B APPRAISAL RIGHT (Title X, Secs.

81-86)
Refers to the right of a stockholder to demand the fair value of his
shares after dissenting from a prop osed corporate action involving a
fundamental change in the corporation in cases provided by law
A. When Right of Appraisal may be exercised:
1.) Extend or shorten corporate term (Sec. 11);
2.) Restriction of rights or privileges of shares through amendment of
the AOI (Sec. 16);
3.) Sale of all or substantially all corporate assets (Sec. 40);
4.) Equity investment in non-primary purpose business (Sec. 42);
5.) Merger or consolidation (Sec. 77);
All the above require the 2/3 votes of the OCS. The appraisal right
refers only to stockholders who have actually dissented from the above
transactions.
B. Procedure for the Exercise of the Right:
1.) Written demand must be submitted by the dissenting stockholder
on the corporation for the payment of the fair value of the shares
within 30 days from the date the vote was taken. (Failure to do so
shall mean waiver of the right.)
Effect: The dissenting stockholder loses all rights as a stockholder
including dividend rights; only one right remains and that is the
right to receive payment of the fair value of his shares.
2.) Within 10 days from demand, the dissenting stockholder must
submit his certificates of stocks for notation that such certificates
represent dissenting shares. (Failure to do so shall mean waiver of
the right.)
N.B. If such shares are subsequently disposed of and new
certificates are issued to the transferee, the right of appraisal is
automatically extinguished, the transferee becomes a regular
stockholder of the corporation.
a.) 60 days from the approval of the corporate action, the
corporation and the dissenting stockholders shall agree as to
the fair value of the dissenting shares. If no agreement is
reached after the 60-day period, it shall be determined and
appraised by 3 disinterested persons: one appointed by the

Law3 Private Corporations

SH; another appointed by the corporation; and the third

person to be chosen by the two thus appointed.
3.) Findings of the majority of the appraisers shall be final and the
award shall be payable within 30 days after it is made.
4.) The dissenting stockholder can only be paid if there are
unrestricted retained earnings.
Nota Bene: If the dissenting stockholder is not paid within 30 days from
after the award, he shall automatically be restored to all his rights as
stockholder.
C. Outline of Instances when Right of Appraisal is Lost:
1.) Failure to make written demand within 30 days after the vote was
taken on the corporate act;
2.) Failure to surrender the certificate of stock within 10 days from
demand for notation;
3.) Non-existence of unrestricted profits to cover payment of the fair
value of dissenting shares within 30 days from date of award;
4.) Subsequent transfer of the shares which have been annotated
when new certificates of stock are issued;
5.) When the corporation consents a demanding stockholder to
withdraw the exercise of appraisal right;
6.) Abandonment of corporate action;
7.) Disapproval of action by SEC.
D. Who shall bear the Cost of Appraisal
1.) Corporation
a.) where the value as determined by the appraisers is higher
than what was offered by the corporation to the dissenting
stockholder; or
b.) if action is filed to recover the fair value of the shares and the
stockholders refusal to receive payment is justified.
2.) Dissenting stockholder
a.) if the value determined by appraisers is approximately the
same as the price offered by the corporation; or
b.) where an action to recover is filed and the refusal of such
stockholder to receive payment is unjustified.

Atty. Jonathan B. Tambol

TITLE IV POWERS OF CORPORATIONS

CORPORATE POWERS AND CAPACITY (Sec 36)
Kinds:
1. Express those expressly authorized by the Corporation Code and
other laws, and its AOI
2. Incidental those that are incidental to the existence of the
corporation (power of succession, to sue and be sued, to have
corporate name, to purchase and hold real and personal property, to
adopt and use a corporate seal, to contract, to make by-laws)
3. Implied those that can be inferred from or necessary for the exercise
of the express powers.
Classification of Implied Powers:
a.) Acts in the usual course of business;
b.) Acts to protect debts owing to the corporation;
c.) Acts which involve embarking in a different business usually to
collect debts out of profits;
d.) Acts to protect or aid employees;
e.) Acts to increase business
GENERAL POWERS & CAPACITY
2 Sources of Express Powers:
a.) Those enumerated in Sec. 36, generally;
b.) Purpose clause of the AOI, specifically
1.
2.
3.
4.
5.
6.
7.

To sue and be sued;

Succession by its corporate name for the term of its existence;
Adopt and use a corporate seal;
Amend its AOI;
Adopt by-laws not contrary to law, morals or public policy and to
amend or repeal the same;
Issue or sell stocks (stock corporations) or to admit members (nonstock corporations);
Purchase, receive, take or grant, hold, convey, sell, lease, pledge,
mortgage and otherwise deal with all types of properties;

Law3 Private Corporations

8. Enter into merger or consolidation;

9. Make reasonable donations;
10. Establish pension, retirement and other plans for the benefit of its
directors, trustees, officers and employees; and
11. Such other powers as may be essential or necessary to carry out its
purpose/s as stated in the AOI.
OTHER POWERS:
1. Extension or shortening of corporate term (Sec 37);
2. Power to increase or decrease capital stock/Power to incur, create or
increase bonded indebtedness (Sec 38);
3. Power to deny pre-emptive right (Sec 39);
4. Sell, dispose, lease, encumber all or substantially all or corporate assets
(Sec 40);
5. Power to acquire own shares (Sec 41);
6. Invest corporate funds in another corporation or business or for any
other purpose other than the primary purpose (Sec 42);
7. Power to declare dividends out of unrestricted retained earnings (Sec
43);
8. Power to enter into management contract (Sec 44).
ULTRA VIRES acts performed by a corporation in excess of its corporate
powers and which are generally not binding on the corporation.
An ultra vires act is merely voidable which may be enforced by
performance, ratification, or estoppel, while an illegal act is void and
cannot be validated.
Requisites for valid ratification of an ultra vires act:
1.) Act or contract must be consummated, not merely executory;
2.) Creditors are not prejudiced, or all of them have given their
consent;
3.) Rights of the public or the State are not involved; and
4.) All the stockholders must give their consent.
Rules on the effects of ultra vires acts:
1.) A wholly executory ultra vires contract or act cannot be enforced
nor can damages be recovered for its breach;

