Title V

Section 46: Adoption of by-laws

 After 1 month after receipt of official notice of the issuance of its certificate of incorporation
by the SEC.
 Affirmative vote of the stockholders representing atleast a majority of the outstanding capital
stock or
atleast majority of the members.
 Shall be signed by the stockholders or members voting for them
 Shall be kept in the principal office of the corporation, st. inspection of the stockholders or
members
during office hours
 A copy, duly certified by a majority of the directors/trustees and countersigned by the
secretary of the
corporation shall be filed with the SEC and attached to the original AIO
 SEC shall not accept for filing the by-laws or any amendment of any bank, banking institution,
building
and loan association, trust company, insurance company, public utility, educational institution or
other
special corporations governed by special laws unless accompanied by a certificate of the
appropriate
government agency to the effect that such by-laws or amendments are in accordance with law.
Prior adoption of by-laws
 Shall be approved and signed by all the incorporators and submitted to SEC together with AIO
Effectivity of by-laws
 Upon the issuance by the SEC of a certificate that the by-laws are not inconsistent with this
code
Meaning of By-laws
 Rules of action adopted by the corporation for its internal regulations and for the government
of its
officers and of its stockholders or members
Necessity of by-laws
 Upon issuance of the certificate of incorporation, it comes into existence but it is not yet
prepared to
do business. It must have the means or instrumentalities for the accomplishment of its purpose.
 Corporation is in existence but not yet organized.
Effect of failure to file by-laws
 Non-filing of by-laws on time will not result in the automatic dissolution of the corporation
 Failure to file a code of by-laws within 1 month from the date of its incorporation shall render
the
corporation liable for revocation of its registration.
 There must be a hearing to determine the existence of the ground, and assuming such finding,
the penalty
is not necessarily revocation but may only be suspension.
Elements of valid by-laws
 Must not be contrary to existing law and inconsistent with the Code
 Must not be contrary to morals and public policy
 Must not impair obligations of contract
 Must be general and uniform in their operation and not directed against particular individuals
 Must be consistent with the AIO
 Must be reasonable
Operation and binding effect of by-laws
 When valid, has the same force and effect as the laws applicable to the corporation .
 The corporation and its direcrors/trustees and officers are bound and must comply with them
Subordinate employees without actual knowledge are not bound
 As to 3rd persons, they are not also bound by the by-laws except when they have knowledge of
its
provisions
Section 47: Content of by-laws
1. Time, place, and manner of calling and conducting regular or special meetings of the
directors/trustees
2. Time and manner of calling and conducting regular or special meetings of the
stockholders/members
3. Required quorum in meetings of stockholders or members and manner of voting therein
Note: By-laws cannot provide that a lesser number shall constitute a quorum
4. Form of proxies of stockholders or members and manner of voting therein
Note: It must be notarized and filed with the corporate secretary, atleast 2 days before the date of
the meeting
5. Qualifications, duties and compensation of directors/trustees, officers and employees
Note: Cannot dispense with the minimum legal requirement that a director must be a registered
owner of atleast 1
share of stock and that at least 2 directors must be residents of the Philippines
 May validly provide for disqualifications for the position of director
6. Time for holding annual election of directors/trustees and the manner of giving notice
7. Manner of election or appointment and the term of office of all officers other than
directors/trustees
8. Penalties for violation of by-laws
9. In case of stock corporations, manner of issuing certificates
10. Such other matters as may be necessary for the proper or convenient transaction of its
corporate business
and affairs
Section 48: Amendment of by-laws
 Majority vote of the Board of directors/trustees and owners of atleast majority of the
outstanding capital
stock or members
 At a regular or special meeting duly called fo the purpose
 2/3 of the outstanding capital stock or 2/3 of the members may delegate to the BOD the power
to amend
or repeal any by-laws or adopt new by-laws
Notes: But the power to amend the AOI lies with the stockholders/members and cannot be
delegated to the BOD
 Whenever any amendment or new by-laws are adopted, such amendment or new by-laws shall
be attached
to the original by-laws in the office of the corporation
 A copy thereof, duly certified under oath by the corporate secretary and a majority of the
directors/trustees
shall be filed with the SEC the same attached to the original AOI and by-laws
Effectivity of amended or new by-laws
 Upon issuance by the SEC of a certification that the same are not inconsistent with this Code
Revocation of delegated power of BOD/T
1. Higher vote of the stockholders/members in a meeting
2. 2. Revocation is valid notwithstanding that no previous notice was given to stockholders
or members