
determines that such
stockholder is not entitled
to the appraisal right, then
the right of said
stockholder to be paid the
fair value of his shares
shall cease, his status as a
stockholder shall
thereupon be restored, and
all dividend distributions
which would have accrued
on his shares shall be paid
to him. (n)
85 Who bears costs of
Notation on Certificates; Rights of Notation on Certificates; Rights of
appraisal. - The costs and
expenses of appraisal shall Transferee.— Within ten (10) days after Transferee.— Within ten (10) days after
be borne by the demanding payment for shares held, a demanding payment for shares held, a
corporation, unless the dissenting stockholder shall submit the dissenting stockholder shall submit the
fair value ascertained by certificates of stock representing the certificates of stock representing the shares to
the appraisers is shares to the corporation for notation the corporation for notation that such shares
approximately the same as that such shares are dissenting shares. are dissenting shares. Failure to do so shall, at
the price which the
Failure to do so shall, at the option of the option of the corporation, terminate the
corporation may have
offered to pay the the corporation, terminate the rights rights under this Title. If shares represented by
stockholder, in which case under this Title. If shares represented the certificates bearing such notation are
they shall be borne by the by the certificates bearing such notation transferred, and the certificates consequently
latter. In the case of an are transferred, and the certificates cancelled, the rights of the transferor as a
action to recover such fair consequently cancelled, the rights of dissenting stockholder under this Title shall
value, all costs and the transferor as a dissenting cease and the transferee shall have all the
expenses shall be assessed
 against the corporation,
unless the refusal of the
stockholder to receive
payment was unjustified.
(n)
stockholder under this Title shall cease
and the transferee shall have all the
rights of a regular stockholder; and all
dividend distributions which would
have accrued on such shares shall be
paid to the transferee.
rights of a regular stockholder; and all
dividend distributions which would have
accrued on such shares shall be paid to the
transferee.

86 Notation on certificates;
Definition.— For purposes of this Code Definition.— For purposes of this Code and
rights of transferee. -
Within ten (10) days after and subject to its provisions on subject to its provisions on dissolution, a
demanding payment for dissolution, a nonstock corporation is nonstock corporation is one where no part of
his shares, a dissenting one where no part of its income is its income is distributable as dividends to its
stockholder shall submit distributable as dividends to its members, trustees, or officers: Provided, That
the certificates of stock members, trustees, or any profit which a non-stock corporation may
representing his shares to officers: Provided, That any profit obtain incidental to its operations shall,
the corporation for
which a non-stock corporation may whenever necessary or proper, be used for the
notation thereon that such
shares are dissenting obtain incidental to its operations shall, furtherance of the purpose or purposes for
shares. His failure to do so whenever necessary or proper, be used which the corporation was organized, subject
shall, at the option of the for the furtherance of the purpose or to the provisions of this Title.
corporation, terminate his purposes for which the corporation was
rights under this Title. If organized, subject to the provisions of The provisions governing stock
shares represented by the this Title. corporations, when pertinent, shall be
certificates bearing such applicable to non-stock corporations, except as
notation are transferred, The provisions governing stock may be covered by specific provisions of this
and the certificates
corporations, when pertinent, shall be Title.
consequently cancelled,
the rights of the transferor applicable to non-stock corporations,
as a dissenting except as may be covered by specific
stockholder under this provisions of this Title.
Title shall cease and the
transferee shall have all
the rights of a regular
stockholder; and all
dividend distributions
which would have accrued
on such shares shall be
paid to the transferee. (n)
87 Definition. - For the Purposes.— Non-stock corporations Purposes.— Non-stock corporations may be
purposes of this Code, a may be formed or organized for formed or organized for charitable, religious,
non-stock corporation is charitable, religious, educational, educational, professional, cultural, fraternal,
one where no part of its professional, cultural, fraternal, literary, literary, scientific, social, civic service, or
income is distributable as scientific, social, civic service, or similar purposes, like trade, industry,
dividends to its members, similar purposes, like trade, industry, agricultural and like chambers, or any
trustees, or officers, agricultural and like chambers, or any combination thereof, subject to the special
subject to the provisions combination thereof, subject to the provisions of this Title governing particular
of this Code on special provisions of this Title classes of non-stock corporations.
dissolution: Provided, governing particular classes of non-
That any profit which a stock corporations.
non-stock corporation
may obtain as an incident
to its operations shall,
whenever necessary or
proper, be used for the
furtherance of the purpose
or purposes for which the
corporation was
organized, subject to the
provisions of this Title.
The provisions governing
stock corporation, when
pertinent, shall be
applicable to non-stock
corporations, except as
 may be covered by
specific provisions of this
Title. (n)
88 Purposes. - Non-stock
Right to Vote.— The right of the Right to Vote.— The right of the members of
corporations may be
formed or organized for members of any class or classes to vote any class or classes to vote may be limited,
charitable, religious, may be limited, broadened, or denied to broadened, or denied to the extent specified in
educational, professional, the extent specified in the articles of the articles of incorporation or the bylaws.
cultural, fraternal, literary, incorporation or the bylaws. Unless so Unless so limited, broadened, or denied, each
scientific, social, civic limited, broadened, or denied, each member, regardless of class, shall be entitled
service, or similar member, regardless of class, shall be to one (1) vote.
purposes, like trade,
entitled to one (1) vote.
industry, agricultural and
Unless otherwise provided in the articles of
like chambers, or any
combination thereof, Unless otherwise provided in the incorporation or the bylaws, a member may
subject to the special articles of incorporation or the bylaws, vote by proxy, in accordance with the
provisions of this Title a member may vote by proxy, in provisions of this Code. The bylaws may
governing particular accordance with the provisions of this likewise authorize voting through remote
classes of non-stock Code. The bylaws may likewise communication and/or in absentia.
corporations. (n) authorize voting through remote
communication and/or in absentia.

89 Right to vote. - The right Nontransferability of Membership.— Nontransferability of Membership.—

of the members of any Membership in a nonstock corporation Membership in a nonstock corporation and all
class or classes to vote and all rights arising therefrom are rights arising therefrom are personal and
may be limited, broadened personal and nontransferable, unless the nontransferable, unless the articles of
or denied to the extent articles of incorporation or the bylaws incorporation or the bylaws otherwise provide.
specified in the articles of otherwise provide.
incorporation or the by-
laws. Unless so limited,
broadened or denied, each
member, regardless of
class, shall be entitled to
one vote.
Unless otherwise provided
in the articles of
incorporation or the by-
laws, a member may vote
by proxy in accordance
with the provisions of this
Code. (n)
Voting by mail or other
similar means by
members of non-stock
corporations may be
authorized by the by-laws
of non-stock corporations
with the approval of, and
under such conditions
which may be prescribed
by, the Securities and
Exchange Commission.
90 Non-transferability of
Termination of Membership.— Termination of Membership.— Membership
membership. -
Membership in a non- Membership shall be terminated in the shall be terminated in the manner and for the
stock corporation and all manner and for the causes provided in causes provided in the articles of incorporation
rights arising there from the articles of incorporation or the or the bylaws. Termination of membership
are personal and non- bylaws. Termination of membership shall extinguish all rights of a member in the
transferable, unless the shall extinguish all rights of a member corporation or in its property, unless otherwise
articles of incorporation or in the corporation or in its property, provided in the articles of incorporation or the
the by-laws otherwise
unless otherwise provided in the bylaws.
provide. (n)
articles of incorporation or the bylaws.
91 Termination of
membership. -
Membership shall be
terminated in the manner
and for the causes
provided in the articles of
incorporation or the by-
laws. Termination of
membership shall have
the effect of extinguishing
all rights of a member in
the corporation or in its
property, unless otherwise
provided in the articles of
incorporation or the by-
laws. (n)
92 92. Election and term of
trustees. - Unless
otherwise provided in the
articles of incorporation or
the by-laws, the board of
trustees of non-stock
corporations, which may
be more than fifteen (15)
in number as may be fixed
in their articles of
incorporation or by-laws,
shall, as soon as
organized, so classify
themselves that the term
of office of onethird (1/3)
of their number shall
expire every year; and
subsequent elections of
trustees comprising one-
third (1/3) of the board of
trustees shall be held
annually and trustees so
elected shall have a term
of three (3) years.
Trustees thereafter elected
to fill vacancies occurring
before the expiration of a
particular term shall hold
office only for the
unexpired period.
No
93 Place of meetings. - The
by-laws may provide that
the members of a non-
stock corporation may
hold their regular or
special meetings at any
place even outside the
place where the principal
office of the corporation is
Election and Term of Trustees.— The
number of trustees shall be fixed in the
articles of incorporation or bylaws
which may or may not be more than
fifteen (15). They shall hold office for
not more than three (3) years until their
successors are elected and qualified.
Trustees elected to fill vacancies
occurring before the expiration of a
particular term shall hold office only
for the unexpired period.
Except with respect to independent
trustees of non-stock corporations
vested with public interest, only a
member of the corporation shall be
elected as trustee.
Unless otherwise provided in the
articles of incorporation or the bylaws,
the members may directly elect officers
of a non-stock corporation.
List of Member’s and Proxies, Place of
Meetings.— The corporation shall, at
all times, keep a list of its members and
their proxies in the form the
Commission may require. The list shall
be updated to reflect the members and
proxies of record twenty (20) days prior
to any scheduled election. The bylaws
may provide that the members of a non-
stock corporation may hold their
regular or special meetings at any place
even outside the place where the
principal office of the corporation is
located: Provided, That proper notice is
sent to all members indicating the date,
time and place of the
meeting: Provided, farther, That the
place of meeting shall be within
Philippine territory.
Rules of Distribution.— The assets of a
non-stock corporation undergoing the
process of dissolution for reasons other
than those set forth in Section 139 of
this Code shall be applied and
distributed as follows:
(a) All liabilities and
Election and Term of Trustees.— The number
of trustees shall be fixed in the articles of
incorporation or bylaws which may or may not
be more than fifteen (15). They shall hold
office for not more than three (3) years until
their successors are elected and qualified.
Trustees elected to fill vacancies occurring
before the expiration of a particular term shall
hold office only for the unexpired period.
Except with respect to independent trustees
of non-stock corporations vested with public
interest, only a member of the corporation
shall be elected as trustee.
Unless otherwise provided in the articles of
incorporation or the bylaws, the members may
directly elect officers of a non-stock
corporation.
List of Member’s and Proxies, Place of
Meetings.— The corporation shall, at all times,
keep a list of its members and their proxies in
the form the Commission may require. The list
shall be updated to reflect the members and
proxies of record twenty (20) days prior to any
scheduled election. The bylaws may provide
that the members of a non-stock corporation
may hold their regular or special meetings at
any place even outside the place where the
principal office of the corporation is
located: Provided, That proper notice is sent to
all members indicating the date, time and
place of the meeting: Provided, farther, That
the place of meeting shall be within Philippine
territory.
Rules of Distribution.— The assets of a non-
stock corporation undergoing the process of
dissolution for reasons other than those set
forth in Section 139 of this Code shall be
applied and distributed as follows:
(a) All liabilities and obligations of
the corporation shall be paid, satisfied
 located: Provided, That
proper notice is sent to all
members indicating the
date, time and place of the
meeting: and Provided,
further, That the place of
meeting shall be within
the Philippines. (n)
94 Rules of distribution. - In
Plan of Distribution of Assets.— A plan
case dissolution of a non-
stock corporation in providing for the distribution of assets,
obligations of the corporation
shall be paid, satisfied and
discharged, or adequate
provision shall be made therefor;
(b) Assets held by the
corporation upon a condition
requiring return, transfer or
conveyance, and which
condition occurs by reason of the
dissolution, shall be returned,
transferred or conveyed in
accordance with such
requirements;
(c) Assets received and held
by the corporation subject to
limitations permitting their use
only for charitable, religious,
benevolent, educational or
similar purposes, but not held
upon a condition requiring
return, transfer or conveyance by
reason of the dissolution, shall
be transferred or conveyed to
one (1) or more corporations,
societies or organizations
engaged in activities in the
Philippines substantially similar
to those of the dissolving
corporation according to a plan
of distribution adopted pursuant
to this Chapter;
(d) Assets other than those
mentioned in the preceding
paragraphs, if any, shall be
distributed in accordance with
the provisions of the articles of
incorporation or the bylaws, to
the extent that the articles of
incorporation or the bylaws
determine the distributive rights
of members, or any class or
classes of members, or provide
for distribution; and
(e) In any other case, assets
may be distributed to such
persons, societies, organizations
or corporations, whether or not
organized for profit, as may be
specified in a plan of distribution
adopted pursuant to this Chapter.
Plan of Distribution of Assets.— A plan
providing for the distribution of assets,
and discharged, or adequate provision
shall be made therefor;
(b) Assets held by the corporation
upon a condition requiring return,
transfer or conveyance, and which
condition occurs by reason of the
dissolution, shall be returned,
transferred or conveyed in accordance
with such requirements;
(c) Assets received and held by the
corporation subject to limitations
permitting their use only for charitable,
religious, benevolent, educational or
similar purposes, but not held upon a
condition requiring return, transfer or
conveyance by reason of the
dissolution, shall be transferred or
conveyed to one (1) or more
corporations, societies or organizations
engaged in activities in the Philippines
substantially similar to those of the
dissolving corporation according to a
plan of distribution adopted pursuant to
this Chapter;
(d) Assets other than those mentioned
in the preceding paragraphs, if any,
shall be distributed in accordance with
the provisions of the articles of
incorporation or the bylaws, to the
extent that the articles of incorporation
or the bylaws determine the distributive
rights of members, or any class or
classes of members, or provide for
distribution; and
(e) In any other case, assets may be
distributed to such persons, societies,
organizations or corporations, whether
or not organized for profit, as may be
specified in a plan of distribution
adopted pursuant to this Chapter.
accordance with the consistent with the provisions of this consistent with the provisions of this Title,
provisions of this Code, Title, may be adopted by a non-stock may be adopted by a non-stock corporation in
its assets shall be applied corporation in the process of the process of dissolution in the following
and distributed as follows:
dissolution in the following manner: manner:
1. All liabilities and
obligations of the
corporation shall be paid, (a) The board of trustees shall, (a) The board of trustees shall, by
satisfied and discharged, by majority vote, adopt a majority vote, adopt a resolution
or adequate provision resolution recommending a plan recommending a plan of distribution
shall be made therefore; of distribution and directing the and directing the submission thereof to
2. Assets held by the submission thereof to a vote at a a vote at a regular or special meeting of
corporation upon a regular or special meeting of members having voting rights;
condition requiring return,
members having voting rights;
transfer or conveyance, (b) Each member entitled to vote
and which condition
(b) Each member entitled to shall be given a written notice setting
occurs by reason of the
dissolution, shall be vote shall be given a written forth the proposed plan of distribution
returned, transferred or notice setting forth the proposed or a summary thereof and the date, time
conveyed in accordance plan of distribution or a and place of such meeting within the
with such requirements; summary thereof and the date, time and in the manner provided in this
3. Assets received and time and place of such meeting Code for the giving of notice of
held by the corporation within the time and in the meetings; and
subject to limitations
manner provided in this Code for
permitting their use only
the giving of notice of meetings; (c) Such plan of distribution shall be
for charitable, religious,
benevolent, educational or and adopted upon approval of at least two-
similar purposes, but not thirds (2⁄3) of the members having
held upon a condition (c) Such plan of distribution voting rights present or represented by
requiring return, transfer shall be adopted upon approval proxy at such meeting.
or conveyance by reason of at least two-thirds (2⁄3) of the
of the dissolution, shall be members having voting rights
transferred or conveyed to present or represented by proxy
one or more corporations,
societies or organizations at such meeting.
engaged in activities in
the Philippines
substantially similar to
those of the dissolving
corporation according to a
plan of distribution
adopted pursuant to this
Chapter;
4. Assets other than those
mentioned in the
preceding paragraphs, if
any, shall be distributed in
accordance with the
provisions of the articles
of incorporation or the by-
laws, to the extent that the
articles of incorporation or
the by-laws, determine the
distributive rights of
members, or any
class or classes of
members, or provide for
distribution; and
5. In any other case, assets
may be distributed to such
persons, societies,
organizations or
corporations, whether or
not organized for profit, as
may be specified in a plan
of distribution adopted
pursuant to this Chapter.
 (n)
95 Plan of distribution of
assets. - A plan providing
for the distribution of
assets, not inconsistent
with the provisions of this
Title, may be adopted by a
non-stock corporation in
the process of dissolution
in the following manner:
The board of trustees
shall, by majority vote,
adopt a resolution
recommending a plan of
distribution and directing
the submission thereof to
a vote at a regular or
special meeting of
members having voting
rights. Written notice
setting forth the proposed
plan of distribution or a
summary thereof and the
date, time and place of
such meeting shall be
given to each member
entitled to vote, within the
time and in the manner
provided in this Code for
the giving of notice of
meetings to members.
Such plan of distribution
shall be adopted upon
approval of at least two-
thirds (2/3) of the
members having voting
rights present or
represented by proxy at
such meeting. (n)
96 Definition and
Articles of Incorporation.— The
applicability of Title. - A
close corporation, within articles of incorporation of a close
the meaning of this Code, corporation may provide for:
is one whose articles of
incorporation provide
that: (1) All the
corporation's issued stock
of all classes, exclusive of
treasury shares, shall be
held of record by not more
than a specified number of
persons, not exceeding
twenty (20); (2) all the
issued stock of all classes
shall be subject to one or
more specified restrictions
on transfer permitted by
this Title; and (3) The
Definition and Applicability of Title.—
A close corporation, within the
meaning of this Code, is one whose
articles of incorporation provides that:
(a) all the corporation’s issued stock of
all classes, exclusive of treasury shares,
shall be held of record by not more than
a specified number of persons, not
exceeding twenty (20); (b) all the
issued stock of all classes shall be
subject to one (1) or more specified
restrictions on transfer permitted by this
Title; and (c) the corporation shall not
list in any stock exchange or make any
public offering of its stocks of any
class. Notwithstanding the foregoing, a
corporation shall not be deemed a close
corporation when at least two-thirds
(2⁄3) of its voting stock or voting rights
is owned or controlled by another
corporation which is not a close
corporation within the meaning of this
Code.
Any corporation may be incorporated
as a close corporation, except mining or
oil companies, stock exchanges, banks,
insurance companies, public utilities,
educational institutions and
corporations declared to be vested with
public interest in accordance with the
provisions of this Code.
The provisions of this Title shall
primarily govern close
corporations: Provided, That other
Titles in this Code shall apply
suppletorily, except as otherwise
provided under this Title.
(a) A classification of shares
or rights, the qualifications for
owning or holding the same, and
restrictions on their transfers,
subject to the provisions of the
following section;
(b) A classification of
directors into one (1) or more
classes, each of whom may be
voted for and elected solely by a
Definition and Applicability of Title.— A close
corporation, within the meaning of this Code,
is one whose articles of incorporation provides
that: (a) all the corporation’s issued stock of
all classes, exclusive of treasury shares, shall
be held of record by not more than a specified
number of persons, not exceeding twenty (20);
(b) all the issued stock of all classes shall be
subject to one (1) or more specified
restrictions on transfer permitted by this Title;
and (c) the corporation shall not list in any
stock exchange or make any public offering of
its stocks of any class. Notwithstanding the
foregoing, a corporation shall not be deemed a
close corporation when at least two-thirds (2⁄3)
of its voting stock or voting rights is owned or
controlled by another corporation which is not
a close corporation within the meaning of this
Code.
Any corporation may be incorporated as a
close corporation, except mining or oil
companies, stock exchanges, banks, insurance
companies, public utilities, educational
institutions and corporations declared to be
vested with public interest in accordance with
the provisions of this Code.
The provisions of this Title shall primarily
govern close corporations: Provided, That
other Titles in this Code shall apply
suppletorily, except as otherwise provided
under this Title.
Articles of Incorporation.— The articles of
incorporation of a close corporation may
provide for:
(a) A classification of shares or
rights, the qualifications for owning or
holding the same, and restrictions on
their transfers, subject to the provisions
of the following section;
(b) A classification of directors into
one (1) or more classes, each of whom
may be voted for and elected solely by
a particular class of stock; and
(c) Greater quorum or voting
 corporation shall not list
in any stock exchange or
make any public offering
of any of its stock of any
class. Notwithstanding the
foregoing, a corporation
shall not be deemed a
close corporation when at
least two-thirds (2/3) of its
voting stock or voting
rights is owned or
controlled by another
corporation which is not a
close corporation within
the meaning of this Code.
Any corporation may be
incorporated as a close
corporation, except
mining or oil companies,
stock exchanges, banks,
insurance companies,
public utilities,
educational institutions
and corporations declared
to be vested with public
interest in accordance
with the provisions of this
Code.
The provisions of this
Title shall primarily
govern close corporations:
Provided, That the
provisions of other Titles
of this Code shall apply
suppletorily except insofar
as this Title otherwise
provides.
97 Articles of incorporation.
- The articles of
incorporation of a close
corporation may provide:
1. For a classification of
shares or rights and the
qualifications for owning
or holding the same and
restrictions on their
transfers as may be stated
therein, subject to the
provisions of the
following section;
2. For a classification of
directors into one or more
classes, each of whom
may be voted for and
elected solely by a
particular class of stock;
and
3. For a greater quorum or
voting requirements in
meetings of stockholders
or directors than those
provided in this Code.
The articles of
incorporation of a close
corporation may provide
that the business of the
particular class of stock; and
(c) Greater quorum or voting
requirements in meetings of
stockholders or directors than
those provided in this Code.
The articles of incorporation of a
close corporation may provide that the
business of the corporation shall be
managed by the stockholders of the
corporation rather than by a board of
directors. So long as this provision
continues in effect, no meeting of
stockholders need be called to elect
directors: Provided, That the
stockholders of the corporation shall be
deemed to be directors for the purpose
of applying the provisions of this Code,
unless the context clearly requires
otherwise: Provided, further, That the
stockholders of the corporation shall be
subject to all liabilities of directors.
The articles of incorporation may
likewise provide that all officers or
employees or that specified officers or
employees shall be e
Validity of Restrictions on Transfer of
Shares.— Restrictions on the right to
transfer shares must appear in the
articles of incorporation, in the bylaws,
as well as in the certificate of stock;
otherwise, the same shall not be
binding on any purchaser in good faith.
Said restrictions shall not be more
onerous than granting the existing
stockholders or the corporation the
option to purchase the shares of the
transferring stockholder with such
reasonable terms, conditions or period
stated. If, upon the expiration of said
period, the existing stockholders or the
corporation fails to exercise the option
to purchase, the transferring
stockholder may sell their shares to any
third person.
requirements in meetings of
stockholders or directors than those
provided in this Code.
The articles of incorporation of a close
corporation may provide that the business of
the corporation shall be managed by the
stockholders of the corporation rather than by
a board of directors. So long as this provision
continues in effect, no meeting of stockholders
need be called to elect directors: Provided,
That the stockholders of the corporation shall
be deemed to be directors for the purpose of
applying the provisions of this Code, unless
the context clearly requires
otherwise: Provided, further, That the
stockholders of the corporation shall be
subject to all liabilities of directors.
The articles of incorporation may likewise
provide that all officers or employees or that
specified officers or employees shall be e
Validity of Restrictions on Transfer of
Shares.— Restrictions on the right to transfer
shares must appear in the articles of
incorporation, in the bylaws, as well as in the
certificate of stock; otherwise, the same shall
not be binding on any purchaser in good faith.
Said restrictions shall not be more onerous
than granting the existing stockholders or the
corporation the option to purchase the shares
of the transferring stockholder with such
reasonable terms, conditions or period stated.
If, upon the expiration of said period, the
existing stockholders or the corporation fails
to exercise the option to purchase, the
transferring stockholder may sell their shares
to any third person.
 corporation shall be
managed by the
stockholders of the
corporation rather than by
a board of directors. So
long as this provision
continues in effect:
1. No meeting of
stockholders need be
called to elect directors;
2. Unless the context
clearly requires otherwise,
the stockholders of the
corporation shall be
deemed to be directors for
the purpose of applying
the provisions of this
Code; and
3. The stockholders of the
corporation shall be
subject to all liabilities of
directors.
The articles of
incorporation may
likewise provide that all
officers or employees or
that specified officers or
employees shall be elected
or appointed by the
stockholders, instead of
by the board of directors.
98 Validity of restrictions on
Effects of Issuance or Transfer of Stock Effects of Issuance or Transfer of Stock in
transfer of shares. -
Restrictions on the right to in Breach of Qualifying Conditions.— Breach of Qualifying Conditions.—
transfer shares must
appear in the articles of (a) If a stock of a close (a) If a stock of a close corporation is
incorporation and in the corporation is issued or issued or transferred to any person who
by-laws as well as in the transferred to any person who is is not eligible to be a holder thereof
certificate of stock; not eligible to be a holder thereof under any provision of the articles of
otherwise, the same shall under any provision of the incorporation, and if the certificate for
not be binding on any
articles of incorporation, and if such stock conspicuously shows the
purchaser thereof in good
faith. Said restrictions the certificate for such stock qualifications of the persons entitled to
shall not be more onerous conspicuously shows the be holders of record thereof, such
than granting the existing qualifications of the persons person is conclusively presumed to
stockholders or the entitled to be holders of record have notice of the fact of the
corporation the option to thereof, such person is ineligibility to be a stockholder.
purchase the shares of the conclusively presumed to have
transferring stockholder notice of the fact of the (b) If the articles of incorporation of a
with such reasonable close corporation states the number of
ineligibility to be a stockholder.
terms, conditions or
persons, not exceeding twenty (20),
period stated therein. If
upon the expiration of (b) If the articles of who are entitled to be stockholders of
said period, the existing incorporation of a close record, and if the certificate for such
stockholders or the corporation states the number of stock conspicuously states such
corporation fails to persons, not exceeding twenty number, and the issuance or transfer of
exercise the option to (20), who are entitled to be stock to any person would cause the
purchase, the transferring stockholders of record, and if the stock to be held by more than such
stockholder may sell his
certificate for such stock number of persons, the person to whom
shares to any third person.
conspicuously states such such stock is issued or transferred is
number, and the issuance or conclusively presumed to have notice of
transfer of stock to any person this fact.
would cause the stock to be held
by more than such number of (c) If a stock certificate of a close
persons, the person to whom corporation conspicuously shows a
such stock is issued or
transferred is conclusively
presumed to have notice of this
fact.
(c) If a stock certificate of a
close corporation conspicuously
shows a restriction on transfer of
the corporation’s stock and the
transferee acquires the stock in
violation of such restriction, the
transferee is conclusively
presumed to have notice of the
fact that the stock was acquired
in violation of the restriction.
(d) Whenever a person to
whom stock of a close
corporation has been issued or
transferred has or is conclusively
presumed under this section to
have notice of: (1) the person’s
ineligibility to be a stockholder
of the corporation; or (2) that the
transfer of stock would cause the
stock of the corporation to be
held by more than the number of
persons permitted under its
articles of incorporation; or (3)
that the transfer violates a
restriction on transfer of stock,
the corporation may, at its
option, refuse to register the
transfer in the name of the
transferee.
(e) The provisions of
subsection (d) shall not be
applicable if the transfer of
stock, though contrary to
subsections (a), (b) or (c), has
been consented to by all the
stockholders of the close
corporation, or if the close
corporation has amended its
articles of incorporation in
accordance with this Title.
(f) The term “transfer”, as
used in this section, is not
limited to a transfer for value.
(g) The provisions of this
section shall not impair any right
which the transferee may have to
either rescind the transfer or
recover the stock under any
express or implied warranty.
restriction on transfer of the
corporation’s stock and the transferee
acquires the stock in violation of such
restriction, the transferee is
conclusively presumed to have notice of
the fact that the stock was acquired in
violation of the restriction.
(d) Whenever a person to whom
stock of a close corporation has been
issued or transferred has or is
conclusively presumed under this
section to have notice of: (1) the
person’s ineligibility to be a stockholder
of the corporation; or (2) that the
transfer of stock would cause the stock
of the corporation to be held by more
than the number of persons permitted
under its articles of incorporation; or (3)
that the transfer violates a restriction on
transfer of stock, the corporation may,
at its option, refuse to register the
transfer in the name of the transferee.
(e) The provisions of subsection (d)
shall not be applicable if the transfer of
stock, though contrary to subsections
(a), (b) or (c), has been consented to by
all the stockholders of the close
corporation, or if the close corporation
has amended its articles of
incorporation in accordance with this
Title.
(f) The term “transfer”, as used in this
section, is not limited to a transfer for
value.
(g) The provisions of this section
shall not impair any right which the
transferee may have to either rescind
the transfer or recover the stock under
any express or implied warranty.
99 Effects of issuance or
Agreements by Stockholders.—
transfer of stock in breach
of qualifying conditions. -
1. If stock of a close
corporation is issued or
transferred to any person
who is not entitled under
any provision of the
articles of incorporation to
be a holder of record of its
stock, and if the certificate
for such stock
conspicuously shows the
qualifications of the
persons entitled to be
holders of record thereof,
such person is
conclusively presumed to
have notice of the fact of
his ineligibility to be a
stockholder.
2. If the articles of
incorporation of a close
corporation states the
number of persons, not
exceeding twenty (20),
who are entitled to be
holders of record of its
stock, and if the certificate
for such stock
conspicuously states such
number, and if the
issuance or transfer of
stock to any person would
cause the stock to be held
by more than such number
of persons, the person to
whom such stock is issued
or transferred is
conclusively presumed to
have notice of this fact.
3. If a stock certificate of
any close corporation
conspicuously shows a
restriction on transfer of
stock of the corporation,
the transferee of the stock
is conclusively presumed
to have notice of the fact
that he has acquired stock
in violation of the
restriction, if such
acquisition violates the
restriction.
4. Whenever any person
to whom stock of a close
corporation has been
issued or transferred has,
or is conclusively
presumed under this
section to have, notice
either (a) that he is a
person not eligible to be a
holder of stock of the
corporation, or (b) that
Agreements by Stockholders.—
(a) Agreements duly signed
and executed by and among all
stockholders before the
formation and organization of a
close corporation shall survive
the incorporation and shall
continue to be valid and binding
between such stockholders, if
such be their intent, to the extent
that such agreements are
consistent with the articles of
incorporation, irrespective of
where the provisions of such
agreements are contained, except
those required by this Title to be
embodied in said articles of
incorporation.
(b) A written agreement
signed by two (2) or more
stockholders may provide that in
exercising any voting right, the
shares held by them shall be
voted as provided or as agreed,
or in accordance with a
procedure agreed upon by them.
(c) No provision in a written
agreement signed by the
stockholders, relating to any
phase of corporate affairs, shall
be invalidated between the
parties on the ground that its
effect is to make them partners
among themselves.
(d) A written agreement
among some or all of the
stockholders in a close
corporation shall not be
invalidated on the ground that it
relates to the conduct of the
business and affairs of the
corporation as to restrict or
interfere with the discretion or
powers of the board of
directors: Provided, That such
agreement shall impose on the
stockholders who are parties
thereto the liabilities for
managerial acts imposed on
directors by this Code.
(e) Stockholders actively
engaged in the management or
(a) Agreements duly signed and
executed by and among all stockholders
before the formation and organization
of a close corporation shall survive the
incorporation and shall continue to be
valid and binding between such
stockholders, if such be their intent, to
the extent that such agreements are
consistent with the articles of
incorporation, irrespective of where the
provisions of such agreements are
contained, except those required by this
Title to be embodied in said articles of
incorporation.
(b) A written agreement signed by
two (2) or more stockholders may
provide that in exercising any voting
right, the shares held by them shall be
voted as provided or as agreed, or in
accordance with a procedure agreed
upon by them.
(c) No provision in a written
agreement signed by the stockholders,
relating to any phase of corporate
affairs, shall be invalidated between the
parties on the ground that its effect is to
make them partners among themselves.
(d) A written agreement among some
or all of the stockholders in a close
corporation shall not be invalidated on
the ground that it relates to the conduct
of the business and affairs of the
corporation as to restrict or interfere
with the discretion or powers of the
board of directors: Provided, That such
agreement shall impose on the
stockholders who are parties thereto the
liabilities for managerial acts imposed
on directors by this Code.
(e) Stockholders actively engaged in
the management or operation of the
business and affairs of a close
corporation shall be held to strict
fiduciary duties to each other and
among themselves. The stockholders
shall be personally liable for corporate
torts unless the corporation has obtained
reasonably adequate liability insurance.
 transfer of stock to him operation of the business and
would cause the stock of affairs of a close corporation
the corporation to be held shall be held to strict fiduciary
by more than the number
duties to each other and among
of persons permitted by its
articles of incorporation to themselves. The stockholders
hold stock of the shall be personally liable for
corporation, corporate torts unless the
or (c) that the transfer of corporation has obtained
stock is in violation of a reasonably adequate liability
restriction on transfer of insurance.
stock, the corporation
may, at its option, refuse
to register the transfer of
stock in the name of the
transferee.
5. The provisions of
subsection (4) shall not
applicable if the transfer
of stock, though contrary
to subsections (1), (2) of
(3), has been consented to
by all the stockholders of
the close corporation, or if
the close corporation has
amended its articles of
incorporation in
accordance with this Title.
6. The term "transfer", as
used in this section, is not
limited to a transfer for
value.
7. The provisions of this
section shall not impair
any right which the
transferee may have to
rescind the transfer or to
recover under any
applicable warranty,
express or implied.
100 Agreements by
When a Board Meeting is Unnecessary When a Board Meeting is Unnecessary or
stockholders. -
1. Agreements by and or Improperly Held.— Unless the Improperly Held.— Unless the bylaws provide
among stockholders bylaws provide otherwise, any action otherwise, any action taken by the directors of
executed before the taken by the directors of a close a close corporation without a meeting called
formation and corporation without a meeting called properly and with due notice shall nevertheless
organization of a close properly and with due notice shall be deemed valid if:
corporation, signed by all nevertheless be deemed valid if:
stockholders, shall survive (a) Before or after such action is
the incorporation of such
(a) Before or after such action taken, a written consent thereto is
corporation and shall
continue to be valid and is taken, a written consent signed by all the directors; or
binding between and thereto is signed by all the
among such stockholders, directors; or (b) All the stockholders have actual
if such be their intent, to or implied knowledge of the action and
the extent that such (b) All the stockholders have make no prompt objection in writing; or
agreements are not actual or implied knowledge of
inconsistent with the the action and make no prompt (c) The directors are accustomed to
articles of incorporation, objection in writing; or take informal action with the express or
irrespective of where the implied acquiescence of all the
provisions of such
(c) The directors are stockholders; or
agreements are contained,
except those required by accustomed to take informal
action with the express or (d) All the directors have express or
this Title to be embodied
in said articles of implied acquiescence of all the implied knowledge of the action in
incorporation. question and none of them makes a
 2. An agreement between stockholders; or prompt objection in writing.
two or more stockholders,
if in writing and signed by (d) All the directors have An action within the corporate powers taken
the parties thereto, may express or implied knowledge of at a meeting held without proper call or notice
provide that in exercising
the action in question and none is deemed ratified by a director who failed to
any voting rights, the
shares held by them shall of them makes a prompt attend, unless after having knowledge thereof,
be voted as therein objection in writing. the director promptly files his written
provided, or as they may objection with the secretary of the corporation.
agree, or as determined in An action within the corporate
accordance with a powers taken at a meeting held without
procedure agreed upon by proper call or notice is deemed ratified
them. by a director who failed to attend,
3. No provision in any unless after having knowledge thereof,
written agreement signed
the director promptly files his written
by the stockholders,
relating to any phase of objection with the secretary of the
the corporate affairs, shall corporation.
be invalidated as between
the parties on the ground
that its effect is to make
them partners among
themselves.
4. A written agreement
among some or all of the
stockholders in a close
corporation shall not be
invalidated on the ground
that it so relates to the
conduct of the business
and affairs of the
corporation as to restrict
or interfere with the
discretion or powers of
the board of directors:
Provided, That such
agreement shall impose
on the stockholders who
are parties thereto the
liabilities for managerial
acts imposed by this Code
on directors.
5. To the extent that the
stockholders are actively
engaged in the
management or operation
of the business and affairs
of a close corporation, the
stockholders shall be held
to strict fiduciary duties to
each other and among
themselves. Said
stockholders shall be
personally liable for
corporate torts unless the
corporation has obtained
reasonably adequate
liability insurance.
101 When board meeting is
Preemptive Right in Close Preemptive Right in Close Corporations.—
unnecessary or
improperly held. - Unless Corporations.— The preemptive right The preemptive right of stockholders in close
the by-laws provide of stockholders in close corporations corporations shall extend to all stock to be
otherwise, any action by shall extend to all stock to be issued, issued, including reissuance of treasury shares,
the directors of a close including reissuance of treasury shares, whether for money, property or personal
corporation without a whether for money, property or services, or in payment of corporate debts,
meeting shall nevertheless personal services, or in payment of unless the articles of incorporation provide
 be deemed valid if: corporate debts, unless the articles of otherwise.
1. Before or after such incorporation provide otherwise.
action is taken, written
consent thereto is signed
by all the directors; or
2. All the stockholders
have actual or implied
knowledge of the action
and make no prompt
objection thereto in
writing; or
3. The directors are
accustomed to take
informal action with the
express or implied
acquiescence of all the
stockholders; or
4. All the directors have
express or implied
knowledge of the action in
question and none of them
makes prompt objection
thereto in writing.
If a director's meeting is
held without proper call or
notice, an action taken
therein within the
corporate powers is
deemed ratified by a
director who failed to
attend, unless he promptly
files his written objection
with the secretary of the
corporation after having
knowledge thereof.
102 Pre-emptive right in close
Amendment of Articles of Amendment of Articles of Incorporation.—
corporations. - The pre-
emptive right of Incorporation.— Any amendment to Any amendment to the articles of
stockholders in close the articles of incorporation which incorporation which seeks to delete or remove
corporations shall extend seeks to delete or remove any provision any provision required by this Title or to
to all stock to be issued, required by this Title or to reduce a reduce a quorum or voting requirement stated
including reissuance of quorum or voting requirement stated in in said articles of incorporation shall require
treasury shares, whether said articles of incorporation shall the affirmative vote of at least two-thirds (2⁄3)
for money, property or
require the affirmative vote of at least of the outstanding capital stock, whether with
personal services, or in
payment of corporate two-thirds (2⁄3) of the outstanding or without voting rights, or of such greater
debts, unless the articles capital stock, whether with or without proportion of shares as may be specifically
of incorporation provide voting rights, or of such greater provided in the articles of incorporation for
otherwise. proportion of shares as may be amending, deleting or removing any of the
specifically provided in the articles of aforesaid provisions, at a meeting duly called
incorporation for amending, deleting or for the purpose.
removing any of the aforesaid
provisions, at a meeting duly called for
the purpose.