Atty. Jonathan B. Tambol

2.) A wholly executed ultra vires contract or act shall not be interfered
with as between the parties or persons whose rights are derived
therefrom; but the State can always question said contract or act;
3.) When an ultra vires act is executed on one side but executory
contract on the other side who received benefits therefrom,
recovery can be had by the former; and
4.) The title of the corporation to property cannot be questioned on
the ground that it acquired the property through an ultra vires
contract of transfer.
POWER TO EXTEND OR SHORTEN CORPORATE TERM (Sec 37)
Requirements:
a.) Majority vote of the BOD/T;
b.) Written notice of the proposed action and the time and place of
meeting shall be served to each stockholder or member either by mail
or personal service;
c.) Ratification in a meeting by 2/3 of the OCS or 2/3 of the members, as
the case may be.
This actually requires the amendment of the AOI; meeting must be duly
called for the purpose; dissenting stockholders may exercise appraisal
right.
The extension of corporate life cannot be made within the 3 -year
liquidation period, because that would constitute new business.
POWER TO INCREASE OR DECREASE CAPITAL STOCK; INCUR, CREATE OR
INCREASE BONDED INDEBTEDNESS (Sec 38)
Requirements:
a.) Majority vote of the members of the BOD/T;
b.) 2/3 vote of the OCS or the members, as the case may be, in a meeting
duly called for the purpose with notice previously given;
c.) Certificate of said corporate act shall be signed by majority of the
members of the Board and the Chairman and Secretary of the
stockholders meeting;
Corporate act shall take effect from and after SEC approval.

Law3 Private Corporations

d.) Certificate must be accompanied by the Treasurers Affidavit certifying

compliance with the 25%-25% requirements as to stock subscription.
No decrease in capital stock shall be approved by SEC if it will
prejudiced corporate creditors;
Bonds issued by the corporation shall be registered with SEC which is
given the power to determine the sufficiency of the terms of such
bonds.
Note Well:
a.) When a corporation increases capital stock, stockholders are entitled to
a PRE-EMPTIVE RIGHT to subscribe to a sufficient number of shares in
order to maintain their previous relative strong power. The corporation
must give the stockholder a reasonable period within which to exercise
such right.
b.) Dissenting stockholders cannot exercise the right of appraisal in this
case.
POWER TO DENY PRE-EMPTIVE RIGHT (Sec 39)
Pre-emptive Right the shareholders right to subscribe to all issues or
disposition of shares of any class in proportion to his present stockholdings, the
purpose being to enable the shareholder to retain his proportionate control in
the corporation and to retain his equity in the surplus.
Pre-emptive right not available in the following:
1.) Shares to be issued to comply with laws requiring stock offering or
minimum stock ownership by the public;
2.) Shares issued in good faith in exchange for property needed for
corporate purposes;
3.) Shares issued in payment of previously contracted debts;
4.) In case the right is denied in the AOI.
DISPOSITION OF ALL OR SUBSTANTIALLY ALL CORPORATE ASSETS (Sec. 40)
Requirements:
a.) Majority vote of the members of the Board;
b.) 2/3 votes of the OCS or members, as the case may be, in a meeting
called for the purpose.
Dissenting stockholder may exercise their right of appraisal.

Atty. Jonathan B. Tambol

Despite approval by the stockholders or members, it is not mandatory

for the Board to continue with the disposition.
Note Well:
a.) substantially all the corporate property and assets if thereby the
corporation would be rendered incapable of continuing the business or
accomplishing the purpose for which it was incorporated.
b.) Disposition of properties in the regular course of the business does not
need approval by or authority of stockholders or members.
POWER TO ACQUIRE OWN SHARES (Sec. 41)
For legitimate business purposes and subject to the condition that
there be unrestricted retained earnings to cover the shares purchased
or acquired.
Instances when corporation may buy its own stocks:
1.) To complete fractional shares;
2.) To collect indebtedness or in case of delinquency sales; and
3.) The exercise of right of appraisal.
TRUST FUND DOCTRINE: The capital stock, property and other assets of
the corporation are regarded as equity in trust for the payment of the
corporate creditors.
Basis of Trust Fund Doctrine
a.) Sec. 43 the corporation can declare dividends only out of
unrestricted retained earnings.
b.) Sec. 122 no corporation shall distribute any of its assets or
property except upon lawful dissolution and after payment of all
its debts and liabilities.
POWER TO INVEST FUNDS IN ANOTHER CORPORATION OR BUSINESS FOR
NON-PRIMARY PURPOSE (Sec. 42)
Requirements:
a.) Majority vote of the BOD/T;
b.) Ratification by 2/3 of OCS or 2/3 of the members, as the case may be.
Right of appraisal may be exercised by dissenting stockholders.
Note: Where the investment is reasonably necessary to accomplish the primary
purpose, a board resolution is sufficient.

Law3 Private Corporations

POWER TO DECLARE DIVIDENDS (Sec. 43)

GR: Stock corporations are prohibited from retaining surplus profits in excess of
100% of their paid-in capital stock.
Exceptions:
1.) When justified by definite corporate expansion projects or programs
approved by the board;
2.) When the corporation is prohibited under any loan agreement with any
financial institution or creditor, whether local or foreign, from declaring
dividends without its consent and such consent has not yet been
secured; or
3.) When it can be clearly shown that such retention is necessary under
special circumstances obtaining in the corporation, such as when there
is a need for special reserve for probable contingencies.
Form of Dividends:
a.) Cash Dividend can be declared by the board only
b.) Property Dividend may be payable in bonds or in stock of another
corporation
c.) Stock Dividend declared by the board but requires the approval of
2/3 of the OCS at a regular or special meeting duly called for such
purpose; cannot be issued to non-stockholders even for services
rendered
POWER TO ENTER INTO MANAGEMENT CONTRACT (Sec 44)
Requirements:
a.) Resolution of the board; and
b.) Majority vote of the OCS or members, as the case may be, in a meeting
called for the purpose.
DERIVATIVE SUIT
An action brought about by minority shareholders in the name of the
corporation to redress wrongs committed against the corporation, for
which the directors refuse to sue
A remedy designed by equity and has been the principal defense of the
minority shareholders against the abuses of the majority.

Atty. Jonathan B. Tambol

Requisites for filing:

a.) Party bringing suit should be a shareholder as of the time of the act or
transaction complained of;
b.) He has extinguished intra-corporate remedies, i.e., has made a demand
on the board of directors for the appropriate relief but the latter has
failed or refused to heed his plea; and
c.) Cause of action actually devolves on the corporation, the wrongdoing
or harm having been caused to the corporation and not to the
particular stockholder bringing the suit.

