CA51017: BUSINESS LAW

LAW ON CORPORATIONS (Sec. 73-139)

Atty. J.C. Domingo

CORPORATE BOOKS AND RECORDS Any officer or agent of the corporation who shall refuse
to allow the inspection and/or reproduction of records in
Section 73. Books to be Kept; Stock Transfer Agent – accordance with the provisions of this Code shall be
Every corporation shall keep and carefully preserve at liable to such director, trustee, stockholder or
its principal office all information relating to the member for damages, and in addition, shall be guilty
corporation including, but not limited to: of an offense which shall be punishable under Section
161 of this Code:
(a) The articles of incorporation and bylaws of the
corporation and all their amendments; Provided, That if such refusal is made pursuant to a
(b) The current ownership structure and voting resolution or order of the board of directors or trustees,
rights of the corporation, including lists of the liability under this section for such action shall be
stockholders or members, group structures, intra-group imposed upon the directors or trustees who voted for
relations, ownership data, and beneficial ownership; such refusal:
(c) The names and addresses of all the members of
the board of directors or trustees and the executive Provided, further, That it shall be a defense to any action
officers; under this section that the person demanding to
(d) A record of all business transactions; examine and copy excerpts from the corporation’s
(e) A record of the resolutions of the board of records and minutes has improperly used any
directors or trustees and of the stockholders or information secured through any prior examination of
members; the records or minutes of such corporation or of any
(f) Copies of the latest reportorial requirements other corporation, or was not acting in good faith or for
submitted to the Commission; and a legitimate purpose in making the demand to examine
(g) The minutes of all meetings of stockholders or or reproduce corporate records, or is a competitor,
members, or of the board of directors or trustees. Such director, officer, controlling stockholder or otherwise
minutes shall set forth in detail, among others: the time represents the interests of a competitor.
and place of the meeting held, how it was authorized,
the notice given, the agenda therefor, whether the If the corporation denies or does not act on a demand
meeting was regular or special, its object if special, for inspection and/or reproduction, the aggrieved party
those present and absent, and every act done or may report such to the Commission within five (5)
ordered done at the meeting. Upon the demand of a days from receipt of such report, the Commission shall
director, trustee, stockholder or member, the time when conduct a summary investigation and issue an order
any director, trustee, stockholder or member entered or directing the inspection or reproduction of the requested
left the meeting must be noted in the minutes; and on a records.
similar demand, the yeas and nays must be taken on
any motion or proposition, and a record thereof carefully Stock corporations must also keep a stock and
made. The protest of a director, trustee, stockholder or transfer book, which shall contain a record of all stocks
member on any action or proposed action must be in the names of the stockholders alphabetically
recorded in full upon their demand. arranged; the installments paid and unpaid on all stocks
for which subscription has been made, and the date of
Corporate records, regardless of the form in which they payment of any installment; a statement of every
are stored, shall be open to inspection by any alienation, sale or transfer of stock made, the date
director, trustee, stockholder or member of the thereof, by and to whom made; and such other entries
corporation in person or by a representative at as the bylaws may prescribe. The stock and transfer
reasonable hours on business days, and a demand book shall be kept in the principal office of the
in writing may be made by such director, trustee or corporation or in the office of its stock transfer agent and
stockholder at their expense, for copies of such records shall be open for inspection by any director or
or excerpts from said records. The inspecting or stockholder of the corporation at reasonable hours on
reproducing party shall remain bound by confidentiality business days.
rules under prevailing laws, such as the rules on trade
secrets or processes under Republic Act No. 8293, A stock transfer agent or one engaged principally in
otherwise known as the “Intellectual Property Code of the business of registering transfers of stocks in behalf
the Philippines”, as amended, Republic Act No. 10173, of a stock corporation shall be allowed to operate in the
otherwise known as the “Data Privacy Act of 2012”, Philippines upon securing a license from the
Republic Act No. 8799, otherwise known as “The Commission and the payment of a fee to be fixed by the
Securities Regulation Code”, and the Rules of Court. Commission, which shall be renewable annually:
Provided, That a stock corporation is not precluded from
A requesting party who is not a stockholder or member performing or making transfers of its own stocks, in
of record, or is a competitor, director, officer, controlling which case all the rules and regulations imposed on
stockholder or otherwise represents the interests of a stock transfer agents, except the payment of a license
competitor shall have no right to inspect or demand fee herein provided, shall be applicable: Provided,
reproduction of corporate records. further, That the Commission may require stock
corporations which transfer and/or trade stocks in
Any stockholder who shall abuse the rights granted secondary markets to have an independent transfer
under this section shall be penalized under Section 158 agent.
of this Code, without prejudice to the provisions of
Republic Act No. 8293, otherwise known as the ** kailangan may record keeping na maayos
“Intellectual Property Code of the Philippines”, as ** what are the books to be kept?/ what are records to be
amended, and Republic Act No. 10173, otherwise kept?
known as the “Data Privacy Act of 2012”.

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(e) yung mga decision ng board, yung output non ang (b) The terms of the merger or consolidation and the
tawag ay board resolution dapat may kopya sa loob ng mode of carrying the same into effect;
corporation (c) A statement of the changes, if any, in the articles
(g) minutes of the meetings – sort of transcript/summary na of incorporation of the surviving corporation in case of
naganap na stockholder/director’s meeting merger; and, in case of consolidation, all the statements
** kailangan i-playback yung recorded 4 hours meeting (be required to be set forth in the articles of incorporation for
attentive if nagmmeeting) corporations organized under this Code; and
** yeas or neas – sino yung pumayag, sino yung hindi (d) Such other provisions with respect to the proposed
merger or consolidation as are deemed necessary or
** pwede makita basta reasonable hours desirable.
** hindi basta pwede ipagkalat sa iba yung napagusapan
** minsan narerealize ng company na mas makakatulang
** if unjustified yung refusal, kung sino man yung nagutos sa survival ng entity yung pagsama sa ibang company
na wag ipakita yung records na hinihingi, siya yung
magiging liable consolidation: a + b = c(onsolidation) – new entity
merger: a + b = a/b – retain na lumang entity
** stock & transfer book dapat itago sa principal office ng
corporation or in the office of its stock transfer agent
** if may isang document na best evidence kung sino sino Section 76. Stockholders’ or Members’ Approval –
ang stockholder ng isang company at magkano ang share Upon approval by a majority vote of each of the board
ng bawat isa – stock and transfer book (alphabetically of directors or trustees of the constituent corporations of
sino ang SH ng isang corporation; parang logbook – kasi the plan of merger or consolidation, the same shall be
andito yung movements) submitted for approval by the stockholders or
members of each of such corporations at separate
** pag maliit lang yung company, hindi ganun kadami ng corporate meetings duly called for the purpose. Notice
transactions, pwedeng corporate secretary na or any of such meetings shall be given to all stockholders or
officer sa company ang magmaintain ng stock & transfer members of the respective corporations in the same
book manner as giving notice of regular or special meetings
** usually and stock transfer agent ay 3rd party service under Section 49 of this Code. The notice shall state the
entity that is availed by an entity na ang expertise ay pabili purpose of the meeting and include a copy or a
at pagrerecord ng shares summary of the plan of merger or consolidation.
** advisable especially if nagbebebnta sa secondary
market – to have an independent transfer agent The affirmative vote of stockholders representing at
least two-thirds (2/3) of the outstanding capital
stock of each corporation in the case of stock
Section 74. Right to Financial Statement – A corporations or at least two-thirds (2/3) of the members
corporation shall furnish a stockholder or member,
in the case of nonstock corporations shall be necessary
within ten (10) days from receipt of their written for the approval of such plan. Any dissenting
request, its most recent financial statement, in the stockholder may exercise the right of appraisal in
form and substance of the financial reporting required accordance with this Code: Provided, That if after the
by the Commission. approval by the stockholders of such plan, the board of
directors decides to abandon the plan, the right of
At the regular meeting of stockholders or members, the appraisal shall be extinguished.
board of directors or trustees shall present to such
stockholders or members a financial report of the Any amendment to the plan of merger or consolidation
operations of the corporation for the preceding year, may be made: Provided, That such amendment is
which shall include financial statements, duly signed approved by a majority vote of the respective boards of
and certified in accordance with this Code, and the rules directors or trustees of all the constituent corporations
the Commission may prescribe. and ratified by the affirmative vote of stockholders
representing at least two-thirds (2/3) of the outstanding
However, if the total assets or total liabilities of the capital stock or of two-thirds (2/3) of the members of
corporation is less than Six hundred thousand pesos each of the constituent corporations. Such plan,
(P600,000.00), or such other amount as may be together with any amendment, shall be considered as
determined appropriate by the Department of Finance, the agreement of merger or consolidation.
the financial statements may be certified under oath by
the treasurer and the president.
** sec 76 – approval needed bago magjoin ang dalawang
corporation
MERGER AND CONSOLIDATION
** magpapatawag ng hiwalay na meeting si A and b tapos
Section 75. Plan of Merger or Consolidation – Two (2) dun nila tatanungin yung stockholders if approve ba yung
or more corporations may merge into a single merger or consolidation
corporation which shall be one of the constituent ** explicitly paguusapan if sasama bas a company
corporations or may consolidate into a new single
corporation which shall be the consolidated corporation. ** majority vote of BOD + 2/3 votes of stockholders