103 Amendment of articles of

incorporation. - Any
amendment to the articles
of incorporation which
seeks to delete or remove
any provision required by
this Title to be contained
in the articles of
incorporation or to reduce
Deadlocks.— Notwithstanding any
contrary provision in the close
corporation’s articles of incorporation,
bylaws, or stockholders’ agreement, if
the directors or stockholders are so
divided on the management of the
corporation’s business and affairs that
the votes required for a corporate action
Deadlocks.— Notwithstanding any contrary
provision in the close corporation’s articles of
incorporation, bylaws, or stockholders’
agreement, if the directors or stockholders are
so divided on the management of the
corporation’s business and affairs that the
votes required for a corporate action cannot be
obtained, with the consequence that the
a quorum or voting
requirement stated in said
articles of incorporation
shall not be valid or
effective unless approved
by the affirmative vote of
at least two-thirds (2/3) of
the outstanding capital
stock, whether with or
without voting rights, or
of such greater proportion
of shares as may be
specifically provided in
the articles of
incorporation for
amending, deleting or
removing any of the
aforesaid provisions, at a
meeting duly called for
the purpose.
cannot be obtained, with the
consequence that the business and
affairs of the corporation can no longer
be conducted to the advantage of the
stockholders generally, the
Commission, upon written petition by
any stockholder, shall have the power
to arbitrate the dispute. In the exercise
of such power, the Commission shall
have authority to make appropriate
orders, such as: (a) cancelling or
altering any provision contained in the
articles of incorporation, bylaws, or any
stockholders’ agreement; (b)
cancelling, altering or enjoining a
resolution or act of the corporation or
its board of directors, stockholders, or
officers; (c) directing or prohibiting any
act of the corporation or its board of
directors, stockholders, officers, or
other persons party to the action; (d)
requiring the purchase at their fair value
of shares of any stockholder, either by
the corporation regardless of the
availability of unrestricted retained
earnings in its.books, or by the other
stockholders; (e) appointing a A provisional director shall be an impartial
provisional director; (f) dissolving the
corporation; or (g) granting such other
relief as the circumstances may
warrant.
A provisional director shall be an
impartial person who is neither a
stockholder nor a creditor of the
corporation or any of its subsidiaries or
affiliates, and whose further
qualifications, if any, may be
determined by the Commission. A
provisional director is not a receiver of
the corporation and does not have the
title and powers of a custodian or
receiver. A provisional director shall
have all the rights and powers of a duly
elected director, including the right to
be notified of and to vote at meetings of
directors until removed by order of the
Commission or by all the stockholders.
The compensation of the provisional
director shall be determined by
agreement between such director and
the corporation, subject to approval of
the Commission, which may fix the
compensation absent an agreement or
in the event of disagreement between
the provisional director and the
corporation.
business and affairs of the corporation can no
longer be conducted to the advantage of the
stockholders generally, the Commission, upon
written petition by any stockholder, shall have
the power to arbitrate the dispute. In the
exercise of such power, the Commission shall
have authority to make appropriate orders,
such as: (a) cancelling or altering any
provision contained in the articles of
incorporation, bylaws, or any stockholders’
agreement; (b) cancelling, altering or
enjoining a resolution or act of the corporation
or its board of directors, stockholders, or
officers; (c) directing or prohibiting any act of
the corporation or its board of directors,
stockholders, officers, or other persons party
to the action; (d) requiring the purchase at
their fair value of shares of any stockholder,
either by the corporation regardless of the
availability of unrestricted retained earnings in
its.books, or by the other stockholders; (e)
appointing a provisional director; (f)
dissolving the corporation; or (g) granting
such other relief as the circumstances may
warrant.
person who is neither a stockholder nor a
creditor of the corporation or any of its
subsidiaries or affiliates, and whose further
qualifications, if any, may be determined by
the Commission. A provisional director is not
a receiver of the corporation and does not have
the title and powers of a custodian or receiver.
A provisional director shall have all the rights
and powers of a duly elected director,
including the right to be notified of and to vote
at meetings of directors until removed by order
of the Commission or by all the stockholders.
The compensation of the provisional director
shall be determined by agreement between
such director and the corporation, subject to
approval of the Commission, which may fix
the compensation absent an agreement or in
the event of disagreement between the
provisional director and the corporation.
104 Deadlocks. -
Withdrawal of Stockholder or Withdrawal of Stockholder or Dissolution of
Notwithstanding any
contrary provision in the Dissolution of Corporation.— In Corporation.— In addition and without
articles of incorporation or addition and without prejudice to other prejudice to other rights and remedies
by-laws or agreement of rights and remedies available under this available under this Title, any stockholder of a
stockholders of a close Title, any stockholder of a close close corporation may, for any reason, compel
corporation, if the corporation may, for any reason, the corporation to purchase shares held at fair
directors or stockholders compel the corporation to purchase value, which shall not be less than the par or
are so divided respecting
shares held at fair value, which shall issued value, when the corporation has
the management of the
corporation's business and not be less than the par or issued value, sufficient assets in its books to cover its debts
affairs that the votes when the corporation has sufficient and liabilities exclusive of capital
required for any corporate assets in its books to cover its debts and stock: Provided, That any stockholder of a
action cannot be obtained, liabilities exclusive of capital close corporation may, by written petition to
with the consequence that stock: Provided, That any stockholder the Commission, compel the dissolution of
the business and affairs of of a close corporation may, by written such corporation whenever any acts of the
the corporation can no
petition to the Commission, compel the directors, officers, or those in control of the
longer be conducted to the
advantage of the dissolution of such corporation corporation are illegal, fraudulent, dishonest,
stockholders generally, whenever any acts of the directors, oppressive or unfairly prejudicial to the
the Securities and officers, or those in control of the corporation or any stockholder, or whenever
Exchange Commission, corporation are illegal, fraudulent, corporate assets are being misapplied or
upon written petition by dishonest, oppressive or unfairly wasted.
any stockholder, shall prejudicial to the corporation or any
have the power to stockholder, or whenever corporate
arbitrate the dispute. In
the exercise of such assets are being misapplied or wasted.
power, the Commission
shall have authority to
make such order as it
deems appropriate,
including an order: (1)
cancelling or altering any
provision contained in the
articles of incorporation,
by-laws, or any
stockholder's agreement;
(2) cancelling, altering or
enjoining any resolution
or act of the corporation
or its board of directors,
stockholders, or officers;
(3) directing or
prohibiting any act of the
corporation or its board of
directors, stockholders,
officers, or other persons
party to the action; (4)
requiring the purchase at
their fair value of shares
of any stockholder, either
by the corporation
regardless of the
availability of unrestricted
retained earnings in its
books, or by the other
stockholders; (5)
appointing a provisional
director; (6) dissolving the
corporation; or (7)
granting such other relief
as the circumstances may
warrant.
A provisional director
shall be an impartial
 person who is neither a
stockholder nor a creditor
of the corporation or of
any subsidiary or affiliate
of the corporation, and
whose further
qualifications, if any, may
be determined by the
Commission. A
provisional director is not
a receiver of the
corporation and does not
have the title and powers
of a custodian or receiver.
A provisional director
shall have all the rights
and powers of a duly
elected director of the
corporation, including the
right to notice of and to
vote at meetings of
directors, until such time
as he shall be removed by
order of the Commission
or by all the stockholders.
His compensation shall be
determined by agreement
between him and the
corporation subject to
approval of the
Commission, which may
fix his compensation in
the absence of agreement
or in the event of
disagreement between the
provisional director and
the corporation.
105 Withdrawal of
Incorporation.— Educational Incorporation.— Educational corporations
stockholder or dissolution
of corporation. - In corporations shall be governed by shall be governed by special laws and by the
addition and without special laws and by the general general provisions of this Code.
prejudice to other rights provisions of this Code.
and remedies available to
a stockholder under this
Title, any stockholder of a
close corporation may, for
any reason, compel the
said corporation to
purchase his shares at
their fair value, which
shall not be less than their
par or issued value, when
the corporation has
sufficient assets in its
books to cover its debts
and liabilities exclusive of
capital stock: Provided,
That any stockholder of a
close corporation may, by
written petition to the
Securities and Exchange
Commission, compel the
dissolution of such
corporation whenever any
of acts of the directors,
officers or those in control
 of the corporation is
illegal, or fraudulent, or
dishonest, or oppressive
or unfairly prejudicial to
the corporation or any
stockholder, or whenever
corporate assets are being
misapplied or wasted.
106 Incorporation. –
Educational corporations
shall be governed by
special laws and by the
general provisions of this
Code. (n)
107 . Pre-requisites to
incorporation. – Except
upon favorable
recommendation of the
Ministry of Education and
Culture, the Securities and
Exchange Commission
shall not accept or
approve the articles of
incorporation and by-laws
of any educational
institution. (168a)
108 Board of trustees. –
Trustees of educational
institutions organized as
non-stock corporations
shall not be less than five
(5) nor more than fifteen
Board of Trustees.— Trustees of
educational institutions organized as
nonstock corporations shall not be less
than five (5) nor more than fifteen
(15): Provided, That the number of
trustees shall be in multiples of five (5).
Unless otherwise provided in the
articles of incorporation or bylaws, the
board of trustees of incorporated
schools, colleges, or other institutions
of learning shall, as soon as organized,
so classify themselves that the term of
office of one-fifth (1⁄5) of their number
shall expire every year. Trustees
thereafter elected to fill vacancies,
occurring before the expiration of a
particular term, shall hold office only
for the unexpired period. Trustees
elected thereafter to fill vacancies
caused by expiration of term shall hold
office for five (5) years. A majority of
the trustees shall constitute a quorum
for the transaction of business. The
powers and authority of trustees shall
be defined in the bylaws.
For institutions organized as stock
corporations, the number and term of
directors shall be governed by the
provisions on stock corporations.
Classes of Religious Corporations.—
Religious corporations may be
incorporated by one (1) or more
persons. Such corporations may be
classified into corporations sole and
religious societies.
Religious corporations shall be governed by
Religious corporations shall be this Chapter and by the general provisions on
governed by this Chapter and by the non-stock corporations insofar as applicable.
general provisions on non-stock
corporations insofar as applicable.
Corporation Sole.— For the purpose of
administering and managing, as trustee,
the affairs, property and temporalities
of any religious denomination, sect or
church, a corporation sole may be
Board of Trustees.— Trustees of educational
institutions organized as nonstock corporations
shall not be less than five (5) nor more than
fifteen (15): Provided, That the number of
trustees shall be in multiples of five (5).
Unless otherwise provided in the articles of
incorporation or bylaws, the board of trustees
of incorporated schools, colleges, or other
institutions of learning shall, as soon as
organized, so classify themselves that the term
of office of one-fifth (1⁄5) of their number
shall expire every year. Trustees thereafter
elected to fill vacancies, occurring before the
expiration of a particular term, shall hold
office only for the unexpired period. Trustees
elected thereafter to fill vacancies caused by
expiration of term shall hold office for five (5)
years. A majority of the trustees shall
constitute a quorum for the transaction of
business. The powers and authority of trustees
shall be defined in the bylaws.
For institutions organized as stock
corporations, the number and term of directors
shall be governed by the provisions on stock
corporations.
Classes of Religious Corporations.—
Religious corporations may be incorporated
by one (1) or more persons. Such corporations
may be classified into corporations sole and
religious societies.
Corporation Sole.— For the purpose of
administering and managing, as trustee, the
affairs, property and temporalities of any
religious denomination, sect or church, a
corporation sole may be formed by the chief
 (15): Provided, however, formed by the chief archbishop, bishop, archbishop, bishop, priest, minister, rabbi, or
That the number of priest, minister, rabbi, or other other presiding elder of such religious
trustees shall be in presiding elder of such religious denomination, sect or church.
multiples of five (5).
denomination, sect or church.
Unless otherwise provided
in the articles of
incorporation on the by-
laws, the board of trustees
of incorporated schools,
colleges, or other
institutions of learning
shall, as soon as
organized, so classify
themselves that the term
of office of one-fifth (1/5)
of their number shall
expire every year.
Trustees thereafter elected
to fill vacancies, occurring
before the expiration of a
particular term, shall hold
office only for the
unexpired period. Trustees
elected thereafter to fill
vacancies caused by
expiration of term shall
hold office for five (5)
years. A majority of the
trustees shall constitute a
quorum for the transaction
of business. The powers
and authority of trustees
shall be defined in the by-
laws.