TITLE V BY-LAWS
BY-LAWS rules of action adopted by a corporation for its internal government
and for the regulation of conduct, and prescribe the rights and duties of its
stockholders or members towards itself and among themselves in reference to
the management of its affairs.
FUNCTIONS:
1. Supplement the AOI;
2. Provide for details not important enough to be stated in the AOI;
3. Continuing rule for the government of the corporation and the
individuals composing it;
4. Define the rights and duties of corporate officers and directors/trustees
and of stockholders/members towards the corporation and among
themselves;
5. Source of authority for corporate officers and agents of the
corporation.
REQUISITES FOR THE VALIDITY OF THE BY-LAWS:
1. Must not be contrary to law nor with the Corporation Code;
2. Must not be contrary to morals and public policy;
3. Must not impair the obligations of contracts
Amendments to the by-laws cannot impair the obligation of existing
contracts or any vested right, e.g., the right of an employee to security

Law3 Private Corporations

4.
5.
6.

of tenure cannot be adversely affected by any amendment in the bylaws, hence his services can only be terminated for causes provided for
by law.
Must be general and uniform;
Must be consistent with the charter or AOI; and
Must be reasonable, not arbitrary or oppressive.

ADOPTION OF BY-LAWS REQUIRED VOTES:

A. If adopted prior to incorporation must be signed and approved by all
the incorporators and filed with the SEC together with the AOI.
B. If adopted and filed after incorporation affirmative vote of the SHs
representing at least a majority of the OCS or majority of the members
(non-stock) shall be necessary; it shall be signed by the SHs/members
voting for them.
A copy thereof duly certified by a majority of the D/T and
countersigned by the secretary of the corporation shall be filed with
the SEC which shall be attached to the original AOI
Effectivity upon approval of the SEC
Effect of non-filing within the required period Failure to submit the
by-laws within 30 days from incorporation does not automatically
dissolve the corporation. It is merely a ground for suspension or
revocation of its charter after proper notice and hearing. The
corporation is, at the very least, a de facto corporation whose existence
may not be collaterally attacked.
CONTENTS OF BY-LAWS (Sec. 47)
1. Time, place and manner of calling and conducting regular or special
meetings of the directors/trustees;
2. Time and manner of calling and conducting regular or special meetings
of the stockholders/members;
3. Required quorum in meetings of stockholders or members and the
manner of voting therein;
4. Form of proxies of stockholders and members and the manner of
voting them;

Atty. Jonathan B. Tambol

5.

Qualifications, duties and compensation of directors, trustees, officers

and employees;
6. Time for holding the annual election of directors or trustees and the
mode or manner of giving notice;
7. Manner of election of appointment and the term of office of all officers
other than directors or trustees;
8. Penalties for violation of the by-laws;
9. In case of stock corporations, the manner of issuing certificates; and
10. Such other matters as may be necessary for the proper or convenient
transaction of its corporate business.
AMENDMENT/REPEAL/ADOPTION OF NEW BY-LAWS (Sec. 48)
a.) With SHs/Members approval:
1.) Majority vote of the members of the Board;
2.) Majority of the OCS/members in a meeting duly called for the
purpose
b.) By the Board of Directors/Trustees: 2/3 of the OCS/members may
delegate to the board the power to amend/repeal/adopt new by-laws
Such power of the board may be revoked by majority vote of the
OCS/members.
The power to adopt the first original by-laws cannot be delegated to
the BOD/T; only the power to adopt new by-laws that will supplant the
old by-laws can be validly delegated.
AOI vs. BY-LAWS:
AOI

BY-LAWS
Nature
Condition precedent in the
Condition subsequent (absence
acquisition of corporate existence
merely furnishes a ground for the
revocation of the franchise)
Purpose
Essentially a contract between the
For the internal government of the
corporation and the SHs/members;
corporation but has the force of a
between the SHs/members inter se; contract between the corporation
and between the corporation and
and the SHs/members, and between
the State
the SHs/members

Law3 Private Corporations

Time of execution
Executed before incorporation
May be executed after incorporation
(may be filed simultaneously with
the AOI)
Amendment
Amendment by a majority of the
May be amended by a majority vote
D/T and 2/3 of the OCS/members
of the BOD and majority of the
OCS/members

TITLE VI MEETINGS
KINDS OF CORPORATE MEETINGS
1. Meetings of stockholders or members:
a.) Regular held annually on a date fixed in the by-laws, or if not
fixed, on any date in April as determined by the board
b.) Special held at any time deemed necessary or as provided in the
by-laws
2. Meetings of directors or trustees:
a.) Regular held by the board monthly, unless the by-laws provide
otherwise
b.) Special held by the board at any time upon the call of the
president or as provided in the by-laws
Where? anywhere in or out of the Philippines, unless the by-laws
provide otherwise.
Note: Whenever there is no person authorized to call a meeting, the SEC, upon
petition of a stockholder or member, and on the showing of good cause, may
issue an order to the petitioning stockholder or member directing him to call a
meeting of the corporation by giving proper notice.
PLACE AND TIME OF MEETINGS OF SHS/MEMBERS (Sec. 51)
In the city or municipality where the principal office of the corporation
is located, and if practicable, in the principal office of the corporation.
Even if the meeting be improperly held or called, any business
transacted at such meeting shall be valid if within the powers or
authority of the corporation, and provided that all the stockholders or

Atty. Jonathan B. Tambol

members of the corporation are present or duly represented at the

meeting.
QUORUM OF MEETINGS (Sec. 52)
Unless otherwise provided for in the Code or in the By-Laws, a quorum
shall consist of the stockholders representing a majority of the OCS or a
majority of the members in case of non-stock corporations.
A corporation may prescribe a greater voting requirement in its AOI or
by-laws in order to protect the rights of the minority stockholders or
members. Such higher number is also the number necessary to
constitute a quorum.
Once a quorum is called and the meeting was called to order, even if
some people walked out and the people left are less than the majority,
the proceedings will be valid so long as there is a quorum when the
meeting was called to order.
For stock corporations, the quorum referred to in Sec. 52 of the
Corporation Code is based on the number of outstanding voting stocks.
For non-stock corporations, only those who are actual, living members
with voting rights shall be counted in determining the existence of a
quorum during members meetings. Dead members shall not be
counted.
REQUIREMENTS OF A VALID MEETING:
1. Must be held at the proper place;
2. Must be held at the stated date and at the appointed time or at a
reasonable time thereafter;
3. Must be called by the proper person:
a.) The person/s designated in the by-laws have authority to call
stockholders or members meeting.
b.) In the absence of such provision in the by-laws, it may be called by
a director or trustee or by an officer entrusted with the
management of the corporation.
c.) A stockholder or member may make the call or order of the SEC
whenever for any cause, there is no person authorized to call a
meeting.