The board of directors or trustees of each corporation, Section 77. Articles of Merger or Consolidation – After
party to the merger or consolidation, shall approve a the approval by the stockholders or members as
plan of merger or consolidation setting forth the required by the preceding section, articles of merger or
following: articles of consolidation shall be executed by each of
the constituent corporations, to be signed by the
(a) The names of the corporations proposing to president or vice president and certified by the secretary
merge or consolidate, hereinafter referred to as the or assistant secretary of each corporation setting forth:
constituent corporations;
(a) The plan of the merger or the plan of consolidation;
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 (b) As to stock corporations, the number of shares surviving or consolidated corporation without further act
outstanding, or in the case of nonstock corporations, or deed; and
the number of members; (e) The surviving or consolidated corporation shall be
(c) As to each corporation, the number of shares or responsible for all the liabilities and obligations of each
members voting for or against such plan, respectively; constituent corporation as though such surviving or
(d) The carrying amounts and fair values of the consolidated corporation had itself incurred such
assets and liabilities of the respective companies as liabilities or obligations; and any pending claim, action
of the agreed cut-off date; or proceeding brought by or against any constituent
(e) The method to be used in the merger or corporation may be prosecuted by or against the
consolidation of accounts of the companies; surviving or consolidated corporation. The rights of
(f) The provisional or pro forma values, as merged or creditors or liens upon the property of such
consolidated, using the accounting method; and constituent corporations shall not be impaired by
(g) Such other information as may be prescribed by the the merger or consolidation.
Commission.
** sasaluhin niya yung mga dating utang nung dalawang
Section 78. Effectivity of Merger or Consolidation – The nagmerge
articles of merger or of consolidation, signed and ** labas yung creditors if nagsama si a and b pag nakabuo
certified as required by this Code, shall be submitted ng c, or iwan nalang si a – hindi nagbabago sa creditors na
to the Commission for its approval: Provided, That in may karapatan sila makakolekta, kahit new entity,
the case of merger or consolidation of banks or banking pwedeng habulin
institutions, loan associations, trust companies,
insurance companies, public utilities, educational APPRAISAL RIGHT
institutions, and other special corporations governed by
special laws, the favorable recommendation of the Section 80. When the Right of Appraisal May Be
appropriate government agency shall first be obtained. Exercised – Any stockholder of a corporation shall have
If the Commission is satisfied that the merger or the right to dissent and demand payment of the fair
consolidation of the corporations concerned is value of the shares in the following instances:
consistent with the provisions of this Code and existing
laws, it shall issue a certificate approving the articles (a) In case an amendment to the articles of
and plan of merger or of consolidation, at which time the incorporation has the effect of changing or restricting
merger or consolidation shall be effective. the rights of any stockholder or class of shares, or
of authorizing preferences in any respect superior to
If, upon investigation, the Commission has reason to those of outstanding shares of any class, or of
believe that the proposed merger or consolidation is extending or shortening the term of corporate
contrary to or inconsistent with the provisions of this existence;
Code or existing laws, it shall set a hearing to give the (b) In case of sale, lease, exchange, transfer, mortgage,
corporations concerned the opportunity to be pledge or other disposition of all or substantially all of
heard. Written notice of the date, time, and place of the corporate property and assets as provided in this
hearing shall be given to each constituent corporation Code;
at least two (2) weeks before said hearing. The (c) In case of merger or consolidation; and
Commission shall thereafter proceed as provided in this (d) In case of investment of corporate funds for any
Code. purpose other than the primary purpose of the
corporation.
** if ang magmemerge ay banks/banking
institutions/educational institutions – the favorable ** ang isang stockholder ay may karapatan magsabi ng
recommendation of the appropriate government agency kanyang pagkontra sa isang plano lalo na kung hindi ito
shall first be obtained para mabantayan yung original na napagusapan sa AOI

Section 79. Effects of Merger or Consolidation – – The ** inaappraise yung value ng shares mo kasi (if inexercise
merger or consolidation shall have the following effects: yung rights of appraisal) ang gusto mo mangyari, dahil hindi
ka agree sa plan nilang gawin, parang binibigyan ka ng
(a) The constituent corporations shall become a code ng isang alternative para makaalis sa corporation
single corporation which, in case of merger, shall be nang matiwasay – ex: list ng listahan na pwede ka
the surviving corporation designated in the plan of magdisagree
merger; and, in case of consolidation, shall be the
consolidated corporation designated in the plan of (1) ex: noong maginvest ka nung simula, binasa mo yung
consolidation; AOI – yung expected life lang ay 10 years so upon seeing
(b) The separate existence of the constituent the ten years, hindi mo pa naman kailangan yung pera,
corporations shall cease, except that of the surviving iinvest nalang muna sa corporation pero nung malapit na
or the consolidated corporation; matapos yung 10 years, nalaman mo lang na i-aamend
(c) The surviving or the consolidated corporation shall yung AOI na + 30 years yung life ng corporation
possess all the rights, privileges, immunities, and - bilang stockholder na may expectation, madidisappoint at
powers and shall be subject to all the duties and kokontra ka kaso minority SH ka lang
liabilities of a corporation organized under this Code; - pwede mo ibenta sa iba yung shares mo
(d) The surviving or the consolidated corporation - ikaw na yung umasa sa 10 years, tapos ngayong binigo
shall possess all the rights, privileges, immunities ka, ang gusto pa nila ikaw ang umalis HMPPP NAKO
and franchises of each constituent corporation; and - disadvantage: pwedeng maforce ka to share the shares
all real or personal property, all receivables due on nang mas mura GRR ikaw na nga naloko, ikaw pa malugi
whatever account, including subscriptions to shares and hwahwjhajwhaj DI PWEDE YON
other choses in action, and every other interest of,
belonging to, or due to each constituent corporation, ** bigyan ng disenteng pagalis/closure ang minority – dapat
shall be deemed transferred to and vested in such yung corporation ay ibuyback/bayaran yung shares at its
fair market value

