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Batas Pambansa Bilang 68

THE CORPORATION CODE OF THE PHILIPPINES

Be it enacted by the Batasang Pambansa in sessionassembled:

TITLE I

GENERAL PROVISIONSDEFINITIONS AND CLASSIFICATIONS

Sectin !"Title of the Code. This Code shall be known as"The Corporation Code of the Philippines." (n)

Sectin #"Corporation dened. A corporation is an articialbeing created by operation of law, haing the right ofs!ccession and the powers, attrib!tes and propertiesepressly a!thori#ed by law or incident to its eistence. ($)

Sectin $"Classes of corporations. Corporations for%ed ororgani#ed !nder this Code %ay be stock or non&stockcorporations. Corporations which hae capital stock diidedinto shares and are a!thori#ed to distrib!te to the holders of

s!ch shares diidends or allot%ents of the s!rpl!s prots onthe basis of the shares held are stock corporations. All othercorporations are non&stock corporations. ('a)

Sectin %"Corporations created by special laws or charters.Corporations created by special laws or charters shall begoerned pri%arily by the proisions of the special law orcharter creating the% or applicable to the%, s!pple%ented bythe proisions of this Code, insofar as they are applicable. (n)

Sectin &"Corporators and incorporators, stockholders andmembers. Corporators are those who co%pose acorporation, whether as stockholders or as %e%bers.ncorporators are those stockholders or %e%bers %entionedin the articles of incorporation as originally for%ing and

co%posing the corporation and who are signatories thereof.

Corporators in a stock corporation are called stockholders orshareholders. Corporators in a non&stock corporation arecalled %e%bers. (a)

Sectin 6"Classication of shares. The shares of stock ofstock corporations %ay be diided into classes or series ofshares, or both, any of which classes or series of shares %ayhae s!ch rights, priileges or restrictions as %ay be stated inthe articles of incorporation* Proided, That no share %ay bedepried of oting rights ecept those classied and iss!ed as"preferred" or "redee%able" shares, !nless otherwise proidedin this Code* Proided, f!rther, That there shall always be aclass or series of shares which hae co%plete oting rights.Any or all of the shares or series of shares %ay hae a paral!e or hae no par al!e as %ay be proided for in thearticles of incorporation* Proided, howeer, That banks, tr!stco%panies, ins!rance co%panies, p!blic !tilities, and b!ildingand loan associations shall not be per%itted to iss!e no&paral!e shares of stock.

Preferred shares of stock iss!ed by any corporation %ay begien preference in the distrib!tion of the assets of thecorporation in case of li+!idation and in the distrib!tion ofdiidends, or s!ch other preferences as %ay be stated in thearticles of incorporation which are not iolatie of the

proisions of this Code* Proided, That preferred shares ofstock %ay be iss!ed only with a stated par al!e. The boardof directors, where a!thori#ed in the articles of incorporation,%ay the ter%s and conditions of preferred shares of stockor any series thereof* Proided, That s!ch ter%s andconditions shall be eectie !pon the ling of a certicatethereof with the -ec!rities and change Co%%ission.

-hares of capital stock iss!ed witho!t par al!e shall be

dee%ed f!lly paid and non&assessable and the holder of s!chshares shall not be liable to the corporation or to its creditorsin respect thereto* Proided/ That shares witho!t par al!e%ay not be iss!ed for a consideration less than the al!e ofe (P0.11) pesos per share* Proided, f!rther, That the entireconsideration receied by the corporation for its no&par al!eshares shall be treated as capital and shall not be aailable fordistrib!tion as diidends.

A corporation %ay, f!rther%ore, classify its shares for thep!rpose of ins!ring co%pliance with constit!tional or legalre+!ire%ents.

cept as otherwise proided in the articles of incorporationand stated in the certicate of stock, each share shall be

e+!al in all respects to eery other share.

2here the articles of incorporation proide for non&otingshares in the cases allowed by this Code, the holders of s!chshares shall neertheless be entitled to ote on the following%atters*

3. A%end%ent of the articles of incorporation/

$. Adoption and a%end%ent of by&laws/

'. -ale, lease, echange, %ortgage, pledge or otherdisposition of all or s!bstantially all of the corporateproperty/

. nc!rring, creating or increasing bondedindebtedness/

0. ncrease or decrease of capital stock/

4. 5erger or consolidation of the corporation withanother corporation or other corporations/

6. nest%ent of corporate f!nds in anothercorporation or b!siness in accordance with this Code/and

7. 8issol!tion of the corporation.

cept as proided in the i%%ediately preceding paragraph,the ote necessary to approe a partic!lar corporate act asproided in this Code shall be dee%ed to refer only to stockswith oting rights. (0a)

Sectin '"Founders shares. 9o!nders: shares classied ass!ch in the articles of incorporation %ay be gien certainrights and priileges not en;oyed by the owners of otherstocks, proided that where the ecl!sie right to ote and beoted for in the election of directors is granted, it %!st be for

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a li%ited period not to eceed e (0) years s!b;ect to theapproal of the -ec!rities and change Co%%ission. Thee&year period shall co%%ence fro% the date of theaforesaid approal by the -ec!rities and changeCo%%ission. (n)

Sectin 8"!edeemable shares.

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Sectin !&"Forms of %rticles of &ncorporation. nlessotherwise prescribed by special law, articles of incorporationof all do%estic corporations shall co%ply s!bstantially withthe following for%*

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BKDTI* (Corporations which will engage in any b!siness oractiity resered for 9ilipino citi#ens shall proide thefollowing)*

"Do transfer of stock or interest which shall red!ce theownership of 9ilipino citi#ens to less than the re+!iredpercentage of the capital stock as proided by eisting lawsshall be allowed or per%itted to be recorded in the properbooks of the corporation and this restriction shall be indicatedin all stock certicates iss!ed by the corporation."

D 2TD-- 2Idait concerning thea%o!nt of capital stock s!bscribed and?or paid isfalse/

. That the percentage of ownership of the capitalstock to be owned by citi#ens of the Philippines has

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not been co%plied with as re+!ired by eisting lawsor the Constit!tion.

Do articles of incorporation or a%end%ent to articles ofincorporation of banks, banking and +!asi&bankinginstit!tions, b!ilding and loan associations, tr!st co%paniesand other nancial inter%ediaries, ins!rance co%panies,p!blic !tilities, ed!cational instit!tions, and other corporationsgoerned by special laws shall be accepted or approed bythe Co%%ission !nless acco%panied by a faorablereco%%endation of the appropriate goern%ent agency tothe eect that s!ch articles or a%end%ent is in accordancewith law. (n)

Sectin !8"Corporate name. Do corporate na%e %ay beallowed by the -ec!rities and change Co%%ission if theproposed na%e is identical or deceptiely or conf!singlysi%ilar to that of any eisting corporation or to any otherna%e already protected by law or is patently deceptie,conf!sing or contrary to eisting laws. 2hen a change in thecorporate na%e is approed, the Co%%ission shall iss!e ana%ended certicate of incorporation !nder the a%endedna%e. (n)

Sectin !("Commencement of corporate e*istence. Apriate corporation for%ed or organi#ed !nder this Code

co%%ences to hae corporate eistence and ;!ridicalpersonality and is dee%ed incorporated fro% the date the-ec!rities and change Co%%ission iss!es a certicate ofincorporation !nder its o>cial seal/ and there!pon theincorporators, stockholders?%e%bers and their s!ccessorsshall constit!te a body politic and corporate !nder the na%estated in the articles of incorporation for the period of ti%e%entioned therein, !nless said period is etended or thecorporation is sooner dissoled in accordance with law. (n)

Sectin #*"+e facto corporations. The d!e incorporation ofany corporation clai%ing in good faith to be a corporation!nder this Code, and its right to eercise corporate powers,shall not be in+!ired into collaterally in any priate s!it towhich s!ch corporation %ay be a party. -!ch in+!iry %ay be%ade by the -olicitor Leneral in a +!o warranto proceeding.

(n)

Sectin #!"Corporation by estoppel. All persons whoass!%e to act as a corporation knowing it to be witho!ta!thority to do so shall be liable as general partners for alldebts, liabilities and da%ages inc!rred or arising as a res!ltthereof* Proided, howeer, That when any s!ch ostensiblecorporation is s!ed on any transaction entered by it as acorporation or on any tort co%%itted by it as s!ch, it shall notbe allowed to !se as a defense its lack of corporatepersonality.

n who ass!%es an obligation to an ostensible corporation ass!ch, cannot resist perfor%ance thereof on the gro!nd thatthere was in fact no corporation. (n)

Sectin ##"-ects on nonuse of corporate charter andcontinuous inoperation of a corporation. f a corporationdoes not for%ally organi#e and co%%ence the transaction ofits b!siness or the constr!ction of its works within two ($)years fro% the date of its incorporation, its corporate powerscease and the corporation shall be dee%ed dissoled.Ioweer, if a corporation has co%%enced the transaction ofits b!siness b!t s!bse+!ently beco%es contin!o!slyinoperatie for a period of at least e (0) years, the sa%e

shall be a gro!nd for the s!spension or reocation of itscorporate franchise or certicate of incorporation. (3@a)

This proision shall not apply if the fail!re to organi#e,co%%ence the transaction of its b!sinesses or theconstr!ction of its works, or to contin!o!sly operate is d!e toca!ses beyond the control of the corporation as %ay bedeter%ined by the -ec!rities and change Co%%ission.

TITLE III

BOARD OF DIRECTORS+TR,STEES AND OFFICERS

Sectin #$"The board of directors or trustees. nlessotherwise proided in this Code, the corporate powers of allcorporations for%ed !nder this Code shall be eercised, allb!siness cond!cted and all property of s!ch corporationscontrolled and held by the board of directors or tr!stees to beelected fro% a%ong the holders of stocks, or where there isno stock, fro% a%ong the %e%bers of the corporation, whoshall hold o>ce for one (3) year !ntil their s!ccessors areelected and +!alied. ($7a)

ery director %!st own at least one (3) share of the capitalstock of the corporation of which he is a director, which shareshall stand in his na%e on the books of the corporation. Any

director who ceases to be the owner of at least one (3) shareof the capital stock of the corporation of which he is a directorshall thereby cease to be a director. Tr!stees of non&stockcorporations %!st be %e%bers thereof. A %a;ority of thedirectors or tr!stees of all corporations organi#ed !nder thisCode %!st be residents of the Philippines.