Law3 Private Corporations

d.) The special meeting for the removal of directors or trustees may
be called by the secretary or by a SH/member.
4. There must be previous notice.
Regular meeting written notice must be sent to registered SHs or
members at least 2 weeks before the meeting
Special meeting written notice must be sent at least one week
5. There must be a quorum.
Note: The President shall preside at all meetings of the directors or trustees as
well as of the stockholders or members, unless the by-laws provide otherwise.
RULES ON MEETING/VOTING APPLICABLE TO CERTAIN KINDS OF SHARES
1. Delinquent shares shall not be entitled to vote.
2. Treasury shares have no voting rights while they remain in the treasury.
3. Fractional shares shall not be entitled to vote.
4. Escrow shares shall not be entitled to vote.
5. Unpaid shares, if not delinquent, are entitled to all the rights of a SH
including the right to vote.
MANNER OF VOTING
A SH/member may vote:
1. Directly (in person); or
2. Indirectly, through representative
a.) By means of a proxy;
b.) By a trustee under a voting trust agreement; or
c.) By executors, administrators, receivers, or other legal
representatives duly appointed by the court.
PROXIES (Sec. 58)
May refer to:
1. The written authority given by one person to another so that the
second person can act for the first;
2. The person authorized by an absent SH or member to vote for him at a
SHs or members meeting;
3. The instrument which evidences the authority of the agent.

Atty. Jonathan B. Tambol

REQUIREMENTS FOR VALIDITY: (WSF-V5)

1. In writing;
2. Signed by the SH/member concerned;
3. Filed before the scheduled meeting with the corporate secretary;
4. Valid only for the meeting for which it was intended, unless otherwise
provided in the proxy;
5. No proxy shall be valid and effective for a period longer than 5 years at
any one time.
The right to vote by proxy may be exercised in any of the following instances:
1. Election of the board of directors or trustees;
2. Voting in case of joint ownership of stock;
3. Voting by trustee under voting trust agreement;
4. Pledge or mortgage of shares;
5. As provided for in its by-laws
Nota Bene (Note well): Stockholders or members may attend and vote in their
meetings by proxy (Sec. 58); BUT directors cannot do so. Directors must always
act in person (Sec. 25).
EXTENT OF AUTHORITY
1. General proxy confers a general discretionary power to attend and
vote at annual meetings
2. Limited proxy restricts the authority to vote to specified matters only
and may direct the manner in which the vote shall be cast
WHO MAY PROXY
A stockholder or member may appoint any person he sees fit to
represent him.
Since a proxy acts for another, he may act as such although he himself
is disqualified to vote his shares.
The same person may act as proxy for one or several stockholders or
members.
Directors or trustees cannot attend or vote by proxy at board meetings
but they may act as proxies in stockholders meetings.

Law3 Private Corporations

VOTING TRUSTS (Sec. 59)

Voting Trust Agreement an agreement whereby one or more
stockholders transfer their shares of stocks to a trustee, who thereby
acquires for a period of time the voting rights (and/or any other rights)
over such shares; and in return, trust certificates are given to the
stockholder/s, which are transferable like stock certificates, subject,
however, to the trust agreement.
LIMITATIONS:
a.) Cannot be entered into for a period exceeding 5 years at any one time
except when it is a condition in a loan agreement, however, said
contract shall automatically expire upon full payment of the loan.
b.) The agreement must not be used for purposes of fraud.
c.) It must be in writing and notarized and specify the terms and
conditions thereof.
d.) A certified copy of the agreement must be filed with the corporation
and with the SEC.
e.) The agreement shall be subject to examination by any stockholder of
the corporation.
f.) Unless, expressly renewed, all rights granted in the agreement shall
automatically expire at the end of the agreed period.
VOTING TRUSTS VS. PROXY
Voting Trusts
Proxy
Nature
Trustee votes as owner rather than as
Proxy holder votes as agent
mere agent
Notarization
Agreement must be notarized
Proxy need not be notarized
Legal title
Trustee acquires legal title to the
Proxy has no legal title to the shares of
shares of the transferring SH
the principal
Manner of voting
Trustee may vote in person or by
Proxy must vote in person
proxy unless the agreement provides
otherwise
Actions allowed

Atty. Jonathan B. Tambol

Trustee is not limited to act at any

particular meeting

Proxy can only act at a specified

stockholders meeting (if not
continuing)
Restrictions on voting
A trustee can vote and exercise all the A proxy can only vote in the absence
rights of the SH even when the latter is of the owners of the stock.
present.
Period
Must not exceed 5 years at any one
Usually of shorter duration although
time except when the same is made a
under Sec. 58 it cannot exceed 5 years
condition of a loan
at any one time
Separability of ownership and voting right
Voting right is divorced from the
Right to vote is inherent in or
ownership of stocks
inseparable from the right to
ownership of stock
Revocability
Agreement is irrevocable
Revocable anytime except one which
is coupled with interest

TITLE VII STOCKS AND STOCKHOLDERS

Ways to become a Stockholder of a corporation:
1. Subscription contract with the corporation;
2. Purchase or acquisition of shares from existing SHs; and
3. Purchase of treasury shares from the corporation.
SUBSCRIPTION CONTRACT (Sec. 60)
Any contract for the acquisition of unissued stock in an existing
corporation or a corporation still to be formed
The subscribed shares need not be paid in full in order that the
subscription may be valid. The subscription contract is a consensual
contract that is perfected upon the meeting of the minds of the parties.
The name of the subscriber is recorded in the stock and transfer book,
and from that time, such subscriber becomes a SH of record, entitled to

Law3 Private Corporations

all the rights of a SH. Until the stocks are fully paid, it continues to be a
subsisting liability that is legally enforceable.
KINDS OF SUBSCRIPTION CONTRACT:
a.) Pre-incorporation subscription Sec. 61
b.) Post incorporation subscription entered into after the incorporation
for the acquisition of unissued stock
c.) Conditional one which is subject to a condition, which may be a past
event unknown to the parties or a future, uncertain event
d.) Absolute not subject to any condition and the subscriber becomes
liable on the subscription and acquires the rights of a SH from the time
it is accepted
e.) Subscription with a special term one where the corporation agrees to
do something, the fulfillment of which not being a condition precedent
to the accrual of a liability of the subscriber or the acquisition of the
rights of a stockholder.
PRE-INCORPORATION SUBSCRIPTION (Sec. 61)
One entered into before incorporation which constitutes a binding
contract among the subscribers.
Irrevocable for a period of at least 6 months from the date of
subscription unless:
a.) All of the other subscribers consent to the revocation, or
b.) The incorporation fails to materialize.
It shall likewise be irrevocable after the submission of the AOI to the
SEC.
STOCK OPTIONS
A privilege granted to a party to subscribe to a certain portion of the
unissued capital stock of a corporation within a certain period and
under the terms and conditions of the grant exercisable by the grantee
at any time within the period granted
UNDERWRITING AGREEMENT

Atty. Jonathan B. Tambol

An agreement between a corporation and a third person, termed the

underwriter, by which the latter agrees, for a certain compensation,
to purchase a stipulated amount of stocks or bonds, specified in the
underwriting agreement, if such securities are not purchased by those
to whom they are first offered.