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 Section 81. How Right is Exercised – The dissenting shares shall cease, the status as the stockholder shall
stockholder who votes against a proposed corporate be restored, and all dividend distributions which would
action may exercise the right of appraisal by making have accrued on the shares shall be paid to the
a written demand on the corporation for the stockholder.
payment of the fair value of shares held within thirty
(30) days from the date on which the vote was taken: ** biglang nagbago yung isip ng disenteng stockholder kasi
Provided, That failure to make the demand within such hindi na matutuloy yung kinaarte niya, balik siya sa dating
period shall be deemed a waiver of the appraisal right. pagiging regular stockholder, babalik yung ibang karapatan
If the proposed corporate action is implemented, the
corporation shall pay the stockholder, upon surrender of Section 84. Who Bears Costs of Appraisal – The costs
the certificate or certificates of stock representing the and expenses of appraisal shall be borne by the
stockholder’s shares, the fair value thereof as of the day corporation, unless the fair value ascertained by the
before the vote was taken, excluding any appreciation appraisers is approximately the same as the price
or depreciation in anticipation of such corporate action. which the corporation may have offered to pay the
stockholder, in which case they shall be borne by
If, within sixty (60) days from the approval of the the latter. In the case of an action to recover such fair
corporate action by the stockholders, the withdrawing value, all costs and expenses shall be assessed against
stockholder and the corporation cannot agree on the fair the corporation, unless the refusal of the stockholder to
value of the shares, it shall be determined and receive payment was unjustified.
appraised by three (3) disinterested persons, one of
whom shall be named by the stockholder, another
by the corporation, and the third by the two (2) thus ** kukuha ng tatlong tao – yung mga yun ay may bayad
chosen. The findings of the majority of the appraisers ** if di ka masaya sa decision ng isang corporation,
shall be final, and their award shall be paid by the ibebenta mo na yung shares for 50 pero ayaw ni
corporation within thirty (30) days after such award is corporation, gusto niya ay 25 so para matapos, kuha
made: Provided, That no payment shall be made to any nalang tayo ng appraisers tatlo – may sahod yun
dissenting stockholder unless the corporation has - general rule: ang magbabayad sa appraisers ay ang
unrestricted retained earnings in its books to cover such corporation kasi ipprove yun ni corporation
payment: Provided, further, That upon payment by the - kapag totoo naman pala yung sinabi ni corporation (upon
corporation of the agreed or awarded price, the the recommendation of appraisers) ang magbabayad ay si
stockholder shall forthwith transfer the shares to the stockholder/iccharge kay stockholder kasi parang ang
corporation. dating ay kasalanan niya bakit kinailangan pa bakit
gumastos sa appraisers
** crucial yung 30 days – dapat magsabi ka na na aalis ka
sa corporation Section 85. Notion on Certificates; Rights of Transferee
** pag di sinabi sa 30 days, kahit di ka approve sa decision, – Within ten (10) days after demanding payment for
yung hindi pagfile ng claim within 30 days ay sign na okay shares held, a dissenting stockholder shall submit
lang sayo the certificates of stock representing the shares to
the corporation for notation that such shares are
** they could not agree on the fair value of the share – it dissenting shares. Failure to do so shall, at the option
shall be determined by appraised by 3 independent of the corporation, terminate the rights under this Title.
persons: 1 – pinili ni stockholder, 1 – pinili ni If shares represented by the certificates bearing such
corporation, 1 – pinili nilang dalawa notation are transferred, and the certificates
consequently cancelled, the rights of the transferor as a
** in essence, para itong nagiging treasury shares – bago dissenting stockholder under this Title shall cease and
makapag buyback ng shares ang isang corporation, dapat the transferee shall have all the rights of a regular
may sufficient amount of unrestricted earnings na kasing stockholder; and all dividend distributions which would
halaga ng treasury shares na bibilhin have accrued on such shares shall be paid to the
transferee.
Section 82. Effect of Demand and Termination of Right
– From the time of demand for payment of the fair value ** pag hindi sinubmit yung certificate mateterminate yung
of a stockholder’s shares until either the abandonment appraisal right mo
of the corporate action involved or the purchase of the
said shares by the corporation, all rights accruing to right of appraisal – hindi lang basta pwede na gusto mo
such shares, including voting and dividend rights, lang umalis (hindi gumagana ang right of appraisal)
shall be suspended in accordance with the provisions of
this Code, except the right of such stockholder to NONSTOCK CORPORATION
receive payment of the fair value thereof: Provided, That
if the dissenting stockholder is not paid the value of the Section 86. Definition – For purposes of this Code and
said shares within thirty (30) days after the award, the subject to its provisions on dissolution, a nonstock
voting and dividend rights shall immediately be corporation is one where no part of its income is
restored. distributable as dividends to its members, trustees,
or officers: Provided, That any profit which a nonstock
corporation may obtain incidental to its operations shall,
Section 83. When Right to Payment Ceases – No whenever necessary or proper, be used for the
demand for payment under this Title may be withdrawn furtherance of the purpose or purposes for which the
unless the corporation consents thereto. If, however, corporation was organized, subject to the provisions of
such demand for payment is withdrawn with the consent this Title.
of the corporation, or if the proposed corporate action is
abandoned or rescinded by the corporation or The provisions governing stock corporations, when
disapproved by the Commission where such approval is pertinent, shall be applicable to nonstock corporations,
necessary, or if the Commission determines that such except as may be covered by specific provisions of this
stockholder is not entitled to the appraisal right, then the Title.
right of the stockholder to be paid the fair value of the
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** nonstock corporation – hindi intention kumita, walang ** non-stock – pwedeng lumampas ng 15
ipinamimigay na dividends
** kung ano man ang kinikita, ginagamit lang lalo para mas ** stock – 1 year
maging maganda ** nonstock – not more than 3 years

Section 87. Purposes – Nonstock corporations may be Section 92. List of Members and Proxies, Place of
formed or organized for charitable, religious, Meetings – The corporation shall, at all times, keep a list
educational, professional, cultural, fraternal, of its members and their proxies in the form the
literary, scientific, social, civic service, or similar Commission may require. The list shall be updated to
purposes, like trade, industry, agricultural and like reflect the members and proxies of record twenty (20)
chambers, or any combination thereof, subject to the days prior to any scheduled election. The bylaws may
special provisions of this Title governing particular provide that the members of a nonstock corporation
classes of nonstock corporations. may hold their regular or special meetings at any
place even outside the place where the principal
MEMBERS office of the corporation is located: Provided, That
proper notice is sent to all members indicating the date,
time and place of the meeting: Provided, further, That
Section 88. Right to Vote – The right of the members of
the place of meeting shall be within Philippine
any class or classes to vote may be limited, broadened,
territory.
or denied to the extent specified in the articles of
incorporation or the bylaws. Unless so limited,
broadened, or denied, each member, regardless of ** pwedeng magpameeting even outside the place outside
class, shall be entitled to one (1) vote. the principal office (be within the Philippine Territory)

Unless otherwise provided in the articles of DISTRIBUTION OF ASSETS IN NONSTOCK

incorporation or the bylaws, a member may vote by CORPORATIONS
proxy, in accordance with the provisions of this Code.
The bylaws may likewise authorize voting through Section 93. Rules of Distribution – The assets of a
remote communication and/or in absentia nonstock corporation undergoing the process of
dissolution for reasons other than those set forth in
** corpo: ang boto ay nakadepende sa number of shares Section 139 of this Code, shall be applied and
** members: counted as one dahil wala naman shares distributed as follows:

(a) All liabilities and obligations of the corporation shall

Section 89. Non-transferability of Membership –
be paid, satisfied and discharged, or adequate provision
Membership in a nonstock corporation and all rights
shall be made therefor;
arising therefrom are personal and non-transferable,
(b) Assets held by the corporation upon a condition
unless the articles of incorporation or the bylaws
requiring return, transfer or conveyance, and which
otherwise provide.
condition occurs by reason of the dissolution, shall be
returned, transferred or conveyed in accordance with
** peculiar o kakaiba sa non-stock corporation such requirements;
** unlike sa stock corpo, pwede mong ibenta if sawa ka na, (c) Assets received and held by the corporation subject
sa nonstock corpo, if gusto mom aging member, kailangan to limitations permitting their use only for charitable,
personally mag-apply, di pwedeng bibili ng shares ng religious, benevolent, educational or similar purposes,
dating member but not held upon a condition requiring return, transfer
or conveyance by reason of the dissolution, shall be
Section 90. Termination of Membership – Membership transferred or conveyed to one (1) or more corporations,
shall be terminated in the manner and for the causes societies or organizations engaged in activities in the
provided in the articles of incorporation or the bylaws. Philippines substantially similar to those of the
Termination of membership shall extinguish all rights of dissolving corporation according to a plan of distribution
a member in the corporation or in its property, unless adopted pursuant to this Chapter;
otherwise provided in the articles of incorporation or the (d) Assets other than those mentioned in the preceding
bylaws. paragraphs, if any, shall be distributed in accordance
with the provisions of the articles of incorporation or the
TRUSTEES AND OFFICERS bylaws, to the extent that the articles of incorporation or
the bylaws determine the distributive rights of members,
Section 91. Election and Terms of Trustees – The or any class or classes of members, or provide for
number of trustees shall be fixed in the articles of distribution; and
incorporation or bylaws which may or may not be more (e) In any other case, assets may be distributed to such
than fifteen (15). They shall hold office for not more persons, societies, organizations or corporations,
than three (3) years until their successors are elected whether or not organized for profit, as may be specified
and qualified. Trustees elected to fill vacancies in a plan of distribution adopted pursuant to this
occurring before the expiration of a particular term shall Chapter.
hold office only for the unexpired period.
** if patapos na ang corporation, ang manner ng distribution
Except with respect to independent trustees of nonstock ay
corporations vested with public interest, only a member
of the corporation shall be elected as trustee. 1. all liabilities and obligations ay babayran
2. assets kailangan i-return
Unless otherwise provided in the articles of 3. assets for charitable…
incorporation or the bylaws, the members may directly
elect officers of a nonstock corporation. Section 94. Plan of Distribution of Assets – A plan
providing for the distribution of assets, consistent with
** stock – limit: 15 the provisions of this Title, may be adopted by a
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 nonstock corporation in the process of dissolution in the stockholders of the corporation shall be deemed to be
following manner: directors for the purpose of applying the provisions of
this Code, unless the context clearly requires otherwise:
a) The board of trustees shall, by majority vote, adopt a Provided, further, That the stockholders of the
resolution recommending a plan of distribution and corporation shall be subject to all liabilities of directors.
directing the submission thereof to a vote at a regular or
special meeting of members having voting rights; The articles of incorporation may likewise provide that
b) Each member entitled to vote shall be given a written all officers or employees or that specified officers or
notice setting forth the proposed plan of distribution or a employees shall be elected or appointed by the
summary thereof and the date, time and place of such stockholders, instead of by the board of directors.
meeting within the time and in the manner provided in
this Code for the giving of notice of meetings; and ** shall be managed by the stockholders of the corporation
(c) Such plan of distribution shall be adopted upon rather than by a BOD kasi 20 lang naman silang kasali
approval of at least two-thirds (2/3) of the members HAHAHHHA, pwedeng iindicate sa AOI na yung mismong
having voting rights present or represented by proxy at SH na ang magmanage
such meeting. ** di na need magelect ng directors
** magiging liable yung SH sa liabilities ng directors
CLOSE CORPORATIONS ** lahat ng power nageeminate sa stockholders, sila na
yung directors, sila na yung bahala mamili ng officers at
Section 95. Definition and Applicability of Title – A close employees
corporation, within the meaning of this Code, is one
whose articles of incorporation provides that: (a) all the Section 97. Validity of Restrictions on Transfer of
corporation’s issued stock of all classes, exclusive of Shares – Restrictions on the right to transfer shares
treasury shares, shall be held of record by not more than must appear in the articles of incorporation, in the
a specified number of persons, not exceeding twenty bylaws, as well as in the certificate of stock; otherwise,
(20); (b) all the issued stock of all classes shall be the same shall not be binding on any purchaser in good
subject to one or more specified restrictions on transfer faith. Said restrictions shall not be more onerous than
permitted by this Title; and (c) the corporation shall not granting the existing stockholders or the corporation the
list in any stock exchange or make any public offering option to purchase the shares of the transferring
of its stocks of any class. Notwithstanding the foregoing, stockholder with such reasonable terms, conditions or
a corporation shall not be deemed a close period stated. If, upon the expiration of said period, the
corporation when at least two-thirds (2/3) of its existing stockholders or the corporation fails to exercise
voting stock or voting rights is owned or controlled the option to purchase, the transferring stockholder may
by another corporation which is not a close sell their shares to any third person.
corporation within the meaning of this Code.
Section 98. Effects of Issuance or Transfer of Stock in
Any corporation may be incorporated as a close Breach of Qualifying Conditions
corporation, except mining or oil companies, stock
exchanges, banks, insurance companies, public (a) If a stock of a close corporation is issued or
utilities, educational institutions and corporations transferred to any person who is not eligible to be a
declared to be vested with public interest in holder thereof under any provision of the articles of
accordance with the provisions of this Code. incorporation, and if the certificate for such stock
conspicuously shows the qualifications of the persons
The provisions of this Title shall primarily govern close entitled to be holders of record thereof, such person is
corporations: Provided, That other Titles in this Code conclusively presumed to have notice of the fact of the
shall apply suppletorily, except as otherwise provided ineligibility to be a stockholder.
under this Title. (b) If the articles of incorporation of a close corporation
states the number of persons, not exceeding twenty
** close corporations – limited lang yung pwede makasali (20), who are entitled to be stockholders of record, and
and usually members lang ng family if the certificate for such stock conspicuously states
** hindi kayo pwedeng sumobra ng 20 such number, and the issuance or transfer of stock to
** wag ibenta sa stock market any person would cause the stock to be held by more
than such number of persons, the person to whom such
Section 96. Articles of Incorporation – The articles of stock is issued or transferred is conclusively presumed
incorporation of a close corporation may provide for: to have notice of this fact.
(c) If a stock certificate of a close corporation
(a) A classification of shares or rights, the qualifications conspicuously shows a restriction on transfer of the
for owning or holding the same, and restrictions on their corporation’s stock and the transferee acquires the
transfers, subject to the provisions of the following stock in violation of such restriction, the transferee is
section; conclusively presumed to have notice of the fact that the
(b) A classification of directors into one (1) or more stock was acquired in violation of the restriction.
classes, each of whom may be voted for and elected (d) Whenever a person to whom stock of a close
solely by a particular class of stock; and corporation has been issued or transferred has or is
(c) Greater quorum or voting requirements in meetings conclusively presumed under this section to have notice
of stockholders or directors than those provided in this of:
Code. (1) the person’s ineligibility to be a stockholder of the
corporation; or
The articles of incorporation of a close corporation may (2) that the transfer of stock would cause the stock
provide that the business of the corporation shall be of the corporation to be held by more than the number
managed by the stockholders of the corporation of persons permitted under its articles of incorporation;
rather than by a board of directors. So long as this or
provision continues in effect, no meeting of stockholders
need be called to elect directors: Provided, That the
episode 9, 10, 11, 12 | 6
 (3) that the transfer violates a restriction on transfer An action within the corporate powers taken at a
of stock, and the corporation may, at its option, refuse meeting held without proper call or notice, is deemed
to register the transfer in the name of the transferee. ratified by a director who failed to attend, unless after
(e) The provisions of subsection (d) shall not be having knowledge thereof, the director promptly files his
applicable if the transfer of stock, though contrary to written objection with the secretary of the corporation.
subsections (a), (b) or (c), has been consented to by all
the stockholders of the close corporation, or if the close Section 101. Preemptive Right in Close Corporations –
corporation has amended its articles of incorporation in The preemptive right of stockholders in close
accordance with this Title.
corporations shall extend to all stock to be issued,
(f) The term “transfer”, as used in this section, is not including reissuance of treasury shares, whether for
limited to a transfer for value. money, property or personal services, or in payment of
(g) The provisions of this section shall not impair any corporate debts, unless the articles of incorporation
right which the transferee may have to either rescind the provide otherwise.
transfer or recover the stock under any express or
implied warranty.
** preemptive right – kakayahan na makatanggap na
bagong issue na shares
Section 99. Agreements by Stockholders ** may preemptive right ang close corporation