For institutions organized

as stock corporations, the
number and term of
directors shall be
governed by the
provisions on stock
corporations. (169a)

109 Classes of religious

Articles of Incorporation.— In order to Articles of Incorporation.— In order to
corporations. – Religious
corporations may be become a corporation sole, the chief become a corporation sole, the chief
incorporated by one or archbishop, bishop, priest, minister, archbishop, bishop, priest, minister, rabbi, or
more persons. Such rabbi, or presiding elder of any presiding elder of any religious denomination,
corporations may be religious denomination, sect or church sect or church must file with the Commission
classified into must file with the Commission articles articles of incorporation setting forth the
corporations sole and of incorporation setting forth the following:
religious societies.
following:
(a) That the applicant chief
Religious corporations
(a) That the applicant chief archbishop, bishop, priest, minister,
shall be governed by this
Chapter and by the archbishop, bishop, priest, rabbi, or presiding elder represents the
general provisions on minister, rabbi, or presiding religious denomination, sect or church
non-stock corporations elder represents the religious which desires to become a corporation
insofar as they may be denomination, sect or church sole;
applicable. (n) which desires to become a
corporation sole; (b) That the rules, regulations and
discipline of the religious
(b) That the rules, regulations denomination, sect or church are
 and discipline of the religious
denomination, sect or church are
consistent with becoming a
corporation sole and do not
forbid it;
(c) That such chief archbishop,
bishop, priest, minister, rabbi, or
presiding elder is charged with
the administration of the
temporalities and the
management of the affair’s,
estate and properties of the
religious denomination, sect or
church within the territorial
jurisdiction, so described
succinctly in the articles of
incorporation;
(d) The manner by which any
vacancy occurring in the office
of chief archbishop, bishop,
priest, minister, rabbi, or
presiding elder is required to be
filled, according to the rules,
regulations or discipline of the
religious denomination, sect or
church; and
(e) The place where the
principal office of the
corporation sole is to be
established and located, which
place must be within the territory
of the Philippines.
The articles of incorporation may
include any other provision not
contrary to law for the regulation of the
affairs of the corporation.
110 Corporation sole. – For
Submission of the Articles of
the purpose of
administering and Incorporation.— The articles of
managing, as trustee, the incorporation must be verified, by
affairs, property and affidavit or affirmation of the chief
temporalities of any archbishop, bishop, priest, minister,
religious denomination, rabbi, or presiding elder, as the case
sect or church, a may be, and accompanied by a copy of
corporation sole may be
the commission, certificate of election
formed by the chief
archbishop, bishop, priest, or letter of appointment of such chief
minister, rabbi or other archbishop, bishop, priest, minister,
presiding elder of such rabbi, or presiding elder, duly certified
religious denomination, to be correct by any notary public.
sect or church. (154a)
From and after filing with the
Commission of the said articles of
incorporation, verified by affidavit or
affirmation, and accompanied by the
consistent with becoming a corporation
sole and do not forbid it;
(c) That such chief archbishop,
bishop, priest, minister, rabbi, or
presiding elder is charged with the
administration of the temporalities and
the management of the affair’s, estate
and properties of the religious
denomination, sect or church within the
territorial jurisdiction, so described
succinctly in the articles of
incorporation;
(d) The manner by which any
vacancy occurring in the office of chief
archbishop, bishop, priest, minister,
rabbi, or presiding elder is required to
be filled, according to the rules,
regulations or discipline of the religious
denomination, sect or church; and
(e) The place where the principal
office of the corporation sole is to be
established and located, which place
must be within the territory of the
Philippines.
The articles of incorporation may include
any other provision not contrary to law for the
regulation of the affairs of the corporation.
Submission of the Articles of Incorporation.—
The articles of incorporation must be verified,
by affidavit or affirmation of the chief
archbishop, bishop, priest, minister, rabbi, or
presiding elder, as the case may be, and
accompanied by a copy of the commission,
certificate of election or letter of appointment
of such chief archbishop, bishop, priest,
minister, rabbi, or presiding elder, duly
certified to be correct by any notary public.
From and after filing with the Commission
of the said articles of incorporation, verified
by affidavit or affirmation, and accompanied
by the documents mentioned in the preceding
paragraph, such chief archbishop, bishop,
priest, minister, rabbi, pr presiding elder shall
 documents mentioned in the preceding
paragraph, such chief archbishop,
bishop, priest, minister, rabbi, pr
presiding elder shall become a
corporation sole and all temporalities,
estate and properties of the religious
denomination, sect or church
theretofore administered or managed as
such chief archbishop, bishop, priest,
minister, rabbi, or presiding elder shall
be personally held in trust as a
corporation sole, for the use, purpose,
exclusive benefit and on behalf of the
religious denomination, sect or church,
including hospitals, schools, colleges,
orphan asylums, parsonages, and
cemeteries thereof.
111 Articles of
Acquisition and Alienation of
incorporation. – In order
to become a corporation Property.— A corporation sole may
sole, the chief archbishop, purchase and hold real estate and
bishop, priest, minister, personal property for its church,
rabbi or presiding elder of charitable, benevolent, or educational
any religious purposes, and may receive bequests or
denomination, sect or gifts for such purposes. Such
church must file with the
corporation may sell or mortgage real
Securities and Exchange
Commission articles of property held by it by obtaining an
incorporation setting forth order for that purpose from the
the following: Regional Trial Court of the province
where the property is situated upon
1. That he is the proof that the notice of the application
chief archbishop, for leave to sell or mortgage has been
bishop, priest, made through publication or as directed
minister, rabbi or
by the Court, and that it is in the
presiding elder of
his religious interest of the corporation that leave to
denomination, sell or mortgage be granted. The
sect or church and application for leave to sell or mortgage
that he desires to must be made by petition, duly verified,
become a by the chief archbishop, bishop, priest,
corporation sole; minister, rabbi, or presiding elder
acting as corporation sole, and may be
2. That the rules,
opposed by any member of the
regulations and
discipline of his religious denomination, sect or church
religious represented by the corporation
denomination, sole: Provided, That in cases where the
sect or church are rules, regulations, and discipline of the
not inconsistent religious denomination, sect or church,
with his becoming religious society, or order concerned
a corporation sole
represented by such corporation sole
and do not forbid
it; regulate the method of acquiring,
holding, selling, and mortgaging real
3. That as such estate and personal property, such rules,
chief archbishop, regulations and discipline shall govern,
bishop, priest, and the intervention of the courts shall
minister, rabbi or not be necessary.
presiding elder, he
is charged with
become a corporation sole and all
temporalities, estate and properties of the
religious denomination, sect or church
theretofore administered or managed as such
chief archbishop, bishop, priest, minister,
rabbi, or presiding elder shall be personally
held in trust as a corporation sole, for the use,
purpose, exclusive benefit and on behalf of the
religious denomination, sect or church,
including hospitals, schools, colleges, orphan
asylums, parsonages, and cemeteries thereof.
Acquisition and Alienation of Property.— A
corporation sole may purchase and hold real
estate and personal property for its church,
charitable, benevolent, or educational
purposes, and may receive bequests or gifts for
such purposes. Such corporation may sell or
mortgage real property held by it by obtaining
an order for that purpose from the Regional
Trial Court of the province where the property
is situated upon proof that the notice of the
application for leave to sell or mortgage has
been made through publication or as directed
by the Court, and that it is in the interest of the
corporation that leave to sell or mortgage be
granted. The application for leave to sell or
mortgage must be made by petition, duly
verified, by the chief archbishop, bishop,
priest, minister, rabbi, or presiding elder acting
as corporation sole, and may be opposed by
any member of the religious denomination,
sect or church represented by the corporation
sole: Provided, That in cases where the rules,
regulations, and discipline of the religious
denomination, sect or church, religious
society, or order concerned represented by
such corporation sole regulate the method of
acquiring, holding, selling, and mortgaging
real estate and personal property, such rules,
regulations and discipline shall govern, and the
intervention of the courts shall not be
necessary.
 the administration
of the
temporalities and
the management
of the affairs,
estate and
properties of his
religious
denomination,
sect or church
within his
territorial
jurisdiction,
describing such
territorial
jurisdiction;

4. The manner in
which any
vacancy occurring
in the office of
chief archbishop,
bishop, priest,
minister, rabbi of
presiding elder is
required to be
filled, according
to the rules,
regulations or
discipline of the
religious
denomination,
sect or church to
which he belongs;
and

5. The place
where the
principal office of
the corporation
sole is to be
established and
located, which
place must be
within the
Philippines.

The articles of
incorporation may
include any other
provision not
contrary to law
for the regulation
of the affairs of
the corporation.
(n)
112 Submission of the articles
Filling of Vacancies.— The successors Filling of Vacancies.— The successors in
of incorporation. – The
articles of incorporation in office of any chief archbishop, office of any chief archbishop, bishop, priest,
must be verified, before bishop, priest, minister, rabbi, or minister, rabbi, or presiding elder in a
filing, by affidavit or presiding elder in a corporation sole corporation sole shall become the corporation
affirmation of the chief shall become the corporation sole on sole on their accession to office and shall be
archbishop, bishop, priest, their accession to office and shall be permitted to transact business as such upon
minister, rabbi or permitted to transact business as such filing a copy of their commission, certificate
presiding elder, as the
upon filing a copy of their commission, of election, or letters of appointment, duly
case may be, and
 accompanied by a copy of certificate of election, or letters of certified by any notary public with the
the commission, appointment, duly certified by any Commission.
certificate of election or notary public with the Commission.
letter of appointment of During any vacancy in the office of chief
such chief archbishop,
During any vacancy in the office of archbishop, bishop, priest, minister, rabbi, or
bishop, priest, minister,
rabbi or presiding elder, chief archbishop, bishop, priest, presiding elder of any religious denomination,
duly certified to be correct minister, rabbi, or presiding elder of sect or church incorporated as a
by any notary public. any religious denomination, sect or
church incorporated as a corporation sole, the person or persons
From and after the filing authorized by the rules, regulations or
with the Securities and corporation sole, the person or discipline of the religious denomination, sect
Exchange Commission of persons authorized by the rules, or church represented by the corporation sole
the said articles of regulations or discipline of the religious to administer the temporalities and manage the
incorporation, verified by
denomination, sect or church affairs, estate, and properties of the
affidavit or affirmation,
and accompanied by the represented by the corporation sole to corporation sole shall exercise all the powers
documents mentioned in administer the temporalities and and authority of the corporation sole during
the preceding paragraph, manage the affairs, estate, and such vacancy.
such chief archbishop, properties of the corporation sole shall
bishop, priest, minister, exercise all the powers and authority of
rabbi or presiding elder the corporation sole during such
shall become a vacancy.
corporation sole and all
temporalities, estate and
properties of the religious
denomination, sect or
church theretofore
administered or managed
by him as such chief
archbishop, bishop, priest,
minister, rabbi or
presiding elder shall be
held in trust by him as a
corporation sole, for the
use, purpose, behalf and
sole benefit of his
religious denomination,
sect or church, including
hospitals, schools,
colleges, orphan asylums,
parsonages and cemeteries
thereof. (n)
113 Acquisition and alienation
Dissolution.— A corporation sole may Dissolution.— A corporation sole may be
of property. – Any
corporation sole may be dissolved and its affairs settled dissolved and its affairs settled voluntarily by
purchase and hold real voluntarily by submitting to the submitting to the Commission a verified
estate and personal Commission a verified declaration of declaration of dissolution, setting forth:
property for its church, dissolution, setting forth:
charitable, benevolent or (a) The name of the corporation;
educational purposes, and (a) The name of the
may receive bequests or corporation; (b) The reason for dissolution and
gifts for such purposes. winding up;
Such corporation may sell (b) The reason for dissolution
or mortgage real property (c) The authorization for the
and winding up;
held by it by obtaining an
dissolution of the corporation by the
order for that purpose
from the Court of First (c) The authorization for the particular religious denomination, sect
Instance of the province dissolution of the corporation by or church; and
where the property is the particular religious
situated upon proof made denomination, sect or church; (d) The names and addresses of the
to the satisfaction of the and persons who are to supervise the
court that notice of the winding up of the affairs of the
application for leave to (d) The names and addresses corporation.
sell or mortgage has been of the persons who are to
given by publication or Upon approval of such declaration of
 otherwise in such manner supervise the winding up of the dissolution by the Commission, the
and for such time as said affairs of the corporation. corporation shall cease to carry on its
court may have directed, operations except for the purpose of winding
and that it is to the interest Upon approval of such declaration of up its affairs.
of the corporation that dissolution by the Commission, the
leave to sell or mortgage corporation shall cease to carry on its
should be granted. The operations except for the purpose of
application for leave to winding up its affairs.
sell or mortgage must be
made by petition, duly
verified, by the chief
archbishop, bishop, priest,
minister, rabbi or
presiding elder acting as
corporation sole, and may
be opposed by any
member of the religious
denomination, sect or
church represented by the
corporation sole:
Provided, That in cases
where the rules,
regulations and discipline
of the religious
denomination, sect or
church, religious society
or order concerned
represented by such
corporation sole regulate
the method of acquiring,
holding, selling and
mortgaging real estate and
personal property, such
rules, regulations and
discipline shall control,
and the intervention of the
courts shall not be
necessary. (159a)
114 Filling of vacancies. –
Religious Societies.— Unless forbidden Religious Societies.— Unless forbidden by
The successors in office
of any chief archbishop, by competent authority, the competent authority, the Constitution,
bishop, priest, minister, Constitution, pertinent, rules, pertinent, rules, regulations, or discipline of
rabbi or presiding elder in regulations, or discipline of the the religious denomination, sect or church of
a corporation sole shall religious denomination, sect or church which it is a part, any religious society,
become the corporation of which it is a part, any religious religious order, diocese, or synod, or district
sole on their accession to society, religious order, diocese, or organization of any religious denomination,
office and shall be
synod, or district organization of any sect or church, may, upon written consent
permitted to transact
business as such on the religious denomination, sect or church, and/or by an affirmative vote at a meeting
filing with the Securities may, upon written consent and/or by an called for the purpose of at least two-thirds
and Exchange affirmative vote at a meeting called for (2⁄3) of its membership, incorporate for the
Commission of a copy of the purpose of at least two-thirds (2⁄3) administration of its temporalities or for the
their commission, of its membership, incorporate for the management of its affairs, properties, and
certificate of election, or administration of its temporalities or for estate by filing with the Commission, articles
letters of appointment,
the management of its affairs, of incorporation verified by the affidavit of the
duly certified by any
notary public. properties, and estate by filing with the presiding elder, secretary, or clerk or other
Commission, articles of incorporation member of such religious society or religious
During any vacancy in the verified by the affidavit of the presiding order, or diocese, synod, or district
office of chief archbishop, elder, secretary, or clerk or other organization of the religious denomination,
bishop, priest, minister, member of such religious society or sect or church, setting forth the following:
rabbi or presiding elder of religious order, or diocese, synod, or
any religious district organization of the religious (a) That the religious society or
denomination, sect or religious order, or diocese, synod, or
denomination, sect or church, setting
church incorporated as a district organization is a religious
corporation sole, the
 person or persons forth the following:
authorized and
empowered by the rules, (a) That the religious society
regulations or discipline or religious order, or diocese,
of the religious
synod, or district organization is
denomination, sect or
church represented by the a religious organization of a
corporation sole to religious denomination, sect or
administer the church;
temporalities and manage
the affairs, estate and (b) That at least two-thirds
properties of the (2⁄3) of its membership has
corporation sole during given written consent or has
the vacancy shall exercise voted to incorporate, at a duly
all the powers and
convened meeting of the body;
authority of the
corporation sole during
such vacancy. (158a) (c) That the incorporation of
the religious society or religious
order, or diocese, synod, or
district organization is not
forbidden by competent
authority or by the Constitution,
rules, regulations or discipline of
the religious denomination, sect
or church of which it forms part;
(d) That the religious society
or religious order, or diocese,
synod, or district organization
desires to incorporate for the
administration of its affairs,
properties and estate;
(e) The place within the
Philippines where the principal
office of the corporation is to be
established and located; and
(f) The names, nationalities,
and residence addresses of the
trustees, not less than five (5)
nor more than fifteen (15),
elected by the religious society
or religious order, or the diocese,
synod, or district organization to
serve for the first year or such
other period as may be
prescribed by the laws of the
religious society or religious
order, or of the diocese, synod,
or district organization.
115 Dissolution. – A Applicability of Provisions to One
corporation sole may be Person Corporations.— The provisions
dissolved and its affairs of this Title shall primarily apply to
settled voluntarily by One Person Corporations. Other
submitting to the provisions of this Code apply
Securities and Exchange suppletorily, except as otherwise
Commission a verified provided in this Title.
organization of a religious
denomination, sect or church;
(b) That at least two-thirds (2⁄3) of its
membership has given written consent
or has voted to incorporate, at a duly
convened meeting of the body;
(c) That the incorporation of the
religious society or religious order, or
diocese, synod, or district organization
is not forbidden by competent authority
or by the Constitution, rules,
regulations or discipline of the religious
denomination, sect or church of which
it forms part;
(d) That the religious society or
religious order, or diocese, synod, or
district organization desires to
incorporate for the administration of its
affairs, properties and estate;
(e) The place within the Philippines
where the principal office of the
corporation is to be established and
located; and
(f) The names, nationalities, and
residence addresses of the trustees, not
less than five (5) nor more than fifteen
(15), elected by the religious society or
religious order, or the diocese, synod, or
district organization to serve for the
first year or such other period as may be
prescribed by the laws of the religious
society or religious order, or of the
diocese, synod, or district organization.
Applicability of Provisions to One Person
Corporations.— The provisions of this Title
shall primarily apply to One Person
Corporations. Other provisions of this Code
apply suppletorily, except as otherwise
provided in this Title.
 declaration of dissolution.

The declaration of
dissolution shall set forth:

1. The name of
the corporation;

2. The reason for

dissolution and
winding up;

3. The
authorization for
the dissolution of
the corporation by
the particular
religious
denomination,
sect or church;

4. The names and

addresses of the
persons who are
to supervise the
winding up of the
affairs of the
corporation.

Upon approval of
such declaration
of dissolution by
the Securities and
Exchange
Commission, the
corporation shall
cease to carry on
its operations
except for the
purpose of
winding up its
affairs. (n)
116 Religious societies. – Any
One Person Corporation.— A One One Person Corporation.— A One Person
religious society or
religious order, or any Person Corporation is a corporation Corporation is a corporation with a single
diocese, synod, or district with a single stockholder: Provided, stockholder: Provided, That only a natural
organization of any That only a natural person, trust, or an person, trust, or an estate may form a One
religious denomination, estate may form a One Person Person Corporation.
sect or church, unless Corporation.
forbidden by the Banks and quasi-banks, preneed, trust,
constitution, rules, Banks and quasi-banks, preneed, insurance, public and publicly-listed
regulations, or discipline
trust, insurance, public and publicly- companies, and non-chartered government-
of the religious
denomination, sect or listed companies, and non-chartered owned and -controlled corporations may not
church of which it is a government-owned and -controlled incorporate as One Person
part, or by competent corporations may not incorporate as Corporations: Provided, further, That a natural
authority, may, upon One Person person who is licensed to exercise a profession
written consent and/or by Corporations: Provided, further, That a may not organize as a One Person Corporation
an affirmative vote at a natural person who is licensed to for the purpose of exercising such profession
meeting called for the exercise a profession may not organize except as otherwise provided under special
purpose of at least two-
as a One Person Corporation for the laws.
thirds (2/3) of its
membership, incorporate purpose of exercising such profession
for the administration of except as otherwise provided under
its temporalities or for the
management of its affairs, special laws.
properties and estate by
filing with the Securities
and Exchange
Commission, articles of
incorporation verified by
the affidavit of the
presiding elder, secretary,
or clerk or other member
of such religious society
or religious order, or
diocese, synod, or district
organization of the
religious denomination,
sect or church, setting
forth the following:

1. That the
religious society
or religious order,
or diocese, synod,
or district
organization is a
religious
organization of a
religious
denomination,
sect or church;

2. That at least
two-thirds (2/3) of
its membership
have given their
written consent or
have voted to
incorporate, at a
duly convened
meeting of the
body;

3. That the
incorporation of
the religious
society or
religious order, or
diocese, synod, or
district
organization
desiring to
incorporate is not
forbidden by
competent
authority or by the
constitution, rules,
regulations or
discipline of the
religious
denomination,
sect, or church of
which it forms a
part;

4. That the
religious society
or religious order,
or diocese, synod,
 or district
organization
desires to
incorporate for
the administration
of its affairs,
properties and
estate;

5. The place
where the
principal office of
the corporation is
to be established
and located,
which place must
be within the
Philippines; and

6. The names,
nationalities, and
residences of the
trustees elected by
the religious
society or
religious order, or
the diocese,
synod, or district
organization to
serve for the first
year or such other
period as may be
prescribed by the
laws of the
religious society
or religious order,
or of the diocese,
synod, or district
organization, the
board of trustees
to be not less than
five (5) nor more
than fifteen (15).
(160a)
117 Methods of dissolution. –
Minimum Capital Stock Not Required Minimum Capital Stock Not Required for One
A corporation formed or
organized under the for One Person Corporation.— A One Person Corporation.— A One Person
provisions of this Code Person Corporation shall not be Corporation shall not be required to have a
may be dissolved required to have a minimum authorized minimum authorized capital stock except as
voluntarily or capital stock except as otherwise otherwise provided by special law.
involuntarily. (n) provided by special law.

