TITLE 9
76
MERGER
- It is the uniting of two or more corporations by
the transfer of property to one of them which
continue in existence, the other or the others being
dissolved and merged therein.
- meron sa mga constituent corporation ang
tinatawag na absorbed corporation and surviving
corporation. Yung isa mawawala, yung isa
magpapatuloy, na absorb na nung magpapatuloy
yung assets and liabilities nung absorbed
corporation.
CONSOLIDATION
- The uniting or amalgamation of two or more
existing corporations to form a new corporation. It
signifies a union as it necessarily results in the
creation of a new corporation and the termination of
existence of old ones.
Sec. 75
Plan of Merger or Consolidation
- 2 or more corporations may merge into a single
corporation which shall be the one of the
constituent corporations or may consolidate into a
new single corporation which shall be the
consolidated corporation.
a. Ang mga corporations, whether they plan to
have a merger or consolidation, ang tawag sa
kanila ay constituent corporation.
b. The terms of the merger or consolidation and
the mode of carrying the same into effect
c. A statement of the changes, if any, in the articles
of incorporation the surviving corporation in case of
merger; and, in case of consolidation, all the
statements required to be set forth in the articles
incorporation for corporations organized under this
Code
d. Such other provisions with respect to the
proposed merger or consolidation are deemed
necessary or desirable.
Sec.
Stockholder’ or Members’ Approval
- since this is a significant change, kailangan ng
approval galing sa stockholders or members. All
constituent corporation shall be submitted for
approval by the stockholders or members
- the affirmative vote of stockholders representing
at least ⅔ of the outstanding capital stock of each
corporation in the case of stock corporations
- at least ⅔ of the members in the case of
nonstock corporations.
Sec. 77
Articles of merger or consolidation
- after the approval, articles of merger or articles
of consolidation shall be executed by each of the
constituent corporations, to be signed by the
president or vp and certified by the corporate
secretary or assistant secretary.
the ff should be included in the articles of
merger or consolidation:
Sec. 78
Effectivity of Merger or Consolidation
- Submission of the articles of merger or
consolidation to the SEC subject to the requirement
that if it involves corporations under direct
supervision of any other government agency or
governed by special laws the favorable
recommendation of the government agency
concerned shall first be secured.
- if the proposed merger or consolidation is
contrary to or inconsistent with the provisions of this
Code, it shall set a hearing to give the corporations
concerned the opportunity to be heard.
Sec. 79
Effects of Merger or Consolidation
- There will only be a single corporation. In case of
merger, the surviving corporation or the
consolidated corporation in case of consolidation.
 - The termination of corporate existence of the
constituent corporations, except that of the
surviving corporation or the consolidated
corporation.
Kung ang nangyari ay merger, in which
case yung surviving corporation ay maiiwan parin
pero yung absorbed corporation ay wala na. In
case of consolidation, both constituent corporations
will exist kasi meron bagong corporation.
- The surviving corporation or the consolidated
corporation will possess all the rights, privileges,
immunities and powers and shall be subject to all
the duties and liabilities of a corporation organized
under the Code.
- pag aari nung surviving corporations ang pag
aari nung absorbed corporation.
FORMS OF CORPORATE COMBINATIONS
A. SALE OF ASSETS
- A union of corporations may be effected by
one corporation selling all or substantially all of its
assets to another. Such sale is usually, though not
necessarily, made in the course of the dissolution of
the vendor corporation.
note: even if the corporation sells all of its assets, it
can continue to survive
B. LEASE OF ASSETS
- A corporation, without being dissolved, leases its
property to another corporation for which the lessor
merely receives rent paid by the lessee. The lease
of assets is similar to the sale of assets except that
under a lease nothing passes except the right to
use the property leased.
C. SALE OF STOCK
- The purpose of a holding company is to acquire
a sufficient amount of the stock of another
corporation for the purpose of acquiring control.
The acquiring corporation is called the parent or
holding company. The corporation whose stocks
are acquired is known as the subsidiary
corporation.
D. MERGER
- two (or more) corporations unite, one
corporation which retains its corporate existence
absorbing or merging in itself the other which
disappears as a separate corporation. It is the
absorption of one corporation by another which
survives.
E. CONSOLIDATION
- two (or more) corporations unite, giving rise to a
new corporate body and dissolving the constituent
corporations which cease to exist as separate
corporations.
TITLE 10
Appraisal right - right of a stockholder to demand
payment of the fair value of his after dissenting
from a proposed corporate action involving a
fundamental change in the corporation in the cases
provided by law.
Sec. 80
When the right of appraisal may be exercised
instances of appraisal right:
a. In case any amendment to the articles of
incorporation has the effect of changing or
restricting the rights of any stockholder or class of
shares, or of authorizing preferences in any respect
superior to those of outstanding shares of any class
(bababaan or tataasan ang par value, idivide, split
up, split down, iniba ang benefits, extending or
shortening the corporate existence)
b. In case of sale, lease, exchange, transfer,
mortgage, pledge or other disposition of all or
substantially all of the corporate property and
assets as provided in this Code
c. In case of merger or consolidation
d. In case of investment of corporate funds for any
purpose other than the primary purpose of the
corporation
note: any stockholder of a close corporation may,
for any reason, compel said corporation to
purchase his shares at their fair value, which shall
not be less than their par or issued value, when the
corporation has sufficient assets in its books to
cover its debts and liabilities exclusive of capital
stock.

