Comparative Matrix

Corporation Code (1980) Revised Corporation Code (2019)

Republic Act No. 11232

SEC. 1. Title of the Code. – This Code

shall be known as the “Revised
Corporation Code of the Philippines”.

SEC. 2. Corporation Defined. – A

corporation is an artificial being created
by operation of law, having the right of
succession and the powers, attributes,
and properties expressly authorized by
law or incidental to its existence.

SEC. 3. Classes of C orporations. – 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
corporations.

nonstock

SEC. 4. Corporations Created by

Special Laws or Charters. –
Corporations created by special laws or
charters shall be governed primarily by
the provisions of the special law or
charter creating them or applicable to
them, supplemented by the provisions
of this Code, insofar as they are
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applicable.

SEC. 5. 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.

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SEC. 6. 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 with complete voting rights.

Holders of nonvoting shares shall nevertheless be

entitled to vote on the following matters:

(a)Amendment of the articles of incorporation;

(b)Adoption and amendment of bylaws;

(c)Sale, lease, exchange, mortgage, pledge, or

other disposition of all or substantially all of the
corporate property;

(d)Incurring, creating, or increasing bonded

indebtedness;

(e)Increase or decrease of authorized capital stock;

(f)Merger or consolidation of the corporation with

another corporation or other corporations;

(g)Investment of corporate funds in another

corporation or business in accordance with this
Code; and

(h)Dissolution of the corporation.

Except as provided in the immediately

preceding paragraph, the vote required under
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this Code to approve a particular corporate act

for a consideration less than the value of shall be deemed to refer only to stocks with
five (P5.00) pesos per share: Provided, voting rights.
further, That the entire consideration
received by the corporation for its no-par The shares or series of shares may or may not
value shares shall be treated as capital and have a par value: Provided, That banks, trust,
shall not be available for distribution as insurance, and preneed companies, public
dividends. utilities, building and loan associations, and
other corporations authorized to obtain or
A corporation may, furthermore, classify its access funds from the public, whether publicly
shares for the purpose of insuring listed or not, shall not be permitted to issue
compliance with constitutional or legal nopar value shares of stock.
requirements.
Preferred shares of stock issued by a
Except as otherwise provided in the articles corporation may be given preference in the
of incorporation and stated in the certificate distribution of dividends and in the
of stock, each share shall be equal in all distribution of corporate assets in case of
respects to every other share. liquidation, or such other preferences:
Provided, That preferred shares of stock may
Where the articles of incorporation provide be issued only with a stated par value. The
for non-voting shares in the cases allowed board of directors, where authorized in the
by this Code, the holders of such shares articles of incorporation, may fix the terms and
shall nevertheless be entitled to vote on the conditions of preferred shares of stock or any
following matters: series thereof: Provided, further, That such
terms and conditions shall be effective upon
1. Amendment of the articles filing of a certificate thereof with the Securities
of incorporation; and Exchange Commission, hereinafter
2. Adoption and amendment of by-laws; referred to as “Commission”.
3. Sale, lease, exchange, mortgage,
pledge or other disposition of all or Shares of capital stock issued without par
substantially all of the corporate property; value shall be deemed fully paid and non-
4. Incurring, creating or increasing assessable and the holder of such shares shall
bonded indebtedness; not be liable to the corporation or to its
5. Increase or decrease of capital stock; creditors in respect thereto: Provided, That no-
6. Merger or consolidation of the par value shares must be issued for a
corporation with another corporation or other consideration of at least Five pesos (P5.00) per
corporations; share: Provided, further, That the entire
7. Investment of corporate funds in consideration received by the corporation for
another corporation or business in its no-par value shares shall be treated as
accordance with this Code; and capital and shall not be available for
8. Dissolution of the corporation. distribution as dividends.

Except as provided in the immediately A corporation may further classify its shares
preceding paragraph, the vote necessary to for the purpose of ensuring compliance with
approve a particular corporate act as constitutional or legal requirements.
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provided in this Code shall be deemed to

refer only to stocks with voting rights. (5a)

Section 7. Founders’ shares. – Founders’

shares classified as such in the articles of SEC. 7. Founders’ Shares. – Founders’ shares
incorporation may be given certain rights may be given certain rights and privileges not
and privileges not enjoyed by the owners of enjoyed by the owners of other stocks. Where the
other stocks, provided that where the exclusive right to vote and be voted for in the
exclusive right to vote and be voted for in election of directors is granted, it must be for a
the election of directors is granted, it must limited period not to exceed five (5) years from the
be for a limited period not to exceed five (5)
date of incorporation: Provided, That such
years subject to the approval of the
exclusive right shall not be allowed if its
Securities and Exchange Commission. The
five-year period shall commence from the exercise will violate Commonwealth Act No.
date of the aforesaid approval by the 108, otherwise known as the “Anti-Dummy
Securities and Exchange Law”; Republic Act No. 7042, otherwise known
Commission. (n) as the “Foreign Investments Act of 1991”; and
other pertinent laws.

Section 8. Redeemable shares. SEC.– 8. Redeemable Shares . – Redeemable

Redeemable shares may be issued byshares the may be issued by the corporation when
corporation when expressly so provided expressly
in provided in the articles of incorporation.
the articles of incorporation. They may be They are shares which may be purchased by the
purchased or taken up by the corporation corporation from the holders of such shares upon
upon the expiration of a fixed period,expiration of a fixed period, regardless of the
the
existence of unrestricted retained earnings in the
regardless of the existence of unrestricted
books of the corporation, and upon such other
retained earnings in the books of the
terms and conditions stated in the articles of
corporation, and upon such other terms incorporation
and and the certificate of stock
conditions as may be stated in the articles of
representing the shares, subject to rules and
incorporation, which terms and conditions regulations issued by the Commission.
must also be stated in the certificate of stock
representing said shares. (n)

Section 9. Treasury shares. – Treasury SEC. 9. Treasury shares. – Treasury shares are
shares are shares of stock which have been shares of stock which have been issued and fully
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issued and fully paid for, but subsequently paid for, but subsequently reacquired by the
reacquired by the issuing corporation by issuing corporation through purchase, redemption,
purchase, redemption, donation or through donation, or some other lawful means. Such
some other lawful means. Such shares may shares may again be disposed of for a reasonable
again be disposed of for a reasonable price price fixed by the board of directors.
fixed by the board of directors. (n)

TITLE II TITLE II
INCORPORATION AND ORGANIZATION INCORPORATION AND ORGANIZATION OF
OF PRIVATE CORPORATIONS PRIVATE CORPORATIONS

Section 10. Number and qualifications of SEC. 10. Number and Qualifications of
incorporators. – Any number of natural Incorporators. – Any person, partnership,
persons not less than five (5) but not more association or corporation, singly or jointly
than fifteen (15), all of legal age and a with others but not more than fifteen (15) in
majority of whom are residents of the number, may organize a corporation for any lawful
Philippines, may form a private corporation purpose or purposes: Provided, That natural
for any lawful purpose or purposes. Each of persons who are licensed to practice a
the incorporators of s stock corporation must profession, and partnerships or associations
organized for the

own or be a subscriber to at least one (1) purpose of practicing a profession, shall not be
share of the capital stock of the corporation. allowed to organize as a corporation unless
(6a) otherwise provided under special laws.
Incorporators who are natural persons must be
of legal age.

Each incorporator of a stock corporation must own

or be a subscriber to at least one (1) share of the
capital stock.

A corporation with a single stockholder is

considered a One Person Corporation as
described in Title XIII, Chapter III of this Code.

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Section 11. Corporate term. – A corporation SEC. 11. Corporate Term. – A corporation shall
shall exist for a period not exceeding fifty have perpetual existence unless its articles of
(50) years from the date of incorporation incorporation provides otherwise.
unless sooner dissolved or unless said
period is extended. The corporate term as Corporations with certificates of incorporation
originally stated in the articles of issued prior to the effectivity of this Code, and
incorporation may be extended for periods which continue to exist shall have perpetual
not exceeding fifty (50) years in any single existence, unless the corporation, upon a vote
instance by an amendment of the articles of of its stockholders representing a majority of
incorporation, in accordance with this Code; its outstanding capital stock, notifies the
Provided, That no extension can be made Commission that it elects to retain its specific
earlier than five (5) years prior to the original corporate term pursuant to its articles of
or subsequent expiry date(s) unless there incorporation: Provided, that any change in the
are justifiable reasons for an earlier corporate term under this section is without
extension as may be determined by the prejudice to the appraisal right of dissenting
Securities and Exchange stockholders in accordance with the
Commission. (6) provisions of this Code.

A corporate term for a specific period may be

extended or shortened by amending the
articles of incorporation: Provided, That no
extension may be made earlier than three (3)
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 Commission: Provided, further, That such
extension of the corporate term shall take
effect only on the day following the original or
subsequent expiry date(s).

A corporation whose term has expired may, at

any time, apply for a revival of its corporate
existence, together with all the rights and
privileges under its certificate of incorporation
and subject to all of its duties, debts and

liabilities existing prior to revival. Upon

approval by the Commission, the corporation
shall be deemed revived and a certificate of
revival of corporate existence shall be issued,
giving it perpetual existence, unless its
application for revival provides otherwise.

No application for revival of certificate of

incorporation of banks, banking and
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quasibanking institutions, preneed, insurance

and trust companies, 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.

Section 12. Minimum capital stock required

of stock corporations. – Stock corporations
incorporated under this Code shall not be
required to have any minimum authorized
SEC. 12. Minimum Capital Stock Not Required of
capital stock except as otherwise specifically
provided for by special law, and subject to Corporations . – Stock corporations shall
Stock
the provisions of the following section. not be required to have a minimum capital
stock, except as otherwise specifically provided
by special law.

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
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case shall the paid-up capital be less

than five
Thousand (P5,000.00) pesos. (n)

Section 14. Contents of the articles of SEC. 13. Contents of the Articles of Incorporation.
incorporation. – All corporations organized – All corporations shall file with the Commission

under this code shall file with the Securities articles of incorporation in any of the official
and Exchange Commission articles of languages, duly signed and acknowledged or
incorporation in any of the official languages authenticated, in such form and manner as may be
duly signed and acknowledged by all of the allowed by the Commission, containing
incorporators, containing substantially the substantially the following matters, except as
following matters, except as otherwise otherwise prescribed by this Code or by special
prescribed by this Code or by special law: law:

1. The name of the corporation; (a)The name of the corporation;

2. The specific purpose or purposes for
which the corporation is being incorporated. (b)The specific purpose or purposes for which the
Where a corporation has more than one corporation is being formed. Where a corporation
stated purpose, the articles of incorporation has more than one stated purpose, the articles of
shall state which is the primary purpose and incorporation shall indicate the primary purpose
which is/are the secondary purpose or and the secondary purpose or purposes: Provided,
purposes: Provided, That a non-stock That a non-stock corporation may not include a
corporation may not include a purpose purpose which would change or contradict its
which would change or contradict its nature nature as such;
as such;
3. The place where the principal office of (c)The place where the principal office of the
the corporation is to be located, which must corporation is to be located, which must be within
be within the Philippines; the Philippines;
4. The term for which the corporation is
to exist; (d)The term for which the corporation is to exist, if
5. The names, nationalities and the corporation has not elected perpetual
residences of the incorporators; existence;
6. The number of directors or trustees,
which shall not be less than five (5) nor (e)The names, nationalities, and residence
more than fifteen (15); addresses of the incorporators;
7. The names, nationalities and
residences of persons who shall act as (f)The number of directors, which shall not be
directors or trustees until the first regular more than fifteen (15) or the number of trustees
directors or trustees are duly elected and which may be more than fifteen (15);
qualified in accordance with this Code;
8. If it be a stock corporation, the amount
(g)The names, nationalities, and residence
of its authorized capital stock in lawful
addresses of persons who shall act as directors or
money of the Philippines, the number of
trustees until the first regular directors or trustees
shares into which it is divided, and in case
are duly elected and qualified in accordance with
the share are par value shares, the par
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value of each, the names, nationalities and this Code;

residences of the original subscribers, and
the amount subscribed and paid by each on (h)If it be a stock corporation, the amount of its
his subscription, and if some or all of the authorized capital stock, number of shares into
shares are without par value, such fact must which it is divided, the par value of each, names,
be stated; nationalities, and residence addresses of the
9. If it be a non-stock corporation, the original subscribers, amount subscribed and paid
amount of its capital, the names, by each on the subscription, and a statement that
nationalities and residences of the some or all of the shares are without par value, if
contributors and the amount contributed by applicable;
each; and (i)If it be a nonstock corporation, the amount of its
10. Such other matters as are not capital, the names, nationalities, and residence

inconsistent with law and addresses of the contributors, and amount contributed by each;
which the incorporators
may deem necessary and (j)Such other matters consistent with law and which the
convenient. incorporators may deem necessary and convenient.

The Securities and An arbitration agreement may be provided in the articles of

Exchange incorporation pursuant to Section 181 of this Code.
Commission shall not
accept the articles of
incorporation of any The articles of incorporation and applications for amendments
stock corporation unless thereto may be filed with the Commission in the form of an
accompanied by a sworn electronic document, in accordance with the Commission’s
statement of the rules and regulations on electronic filing.
Treasurer elected by the
subscribers showing that
at least twentyfive (25%)
percent of the authorized
capital stock of the
corporation has been
subscribed, and at least
twenty-five (25%) of the
total subscription has
been fully paid to him in
actual cash and/or in
property the fair
valuation of which is
equal to at least twenty-
five (25%) percent of the
said subscription, such
paid-up capital being not
less than five thousand
(P5,000.00) pesos.
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Section 15. Forms of

Articles of
Incorporation. – Unless
otherwise prescribed by
special law, articles of
incorporation of all SEC. 14. Form of Articles of Incorporation. – Unless
domestic corporations shall
otherwise prescribed by special law, the articles of
comply substantially with
incorporation of all domestic corporations shall
the following form:
comply substantially with the following form:
ARTICLES OF
INCORPORATION Articles of Incorporation
OF of
__________________ __________________________
________ (Name of (Name of Corporation)
Corporation)
KNOW ALL MEN BY
THESE PRESENTS:
The undersigned
incorporators, all of legal
age and a majority of whom The undersigned incorporators, all of legal age, have
are residents of the voluntarily agreed to form a (stock) (nonstock) corporation under
Philippines, have this day the laws of the Republic of the Philippines and certify the following:
voluntarily agreed to form a
(stock) (non-stock) First: That the name of said corporation shall be
corporation under the laws “_______________, Inc., Corporation or
of the Republic of the OPC”;
Philippines;
AND WE HEREBY
CERTIFY:
FIRST: That the name of Second: That the purpose or purposes for which such
said corporation corporation is incorporated are: (If there is more than one
shall be purpose, indicate primary and secondary purposes);
"_____________________,
INC. or
CORPORATION";

SECOND: That the purpose

or purposes for which such
corporation is incorporated
are: (If there is more than
one purpose, indicate
primary and secondary
purposes);

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THIRD: That the principal

office of the

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corporation is located in the Third: That the principal office of the

City/Municipality of corporation is located in the
corporation is perpetual City/Municipality of
________________________,
to exist is Province ______________________, a termProvince
of _______________________,
________ issuance of the cer of _______________________,
of
Philippines; FOURTH: _____
That the term for
tificate of
residence Fourth: That the corporation shall have
incorporation;
residences of the the corporation existence or
years from and after the date of ______________ years from the date
issuance of the certificate of
rs of the ofofthe
incorpora
tors of s:
FIFTH: That the names, nationalities
Name and Fifth: That the names, nationalities,
_____ Reside and addresses
___ e as nce are as Reside
_______ follow nce
follows:
_____ __ ______
____ ___
Nationa
Nationali _______ lity
_____ ty __ ______
_______ ___
____ _______
_______ __
__
_____ __ ______
_______
____ _______ ___
__
__ _______
_____ __ _______ ______
____ _______ ___
_
__ _______
__ _______ ______
_______ __ ___
SIXTH: __
That
_______
truste _______ of
__
es of __ directors of
the or hall directors
and be or ion
the _______ shall
he
name the ; and number be the
of the number residenc names,
first the
corporatioes corporat
ddresse
corpor n s rustees s of the
_____;
ation s, of the
and ndthe
ar nationalitie residenc corporati
s ea on
Name directors Reside or
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or t trustees Reside
Name
e as of nce
_________
follows: ______
_________ ___
Nationali Nationa
ty lity ______
_________
_______ _______ ___
__ __
_________
_____ ______
____ _______ _____________
___ ___
__ __
nce
_____ _______ ______
_______ _______
____ __ ___
__ __t
Sixth: That
trustees of
_____ _______ _______ ______
____________
____ _______ __ __ a ___
__ nationalities,
first directors
_____ _______
_______ _______ are as follows:
____ __ __
__
Name
_____ _______ _________
____ __
_________
at the_______
authoriz __ _________

SEVE _________
NTH:
Th _________
of the ed
corporation capital
is stock

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______________________ Seventh: That the authorized capital stock

(P___________) PESOS in lawful money of of the corporation is ______________
the Philippines, divided into __________ PESOS (P________), divided into _____
shares with the par value of shares with the par value of ____________
____________________ PESOS (P_______________) per share.
(P_____________) Pesos per share.
(In case all the share are without par value): (In case all the shares are without par
That the capital stock of the corporation is value): That the capital stock of the
______________ shares without par value. corporation is
(In case some shares have par value and __________________________ shares
some are without par value): That the without par value.
capital stock of said corporation consists of
_____________ shares of which (In case some shares have par value and
______________ shares are of the par some are without par value): That the capital
value of _________________ stock of said corporation consists of
(P____________) PESOS each, and of __________________________ shares, of
which _________________ shares are which _______________________ shares
without par value. have a par value of _________________
PESOS (P____________) each, and of
EIGHTH: That at least twenty five (25%) which _______________________ shares
per cent of the authorized capital stock are without par value.
above stated has been subscribed as
follows: Eighth: That the number of shares of the
authorized capital stock above stated has
been subscribed as follows:
Name of Nationality No. of Amount Amount Paid
Share
Subscriber Subscribed Subscribed

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Name of Nationality No. of Shares Amount Amount Paid

Subscribed
Subscriber 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 of
state
contributed
the or donated bycapital
amount specifiedor persons,
money
stating the names, nationalities, and residence

addresses of the contri butors or donors and

respective amount given by each.)
NINTH: That the above-named
subscribers have paid at least twenty-five

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(25%) percent of the total subscription as

follows: Ninth: That _____________________ has
Name of Amount Subscribedbeen elected by the subscribers
Subscriber as Total Treasurer of the Corporation to
act as such until after the successor is duly
___________________ elected and Paid-In
___________________ ___________________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
(Modify Nos. 8 and 9 if shares are with no given by the subscribers ___________________or
par value. In case the corporation is non- members, who certifies the information set
stock, Nos. 7, 8 and 9 of the above articles
may be modified accordingly, and it is ___________________forth in the se venth and eighth
sufficient if the articles state the amount of clauses above, and that the paid-up portion
capital or money contributed or donated by of the subscription in cash and/or property
specified persons, stating the names, for the benefit and credit of the corporation
nationalities and residences of the has been duly received.
contributors or donors and the respective
amount given by each.) Tenth: That the incorporators undertake
to change the name of the corporation
TENTH: That _____________________ has immediately upon receipt of notice from
been elected by the subscribers as the Commission that another
Treasurer of the Corporation to act as such corporation, partnership or person has
until his successor is duly elected and acquired a prior right to the use of such
qualified in accordance with the by-laws, name, that the name has been declared
and that as such Treasurer, he has been not distinguishable from a name already
authorized to receive for and in the name registered or reserved for the use of
and for the benefit of the corporation, all another corporation, or that it is contrary
subscription (or fees) or contributions or to law, public morals, good customs or
donations paid or given by the subscribers public policy.
or members.
Eleventh: (Corporations which will engage
ELEVENTH: (Corporations which will in any business or activity reserved for
engage in any business or activity reserved Filipino citizens shall provide the following):
for Filipino citizens shall provide the
following): "No transfer of stock or interest “No transfer of stock or interest which shall
which shall reduce the ownership of Filipino reduce the ownership of Filipino citizens to
citizens to less than the required percentage less than the required percentage of capital
of the capital stock as provided by existing stock as provided by existing laws shall be
laws shall be allowed or permitted to be allowed or permitted to be recorded in the
recorded in the proper books of the proper books of the corporation, and this
corporation and this restriction shall be restriction shall be indicated in all stock
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indicated in all stock certificates issued by certificates issued by the corporation.”

the corporation."
IN WITNESS WHEREOF, we have hereunto
signed these Articles of Incorporation, this
................... day of ..............................,
20........... in the City/Municipality of
........................................, Province of
___________________
___________________
___________________
___________________
___________________

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................................................., Republic o
IN WITNESS WHEREOF, we have hereunto the Philippines.
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)
___________________ ___________________
___________________ (Name and signature of Treasurer)
___________________
_______________________

_________
(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 by-laws
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
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_____________________, this _______

day of ___________, 19 _____; by
__________________ with Res. Cert. No.
__________________
_

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___________ issued at
_______________________ on
____________, 19 ______
NOTARY PUBLIC
My commission expires on _________, 19
_____
Doc. No. _________;
Page No. _________;
Book No. ________;
Series of 19____ (7a)

Section 16. Amendment of Articles of SEC. 15. Amendment of Articles of Incorporation.

Incorporation. – Unless otherwise – Unless otherwise prescribed by this Code or by
prescribed by this Code or by special law, special law, and for legitimate purposes, any
and for legitimate purposes, any provision or provision or matter stated in the articles of
matter stated in the articles of incorporation incorporation may be amended by a majority vote
may be amended by a majority vote of the of the board of directors or trustees and the vote or
board of directors or trustees and the vote or written assent of the stockholders representing at
written assent of the stockholders least two-thirds (2/3) of the outstanding capital
representing at least two-thirds (2/3) of the stock, without prejudice to the appraisal right of
outstanding capital stock, without prejudice dissenting stockholders in accordance with the
to the appraisal right of dissenting provisions of this Code. The articles of
stockholders in accordance with the incorporation of a nonstock corporation may be
provisions of this Code, or the vote or amended by the vote or written assent of majority
written assent of at least twothirds (2/3) of of the trustees and at least two-thirds (2/3) of the
the members if it be a nonstock members.
corporation.
The original and amended articles together shall
The original and amended articles together contain all provisions required by law to be set out
shall contain all provisions required by law in the articles of incorporation. Amendments to the
to be set out in the articles of incorporation. articles shall be indicated by underscoring the
Such articles, as amended shall be change or changes made, and a copy thereof duly
indicated by underscoring the change or certified under oath by the corporate secretary and
changes made, and a copy thereof duly a majority of the directors or trustees, with a
certified under oath by the corporate statement that the amendments have been duly
secretary and a majority of the directors or approved by the required vote of the stockholders
trustees stating the fact that said or members, shall be submitted to the
amendment or amendments have been duly Commission.
approved by the required vote of the
stockholders or members, shall be The amendments shall take effect upon their
submitted to the Securities and Exchange approval by the Commission or from the date of
Commission. filing with the said Commission if not acted upon
within six (6) months from the date of filing for a
The amendments shall take effect upon their cause not attributable to the corporation.
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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.

Section 17. Grounds when articles of SEC. 16. Grounds When Articles of Incorporation
incorporation or amendment may be or
rejected or disapproved. – The Securities Amendment may be Disapproved. – The
and Exchange Commission may reject the Commission may disapprove the articles of
articles of incorporation or disapprove any incorporation or any amendment thereto if the
amendment thereto if the same is not in same is not compliant with the requirements of
compliance with the requirements of this this Code: Provided, That the Commission shall
Code: Provided, That the Commission shall give the incorporators, directors, trustees, or
give the incorporators a reasonable time officers a reasonable time from receipt of the
within which to correct or modify the disapproval within which to modify the
objectionable portions of the articles or objectionable portions of the articles or
amendment. The following are grounds for amendment. The following are grounds for such
such rejection or disapproval: disapproval:

1. That the articles of incorporation or (a)The articles of incorporation or any amendment

any amendment thereto is not substantially thereto is not substantially in accordance with the
in accordance with the form prescribed form prescribed herein;
herein;
(b)The purpose or purposes of the corporation are
2. That the purpose or purposes of the patently unconstitutional, illegal, immoral or
corporation are patently unconstitutional, contrary to government rules and regulations;
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
3. That the Treasurer’s Affidavit
concerning the amount of capital stock (d)The required percentage of Filipino ownership
subscribed and/or paid is false; of the capital stock under existing laws or the
Constitution has not been complied with.
4. That the percentage of ownership of
the capital stock to be owned by citizens of No articles of incorporation or amendment to
the Philippines has not been complied with articles of incorporation of banks, banking and
as required by existing laws or the quasi-banking institutions, preneed, insurance and
Constitution.
trust companies, NSSLAS, pawnshops, and
other financial intermediaries shall be approved
No articles of incorporation or amendment to
by the Commission unless accompanied by a
articles of incorporation of banks, banking
and quasi-banking institutions, building and favorable recommendation of the appropriate
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loan associations, trust companies and government agency to the effect that such articles
other financial intermediaries, insurance or amendment is in accordance with law.
companies, 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. (n)

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Section 18. Corporate name. No – or SEC. 17. Corporate name. – No corporate name
name may be allowed by the corporate shall be allowed by the Commission if it is not
Exchange Commission if Securities
the proposed distinguishable from that already reserved or
name is identical or registered for the use of another corporation,
confusingly similar to that and
of any existing
deceptively or if such name is already protected by law, or
corporation or to any other name already when its use is contrary to existing law, rules
protected by law or is patently deceptive, and regulations.
confusing or contrary to exis a change in the
corporate name is approved, the
ting laws. When A name is not distinguishable even if it
Commission shall issue an amended contains one or more of the following:
certificate of incorporation
amended name. (n) under (a) The word “corporation”,
“company”,
“incorporated”, “limited”, “limited liability”, or
an abbreviation of one of such words; and

(b) Punctuations, articles, conjunctions,

contractions, prepositions, abbreviations,
different tenses, spacing, or number of the
same word or phrase.

The Commission, upon determination that the

corporate name is: (1) not distinguishable from
a name already reserved or registered for the
use of another corporation; (2) already
protected by law; or (3) contrary to law, rules
and regulations, may summarily order the
corporation to immediately cease and desist
from using such name and require the
corporation to register a new one. The
Commission shall also cause the removal of all
visible signages, marks, advertisements,
labels, prints and other effects bearing such
corporate name. Upon the approval of the new
corporate name, the Commission shall issue a
certificate of incorporation under the amended
name.

If the corporation fails to comply with the

Commission’s order, the Commission may
hold the corporation and its responsible
directors or officers in contempt and/or hold
them administratively, civilly and/or criminally
liable under this Code and other applicable
laws and/or revoke the registration of the
corporation.

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Section 19. Commencement of corporate SEC. 18. Registration, Incorporation and

existence. – A private corporation formed or Commencement of Corporate Existence. – A
organized under this Code commences to person or group of persons desiring to

have corporate existence and juridical incorporate shall submit the intended corporate
personality and is deemed incorporated name to the Commission for verification. If the
from the date the Securities and Exchange Commission finds that the name is
Commission issues a certificate of distinguishable from a name already reserved
incorporation under its official seal; and or registered for the use of another
thereupon the incorporators, corporation, not protected by law and not
contrary to law, rules and regulations, the
stockholders/members and their successors
name shall be reserved in favor of the
shall constitute a body politic and corporate
incorporators. The incorporators shall then
under the name stated in the articles of submit their articles of incorporation and
incorporation for the period of time bylaws to the Commission.
mentioned therein, unless said period is
extended or the corporation is sooner If the Commission finds that the submitted
dissolved in accordance with law. (n) documents and information are fully compliant
with the requirements of this Code, other
relevant laws, rules and regulations, the
Commission shall issue the certificate of
incorporation.

A private corporation organized under this

Code commences its corporate existence and
juridical personality from the date the
Commission issues the certificate of
incorporation under its official seal and
thereupon the incorporators,
stockholders/members and their successors
shall constitute a body 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.

Section 20. De facto corporations. – The SEC. 19. De facto Corporations. – The due
due incorporation of any corporation incorporation of any corporation claiming in good
claiming in good faith to be a corporation faith to be a corporation under this Code, and its
under this Code, and its right to exercise right to exercise corporate powers, shall not be
corporate powers, shall not be inquired into inquired into collaterally in any private suit to which
collaterally in any private suit to which such such corporation may be a party. Such inquiry may
corporation may be a party. Such inquiry be made by the Solicitor General in a quo
may be made by the Solicitor General in a warranto proceeding.
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quo warranto proceeding. (n)

Section 21. Corporation by estoppel. – All SEC. 20. Corporation by Estoppel. – All persons
persons who assume to act as a corporation who assume to act as a corporation knowing it to
knowing it to be without authority to do so be without authority to do so shall be liable as
shall be liable as general partners for all general partners for all debts, liabilities and
debts, liabilities and damages incurred or damages incurred or arising as a result thereof:
arising as a result thereof: Provided, Provided, however, That when any such ostensible
however, That when any such ostensible corporation is sued on any transaction entered by
it

corporation is sued on any transaction as a corporation or on any tort committed by it as

entered by it as a corporation or on any tort such, it shall not be allowed to use its lack of
committed by it as such, it shall not be corporate personality as a defense. Anyone
allowed to use as a defense its lack of who assumes an obligation to an ostensible
corporate personality. corporation as such cannot resist performance
On who assumes an obligation to an thereof on the ground that there was in fact no
ostensible corporation as such, cannot resist corporation.
performance thereof on the ground that
there was in fact no corporation. (n)

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Section 22. Effects on non-use of corporate SEC. 21. Effects of Non-Use of Corporate Charter
charter and continuous inoperation of a and Continuous Inoperation. – If a corporation
corporation. – If a corporation does not does not formally organize and commence its
formally organize and commence the business within five (5) years from the date of its
transaction of its business or the incorporation, its certificate of incorporation
construction of its works within two (2) years shall be deemed revoked as of the day
following the end of the five-year period.
from the date of its incorporation, its
corporate powers cease and the corporation
However, if a corporation has commenced its
shall be deemed dissolved. However, if a
business but subsequently becomes inoperative
corporation has commenced the transaction for a period of at least five (5) consecutive years,
of its business but subsequently becomes the Commission may, after due notice and
continuously inoperative for a period of at hearing, place the corporation under delinquent
least five (5) years, the same shall be a status.
ground for the suspension or revocation of
its corporate franchise or certificate of A delinquent corporation shall have a period of
incorporation. (19a) This provision shall two (2) years to resume operations and comply
not apply if the failure to organize, with all requirements that the Commission
commence the transaction of its shall prescribe. Upon compliance by the
businesses or the construction of its corporation, the Commission shall issue an
works, or to continuously operate is due order lifting the delinquent status. Failure to
comply with the requirements and resume
to causes beyond the control of the
operations within the period given by the
corporation as may be determined by the
Commission shall cause the revocation of the
Securities and Exchange Commission. corporation’s certificate of incorporation.

