1

COR
PORATI
ON LAW - I
n cases
of an
sl
der,
l
ibel d
anot
her orm
fs o
f def
amati
on
(
shou
ld not qu
al
if
y becau
se the
code
does
not qu
al
if
y
Cor
por
at
i
on i
s one of t
he t
ype
s of busi
nes
s whet
hernat
uralorj
uri
dical
)Ar
t.2219oft
heci
vilcode:
organ
i
zat
i
ons.I
t s
i a
l
so the
mostmpo
irtan
t n
i econ
omic
deve
l
opment
. Art
.2219.Moraldamages ma
y be r
ecov
ered
i
n t
he ol
flowi
ng and anal
ogou
s cases:
I
NTR
ODUCTI
ON
(
1) A
cri
mi
nal o
en
seresu
l
ti
ng i
n ph
ysi
calnj
uiri
es;
Sol
e prop
ri
et
orsh
i
p

(
2) Quas
i
-del
i
cts cau
si
ng p
hysi
ca
linj
uri
es;
- One man f
ormofbu
siness enti
ty
, personal
l
y a
nswes
r al
l
l
iab
il
iti
es, t
buen
j
oys
all
the
pro
ts i
th
w th
e ex
cl
usi
on of
(
3) ed
Suct
i
on, ab
ducti
on
, rap
e,or oth
er ascivi
l ou
s a
cts;
others
- Li
mit
edshareh
ol
ders resp
onsi
bi
li
ty
- Paid b
su
scri
pti
on i
n f
ull
, youare onon
lgeri
abl
le (
4) Ad
ul
tery or cu
con
bi
nage;

Pa
rtnersh
i
p
(
5) I
ll
ega
l or rb
ai
trary eten
d ti
on or rrest;
a

- Base
d onmutual
tr
ustandcondence
(
6) I
ll
egal se
arch
;

Joi
ntv
ent
ure
(
7) b
Li
el
, sl
ande
r or y
anoth
er orm
f ofde
f
amati
on
;
- on
e i
t
me gr
ou
ping of
persons
het
her
w ht
ey beat
u
nralor
j
uridi
cal (
8) al
Mi
ciou
s p
rosecu
ti
on;
- does ot
n entai
l con
t
inui
ty b
ecau
se f
a
ter ht
e u
ndertaki
ng
i
s com
pl
etedi
tis alr
ead
y the
end
(
9)Acts
men
ti
oned inrt
i
cl
Ae 30
9;
- part
i
cul
ar part
ners
hi
p and j
oint ve
nture
wou
ld be
si
mil
ar, bu
t h
ter
e s
i a
l
ready
a deci
si
on of he
t S
uprem
e
(
10) Act
s and acti
ons ref
erred n
toArt
i
cles 1
2, 26
, 27
,
Courtdecl
ari
ng htem as dierent
28, 29
, 30
, 32
, 34
, an
d 35.
- whentheydonotr
egis
ter
,itdoesnotexi
st
- Forei
gn corpor
ati
ons en t
ers nito an agree
ment i
tw
h a

domest
ic corporati
on, t
i must be
regi
st
ered.
eneral
Gly Thepar
ent
soft
hefemal
eseduced,abduct
ed,r
aped,or
t
hey od n
ot need
t
o be regi
st
ered. abused, err
ref
ed to i
n No. 3of ht i
s arti
cle, amy al
so
recove
r moral
damages.
Corporat
i
ons
Thespouse,descendant
s,ascendant
s,andbr
other
sand
- They may ent
eri
ntoj
ointv
ent
ure,butgener
all
ythey si
st
ers ay m ribng thect ion
a men t
ion
ed in No.9 o
fthi
s
cannot
ent
er i
nto a part
ner
shi
p, bu
t t
her
e ar
e arti
cl
e,in the orde r na
med .
except
i
ons al
lowed y
b theEC
S:t
he 3except
i
ons mustgo
handi
n hand Advant
ages(
SEE LADI
ABOOK)
1. The art
i
cles of
ncorporat
i i
on express
l
y a
uthori
zed
t
he cor
por
at
i
on t
o ent
er i
nto cont
ract
s of - No.2 may so
al be a
sadvan
di t
age
pa
rtnershi
p; - No.5 may so
al be a
sadvan
di t
age
2. Theagree
ment ort
icl
ar
es of par
t
ner
shi
p must
pro
vi
de t
hat al
l h
te part
ners
wil
l mana
ge t
he Acor
por
ati
oni
saper
son,t
her
efor
epr
otect
edbyt
hedue
pa
rtnershi
p; and proc
esscl
ause an
d equalr
ote
pct
i
on cl
ause of he
t
3. Th
e art
icl
es of
part
ner
shi
p mustst
i
pul
ate h
tatal
l Con
sti
tut
ion
t
he pa
rtners are
nd sh
a al
l be j
oint
ly an
d sever
al
ly
li
abl
e for
ll ob
ali
gati
on
s of he
t p
artn
ersh
i
p. CLASSI
FI
CATI
ON OF CO
RPO
RATI
ONS
DEFI
NITI
ON ANDATTRI
BUT ES
Sect
ion3 S
tock nd
a n
on-
stock
4 att
ri
but
es f
oa corp
orati
on
- I
mport
an
ce of
know
ing,det
er
mini
ng w
hat pr
ovi
sion
s of
1. Art
ici
albei
ng t
he code h
or
e aw
lt may be
app
l
icabl
e
2. Cr
eated by oper
at
ion of
l
aw
3. Ri
ght ofsucc
es
son
i
4. Power
s,att
ribu
tes an
d propert
i
es expres
sl
y au
thori
zed Secti
on 3.Cl asses of cor porat
ions.-
byl
aw ori
nci
dentt
oit
sexi
stence. Corporat
ionsf ormedor or ganize
d und er hits C ode ay
m
bes t
ock ornon-st
ock corporati
ons.Corporati
onswhi ch
havecapi tal stock di vded
i i
nto shar es and ar e
Doctri
ne o
fli
mit
edcap
aci
t
y
authori
zedt o disri
tbu t
e to the holdersf o such sh
ares
di
vden
i ds or l al
otments of he su
t rpl
us p rot
s on the
- Onl
y su
ch pow
er
s a
s are expressl
y grant
ed t
o t
i byaw
l basisofthesharesheldar estockcorporat
ions.Allot
her
an
d by i
ts art
icl
es of ncorporati
i on i
ncl
udi
ng ot
hers corporati
on s are non-st
ockorp corati
ons.(3a)
whi
ch ar
einci
dent
alt
o suc
h conf
err
ed power
s,t
hose
r
easonabl
y necess
aryto accom
pl
i
sh i
ts pu
rpose dan Non
-st
ock
- i
t
tl
e 1
0
t
hose hw
i
chmay e
b n
ici
den
t
al ott
i
s exi
st
ence
St
ock- secti
on 51
- Can dot
hings as the
aw ask
ls or low
al
s t
ito d
o
- If t
i do
es an
ythi
ng beyon
d, ti sh
al
l beconsi
dered
as
ULT
RA V
I
RES Stockhol
ders
must general
l
y casthei
t
r vot
es in the
mee
t
ing; sect
ion 4 gov
er
ned pri
mari
l
y by the l
aw
creati
ng th
em
Gener
al ul
re: o
Marl dam
age
s cannot gr
be
ant
ed t
o
corp
orati
on
s
Secti
on 4. Cor
por
at
i
onscreat
ed by speci
al
Excepti
on
: Fi
l
ipi
nas Br
oadcast
i
ng Net
wor
k I
nc. vs.
o Ag l
aws or cha
rt
ers.
- oCrporati
on
s creat
ed by speci
al aw
ls
or cha
rt
ers alsh
l be overn
g edprimari
ly by ethprovi
sion
s
Med
oft
he speci
all aw or ch
artercreati
ng them or ap
pli
cab
le
t
o them
, suppl
em ented tby
he provi
si
ons ofhis
t C ode,
i
nsof
ar s
a th
eyareppliacab
l
e.n)(
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 2

Sect
ion3 De act
fo

- Thet
worequi
sit
esmus
tal
waysconcur - exi
st
s by virt
ue of orab
coll
e compl
iance
1. Thatthey have at al
capi
stock vidi
dedint
o sha
res;
and, - At
tached di
rect
ly onl
y by t
he s
tat
ein a quo war
rant
o
2. That hey
t are author
i
zed to disrt
ibu
te di
vdends
i or proceed
i
ng
al
l
otmen
ts a
s su
rpl
us p
rots
o t
i
t
s st
ockh
ol
ders on
the
basi
soft
heshar
eshel
dbyeac
hoft
hem. Corporat
i
onbyest
oppel

Sect
ion4 - So def
ecti
vel
y form
ed, bu
t st
il
l con
si
dered
corp
orati
on
,
butonl
yi nrel
ati
on t
ot hose who cannot deny t
hei
r
- Creat
edby aspeci
allaw
,t hey ave
h thei
r own charact
er exi
st
ence sect
ion20an d 2 1
- They ar
enoti
mmunef
rom sui
tunl
esspr
ovi
ded bythe FOR
MATI
ON AN D ORGANIZATION
l
aw of hei
tr crea
t
ion 3 stages
- Pri
mari
ly govern
edbythe awl cre
ati
ng them 1. Creati
on
- Thei
rsubsi
diar
iesar
eent
irel
y di
er
entori
ndependent 2. Re-organ
izati
on or u
qasi
-reorgan
i
zati
on
f
romt
hat of
t
he other 3. Dissol
uti
on/w
indi
ng-up
Pu rposel
ause
c
Cl
ose corp
orati
on - Dening the scope of au
thori
t
y of het cor
por
at
e
ente
rpri
se prndert
u ak
ing.otB
h con
rm
edand l
imi
ted
4 i
l
mitati
on
s of
purpo
se au
clse
- Ther
eisnoexemp
tioni
tisabsol
ute
1. Lawf
ul
2. Speci
c or
st
ated conci
sel
y
Publ
ic co
rpo
rati
on
3. More h
tan one,
the pr
i
mary and c
se
ondar
y must
bespeci
ed
- Pol
iti
cal or governm
en
tal pu
rposes
4. Lawf
ully co
mbi
ned
- Those f
orme
d or or
gani
zed f
or t
he gov
ernme
nt or a
- Provi
si
on that ates
st, acn
not be
i
ssu
ed l
ess tha
n par
,
porti
on of ht
e St
ate ro a
ny of t
si pol
i
ti
cal bd
su
ivi
si
on
except
i
on i
s t
reasu
ry sh
ares becau
se i
t can
be i
ssued
an
d w
hich haveor
f ht
ei
r pu
rpose
he tgeneral
goodan
d
l
esshan
t par
wel
far
e
Acor
por
ati
on commences onl
y upon i
ssuance oft
he
Pri
vateorp
Corati
on
cer
ti
cate,
pri
or there
t
o i
t h
as no bei
ng an
d can
not
t
ransa
ct bu
si
ness.
Prom
ot
ers can
not act
or faproj
ect
ed
- I
mmedi
at
e benet
, aim or adv
ant
age of pr
i
vat
e
i
ndivi
duals corp
orati
on
- Thosef
orme
dforsomepr
ivat
epur
pose,benet
,ai
m or
Met
ro an
Mil
a- pai
d up ca
pi
talre
qui
rem
enti
s 10M
end
- Dist
inct
i
on: pu
bli
c or
f govern
men
tal pu
rpose
Non
- st
ock-ere
m men
ti
onoft
he operati
ng cap
it
al

Corpo
rat
i
onSol
e
Men
ti
ont
he au
t
hori
zed cap
it
al

- Exem
pi
ton t
o t
he r
ule b
ecause
it s
i com
posed
onl
y of
Restri
cti
ons
one per
son
- Anincor
por
atorma
yal
sobeaj
uri
dicalper
son
- Manda
toryn i
close
- Notmanda
toryn iordi
nary
Cl
ose corp
orati
on

Non
-st
ock
- Thereisexclusi
vit
yofsharesofst
ock
- Secti
on96 -105
- Restri
cti
ons toran tsf
er shares - I
f val
ue s
i notore
m han
t 10
0,00
0
- Only htosendi icat
ed can own shares
- Art
iclemus tprovi
dethatt
her ewi
llbenopubl
icoer
ing Acor
por
ati
on cannotuseanyot
hernameunl
essi
thas
beename
nded
Opencorporat
i
on
Sect
ion 19
- op
enl
y admi
t n
ivest
ors
- exam
pl
e:st
ock excha
nge - I
f con
fusi
ngl
y si
mil
ar i
t wi
ll n
ot e
b al
l
owed t
o be
registered
Domest
ic/Forei
gn - Ver
icat
ionsl
ipf
rom t
her
ecor
dsocer

Tes
t
Secti
on 19. Commencement of orpor
cat
e
exist
ence.- A pri vate corporat
ion form
ed or organi zed
- I
ncorp
orati
ont
est
und erthis Code com mences o have
t corporat
e exi
stence
- I
fincorp
orated
under the slaw
o
f the hi
P
li
ppi
nes tis
i a
and j uri
dical per
sonali
ty an d is deemed i ncorpor
ated
do
mest
ic co
rporati
on fr
om t hedat e hteSecu ri
ti
es and Exchange omC missi
on
issues a certi
cate f oncorporat
i i
on underi t
s oci al
ME Gr
ayvs
. CA seal; and thereupon the incorporat
ors,
stockhol
ders/members and t heir successosr shall
- Parent Hol
ordi
ng/ subsi
di
ari
es an
d al
iates consti
tut
e abod y p ol
it
ic an d corporat
e underhe t name
- Ali
ates-nomaj
orit
yvot
e stated i
n t he arti
cles f oincorp
orati
on f
or th e peri
od of
ti
me m enti
oned therei
n, unl ess d sai
peri
od is extended
SMC 12 %
or the corpor
ati
on i s sooner di
ssol
vedi n accordance
wi
thl
aw.(
n)
HER
SHEY CB
Pl12%
CBP - Wo
rds cor
por
ati
on ori
nc.ei
theri
nful
lorabbr
evi
ated
12%
f
ormmustbe ncl
iuded
Al
iat
eissubj
ectt
ocommoncont
rolbyt
he12% owner
s
De u
jre
Sect
ion 18
.
Cor
por
at
e nam
e.- oN corporat
e
name may beal
l
owed byt
he Securi
t
ies and
Exc
han ge
- can
notbe att
ached
by the
ate
steve
n i
n a qu
o w
arr
an
to Commiss
i
on i
f hte pr
opose
d nam
e i s i
dent
ical or
proceeding decep
t
ivel
y or co
nf
usi
ngl
y si
mil
ar toatthofyanex
i
sti
ng

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 3

corporat
i
on or ot a
ny ot
her name al
readyprot
ect
ed by - Gen
eralrul
e:on
ly n
atural
person
s
l
aw or sipa t
ent
ly decep
t
ive, conf
usi
ng or co
ntrary to - Except
i
on: cooperat
i
ves and corporat
i
on pri
mari
ly
exi
st
ing l
aws.Whena chan ge nit
he cor
porat
e n ame si organ
i
zed tol
d ho
eq
ui
ti
es ni ru
ral
banks
appr
oved, he
t Commiss
ion shal
l ss
iue an amended
cer
ti
cate incorporat
of i
onunderhe t amend
edname.( n) How about
mi
nor
s?

Doct
ri
ne of
second
ary ean
ming - NO, becau
se ht
ey u
mstbe of
l
egal
age

- A wor
d or phr
ase or
igi
nal
lyi
ncapabl
e of excl
usi
ve May acorporati
on organ
i
zed ybn
icorporator
s con
si
st
ing
ap
prop
ri
ati
on [
usu
all
y gen
eri
c] i
w
th re
f
erence
to an so
l
ely oforeign
f ers
art
icl
e i
n t
he market
, becau
se of geograph
i
cal
l
y or
ot
herw
i
se descri
pt
i
ve, i
ght
m neve
rt
hel
esshavebeen - Yes,t
her
eisnonat
ional
it
yrequi
reme
ntonl
yresi
dence,
usedso ong
l and so excl
usi
vel
y by oneproducer
i
th w as on
lg as
maj
ori
t
y are d
resi
en
ts of
thehi
P
l
ref
eren
ce toi
sha
rti
cle th
at,
in tha
t rad
t e a
nd t
o tha
t
br
anc
hoft
hepur
chasi
ngpubl
ic,t
hewor
dorphr
asehas Den
eincorporat
ors <sec.
5>
becomet
ome
ant
hatt
hear
ticl
ewashi
spr
oduct
.
- Those per
son me
nti
oned i
nthe ar
ticl
es as or
igi
nal
ly
Sect
ion18 f
orm
i
ng the
corporat
i
on an
d who are gn
si
at
ori
es of
het
arti
cl
esofncorp
i orati
on
.
- Lyc
eum of t
he Phi
li
ppi
nes c
ase
, t
he addi
t
ional - Mustbesi
gnator
i
es to be
i
ncorporator
s
geogr
ap
hical
name doesot
n a
mkei
t ocn
fusi
ngl
y si
mil
ar
- act
ual conf
usi
on i Ph
s not ecessil
i
n ary-ps cas
e it is
Sect i
on 5. Cor
porat
or
s and incorpor
ator
s,
en
ought
hatt
here
is proba
bl
e con
fusi
on
st
oc
khol
ders and mem bers.-Corporat
ors earh
tose hw
o
compose a corporation, whet
her asst
ockhol
ders or as
2 requ
i
sit
es u
mstbe roven
p members. Incor por
ators are thosestockhol
der
s or
membersentimon ed in the art
i
cles ofncorpor
i at ion as
- t
hat ht
e com
pl
an
ian
t corporati
on acqu
ire
d a p
ri
or gh
ri
t ori
gi
nal
ly ofrming a nd com posi
ng the corporat
i
on and
over
the use su
ofch corporat
e nam
e whoaresi
gnatoriesthereof
.
- i
den
ti
cal
, dece
pti
vel
y or on
cfusi
ngl
y,pat
entl
y d
ece
pti
ve
Corporator
s n
i a st
ockcorporati
on are lca
led
pri
nci
pal oce st
ockh
ol
dersr osh
arehol
ders.Corporat
orsn ia non-

st
ock
corporati
onare l
cal
ed mem
bers.
(4a
)
- st
ate
men
t of
pri
nci
pal oce si requ
i
red
- ci
t
y and muni
cipal
ity notonl y provi
nce mustbe
Den
e corporat
ors <sec.
5>
speci
ed
- pri
nci
paloceNOT operat
ions o
ce
- Al
lper
sonswho compose t
hecor
por
ati
on atany gi
ven
- necess
arybecau
se i
t w
il
l es
tab
li
sh t
he r
esi
den
ce of
t
ime andnee
d not be ong
am those ho
w ex
ecut
e t
he
corp
orati
ons
- v
enueofact
ionsf
ororagai
nstt
hecor
por
ations arti
cl
es f
oincorp
ora
ti
on at he
t start
its
oform
f ati
on an
d
- v
enueofmeeti
ngs organ
i
zati
on.
- sect
ion 51 meeti
ngs aym on
ly be i
tw
hin the bou
ndari
es - Ori
gi
nall
y or su
bsequ
en t
ly
oft
he ci
t
y wherehetpri
nci
pal oce - Sect
i
on 5 provi
des:
- non
-st
ockmay eb h
eld an
ywhere ni t
he P
hil
ipp
ines,
if Corporator
s ni a st
ockcorporati
on are l
ca
led
provi
dedin i
ts b
y-l
aws st
ockh
ol
dersr osh
arehol
ders.
Corporat
orsn ia non
-
- wheresummonsmaybeser
ved st
ock
corporati
onare l
cal
ed mem
bers.
(4a
)
- regi
st
rat
ion of cha
t
tel omrt
gage
must e
b regi
st
ered
i
n
the regi
st
er of
deed
s w
herehet pri
nci
paloce sioca
l t
ed May acorpor
at
i
onbe acorporat
or?

Cl
aveci
ll
a Rad
i
o Syst
em vs.
Ant
il
lon - YES.Ther
eis not
hing t
o pr
eventa cor
por
ati
on f
rom
bei
ngas
toc
khol
der
- acti
onnotupon awri
t
tencont
ract
- ci
t
y wherehe
tdef
enda
nt esi
r des I
ncorpor
at
or m
ustsu
bscri
be to sha
1re

t
ermofexi
st
ence Ther
ear
ethoset
hatar
eexcl
usi
vel
yreser
vedt
oFi
li
pinos

- corporate
ermrequi
t red An i
ncor
por
atormaybea cor
por
atorasl
ongashei
sa
- det
erm
i
ning w
hat poi
nt i
n t
ime h
te u
jri
dical
person
al
i
ty st
ock
hol
der
wi
llceasetoexis
t
- en
ter ntio contractl yon
whenit ha
s ujri
di
cal person
al
ity secti
on 6
- on
ce ticea ses to , exist
i
t no on
l gerash erson
p ali
ty
- exi
stor f na
otheryears3 nl
yoor
f u p
rposesfo l
iqu
idat
ion
- Di
ssoluti
on- tis i a
utomati
c Section 6. Classi
cat
ion of sh ares.- The
shares of t
ock sofstock corporati
ons may e b divi
dedi nto
Whenshoul
dext
ensi
onbemade? classes or seri
es of res,sha or both, an y ofhi w
chcl asses
or series fosh aresay m have ch suri gh t
s,pri vil
eges or
restri
cti
ons as may be st ated i n t he art icl
es of
- Gen
eralrul
e:Notearl
i
er han
t 5 years
i
ncorpor at
i
on: Provided, That nosha re maybedep rived
- Excep
t
ion
: unl
esshere
t are
ust
i
ab
jl
e reason
s
of voting ri
gh t
s except hosetclassiedan d issued as
"pref
erred"or " redeemable" shares, nl u
essot herw i
se
May tibe ex
ten
dedaf
t
er expi
rati
on
? provided i
n this C ode:Provided,f urt
her , That ht ere al sh
l
always be a cl assor ser i
es of hares s whi ch have
- Al
hambr
aci
garvs.SEC on
ce ti ceases to
t tiexis
ha
s no com ple
te voti
ng rights.Any o r all of he t sh ares ro seri
es
v
est
ed pol
it
ic,exi
stonl
yfora per
iod of3 year
sonl
yfor ofshares aymave
h a rpaau
v le or havepar no val
ue as
l
iqu
ida
ti
onan
d f
or that
urpose
p on
ly may be provi dedf or i n the art i
cles of ni corpor
ation:
Provided,how eev,r Thatbank s, r tust com pan i
es,
i
nsu rance compa nies,pu bl
ic util
it
ies, an d bu il
ding an d
Ar
ticl
e5How manyi
ncor
por
ator
sshoul
dther
ebe?
l
oanassoci ations shall not beerm pitt
edt o sisue n o-par
valuesharesofstock.
- 5-15

Pr
eer
fr
ed shar
es of st
ockiss
ued by any
May acorporat
i
onbe n
aincorporat
or?
corporati
on maybe gi
venpref
erence
i
n t
he di
stri
but
ion
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 4

of ht e assets of ht e corporation i n case of i qu

lidat
ion aw
ay w
i
th t
he mi
nimum di
squal
i
cat
i
onsl
ay dow
n by
and i n t he di sri
tbution of vi didends, or such ot her t
he o
Cde.
preer
fences as may be st ated i n the ar ti
cles of
i
ncorp orati
on whichare ot n ol
vi
ative of hetprovisions of Qual
i
ca
t
ion
s of
the governi
ng b
oard
thi
s C ode:Provided, Th at pref
erred sh ares st of
ockmay
be issued only wi
th as tated parv alue.The board of
- Requ
i
res mer
e res
i
dency <sec.
23>
dir
ectors, wher e au thorized i n t he ar t
icl
es of
i
ncor porat
ion, ay m x t he t er
ms and condi t
ionsof
pref
erredares sh f st
oockor an y series th
ereof
: Provided, Secti
on 23 .
The b oa
rd ofr ect
di
ors or rustees.
t
Thats ucht er
msand c onditi
onsshal lbeeecti
veupon - Unless otherwi
se rovi
p dedi n t hi
s C ode,the corpo
rate
the l i
n
g o f a certi
c atehereof
t with th
e S ecuriti
es n a
d powesr of lalcorporat
ions orm
f edunderhi t
s Codeshall
Exchan ge Com mission. beexerci
sed,allbusi
nessconduct edandal lpropert
yof
such corporat
ions control
led an d held by t he boardf o
Shares of t al
capitock
s i
ssued wit
hou t par di
rect
ors or t rusteest o be el ect
ed f r
om amongt he
val
ue shallbe deeme
df ully paid and non-assessable hol
ders of ocks,
st w
or
here t here is no st ock, r
omf
and the h ol
der of such shares al sh
l not be i
able tohe t amongt he mem bers of the corporati
on, ho w shal
l hol
d
corporat
i
on or t o it
s cr edi
torsi n r espect t
hereo:
t ocef or n o
e ( 1) year nti
lutheir successors ect are
ed el
Prov
ided; at Th shar
es i w
thout par u val
e may ot n be and qu al
ied
.( 28a)
i
ssued f
or acon si
derat
ion l ess than the val ue of ve
(
P5.00) pesos persha r
e: Provi ded
, u frt
her , T hat the Everyrec di
tor umstow n at east
l on e 1)
( share
ent
ire consi
derati
on recei
vedby thecorp oration for tsi of hte capit
al tock
s of he t corporati
on of h wi
ch he s i a
no-parue val
sh
ares al sh
l bet reat
edas ca pit
alan d shal
l dir
ect
or, w hi
ch shareal l
shtsand in his na me on t he
not be avai
lab
le or
f i st
dributionasdi vidends. booksofthecorporat
ion.Anydirect
orwhoc easestobe
thewn oer of at east
l eon1
() share of he tcap
italstockof
Acor
por
ati
on may
,f ur
thermore,cl
assi
fyi
ts the corporati
on of h w
ich he s i a direct
or shallthereby
share
s for the pu
rpose of nsuri
ng
i com pi
l
ance wi
th cease t o be a di rec
tor
. Tr ust
ees of non -stoc
k
con
st
i
tut
ional orega
l requ
i
rements. corporat
i
onsmustbe mem bers ther
eof. A maj ori
ty of
thedi rect
orsor trustees f al l corpora
o t
ions organized
underhi st Cod
e m ustbe residen t
s of t
he Ph i
li
ppines.
Except as oth
erw
ise rovi
p dedin therti
a
cles of
i
ncorp
orati
on and st
atedi
n the certi
cate st
of
ock
, each
share al
sh
l beequalin al
l respects
o every
t otherare.
sh May a dom
est
ic cor
por
at
i
on have
a gov
er
nn
ig boar
d
con
si
sti
ng solel
y oforei
f gn
ers?
Wheretheart
icl
esofi
ncor
por ati
onprovi
defor
non -
vot
i
ng shares n t
ihe cases ll
ow ed
a by thi
s Code,the - YES,sect
ion 23 major
ityofthem mus
tberesident
sof
holders ofsuch shares alsh
l nevertheless eb en
ti
tl
ed to thehi P
li
ppines, no nati
onal
ity requ
irem
ent
vot
eont hef
oll
owi
ngmat t
ers:
Ant
i-dummyact<sec.
2-A>
1. Am
en
dmen
t oft
he art
i
cles of
i
ncorporati
on;
- I
f h
te bu
sinessunde
rtak
i
ng or ct
ai
vit
y i
s o
nly parti
al
l
y
nati
on
ali
zed,i
enal
s canbe el
ect
ed as su
ch di
rec
t
ors,
2.Ad
opt
i
on nd
a amendm
ent
ofby-
laws;
[
unl
esshe
t a
lw provi
desot
herw
ise]
but h
tei
r n
umber
shal
l onl
y be i
n pr
opor
ti
on t
o t
hei
r equi
t
y or
3. al
Se, ease,
l han
exc
ge, ort
mgage,edge
plor other
parti
ci
pat
ioni
n t
he ca
pi
tal ock
st of he
t co
rpo
rati
on
.
di
sposi
t
ion of all
or subst
ant
ial
l
y al
l ofhe
t corp
orate
property;
Di
squ
al
i
ca
t
ion
s <sec.
27>

4. Incurr
ing, cr
eat
i
ng or i
ncr
ea
sng
i bonded
- The di
squal
icat
ions pr
ovi
ded f
ori
s absol
ute and ma
y
i
ndeb
t
edness;
notbe on
de aw
ay i
w
th. Corporat
e by-
l
aws m
ay,
how
eve
r
,
pr
ovi
de f
or addi
t
ional qual
i
cat
i
ons and
5. I
ncrease
r decrea
o se f
ocap
i
tal
st
ock
;
di
squ
al
i
cati
on
s.

6.
an
ot M
eg
herrer or
consol
i
da
corporati
on or t
ion of rat
other ht
e corporat
corpo
ion
s; i
on wi
th Section 27. Disquali
cati
on of di r
ectors,
t
rust
eesor o cer
s. - N o per so
n convict
ed by nal
j
udgmentofan oensepuni shablebyimpri
sonmentfor
7. nvestm
I en
t of corporate
undsin
f anot
her corporat
i
on a peri
od exceedi
ng si x (6) years, or vi
olati
aon of ht
i
s
or bu
sinessn i
accor
dance i
wt
h t
his C
ode; an
d Code com
mitt
ed i w
thin ve5) (yearsor pri
ot theate
d of
his el
ecti
on or pp aoint
men t, shal
l qual
ify as a direct
or,
8. Di
ssol
ut
ionoft
he corp
orati
on
. trustee or cer o of
any corp orat
i
on.(n)

Sec
t
ion 27 and 23 mi
nimum di
squal
i
cat
i
onsand
Excep
t as pr ovided in t he immediat
eyl
prece
di
ng paragr
ap
h, the vot
e n eces
sary to prov
ap
e a qu
ali
cati
on
s
part
i
cular corp
orat
e act asrovi
pdedi n thi
s Code shal
l
bedeemedt
oref
eronl
ytostoc
kswit
hv ot
ingr
ight
s.(
5a) Lee vs.
CA

How many i
rd
ect
or
s shou
l
dt here be? - By aw
ls m
ay provi
de or
f add
i
ti
onal

- General
rul
e:Notl
esshan
t 5 n otmoret
han 15 Gov
t vs.
El ho
gar Fi
li
pino,Goko
ngw
eivs.
SMC
- Excepti
ons:
1. Edu
cat
i
onal por
cor
ati
ons r
egi
ster
ed as non stock Cap
i
tal t
ru
sct
ure
corporat
i
on whose umber
n of
trust
ees,
t
hou
gh not ess
l
t
han ve dan
notmorehan
t [15
] shou
ld be i
d
visi
bl
e by
Fou
ndat
i
on- i
ni
mmum pai
d-up cap
i
tal3M
ve[5]
, m
eani
ng t
heymust have t
herei
ve, en,
t or
ft
eent
rusteesno
and
ot
her; Aut
hor
izedcapi
tal1M No.ofshar
es1M shar
es
2. I
n close corpor
at
i
onswhere lal
t
he st
ockhol
ders ear pa
r val
ue 1
.
00
consi
dered
s a
mem
bers t
of
he b
oardf di
or
ect
orsher
teby
e
ect
i
vel
y a
ll
owi
ng tw
entyem
mbers
n t
i
he board. Amo
untofshar
essubscr
ibed
3. Th
e by-
l
aws ofa corpor
at
i
on may prov
ide or
f addi
ti
ona
l
qual
ica
ti
ons and disqual
icat
ion
s oft simembers of
he t
50K A
boar
d ofdir
ect
ors ortr
ustees.Howeveri
tmay notdo

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 5

50K B - Fo
r
exi
bil
it
y i
n pri
ce, parti
cu
l
arl
y,no pa
r sh
aresay
m
be i
ssued orsol
dfr
om t
imet
oti
meatdi
er
entpr
ice
C 250K depen
di
ng on t
he net wort
h oft
he com
pan
y si
nce they
donotpu
rport
to represent
ct
ual
an
ofxe
a d va
l
ue.
D
Sect
ion 6
E
- Eachsh
all be equ
alin al
l respects
o every
t er
oth
sha
re
PAI
D UP =62,
500
Pref
erredares
sh
Cor
por
at
i
on cannot
xc
eed mor
e t
han1 M i
t s
i t
he maxi
mum
amou
nt ti
cann
otissueor
m
e un
l
ess
amended - Speci
cpref
ere
nce
- Di
viden
ds r
o du
ri
ng i
l
qui
dati
on
Maxi
mum share
s t
icanssue
i s i
1Mshares
un
less
amended
No par
How much share
s shoul
d be sub
sc
r
ibed?
- Can sel
lit wi
th the
et
work
n fo
the corp
orati
on
- Mustbeat east
l 25%
oft
he au
t
hori
zed pi
ca
t
alst
ock
Di
sti
nct
i
on bet
weent
he sub
scr
i
bedan
d outs
t
andi
ng
Pai
d-up mustbe at
l
eas
t 25%
-mi
nimum stocks?

Sect
ion30 - Sect
ion13
7

- Tot
alsubscri
pti
oncompl
iancewi
thminimum 25% t
otal
Sect i
on 137. Out
san
tding capi
tal st
ock
- Any combinati
on woul
d comply wi
th the mini
mum
dened.
- Th e te
rm "
out
stan
ding ca
pi
tal t
ock",
s as sed
u
requi
redybsecti
on30
i
n thi
s Code,ean ms thetotal sharest ock
ofissued
s
und
er nbiding sub
scr
ipt
i
on agree
ments o tsu
bscri
bers
Sect
ion 30
.
Com pen
sa
tion of r
di
ect
or
s.
-In or stockh
olders,whet
her orot nul
fl
y or parti
all
y paid,
t
he absen
ce of any
provi
si
on in the by-l
aws xi
ng thei
r excep
t reasu
t ry sh
ares.
(
n)
com
pensat
ion,the dir
ect
or
s shall notr ece
ive any
com
pensati
on
, as su
ch di
rc
eors,
t exceptor freason
abl
e - Vot
ingand di
vidend r
ight
s,i
tref
erst
otheout
standi
ng
per di ems: Pr ov
i
de d, howev er
, Thatany suc h capi
talstock
s
com pensat
i
on ot
herha t
n per em di
s may be granted o t - Only ou
tst
andi
ng st
ocks a
re l
al
owed t
o vot
e an
d rece
i
ve
direct
ors yb thet evo ofhet st
ockholders represen
t
ing at
di
vden
i ds
l
east maj a ori
ty of ht e outstandi
ng capit
al ock
st at a
- Act
ual
lyt
hesame
regular oreci
sp
al t ock
s holders'meeting.In no case shal
l
the t ot
al year
l
y com pen
sati
on of i d
r
ect
ors, assu ch
Tr
easur
yshar
es
dir
ectors,excee
d ten (10%) per cent of he ntet ncom
i e
befor
e income tax of the corporat
ion duri
ng the
precedi
ng year.
(n) - are so
al su
bscri
bedsh
ares
- whi
lethey r
emai
n i
n the t
reasur
y, no v
oti
ng and

di
viden
d ri
ght
s
Mi
nimum f
or a dom
es
t
ic corpor
at
i
on?
- may eb re
i
ssued by the corporat
ion
- once re
i
ssued t
hey becom
e ou
t
standi
ng st
ocksgai
a
n
- I
n no ca
se sh
al
lthe p
aid- p
u cap
i
talbel
esshan
t 5k

co
mmon har
s es
I
s t
here ai
nimum au
thori
ze
d capi
t
alimposed
by the
code?
- ca
rry the
ri
gh
tto vote

- I
ftheres imi
nimum pa
id-u
p l
ogi
cal
ly there
oul
d
shal
so
pref
erredares
sh
beami
nimum capi
tal=5000

- gran
t
s h
te ho
l
derpref
eren
ce
Mi
nimum pai
d-
up capi
t
alf
ora n
anci
ng com
pany met
r
o - pref
eren
ce as tovi
den
di
ds
man
il
a 1
0 Mi
flocat
ed ni MM - pref
erence
as to di
sri
tbuti
on of ht
e rem
an
ii
ng asset
s
upon d
issol
utionor
Shares st
of
ock - bot
h
- YOU MUST STATE THE PREFERENCE BECAUSE I
F
Purpo
se f
ocl
assicati
on NOT T
HEY ARE RESUM
P ED TO BE UAL
EQ
- I
t may ni
cl
ude su
ch ot
her pref
erencesot n
ncon
i si
st
ent
- To speci
fy and dene t
he r
ight
s and pr
ivi
leges oft
he wi
tht
heCode.Thi
sissobecauseSect
ion 6oft
hesai
d
st
ock
hol
ders; l
aw al
l
ows a st
ockcorporati
on t
o i
ssu
e p
ref
err
edsh
ares
su
bject l
onto the
y li
mit
ati
on
s mpo
i sedt
here
in whi
ch
- Forr
egu
l
ati
on an
d contr
ol of
heti
ssua
nce f
o sal
e of are:
corp
orate ri
secu
t
ies or
f the
rot
ecti
p on ofpurcha
sers dan a. They an
c be ssiued onl
y wi
th sat
ed paralue;
v and,
st
ock
hol
ders. b. The pr
efer
ences must be s
tated i
n t
he ar
ticl
es of
i
ncorporati
on an
d i
n t
he cert
i
ca
te of ock
st, ot
herw
i
se,
- Asamanageme
ntcont
roldevi
ce. each
share al
sh
l be,i
n al
l respect,
equ
al ot every
other
share.
- To compl
y wi
th s
tat
utor
y r
equi
reme
nts par
ticul
arl
y
Parti
ci
pati
ng
t
hosewhi
ch provi
de f
or cert
ai
n l
imi
tati
on
s on f
orei
gn
ow
ner
shi
p and shar
es l
ike ov
esre
as em
ploy
ment
agenci
es re
qu
iri
ng to n
owat east
l 75% oft ares of-
he sh Must be
stat
ed because
t
he pre
sum
pti
on i
s t
hat t
i s
i

st
ockthereof
. parti
ci
pati
ng

Cumul
ati
ve
- To bet
ter i
nsur
eret
urn on i
nves
tme
nt whi
ch can be
a
ect
ed t
hrough
the i
ssuan
ce of
edeem
r abl
e share
s or
- I
rrespecti
ve of
whet
her or not
hey t
h
were earned
pref
err
ed sh
ares,
.
e.,i g
ran
t
ing t
he hol
ders
thereof
,
pref
eren
ce as to
i
viden
dds an
d/o
r di
st
ri
but
ion ofassets
Pref
erred
i
n case
ofi
qu
li
dati
on
; an
d,

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 6

- May be deni
ed - Onl
y pref
err
ed n
ad re
deem
ab
le sh
are
s are i
den
ed n
ul
ess
- Unl
ess
den
iedthey
are l
sti
l en
ti
tl
ed provi
de
d n
i th
i
s cod
e

Whati
fhi
ndii
-decl
arekahi
tnamaydi
videndsr
ight
sfor - PWEDENGMA-
DENY YUNG MMON
CO SHARE
S,KAS
I
t
he previ
ous years?
ay Mthey
beden
i
eddi
vden
i d ri
gh
ts YUNG FOUNDER
S SHARES MERON SI
LANG
becauset
heyar
enonhol
der
sofnon-
cumul
ati
ve?NOTE: EXCLUSI
VE RI
GHTS NASI
LA LANG
ANGMERO
N,SO
YOU CANNOT COMPEL THE CORPORATI
ON TO PWEDE SI
LANG BUMOTO WI
TH RE
GARDS TO
DECLARE
DIVI
DENDS UNLESST IEXC
EED
S 10
0 % SOMET
HING NA HI
NDI NA SAK
OP NG COM
MON
PAI
D UP C
API
TAL SE
C.43 SHARE
RIGHTS

- Exam
pel:f
ounders ares
sh
- may e
b gi
vencer
tai
n ri
gh
ts
Section 3.4
Pow er ot d
ecl
arei vi
d
dend- Th
s. e
boar
d ofdi
rect
ors ofa s
tock cor
porat
ion may decl
are an
d p
ri
vi
l
eges

divden
i ds ou t o f the unr est
ri
cted r etai
ned earnings
whichs hallbepayabl ei ncash,in property,orinstock - Eve
n com
mon shares
may be deni
ed he
t ght
ri o tvot
e of
to all stockholders on t he ba sis of ou tst
anding st
ock f
ounders
sh
ares
ssu
i
ed<sec.
7>
held by h tem : Provi
ded , Thatan y cash divden
i ds ude on
deli
nquentst ocksha ll rs t beap pl
ied to the unp aid
balance on the subscripti
on plus cost
s and expenses, Section 7.Fou nder
s' shar
es. - Founders'
while stock dividends shal l be withheld from t he sharesasscl
iedas u s
ch i n the rt
a
icl
es foincorporati
on
deli
nquen t stockholderunt i
l his unp aid su bscri
pti
on i
s may e b gi
ven cert
ai
n rights and pri
vi
l
egesot nne
joyedby
full
y pa id: rovi
P ded , u frther
, Th at o n stockdi vden
i d the owners of her
otstocks,ovi pr
dedt hat w here the
shall bei ssued withou t hte app roval of t
ockh
sol
ders excl
usi
ve ghrit o
t vot
e a nd be voted f
or nit he electi
on of
represe
nt i
ng not ess l t han t wo-thir
ds ( 2/3) of the direct
orss igranted,it m ustbe or
f al
imit
ed period not
outstan
ding pit ca
alstockat a regu lar or ci spe
almeeting to exceed ve(5) years bj
ect
suo tt
he a pproval of ht
e
duly calledf or the urpopse. (
16a) Securi
t
ies and Exc hange Com miss
i
on. Th e ve -
year
peri
od shal
l com mence fr
om t he dat
e ofhe t afore
sai
d
approvalby the ecuri
Sties and Exchange om
C mi ssi
on.
Stoc
k cor porat
ions ar e prohi bi
ted f rom (
n)
ret
ai
ning surplus prot s in exc essof one hund
red
(
100%) percent ofhei tr pai
d-
in cap i
tal ock
st , except:
(
1)
when j
usti
ed by denit
ec or
porat
ee xpansi
on proj
ects Do youi
ncl
ude non
-
vot
ing share
s i
n passi
ng a val
id
or programs approvedby t he b oard of rdi
ect
ors; or 2)
( corp
orate? act
when the cor
poration i
s prohi
bit
ed under any loan

agree
whe t
hment
er l ocawi
lt
hor an
f y
orein
gn,an
f
r ci
alde
om ni
st
cli
at
u
ri
nt
gi
on di
vor
idencr
edi
ds tor
, - Eve
n non -
vot
i
ng share
s are t
en
itl
ed t
o vo
t
e und
er
secti
on 6
withouti ts/hi sconsent ,and suchconsenthasnotye t
been s ecur ed;or( 3)when itcan beclearlys hown that
Redeem
abl
e shares
suchre ten tioni s n ecessary nderu speci
alci rcum st
ances
obtaining n it he corporati
on, suchas h went her
e si n
eed
f
or sp ecial reserve f
or rob
p able co
ntingen cies. n)( - Di
scre
t
ion
ary/
opti
on
al

- Obl
i
gat
ory or
manda
tory
- I
t depends
because
ther
e ar
e t
hre
e t
ypes
of non-
cu
mulati
ve pref
erredshares
Gen
eral
l
y a corporati
on canreacqu
ire t
si ow
n sh
ares
f i
- Di
scret
ionary ivi
d
dend type
- Manda
toryf earned
i i
t has n
urest
ri
ct
edret
ai
nedearn
ings
- Earn
ed cumul
ati
ve orviddi
end cr
edi
tt
ype
Exce
pt
i
on: r
edee
mabl
e shar
es may be r
eac
qui
r
ed
Com
pare cum
ul
ati
ve share
r
om non
f -
cum
ulat
i
ve, ear
ned i
rresp
ecti
ve of
ret
ai
nedea
rni
ngs
cu
mul
ati
ve orvi
d
di
en
d cred
i
ttyp
e
Tr
easur
yshar
es
- Cumulat
i
ve h s
are
whet
herornotearned
- Non-c
umulat
i
ve ear
nedcumul
ati
ve or di
vdend
i cr
edi
t - They ar
etr
easur
ywhi
lei
nthet
reasur
y accountoft
he
t
ype- on
l
y fiearn
ed corp
orati
on

Par May they

e re
bi
ssued
by the corporat
i
on?

- st
ate
d pa
r val
ue;sh
all not be
ssu
i
edl
ess tha
n pa
r - YES

No par I
f they
are ssu
rei
edwi
ll they
be d
eni
edt
he ri
ght o
t vo
t
e?

- wi
thouts
tat
edparval
ue - Oncer
eissued
t
heyshal
l bec
ome outs
t
andi
ng st
ocks
aga
i
n an
d pu
rchasersal
l
shbe en
ti
tl
ed t
o al
lthe ri
gh
ts
- on
ce ful
ly p
aid no l
ongeri
abl
le an
d pri
vi
l
eges as
t
he other
ol
ders
h ave
h

Corpor
at
i
ons cann
ot use i
ts capi
t
als i
n decl
ari
ng Sect
ion 57 t
reasu
ry sha
r
es ave
h on vot
i
ng an
d di
vden
i d
di
viden
ds;notal
l cani
ssu
e n
o p
ar val
ue secti
on 6 ri
gh
ts.Why ot
n?

Vot
ing
Secti
on 7.
5Vot
ing ri
ghtfor rea
tsury hs
ar-
es.
Tr
easur
ys har
es shal
lhave no v
oti
ng r
ightas l
ong as
- en
ti
tl
edt
o vote atmot
any
i
onbrou
ght upi
n wri
t
ing
suchsh aresem ai
rn in the Treasu
ry
.( n)

Non
-voi
t
ng - :com
Answer mi
ssi
oner
vs.
man
ning
page 62
rst
pa
r.

- not en
ti
tl
edto vote

Alt
hou
gh au
thori
ti
es m
ay i
d
er on
the exact

Whatt
ypesofshar
esmaybedeni
edoft
her
ightt
ovot
e? l
egal
an
d a
ccou
nt
ing st
atus of
so-cal
l
ed easu
tr ry sh
ares,
t
hey are
ore
m or
ess
ln i
agree
menthat
t reasu
t ry sh
ares
- Pref
err
ed n
ad r
edeem
ab
le sha
res are ocks
st i
ssued
and f
ull
y pa
id f
or an
d reacqu
i
red by
thecorp
orati
on ei
thery bp
urcha
se,don
ati
on
,forf
ei
ture
I
s t
i o
crr
ect
to st
at
e h
tat com
mon sha
r
es can
neve
r be or other
ean
s.
m Tre
asu
ry sh
ares areef
ore
ther
ssued
i
den
i
edthe gh
ri
t o
t vote? sha
r
es bu
t bei
ng n
i t
he r
t
easu
ry ht
ey do
not have
he t
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 7

st
atus ou
of
tst
andi
ng sh
ares.
Consequ
en
tly,al
t
hou
gh a Section 17. Grounds when ar t
icl
es of
t
reas
ury shar
e, ot
n havi
ng beenr
eti
red by t
he i
ncor
porati
on or am endm entmay be r ej
ected or
corporati
on re-
acqu
i
ring i
t, m
ay be re
-ssu
i ed or sol
d di
sapproved. - The Se cur i
ti
es and Exc hange
agai
n, su
ch shar
es
, asl
ongas i
t s
i hel
d by t
he Commi ssi
on may reject the art i
cles of i
ncorporati
on or
di
sapprove any amendmenther teot fithe sam e si notin
corp
orati
on as at
reasu
ry sh
are,
parti
ci
patesei
t
hner ni
compli
ancewi t
h t he r equriem ent
s of t his Code :
di
vden
i ds, becau
se di
viden
dscan
not beecl
d
aredy b
the
Prov
ided,Thatt he Com mission shal l gi ve t he
corp
orati
on t
o i
tsel
f, no
r n
i meet
ingsof he
t corp
orati
on i
ncorporator
s a reason
ab l
e i t
me w i
thin which t o correct
asvoti
ng stock
,for oth
erw
i
se eq
ualdi
str
i
buti
on of vot
ing ormod i
fy the obj
ecti
on abl
e po rt
ions of hte articl
es or
pow
es
r amon
g st
ockh
ol
dersi
ll
w be ect
e
ivel
y l
ost d
an amendm ent. The f ol
l
ow ing ar e gr ounds f or suc h
thedi
rect
orswi
ll be ab
le tope
rpetr
ate ei
th
r con
trol
of rej
ecti
on or disap
prova
l:
t
he corporati
on, h
tou
gh i
t st
il
l epresen
r t
s a pa
id f
or
i
nterest
i
n the p
roperty
heof
co
rpo
trati
on
. Th
e oregoi
f ng 1. Th
at ht
e art
i
cles of
i
ncorporat
i
on or an
y am
end
ment

essen
t
ial eatu
f res of reasu
a t
ry stocks
areack
li
ng n
i the theret
o s
i hn
prescri
bed otn;sub
ere
i st
ant
ial
l
y n
i acco
rda
nce i
w
th the
f
orm
qu
est
i
onedshares.

I
n t
his case,
an
d u
nderhe
t erm
t s of
the ru
t st 2. Tha
tthe purpose or rposes
pu t
heofcorpor
at
ion are
agreem
en
t,t
he sh
ares
ofst
ock of
Reese pa
rti
cipa
ted paten
t
ly uncon
sti
tut
ion
al, l
i
legal,i
mmoral, or nco
trary
i
n di
vden
i ds whi
ch t
he t
rust
ee rece
i
vedan
d t
he sai
d to governm
ent rul
es an
d regu
l
ations;

sh
areser
e
w vot
edupo
n byt
he r
tust
ee nial
l corporati
on
meet
ings.
They ere
w t
no
, t
heref
ore,
t
reasu
ry sh
ares.
3.Th
atthe Tr
easu
r
er'
s Adavi
t concerni
ng h
te am
ount
ofcap
i
talst
ocksu
bscri
bedan
d/or ai
pd i
s al
fse;
When t
hel
aw speaksofout
standi
ngr
ight
sitdoesnot
i
ncl
udet
reasu
ry sh
ares 4. That ht
e percentagenershi
ofpowofthe cap
i
tal t
ock
s
to be owned by ci
t
izens
ofthe Phi
li
ppines as
h otn been
Tr
easur
yshar
esmayber
eissued compil
ed with as requi
red by exi
sti
ng laws or the
Const
it
uti
on.

- Theyar
eact
ual
lyasset
soft
hecor
por
ati
on
No articl
es of ncorporat
i i
on or am endmentot
- Once e-
ri
ssued
t
hey ecom
b e ou
t
stan
ding st
ocksgai
a
n art
icl
es of ncorporati
i on ofba nks, banki
ng a nd qu asi
-
banki
ng i
nst
itut
ions, bui
lding and loan associ
ati
ons,
trust com
panies an d ot hern anci
al nteirmediari
es,
- Thecor
por
ati
onma
ycancelt
hem;i
neectt
her
ewi
llbe
a redu
ct
i
on i
n th
e ou
t
stan
ding cap
it
alst
ock
s i
nsurance com pani
es,pu bl
ic util
it
ies,educat
i
onal
i
nsti
tut
ions,an d other corpo
rat
i
ons governed
byspeci
al
l
aws sh al
l be accepted or approv
ed by the omC
missi
on
- The code does not r
equi
re or
dinar
ycor
por
ati
ons t
o unl
ess acc om
pan i
ed y b a avor
f abl
e re com
menda
ti
on of
provi
de or
f restri
cti
on
s,but t
i do
es ot
n ikl
ewi
se roh
pibi
t the appropri
ate gover
nment agencyto t
he eect hatt
restricti
ons such arti
cles or endamments in
i accor
dance i
tw
h law.
(
n)
- Exa
mpl
e:ri
gh
t ofrst
ref
usal
- But t
he grou
nds nisect
i
on17 are notusi
excl
ve
- The r
est
rict
ion mus
t be cont
ained i
nthe ar
ticl
es of
i
ncorp
orati
on Whenwi
llt
hecor
por
ati
oncommencet
oexi
st?

- I
f prov
i
ded i
n by-
l
aws bu
t n
ot ni t
he art
icl
es of - Sect
ion 19
i
ncorp
orati
onthen
i
t w
i
ll not be
bi
ndi
ng

Sect
ion 19.Commenc
ement of or
por
cat
e
- Rest
ri
cti
ons an
d p
ref
eren
ces are
andatori
m ly requ
i
redn i
exi
sten
ce.- A privat
e corporat
i
on form
ed or organi
zed
cl
oseorp
corati
on
s undert hi
s Code com
mences o have
t corporat
e exi
st
ence
and juridi
cal per
sona
l
it
y and is deem
ed i
ncorpor
at
ed
- I
f t
i d
oesnot rovi
p de res
tri
ct
i
ons i
t s
i not acl
ose f
rom thedat e h
teSecuri
t
ies an
d Exchan
ge om
C mi
ssi
on
corp
orati
on issuesa certi
cate f o
ncorporat
i i
on underi ts ocial
seal
; and thereupon t
he incorpor
ator
s,
- Speci
edperson
s- ose
cl corp
orat
i
ons stockhol
ders/members and t hei
r succe ssos
r shall
const
i
tute abod y p ol
it
ic and corporat
e underhe t name
statedi
n t he arti
cles foincorp
orati
on f
or the p eri
od of
- I
f not eon
of hose
t speci
edyouar
e not ncl
iuded
ti
me m enti
oned therei
n, unless d sai
peri
od is ext
ended
becauset
her
eisexcl
usi
vit
yincl
osecor
por
ati
ons or the corpor
ati
on i s sooner di
ssol
vedi n accorda
nce
withl
aw.(n)
- Shou
ld al
so e
b n
i t
he b
y-l
aws n
ot onl
y n
i t
he a
rti
cles of
i
ncorp
orati
on
Acor
por
ati
ondej
urecancomei
ntoexi
stenceonl
yupon
t
he i
ssu
an
ce of ht
e cert
i
ca
te of regi
st
rat
i
on by t
he
No ran
t sf
er au
cl
se
SEC?RU
TE O
R FAL
SE?

Execu
ti
on au
cl
se
- TRUE

Ac
knowl
edgme
nt
- EX
CEPTI
ON:CORPO
RATI
ON SO
LE <se
c.112>

Tr
easur
eradavi
tpar
toft
hear
ticl
esofi
ncor
por
ati
on
Section 112 .
Submissi
on of he t articl
es of
Sect
i
on23
-27mi
nimum qu
ali
cat
i
ons,
butt
hereay
m be i
ncorporat
ion. - Th e articl
es f o ni
corporati
on must be
ver
ied,before l
ing,by adav i
torar mation ofthe
ad
dit
ion
al
chi
ef rc ahbishop, b i
shop, p riest
, mi nist
er, rabbi ro
presi
ding elder
, as the case ay be,
man d a ccompani
ed yb
Gr
ounds or
f sapp
di r
oval a copy o f the com missi
on, certi
cate of ecti
on
elor et
l
ter
of appointment of suchchi efarchb i
shop , bi
shop, pri
est
,
- Onl
y su
bst
ant
ial an
d not ri
st
ctsirequ
i
red minist
er, rabbi orpresi ding elder, l y
du cert
i
edt o be
corr
ect by nyanotaryublpic.
May the
EC S
ref
use or
eject
r regi
st
rati
on
?
Fr
om an
d af
t
er ht
e
li
ng wi
th t
he Securi
ti
es
- <S
ect
i
on 7>
1 and Exchange
Commi
ssi
on of he
t sai
d ar
ti
cles of
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 8

i
ncorporati
on, veri
edby adavi t orarm ati
on, d an Exi
st
ence
of a de
f
act
o canbe qu
est
i
oned on
ly b
y the
accompanied by t he doc ument s ment i
oned in t he St
ate re
di
cl
ty n
i a qu
o w
arranto
roceedi
png o
nly
prece
ding pa ragr
ap h, su ch chief archbi
shop, bishop
,
pri
est, minist
er
, rab bi or resi
p ding elder al
lsh
become a
Muni
cipa
li
ty of
Mal
aban
g vs.
Ben
i
to
corporat
ion sole an d al l temporali
ties, est
ate and
properti
es of hetrel i
gious d
en ominati
on, sect or hurch
c
there
tof
ore a dminiser
ted or m an aged by him as su ch - Whati
sthemi
ssi
ngl
inksoast
oconsi
deri
tadef
act
o?
chi
ef rc ahbish
op, b i
shop, p ri
est, m i
nist
er
, rab bi ro Al
aw,becauset
heexecut
iveor
deri
suncondi
ti
onal
presi
di
ng el dershal l behel d i n trust by him as a
corporati
on sol
e, or f the use, purpose,al f
behandsol
e - Anuncondi
ti
onalactaor
dsnor
ight
s,cr
eat
esnooce
benetofhi sreli
gious denominati
on,sector church,
i
ncludi
ng hosp it
als, schools, col
l
eges, an orph
asyl
ums, - Lega
l con
t
empl
ati
oni
t was ever
n passed
at l
al
parsonagesnd a cem eeri
t es thereof
.(n)

-
- CORPO
RATI
ON SO
LE- uponl
i
ng of
t
he ver
i
ed rt
a
icl
es I
t cant
her
eore
f beest
qu
ion
edby ny
a person
of ncorp
i orati
on
, on
ce l

ed i
t s
i vested
wi
th a j
udici
al I
fthe certi
c
ate of
regi
st
rat
i
on has ot
n been
i
ssued
, may
capacity a corp
orati
onde acto
f ist
ex
?

Gen
eral
rul
e sect
ion19 - NO!

- Ves
ted wi
th j
udi
cial capaci
ty upon i
ssuance of t
he - Number 4 requi
re
ment,
good
f
ait
h i
n cl
ai
ming o
t bean
d
cert
i
ca
te by
the S
EC do
i
ng b
usi
ness as a orat
corp
ion

o How
eve
r t
i s
i not accurat na
e accor
digt
ty.
to Hal
l vs.i
ccio
P
La
dia b
ecau
se ht
ere are
hose
t hat
t can
i
ssue
f
or ex
ampl
e co
ope
r
ati
v -BU
es REAU OF - Mi
ssi
ng i
l
nk is goo
d fai
th
COOPER
ATI
VES whi
c
h r
egi
ster
, hom
e
i
nsur
anceguar
ant
y co
rpor
at
i H OME
on- - The cer
ticat
e was not yet i
ssued by t
he SEC, t
he
OWNERS mem
ber
s kn
ew andt
her
ef
or
e t
heywer
e not act
ing i
n
goo
d ai
ft
h, t
heref
ore yb
an
ody ca
n qu
est
i
oni
ts exi
st
ence

Cagayan
Fi
shi
ng vs.
Sa
ndi
ka
Corporat
i
onbyest
oppel

- Corpo
rat
i
ons are creat
edbyl
aw
- So def
ec
tive
l
y f
ormed so t
hatt
heyar
e nott
o be
con
si
dered de
a jure or de
acto
f
- Commenc
e o
t e
xsi
t upon
iss
uan
ceby he
t CO
NCER
NED
gover
nment corpor
at
i
onor agency
- Generalner
part
s- i
ab
ll
e eve
n beyon
d hi
s prom
i
se even
hi
s person
alprop
ert
i
es are prone
t
o att
ach
men
t
- Pri
or there
thto
as i
o
n b
eing

- Thet
ransf
eroft
hepr
oper
tywasnotval
id,i
tli
kewi
sedi
d Lozan
o vs.
Del
os an
Stos
not ha
ve the
ri
ght o
t tr
ansf
er
- Fo
undedonpri
nci
pl
e of
equ
i
ty
De u
jre
- Exerci
se corporate
pow
ers
- St
rictor su
bstan
t
ialcom
pli
an
ce
rd
- Ent
ers w
ith bu
siness i
tw
h 3
p
art
i
es
De acto
f
- When t
her
eisno3rd p
ersons
i
nvol
vedan
d t
he p
robl
em
- 4 r
equi
si
t
es m
ustgo and
h in han
d t
ake ou
t anyo
ne of ar
i
ses bet
ween t
her
e mem
ber
s, t
her
ef
or
e t
hey
t
hem t
here
canbe o
n deacto
f corporati
on t
hem
sel
ves knowt
hatt
her
e i
s no cor
por
at
i
on by
estoppel
1. Th
ere i
s a val
id st
at
ute un
der hi
wch t
he cor
por
at
i
on
cou
l
d h
ave been
cr
eated as
eau
jre
dcorporati
on. Al
ber
tvs.Uni
ver
sit
y

2. An at
t
empt
, n
i goo
d f
ait
h, o
t f
orm a co
rpor
at
i
on - 19
65case,
no sect
i
on21yet
accor
di
ng t
o t
he requ
i
rements of
aw, lw
hich goes
arf
enou
gh t
o am
ount ot a col
orabl
e com
pl
i
ance
wit
h t
he - Appl
iedwher
ether
ulesgover
ningagency
l
aw;
- A per
son pur
por
ting i
n behal
f of a non exi
sti
ng
3. A user
ofcor
porat
e pow
er
s,t
he t
ran
sact
i
on ofbu
siness corp
orati
on
i
n som
e w
ay s
afii
t were a corporati
on; an
d,
- Sect
ion 21
, youarri
ve at
hetsam
e d
eci
si
on
4. Goodai
f
t
h i
n cl
ai
ming t
o b
e an
d doi
ng busi
nes
s asa
corp
orati
on
. Chi
ang K
aiSi
ek vs.
CA

Ar
ethe r
ight
s and obl
igat
ions bet
ween ocer
s and - SC based
i
ts deci
si
on f
rom t
he pr
ovi
sion of he
t
di
rec
t
ors of
a de u
jre an
d de acto
f hetsam
e? edu
cat
i
onact

-
- YES.Gover
nedbyt
hesamel
aw,r
ulesandr
egul
ati
ons I
t a cnnot mmu
i ne t
i
sel
f by vi
rt
ue oft
sin
on com
pi
lan
ce
wit
ht helaw
Onl
y m
iport
an
t n
i det
ermi
ning, si o
fr ht
e p
urpose of
app
l
ying t
he rul
es wi
th r
egar
ds t
o t
he di
r
ect d
an Assumi
ngt
her
ewasnol
aw?
co
l
lateral attack
- YES,i
tma
yst
il
lbe sued as a sc
hoolf
ort
he pas
t32
Theexi
stenceofadej
urecannotbeques
tionedev
en by year
sthe sc
hool r
epr
esent
ed i
tsel
f as possessed of
th
e S
tate,
ei
th
er i
rectl
d y o
r n
idi
rectl
y j
uri
dicalper
sonal
it
y

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 9

r
d
Gen
eral
rul
e:a 3
p
art
y tr
ansacti
ng wi
th a n
on exi
st
ent - Chi
ang k
aisi
ekcase
corporati
onshal
l beest
oppedt
o d
eny
- Al
ber
tcase
Asi
abanki
ngvs.s
tandar
dpr
oduct
s
Whatwoul
d be t
he eecti
fthe cor
por
ati
on f
ail
ed t
o
- General
rul
e:ab
sence f
r
of
au
d a person
ho wh
as eal
dt com
mence
ran
t
sact
i
on?
wi
th anon i
ncor
por
atedcor
por
ati
onshal
lbes
toppedt
o
den
y rom
f act
ion
s n
i whi
chi
t hadben
et
ed - Aut
omat
ic

- Exem
pi
ton
s:when t
her
e s
i r
faud
the gen
er
al ur
l
e sh
al
l Oper
at
ed bu
t becom
es sub
sequent
l
y i
nop
er
ai
tve or
f 5
notap
ply year
sonl
y a gr
ound f
orsuspensi
on,pr
opernot
iceand
heari
ng

Salvati
erra
vs.arl
Gi
tos Com
menc
ement
- As a gener
alr
ule a per
son who has cont
ract
ed i
ta
- Exam
pel eal
rty com
pan
y
corp
orati
on l
ack
i
ng person
al
i
ty

- Doct
ri
ne s
i n
ot app
l
icab
l
e w
hererau
fd t
akes
parti he CORPOR
n t ATECHARTER AND
TS AM
I ENDM
ENTS
tr
ansa
cti
on
Whatdoyou under
stand byt
hewor
dchar
ter
?Isi
tthe
Anot
herexemp
tion sam
e asrt
i
a
cles of
i
ncorp
orati
on
?

- Corpo
rat
e cha
rt
er si broad
er
I
ntern
ati
on
alexp
ress
ravel
t an
d t
ours vs.
CA

Franch
i
se
- No rau
f d i
n t
his case

- Pri
mary pow
er gr
an
ted by theat
e
sto
t b
e an
d act
as a
- How co
me Kahn
was m
adei
abl
le?
corp
orati
on
- Doctri
ne ofncorp
i orati
on
- Secon
da
ry f
ran
chi
se i
s t
he ri
gh
t or ri
p
vi
leget
hat the
- Appl
ies onl
yift
hatper
son i
str
ying t
o escape f
rom a corporati
onmay exerci
se
con
t
ract
where
he s
i ben
eted
You cannot i
ssue i
nves
tme
nt cont
ract
s wi
thout a
- I
n thisse
capeti
ti
oner sinot tryi
ng t
o esca
pe l
iab
il
ity
, se
condary
f
ranchi
se
, kai
l
angan
pri
marymun
a hi
ndi
butr
athert
heonecl
aimi
ngf
rom t
hecont
ract pw
ede au
mna sec
ond
ary kasi
sa sec
t
ion 19 i
t does not
exi
st n
uti
l ssu
i ed wi
th a cert
i
cate foegi
r st
rati
on or
Woul
dthi
sappl
ytof
orei
gncor
por
ati
on? i
ncorp
orati
on

- YES,i
tma
yappl
y Corp
orate t
yenti

- Geor
g Gr
otj
ahn vs.
I
sna
mi - Corpo
rat
i
onexi
stsepa
rat
el
y an
d n
idep
en
den
t
ly rom
f the
st
ock
hol
ders
Af
orei
gn cor
por
ati
on cannotgai
n accesst
oourcour
ts
unl
ess they
tt
aina
a i
l
cen
se ot en
gage
n bu
i si
nessn i
the - Stockhol
ders n
can
ot bri
ng an act
ion
,to b
ring b
ackt
he
Ph
il
ipp
ines bu
t ap
pl
yn
ig corporati
on by est
oppel
s, ht
e prop
erti
es of
a co
rp
ora
ti
on
cou
rtal
l
owed
- Corp
orati
on has o
n n
iterest
in thendi
i
vidualproperti
es
Mun
i
cipa
l
ity o
f Mal
aban
gcase ofi
ts m
embers

- No a
lw, hen
ce m
ay be es
qu
t
ioned
by an
y pers
on Sul
o ng ayan
B vs.
Ar
anet
a

- Anuncons
tit
uti
onalacti
snotal
aw,tconf
ersnor
ight
s, - Corporat
i
on can
not bri
ng an act
ion f
or the recov
ery of
i
t mp
i oses
no d
uti
es,ti
aords
no p
rot
ecti
on
s,i
t cr
ates o t
he prop
ert
ies of
i
ts m
embers
oce,t is
i i
n l
egal t
con
empl
ati
on
, asi
nop
erat
i
ve as
t
hough tiha
d n
eve
r been
passes Car
am vs
. CA

Hal
l vs
. Pi
ccio - St
ock
hol
ders
can
not be
hel
d l
iab
le f
or t
he l
egi
t
imate
ob
l
igati
on
s of he
t c
orp
orati
on
, they
exi
st sepa
rat
el
y an
d
- No go
odf
ait
h i
ndep
end
entl
y r
f
om on
e another

Corporat
i
onbyest
oppel Cruz vs.
al
i
say
D

- Admi
ssi
on,conductoragr
eeme
nt - Fi
nalj
udg
men
t aga
i
nsta corpo
rat
i
oncan
notbe en
forced
aga
i
nstst
ock
hol
ders
- Wi
llnotappl
y amo
ngme
mber
sthems
elv
est
her
e mus
t
r
d
bea3 pa
rt
y Rust
anPu
lp vs.
CA

-
Cann
otes
capehen
w benet
ed - Corpo
rat
i
onexi
stsepa
rat
el
y an
d i
ndep
en
den
t
ly

- Gen
eral
ru
le:youdeal
with a
corp
orati
on
, as to op
est
i
t - Corp
ora
ti
on are juridi
ca
l en
ti
ti
es,hey
t xist
e only in legal
contem
pl
ai
ton
, canact l
on
y thr
ough i
ts au
thori
zed
- Excepti
on
s: 1. f
rau
dul
ent
ly mi
srepres
en
ts the rd
thi
repres
en
tati
ves
person
aym l
e anact
ion di
r
ect
l
y o
t h
tose em
m bers,
2.
3rd p
artyi
llw
not be estopp
edi
f he s
i n
ot ryi
tng to escap
e
Sori
ano vs.
CA
li
abil
ity

- Theyar
enotper
sonal
lyl
iabl
e
2 p
ossi
bl
e re
medi
es
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 10

- Theywher
esi
gnedf
orandi
nbehal
foft
hecor
por
ati
on - Mer
e su
bst
an
ti
al w
oners
hi
p doesot
n e
mant
hat t
i
has asam
e corporat
e en
t
ity
Palay
nc.
ivs.
Clave
La a
Cmpan
a C
oee Fact
ory
,Inc.
vs.
KKM
- Li
abi
l
it
ies i
ncu
rr
ed by t
he cor
porat
i
on cann
ot be
en
f
orced
aga
i
nst ock
sthol
ders,
tc.
,
e even
if st
ock
hol
ders, - Twocor
por
ati
onsmanaged byt
hesamef
ami
ly
,wor
ker
s
et
c. hap
penst
o ow
n a sub
st
ant
ial nte
ir
estn it
he wer
emadei
nter
changeabl
y
cor
porat
i
on, er
me ow
ners
hi
p does
notdi
se
rgar
d the
corp
orate
tit
yenth
eory Emi
li
o C
ano vs.
CI
R

Corp
orate
tit
yen
or
f egal
l or
egi
timate
l urpo
p sesnl
o
y - Sued nit
here
oci
alcap
aci
t
y

Twoormo
recor
por
ati
ons,oneoft
hem wi
llbet
reat
edas - Reve
r
se ofSori
an
o vs. CA
(si
gned i
n t
hei
r o
ci
al
a mere ter
al
-ego cap
aci
ty)

You cannot pi
erce t
he v
eilofcor
por
ate ct
ion when Tescovs.WCC
t
here are
o acts
fn ten
at
da
nt n
ithe ca
se
- Thet
wocor
por
ati
onswher
elocat
edi
nthesameoce
Corpo
rat
e En
t
ity Th
eory
Cl
aparol
s vs.
CI
R
- Thecor
por
ati
oni
spossessedwi
thaper
sonal
it
ysepar
ate
an
d di
si
tnct f
rom t
he i
ndi
vidu
al st
ockhol
dersor - Sam
e a
s NAF
LU and C
A.
.Rans
om
mem
ber
s andi
s not a
ec
t
ed by t
he per
sonal
i
ght
r
s,
ob
l
iga
ti
on
s o
r ran
t sa
cti
on
s o
f the
latt
er Con
cept
bui
lders
s.v
NLR
C

I
nst
rumen
tal
i
ty ru
l
e - I
nst
rum
ent
ali
ty rul
e. h
Wat sit
he i
nst
rum
ent
ali
ty rul
e?

wher
e on
e corporat
i
on i
s so org
anizedan
d contr
ol
l
ed
- Wher
e one cor
por
ati
on i
s so or
gani
zed and cont
rol
led an
d i
ts a
ai
rs are du
con
ct
edso th
at tis,
iin f
act,
a mere
an
d i
ts a
ai
rs are du
con
ct
edso th
at tis,
iin f
act,
a mere i
nst
rumen
tal
i
ty ordj
a
unct of
t
he other,
the cti

on oft
he
i
nst
rumen
tal
i
ty ordjun
a ct of
the oth
er
, the cti

on oft
he cor
porat
e ent
i
ty of t
he
inst
rum
ent
al
i
ty may be
cor
porat
e ent
i
ty of t
he
inst
rum
ent
al
i
ty may be
di
sregarde
d di
sregarde
d.

- Has o
n separat
e mi
nd ofi
ts ow
n. W
hat s
i h
te degr
ee of
- Cou
rts are cerned
con wi
th real
i
ty an
d notf
orm con
tr
ol?

- Mere n
ow
ershi
p of l
alor bstan
su t
ial
l
y al
l of ht
e sh
ares 1. Contr
ol
, not er
me maj
ori
t
y or com
pl
ee
t st
ockcont
rol
,
of ock
st of acorporati
on i
s not
, n
i i
tsel
f, n
isu
ci
ent butcompl
ete domi
nat
ion,notonl
y ofnances butof
gr
oun
d f
or di
se
rgar
dnig t
he se
parat
e cor
por
at
e pol
icy and bu
sinessprac
ti
ce i
n r
espectt
o t
he
person
al
i
ty. An
d for t
he sepa
rat
e person
al
i
ty of ht
e t
ransa
ct
i
on att
acked
so t
hat the
corporate
t
ity as
ent
o
corporat
i
on t
o b
e d
isr
egar
ded
,the w
ron
g d
oing mustbe t
his tr
ansact
i
on ha
d at ht
e ti
me n
o separat
e mi
nd, i
w
ll
cl
earl
y a
nd con
vi
nci
ngl
y est
abl
ish
ed or exi
st
ence f
oit
s ow
n.

- Fra
ud must be
prov
en by cl
ear and
convi
nci
ngl
y 2. Su
ch co
ntr
olmust
have en
be s
ued by he
t def
endant
o t
ev
i
dence
amoun
t
ing t
o mor
e t
hanpr
eponder
ance.
t I com
mit rau
f d or rong,
w o p
erpet
t uatehe
t vi
ol
ati
on ofa
cann
ot be
just
i
edby specul
at
i
on andcannever be st
atutory
r other
o po
sit
ive egal
l t
ydu
or i
d
shon
est d
an
presu
med. d
Anon
ly f
iit sou
gh
tto h
old t
he st
ockhol
ders unj
ust act con
int
raven
t
ion of l
ai
pnt
i
s l
egalgh
ri
ts;
l
iab
le d
i
rectl
y or
f co
rp
ora
t
e deb
t and,

Palaci
o vs. Fely 3. The af
or
esai
d cont
r
ol nd
a br
eac
h of dut
y mus
t
proxi
matel
y cau
se ht
e n
ij
ury or j
uun
stl
oss com
pl
an
ied
- Pi
erci
ng th
e vei
l of corp
ora
t
e
cti
on of
.

- Fel
y tr
ans an
d t
he ot
hercor
porat
i
on i
s onean
d t
he - The absence ofone oft
he el
eme
ntspr
event
spi
erci
ng
same thecorp
oratel
.vei
n
I ap
plyi
ng t
he i
nst
rumen
tal
i
ty or

alt
er ego
doctr
i
ne, he
t cou
rt
s arecon
cer
ned wi
th
Marvel
bl
dg.vs.
Davi
d real
i
ty an
d n
ot orm
f , wi
th how t
he corpo
rat
i
on op
erat
ed
an
d t
he i
ndi
vdu
i al ef
dendan
t
s r
elat
i
onshi
p to t
hat
- Ther
emus
tbef
act
sbef
oret
hecour
twi
llbej
ust
ied i
n op
erati
on
.
pi
erci
ng th
e vei
l of corp
ora
t
e
cti
on
Ther
e mus
tfact
s and ci
rcums
tances bef
ore war
rant
- Corporat
i
on was amer
e ext
ensi
on oft
he p
ersona
li
ty o
f pi
erci
ng th
e vei
l of corp
ora
t
e
cti
on
t
he person
Thecont
rolnecessar
ydoesnotme
ans
toc
kowner
shi
p
Yut
ivoandsonsv
s.Cour
tofTaxAppeal
s
MCConnel
vs
. CA
- Whatwher
ethe f
act
s orci
rcums
tances ar
riv
ed by t
he
cou
rther
e? - wer
elocat
edi
nthesameoor

- Subscri
bedcapi
t
al h
wer
e al
l ad
van
cedby Yu
ti
vo,
the -
whi
le t
he mer
e ow
ner
shi
p of l
alor ear
nl
y al
l ofhe
t
boar
dwher
ethesameasYut
ivo capi
t
alst
ockof a corporat
i
on does
not necessary
ean m
t
hat ti s
i a mer
e bu
siness
con
dui
t ofhe
t st
ockh
ol
der
,
Commi
ssi
oner of
nt
enr
Ial ev
Renu
e vs
. N
ort
on and t
hat concl
usi
on i
s am
pyl u
jst
i
edwher
e t
iis sh
own, as
Harri
son i
n t
he case
bef
or
e us, hat
t the oper
at
i
onsof he
t
corporat
i
on wer
e somer
gedwi
th t
he st
ockh
ol
ders as
to
- Cou
rtap
pli
edt
he gen
eral
rul
e bepr
act
ical
lyi
ndi
sti
ngui
shabl
efr
om t
hem.Tohol
dthe
l
att
er ab
li
le f
or theco
rpora
ti
on
s ob
l
iga
t
ion
s i
s not to

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 11

i
gnore e
thco
rpo
rati
on

s se
paratet
ity,
enbu
t m
erel
y t
o t
he rights of an
y st
ock
hol
der orass
clof sha
re
s, or of
ap
ple the
est
ab
li
shed pri
nci
pl
e tha
t such
en
ti
ty ca
nnot authori
zing pref
erences
in an
y res
pect peri
suor to those
be i
nvoked orused f
orpur
poses t
hatcoul
d nothav
e of outst
andi
ng shares of cl
any
ass, orextof
endi
ng o
r
short
en
ing the mterofcorp
oratest
en
exi
ce;
been i
ntended by t
he l
aw t
hatcr
eat
ed t
hatsepar
ate
perso
nal
ity.