CONSIDERATION FOR STOCKS (Sec. 62)

Valid Considerations in Subscription Agreements:
1. Cash actually received;
2. Property, tangible or intangible, actually received and necessary or
convenient for its use and lawful purposes
REQUISITES:
a.) The property is actually received by the corporation;
b.) The property is necessary or convenient for its use and lawful
purposes;
c.) It must be subject to a fair valuation equal to the par or issued
value of the stock issued;
d.) The valuation thereof shall initially be determined by the
incorporators or the board of directors; and
e.) The valuation is subject to the approval by the SEC.
3. Labor or services actually rendered to the corporation;
4. Previously incurred corporate indebtedness;
5. Amounts transferred from unrestricted retained earnings to stated
capital;
6. Outstanding shares in exchange for stocks in the event of
reclassification or conversion
Note: Shares of stock shall not be issued in exchange for promissory notes or
future services. However, there is no prohibition on the use of checks, bills or
notes in payment of the cash consideration.
SOURCES OF CORPORATE CAPITAL
a.) Funds furnished by shareholders;
b.) Borrowings; and
c.) Profits and stock dividends

SHARES OF STOCK
Interest or right which owner has in the management of the
corporation, and its surplus profits, and, on dissolution, in all of its
assets remaining after the payment of its debt.
CERTIFICATE OF STOCK
Paper representation or tangible evidence of the stock itself and of the
various interests therein
REMEDIES WHERE CORPORATION REFUSES TO ISSUE CERTIFICATE: (SM-DR)
1. Suit for specific performance of an express or implied contract;
2. Petition for mandamus;
3. Suit for damages where specific performance cannot be granted;
4. Rescind contract of subscription and recover the consideration paid
ISSUANCE OF THE CERTIFICATE OF STOCK (Sec. 64)
Requisites:
1. The certificate must be signed by the President or Vice-President,
countersigned by the secretary or assistant secretary;
2. Must be sealed with the seal of the corporation;
3. Certificate must be delivered;
4. The par value, as to par value shares or full subscription as to no par
value shares must first be fully paid;
BASIS: Doctrine of Indivisibility of Subscription subscription is one,
entire, indivisible and whole contract, which cannot be divided into
portions.
5. Original certificate must be surrendered where the person requesting
the issuance of a certificate is a transferee from the stockholder.
ACTIONS BY STOCKHOLDERS OR MEMBERS:
1. Derivative Suit
2. Individual Suit
3. Representative Suit
LIABILITY OF DIRECTORS FOR WATERED STOCKS (Sec. 65)

Law3 Private Corporations

Atty. Jonathan B. Tambol

Watered Stock stock issued not in exchange for its equivalent either in cash,
property, share, stock dividends, or services.
Includes:
a.) Issued without consideration (bonus share);
b.) Issued as fully p[aid when the corporation has received a lesser sum of
money than its par or issued value (discount share);
c.) Issued for a consideration other than actual cash such as property or
services the fair valuation of which is less than its par or issued value;
and
d.) Issued as stock dividend when there are not sufficient retained
earnings or surplus to justify it.
DELINQUENCY SALE (Sec. 68)
1. If the subscription contract fixes the date for payment, failure to pay on
such date shall render the entire balance due and payable with
interest. 30 days therefrom, if still unpaid, the shares become
delinquent, as of the due date, and subject to sale, unless the board
declares otherwise.
2. If no date is fixed in the subscription contract, the board of directors
can make the call for payment, and specify the due date. The notice of
call is mandatory. A mere demand is insufficient. The failure to pay on
such date shall render the entire balance due and payable with
interest. 30 days therefrom, if still unpaid, the shares become
delinquent, as of the date of the call, and subject to sale, unless the
board declares otherwise.
Note: A CALL is the resolution or formal declaration of the board that the
unpaid subscriptions are due and payable.
PROCEDURE FOR THE SALE OF DELINQUENT STOCKS
1. Resolution of the board
2. Notice of sale
3. Publication of the notice
4. Sale at public auction
5. Transfer of the stock so purchased in the books of the corporation
6. Credit Remainder in favor of the delinquent stockholder

Law3 Private Corporations

PROCEDURE FOR ISSUANCE OF NEW CERTIFICATE OF STOCK IN LIEU OF LOST,

STOLEN OR DESTROYED ONES
1. Affidavit of Loss by the registered owner
2. Verification by the corporation
3. Publication of a notice (once a week for 3 consecutive weeks)
4. One year waiting period from the date of last publication
5. Contest
6. Replacement if no contest within the 1 year period
RIGHTS AND REMEDIES OF STOCKHOLDERS
1. Rights as to Control and Management
a.) Attend and vote in person/proxy at stockholders meetings (Secs.
50, 58);
b.) Elect and remove directors (Secs. 24, 28);
c.) Approve certain corporate acts (Sec. 52);
d.) Compel the calling of meetings (Sec. 50);
e.) To have the corporation voluntarily dissolved (Secs. 118, 119);
f.) Enter into a voting trust agreement (Sec. 59);
g.) Adopt/amend/repeal the by-laws or adopt new by-laws (Secs. 46,
48).
2. Proprietary Rights
a.) Transfer of stock in the corporate book (Sec. 63);
b.) Receive dividends when declared (Sec. 43);
c.) Issuance of certificate of stock (Sec. 63);
d.) Participate in the distribution of corporate assets upon dissolution
(Sec. 118, 119); and
e.) Pre-emption in the issue of shares (Sec. 39).
Note: Right of pre-emption extends to treasury shares in case of their
reissuance.
3. Remedial Rights
a.) Inspect corporate books (Sec. 74);
b.) Recover stock unlawfully sold for delinquency (Sec. 69);
c.) Demand payment in the exercise of appraisal right (Secs. 41, 81);
d.) To be furnished recent financial statements (Sec. 75); and
e.) To bring suits