118 Voluntary dissolution

where no creditors are
affected. – If dissolution
of a corporation does not
prejudice the rights of any
creditor having a claim
against it, the dissolution
may be effected by
majority vote of the board
of directors or trustees,
and by a resolution duly
adopted by the affirmative
vote of the stockholders
Articles of Incorporation.— A One
Person Corporation shall file articles of
incorporation in accordance with the
requirements under Section 14 of this
Code. It shall likewise substantially
contain the following:
(a) If the single stockholder is
a trust or an estate., the name,
nationality, and residence of the
trustee, administrator, executor,
Articles of Incorporation.— A One Person
Corporation shall file articles of incorporation
in accordance with the requirements under
Section 14 of this Code. It shall likewise
substantially contain the following:
(a) If the single stockholder is a trust
or an estate., the name, nationality, and
residence of the trustee, administrator,
executor, guardian, conservator,
custodian, or other person exercising
 owning at least two-thirds guardian, conservator, custodian, fiduciary duties together with the proof
(2/3) of the outstanding or other person exercising of such authority to act on behalf of the
capital stock or of at least fiduciary duties together with the trust or estate; and
two-thirds (2/3) of the
proof of such authority to act on
members of a meeting to
behalf of the trust or estate; and (b) Name, nationality, residence of
be held upon call of the
directors or trustees after the nominee and alternate nominee, and
publication of the notice (b) Name, nationality, the extent, coverage and limitation of
of time, place and object residence of the nominee and the authority.
of the meeting for three alternate nominee, and the
(3) consecutive weeks in a extent, coverage and limitation
newspaper published in of the authority.
the place where the
principal office of said
corporation is located; and
if no newspaper is
published in such place,
then in a newspaper of
general circulation in the
Philippines, after sending
such notice to each
stockholder or member
either by registered mail
or by personal delivery at
least thirty (30) days prior
to said meeting. A copy of
the resolution authorizing
the dissolution shall be
certified by a majority of
the board of directors or
trustees and countersigned
by the secretary of the
corporation. The
Securities and Exchange
Commission shall
thereupon issue the
certificate of dissolution.
(62a)
119 Voluntary dissolution
Bylaws.— The One Person Corporation Bylaws.— The One Person Corporation is not
where creditors are
affected. – Where the is not required to submit and file required to submit and file corporate bylaws.
dissolution of a corporate bylaws.
corporation may prejudice
the rights of any creditor,
the petition 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
other officers having the
management of its affairs,
verified by its president or
secretary or one of its
directors or trustees, and
shall set forth all claims
and demands against it,
and that its dissolution
was resolved upon by the
affirmative vote of the
stockholders representing
at least two-thirds (2/3) of
the outstanding capital
stock or by at least two-
thirds (2/3) of the
 members at a meeting of
its stockholders or
members called for that
purpose.

If the petition is sufficient

in form and substance, the
Commission shall, by an
order reciting the purpose
of the petition, fix a date
on or before which
objections thereto may be
filed by any person, which
date shall not be less than
thirty (30) days nor more
than sixty (60) days after
the entry of the order.
Before such date, a copy
of the order shall be
published at least once a
week for three (3)
consecutive weeks in a
newspaper of general
circulation published in
the municipality or city
where the principal office
of the corporation is
situated, or if there be no
such newspaper, then in a
newspaper of general
circulation in the
Philippines, and a similar
copy shall be posted for
three (3) consecutive
weeks in three (3) public
places in such
municipality or city.

Upon five (5) day’s

notice, given after the date
on which the right to file
objections as fixed in the
order has expired, the
Commission shall proceed
to hear the petition and try
any issue made by the
objections filed; and if no
such objection is
sufficient, and the
material allegations of the
petition are true, it shall
render judgment
dissolving the corporation
and directing such
disposition of its assets as
justice requires, and may
appoint a receiver to
collect such assets and
pay the debts of the
corporation. (Rule 104,
RCa)
120 Dissolution by shortening
Display of Corporate Name.— A One Display of Corporate Name.— A One Person
corporate term. – A
voluntary dissolution may Person Corporation shall indicate the Corporation shall indicate the letters “OPC”
be effected by amending letters “OPC” either below or at the end either below or at the end of its corporate
the articles of
 incorporation to shorten of its corporate name. name.
the corporate term
pursuant to the provisions
of this Code. A copy of
the amended articles of
incorporation shall be
submitted to the Securities
and Exchange
Commission in
accordance with this
Code. Upon approval of
the amended articles of
incorporation of the
expiration of the
shortened term, as the
case may be, the
corporation shall be
deemed dissolved without
any further proceedings,
subject to the provisions
of this Code on
liquidation. (n)

121 Involuntary dissolution. - Single Stockholder as Director, Single Stockholder as Director, President.—
A corporation may be President.— The single stockholder The single stockholder shall be the sole
dissolved by the shall be the sole director and president director and president of the One Person
Securities and Exchange of the One Person Corporation. Corporation.
Commission upon filing
of a verified complaint
and after proper notice
and hearing on the
grounds provided by
existing laws, rules and
regulations. (n)
122 Corporate liquidation. -
Treasurer, Corporate Secretary, and Treasurer, Corporate Secretary, and Other
Every corporation whose
charter expires by its own Other Officers.— Within fifteen (15) Officers.— Within fifteen (15) days from the
limitation or is annulled days from the issuance of its certificate issuance of its certificate of incorporation, the
by forfeiture or otherwise, of incorporation, the One Person One Person Corporation shall appoint a
or whose corporate Corporation shall appoint a treasurer, treasurer, corporate secretary, and other
existence for other corporate secretary, and other officers officers as it may deem necessary, and notify
purposes is terminated in as it may deem necessary, and notify the Commission thereof within five (5) days
any other manner, shall
the Commission thereof within five (5) from appointment.
nevertheless be continued
as a body corporate for days from appointment.
three (3) years after the The single stockholder may not be
time when it would have The single stockholder may not be appointed as the corporate secretary.
been so dissolved, for theappointed as the corporate secretary.
purpose of prosecuting A single stockholder who is likewise the
and defending suits by or A single stockholder who is likewise self-appointed treasurer of the corporation
against it and enabling itthe self-appointed treasurer of the shall give a bond to the Commission in such a
to settle and close its corporation shall give a bond to the sum as may be required: Provided, That the
affairs, to dispose of andCommission in such a sum as may be said stockholder/treasurer shall undertake in
convey its property and to
required: Provided, That the said writing to faithfully administer the One Person
distribute its assets, but
not for the purpose of stockholder/treasurer shall undertake in Corporation’s funds to be received as
continuing the business writing to faithfully administer the One treasurer, and to disburse and invest the same
for which it Person Corporation’s funds to be according to the articles of incorporation as
was
established. received as treasurer, and to disburse approved by the Commission. The bond shall
and invest the same according to the be renewed every two (2) years or as often as
At any time during said articles of incorporation as approved by may be required.
three (3) years, the the Commission. The bond shall be
corporation is authorized
renewed every two (2) years or as often
and empowered to convey
all of its property to
 trustees for the benefit of as may be required.
stockholders, members,
creditors, and other
persons in interest. From
and after any such
conveyance by the
corporation of its property
in trust for the benefit of
its stockholders, members,
creditors and others in
interest, all interest which
the corporation had in the
property terminates, the
legal interest vests in the
trustees, and the beneficial
interest in the
stockholders, members,
creditors or other persons
in interest.

Upon the winding up of

the corporate affairs, any
asset distributable to any
creditor or stockholder or
member who is unknown
or cannot be found shall
be escheated to the city or
municipality where such
assets are located.

Except by decrease of
capital stock and as
otherwise allowed by this
Code, no corporation shall
distribute any of its assets
or property except upon
lawful dissolution and
after payment of all its
debts and liabilities. (77a,
89a, 16a)

123 Definition and rights of

foreign corporations. - For
the purposes of this Code,
a foreign corporation is
one formed, organized or
existing under any laws
other than those of the
Philippines and whose
laws allow Filipino
citizens and corporations
to do business in its own
country or state. It shall
have the right to transact
business in the Philippines
after it shall have obtained
a license to transact
business in this country in
accordance with this Code
and a certificate of
authority from the
appropriate government
agency. (n)
Special Functions of the Corporate
Secretary.— In addition to the functions
designated by the One Person
Corporation, the corporate secretary
shall:
(a) Be responsible for
maintaining the minutes book
and/or records of the
corporation;
(b) Notify the nominee or
alternate nominee of the death or
incapacity of the single
stockholder, which notice shall
be given no later than five (5)
days from such occurrence;
(c) Notify the Commission of
the death of the single
stockholder within five (5) days
Special Functions of the Corporate
Secretary.— In addition to the functions
designated by the One Person Corporation, the
corporate secretary shall:
(a) Be responsible for maintaining the
minutes book and/or records of the
corporation;
(b) Notify the nominee or alternate
nominee of the death or incapacity of
the single stockholder, which notice
shall be given no later than five (5) days
from such occurrence;
(c) Notify the Commission of the
death of the single stockholder within
five (5) days from such occurrence and
stating in such notice the names,
residence addresses, and contact details

124 Application to existing
foreign corporations. -
Every foreign corporation
which on the date of the
effectivity of this Code is
authorized to do business
in the Philippines under a
license therefore issued to
it, shall continue to have
such authority
under the terms and
condition of its license,
subject to the provisions
of this Code and other
special laws. (n)
125 Application for a license. -
A foreign corporation
applying for a license to
transact business in the
Philippines shall submit to
the Securities and
Exchange Commission a
copy of its articles of
incorporation and by-
laws, certified in
accordance with law, and
their translation to an
official language of the
Philippines, if necessary.
The application shall be
under oath and, unless
already stated in its
articles of incorporation,
shall specifically set forth
from such occurrence and stating
in such notice the names,
residence addresses, and contact
details of all known legal heirs;
and
(d) Call the nominee or
alternate nominee and the known
legal heirs to a meeting and
advise the legal heirs with regard
to, among others, the election of
a new director, amendment of
the articles of incorporation, and
other ancillary and/or
consequential matters.
Nominee and Alternate Nominee.— The
single stockholder shall designate a
nominee and an alternate nominee who
shall, in the event of the single
stockholder’s death or incapacity, take
the place of the single stockholder as
director and shall manage the
corporation’s affairs.
The articles of incorporation shall
state the names, residence addresses
and contact details of the nominee and
alternate nominee, as well as the extent
and limitations of their authority in
managing the affairs of the One Person
Corporation.
The written consent of the nominee
and alternate nominee shall be attached
to the application for incorporation.
Such consent may be withdrawn in
writing any time before the death or
incapacity of the single stockholder.
Term of Nominee and Alternate
Nominee.— When the incapacity of the
single stockholder is temporary, the
nominee shall sit as director and
manage the affairs of the One Person
Corporation until the stockholder, by
self determination, regains the capacity
to assume such duties.
In case of death or permanent
incapacity of the single stockholder, the
nominee shall sit as director and
manage the affairs of the One Person
Corporation until the legal heirs of the
single stockholder have been lawfully
determined, and the heirs have
of all known legal heirs; and
(d) Call the nominee or alternate
nominee and the known legal heirs to a
meeting and advise the legal heirs with
regard to, among others, the election of
a new director, amendment of the
articles of incorporation, and other
ancillary and/or consequential matters.
Nominee and Alternate Nominee.— The single
stockholder shall designate a nominee and an
alternate nominee who shall, in the event of
the single stockholder’s death or incapacity,
take the place of the single stockholder as
director and shall manage the corporation’s
affairs.
The articles of incorporation shall state the
names, residence addresses and contact details
of the nominee and alternate nominee, as well
as the extent and limitations of their authority
in managing the affairs of the One Person
Corporation.
The written consent of the nominee and
alternate nominee shall be attached to the
application for incorporation. Such consent
may be withdrawn in writing any time before
the death or incapacity of the single
stockholder.
Term of Nominee and Alternate Nominee.—
When the incapacity of the single stockholder
is temporary, the nominee shall sit as director
and manage the affairs of the One Person
Corporation until the stockholder, by self
determination, regains the capacity to assume
such duties.
In case of death or permanent incapacity of
the single stockholder, the nominee shall sit as
director and manage the affairs of the One
Person Corporation until the legal heirs of the
single stockholder have been lawfully
determined, and the heirs have designated one
of them or have agreed that the estate shall be
the single stockholder of the One Person
the following: designated one of them or have agreed Corporation.
that the estate shall be the single
1. The date and term of stockholder of the One Person The alternate nominee shall sit as director
incorporation; and manage the One Person Corporation in
Corporation.
case of the nominee’s inability, incapacity,
2. The address, including The alternate nominee shall sit as death, or refusal to discharge the functions as
the street number, of the
director and manage the One Person director and manager of the corporation, and
principal office of the
corporation in the country Corporation in case of the nominee’s only for the same term and under the same
or state of incorporation; inability, incapacity, death, or refusal to conditions applicable to the nominee.
discharge the functions as director and
3. The name and address manager of the corporation, and only
of its resident agent for the same term and under the same
authorized to accept conditions applicable to the nominee.
summons and process in
all legal proceedings and,
pending the establishment
of a local office, all
notices affecting the
corporation;

4. The place in the

Philippines where the
corporation intends to
operate;

5. The specific purpose or

purposes which the
corporation intends to
pursue in the transaction
of its business in the
Philippines: Provided,
That said purpose or
purposes are those
specifically stated in the
certificate of authority
issued by the appropriate
government agency;

6. The names and

addresses of the present
directors and officers of
the corporation;

7. A statement of its
authorized capital stock
and the aggregate number
of shares which the
corporation has authority
to issue, itemized by
classes, par value of
shares, shares without par
value, and series, if any;

8. A statement of its
outstanding capital stock
and the aggregate number
of shares which the
corporation has issued,
itemized by classes, par
value of shares, shares
without par value, and
series, if any;

9. A statement of the
amount actually paid in;
and

10. Such additional

information as may be
necessary or appropriate
in order to enable the
Securities and Exchange
Commission to determine
whether such corporation
is entitled to a license to
transact business in the
Philippines, and to
determine and assess the
fees payable.

Attached to the
application for license
shall be a duly executed
certificate under oath by
the authorized official or
officials of the jurisdiction
of its incorporation,
attesting to the

fact that the laws of the

country or state of the
applicant allow Filipino
citizens and corporations
to do business therein, and
that the applicant is an
existing corporation in
good standing. If such
certificate is in a foreign
language, a translation
thereof in English under
oath of the translator shall
be attached thereto.

The application for a

license to transact
business in the Philippines
shall likewise be
accompanied by a
statement under oath of
the president or any other
person authorized by the
corporation, showing to
the satisfaction of the
Securities and Exchange
Commission and other
governmental agency in
the proper cases that the
applicant is solvent and in
sound financial condition,
and setting forth the assets
and liabilities of the
corporation as of the date
not exceeding one (1) year
immediately prior to the
filing of the application.

Foreign banking, financial

and insurance
corporations shall, in
 addition to the above
requirements, comply
with the provisions of
existing laws applicable to
them. In the case of all
other foreign corporations,
no application for license
to transact business in the
Philippines shall be
accepted by the Securities
and Exchange
Commission without
previous authority from
the appropriate
government agency,
whenever required by law.
(68a)
126 Issuance of a license. - If
Change of Nominee or Alternate Change of Nominee or Alternate Nominee.—
the Securities and
Exchange Commission is Nominee.— The single stockholder The single stockholder may, at any time,
satisfied that the applicant may, at any time, change its nominee change its nominee and alternate nominee by
has complied with all the and alternate nominee by submitting to submitting to the Commission the names of
requirements of this Code the Commission the names of the new the new nominees and their corresponding
and other special laws, nominees and their corresponding written consent. For this purpose, the articles
rules and regulations, the written consent. For this purpose, the of incorporation need not be amended.
Commission shall issue a
articles of incorporation need not be
license to the applicant to
transact business in the amended.
Philippines for the
purpose or purposes
specified in such license.
Upon issuance of the
license, such foreign
corporation may
commence to transact
business in the Philippines
and continue to do so for
as long as it retains its
authority to act as a
corporation under the laws
of the country or state of
its incorporation, unless
such license is sooner
surrendered, revoked,
suspended or annulled in
accordance with this Code
or other special laws.

Within sixty (60) days

after the issuance of the
license to transact
business in the
Philippines, the license,
except foreign banking or
insurance corporation,
shall deposit with the
Securities and Exchange
Commission for the
benefit of present and
future creditors of the
licensee in the
Philippines, securities
satisfactory to the
Securities and Exchange
Commission, consisting
of bonds or other evidence
of indebtedness of the
Government of the
Philippines, its political
subdivisions and
instrumentalities, or of
government-owned or
controlled corporations
and entities, shares of
stock in "registered
enterprises" as this term is
defined in Republic Act
No. 5186, shares of stock
in domestic corporations
registered in the stock
exchange, or shares of
stock in domestic
insurance companies and
banks, or any combination
of these kinds of
securities, with an actual
market value of at least
one hundred thousand
(P100,000.) pesos;
Provided, however, That
within six (6) months after
each fiscal year of the
licensee, the Securities
and Exchange
Commission shall require
the licensee to deposit
additional securities
equivalent in actual
market value to two (2%)
percent of the amount by
which the licensee's gross
income for that fiscal year
exceeds five million
(P5,000,000.00) pesos.
The Securities and
Exchange Commission
shall also require deposit
of additional securities if
the actual market value of
the securities on deposit
has decreased by at least

ten (10%) percent of their

actual market value at the
time they were deposited.
The Securities and
Exchange Commission
may at its discretion
release part of the
additional securities
deposited with it if the
gross income of the
licensee has decreased, or
if the actual market value
of the total securities on
deposit has increased, by
more than ten (10%)
percent of the actual
market value of the
securities at the time they
were deposited. The
Securities and Exchange
 Commission may, from
time to time, allow the
licensee to substitute other
securities for those
already on deposit as long
as the licensee is solvent.
Such licensee shall be
entitled to collect the
interest or dividends on
the securities deposited. In
the event the licensee
ceases to do business in
the Philippines, the
securities deposited as
aforesaid shall be
returned, upon the
licensee's application
therefor and upon proof to
the satisfaction of the
Securities and Exchange
Commission that the
licensee has no liability to
Philippine residents,
including the Government
of the Republic of the
Philippines. (n)
127 Who may be a resident
Minutes Book.— A One Person Minutes Book.— A One Person Corporation
agent. - A resident agent
may be either an Corporation shall maintain a minutes shall maintain a minutes book which shall
individual residing in the book which shall contain all actions, contain all actions, decisions, and resolutions
Philippines or a domestic decisions, and resolutions taken by the taken by the One Person Corporation.
corporation lawfully One Person Corporation.
transacting business in the
Philippines: Provided,
That in the case of an
individual, he must be of
good moral character and
of sound financial
standing. (n)
128 Resident agent; service of Records in Lieu of Meetings.— When Records in Lieu of Meetings.— When action
process. - The Securities action is needed on any matter, it shall is needed on any matter, it shall be
and Exchange be sufficient to prepare a written sufficient to prepare a written resolution,
Commission shall require resolution, signed and dated by the signed and dated by the single stockholder,
as a condition precedent single stockholder, and recorded in the and recorded in the minutes book of the
to the issuance of the minutes book of the One Person One Person Corporation. The date of
license to transact Corporation. The date of recording in recording in the minutes book shall be
business in the Philippines the minutes book shall be deemed to be deemed to be the date of the meeting for all
by any foreign corporation the date of the meeting for all purposes purposes under this Code.
that such corporation file under this Code.
with the Securities and
Exchange Commission a
written power of attorney
designating some person
who must be a resident of
the Philippines, on whom
any summons and other
legal processes may be
served in all actions or
other legal proceedings
against such corporation,
and consenting that
service upon such resident
agent shall be admitted
and held as valid as if
served upon the duly
authorized officers of the
foreign corporation at its
home office. Any such
foreign corporation shall
likewise execute and file
with the Securities and
Exchange Commission an
agreement or stipulation,
executed by the proper
authorities of said
corporation, in form and
substance as follows:

"The (name of foreign

corporation) does hereby
stipulate and agree, in
consideration of its being
granted by the Securities
and Exchange
Commission a license to
transact business in the
Philippines, that if at any
time said corporation shall
cease to transact business
in the Philippines, or shall
be without any resident
agent in the Philippines on
whom any summons or
other legal processes may
be served, then in any
action or proceeding
arising out of any business
or transaction which
occurred in the
Philippines, service of any
summons or other legal
process may be made
upon the Securities and
Exchange Commission
and that such service shall
have the same force and
effect as if made upon the
duly-authorized officers
of the corporation at its
home office."

Whenever such service of

summons or other process
shall be made upon the
Securities and Exchange
Commission, the
Commission shall, within
ten (10) days thereafter,
transmit by mail a copy of
such summons or other
legal process to the
corporation at its home or
principal office. The
sending of such copy by
the Commission shall be
necessary

part of and shall complete

such service. All expenses
incurred by the
Commission for such
service shall be paid in
 advance by the party at
whose instance the service
is made.
In case of a change of
address of the resident
agent, it shall be his or its
duty to immediately
notify in writing the
Securities and Exchange
Commission of the new
address. (72a; and n)
129 Law applicable. - Any
foreign corporation
lawfully doing business in
the Philippines shall be
bound by all laws, rules
and regulations applicable
to domestic corporations
of the same class, except
such only as provide for
the creation, formation,
organization or
dissolution of
corporations or those
which fix the relations,
liabilities, responsibilities,
or duties of stockholders,
members, or officers of
corporations to each other
or to the corporation.
(73a)
130 Amendments to articles of
Reportorial Requirements.— The One Reportorial Requirements.— The One
Person Corporation shall submit the Person Corporation shall submit the
following within such period as the following within such period as the
Commission may prescribe: Commission may prescribe:
(a) Annual financial (a) Annual financial statements
statements audited by an audited by an independent certified
independent certified public public accountant: Provided, That if
accountant: Provided, That if the the total assets or total liabilities of
total assets or total liabilities of the corporation are less than Six
the corporation are less than Six hundred thousand pesos
hundred thousand pesos (₱600,000.00), the financial
(₱600,000.00), the financial statements shall be certified under
statements shall be certified oath by the corporation’s treasurer
under oath by the corporation’s and president;
treasurer and president;
(b) A report containing
(b) A report containing explanations or comments by the
explanations or comments by the president on every qualification,
president on every qualification, reservation, or adverse remark or
reservation, or adverse remark or disclaimer made by the auditor in the
disclaimer made by the auditor latter’s report;
in the latter’s report;
(c) A disclosure of all self-dealings
(c) A disclosure of all self- and related party transactions
dealings and related party entered into between the One Person
transactions entered into Corporation and the single
between the One Person stockholder; and
Corporation and the single
stockholder; and (d) Other reports as the
Commission may require.
(d) Other reports as the
Commission may require. For purposes of this provision, the fiscal
year of a One Person Corporation shall be
For purposes of this provision, the that set forth in its articles of incorporation
fiscal year of a One Person Corporation or, in the absence thereof, the calendar
shall be that set forth in its articles of year.
incorporation or, in the absence thereof,
the calendar year. The Commission may place the
corporation under delinquent status should
The Commission may place the the corporation fail to submit the
corporation under delinquent status reportorial requirements three (3) times,
should the corporation fail to submit the consecutively or intermittently, within a
reportorial requirements three (3) times, period of five (5) years.
consecutively or intermittently, within a
period of five (5) years.
Liability of Single Shareholder.— A Liability of Single Shareholder.— A sole
 incorporation or by-laws
of foreign corporations. -
Whenever the articles of
incorporation or by-laws
of a foreign corporation
authorized to transact
business in the Philippines
are amended, such foreign
corporation shall, within
sixty (60) days after the
amendment becomes
effective, file with the
Securities and Exchange
Commission, and in the
proper cases with the
appropriate government
agency, a duly
authenticated copy of the
articles of incorporation or
by-laws, as amended,
indicating clearly in
capital letters or by
underscoring the change
or changes made, duly
certified by the authorized
official or officials of the
country or state of
incorporation. The filing
thereof shall not of itself
enlarge or alter the
purpose or purposes for
which such corporation is
authorized to transact
business in the
Philippines. (n)
131 Amended license. - A
foreign corporation
authorized to transact
business in the Philippines
shall obtain an amended
license in the event it
changes its corporate
name, or desires to pursue
in the Philippines other or
additional purposes, by
submitting an application
therefor to the Securities
and Exchange
Commission, favorably
endorsed by the
appropriate government
agency in the proper
cases. (n)
sole shareholder claiming limited shareholder claiming limited liability has
liability has the burden of affirmatively the burden of affirmatively showing that
showing that the corporation was the corporation was adequately financed.
adequately financed.
Where the single stockholder cannot
Where the single stockholder cannot prove that the property of the One Person
prove that the property of the One Corporation is independent of the
Person Corporation is independent of stockholder’s personal property, the
the stockholder’s personal property, the stockholder shall be jointly and severally
stockholder shall be jointly and liable for the debts and other liabilities of
severally liable for the debts and other the One Person Corporation.
liabilities of the One Person
The principles of piercing the corporate
Corporation.
veil applies with equal force to One Person
The principles of piercing the Corporations as with other corporations.
corporate veil applies with equal force
to One Person Corporations as with
other corporations.
Conversion from an Ordinary Conversion from an Ordinary Corporation to
Corporation to a One Person a One Person Corporation.— When a single
Corporation.— When a single stockholder acquires all the stocks of an
stockholder acquires all the stocks of an ordinary stock corporation, the latter may
ordinary stock corporation, the latter apply for conversion into a One Person
may apply for conversion into a One Corporation, subject to the submission of
Person Corporation, subject to the such documents as the Commission may
submission of such documents as the require. If the application for conversion is
Commission may require. If the approved, the Commission shall issue a
application for conversion is approved, certificate of filing of amended articles of
the Commission shall issue a certificate incorporation reflecting the conversion. The
of filing of amended articles of One Person Corporation converted from an
incorporation reflecting the conversion. ordinary stock corporation shall succeed
The One Person Corporation converted the latter and be legally responsible for all
from an ordinary stock corporation the latter’s outstanding liabilities as of the
shall succeed the latter and be legally date of conversion.
responsible for all the latter’s
outstanding liabilities as of the date of
conversion.