Sectin #%"lection of directors or trustees. At all electionsof directors or tr!stees, there %!st be present, either inperson or by representatie a!thori#ed to act by writtenproy, the owners of a %a;ority of the o!tstanding capitalstock, or if there be no capital stock, a %a;ority of the%e%bers entitled to ote. The election %!st be by ballot ifre+!ested by any oting stockholder or %e%ber. n stockcorporations, eery stockholder entitled to ote shall hae theright to ote in person or by proy the n!%ber of shares of

stock standing, at the ti%e ed in the by&laws, in his ownna%e on the stock books of the corporation, or where the by&laws are silent, at the ti%e of the election/ and saidstockholder %ay ote s!ch n!%ber of shares for as %anypersons as there are directors to be elected or he %ayc!%!late said shares and gie one candidate as %any otesas the n!%ber of directors to be elected %!ltiplied by then!%ber of his shares shall e+!al, or he %ay distrib!te the%on the sa%e principle a%ong as %any candidates as he shallsee t* Proided, That the total n!%ber of otes cast by hi%shall not eceed the n!%ber of shares owned by hi% asshown in the books of the corporation %!ltiplied by the wholen!%ber of directors to be elected* Proided, howeer, That nodelin+!ent stock shall be oted. nless otherwise proided inthe articles of incorporation or in the by&laws, %e%bers ofcorporations which hae no capital stock %ay cast as %anyotes as there are tr!stees to be elected b!t %ay not cast%ore than one ote for one candidate. Candidates receiingthe highest n!%ber of otes shall be declared elected. Any%eeting of the stockholders or %e%bers called for an election%ay ad;o!rn fro% day to day or fro% ti%e to ti%e b!t not sinedie or indenitely if, for any reason, no election is held, or ifthere are not present or represented by proy, at the %eeting,the owners of a %a;ority of the o!tstanding capital stock, or ifthere be no capital stock, a %a;ority of the %e%bers entitledto ote. ('3a)

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Sectin #&"Corporate o/cers, #uorum. %%ediately aftertheir election, the directors of a corporation %!st for%allyorgani#e by the election of a president, who shall be adirector, a treas!rer who %ay or %ay not be a director, asecretary who shall be a resident and citi#en of thePhilippines, and s!ch other o>cers as %ay be proided for inthe by&laws. Any two ($) or %ore positions %ay be heldconc!rrently by the sa%e person, ecept that no one shall actas president and secretary or as president and treas!rer atthe sa%e ti%e.

The directors or tr!stees and o>cers to be elected shallperfor% the d!ties en;oined on the% by law and the by&lawsof the corporation. nless the articles of incorporation or theby&laws proide for a greater %a;ority, a %a;ority of then!%ber of directors or tr!stees as ed in the articles ofincorporation shall constit!te a +!or!% for the transaction ofcorporate b!siness, and eery decision of at least a %a;orityof the directors or tr!stees present at a %eeting at whichthere is a +!or!% shall be alid as a corporate act, ecept forthe election of o>cers which shall re+!ire the ote of a%a;ority of all the %e%bers of the board.

8irectors or tr!stees cannot attend or ote by proy at board%eetings. (''a)

Sectin #6"!eport of election of directors, trustees ando/cers. 2ithin thirty ('1) days after the election of thedirectors, tr!stees and o>cers of the corporation, thesecretary, or any other o>cer of the corporation, shall s!b%itto the -ec!rities and change Co%%ission, the na%es,nationalities and residences of the directors, tr!stees, ando>cers elected. -ho!ld a director, tr!stee or o>cer die, resignor in any %anner cease to hold o>ce, his heirs in case of hisdeath, the secretary, or any other o>cer of the corporation, orthe director, tr!stee or o>cer hi%self, shall i%%ediatelyreport s!ch fact to the -ec!rities and change Co%%ission.(n)

Sectin #'"+is#ualication of directors, trustees oro/cers. Do person conicted by nal ;!dg%ent of an oensep!nishable by i%prison%ent for a period eceeding si (4)

years, or a iolation of this Code co%%itted within e (0)years prior to the date of his election or appoint%ent, shall+!alify as a director, tr!stee or o>cer of any corporation. (n)

Sectin #8"!emo)al of directors or trustees. Any directoror tr!stee of a corporation %ay be re%oed fro% o>ce by aote of the stockholders holding or representing at least two&thirds ($?') of the o!tstanding capital stock, or if thecorporation be a non&stock corporation, by a ote of at leasttwo&thirds ($?') of the %e%bers entitled to ote* Proided,

That s!ch re%oal shall take place either at a reg!lar %eetingof the corporation or at a special %eeting called for thep!rpose, and in either case, after preio!s notice tostockholders or %e%bers of the corporation of the intention topropose s!ch re%oal at the %eeting. A special %eeting ofthe stockholders or %e%bers of a corporation for the p!rposeof re%oal of directors or tr!stees, or any of the%, %!st becalled by the secretary on order of the president or on thewritten de%and of the stockholders representing or holding atleast a %a;ority of the o!tstanding capital stock, or, if it be anon&stock corporation, on the written de%and of a %a;ority ofthe %e%bers entitled to ote. -ho!ld the secretary fail orref!se to call the special %eeting !pon s!ch de%and or fail orref!se to gie the notice, or if there is no secretary, the callfor the %eeting %ay be addressed directly to the stockholdersor %e%bers by any stockholder or %e%ber of the corporationsigning the de%and. Dotice of the ti%e and place of s!ch

%eeting, as well as of the intention to propose s!ch re%oal,%!st be gien by p!blication or by written notice prescribedin this Code. cers is oidable, at theoption of s!ch corporation, !nless all the following conditionsare present*

3. That the presence of s!ch director or tr!stee in theboard %eeting in which the contract was approedwas not necessary to constit!te a +!or!% for s!ch%eeting/

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$. That the ote of s!ch director or tr!stee was notnecessary for the approal of the contract/

'. That the contract is fair and reasonable !nder thecirc!%stances/ and

. That in case of an o>cer, the contract has beenpreio!sly a!thori#ed by the board of directors.

2here any of the rst two conditions set forth in thepreceding paragraph is absent, in the case of acontract with a director or tr!stee, s!ch contract %aybe ratied by the ote of the stockholdersrepresenting at least two&thirds ($?') of theo!tstanding capital stock or of at least two&thirds($?') of the %e%bers in a %eeting called for thep!rpose* Proided, That f!ll disclos!re of the aderseinterest of the directors or tr!stees inoled is %adeat s!ch %eeting* Proided, howeer, That thecontract is fair and reasonable !nder thecirc!%stances. (n)

Sectin $$"Contracts between corporations with interlockingdirectors. cept in cases of fra!d, and proided thecontract is fair and reasonable !nder the circ!%stances, a

contract between two or %ore corporations hainginterlocking directors shall not be inalidated on that gro!ndalone* Proided, That if the interest of the interlocking directorin one corporation is s!bstantial and his interest in the othercorporation or corporations is %erely no%inal, he shall bes!b;ect to the proisions of the preceding section insofar asthe latter corporation or corporations are concerned.

-tockholdings eceeding twenty ($1=) percent of theo!tstanding capital stock shall be considered s!bstantial forp!rposes of interlocking directors. (n)

Sectin $%"+isloyalty of a director. 2here a director, byirt!e of his o>ce, ac+!ires for hi%self a b!siness opport!nitywhich sho!ld belong to the corporation, thereby obtainingprots to the pre;!dice of s!ch corporation, he %!st acco!nt

to the latter for all s!ch prots by ref!nding the sa%e, !nlesshis act has been ratied by a ote of the stockholders owningor representing at least two&thirds ($?') of the o!tstandingcapital stock. This proision shall be applicable,notwithstanding the fact that the director risked his own f!ndsin the ent!re. (n)

Sectin $&"*ecuti)e committee. The by&laws of acorporation %ay create an eec!tie co%%ittee, co%posed ofnot less than three %e%bers of the board, to be appointed bythe board. -aid co%%ittee %ay act, by %a;ority ote of all its%e%bers, on s!ch specic %atters within the co%petence ofthe board, as %ay be delegated to it in the by&laws or on a%a;ority ote of the board, ecept with respect to* (3)approal of any action for which shareholders: approal is alsore+!ired/ ($) the ling of acancies in the board/ (') thea%end%ent or repeal of by&laws or the adoption of new by&laws/ () the a%end%ent or repeal of any resol!tion of theboard which by its epress ter%s is not so a%endable orrepealable/ and (0) a distrib!tion of cash diidends to theshareholders.

TITLE IVPO-ERS OF CORPORATIONS

Sectin $6"Corporate powers and capacity. erycorporation incorporated !nder this Code has the power andcapacity*

3. To s!e and be s!ed in its corporate na%e/

$. f s!ccession by its corporate na%e for the periodof ti%e stated in the articles of incorporation and thecerticate of incorporation/

'. To adopt and !se a corporate seal/

. To a%end its articles of incorporation inaccordance with the proisions of this Code/

0. To adopt by&laws, not contrary to law, %orals, orp!blic policy, and to a%end or repeal the sa%e inaccordance with this Code/

4. n case of stock corporations, to iss!e or sellstocks to s!bscribers and to sell stocks to s!bscribersand to sell treas!ry stocks in accordance with theproisions of this Code/ and to ad%it %e%bers to thecorporation if it be a non&stock corporation/

6. To p!rchase, receie, take or grant, hold, coney,sell, lease, pledge, %ortgage and otherwise deal withs!ch real and personal property, incl!ding sec!ritiesand bonds of other corporations, as the transactionof the lawf!l b!siness of the corporation %ayreasonably and necessarily re+!ire, s!b;ect to theli%itations prescribed by law and the Constit!tion/

7. To enter into %erger or consolidation with othercorporations as proided in this Code/

@. To %ake reasonable donations, incl!ding those forthe p!blic welfare or for hospital, charitable, c!lt!ral,scientic, ciic, or si%ilar p!rposes* Proided, That no

corporation, do%estic or foreign, shall gie donationsin aid of any political party or candidate or forp!rposes of partisan political actiity/

31. To establish pension, retire%ent, and other plansfor the benet of its directors, tr!stees, o>cers ande%ployees/ and

33. To eercise s!ch other powers as %ay beessential or necessary to carry o!t its p!rpose orp!rposes as stated in the articles of incorporation.(3'a)

