Section 2 Corporation defined.

–
A corporation is an artificial being Aciaab
created by operation of law, c b o o l,
having the right of succession and htrosa
the powers, attributes and properties t p, a a p
expressly authorized by law eabl
or incident to its existence. o i t i e.

Section 23 The board of directors or trustees. –

Unless otherwise provided in this Code, U o p i t C,
the corporate powers of all corporations tcpoac
formed under this Code futC
shall be exercised, s b e,
all business conducted abc
and all property of such corporations aaposc
controlled and held by the board of directors or trustees cahbtbodot
to be elected from among the holders of stocks, t b e f a t h o s,
or where there is no stock, from among the members of the o w t i n s, f a t m o t c, w s h o
corporation, who shall hold office f o (1) y u
for one (1) year until t s a e a q.
their successors are elected and qualified.

Every director must own Edmo

at least one (1) share of the capital stock of the corporation a l o (1) s o t c s o t c
of which he is a director, o w h i a d,
which share shall stand in his name wsssihn
on the books of the corporation. o t b o t c.
Any director who ceases Adwc
to be the owner of at least one (1) share of the capital stock t b t o o a l o (1) s o t c s
of the corporation of which he is a director otcowhiad
shall thereby cease to be a director. s t c t b a d.
Trustees of non-stock corporations T o n-s c
must be members thereof. m b m t.
A majority of the directors or trustees Amotdot
of all corporations oac
organized under this Code outC
must be residents of the Philippines. m b r o t P.

Section 29 Vacancies in the office of director or trustee. –

Any vacancy occurring Avo
in the board of directors or trustees itbodot
other than by removal by the stockholders or members otbrbtsom
or by expiration of term, o b e o t,
may be filled by the vote of mbfbtvo
at least a majority of alamo
the remaining directors or trustees, t r d o t,
if still constituting a quorum; i s c a q;
otherwise, said vacancies o, s v
must be filled by the stockholders mbfbts
in a regular or special meeting iarosm
called for that purpose. c f t p.

A director or trustee so elected to fill a vacancy Adotsetfav

shall be elected only for the unexpired term sbeoftut
of his predecessor in office. o h p i o.
A directorship or trusteeship Adot
to be filled by reason of tbfbro
an increase in the number aiitn
of directors or trustees odot
shall be filled only sbfo
by an election at a regular or at a special meeting baeaaroaasm
of stockholders or members osom
duly called for the purpose, d c f t p,
or in the same meeting oitsm
authorizing the increase ati
of directors or trustees odot
if so stated in the notice of the meeting. i s s i t n o t m.

Section 31 Liability of directors, trustees or officers. –

Directors or trustees Dot
who willfully and knowingly wwak
vote for or assent to patently unlawful acts vfoatpua
of the corporation otc
or who are guilty of gross negligence owagogn
or bad faith obf
in directing the affairs of the corporation idtaotc
or acquire any personal or pecuniary interest oaapopi
in conflict with their duty icwtd
as such directors or trustees asdot
shall be liable jointly and severally sbljas
for all damages resulting therefrom fadrt
suffered by the corporation, s b t c,
its stockholders or members and other persons. i s o m a o p.

When a director, trustee or officer W a d, t o o

attempts to acquire or acquires, a t a o a,
in violation of his duty, i v o h d,
any interest adverse to the corporation aiattc
in respect of any matter iroam
which has been reposed in him in confidence, w h b r i h i c,
as to which equity imposes a disability upon him atweiaduh
to deal in his own behalf, t d i h o b,
he shall be liable as a trustee hsblaat
for the corporation ftc
and must account for the profits amaftp
which otherwise would have accrued to the corporation. w o w h a t t c.

