The Corporation Code of The Philippines
The Corporation Code of The Philippines
The Corporation Code of The Philippines
TITLE I
GENERAL PROVISIONS
DEFINITIONS AND CLASSIFICATIONS
Section 1. Title of the Code. – This Code shall be known as "The Corporation Code
of the Philippines." (n)
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except those classified and issued as "preferred" or "redeemable" shares, unless
otherwise provided in this Code:
Provided, further, That there shall always be a class or series of shares which have
complete voting rights. Any or all of the shares or series of shares may have a par
value or have no par value as may be provided for in the articles of incorporation:
Provided, however, That banks, trust companies, insurance companies, public
utilities, and building and loan associations shall not be permitted to issue nopar
value shares of stock.
Preferred shares of stock issued by any corporation may be given preference in the
distribution of the assets of the corporation in case of liquidation and in the
distribution of dividends, or such other preferences as may be stated in the articles
of incorporation which are not violative of the provisions of this Code:
Provided, That preferred shares of stock may be issued only with a stated par value.
The board of directors, where authorized in the articles of incorporation, may fix the
terms and conditions of preferred shares of stock or any series thereof:
Provided, That such terms and conditions shall be effective upon the filing of a
certificate thereof with the Securities and Exchange Commission.
Shares of capital stock issued without par value shall be deemed fully paid and non-
assessable and the holder of such shares shall not be liable to the corporation or to
its creditors in respect thereto: Provided; That shares without par value may not be
issued for a consideration less than the value of five (P5.00) pesos per share:
Provided, further, That the entire consideration received by the corporation for its
nopar value shares shall be treated as capital and shall not be available for
distribution as dividends.
A corporation may, furthermore, classify its shares for the purpose of insuring
compliance with constitutional or legal requirements.
Where the articles of incorporation provide for nonvoting shares in the cases
allowed by this Code, the holders of such shares shall nevertheless be entitled to
vote on the following matters:
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4. Incurring, creating or increasing bonded indebtedness;
Section 9. Treasury shares. – Treasury shares are shares of stock which have been
issued and fully paid for, but subsequently reacquired by the issuing corporation by
purchase, redemption, donation or through some other lawful means. Such shares
may again be disposed of for a reasonable price fixed by the board of directors. (n)
TITLE II
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INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS
Section 11. Corporate term. – A corporation shall exist for a period not exceeding
fifty (50) years from the date of incorporation unless sooner dissolved or unless said
period is extended. The corporate term as originally stated in the articles of
incorporation may be extended for periods not exceeding fifty (50) years in any
single instance by an amendment of the articles of incorporation, in accordance with
this Code; Provided, That no extension can be made earlier than five (5) years prior
to the original or subsequent expiry date(s) unless there are justifiable reasons for
an earlier extension as may be determined by the Securities and Exchange
Commission. (6)
Section 13. Amount of capital stock to be subscribed and paid for the purposes of
incorporation. – At least twenty-five percent (25%) of the authorized capital stock as
stated in the articles of incorporation must be subscribed at the time of
incorporation, and at least twenty-five (25%) per cent of the total subscription must
be paid upon subscription, the balance to be payable on a date or dates fixed in the
contract of subscription without need of call, or in the absence of a fixed date or
dates, upon call for payment by the board of directors: Provided, however, That in
no case shall the paidup capital be less than five Thousand (P5,000.00) pesos. (n)
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1. The name of the corporation;
2. The specific purpose or purposes for which the corporation is being incorporated.
Where a corporation has more than one stated purpose, the articles of incorporation
shall state which is the primary purpose and which is/are the secondary purpose or
purposes: Provided, That a non-stock corporation may not include a purpose which
would change or contradict its nature as such;
3. The place where the principal office of the corporation is to be located, which
must be within the Philippines;
6. The number of directors or trustees, which shall not be less than five (5) nor more
than fifteen (15);
7. The names, nationalities and residences of persons who shall act as directors or
trustees until the first regular directors or trustees are duly elected and qualified in
accordance with this Code;
The Securities and Exchange Commission shall not accept the articles of
incorporation of any stock corporation unless accompanied by a sworn statement of
the Treasurer elected by the subscribers showing that at least twenty-five (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 paidup 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 domestic corporations shall comply
substantially with the following form:
ARTICLES OF INCORPORATION
OF
__________________________
(Name of Corporation)
KNOW ALL MEN BY THESE PRESENTS:
The undersigned incorporators, all of legal age and a majority of whom are residents
of the Philippines, have this day voluntarily agreed to form a (stock) (non-stock )
corporation under the laws of the Republic of the Philippines;
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);
THIRD: That the principal office of the corporation is located in the City/Municipality
of ________________________, Province of _______________________,
Philippines;
FOURTH: That the term for which said corporation is to exist is _____________
years from and after the date of issuance of the certificate of incorporation;
FIFTH: That the names, nationalities and residences of the incorporators of the
corporation are as follows:
SIXTH: That the number of directors or trustees of the corporation shall be _______;
and the names, nationalities and residences of the first directors or trustees of the
corporation are as follows:
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___________________ ___________________ ___________________
___________________ ___________________ ___________________
PESOS in lawful money of the Philippines, divided into __________ shares with the
par value of
____________________ (P_____________) Pesos per share.
That the capital stock of the corporation is ______________ shares without par
value. (In case some shares have par value and some are without par value): That
the capital stock of said corporation consists of _____________
shares of which ______________ shares are of the par value of
_________________ (P____________) PESOS each, and of which
_________________ shares are without par value.
EIGHTH: That at least twenty five (25%) per cent of the authorized capital stock
above stated has been subscribed as follows:
Name of
Subscriber
Nationality No. of Shares
Subscribed
Amount
Subscribed
___________________ ___________________ ___________________
___________________
___________________ ___________________ ___________________
___________________
___________________ ___________________ ___________________
___________________
___________________ ___________________ ___________________
___________________
___________________ ___________________ ___________________
___________________
___________________ ___________________ ___________________
___________________
NINTH: That the abovenamed subscribers have paid at least twenty-five (25%)
percent of the total subscription as follows:
Name of
Subscriber
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Amount Subscribed Total
PaidIn
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
(Modify Nos. 8 and 9 if shares are with no par value. In case the corporation is non-
stock , Nos. 7, 8 and 9 of the above articles may be modified accordingly, and it is
sufficient if the articles state the amount of capital or money contributed or donated
by specified persons, stating the names, nationalities and residences of the
contributors or donors and the respective amount given by each.)
ELEVENTH: (Corporations which will engage in any business or activity reserved for
Filipino citizens shall provide the following):
"No transfer of stock or interest which shall reduce the ownership of Filipino citizens
to less than the required percentage of the capital stock as provided by existing laws
shall be allowed or permitted to be recorded in the proper books of the corporation
and this restriction shall be indicated in all stock certificates issued by the
corporation."
___________________ ___________________
___________________ ___________________
________________________________
(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 )
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I, ____________________, being duly sworn, depose and say:
That I have been elected by the subscribers of the corporation as Treasurer thereof,
to act as such until my successor has been duly elected and qualified in accordance
with the bylaws of the corporation, and that as such Treasurer, I hereby certify under
oath that at least 25% of the authorized capital stock of the corporation has been
subscribed and at least 25% of the total subscription has been paid, and received by
me, in cash or property, in the amount of not less than P5,000.00, in accordance
with the Corporation Code.
____________________
(Signature of Treasurer)
SUBSCRIBED AND SWORN to before me, a Notary Public, for and in the
City/Municipality of___________________Province of _____________________,
this _______ day of ___________, 19 _____; by __________________ with Res.
Cert. No. ___________ issued at _______________________ on ____________,
19 ______
NOTARY PUBLIC
My commission expires on _________, 19 _____
Doc. No. _________;
Page No. _________;
Book No. ________;
Series of 19____ (7a)
The original and amended articles together shall contain all provisions required by
law to be set out in the articles of incorporation. Such articles, as amended shall be
indicated by underscoring the change or changes made, and a copy thereof duly
certified under oath by the corporate secretary and a majority of the directors or
trustees stating the fact that said amendment or amendments have been duly
approved by the required vote of the stockholders or members, shall be submitted to
the Securities and Exchange Commission.
The amendments shall take effect upon their approval by the Securities and
Exchange Commission or from the date of filing with the said Commission if not
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acted upon within six (6) months from the date of filing for a cause not attributable to
the corporation.
3. That the Treasurer’s Affidavit concerning the amount of capital stock subscribed
and/or paid is false;
Section 18. Corporate name. – No corporate name may be allowed by the Securities
and Exchange Commission if the proposed name is identical or deceptively or
confusingly similar to that of any existing corporation or to any other name already
protected by law or is patently deceptive, confusing or contrary to existing laws.
When a change in the corporate name is approved, the Commission shall issue an
amended certificate of incorporation under the amended name. (n)
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Commission issues a certificate of incorporation under its official seal; and
thereupon the incorporators, stockholders/members and their successors shall
constitute a body politic and corporate under the name stated in the articles of
incorporation for the period of time mentioned therein, unless said period is
extended or the corporation is sooner dissolved in accordance with law. (n)
This provision shall not apply if the failure to organize, commence the transaction of
its businesses or the construction of its works, or to continuously operate is due to
causes beyond the control of the corporation as may be determined by the
Securities and Exchange Commission.