(a) Agreements duly signed and executed by and Section 102. Amendment of Articles of Incorporation –
among all stockholders before the formation and Any amendment to the articles of incorporation which
organization of a close corporation shall survive the seeks to delete or remove any provision required by this
incorporation and shall continue to be valid and Title or to reduce a quorum or voting requirement stated
binding between such stockholders, if such be their in said articles of incorporation shall require the
intent, to the extent that such agreements are consistent affirmative vote of at least two-thirds (2/3) of the
with the articles of incorporation, irrespective of where outstanding capital stock, whether with or without
the provisions of such agreements are contained, voting rights, or of such greater proportion of shares as
except those required by this Title to be embodied in may be specifically provided in the articles of
said articles of incorporation. incorporation for amending, deleting or removing any of
(b) A written agreement signed by two (2) or more the aforesaid provisions, at a meeting duly called for the
stockholders may provide that in exercising any voting purpose.
right, the shares held by them shall be voted as provided
or as agreed, or in accordance with a procedure agreed
upon by them. Section 103. Deadlocks – Notwithstanding any contrary
(c) No provision in a written agreement signed by the provision in the close corporation’s articles of
stockholders, relating to any phase of corporate affairs, incorporation, bylaws, or stockholders’ agreement, if the
shall be invalidated between the parties on the ground directors or stockholders are so divided on the
that its effect is to make them partners among management of the corporation’s business and affairs
themselves. that the votes required for a corporate action cannot be
(d) A written agreement among some or all of the obtained, with the consequence that the business and
stockholders in a close corporation shall not be affairs of the corporation can no longer be conducted to
invalidated on the ground that it relates to the conduct the advantage of the stockholders generally, the
of the business and affairs of the corporation as to Commission, upon written petition by any stockholder,
restrict or interfere with the discretion or powers of the shall have the power to arbitrate the dispute. In the
board of directors: Provided, That such agreement shall exercise of such power, the Commission shall have
impose on the stockholders who are parties thereto the authority to make appropriate orders, such as: (a)
liabilities for managerial acts imposed on directors by cancelling or altering any provision contained in the
this Code. articles of incorporation, bylaws, or any stockholder’s
(e) Stockholders actively engaged in the management agreement; (b) cancelling, altering or enjoining a
or operation of the business and affairs of a close resolution or act of the corporation or its board of
corporation shall be held to strict fiduciary duties to each directors, stockholders, or officers; (c) directing or
other and among themselves. The stockholders shall be prohibiting any act of the corporation or its board of
personally liable for corporate torts unless the directors, stockholders, officers, or other persons party
corporation has obtained reasonably adequate liability to the action; (d) requiring the purchase at their fair
insurance. 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
Section 100. When a Board Meeting is Unnecessary or stockholders; (e) appointing a provisional director; (f)
Improperly Held. – Unless the bylaws provide dissolving the corporation; or (g) granting such other
otherwise, any action taken by the directors of a close relief as the circumstances may warrant.
corporation without a meeting called properly and with
due notice shall nevertheless be deemed valid if: A provisional director shall be an impartial person who
is neither a stockholder nor a creditor of the corporation
(a) Before or after such action is taken, a written consent or any of its subsidiaries or affiliates, and whose further
thereto is signed by all the directors; or qualifications, if any, may be determined by the
(b) All the stockholders have actual or implied Commission. A provisional director is not a receiver of
knowledge of the action and make no prompt objection the corporation and does not have the title and powers
in writing; or of a custodian or receiver. A provisional director shall
(c) The directors are accustomed to take informal action have all the rights and powers of a duly elected director,
with the express or implied acquiescence of all the including the right to be notified of and to vote at
stockholders; or meetings of directors until removed by order of the
(d) All the directors have express or implied knowledge Commission or by all the stockholders. The
of the action in question and none of them makes a compensation of the provisional director shall be
prompt objection in writing. determined by agreement between such director and

episode 9, 10, 11, 12 | 7

 the corporation, subject to approval of the Commission, SPECIAL CORPORATION: RELIGIOUS
which may fix the compensation absent an agreement CORPORATIONS
or in the event of disagreement between the provisional
director and the corporation. Section 107. Classes of Religious Corporations –
Religious corporations may be incorporated by one or
** provisional director – close to independent director more persons. Such corporations may be classified
into corporations sole and religious societies.
Section 104. Withdrawal of Stockholder or Dissolution
Religious corporations shall be governed by this
of Corporation – In addition and without prejudice to
Chapter and by the general provisions on nonstock
other rights and remedies available under this Title, any
corporations insofar as applicable.
stockholder of a close corporation may, for any reason,
compel the corporation to purchase shares held at fair
value, which shall not be less than the par or issued ** one or more person – corporation sole & religious
value, when the corporation has sufficient assets in its societies
books to cover its debts and liabilities exclusive of
capital stock: Provided, That any stockholder of a close Section 108. Corporation Sole – For the purpose of
corporation may, by written petition to the Commission, administering and managing, as trustee, the affairs,
compel the dissolution of such corporation whenever property and temporalities of any religious
any of acts of the directors, officers, or those in control denomination, sect or church, a corporation sole may
of the corporation is illegal, fraudulent, dishonest, be formed by the chief archbishop, bishop, priest,
oppressive or unfairly prejudicial to the corporation or minister, rabbi, or other presiding elder of such
any stockholder, or whenever corporate assets are religious denomination, sect, or church.
being misapplied or wasted.
** before pa yung revised corporation code and one person
** appraisal right corporation, meron ng corporation sole dati pa – may isang
corporation na isang tao lang pwede magpasimula (usually
SPECIAL CORPORATION: EDUCATIONAL associated with religious corporation)
CORPORATIONS
Section 109. Articles of Incorporation – In order to
Section 105. Incorporation – Educational corporations become a corporation sole, the chief archbishop,
shall be governed by special laws and by the general bishop, priest, minister, rabbi or presiding elder of any
provisions of this Code. religious denomination, sect or church must file with the
Commission articles of incorporation setting forth the
following:
Section 106. Board of Trustees – Trustees of
educational institutions organized as nonstock
(a) That the applicant chief archbishop, bishop, priest,
corporations shall not be less than five (5) nor more
minister, rabbi, or presiding elder represents the
than fifteen (15): Provided, That the number of trustees
religious denomination, sect, or church which desires to
shall be in multiples of five (5).
become a corporation sole;
(b) That the rules, regulations and discipline of the
Unless otherwise provided in the articles of
religious denomination, sect or church are consistent
incorporation or bylaws, the board of trustees of
with becoming a corporation sole and do not forbid it;
incorporated schools, colleges, or other institutions of
(c) That such chief archbishop, bishop, priest, minister,
learning shall, as soon as organized, so classify
rabbi, or presiding elder is charged with the
themselves that the term of office of one-fifth (1/5) of
administration of the temporalities and the management
their number shall expire every year. Trustees
of the affairs, estate and properties of the religious
thereafter elected to fill vacancies, occurring before the
denomination, sect or church within the territorial
expiration of a particular term, shall hold office only for
jurisdiction, so described succinctly in the articles of
the unexpired period. Trustees elected thereafter to fill
incorporation;
vacancies caused by expiration of term shall hold office
(d) The manner by which any vacancy occurring in the
for five (5) years. A majority of the trustees shall
office of chief archbishop, bishop, priest, minister, rabbi,
constitute a quorum for the transaction of business. The
powers and authority of trustees shall be defined in the or presiding elder is required to be filled, according to
the rules, regulations or discipline of the religious
bylaws.
denomination, sect or church; and
(e) The place where the principal office of the
For institutions organized as stock corporations, the
corporation sole is to be established and located, which
number and term of directors shall be governed by the
place must be within the territory of the Philippines.
provisions on stock corporations.
The articles of incorporation may include any other
** ang nagpapatakbo ay board of trustees provision not contrary to law for the regulation of the
** not less than 5, not more than 15, in multiples of five = 5, affairs of the corporation.
10, 15 lang – bawal 7, 9
- reason: concept of staggered terms – ex: 15 (Mr. A – Mr.
O), ang mangayayari: abc (5 year term), def (4 year term), Section 110. Submission of the Articles of Incorporation
ghi (3 year term), jkl (2 year term), mno (1 year term) tapos – The articles of incorporation must be verified, by
matatanggal sim no at papalit si pqr na magkakaron ng 5 affidavit or affirmation of the chief archbishop, bishop,
year term priest, minister, rabbi, or presiding elder, as the case
** para hindi sabay-sabayYYY matatapos yung term ng may be, and accompanied by a copy of the commission,
mga board of trustees, apra may continuity certificate of election or letter of appointment of such
chief archbishop, bishop, priest, minister, rabbi, or
presiding elder, duly certified to be correct by any notary
public.