Section 122 Corporate liquidation. -

Every corporation Ec
whose charter expires by its own limitation wcebiol
or is annulled by forfeiture or otherwise, o i a b f o o,
or whose corporate existence for other purposes owcefop
is terminated in any other manner, i t i a o m,
shall nevertheless be continued snbc
as a body corporate aabc
for three (3) years f t (3) y
after the time when it would have been so dissolved, a t t w i w h b s d,
for the purpose of prosecuting ftpop
and defending suits by adsb
or against it and oaia
enabling it to settle eits
and close its affairs, a c i a,
to dispose of tdo
and convey its property acip
and to distribute its assets, a t d i a,
but not for the purpose bnftp
of continuing the business octb
for which it was established. f w i w e.

At any time during said three (3) years, A a t d s t (3) y,

the corporation tc
is authorized and empowered iaae
to convey all of its property to trustees tcaoiptt
for the benefit of stockholders, members, creditors, f t b o s, m, c,
and other persons in interest. a o p i i.
From and after any such conveyance Faaasc
by the corporation btc
of its property in trust for the benefit of its stockholders, members, o i p i t f t b o i s, m,
creditors and others in interest, c a o i i,
all interest which the corporation had in the property terminates, a i w t c h i t p t,
the legal interest vests in the trustees, t l i v i t t,
and the beneficial interest in the stockholders, members, creditors a t b i i t s, m, c
or other persons in interest. o o p i i.

Upon the winding up of the corporate affairs, U t w u o t c a,

any asset distributable to any creditor or stockholder or member aadtacosom
who is unknown wiu
or cannot be found ocbf
shall be escheated to the city or municipality sbettcom
where such assets are located. w s a a l.

Except by decrease of capital stock Ebdocs

and as otherwise allowed by this Code, a a o a b t C,
no corporation shall distribute any of its assets or property ncsdaoiaop
except upon lawful dissolution euld
and after payment of all its debts and liabilities. (77a, 89a, 16a) a a p o a i d a l. (7, 8, 1)

Section 81 Instances of appraisal right.-

Any stockholder of a corporation Asoac
shall have the right to dissent shtrtd
and demand payment adp
of the fair value of his shares otfvohs
in the following instances: i t f i:
1. In case any amendment 1. I c a a
to the articles of incorporation ttaoi
has the effect of hteo
changing or restricting cor
the rights of any stockholder or class of shares, t r o a s o c o s,
or of authorizing preferences ooap
 in any respect superior iars
to those of outstanding shares of any class, t t o o s o a c,
or of extending or shortening ooeos
the term of corporate existence; t t o c e;
2. In case of sale, lease, exchange, transfer, mortgage, pledge 2. I c o s, l, e, t, m, p
or other disposition ood
of all or substantially all oaosa
of the corporate property otcp
and assets as provided in the Code; and a a a p i t C; a
3. In case of merger or consolidation. (n) 3. I c o m o c. (n)

Section 6 Classification of shares. –

The shares of stock of stock corporations Tsososc
may be divided mbd
into classes or series of shares, or both, i c o s o s, o b,
any of which classes or series of shares aowcosos
may have such rights, m h s r,
privileges or restrictions por
as may be stated in the articles of incorporation: a m b s i t a o i:
Provided, P,
That no share Tns
may be deprived of voting rights mbdovr
except those classified and issued etcai
as "preferred" or "redeemable" shares, a "p" o "r" s,
unless otherwise provided in this Code: u o p i t C:
Provided, further, P, f,
That there shall always be Ttsab
a class or series of shares acosos
which have complete voting rights. w h c v r.
Any or all of the shares Aoaots
or series of shares osos
may have a par value or have no par value mhapvohnpv
as may be provided for in the articles of incorporation: a m b p f i t a o i:
Provided, however, P, h,
That banks, trust companies, insurance companies, T b, t c, i c,
public utilities, and building and loan associations p u, a b a l a
shall not be permitted to issue no-par value shares of stock. s n b p t i n-p v s o s.