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TITLE III
Section 23. The board of directors or trustees. – Unless otherwise provided in this
Code, the corporate powers of all corporations formed under this Code shall be
exercised, all business conducted and all property of such corporations controlled
and held by the board of directors or trustees to be elected from among the holders
of stocks, or where there is no stock, from among the members of the corporation,
who shall hold office for one (1) year until their successors are elected and qualified.
(28a)
Every director must own at least one (1) share of the capital stock of the corporation
of which he is a director, which share shall stand in his name on the books of the
corporation. Any director who ceases to be the owner of at least one (1) share of the
capital stock of the corporation of which he is a director shall thereby cease to be a
director. Trustees of non-stock corporations must be members thereof. A majority of
the directors or trustees of all corporations organized under this Code must be
residents of the Philippines.
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the owners of a majority of the outstanding capital stock, or if there be no capital
stock, a majority of the members entitled to vote. (31a)
Section 25. Corporate officers, quorum. – Immediately after their election, the
directors of a corporation must formally organize by 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 concurrently by the same person, except
that no one shall act as president and secretary or as president and 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 bylaws of the corporation. Unless the articles of
incorporation or the bylaws provide for a greater majority, a majority of the number
of directors or trustees as fixed in the articles of incorporation shall constitute a
quorum for the transaction of corporate business, and every decision of at least a
majority of the directors or trustees present at a meeting at which there is a quorum
shall be valid as a corporate act, except for the election of officers which shall
require the vote of a majority of all the members of the board.
Section 26. Report of election of directors, trustees and officers. – Within thirty (30)
days after the election of the directors, trustees and officers of the corporation, the
secretary, or any other officer of the corporation, shall submit to the Securities and
Exchange Commission, the names, nationalities and residences of the directors,
trustees, and officers elected. Should a director, trustee or officer die, resign or in
any manner cease to hold office, his heirs in case of his death, the secretary, or any
other officer of the corporation, or the director, trustee or officer himself, shall
immediately report such fact to the Securities and Exchange Commission. (n)
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Section 28. Removal of directors or trustees. – Any director or trustee of a
corporation may be removed from office by a vote of the stockholders holding or
representing at least two-thirds (2/3) of the outstanding capital stock, or if the
corporation be a non-stock corporation, by a vote of at least two-thirds (2/3) of the
members entitled to vote:
Provided, That such removal shall take place either at a regular meeting of the
corporation or at a special meeting called for the purpose, and in either case, after
previous notice to stockholders or members of the corporation of the intention to
propose such removal at the meeting. A special meeting of the stockholders or
members of a corporation for the purpose of removal of directors or trustees, or any
of them, must be called by the secretary on order of the president or on the written
demand of the stockholders representing or holding at least a majority of the
outstanding capital stock, or, if it be a non-stock corporation, on the written demand
of a majority of the members entitled to vote. Should the secretary fail or refuse to
call the special meeting upon such demand or fail or refuse to give the notice, or if
there is no secretary, the call for the meeting may be addressed directly to the
stockholders or members by any stockholder or member of the corporation signing
the demand.
Notice of the time and place of such meeting, as well as of the intention to propose
such removal, must be given by publication or by written notice prescribed in this
Code. Removal may be with or without cause: Provided, That removal without cause
may not be used to deprive minority stockholders or members of the right of
representation to which they may be entitled under Section 24 of this Code. (n)
Section 29. Vacancies in the office of director or trustee. – Any vacancy occurring in
the board of directors or trustees other than by removal by the stockholders or
members or by expiration of term, may be filled by the vote of at least a majority of
the remaining directors or trustees, if still constituting a quorum; otherwise, said
vacancies must be filled by the stockholders in a regular or special meeting called
for that purpose. A director or trustee so elected to fill a vacancy shall be elected
only or the unexpired term of his predecessor in office.
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Section 30. Compensation of directors. – In the absence of any provision in the
bylaws fixing their compensation, the directors shall not receive any compensation,
as such directors, except for reasonable per diems:
Provided, however, That any such compensation other than per diems may be
granted to directors by the vote of the stockholders representing at least a majority
of the outstanding capital stock at a regular or special stockholders’ meeting. In no
case shall the total yearly compensation of directors, as such directors, exceed ten
(10%) percent of the net income before income tax of the corporation during the
preceding year. (n)
1. That the presence of such director or trustee in the board meeting in which the
contract was approved was not necessary to constitute a quorum for such meeting;
2. That the vote of such director or trustee was not necessary for the approval of the
contract;
3. That the contract is fair and reasonable under the circumstances; and
4. That in case of an officer, the contract has been previously authorized by the
board of directors.
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Where any of the first two conditions set forth in the preceding paragraph is absent,
in the case of a contract with a director or trustee, such contract may be ratified by
the vote of the stockholders representing at least two-thirds (2/3) of the outstanding
capital stock or of at least two-thirds (2/3) of the members in a meeting called for the
purpose: Provided, That full disclosure of the adverse interest of the directors or
trustees involved is made at such meeting: Provided, however, That the contract is
fair and reasonable under the circumstances. (n)
Stockholdings exceeding twenty (20%) percent of the outstanding capital stock shall
be considered substantial for purposes of interlocking directors. (n)
(1) approval of any action for which shareholders’ approval is also required;
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(3) the amendment or repeal of bylaws or the adoption of new bylaws;
(4) the amendment or repeal of any resolution of the board which by its express
terms is not so amendable or repealable; and (5) a distribution of cash dividends to
the shareholders.
TITLE IV
POWERS OF CORPORATIONS
Section 36. Corporate powers and capacity. – Every corporation incorporated under
this Code has the power and capacity:
2. Of succession by its corporate name for the period of time stated in the articles of
incorporation and the certificate of incorporation;
5. To adopt bylaws, not contrary to law, morals, or public policy, and to amend or
repeal the same in accordance with this Code;
7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage
and otherwise deal with such real and personal property, including securities and
bonds of other corporations, as the transaction of the lawful business of the
corporation may reasonably and necessarily require, subject to the limitations
prescribed by law and the Constitution;
9. To make reasonable donations, including those for the public welfare or for
hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, That no
corporation, domestic or foreign, shall give donations in aid of any political party or
candidate or for purposes of partisan political activity;
10. To establish pension, retirement, and other plans for the benefit of its directors,
trustees, officers and employees; and
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11. To exercise such other powers as may be essential or necessary to carry out its
purpose or purposes as stated in the articles of incorporation. (13a)
Section 37. Power to extend or shorten corporate term. – A private corporation may
extend or shorten its term as stated in the articles of incorporation when approved
by a majority vote of the board of directors or trustees and ratified at a meeting by
the stockholders representing at least two-thirds (2/3) of the outstanding capital
stock or by at least two-thirds (2/3) of the members in case of non-stock
corporations. Written notice of the proposed action and of the time and place of the
meeting shall be addressed to each stockholder or member at his place of residence
as shown on the books of the corporation and deposited to the addressee in the
post office with postage prepaid, or served personally: Provided, That in case of
extension of corporate term, any dissenting stockholder may exercise his appraisal
right under the conditions provided in this code. (n)
Section 38. Power to increase or decrease capital stock; incur, create or increase
bonded indebtedness. – No corporation shall increase or decrease its capital stock
or incur, create or increase any bonded indebtedness unless approved by a majority
vote of the board of directors and, at a stockholder’s meeting duly called for the
purpose, two-thirds (2/3) of the outstanding capital stock shall favor the increase or
diminution of the capital stock, or the incurring, creating or increasing of any bonded
indebtedness. Written notice of the proposed increase or diminution of the capital
stock or of the incurring, creating, or increasing of any bonded indebtedness and of
the time and place of the stockholder’s meeting at which the proposed increase or
diminution of the capital stock or the incurring or increasing of any bonded
indebtedness is to be considered, must be addressed to each stockholder at his
place of residence as shown on the books of the corporation and deposited to the
addressee in the post office with postage prepaid, or served personally.
(1) That the requirements of this section have been complied with;
(3) If an increase of the capital stock, the amount of capital stock or number of
shares of nopar stock thereof actually subscribed, the names, nationalities and
residences of the persons subscribing, the amount of capital stock or number of
nopar stock subscribed by each, and the amount paid by each on his subscription in
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cash or property, or the amount of capital stock or number of shares of nopar stock
allotted to each stockholder if such increase is for the purpose of making effective
stock dividend therefor authorized;
(5) The actual indebtedness of the corporation on the day of the meeting;
(7) The vote authorizing the increase or diminution of the capital stock, or the
incurring, creating or increasing of any bonded indebtedness.
Any increase or decrease in the capital stock or the incurring, creating or increasing
of any bonded indebtedness shall require prior approval of the Securities and
Exchange Commission.
One of the duplicate certificates shall be kept on file in the office of the corporation
and the other shall be filed with the Securities and Exchange Commission and
attached to the original articles of incorporation.
From and after approval by the Securities and Exchange Commission and the
issuance by the Commission of its certificate of filing, the capital stock shall stand
increased or decreased and the incurring, creating or increasing of any bonded
indebtedness authorized, as the certificate of filing may declare: Provided, That the
Securities and Exchange Commission shall not accept for filing any certificate of
increase of capital stock unless accompanied by the sworn statement of the
treasurer of the corporation lawfully holding office at the time of the filing of the
certificate, showing that at least twenty-five (25%) percent of such increased capital
stock has been subscribed and that at least twenty-five (25%) percent of the amount
subscribed has been paid either in actual cash to the corporation or that there has
been transferred to the corporation property the valuation of which is equal to
twenty-five (25%) percent of the subscription: Provided, further, That no decrease of
the capital stock shall be approved by the Commission if its effect shall prejudice the
rights of corporate creditors.