The Commission shall give reasonable notice

to, and coordinate with the appropriate
regulatory agency prior to the suspension or
revocation of the certificate of incorporation of
companies under their special regulatory
jurisdiction.

TITLE III TITLE III

BOARD OF DIRECTORS/TRUSTEES AND BOARD OF DIRECTORS/ TRUSTEES AND
OFFICERS OFFICERS

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Section 23. The board of directors or SEC. 22. The Board of Directors or Trustees of a
trustees. – Unless otherwise provided in this Corporation; Qualification and Term. – Unless
Code, the corporate powers of all otherwise provided in this Code, the board of
corporations formed under this Code shall directors or trustees shall exercise the corporate
be exercised, all business conducted and all powers, conduct all business, and control all
property of such corporations controlled and properties of the corporation.
held by the board of directors or trustees to
be elected from among the holders of Directors shall be elected for a term of one (1) year
stocks, or where there is no stock, from from among the holders of stocks registered in the
among the members of the corporation, who corporation’s books, while trustees shall be elected
shall hold office for one (1) year until their for a term not exceeding three (3) years from
successors are elected and qualified. (28a) among the members of the corporation. Each
Every director must own at least one (1) director and trustee shall hold office until the
share of the capital stock of the corporation successor is elected and qualified. A director who
of which he is a director, which share shall ceases to own at least one (1) share of stock or a
stand in his name on the books of the trustee who ceases to be a member of the
corporation. Any director who ceases to be corporation shall cease to be such.
the owner of at least one (1) share of the
capital stock of the corporation of which he The board of the following corporations vested
is a director shall thereby cease to be a with public interest shall have independent
directors constituting at least twenty percent
director. Trustees of non-stock corporations
(20%) of such board:
must be members thereof. A majority of the
directors or trustees of all corporations
a. Corporations covered by Section 17.2 of
organized under this Code must be
Republic Act No. 8799, otherwise known as
residents of the Philippines. “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 (P50,000,000.00) and having two
hundred (200) or more holders of shares, with
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, pre-need, trust and
insurance companies, and other financial
intermediaries; and

c. Other corporations engaged in business

vested with public interest similar to the above,
as may be determined by the Commission,
after taking into account relevant factors which
are germane to the objective and purpose of

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requiring the election of an independent

director, such as the extent of minority
ownership, type of financial products or

securities issued or offered to investors, public

interest involved in the nature of business
operations, and other analogous factors.

An independent director is a person who, apart

from shareholdings and fees received from the
corporation, is independent of management
and free from any business or other
relationship which could, or could reasonably
be perceived to materially interfere with the
exercise of independent judgment in carrying
prescribe
out the responsibilities as a director.

Independent directors must be elected by the

shareholders present or entitled to vote in
absentia during the election of directors.
Independent 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 to
strengthen their independence and align with
international best practices.

Section 24. Election of directors or trustees. SEC. 23. Election of Directors or Trustees. –
– At all elections of directors or trustees, Except when the exclusive right is reserved for
there must be present, either in person or by holders of founders’ shares under Section 7 of
representative authorized to act by written this Code, each stockholder or member shall
proxy, the owners of a majority of the have the right to nominate any director or
outstanding capital stock, or if there be no trustee who possesses all of the qualifications
and none of the disqualifications set forth in
capital stock, a majority of the members
this Code.
entitled to vote. The election must be by
ballot if requested by any voting stockholder
At all elections of directors or trustees, there must
or member. In stock corporations, every be present, either in person or through a
stockholder entitled to vote shall have the representative authorized to act by written proxy,
right to vote in person or by proxy the the owners of majority of the outstanding capital
number of shares of stock standing, at the stock, or if there be no capital stock, a majority of
time fixed in the by-laws, in his own name the members entitled to vote. When so authorized
on the stock books of the corporation, or in the bylaws or by a majority of the board of
where the bylaws are silent, at the time of directors, the stockholders or members may also
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the election; and said stockholder may vote vote through remote communication or in absentia:
such number of shares for as many persons Provided, That the right to vote through such
as there are directors to be elected or he modes may be exercised in corporations vested
may cumulate said shares and give one with public interest, notwithstanding the absence of
candidate as many votes as the number of a provision in the by-laws of such corporations.
directors to be elected multiplied by the
number of his shares shall equal, or he may
distribute them on the same

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principle among as many candidates as he A stockholder or member who participates

shall see fit: Provided, That the total number through remote communication or in absentia,
of votes cast by him shall not exceed the shall be deemed present for purposes of
number of shares owned by him as shown quorum.
in the books of the corporation multiplied by
the whole number of directors to be elected: The election must be by ballot if requested by any
Provided, however, That no delinquent stock voting stockholder or member.
shall be voted. Unless otherwise provided in
In stock corporations, stockholders entitled to
the articles of incorporation or in the by-
vote shall have the right to vote the number of
laws, members of corporations which have
shares of stock standing in their own names in
no capital stock may cast as many votes as the stock books of the corporation at the time
there are trustees to be elected but may not fixed in the bylaws or where the bylaws are
cast more than one vote for one candidate. silent, at the time of the election. The said
Candidates receiving the highest number of stockholder may: (a) vote such number of
votes shall be declared elected. Any shares for as many persons as there are
meeting of the stockholders or members directors to be elected; (b) cumulate said
called for an election may adjourn from day shares and give one (1) candidate as many
to day or from time to time but not sine die votes as the number of directors to be elected
or indefinitely if, for any reason, no election multiplied by the number of the shares owned;
is held, or if there are not present or or (c) distribute them on the same principle
among as many candidates as may be seen fit:
represented by proxy, at the meeting, the
Provided, That the total number of votes cast
owners of a majority of the outstanding
shall not exceed the number of shares owned
capital stock, or if there be no capital stock, by the stockholders as shown in the books of
a majority of the members entitled to vote. the corporation multiplied by the whole number
(31a) 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 bylaws, members of
nonstock corporations may cast as many votes
as there are trustees to be elected but may not
cast more than one (1) vote for one (1)
candidate. Nominees for directors or trustees
receiving the highest number of votes shall be
declared elected.

If no election is held, or the owners of majority

of the outstanding capital stock or majority of
the members entitled to vote are not present in
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

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their duties as prescribed by law, rules of good

corporate governance, and by-laws of the corporation.

Section 25. SEC. 24. Corporate Officers. – Immediately after their election, the directors of a
Corporate corporation must formally organize and elect: (a) a president, who must be a
officers, director; (b) a treasurer, who must be a resident; (c) a secretary, who must be a
quorum. – citizen and resident of the Philippines; and (d) such other officers as may be
Immediately provided in the bylaws. If the corporation is vested with public interest, the board
after their shall also elect a compliance officer. The same person may hold two (2) or more
election, the positions concurrently, except that no one shall act as president and secretary or
directors of a as president and treasurer at the same time, unless otherwise allowed in this
corporation Code.
must formally
organize by The officers shall manage the corporation and perform such duties as may be
the election of
a president,
who shall be
a director, a
treasurer who
may or may
not be a
director, a
secretary who
shall be a
resident and
citizen of the
Philippines,
and such
other officers
as may be
provided for
in the bylaws.
Any two (2) or
more
positions may
be held provided in the bylaws and/or as resolved by the board of directors.
concurrently
by the same
person,
except that no
one shall act
as president
and secretary
or as
president and
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treasurer at
the same
time.
The
directors or
trustees and
officers to be
elected shall
perform the
duties
enjoined on
them by law
and the by-
laws of the
corporation.
Unless the
articles of
incorporatio
n or the by-
laws provide
for a greater
majority, a
majority of
the number
of directors
or trustees
as fixed in
the articles
of
incorporatio
n 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
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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.
(33a)

Section 26. SEC. 25. Report of Election of Directors, Trustees and Officers, Non-holding of
Report of Election and Cessation from Office. – Within thirty (30) days after the election of
election of the directors, trustees and officers of the corporation, the secretary, or any other
directors, officer of the corporation, shall submit to the Commission, the names,
trustees and nationalities, shareholdings, and residence addresses of the directors, trustees,
officers. – and officers elected.
Within thirty
The non-holding of elections and the reasons therefor shall be reported to
(30) days
the Commission within thirty (30) days from the date of the
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
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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

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himself, shall immediately report such fact to scheduled election. The report shall specify a
the Securities and Exchange Commission. new date for the election, which shall not be
(n) later than sixty (60) days from the scheduled
date.

If no new date has been designated, or if the

rescheduled election is likewise not held, the
Commission may, upon the application of a
stockholder, member, director or trustee, and
after verification of the unjustified non-holding
of the election, summarily order that an
election be held. The Commission shall have
the power to issue such orders as may be
appropriate, including orders directing the
issuance of a notice stating the time and place
of the election, designated presiding officer,
and the record date or dates for the
determination of stockholders or members
entitled to vote.

Notwithstanding any provision of the articles

of incorporation or bylaws to the contrary, the
shares of stock or membership represented at
such meeting and entitled to vote shall
constitute a quorum for purposes of
conducting an election under this section.

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, or in case of death, the
officer’s heirs shall, within seven (7) days from
knowledge thereof, report in writing such fact
to the Commission.

Section 27. Disqualification of directors, SEC. 26. Disqualification of Directors, Trustees or

trustees or officers. – No person convicted Officers. – A person shall be disqualified from
by final judgment of an offense punishable being a director, trustee, or officer of any
by imprisonment for a period exceeding six corporation if, within five (5) years prior to the
(6) years, or a violation of this Code election or appointment as such, the person
committed within five (5) years prior to the was:
date of his election or appointment, shall
qualify as a director, trustee or officer of any (a) Convicted by final judgment:
corporation.
(n) (1) Of an offense punishable by imprisonment
for a period exceeding six (6) years;
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(2) For violating this Code; and

(3) For violating Republic Act No. 8799,

otherwise known as “The Securities Regulation
Code”;

(b) Found administratively liable for any

offense involving fraud 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

qualifications or other disqualifications, which
the Commission, the primary regulatory
agency, or the Philippine Competition
Commission may impose in its promotion of
good corporate governance or as a sanction in
its administrative proceedings.

Section 28. Removal of directors or SEC. 27. Removal of Directors or Trustees. – Any
trustees. – Any director or trustee of a director or trustee of a corporation may be
corporation may be removed from office by removed from office by a vote of the stockholders
a vote of the stockholders holding or holding or representing at least two-thirds (2/3) of
representing at least two-thirds (2/3) of the the outstanding capital stock, or in a nonstock
outstanding capital stock, or if the corporation, by a vote of at least two-thirds (2/3) of
corporation be a non-stock corporation, by a the members entitled to vote: Provided, That such
vote of at least two-thirds (2/3) of the removal shall take place either at a regular
members entitled to vote: Provided, That meeting of the corporation or at a special meeting
such removal shall take place either at a called for the purpose, and in either case, after
regular meeting of the corporation or at a previous notice to stockholders or members of the
special meeting called for the purpose, and corporation of the intention to propose such
in either case, after previous notice to removal at the meeting. A special meeting of the
stockholders or members of the corporation stockholders or members for the purpose of
of the intention to propose such removal at removing any director or trustee must be called by
the meeting. A special meeting of the the secretary on order of the president, or upon
stockholders or members of a corporation written demand of the stockholders representing or
for the purpose of removal of directors or holding at least a majority of the outstanding
trustees, or any of them, must be called by capital stock, or a majority of the members entitled
the secretary on order of the president or on to vote. If there is no secretary, or if the secretary,
the written demand of the stockholders despite demand, fails or refuses to call the special
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representing or holding at least a majority of meeting or to give notice thereof, the stockholder
the outstanding capital stock, or, if it be a or member of the corporation signing the demand
non-stock corporation, on the written may call for the meeting by directly addressing the
demand of a majority of the members stockholders or members. Notice of the time and
entitled to vote. Should the secretary fail or place of such meeting, as well as of the intention
refuse to call the special meeting upon such to propose such removal, must be given by
demand or fail or refuse to give the notice, publication or by written notice prescribed in this
or if there is no secretary, the call for the Code. Removal may be
meeting may be

addressed directly to the stockholders or with or without cause: Provided, That removal
members by any stockholder or member of without cause may not be used to deprive minority
the corporation signing the demand. Notice stockholders or members of the right of
of the time and place of such meeting, as representation to which they may be entitled under
well as of the intention to propose such Section 23 of this Code.
removal, must be given by publication or by
written notice prescribed in this Code. The Commission shall, motu proprio or upon
verified complaint, and after due notice and
Removal may be with or without cause:
hearing, order the removal of a director or
Provided, That removal without cause may
trustee elected despite the disqualification, or
not be used to deprive minority stockholders whose disqualification arose or is discovered
or members of the right of representation to subsequent to an election. The removal of a
which they may be entitled under Section 24 disqualified director shall be without prejudice
of this Code. (n) 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.

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Section 29. Vacancies in the office of SEC. 28. Vacancies in the Office of Director or
director or trustee. – Any vacancy occurring Trustee; Emergency Board. – Any vacancy
in the board of directors or trustees other occurring in the board of directors or trustees other
than by removal by the stockholders or than by removal or by expiration of term, may be
members or by expiration of term, may be filled by the vote of at least a majority of the
filled by the vote of at least a majority of the remaining directors or trustees, if still constituting a
remaining directors or trustees, if still quorum; otherwise, said vacancies must be filled
constituting a quorum; otherwise, said by the stockholders or members in a regular or
vacancies must be filled by the stockholders special meeting called for that purpose.
in a regular or special meeting called for that
purpose. A director or trustee so elected to When the vacancy is due to term expiration,
fill a vacancy shall be elected only or the the election shall be held no later than the day
unexpired term of his predecessor in office. of such expiration at a meeting called for that
Any directorship or trusteeship to be purpose. When the vacancy arises as a result
filled by reason of an increase in the number of removal by the stockholders or members,
of directors or trustees shall be filled only by the election may be held on the same day of
an election at a regular or at a special the meeting authorizing the removal and this
meeting of stockholders or members duly fact must be so stated in the agenda and notice
called for the purpose, or in the same of said meeting. In all other cases, the election
meeting authorizing the increase of directors must be held no later than forty-five (45) days
from the time the vacancy arose. A director or
or trustees if so stated in the notice of the
trustee elected to fill a vacancy shall be
meeting. (n)
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

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damage to the corporation, the vacancy may

be temporarily filled from among the officers of
the corporation by unanimous vote of the
remaining directors or trustees. The action by
the designated director or trustee shall be
limited to the emergency action necessary, and
the term shall cease within a reasonable time
from the termination of the emergency or upon
election of the replacement director or trustee,
whichever comes earlier. The corporation must
notify the Commission within three (3) days
from the creation of the emergency board,
stating therein the reason for its creation.

Any directorship or trusteeship to be filled by

reason of an increase in the number of
directors or trustees shall be filled 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.

In all elections to fill vacancies under this

section, the procedure set forth in Sections 23
and 25 of this Code shall apply.

Section 30. Compensation of directors. – In SEC. 29. Compensation of Directors or Trustees.

the absence of any provision in the by-laws – In the absence of any provision in the by-laws
fixing their compensation, the directors shall fixing their compensation, the directors or trustees
not receive any compensation, as such shall not receive any compensation in their
directors, except for reasonable per diems: capacity as such, except for reasonable per diems:
Provided, however, That any such Provided however, That the stockholders
compensation other than per diems may be representing at least a majority of the outstanding
granted to directors by the vote of the capital stock or majority of the members may grant
stockholders representing at least a majority directors or trustees with compensation and
of the outstanding capital stock at a regular approve the amount thereof at a regular or special
or special stockholders’ meeting. In no case meeting.
shall the total yearly compensation of
In no case shall the total yearly compensation of
directors, as such directors, exceed ten
directors exceed ten (10%) percent of the net
(10%) percent of the net income before
income before income tax of the corporation during
income tax of the corporation during the the preceding year.
preceding year. (n)
Directors or trustees shall not participate in the
determination of their own per diems or
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compensation.

Corporations vested with public interest shall submit to their shareholders

and the Commission, an annual report of the total compensation of each of
their directors or trustees.

Section 31. SEC. 30. Liability of Directors, Trustees or Officers. – Directors or trustees who
Liability of willfully and knowingly vote for or assent to patently unlawful acts of the
directors, corporation or who are guilty of gross negligence or bad faith in directing the
trustees or affairs of the corporation or acquire any personal or pecuniary interest in conflict
officers. - with their duty as such directors or trustees shall be liable jointly and severally for
Directors or all damages resulting therefrom suffered by its stockholders or members and
trustees who
willfully and
knowingly the corporation,
vote for or
assent to
patently
unlawful acts
of the A Director, Trustee, or Officer shall not att empt to
corporation acquire, or acquire any interest adverse to the
or who are corporation in respect of any matter which has been
guilty of reposed in them in confidence, and upon which,
gross equity imposes a disability upon themselves to deal
negligence in their own behalf, otherwise the said director,
or bad faith trustee, or officer shall be liable as a trustee for the
in directing corporation and must account for the profits which
the affairs of otherwise would have accrued to the corporation.
the
corporation
or acquire
any personal
or pecuniary
interest in
conflict with other persons.
their duty as
such
directors or
trustees
shall be
liable jointly
and
severally for
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all damages
resulting
therefrom
suffered by
the
corporation,
its
stockholders
or members
and other
persons.

When a
director,
trustee or
officer
attempts to
acquire or
acquire, in
violation of
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
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which
otherwise
would have
accrued to
the
corporation.
(n)

Section 32. SEC. 31. Dealings of Directors, Trustees or Officers with the Corporation. – A
Dealings of contract of the corporation with (1) one or more of its directors, trustees, officers or
directors, their spouses and relatives within the fourth civil degree of consanguinity or affinity
trustees or is voidable, at the option of such corporation, unless all the following conditions
officers with are present:
the
corporation. (a) The presence of such director or trustee in the board meeting in which the
– A contract contract was approved was not necessary to constitute a quorum for such
of the meeting;
corporation
with one or (b) The vote of such director or trustee was not necessary for the approval of
more of its the contract;
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
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meeting;
2. That
the vote of
such director
or trustee
was not
necessary for
the approval
of the
contract;
3. That
the contract
is fair and
reasonable
under the
circumstance
s; and
4. That in
case of an
officer, the
contract has
been
previously
authorized by
the board of

directors. (c) The contract is fair and reasonable under the

Where any of the first two conditions set circumstances;
forth in the preceding paragraph is absent,
in the case of a contract with a director or (d) In case of corporations vested with public
trustee, such contract may be ratified by the interest, material contracts are approved by at
vote of the stockholders representing at least two-thirds (2/3) of the entire membership
least twothirds (2/3) of the outstanding of the board, with at least a majority of the
independent directors voting to approve the
capital stock or of at least two-thirds (2/3) of
material contract; and
the members in a meeting called for the
purpose: Provided, That full disclosure of
(e) In case of an officer, the contract has been
the adverse interest of the directors or previously authorized by the board of directors.
trustees involved is made at such meeting:
Provided, however, That the contract is fair
and reasonable under the circumstances.
(n)

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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 ou tstanding 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 re asonable
under the circumstances.

Section 33. Contracts between corporations SEC. 32. Contracts between Corporations with
with interlocking directors. – Except in cases Interlocking Directors. – Except in cases of fraud,
of fraud, and provided the contract is fair and provided the contract is fair and reasonable
and reasonable under the circumstances, a under the circumstances, a contract between two
contract between two or more corporations (2) or more corporations having interlocking
having interlocking directors shall not be directors shall not be invalidated on that ground
invalidated on that ground alone: Provided, alone: Provided, That if the interest of the
That if the interest of the interlocking director interlocking director in one (1) corporation is
in one corporation is substantial and his substantial and the interest in the other corporation
interest in the other corporation or or corporations is merely nominal, the contract
corporations is merely nominal, he shall be shall be subject to the provisions of the preceding
subject to the provisions of the preceding section insofar as the latter corporation or
section insofar as the latter corporation or corporations are concerned.
corporations are concerned.
Stockholdings exceeding twenty (20%) percent of
Stockholdings exceeding twenty (20%) the outstanding capital stock shall be considered
percent of the outstanding capital stock shall substantial for purposes of interlocking directors.
be considered substantial for purposes of
interlocking directors. (n)

Section 34. Disloyalty of a director. – SEC. 33. Disloyalty of a Director. – Where a

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Where a director, by virtue of his office, director, by virtue of such office, acquires a
acquires for himself a business opportunity business opportunity which should belong to the
which should belong to the corporation, corporation, thereby obtaining profits to the
thereby obtaining profits to the prejudice of prejudice of such corporation, the director must
such corporation, he must account to the account for and refund to the latter all such profits,
latter for all such profits by refunding the unless the act has been ratified by a vote of the
same, unless his act has been ratified by a stockholders owning or representing at least
vote of the stockholders owning or twothirds (2/3) of the outstanding capital stock.
representing at least two-thirds (2/3) of the This provision shall be applicable, notwithstanding
outstanding capital stock. This provision the fact that the director risked one’s own funds in
shall be applicable, notwithstanding the fact the venture.
that the director risked his own funds in the
venture. (n)

Section 35. Executive committee. – The SEC. 34. Executive, Management, and Other
bylaws of a corporation may create an Special Committees. – If the bylaws so provide,
executive committee, composed of not less the board may create an executive committee
than three members of the board, to be composed of at least three (3) directors. Said
appointed by the board. Said committee committee may act, by majority vote of all its
may act, by majority vote of all its members, members, on such specific matters within the
competence of the board, as may be delegated to
on such specific matters within the
it in the bylaws or by majority vote of the board,
competence of the board, as may be
except with respect to the: (a) approval of any
delegated to it in the by-laws or on a action for which shareholders’ approval is also
majority vote of the board, except with required; (b) filling of vacancies in the board; (c)
respect to: (1) approval of any action for amendment or repeal of bylaws or the adoption of
which shareholders’ approval is also new bylaws; (d) amendment or repeal of any
required; (2) the filing of vacancies in the resolution of the board which by its express terms
board; (3) the amendment or repeal of is not amendable or repealable; and (e) distribution
bylaws or the adoption of new by-laws; (4) of cash dividends to the shareholders.
the amendment or repeal of any resolution
of the board which by its express terms is The board of directors may create special
not so amendable or repealable; and (5) a committees of temporary or permanent nature
distribution of cash dividends to the and to determine the members’ term,
composition, compensation, powers, and
shareholders.
responsibilities.

TITLE IV TITLE IV
POWERS OF CORPORATIONS POWERS OF CORPORATIONS

Section 36. Corporate powers and capacity. SEC. 35. Corporate Powers and Capacity. – Every
– Every corporation incorporated under this corporation incorporated under this Code has the
Code has the power and capacity: power and capacity:
1. To sue and be sued in its corporate
name; 2. Of succession by its corporate (a)To sue and be sued in its corporate name;
name for the period of time stated in the
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articles of incorporation and the certificate of (b)To have perpetual existence unless the
incorporation; certificate of incorporation provides otherwise;

3. To adopt and use a corporate seal; (c)To adopt and use a corporate seal;
4. To amend its articles of incorporation
in accordance with the provisions of this (d)To amend its articles of incorporation in
Code; 5. To adopt by-laws, not contrary to accordance with the provisions of this Code;
law, morals, or public policy, and to amend
or repeal the same in accordance with this (e)To adopt bylaws, not contrary to law, morals or
Code; public policy, and to amend or repeal the same in
6. In case of stock corporations, to issue accordance with this Code;
or sell stocks to subscribers and to sell
stocks to subscribers and to sell treasury (f)In case of stock corporations, to issue or sell
stocks in accordance with the provisions of stocks to subscribers and to sell treasury stocks in
this Code; and to admit members to the accordance with the provisions of this Code; and
corporation if it be a non-stock corporation; to admit members to the corporation if it be a
7. To purchase, receive, take or grant, nonstock corporation;
hold, convey, sell, lease, pledge, mortgage
and otherwise deal with such real and (g)To purchase, receive, take or grant, hold,
personal property, including securities and convey, sell, lease, pledge, mortgage, and
bonds of other corporations, as the otherwise deal with such real and personal
transaction of the lawful business of the property, including securities and bonds of other
corporation may reasonably and necessarily corporations, as the transaction of the lawful
require, subject to the limitations prescribed business of the corporation may reasonably and
by law and the Constitution; necessarily require, subject to the limitations
8. To enter into merger or consolidation prescribed by law and the Constitution;
with other corporations as provided in this
Code; 9. To make reasonable donations, (h)To enter into a partnership, joint venture,
including those for the public welfare or for merger, consolidation, or any other commercial
hospital, charitable, cultural, scientific, civic, agreement with natural and juridical persons;
or similar purposes: Provided, That no
corporation, domestic or foreign, shall give
(i)To make reasonable donations, including those
donations in aid of any political party or
for the public welfare or for hospital, charitable,
candidate or for purposes of partisan
cultural, scientific, civic, or similar purposes:
political activity; 10. To establish pension,
Provided, That no foreign corporation shall give
retirement, and other plans for the benefit of
donations in aid of any political party or candidate
its directors, trustees, officers and
or for purposes of partisan political activity;
employees; and
11. To exercise such other powers as may
(j)To establish pension, retirement, and other plans
be essential or necessary to carry out its
for the benefit of its directors, trustees, officers,
purpose or purposes as stated in the articles and employees; and
of incorporation. (13a)
(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.

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Section 37. Power to extend or shorten SEC. 36. Power to Extend or Shorten Corporate
corporate term. – A private corporation may Term. – A private corporation may extend or
extend or shorten its term as stated in the shorten its term as stated in the articles of
articles of incorporation when approved by a incorporation when approved by a majority vote of
majority vote of the board of directors or the board of directors or trustees, and ratified at a

trustees and ratified at a meeting by the meeting by the stockholders or members

stockholders representing at least two-thirds representing at least two-thirds (2/3) of the
(2/3) of the outstanding capital stock or by at outstanding capital stock or of its members.
least two-thirds (2/3) of the members in case Written notice of the proposed action and the time
of non-stock corporations. Written notice of and place of the meeting shall be sent to
the proposed action and of the time and stockholders or members at their respective place
of residence as shown in the books of the
place of the meeting shall be addressed to
corporation, and must either be deposited to the
each stockholder or member at his place of
addressee in the post office with postage prepaid,
residence as shown on the books of the served personally, or when allowed in the by-laws
corporation and deposited to the addressee or done with the consent of the stockholder, sent
in the post office with postage prepaid, or electronically in accordance with the rules and
served personally: Provided, That in case of regulations of the Commission on the use of
extension of corporate term, any dissenting electronic data messages. In case of extension
stockholder may exercise his appraisal right of corporate term, a dissenting stockholder may
under the conditions provided in this code. exercise the right of appraisal under the conditions
(n) provided in this Code.