Preferred shares of stock Psos

issued by any corporation ibac
may be given preference mbgp
in the distribution of the assets of the corporation itdotaotc
in case of liquidation icol
and in the distribution of dividends, a i t d o d,
or such other preferences osop
as may be stated in the articles of incorporation ambsitaoi
which are not violative wanv
of the provisions of this Code: o t p o t C:
Provided, P,
That preferred shares of stock Tpsos
may be issued only with a stated par value. m b i o w a s p v.
The board of directors, T b o d,
where authorized in the articles of incorporation, w a i t a o i,
may fix the terms and conditions mfttac
of preferred shares of stock opsos
or any series thereof: o a s t:
Provided, P,
That such terms and conditions Tstac
shall be effective sbe
upon the filing of a certificate thereof utfoact
with the Securities and Exchange Commission. w t S a E C.

Shares of capital stock issued Socsi

without par value wpv
shall be deemed fully paid sbdfp
and non-assessable and the holder of such shares a n-a a t h o s s
shall not be liable snbl
to the corporation ttc
or to its creditors in respect thereto: o t i c i r t:
Provided; P;
That shares without par value Tswpv
may not be issued for a consideration mnbifac
less than the value of five (P5.00) pesos per share: l t t v o f (P.0) p p s:
Provided, further, P, f,
That the entire consideration received by the corporation Ttecrbtc
for its no-par value shares f i n-p v s
shall be treated as capital sbtac
and shall not be available asnba
for distribution as dividends. f d a d.

A corporation may, A c m,
furthermore, f,
classify its shares cis
for the purpose of insuring ftpoi
compliance with constitutional cwc
or legal requirements. o l r.

Except as otherwise provided Eaop

in the articles of incorporation itaoi
and stated in the certificate of stock, a s i t c o s,
each share shall be equal essbe
in all respects to every other share. i a r t e o s.

Where the articles of incorporation Wtaoi

provide for non-voting shares p f n-v s
in the cases allowed by this Code, i t c a b t C,
the holders of such shares thoss
shall nevertheless be snb
entitled to vote on the following matters: e t v o t f m:
1. Amendment of the articles of incorporation; 1. A o t a o i;
2. Adoption and amendment of by-laws; 2. A a a o b-l;
3. Sale, lease, exchange, mortgage, pledge 3. S, l, e, m, p
or other disposition of all or substantially all of the corporate o o d o a o s a o t c p;
property; 4. I, c o i b i;
4. Incurring, creating or increasing bonded indebtedness; 5. I o d o c s;
5. Increase or decrease of capital stock; 6. M o c o t c w a c o o c;
6. Merger or consolidation of the corporation with another 7. I o c f i a c o b i a w t C; a
corporation or other corporations; 8. D o t c.
7. Investment of corporate funds in another corporation or business
in accordance with this Code; and
8. Dissolution of the corporation. E a p i t i p p,
tvntaapca
Except as provided in the immediately preceding paragraph, apitC
the vote necessary to approve a particular corporate act sbdtr
as provided in this Code o t s w v r.
shall be deemed to refer
only to stocks with voting rights.

Section 27 Disqualification of directors, trustees or officers. –

No person convicted by final judgment Npcbfj
of an offense punishable by imprisonment oaopbi
for a period exceeding six (6) years, f a p e s (6) y,
or a violation of this Code oavotC
committed within five (5) years c w f (5) y
prior to the date of his election or appointment, p t t d o h e o a,
shall qualify as a director, trustee or officer of any corporation. s q a a d, t o o o a c.