132 Merger or consolidation

involving a foreign
corporation licensed in the
Philippines. - One or more
foreign corporations
authorized to transact
business in the Philippines
Conversion from a One Person
Corporation to an Ordinary Stock
Corporation.— A One Person
Corporation may be converted into an
ordinary stock corporation after due
notice to the Commission of such fact
Conversion from a One Person Corporation
to an Ordinary Stock Corporation.— A One
Person Corporation may be converted into
an ordinary stock corporation after due
notice to the Commission of such fact and of
the circumstances leading to the conversion,
 may merge or consolidate and of the circumstances leading to the and after compliance with all other
with any domestic conversion, and after compliance with requirements for stock corporations under
corporation or all other requirements for stock this Code and applicable rules. Such notice
corporations if such is
corporations under this Code and shall be filed with the Commission within
permitted under
Philippine laws and by the applicable rules. Such notice shall be sixty (60) days from the occurrence of the
law of its incorporation: filed with the Commission within sixty circumstances leading to the conversion into
Provided, That the (60) days from the occurrence of the an ordinary stock corporation. If all
requirements on merger or circumstances leading to the conversion requirements have been complied with, the
consolidation as provided into an ordinary stock corporation. If all Commission shall issue a certificate of fifing
in this Code are followed. requirements have been complied with, of amended articles of incorporation
the Commission shall issue a certificate reflecting the conversion.
Whenever a foreign
of fifing of amended articles of
corporation authorized to
In case of death of the single stockholder,
transact business in the incorporation reflecting the conversion.
Philippines shall be a the nominee or alternate nominee shall
party to a merger or In case of death of the single transfer the shares to the duly designated
consolidation in its home stockholder, the nominee or alternate legal heir or estate within seven (7) days
country or state as nominee shall transfer the shares to the from receipt of either an affidavit of
permitted by the law of its duly designated legal heir or estate heirship or self-adjudication executed by a
incorporation, such within seven (7) days from receipt of sole heir, or any other legal document
foreign corporation shall,
either an affidavit of heirship or self- declaring the legal heirs of the single
within sixty (60) days
after such merger or adjudication executed by a sole heir, or stockholder and notify the Commission of
consolidation becomes any other legal document declaring the the transfer. Within sixty (60) days from the
effective, file with the legal heirs of the single stockholder and transfer of the shares, the legal heirs shall
Securities and Exchange notify the Commission of the transfer. notify the Commission of their decision to
Commission, and in Within sixty (60) days from the transfer either wind up and dissolve the One Person
proper cases with the of the shares, the legal heirs shall notify Corporation or convert it into an ordinary
appropriate government the Commission of their decision to
stock corporation.
agency, a copy of the
articles of merger or either wind up and dissolve the One
The ordinary stock corporation converted
consolidation duly Person Corporation or convert it into an
authenticated by the ordinary stock corporation. from a One Person Corporation shall
proper official or officials succeed the latter and be legally responsible
of the country or state The ordinary stock corporation for all the latter’s outstanding liabilities as
under the laws of which converted from a One Person of the date of conversion.
merger or consolidation Corporation shall succeed the latter and
was effected: Provided, be legally responsible for all the latter’s
however, That if the
outstanding liabilities as of the date of
absorbed corporation is
the foreign corporation conversion.
doing

business in the
Philippines, the latter shall
at the same time file a
petition for withdrawal of
it license in accordance
with this Title. (n)
133 Doing business without a
Methods of Dissolution.— A Methods of Dissolution.— A corporation
license. - No foreign
corporation transacting corporation formed or organized under formed or organized under the provisions
business in the Philippines the provisions of this Code may be of this Code may be dissolved voluntarily or
without a license, or its dissolved voluntarily or involuntarily. involuntarily.
successors or assigns,
shall be permitted to
maintain or intervene in
any action, suit or
proceeding in any court or
administrative agency of
the Philippines; but such
corporation may be sued
or proceeded against
before Philippine courts
or administrative tribunals
 on any valid cause of
action recognized under
Philippine laws. (69a)
134 Revocation of license. -
Without prejudice to other
grounds provided by
special laws, the license of
a foreign corporation to
transact business in the
Philippines may be
revoked or suspended by
the Securities and
Exchange Commission
upon any of the
following grounds:
1. Failure to file its annual
report or pay any fees as
required by this Code;
2. Failure to appoint and
maintain a resident agent
in the Philippines as
required by this Title;
3. Failure, after change of
its resident agent or of his
address, to submit to
the Securities and
Exchange Commission a
statement of such change
as
required by this Title;
4. Failure to submit to the
Securities and Exchange
Commission an
authenticated copy of any
amendment to its articles
of incorporation or bylaws
or of any articles of
merger or consolidation
within the time
prescribed by this Title;
5. A misrepresentation of
any material matter in any
application, report,
affidavit or other
document submitted by
such corporation pursuant
to this
Title;
6. Failure to pay any and
all taxes, imposts,
assessments or penalties,
if
any, lawfully due to the
Philippine Government or
any of its agencies or
political subdivisions;
7. Transacting business in
the Philippines outside of
the purpose or
purposes for which such
corporation is authorized
under its license;
8. Transacting business in
the Philippines as agent of
or acting for and in
behalf of any foreign
Voluntary Dissolution Where No
Creditors are Affected.—If
dissolution of a corporation does not
prejudice the rights of any creditor
having a claim against it, the
dissolution may be effected by majority
vote of the board of directors or
trustees, and by a resolution adopted by
the affirmative vote of the stockholders
owning at least majority of the
outstanding capital stock or majority of
the members of a meeting to be held
upon the call of the directors or
trustees.
At least twenty (20) days prior to the
meeting, notice shall be given to each
shareholder or member of record
personally, by registered mail, or by
any means authorized under its bylaws,
whether or not entitled to vote at the
meeting, in the manner provided in
Section 50 of this Code and shall state
that the purpose of the meeting is to
vote on the dissolution of the
corporation. Notice of the time, place,
and object of the meeting shall be
published once prior to the date of the
meeting in a newspaper published in
the place where the principal office of
said corporation is located, or if no
newspaper is published in such place,
in a newspaper of general circulation in
the Philippines.
A verified request for dissolution shall
be filed with the Commission stating:
(a) the reason for the dissolution; (b)
the form, manner, and time when the
notices were given; (c) names of the
stockholders and directors or members
and trustees who approved the
dissolution; (d) the date, place, and time
of the meeting in which the vote was
made; and (e) details of publication.
The corporation shall submit the
following to the Commission: (1) a
copy of the resolution authorizing the
dissolution, certified by a majority of
the board of directors or trustees and
countersigned by the secretary of the
corporation; (2) proof of publication;
and (3) favorable recommendation from
the appropriate regulatory agency,
when necessary.
Within fifteen (15) days from receipt of
the verified request for dissolution, and
in the absence of any withdrawal within
said period, the Commission shall
approve the request and issue the
certificate of dissolution. The
dissolution shall take effect only upon
the issuance by the Commission of a
certificate of dissolution.
No application for dissolution of banks,
Voluntary Dissolution Where No Creditors
are Affected.—If dissolution of a
corporation does not prejudice the rights of
any creditor having a claim against it, the
dissolution may be effected by majority vote
of the board of directors or trustees, and by
a resolution adopted by the affirmative vote
of the stockholders owning at least majority
of the outstanding capital stock or majority
of the members of a meeting to be held
upon the call of the directors or trustees.
At least twenty (20) days prior to the
meeting, notice shall be given to each
shareholder or member of record
personally, by registered mail, or by any
means authorized under its bylaws, whether
or not entitled to vote at the meeting, in the
manner provided in Section 50 of this Code
and shall state that the purpose of the
meeting is to vote on the dissolution of the
corporation. Notice of the time, place, and
object of the meeting shall be published
once prior to the date of the meeting in a
newspaper published in the place where the
principal office of said corporation is
located, or if no newspaper is published in
such place, in a newspaper of general
circulation in the Philippines.
A verified request for dissolution shall be
filed with the Commission stating: (a) the
reason for the dissolution; (b) the form,
manner, and time when the notices were
given; (c) names of the stockholders and
directors or members and trustees who
approved the dissolution; (d) the date,
place, and time of the meeting in which the
vote was made; and (e) details of
publication.
The corporation shall submit the following
to the Commission: (1) a copy of the
resolution authorizing the dissolution,
certified by a majority of the board of
directors or trustees and countersigned by
the secretary of the corporation; (2) proof
of publication; and (3) favorable
recommendation from the appropriate
regulatory agency, when necessary.
Within fifteen (15) days from receipt of the
verified request for dissolution, and in the
absence of any withdrawal within said
period, the Commission shall approve the
request and issue the certificate of
dissolution. The dissolution shall take effect
only upon the issuance by the Commission
of a certificate of dissolution.
No application for dissolution of banks,
banking and quasi-banking institutions,
preneed, insurance and trust companies,
NSSLAs, pawnshops, and other financial
intermediaries shall be approved by the
Commission unless accompanied by a
favorable recommendation of the
appropriate government agency.
 corporation or entity not
duly licensed to do
business
in the Philippines; or
9. Any other ground as
would render it unfit to
transact business in the
Philippines. (n)
135 Issuance of certificate of
revocation. - Upon the
revocation of any such
license
to transact business in the
Philippines, the Securities
and Exchange
Commission shall
issue a corresponding
certificate of revocation,
furnishing a copy thereof
to the
appropriate government
agency in the proper
cases.
The Securities and
Exchange Commission
shall also mail to the
corporation at its
registered office in the
Philippines a notice of
such revocation
accompanied by a copy of
the certificate of
revocation. (n)
banking and quasi-banking institutions,
preneed, insurance and trust companies,
NSSLAs, pawnshops, and other
financial intermediaries shall be
approved by the Commission unless
accompanied by a favorable
recommendation of the appropriate
government agency.
Voluntary Dissolution Where
Creditors are Affected; Procedure
and Contents of Petition.— Where the
dissolution of a corporation may
prejudice the rights of any creditor, a
verified petition for dissolution shall be
filed with the Commission. The petition
shall be signed by a majority of the
corporation’s board of directors or
trustees, verified by its president or
secretary or one of its directors or
trustees, and shall set forth all claims
and demands against it, and that its
dissolution was resolved upon by the
affirmative vote of the stockholders
representing at least two-thirds (2⁄3) of
the outstanding capital stock or at least
two-thirds (2⁄3) of the members at a
meeting of its stockholders or members
called for that purpose. The petition
shall likewise state: (a) the reason for
the dissolution; (b) the form, manner,
and time when the notices were given;
and (c) the date, place, and time of the
meeting in which the vote was made.
The corporation shall submit to the
Commission the following: (1) a copy
of the resolution authorizing the
dissolution, certified by a majority of
the board of directors or trustees and
countersigned by the secretary of the
corporation; and (2) a list of all its
creditors.
If the petition is sufficient in form and
substance, the Commission shall, by an
order reciting the purpose of the
petition, fix a deadline for filing
objections to the petition which date
shall not be less than thirty (30) days
nor more than sixty (60) days after the
entry of the order. Before such date, a
copy of the order shall be published at
least once a week for three (3)
consecutive weeks in a newspaper of
general circulation published in the
municipality or city where the principal
office of the corporation is situated, or
if there be no such newspaper, then in a
newspaper of general circulation in the
Philippines, and a similar copy shall be
posted for three (3) consecutive weeks
in three (3) public places in such
municipality or city.
Upon five (5) days’ notice, given after
the date on which the right to file
objections as fixed in the order has
expired, the Commission shall proceed
Voluntary Dissolution Where Creditors are
Affected; Procedure and Contents of
Petition.— Where the dissolution of a
corporation may prejudice the rights of any
creditor, a verified petition for dissolution
shall be filed with the Commission. The
petition shall be signed by a majority of the
corporation’s board of directors or trustees,
verified by its president or secretary or one
of its directors or trustees, and shall set
forth all claims and demands against it, and
that its dissolution was resolved upon by the
affirmative vote of the stockholders
representing at least two-thirds (2⁄3) of the
outstanding capital stock or at least two-
thirds (2⁄3) of the members at a meeting of
its stockholders or members called for that
purpose. The petition shall likewise state:
(a) the reason for the dissolution; (b) the
form, manner, and time when the notices
were given; and (c) the date, place, and time
of the meeting in which the vote was made.
The corporation shall submit to the
Commission the following: (1) a copy of the
resolution authorizing the dissolution,
certified by a majority of the board of
directors or trustees and countersigned by
the secretary of the corporation; and (2) a
list of all its creditors.
If the petition is sufficient in form and
substance, the Commission shall, by an
order reciting the purpose of the petition,
fix a deadline for filing objections to the
petition which date shall not be less than
thirty (30) days nor more than sixty (60)
days after the entry of the order. Before
such date, a copy of the order shall be
published at least once a week for three (3)
consecutive weeks in a newspaper of
general circulation published in the
municipality or city where the principal
office of the corporation is situated, or if
there be no such newspaper, then in a
newspaper of general circulation in the
Philippines, and a similar copy shall be
posted for three (3) consecutive weeks in
three (3) public places in such municipality
or city.
Upon five (5) days’ notice, given after the
date on which the right to file objections as
fixed in the order has expired, the
Commission shall proceed to hear the
petition and try any issue raised in the
objections filed; and if no such objection is
sufficient, and the material allegations of
the petition are true, it shall render
judgment dissolving the corporation and
 to hear the petition and try any issue directing such disposition of its assets as
raised in the objections filed; and if no justice requires, and may appoint a receiver
such objection is sufficient, and the to collect such assets and pay the debts of
material allegations of the petition are the corporation.
true, it shall render judgment dissolving The dissolution shall take effect only upon
the corporation and directing such the issuance by the Commission of a
disposition of its assets as justice certificate of dissolution.
requires, and may appoint a receiver to
collect such assets and pay the debts of
the corporation.
The dissolution shall take effect only
upon the issuance by the Commission
of a certificate of dissolution.
136 Withdrawal of foreign
Dissolution by Shortening Corporate Dissolution by Shortening Corporate
corporations. - Subject to
existing laws and Term.— A voluntary dissolution may Term.— A voluntary dissolution may be
regulations, a foreign be effected by amending the articles of effected by amending the articles of
corporation licensed to incorporation to shorten the corporate incorporation to shorten the corporate term
transact business in the term pursuant to the provisions of this pursuant to the provisions of this Code. A
Philippines may be Code. A copy of the amended articles copy of the amended articles of
allowed to withdraw from of incorporation shall be submitted to incorporation shall be submitted to the
the Philippines by filing a
the Commission in accordance with this Commission in accordance with this Code.
petition for withdrawal of
license. No certificate of Code.
withdrawal shall be issued Upon the expiration of the shortened
by the Securities and Upon the expiration of the shortened term, as stated in the approved amended
Exchange Commission term, as stated in the approved articles of incorporation, the corporation
unless all the following amended articles of incorporation, the shall be deemed dissolved without any
requirements are met; corporation shall be deemed dissolved further proceedings, subject to the
without any further proceedings, provisions of this Code on liquidation.
1. All claims which have subject to the provisions of this Code
accrued in the Philippines In the case of expiration of corporate
on liquidation.
have been paid, term, dissolution shall automatically take
compromised or settled;
In the case of expiration of corporate effect on the day following the last day of
2. All taxes, imposts, term, dissolution shall automatically the corporate term stated in the articles of
assessments, and take effect on the day following the last incorporation, without the need for the
penalties, if any, lawfully day of the corporate term stated in the issuance by the Commission of a certificate
due to the Philippine articles of incorporation, without the of dissolution.
Government or any of its need for the issuance by the
agencies or political Commission of a certificate of
subdivisions have been dissolution.
paid; and

3. The petition for

withdrawal of license has
been published once a
week for three (3)
consecutive weeks in a
newspaper of general
circulation in the
Philippines.
137 Outstanding capital stock
Withdrawal of Request and Petition for Withdrawal of Request and Petition for
defined. - The term
"outstanding capital Dissolution.— A withdrawal of the Dissolution.— A withdrawal of the request
stock", as used in this request for dissolution shall be made in for dissolution shall be made in writing,
Code, means the total writing, duly verified by any duly verified by any incorporator, director,
shares of stock issued incorporator, director, trustee, trustee, shareholder, or member and signed
under binding shareholder, or member and signed by by the same number of incorporators,
subscription agreements the same number of incorporators, directors, trustees, shareholders, or
to subscribers or
directors, trustees, shareholders, or members necessary to request for
stockholders, whether or
not fully or partially paid, members necessary to request for dissolution as set forth in the foregoing
except treasury shares. (n) dissolution as set forth in the foregoing sections. The withdrawal shall be submitted
sections. The withdrawal shall be no later than fifteen (15) days from receipt
submitted no later than fifteen (15) days by the Commission of the request for

138 Designation of governing
boards. - The provisions
of specific provisions of
this Code to the contrary
notwithstanding, non-
stock or special
corporations may, through
their articles of
incorporation or their by-
laws, designate their
governing boards by any
name other than as board
of trustees. (n)
from receipt by the Commission of the
request for dissolution. Upon receipt of
a withdrawal of request for dissolution,
the Commission shall withhold action
on the request for dissolution and shall,
after investigation: (a) make a
pronouncement that the request for
dissolution is deemed withdrawn; (b)
direct a joint meeting of the board of
directors or trustees and the
stockholders or members for the
purpose of ascertaining whether to
proceed with dissolution; or (c) issue
such other orders as it may deem
appropriate.
A withdrawal of the petition for and filed prior to publication of the order
dissolution shall be in the form of a setting the deadline for filing objections to
motion and similar in substance to a the petition.
withdrawal of request for dissolution
but shall be verified and filed prior to
publication of the order setting the
deadline for filing objections to the
petition.
Involuntary Dissolution.— A
corporation may be dissolved by the
Commission motu proprio or upon
filing of a verified complaint by any
interested party. The following may be
grounds for dissolution of the
corporation:
(a) Non-use of corporate
charter as provided under
Section 21 of this Code;
(b) Continuous inoperation of
a corporation as provided under
Section 21 of this Code;
(c) Upon receipt of a lawful
court order dissolving the
corporation;
(d) Upon finding by final
judgment that the corporation
procured its incorporation
through fraud;
(e) Upon finding by final
judgment that the corporation:
(1) Was created for the
purpose of committing,
concealing or aidihg the
commission of securities
violations, smuggling, tax
evasion, money
dissolution. Upon receipt of a withdrawal of
request for dissolution, the Commission
shall withhold action on the request for
dissolution and shall, after investigation: (a)
make a pronouncement that the request for
dissolution is deemed withdrawn; (b) direct
a joint meeting of the board of directors or
trustees and the stockholders or members
for the purpose of ascertaining whether to
proceed with dissolution; or (c) issue such
other orders as it may deem appropriate.
A withdrawal of the petition for
dissolution shall be in the form of a motion
and similar in substance to a withdrawal of
request for dissolution but shall be verified
Involuntary Dissolution.— A corporation
may be dissolved by the Commission motu
proprio or upon filing of a verified
complaint by any interested party. The
following may be grounds for dissolution of
the corporation:
(a) Non-use of corporate charter as
provided under Section 21 of this
Code;
(b) Continuous inoperation of a
corporation as provided under
Section 21 of this Code;
(c) Upon receipt of a lawful court
order dissolving the corporation;
(d) Upon finding by final judgment
that the corporation procured its
incorporation through fraud;
(e) Upon finding by final judgment
that the corporation:
(1) Was created for the
purpose of committing,
concealing or aidihg the
commission of securities
violations, smuggling, tax
evasion, money laundering, or
graft and corrupt practices;
(2) Committed or aided in

139 Incorporation and other
fees. - The Securities and
Exchange Commission is
hereby authorized to
collect and receive fees as
authorized by law or by
rules and regulations
promulgated by the
Commission. (n)
laundering, or graft and
corrupt practices;
(2) Committed or aided
in the commission of
securities violations,
smuggling, tax evasion,
money laundering, or
graft and corrupt
practices, and its
stockholders knew of the
same; and
(3) Repeatedly and
knowingly tolerated the
commission of graft and
corrupt practices or other
fraudulent or illegal acts
by its directors, trustees,
officers, or employees.
If the corporation is ordered
dissolved by final judgment pursuant to
the grounds set forth in subparagraph
(e) hereof, its assets, after payment of
its liabilities, shall, upon petition of the
Commission with the appropriate court,
be forfeited in favor of the national
government. Such forfeiture shall be
without prejudice to the rights of
innocent stockholders and employees
for services rendered, and to the
application of other penalty or sanction
under this Code or other laws.
The Commission shall give
reasonable notice to, and coordinate
with, the appropriate regulatory agency
prior to the involuntary dissolution of
companies under their special
regulatory jurisdiction.
Corporate Liquidation.— Except for
banks, which shall be covered by the
applicable provisions of Republic Act
No. 7653, otherwise known as “The
New Central Bank Act”, as amended,
and Republic Act No. 3591, otherwise
known as the Philippine Deposit
Insurance Corporation Charter, as
amended, every corporation whose
charter expires pursuant to its articles of
incorporation, is annulled by forfeiture,
or whose corporate existence is
terminated in any other manner, shall
nevertheless remain as a body corporate
for three (3) years after the effective
date of dissolution, for the purpose of
the commission of securities
violations, smuggling, tax
evasion, money laundering, or
graft and corrupt practices,
and its stockholders knew of
the same; and
(3) Repeatedly and
knowingly tolerated the
commission of graft and
corrupt practices or other
fraudulent or illegal acts by its
directors, trustees, officers, or
employees.
If the corporation is ordered dissolved by
final judgment pursuant to the grounds set
forth in subparagraph (e) hereof, its assets,
after payment of its liabilities, shall, upon
petition of the Commission with the
appropriate court, be forfeited in favor of
the national government. Such forfeiture
shall be without prejudice to the rights of
innocent stockholders and employees for
services rendered, and to the application of
other penalty or sanction under this Code
or other laws.
The Commission shall give reasonable
notice to, and coordinate with, the
appropriate regulatory agency prior to the
involuntary dissolution of companies under
their special regulatory jurisdiction.
Corporate Liquidation.— Except for banks,
which shall be covered by the applicable
provisions of Republic Act No. 7653,
otherwise known as “The New Central
Bank Act”, as amended, and Republic Act
No. 3591, otherwise known as the Philippine
Deposit Insurance Corporation Charter, as
amended, every corporation whose charter
expires pursuant to its articles of
incorporation, is annulled by forfeiture, or
whose corporate existence is terminated in
any other manner, shall nevertheless
remain as a body corporate for three (3)
years after the effective date of dissolution,
for the purpose of prosecuting and
defending suits by or against it and
 prosecuting and defending suits by or enabling it to settle and close its affairs,
against it and enabling it to settle and dispose of and convey its property, and
close its affairs, dispose of and convey distribute its assets, but not for the purpose
its property, and distribute its assets, of continuing the business for which it was
but not for the purpose of continuing established.
the business for which it was
established. At any time during said three (3) years,
the corporation is authorized and
At any time during said three (3) empowered to convey all of its property to
years, the corporation is authorized and trustees for the benefit of stockholders,
empowered to convey all of its property members, creditors and other persons in
to trustees for the benefit of interest. After any such conveyance by the
stockholders, members, creditors and corporation of its property in trust for the
other persons in interest. After any such benefit of its stockholders, members,
conveyance by the corporation of its creditors and others in interest, all interest
property in trust for the benefit of its which the corporation had in the property
stockholders, members, creditors and terminates, the legal interest vests in the
others in interest, all interest which the trustees, and the beneficial interest in the
corporation had in the property stockholders, members, creditors or other
terminates, the legal interest vests in the persons-in-interest.
trustees, and the beneficial interest in
the stockholders, members, creditors or Except as otherwise provided for in
other persons-in-interest. Sections 93 and 94 of this Code, upon the
winding up of corporate affairs, any asset
Except as otherwise provided for in distributable to any creditor or stockholder
Sections 93 and 94 of this Code, upon or member who is unknown or cannot be
the winding up of corporate affairs, any found shall be escheated in favor of the
asset distributable to any creditor or national government.
stockholder or member who is
unknown or cannot be found shall be Except by decrease of capital stock and as
escheated in favor of the national otherwise allowed by this Code, no
government. corporation shall distribute any of its assets
or property except upon lawful dissolution
Except by decrease of capital stock and after payment of all its debts and
and as otherwise allowed by this Code, liabilities.
no corporation shall distribute any of its
assets or property except upon lawful
dissolution and after payment of all its
debts and liabilities.