Bonds issued by a corporation shall be registered with the Securities and Exchange
Commission, which shall have the authority to determine the sufficiency of the terms
thereof. (17a)
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Section 39. Power to deny pre-emptive right. – All stockholders of a stock
corporation shall enjoy pre-emptive 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 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. Sale or other disposition of assets. – Subject to the provisions of existing
laws on illegal combinations and monopolies, a corporation may, by a majority vote
of its board of directors or trustees, sell, lease, exchange,
mortgage, pledge or otherwise dispose of all or substantially all of its property and
assets, including its goodwill, upon such terms and conditions and for such
consideration, which may be money, stocks, bonds or other instruments for the
payment of money or other property or consideration, as its board of directors or
trustees may deem expedient, when authorized by the vote of the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock, or in case of
non-stock corporation, by the vote of at least to two-thirds (2/3) of the members, in
a stockholder’s or member’s meeting duly called for the purpose. Written notice of
the proposed action and of the time and place of the meeting shall be addressed to
each stockholder or member at his place of residence as shown on the books of the
corporation and deposited to the addressee in the post office with postage prepaid,
or served personally: Provided, That any dissenting stockholder may exercise his
appraisal right under the conditions provided in this Code.
A sale or other disposition shall be deemed to cover substantially all the corporate
property and assets if thereby the corporation would be rendered incapable of
continuing the business or accomplishing the purpose for which it was incorporated.
Nothing in this section is intended to restrict the power of any corporation, without
the authorization by the stockholders or members, to sell, lease, exchange,
mortgage, pledge or otherwise dispose of any of its property and assets if the same
is necessary in the usual and regular course of business of said corporation or if the
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proceeds of the sale or other disposition of such property and assets be
appropriated for the conduct of its remaining business.
In non-stock corporations where there are no members with voting rights, the vote of
at least a majority of the trustees in office will be sufficient authorization for the
corporation to enter into any transaction authorized by this section.
Section 41. Power to acquire own shares. – A stock corporation shall have the
power to purchase or acquire its own shares for a legitimate corporate purpose or
purposes, including but not limited to the following cases:
Provided, That the corporation has unrestricted retained earnings in its books to
cover the shares to be purchased or acquired:
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Section 43. Power to declare dividends. The board of directors of a stock
corporation may declare dividends out of the unrestricted retained earnings which
shall be payable in cash, in property, or in stock to all stockholders on the basis of
outstanding stock held by them: Provided, That any cash dividends due on
delinquent stock shall first be applied to the unpaid balance on the subscription plus
costs and expenses, while stock dividends shall be withheld from the delinquent
stockholder until his unpaid subscription is fully paid: Provided, further, That no
stock dividend shall be issued without the approval of stockholders representing not
less than two-thirds (2/3) of the outstanding capital stock at a regular or special
meeting duly called for the purpose. (16a)
Stock corporations are prohibited from retaining surplus profits in excess of one
hundred (100%) percent of their paidin capital stock, except:
(2) when the corporation is prohibited under any loan agreement with any financial
institution or creditor, whether local or foreign, from declaring dividends without
its/his consent, and such consent has not yet been secured; or
(3) when it can be clearly shown that such retention is necessary under special
circumstances obtaining in the corporation, such as when there is need for special
reserve for probable contingencies. (n)
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The provisions of the next preceding paragraph shall apply to any contract whereby
a corporation undertakes to manage or operate all or substantially all of the
business of another corporation, whether such contracts are called service
contracts, operating agreements or otherwise: Provided, however, That such service
contracts or operating agreements which relate to the exploration, development,
exploitation or utilization of natural resources may be entered into for such periods
as may be provided by the pertinent laws or regulations. (n)
Section 45. Ultra vires acts of corporations. – No corporation under this Code shall
possess or exercise any corporate powers except those conferred by this Code or
by its articles of incorporation and except such as are necessary or incidental to the
exercise of the powers so conferred. (n)
TITLE V
BY LAWS
Section 46. Adoption of bylaws. – Every corporation formed under this Code must,
within one (1) month after receipt of official notice of the issuance of its certificate of
incorporation by the Securities and Exchange Commission, adopt a code of bylaws
for its government not inconsistent with this Code. For the adoption of bylaws by the
corporation the affirmative vote of the stockholders representing at least a majority
of the outstanding capital stock, or of at least a majority of the members in case of
non-stock corporations, shall be necessary. The bylaws shall be signed by the
stockholders or members voting for them and shall be kept in the principal office of
the corporation, subject to the inspection of the stockholders or members during
office hours. A copy thereof, duly certified to by a majority of the directors or trustees
countersigned by the secretary of the corporation, shall be filed with the Securities
and Exchange Commission which shall be attached to the original articles of
incorporation. Notwithstanding the provisions of the preceding paragraph, bylaws
may be adopted and filed prior to incorporation; in such case, such bylaws shall be
approved and signed by all the incorporators and submitted to the Securities and
Exchange Commission, together with the articles of incorporation. In all cases,
bylaws shall be effective only upon the issuance by the Securities and Exchange
Commission of a certification that the bylaws are not inconsistent with this Code.
The Securities and Exchange Commission shall not accept for filing the bylaws or
any amendment thereto of any bank, banking institution, building and loan
association, trust company, insurance company, public utility, educational institution
or other special corporations governed by special laws, unless accompanied by a
certificate of the appropriate government agency to the effect that such bylaws or
amendments are in accordance with law. (20a)
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Section 47. Contents of bylaws. – Subject to the provisions of the Constitution, this
Code, other special laws, and the articles of incorporation, a private corporation may
provide in its bylaws for:
1. The time, place and manner of calling and conducting regular or special meetings
of the directors or trustees;
2. The time and manner of calling and conducting regular or special meetings of the
stockholders or members;
4. The form for proxies of stockholders and members and the manner of voting
them;
6. The time for holding the annual election of directors of trustees and the mode or
manner of giving notice thereof;
7. The manner of election or appointment and the term of office of all officers other
than directors or trustees;
9. In the case of stock corporations, the manner of issuing stock certificates; and
10. Such other matters as may be necessary for the proper or convenient
transaction of its corporate business and affairs. (21a)
Provided, That any power delegated to the board of directors or trustees to amend
or repeal any bylaws or adopt new bylaws shall be considered as revoked whenever
stockholders owning or representing a majority of the outstanding capital stock or a
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majority of the members in non-stock corporations, shall so vote at a regular or
special meeting.
Whenever any amendment or new bylaws are adopted, such amendment or new
bylaws shall be attached to the original bylaws in the office of the corporation, and a
copy thereof, duly certified under oath by the corporate secretary and a majority of
the directors or trustees, shall be filed with the Securities and Exchange
Commission the same to be attached to the original articles of incorporation and
original bylaws.
The amended or new bylaws 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
MEETINGS
Provided, however, That at least one (1) week written notice shall be sent to all
stockholders or members, unless otherwise provided in the bylaws.
Notice of any meeting may be waived, expressly or impliedly, by any stockholder or
member.
Whenever, for any cause, there is no person authorized to call a meeting, the
Securities and Exchange Commission, upon petition of a stockholder or member on
a showing of good cause therefor, may issue an order to the petitioning stockholder
or member directing him to call a meeting of the corporation by giving proper notice
required by this Code or by the bylaws.
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The petitioning stockholder or member shall preside thereat until at least a majority
of the stockholders or members present have chosen one of their number as
presiding officer. (24, 26)
Notice of meetings shall be in writing, and the time and place thereof stated therein.
All proceedings had and any business transacted at any meeting of the stockholders
or members, if within the powers or authority of the corporation, shall be valid even if
the meeting be improperly held or called, provided all the stockholders or members
of the corporation are present or duly represented at the meeting. (24 and 25)
Section 52. Quorum in meetings. – Unless otherwise provided for in this Code or in
the bylaws, a quorum shall consist of the stockholders representing a majority of the
outstanding capital stock or a majority of the members in the case of non-stock
corporations. (n)
Special meetings of the board of directors or trustees may be held at any time upon
the call of the president or as provided in the bylaws.
A director or trustee may waive this requirement, either expressly or impliedly. (n)
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Section 54. Who shall preside at meetings. – The president shall preside at all
meetings of the directors or trustee as well as of the stockholders or members,
unless the bylaws provide otherwise. (n)
Section 56. Voting in case of joint ownership of stock. – In case of shares of stock
owned jointly by two or more persons, in order to vote the same, the consent of all
the co-owners shall be necessary, unless there is a written proxy, signed by all the
coowners, authorizing one or some of them or any other person to vote such share
or shares: Provided, That when the shares are owned in an "and/or" capacity by the
holders thereof, any one of the joint owners can vote said shares or appoint a proxy
therefor. (n)
Section 57. Voting right for treasury shares. – Treasury shares shall have no voting
right as long as such shares remain in the Treasury. (n)
Section 58. Proxies. – Stockholders and members may vote in person or by proxy in
all meetings of stockholders or members. Proxies shall in writing, signed by the
stockholder or member and filed before the scheduled meeting with the corporate
secretary. Unless otherwise provided in the proxy, 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. (n)
Section 59. Voting trusts. – One or more stockholders of a stock corporation may
create a voting trust for the purpose of conferring upon a trustee or trustees the right
to vote and other rights pertaining to the shares for a period not exceeding five (5)
years at any time: Provided, That in the case of a voting trust specifically required as
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a condition in a loan agreement, said voting trust may be for a period exceeding five
(5) years but shall automatically expire upon full payment of the loan. A voting trust
agreement must be in writing and notarized, and shall specify the terms and
conditions thereof. A certified copy of such agreement shall be filed with the
corporation and with the Securities and Exchange Commission; otherwise, said
agreement is ineffective and unenforceable. The certificate or certificates of stock
covered by the voting trust agreement shall be cancelled and new ones shall be
issued in the name of the trustee or trustees stating that they are issued pursuant to
said agreement. In the books of the corporation, it shall be noted that the transfer in
the name of the trustee or trustees is made pursuant to said voting trust agreement.