Section 28 Removal of directors or trustees. –

Any director or trustee of a corporation Adotoac
may be removed from office mbrfo
by a vote of the stockholders bavots
holding or representing hor
at least two-thirds (2/3) of the outstanding capital stock, a l t-t (2/3) o t o c s,
or if the corporation be a non-stock corporation, o i t c b a n-s c,
by a vote of at least two-thirds (2/3) b a v o a l t-t (2/3)
of the members entitled to vote: o t m e t v:
Provided, P,
That such removal shall take place Tsrstp
either at a regular meeting of the corporation eaarmotc
or at a special meeting called for the purpose, o a a s m c f t p,
and in either case, a i e c,
after previous notice to stockholders or members apntsom
of the corporation otc
of the intention to propose such removal at the meeting. o t i t p s r a t m.
A special meeting Asm
of the stockholders or members of a corporation otsomoac
for the purpose of removal of directors or trustees, f t p o r o d o t,
or any of them, o a o t,
must be called by the secretary on order of the president mbcbtsoootp
or on the written demand of the stockholders ootwdots
representing or holding roh
at least a majority of the outstanding capital stock, a l a m o t o c s,
or, if it be a non-stock corporation, o, i i b a n-s c,
on the written demand otwd
of a majority of the members entitled to vote. o a m o t m e t v.
Should the secretary fail Stsf
or refuse to call the special meeting ortctsm
upon such demand usd
or fail or refuse to give the notice, o f o r t g t n,
or if there is no secretary, o i t i n s,
the call for the meeting tcftm
may be addressed directly to the stockholders or members mbadttsom
by any stockholder or member of the corporation basomotc
signing the demand. s t d.
Notice of the time and place of such meeting, N o t t a p o s m,
as well as of the intention to propose such removal, a w a o t i t p s r,
must be given by publication mbgbp
or by written notice prescribed in this Code. o b w n p i t C.
Removal may be with or without cause: R m b w o w c:
Provided, That removal without cause P, T r w c
may not be used to deprive minority mnbutdm
stockholders or members som
of the right of representation otror
to which they may be entitled under Section 24 of this Code. t w t m b e u S 2 o t C.

Section 32 Dealings of directors, trustees or officers with Acotc

the corporation.- A contract of the corporation woom
with one or more oidotoo
of its directors or trustees or officers i v,
is voidable, a t o o s c,
at the option of such corporation, u a t f c a p:
unless all the following conditions are present: 1. Ttposdot
1. That the presence of such director or trustee itbm
in the board meeting iwtc
in which the contract wawnn
was approved was not necessary t c a q f s m;
to constitute a quorum for such meeting; 2. Ttvosdot
2. That the vote of such director or trustee w n n f t a o t c;
was not necessary for the approval of the contract; 3. Ttc
3. That the contract ifar
is fair and reasonable u t c; a
under the circumstances; and 4. T i c o a o,
4. That in case of an officer, tchbpa
the contract has been previously authorized b t b o d.
by the board of directors.
Waotftc
Where any of the first two conditions s f i t p p i a,
set forth in the preceding paragraph is absent, i t c o a c w a d o t,
in the case of a contract with a director or trustee, scmbr
such contract may be ratified btvots
by the vote of the stockholders r a l t-t (2/3) o t o c s
representing at least two-thirds (2/3) of the outstanding capital stock o o a l t-t (2/3) o t m
or of at least two-thirds (2/3) of the members i a m c f t p:
in a meeting called for the purpose: P,
Provided, Tfd
That full disclosure otaiotdoti
of the adverse interest of the directors or trustees involved i m a s m:
is made at such meeting: P, h,
Provided, however, T t c i f a r u t c.
That the contract is fair and reasonable under the circumstances.
Section 33 Contracts between corporations with
interlocking directors. - Except in cases of fraud, E i c o f,
and provided the contract is fair and reasonable aptcifar
under the circumstances, u t c,
a contract between two or more corporations acbtomc
having interlocking directors hid
shall not be invalidated snbi
on that ground alone: o t g a:
Provided, P,
That if the interest Titi
of the interlocking director otid
in one corporation ioc
is substantial is
and his interest in the other corporation ahiitoc
or corporations is merely nominal, o c i m n,
he shall be subject hsbs
to the provisions of the preceding section ttpotps
insofar as the latter corporation or corporations are concerned. i a t l c o c a c.

