BY LAWS

Sec 45 of the RCC

Meaning
The bylaws of the Corporation are the rules and
regulations or private laws enacted by the corporation
to regulate, govern, and control its own actions, affairs
and concerns and of its stockholders or members and
directors and officers in relation thereto and among
themselves in their relation to the corporation.
Power to adopt by laws
• Inherent to every corporation.

• Holders of non-voting shares or non-voting members can

vote to adopt the bylaws.

• Where the statute authorizes a corporation to make bylaws

upon specifically named subjects, there is an implied denial
of authority to make by laws upon subjects not named
Function and nature
•They supplement the articles of incorporation.
•Define the rights and duties of corporate officers.
and directors or trustees and of stockholders or
members towards the corporation or among
themselves and to regulate the transaction of
business of the corporation in a particular
manner.
•By laws looks to the future.
Necessity of adopting bylaws
• Practicality: It must have the means for the
accomplishment of its purpose.

It has been said that the By-Laws of a corporation

are the rule of its life, and that until By-Laws have been
adopted the corporation may not be able to act for the
purposes of its creation, and that the first and most
important duty of the members is to adopt them.
Necessity of adopting bylaws
• Corporation Sole- is governed by the Rules, Regulations
and Discipline of its religious denomination which
already contain the provisions embodied in the bylaws
of ordinary corporations.

• Sec 109 par 2 allows corporation sole to include in their

AOI any provision to regulate the affairs of said
corporation. Hence, it need not comply with Sec 45
 CORPORATION CODE
SEC. 46 Every corporation formed
under this Code must, within one (1)
month after receipt of official notice
of the issuance of its certificate of
incorporation by the Securities and
Exchange Commission, adopt a
code of by-laws for its government
not inconsistent with this Code. For
the adoption of by-laws by the
corporation the affirmative vote of
the stockholders representing at least
a majority of the outstanding capital
stock, or of at least a majority of the
members in case of non-stock
corporations, shall be necessary.
REVISED CORPORATION CODE
SEC 45. For the adoption of bylaws
by the corporation, the affirmative
vote of the stockholders representing
at least a majority of the outstanding
capital stock, or of at least a majority
of the members in case of nonstock
corporations, shall `be necessary. The
bylaws shall be signed by the
stockholders or members during
office hours. A copy thereof, duly
certified by a majority of the
directors or trustees and
countersigned the secretary of the
corporation, shall be filed with the
Commission and attached to the
original articles of incorporation.
PROCEDURE
• The By-Laws may be adopted before or after
incorporation.

• In all cases, the By-Laws shall be effective only upon the

issuance by the SEC of a certification that the By-Laws
are in accordance with the RCC.
Procedure (Sec 45, RCC)
a. Pre-Incorporation. The By-Laws shall be approved and
signed by all the incorporators and submitted to the SEC
together with the Articles of Incorporation.
b. Post-Incorporation. The By-Laws shall be adopted by
the corporation by the affirmative vote of the
stockholders representing at least a majority of the
outstanding capital stock. In a non-stock corporation,
the affirmative vote of at least a majority of the members
shall be necessary.
Effect of Non adoption
• Section 6 of PD 902-A
Failure to file the by-laws within 1 month from the date of
incorporation with the SEC shall render the corporation
liable to the revocation of its registration.

In One Person Corporations (OPC), the RCC is

explicit that the filing of the By-Laws is not required.
• The Supreme Court reiterated in Sawadjaan v. Court of Appeals
that a corporation, which has failed to file its By-Laws within the
prescribed period, does not ipso facto lose its powers as such.
The procedures and remedies provided for under SEC rules
governing the revocation of certificates of incorporation must be
complied with. At the very least, a corporation that failed to
submit the By-Laws "may be considered a de facto corporation
whose right to exercise corporate powers may not be inquired
into collaterally in any private suit to which such corporation may
be a party.
REQUISITES
1. It must be consistent with the Constitution, RCC, other
laws and regulations;

2. It must be consistent with the AOI;

3. It must not be contrary to morals or public policy;

REQUISITES
4. It must not disturb vested rights, impair contract or
property rights of stockholders or members or create
obligations not sanctioned by law.

5. They must be general and uniform in operation and

not directed against particular individuals

6. They must be reasonable.

1. Not contrary to existing law and the RCC

• Example:
a provision in the By-Laws creating a permanent seat in
the Board of Directors is contrary to the provisions of the
RCC because the Code requires annual election of
directors.
2. Consistent with the AOI
• The Articles of Incorporation should be given more
weight than the By-Laws.
Hence, incase of conflict AOI shall prevail.

Example: The number of directors stated in the AOI shall

be controlling and the Bylaws cannot provide otherwise.
example:
The By-Laws cannot specify powers that are
not expressly provided for or implied from the
Articles of Incorporation.
3. Not contrary to public policy and
morals
• Bylaws must be consistent with the public policy and
not in conflict with public welfare. If they conflict with
either, they are invalid and will not be sustained.
Thus, bylaws operating in restraint of trade by
imposing unreasonable restrictions on the right of
stockholder to transfer his stock are invalid.
4. Must not disturb vested right
EXAMPLE:
Thomson v. Court of Appeals,
the Supreme Court disallowed the absolute restriction
imposed on the right to transfer shares of stock or proprietary
membership in a corporation.

Salafranca u. Philamlife (Pamplona),

the Court declared that amended By-Laws should not
undermine the security of tenure of an employee by
declaring non-existent an employee's position
5. They must be general and uniform
• It must operate equally to all stockholders or members under
the same circumstances and not be directed against any
stockholders or members.

• the provisions must be reasonable and must not be

discriminatory, arbitrary, or oppressive upon the
shareholders.
Example: additional qualifications provided for in the By-
Laws, the same should apply to all shareholders and not
merely to one or a group of shareholders.
• The fact that the provisions of the By-Laws, which are
contrary to law, have not been questioned for several
years cannot forestall the challenge to their validity.
Neither can the By-Laws provisions attain validity
through acquiescence because, if they are contrary to
law, it is beyond the power of the members of the
association to waive their invalidity.