The trustee or trustees shall execute and deliver to the transferors voting trust
certificates, which shall be transferable in the same manner and with the same
effect as certificates of stock.
The voting trust agreement filed with the corporation shall be subject to examination
by any stockholder of the corporation in the same manner as any other corporate
book or record: Provided, That both the transferor and the trustee or trustees may
exercise the right of inspection of all corporate books and records in accordance
with the provisions of this Code.
Any other stockholder may transfer his shares to the same trustee or trustees upon
the terms and conditions stated in the voting trust agreement, and thereupon shall
be bound by all the provisions of said agreement.
No voting trust agreement shall be entered into for the purpose of circumventing the
law against monopolies and illegal combinations in restraint of trade or used for
purposes of fraud.
Unless expressly renewed, all rights granted in a voting trust agreement shall
automatically expire at the end of the agreed period, and the voting trust certificates
as well as the certificates of stock in the name of the trustee or trustees shall
thereby be deemed cancelled and new certificates of stock shall be reissued in the
name of the transferors.
The voting trustee or trustees may vote by proxy unless the agreement provides
otherwise. (36a)
TITLE VII
STOCKS AND STOCKHOLDERS
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Section 60. Subscription contract. – Any contract for the acquisition of unissued
stock in an existing corporation or a corporation still to be formed shall be deemed a
subscription within the meaning of this Title, notwithstanding the fact that the parties
refer to it as a purchase or some other contract. (n)
Section 62. Consideration for stocks. – Stocks shall not be issued for a
consideration less than the par or issued price thereof. Consideration for the
issuance of stock may be any or a combination of any two or more of the following:
Where the consideration is other than actual cash, or consists of intangible property
such as patents of copyrights, the valuation thereof shall initially be determined by
the incorporators or the board of directors, subject to approval by the Securities and
Exchange Commission.
Shares of stock shall not be issued in exchange for promissory notes or future
service.
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The same considerations provided for in this section, insofar as they may be
applicable, may be used for the issuance of bonds by the corporation.
The issued price of nopar value shares may be fixed in the articles of incorporation
or by the board of directors pursuant to authority conferred upon it by the articles of
incorporation or the bylaws, or in the absence thereof, by the stockholders
representing at least a majority of the outstanding capital stock at a meeting duly
called for the purpose. (5 and 16)
Section 63. Certificate of stock and transfer of shares. – The capital stock of stock
corporations shall be divided into shares for which certificates signed by the
president or vice president, countersigned by the secretary or assistant secretary,
and sealed with the seal of the corporation shall be issued in accordance with the
bylaws.
Shares of stock so issued are personal property and may be transferred by delivery
of the certificate or certificates indorsed by the owner or his attorney-in-fact or other
person legally authorized to make the transfer.
No transfer, however, shall be valid, except as between the parties, until the transfer
is recorded in the books of the corporation showing the names of the parties to the
transaction, the date of the transfer, the number of the certificate or certificates and
the number of shares transferred.
No shares of stock against which the corporation holds any unpaid claim shall be
transferable in the books of the corporation. (35)
Section 65. Liability of directors for watered stocks. – Any director or officer of a
corporation consenting to the issuance of stocks for a consideration less than its par
or issued value or for a consideration in any form other than cash, valued in excess
of its fair value, or who, having knowledge thereof, does not forthwith express his
objection in writing and file the same with the corporate secretary, shall be solidarily,
liable with the stockholder concerned to the corporation and its creditors for the
difference between the fair value received at the time of issuance of the stock and
the par or issued value of the same. (n)
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Section 66. Interest on unpaid subscriptions. – Subscribers for stock shall pay to the
corporation interest on all unpaid subscriptions from the date of subscription, if so
required by, and at the rate of interest fixed in the bylaws.
If no rate of interest is fixed in the bylaws, such rate shall be deemed to be the legal
rate. (37)
Payment of any unpaid subscription or any percentage thereof, together with the
interest accrued, if any, shall be made on the date specified in the contract of
subscription or on the date stated in the call made by the board.
Failure to pay on such date shall render the entire balance due and payable and
shall make the stockholder liable for interest at the legal rate on such balance,
unless a different rate of interest is provided in the bylaws, computed from such date
until full payment. If within thirty (30) days from the said date no payment is made,
all stocks covered by said subscription shall thereupon become delinquent and shall
be subject to sale as hereinafter provided, unless the board of directors orders
otherwise. (38)
Section 68. Delinquency sale. – The board of directors may, by resolution, order the
sale of delinquent stock and shall specifically state the amount due on each
subscription plus all accrued interest, and the date, time and place of the sale which
shall not be less than thirty (30) days nor more than sixty (60) days from the date the
stocks become delinquent.
Notice of said sale, with a copy of the resolution, shall be sent to every delinquent
stockholder either personally or by registered mail. The same shall furthermore be
published once a week for two (2) consecutive weeks in a newspaper of general
circulation in the province or city where the principal office of the corporation is
located.
Unless the delinquent stockholder pays to the corporation, on or before the date
specified for the sale of the delinquent stock, the balance due on his subscription,
plus accrued interest, costs of advertisement and expenses of sale, or unless the
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board of directors otherwise orders, said delinquent stock shall be sold at public
auction to such bidder who shall offer to pay the full amount of the balance on the
subscription together with accrued interest, costs of advertisement and expenses of
sale, for the smallest number of shares or fraction of a share.
The stock so purchased shall be transferred to such purchaser in the books of the
corporation and a certificate for such stock shall be issued in his favor. The
remaining shares, if any, shall be credited in favor of the delinquent stockholder who
shall likewise be entitled to the issuance of a certificate of stock covering such
shares.
Should there be no bidder at the public auction who offers to pay the full amount of
the balance on the subscription together with accrued interest, costs of
advertisement and expenses of sale, for the smallest number of shares or fraction of
a share, the corporation may, subject to the provisions of this Code, bid for the
same, and the total amount due shall be credited as paid in full in the books of the
corporation. Title to all the shares of stock covered by the subscription shall be
vested in the corporation as treasury shares and may be disposed of by said
corporation in accordance with the provisions of this Code. (39a46a)
Section 69. When sale may be questioned. – No action to recover delinquent stock
sold can be sustained upon the ground of irregularity or defect in the notice of sale,
or in the sale itself of the delinquent stock, unless the party seeking to maintain such
action first pays or tenders to the party holding the stock the sum for which the
same was sold, with interest from the date of sale at the legal rate; and no such
action shall be maintained unless it is commenced by the filing of a complaint within
six (6) months from the date of sale. (47a)
Section 70. Court action to recover unpaid subscription. – Nothing in this Code shall
prevent the corporation from collecting by action in a court of proper jurisdiction the
amount due on any unpaid subscription, with accrued interest, costs and expenses.
(49a)
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Section 72. Rights of unpaid shares. – Holders of subscribed shares not fully paid
which are not delinquent shall have all the rights of a stockholder. (n)
2. After verifying the affidavit and other information and evidence with the books of
the corporation, said corporation shall publish a notice in a newspaper of general
circulation published in the place where the corporation has its principal office, once
a week for three (3) consecutive weeks at the expense of the registered owner of
the certificate of stock which has been lost, stolen or destroyed. The notice shall
state the name of said corporation, the name of the registered owner and the serial
number of said certificate, and the number of shares represented by such certificate,
and that after the expiration of one (1) year from the date of the last publication, if no
contest has been presented to said corporation regarding said certificate of stock,
the right to make such contest shall be barred and said corporation shall cancel in
its books the certificate of stock which has been lost, stolen or destroyed and issue
in lieu thereof new certificate of stock, unless the registered owner files a bond or
other security in lieu thereof as may be required, effective for a period of one (1)
year, for such amount and in such form and with such sureties as may be
satisfactory to the board of directors, in which case a new certificate may be issued
even before the expiration of the one (1) year period provided herein: Provided, That
if a contest has been presented to said corporation or if an action is pending in court
regarding the ownership of said certificate of stock which has been lost, stolen or
destroyed, the issuance of the new certificate of stock in lieu thereof shall be
suspended until the final decision by the court regarding the ownership of said
certificate of stock which has been lost, stolen or destroyed.
Except in case of fraud, bad faith, or negligence on 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
CORPORATE BOOKS AND RECORDS
Section 74. Books to be kept; stock transfer agent. – Every corporation shall keep
and carefully preserve at its principal office a record of all business transactions and
minutes of all meetings of stockholders or members, or of the board of directors or
trustees, in which shall be set forth in detail the time and place of holding the
meeting, how authorized, the notice given, whether the meeting was regular or
special, if special its object, those present and absent, and every act done or
ordered done at the meeting. Upon the demand of any director, trustee, stockholder
or member, the time when any director, trustee, stockholder or member entered or
left the meeting must be noted in the minutes; and on a similar demand, the yeas
and nays must be taken on any motion or proposition, and a record thereof carefully
made. The protest of any director, trustee, stockholder or member on any action or
proposed action must be recorded in full on his demand.