Atty. Jonathan B. Tambol

TITLE VIII CORPORATE BOOKS AND RECORDS

BOOKS TO BE KEPT; STOCK TRANSFER AGENT (Sec. 74)
1. Book of all business transactions;
2. Book of minutes of all meetings of SHs/members;
3. Book of minutes of all meetings of D/T;
4. Stock and transfer book, in case of stock corporations.
Corporate Records required by the SEC to be kept and/or registered:
1. Books of Account;
2. List of Stockholders or Members; and
3. Financial Records.
Persons given the right to inspect Corporate Books:
1. Any D/T/SH/member;
2. Voting trust certificate holder;
3. SH of a sequestered company; and
4. Beneficial owner of shares
Rights of stockholders to corporate books and records:
1. Right of inspection;
2. Right to demand a list of SHs;
3. Right to demand a detailed auditing of business expenditures;
4. To examine books of the corporations subsidiary;
5. Right to financial statements. (Sec. 75)

Limitations on the Right of Inspection:

a.) Must be exercised during reasonable hours on business days;
b.) Person demanding the right has not improperly used any
information obtained through any previous examination of the
books and records of the corporation; and
c.) Demand is made in good faith or for a legitimate purpose.
Remedies if Inspection Denied:
a.) Mandamus;
b.) Damages;

Law3 Private Corporations

c.) Criminal Suit

TITLE IX MERGER AND CONSOLIDATION

Common Forms of Corporate Combinations:
1. Sale of assets;
2. Lease of assets;
3. Sale of stock;
4. Merger;
5. Consolidation
MERGER - a union whereby one or more existing corporations are absorbed by
another corporation which survives and continues the combined business
CONSOLIDATION union of two or more existing corporations to form a new
corporation called the consolidated corporation
PROCEDURE FOR MERGER/CONSOLIDATION:
1. Approval of plan
2. Submission to stockholders or members for approval
3. Execution of formal contract
4. Submission to SEC for approval
5. Conduct of hearing by SEC
6. Issuance of certificate by SEC
Note: The plan may still be amended before the same is filed with the SEC,
however, any amendment thereto must be approved by the majority vote of the
board members or trustees of the constituent corporations and affirmed by the
vote of 2/3 of the OCS or members.
SECS APPROVAL AND EFFECTIVITY OF MERGER OR CONSOLIDATION (Sec. 79)
General Rule: When one corporation buys all the shares of another corporation,
this will not operate to dissolve the other corporation and as the two
corporations still maintain their separate corporate entities, one will not answer
for the debts of the other.

Atty. Jonathan B. Tambol

EXCEPTIONS as to non-assumption of Liabilites:

1. If there is an express assumption of liabilities;
2. If there is a consolidation or merger;
3. If the purchase was in fraud of creditors; and
4. If the purchaser is merely a continuation of the seller.
LEGAL EFFECTS OF MERGER/CONSOLIDATION:
1. There is automatic assumption of liabilities of the absorbed corporation
or constituent corporations which are dissolved.
2. The absorbed or constituent corporations are ipso facto dissolved by
operation of law without necessity of any further act or deed but there
is no winding up or liquidation of their assets for the surviving
corporation automatically acquires all the liabilities of the constituent
corporation.
3. Permits the transfer of the assets to the purchaser and the distribution
of the consideration received in a single operation.
4. Involve exchanges of properties, a transfer of the assets of the
constituent corporations in exchange for securities in the new or
surviving corporation but neither involves winding up of the affairs of
the constituent corporations in the sense that their assets are
distributed to the stockholders.
5. Dissolution of the constituent corporations cannot be made to retroact
to a date prior to the ratification of the SHs but the transfer of the
assets and liabilities of the constituent corporations could be made
effective retroactively as of the date the said board of directors so
resolved.
6. Consent of the creditors not necessary.

TITLE XI NON-STOCK CORPORATIONS

CONCEPT (Sec. 87)
A non-stock corporation is one where no part of its income is
distributable as dividends to its members.

Law3 Private Corporations

Even if there is a statement of capital stock, for as long as there is no

distribution of retained earnings to its members, the corporation is
non-stock.
Any profit which it may obtain as an incident to its operations shall,
whenever necessary or proper, be used in furtherance of the purpose/s
for which it was organized.

PURPOSES (Sec. 88)

Non-stock corporations may be formed or organized for:
1. Charitable
2. Religious
3. Educational
4. Professional
5. Cultural
6. Fraternal
7. Literary
8. Scientific
9. Social
10. Civic service
Or similar purposes like:
1. Trade
2. Industry
3. Agricultural
4. And like chambers
Or any combination thereof.
RULES ON CONVERSION
1. Stock to non-stock corporation may be made by mere amendment of
the AOI
The effect of this is that after the conversion, the SHs now become the
members of the non-stock corporation and thus will no longer have any
pecuniary interest in the corporation. Neither are they entitled to any
share in the profit that may be obtained out of the operations or
activities of the non-stock corporation. Hence, there is in fact no

Atty. Jonathan B. Tambol

2.

distribution by the stock corporation, by conversion, it its assets to its

stockholders.
Non-stock to stock corporation cannot be converted by mere
amendment of its AOI because the conversion would change the
corporate nature from non-profit to monetary gain
What the corporation should do is to dissolve itself and its members
may decide to organize a stock corporation.

STOCK VS. NON-STOCK

STOCK

NON-STOCK

Nature
Has capital stock, divided into shares
Does not have shares and may not
and with authority to distribute
distribute profits to its members
dividends to its stockholders
Meeting/Voting of members/SHs
SHs and directors must act in a
Members may be allowed by the bymeeting, except where a mere assent
laws to vote by mail or other similar
is sufficient or a formal meeting
means
unnecessary
Manner of voting
Cumulative voting is available in the
Cumulative voting not available unless
election of directors
otherwise provided in the AOI/by-laws
Proxy
SHs may vote by proxy
Members may be deprived of the right
to vote by proxy in the AOI/by-laws
Non-transferability of membership
SHs may transfer their shares
Members cannot transfer their
membership unless allowed by the
AOI/by-laws
Directors/trustees
Directors cannot exceed 15 in number Trustees may exceed 15 in number
Term of Director/trustee
Term of a director is 1 year
Term of a trustee is 3 years; 1/3 of the
Board shall be elected annually

Law3 Private Corporations

Election of officers
Officers are elected by the BOD
Officers may be directly elected by the
members unless otherwise provided in
the AOI/by-laws
Place of meeting
SHs meetings shall be held in the city
By-laws may provide that members of
or municipality where principal office
a non-stock corporation may hold
of corporation is located, and if
their meetings at any place within the
practicable in the principal office
Phils.