2. I
n caseof sal
e,l ease
, exch
ange,ran
tsf
er
, mort
gage,
pled
ge orother
disposi
ti
on of lalor b
su
st
anti
all
y al
l of
Tanboonbeevs.Jar
enci
o
the corporat
e p
rop
ert
y an d asset
s as p
rovded
i in t
he
Code;and
- Whywoul
dadr
ugcompanyneedapr
int
ingmac
hine

3. I
n cas
e of erger
m or
sol
i
d
con
ati
on
.(n)
- The pr
oper
ty mus
t be i
n pur
suance of a company
busi
ness
- Ri
ght gr
antedon
ly n
i speci
edinst
ances
Cease
s.v
CA
Ar
e non-
vot
ing shar
es i
ncl
uded i
n ame
ndi
ng t
he ar
ticl
es of
- Al
ter
-ego ort
he ext
ensi
on oft
he per
son off
orestwar
e i
ncorp
orati
on
does
theou
c
rtpi
erced
the vei
l of corporate
ct
i
on
1 100/s
- Ast
onotdepr
ivet
hehol
der
soft
hei
rsuccessi
onalr
ight
s XYZ-
---
-ABC

- Mer
e ow
ner
shi
p of l
alor bst
su
anti
all
y al
l s
i not a 2 100/s
j
ust
icat
ionofpi
erci
ngt
hev
eilofcor
por
atect
ion
To
Fraud
mustbe r
p
ove
n by cl
ear and
convi
nci
ng ev
i
dence
10 100/s
cann
ot pr
esum
e orspecul
at
e,thereust
m be f
act
s a
nd
ci
r
cumst
ances
=1M
/S what
woul
d be
t
he 2/
3?
Fraud
mustbe cl
ear and
convi
nci
ngev
i
den
ce m
oer h
tan
preponderance
Sect
ion6 l
ast paragrap
h

Rem
o J
r. vs.
IAC
Vot
ingshar
esar
eexcl
udedexceptt
hef
oregoi
ngi
nst
ances
- Ther
esol
uti
onwasnotent
eredt
odef
raudanyone
1 1

DelRosari
o vs.
Nat
i
onalLab
or om
C mi
ssi
on 2 2

- Thewr
ongdoi
ngmus
tbecl
ear
lyes
tabl
ished 3 3

- Ther
emus
tbef
act
stosuppor
t 4 4

- Paym
ent
ofcl
ai
ms cann
ott
hus be esum
pr ed
5 5
I
ndo
phi
l Texti
le M
ill vs.
CALIC
A
6 6
- How do youdi
si
tngu
i
sh t
his ru
l
ing
Lat
o Cam
pa ,
na
havi
ng h
te sam
e ssues:
i 1 & 2=abs
ent
1&
2=ab
sent tbu
gave
hei
t
r w
rit
tenassent
- La c a,one pay
ampan r
oll
, em
ploy
ees wer
e made
i
nterc
hangeab
le.Acryl
i
c hadi
ts ow
n st
anda
rds 3 & 4= bj
oect
ed
3&
4=obj
ect
ed
PN
B vs.
Rit
rat
t
o G
rou
p
5& 6
= appr
oved t
heame
ndme
nt 5&6
=appr
oved
- Con
trol
t
est
Woul
dther
ebeaval
idame
ndme
nt
- Not e
mer maj
ori
t
y b
ut r
ather pl
com
ee
t
Speci
al mendm
a ent
s 37 & 38 shor
teni
ng t
hat oul
wd
- Twi
nacewasonl
yasubsequenti
nter
est
edpar
ty resu
l
tt o d
i
ssol
ut
ionrequ
ire pri
or ap
proval
bythe S
EC

- Asset
sandmac
hiner
ies
Section 37. Power t o ext end or shor ten
cor
porate term. - A pri vate corpor ation may ext endor
Ame
ndme
ntoft
hear
ticl
esofi
ncor
por
ati
on shorten i ts t erm as s tated i n t he ar t
icl
es of
incorpor
ati
on whenapp roved by a maj orit
y vot e ofhe t
- Exp
ress
po
wergran
ted ot a corporati
on board ofdir
ector
sort rusteesand r ati
ed ata me et
ing
by the stockhol
dersr epresenting at leasttwo- t
hirds
Sect
ion16 (2/3) oftheut o
standing ca pital st
ockor by at east
l wo-
t
thi
rds ( 2/3) of the mem bers i n cas e of non -stoc
k
corporati
ons.Wri tt
en not i
ce of hetp roposed action and
- Appr
aisalr
ight
oft he ti
me an d place of he tmeeting sh all bead dress
ed
to each st
ockholder or em m
ber at s hi
pl
ace of resi
dence
- Sect
ion81 t
o o
bject on
cert
ai
n acts dan
t
ran
sacti
on
s as sh own ont he book s of the corporati
onan d d eposi
t
ed
to the dress
adee nit he postce oi w
th post age r epai
p d,
Sect ion 81 .I
nstancesof ap prai
sal ghri
t
. - or served personall
y:Provi ded, That nicase ofextensi
on
of cor porat
e t erm, an y di sse
nting st ockholdermay
Anyst
ockholderofacorporat
ion shal
lhav
etherightt
o
exerci
se hi s app rai
salri ghtund er t he condi ti
ons
di
sse
nt an d dem and paym ent of hetf
air val
ue of shi
provi
dedi n this e. cod
(n)
sharesn ti
he olfl
owing nist
ances:

1. I
n cas
e any amendm
ent t
o the art
icl
es of Sect
ion 38
.Pow
er oti
ncr
easeor ecr
dease
i
ncorporati
on has t
he e
ect of gi
chan
ng or rest
ri
ct
i
ng capi
t
al st
oc
k; incur
, cr
eat
e or incr
easebonded
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 12

i
nd ebtedness. - No cor porati
on shal l n icreas
e or ap
provedby th
e Commi
ssi
on i
fit
s e
ect
shal
l prej
udi
ce
decrease i
ts capit
al ock
st or ncu ir , createncrease
or ian y theri
gh
ts ofcorp
ora
t
e cred
i
tors.
bondedi ndebtednessunl essapprov edbyama jori
tyvote
oft he b oa rd fodirect
ors d an
, at a ockst hol
der'
s m eet
ing
Non
-st
ockcorporations may nicur or eat
cr
e
duly cal led for t he pu rpose, wo-th
ti
rds ( 2/3) of t
he
bonded i
ndebt
edness,orincrease t
he same
,withthe
outstanding cap i
tal ockst sh all avor
f t
he i ncrease r o
approvalbya maj ori
ty vot
e ofhe tb oardoftrustee
s a
nd
diminution of he t capi t
al ock,st or
the i ncurri
ng,
ofat east
l wo-t
thirds2/ (
3) of the members n a
i meet
i
ng
creating or i ncreasing of any bondedi ndebtedness
.
duly cal
ledfor ht
e purpose.
Wr i
tten noti
ceofthepr oposedi ncreaseordimi nuti
onof
the capi tal stockor of the i
ncurri
ng, creat i
ng, or
i
ncreasing of any b ondedi ndeb tedness d anoft he it
me Bondsi
ssued by a co r
porat
ion shal
l be
and pl aceof he t st ockholder'
s mee ti
ng at h wcih the reg
i
ster
ed wi t
h t
he Securit
ies and Exchange
proposed incre
aseor mi dinuti
on oft he cap it
alst ockor Commissi
on, whi
ch shal
l have t he aut
hori
ty to
the i ncurri
ng or ni cr
easing ofan y bondedi ndeb tedn
ess deter
mi
ne hte su
ci
ency of
the erm
t s htere
of
.(17a)
i
s t o be consi
der
ed, ust
m eb addr
es
sed t o each
st
ockhol
der at i
s hpl
ace of esi
den
r ce asshow n on the
The v
ote mus
tbe cas
tatt
he me
eti
ng cal
led f
or t
hat
booksoft
hecor
por
ati
onanddeposi
tedtot
headdressee
i
n t he post ceo wit
h postagepr epai
d, or se
revd purpose
person
all
y.
Wr
itt
enassentwoul
dnotsuce

A cer
ticatei
ndupl
icat
emus tbesi
gnedbya
Whendoame
ndme
ntsbecomeval
idandeect
ive?
maj
ori
t
y of the di
rect
ors of the cor
porat
i
on an
d
cou
nter
si
gned y b the i cha
rm an an
d the secr
et
ary of
he t
st
ock
hol
ders' meeting, set
ti
ng orth
f : - Onl
y upon
het appr
ov
aloft
he SE
C TRU
E OR FALS
E?

- FA
LSE becau
se ticanbe val
i
d upont
he da
t
e of
li
ng f
i
(
1) Th
at ht
e requ
i
rem
ents ofs thi
sect
ion have een
b
com
pi
ledwi
th; not act
ed uponwi
thi
n 6 mont
hs wi
thoutf
aul
t
att
ri
butab
l
e o
t therp
co
ora
ti
on

(
2) The amount ofhe
tincre
aseor di
mi
nut
ion of he
t
Whyi
sitr
etr
oact
ive?
capi
talstock
;

Whatpr
ovi
sionma
ybeame
nded,al
ter
edorr
epeal
ed
(
3) fIan i ncre
aseof hte ca pi
tal t ock
s , h te amount of
capi
t
al ock
st or u nmberof share s of no-par ockst
thereofual act
l
y su bscri
bed
, the names, atinon
ali
ties Can you chan
ge nam
e,add
r
ess
forexam
pl
e shearr
mi
ed
and resi
dences ofthe persons bscri
su
bing,the am ount or ha
cngedadd
r
ess
?
ofcapi
talstock or number ofno-par ockstsubscri
bed y b
each,and theamou nt pai
d by each on his subscr
ipti
on - NO. you cann
otchange
hat
t
i
n cash or propert
y,or h t
e a mount of capi
tal tock
s or
number of shares n of
o-par ock
st al
lot
tedt o eachstock- Fa
i
t acc
om
pli are beyon
, d t
he pow
ers ort
hori
au
ty of
the
hol
derfiu sch incr
eases i o
fr the urpose
p of
akingm
corporat
i
on t
o chan
ge, t
er
al or
modi
fy.Th
esewou
ld
eecti
ve ock
st divi
dend theref
or uathori
zed;
i
ncl
ude th
e ol
fl
owi
ng:

(
4) An
y bon
dedi
ndeb
t
edn
essotb
e n
icu
rred,r
eat
ced or - Names of
t
he n
icorpor
at
ors and
i
ncreased
;

- Thei
ncor
por
ati
ngdi
rect
orsort
rus
tees,
(
5) The act
ual ndeb
i t
edn
ess foh
te corporat
i
on on t
he
day ofhetmeet
i
ng; - Thenameoft
het
reasur
eror
igi
nal
lyorr
stel
ect
ed by
t
he sub
scr
i
ber
s or m
ember
s to act as
ch u
su
nti
l hi
s
(
6)Th
e am
ount ofst
ock
repres
ented h
at
e m
teet
ing;an
d su
ccess
or ha
s been
du
ly el
ect
edan
d qu
ali
ed
,

(
7) Th
e votet
hori
au
zing the
incr
ease
or i
mi
d nut
ion of - Thenumberofshar
esandamo
untor
igi
nal
lysubscr
ibed
an
d pa
id ou
t of
the o
ri
gi
nal au
thori
zedcap
i
tal t
ock
s of
t
he
i
n capi
ngt
al
creasi ofst
anock,
y or i
bon
ded t
nhe
deb
tincu
ednrr
ing, cr
ess. eat
i
ng or
t
he co
rporati
on,

Anyi
ncreaseordecreaseinthecapi
tals
toc
k - The dat
e and pl
ace of execut
ion of t
he ar
ticl
es of
or thei
ncurr
ing,creati
ng o r ni
creasi
ng of any bo
nded i
ncorp
orati
on
,
i
ndebt
edn
ess shall r equi
re prior app roval of t
he
Secu
ri
t
ies andExchange om
C mi ssi
on. - Thesi
gnat
ori
esandac
knowl
edgme
ntt
her
eof
.

One o ft he dupli
cate i cert
cates shall bekep t - Al
lot
herpr
ovi
sions ormat
ter
sst
ated orcont
ained i
n
on le ni the oce of he tcor
porat
ion an d the ot her t
he art
i
cles are j
ect
sub
t
o am
endmen
t.
shal
l be l ed wi th t he Sec uri
t
ies and Exc hange
Commi ssi
on an d attached t
o t he origi
nal articl
es of Fo
under
s or
sign
atori
es hind
i pwed
e pa
l
it
an
i
ncorporati
on
. Froman d after approvalbyt he S ecu
rit
ies
andExc han
ge o Cmmissi
on andt he i ss
uan ce byhe t
Names,
nati
on
ali
ti
es-
youcan
not
Commi ssi
on of tsi certi
cate of i
ng,
lhe t capitalstock
shal
l stand increased or decreased and the n icurr
ing,
cr
eati
ng or i ncre
asing of an y bonded i ndebtedness Cap
it
al- ri
gh
t gran
t
edbyl
aw t
o al
l corp
orati
on
aut
horized, as the certicate of li
ng may decl are:
Provi
ded, Th
att he Secu ri
ti
es and Exchange omC mission Pa
id up ca
pi
tal
- NO
shal
l notccepta or fl
i
ng an y cert
icat
e of ncrease
i of
capit
al st ock un less ac companied by t he sworn Rest
ri
cti
on an
d t
ran
sfer of sh
ares
in ordi
naryst
ock
state
men t ofhe tt reasurer of he tcorporati
on lawfully
corp
orati
on
s
holding oce t ah te time ofhe t
li
ng o fthe cert
ica te,
show ing that at east
l went
ty-ve25 (
%) percent ofsu ch
- Youcan,butcl
osecor
por
ati
oncannot
i
ncreased capi
talstock has beensub scr
ibedan d t
hat at
l
ea s
t t wenty-
ve ( 25% ) per cent of t he amount
subscribedhas eenb pai
d either niactualcash to the - Secti
on 96
, otherw
ise ti w
i
ll not be cl
a
ose
corp
orati
on
corporati
on or that there as been
ht r
an sf
err
ed to t he
corporati
on propert
y t he valuati
on of h wi
ch is equal ot
Section 96.
Deni
t
ion and appl
i
cab
il
it
y of
twenty-ve(25 %) percenthe ofsubscri
t ption: Provi
ded ,
f
urther , That on decrease of hte capit
al ock
st sh all be Ti
tl
e.- A cl
ose corp
orat
i
on, wi
thi
n the mean
ing o
fthi
s

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 13

Code, s ion e who se art i

cles of ni corporat
ion provide dir
ect
or, w hi
ch shareal l
shtsand in his na me on t he
tha
t:( 1) All the corporati
on'
s ssu
i ed st ockof l alcl
asses, booksofthecorpor
ati
on.Anydirect
orwhoc easestobe
excl
usi
veof re tasurysh ares, hall
s be held of ecord
r by thewn oer of at east
l eon1
() share of he tcap
it
alst ockof
not or me t han a spe ci
ednu mber ofr so
pe
ns, not the corporati
on of h w
ich he s i a direct
or shal
lt hereby
exceedi
ng t wen ty ( 20); 2)
( l l
a hte i ssued st ockof l al cease t o be a di rec
tor
. Tr ust
ees of non -stoc
k
cl
asses shal l be subj ec
t t o oneor mor e spec i
ed corporat
i
onsmustbe mem bers ther
eof. A maj ori
ty of
rest
ri
cti
on s on t ransfer erm
p itted by thi s Titl
e; an d (
3) thedi rect
orsor trustees f al l corpora
o t
ions organized
Thecorporation shal lnotlistin anystock exchangeor underhi st C
ode m ustbe resi
den t
s of t
he Ph i
li
ppines.
makean y p ubl i
c o ering of an y of i
ts stock ofan y cl
ass.
Not
withstanding t he oregoi
f ng, a rporati
co on sh al
l not
- Con
trol
ledbyt
he b
oard ofrect
di
ors
bedeeme d acl osec orporati
on when atleasttwo-thirds
(
2/3) of t
si voting st ockor voti ng ri ghts is ow ned or
con
trol
led by an other corporation which i s n ot a osecl - Aut
hor
ityar
ehoweverr
est
rict
edt
othedayt
oday
corporati
onwi t hin the m eani
ng of t
his C ode.
- Stockhol
dersay
m ave
h l
alt
he pr
ot ut
b w
il
lturn over
t
he m
anagem
ento th
te gover
ni
ngboard
Any cor
porat
ion ma
y be i ncorpor
ated as a
close rpo
corati
on, excep
t mi
ning or loi compani
es, st
ock
exchanges,banks,nsu
irance compa ni
es, publi
c u t
il
it
ies, - But unl
esshe
t aw
l provi
deshe
t pow
ermay beel
egat
d ed
educati
onalinst
it
uti
ons and corporati
on s decl
ared to be
vest
ed with publ
icinter
estin accordance with the Gen
eral
rul
e
provi
sion
s of thi
s Code.
- Corporat
i
ons m
ustsi
t an
d act as a
y bod
The pr
ovi
sions ofthi
s Ti
tl
es hal
lpri
mari
ly
govern
cl
ose rpo
co
ration
s:Provided
, That he
t provi
si
ons - Wi
llbeboundbycor
por
ateocer
sift
heyact
ed wi
thi
n
of other
Ti
tl
es of this Cod e shall appl
y su
pp l
etori
l
y t
he 5cl
assi
ca
ti
onpa
ge 15
0
exce
pt nsofar
i as tlthis
e oth
erw
Ti
i
se rovi
p des.

Rami
rez vs.
Ori
en
tal
i
stco.
Tr
ansf
er cl
ause, execut
or cl
ause, ac
knowl
edgme
nt,
t
reasu
ry a
davi
t
-NO - What was t
he posi
ti
on of Fer
nandez i
n t
hiscase?
TREASURER
Phi
li
ppinei
rst
FI
nsu
ran
ce case
- Whydi
dthecour
trul
ethatact
ionsofFer
nandezbound
-
Mer
e chan
ge nithe name ofa corpor
at
i
on or byer
m
eyl t
he corporati
onwhenhe s
i n
oteven bo
aard of
di
rec
t
or?
com
pylng
i wi
th the aw
l is ge
neral
amendm
ent

if a man i
s f
ound act
ing f
or acorporat
i
on
- I
t does
not cha
nge t
si p
erson
al
i
ty.I
t s
i the
sam
e p
erson wi
tht
he ext
ernali
ndi
cia ofaut
hor
ity
,any per
son not
i
n a d
ier
ent me.
na the chart
er sih
te sam
e havi
ng noti
ce of an
w t of t
au
hori
t
y,may usua
l
ly r
ely
upont
hose
app
ear
an
ces
; and
if t
i bef
ound t
hat h
te
Ame
ndme
ntofacor
por
atet
erm di
r
ect
or
s had perm
i
tted t
he agent
t
o exe
r
cise t
hat
aut
hor
i
ty and t
her
ebyhel
d hi
m out as
a per
so
n
- Ext
endi
ng t
he sam
e can
neve
r be ade
m 7
year
s pri
or
? com
petent
o bi
n
td the corp
orat
ion
, or ha
d acqu
i
esced
n i
TRUE orFALSE a cont
ract and
ret
ai
nedt
he benetpposed
su to have
been conf
err
ed by i
t,t
he cor
por
ati
on wi
llbe bound,
- FA
LSE. I
t can
be i
fther
e a
re u
jst
i
ab
l
e reasons
for not
wi
thst
an
ding t
he act
ual authori
ty may never
ave
h
ear
l
ier xt
eensi
onas m
ay be
det
er
minedby the
ECS beengr
ant
ed.

Can youext
endt
he cor
porat
e t
erm i
f t
i ha
s al
r
eady - Cont
r
act
s must beade
m by t
he di
r
ect
or and
nothe
t
exp
i
red? st
ock
hol
ders

- Once he
t er
tm ex
pri
es i
w
thou
t a
n amendm
ent hav
ing - Act
ions oft
he s
toc
khol
der
sinsuc
h mat
ter
sis onl
y
hap
pen i
t cease
s to exist
asa b
ody p
oli
ti
c.I
t s
i d
i
sso
l
ved ad
visory dan
n
oti
n an
y w
ay n
bi
di
ng n
ithe corporati
on
au
tomati
cal
l
y ontheay
d tiexp
i
res.
Barret
o vs. La
previ
sora
Fi
li
pina
Al
hambr
aci
garandPNBc
ase
- Everyt
hi
ng em
anates
f
romt
he boa
rd of
di
rec
t
ors
I
nst
an
ces hen
w the SE
C al
l
owed ext
ensi
on whose rm
te
hasal
ready
expi
red - Stockhol
dersct
i
a
on i
s mer
ey
l advi
sory except
thei
r
ap
proval or
e sivot
necessaryrov
to
e ap
val
i
d corporate
- Al
loft
hem i
nvol
ved ar
eins
tit
uti
onsofl
ear
ning,i
twas act
t
he case
n i
order
o avoi
t d conf
usi
on t
hat ou
wld ari
se
l
ater on
. Qual
i
ca
t
ion
s:

BOAR
D OF DI
RECTO
RS/T
RUSTEES - No ci
t
izensh
i
p requ
i
rement, at
east
l aj
mt
ori
y must be
resi
den
ts
Sect
ion23
- Can havea gov
er
nn
ig boar
d consi
st
i
ng sol
el
y of

Section 3.
2The bo
ard of rdi
ect
ors orrust
ees
t. f
oreign
ers
- U
nless otherw
i
se rovi
p ded i
n thi
s Code,t
he corpo
rat
e
pow
esr o
f al
l corporat
i
ons o
frm edunder thi
s C
odesha
ll - But we hav
e t
o t
ake i
nto co
nsi
der
at
i
on par
t
ly
beexer
cised,al
lbus i
nessconduct
edandallproper
tyof nati
on al
i
zedindu
stri
es n
ad ot
her aw
ls w
hich proh
ibi
t
s
such corporat
i
on s cont
roll
ed and hel
d by t he board of or i
mi
lts orei
f gnow nersh
i
p
di
rect
ors or trust
eest o be elect
ed fr
om amongt he
hol
ders of ocks,
st w
or
here ther
e is no st ock, r
omf - Ant
i-dummyact
amongt he mem ber
s of t
he corporat
ion, how shal
l hol
d
ocef or one (1) year nti
lut
heir successors el
ect
are
ed
- Ut
il
izat
ion devel
opment of
natur
alr
esources
% mu
60
st
and quali
ed.(28 a)
be owned by Fi
li
pino ci
ti
zens,t
her
efor
ethey onl
y own
40
%--
-10 mem
ber
s h
tey can
onl
y have 4 s,
seat
bu
t not
Everyrecdi
tor u
mstown at east
l on
e 1)
( share
en
ti
rel
y correct
beca
use ht
e aw
l may rovi
p de ot
herw
i
se;
of ht
e ca
pi
tal t
ock
s of ht
e co
rporati
on of hw
ich he s
i a

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 14

ed
uca
ton
ial nst
ii
tuti
on
s restri
cted
t
o F
il
ipi
nos
, but h
tere Do you
incl
ude h
te vot
e of
1 & 2 t
o h
ave a qu
or
um t
o
are excepti
on
s w
hen creat
edby re
l
igi
ous an
d cha
ri
t
abl
e have a i
d
val
meet
ing?
i
nsti
tu
ton
is.
- NO, qu
orum
requi
r
ement
s s
i 401,
00
0
- By-
l
aws may prov
i
de add
i
ti
ona
l qu
al
icat
i
ons and
di
squ
al
i
cati
on
s Quorum
r
equi
r
ement
is 501k

- Toqual
if
yasadi
rect
orhemus
townatl
eas
t1shar
e Hol
ders of
non-
voti
ng sh
ares
rea on
l
y en
t
itl
edt
o vote
n l
ast
i r
pa
. Of
secti
on 6
Shou
ld t
he st
ockh
ol
der eb the
equ
i
tab
le o
r ben
eci
al
ow
ner niorder to
al
i
fyqu
a
s adi
rect
or? 1-200k

- NO, i
t s
i n
ot necessa
ry
, ason
l
g a
s you
arei
stl
ed i
n t
h2-200k
e
booksasownerofoneshar
e
3-200k
Lee vs.
CA
4-100k
- Asl
ongasyou ar
eli
sted i
nthebooksasownerofone
share 5-100k

- Und
ert
he ol
d a
lw he m
ustbe he
t eneci
b alow 6-100k
ner and
l
egal ner
ow ht
ere
of bu
t nithe n
ew l
aw it s
i n
ot equ
ri
red
7-50k
as on
lg ast i
stan
ds nihi
s name h
e si qu
al
ies

8-40k
1 A-
100t
/S B (
own n
i t
he r
t t ofX)i
us s B qual
i
ed o
t b
ea
di
rector?
9-5k

2
10-5k

3-10
=1MS

2 tr
ansf
erri
ng th
ere voti
ng ri
ghtsnif
avo
r of
VT
1&
2 i
s abs
ent
, 3&
4 ay
aw t
umakboandhi
ndi nagv
ot
e 6-
10,
tumakbo an
d ninomi
nat
e n
il
a yu
ng sari
l
i ni
la an
d castl al
thei
r
Othergh
t
ri
s w
il
l accru
e n
ifavor
f them
o , bu
t not he
t voti
ng ri
gh
ts
share
s on them
sel
ves
vot
ingr
ight
smus
tber
ecor
deri
nthebooksoft
hecor
por
ati
ont
hat
Whowi
ns?Orwhoget
sel
ect
ed?
i
t s
i tran
sferred

- No vot
e e
rqui
r
ement
,the on
e whoge
t
s h
te m
ost
number
PN
B-I
FL- whol
l
y ow
ned su
bsi
di
ary of
PNB
of vot
es ge
t
s elect
ed
, secti
on
24.
PN
B wi
ll assi
gn to BPN
-I
FL nom
i
nal share
s and
PNB-
IFL nowwi
ll
Whati
scumul
ati
vevot
ing?
beabl
etobenomi
nat
ed

- Proc
ess oful
tm
i
plyng
i the nu
mber of shares
o t
he t
Gen.
Rul
e:
number of
dir
ect
or ot b
e el
ect
ed
- Ter
m ofone year who wi
llser
ve as suc
h unt
ilt
her
e
- Mat
t
er ofgh
ri
t grante
d t
o st
ockh
ol
ders
in a st
ock
su
ccessors ect
are
edan
el
d qu
ali
ed
corp
orati
on
Excepti
on
:
1 t
o 5 as
h 200
k/s an
d mem
ber
s of
the sam
e am
fi
ly-maj
ori
t
y 800
k
- Non
-st
ock
corporati
oncanserve t of3 yearst
or faerm hey have
M vot
4es ht
ey are
guarante
ed 4seat
s

- Edu
cat
i
onal non
-
stock-
erm
t oft
hegover
ni
ng b can 6 to 10
oard are not
el
ated-
r 1 seat 1M
vot
es
be5year
s
Cumul
ati
ve t
o al
l
ow t
he mi
nori
t
y to have
a r
ight
f
ul
May ht
i
s er
tm excee
d on
e ye
ar? represen
tat
i
onin th
e bo
ard

I
s t
ial
l
owedi
n a n
on-s
t
ockcorp
orati
on
?
- Yes,t
hey ma
yser
vei
n a hol
d ov
ercapaci
ty unt
ilt
hei
r
su
ccessors
have been
du
ly el
ect
ed n
ad qu
al
ied
- Not gen
erall
y av
ail
ab
le

Det
ecti
ve an
d prot
ecti
ve bu
reau
vs.
Clori
be
l
- Sect
i
on 89 unl
ess t
he art
icl
es or by-
l
aws al
l
ow
cu
mul
ati
ve voti
ng
- I
n t
he by-l
aws,man
agi
ng d
i
rect
or m
ustbe el
ect
ed f
rom
amonghem
t se
l
ves
Sect
ion 89 .i
R gh
t ot vote.
- The righ
t of the
- Mustbe u
dl
y el
ect
ed n
ad q
ual
i
ed mem bers anofy class or asses
cl o votte may e b i
l
mit
ed,
br
oadened or deni
ed tothe ext
ent speci
ed i
n the
How are the
i
rect
ors
d ect
el
ed? art
icl
es of nicorporat
i
on or t he by- l
aws. nUlessso
l
imi
ted, broaden
ed or den
i
ed, each
member
, egar
r dl
ess
of as
cl
s, sh
al
l be e
nti
tl
edto on
e vo
t
e.
1-100T/S

2-100T/S Unl
ess otherw
ise rovi
p dedin the a
rti
cles f
o
i
ncorpor
at
i
on or he
t by-l
aw s,a mem ber ay
m vot
e by
proxy
i
n accorda
nce iw
th the provi
si
ons ofhi
s
t C od
e.(n)
3-100T/S

t
o 10=1M
/S Voti
ng by mailor ot
her si
milar me
ans by
member
s of non -
stockcorporat
i
onsmay be au
t hori
ze
d
by t
he by-
laws of non-
stoc
k corpor
ati
ons wit
h the
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 15

app
rovalof
, an
d und
er u
sch condi
t
ionswhi
ch may be Excepti
on
:
pr
esc
ri
bed by , the Securi
t
ies and Exc
hange
Commi
ssi
on. - Del
ega
t
ion

- Exp
ressl
y con
f
erred

Ot
her orporat
c e o
cer
s ot
her ht
an t
he gover
ni
ng bo
ard - Wher
ethe ocer or agent i
scl
othed wi
th act
ualor
secti
on 25 ap
parent
aut
hori
ty

- Otherw
i
se ti w
i
ll not n
bi
d the rpo
corati
on
Sect
ion 25.Corpor
at
e o cer
s, quor
um .-
I
mmedi
atel
y after t
heir el
ect
ion, thedirc
eors
t of a
Yaokasi
ntr
adi
ngcase
alr
eadyaskedi
nthebar

corporati
on must orm
f al
ly organ
i
ze byt
he electi
on of a

presi
or den
m
ayt
,not
who be
sh
al
aldi
be
r a
ect
or,d
ire
csec
a or
t,raary
et tr
easure
ho
w rshal
w
hl
o be
maya - Onl
y bi
nd t
he corpor
at
i
on t
o t
he ext
entof au
thori
ty
res
iden
t and ci
t
izenof ht e P
hili
ppi
nes, and such other con
ned tomhi
or rt
vi
ue of
cust
oms,usage dan
p
oli
cy
ocer
s asmay e b prov
idedfor nit he by-
laws.Any t wo
(
2) ororem posi
ti
ons may e b h el
d concurr
entl
y b y the - Mustpass
rst
t
he con
tr
oll
er and
cou
nsel
same per
son, ept
exchat
t noone shal
l act as presi
dent
and secr
et
ary or asresden
ipt and tre
asurer atthe sam e
Whati
fthenot
icer
equi
reme
nti
snotcompl
iedwi
th?
t
ime.

Lo
pez eal
rt
y vs.
Fo
ten
cha
The di
rect
ors ort rustees and oc ersto be
elect
edsh al
l perf
ormt he du t
ies en j
oinedont hem by awl
- Not
i
ce r
equi
r
ement u
mst be
com
pil
ed wi
th hence
i
t
and the by-l
aws of the corp oration. Unl
ess the rt
i
cles
a of
i
ncorporat
ion or t he by- l
aw s provi de f or a gr eat
er shou
ld have been
wi
th f
orc
e an
d e
ect
, bu
t acc
ordi
ng to
majori
ty, a maj ori
ty of he t nu mberof di rector
s or t
he SC
, t
i may be r
ati
edexpr
ess
l
y i
f h
tere
is a
trustees s xed
a i n t he articles of ncorporati
i on shal
l su
bseq
uent meet
ing cal
l
ed or
f ht
atpu
rpose
const
it
ute a qu orumf or the t
ransacti
on of cor porat
e
busi
ness,andeverydecisionofatl eastamaj orit
yofthe - I
mpl
i
edl
y throu
ghacts
direc
t
ors or usttr
eesresep nt at aeet mi
ng a t whichthere
i
s aqu orum shall beval id as acorporate , except
actor f
- Asunci
onwasawar
eoft
hecor
por
ati
onsobl
igat
ion
the el
ecti
on of o cershi ch
w sh all re
qu i
re hte vote aof
majori
ty ofallthe m em bers t of
he board.
- Ther
ewasi
mpl
iedr
ati
cat
ionorshewases
topped

Direc
tors or trust
ees nca
not t
at
end or vot
e b
y
Puaca
smi vs
. Neum
ark and
Co.
proxy
t bo
aard eet
mings.
(
33a)

- Con
sidered i
r
3cu
mst
c an
ced
I
s h
te presi
den
t requ
i
red to be a ol
stockh
der
. YES

- Chec
k whi
c
h was he
t pr
ocee
d oft
he l
oanwhi
c
h was
Thec
hai
rmanma
ybeanot
herper
son
end
orse
d an
d depo
si
tin t
he corporat
e accou
nt

Thepr
esi
dentma
yal
sobeanot
herper
son
- Neu
mark as i
pres
den
t an
d al
so ockh
st ol
der

Proh
ibi
t
ed i
s presi
den
t o
t be secr
et
aryor easu
tr rer at
Yu c
huckvs.KongLiPo
t
he sam
e i
tme

- Gener
alman
ager usua
l
ly h
as the
ower
p ot h
ire b
ut he
t
Board
ofdi
rec
t
or u
mstsi
t an
d a
ctas abo
dyt
o arri
ve at
SC sai
d the contr
act
mustbe re
ason
ab
le
a corp
orat
e act

- Thecont
racther
eissooner
oust
hati
twoul
dthr
ow t
he
Whatwoul
d cons
tit
ute a quor
um i
f5 t
hen 3 mus
tbe
corp
orati
on i
nto inso
l
ven
cy
present

Fran
ci
sco vs.
GSI
S
May he
t vot
e of2 mem
ber
s past
a 5 man go
ver
nnig
boar
dpassaval
idcor
por
ateact
?
- GSI
S can
notevad
e hte bi
ndi
ng e
ect
oft
he el
tegram

- YES.Vot
ingr
equi
reme
nti
smaj
ori
tyofdi
rect
orspr
esent
- Onl
y 1
5 mon
ths a
letr ht
at ht
e corporat
i
on sai
d ther
e
atwhi
ch ther
e w
here a quorum
wasami
stake

1 1 and 2 pr
esent
=val
id v
oti
ng
- Thesi
lencecoupl
ed wi
tht
heuncondi
ti
onalaccept
ance
r
equi
r
ement
of ht
e other
bsequ
su
ent rem
i
ttan
cessib
indi
ng t
o t
he
corp
orati
on
2 1
and
2
vot
edyes

Boa
rd f
oli
qui
dators K
vs.
al
aw
3 v
3
ote
nd
o

Set
t
led j
uri
spruden
ce has i
t t
hatwhere
4
si
mil
ar acts have
beenap
prove
d by t
he d
ir
ect
ors as
a
mat
t
er of generali
ce,
pract
cust
om an
d pol
icy
, the
5
ge
ner
almanager
may bi
nd t
he com
pany
wit
hou
tfor
mal

I
s t
iabso
l
ute? aut
hori
zat
i
on of the boa
r
d of id
rect
ors. n Ivaryi
ng
l
anguage
, exi
st
ence f
osuch au
tho
ri
t
y si estab
l
ish
ed, by
- NO, exce
pt i
n t
he el
ect
i
on because
i
t requi
res t
he pr
oof of
hetcour
se of bu
si
ness
, the usag
es and
maj
ori
t
y of
allt
he m
embers t
of
he boa
rd pract
i
ces of
the com
pan
y an
d by theow
kn
ledgehi
wh
c
t
he boar
d of di
r
ect
ors has, or
ust
m be
pr
esumed t
o
- I
f by-l
aw
s orrt
i
a
cles rovi
p de ahi
gher vot
ing requ
i
rem
ent have, of
s and
actdoi
ngsof t
si sub
or
dn
iat
es i
n an
d
abou
t thea
air
s of he
t cor
porat
i
on.So al
so, xx

Ar
tici
albei
ngsmus
tactt
hrough i
tsme
mber
sand act au
thori
t
y to actor
f an
d bi
nd a cor
porat
i
on may e
b
as a od
b
y o
t h
ave a i
d
val
co
rporate
act presum
ed f
rom act
s of ecogni
r t
ion i
n ot
her ni
st
ances
wher
ethepowerwasi
nfactexer
cised.
xxThus,when,
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 16

i
n t
he u
sual ou
crs
e of bu
si
ness of corporat
a i
on, an Mee
t
ings cal
led by t
he pre
si
dentor t
he sec
r
etary
oce
r hasbeenal
l
owed i
n hi
s oci
al capac
i
ty t
o ordered byre
s
the
den
i t p
mana
ge i
ts a
air
s, i
h
s au
thori
t
y to r
epr
ese
nt t
he
cor
porat
i
on may bempl
ii
ed r
om
f t
he man
nern iwhi
ch I
t depen
ds i
fthe rem
oval
i
s w
ithou
t cause
they can
not
he ha
s been
perm
i
tted by t
he di
r
ect
or
s t
o man
aget
si do so becau
se em
roval
wi
tho
ut cau
se sha
l
l not depri
ve
busi
ness.
t
he mi
nori
ty st
ockh
ol
ders or
embers
m of
t
he ri
ght of
repres
en
tati
ve
I
n t
he cas
e at ar
b, t
he pr
act
i
ce of he
t
corporat
i
on ha
s b
eent
o al
l
ow i
ts general
man
ager
o t I
f wi
thcau
se th
ey an
c even
i
fit w
il
l prej
udi
cethe
righ
ts
negot
i
ate an
d execut
e contr
act
s in i
ts copra
t
rad
i
ng of t
he mi
nori
t
y, pr
ovi
ded of cour
se addi
t
ional
act
ivi
t
ies f
or an
d in NAC
OCO
s beh
al
f w
it
hou
t pri
or requ
i
remen
ts by-l
aws an
d a
rti
cles of
i
ncorp
orati
on
boar
d appr
oval
.Ift
he by-
laws wer
eto be l
it
eral
ly

f
oll
owed, the
board
shou
l
d gi
ve i
ts st
amp of pri
or Whowi
lll
lupt
hevacancycr
eat
edduet
otheous
terof
approval al
on
l cor
porat
e contr
act
s. uBt h
tat oard
B a mem
ber oft
heboa rd ofdi
rect
ors <sect
ion29>
i
tsel
f, byi
ts actsndathrou
gh acq
ui
escen
ce, practi
cal
l
y
l
aid a
side h
te by-l
aw requ
i
remen
t ofpri
or ap
proval
.
Section 9.2Vacanci
esi n theo ce ofr ect
di
or
or trustee. - An y vac ancy occurri
ng i n t he boar d of
- Kal
aw si
gned l
a
one an
d sai
d con
tract
s wer
e su
bmi
tted dir
ectors or tr usteesot hert han by r emoval by the
t
o theoard
b ofdi
rec
t
ors t
er
aft
si con
su
mmati
on an
d n
ot stockholders or em bers
m or by r
ation
expioft erm, may
bef
ore be l l
ed by t he vote of at l
east a ma j
orit
y of the
rem ai
ning di rect
orsor t ru
stees, f ist
il
l con sti
tuti
ng a
quorum ; otherwi
se, said vacanci
es m ustbe l
l
ed y b the
Buenase
da vs.
Bowen
stockholdersn ia regul aror sp ecial m eeti
ng cal l
ed for
that u prpose.di rAec
tor ro tr
ustee so el ected to ll a
- Expre
ss rat
i
cat
i
on i
s madet
hrough
a f
orm
al boar
d vacanc y shallbeelect
ed onlyortheune xpired ter
m of
acti
on his predecess or nioce.

- I
mpli
ed rat
ic
ati
on i
s throu
gh
: si
l
ence or qu
ac
iescen
ce,
Anydirectorshi
p ortr
usteeshi
pt obel
ledby
acceptan
ce en
bets dan
l
ast
l
y recogn
i
ti
onor ad
opti
on r
eason of an i
ncre asei n the nu mber ofr ect
di
or
s or
t
rust
ees alsh
l be ll
edon ly by a n el
ecti
on at a regu
l
ar or
Anunaut
hor
izedactma
ynever
thel
essbebi
ndi
ngei
ther at a eci
sp
al e met
ing of ockh
stol ders or em bers
m lydu
byexpr
essori
mpl
iedbyest
oppel
s cal
l
ed for the purpos e, ori n t he same mee t
ing
authori
zi
ng thei ncrease of rect
diorsor trustees so if
By vi
rt
ue of l
en
si
ce the
board
hadi
mpl
i
edl
y a
ccept
edthe st
atedi
n the n oti
ce f othe eetming.(n)

act
Ot
her ha
tn by rem
oval
or expi
rat
ion oft
erm t
hey do
not
By recogn
i
ti
onor ad
opti
on have
het pow
er

By vi
rt
ue of paym
en
t of obl
i
gati
ons ari
si
ng t
heref
ore- Whenwi
llt
hevacanci
esbel
ledup?
Lo
pez ea
r
lt
y
I
s n
oti
ce requ
ired,
t
o
l
l up va
can
ci
es u
de o
t rem
oval?
May i
d
rec
t
ors or
rustees
t isqu
be
ali
ed
d t
o a
ctas su
ch?
Whati
fthevacancyi
sduet
oani
ncr
ease,cani
tbel
led
- YES,cr
ime
,et
c.di
squal
icat
ionsi
nbook up i
n t
he same meet
ing whe
re i
n t
he num
ber i
s
i
ncr
eased
?
- Posses
s or di
sposse
ss any of he
t qu
ali
cat
i
onsor
di
squ
al
i
cati
on
s ,cea
se to
oldhat east
l eon
sh
are El
ect
i
on du
e to rem
oval
-
in t
he sam
e meet
ing not
i
ce si
not equ
ri
red
May di
r
ect
or
s be ou
st
ed r
om
f oce?
El
ect
i
on du
e o
t n
icre
asen i
number-
i
t mustbe so
st
ated
- At l
eas
t 2/3 of me
mber
s r
epr
esent
ing out
standi
ng i
n th
e m
eet
i
ng
capi
tal st
oc
k. Again not
i
ce requir
ementmustbe
com
pi
led i
w
th Sect
ion 30

1-
200 1-
5 same
Section 30.Compensati
on of r di
ect
ors.
-I n
f
ami
ly
the ab senceofany p rovi
sion in the by-law s xing thei
r
com pensati
on,t he di r
ect
ors shal l notr ecei
ve any
2-200 com pensati
on, as such direc
tors, except or f reason
ab
le
per di ems: Pr ov
i
de d, howev er
, Thatany s uch
3-200 com pensati
on otherhant per em di
s may be grant ed o t
direct
orsyb thet evo ofhet st
ockholders represent
ing at
4-100 l
east maj a ori
ty of hte outstandi
ng cap it
al ockst at a
regular orecisp
alstock
holders'meeting.In no ca se shal
l
the t ot
al year
ly com pen
sati
on of i d
r
ectors, assu ch
5-
100 el
ect
ing
dir
ectors
, exc
eedt en (10%) per cent of he ntet ncom
i e
befor
e income tax of the corporat
ion dur i
ng t he
6-
100 6
t
1
o0not precedi
ng year.(
n)
related

- Gen
eral
l
y not enti
t
led t
o recei
ve com
pen
sati
on beca
use
7-50 they
ren
der ti
gra
t
uit
ousl
y

8-40
- Unl
esshe
t by-l
aws al
lows

9-
5
- St
ock
hol
dersay
m so
al gran
t pu
rsua
nt t
o a m
aori
jt
y vot
e

10
-5 o
utst
andi
ng
- Mustnotexcee
d n
eti
ncom
e of
10% t
ax of
t
he prec
edi
ng
director
year

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 17

- Act
ingi
nspeci
alcapaci
ty - Wat
ered s
toc
ks-i
ssued,f
ull
ypai
d up when i
nfactt
hey
haveot
nbeen
f
ull
y p
aid or prom
i
sed sa su
ch
- I
n, su
m di
rc
eors
t ay
m ecei
r ve om
cpen
sat
i
onwhen
Ll
amado vs.
CA
1. t
here
s i
a provi
si
onin t
he y-
bl
aws o
t h
tat e
ect
- Thecor
por
ateent
ityt
heor
ycannotbeusedasadef
ense
2. When t
he s
toc
khol
de
rs, y
b a maj
or
it
y v
ote of he
t to esc
ape li
abi
li
ty nivi
olati
on of .
P.
B 22
ou
tst
andi
ng cap
it
alst
ockran
gt t
he sam
e;an
d,
- Wher
ethec
hecki
sdr
awn byacor
por
ati
on t
heper
sons
3. I
fthe di
re
cor
t en
rders ra-
ext
ordi
nary orsu
un
alservi
ce whosi
gnedt
hec
heckshal
lbel
iabl
e.

Cen
tral
coop
erat
i
ve exch
ange vs.
beTi Ui
chi
co vs.
NLRC

- By-
l
aws m
ay l
al
ow, st
ock
hol
ders
may so
al l
al
ow su
ch - La
bor case orat
corp
e d
irec
tors d
anocers are
i
dari
sol
l
y
l
iab
le wi
th t
he corporat
i
on f
or t
he t
erm
i
nat
i
on of
What do you under
stand by t
he phr
ase
as suc
h em
ploym
ent of
corporat
e em
po
lyee
don
e w
it
h mal
i
ce and
di
rectors badf
ait
h

Wes
ter
nins
tit
utevs.Sal
as 3 f
old duty of
di
rect
ors

- Com
pen
sat
i
onwas gr
an
ted i
w
thou
t by-
laws au
t
hori
ty - obed
ient

- Proh
i
bit
ion i
s n
ota sw
eep
i
ng ru
l
e - di
li
gent

- Mem
bers t
of
heboard
may re
cei
ve h
went
heyr
ece
i
ve ni - loyal
a sp
eci
al cap
aci
ty
Busi
ness
udgm
j entul
r
e
- Mer
e act
oft
he boa
rd w
ill su
ce
- Quest
ion
s o
f pol
icy n
ad man
agem
ent r
ea e
ltf sol
el
y t
o
I
s the0%
1 cei
li
ng a
ppl
icab
l
e o
t other
cers?
o t
he ho
nest deci
si
on of ht
e b
oard
of r
di
ect
ors d
ant
he
cou
rt
s arei
thw
out au
t
hori
ty to bsti
sut
ute t
i
s u
jdg
men
t
- NO. the ph
rase as
such
di
rec
t
or w
as s
ued t
wice as agai
nst ht
e f
orm
e.
r Th
e di
r
ect
ors r
eat
he bu
siness
<Sect
ion30
> man
ager
s of
the corporat
i
on an
d as on
lg ast
hey act
n i
good
fai
t
h, t
i
s actua
t
ion
s arenot su
bj
ect to
j
udi
cal
i
- TheSC r
uledt
hatt
he10% cei
li
ngwi
llnotl
ikewi
seappl
y review
.Mon
t
eli
bano vs.
Bacol
odMurci
a M
il
li
ng
i
fthey ct
aedi
n a ca
paci
ty othern tha
as su
chdi
rect
ors
- qu
est
i
ons of i
pol
cy an
d man
agem
en
t ar
e ef
lt sol
el
y tohe
t
Gove
rnm
ent
vs. El Hogar boar
dofdi
rect
ors

- Judi
ciali
nter
vent
ioni
snotpr
oper - BOD, bu
sinessana
m ger
oft
he corpor
at
ion andas ong
l
ast
hey ct
a nigoo
d f
aith,t
sia
ctuati
on
s a
re no
t su
bj
ect
- Theappr
opr
iat
esr
eme
dy i
stot
hosewhocan makeor to ud
ji
cial
review
un
makehe
t by-
l
aws
- They ar
e noti
nsur
eroft
he pr
oper
ty oft
he company
,
Li
abi
li
ty o
f corp
oratecers
o t
hey er
we gu
arantor
s that
he ten
t
erpr
i
se n
udert
aken
by
t
he corpo
rat
i
onsh
all besu
ccessf
ul
- Obl
i
gati
on
s n
icu
rredbyt
hose ct
a
i
ng or
f an
d in beh
al
f of
t
he cor
por
at
i
ons ar
e not t
her
e
s BUT t
her
e ar
e
Mon
tel
i
ban
o vs.
Bacol
odMur
cia Mi
ll
ing C
o.
excep
t
ion
s even
i
fthey re
a acti
ng or
f an
d i
n beh
alf oft
he

corp
orati
on - Di
rect
ors are
ot n
i
ab
ll
e d
ue o
t i
mpru
den
ce oron
h
est
err
or of
j
udgm
ent
Tr
amatv
s.CA
- Duty of
l
oya
l
ty of corp
ora
t
e d
i
rect
ors
- Gen
eral
rul
e w
as ap
pl
i
ed nit
he case
- 31
,32
,33
,34
- Ong act
ed as
ocer
s an
d a
cted i
w
thi
n t
he scope hi
of
s
au
thori
ty - 31
,32
,33-speci
c inst
an
ces hen
w cor
porat
e ocer
s
may i
ol
vateoya
ll
ty
- Cou
rtl
aid dow
n 4 i
nst
ances hw
en eve
n i
f act
ing w
ithi
n
the
sco
pe of his
tho
ri
au
ty e
hsi h
eld so
l
idaril
y i
l
abl
e - 32,
33 sel
f-dea
l
ing an
d i
nterl
ock
ing di
rect
or

1. He as
sent
s (
a) o
t a pat
ent
l
y unl
awf
ul act of
he t Corpo
rat
e op
po
rtuni
ty d
oct
ri
ne
corp
orati
on
, orb)(or
f bad f
aith, or s
gros
negl
igen
cei
n
di
rect
i
ng i
ts a
airs, or
(
c) or
f con
i
ct of i
nterest
, - I
t pl
aces
a di
rect
or f
oa corp
orati
on i
n t
he p
osi
t
ion of a
resu
l
ti
ng n
i da
mages
t
o therpo
co
rati
on
,it
s st
ockhol
ders d
uci
ary nd
a prohi
bi
t
s hi
m f
orm sei
zi
ng a bu
siness
or h
ot
erperson
s; opport
uni
t
y an
d/or
deve
l
opi
ng i
t at the
expense
an
d
wi
th t
he f
aci
li
ti
es of t
he cor
por
ati
on. He cannot

2. He conse
nts ot t
he ss
iuance of
wat
ee
rd st
ocks or
who, approp
ri
ateo th
imsel
fa busi
ness po
oprt
uni
ty w
hich i
n
havi
ng knowl
edge ther
eof
, does
not ort
fhwi
th l
e wi
th f
airness
sh
oul
d bel
on
gto th
e corp
orat
ion.
the
corp
orate secret
aryhi
s w
rit
tenob
jecti
on t
heret
o;
Last parag
raph of se
ct
i
on 31 and t
he pr
ovi
si
on of
3. He a
greesoth
old hi
msel
f personal
l
y a
nd sol
ida
ri
ly i
l
abl
e sect
i
on 34 maker
efer
ence
to r
ecov
eryof f
orbi
dd
en
wi
tht
hecor
por
ati
on; prots

4. He s
i made,
by aspeci
cprov
i
sion ofl
aw,t
o p
ersonal
l
y Di
sti
nct
i
on bet
weensect
i
on 31 an
d 34 r
elat
i
ve to the
an
swer or
f s
hicorpo
rate
acti
on
. rat
ic
ati
on bythe stockh
ol
ders

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 18

- The second par

agr
aph ofsect
ion 31 whi
ch makes a - YES.I
fal
lthe4condi
ti
onsar
epr
esentt
heywi
llbeval
id
di
rec
t
or l
iab
le t
o accou
nt or
f pro
ts i
f h
e att
empts to per se
acqui
r
e or acqui
r
es any i
ntee
rst adve
rse t
o t
he
corporat
i
on i
n r
espect
o an
t
y mat
t
er eposed
r in hi
m i
n 1. Th
at he
t pr
esence of
uch
sdi
r
ect
or orr
ust
tee ni t
he
con
dence as to
hi
chwequ
i
ty m
iposesdi
a
sabi
l
it
y u
pon boar
d me
eti
ngi
n whi
cht
hecont
ractwasappr
oved was
hi
m t
o dealn i
his ow
n behal
f s
i not su
bj
ect o
t notnecess
aryotcon
st
i
tut
e a qu
orum
for such
meet
i
ng;
rat
ica
t
ion by t
he stockh
ol
ders.
Wher
eas,
n sect
i i
on 34
i
fa d
irect
or cqu
a i
resor
fimsel
h fa b
usi
nesspp
oort
unit
y 2. Thathe
t vo
t
e of suc
h di
r
ect
or orr
ust
tee as not
w
whi
chshoul
dbel
ongt
othecor
por
ati
on,hei
sbound t
o necessa
ry or
f ht
e ap
proval
ofthe con
tract;
accou
nt or
f su
ch pro
ts u
nless i
sh act
s i
rat
i
edbyt
he
st
ock
hol
ders n
ow
i
ng o
re epresen
r t
ing a
tleast 2/3
oft
he 3. Thathe
t co
ntr
act s
i f
air an
d r
eas
onabl
e un
der he
t
ou
tst
andingpi
ca
talst
ock
. ci
r
cumst
ances;
an
d

- I
f re
pose
d in hi
m i
n co
ndence, subj
not
ec
t t
o 4. Thatn icas
e of an oce
r
, h
te co
ntr
act has bee
n
rati
ca
ti
on previ
ou
sly a
uthori
zedyb theoa
rd
b of
di
rect
ors.

- I
f t
he acqui
si
t
ion i
s mer
ey
l t
hat of a bu
siness Whendot
heybecomev
oidabl
e?
opport
uni
ty whi
ch hasnot been
repose
d i
n hi
m i
n
cond
ence,
t
he sam
e may e
b su
bj
ect
to r
ati
cat
i
on by - When anyoft
het
wor
equi
sit
esar
eabsenti
tisv
oidabl
e,
t
he st
ock
hol
ders. butsubj
ectt
orat
icat
ion by 2/3 oft
he out
standi
ng
capi
t
alst
ock or
/32
oft
hemem
ber
Di
rector x co.
Requ
i
sit
esf
orrat
ic
ati
on (
subj
ect to cati
rati
on by t
he
A-
REALTY st
ock
hol
dersol
h
ding or representi
ng at east
l 32/
of ht
e
ou
tst
andi
ng cap
it
alst
ock ro
2/3 of
the m
embers.
)
B
- i
t mustbeat a eet
ming cal
l
edfor ht
e pu
rpose
C Z owns pr
oper
ty and i
s goi
ng
abroad
even
r ot R
eturn,
he wan
ts - f
ull di
scl
osu
re f
o h
te ad
verse
i
nterest h
of
e dir
tect
or
t
o sel
lf
or 25
M the ai
fr m
arketue
val co
nce
r
ned ust
m be m
ade
i
s 3
0M
- t
he cont
rac
t is f
air and r
eas
onabl
e un
der t
he
D ci
rcu
mst
ances

E Prob
lem i
f sel
f
-deal
i
ng di
rec
t
or i
nvol
vedow
ns al
l or
su
bstan
ti
all
y al
l oftheha
sres of
st
ockoftheorp
cora
ti
on
E goes
o t
Z an
d o
ers o
t pay
the proper
ty o
fr 26
M andl
aterhe t
her
ebymak
ing t
i easi
ly p
ossi
bl
e to ave
h the
con
tract
sel
ls t
i or
f 30
M mak
i
ng 4M prot
, on
e ofhe
t st
ockh
ol
ders
earned
l ratied
an
d com
pa
lns
i t
hat he
shou
ld sub
mit he
t prot
s.E sai
d tha
t he
wi
llmo
vef
orr
ati
cat
ionofhi
sac
tuat
ion.Cani
tber
ati
ed? - l
ast
sent
ence
ofsect
i
on 32 shou
ld be m
ade o
t a
ppl
y b
y
det
er
mini
ng t
he r
easonabl
enessan
d f
airness
of he
t
- I
t canbe rat
i
edhe mer
ey
l a
cqu
i
reda b
usi
ness n
ow
i
ng con
t
ract
t
o th
e co
rpo
rat
i
on

Section 32 .ea
D li
ngs of ird
ect
ors,t
rustees
or
- I
t wou
ld bedi
erent
fiti
was en
trusted
n hi
s
i con
den
ce ocer
s wi t
h t he corpor
ati
on.- A contract ofhet
corp
orati
on with on e or ore
m of
it
s di
rect
ors or
ru
stees
t
Anot
herscenar
io: or ocers s i
voi
dable,at hte op
ti
on ofsuchcorporati
on ,
unl
essl lathe f
oll
owing co
nditi
ons are resen
p t :
Had Anot t
at
ended
the m
eet
i
heng
ou
wld n
othave know
n of
the
sal
e tii
s h
tena matt
er epo
r sedn i
him i
n con
d
ence 1. That ht
e pre
sence fosuch di
rceor
t orusttr
ee nit
he
boar
d meet
ingi
n whi
chthecont
ractwasappr
oved was
A cor
por
ati
on cannot r
eaqui
rei
ts shar
eifi
t has no notnecess
aryotcon st
i
tut
e a quorum f
or such meet
ing;
rest
ri
ct
edunret
ai
nedearn
i
ngs
2. Th
at ht
e vote o
f su
ch di
rect
or orust
tr
ee a
ws not
St
rong vs.
Rap
ide necessa
ry or
f ht
e ap
proval
ofthe con
t
ract;

- Whatdut
ydi
dhevi
olat
e? 3. Th
at ht
e con
tract
i
s a
fri an
d r
eason
ab
le under the
ci
r
cumst
ances;
an
d
- He vi
ol
ated
hi
s d
uty of
l
oya
l
ty
4. Tha
t n
i case of oan
cer
, he
t cont
r
act has
been
- The l
aw woul
d be i
mpot
ent i
fthe sal
e wer
e not previ
ou
sly a
uthori
zedyb theoa
rd
b of
di
rect
ors.
i
nva
l
idated

Whereanyoft her sttwoconditionsse tfor

th
Sel
f
-dea
l
ing d
i
rect
or n
ad i
nterl
ock
ing d
i
rect
or in the preceding pa ragr
aphi s a bsen
t, n it he case of a
contractwith a d i
recor
t orrust
tee, suchcon t
ract may e b
Whati
sasel
f-deal
ingdi
rect
or? rati
edby t he vote h of
e stockh
t ol ders represen t
ing at
least wo-t
thi
rds2/ (
3) of het ou tst
anding ca pital st
ockor
- ofat east
l wo-t
thirds2/ (3) of the mem bers n ai meeti
ng
Di
rect
or of a corp
orati
on de
ali
ng orran
tsacti
ng b
usi
ness call
ed for the p urpose: Provi
ded, That ul fl disclosure of
wi
thhiscor
porat
ion
the ad
verse nterest
i the
ofdi rect
orsroru tstees nvol
ved
i
is madeat such meeti
ng: Pro vi
ded, how eve,r That the
Ar
ethecont
ract
sand deal
ingofa sel
f0deal
ingdi
rect
or
contrac
t i s fai
r and r easonabl
e undert he
val
id? circumst
ances. (n)

Gen
eral
ru
le:voi
dabl
e
Pri
me w
hit
e cem
ent .
vsI
AC

Maytheon
c
tracts aof
s
elf
-dea
l
ing d
i
rect
or e
b va
l
id per
- a d
irect
or of a orati
corp
onowes a
posi
ti
oni
n t
rust
se.
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 19

- i
n case of ct
coni
bet
weenhi
msel
f andt
hat of
het Avai
labl
esui
ts
corporat
i
on, h
e can
not sacri
cet
he i
nter
est of the
corporat
i
onto h
is ow
n ad
van
t
age i
ndi
vdu
i al or person
al

- as a i
rd
ect
or he ou
sh
l
d h
ave act
ed nia man
neras ot
n to - Wr
ongdoneagai
nsthi
sper
sonasas
toc
khol
der
undu
ly p
rej
udi
ce the
corporati
on
Cl
ass i
su
t
- he can
notbeal
l
owedt
o en
ri
chhi
msel
f
- Fi
l
ed by a st
ockhol
derin r
epr
ese
ntat
i
on of ot
her
May cor
por
at
e di
r
ect
ors pu
rchase
the cor
por
at
e st
ock
hol
ders
property?
- Awr
ongorr
edr
essdone,ader
ivat
ivesui
tinnat
ure

Mead
vs. Mccul
l
ogh I
ntra-corporate
rem
edi
es
- i
nterl
ock
ing d
irect
or-a di
rect
or of eon
co
rpo
rati
on who
deal
s an
d t
ran
sact
s bu
siness i
tw
h an
other corporat
ion - Dem
and o
t h
te OD
B to n
ist
i
tut
e such
act
i
on
whoi
shi
msel
fadi
rect
or
- Neg
aetd by
hetO
BD
A- di
rect
orofX companyal
soadi
rect
orofYcor
por
ati
on
- The one who i
nst
itut
ed mus
tbe a s
tockhol
deratt
he
B- dat
e whe
n t
he ac
t w
as do
ne, mus
t hav
e be
en a
st
ock
hol
der by t
tha
t
ime
C-
Dem
and wi
ll not be
equ
r
ire
d i
fthe maj
ori
t
y ofhe
t B
OD
D- are the
ne
sogu
i
lt
y ofhe
twrong
cha
rged

E- The cor
por
ati
on mus
t be made a par
tyi
nthe case
what
eversi
dewi
llnotmat
terbecauseunderPhi
li
ppi
ne
Bot
h com
pani
es en
ter nt
i
o a contr
act and
A si
t
s,i
s the l
aw mi
sjoi
nders in
ota grou
nd f
or sm
di
issal
con
tr
ac
t va
l
id?
Non
-j
oinders ia grou
nd o
fr sm
di
issal
- Yesont
hegr
oundoff
raudori
fiti
sunf
air
Anybenetshoul
dinur
etot
hecor
por
ati
on
- May e
b su
bj
ecto tthe
provi
si
on ofsect
i
on 32
St
ockhol
der bri
ngi
ng t
he act
ion i
s ent
i
tl
ed t
o
- Sect
i
on 32 cont
ract ay
m ecom
b e voi
dab
le,hen
ce ti m
ay r
eimbu
rsem
ent such
as t
a
torney
s e
fe N
OLYI
F t
he case
al
soberat
ie
d i
s SU
CCESS
FUL t
o av
odi har
ass
ment sui
t t
o t
hei
r
mana
gement
X Co.
YCo. Pa
scu
alvs.
Oroz
co

Aowe20% - By vi
rt
ue of he
t f
actha
t
t h
e i
s a st
ockhol
der
, may
Aowe20% mai
nt
ain a d
eri
vati
ve su
it

I
s t
i gen
erall
y va
l
id or vo
i
dabl
e?VALI
D - Depe
ndon how
, when an
d what
reas
on

25% - Seeki
ng or
f he
t year
s 18
98 al
ltheway 90
17
25%VALI
D
- Onl
y becam
e a st
ockhol
dern i
190
3

15%
25%VO
IDAB
LE SU
BJE
CT TOsect
ion 32 - He can sue
l
y on
n
i 1903
for
war
d b
ecau
se heust
m be a
st
ock
hol
der
Mor
e h
tan 20sub
st
ant
ial
- Ther
ightofact
ion i
sper
sonali
n nat
ure.Hebecamea
BOD mi
smanag
es or
cpor
at
e o
cer
s.Who may l
e a st
ock
hol
der onl
y n
i 19
02
su
it?
Deri
va
tve
i su
i
t
- General
rul
e:BOD whi
chcani
nst
i
tut
e a case
ecau
b
se ti
has l
a
lthe p
owers.
To l
a
low st
ock
hol
ders to
e w
l
oul
d - By a st
ockhol
derota
ddr
ess a
wrongdon
e agai
nsthe
t
vi
olat
ethedoct
rineofcor
por
ateent
ityandmayr
esul
tto corp
orati
on an
d t
he st
ockhol
der n
idir
ectl
y
mul
ti
pl
ici
ty fosu
its
- Essen
ti
alre
qui
sit
e must have
een
ba stockh
ol
derrom
f
- Stockhol
derscan
not ther
ef
oregeneral
l
y l
e a case t
he i
t
me h
te act
com
paln
ied f
otookpl
ace
EXC
EPT of
co
urs
e n
ia D
ERI
VATI
VE SU
IT
- Can
notnst
ii
tut
e a
n act
ion f
rom t
he years
e w
h
as st
i
ll
Deri
vati
ve su
i
t nota st
ockhol
der

- An act
ion based on i
njur
ytot
hecor
por
ati
on-
toenf
orce Ever
et
t s
v.Asi
a B
anki
ng
a co
rp
ora
t
e ri
gh
t-wherei
n theorp
cora
ti
on i
tsel
fi
s oi
jned
asa necessary
art
y,an
p d recov
erys in
ifavor of
d f
an
or - Stockhol
ders n
can
ot or
di
nari
ly com
mence
sui
t n
i equ
i
ty
t
he corporati
on. an
d such
is n
ithe ha
nds of
its B
OD how
ev
er here
t ear
exc
ept
i
onswhent
he BOD wi
ll not sue
si
ncet
heyar
e
- Rem
edygr
ant
ed by l
aw t
o st
ockh
ol
ders
o t
i
nst
i
tut
e a t
hem
sel
vesri
n
pci
pal
s to the
raud.
f
case
o t
rem
edya w
rongon
e
d di
rec
tl
y o
t the corpo
rat
ion
an
d i
ndi
rect
l
y to the
st
ock
hol
ders,
i
f the oa
b
rd ref
uses Repu
bl
ic vs
. Cuad
erno
t
o d
o so.t
herw
O i
se fi
not hey
t ou
wld bel
eft w
it
hou
t any
rec
ourse - Thef
act
sconst
itut
esuci
entcauseofact
ion
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 20

- I
t i
s not t
he corpor
at
e int
erestotshi
el
d on
e f
rom Thenumberofhi
shar
esi
simmat
eri
alsi
nce hei
snot
cri
minalprosec
ut
ion whi
ch si person
ali
nterest sui
ng i
n hi
s ow
n behal
f orf
or t
he pr
oec
tt
ion or
vi
ndi
cat
ion ofhi
sown r
ight
,ort
her
edr
essofa wr
ong
- Perez
s n
i
ot su
ing i
n hi
s b
ehal
f
, bu
t n
i beh
al
f of
the don
e aga
insthi
m, i
ndi
vidu
all
y,bu
tin beh
alf an
d or
f ht
e
corp
orati
on benetoft
hecor
por
ati
on.

Wes
ter
nins
tit
utevs.Sal
as 2. He h
as ri
ted o
t exha
usti
ntr
a-
cor
porat
e e
rmedi
es,he as
h
madea dem
andon t
he boar
d of di
r
ect
ors f
or he
t
- Assumi
ngi
twasl
ed i
nthepr
operf
orum woul
dther
e ap
propri
ate i
rel
ef bu
t h
te l
att
er ad
h fai
l
ed or ref
usedt
o
argu
ment h
tat tis
i a deri
vati
vesu
it prosper?
NO. t
isi heedhi
s p
lea. em
Dan
d, how
eve
r
, s
i n
ot equ
ri
red i
fthe
peop
l
e of ht
e P
hil
ippi
nesvs.ndi
vidu
al rect
dior,
it m
ust com
pan
y i
s u
nder the
compe
let con
trol
of ht
e d
ir
ect
ors
bes
tat
edi
nthecompl
aintt
hati
tisbei
ngi
nst
itut
edasa whoar
ethev
eryonest
obesued (
orwher
eitbecome
s

deri
vati
ve su
it an
d f
or n
ad i
n be
hal
f of he
t corp
orati
on obv
ious hat
t ade
mandupon t
hem woul
d hav
e bee
n
f
uti
le an
d usel
ess)si
nce t
he l
aw doesnot equ
ri
re a
- Granti
ng argu
en
do, h
tat thi
s i
s a deri
vati
ve su
it
, h
te l
iti
ga
nt t
o p
erf
ormusel
esscts;
a
sam
e i
s st
i
ll ou
t
righ
tl
y di
smi
ssi
bl
e f
or havi
ng been
wr
ongf
ull
y l
ed i
n t
he r
egul
ar cour
t dev
oid of any 3. Th
e st
ockhol
der bri
ngi
ng t
he sui
t must l
al
ege i
n hi
s
j
uri
sdi
cti
on t
oent
ert
aint
hecompl
aint
.Thecaseshoul
d com
palnt
i tha
t h
e i
s sui
ng on a deri
vat
ive cau
se of
have
been
led wi
th t
he SE
C whi
ch exe
r
cises ori
gi
nal act
ion on beha
lf of he
t cor
porat
i
on an
d al
l ot
her
an
d excl
usi
ve j
uri
sd
ict
i
on over
deri
vati
ve su
it
s, ht
ey st
ock
hol
ders mi
si
l
arl
y si
t
uated, otherw
i
se,het c
asei
s
bei
ngi
ntr
a-cor
por
atedi
sput
es,perSect
ion 5(
b)ofP.
D. di
smi
ssi
bl
e.Th
is s
i b
ecau
se theuse
ca of
acti
on actu
al
l
y
902-A devol
ves on
t
he corporat
i
on an
d not ot a part
i
cul
ar
st
ock
hol
der
.
Sa
n Mi
guel
vs
. Kha
n
4. Th
e cor
porat
i
onshou
ld b
e m
ade aart
p
y, ei
t
her as y-
part
- Wasademandmade?NO pl
an
iti
or ef
dend
ant
, n
i order
o make
t the cou
rt

s
j
udgme
nt bi
ndi
ng upon i
t, and t
hus, bar f
utur
e
- I
t s
i n
ot necessary
ecau
se be
h o
bject
ed i
n t
he b
oard l
it
igat
ion of he
t sam
e i
ssues. nO whatsi
de t
he
meet
ing, bu
t st
i
lli
t w
asad
opt
edt
heref
oret iw
asusel
ess cor
por
at
i
on appear
s lose
s i
mport
ancewhen i
t i
s
con
si
dered t
tha
t
i ay
l wi
thi
n t
he p
ower of
hetco
urtt
o

Chases.
vBuencam
i
no di
r
ect the maki
ng ofamendm
ent of
the pl
eadi
ng, by
ad
ding or roppi
d ng part
ies,
as may e
b requi
red i
n t
he
- Ar
gume
ntt
hatheshoul
d bei
n es
toppel
ssi
ncehel
ed i
nterest u
of
st
i
ce.
j i
sj
Moi
nder f
o pa
rt
i
esi
s not agrou
nd
i
n t
he U
.S. t
o d
ism
iss ct
ai
on; an
d,

- Assumi
ng t
he case pr
osper
ed i
nthe U.
S.woul
d not 5. Any enet
b or dam
age
s r
ecov
eerd shal
l per
t
ain t
o t
he
est
oppel
s ap
pl
y as
aga
i
nsthi
m? N
O f
or est
oppel
s o
t st
ep cor
porat
i
on.Th
is i
s so becau
se i
n al
l n
ist
an
ces
,
i
n i
t mustbea ca
se by the
corporati
on deri
vati
ve su
i
t s
i i
nst
i
tut
ed f
or an
d i
n beh
al
f of the
corp
orati
on an
d notor
f the
prot
ecti
on or n
vi
di
cati
on of a
Reyes vs.
tan ri
gh
t or gh
ri
ts of
a p
arti
cu
lar stock
hol
der,
oth
erw
i
se,
the
aggri
eve
d st
ockh
ol
dershou
ld i
nst
i
tut
e, i
nst
ead,
an
- Corp
orate
rect
di
or re
a gu
i
lt
y o
f breach
of ru
t
st i
ndivi
du
al or person
al suit
to vind
i
catei
shp
erson
al or
i
ndivi
du
al gh
ri
t. O
r, or
f that matt
er
, represen
tat
ive or
- As
toc
khol
derma
yins
tit
uteanact
iont
oreme
dyawr
ong cl
asssu
it or
f l
a
l ot
her ockh
st ol
ders
whoseri
gh
ts are
done si
mil
arl
y si
t
uated,
nj
ured
i or vi
ol
ated,
erson
pal
l
y or
i
ndi
vidual
ly.
- Frau
d n
i the du
con
ctofcorporate
aai
rs
Executi
ve com
mi
ttee
Gamboa vs.
Vi
ctori
ano
- Notal
l
owed nd
u ert
he L
OD l
aw
- I
s d
eri
va
tve
i su
it ap
prop
ri
aten i
this case
How may exec
ut
ive com
mi
ttee eat
cr
ed an
d con
st
i
tut
ed?
- They ar
e not vi
ndi
cat
ory damage done t
o t
he
corporat
i
on, bu
t a
rhter ht
ey h
wer
e vi
ndi
cat
i
ng da
mage - Sect
ion 35
aga
i
nst m
hi

Section 35 .
Executi
ve com mi t
tee. - The - by
- Vi
olat
ion oft
hei
rri
ght
sasi
ndi
vidual
s,henceder
ivat
ive
laws of a co r
por ati
on may cr eate an ex ecuti
ve
su
iti
s n
ott
he rem
edy com mit
tee, composed not of essl ha t
n t hreeem mbers of
the board,to b e ap poi
nted y b hte boa r
d.Sai d com mittee
Evan
gel
i
sta vs.
San
tos may ct a, by maj orit
y vot e of l ali
ts mem bers, on such
speci
cmat ter
s w ithin the com pet
ence oft he boa rd, as
- Deri
vati
ve su
it s
i n
ot prop
er may e b del
egated t o ti nit he by-laws or noa maj orit
y
vot
eoft heboard,exceptwi thr espectto:(1)appr ovalof
any act i
on f or whi ch sha reholders' approval s ali
so
- Cl
aim i
s notor
f the
ben
et of
hetcor
porat
i
on, ub
t
required; 2) (
the ling o f vacancies in the b oard;3)(t he
rat
her i
h n
s idi
vdu
i al ben
et amend ment or epealr ofby- laws orhe t ad opti
on ofnew
by-l
aws;(4)theame ndme ntorr epealofanyr esol
ution
Fr
om t
he cases
bove
a ted,
ci hese
t are
he t
requi
rem
ents of het boar d whi ch by i ts expr ess t er ms i s not so
an
d therocedu
p res
thatmustbe ol
f
low
ed niorder
hat
ta amen
dabl
e o
r re
pea
l
abl
e;and (
5) a i
st
dri
but
ion ofcash
deri
vati
ve su
it m
ay rosper
p di
vden
i dsto the
shareho
l
ders.

1. Th
att
he art
p y bri
ngi
ngthe su
it shou
ld b
e a st
ockhol
der - Sai
d com
mi
ttee a
my act
and b
ind the porat
cori
on y
b h
te
as f
othe ti
me thect
aor ran
t sacti
on com
paln
iedoft
ook maj
ori
t
y vot
e of l
ali
ts mem
bers excep
t w
it
h respect
o t
pl
ace,
or hose
w are
shs h
ave ol
ev
ved pon
u hi
m si
nceby t
hose att
mers provi
dedf
or nisec.
35 t
hese are:
op
erat
i
on of aw
l. Th
i
s ru
l
e, how
ever
, does
not ap
pl
y i
f
su
chact or
ran
sacti
t oncon
t
inues an
d is n
ij
uri
ous o
t the 1. Approv
alofanyact
ion f
or hi
wchshare
hol
der
sapp
r
oval
st
ock
hol
der or
aect
him speci
cal
ly n
i som
e ot
her ay.
w i
s a
l
sorequ
i
red

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 21

2. Th
e l
ing of
vacanci
esi
n h
te board; 8. To
ente
r n
ito mer
ger or con
sol
i
dat
ion wi
th ot
her
corporati
ons as rovi
pdedin t
his C
ode;
3. Amendm
ent
orr
epeal
ofby-
l
aws or
the adopt
i
on of
new
by-
laws; 9. To akem reason
able donat
ions,incl
udi
ng thoseor f
thepubli
c welf
areorf orhosp i
tal
, chari
tabl
e, cul
tural
,
4. Amendm
ent ro r
epe
alofanyr
esout
li
on oft
he boar
d sci
en
ti
c, vici
c, ormi si
l
ar uprposes: Provi
ded
, That o n
whi
ch by i
ts expr
ess t
erms i
s not so ame
nabl
e or corp
orati
on, domest
i
c or orei
f gn
, shall gi
ve on
dation
s in
ai
d ofan y pol
i
ti
cal party ordi da
can
t
e oror fuprposesfo
repea
l
abl
e;an
d,
parti
san poli
ti
ca
l acti
vit
y;

5. Di
stri
but
ion f
ocashi
viden
d ds ot h
te sharehol
ders.
10. Toest
abl
ish pensi
on, re
ti
remen
t, and
other an
pl
s or
f
May t
he boar
d al
onecr
eat
e an ex
ecut
ive com
mit
tee t
he benet of it
s di r
ector
s, rust
t ees
, ocer
s and
employees
; an
d
wi
thoutanyaut
hor
itypr
ovi
dedf
ort
heby-
laws?

- NO boa
r
d o
f di
r
ect
ors um
stsi
t an
d act
as a ody
b t
o h
ave 11. To exer
ci
se su
chother pow
er
s asmay e
b essent
i
alor
necessary
o carry
t tit
ou
s purpose orrposes
pu s st
ated
a
a va
l
id tr
ansa
cti
on
i
n the arti
cl
es f
oinco
rpo
rati
on
.(13a)

May a non-
member of
t
he boar
d ofdi
r
ect
ors be a
mem
ber of
the x
eecuti
ve om
cmi
ttee? Section 37 . er ot ex
Pow tendor short encorporate erm
t .
-
A pri
vatecorporat
ion mayextend orshorten i
tsterm ass tated i
n
the articl
es of ncorporati
i on when ap proved by a maj ori
ty vot
e of
- NO, a l
l oft hem must beem mbe
rs of he t board of
the board ofdirceors
t or
rustees
t d rat
an
iedat a eet mi ng b
y the
directors
stockhol
dersr epres
enti
ng at l east two-t
hirds ( 2/3) of t he
outst
an di
ng cap i
tal ock
st or y b at east
l wo-t
thirds( 2/3) of het
- BOD cannot act by pr
oxy tiw oul
d be abdicati
on ofmem bers n icasef onon -
stockcorporat i
ons.Wri tten not i
ce of het
pow esr proposed acti
on an d ofthe itme an d place of he t meet
ing shall be
addressedt o each stockh
older or emmber at s hip
l
ace of esi
den
r ce
Pu rpose auses
cl eces
n saryecau
b se ti o
cnf
ers and also as sh own on t he books ofthe cor porati
on an d deposi ted to the
li
mi t
s th e a
ctual au
thori
ty o
fthe corpo
rati
on addressee n it he post ce o i wt
h post agepre paid, or ved ser
personal
ly: Provi
ded, That nicase of extensi
on of corporat e ter
m,
any d i
ssenti
ng stockhol
der aym exerci se i h
s appraisal ri
ght under
CORPOR
ATE OWP ERS AND AUTHO RI
TY the condit
ions provi
dedi n thi
s co de.( n)

Corpo
rat
e au
t
hori
ty may e
b cl
assi
edi
nto three
asses
cl
Section 38 . er otncreas
Pow i e orecr dease ca pit
al stock;
nam
ely:
i
ncu r
, r cea
te or ncriease bon ded i ndebtedness.
- N o corpor ati
on
shall n icr
ease or decrease it
s cap ital ock
st or i ncu r, cr eat
e or
1. Th ose expr
essl
y grant
ed or t hori
auzed by aw
l incl
usi
ve incr ease yan bon
dedi ndeb t
edn ess l un
ess app r
oved bymaj aori
t
y
of hte corp
orate arter
ch rt
or
icl
es
aofncorp
i orati
on; voteoft heboardofdi rectorsand,atas tockholder'sme et
ingdul y
call
ed f or hte purpo se, t
wo-thirds2/3 () oft he ou t
stan ding pi ca
tal
2. Th osempliiedl
y grant
ed as are ntiesse y st
alor easonabl
r ocksh al
lf avoreth n
i crease r di
mi
o nut i
on of he t ca pit
al t ock
s , or
necessary o thet carryi
ng ou
t ofthe express pow t
ers; he n icurr
ing,cr eati
ng orncre iasing o f an y b on
dedi ndeb t
edness.
Wr i
ttennoticeoftheproposedi ncr easeordiminut i
onoft hec apit
al
stockor of hetincu rr i
ng, reat
ci ng, or ncre
iasi
ng of any bonded
3. Th oseha t
t arenciiden
talto t
i
s exist
ence.
i
nd ebtednessan d of he t t i
me an d pl aceof he t st ockholder
's
mee t
ing at h wc
ih t he proposed increaseor di minu ti
on of he t
Sect
ion 36o t45- POWER GRANTE D BY LAW
capital stockor t he i ncurring or i ncreasi
ng of any bonded
i
nd ebtednesssit o be consi der ed, u m
st be addressed t o each
Section 36. Corpor
at
e pow er
s and capacity.- Eve
ry stockholder at s hi
pl
ace of resdience as ow shn on t he bo oks of the
corporation and dep osi
tedt o thedd ar
essee n t h
ie p ost oce i wth
cor
por
ati
on i ncorpor
ated under thi
s Codehast he pow
er and
postage repa
ip
d, or served person al
l
y.
cap
aci
ty:

Acer
ticat
ein dupl
icat
e mus
tbe si
gned by a maj
ori
ty oft
he
1.To suedan
b
e sued
i
n i
ts cor
porat
e na
me;
di
rect
ors of
he tcorporat
ion and cou
nt
ersgn
ied by t he ch
ai
rman
and t
he secretary
f thest
o
ockhol
ders'
meeti
ng, tse
ti
ng orth:
f
2. fOsuccessi
on by ts
i corporate me or
fnaht
e p
eri
od of
t
ime st
ated i
n the arti
cles of ni
corpor
at
i
on and the
(1) Th
at the r
equi
rementsf ohtis sect
ion have een
b
certi
ca
te ofi
nco
rpora
ti
on;
compi
l
edwith;

3. To adop
t an
d use a corporat
e seal
;
(
2) The amount ofhe
tincre
ase or
di
minu
tion of he
t
capi
tal
stock
;
4. Tomen
ad i t
s art
icl
es of ncorporati
i on i
n accorda
nce
wi
tht
hepr
ovi
sionsoft
hisCode;
(
3) fI ani ncr
ease of hte capi
tal ock,
st hetamou nt of
capi
t
al t ock
s or unmberof share s of no-par ockst
5. To ado
pt by-l
aws, not trar
con
y t
o l
aw, mor
as,
l or ther
eof cta
uall
y su bscri
bed
, hte names, ati non
ali
ti
es
pu
bli
c pol
icy
, andt o amendor re
pealhe
tsame in and resi
dences ofthe persons bscri
su
bing,the amou nt
accor
dance iw
th t
his Code; ofcapi
talstock or number ofno-par ock
st bscri
su bedby
each,and theamou nt pai
d by each on his subscr
ipti
on
i
n cash or propert
y,or hte a mount of capi
t
al tock
s or
6. I
n case f
ost
ockcorp
ora
ti
on
s,t o ssu
i e or sell
st
ocks to
number of hares
s n
of
o-par ockstal
lot
tedt o eachstock-
subscri
bers dan
to sel
l st
ockst
o subscri
bersndat
o sell
hol
derfiu sch incr
ease s io
fr the urpose
p of
ak i
ngm
treasu
ry ock
sts n
i acco
rda
nce iw
th therovi
si
pons ofthi
s
eecti
ve ock
st divi
dend theref
or uathorized;
Code; and
to ad
mit m
emberso t the corporat
ionifit be a
non
-st
ock
corporati
on;
(
4) An
y bondedi ndeb
tedn
essotb
e nicu
rred,reat
ced or
i
ncreased
;
7. Tourcha
p se,ecei rve,ak e
t or grant
, hold, convey, l
, sel
l
ease, pl
edge, ortgage
m nda ot
herwise eal
d i
th
w such
real d anpersonal propert
y, ncl
iudi ng securit
ies and (
5) The act
ual ndebtedness
i of he
t corpor
at
i
on on t
he
bonds ofothercorporati
ons,asthe t
ransact
ion ofthe day ofhetmeet
ing;
l
aw f
ul bu si
ness of the corporat
i
on may reasonab l
y and
necessarl
iy requ
ire, subjecto tth
e il
mi tati
on s prescri
bed
(
6)The amount ofstock represented
t
he m eet
iat
ng;and
bylaw andtheCons t
ituti
on;

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 22

(
7) Th
e votethori
au
zing thei
ncreaseor imi
d nuti
on ofri
gh
ts ofhird
t arti
p es n
uder an
y co
nt
ract el
ati
rng th
eret
o, i
tho
w ut
t
he capi
t
al st
ock,or t he incu
rr
ing, cr
eati
ng or furt
her act
i
onor approval
by theock
st
hol
ders orembers.
m
i
ncreasi
ng of
any bon
dedindeb
t
edness.