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Sectin $'"Power to e*tend or shorten corporate term. Apriate corporation %ay etend or shorten its ter% as statedin the articles of incorporation when approed by a %a;orityote of the board of directors or tr!stees and ratied at a%eeting by the stockholders representing at least two&thirds($?') of the o!tstanding capital stock or by at least two&thirds($?') of the %e%bers in case of non&stock corporations.2ritten notice of the proposed action and of the ti%e andplace of the %eeting shall be addressed to each stockholderor %e%ber at his place of residence as shown on the books ofthe corporation and deposited to the addressee in the post

o>ce with postage prepaid, or sered personally* Proided,That in case of etension of corporate ter%, any dissentingstockholder %ay eercise his appraisal right !nder theconditions proided in this code. (n)

Sectin $8"Power to increase or decrease capital stock2incur, create or increase bonded indebtedness. Docorporation shall increase or decrease its capital stock orinc!r, create or increase any bonded indebtedness !nlessapproed by a %a;ority ote of the board of directors and, at astockholder:s %eeting d!ly called for the p!rpose, two&thirds($?') of the o!tstanding capital stock shall faor the increaseor di%in!tion of the capital stock, or the inc!rring, creating orincreasing of any bonded indebtedness. 2ritten notice of theproposed increase or di%in!tion of the capital stock or of theinc!rring, creating, or increasing of any bonded indebtedness

and of the ti%e and place of the stockholder:s %eeting atwhich the proposed increase or di%in!tion of the capital stockor the inc!rring or increasing of any bonded indebtedness isto be considered, %!st be addressed to each stockholder athis place of residence as shown on the books of thecorporation and deposited to the addressee in the post o>cewith postage prepaid, or sered personally.

A certicate in d!plicate %!st be signed by a %a;ority of thedirectors of the corporation and co!ntersigned by thechair%an and the secretary of the stockholders: %eeting,setting forth*

(3) That the re+!ire%ents of this section hae beenco%plied with/

($) The a%o!nt of the increase or di%in!tion of thecapital stock/

(') f an increase of the capital stock, the a%o!nt ofcapital stock or n!%ber of shares of no&par stockthereof act!ally s!bscribed, the na%es, nationalitiesand residences of the persons s!bscribing, thea%o!nt of capital stock or n!%ber of no&par stocks!bscribed by each, and the a%o!nt paid by each onhis s!bscription in cash or property, or the a%o!nt ofcapital stock or n!%ber of shares of no&par stockallotted to each stock&holder if s!ch increase is forthe p!rpose of %aking eectie stock diidendtherefor a!thori#ed/

() Any bonded indebtedness to be inc!rred, createdor increased/

(0) The act!al indebtedness of the corporation on theday of the %eeting/

(4) The a%o!nt of stock represented at the %eeting/and

(6) The ote a!thori#ing the increase or di%in!tion ofthe capital stock, or the inc!rring, creating orincreasing of any bonded indebtedness.

Any increase or decrease in the capital stock or theinc!rring, creating or increasing of any bondedindebtedness shall re+!ire prior approal of the-ec!rities and change Co%%ission.

ne of the d!plicate certicates shall be kept on le

in the o>ce of the corporation and the other shall beled with the -ec!rities and change Co%%issionand attached to the original articles of incorporation.9ro% and after approal by the -ec!rities andchange Co%%ission and the iss!ance by theCo%%ission of its certicate of ling, the capitalstock shall stand increased or decreased and theinc!rring, creating or increasing of any bondedindebtedness a!thori#ed, as the certicate of ling%ay declare* Proided, That the -ec!rities andchange Co%%ission shall not accept for ling anycerticate of increase of capital stock !nlessacco%panied by the sworn state%ent of thetreas!rer of the corporation lawf!lly holding o>ce atthe ti%e of the ling of the certicate, showing thatat least twenty&e ($0=) percent of s!ch increased

capital stock has been s!bscribed and that at leasttwenty&e ($0=) percent of the a%o!nt s!bscribedhas been paid either in act!al cash to the corporationor that there has been transferred to the corporationproperty the al!ation of which is e+!al to twenty&e ($0=) percent of the s!bscription* Proided,f!rther, That no decrease of the capital stock shall beapproed by the Co%%ission if its eect shallpre;!dice the rights of corporate creditors.

Don&stock corporations %ay inc!r or create bondedindebtedness, or increase the sa%e, with theapproal by a %a;ority ote of the board of tr!steesand of at least two&thirds ($?') of the %e%bers in a%eeting d!ly called for the p!rpose.

Gonds iss!ed by a corporation shall be registeredwith the -ec!rities and change Co%%ission, whichshall hae the a!thority to deter%ine the s!>ciencyof the ter%s thereof. (36a)

Sectin $("Power to deny preempti)e right. Allstockholders of a stock corporation shall en;oy pre&e%ptieright to s!bscribe to all iss!es or disposition of shares of anyclass, in proportion to their respectie shareholdings, !nlesss!ch right is denied by the articles of incorporation or ana%end%ent thereto* Proided, That s!ch pre&e%ptie rightshall not etend to shares to be iss!ed in co%pliance withlaws re+!iring stock oerings or %ini%!% stock ownership bythe p!blic/ or to shares to be iss!ed in good faith with theapproal of the stockholders representing two&thirds ($?') ofthe o!tstanding capital stock, in echange for propertyneeded for corporate p!rposes or in pay%ent of a preio!slycontracted debt.

Sectin %*"3ale or other disposition of assets. -!b;ect tothe proisions of eisting laws on illegal co%binations and%onopolies, a corporation %ay, by a %a;ority ote of its boardof directors or tr!stees, sell, lease, echange, %ortgage,pledge or otherwise dispose of all or s!bstantially all of itsproperty and assets, incl!ding its goodwill, !pon s!ch ter%sand conditions and for s!ch consideration, which %ay be%oney, stocks, bonds or other instr!%ents for the pay%ent of

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%oney or other property or consideration, as its board ofdirectors or tr!stees %ay dee% epedient, when a!thori#edby the ote of the stockholders representing at least two&thirds ($?') of the o!tstanding capital stock, or in case of non&stock corporation, by the ote of at least to two&thirds ($?') ofthe %e%bers, in a stockholder:s or %e%ber:s %eeting d!lycalled for the p!rpose. 2ritten notice of the proposed actionand of the ti%e and place of the %eeting shall be addressedto each stockholder or %e%ber at his place of residence asshown on the books of the corporation and deposited to theaddressee in the post o>ce with postage prepaid, or sered

personally* Proided, That any dissenting stockholder %ayeercise his appraisal right !nder the conditions proided inthis Code.

A sale or other disposition shall be dee%ed to coers!bstantially all the corporate property and assets if therebythe corporation wo!ld be rendered incapable of contin!ing theb!siness or acco%plishing the p!rpose for which it wasincorporated.

After s!ch a!thori#ation or approal by the stockholders or%e%bers, the board of directors or tr!stees %ay,neertheless, in its discretion, abandon s!ch sale, lease,echange, %ortgage, pledge or other disposition of propertyand assets, s!b;ect to the rights of third parties !nder any

contract relating thereto, witho!t f!rther action or approal bythe stockholders or %e%bers.

Dothing in this section is intended to restrict the power of anycorporation, witho!t the a!thori#ation by the stockholders or%e%bers, to sell, lease, echange, %ortgage, pledge orotherwise dispose of any of its property and assets if the sa%eis necessary in the !s!al and reg!lar co!rse of b!siness ofsaid corporation or if the proceeds of the sale or otherdisposition of s!ch property and assets be appropriated forthe cond!ct of its re%aining b!siness.

n non&stock corporations where there are no %e%bers withoting rights, the ote of at least a %a;ority of the tr!stees ino>ce will be s!>cient a!thori#ation for the corporation toenter into any transaction a!thori#ed by this section.

Sectin %!"Power to ac#uire own shares. A stockcorporation shall hae the power to p!rchase or ac+!ire itsown shares for a legiti%ate corporate p!rpose or p!rposes,incl!ding b!t not li%ited to the following cases* Proided, Thatthe corporation has !nrestricted retained earnings in its booksto coer the shares to be p!rchased or ac+!ired*

3. To eli%inate fractional shares arising o!t of stockdiidends/

$. To collect or co%pro%ise an indebtedness to thecorporation, arising o!t of !npaid s!bscription, in adelin+!ency sale, and to p!rchase delin+!ent sharessold d!ring said sale/ and

'. To pay dissenting or withdrawing stockholdersentitled to pay%ent for their shares !nder theproisions of this Code. (a)

Sectin %#"Power to in)est corporate funds in anothercorporation or business or for any other purpose. -!b;ect tothe proisions of this Code, a priate corporation %ay inestits f!nds in any other corporation or b!siness or for anyp!rpose other than the pri%ary p!rpose for which it was

organi#ed when approed by a %a;ority of the board ofdirectors or tr!stees and ratied by the stockholdersrepresenting at least two&thirds ($?') of the o!tstandingcapital stock, or by at least two thirds ($?') of the %e%bers inthe case of non&stock corporations, at a stockholder:s or%e%ber:s %eeting d!ly called for the p!rpose. 2ritten noticeof the proposed inest%ent and the ti%e and place of the%eeting shall be addressed to each stockholder or %e%ber athis place of residence as shown on the books of thecorporation and deposited to the addressee in the post o>cewith postage prepaid, or sered personally* Proided, That any

dissenting stockholder shall hae appraisal right as proidedin this Code* Proided, howeer, That where the inest%entby the corporation is reasonably necessary to acco%plish itspri%ary p!rpose as stated in the articles of incorporation, theapproal of the stockholders or %e%bers shall not benecessary. (36 3?$a)

Sectin %$"Power to declare di)idends. & The board ofdirectors of a stock corporation %ay declare diidends o!t ofthe !nrestricted retained earnings which shall be payable incash, in property, or in stock to all stockholders on the basis ofo!tstanding stock held by the%* Proided, That any cashdiidends d!e on delin+!ent stock shall rst be applied to the!npaid balance on the s!bscription pl!s costs and epenses,while stock diidends shall be withheld fro% the delin+!entstockholder !ntil his !npaid s!bscription is f!lly paid*

Proided, f!rther, That no stock diidend shall be iss!edwitho!t the approal of stockholders representing not lessthan two&thirds ($?') of the o!tstanding capital stock at areg!lar or special %eeting d!ly called for the p!rpose. (34a)