The records of all business transactions of the corporation and the minutes of any
meetings shall be open to inspection by any director, trustee, stockholder or
member of the corporation at reasonable hours on business days and he may
demand, in writing, for a copy of excerpts from said records or minutes, at his
expense.
Any officer or agent of the corporation who shall refuse to allow any director,
trustees, stockholder or member of the corporation to examine and copy excerpts
from its records or minutes, in accordance with the provisions of this Code, shall be
liable to such director, trustee, stockholder or member for damages, and in addition,
shall be guilty of an offense which shall be punishable under Section 144 of this
Code: Provided, That if such refusal is made pursuant to a resolution or order of the
board of directors or trustees, the liability under this section for such action shall be
imposed upon the directors or trustees who voted for such refusal: and Provided,
further, That it shall be a defense to any action under this section that the person
demanding to examine and copy excerpts from the corporation’s records and
minutes has improperly used any information secured through any prior examination
of the records or minutes of such corporation or of any other corporation, or was not
acting in good faith or for a legitimate purpose in making his demand.
Stock corporations must also keep a book to be known as the "stock and transfer
book", in which must be kept a record of all stocks in the names of the stockholders
alphabetically arranged; the installments paid and unpaid on all stock for which
subscription has been made, and the date of payment of any installment; a
statement of every alienation, sale or transfer of stock made, the date thereof, and
by and to whom made; and such other entries as the bylaws may prescribe. The
stock and transfer book shall be kept in the principal office of the corporation or in
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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.
Section 75. Right to financial statements. – Within ten (10) days from receipt of a
written request of any stockholder or member, the corporation shall furnish to him its
most recent financial statement, which shall include a balance sheet as of the end of
the last taxable year and a profit or loss statement for said taxable year, showing in
reasonable detail its assets and liabilities and the result of its operations.
At the regular meeting of stockholders or members, the board of directors or
trustees shall present to such stockholders or members a financial report of the
operations of the corporation for the preceding year, which shall include financial
statements, duly signed and certified by an independent certified public accountant.
However, if the paid-up capital of the corporation is less than P50,000.00, the
financial statements may be certified under oath by the treasurer or any responsible
officer of the corporation. (n)
TITLE IX
MERGER AND CONSOLIDATION
Section 76. Plan or merger of consolidation. – Two or more corporations may merge
into a single corporation which shall be one of the constituent corporations or may
consolidate into a new single corporation which shall be the consolidated
corporation.
2. The terms of the merger or consolidation and the mode of carrying the same into
effect;
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3. A statement of the changes, if any, in the articles of incorporation of the surviving
corporation in case of merger; and, with respect to the consolidated corporation in
case of consolidation, all the statements required to be set forth in the articles of
incorporation for corporations organized under this Code; and
4. Such other provisions with respect to the proposed merger or consolidation as are
deemed necessary or desirable. (n)
Any amendment to the plan of merger or consolidation may be made, provided such
amendment is approved by majority vote of the respective boards of directors or
trustees of all the constituent corporations and ratified by the affirmative vote of
stockholders representing at least two-thirds (2/3) of the outstanding capital stock or
of two-thirds (2/3) of the members of each of the constituent corporations. Such
plan, together with any amendment, shall be considered as the agreement of
merger or consolidation. (n)
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3. As to each corporation, the number of shares or members voting for and against
such plan, respectively. (n)
If, upon investigation, the Securities and Exchange Commission has reason to
believe that the proposed merger or consolidation is contrary to or inconsistent with
the provisions of this Code or existing laws, it shall set a hearing to give the
corporations concerned the opportunity to be heard. Written notice of the date, time
and place of hearing shall be given to each constituent corporation at least two (2)
weeks before said hearing. The Commission shall thereafter proceed as provided in
this Code. (n)
2. The separate existence of the constituent corporations shall cease, except that of
the surviving or the consolidated corporation;
3. The surviving or the consolidated corporation shall possess all the rights,
privileges, immunities and powers and shall be subject to all the duties and liabilities
of a corporation organized under this Code;
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corporation, shall be deemed transferred to and vested in such surviving or
consolidated corporation without further act or deed; and
5. The surviving or consolidated corporation shall be responsible and liable for all
the liabilities and obligations of each of the constituent corporations in the same
manner as if such surviving or consolidated corporation had itself incurred such
liabilities or obligations; and any pending claim, action or proceeding brought by or
against any of such constituent corporations may be prosecuted by or against the
surviving or consolidated corporation. The rights of creditors or liens upon the
property of any of such constituent corporations shall not be impaired by such
merger or consolidation. (n)
TITLE X
APPRAISAL RIGHT
1. In case any amendment to the articles of incorporation has the effect of changing
or restricting the rights of any stockholder or class of shares, or of authorizing
preferences in any respect superior to those of outstanding shares of any class, or
of extending or shortening the term of corporate existence;
Section 82. How right is exercised. – The appraisal right may be exercised by any
stockholder who shall have voted against the proposed corporate action, by making
a written demand on the corporation within thirty (30) days after the date on which
the vote was taken for payment of the fair value of his shares: Provided, That failure
to make the demand within such period shall be deemed a waiver of the appraisal
right. If the proposed corporate action is implemented or affected, the corporation
shall pay to such stockholder, upon surrender of the certificate or certificates of
stock representing his shares, the fair value thereof as of the day prior to the date on
which the vote was taken, excluding any appreciation or depreciation in anticipation
of such corporate action.
If within a period of sixty (60) days from the date the corporate action was approved
by the stockholders, the withdrawing stockholder and the corporation cannot agree
on the fair value of the shares, it shall be determined and appraised by three (3)
disinterested persons, one of whom shall be named by the stockholder, another by
the corporation, and the third by the two thus chosen. The findings of the majority of
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the appraisers shall be final, and their award shall be paid by the corporation within
thirty (30) days after such award is made: Provided, That no payment shall be made
to any dissenting stockholder unless the corporation has unrestricted retained
earnings in its books to cover such payment: and Provided, further, That upon
payment by the corporation of the agreed or awarded price, the stockholder shall
forthwith transfer his shares to the corporation. (n)
Section 83. Effect of demand and termination of right. – From the time of demand for
payment of the fair value of a stockholder’s shares until either the abandonment of
the corporate action involved or the purchase of the said shares by the corporation,
all rights accruing to such shares, including voting and dividend rights, shall be
suspended in accordance with the provisions of this Code, except the right of such
stockholder to receive payment of the fair value thereof: Provided, That if the
dissenting stockholder is not paid the value of his shares within 30 days after the
award, his voting and dividend rights shall immediately be restored. (n)
Section 84. When right to payment ceases. – No demand for payment under this
Title may be withdrawn unless the corporation consents thereto. If, however, such
demand for payment is withdrawn with the consent of the corporation, or if the
proposed corporate action is abandoned or rescinded by the corporation or
disapproved by the Securities and Exchange Commission where such approval is
necessary, or if the Securities and Exchange Commission determines that such
stockholder is not entitled to the appraisal right, then the right of said stockholder to
be paid the fair value of his shares shall cease, his status as a stockholder shall
thereupon be restored, and all dividend distributions which would have accrued on
his shares shall be paid to him. (n)
Section 85. Who bears costs of appraisal. – The costs and expenses of appraisal
shall be borne by the corporation, unless the fair value ascertained by the
appraisers is approximately the same as the price which the corporation may have
offered to pay the stockholder, in which case they shall be borne by the latter. In the
case of an action to recover such fair value, all costs and expenses shall be
assessed against the corporation, unless the refusal of the stockholder to receive
payment was unjustified. (n)
Section 86. Notation on certificates; rights of transferee. – Within ten (10) days after
demanding payment for his shares, a dissenting stockholder shall submit the
certificates of stock representing his shares to the corporation for notation thereon
that such shares are dissenting shares. His failure to do so shall, at the option of the
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corporation, terminate his rights under this Title. If shares represented by the
certificates bearing such notation are transferred, and the certificates consequently
cancelled, the rights of the transferor as a dissenting stockholder under this Title
shall cease and the transferee shall have all the rights of a regular stockholder; and
all dividend distributions which would have accrued on such shares shall be paid to
the transferee. (n)
TITLE XI
NON-STOCK CORPORATIONS
Section 87. Definition. – For the purposes of this Code, a non-stock corporation is
one where no part of its income is distributable as dividends to its members,
trustees, or officers, subject to the provisions of this Code on dissolution: Provided,
That any profit which a non-stock corporation may obtain as an incident to its
operations shall, whenever necessary or proper, be used for the furtherance of the
purpose or purposes for which the corporation was organized, subject to the
provisions of this Title.
CHAPTER I
MEMBERS
Section 89. Right to vote. – The right of the members of any class or classes to vote
may be limited, broadened or denied to the extent specified in the articles of
incorporation or the bylaws.
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Voting by mail or other similar means by members of non-stock corporations may be
authorized by the bylaws of non-stock corporations with the approval of, and under
such conditions which may be prescribed by, the Securities and Exchange
Commission.
CHAPTER II
TRUSTEES AND OFFICES
Section 92. Election and term of trustees. – Unless otherwise provided in the articles
of incorporation or the bylaws, the board of trustees of non-stock corporations,
which may be more than fifteen (15) in number as may be fixed in their articles of
incorporation or bylaws, shall, as soon as organized, so classify themselves that the
term of office of one-third (1/3) of their number shall expire every year; and
subsequent elections of trustees comprising one-third (1/3) of the board of trustees
shall be held annually and trustees so elected shall have a term of three (3) years.