Nothing in thi
s section i
s i
ntendedt o rest
rict hte power of yan
Any i
ncrease ordecreaseinthe capi
talst
oc k orthe i
ncurr
ing, corporat
i
on, w i
thout the au
thori
zat
i
on by t he stockhol
ders or
creat
i
ng or ni cr
easi
ng of any bon dedi ndebtedn
esssha ll erqui
re mem bers, t
o sell
,lease, xch
an
ege,mort gage, edge
plor otherwise
pri
or approval ofthe Securi
t
ies and Exchan ge om
C missi
on. dispose of any ofits propert
y and asset
s fit he sam e si necessary
i
n t he usualan d regul
ar cou
rse of busi
ness of sai
d corporati
on or
i
f theroceed
p s of the sal
e or other i
sposi
ti
d
onofsu chprop ert
y and
One of the d upl
icate t i
cer
cates shal
l bekep t on l enit he o ce of
assets b
e ap prop
ri
ated orfht
e conduct ofi
ts rem ai
ning business.
the corpo
rati
onan d the otherl lsha
be l
edwi th the Securit
ies and
Exchange Com mi
ssion and attached to t he origi
nal arti
cles of
i
ncorporat
ion. From and af
ter ap proval by the Securit
ies nda I n non-st
ock corporat
i
ons where her
t
e are no embers
m i
thw vot
ing
Exchange omC missi
on nda the ssuan
i ce by he toCmmissi
on of its ri
gh t
s, het vote of east
at maj
la ori
t
y o fthe trustees n ocei iw
ll be
cert
icate of i l
ng, hte capital ock
st sh al
l stand increased or sucientau thori
zati
on for t he corporati
on t o enter into any
decreasedand th e n
icurri
ng,creati
ng orncreiasing of any bonded tran
sacti
on authori
zed bythis secti
on.
i
ndebt
edn ess utahori
zed, as he tcert
i
cate of i n
l
g may ecl
d are:
Provi
ded, Thatt he Securit
ies and Exchan ge om
C missi
on shal
l not
Section 41 .Pow
er ot acquri
e ow n shar - A st
es. ock
accep
t or
f l i
ng a ny cert
icate of ncrease
i of capitalst
ockunl ess
corporat
i
on shall have the power otpu rchase or acqui
re ti
s own
acc
ompan i
ed by t he sworn statement of hettreas
urer of het
shares orf alegi
timate corporate rpose or
puuprposes, ncl
udi
n
ig
corporati
on lawfull
y holdi
ng oce t a h te ti
me ofhe t
li
ng o fthe
but not li
mit
ed to t he f
oll
owing cases: Provi
ded, That t
he
cert
icate, hs
ow i
ng that at east
l wen t
ty-ve(25%) percen
t of such
corporat
i
on has unr est
ri
ct
ed r et
ai
nedearni ngs in its books to
i
ncr
eased capi
tal t ock
s ha s beensu bscri
bedan d that at east
l
coverthe shares o t b
e purc
hased or acqu i
red:
t
wenty-
ve25 (
%) percent ofthe am ount subscri
bedha s been pai
d
ei
ther ni act
ual cash t
o t he corpor
ati
on or that thereas been
h
t
ransf
err
ed to the corporati
on propert
y t he va
l
uati
on of hw
ich i
s 1. Toel
i
minateracti
f on
al sha
res siari
ng out ofst
ock divi
den
ds;
equal ot tw
ent
y-ve( 25
%) percenthe ofsu
bscri
t pti
on: Provi
ded
,
f
urther
, That on d
ecrease ofthe cap
i
talstockshal
l beapprovedby
2. To l ect
col or prom
com
ise n
ai ndebt
edness to he tcorporat
i
on,
t
he C ommissi
on i
fi t
s e ect sha
l
l prej
udice hetri
gh
ts ofcorporate
ari
si
ng o
ut of unp
aid su
bscri
pti
on, ni a del
i
nquency sal
e,and to
cred
itors.
purc
hase el
d
i
nquent sh
ares dsol
d
uri
ng said sa
le;and

Non-st
ockcorpor
ati
ons may ncu
i r orr eat
ce bond
edindebt
edn
ess,
3. To paydissent
i
ng or wi
thdraw
i
ng st
ockh
ol
dersenti
t
led t
o
or ncrease
i he tsam
e,wi t
h the ap proval
by a maj
ori
t
y vot
e ofhe
t
paym
entfor ht
ei
r sha
res de
un
r ht
e provi
sion
s ofthi
s Cod
e.(
a)
boar
doftr
ust
eesandofatl
eastt
wo-thi
rds(
2/3)oft
hemember
sin

a meet
ing d
uly ca
l
ledf
or ht
e p
urpose.
Sect ion 42 . er oti
Pow nvestporat core funds i n an other
Bond s i ssued by a cor poration shal l ber egi
stered wi th t he cor porati
on or bu si
nes s or or f an y othe r pu r - e.
pos u
Sbjecto tthe
Securiti
es and Exc han ge Com mi ssion, hi wch shal l have the provisions of this C ode,a p rivate corpo ration may nvesti i
ts ufnds
authority o t determ i
ne the ci su en cy of t
he erm
t s h tere of
.( 17a) i n an y ot her cor porationor bu si
ness or or fany pu rpose other han t
thepri mary rpose
pu orfhi wchi t w as org anized whenapp roved by
a maj ori
ty o ft he b oard of recdi tors or usttr
eesnd a ratiedbyt he
Sect ion 39 .
Pow er ot den y pr eem
- ptive r i
ght-. A ll stockh ol
dersr epres enting at l east two- thir
ds ( 2/ 3) of t he
stockholders of a stock corporati
on sh al
l en joy re-
p em ptive gh ri
t o tou t
stan di
ng cap ital ock,
st or
by at east l wott hirds( 2/3) of het
subscribe t o al l ssu
i es ordi spo sit
ion of sh ares of an y cl ass, n
memi bers n ti
he case of -s
tock
non corporati ons,at a ockh stolder'
s
proportion t o th ei
r esp
r ective sh areh oldings, l un
ess ch suri gh t si or e mm ber'
s m eeting du l
y cal led or f hte pu rpose. Writt
en not i
ce of
denied by t he a rti
cles of ncorporat
i i
on or an amend ment ther et
o:t he propose d i nvestment d an the t ime an d place of het meeti
ng
Provided, Th at su chpre- emptive ghri t sha l
l not ext end t o sh ares osha
tl l be dd aressed o each
t stockh older or emm
ber at s hi
pl
ace of
be issued i nc ompliance wi thl aws r equiri
ng s tock oerings or residence as ow sh
n ont he boo ksoft hecorpor ation an d d eposi
ted
minimum st ock ow ner shi
p by the ubli
pc;or ot sh ares o tb
e ssued
i t o the addresseen i the p ost o ce i w
th post age r epai
p d, or ved ser
i
n good faith wi t
h t he a pproval of ht e st ockholders represen t
ing person all
y: Provi ded , Th at an y di ssenting st ockh oldersh al
l have
two-thirds (2/3) of hetou tstanding cap i
tal ock,
st n i excha ngef orap praisal right as rovi pdedi n t his C ode:Provi ded , how ever
, Th at
property needed f
or corpor ate pu rposes or n i paym ent of w aheret hei nvestme ntbyt hecor poration isr easonablynec essary
previously co ntract
eddeb t
. to accom plish i ts pri marypu rpose as st at
ed i n t he art i
cles f o
incorporation, h te a pp roval t of
he st ockh olders or mem bers al sh
l
notbe ecessary.
n (171/ 2a )
Secti on 40 S.al
e or her ot i sp
dos it
ionofass e
-s.
t
Subj ect
to t he provi sions of exi st
ing l aw s on i l
legal com bi nations an d
mon opolies, a corporation may, by a maj ori
ty vote oft si board of Secti on 43 . er ot d
Pow eclarei vi
d
dend s.
- The board of
dir
ectorsor trustees, sell
, eas
l e, excha nge, ortgage,
m edgeplordi rectors of a stock rporation
co may ecl d are i vi
dden ds ou t of the
otherw i
se dispose of l alor b su
stanti
ally al l of i
ts prop erty an dunres tri
cted re t
ai ned earn i
ngs h wich sh all be pa yab le ni cash ,in
assets,i ncluding tis good will
, upo n su cht erms an d con dit
ions an d property, or nist ockt o a l
l st ockholders on the asi bs of t ou
st
anding
f
or such consi
deration, hi wch may e b money, st
ocks, bon ds orst ockhel d by t hem : Prov ided, Tha t any cash di vden
i ds du e on
othernst irum ents orfht e paym ent of mon ey orher ot property or delinqu ent tsock sh al
l rst beap pliedt o thenpa ui d ba l
an ce on the
consideration, asi t
s boa rd of r di
ectorsor t rusteesmay deem su bscri
ption pl us cost s an d expen ses, whi l
e st ockdi vdi
en ds shall
expedient, w hen au t hori
zed by t he vo te of he t st ockholders be wi thheldf rom t he del i
nquent s tockholder unt ilhi s unpai d
representing at eastl wo-t
thirds( 2/ 3) of hetou tstan ding cap italsu bscri
ption i s uflly p aid: Provide d, u f
rther , That o n stock divi
dend
stock, or nicase of no n-stockcorp orati
on , byt he vote of east
at
sho lt
al be i ssued wi t
hou t h te a pproval of t ock
s holders represen ti
ng
two-thirds ( 2/3) of the mem bers, i
n a st ockh ol
der'
s ormem ber'
s not essl an
tht wo-thirds2/3 () oftheut o
standing ca pitalst ockat a
meet i
ng d uly call
edf or hte p urpose. ritt
en
W not ice of hetp roposedregu l
ar oreci sp
almeet ing d uly ca lledf or the urpopse. (
16 a)
acti
on an d o ft he i t
me an d p lace of the m eeti
ng sh all be ddares sed
to each stockholder or emmber at s hipl
ace of resi
den ce as ow shn
Stockcorporati on s a re proh ibitedf romre taini
ng su rplus p rot
s ni
on t he bo oks of the corporati on an d d epositedt o h te ad dressee n i
excessof one hu nd red ( 100 %) per cent of rthei pai
d-in capital
the post ce o wi th post agepr epaid, or se revd per sonally:
stock, except: (1) h w
en j ustiedby de nite co rporatensi expa
on
Provided, That any di sse
nting st ockholdermay exe rcise hi s
projects or r p
ogram s ap prove d by t he boa rd of r di
ectors; or 2)(
appraisali ghrt under the condit
ions p rovi
dedi n this C od e.
whent hecor porationi spr ohibitedunderanyl oanagr eeme ntwi th

A sal
eorotherdi sposi
ti
on shallbedeeme dt ocoversubs
tanti
all
y any nanci
al i
nsti
tuti
on or cred i
tor,whether oca
l l or orei
f gn
,f rom
declari
ng di
vi
dends iwt
hou tits/hi
s consen
t, and such co
nsent has
al
l h te corporate ropert
ypan d assets if htereby the corporati
onnotyet been secu
red;or 3)( wheni t canbe earl
cly shown that such
would be rendered incapable of cont
inuing the busi
ness or ret
en t
ion i
s n ecessary nder u eci
spal rc
ci
umstances t ob
ai
ning ni
accompli
shi
ng h te pu rpose or fh
w i
chi t was nicorporated. t he corporat
i
on, such as hwent heres ineed f
or speci
al eserve
r or f
probable c
onti
ngenci
es. n)(
Aft
er such aut
horiz
ation or appr
oval by the st
ockhol
der
s or
mem bers,the board of rec
ditors or usttr
ees ay,
m nevert
hel
ess,
in Secti
on 44
. er otent
Pow er nt
i
o man
agem
ent cont
r
act
-.
i
ts discret
i
on, aban don su ch sale, ease,
l han
exc
ge, ort
mgage, No cor
por
at
i
on shal
l concl
ude a managementcont
ract it
w
h
pl
edge or otherdi
spo si
t
ion of propert
y an d asset
s, sub
j
ecto tt
heanothercor
por
at
ion un
les
s suchcont r
actshal
l h
ave been

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 23

approved by the oard

b of
rect
ors
di danby stockholders nowing at t
he pa
rt
i
cul
ar evi
rsi
on under ect
Si
on 11 ofRul
e 14was
l
east the majori
ty of the outst
an dingcapit
al ockst, or y b at east
l a expl
ai
nedby r
eti
red Su
pre
me Court st
Ju
i
ce Fl
oe
rnz
majority of t
he m em bers n ti
he case aof n
on -
stock rporati
co on , of Regal
ad
o,t
hus:
botht he managi ng and the managed corporat
ion,ata me et
ing
duly ca l
ledf or hte p urpose: ded Provi
, That 1)( h w
ere ast ockholder

xxxt
he then
sect
i
on 13 oft
his R
ule al
lowed
or st ockholders repr esenti
ng t he sam e interest of both t
he
man aging an d the m an aged porat
cor i
ons own or cont rolmor e htan serv
i
ce pon
u a def
endan
t cor
porat
i
on t
o
be
one-third (1/3 ) ofhet t otalou t
standi
ng cap it
al ockst en t
itl
ed t o madeon t
he pre
si
den
t
, man
ager
, sec
ret
ary
,
vote ofthemanagi ng corporati
on;or( 2)where a ma j
orit
y ofthe cash
ier
, agen
t oran
y of t
si di
rect
ors.
T
he
mem bers of he t board of r di
ect
ors of het man aging corporati
on af
or
esai
d ter
ms wer
e obvi
ou
sly ambi
guou
s
also constit
ute amaj ori
ty ofhe t members of he b t
oard ofdi rec
tors and susc
ept
ibl
e of br
oad and so
met
imes
oft he m anaged porat
cor ion,hent t he m anagementontrc act must
i
ll
ogi
cal n
iterp
ret
ati
on
s, esp
eci
all
y theword
be appr oved by the s t
ockholder
s of the manag ed corporat
ion

agen
t o
f h
te corporati
on. Th
e Fi
loi
l case,
owning at eastl wo-t
thirds( 2/3) of hett ot
al ou tst
anding cap i
tal
st
ockent
itl
ed to vot
e, or
by at l
east o-t
tw
hi
rds(2/3) f
o h
te i
nvol
vi
ng the li
ti
gat
i
on l aw
yer of t
he
member
s n
it he caseaofn
on-s
tock cor
porat
i
on. No man
agem
ent cor
por
at
ion who prec
ise
l
y appear
ed to
con
tract ll
sha
be en
t
ered into
or af
eri
p
odlongerhan
t ve years
or f cha
l
len
ge thel
idi
va
ty of ser
vi
ce of sum
mon
s
anyone rm
te. butwhosev
ery appear
ancef
ort
hatpur
pose
was sei
zed upon t
oval
idat
ethe def
ect
ive
Theprovisionsoft hene xtprecedingpar agraph shallapplytoany service,
s a
n i
i
ll
ustr
ati
on of he
t n
eedf
or th
i
s
contr
act whereby a corporat ion undert akes o tmanage or operat
e revi
sedsect
i
onwi
th l
imi
tedscop
e and speci
c
al
l or bstansu t i
ally all ofhe t bu sinessof an other corporati
on, t
ermi
nol
ogy.
Thus the
absu
rd r
esul
t n
i t
he
whether suc hc ontract
s ar ec al
led service contr
acts,operat
ing
Fi
l
oil cas
e nece
ss
it
ated t
he amendm
ent
agre
em ents or otherwise: Provided, how ever, Th at such servi
ce
perm
i
tti
ng ser
vi
ce onl
y on t
he i
n-hou
se
con
tracts orperati
o ng a greements w hich relateo tth e exp
lorat
i
on,
devel
opmen t
, exploitati
on orut i
li
zati
on of atural
n sou
rc
rees may cou
nsel
oft
he corporati
on who s
i n
i e
ect
an
be enter
ed i ntofor suc h periods as ma y be provi
ded by the em
ployee
of ht
e co
rporati
on, asi
st
di
ngu
ish
ed
perti
nentl aw s or regu l
ation
s.( n) f
romani
ndep
en
den
t practi
ti
oner
.

Sect
ion 45.Ul
tra vi
res act
s of corporat
i
ons. - oN o not
es: add
it
ion
al kn
owl
edge
cor
porat
i
on und er thi
s Code shal
l posse
ss or exerci
se any
corpor
at
e p ow
ers excepthose
t con
ferr
ed by t
his Codeor by i
ts - speci
al app
earan
ce en
ter or
f ht
at pa
rt
i
cul
ar ap
pearance
art
i
cles of ncorpor
i at
i
on and except suchas are eces
n sary
or youar
enott
hecounseli
nthecase
i
nci
dental t
o the exerci
seof he
t powers so
conferred.
n) (
- woul
d appl
y onl
yifi
t does not i
nvol
ve an i
ntr
a-
Sect
ion36 corporat
e con
trover
sy con
(t
rov
er
sy bet
weenan
d amon
g
t
he stockh
ol
ders)
Wher
eshoul
dthecor
por
ati
onbesued?
- uponan
y of
the st
at
utory o
cer
s or
ocer
s xed
n t
he
i
- pri
nci
pal oce si mpo
i rtan
t becau
se ti s
eab
tl
ish
es the by-
laws any secr
etar
y, any of t
he di
rect
ors; any
res
iden
ce of
hetcorpo
rat
i
on an
d deter
mini
ng servi
ce of man
ager
s n
i the l
aw
by-
s
sum
mons,
ve
nue of
act
i
on
Seal
- i
t can
be sued
in t
he ci
t
y or m
uni
cipal
it
y wher
e i
ts
pri
nci
pal oce siou
f nd - merel
y mi
nist
eri
al or
perm
i
ssi
ve

Pri
nci
pal oce si al
so mpo
i rt
antf
or venu
e ofmeet
ings Pow
ert
o am
end

Non
-st
ockcorpor
at
i
on may provi
de i
n i
ts by-
laws t
hat - secti
on 16
t
hevenu
e of
meet
ing b
e an
ywher
e n
ithePh
il
ipp
ines
- speci
al 37
,
38,
120
Upon hom
w se
rvi
ceofsum
mons be
made
?
Pow
er ot ad
opt by-
l
aws
- Sect
ion 11
. S
erv
i
ce upon dom
est
i
c pri
vat
e j
uri
di
cal
en
ti
ty- h
went
he d
efen
dant s
i acorporati
on, pa
rtnershi
p - sect
i
on46
-48
or ass
oci
at
ion or
gani
ze
d un
der t
he l
aws of the
Phi
li
ppines
wi
th aj
uri
dical
person
al
i
ty,servi
ce may be Pow
er otssue
i or
l st
sel
ocks dan
to adm
i
t mem
bers
madeup
on t
he pr
esi
dent
, managi
ng part
ner
, ge
ner
al
man
ager
, corporat
e secr
et
ary,
reasu
trer
, ori
n hou
se - st
ock
ofst
ock
hol
ders d
anprovi
si
ongoverni
ng n
on-
stock
cou
nsel
.
Po
wer ot a
cqu
i
re ori
enal
ateeal
r or pe
rson
alproperty

Del
t
a mot
or s.
v Man
gosi
ng
- i
s h
tere y
ani
l
mit
ati
on
? Y
ES

- st
ri
ctcom
pl
ian
ce si n
ecessa
ry
- Twospeci
cl
imi
tat
ion

- shou
ld be served
o those
t amed
n nit
he st
at
ute
1. Sect
i
on 36, as
awf
ullt
ran
sact
i
onsofbu
siness of
he t
corporati
onmay reason
ab
ly an
d n
ecessari
l
y requi
re
- secret
ary
ofa d
ep
t aretno
tho
se ncl
iudedi
n the statute

2. Const
i
tut
ion and
l
aw
E.
B. Vi
ll
aro
savs.
Ben
i
to

Lu
net
a vs.
A.
D. San
tos
- deci
si
onEn B
anc e
rpeal
s al
l ot
herpronou
ncement

- I
mport
an
ce of
t
he pu
rpose
ause
cl
- sect
i
on13Rul
e 14was repeal
ed

- Can
not have
he pow
terto acqu
i
re
- t
heol
d ru
l
es as
w am
bi
guou
s an
d broaddan
a
t al
lti
me
i
ll
ogi
cal
- Can
noten
gage
n i
an
l d tr
anspo
rt
ati
on

- Doctri
ne o
f i
mi
ltedcap
aci
t
y
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 24

Gov
t vs.
El Hogar Nati
on
alPow
er vs.
Vera

- As t
he l
awf
ul t
ransact
ion of i
ts busi
ness may - For rpose
pu prohi
ofbi
t
ingt
he A
NPO
COR
reason
ab
ly epresen
r t
- The cour
tmustdeci
de whet
her or nota l
ogi
caland
Di
recor
t of
La
ndsvs.
CA necess
aryre
l
ati
on exi
st
s bet
weent
he act est
qu
ion
ed
and t
he co
rpor
at
e purpos
e expr
ese
d i
n t
he NPC
- Excep
ti
on t
o th
e ru
l
e n
ithe con
st
i
tut
ion cha
rt
er

- Al
ienabl
epubl
icl
and I
mpo
rtan
ce of
PL
ACE ofregi
st
rat
i
on

- Con
vert
s the
prop
ert
y t
o a pri
vat
e an
l d au
tomati
cal
l
y - Resi
dence

on
ce con
vert
edit cannow beregi
st
ered
- Venue
Pow
ert
o make don
at
i
on
- Pl
ace
ofmeet
ings
- Li
mit
ati
onsecti
on 36 par.
9
- Pl
ace or str
regi
ati
on ofch
att
elmortgag
e
- These ar
e ci
rcums
tances, howev
er, under whi
ch a
don
at
ion by a cor
porat
i
on may e
b tot
si b
enet a
as Pow
er ot ext
en
d t
i
s erm
t s
mea
ns of i
ncr
eas
i
ng i
ts busi
nes
s or pr
omot
i
ng
pa
tron
age.
Thus,paragraph
9 of ect
si
on 36 expres
sl
y - Once i
ts t
ermexpi
res,
al
ready
di
ssol
vedau
tomati
cal
l
y,
au
thori
zes a corporat
ion t
o makedon
at
ion
s.Th
e on
l
y t
hus can
no on
l ger ask
or f
ext
en
si
on
l
imi
tati
on
s mp
i osed
are the
f
oll
owi
ng:
- Af
terdi
ssol
uti
on,i
thas3year
stowi
ndup
1. The donat
i
on m
ust
be r

eas
onabl
e
;
Whatar
ethemodesofi
ncr
easi
ngcapi
tals
toc
k?
2. I
t mustbef
or pu
bl
ic w
elf
are,
or or
f osp
hit
al, cha
ri
t
abl
e,
sci
ent
ic,cu
lt
ural
or mi
si
lar u
prpo
se;
and, 1. I
ncr
eas
i
ng t
he par val
ue of he
t exi
s
ting nu
mber of
sha
r
es i
w
thou
tincreasi
ng h
te n
umber of
shar
es;
3. I
t sh
all not be
n ai
id ofpo
l
iti
cal
part
y or can
di
dat
e,or
f
or u
prp
ose
s of pa
rt
i
san pol
i
ti
ca
l ac
t
ivi
ty
. 2. I
ncr
eas
i
ng the nu
mber ofxist
e
ing shar
es w
i
thout
i
ncr
easi
ng th
e p
ar val
ue thereof
; and,
Pow
er ot establ
i
shpen
si
on
3. I
ncr
eas
i
ng t
he nu
mber of
ex
i
sti
ng shar
es and
at he
t
- I
ncl
ude any ac
t t
o pr
omot
e and i
mpr
ove t
he sam
e i
t
me n
icre
asi
ng h
te pa
r val
ue of
the sha
res
.
conveni
ence,
elf
ar
we an
d benet
of he
t em
ploye
es or
Whyacor
por
ati
oni
ncr
easesi
tcapi
tals
tock?
oce
s

- Gener
at
e f
unds, si
bu
ness
expansi
on, or
paym
ent of
Rep
ubli
c vs.
Acoj
e
l
iab
il
it
ies,pu
rposes
of acqu
iri
ng ot
her bu
siness.
- Whi
le as a r
ule an ul
tra-
vir
es acti
s one commi
tted (
exam
pl
e: ot bu
y car
s f
or the
oce
r
s, purpose of
ou
tsi
det
he o
bjector
f h
wi
ch a corporati
on i
s creat
edas acqui
ri
ng ot
her bu
siness,
expan
si
on, ot
her val
id
de
nedby aw
l, t
here areever
how
ert
ai
cn corporate
s act reasons)
t
hat ay
m be per
f
ormed out
si
de of he
t sc
opeof he
t
How do you de
creas
e capi
t
al t
s
ock and why a
pow
es
r express
l
y con
f
err
ed i
f h
teyare eces
n sary
to
prom
ote
thent
erest
i or el
wf
are of
the corp
orati
on. Thus, corporati
ondecreases?

i
t has bee
n hel
d that
alt
houghnot ex
presy
l
- Redu
ce r
o w
ipeou
t exi
st
i
ng de
ci
t w
her
e no cr
edi
t
ors
au
thori
ze
d t
o d
o soa corpor
at
i
on may becom
e a sure
ty
wher
e t
he par
ticul
ar t
ransact
ion i
s r
easonabl
y woul
dther
ebybeeect
ed
necessary
roper
or o
p the
t ndu
co
ct of
i
ts b
usi
ness,
an
d
- When capi
tali
smo
ret
han necessar
yto pr
ocr
eat
ethe
heret i
si u
ndi
spu
t
ed t
hat ht
e est
ab
li
shmen
t ocal
l post
busi
nessorr
educt
ionofcapi
talsur
plus
oce si a easona
r bl
e an
d p
roper u
adj
nctt
o h
te cond
uct
oft
he b
usi
ness of appel
lan
t com
pany.I
ndeed, such
post
- To wr
ite down t
he val
ue ofi
ts xed asset
stor
eect
oce si avi
tal
i
mprovem
en
t n
ithe i
l
ving co
ndi
ti
on ofi
ts
t
hose pre
sent and
act
ual
em
ployeesd an
ab
l orer
s who cam
e o
t set
t
le n
i t
i
s m
ini
ng
cam
p whi
ch i
s ar
f rem
oved
f
romt
he p
ost
alf
aci
l
it
ies or
o NOTE
: an
y n
icr
easer odecrease t
al
ofst
ock
capi
requi
res
mean
s of
com
muni
cat
i
on accor
dedt
o p
eopl
e i
l
ving n
ia
app
r
oval
of ove
g rnm
ent agency
l
ike SE
C i
t can
never
ci
ty orun
mi
cipali
ty
.
t
ake ace
pl lun
essSE
C app
r
ove
s h
te sam
e

Pow
er t
o ex
ecrse
i suchot
herpow
er
s es
sent
i
al or
Rel
evan
ce f
ode
crease
f cap
oi
tal
?
necessary
o carry
t tit
ou
s pu
rpose
i
mpl
(
i
edpow
er)

1. To re
du
ce ori
pew out exi
st
i
ngdeci
t w
here no
cr
edi
t
ors
1. Act
s n
ithe s
uual
cour
se of
busi
ness
;
woul
dther
ebybeaect
ed;

2. Act
s o
t prot
ectdeb
t
s ow
i
ng o
t h
te cor
porat
i
on;
2. Whent
he capi
tali
s mor
e t
hanwhatsinece
ss
ary t
o
procreat
e th
e b
usi
ness ro redu
ct
i
on of capi
t
al surp
lus;
3. Embar
ki
ng n
ia i
d
er
ent
busi
nes
s; or
,

4. Act
s n
i part
or h
wol
l
y o
t prot
ector d
aiem
polyees
; an
d,
3. To ri
wt
e dow
n the val
ue of
i
ts xed
sse
t
a
s o
t re
ect
t
her
e
presen
t act
ual al
v
ue n
i case
wher
e there
s ai
decl
i
ne n
i
5. Act
s o
t ncr
i eas
e busi
ness
the l
u
vae of
the xed
assets
the
of corp
orati
on.

Ter
esaEl
ect
ricandPowerCo.vs.P.
S.C.
- Exam
pels:
Php 1
0M capi
t
alfor ocery
gr si
n
bu
ess,
mayor
di
dn
t wan
tto ssu
i e i
l
cense/
perm
it beca
use a
myor has 3
- Exam
i
ned t
he art
icl
esof ncorporati
i on t
o arri
veat t
si
other
rocery
g st
ores,
ly on
a
l
low
edsari
-sari
st
oreerm
pi
t,
deci
si
on
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 25

redu
ce ca
pi
tal or
f sa
ri
-
sari
so t
hat ht
e mon
ey i
w
ll not Provi
ded, That su
ch pre-empti
ve ghrit shall not extend
sl
eepn i
bank t
o sh ares o t
b
e ssu
i edi n compilan
ce i w
th law s requi
ring
s
tock oeringsor m i
nimum s t
ock ow nershi
p by t he
-
publ
ic;or ot shares o tb
e ssu
i ed i n good f
aith with the
Exam
pel: ar
c rent
al agenci
es-
Ph
p 10
M capi
t
al or
f 0
2
approval h of
e stock
t holders repre
senti
ng t wo-thi
rds
t
axi

s,af
t
er som
e i
tme each
t
axi
is on
l
y 2
50K, nagm
ura
(
2/3) of hetoutst
anding capi
tal ock,
st n i exchange for
an
g taxi
,to red
uce ca
pi
tali
s to ow
shactu
al asset
s propert
y neededfor corporat
e pu rposes nor paymient of
a previ
ousl
y cont
racted ebt
.d
Li
mit
ati
oni
mpo
sed ybaw
l

May tibe deni

ed? ow
H?
- Decr
ease al
sh
l not nian
y w
ay a
ect
the ri
ght
s ofhe
t
cred
i
tors
- Yes,i
fpr
ovi
ded by ar
ticl
es ofi
ncor
por
ati
on or by an
amendm
ent
Ph
il
ipp
ine Tru
stCom
pany vs.
Ri
ver
a

- How
ever
, pre-
empti
veri
gh
ts i
s unavai
l
abl
e t
o sh
ares
n i
- Wi
thout t
he appr
aisalofSEC,a decr
ease i
ncapi
tal
t
rad
i
ng n
i st
ockexchan
ge otherw
ise ockh
st ol
dersust
m
st
ocksas
h o
n e
ect
wai
ver
stt
hei
rri
ghtbef
oret
heyma
ysel
lsuc
h.

TRUSTFUND DOCTRI
NE:
Excepti
on
s

- Subscri
pti
on t
o c
api
tal ock
st of a corp
orati
on con
st
i
tut
e
1. Whent
he share
s o
t bess
i
ued sin
i com
pi
lancei
th
w
a f
und t
o w
hich t
he credi
t
ors ave
h a
ri
ghtoto
lokupon
l
aws r
equi
ri
ng st
ocko
eri
ngsor m
i
nimum st
ock
f
or sa
ti
sfacti
on of ht
ei
r cl
ai
ms a
nd tha
t h
te a
ssi
gn
ee in
ow
nershi
p by the
ubl
i
p
c
i
nsol
ve
ncycanmai
ntai
n an act
ion up
on anyun
pai
d
st
ocksu
bscri
pti
on i
n order
t
o re
ai
lze asset
s f
or t
he
2. Sh
ares ot bessued
i n good
i f
ait
h wi
th the app
r
oval
pa
ymen
t ofi
ts deb
ts.
of t
he st
oc
khol
der
s r
epr
es
ent
i
ng 2/3 of t
he
ou
tst
andi
ng ca
pi
tal ock
st ei
t
her
Mad
ri
gal
vs.
Zamora
a. I
n exc
ha
ngeor
f pr
opert
y needed
f
or orpor
c ate
- Decr
ease
n capi
i t
alhas asu
bte
rf
uge ot evade
aym
p
ent pu
rpose
, or

- Thusnotval
idandeect
ive
b. I
npayme
ntofapr
evi
ousl
ycont
ract
eddebt
- Mustnotpr
eujdi
ce cr
edi
t
ors whi
ch i
ncl
ud
es t
he - Theexcept
ions,howeverwi
llnotappl
ytos
toc
khol
der
sof
em
ploye
es a cl
osecor
porat
i
on by vi
rt
ue of asub
sequent
an
d
speci
c provi
si
on of ht
e Codewhi
ch provi
desthat ht
e
Bond
pre-
empti
ve gh
ri
t of
a st
ock
hol
der n
i a closeorati
corp
on
shal
l ext
end t
o al
l st
ock t
o be i
ssued,
i
ncl
udi
ng
- Common
ly unders
t
oodas an obl
igat
i
on ofa st
at
e,i
ts
r
eissuan
ce of r
easury
t share
s, het
w herf
or money,
su
bdi
visi
on or apri
vat
e co
rporati
on, epresen
r t
ed by a
pr
oper
ty or per
sonalrv
i
se
ces or i
n paym
entof a
cer
ti
cate an
or i
nst
rum
entor
f the
pri
nci
pal and
by
corporate
deb
t
, u
nlesst
he art
icl
es of ni
corporati
on
detacha
bl
e cou
pons or
f the
pa
ymen
t of
int
erest
s.In i
ts
provi
de otherw
ise,f ino
t en
t
irel
y ab
sol
ut
e, ni tha
t t
i
si
mpl
esterm
t, i
t s
i on
e w
her
e a
n ob
l
igor l
ob
iges i
msel
h f
extend
s o
t al
lissu
an
ce an
d di
sposi
ti
on ofsh
ares
t
o pay ace
rt
ain sum ofmoneyo t
anot
her at a
ayd
nam
ed.
- Such ri
ght of
e-e
prm
pti
on may e
b o
lst
by wai
ver of
the
st
ock
hol
der
, exp
ressl
y or mpli
i ed
l
y by hi
s i
nab
il
it
y or
- Ther
ear
edi
er
entki
ndsofbondbutbef
oret
heyma
ybe
f
ail
ure to erci
ex
se i
t af
ter avi
h ng be
en noti
ed of ht
e
i
ssued
or oat
edbyt
he cor
porat
i
on,he
t sam
e mustbe
prop
osed
i
ssu
an
ce or
ispo
dsi
t
ionofsh
ares
r
egi
st
er
edan
d ap
prove
d byt
he S
EC su
bject
to the l
es
ru
an
d r
egul
at
i
onst
hat m
ay e
b ad
opt
ed by t
hat ag
ency.
Wheni
situnavai
labl
e?
Thepr
ocedur
eandrequi
reme
ntssetf
ort
hinsect
ion 38
i
s the same as n
i incr
easi
ng or decreasi
ng the capi
t
al - I
n sha
r
es raded
t enl
op
y ni st
ock excha
nge/m
arket
st
ockexcept that
he cert
ica
t t
e d
oesnot ha
ve toate
st
t
he matt
ersequ
ri
redn i
sub-sect
i
on2 & 3 thereof
. I
s t
i ap
pl
ica
ble to os
cl
e co
rp
ora
t
ion
s?

Pre-
empti
ve gh
ri
ts - See sect
i
on 96
, cl
ose rporati
co ons mustprovi
de i
t rst
on i
ts arti
cl
es f
oincorp
ora
ti
on
, tha
t ts
i arti
cl
esdoes
not
- Ar
ightgr
ant
ed byl
aw t
oal
lexi
sti
ngs
toc
khol
der
sofa real
l
y den
y su
ch re-
p em
pti
ve gh
ri
ts.
st
ock cor
por
at
i
on t
o subscr
ibe t
o al
l i
ssues or
di
sposi
ti
on of sha
res ofy an
c
l
ass
,in propo
rt
i
on t
o th
ei
r Secti
on 10
2, wi
ll not app
l
y to ose
cl rpo
corati
on
s
respecti
vest
ock
hol
di
ngs, b
su
j
ect l
on
y t
o t
he l
imi
tati
on
s
i
mposed
nder
u ect
s
ion39oft
he C
ode. The r
ight of pr
e-emp
tiver
ight
sis absol
utei
n cl
ose
corp
orati
on
s
- I
ntern
at
ion
all
y gran
t
ed
Al
lissu
es or osi
dep
ti
ng sh
ares an
of
y cl
ass
formpart
ofACS
Pre-
empti
ve gh
ri
ts,why t
isi gran
t
ed?
Cert
ai
n i
nst
ances hw
en a st
ockh
ol
der ay
m eve
n rt
hel
ess
- I
n order
hat
t the
exi
st
i
ng st
ockh
ol
ders
may mai
nt
ain beunabl
etoexer
ciset
hisr
ight
:
the
i
r pro
porti
on
ate ri
gh
t as n
ot ot d
i
lut
e th
ei
r ri
gh
t
- I
ssu
edf
or pu
bl
ic ow
nershi
p
Pow
er ot d
enypre-
em
pti
ve gh
ri
ts
- I
ssu
edi
n good
f
ait
h, wi
th ap
proval
2/3
ofofou
tst
andi
ng
Section 39. er otdenypre-
Pow em pt
ive ghri
-t
. cap
i
tal ock
st ei
t
her a)
n excha
i nge f
or ropert
p y needed
Al
ls t
ockhol
dersofa st
ockcorpor
ati
on shallenjoy pre- or b)
orfpa
ymen
t ofa p
revou
i sl
y con
tract
eddeb
t
emptive gh
rit o
t subscri
be tol laissues r o disposi
ti
on of
shares of any cl
ass, n i
proport
ion to t heir respecti
ve Pre- pti
em
ve ri
gh
ts of ockh
st ol
ders
in ordi
naryst
ock
sharehol
di
ngs, nl e
usssuchri ghti s deni ed by t he corporat
i
ons m
ay beeni
d
ed
art
icl
es of ncorpor
i ation or an amendm entt hereto:
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 26

- f
ithe sh
ares are
o b
etssu
i ed i
n com
pi
lan
ce i
w
th l
aws
SUBSCRI
BED 1M
r
equ
i
ring st
ock eri
o
ng or
mini
mum st
ock n
ow
er
shi
p b
y
t
he u
pbi
c PAI
D UP 1M

- I
n exch
an
ge or
f propert
y n
eeded
f
or corporat
e pu
rposes 1 100K

- I
n pa
ymen
t ofprevi
ousl
y con
tract
ed ebts
d 2 100K

Thi
srul
e,however
,doesnotappl
yinacl
osecor
por
ati
on TO
as the re-
pem
pti
ve gh
rit
s ofhe t stockh
olders thereof
s i
br
oadened toi
ncl
ude al
li ssues wit
hout except
ions 10 100K
unl
ess, cou
ofrse,
den
i
ed or i
mi
lt
ed by t
he art
icl
es of
I
f 1-
5 b
ecam
e 200
K each,
may 6-
10 em
d an
d t
he exer
ci
se
i
ncorporati
ons. Sect
i
on102 provi
des: the
i
r pre-em
pti
ve gh
ri
t?

Sect
i
on 102. Pre-
empt
i
ve r ight in close
- YES
corporations.
- The pre-
empti
ve gh
rit oft ock
sholdersn i
cl
osecorp
orati
ons sh
al
l extend
to all st
ockto be ssu
i ed,
May -
1
5 sub
scr
i
be t
o the
unsu
bscri
bedcapi
t
alst
ockt
o
i
ncl
udi
ng rei
ssua
nce of r
easu
t ry sha res, hwet
her or
f
money
, propert
y or pers
on
al erv
sices, or nipayment of t
he excl
usi
onof6-10
?
corporate
deb
t
s, nul
essthe arti
cles of nicorporati
on
provi
de otherw
ise. - I
f a cor
por
at
i
on makes2M un
res
t
rict
ed r
etai
ned
earn
ings,
iti
s h
te sha
res and
nott
he nu
mber of
person
s
Den
i
alwi
ll notap
ply o
t a ose
cl corporati
on
, ABSOLU
TE t
hat att
m ers

- secti
on 96 May -10
6 com
pl
ain f
or ai
lu
dti
onofthei
r n
iterest
?

May a st
ockhol
dern ia cl
osecorporati
on i
nsi
st nit
he - YES,i
t
san i
nter
nat
ional
lyr
ecogni
zed r
ightbecausei
t
exercise
hi
s of
p
re-em
pti
ve gh
ri
ts? i
ncl
udes
all ssu
i es an
d di
spo
si
t
ion of sha
res ofy an
cl
ass dan
al
l ki
ndsofsh
aresew
nor d
ol
- Yes,sect
ion102
- I
fthe rem
ai
ning u
nsu
bscri
bedsh
ares are
ssu
ed,
it
si a
n
Whatt
ypeorshar
esar
ecover
edbypr
e-emp
tiv
eri
ght
s? i
ssu
an
ce of any
asscl

Does
it n
icl
udet
hose
ori
gi
nal
l
y unsu
bscri
bed
? Maya corp
orati
on sel
l/d
isp
ose
all or su
bstan
t
ial
l
y a
l
l of
i
ts corp
ora
te ass
ets d
anl
iabi
li
ti
es?
- NO.Beni
to vs.
SEC
- YES
Wi
llt
he s
toc
khol
der
s be abl
eto exer
ciset
hei
r pr
e-
em
pti
ve gh
ri
t w
i
th respect
to thel
douni
ssu
edsh
ares? - 1)RE
SOLU
TION 2)AU
THORI
ZATI
ON 3)RA
TIFI
CATI
ON
4)PRI
OR WRI
TTEN NOTI
CE 5)SALESUB
JECTTO
- Pre-
em
pti
ve ri
gh
ts i
s app
l
icabl
e on
ly t
o new i
ssued PROVI
SI
ONS OF EXI
TI
NG LAW
S 6) DI
SSENTI
NG
sha
r
es an
d not ot thedol
uni
ssued
sha
r
es becau
se tis
i ST
OCKHO
LDERSHAVETHE RI
GHT TO EXERCI
SE
pre
sum
ed t
hat h
te ori
gi
nal bscr
su i
bers
s i
deem
ed t
o THEI
R APPRAI
SALRI
GHT
haveaken
t his shares
owi
nkn
g htatt
hey orm
f a de
ni
te
proport
i
onat
e p
art of
the w
hol
e n
umber of authori
zed I
f a corp
orati
on sel
ls su
bst
ant
ial
l
y al
l oft ia
sset
s an
d
shares prop
erti
es,
wil
l the uyer
b su
as
me i
l
abi
li
ty?

- When t
he shar
es,l
eftunsubscr
ibed ar
ere-
oer
ed,he - NO,EXC
EPT
cann
otthere
f
ore c
l
aim. DI
LUTI
ON OF N
ITE
REST

1) Expr
es
s or
impl
i
ed agr
ee
ment
to h
te pu
r
chase
Wi
llt
he acqui
ring pur
chaserbe l
iabl
efordebt
soft
he
f
orm
er corporati
on? 2) Wher
e t
he t
ransac
t
ion amount
s to co
nsol
i
dat
ion or
mer
ger of
the corpo
rat
i
ons
- Gen
eral
l
y no,corporate
nt
ity h
t
eeory beca
use ht
ere m
ay
bei
nst
anceswhen pur
chasi
ngcor
por
ati
on ma
ybehel
d 3) Whenpu
rchasi
ng cor
por
at
i
on i
s mer
ey
l a cont
i
nuat
i
on
l
iabl
e of he
t se
l
li
ng c
orp
ora
ti
on

May acorporat
i
onacqu
i
re t
si ow
n sha
r
es? 4) Wherehe
ttr
ansact
i
on i
s en
t
ered i
ntor
au
fdu
lent
l
y i
n
order
to escap
e i
l
abi
li
tyf
or su
chdeb
t
- Yes
Legi
t
imate urpose:
p or af corporati
on t
o reacqu
ire t
si
I
s t
hereany r
est
rict
i
on prov
i
ded f
or by l
aw i
n ow
n share
s
reacqu
iri
ng t
i
s ow
n sh
ares?
- Li
mit
ati
on
: t
i m
ust ha
ve su
rpl
us/u
nres
tri
ct
ed re
t
ained
- Yes,i
tmus
thav
e been unr
est
rict
ed r
etai
ned ear
nings earn
ings
ap
pea
ri
ng n
ithe b
ook
s of
corporati
on
- Except
i
on: may re
deemi
rrespect
i
ve of n
urest
ri
cted
A cor
por
ati
on can neveracqui
rei
tsown shar
esi
fithas re
t
ainedearn
ings
no unre
sri
tct
edre
t
ainedearn
ings
1) Exe
rci
se of st
ockhol
der
s i
ght
r t
o com
pel cl

ose
- Fal
se, exce
pt
i
on cl
osecor
porat
i
on an
d r
edeem
abl
e corporati
on o
t p
urc
hase i
sh sh
ares
shares
2) Wher
e cor
por
at
i
on has su
ci
ent se
as
t
s n
i i
ts books
o t
EXAM
PLE: co
verts
i de
bts an
d l
iabi
li
ti
es xc
el
usi
ve f
oca
pital
stock

ACS 2M ACS 1M

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 27

SUBSRI
BED 1M 2. Wher
e t
he tr
ansact
ion amoun
t
s o
t a conso
l
idat
i
on
or e
mrg
er of
t
he corpo
rat
i
ons;
PAI
D-UP 1M
3. Wher
e the r
pu
chasi
ng co
rpor
at
i
on i
s mer
ey
l a
ASSETS 500K con
t
inuati
onof he
t sel
l
ing co
rpo
rati
on
;

1M PRO
FITS 4. Where
hett
ran
sact
i
on i
s en
t
eredi
ntor
aufdu
lent
l
y
i
n ord
er ot esc
ap
e i
l
abi
li
ty or
f su
chdeb
ts.
- 500
K LI
ABI
LITE
IS
Pow
ert
o acqu
i
reow
n sh
ares
____________________

Secti
on 1.
4Pow
er ot acqui
r
e own sh
are
-s.
A
500KRESERVES I
N A CLOSE st
ockcorporat
ion shal
l havehe t power ot p
urchaseor
CORPORATI
ON I T CAN USE THI
S TO REACQU
IRE ISSUED acqui
r
e i ts ow n shares for a l egi
t
imate cor
porat
e
STOCKS purpose or pu
rposes,incl
udi
ng bu t not i
mil
ted t
o t
he
f
oll
owi
ng cases: ded Provi
, That the corporat
i
on has
X REALTYCORPORATI
ON unres
tri
ct
ed ret
ained earn
ingsin its b
ooks to coverhe t
shares o tbe urc
phased or acqu
i
red:
THE ONLY PROPERTY
OF TH
E CO
RPORATI
ON 1. To el
i
minateract
fi
onal sh
ares
ari
si
ng ou
t of ock
st
di
viden
ds;
BOARDOF D
IRECTORS
DEC
IDED TO SELLT I 2. Tocol
l
ect or prom
com i
se an indebt
edn
ess ott
he
corporati
on, ari
sing ou
t of npaui
d subscri
pti
on
, ni a
Wi
lli
tneedt
heappr
ovaloft
hes
tockhol
der
s? del
inqu
ency sal
e, and to pur
chase del
i
nquentshares
sol
d du
ring sa
i
d sal
e;and
- NO, i
fthe sam
e s
i n
ece
ssar
y i
n t
he usual and
r
egul
ar
cou
rse of
busi
ness of
sai
d co
rpo
rati
on or fi
the roceed
p s 3. To pay disse
nti
ng or withd
raw
ing st
ockhol
ders
of ht
e sal
e or other
isposi
d
ti
on of such
propert
y an
d en
ti
tled toympa
en
tfor ht
ei
r sh
aresnder
u het provi
si
ons
of hi
ts C
ode.a)
(
asset
s be ap
prop
ri
ated
orfht
e con
duct of
i
ts rem
ai
ning
busi
ness
The cor
por
ati
on mustatal
lti
mes have
unr
est
rict
ed
I
f Xi
s a man
ufact
uri
ng com
pany,hen
t it can
sel
l t
i
s ret
ai
ned arn
eingso texerci
se thi
s corp
orate er pow
on
ly property
upo
n app
roval
ofthe st
ockh
ol
ders becau
se St
einberg vs.
asco
Vel
i
t w
il
l en
rder t
sel
i f cap
ab
le of con
t
inui
ng i
ts bu
siness,
- Foras l
ong as t
here
are debt
s an
d l
iabi
li
ti
es, a
BUT i
fthe p
roceeds
wi
ll be used torc
h
pu
ase a
bet
t
er
on
e or
f the t
icon
nuan
ce of
t
sib
usi
ness,
t
heni
t does
not corporat
i
on may not reacqui
r
e i
ts sha
r
es (
sub
j
ectot

need e
thap
proval
oft
he st
ockh
ol
ders excep
t
ion
s)

Con
dit
ion
s f
or th
e val
id exerc
ise of ht
i
s pow
er re
a the - Credi
t
ors of
a corp
orat
ion havehe
t ri
ghtt
o a
ssu
me h
tat
so l
ong as t
here are
ou
tst
andi
ng deb
t
s an
d l
iab
il
it
ies,
f
oll
ow
ing
t
he boa
r
d of r
di
ect
ors i
lw
l notse
uthe asset
s of he
t
1. Res
ol
ut
ion by t
he maj
or
it
y v
ote of he
t boa
r
d of corporati
on t
o purc
hasei
ts ow
n st
ock
, an
d t
hat ti w
il
l
di
rect
ors/
tr
ust
ees not decl
ar
e di
vdends
i to st
ockhol
der
s when t
he
corp
orati
on i
sinsol
vent
.
2. Au
thori
zat
ion f
rom t
he st
ockhol
der
s r
epr
es
ent
i
ng at
Pow
er otn
ivest
f
unds sec.
< 42
>
l
east 32/
of he
t ou
t
stan
ding ca
pi
tal t
ock
s or /3
2 of he
t
membe
rs;
Secti
on 2.
4
Power otnve
i stcorporat
e fun
ds n
i
3. Th
e r
ait
cat
i
onoft he st
oc
kholder
s or em
m ber
s must
be another corporati
onor bu si
nessor or f any otherurpose
p .
madeat a eet
ming d
uly cal
l
ed or
f ht
at pu
rpose - S ubjectott he provi si
ons of ht is Code, a privat
e
corporation may i nvest i t
s f unds i n any ot her
4. Pri
or ri
wt
ten not
i
ce of
t
he propose
d act
ion an
d oft
he corporation or bu siness or orfany p urpose other han t
the primary pu rpose orfhiwch i t was org ani
zed when
t
ime an
d pl
ace of
meet
ing must beade
m ad
dr
ese
d t
o
approved by a maj orit
y of he t board of r di
ectors or
al
l t
s
ockh
ol
ders
of ecord,
r t
her
eiy
b mai
l or person
al
trustees d ratan
i
edbyt he st ockhol
ders representi
ng a t
service; least o-t tw
hirds( 2/3) of he t o utst
anding cap i
tal ockst,
or by at east
l t wo thi rds (2/3) of the mem bers n ithe
5. Th
e sal
e of
the asset
s sh
al
l be su
bj
ect
to the provi
si
ons case of no n-stockcorporati ons, at st aockhol
der's or
ofexi
st
ing aw
l s oni
ll
egal
com
bniati
on
s a
nd mon
opol
i
es mem ber'
s meet ing du ly call
ed f or h t
e p urpose. Written
notice ofhe tproposed nvest
ment
i d
ant he time an d
6. An
y di
ss
ent
i
ng st
ockhol
der shal
l hav
e t
he opt
i
on t
o placeof he t mee t
ing shal l be addre ssed to eac h
stockholder or mem ber ta hi s placeof esi rdence as
exercise
apprai
his
sa
l ri
gh
t
show n on t he book s of t
he corporation an d deposited to
the ad dressee nit he po stoce i w
th postage r epai
p d, or
I
DP vs.
CA served per sonall
y: Pro vi
ded,Th at any di ssenti
ng
stockholder sh all have appraisal gh ri
t asprovi dedi n
- Consent
fthe
o m
ember
s w
as not
sec
ur
ed this Cod e:Provided , however, Thatwher e hte nivest
men t
by t he cor porati
on i s r easonably necess ary t o
accom pli
sh its p ri
mary urpose
p as statedi n the articles
Edw
ard el
N
l Co.vs.
Paci
c arm
F s of ncorporati
i on, h te ap proval hof e st ock
t holders or
mem bers shall notbe eces
n sary .(171/ 2a)
- Gener
al
l
y where
onecor
porat
i
on sel
ls or ot
herw
ise
t
ran
sf
ersal
l oft
siass
et
s t
o an
other
corp
orati
on
, h
te
- For any
ot
her rpose
pu her
otha
t
n t
he ri
pmary rpose
pu ,
l
att
er isot
nia
lbl
e f
or thedeb
ts n
ad l
iabi
li
ti
es of the
st
ock
hol
der
s con
sen
t or app
roval
i
s nece
ssary
tr
ansf
eror, excep
t:

- Thus,i
fit
sf
ort
hesecondar
ypur
pose,i
tisnecessar
y
1. Where
hetu
prchaser
expr
ess
l
y or
impl
i
edl
y agr
ees
t
o assum
e u
sch debt
s;

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 28

- I
f t
i
s i
n conn
ect
ion wi
th t
he pri rpose,y onl -
marypu I
t becom
es r
easu
t ry sha
r
es
boar
dresol
uti
oni
snecessar
y
Stockhol
der
s consen
t/ ap
proval
i
s not necessary
nd a
Requi
r
ement
s an
d st
epst
o be f
oll
owed f
or a val
id mer
e board
act
i
on i
s su
ci
entfin
i accor
dan
ce wi
th
i
nvest
ment ofcorporate
unds re:
f
a pri
mary
purpose

1. Resol
ut
ion by t
he maj
ori
t
y ofhe
t board
ofdi
r
ect
ors or Thel
ogi
calr
elat
ion ofactdoneandpr
imar
ypur
poseof
tr
ust
ees; cor
porat
i
on an
d bet
weent
he board
of di
r
ect
or
s t
o
undert
akesubm
i
ssi
on of act
s i
s a sound
cor
por
at
e
2. Rat
i
cat
i
on by t
he st
ockhol
ders pre
re
sent
i
ng at east
l practi
ce
2/3of he
t outs
t
andi
ng capi
t
al t
ock
s or /3
2 of he
t
mem
bers
n case
i n
of
on
-st
ock corporat
i
ons; Di
viden
ds

3. Th
e r
ait
cat
i
on m
ust
be m
ade at
a mee
t
ing u
dly cal
l
ed
Section 3. 4Pow er ot d ecl
arei vi
d
dend s.
- The
f
or ht
at pu
rpose;
board ofdi r
ectors ofa s t
ockc orporati
on ma y declare
divden
i ds ou t o f the unr estri
cted r etai
ned earni ngs
4. Pri
or ri
wt
tennot
i
ce of
t
hepropose
d i
nves
tment and
the whichs hallbepayabl ei ncas h,in property,orins tock
t
ime an
d pl
ace of
the meet
ing sh
al
l be m
ade,ad
dress
ed to all st ockhol
ders on t he b asis o f outstanding stock
t
o each
st
ockhol
der or
mem
ber byai
l
mor by sonal
per held by h tem : Provided , Thatan y cash divden
i ds u de on
servi
ce,an
d; deli
nquentst ocksha ll rs t beap pl
ied to t he unp aid
balance on the subs cripti
on pl us costs and expenses,
while stock dividends s hall be wi t
hhel d fr
om t he
5. An
y di
ss
ent
i
ng st
ockhol
der shal
l hav
e t
he opt
i
on t
o
deli
nquen t stockholderunt i
l hi s unpa i
d su bscripti
on i
s
exercise
apprai
his
sa
l ri
gh
t
f
ul l
y pa id: rovi
P ded , u frther, Th at o n stockdi vden
i d
shall bei ssued withou t h te ap proval st ockh
of olders
Del
a r
ama vs
. Ma-
ao Su
gar represe
nting notl esst han t wo-thirds (2/3) of the
outstanding capitalst ockat a regu lar or special meet
ing
- Ther
eisa subs
tant
ial and not r
emo
te connect
ion duly ca l
ledf or the urpopse. (
16a)
bet
ween t
he sugar bags and t
he sugar manuf
act
ure,
thu
s stockh
ol
der
s app
roval
s not
i ecessa
n ry or
f va
l
idit
y Stoc
k cor
porat
ions are prohi
bi
t
ed fr
om
r
etai
ni
ng surpl
us prot
s in exc
essof one hu
ndr
ed
- Apr
ivat
ecor
por
ati
on,i
nor
dert
oaccompl
ishi
tspur
pose (
100%) percen
t ofhei
t
r p ai
d-
in cap
i
tal ock
st, except:
(
1)
as stated
n i
ts i
arti
cl
es of
ncorp
i orati
on
, an
d i
mpo
sedby when justied by denitecorporate expansi on proj
ects
or program s a ppro
vedby t he b oard of rdi
ect
ors; or 2)
(
t
he Corpor
at
i
on Law
, has
the pow
er o
t acqui
r
e,hol
d,
when t he c orporat
ion is prohi
bited under any l oan
mort
gage,
edge,
pl or
i
spose
d f
ohsareson
ds,
b secu
ri
t
ies agreementwi th an y n an ci
al ni st i
tution or cr edi
tor
,
an
d ot
her ev
i
dences of
indeb
t
edn
ess of
any d
omest
ic or whe t
her l ocal or forei
gn, from decl ar i
ng divi
dends
f
orei
gncorporati
on. Suchanact,
i
f do
ne n
i pu
rsua
nce of withoutits/hi sconsent,and suchc ons enthasnotye t
t
he corporate
pu
rpose,
do
es not need
t
he ap
proval
oft
he been secur ed;or(3)when itcan becl ear lyshown that
st
ockhol
der
s; but
when t
he pu
rchase
of shar
es of such reten tion is necessa
ry n uder speci alcircumstan
ces
obtaini
ng n it he corporati
on, suchas h went heres ineed
an
other corporat
ion i
s don
e sol
el
y f
ori
nvest
mentan
d
f
or sp eci
al eser
r ve or f rob
p ab l
e co nti ngenci
es. n)(
not ot a
ccom
pl
i
sh t
he p
urpose
ofi
ts n
icorporati
on,t
he
vot
eofappr
ovaloft
hes
toc
khol
der
sisnecessar
y.
Whatar
edi
vidends?

Gokongw
eivs
. SE
C
- Corpo
rat
e protsasi
set
de,decl
aredndaorderedt
heby
Board
ofDi
recors
t o tb
e p
aid t
o the
st
ockh
ol
ders.
- I
nvest
mentsad
m
e by SM
C i
s necessari
l
y conn
ect
ed i
w
th
i
ts pri
maryurpose
p d an
thi
s w
as rat
i
edi
n a meet
ing
Whatar
epr
oper
tydi
vidends?

- Su
bmi
ssi
on of pr
evi
ous act
ion i
s a soun
d cor
porat
e
- Thosepai
dinpr
oper
tysur
plus
practi
ce

Li
ke tabl
es an
d chai
r
s? a
Cn t
abl
es an
d chai
r
s make
Redeem
abl
e share
s
su
rpl
us pro
ts?

Cl
osed
corporati
on(see sect
i
on 10
5)
- No,t
hey doot
nmake rpl
su
us,bon
ds,
etc.

- For y
anreason,
om
pel
ct
he val
ue of
sha
r
es w
it
hdraw
al
Wher
eshoul
ddi
videndscomef
rom?
share
s prov
idedcor
porat
i
on ha
s su
ci
entund
fs t
o
co
verts
i eb
dts an
d l
iabi
li
ti
es
- St
ockdi
vden
i ds are ecl
dar
ed as st
ocks
com
i
ng f
rom
corp
orati
on
Section 105 .
Withdrawal ofockhol stderor
disso
lution of corpo rati .- n
on I add i
tion an d wi thout Whodecl
aresdivi
dendstobedecl
ared?Dos
toc
kholders
prej
udice t o ot her gh rits a nd rem edies vaial able to a
have yan say?
st
ockhol der n uder t
his Ti t
le, any stockh older of acl ose
corporation may , o fr any r eas on,com pel he t said
- Boardof i D
recors,
t if st
ockapproval2/ of
3 outst
andi
ng
corporation to pu rc
hasehi s sh arest ah teir aifr value,
which shallnotbel esst han theirparori ssued value, ca
pitalstock
when thecor poration hass uc ientass et
si ni tsbooks
to cover i
ts deb ts an d l iabil
it
ies excl usive of ca pitalACS-
1M SUB- 1M P.U.-
1M 1M- U.R.
E. (surpl
us
st
ock:r ovi
Pded, Th at any st ockholderof a cl ose protsthe of corp
orati
on)
corporation may, by wri tten petiti
on t o t he Secu rit
ies
andExc hange Com mi ssi
on, com pel the di ss
outi
l on of
1-100k
such corporation when ever any ofacts t of
he di recors,
t
ocers or osethin con trol of het co rpo rat
ion i s li
legal
,
2-100k
or frau dulent
, ordi shon est
, orop pressive or unf ai
rly
prej
udicali ot t he corporati on or an y st ockholder
, or
whenev er corporate as set
s ar e being mi s appli
ed or To
was
ted.
10-100k
I
f sh
ares are
reacqu
i
red, what hap
pen
s?
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 29

1M 2 100K

Boar
d dec
i
dest
o dec
l
are 1M, howmuchwi
ll e
ach TO
rec
ei
ve? ay
M the
oard
b decl
are ock
stdi
vden
i d
10 10
0K
- NO. t
hat ou
wld be ver
o ssu
ian
ce of
shares,
vi
ol
ati
on of
secu
ri
ti
es regu
lati
on co
de 1M

- I
t musthave f
a
ree rt
po
i
on May hey
t be pel
com
led?

- Thecor
por
ati
onma
yincr
easei
tscapi
tal - NO. Youcannot
ecl
ar
de i
f t
i does
not com
e f
rom
unrest
ri
ct
ed retai
ned arn
eings.
Z co
. 1M t
o X Co. si 2/3 of Xco
. St
oc
khol
der
s
reacqu
ired? 1. 1M-
U.R.
E. (
is t
itruehere
t s i
noway ot com
pel
?)

- No,beca
use niprop
ert
y 2
/3i
s n
otrequi
red 2. 2M-
U.R.
E.

What i
sthe eect of decl
arat
ion of di
vidends wi
th May they
e com
b pel
l
edt
o d
ecl
are vi
di
den
ds
r
egar
dsto the asset
s of
a com
pa
ny?
- Mand
at
or
y i
f e
arned,he
tboar
d may e
b com
pel
l
ed t
o
- Ascompar
edt
ost
ockdi
vidends,t
hedecl
arat
ionofcash decl
are vi
di
den
ds
or pr
oper
ty di
vdends
i havet
he eect of
reduci
ng
corp
orate assets
o thet
t
en
ex
t ofdi
viden
ds d
ecl
ared
. - i
f excee
ds 00
1% oft
he pa
i
d-up
capi
t
althe boa
rds m
ay
becompel
led
- Nei
t
her woul
d s
toc
k di
vi
dends i
ncr
ea
se t
he
proport
i
onat
e i
nter
estof t
he st
ockh
ol
dersof t
he ACS 2M 1M U.
R.E.
corp
orati
on al
tho
ugh i
t wil
l have e
the
ect of
increasi
ng
t
he su
bscri
bedand paid-u
p cap
i
tal of
t
he corp
orat
i
on.It SUB 1M
gi
ves the h
stock
ol
dersothi
nng n
i the ay
w f
odis
tri
but
ion
of asset
s bu
t m
erey
l di
vdes
i hi
s exi
st
ing sh
ares
ntoi PU 800K

sm
all
eruni
ts.
1-
100K 50K P
U
Earni
ngs bel
ong t
o t
he corporat
i
on unt
il decl
aredor
2-
100K 50K
gi
ven

TO
Revoca
t
ion

10-100K
- No rev
ocat
i
on ofdi
vden
i d may be
has u
nlesst i
has ot
n
beenoci
all
ycommuni
cat
edt
othes
tockhol
der
sori
sin
1M
t
he f
ormof t
ock
s di
vden
i ds whi
ch i
s rev
ocabl
e at any
ti
me p
ri
or to ri
dist
buti
on
.
Wi
ll1and2r
ecei
vef
ullamountofdi
vidends?

Stock
di
vden
i ds-no r
edu
ct
ion
, youcapi
t
ali
ze you
r
- YES.They ar
e ent
itl
ed howev
er i
fthey ar
e decl
ared
rest
ri
ct
edret
ai
nedearn
ings,
what sissu
i edi
s a pi
ecefo
del
inqu
ent,
t
he amou
nt du
e h
tem sha
l
l rst
be pp
ali
ed
pa
per.
Th
e rest
ri
ct
edearn
i
ngs rem
ai
n i
n t
he corp
orat
ion
t
o h
is del
i
nquen
cy u
pl
s expen
ses.

Cashan
d propert
y- edu
r ces corporat
e asset
s
Del
i
nqu
ency ccu
o rs,
youare call
ed toy,
pa
but youf
ail
ed
t
o pay.
n case
I of ock
st di
vden
i d, h
te d
eli
nqu
ent st
ock
St
ockdi
vden
i ds i
ncre
asecorporate
sset
s?aNo, ti w
il
l
hol
der i
w
ll not be
ent
itl
ed theret
o unt
il he h
as pai
d hi
s
onl
y have theect
eof ncr
ieasi
ng the
subscri
bedan
d su
bscri
pti
on i
n f
ull
.
pai
d-upcap
i
tal
of he
t co
rporati
on

Ar
enon-
stockhol
der
sent
itl
edt
orecei
vedi
vidends?
Wi
llt
her
e be a cor
respondi
ng i
ncr
ease i
n t
hei
r
prop
orti
on
atent
erest?
i
- No, t
ockdi
vden
i ds areci
vi
l r
fui
t
s of the
ori
gi
nal
i
nvest
ment,
and t
o the now
er
s of
the sh
ares on
bel
g the
- REM
AINS H
TE SAM
E
civil
ru
its.
f

- Exce
pt
i
on: w
hen st
ock di
vdend
i s wi
ll re
sul
t i
n a
How di
d t
he cour
t deci
de di
vdends
i i
n t
he cas
e of
f
racti
on
alsh
are
Nei
l
sen

ACS-
2M 1-
100K 200(
10%) *
VOTI
NG AND
- Stock
viden
di
ds can
notbe ssued
i t
o a er
psonwhoi
s not
DI
VIDEN
D RI
GHTS STI
LLTHESAM
E
a st
ockhol
dern i
pay
men
t ofservi
ces nre
dered.

SUB-
1M TO
- Whet
hercash,pr
oper
tyors
toc
k,onl
yst
ockhol
der
smay
10%
rec
ei
ve di
vden
i ds. i
vi
Dden
ds aref
rui
ts of nvest
i ment
s.
They come f
rom t
he U.
R.E.or sur
plus pr
ot
s oft
he
PU-
1M 10-
100K
corp
orati
on
.

ACS 2M
ACS 2M 1M U.
R.E.

SUB 1M
SUB 1M JULY 24 DECLARATI
ON
JULY31
PU 1M

PU 1M
1M RE

1 100K

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 30

1 100K 100T JULY 26-

Y(NEW The pr ovisi
ons of t he next pr eceding
ONE WAS D
ECLARE
D TO Y)JULY0-
310
0K paragraph shal l appl y to any cont ract her w ebya
corporati
on und ert
akes t
o man ageor op erae t all or
substantiall
y all of he t businessfo another rpo
co
rati
on,
2
whether suc h contracts arec al
led servi
ce cont racts,
operati
ng agre em entsr ootherw ise: Provi
ded , h owever
,
TO TO HAVE THE TRANSFER
That suc hs ervi
ce cont r
acts or operat
ing agreeme nts
RECORDED which r elate t o t he e xpl
oration, developme nt,
exploi
tati
on orut i
lizati
on of atural
n sources
re aym be
10 10
0K enter
edi nto or
f suchperi
odsas m ay e b providedby the
perti
nen tl aws or regu lati
on s.(n)
1M
Ther
equi
reme
ntf
oraval
idmanageme
ntcont
ractar
eas
I
nsof
ar as
1 andY who hasa bet
ter i
ght
r ? Al
r
eady f
oll
ows:
decl
ared
, but not t
yepai
d?
1. Resol
ut
ion f
othe boarddi
r
of
ceors
t
- Ri
ghtt
o recei
ve vest
upo
n decl
arati
on
. Who ever
owns at
t
he i
t
me of
decl
arati
onow
ns h
te di
vi
den
ds
2. Approv
alby theockhol
stders hol
ding or epr
r ese
nti
ng a
majori
ty of ht
e outst
andi
ng capi
tal t
ock
s or m aori
jty of
- Unl
ess ere
th s ia sti
pul
ati
ont
o the
con
t
rary the members n i
case ofnon-
stockcorporat
i
on ofboth
the mana
gi
ng and the mana
ged cor
porat
i
on
TRUSTFUND DOCTRI
NE

3. The appro
va
l oft
he st
oc
khol
der
s or em
m ber
s must
be
- The power t
o decl
are i
tif pai
d-up capi
tal i
s not
mad
e athe
t meet
ing cal
l
edfor ha
tt pu
rpose
mai
nt
ained or
s mpa
i
i ired

4. The cont
ract shal
l not be for aper iod longer han
t5
- Tr
ustf
und mus
tbe kepti
ntactf
or t
he pr
otect
ion of
year
sfor any one t
erm,exceptthose whic
hr elat
et o
cre
di
tors hw
o h
ave the
gh
tri
o
t rel
y onsu
chsu
bscri
pti
on expl
orat
i
on , development or ut il
izat
ion of na tural
an
d t
he pa
id-u
p cap
i
tal or
f t
he sati
sf
acti
on of ht
ei
r resources hi
chwm ay be t er
en
ed nit
o or
f suchperi
ods sa
cl
ai
ms may eb provi
dedby er pt
inentaw l
s an dr egu
lati
ons

Can
not cum
aculat
e surpl
us un
r
easonabl
y Eve
ry orpor
c ate act
eman
ates r
om
f t
he O
BARD

Basi
s si the
pai
d-u
p cap
i
tal I
s t
he vot
ing re
qui
rem
ents
of amaj
ori
t
y st
ockh
ol
der
ABSOLUTE?
Ent
itl
edt
o di
viden
ds

- Not onl
y a maj
ori
t
y b
ut 2/3
oft
he ou
tst
andi
ng ca
pi
tal
I
rresp
ecti
ve f
owhet
her the
subscri
pti
on i
s ful
l
st
ock ro 2/3
oft
he mem
bers
n a
i n
on-
stock corporat
i
on
woul
d be r
equi
red f
or t
he appr
ovalofa manageme
nt
Il
l
egal
ly d
ecl
ared
con
t
ract
n the
i fol
l
owi
ng i
nst
ances:

- Decl
are i
vi
dden
d wi
th t
he b
eli
ef hat
t tiorm
f ed pa
rt of
1. Wher
e t
he st
oc
khol
der
s r
epr
es
ent
i
ng t
he sam
e n
itee
rst
t
he U
.R.
E., bu
t yu
n pa
la sa pi
ca
t
al
ofbot
h t
he m
anagi
ng an
d managedpor
cor
at
i
on ow
n or
contr
ol o
mer t
han 1/
3 of ht
e tot
al outs
tan
ding capi
t
al
Di
rect
orsre
a ot
n iab
lle,unl
ess sec3
1 acted
in ba
d f
aith
st
ock fo
the m
anagi
ng corporati
on
; an
d
or gross
egl
igen
nce nit
he con
duct of
corporate
ai
rs a

2. Whe
re a maj
or
it
y oft
he membe
rs of he
t bo
ard of
Di
rect
ors even
i
f acti
ng n
i beh
alf oft
he corp
orati
on
, may
di
rec
t
ors of
he tman
agi
ng corporati
on al
socon
st
i
tut
e a
sti
l
l be h
eld
sol
idari
l
y l
iabl
e
maj
ori
t
y o
fthe d
i
rect
ors of
he t
man
aged
corporati
on

Pow
ert
o ente
ri
nto m
anagem
enton
c
tract 3. Wher
e h
te cont
r
actwoul
d const
i
tut
e hte managem
ent or
op
erati
on of l
alor su
bst
ant
ial
l
y all of he
t bu
sinessof
- New provi
si
on
an
other corporati
on, whet
her su
ch con
t
ract
s are l
ed
cal
ser
vi
ce contr
act
s. I
f i
t wi
ll not const
i
tut
e t
he
Secti on 44 . er ot ent
Pow er nt i
o m anagem ent man
agem
en
t of
all or su
bstan
t
ial
l
y a
l
l oft
he b
usi
ness of
con
tr
act. - No cor
porati
on shal l conclude aman agement an
other corporat
ion t
he rst paragr
aphof se
ct
i
on 44
contr
act i tw
h an other corporat
ion unl ess ch sucontr act wi
llappl
yand nott
hatoft
hesecond,t
hati
s,onl
ythe
shal
l have been appr
ovedy bthe boa rd ofdi r
ectors d an
vot
eoft
hes
tockhol
der
shol
dingorr
epr
esent
ingatl
eas
t
by st
ockholders owning at leastthe ma jori
ty oft he
a maj
ori
t
y ofhet ou
t
stan
ding ca
pi
talst
ockor a
mori
jt
y of
out
standing capital ock
st , or y b at east
l aajori
mty o
f the
mem bers n tihecase a ofnon-stock corporati
on, ofboth t
he mem
bers
n i
t
he case of
-st
ock
noncorporat
i
on wi
ll
the managi ng and t he manage d co rporati
on, at a ber
equi
red.
meeti
ng d uly ca l
led for the purpose: dProvi ed, at Th1)(
whereas tockholder or st
ockholdersr epresenting the How l
ong?
same niteerst of both the managi ng andt he managed
corporati
ons ow n o r cont
rol morehan t on e-
third 1/(3)of
- Noton
l
gerhan
t 5 years
or fan
y on
e erm
t
the totaloutstanding capit
al stocken titl
edt o vote of the
managing corporation; or2) ( hwer
e a maj orit
y of ht e
- Excepti
on
: exp
lorat
i
on, d
evel
op
men
t o
r ut
il
izat
ion of
mem ber
s of he t boar d of r di
ect
ors of he t managi ng
corporati
on al so const
itut
e a m aori
jt y of the m embers of natural
resources

t
he b oard ofdirc
eors
t of
the managed corporati
on,then
t
he manage ment ont
cract must be appro ved by t he Whati
sanul
tra-
vir
esactorcont
ract
?
st
ockholdersofthe m anaged rporati
co on ow ning at l
east
t
wo-thirds(2/3) of thet otalout
standi
ng cap italstock - Doct
ri
ne of i
mi
lt
ed capa
ci
ty.Corporat
i
on cando su
ch
ent
itl
ed to vote, ory b at east
l o-t
tw
hirds(2/3) ofhet acts dan
th
ings s
atii
s al
low
edt
o d
o
mem bers ni the case of a non-st
ockcor porat
i
on. oN
man agement con
tr
act shal
l be ente
red into for aperiod
- Act
sbeyond i
twi
llbe ul
travi
res,al
lowi
ng a col
lat
eral
l
ongerhan t ve yearsor anyf on
e erm
t .
attack

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 31

- I
f not
llegal
i per
se mere
ly voi
dabl
e. an
C be rat
ied - PT
C- t
rust
com
pan
y as ch,
su i
t al
so as
h mpl
ii
ed ow
p er
s
express
l
y or i
mpl
i
edl
y or eve
n st
opp
ed as equ
i
tab
le as o
t make them
mor
e at
t
ract
able
grounds
- Not l
t
ura-vi
resn i
pursu
an
ce f
oit
s egi
lti
mate si
bu
ness
- Ul
tra-
vi
res a
cts w
hich are ot
nll
egal
i per se
aym ecom
b e
bi
ndi
ngandenf
orceabl
eei
therbysat
isf
act
ion,es
toppel
s Japanesewarnot
esvs.SEC
or equ
i
tab
le groun
ds
- Non-
s
toc
k co
rpor
at
i
ons cannot
make pr
ot
s and
Con
sequ
en
cesfo
ult
ra-
vi
re
s acts? di
stri
but
e p
ro
ts otts
i sh
areh
olders

1. On t
he cor
por
at
i
oni
tse
l
f - Ul
tra-
vi
res ecau
b se apa
J nese ar
w ot
nes si a non
-st
ock
corp
orati
on
- Thepr
operf
orum,i
n accor
dancewi
tht
hepr
ovi
sionsof
PD 902-
A,as am
ended and
.A.N
Ro.8799 ay
m uspend
s Cri
sol
og
oJ-o
se vs. CA (
ALW
AYS ASK
ED BY DEA
N
or revoke,
ter prop
af
er oti
nce n
ad heari
ng,t
he ran
f ch
ise SUND
I
ANG
)
or cert
i
ca
te of regi
st
rat
i
on of t
he corporati
on f
or
ser
ious mi
sreprese
nt
ati
on as t
o what the
corporat
i
on - The negot
iabl
e i
nst
rume
nts l
aw whi
ch hol
ds an
cando or si d
oing tohe
t gre
at dam
age or u
prej
di
ce of acc
ommodat
i
on part
y li
abl
e on t
he i
nst
r
ument ota
the gen
eral
publ
ic hol
deror
f val
ue,al
t
hough su
ch hol
der at the
ti
me of
t
aki
ng t
he i
nst
r
ument knew
hi
m t
o be onl
y an
2. On t
he ri
ght
s of
the st
ockhol
der
s accom
modati
on part
y
, does
otnncl
iude norapp
l
y t
o
corporat
i
ons w
hich are accom
moda
t
ion pa
rti
es.
Thi
s s
i
- A s
toc
khol
der may br
ing ei
ther an i
ndi
vidual or becauset
hei
ssueori
ndor
seme
ntofnegot
iabl
epaperby
deri
vati
vesu
it o
t en
j
oin a threatene
d ul
tra-
vi
res ct
a or a cor
por
at
i
on wi
thou
t consi
der
at
i
on and f
or t
he
cont
ract
. f
I theact or
cont
ract as
h al
r
eadybeen accom
modati
onofan
other si u
lt
ra-
vi
res
perf
orm
ed, a
deri
vat
ive sui
t or
f da
mages
agai
nst ht
e
di
rect
ors ay
m be led,t bu
htei
r i
l
abi
li
ty w
il
l dep
end on - Cor
por
at
e oce
r
s may guar
ant
ee or endo
rse an
whet
hert
hey act
ed i
n good f
ait
h and wi
thr
easonabl
e accom
modati
onon
ly f
ispeci
ca
l
ly au
t
hori
zed
di
li
gen
ce nien
teri
ng n
ito th
e con
tr
act.
Sect
i
on 6
3 pa
r
agraph
11
3. On t
he mme
i di
ae
t pa
r
ties
Sect
ion10
- The cour
ts have notagr
eed as t
othe l
egaleectofa
corporate
tract
cont
si
ou
de of t
si au
thori
zedbu
siness Sect
i
on14an
d 1
5
but Bal
lat
ine gi
ves t
he f
oll
owi
ng summar
y of t
he
doctri
nes evolved: Cor
por
at
e power
s depe
nd on t
he agr
ee
ment of
het
st
ock
hol
dersather
r ntha
an
y d
ire
cor
t
a. I
fthe con
tract
i
s u
fll
y executed
both
ondes,
sit
he
con
t
ract
s i
e
ecti
ve n
ad the
cou
rt
s w
il
l no i
nterf
ere - I
t may se
l
l an
d i
t may guar
ant
ee
, cont
r
act not
t
o dep
ri
ve t
ei
her part
y of h
wat ha
s beenacqu
ire
d neces
sa
ri
ly i
ll
ega
l
, t
i w
il
lin theab
sen
ceof proo
f o
t the
undert i contr
arypres
umed wi
thi
n i
ts p
ower
. C
orporat
i
ons a
re
pre
sum
ed o
t cont
r
actwi
th n
iit
s pow
er
s-CARLO
S C
ASE
b. I
fthe cont
racti
s execut
ory on bot
h si
des,as a
rul
e,nei
t
her pa
rt
y canmai
nt
ain an acti
on f
or t
si - Pu
rpose
ause
cl m
ay e
b st
ret
ched
t
o coverTPLD
i
nter
net
.
non
-
perf
orm
ance I
t m
ay e
b w
ithi
n i
ts b
usi
ness.

c. Wher
e t
he cont
ract
is exe
cut
or on
one de
si on
ly
, - May i
t sel
l com
put
ers?O!
Not
her i
nl
e of si
bu
ness.
I
ts
an
d ha
s b
eenf
ull
y perf
orm
ed on t
he ot
her
, he
t t
rad
i
ng!
cou
rt
s d
i
er as to
het
hw
er an
acti
on wi
lll
ie ont
he
contr
actagai nstt he party who has r ec
eve
id BY-
LAW
S
benets ofper
for
mance underi
t.Ma
jor
ity oft
he
cour
ts, how
ev
e,r hol
d thatt
he part
y who has By-
Laws
r
ecei
vedben
ets
rom
fthe p
erf
orm
ance si est
opp
ed
t
o set putha
t h
te c
ont
ract
s i
u
ltra-vi
res to
ef
eat
d - Rul
e adopte
d by t
he cor
porat
i
on f
or i
ts i
nte
rnal
an act
ion on t
he cont
ract
. Th
i
s i
s mor
e i
n governance
conf
orm
it
y wi
th t
he d
oct
ri
ne that
o person
n shal
l
be al
lowed t
o enr
ich hi
msel
fat t
he expense of I
s the opti
ad
onofby-
laws man
dat
ory?
another
Whenshoul
dtheby-
lawsbeadopt
edorl
ed?Cani
tnot
Pri
vano
vs. Del
a R
ama beadopt
edear
lier
?

- Cou
rtl
ooked
i
nto theurpose
p ause
cl - Af
teri
ncor
por
ati
on-wi
thi
n1mo
nth(
emanat
esf
rom t
he
BOARD)
- Thepur
posecl
auseempower
sandl
imi
ts
- Pri
or
-more con
ven
i
ent si
(gnedbyt
he n
icorporator
s)
- Ar
ticl
esl
ikewi
sepr
ovi
det
hati
tma
ydealwi
th anyofi
ts
mone
y Whowi
llsi
gnt
headopt
ioncl
ause?