-tock corporations are prohibited fro% retaining s!rpl!sprots in ecess of one h!ndred (311=) percent of their paid&in capital stock, ecept* (3) when ;!stied by denitecorporate epansion pro;ects or progra%s approed by theboard of directors/ or ($) when the corporation is prohibited!nder any loan agree%ent with any nancial instit!tion orcreditor, whether local or foreign, fro% declaring diidendswitho!t its?his consent, and s!ch consent has not yet beensec!red/ or (') when it can be clearly shown that s!chretention is necessary !nder special circ!%stances obtainingin the corporation, s!ch as when there is need for special

resere for probable contingencies. (n)

Sectin %%"Power to enter into management contract. Docorporation shall concl!de a %anage%ent contract withanother corporation !nless s!ch contract shall hae beenapproed by the board of directors and by stockholdersowning at least the %a;ority of the o!tstanding capital stock,or by at least a %a;ority of the %e%bers in the case of a non&stock corporation, of both the %anaging and the %anagedcorporation, at a %eeting d!ly called for the p!rpose*Proided, That (3) where a stockholder or stockholdersrepresenting the sa%e interest of both the %anaging and the%anaged corporations own or control %ore than one&third(3?') of the total o!tstanding capital stock entitled to ote ofthe %anaging corporation/ or ($) where a %a;ority of the%e%bers of the board of directors of the %anagingcorporation also constit!te a %a;ority of the %e%bers of theboard of directors of the %anaged corporation, then the%anage%ent contract %!st be approed by the stockholdersof the %anaged corporation owning at least two&thirds ($?') ofthe total o!tstanding capital stock entitled to ote, or by atleast two&thirds ($?') of the %e%bers in the case of a non&stock corporation. Do %anage%ent contract shall be enteredinto for a period longer than e years for any one ter%.

The proisions of the net preceding paragraph shall apply toany contract whereby a corporation !ndertakes to %anage or

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operate all or s!bstantially all of the b!siness of anothercorporation, whether s!ch contracts are called sericecontracts, operating agree%ents or otherwise* Proided,howeer, That s!ch serice contracts or operatingagree%ents which relate to the eploration, deelop%ent,eploitation or !tili#ation of nat!ral reso!rces %ay be enteredinto for s!ch periods as %ay be proided by the pertinent lawsor reg!lations. (n)

Sectin %&"ltra ires acts of corporations. Do corporation!nder this Code shall possess or eercise any corporatepowers ecept those conferred by this Code or by its articlesof incorporation and ecept s!ch as are necessary orincidental to the eercise of the powers so conferred. (n)

TITLE VB. LA-S

Sectin %6"%doption of bylaws. ery corporation for%ed!nder this Code %!st, within one (3) %onth after receipt ofo>cial notice of the iss!ance of its certicate of incorporationby the -ec!rities and change Co%%ission, adopt a code ofby&laws for its goern%ent not inconsistent with this Code. 9orthe adoption of by&laws by the corporation the a>r%atieote of the stockholders representing at least a %a;ority of theo!tstanding capital stock, or of at least a %a;ority of the

%e%bers in case of non&stock corporations, shall benecessary. The by&laws shall be signed by the stockholders or%e%bers oting for the% and shall be kept in the principalo>ce of the corporation, s!b;ect to the inspection of thestockholders or %e%bers d!ring o>ce ho!rs. A copy thereof,d!ly certied to by a %a;ority of the directors or tr!steesco!ntersigned by the secretary of the corporation, shall beled with the -ec!rities and change Co%%ission which shallbe attached to the original articles of incorporation.

Dotwithstanding the proisions of the preceding paragraph,by&laws %ay be adopted and led prior to incorporation/ ins!ch case, s!ch by&laws shall be approed and signed by allthe incorporators and s!b%itted to the -ec!rities andchange Co%%ission, together with the articles ofincorporation.

n all cases, by&laws shall be eectie only !pon the iss!anceby the -ec!rities and change Co%%ission of a certicationthat the by&laws are not inconsistent with this Code.

The -ec!rities and change Co%%ission shall not accept forling the by&laws or any a%end%ent thereto of any bank,banking instit!tion, b!ilding and loan association, tr!stco%pany, ins!rance co%pany, p!blic !tility, ed!cationalinstit!tion or other special corporations goerned by speciallaws, !nless acco%panied by a certicate of the appropriategoern%ent agency to the eect that s!ch by&laws ora%end%ents are in accordance with law. ($1a)

Sectin %'"Contents of bylaws. -!b;ect to the proisionsof the Constit!tion, this Code, other special laws, and thearticles of incorporation, a priate corporation %ay proide inits by&laws for*

3. The ti%e, place and %anner of calling andcond!cting reg!lar or special %eetings of thedirectors or tr!stees/

$. The ti%e and %anner of calling and cond!ctingreg!lar or special %eetings of the stockholders or%e%bers/

'. The re+!ired +!or!% in %eetings of stockholdersor %e%bers and the %anner of oting therein/

. The for% for proies of stockholders and %e%bersand the %anner of oting the%/

0. The +!alications, d!ties and co%pensation ofdirectors or tr!stees, o>cers and e%ployees/

4. The ti%e for holding the ann!al election ofdirectors of tr!stees and the %ode or %anner ofgiing notice thereof/

6. The %anner of election or appoint%ent and theter% of o>ce of all o>cers other than directors ortr!stees/

7. The penalties for iolation of the by&laws/

@. n the case of stock corporations, the %anner of

iss!ing stock certicates/ and

31. -!ch other %atters as %ay be necessary for theproper or conenient transaction of its corporateb!siness and aairs. ($3a)

Sectin %8"%mendments to bylaws. The board of directorsor tr!stees, by a %a;ority ote thereof, and the owners of atleast a %a;ority of the o!tstanding capital stock, or at least a%a;ority of the %e%bers of a non&stock corporation, at areg!lar or special %eeting d!ly called for the p!rpose, %aya%end or repeal any by&laws or adopt new by&laws. Theowners of two&thirds ($?') of the o!tstanding capital stock ortwo&thirds ($?') of the %e%bers in a non&stock corporation%ay delegate to the board of directors or tr!stees the power

to a%end or repeal any by&laws or adopt new by&laws*Proided, That any power delegated to the board of directorsor tr!stees to a%end or repeal any by&laws or adopt new by&laws shall be considered as reoked wheneer stockholdersowning or representing a %a;ority of the o!tstanding capitalstock or a %a;ority of the %e%bers in non&stock corporations,shall so ote at a reg!lar or special %eeting.

2heneer any a%end%ent or new by&laws are adopted, s!cha%end%ent or new by&laws shall be attached to the originalby&laws in the o>ce of the corporation, and a copy thereof,d!ly certied !nder oath by the corporate secretary and a%a;ority of the directors or tr!stees, shall be led with the-ec!rities and change Co%%ission the sa%e to be attachedto the original articles of incorporation and original by&laws.

The a%ended or new by&laws shall only be eectie !pon theiss!ance by the -ec!rities and change Co%%ission of acertication that the sa%e are not inconsistent with this Code.($$a and $'a)

TITLE VI/EETINGS

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Sectin %("4inds of meetings. 5eetings of directors,tr!stees, stockholders, or %e%bers %ay be reg!lar or special.(n)

Sectin &*"!egular and special meetings of stockholders ormembers. & cer. ($, $4)

Sectin &!"Place and time of meetings of stockholders ofmembers. -tockholder:s or %e%ber:s %eetings, whetherreg!lar or special, shall be held in the city or %!nicipalitywhere the principal o>ce of the corporation is located, and ifpracticable in the principal o>ce of the corporation* Proided,

That 5etro 5anila shall, for p!rposes of this section, beconsidered a city or %!nicipality.

Dotice of %eetings shall be in writing, and the ti%e and placethereof stated therein.

All proceedings had and any b!siness transacted at any%eeting of the stockholders or %e%bers, if within the powersor a!thority of the corporation, shall be alid een if the%eeting be i%properly held or called, proided all thestockholders or %e%bers of the corporation are present ord!ly represented at the %eeting. ($ and $0)

Sectin "5uorum in meetings. nless otherwiseproided for in this Code or in the by&laws, a +!or!% shallconsist of the stockholders representing a %a;ority of theo!tstanding capital stock or a %a;ority of the %e%bers in thecase of non&stock corporations. (n)

Sectin &$"!egular and special meetings of directors ortrustees.

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Sectin &("0oting trusts. ne or %ore stockholders of astock corporation %ay create a oting tr!st for the p!rpose ofconferring !pon a tr!stee or tr!stees the right to ote andother rights pertaining to the shares for a period noteceeding e (0) years at any ti%e* Proided, That in thecase of a oting tr!st specically re+!ired as a condition in aloan agree%ent, said oting tr!st %ay be for a periodeceeding e (0) years b!t shall a!to%atically epire !ponf!ll pay%ent of the loan. A oting tr!st agree%ent %!st be inwriting and notari#ed, and shall specify the ter%s andconditions thereof. A certied copy of s!ch agree%ent shall be

led with the corporation and with the -ec!rities andchange Co%%ission/ otherwise, said agree%ent isineectie and !nenforceable. The certicate or certicates ofstock coered by the oting tr!st agree%ent shall becancelled and new ones shall be iss!ed in the na%e of thetr!stee or tr!stees stating that they are iss!ed p!rs!ant tosaid agree%ent. n the books of the corporation, it shall benoted that the transfer in the na%e of the tr!stee or tr!steesis %ade p!rs!ant to said oting tr!st agree%ent.

The tr!stee or tr!stees shall eec!te and delier to thetransferors oting tr!st certicates, which shall betransferable in the sa%e %anner and with the sa%e eect ascerticates of stock.

The oting tr!st agree%ent led with the corporation shall bes!b;ect to ea%ination by any stockholder of the corporationin the sa%e %anner as any other corporate book or record*Proided, That both the transferor and the tr!stee or tr!stees%ay eercise the right of inspection of all corporate books andrecords in accordance with the proisions of this Code.

Any other stockholder %ay transfer his shares to the sa%etr!stee or tr!stees !pon the ter%s and conditions stated inthe oting tr!st agree%ent, and there!pon shall be bo!nd byall the proisions of said agree%ent.