Section 38. Power to increase or decrease SEC. 37. Power to Increase or Decrease Capital
capital stock; incur, create or increase Stock; Incur, Create or Increase Bonded
bonded indebtedness. – No corporation Indebtedness. – No corporation shall increase or
shall increase or decrease its capital stock decrease its capital stock or incur, create or
or incur, create or increase any bonded increase any bonded indebtedness unless
indebtedness unless approved by a majority approved by a majority vote of the board of
vote of the board of directors and, at a directors and by two-thirds (2/3) of the outstanding
stockholder’s meeting duly called for the capital stock at a stockholders’ meeting duly called
purpose, two-thirds (2/3) of the outstanding for the purpose. Written notice of the time and
capital stock shall favor the increase or place of the stockholders’ meeting and the
diminution of the capital stock, or the purpose for said meeting must be sent to the
incurring, creating or increasing of any stockholders at their places of residence as shown
bonded indebtedness. Written notice of the in the books of the corporation and served on the
proposed increase or diminution of the stockholders personally, or through electronic
capital stock or of the incurring, creating, or means recognized in the corporation’s bylaws
increasing of any bonded indebtedness and and/or the Commission’s rules as a valid mode for
of the time and place of the stockholder’s service of notices.
meeting at which the proposed increase or
diminution of the capital stock or the A certificate must be signed by a majority of the
incurring or increasing of any bonded directors of the corporation and countersigned by
indebtedness is to be considered, must be the chairperson and secretary of the stockholders’
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addressed to each stockholder at his place meeting, setting forth:

of residence as shown on the books of the
corporation and deposited to the addressee (a)That the requirements of this section have been
in the post office with postage prepaid, or complied with;
served personally.
A certificate in duplicate must be signed by (b)The amount of the increase or decrease of the
a majority of the directors of the corporation capital stock;
and countersigned by the chairman and the
secretary of the stockholders’ meeting,
setting forth:

(1) That the requirements of this section (c)In case of an increase of the capital stock, the
have been complied with; amount of capital stock or number of shares of
(2) The amount of the increase or nopar stock thereof actually subscribed, the
diminution of the capital stock; names, nationalities and addresses of the persons
(3) If an increase of the capital stock, the subscribing, the amount of capital stock or number
amount of capital stock or number of shares of no-par stock subscribed by each, and the
of no-par stock thereof actually subscribed, amount paid by each on the subscription in cash or
the names, nationalities and residences of property, or the amount of capital stock or number
the persons subscribing, the amount of of shares of no-par stock allotted to each
capital stock or number of no-par stock stockholder if such increase is for the purpose of
subscribed by each, and the amount paid by making effective stock dividend therefor
each on his subscription in cash or property, authorized;
or the amount of capital stock or number of
shares of no-par stock allotted to each (d)Any bonded indebtedness to be incurred,
stockholder if such increase is for the created or increased;
purpose of making effective stock dividend
therefor authorized; (e)The amount of stock represented at the meeting;
(4) Any bonded indebtedness to be and
incurred, created or increased;
(5) The actual indebtedness of the (f)The vote authorizing the increase or decrease of
corporation on the day of the meeting; (6) the capital stock, or the incurring, creating or
The amount of stock represented at the increasing of any bonded indebtedness.
meeting; and
(7) The vote authorizing the increase or Any increase or decrease in the capital stock or
diminution of the capital stock, or the the incurring, creating or increasing of any bonded
incurring, creating or increasing of any indebtedness shall require prior approval of the
bonded indebtedness. Commission, and where appropriate, of the
Any increase or decrease in the capital Philippine Competition Commission. The
stock or the incurring, creating or increasing application with the Commission shall be made
of any bonded indebtedness shall require within six (6) months from the date of approval
prior approval of the Securities and of the board of directors and stockholders,
Exchange Commission. which period may be extended for justifiable
One of the duplicate certificates shall be reasons.
kept on file in the office of the corporation
and the other shall be filed with the Copies of the certificate shall be kept on file in
Securities and Exchange Commission and
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attached to the original articles of the office of the corporation and filed with the
incorporation. From and after approval by Commission and attached to the original
the Securities and Exchange Commission articles of incorporation. After approval by the
and the issuance by the Commission of its Commission and the issuance by the
certificate of filing, the capital stock shall Commission of its certificate of filing, the
stand increased or decreased and the capital stock shall be deemed increased or
incurring, creating or increasing of any decreased and the incurring, creating or
bonded indebtedness authorized, as the increasing of any bonded indebtedness
certificate of filing may declare: Provided, authorized, as the certificate of filing may
That the Securities and Exchange declare: Provided, That the Commission shall
Commission shall not accept for filing any not accept for filing any certificate of increase
certificate of increase of capital stock unless of capital stock unless accompanied by a
accompanied by the sworn statement of the sworn statement of the treasurer of the
treasurer of the corporation corporation lawfully holding office at the time
of the filing of the certificate, showing that at
least twenty-five percent (25%)

lawfully of the increase in capital stock has been subscribed and that at least
holding office twenty-five percent (25%) of the amount subscribed has been paid in actual
at the time of cash to the corporation or that property, the valuation of which is equal to
the filing of twenty-five percent (25%) of the subscription, has been transferred to the
the certificate, corporation: Provided further, That no decrease in capital stock shall be
showing that approved by the Commission if its effect shall prejudice the rights of
at least corporate creditors.
twentyfive
(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
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corporation Nonstock corporations may incur, create or increase bonded indebtedness when
property the approved by a majority of the board of trustees and of at least twothirds (2/3) of
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 the members in a meeting duly called for the purpose.
create
bonded Bonds issued by a corporation shall be registered with the Commission, which
indebtedness, shall have the authority to determine the sufficiency of the terms thereof.
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
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Securities and
Exchange
Commission,
which shall
have the
authority to
determine the
sufficiency of
the terms
thereof. (17a)

Section 39. SEC. 38. Power to Deny Preemptive Right. – All stockholders of a stock
Power to corporation shall enjoy preemptive right to subscribe to all issues or disposition of
deny pre- shares of any class, in proportion to their respective shareholdings, unless such
emptive right. right is denied by the articles of incorporation or an amendment thereto:
– All Provided, That such preemptive right shall not extend to shares issued in
stockholders compliance with laws requiring stock offerings or minimum stock ownership by
of a stock the public; or to shares issued in good faith with the approval of the stockholders
corporation representing two-thirds (2/3) of the outstanding capital stock, in exchange for
shall enjoy property needed for corporate purposes or in payment of a previously contracted
pre-emptive debt.
right to
subscribe to
all issues or
disposition of
shares of any
class, in
proportion to
their
respective
shareholdings
, unless such
right is denied
by the articles
of
incorporation
or an
amendment
thereto:
Provided,
That such
pre-emptive
right shall not
extend to
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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.

Section 40. SEC. 39. Sale or Other Disposition of Assets. – Subject to the provisions of
Sale or other Republic Act No. 10667, otherwise known as “Philippine Competition Act”,
disposition of and other related laws, a corporation may, by a majority vote of its board of
assets. –
Subject to the
provisions of
existing laws
on illegal
combinations
and
monopolies, a
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corporation
may, by a
majority vote
of its board of
directors or
trustees, sell,
lease,

exchange, mortgage, pledge or otherwise directors or trustees, sell, lease, exchange,

dispose of all or substantially all of its mortgage, pledge, or otherwise dispose of its
property and assets, including its property and assets, upon such terms and
goodwill, upon such terms and conditions conditions and for such consideration, which may
and for such consideration, which may be be money, stocks, bonds, or other instruments for
money, stocks, bonds or other instruments the payment of money or other property or
for the payment of money or other property consideration, as its board of directors or trustees
or consideration, as its board of directors or may deem expedient.
trustees may deem expedient, when
authorized by the vote of the stockholders A sale of all or substantially all of the
representing at least two-thirds (2/3) of the corporation’s properties and assets, including
outstanding capital stock, or in case of non- its goodwill must be authorized by the vote of
stock corporation, by the vote of at least to the stockholders representing at least
two-thirds (2/3) of the members, in a twothirds (2/3) of the outstanding capital stock,
stockholder’s or member’s meeting duly or at least two-thirds (2/3) of the members, in a
called for the purpose. Written notice of the stockholders’ or members’ meeting duly called
proposed action and of the time and place of for the purpose.
the meeting shall be addressed to each
stockholder or member at his place of In nonstock corporations where there are no
residence as shown on the books of the members with voting rights, the vote of at least
corporation and deposited to the addressee a majority of the trustees in office will be
in the post office with postage prepaid, or sufficient authorization for the corporation to
served personally: Provided, That any enter into any transaction authorized by this
dissenting stockholder may exercise his section.
appraisal right under the conditions provided
in this Code. The determination of whether or not the sale
A sale or other disposition shall be deemed involves all or substantially all of the
to cover substantially all the corporate corporation’s properties and assets must be
property and assets if thereby the computed based on its net asset value, as
corporation would be rendered incapable of shown in its latest financial statements. A sale
continuing the business or accomplishing or other disposition shall be deemed to cover
the purpose for which it was incorporated. substantially all the corporate property and
After such authorization or approval by the assets if thereby the corporation would be
stockholders or members, the board of rendered incapable of continuing the business
directors or trustees may, nevertheless, in or accomplishing the purpose for which it was
its discretion, abandon such sale, lease, incorporated.
exchange, mortgage, pledge or other
disposition of property and assets, subject to Written notice of the proposed action and of
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the rights of third parties under any contract the time and place for the meeting shall be
relating thereto, without further action or addressed to stockholders or members at their
approval by the stockholders or members. places of residence as shown in the books of
Nothing in this section is intended to restrict the corporation and deposited to the
the power of any corporation, without the addressee in the post office with postage
authorization by the stockholders or prepaid, served personally, or when allowed by
the by-laws or done with the consent of the
members, to sell, lease, exchange,
stockholder, sent electronically: Provided, That
mortgage, pledge or otherwise dispose of
any dissenting stockholder may exercise the
any of its property and assets if the same is right of appraisal under the conditions
necessary in the usual and regular course of provided in this Code.
business of said corporation or if the
proceeds of the sale or other disposition of

such After such authorization or approval by the stockholders or members, the

property and board of directors or trustees may, nevertheless, in its discretion, abandon
assets be such sale, lease, exchange, mortgage, pledge, or other disposition of
appropriated property and assets, subject to the rights of third parties under any contract
for the relating thereto, without further action or approval by the stockholders or
conduct of members.
its remaining
business. Nothing in this section is intended to restrict the power of any corporation,
In non- without the authorization by the stockholders or members, to sell, lease,
stock exchange, mortgage, pledge, or otherwise dispose of any of its property and
corporation assets if the same is necessary in the usual and regular course of business
s where of the corporation or if the proceeds of the sale or other disposition of such
there are no property and assets shall be appropriated for the conduct of its remaining
members business.
with voting
rights, the
vote of at
least a
majority of
the trustees
in office will
be sufficient
authorizatio
n for the
corporation
to enter into
any
transaction
authorized
by this
section.

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Section 41.
Power to
acquire
own
shares. – A
stock
corporation
SEC. 40 . Power to Acquire Own Shares. –
shall have
Provided that the corporation has unrestricted
the power
to purchase retained earnings in its books to cover the
or acquire shares to be purchased or acquired, a stock
its own corporation shall have the power to purchase or
shares for a acquire its own shares for a legitimate corporate
legitimate purpose or purposes, in cluding the following
corporate cases:
purpose or
purposes, (a)To eliminate fractional shares arising out of stock
including dividends;
but not
limited to
the (b)To collect or compromise an indebtedness to the corporation, arising out of
following unpaid subscription, in a delinquency sale, and to purchase delinquent shares sold
cases: during said sale; and
Provided,
That the (c)To pay dissenting or withdrawing stockholders entitled to payment for their
corporation shares under the provisions of this Code.
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
compromis
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e an
indebtedne
ss 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
stockholder
s entitled to
payment for
their shares
under the
provisions
of this
Code. (a)

Section 42. SEC. 41. Power to Invest Corporate Funds in Another Corporation or Business or
Power to for Any Other Purpose. – Subject to the provisions of this Code, a private
invest corporation may invest its funds in any other corporation, business, or for any
corporate purpose other than the primary purpose for which it was organized,
funds in
another
corporation
or business
or for any
other
purpose. –
Subject to
the
provisions
of this
Code, a
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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 when approved by a majority of the board of
approved by a majority of the board of directors or trustees and ratified by the
directors or trustees and ratified by the stockholders representing at least two-thirds (2/3)
stockholders representing at least two-thirds of the outstanding capital stock, or by at least two
(2/3) of the outstanding capital stock, or by thirds (2/3) of the members in the case of nonstock
at least two thirds (2/3) of the members in corporations, at a meeting duly called for the
the case of non-stock corporations, at a
purpose. Notice of the proposed investment and
stockholder’s or member’s meeting duly
the time and place of the meeting shall be
called for the purpose. Written notice of the
proposed investment and the time and place addressed to each stockholder or member at the
of the meeting shall be addressed to each place of residence as shown in the books of the
stockholder or member at his place of corporation and deposited to the addressee in the
residence as shown on the books of the post office with postage prepaid, served
corporation and deposited to the addressee personally, or sent electronically in accordance
in the post office with postage prepaid, or with the rules and regulations of the Commission
served personally: Provided, That any on the use of electronic data message, when
dissenting stockholder shall have appraisal allowed by the bylaws or done with the consent of
right as provided in this Code: Provided, the stockholders: Provided, That any dissenting
however, That where the investment by the stockholder shall have appraisal right as provided
corporation is reasonably necessary to in this Code: Provided however, That where the
accomplish its primary purpose as stated in
investment by the corporation is reasonably
the articles of incorporation, the approval of
the stockholders or members shall not be necessary to accomplish its primary purpose as
necessary. (17 1/2a) stated in the articles of incorporation, the approval
of the stockholders or members shall not be
necessary.

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Section 43. Power to declare dividends. - SEC. 42. Power to Declare Dividends. – The board
The board of directors of a stock corporation of directors of a stock corporation may declare
may declare dividends out of the dividends out of the unrestricted retained earnings
unrestricted retained earnings which shall which shall be payable in cash, property, or in
be payable in cash, in property, or in stock stock to all stockholders on the basis of
to all stockholders on the basis of outstanding stock held by them: Provided, That
outstanding stock held by them: Provided, any cash dividends due on delinquent stock shall
That any cash dividends due on delinquent first be applied to the unpaid balance on the
stock shall first be applied to the unpaid subscription plus costs and expenses, while stock
balance on the subscription plus costs and dividends shall be withheld from the delinquent
expenses, while stock dividends shall be stockholders until their unpaid subscription is fully
withheld from the delinquent stockholder paid: Provided, further, That no stock dividend
until his unpaid subscription is fully paid: shall be issued without the approval of
Provided, further, That no stock dividend stockholders representing at least two-thirds (2/3)
shall be issued without the approval of of the outstanding capital stock at a regular or
stockholders representing not less than two- special meeting duly called for the purpose.
thirds (2/3) of the outstanding capital stock
at a regular or special meeting duly calledStock corporations are prohibited from retaining
for the purpose. surplus profits in excess of one hundred percent
(16a) (100%) of their paid-in capital stock, except: (a)
when justified by definite corporate expansion
Stock corporations are prohibited from projects or programs approved by the board of
retaining surplus profits in excess of one directors; or (b) when the corporation is prohibited
hundred (100%) percent of their paid-in under any loan agreement with financial
institutions

capital stock, except: (1) when justified by or creditors, whether local or foreign, from
definite corporate expansion projects or declaring dividends without their consent, and such
programs approved by the board of consent has not yet been secured; or (c) when it
directors; or (2) when the corporation is can be clearly shown that such retention is
prohibited under any loan agreement with necessary under special circumstances obtaining
any financial institution or creditor, whether in the corporation, such as when there is need for
local or foreign, from declaring dividends
special reserve for probable contingencies.
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)

Section 44. Power to enter into SEC. 43. Power to Enter into Management
management contract. – No corporation Contract. – No corporation shall conclude a
shall conclude a management contract with management contract with another corporation
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another corporation unless such contract unless such contract is approved by the board of
shall have been approved by the board of directors and by stockholders owning at least the
directors and by stockholders owning at majority of the outstanding capital stock, or by at
least the majority of the outstanding capital least a majority of the members in the case of a
stock, or by at least a majority of the nonstock corporation, of both the managing and
members in the case of a non-stock the managed corporation, at a meeting duly called
corporation, of both the managing and the for the purpose: Provided, That (a) where a
managed corporation, at a meeting duly stockholder or stockholders representing the same
called for the purpose: Provided, That (1) interest of both the managing and the managed
where a stockholder or stockholders corporations own or control more than one-third
representing the same interest of both the (1/3) of the total outstanding capital stock entitled
managing and the managed corporations to vote of the managing corporation; or (b) where a
own or control more than one-third (1/3) of majority of the members of the board of directors
the total outstanding capital stock entitled to of the managing corporation also constitute a
vote of the managing corporation; or (2) majority of the members of the board of directors
where a majority of the members of the of the managed corporation, then the management
board of directors of the managing contract must be approved by the stockholders of
corporation also constitute a majority of the the managed corporation owning at least two-
members of the board of directors of the thirds (2/3) of the total outstanding capital stock
managed corporation, then the management entitled to vote, or by at least two-thirds (2/3) of the
contract must be approved by the members in the case of a non-stock corporation.
stockholders of the managed corporation
owning at least twothirds (2/3) of the total These shall apply to any contract whereby a
outstanding capital stock entitled to vote, or corporation undertakes to manage or operate all or
by at least two-thirds (2/3) of the members substantially all of the business of another
in the case of a nonstock corporation. No corporation, whether such contracts are called
management contract shall be entered into service contracts, operating agreements or
for a period longer than five years for any
otherwise: Provided however, That such service
one term.
contracts or operating agreements which relate to
The provisions of the next preceding
the exploration, development, exploitation or
paragraph shall apply to any contract
utilization of natural resources may be entered into
whereby a corporation undertakes to
manage or operate all or substantially all of

the business of another corporation, for such periods as may be provided by the
whether such contracts are called service pertinent laws or regulations.
contracts, operating agreements or
otherwise: Provided, however, That such No management contract shall be entered into
service contracts or operating agreements for a period longer than five (5) years for any
which relate to the exploration, one (1) term.
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)

Section 45. Ultra vires acts of corporations. SEC. 44. Ultra Vires Acts of Corporations. – No
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– No corporation under this Code shall corporation shall possess or exercise corporate
possess or exercise any corporate powers powers other than those conferred by this Code or
except those conferred by this Code or by by its articles of incorporation and except as
its articles of incorporation and except such necessary or incidental to the exercise of the
as are necessary or incidental to the powers conferred.
exercise of the powers so conferred. (n)

TITLE V TITLE V
BY LAWS BY-LAWS

Section 46. Adoption of by-laws. – Every SEC. 45. Adoption of Bylaws. – For the adoption
corporation formed under this Code of bylaws by the corporation, the affirmative
must, within one (1) month after receipt vote of the stockholders representing at least a
of official notice of the issuance of its majority of the outstanding capital stock, or of
certificate of incorporation by the at least a majority of the members in case of
Securities and Exchange Commission, nonstock corporations, shall be necessary. The
adopt a code of by-laws for its bylaws shall be signed by the stockholders or
government not inconsistent with this members voting for them and shall be kept in the
Code. For the adoption of by-laws by the principal office of the corporation, subject to the
corporation the affirmative vote of the inspection of the stockholders or members during
stockholders representing at least a office hours. A copy thereof, duly certified by a
majority of the outstanding capital stock, majority of the directors or trustees and
or of at least a majority of the members countersigned by the secretary of the corporation,
in case of non-stock corporations, shall shall be filed with the Commission and attached to
be necessary. The by-laws shall be signed the original articles of incorporation.
by the stockholders or members voting for
them and shall be kept in the principal office Notwithstanding the provisions of the preceding
of the corporation, subject to the inspection paragraph, by-laws may be adopted and filed prior
of the stockholders or members during office to incorporation; in such case, such by-laws shall
hours. A copy thereof, duly certified to by a be approved and signed by all the incorporators
majority of the directors or trustees and submitted to the Commission, together with
countersigned by the secretary of the the articles of incorporation.
corporation, shall be filed with the Securities
and Exchange Commission which shall be In all cases, bylaws shall be effective only upon
attached to the original articles of the issuance by the Commission of a certification
incorporation. that the bylaws are in accordance with this Code.

Notwithstanding the provisions of the

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preceding paragraph, by-laws may be The Commission shall not accept for filing the
adopted and filed prior to incorporation; bylaws or any amendment thereto of any bank,
in such case, such by-laws shall be banking institution, building and loan association,
approved and signed by all the trust company, insurance company, public utility,
incorporators and submitted to the educational institution, or other special
Securities and Exchange Commission, corporations governed by special laws, unless
together with the articles of
accompanied by a certificate of the appropriate
incorporation. In all cases, by-laws shall be
government agency to the effect that such bylaws
effective only upon the issuance by the
Securities and Exchange Commission of a or amendments are in accordance with law.
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)

Section 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
SEC. 46. Contents of Bylaws. – A private
the stockholders or members;
corporation may provide the following in its
3. The required quorum in meetings of
bylaws:
stockholders or members and the manner of
voting therein; (a)The time, place and manner of calling and
4. The form for proxies of stockholders
conducting regular or special meetings of the
and members and the manner of voting directors or trustees;
them;
5. The qualifications, duties (b)The
and time and manner of calling and conducting
compensation of directors or trustees, regular or special meetings and mode of notifying
officers and employees; the stockholders or members thereof;
6. The time for holding the annual
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election of directors of trustees and the (c)The required quorum in meetings of

mode or manner of giving notice thereof; stockholders or members and the manner of voting
7. The manner of election or appointment therein;
and the term of office of all officers other
than (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

directors or trustees; compensation of directors or trustees and officers,

8. The penalties for violation of the by- and the maximum number of other board
laws; representations that an independent director or
9. In the case of stock corporations, the trustee may have which shall, in no case, be more
manner of issuing stock certificates; and 10. than the number prescribed by the Commission;
Such other matters as may be necessary for (g)The time for holding the annual election of
directors of trustees and the mode or manner of
the proper or convenient transaction of its
giving notice thereof;
corporate business and affairs. (21a)
(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;

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(j)In the case of stock corporations, the manner of

issuing stoc k 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.

Section 48. Amendments to by-laws. – The SEC. 47. Amendment to Bylaws. – A majority of
board of directors or trustees, by a the board of directors or trustees, and the owners
majority vote thereof, and the owners of at of at least a majority of the outstanding capital
least a majority of the outstanding capital stock, or at least a majority of the members of a
stock, or at least a majority of the members nonstock corporation, at a regular or special
of a nonstock corporation, at a regular or meeting duly called for the purpose, may amend or
repeal the bylaws or adopt new bylaws. The
special meeting duly called for the purpose,
owners of twothirds (2/3) of the outstanding capital
may amend or repeal any by-laws or adopt
stock or twothirds (2/3) of the members in a non-
new by-laws. The owners of two-thirds (2/3) stock corporation may delegate to the board of
of the outstanding capital stock or two-thirds directors or trustees the power to amend or repeal
(2/3) of the members in a non-stock the bylaws or adopt new bylaws: Provided, That
corporation may delegate to the board of any power delegated to the board of directors or
directors or trustees the power to amend or trustees to amend or repeal the bylaws or adopt
repeal any by-laws or adopt new by-laws: new bylaws shall be considered as revoked
Provided, That any power delegated to the whenever stockholders owning or representing a
board of directors or trustees to amend or majority of the outstanding capital stock or majority
repeal any by-laws or adopt new by-laws of the members shall so vote at a regular or
shall be considered as revoked whenever special meeting.
stockholders owning or representing a
Whenever the bylaws are amended or new by-laws
majority of the outstanding capital stock or a
are adopted, the corporation shall file with the
majority of the members in non-stock
Commission such amended or new bylaws and, if
corporations, shall so vote at a regular or
special meeting.
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applicable, the stockholders’ or members’

Whenever any amendment or new by-laws resolution authorizing the delegation of the power
are adopted, such amendment or new by- to amend and/or adopt new bylaws, duly certified
laws shall be attached to the original by- under oath by the corporate secretary and a
laws in the office of the corporation, and a majority of the directors or trustees.
copy thereof, duly certified under oath by the
corporate secretary and a majority of the The amended or new bylaws shall only be
directors or trustees, shall be filed with the effective upon the issuance by the Commission of
Securities and Exchange Commission a certification that the same is in accordance with
the same to be attached to the original this Code and other relevant laws.
articles of incorporation and original
bylaws.

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)
TITLE VI TITLE VI
MEETINGS MEETINGS
Section 49. Kinds of meetings. – Meetings SEC. 48. Kinds of Meetings. – Meetings of
of directors, trustees, stockholders, or directors, trustees, stockholders, or members may
members may be regular or special. (n) be regular or special.

SEC. 49. Regular and Special Meetings of

Section 50. Regular and special meetings of Stockholders or Members. – Regular meetings of
stockholders or members. - Regular stockholders or members shall be held annually on
meetings of stockholders or members shall a date fixed in the bylaws, or if not so fixed, on any
be held annually on a date fixed in the date after April 15 of every year as determined
bylaws, or if not so fixed, on any date in by the board of directors or trustees: Provided,
April of every year as determined by the That written notice of regular meetings shall be
board of directors or trustees: Provided, sent to all stockholders or members of record at
That written notice of regular meetings shall least twentyone (21) days prior to the meeting,
be sent to all stockholders or members of unless a different period is required in the bylaws,
record at least two (2) weeks prior to the law, or regulation: Provided further, That written
meeting, unless a different period is required notice of regular meetings may be sent to all
by the by-laws. stockholders or members of record through
Special meetings of stockholders or electronic mail or such other manner as the
members shall be held at any time deemed Commission shall allow under its guidelines.
necessary or as provided in the by-laws:
Provided, however, That at least one (1) At each regular meeting of stockholders or
week written notice shall be sent to all members, the board of directors or trustees
stockholders or members, unless otherwise shall endeavor to present to stockholders or
provided in the by-laws. members the following:
Notice of any meeting may be waived,
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expressly or impliedly, by any stockholder or

member.
Whenever, for any cause, there is no a) The minutes of the most recent regular
person authorized to call a meeting, the meeting which shall include, among others:
Securities and Exchange Commission, upon

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petition of a stockholder or member on a (1) A description of the voting and vote

showing of good cause therefor, may issue tabulation procedures used in the previous
an order to the petitioning stockholder or meeting;
member directing him to call a meeting of
the corporation by giving proper notice (2) A description of the opportunity given to
required by this Code or by the by-laws. The stockholders or members to ask questions and
petitioning stockholder or member shall a record of the questions asked and answers
given;
preside thereat until at least a majority of the
stockholders or members present have
(3) The matters discussed and resolutions
chosen one of their number as presiding
reached;
officer. (24, 26)
(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 non-stock

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
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for nonpayment thereof;

f) Director or trustee profiles which shall

include, among others, their qualifications and
relevant experience, length of service in the
corporation, trainings and continuing
education attended, and their board
representations in other corporations;

g) A director or trustee attendance report,

indicating the attendance of each director or
trustee at each of the meetings of the board
and its committees and in regular or special
stockholder meetings;

h) Appraisals and performance reports for

the board and the criteria and procedure for
assessment;

i) A director or trustee compensation report

prepared in accordance with this Code and the
rules the Commission may prescribe;

j) Director disclosures on self-dealings and

related party transactions; and/or

k) The profiles of directors nominated or

seeking election or reelection.

A director, trustee, stockholder, or member

may propose any other matter for inclusion in
the agenda at any regular meeting of
stockholders or members.

Special meetings of stockholders or members

shall be held at any time deemed necessary or
as provided in the bylaws: Provided however,
That at least one (1) week written notice shall
be sent to all stockholders or members, unless
a different period is provided in the bylaws, law
or regulation.

A stockholder or member may propose the

holding of a special meeting and items to be
included in the agenda.

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Notice of any meeting may be waived,

expressly or impliedly, by any stockholder or
member: Provided, That general waivers of
notice in the articles of incorporation or the
bylaws shall not be allowed: Provided, further,
That attendance

at a meeting shall constitute a waiver of notice

of such meeting, except when the person
attends a meeting for the express purpose of
objecting to the transaction of any business
because the meeting is not lawfully called or
convened.

Whenever for any cause, there is no person

authorized or the person authorized unjustly
refuses to call a meeting, the Commission,
upon petition of a stockholder or member on a
showing of good cause therefor, may issue an
order directing the petitioning stockholder or
member to call a meeting of the corporation by
giving proper notice required by this Code or
the bylaws. The petitioning stockholder or
member shall preside thereat until at least a
majority of the stockholders or members
present have chosen from among themselves,
a presiding officer.

Unless the bylaws provide for a longer period,

the stock and transfer book or membership
book shall be closed at least twenty (20) days
for regular meetings and seven (7) days for
special meetings before the scheduled date of
the meeting.

In case of postponement of 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, through a proxy,
or when so authorized in the bylaws, through
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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
member’s meetings.

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Section 51. Place and time of meetings of SEC. 50. Place and Time of Meetings of
stockholders of members. – Stockholder’s or Stockholders or Members. – Stockholders’ or
member’s meetings, whether regular or members’ meetings, whether regular or special,
special, shall be held in the city or shall be held in the principal office of the
municipality where the principal office of the corporation as set forth in the articles of
corporation is located, and if practicable in incorporation, or, if not practicable, in the city
the principal office of the corporation: or municipality where the principal office of the
Provided, That Metro Manila shall, for corporation is located: Provided, That any city
purposes of this section, be considered a or municipality in Metro Manila, Metro Cebu,
city or municipality. Metro Davao, and other Metropolitan areas
Notice of meetings shall be in writing, and shall, for purposes of this section, be
the time and place thereof stated therein. considered a city or municipality.
All proceedings had and any business
transacted at any meeting of the Notice of meetings shall be sent through the
stockholders or members, if within the means of communication provided in the
powers or authority of the corporation, shall bylaws, which notice shall state the time, place
be valid even if the meeting be improperly and purpose of the meetings.
held or called, provided all the stockholders
or members of the corporation are present Each notice of meeting shall further be
or duly represented at the meeting. (24 and accompanied by the following:
25)
(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 called: Provided, That all
the stockholders or members of the
corporation are present or duly represented at
the meeting and not one of them expressly
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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.

Section 52. Quorum in meetings. – SEC. 51. Quorum in Meetings. – Unless otherwise
Unless otherwise provided for in this Code provided in this Code or in the bylaws, a quorum
or in the by-laws, a quorum shall consist of shall consist of the stockholders representing a
the stockholders representing a majority of majority of the outstanding capital stock or a
the outstanding capital stock or a majority of majority of the members in the case of nonstock
the members in the case of non-stock corporations.
corporations. (n)

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Section 53. Regular and special meetings of SEC. 52. Regular and Special Meetings of
directors or trustees. – Regular meetings of Directors or Trustees; Quorum. – Unless the
the board of directors or trustees of every articles of incorporation or the by-laws
corporation shall be held monthly, unless provides for a greater majority, a majority of
the by-laws provide otherwise. the directors or trustees as stated in the
Special meetings of the board of directors or articles of incorporation shall constitute a
trustees may be held at any time upon the quorum to transact corporate business, and
call of the president or as provided in the every decision reached by at least a majority of
bylaws. the directors or trustees constituting a
Meetings of directors or trustees of quorum, except for the election of officers
corporations may be held anywhere in or which shall require the vote of a majority of all
outside of the Philippines, unless the by- the members of the board, shall be valid as a
laws provide otherwise. Notice of regular or corporate act.
special meetings stating the date, time and
place of the meeting must be sent to every Regular meetings of the board of directors or
director or trustee at least one (1) day prior trustees of every corporation shall be held
to the scheduled meeting, unless otherwise monthly, unless the bylaws provide otherwise.
provided by the by-laws. A director or
trustee may waive this requirement, either Special meetings of the board of directors or
expressly or impliedly. (n) trustees may be held at any 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
outside of the Philippines, unless the bylaws
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 two (2) days prior to the
scheduled meeting, unless a longer time is
provided in the bylaws. A director or trustee
may waive this requirement, either expressly or
impliedly.

Directors or trustees who cannot physically

attend or vote at board meetings can
participate and vote through remote
communication such as videoconferencing,
teleconferencing, or other alternative modes of
communication that

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allow them reasonable opportunities to

participate. Directors or trustees cannot attend
or vote by proxy at board meetings.

A director or trustee who has a 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.