episode 9, 10, 11, 12 | 8

From and after filing with the Commission of the said (c) The authorization for the dissolution of the
articles of incorporation, verified by affidavit or corporation by the particular religious denomination,
affirmation, and accompanied by the documents sect or church; and
mentioned in the preceding paragraph, such chief (d) The names and addresses of the persons who are
archbishop, bishop, priest, minister, rabbi, or presiding to supervise the winding up of the affairs of the
elder shall become a corporation sole and all corporation.
temporalities, estate and properties of the religious .
denomination, sect or church theretofore administered Upon approval of such declaration of dissolution by the
or managed as such chief archbishop, bishop, priest, Commission, the corporation shall cease to carry on its
minister, rabbi, or presiding elder shall be personally operations except for the purpose of winding up its
held in trust as a corporation sole, for the use, purpose, affairs.
exclusive benefit and on behalf of the religious
denomination, sect or church, including hospitals, Section 114. Religious Societies – Unless forbidden by
schools, colleges, orphan asylums, parsonages, and competent authority, the Constitution, pertinent rules,
cemeteries thereof. regulations, or discipline of the religious denomination,
sect or church of which it is a part, any religious society,
Section 111. Acquisition and Alienation of Property – religious order, diocese, synod, or district organization
A corporation sole may purchase and hold real estate of any religious denomination, sect or church, may,
and personal property for its church, charitable, upon written consent and/or by an affirmative vote at a
benevolent, or educational purposes, and may receive meeting called for the purpose of at least two-thirds (2/3)
bequests or gifts for such purposes. Such corporation of its membership, incorporate for the administration of
may sell or mortgage real property held by it by its temporalities or for the management of its affairs,
obtaining an order for that purpose from the Regional properties, and estate by filing with the Commission,
Trial Court of the province where the property is situated articles of incorporation verified by the affidavit of the
upon proof that the notice of the application for leave to presiding elder, secretary, or clerk or other member of
sell or mortgage has been made through publication or such religious society or religious order, or diocese,
as directed by the Court, and that it is in the interest of synod, or district organization of the religious
the corporation that leave to sell or mortgage be denomination, sect or church, setting forth the following:
granted. The application for leave to sell or mortgage
must be made by petition, duly verified, by the chief (a) That the religious society or religious order, or
archbishop, bishop, priest, minister, rabbi, or presiding diocese, synod, or district organization is a religious
elder acting as corporation sole, and may be opposed organization of a religious denomination, sect or church;
by any member of the religious denomination, sect or (b) That at least two-thirds (2/3) of its membership has
church represented by the corporation sole: Provided, given written consent or has voted to incorporate, at a
That in cases where the rules, regulations, and duly convened meeting of the body;
discipline of the religious denomination, sect or church, (c) That the incorporation of the religious society or
religious society, or order concerned represented by religious order, or diocese, synod, or district
such corporation sole regulate the method of acquiring, organization is not forbidden by competent authority or
holding, selling, and mortgaging real estate and by the Constitution, rules, regulations or discipline of the
personal property, such rules, regulations and discipline religious denomination, sect or church of which it forms
shall govern, and the intervention of the courts shall not part;
be necessary. (d) That the religious society or religious order, or
diocese, synod, or district organization desires to
incorporate for the administration of its affairs,
Section 112. Filing of Vacancies – The successors in
properties and estate;
office of any chief archbishop, bishop, priest, minister,
(e) The place within the Philippines where the principal
rabbi, or presiding elder in a corporation sole shall
office of the corporation is to be established and
become the corporation sole on their accession to office
located; and
and shall be permitted to transact business as such
(f) The names, nationalities, and residence addresses
upon filing a copy of their commission, certificate of
of the trustees, not less than five (5) nor more than
election, or letters of appointment, duly certified by any
fifteen (15), elected by the religious society or religious
notary public with the Commission.
order, or the diocese, synod, or district organization to
serve for the first year or such other period as may be
During any vacancy in the office of chief archbishop,
prescribed by the laws of the religious society or
bishop, priest, minister, rabbi, or presiding elder of any
religious order, or of the diocese, synod, or district
religious denomination, sect or church incorporated as
organization.
a corporation sole, the person or persons authorized by
the rules, regulations or discipline of the religious
denomination, sect or church represented by the SPECIAL CORPORATION: ONE PERSON
corporation sole to administer the temporalities and CORPORATION
manage the affairs, estate, and properties of the
corporation sole shall exercise all the powers and ** major change na ipinasok ng revised corporation code –
authority of the corporation sole during such vacancy. one person corporation
** may mga negosyo na isa lang naman talaga yung mayari
yet ayaw magopen ng sole proprietorship/partnership
Section 113. Dissolution – A corporation sole may be because gusto niya maenjoy yung benefits of having a
dissolved and its affairs settled voluntarily by submitting corporation
to the Commission a verified declaration of dissolution, ** open secret to circumvent the corporations code (before)
setting forth: is to open corporations, lima sila pero if titingin sa records,
halos ilang piraso lang ang ibinibigay nilang share sa mga
(a) The name of the corporation; kasama nila (nominal stockholder – masabing meron
(b) The reason for dissolution and winding up; shares pero in reality para lang sila sinama para maging
lima)

episode 9, 10, 11, 12 | 9

** you could built a corporation on your own and you could Section 121. Single Stockholder as Director, President
enjoy the benefit of the corporation alone – The single stockholder shall be the sole director and
president of the One Person Corporation.
Section 115. Applicability of Provisions to One Person
Corporations – The provisions of this Title shall primarily ** malamang kasi siya lang naman yung andun, wala
apply to One Person Corporations. Other provisions of naman choice HHAHAHAHAH
this Code apply suppletorily, except as otherwise
provided in this Title. Section 122. Treasurer, Corporate Secretary and Other
Officers – Within fifteen (15) days from the issuance of
Section 116. One Person Corporation – A One Person its certificate of incorporation, the One Person
Corporation is a corporation with a single stockholder: Corporation shall appoint a treasurer, corporate
Provided, That only a natural person, trust, or an secretary, and other officers as it may deem necessary,
estate may form a One Person Corporation. and notify the Commission thereof within five (5) days
from appointment.
Banks and quasi-banks, pre-need, trust, insurance,
public and publicly-listed companies, and non-chartered The single stockholder may not be appointed as the
government-owned and -controlled corporations may corporate secretary.
not incorporate as One Person Corporations:
Provided, further, That a natural person who is licensed A single stockholder who is likewise the self-appointed
to exercise a profession may not organize as a One treasurer of the corporation shall give a bond to the
Person Corporation for the purpose of exercising such Commission in such a sum as may be required:
profession except as otherwise provided under special Provided, That the said stockholder/treasurer shall
laws. undertake in writing to faithfully administer the One
Person Corporation’s funds to be received as treasurer,
** trust and estate – considered as an entity and to disburse and invest the same according to the
** ex: gusto ipractice yung pagiging lawyer bawal yung one articles of incorporation as approved by the
person corporation, ang choice lang ay sole proprietorship Commission. The bond shall be renewed every two (2)
at partnership years or as often as may be required.

Section 117. Minimum Capital Stock Required for One ** notify SEC within 5 days
Person Corporation – A One Person Corporation shall
not be required to have a minimum authorized capital 2nd par: ikaw lang ang may-ari at decide pero hindi lang
stock except as otherwise provided by special law. ikaw yung tao
** isa sa pwedeng ihire ay corporate secretary dahil hindi
pwede ang single stockholder dahil president ka na (same
** same with regular corporation (limahan)
with regular corporation)
Section 118. Articles of Incorporation – A One Person 3rd par: si single stockholder ay pwedeng iappoint ang sarili
Corporation shall file articles of incorporation in as a treasurer
accordance with the requirements under Section 14 of
this Code. It shall likewise substantially contain the SUMMARY: bawal secretary, pwede treasurer
following:
Section 123. Special Functions of the Corporate
(a) If the single stockholder is a trust or an estate, the
Secretary – In addition to the functions designated by
name, nationality, and residence of the trustee,
the One Person Corporation, the corporate secretary
administrator, executor, guardian, conservator,
shall:
custodian, or other person exercising fiduciary duties
together with the proof of such authority to act on behalf
(a) Be responsible for maintaining the minutes book
of the trust or estate; and
and/or records of the corporation;
(b) Name, nationality, residence of the nominee and
(b) Notify the nominee or alternate nominee of the death
alternate nominee, and the extent, coverage and
or incapacity of the single stockholder, which notice
limitation of the authority.
shall be given no later than five (5) days from such
occurrence;
** estate – administrator/executor (c) Notify the Commission of the death of the single
stockholder within five (5) days from such occurrence
(b) nominee and alternate nominee – papalit kay single and stating in such notice the names, residence
stockholder if may nangyaring masama addresses, and contact details of all known legal heirs;
and
Section 119. Bylaws – The One Person Corporation is (d) Call the nominee or alternate nominee and the
not required to submit and file corporate bylaws known legal heirs to a meeting and advise the legal
heirs with regard to, among others, the election of a new
** bylaws – internal rules & regulation director, amendment of the articles of incorporation, and
** walang ganun sa OPC other ancillary and/or consequential matters.
reason: ikaw yung gagawa ng rule, pwede kayo magaway
ng sarili mo if ikaw yung susuway HAHAHHAHAHAH ** nominee and alternate nominee – pansamantala
walang sense
Section 124. Nominee and Alternate Nominee – The
Section 120. Display of Corporate Name – A One single stockholder shall designate a nominee and an
Person Corporation shall indicate the letters “OPC” alternate nominee who shall, in the event of the single
either below or at the end of its corporate name. stockholder’s death or incapacity, take the place of the
single stockholder as director and shall manage the
corporation’s affairs.