140 Stock ownership in

Definition and Rights of Foreign Definition and Rights of Foreign
certain corporations. -
Pursuant to the duties Corporations.— For purposes of this Corporations.— For purposes of this Code,
specified by Article XIV Code, a foreign corporation is one a foreign corporation is one formed,
of the Constitution, the formed, organized or existing under organized or existing under laws other than
National Economic and laws other than those of the those of the Philippines’ and whose laws
Development Authority Philippines’ and whose laws allow allow Filipino citizens and corporations to
Filipino citizens and corporations to do do business in its own country or State. It
shall, from time to time, business in its own country or State. It shall have the right to transact business in
make a determination of
shall have the right to transact business the Philippines after obtaining a license for
whether the corporate
vehicle has been used by in the Philippines after obtaining a that purpose in accordance with this Code
any corporation or by license for that purpose in accordance and a certificate of authority from the
business or industry to with this Code and a certificate of appropriate government agency.
frustrate the provisions authority from the appropriate
thereof or of applicable government agency.
laws, and shall submit to
the Batasang Pambansa,
whenever deemed
necessary, a report of its
findings, including
 recommendations for their
prevention or correction.

Maximum limits may be

set by the Batasang
Pambansa for
stockholdings in
corporations declared by it
to be vested with a public
interest pursuant to the
provisions of this section,
belonging to individuals
or groups of individuals
related to each other by
consanguinity or affinity
or by close business
interests, or whenever it is
necessary to achieve
national objectives,
prevent illegal monopolies
or combinations in
restraint or trade, or to
implement national
economic policies
declared in laws, rules and
regulations designed to
promote the general
welfare and foster
economic development.

In recommending to the
Batasang Pambansa
corporations, business or
industries to be declared
vested with a public
interest and in formulating
proposals for limitations
on stock ownership, the
National Economic and
Development Authority
shall consider the type and
nature of the industry, the
size of the enterprise, the
economies of scale, the
geographic location, the
extent of Filipino
ownership, the labor
intensity of the activity,
the export potential, as
well as other factors
which are germane to the
realization and promotion
of business and industry.
141 Annual report or Application to Existing Foreign Application to Existing Foreign
corporations. - Every Corporations.— Every foreign Corporations.— Every foreign corporation
corporation, domestic or corporation which, on the date of the which, on the date of the effectivity of this
foreign, lawfully doing effectivity of this Code, is authorized to Code, is authorized to do business in the
business in the Philippines do business in the Philippines under a Philippines under a license issued to it shall
shall submit to the license issued to it shall continue to continue to have such authority under the
Securities and Exchange have such authority under the terms and terms and conditions of its license, subject
Commission an annual conditions of its license, subject to the to the provisions of this Code and other
report of its operations, provisions of this Code and other special laws.
together with a financial special laws.
statement of its assets and
liabilities, certified by any
independent certified
 public accountant in
appropriate cases,
covering the preceding
fiscal year and such other
requirements as the
Securities and Exchange
Commission may require.
Such report shall be
submitted within such
period as may be
prescribed by the
Securities and Exchange
Commission. (n)
142 Confidential nature of
Application for a License.— foreign Application for a License.— foreign
examination results. - All
interrogatories corporation applying for a license to corporation applying for a license to
propounded by the transact business in the Philippines transact business in the Philippines shall
Securities and Exchange shall submit to the Commission a copy submit to the Commission a copy of its
Commission and the of its articles of incorporation and articles of incorporation and bylaws,
answers thereto, as well as bylaws, certified in accordance with certified in accordance with law, and their
the results of any law, and their translation to an official translation to an official language of the
examination made by the
language of the Philippines, if Philippines, if necessary. The application
Commission or by any
other official authorized necessary. The application shall be shall be under oath and, unless already
by law to make an under oath and, unless already stated in stated in its articles of incorporation, shall
examination of the its articles of incorporation, shall specifically set forth the following:
operations, books and specifically set forth the following:
records of any (a) The date and term of
corporation, shall be kept (a) The date and term of incorporation;
strictly confidential, incorporation;
except insofar as the law (b) The address, including the
may require the same to (b) The address, including the street number, of the principal office
be made public or where
street number, of the principal of the corporation in the country or
such interrogatories,
answers or results are office of the corporation in the State of incorporation;
necessary to be presented country or State of
as evidence before any incorporation; (c) The name and address of its
court. (n) resident agent authorized to accept
(c) The name and address of summons and process in all legal
its resident agent authorized to proceedings and all notices affecting
accept summons and process in the corporation, pending the
all legal proceedings and all establishment of a local office;
notices affecting the corporation,
pending the establishment of a (d) The place in the Philippines
local office; where the corporation intends to
operate;
(d) The place in the
Philippines where the (e) The specific purpose or
corporation intends to operate; purposes which the corporation
intends to pursue in the transaction
(e) The specific purpose or of its business in the
purposes which the corporation Philippines: Provided, That said
intends to pursue in the purpose or purposes are those
transaction of its business in the specifically stated in the certificate of
Philippines: Provided, That said authority issued by the appropriate
purpose or purposes are those government agency;
specifically stated in the
certificate of authority issued by (f) The names and addresses of the
the appropriate government present directors and officers of the
agency; corporation;

(f) The names and addresses (g) A statement of its authorized

of the present directors and capital stock and the aggregate
 officers of the corporation;
(g) A statement of its
authorized capital stock and the
aggregate number of shares
which the corporation has
authority to issue, itemized by
class, par value of shares, shares
without par value, and series, if
any;
(h) A statement of its
outstanding capital stock -and
the aggregate number of shares
which the corporation has
issued, itemized by class, par
value of shares, shares without
par value, and series, if any;
(i) A statement of the amount
actually paid in; and
(j) Such additional information
as may be necessary or
appropriate in order to enable the
Commission to determine
whether such corporation is
entitled to a license to transact
business in the Philippines, and
to determine and assess the fees
payable.
Attached to the application for
license shall be a certificate under oath
duly executed by the authorized official
or officials of the jurisdiction of its
incorporation, attesting to the fact that
the laws of the country or State of the
applicant allow Filipino citizens and
corporations to do business therein, and
that the applicant is an existing
corporation in good standing. If the
certificate is in a foreign language, a
translation thereof in English under
oath of the translator shall be attached
to the application.
The application for a license to
transact business in the Philippines
shall likewise be accompanied by a
statement under oath of the president or
any other person authorized by the
corporation, showing to the satisfaction
of the Commission and when
appropriate, other governmental
agencies that the applicant is solvent
and in sound financial condition, setting
forth the assets and liabilities of the
corporation as of the date not exceeding
number of shares which the
corporation has authority to issue,
itemized by class, par value of shares,
shares without par value, and series,
if any;
(h) A statement of its outstanding
capital stock -and the aggregate
number of shares which the
corporation has issued, itemized by
class, par value of shares, shares
without par value, and series, if any;
(i) A statement of the amount
actually paid in; and
(j) Such additional information as
may be necessary or appropriate in
order to enable the Commission to
determine whether such corporation
is entitled to a license to transact
business in the Philippines, and to
determine and assess the fees
payable.
Attached to the application for license
shall be a certificate under oath duly
executed by the authorized official or
officials of the jurisdiction of its
incorporation, attesting to the fact that the
laws of the country or State of the applicant
allow Filipino citizens and corporations to
do business therein, and that the applicant
is an existing corporation in good standing.
If the certificate is in a foreign language, a
translation thereof in English under oath of
the translator shall be attached to the
application.
The application for a license to transact
business in the Philippines shall likewise be
accompanied by a statement under oath of
the president or any other person
authorized by the corporation, showing to
the satisfaction of the Commission and
when appropriate, other governmental
agencies that the applicant is solvent and in
sound financial condition, setting forth the
assets and liabilities of the corporation as of
the date not exceeding one (1) year
immediately prior to the filing of the
application.
Foreign banking, financial, and insurance
corporations shall, in addition to the above
requirements, comply with the provisions of
existing laws applicable to them. In the case
of all other foreign corporations, no
application for license to transact business
 one (1) year immediately prior to the in the Philippines shall be accepted by the
filing of the application.
Foreign banking, financial, and whenever required by law.
insurance corporations shall, in addition
to the above requirements, comply with
the provisions of existing laws
applicable to them. In the case of all
other foreign corporations, no
application for license to transact
business in the Philippines shall be
accepted by the Commission without
previous authority from the appropriate
government agency, whenever required
by law.
143 Rule-making power of the
Issuance of a License.— If the
Securities and Exchange
Commission. - The Commission is satisfied that the
Securities and Exchange applicant has complied with all the
Commission shall have requirements of this Code and other
the power and authority to special laws, rules and regulations, the
implement the provisions Commission shall issue a license to
of this Code, and to transact business in the Philippines to
promulgate rules and
the applicant for the purpose or
regulations reasonably
necessary to enable it to purposes specified in such license.
perform its duties Upon issuance of the license, such
hereunder, particularly in foreign corporation may commence to
the prevention of fraud transact business in the Philippines and
and abuses on the part of continue to do so for as long as it
the controlling retains its authority to act as a
stockholders, members,
corporation under the laws of the
directors, trustees or
officers. (n) country or State of its incorporation,
unless such license is sooner
surrendered, revoked, suspended, or
annulled in accordance with this Code
or other special laws. Within sixty (60)
days after the issuance of the license to
transact business in the Philippines, the
licensee, except foreign banking or
insurahce corporations, shall deposit
with the Commission for the benefit of
present and future creditors of the
licensee in the Philippines, securities
satisfactory to the Commission,
consisting of bonds or other evidence of
indebtedness of the Government of the
Philippines, its political subdivisions
and instrumentalities, or of
government-owned or -controlled
corporations and entities, shares of
stock or debt securities that are
registered under Republic Act No.
8799, otherwise known as “The
Securities Regulation Code”, shares of
stock in domestic corporations listed in
the stock exchange, shares of stock in
domestic insurance companies and
banks, any financial instrument
Commission without previous authority
from the appropriate government agency,
Issuance of a License.— If the Commission
is satisfied that the applicant has complied
with all the requirements of this Code and
other special laws, rules and regulations,
the Commission shall issue a license to
transact business in the Philippines to the
applicant for the purpose or purposes
specified in such license. Upon issuance of
the license, such foreign corporation may
commence to transact business in the
Philippines and continue to do so for as long
as it retains its authority to act as a
corporation under the laws of the country
or State of its incorporation, unless such
license is sooner surrendered, revoked,
suspended, or annulled in accordance with
this Code or other special laws. Within sixty
(60) days after the issuance of the license to
transact business in the Philippines, the
licensee, except foreign banking or
insurahce corporations, shall deposit with
the Commission for the benefit of present
and future creditors of the licensee in the
Philippines, securities satisfactory to the
Commission, consisting of bonds or other
evidence of indebtedness of the Government
of the Philippines, its political subdivisions
and instrumentalities, or of government-
owned or -controlled corporations and
entities, shares of stock or debt securities
that are registered under Republic Act No.
8799, otherwise known as “The Securities
Regulation Code”, shares of stock in
domestic corporations listed in the stock
exchange, shares of stock in domestic
insurance companies and banks, any
financial instrument determined suitable by
the Commission, or any combination
thereof with an actual market value of at
least Five hundred thousand pesos
(₱500,000.00) or such other amount that
may be set by the
 determined suitable by the
Commission, or any combination
thereof with an actual market value of
at least Five hundred thousand pesos
(₱500,000.00) or such other amount
that may be set by the
Commission: Provided, however, That
within six (6) months after each fiscal
year of the licensee, the Commission
shall require the licensee to deposit
additional securities or financial
instruments equivalent in actual market
value to two percent (2%) of the
amount by which the licensee’s gross
income for that fiscal year exceeds Ten
million pesos (₱10,000,000.00). The
Commission shall also require the
deposit of additional securities or
financial instruments if the actual
market value of the deposited securities
or financial instruments has decreased
by at least ten percent (10%) of their
actual market value at the time they
were deposited. The Commission may,
at its discretion, release part of the
additional deposit if the gross income
of the licensee has decreased, or if the
actual market value of the total deposit
has increased, by more than ten percent
(10%) of their actual market value at
the time they were deposited. The
Commission may, from time to time,
allow the licensee to make substitute
deposits for those already on deposit as
long as the licensee is solvent. Such
licensee shall be entitled to collect the
interest or dividends on such-deposits.
In the event the licensee ceases to do
business in the Philippines, its deposits
shall be returned, upon the licensee’s
application and upon proof to the
satisfaction of the Commission that the
licensee has no liability to Philippine
residents, including the Government of
the Republic of the Philippines. For
purposes of computing the securities
deposit, the composition of gross
income and allowable deductions
therefrom shall be in accordance with
the rules of the Commission.
144 Violations of the Code. -
Who May be a Resident Agent.— A
Violations of any of the
provisions of this Code or resident agent may be either an
its amendments not individual residing in the Philippines or
otherwise specifically a domestic corporation lawfully
penalized therein shall be transacting business in the
punished by a fine of not Philippines: Provided, That an
Commission: Provided, however, That
within six (6) months after each fiscal year
of the licensee, the Commission shall
require the licensee to deposit additional
securities or financial instruments
equivalent in actual market value to two
percent (2%) of the amount by which the
licensee’s gross income for that fiscal year
exceeds Ten million pesos (₱10,000,000.00).
The Commission shall also require the
deposit of additional securities or financial
instruments if the actual market value of
the deposited securities or financial
instruments has decreased by at least ten
percent (10%) of their actual market value
at the time they were deposited. The
Commission may, at its discretion, release
part of the additional deposit if the gross
income of the licensee has decreased, or if
the actual market value of the total deposit
has increased, by more than ten percent
(10%) of their actual market value at the
time they were deposited. The Commission
may, from time to time, allow the licensee to
make substitute deposits for those already
on deposit as long as the licensee is solvent.
Such licensee shall be entitled to collect the
interest or dividends on such-deposits. In
the event the licensee ceases to do business
in the Philippines, its deposits shall be
returned, upon the licensee’s application
and upon proof to the satisfaction of the
Commission that the licensee has no
liability to Philippine residents, including
the Government of the Republic of the
Philippines. For purposes of computing the
securities deposit, the composition of gross
income and allowable deductions therefrom
shall be in accordance with the rules of the
Commission.
Who May be a Resident Agent.— A resident
agent may be either an individual residing
in the Philippines or a domestic corporation
lawfully transacting business in the
Philippines: Provided, That an individual
resident agent must be of good moral
 less than one thousand individual resident agent must be of character and of sound financial
(P1,000.00) pesos but not good moral character and of sound standing: Provided, further, That in case of a
more than ten thousand financial standing: Provided, further, domestic corporation who will act as a
(P10,000.00) pesos or by
That in case of a domestic corporation resident agent, it must likewise be of sound
imprisonment for not less
than thirty (30) days but who will act as a resident agent, it must financial standing and must show proof that
not more than five (5) likewise be of sound financial standing it is in good standing as certified by the
years, or both, in the and must show proof that it is in good Commission.
discretion of the court. If standing as certified by the
the violation is committed Commission.
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)
145 Amendment or repeal. -
Resident Agent; Service of Process.— Resident Agent; Service of Process.— As a
No right or remedy in
favor of or against any As a condition to the issuance of the condition to the issuance of the license for a
corporation, its license for a foreign corporation to foreign corporation to transact business in
stockholders, members, transact business in the Philippines, the Philippines, such corporation shall file
directors, trustees, or such corporation shall file with the with the Commission a written power of
officers, nor any liability Commission a written power of attorney designating a person who must be
incurred by any such attorney designating a person who must a resident of the Philippines, on whom
corporation, stockholders,
be a resident of the Philippines, on summons and other legal processes may be
members, directors,
trustees, or officers, shall whom summons and other legal served in all actions or other legal
be removed or impaired processes may be served in all actions proceedings against such corporation, and
either by the subsequent or other legal proceedings against such consenting that service upon such resident
dissolution of said corporation, and consenting that service agent shall be admitted and held as valid as
corporation or by any upon such resident agent shall be if served upon the duly authorized officers
subsequent amendment or admitted and held as valid as if served of the foreign corporation at its home office.
repeal of this Code or of
upon the duly authorized officers of the Such foreign corporation shall likewise
any part thereof. (n)
foreign corporation at its home office. execute and file with the Commission an
Such foreign corporation shall likewise agreement or stipulation, executed by the
execute and file with the Commission proper authorities of said corporation, in
an agreement or stipulation, executed form and substance as follows:
by the proper authorities of said
corporation, in form and substance as “The (name of foreign corporation)
follows: hereby stipulates and agrees, in
consideration of being granted a
“The (name of foreign license to transact business in the
corporation) hereby stipulates Philippines, that if the corporation
and agrees, in consideration of shall cease to transact business in the
being granted a license to Philippines, or shall be without any
transact business in the resident agent in the Philippines on
Philippines, that if the whom any summons or other legal
corporation shall cease to process may be served, then service