Section 54. Who shall preside at SEC. 53. Who Shall Preside at Meetings. – The
meetings. – The president shall preside at chairman or, in his absence, the president shall
all meetings of the directors or trustee as preside at all meetings of the directors or trustees
well as of the stockholders or members, as well as of the stockholders or members, unless
unless the the bylaws provide otherwise.
by-laws provide otherwise. (n)

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Section 55. Right to vote of pledgors,

mortgagors, and administrators. – In case of
pledged or mortgaged shares in stock
corporations, the pledgor or mortgagor shall
have the right to attend and vote at
meetings of stockholders, unless the
pledgee or mortgagee is expressly given by
the pledgor or mortgagor such right in
writing which is recorded on the appropriate
corporate books. (n)
Executors, administrators, receivers,
SEC. 54. Right to Vote of Secured Creditors and
and other legal representatives duly Administrators. – In case a stockholder grants
security interest in his or her shares in stock
appointed by the court may attend and vote
in behalf of the stockholders or members corporations, the stockholder -grantor shall have
without need of any written proxy. (27a) the right to attend and vote at meetings of
stockholders, unless the secured creditor is
expressly given by the stockholder -grantor such
right in writing which is recorded in the appropriate
corporate books.

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.

Section 56. Voting in case of joint ownership SEC. 55. Voting in Case of Joint Ownership of
of stock. – In case of shares of stock owned Stock. – The consent of all the co-owners shall
jointly by two or more persons, in order to be necessary in voting shares of stock owned
vote the same, the consent of all the jointly by (2) two or more persons, unless there
coowners shall be necessary, unless there is a written proxy, signed by all the co-owners,
is a written proxy, signed by all the co- authorizing (1) one or some of them or any
owners, authorizing one or some of them or other person to vote such share or shares:
any other person to vote such share or Provided, That when the shares are owned in an
shares: “and/or”

Provided, That when the shares are owned capacity by the holders thereof, any one of the
in an "and/or" capacity by the holders joint owners can vote said shares or appoint a
thereof, any one of the joint owners can vote proxy therefor.
said shares or appoint a proxy therefor. (n)

Section 57. Voting right for treasury shares. SEC. 56. Voting Right for Treasury Shares. –
– Treasury shares shall have no voting right Treasury shares shall have no voting right as long
as long as such shares remain in the as such shares remain in the Treasury.
Treasury. (n)

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Section 58. Proxies. – Stockholders and SEC. 57. Manner of Voting; Proxies. –
members may vote in person or by proxy in Stockholders and members may vote in person or
all meetings of stockholders or members. by proxy in all meetings of stockholders or
Proxies shall in writing, signed by the members.
stockholder or member and filed before the
scheduled meeting with the corporate When so authorized in the by-laws or by a
secretary. Unless otherwise provided in the majority of the board of directors, the
stockholders or members of corporations may
proxy, it shall be valid only for the meeting
also vote through remote communication or in
for which it is intended. No proxy shall be
absentia: Provided, That the votes are received
valid and effective for a period longer than before the corporation finishes the tally of
five (5) years at any one time. (n) votes.

A stockholder or member who participates

through remote communication or in absentia,
shall be deemed present for purposes of
quorum.

The corporation shall establish the appropriate

requirements and procedures for voting
through remote communication and in
absentia, taking into account the company’s
scale, number of shareholders or members,
structure and other factors consistent with the
basic right of corporate suffrage.

Proxies shall be in writing, signed and filed, by the

stockholder or member, in any form authorized in
the bylaws and received by the corporate
secretary within a reasonable 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.

Section 59. Voting trusts. – One or more

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stockholders of a stock corporation may SEC. 58. Voting Trusts. – One or more
create a voting trust for the purpose of stockholders of a stock corporation may create a
conferring upon a trustee or trustees the voting trust for the purpose of conferring upon a
right to vote and other rights pertaining to trustee or trustees the right to vote and other rights
the shares for a period not exceeding five pertaining to the shares for a period not exceeding
(5) years at any time: Provided, That in the five (5) years at any time: Provided, That in the
case of a voting trust specifically required as case of a voting trust specifically required as a
a condition in a loan agreement, said voting condition in a loan agreement, said voting trust
trust may be for a period exceeding five (5) may be for a period exceeding five (5) years but
years but shall automatically expire upon full shall automatically expire upon full payment of the
payment of the loan. A voting trust loan. A voting trust agreement must be in writing
agreement must be in writing and notarized, and notarized, and shall specify the terms and
and shall specify the terms and conditions conditions thereof. A certified copy of such
thereof. A certified copy of such agreement agreement shall be filed with the corporation and
shall be filed with the corporation and with with the Commission; otherwise, the agreement is
the Securities and Exchange Commission; ineffective and unenforceable. The certificate or
otherwise, said agreement is ineffective and certificates of stock covered by the voting trust
unenforceable. The certificate or certificates agreement shall be cancelled and new ones shall
of stock covered by the voting trust be issued in the name of the trustee or trustees,
agreement shall be cancelled and new ones stating that they are issued pursuant to said
shall be issued in the name of the trustee or agreement. The books of the corporation shall
trustees stating that they are issued state that the transfer in the name of the trustee or
pursuant to said agreement. In the books of trustees is made pursuant to the voting trust
the corporation, it shall be noted that the agreement.
transfer in the name of the trustee or
trustees is made pursuant to said voting The trustee or trustees shall execute and deliver to
trust agreement. the transferors, voting trust certificates, which shall
The trustee or trustees shall execute and be transferable in the same manner and with the
deliver to the transferors voting trust same effect as certificates of stock.
certificates, which shall be transferable in
the same manner and with the same effect The voting trust agreement filed with the
as certificates of stock. corporation shall be subject to examination by any
The voting trust agreement filed with the stockholder of the corporation in the same manner
corporation shall be subject to examination as any other corporate book or record: Provided,
by any stockholder of the corporation in the That both the trustor and the trustee or trustees
same manner as any other corporate book may exercise the right of inspection of all corporate
or record: Provided, That both the transferor books and records in accordance with the
and the trustee or trustees may exercise the provisions of this Code.
right of inspection of all corporate books and
records in accordance with the provisions of Any other stockholder may transfer the shares to
this Code. the same trustee or trustees upon the terms and
Any other stockholder may transfer his conditions stated in the voting trust agreement,
shares to the same trustee or trustees upon and thereupon shall be bound by all the provisions
the terms and conditions stated in the voting of said agreement.
trust agreement, and thereupon shall be
bound by all the provisions of said No voting trust agreement shall be entered into for
agreement. purposes of circumventing the laws against
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No voting trust agreement shall be entered anticompetitive agreements, abuse of dominant

into for the purpose of circumventing the law position, anti-competitive mergers and
against monopolies and illegal combinations acquisitions,

in restraint of trade or used for purposes of violation of nationality and capital requirements, or
fraud. for the perpetuation of fraud.
Unless expressly renewed, all rights granted
in a voting trust agreement shall Unless expressly renewed, all rights granted in a
automatically expire at the end of the agreed voting trust agreement shall automatically expire at
period, and the voting trust certificates as the end of the agreed period. The voting trust
well as the certificates of stock in the name certificates as well as the certificates of stock in
of the trustee or trustees shall thereby be the name of the trustee or trustees shall thereby
deemed cancelled and new certificates of be deemed cancelled and new certificates of stock
shall be reissued in the name of the trustors.
stock shall be reissued in the name of the
transferors. The voting trustee or trustees
The voting trustee or trustees may vote by proxy or
may vote by proxy unless the agreement
in any manner authorized under the bylaws unless
provides otherwise. (36a)
the agreement provides otherwise.

TITLE VII TITLE VII

STOCKS AND STOCKHOLDERS STOCKS AND STOCKHOLDERS

Section 60. Subscription contract. – SEC. Any 59. Subscription Contract. – Any contract for
contract for the acquisition of unissued stockacquisition of unissued stock in an existing
the
corporation or a corporation still to be formed shall
in an existing corporation or a corporation
be deemed a subscription within the meaning of this
still to be formed shall be deemed a
Title, notwithstanding the fact that the parties refer
subscription within the meaning of this Title,
to it as a purchase or som e other contract.
notwithstanding the fact that the parties refer
to it as a purchase or some other contract.
(n)

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Section 61. Pre-incorporation subscription. – SEC. 60. Pre-incorporation Subscription. – A

A subscription for shares of stock of a subscription of shares in a corporation still to be
corporation still to be formed shall be formed shall be irrevocable for a period of at least
irrevocable for a period of at least six (6) six (6) months from the date of subscription,
months from the date of subscription, unless unless all of the other subscribers consent to the
all of the other subscribers consent to the revocation, or the corporation fails to incorporate
revocation, or unless the incorporation of within the same period or within a longer period
said corporation fails to materialize within stipulated in the contract of subscription. No
said period or within a longer period as may preincorporation subscription may be revoked after
be stipulated in the contract of subscription: the articles of incorporation is submitted to the
Provided, That no pre-incorporation
Commission.
subscription may be revoked after the
submission of the articles of incorporation to
the Securities and Exchange Commission.
(n)

Section 62. Consideration for stocks. – SEC. 61. Consideration for Stocks. – Stocks shall
Stocks shall not be issued for a not be issued for a consideration less than the par
consideration less than the par or issued or issued price thereof. Consideration for the
price thereof. Consideration for the issuance issuance of stock may be:
of stock may be any or a combination of
any two or more of the following: (a) Actual cash paid to the corporation;

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1. Actual cash paid to the corporation; (b) Property, tangible or intangible, actually
2. Property, tangible or intangible, received by the corporation and necessary or
actually received by the corporation and convenient for its use and lawful purposes at a fair
necessary or convenient for its use and valuation equal to the par or issued value of the
lawful purposes at a fair valuation equal to stock issued;
the par or issued value of the stock issued;
3. Labor performed for or services (c) Labor performed for or services actually
actually rendered to the corporation; rendered to the corporation;
4. Previously incurred indebtedness of
the corporation; (d) Previously incurred indebtedness of the
5. Amounts transferred from unrestricted corporation;
retained earnings to stated capital; and
6. Outstanding shares exchanged for (e) Amounts transferred from unrestricted
stocks in the event of reclassification or retained earnings to stated capital;
conversion.
(f) Outstanding shares exchanged for stocks in
the event of reclassification or conversion;

(g) Shares of stock in another corporation;

and/or
Where the consideration is other than actual
cash, or consists of intangible property such (h) Other generally accepted form of
as patents of copyrights, the valuation consideration.
thereof shall initially be determined by the
incorporators or the board of directors, Where the consideration is other than actual cash,
subject to approval by the Securities and or consists of intangible property such as patents
Exchange Commission. or copyrights, the valuation thereof shall initially be
determined by the stockholders or the board of
Shares of stock shall not be issued in directors, subject to the approval of the
exchange for promissory notes or future Commission.
service.
Shares of stock shall not be issued in exchange for
The same considerations provided for in this promissory notes or future service. The same
section, insofar as they may be applicable, considerations provided in this section, insofar as
may be used for the issuance of bonds by applicable, may be used for the issuance of bonds
the corporation. by the corporation.

The issued price of no-par value The issued price of no-par value shares may be
shares may be fixed in the articles of fixed in the articles of incorporation or by the board
incorporation or by the board of directors of directors pursuant to authority conferred by the
pursuant to authority conferred upon it by articles of incorporation or the bylaws, or if not so
the articles of incorporation or the by-laws, fixed, by the stockholders representing at least a
or in the absence thereof, by the majority of the outstanding capital stock at a
stockholders representing at least a majority meeting duly called for the purpose.
of the outstanding capital stock at a meeting
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duly called for the purpose. (5 and 16)

Section 63. Certificate of stock and transfer SEC. 62. Certificate of Stock and Transfer of
of shares. – The capital stock of stock Shares. – The capital stock of corporations shall be

corporations shall be divided into shares for divided into shares for which certificates signed by
which certificates signed by the president or the president or vice president, countersigned by
vice president, countersigned by the the secretary or assistant secretary, and sealed
secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in
with the seal of the corporation shall be accordance with the bylaws. Shares of stock so
issued in accordance with the by-laws. issued are personal property and may be
Shares of stock so issued are personal transferred by delivery of the certificate or
property and may be transferred by delivery certificates indorsed by the owner, his attorney-
of the certificate or certificates indorsed by infact, or any other person legally authorized to
the owner or his attorney-in-fact or other make the transfer. No transfer, however, shall be
person legally authorized to make the valid, except as between the parties, until the
transfer. No transfer, however, shall be transfer is recorded in the books of the corporation
valid, except as between the parties, until showing the names of the parties to the
the transfer is recorded in the books of the transaction, the date of the transfer, the number of
corporation showing the names of the the certificate or certificates, and the number of
parties to the transaction, the date of the shares transferred. The Commission may
transfer, the number of the certificate or require corporations whose securities are
certificates and the number of shares traded in trading markets and which can
transferred. reasonably demonstrate their capability to do
No shares of stock against which the so to issue their securities or shares of stocks
corporation holds any unpaid claim shall be in uncertificated or scripless form in
transferable in the books of the corporation. accordance with the rules of the Commission.
(35)
No shares of stock against which the corporation
holds any unpaid claim shall be transferable in the
books of the corporation.

Section 64. Issuance of stock SEC. 63. Issuance of Stock Certificates. – No

certificates. – No certificate of stock shall be certificate of stock shall be issued to a subscriber
issued to a subscriber until the full amount until the full amount of the subscription together
of his subscription together with interest and with interest and expenses (in case of delinquent
expenses (in case of delinquent shares), if shares), if any is due, has been paid.
any is due, has been paid. (37)

Section 65. Liability of directors for SEC. 64. Liability of Directors for Watered Stocks.
watered stocks. – Any director or officer – A director or officer of a corporation who: (a)
of a corporation consenting to the issuance consents to the issuance of stocks for a
of stocks for a consideration less than its par consideration less than its par or issued value; (b)
or issued value or for a consideration in any consents to the issuance of stocks for a
form other than cash, valued in excess of its consideration other than cash, valued in excess of
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fair value, or who, having knowledge its fair value; or (c) having knowledge of the
thereof, does not forthwith express his insufficient consideration, does not file a written
objection in writing and file the same with objection with the corporate secretary, shall be
the corporate secretary, shall be solidarily, liable to the corporation or its creditors, solidarily
liable with the stockholder concerned to the with the stockholder concerned for the difference
corporation and its creditors for the between the value received at the time of issuance
difference between the fair value received at of the stock and the par or issued value of the
the time of issuance of the stock and the par same.
or issued value of the same. (n)

Section 66. Interest on unpaid subscriptions. SEC. 65. Interest on Unpaid Subscriptions. –
– Subscribers for stock shall pay to the Subscribers to stocks shall be liable to the
corporation interest on all unpaid corporation for interest on all unpaid subscriptions
subscriptions from the date of subscription, from the date of subscription, if so required by and
if so required by, and at the rate of interest at the rate of interest fixed in the subscription
fixed in the by-laws. If no rate of interest is contract. If no rate of interest is fixed in the
subscription contract, the prevailing legal rate
fixed in the by-laws, such rate shall be
shall apply.
deemed to be the legal rate. (37)

Section 67. Payment of balance of SEC. 66. Payment of Balance of Subscription. –

subscription. – Subject to the provisions of Subject to the provisions of the subscription
the contract of subscription, the board of contract, the board of directors may, at any time,
directors of any stock corporation may at declare due and payable to the corporation unpaid
any time declare due and payable to the subscriptions and may collect the same or such
corporation unpaid subscriptions to the percentage thereof, in either case, with accrued
capital stock and may collect the same or interest, if any, as it may deem necessary.
such percentage thereof, in either case with
accrued interest, if any, as it may deem Payment of unpaid subscription or any percentage
necessary. thereof, together with any interest accrued shall be
made on the date specified in the subscription
Payment of any unpaid subscription or any contract or on the date stated in the call made by
percentage thereof, together with the the board. Failure to pay on such date shall render
interest accrued, if any, shall be made on the entire balance due and payable and shall
the date specified in the contract of make the stockholder liable for interest at the legal
subscription or on the date stated in the call rate on such balance, unless a different interest
made by the board. Failure to pay on such rate is provided in the subscription contract. The
date shall render the entire balance due and interest shall be computed from the date specified,
payable and shall make the stockholder until full payment of the subscription. If no payment
liable for interest at the legal rate on such is made within thirty (30) days from the said date,
balance, unless a different rate of interest is all stocks covered by the subscription shall
provided in the by-laws, computed from thereupon become delinquent and shall be subject
such date until full payment. If within thirty to sale as hereinafter provided, unless the board of
(30) days from the said date no payment is directors orders otherwise.
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made, all stocks covered by said

subscription shall thereupon become
delinquent and shall be subject to sale as
hereinafter provided, unless the board of
directors orders otherwise. (38)

Section 68. Delinquency sale. – The board SEC. 67. Delinquency Sale. – The board of
of directors may, by resolution, order the directors 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 each amount due on each subscription plus all accrued
subscription plus all accrued interest, and interest, and the date, time and place of the sale
the date, time and place of the sale which which shall not be less than thirty (30) days nor
more than sixty (60) days from the date the stocks
shall not be less than thirty (30) days nor
become delinquent.
more than sixty (60) days from the date the
stocks become delinquent. Notice of said
sale, with a copy of the

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resolution, shall be sent to every delinquent Notice of the sale, with a copy of the resolution,
stockholder either personally or by shall be sent to every delinquent stockholder either
registered mail. The same shall furthermore personally, by registered mail, or through other
be published once a week for two (2) means provided in the bylaws. The same shall be
consecutive weeks in a newspaper of published once a week for two (2) consecutive
general circulation in the province or city weeks in a newspaper of general circulation in the
where the principal office of the corporation province or city where the principal office of the
is located. corporation is located.

Unless the delinquent stockholder pays to Unless the delinquent stockholder pays to the
the corporation, on or before the date corporation, on or before the date specified for the
specified for the sale of the delinquent stock, sale of the delinquent stock, the balance due on
the balance due on his subscription, plus the former’s subscription, plus accrued interest,
accrued interest, costs of advertisement and costs of advertisement and expenses of sale, or
expenses of sale, or unless the board of unless the board of directors otherwise orders,
directors otherwise orders, said delinquent said delinquent stock shall be sold at a public
stock shall be sold at public auction to such auction to such bidder who shall offer to pay the
bidder who shall offer to pay the full amount full amount of the balance on the subscription
of the balance on the subscription together together with accrued interest, costs of
with accrued interest, costs of advertisement advertisement and expenses of sale, for the
and expenses of sale, for the smallest smallest number of shares or fraction of a share.
number of shares or fraction of a share. The The stock so purchased shall be transferred to
stock so purchased shall be transferred to such purchaser in the books of the corporation and
such purchaser in the books of the a certificate for such stock shall be issued in the
corporation and a certificate for such stock purchaser’s favor. The remaining shares, if any,
shall be issued in his favor. The remaining shall be credited in favor of the delinquent
shares, if any, shall be credited in favor of stockholder who shall likewise be entitled to the
the delinquent stockholder who shall issuance of a certificate of stock covering such
likewise be entitled to the issuance of a shares.
certificate of stock covering such shares.
Should there be no bidder at the public auction
Should there be no bidder at the public who offers to pay the full amount of the balance on
auction who offers to pay the full amount of the subscription together with accrued interest,
the balance on the subscription together costs of advertisement, and expenses of sale, for
with accrued interest, costs of advertisement the smallest number of shares or fraction of a
and expenses of sale, for the smallest share, the corporation may, subject to the
number of shares or fraction of a share, the provisions of this Code, bid for the same, and the
corporation may, subject to the provisions of total amount due shall be credited as fully paid in
this Code, bid for the same, and the total the books of the corporation. Title to all the shares
amount due shall be credited as paid in full of stock covered by the subscription shall be
in the books of the corporation. Title to all vested in the corporation as treasury shares and
the shares of stock covered by the may be disposed of by said corporation in
subscription shall be vested in the accordance with the provisions of this Code.
corporation as treasury shares and may be
disposed of by said corporation in
accordance with the provisions of this Code.
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(39a-46a)

Section 69. When sale may be questioned. – SEC. 68. When Sale may be Questioned. – No
No action to recover delinquent stock sold action to recover delinquent stock sold can be

can be sustained upon the ground of sustained upon the ground of irregularity or defect
irregularity or defect in the notice of sale, or in the notice of sale, or in the sale itself of the
in the sale itself of the delinquent stock, delinquent stock, unless the party seeking to
unless the party seeking to maintain such maintain such action first pays or tenders to the
action first pays or tenders to the party party holding the stock the sum for which the same
holding the stock the sum for which the was sold, with interest from the date of sale at the
same was sold, with interest from the date legal rate. No such action shall be maintained
of sale at the legal rate; and no such action unless a complaint is filed within six (6) months
shall be maintained unless it is commenced from the date of sale.
by the filing of a complaint within six (6)
months from the date of sale. (47a)

Section 70. Court action to recover SEC. 69. Court Action to Recover Unpaid
unpaid subscription. – Nothing in this Code Subscription. – Nothing in this Code shall prevent
shall prevent the corporation from collecting the corporation from collecting through court
by action in a court of proper jurisdiction the action, the amount due on any unpaid
amount due on any unpaid subscription, subscription, with accrued interest, costs and
with accrued interest, costs and expenses. expenses.
(49a)

Section 71. Effect of delinquency. – No

delinquent stock shall be voted for or be
entitled to vote or to representation at any
stockholder’s meeting, nor shall the holder
SEC. 70. Effect of Delinquency. – No delinquent
thereof be entitled to any of the rights stock
of a shall be voted for, be entitled to vote, or be
stockholder except the right to dividends in
represented at any stockholder’s meeting, nor shall
accordance with the provisions of this Code,
the holder thereof be entitled to any of the rights of
until and unless he pays the amount duea stockholder
on except the right to dividends in
his subscription with accrued interest, accordance
and with the provisions of this Code, until
the costs and expenses of advertisement, andifunless payment is made by the holder such
any. (50a) delinquent stock for the amou nt due on the
subscription with accrued interest, and the costs
and expenses of advertisement, if any.

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Section 72. Rights of unpaid shares. – SEC. 71. Rights of Unpaid Shares,
Holders of subscribed shares not fully paid Nondelinquent. – Holders of subscribed shares
which are not delinquent shall have all the not fully paid which are not delinquent shall have
rights of a stockholder. (n) all the rights of a stockholder.

Section 73. Lost or destroyed certificates. – SEC. 72. Lost or Destroyed Certificates. – The
The following procedure shall be followed following procedure shall be followed by a
for the issuance by a corporation of new corporation in issuing new certificates of stock in
certificates of stock in lieu of those which lieu of those which have been lost, stolen or
have been lost, stolen or destroyed: destroyed:

1. The registered owner of a certificate of (a) The registered owner of a certificate of stock in
stock in a corporation or his legal a corporation or such person’s legal representative
representative shall file with the corporation shall file with the corporation an affidavit in
an affidavit in triplicate setting forth, if triplicate setting forth, if possible, the
possible, the circumstances as to how the circumstances as to how the certificate was lost,
certificate was lost, stolen or destroyed, the stolen or destroyed, the number of shares
represented by such certificate,

number of shares represented by such the serial number of the certificate and the name of
certificate, the serial number of the the corporation which issued the same. The owner
certificate and the name of the corporation of such certificate of stock shall also submit such
which issued the same. He shall also submit other information and evidence as may be deemed
such other information and evidence which necessary;
he may deem necessary;
(b) After verifying the affidavit and other
2. After verifying the affidavit and other information and evidence with the books of the
information and evidence with the books of corporation, the corporation shall publish a notice
the corporation, said corporation shall in a newspaper of general circulation in the place
publish a notice in a newspaper of general where the corporation has its principal office, once
circulation published in the place where the a week for three (3) consecutive weeks at the
corporation has its principal office, once a expense of the registered owner of the certificate
week for three (3) consecutive weeks at the of stock which has been lost, stolen or destroyed.
expense of the registered owner of the The notice shall state the name of the corporation,
certificate of stock which has been lost, the name of the registered owner, the serial
stolen or destroyed. The notice shall state number of the certificate, the number of shares
the name of said corporation, the name of represented by such certificate, and shall state that
the registered owner and the serial number after the expiration of one (1) year from the date of
of said certificate, and the number of shares the last publication, if no contest has been
represented by such certificate, and that presented to the corporation regarding the
after the expiration of one (1) year from the certificate of stock, the right to make such contest
date of the last publication, if no contest has shall be barred and the corporation shall cancel
been presented to said corporation the lost, destroyed or stolen certificate of stock in
regarding said certificate of stock, the right its books. In lieu thereof, the corporation shall
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to make such contest shall be barred and issue a new certificate of stock, unless the
said corporation shall cancel in its books the registered owner files a bond or other security as
certificate of stock which has been lost, may be required, effective for a period of one (1)
stolen or destroyed and issue in lieu thereof year, for such amount and in such form and with
new certificate of stock, unless the such sureties as may be satisfactory to the board
registered owner files a bond or other of directors, in which case a new certificate may be
security in lieu thereof as may be required, issued even before the expiration of the one (1)
effective for a period of one (1) year, for year period provided herein. If a contest has been
such amount and in such form and with presented to the corporation or if an action is
such sureties as may be satisfactory to the pending in court regarding the ownership of the
board of directors, in which case a new certificate of stock which has been lost, stolen or
certificate may be issued even before the destroyed, the issuance of the new certificate of
expiration of the one (1) year period stock in lieu thereof shall be suspended until the
provided herein: Provided, That if a contest court renders a final decision regarding the
has been presented to said corporation or if ownership of the certificate of stock which has
an action is pending in court regarding the been lost, stolen or destroyed.
ownership of said certificate of stock which
has been lost, stolen or destroyed, the
issuance of the new certificate of stock in Except in case of fraud, bad faith, or negligence on
lieu thereof shall be suspended until the final the part of the corporation and its officers, no
decision by the court regarding the action may be brought against any corporation
ownership of said certificate of stock which which shall have issued certificate of stock in lieu
has been lost, stolen or destroyed.
of those lost, stolen or destroyed pursuant to the
procedure above-described.

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 have
issued certificate of stock in lieu of those
lost, stolen or destroyed pursuant to the
procedure above-described. (R.A. 201a)

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TITLE VIII TITLE VIII

CORPORATE BOOKS AND RECORDS CORPORATE BOOKS AND RECORDS

Section 74. Books to be kept; stock transfer SEC. 73. Books to be Kept; Stock Transfer
agent. – Every corporation shall keep and Agent. – Every corporation shall keep and
carefully preserve at its principal office a carefully preserve at its principal office all
record of all business transactions and information relating to the corporation
minutes of all meetings of stockholders or including, but not limited to:
members, or of the board of directors or
trustees, in which shall be set forth in detail (a) The articles of incorporation and by-laws
the time and place of holding the meeting, of the corporation and all their amendments;
how authorized, the notice given, whether
the meeting was regular or special, if special (b) The current ownership structure and
its object, those present and absent, and voting rights of the corporation, including lists
every act done or ordered done at the of stockholders or members, group structures,
meeting. Upon the demand of any director, intra-group relations, ownership data, and
trustee, stockholder or member, the time beneficial ownership;
when any director, trustee, stockholder or
member entered or left the meeting must be (c) The names and addresses of all the
noted in the minutes; and on a similar members of the board of directors or trustees
demand, the yeas and nays must be taken and the executive officers;
on any motion or proposition, and a record
thereof carefully made. The protest of any (d) A record of all business transactions;
director, trustee, stockholder or member on
any action or proposed action must be
(e) A record of the resolutions of the board
recorded in full on his demand.
of directors or trustees and of the stockholders
or members;
The records of all business transactions of
the corporation and the minutes of any
(f) Copies of the latest reportorial
meetings shall be open to inspection by any
requirements submitted to the Commission;
director, trustee, stockholder or member of
and
the corporation at reasonable hours on
business days and he may demand, in
(g) The minutes of all meetings of
writing, for a copy of excerpts from said
records or minutes, at his expense. stockholders or members, or of the board of
Any officer or agent of the corporation who directors or trustees. Such minutes shall set
shall refuse to allow any director, trustees, forth in detail, among others: the time and
stockholder or member of the corporation to place of the meeting held, how it was
examine and copy excerpts from its records authorized, the notice given, the agenda
or minutes, in accordance with the therefor, whether the meeting was regular or
provisions of this Code, shall be liable to special, its object if special, those present and
such director, absent, and every act done or ordered done at
the meeting. Upon the demand of a director,
trustee, stockholder or member,

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trustee, stockholder or member for the time when any director, trustee,
damages, and in addition, shall be guilty of stockholder or member entered or left the
an offense which shall be punishable under meeting must be noted in the minutes; and on
Section 144 of this Code: Provided, That if a similar demand, the yeas and nays must be
such refusal is made pursuant to a taken on any motion or proposition, and a
resolution or order of the board of directors record thereof carefully made. The protest of a
or trustees, the liability under this section for director, trustee, stockholder or member on
such action shall be imposed upon the any action or proposed action must be
directors or trustees who voted for such recorded in full upon their demand.
refusal: and Provided, further, That it shall
be a defense to any action under this Corporate records, regardless of the form in
section that the person demanding to which they are stored, shall be open to
examine and copy excerpts from the inspection by any director, trustee, stockholder
corporation’s records and minutes has or member of the corporation in person or by a
improperly used any information secured representative at reasonable hours on
through any prior examination of the records business days, and a demand in writing may
or minutes of such corporation or of any be made by such director, trustee or
other corporation, or was not acting in good stockholder at their expense, for copies of
faith or for a legitimate purpose in making such records or excerpts from said records.
his demand. The inspecting or reproducing party shall
remain bound by confidentiality rules under
Stock corporations must also keep a book to prevailing laws, such as the rules on trade
be known as the "stock and transfer book", secrets or processes under
in which must be kept a record of all stocks Republic Act No. 8293, otherwise known as the
in the names of the stockholders “Intellectual Property Code of the Philippines”,
alphabetically arranged; the installments as amended, Republic Act No. 10173, otherwise
paid and unpaid on all stock for which known as the “Data Privacy Act of 2012”,
subscription has been made, and the date of Republic Act No. 8799, otherwise known as
payment of any installment; a statement of
“The Securities Regulation Code”, and the
every alienation, sale or transfer of stock
Rules of Court.
made, the date thereof, and by and to whom
made; and such other entries as the by-laws
A requesting party who is not a stockholder or
may prescribe. The stock and transfer book
member of record, or is a competitor, director,
shall be kept in the principal office of the
officer, controlling stockholder or otherwise
corporation or in the office of its stock
represents the interests of a competitor shall
transfer agent and shall be open for
have no right to inspect or demand
inspection by any director or stockholder of
reproduction of corporate records.
the corporation at reasonable hours on
business days.
Any stockholder who shall abuse the rights
No stock transfer agent or one engaged granted under this section shall be penalized
under Section 158 of this Code, without
principally in the business of registering
prejudice to the provisions of Republic Act No.
transfers of stocks in behalf of a stock
8293, otherwise known as the “Intellectual
corporation shall be allowed to operate in
Property Code of the Philippines,” as
the Philippines unless he secures a license amended, and Republic Act No. 10173,
from the Securities and Exchange otherwise known as the “Data Privacy Act of
Commission and pays a fee as may be fixed
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by the Commission, which shall be 2012”.

renewable annually: Provided, That a stock
corporation is not precluded from performing Any officer or agent of the corporation who
or making transfer of its own stocks, in shall refuse to allow the inspection and/or
which case all reproduction of records in accordance with the

the rules and regulations imposed on stock provisions of this Code shall be liable to such
transfer agents, except the payment of a director, trustee, stockholder or member for
license fee herein provided, shall be damages, and in addition, shall be guilty of an
applicable. (51a and 32a; P.B. No. 268.) offense which shall be punishable under
Section 161 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: 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 the demand
to examine or reproduce corporate records, or
is a competitor, director, officer, controlling
stockholder or otherwise represents the
interests of a competitor.