Do oting tr!st agree%ent shall be entered into for thep!rpose of circ!%enting the law against %onopolies andillegal co%binations in restraint of trade or !sed for p!rposesof fra!d.

nless epressly renewed, all rights granted in a oting tr!stagree%ent shall a!to%atically epire at the end of the agreedperiod, and the oting tr!st certicates as well as thecerticates of stock in the na%e of the tr!stee or tr!steesshall thereby be dee%ed cancelled and new certicates ofstock shall be reiss!ed in the na%e of the transferors.

The oting tr!stee or tr!stees %ay ote by proy !nless theagree%ent proides otherwise. ('4a)

TITLE VIISTOC0S AND STOC0HOLDERS

Sectin 6*"3ubscription contract. Any contract for theac+!isition of !niss!ed stock in an eisting corporation or acorporation still to be for%ed shall be dee%ed a s!bscriptionwithin the %eaning of this Title, notwithstanding the fact thatthe parties refer to it as a p!rchase or so%e other contract.(n)

Sectin 6!"Preincorporation subscription. A s!bscriptionfor shares of stock of a corporation still to be for%ed shall beirreocable for a period of at least si (4) %onths fro% thedate of s!bscription, !nless all of the other s!bscribers

consent to the reocation, or !nless the incorporation of saidcorporation fails to %ateriali#e within said period or within alonger period as %ay be stip!lated in the contract ofs!bscription* Proided, That no pre&incorporation s!bscription%ay be reoked after the s!b%ission of the articles ofincorporation to the -ec!rities and change Co%%ission. (n)

Sectin 6#"Consideration for stocks. -tocks shall not beiss!ed for a consideration less than the par or iss!ed pricethereof. Consideration for the iss!ance of stock %ay be any ora co%bination of any two or %ore of the following*

3. Act!al cash paid to the corporation/

$. Property, tangible or intangible, act!ally receiedby the corporation and necessary or conenient forits !se and lawf!l p!rposes at a fair al!ation e+!alto the par or iss!ed al!e of the stock iss!ed/

'. Babor perfor%ed for or serices act!ally renderedto the corporation/

. Preio!sly inc!rred indebtedness of thecorporation/

0. A%o!nts transferred fro% !nrestricted retainedearnings to stated capital/ and

4. !tstanding shares echanged for stocks in theeent of reclassication or conersion.

2here the consideration is other than act!al cash, orconsists of intangible property s!ch as patents ofcopyrights, the al!ation thereof shall initially bedeter%ined by the incorporators or the board ofdirectors, s!b;ect to approal by the -ec!rities andchange Co%%ission.

-hares of stock shall not be iss!ed in echange for

pro%issory notes or f!t!re serice.

The sa%e considerations proided for in this section,insofar as they %ay be applicable, %ay be !sed forthe iss!ance of bonds by the corporation.

The iss!ed price of no&par al!e shares %ay be edin the articles of incorporation or by the board ofdirectors p!rs!ant to a!thority conferred !pon it bythe articles of incorporation or the by&laws, or in theabsence thereof, by the stockholders representing atleast a %a;ority of the o!tstanding capital stock at a%eeting d!ly called for the p!rpose. (0 and 34)

Sectin 6$"Certicate of stock and transfer of shares . The

capital stock of stock corporations shall be diided into sharesfor which certicates signed by the president or icepresident, co!ntersigned by the secretary or assistantsecretary, and sealed with the seal of the corporation shall beiss!ed in accordance with the by&laws. -hares of stock soiss!ed are personal property and %ay be transferred bydeliery of the certicate or certicates indorsed by the owneror his attorney&in&fact or other person legally a!thori#ed to%ake the transfer. Do transfer, howeer, shall be alid, eceptas between the parties, !ntil the transfer is recorded in thebooks of the corporation showing the na%es of the parties tothe transaction, the date of the transfer, the n!%ber of the

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certicate or certicates and the n!%ber of sharestransferred.

Do shares of stock against which the corporation holds any!npaid clai% shall be transferable in the books of thecorporation. ('0)

Sectin 6%"&ssuance of stock certicates. Do certicate ofstock shall be iss!ed to a s!bscriber !ntil the f!ll a%o!nt ofhis s!bscription together with interest and epenses (in case

of delin+!ent shares), if any is d!e, has been paid. ('6)

Sectin 6&"1iability of directors for watered stocks. Anydirector or o>cer of a corporation consenting to the iss!anceof stocks for a consideration less than its par or iss!ed al!eor for a consideration in any for% other than cash, al!ed inecess of its fair al!e, or who, haing knowledge thereof,does not forthwith epress his ob;ection in writing and le thesa%e with the corporate secretary, shall be solidarily, liablewith the stockholder concerned to the corporation and itscreditors for the dierence between the fair al!e receied atthe ti%e of iss!ance of the stock and the par or iss!ed al!eof the sa%e. (n)

Sectin 66"&nterest on unpaid subscriptions. -!bscribers

for stock shall pay to the corporation interest on all !npaids!bscriptions fro% the date of s!bscription, if so re+!ired by,and at the rate of interest ed in the by&laws. f no rate ofinterest is ed in the by&laws, s!ch rate shall be dee%ed tobe the legal rate. ('6)

Sectin 6'"Payment of balance of subscription. -!b;ect tothe proisions of the contract of s!bscription, the board ofdirectors of any stock corporation %ay at any ti%e declared!e and payable to the corporation !npaid s!bscriptions tothe capital stock and %ay collect the sa%e or s!chpercentage thereof, in either case with accr!ed interest, ifany, as it %ay dee% necessary.

Pay%ent of any !npaid s!bscription or any percentagethereof, together with the interest accr!ed, if any, shall be

%ade on the date specied in the contract of s!bscription oron the date stated in the call %ade by the board. 9ail!re topay on s!ch date shall render the entire balance d!e andpayable and shall %ake the stockholder liable for interest atthe legal rate on s!ch balance, !nless a dierent rate ofinterest is proided in the by&laws, co%p!ted fro% s!ch date!ntil f!ll pay%ent. f within thirty ('1) days fro% the said dateno pay%ent is %ade, all stocks coered by said s!bscriptionshall there!pon beco%e delin+!ent and shall be s!b;ect tosale as hereinafter proided, !nless the board of directorsorders otherwise. ('7)

Sectin 68"+elin#uency sale. The board of directors %ay,by resol!tion, order the sale of delin+!ent stock and shallspecically state the a%o!nt d!e on each s!bscription pl!s allaccr!ed interest, and the date, ti%e and place of the salewhich shall not be less than thirty ('1) days nor %ore thansity (41) days fro% the date the stocks beco%e delin+!ent.

Dotice of said sale, with a copy of the resol!tion, shall be sentto eery delin+!ent stockholder either personally or byregistered %ail. The sa%e shall f!rther%ore be p!blishedonce a week for two ($) consec!tie weeks in a newspaper ofgeneral circ!lation in the proince or city where the principalo>ce of the corporation is located.

nless the delin+!ent stockholder pays to the corporation, onor before the date specied for the sale of the delin+!entstock, the balance d!e on his s!bscription, pl!s accr!edinterest, costs of adertise%ent and epenses of sale, or!nless the board of directors otherwise orders, said delin+!entstock shall be sold at p!blic a!ction to s!ch bidder who shalloer to pay the f!ll a%o!nt of the balance on the s!bscriptiontogether with accr!ed interest, costs of adertise%ent andepenses of sale, for the s%allest n!%ber of shares or fractionof a share. The stock so p!rchased shall be transferred tos!ch p!rchaser in the books of the corporation and a

certicate for s!ch stock shall be iss!ed in his faor. There%aining shares, if any, shall be credited in faor of thedelin+!ent stockholder who shall likewise be entitled to theiss!ance of a certicate of stock coering s!ch shares.

-ho!ld there be no bidder at the p!blic a!ction who oers topay the f!ll a%o!nt of the balance on the s!bscriptiontogether with accr!ed interest, costs of adertise%ent andepenses of sale, for the s%allest n!%ber of shares or fractionof a share, the corporation %ay, s!b;ect to the proisions ofthis Code, bid for the sa%e, and the total a%o!nt d!e shall becredited as paid in f!ll in the books of the corporation. Title toall the shares of stock coered by the s!bscription shall beested in the corporation as treas!ry shares and %ay bedisposed of by said corporation in accordance with theproisions of this Code. ('@a&4a)

Sectin 6("6hen sale may be #uestioned. Do action torecoer delin+!ent stock sold can be s!stained !pon thegro!nd of irreg!larity or defect in the notice of sale, or in thesale itself of the delin+!ent stock, !nless the party seeking to%aintain s!ch action rst pays or tenders to the party holdingthe stock the s!% for which the sa%e was sold, with interestfro% the date of sale at the legal rate/ and no s!ch actionshall be %aintained !nless it is co%%enced by the ling of aco%plaint within si (4) %onths fro% the date of sale. (6a)

Sectin '*"Court action to reco)er unpaid subscription.Dothing in this Code shall preent the corporation fro%collecting by action in a co!rt of proper ;!risdiction thea%o!nt d!e on any !npaid s!bscription, with accr!ed interest,

costs and epenses. (@a)

Sectin '!"-ect of delin#uency. Do delin+!ent stock shallbe oted for or be entitled to ote or to representation at anystockholder:s %eeting, nor shall the holder thereof be entitledto any of the rights of a stockholder ecept the right todiidends in accordance with the proisions of this Code, !ntiland !nless he pays the a%o!nt d!e on his s!bscription withaccr!ed interest, and the costs and epenses ofadertise%ent, if any. (01a)

Sectin '#"!ights of unpaid shares. Iolders of s!bscribedshares not f!lly paid which are not delin+!ent shall hae allthe rights of a stockholder. (n)

Sectin '$"1ost or destroyed certicates. The followingproced!re shall be followed for the iss!ance by a corporationof new certicates of stock in lie! of those which hae beenlost, stolen or destroyed*

3. The registered owner of a certicate of stock in acorporation or his legal representatie shall le withthe corporation an a>dait in triplicate setting forth,if possible, the circ!%stances as to how thecerticate was lost, stolen or destroyed, the n!%berof shares represented by s!ch certicate, the serial

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n!%ber of the certicate and the na%e of thecorporation which iss!ed the sa%e. Ie shall alsos!b%it s!ch other infor%ation and eidence whichhe %ay dee% necessary/