146 Repealing clause. - Except
as expressly provided by
this Code, all laws or parts
thereof inconsistent with
any provision of this Code
shall be deemed repealed.
(n)
147 Separability of provisions.
- Should any provision of
this Code or any part
thereof be declared invalid
or unconstitutional, the
other provisions, so far as
they are separable, shall
transact business in the
Philippines, or shall be without
any resident agent in the
Philippines on whom any
summons or other legal process
may be served, then service of
any summons or other legal
process may be made upon the
Commission in any action or
proceeding arising out of any
business or transaction which
occurred in the Philippines and
such service shall have the same
force and effect as if made upon
the duly authorized officers of
the corporation at its home
office.”
Whenever such service of summons
or other process is made upon the
Commission, the Commission shall,
within ten (10) days thereafter, transmit
by mail a copy of such summons or
other legal process to the corporation at
its home or principal office. The
sending of such copy by the to immediately notify the Commission in
Commission shall be a necessary part writing of any change in the resident
of and shall complete such service. All agent’s address.
expenses incurred by the Commission
for such service shall be paid in
advance by the party at whose instance
the service is made.
It shall be the duty of the resident
agent to immediately notify the
Commission in writing of any change
in the resident agent’s address.
Law Applicable.— A foreign
corporation lawfully doing business in
the Philippines shall be bound by all
laws, rules and regulations applicable to
domestic corporations of the same
class, except those which provide for
the creation, formation, organization or
dissolution of corporations or those
which fix the relations, liabilities,
responsibilities, or duties of
stockholders, members, or officers of
corporations to each other or to the
corporation.
Amendments to Articles of
Incorporation or Bylaws of Foreign
Corporations.— Whenever the articles
of incorporation or bylaws of a foreign
corporation authorized to transact
business in the Philippines are
of any summons or other legal
process may be made upon the
Commission in any action or
proceeding arising out of any
business or transaction which
occurred in the Philippines and such
service shall have the same force and
effect as if made upon the duly
authorized officers of the corporation
at its home office.”
Whenever such service of summons or
other process is made upon the
Commission, the Commission shall, within
ten (10) days thereafter, transmit by mail a
copy of such summons or other legal
process to the corporation at its home or
principal office. The sending of such copy
by the Commission shall be a necessary part
of and shall complete such service. All
expenses incurred by the Commission for
such service shall be paid in advance by the
party at whose instance the service is made.
It shall be the duty of the resident agent
Law Applicable.— A foreign corporation
lawfully doing business in the Philippines
shall be bound by all laws, rules and
regulations applicable to domestic
corporations of the same class, except those
which provide for the creation, formation,
organization or dissolution of corporations
or those which fix the relations, liabilities,
responsibilities, or duties of stockholders,
members, or officers of corporations to each
other or to the corporation.
Amendments to Articles of Incorporation or
Bylaws of Foreign Corporations.—
Whenever the articles of incorporation or
bylaws of a foreign corporation authorized
to transact business in the Philippines are
amended, such foreign corporation shall,
 remain in force. (n)
148 Applicability to existing
corporations. - All
corporations lawfully
existing and doing
business in the Philippines
on the date of the
effectivity of this Code
and heretofore authorized,
licensed or registered by
the Securities and
Exchange Commission,
shall be deemed to have
been authorized, licensed
or registered under the
provisions of this Code,
subject to the terms and
conditions of its license,
and shall be governed by
the provisions hereof:
Provided, That if any such
corporation is affected by
the new requirements of
this Code, said
corporation shall, unless
otherwise herein provided,
be given a period of not
more than two (2) years
from the effectivity of this
Code within which to
comply with the same. (n)
149 Effectivity. - This Code
shall take effect
immediately upon its
approval.
amended, such foreign corporation
shall, within sixty (60) days after the
amendment becomes effective, file with
the Commission, and in proper cases,
with the appropriate government
agency, a duly authenticated copy of
the amended articles of incorporation or
bylaws, indicating clearly in capital
letters or underscoring the change or
changes made, duly certified by the
authorized official or officials of the
country or State of incorporation. Such
filing shall not in itself enlarge or alter
the purpose or purposes for which such
corporation is authorized to transact
business in the Philippines.
Amended License.— A foreign
corporation authorized to transact
business in the Philippines shall obtain
an amended license in the event it
changes its corporate name, or desires
to pursue other or additional purposes
in the Philippines, by submitting an
application with the Commission,
favorably endorsed by the appropriate
government agency in the proper cases.
Merger or Consolidation Involving a
Foreign Corporation Licensed in the
Philippines.— One or more foreign
corporations authorized to transact
business in the Philippines may merge
or consolidate with any domestic
corporation or corporations if permitted
under Philippine laws and by the law of
its incorporation: Provided, That the
requirements on merger or
consolidation as provided in this Code
are followed.
authorized to transact business in the
Whenever a foreign corporation Philippines shall be a party to a merger or
within sixty (60) days after the amendment
becomes effective, file with the Commission,
and in proper cases, with the appropriate
government agency, a duly authenticated
copy of the amended articles of
incorporation or bylaws, indicating clearly
in capital letters or underscoring the change
or changes made, duly certified by the
authorized official or officials of the country
or State of incorporation. Such filing shall
not in itself enlarge or alter the purpose or
purposes for which such corporation is
authorized to transact business in the
Philippines.
Amended License.— A foreign corporation
authorized to transact business in the
Philippines shall obtain an amended license
in the event it changes its corporate name,
or desires to pursue other or additional
purposes in the Philippines, by submitting
an application with the Commission,
favorably endorsed by the appropriate
government agency in the proper cases.
Merger or Consolidation Involving a Foreign
Corporation Licensed in the Philippines.—
One or more foreign corporations
authorized to transact business in the
Philippines may merge or consolidate with
any domestic corporation or corporations if
permitted under Philippine laws and by the
law of its incorporation: Provided, That the
requirements on merger or consolidation as
provided in this Code are followed.
Whenever a foreign corporation
 authorized to transact business in the
Philippines shall be a party to a merger
or consolidation in its home country or
State as permitted by the law
authorizing its incorporation, such
foreign corporation shall, within sixty
(60) days after the effectivity of such
merger or consolidation, file with the
Commission, and in proper cases, with
the appropriate government agency, a
copy of the articles of merger or
consolidation duly authenticated by the
proper official or officials of the
country or State under whose laws the
merger or consolidation was
effected: Provided, however, That if the
absorbed corporation is the foreign
corporation doing business in the
Philippines, the latter shall at the same
time file a petition for withdrawal of its
license in accordance with this Title.
150 None
Doing Business Without a License.—
No foreign corporation transacting
business in the Philippines without a
license, or its successors or assigns,
shall be permitted to maintain or
intervene in any action, suit or
proceeding in any court or
administrative agency of the
Philippines; but such corporation may
be sued or proceeded against before
Philippine courts or administrative
tribunals on any valid cause of action
recognized under Philippine laws.
151 None
Revocation of License.— Without
prejudice to other grounds provided
under special laws, the license of a
foreign corporation to transact business
in the Philippines may be revoked or
suspended by the Commission upon
any of the following grounds:
(a) Failure to file its annual
report or pay any fees as
required by this Code;
(b) Failure to appoint and
maintain a resident agent in the
Philippines as required by this
Title;
(c) Failure, after change of its
resident agent or address, to
submit to the Commission a
statement of such change as
consolidation in its home country or State
as permitted by the law authorizing its
incorporation, such foreign corporation
shall, within sixty (60) days after the
effectivity of such merger or consolidation,
file with the Commission, and in proper
cases, with the appropriate government
agency, a copy of the articles of merger or
consolidation duly authenticated by the
proper official or officials of the country or
State under whose laws the merger or
consolidation was
effected: Provided, however, That if the
absorbed corporation is the foreign
corporation doing business in the
Philippines, the latter shall at the same time
file a petition for withdrawal of its license in
accordance with this Title.
Doing Business Without a License.— No
foreign corporation transacting business in the
Philippines without a license, or its successors
or assigns, shall be permitted to maintain or
intervene in any action, suit or proceeding in
any court or administrative agency of the
Philippines; but such corporation may be sued
or proceeded against before Philippine courts
or administrative tribunals on any valid cause
of action recognized under Philippine laws.
Revocation of License.— Without prejudice to
other grounds provided under special laws, the
license of a foreign corporation to transact
business in the Philippines may be revoked or
suspended by the Commission upon any of the
following grounds:
(a) Failure to file its annual report or
pay any fees as required by this Code;
(b) Failure to appoint and maintain a
resident agent in the Philippines as
required by this Title;
(c) Failure, after change of its
resident agent or address, to submit to
the Commission a statement of such
change as required by this Title;
(d) Failure to submit to the
Commission an authenticated copy of
 required by this Title;
(d) Failure to submit to the
Commission an authenticated
copy of any amendment to its
articles of incorporation or
bylaws or of any articles of
merger or consolidation within
the time prescribed by this Title;
(e) A misrepresentation of any
material matter in any
application, report, affidavit or
other document submitted by
such corporation pursuant to this
Title;
(f) Failure to pay any and all
taxes, imposts, assessments or
penalties, if any, lawfully due to
the Philippine Government or
any of its agencies or political
subdivisions;
(g) Transacting business in the
Philippines outside of the
purpose or purposes for which
such corporation is authorized
under its license;
(h) Transacting business in the
Philippines as agent of or acting
on behalf of any foreign
corporation or entity not duly
licensed to do business in the
Philippines; or
(i) Any other ground as would
render it unfit to transact
business in the Philippines.
152 None
Issuance of Certificate of Revocation.—
Upon the revocation of the license to
transact business in the Philippines, the
Commission shall issue a
corresponding certificate of revocation,
furnishing a copy thereof to the
appropriate government agency in the
proper cases.
The Commission shall also mail the
notice and copy of the certificate of
revocation to the corporation, at its
.registered office in the Philippines.
153 None
Withdrawal of Foreign Corporations.— Withdrawal of Foreign Corporations.—
Subject to existing laws and Subject to existing laws and regulations, a
any amendment to its articles of
incorporation or bylaws or of any
articles of merger or consolidation
within the time prescribed by this Title;
(e) A misrepresentation of any
material matter in any application,
report, affidavit or other document
submitted by such corporation pursuant
to this Title;
(f) Failure to pay any and all taxes,
imposts, assessments or penalties, if
any, lawfully due to the Philippine
Government or any of its agencies or
political subdivisions;
(g) Transacting business in the
Philippines outside of the purpose or
purposes for which such corporation is
authorized under its license;
(h) Transacting business in the
Philippines as agent of or acting on
behalf of any foreign corporation or
entity not duly licensed to do business
in the Philippines; or
(i) Any other ground as would render
it unfit to transact business in the
Philippines.
Issuance of Certificate of Revocation.— Upon
the revocation of the license to transact
business in the Philippines, the Commission
shall issue a corresponding certificate of
revocation, furnishing a copy thereof to the
appropriate government agency in the proper
cases.
The Commission shall also mail the notice
and copy of the certificate of revocation to the
corporation, at its .registered office in the
Philippines.
 regulations, a foreign corporation
licensed to transact business in the
Philippines may be allowed to
withdraw from the Philippines by filing
a petition for withdrawal of license. No
certificate of withdrawal shall be issued
by the Commission unless all the
following requirements are met:
(a) All claims which have
accrued in the Philippines have
been paid, compromised or
settled;
(b) All taxes, imposts,
assessments, and penalties, if
any, lawfully due to the
Philippine Government or any of
its agencies or political
subdivisions, have been paid;
and
(c) The petition for withdrawal
of license has been published
once a week for three (3)
consecutive weeks in a
newspaper of general circulation
in the Philippines.
foreign corporation licensed to transact
business in the Philippines may be allowed to
withdraw from the Philippines by filing a
petition for withdrawal of license. No
certificate of withdrawal shall be issued by the
Commission unless all the following
requirements are met:
(a) All claims which have accrued in
the Philippines have been paid,
compromised or settled;
(b) All taxes, imposts, assessments,
and penalties, if any, lawfully due to the
Philippine Government or any of its
agencies or political subdivisions, have
been paid; and
(c) The petition for withdrawal of
license has been published once a week
for three (3) consecutive weeks in a
newspaper of general circulation in the
Philippines.

154 None
Investigation and Prosecution of Investigation and Prosecution of Offenses.—
Offenses.— The Commission may The Commission may investigate an alleged
investigate an alleged violation of this violation of this Code, or of a rule, regulation,
Code, or of a rule, regulation, or order or order of the Commission.
of the Commission.
The Commission may publish its findings,
The Commission may publish its orders, opinions, advisories, or information
findings, orders, opinions, advisories, concerning any such violation, as may be
or information concerning any such relevant to the general public or to the parties
violation, as may be relevant to the concerned, subject to the provisions of
general public or to the parties Republic Act No. 10173, otherwise known as
concerned, subject to the provisions of the “Data Privacy Act of 2012”, and other
Republic Act No. 10173, otherwise pertinent laws.
known as the “Data Privacy Act of
2012”, and other pertinent laws. The Commission shall give reasonable
notice to and coordinate with the appropriate
The Commission shall give regulatory agency prior to any such
reasonable notice to and coordinate publication involving companies under their
with the appropriate regulatory agency regulatory jurisdiction.
prior to any such publication involving
companies under their regulatory
jurisdiction.

155 None
Administration of Oaths, Subpoena of Administration of Oaths, Subpoena of
Witnesses and Documents.— The Witnesses and Documents.— The
Commission, through its designated Commission, through its designated officer,
officer, may administer oaths and may administer oaths and affirmations,
affirmations, issue subpoena and subpoena duces
 issue subpoena and subpoena duces
tecum take testimony in any inquiry or
investigation, and may perform other
acts necessary to the proceedings or to
the investigation.
156 None
Cease and Desist Orders.— Whenever
the Commission has reasonable basis to
believe that a person has violated, or is
about to violate this Code, a rule,
regulation, or order of the Commission,
it may direct such person to desist from
Committing the act constituting the
violation.
The Commission may issue a cease
and desist order ex parte to enjoin an
act or practice which is fraudulent or
can be reasonably expected to cause
significant, imminent, and irreparable
danger or injury to public safety or
welfare. The ex parteorder shall be
valid for a maximum period of twenty
(20) days, without prejudice to the
order being made permanent after due
notice and hearing.
Thereafter, the Commission may
proceed administratively against such
person in accordance with Section 158
of this Code, and/or transmit evidence
to the Department of Justice for
preliminary investigation or criminal
prosecution and/or initiate criminal
prosecution for any violation of this
Code, rule, or regulation.
157 None
Contempt.— Any person who, without
justifiable cause, fails or refuses to
comply with any lawful order, decision,
or subpoena issued by the Commission
shall, after due notice and hearing, be
held in contempt and fined in an
amount not exceeding Thirty thousand
pesos (₱30,000.00). When the refusal
amounts to clear and open defiance of
the Commission’s order, decision,
or subpoena the Commission may
impose a daily fine of One thousand
pesos (₱1,000.00) until the order,
decision, or subpoena is complied with.
158 None
Administrative Sanctions.— If, after
due notice and hearing, the
Commission finds that any provision of
this Code, rules or regulations, or any
tecum take testimony in any inquiry or
investigation, and may perform other acts
necessary to the proceedings or to the
investigation.
Cease and Desist Orders.— Whenever the
Commission has reasonable basis to believe
that a person has violated, or is about to
violate this Code, a rule, regulation, or order of
the Commission, it may direct such person to
desist from Committing the act constituting
the violation.
The Commission may issue a cease and
desist order ex parte to enjoin an act or
practice which is fraudulent or can be
reasonably expected to cause significant,
imminent, and irreparable danger or injury to
public safety or welfare. The ex parteorder
shall be valid for a maximum period of twenty
(20) days, without prejudice to the order being
made permanent after due notice and hearing.
Thereafter, the Commission may proceed
administratively against such person in
accordance with Section 158 of this Code,
and/or transmit evidence to the Department of
Justice for preliminary investigation or
criminal prosecution and/or initiate criminal
prosecution for any violation of this Code,
rule, or regulation.
Contempt.— Any person who, without
justifiable cause, fails or refuses to comply
with any lawful order, decision,
or subpoena issued by the Commission shall,
after due notice and hearing, be held in
contempt and fined in an amount not
exceeding Thirty thousand pesos (₱30,000.00).
When the refusal amounts to clear and open
defiance of the Commission’s order, decision,
or subpoena the Commission may impose a
daily fine of One thousand pesos (₱1,000.00)
until the order, decision, or subpoena is
complied with.
Administrative Sanctions.— If, after due notice
and hearing, the Commission finds that any
provision of this Code, rules or regulations, or
any of the Commission’s orders has been
 of the Commission’s orders has been
violated, the Commission may impose
any or all of the following sanctions,
taking into consideration the extent of
participation, nature, effects, frequency
and seriousness of the violation:
(a) Imposition of a fine
ranging from Five thousand
pesos (₱5,000.00) to Two
million pesos (₱2,000,000.00),
and not more than One thousand
pesos (₱1,000.00) for each day
of continuing violation but in no
case to exceed Two million
pesos (₱2,000,000.00);
(b) Issuance of a permanent
cease and desist order;
(c) Suspension or revocation
of the certificate of
incorporation; and
(d) Dissolution of the
corporation and forfeiture of its
assets under the conditions in
Title XIV of this Code.
159 None Unauthorized Use of Corporate Name;
Penalties.— The unauthorized use of a
corporate name shall be punished with
a fine ranging from Ten thousand pesos
(₱10,000.00) to Two hundred thousand
pesos (₱200,000.00).
160 None Violation of Disqualification Provision;
Penalties.— When, despite the
knowledge of the existence of a ground
for disqualification as provided in
Section 26 of this Code, a director,
trustee or officer willfully holds office,
or willfully conceals such
disqualification, such director, trustee
or officer shall be punished with a fine
ranging from Ten thousand pesos
(₱10,000.00) to Two hundred thousand
pesos (₱200,000.00) at the discretion of
the court, and shall be permanently
disqualified from being a director,
trustee or officer of any corporation.
When the violation of this provision is
injurious or detrimental to the public,
the penalty shall be a fine ranging from
Twenty thousand pesos (₱20,000.00) to
Four hundred thousand pesos
(₱400,000.00).
161 None
Violation of Duty to Maintain Records,
to Allow their Inspection or
Reproduction; Penalties.— The
unjustified failure or refusal by the
corporation, or by those responsible for
keeping and maintaining corporate
violated, the Commission may impose any or
all of the following sanctions, taking into
consideration the extent of participation,
nature, effects, frequency and seriousness of
the violation:
(a) Imposition of a fine ranging from
Five thousand pesos (₱5,000.00) to
Two million pesos (₱2,000,000.00), and
not more than One thousand pesos
(₱1,000.00) for each day of continuing
violation but in no case to exceed Two
million pesos (₱2,000,000.00);
(b) Issuance of a permanent cease and
desist order;
(c) Suspension or revocation of the
certificate of incorporation; and
(d) Dissolution of the corporation and
forfeiture of its assets under the
conditions in Title XIV of this Code.
Unauthorized Use of Corporate Name;
Penalties.— The unauthorized use of a
corporate name shall be punished with a fine
ranging from Ten thousand pesos (₱10,000.00)
to Two hundred thousand pesos
(₱200,000.00).
Violation of Disqualification Provision;
Penalties.— When, despite the knowledge of
the existence of a ground for disqualification
as provided in Section 26 of this Code, a
director, trustee or officer willfully holds
office, or willfully conceals such
disqualification, such director, trustee or
officer shall be punished with a fine ranging
from Ten thousand pesos (₱10,000.00) to Two
hundred thousand pesos (₱200,000.00) at the
discretion of the court, and shall be
permanently disqualified from being a
director, trustee or officer of any corporation.
When the violation of this provision is
injurious or detrimental to the public, the
penalty shall be a fine ranging from Twenty
thousand pesos (₱20,000.00) to Four hundred
thousand pesos (₱400,000.00).
Violation of Duty to Maintain Records, to
Allow their Inspection or Reproduction;
Penalties.— The unjustified failure or refusal
by the corporation, or by those responsible for
keeping and maintaining corporate records, to
comply with Sections 45, 73, 92, 128, 177 and
 records, to comply with Sections 45,
73, 92, 128, 177 and other pertinent
rules and provisions of this Code on
inspection and reproduction of records
shall be punished with a fine ranging
from Ten thousand pesos (₱10,000.00)
to Two hundred thousand pesos
(₱200,000.00), at the discretion of the
court, taking into consideration the
seriousness of the violation and its
implications. When the violation of this
provision is injurious or detrimental to
the public, the penalty is a fine ranging
from Twenty thousand pesos
(₱20,000.00) to Four hundred thousand
pesos (₱400,000.00).
The penalties imposed under this
section shall be without prejudice to the
Commission’s exercise of its contempt
powers under Section 157 hereof.
162 None
Willful Certification of Incomplete,
Inaccurate, False? or Misleading
Statements or Reports; Penalties.—
Any person who willfully certifies a
report required under this Code,
knowing that the same contains
incomplete, inaccurate, false, or
misleading information or statements,
shall be punished with a fine ranging
from Twenty thousand pesos
(₱20,000.00) to Two hundred thousand
pesos (₱200,000.00). When the
wrongful certification is injurious or
detrimental to the public, the auditor or
the responsible person may also be
punished with a fine ranging from Forty
thousand pesos (₱40,000.00) to Four
hundred thousand pesos (₱400,000.00).
163 None
Independent Auditor Collusion;
Penalties.— An independent auditor
who, in collusion with the corporation’s
directors or representatives, certifies the
corporation’s financial statements
despite its incompleteness or
inaccuracy, its failure to give a fair and
accurate presentation of the
corporation’s condition, or despite
containing false or misleading
statements, shall be punished with a
fine ranging from Eighty thousand
pesos (₱80,000.00) to Five hundred
thousand pesos (₱500,000.00). When
the statement or report certified is
other pertinent rules and provisions of this
Code on inspection and reproduction of
records shall be punished with a fine ranging
from Ten thousand pesos (₱10,000.00) to Two
hundred thousand pesos (₱200,000.00), at the
discretion of the court, taking into
consideration the seriousness of the violation
and its implications. When the violation of this
provision is injurious or detrimental to the
public, the penalty is a fine ranging from
Twenty thousand pesos (₱20,000.00) to Four
hundred thousand pesos (₱400,000.00).
The penalties imposed under this section
shall be without prejudice to the
Commission’s exercise of its contempt powers
under Section 157 hereof.
Willful Certification of Incomplete,
Inaccurate, False? or Misleading Statements
or Reports; Penalties.— Any person who
willfully certifies a report required under this
Code, knowing that the same contains
incomplete, inaccurate, false, or misleading
information or statements, shall be punished
with a fine ranging from Twenty thousand
pesos (₱20,000.00) to Two hundred thousand
pesos (₱200,000.00). When the wrongful
certification is injurious or detrimental to the
public, the auditor or the responsible person
may also be punished with a fine ranging from
Forty thousand pesos (₱40,000.00) to Four
hundred thousand pesos (₱400,000.00).
Independent Auditor Collusion; Penalties.—
An independent auditor who, in collusion
with the corporation’s directors or
representatives, certifies the corporation’s
financial statements despite its incompleteness
or inaccuracy, its failure to give a fair and
accurate presentation of the corporation’s
condition, or despite containing false or
misleading statements, shall be punished with
a fine ranging from Eighty thousand pesos
(₱80,000.00) to Five hundred thousand pesos
(₱500,000.00). When the statement or report
certified is fraudulent, or has the effect of
causing injury to the general public, the
auditor or responsible officer may be punished
 fraudulent, or has the effect of causing with a fine ranging from One hundred
injury to the general public, the auditor thousand pesos (₱100,000.00) to Six hundred
or responsible officer may be punished thousand pesos (₱600,000.00).
with a fine ranging from One hundred
thousand pesos (₱100,000.00) to Six
hundred thousand pesos (₱600,000.00).
164 None
Obtaining Corporate Registration
Through Fraud; Penalties.— Those
responsible for the formation of a
corporation through fraud, or who
assisted directly or indirectly therein,
shall be punished with a fine ranging
from Two hundred thousand pesos
(₱200,000.00) to Two million pesos
(₱2,000,000.00). When the violation of
this provision is injurious or
detrimental to the public, the penalty is
a fine ranging from Four hundred
thousand pesos (₱400,000.00) to Five
million pesos (₱5,000,000.00).
165 None
Fraudulent Conduct of Business;
Penalties.— A corporation that
conducts its business through fraud
shall be punished with a fine ranging
from Two hundred thousand pesos
(₱200,000.00) to Two million pesos
(₱2,000,000.00). When the violation of
this provision is injurious or
detrimental to the public, the penalty is
a fine ranging from Four hundred
thousand pesos (₱400,000.00) to Five
million pesos (₱5,000,000.00).
166 None
Acting as Intermediaries for Graft and
Corrupt Practices; Penalties.— A
corporation used for fraud, or for
committing or concealing graft and
corrupt practices as defined under
pertinent statutes, shall be liable for a
fine ranging from One hundred
thousand pesos (₱100,000.00) to Five
million pesos (₱5,000,000.00).
When there is a finding that any of its
directors, officers, employees, agents,
or representatives are engaged in graft
and corrupt practices, the corporation’s
failure to install: (a) safeguards for the
transparent and lawful delivery of
services; and (b) policies, code of
ethics, and procedures against graft and
corruption shall be prima
facie evidence of corporate liability
under this section.
Obtaining Corporate Registration Through
Fraud; Penalties.— Those responsible for the
formation of a corporation through fraud, or
who assisted directly or indirectly therein,
shall be punished with a fine ranging from
Two hundred thousand pesos (₱200,000.00) to
Two million pesos (₱2,000,000.00). When the
violation of this provision is injurious or
detrimental to the public, the penalty is a fine
ranging from Four hundred thousand pesos
(₱400,000.00) to Five million pesos
(₱5,000,000.00).
Fraudulent Conduct of Business; Penalties.—
A corporation that conducts its business
through fraud shall be punished with a fine
ranging from Two hundred thousand pesos
(₱200,000.00) to Two million pesos
(₱2,000,000.00). When the violation of this
provision is injurious or detrimental to the
public, the penalty is a fine ranging from Four
hundred thousand pesos (₱400,000.00) to Five
million pesos (₱5,000,000.00).
Acting as Intermediaries for Graft and
Corrupt Practices; Penalties.— A corporation
used for fraud, or for committing or
concealing graft and corrupt practices as
defined under pertinent statutes, shall be liable
for a fine ranging from One hundred thousand
pesos (₱100,000.00) to Five million pesos
(₱5,000,000.00).
When there is a finding that any of its
directors, officers, employees, agents, or
representatives are engaged in graft and
corrupt practices, the corporation’s failure to
install: (a) safeguards for the transparent and
lawful delivery of services; and (b) policies,
code of ethics, and procedures against graft
and corruption shall be prima facie evidence
of corporate liability under this section.
167 None
Engaging Intermediaries for Graft and
Corrupt Practices; Penalties.—
corporation that appoints an
intermediary who engages in graft and
corrupt practices for the corporation’s
benefit or interest shall be punished
with a fine ranging from One hundred
thousand pesos (₱100,000.00) to One
million pesos (₱1,000,000.00).
168 None
Tolerating Graft and Corrupt
Practices; Penalties.— A director,
trustee, or officer who knowingly fails
to sanction, report, or file the
appropriate action with proper
agencies, allows or tolerates the graft
and corrupt practices or fraudulent acts
committed by a corporation’s directors,
trustees, officers, or employees shall be
punished with a fine ranging from Five
hundred thousand pesos (₱500,000.00)
to One million pesos (₱1,000,000.00).
169 None
Retaliation Against Whistleblowers.—
A whistleblower refers to any person
who provides truthful information
relating to the commission or possible
commission of any offense or violation
under this Code. Any person who,
knowingly and with intent to retaliate,
commits acts detrimental to a
whistleblower such as interfering with
the lawful employment or livelihood of
the whistleblower, shall, at the
discretion of the court, be punished
with a fine ranging from One hundred
thousand pesos (₱100,000.00) to One
million pesos (₱1,000,000.00).
170 None
Other Violations of the Code; Separate
Liability.— Violations of any of the
other provisions of this Code or its
amendments not otherwise specifically
penalized therein shall be punished by a
fine of not less than Ten thousand pesos
(₱10,000.00) but not more than One
million pesos (₱1,000,000.00). If the
violation is committed by a corporation,
the same may, after notice and hearing,
be dissolved in appropriate proceedings
before the 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
Engaging Intermediaries for Graft and
Corrupt Practices; Penalties.—corporation
that appoints an intermediary who engages in
graft and corrupt practices for the
corporation’s benefit or interest shall be
punished with a fine ranging from One
hundred thousand pesos (₱100,000.00) to One
million pesos (₱1,000,000.00).
Tolerating Graft and Corrupt Practices;
Penalties.— A director, trustee, or officer who
knowingly fails to sanction, report, or file the
appropriate action with proper agencies,
allows or tolerates the graft and corrupt
practices or fraudulent acts committed by a
corporation’s directors, trustees, officers, or
employees shall be punished with a fine
ranging from Five hundred thousand pesos
(₱500,000.00) to One million pesos
(₱1,000,000.00).
Retaliation Against Whistleblowers.— A
whistleblower refers to any person who
provides truthful information relating to the
commission or possible commission of any
offense or violation under this Code. Any
person who, knowingly and with intent to
retaliate, commits acts detrimental to a
whistleblower such as interfering with the
lawful employment or livelihood of the
whistleblower, shall, at the discretion of the
court, be punished with a fine ranging from
One hundred thousand pesos (₱100,000.00) to
One million pesos (₱1,000,000.00).
Other Violations of the Code; Separate
Liability.— Violations of any of the other
provisions of this Code or its amendments not
otherwise specifically penalized therein shall
be punished by a fine of not less than Ten
thousand pesos (₱10,000.00) but not more
than One million pesos (₱1,000,000.00). If the
violation is committed by a corporation, the
same may, after notice and hearing, be
dissolved in appropriate proceedings before
the 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
 construed to repeal the other causes for provided in this Code.
dissolution of a corporation provided in
this Code.
shall be separate from any other
Liability for any of the foregoing administrative, civil, or criminal liability under
offenses shall be separate from any this Code and other laws.
other administrative, civil, or criminal
liability under this Code and other laws.
171 None
Liability of Directors, Trustees,
Officers, or Other Employees.— If the
offender is a corporation, the penalty
may, at the discretion of the court, be
imposed upon such corporation and/or
upon its directors, trustees,
stockholders, members, officers, or
employees responsible for the violation
or indispensable to its commission.
172 None
Liability of Aiders and Abettors and
Other Secondary Liability.—Anyone
who shall aid, abet, counsel, command,
induce, or cause any violation of this
Code, or any rule, regulation, or order
of the Commission shall be punished
with a fine not exceeding that imposed
on the principal offenders, at the
discretion of the court, after taking into
account their participation in the
offense.
173 None
Outstanding Capital Stock Defined.—
The term “outstanding capital stock”,
as used in this Code, shall mean the
total shares of stock issued under
binding subscription contracts to
subscribers or stockholders, whether
fully or partially paid, except treasury
shares.
174 None
Designation of Governing Boards.—
The provisions of specific provisions
of this Code to the contrary
notwithstanding, nonstock or special
corporations may, through their articles
of incorporation or their bylaws,
designate their governing boards by any
name other than as board of trustees.
175 None
Collection and Use of Registration,
Incorporation and Other Fees.— For a
more effective implementation of this
Code, the Commission is hereby
authorized to collect, retain, and use
fees, fines, and other charges pursuant
to this Code and its rules and
Liability for any of the foregoing offenses
Liability of Directors, Trustees, Officers, or
Other Employees.— If the offender is a
corporation, the penalty may, at the discretion
of the court, be imposed upon such
corporation and/or upon its directors, trustees,
stockholders, members, officers, or employees
responsible for the violation or indispensable
to its commission.
Liability of Aiders and Abettors and Other
Secondary Liability.—Anyone who shall aid,
abet, counsel, command, induce, or cause any
violation of this Code, or any rule, regulation,
or order of the Commission shall be punished
with a fine not exceeding that imposed on the
principal offenders, at the discretion of the
court, after taking into account their
participation in the offense.
Outstanding Capital Stock Defined.— The
term “outstanding capital stock”, as used in
this Code, shall mean the total shares of stock
issued under binding subscription contracts to
subscribers or stockholders, whether fully or
partially paid, except treasury shares.
Designation of Governing Boards.— The
provisions of specific provisions of this Code
to the contrary notwithstanding, nonstock or
special corporations may, through their articles
of incorporation or their bylaws, designate
their governing boards by any name other than
as board of trustees.
Collection and Use of Registration,
Incorporation and Other Fees.— For a more
effective implementation of this Code, the
Commission is hereby authorized to collect,
retain, and use fees, fines, and other charges
pursuant to this Code and its rules and
regulations. The amount collected shall be
 regulations. The amount collected shall
be deposited and maintained in a
separate account which shall form a
fund for its modernization and to
augment its operational expenses such
as, but not limited to, capital outlay,
increase in compensation and benefits
comparable with prevailing rates in the
private sector, reasonable employee
allowance, employee health care
services, and other insurance, employee
career advancement and
professionalization, legal assistance,
seminars, and other professional fees.
deposited and maintained in a separate account
which shall form a fund for its modernization
and to augment its operational expenses such
as, but not limited to, capital outlay, increase
in compensation and benefits comparable with
prevailing rates in the private sector,
reasonable employee allowance, employee
health care services, and other insurance,
employee career advancement and
professionalization, legal assistance, seminars,
and other professional fees.