TITLE XII CLOSE CORPORATIONS

1.

2.

Special kind of stock corporation

Whose articles of incorporation should provide that:
a.) The number of SHs shall not exceed 20;
b.) Issued stocks are subject to transfer restrictions, with a right of
preemption in favor of the SHs or the corporation; and
c.) The corporation shall not be listed in the stock exchange or its
stocks should not be publicly offered; or
Whose stocks, at least 2/3 of the voting stocks or voting rights of which
are not owned or controlled by another corporation which is not a
close corporation.
Non-compliance with any of the requirements shall not make the
corporation a close corporation within the meaning of the Corporation
Code.

CHARACTERISTICS:
1. SHs may act as directors without need of election and therefore are
liable as directors;
2. SHs who are involved in the management of the corporation are liable
in the same manner as directors are;
3. Quorum may be greater than mere majority;

Atty. Jonathan B. Tambol

4.

Transfer of stocks to others, which would increase the number of SHs

to more than the maximum are invalid;
5. Corporate actuations may be binding even without formal board
meeting, if the SH had knowledge or ratified the informal action of the
others;
6. Pre-emptive right extends to all stock issues;
7. Deadlocks in board are settled by the SEC. on the written petition by
any SH; and
8. SH may withdraw and avail of his right of appraisal.
N.B.: Special rules are provided for close corporations because it is essentially an
incorporated partnership.
ORDINARY STOCK CORPORATION vs. CLOSE CORPORATION
ORDINARY STOCK CORPORATION
CLOSE CORPORATION
Articles of Incorporation
Need only contain the general matters Must contain the special matters
enumerated in Sec. 14 of the code
prescribed by Sec. 97, aside from the
general matters in Sec. 14 (failure to
do so precludes a de jure close
corporation)
Ownership of stocks
Its status as an ordinary stock
2/3 of its voting stock or voting rights
corporation is not affected by the
must not be owned or controlled by
ownership of its voting stock or voting another corporation which is not a
rights
close corporation
Classification of directors
Its articles cannot classify its directors
Its articles may classify its directors
Election/appointment of officers
Corporate officers and employees are
Its articles may provide that any or all
elected by a majority vote of all the
of the corporate officers or employees
members of the board of directors
may be elected or appointed by SHs
Management
Business of the corporation is
May be managed by the SHs if the AOI
managed by the board of directors
so provide, but they are liable as
directors

Law3 Private Corporations

Pre-emptive right
Subject to the exceptions found in Sec. Subject to no exceptions unless denied
39
in the articles
Appraisal right
May be exercised by a SH only in the
May be exercised and compelled
cases provided in Secs. 81 and 42 of
against the corporation by a SH for any
the Code
reason
Purchase of its own shares
Must always be made from the
In case of an arbitration of an intraunrestricted retained earnings (except corporate deadlock by the SEC, the
as regards redeemable shares)
corporation may be ordered to
purchase its own shares from the SHs
regardless of the availability of URE
Remedy of arbitration
Not a remedy
Available remedy in case the directors
or SHs are so divided respecting the
management of the corporation
Note: The following cannot be a close corporation: (BIMPOSE)
a.) Banks;
b.) Insurance companies;
c.) Mining companies;
d.) Public utilities;
e.) Oil companies;
f.) Stock exchanges;
g.) Educational institutions;
h.) Other corporations declared to be bested with public interest
VALIDITY OF RESTRICTIONS ON TRANSFER OF SHARES (Sec. 98)
It is mandatory for the AOI of a close corporation to provide that all of
the issued stocks of all classes be subject to one or more restriction.
The restriction on transfer is in the nature of a right of first refusal in
favor of the SHs which can be waived by the SH, if the latter fails to
exercise the option to purchase within the period stated in the articles
and by-laws.

Atty. Jonathan B. Tambol

TITLE XIV DISSOLUTION

Any transfer made should not result in exceeding the number of SHs as
allowed by the Code.
-

Note: Under Sec. 99, good faith is not a defense because there is a conclusive
presumption of knowledge of the restriction.
EFFECTS WHERE STOCKHOLDERS ARE MANAGERS (Sec. 100)
1. No longer necessary to elect directors;
2. SHs concerned shall be deemed the directors;
3. SHs shall have the same liabilities as directors;
4. To the extent that the SHs are actively engaged in the management or
operation of the business and affairs of a close corporation, the SHs
shall be held to strict fiduciary duties to each other and among
themselves; and
5. The SHs shall be personally liable for corporate torts unless the
corporation has obtained reasonably adequate liability insurance.
DEADLOCKS (Sec. 104)
Arise when the directors or SHs are so divided respecting the
management of the business and affairs of the corporation that the
votes required for any corporate action cannot be obtained and as a
result, business and affairs can no longer be conducted to the
advantage of the SHs generally
In this case, the SEC shall have the power to arbitrate the dispute and
in the exercise of such power, the SEC shall have the authority to:
a.) Cancel or alter any provision in the articles of incorporation or bylaws;
b.) Cancel, alter or enjoin any resolution of the corporation;
c.) Direct or prohibit any act of the corporation;
d.) Require the purchase at their fair value of shares of any SH either
by any SH or by the corporation regardless of the availability of
URE;
e.) Appoint a provisional director;
f.) Dissolve the corporation; or
g.) Grant such other relief as the circumstances may warrant.

Law3 Private Corporations

The extinguishment of the corporate franchise and the termination of

corporate existence; the complete destruction of the corporation and
within contemplation of the law, is equivalent to its death.

METHODS OF DISSOLUTION (Sec. 117)

A. Voluntary
1.) Application for dissolution with SEC:
a.) Where no creditors are affected;
b.) Where creditors are affected;
2.) Shortening of the corporate term by amending the articles of
incorporation
B. Involuntary
1.) Expiration of the corporate term;
2.) Failure to organize and commence business within 2 years from
the date of issuance of the certificate of incorporation (Sec. 121)
3.) Legislative dissolution;
4.) Quo warranto suit against a de facto corporation;
5.) Minority stockholders suit for dissolution on justifiable grounds; or
6.) SEC dissolution, upon complaint and after notice and hearing, on
the following grounds:
a.) Corporation was illegally organized;
b.) Continuous inactivity (subsequent to incorporation,
organization and commencement of business) for at least 5
years;
c.) Serious dissention in the corporation;
d.) Commission by the corporation of illegal or ultra vires act or
violations of the Code.
EFFECTS:
1. Transfer of legal tile to corporate property to the SHs who become coowners thereof;
2. Continuation of corporate business merely as an association without
juridical personality;

Atty. Jonathan B. Tambol

3.
4.
5.
6.