$. After erifying the a>dait and other infor%ationand eidence with the books of the corporation, saidcorporation shall p!blish a notice in a newspaper ofgeneral circ!lation p!blished in the place where thecorporation has its principal o>ce, once a week forthree (') consec!tie weeks at the epense of theregistered owner of the certicate of stock which hasbeen lost, stolen or destroyed. The notice shall statethe na%e of said corporation, the na%e of theregistered owner and the serial n!%ber of saidcerticate, and the n!%ber of shares represented bys!ch certicate, and that after the epiration of one(3) year fro% the date of the last p!blication, if nocontest has been presented to said corporationregarding said certicate of stock, the right to %akes!ch contest shall be barred and said corporationshall cancel in its books the certicate of stock whichhas been lost, stolen or destroyed and iss!e in lie!thereof new certicate of stock, !nless the registeredowner les a bond or other sec!rity in lie! thereof as%ay be re+!ired, eectie for a period of one (3)year, for s!ch a%o!nt and in s!ch for% and with

s!ch s!reties as %ay be satisfactory to the board ofdirectors, in which case a new certicate %ay beiss!ed een before the epiration of the one (3) yearperiod proided herein* Proided, That if a contesthas been presented to said corporation or if an actionis pending in co!rt regarding the ownership of saidcerticate of stock which has been lost, stolen ordestroyed, the iss!ance of the new certicate ofstock in lie! thereof shall be s!spended !ntil the naldecision by the co!rt regarding the ownership of saidcerticate of stock which has been lost, stolen ordestroyed.

cept in case of fra!d, bad faith, or negligence onthe part of the corporation and its o>cers, no action%ay be bro!ght against any corporation which shall

hae iss!ed certicate of stock in lie! of those lost,stolen or destroyed p!rs!ant to the proced!re aboe&described. (

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TITLE I1/ERGER AND CONSOLIDATION

Sectin '6"Plan or merger of consolidation. Two or %orecorporations %ay %erge into a single corporation which shallbe one of the constit!ent corporations or %ay consolidate intoa new single corporation which shall be the consolidatedcorporation.

The board of directors or tr!stees of each corporation, party

to the %erger or consolidation, shall approe a plan of %ergeror consolidation setting forth the following*

3. The na%es of the corporations proposing to %ergeor consolidate, hereinafter referred to as theconstit!ent corporations/

$. The ter%s of the %erger or consolidation and the%ode of carrying the sa%e into eect/

'. A state%ent of the changes, if any, in the articlesof incorporation of the s!riing corporation in caseof %erger/ and, with respect to the consolidatedcorporation in case of consolidation, all thestate%ents re+!ired to be set forth in the articles of

incorporation for corporations organi#ed !nder thisCode/ and

. -!ch other proisions with respect to the proposed%erger or consolidation as are dee%ed necessary ordesirable. (n)

Sectin ''"3tockholders or members appro)al. ponapproal by %a;ority ote of each of the board of directors ortr!stees of the constit!ent corporations of the plan of %ergeror consolidation, the sa%e shall be s!b%itted for approal bythe stockholders or %e%bers of each of s!ch corporations atseparate corporate %eetings d!ly called for the p!rpose.Dotice of s!ch %eetings shall be gien to all stockholders or%e%bers of the respectie corporations, at least two ($)

weeks prior to the date of the %eeting, either personally or byregistered %ail. -aid notice shall state the p!rpose of the%eeting and shall incl!de a copy or a s!%%ary of the plan of%erger or consolidation. The a>r%atie ote of stockholdersrepresenting at least two&thirds ($?') of the o!tstandingcapital stock of each corporation in the case of stockcorporations or at least two&thirds ($?') of the %e%bers in thecase of non&stock corporations shall be necessary for theapproal of s!ch plan. Any dissenting stockholder in stockcorporations %ay eercise his appraisal right in accordancewith the Code* Proided, That if after the approal by thestockholders of s!ch plan, the board of directors decides toabandon the plan, the appraisal right shall be eting!ished.

Any a%end%ent to the plan of %erger or consolidation %aybe %ade, proided s!ch a%end%ent is approed by %a;ority

ote of the respectie boards of directors or tr!stees of all theconstit!ent corporations and ratied by the a>r%atie ote ofstockholders representing at least two&thirds ($?') of theo!tstanding capital stock or of two&thirds ($?') of the%e%bers of each of the constit!ent corporations. -!ch plan,together with any a%end%ent, shall be considered as theagree%ent of %erger or consolidation. (n)

Sectin '8"Articles of %erger or consolidation. After theapproal by the stockholders or %e%bers as re+!ired by thepreceding section, articles of %erger or articles of

consolidation shall be eec!ted by each of the constit!entcorporations, to be signed by the president or ice&presidentand certied by the secretary or assistant secretary of eachcorporation setting forth*

3. The plan of the %erger or the plan of consolidation/

$. As to stock corporations, the n!%ber of shareso!tstanding, or in the case of non&stock corporations,

the n!%ber of %e%bers/ and

'. As to each corporation, the n!%ber of shares or%e%bers oting for and against s!ch plan,respectiely. (n)

Sectin '("ectiity of %erger or consolidation. Thearticles of %erger or of consolidation, signed and certied asherein aboe re+!ired, shall be s!b%itted to the -ec!ritiesand change Co%%ission in +!adr!plicate for its approal*Proided, That in the case of %erger or consolidation of banksor banking instit!tions, b!ilding and loan associations, tr!stco%panies, ins!rance co%panies, p!blic !tilities, ed!cationalinstit!tions and other special corporations goerned byspecial laws, the faorable reco%%endation of the

appropriate goern%ent agency shall rst be obtained. f theCo%%ission is satised that the %erger or consolidation ofthe corporations concerned is not inconsistent with theproisions of this Code and eisting laws, it shall iss!e acerticate of %erger or of consolidation, at which ti%e the%erger or consolidation shall be eectie.

f, !pon inestigation, the -ec!rities and changeCo%%ission has reason to beliee that the proposed %ergeror consolidation is contrary to or inconsistent with theproisions of this Code or eisting laws, it shall set a hearingto gie the corporations concerned the opport!nity to beheard. 2ritten notice of the date, ti%e and place of hearingshall be gien to each constit!ent corporation at least two ($)weeks before said hearing. The Co%%ission shall thereafterproceed as proided in this Code. (n)

Sectin 8*"ects of %erger or consolidation. The %ergeror consolidation shall hae the following eects*

3. The constit!ent corporations shall beco%e a singlecorporation which, in case of %erger, shall be thes!riing corporation designated in the plan of%erger/ and, in case of consolidation, shall be theconsolidated corporation designated in the plan ofconsolidation/

$. The separate eistence of the constit!entcorporations shall cease, ecept that of the s!riingor the consolidated corporation/

'. The s!riing or the consolidated corporation shallpossess all the rights, priileges, i%%!nities andpowers and shall be s!b;ect to all the d!ties andliabilities of a corporation organi#ed !nder this Code/

. The s!riing or the consolidated corporation shallthere!pon and thereafter possess all the rights,priileges, i%%!nities and franchises of each of theconstit!ent corporations/ and all property, real orpersonal, and all receiables d!e on whateeracco!nt, incl!ding s!bscriptions to shares and other

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choses in action, and all and eery other interest of,or belonging to, or d!e to each constit!entcorporation, shall be dee%ed transferred to andested in s!ch s!riing or consolidated corporationwitho!t f!rther act or deed/ and

0. The s!riing or consolidated corporation shall beresponsible and liable for all the liabilities andobligations of each of the constit!ent corporations inthe sa%e %anner as if s!ch s!riing or consolidatedcorporation had itself inc!rred s!ch liabilities orobligations/ and any pending clai%, action orproceeding bro!ght by or against any of s!chconstit!ent corporations %ay be prosec!ted by oragainst the s!riing or consolidated corporation.

The rights of creditors or liens !pon the property ofany of s!ch constit!ent corporations shall not bei%paired by s!ch %erger or consolidation. (n)

TITLE 1APPRAISAL RIGHT

Sectin 8!"nstances of appraisal right. Any stockholder ofa corporation shall hae the right to dissent and de%andpay%ent of the fair al!e of his shares in the followinginstances*

3. n case any a%end%ent to the articles ofincorporation has the eect of changing or restrictingthe rights of any stockholder or class of shares, or ofa!thori#ing preferences in any respect s!perior tothose of o!tstanding shares of any class, or ofetending or shortening the ter% of corporateeistence/

$. n case of sale, lease, echange, transfer,%ortgage, pledge or other disposition of all ors!bstantially all of the corporate property and assetsas proided in the Code/ and

'. n case of %erger or consolidation. (n)

Sectin 8#"7ow right is e*ercised. The appraisal right %aybe eercised by any stockholder who shall hae oted againstthe proposed corporate action, by %aking a written de%andon the corporation within thirty ('1) days after the date onwhich the ote was taken for pay%ent of the fair al!e of hisshares* Proided, That fail!re to %ake the de%and within s!chperiod shall be dee%ed a waier of the appraisal right. f theproposed corporate action is i%ple%ented or aected, thecorporation shall pay to s!ch stockholder, !pon s!rrender ofthe certicate or certicates of stock representing his shares,the fair al!e thereof as of the day prior to the date on whichthe ote was taken, ecl!ding any appreciation ordepreciation in anticipation of s!ch corporate action.

f within a period of sity (41) days fro% the date thecorporate action was approed by the stockholders, thewithdrawing stockholder and the corporation cannot agree onthe fair al!e of the shares, it shall be deter%ined andappraised by three (') disinterested persons, one of who%shall be na%ed by the stockholder, another by thecorporation, and the third by the two th!s chosen. Thendings of the %a;ority of the appraisers shall be nal, andtheir award shall be paid by the corporation within thirty ('1)days after s!ch award is %ade* Proided, That no pay%entshall be %ade to any dissenting stockholder !nless thecorporation has !nrestricted retained earnings in its books to

coer s!ch pay%ent* and Proided, f!rther, That !ponpay%ent by the corporation of the agreed or awarded price,the stockholder shall forthwith transfer his shares to thecorporation. (n)

Sectin 8$"-ect of demand and termination of right. 9ro%the ti%e of de%and for pay%ent of the fair al!e of astockholder:s shares !ntil either the abandon%ent of thecorporate action inoled or the p!rchase of the said sharesby the corporation, all rights accr!ing to s!ch shares,incl!ding oting and diidend rights, shall be s!spended inaccordance with the proisions of this Code, ecept the rightof s!ch stockholder to receie pay%ent of the fair al!ethereof* Proided, That if the dissenting stockholder is notpaid the al!e of his shares within '1 days after the award,his oting and diidend rights shall i%%ediately be restored.(n)