If the corporation denies or does not act on a

demand for inspection and/or reproduction, the
aggrieved party may report such to the
Commission. Within five (5) days from receipt
of such report, the Commission 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
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every alienation, sale or transfer of stock

made, the date thereof, 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.

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.

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Section 75. Right to financial statements. – SEC. 74. Right to Financial Statements. – A
Within ten (10) days from receipt of a written corporation shall furnish a stockholder or
request of any stockholder or member, the member, within ten (10) days from receipt of their
corporation shall furnish to him its most written request, its most recent financial statement,
recent financial statement, which shall in the form and substance of the financial reporting
include a balance sheet as of the end of the required by the Commission.
last taxable year and a profit or loss
statement for said taxable year, showing in At the regular meeting of stockholders or
reasonable detail its assets and liabilities members, the board of directors or trustees shall
and the result of its operations. present to such stockholders or members a
At the regular meeting of stockholders or financial report of the operations of the corporation
members, the board of directors or trustees for the preceding year, which shall include financial
shall present to such stockholders or statements, duly signed and certified in
members a financial report of the operations accordance with this Code, and the rules the
of the corporation for the preceding year, Commission may prescribe.
which shall include financial statements,
duly signed and certified by an independent However, if the total assets or total liabilities of the
certified public accountant. corporation is less than Six hundred thousand
pesos (P600,000.00), or such other amount as
However, if the paid-up capital of the may be determined appropriate by the
corporation is less than P50,000.00, the Department of Finance, the financial
financial statements may be certified under statements may be certified under oath by the
oath by the treasurer or any responsible treasurer and the president.
officer of the corporation. (n)

TITLE IX TITLE IX
MERGER AND CONSOLIDATION MERGER AND CONSOLIDATION

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Section 76. Plan or merger of consolidation. SEC. 75. Plan of Merger or Consolidation. – Two
– Two or more corporations may merge into (2) or more corporations may merge into a single
a single corporation which shall be one of corporation which shall be one of the constituent
the constituent corporations or may corporations or may consolidate into a new single
consolidate into a new single corporation corporation which shall be the consolidated
which shall be the consolidated corporation. corporation.

The board of directors or trustees of each The board of directors or trustees of each
corporation, party to the merger or corporation, party to the merger or consolidation,
consolidation, shall approve a plan of shall approve a plan of merger or consolidation
merger or consolidation setting forth the setting forth the following:
following:
(a) The names of the corporations proposing to
1. The
merge names or of the corporations
consolidate, hereinafter referred to as the
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;
2. The terms of the merger or
consolidation and the mode of carrying(c) the A statement of the changes, if any, in the articles
same into effect; of incorporation of the surviving corporation in case
3. A statement of the changes, if any, of merger;
in and, in case of consolidation, all the
statements required to be set forth in the articles of
the articles of incorporation of the surviving
corporation in case of merger; and, incorporation
with for corporations organized under this
respect to the consolidated corporation Code;
in and
case of consolidation, all the statements
required to be set forth in the articles(d)ofSuch other provisions with respect to the
incorporation for corporations organized proposed merger or consolidation as are deemed
under this Code; and necessary or desirable.
4. Such other provisions with respect to
the proposed merger or consolidation as are
deemed necessary or desirable. (n)

Section 77. Stockholder’s or member’s SEC. 76. Stockholders’ or Members’ Approval. –

approval. – Upon approval by majority vote Upon approval by a majority vote of each of the
of each of the board of directors or trustees board of directors or trustees of the constituent
of the constituent corporations of the plan of corporations of the plan of merger or consolidation,
merger or consolidation, the same shall be the same shall be submitted for approval by the
submitted for approval by the stockholders stockholders or members of each of such
corporations at separate corporate meetings duly
or members of each of such corporations at
called for the purpose. Notice of such meetings
separate corporate meetings duly called for
shall be given to all stockholders or members
the purpose. Notice of such meetings of the respective corporations in the same
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shall be given to all stockholders or manner as giving notice of regular or special

members of the respective corporations, meetings under Section 49 of this Code. The
at least two (2) weeks prior to the date of notice shall state the purpose of the meeting
the meeting, either personally or by and include a copy or a summary of the plan of
registered mail. Said notice shall state the merger or consolidation.
purpose of the meeting and shall include a
copy or a summary of the plan of merger or

consolidation. The affirmative vote of The affirmative vote of stockholders

stockholders representing at least two-thirds representing at least two-thirds (2/3) of the
(2/3) of the outstanding capital stock of each outstanding capital stock of each corporation
corporation in the case of stock corporations in the case of stock corporations or at least
or at least two-thirds (2/3) of the members in twothirds (2/3) of the members in the case of
the case of non-stock corporations shall be nonstock corporations shall be necessary for
necessary for the approval of such plan. Any the approval of such plan. Any dissenting
dissenting stockholder in stock corporations stockholder may exercise the right of appraisal
may exercise his appraisal right in in accordance with this Code: Provided, That if
accordance with the Code: Provided, That if after the approval by the stockholders of such
after the approval by the stockholders of plan, the board of directors decides to
such plan, the board of directors decides to abandon the plan, the right of appraisal shall
abandon the plan, the appraisal right shall be extinguished.
be extinguished.
Any amendment to the plan of merger Any amendment to the plan of merger or
or consolidation may be made, provided consolidation may be made: Provided, That such
such amendment is approved by majority amendment is approved by a majority vote of the
vote of the respective boards of directors or respective boards of directors or trustees of all the
trustees of all the constituent corporations constituent corporations and ratified by the
and ratified by the affirmative vote of affirmative vote of stockholders representing at
stockholders representing at least two-thirds least two-thirds (2/3) of the outstanding capital
(2/3) of the outstanding capital stock or of stock or of two-thirds (2/3) of the members of each
two-thirds (2/3) of the members of each of
of the constituent corporations. Such plan,
the constituent corporations. Such plan,
together with any amendment, shall be together with any amendment, shall be considered
considered as the agreement of merger or as the agreement of merger or consolidation.
consolidation. (n)

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Section 78. Articles of merger or SEC. 77. Articles of Merger or Consolidation. –

consolidation. – After the approval by the After the approval by the stockholders or members
stockholders or members as required by the as required by the preceding section, articles of
preceding section, articles of merger or merger or articles of consolidation shall be
articles of consolidation shall be executed executed by each of the constituent corporations,
by each of the constituent corporations, to to be signed by the president or vice-president and
be signed by the president or vice-president certified by the secretary or assistant secretary of
and certified by the secretary or assistant each corporation setting forth:
secretary of each corporation setting forth:
1. The plan of the merger or the plan of (a) The plan of the merger or the plan of
consolidation; consolidation;
2. As to stock corporations, the number
of shares outstanding, or in the case of (b) As to stock corporations, the number of
nonstock corporations, the number of shares outstanding, or in the case of non-stock
members; and corporations, the number of members;
3. As to each corporation, the number of
shares or members voting for and against (c) As to each corporation, the number of shares
such plan, respectively. (n) or members voting for or against such plan,
respectively;

(d) The carrying amounts and fair values of

the assets and liabilities of the respective
companies as of the agreed cut-off date;

(e) The method to be used in the merger or

consolidation of accounts of the companies;

(f) The provisional or pro-forma values, as

merged or consolidated, using the accounting
method; and

(g) Such other information as may be

prescribed by the Commission.

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Section 79. Effectivity of merger or SEC. 78. Effectivity of Merger or Consolidation. –

consolidation. – The articles of merger or of The articles of merger or of consolidation, signed
consolidation, signed and certified as herein and certified as required by this Code, shall be
above required, shall be submitted to the submitted to the Commission for its approval:
Securities and Exchange Commission in Provided, That in the case of merger or
quadruplicate for its approval: Provided, consolidation of banks or banking institutions, loan
That in the case of merger or consolidation associations, trust companies, insurance
of banks or banking institutions, building and companies, public utilities, educational institutions,
loan associations, trust companies, and other special corporations governed by special
insurance companies, public utilities, laws, the favorable recommendation of the
educational institutions and other special appropriate government agency shall first be
corporations governed by special laws, the obtained. If the Commission is satisfied that the
favorable recommendation of the merger or consolidation of the corporations
appropriate government agency shall first be concerned is consistent with the provisions of this
obtained. If the Commission is satisfied that Code and existing laws, it shall issue a certificate
the merger or consolidation of the approving the articles and plan of merger or of
corporations concerned is not inconsistent consolidation, at which time the merger or
with the provisions of this Code and existing consolidation shall be effective.
laws, it shall issue a certificate of merger or
of consolidation, at which time the merger or If, upon investigation, the Commission has reason
consolidation shall be effective. to believe that the proposed merger or
consolidation is contrary to or inconsistent with the
If, upon investigation, the Securities and provisions of this Code or existing laws, it shall set
Exchange Commission has reason to a hearing to give the corporations concerned the
believe that the proposed merger or opportunity to be heard. Written notice of the date,
consolidation is contrary to or inconsistent time, and place of hearing shall be given to each
with the provisions of this Code or existing constituent corporation at least two (2) weeks
laws, it shall set a hearing to give the before said hearing. The Commission shall
corporations concerned the opportunity to thereafter proceed as provided in this Code.
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)

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Section 80. Effects of merger or SEC. 79. Effects of Merger or Consolidation. – The
consolidation. – The merger or consolidation merger or consolidation shall have the following
shall have the following effects: effects:

1. The constituent corporations shall (a) The constituent corporations shall become a
become a single corporation which, in case single corporation which, in case of merger, shall
of merger, shall be the surviving corporation be the surviving corporation designated in the plan
designated in the plan of merger; and, in of merger; and, in case of consolidation, shall be
case of consolidation, shall be the the consolidated corporation designated in the
consolidated corporation designated in the plan of consolidation;
plan of consolidation;
2. The separate existence of the (b) The separate existence of the constituent
constituent corporations shall cease, except corporations shall cease, except that of the
that of the surviving or the consolidated surviving or the consolidated corporation;
corporation;
3. The surviving or the consolidated (c) The surviving or the consolidated corporation
corporation shall possess all the rights, shall possess all the rights, privileges, immunities,
privileges, immunities and powers and shall and powers and shall be subject to all the duties
be subject to all the duties and liabilities of a and liabilities of a corporation organized under this
corporation organized under this Code; Code;
4. The surviving or the consolidated
corporation shall thereupon and thereafter (d) The surviving or the consolidated corporation
possess all the rights, privileges, immunities shall possess all the rights, privileges, immunities
and franchises of each of the constituent and franchises of each constituent corporation;
corporations; and all property, real or and all real or personal property, all receivables
personal, and all receivables due on due on whatever account, including subscriptions
whatever account, including subscriptions to to shares and other choses in action, and every
shares and other choses in action, and all other interest of, belonging to, or due to each
and every other interest of, or belonging to, constituent corporation, shall be deemed
or due to each constituent corporation, shall transferred to and vested in such surviving or
be deemed transferred to and vested in consolidated corporation without further act or
such surviving or consolidated corporation deed; and
without further act or deed; and
5. The surviving or consolidated (e) The surviving or consolidated corporation
corporation shall be responsible and liable shall be responsible for all the liabilities and
for all the liabilities and obligations of each obligations of each constituent corporation as
of the constituent corporations in the same though such surviving or consolidated corporation
manner as if such surviving or consolidated had itself incurred such liabilities or obligations;
corporation had itself incurred such liabilities and any pending claim, action or proceeding
or obligations; and any pending claim, action brought by or against any constituent corporation
or proceeding brought by or against any of may be prosecuted by or against the surviving or
such constituent corporations may be consolidated corporation. The rights of creditors or
prosecuted by or against the surviving or liens upon the property of such constituent
consolidated corporation. The rights of corporations shall not be impaired by the merger
or consolidation.
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creditors or liens upon the property of any of

such constituent corporations shall not be
impaired by such merger or consolidation.
(n)

TITLE X TITLE X
APPRAISAL RIGHT APPRAISAL RIGHT

Section 81. Instances of appraisal right. – SEC. 80. When the Right of Appraisal May Be
Any stockholder of a corporation shall have Exercised. – Any stockholder of a corporation
the right to dissent and demand payment of shall have the right to dissent and demand
the fair value of his shares in the following payment of the fair value of the shares in the
instances: following instances:

1. In case any amendment to the articles

(a) In case an amendment to the articles of
of incorporation has the effect of changing
incorporation has the effect of chang ing or
or restricting the rights of any stockholder or
restricting the rights of any stockholder or class of
class of shares, or of authorizing shares, or of authorizing preferences in any respect
preferences in any respect superior to those
superior to those of outstanding shares of any
of outstanding shares of any class, orclass, of or of extending or shortening the term of
extending or shortening the term corporate of existence;
corporate existence;
(b) In case of sale, lea se, exchange, transfer,
2. In case of sale, lease, exchange, mortgage, pledge or other disposition of all or
transfer, mortgage, pledge or other substantially all of the corporate property and
disposition of all or substantially all of assets
the as provided in this Code;
corporate property and assets as provided
in the Code; and 3. In case of merger(c)orIn case of merger or consolidation; and
consolidation. (n)
(d) In case of investment of corporate funds for
any purpose other than the primary purpose of
the corporation.

Section 82. How right is exercised. – The SEC. 81. How Right is Exercised. – The
appraisal right may be exercised by any dissenting stockholder who votes against a
stockholder who shall have voted against proposed corporate action may exercise the
the proposed corporate action, by making a right of appraisal by making a written demand
written demand on the corporation within on the corporation for the payment of the fair
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thirty (30) days after the date on which the value of shares held within thirty (30) days from
vote was taken for payment of the fair value the date on which the vote was taken: Provided,
of his shares: Provided, That failure to make That failure to make the demand within such
the demand within such period shall be period shall be deemed a waiver of the appraisal
deemed a waiver of the appraisal right. If the right. If the proposed corporate action is
proposed corporate action is implemented implemented, the corporation shall pay the
or affected, the corporation shall pay to such stockholder, upon surrender of the certificate or
stockholder, upon surrender of the certificates of stock representing the stockholder’s
certificate or certificates of stock shares, the fair value thereof as of the day before
representing his shares, the fair value the vote was taken, excluding any appreciation or
thereof as of the day prior to the date on depreciation in anticipation of such corporate
which the vote was taken, excluding any action.
appreciation or depreciation in anticipation
of such corporate action.
If within a period of sixty (60) days from the If, within sixty (60) days from the approval of the
date the corporate action was approved by corporate action by the stockholders, the
the stockholders, the withdrawing withdrawing stockholder and the corporation

stockholder and the corporation cannot cannot agree on the fair value of the shares, it
agree on the fair value of the shares, it shall shall be determined and appraised by three (3)
be determined and appraised by three (3) disinterested persons, one of whom shall be
disinterested persons, one of whom shall be named by the stockholder, another by the
named by the stockholder, another by the corporation, and the third by the two (2) thus
corporation, and the third by the two thus chosen. The findings of the majority of the
chosen. The findings of the majority of the appraisers shall be final, and their award shall be
appraisers shall be final, and their award paid by the corporation within thirty (30) days after
shall be paid by the corporation within thirty such award is made: Provided, That no payment
(30) days after such award is made: shall be made to any dissenting stockholder
Provided, That no payment shall be made to unless the corporation has unrestricted retained
any dissenting stockholder unless the earnings in its books to cover such payment:
corporation has unrestricted retained Provided, further, That upon payment by the
earnings in its books to cover such payment: corporation of the agreed or awarded price, the
and Provided, further, That upon payment stockholder shall forthwith transfer the shares to
by the corporation of the agreed or awarded the corporation.
price, the stockholder shall forthwith transfer
his shares to the corporation. (n)

Section 83. Effect of demand and SEC. 82. Effect of Demand and Termination of
termination of right. – From the time of Right. – From the time of demand for payment of
demand for payment of the fair value of a the fair value of a stockholder’s shares until either
stockholder’s shares until either the the abandonment of the corporate action involved
abandonment of the corporate action or the purchase of the said shares by the
involved or the purchase of the said shares corporation, all rights accruing to such shares,
by the corporation, all rights accruing to
including voting and dividend rights, shall be
such shares, including voting and dividend
suspended in accordance with the provisions of
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rights, shall be suspended in accordance this Code, except the right of such stockholder to
with the provisions of this Code, except the receive payment of the fair value thereof:
right of such stockholder to receive payment Provided, That if the dissenting stockholder is not
of the fair value thereof: Provided, That if the paid the value of the said shares within thirty (30)
dissenting stockholder is not paid the value days after the award, the voting and dividend
of his shares within 30 days after the award, rights shall immediately be restored.
his voting and dividend rights shall
immediately be restored. (n)

Section 84. When right to payment ceases. SEC. 83. When Right to Payment Ceases. – No
– No demand for payment under this Title demand for payment under this Title may be
may be withdrawn unless the corporation withdrawn unless the corporation consents
consents thereto. If, however, such demand thereto. If, however, such demand for payment is
for payment is withdrawn with the consent of withdrawn with the consent of the corporation, or if
the corporation, or if the proposed corporate the proposed corporate action is abandoned or
action is abandoned or rescinded by the rescinded by the corporation or disapproved by
corporation or disapproved by the Securities the Commission where such approval is
and Exchange Commission where such necessary, or if the Commission determines that
approval is necessary, or if the Securities such stockholder is not entitled to the appraisal
and Exchange Commission determines that right, then the right of the stockholder to be paid
such stockholder is not entitled to the the fair value of the shares shall cease, the status
appraisal right, then the right of said as the stockholder shall be restored, and all
stockholder to be dividend

paid the fair value of his shares shall cease, distributions which would have accrued on the
his status as a stockholder shall thereupon shares shall be paid to the stockholder.
be restored, and all dividend distributions
which would have accrued on his shares
shall be paid to him. (n)

Section 85. Who bears costs of appraisal. – SEC. 84. Who Bears Costs of Appraisal. – The
The costs and expenses of appraisal shall costs and expenses of appraisal shall be borne by
be borne by the corporation, unless the fair the corporation, unless the fair value ascertained
value ascertained by the appraisers is by the appraisers is approximately the same as
approximately the same as the price which the price which the corporation may have offered
the corporation may have offered to pay the to pay the stockholder, in which case they shall be
stockholder, in which case they shall be
borne by the latter. In the case of an action to
borne by the latter. In the case of an action
recover such fair value, all costs and expenses
to recover such fair value, all costs and
expenses shall be assessed against the shall be assessed against the corporation, unless
corporation, unless the refusal of the the refusal of the stockholder to receive payment
stockholder to receive payment was was unjustified.
unjustified. (n)

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Section 86. Notation on certificates; rights of SEC. 85. Notation on Certificates; Rights of
transferee. – Within ten (10) days after Transferee. – Within ten (10) days after
demanding payment for his shares, a demanding payment for shares held, a dissenting
dissenting stockholder shall submit the stockholder shall submit the certificates of stock
certificates of stock representing his shares representing the shares to the corporation for
to the corporation for notation thereon that notation that such shares are dissenting shares.
such shares are dissenting shares. His
Failure to do so shall, at the option of the
failure to do so shall, at the option of the
corporation, terminate the rights under this Title. If
corporation, terminate his rights under this
Title. If shares represented by the shares represented by the certificates bearing
certificates bearing such notation are such notation are transferred, and the certificates
transferred, and the certificates consequently cancelled, the rights of the transferor
consequently cancelled, the rights of the as a dissenting stockholder under this Title shall
transferor as a dissenting stockholder under cease and the transferee shall have all the rights
this Title shall cease and the transferee shall of a regular stockholder; and all dividend
have all the rights of a regular stockholder; distributions which would have accrued on such
and all dividend distributions which would shares shall be paid to the transferee.
have accrued on such shares shall be paid
to the transferee. (n)

TITLE XI TITLE XI
NON-STOCK CORPORATIONS NON-STOCK CORPORATION

Section 87. Definition. – For the purposes of SEC. 86. Definition. – For purposes of this Code
this Code, a non-stock corporation is one and subject to its provisions on dissolution, a
where no part of its income is distributable nonstock corporation is one where no part of its
as dividends to its members, trustees, or income is distributable as dividends to its
officers, subject to the provisions of this members, trustees, or officers: Provided, That any
Code profit which

on a non-stock corporation may obtain incidental to its operations shall, whenever

dissolution: necessary or proper, be used for the furtherance of the purpose or purposes for
Provided, which the corporation was organized, subject to the provisions of this Title.
That any
profit which a The provisions governing stock corporations, when pertinent, shall be applicable
non-stock to non-stock corporations, except as may be covered by specific provisions of
corporation this Title.
may obtain
as an
incident to its
operations
shall,
whenever
necessary or
proper, be
used for the

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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
nonstock
corporations,
except as
may be
covered by
specific
provisions of
this Title. (n)

Section 88. SEC. 87. Purposes. – Non-stock corporations may be formed or organized for
Purposes. – charitable, religious, educational, professional, cultural, fraternal, literary,
Non-stock scientific, social, civic service, or similar purposes, like trade, industry, agricultural
corporations and like chambers, or any combination thereof, subject to the special provisions
may be of this Title governing particular classes of non-stock corporations.
formed or
organized for
charitable,
religious,
educational,
professional,
cultural,
fraternal,
literary,
scientific,
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social, civic
service, or
similar
purposes,
like trade,
industry,
agricultural
and like
chambers, or
any
combination
thereof,
subject to the
special
provisions of
this Title
governing
particular
classes of
nonstock
corporations.
(n)

CHAPTER I
MEMBERS

Section 89.
Right to vote.
– The right of
the members
of any class
or classes to
vote may be Chapter I
limited, MEMBERS
broadened or
denied to the
extent
specified in
the articles of
incorporation
or the by-
laws. Unless
so limited,
broadened or SEC. 88. Right to Vote. – The right of the members of any class or classes to
denied, each vote may be limited, broadened, or denied to the extent specified in the articles of
incorporation or the bylaws. Unless so limited, broadened, or denied, each
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member, member, regardless of class, shall be entitled to one (1) vote.

regardless of
class, shall
be entitled to Unless otherwise provided in the articles of incorporation or the bylaws, a
one vote. member may vote by proxy, in accordance with the provisions of this Code. The
bylaws may likewise authorize voting through remote communication
Unless and/or in absentia.
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
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Section 90. Non-transferability of SEC. 89. Nontransferability of Membership. –

membership. – Membership in a non-stock Membership in a nonstock corporation and all
corporation and all rights arising therefrom rights arising therefrom are personal and non-
are personal and non-transferable, unless transferable, unless the articles of incorporation or
the articles of incorporation or the by-laws the by-laws otherwise provide.
otherwise provide. (n)

Section 91. Termination of membership. – SEC. 90. Termination of Membership. –

Membership shall be terminated in the Membership shall be terminated in the manner
manner and for the causes provided in the and for the causes provided in the articles of
articles of incorporation or the by-laws. incorporation or the by-laws. Termination of
Termination of membership shall have the membership shall extinguish all rights of a
effect of extinguishing all rights of a member member in the corporation or in its property,
in the corporation or in its property, unless
unless otherwise provided in the articles of
otherwise provided in the articles of
incorporation or the by-laws.
incorporation or the by-laws. (n)

CHAPTER II Chapter II
TRUSTEES AND OFFICES TRUSTEES AND OFFICERS

Section 92. Election and term of trustees. – SEC. 91. Election and Term of Trustees. – The
Unless otherwise provided in the articles of number of trustees shall be fixed in the articles of
incorporation or the by-laws, the board of incorporation or bylaws which may or may not be
trustees of non-stock corporations, which more than fifteen (15). They shall hold office for
may be more than fifteen (15) in number not more than three (3) years until their
as may be fixed in their articles of successors are elected and qualified. Trustees
incorporation or by-laws, shall, as soon as elected to fill vacancies occurring before the
organized, so classify themselves that the expiration of a particular term shall hold office only
term of office of one-third (1/3) of their for the unexpired period.
number shall expire every year; and
subsequent elections of trustees Except with respect to independent trustees of
comprising one-third (1/3) of the board of nonstock corporations vested with public interest,
trustees shall be held annually and only a member of the corporation shall be elected
trustees so elected shall have a term of as trustee.
three (3) years. Trustees thereafter elected
to fill vacancies occurring before the Unless otherwise provided in the articles of
expiration of a particular term shall hold incorporation or the bylaws, the members may
office only for the unexpired period. directly elect officers of a nonstock corporation.

No person shall be elected as trustee unless

he is a member of the corporation.
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Unless otherwise provided in the articles of

incorporation or the by-laws, officers of a
non-stock corporation may be directly
elected by the members. (n)

Section 93. Place of meetings. – The SEC. 92. List of Members and Proxies, Place of
by-laws may provide that the members of a Meetings. – The corporation shall, at all times,
non-stock corporation may hold their regular keep a list of its members and their proxies in
or special meetings at any place even the form the Commission may require. The list
outside the place where the principal office shall be updated to reflect the members and
of the corporation is located: Provided, That proxies of record twenty (20) days prior to any
scheduled election. The bylaws may provide
proper notice is sent to all members
that the members of a nonstock corporation may
indicating the date, time and place of the
hold their regular or special meetings at any place
meeting: and Provided, further, That the even outside the place where the principal office of
place of meeting shall be within the the corporation is located: Provided, That proper
Philippines. (n) notice is sent to all members indicating the date,
time and place of the meeting: Provided, further,
That the place of meeting shall be within Philippine
territory.

CHAPTER III Chapter III

DISTRIBUTION OF ASSETS IN NON- DISTRIBUTION OF ASSETS IN NON-STOCK
STOCK CORPORATIONS CORPORATIONS

Section 94. Rules of distribution. – In case SEC. 93. Rules of Distribution. – The assets of a
dissolution of a non-stock corporation in nonstock corporation undergoing the process
accordance with the provisions of this Code, of dissolution for reasons other than those set
its assets shall be applied and distributed as forth in Section 139 of this Code, shall be
follows: applied and distributed as follows:

1. All liabilities and obligations of the (a) All liabilities and obligations of the
corporation shall be paid, satisfied and corporation shall be paid, satisfied and
discharged, or adequate provision shall be discharged, or adequate provision shall be made
made therefore; therefor;

2. Assets held by the corporation upon a (b) Assets held by the corporation upon a
condition requiring return, transfer or condition requiring return, transfer or conveyance,
conveyance, and which condition occurs by and which condition occurs by reason of the
reason of the dissolution, shall be returned, dissolution, shall be returned, transferred or
transferred or conveyed in accordance with conveyed in accordance with such requirements;
such requirements;
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3. Assets received and held by the (c) Assets received and held by the corporation
corporation subject to limitations permitting subject to limitations permitting their use only for
their use only for charitable, religious, charitable, religious, benevolent, educational or
benevolent, educational or similar purposes, similar purposes, but not held upon a condition
but not held upon a condition requiring requiring return, transfer or conveyance by reason
return, transfer or conveyance by reason of of the dissolution, shall be transferred or conveyed
to one (1) or more corporations, societies or
the dissolution, shall be transferred or
organizations engaged in activities in the
conveyed to one or more corporations,
Philippines substantially similar to those of the
societies or organizations engaged in dissolving corporation according to a plan of
activities in the Philippines substantially distribution adopted pursuant to this Chapter;
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

4. Assets other than those mentioned in preceding paragraphs, if any, shall be distributed
the preceding paragraphs, if any, shall be in accordance with the provisions of the articles of
distributed in accordance with the provisions incorporation or the bylaws, to the extent that the
of the articles of incorporation or the by- articles of incorporation or the bylaws, determine
laws, to the extent that the articles of the distributive rights of members, or any class or
incorporation or the by-laws, determine the classes of members, or provide for distribution;
distributive rights of members, or any class and
or classes of members, or provide for
distribution; and (e) In any other case, assets may be distributed
5. In any other case, assets may be to such persons, societies, organizations or
distributed to such persons, societies, corporations, whether or not organized for profit,
organizations or corporations, whether or as may be specified in a plan of distribution
not organized for profit, as may be specified adopted pursuant to this Chapter.
in a plan of distribution adopted pursuant to
this Chapter. (n)

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Section 95. Plan of distribution of assets. – SEC. 94. Plan of Distribution of Assets. – A plan
A plan providing for the distribution of providing for the distribution of assets, consistent
assets, not inconsistent with the provisions with the provisions of this Title, may be adopted by
of this Title, may be adopted by a non-stock a non-stock corporation in the process of
corporation in the process of dissolution in dissolution in the following manner:
the following manner:
The board of trustees shall, by majority a) The board of trustees shall, by majority vote,
vote, adopt a resolution recommending a adopt a resolution recommending a plan of
plan of distribution and directing the distribution and directing the submission thereof to
submission thereof to a vote at a regular or a vote at a regular or special meeting of members
special meeting of members having voting having voting rights;
rights. Written notice setting forth the
proposed plan of distribution or a summary b) Each member entitled to vote shall be given
thereof and the date, time and place of such a written notice setting forth the proposed plan of
distribution or a summary thereof and the date,
meeting shall be given to each member
time and place of such meeting within the time
entitled to vote, within the time and in the
and in the manner provided in this Code for the
manner provided in this Code for the giving giving of notice of meetings; and
of notice of meetings to members. Such
plan of distribution shall be adopted upon c) Such plan of distribution shall be adopted
approval of at least two-thirds (2/3) of the upon approval of at least two-thirds (2/3) of the
members having voting rights present or members having voting rights present or
represented by proxy at such meeting. (n) represented by proxy at such meeting.