Conveyance by the SHs of their respective shareholdings toward the

creation of a new corporation to continue the business of the old;
Reincorporation of the dissolved corporation by re-filing new articles of
incorporation and by-laws;
The corporation continues as a body corporate for 3 years for purposes
of winding up; and
Cessation of corporate existence for all purposes upon the expiration of
the winding up period of 3 years.

VOLUNTARY DISSOLUTION WHERE NO CREDITORS ARE AFFECTED (Sec. 118)

Requirements:
1. Majority vote of the board of directors or trustees;
2. Resolution adopted by the affirmative vote of the SHs owning at least
2/3 of the OCS or at least 2/3 of the members at a meeting called for
such purpose.
VOLUNTARY DISSOLUTION WHERE CREDITORS ARE AFFECTED (Sec. 119)
Requirements:
1. Petition shall be filed with the SEC;
2. Signed by a majority of its board of directors or trustees or other
officers having management of its affairs;
3. Verified by its president or secretary or one of its directors or trustees;
4. Shall set forth all claims and demands against it;
5. Resolved upon by the affirmative vote of the SHs representing at least
2/3 of the OCS or by at least 2/3 of the members at a meeting called for
that purpose.
CORPORATE LIQUIDATION (Sec. 122)
Liquidation the process by which all the assets of the corporation are
converted into liquid assets (cash) in order to facilitate the payment of
obligations to creditors, and the remaining balance, if any, is to be distributed to
the SHs or members.
N.B.: A dissolved corporation continues to be a body corporate for 3 years from
the time it is dissolved for the purpose of liquidation or winding up its corporate

Law3 Private Corporations

affairs. The termination of the life of a juridical entity does not by itself cause
the extinction or diminution of the rights and liabilities of such entity nor those
of its owners and creditors alike. (Sec. 145)
METHODS:
1. By the corporation itself through its board of directors/trustees;
2. By a trustee to whom the corporate assets have been conveyed; and
3. By a management committee or rehabilitation receiver appointed by
the SEC.
Note:
a.) The 3-year period of liquidation does not apply to methods 2 and 3 as
long as the trustee or the receiver is appointed within the said period.
b.) But the word trustee as used in the corporation statute must be
understood in its general concept which could include the counsel to
whom was entrusted the prosecution of the suit filed by the
corporation.
c.) The board of directors may also be permitted to complete the
corporate liquidation by continuing as trustees by legal implication.
d.) The question as to the right of priority of a claimant against the assets
of a corporation that is being dissolved and liquidated becomes of
importance only when the assets of the corporation are not sufficient
to pay all claims.
LIQUIDATION vs. REHABILITATION
LIQUIDATION

REHABILITATION

Nature
Connotes a winding up or settling with Connotes a reopening or
creditors and debtors
reorganization
Continuity of corporate life
Winding up process so that assets may Contemplates a continuance of
be distributed to those entitled
corporate life in an effort to restore
the corporation to its former
successful operation

Atty. Jonathan B. Tambol

TITLE XV FOREIGN CORPORATIONS

-

Formed, organized or existing under any law other than those of the
Philippines and whose laws allow Filipino citizens and corporation to do
business in its own country or state. (This definition espouses the
incorporation test and the reciprocity rule and is significant for
licensing purposes.)

APPLICATION TO EXISTING FOREIGN CORPORATION (Sec. 124)

It is not permitted to transact or do business in the Philippines until it
has secured a license for that purpose from the SEC and a certificate of
authority from the appropriate government agency.
APPLICATION FOR A LICENSE (Sec. 125)
Reasons why a license is important:
1. To place them under the jurisdiction of the courts;
2. To place them in the same footing as domestic corporations; and
3. Protection for the public in dealing with said corporations.
RESIDENT AGENT (Secs. 127-128)
An individual, who must be of good moral character and of sound
financial standing, residing in the Philippines, or a domestic corporation
lawfully transacting business in the Philippines, designated in a written
power of attorney by a foreign corporation authorized to do business in
the Philippines, on whom any summons and other legal processes may
be served in all actions or other legal proceedings against the foreign
corporation.

5.
6.
7.
8.
9.

A misrepresentation in material matters in reports;

Failure to pay taxes, imposts and assessments;
Engage in business unauthorized by SEC;
Acting as dummy of a foreign corporation; and
Not licensed to do business in the Philippines.

DOCTRINE OF ISOLATED TRANSACTIONS

Foreign corporations, even unlicensed ones, can sue or be sued on a
transaction or series of transactions set apart from their common
business in the sense that there is no intention to engage in a
progressive pursuit of the purpose and object of business transaction.
INSTANCES WHEN A FOREIGN CORPORATION MAY SUE IN THE PHILIPPINES
WHETHER OR NOT LICENSED TO DO BUSINESS:
1. To seek redress for an isolated business transaction;
2. To protect its corporate reputation, name, and goodwill;
3. To enforce a right not arising out of a business transaction, e.g., tort
that occurred in the Philippines;
4. When the parties have contractually stipulated that Philippines is the
venue of actions;
5. When the party sued is barred by the principle of estoppel and/or
principle of unjust enrichment from questioning the capacity of the
foreign corporation; and
6. Recovery of misdelivered property.

GROUNDS FOR REVOCATION OF LICENSE

1. Failure to file annual reports required by the Code;
2. Failure to appoint and maintain a resident agent;
3. Failure to inform the SEC of the change of residence of the resident
agent;
4. Failure to submit copy of amended articles or by-laws or articles of
merger or consolidation;

Law3 Private Corporations

Atty. Jonathan B. Tambol

REFERENCES:
1.
2.
3.
4.
5.
6.
7.
8.
9.

The Corporation Code of the Philippines Annotated, Hector S. De Leon,

2002 Edition.
Civil Code of the Philippines Annotated Book V, Paras, 1995 Edition.
The Law on Partnerships and Private Corporations, Hector S. De Leon,
2010 Edition.
Notes in Business Law, Fidelito R. Soriano, 2011 Edition.
Civil Law Reviewer, Jurado, 2001 Edition.
Civil Law Review, Villanueva, 2004 Edition.
Supreme Court Reports Annotated.
Philippine Reports.
IBP Journals.

Law3 Private Corporations

Atty. Jonathan B. Tambol