-
dea
l
broad
en
ough t
o cover
he t
d
onati
on i
tis n
ot ht
en - Maj
ori
t
y of ht
e st
ockh
ol
ders or
embers
m est
att
ed t
o by
ul
tra-vires the corp
orate tary
secre

- Not l
legal
i per se ce
henl
aw
( ofagen
cy)excess
ow
ers
p
are Whathappensi
fthecor
por
ati
on f
ail
stoadoptt
heby-
su
bject toca
rati
t
ion l
aws r
f
om t
he i
t
e provi
dedby the
aw?l Wou
ld t
her
e b
e an
au
tomati
c evocati
r on r
osu
spen
si
on?
- Rati
edbypa
ssi
ng the
re
sol
ut
ioni
n qu
est
i
on
- Prop
ernot
i
ce an
d heari
ng,mustrst
be com
pl
i
ed i
w
th
Carl
os vs.
Mi
ndoro gar
su .
Co
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 32

Lo
yol
a gran
d vi
l
lasvs.
CA Gov
t vs.
El Hogar

- Nott
he E
SC, bu
tthe I
H
GC - Di
d the u
co
rtcategori
cal
ly ru
l
edherehat
t ht
e p
rovi
si
on
t
h
i
n the ca
5use f
oac
t
ion i
s va
l
id?
- Must n
otal
waysmperat
i ive
- Rul
esgoverni
ng equ
i
ty,con
si
deri
ng t
he f
act tha
t h
tere
- Fi
li
ng of
by-l
aw
s m
anda
tory wasal
waysl
ackofquor
um

- Empower
edbySE
C - Sect
ion 29 BOD i
f st
i
ll con
st
i
tut
ing a qu
orum may l
lup
a vacan
cy ot
her ht
anby rem
oval
, et
c.
- Mer
ey
l a gr
oun
d, her
t e must be
proper i
not
ce an
d
heari
ng Gokongw
eivs
. SE
C

- Not a
ecthe
t st
at
us of ht
e corporat
i
on as a j
uri
di
cal - Sect
ion 48al
l
ows a corp
orat
iont
o am
end t
i by-l
aw
s
person
- Sect
ion 47 oft
he cod
e,the b
y-l
aws may r
p
ovi
de f
or ht
e
- Su
bject
the cor
porat
i
on t
o a n
e,as m
ay e
b s
isued
by qu
ali
cati
on an
d d
i
squ
al
i
cati
on
t
he SE
C
- I
t can
notbe sa
id G
oko
ngw
eihas a vest
ed gh
rit
s
Whendoby-
lawsbecomeeect
ive?
- Prevent
irec
t
ors
d rom
f tak
i
ng ad
van
t
ageof posi
t
ion t
o
- Unt
il an
d u
nlesshe
t S
EC gi
vest i
st
ampedofap
proval prom
ot
e h
is n
idi
vdu
i alnt
i
ere
st ot the
damagefo
others

- Su
spensi
on ofanygov
er
nment agency
. Th
e p
ermi
ssi
on - Theval
idi
tyorr
easonabl
enessofaby-
lawsi
saques
tion
mustrst
besecured-
ct
i
onse
46 of aw
l

El
emen
ts of
a va
l
id by-l
aw - Subj
ecto t
the i
l
mit
ati
on
s tha
t eason
r ab
len
ess fo
a by-
l
aw i
s a e
mer m
att
erofj
udgm
ent
1. I
t mustnotbe con
t
raryo taw
l , pu
bli
c pol
i
cy or
moral
s;
- Rul
e of
the m
ajori
ty an
d nott
he y
tran
nyoft
he m
inori
ty
2. I
t must ot
n bei
nconsi
st
ent i
t
wh t
he ar
t
icl
es of
i
ncorp
orati
on
; May ht
e by-
l
aws be am
end
ed al
t
ered or appeal
ed?

3. I
t mustbe general
and uni
f
ormi
n i
ts e
ect
or appl
i
cabl
e - YES.HOW?Twomo
des
t
o all
ali
keor th
osesi
mil
arl
y si
tua
t
ed;
1. By a maj
ori
t
y vot
e ofhe
t di
r
ect
or
s orrust
t ees and
the
4. I
t m
ustnotmpai
i r obl
i
gat
ionsan
d cont
ract
s or ves
ted maj
ori
t
y vo
t
e of the
outs
t
andi
ng capi
t
al st
ock or
ri
gh
ts;an
d mem
ber
s i
n a non
-
stockcor
porat
i
on, at r
egul
a ar or
sp
eci
almeet
ing call
ed or
f ht
at pu
rpo
se;
5. I
t must
be e
ras
onabl
e.
2. By h
te board
dir
ect
of
ors al
one hen
w del
egat
ed by 2/3
of
- Must not be
i
nconsi
st
ent i
tw
h exi
st
ing l
aws. Not
e b t
he ou
t
stan
ding cap
it
alst
ockor 2/3
oft
he mem
bers
n i
i
nco
nsi
st
ent wi
th rt
ai
cles f
oincorp
ora
ti
on a n
on-
stock rporati
co on.

By-
l
aws - Thi
s del
egat
ed power
,howev
er,i
sconsi
der
ed r
evoked
wheneveramaj
ori
tyoft
heout
standi
ngcapi
tals
tock or
- Nonel
i
ng woul
d notaec
t the s
tat
us of he
t mem
bers al
sh
l so vot
e at a regul
ar or speci
almeet
i
ng.
corp ,Loy
orati
on ol
a gr
and vi
l
las ca
se
I
fiti
s o
t b
e am
endedwhat sih
te proceeding?
-
Thewor
dmus
ti
snotal
waysi
mper
ati
ve
- on48n2
Sect
i d
p
aragr
ap
h provi
des:
- St
ockhol
der
s ar
e conl
usi
ve
ly pre
sum
ed t
o kn
ow t
he
provi
si
ons ofhet by-l
aws
Sect i
on 48 .Ame ndme ntst o by-l
aws. - The
r
d boar dofdirectorsortrus t
ees,byamaj ori
tyvotether eof,
How about
3 pers
on
s?
and t he ow ners of at east
l a
ajori
mty ofhe t outst
anding
capital t ock
s , or at eastl aaj
ori
mt y oft he mem bers fao
- NO. unl
essher
te s
i act
ualkn
owl
edge of
t
he sam
e h
tey non -st
ockcorporati on, at are gular or eci sp
al e met
i
ng
are not
esum
pr
ed t
o k
now oft
he provi
si
ons of
the by- duly called f or het pu rpose , may am endor epealr any
l
aws by-lawsoradoptnew by -laws .Theowner soft wo-thirds
(2/3) oftheut o
standing ca pital st
ock or wto-thirds2/3 ()
Fl
eisch
er vs.
Boti
ka Nol
asco oft he m em bers n ai n on-stock corporationmay del egat
e
to theoard b ofdi rectors or rustee
ts theow p
er ot amen d
or re peal any by-l
aw s o r ad opt ew n by- l
aw s:Provided ,
- Shares st
of
ockare person
alproperti
es
Thatany powerdel egated tot he board ofdirectors or
trusteesotamendor epeal r anyby- laws or dopta ewn
- Shares
ofst
ock ay
m ran
t sf
ert
o w
hom ever
he w
ishes by-laws s hall be c ons i
der ed as r evoked whenev er
stockhol
ders owning or repre senti
ng a maj ori
ty of he t
- Theby-
lawsi
scont
rar
ytol
aw outstanding ca pit
al t ock
s or amaj ori
t
y o ft he mem bers
in non -st
ockcorporati on s, hs al
l sovot e at aregul ar or
Ar
ticl
esofi
ncor
por
ati
on sp
eci
al e
met
i
ng.

- May rovi
p de reason
ab
le rest
ri
cti
on Wheneveranyamendmentornew by-l
awsare
adopt
ed, uch
s amendm ent or new by-l
aw s shal
l be
- By-
l
aws mer
ey
l n
iterna
llaw
s at
tachedt
o the origi
nal by-
l
aws in t he oce of het
corporat
i
on, and a copy t
hereof
, dul
y cer ti
edund er
oathby t
he corporat
e secr
et
ary nda a maj ori
ty o
ft he
- Ar
ticl
esi
sthecont
ractbet
ween and amo
ngt
hepar
ties
di
rect
orsor u tr
st
ees, alsh
l be led with the S ecu
ri
t
ies
an
d corp
orat
i
on
andExc
han ge om
C mi
ssi
on the same ot be t at
ached o t

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 33

theori
gi
nal arti
cl
es of ncorp
i orati
on an
d ori
gi
nal by- Whati
fthenot
icer
equi
reme
nti
snotcompl
iedwi
th?
l
aws.
Whathappened t
o any actpassed i
n a me
eti
ng when
The amended or new by-
laws shal
lonly be not
i
ce equ
ri
remen
t was ot
n requi
red i
tw
h?
eect
i
ve upon the i ssuan ce by t he Securit
ies and
Exchan
ge om
C missi
on ofa cer ti
cati
on tha t he
t same - Voi
dabl
e,subj
ectt
orat
icat
ion
areotni
ncon
sist
ent with this Code.(22a and 23a)

Boa
rd f
odi
rect
ors vs.
Ta
n
Baret
t
o vs
. LaPrevi
sora
- Not
i
ce r
equi
r
ementi
s t
he by-
laws i
s a mand
at
or
y
- Anycor
por
ateactemanat
esf
rom t
heboar
d r
equi
r
ement

- -
Dir
ectorshem
t sel
ves can
not am
endt
he by-l
aws f
ithey I
mproperl
y se
rved,y an
a
cti
on wi
ll be i
nval
idated
at ht
e
werenotgr
ant
edthesame obj
ect
ionofany st
ockh
ol
der or em m
ber

Sect
ion48 Mustbe el
hd i
n t
he proper
acepl

Thepowergr
ant
edi
snotsubj
ectt
orevocat
ionTorF? Wher
eshoul
ditbehel
d?

- FALSE - Appar
entf
rom t
hef
oregoi
ng pr
ovi
sion i
sthatme
eti
ngs
of t
ock
s hol
ders u
mst
, at l
alt
imes,
behel
d i
n thei
ty
c o
r
I
fthe by-
l
aws are end
amed h
wenwi
llt
hey ecom
b e val
i
d? mun
ici
pal
i
ty wher
e t
he pr
i
nci
pal oce of t
he
corp
orati
on i
s oca
l t
ed an
d, asf
ar s
a p
racti
cab
l
e,i
n t
he
- Uponi
ssua
nce of
t
heSEC t
hat ht
ey are not
nconsi
st
ient pri
nci
pal oce of
t
he corpo
rat
i
on.

Whati
ftheSEC f
ail
edt
oactwi
thi
n 10mo
nthswi
thout Mayt
he b
y-l
aws o
f a corporat
i
on provi
de t
hat m
eet
i
ngs
f
aul
t att
ri
butab
l
e o
t th
e corp
ora
ti
on
? behel
danywher
eint
hePhi
li
ppi
nes?

TorFanyame
ndme
ntoft
heby-
lawswi
llneverbecome - Whi
le t
her
e i
s no pr
ovi
sion aut
hor
izi
ng a s
tock
val
idunt
ili
tgi
vesi
tss
tampofappr
ovalev
enaf
ter1year corp
orati
on t
o h
old stock
hol
ders
meet
i
ngs ou
tsi
de of
the
Ci
ty of uM
nici
pal
it
y w
herehe
tpri
nci
pal oce siocated,
l
- TRUE.Ar
ticl
esofi
ncor
por
ati
onandby-
lawsar
edi
er
ent t
he aw
l al
l
ows a non
-st
ockcorporati
on t
o provi
de i
n i
ts
by-
lawsany pl
ace ofme
mber
s me
eti
ng pr
ovi
ded t
hat
MEETI
NGS prop
er no
ti
ce si sen
t ot a
ll mem
bers
ndi
iati
c ng the
dat
e,
t
ime an
d pl
ace of
he t
meet
ing w
hichsha
l
l bewi
thi
n t
he
Meet
ings Phi
li
ppi
nes.

- Meet
ingsofst
ockh
ol
ders 1. Dat
e xed T orF t
he by-
laws ofa s
tockcor
por
ati
on mayval
idl
y
i
n they-l
b
aws o
r by-l
aw prov
i
de t
hat mee
t
ingsshal
l behel
d anyw
here
n i
the
Phi
li
ppi
nes?
- Meet
ingsof rect
dior r
o ru
t st
ees
- FA
LSE. Non-s
t
ock corpor
at
i
onslan
g pw
ede prov
i
ded
Meet
ings are
egu
l
r
ar an
d sp
eci
al nak
alagay
sa y-
bl
aws an
d provi
dedprop
er noti
ce si gi
ven

Meet
ings f
ost
ock
hol
ders Corpo
rat
i
oncando n
ol
y su
ch thi
ngs as
hetaw
l al
l
ows t
i
t
o do
, DOCTRI
NE OF LI
MI
TEDCA
PACI
TY
Whati
sregul
arandwhati
sspeci
al?
San Mi
guelce
o loc
aetd i
n Or
tigasCent
er
. May
Whenar
eregul
arme
eti
ngsoft
hes
tockhol
der
shel
d?
st
ock
hol
ders
meet
ing be el
h
d n
i P
ICC cen
t
er?

- Fi
xed ate
d provi
dedby the
y-l
aw
bs - YES.Me
troMani
la,onesi
ngl
eci
ty

Whati
fther
eisnodat
e? Mustbe cal
l
ed by the
roper
p y
part

- Apr
il Whocal
ls?

Whyapr
il?
- Pre
si
dent
unti
l an
d unl
esst
here
is a prov
i
sion ,
secre
taryonorder h
of
e p
re
tsd
ien
t
- Poi
nt n
iti
me theudi
at
edn
anci
alst
at
ement ave
h been
prepared Whati
fther
eisnobodywhocancal
l?

Whati
fint
hedat
especi
edi
ntheby-
lawsorbyt
hel
aw
- Thepet
iti
oner
,st
ockhol
derma
ypet
iti
ont
hecour
t
i
tsel
fthe meet
ing w
asnot conven
ed,orfni
st
ance ack
l of
qu
orum
or or
f
ce m
aeure
j ? Whati
fther
eisa per
son whocan cal
l,buthef
ail
sor
negl
ects
o t
ca
llt
he m
eet
i
ng? M
ay ast
ock
hol
der peti
t
ion
- I
t may be post
pon
ed on
a re
ason
abl
e dat
e
t
o au
t
hori
ze a eet
mi
ng?

Not
i
ce qu
re
irem
ent
?
- Poncecas
e onl
y appl
ies whent her
e is NO per
so
n
au
thori
zed t
o cal
lt
he meet
ing. fIther
e i
s a person
, bu
t
- Regu
l
ar-
2 weeks
pri
or ot
ni
ce
negl
ects
is hd
uty.Po
nce i
w
ll not ap
ply
.

- Speci
al
-1 w
eek
Wr
itofi
njunct
ionmaynev
erbei
ssuedexpar
te

May the
oti
ce
n re
qu
irem
ent be
esse
l
ned?
I
s h
tere y
anexcep
ti
on?

- By-
l
aws m
ay rovi
p de al
onger or
a sh
ort
er du
rat
i
on
- Sect
ion 28on
ly n
ist
ance

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 34

Section 8. 2
Rem oval ofdir
ectors or ustees.
tr
- - I
fthe voti
ng re
qui
remen
t s
i met
, any
res
ol
ut
ion pa
ssed
Anydir
ectorortrusteeofacor porat
ion mayber emoved i
n t
he meet
ing, ven
e i
fimprop
erl
y hel
d or ca
l
led wi
ll be
f
rom oce by a vo t
e oft he stockholdersol di
hng or val
idi
fal
lthes
toc
khol
der
sorme
mber
sar
epr
esentor
represen
t
ing at east
l wo-t
thi
rds2/3 () oftheut o
standing du
ly represen
t
ed t
her
eat.
The a
lst ragraph
pa of sect
i
on
capi
tal ock,
st or
if h te corporat
ion be a non -
stock
51 i
s cl
ear on
t
he m
att
er h
weni
t provi
des:
corp
orati
on, by a vot e o f at east
l o-t
tw
hi
rds (2/3) of he
t
mem bers enti
t
led t o vote:Provided, Th at such rem oval
shal
l ake
t pl
aceei t
her t a ar egu l
ar meet i
ng of ht e
all p
roc
eedn
igs had and any busi
nes
s
cor
porat
ion or at a speci al m eeti
ng cal l
ed f or the t
ran
sact
edat an
y meet
ing ofhe
t st
ockh
ol
ders
purpose, d an
i
n ei ther ca se, t er
af revpious notice t
o or e
mmbers,
if wi
thi
n t
he pow
ers or
aut
hori
ty
st
ockhol
ders or mem bers of het cor porat
i
on of he t of ht
e co
rpo
rati
on
, sha
l
l be va
l
id even
i
fthe
i
ntenti
on to propose chsu
removal at het mee t
ing. A meet
ing bemp
irope
rl
y h
eld o
r cal
led
, provi
ded
speci
al m ee
ti
ng of he t stockholder
s or m em ber
s of a
al
l h
te st
ockhol
der
s or m
ember
s of he
t
corporati
on for the purpose of emroval di ofrec
tors or
trustees
, or an y ofhem t, mustbecal ledbyt he secretary corporati
onare presen
t or
dul
y represented
t a
on order of the pre si
den t or on the wri t
ten dem an d of t
he meet
ing.

the stockhol
ders representi
ng or hol ding at l east a
majori
ty of hte o utstanding cap ital ock
st , or, fit i bea Di
rect
ors/tru
st
ees
meet
ing
non-st
ockcor porati
on, on the wri t
ten dem and of a
majori
ty of ht e mem bers t i
en
tled t o vot e.Shou ld t he Regu
l
ar mon
( t
hly)an
d sp
eci
al(
anyt
i
me)
secret
aryfail or refuse to l lca
the sp ecial e met
ing u pon
such dem and or ai fl or refuse tove githe notice, or fi
May th
at be restr
ict
ed(
withi
n or ou
tsi
det
he P
hil
)
there i
s no secr etary
, h te cal l or
f themeet i
ng may be
address
ed dircelt
y tohe t stockh ol
ders or embers
m by
any stockh
older orem m
ber of t
he corporat ion signing - YES.unl
esst
heby-
lawspr
ovi
deot
her
wise.
the dem and. Notice ofhe tt ime andpl ace of such
meeti
ng, as well as of he tintention t o propose su ch I
s there
y an
n
oti
ce requ
ire
men
t?
removal
, m ust be gi
ven by pu bl
icati
on or y b written
not
ice presc
ribedi n t hi
s C ode. Rem oval may e b w i
th or - YES.1dayunl
essot
her
wisepr
ovi
dedbyt
heby-
laws
wit
houtcause:Pr ovided,Thatr emo valwi thoutcause
may otn beusedt o deprive m i
nority stockholders or
Whathappensi
fnot
icei
snotcompl
iedwi
th?
mem bers of he t ri
ght of epres
rentat i
on t o whi ch t hey
may be ent
itl
ed n uder ectSion24oft his C ode.(n)
- I
f h
te not
i
ce r
equi
r
ementi
s notcom
pil
ed wi
th t
he
meet
ing i
s i
ll
egal dan
wil
l noti
ndb t
he corporati
on
Cases
f re
omoval
or ou
st
er of
a di
rect
or except
hen
wsu
bsequ
entl
y rat
i
edor nit
he case
fao
cl
ose corpo
rat
i
on wherehe
t act an
of
y on
e di
rec
tor a
my
Mand
amus woul
d be appro
pri
ate re
medyfi
ther
e s
i a
bi
nd t
hecor
por
ati
on even wi
thoutame
eti
ngundert
he
person
au
thori
zed t
bure
f
uses
speci
al provi
si
onofSect
ion10
1 oft
he C
ode.

Quorum
andvo
t
ing re
qui
rem
ent
Cannot
i
ce beai
ved?
w <sec.
53
>

- Maj
ori
t
y st
ockh
ol
ders or
embers
m const
i
tut
e aqu
orum
Secti
on 53 .egul
R ar nd
a speci
al eet
mingsof
I
s t
he pr
esenceof he
t maj
or
it
y ow
ner
s of he
t di
rectors
r rus
to t
ees-
. eRgu
l
ar meet
i
ngs of
t
he board of
ou
tst
andi
ng capi
talst
ock AB
SOLU
TE t
o have a quorum
? di
rect
ors roru
tst eesof everyorati
corp
on sh
all be h
eld
mont
hly,unl
esshe t by-l
aw
s provi
deot
herw
ise.

- NO. whent
he code
qui
re
r
es a i
gher
h quor
um i
t m
ust
al
so e
b eq
ui
val
en
t o
t th
e vote i
requ
red Speci
al e
meti
ngsof ht
e boardof rect
diors or
trust
ees ay
m eb h
eld at anyt
ime uponthe cal
l oft
he
presi
den
t or asrovi
pdedin t
he by-l
aws.
Do youi
ncl
ude non
-
vot
ing share
s i
n arr
i
ving at he
t
vot
ingr
equi
reme
ntt
ohav
eaval
idcor
por
ateact
?
Meet
ings of dir
ector
s or t r
ust
ee
s of
- I
t de
pen
ds. corporat
i
ons may e
b h
eld anywher
e n
i or outsi
de f
othe
Phil
ippi
nes,unless theby-l
aws provi
deotherwi
se. Noti
ce
ofregu l
ar orecisp
almeetings stati
ng theate,d time and
- Secti
on 6 l
ast pa
r
.Ifi
t all
fs wi
thineth
p
enul
ti
mat
e p
ar.
placeof hte meeti
ng mustbe sent o t everyir
ect
d
or or
Of secti
on 6 trust
ee at east
l eon
(1) ay
d prior t
o t he schedul
ed
meeting, un
l
ess otherwi
se r p
ovi
dedby t he by-
laws. A
Fi
ve requ
isi
t
es f
oa va
l
id meeti
ng direc
tor ortrust
ee m ay waive thi
s requirem
ent
, either
expressl
y or im
pl
iedl
y.(n)
1. I
t must be dhel
on t
he at
de xed
n t
i
he by-
l
aws orn i
accorda
nce i
w
th a
lw - YES.Expr
essl
yandi
mpl
iedl
y

2. Pri
ornot
i
ce m
ust
be ve
gi
n - SE
C rul
ing

3. I
t mustbe hel
d at
he pr
oper
pl
ace A speci
al me
eti
ng i
sval
id wi
thout not
ice
wher
ethe di
rect
orsar
e al
lpr
esentorwher
e
4. I
t mustbe cal
l
ed by
het prope
r par
ty t
hey con
sent
o t
he meet
ing. Prese
nce t
a h
te
meet
ing wai
veshe
t w
ant of
not
i
ce.
More
over
,
5. Quor
um and ot
v
ing eq
ruri
ement
s m
ust
bemet i
t has
been
rul
ed t
hat h
te mee
t
ing of he
t
di
rect
ors i
thou
w t a orm
f alcal
l rst
bei
ng h
ad,
Dateot
n com
pl
i
edwi
th, not
i
ce,
place, not
pli
ed
com
wi
th
an
d not
i
ce ther
eof
givent
o the
mem
bers,
di
d
and t
he per
so
n who ca
ll
ed not au
thor
i
zed, hat
w not op
erat
e t
o i
nval
ida
te i
t ort
o rend
er the
hap
pen
s o
t a
nyresol
ut
ioncal
led? proceedi
ngs whi
ch wer
e t
aken
at ti voi
d, or
f
ev
ery mem
ber of
theboard
ere
w pres
ent
, an
d
- Sect
ion 51
, an
y meet
ing sh
all be val
id provi
dedal
lthe
t
hei
r o
jnit act
i
on ha
d com
pe
lel
ty bou
nd t
he
st
ockhol
dersar
e pre
sent or
dul
y r
epr
ese
nte
d an
d
RD
corporati
on as fit
he meet
ing h
asbeen
cal
l
ed
provi
dedit s
i w
ithi
n t
he p
ower of
hetco
rporati
on.3
wi
th due f
ormal
it
y, and ever
yone of t
he
pa
ragr
aphof32
4
di
rect
orsad
h recei
vedprop
er oti
nce.

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 35

What i
sthe quor
um and v
oti
ng r
equi
reme
nt i
nthe Sect
ion 58.
Pr
oxies.
- St
ockhol
ders d
an
di
rect
ors eet
mi
ng? mem
ber
s may vot
e n
i per
sonor by proxy
n al
l mee
i t
ings
of ockh
st ol
ders
or m
embers.
Proxi
es sha
l
l n
i wri
t
ing,
- Maj
ori
t
y of
the em
mbers of
t
he bo
ardfo
dir
ect
orsen
t
(i
re si
gned
by theockhol
stder orem
m
ber d
anl
ed bef
or
e
mem
ber
shi
p) t
he schedu
led meet
ing wi
th t
he corpor
at
e secr
et
ary
.
Unl
esstherw
o i
se rovi
p ded i
n t
he p
roxy,
it sha
l
l be va
l
id
Vot
erequi
redt
opassaval
idcor
por
ateact
? on
ly or
f theeet
m
ing o
fr h
wi
ch i
t s
i n
iten
ded
. No p
roxy
sh
all be val
id an
d e
ect
i
ve or
f aperi
od l
ongerhan
t ve
- Maj
ori
t
y ofhose
t r
esent
p at
hi
chw
ther
e s
i a qu
orum(
3 (
5) ears
y t an
a y on
e i
t
me.(
n)
presen
t, vot
e of 2 ci
su
ent
)
How l
ong ay
m a proxy
xi
st
?e
- Except
i
on, m
ajori
ty of l
alt
he mem
bers of
he boa
t r
d i
n
case
of ecti
elon of corpora
t
e o
cers,
unl
ess e
tha
rt
icl
es
- Maxi
mum of5 ye
ar
s
provi
de or
f a eate
grr quo
rumor vot
ing requ
i
rem
ent
- Val
idf
ort
heme
eti
ngi
nwhi
chi
tisi
ntended
Shou
ld th
e d
i
rect
or or
rust
t
eesebph
ysi
cal
ly p
resen
t
?
I
s p
roxy revoca
ble?
- Gen
eral
ru
le,mustsi
t an
d act as od
ay bo
t h
ave a l
id
va
corporate act - Gen
eral
l
y revocab
le,unl
ess cou
pl
ed i
w
th nt
i
erest

Fi
ve m
an mem
ber boar
d, a ee
mt
ing was cal
l
ed oday
t , Revoca
t
ion
shou
ld t
heph
ysi
cal
prese
nce orarm
w bod
i
es re
qu
ire
s o
t
con
st
i
tut
e a quoru
m? - A pr
oxy
,li
ke agency i
n gener
al i
srevocabl
e unl
ess
coup
led wi
th an i
nte
r
est an
d r
evocat
i
on need
not eb
- NO. i
t s
i n
ot equ
ri
red. econ
Tel
f
eren
ce r
o vi
de
o co
nf
erenc
e madeby f
orm
al not
i
ce ni wri
t
ing. ev
R
ocat
i
on may be
i
s al
low
ed,
E- com
merce
l
aw exp
ress
edto th
e p
roxyol
der,
h to th
e el
ect
ion com
mit
tee,
by a subsequentpr
oxy t
o anot
her or by sal
e oft
he
Mem
bers
hi
p sub
j
ect
to a
lws share
s.Th
us i
t m
ay be r
evokeor
all
y by condu
ct u
sch
t
hat ap
peari
ng an
d asser
t
ing t
he ri
ght to evot
at a
St
ockh
ol
der ot
nyet meet
ing byt
he regi
st
ered now
er of
t
he sh
aresvokes
re a
proxyrevi
pou
sly gi
ven.
May i
d t
rec
or vot
e byproxy?
Mustbe su
bmit
ted to ai
da
val
t
ioncom
mit
tee
- NO
By-
l
aws of non
-
stoc
k cor
por
at
i
onsmay denypr
oxy
I
fA i
s a i
d or an
rect d a meet
ing s
i ca
l
ledf
or ht
e p
urpo
se vot
ing
ofel
ect
i
ng anew set
ofBOD canA vot
e by r
oxy?
p
Whati
svot
ingt
rustagr
eeme
nt?
- YES.Becausei
tisas
toc
khol
der
sme
eti
ng
- One cr
eat
ed by an agr
eem
ent t
be
ween a gr
oupof
I
f dir
ect
ors eet
mi
ng,can
not vot
e b
y p
roxy st
ock
hol
ders of
a co
rporati
on an
d a tr
ust
ee,
or a roup
g
of den
it
ical agreem
en
ts betw
eeni
ndi
vdu
i al ock
sthol
ders
St
ock
holder
s ri
ghtt
o vo
t
e
an
d a com
mon t
rust
ee,wher
ebyti
is provi
dedt
hat or
f a
t
ermo years or
or af
peri
od conti
ngentpon
u a cer
tai
n
- I
nherent
n st
i
ock
ownershi
p
even
t, or n
uti
lthe ag
reem
enti
s erm
t i
nated,
cont
rol
over
t
he st
ockow
ned y
b su
ch stockh
ol
ders,
sh
all be od
lgedn i
- How
eve
r thi
s ri
gh
t s
i not l
waaysi
nher
ent,
becau
se i
t
t
he t
rust
ee, t
hei
er i
w
th or i
w
thou
t re
servat
i
on t
o t
he
may be ni
de
ed:
ow
ner
s or per
sonses
d
i
gnat
ed by t
hem t
he pow
er ot
di
rec
t how
suchcon
t
rol
shal
l bei
ssu
ed.
1. Redee
mable and pr
eer
fr
ed shar
es
, h
owev
er i
f
f
ound
ers share
s a
re s
isued
othersay
m e
b deni
ed
- I
t s
i a devi
se of n
bi
di
ng st
ockh
ol
ders
t
o vot
e as a uni
t
the
righ
t o
t vo
t
e.
an
d t
hus assu
ri
ng a esi
d rab
l
e st
abi
li
ty an
d co
nt
inui
ty n
i
man
agem
entn i
sit
uat
i
ons w
her
e t
iis n
eeded.
2. May be den
i
ed by t
he art
icl
es f
o ncorporat
i i
on or
con
t
racts
Whati
stheeectofav
oti
ngt
rus
tagr
eeme
ntr
elat
ivet
o
the
righ
ts?
- Whennotdeni
edt
heyma
ydosoi
nper
sonorbypr
oxy

- Lee vs.
CAmustpa
ss ht
ese t
cri
eri
a
May the
ght
rit
o vot
e by roxy
p be
en
ied?
d

1. Th
at he
t vot
ing ri
ghts of
t
he st
ockare parat
se ed f
rom
Mayt
he arti
cl
es of
ncorporati
i onden
y?
the other
ri
but
es
attof
ow
nership;

Mayt
he b
y-l
aws va
l
idl
y p
rovi
de t
hat proxy
vot
ing s
i n
ot
2. Thathe
t vo
t
ing r
ight
s gr
ant
ed ar
e i
ntended
to be
al
l
owed?
i
rrevoca
bleor
f ae
d
nit
e p
eri
odoft
ime;an
d,

- NO
3. Th
at ht
e pri
nci
pal pu
rpose t
hof
e gr
an
t ofvot
ing ri
ght
s
i
s tocqu
ai
re voti
ng con
t
rol
of he
t co
rpo
rati
on
.
Onl
y non
-
stoc
k may e
b d
eni
ed pr
oxy vot
i
ng (may e
b
br
oaden,l
imi
tedordeni
ed)
Duri
ng t
he du
rat
i
on of ht
e t
rust
hey
t arerr
evocabl
i e
unl
ess ere
th s ia viol
ati
on ei
the
r by au
fr
d
Proxy n
voti
g s
i amatt
er of
ri
gh
t gran
tedbyl
aw

Requ
i
sit
es
Requ
i
rem
ent
s of
a val
i
d proxy?

- Sect
ion 59
- Sect
ion58

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 36

Sect
ion 59. Voti
ng t rusts.- One oror em Lega
l i
t
tl
e is an
tr
sf
erred
to the
voti
ng tr
ust
ee
stockholders ofa stock orat corp
ion may creat e a voting
trust orf thepu rpose of conf
erri
ng upona t rustee or May the nvoti
g r
tust
ee vot
e byproxy?
trust
ees e thri
ght ot vo t
e a nd other ght
sripertai
ni
ng to
the sh ares orf aperi
odnot exceedi ng ve 5)( years aty an
- Yes,l
egalownerma
yvot
ebypr
oxy
ti
me: Pro vi
ded,ha T
t n i t he case of avot ing trust
specicall
y requi
redsaacon di
t
ion i n a l oanagreem ent
,
May the proxy
ol
der he
vot
by r
oxy?
p
said voting trustay m be f or aperi od exceeding ve( 5)
yearsbutshal lautomaticall
yexpir
eupon f ullpayme nt
oft he oan
l . A voti
ng tr ustagreem en t m ustbei n writi
ng - NO, (
AGENT)an age
nt can
have no
ot
her age
nt un
l
ess
and not ari
zed, an d shal l specif
y t he t erms and sp
eci
c
all
y al
low
edby th
e pri
nci
pal
conditi
on s t
hereof. A cer t
iedcopy of such agree
ment
shall be l ed with t he corporat i
on and wi th t he Stockhol
der execu
ti
ng as a proxy
, s
i h
e qu
ali
edt
o be
Securiti
es an d Exchan ge Com mission; herw
ot ise,ai d
s
vot
edasadi
rect
or?
agreement is i neect
ive and un enforceabl
e. The
cert
icate orrt i
ce
cates f stoockcovered by t
he voti
ng
Whyi
shequal
iedt
oac
tasadi
rect
ori
fthes
tockhol
der
trust eem
agrent shall be can cell
ed an d new on es shal
l
beissuedinthenameoft hetr ust
eeort r
us teesst
ati
ng execu
t
es s
a a i
rect
d or?
that htey are ssued
i pu rs
uan t ot sai
d agree ment.I
n the
books ofthe corpor
ati
on,i t shallbe noted thatthe - The beneci
alowneroft
he shar
esi
n av
oti
ng t
rus
tis
tr
an sf
er nithe n ame ofhe t tr
ustee orust tr
eess imad e di
squ
al
i
edt
o b
e adir
ect
or nia voti
ng trust
hereas
w n i
pursuant ot sai
d voti
ng trustagreem en t. a p
roxy
,the ow
ner of
t
he sha
res m
ay be
el
ect
ed s
a su
ch
si
nce ega
ll ti
tl
e th
ereof
emains
r wi
th i
h
m
The t
rust
ee or t
rus
tees shal
l execute and
del
i
ver to tr the
ansferors ti
ng
votrust cert
icat
es, hiw
ch - YESher
emai
nst
obet
heowner
shal
l betran
sfer
abl
e ni the same man ner d anwit
h the
same e
ect as certi
catesst ock
of.
I
s the
st
ockh
ol
der execu
ti
ng i
n a vot
ing trust agreem
en
t,
i
s h
e qu
al
ie
d t
o a
ct as da
i
rect
or?
The v
oting t
rust agreement l
ed with t
he
cor
porat
ion shall besub jectotexam i
nati
on by any - NO. e
cases tost
ockh
be ol
der of
ecor
r
d, no
lon
gerhe
t
st
ockhol
der of hetcorporat
ion in the sam e manner as
l
egal
owner of
sh
ares
any other corporate or ecord:
r bookProvi
ded
, That both
t
he tr
ansf
eror dan the trustee orust tr
ees aym exerci
se
May the corpo
rat
i
on en
f
orce
hetvot
i
ng r
tustagreem
en
ts
t
he rightof ni spect
ion of l alcorporat
e books and
rec
ordsi
n accordance iw
th the p rovi
sions ofhist C
ode. execu
t
ed y
bti
s st
ock
hol
ders?

- NO.NI
DC vs. AQ
UINO
Anyot
herstoc
kholdermaytr
ansferhi
sshares
t
o t
he sam e trust
ee orr ust
tees upon the terms and
cond
iti
ons stat
ed in t he vot
ing t
rust agreement, and - Not ari
vy
p to
hetcon
tract
t
hereup
on shal
l be bou nd by al
lt he pro
vsi
ions of ai
sd
agree
ment. - Ri
ght
s l
iab
il
it
ies of ast
ockh
ol
deraret
herei
n t
hei
r
i
ndivi
du
al cap
aci
ty- corp
orate
tit
yen
theory
No voti
ng trust agree
ment alsh
l be ente
red
i
nto f
or thepu rposeof i
rc
cumvent
i
ng t he a
lw agai
nst Vot
ingt
rus
tagr
eeme
nts
monopol
i
es na
d illegal
com
binat
ion
s ni rest
rai
nt oft
rade
or sed
u orf purposesffrau
od. - Norm
all
y exe
cut
ed i
n f
avor of
banki
ng an
d n
anci
al
i
nsti
tu
ton
is
Unlessexpressl
y renew
ed, lalir
ghts gran
ted
i
n a voting trust agreem
ent sha
ll au
tomati
cal
ly ex
pi
re at - So th
at ht
ey ca
n vote a certai
n set
ofdi
rect
ors
the endof he t agreedperiod, danthe voting trust
cert
icat
es as wel l ast he cert
ica
t
es of ock
st in the - Theywi
llbemor
esecur
ed
name ofhe tr tust
ee or rust
tees sha
l
lthereby bedeemed
can
cel
ledan d new certi
cates ofock
stshall berei
ssued

i
n the name ofhe t tr
ansferor
s. Vot
ingpul
lagr
eeme
nt

- Ente
r
s n
ito an
agr
eem
ent
The vot
ing t
rust
ee or t
rust
ees mayv
ote by
proxy
nless
u he t agreem
ent provi
des oth
erw
i
se. (
36a)
- Pul
l all
the
i
r sh
ares
t
o c
ast e
onvote

Doest i
need to be
ot
ari
zed?
n - Covere
d by ru
les governi
ng con
tract
s

- Yes,ot
her
wisei
tisi
neect
iveandunenf
orceabl
e - By pu
ll
ing t
hei
r vot
es t
hey candecl
i
ne t
he res
ol
uti
on
passed t
he
by oar
b d
Onl
y egal
l nersh
owi
p is ran
t sf
erred

Bei
ng sti
l
lthe b
eneci
alow
ner ht
ey m
ay an
tr
sfer ht
ese
E ND O F M ID T E R MS
ri
gh
ts

I
s t
he r
ightgr
ant
ed t
o a vo
t
ing t
rustagr
ee
ment
ST
OCK
S AND ST
OCK
HOLDERS
ab
sol
ut
e?(
toi
nsp
ect)

3 mode
s
- NO.

- The v
oti
ng t
rus
tagr
eeme
ntl
ed wi
tht
he cor
por
ati
on 1. By a cont
ract
ofsu
bscri
pt
ion i
w
th the porat
cori
on;
sha
l
l be su
bjecto t
exam
i
nat
i
on by an
y st
ockh
ol
der of
2. By p
urc
hase of
r
eas
ury
t share
s r
f
om t
he cor
por
at
i
on;
t
he co
rpor
at
i
on i
n t
he sa
me manner as
anyot
her
and,
cor
porat
e bookor r
ecor
d. Pro
vi
ded,
thatbot
h t
he
t
ran
sfer n
ad t
he t
rust
ee or tr
ust
eesmay exer
ci
se t
he
3. By pur
chase or
acqui
si
t
ion of hare
s s fr
om ex
i
sti
ng
ri
gh
t ofinsp
ecti
on ofal
l corp
orateok
sboa
nd records in
st
ock
hol
ders.
accorda
nce i
w
th t
he provi
si
ons of
thi
s C
ode.

Secti
on 60 su
bscri
pti
on
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 37

- Anycont
ract NO such
thi
ngas pu
rchase un
of
i
ssued
ocks
st

- Whet
herexi
sti
ngors
til
ltobef
orme
d A subscr
ipt
ion cont
ract can be condi
ti
onal pr
ovi
ded
there
s n
othi
i ng in e
thch
arter or
atu
test
p
roh
i
bit
ing i
t

Section 60 .
Subscri
pti
oncon t
ract
.- nAycontract orfht
e an
d not agai
nst pu
bl
ic orde
r
,law
, et
c.
acqui
sit
ion of un i
ssued st
ocki n an exist
i
ng corporati
on or a
corporati
on sti
llt o bef ormedsh al
l bedeem eda su bscri
pti
on Musti
t be n
i wri
t
ing?
wit
hintheme aningofthi
sTit
le,notwi
ths
tandi
ngthefactt
hat
the parti
es ref
er ot ti as a purc
haseor som e othert ract
con
. - NO, i
t may beal
or
(
n)
5M shou
ld i
t ben i
wri
t
ing to be
val
i
d an
d bi
ndi
ng a
s a
t
h
Underhe
t ol
d alw t
h emod
4e i
s PU
RCHASE su
bscri
pti
on?

Purchase - NO, st
atutesf
rau
of
ds n
ol
y ap
pl
i
es ot S
ALE
S

- Reci
procal
in n
atu
re Tr
ill
anavs.Quez
onCol
lege

- Pu
rchaser can
ei
t
her
n equ
ri
ret
he ssu
i an
ce - Cou
nte
r p
roposal
, h
tere
f
ore t
hereas
w a need
for an
acceptance
Xco.I
nc.
- Fac
ultati
ve eca
b usei
t s
i in
his o
wn f
ree i
ll
w
, t
isi vo
i
d

P Whatma
y be used as a consi
der
ati
on and how muc
h
sh
oul
d b
e h
te con
si
derati
on
?

Aut
hor
izedcapi
tal 1M - Sect
ion 62provi
des:

500 SUBSCRI
BED
Section 62
.on
C si
derati
onfor ock
st.s- Stock
s
sh
all not be ssu
i
edfor a con
si
derati
on l
ess tha
n the p
ar
500 UNI
SSUED ST
OCKSAS
( LONG AS
GAL
I
NG DI
TO)
or ssu
i ed pri
cether
eof
. Consi
derati
on for thei
ssuance
ofstock ay
m be y anor a com
bi
nat
ionofany o twor or
me
Z w
ant
s o
t acqu
i
re10
0K of he
t oll
fowi
ng:

Ent
eerd ni J
une 50%
shal
l be dow
n paym
ent
rem
aind
erDec
ember
1. ct
Aual cash
pa
id t
o th
e corp
orat
i
on;
08

o he w
il
l not be si
con
dered st
a
ockh
ol
der nl
u
ess eh h
as 2. Prop
ert
y, antgi
bl
e ori nt
angibl
e, actu
ally recei
vedby
the corpo
rat
i
on an d necessary veniorencon
t or
f ts
i u
se
paidn i
ful
l
and l
awful purposes t aaai
fr val
uati
on equalt
o thearp
or ssu
iedval ue of t
he st
ock issu
ed;
Augus
t08pr
oper
tyi
sravagedbyr
eal
lar
etur
nedi
ntoshar
es

3. La
bor perf
ormed f
or or servi
ces ct
a
ual
l
y ren
dered
t
o
I
s Zl
iab
le toay
pthe b
alan
ce f
ohi
s a
cqu
i
sit
ion
s?
the rpo
corati
on;

- YES,nomat
terhow t
hepar
tyr
efert
oit
,iti
sconsi
der
ed
su
bscri
pti
on 4. Previ
ousl
y n
icu
rred
nde
i
bted
ness of
the corp
orati
on;

- Onceyousub
scr
i
be,
youbecom
e a st
ockhol
der hi
w
chi
s 5. Amou
ntstr
ansf
er
red from unres
t
rict
ed r
etai
ned
en
ti
tl
edto l
l
ath
e li
abi
li
ti
esof a
stock
holde
r earn
i
ngs toated
st pica
tal
; and

Z- subscr
ibed to 100T
/SofXCo.
6. u
Otst
ofrecl
asan
s
idi
n
ca
tgon
ishares h
exc
or conanged
versi
on. f
or ocks
st i
n t
he event
Amo
unthepai
d50k
Wher
etheconsider
ati
on i
sothert
han act
ual
Z di
d not pay t
he
on dat
e cal
l
ed an
d was ecl
d are
d a del
inqu
ent cash
, or consi
st
s of n
itangi
bl
e p ropert
y such aspa t
ents
share of co
pyri
gh
ts, the val
uati
on thereof al
l sh
ni
iti
all
y be
det
er
mined by the i ncorpor
at
osr or t he board of
Corpor
at
i
on pai
d 100
T/S t
here
f
ore t
he cor
porat
i
on di
rect
ors
, su
bjectotapp roval by t
he Securi
ties an d
Exc
hangeCommissi
on.
reacqu
ired the
ares
sh agai
n, what are
hey
t cal
led?

- Tr
easur
yshar
es Shar
es of st
ock shal
l not be i
ssued i
n
exch
an
ge or
f rom
p i
ssory
oten
s or
utu
fre servi
ce.
Y-80T/SDECEMBER 08
Thesameconsi
der
ati
onsprovi
ded f
orinthi
s
40 %(
AUGUST)
WAS D
ESTRO
YEDBY FI
RE,I
S H
E S
TILL I
L
ABLE sect
i
on,insof
ar as they ay em
b ap
plicab
le,may besed
u
TO PAYTHEUNPAI
D PORTI
ON? f
or ht
e ssu
i ance of dsbon
bythe corporat
ion
.

I
T WAS AGREE
D THATTIWAS A PURCH
ASE AND
WILL Theissued pri
ceofno-parvalueshar
esma y
BE A STOCKH
OLDE
R ONL
Y I
F PAI
D IN FULLSIHE bexed i
nt hearti
clesofincor
por
ati
on orbytheboar
d
LI
ABLE? of re
di
cors
t ursua
p nt o t aut
hori
ty co
nferr
ed upon i
t by
t
he art
icl
es of ncorporati
i on ort he by-l
aws, or n i
the
absencet
hereof
, bythe stockhol
ders r
eprese
nti
ng at
- NO, because
ha
t was
t a pu
r
chase
l
east maj
a ori
t
y of hte outst
andi
ng capit
al ock
st at a
meet
i
ng duly cal
ledfor ht
e purpose.
(5 and 16)
- Fi
rst exam
pl
e gal
i
ng sa
uni
ssu
ed stock

Amoun
t
s t
ran
sfer
r
ed f
rom unres
t
rict
ed r
etai
ned
- 2nd exam
pl
e gal
l
ing sa easu
trry sh
aresndi
hisa n
ui
ssu
ed
earn
ings ot st
ated i
cap
tal
w
hat does
t mean
i?
share

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 38

- St
ockdi
viden
ds wi
lli
n e
ect cap
it
ali
ze th
e unrest
ri
ct
ed - Quasi
-negot
i
abl
e
re
t
ainedearn
ings
Why ar
ethey consi
der
ed quasi
-negot
iabl
ewhen i
tma
y
Af
ter5year
sthef
ounder
sshar
esmaybeconv
ert
edi
nto bet
ransf
err
edt
hroughendor
seme
ntanddel
iver
y?
com
monshare
s ort
her
o nd
ki
s of
shares

May sh
are
s of ocks
st be i
ssued
wi
tho
ut o
cnsi
derat
i
on? 100t/s 001
Why? 10/s
- NO, t
wo reasons
by the
C,S
discr
i
minat
ory agai
nstot
her
st
ockh
ol
ders
and second
unl
awf
ul, t
i prej
udi
cest
he
Abc co.
ri
gh
t ofthe credi
t
ors Tru
stFund D
octri
ne B st
ol
e an
d f
orged the
si
gnature
C i
s purcha
sern i
goo
d f
aith n
ad f
or val
ue wi
ll C acq
ui
re i
tt
l
e
I
fissu
edwi
thou
t a co
nsi
derati
on

- Sect
ion65
,they i
w
ll becon
si
dered
as ate
w red ock
st
s

Secti
on 65 .i
L abi
li
ty of i rd
ectors a for
tered w
stocks
. - Any di r
ec t
or or oce r of a cor porat
ion
consent
ing to the i
ssu ance f ots
ock s for acon si
derati
on
l
ess an thits par or ssu
i
edval ue oror f aconsi
derati
on in
any formot her h t
an cash,ued val in exces
s of t s
i afr
i
val
ue, or who, havi
ng knowl edge thereof
, does not
f
orthwit
h exp ressi shob ject
ion in wri ti
ng and l e the Endor
sem entrom
f
sam e with the corporateary, secret l
sha
l besol i
dari
ly, Whenissuedbyowner
l
iable wit
h the stockholder concerned to hetcorp on Endorsed
orati y ow
bner
- ts
rict om
cpl
i
ance
an
d its credi
torsorf thei
erenc
d e b
etweent
he ai
fr val
ue
rec
eived tat
he it
me ofi
ssuan
ce of
t
he stockan
d t
he p
ar
or ssu
i edval
ue ofhe
t sam
e.(n) ANSWER:acer
ticat
eofstoc
kisnotr
egar
dedasnegot
iabl
einthe
same sen
se th
at ai l
lbor ote
n s inego
ti
abl
e,even i
fitis en
dorsed
i
n
- Subscri
bersay
m be com
pel
l
ed ot pay the
ue val bl
ank.Thus,whi
lei
tma
ybet
ransf
err
ed byendor
seme
ntcoupl
ed
wi
th del
iver
yther
eof
,and t
her
efor
e me
rel
y quasi
-negot
iabl
e,i
tis
I
ssu
an
ce of a i
c
cert
ate of
st
ock
is a
notherng
thi non
ethel
ess on
n
-neg
oti
abl
e n
i tha
tthe ran
t sf
erees
ak
est tiwi
thou
t
prej
udi
ce ot al
lt he ri
ght
s an
d def
enses hw
i
ch t
he r
tuean
d l
awf
ul
What ar
ethe r
equi
sit
es f
or t
he i
ssuance ofa val
id ow
nermay have
exc
eptn iso f
ar s
a t
he pri
nci
pl
es gover
ni
ng
certi
ca
t
e o
f st
ock
? est
oppel
s may ap
pl
y.

1. I
t mustbe si
gnedby the i
pres
dent or
ce-pre
visi He a
dent dan cquir
ed i
t by rt
vi
ue of aforg
ed i
nstrum
ent;no mat
t
er how
cou
nt
ersi
gn
ed y
b h
te secret
ary or tassis
an ary; i
t secret nnocen
t theurcha
p sers ib
ecau
se tii
s subj
ecto ta
l
l the gh
ri
t
s an
d
def
enses
2. I
t mustbe seal
ed i
wt
h the corporat
e seal
; an
d the enti
r
e
val
uet
her
eof(
toget
herwi
thi
nter
estorexpenses,i
fany) Whati
fAendor
sedi
t?
shou
ld have been
pai
d.
- He s
i est
op
ped, un
less there are other
ab
le de
f
enses
avail
Whi
lei
tappear
s,t
hata subscr
ibert
oshar
es ofs
tock
can
notbe enti
t
led t
o t
he i
ssua cate of
nce of acer
ti Tr
ansf
eri
srequi
red t
ober
ecor
ded i
nthebooksoft
he
st
ockunt
ilt
he f
ull amou
nt of shi
subscri
pti
on t
oget
her corp
ora
ti
on
, how
ever even
i
f not eco
rrde
d, i
t wi
ll be va
l
id
wi
thi
nter
estandexpenses(
incaseofdel
inquentshar
es) bet
ween t
he par
ties.Non-
regi
str
ati
on wi
llnothowev
er,
i
f any
i
s d
ue,ha
s b
eenpa
id, a bscri
su berotsha
r
es of a
ecthe
t val
idi
t
y t
her
eof at
l
east
n i
so f
ar as t
he
stock
, eve
n i
f not yet
ul
ly fp
aid, i
s en
ti
tl
ed to exe
rci
seal
l con
t
ract
i
ng p
art
i
es re
a con
cerned
.
t
he ri
ghts
of ast
ockhol
deran
d t
he cor
r
espond
ing
l
iabi
li
ty t
hat at
t
ach t
here
under
. Th
us, t
he Code Section 3.6Cert
icate ofock st ndatransfer of
provi
des: shares. - The capital st
ockof t ock
s corp orati
on s shall be
divded
i i
nto sh ares orf hwich cert
icates gn
si ed by t he
Sect
ion 72.
Ri
ght
s of unpai
d shar
es.
- presidentor vi ce pre sident, coun t
ersgned
i by t he
secretaryroassi st
ant secretary, and sealedwi th t he seal
Hol
ders ofscr
sub
i
bedsha
r
es ot
n uf
l
ly pa
id whi
ch are
of ht e corporat
i
on sha l
l bei ssued i
n accorda nce wi th
not del
inqu
ent sha
ll have l
lathe gh
ri
t
s of aock
st
hol
der
.
the by- l
aws. Sh ar
es of t ock
s so issued ar e per sonal
(
n) property an d may be t ran sf
err
ed by del ivery of he t
certi
cate or certi
ca t
es ni dorsedy b the ow ner ori sh
I
s t
he i
ssua
nce of acer
ti
cate
f o
st
ocknecess
aryt
o attorney-
in-
factor ot her person l
egal
ly au t
hori zedt o
con
si
der ht
e su
bscri
ber a
st
ockh
ol
der? maket he t ran
sfer
. N o tran sf
er, however
, sha l
l beval id,
except s bet
a weent he pa rti
es, ntuil hte t ransfer is
- NO, sha
l
l be consi
dered st
a
ockh
ol
der even
wi
thou
t a recordedi n the b ook s ofhe t corporat
ion show ing the
names of hetp art
ies to hettr ansacti
on,the d ate of the
certi
ca
te of
stock
transf
er, the umb
n er of the certi
cate or i
cert
catesd an
the nu mber of shares rantsf
erred.
I
nst
ances hen
w he m
ay ot
n be bl
ae o
t exerci
se i
h ri
s gh
ts
as su
chst
ockh
ol
der
No shar
es of st
oc
k ag
anst
i whi
c
h t
he

- Decl
ared
del
i
nqu
ent corporati
n theon
i oo
b hol
ks dsthe
of an
y u
npai
rpo
cod on
cl
ratiai
.m(
35sh
) al
l bet
ransf
erabl
e

- Whenheexer
ciseshi
sappr
aisalr
ight
U
nti
l egi
r st
rati
on i
s acco
mpli
sh
ed, h
te t
ran
sf
er
, h
tou
gh

Ar
ecer
ticat
eofs
tockst
ransf
err
abl
e? val
idbet
ween t
hepar
ties,cannotbeeect
iveasagai
nst
t
he corporat
i
on. Thu
s the,r
ecor
un
dedt
ran
sfer can
not
- YES en
j
oy the u
stat
s of
a st
ockh
ol
der;
he can
not ot
v
e n
or be
vot
ed f
or,and he wi
llnotbe ent
itl
ed t
odi
vidends.The
Ar
ecer
ticat
eofs
tocksconsi
der
ednegot
iabl
e? corporati
on wi
ll be prot
ect
ed when i
t pays
di
vden
i d t
o
the regi
st
ered now
er desp
i
te a revi
p ou
s ran
t sf
er of
whi
ch
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 39

i
t h
ad no kn
owl
edge. eTh
purpose
of egi
rst
rat
i
on - Absol
uteanduncondi
ti
onalt
ransf
er
the
ref
ores itw
of
ol
d: t
o en
ab
le th
e tr
ansf
eree to
rci
se
exe
al
l h
te ri
ghts of st
a
ockhol
derand t
o i
nform t
he - Onl
y t
he t
ransf
er or absol
ut
e conv
ey
anceof he
t
corporati
onofany cha
nge nish
ares nershi
ow p sot
hat ti ow
ner
shi
p oft
he ti
tl
e o
t a sha
r
e n
eedbe enter
ed an
d
canascer
t
ain t
he persons
enti
tl
ed t
o t
he ri
gh
ts an
d not
ed upont
he books
of he
t cor
porat
i
on i
n or
derha
t
t
su
bject to
e th
i
l
abi
li
ti
esof a stock
holde
r.
su
ch t
ransf
er may be val
id, ht
ereore
f, ni
asm
uch as a
ch
att
elmort
gage o
f theaf
oresai
d t
itl
e s
i n
ot a mp
col
ete
Thus,i
twasal
sor
uled byt
heHi
gh Cour
tin an
d ab
sol
ut
e al
iena
t
ion oft
he do
mi
nion an
d ow
ner
shi
p
Naut
i
ca Canni
ng Cor
p. s.
v Yum
ut
hlat A t
her
eof
, t
i
s en
t
ry an
d not
ai
ton upont
he b
ook
s ofhe
t
t
ransf
er of res
shaot
n ecorded
r i
n the stock corp
ora
ti
on i
s n
ot eces
n sa
ry req
ui
sit
e tots
i val
idi
ty
an
d t
ransf
er book
of he
t corporat
i
on i
s n
on-
exi
st
enti
n so f
ar as t
he cor
porat
i
on i
s Chu
a guan
vs
. Mags
asa
ka

co
nce
r
ned.
Thi
s is so be
cause
the
corporati
on l
ook
s on
l
y throu
gh i
ts b
ook
s or
f - Was t
he mo
rtgage val
id and eect
ive as agai
nst
t
he pur
pos
e of de
t
ermi
ning who i
ts su
bseq
uent h
ti
rd art
pies
st
ock
hol
dersre.
a

- Regi
st
er of deeds
wher
e t
he corpor
at
i
on r
esi
desan
d i
f
Regist
rati
on i
s n
eces
sa
ry or
f the
ol
l
owf
ing: di
eren
t n
i the regi
st
er of deed
s o
f ow
ner
s domi
cil
e

1. To enabl
e h
te corpor
at
ion to know
who t
si s
t
ockhol
der
s Unson
vs. Di
nami
to
are;
- Al
ltr
ansf
err
ednotr
egi
sterwi
llnothav
eaval
idf
orceand
2. To enabl
e t
he t
ransf
er
ee o
t ex
ecrse
i i
h
s r
ight
s a s eect
st
ock
hol
ders;
Ri
ght o
t tr
ansf
er a
my e
b regu
l
ated
3. To a
or
d t
he cor
por
at
i
on an opport
uni
ty t
o obj
ect or
ref
use regi
st
rat
i
onof he
t tr
ansf
er nicase
al
low
edbyl
aw; May ot
n be n
ure
ason
abl
y e
rst
ri
ct
ed

4. To avoi
d
cti
ti
ous an
d r
f
audu
lentransf
t er
s;an
d, Vi
olat
ionofnat
ional
izat
ionl
aw-Cent
ralBank

5. To r
p
otec
t cr
edi
tor
s w
ho havehe
tri
ghtotl
ookupon Lam
bert
vs.
Fox
st
ockh
ol
ders,
in case of no-paym
ent orat
ew
e
rd sha
r
es,
f
or th
e sati
sf
acti
on of hei
tr cl
aims. - Val
id , ma
y be r
easonabl
y r
egul
ated, r
est
rict
ed by
agreem
en
t of
part
i
es
Dut
y ofhe
t secr
et
arys imi
nist
er
ial
, hence an
m
dam
us
wi
lll
iei
fthesecr
etar
yref
usest
orecor
dthet
ransf
er,but - Reason
ab
le agree
ment by
he tpart
i
es
he ca
nnot bempel
col
edwhent
he tr
ansf
eree
s ti
tl
e tohe
t
sai
d sh
aresas
hon p
ri
ma aci
f e val
i
dit
y orncert
u ai
n - Reason
ab
le aso ten
lgth of
ti
me

Tr
ansf
er-absol
uteanduncondi
ti
onalt
ransf
ert
owar
rant Pa
dget
t vs.
Bab
cock
regi
st
rat
i
on i
n t
he bo
oks of ht
e corporati
on i
n order to
bi
ndt
hel
att
erandot
hert
hir
dper
sons. - Anyat
temp
ttor
est
rai
ntr
ansf
er

Other ri
rest
cti
on
s onthe gh
ri
tto tr
ansf
er sh
aresou
w
ld - SC, i
n t
he ab
sence
ofa va
l
id l
ienupo
n i
ts sh
ares
i
ncl
ude
:
- Val
idr
est
rict
ionsshar
esar
eappl
icabl
e
1. I
t s
i not val
i
d, exc
ept as
bet
weent
he part
i
es,unti
l
rec
orded
i
n t
he bo
ok
s of
the corpo
rat
i
on; - Anyr
est
rict
ion onas
toc
khol
der
sr
ightt
odi
sposeofhi
s
sha
r
es m
ust be st
con
rued
stri
ct
l
y;an
d an
y a
tt
empt ot

2. Shar
es ofst
ock agai
nstwhi
ch he
t corpor
at
i
on ol
hds an
y res
trai
n a t
ran
sfer of ares
sh s i
regarded
as bei
ng i
n
unpai
d cl
ai
m sha
l
l not beantr
sf
erab
le n
i the b
ooksof rest
rai
nt of
trad
e,i
n theabsen
ceof a l
i
va
d l
ien upon i
ts
t
he corporati
on; u
npai
d cl
ai
ms, ef
r
er toai
ms
cl ari
si
ng sh
ares,d an
excep
t o
t t
he extentt tha
val
i
d rest
ri
ct
i
ve
f
rom unp
aid sub
scr
i
pti
on an
d nototanyi
ndebt
edness r
egu
l
ati
ons an
d agree
ments st
exian
d are pp
al
icabl
e.
whi
ch as
tockhol
dermay owe t
he cor
por
ati
on suc
h as Subj
ect onl
y to ch
sures
tri
ct
i
ons, a ock
st
hol
der can
not
mont
hl
y du
es
; becont
rol
ledi
norr
est
rai
nedf
rom exer
cisi
nghi
sri
ghtt
o
t
ran
sfer by
the corporat
i
on or t
si ocer
s or by
other
3. Rest
ri
cti
ons r
equ
i
red t
o be i
ndi
cat
ed i
n t
he a
rti
cles of st
ock
hol
ders,
even
t
hou
gh t
he sal
e s
i o
t a com
peti
t
or of
i
ncorporati
on, by-l
aws an
d st
ockcert
i
ca
tesof acl
ose t
he com
pa
ny,
or ot a
n i
nsol
vent son
per
, or ev
en t
hou
gh
corp
orati
on
; a con
t
rol
l
ing inter
ests iso
l
d t
o on
e p
urcha
ser
.

4. Res
t
rict
i
onsi
mposed
y b
speci
all
aw, such
as he
t Pu
bli
c Certi
ca
t
e of
stock
s are
ran
sf
terrab
l
e
Serv
i
ce ct
A equ
ri
ring t
he a
ppro
val of
the governm
ent
agen
cy co
ncern
ed i
fit wi
ll vest
unt
o th
e ran
t sf
eree0%4 - By end
ors
em
ent nd
a del
iver
y of ht
e st
ockcer
ti
cate
o t
of he
t ca
pi
tal of
t
he p
ubl
i
c servi
ce com
pa
ny; the
tran
sf
eree

5. Sal
e t
o al
i
ensnivi
ol
at
ion ofmaxi
mum ow
ner
shi
p of I
n order
o be
t val
id, u
mstbe regi
st
ered
n i
t
he b
ook
s.I
f
sh
ares der
un he
t N
ati
on
ali
zat
i
onLaw
s; not
, wi
ll on
ly b
e b
i
ndi
ng a
mon
g p
art
i
es

6. Th
oseove
cr
ed byasonab
re l
e agr
eement of
the art
pies. How may sha
re
s of
stock ebr
t
ansf
err
ed?

Mon
ser
atvs.
Cer
on - Endorsem
ent of
t
ock
s cer
t
icate ow
by
ner ort
orney-
at
i
n-f
act i
th
w el
d
ivery
- Doest i
ncl
ude m
ort
gage?
Embass
y ar
fms v
s.CA
- NO, i
tis n
ot an
absol
ut
e ran
t sf
er
- Mustbe end
ors
ed by ow
ner ort
orney-
at i
n-f
act coup
l
ed
- Wi
llnotaectt
het
ransf
ert
hroughmo
rtgage wi
thdel
iver
y
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 40

- Endo
rsedot
ndel
iver
ed End
orse
ment an
d del
ive
ry i
s not ec
n
es(
ary vs.
TAN
SEC)
- Pr
oper
mode and
ann
m
ermust
be com
pl
i
ed i
w
th
Tanvs.SEC (
FULLKNOWLEDGE,HE I
SESTOPPED)
Razon
vs.
I
AC
- Per
sons
sought
o be
t st
ockhol
dersioce
r an
d has
- Del
i
ver
ednot ne
dorsed cu
stod
y of
the boo
k est
( op
ped
)

- Rev
esreofEmbassy
Farm
s Gen
eral
Rul
e or
f val
id t
ran
sf
er

- Endorsem
ent on
al
e s
i n
otsu
ci
ent nor
iver
del
y wi
thou
t - Cer
t
icat
e of t
ock
s must be end
or
sed by ow
ner or
end
orse
ments in
ot l
al
owed att
orney-i
n-f
ac
t co
upl
ed i
w
th el
di
very

- Endorsem
ent upl
s del
i
ver
y s
i m
anda
tory Excepti
on
s

I
s there
y an
other
odem ofransf
t err
ing stock? - Sect
i
on63uses
the o
wdr m
ay

- Not
ari
zedeed
d - Show
ing h
tat ht
ere may be other
odes
m t
of
ransf
err
i
ng
shares
- Deed of
assi
gnm
ent
I
s ther
e a t
ime f
rame orxed
peri
od aswhent
ran
sfer
Rural
bank ofSal
i
nas vs.
CA ca
n be ade
m ?

- I
f den
i
ed or
efur
sed i
tw
hou
t good
cau
se,
man
damus w
il
l - NO,(
WON vs.WACKWACK)
l
ie
Wo
nvs.Wac
kWack
Tayvs.CA
- Val
idbet
weencont
ract
ingpar
tiesev
en i
fnotr
ecor
dedi
n
- Man
damus m
ay ssu
ie f
ipeti
t
ionhas a ear
cl egal
l ri
gh
t corporat
i
onbook
s

- Never
i
ssu
ed nido
ubtf
ul cases - Ri
ght accru
es on
l
y f
iref
used

- Peti
t
ion
er f
ail
ed t
o establ
i
sh a cl
earl
egalgh
ri
t and - Stat
ut
e o
f i
mi
ltati
on
s d
oesnot ap
pl
y i
n regi
st
rati
on of
al
l
eged now
ers
hi
p s
i w
ithou
t meri
t sh
ares of
ock
st

- Di
d not acqu
ir
e ow
ner
shi
p by vi
rt
ue ofhe
t con
tr
act of - Mustdet
ermi
ned r
om
f t
he i
t
me of
ref
usal
pl
edge
Why ar
e t
hey non-
negot
iabl
e when t
hey may be
- I
n a con
t
ract
ofpl
edge
t
her
e mustbef
orecl
osu
re tr
ansf
erred
?

- I
n t
he case there
as o
nwa
tt
empt otorecl
f ose - Tr
ansf
erees pays i
twi
thoutpr
ejudi
ce t
o al
lthe r
ight
s
anddef
ense
s ast
he t
rue an
d l
awf
ul w
oner ay
m av
he
- Peti
t
ion
er u
msthave a
pri
ma f
aci
e ri
ght undert
he l
aw ex
cept nsof
i ar as suchr
ight
s and
def
enses re
a sub
j
ecto tthe
l
imi
tati
on
s mpo
i sedby t
he
Nava vs.
Peers
arket
Mi
ng pri
nci
pl
es overn
g ing estop
pel
s

- As
toc
k subscr
ipt
ion i
s a subsi
sti
ng l
iabi
li
tyf
rom t
he De os
l an
St
os vs.
Repu
bl
ic
t
ime h
te sub
scri
pti
onis m
ade
- Whyi
she,notconsi
der
edast
heownerofshar
es?When
- The subscr
iber i
s as much bound t
o pay hi
s i
t has been
sai
d tha
t when end
ors
ed by thener
owtii
s
subscri
pti
onas e h wou
ld b
e ot p
ay an
y ot
herdebt con
si
deredas st
ri
ct cert
i
ca
te? Becau
se cert
i
ca
te of
st
ock
s areon
n-
negot
i
abl
e
- No st
oc
k ce
rt
icat
e was i
ssued.Wi
thou
t st
ock
cer
ti
cat
e, h
wcih i
s t
he evi
dence of ow
ners
hi
p of - Al
though a s
toc
k-cer
ticat
eissome
time
sregar
ded as
corporate
ock,h
st
et a
ssi
gn
men
t of
corporate
ressha
si qu
asi
-nego
t
iab
le,i
n t
he sen
se tha
ti
t m
ay e
b tr
ansf
erred
e
ecti
ve on
l
y bet
weenthearti
pes ot h
te ran
t sac
t
ion byendor
seme
nt,coupl
ed wi
th del
iver
y,i
tiswel
lset
tled
t
hat the
inst
rum
enti
s non
-
negot
i
abl
e, becau
se t
he
Excep
ti
on t
o the eral
genru
le
hol
dert
here
of ak
tesi
t w
it
hou
t prej
udi
cet
o su
ch ri
gh
ts
or def
enses as the
st
ered
reginow
er or
cr
edi
t
or a
my ave
h
Rural
Ban
k of
Lipa vs.
CA under the
l
aw, except
nsof
ar
i as
suchri
gh
ts oref
d
enses
are bject
su to the
l
imi
tati
on
s mp
i oses
by the ri
n
pci
pl
es
- By n
otari
zedeed
d
governi
ng est
oppel
s.

- Cert
icate of
ocks
st
alr
eady
issued
must be
cou
pl
ed
Unau
thori
zedssu
ian
ce of
tock
s cert
i
ca
tes
wi
thdel
ivery
,except
i TANvs
on( .SE
C
)

St
ockcer
t
icat
e ha
s al
r
eady
been
issued
i
t must be 100/s
cou
pledi
thw th
e del
i
very 100
Af
tercer
ticat
eofst
ocki
sissued,mayi
tbeeect
ivel
y
t
ransf
err
edeven
wit
hou
t en
dorsem
ent or
del
i
very t
of
he
st
ockcerti
ca
t
e? 100pesos per
share
St
olenbyB and ofrged the
gnature
si Aof
- Per
sonsough
tto bea st
ockhol
ders ianocer sB sel
andha l
s to Cwil
l C acqu
i
re i
tl
t
e? ON
cu
stody

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 41

Aut
hor
izedcapi
tals
toc
k1M shar
es

Al
lar
esubscr
ibed whowi
llt
hecor
por
ati
on r
ecogni
zeas
ri
gh
tf
ul ow
ner Aor ?
D f
i both
wil
l be re
cogn
izedt
here
ENDORSEM
ENTFORM wi
llbeoveri
ssuance

C arm
ed i
w
th t
heend
ors
ementorm
f cer
t
icate
, sol
d to D - onl
y A ci
t
i ci
ngti
zens
nat
ion
al ba
nk vs. ate
st (
but f
i
(
innoce
nt pu
rch
as
er or
f va
l
ue)
, wi
ll D ac
qui
re i
tl
t
e? r
ecogn
i
ti
on of bot
h st
ockh
ol
ders ou
w
ld r
esu
l
t n
i an over
i
ssu
e of
shar
es,
t
hen o
nl
y h
te ori
gi
nal and t
rue n
ow
er an
c
- NO, su
bject
to su
ch ri
ghts dan
def
enses
s a
h
te r
tue nd
a ber
ecogn
i
zedasa st
ockh
ol
der)
l
awf
ul ow
ner ay
m have
- byvi
rt
ue o
f thedoctri
ne o
f non
-ne
go
tab
ii
li
ty of
certi
ca
t
e
Whati
fC now goest
othecor
por
ati
on and pr
esent
sthe
f
orm
? ofst
ock
s

Thet
rueandl
awf
ulownerwi
llneverbedepr
ived ofhi
s
- Then t
he cor
por
ati
on shal
lcancelt
he ol
dcer
ticat
e and ri
ghts
i
ssuesnew
a one,
nowi
n t
hena
me of
C, nowr
egi
st
er
ed Whathappenst
oD?
i
n the am
ne of,C
wil
l C acq
ui
re i
tt
l
e?
- D wi
ll have a
cau
se of i
on
act
agai
nst he
t corpo
rat
i
on f
or
Af
oundoutwhathappenedandgoest
othecor
por
ati
on t
he va
l
ue o
f hi
s acqu
isi
t
ion cost
ncl
u
isi
ve f
o dam
ages,
whohasabet
tert
itl
eC orA? att
orney
s ees
f and cost of
i
t su

- A, A cannot be depr
ived ofhi
sri
ght by vi
rtue ofan D su
es the
corporati
on f
or the
val
ue o
f hi
s a
cqu
i
sit
ion
unau
thori
zedransf
t er cost
, n
icl
usi
ve of dam
ages,orn
att
ey
s feesan
d cost of
su
it
. Whatmay ht
e corpor
at
i
ondo?
Cor
por
at
i
on cancom
pel Ct
o del
ive
r t
he new st
ock
cer
ti
cate becau
se e
h mad
e ar
epres
entat
i
on t
hat ht
e - NO def
ense, val
no
id def
ense, becau
se ti w
asr
eprese
nt
ed
cert
i
ca
te w
here good. t
o other
parti
es t
hat the
cert
i
catef ost
ock
s i
s val
id,
Ar
me dwi
tht
henew cer
ticat
eissuedt
oC,C del
iver
sto su
bsi
sti
ng, c.
et
D a p
urc
haser
n good
i f
ait
h an
d or
f val
ue wi
ll D acqu
ire
titl
e? 2nd si
tuati
on
, what cau
se of
acti
on may therporati
co on
have
? Rem
edy
?
- D wi
ll acq
ui
re i
tt
l
e took
the
shares
not by
vi
rt
ue o
fa f
orged
or n
uau
thori
zedt
ran
sf
er
, bu
t ont
he rel
i
ance tha
t h
te - Thi
rd par
ty compl
aint agai
nst C, but what i
fhe i
sa
st
ock
cert
i
ca
te s
i val
i
d an
d ow
nedbyC pu
rchaser t
h
orf val
ue? p
art
4 y cl
ai
m agai
nstB

Stockt
icate
cer now
in possessi
on ofD. A kn
ew ofwhat Whenma
ycer
ticat
eofs
toc
ksbei
ssued?
ha
ppen
ed an
d wento tt
he corpor
at
ion andcom
palns.
i
Whowi
llhaveabet
tert
itl
e? - Sect
ion 64provi
des:

- t
he corporat
i
onmay be com
pel
l
ed to
ecogni
r ze bot
h, A as
Secti
on 4.
6I
ssuance fost
ockcert
i
ca
t
es
. - No
st
ock
hol
der non
(-negoti
ab
le)D, rel
ian
ce th
at ht
e stock cert
i
cate ofst
ockshall be ssu
i ed to a su
bscri
ber nu
til
cert
i
ca
te s
i val
i
d an
d exi
st
ing a
nd ow
nedbyC t
he f ul
l amount of i h
s sub scr
ipt
ion toge
therwit
h
i
nter
est d an
expen
ses( i
n case of del
i
nquen
t shares)
, fi
Fo
rgedan
tr
sfers any si du
e,has een
b pa id. 37
(
)

- I
f h
te corporat
i
on shou
ld i
ssue
a new cer
ti
cate
n i Acer
ticat
e ofs
toc
k cannotbe i
ssued unl
ess he f
ull
y
pu
rsua
nce of f
orged
a t
ransf
er
, hte corp
orat
ion i
ncu
rs pai
d the oun
amt sub
scr
i
bed
no li
ab
ili
ty to the
pe
rson
i
n whose
favor
t s
i
i ssu
i edan
d Subscri
pti
on to thecap
i
tal
stock
s ofhet corp
orati
on are
i
t may demand i
ts r
eturn f
or cance
l
lat
ion.The i
ndivisi
bl
e
cor
por
at
i
on i
n such cas
e has bee
n gui
lt
y of no Clear an
mdat
e of ect
sion 148of he
t code
is that
het
mi
sre
prese
nt
ati
on
. On t
he other
nd,
hatii
s h
te du
t
y of rul
ing of he rtBn
t cou al
t
iazar .
vsLi
ng
ayen
Gul
f
,no
t
he pu
rcha
sero td
eter
mine that
he t
nidorsem
ent of
the l
ongerol
h
dst
rue
ow
ner si gen
ui
ne.How
ever
,i
fthe n
ew cert
i
ca
te ssu
i ed
t
o the r
pu
chase
r com
es nt
i
o the han
ds ofa bona
de
Section 148. Appli
cabil
ity t o e xist
ing
pu
rchaser
f
or val
ue, ht
e corpor
at
i
on wi
ll best
opp
ed corpo
rati
ons. - A l
l corporati ons l aw f
ully existi
ng an d
f
romden
yi
ng val
idi
t
y th
ere
of
, si
nce y
b s
isu
i
ng su
chnew doi
ng bu si
ness i
n t he P hili
ppines on t
he d ate of ht e
cert
i
catet represen
i ts h
tat he
t person
named th
erei
n i
s eect
ivit
y of thi s Code an d her eof
toreau thori
zed,
a st
ockhol
der of
the corp
orati
on. Th
e corp
orati
onis h
tus l
icensed or regi
stered by t he Securi ties and Exchan ge
f
orced
t
o recogn
i
ze oth
b e
thori
gi
nalcert
i
cate dan
new Commi ssion,ha sl
l be eemd ed to have au been
thori
ze
d,
l
icensedor regi st
eredndu er het p rovisi
ons of this Code,
cert
i
ca
te-
t
he ori
gi
nal
, becau
se t
he t
rueow
ner cou
l
d
subj
ecto t the terms a nd con ditions o f ti
s i l
cense, and
not be
depri
vedof s
hiti
tl
e b
y a f
orged
t
ran
sf
er
, an
d t
he
shal
l begover ned by t he provi si
on s hereof: Provi
ded ,
new
, becau
se of t
si r
epres
entat
i
on t
hat h
te person Thati fany suchc orporat
ion is aect ed by the new
named therei
n i
s h
te ow
ner of
sh
ares
n t
i
he corporati
on
. requi
rements of ht is Code, d sai corpor
ati
on sha l
l,
But f
ithe recogn
i
ti
on of both
st
ockh
ol
dersou
w
ld res
ul
t unless otherwise erheni provi ded, begi vena peri od of
i
n an over
ssue
i of shares,
t
hen on
ly t
he ori
gi
nal an
d not o mrehan t t wo 2 () years rom
f the e ect
ivit
y oft his
t
rue n
ow
er an
c be recogni
zed asst
a ol
ockh
der
. Th
e bon
a Code i t
w
hin which to com ply w i
th t he sam e.( n)

de pu
rc
haser t
of
he n
ew cert
ica
t
e w
il
l however
have a
r
ight of dam
age
s aga
inst t
he co
rpor
ati
on. The Subscri
pti
on t
o shares f st
oocks are nd
ii
visi
bl
e
corporat
i
on, n
i t
urn, ou
wl
d havea ri
gh
t of acti
on Al
so appar
entisthatoncea subscr
iberhas pai
d hi
s
agai
nstt
he person
who mad
e al
fse re
present
at
i
ons an
d su
bscri
pti
on i
n f
ull
, he b
ecom
esen
ti
tl
edt
o be i
ssu
ed a
i
n whose
favor
t i
s
isued
a newcer
t
icat
e. The
t
rue st
ockcert
i
ca
te a
nd i
n t
he even
t h
tat ht
e co
rporati
on
ow
ner of
hetsh
areshi
ch
w wer
e wr
ongf
ul
ly t
ran
sferr
ed ref
uses to
o so,
d het st
ockh
ol
der y
mnist
i
tut
e a case
f
or
woul
d ofcour
sehavea r
ightt
ocompelt
hecor
por
ati
on mand
amus w
i
th dam
age
s.Thu
s,i
t has ee
bn sai
d that
t
o i
ssue
him a cer
ti
cate
i
n l
ieu of ht
e ori
gi
nal one t
he du
ty of he
t cor
por
at
e oce
r
s t
o i
ssue st
ock
whi
chwaswr
ongf
ull
ycancel
led. certi
ca
t
es toose
then
ti
tl
edthe
ret
o is ai
nim
steri
al du
ty
enf
or
ceabl
e by and
m amus.
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 42

Fua Cun vs
. Summers and hCnia aBnki
ng o
Crp. t
he pa
rt of
t
he t
ransf
er
ee of at
wee
rd st
ocki
s mad
e t
o
- Thecour
ter
red i
n hol
dingthepl
aint
i ast
heownerof depe
nd uponwhet
her he
acq
ui
red t
he sa
me w
ithout
25
0 sh
ares
of ock;
st t
he pl
an
iti
s ri
gh
ts con
si
st ni not
i
ce, ei
theras pu
rchase
r or donee.
f h
I
e had
equi
t
y ni 500shar
es and
upon paym
ent of
the un
pai
d know
led
ge the
reof
, he s
i su
bject
to the
sam
e i
l
abi
li
ty a
s
po
rti
on of ht
e su
bscri
pti
on pri
ce e
h b
ecom
es en
ti
tl
edt
o hi
s transf
eror.
t
he i
ssua
nce of cer
t
icate
orfsai
d 50
0 sha
r
es i
n hi
s What i
st he nat
ure oft
he l
iabi
li
ty oft
he cor
por
ate
f
avo
r. di
rec
t
ors con
sen
t
ing to the
i
ssuan
ce ofater
wed st
ock
s
- No cer
ti
cate of
ockst
unti
lthe f
ull am
ount ha
s been and th
e ex
ten
t ofth
eri i
l
abi
li
ti
es?
pai
d. - Sol
ida
ri
ly i
l
abl
e w
iththe hol
der ofhet w
ater
edst
ock
s to
Water
edstock t
he exte
nt ofthe waterf
romsaid shares of t
ockss
- One w hi
ch is ssu
i ed y
b the corpo
rat
ion as uf
l
ly p
aid-u
p Wil
lal
lthedi
rect
orsbel
iabl
e?Whatifyou obj
ect
edwil
l
shar
es
, w
heni
n f
acthe
t whol
e amoun
t ofhe
t val
ue youalsobel i
abl
e?
thereof
has ot
n been pai
d. - If youdo n ot ssu
ie awri ttenobj
ecti
on, youare lsti
l l
iab
le
- Basi
s s
i pa
r avu
le and notthe ai
fr market
val
ue - Even pa ssi
ve irec
d tors aym e bi
lab
le
Sect
i
on 62 st
ates hat
t ocks
st shal
l not bei
ssued f
or a - Those havi
ng knowl
edge t
hereof
,butdid noti
nter
pose
consi
derat
i
on l
esst
han paror i
ssued
pri
ce t
her
eof
, the
i
r ob
j
ecti
on sh
all
be l
iab
le
whi
lesect
ion 13s
tat
est
hati
n nocaseshal
lbepai
d-up
capi
talbelesshan
t ve thou
sand[P500
0] pesos. - Sect
ion 65provi
des:
I
fissuedbel
ow pa
r,issu
edvalue con
si
dered
as ater
w
How may at
wee
rd ocks
st be
ssued?
i Sect i
on 65 .
Li
abil
it
y of i rect
d ors for awtered
1. For aonet
m ary consi
derat
i
onlessha t
n i
ts par or
ssued
i stocks
. - Any di rector or oce r of a cor porat
ion
val
ue; consent
ing t
o th e sisuance f ostocks for acon si
derati
on
2. For a consi
derat
i
on i
n propert
y,t
angi
bl
e o
r n
itan
gibl
e, l
ess an thit
s p ar or ssui
edval ue or or
f acon
siderati
on i
n
val
uedinexcessofi
tsf
airmar
ketv
alue; any formot her h tan cash,ued valin excess of t s
i afri
3. Gratui
tousl
y or under an agre
em enthat
t not
hi
ng shal
l val
ue, or who, having knowl edge thereof, does not
bepai
datal
l;or f
orthwit
h express his o bj
ection in wri ti
ng an d l e the
4. In the gui
se of
stoc
k di
vdends
i whent
her
e ar
e n
o sam e wit
h t he corporateary, secretl
sha
l besol ida
ri
ly,
su
rpl
us prot
s ofhe t corpo
rat
ion
. l
iable with hte st
ockholder con cerned to hetcorporati
on
Whyi
sst
ockwater
ingi
ll
egal
? and its credi
torsor f ht
e dierence b etweent he aifr val
ue
1. Th
e corporat
i
oni s dep
ri
ved of
ts i
cap
i
talt
her
eby uh
rt
ing rec
eived tathe itme of issuan ce of the stock and the par
or ssu
iedval ue of the sam e.( n)
i
ts bu
sinesspros
pect
s, n
anci
al capabi
li
ty an
d
resp
on
sibi
l
ity;
2. St
ockhol
der
s who pai
d t
hei
r su
bscr
i
pti
onsin f
ull
, or ACS-
100M 100M/S PAR VALUE-
prom
i
sed to pay thee,are
sam
nj
u
ired na
d prej
udi
ced yb 1.
00
t
he redu
ct
i
on of thei
r prop
ort
i
onate nt
er
iestn it
he SUBSCRI
BED-
50M FAI
R MARKET VALUE-
corporati
on
; an
d, 12.
00/S
3. Pr
esent an
d fut
urecr
edi
t
ors ar
e depr
iv
ed of he
t UNSUBSCR
I
BED
-50
M
A
corp
ora
te a
ssets or fth
e p
rot
ecti
on of hei
tr ni
terest.
B
- Corp
orati
on i
s prej
udiced
C
- St
ockholders,l
uti
on di
ofnti
erest
D
- Credi
torsareprejudiced,rt u
vi
e of gh
rit ot lookupo
n
E
corporati
ons prop
ert
i
es f
or t
he sati
sf
acti
on of t
hei
r
cl
ai
ms
Ther
e i
s a deni
al of pr
e-emp
tiv
e r
ight
s and di
rect
ors
Whati
stheeectofi
ssuanceofwat
ereds
tocks
1. As o
t the porat
corion - whena corpor at
ion i
s gu
i
lt
y of A,
B,C,
D,E deci
ded t
o i
ssue t
he r
emai
ning 50M and

ul
tra-vi
res or
l
lega
l
i actshi
ch
w con
sti
tut
e a
n i
njury to orsub
scr
i
bedf
or 10M
each
at2 p
er hs
are.

f
raud
upont
he pu
bli
c,or h
wi
ch wi
llt
endt
o i
njur
e or
Is there stock
wateri
ng fithe ai
fr marketue val
s
i 1
2.00
?
def
raud t
he pu
bli
c, he
t Stat
e may i
nst
i
tut
e a qu
o-
- No st
ock atweri
ng
war
rant
opr
oceedi
ngt
ofor
fei
tit
schar
terf
ort
hemi
suse
- Thebasi
sistheparvalue
or bu
ase foi
ts ran
f ch
ise. - Theshareswher
ei nfactpaid mor
ethan t
heparval
ue
2. As bet
wee
n the co
rpor
at
ion andt
he subsc
r
iber
- The
subscr
ipt
i
on i
s vo
i
d. Su
ch bei
ng t
he cas
e, he
t i
ndi
cated in
e th
art
i
cles f
oincorp
ora
ti
on
su
bscri
ber sil
iab
le t
o pa
y t
he f
ull par
or ssu
i ed val
ue
3 daysat
e
lr hey
t sol
d t
hei
r 10
M share
orf P1
1.
00 eac
h,
the
reof
,to ren
der ti val
i
d an
d eecti
ve.
t
heref
ore ak
mi
ng apro
t.
3. As t
o the conse
nt
ing st
ockh
older
s - Th
ey ar
e st
opped
f
romrai
sing a
ny obj
ect
i
on theret
o;
Can you qu
es
t
ion t
here ua
act
ti
ons? ha
Wt wou
ld be the
4. As o
t d
issent
ing st
ockh
ol
ders n- vi
I
ew oft
he di
lut
ion of
cause of i on
act
?
thei
r prop
ort
ion
atent
erest
i i
n the corp
orati
on
, theyay
m
- It may be quest
i
oned.
com
pelhe
tpaym
ent of
the w
at
er
i
n t
he st
ocksol
ida
ri
ly - Duty o floyal
t
y ordu ci
ary ut
d
y a s su
chdi
rec
tors
agai
nst ht
e r
espon
si
bl
e an
d consen
ti
ng di
r
ect
ors nd
a - They cannotadvancet
hei
rown moti
vestot
hedamage
ocers
ncl
uisi
ve of
heth
older of
he t
wate
red ocks;
st prej
udi
ce of
hetcorpo
rat
i
on whi
ch t
hey represents
d an
5. As t
o cr
edi
tor
s - Theyaym enf
orce pay
ment fo h
te st
ock
hol
ders as h
aol
ewni
steadofi
t bei
ng sol
d out
side
di
er
ence
in t
he pri
ce, or
hetwat
er ni t
he st
ock, - 50
0M woul
d h
ave goneo hte
t coers t
heof
cor
porat
i
on,
sol
ida
ri
ly aga
i
nst ht
e re
spo
nsi
bl
e di
rec
t
ors/o
cersnda 500M should bether
e or
f hte protect
ion ofcredi
t
ors
thest
ockh
ol
ders cer
con
ned; and
- Theyarepl
acedinaduci
aryr
elat
ionship
6. As agai
nstt
ran
sfer
ees of
t
he w
atee
rdst
ock i
sH ri
ghti
s - Sil
a lang ba ang k
iki
ta, panona man yun g corpor
at
i
on,
t
he sam
e as t
hat ofi
sht
ransf
er
o.
r f
I
, how
ever
, a opport
unit
y nayunpara mi kut
a
cert
i
ca
te of
stockhas een
b issu
ed n
ad du
ly n
ido
rse
d t
o Whenar
eunpaidsubscr
ipt
ionsdueandpayabl
e?
a bon
a d
e p
urchaser
, w
ithou
t kn
owl
edge,
act
ualor - Sect
ion 67.Pay
mentof ba lance of subscr
i
pt
.i
on
-

con
str
ucti
ve,the
latt
er ca
nnot be
hel
d l
iabl
e,at ea
l
st as Subj
ecto tth
e p
rovi
si
ons o
f the nco
tract su
ofbs
cri
pti
on
,
agai
nst ht
e corporat
ion
, is
nce e
h t
ookt he sha
r
es on the board
of rdi
ect
ors of anyst
ockcorporat
i
on may ta
r
eli
anceof t
he mi
srepr
es
ent
at
i
on made by t
he anyt
ime decl
ar
e du
e an
d payabl
e t
o t
he cor
porat
i
on
corporat
i
on t
hat t
he st
ock cer
ti
cate
i
s val
id an
d unp
aid sub
scr
i
pti
ons t
o t
he capi
t
al t
ock
s an
d may
su
bsi
st
i
ng. Th
is i
s beca
usea corporati
on i
s proh
ibi
t
ed col
lecthe
t sa
me o
r su
ch percen
taget
here
of
, n
i ei
t
her
f
romi
ssu
i
ng c
ert
i
catesf st
oockunt
ilt
he ful
l val
ue o
f case
wit
h accrued
i
nter
est
, f
i any, as
t may
i deem
t
he subsc
r
ipt
i
ons hav
e bee
n pai
d and co
udl not
, necessary.
theref
ore, y
den
theval
idi
ty of the
st
ockcert
i
cate
i
t
i
ssued
as agai
nst a
pur
chaser
n good
i fai
t
h. Th
us, Paym
ent of
anyunpai
d sub
scri
pti
on or any
per
cent
age
Bal
len
t
ine stat
es th
at h
wet
her there
s a
nyi li
ab
ili
ty o
n thereof
, ogethe
t r wi
th theint
erest accru
ed
, f
i an
y,shal
l
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 43

be made on t he dat e specied in the contr

ac t of any, alsh
l be cr
edi
t
ed in favorof thedel
i
nquent
subscripti
on or on t
he d ate stat
ed in the cal l made by st
ockhol
derwho shal
l i
l
kewi
se be ent
i
tl
ed t
o the
the boa rd. Fail
ur e to pay on such date l sha
lr end
er ht
e i
ssuan
ce ofa certi
c
ate ofst
ock
coveri
ng su
chshares.
entir
e bal ance du e andpayabl e andshal l m aket he
st
ock holder iab
lle f or inter
est at e th
legal ater onsuch
Sh oul
d t here be no bi dder at het pu bl
i
c
balance,unlessadi erentrat
eofinteres
tisprovidedin
aucti
onwho o ers ot pay t
he u fl
l amount ofthe bal
an ce
the by- l
aws, co mpu ted from suchdat e un til ufl
on the b su
scri
ption togethe
r w ith ccru
a edi nterest
, costs
paym ent.I f wi
thin t hirt
y 30
( ) days rom
f t he said dat
e no
ofad vert
i
sem ent and expenses ofe, sal
for hte smal
l
est
paym enti s m ade,al l stocks cover
edby sa id subscri
pti
on
number of shares ract
ionoroffa share,the corpo
rat
ion
shallt hereuponbecom e deli
nquent d anshal
l be su bj
ect
may, su
bjecto t the provi
sion s of ht
is Code,bid for the
to sale as her eniaf
ter rov
pi ded, unless the board of
sam e,and t he totalamoun t du e shal
l be cr edi
t
ed as
direct
orsrders
o erw
oth
ise.(38)
paid in ful
li n thebo oks o f thecorporati
on. Ti
tl
e to l la
the shares st of
ockcoveredbyt he subscri
ption shal
l be
Remedi
es of he
t cor
por
at
i
on t
o enf
or
ce paym
ent of vest
edinthec or
porati
onastreasurysharesandma ybe
unpa
id su
bscri
pti
on disposedof by d sai
corporat
ion in accor
dancewi th t
he
provi
sion
s ofhi s
t Code.(
39a -46a)

1. By boardion
act
i
n acc
or
dan
ce iw
th t
he pr
oce
du
re a
ldi
dow
n i
n sect
i
ons 67to 6
9 o
fthe code Whoi
sthewi
nni
ngbi
dderi
nadel
inquencysal
e?