Sectin 8%"6hen right to payment ceases. Do de%and forpay%ent !nder this Title %ay be withdrawn !nless thecorporation consents thereto. f, howeer, s!ch de%and forpay%ent is withdrawn with the consent of the corporation, orif the proposed corporate action is abandoned or rescinded bythe corporation or disapproed by the -ec!rities andchange Co%%ission where s!ch approal is necessary, or ifthe -ec!rities and change Co%%ission deter%ines that

s!ch stockholder is not entitled to the appraisal right, then theright of said stockholder to be paid the fair al!e of his sharesshall cease, his stat!s as a stockholder shall there!pon berestored, and all diidend distrib!tions which wo!ld haeaccr!ed on his shares shall be paid to hi%. (n)

Sectin 8&"6ho bears costs of appraisal. The costs andepenses of appraisal shall be borne by the corporation,!nless the fair al!e ascertained by the appraisers isapproi%ately the sa%e as the price which the corporation%ay hae oered to pay the stockholder, in which case theyshall be borne by the latter. n the case of an action to recoers!ch fair al!e, all costs and epenses shall be assessedagainst the corporation, !nless the ref!sal of the stockholderto receie pay%ent was !n;!stied. (n)

Sectin 86""otation on certicates2 rights of transferee. 2ithin ten (31) days after de%anding pay%ent for his shares,a dissenting stockholder shall s!b%it the certicates of stockrepresenting his shares to the corporation for notation thereonthat s!ch shares are dissenting shares. Iis fail!re to do soshall, at the option of the corporation, ter%inate his rights!nder this Title. f shares represented by the certicatesbearing s!ch notation are transferred, and the certicatesconse+!ently cancelled, the rights of the transferor as adissenting stockholder !nder this Title shall cease and thetransferee shall hae all the rights of a reg!lar stockholder/and all diidend distrib!tions which wo!ld hae accr!ed ons!ch shares shall be paid to the transferee. (n)

TITLE 1INON2STOC0 CORPORATIONS

Sectin 8'"8enition. 9or the p!rposes of this Code, a non&stock corporation is one where no part of its inco%e isdistrib!table as diidends to its %e%bers, tr!stees, oro>cers, s!b;ect to the proisions of this Code on dissol!tion*Proided, That any prot which a non&stock corporation %ayobtain as an incident to its operations shall, wheneernecessary or proper, be !sed for the f!rtherance of thep!rpose or p!rposes for which the corporation was organi#ed,s!b;ect to the proisions of this Title.

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The proisions goerning stock corporation, when pertinent,shall be applicable to non&stock corporations, ecept as %aybe coered by specic proisions of this Title. (n)

Sectin 88"P!rposes. Don&stock corporations %ay befor%ed or organi#ed for charitable, religio!s, ed!cational,professional, c!lt!ral, fraternal, literary, scientic, social, ciicserice, or si%ilar p!rposes, like trade, ind!stry, agric!lt!raland like cha%bers, or any co%bination thereof, s!b;ect to thespecial proisions of this Title goerning partic!lar classes ofnon&stock corporations. (n)

CHAPTER I/E/BERS

Sectin 8("!ight to )ote. The right of the %e%bers of anyclass or classes to ote %ay be li%ited, broadened or deniedto the etent specied in the articles of incorporation or theby&laws. nless so li%ited, broadened or denied, each%e%ber, regardless of class, shall be entitled to one ote.

nless otherwise proided in the articles of incorporation orthe by&laws, a %e%ber %ay ote by proy in accordance withthe proisions of this Code. (n)

Koting by %ail or other si%ilar %eans by %e%bers of non&stock corporations %ay be a!thori#ed by the by&laws of non&stock corporations with the approal of, and !nder s!chconditions which %ay be prescribed by, the -ec!rities andchange Co%%ission.

Sectin (*"Don&transferability of %e%bership. 5e%bership in a non&stock corporation and all rights arisingtherefro% are personal and non&transferable, !nless thearticles of incorporation or the by&laws otherwise proide. (n)

Sectin (!"Ter%ination of %e%bership. 5e%bership shallbe ter%inated in the %anner and for the ca!ses proided inthe articles of incorporation or the by&laws. Ter%ination of%e%bership shall hae the eect of eting!ishing all rights of

a %e%ber in the corporation or in its property, !nlessotherwise proided in the articles of incorporation or the by&laws. (n)

CHAPTER IITR,STEES AND OFFICES

Sectin (#"lection and term of trustees. nless otherwiseproided in the articles of incorporation or the by&laws, theboard of tr!stees of non&stock corporations, which %ay be%ore than fteen (30) in n!%ber as %ay be ed in theirarticles of incorporation or by&laws, shall, as soon asorgani#ed, so classify the%seles that the ter% of o>ce ofone&third (3?') of their n!%ber shall epire eery year/ ands!bse+!ent elections of tr!stees co%prising one&third (3?') ofthe board of tr!stees shall be held ann!ally and tr!stees soelected shall hae a ter% of three (') years. Tr!steesthereafter elected to ll acancies occ!rring before theepiration of a partic!lar ter% shall hold o>ce only for the!nepired period.

Do person shall be elected as tr!stee !nless he is a %e%berof the corporation.

nless otherwise proided in the articles of incorporation orthe by&laws, o>cers of a non&stock corporation %ay bedirectly elected by the %e%bers. (n)

Sectin ($"Place of meetings. The by&laws %ay proidethat the %e%bers of a non&stock corporation %ay hold theirreg!lar or special %eetings at any place een o!tside theplace where the principal o>ce of the corporation is located*Proided, That proper notice is sent to all %e%bers indicatingthe date, ti%e and place of the %eeting* and Proided,f!rther, That the place of %eeting shall be within thePhilippines. (n)

CHAPTER IIIDISTRIB,TION OF ASSETS IN NON2STOC0CORPORATIONS

Sectin (%"!ules of distribution. n case dissol!tion of anon&stock corporation in accordance with the proisions of thisCode, its assets shall be applied and distrib!ted as follows*

3. All liabilities and obligations of the corporationshall be paid, satised and discharged, or ade+!ateproision shall be %ade therefore/

$. Assets held by the corporation !pon a conditionre+!iring ret!rn, transfer or coneyance, and whichcondition occ!rs by reason of the dissol!tion, shall beret!rned, transferred or coneyed in accordance withs!ch re+!ire%ents/

'. Assets receied and held by the corporations!b;ect to li%itations per%itting their !se only forcharitable, religio!s, beneolent, ed!cational orsi%ilar p!rposes, b!t not held !pon a conditionre+!iring ret!rn, transfer or coneyance by reason ofthe dissol!tion, shall be transferred or coneyed toone or %ore corporations, societies or organi#ationsengaged in actiities in the Philippines s!bstantiallysi%ilar to those of the dissoling corporationaccording to a plan of distrib!tion adopted p!rs!ant

to this Chapter/

. Assets other than those %entioned in thepreceding paragraphs, if any, shall be distrib!ted inaccordance with the proisions of the articles ofincorporation or the by&laws, to the etent that thearticles of incorporation or the by&laws, deter%inethe distrib!tie rights of %e%bers, or any class orclasses of %e%bers, or proide for distrib!tion/ and

0. n any other case, assets %ay be distrib!ted tos!ch persons, societies, organi#ations orcorporations, whether or not organi#ed for prot, as%ay be specied in a plan of distrib!tion adoptedp!rs!ant to this Chapter. (n)

Sectin (&"Plan of distribution of assets. A plan proidingfor the distrib!tion of assets, not inconsistent with theproisions of this Title, %ay be adopted by a non&stockcorporation in the process of dissol!tion in the following%anner*

The board of tr!stees shall, by %a;ority ote, adopt aresol!tion reco%%ending a plan of distrib!tion and directingthe s!b%ission thereof to a ote at a reg!lar or special%eeting of %e%bers haing oting rights. 2ritten notice

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setting forth the proposed plan of distrib!tion or a s!%%arythereof and the date, ti%e and place of s!ch %eeting shall begien to each %e%ber entitled to ote, within the ti%e and inthe %anner proided in this Code for the giing of notice of%eetings to %e%bers. -!ch plan of distrib!tion shall beadopted !pon approal of at least two&thirds ($?') of the%e%bers haing oting rights present or represented byproy at s!ch %eeting. (n)

TITLE 1IICLOSE CORPORATIONS

Sectin (6"+enition and applicability of Title. & A closecorporation, within the %eaning of this Code, is one whosearticles of incorporation proide that* (3) All the corporation:siss!ed stock of all classes, ecl!sie of treas!ry shares, shallbe held of record by not %ore than a specied n!%ber ofpersons, not eceeding twenty ($1)/ ($) all the iss!ed stock ofall classes shall be s!b;ect to one or %ore speciedrestrictions on transfer per%itted by this Title/ and (') Thecorporation shall not list in any stock echange or %ake anyp!blic oering of any of its stock of any class. Dotwithstandingthe foregoing, a corporation shall not be dee%ed a closecorporation when at least two&thirds ($?') of its oting stock oroting rights is owned or controlled by another corporationwhich is not a close corporation within the %eaning of this

Code.

Any corporation %ay be incorporated as a close corporation,ecept %ining or oil co%panies, stock echanges, banks,ins!rance co%panies, p!blic !tilities, ed!cational instit!tionsand corporations declared to be ested with p!blic interest inaccordance with the proisions of this Code.

The proisions of this Title shall pri%arily goern closecorporations* Proided, That the proisions of other Titles ofthis Code shall apply s!ppletorily ecept insofar as this Titleotherwise proides.

Sectin ('"%rticles of incorporation. The articles ofincorporation of a close corporation %ay proide*

3. 9or a classication of shares or rights and the+!alications for owning or holding the sa%e andrestrictions on their transfers as %ay be statedtherein, s!b;ect to the proisions of the followingsection/

$. 9or a classication of directors into one or %oreclasses, each of who% %ay be oted for and electedsolely by a partic!lar class of stock/ and

'. 9or a greater +!or!% or oting re+!ire%ents in%eetings of stockholders or directors than thoseproided in this Code.