TITLE XII TITLE XII

CLOSE CORPORATIONS CLOSE CORPORATIONS

Section 96. Definition and applicability of SEC. 95. Definition and Applicability of Title. – A
Title. - A close corporation, within the close corporation, within the meaning of this Code,
meaning of this Code, is one whose articles is one whose articles of incorporation provides
of incorporation provide that: (1) All the that:
corporation’s issued stock of all classes, (a) All the corporation’s issued stock of all classes,
exclusive of treasury shares, shall be held of record

exclusive of treasury shares, shall be held of by not more than a specified number of persons,
record by not more than a specified number not exceeding twenty (20); (b) All the issued stock
of persons, not exceeding twenty (20); (2) all of all classes shall be subject to one or more
the issued stock of all classes shall be specified restrictions on transfer permitted by this
subject to one or more specified restrictions Title; and (c) The corporation shall not list in any
on transfer permitted by this Title; and (3) stock exchange or make any public offering of its
The corporation shall not list in any stock stocks of any class. Notwithstanding the foregoing,
exchange or make any public offering of any a corporation shall not be deemed a close
of its stock of any class. Notwithstanding the corporation when at least two-thirds (2/3) of its
foregoing, a corporation shall not be voting stock or voting rights is owned or controlled
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deemed a close corporation when at least by another corporation which is not a close
two-thirds (2/3) of its voting stock or voting corporation within the meaning of this Code.
rights is owned or controlled by another
corporation which is not a close corporation Any corporation may be incorporated as a close
within the meaning of this Code. corporation, except mining or oil companies, stock
Any corporation may be incorporated as a exchanges, banks, insurance companies, public
close corporation, except mining or oil utilities, educational institutions and corporations
companies, stock exchanges, banks, declared to be vested with public interest in
insurance companies, public utilities, accordance with the provisions of this Code.
educational institutions and corporations
declared to be vested with public interest in The provisions of this Title shall primarily govern
accordance with the provisions of this Code. close corporations: Provided, That other Titles in
The provisions of this Title shall primarily this Code shall apply suppletorily, except as
govern close corporations: Provided, That otherwise provided under this Title.
the provisions of other Titles of this Code
shall apply suppletorily except insofar as this
Title otherwise provides.

Section 97. Articles of incorporation. – The SEC. 96. Articles of Incorporation. – The articles
articles of incorporation of a close of incorporation of a close corporation may
corporation may provide: provide for:
1. For a classification of shares or rights (a) A classification of shares or rights, the
and the qualifications for owning or holding qualifications for owning or holding the same, and
the same and restrictions on their transfers restrictions on their transfers, subject to the
as may be stated therein, subject to the provisions of the following section;
provisions of the following section;
2. For a classification of directors into (b) A classification of directors into one (1) or
one or more classes, each of whom may be more classes, each of whom may be voted for and
voted for and elected solely by a particular elected solely by a particular class of stock; and
class of stock; and
3. For a greater quorum or voting (c) Greater quorum or voting requirements in
requirements in meetings of stockholders or meetings of stockholders or directors than those
directors than those provided in this Code. provided in this Code.
The articles of incorporation of a close
corporation may provide that the business of The articles of incorporation of a close
the corporation shall be managed by the corporation may provide that the business of
stockholders of the corporation rather than the corporation shall be managed by the
by a board of directors. So long as this stockholders of the corporation rather than by
provision continues in effect:

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1. No meeting of stockholders need a board of directors. So long as this provision

be called to elect directors; continues in effect, no meeting of stockholders
2. Unless the context clearly requires need be called to elect directors: Provided,
otherwise, the stockholders of the That the stockholders of the corporation shall
corporation shall be deemed to be be deemed to be directors for the purpose of
directors for the purpose of applying the applying the provisions of this Code, unless
provisions of this Code; and the context clearly requires otherwise:
3. The stockholders of the corporation Provided further, That the stockholders of the
shall be subject to all liabilities of corporation shall be subject to all liabilities of
directors. directors.

The articles of incorporation may likewise The articles of incorporation may likewise provide
provide that all officers or employees or that that all officers or employees or that specified
specified officers or employees shall be officers or employees shall be elected or
elected or appointed by the stockholders, appointed by the stockholders, instead of by the
instead of by the board of directors. board of directors.

Section 98. Validity of restrictions on SEC. 97. Validity of Restrictions on Transfer of

transfer of shares. – Restrictions on the right Shares. – Restrictions on the right to transfer
to transfer shares must appear in the shares must appear in the articles of
articles of incorporation and in the by-laws incorporation, in the by-laws, as well as in the
as well as in the certificate of stock; certificate of stock; otherwise, the same shall not
otherwise, the same shall not be binding on be binding on any purchaser in good faith. Said
any purchaser thereof in good faith. Said
restrictions shall not be more onerous than
restrictions shall not be more onerous than
granting the existing stockholders or the
granting the existing stockholders or the
corporation the option to purchase the corporation the option to purchase the shares of
shares of the transferring stockholder with the transferring stockholder with such reasonable
such reasonable terms, conditions or period terms, conditions or period stated. If upon the
stated therein. If upon the expiration of said expiration of said period, the existing stockholders
period, the existing stockholders or the or the corporation fails to exercise the option to
corporation fails to exercise the option to purchase, the transferring stockholder may sell
purchase, the transferring stockholder may their shares to any third person.
sell his shares to any third person.

Section 99. Effects of issuance or transfer of SEC. 98. Effects of Issuance or Transfer of Stock
stock in breach of qualifying conditions. - 1. in Breach of Qualifying Conditions. –
If stock of a close corporation is issued or
transferred to any person who is not entitled (a) If a stock of a close corporation is issued or
under any provision of the articles of transferred to any person who is not eligible
incorporation to be a holder of record of its thereof under any provision of the articles of
stock, and if the certificate for such stock incorporation, and if the certificate for such stock
conspicuously shows the qualifications of the
conspicuously shows the qualifications of
persons entitled to be holders of record thereof,
the persons entitled to be holders of record
such person is conclusively presumed to have
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thereof, such person is conclusively notice of the fact of the ineligibility to be a

presumed to have notice of the fact of his stockholder.
ineligibility to be a stockholder.

2. If the articles of incorporation of a (b) If the articles of incorporation of a close

close corporation states the number of corporation states the number of persons, not
persons, not exceeding twenty (20), who are exceeding twenty (20), who are entitled to be
entitled to be holders of record of its stock, stockholders of record, and if the certificate for
and if the certificate for such stock such stock conspicuously states such number,
conspicuously states such number, and if and the issuance or transfer of stock to any
the issuance or transfer of stock to any person would cause the stock to be held by more
person would cause the stock to be held by than such number of persons, the person to whom
more than such number of persons, the such stock is issued or transferred is conclusively
person to whom such stock is issued or presumed to have notice of this fact.
transferred is conclusively presumed to
have notice of this fact. (c) If a stock certificate of a close corporation
3. If a stock certificate of any close conspicuously shows a restriction on transfer of
corporation conspicuously shows a the corporation’s stock and the transferee
restriction on transfer of stock of the acquires the stock in violation of such restriction,
corporation, the transferee of the stock is the transferee is conclusively presumed to have
conclusively presumed to have notice of the notice of the fact that the stock was acquired in
fact that he has acquired stock in violation of violation of the restriction.
the restriction, if such acquisition violates
the restriction. (d) Whenever a person to whom stock of a
4. Whenever any person to whom stock close corporation has been issued or transferred
of a close corporation has been issued or has, or is conclusively presumed under this
transferred has, or is conclusively presumed section to have notice of: (1) the person’s
under this section to have, notice either (a) ineligibility to be a stockholder of the corporation,
that he is a person not eligible to be a holder or (2) that the transfer of stock would cause the
of stock of the corporation, or (b) that stock of the corporation to be held by more than
transfer of stock to him would cause the the number of persons permitted under its articles
stock of the corporation to be held by more of incorporation; or (3) that the transfer violates a
than the number of persons permitted by its restriction on transfer of stock, and the corporation
articles of incorporation to hold stock of the may, at its option, refuse to register the transfer in
corporation, or (c) that the transfer of stock the name of the transferee.
is in violation of a restriction on transfer of
stock, the corporation may, at its option, (e) The provisions of Subsection (d) shall not be
refuse to register the transfer of stock in the applicable if the transfer of stock, though contrary
name of the transferee. to Subsections (a), (b) or (c), has been consented
5. The provisions of subsection (4) shall to by all the stockholders of the close corporation,
not be applicable if the transfer of stock, or if the close corporation has amended its articles
though contrary to subsections (1), (2) or of incorporation in accordance with this Title.
(3), has been consented to by all the
stockholders of the close corporation, or if
(f) The term “transfer”, as used in this section,
the close corporation has amended its
is not limited to a transfer for value.
articles of incorporation in accordance with
this Title.
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6. The term "transfer", as used in this (g) The provisions of this section shall not
section, is not limited to a transfer for value. impair any right which the transferee may have to
7. The provisions of this section shall not either rescind the transfer or recover the stock
impair any right which the transferee may under any express or implied warranty.
have to rescind the transfer or to recover
under any applicable warranty, express or
implied.

Section 100. Agreements by stockholders. - SEC. 99. Agreements by Stockholders. –

1. Agreements by and among stockholders
executed before the formation and (a) Agreements duly signed and executed by
organization of a close corporation, signed and among all stockholders before the formation
by all stockholders, shall survive the and organization of a close corporation shall
incorporation of such corporation and shall survive the incorporation and shall continue to be
continue to be valid and binding between valid and binding between such stockholders, if
and among such stockholders, if such be such be their intent, to the extent that such
their intent, to the extent that such agreements are consistent with the articles of
agreements are not inconsistent with the incorporation, irrespective of where the provisions
articles of incorporation, irrespective of of such agreements are contained, except those
where the provisions of such agreements required by this Title to be embodied in said
are contained, except those required by this articles of incorporation.
Title to be embodied in said articles of
incorporation. (b) A written agreement signed by two (2) or
2. An agreement between two or more more stockholders may provide that in exercising
stockholders, if in writing and signed by the any voting right, the shares held by them shall be
parties thereto, may provide that in voted as provided as agreed, or in accordance
exercising any voting rights, the shares held with a procedure agreed upon by them.
by them shall be voted as therein provided,
or as they may agree, or as determined in (c) No provision in a written agreement signed
accordance with a procedure agreed upon by the stockholders, relating to any phase of
by them. corporate affairs, shall be invalidated between the
3. No provision in any written agreement parties on the ground that its effect is to make
signed by the stockholders, relating to any them partners among themselves.
phase of the corporate affairs, shall be
invalidated as between the parties on the (d) A written agreement among some or all of
ground that its effect is to make them the stockholders in a close corporation shall not
partners among themselves. be invalidated on the ground that it relates to the
4. A written agreement among some or conduct of the business and affairs of the
all of the stockholders in a close corporation corporation as to restrict or interfere with the
shall not be invalidated on the ground that it discretion or powers of the board of directors:
so relates to the conduct of the business Provided, That such agreement shall impose on
and affairs of the corporation as to restrict or the stockholders who are parties thereto the
interfere with the discretion or powers of the liabilities for managerial acts imposed on directors
board of directors: Provided, That such by this Code.
agreement shall impose on the stockholders
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who are parties thereto the liabilities for (e) Stockholders actively engaged in the
managerial acts imposed by this Code on management or operation of the business and
directors. affairs of a close corporation shall be held to strict
5. To the extent that the stockholders are fiduciary duties to each other and among
actively engaged in the management or themselves. The stockholders shall be personally
operation of the business and affairs of a liable for corporate torts unless the corporation
close corporation, the stockholders shall be has obtained reasonably adequate liability
held to strict fiduciary duties to each other insurance.
and among themselves. Said stockholders
shall be personally liable for corporate torts

unless the corporation has obtained

reasonably adequate liability insurance.

Section 101. When board meeting is SEC. 100. When a Board Meeting is Unnecessary
unnecessary or improperly held. - Unless or Improperly Held. – Unless the by-laws provide
the by-laws provide otherwise, any action by otherwise, any action taken by the directors of a
the directors of a close corporation without a close corporation without a meeting called
meeting shall nevertheless be deemed valid properly and with due notice shall nevertheless be
if: deemed valid if:
1. Before or after such action is taken, (a)Before or after such action is taken, written
written consent thereto is signed by all the consent thereto is signed by all the directors; or
directors; or
2. All the stockholders have actual or (b)All the stockholders have actual or implied
implied knowledge of the action and make knowledge of the action and make no prompt
no prompt objection thereto in writing; or objection in writing; or
3. The directors are accustomed to take
informal action with the express or implied (c)The directors are accustomed to take informal
acquiescence of all the stockholders; or action with the express or implied acquiescence of
4. All the directors have express or all the stockholders; or
implied knowledge of the action in question
and none of them makes prompt objection (d)All the directors have express or implied
thereto in writing. knowledge of the action in question and none of
If a director’s meeting is held without them makes a prompt objection in writing.
proper call or notice, an action taken therein
within the corporate powers is deemed An action within the corporate powers taken at a
ratified by a director who failed to attend, meeting held without proper call or notice, is
unless he promptly files his written objection deemed ratified by a director who failed to attend,
with the secretary of the corporation after unless after having knowledge thereof, the
having knowledge thereof. director promptly files his written objection
with the secretary of the corporation.

Section 102. Pre-emptive right in close SEC. 101. Preemptive Right in Close
corporations. – The pre-emptive right of Corporations. – The preemptive right of
stockholders in close corporations shall stockholders in close corporations shall extend to
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extend to all stock to be issued, including all stock to be issued, including reissuance of
reissuance of treasury shares, whether for treasury shares, whether for money, property or
money, property or personal services, or in personal services, or in payment of corporate
payment of corporate debts, unless the debts, unless the articles of incorporation provide
articles of incorporation provide otherwise. otherwise.

Section 103. Amendment of articles of SEC. 102. Amendment of Articles of

incorporation. – Any amendment to the Incorporation. – Any amendment to the articles of
articles of incorporation which seeks to incorporation which seeks to delete or remove any
delete or remove any provision required by provision required by this Title or to reduce a
this Title to be contained in the articles of quorum or voting requirement stated in said
incorporation or to reduce a quorum or articles of incorporation shall require the
voting requirement stated in said articles affirmative vote of at least two-thirds (2/3) of the
of incorporation shall not be valid or outstanding capital stock, whether with or without
voting rights, or of

effective unless approved by the such greater proportion of shares as may be

affirmative vote of at least two-thirds (2/3) of specifically provided in the articles of incorporation
the outstanding capital stock, whether with for amending, deleting or removing any of the
or without voting rights, or of such greater aforesaid provisions, at a meeting duly called for
proportion of shares as may be specifically the purpose.
provided in the articles of incorporation for
amending, deleting or removing any of the
aforesaid provisions, at a meeting duly
called for the purpose.

Section 104. Deadlocks. – Notwithstanding SEC. 103. Deadlocks. – Notwithstanding any

any contrary provision in the articles of contrary provision in the close corporation’s
incorporation or by-laws or agreement of articles of incorporation, bylaws, or stockholders’
stockholders of a close corporation, if the agreement, if the directors or stockholders are so
directors or stockholders are so divided divided on the management of the corporation’s
respecting the management of the business and affairs that the votes required for a
corporation’s business and affairs that the corporate action cannot be obtained, with the
votes required for any corporate action consequence that the business and affairs of the
cannot be obtained, with the consequence corporation can no longer be conducted to the
that the business and affairs of the advantage of the stockholders generally, the
corporation can no longer be conducted to Commission, upon written petition by any
the advantage of the stockholders generally, stockholder, shall have the power to arbitrate the
the Securities and Exchange Commission, dispute. In the exercise of such power, the
upon written petition by any stockholder, Commission shall have authority to make
shall have the power to arbitrate the dispute. appropriate orders, such as: (a) cancelling or
In the exercise of such power, the altering any provision contained in the articles of
Commission shall have authority to make incorporation, bylaws, or any stockholder’s
such order as it deems appropriate, agreement; (b) cancelling, altering or enjoining a
including an order: (1) cancelling or altering resolution or act of the corporation or its board of
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any provision contained in the articles of directors, stockholders, or officers; (c) directing or
incorporation, by-laws, or any stockholder’s prohibiting any act of the corporation or its board
agreement; (2) cancelling, altering or of directors, stockholders, officers, or other
enjoining any resolution or act of the persons party to the action; (d) requiring the
corporation or its board of directors, purchase at their fair value of shares of any
stockholders, or officers; (3) directing or stockholder, either by the corporation regardless
prohibiting any act of the corporation or its of the availability of unrestricted retained earnings
board of directors, stockholders, officers, or in its books, or by the other stockholders; (e)
other persons party to the action; (4) appointing a provisional director; (f) dissolving the
requiring the purchase at their fair value of corporation; or (g) granting such other relief as the
shares of any stockholder, either by the circumstances may warrant.
corporation regardless of the availability of
unrestricted retained earnings in its books, A provisional director shall be an impartial person
or by the other stockholders; (5) appointing who is neither a stockholder nor a creditor of the
a provisional director; (6) dissolving the corporation or any of its subsidiaries or affiliates,
corporation; or (7) granting such other relief and whose further qualifications, if any, may be
as the circumstances may warrant. determined by the Commission. A provisional
A provisional director shall be an impartial
director is not a receiver of the corporation and
person who is neither a stockholder nor a
does not have the title and powers of a custodian
creditor of the corporation or of any
or receiver. A provisional director shall have all the

subsidiary or affiliate of the corporation, and rights and powers of a duly elected director,
whose further qualifications, if any, may be including the right to be notified of and to vote at
determined by the Commission. A meetings of directors until removed by order of the
provisional director is not a receiver of the Commission or by all the stockholders. The
corporation and does not have the title and compensation of the provisional director shall be
powers of a custodian or receiver. A determined by agreement between such director
provisional director shall have all the rights
and the corporation, subject to approval of the
and powers of a duly elected director of the
Commission, which may fix the compensation
corporation, including the right to notice of
and to vote at meetings of directors, until absent an agreement or in the event of
such time as he shall be removed by order disagreement between the provisional director and
of the Commission or by all the the corporation.
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.

Section 105. Withdrawal of stockholder or SEC. 104. Withdrawal of Stockholder or

dissolution of corporation. – In addition and Dissolution of Corporation. – In addition and
without prejudice to other rights and without prejudice to other rights and remedies
remedies available to a stockholder under available under this Title, any stockholder of a
this Title, any stockholder of a close close corporation may, for any reason, compel the
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corporation may, for any reason, compel the corporation to purchase shares held at fair value,
said corporation to purchase his shares at which shall not be less than the par or issued
their fair value, which shall not be less than value, when the corporation has sufficient assets
their par or issued value, when the in its books to cover its debts and liabilities
corporation has sufficient assets in its books exclusive of capital stock: Provided, That any
to cover its debts and liabilities exclusive of stockholder of a close corporation may, by written
capital stock: Provided, That any
petition to the Commission, compel the dissolution
stockholder of a close corporation may, by
of such corporation whenever any of acts of the
written petition to the Securities and
Exchange Commission, compel the directors, officers, or those in control of the
dissolution of such corporation whenever corporation is illegal, fraudulent, dishonest,
any of acts of the directors, officers or those oppressive or unfairly prejudicial to the corporation
in control of the corporation is illegal, or or any stockholder, or whenever corporate assets
fraudulent, or dishonest, or oppressive or are being misapplied or wasted.
unfairly prejudicial to the corporation or any
stockholder, or whenever corporate assets
are being misapplied or wasted.

TITLE XIII TITLE XIII

SPECIAL CORPORATIONS SPECIAL CORPORATIONS

CHAPTER I - EDUCATIONAL Chapter I

CORPORATIONS EDUCATIONAL CORPORATIONS
Section 106. Incorporation. – Educational SEC. 105. Incorporation. – Educational
corporations shall be governed by special corporations shall be governed by special laws
laws and by the general provisions of this and by the general provisions of this Code.

Code. (n)
Section 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)

Section 108. Board of trustees. – Trustees SEC. 106. Board of Trustees. –Trustees of
of educational institutions organized as educational institutions organized as nonstock
nonstock corporations shall not be less than corporations shall not be less than five (5) nor
five (5) nor more than fifteen (15): Provided, more than fifteen (15): Provided however, That the
however, That the number of trustees shall number of trustees shall be in multiples of five (5).
be in multiples of five (5).
Unless otherwise provided in the articles of Unless otherwise provided in the articles of
incorporation on the by-laws, the board of incorporation or by-laws, the board of trustees of
trustees of incorporated schools, colleges, incorporated schools, colleges, or other institutions
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or other institutions of learning shall, as of learning shall, as soon as organized, so classify

soon as organized, so classify themselves themselves that the term of office of one-fifth (1/5)
that the term of office of one-fifth (1/5) of of their number shall expire every year. Trustees
their number shall expire every year. thereafter elected to fill vacancies, occurring
Trustees thereafter elected to fill vacancies, before the expiration of a particular term, shall
occurring before the expiration of a hold office only for the unexpired period. Trustees
particular term, shall hold office only for the elected thereafter to fill vacancies caused by
unexpired period. Trustees elected expiration of term shall hold office for five (5)
thereafter to fill vacancies caused by years. A majority of the trustees shall constitute a
expiration of term shall hold office for five (5) quorum for the transaction of business. The
years. A majority of the trustees shall powers and authority of trustees shall be defined
constitute a quorum for the transaction of in the bylaws.
business. The powers and authority of
trustees shall be defined in the by-laws. For institutions organized as stock corporations,
For institutions organized as stock the number and term of directors shall be
corporations, the number and term of governed by the provisions on stock corporations.
directors shall be governed by the
provisions on stock corporations. (169a)
CHAPTER II Chapter II
RELIGIOUS CORPORATIONS RELIGIOUS CORPORATIONS

Section 109. Classes of religious SEC. 107. Classes of Religious Corporations. –

corporations. – Religious corporations may Religious corporations may be incorporated by
be incorporated by one or more persons. one or more persons. Such corporations may be
Such corporations may be classified into classified into corporations sole and religious
corporations sole and religious societies. societies.
Religious corporations shall be governed by
this Chapter and by the general provisions Religious corporations shall be governed by this
on non-stock corporations insofar as they Chapter and by the general provisions on non-
may be applicable. (n) stock corporations insofar as applicable.

Section 110. Corporation sole. – For the SEC. 108. Corporation sole. – For the purpose of
purpose of administering and managing, as administering and managing, as trustee, the
trustee, the affairs, property and affairs, property and temporalities of any religious
temporalities of any religious denomination, denomination, sect or church, a corporation sole
sect or church, a corporation sole may be may be formed by the chief archbishop, bishop,
formed by the chief archbishop, bishop, priest, minister, rabbi, or other presiding elder of
priest, minister, rabbi or other presiding
such religious denomination, sect, or church.
elder of such religious denomination, sect or
church. (154a)

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Section 111. Articles of incorporation. – In SEC. 109. Articles of incorporation. – In order to

order to become a corporation sole, the become a corporation sole, the chief archbishop,
chief archbishop, bishop, priest, minister, bishop, priest, minister, rabbi or presiding elder of
rabbi or presiding elder of any religious any religious denomination, sect or church must
denomination, sect or church must file with file with the Commission articles of incorporation
the Securities and Exchange Commission setting forth the following:
articles of incorporation setting forth the
following: (a) That the applicant chief archbishop, bishop,
1. That he is the chief archbishop, bishop, priest, minister, rabbi, or presiding elder
priest, minister, rabbi or presiding elder of represents the religious denomination, sect, or
his religious denomination, sect or church church who desires to become a corporation sole;
and that he desires to become a corporation
sole; 2. That the rules, regulations and (b) That the rules, regulations and discipline of
discipline of his religious denomination, sect the religious denomination, sect or church are
or church are not inconsistent with his consistent with becoming a corporation sole and
becoming a do not forbid it;
corporation sole and do not forbid it;
3. That as such chief archbishop, bishop, (c) That such chief archbishop, bishop, priest,
priest, minister, rabbi or presiding elder, he minister, rabbi, or presiding elder is charged with
is charged with the administration of the the administration of the temporalities and the
temporalities and the management of the management of the affairs, estate and properties
affairs, estate and properties of his religious of the religious denomination, sect, or church
denomination, sect or church within his within the territorial jurisdiction, so described
territorial jurisdiction, describing such succinctly in the articles of incorporation;
territorial jurisdiction;
4. The manner in which any vacancy (d) The manner by which any vacancy occurring
occurring in the office of chief archbishop, in the office of chief archbishop, bishop, priest,
bishop, priest, minister, rabbi of presiding minister, rabbi, or presiding elder is required to be
elder is required to be filled, according to the filled, according to the rules, regulations or
rules, regulations or discipline of the discipline of the religious denomination, sect, or
religious denomination, sect or church to church; and
which he belongs; and
5. The place where the principal office of (e) The place where the principal office of the
the corporation sole is to be established and corporation sole is to be established and located,
located, which place must be within the which place must be within the territory of the
Philippines. Philippines.
The articles of incorporation may include
any other provision not contrary to law for
the regulation of the affairs of the
corporation. (n)

The articles of incorporation may include any other

provision not contrary to law for the regulation of
the affairs of the corporation.

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Section 112. Submission of the articles of SEC. 110. Submission of the Articles of
incorporation. – The articles of incorporation Incorporation. – The articles of incorporation must
must be verified, before filing, by affidavit or be verified, by affidavit or affirmation of the chief
affirmation of the chief archbishop, bishop, archbishop, bishop, priest, minister, rabbi, or
priest, minister, rabbi or presiding elder, as presiding elder, as the case may be, and
the case may be, and accompanied by a accompanied by a copy of the commission,
copy of the commission, certificate of certificate of election or letter of appointment of
election or letter of appointment of such such chief archbishop, bishop, priest, minister,
chief archbishop, bishop, priest, minister, rabbi, or presiding elder, duly certified to be
rabbi or presiding elder, duly certified to be correct by any notary public.
correct by any notary public.
From and after the filing with the From and after filing with the Commission of the
Securities and Exchange Commission of the said articles of incorporation, verified by affidavit or
said articles of incorporation, verified by affirmation, and accompanied by the documents
affidavit or affirmation, and accompanied by mentioned in the preceding paragraph, such chief
the documents mentioned in the preceding archbishop, bishop, priest, minister, rabbi, or
paragraph, such chief archbishop, bishop, presiding elder shall become a corporation sole
priest, minister, rabbi or presiding elder shall and all temporalities, estate and properties of the
become a corporation sole and all religious denomination, sect or church theretofore
temporalities, estate and properties of the administered or managed as such chief
religious denomination, sect or church archbishop, bishop, priest, minister, rabbi, or
theretofore administered or managed by him presiding elder shall be personally held in trust as
as such chief archbishop, bishop, priest, a corporation sole, for the use, purpose, exclusive
minister, rabbi or presiding elder shall be benefit and on behalf of the religious
held in trust by him as a corporation sole, for denomination, sect, or church, including hospitals,
the use, purpose, behalf and sole benefit of schools, colleges, orphan asylums, parsonages,
his religious denomination, sect or church, and cemeteries thereof.
including hospitals, schools, colleges,
orphan asylums, parsonages and
cemeteries thereof. (n)

Section 113. Acquisition and alienation of SEC. 111. Acquisition and Alienation of Property.
property. – Any corporation sole may – A corporation sole may purchase and hold real
purchase and hold real estate and personal estate and personal property for its church,
property for its church, charitable, charitable, benevolent, or educational purposes,
benevolent or educational purposes, and and may receive bequests or gifts for such
may receive bequests or gifts for such purposes. Such corporation may sell or mortgage
purposes. Such corporation may sell or real property held by it by obtaining an order for
mortgage real property held by it by that purpose from the Regional Trial Court of the
obtaining an order for that purpose from the province where the property is situated upon proof
Court of First Instance of the province where that the notice of the application for leave to sell or
the property is situated upon proof made to mortgage has been made through publication or
the satisfaction of the court that notice of the as directed by the Court, and that it is in the
application for leave to sell or mortgage has interest of the corporation that leave to sell or
been given by publication or otherwise in mortgage be granted. The application for leave to
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such manner and sell or

for such time as said court may have mortgage must be made by petition, duly verified,
directed, and that it is to the interest of the by the chief archbishop, bishop, priest, minister,
corporation that leave to sell or mortgage rabbi, or presiding elder acting as corporation
should be granted. The application for leave sole, and may be opposed by any member of the
to sell or mortgage must be made by religious denomination, sect, or church
petition, duly verified, by the chief represented by the corporation sole: Provided,
archbishop, bishop, priest, minister, rabbi or That in cases where the rules, regulations, and
presiding elder acting as corporation sole, discipline of the religious denomination, sect, or
and may be opposed by any member of the church, religious society, or order concerned
religious denomination, sect or church represented by such corporation sole regulate the
represented by the corporation sole: method of acquiring, holding, selling, and
Provided, That in cases where the rules, mortgaging real estate and personal property,
regulations and discipline of the religious such rules, regulations and discipline shall control,
denomination, sect or church, religious and the intervention of the courts shall not be
society or order concerned represented by necessary.
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)

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Section 114. Filling of vacancies. – The

successors in office of any chief archbishop,
bishop, priest, minister, rabbi or presiding
elder in a corporation sole shall become the
corporation sole on their accession to office
and shall be permitted to transact business
as such on the filing with the Securities and
SEC. 112. Filling of Vacancies. – The successors
Exchange Commission of a copy of their
in office of any chief archbishop, bishop, priest,
commission, certificate of election, or letters
minister, rabbi, or presiding elder in a corporation
of appointment, duly certified by any notary
sole shall become the corporation sole on their
public.
accession to office and shall be permitted to
During any vacancy in the office of
transact business as such upon filing a copy of their
chief archbishop, bishop, priest, minister,
commission, certificate of election, or letters of
rabbi or presiding elder of any religious appointment, duly certified by any notary public with
denomination, sect or church incorporated the Commission.
as a corporation sole, the person or persons
authorized and empowered by the rules, During any vacancy in the office of chief
regulations or discipline of the religiousarchbishop, bishop, priest, minister, rabbi, or
denomination, sect or church represented presiding elder of any religious denomination, sect
by the corporation sole to administer orthe church incorporated as a corporation sole, the
temporalities and manage the affairs, estate or persons authorized by the rules,
person
regulations or discipline
and properties of the corporation sole during
denomination, sect, or church represented by the
the vacancy shall exercise all the powers
corporation sole to administer the tem poralities and
and authority of the corporation sole during
manage the affairs, estate, and properties of the
such vacancy. (158a) corporation sole shall exercise all the powers and
authority of the corporation sole during such
vacancy.

the religious

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Section 115. Dissolution. – A corporation SEC. 113. Dissolution. – A corporation sole may
sole may be dissolved and its affairs settled be dissolved and its affairs settled voluntarily by
voluntarily by submitting to the Securities submitting to the Commission a verified
and Exchange Commission a verified declaration of dissolution, setting forth:
declaration of dissolution.
(a) The name of the corporation;
The declaration of dissolution shall set
forth: (b) The reason for dissolution and winding up;
1. The name of the corporation;
2. The reason for dissolution and winding (c) The authorization for the dissolution of the
up; 3. The authorization for the dissolution of corporation by the particular religious
the corporation by the particular religious denomination, sect or church;
denomination, sect or church;
4. The names and addresses of the persons (d) The names and addresses of the persons
who are to supervise the winding up of the who are to supervise the winding up of the affairs of
affairs of the corporation. the corporation.
Upon approval of such declaration of Upon approval of such declaration of dissolution
dissolution by the Securities and Exchange
by the Commission, the corporation shall cease to
Commission, the corporation shall cease to
carry on its operations except for the purpose of
carry on its operations except for the
purpose of winding up its affairs. (n) winding up its affairs.