Stockholdings exceeding twenty (20%) percent S e t (2%) p

of the outstanding capital stock otocs
shall be considered substantial for purposes of interlocking directors. s b c s f p o i d.

Section 39 Power to deny pre-emptive right. –

All stockholders of a stock corporation Asoasc
shall enjoy pre-emptive right s e p-e r
to subscribe to all issues tstai
or disposition of shares of any class, o d o s o a c,
in proportion to their respective shareholdings, i p t t r s,
unless such right usr
is denied by the articles of incorporation idbtaoi
or an amendment thereto: o a a t:
Provided, P,
That such pre-emptive right T s p-e r
shall not extend sne
to shares to be issued tstbi
in compliance with laws requiring stock offerings or minimum stock i c w l r s o o m s o b t p;
ownership by the public; otstbiigf
or to shares to be issued in good faith wtaots
with the approval of the stockholders r t-t (2/3) o t o c s,
representing two-thirds (2/3) of the outstanding capital stock, iefpn
in exchange for property needed fcp
for corporate purposes o i p o a p c d.
or in payment of a previously contracted debt.

Section 74 Books to be kept; stock transfer agent. –

Every corporation Ec
shall keep and carefully preserve skacp
at its principal office aipo
a record of all business transactions aroabt
and minutes of all meetings of stockholders or members, a m o a m o s o m,
or of the board of directors or trustees, o o t b o d o t,
in which shall be set forth in detail iwsbsfid
the time and place of holding the meeting, t t a p o h t m,
how authorized, h a,
the notice given, t n g,
whether the meeting was regular or special, w t m w r o s,
if special its object, i s i o,
those present and absent, t p a a,
and every act done or ordered done at the meeting. a e a d o o d a t m.
Upon the demand Utd
of any director, trustee, stockholder or member, o a d, t, s o m,
the time when any director, trustee, stockholder or member t t w a d, t, s o m
entered or left the meeting eoltm
must be noted in the minutes; m b n i t m;
and on a similar demand, a o a s d,
the yeas and nays tyan
must be taken on any motion or proposition, m b t o a m o p,
and a record thereof carefully made. a a r t c m.
The protest of any director, trustee, T p o a d, t,
stockholder or member som
on any action oaa
or proposed action opa
must be recorded in full mbrif
on his demand. o h d.

The records of all business transactions Troabt

of the corporation otc
and the minutes of any meetings atmoam
shall be open to inspection sboti
by any director, trustee, b a d, t,
stockholder or member som
of the corporation otc
at reasonable hours arh
on business days obd
and he may demand, writing, a h m d, w,
for a copy of excerpts from said records or minutes, f a c o e f s r o m,
at his expense. a h e.

Any officer or agent of the corporation Aooaotc

who shall refuse wsr
to allow any director, trustees, t a a d, t,
stockholder or member som
of the corporation otc
to examine and copy teac
excerpts from its records or minutes, e f i r o m,
in accordance with the provisions of this Code, i a w t p o t C,
shall be liable to such director, trustee, s b l t s d, t,
stockholder or member for damages, s o m f d,
and in addition, a i a,
shall be guilty of an offense sbgoao
which shall be punishable wsbp
under Section 144 of this Code: u S 1 o t C:
Provided, P,
That if such refusal Tisr
is made pursuant to a resolution or order imptaroo
of the board of directors or trustees, o t b o d o t,
the liability under this section tluts
for such action fsa
shall be imposed upon the directors or trustees sbiutdot
who voted for such refusal: w v f s r:
and Provided, further, a P, f,
That it shall be a defense to any action Tisbadtaa
under this section uts
that the person ttp
demanding to examine and copy dteac
excerpts from the corporation's records and minutes e f t c's r a m
has improperly used any information hiuai
secured through any prior examination of the records or minutes stapeotrom
of such corporation osc
or of any other corporation, o o a o c,
or was not acting in good faith ownaigf
or for a legitimate purpose in making his demand. o f a l p i m h d.