Trustees thereafter elected to fill vacancies occurring before the expiration of a
particular term shall hold office only for the unexpired period.
Section 93. Place of meetings. – The bylaws may provide that the members of a
non-stock corporation may hold their regular or special meetings at any place even
outside the place where the principal office of the corporation is located: Provided,
That proper notice is sent to all members indicating the date, time and place of the
meeting: and Provided, further, That the place of meeting shall be within the
Philippines. (n)
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CHAPTER III
DISTRIBUTION OF ASSETS IN NON-STOCK CORPORATIONS
1. All liabilities and obligations of the corporation shall be paid, satisfied and
discharged, or adequate provision shall be made therefore;
3. Assets received and held by the corporation subject to limitations permitting their
use only for charitable, religious, benevolent, educational or similar purposes, but
not held upon a condition requiring return, transfer or conveyance by reason of the
dissolution, shall be transferred or conveyed to one or more corporations, societies
or organizations engaged in activities in the Philippines substantially similar to those
of the dissolving corporation according to a plan of distribution adopted pursuant to
this Chapter;
4. Assets other than those mentioned in the preceding paragraphs, if any, shall be
distributed in accordance with the provisions of the articles of incorporation or the
bylaws, to the extent that the articles of incorporation or the bylaws, determine the
distributive rights of members, or any class or classes of members, or provide for
distribution; and
Section 95. Plan of distribution of assets. – A plan providing for the distribution of
assets, not inconsistent with the provisions of this Title, may be adopted by a non-
stock corporation in the process of dissolution in the following manner:
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the manner provided in this Code for the giving of notice of meetings to members.
Such plan of distribution shall be adopted upon approval of at least two-thirds (2/3)
of the members having voting rights present or represented by proxy at such
meeting. (n)
TITLE XII
CLOSE CORPORATIONS
Section 96. Definition and applicability of Title. A close corporation, within the
meaning of this Code, is one whose articles of incorporation provide that:
(1) All the corporation’s issued stock of all classes, exclusive of treasury shares,
shall be held of record by not more than a specified number of persons, not
exceeding twenty (20);
(2) all the issued stock of all classes shall be subject to one or more specified
restrictions on transfer permitted by this Title; and
(3) The corporation shall not list in any stock exchange or make any public offering
of any of its stock of any class. Notwithstanding the foregoing, a corporation shall
not be deemed a close corporation when at least two-thirds (2/3) of its voting stock
or voting rights is owned or controlled by another corporation which is not a close
corporation within the meaning of this Code.
The provisions of this Title shall primarily govern close corporations: Provided, That
the provisions of other Titles of this Code shall apply suppletorily except insofar as
this Title otherwise provides.
1. For a classification of shares or rights and the qualifications for owning or holding
the same and restrictions on their transfers as may be stated therein, subject to the
provisions of the following section;
2. For a classification of directors into one or more classes, each of whom may be
voted for and elected solely by a particular class of stock; and
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3. For a greater quorum or voting requirements in meetings of stockholders or
directors than those provided in this Code.
The articles of incorporation of a close corporation may provide that the business of
the corporation shall be managed by the stockholders of the corporation rather than
by a board of directors. So long as this provision continues in effect:
2. Unless the context clearly requires otherwise, the stockholders of the corporation
shall be deemed to be directors for the purpose of applying the provisions of this
Code; and
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3. If a stock certificate of any close corporation conspicuously shows a restriction on
transfer of stock of the corporation, the transferee of the stock is conclusively
presumed to have notice of the fact that he has acquired stock in violation of the
restriction, if such acquisition violates the restriction.
4. Whenever any person to whom stock of a close corporation has been issued or
transferred has, or is conclusively presumed under this section to have, notice either
(a) that he is a person not eligible to be a holder of stock of the corporation, or (b)
that transfer of stock to him would cause the stock of the corporation to be held by
more than the number of persons permitted by its articles of incorporation to hold
stock of the corporation, or (c) that the transfer of stock is in violation of a restriction
on transfer of stock, the corporation may, at its option, refuse to register the transfer
of stock in the name of the transferee.
5. The provisions of subsection (4) shall not be applicable if the transfer of stock,
though contrary to subsections (1), (2) or (3), has been consented to by all the
stockholders of the close corporation, or if the close corporation has amended its
articles of incorporation in accordance with this Title.
6. The term "transfer", as used in this section, is not limited to a transfer for value.
7. The provisions of this section shall not impair any right which the transferee may
have to rescind the transfer or to recover under any applicable warranty, express or
implied.
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3. No provision in any written agreement signed by the stockholders, relating to any
phase of the corporate affairs, shall be invalidated as between the parties on the
ground that its effect is to make them partners among themselves.
5. To the extent that the stockholders are actively engaged in the management or
operation of the business and affairs of a close corporation, the stockholders shall
be held to strict fiduciary duties to each other and among themselves. Said
stockholders shall be personally liable for corporate torts unless the corporation has
obtained reasonably adequate liability insurance.
Section 101. When board meeting is unnecessary or improperly held. Unless the
bylaws provide otherwise, any action by the directors of a close corporation without
a meeting shall nevertheless be deemed valid if:
1. Before or after such action is taken, written consent thereto is signed by all the
directors; or
2. All the stockholders have actual or implied knowledge of the action and make no
prompt objection thereto in writing; or
3. The directors are accustomed to take informal action with the express or implied
acquiescence of all the stockholders; or
4. All the directors have express or implied knowledge of the action in question and
none of them makes prompt objection thereto in writing.
If a director’s meeting is held without proper call or notice, an action taken therein
within the corporate powers is deemed ratified by a director who failed to attend,
unless he promptly files his written objection with the secretary of the corporation
after having knowledge thereof.
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Section 103. Amendment of articles of incorporation. – Any amendment to the
articles of incorporation which seeks to delete or remove any provision required by
this Title to be contained in the articles of incorporation or to reduce a quorum or
voting requirement stated in said articles of incorporation shall not be valid or
effective unless approved by the affirmative vote of at least two-thirds (2/3) of the
outstanding capital stock, whether with or without voting rights, or of such greater
proportion of shares as may be specifically provided in the articles of incorporation
for amending, deleting or removing any of the aforesaid provisions, at a meeting
duly called for the purpose.
(2) cancelling, altering or enjoining any resolution or act of the corporation or its
board of directors, stockholders, or officers;
(3) directing or prohibiting any act of the corporation or its board of directors,
stockholders, officers, or other persons party to the action;
(4) requiring the purchase at their fair value of shares of any stockholder, either by
the corporation regardless of the availability of unrestricted retained earnings in its
books, or by the other stockholders;
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whose further qualifications, if any, may be determined by the Commission. A
provisional director is not a receiver of the corporation and does not have the title
and powers of a custodian or receiver. A provisional director shall have all the rights
and powers of a duly elected director of the corporation, including the right to notice
of and to vote at meetings of directors, until such time as he shall be removed by
order of the Commission or by all the stockholders. His compensation shall be
determined by agreement between him and the corporation subject to approval of
the Commission, which may fix his compensation in the absence of agreement or in
the event of disagreement between the provisional director and the corporation.
TITLE XIII
SPECIAL CORPORATIONS CHAPTER I EDUCATIONAL CORPORATIONS
Unless otherwise provided in the articles of incorporation on the bylaws, the board of
trustees of incorporated schools, colleges, or other institutions of learning shall, as
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soon as organized, so classify themselves that the term of office of one-fifth (1/5) of
their number shall expire every year. Trustees thereafter elected to fill vacancies,
occurring before the expiration of a particular term, shall hold office only for the
unexpired period. Trustees elected thereafter to fill vacancies caused by expiration
of term shall hold office for five (5) years. A majority of the trustees shall constitute a
quorum for the transaction of business. The powers and authority of trustees shall
be defined in the bylaws.
For institutions organized as stock corporations, the number and term of directors
shall be governed by the provisions on stock corporations. (169a)
CHAPTER II
RELIGIOUS CORPORATIONS
Section 110. Corporation sole. – For the purpose of administering and managing, as
trustee, the affairs, property and temporalities of any religious denomination, sect or
church, a corporation sole may be formed by the chief archbishop, bishop, priest,
minister, rabbi or other presiding elder of such religious denomination, sect or
church. (154a)
1. That he is the chief archbishop, bishop, priest, minister, rabbi or presiding elder of
his religious denomination, sect or church and that he desires to become a
corporation sole;
2. That the rules, regulations and discipline of his religious denomination, sect or
church are not inconsistent with his becoming a corporation sole and do not forbid it;
3. That as such chief archbishop, bishop, priest, minister, rabbi or presiding elder,
he is charged with the administration of the temporalities and the management of
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the affairs, estate and properties of his religious denomination, sect or church within
his territorial jurisdiction, describing such territorial jurisdiction;
4. The manner in which any vacancy occurring in the office of chief archbishop,
bishop, priest, minister, rabbi of presiding elder is required to be filled, according to
the rules, regulations or discipline of the religious denomination, sect or church to
which he belongs; and
5. The place where the principal office of the corporation sole is to be established
and located, which place must be within the Philippines.