2. By a col
lect
i
on case
n i
cou
rtas r
p
ovi
dedf
or nisect
i
on - Bidderho w shal
l oer otpayt he f
ull amount ofhet
70 balance on the subscr
ipt
ion t
oget
her wit
h accr
ued
i
nterest
, cost of adverti
sement and expensesfo sal
e,for
the sm al
lestnumber of shares or ract
ion
f ofa share.

Aresubscr
iber
sofshar
esofs
tocksnotf
ull
ypai
d,l
iabl
e
to p
ayi nterest?
X Co.has1M aut
hor
izedcapi
tals
tock

- Generale rulis they arenot i ab

lle to payi
nter
est
becauset
hecodesaysunl
essr
equi
resi
nt heby-
laws 50
0 t
hou
san
d i
s al
re
ady su
bscri
bed

- Asi
defrom t hemandateoft hel aw thatsubscri
bersto A subscr
ibed t
o 100 t
housand shares,50 t
housand i
s
shares of st ock mustpayt he full value of hei
tr al
ready paid elavi
ng 50 t
housan d unpaid
subscr
ipti
on,t heymay l i
kew i
se be r equi
red to pay
i
nterest on all unpai
d su bscripti
ons fiso mpo
i sedin the
cont
ract or nit he corporate l
aws by-
at such rat
e as ay
m Thec or
por
ation i
satal
ossof250thousand,t
heboar
d
deci
dest o makea cal lfor he
t paym ent ofthe unpai
d
be i
ndicated t
hereator t
he l egalrateifnotso xed.
subscri
pti
ons,how ever A ldcou
not pai
d, hen
ce decl
ared
Unless so re
quired or rovip
ded, however
, subscri
bers to
del
inquent nda deci
dest o sel
l his share at apu bl
ic
shares of ock
st, n ot uflly pa id, re
a ot n iab
lle t
o pay
aucti
on
i
nterest on t
heir unpaid su bscri
pt
ion
s. The code t
hus
provi
des:
55 t
housan
d i
s o
t b
e pa
i
d, em
rai
ni
ng ba
lan
ce u
pl
s cost
andexpenses
Section 6.
6Interest
on unpai
d su bs
cri
pti.s
on
- S ubscri
bers f
or stocksha l
l pay to the corpor
ation
i
nterest on al
l un pa
id su bscri
pti
ons fromt he da te of BI
DDERS:
subscri
pti
on,if so requi
redy, band at het ratei nof
t
erest
xedi n the by-l
aws.I f no ra
te ofnt erest
i i
s xedin the X-
55K FOR 99,
900shar
es
by-l
aws,suchrateshal
lbedeeme dtobet hel
egalrat
e.
(
37)
Y-
55K FOR 99,
500shar
es

Unti
l a cal
li
s made,they are otn du
e and payab
l
e,bu
t
sti
l
l subj
ect to pthe
rovi
si
ons of thecon
tr
act
s Z-55K
FOR 99,
00
0 share
s w
(inn
ingbi
dder)
Proced
uresn i
cas
e ofsal
e ofdel
inqu
ent st
ock
s
Assumet
her
eisnobi
dder
,mayt
hecor
por
ati
onbi
d?
- Secti
on 68 .el
D inquencysal
e
. - The boardof rect
diors
may, by resol
uti
on, or
dert he sale of del
inquen
t st
ock - NO. It cann
ot dbibecau
se theawl
says,
subj
ectt
o the
and shall speci
cal
l
y stat
e the amoun t du e on eac
h prov
i
sionsofthis CODE. Sect
i
on 68 an
d 41 shou
ld be
subscri
pt
i
on plus all accrued i
nterest
, and the date, recon
ci
led
. Secti
on 68 st
ates ttha
:
t
ime a nd pl
ace fo t
he sal
e w hi
ch shall not be ess
l ha
tn
t
hiryt 3
(0) days nor morehan
t si xt
y 6(0) daysf
romt he
dat
e hte st
ocksecomb e del
i
nquent. Sh ould t here be no bi dder at het pu bl
ic
aucti
onwho o ers ot pay the ufll amount oft he balance
on the b su
scripti
on t ogethe
r w i
th ccru
a edi nterest, costs
Noti
ce of said sale, i
wt
h a copyof he t ofad vert
i
sem ent an d expenses ofe, sal
for hte sm all
est
resol
ut
ion, shal
l be sen
t ot everyel
i
nquden
t ts
ockhol
der number of shares ract
ion
or offa share,the corporati
on
ei
ther personal
l
y or by re
gst
ieredaiml
. The same shall may,subject to the provision s of htisb i
dC
odfe,
or
f
urthermore be pu bl
ished oncea wee k for wto (2) the same,an d thet al
toamou nt due shal
l be credited sa
consecu
ti
ve eeks
w in a n
ew spa
per ofgeneral
ci
rculati
on paid in ful
li n thebo oks o f thecorporati
on. Titl
e to l la
i
n t he provi
nce ort yciw
herehet pri
ncipa
l oce of the the shares st of
ockcoveredbyt he subscri
pti
on sh al
l be
corp
orati
on is oca
l t
ed. vest
edinthec orporati
onast r
easur ysharesandma ybe
disposedof by d sai
corporat
ion in accor
dancewi th the
Unl
ess theel
i
nqu
den
t st
ock
hol
derays
p o tthe provi
sion
s ofhi st Code.(39a -
46a)
corporati
on, onor ef
bore the
dat
e speci
edf
or thesal
e
of he
t deli
nquentst
ock, he
t balancedue on his

subscri
pti
on, pl us acc rued i ntee
rst, cos ts of
advert
isement and exp enses ofsale,or un lesshe t bo
ard
of rect
diors otherwi
se rders,
o sai
d del i
nquen t stockshall - Ther
e was no unres
tri
cted r
etai
ned ear
nings i
nt he
besoldatpublicauction t
osuch bidderwhos halloer exampl
e gi
vent heref
orehe t corporat
ion cannot dbi,
to pay t he full am ountof he t bal anceon t he secti
on 41, i
t statesat: th
subscri
pti
on t oget
her i w
th accrued i nterest, cost
s of
advert
isement nda expen sesof sal e, orf the smal
l
est
Secti
on 1.
4Power ot acqui
re own share
-s.
A
number of hares
s or
ract
ion
f ofa sha r
e.Th e stockso
st
ockcorpor
at
i
on sha
ll havehe t p
ower ot purchaseor
purchased shal
l bet r
ansferr
edt o su chpu rchaser n thi
e
acqui
r
e its own share
s f or a legi
t
imate corporat
e
booksofthecorporat
ionandac ert
icateforsuc hstock
purpose
or purposes,
i
ncludi
ng but not i
mil
ted to t
he
shall be issued in hi s avor
f . Th e rem aining shares, i
f
f
oll
owi
ng cases: ded
Provi
, That the corporat
i
on has
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 44

unres
tri
ctedre
tai
ned earni
ngisi
n ts books to cover - I
t was prem
at
ure
t
he shares
to be urc
phased
or acqu
i
red:
- Unp
aid su
bscri
pti
ons w
il
l becom
e du
e an
d p
ayabl
e on
l
y
1. To el
i
minat
e f
ract
i
onal sh
ares
ari
si
ng ou
t of ock
st upo
n cert
ai
n n
ist
ance
di
viden
ds;
- Cal
l or fi
the
re si asti
pul
ati
on i
n con
tr
ac
t
2. Tocol
l
ect or prom
com i
se an indebt
edn
ess ott
he
corporati
on, ari
sing ou
t of npaui
d subscri
pti
on
, ni a
- If no cal
l and no sti
pul
ati
on i
n con
t
ract
hen
tit w
il
l not
del
inqu
ency sal
e, and to pur
chase del
i
nquentshares
bedemandabl
eorpayabl
eatal
l
sol
d du
ring sa
i
d sal
e;and

Lu
manl
an vs.
Cura
3. To pay di
sse
nti
ng or wi
thd
raw
ing st
ockhol
ders

en
t
ofi
tl
ed
hi
t
s Cto
ode.ym
pa
en
(t f
a) or ht
ei
r sh
aresnder
u he
t provi
si
ons - TrustFund Doct
rine-subscr
ipti
on tot he capi
talofa
corporat
ion consti
tute a fund t o which t he credi
tors
havea right ot look for sati
sfacti
on of heitr cl
ai
ms a nd
Whati
ftheshar
esofA wer
es ol
dwithoutcompl
ianceof
that ht
e assi
gnee nii nsol
vency canmai nt
ain an acti
on
t
her equ
ir
em ents?ay M Aquest
i
ont he sal
e?
uponan y unp ai
d stocksu bscript
ion in order o r
eal
ti ze
assetsor hft
e paym en
t ofi t
s d ebt
s.
- The l
aw pr
escri
bes t
wo condi
ti
ons bef
ore an act
ion t
o
reco
ver deli
nquentst ocksi rr
egularl
y sol d may be
al
lowed. ese
Th are: PN
B vs.
Bit
ulak

1. The part
y see
ki
ng t
o maintai
n suchact
i stpays or -
on r Wher
eitnotf
ort
hepr
omi
se,t
hedef
endant
swoul
dhav
e
t
enderso t
theart
py h
oldi
ng theockst
the su
m for h
wi
ch notsubscri
bed
t
he same was sol
d, iw
th inter
est
from the d
ate ofhet
sal
e a
t thel
ega
l rate;
and, - Trust Fund Doct
rine, i
ti s est
ablished doct
rine t
hat
subscripti
on
s to the capital of a corporati
on const
it
ute a
2. Theacti
on shall be co
mmenced by t
he li
ng ofa fund t o which cr edit
ors havea ri ghtt o lookf or
com
pa
lnit wi
thi
n si
x mon
ths rom
f the da
te of
the sal
e. sati
sf
action of hteir clai
ms an d t hat the assi
gnee in
insol
vencycanmai ntai
n an act ion up on anyunpai d
stocksu bscri
pti
on i n order t
o re ail
ze assets for the
- Ther
easonforsuc
hist
hes
tabi
li
tyoft
ransact
ionsoft
he
shares f st
oock pa
ymen
t of
i
ts d
ebts.

- A cor
poration has no power tor el
ease an origi
nal
Supposen i
the exampl
e,si
nce ht
ere ear
n
o u nres
tri
ct
ed subscri
ber to i
ts capit
al ock
st f rom t he ob li
gati
on of
re
tai
ned earn
ings,
hence thecorporati
on cannot d,
bi si payi
ng for i h
s shares, wi
thou t avaluab l
e con si
derati
on
the corp
orati
on lef
t wi
thou
t an
y recou
rse? f
or suchrel ease;d an asaga inst edi
crtors a redu
ct
ion of
the capi
talstock cant akepl ace l on
y nit he manner and
under h t
e con di
ti
ons prescri
bedby t he statute or h
te
- Secti
on 70.ou
C rtact
i
ont o recoverpai
d su
un
bscri -
pti
on.
charter h or
e arti
tcl
es f oincorpora
ti
on.
Not
hing n
i thi
s Cod
e shall preventcorporati
the on f rom
col
l
ecti
ng by acti
on i
n a cou rt of
proper
juri
sdicti
on t
he
amount due onanyunp ai
d subscr
i
pti
on, it
w
h accr ued Edw
ard Kel
l
erandCo.vs
. COB
i
nterest
, costsd an
expen
ses. 49a
(
)

- May t
he st
ockh
ol
der eb h
eld l
iab
le or
f ht
e debts tof
he
Vel
ascovs.Poi
zat cor
por
ati
on? YE
S. To the extentof thei
r unpai
d
su
bscri
pti
on
- Thesubscr
iberi
sasmuc h boundtopaytheamountof
the sh
are subscr
ibed yb hi
m as heou wl
d be o
t pay yan - Astot
heliabi
li
tyoft
hes
tockhol
ders,i
tisset
tledt
hata
other debt
, and the ri
ght of the companyto dem
and st
ockhol
der is personal
ly l i
able for t he nanci
al
paymentis no ess
l ncon
it est
abl
e. obl
igati
ons of a corporati
on t o the ext
ent of shiunp
aid
su
bscri
pti
ons
- Two avai
labl
er emedies: t
he rst and mos
t speci
al
remedygi venby t he statute consi
st nipermitt
ing t
he Is t
herea prescr
i
pti
ve peri
od where
i
n a dem
and f
or
corporati
on to put up thenp u
ai
d stock d an
d
ispose of
it unpai
d sub
scr
i
pti
onshoul
d be m
ade?
for ht
e a ccou
nt of the d el
i
nquent subscri
ber.Th e other
remedy i
s by ct a
i
oni n court
.
- NO.Garci
a vs.
Sua
rez case

De S
i
lva vs.
Aboi
ti
z an
d Co.
Garci
a vs.
Suarez

- Di
scretionary on the p
art of t
he b oardof re
di
cors
t to
o d
- Neve
r becam
e du
e an
d p
ayabl
e u
nti
lther
e s
i a cal
l made
whateveris pr
ovi
ded int
he sai
d art
icler
elat
ivet
othe
appl
icati
on of ht e part of he 70
t perce nt ofhet prot
di
sri
tbu tabl
e in equal arts
p on t he payment of the - Presc
ri
pt
ion wi
ll not
rununti
l an
d unl
esst
her
e i
s
shares bscri
subedt o a
nd ful
ly paid de
mand

Li
ngayen
Gul
f vs.
Bal
t
azar - Pr
esci
r
pti
on shoul
d be det
er
mined f
rom the t
ime
de
mandhas bee
n made andnotf
rom t
he it
me of
su
bscri
pti
on
- Except
i
on: pu
rsuan
tto a on
ba d
e com
prom
i
se or
t
o set
o a debt du e r
fom the corporat
i
on, a rel
ease pp su
ort
ed
byconsi
derati
on,willbeeect
ualasag ai
nstdi
ssent
ing I
f decl
aredel
id uent,
nq wha
t w
oul
d be t
he e
ect
as t
o
st
ockhol
ders an d subsequentan d exi
sti
ng credi
tors
. A t
he ow
nerofsai
d sh
ares?
rel
ease which mi ght ori
gi
nall
y have eenb held i nval
id
may e b sust
ained fa
ter a con
siderab
le ap
lse oftime
- Secti
on 71E.ect ofdeli
nqu en - o
cy. N del
inquent st
ock
shal
l be vo ted f or or be ent i
tled t o vote or t o
Apocadavs.NLRC representat
i
on at an y stockhol
der'
s meet i
ng, nor shal
l
thehol
der ht ereof be en ti
tl
ed to a ny of theri ght
s o fa
st
ock
hol
der except he righ
tt ot d
ividends in accorda
nce
- Set
-o
is w
ithou
t an
y egal
l basi
s
wi
ththe pr
ov i
sions ofthi
s Code,untiland unless he

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 45

pays he
tamoun
t dueon hi
s su
bscr
i
pti
on wi
th accr
ued - Secti
on 73.stor st
Lo de
royedcert
i
cates
-.The oll
fowing
i
nter
est
, and
the costsd exp
anen
sesfoad
vert
isem
ent,i
f proc
edu
re shall bef oll
owed for the i ssuan
ce by a
any.(
50a) corporati
on of new cert
ica
tesof ock
st i n l
ieu of ht
ose
whi
chhavebeenlos
t,s
tol
enordes
troyed:
- However ft
hie sh
ares areot ndel
inqu
ent, su
bscri
berso t
thecapit
al ofa corp
orati
on, thou
gh not ul
f
ly p
aid, are 1. hTe regist
er
ed ow ner of cera t
icate of
en
ti
tl
ed to all h
te ri
gh
ts of astock
hol
der, acco
rdi
ng to st
ocki n a corporati
on or i s
h egal
l epresen
r tat i
ve sh
all
secti
on 72 l
e w ith th
e corp
orati
on an adavit n
it ri
pl
icate t i
set
ng
f
orth, fi possi
bl
e, het cir
cu mst
ancesas t o how t he
cert
ica
te was lost
, st
olen or destr
oyed, he tnumber fo
Sect
ion 72.Ri
ght
s of unpai d shar
es.
-
shares r epr
ese
nte
d by suchcer ti
cat
e, the ser
ial
Hol
ders ofscr
sub
i
bedsha r
es otn ufl
ly pai
d whi
ch are
num ber of het c ert
ic
ate and t he nam e of het
not del
inqu
ent sha
ll have llathe gh
ri
ts of aock
st
hol
der
.
cor
porati
on which issued t he same. eH shal l al
so
(
n)
sub
mi
may tdee
u
sch
m ot
ha
neceer
ss ry
;nf
o
irm
ait
on an
d ev
i
den
ce h
wcih he
May t
he rul
es gov
ernn
ig del
inqu
encysal
e app
ly to a
non
-st
ockcor
porat
i
on?Ar e t
herenpuai
d share
s in a
2. Af ter ve rfi
yi
ng t he adavi t an d ot her
non
-st
ockcorporati
on?
i
nfor mation and ev idence with t he books of het
corporation, said corp oration sh all pu bli
sh a n oti
ce nia
- Rul
es gover
ni
ng st
ockcorpor
at
i
ons, h
wen ap
pli
cabl
e, new spaper of general ci
rculation pu bli
sh ed in t he p l
ace
al
so p
apli
es to on
a -s
n
tockcorp
orati
on wher et he corporation has i t
s pr incipaloc e,once a
week fort hree(3)c ons ecutiveweeksatt heexpenseof
the registeredow ner of t
he cert icate of ock stwhi chhas
- Ther
e ar
e del
inquentshar
ehol
der
s al
soin a non-
stoc
k
been lost,stol
en ordes troyed.Thenot ices hallstatethe
cor
porat
ion. Exampl
e si member
shi
p dues
name of sai d corporat ion, h te n ame ofhe t regi
stered
ow ner an d the seri alnu mber of aids cert
icate, and t he
Acorpor
ati
onpaid50% ofsubscr
ipt
ionandwasl
ateron number of shares repr esented by su ch cer t
icate
, an d
decl
aredel i
n
dquent hwenhe cou l
d notpay pon
u cal
l
;A tha t aft
er ht e exp irati
on of one (
1) year rom fthe d ate of
i
s al so a direct
or of hte corporat
ion
. W i
ll A, u
pon theast l b
pu
l
icati
on ,i f no con t
est s hab eenpresen tedt o
decl
arati
on of de
l
inquency , sti
ll beabl
e to exerci
sehi
s said corp orati
on regardi ng sai d cert i
cate of ock,st
the
ri
ght asa d irect
or? rightotmakesuch contest shal l be barr ed and sai d
corporation sh all cancel n i tsibo oks the cert icat
e of
stockwhi chhas een b l ost, st ol
enor dest royedd an issue
- Yes,he l
oses al
lhi
sri
ghtas a s
tockhol
derexcepthi
s
i
n l ieu t hereof ew n cer ti
cate of ock,
st nless
u the
ri
gh
tto receive
dends
divi regist
eredwno er es l abo nd or otherri t
secu
y n i lieu
thereof as ay me b requ i
red, eective orf aperi od of one
- He remai
ns to be a di
r
ect
or
, only qual
i
cati
on t
o be a (
1)ye a, rfor such amou nt an d in such forman d wi t
h
di
rect
or si h
e mustown at east
l 1are
sh dansi
nce tisti
ll such sureti
es s a may be sat i
sfactoryt o t he board of
st
ands ni hi
s name pen
di
ng the sal
e,he r
em ai
ns t
o b e directors, i
n whi ch case a ewn certi
ca t
e m ay e b ssu
i ed
and act as i re
acor
dt even bef
ore the expirati
on of ht e on e ( 1) year eriodp
providedher eni: Provi ded, Th at fi a contes t h as been
presen t
ed t o said corporati on or fian acti on is p ending
- Even ift
heres isal
e,he m ay sti
ll be di
rect
or ecau
b se the
i
n cou rt egar
r ding t he ow ner ship of sai d certicate of
winni
ngbiddermaynotbi
dorpayforalltheshar
esor
stockwhi ch has been lost, st olen or est d royed,he t
ther
e might be remai
ning shar
es
, w hi
c
h would be
i
ssu an ce f o hte n ew cert i
ca t
e o f tsocki n lieu there of
credi
t
edin f avorfto
he del
inqu
ent st
ockhol
der
sha l
l besu spendedunt ilt he naldeci sion byt he cou rt
regarding t he ow ner ship of sai d cer t
icate of ockst
- Sect
ion43 provi
des: whi chhasbeenl ost,stolenordes troyed.

Secti on 3. 4Pow er ot d ecl

arei vi
d
dend - Th
s. e Exce
pt i n case of r aud
f , b ad f ai
t
h, or
board ofdi r
ectors ofa s t
oc k corporati
on ma y declare negl
igence on the part of the cor
porat
i
on an d it
s
divden
i ds ou t o f the unr est
ri
cted r etai
ned earni ngs oce
rs, noac t
ion may be br ought agai
nst any
whichs hallbepayabl ei nc ash,in property,orins tock corporati
on whi
ch shall haveissu
ed cert
i
cate of ock
st
to all stockholders on t he ba sis of ou tstanding st
ock i
n li
eu of hose
t l ost,
st
olen or est
d royed
pursuant o
t th
e
held by h tem : Provided , Th atan y cash divden
i ds u de on proced
ure ab
ove-
descri
bed.R.A
(. 20
1a)
deli
nquentst ocksha ll rs t beap pl
ied to t he unp aid
balance on the subs cripti
on pl us costs and expenses, - The rat
ional
e of t
he abov
e-quot
ed l
aw i
st o avoi
d
while stock dividends shal l be wi t
hhel d fr
om t he dupl
icati
on of cer
ti
cat
es fostockand the avoi
danceof
deli
nquen t stockholderunt i
l his unp aid su bscripti
on i
s ct
it
ious and fr
audulen
ttransf
ers.
full
y pa id: rovi
P ded , u frther, Th at o n stockdi vden
i d
shall bei ssued withou t h te app ro
val of tockh
sol
ders
represe
nt i
ng not ess l t han t wo-thirds (2/3) of the Whenwi
llt
her
epl
aceme
ntcer
ticat
ebei
ssued?
outstanding pit ca
alst ockat a regu lar or ci spe
almeeting
duly calledf or the urpopse. (
16a)
- Thecodepr
ovi
dest
hat
:

Stock cor porati

ons ar e prohi bi
ted f rom
af
t exp
er the i
ration of one 1
() year rom
f the
ret
aini
ng surpl us prot s i n exc essof one hund
red
da
te of the l
ast ubl picati
ion
f,no con
testhas been
(
100%) percen t ofhei tr paid-i
n cap i
tal ock
st , except:
(1)
presen
t
ed to sai
d corporati
on regar
di
ng sai
d certi
ca
te
when jus
tied by denitecorporateexpans i
on proj
ects
ofstock,the ri
ght ot make such con
testshal
l beba rr
ed
or program s approvedby t he b oard of rdi
ect
ors; or 2)
(
an
d sai d corporat
i
on shal l canceln its
i books t
he
when the c or
poration is prohi
bited under any loan
cer
t
icate of st
ockwhi ch hasbeenl ost
, st
olen or
agree
mentwi th an y n an ci
al nisti
tution or cr edi
tor
,
dest
r
oyed and i
ssue in li
eu ther
eof new cer
ti
cate of
whether local or forei
gn, from dec l
aring divi
dends
stock,
wit
houtits/hisconsent ,and suchc onsenthasnotye t
been secur
ed;or(3)when i
tcan beclearl
ys hown t
hat
suchre tenti
onis necessary nder u speci
alcircumst
ances Cou
ld i
t bessu
iedearl
i
er ht
an1 year?
obtai
ning nit he corporati
on, suchas h went here s
i n
eed
f
or special reserve
for rob
p abl
e contingenci
es. n)(
- Yesi
tcanbe,t
hecodes
tat
est
hat
:

When a cer
ticat
e ofs
toc
ki sl
oss ordes
troyed,what
unlesshetr egi
st
ered owner les
abond or
mustbe don e byhe t ownerhere
t of?
ot
hersecuri
ty in l
ieu t
hereof as may be r
equir
ed,
e
ect
i
ve orf aperi
od of one (
1) ye
ar
, or
f su
ch amount
andin such f
orm andwi t
h such sur
eti
es as ay
m be

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 46

sati
sf
actory tobo ard
theof re dicors,
t in whi a case
ch compelhe t regi
st
rat
ion of hte transf
er nithe books of
new cer ticat
e m ay be i ssued ev en before the the corp
orati
on as rovi
p dedf or nisecti
on 63;
expirat
ion of hte one 1() yea r period provided h erei
n:
Provi
ded, That fia contesthas been presen
ted to said 5. To be issued a cert
icate of t ock
s f
or ufl
ly paid-
up
corp
orati
on or fian acti
on is p ending ni cou
rtregarding shar
es niaccor
dance i w
th 64;
the ownershi
p ofsai
d certi
cate of stock whi
ch ash een
b
l
ost, stol
en or destroyed, the issuance of h t
e new
cert
i
cate of ock
st in lieu thereof al sh
l besu spended 6. To exerc
i
se rp
e-empt
ive ghri
ts asprovidedfor nisect
ion
unti
l hte n al deci
si
on by t he courtgar re
ding the 39;
ownershi
p of aisd cer
ti
cate of tock s
which has been
l
ost,stol
en or estroye
d d. 7. To exer
ci
se ht
eir app
raisal ri
gh
ti n accor
dance iw
th the
provi
si
on ofsect
ion 81 and in thosenstian
ce lal
owedby
May c or
porat
e oce rs be hel d l i
abl
e f or t he l
aw such as se
cti
on42an d 105;

unau
tho
ri
zedssua
i nce?
8. To nst
ii
tut
e an
d l
e aderi
vat
ive su
it
;
- YES,t
hecodepr
ovi
dest
hat
:
9. To reco
ver shar
es of st
ock unl
awf
ul
ly sol
d f
or
Exce
pt i n case of r aud
f , b ad f ai
t
h, or del
inquencys am
ay below
al
ed n
uderect
s
ion69;
negl
igence on the part of the cor
porat
ion and it
s
oce
rs, noac t
ion may be br ought against any 10
. To ni
spectt
he boo
ks f
othe corporat
i
on su
bject
onl
y o
t
corporati
on whi
ch shall haveissu
ed cert
i
ca t
e of ock
st t
he il
mit
ati
ons mpo
i sedbysect
ion73
;
i
n li
eu of hose
t l ost,
st
olen or est
d royedpursu
ant o
t th
e
proced
ure ab
ove-
descri
bed.(R.
A. 20
1a)
11.To beurni
fshedy bh
te mostr
ece
nt na
nci
alst
at
ement
oft
he corpo
rat
ionas yb sect
ion75
;
Assumingthelas
tparagraph i
snott her
e;woul
di tbe
nothe t same,t hat they ou
ld
sh be hel
d li
able du
e to
f
rau d, ba
d f
aith ro n
egli
gence? 12
. To e
b ssued
i a n
ew st
ockcer
ti
caten l
ii
eu oft
he ost
l or
dest
roye
d onesub
j
ectotthe proc
edu
re lai
d down in
sect
i
on73 ;
- YES.Sect
ion31pr
ovi
dest
hat
:

13.To ave
h he
t cor
porat
i
on dissol
ved nd
uer se
ct
i
on 118t
o
Sect
ion 31
.
Liabi
li
ty of i
r
dectors,
rus
t
eestor 12
1,and secti
on105 ni a cl
ose corpo
rat
i
on;

ocers.- Di r
ect
orsor t rust
eeswho wi ll
full
y an d
knowingly vote or
f or assen
t o t patentl
y u nlawful acts of
14
. To pa
rti
cipa
te i
n the di
sri
tbu
ti
on of ht
e asset
s of he
t
the corp orat
ion or h wo a re gu i
lt
y o f gross egl
igen
n ce or
corporati
onupo n d
issol
uti
onunder sect
i
on12 2;
bad fait
hi n dir
ect
ing the aairsoft he corporati
on or
acquire an y personal pecu
orniaryi nterestn icon ict
wit
ht heirduty as suc
h di r
ectors ortrustees shallbe 15
. I
n t
he case aofcl
ose corpo
rat
i
on,t
o p
eti
ti
on the S
EC t
o
l
iable j oi
ntl
y an d sever all
y f or all d amages res
ul
ti
ng arbi
tr
ate n
i t
he eve
nt of aeadl
dockas al
low
ed under
thererom f su ered byt he corp orat
ion,i ts stockhol
ders sect
i
on10 4; and
,
or m em ber
s and other persons.

16.Also i
n t
he case ofcl ose
a corpor
ati
on,otwit
hdraw
When adi r
ector,trusteeoroc erat
temp tst
o ther
erom
f ,f or y
m reason
, and com
pelthe corporat
i
on to
acqui
re orqu ac
i
res, i
n vi ol
ation ofhi s duty, any n
iterest purc
hase is
h sh
ares as
r
ovi
ded
p for n
uder sect
ion105.
adver
se t o the cor porati
on i n r espect of y anmatter
whic
h has been r eposed in him i n condence,as to
whic
h equityimpos es a disabil
ity upon him to deali
n
hi
s ow n beh al
f, hesh all be l iabl
e as a t rustee
or f the
cor
poration andmust account for t he prots whi
ch
ot
herw i
se ouwld h ave accr ut
ed
o th e corpo rati
on .(n)

Cert
ica
t
e o
f t
s
ockwas l
ost
, h
te ow
ner ransf
t ers i
sh
sh
ares
ybw
ay f
oa n
otari
zed eed
d wi
lli
t be val
i
d?

- He ca
nnot do
so,f a
i cert
ica
t
e o
f stockis ssu
i ed by a
corporati
on
,a mer
e n
otari
zedeed
d ilw notsu
l ce

- Deed of
assi
gnment as
w notuci
senti nce
s here
t as
w
no end
or
se R(
mentural
Ban
k ofLi
pavs.
)CA

Ri
ghts an
d l
iabi
li
ti
esof ock
stholders

- RI
GHTS

1. Part
ici
pati
oni n the managem
ent of
the corpor
at
e a ai
r
s
byexer
cisi
ngtheirri
ghtt
ovot
eandbev
oteduponei
ther
person
all
y or by proxys aprovi
dedfor nu
der sect
i
ons 50
and 58 of t
he code;

2. To ent
er nt
i
o a vo
ti
ng t
rust agr
ee
ment subj
ec
t ot t
he
procedu
re,requ
i
rements dan
l
imi
tat
ions mposed
i under
sect
ion50;

3. To rec
ei
ve di
vi
dends and to com
pelhei
t
r decl
arat
i
on i
f
war
rant
edundersect
ion43;

4. To tr
an sf
er share
s ofst
ocksubjectonl
y t
o reasonabl
e
r
estri
cti
ons suchasopt
ion
s and pref
erencesasmay e
b
al
lowed bylaw i
ncl
usi
ve fotherigh
t ofthe t
ran
sf
eree to

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 47

- LIAB
ILITI
ES Stock corporations m ustal so keep a bookt o
be known as the "st
ock and transferbook",in which
mustbe kept a ord recof l st
alocksin the names of the
1. To payt
o the por
cor
ati
on the bal
ance of s hi
unpai
d
st
ockholdersal phabeti
call
y arranged ; the inst
all
men ts
subscri
pti
ons su
bjecto t
the provi
si
on of sect
i
on 67 t
o
paid and unp ai
d onal l st
ock for hwichsub scri
ption has
70;
been made,andt hedateofpayme ntofanyi ns
tall
me nt;
a statement of every l
ienati
on
a, sale or ran
t sfer f ostock
2. To paynter
i
estonhis u
npai
d subscri
pt
ion i
frequi
red yb made, the at
de h ter
eof, andby an d to w hommade; and
t
he by-
law
s or by the cont
r
act of sub
scr
i
pti
on in such other entries as the b y-l
aw s may re pscri
be. e Th
accor
da
nce iw
th sect
i
on66; st
ockan d transfer book sha ll be kept n ithe principal
oce of he t cor porat
ion or ni t he oce of tsistock
tr
an sf
er agent an d shall be open f
or nispect
ion by an y
3. To an
sw er ot theedi
cr
t
ors o
fr he
t unp
aid port
ion ofhi
s
direct
or orock sthol
der of t
he corp orati
on at easo
r nab l
e
subsc
ri
pti
on undert
he TRUST U
FND DOCTRINE;
hoursonbu siness days.

4. To an
sw
er he
t
wat
e
r n
i hi
s st
ocks as
pro
vi
dedf
or ni
No st oc
k transfer agent or on e engaged
sect
i
on65 ;
pri
ncipal
ly i
n thebusi nessof regi st
eri
ng t ran
sf
ers fo
st
ocks in behal
f of a stockcorporation shal
l be l l
ow
a ed
5. Tobe l
iab
le, as eral
gen partners,
or l
l
a deb
ts,
f iab
li
li
ties to operat
e ni the hi
Pl
ippi
nes n u
less eh secures a i
cen
lse
and damages of a deter
minabl
e co
rpor
ati
on as f
rom t he ecuri
S t ies and xchan
E ge omC mission and pays
en
vi
si
oned under secti
on 21 (
corporati
on by est
op
pel
); a efe asay m be xed by het o Cmmissi
on, whi
ch shall be
and, renewabl
e annuall
y:Provided, That a ockst corporati
on
i
s n ot precl
udedf romperf orming or akming transf
er of
i
ts ow n stocks, ni whi ch cas e all hte r ules and
6. To be per
sonal
l
y li
abl
e for or
tt
s, ni t
he event that a
regul
ati
ons mpo
i sed on stock t
ransf
er agent
s,except he t
st
ockhol
der nia cl
osecorp
orati
on acti
vely parti
ci
pat
es
paymentof al icense f
ee here in provi
ded, shal
l be
i
n the managem
ent of
the cor
porat
e a
airs
.
appl
icabl
e.(51a and 32a;P. B. No.268.)

CORPORAT
E BOOKS AND
ECORDS
R
Tosummar
ize:

Whataret
hesebooksand r
ecor
dst
hatar
erequi
red t
o
1. Rec
ords of al
l busi
nesstr
ansact
ionswhich i
ncl
ud
e,
bekept
?
among others,
journa
l
s,ledger,
con
tract
s,vou
chers dan
rec
ept
is, nan
ci
al st
atem
ents and ot
herbooks of
- Sect i
on 74.Books t
o be kept ; stockt ransf
er .gent
a
- acc
ount
s, ncom
i e t ax r
eturns,nda vo
t
ing t
rust
Every corporation shal l keep and caref ully preserve agree
mentshicwh mustbe kep
t an
d caref
ul
ly prese
rve
d
at i ts princi pal o ce a r ecord of al l busi ness at t
si p
ri
nci
pal oce;
transactions and m i nutes of al l mee tings of
stockholders or member s, or of he t board of 2. Minut
es of al
l meet
ings ofstockhol
ders or em
m bers and
directors r troust
ees, n iwhich sha ll be setorth f i n of the dir
ect
orsor t rust
eessetti
ng forthin detail hte
detail the ti m e and pl ace fo hol ding the meet ing, dat
e,t i
me,an d pl
aceof e met
i
ng, how au
thori
zed, het
how aut horized, he t not ice gi ven, het w her the not
ice ven
gi hw et
her hte same be regul
ar or speci
al, and
i
f speci
al, thepurpose thereofshal
l be sp
ecied, thos
e
m eeting was regu lar r o spe ci
al
, f i special ts i ob j
ect,
prese
nt and absen
t, and every donacte or dered
or e
don
thosepr es
ent and abs ent
, andeve ry act done or
ther
e at h wi
ch ,must ikew
l ise eb k
ept at he tp
rinci
pal
order ed done at he t meet ing.Up on the dem andof oce of thecorporat
i
on; and,
anydi rect
or, t rustee, ockh
st ol deror member , the
tim e when any di rect or
, tr ustee, ockh
st ol deror
3. Stoc
k andt r
ansfer bo ok showi
ng t he nam es of t
he
m emberenter ed oref t
l the m eet i
ng m ustbe ot n ed
st
ockhol
ders,the am ou
nt pai
d or np uai
d on al l st
ocks
in the m inu tes; andon a si mi l
ar dem and , the yeas
f
or hiwch subscri
ption has beenmade, aat e
stm
ent of
and na ys m us t be take n on any m oti on or
every li
enati
a on, sale or ran
t sfer ofock stmad e, fiany
propositi
on, anda r ecord thereof f care
ully m ade. the dat
e t her
eof
, a nd by w hom andt o whom made
The protest ofany di rector
,trustee,stockhol der or whic
h mus tal
so be keptatthe pr
inci
paloce ofthe
m emberon any act i
on or pr opose d act i
on mustbe corp
orati
on or nit he o ce of i
ts stockt
ransfer agen
t.
recor
dedi
n f
ull on hi
s dem
and.
These corporat
e books and recor
ds, incl
usi
ve of all
Therec or
dsofal
lbus i
nesst
ransact
ionsofthe business tr
ansacti
ons and minutes of meet
ings, ar
e
cor
porat
ion an d t he mi
nu tes of any meetingsshal
l be subjecto tinsp ecti
on by any o f thedi rect
ors, ru
st
tees,
open to nispecti
on by any d i
rect
or, t
rustee, st
ock
hol
der st
ockholders or mem bers of he t co rporat
ion at
or m ember of the cor
porati
on at easonabl
r e hours on reasonabl
e hours on busi
ness day s and a co py of
busi
ness days and he may demand,in wri
ting,fora excerpt
s of sai
d records ay em
b dem anded.In fact,in so
copy of xcer
e pts f r
om said r ecor
ds or m inutes,at i
h
s f
ar as nan ci
alstatement si concerned
,the C ode cl
earl
y
expense. provides:

Any oc eroragentoft he corporation who Sect i

on 75 .
Right o t na
nci
al at st
ement
s.
-
shall ef
ruse t o allow an y director, trustees,ock st
holder Withinten (10)daysfrom receiptofawri
tten r
equestof
or m em ber of hetco rpor
ation t o ex ami ne andco py any st ockh ol
deror mem ber, thecor porati
on shall
excerpt
s rom
f it
s recor dsor i m
nutes, i
n accorda nce i w
th f
urnish t o hi m i ts mostece rnt nancial atst
ement,
the provisi
on s of h ti
s Code, al sh
l bel iab l
e t o su ch whichs hallincl
udeabal anceshee tasoftheendoft he
dir
ector
, rust
t ee,t ockh
s ol deror m emberf or am d ages, l
astaxa tble year nd aa pro t orossl stat
ement or
f sai
d
and in ad di
tion, shall begu i
lty of an o en se h wichsh al
l taxabl
e year, showi
ng n i reason ab
le d
etailits asset
s and
bepunishableunderSec tion144oft hisCode:Pr ovided, l
iabil
iti
es n a
d the result of i
ts op
erati
ons.
Thatifsuchr efusalismadepur suantt oar esolution or
order f otheboa rdof dir ectors r rutostees, the l
iabil
ity
under this sect ion f or su ch act ion sha l
l bemposed i Atther egularme et
ingofstockholdersorme mbers,the
board ofdi rect
ors or t
rust
ees shallpresent t
os uch
upon t he di rector
s or tr ust ees ho w vot ed f or such
st
ockholders or m embers a n anci
al epor
r t of he t
ref
usal: and Provide d, urt
fher , That ti sha ll be ade fense
operat
ions of ht e corporati
on f or the preceding year
,
to anyact ion un dert his se cit
on t hatt he per son
which shalli ncl
ude nanci
als tatement
s,dulys igned
dem andi
ng t o ex amine andco py ex cerpts f rom t he
and ce rt
ied by an i ndependent ce
rt
ied pu bl
i
c
corporat
ion'
s recordsndami nutes as h mproperl
i y u sed
accountant.
any niformaiton secured through any prior exam i
nation
of hte recordsor m i
nu tes of such corporation or of any
other rpo
co
rati
on, or as w ot n act
ing n i goo d f ai
th or or f However
,if the ai
p
d-u
p cap
it
al ofthe co
rpo
rati
on i
s ess
l
a egi
lt i
mat e pu rpose n m i
ak i
ng hi s dem and. than P50,
000.
00, het n
ancial t
at
sem ent
s may be

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
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 48

cert
iedunder oath
by the easu
tr
re
r or any respon
si
bl
e At t
he regul
ar me et
ing of s
tockholders or
ocer of
the corp
orati
on
.(n) mem bers, he
t board of direct
or
s or t rusteesshal l
pres
entotsuch st
ockhol
ders or m em bers a n anci
al
r
eport of operatthei ons of ht e corporation for the
May book
s and r
ecor
ds be exa
mine
d? Who may
precedi
ng yea
r, whichshallincluden ancialstatements,
exam
ine? an
C they
opychem
t? n
I whosexpense?
e
duly signedan d cer
tiedby an i ndepend ent cert
i
ed
publi
c accou
ntant.
- Yes,accor
dingt
othecode:
How
eve,
r i
f the pai
d-up capi
tal of the
T he record
s ofal
l busi
ness an
tr
sacti
on
s of cor
porat
ion i
s lessthan P50,
000.
00, the nanci
al
the cor
porati
on andthe m i
nutes ofnya m eet
ings st
at
ementsay m be cert
iedunder oat
h by the reasu
trer
shal
l be open to ni
spe
cti
on by an
y di
rector,tr
ustee, or an
y respo
nsi
bl
e o
cer of
the corp
orat
ion.(
n)
stockhol
der or m ember of the cor
por
ation at
rea
sonabl
e hours on busi
nes
s days and he may - Audit
ed nancialst
atementl
ed i
nt heSEC,120 days
demand,in wri
ting,for a co
py of excer
ptsr om
f said f
rom t he endoft he nalyea,r or mustbe l ed on or
recor
ds r
o minutes,at hi
s exp
ense. bef
oreAprilofeachyear
- Mustbe am st p recei
ved by he tB
IR

I
s there y an
d
efen
se ava
i
lab
le tha
t cou
ld be rai
sed?
By
the rpo
corat
e ocers
o t
u
jst
i
fy the
ref
usal
? Thosei
nthes
tockexc
hange

- Yes,t
hecodepr
ovi
dest
hat
: - Di
scl
osu
re of
any matt
er ht
at have
t
o do w
ith i
ncr
easi
ng
an
d decr
easi
ng

an
d Provi
ded, ufrt
her, Th
at i t shal
l bea
def
ense to yan
act
i
onunder s thi
sect
i
onthe
t pers
hat on - I
f not ku
lon
g ol
vi
ati
on ofsecu
ri
ti
es n
ad regu
l
ati
on act
demandi
ng to exami ne andcopy excer pt
s from the
corpor
at
ion'
s records and m i nutes as h miproper
l
y Whyi
sthi
sri
ghtofi
nspect
iongr
ant
edt
oas
tockhol
der
?
usedany i nf
orm ation secured through any pr ior
examinat
ion of het r ecords or m inute
s of such - Thebasisoftherightofthestockhol
dertoinspectt he
corpor
at
ion or of any ot
her corporation, or as
w otn books and r
ecor
ds of the corporat
ion f
or a pr oper
acti
ng in goo
d f aith or orf alegiti
mate urpo
p se in purpose si o
t prot
ect hi
s niterestas a stockholder.
Thus,
m aki
ng hi
s de
mand.
i
t has een
b said t hat:

Whati
sthes
toc
kandt
ransf
er?Whereshoulds
tockand The right ofhe t sharehol
ders to ascertai
n
t
ransf
er beept?
k anCit be kep
t l
esewhere? how t he aai r
s of hi s companyar e bei ng
conducted by i ts di r
ectors an d ocer s i s
f
oundedby hi s ben ecial nit
eresthrout gh

Stock corporati
ons mustal so keep a bookto
ownership o f shares dan n self-
theecessity of
be known as t
he "stock and transferbook" ,in which
protection. M anagers of som e corporati
ons
m ust be kept ad recor ofal l stocksn i the names of
del
iberatey
l kee p the shar eholder
s i n
the st ockholders al phabet icall
y ar ranged; the
i
gnorance or n uder m i
sapprehension as t o
instal
lmen ts paid an d un pai d on al l stockf or h wi
ch the t ruecond iti
on of t si aairs. Business
subscription has be en m ade , andthe dat e of prudence dem ands that he it
nvestor keep a
paym entof any install
m ent ; a st atement f o every watchfuleye on t he manag ement and the
ali
en ati
on , sal
e o r transfer of ock st m ade,theda te condit
ion oft he bu si
ness. Thosen i charge of
thereof, and by and tohom w m ade; and such other the c ompanymay be gui lty of gr oss
entries as the by-laws may r p
escri
Thbe.
e st
ock and i
ncom petence or i d
shonesty for year s an d
transf
er book sh al keptn i
l be the pri ncipaloce f o escape l i
abili
ty i f hte sh arehol
ders cannot
the orporati
c on or n i the oce f oi ts stocktransf er i
nspect he t records nd ob a
tai
n informati
on .

agent and shall be open f
or ni specti
on by an y dir
ector
or ockh
st older fot he corp orat
ionreasonabl
at e hours I
s there ny
a dist
inct
i
on of ht
e ri
ght ofnsp
iecti
on of a
on bu siness days. st
ock
hol
der and t
hat ofa d
irect
or?

Stockdan
tr
ansf
er agent - Yes,ascomp ared toas tockholderorme mber,ther ight
ofa di rceor
t orrust
t ee ot nispectd an exam i
ne corp orat
e
books and r ecords i s c ons i
dered absol ute and
- Rec
ords ev
er
y mov
ement
unqu al
ied an d wi thout re gar
d t o mot ive
. Th is is
because a director supervises, dir
ec t
s and manag es
- Per
so
n who moni
t
ors mov
ement yb the i
nu
mt
es or by corporat
e bu siness and i t s i nece ss
aryt hathe be
t
he ou
hrs equippedwi th al lthe n iform ati
on an d da t
a wi th r egar
d
to the a air
s ofhe t com pany in order hat t he
may
man agean d di rect t si operat ions intelli
gently an d
- Non
-st
ock
corporati
on- st
ockan
d tr
ansf
er book
s accordi
ng to i shb estudg jmen t n i thent erest
i of l al
the
stock
holders he represents. Th us,whi le st ockh ol
ders
- Cl
ub shar
e-mem
ber
shi
p and mem bers are i ent
tl
ed to nspect
i and
exam ine the
books and r
ecor ds as provi
ded ins ect
ions 74 and 75
theymay notgai n acc es s t o hi ghl
y se nsiti
ve and
Ar
est
ockhol
der
sent
itl
edt
onanci
als
tat
eme
nts?
condenti
al nf i
orm ati
on . nI thecas e of i rect
d ors. itsi
not den i
ed ha t
t h teyhave such access. Th i
s wou ld
- Yes,t
heyar
eent
itl
edt
oacopy
,thecodepr
ovi
dest
hat
: incl
ude, amon g ot her
s,

Secti
on 75 Ri
. ght o t nanci
al at st
ement
s.
- a. Market
ing st
rat
egi
es and
ri
ci
n
pg t
s
ruct
ur
e;
Withi
nt en (
10)daysfrom receiptofawr i
tten r
equestof
any st ockhol
deror mem ber, thecor porat
ion shall b. Budgetf
orexpansi
onanddi
ver
sicat
ion;
f
urnish t o him i ts most ece rnt nancial atst
ement,
which shal
lincl
udeabal ances heetasoftheendoft he
l
astaxa tble year and a pro t orossl stat
em ent or
f sai
d c. Res
ear
ch and v
de
el
opm
ent
;
taxable year
, showi
ng n i reason abl
e detailits asset
s and
l
iabil
iti
es n a
d the result of its op
erati
ons. d. Sou
r
ces of f
undi
ng,aval
i
abi
l
it
y of personnel
,
prop
osal
s of
merg
ers or
t
ie-
ups iw
th ot
herrm
s

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 49

May thi
s r
ightbe ex
ecrse
id, ot
hert
han by t
he - Thecor
porati
on,ori
tsresponsi
bledir
ect
orsandocer
s
st
ock
hol
ders
them
sel
ves? cannot undul
y rest
ri
ct hits ri
ght ofi nspecti
on and may
not arbi
t
rari
ly set a ewfdays f oh t
e yeari t
hwi
n whi
ch
the st
ockhol
der ay
m m ake the nspect
iion.
- Yes,whi
letheri
ghtisf
oundedon s
toc
kownershi
pthus
personal n nat
ui
re t
i may eb mad e bythe st
ockhol
der
s
agent or representat
ive nsi
ce ti may be unavai
l
ing in - A by-
law undul
yr es
tri
cti
ng t
he r
ightofi
nspect
ion i
s
manynst ian
ces undoubtedl
yinval
id

Whati
fther
ightofthes
tockhol
dert
oinspecti
sdeni
ed? Vegar
uthvs.I
sabel
aSugarCo.
Whati
shisr
eme dy?

- Direc
tors of a rat
corpo
i
on have the
unqu
ali
edrigh
t o
t
1. Mandamus i
nspecthe tb
ook
s an
d rec
ordsf t
o
he corporat
ion at l
al

r
eason
ab
le h
our
s.
2. Damagest her
ei agai
nsthe
t cor
porat
i
on or esponsi
r bl
e
ocer ho
wrefused the
nspect
iion - We do not concei
ve, however
,t hat a di
rect
or or
st
ockhol
der as
h an y a bsol
ute righ
t ot secure cert
ied
copi
es of ht
e mi nutes of he t corporat
i
on unt i
l htese
3. Criminalcom paln
it or
f ol
vi
ation ofhi s rightoti nspect
minutes have been writ
ten up andappr oved by the
and copy excer
pst of al l bu si
ness t
ransactionsan d
di
rectors.
minutes of meeti
ng.Sect i
on 74 provides that y o
Ancer
or agen t oft
he corporati
onwho sh al
l ref
use tol ow
alany
dir
ector
, t rustees
, st ockhol
der or mem ber of t he May a stockh
older of holading com
pany
inspect
he t
corporati
on to exam i
ne an d copy excerpst f r
om i t
s booksandr
ecor
dsofasubsi
diary?
records or inut
mes,in accordance i w
th the provisions of
this Cod e, shal
l bel iable to su ch di rect
or, r tustee,
- I
t depen
ds
stockhol
der orem mberor f dam ages
, and i
n add it
ion,
shall be gui
lty of an oense whi
ch sha ll be pu nishabl
e
underSect ion 14 4 of ht i
s Code. eTh l
atter provisi
on - The ri
ght of t
he stockholder
st o examine cor
porate
i
mposes pena a lty of a e nof notlessha tn P1 ,000 but books ext
ends to wholl
y-owned subsidi
ary which is
not or me h
tan P10 ,
00 0 or an impri
sonm entor f not essl compelel
ty underhe t contr
ol and managem ent of het
than 30 daysut bnotmor e h tan 5 years, or bot h, atthe parent ompan
cy w here he s su
ich a stockhol
der. Bu
t fi
discret
i
on of ht e court.If h te ref
usals ip ursu ant ota the t
wo e nt
iti
es su(bsi
diary nd a
parent) areegal
lly b
eing
resol
uti
on or order of hte boa rd,he tl i
abili
ty sh all be operat
ed as separate an d disi
tnct enti
ti
es,herte is no
i
mposedupont
he d
ire
cors
t or
rust
t
ees hw
o vot
ed f
or suchri
gh
t ofi
nsp
ecti
on on t
he pa
rtoft
he st
ockhol
der of
suchref
usal
. t
he parent
com
pan
y.

Def
ense of
t
he espo
r nsi
bl
e corporat
e o
cer AYALA-HOLDI
NG COMP
ANY/PARENTCOMP
ANY

1. Thathe t per
son demandi
ng hasmpr
i ope
r
ly use
d any SU
BSI
DIAR
IES: BPI
/GLO
BE/A
YALA
LAN
D (
not
whol
l
y-
i
nform
ait
on secured through
an
y p
ri
or exam
inat
i
on of ow
ned sub
sidi
ary)
t
he recor
ds or mi
nu t
es of such
cor
porat
ion or of any
other corpora
t
ion
;
o HOLD ATLEAST
50 +1 shar
es i
n or
der t
o bea
PARENT CO
MPANY
2. Th
at heas
w ot
n act
ing i
n good
f
ait
h or or
f aegi
l
timat
e
pu
rpose
i
n maki
ng i
h
s demand
;
A,i
sa s
tockhol
derofAyal
a,does he hav
ear
ightt
o
i
nsp
ecthet record
s of
itssubsidiaries?
3. The ri
ght s
i i
lmi
ted or re
st
ri
ct
ed by speci
al aw
l or ht
e
l
aw ofticrea
ti
on
.
- I
f w hol
ly ownedpw ede, t bu
t
is sub
si
di
ari
es ar
e not
whol
lyownedkayahi
ndipwede
W.
G.Phi
lpot
tsvs.Phi
li
ppi
neManuf
act
uri
ngCo.

Gokongw
eivs
. SE
C
- The ri
ghtofi
nspecti
on gi
ven toa s t
ockhol
dercan be
execrse
id either by hi mse lf or by any pr ope
r
- San Mi
guelcorporati
onowns al
l oft
he sh
ares st
of
ock
of
represe
nt
ati
ve or attorn
ey-i
n- f
act, dan ei
t
her with or
wit
houttheat
tendanceofthestockhol
der SanMiguelI
nternati
on
al

- I
tis w
hol
l
y-ow
ned
- Therightmayberegar
dedaspersonal,i
nt hesensethat
onl
y a st ockh
ol
der aym enj
oy t ;ibu tthe n i
specti
on an
d
examinati
on may be madeby anot her. Otherwi
se ti - It woul
d be in accord wit
h equ i
ty,good f
ait
h an d fai
r
wouldbeunavai
li
nginmanyinstances. deal
i
ng t o con
st
rue the statutory ght of ri
peti
ti
oner as
st
ockhol
der to nspect
i he tbooks and r
ecords of u s
ch
Not
e:Usua
ll
y hir
es n
a au
dit
or orccoun
a t
ant o
t whol
ly-
owned subsi
diar
y whi ch are i
n respondent
o
corporati
on
s p
ossessi
onan d cont
rol
saf
egu
ard
his n
iterest

I
f bei
ng op
erat
ed assepa
rat
e a
nd di
si
tnct corporati
ons,
Pardo. Her
vscul
es Lum
berCo.
t
her
e s
i n
o su
chrigh
t

- Thelaw i
scl
ear
,itmaybeexer
cised dur
ingreasonabl
e
Tel
ecommuni
cat
ions-speci
alf
ranc
hise,i
tisal
egi
slat
ive
hours onanybu si
ness days, t
he by-l
aw s cannot deny
grant
thi
s ri
ght al
l togeth
er

- The general ri
ght gi
ven by the stat
ute may not be Gon
zal
es s.
v PN
B
l
aw f
ull
y abri dgedt o t he extentat tempted in t hi
s
resol
uti
on.I t may be adm i
tted thatt he oci al
s in - Pro
vi
si
onsof he
t ol
d law was un
qual
i
ed, hen
w it
charge of acor por
ati
on may denyi nspect
i
on when gran
t
ed stockh
ol
dershet ri
gh
tto n
isp
ect
sought at un usual r hou
s or n uder her
ot mpri ope
r
condi
ti
on s; but n ei
ther h t
e executive ocer
s nor the
- Howev
e,r whol
e se emi
ngly enl
ar
gng
i the right of
board of director
s have t he power to depri
ve a
st
ockholder of the ghri
t altogeth
er. i
nspecti
on,the new code has prescri
bedl
imit
ati
ons to
the sam
e.It si n
ow expressl
y requ
iredsaacon di
t
ion f
or
suchexamina
ti
on that he
t onerequest
i
ng it mustnot
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 50

have een
b gu i
lty of usi
ng improperl
y an
y inf
ormai
t
on - Sect ion 79. E ect
ivi
ty of mer ger or
se
cur
ed t hrough a pri
or exami
nati
on and that the consol
idation. - Th e ar ticl
es of mer ge
r or of
per
sonasking f
or suchexami
nat
ion mustbe act
i
ng in consol
idation
, signedan d cer ti
ed as her eni ab ove
goodf
ait
h and f or al
egi
ti
mate purposen mak
i i
ng his requ
ired, sh all besu bmi t
ted t o t he Securit
ies an d
de
mand Exchan ge om
C missi
on in qu adrupli
cat
e or
f t s
i ap proval
:
Provide d, That i n the ca se of mer ger or
- Admitt
edl
y,hesoughtt
obeas tockholderinordert
opry consol i
dation of ban ks or ban king i nstituti
ons,
i
nto transact
i
ons ente
red into ybt he respon
dent ban
k buil
di ng and l oan associations, trust compani es,
even befor
e he bec ame a st ockh ol
der
. H i
s obvi
ous insuranc e com panies, pu blic utiliti
es, edu cational
purpose aswot arm hi
mself with mat ei
rals he can
use inst
ituti ons and o ther specialco rporati
ons gov erne d
agai
nstthe responden
t bank f or acts do
ne byt he att
l er by speci al l
aws, the favorabler ecommendati on of
whenthepeti
ti
onerwasatot
als t
rangertothes ame. the appropr iat
e gover nmentagency shall rst be
obtained .I
ft he Commission is sat
ised t
hatt he m erg
er
- Bank was creat
ed y
b a sp
eci
all
aw,it has t
si ow
n cha
rt
er or consol
ida
ti
on of hte corporat
i
ons concerned
i
s not
and p
ri
mari
ly governed
by theawl
creati
ng them i
nconsist
entwi th the prov
i
sions of hi
ts Codean d
exi
sti
ng laws, ti sh
al
lissu
e a cert
i
cate f merger
o or of
consol
ida
ti
on, at hwi
chtime themerger or sol
con
ida
ti
on
- Thebanki sonl
ys ubj
ecttotheinspectionoftheCent r
al
shallbe eecti
ve.
Bank an d anyi nf
ormait
on pert aining to the ban k i
s
condent
ial and shal
l not be reveal
ed to anyper son
ot
her t han t he Pre si
den t of the Phil
ippines, the If, u pon investi
gati
on, the Securit
ies and
Secr
etary foFi nance and t he B oard of i D
rect
ors
, nor Exchange om C missi
on ha s reason t
o b el
ieve that het
shal
l any nif
orm ati
on rel
ati
ve to hetufnds n ii t
s cust
ody, proposed mer ger or consol
idat
ion is contraryt o or
i
ts cu rr
ent accounts or d eposit
s belon gi
ng t o pri
vat
e i
nconsi
stent w ith th
e provisi
ons ofhi s
t Code or i st
ex
ing
i
ndivdu
i als, corporat
ion
s or ot her en ti
ti
es except by l
aw s, ti sh al
l set a hearing t o give the corporati
ons
orderof aCourt of ompet
C ent uJ risdi
cti
on, ence
h concerned the opport
unit
y o t be heard.Writt
ennot i
ce of
i
nspecti
on sought ot by t he petiti
oner sivi ol
ati
veof hte the date, time an d placeof hearing sha l
l be givent o
provi
si
ons o fits chart
er an d i s even subjecto t pen
al each constituentcorporation at east
l wot( 2) eeks
w
sanct
ions bef
ore sai
d hear i
ng.The Commi ssi
on shal
lthereaft
er
proceed asprovidedin t hi
s C ode.(
n)

Assumingyou ar
east
ockhol
derofPNB,andthenitwas
pri
vati
zed,ay m you
al
ready have the ghtri
t
o nispect
? Mer
ger

- No, un
lesstsi ch
arters ha
b
eenal
t
ered
or repea
l
ed i
t s
i - A uni
on eect
ed by absor
bing one or mo
re exi
sti
ng
sti
ll su
bjecto tth
e sa
me aw
l corporat
i
ons byan ot
her hw i
ch su rvi
ves d anconti
nues
t
he combinedbusiness

3 stages
i
n the
lif
e o
fa c
orp
ora
ti
on
- I
t si the unit
ing of wt
o or more corporat
ion
s by the
t
ransf
er ofopert
pry t
o one ofthem whi
ch conti
nue n
i
- Fo
rmati
onor rt
bi
h exi
st
ence,the other r ht
oe oth
ers bei
ng di
ssol
vedan d
merged there
i
n.
- Wenow di
scusst
heuni
onoft
hecor
por
ati
on
A B
- Thel
astwoul
dbei
tsdeat
hordi
ssol
uti
on
At r
ansf
ers al
lasset
s, pr
oper
ties, r
ight
s,obl
igat
ions,
MERG
ER AND
CON
SOLI
DATI
ON li
abi
li
ti
esto B

Merge
r an
d con
sol
i
dat
ion B i
ssu
es sh
ares st
of
ocks
i
n excha
nge of
hettr
ansf
er

- I
n co
rpora
t
e p
arl
an
ce tii
s ca
l
ledsp
i
n-o Ai
sthendi
ssol
vedandB SURVI
VES

- Almosta year ago San Mi

guelsepar
ated i
ts br
ewer
y o
Part
i
es to a mer
ge
r ar
e cal
led cons
ti
tuen
t
busi
ness corp
orati
on

- San Mi
guelorCpor
ati
on i
s now a f
ull i
tme hol
di
ng Con
sol
i
dati
on
com
pany;i
t canlat
eron bsorb
a hetcom
pany
- The uni
ti
ng or amal
gamat
ion oft
wo or mo
reexi
sti
ng
- Cor
por
ati
onsar
e gr
ant
ed by t
he code
to mer
ge or corporati
ons o
t orm
f a new corporati
on
con
sol
i
date
- I
n merger theres aisurvi
vi
ng corporati
on, h
te others
- most
com
mont
ype of
orporat
c e e
rcogni
t
ion are i
sso
dlved
, whi
le n
i consoli
dati
on
, all
consti
tue
nt are
di
ssol
ved dananew on e org
ani
zed

- nott
he sa
me n
i ever
y case
A B

- butmo st common i
nt he wealnanci
alor i
nsol
vent
condi
ti
on,ai m is to bring it backt o i t
s n an
cial
capabi
li
ty
C
-
al
soa met
hodof ecap
r i
tal
i
zati
on
Likel other
al orate
corp acts,
i
t em
anates
rom
fthe oa
b
rd
o pur
cha
se an
d sal
e of cor
porat
e a
sse
t
s s
i a
not
her
f
ormofcorp
orate
eorgan
rizati
on 1. The boar
d ofdi
rect
ors ort
rus
tees ofeach cons
tit
uent
cor
porati
ons shallapprove a pl anof mer ger or
How doyouval
ue h
te asset
s oft
he mer
gn
ig corporat
i
on, consol
ida
tion set
ti
ng f ort
h the mat ters r equi
red i
n
doyoucon
si
der goodw
i
ll
? sect
i
on76 ;

Fi
r
st se
cure
favor
abl
y r
eco
mmenda
ti
on of gov
er
nment
agency
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 51

2. Approvalofthel b
an
py thest
ockholdersrepr
esenting - Alt
hough thesubjectpromi
ssor
y notenamesCBTC as
2/3of he t outstanding capi
talstockor 2/ 3 of he
t the payee, t
he referenceto CBTC i n t
he note sh
all be
m ember ninon -
stockcor pora
ti
ons
ofeach ofsuch const
rued,nd er
u theve
ry provisi
on of he
t mer ger
corporati
on
s at separat
e corporate eet
i
ngsm cal
led for agreement
, as aref erenc
e to peti
t
ioner ba
nk, as
if such
t
hepu rpose
; ref
eren
ce ( was a) i rect
d eren
ref
ce to t
he latt
er or
f all
i
ntents and purposes

3. Pri
ornoti
ceof uch
s meet
i wi
th a copy orsummary
ng,
- Secti
on 80 par.
4 states:
of hte pl
an of merger orsol con
i
da
sh
ati
on
l
l be g
iven
to al
l st
ockh
ol
ders or embers
m at
eastlwot(2) eeks
w
pri
or to theschedu
l
ed meet
ing, t person
her al
ei ly or Thesurvi
vingort
heconsol
idatedcor
porati
on
regi
stered ai
m
lst
ati
ng theurpo
pse htereof
; sh
allt hereu
pon an d ther
eaf
ter ossess
p al
lt he ri
ghts,
pri
vil
eges, mmuini
ties and franch
isesof each of ht
e
con
st
ituentcorporat i
ons; na
d al l p ropert
y, real or
4. Execu
ti
on of hte a
rti
clesof emgrer ornsol
co
ida
ti
on by personal
, and al
lrecei
vabl
es u de onwha t
ever accou
nt,
each const
it
uentcor porat
i
onst si
o begnedby the i
ncl
udi
ng subscri
pt
ions to sharesan d ot
her chosesni
pres
ident or vice-pres
iden
t an d certi
ed by the acti
on, and al
l and every t
hero nt
ierest
of
, or el
bongi
ng
corpo
ratesecr etar
y or assistan
t secretarysetti
ng t
o, or due to each const
i
tuentcorporat
ion, sha
ll be
fort
h the att
m ersequrir
ed i
n section 78; deem
ed transf
err
ed t
o a nd vest
ed in such survi
vi
ng or
consol
i
dated corpor
at
i
on wi t
hou t ufrt
her ct
a or
deed
;
and
5. Submission ofthe art
icl
es of mergeror consol
i
dation
i
n qu adrupl
icateo tthe SE
Ce
su
b jctt
o the requ
irem
ent
- Wi
thoutf
urt
herac
ts,me
ani
ngi
tisaut
omat
ic
of sect
i
on 79 that fiti nvol
i ve corporati
on
s underthe
di
rect supervi
si
on ofany other n gover
men
t agency r o
gover
ned by speci
al aw
ls the avor
fabl
e recom
mendat
i
on When do merger and consol
idat
ion become eect
ive?
of he
t gov er
nment agencyconcer
ned shal
l rst be What i
ft he SEC f ai
lst o act on it without f
ault
sec
ur
ed an d; att
ri
butab
le to e thco
rporati
oni nvol
ved?

6. Issuanc e of the certi cate of merger or - I

t wi
ll neverbeco
me val
i
d unt
il an
d u
nlesshe
t S
EC gi
ves
con soli
dation by the S EC hi
at wch me
ti htemer ger
or i
ts st
am p o
f ap
proval
consoli
dati
on sh all beeecti
ve.f Iht
e p l
an, however
, s
i
beli
eved to be contr
arytolaw,the SEC shallseta
- I
t wi
ll be u
p t
o th
e con
sti
tuen
t corp
ora
ti
on t
o oll
fow i
t up
hearing t o gi ve t he corpor
ati
ons co ncerned an
oppor
t
un i
ty t
o be hear
d uponpr ope
r not
i
ce and
t
hereaf
ter
,the C
ommi
ssi
on sh
all proceed
as rovi
p dedi
n - I
t wil
l neverake
t eect t
un
ilt he S
EC gi
vest
si a
pproval
t
he o
Cde. and i
ssues the
rti
cla
es oferg
mer

Al
though mer
gerandconsol
idat
ion i
san expr
esspower o Grant
ed 3 year
s to wi
ng up unl
es t
her
e i
s a
gran
ted to corp
orati
on , ti s
i su bject o l
itt
miati
ons, as t
rust
ee ot w
ing u
p ti
s aai
rs
mayber oscri
p bedby awl
Coul
d t
here be
l
iqui
dat
ors andwi
ndi
ng u
p wi
th r
espect
Whatwoul
d be t
he eectofme
rgerorconsol
idat
ion? to the
corporati
onin consol
ida
ti
onand merger
?
<sec.
80>
- No,t
heres in
one
1. Th
ere wil
l ony
l be a si
ngl
e cor
por
at
ion. nIcas
e of
mer
ger
, hte su
rvi
vi
ng corporati
on or the
consol
ida
ted
- No asset
s propert
i
es or ri
ghts
to col
lect
, they
are
corp
orati
on i
n caseofcon
sol
i
dat
ion
;
tran
sf
erred

2. The t
erminat
i
on of het cor
por
at
e ex
is
tenc
e of he
t
- No debts dani
lab
il
it
ies ot p
ay ecau
b se ht
ey beco
me hte
con
st
i
tuent corpo
rat
i
ons, exceptt of
thathe
su
rvi
vi
ng
l
iabi
li
ti
es foth
e survivi
ng corp
ora
ti
on
s
corp
orati
on or he
t con
sol
i
dated corp
orati
on;

- No proper
ti
es tr
ansf
er
red because
t
heywi
ll bet
he
3. The s urvi
ving c or
por
at
i
on or t he consol
i
dated
prope
rt
i
es fot
he su
rvi
vi
ng co
rpo
rati
on
s
corporati
on wi l
l p ossessal
l theri
ght
s, privi
l
eges,
i
mmuniti
es an d pow es
r an
d sha
l
l be su
bjectt
o allthe
dut
ies and liabi
li
ti
es of acorporati
on organ
i
zedunder o Hardest part
s the n
i an
cial act
, e
rgar
di
ng how
t
he oCde; many shar
es woul
d be issued, obabi
pr l
it
y of
coll
ecti
on an
d theli
ke

4. Th e survi
vi
ng oron csol
idat
ed corporation sha l
l possess
allt he ri
gh t
s, privi
leges, mmu ini
ti
es n a
d f ranchisesof o In mer
ger dan
con
sol
i
dat
ion, h
teres id
ue d
il
igen
ce
the co nst
i
tuen t corporati
ons,an d all prop ert
y an d al
l and aneconom
i
sti
s usual
ly h
ir
ed
recei
vables u d
e,i ncluding su bscri
pti
ons t o sh aresnda
other choses i
n action , and every other i
nterest of
, or
APPRAI
SAL RI
GHT
belongi
ngtoorduet othec onsti
tuentcorporati
onss hall
bedeeme dt r
ansfer
r ed toand vested i
n suchs urvivi
ng
or consoli
da t
ed corporat ion wi thout ufrther ct a an
d Den
e apprai
sal
deed; and,

- Rightotwithd
raw f
rom the cor
por
ati
on anddem and
5. Th
e ri
ght
s of
credi
t
ors orany i
l
enont he propert
y oft
he paymen
t ofhetfai
r val
ue of shi
sharesfter
a issenti
d ng
con
st
i
tuent corporat
ions sha
l
l note b
impai
red by t
he f
rom cert
ain cor
porat
e act
s invol
vi
ng fundament
al
mer
ger or sol
con
i
dati
on. changesn i
corporate
ructu
re
st <sec.
81>

I
s there a li
qui
dati
on proces
s i
n case
of eg
m rer or Whatpr
oper
ty?Whenma
ythi
sri
ghtbeexer
cises?
con
sol
i
dati
on?