176 None
Stock Ownership in Corporations.— Stock Ownership in Corporations.— Pursuant
Pursuant to the duties specified by to the duties specified by Article XIV of the
Article XIV of the Constitution, the Constitution, the National Economic and
National Economic and Development Development Authority (NEDA) shall, from
Authority (NEDA) shall, from time to time to time, determine if the corporate vehicle
time, determine if the corporate vehicle has been used by any corporation, business, or
has been used by any corporation, industry to frustrate the provisions of this
business, or industry to frustrate the Code or applicable laws, and shall submit to
provisions of this Code or applicable Congress, whenever deemed necessary, a
laws, and shall submit to Congress, report of its findings, including
whenever deemed necessary, a report of recommendations for their prevention or
its findings, including correction.
recommendations for their prevention
or correction. The Congress of the Philippines may set
maximum limits for stock ownership of
The Congress of the Philippines may individuals or groups of individuals related to
set maximum limits for stock each other by consanguinity, affinity, or by
ownership of individuals or groups of close business interests, in corporations
individuals related to each other by declared to be vested with public interest
consanguinity, affinity, or by close pursuant to the provisions of this section, or
business interests, in corporations whenever necessary to prevent anti-
declared to be vested with public competitive practices as provided in Republic
interest pursuant to the provisions of Act No. 10667, otherwise known as the
this section, or whenever necessary to “Philippine Competition Act”, or to implement
prevent anti-competitive practices as national economic policies designed to
provided in Republic Act No. 10667, promote general welfare and economic
otherwise known as the “Philippine development, as declared in laws, rules and
Competition Act”, or to implement regulations.
national economic policies designed to
promote general welfare and economic In recommending to the Congress which
development, as declared in laws, rules corporations, businesses and industries will be
and regulations. declared as vested with public interest, and in
formulating proposals for limitations on stock
In recommending to the Congress ownership, the NEDA shall consider the type
which corporations, businesses and and nature of the industry, size of the
industries will be declared as vested enterprise, economies of scale, geographic
with public interest, and in formulating location, extent of Filipino ownership, labor
proposals for limitations on stock intensity of the activity, export potential, as
ownership, the NEDA shall consider well as other factors which are germane to the
the type and nature of the industry, size realization and promotion of business and
of the enterprise, economies of scale, industry.
geographic location, extent of Filipino
 ownership, labor intensity of the
activity, export potential, as well as
other factors which are germane to the
realization and promotion of business
and industry.
177 None
Reportorial Requirements of
Corporations.— Except as otherwise
provided in this Code or in the rules
issued by the Commission, every
corporation, domestic or foreign, doing
business in the Philippines shall submit
to the Commission:
(a) Annual financial
statements audited by an
independent certified public
accountant: Provided, That if the
total assets or total liabilities of
the corporation are less than Six
hundred thousand pesos
(₱600,000.00), the financial
statements shall be certified
under oath by the corporation’s
treasurer or chief financial
officer; and
(b) A general information
sheet.
Corporations vested with public
interest must also submit the following:
(1) A director or trustee
compensation report; and
(2) A director or trustee
appraisal or performance report
and the standards or criteria used
to assess each, director or
trustee.
The reportorial requirements shall be
submitted annually and within such
period as may be prescribed by the
Commission.
The Commission may place the
corporation under delinquent status in
case of failure to submit the reportorial
requirements three (3) times,
consecutively or intermittently, within a
period of five (5) years. The
Commission shall give reasonable
notice to and coordinate with the
appropriate regulatory agency prior to
placing on delinquent status companies
under their special regulatory
Reportorial Requirements of Corporations.—
Except as otherwise provided in this Code or
in the rules issued by the Commission, every
corporation, domestic or foreign, doing
business in the Philippines shall submit to the
Commission:
(a) Annual financial statements
audited by an independent certified
public accountant: Provided, That if the
total assets or total liabilities of the
corporation are less than Six hundred
thousand pesos (₱600,000.00), the
financial statements shall be certified
under oath by the corporation’s
treasurer or chief financial officer; and
(b) A general information sheet.
Corporations vested with public interest
must also submit the following:
(1) A director or trustee
compensation report; and
(2) A director or trustee appraisal or
performance report and the standards or
criteria used to assess each, director or
trustee.
The reportorial requirements shall be
submitted annually and within such period as
may be prescribed by the Commission.
The Commission may place the corporation
under delinquent status in case of failure to
submit the reportorial requirements three (3)
times, consecutively or intermittently, within a
period of five (5) years. The Commission shall
give reasonable notice to and coordinate with
the appropriate regulatory agency prior to
placing on delinquent status companies under
their special regulatory jurisdiction.
Any person required to file a report with the
Commission may redact confidential
information from such required
report: Provided, That such confidential
information shall be filed in a supplemental
report prominently labelled “confidential”,
together with a request for confidential
treatment of the report and the specific
 jurisdiction.
Any person required to file a report
with the Commission may redact
confidential information from such
required report: Provided, That such
confidential information shall be filed
in a supplemental report prominently
labelled “confidential”, together with a
request for confidential treatment of the
report and the specific grounds for the
grant thereof.
178 None
Visitorial Power and Confidential
Nature of Examination Results.— The
Commission shall exercise visitorial
powers over all corporations, which
powers shall include the examination
and inspection of records, regulation
and supervision of activities,
enforcement of compliance, and
imposition of sanctions in accordance
with this Code.
Should the corporation, without
justifiable cause, refuse or obstruct the
Commission’s exercise of its visitorial
powers, the Commission may revoke its
certificate of incorporation, without
prejudice to the imposition of other
penalties and sanctions under this Code.
All interrogatories propounded by the
Commission and the answers thereto, as
well as the results of any examination
made by the Commission or by any
other official authorized by law to make
an examination of the operations,
books, and records of any corporation,
shall be kept strictly confidential,
except when the law requires the same
to be made public, when necessary for
the Commission to take action to
protect the public or to issue orders in
the exercise of its powers under this
Code, or where such interrogatories,
answers or results are necessary to be
presented as evidence before any court.
179 None
Powers, Functions, and Jurisdiction of Powers, Functions, and Jurisdiction of the
the Commission.— The Commission Commission.— The Commission shall have
shall have the power and authority to: the power and authority to:
(a) Exercise supervision and
jurisdiction over all corporations
and persons acting on their
behalf, except as otherwise
grounds for the grant thereof.
Visitorial Power and Confidential Nature of
Examination Results.— The Commission shall
exercise visitorial powers over all
corporations, which powers shall include the
examination and inspection of records,
regulation and supervision of activities,
enforcement of compliance, and imposition of
sanctions in accordance with this Code.
Should the corporation, without justifiable
cause, refuse or obstruct the Commission’s
exercise of its visitorial powers, the
Commission may revoke its certificate of
incorporation, without prejudice to the
imposition of other penalties and sanctions
under this Code.
All interrogatories propounded by the
Commission and the answers thereto, as well
as the results of any examination made by the
Commission or by any other official
authorized by law to make an examination of
the operations, books, and records of any
corporation, shall be kept strictly confidential,
except when the law requires the same to be
made public, when necessary for the
Commission to take action to protect the
public or to issue orders in the exercise of its
powers under this Code, or where such
interrogatories, answers or results are
necessary to be presented as evidence before
any court.
(a) Exercise supervision and
jurisdiction over all corporations and
persons acting on their behalf, except as
provided under this Code;
(b) Pursuant to Presidential
Decree No. 902-A.. retain
jurisdiction over pending cases
involving intra-corporate
disputes submitted for final
resolution. The Commission
shall retain jurisdiction over
pending suspension of
payment/rehabilitation cases
filed as of 30 June 2000 until
finally disposed;
(c) Impose sanctions for the
violation of this Code, its
implementing rules and orders of
the Commission;
(d) Promote corporate
governance and the protection of
minority investors, through,
among others, the issuance of
rules and regulations consistent
with international best practices;
(e) Issue opinions to clarify
the application of laws, rules and
regulations;
(f) Issue cease and desist
orders ex parte to prevent
imminent fraud or injury to the
public;
(g) Hold corporations in direct
and indirect contempt;
(h) Issue subpoena duces
tecum and summon witnesses to
appear in proceedings before the
Commission;
(i) In appropriate cases, order
the examination, search and
seizure of documents, papers,
files and records, and books of
accounts of any entity or person
under investigation as may be
necessary for the proper
disposition of the cases, subject
to the provisions of existing
laws;
(j) Suspend or revoke the
certificate of incorporation after
proper notice and hearing;
(k) Dissolve or impose
sanctions on corporations, upon
otherwise provided under this Code;
(b) Pursuant to Presidential Decree
No. 902-A.. retain jurisdiction over
pending cases involving intra-corporate
disputes submitted for final resolution.
The Commission shall retain
jurisdiction over pending suspension of
payment/rehabilitation cases filed as of
30 June 2000 until finally disposed;
(c) Impose sanctions for the violation
of this Code, its implementing rules and
orders of the Commission;
(d) Promote corporate governance
and the protection of minority investors,
through, among others, the issuance of
rules and regulations consistent with
international best practices;
(e) Issue opinions to clarify the
application of laws, rules and
regulations;
(f) Issue cease and desist orders ex
parte to prevent imminent fraud or
injury to the public;
(g) Hold corporations in direct and
indirect contempt;
(h) Issue subpoena duces tecum and
summon witnesses to appear in
proceedings before the Commission;
(i) In appropriate cases, order the
examination, search and seizure of
documents, papers, files and records,
and books of accounts of any entity or
person under investigation as may be
necessary for the proper disposition of
the cases, subject to the provisions of
existing laws;
(j) Suspend or revoke the certificate
of incorporation after proper notice and
hearing;
(k) Dissolve or impose sanctions on
corporations, upon final court order, for
committing, aiding in the commission
of, or in any manner furthering
securities violations, smuggling, tax
evasion, money laundering, graft and
corrupt practices, or other fraudulent or
illegal acts;
(l) Issue writs of execution and
attachment to enforce payment of fees,
 final court order, for committing,
aiding in the commission of, or
in any manner furthering
securities violations, smuggling,
tax evasion, money laundering,
graft and corrupt practices, or
other fraudulent or illegal acts;
(l) Issue writs of execution and
attachment to enforce payment
of fees, administrative fines, and
other dues collectible under this
Code;
(m) Prescribe the number of
independent directors and the
minimum criteria in determining
the independence of a director;
(n) Impose or recommend new
modes by which a stockholder,
member, director, or trustee may
attend meetings or cast their
votes, as technology may allow,
taking into account the
company’s scale, number of
shareholders or members,
structure, and other factors
consistent with the basic right of
corporate suffrage;
(o) Formulate and enforce
standards, guidelines, policies,
rules and regulations to carry out
the provisions of this Code; and
(p) Exercise such other powers
provided by law or those which
may be necessary or incidental
to carrying out the powers
expressly granted to the
Commission.
In imposing penalties and additional
monitoring and supervision
requirements, the Commission shall
take into consideration the size, nature
of the business, and capacity of the
corporation.
No court below the Court of Appeals
shall have jurisdiction to issue a
restraining order, preliminary
injunction, or preliminary mandatory
injunction in any case, dispute, or
controversy that directly or indirectly
interferes with the exercise of the
powers, duties and responsibilities of
the Commission that falls exclusively
administrative fines, and other dues
collectible under this Code;
(m) Prescribe the number of
independent directors and the minimum
criteria in determining the
independence of a director;
(n) Impose or recommend new modes
by which a stockholder, member,
director, or trustee may attend meetings
or cast their votes, as technology may
allow, taking into account the
company’s scale, number of
shareholders or members, structure, and
other factors consistent with the basic
right of corporate suffrage;
(o) Formulate and enforce standards,
guidelines, policies, rules and
regulations to carry out the provisions
of this Code; and
(p) Exercise such other powers
provided by law or those which may be
necessary or incidental to carrying out
the powers expressly granted to the
Commission.
In imposing penalties and additional
monitoring and supervision requirements, the
Commission shall take into consideration the
size, nature of the business, and capacity of the
corporation.
No court below the Court of Appeals shall
have jurisdiction to issue a restraining order,
preliminary injunction, or preliminary
mandatory injunction in any case, dispute, or
controversy that directly or indirectly
interferes with the exercise of the powers,
duties and responsibilities of the Commission
that falls exclusively within its jurisdiction.
 within its jurisdiction.

180 None
Development and Implementation of
Electronic Filing and Monitoring
System.— The Commission shall
develop and implement an electronic
filing and monitoring system. The
Commission shall promulgate rules to
facilitate and expedite, among others,
corporate name reservation and
registration, incorporation, submission
of reports, notices, and documents
required under this Code, and sharing
of pertinent information with other
government agencies.
Development and Implementation of
Electronic Filing and Monitoring System.—
The Commission shall develop and
implement an electronic filing and monitoring
system. The Commission shall promulgate
rules to facilitate and expedite, among others,
corporate name reservation and registration,
incorporation, submission of reports, notices,
and documents required under this Code, and
sharing of pertinent information with other
government agencies.

181 None
Arbitration for Corporations.— An Arbitration for Corporations.— An arbitration
arbitration agreement may be provided agreement may be provided in the articles of
in the articles of incorporation or incorporation or bylaws of a corporation.
bylaws of a corporation. When such an When such an agreement is in place, disputes
agreement is in place, disputes between between the corporation, its stockholders or
the corporation, its stockholders or members, which arise from the
members, which arise from the implementation of the articles of incorporation
implementation of the articles of or bylaws, or from intra-corporate relations,
incorporation or bylaws, or from intra- shall be referred to arbitration. A dispute shall
corporate relations, shall be referred to be nonarbitrable when it involves criminal
arbitration. A dispute shall be offenses and interests of third parties.
nonarbitrable when it involves criminal
offenses and interests of third parties. The arbitration agreement shall be binding
on the corporation, its directors, trustees,
The arbitration agreement shall be officers, and executives or managers.
binding on the corporation, its
directors, trustees, officers, and To be enforceable, the arbitration agreement
executives or managers. should indicate the number of arbitrators and
the procedure for their appointment. The
To be enforceable, the arbitration power to appoint the arbitrators forming the
agreement should indicate the number arbitral tribunal shall be granted to a
of arbitrators and the procedure for designated independent third party. Should the
their appointment. The power to third party fail to appoint the arbitrators in the
appoint the arbitrators forming the manner and within the period specified in the
arbitral tribunal shall be granted to a arbitration agreement, the parties may request
designated independent third party. the Commission to appoint the arbitrators. In
Should the third party fail to appoint any case, arbitrators must be accredited or
the arbitrators in the manner and within must belong to organizations accredited for the
the period specified in the arbitration purpose of arbitration.
agreement, the parties may request the
Commission to appoint the arbitrators. The arbitral tribunal shall have the power to
In any case, arbitrators must be rule on its own jurisdiction and on questions
accredited or must belong to relating to the validity of the arbitration
organizations accredited for the purpose agreement. When an intra-corporate dispute is
of arbitration. filed with a Regional Trial Court, the court
shall dismiss the case before the termination of
The arbitral tribunal shall have the the pretrial conference, if it determines that an
power to rule on its own jurisdiction arbitration agreement is written in the
and on questions relating to the validity corporation’s articles of incorporation, bylaws,
of the arbitration agreement. When an or in a separate agreement.
intra-corporate dispute is filed with a
 Regional Trial Court, the court shall
dismiss the case before the termination
of the pretrial conference, if it
determines that an arbitration
agreement is written in the
corporation’s articles of incorporation,
bylaws, or in a separate agreement.
The arbitral tribunal shall have the
power to grant interim measures
necessary to ensure enforcement of the
award, prevent a miscarriage of justice,
or otherwise protect the rights of the
parties.
A final arbitral award under this under this section, subject to existing laws on
section shall be executory after the
lapse of fifteen (15) days from receipt
thereof by the parties and shall be
stayed only by the filing of a bond or
the issuance by the appellate court of an
injunctive writ.
The Commission shall formulate the
rules and regulations, which shall
govern arbitration under this section,
subject to existing laws on arbitration.
182 None Jurisdiction Over Party-List
Organizations.— The powers,
authorities, and responsibilities of the
Commission involving party-list
organizations are transferred to the
Commission on Elections
(COMELEC).
Within six (6) months after the
effectivity of this Act, the monitoring,
supervision, and regulation of such
corporations shall be deemed
automatically transferred to the
COMELEC.
For this purpose, the COMELEC, in
coordination with the Commission,
shall promulgate the corresponding
implementing rules for the transfer of
jurisdiction over the abovementioned
corporations.
183 None Applicability of the Code.— Nothing
in this Act shall be construed as
amending existing provisions of special
laws governing the registration,
regulation, monitoring and supervision
of special corporations such as banks,
nonbank financial institutions and
insurance companies.
Notwithstanding any provision to the
contrary, regulators such as the Bangko
Sentral ng Pilipinas and the Insurance
Commission shall exercise primary
authority over special corporations such
as banks, nonbank financial institutions,
and insurance companies under their
supervision and regulation.
184 None Effect of Amendment or Repeal of
The arbitral tribunal shall have the power to
grant interim measures necessary to ensure
enforcement of the award, prevent a
miscarriage of justice, or otherwise protect the
rights of the parties.
A final arbitral award under this section
shall be executory after the lapse of fifteen
(15) days from receipt thereof by the parties
and shall be stayed only by the filing of a bond
or the issuance by the appellate court of an
injunctive writ.
The Commission shall formulate the rules and
regulations, which shall govern arbitration
arbitration.
Jurisdiction Over Party-List
Organizations.— The powers, authorities,
and responsibilities of the Commission
involving party-list organizations are
transferred to the Commission on Elections
(COMELEC).
Within six (6) months after the effectivity of
this Act, the monitoring, supervision, and
regulation of such corporations shall be
deemed automatically transferred to the
COMELEC.
For this purpose, the COMELEC, in
coordination with the Commission, shall
promulgate the corresponding implementing
rules for the transfer of jurisdiction over the
abovementioned corporations.
Applicability of the Code.— Nothing in this
Act shall be construed as amending existing
provisions of special laws governing the
registration, regulation, monitoring and
supervision of special corporations such as
banks, nonbank financial institutions and
insurance companies.
Notwithstanding any provision to the contrary,
regulators such as the Bangko Sentral ng
Pilipinas and the Insurance Commission shall
exercise primary authority over special
corporations such as banks, nonbank financial
institutions, and insurance companies under
their supervision and regulation.
Effect of Amendment or Repeal of This
 This Code, or the Dissolution of a
Corporation.— No right or remedy in
favor of or against any corporation, its
stockholders, members, directors,
trustees, or officers, nor any liability
incurred by any such corporation,
stockholders, members, directors,
trustees, or officers, shall be removed
or impaired either by the subsequent
dissolution of said corporation or by
any subsequent amendment or repeal of
this Code or of any part thereof.
185 None Applicability to Existing
Corporations.— A corporation
lawfully existing and doing business in
the Philippines affected by the new
requirements of this Code shall be
given a period of not more than two (2)
years from the effectivity of this Act
within which to comply.
186 None
Separability Clause.— If any provision
of this Act is declared invalid or
unconstitutional, the other provisions
hereof which are not affected thereby
shall continue to be in full force and
effect.
187 None
Repealing Clause.— Batas Pambansa
Big. 68, otherwise known as “The
Corporation Code of the Philippines”,
is hereby repealed. Any law,
presidential decree or issuance,
executive order, letter of instruction,
administrative order, rule or regulation
contrary to or inconsistent with any
provision of this Act is hereby repealed
or modified accordingly.
188 None
Effectivity.— This Act shall take effect
upon completion of its publication in
the Official Gazette or in at least two
(2) newspapers of general circulation.
Code, or the Dissolution of a
Corporation.— No right or remedy in favor
of or against any corporation, its stockholders,
members, directors, trustees, or officers, nor
any liability incurred by any such corporation,
stockholders, members, directors, trustees, or
officers, shall be removed or impaired either
by the subsequent dissolution of said
corporation or by any subsequent amendment
or repeal of this Code or of any part thereof.
Applicability to Existing Corporations.— A
corporation lawfully existing and doing
business in the Philippines affected by the new
requirements of this Code shall be given a
period of not more than two (2) years from the
effectivity of this Act within which to comply.
Separability Clause.— If any provision of this
Act is declared invalid or unconstitutional, the
other provisions hereof which are not affected
thereby shall continue to be in full force and
effect.
Repealing Clause.— Batas Pambansa Big. 68,
otherwise known as “The Corporation Code of
the Philippines”, is hereby repealed. Any law,
presidential decree or issuance, executive
order, letter of instruction, administrative
order, rule or regulation contrary to or
inconsistent with any provision of this Act is
hereby repealed or modified accordingly.
Effectivity.— This Act shall take effect upon
completion of its publication in the Official
Gazette or in at least two (2) newspapers of
general circulation.