SEC. 114. Religious Societies. – Unless forbidden

Section 116. Religious societies. – Any by competent authority, the Constitution, pertinent
religious society or religious order, or any rules, regulations, or discipline of the religious
diocese, synod, or district organization of denomination, sect, or church of which it is a part,
any religious denomination, sect or church, any religious society, religious order, diocese,
unless forbidden by the constitution, rules, synod, or district organization of any religious
regulations, or discipline of the religious denomination, sect, or church, may, upon written
denomination, sect or church of which it is a consent and/or by an affirmative vote at a meeting
part, or by competent authority, may, upon called for the purpose of at least two-thirds (2/3) of
written consent and/or by an affirmative vote its membership, incorporate for the administration
at a meeting called for the purpose of at of its temporalities or for the management of its
least two-thirds (2/3) of its membership, affairs, properties, and estate by filing with the
incorporate for the administration of its Commission, articles of incorporation verified by
temporalities or for the management of its the affidavit of the presiding elder, secretary, or
affairs, properties and estate by filing with clerk or other member of such religious society or
the religious order, or diocese, synod, or district
Securities and Exchange Commission, organization of the religious denomination, sect, or
articles of incorporation verified by the church, setting forth the following:
affidavit of the presiding elder, secretary, or
clerk or other member of such religious (a) That the religious society or religious order, or
society or religious order, or diocese, synod, diocese, synod, or district organization is a
or district organization of the religious religious organization of a religious denomination,
denomination, sect or church, setting forth sect or church;
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the following:
1. That the religious society or religious
order, or diocese, synod, or district
organization is a

religious (b) That at least two-thirds (2/3) of its membership has given written consent or
organization has voted to incorporate, at a duly convened meeting of the body;
of a religious
denominatio (c) That the incorporation of the religious society or religious order, diocese,
n, sect or synod, or district organization is not forbidden by competent authority or by the
church; Constitution, rules, regulations or discipline of the religious denomination, sect, or
2. That at church of which it forms part;
least two-
thirds (2/3) (d) That the religious society or religious order, diocese, synod, or district
of its organization desires to incorporate for the administration of its affairs, properties
membership
have given
their written
consent or (e) The place within the Philippines where the
have voted principal office of the corporation is to be
to established and located; and
incorporate,
at a duly (f) The names, nationalities, and residence
convened addresses of the trustees, not less than five (5) nor
meeting of more than fifteen (15), elected by the religious
the body; society or religious order, or the diocese, synod, or
3. That district organization to serve for the first year or
the such other period as may be prescribed by the laws
incorporatio of the religious society or religious order, or of the
n of the diocese, synod, or district organization.
religious
society or
religious
order, or
diocese,
synod, or
district
and estate;
organization
desiring to
incorporate
is not
forbidden by
competent
authority or
by the
constitution,
rules,
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regulations
or discipline
of the
religious
denominatio
n, 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
administratio
n 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
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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)
Chapter III
ONE PERSON CORPORATIONS

SEC. 115. 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.

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SEC. 116. One Person Corporation. – A One Person Corporation is a

corporation with a single stockholder: Provided, That only a natural person,
trust, or an estate may form a One Person Corporation.

Banks and quasi-banks, pre-need, trust,

insurance, public and publicly-listed
companies, and non-chartered
governmentowned and -controlled
corporations may not incorporate as One
Person Corporations: Provided further, That a
natural person who is licensed to exercise a
profession may not organize as a One Person
Corporation for the purpose of exercising such
profession except as otherwise provided under
special laws.

SEC. 117. Minimum Capital Stock Required for

One Person Corporation. – A One Person
Corporation shall not be required to have a
minimum authorized capital stock except as
otherwise provided by special law.

SEC. 118. 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 fiduciary duties together with the
proof of such authority to act on behalf of the
trust or estate; and

(b) Name, nationality, residence of the

nominee and alternate nominee, and the
extent, coverage and limitation of the
authority.

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SEC. 119. By-laws. – The One Person

Corporation is not required to submit and file
corporate by-laws.

SEC. 120. Display of Corporate Name. – A One

Person Corporation shall indicate the letters
“OPC” either below or at the end of its
corporate name.

SEC. 121. Single stockholder as Director,

President. – The single stockholder shall be
the sole director and president of the One
Person Corporation.

SEC. 122. Treasurer, Corporate Secretary, and Other Officers. – Within fifteen (15)
days from the issuance of its certificate of incorporation, the One Person
Corporation shall appoint a treasurer, corporate secretary, and other officers as it
may deem necessary, and notify the Commission thereof within five (5) days from
appointment.

The single stockholder may not be appointed as the corporate secretary.

A single stockholder who is likewise the selfappointed treasurer of the corporation,

shall give a bond to the Commission in such a sum as may be required: Provided,
That, the said stockholder/treasurer shall undertake in writing to faithfully
administer the One Person Corporation’s funds to be received as treasurer, and to
disburse and invest the same according to the articles of incorporation as
approved by the Commission. The bond shall be renewed every two (2) years or as
often as may be required.

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SEC. 123. Special Functions of the Corporate

Secretary. – In addition to the functions
designated by the One Person Corporation, the
corporate secretary shal l:

(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 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.

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SEC. 124. 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.

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SEC. 125. 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 been
determined, and the heirs have designated one
of them or have agreed that the estate shall be
the single stockholder of the One Person
Corporation.
lawfully

The alternate nominee shall sit as director and

manage the One Person Corporation in case of
the nominee’s inability, incapacity, death, or
refusal to discharge the functions as director
and manager of the corporation, and only for

the same term and under the same conditions

applicable to the nominee.

SEC. 126. Change of Nominee or Alternate

Nominee. – The single stockholder may, at any
time, change its nominee and alternate
nominee by submitting to the Commission the
names of the new nominees and their
corresponding written consent. For this
purpose, the articles of incorporation need not
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be amended.

SEC. 127. Minutes Book. – A One Person

Corporation shall maintain a minutes book
which shall contain all actions, decisions, and
resolutions taken by the One Person
Corporation.

SEC. 128. Records in Lieu of Meetings . – When

action is needed on any m atter, it shall be
sufficient to prepare a written resolution,
signed and dated by the single stockholder, and
recorded in the minutes book of the One Person
Corporation. The date of recording in the
minutes book shall be deemed to be the date of
the meeting for all purposes under this Code.

SEC. 129. Reportorial Requirements. – The

One Person Corporation shall submit the
following within such period as the
Commission may prescribe:

(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 (P600,000.00), the
financial statements shall be certified under
oath by the corporation’s treasurer and
president.

(b) A report containing explanations or

comments by the president on every
qualification, reservation, or adverse remark or
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disclaimer made by the auditor in the latter’s

report;

(c) A disclosure of all self-dealings and

related party transactions entered into
between the

One Person Corporation and the single

stockholder; and

(d) Other reports as the Commission may

require.

For purposes of this provision, the fiscal year

of a One Person Corporation shall be that set
forth in its articles of incorporation or, in the
absence thereof, the calendar year.

The Commission may place the corporation

under delinquent status should the
corporation fail to submit the reportorial
requirements three (3) times, consecutively or
intermittently, within a period of five (5) years.

SEC. 130. Liability of Single Shareholder. – A

sole shareholder claiming limited liability has
the burden of affirmatively showing that the
corporation was adequately financed.

Where the single stockholder cannot prove

that the property of the One Person
Corporation is independent of the
stockholder’s personal property, the
stockholder shall be jointly and severally liable
for the debts and other liabilities of the One
Person Corporation.

The principles of piercing the corporate veil

applies with equal force to One Person
Corporations as with other corporations.

SEC. 131. Conversion from an Ordinary

Corporation to a One Person Corporation. –
When a single stockholder acquires all the
stocks of an ordinary stock corporation, the

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latter may apply for conversion into a One

Person Corporation, subject to the submission
of such documents as the Commission may
require. If the application for conversion is
approved, the Commission shall issue
certificate of filing of amended articles of
incorporation reflecting the conversion. The
One Person Corporation converted from an
ordinary stock corporation shall succeed the
latter and be legally responsible for all the
latter’s outstanding liabilities as of the date of
conversion.

SEC. 132. 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,
and after compliance with all other
requirements for stock corporations under this
Code and applicable rules. Such notice shall
be filed with the Commission within sixty (60)
days from the occurrence of the
circumstances leading to the conversion into
an ordinary stock corporation. If all
requirements have been complied with, the
Commission shall issue an amended
certificate of incorporation reflecting the
conversion.

In case of death of the single stockholder, the

nominee or alternate nominee shall transfer
the shares to the duly designated legal heir or
estate within seven (7) days from receipt of
either an affidavit of heirship or
selfadjudication executed by a sole heir, or any
other legal document declaring the legal heirs
of the single stockholder and notify the
Commission of the transfer. Within sixty (60)
days from the transfer of the shares, the legal
heirs shall notify the Commission of their
decision to either wind up and dissolve the
One Person Corporation or convert it into an
ordinary stock corporation.
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The ordinary stock corporation converted from

a One Person Corporation shall succeed the
latter and be legally responsible for all the
latter’s outstanding liabilities as of the date of
conversion.

TITLE XIV TITLE XIV

DISSOLUTION DISSOLUTION
Section 117. Methods of dissolution. – A
corporation formed or organized under the SEC. 133. Methods of Dissolution. – A corporation
provisions of this Code may be dissolved formed or organized under the provisions of this
voluntarily or involuntarily. (n) Code may be dissolved voluntarily or involuntarily.

Section 118. Voluntary dissolution where no SEC. 134. Voluntary Dissolution Where No
creditors are affected. – If dissolution of a Creditors are Affected. – If dissolution of a

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corporation does not prejudice the rights of corporation does not prejudice the rights of any
any creditor having a claim against it, the creditor having a claim against it, the dissolution
dissolution may be effected by majority vote may be effected by majority vote of the board of
of the board of directors or trustees, and by directors or trustees, and by a resolution adopted
a resolution duly adopted by the affirmative by the affirmative vote of the stockholders owning
vote of the stockholders owning at least at least majority of the outstanding capital
stock or majority of the members of a meeting
two-thirds (2/3) of the outstanding capital
to be held upon the call of the directors or
stock or of at least two-thirds (2/3) of the
trustees.
members of a meeting to be held upon
call of the directors or trustees after At least twenty (20) days prior to the meeting,
publication of the notice of time, place notice shall be given to each shareholder or
and object of the meeting for three (3) member of record personally, by registered
consecutive weeks in a newspaper mail, or by any means authorized under its
published in the place where the bylaws whether or not entitled to vote at the
principal office of said corporation is meeting, in the manner provided in Section 50
located; and if no newspaper is of this Code and shall state that the purpose of
published in such place, then in a the meeting is to vote on the dissolution of the
newspaper of general circulation in the corporation. Notice of the time, place, and
Philippines, after sending such notice to object of the meeting shall be published once
prior to the date of the meeting in a newspaper
each stockholder or member either by
published in the place where the principal
registered mail or by personal delivery at
office of said corporation is located, or if no
least thirty (30) days prior to said newspaper is published in such place, in a
meeting. A copy of the resolution newspaper of general circulation in the
authorizing the dissolution shall be Philippines.
certified by a majority of the board of
directors or trustees and countersigned A verified request for dissolution shall be filed
by the secretary of the corporation. The with the Commission stating: (a) the reason for
Securities and Exchange Commission the dissolution; (b) the form, manner, and time
shall thereupon issue the certificate of when the notices were given; (c) names of the
dissolution. (62a) 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.

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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,
nonstock savings and loan associations,
pawnshops, and other financial intermediaries
shall be approved by the Commission unless
accompanied by a favorable recommendation
of the appropriate government agency.

Section 119. Voluntary dissolution where SEC. 135. Voluntary Dissolution Where Creditors
creditors are affected. – Where the are Affected; Procedure and Contents of Petition.
dissolution of a corporation may prejudice – Where the dissolution of a corporation may
the rights of any creditor, the petition for prejudice the rights of any creditor, a verified
dissolution shall be filed with the Securities petition for dissolution shall be filed with the
and Exchange Commission. The petition Commission. The petition shall be signed by a
shall be signed by a majority of its board of majority of the corporation’s board of directors or
directors or trustees or other officers having trustees, verified by its president or secretary or
the management of its affairs, verified by its one of its directors or trustees, and shall set forth
president or secretary or one of its directors all claims and demands against it, and that its
or trustees, and shall set forth all claims and dissolution was resolved upon by the affirmative
demands against it, and that its dissolution vote of the stockholders representing at least
was resolved upon by the affirmative vote of twothirds (2/3) of the outstanding capital stock or
the stockholders representing at least at least two-thirds (2/3) of the members at a
twothirds (2/3) of the outstanding capital meeting of its stockholders or members called for
stock or by at least two-thirds (2/3) of the that purpose. The petition shall likewise state: (a)
members at a meeting of its stockholders or the reason for the dissolution; (b) the form,
members called for that purpose. manner, and time when the notices were given;
If the petition is sufficient in form and and (c) the date, place, and time of the meeting in
substance, the Commission shall, by an which the vote was made. The corporation shall
order reciting the purpose of the petition, fix submit to the Commission the following: (1) a copy
a date on or before which objections thereto of the resolution authorizing the dissolution,
may be filed by any person, which date shall certified by a majority of the board of directors or
not be less than thirty (30) days nor more trustees and countersigned by the secretary of the
corporation; and (2) a list of all its creditors.
than sixty (60) days after the entry of the
order. Before such date, a copy of the order
If the petition is sufficient in form and substance,
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shall be published at least once a week for the Commission shall, by an order reciting the
three (3) consecutive weeks in a newspaper purpose of the petition, fix a deadline for filing
of general circulation published in the objections to the petition which date shall not be
municipality or city where the principal office less than thirty (30) days nor more than sixty (60)
of the corporation is situated, or if there be days after the entry of the order. Before such date,
no such newspaper, then in a newspaper of a copy of the order shall be published at least
general circulation in the Philippines, and a once a week for three (3) consecutive weeks in a
similar copy shall be posted for three (3) newspaper of

consecutive weeks in three (3) public places general circulation published in the municipality or
in such municipality or city. city where the principal office of the corporation is
Upon five (5) day’s notice, given after the situated, or if there be no such newspaper, then in
date on which the right to file objections as a newspaper of general circulation in the
fixed in the order has expired, the Philippines, and a similar copy shall be posted for
Commission shall proceed to hear the three (3) consecutive weeks in three (3) public
petition and try any issue made by the places in such municipality or city.
objections filed; and if no such objection is
sufficient, and the material allegations of the Upon five (5) days’ notice, given after the date on
petition are true, it shall render judgment which the right to file objections as fixed in the
dissolving the corporation and directing such order has expired, the Commission shall proceed
disposition of its assets as justice requires, to hear the petition and try any issue raised in the
and may appoint a receiver to collect such objections filed; and if no such objection is
assets and pay the debts of the corporation. sufficient, and the material allegations of the
(Rule 104, RCa) 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.

The dissolution shall take effect only upon the

issuance by the Commission of a certificate of
dissolution.

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SEC. 136. Dissolution by Shortening Corporate

Section 120. Dissolution by shortening Term. – A voluntary dissolution may be effected
corporate term. – A voluntary dissolution by amending the articles of incorporation to
may be effected by amending the articles of shorten the corporate term pursuant to the
incorporation to shorten the corporate term provisions of this
pursuant to the provisions of this Code. A Code. A copy of the amended articles of
incorporation shall be submitted to the
copy of the amended articles of
Commission in accordance with this Code.
incorporation shall be submitted to the
Securities and Exchange Commission in
Upon the expiration of the shortened term, as
accordance with this Code. Upon approval stated in the approved amended articles of
of the amended articles of incorporation of incorporation, the corporation shall be deemed
the expiration of the shortened term, as the dissolved without any further proceedings, subject
case may be, the corporation shall be to the provisions of this Code on liquidation.
deemed dissolved without any further
proceedings, subject to the provisions of this In the case of expiration of corporate term,
Code on liquidation. (n) dissolution shall automatically take effect on
the day following the last day of the corporate
term stated in the articles of incorporation,
without the need for the issuance by the
Commission of a certificate of dissolution.

SEC. 137. Withdrawal of Request and Petition

for Dissolution. – A withdrawal of the request for
dissolution shall be made in writing, duly verified
by

any incorporator, director, trustee, shareholder, or

member and signed by the same number of
incorporators, directors, trustees, shareholders, or
members necessary to request for dissolution as
set forth in the foregoing sections. The withdrawal
shall be submitted no later than fifteen (15) days
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.

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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 and filed prior to publication of the order
setting the deadline for filing objections to the
petition.

Section 121. Involuntary dissolution. – A SEC. 138. Involuntary Dissolution. – A corporation

corporation may be dissolved by the may be dissolved by the Commission motu
Securities and Exchange Commission upon proprio or upon filing of a verified complaint by any
filing of a verified complaint and after proper interested party. The following may be grounds
notice and hearing on the grounds provided for dissolution of the corporation:
by existing laws, rules and regulations. (n)
(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:

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(1) Was created for the purpose of

committing, concealing or aiding the
commission of securities violations,
smuggling, tax evasion, money 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; 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.

Section 122. Corporate liquidation. – Every

corporation whose charter expires by its SEC. 139. Corporate Liquidation. – Except for
own limitation or is annulled by forfeiture or banks, which shall be covered by the applicable
otherwise, or whose corporate existence for provisions of Republic Act No. 7653, otherwise
other purposes is terminated in any other known as the “New Central Bank Act,” as
manner, shall nevertheless be continued as amended, and Republic Act No. 3591, otherwise
a body corporate for three (3) years after the known as the Philippine Deposit Insurance
time when it would have been so dissolved, Corporation Charter, as amended, every
for the purpose of prosecuting and corporation whose charter expires pursuant to its
defending suits by or against it and enabling articles of incorporation, is annulled by forfeiture,
it to settle and close its affairs, to dispose of
or whose corporate existence is terminated in any
and convey its property and to distribute its
assets, but not for the purpose of continuing other manner, shall nevertheless remain as a body
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the business for which it was established. corporate for three (3) years after the effective
date of dissolution, for the purpose of prosecuting
and defending suits by or against it and enabling it
to settle and close its

affairs, dispose of and convey its property, and distribute its assets, but not for
the purpose of continuing the business for which it was established.

At any time during said three (3) years, the corporation is authorized and
At any time empowered to convey all of its property to trustees for the benefit of
during said stockholders, members, creditors, and other persons in interest. After any such
three (3) conveyance by the corporation of its property in trust for the benefit of its
years, the stockholders, members, creditors and others in interest, all interest which the
corporation is corporation had in the property terminates, the legal interest vests in the
authorized and trustees, and the beneficial interest in the stockholders, members, creditors or
empowered to other personsin-interest.
convey all of
its property to
trustees for the
benefit of
stockholders,
members, Except as otherwise provided for in Sections 93
creditors, and and 94 of this Code, upon the winding up of
other persons corporate affairs, any asset distributable to any
in interest. creditor or stockholder or member who is unknown
From and after or cannot be f ound shall be escheated in favor of
any such the national government.
conveyance by
the corporation Except by decrease of capital stock and as
of its property otherwise allowed by this Code, no corporation
in trust for the shall distribute any of its assets or property except
benefit of its upon lawful dissolution and after payment of all its
stockholders, debts and liabilities.
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
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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)

TITLE XV TITLE XV
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FOREIGN FOREIGN CORPORATIONS

CORPORATIO SEC. 140. Definition and Rights of Foreign Corporations. – For purposes of this
NS Code, a foreign corporation is one formed, organized or existing under laws
Section 123. other than the Philippines’ and whose laws allow Filipino citizens and
Definition and corporations to do business in its own country or State. It shall have the right to
rights of transact business in the Philippines after obtaining a license for that purpose in
foreign accordance with this Code and a certificate of authority from the appropriate
corporations. – government agency.
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
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appropriate
government
agency. (n)

Section 124. Application to existing foreign

corporations. – Every foreign corporation SEC. 141. Application to Existing Foreign
which on the date of the effectivity of this Corporations. – Every foreign corporation which
Code is authorized to do business in the on the date of the effectivity of this Code is
Philippines under a license therefore issued authorized to do business in the Philippines under
to it, shall continue to have such authority a license issued to it, shall continue to have such
under the terms and condition of its license, authority under the terms and conditions of its
subject to the provisions of this Code and license, subject to the provisions of this Code and
other special laws. (n) other special laws.

Section 125. Application for a license. – A SEC. 142. Application for a License. – A foreign
foreign corporation applying for a license to corporation applying for a license to transact
transact business in the Philippines shall business in the Philippines shall submit to the
submit to the Securities and Exchange Commission a copy of its articles of incorporation
Commission a copy of its articles of and bylaws, certified in accordance with law, and
incorporation and by-laws, certified in their translation to an official language of the
accordance with law, and their translation to Philippines, if necessary. The application shall be
an official language of the Philippines, if under oath and, unless already stated in its articles
necessary. The application shall be under of incorporation, shall specifically set forth the
oath and, unless already stated in its articles following:
of incorporation, shall specifically set forth
the following: (a) The date and term of incorporation;
1. The date and term of incorporation;
2. The address, including the street (b) The address, including the street number, of
number, of the principal office of the the principal office of the corporation in the country
corporation in the country or state of or State of incorporation;
incorporation;
3. The name and address of its resident (c) The name and address of its resident agent
agent authorized to accept summons and authorized to accept summons and process in all
process in all legal proceedings and, legal proceedings and all notices affecting the
pending the establishment of a local office, corporation, pending the establishment of a local
all notices affecting the corporation; office;
4. The place in the Philippines where the
corporation intends to operate; (d) The place in the Philippines where the
5. The specific purpose or purposes corporation intends to operate;
which the corporation intends to pursue in
the transaction of its business in the (e) The specific purpose or purposes which the
Philippines: Provided, That said purpose or corporation intends to pursue in the transaction of
purposes are those specifically stated in the its business in the Philippines: Provided, That said
certificate of authority issued by the purpose or purposes are those specifically stated
appropriate government agency; in the certificate of authority issued by the
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6. The names and addresses of the appropriate government agency;

present directors and officers of the
corporation; (f) The names and addresses of the present
7. A statement of its authorized capital directors and officers of the corporation;
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 (g) A statement of its authorized capital stock
stock and the aggregate number of shares and the aggregate number of shares which the
which the corporation has issued, itemized corporation has authority to issue, itemized by
by classes, par value of shares, shares class, par value of shares, shares without par
without par value, and series, if any; value, and series, if any;
9. A statement of the amount actually
paid in; and (h) A statement of its outstanding capital stock
10. Such additional information as may be and the aggregate number of shares which the
necessary or appropriate in order to enable corporation has issued, itemized by class, par
the Securities and Exchange Commission to value of shares, shares without par value, and
determine whether such corporation is series, if any;
entitled to a license to transact business in
the Philippines, and to determine and (i) A statement of the amount actually paid in;
assess the fees payable. and

Attached to the application for license shall (j) Such additional information as may be
be a duly executed certificate under oath by necessary or appropriate in order to enable the
the authorized official or officials of the Commission to determine whether such
jurisdiction of its incorporation, attesting to corporation is entitled to a license to transact
the fact that the laws of the country or state business in the Philippines, and to determine and
of the applicant allow Filipino citizens and assess the fees payable.
corporations to do business therein, and that
the applicant is an existing corporation in Attached to the application for license shall be a
good standing. If such certificate is in a certificate under oath duly executed by the
foreign language, a translation thereof in authorized official or officials of the jurisdiction of
English under oath of the translator shall be its incorporation, attesting to the fact that the laws
attached thereto. of the country or State of the applicant allow
Filipino citizens and corporations to do business
The application for a license to transact therein, and that the applicant is an existing
business in the Philippines shall likewise be corporation in good standing. If the certificate is in
accompanied by a statement under oath of a foreign language, a translation thereof in English
the president or any other person authorized under oath of the translator shall be attached to
by the corporation, showing to the the application.
satisfaction of the Securities and Exchange
Commission and other governmental The application for a license to transact business
agency in the proper cases that the in the Philippines shall likewise be accompanied
applicant is solvent and in sound financial by a statement under oath of the president or any
condition, and setting forth the assets and
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liabilities of the corporation as of the date other person authorized by the corporation,
not exceeding one (1) year immediately showing to the satisfaction of the Commission and
prior to the filing of the application. when appropriate, other governmental agencies
Foreign banking, financial and insurance that the applicant is solvent and in sound financial
corporations shall, in addition to the above condition, setting forth the assets and liabilities of
requirements, comply with the provisions of the corporation as of the date not exceeding one
existing laws applicable to them. In the case (1) year immediately prior to the filing of the
of all other foreign corporations, no application.
application for license to transact business
in the Philippines shall be accepted by the Foreign banking, financial, and insurance
Securities and Exchange Commission 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

without previous authority from the accepted by the Commission without previous
appropriate government agency, whenever authority from the appropriate government agency,
required by law. (68a) whenever required by law.

SEC. 143. Issuance of a License. – If the

Section 126. Issuance of a license. – If the Commission is satisfied that the applicant has
Securities and Exchange Commission is complied with all the requirements of this Code
satisfied that the applicant has complied and other special laws, rules and regulations, the
with all the requirements of this Code and Commission shall issue a license to transact
other special laws, rules and regulations, the business in the Philippines to the applicant for the
Commission shall issue a license to the purpose or purposes specified in such license.
applicant to transact business in the
Upon issuance of the license, such foreign
Philippines for the purpose or purposes
corporation may commence to transact business
specified in such license. Upon issuance of
the license, such foreign corporation may in the Philippines and continue to do so for as long
commence to transact business in the as it retains its authority to act as a corporation
Philippines and continue to do so for as long under the laws of the country or State of its
as it retains its authority to act as a incorporation, unless such license is sooner
corporation under the laws of the country or surrendered, revoked, suspended, or annulled in
state of its incorporation, unless such accordance with this Code or other special laws.
license is sooner surrendered, revoked, Within sixty (60) days after the issuance of the
suspended or annulled in accordance with license to transact business in the Philippines, the
this Code or other special laws. licensee, except foreign banking or insurance
Within sixty (60) days after the issuance of corporations, shall deposit with the Commission
the license to transact business in the for the benefit of present and future creditors of
Philippines, the license, except foreign
the licensee in the Philippines, securities
banking or insurance corporation, shall
deposit with the Securities and Exchange satisfactory to the Commission, consisting of
Commission for the benefit of present and bonds or other evidence of indebtedness of the
future creditors of the licensee in the Government of the Philippines, its political
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Philippines, securities satisfactory to the subdivisions and instrumentalities, or of

Securities and Exchange Commission, government-owned or controlled corporations and
consisting of bonds or other evidence of entities, shares of stock or debt securities that are
indebtedness of the Government of the registered under Republic Act No. 8799, otherwise
Philippines, its political subdivisions and known as “The Securities Regulation Code”,
instrumentalities, or of government-owned shares of stock in domestic corporations listed in
or controlled corporations and entities, the stock exchange, shares of stock in domestic
shares of stock in "registered enterprises" insurance companies and banks, any financial
as this term is defined in Republic Act No. instrument determined suitable by the
5186, shares of stock in domestic Commission, or any combination thereof with an
corporations registered in the stock actual market value of at least Five hundred
exchange, or shares of stock in domestic thousand (P500,000.00) pesos or such other
insurance companies and banks, or any amount that may be set by the Commission:
combination of these kinds of securities, Provided however, That within six (6) months after
with an actual market value of at least one each fiscal year of the licensee, the Commission
hundred thousand (P100,000.) pesos; shall require the licensee to deposit additional
Provided, however, That within six (6) securities or financial instruments equivalent in
months after each fiscal year of the actual market value to two (2%) percent of the
licensee, the Securities and Exchange amount by which the licensee’s gross income for
Commission shall require the licensee to that fiscal year exceeds Ten million pesos
deposit (P10,000,000.00). The Commission shall also
require the deposit of additional securities or

additional securities equivalent in actual financial instruments if the actual market value of
market value to two (2%) percent of the the deposited securities or financial instruments
amount by which the licensee’s gross has decreased by at least ten (10%) percent of
income for that fiscal year exceeds five their actual market value at the time they were
million (P5,000,000.00) pesos. The deposited. The Commission may, at its discretion,
Securities and Exchange Commission shall release part of the additional deposit if the gross
also require deposit of additional securities if
income of the licensee has decreased, or if the
the actual market value of the securities on
actual market value of the total deposit has
deposit has decreased by at least ten (10%)
percent of their actual market value at the increased, by more than ten (10%) percent of their
time they were deposited. The Securities actual market value at the time they were
and Exchange Commission may at its deposited. The Commission may, from time to
discretion release part of the additional time, allow the licensee to make substitute
securities deposited with it if the gross deposits for those already on deposit as long as
income of the licensee has decreased, or if the licensee is solvent. Such licensee shall be
the actual market value of the total entitled to collect the interest or dividends on such
securities on deposit has increased, by deposits. In the event the licensee ceases to do
more than ten (10%) percent of the actual business in the Philippines, its deposits shall be
market value of the securities at the time returned, upon the licensee’s application therefor
they were deposited. The Securities and and upon proof to the satisfaction of the
Exchange Commission may, from time to
Commission that the licensee has no liability to
time, allow the licensee to substitute other
Philippine residents, including the Government of
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securities for those already on deposit as the Republic of the Philippines. For purposes of
long as the licensee is solvent. Such computing the securities deposit, the
licensee shall be entitled to collect the composition of gross income and allowable
interest or dividends on the securities deductions therefrom shall be in accordance
deposited. In the event the licensee ceases with the rules of the Commission.
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)

Section 127. Who may be a resident agent. SEC. 144. Who May be a Resident Agent. – A
– A resident agent may be either an resident agent may be either an individual residing
individual residing in the Philippines or a in the Philippines or a domestic corporation
domestic corporation lawfully transacting lawfully transacting business in the Philippines:
business in the Philippines: Provided, That Provided, That an individual resident agent must
in the case of an individual, he must be of be of good moral character and of sound financial
good moral character and of sound financial standing: Provided further, that in case of a
standing. (n) domestic corporation who will act as a
resident agent, it must likewise be of sound
financial standing and must show proof that it
is in good standing as certified by the
Commission.