The articles of incorporation of a close corporation %ayproide that the b!siness of the corporation shall be %anagedby the stockholders of the corporation rather than by a boardof directors. -o long as this proision contin!es in eect*

3. Do %eeting of stockholders need be called to electdirectors/

$. nless the contet clearly re+!ires otherwise, thestockholders of the corporation shall be dee%ed to

be directors for the p!rpose of applying theproisions of this Code/ and

'. The stockholders of the corporation shall bes!b;ect to all liabilities of directors.

The articles of incorporation %ay likewise proide that allo>cers or e%ployees or that specied o>cers or e%ployeesshall be elected or appointed by the stockholders, instead ofby the board of directors.

Sectin (8"0alidity of restrictions on transfer of shares.

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0. The proisions of s!bsection () shall not beapplicable if the transfer of stock, tho!gh contrary tos!bsections (3), ($) or ('), has been consented to byall the stockholders of the close corporation, or if theclose corporation has a%ended its articles ofincorporation in accordance with this Title.

4. The ter% "transfer", as !sed in this section, is notli%ited to a transfer for al!e.

6. The proisions of this section shall not i%pair anyright which the transferee %ay hae to rescind thetransfer or to recoer !nder any applicable warranty,epress or i%plied.

Sectin !**"%greements by stockholders.&

3. Agree%ents by and a%ong stockholders eec!tedbefore the for%ation and organi#ation of a closecorporation, signed by all stockholders, shall s!riethe incorporation of s!ch corporation and shallcontin!e to be alid and binding between and a%ongs!ch stockholders, if s!ch be their intent, to theetent that s!ch agree%ents are not inconsistentwith the articles of incorporation, irrespectie of

where the proisions of s!ch agree%ents arecontained, ecept those re+!ired by this Title to bee%bodied in said articles of incorporation.

$. An agree%ent between two or %ore stockholders,if in writing and signed by the parties thereto, %ayproide that in eercising any oting rights, theshares held by the% shall be oted as thereinproided, or as they %ay agree, or as deter%ined inaccordance with a proced!re agreed !pon by the%.

'. Do proision in any written agree%ent signed bythe stockholders, relating to any phase of thecorporate aairs, shall be inalidated as between theparties on the gro!nd that its eect is to %ake the%partners a%ong the%seles.

. A written agree%ent a%ong so%e or all of thestockholders in a close corporation shall not beinalidated on the gro!nd that it so relates to thecond!ct of the b!siness and aairs of the corporationas to restrict or interfere with the discretion orpowers of the board of directors* Proided, That s!chagree%ent shall i%pose on the stockholders who areparties thereto the liabilities for %anagerial actsi%posed by this Code on directors.

0. To the etent that the stockholders are actielyengaged in the %anage%ent or operation of theb!siness and aairs of a close corporation, thestockholders shall be held to strict d!ciary d!ties to

each other and a%ong the%seles. -aid stockholdersshall be personally liable for corporate torts !nlessthe corporation has obtained reasonably ade+!ateliability ins!rance.

Sectin !*!"6hen board meeting is unnecessary orimproperly held. & nless the by&laws proide otherwise, anyaction by the directors of a close corporation witho!t a%eeting shall neertheless be dee%ed alid if*

3. Gefore or after s!ch action is taken, writtenconsent thereto is signed by all the directors/ or

$. All the stockholders hae act!al or i%pliedknowledge of the action and %ake no pro%ptob;ection thereto in writing/ or

'. The directors are acc!sto%ed to take infor%alaction with the epress or i%plied ac+!iescence of allthe stockholders/ or

. All the directors hae epress or i%pliedknowledge of the action in +!estion and none ofthe% %akes pro%pt ob;ection thereto in writing.

f a director:s %eeting is held witho!t proper call or notice, anaction taken therein within the corporate powers is dee%edratied by a director who failed to attend, !nless he pro%ptlyles his written ob;ection with the secretary of the corporationafter haing knowledge thereof.

Sectin !*#"Preempti)e right in close corporations. Thepre&e%ptie right of stockholders in close corporations shalletend to all stock to be iss!ed, incl!ding reiss!ance oftreas!ry shares, whether for %oney, property or personal

serices, or in pay%ent of corporate debts, !nless the articlesof incorporation proide otherwise.

Sectin !*$"%mendment of articles of incorporation. Anya%end%ent to the articles of incorporation which seeks todelete or re%oe any proision re+!ired by this Title to becontained in the articles of incorporation or to red!ce a+!or!% or oting re+!ire%ent stated in said articles ofincorporation shall not be alid or eectie !nless approedby the a>r%atie ote of at least two&thirds ($?') of theo!tstanding capital stock, whether with or witho!t otingrights, or of s!ch greater proportion of shares as %ay bespecically proided in the articles of incorporation fora%ending, deleting or re%oing any of the aforesaidproisions, at a %eeting d!ly called for the p!rpose.

Sectin !*%"+eadlocks. Dotwithstanding any contraryproision in the articles of incorporation or by&laws oragree%ent of stockholders of a close corporation, if thedirectors or stockholders are so diided respecting the%anage%ent of the corporation:s b!siness and aairs that theotes re+!ired for any corporate action cannot be obtained,with the conse+!ence that the b!siness and aairs of thecorporation can no longer be cond!cted to the adantage ofthe stockholders generally, the -ec!rities and changeCo%%ission, !pon written petition by any stockholder, shallhae the power to arbitrate the disp!te. n the eercise ofs!ch power, the Co%%ission shall hae a!thority to %akes!ch order as it dee%s appropriate, incl!ding an order* (3)cancelling or altering any proision contained in the articles ofincorporation, by&laws, or any stockholder:s agree%ent/ ($)cancelling, altering or en;oining any resol!tion or act of thecorporation or its board of directors, stockholders, or o>cers/(') directing or prohibiting any act of the corporation or itsboard of directors, stockholders, o>cers, or other personsparty to the action/ () re+!iring the p!rchase at their fairal!e of shares of any stockholder, either by the corporationregardless of the aailability of !nrestricted retained earningsin its books, or by the other stockholders/ (0) appointing aproisional director/ (4) dissoling the corporation/ or (6)granting s!ch other relief as the circ!%stances %ay warrant.

3@

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A proisional director shall be an i%partial person who isneither a stockholder nor a creditor of the corporation or ofany s!bsidiary or a>liate of the corporation, and whosef!rther +!alications, if any, %ay be deter%ined by theCo%%ission. A proisional director is not a receier of thecorporation and does not hae the title and powers of ac!stodian or receier. A proisional director shall hae all therights and powers of a d!ly elected director of thecorporation, incl!ding the right to notice of and to ote at%eetings of directors, !ntil s!ch ti%e as he shall be re%oedby order of the Co%%ission or by all the stockholders. Iis

co%pensation shall be deter%ined by agree%ent betweenhi% and the corporation s!b;ect to approal of theCo%%ission, which %ay his co%pensation in the absenceof agree%ent or in the eent of disagree%ent between theproisional director and the corporation.

Sectin !*&"6ithdrawal of stockholder or dissolution ofcorporation. n addition and witho!t pre;!dice to other rightsand re%edies aailable to a stockholder !nder this Title, anystockholder of a close corporation %ay, for any reason,co%pel the said corporation to p!rchase his shares at theirfair al!e, which shall not be less than their par or iss!edal!e, when the corporation has s!>cient assets in its booksto coer its debts and liabilities ecl!sie of capital stock*Proided, That any stockholder of a close corporation %ay, bywritten petition to the -ec!rities and change Co%%ission,

co%pel the dissol!tion of s!ch corporation wheneer any ofacts of the directors, o>cers or those in control of thecorporation is illegal, or fra!d!lent, or dishonest, oroppressie or !nfairly pre;!dicial to the corporation or anystockholder, or wheneer corporate assets are being%isapplied or wasted.

TITLE 1IIISPECIAL CORPORATIONSCHAPTER I 2 ED,CATIONAL CORPORATIONS

Sectin !*6"&ncorporation. d!cational corporations shallbe goerned by special laws and by the general proisions ofthis Code. (n)

Sectin !*'"Prere#uisites to incorporation. cept !ponfaorable reco%%endation of the 5inistry of d!cation andC!lt!re, the -ec!rities and change Co%%ission shall notaccept or approe the articles of incorporation and by&laws ofany ed!cational instit!tion. (347a)

Sectin !*8"Board of trustees. Tr!stees of ed!cationalinstit!tions organi#ed as non&stock corporations shall not beless than e (0) nor %ore than fteen (30)* Proided,howeer, That the n!%ber of tr!stees shall be in %!ltiples ofe (0).

nless otherwise proided in the articles of incorporation onthe by&laws, the board of tr!stees of incorporated schools,colleges, or other instit!tions of learning shall, as soon as

organi#ed, so classify the%seles that the ter% of o>ce ofone&fth (3?0) of their n!%ber shall epire eery year.

Tr!stees thereafter elected to ll acancies, occ!rring beforethe epiration of a partic!lar ter%, shall hold o>ce only forthe !nepired period. Tr!stees elected thereafter to llacancies ca!sed by epiration of ter% shall hold o>ce fore (0) years. A %a;ority of the tr!stees shall constit!te a+!or!% for the transaction of b!siness. The powers anda!thority of tr!stees shall be dened in the by&laws.

9or instit!tions organi#ed as stock corporations, the n!%berand ter% of directors shall be goerned by the proisions onstock corporations. (34@a)

CHAPTER IIRELIGIO,S CORPORATIONS

Sectin !*("Classes of religious corporations. dait or a>r%ation of the chief archbishop, bishop, priest,

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%inister, rabbi or presiding elder, as the case %ay be, andacco%panied by a copy of the co%%ission, certicate ofelection or letter of appoint%ent of s!ch chief archbishop,bishop, priest, %inister, rabbi or presiding elder, d!ly certiedto be correct by any notary p!blic.

9ro% and after the ling with the -ec!rities and changeCo%%ission of the said articles of incorporation, eried bya>dait or a>r%ation, and acco%panied by the doc!%ents%entioned in the preceding paragraph, s!ch chief archbishop,bishop, priest, %inister, rabbi or presiding elder shall beco%ea corporation sole and all te%poralities, estate and propertiesof the religio!s deno%ination, sect or ch!rch theretoforead%inistered or %anaged by hi% as s!ch chief archbishop,bishop, priest, %inister, rabbi or presiding elder shall be heldin tr!st by hi% as a