Sec. 81
How right is exercised
- The dissenting stockholder shall make a written
demand on the corporation within 30 days after the
date on which the vote was taken for payment of
the fair value of his shares. Kapag lumagpas sa 30
days then it shall be deemed a waiver of the
appraisal right.
- Kapag yung proposed corporate action is
implemented saka lang babayaran ni corporation si
stockholder, upon surrender of the corresponding
certificates of stock within 10 days after demanding
payment.
- If, within 60 days from the approval of the
corporate action by the stockholders, the
withdrawing stockholder and the corporation cannot
agree on the fair value of the shares, it shall be
determined and appraised by three (3)
disinterested persons, one of whom shall be named
by the stockholder, another by the corporation, and
the third by the two (2) thus chosen.
note: the fair value of the shares of the dissenting
stockholder is determined as of the day prior to the
date on which the vote was taken notwithstanding
any appreciation or depreciation in value of the
shares.
Sec. 82
Effect of Demand and Termination of right
A. All rights accruing to such shares including
voting and dividend rights shall be suspended.
B. He shall be entitled to receive payment of the fair
value of his shares as agreed upon between him
and the corporation or as determined by the
appraisers chosen by them.
C. If he is not paid the value of his shares within 30
days after the award, his voting and dividend rights
shall be immediately restored until payment of his
shares.
D. Upon such payment, all his rights as stockholder
are terminated, not merely suspended.
E. If before he is paid the proposed corporate
action is abandoned, his rights and status as a
stockholder shall thereupon be permanently
restored.
Sec. 83
When Right to Payment Ceases
- a dissenting stockholder who demands payment
of his shares is no longer allowed to withdraw from
his decision unless the corporation consents
thereto.
a. Such stockholder withdraws his demand for
payment and the corporation consents thereto
b. The proposed corporate action is abandoned or
rescinded by the corporation
c. The proposed corporate action is disapproved by
the SEC where its approval is necessary
d. The SEC determines that such stockholder is not
entitled to the appraisal right
Sec. 84
Who bears the cost of appraisal
- as a general rule, the costs and expenses of
appraisal shall be borne by the corporation.
A. BY THE CORPORATION
1. Where the price which the corporation offered to
pay the dissenting stockholder is lower than the fair
value as determined by the appraisers named by
them.
2. Where an action is filed by the dissenting
stockholder to recover such fair value and the
refusal of the stockholder to receive payment is
found by the court to be justified.
B. BY THE DISSENTING STOCKHOLDER
1. Where the price offered by the corporation is
approximately the same as the fair value
ascertained by the appraisers.

2. Where the same action is filed by the dissenting

stockholder and his refusal to accept payment is
found by the court to be unjustified.

Sec. 85
Notation on certificates; rights of transferee

NOTATION ON CERTIFICATES OF SHARES OF

DISSENTING STOCKHOLDER
- The dissenting stockholder is required to submit to
the corporation within 10 days after demanding
payment for his shares, the corresponding
certificate/s of stock for notation thereon that such
shares are dissenting shares. CHAPTER 1 - MEMBERS
- With the notation the secretary of the corporation
will be guided accordingly, for under Section 82 all Sec. 88
rights accruing to such shares including voting and Right to Vote
dividend rights shall be suspended except as
provided in said section and Section 83.