- Sect
ion 81provi
des:
- Non
e, here
t s in
othi
ng toi
st
dri
but
e

Sect ion 81. I

nstancesof ap prai
sal ghri
t
. -
Associ
atedBankv
s.CA Anyst
ockholderofacorporat
ion shal
lhav
etherightt
o
di
sse
nt an d dem and paym ent of hetf
air val
ue of shi
sharesn ti
he olfl
owing nist
ances:
- By virt
ue of a sp
eci
c provi
si
oni n the m
erger agre
em
ent
Notes on Corporati
on Law
Not
es omce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed
GTan; ASogu
il
on; VVi
l
lan
ueva
 52

1. In c ase any amendm ent t

o the art
icl
es of A obj
ectsand makesa wri
tten demand f
orpaymentof
i
ncorporati
on has the eect of gi
chan
ng or rest
ri
ct
i
ng f
air val
ue of shares
. Can he m ake a deman
d of paym
ent
t
he rights of an
y stock
hol
der orass
clof sha
re
s, or of of share
s?
authori
zing pref
erences
i
n any res
pect peri
suor to those
of outst
andi
ng shares of clany
ass, orextof
endi
ng or
TrueorFal
se,nos
tockhol
deri
nas toc
kcorpor
ati
oncan
shorteni
ng the mterofcorp
oratesten
exi
ce;
ever dem
and fithe pri
nci
pal oce si am
ended,chan
gi
ng
itfrom QC to Mani
la
2. I
n caseof sal
e,lease
, exch
ange,ran
tsf
er
, mort
gage,
pl
edge orother
di
sposi
ti
on of lalor bstan
su t i
all
y al
l of
- Fal
se,a st
ock
hol
dern ia cl
ose rporati
co on may or
f an
y
the corporat
e p
ropert
y and asset
s as p
rovded
i in t
he
reasoncom
pelt
he cl
ose corpo
rat
i
on t
hat hee bpa
i
d the
Code;and
f
air va
l
ue of hisares
sh

3. I
n case
of erger
m or
sol
i
d
con
ati
on
.(n)
Can he exerci
se i
h
s app
rai
saligh
rt
s ni the
rst pl
ace?
He hasn

t v
eenpai
d h
is su
bscri
pti
on i
n f
ull.
May tibe exerci
sedby astockh
ol
der hw
o di
ssen
ts o
t the
act
ofa b usi
ness hot
erthana p
ri
mary rpose?
pu
May astockh
ol
der hw
o hasn
t pai
d hi
s su
bscri
pt
ion i
n
f
ull exerci
sehi
s apprai
sal ri
gh
ts?
X Co.i
nc

- Yes,hecan exer
cisehi
sapprai
salr
ight
s,byreconci
li
ng
Pri
nci
pal o
ce i
s i
n Quez
on ci
t
y, t
i w
as chan
gedt
o therovi
psions of secti
on 72, secti
on 82 and secti
on86
Paranaque

Sect
i
on 72. Ri
ght
s of unpai
d shar
es.
-
A obj
ect
sandmakesawri
ttendemand.Ma
yheexer
cise Hol
ders ofscr sub
i
bedsha r
es ot
n ufl
ly pa
id whi
ch are
hi
s right ofap
prai
sa
l
? not del
i
nquentshall haveall the rights of a
st
ockhol
der n
. ()
- I
tis not avai
l
abl
e ni al
l amen
dmen t
s oft
he corp
orati
on
- I
t must bechangi
ng or res
t
rict
i
ng the ri
gh
ts of any
Section 82 .
How righti s exercised.
- The
st
ock
hol
der
appraisalright m ay e b exer
ci
sed byan y stockholder hw o
shall have voted agai nst he
t p roposed corporate i
on, act
Whatift
heprinci
paloceischangedfrom QC t
oTAWI
- bymaki ngawr i
tten demand on thecorporati
on within
TAWI
,willi
tchangeoraectt
herightsofA? thi
rty (30) days af t
er het date on which t he vote was
takenf or paym ent of the fai
r value of hi s share s:
Provi
ded, Th at aif
lure o t make the em andd within su ch
- Tosomei
tma
ychangeorr
est
rictt
her
ight
stoot
her
sit
peri
od sh all be eem
d eda w ai
ver of the ap praisal ri
ght.If
maynot
the pr oposed cor porate acti
on i s i mpl emented or
aected, the cor porati
on shal l pay to such
How i
s the
ri
gh
t x
eerci
sed? stockh ol
der , upo n surr ender f o t he cert icat e or
certicates of tock srepresenti
ng h i
s sh ares,
th
e fai
r
- Accor
dingt
osect
ion82oft
hecode: val
uet hereofasoft heday pri
ort othedat eon whi ch
the vo t
e was t aken, u excl
ding anyapp r
eciati
on or
depreci
ati
on i n anticipati
onof su chcorp orate on acti
.
Section 82 .
How r ightis exer ci
sed.- The
apprai
sal ri
ght may e b exer
ci
sed by nya st ockhol
der hwo
If w i
thin a peri od of xt si
y ( 60) da ysf romt he
shal
l have vot
ed against het proposed corporate ion
, act
date t he co rporat
e ac ti
on was appr ov
ed by t he
bymakingawr i
tten demand on t
hec orporat
ion wit
hin
stockhol
ders, thewi t
hd r
aw i
ng st ockholderand t he
thi
ry
t (30) days after ht
e d ate on whi ch the vote was
corporati
on can not agree ont he aifr value ofhe t sh
ares,
takenfor paym ent of the fai
r value of hi s shares:
i
t shal l bedet ermined and app r
aisedby t hree3) (
Provi
ded, That aif
lure ot make the em an
dd wi t
hin such
disnte
irested per sons, oneofwhom shal l be na med by
peri
odshall be eem
d eda w ai
ver of the ap pra
isalri
ght.If
the stockh ol
der, another y t heb corporation , and the
the propose
d cor por
ate action i s i mplem ent
ed or
thir
d by t he t wo t hus chose n. Th e n di ngsof he t
aect
ed,he t corp
orati
on sh al
l pay to ch sustockhol
der,
maj ori
ty o ft he appraisers l sha
l ben al, an d their award
upon su
rren
der of ht
e certi
cat
e or cert
i
ca t
esof ock
st shall be pa id by t he corporation within t hirty (30) days
represen
t
ing hi
s sh
ares, he tai
fr val
ue the
reof asof he
t
aft
er u sch aw ardsim ade: Pro
vided, That paym
noent
dayprior otthe dat
e on whi ch t
he vot
e was taken,
shall be mad e ot a ny dissenti
ng st ockholder nu l
esshe t
ex
cud
ling any appre ci
ati
on or depr eciati
on in
corporati
on has unres tri
ct
ed re tained earn i
ngs i n it
s
ant
ici
pati
onof such corporate onacti
.
books to cover such payme nt:and Pr ovided,f urther,
Thatupon payme ntbyt hecor porati
on oftheagr eed or
If w i
thin a period of xtsi
y ( 60) da ysfromt he aw arded price,he t st
ockholder sh al
l ort
f hwi th t ransf
er
date t he co rporat
e ac ti
on was appr ov
ed by t he his shares to e co
th
rporati
on.( n)
st
ockholders, thewi thdr
aw i
ng st ockholderand t he
corporati
on can not agree on the ai
fr value ofhe t sh
ares,
i
t sha ll bedet ermined and app rai
sedby t hree3) ( Section 86 .ot
N ation on certica
tes
; rights of
disnte
irested per sons, oneofwhom shal l be na med by tr
ansferee. - Wi thin t en ( 10) days af
ter dem and ing
the stockh ol
der, another y t heb corporat
ion, and the paym ent or f i h sh
s ares, a dissenti
ng stockhol
der al sh
l
thir
d by t he t wo t hus chose n. The n dingsof he t submi t h te certi
cates f ostockrepresenti
ng hi s sh ares
majori
ty o ft he appraisers l sha
l ben al, an d thei
r award to the corporati
on for ot nati
ont here
on that suchsh ares
shall be pa id by the corporati
on within t hirt
y (30) days are i ssen
d t i
ng s hares. i
s H ai
flure ot do soatsh h
t
ale
l,
aft
er u sch aw ard is made: Provided, That aym noentp option of h te corpo rat
,i on
terminate shi ri
ghts u nder
shall be mad e ot any dissenti
ng stockholder nl u
esshe t this Ti tl
e. fI sh ares represented by t he cert i
cates
corporati
on has unres tri
ct
ed re tai
ned earn i
ngs i n it
s bearing s uch not ati
on ar e transf
erred, and t he
books to cover such payment:and Provided,f urther
, certi
ca t
es con sequentl
y can cel
led, e thri
ghts of the
transferor as a di ssent
ing st ockhol
derundert his Titl
e
Tha
aw tuponpri
arded payme
ce,nht
eb
tyst
thec
ocko
hrp
do
ol r
erati
on
sho
al
lft
h eh
aw
ort
f gr
ie
t
hed o
tr er
ransf shall cease n a
d t he transfereeal sh
l havel lathe gh ri
ts of
his sh
ares to e co
th
rporati
on
.( n) a regul ar st ockholder; dan all dividen
d di sri
tbu tions
which woul dhav eaccruedonsuc hs haresshallbepaid
to the transferee
.( n)
X Co.

- Notait
on is not m andator
y, ti s
i eve n discr
et
i
onary
Pri
nci
pal Oce-
QC, i
t was chan
gedotM
ani
la because t
he code pr
ovides
at t
he option of t
he
corporati
on becau
se ti neverssu
ed
i one or
f htat amtt
er
si
nce the su
bscri
pti
ons are ot
n yetful
ly paid

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 53

May the
corporat
i
on be com
pel
l
edt
o p
ay the
i
nter
estof Whati
fa s
tockhol
derexer
cisi
nghi
sappr
aisalri
ght
sis
A al
so a direct
or, wi
ll h e al
so losehi s ri
ghtsas a
st
ock
hol
der?

30
0 T,15
0T, 150
T and 0 unr
est
ri
ct
edr
etai
nedearni
ngs
- Theshar
esremai
ntost
andinhi
snameunt
ilheispai
d,
unl
ess ere
th s iast
i
pul
ati
on i
n they-l
baws
No st
ockh
ol
der ay
m beable o
t com
pelt
he corporat
ionto
paythe val
ue of hi
s share
s if he
t corpor
at
i
on has no
unrest
ri
ct
edretai
nedearn
i
ngs When mayt
her i
ghttobepai
dtheval
ueofhi
ss hares
cease?an hCe wi
thdrawhi
s ri
gh
t ofapprai
sal
?

- Fal
se,a stock
hol
der ofa cl
ose rporati
co on may or
f an
y
reason
, provi
dedonl
y thathe tcorporat
i
onhas su
ci
ent - Yes,hemaywi
thdr
aw,butt
her
emustbeconsentbyt
he
asse
ts ot c
ove
r ts
i de
bts an
d li
abi
li
ti
es corporati
onas rovi
p dedfor by
sect
ion83oft he cod
e:

o Gen
eralru
l
e:t
here sho
ul
d be u
nrest
ri
ct
edret
ai
ned Sect
ion 84 .
When r
ighto tpa ym c-
enteases.
earn
ings No dem and for pay ment u nderhi s
t Titl
e may be
wit
hdrawn unlessthe corporati
on consentsthereto.If,
howeve,r suchdem andf or paym entsiw i
thdr awn with
o Excep
ti
on: secti
on 10
5 cl
ose rpo
corati
on

the consent of he
t cor poration,or i f hte propose d
cor
porate action is aban doned or re sci
nded by t he
Thepr
ocedur
eandr
equi
reme
ntsf
ort
heval
idexer
ciseof cor
poration or di sapproved by t he Secu riti
es and
this ghts
ri are: Exchange Com missi
on whe r
e suc h app roval i s
necessar
y, or i f t he Sec urit
ies and Exc hange
Commi ssi
on determinest hat ch su st ockhol
dersin ot
1. The st
ockh
older ust
m hav
e vot
ed agai
nstthe pr
opose
d
ent
itl
ed t o theap praisal gh ri
t, h ten theri gh t of d sai
corporate on i
n
acti
an
y oft he n
ist
ances ll
ow
a ed by l
aw
st
ockholder otbe pa i
d t he aifr value ofi sh shares al sh
l
f
or th
e ex
erci
se fothe ri
gh
t of ap
prai
sa
l;
cease, his st
atus as a st ockholder alshlther eupon be
rest
ored, and all dividend di sri
tbu t
ions which wou l
d
2. The rw
itt
en dem
andor fpaymentmust be made yb h
te have accrued no hi
s sh ares l sha
l be aipd to m. hi(
n)
di
ssen
ti
ng stock
holder iw
thi
n thi
rt
y 3(
0) days fa
t
er hte
dat
e on which t
he vot
e was taken t
here
on. Fai
l
ure to
Inst
ances hw
en the ri
ght ofa di
ssenti
ng stockh
ol
der to
maket he demandwi t
hin the sai
d peri
od shall be
bepai
dthef
airval
ueofhi
sshar
esceases.
deemed a waiver ont he part of het st
ockhol
der
concern
edt o exerci
se i
h
s apprai
sali
ghrt
;
1. When he wit
hdr aws shide mand orf pa
ymentand he t
corporati
oncon sentsthere
to;
3. Su rr
ender of he cer
tticat
e ofstockby t he di
sse
nting
stock
holder orf ot
nati
on in t
he corporate ksan boo
d the
payment by the corporat
i
on ofthe aifr market
value of 2. When the opose
prd act
i
on s i abandon
ed orres
cnd
i ed by
the sai
d sh ares ast he
ofday pri
or ot theate
d onhi
ch
w the co
rporati
on ;
the v ote was t ake
n. I f the stoc
khol
derand t he
corporat
ion cannot agree on t he fair mar
ket value
3. Whent he pro
pos ed act
i
on s i di
sappr
oved byhe t ESC
there
of, hte sam e shall bedeterminedin accor
dance
wher
esuchapprovali
snecessary;
withtheprovi
sionofpar
agraph2ofsect
ion82;

4. Whent
he SE
C deter
mines hat
t he
s i
notent
i
tl
ed o
t
4. The ai
fr val
ue of t
he shares of the di
ssent
ing st
ockh
ol
der
exercise
i
s a
pprai
h sa
l ri
gh
t;
must be pai
d by t he corporati
on onl y if ti has

unrestri
ct
ed ret
ained earni
ngsn ii t
s bo oks t
o cover
such payment. I
f h te corpor
ati
on ha s no unrest
ri
ct
ed 5. Whenhe f
ail
s o
t su
bmi
t he
t st
ock cert
i
cat
e wi
thin t
en
re
tai
ned earni
ngs, the dissenti
ng stockhol
der aym ot
n, (
10) days
fr
om dem
and to t
he corporat
i
on for ot
nai
ton
t
heref
ore, be able t o e
ecti
vely exerci
se his apprai
sal t
hatsuch sh
ares are
di
ssenti
ng sh
ares;
and,
ri
ght
s;

6. I
f the shar
es ar
e t
ransf
er
r
ed and t
he ce
rt
icat
e
5. Uponpayment fot
he shar
es byhet co
rpor
at
i
on,the subseq
uent
ly can
cel
l
ed.
di
ssen
t
ing st
ock
hol
dersh
all ransf
t er ih
s sh ares
to t
he
corp
orati
on
.
Whobear
sthecos
tofappr
aisal
?

Whatwoul
dbetheeecti
fthes
tockhol
derexerci
seshis
- I
t depen
ds
apprai
sal i
ght
rs? Whathapp enst o hi s vo t
ing and
di
viden
d ri
ghts fi
he exerci
ses isha pprai
sa l ri
ghts?
- Thecor
por
ati
onbear
sthecos
tif
- I
t wi
ll be su
spen
ded
, w
i
th a li
mit
ation of 30
days, as
provi
dedf or bysect
i
on83 oft
he code: a. Thepri
ce oer
ed yb t
he cor
por
at
i
on i
s olw
er han
t
t
he fai
r val
ue of ht
e shar
es of ht
e dissent
ing
st
ock
hol
der aset
erm
di
ned yb h
te ap
prai
ser
s;
Secti
on 3.8
Eectofdem
and andtermi
nati
on
of g ri
ht.- From t
he t i
me ofdem
andf or paymentfothe
f
air value of ast ockhol
der'
s sh
ares unt
il eit
her the b. Where an act
ion i
s led by the dissent
ing
abandonment of hetcor
porat
e act
i
on invol
ved or the st
ockhol
derto r ecove
r such fair val
ue an d the
purchase of he
t said share
s by the cor al
l
porat
ion, re
fusal of he tstockh
ol
der ot rec
eive aym
p ent s
i
ri
ghts accruing tosuch shares,
i
ncluding voti
ng an
d f
ound by thecourtto be u
jst
i
ed .
di
vidend ri ghts,shall besuspendedi n accordance
wi
th the provisi
ons ofthi
sCode,exceptthe ri
ghtof - Di
ssenti
ng st
ock
hol
der i
w
ll bel
iab
le f
or t
he cost dan

suchst ockholderto recei

ve paym
entof het f ai
r expen
ses of
ap
prai
salwhen
value thereof
:Provi
ded, That if thediss
enti
ng
stockhol
de r s
i not pai
d the va
l
ue of shisha
res ithi
wn a. When t
he pri
ce oer
ed by t
he cor
por
at
ion i
s
30 days af
ter the awar
d, hi
s vot
ing and di
vidend appr
oxi
matey
l the same as t he f
air va
lue
ri
gh ts hsal
li m med
iatel
y be rest
ored
.(n) ascert
ai
nedbyt he ap
prai
sers
;

How do yo
u compar
e t he r
ight
s of as
toc
khol
der
, b. Wher
e t he act
ion led by the di
ssent
ing
dec
l
ared del
i
nquent compar
ed t o a diss
ent
i
ng st
ockhol
der nd
a his ref
usalo taccept entpaym
si
st
ock
hol
der exerci
si
ng hi
s apprai
salgh
ri
t
s f
ound by hte cou
rtto be nj
u
usti
ed
.

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 54

The di
ssent
ing s
tockhol
der may al
sosel
l,t
ransf
er or Vot
ing by mai l or herot misi
lar meansby
assi
gnhi s sh
ares mem ber
s of non-st
ockcor porat
i
onsmay be au
thori
ze
d
by the by-
laws of non-
stoc
k corporat
ions wi
th t
he
appr
oval of, an
d und er u s
ch condit
ionswhi ch m
ay be
Section 6.8Not
ati
on on cert
ica
tes
; ri
ght
s o f
pr
escri
bed by , t he Sec uri
ties and Exc hange
t
ransf
eree.- Wi thi
n t en (10) days af
ter demanding
Commission.
payment or
f i h
s shares, a di
ssent
ing stock
hol
der shal
l
submi
t hte cert
ica
tes f ost
ockrepresenti
ng hi
s sh ares
t
o the corporati
on f
or otnati
on ther
eont hat such shares How abou
tin st
ock?
are issen
d ti
ng sh ares. is H
ai
flure ot do sosh all
, at the
opti
on of hte corporat
i
on, erm
t inate his ri
ght
s under
- Vot
ing by mai
lor other si
mil
ar means ma
y also be
thi
s TitlI
f shares repres
e. ented by thecert icates authori
ze
d an d all
ow ed by the by-l
aws of non -st
ock
beari
ng such notati
on are transf
erred, and the corp
orati
ons. en
Geral
ly,in stockcorporati
ons, het vote
certi
catesnsequ
co en tl
y cancel
led, therights ofthe must be cast du atl
ya const
i
tut
ed meet
ing. e Th onl
y
tr
an sferor as a di ssenti
ng st ockh
olderun derthis excepti
on, ni case of ht e latt
er, si in the matter f
o
Title shal
lceaseand thetransfereeshal
lhaveallthe general endam
mentof ht e articl
es of ncorporat
i i
on
ri
gh ts f o a r egul
ar st ockholder
; an d al
l di vi
den
d wher
et he wri
tten assent ofthe s
tockhol
der may be
distributi
ons whi ch woul d haveaccr ued on such sucient
.
shares al sh
l be paid toe th tran
sferee
.(n)
How i
s the governi
ng boa
rd con
sti
tut
ed i
n a non
-st
ock
co
rpor
ati
on? ow
H many em
m ber
s?
NON-
STOCK
COR
PORATI
ONS

- It may exceed 5 in1a non-

stockcorpor
at
ion unlesshe
t
Whati
sanon-
stoc
kcor
por
ati
on?
AOIor by-
laws pr
ovi
de ot
her
wise,as pr
ovi
ded f
or by
sect
i
on92 oft he cod
e:
- A non-s
tockcorporat
ion i
s one wher
e no par
tofi t
s
i
ncom e is di
sri
tbu t
able as divden
i ds to its members,
Sect
ion 92 .
Elect
ion an
d termof rust
t ees.
-
t
rustees
, or cers,
o subj
ecto tt he provi
si
ons of ht
i
s
Unl
es otherwi
se pr ov
i
ded i n the ar t
icl
es of
code ondissol
ution
i
ncorporati
on or the by-l
aws,t he b
oard of ruste
t es f o
non
-st
ock corporat
i
ons,which m ay beore
m han
t ft
een
What pr
ovi
sion of t
he code wil
l gov
ern non-
stoc
k (
15)ninu mber as may be xed i
n thei
r art
icl
es of
cor
porat
i
ons?Wou ld the provisi
on governn
ig stock i
ncorp
orati
on or by-l
aws,shal
l, as so
on as rgan
o ized, so
corporati
ons also pp
aly toonn-
stock corporati
ons? cl
assi
f
y th
emsel
ves that the m ofter
oce foone-
thi
rd
(1/3) of hei tr nu mbershal l expire ev ery year; and
subseq uent elect i
on s of ruste
t es com prisi
ng on e-t
hird
- Yes,2nd pa
r
. Of secti
on 87 provi
des:
(1/3) of the b oard oft rustees l
l be
shaheld annuall
y and
trust
ees so elected sh all have a t
ermof hree t 3)(years.
The provi
sions gov
erni
ng s t
ockc orpor
ati
on, Trustees thereafter elect
ed to llvacancies occur
ring
when pert
inent
,s hall be applicable t
o non- st
ock befor
et he expiration ofa par ti
cul
ar term shal lhold
cor
porat
i
ons, except as may be cov ered by speci
c oce on l
y orf ht e u nexpi
red peri
od.
provisi
ons of this Titl
e.n)(

No person
shal
l be ect
eled ast
rust
eeunl
ess
How i
s the ri
ghtto vot
e exe r
cisedi
n a non
-st
ock he s
i amember of
the corporat
i
on.
corporati
oncom
paredo ta ock
st corporati
on
May a member in a non- s
tock cor
por
at
i
on vot
e
Unl
ess otherw
i
se rovi
p dedin t
he art
i
cles fo
cu
mulati
vel
y?
i
ncorpor
at
i
on or the
by-l
aws, o
cer
s of anon-st
ock
corporati
onmay e
b d
i
reclt
y el
ect
edby the m
embers.(
n)
- Gen
eral
rul
e s
i N
O

Qual
i
ca
t
ion
s?
May tibe gran
ted orl
owal
ed y
b h
te by-l
aws?

1. He s
i a m
ember
oft
he ass
oc
i
ati
on;
- Yes

2. Maj
ori
t
y t
here
of u
mstbe r
esi
den
t
s of he
t Ph
il
ippi
nes;
May thegh
tri
t
o cu
mul
ati
ve vot
ing b
e d
eni
edi
n a st
ock and,
corp
orati
on
?

3. Other qual
i
cat
ions as
may ber
ovi
pdedf
or nit
he by-
- No,Doct
ri
ne of mi
Li
t
edCap
aci
t
y l
aws.

May m
embers
n i
a on
n-st i e by proxy?
ock corporat
on vot Gover
ni
ng bo
ardn i
a n
on-
stock

- Yes,sect
ion89pr
ovi
dest
hat
: - Boardf Tru
o st
ees,
how
ever
sect
i
on13
8 p
rovi
des tha
t:

Unl
essotherw
ise provi
dedin the art
icl
esof Sect
i
on 138. Desi
gna
t
ion of governi
ng
i
ncor
porat
i
on or he
t by-
laws, amember aym vote by boards.
- Th
e provi
si
ons of speci
c provi
si
ons of ht
i
s
proxy
i
n accorda
nce i
w
th the p
rovi
si
ons ofhis
t Code.(
n) Codet
o the cont
rarynotwi
thst
an
dinon
n -
g,st
ock or
speci
al corporat
i
ons m ay, hr
tou
gh their art
icl
es of
i
ncorporat
i
on or their by- l
aws, esi
d gnatethei
r
May t
he ri
ght toevot
by proxy
e b
val
i
dly den
i
ed i
n a governi
ng bo
ar
ds by any amen otherthan as board of
st
ock rpo
co
rati
on? tru
stee
s.(
n)

- No,i
tis a a
mtt
er of
ri
gh
tin a stock
corp
ora
ti
on Di
squ
al
i
cati
on
s

May mem
ber of
a non
-st
ockcorpor
at
i
on cast
t
hei
r o
vet - Sect
i
on 27 al
so pp
ali
es ot anon
-st
ockcorporati
on
, same
byt
ext
? hol
ds rue
t othte mannerofrem
oval<sec.
29ad30 >

- Yes,subjectt
otheappr
ovalandt
ermsandcondi
ti
onsof Section 27. Disquali
cati
on of direct
ors,
the E SC <sec.89> t
rust
eesor o cer
s.- N o per so
n convict
ed by nal
j
udgmentofan oensepunishablebyimpr
isonme
ntfor

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 55

a peri
od exceed
ing si
x (6) years, or vi
ol
ati
aon of ht
i
s the stockhol
der
s, i
nst
ead of by the boar
d of
Code com
mit
ted iw
thi
n ve5) (yearsor pri
ot theate
d of direc
tors.
his e
l
ecti
on or ppaoi
ntment, shal
l qu
ali
fy a
s a di
rect
or,
trustee or ceroof
any corp
orat
ion
.(n)
Nat
ure of
mem bershi
p i
s non
-t
ransf
er
rabl
e an
d per
sona
l
i
n natu
re n
ul
ess thearti
cl
es foi
ncorp
orati
on or by-l
aw
s
Secti
on 29 . can
Va ci
esi n theo ce of ir
ect
d
or provi
deot
herwi
se
or trustee.
- An y vacancy occurri
ng in t he board of
di
rect
ors or tr
usteesot hert han by r em oval by the
st
ockholders or em bers
m or by rat
ion
expiofterm, may Section 90. Non
-transf
er
abi
li
ty of
be ll
ed by the vot
e of at least a majorit
y of the mem ber
ship. - Membershi
p in a non
-st
ock corpor
ati
on
remai
ning direct
orsor t rustees, f ist
il
l con st
i
tuting a and all ri
ghts ari
si
ng there romf
are person
aland n on
-
quorum ; ot
herwi
se, sai
d vaca nci
es m ustbe l
led y b the tran
sferab
le, nul
ess thearti
cl
esof ncorp
i orati
on ort he
st
ockholdersn ia regul aror sp ecial e meti
ng called f
or by-
lawsother
wiseprovi
de.(
n)

t
vh
aat
cancu
yprpose.
shal
lbeel
edi
r
ct
eA
dec
t
or
o yor
nl hu
orttr
est
uee
ne so
xpi
r el
ed ect
t
ered
m t
ofo l
l a
How i
s a mem
ber
shi
p r
equr
i
ement nia non-
st
ock
his predecessor
i
n oce. corp
orati
on

Anydirectorshi
p ortr
usteeshi
pt obel
ledby Ahol
dsame
mber
shi
pcer
ticat
e
r
eason of an i
ncre asei n the nu mber ofr ect
di
or
s or
t
rustees al
sh
l be l
ledon ly by a n el
ecti
on at a regu
l
ar or
at aspeci
al m eeting of t ockhol
s ders or mem ber
s duly B goes
o t
the corporat
ion an
d compel
s the corporat
ion
cal
l
ed for the purpos e, ori n t he same mee t
ing t
o record an
the
sfertr
nihi
s name
aut
hori
zi
ng thei ncrease of rect
diorsor tru st
eesif so
st
atedin the oti
nce f othe eetming.(n) - Mem bers
hi
p in non -
stockcor porati
onsmay e b acqu
ir
ed
byc omplyi
ngwi t
ht heprovi
sionsofi t
sr ulesprescri
bed
Section 30.
Com pensa
tion of rdi
ect
or
s.
-In in the b y-
laws.Th i
s si ni conson ance i w
th t he exp
ress
the a
bsence of any provi
sion in the by-l
aws xing thei
r power granted y b a
lw und er ect
si on 36 , paragraph6 of
compen
sati
on,t he di r
ect
ors shall notr ece
i
ve any the code, aut
horizi
ng them t o admi t m em bers ther
eof
compen
sati
on, as such dirc
eors,
t exceptor freason
ab
le and t hat aut
horit
y carri
es i w
th it hte p ower otprescri
be
per diems: Pr ov
i
ded, howev er
, Thatany suc h rules on mem bershi
p. tI has thus b eenst ated that ni
compen
sati
on otherha t
n per em di
s may be granted o t the ab sence of chart
er or statutory rict
rest
i
ons, non-
direct
ors yb thet evo ofhet st
ock
holders represen
t
ing at stock corporat
i
ons m ay determine w hosha l
l be dmaitted
l
east maja ori
ty of hte outst
andi
ng capi
tal ock
st at a to mem bershi
p an d how they shal l be adm it
ted.

regul
ar orecisp
al t ock
s hol
ders'meeting.In no ca
se shal
l
the t ot
al year
l
y com pensat
i
on of i d
r
ect
ors, assu ch Secti
on 6.3Cor
por
at
e pow
ers a
nd capa
ci
t
y.
-
dir
ectors,excee
d ten (10%) percent of he ntet ncom
i e Ever
y corporat
i
oni ncorpor
atedunderhis
t Codehas the
befor
e income tax of t
he corporat
ion duri
ng the pow
eran
d cap
aci
ty:
precedi
ng year.
(n)

6. I
n case fostockcorp
ora
ti
on
s,to ssu
i e or sell
stock
s to
Whoel
ect
stheot
herocer
s? subscri
bers dan
to sel
l st
ock
s to bscri
su bersndat
o sell
treasu
ry ock
sts n
i acco
rdance i
w
th the rovi
si
pons ofthi
s
- Di
rect
ly b
y the er
gen
almembersnl
ess
u he
t by-l
aws or Code; andto ad
mit memberso tthe corporat
ionifit bea
arti
cl
esprovi
de otherw
ise. <sec.92
> non-
stockcorporati
on;

Unl
essot
herwise provi
dedin the art
icl
esof - They can pr
ovi
de t
he manner i
n whi
ch t
o admi
t
i
ncorporat
ion or theby-l
aws, o
cer
s of anon-st
ock depend
ing onthei
r ow
n rul
es
corporat
i
on may eb d
ir
ectl
y el
ect
edbythe members.
(n)
The powerorauthor
itytoterminateme mber
sin non-
stockcorporat
ions is said to be i nherentbu t st
ri
ct
I
n stock corporati
on
s w
ho el
ectocers
? compil
ance iwt
h the m an
ner and proc
edure ai
ld down i
n
the by-l
aws m ustbe bserve
o d, h ot
erw
ise timay render
the expul
sion i
neecti
ve and nival
i
d.
- Di
rect
ors
Sect
ion 91 .Termi
nati
on of m em bershi
p. -
The pr
ovi
sion that s
tock corpor
ations cannot val
idl
y Members
hi
p sh al
l be ertminate
d in the m anner andf
or
prov
i
de that em m bers cannot be vot
ed by st ockhol
ders t
he cau
ses rovi
p dedi n the arti
cles of ncorporati
i on or
i
s on l
y a general ule becau
r se there is an excepti
on t
he by-l
aws.Terminati
on ofmem bershi
p sha l
l havehet
secti
on 97 o f the d co
e stat
es that: eect of
ext
i
ngu i
shing all ri
ghts ofmem a bernit he
corp
orati
on or nii t
s property
, unless oth
erw i
se rovi
p ded
The arti
cles of i
ncorpor
ation of a cl
ose i
n thearti
cl
es f oincorpo
rati
on or the by
-aw
ls.( n)
corporation
may pro vi
de that the bu
siness of he
t
onshal
corporati l be m anaged by theockhstolders of Pow
er si i
nher
ent d
anmay be exe
r
cisedi
n cer
tai
n
thecorporati
on r ather than by a board of di
rector
s. si
tua
ti
on
s:
So on
l g as is
thprovi
sion con
t
inues nieect:
1. Whenan oense s
i committ
ed whc
ih,alt
hough i
t
1. o
N meet
ing of t
ockh
s ol
derseed
n be cal
led t
o el
ect has no m
imedi
ate r
eat
lion t
o a mem ber

s dut
y as
di
rectors; such,t i
si sonfam
i ous ast o rend
er hi
m unt or
f
soci
et
y of onest
h en,
m hiwch i
s ind
ictabl
e at
common aw;
l
2. n
Ul
essthe con
t
ext earl
cly requi
res otherw
i
se,het
st
ockh
olders of
he tcorporat
i
on sha
l
l be deem
ed t
o be
2. Whent
he oens
e i
s a vi
olat
ion ofhi
s du
t
y as
di
tr
hisec
tors
C or
fdthe
ode;
an pu
rpose
of app
l
ying t
he p
rovi
si
ons of mem
ber of
t
he cor
porat
i
on; and,

3. Th
e stockhol
dersf t
ohe corpo
rat
i
on sh
all be su
bject 3. Whenthe oens
e si of
a mixe
d nat
ure
, bei
ng o
bht
to l
lal
iabil
iti
esof di
rec
tors
. agai
nst shidut
y as amem ber ofhetcor
porat
i
on,
an
d al
so ni
di
catbl
e atcommonlaw
.

The arti
cles ofincorporati
onmay li
kew
i
se
provi at o
de th cer
all s or employees t or
hat peci
s ed Ift
he condu
ctoft
he member com
es iwthi
n anyofthi
s
ocers orempl oyeesal
sh l be el edappo
ect or i
nted by cases,
t s
iia grou
nd f
or val
i
d exp
ul
sion al
thou
gh i
t may
notbe exp
ressl
y madeso by thelaws
by-

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 56

Chi
nese
YMCA vs.
Chi
ng re
qu i
ring ret
urn,rantsf
er or veyan
conce y b re
ason
of het d i
ssol
ut
ion
, shall betransf
erredor co
nveyed
t
o one or mor e cor por
ations,soci
eti
es or
- Ri
ght ofhet
corpor
ati
on t
o choose who t
he member
s or
ganizations engaged i
n act ivi
t
ies in t he
are,
can
notbe ni
qui
red or nt
ervened
i by the
cou
rt Phi
li
pp ines substan
t
ial
ly simil
ar to thoseof the
di
ssolvi
ng cor porat
ion accordi
ng t o a pl an of
- The appealed decisi
on t
hus cont
ravened t
he es
tabl
ish di
sri
tbu ti
onad opted ursua
p nt ot th
i
s Chapt
er;
pri
ncipl
e that he tcou
rt
s cannot t ri
sp a mem ber of a
non-st
ock cor porati
on of hi s mem ber
shi
p t herei
n 4. ss
Aest othert han thosement i
onedi n t he
wit
houtc ause. preced
ing parag
raphs,if any,shal
l be dist
ri
buted
i
n accorda
nce iw
th the rovi
pon
si s ofhet arti
cles of
Li
ons C
lub I
nterna
ti
onalvs.
CA i
ncorp
orati
on or ht
e by-l
aws,to the t en
ext h
tat hte
arti
cl
es f oi
ncorp
orati
on or the by-l
aw s,det
ermine
t
he di
stri
but
ive gh
rits o
f mem bers,
or any cl
ass or
- Court
s w ill not gen
eral
l
y int
erfere onmatt
ersnvol
iving cl
asses of emmbers, or de provi
for i d
st
ri
buti
on;
the int
ernalai r
a
s of an unincorporat
ed associ
ati
on and
such as electi
on cont
est unl
esshe t a
cts com
plan
ied of
arearb it
rary,pressi
opve,raufdulen
t,viol
ati
ve of vici
l
ri
ght
s a nd the il
ke 5. nIany other case, s mayasset
e
b di
stri
but
ed to
such persons,soci
eti
es, or gani
zat
ions or
corporati
ons,whet
her orot n gan
orizedfor rot
p ,
- General rule si th
at hte co
urts wil
l not ntierf
ere ith
w the as may be speci
edin a pl an of dist
ri
bution
i
nternal a ai
rs of an unincorporated ssoci
ati
on
a so s a ad
opted ursua
p nt t
o thi
s Chapt
er.(n)
to set
tl
e d isput
es et
bweent he mem bers, or qu
est
i
ons of
pol
icy, disci
pl
ine, or nt
ern
ial govern
men t, solong a
s the
Non
-st
ockcorpor
at
i
ons wi
th 4B
il
li
on f
unds, ay
m it be
gov
ernmentof the soci
et
y i s fairl
y an d honest
ly
administered n con
i f
orm i
ty wi
th it
s by-law s an
d the aw
l di
sri
tbut
ed or
f and
among t
i
s members?
of het an
l d, and no propertyvi l
orri
ghci
ts a
re nvol
i ved.
- Sect
ion94number 3 provi
des:
- Excep
ti
ons are
hetol
fl
owi
ng:
3. Assetsecei
ved
ran d hel
d bythe corpo
ration
a. Where law and j ust
ice so r equi
re, andt he su
bject to
l
imitati
ons permi
tti
ng thei
r use onl
y f or
proc
eedings of the associ
ati
on ar e subject to ch
ari
tabl
e, rel
i
gious, en
bevol
ent
, educati
onal r
o si
milar
j
udi
cialr
evi
ew wher
ethereisf
raud,oppr
essi
on,or pu
rpose
s, butot n hel
d upon a condit
ion requi
ri
ng
bad f
ait
h,or wher
ethe act
ion complai
ned ofi
s r
eturn, t r
ansf
er or conv eyanceby r eason of the
capri
ci
ous,arbi
trary,
or nujustl
y di
scri
minatory di
ssol
ution, sha
ll betransferr
ed or con
veyed t
o one or
more corporati
ons,soci
eti
es or organ
i
zations engagedin
acti
vi
ti
es i n the Phil
ippines substan
ti
all
y si mil
ar to
b. To grantreli
efin case propert
y orci
vilri
ghtsar
e thos
e of the dissol
vi
ng corporati
onacc ordi
ng ot a lan
p of
invaded, t h
al
ough it has al
so een
b hel
d tha
t hte di
sri
tbuti
on adopted ursua
p nt ot thi
s Chap t
er;
invol
vem ent ofprope rty right
s does otn necessa
ri
l
y
authorize judical
i nt ierventi
on, ni the absen
ce of
arbitr
arines
s,f raud or collusion
. - I
ftheres in
o d
ist
ri
but
ive agreem
en
t h
tenthey m
ay o
d so
t
hroug
h a pl
an ofdi
sri
tbut
ionunder sect
i
on95

c. Are olvi
ati
ve of
the aw
l s of
the soci
et
y,or ht
e aw
l of
the an
l d,as y
b depri
vi
ng theerson
p f du
oe process Secti
on 5.
9Plan of i
st
dri
buti
on of as
sets.
-A
of l
aw pl
an provi
di
ng for t he disri
tbu t
ion of sse
at s, ot
n
i
ncon
si
st
ent wit
h the provisi
ons of ht i
s Ti
tl
e, a my be
adopte
d by a non-
stockcor porat
i
on i n the proc
ess of
d. Ther
e s
i alckofj urisdi
ct
i
on on the part of
t
he di
ssol
uti
on in th
e ol
fl owi
ng manner:
t
ribu
nal on
cduct
ing the procee
di
ngs,her
we t
he
or
gani
zat
ion exc
eeds it
s powesr, orwherethe
proce
edi
ngs re
a h ot
erw
ise l
lega
i l Theboard oft
rus
teesshal
l,bymaj
ori
tyvot
e,
ad
opt a resol
uti
on recommen di
ng a lp
an ofdisri
tbu
tion
an
d di
r
ecti
ng the sub missi
on there
of ot a vot
e at a
Corpo
rat
i
ons,stockan d non-
stock
, may eb di
ssol
vedn i
accor
dance and purs
uan t o
t the provi
si
ons of Sect
i
ons r
egular or special m ee
ting of m embers havi ng vot
ing
ri
ghts.Writt
en notice setti
ng orth
f eth p
roposedplan of
118to 121 oft he Corpor
at
ion Code an
d the pert
inent di
sri
tbuti
on or a mmary
su her
teofand t he da te,time
prov
isi
onsof . D
P. 902-A, as amended
. fI u
sch be t he and placeof u s
ch mee ti
ng shall begi ve
n t o each
case
, the sset
a s ofhe t co
rporati
on are to e b
d
ist
ributed mem ber t en
i
tled t
o vot e, i w
thi
n the time an d in t he
i
n accorda
nce iw
t
h alw and estab
li
shed uj
ri
spru
dence. manner providedin t hi
s C ode or
f ht
e gi ving of noti
ce of
meeti
ngs o t members. Suchpl an ofdisri
tbu ti
onsha l
l be
If a non
-st
ockcorporat
i
on i
s di
ssol
vedhow wi
ll t
i
s adopted pon
u approval atof
east
l wo-t
thirds2/ (3) ofthe
properti
esbedis
tri
but
ed? mem bersavi h
ng voti
ng rights present epres
or ented
r y b
proxy at such meeti
ng.( n)

Secti
on 94 .
Rules of ist
dri
but
ion
.- nI case
di
ss
outi
l on of a non -
stoc
k cor porat
ion in
accor
dancewi t
h the provi
si
ons of hti
s Code, tsi
assets al
lsh
beap pl
iedand dis
tri
but
edas olf
low
s: CLOSE COR
PORATI
ONS

1. Al
l iab
lil
iti
esan d obl
iga
ti
on
s of the
corp
ora
ti
on Secti
on 96 .e
D niti
onand appl i
cabil
it
y of Tit
-l
e.Acl
ose
shal
l bepai
d, sati
sedand di
scha
rged,
or ad
equ
ate corporat
i
on , wi
thin the mean ing of ht i
s C ode, s i
one
provi
sion sh
all be mad
e hteref
ore;
whosear
ticl
esofincor
porat
ion pr
ovidethat:(1) All th
e
corporati
on's ssu
i ed stock of l alclasses, exclusi
ve of
2. Asset
s hel
d by the corp
orat
ion upon a con
di
t
ion tr
easury shares, shall be elhd of ecord
r by not m ore
requ
iri
ng return, antr
sf
er or conveyance, dan thana speci ed nu mber of per
sons, not exceedi
ng
whi
ch c ondi
ti
on occurs by reason of the twenty (20); 2
() al l hte i ssuedst ock of all classes
di
ssol
uti
on, shall be returned, tr
ansf
err
ed or
shal
l be subjectoton e or more spec i
ed restri
cti
on s
conveyedn accor
idance iw
th su
chr equi
rements;
on transfer er
pm i tted by thi s Title; and (3) heT
corpo
ration shall not i st
l ni anyst ockexch ange r o
3. sse
Ats recei
vedan d hel
d by t he corporat
ion m akeanypu bli
c o eri
ng of any of tsi stockof any
su
bjecto tl
imi
tati
ons perm
i
tti
ng thei
r use n
ol
y f or class.
Not
withst
anding the oregoi
f ng, a corpo
rat
i
onsh al
l
ch
ari
tab
le, rel
i
gious, en
bevol
ent
, educati
onal or not be deemed a cl ose cor
porat
i
on whenat east
l t wo-
si
mil
ar up
rposes, but not d hel
upona condi
ti
on thi
rds(2/3) of t
si voti
ng stockor voti
ng ri gh
ts s
i owned
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

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il
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 57

or con
t
rol
l
edbyanother corporati
on whi
chis n
ot a ose
cl - Ordi
nary ock-
st no
chsu
ri
ght
corporati
onwi
thi
n t
he mean
ing of
thi
s Cod
e.

- Cl
ose rpo
corati
on
-yes
there
s su
ich ari
gh
t
- Bet
ween
and a
mon
g them
sel
ves,
t
hey eel
f an
d a
ctal
i
ke

Secti
on 97 i
s a erm
p i
ssi
ve rovi
p si
on
- Notmore
than 0
2 st
ockh
ol
ders

Secti
on 97.
Art
icl
esofi
ncor
por
ati
on. - The
- Speci
edperson
s,i
f youare not ed
speci
, youcan
notbe art
i
cles of ni
corporat
ion of aclosecorporat
i
on may
a st
ockh
ol
der provi
de:

- Al
lthe issued s
toc
ks of al
l cl
asses i
ssubj
ect t
o 1. For
a cl
assi
cat
ion of share
s or ri
ght
s an
d the
restricti
ons qual
i
cat
i
onsfor ow
ning or hol
di
ng t
he same and
rest
ri
cti
on
s ontheir ran
t sf
ers asmay eb stat
ed t
herei
n,
- Shal
l not be
l
ist
ed i
n t
he stock
excha
nge ot
n pu
bl
icl
y su
bjecto tth
e p
rovi
si
ons ofhet oll
fow
ing sec
ti
on
;
oer
ed
2. Fo
r a cl
assi
cati
on of r
di
ectorsnti
o on
e or more
- 3 qual
if
ying con di
tions mustbe co ntai
ned nitherti
a
cles cl
asse
s,eachofwhom may eb vot
ed f
or an
d el
ect
ed
sol
el
y b
y aparti
cu
lar ass
cl of ock
st
; and
of incorporat
ion, t o be consi dered as a close
corp
orati
on,i f not, i
t wil
l not bensi co
deredassu
ch and
wi
llbegover
nedbyt hegeneralpr
ovi
sionsoft
hecode 3. For
a great
er qu
orumor vot
ing requi
r
ement
s i
n
mee
t
ings of st
ockhol
der
s or di
r
ector
s tha
n those
- Eve
n if 100% is ow
nedby onepersonit wi
ll not be provi
dedin t
his C
ode.
con
si
dere
d a cl
osecorporati
on wi
thou
t hte 3 qu
ali
fyi
ng
provi
si
ons Af
tercl
assi
cat
ionwhatt
hen?

- I
dent
ity o
f st
ock
hol
ders,
speci
edpe
rson
s - Af
tercl
assi
cat
ion,qual
icat
ion and then r
es t
rict
ion as
provi
de
d for nuder ht
e 3qu alif
ying con di
tions ni secti
on
- Act
ive manageme
ntei
ther as di
rect
ors orpar
tner
sin 96
management
Cumul
ati
ve voti
ng s
i rest
ri
ct
ed i
n cl
ose rpo
corati
on
s f
i
- Combinat
ion oft
he corporat
i
on an
d pa
rtner
shi
p t
ype fo wi
llbeel
ect
edsol
elybyapar
ticul
arcl
ass
busi
ness
In a cl
ose corporati
on, the rta
icl
es of ncorp
i orati
on may
May ny
a type fo
corporat
i
on, beorg
anized as
su
chcl
ose provi
def or agr eat
er quoruman d vot
i
ng requi
rem entn i
corp
orati
on? meeti
ngs of both st
ockholders or idcors
re t to
ncre
iase
the vet
o pow er of i nm
ori
ty stockh
ol
ders,l ike
unin a
stockcorporat
ion whereni only di
rect
ors eet
mings m ay
- No,t
he 3 u
qal
i
fyi
ng con
di
ti
ons m
ustbe re
psen
t prov
ide f or greater quor um r equr
iement and i n
stockhol
ders mee ti
ng whi ch may not eb al ter
ed or
Whatif2/3oftheoutst
andingcapi
tals
tocki
sownedby i
ncreased
, asprovi de f or i
n secti
on 25 , ol
flowing the
an
other corporati
on whi ch i
s also acl ose rporati
co on
, doctri
ne of i
milt
edca pacity
wi
lli
tbeac l
osecorpor
ation?
Thear t
iclesofac losecorporat
ion mayli
kewi
sepr ovi
de
- No, ti wi
ll onl
y be a closed corporati
on if 2/3 of ht
e that hte b usiness of the corporat
ion shal
l be man aged
voti
ngst
ocksofa cl
osecor
por
ati
on i
salsoowned bya by the s tockhol
ders rather than by the board of
closecorp
orati
on.It must be i vot
ng ock
sts dir
ector
s . Howev er t he sa me must c ontain the
conti
nuing provisi
on s requi
redn i paragraph 2 of ect
sion
97, that s:i
- Evenif anot
her corporat
i
on owns or con
t
rol
s 2/
3 oft
he
vot
ings
toc
ksofacl
osecor
porat
ion,t
hel
att
ermayst
il
l
be consi
der
ed as such cl
ose cor
porat
ion i
f t
he 1. No mee
t
ing ofst
ockhol
der
s n
eed be l
ed
cal
o
t el
ect
corporati
on owni
ng o r con
t
rol
li
ng the sharess ia
l
so a directors;
cl
oseorpcorati
on
.
2. Unl
esshe t contextcl
ear
l
y requi
res ot
herw
i
se,t
he
N
otwi
thstan
ding eth oregoi
f ng,a corporati
on st
ockhol
ders of he corpo
t rati
on sh
all bedeem
edto
shal
l not be deem
ed a close corporat
i
on when at east
l bedir
ect
ors;and;
t
wo-thi
rds(
2/3) oft sivoti
ng stockor vot
ing righ
ts i
s
ownedor contr
oll
edbyan other corporat
ion whichis not 3. The s
toc
khol
der
s of he
t co rpor
at
ion shal
l be
a cl
ose corp
orat
ionwithin t
he m eani
ng oft
hi s Cod
e.
su
bjec
t o
t a
l
lli
abi
li
ti
esof di
rec
tors
.

What ki
nd of cor
por
ati
ons cannot be a cl
ose Liabi
li
ty of ock
sthol
ders cta
ing as dir
ect
orsin a cl ose
corp
orati
on? corpor
ation ar
e mor e extensi
ve since they are
personal
ly l i
able for corporat
e torts unless the
1. Mi
ning or
oi
lco
mpani
es
, corporati
on has btai
o ned areasonabl
e adequateiabl
il
it
y
i
nsu rance,unlikea ordi
nary st
ockcorporati
on, wherei
n
directors ereofth are
nly li
ab
ol
e or
f co
rpo
rate s tort
o
nly if
2. St
ock e
xchang
e they have eenb negli
gent or act
ed fraud
ul
entl
y in t he
perf
orm ance of hei
r
t u
fnct
ions.
3. Banks and
ns
uranc
i e c
ompani
es,
Restri
cti
ons
4. Pu
bli
c ut
il
it
ies
- I
n ordi
naryst ockcorporati
ons, ht
e rest
ri
ct
i
ons must
5. Edu
cat
i
ona
linst
i
tuti
ons appea
r ni the a
rti
cles f
on i
corporati
on as wel
l as the
certi
ca
te of stock
s

6. Corpor
at
i
ons
vesed
t i
w
th pu
bli
c n
ite
r
est
- In a cl osecorporati
on, hte rest
ri
ct
ions must app
earn i
the art i
cles of nicorpor
at
ion, the by-
law
s and the
Cl
ass
ica
ti
on ofdi
rect
ors certi
cat
e o f st
ocks
. Otherwise,the sam e sh
al
l not be
bindingonanypurchasert
hereofi
ngoodfait
h
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
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ueva
 58

Whatift
hest
ockhol
ders do notwantto exer
cise t
hei
r pet
i
ti
on to t he Secu ri
ti
es nda Exchan ge Commissi
on,
ri
ght or opti
onto p urc
hase ay m tibe sold to y anperson
? compelhe t dissol
ut
ion of such cor
porat
i
on whenever
an
y of s actofthei rect
d ors, ocers or hose
tn icon
trolof
the corp
ora
ti
on i s li
l
egal, or rau
f dul
ent, or i
sh
d onest,or
- Yes,anyt
hir
dper
son,sect
ion98pr
ovi
des:
op
pressi
ve r o unf
airl
y prejudi
cial otthe corpo
rati
on or
an
y stockhol
der, or h w
enever corporate s are
assetn
bei
g
Secti
on 8.9Val
idi
ty of esrt
ri
cti
ons on t ransfer mi
sappl
ied ro w ast
ed.
of sha
res.- estr
R icti
on s on theri gh t ott ransf
er shares
mustap pear nithe articl
es of ncorporati
i on an d in the Agr
eement
sma
yal
sobeent
ered i
n acl
osecor
por
ati
on
by-
lawsaswellasint hecerti
cateofstock;otherwise,
<sec.
10
0>
the same shal
l notbe i b
nding onan y purchaser her
t
eof
i
n goodf ait
h. S aid r est
ri
cti
ons sha l
l not be more
onerou
s than grant
ing the st exi
i
ng st ock ders or the-
hol Theycanevenagr
eet
obepar
tner
sinmanageme
nt
corporat
ion the opt
ion t o pu r
chase the sha res f o h
te
t
ransf
erri
ng st
ockhol
derwith such r
eason
abl
e t
erms, - Pre-
incorp
orati
on
condi
ti
ons or period st
ated t I
here
i f uponthe
n.
expi
ration of sai
d period, theexis
ti
ng stock
holde
rs
- Manner niwhi
ch t
he bu
si
ness of
the corporat
i
on sha
l
l
or th e corpo
r
ation fail
s toexercise theopti
on to
bemanaged
purchase, he tr
tansf
err
ing stock
holdermay sel
l his
shareso tany third p
erson.
Board
res
ol
ut
ion

o ordi
naryst
ockcorporati
ons a
re i
ab
ll
e onl
y fi
act
ed in Bad f
ait
h, raud
f or negl
i
gencei
n - Ordi
nary ock
st corporat
i
ons- i
ts andact asbod
ay at a
perf
orm
ance of
duty dul
y const
i
tut
ed meet
ing,they m ay o
d soby vi
rt
ue of
the E-
Commerce ct
A hrough
t t
eleconf
er
enceor deo
vi
con
fer
ence
Whati
fther
ear
eal
ready20s
tockhol
der
sandt
heywant
t
o add 2more,may ticompel
?
Exce
pt
i
on t
o t he rul
e: her
ot ocer
s may be di
r
ect
l
y
appoi
nt
edan d hi
redby the
st
ockh
ol
ders
- I
n ordn
iary st
ockcor
porat
i
ons,hey
t may com
pel by
mand
amus
Cl
osecor
porat
ionsmay val
i
dly act eve
n wi
thou
t a
meet
i
ng p
rovi
ded th
e con
dit
ions are t
ai
ob
ned
- I
n cl
ose corpor
at
i
ons,ay
m not ebcom
pel
l
ed t
o adm
i
t
becausei
tbr
eachest
hequal
if
yingcondi
ti
ons
Secti
on 101. When boad
r mee t
ing is
unnecessary
or mpr
i oper
l
y held.
- Unl
ess the by-
laws
Si
nce hey
t can
notbe com
pel
l
ed,
may ht
ey adm
i
t?
provi
de otherw
ise,
an y act
i
on by the i
rect
d ors of ose
a cl
corporat
i
on wi thou
t a meet i
ng shal
l never
t
hel
essbe
- Yes,pr
ovi
ded al
lthest
ockhol
der
sconsent
ed ori
nst
ead deem
edvali
d if:
of consen
ti
ng t hey deci
de t
o amendt hei
r art
i
cles of
incorp
orati
on
1. ef
Bore orf
ter
a su
ch acti
on i
s taken
, wri
t
ten con
sen
t
the
ret
o is gn
si
edby al
l the
direct
ors; or
- Wi
ll hav
eto amend t
he ar
ticl
es of i
ncor
por
ati
on t
o
accommodat
e other rpu
chaser
s of share
2. lAlt
he stockh
oldersave
h ct
aualor mpl
ii
edkn owl
edge
ofthe acti
on an
d makeno prompt obj
ect
i
on t
hereot n
i
- Willceaset
o be a cl
ose cor
por
ati
on i
fitame
nds and wr
iti
ng;or
becomesinexcessof20

3. Th
e dire
cors
t are staccu
om edt o take nform
ialacti
on
o Unl
essal
l t
he st
ockhol
dersconsent
they wi
ththe expr
ess or i
mpl
ied acqui
escence of al
lt he
may
st
ock
hol
ders;or

Whatiftheotherst
ockhol
der
sobj ectt
oregi
ster
?What 4. lAl
t
he di
rect
orsaveh exp
ress or
mpl
i
ed
i kn
owl
edge
of
wi
llbetheremedyofthetr
ansf
eree? t
he act
i
on i
n qu et
s
ion nda non
e of
themmakes om
pr
pt
obj
ecti
on the
ret
o in wri
ti
ng.

- Hi
s remedyi s resci
ssi
on. Th
e e
ect ofsci
re
ssi
on i
s
mutual est
ri
tut
ion Pre-
empti
ve gh
ri
ts n
i a closeorati
corp
on i
s a
bsol
ut
e

How ab
outt
he st
ockh
ol
der,
whati
s hi
s ercou
rse? Sect
ion 102 .Pre-
empt
i
ve r ight in close
corpo
rati
ons. - Th
e pre-em
pti
ve gh
rit oft ockh
s oldersn i
cl
ose corp
orati
ons shal
l extend
to all st
ockto be ssu
i ed,
- He may com
pel t
he close cor
porat
i
on to pur
chase i
sh
i
ncl
uding rei
ssua
nceof r easu
t ry sha res, hwet
her or
f
sh
aresat thei
r ai
fr val
ue f
or na
y reason, provi
dedt
he
money, propert
y o
r personal rvi
ces,
seor nipayment of
corporat
i
on has sucient asset
s n
i i t
s b ookst
o cove
r
corporatedeb
ts, nu
lessthe arti
cles of nicorporati
on
thedeb
ts an
d l
iabi
li
ti
es xcl
eusi
ve focapi
tal
provi
de t o
herw
ise.

- I
n a cl ose corpor
at
i
on, t
here is a wi t
hdr
awi
ng
Whyi
sitsai
dtobeabsol
ute?
st
ockh
ol
der
, unl
ike i
n an ordi
naryst
ockhol
derwhere
t
here s i
non
e,t hey may on
ly do so ni t
he exer
ci
se of
apprai
sa
l ri
gh
ts - Bec
ausether
e i
s no pub li
c oer
i
ng i n a cl
os
e
corp
orati
on
, otherw
i
se ti w
i
ll not be
consi
de
redsacl
ose
Sect
ion 105.Wit
hdr
awal ofockhol
stderor
di
ssol
uti
on of corpo
r
ati
on.- nI add
i
ti
on and wi
thou
t In a cl ose corporat
ion t he pre -empti
ve rightsi
s
prej
udi
ce to other gh
rit
s and rem
edies vai
alab
le t
o a broadenedtoincl
udeal
lissueswithoutexcept
ionunl
ess
st
ockhol
der nu
der thi
s Tian
t
l y st
e, ock
holde
r ofa cl
ose deniedor i mi
lt edby the rt
i
cl
aes of i
ncorpora
ti
on
corpor
ati
on may,f or an y reason, pel comhe t sai
d
corpor
ati
on to pu rchase his shares t at
heir fai
r Sect
i
on 39 is the governi
ng provi
si
on concerni
ng ri
ght
s
val
ue, which shal
l not be l
ess than thei
r par or ofthe st
ockhol
dern i an ordi
nary ock
st corporati
on and
iss
ued value, hen
w the corporati
on hassu cient i
t m ay eb denied.f I
it s
i not den
i
ed a stockhol
der nca
assets n its
i bo
oks toco ver s itde
bts and l i
abil
i
ties exerci
se hi
s p re-
empti
ve gh
rit
s or
f lai
l ssu
es of shares
excl
usi
ve of capi tal stock:
Pro
vided, atTh any whet
her mo ney
, proper
ty or pr
evi
ously i
ncurred
st
ockh
olderof acl osecorporat
ion may,by wri tt
en i
ndebtedness.
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 59

Section 39 . er otdenypre-
Pow em pt
ive ghri
-t. absenceof agr
eem ent or n ti
he event of sagr
di
eem
ent
Allstockhol
dersofa s t
ockc orpor
ation shallenjoy pre- bet
weent
hepr
ovi
sionaldi
rect
orandthecor
por
ati
on.
em pti
ve ghrit o
t s ubscribe tol lai
ssu es r o disposi
tion of
shares of any class, n iprop
orti
on t o t heir respective
- Pow
ers oft
he SEC i
n i ntr
a-c
orporat
e con
cerns h
as een
b
shareholdi
ngs, nl e
usssuchri ghti s deni ed by t he
transf
err
edto theroper
p merc
comi
alcourt
s
arti
cles of ncorpor
i ation or an amendm entt hereto:
- Proh
i
bit,eveni
f ac
tni
g in go
od f
aith
Provi
ded , That such pre- em pti
ve ghrit sha ll not ext end
to sh ares o tb
e ssu
i edi n compilance i w
th law s requ i
ring
st
ock oer ingsor m ini
mum st ock own esrhi
p by t he - Provi
si
onaldir
ector
ap
poi
nt
ed y
b the rt
cou
public;or ot sh ares o t b
e ssu
i ed i n good f
aith wi th the
approval h of
e stockh
t ol ders repre
sen ti
ng t wo-t hi
rds
- Requ
iri
ng t
he pu rc
hase,rr
especti
i ve of n
ures
tri
ct
ed
(
2/ 3) of hetoutstanding cap i
tal ock
st , n i excha nge for
re
tai
nedearni
ngs
property needed f
or cor porat
e pu rposes nor paym ient of
a p revi
ousl
y contracted ebt
.d
- Thepr
ovisi
on oft helaw above-
quot
ed gi
vestheSEC a
ver
ywidediscret
ioninrespecttomanagementofacl
ose
Aret r
easury shares cover
ed i
nthe exerci
se ofpr
e-
corporati
oni n the event of a dead
lock.t Imay:
emptive gh
rit
s n i ordi
nary stockrpo rati
co
on
s?
Asregardsame ndments
1. Can
celor al
t
er any pro
vi
si
on i
n t
he art
i
cles of
i
ncor
por
at
i
on, by-
laws or any st ockhol
ders
Section 103. Amendme nt o f arti
cl
es o f agr
ee
ment
i
ncorpor
ati
on . - An y amendm ent ott he ar ticl
es of
i
ncorporati
on whi ch see ks to del et e or rem ove nya
provi
si
on requi redby t his Tit
le t o be con tai
ned in the 2. Can
cel
, al
ter or
enj
oi
n an
y re
sol
uti
on or h
ot
er act
art
icl
es f oincorporati
on or ot redu ce aqu orum or vot
ing of the corpor
at
i
on or i
ts boa
r
d of i d
r
ect
ors,
requi
rem ent st
ated i
n sai d arti
cles f oincorporati
on sh
all st
ockh
ol
ders or cer
o
s
notbe val i
d or eect i
ve un les
s appro ved by t he
arm ati
ve vot e of ateast l wo- t
thir
ds ( 2/3) ofhet 3. Prohi
bi
t anyct
aofthe cor
porat
i
on or t
si boa
rd of
outst
anding capi tal stock, het wherwi th or wi thou
t di
rec
tors,
st
ock
hol
dersr oo
cers orherotperson
s
vot
ingrights,orofs uch gr
eaterproportion ofsharesas pa
rty o
t thect
ion
a;
may be spec i
cally pr ovi
ded i n t he ar ti
cles of
i
ncorporati
on for am en di
ng,del eti
ng or rem oving any of
the f oresai
a d provi si
ons,at a eet ming d uly ca l
ledfor the 4. Requi
r
ing the purc
hase ofhe t
par val
ue ofthe
purpose. shar
es of an y stockhol
der
s, eit
her by t he
cor
porat
i
on regar
dless of avai l
abi
l
it
y of
unre
st
rict
ed ear
nnigs
, or by t he other
Whathappensi
fther
eisadeadl
ock? sh
arehol
ders,

- Sect
ion10
4 provi
desor
f a rem
edy 5. App
ointm
ent of
a pr
ovi
si
onaldi
r
ect
or

Sect ion 10 4.
Dead locks. - N otwithstan ding 6. Di ssolvi
ngt he corpor
ati
on; or
any co ntrary rovi
psion in the arti
cles f oincorp oration or
by-l
aws or agr eeme nt of s tockholders of a c l
ose
7. Ot herel i
r
efas he t cir
cum st
ances aym awrrant.
corporati
on , f i h te di rceors
t or st ockh olders areso
divded
i respect i
ng thean magem ent oft he corporati on's
business and aai rst hat t he votes required f or any Sect
ion10 5
corporate ac tion cannot be obt ained,wi th t he
consequence thatt he busi ness and aai r
s of he t
- Dishonest
y i s a gr ound f or di ssol
ut i
on of a cl ose
corporati
on can no l onger be co ndu ced
t to t he
corp
oration
advan t
ageof ht e st ockholders generally, ht e Secu rit
ies
and Exchan ge om C mi ssion, upon writt
en et pitionby an y
st
ockh older
, sh al
l h avet he pow er t o arbi trate t he - Even one stockholder ay
m et pit
ionf or ssol
diut i
on
dispute.I n t he exerc ise of such powe,rt he C ommi ssi
on
shall haveut a t
hori y to ake m such order as it deem s
o when t hereisa reli
efav ail
able,dissolution
appropriate, ni cl
udi ng an order : ( 1) can cell
ing or
alt
ering an y provi sion contai ned i n t he art icles of would not be av ail
able i n an or dinar y
i
ncorporation, by- law s, or yan st
ockhol der'
s agreem en t
; corporation
(
2) ca ncell
ing,alt eri
ng o r en j
oining a ny reso l
ution or ac t
of het co rporation or t si boardof rectdiors, t
ocksholders,
or cers
o ; 3)( rect
dii ng or rohip bi ti
ng an y act of he t
corporati
on or i ts bo ardof i d t
recors, ock st
hol ders, CLOSE CORPORATI ON ORDI NARY STOCK
ocer s, or ot
herper sonspart y t o t he act ion; 4) ( CORPOR ATION
requiri
ng t he p urchaseat ht eir ai
fr val ue o f sh ares of
any st ockholder, ei
ther by t
he corporati on regar dless of 1. Thenu mber of toc
ksholder
sNo limitati
on as toumber n of
theava il
ab i
li
ty of n u
restrict
ed ret ained earn ings i n its can notexceed 2 0 shar
eholder
books,orby t he other s tockholders;(5)appoi nting a
provi
sional dir ector; (6) dissolvi
ng the corp oration; or 7) (
granting such otherr el
ief as the ci r
cum stan cesmay 2.To t he e xt ent t hat al l
Maximum nu mber fodi r
ec t
ors
warrant. st
ockholders can be eem
d ed is 1
5
di
rec t
ors, the nu mber of
di
rec t
orscane ect
i
vely be
A provisionaldi rector shallbe an i mpar tial mor e htan15
person who s i n either a ock st holder or n a credi tor of the
corporati
on or of any sub si
diaryor al iate of he t
corporati
on , and whosef urther qu ali
ca tions, fi any, 3.Shar es of t ock
s are bj su
ect
Generall
y no r estri
cti
on on
may be determi nedby t he Com miss i
on. A provisional t o sp eci
edrestricti
ons tran
sfer of shares
di
rector si not a recei
ver of the rpocorat
i
on an d does otn
have the t
itl
e and pow ers of a st
od
cu
i
an or receiver.A
4.Shares of st
ock ar
eNo proh
i
bit
ion
provi
si
onal rect
dior sh all have l lathe ghri
ts and po wers
proh
ibited f
rom be i
ng list
ed
of a ul d
y el ect
ed direct
or f oh te corporat
i
on ,including
i
n t he stock exchange or
the ri
ght ot n oti
ce f oan d to vote at eeti
ngs
m f odirect
ors,
oered orf sal
e tohetp ubl
ic
unti
l such t i
me ashe sha ll be r emovedy bordert hof
e
Commi ssi
on or by al l t he s toc
kholder
s. Hi s
compensati
on shal l be de termined by agr ment 5.S
ee toc
kholder
s may t akean Manage
mentsil odg
ed i
n t
he
bet
ween him andt hecorporati
on subjectt
oapprovalof act
ive parti n cor por
ateBoard
of iD
re
cors
t
the omC missi
on, which m ay xi shcompensati
on in the mana gement by v est
ing

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 60

- Cannot act
both as
r
esi
den
p t an
d tr
easu
r
eratt
he sam
e
ti
me
manage
mentt
o t
hem rat
her
t
han a B
oard ofi
rect
D
or
- Si
ncei t si a cl
ose corporat
i
on ow
ned by t
he afmi
ly of
ManuelDul ay,save dan
except
he t
secre
t
ary,i
t hsoul
d
6.
Those ive
act nimanagement
Direct
orsareli
abl
e f or t
orts
begov
ernedbyTit
leXI
I
are personal
ly l i
abl
e f or
onl
y if they hav e acted
corpor
at
e torts unlessthenegli
gen
tl
y orrau
fdulentl
y
corpor
at
ion has btai
o ned an - Pet
it
ioner is classied as a cl osecorpor ati
on an d
adequ
ateiab
li
li
tyinsuran
ce consequ
entl
y a bo ardres ol
ution au t
horizing the l e
saor
mortgage of hte su bj
ect propert
y i s not necessary to
bi
nd thecorpor
ation f
ortheac ti
on ofitspr esi
dent.At
7.Di
rect
ors ncaval
idl
y a
ct en
ev
Di
rect
ors um
st, as a l
ru
e,act as any rat
e,a corporat e acti
on t aken at a oardb meet
i
ng
wi
thoutame
eti
ng a bodyat adu l
y const
i
tut
ed wi
thoutpropercallornotice i
n ac lose cor
por at
ion i
s
meet
ing deemed rat
iedby t he ab sen
t di
rector nul
ess the att
erl
promptl
y l
es i h w
s ri
t
ten obj
ecti
on wi t
h the secret
ary fo
8.Ag
r
eements be
tween Not val
id and bindi
ng si nce the corporat
ion aft
er avi
h ng knowl
edge of hte meet
i
ng
st
ockh
oldersregar
di
ng t he st
ockh
ol
dersagre
ement cannot whic
h,i
nt hi
scase,peti
ti
onerVir
gil
ioDulayfai
ledtodo.
operat
ions of ht
e bu si
nessl
imi
t h
te di
scret
ion of he
t Board
can val
i
dly be ad
me t
o manage corporat
e aairs - Vi
rgi
li
oDulayisasi
gnat
orywit
ness,heknowsv
erywel
l
about h
te deedofabsol
ute sal
e,he si est
opped
9.
To the extent t tha
di
recors
tOr dinar
ily
, no such
may be cl
assi
edi nto on
e cor
lassic
ation and no
Nagu
i
atvs.
NLR
C
more asses
cl d an
to be vot
ed
restri
cti
ons on cum ulat
i
ve
solel
y bya particul
ar ass
cl vof
oting
stock, cum ul
ative vo t
ing - Sect
i
on 100 par. 5. To the extent
hat ht
e st
ock
t holders
may, in e
ect, be rest
ri
cted are act
i
vel
y engaged n ti
he managem
ent or operat
ion of
t
he bu si
ness and a ai
rs of aclosecor
porat
i
on, the
st
ock
holders al
shl beheld to st
ri
ct d
uci
arydu t
ies to
10.The ar
ticl
es of Ocer
s ar
e el
ect
ed by t
he each ot
her d anamongt hemsel
ves.Sai
d stockhol
ders
i
ncorpor
ati
on may prov i
deBoardof i
D
rect
ors shal
l be person
al
ly li
abl
e or
f co
rpo
rat
e tort
s unl
ess t
he
t
hat all o cer
s shall be corporati
on has obtai
ned reason
abl
y adequ
atei ab
li
li
ty
el
ect
ed or appoint
ed by the i
nsurance.
st
ock
hol
ders

Fam
i
ly cor
porat
i
ons i
s not automat
i
cal
ly a cl
ose
11
.It may provi
de f
or great
er
Alt
hough t he ar t
icl
es of corporati
ont
he 3qual
i
fyi
ng con
di
ti
ons mustbepresen
t
.
quor
um and vot
ing i
ncorpor
ati
on or by- l
aw s may
requi
rem
ents i
n mee t
ingsofprovi
de or
f greater quoruman d
stock
hol
dersand di
rect
ors v ot
ing r
equireme
nts i
n SPECI
AL CORPO
RATI
ONS
direct
ors
meeting under secti
on
25, t hosef or stockholders

2 t
ypes of speci
al corpora
t
ion
s
mee t
ing cannot general
ly be
altered
1. Edu
cat
i
onal
cor
por
at
i
ons

12
.Rest
ri
ct
ion on t ransf
er ofVal
idandbindi
ngi
findi
cat
edi
n
share
s shoul
d be i nd
icat
edthe arti
cles of incorporati
on 2. Rel
i
giouscor
por
at
i
ons
in the ar
ticl
es ofan d stock cates
certi
incorporat
ion
, by- laws and
2.
1 Cor
por
at
i
on Sol
e
stockcerti
ca
tes

2.
2 Rel
i
giou
s Soci
et
ies
13.Pr
e-
empt
iv
e ri
ght
s ofPr
ee-m
pti
ve r
ight
s may be
stockh
ol
dersis broader
asideni
t ed as pr ov
i
ded f
or i
n
incl
ude all ssues
i wi
thou
tsecti
on39 Whatpr
ovi
siongov
ernseducat
ionalcor
por
ati
ons?

excep
t
ion
Sect
i
on 106 .
Incorp
ora
t
ion
. - Edu cati
onal
14
.A stoc
kholder may Unl esshe sel ls hi
s shares, a corporat
i
ons sh
al
l be gover
ned by speci
al aw
ls a
nd by
wit
hdraw and c ompel the st ockhol
der can
notget back ih
s the
gen
eral provi
si
ons ofthis C
ode.(n)
corpor
ati
on t o pu r
chase hisi
nves
tment nor c ompel the
shares for nya r eason withcorporat
i
on to bu y his shares
- Speciall aws il
ke th ey du
E cati
onActofthehi P
li
ppi
nes
the limi
tation only that theexcept n t
hie exerci
se of ih
s
- These insti
tuti
ons oflearning,once r
ecogni
zed by the
cor
porati
on has su cient appra
isalgh
rit
government as such ar e manda t
ed by l aw t o be
assetsto co veri tsl i
abil
iti
es
i
ncor porat
ed wi thin ni nety ( 90) daysun der t he
exclus
iveof capitalockst
provisi
ons o ft he C orporat
ion Codean d must , perf
orc
e,
com pyl with the r equi
r
em ent
s and procedur
e a ldi dow
n
15
.The pr oper f orum mayCou rts can
noti nt
erf
ere I hte there under . Th ei
r ai
flure ot so i w
ll not mmu
i ne t he
inte
rfer
e in the man agement
busi
ness judgment of the edu cat
ional ni st
it
ution fr om suit as a corpor at
ion
.
ofa closeorp corati
on i
n case
direct
ors/
st
ockhol
ders (
Chi ang KaiSi ek ase)
C
of deadlocks under Section
BUSINESS JUDGMENT RULE
104, even of t
he - Fav
or
abl
e r
ecommendat
i
on of go
ver
nment age
ncy
dir
ectors
/st
ockhol
ders are i
nvo
lved
acti
ng ni goodfaith

Twot
ypesofeducat
ionalcor
por
ati
ons
16.Any s tockho
l
der may Di sso
l
utionmay beadhonl
y on
pet
iti
on t he SEC f or t
he gr oun
ds pr
ovi
dedby the
cor
porat
e dissol
ut
ion onpr ov
i
sions of he
t Code on - Cert
ica
t
e of
com
peli
t
on i
n t
he aca
demi
c
eld
gr
ounds among ot hers, di
ssol
uti
on an
d P.D. 902
-A, as
provi
des or
f nisecti
on 105 amende d - Vocat
ionalandt
echni
calone
s
Man
uelDul
ay nter
E pri
sess.
vCA

o Rec
ommendat
ion of E
DCS i
f c et
r
icat
e of
- Whatwast
heposi
ti
onofManuelDul
ayher
e?Pr
esi
dent
, com
peli
t
oni
n the acad
emi
c
eld
Gener
alManagerand Tr
easure
r

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

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il
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 61

How i
s the govern
ing b
oard
ofan edu
cati
on
ali
nst
i
tut
ion parti
ci
pat
ion i
n all edu
cati
on
al nst
ii
tut
ions. Th e con
trol
i
nsti
tuted? and administ
rat
i
on of educati
onal nst
iituti
on s shal
l be
vest
ed i
n ci
ti
zens of t he Phil
ippines.

- Non
-st
ock-ul
m
ti
ples of 5l
yon
e
(xam
pl
e:5,
10,
15)
No edu cat
i
onal i nst
i
tuti
on shal l be es tabl
ished
excl
usi
vely for al
iensan d no gr oup of i al
ensshal
l
- St
ock-
canbe an
ywheret
wbe
een 5
t
o 15 compri
se m oe
r htan one-thi
rd ofthe enroll
mentn i an
y
schoo
l. The provi
si
ons of this sub sect
i
on sh al
l not app
l
y
to school
s est
abl
ished for orei
f gn di
polmati
c person
nel
Cant
hey consi
stof7 or 9em
mber
s?
and their depen
dents and, unless h ot
erwi
se provi
dedby
l
aw,for other orei
f gn t
em porary resi
dents.
- Yes,i
fst
ock
- Man
agemen
t si ef
lt sol
el
y to t
ici
zen
s of thePhi
li
ppi
nes
- Boar
d of iD
rect
ors managesthe cor
porat
e aairs,
Cant
hey be
i
ncorporat
ed l
a
so ason
n
-st
ock? f
orei
gners can
not heref
t oreebelect
edin the b
oard

- Yes
- Except
ion
s are, missi
on boards an d reli
gious order
s,
whi
ch may have a gover
ning boar
d c onsis
ting of
- B.P. 232 al
low
s t he or
gani
zat
i
on of anedu cat
ional f
oreign
ers
i
nsti
tut
ion tha
t si stock
corp
orati
on, on
ly i
f h
teydo not
i
ssue acerti
ca
te of com
pl
ei
tonin the aca
dem
ic
eld
Term ofoce ofgov
erni
ng boar
din an educat
ional
insti
tu
ton
is
Qual
icati
on
s and di
squ
al
icati
on
s ofhe
t mem
bershi
p
i
n the b
oardofan edu
cati
on
alcorporati
on
- Can ser
ve at
erm of5 year
s.Ift
hat be the case,
1/
5 of
thei
r nu
mber al
sh
l expi
re ery
ev year
- Educat
i
onal cor
porat
i
ons are gover
ned by speci
al aw
ls
and gen
eralprovi
si
ons,hen
ce fitheres n
oi p
rovi
si
on in
Non-st
ockor ock,
st can
t
hey serve
or a
f1 year
erm
t
thespeci
al aw
l, yougo ack
b to sect
i
on 25 and 27 ofthe
onl
y?
gen
eralprovi
sions

- Yes,t
hear
ticl
esofi
ncor
por
ati
on maypr
ovi
det
hati
tbe
- Stock-
mustbe a ockh
stol
der
1 year lyon

- Non-
st
oc
k-mustbe a
mem
ber Whatar
etheser
eli
giouscor
por
ati
onsspokeno?

- By-l
aw s may provi
de f
or dd
ait
ion
al qu
al
icati
ons an
d
- Corp
orati
on sol
e an
d rel
igi
ous s
oci
et
i
es
di
squ al
icati
on
s

Whati
sacor
por
ati
onsol
e?
Secti
on 25. Corporat
e o cer
s, quor
um .-
I
mmedi atel
y after their el ect
ion, the di
rceors
t of a
corporati
on must ormf all
y organ i
ze by the elect
ion of a - Consi
st
s of one er
sp
ononl
y a nd hi
s succe
ssor n som
i e
presi
dent
, who sh al
l be a d i
recor
t, a tr
easurer w ho may part
i
cul
ar ati
ston
, who are ncorporated
i y a
lw ib
n order
or m ay not be a direct
or, a secretary how shal l be a to gi
ve them some legalcapaci
ties and advantages,
res
ident and ci
tizenof ht e Phil
ippi
nes, and su ch other part
i
cul
arl
y that fo perp
et
uity, hw
ich i
n their natural
ocers asmay e b providedf or nit he by-
laws.Any t wo persons they d not
coul
have had
(
2) orore m posi
ti
ons may e b hel
d concu rr
entl
y b y the
same p er
son, eptexc hat
t no
on e shal
l act as presi
dent
May acor
porat
i
on be or
gani
ze
d by l
essha
t
n 5 na
tur
al
and secret
ary or as resden
ipt and tre
asurer at t
he sam e
persons?
t
ime.

- Gene
ral rul
e, 5 t o 15 natural pe
rsons(
exc
ept
The di
rect
ors ort
rus
tees and ocer
sto be
cooperat
ivesan d corporat
ion
s pri
mari
l
y org
anizedto
el
ect
edsh
all perf
ormt he du
ti
es en j
oinedonthem by aw
l
hol
d equ
it
ies nirural
ba
nksand may gh
rit
full
y become
and the by-l
aws of the corporati
on. Unl
ess the rt
i
cles
a of i
ncorp
orators thereof)
i
ncorporat
ion or t he by- l
aw s provide f or a gr eat
er
majori
ty, a majorit
y of he t nu mberof di rector
s or
- Excep
ti
on, corp
orati
on sol
e,con
si
stofon
ly on
e p
erson
trustees s xed
a i n t he articl
es of ncorporati
i on shal
l
const
it
ute a qu orumf or the t
ransacti
on of cor porat
e
busi
ness,andever
ydeci si
onofatleastamaj orit
yofthe May an
y per
sonf
ormor or
gan
ize a corporat
i
onsol
e?
direc
t
ors or ust
tr
eesrese
p nt at aeet mi
ng a t whichthere
i
s aqu orum shall bevalid as acorporate , except
actor f
- No,not any
person
canf
orma corp
orat
ion sol
e,sect
i
on
the el
ecti
on of o cershi ch
w sh all re
qu i
re hte vote aof
110 provi
des:
majori
ty ofallthe m em bers t of
he board.