The articles of incorporation may include any other provision not contrary to law for
the regulation of the affairs of the corporation. (n)
From and after the filing with the Securities and Exchange Commission of the said
articles of incorporation, verified by affidavit or affirmation, and accompanied by the
documents mentioned in the preceding paragraph, such chief archbishop, bishop,
priest, minister, rabbi or presiding elder shall become a corporation sole and all
temporalities, estate and properties of the religious denomination, sect or church
theretofore administered or managed by him as such chief archbishop, bishop,
priest, minister, rabbi or presiding elder shall be held in trust by him as a corporation
sole, for the use, purpose, behalf and sole benefit of his religious denomination, sect
or church, including hospitals, schools, colleges, orphan asylums, parsonages and
cemeteries thereof. (n)
Section 113. Acquisition and alienation of property. – Any corporation sole may
purchase and hold real estate and personal property for its church, charitable,
benevolent or educational purposes, and may receive bequests or gifts for such
purposes. Such corporation may sell or mortgage real property held by it by
obtaining an order for that purpose from the Court of First Instance of the province
where the property is situated upon proof made to the satisfaction of the court that
notice of the application for leave to sell or mortgage has been given by publication
or otherwise in such manner and for such time as said court may have directed, and
that it is to the interest of the corporation that leave to sell or mortgage should be
granted. The application for leave to sell or mortgage must be made by petition, duly
verified, by the chief archbishop, bishop, priest, minister, rabbi or presiding elder
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acting as corporation sole, and may be opposed by any member of the religious
denomination, sect or church represented by the corporation sole: Provided, That in
cases where the rules, regulations and discipline of the religious denomination, sect
or church, religious society or order concerned represented by such corporation sole
regulate the method of acquiring, holding, selling and mortgaging real estate and
personal property, such rules, regulations and discipline shall control, and the
intervention of the courts shall not be necessary. (159a)
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 Exchange Commission of a
copy of their commission, certificate of election, or letters of appointment, duly
certified by any notary public.
During any vacancy in the office of chief archbishop, bishop, priest, minister, rabbi or
presiding elder of any religious denomination, sect or church incorporated as a
corporation sole, the person or persons authorized and empowered by the rules,
regulations or discipline of the religious denomination, sect or church represented by
the corporation sole to administer the temporalities and manage the affairs, estate
and properties of the corporation sole during the vacancy shall exercise all the
powers and authority of the corporation sole during such vacancy. (158a)
Section 115. Dissolution. – A corporation sole may be dissolved and its affairs
settled voluntarily by submitting to the Securities and Exchange Commission a
verified declaration of dissolution.
3. The authorization for the dissolution of the corporation by the particular religious
denomination, sect or church;
4. The names and addresses of the persons who are to supervise the winding up of
the affairs of the corporation.
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Section 116. Religious societies. – Any religious society or religious order, or any
diocese, synod, or district organization of any religious denomination, sect or
church, unless forbidden by the constitution, rules, regulations, or discipline of the
religious denomination, sect or church of which it is a part, or by competent
authority, may, upon written consent and/or by an affirmative vote at a meeting
called for the purpose of at least two-thirds (2/3) of its membership, incorporate for
the administration of its temporalities or for the management of its affairs, properties
and estate by filing with the Securities and Exchange Commission, articles of
incorporation verified by the affidavit of the presiding elder, secretary, or clerk or
other member of such religious society or religious order, or diocese, synod, or
district organization of the religious denomination, sect or church, setting forth the
following:
2. That at least two-thirds (2/3) of its membership have given their written consent or
have voted to incorporate, at a duly convened meeting of the body;
5. The place where the principal office of the corporation is to be established and
located, which place must be within the Philippines; and
6. The names, nationalities, and residences of the trustees elected by the religious
society or religious order, or the diocese, synod, or district organization to serve for
the first year or such other period as may be prescribed by the laws of the religious
society or religious order, or of the diocese, synod, or district organization, the board
of trustees to be not less than five (5) nor more than fifteen (15). (160a)
TITLE XIV
DISSOLUTION
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Section 118. Voluntary dissolution where no creditors are affected. – If dissolution of
a corporation does not prejudice the rights of any creditor having a claim against it,
the dissolution may be effected by majority vote of the board of directors or trustees,
and by a resolution duly adopted by the affirmative vote of the stockholders owning
at least two-thirds (2/3) of the outstanding capital stock or of at least two-thirds (2/3)
of the members of a meeting to be held upon call of the directors or trustees after
publication of the notice of time, place and object of the meeting for three (3)
consecutive weeks in a newspaper published in the place where the principal office
of said corporation is located; and if no newspaper is published in such place, then
in a newspaper of general circulation in the Philippines, after sending such notice to
each stockholder or member either by registered mail or by personal delivery at
least thirty (30) days prior to said meeting. A copy of the resolution authorizing the
dissolution shall be certified by a majority of the board of directors or trustees and
countersigned by the secretary of the corporation. The Securities and Exchange
Commission shall thereupon issue the certificate of dissolution. (62a)
Section 119. Voluntary dissolution where creditors are affected. – Where the
dissolution of a corporation may prejudice the rights of any creditor, the petition for
dissolution shall be filed with the Securities and Exchange Commission. The petition
shall be signed by a majority of its board of directors or trustees or other officers
having the management of its affairs, verified by its president or secretary or one of
its directors or trustees, and shall set forth all claims and demands against it, and
that its dissolution was resolved upon by the affirmative vote of the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock or by at least
two-thirds (2/3) of the members at a meeting of its stockholders or members called
for that purpose.
If the petition is sufficient in form and substance, the Commission shall, by an order
reciting the purpose of the petition, fix a date on or before which objections thereto
may be filed by any person, which date shall not be less than thirty (30) days nor
more than sixty (60) days after the entry of the order. Before such date, a copy of
the order shall be published at least once a week for three (3) consecutive weeks in
a newspaper of general circulation published in the municipality or city where the
principal office of the corporation is situated, or if there be no such newspaper, then
in a newspaper of general circulation in the Philippines, and a similar copy shall be
posted for three (3) consecutive weeks in three (3) public places in such municipality
or city.
Upon five (5) day’s notice, given after the date on which the right to file objections as
fixed in the order has expired, the Commission shall proceed to hear the petition and
try any issue made by the objections filed; and if no such objection is sufficient, and
the material allegations of the petition are true, it shall render judgment dissolving
the corporation and directing such disposition of its assets as justice requires, and
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may appoint a receiver to collect such assets and pay the debts of the corporation.
(Rule 104, RCa)
Section 122. Corporate liquidation. – Every corporation whose charter expires by its
own limitation or is annulled by forfeiture or otherwise, or whose corporate existence
for other purposes is terminated in any other manner, shall nevertheless be
continued as a body corporate for three (3) years after the time when it would have
been so dissolved, for the purpose of prosecuting and defending suits by or against
it and enabling it to settle and close its affairs, to dispose of and convey its property
and to 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
empowered to convey all of its property to trustees for the benefit of stockholders,
members, creditors, and other persons in interest. From and after any such
conveyance by the corporation of its property in trust for the benefit of its
stockholders, members, creditors and others in interest, all interest which the
corporation had in the property terminates, the legal interest vests in the trustees,
and the beneficial interest in the stockholders, members, creditors or other persons
in interest.
Upon the winding up of the corporate affairs, any asset distributable to any creditor
or stockholder or member who is unknown or cannot be found shall be escheated to
the city or municipality where such assets are located.
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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
FOREIGN CORPORATIONS
Section 123. Definition and rights of foreign corporations. – For the purposes of this
Code, a foreign corporation is one formed, organized or existing under any laws
other than those of the Philippines and whose laws allow Filipino citizens and
corporations to do business in its own country or state. It shall have the right to
transact business in the Philippines after it shall have obtained a license to transact
business in this country in accordance with this Code and a certificate of authority
from the appropriate government agency. (n)
Section 125. Application for a license. – A foreign corporation applying for a license
to transact business in the Philippines shall submit to the Securities and Exchange
Commission a copy of its articles of incorporation and bylaws, certified in
accordance with law, and their translation to an official language of the Philippines, if
necessary.
The application shall be under oath and, unless already stated in its articles of
incorporation, shall specifically set forth the following:
2. The address, including the street number, of the principal office of the corporation
in the country or state of incorporation;
3. The name and address of its resident agent authorized to accept summons and
process in all legal proceedings and, pending the establishment of a local office, all
notices affecting the corporation;
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5. The specific purpose or purposes which the corporation intends to pursue in the
transaction of its business in the Philippines: Provided, That said purpose or
purposes are those specifically stated in the certificate of authority issued by the
appropriate government agency;
6. The names and addresses of the present directors and officers of the corporation;
7. A statement of its authorized capital stock and the aggregate number of shares
which the corporation has authority to issue, itemized by classes, par value of
shares, shares without par value, and series, if any;
8. A statement of its outstanding capital stock and the aggregate number of shares
which the corporation
has issued, itemized by classes, par value of shares, shares without par value, and
series, if any;
9. A statement of the amount actually paid in; and 10. Such additional information as
may be necessary or appropriate in order to enable the Securities and Exchange
Commission to determine whether such corporation is entitled to a license to
transact business in the Philippines, and to determine and assess the fees payable.
Attached to the application for license shall be a duly executed certificate under oath
by the authorized official or officials of the jurisdiction of its incorporation, attesting to
the fact that the laws of the country or state of the applicant allow Filipino citizens
and corporations to do business therein, and that the applicant is an existing
corporation in good standing. If such certificate is in a foreign language, a translation
thereof in English under oath of the translator shall be attached thereto.