TITLE 11

Sec. 86
NONSTOCK CORPORATION
- one where no part of its income is distributable
as dividends to its members, trustees, or officers,
Sec. 89
subject to the provisions of the RCC on dissolution
Non Transferability of membership
- any profit which a nonstock corporation may
- as a general rule, hindi siya transferable kasi
obtain incidental to its operations shall, whenever
personal in nature, unless otherwise provided.
necessary or proper, be used for the furtherance of
- termination of membership shall extinguish all
the purpose or purposes for which the corporation
rights of a member in the corporation or in its
was organized
property. (ex. nagpahiram ng property sa nonstock
corporation kung saan member ka, pero
Sec. 87
tinerminate yung membership mo, so kahit na
Purposes of nonstock corporations
tinerminate yung membership mo ay may
- may be formed or organized for charitable,
karapatan ka padin sa property mo. unless
religious, educational, professional, cultural,
otherwise provided in the AOI)
fraternal, literary, scientific, social, civic service, or
similar purposes, like trade, industry, agricultural
and like chambers, or any combination thereof.

CHAPTER 2 - TRUSTEES AND OFFICERS
Sec. 91
GOVERNING BOARDS
- Non-stock corporations may, through their articles
of incorporation or their by-laws, designate their
governing boards by any name other than as board
of trustees. Trustees of non-stock corporations
have duties similar to those of stock corporations.
A. The number of trustees to be elected may or
may not be more than 15. But the number of
incorporating trustees shall not be more than 15
B. Trustees shall hold office for not more than three
years until their successors are elected and
qualified. Trustees elected to fill vacancies
occurring before the expiration of a particular term
shall hold office only for the unexpired period.
C. Except with respect to independent trustees of
non-stock corporations ves public interest, only a
member of the corporation shall be elected as
trustee. Hence, to be eligible as trustee, a
candidate should meet the qualifications for
membership of the corporation as prescribed by its
by-laws.
D. Officers other than trustees may be directly
elected by the members (not by the board) unless
otherwise provided in the articles of incorporation
and the by-laws
E. Proper written notice must be sent to all
members indicating the date, time and place of the
meeting
Sec. 92
List of Members and Proxies, Place of Meetings
- corporations shall keep a list of its members and
their proxies in the form the SEC may require.
- list shall be updated to reflect the members and
proxies of record 20 days prior to any scheduled
election.
- ang meetings ng members ay pwede kahit saan,
kahit pa sa labas ng place where the principal office
of the corporation is located’
note: the place of meeting shall be within Philippine
territory
CHAPTER 3 - DISTRIBUTION OF ASSETS IN
NONSTOCK CORPORATION
Sec. 93
DISSOLUTION
- In case of dissolution, its assets shall be applied
and distributed in accordance with certain specific
rules laid down by law (Section 93) or as may be
specified in a plan of distribution adopted by the
corporation (Section 94), provided it is not
inconsistent with such rules. It is not allowed to
distribute any of the assets of the corporation or
any incidental income or profit made by the
corporation during its existence.

RULES OF DISTRIBUTION
A. All liabilities and obligations of the corporation
shall be paid, satisfied, and discharged, or
adequate provision shall be made therefore.
- ibig sabihin, outside creditors muna. bayadan
muna nila ito, yung mga bank, etc

B. Assets held with the condition that the same

shall be returned, transferred, or conveyed shall be
returned, transferred or conveyed.
- ex. Si member ay nagpahiram ng kotse sa
corporation, upon the dissolution of the corporation
ay isasauli iyon sa member.

C. Assets which are allowed only to be used for

charitable, religious, benevolent, educational or
other similar purposes but not subject to return,
transfer or conveyance, shall be transferred or
conveyed to one or more corporations, societies or
organizations engaged in activities in the
Philippines substantially similar to those of the
dissolving corporation.
- ex. itong si animal foundation may mga cages
sila that is specifically stated sa agreement na
gagamitin lang to house the animals. Unfortunately,
nadissolve itong animal foundation, yung mga
cages na yon ay idodonate nalang or itatransfer sa
ibang animal foundation.

D. Assets other than those mentioned shall be

distributed in accordance with the provisions of the
articles of incorporation or the by-laws to the
members.

E. In any other case, assets may be distributed to

such persons, societies, corporations, whether or
not organized for profit, as may be specified in a
plan of distribution.

Sec. 94.
Plan of Distribution of Assets