episode 9, 10, 11, 12 | 10

 The articles of incorporation shall state the names, Section 129. Reportorial Requirements – The One
residence addresses and contact details of the nominee Person Corporation shall submit the following within
and alternate nominee, as well as the extent and such period as the Commission may prescribe:
limitations of their authority in managing the affairs of
the One Person Corporation. (a) Annual financial statements audited by an
independent certified public accountant: Provided, That
The written consent of the nominee and alternate if the total assets or total liabilities of the corporation are
nominee shall be attached to the application for less than Six Hundred Thousand Pesos (P600,000.00),
incorporation. Such consent may be withdrawn in the financial statements shall be certified under oath by
writing any time before the death or incapacity of the the corporation’s treasurer and president.
single stockholder. (b) A report containing explanations or comments by the
president on every qualification, reservation, or adverse
** nominee – back up remark or disclaimer made by the auditor in the latter’s
** alternate nominee – back up ng back up report;
** hindi heir pero tagapamahala pansamantala (c) A disclosure of all self-dealings and related party
transactions entered into between the One Person
Corporation and the single stockholder; and
Section 125. Term of Nominee and Alternate Nominee
(d) Other reports as the Commission may require.
– When the incapacity of the single stockholder is
temporary, the nominee shall sit as director and
For purposes of this provision, the fiscal year of a One
manage the affairs of the One Person Corporation until
Person Corporation shall be that set forth in its articles
the stockholder, by self determination, regains the
of incorporation or, in the absence thereof, the calendar
capacity to assume such duties.
year.
In case of death or permanent incapacity of the single
The Commission may place the corporation under
stockholder, the nominee shall sit as director and
delinquent status should the corporation fail to submit
manage the affairs of the One Person Corporation until
the reportorial requirements three (3) times,
the legal heirs of the single stockholder have been
consecutively or intermittently, within a period of five (5)
lawfully determined, and the heirs have designated one
years.
of them or have agreed that the estate shall be the
single stockholder of the One Person Corporation.
Section 130. Liability of Single Shareholder – A sole
The alternate nominee shall sit as director and manage shareholder claiming limited liability has the burden of
the One Person Corporation in case of the nominee’s affirmatively showing that the corporation was
inability, incapacity, death, or refusal to discharge the adequately financed.
functions as director and manager of the corporation,
and only for the same term and under the same Where the single stockholder cannot prove that the
conditions applicable to the nominee. property of the One Person Corporation is independent
of the stockholder’s personal property, the stockholder
shall be jointly and severally liable for the debts and
Section 126. Change of Nominee or Alternate Nominee
other liabilities of the One Person Corporation.
– The single stockholder may, at any time, change its
nominee and alternate nominee by submitting to the
The principles of piercing the corporate veil applies with
Commission the names of the new nominees and their
equal force to One Person Corporations as with other
corresponding written consent. For this purpose, the
corporations.
articles of incorporation need not be amended.

** if may isang bagay na hinahabol ang investor sa isang

** habang buhay pa si single stockholder at any time,
pagiging corporation – LIMITED LIABILITY
pwedeng palitan yung nominee or alternate nominee
** general rule: limited liability
** unless it could be proven that the corporation was
Section 127. Minutes Book – – A One Person created to circumvent the rules of which the stockholders
Corporation shall maintain a minutes book which shall will be treated as one (pwedeng habulin sa personal assets
contain all actions, decisions, and resolutions taken ng stockholder)
by the One Person Corporation.
Section 131. Conversion from an Ordinary Corporation
** parang blue book nandun lahat ng nangyari sa to a One Person Corporation – When a single
corporation stockholder acquires all the stocks of an ordinary stock
corporation, the latter may apply for conversion into a
Section 128. Records in Lieu of Meetings – When One Person Corporation, subject to the submission of
action is needed on any matter, it shall be sufficient to such documents as the Commission may require. If the
prepare a written resolution, signed and dated by the application for conversion is approved, the Commission
single stockholder, and recorded in the minutes book of shall issue a certificate of filing of amended articles of
the One Person Corporation. The date of recording in incorporation reflecting the conversion. The One Person
the minutes book shall be deemed to be the date of the Corporation converted from an ordinary stock
meeting for all purposes under this Code. corporation shall succeed the latter and be legally
responsible for all the latter’s outstanding liabilities as of
** if nasa OPC, wag na raw magmeeting (board meeting) – the date of conversion.
pwede mo imeet ang empleyado mo if may kailangan
pagusapan or turuan ** chance ang mga corporation na mula sa lima magiging
** if may gusto kang gawin sa corporation mo, gawan lang opc (transitory provision)
ng written resolution with date, binding nay un

episode 9, 10, 11, 12 | 11

 Section 132. Conversion from a One Person The corporation shall submit the following to the
Corporation to an Ordinary Stock Corporation – A One Commission: (1) a copy of the resolution authorizing
Person Corporation may be converted into an ordinary the dissolution, certified by a majority of the board of
stock corporation after due notice to the Commission of directors or trustees and countersigned by the secretary
such fact and of the circumstances leading to the of the corporation; (2) proof of publication; and (3)
conversion, and after compliance with all other favorable recommendation from the appropriate
requirements for stock corporations under this Code regulatory agency, when necessary.
and applicable rules. Such notice shall be filed with the
Commission within sixty (60) days from the occurrence Within fifteen (15) days from receipt of the verified
of the circumstances leading to the conversion into an request for dissolution, and in the absence of any
ordinary stock corporation. If all requirements have withdrawal within said period, the Commission shall
been complied with, the Commission shall issue a approve the request and issue the certificate of
certificate of filing of amended articles of incorporation dissolution. The dissolution shall take effect only upon
reflecting the conversion. the issuance by the Commission of a certificate of
dissolution.
In case of death of the single stockholder, the nominee
or alternate nominee shall transfer the shares to the No application for dissolution of banks, banking and
duly designated legal heir or estate within seven (7) quasi-banking institutions, preneed, insurance and trust
days from receipt of either an affidavit of heirship or companies, NSSLAs, pawnshops, and other financial
self-adjudication executed by a sole heir, or any other intermediaries shall be approved by the Commission
legal document declaring the legal heirs of the single unless accompanied by a favorable
stockholder and notify the Commission of the transfer. recommendation of the appropriate government
Within sixty (60) days from the transfer of the shares, agency
the legal heirs shall notify the Commission of their
decision to either wind up and dissolve the One Person ** walang creditors na apektado
Corporation or convert it into an ordinary stock - majority ng BOD + majority ng stockholders
corporation.
** need rin magfile sa SEC – VERIFIED REQUEST FOR
The ordinary stock corporation converted from a One DISSOLUTION
Person Corporation shall succeed the latter and be
legally responsible for all the latter’s outstanding ** certificate of dissolution – death certificate (tumatapos sa
liabilities as of the date of conversion. buhay ng corporation)