The application for a license to transact business in the Philippines shall likewise be
accompanied by a statement under oath of the president or any other person
authorized by the corporation, showing to the satisfaction of the Securities and
Exchange Commission and other governmental agency in the proper cases that the
applicant is solvent and in sound financial condition, and setting forth the assets and
liabilities of the corporation as of the date not exceeding one (1) year immediately
prior to the filing of the application.
Foreign banking, financial and insurance corporations shall, in addition to the above
requirements, comply with the provisions of existing laws applicable to them. In the
case of all other foreign corporations, no application for license to transact business
in the Philippines shall be accepted by the Securities and Exchange Commission
without previous authority from the appropriate government agency, whenever
required by law. (68a)
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the applicant to transact business in the Philippines for the purpose or purposes
specified in such license. Upon issuance of the license, such foreign corporation
may commence to transact business in the Philippines and continue to do so for as
long as it retains its authority to act as a corporation under the laws of the country or
state of its incorporation, unless such license is sooner surrendered, revoked,
suspended or annulled in accordance with this Code or other special laws.
Within sixty (60) days after the issuance of the license to transact business in the
Philippines, the license, except foreign banking or insurance corporation, shall
deposit with the Securities and Exchange Commission for the benefit of present and
future creditors of the licensee in the Philippines, securities satisfactory to the
Securities and Exchange Commission, consisting of bonds or other evidence of
indebtedness of the Government of the Philippines, its political subdivisions and
instrumentalities, or of government owned or controlled corporations and entities,
shares of stock in "registered enterprises" as this term is defined in Republic Act No.
5186, shares of stock in domestic corporations registered in the stock exchange, or
shares of stock in domestic insurance companies and banks, or any combination of
these kinds of securities, with an actual market value of at least one
hundred thousand (P100,000.) pesos; Provided, however, That within six (6) months
after each fiscal year of the licensee, the Securities and Exchange Commission shall
require the licensee to deposit additional securities equivalent in actual market value
to two (2%) percent of the amount by which the licensee’s gross income for that
fiscal year exceeds five million (P5,000,000.00) pesos. The Securities and
Exchange Commission shall also require deposit of additional securities if the actual
market value of the securities on deposit has decreased by at least ten (10%)
percent of their actual market value at the time they were deposited. The Securities
and Exchange Commission may at its discretion release part of the additional
securities deposited with it if the gross income of the licensee has decreased, or if
the actual market value of the total securities on deposit has increased, by more
than ten (10%) percent of the actual market value of the securities at the time they
were deposited. The Securities and Exchange Commission may, from time to time,
allow the licensee to substitute other securities for those already on deposit as long
as the licensee is solvent. Such licensee shall be entitled to collect the interest or
dividends on the securities deposited. In the event the licensee ceases to do
business in the Philippines, the securities deposited as aforesaid shall be returned,
upon the licensee’s application therefor and upon proof to the satisfaction of the
Securities and Exchange Commission that the licensee has no liability to Philippine
residents, including the Government of the Republic of the Philippines. (n)
Section 127. Who may be a resident agent. – A resident agent may be either an
individual residing in the Philippines or a domestic corporation lawfully transacting
business in the Philippines: Provided, That in the case of an individual, he must be
of good moral character and of sound financial standing. (n)
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Section 128. Resident agent; service of process. – The Securities and Exchange
Commission shall require as a condition precedent to the issuance of the license to
transact business in the Philippines by any foreign corporation that such corporation
file with the Securities and Exchange Commission a written power of attorney
designating some person who must be a resident of the Philippines, on whom any
summons and other legal processes may be served in all actions or other legal
proceedings against such corporation, and consenting that service upon such
resident agent shall be admitted and held as valid as if served upon the duly
authorized officers of the foreign corporation at its home office. Any such foreign
corporation shall likewise execute and file with the Securities and Exchange
Commission an agreement or stipulation, executed by the proper authorities of
said corporation, in form and substance as follows:
"The (name of foreign corporation) does hereby stipulate and agree, in consideration
of its being granted by the Securities and Exchange Commission a license to
transact business in the Philippines, that if at any time said corporation shall cease
to transact business in the Philippines, or shall be without any resident agent in the
Philippines on whom any summons or other legal processes may be served, then in
any action or proceeding arising out of any business or transaction which occurred
in the Philippines, service of any summons or other legal process may be made
upon the Securities and Exchange Commission and that such service shall have the
same force and effect as if made upon the duly authorized officers of the corporation
at its home office."
Whenever such service of summons or other process shall be made upon the
Securities and Exchange Commission, the Commission shall, within ten (10) days
thereafter, transmit by mail a copy of such summons or other legal process to the
corporation at its home or principal office. The sending of such copy by the
Commission shall be necessary part of and shall complete such service. All
expenses incurred by the Commission for such service shall be paid in advance by
the party at whose instance the service is made.
In case of a change of address of the resident agent, it shall be his or its duty to
immediately notify in writing the Securities and Exchange Commission of the new
address. (72a; and n)
Section 129. Law applicable. – Any foreign corporation lawfully doing business in
the Philippines shall be bound by all laws, rules and regulations applicable to
domestic corporations of the same class, except such only as provide for the
creation, formation, organization or dissolution of corporations or those which fix the
relations, liabilities, responsibilities, or duties of stockholders, members, or officers
of corporations to each other or to the corporation. (73a)
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Section 130. Amendments to articles of incorporation or bylaws of foreign
corporations. – Whenever the articles of incorporation or bylaws of a foreign
corporation authorized to transact business in the Philippines are amended, such
foreign corporation shall, within sixty (60) days after the amendment becomes
effective, file with the Securities and Exchange Commission, and in the proper
cases with the appropriate government agency, a duly authenticated copy of the
articles of incorporation or bylaws, as amended, indicating clearly in capital letters or
by underscoring the change or changes made, duly certified by the authorized
official or officials of the country or state of incorporation. The filing thereof shall not
of itself enlarge or alter the purpose or purposes for which such corporation is
authorized to transact business in the Philippines. (n)
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Section 133. Doing business without a license. – No foreign corporation transacting
business in the Philippines without a license, or its successors or assigns, shall be
permitted to maintain or intervene in any action, suit or proceeding in any court or
administrative agency of the Philippines; but such corporation may be sued or
proceeded against before Philippine courts or administrative tribunals on any valid
cause of action recognized under Philippine laws. (69a)
1. Failure to file its annual report or pay any fees as required by this Code;
3. Failure, after change of its resident agent or of his address, to submit to the
Securities and Exchange Commission a statement of such change as required by
this Title;
6. Failure to pay any and all taxes, imposts, assessments or penalties, if any,
lawfully due to the Philippine Government or any of its agencies or political
subdivisions;
9. Any other ground as would render it unfit to transact business in the Philippines.
(n)
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Section 135. Issuance of certificate of revocation. – Upon the revocation of any such
license to transact business in the Philippines, the Securities and Exchange
Commission shall issue a corresponding certificate of revocation, furnishing a copy
thereof to the appropriate government agency in the proper cases.
The Securities and Exchange Commission shall also mail to the corporation at its
registered office in the Philippines a notice of such revocation accompanied by a
copy of the certificate of revocation. (n)
1. All claims which have accrued in the Philippines have been paid, compromised or
settled;
2. All taxes, imposts, assessments, and penalties, if any, lawfully due to the
Philippine Government or any of its agencies or political subdivisions have been
paid; and
3. The petition for withdrawal of license has been published once a week for three
(3) consecutive weeks in a newspaper of general circulation in the Philippines.
TITLE XVI
MISCELLANEOUS PROVISIONS
Section 137. Outstanding capital stock 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 stockholders, whether or not fully or
partially paid, except treasury shares. (n)
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Section 139. Incorporation and other fees. – The Securities and Exchange
Commission is hereby authorized to collect and receive fees as authorized by law or
by rules and regulations promulgated by the Commission.
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records of any corporation, shall be kept strictly confidential, except insofar as the
law may require the same to be made public or where such interrogatories, answers
or results are necessary to be presented as evidence before any court. (n)
Section 143. Rulemaking power of the Securities and Exchange Commission. – The
Securities and Exchange Commission shall have the power and authority to
implement the provisions of this Code, and to promulgate rules and regulations
reasonably necessary to enable it to perform its duties hereunder, particularly in the
prevention of fraud and abuses on the part of the controlling stockholders, members,
directors, trustees or officers. (n)
Section 144. Violations of the Code. – Violations of any of the provisions of this
Code or its amendments not otherwise specifically penalized therein shall be
punished by a fine of not less than one thousand (P1,000.00) pesos but not more
than ten thousand (P10,000.00) pesos or by imprisonment for not less than thirty
(30) days but not more than five (5) years, or both, in the discretion of the court. If
the violation is committed by a corporation, the same may, after notice and hearing,
be dissolved in appropriate proceedings before the Securities and Exchange
Commission: Provided, That such dissolution shall not preclude the institution of
appropriate action against the director, trustee or officer of the corporation
responsible for said violation: Provided, further, That nothing in this section shall be
construed to repeal the other causes for dissolution of a corporation provided in this
Code. (190 1/2 a)
Section 146. Repealing clause. – Except as expressly provided by this Code, all
laws or parts thereof inconsistent with any provision of this Code shall be deemed
repealed. (n)
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Section 147. Separability of provisions. – Should any provision of this Code or any
part thereof be declared invalid or unconstitutional, the other provisions, so far as
they are separable, shall remain in force. (n)
Section 149. Effectivity. – This Code shall take effect immediately upon its approval.
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