Dire
cors
t or
rust
t
ees can
not t
at
end or vot
e by p
roxy at Sect
ion 110
. Corpor
ati
on sol e.- Forhe t
boar
dme et
ings.(
33a) purpose ofi ni
adm
steri
ng and man agi
ng,as tr
ustee, the
aai
rs
, propert
y an d temporal
it
ies of an y reli
gious
den
ominat
i
on, sect
or churc
h, a corporat
i
onsole may e b
Sect
ion 27 .Disqu
al
icati
on of direct
ors, rust
t
eesor f
ormedby the ch
iefarchbi
shop, bisho
p, pri
est
, minister
,
ocers. - Nopersonconv ict
ed by nal udgm
j ent of an oense r
abbi or other presi
di
ng el der of suchr el
igi
ou s
punishab
le byimprisonmentfor aeripodexceedi
ng si
x 6)
( years,
or den
ominati
on, sect
or churc
h. (
154a )
a viol
ati
on ofthi
s C ode committ
edwi thi
n ve 5)
( years ri
or
p ot the
dat
e of i h el
s ecti
on or pp aoint
ment, sha
ll qual
if
y as a direct
or
,
I
s i
t requ
i
redt
o le the
arti
cl
esof ncorp
i orati
on i
n the
t
rustee or cer oof
any corp
orat
ion
.( n)
SEC?
Ar
ticl
e14sect
ion4par
.2oft
heCons
tit
uti
ons
- Yes

Educat
ional inst
i
tuti
ons, otherthan t hose
What shoul
d be cont
ained i
n t
he ar
ticl
es of
est
abli
shed by r el
i
gious groups and missi
on boards,
i
ncorp
orati
on
?
shall be n ow
ed sol
ely by cit
izensof ht
e Phil
ippi
nes or
corporati
ons or associ
ati
ons at east
l xty
si pert um
cenof
the capi
tal ofhi c
wh is ownedby such ci
t
izens. e Th - Sect
i
on 11
1 an
d sect
i
on 11
2 provi
desfor ht
e con
tents
Congress ay,
mhowever
, equ
r ire ncre
i asedFil
ipi
no equi
ty and pr
ocedures

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

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il
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 62

Secti
on 11 1.
Art
icl
eso finc
orporati
on. - I
n SEC, m
imediat
ey
l becomes endowed wi
th corpor
ate
or
der t o bec ome a co rporat
ion so l
e, the c
hief person
al
it
y,this servess anaexcep
ti
on to the rul
e that
arch
bish
op , bi
shop, pri
est
, mini
ster
, abr bi or resi
p ding a corporati
on acqu
i
res juri
di
cal person
al
i
ty only upon
el
der of any rel
i
giou
s denominati
on, sect or church must thessu
iance of a i
cert
cate iof
ncorp
orati
on bythe sai
d
l
e wi t
h t he Securit
ies nda Exc han ge Commi ssi
on gov
er
nment ency.
ag
arti
clesofncorp
i ora ti
on sett
i
ng forth the fol
lowi
ng:
- Upon l
ing of ver
i
ed arti
clesof ncorporati
i on wi
th t
he
1. h T
at e h i s the chi
ef arc
hbi
sho
p, ib
sho
p, ri
pest
, SEC, wi
ll notrequi
re ht
e approval
ofSEC
minist
er
, rab bi or presi
di
ng el
derof his rel
igi
ous
denomina
ti
on, sec t or chu
r
ch an
d tha
t hedesi
r
es to
A cor
porat
ion sol
ei s possessed wi
ththe samepower
,
becomeacorporati
onsol
e;
ri
ghts and privi
l
eges, t
o ow n, acqui
re and hol
d or con
vey
prope
rti
es ike
l n ay otherorati corp
on? Tru
e or l se
Fa
2. Th
at t
he rul
es,egu
rl
ati
ons an
d di
sci
pl
i
ne of i
h
s
rel
i
gious denomi
nat
ion, se
ct or churc
h are not - Fal
se, t
hey ave
h the
sam e pow
er ghrit
s and pri
vi
l
eges,
i
nconsi
st
ent wi
th hi
s becom
i
ng a corpor
at
ion sol
e an
d
butwhenitcomest oal
ienat
ionandacqui
siti
on,i
tmust
do not orb
fi
d it;
possess art cou
order
, how everwhent heres ia regu
lated
method, court
a or
der ay m bedispense
d wit
h <sec.
3. Th at as suchchi ef arc hbishop, bishop, pri
est
, 113>
mini
ster, rabbi or resi
p ding el
de r
, he s i chargedwi
th the
administ
rati
onoft he etm poral
i
ties and t heman agement
Sect ion 113 .
Ac qui
sition and al ienationo f
of the aairs,st ate
e and prop ert
ies of i h
s rel
igi
ous
property. - A nycor porat ion sole may pu rchasedan hold
denominati
on , sect or chur
ch wi thin hi s terr
itori
al
real est at
e an d per sonal proper ty f or i ts chu rch,
j
urisdi
cti
on,describi
ngsuc hter
ritori
aljurisdi
cti
on;
charitabl e, ben evol
entor edu cational u p
rposes, d an
may recei ve equ
b est s or f gi
ts o fr su ch pu rposes. Such
4. Theannmer niwhich anyvac ancy occur r
ing i
n the corporati on may sel l or m ortgage real propert y h eld byi t
oce of hi
ef
c arch
bi
shop, bisho
p, pri
est
, mi nist
er
, rab
bi byobt ai ninganor derf ort hatpur pos efrom t heCour tof
of presi
ding el
der si requ
iredt o be l
led, according to First n Ist ance of ht e provi nce wher e t he propert y i s
t
he rules, regu
l
ati
ons or discipl
ine of t he reli
gious situated upo n proof ademo t the satisfacti
onoft he cou rt
den
omi
nation
, sector hc
urch t
o w hichhe bel ongs;and tha t noti ce f othe ap pli
ca ti
on f or eave
l t o s ellor o mrtgage
ha s been gi
ven by pu blicati
on or ot herwise n i such
manner and f
or uch s time assa id co urtmay have
5. Th
e pl
ace hw
erehet pri
nci
pal oce of
the corporati
on
directed, d tha
ant t is i to the i
nt erestthe ofcorp orat
ion
sol
e si o
t be est
ab
li
shed an
d located,
whi
ch pl
ace u
mst
that eavel o tsell or m ortgage ou shl
d be grant ed. e Th
bewi
thi
nthePhi
li
ppi
nes. ap pli
cation f or eave
l o tsel
l or m ortgageust m be mad e
by pet ition, dul yv eried, by t he c hief ar chbishop,
Thear
ticl
esofi
ncor
por
ation mayincl
udeany bishop,pr i
est,mi nister,r abbiorpr esiding elderact ing
other
rovi
si
pon not con
trary to aw for
l the lregu
ati
on of as co rpor ati
on so le, and may be oppos ed by any
the
aai
rs of hetco
rporati
on.(n) mem ber of he treligi
ou s d enom inat i
on , sect or chu rch
represent ed by t he corporati on sol e: Provi ded, at Th ni
cases wher e the rules, regul ati
on s a nd di scipl
ine o ft he
Section 11 2.Submi
ssion of he t articl
es of
religi
ou s d en ominati on, sect or urch,
ch i gi
rel
ou s so ciet
y
i
ncorporat
ion. - Th e arti
cles f o ni
corporati
on must be
or deror con
cerned represented y b su ch co rporationsol e
ver
ied,before li
ng,by adavitorar mation ofthe
regulatehe t met hod of acqu iring, hol ding, selling an d
chi
ef rc ahbishop, b i
shop, p ri
est, m ini
ster, rabbi ro
mort gagi ng r eal t at
ese an d personal y, propert
su ch
presi
ding elder
, as the case ay be,
man d accom pani
ed yb
rules,egu rlati
ons a nd di scipli
ne sh all con trol, an d the
a copy o f the com missi
on, cert
icate of ecti
on
elor et
l
ter
interven tion oft he cou rts sh all not beecessa n ry. (159a )
of appointment of suchchi efarchb i
shop , bi
shop, pri
est
,
minist
er, rabbi orpresi di
ng elder, l y
du cert
i
edt o be
corr
ect by ny anot
aryublpic. Si
nce acorporation sol
e si con
si
st
s onl
y of one p
ers
on,
wi
llther
egi
str
at i
on ofthepr
oper
tyinthenameofthe
cor
porat
i
on sol e ve st nuto the headt hereof he
t
From and af
t
er ht
e
li
ng wi
th t
he S ecuri
ti
es
ownershi
p of the property?
and Exc
hange Commi
ssi
on of he
t sai
d arti
cles of
i
ncorpor
at
ion, ver
iedby adavi
t orarm at
i
on, d an

accompanied by t he doc ument s ment i

oned in t he - No, ti w
il
l not st
ve un
to t
he h
ead
,the h
eadi
s a
cti
ng
prece
ding pa ragr
ap h, su ch chief archbi
shop, bishop
, mer
eyl as a ardi
guan
pri
est, mini
ster
, rab bi or resi
p ding elder al
lsh
become a
corporat
ion sole an d al l temporali
ties, est
ate and
Roman Cathol
ic A
post
ol
i
c A
dm. Of Davao,
inc.vs.
Lan
d
properti
es of hetrel i
gious d
en ominati
on, sect or hurch
c
Reg.Comm, etal
.
there
tof
ore a dminiser
ted or m an aged by him as su ch
chi
ef rc ahbi
shop, b i
shop, p ri
est, m i
nist
er
, rab bi ro
presi
di
ng el dershal l behel d i n trust by him as a - Actonl
yasaguar
dian
corporati
on sol
e, or f the use, purpose,al f
behandsol
e
benetofhi sreli
gious denominati
on,sector church,
- Owner
shi
p devol
ves pon
u the con
gre
gat
i
on or rel
igi
ous
i
ncludi
ng hosp it
als, schools, col
l
eges, an orph
asyl
ums,
den
omi
nati
on
parsonagesnd a cem eeri
t es thereof
.(n)

- A corporat
ion consi
sts of one per
son onl
y and his
Is i
t e
rqu
i
redt
o i
ndi
cate
tsi
term
s of executi
on? Why
success
orswh (
o w il
l always be on
e at ame, tiin som
e
not
?
parti
cular ati
ston), who are ncorp
i orated y aw
lb in order
to give them some l egal capaci
t
ies and advantages,
- Not equi
r r ed becau
se t
heyare pposed
su t
o exi
st ni part
icularl
y that f o perp
etuit
y, h w
ich in thei
r natural
perpetu
i
ty persons they d n ot
coul
have had

-
How
f
oreever
,,t
ver i
it m
does
er
eylotne
msan
mean t
t
hhatt
at t
iihshal
aslt
con
het
inue ci
capa to
t st
exi -
y of Roman Cathol
i
c Church as
h on n
ational
it
y an d that het
f
ramers of het Const
it
ution,as wi l
l behere under
conti
nuou
s exist
enceduri
ng a parti
cul
ar peri
od until expa
lned,
i di
d not hav e in mi nd t he r el
i
gious
di
ssol
vedi
n accorda
nce iw
th law corporat
i
ons sol
e whenthey rp
ovi
dedt hat 60 perce
nt of
theap ci
talthereofwn be
edby
o Fil
ipi
no citi
zens.
When wi
lli
tacqui
rej
udici
alper
sonal
it
y? How do you
compa
re ht
is to hot
er ypes
t ofcorporation
? Di
rec
t
or of
La
ndsvs.
CA

- Af
tert
helingthev
eri
edar t
icl
esofi
nc or
porat
ional
ong - Al
ienabl
e publi
cland isc onver
ted i
nto pri
vat
el and
wi
ththe documentsrequi
red i
n Sect
ion 112 wi
ththe when the same has been openly
,c ont
inuousl
y and
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 63

excl
usi
vel
y i
n possessi
on of ht
e p
ropert
y as con
cept of May a rpo
corati
onsol
e be i
ssol
d ved ybu
jdi
cialdecree?
anowner or
f 30years,
aut
omati
cal
ly tha
t si

- Generalrule:No, because acorporation sol

e,i s b
y i
ts
Rep
ubli
c of thehi
P
li
ppines
vs.I
AC ver
y natur
e eccl
esi
ast
ical and r
eli
gious (
doct
rine of
separat
ionofchu rch and stat
e)

- Det
erm
i
nati
on oft
he cha
ract
er of
t
he an
l d sh
oul
d be i
n
mi
nd - Excepti
on: po li
ce powerof the state,if ti
s pu rpose
i
s
bei
ng car
ried outand i
sins
tead bei
ng used f
orill
egal
purpose,it may e b soissol
d ved
- I
ft hey i
st
llformpa rtof pu bl
i
c domai
n they ca
nnot be
owned, t
buf
i ht
ey rea con
vert
ed i
nto pri
vat
e a
lnd, ht
e
consti
tuti
on
al proh
i
biti
on wi
ll not ap
pl
y Whatar
erel
igi
oussoci
eti
es?

I
ftheres i
vacan
cy h
wo wil
l l
l up t
he same? W
hatfi - Undercommon law, ar
eli
gioussoc
iet
y i
s a body
of
t
heres i
non
e,whatmustthe successor
do? per
sonsassoci
at
ed toge
t
her f or t
he pu rpos
e of
mai
nt
aini
ng rel
igi
ous w
orshi
p.

- Accor
dingt
osect
ion114:
I
s i
t al
so requ
i
redt
o l
e i
ts rt
ai
clesof ncorp
i ora
ti
on t
o
t
he SE
C?
Sect i
on 114. Fi
ll
ing of va cancies.- The
success
or
s in oce of any chief archbishop, bishop,
pri
est,mini
ster,rabbi or resi
p ding elder n a ic
orporati
on - No <se
c.116>may

sol
e shall b ecome t he cor porati
on sol e on t hei
r
acce
ssi
on to oce an d shall be er pmitted to tr
an sact What shoul
d be cont
ained i
n t
he ar
ticl
es of
busi
nessass uch on t
helingwitht heSec urit
iesand i
ncorp
orati
on
?
Exchange oCmmi ss
ion ofa copy of t
hei r commissi
on,
cert
i
cateof ecti
elon , oret tl
ersof ap poi
ntment, duly
cert
i
edbyan y n ot
ary ublpi
c. - Sect
ion 11
6 p
rovi
des:

Duri
ng anyv aca
ncyi n the oce ofhi ecf Sect
ion 116.Rel
i
giou
s societ
i
es. - Any
arch
bi
shop
, bi
shop
, pri
est
, mini
ster
, ab
r bi or resi
p di
ng rel
igi
ous soci
et
y or rel
igi
ous order
, or any diocese,
el
derof any rel
i
giou
s denom i
nati
on, sect or urch
ch synod
, or disri
tct org
ani
zat
ion of an y r el
i
giou
s
i
ncorpor
at
ed as a corporat
ion sole, het person or den
ominat
i
on, esct orhur
ch,
c nl
u
essorbi
fdden by t
he
per
so ns aut hori
zed and em pow
eerd by t he r ules
, consti
tution, rules, regulati
ons, r o disci
pl
ine of th e
regul
ati
on s or i sci
dpli
ne o ft he reli
gious denominati
on, rel
igi
ou s d en
om i
nation
, e sct or rc chu
h of h wich it si a
sect orr ch
chu
repres
ented by the corporat
ion sole to part, orby com pet
entau thori
ty, may , u ponwri tten
adm i
niser
t thetem poral
it
ies and man aget he a ai
rs, consent and/or an by
ar mative v ot
e at amee ting
est
ate d anpropert
ies f othe corporati
on sol
e during the cal
led for th e purposeof at eastl o-ttw
hirds (2/3) of its
vacancy shal
lexerci
se allthe power
s and aut
horit
y of mem bersh i
p, ncorporate
i or the fad minist
rati
on of t si
t
he corpo rat
ionsole du ri
ng su chvacan cy.(
158a) temporalit
ies or f or the man agem entof t s
i a ai
rs,
properti
es n ad estate by l
ing w ith the S ecurit
ies n ad
Exchan ge omC missi
on, arti
cles of i
ncorporati
on veried
I
fa c
orp
orati
on exi
st
s n
i equ
i
ty may it
not be
di
ssol
ved
?
bytheadav itofthepresi
dingelder,secret
ary,orclerk
or other ember
m of such rel
i
gious so ci
ety or rel i
gious
Sect
i
on 115
D.i
ssoul
ti
on. - A rpo
corati
on sol
e order, i ocese,
or d nod ,syori st
dri
ct organi
zation of ht e
may be di
ssol
vedan
d i t
s a airs set
t
led vol
untari
l
y by rel
igi
ou s d en
om i
nation
, sect orrch, chut iset
ng orth
f eth
sub
mit
tingt
o theSecuri
ti
es an d Exchan
ge om
C missi
on f
oll
ow i
ng:
a veri
eddecl
ara
ti
on ofdissol
ution.
1. That t
he rel
igi
ous soci
et
y or reli
giou
s order
, or
Thedecl
arat
ionofdi
ssol
uti
onshal
lsetf
ort
h: di
ocese
, synod
, ordist
rict rgan
o i zati
on is a rel
i
giou
s
organ
i
zati
onofa reli
gious den
omi
nati
on, sector chu
rch;

1.Th
e na
me of
the corporat
i
on;
2. Th
at at east
l wo-t
thi
rds2/ (
3) of
it
s mem
bersh
ip have
gi
vent
heir w
ri
tt
en con
sent orhave voted ncorp
toorate,
i
2. Th
e re
ason
f
or ssol
diut
ionan
d w
indi
ng u
p; at a ldu
y con
vened
meeting oft
he bod
y;

3. Th
e au t
hori
zat
i
on for the dissol
uti
on of the 3. h T
at the i
ncorporati
on of ht
e rel
igiou
s societ
y or
corporati
on by the part
icu
lar rel
i
gious denomi
nati
on
, r
eli
gious order
, or di oces
e, synod, or disri
tct
sect or
hurc
h
c; organ
izati
on desi
ri
ng toncorp
i orates n ot
i orb
fi
dden by
compet
entau thori
t
y or by t he consti
tut
ion,rules,
4.Th
e na
mes and add
r
ess
es of
t
he er
psonsho
w r
a
e ot regu
lati
on
s or disci
pl
ine o
f therel
igi
ous denomi
nation
,
super
vi
se the wi
ndi
ng up of he
t aai
r
s of he
t sect,or chu
rchfo whichitf
orms a art;
p
corp
orati
on
.
4. That the re
li
giou
s societ
y or rel
igi
ous order
, or
Upon appr
ov
al of s uch de cl
arai
ton of di
ocese,synod, or disri
tct organi
zat
i
on desi
resto
di
ssout
lion by t he Securi
ties and Exc hange i
ncorpor
at
e f or the administ
r
ati
on of its aai
rs,
Commi ssi
on
,the corporati
on shall cease to carryit
s on prope
rt
i
es n a
d est
ate;
oper
ationsexc
eptorfthe purpose of i
nding
w up its
aai
rs. (
n) 5. The pl
ace hwerehe t pri
nci
pal oce of
the corporati
on
i
s o t be est
abl
ished and l
ocat
ed, hiw
ch pl
ace um
stbe
- Whilesection 115 ofthec odeprovi
desforthepr ocess wit
hinthePhi
li
ppines;and
and proced ure or f the di
ssol
uti
on of a corp orate sol
e,
there s n othi
i ng n i theaw litsel
f which wou l
d prohibit t
i 6. The names, nati
onal
iti
es, and r
esidences of the
f
romamen ding i
ts arti
cl
es f oincorp
orati
on t
rusteeselect
ed by therel i
gious soci
ety or reli
gious
- It si believed that au t
horizati
on for the dissol
ution by order, or di
ocese,
the od,
synorist
d
rict organ
i
zati
on t o
theartipcu lar rel
i
gious denomination
, sect ch or
urch, as serv
e or
f hte rst e
yar or such ot
her peri
od as m ay e b
requi
red i n su b-paragr
aph 3 of se cti
on 115 wou l
d stil
l presc
ri
bed by t he law
s of the rel
igi
ous societ
y or
be necessaryi nthe case ofame nding t
he ar
ticl
es of rel
i
gious order
, orof the diocese,od syn
, ordi sri
tct
i
ncorporationt o aect ssol
diuti
on. organ
izat
i
on,the b oard
of rustees
t o be tnot ess
l tha
n
ve (
5) nor ore
m han
t ft
een( 15)
.(160a)
o Expi
rat
i
on of a corp
orat
e ter
m wi
ll not app
l
y
to arel
igi
ous co
rp
ora
ti
on I
s t
i equ
r i
red
to ind
i
cat
e ts
i erm
t of exi
sten
ce?
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 64

- Li
kew
i
se to stexi
niperpetu
i
ty,the aw
l doesnot equ
ri
re o 3 modes of di
ssol
ut
ion
, 3 modes vol
ofunt
ary
t
o ind
i
cat
e ts
i erm
t of exi
stenc
e di
ssol
uti
on an d 3 modes of iqu
lida
ti
on and
wi
ndi
ng up- FREQUENTLY ASKED I
N THE
FI
NALS
Whenwi
lli
tacqui
rej
uri
dicalper
sonal
it
y?

- Onl
y acorporat
i
onsol
e may com
e nto
i st
exi
encei
th
wou
t Whatar
ethe3mo
desofv
olunt
arydi
ssol
uti
on?
SEC ap
proval
, e
sct
i
on 19 wi
llt
hus govern,
edVest
wi
th
j
udi
cialcapaci
tyupon i
ssuanceoft
hecer
ticat
ebyt
he 1. Vol
untar
y d
isso
l
uti
on where no
cr
edi
t
ors are ect
a
ed;
SEC <sec.
118>

o How
eve
r t
i s
i not accurat na
e accor
digt
ty.
to 2. Vol
untary ssol
di
uti
on wher
e cr
edi
tors e
ara
ect
ed;
<sec.
La
dia b
ecau
se ht
ere are
hose
t hat
t can
i
ssue 119>

f
or ex
ampl
e co
oper
ativ
es-BUREAU OF 3. Sh
ort
eni
ng of
cor
porat
e er
tm. <sec.
120>
COOPER
ATI
VES whi
ch reg
i
ster
, hom
e
i
nsur
anceguar
ant
y co
rpor
at
i H OME
on-
Vol
untary di
ssol
uti
on wher
e no cr
edi
tor
s ar
e aect
ed
OWNERS <sec.
118>

How may rel

igi
ous soci
et
ies e
b d
issol
ved?
- Thef
ormaland pr
ocedur
alr
equi
reme
ntsnecessar
y ar
e
the low
fol
i
ng:
- Go tohe t gen
eral
rul
es governi
ng d
issol
ut
ion
, beca
use
the ru
l
es nuder eci
sp
al corporat
i
ons d
o not provi
de f
or
1. Maj
ori
t
y vot
e of
the boa
rd of
di
rec
t
ors or
trustees;
such ru
l
e

2. Sending of not
ice ofeachockhol
st ders ormem beri t
her
e
DI
SSO
LUTI
ON byregis
teredmailorper
sonaldeli
ver
yatleastt
hir
ty(30)
days prior ott he meeti
ng (schedu
led by the b oardfor
the pu rposeof submitt
ing the boa
rd action t
o dissol
ve
Whati
sdi
ssol
uti
on?
the cor porat
i
on f or approval of the st
ockhol
deror
mem bers.
);
- Ext
ingui
shment of the
cor
porat
e f
ran
chi
se an
d t
he
term
inati
onofcorp
oratest
en
exi
ce 3. Publ
i
cat
i
on ofthe not
i
ce ofi
me,
t pl
ace dansub
j
ect
of
t
he meeti
ng f
or thre
e (
3) conse
cut
i
ve wee
ks i
n a

new
spaper ubl
i
shed
p i
n t
he place here
w hetpri
nci
pal
3 mod
es of
di
ssol
ut
ion
oce of
aidscorporat
i
onis ocat
l edor nia newspap
er of
gen
eral
ci
rcul
ati
on i
n thehiP
l
ippi
nes;
1. By e
xpi
r
ati
on of
i
ts er
tm;
4. Res
olut
ion adopt
ed by the armat
i
ve vot
e of het
2. By v
olunt
ar
y sur r
ende
r of t
s
i pr
i
mar
y f
ranc
hi
se st
ockhol
ders n ow
ing at east
l 2/3
of ht
e outst
andi
ng
(
volun
tary i
sso
d
luti
on)
; capi
talst
ock ro 2/3oft
he members at
he mteet
ing dul
y
cal
l
edf or ht
e purpo
se;
3. By r
evocat
ion of t
si cor
porat
e f
ran
chi
se (
invol
untar
y
di
sso
l
uti
on
) 5. A copyof he
t r
eso
l
uti
on au t
hori
zing t
he di
ssol
ut
ion
mustbecert
i
edbya majori
ty ofhet b
oard
ofdi
rect
ors
or t
rust
ee
s and count
er
sgned
i by the cor
por
at
e
Ph
il
ipp
ine N
ati
on
alBan
k vs.
CFI secretary;

- When the peri

od of corpor
at e li
fe expi
res, t
he 6. Issua
nce of a cer
ticateofdissol
ut
ion y
b hte SEC.
corporat
ion ceases o be
t a bod y corporat
e ofr purposes
of conti
nuing the busi
nessor f hwi
chi t s
i organ
ized. utB Should th
is be i str
ctl
y com pl
ied i
wt
h?
i
t shal
l nevert
heless eb con
tinued as abo dy corporate
f
or hree
t year
s after he
t ti
me wheni t w ou
ld have be
di
ssol
ved,orfhte purposeof prosecuti
ng a nd def
endi
ng - Yes,compl
iance wi
ththe r
equir
ement
sand f
ormal
it
ies

sui
ts by or gai a nst ti and for enabli
ng it gradual
ly to pre
scr
i
bedabove i
s mandatorysucht
hat ai
flur
e to
set
tl
e a nd cl osei t
s a ai
rs otdi spo
seof an d con veyt si com
pyl t
herewi
th wil
l have no eect on
the leg
al
propert
y a nd t o divd
ie tis asset
s. Theres in o needf or exi
sten
ce fothe co
rpo
rati
on.
t
he i nsti
tution of aproceedi ng for qu o warrant
o t o
det
ermine t he t ime anddat e of het di ssol
ution of a
Wil
l dissol
uti
on be eect
ive and vali
d by a me
re
corporati
on beca use the peri
od of corporat
e exist
ence si
r
esolut
ionoft he B
OD an d stockh
olders?
provi
dedi n t he arti
cles of ncorporat
i i
on. Whensu ch
peri
od expires an d without any extension havi
ng b een
madepu rsuan t tol aw, hte corporati
on is dissol
ved - No,a mere e rsol
uti
on by the ockh
stol
ders tor
he BOD of
aut
om ati
cally nisof
ar s ahte conti
nuation ofit
s b usi
ness a corporat
i
on t o dissol
ve ht
e sam
e does ot
n aectthe
i
s concerned. di
ssol
uti
on but htat some other
st
eps, mi
ad
ni
strat
i
ve or
j
udi
ciali
snecessary Dag
.( uhoy nt
Eerpr
i
ses vs.
Pon
ce
)
- The ri
ghts of t
he lessor and t he lessee over t
he
i
mprovem ent
s whi ch t he l at
ter cons tr
ucted on t he - Si
ncei t si th
e S
tate whi
ch gran
ts ts
i gh
ri
t ot exist
, t
isi
l
eased premises are governedbyArt i
cle 1678 oft he Ci
vil onl
y through the S
tate whi
ch canal
low t
he etm
rinat
ion
Code.Th e provi
si
on gives the esseel the
ri
ght ot rem
ove of tsi ex
ist
ence; i
thou
w t consen
t ofhetS t
ate,it w
il
l not
the i
mprovements ft i
he essor
l hooses
c otnot pay one bedissol
ved.
hal
f ofthe l u
va
e thereof
. How ever,in t he case t aba
r h te
l
aw wi ll notppl ay because the part i
es herein have
Vol
untary di
ssol
uti
on wher
e cr
edi
tor
s ar
e aect
ed
st
ipul
ated in t he cont r
act hei tr ow n t er
ms and
<sec.
119>
condi
ti
onsconcer ning t he i mprovem ents befor
e t he
termi
nati
on of hte e lase.i ti
on
Pet
er PN B as assi gnee fo
PBM su cceededto the l i
gati
obon oft he att
l er under the - By vi
rt
ue of
a p
eti
ti
on, whenthere are
tors
credi
ect
a
ed
cont
ract l of
ease. t couIld not possess ri
ghts more than
whatPBM had as l essee under the contract.Hence, - Thef
oll
owi
ngf
ormal
it
ieswoul
dthusber
equi
red:
pet
iti
oneras w udly b ound t o removehe timprovement
s
bef
oretheexpi
rat
ion oft heperiodoflease.Itsfai
lureto
1. Armati
vevot
e ofthe t
sockh
oldersepres
r enti
ng atl
east
do sohenw t he ease
l swaer
tmi nate
d w as antam
t ou
nt ot
2/3 ofthe ou
t
stan
ding ca
pi
talst
ockor at east
l 2/3
of
a waiver ofi
ts ri
gh ts a nd int
erest over the i
mprovemen
ts
the members aatmeet
i
ng d
uly cal
l
ed or
f ht
at purpo
se;
ont he eased
l r
em pi
se.

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 65

2. Pet
i
ti
on for i d
ssouti
l on shall bel ed with t he SE
C compaln
it and af
t
er pr
operot i
n
ce an
d heari
ng ont
he
si
gnedbya maj ori
ty ofi ts boa rd fodirect
orsrorutstees gr
ound s provi
ded by exi
s
ting l
aws,r ul
es and
or ot
her o cer
s having the man agement of it
s aai
r
s, regu
lati
ons.(
n)
v
eri
ed by the pr
esident or secr
etary or one of i
ts
di
rec
torsor t ruste
es, setti
ng f ort
h al l clai
ms and
- Dissol
ut
ion i
s t an
t amount o
t t
he i
mposi
t
ion of death
demands gai
a nstit.
penal
ty
- Inst
eadof ssol
diving the corporati
on, cou
rt
s norm
al
ly
3. I
ssuan
ce of an or
der byhetESC r ec
i
tingt
he urpose
p of
enj
oin the u
frthercommi ssi
onofthe qu
est
i
oned ct
a
t
he peti
ti
on and xing the dat
e on or efbor
e whi
ch
obj
ect
i
ons there
to may be l
ed by anyper son,hic
wh
dat
e shal
l not be ess
l han
t thi
rty days or
n morehan
t - Therel
iefofdissolut
ion wil
lbeawar ded onlywher
eno
si
xtyays
d after en
try of
therdeor. ot
her rem edyi s avail
able and i t w il
l note bal low
ed
wher
et he ri
ghts oft he st
ockhol
ders can be,or are,
4. Bef
or
e such
ated
,a copy t
he
of order
mustbe pu
bl
ished pro
tect
ed in som e other R epu
ay
w bl
i
(c vs. Bisaya Land
once a week for thr
ee (3) conse
cut
ive weeks i
n a Tran
s.Co.I
nc.
)
new
spaperfo gen
eral
ci
rcul
ati
on pu
bli
shedin the ci
t
y or
munici
pal
it
y wher
e thepri
ncipa
l oce si si
tuated or
n i
Whatar
ethegr
oundsf
ori
nvol
unt
arydi
ssol
uti
on?
a newsp
ap er of
gen
eral
ci
rcu
lati
on in the Phi
li
ppi
nes.

5. Post
ing oft
he sam e or
derorft
hree 3)
(consecu
t
ive eeks
w - I
tis com
menced
t
hrough
a ver
iedcom
pa
lnt
i orot
m
u
i
n three3) p
(ubl
ic p
lace
s n
i suchci
ty or m
uni
cipa
li
ty. prop
ri
o b
y h
te prop
er courts

6. Uponve5) (daysnot
i
ce,gi
ven ter
afthe date
on whi
ch - Sect
i
on 6 of PD90 2-Aprovi
desf
or he
t gr
ound
s f
or
the ri
gh
t ot le obj
ect
ion
s has expi
r
ed,het SEC shal
l i
nvol
untaryi
ssol
dut
ion asf
oll
ows:
hearhe t pet
i
ti
on and try anyiss
ue madeby t he
obj
ecti
on
s l
ed. 1. Frau
d n
i p
rocuri
ng t
i
s cer
t
ica
t
e of
regst
irat
i
on;

7. Ju
dgment ssol
diving h
te corporat
i
on and di
recti
ng ofi
ts 2. Seri
ousmisr
epres
ent
at
i
on as t
o what the
cor
por
at
i
on
asset
s as j
usti
ce requi
res na
d t he appoi
ntment of a candoor si do
i
ng tohe
t great
prej
udi
ce of
or da
mage to
recei
ver(
if neces
sary i
n its iscreti
d on
) o t coll
ectuch
s the gen
eral
publi
c;
asset
s an
d pay the ebts
d tof
he corporati
on.
3. Ref
usalt
o compl
y or deance anyof
awlf
ul or
der of
the
o The f or
egoi
ng ar
e al
so mandat
ory Commiss
i
on rest
rai
ni
ng com miss
ion of acts whi
ch
requ
i
rements woul
damountt
oagravevi
olat
ionofi
tsfr
anchi
se;

4. Conti
nuou
s n
iop
er
ai
ton f
or aperi
od ofat east
l ve5)
(
I
s the poi
ap
nt
ment of
a recei
ver an
mda
tory?
year
s;

- No, tis
i merel
y p erm
issi
ve oriscre
dt i
onaryon the p
art 5. Fai
lur
e o
t
le by-
l
aws w
ithi
n t
he e
rqu
i
red er
pi
od;
of he
t court
. The codeuseshe
t word may
; he
t law
i
ntendedto let ht
e sh
areho
ldersave
h e thco
nt
rolof ht
e 6. Fai
l
ure to e
lrequi
red r
eport
s n
i appr
opri
at
e ofrm
s as
asset
s o
f hte corporat
i
on upondi
ssol
uti
on and wi
ndi
ng det
erminedby t
he Commissi
on wit
hin the pre
scr
i
bed
up. peri
od.

- The direct
ors may also undert
ake l
iqui
dat
ion and
- Other gr
ounds are provi
dedf
or nit
he corporat
i
on code
windi
ngupofi tscorpor
ateaai
rs,andsoundbusi
ness
i
tsel
f
: amon
g h
tem are:
judgment,onhow t
heywi l
lwi
ndup

1. Vi
olat
i
onofanypro
vi
si
onoft
heCode nd
uer ect
sion144
;
Di
ssol
ut
ionby sh
ort
en
i
ng of
corporate
erm<sec.
t 12
0>

2. I
n case dead
of locknia cl
ose corpor
at
i
onas provi
dedfor
- Wi
llbeval
id upon appr
ovaloftheSEC,unl
ikegener
al i
n sect
i
on105;
amendm
ents,whi c h wil
l bedee med approved if not
act
ed pon
u by he t E SC wit
hin 6months r
omfthe dat
e of 3. I
n a cl
ose corporat
i
on, an
y act
s ofdi
r
ect
ors
, ocer
s or

l
ing or
f a u
ca
se ot
n tat
ri
butabl
e tohe
t corp
orati
on
. thosei n control of hte corporati
on which i s i
ll
egal or
f
r au
dulentor di shonestor oppressi
ve or unf ar
i
ly
- Short
eni
ng ofhe t corporat
e term partakesthe nat
ure of prej
udi
cal
i o tthe corpor at
i
on or any st ockhol
deror
an amendment oft
he arti
cl
es of ncorporati
i on
. Sect
ion whenever cor
porate asset
s ar
e bei
ng misappli
ed or
16 und
er gener
alamend ments a
ll
ow s wri
t
ten asse
nt wast
edundersection105.
sec
ti
on 37 mandat
es hatt t
he vote mustbe cast aat
dul
y con
sti
tut
edmeeting.
- Mere sh
di
on
est
y s
i al
so a
grou
nd i
n a cl
ose corp
orat
i
on

Sect i
on 120. Dissol
uti
on by short ening - Other gr
ounds canbe f ound in ot
her speci
allaw
s il
ke
corporat
e erm
t .-A vol untary i ssol
d ution may be ect e
ed the Securi
ti
es egu
R lati
onCode nd a theeneral
G Banki
ng
byame ndingthearti
clesofi ncorporat
iont os hor
tenthe Actaswel
lastheI
nsuranceCode.
corporate ermpu t
rsuant t o therovi psions of thi
s C od
e.
A copyoft heame ndedar ti
clesofincorporationshallbe
sub mit
ted to hetSecu ri
ties an d Exchan ge omC missi
on Gover
nment vs.
Ph
il
ipp
ine S
ugarst
E
ate
i
n accor dance i w
th t his C ode. on Upapp roval of he
t
amen dedart i
cles f on i
corporation of ht e expirat
i
on of - I
t si n ecessa
ryin orderto secu
re uj
di
cial orecl
f osu
re of
theshort ened t
erm , as the case ay e, bmthe corporat
ion res
pondent
s ch
art
er ot sh
ow a mis-
user ofi
ts ran
f chi
se
shall be dee med di ssovled wi thoutany f urt
her j
usti
fyi
ngsuchafor
fei
tur
e
proceedings, jectosubtthe p rovi
si
on s of ht i
s C ode on
l
iquidation.(n) - Obj
ects i
ot p
rot
ecthe
tpubli
c,an
d not ot red
ress
rivate
p

gri
evan
ces,the mis-
user mustbe such as ot work or
o I
ntra-corpora
te-sp
eci
alcom
merci
alcou
rt
s threatena su
bstan
t
ialinj
ury ot the
publi
c,or suchas to
amount ot a vi
ol
ati
on ofthe ufnda
mentalcond
iti
on of
t
he contract bywhich t
he fr
anchi
se aws gr
ant
ed an d
Anot
her way of dissol
ving a cor
por
ati
on i
sthr
ough t
hus defeathetpurpose heofgrant
t
i
nvol
untary dissol
ution
- Cou
rts proceed it
hwextr
em e cau
ti
onwhi chhas or
f ht
eir
Sect
i
on 121.I
nvou
lnt
ary di
ssol
ut
ion
.- A obj
ectt he forf
ei
tur
e of corpor at
e f ranch
i
se,an d
cor
porat
i
on may be di
ssol
vedby the Secu
ri
t
ies an
d f
orf
ei
ture i w
ll not be allowed, excep
t u nderexpress
l
imi
tati
on, oror f lp
ain ab use of pow
er by whi
ch the
Exc
hangeCommi
ssi
on upon l i
ng of a v eri
ed
corp
orati
on f
ail
s toul
fll thedesi
gn and purpo
se foits
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 66

or
ganiz
ati
on. But when t he abuseor vi ol
at
ion oce r
s, except n cases
i her
we the i ntervent i
on of
con
st
itutes or threat
ensa su bst
ant
ial ni
jury to the the Stat e, orf one reas on or another , cannot be
publ
i
c or su ch as t o amoun
t ot a viol
ati
on of het obtained, as when the Stat e i s not i nteres t
ed
f
undamen talcondi
ti
ons ofits ch
arter
, or tsi con
duct si because the compl
aint i
s stri
ctly a matter between
cha
racteri
zed yb obduracy ori npert
aci
ty n
i contempt of
the stockhol der
s and doesnot i nvol
ve, ni the
l
aw, disso
luti
on wi
ll be gra
nt
ed
opinion of het legal ocer of the Gover nment, any
of het act s or om iss
ionswar ranting quowar ranto
- Did the u co
rtdissol
ve the
corporati
on? No, ti di
d not,it
gran
ted t he cor
porat
i
on 6 monthsto ceas
e and desi
st proceeding , i n which m i nori
ty st ockh ol
ders are
the perf
orm an
ce of hetqu
est
i
oned act hot
erwi
se ti w
il
l entitled to have suchdi ssoluti
on
t .shoul
I d be
bedissol
ved exerci
sedif necessa
ry niorder not ot e
nti
rel
y gni orend a
di
sergard the rights of said mi nori
ty stockh ol
ders,
especi
all
y whensaid minori
ty st
ockhol
ders are nable
uo t
Gove
rnm
ent
vs. El Hogar obt
ain redres
s and prot
ecti
on of htei
r right
s wi thin the
corporat
i
on itsel
f
. Stoc
kh
olders
shou
ld not be l
eft
- 3 cau sesof act ion, hte rst s it
ha t the corporat
ion wi
thoutr
ecour
se
vi
olatedt helaw byholdi
ngon thepr opertybeyond t
hat
provi
de f or y bl aw,the secon d is tha t hte corporati
on Presen
t s
et up
und ert
ookt he man agem entf pet it
ioners bel
onging t
o
del
inqu ent shareholders of hte association
, an d last
ly
that het by- l
aw prov i
sion, hiwch em pow es
r theDBt o - Any st
ockholder or member of a cor
por
ati
on can
cancel shar
es an d to return to the owners her
t
eofthe i
nsti
tut
e a di ssol
uti
on proceedi
ng against ih
s ow
n
balancereturningfr
om theliqui
dati
on corp
orati
on beforehe t prop
er oru
fm

- Speci
alCommerc
ialCou
rts,sh
all hear d
and
eci
de ni
t
ra-
Compar
e ot Phi
li
ppi
ne S ugar st
E
ate,wher
en
i the court corporate
ispu
t
esd
ru
led con
dit
ional ssol
diut i
on. Why decree ndi
tco
ion
al
di
ssol
ut
ionin one and notnithe other case?
Maya corporati
on askfor issol
d ut i
on of het corp
orat
ion
whent
her
eisnopr
ejudi
cet
othegener
alpubl
ic?
- Because
n Ei
l Hogarhe
tgov
er
nment as
w at
aul
f
t,t he
govern
men
t wasn

t ab
l
e tossu
ie thecert
i
cate of
i
tl
e ton
ti
me - Yes,inaclosecorpor
ati
on,apet
iti
onforthedi
ssol
uti
on
of het cor porat
ion may be i nst
it
uted by any one
- Whent
hecasewasi
nst
itut
ed,ElHogarwasal
readyabl
e indi
vidual hasrehol
der on t
he gr ound, evenby mer
e
dishonest
y
t
o
S di
s
ugar po
se
Est
atetth
eiwp
ropert
as st
i
li
esh
l tnihqu
e est
ol
dii
on
ng ,
hen
t i Ph
i
propl
ipp
ert
i i
nei
es n
order tori
chen
i
tsel
f at ht
e exp
ense fothe taxp
ayers Eects of
ssol
u
di
ti
on

Repu
bl
ic vs.
Secu
ri
t
y C
redt
i and
Acceptan
ce orp.
C etal
. - Thedissolution ofacorpor
ati
on notonl
ytermi
natesi
ts
pri
maryf ranchise t
o be a corporat i
on, but general
l
y
-
prevents t rom
f ifurther exer
cisi
ng other or secon
dary
Thecorpor
ation her
eisa l
endi
ngi
nst
itut
ion and nota
f
ranchises whi ch havebeenconf erred to its. tI
banki
nginsti
tuti
on
term
inates i t
s pow er to t er
en ni
to contr
act
s or to
conti
nue h te bu si
ness as a nggoi
con
cer
n.
- Def
enda
nt cor
po
rat
i
on vi
ol
ated the
aw beca
l use bef
ore a
corporat
ion may en
gagento
i aba
nking a
cti
vit
y i
t must
- Basedn o thi
s general
rul
e,the Suprem e Courthel d that
rst
obtai
n a secon
da
ry ranch
f ise r
om
f the Centr
alBan
k
a corporat
ion, whosecorporat
e l i
fe expired, n ca
not
l
awful
ly pursue the usi
ness
b or f hwi
chi t was rgoanized.
- Def
enda
nt corporati
on t
hreat
en
s su
bstan
ti
al nj
i
ury to
It cannot appl
y for anewcer t
icate or asec ondary
the gen
eral
publ
ic,dissol
ut
ion i
s w
arran
t
f
ranchi
se orf tisinica
pabl
e of recei
ving a grant. Neither
canit en f
orce a con
tract execu
ted prior tsi di
ssolut
ion
- I
fthere
s i
a ban
k run
kaw
awa n
amanyun
g deposi
t
ors
f
or the pu rposeof cont
inu
ing t he bu siness of tsi
organ
i
zation
.
Repu
bl
ic vs.
Bi
sayaan
d
L T
ran
spo
rt
ati
onCo.I
nc
- I
n gen
eralhetri
gh
ts an
d l
iab
il
it
ies of the
corp
orati
on
areot
n ext
ingui
shedbyit
s d
issol
ution
.
- Therel
iefofdissolut
ion wil
lbeawar ded onlywher
eno
ot
her rem edyi s avail
able an d it w il
l note ball
owed
wher
et he ri
ghts oft he stockhol
der
s can be,or ar
e, Sect
ion 145.
Amendme nto
rrepeal
. - No ri
ght
prot
ect
edi n som e other ayw or remedyin f avor of agaiornst any corporati
on, tis
st
ock
holders,mem bers, recdi
ors,
t t
rustees, or ocers,
- Misuseand misappl
icat
ion of he
t f
unds an
d asse
ts of nor ny
a l i
abil
it
y incurre
d by an y su ch corpor
ation,
the r
esponden
t wer
e commit
ted part
i
cular
l
y by t
he st
ock
holders,mem bers, recdi
ors,
t t
rustees, or ocers,
cor
por
ate ocers, her
w e theycani nst
eadbe held sha
ll be removed or mpair
i
ed t ei
her by het sub
sequent
perso
nall
y ilbl
a e di
ssol
uti
on of aisd corporat
i
on or by any su bsequent
amendment or epeal
r ofthis C ode roof any partthereof
.
- Si
nce t
heres ia
not
her rem
edyavai
l
abl
e di
ssol
ut
ion i
s (
n)
notwarr
an
ted

Buena
orvs.
Camari
nes Su
rInd
ust
ryCorp.
Assumi
ng the abov
e st
ated cor
por
ati
on isa cl
ose
corporati
on, woul
d the cou
rtdecree herw
ot
i
se?
- From thatime
t onCamar
i
nes Su
r was pl
yi
ng i
n an
acti
vi
ty hat
t a
ws l
i
lega
l
- Yes,becausei
nacl
osecor
por
ati
on,me
redi
shones
tyi
sa
ground or
f hte di
ssol
uti
on
- A cor
por
ation wher
ethe cor
por
ateli
fe has expi
red i
t
cannot aw
lful
ly purs
ue the busi
nessor f hwich it w
as
- Can ev
en be di ss
ovl
ed by peti
ti
on of onl
y one
organ
ized.
st
ockh
ol
der on t
he grounds st
at
ed ni the e
cod
< sec.
105>
- the Supreme Court d helt
hat acor porat
ion, hose
w
corporat
e l i
fe expi
re
d, cannot l aw f
ull
y pu rsue the
Fi
nan
cing C
orpo
rat
i
onof he
t P
hil
ipp
ines vs. Teodoro busi
nessforwhi
chitwasor
ganized.Itcannotappl
yfor
a new cer t
icate a orsecond aryf ranch
ise for i
t si
- Mi
nori
ty st
ockhol
dersaym ot
n askfor ht
e di
ssol
uti
on of i
ncapabl
e ofecei
rvi
ng agrant.
a corpor
at
ion in pri
vat
e su i
ts an
d that such acti
ons
shou
l
d bebroughtt he
byGove
rnmenthrough
t i
ts elgal
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 67

- Awar
dingi
ttoCamari
nesSuri
stant
amo
untt
oame
dal Atany t i
medur i
ng s aidthr ee (
3)years,the
f
or it
s il
l
egal acts corporat
i
on is au thorized d an empow eerd to con vey l al
oft siproperty ru st
to
ees tor f the benet of st
ockholders,
mem bers,credi
tors, and other person s nii nt
erest. From
- It cannot app
ly for anewcerti
cate or asecond
ary
and aft
er any suchconveyan ce y b the corporati
on ofi t
s
f
ranchi
sef or tisi inca
pab
le of ecei
r vi
ng a gran
t
. t
I was
prop
erty in t rust orft he ben et fot is stockholders,
not ev
en a corporat
i
on de f
act
o. And then,her
te s
i no
mem bers, edit
cr
orsan d othersn ii nteres
t
, al l nit
erest
appl
i
cationsubscri
bed y
b h
te new corporati
on
whic
ht he cor
poration had int he propertyterminates,
the l
egal nterest
i vest s nit he trustees, and t he ben e
ci
al
- Andyetass
tat
ed,thenew cor
por
ati
onhasnotledany i
nterestin the stockholders, mem bers, credi
tors or her
ot
appl
icati
on for cert
ica
te of u p
bli
c conveni
ence i
n person
s n iinterest.
Sabang,an
d h as ot
n publi
shedsuch pp
ali
cati
on.

Upont he wi
ndi
ng up of t
he corpor
at
e aai
rs
,
an
y asset
dist
ri
butabl
e ot a
ny credi
tor orock
st
hol
der or
CebuPort
Lab
or Un
ionvs
. Stat
e Mari
ne o
C memberwho i
s un know
n orcannot be ound
f shal
l be
esch
eat
ed t
o thet ycior u
mni
cipa
li
ty wher
e such asset
s
- Even a cursor
y reading of het provi
sion would convey are loca
t
ed.
the i
deaclearl
y man i
fest
edi n t
he il
mi tat
i
on but no
t or
f
thepu rpose on
of t
inuci
ng theusib
nessor f h
wichit w
as
est
abl
ished
,
htat ht
e 3 -yeareri
podallowedbytheaw lis Exce
pt by decr
ease of t al
capi
t
ock
s and as
onl
y or
f hte p
urpose f wo
i
ndi
ng up it
s a ai
rs. otherwi
se la
lowed by t
his Code, nocorporat
ion sha l
l
disri
tbute any of ts
i asset
s or propert
y except ponu
l
aw f
ul dissol
uti
on and aft
er pay
ment ofal
lit
s d ebt
s an d
Gon
zal
es vs.
Sugar egu
Rl
atorymi
Ad
nist
rat
i
on l
iabil
iti
es.77a
(, 89
a, 16
a)

- I
nsteadof app
lyi
ng t
he corpor
at
i
on code,
het
cou
rt Howevert
he 3 yearodperi
i
s n
otabsol
ut
e
appl
iedtheon
c
sti
tuti
on
alprovi
si
on Li
qui
dat
ionmay beundert
aken
i
n ei
t
her of
t
he 3ways

- Can
notbe read
as erm
p i
tti
ng o
t destr
oy thebstan
sut
ive 1. By h
te cor
porat
i
on t
sel
i ft
hrough
the O
BD
ri
gh
ts

- Usualmet
hod or procedu
re of l
iqu
ida
ti
ng a corporati
on
- Su
ch woul
d col
li
de wi
th t he non-
impai
rment of and al
t
hough t
heres in
o law aut
hori
zing i
t, nei
t
her si
con
tr
ac
tscl
ause of
the nco
sti
tuti
on ther
e an
yt
hi
ng hta
t prohi
bi
ts h
te BOD from undert
aki
ng
t
he am
se
- Compl
anian
ts wi
ll have the
ri
gh
t ot o
fll
ow t
he a
sset
s of
the corporat
ionin the an
h ds of
SRA or any other
ncy age
- Ift
his met
hod i
s resort
ed t
o, ht
e boardwi
ll on
ly have a
f
or ht
at amtt
er peri
odof 3 yea
rs ot
nishits as
t
k ofi
qu
lidat
ion

Af
terdi
ssol
uti
onwhatnext
? - Cl
aims for or agai
nst hte corporate enti
ty not l

ed
wi
thint
he per
iod wi
llbecome unenf
orceabl
e as t
her
e
- Li
qui
dat
ionan
d w
indi
ng u
p sh
oul
d ol
fl
ow exi
st no cor
porat
e entit
y against hiwch theycanbe
en
forced

Whati
sthedeni
ti
onofl
iqui
dat
ionandwi
ndi
ngup?
- Act
ionspendi
ngfororagai
nstthecorpor
ati
onwhen t
he
3 yeareri p
od expi
res,areba at
edsi nce f
at
er hte p
eriod
,
- Coll
ecti
on of l al
corp
orat
e a ssets,thepaymen ts of
all i
ts the corpo
rat
ion ceasesor f l
ali
ntent
s and purposes nd a
debts and set
tl
ement of it
s o bl
igati
ons and the ul
ti
mate i
s n o on
l ger capa
bl
e of sui
ng or being su
ed
dist
ri
bution of ht
e co
rporate assets,
if any of tiem
r ains,
to al l s toc
khol
der
s i n accor
dancewi th thei
r
proport
i
on at
e stockh
ol
dings in t he corporat
i
on or in 2. By a r
utst
ee appoi
nte
d byhe
t corpor
at
ion
accordan
ce wi th t
heir r espect
ive cont r
acts of
subscri
pti
on. - Thecor
por
ati
on ma
yoptt
oconv
ey al
lcor
por
ateasset
s

t
oa t
rust
ees hw
o w
il
ltak
e ch
arge
ofi
qu
li
dati
on
Pref
eren
ce p
uonl
iqu
idati
on
- I
fthi
s met
hod i
s used
, the ree
th year
eri
odpl
imi
tati
on
- I
f thererea pref
erredares,
sh he t
pref
eren
ce ran
gted t
o i
mposedby sec
t
ion 122will not app
ly prov
i
dedt he
such sh
oul
d b
e compl
i
ed i
w
th desi
gn
ati
onof ht
e tr
ust
ee si mad
e wi
thi
n that peri
od

- Pref
err
edsh aresay m gi
ve thehol
der t
here of
, pref
erence 3. By appoi
nt
ment
ofa r
ecev
i
er
on
ly i
n the divden
i ds but also i
n t he di sri
tbuti
on of
corporate s asset
u
pon liqu
ida
ti
on or ermt inati
on of ht
e
- Arecei
ver ma
y be appoi
nted by t
he pr
oper f
orum on
corp
oratesten
exi
ce.f su
I chis the nit
en t
, the cont
ract of
pet
i
ti
on or m ou
t proprio upont he dissolut
ion of ht
e
su
bscri
pt
i
on must so indi
cat
e lestheyt are l aced
p on
corp
orati
on
equ
alfoot
i
ng wit
h com monsha r
ehol
ders

- Pref
eren
ce a
my e
b pa
rt
i
cipati
ng or n
no
-parti
ci
pati
ng The appoi
ntme -
ntofa r
eceiveri
s,however
,permissiv
e
rat
herha t
n man dat
ory d anthe law t
ends to recog
ni
ze
that ni cases of vol
untary dissol
uti
on ther e is no
Dissol
vedcorporati
ons a
re granted
peri
od
a of 3 years to
occasi
on for ht
e appo
intment ofa receiver except
under
l
iqui
date
speci
alcircumst
ances and ponupropershow
ing

Sect
ion 12
2.Corpo
rat
e il
qui
dat
i . - ver
on Ey
- I
f a receivers iap
point
ed, the 3 yeareriod
p xedby l aw
corporati
on whose art cher expi
res by it
s ow n li
mitati
on wit
hin whi
chtocomplet
ethetaskofli
quidat
ionwi
llnot
or is an null
ed by f orf
ei
tur
e or otherw i
se, orhose w
l
ikewi
se ap pl
y becau se t
he dissolvedcorporat
ion is
corporate stenceexi
or
f other urposes
p i s terminated in
subst
it
uted yb h
te ercei
ver who may sue or beed sueven
any other annm
er
, shall nevert
heless be continuedas a
aft
er that period
bodycorporat
ef orthr
ee(3)yearsafterthetimewhen i t
would have been s o di
ssol
ved, for the pur pose of
prosecut
i
ng an d defendi
ng suits by or agai nst ti and o Mer
e appoint
mentof a rec
evi
er wi
thout
enabl
ing it ot settl
e an d closei ts aairs, to disposeof an
ythi
ng more does
impl
y i
n the d
issol
ut
ion
and conveyt si p
ropert
y and to di sri
tbut
e i ts asset
s, but of a rpo
corat
i
on
notfor hte pu rpose ofnu conti
i
ng theusi bnessor f h
wi
ch
i
t was establi
sh ed
.
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 68

Nati
on
alAba
ca other
i
bers
F o.
Cvs.
Pore Repu
bl
ic v
s.Marsm
an D
eveopm
l ent
Com
pany C
&hu
ng
Ka B
io vs.I
AC

- Acti
onspendi
ngfororagai
nstthecorpor
ati
on when t
he
3 year eri
od
p expires,areba at
edsi nce ft
aer htat peri
od
, - During the three year odgran t
peri
edt o acorporation to
the corpo
rat
ion ceasesor f l
ali
ntent
s and pu rposesnd a l
iqu i
da t
e or i n
wd up ti
s aairs, the BOD i s n otnorm all
y
i
s n o on
l ger capa
bl
e of sui
ng or being sued perm it
ted to undertakean y act ivity ou t
side the usua l
l
iqu i
da t
ionof he t corpo
rati
on. Theres, ihowever, nothi
ng
to pre vent t
he st ockhol
dersf r om convey ing t hei
r
- May be cont
i
nued by t
he t
rust
ee r
p
ovi
deddon
e w
ithi
n
respecti
ve sh areho
ldi
ngs towardt he creation ofa new
t
he 3year odperi
corporation t
o con t
inue the bu sinessfo the old. Thi
s si
becausewi ndingup isthesoleactivityofthedi ssol
ved
- Shoul
d the co
rporati
on, h
teref
ore,
nds it di
cult o
t corporation t
hat does not nti
en d t o nicorporate ew.aI
fn
ni
sh it
s li
qui
dat
ion
, t
i may,at an
y t
ime duri
ng t
he i
t does, ow ever
h, tisi not n ul
aw ful f
or the old boardof

three
a tr
ustar
ee ye
oteri
ppod, con
vey
rosecute dllai
ts
def
an
en assets
d su
i
t dor
s by rece
an
i
vabst
l
agai
n es
theto di
r
sec
di tors
sol
ved to negoti
ate
corporati
on to nd
a n
thetran
ewsf
er the asset
corporati
on i
nts
en of t
ded h
ot
e
corp
orati
on begun bef
orehet exp
i
rati
on ofsai
d peri
od becreat
ed aslongasthest
ockhol
der
shavegiv
en t
heir
(
consentRepubl
ic s
v.MarsmanDevel
opmentCompany)

- Theeectofthec onveyancei
st omaket
het r
usteesthe
- Windi
ngupisthesol
eac ti
vit
yofadissol
vedcorpor
ati
on
l
egal nowers of ht e property conveyed, bjectsu
o tt
he
that oes
d noti nt
endt o i ncorporat
e anew. fI ti does,
beneci
ali
nteres
tt herei
nofcredi
tor
sandst
ockholder
s
however
,it s
i not n ul
aw f
ul for theold board fodi
rect
ors
to negot
i
ate d antransfer the assets of hte dissol
ved
Sumer
a vs.
Va
lenci
a corporat
i
on to t he new cor porat
i
on i nte
nded to be
creat
ed as l
ong as t he st ockh
oldersave h ven
gi thei
r
(
Chu
consent ng aK B i
o vs. IAC)
- Thusitwasheldthatwhen a corporati
on i
sdi
ssolved
and the il
qui
dat
ion oft he asset
s s i p
lacedin the han
ds
of ecei
r ver or ssign
aee, theperi
od of 3 years prescri
bed Whathappenst
other
emaini
ngasset
sandpropert
iesof
bylaw i
snotappl
icableand t
heassigneema yi
nsti
tute t
he dissol
vedcorporati
on if i
l
quidat
ion and windi
ng up
al
l acti
ons lead
i
ng t o the li
qui
da t
ion of ht
e corp orati
on as provi
dedi n sect
ion 122 i
s n ot compl
ied wi
th, as a
even aft
er ht
e expi
rati
onof 3 yea rs. res
ul
t ofwhichthe 3year od peri
has ap
elsed

- I
f the
corpora
ti
on ca
rri
es u
ot h
te il
qui
dati
on ofts -
i assets I
f h
te t
hree year end
ext
ed l
if
e has expi
r
ed wit
hou
t a
t
hroughi
ts ow
n ocers an
d con
ti
nues anddef
endst
he t
rustee or iver
rece
vi
ha
ng b
eenexpressl
y desi
gnatedy b
acti
on s brough t byor aga i
nst t ,
i tis exist
ence sh al
l the cor porat
ion wi thin t hatper iod,t he boar d of
terminate at he t endof hree t year
s fr
om t he ti
me of directors tr
ust
oeesi tsel
f, ol
fl
ow i
ng therati onale of e th
dissol
ution; but f i a receiver or ssi
gn
aee si a ppoi
nt
ed , Suprem e Cour t
s decision in Gel anovs . CA may be
with or wit
houta t rans f
er ofits properti
es wit
hin3 permitt
ed t o do so cont inue as rustt ees by l egal
years, t
he legalinterest passes t
ot he assi
gnee, the i
mpl i
cati
on t o com pele
t t he l i
qu i
dati
on . S t
il
l n i t he
benecial interest r emaining i n t he member s, absencea of BOD or BO T,those havi ng any ec puniary
stockhol
ders, credi
tors d another nt i
erest
ed erson
p s an d i
nteerst i n t he ass ets, i ncl
uding not onl y t he
said assignee a my bring anacti on , prosecu
te htat h w
ich shareholder
s bu t l ikewise t he cr edit
ors of t he
hasal ready been co mmence d f or het benet t he
of corporat
ion, acti
ng f or n ad in its beh alf
, m i
ghtmake
corporati
on, or efdend the att
l er aga i
nst any other acti
on properr epr
esentati
ons wi th t he SE C, whi ch has
alr
eady i
nsti
tuted or h wcih may be i nst
it
uted eve n pri
mary nd a su ci
ently broad jurisdi
ct
ion in mat t
ers of
outside of hte p eri
od of ht ree years xed for hte o ces thi
s nat ure, orf orki
w ng ou t a n al sett
lem ent foh te
oft he corporati
on. corporateconcernsClem ent
(
e vs. CA)

Board
of qu
Li
ida
tors vs.
Kal
aw o Accor
ding to at
ty. Ladiathe r
uli
ng of t
he
Supreme C ourt in t he cas
e of emClent
e vs.
CA i s wrong, i ni
op
on is furt
herdi scusse
d
- I
f there is a trustee
, assi
gnee or li
quida
tor
, t
i can
aft
er het Clementease C
con
ti
nue prosecu
ti
ng su
i
t eveneyon
bd the year
3 od
peri
xed by aw
l because
e becom
h es het egal
l ow ner of
the
ri
gh
ts,assets d an
p
roperti
es con
veyedt
o h i
m
Cl
ement
e vs.
CA

Gel
ano vs.
CA - Whoownst
hepr
oper
ties?SOCI
EDAD ANONI
MA

- Theter mination ofthel i

feofaj uri
di calent i
tydoesnot
- Trust
ee as sedui n the corporat
ion statute must be
byitsel
fcauset heext i
nctionordi mi nut i
onoft heright
s
underst
oodi n its general concept hich cou
w l d include
and l i
ab i
li
ties f osuch en ti
ty or h toseof t s
i ownersnd a
the counsel to w hom was entrusted ni the nsti
an t case,
cre
ditors. f I h
te t hreeyear exten dedl if
e has expi red
the prosecuti
on of he t su
it l
edbyt he corp orat
ion. Th e
wit
hout a t r
us tee or receiver having been expr essl
y
purpose in the t ransf
er of heta sset
s of ht e corporati
on
desi
gn ated by t he corporat ion wi t
hin t hat eri
p od, the
to a t rust
ee upon i ts dissol
uti
on i s mor e f or t he
board of di rectors o t rustees its el
f,f ollowing the
prot
ecti
on oft sicredit
ors and stockhol
ders. ebt
D
ors l
ike
rat
ionale of the S uprem e C ourt
s d eci
sion i n Gelano vs.
the petit
ioners hereni may not aket ad vantage he of t
CA may beerm pitted to do so tinucon
e as rust
t
ees by
f
ail
ure of the corporati
on to t ransf
er it
s asset s to a
lega
li mpl i
ca ti
on t o c om pl
ete the li
qu idation. Sti
l
li n the
tru
stee, assuming t ihas n a
y ot ran
t sf er h w
ichpet iti
oner
absencea of BOD or BO T,t hose havi ng any ec pun i
ary
has f ai
led t o show , ni t he rs t place. To sustain
int
eerst i n t he ass ets, i ncludi ng not onl y t he
peti
ti
oners cont
ention woul
d bet o allow them t o en rich
shareholders bu t l ikew i
se t he cr edi t
ors of t he
themselves at t he ex pense of an ot
her
, w hi
ch al l
corporati
on , act i
ng f or n ad i n i ts beh alf
, m ightmake
enl
ightened legalsystems condemn.
properr epres entati
ons wi th t he SE C, whi ch has
pri
mary nd a su ci
entl
y b road jurisdiction in mat t
ers of
- Thecounselwho pr
osecut
ed and def
ended t
hei
nter
est
thi
s nat ur e, or f orki
w ng ou t a n al se tt
lement foh te
of ht
e corporat
ion may eb con
si
dered as a
trust
ee at corporate concerns
l
east ith
w res
pecto tth
e matt
er nil
it
igaton
i on l
y

o therul
i
ng s
i w
ron
g ac
cordi
ng to atty.
La
dia
May acorporati
on t
hat si al
read
y di
ssol
ved,transf
er an
d
assi
gn i
ts assets and propert
i
es to a new corporat
i
on
whi
chwi
llcont
inuethebusi
nessofthedi
ssol
vedone? Accor
dingt
oatt
yLadi
a:Whathappenstoacor
porat
ion
that si al
readydi
ssol
ved, ha
tt has not been ab
le t
o
appoi
nt a ruste
t e with i
n t
he 3year od peri
?
- Yes,pr
ovi
ded al
lthe s
tockhol
der
s gavet
hei
r consent
(Chung a
K Bi
o vs.IAC)

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 69

- a co
rpora
ti
on disso
l
ved whi
chfailedto exe
rci
se ts
i i
gh
rts - Thet
esti
sthe
incor
por
ati
ont
est

gr
anted i
n secti
on 122af ter he
t 3 year peri
od has
el
apsed
, ceasesto exi
st orf ll
aint
ents a
nd purpo
ses,t i
- Gen
eral e:rul
ht
e pl
aceof t
sii
ncorp
orati
on i
rrespecti
ve
cannol ongersue orbe sued
of he
t n
ati
on
ali
ty

- accor
di
ng to 2
12ofthe cod
e,the p
ropert
y sh
oul
d be
esch
eated,
acco
rdi
ngl
y: - Excepti
on: con
t
rol testwould appl
y ni det
erm
ini
ng the
corporate
nati
on al
i
ty, i.
e., the citi
zensh
i
p of t he
con
t
rol
l
ing st
ockhol
dersdetermi
nes the nati
on
ali
ty of
Secti
on 12 2.
Corporat
e il
qui
dat
ion
. - ver
Ey the rpo
co rati
on
corporati
on whose art
cher expi
res by i
ts own li
mit
ati
on
or i
s an
null
ed by f orf
ei
ture or otherw
ise, orhosew
corporatest
enceexi
or
f other urposes
p is ter
minate
d in I
f a orei
f gn corporati
on wan
ts to t
ran
sact si
bu
nessn i
an
y other annm
er
, sha
ll nevert
hel
ess beconti
nuedas a t
he P
hil
ipp
ines,
what u
mstit do
?

bodycorpor
ateforthree(
3)yearsaftertheti
mewhen i t
would have been so di
ssol
ved, for the purpose of - Obtai
n a i
l
cen
se
prosecut
i
ng an d defendi
ng suits by or agai nst ti and
enabl
ing it ot set
tle and closei ts aairs,to disposeof
and conveyt si p
ropert
y and to di sri
tbu
te its asset
s, but How may tido so?
notfor hte purpose ofnu conti
ing theusi b
nessor f h
wi
ch
i
t was establ
ished.
- Accor
dingt
osec.125:

Atany t imedur i
ng saidthr ee (3)years,the
Sect
ion 12 5.Appli
cati
onfora license. -A
corporat
i
on is au t
horized d anem pow ee rd to con vey l al
f
orei
gn corporati
on ap plynig for a l i
cense to transact
oft sipropert
y to trustees or the ben
fe t of st
ockholders,
busi
ness in the Phil
ippines shall submi t to the
mem bers,credit
ors, and other person s n ii nt
erest. From
Securi
ti
es and Exchan ge o Cmmiss
ion a copy of t
s i
and aft
er anych su
conveyance by t
he corporation ofi ts
art
icl
es of incorporat
ion an d by- l
aw s, certi
ed i n
prop
erty in t ru st orf the ben et fot is stockholders,
accorda
nce iw
th law, and their ransl
t ati on to anoci al
mem bers, edit
cr
orsan d othersn ii nterest
, al l nit
erest
l
anguage of ht
e Phil
ippines, f necessa
i ry. The appli
cati
on
whic
ht he corporati
on had i
nt he proper t
yt erminates,
shal
l be under t oa
h an d, nuless r al st
eady ated in it
s
the l
egal nterest
i vest s ni the t
ru stees,dan the ben e
ci
al
arti
cl
es of nco
irporati
on , shall sp
ecical
ly setorthf the
i
nterestin the st ock
holders,mem bers, credi
tors or her
ot
f
oll
owing:
person
s n iinterest.

1. Th
e da
t
e an
d t
ermofi
ncorporati
on;
Upont he w i
nding u p oft
he cor
porat
e aai
rs
,
any as set di stri
but abl
e to any cr edi
tor or
stockhol
der orm ember who s i unkn
ow
n orcannot e b 2. he
T add ress
, ncl
i udi
ng t
he st
reet mber
nu , ofhe
t
found shal
l be esche ated toe th c
ity or un
mi
cipal
i
ty pri
nci
pal oce ofhetcorpo
rat
ioni
n t
he cou
nt
ry orate
st
ofinco
rpora
ti
on;
wheresuch assetsarel ocated.

3. The nam e and address of ts

i resi
dent agent
Exce
pt by decr
ease of t al
capi
t
ock
s and as
aut
hori
zedota ccept
summons an
d process n al
lil
egal
otherwi
se la
lowed by t
his Code, nocorporat
ion sha l
l
proceedi
ngs nad, pend
ing t
he est
abl
ishment of ocal
a l
disri
tbute any of ts
i asset
s or propert
y except ponu
oce,all noti
cesecti
a ng therpoco
rat
i
on;
l
aw f
ul dissol
uti
on and af
ter pay
ment ofal
lit
s d ebt
s an d
l
iabil
iti
es.77a
(, 89
a, 16
a)
4. Th
e pl
acei
n t
he Ph
il
ipp
ines where
the corpor
at
i
on
i
nten
ds to erate;
op
FOR
EIGN COR
PORATI
ONS

5. Th e speci
c purpose or pur pos
es which the
Den
i
ti
on
corporati
on i
nten
ds to pu rsue i
n t he tr
ansacti
on of ts
i
busi
nessint
hePhil
ippi
nes:Provi
ded,Thatsai
dpurpose
- Sect
ion 123.
Deni
ti
on and ri
ght
s of for
ei
gn or pu rpose
s ar e thosespec ical
ly stat
ed in t he
corporations.
- Fo
r hte purposes
ofthi
s C
ode,a f
orei
gn cer
ti
cate of authori
ty i ssued by the app r
opri
at
e

corporati
on i s on e orm
f ed, gan or i
zed ro exi st
i
ng under gov
er
nment agency;
any awl s other ht an those of t
he Ph il
ippines an
d whose
l
aw s al l
ow Fi l
ipino citizens and corporat i
ons to do 6. The
names an
d add
r
esses of
hetpre
sentr
ect
di
or
s
businessi nitsown c ountry orstate.Itshallhavethe an
d o
cersoft
he corporat
i
on;
ri
ght o t t ransactusi b
nessi n t he Ph il
ippi
nes aft
er ti
shal
l have btai o ned a l icense toan tr
sact si bu
nessin
thi
s co untry in ac cordance with this Codeand a 7. Astatem
en
t ofi
ts authori
zedcapit
alst
ockan d t
he
cert
icate of aut
hority rom
f t
he ap prop
riate gover
nment aggr
egat
e number of
share
s whi
ch t
he cor
porat
ion has
agency. (n) au
thori
t
y to i
ssue,temi
zedby classes, val
par
ue of
sh
ares,sh
aresithou
w t pa
r val
ue,and seri
es,
if an
y;

Whati
fthe l
aw oft
he stat
e oft
he f
orei
gn corporat
ion
doesnot lal
ow Fi
li
pino cit
izen
s to od b usinessn ithei
r 8. Astatem ent of i
ts outstandi
ng capi
t
alstockan
d the
cou
ntr
y? aggregat
e n umber of share
s w hi
ch the cor
porat
i
on has
i
ssued,t em
iizedby cl asses, val par
ue of sha
res,
shares
wit
houtparvalue,andseri
es,ifany;
- Thephr aseand whoselawsallow Fil
ipi
noc i
ti
zensand
corporations ot do businessn i it
s ow n cou ntry orate
st
i
s not , however
, anaccu rat
e n icl
usion i n the den
i
ti
on 9.A st
atem
ent oft
he am
ount actua
l
ly pa
i
d n
i; an
d
as y a corp
orati
on regst
iered or i organ
zed nder
u the
l
aws
of n aot
her statei s necessarily a f orei
gn corporati
on 10. Su
ch ddaiti
onali nformai
t
on as m ay beecess
n ary or
whe t
her or not t he s
tate of it
si ncorporati
on all
ow appropri
ate in or dert o enable the Secu
ri
ti
es and
Fil
ipino c i
tizen
s or rpo co
rati
on s to do busi
nessn ithat Exchange Com missi
on t o det
ermine whe
thersuch
f
orum. corp
orati
on is ent
itl
ed t o a l
icen
se toan tr
sac
t busi
ness
i
n the Phil
ippi
nes, an d to d
etermi
ne an
d assess eesthe f
- Thesai
d phr
asewasinser
ted bythefr
ame
rsofthel
aw payable.
onl
y as acondit
ion preceden
t ot the
grant of
a li
cen
se f
o
a orei
f gncorporati
onto do b usi
nessn i
thehiP
li
ppines. Att
ached tothe appli
cati
on f
orlicense shal
l
be a dul
y execut
ed certi
cate under oath by t he
Composed 10of
0% Ameri
cans;
or
gani
ze
d u
ndert
he aw
ls aut
hori
zedoci al orci oals of hte jurisdi
ction of t
si
ot
her ht
an t
he Phi
li
ppi
nes i
ncorp
orati
on
, attest
i
ng to t he act
f tha
t hte aw
ls o fthe
cou
ntry ro stat
e of ht
e a pplicant al
l
ow Fi l
ipino ci
ti
zens
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 70

and corporat
ions to dobusi
nessther
eni
, and that hte addi
tional securi
ti
esequ ival
ent ni act
ual a mrketue val
appl
ican
t si anexisti
ng co
rpo
rati
on i
n good standi
ng. fI to two ( 2%) per cent of hetamount by which the
such cert
i
cat
e i s i
n a forei
gn l
anguage, t a
ransl
ati
on l
icensee'
s gross ncom
ie ofr that scal ear
y exceed
s ve
t
hereofin Engli
sh under toa
h of ht
e tran
slator l sha
l be mil
li
on ( P5,000,000.00)pesos. The Secu ri
ti
es an d
att
achedtheret
o. Exchange Com missi
on shall also requi
re deposit of
addi
tional securi
ti
es if hte actual amrketue valof hte
securi
ti
es on deposi
t has decreasedbyat east
l ent (10%)
The appli
cat
ion for a license to transact
perce
nt ofhei t
r actual a mrke
t val
ue at h te ti
me t hey
business i n t he Phili
ppines s hall likewi
se be
were deposited. The Secur i
ti
es and Exc hange
accom panied by a em stat
ent der
un oat
h of the presi
dent
Commi ssi
on may at t si di
scret
ion rel
easeart p of
the
or an y ot herper sonau thori
ze
d by t he cor porat
i
on,
addi
tional securit
ies deposi
ted with it if the gross
show i
ng t o t he satisf
acti
on of t he Secu ri
ties an d
i
ncom e of hte l i
censee has decre
ased, f orhe
tiact ual
Exchan ge om C miss
ion andot her ve go
rnm ent
alage ncy
marketue valof ht e tot
al securi
t
ies on dep osit has
i
n t he p roper casesthat hte app l
icant si sol
vent dan i
n
i
ncreased, by m oreha t
n ten( 10%) perce
nt of t
he actual
sound n an ci
al cond
it
ion, and set ti
ng o frt
h the a sset
s
and l iabili
ti
es of hte corporation as of ht e da t
e not market value ofhe t securi
ti
es t a hte ti
me they were
deposited. The Securi
ti
es an d Exchan ge o Cmmissi
on
exceeding on e 1)
( yearmmedi
iately p ri
or ott he l
ing of
may, fromt ime to me,tial l
ow t he ilcen
see tobsti su
tut
e
thepp a
li
ca ti
on.
other securiti
es or
f those l a
ready on deposi
t as long as
the l
icensee is so
lvent.Such l i
censee sh
all be entitl
edt o
Foreign ban king,na ncial and i nsurance coll
ectt he i nter
estor di vden
i ds on t he securiti
es
cor
por ati
ons shal l
, i n additi
on t o the abov e deposited. nI t he ev entt he l icensee ceases t o do
require
ments, pl com
y wi t
h t he provisi
ons of exi
st
i
ng businessint hePhil
ippi
nes,t hesecurit
iesdeposit
ed as
l
aw s a ppli
cable to them .I n t he case f oal
l otherorei
gn
f af
or esai
d shal l be r et
urned, upon t he l i
censee'
s
corporati
ons, o n ap pl
i
cation f or li
cense to t ransa
ct applicati
on theref
or and uponproof to the sati
sf
acti
on of
business int he Phi
li
ppines s hallbe accept
ed by t
he the Sec uriti
es and Exc hange Commi ss
i
on t hatt he
Securit
ies an d Exchan ge omC mi ssion wit
hout previ
ous l
icensee has no l iabil
it
y t o Ph i
li
ppi
ne r esi
dents,
authority f r
om t he app r
opriate gov er
nmentagency, i
nclud i
ng t he Govenrment of the Republi
c of he t
whenev errequir
edbyl aw.(68a) Phili
ppines.n)(

I
s there
nydep
a osi
t or secu
ri
t
y requ
i
remen
t? Other than sect
ion 125 and 126. hat
W he
otr
requi
rement
s are set nd
er
u hi
Pl
ippi
ne Law bef
or
e a
f
oregn
i corporat
ion may tran
sact sibu
nessin the
- Yes,within 60 daysaftertheissuanceoft helicense,a
Phi
li
ppines
forei
gn corporati on, except setho
engaged i
n f orei
gn
banking ori nsurance,shalldepositwitht he SEC,for
the ben et of credit
ors, securi
ti
es co nsi
st
ing of bondsor - Yes. A Res i
dent agent isr equired. As a c ondi
ti
on
other evi dence of i nd ebt
edness of t he Ph il
ippi
ne precedent ot the grant of li
cense
a to do or ransact
t
governmen t or t si p
oli
ti
cal subdivi
sion, or of govern
men t business i
nt he Phi
li
ppines,t he f
oreign cor
porati
on is
owned or contr ol
led corporati
on, sha res of ockst i n requir
ed t o desi gnate i
ts r esident a gent on whom
regst
iered en terprises as t
his ter m is d ened in R.A. sum monsandot heregal
l proc ess es m ay be serv
ed nial
l
5186, sha res of st
ocknidom esti
c nisuran ce compa
nies acti
ons orega ll proceed
ings gai
anstsu ch orp
c orati
on
and ban ks or yan com
binati
on t hereofwi th an actual
market value of 100,000
- Sect
ion 12
8 p
rovi
des:

- Addi
tionalsecur
iti
esma yberequi
red bytheSEC i
fthe
Secti
on 128 .Resi
dent agent; servi
ce of
act
ual a mrket alue
v of hte securi
ti
es on deposi
t h
as
proc
ess. - The Securi
t
ies and Exchange oCm mi
ssion
decr
eased by at easlt 10% . Section 126of het code
shall requi
re as cona di
tion preceden
t o
t the i
ssuance of
provi
des:
the ilcen
se toan tr
sact si bu
nessn ithe Phil
ippi
nes y b
any orei
f gn corporati
on that such corporati
on le w i
th
Sect
ion 126.
I
ssuanceof al i - If
cense. he t the Securiti
es and Exc han
ge Com miss
ion a wr i
tten
Secu
ri
t
ies an
d Exchange o Cmmissi
on is sati
sed tha t power of att
orney gnati
desingsom e personwhomustbe
t
he appl
i
cant has com
pli
ed iwth al
lthe erqui
remen t
s of a r es
ident of the Phi
li
ppines, on whom anysum mons
t
his C
ode and ot
her speci
allaws,rul
es and regul
ations, and other egal
l processes ay e bm served
n alliacti
ons or
t
he Commissi
on sh
alli
ssu e alicen
se ot theappli
cant ot other egal
l proceedings against usch corporati
on, and

t
ransact busi
nessn i t
he P hil
ippi
nes or
f the urpose
p or consent
ing tha
t servi
ce pon
u such resi
dent agent al
lsh
purposes edspeci
i
n su chl i
cense. Uponissuance oft he beadmi t
tedandhel
dasv al
idasifser
veduponthedul
y
l
icense,suchf or
egn
i cor porat
ion may com mence to authori
zed ocers t of
he orei
f gncorporati
onat ts
i home
t
ransactbu si
nessn ithe Ph i
lipp
ines and cont
i nue o t do oce. ny A suchf oregn
i cor porat
ion shal
l il
kewi
se
so f
or s al on
g as i t erai
tns its authori
ty t o act as a execut
e and l e wi t
h t he Securi
ties nd
a Exchange
corporati
on under the l
aws o fthe country or state ofi ts Commi ssi
on an agreem ent ori pust
lat
ion, exe
cut
ed by
i
ncor
porati
on, un less such li
cense i s sooner the propert hori
auti
es f osaid corporati
on
,in formand
surr
ender
ed, r ev
oked, suspended or annul led i n substance as ol
l
ow
fs:
accorda
nce iw
th t
his C ode or hoter speci
alaw ls.