Section 128. Resident agent; service of SEC. 145. Resident Agent; Service of Process. –
process. – The Securities and Exchange As a condition to the issuance of the license for

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Commission shall require as a condition a foreign corporation to transact business in

precedent to the issuance of the license to the Philippines, such corporation shall file with
transact business in the Philippines by any the Commission a written power of attorney
foreign corporation that such corporation file designating a person who must be a resident
with the Securities and Exchange of the Philippines, on whom summons and
Commission a written power of attorney other legal processes may be served in all
designating some person who must be a actions or other legal proceedings against
resident of the Philippines, on whom any such corporation, and consenting that service
summons and other legal processes may be upon such resident agent shall be admitted
served in all actions or other legal and held as valid as if served upon the duly
proceedings against such corporation, and authorized officers of the foreign corporation
consenting that service upon such resident at its home office. Such foreign corporation
agent shall be admitted and held as valid as shall likewise execute and file with the
if served upon the duly authorized officers of Commission an agreement or stipulation,
the foreign corporation at its home office. executed by the proper authorities of said
Any such foreign corporation shall likewise corporation, in form and substance as follows:
execute and file with the Securities and
Exchange Commission an agreement or “The (name of foreign corporation) hereby
stipulation, executed by the proper stipulates and agrees, in consideration of being
authorities of said corporation, in form and granted a license to transact business in the
substance as follows: Philippines, that if the corporation shall cease to
"The (name of foreign corporation) does transact business in the Philippines, or shall be
hereby stipulate and agree, in consideration without any resident agent in the Philippines on
of its being granted by the Securities and whom any summons or other legal processes may
Exchange Commission a license to transact be served, then service of any summons or other
business in the Philippines, that if at any legal process may be made upon the Commission
time said corporation shall cease to transact in any action or proceeding arising out of any
business in the Philippines, or shall be business or transaction which occurred in the
without any resident agent in the Philippines Philippines and such service shall have the same
on whom any summons or other legal force and effect as if made upon the duly-
processes may be served, then in any authorized officers of the corporation at its home
action or proceeding arising out of any office.”
business or transaction which occurred in
the Philippines, service of any summons or Whenever such service of summons or other
other legal process may be made upon the process is made upon the Commission, the
Securities and Exchange Commission and Commission shall, within ten (10) days thereafter,
that such service shall have the same force transmit by mail a copy of such summons or other
and effect as if made upon the duly- legal process to the corporation at its home or
authorized officers of the corporation at its principal office. The sending of such copy by the
home office." Commission shall be a necessary part of and shall
Whenever such service of summons or complete such service. All expenses incurred by
other process shall be made upon the the Commission for such service shall be paid in
Securities and Exchange Commission, the advance by the party at whose instance the
Commission shall, within ten (10) days service is made.
thereafter, transmit by mail a copy of such
summons or other legal process to the It shall be the duty of the resident agent to
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corporation at its home or principal office. immediately notify the Commission in writing of
The sending of such copy by the any change in the resident agent’s address.
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)

Section 129. Law applicable. – Any SEC. 146. Law Applicable. – A foreign corporation
foreign corporation lawfully doing business lawfully doing business in the Philippines shall be
in the Philippines shall be bound by all laws, bound by all laws, rules and regulations applicable
rules and regulations applicable to domestic to domestic corporations of the same class, except
corporations of the same class, except such those which provide for the creation, formation,
only as provide for the creation, formation, organization or dissolution of corporations or those
organization or dissolution of corporations or which fix the relations, liabilities, responsibilities, or
those which fix the relations, liabilities, duties of stockholders, members, or officers of
responsibilities, or duties of stockholders, corporations to each other or to the corporation.
members, or officers of corporations to each
other or to the corporation. (73a)

Section 130. Amendments to articles of

incorporation or by-laws of foreign SEC. 147. Amendments to Articles of
corporations. – Whenever the articles of Incorporation or Bylaws of Foreign Corporations. –
incorporation or by-laws of a foreign Whenever the articles of incorporation or bylaws of
corporation authorized to transact business a foreign corporation authorized to transact
in the Philippines are amended, such foreign business in the Philippines are amended, such
corporation shall, within sixty (60) days after foreign corporation shall, within sixty (60) days
the amendment becomes effective, file with after the amendment becomes effective, file with
the Securities and Exchange Commission, the Commission, and in the proper cases, with the
and in the proper cases with the appropriate appropriate government agency, a duly
government agency, a duly authenticated
authenticated copy of the amended articles of
copy of the articles of incorporation or
bylaws, as amended, indicating clearly in incorporation or bylaws, indicating clearly in
capital letters or by underscoring the change capital letters or underscoring the change or
or changes made, duly certified by the changes made, duly certified by the authorized
authorized official or officials of the country official or officials of the country or state of
or state of incorporation. The filing thereof incorporation. Such filing shall not in itself enlarge
shall not of itself enlarge or alter the purpose or alter the purpose or purposes for which such
or purposes for which such corporation is corporation is authorized to transact business in
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authorized to transact business in the the Philippines.

Philippines. (n)

Section 131. Amended license. – A foreign SEC. 148. Amended License. – A foreign
corporation authorized to transact business corporation authorized to transact business in the
in the Philippines shall obtain an amended Philippines shall obtain an amended license in the
license in the event it changes its corporate event it changes its corporate name, or desires to
name, or desires to pursue in the Philippines pursue other or additional purposes in the
other or additional purposes, by submitting Philippines, by submitting an application with the
an application therefor to the Securities and Commission, favorably endorsed by the
Exchange Commission, favorably endorsed appropriate government agency in the proper

by the appropriate government agency in the cases.

proper cases. (n)

Section 132. Merger or consolidation SEC. 149. Merger or Consolidation Involving a

involving a foreign corporation licensed in Foreign Corporation Licensed in the Philippines. –
the One or more foreign corporations authorized to
Philippines. – One or more foreign transact business in the Philippines may merge or
corporations authorized to transact business consolidate with any domestic corporation or
in the Philippines may merge or consolidate corporations if permitted under Philippine laws and
with any domestic corporation or by the law of its incorporation: Provided, That the
corporations if such is permitted under requirements on merger or consolidation as
Philippine laws and by the law of its provided in this Code are followed.
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
Whenever a foreign corporation party to a merger or consolidation in its home
authorized to transact business in the country or State as permitted by the law
Philippines shall be a party to a merger or authorizing its incorporation, such foreign
consolidation in its home country or state as corporation shall, within sixty (60) days after the
permitted by the law of its incorporation, effectivity of such merger or consolidation, file with
such foreign corporation shall, within sixty the Commission, and in proper cases, with the
(60) days after such merger or consolidation appropriate government agency, a copy of the
becomes effective, file with the Securities articles of merger or consolidation duly
and Exchange Commission, and in proper authenticated by the proper official or officials of
cases with the appropriate government the country or state under whose laws, the merger
agency, a copy of the articles of merger or or consolidation was effected: Provided however,
consolidation duly authenticated by the That if the absorbed corporation is the foreign
proper official or officials of the country or corporation doing business in the Philippines, the
state under the laws of which merger or latter shall at the same time file a petition for
consolidation was effected: Provided, withdrawal of its license in accordance with this
however, That if the absorbed corporation is Title.
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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. (n)

Section 133. Doing business without a

license. – No foreign corporation transacting SEC. 150. Doing Business Without a License. –
business in the Philippines without a license, No foreign corporation transacting business in the
or its successors or assigns, shall be Philippines without a license, or its successors or
permitted to maintain or intervene in any assigns, shall be permitted to maintain or
action, suit or proceeding in any court or intervene in any action, suit or proceeding in any
administrative agency of the Philippines; but court or administrative agency of the Philippines;
such corporation may be sued or proceeded but such corporation may be sued or proceeded
against before Philippine courts or against before Philippine courts or administrative
administrative tribunals on any valid cause tribunals on any valid cause of action recognized
of action recognized under Philippine laws.
under Philippine laws.
(69a)

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Section 134. Revocation of license. – SEC. 151. Revocation of License. – Without

Without prejudice to other grounds provided prejudice to other grounds provided under special
by special laws, the license of a foreign laws, the license of a foreign corporation to
corporation to transact business in the transact business in the Philippines may be
Philippines may be revoked or suspended revoked or suspended by the Commission upon
by the Securities and Exchange any of the following grounds:
Commission upon any of the following
grounds: (a) Failure to file its annual report or pay any
1. Failure to file its annual report or pay fees as required by this Code;
any fees as required by this Code;
2. Failure to appoint and maintain a (b) Failure to appoint and maintain a resident
resident agent in the Philippines as required agent in the Philippines as required by this Title;
by this
Title; (c) Failure, after change of its resident agent or
3. Failure, after change of its resident address, to submit to the Commission a statement
agent or of his address, to submit to the of such change as required by this Title;
Securities and Exchange Commission a
statement of such change as required by this (d) Failure to submit to the Commission an
Title; 4. Failure to submit to the Securities authenticated copy of any amendment to its
and Exchange Commission an authenticated articles of incorporation or bylaws or of any
copy of any amendment to its articles of articles of merger or consolidation within the time
incorporation or by-laws or of any articles of prescribed by this Title;
merger or consolidation within the time
prescribed by this Title; (e) A misrepresentation of any material matter
5. A misrepresentation of any material in any application, report, affidavit or other
matter in any application, report, affidavit or document submitted by such corporation pursuant
other document submitted by such to this
corporation pursuant to this Title; Title;
6. Failure to pay any and all taxes,
imposts, assessments or penalties, if any,
(f) Failure to pay any and all taxes, imposts,
lawfully due to the Philippine Government or
assessments or penalties, if any, lawfully due to
any of its agencies or political subdivisions;
the Philippine Government or any of its agencies
7. Transacting business in the
or political subdivisions;
Philippines outside of the purpose or
purposes for which such corporation is
(g) Transacting business in the Philippines
authorized under its license;
outside of the purpose or purposes for which such
8. Transacting business in the
corporation is authorized under its license;
Philippines as agent of or acting for and in
behalf of any foreign corporation or entity
not duly licensed to do business in the (h) Transacting business in the Philippines as
Philippines; or agent of or acting on behalf of any foreign
9. Any other ground as would render it corporation or entity not duly licensed to do
unfit to transact business in the Philippines. business in the Philippines; or
(n)
(i) Any other ground as would render it unfit to
transact business in the Philippines.
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Section 135. Issuance of certificate of SEC. 152. Issuance of Certificate of Revocation. –

revocation. – Upon the revocation of any Upon the revocation of the license to transact
such license to transact business in the business in the Philippines, the Commission shall
Philippines, the Securities and Exchange issue a corresponding certificate of revocation,
Commission shall issue a corresponding furnishing a copy thereof to the appropriate
certificate of revocation, furnishing a copy government agency in the proper cases.
thereof to the appropriate government
agency in the proper cases. The Commission shall also mail the notice and
The Securities and Exchange copy of the certificate of revocation to the
Commission shall also mail to the corporation, at its registered office in the
corporation at its registered office in the Philippines.
Philippines a notice of such revocation
accompanied by a copy of the certificate of
revocation. (n)

Section 136. Withdrawal of foreign SEC. 153. Withdrawal of foreign corporations. –

corporations. – Subject to existing laws and Subject to existing laws and regulations, a foreign
regulations, a foreign corporation licensed to corporation licensed to transact business in the
transact business in the Philippines may be Philippines may be allowed to withdraw from the
allowed to withdraw from the Philippines by Philippines by filing a petition for withdrawal of
filing a petition for withdrawal of license. No license. No certificate of withdrawal shall be
certificate of withdrawal shall be issued by issued by the Commission unless all the following
the Securities and Exchange Commission requirements are met:
unless all the following requirements are
met; 1. All claims which have accrued in the (a) All claims which have accrued in the
Philippines have been paid, compromised or Philippines have been paid, compromised or
settled; settled;
2. All taxes, imposts, assessments, and
penalties, if any, lawfully due to the (b) All taxes, imposts, assessments, and
Philippine Government or any of its penalties, if any, lawfully due to the Philippine
agencies or political subdivisions have been Government or any of its agencies or political
paid; and subdivisions have been paid; and
3. The petition for withdrawal of license
has been published once a week for three (c) The petition for withdrawal of license has
(3) consecutive weeks in a newspaper of been published once a week for three (3)
general circulation in the Philippines. consecutive weeks in a newspaper of general
circulation in the Philippines.

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TITLE XVI
INVESTIGATIONS, OFFENSES, AND
PENALTIES

SEC. 154. Investigation and Prosecution of

Offenses. – The Commission may investigate
an alleged violation of this Code, rule,
regulation, or order of the Commission.

The Commission may publish its findings,

orders, opinions, advisories, or information
concerning any such violation, as may be
relevant to the general public or to the parties

concerned, subject to the provisions of

Republic Act No. 10173, otherwise known as
the “Data Privacy Act of 2012”, and other
pertinent laws.

The Commission shall give reasonable notice

to and coordinate with the appropriate
regulatory agency prior to any such
publication involving companies under their
special regulatory jurisdiction.

SEC. 155. Administration of Oaths, Subpoena

of Witnesses and Documents. – The
Commission, through its designated officer,
may administer oaths and affirmations, 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.

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SEC. 156. Cease and Desist Orders. –

Whenever the Commission has reasonable
basis to believe that a person has violated, or
is about to violate, this Code, 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 parte order 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.

SEC. 157. 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 (P30,000.00).
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 (P1,000.00)
until the order, decision, or subpoena is
complied with.

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Section 144. Violations of the Code. – SEC. 158. Administrative Sanctions. – If, after
Violations of any of the provisions of this due notice and hearing, the Commission finds
Code or its amendments not otherwise that any provision of this Code, rules or
specifically penalized therein shall be regulations, or any of the Commission’s
punished by a fine of not less than one orders has been violated, the Commission may
thousand (P1,000.00) pesos but not more impose any or all of the following sanctions,
taking into consideration the extent of
than ten thousand (P10,000.00) pesos or
participation, nature, effects, frequency and
by imprisonment for not less than thirty
seriousness of the violation:
(30) days but not more than five (5)
years, or both, in the discretion of the 1.Imposition of a fine ranging from Five
court. If the violation is committed by a thousand pesos (P5,000.00) to Two million
corporation, the same may, after notice pesos (P2,000,000.00), and not more than One
and hearing, be dissolved in appropriate thousand pesos (P1,000.00) for each day of
proceedings before the Securities and continuing violation but in no case to exceed
Exchange Commission: Provided, That Two million pesos (P2,000,000.00);
such dissolution shall not preclude the 2.Issuance of a permanent cease-and-desist
institution of appropriate action against order;
the director, trustee or officer of the
corporation responsible for said 3.Suspension or revocation of the certificate of
violation: Provided, further, That nothing incorporation; and
in this section shall be construed to
4.Dissolution of the corporation and forfeiture
repeal the other causes for dissolution of
of its assets under the conditions in Title XIV
a corporation provided in this Code. (190
of this Code.
1/2 a)

SEC. 159. Unauthorized Use of Corporate

Name; Penalties. – The unauthorized use of a
corporate name shall be punished with a fine
ranging from Ten thousand pesos (P10,000.00)
to Two hundred thousand pesos (P200,000.00).

SEC. 160. Violation of Disqualification

Provision; Penalties. – When, despite the
knowledge of the existence of a ground for
disqualification as provided in Sec. 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 by a fine ranging
from Ten thousand pesos (P10,000.00) to Two
hundred thousand pesos (P200,000.00) at the

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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
(P20,000.00) to Four hundred thousand pesos
(P400,000.00).

SEC. 161. 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 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
(P10,000.00) to Two hundred thousand pesos
(P200,000.00), 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
(P20,000.00) to Four hundred thousand pesos
(P400,000.00).

The penalties imposed under this section shall

be without prejudice to the Commission’s
exercise of its contempt powers under Section
157 hereof.

SEC. 162. 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
(P20,000.00) to Two hundred thousand pesos
(P200,000.00). When the wrongful certification
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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 (P40,000.00) to Four hundred
thousand pesos (P400,000.00).

SEC. 163. 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 (P80,000.00) to Five hundred
thousand pesos (P500,000.00). 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 with a fine ranging from One
hundred thousand pesos (P100,000.00) to Six
hundred thousand pesos (P600,000.00).

SEC. 164. 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
(P200,000.00) to Two million pesos
(P2,000,000.00). When the violation of this
provision is injurious or detrimental to the
public, the penalty is a fine ranging from Four
hundred thousand pesos (P400,000.00) to Five
million pesos (P5,000,000.00).

SEC. 165. 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 (P200,000.00) to Two million pesos
(P2,000,000.00). When the violation of this
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provision is injurious or detrimental to the

public, the penalty is a fine ranging from Four
hundred thousand pesos (P400,000.00) to Five
million pesos (P5,000,000.00).

SEC. 166. Acting as Intermediaries for Graft

and Corrupt Practices; Penalties. – A
corporation used for fraud, for committing or
concealing graft and corrupt practices shall be
liable for a fine ranging from One hundred
thousand pesos (P100,000.00) to Five million
pesos (P5,000,000.00).

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.

SEC. 167. 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 (P100,000.00) to One million
pesos (P1,000,000.00).

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SEC. 168. 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
(P500,000.00) to One million pesos
(P1,000,000.00).

SEC. 169. 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 (P100,000.00) to
One million pesos (P1,000,000.00).

SEC. 170. 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 (P10,000.00)
but not more than One million pesos
(P1,000,000.00). 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 provided in
this Code.
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Liability for any of the foregoing offenses shall

be separate from any other administrative,
civil, or criminal liability under this Code and
other laws.

SEC. 171. 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.

SEC. 172. Liability of Aiders and Abettors and

Other Secondary Liability. – Anyone who shall
aid, abet, counsel, command, induce, or
procure 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.

TITLE XVI TITLE XVII

MISCELLANEOU MISCELLANEOUS PROVISIONS
S PROVISIONS
SEC. 173. Outstanding Capital Stock Defined. – The term “outstanding
Section 137. capital stock”, as used in this Code, shall mean the total shares of stock
Outstanding issued under binding subscription agreements to subscribers or stockholders,
capital stock whether fully or partially paid, except treasury shares.
defined. – The
term "outstanding
capital stock", as
used in this
Code, means the
total shares of
stock issued
under binding
subscription
agreements to
subscribers or
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stockholders,
whether or not
fully or partially
paid, except
treasury shares.
(n)

Section 138. SEC. 174. Designation of Governing Boards. – The provisions of specific
Designation of provisions of this Code to the contrary notwithstanding, nonstock or special
governing corporations may, through their articles of incorporation or their bylaws,
boards. – The designate their governing boards by any name other than as board of
provisions of trustees.
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)

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Section 139.
Incorporation and
other fees. – The
Securities and
Exchange
Commission is
hereby
authorized to
collect and
SEC. 175 . Collection and Use of Registration ,
receive fees as
Incorporation and Other Fee s. – For a more
authorized by law
effective implementation of this Code, the
or by rules and
Commission is hereby authorized to collect,
regulations
retain, and use fees, fines, and other charges
promulgated by
pursuant to this Code and its rules and
the
regulations. The amount collected shall be
Commission.1âw
deposited and maintaine d in a separate account
phi1 (n) 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
reasonable employee allowance, employee
health care services, and other insurance,
employee advancement
professionalization, legal assistance, seminars,
and other professional fees.
private sector,

career and

Section 140. SEC. 176. Stock Ownership in Corporations. –

Stock ownership Pursuant to the duties specified by Article XIV of the
in certain Constitution, the National Economic and Development Authority (NEDA)
corporations. – shall, from time to time, determine if the corporate vehicle has been used by
Pursuant to the any corporation, business, or industry to
duties specified
by Article XIV of
the Constitution,
the National
Economic and
Development
Authority shall,
from time to time,
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make a
determination of
whether the
corporate

vehicle has been used by any corporation or frustrate the provisions of this Code or applicable
by business or industry to frustrate the laws, and shall submit to Congress, whenever
provisions thereof or of applicable laws, and deemed necessary, a report its findings, including
shall submit to the Batasang Pambansa, recommendations for their prevention or
whenever deemed necessary, a report of its correction.
findings, including recommendations for
their prevention or correction. The Congress of the Philippines may set
Maximum limits may be set by the Batasang maximum limits for stock ownership of individuals
Pambansa for stockholdings in corporations or groups of individuals related to each other by
declared by it to be vested with a public consanguinity, affinity, or by close business
interest pursuant to the provisions of this interests, in corporations declared to be vested
section, belonging to individuals or groups of with public interest pursuant to the provisions of
individuals related to each other by this section, or whenever necessary to prevent
consanguinity or affinity or by close anticompetitive practices as provided in
Republic Act No. 10667, otherwise known as
business interests, or whenever it is
the “Philippine Competition Act”, or to
necessary to achieve national objectives,
implement national economic policies designed to
prevent illegal monopolies or combinations promote general welfare and economic
in restraint or trade, or to implement national development, as declared in laws, rules, and
economic policies declared in laws, rules regulations.
and regulations designed to promote the
general welfare and foster economic In recommending to the Congress which
development. In recommending to the corporations, businesses and industries will be
Batasang Pambansa corporations, declared as vested with public interest, and in
businesses or industries to be declared formulating proposals for limitations on stock
vested with a public interest and in ownership, the NEDA shall consider the type and
formulating proposals for limitations on stock nature of the industry, size of the enterprise,
ownership, the National Economic and economies of scale, geographic location, extent of
Development Authority shall consider the Filipino ownership, labor intensity of the activity,
type and nature of the industry, the size of export potential, as well as other factors which are
the enterprise, the economies of scale, the germane to the realization and promotion of
geographic location, the extent of Filipino business and industry.
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.

Section 141. Annual report or corporations. SEC. 177. Reportorial requirements of

– Every corporation, domestic or foreign, corporations. – Except as otherwise provided
lawfully doing business in the Philippines in this Code or in the rules issued by the
Commission, every corporation, domestic or
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shall submit to the Securities and Exchange foreign, doing business in the Philippines shall
Commission an annual report of its submit to the Commission:
operations, together with a financial
statement of its assets and liabilities, (a) Annual financial statements audited by an
certified by any independent certified public independent certified public accountant:
accountant in appropriate cases, covering Provided, That if the total assets or total
the preceding fiscal year and such other liabilities of the corporation are less than Six
requirements as the Securities and hundred thousand pesos (P600,000.00) the
Exchange Commission may require. Such financial statements shall be certified under
report shall be submitted within such period

as may be prescribed by the Securities and oath by the corporation’s treasurer or chief
Exchange Commission. (n) 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;

(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 under 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
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with a request for confidential treatment of the

report and the specific grounds for the grant
thereof.

Section 142. Confidential nature of SEC. 178. Visitorial Power and Confidential
examination results. – All interrogatories Nature of Examination Results. – The
propounded by the Securities and Exchange Commission shall exercise visitorial powers
Commission and the answers thereto, as over all corporations, which powers shall
well as the results of any examination made include the examination and inspection of
by the Commission or by any other official records, regulation and supervision of
activities, enforcement of compliance, and
authorized by law to make an examination
imposition of sanctions in accordance with
of the operations, books and records of any
this Code.
corporation, shall be kept strictly
confidential, except insofar as the law may
require the

same to be Should the corporation, without justifiable cause, refuse or obstruct the
made public Commission’s exercise of its visitorial powers, the Commission may revoke
or where its certificate of incorporation, without prejudice to the imposition of other
such penalties and sanctions under this Code.
interrogatorie
s, answers or All interrogatories propounded by the Commission and the answers thereto, as
results are well as the results of any examination made by the Commission or any other
necessary to official authorized by law to make an examination of the operations, books, and
be presented records of any corporation, shall be kept strictly confidential, except when the law
as evidence requires the same to be made public, when necessary for the Commission to take
before any action to protect the public or to issue orders in the exercise of its powers under
court. (n) this Code, or where such interrogatories, answers or results are necessary to be
presented as evidence before any Court.

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Section 143.
Rule-making
power of the
Securities
and
Exchange
Commission. SEC. 179. Powers, functions, and jurisdiction of
– The the Commission . – The Commiss ion shall have
Securities the power and authority to:
and
Exchange (a) Exercise supervision and jurisdiction over
all corporations and persons acting on their
Commission
behalf, except as otherwise provided under this
shall have
Code;
the power
and authority (b) Pursuant to Presidential Decree 902 -A,
to implement retain jurisdiction over pending cases involving
the intracorporate disputes submitted for final
provisions of resolution. Commission shall
this Code, pending
and to The retain
promulgate jurisdiction over suspension of payment/rehabilitation cases filed as of 30
rules and June 2000 until finally disposed.
regulations
reasonably (c) Impose sanctions for the violation of this Code, its implementing rules,
necessary to and orders of the
enable it to Commission;
perform its
duties (d) Promote corporate governance and the protection of minority
hereunder, investors, through, among others, the issuance of rules and regulations
particularly in consistent with international best practices;
the
prevention of
fraud and
abuses on
the part of
the
controlling
stockholders,
members,
directors,
trustees or
officers. (n)

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(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, 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
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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.

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SEC. 180. 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, not ices, and documents
required under this Code, and sharing of
pertinent information with other government
agencies.

SEC. 181. Arbitration for Unlisted

Corporations. – An arbitration agreement may
be provided in the articles of incorporation or
by-laws of an unlisted corporation. When such
an agreement is in place, disputes between the
corporation, its stockholders or members,
which arise from the implementation of the
articles of incorporation or by-laws, or from
intracorporate relations, shall be referred to
arbitration. A dispute shall be non-arbitrable
when it involves criminal offenses and
interests of third parties.

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The arbitration agreement shall be binding on

the corporation, its directors, trustees,
officers, and executives or managers.

To be enforceable, the arbitration agreement

should indicate the number of arbitrators and
the procedure for their appointment. The
power to appoint the arbitrators forming the
arbitral tribunal shall be granted to a
designated independent third party. Should the
third party fail to appoint the arbitrators in the
manner and within the period specified in the
arbitration agreement, the parties may request
the Commission to appoint the arbitrators. In
any case, arbitrators must be accredited or
must belong to organizations accredited for
the purpose of arbitration.

The arbitral tribunal shall have the power to

rule on its own jurisdiction and on questions
relating to the validity of the arbitration
agreement. When an intracorporate 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, by-
laws, 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 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.
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SEC. 182. 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
above-mentioned corporations.

SEC. 183. Applicability of the Code. – Nothing

in this law shall be construed as amending
existing provisions of special laws governing
the registration, regulation, monitoring and
supervision of special corporations such as
banks, non-bank 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, non-bank
financial institutions, and insurance companies
under their supervision and regulation.

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Section 145. Amendment or repeal. – No SEC. 184. Effect of Amendment or Repeal of

right or remedy in favor of or against any This Code, or the Dissolution of a Corporation.
corporation, its stockholders, members, – No right or remedy in favor of or against any
directors, trustees, or officers, nor any corporation, its stockholders, members,
liability incurred by any such corporation, directors, trustees, or officers, nor any liability
stockholders, members, directors, trustees, incurred by any such corporation,
stockholders, members, directors, trustees, or
or officers, shall be removed or impaired
officers, shall be removed or impaired either by
either by the subsequent dissolution of said
the subsequent dissolution of said corporation
corporation or by any subsequent or by any subsequent amendment or repeal of
amendment or repeal of this Code or of any this Code or of any part thereof.
part thereof. (n)

Section 146. Repealing clause. – Except as SEC. 187. Repealing clause. – Batas Pambansa
expressly provided by this Code, all laws or Blg. 68 otherwise known as “The Corporation
parts thereof inconsistent with any provision Code of the Philippines” is hereby repealed.
of this Code shall be deemed repealed. (n) 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.

Section 147. Separability of provisions. – SEC. 186. Separability clause. – If any

Should any provision of this Code or any provision of this Act is declared invalid or
part thereof be declared invalid or unconstitutional, other provisions hereof
unconstitutional, the other provisions, so far which are not affected thereby shall continue
as they are separable, shall remain in force. to be in full force and effect.
(n)

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Section 148. Applicability to existing

corporations. – All corporations lawfully
existing and doing business in SEC. the 187. Applicability to Existing Corporation. – A
Philippines on the date of the effectivitycorporation
of lawfully existing and
this Code and heretofore authorized, business in the Philippines affected by the new
licensed or registered by the Securities requirements
and of this Code shall be given a
Exchange period of not more than two (2) years from the
Commission, shall be deemed to have been effectivity of this Act within which to comply.
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)
doing

Section 149. Effectivity. – This Code shall SEC. 188. Effectivity. – This Act shall take
take effect immediately upon its approval. effect upon completion of its publication in the
Official Gazette or in at least two (2)
newspapers of general circulation.

Published in Manila Bulletin and Business Mirror on

February 23, 2019.

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