DISSOLUTION Section 135. Voluntary Dissolution Where Creditors are

Affected; Procedure and Contents of Petition – Where
Section 133. Methods of Dissolution – A corporation the dissolution of a corporation may prejudice the rights
formed or organized under the provisions of this Code of any creditor, a verified petition for dissolution shall be
may be dissolved voluntarily or involuntarily. filed with the Commission. The petition shall be signed
by a majority of the corporation’s board of directors or
** voluntarily – bukal sa loob trustees, verified by its president or secretary or one of
its directors or trustees, and shall set forth all claims and
demands against it, and that its dissolution was
Section 134. Voluntary Dissolution Where No Creditors
resolved upon by the affirmative vote of the
are Affected – If dissolution of a corporation does not
stockholders representing at least two-thirds (2/3)
prejudice the rights of any creditor having a claim
of the outstanding capital stock or at least two-thirds
against it, the dissolution may be effected by majority
(2/3) of the members at a meeting of its stockholders or
vote of the board of directors or trustees, and by a
members called for that purpose. The petition shall
resolution adopted by the affirmative vote of the
likewise state: (a) the reason for the dissolution; (b) the
stockholders owning at least majority of the outstanding
form, manner, and time when the notices were given;
capital stock or majority of the members of a meeting to
and (c) the date, place, and time of the meeting in which
be held upon the call of the directors or trustees.
the vote was made. The corporation shall submit to the
Commission the following: (1) a copy of the resolution
At least twenty (20) days prior to the meeting, notice
authorizing the dissolution, certified by a majority of the
shall be given to each shareholder or member of record
board of directors or trustees and countersigned by the
personally, by registered mail, or by any means
secretary of the corporation; and (2) a list of all its
authorized under its bylaws whether or not entitled to
creditors.
vote at the meeting, in the manner provided in Section
50 of this Code and shall state that the purpose of the
If the petition is sufficient in form and substance, the
meeting is to vote on the dissolution of the corporation.
Commission shall, by an order reciting the purpose of
Notice of the time, place, and object of the meeting shall
the petition, fix a deadline for filing objections to the
be published once prior to the date of the meeting in a
petition which date shall not be less than thirty (30) days
newspaper published in the place where the principal
nor more than sixty (60) days after the entry of the order.
office of said corporation is located, or if no newspaper
Before such date, a copy of the order shall be published
is published in such place, in a newspaper of general
at least once a week for three (3) consecutive weeks in
circulation in the Philippines.
a newspaper of general circulation published in the
municipality or city where the principal office of the
A verified request for dissolution shall be filed with the
corporation is situated, or if there be no such
Commission stating: (a) the reason for the dissolution;
newspaper, then in a newspaper of general circulation
(b) the form, manner, and time when the notices were
in the Philippines, and a similar copy shall be posted for
given; (c) names of the stockholders and directors or
three (3) consecutive weeks in three (3) public places in
members and trustees who approved the dissolution;
such municipality or city.
(d) the date, place, and time of the meeting in which the
vote was made; and (e) details of publication.

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 Upon five (5) days’ notice, given after the date on which
the right to file objections as fixed in the order has (a) Non-use of corporate charter as provided under
expired, the Commission shall proceed to hear the Section 21 of this Code;
petition and try any issue raised in the objections filed; (b) Continuous inoperation of a corporation as provided
and if no such objection is sufficient, and the material under Section 21 of this Code;
allegations of the petition are true, it shall render (c) Upon receipt of a lawful court order dissolving the
judgment dissolving the corporation and directing such corporation;
disposition of its assets as justice requires, and may (d) Upon finding by final judgment that the corporation
appoint a receiver to collect such assets and pay the procured its incorporation through fraud;
debts of the corporation. (e) Upon finding by final judgment that the corporation:
(1) Was created for the purpose of committing,
The dissolution shall take effect only upon the issuance concealing or aiding the commission of securities
by the Commission of a certificate of dissolution violations, smuggling, tax evasion, money laundering,
or graft and corrupt practices;
** ginawa yung provisition for the protection of the creditors (2) Committed or aided in the commission of
** majority of BOD + 2/3 of stockholders securities violations, smuggling, tax evasion, money
laundering, or graft and corrupt practices, and its
stockholders knew; and
Section 136. Dissolution by Shortening Corporate Term
(3) Repeatedly and knowingly tolerated the
– A voluntary dissolution may be effected by amending
commission of graft and corrupt practices or other
the articles of incorporation to shorten the corporate
fraudulent or illegal acts by its directors, trustees,
term pursuant to the provisions of this Code. A copy of
officers, or employees.
the amended articles of incorporation shall be submitted
to the Commission in accordance with this Code.
If the corporation is ordered dissolved by final judgment
pursuant to the grounds set forth in subparagraph (e)
Upon the expiration of the shortened term, as stated in
hereof, its assets, after payment of its liabilities, shall,
the approved amended articles of incorporation, the
upon petition of the Commission with the appropriate
corporation shall be deemed dissolved without any
court, be forfeited in favor of the national government.
further proceedings, subject to the provisions of this
Such forfeiture shall be without prejudice to the rights of
Code on liquidation.
innocent stockholders and employees for services
rendered, and to the application of other penalty or
In the case of expiration of corporate term, dissolution
sanction under this Code or other laws.
shall automatically take effect on the day following the
last day of the corporate term stated in the articles of
The Commission shall give reasonable notice to, and
incorporation, without the need for the issuance by the
coordinate with, the appropriate regulatory agency prior
Commission of a certificate of dissolution.
to the involuntary dissolution of companies under their
special regulatory jurisdiction.
** nakakapagpadissolve ng isang corporation ang
pagpapaikli ng corporate term
** involuntary – hindi naman talaga gusto pero naddisolve
** pag binago ang AOI, pinaikli, ang effect ay madidissolve
because of different reasons
yung corporation
(a) may palugit sa start para makpagstart
Section 137. Withdrawal of Request and Petition for (b) pag tumatakbo na, hindi pwedeng tumigil ng 5 years or
Dissolution – A withdrawal of the request for dissolution else your corporation will be deemed delinquent then 2
shall be made in writing, duly verified by any years to return back tapos if hindi pa rin nakabalik, dissolve
incorporator, director, trustee, shareholder, or member na
and signed by the same number of incorporators, (c) lawcourt
directors, trustees, shareholders, or members (d) through fraud
necessary to request for dissolution as set forth in the (e1) ginawa lang para makapanloko, tax evasion
foregoing sections. The withdrawal shall be submitted (e2) graft & corrupt practices
no later than fifteen (15) days from receipt by the
Commission of the request for dissolution. Upon receipt
Section 139. Corporate Liquidation – Except for banks,
of a withdrawal of request for dissolution, the
which shall be covered by the applicable provisions of
Commission shall withhold action on the request for
Republic Act No. 7653, otherwise known as the “New
dissolution and shall, after investigation: (a) make a
Central Bank Act”, as amended, and Republic Act No.
pronouncement that the request for dissolution is
3591, otherwise known as the Philippine Deposit
deemed withdrawn; (b) direct a joint meeting of the
Insurance Corporation Charter, as amended, every
board of directors or trustees and the stockholders or
corporation whose charter expires pursuant to its
members for the purpose of ascertaining whether to
articles of incorporation, is annulled by forfeiture, or
proceed with dissolution; or (c) issue such other orders
whose corporate existence is terminated in any other
as it may deem appropriate.
manner, shall nevertheless remain as a body
corporate for three (3) years after the effective date
A withdrawal of the petition for dissolution shall be in the
of dissolution, for the purpose of prosecuting and
form of a motion and similar in substance to a
defending suits by or against it and enabling it to settle
withdrawal of request for dissolution but shall be verified
and filed prior to publication of the order setting the and close its affairs, dispose of and convey its property,
and distribute its assets, but not for the purpose of
deadline for filing objections to the petition.
continuing the business for which it was established.

Section 138. Involuntary Dissolution – A corporation At any time during said three (3) years, the corporation
may be dissolved by the Commission motu proprio or is authorized and empowered to convey all of its
upon filing of a verified complaint by any interested property to trustees for the benefit of stockholders,
party. The following may be grounds for dissolution of members, creditors and other persons in interest.
the corporation: After any such conveyance by the corporation of its

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 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.

Except as otherwise provided for in Sections 93 and 94

of this Code, upon the winding up of corporate affairs,
any asset distributable to any creditor or stockholder or
member who is unknown or cannot be found shall be
escheated in favor of the national government.

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.

** kaya pang mabuhay for 3 years pero ginawa lang talaga

para sa liquidation – not in the purpose for continuing the
business

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