"
Th e ( name of or fegn
i corporat i
on)does
Withins ixt
y( 60)days af terthe issuanc e of hereby sti
pulate d anagree,i
n consi
derati
on of t si b
eing
the cenli
se toan tr
sactusi bnessn i the P hil
ippines, he t gran
ted by t
he ecuri
S t i
es and Exchan
ge omC mission a
l
ice
nse,ex cept f oregn
i banki ng or i nsurance l
icenset o transact usi
b
ness i
n the Phil
ippines,hatt fi at
corporat
ion, sh all d eposit wi th t he Securi ties an d any t i
me sai d cor porat
i
on shall cease to tr
an sact
Exchange o Cm mi ssi
on f or het benet pr of
esent and busi
ness int he Phil
ippi
nes,or shal
lbe withoutany
f
uture cr editorsof the li
cen seei n t he Ph i
li
ppines, res
identage nt i n t he Phi l
ippi
nes on whom any
securi
ti
es satisfactory t hto
e Secu ri
ti
es an d Exch ange summonsor ot heregal
l processes may be ser
ved, then
Commi ssi
on, consi st
ing of bon ds or ot herevi dence of i
n an y a ct
ion or proceedi
ng a ri
si
ng out of an
y b usi
ness
i
ndebtedness of he tGovernm ent of the P hili
pp i
nes, i
ts or ran
t sacti
on whichoccu rredin thehi P
lippines, ce servi
pol
it
icalsu bd ivi
sions an d i nstrumen t
alit
ies, ro of ofany sum mons orher oteg l
alproc
es may be made
gov
ernment -owned or cont rolled cor porations and
ent
iti
es, ares
sh of ock st i n " regi
st
ered enterprises" as upon
su the
ch serce Securi
vi ti
sh
ales
lhand E
ave hxchan
e ge
t sam eCom
f mi
essi
orc on
a
n an
d h
d e
ecttas
atfi
thi
s etrmi s de ned niRepu bli
c A ctNo.51 86 , shares of made upon the dul y-
aut hor
ized ocers of het
st
ocki n do mest i
c corporations re gst
iered in t he stock corporati
onatits ho
me o ce.
"
exc
ha nge, or shares of ockst i n dom est
ic i nsurance
companies an d ban ks,or any combniation oft hese
Wheneversuch ser
viceofsummonsorot her
ki
nds of ecu s ri
ties, with an actua l marketue valo
f at
proc
es shall be made upont he Sec uri
ti
es and
l
east one hu ndred t housand (
P100, 000.) pes os;
Exchan
ge Commi ss
i
on, he t Com miss
ion shal
l, w i
thi
n
Provi
ded, how ever, That i w
thin si x (
6) o mnths a ft
er each
ten(10
) days thereaf
t
er,t ransmi
t by aiml a copy of such
scal year t of
he ilcensee, the S ecurit
ies an d Exch ange
summons or hot
er egal
l process o the
t corp
orat
ion at t
si
Commi ssi
on shal l require t he l i
censee t
o deposi t
home or pri
nci
pal oce. Th e sendi
ng ofsuch copy by
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 71

the Commissi
on shal
l be necess
ary art
p ofandshal l - i
fthey od so,
the responsi
bl
e ocer
s may eb subj
ect
ed
compele
t such ser
vi
ce.Al
l xepensesncurre
i d by t he t
o th
e penal sancti
on
s p
rovi
dedf
or nisect
i
on 14
4 ofthe
Commi ssi
onf
or suchser
vi
ce sha
l
l be ai
pd ni ad
vance by code,
whi
ch may tei
her been
ormpri
i sonm
ent
the part
y at hose
w nst
i
ance ht
e servi
ce si m
ade.

Whati
fiti
snotdoi
ngbusi
nesswi
thoutal
icense?
I
n case of a nge
chaof
address t h
of
e resi
dent
ag
en t,i
t shallbe hi
s ort si d
uty otmmed
i i
atel
y n
oti
f
y ni
- If tisi n
ot ran
t sacti
ng busi
ness i
n the Phi
lippines, even
wri
ti
ngtheSecuri
ti
esandExchangeCommissi
on ofthe
wit
hout a l
icense, i
t can sue bef
orethe Phil
ippi
ne
new address
.(72a;and n)
Courts

- Thenecessi
tyoft
heappoi
ntmentofa r
esi
dentagentis
The gener
alrul
eisthati
tisnotthe l
ack ofr
equi
red
onl
y ofr het purpose r of
ece
ivi
ng sum monsan d other
l
icen
se bu t do
ing busi
ness i
twou
h ta i l
cense whi
ch ars
b
l
egal processesn an
yiegal
l acti
on or proce
eding agai
nst
the
forei
gncorp
orati
on a orei
f gn corp
orati
onf
ormacces
s o
t ou
r cou
rt
s.

Excepti
on
:
Whoma
ybeappoi
ntedasar
esi
dentagent
?

1. Fore
i
gn corporat
i
onscansuebef ore thehi l
P
ipp
ine
- Sect
ion12
7 p
rovi
des tha
t:
Courts i
f hte act or t
ransacti
on i nvol
vedis an
i
sol
ated tran
sacti
on ort he corporation i
s not
Secti
on 127 .
Who m
aybe ar esi
dent -.
agent seeki
ng to en
force any l
egal or nt
ract
co
ual gh
ri
ts
Aresidentagentma ybeeit
herani ndivi
dualresidi
ngi
n ari
si
ng rom
f , or growi
ng out of, any busi
ness hw
ich
t
he Ph i
li
ppi
nes or a dom esti
c corpor ati
on lawf
ull
y i
t has tr
ansactedin the Phi
li
ppines
t
ransa ct
ing businessn ithe P hi
li
ppines: Provi
ded
, That
i
n t he case an ofindi
vdu
i al
, he mustbe f ogoodmoral
2. Neit
heri s a li
censerequi
red bef
or
e a for
egn
i
character an
d ofsou nd nancialstan di
ng.(n)
corpor
ati
on may suebef ore the f
orum if h
te
purpose of ht
e su i
t s
i t
o protecttsitradem
ark,
May a art
pner
shi
p be pp
aoint
ed s
a a resi
den
t agent? tr
ade nam e, corpor
at
e nam e, eput
r ati
on or
goodwi
ll
;

- Yes,dome
sti
ccor
por
ati
on t
aken i
nit
sgener
alsensenot
lega
l sen
se 3. Or w
heretii
s based
on a vi
ol
ati
on oft
he Rev
i
sed
Penal
Code;

I
fther
e s
i a res
i
den
t agent oi
app
nted.
May su
mmon
s be
served
o an
t
y o
cers
ofthe corporati
on? 4. Or m
erey
l def
end
inga su
i
t l
ed agai
nst
it

- No, fi h
ter
e is a resi
den
t agent, he desi
t gna t
ion i
s 5. Or wher
e a part
y i
s s
toppe
d to chal
l
eng
e the
excl
usi
ve and ser
vi
ce mustbe made on
ly tohet re
si
den
t person
al
i
ty of ht
e corporati
on by en
teri
ng i
nto a
agentor se
el the ser
vi
ce i
s wit
hout or
fce and eect con
tr
ac
t wi
th t.
i
unl
ess ade
m oth i
m
Rul
es ai
l
d d
own by he
t SC
- Thus,whi
let
hel
aw al
lowsservi
ceupont
heSEC orany
ofit
s o cers or t s
agen
w
ithi
n thehiP
l
ippines

A. As t
o whet
her or B. As ot whe
the
r o
r
- Thet
womodesmaybecomeeect
iveonl
yift
hefor
eign
notit cansue noti
t canbe su
ed
corporat
i
on fai
l
ed or neglect
ed to desi
gnat
e su ch a
per
son or an
genta
A f
oreign cor porat
ion A foreign cor
por
ation
tr
ans acti
ng or doi
ngtran
sact i
ng bu si
nessi n t he
- Summons umstbe m ade only ot resi
dent ent
agex
cept
business int he Phi l
ippi
nes Phil
ippineswi t
h the requ i
sit
e
whent
her
eisnoresi
dentagentappoi
nted
with alicensecan suebef or
e li
censecanbe sued i
n t he
Phil
ippine Cou rt
s Phil
ippine Courts
- Wheresuchforei
gn corpor
ation actuall
ydoingbusiness
hereas h not app l
ied for al icense o do
t an d has not
Subject to cer
tai
n A foreign corpor
ation
desi
gnat
edanagent o rece
t ive su mmon s,thenser vi
ce of
excepi
tons, a foregn
i tr
ansact i
ng bu si
nessi n the
summonson i t wil
l be m ade up r
suan tto the prov
isi
ons
cor
poration doi
ng busi
nessPhil
ippineswi t
hou t al icense
of ht
e rulesof cou rt
.I f such forei
gn corporati
on has a
i
n t he count
ry wi
thouta canbe suedi n Ph i
lippi
ne
l
icense to bu do
siness, hen t sum monst o it w i
ll be
l
icense ca nnot sue i nCourts
served t h
on
e agen t desi
gnated by i
tf or ht
e p urpose,
or
Phil
ippi
ne Court
s
ot
herwise i
n acc ordance wi th t he Cor por
ati
on Law
Gener
( al Cor porat
ion of t he Ph il
ippi
nes vs. ni U
on
I
nsur
ance oc.
S Of Can tonLt
)d. If it i s not t ransact
ingi
f tisi not oidng busi
nessin
busi
ness i
nt he Phil
ippi
nes, the Phil
ipp
ines,t icannot eb
even wi
thout a i cen
l se,t i can
suedi
n Ph il
ippine Cou
rts or
f
I
f h te f or
egn
i corporat
i
on cond
uct
s busi
nessin t he
sue before t he Ph i
lipp
inel
ackofurijsdicti
on
Phi
li
pp ines iw
thou
t h
te i
lcen
se requ
i
remen
t. What si the
Court
s
eect?
A forei
gn c or
porati
on not doi
ng busi ness i
n the
Phi
li
pp i
nes, may tibesu ed?
- Sect
ion13
3 p
rovi
des:

- Ifit s
i n ot ran
tsacti
ng b usi
nessn i
the u
co
nt
ry tican
not
Sect i
on 133. Doi
ng busi nesswi t
hout a besuedforlackofj
uri
sdict
ion
l
icense
. -No orei
f gn corp orati
on t
ransacti
ng b usinessn i
t
he Ph il
ippines without al icen
se, or t
s su
iccessors r o
I
s ther
e an
y san
ct
i
on that can
be enf
orc
ed t
o fore
i
gn
assi
gns,sh all be perm it
ted to maintain or ni t
ervene in
cor
porat
i
onswhich ar
e doi
ng bu
sinesswi
thout h
te
any ac ti
on,sui t or pr oceedn
ig i n any co urtor
requ
i
redicen
lse?
admini
strati
ve agency of the Phi
li
ppines; t busuch
cor
porati
on may be sued or proce
eded agai
nst befor
e
Phi
lipp
ine cou rts or adm inist
rat
i
ve t ri
bunal
s on an y - Pen
alsan
ct
i
ons u
nder se
ct
i
on14
4
val
idcauseofac tion r
ecogniz
ed underPhili
ppinel aws.
(
69a)
- Any vi
olati
on of t
he code i
ssubj
ect t
o suc
h penal
san
cti
on s

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 72

Whatwoul
dconst
itut
edoi
ngbusi
ness? transacti
on
,i sol
ated ro ot
herwise, but du e o
t a m ist
aken
bel
iefthatt
heywerepartoftheshi
pme ntoffor
tysi
milar
bundles consi
gned t
o per sons or ent i
ti
es in the
- Thet ruet est
,howev er,seemst obewhe t
hert hef orei
gn
Phi
lippines,t hereis no j usti
ca t
ion t here
fore,orf
corporati
on i s con t
inuing the b odyor su bst
an ce f ohte
i
nvok i
ng the secti
on
business or ent erprisefor whichitwas or ganized or
whetheri thassubs tanti
allyreti
redfr
om itandt urnedi t
over t o an other. Th e t er
m i mpl i
es a cont i
nu i
ty of Ther
e wer e 3 cont
ract
s entered i
nto,how come t
hey
commer cial de al
ings and ar r
ang ement s, and weres ti
llnot consi
dered as doi
ng busi Ant
ness? ( am
contem pl
ates, to tha t xeetnt
,t he p erf
orman ce of s act
or Consol
idted
,I nc.vs. ) CA
worksort hee xerciseofsomeoft hefunctionsnor mal l
y
inci
den t t o, an d i n progr essi
ve prosec ution of , the
- Every se
ca sh
al
l be j
udged i
n the l
igh
t oftsi p
ecu
li
ar
purpose an d ob ject of its organ
i Ment
zatonhol
i (at um Co.
ci
rcum
stan
ces
, wherea si ngl
e actor transact
i
on
Inc.vs. Man ga li
man)
however
,is n
otmerel
y ni
ciden
tal
or casu
albutindicat
es
theoreifgn corporati
on
s nit
ent
ion t
o d
o oth
er bu
si
ness
Ment
hol
at
um vs
. Mangal
i
man i
n t he Ph i
lippi
nes, said singl
e actor tr
ansact
i
on
const
it
ut es doi
ng or engagi
ng in o
r
transa
ct
ing
busi
nessi nt
hePhi li
ppi
nes
- Thet ruet est
,howev er,seemst obewhe t
hert hef orei
gn
corporati
on i s con t
inuing the b odyor su bst
an ce f ohte
business or ent erprisefor whichitwas or ganized or - I
n the ca se t a bar,the transacti
on entered ntoi b
y the
whetheri thassubs tanti
allyreti
redfr
om itandt urnedi t r
espondent w i
th t he petit
ioner
s are ot n aser i
es of
over t o an other. Th e t er
m i mpl i
es a cont i
nu i
ty of com
mer cal
i deal
i
ngs h wichsigni
fy a
n intent on t
hepa rt
commer cial de al
ings and ar r
ang ement s, and of ht
e respondent ot do bu si
nessn ithe P
hil
ippines ubt
contem pl
ates, to tha t xeetnt
,t he p erf
orman ce of s act
or con
sti
tute ani solated eon whi
chdo es ot
n alf
l under the
worksort hee xerciseofsomeoft hefunctionsnor mal l
y category f doi
n
og business.

inci
den t t o, an d i n progr essi
ve prosec ution of , the
purpose n a
d ob ject of it
s organizati
on - The r ecords show t hat the only reason why t he
respondent enter
ed i nt
o t he se cond and t hird
- Whatevertransact
ion t
hePhi
lippi
ne-Ameri
can DrugCo. transacti
on s wi
th t he p et
it
ioner as
w ecau
b se ti w anted
had executed n i vi
ew oft he law,the Ment hol
at
um Co. to recover l oss
the i
t sustai
ned fromt he ai
flure of het
di
d it t i
self
. And t he MentholatumCo. bei ng a f
orei
gn peti
ti
on erso tdel iver the cru
de cocon ut oil undert he
corporat
i
on doi ng bu si
nessin t he Phil
ipp
ines wi
thout rst ransa
t ct
ion an d in order o gi
tve the l
atter a chance
t
he l i
cense requi
red by secti
on 68 of ht e Corporat
i
on to makegood on t hei
r ob l
igat
i
on. r om
F t
hese f
acts
Law, ti m ay not prosecut
e t his act
i
on f or ol
vi
ati
on of alone,i t can be ded uct
ed that nire ail
ty there wason l
y
t
rade mark d anunfai
r com
petit
ion one agr eement bet ween t he pet it
ioner
s and t he
respondent.

Why i
sfor
eign corporat
ions bar
r ed accessfr
om our
cou
rt
s fithey o d busi
ness i th
wouta i l
cen
se? - Thethreeseemi
nglydi
erenttr
ansacti
onswereentered
i
nto by the parti
es n o
ly i
n an e orto tf
ulll hte ba
sic
agr
eem ent andin no way ndii
cate ani nte
nt on t
hepart
- Marshal
l
-Wel
l
s C
o.vs.
Henry.W
Elser
and C
o. of het r espondent t
o eng age i n a co ntinuit
y of
tran
sacti
on
s withpet i
ti
on ers hw
ich wil
l cat
egori
ze ti as
Marshal
l
-Wel
l
s C
o.vs.
Henry.W
Elser
and C
o. a orei
f gn corporati
ondoi ng busi
nessn i thehi P
li
ppines

- 3 contr
act
s,but accor
di
ng tohe
t cou
rtwas ot
n doi
ng
- The object ofthe stat
ute was to subjectthe for
eign
corporat
ion doi ng bu si
nessi n t he Ph i
li
pp i
nes to the busi
nessi
nthePhi
li
ppi
nes
juri
sdi
ction ofit
scour t
s.Theobjectoft hes t
atutewas
not ot p revent the forei
gn corporation fromperf ormi
ng Fa
r E
astnt
I
limpo
rtvs.
Nan
kai Kogyoo.
CLtd.
singl
e acts, but ot prevent t rom
f i acqu iri
ng a domici
le
f
or h te p urpose of si
ness
bu i t
whout ak
ting t he st
eps
necessa
ry ot ren der tiamen abl
e o t suitin local cou
rt
s. - Onl
y one contr
act, bu
t accor
ding o
t h
te Su
prem
e C
ourt
wasdoi
ngbusi
nessi
nthePhi
li
ppi
nes

Bul
akhi
dasvs.
Navarr
o - Every se ca sh
al
l be judged in t
he l
ight oft si pecu
li
ar
ci
rcum st
an ces
, w herea si ngl
e actor t ransact
i
on
- It s
i settl
edtha t f
ia forei
gn co
rporati
on i s not en
gaged
in however
,i s notmerel y ni
cidentalor casu
albu tindicat
es
busi
ness i
nt he Phi
li
ppi
nes,itmay notbe denied t
he theoreifgn corporati
on
s niten
tion t
o d
o other bu si
ness
ri
ght ot le an acti
on in Phi
li
ppine courts for sol
iated i
n t he Ph il
ippi
nes, said si ngl
e actor t ran
sacti
on
tran
sacti
ons const
it
ut es doi
ng or engagi
ng in or t
ransact
ing
busi
nessi nthePhili
ppi
nes
- Theobj ectofsecti
on 68 and 69 oftheCor porat
ion law
was not t o prevent t
he f or
eign c orporat
ion f r
om - In t he i nst
an t case , thet es
t
imony of t At
y . Pablo
perf
orm ing singl
e acts, bu t ot prevent t rom
f i acqu i
ring Ocam po, hatt app
el
lant as w doing bu si
ness i
n t he
a dom i
cil
e ofr h t
e purpose of si
ness
bu i tw
ho ut ak
ting Phi
lippines corr
oboratedbyno e lsshant Nab uo Toshida,
the stepsnecessary en
der
to t riamenable o t suit nithe oneof appel lant
s ocer s, hat
t he was sento t the
l
ocal cou rt
s.I t was ever
n hetp urpo se of he tLegi
sl
ature Phi
lippinest o looki nto t he operat
i
on of i mnes,hereby
t
to exc lude a f oregn
i cor porati
on whi ch ha ppenst o reveal
ing the d efen
da nt
s d esi
re ot cont
inue engaging ni
obtai
n an i sol
ated or der f or bu si
nessf r
om t he businesshere,afterrecei
vingt heshi
pme ntofthescrap
Phil
ippines,rom f secu ring redress n t he
i Ph i
li
ppine i
ron nderu con
siderati
on , making thehi l
i
Ppp
ines a aseb
courts thereof
.

- I
n sucha case,
t
he si
ngl
e act ofransact
t i
on is not
TheSwedi
shEas
tAsi
aCo.
,Lt
d.Vs.Mani
laPor
tSer
vice
mer
ey
linci
den
t
al or casu
al, bu
t s
i of ch
sucharact
er as
di
si
tnct
ly to i
ndicat
e a purpose
on t
he pa
rt of
het
- I
t m ust ated
st t
thah
te secti
on is n ot ap
pl
icab
le to a op
erat
ions f
or the con
duct of pa
art of
corporati
on
s
f
orei
gn corporati
on pe rf
orming singl
e actsr oisol
ated ordi
nary sibu
ness
t
ransact
ions.
There i s nothing t o showt hatt he
pet
i
ti
oner has beeni n t he Ph il
ippi
nesengaged i
n
I
f a corpor
at
i
on appoi
nt
s a dis
tri
but
or or a
cont
i
nu i
ng bu si
ness or enter
prise for whi
ch it was
org
ani
zed, whent he sixteenbu ndles er
we erron
eously represen
tat
i
ve, il
lwi
t n
ecessa
ri
l
y i
mply oi
dg bu
n siness
i
n the n
cou
try?
di
sc
ha r
gedi n man il
a, orf i t tobe consi der
ed as
t
ransacti
ng busi
nessn i the Phil
ippines. e act
Th
f s itha
t
t
he bun de
ls, t
he v alue of h wc
ih is sought to be
r
ecove
red, erwe a
ln dednot as r aesul
t ofa bu si
ness
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 73

- I
ft he f
ore
ign corporat
i
on mai
ntai
ned an i
ndepend
ent competi
t
ion, oral se
f designati
on of ori
gi
n an d f
alse
st
atus du
ri
ng the st
exi
ence of
the di
sp
uted co
nt
ract. descri
pti
on, w
het
her orot nti ha
s beenlicensedto do
busi
ness in the Phi
li
ppi
nes under Act Numbered
- Appoint
mentofa dis
tributor or r
epr
esent
ativ
ei nt
he Fourt
een unhdred dan
ft
y-ni
ne,as am end
ed, ot
herwi
se
Phi
lippi
nes, unl
ess it has an i ndependent st
at
us known as Cor porat
i
on Law, at the time it bri
ngs
(
transactsan
d does si bu
nessn it i
s own n ame and or
f ts
i compaln
it.
account an
d not ofthe orei
f gncorporation)

Pu
ma Sporsc
huf
abri
kenRudol
f Dassl
er
, K.
G. v
s. AC
I
- i
ft hat be the se ca
ht
e m er
e ap
po
int
men
t ofa d
ist
ri
but
or
and I
M
L-ORO MFG.Cor
p.
wil
lnotcons
tit
utedoi
ngbusi
ness

- Tr
eat
iesf
orpar
toft
hel
aw oft
hel
and
How do you
know i
fit ha
s ani
ndepend
entt
at
sus?

- Quoti
ng t he Pari
s Convent
i
on and t he case of i
ty
Van
- Communi
cat
i
ons at
Mei
ral
s and
Desi
gnvs.
CA Fai
r M i
ll
s Inc. T.vs.
aton
E Co. hi
t
s co
urtfurt
her sai
d:

Communi
cat
i
ons at
Mei
ral
s and
Desi
gnvs.
CA By the sam
e token, he pet
tit
ioner should be
givent he same treatmentnit he Phi
lippines
as e w make avail
able ot our own ci
ti
zens. We
- A perusaloftheagreeme nt
sbe t
ween pet
iti
onerASPAC
arebl o
iged t
o a ssure ot n
ati
onals of countri
es
and t he respondents showt hat there are provisi
ons
of het Union an e ect
ive rp
otect
ion against
which arehi
ghlyres
trict
iveinnatur
e,such astoreduce
unfair compet
i
ti
on on t he same w ay ha
tt t hey
peti
ti
on er ASPA
C t o a mer e extensi
on or nst
irum ent of
areob li
gated to simi l
arl
y protectFi li
pino
the privat
e respon
den t
s
Citi
zen and rms

- ITEC was doing bu

siness
wit
hou
t al
icense,
howee
vr
ASPAC i
ses
topped - Ther uli
ngint heaforecit
ed casei
sinc onsonancewi th
the C onventi
onof he t U nionofPa ri
s or
f the rot
ect
pion of
- by ent
eri
ng i ntothe Representat
ive Agreeme nt
with Industri
al Propert
y t o whi ch t
he Ph il
ippi
nesbecam e a
ITE
C, pet i
tioner si cha r
ge wi t
h kn owledge t
ha t TE
IC party.Articl
e 8t here of provi
desthat a t
rade name shall
wasnotlicensed toengagein busi
nessac ti
vit
iesint he be prot
ected i
n al
lt he countri
esofthe Union wit
hout
countr
y,an d i s t
hus st opped from rai si
ng i n def
ense theob l
igati
on of i l
ng or regi
strat
i
on , whether or not ti
suchincap acit
y of ITEC, having chosen t
o gn
i ore or en
ev f
orm s pa rtofthe r tadem ark
presumpt
ively takevantage
ad theofsame

Le h
Cem
ist
e Lacost
e vs.
Fernan
dez
- I
n t op-wel
d we ru l
ed that aore fi
gn corporati
on may e b
exempted f r
om t he li
cense requirements in or der to
i
nstituten a ac
ton
i in our courts fii ts rep
resen ve in -
tati TheFrenchcompanymaygai
n accesstoourcour
ts,i
n
the coun t
ry m antai
i nedan i nd ependent atst
us d uri
ng the rst placeit was not oi d
ng businessi n t
he
the existence of the di
sput
ed con t
ract. Peti
ti
oner is Phi
li
ppines
deem edt o h ave acc
ededt
o su ch ndiependentha c
ract
er
when itenteredi
ntotheRepr
esentati
veAgr eeme
ntwi th - Themar ket
ingofit
spr oductsinthePhil
ippi
nesisdone
I
TE C through an exc l
usive di sri
tbutor, R
ustan Com mer cal
i
Corporat
ion. The att
l er si an i ndep
endent enti
ty w hich
buys and t hen markets not only pr
oducts of the
Wes
ter
nEqui
pme
ntandSuppl
yCo.vs.Reyes peti
t
ioner bu t al
so m any other uprodct
s beari
ng equ all
y
wel
l-known and es t
ablished tr
ademarks and trade-
- Thecomp anyisnothereseekingt oenf
orceanyl egalor names
contr
act ghts
ri ri si
ang fr
om , or grow i
ng ou t of yan
busi
ness which it has t
ransacted in the Phili
ppine Assuming Rus
tans had no i
ndependentst
atus woul
d
Isl
ands. The sol
e p urpose f othe a cti
on is to rotp
ecttsi the SC grant Lacost
e access o ou r
t court
s?
reput
ation, ti
s corporate ame, n tsi goodwi
ll
, w henever
that reputati
on,cor porat
e nam e or goodw i
ll have
thr
ough t he nat ural ev d
eopm
l ent of i t
s t rade, - Evenif Lacost
e did busi
nessn ithe P hil
ipp
ines ti can
est
abli
shedt hemselves br
ingact
ionbecauset
hecasei
nvol
vesaviol
ationofour
pen
alcode
- Anditcontendsthatit
srightstotheus eofitsc orporate
and tradena me,i s a proper t
y ri ght, a ri ghtnir em, - Such was a vi ol
ation of ar ti
cle 189of he t RPC , fi
which may asser
tand protectagai
nstal lthewor l
d,i n pros
ecut
ion f oll
ow s af t
er t he com pelit
on of t he
any of ht e cou rt
s of ht e wor l
d even in jurisdi
ct
i
ons prel
i
minary investi
gationbei ng conduct
edbyt he Speci
al
whereitdoesnott r
ansactbus i
nessjustt hes ameasi t Prosecut
or ht e niformaiton shall be in the n ame ofhe t
may protecti ts tangi
ble property, ealr orpersonal
, Peop
le oft he P hil
ippi
nes an d no l ongerhe t p
eti
ti
oner
agai
nst respa
t ss, orversi con
on whi
chisonlyanaggr i
evedpar tysi
nceacr i
minaloense
i
s essent
iall
y an actaga i
nst the State. t s
Iithe latt
er
- Sinceit sit he t
radean d nothe t mark that sito be whi
chispr i
ncipal
lyt heinjured part
yalthough ther
eis
prot
ect
ed a t rademar
k acknow l
edges no t er
rt
iori
al a pri
vate ghri
t vi olated
boundar
ies ormuni
cipal
it
ies orstat
es ornati
ons,but
extend
s to every marketwher e thead tr
er
s goods h
ave - The records show t
hatt he goodwil
land reputati
on of
becomeknownandidenti
edbyt heuseofthemar k the p et
it
ioner
s produ ct
s b eari
ng the trademarkLa coste
date back even bef or
e 1964when Lacos t
e clothnig
apparels wereorstf marketed n thei hi
Pl
ippines. l l
To
ow a
Gen
eral
Garm
ent
s C
orporati
onvs.Di
rec
t
or of
Pa
ten
ts Hem andast o conti
nu e using the tr
adem ark Lacost
e or
f
the simple reason that he was th e rst egi
r st
rant nit he
- Afor
eign cor
por
ati
on whi
ch hasnev
erdonebusi
nessi
n Su ppl
em ent
al R egi
ster of a t rademark usedi n
t
he Ph il
ippine I
slands and which is unl
icensed
an
d i
nt er
nationalcom mer ce and notbel on
ging to m hiis ot
renderugat nor y t he ver y es sence of he t law on
unr
egist
ered t
o do bu si
ness er
he, bu
t si wi
dely and trademarks and t
rade nam es
f
avorab
ly known i
n t he Isl
andst
hrou
gh t
he use h t
eren
i
ofits prod
uct
s beari
ng ti
s corporate t
rade
andamn
e has
a egal
l ri
ghtto maintai
n an acti
onin the an
Isl
ds At
lant
icMut
ualI
nsur
anceCo.vs.CebuSt
evedor
ingCo.

- Ment hol
atum cas e was sub sequentl
y der ogat
ed when
Con gress, purposel
y to count
eract he t e
ects ofsai
d - The law deni
es t
oaf orei
gn corporat
ion t
he r i
ght t
o
case, ena ct
ed R.A. 638, ni
serti
ng Sect ion 21 -A in t
he maintai
n su i
t unlesst ihas revpiousl
y com pli
ed wi t
h a
Trademar k Law,whi
ch al
lows a f
orei
gn cor porat
ion or cert
ain requi
rement,then such com pi
l
an ce, or hte fact
juri
sti
cper son t
obri
ngan acti
on in Phi l
ippineCour ts thatt he sui ng corpor
ation i s exempt t here f r
om,
for nif
ringem ent of mark
a or r ad
t e-na me,f or nuf
air becomesanecessaryav
erme nti
nt hecomplaint
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 74

- These are matter

s pecul
iarl
y wit
hint he knowl
edge of Securi
ties andExc
han
ge om
C mi
ssi
on up
on anyoft
he
appel
lants alone,an d i
t w oul
d beunf ai
r ot miposeupon f
oll
owi
ng grou
nds:
appel
lee t he bu r
den of asse rti
ng and pr ovi
ng the
contr
ary. tI s i enough t hat forei
gn corporati
ons are
1. Fa
i
lur
e t
o l
e it
s an
nual eport
r or
ay an
py f
ees sa
al
lowed by l aw t o seek redressniou r court
s under
requi
redybthi
s C
ode;
cert
ai
n con dition
s: het niterpret
ati
on of het aw
l sh ou
ld
not go so far s a toncli
ude,n i eect
, an inf
erencethan
those condit
ions h ave beenmetf rom t he m er
e act
f hat
t 2. Fai
lure otappoi
nt and mai
ntai
n a r
esi
den
t agent
n i
theartyp insu
g si aforeign corp
orati
on the hi
Pl
ippi
nes s
a requ
i
red bythistl
e;
Ti

Ol
ympi
a B
usi
nessachi
M nes o.
C vs.
E. Razon 3. Fai
lure,aft
er ch
an
ge of t
si resi
dent agen
t or fo hi
s
add
ress
, ot sub
mit o
t the Securi
t
ies an
d Exchan
ge
Commi
ssi
on a st
at
ementfosuch change as
equi
rr
ed by
- How doyoudi
si
tngu
isht
his case
it
hwAt
lan
ti
c? th
is T
itl
e;

- In At
lan
ti
c t
i di
smissed
t
he ca
se,
whi
le n
i Ol
ympiat i
di
d
not 4. Fail
ure t o sub
mit ot t
he Securi
t
ies nd
a Exchange
Commi ssi
on an authent
icat
ed copy of anyendm
ament
to it
s art i
cles of ncorporati
i on or by-l
aws or of an
y
Ti
meI
nc.vs.Reyes art
icl
es of m eg
reror con sol
idat
ion wi
thi
n the ti
me
prescri
bedbythisl e;
Tit
- Wef ai
ltoseehow thesedoctri
nescanbeapr oposinthe
case at bar, since th
e p etit
ioner si n
ot mai
ntai
ning any 5. Ami sr
epres
entat
i
on of any
materi
al amt
er ni an
y
suitbut is m erel
y defending one agai
nstt sel
if ;it di
d not appl
i
cat
ion, r
eport
, adavit or other docum
ent
le any complaint but on l
y a coroll
ary def
ensi
ve etpi
ti
on su
bmitt
edbysu chcorporati
onpursua
nt t
o thi
s T
itl
e;
to prohi
bit hte ow
l er courtf romfurther proceedi
ng w i
th
a suit thati t had no ujrisdicti
on to en t
ertai
n
6. Fai l
ure to pay any and al
l t axe
s, mpos
i ts,
assessment
s or en
pal
ti
es,f iany,
awf
ull
ly du
e to the
What l
aw govern f
orei
gn corporat
ion doing and Phil
ippi
ne G overn
men
t or an
y oftsiage
ncies orol
i
tp
i
cal
t
ransacti
ng b
usinessn ithe P
hil
ippi
nes i w
th a l
icen
se subdivi
si
ons;

- Law
s ofhet Repu
bl
ic ofhe
t P
hil
ippi
nes savend a
except 7. Tran
sacti
ng b
usi
nessn i
the Phi
li
ppines
utsi
oe of
d the
t
hat wou
ld n
ormal
l
y be thoseatter
sm w
hich con
cer
n i
ts purpose
or urpose
p s f
or w hc
ih suchcor
porat
ion i
s

f
ormati
on
, organ
i
zati
on or dissol
ut
ion
, orthosexing au
thori
zedunder t
sii
l
cen
se;
the rel
ati
on
shi
p, il
abil
iti
es, pres
onsi
bi
li
ti
es
, oruti
desof
t
he stockhol
ders
, m ember
s or o cer
s of he
t f
oregn
i
8. Transacti
ng busi
nessn it
he Phil
ippi
nes sa agen
t ofor
corp
orati
on or their
rel
ati
on
s to cheaother.
acti
ng for n
ad in behal
f of an
y f orei
gn corporati
on or
ent
ity notdu l
y l i
censedt o do bu si
nessin the
- I
n eect, intr
a-
cor
porat
e or inte
rnal mat
t
ers not
Phi
lippi
nes; or
aect
i
ng cr
edi
tors ore th
p
ubli
c i
n general
are govern
ed
not byPhi
li
ppine l
aws but h
te law under hi
wch t
he
f
orei
gncorporati
onwas orm
f edor organ
i
zed 9. Any ot
her ou
grnd as ouwl
d r
end
er tiunt ot r
t
ansact
busi
nessi
nthePhil
ippi
nes.(
n)

Section 12 9.
Law ap pl
icabl
e.- n A
y orei
f gn
corporati
on law f
ully do i
ng bu sinessi n the Ph i
lippi
nes SEC doesot n have the sol
e authori
ty t o suspend or
shal
l bebou nd by al l aw
l s, u r
les an d r egul
ations revoke the license of a foregn
i cor porat
i
on doing
appl
icab
l
e to mestdo ic corporati
ons ofhe t sam e class, businessi
nthePhi l
ippi
nes,ot
hergovernmentagencies
except chsu
only asprovi de for the creati
on, orm
f ation, l
ike het Centr
alBan k ,the nsu
I r ance omC missi
on may
organ
izat
ion or di ssoluti
on of corporation s or t hose alsodo sowi thin their respect
i
ve omdi nion, despi
te t
he
whic
h x the r
elati
ons,l i
abil
it
ies,responsi
bili
ti
es, or provi
sion of sect
i
on134
dut
ies of st ockholders, m em bers, oroce r s of If the ECS believes t tha
evoca
r ti
on is w arran
ted, secti
on
corp
orati
ons ot eachother o orthe
t rpo
corat
ion
.( 73a) 135 p rovi
des that:

Wi
llt
he pr
e-empt
iveri
ght
s ofa for
eign cor
por
ati
on be Sect
i
on 135. I
ssua
nce of cer t
icat
e of
gover
ned by the same sect
ion oft he code? I
s h te pre- r
evocat
i . - po
on Un the rev
ocati
on ofan y such l
icen
se ot
empt
i
ve r i
ghts of a s toc
kholder i n a dom es
ti
c tran
sact sibu
nessn ithe hi
P
li
ppines,the ecu
Sri
ties an
d
corporat
i
on sam e as thepre-emptive of a ockh
stol
der of Exchange Commi
ssi
on shal
l ssiue a cor res
pondi
ng
a orei
f gn corpora
ti
on. cert
i
cate ofevoca
rt
ion
,furni
shing a cop
y thereoft
o t
he
appropri
at
e governm
ent agen
cy nithe proper cases.
- No
The Secur
iti
es and Exc
hange Commissi
on
shal
l al
so malito the corp
orati
on at t
si regi
st
eredoce
M.
E. Gr
ey s.
vInsul
ar Lum
berCom
pany
i
n t he Phili
ppines a not ice of suchr evocat
i
on
accom
pani
ed by a copy of ht
e cert
icate evocat
of ri
on.
- PNB vs. Gonzal
es, wi
ll thi
s appl
y t o a for
egn
i (
n)
cor
porat
ion?How do youdi
si
tngu
i
sh t
his case
rom
f a
Phi
li
ppine
law
?
Vol
unt
arywi
thdr
awalofl
icense

- Si
ncei
t concern
s th
e ri
gh
ts o
f st
ock
hol
derst i
si th
e aw
l
ofNew Yor
k t
hat hs
oul
d govern - Al
l3condi
ti
onsmus
tbecompl
iedwi
th

I
s t
he l
icen
se t
o do bu
sinessof af
orei
gn corporati
on Sec
ti
on 136.
Wit
hdr
awal of f
orei
gn

sub
j
ectotsuspen
si
on or re
voc
at
i
on?Wha
t are the corpor
ation
s.- uSbjecto t exi
st
i
ng laws and regul
ati
on
s,
grounds? a foreign corporati
on licen
sedt o tran
sactusib
nessin
the Ph il
ippi
nesmay e b all
owed to wit
hdraw f
rom the
Phi
lippinesby li
ng a petition f
or iw
thdraw
al ofi
cenl
se.
- Sect
ion13
4 p
rovi
des:
No cer ticat
e of i wt
hd r
aw al shal
l bei ssuedby the
Securiti
es andExc han ge Commi ss
i
on unles all h
te
Sect
ion 134
.evo
R cat
ionofli
cen
se-Wi
. thou
t f
oll
ow ing requi
re
men ts are m e;
t
prej
udi
ce to other ndsgrou
provi
dedbyspecialaw
ls,the
l
icen
se of aorei
fgn corp
orati
on t
o tran
sact bu
si
nessin 1. lAlcl
ai
ms w hi
chhave accru ed nit
he P
hil
ipp
ines ave
h
t
he Phi
li
ppi
nesmay be rev
oked or suspended
by t
he
beenpai
d,compr
omisedorset
tled;

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 75

2. Al
lt ax
es,i
mpo st
s,asses
sment
s,and pe
nal
ti
es,
if an
y, - Jur
isdi
cti
on l
ies or
igi
nal
ly and excl
usi
vel
ytospeci
al
l
awfull
y due o
t the Phi
li
ppi
ne Governm
en
t or any
ofits commer
cal
i court
s an
d n
otin t
he LNR
C
agenci
es orl i
tpo
i
cal su
bdivi
si
ons haveeen
b pai
d; an
d - SE
C has j uri
sdi
ct
i
on over cas
es of re
moval r
f
om
employment of cor
porat
e ocers
3. hTe pet
i
ti
on f
or wi
thdrawal of i
cense
l has been - The r
elat
ionshi
p ofa per
son t
o a cor
por
ati
on,whet
her
pu
bli
shedonce a eek
w orf ht
ree3) (con
secut
ive eeks
w n i as o
cer
or as agent
empl
or
oye
e or noter
m
det
inedby
a newsp
aper of
gen
eral
ci
rculati
on i
n the Phil
ipp
ines. t
he nat
ureof he
t se
rvi
desper
f
ormed, bu
t by t
he
i
nci
de
nts of he
t rel
ati
onsh
i
p onthey
actu
al
ly exi
st
- Corpo
rat
e ocerssmdi
i
ssali
s al
ways a corpo
rat
e act
or
i
ntra-corpora
te con
t
roversy
Mi
dlan
d constru
cti
onvs.
Movi
lla
P.
D. 90
2-A
- NLRC wi
ll be possessed
ofj
urisd
i
cti
on excep
t
ion wi
ll not
apply ot m
ere re
covery
P.
D. 902- A was amende d by R. A. 8799 or he
t Main consi
derati
on
SECURITEIS REGULATION CODE n i the ey
ar2000 - Assert
shisri
ghtt
otheoceorques
tionst
hepr
opr
iet
y
Thejur
isdi
cti
on ofSEC f
orcasesf
all
ingundersect
ion 5
or va
l
idi
ty o
f hi
s o
uster orova
rem
l
,it w
i
ll be th
e sp
eci
al
t
her
eof as
w tr
ansf
er
r
ed t
o t
he court
s of ge
ner
al commercal
i court
s andnotthe LNR
C
j
uri
sdi
cti
on desi
gnat
ed by t
he SC, t
hey wer
e cal
led Secu
ri
ties egu
R lati
onCode
speci
al com
mercal
i cou
rt
s, ht
e on
ly except
i
ons wer
e - Tr
ansf
erred jur
isdi
cti
on of the SEC t
o Speci
al
revocati
on of corpo
rateran
fi
chsean
d call
i
ng of ecti
elons Commer
cal
i Court
s
How
eve
r h
te SEC r
etai
ned r
ecei
ver
shi
p or susp
en
sion - Suspe
nsi
on of pa
yment
, appoi
nt
ment ofanage
m ment
payments wi
thi
n Ju ne 20,
20
00 recei
versh
ip
Jur
isdi
cti
on ofspeci
alcommer
cialcour
tsar
eexcl
usi
ve Whatist
her easonf
orsuspensionofal
lclai
ms?
an
d ori
gi
nal
,juri
sd
ict
i
on i
s co
nf
erred
by l
aw; 1 Speci
al - Ther
easonforsuspendi
ngac t
ionsforcl
aimsagai
nstt
he
Commer
ci
al o
Cur
t pe
r r
egi
on exc
ept MAK
ATIand cor
porat
i
on i
s not real
l
y t
o enab
le t
he man
agem
ent
QUEZON CI
TY w
hic
h haswot com
mit
tee r
o the
reha
bi
li
tat
i
on recei
vero ts
ubst
i
tut
e th
e
Devi
cesorSch
emes def
endan
t n
i an
y pen
di
ng act
ion agai
nst ti bef
ore y
an
- Pyr
ami
d sc
heme (
misr
epr
es
ent
at
i
on)
-
Speci
al cou
rt
,tri
bunal ordy.
boTh
e real
ust
i
j
cati
onis to ab
en
le
Commercal
i Court
s t
he m
anagem
en
t com
mit
tee or
ehab
ril
itati
on re
cei
ver
to
- Syndicat
edestaf
a- ot
n ba
i
lab
le e
ect
i
vel
y exerc
isehi
s pow
ersree
f rom
f an
y Ju
dical
i or
Al
lej
ecase
ext
ra-
judi
cal
i nt
i
erf
erence
that m
i
ght u
ndu
ly hi
nderor
- Fal
ls squarel
y under sec. (
a)
5 Sp
eci
al om
C mer
cal
i
prev
ent the
r
escue h
of
e deb
tt
or com
pa
ny. To
ll
owa
Courts such
other ct
a
ionst
o cont
i
nue wou
ld onl
y addt
o t
he
- Al
legat
ion cor
por
ate ocer
s empl
oyi
ng sc
heme
s i
n
bur
den oft
hemanageme
ntcommi
tteeprr
ehabi
li
tat
ion
di
verti
ng
- Not onl
y det
ri
ment
al tocor
porat
i
on, bu
t gener
al r
ece
i
ver
, w
hose
time,
eort and
r
esour
ces ou
wld be
member
shi
p was
ted i
n def
endi
ng cl
aims agai
nstt
he cor
por
ati
on
- Frau
d mustbe stat
ed i
w
th pa
rti
cul
ari
t
y i
nst
eadof bei
ng di
r
ect
ed t
owards
rest
ruct
uri
ng an
d
Abadv
s.CFIofPangasi
nan rehabil
itati
on.(
PAL vs.Spouses di Sa
c an d Kuran
gki
ng)
- Fraud must be stated wi
th pa
rti
cul
ari
t
y ot
herw
i
se i
t - To enabletherecei
vert
o eect
ivel
y exer
cise hi
sorher
may beed lot any cou
rt pow
er ree
f orm
f an
y j
udi
cal
i or ra-
ext
judi
cal
i ht
at m
ay
Int
ra-corp
ora
t
e di
stu
rb
- Exclusi
ve an
d ori
ginalj
uri
sdi
cti
on ofsp
eci
alcom
merci
al 3 typessu of
spen
si
onofpayments
cou
rt
s 1. Si
mple sus
pens
ion of
pay
ment
s
- Sol
e cr
i
ter
i
a i
s t
heremust be an i
ntr
a-
cor
porat
e - wher
e def
ermen
t ofpay
men
t ofcl
ai
ms agai
nsta d
i
stress
rel
ati
on
shi
p com
pan
y;ask thert
cou
to begi
ve
n t
ime o
t t
hepaym
ent
- Pert
ai
ni
ng to a contr
over
sy (
speak
s al
so of ntr
ia- ofiab
li
lit
y b
y p ost
po
ning the payment
part
ners
hi
p cont
rove
r
sy, t
hat part
ners
hi
p must e
b - When i
thas suci
entasset
s and l
iabi
li
ti
es butf
orces
regi
st
eredit
hwthe S
EC) t
he mpo
i ssi
bi
l
it
y of eet
mi
ng them
whent
hey respect
i
vel
y
Rule now f
all due
1. Necess
ari
ly b
e anint
ra-c
orporat
e re
l
ati
onshi
p; and
, 2. Suspensi
on ofr
eceve
ir w
ith a manage
mentco
mmi
ttee
2. The contr
over
sy m
ustari
se out sai
of
d rel
at
ion
shi
p
Int
ra-
corporateati
onsh
rel
i
p al
one w
il
l not su
ce toutp wi
th ar
ehabi
li
tat
ion pl
ay or suspensi
on ofpayme
nt s
accom
pa
nied by a proposal or reha
fbil
itat
i
on (with or
i
t n
ithe am
bti of
speci
alcom
mer
cal
i cou
rt
s an
d cou
rt
s wi
thoutr
ehabi
li
tat
ion)
ofgen
eral
j
uri
sd
ict
ion may takeni
zan
cog
ce - c
orporati
on hassu ci
ent assets ver
to t
sco
il
iab
il
it
ies,
Caseof a an
tr
sfer
ee fo h
sares of
tock
sto com
pelhe
t but sees t
he possi
bil
it
y; i
s or wi
thout r
ehabi
li
tat
ion
corporati
ont o recogn
i
ze mhias ast
ockh
older pl
ans;norm
al
ly w
oul
d att
acht he reha
bil
itat
i
onpl
an
How cani
t be int
ra-corporate
hen he
w si notyet
ful
ly - For rpose
pu ofeconomi
c deve
lopment
pai
d 3. Suspe
nsi
on ofpaym
ent
s w hen he
t co
rporat
i
on a
hs no
- When t
het
ransf
ereehasdoneal
lhecan ber
equi
red t
o sucien
t assetso tit
s i
l
abil
iti
es
do t
o rend
er ht
e r
tan
sf
er e
ect
ualan
d t
he corpo
rat
i
on Mayi t st
i
ll be revived?
ref
usest
o regi
st
er the
t
ran
sf
er
, h
te requ
i
remen
t ofhet - Yes,i
tmaysti
llber
evi
ved
regi
st
rat
i
on i
s wai
vedan
d t
he t
ran
sf
eree
s con
i si
dered How cana corp orat
i
on wit
h morei
abl
il
it
ies than
asset
s
t
echn
ical
l
y a st
ockh
ol
der hw
o may su
e to enf
orcehet con
t
inue ti
s op
erati
on
s pro
t
abl
y?
- Evenfithe di
stre
ssed com
pany has o
n su
ci
ent asse
t
s
ri
ght ot have the tr
ansf
er regist
ered
Floe
rndo vs.river
a,Embassyrm Fa
s and l
iab
il
iti
es ti can
gofor su
spen
sion
- The t
ransf
eror wi
thhel
dt he del
ivery
,they ar
e notyet - I
t askedfor a anmagem
ent com
mit
tee iw
tho
ut a rec
ei
ver
pri
ma ac
fie;it wi
ll not bensi co
deredi
ntra-corp
ora
te pl
an (Victori
us Mi
ll
ing case)
Controv
ersi
es nithe appoint
men t(ask
ed nithe ba
r) Convertthei
r cl
ai
ms nit
o equity
- Cases nvol
ivi
ng el
ect
ion, appoi
ntment an
d removal - Thei
rl i
abil
it
y was al
most wiped out t
hey became
In Andaya the rt cou
said that a corpo
rat
e ocerelect
ed st
ockhol
dersnsti
ead of credit
ors
or appo
int
ed by the OD iBs al
ways a porat
cor e act - Af
ter5 year
sthose who convert
ed sol
ditbackt
othe
- The f
actthat pet
iti
oner soughtpayme
nt ofhis bac
k corporati
on,there
by mak i
ng pro
ts
wages,ot
herbenet
s as wel
las mo
raland exempl
ary Ame
ndment i
sfor t
he economi
c devel
opme
nt oft
he
da
mages
and at
t
orney
s f
eesnihi
s com
pl
an
it w
il
l not cou
ntry
Whatifwal
angame
ndme
nt,emasmar
ami
ngl
iabi
li
ti
es
oper
at
e t
o pr
eevnt t
he SE
C f
rom ex
ecrsi
ing i
ts
j
uri
sdi
cti
on underP.
D.902-
A.Thej
uri
sdi
cti
on wi
llnot kesaasset
s
Suspen
si
on order
- al
l act
i
ons f
or cl
ai
ms agai
nst the
wr
estont
heNLRC j
ustbecauseoft
hat
cor
porat
i
on ar
e accor
di
ngl
y suspen
ded at hate
w ve
r
Tabangvs.NLRC
st
agehe
t procee
di
ngs m
aybe

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 76

Eectofsuspen
si
on- youcan
notf
orecl
ose Serv
ice of
summon
s-rul
e 2sect
i
on5
Whatar
ecl
aims
? - Summons maybe made
to a
nyone
- Debt
s or dem
ands ofpecun
iary at
n
ure.Asse
rt
i
on of a In cas
e of nt
i
ra-corpora
t
e dispu
t
e, ecti
elon
s, rau
fd, et
c;
ri
ghtto h
ave on
mey pai
d i
f h
tey r
a
e gover
ned by i
nteri
m rul
es f
o pr
ocedu
r
e on
- Cl
aims agai
nst the
cor
porat
i
on shal
l besuspen
ded, i
ntra-corp
ora
t
e con
troversies
assert
i
on ofa ri
ghtt
o h
ave on
mey pa
id; ti
mustpresen
t Venue
a monet
ary
clai
m, l
iqu
ida
tedor nu
liqu
ida
ted - Speci
al com
mercal
i court
s whereri
nci
p pal o
ce i
s
Nul
li
cat
i
on of corporat
ions doesnot presenta l
oca
t
ed/est
abl
ish
ed(
secti
on 5 ru
l
e 1)
mon
etary ai
cl
m ofpecu
ni
ary t
na
ure - Mat
t
ers of pay
ment
/suspensi
on must be
l
ed i
n t
he
Uni
onvs
. CA ci
ty/muni
cipal
i
ty w
here corp
orati
onis oca
l t
ed
- It does
not l
al
ow a merendi
ivdu
i al otl
e t
he peti
t
ion Underol
d rule, edi
crt
ors ave
h no ri
gh
t o
t i
nst
i
tut
e an
whi
ch i
s l
imi
ted t
o cor
por
ati
ons par
tner
shi
p or acti
on f
or recei
versh
i
p; now
credi
tors,
f h
i
tey sol
d 20
%
asso
ci
ati
on
s. they
can i
nsti
tut
e anac
t
ion f
or recei
versh
i
p
- Wher
e no author
ityis grant
ed t
o hear pet
iti
ons of Sect
ion 5
i
ndi
vdu
i al
s f
or su spen
sion of paymen
ts,su ch peti
t
ion - Serv
i
ce fosum
mons ay
m beade
m by
ax/e-
fmai
l
ar
e beyond t
hecom petence t of
he E SC E.B. Vil
larosavs.Ben
it
o
Whathappensift
her
eisas uspensionorder
? - Willappl
yonlyi
fiti
snotani
ntr
a-cor
por
atecont
rov
ersy
If hte controver
sy aroseout of ani ntra-
corporat
e
Expl
ain theey k h
prase al qu
it
y s i equ
ity
- Al
lcredi
tor
sstandonequalfoot
ing,secureorunsecur
e, di
spu
t
e rul
es on i
nter
i
m rul
es of procedu
re ofntr
a-
i
hol
di
ng ori
enl or i
w
thou
t ai
en
l, no cred
i
tor a
my en
force corp
oratet roversi
conesshal
l govern
hi
s i
l
enwhil
e reh
abi
li
tati
on i
s go
i
ng A
(l
emar ca
se) Rul
e 4 sect
i
on17-immuni
ty r
fom su
it
- No p
ref
eren
ce sh
al
l begi
ven Rehab
il
itat
ion recei
ver al
sh
l not su
bject
t
o an
y a
cti
on
,
RCBC vs
.IAC cl
ai
m or dem
andi
n co
nnect
i
on wi
th anyact ne
do
- Deci
dedonmot i
onf or reconsi
derat
i
on omi
tted by hi
m i
n good
fai
t
h i
n t
he exe
r
cise of hi
s
- It cou
rt7 years eci todedauthen
t
icati
on f
uncti
ons an
d p
owers
here
in con
f
err
ed
Rul
e ofthe hu
tmb Claim
- Aut
omati
c suspensi
on even i
f not decr
eed i
n t
he - Right otpaym
ent
, whet
heror ot
n ti s
i r
edu
cedt
o
decisi
on itsel
f j
udgme
nt, l
iqui
dat
ed or unl
iqui
dat
ed, xed or
- Once l
if
ted the pref
err
ed cr
edi
t
orswi
ll regai
n t
hei
r co
nti
nge
nt
, mat
ure
d or un
mat
ure
d, di
sput
ed or
pref
erence undisputed,l
egalor equit
ab le an
d secured or nsecu
u red
Appoi
ntmentofamanagementcommit
tee Invest
men t o
cnt
ract
s
- Takeoverthemanagementcommit
teeofthedi
str
essed - Ac ontr
ac t
,tr
ansact
ion or scheme wher
eby a per
son
corporati
on i
nvest
s hi
s money nia common enterpri
se and i
s ed
l to
- Extraordinary d an drast
ic re
medy
exp
ect prots mari
l
ypri
rom
f the eect
s of hot
ers
- Withoutanyr eme dy
Themanageme
ntcommitt
eeand r
ehabi
li
tat
ion r
ecei
ver
Whati sani ntr
a-corporat
econtrover
sy?
ar
e empower
ed o:
t
- Secti
on5( B)
1. Take st
cu
odyand contr
olofall asset
s of t
he corpor
at
i
on
- Sol
e c riteri
a is w hether there exi
st
s a n i nt ra-corpora
t
e
2. Eval
uat
e asset
s and l
iab
il
it
ies,earni
ngs operat
ion
s of
di
sp ute s i th
at fi there si a
n intra-corpora
t e relati
on
ship
the rpo
co
rati
on
Why ist heres uspension ofal
lac ti
ons againstc lai
ms
3. Det
er
mine t
he bes
t w
ay o
t pr
oec
tt h
te i
nves
tor
s an
d
whenar ecei
verisappointed?
cred
i
tors
- To enablet he manag eme ntcommi tt
ee to exercise i
ts
4. Study,
view
reev
aulat
e t
he f
easi
bi
l
it
y of con
t
inu
ing
powesr
op
erat
i
onan d str
uct
ures
Sy h
Cmi vs
. Sy i
S
y H
o b
(ef
or
e a m
anagem
entcom
mit
tee
5. Subm
i
t recommendat
ions t
o t
he RTC r
egar
dnig
may be opt
by a cou
rt
) reh
ab
il
itati
on pl
an
- 2 r
equi
si
t
es or
f aval
i
d app
oi
ntm
ent ofan
agem
m ent 6. Reha
bi
li
tat
e the corporat
i
on i
f det
ermi
nedt
o bef
easi
bl
e
com
mit
tee
byt
heRTC
1. I
mminentdange
r of di
ss
i
pat
i
on, os
l
s, a
wst
age or 7. Report
t
o hte T
RC unti
lthe cor
porat
i
onis di
ssol
ved
dest
ructi
on of asset
s or oth
er corp
orate ert
prop
ies
2. Paral
ysi
s of busi
ness er
op
ai
tons,
hetmer
e ap
pre
hensi
on
THE SECURI TIES REGULATI ON CODE ( RA8799)
off uture m isconductbased pon
u pri
ormana gem
ent
- Save d anexcept n t hi
e ca se of cl aose corporat
ion i
n
case of deadlock anam gem ent committee si al
l
ow o -
ed t Also know n as Blhe
tue Sk y Law si
nce ti w as en acte
d to p rot
ect
the pu bli
c f r
om un sc
rupu louspr om otesr who st akebu si
ness
take over ight
r aw ay which hav e no basis and sel ls hares and i nterestthereint o
Jacintocase i
nvestors,ho w aret hen l eft ho l
ding cer ticate
s r epresent
ing
- 2nd par of page76 6 nothi
ng morehan t a cl aim to asqu are of t
he blue sky.
- 2 re qui
sit
es h were present
- Walangmapaut ang,therewasapar al
yzati
on -SEC. 2. Decl arati
on of Stat e P oli
cy. T he S tate al sh
l est
abli
sh a
Sy h Cmi soci
all
y con scious, ree
f arket
m ttha
regulates tsel
i
f
, enco urage the
- Did n otappoi nt a anagem
m entcommittee widest parti
cipati
on of owner shipi n ent erprises, enhancet he
- In t he absenceaof str
ongshow i
ng ofan i mmi nent dem ocrat
izat
ion ofweal th, prom ote theevel dopmen t of the capital
danger of ssi
pa
di
ti
on , oss
l wastage r d est
o ru
ction of market, prot
ect nvest
i ors, ensu
re uf
ll an
d f
air di
sclosure boaut
securi
ti
es, i n
mimize if not otal
tly el imi natensi i
der tr adi
ng an d
assets h or
er otprop
ert
ies of a co
rporati
on and pa ral
ysi
s
other raud
f ul entor m an i
pu l
ative devi cesan d practi
ces hw ich
of t si business er opai
tons, hte mere ap prehen
sion of
creat
e d i
storti
on s nit he ree
f arket.
m
future i m
sconduct d base
uponpr i
or m i
smanagement
wi
llnotaut
hor
izet
he appoi
ntme
ntofa manageme
nt BROKER - per
sonwhobuys and
sel
l
s securi
t
ies or
f he
t accoun
t of
com mit
tee others.
Secti
on 5 an d 6(
D) governed
by sepa
rat
e ru
l
es;
int
eri
m
rules and n
itra-corpo
rat
e con
troversy DEALER - per
sonwho bu
ys an
d sel
l
s sec
uri
ti
es or
f hi
s/hernow
Venueofacti
ons accou
nt i
n th
e ordi
nary cou
rse
ofbusiness.
- Rul
es ofcou
rt
- wherehet pa
rt
i
es are ding
resi
- Intr
a-cor
porat
e- no matt
er wherethe part
i
es ar
e NOTE: No person sh
all en
gage ni he
t bu si
ness
resi
ding it wil
l be in theci t
y o r municipali
ty w here the of bu
ying or l se
li
ng secu
rtiesin the Phil
ippi
nesas a
br
oker or eal
er
d, or act a assal
esm an, or an
pri
ncipaloce sioca l ted
associ
ated per sonof any br
oker or ealer
d un
less
Rehab il
itati
onproceedi
ngsvenu e
r
egi
ster
edassuch wi
th t
heCom missi
on. Sec
( 28
)
- In rem
- Acquired upon publ icat
ion wi t
hout furni
s hing the
SECURITES - shares, part
ici
pat
ion or nti
erest
s ni a corporati
on or
credi
tors copy
a ofthe p et
it
ionan d attachmen ts thereof
i
n a com mer cal
i enter pri
se or prot
-mak i
ng venture d evi
an
den
ced
- A creditor may now let he suspensi
on proceedings;
byacert
icate,contract
,inst
rument,whetherwri
ttenorel
ectroni
c
provi
des tha t credi
t
ors n ow
s ateastl %25 i
n character
. It i
ncludes:
Int
ra-corporat
e- rule 1section 6
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 77

CODE:COFDI PS conver
sion price,would at ht e ti
me of such conversi
on
a) Certi
cates of assignments, cert
i
cates of pa
rt
ici
pati
on, f
all withi
n th e cl
assof secu ri
ti
esen ti
tl
ed to regist
rati
on
trust certi
c
ates, ng voti
trust certi
catesor similar undert his Code. Uponsu ch con ver
si
on the par ue val
of
i
nstrum ents; the securit
y surr endere
d in suchexc ha ngeshal l be
b) Other nst
irum ents as aym nithe u ft
ure be etd
ermined deemed t he price ta w hi
ch t he securi
ti
es issued and
bytheCommi ssion; del
iver
edi n su chexchange ared. sol
c) Fracti
onal undi vded
i inter
est
s i n oi l
, gas or ot her h) Broker
s transact
i
ons, xec
e
uteduponcust omers order
s,
mineral ri
ght
s; onan y e rgi
st
eredxch Eange or ot
hert radi
ng m arket
.
d) Derivati
vesikel pti
oonan d warrant
s; i
) Su bscri
pti
onsf or shares of he t capital t ock
s of a
corporati
on pri or to the i ncorporati
on t here
of or i
n
e) Inves
tment cont ract
s, cer ti
cates of i nte
r
est or
pursuance f oan incr
ease i
n its authori
zed capi
tal tock
s
parti
cipat
ion i
n a pro t sharing agreemen
t, cer
ti
cates
under he t Cor por
ati
on Code , when no ex pense s i
of deposi
t or
f a
future subscri
pti
on;
i
ncurred, or no c ommi ssi
on, c ompensati
on or
f) Propri
etary or onn prop
ri
etary emm bersh
ip cert
i
cat
es
remunerait
on i s pai
d or vengi i n connecti
on wi t
h t he

g) i
n
Scorp
h orati
ares on
s;
of
t an
sd ds,
ock, bon deb
en
tures,not
es,
evi
den
ces of sal
e o r dispositi
on of us chsecu riti
es, an d on l
y w hent he
purpose for sol i
cit
ing, gi ving or t aking of such
i
ndeb
ted
ness,asset-
ba
ckedsecu
rit
ies; subscripti
ons s i ot com ply w i
th the requi remen t
s of such
law as t o t he per centageof he t capi tal ock
st of a
GR: Secu
ri
ties h sall not be sol d or oered for sa le o r d i
stri
bu ti
on corporati
on whi chshou ld besu bscri
bedbef oret ia cn be
wit
hinthe PH,wi thouta r egi
st r
at i
on s t
ateme ntl ed wi th and regi
stered an d du ly i ncorporated,or i ts au thori
zed
approved
bySEC. Pri or ot su chsal e,i nformati
on on t he secu ri
ties, capi
tal i
ncreased .
i
n such form andwi t
h suc h subs tance as hetC om missi
on may j) Theexc hangeofs ecurit
iesbyt hei ssuerwi thitsexisti
ng
prescri
be,sh all be mad e ava ilable to each prospecti
ve u prchaser. securit
y hol ders excl usively,wher e no com mi ssi
on or
(
Sec 8) other u rem
neration i s paid or ven gi dir ectl
y or ndir
i ectl
y
for sol
ici
ting su chexch an ge.
EXCEPT: Exem pt Secu riti
es n uder Sec 9 k) The sal e ofecuri
s t ies byn a i
ssuer o ef
twer hatn t wenty
a) An y securi ty ss
iued or guarantee d byhe t o Gvenrment of (20
) person s nit he Ph i
li
pp i
nes u dri
ng an y tw elve-
mon th
the H, P or bynya p oli
tical su bdi
visi
on or agen cy thereof,peri od .
or bynya p erson con troll
edor su pervi
sed by, and a cting l) The sal e ofse curities o t anynu mber of het fol
lowing
as an instrum entali
ty of sai
d G over
nment. qualiedbu yers: i (
) B an k; ( i
i) R egist
ered i
nvestmen t
b) Anys ecur i
tyissuedorguar anteedbyt hegov ernme ntof house;i i
i)
(
insu rance compan y; i v)
( Pen
si
on f und or
an y cou ntry i w
th dipo lm ati
c re lati
ons w i
th t he PH , or by ret
ir
em ent an plmai ntainedby t he Gove rnment of t
he
an y state, provi
nceor ol piti
cal b su
divi
sion t hereof the on Phil
ippines or an y pol i
ticalsu bd ivi
si
on t hereofor
bas i
sofr ecipr
ocity:Provi ded,thatt heSEC ma yr equire mana ged by an a kb or herot per sons t hori
auze d b y hte
com pilance i w
th t he orm
f and content disof
cl
osures the Bangko Sentral t o engag e i n t rustun f
ctions; (v)
Commi ssion m aypre scr ibe. inves
tment com pany or ; vi() Such otherper sonas t he
c) Cer t
icates ss iued by a r eceve
ir orby a t rustee i n Commi ssion may by e ruldet
ermine as qu ali
ed ub yer
s,
bankr upt cy duly appr oved by t he proper adjudi catory on t he b asi
s o f su ch f actors a s nancial sophist
icati
on ,
body . net ortwh, kn ow l
edge, and exper i
ence in n an ci
al and
d) Any securi ty ori t
s d eri
vati
veshe t sale or an tr
sfer of business mat ters, or amo unt of ass et
s under
whi ch,byl aw,isundert hesuper visionandr egulat i
onof mana gement .
the O ce f othe nsurance
I ommiC
ssion,Housi ng an d
Lan d Use egulR at ory oard,
B or het Bur eauofI nternal PROTECTI
ON OF SH AREH OLDER S I NTEREST
Revenue.
e) An y se curity ss
iued by a ankb excepti ts ow n shar es f o 1. Tender Oer s Sec
( 19)
stock. 2. Proxyi ci
sol
tat
ion( Sec 0) 2
3. Internalr
ecor
d keepi
ng an
d accoun
ti
ng Sec
( 22)
AND ExemptTransact
ions nd
uerSec 10
a) A j udical
i al se,or sale b y an execut
or
, ad mini
strat
or, TENDER OFFER Apubl
icl
y an
nouncednten
it i
on acti
ng al
on
e or
guardi
an or r ece
iveror t rust
ee i n insol
vency or i n concertwit
h otherso ta
cqu
ire equ
i
ty securi
t
ies foa company.
bankrupt
cy. (
2002ar BExam s)
b) Byorf ortheaccountofapledgehol
der,ormort
gageeor
any other mi
sil
ar ien
l holder sel
l
ing or o
eri
ng or
f sa
l
e orInst
ances hen
w Ten der O
eris Req
uired
del
ivery n ti
he ordi
nary u co
rse ofbusi
ness d an not or
f 1. When the rso
pe
n i
ntendsotacqui
r
e 15%ormor e ofthe
the purpose of avoi
di
ng the p rovi
si
ons o
ft his Code,to eq
utiy shar
e of apub l
ic companypurs uant t
o an
l
i
fqu
aithi
date
aa
s bon
secu
ri
ta or
y d
f e su
debt,
ch deba.securi
t ty pl edged in good agreement made bet ween or mong
a he
t per
son andone
or o mre l sel
ers;
c) An i sol
ated transacti
on i n whi ch anysec urity s i sol
d, 2. When the r
sope
n intends otacqui
re 30%ormor e of the
oered f or sal
e,su bscri
ption or del ivery by t
he ow ner equit
y sh are of a p ubl
ic company wit
hin a peri
od of12
thereof
, or by his representati
ve or f hte ow ners a ccount, months;
such sal e or o er orf sale, sub scripti
on or el diveryot n 3. Whent he per so
n int endso tacqui
re shar
es hat
t oul
wd
being made int he course ofr epeated and s uccessive resul
t n i an ow ners
hip ofmor e than 50% oft he equity
transacti
ons of a ikelcha racter by ch suow ner
, or on his shares of a pu bl
ic company.
accoun t bysuchr epresentative an d suchow ner or
representat
ive notbei ng t he und erwrit
er of su ch
PROXY SO LICITATION
securit
y.
d) Distri
bu t
ion by a cor porati
on, act ivel
y engaged in the
NOTE: A broker orl erdeaho
w holds or acqui
res t
he pro
xy f or at
business authori
zed by i t
s AOI , of securit
ies toi ts
l
east entper cent
um ( 10%) or such er
cent
pageas the Com mi
ssion
st
ockhol ders or ot hersec urity hol ders as a st ock
divi
den d or other ist
ri
budti
onou t ofsu rpl
us. may prescri
beoft he outst
anding share ofhe ssu
t
i er
, shal
l subm i
ta
e) Sale of ca pi
tal t s
ock of a co r
por ati
on t o i ts ow n r epor
t dienti
fyi
ng t he benecial ownerwithi
n ten (10) da
ys after
st
ockh olders excl
usi
vely,wher e no com mission or other such cqu
aisi
ti
on,f or tsi own accou
nt or custom
er
,to hte ss
iuer of t
he
rem unerati
on is pa id or gi vendi rectly or i ndirectl
y i n securi
ty, ott
he Exchan gewhe re t
he securi
t
y is tr
aded and to t he
connectionwi t
h t he sale of ch sucap ital tock.
s Commissi
on. Sec( 20.
5)
f
) I
ssuan
ce ofbonds or es
not
ec
sure
d by m
ort
gage upon
r
eal est
at
e or t
angi
bl
e personal
propert
y, h w
er he FRAUDUL
e t ENT TRANS
ACT
IONS AN
D OTHER MARKET

enti
re mortgage toget
her iwt
h all he
t bon ds or otnes MANIPULATI
ONS
sec
ured thereby ar e sol
d to a singl
e pu r
chaser at a
si
ngl
e sale. 1. Wash Sal e(Sec 24.1(
a( )
i
)) an y t ransa
cti
on in a
g) I
ssue d andel
iver
y of anysecuri
ty n
i exchangeor f any sec
uri
ty which invol
ves on chan ge in the bene ci
al
ot
her securi
ty of the same ssu
i er pursua
nt to a ri
ght of ownershi
p thereof
.
conver
si
on ent it
li
ng t he holder of t he sec uri
ty 2. MatchedOrderS(ec24.1(a)(
ii
)) order ro orders for e th
surr
ender
ed i n ex change to makesuchconv erson:
i purc
haseor sale of securit
y wit
h t he knowledgethat a
Prov
i
ded,ha Tt hte securi
t
y so surrendere
d ha s been si
mult
an eou
s order or sorderof u s
bst
anti
ally the same
r
egi
ster
ed und er hits Codeor as,
w whensol d, xem
e pt si
ze, t
ime and price for the sale or u p
rchase of such
f
romt he p rovi
si
ons ofhi s
t C od
e,an d t
hat hte securi
t
y securi
ty has, or i
llwbe enter
ed by or or f theme sao
r
i
ssued and del i
vered in exchange,f isold at t he di
erent pa
rt
i
es.
Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva
 78

i
mport
an
t under he
t ci
r
cum
san
tcesin det
er
mini
ng hi
s
Not
e:Wash lsa
e andmat
chedders
orbecome l
i
l
egalwhen cou
r
se foact
i
onwhetherotb
uy,sel
l or l
ho
d a secu
ri
t
y.
theyar
e usedas amean
s ot cr
eat
e al
fse pp
aear
ance of
act
i
ve atr
di
ng n
i theecu
s
ri
ty co
ncern
ed. Note:W ho i s a n insider?
- nI
sider eamns: a)( het
i
ssuer; b)
( adirect
or or o ceror (person perf
orming
3. Marki ng t he cl ose
l p
acing theurc phaseorder , at or si
milar ufnct
ion
s) , ofor a perso
n cont
rol
li
ng the issuer;(c)
nearhe t cl
ose of he t tr
ading p eriod . The p ri
ce that as w a pe r
sonwhose rel
ati
onshi
p or orm
fer el r
ati
on
ship to the
closed wil
lt hen be t he p rice tha t w il
l be po sted on the i
ssuer ves
gi or ga vehim access t
o mat eri
al nf
iormati
on
f
ollowing radt ing d ay. aboutt he issuer or he t securi
ty that s i notgen eral
l
y
4. Pa i
n tin g the tap ei nvolvesa seri es of ran tsactions avai
lable to the pu bl
ic;(d) a government pl em
oyee, or
that are re
po rt
ed pu blicl
y t o give the i
mpressi on of an di
rector
, or ocer ofanexcha nge, cl
ea
ringagency and/or
acti
vity nia sec uri ty. sel
f-
regul
atoryor gani
zati
on who ha s access to material
5. Squee zing t he oat t he part of an out st
anding i
nfor
mat i
on ab out nai ssueror asecur i
ty that si not
security i ntenti
on all
y hel d by dea lers or other ersons
p general
l
y ava il
able to the publi
c;or e) ( aperson who
withavi ew ofresell
ingt hem lat erforpr ot. l
earnsch su
nf
ior
mationby a com muni
cati
onf r
om an y of
6. Hype and dum p
A ctem ploye d by a er psonor r ou
g p of t
he f orego
i
ng insi
ders.
person s of rc pu
hasi ng the ou tst
an ding ca pit
alst ockofa
dorm ant pu blic shel l com pany for a om ni nal mouna t I NDEPEND ENT DI REC TOR
and mer ge tiwi th t heir pri vat
ely h el
d com pa ny.Th ey Person ot her hant an oce r or em pl oyee of he t
woul dt hen gai nc ont roloft he maj ori
tys t
ocks oft he corporati
on, t i
s pa rent or subsi
diari
es, or ny aot her ni
divdu
i al
mergedt i
ty.
enSt ockcert icates are ten re-of
issued in having a rel ati
onsh ip with the corporat
ion, which wou l
d i nt
erfere
the n ame ofhe t mer ged en tit
y toel ati
r ves d anassoci wi
ates t
ht he exerci
se ofi ndependentjudgme ntinc arryi
ng outt he
whoac tasnomi neesoft heper s onorper sonsemp loying responsibi
li
ties of adi
rector.
the devi ce.Th ey ou wl d t hen l ookf or a r oker
b - deal
er
whowoul dbewi l
li
ngt omakea hypeoft hes ecur i
ti
es. Corporat ions w hi ch require anI ndependen t D irector
The br oker-dealert hen g enerat es volume and adv ance 1. An x echang e;or
bid price. When t hemar ketr eac hesa hi gh pr i
ce,t hey 2. Any corpor ati
on with a cl assofequ it
y securities ist
led
woul d dumpt heirshar eholdingsandbai lout. for r ad
ti ng onan Excha nge ori thw asset s n
i exces s of
7. Boiler Room Oper ati ons
nivol ves an i ntensive el s
li
ng P50Mandhavi ng 200or m oe
r h ol
ders,at easlt 200 of
cam paign t hrough nu mer oussal esmen by tel
ephone or whi c
h ar e holdi
ngatl eas
t100 sharesofa c lassofit
s
through di rectai lm o eri
ngs f orsecu ri
ti
es of t ei
her a equ i
ty securi ti
es or h wich has sol d a cl assof equi t
y
certain t yp e orrom f a sp ecic i ssu er
. I nvestors are securiti
es t o t he pu bli
c pu rsuan t t o an eect i
ve
i
ndu ce d t o purc haset hroughhar d-sel
l base d on regist
rati
on st atementsha ll haveat l east otw (2)
unfou ndedpredi ction s an d mai l
ing of misl
eadi ng market independ entdi rect
orsor su ch indep endentdi rectors
letters. shal
l const
i
tute ateast
l 20 % oft
he mem
bers of
su
ch
boar
d,whi
cheveri
sthel
esser
.
Not e:Marking thecl ose, Paint
ing hte a t
pe, Squeezing the
oat,Hypeand dump,Bo i
lerRo om Operati
ons bec
ome OPTI ON TR ADING
unlawful ifi ti s eectedt o eit
her raisethe p rice r oniduce Pu t at ransf
errable opti on or oer otdel i
ver a gi
ven
the purchaseof a secu
rit
y or of con atrol
ling, contr
oll
ed, or number of sh ares st of
ockat a ated st ce
pri on
any given
com monly control
ledcom panybyot hers or o d epr
tesshe t time during the ed stat eri
p od.
pri
cetoinduc ethesaleofas ecuri
ty,whe t
heroft
hesame Call at ransf
errable option t o b uy a speciednu mber
or of di aer ent ass,
cl of
he sam
t e i ssuer or of a of sha re at a ed stat
price
contr
oll
ing, cont r
oll
ed com pany or com mon contr oll
ed Stradd
le a com binationofpu t an d cal
l.
com pany by ot hers or o crea
tte act i
ve adtri
ng t o induce
the urc
p hase hrough
t sai
d d evi
ces or schem
es. SETTL EMENT OFFERS
Atanyt i
me ,duringani nv esti
gati
onorpr oceedingunder
8. Circulat ing or Di ssemina ti
ng I nformat ion
t
h i
s C
ode, part
i
es eibng i nvesti
gated an d/ or chargedmay r p
opose
circul
ati
ng a n informati
on t hat an y of the secu ri
ty ilst
ed i
n writ
ing an oer ofet
tlem
sent it
w
h the C om miss
ion. The
i
n t he ex chan gewi ll or si il
kely to rise r o al
fl becau seCom
of mission may on l
y agr ee o t a se ttl
em ent oer based on i t
s
mani pulati
ve mar ket operationsof any oneor m e n
or dingst hatsuchse ttl
em enti s i n t he pu bl
ic interes
t. A ny
personscondu ct
ed f or t he pu rposeof ai ng or agree
rsi mentt o set t
le sha ll h aveno l egal ect e ntiul pu bl
icl
y
depressing the pri ce of het securit
y an d thus i ndu ng di
ci sclosed. Su chdecision may e b madewi thout a etdermina
tion of
the pu rchase of suchsecu rit
y. gui
lt ont he partoft he person mak i
ng h te oer.

9. Mak i
ng Fa l
se or i sl
Mead ing Statement
w
its re
h spect
to any mat eir
alf act hiwch he kn ew or had r e DAMAGES
easonabl
grou
nd t o bel i
eve as w so f al
se or m isleadi
ng for the Al
lsui
tst
or ecov
erdamag esshallbebroughtbef
orethe
purpose of ndu
i cng
i t he pu r
chase or sale of such Regi
on
al Tri
al ou
C rt
, w hi
ch sh al
l ha ve excl
usive j
urisdi
ct
ion to
securi
ty. hear dan
deci
de such sui
ts.Th e C
ou rt i
s authori
ze
d to award
10. Pegging orFi xing Or St
abi li
zingthepri
ce f osecuri
t
y damage
s n
i an am ount not xce
eedi
ng t
ripl
e the oun
am t of
the
eect
edei ther onal
e or i t
w
h ot hershroug
t h an y seri t
es ofr
ansact
ionplus actualages.dam
tran
sacti
ons or
f the
purchase r o sal
e th ereof
,if done or
f
suchurpose
p .
11. Short ales sel
li
ng of securi
ty which t he ven
dor do es NOTES
not n owunl ess done i
n accordance i w
th the rules and If htere re
a goo ds i nvo
lvedi n t he mul t
imarket, ti si
regul
ati
ons of the SEC. beyondthej
ur i
sdictionofSEC (
ExFi rs
tQuadr ant)
12. Insi
derTr ad i
ng the act of an insider to uybor sell Criminal cha
rgeor f ol
vi
ati
on of SR C i s a speci al
ized
dispute, hence it mustbe r st efr
erred wi t
h SE C
securi
t
y of ht e s isu
er h wi
le ni po ssessi
on of a mter
ial
(Bavi
era vs.Paglinaw an G.R. No.16 8380 Feb8,
i
nformait
on wi th respect o such
t securi
ty that sinot
2007)
gener
all
y madeknow n to t he pu bl
ic un l
ess (a) The
i
nsider roves
p hattht
e nif
orm ati
on was otn gai
nedf rom T3 Rulein tradi ng of Securiti
es Tr
ading day + 3
such relati
on shi
p; or (b) fI hte other party l in
sel
g to or more days you ust m
compyl wit
h you r obl
igati
ons.
buyingf
rom theinsi
der(orhisagent)i
si dent
ied,the
i
nsider roves:
p i)t hat
( e
h discl
osed thei nformati
on t
o
the other arty
p
, or ii)
(that eh had reason t
o be l
ieve at
th
the other part
y otherwise si a
lso in po ssessi
on of hte
i
nformati
on.

Not
e:W hen i s i
nformat
ion m at
erial non-
public? -
i
f:(a) I
t has not bee
n gen
eral
l
y discl
ose
d to thepubli
c and
woul
d likel
y aecthe tmarketce pri
of
he ts
ecuri
t
y after
bei
ng dissemina
ted t
o the pub
li
c an d t
he lapse of a
r
easonabl
e ti
me for he
t market
o abtsorbhetinf
ormati
on;
or b)( oul
w d be consi
der
ed by a r easonab
l
e person

Notes onCorporati
on Law
Not
es om
ce n
i ha
nd y onl
y when you
ave
h ud
st
i
ed

GTan
; ASogu
il
on; VVi
l
lan
ueva