Today is Monday, November 25, 2013

Batas Pambansa Bilang 68 THE CORPORATION CODE OF THE PHILIPPINES Be it enacted by the Batasang Pambansa in session assembled: TITLE I GENERAL PROVISIONS DEFINITIONS AND CLASSIFICATIONS Secti n !" Title of the Code. This Code shall be known as "The Corporation Code of the Philippines." (n) Secti n #" Corporation defined. A corporation is an artificial being created by operation of law, having the right of s ccession and the powers, attrib tes and properties e!pressly a thori"ed by law or incident to its e!istence. (#) Secti n $" Classes of corporations. Corporations for$ed or organi"ed nder this Code $ay be stock or non%stock corporations. Corporations which have capital stock divided into shares and are a thori"ed to distrib te to the holders of s ch shares dividends or allot$ents of the s rpl s profits on the basis of the shares held are stock corporations. All other corporations are non%stock corporations. (&a) Secti n %" Corporations created by special laws or charters. Corporations created by special laws or charters shall be governed pri$arily by the provisions of the special law or charter creating the$ or applicable to the$, s pple$ented by the provisions of this Code, insofar as they are applicable. (n) Secti n &" Corporators and incorporators, stockholders and members. Corporators are those who co$pose a corporation, whether as stockholders or as $e$bers. 'ncorporators are those stockholders or $e$bers $entioned in the articles of incorporation as originally for$ing and co$posing the corporation and who are signatories thereof. Corporators in a stock corporation are called stockholders or shareholders. Corporators in a non% stock corporation are called $e$bers. ((a) Secti n 6" Classification of shares. The shares of stock of stock corporations $ay be divided into classes or series of shares, or both, any of which classes or series of shares $ay have s ch rights, privileges or restrictions as $ay be stated in the articles of incorporation) Provided, That no share $ay be deprived of voting rights e!cept those classified and iss ed as "preferred" or "redee$able" shares, nless otherwise provided in this Code) Provided, f rther, That there shall always be a class or series of shares which have co$plete voting rights. Any or all of the shares or series of shares $ay have a par val e or have no par val e as $ay be provided for in the articles of incorporation) Provided, however, That banks, tr st co$panies, ins rance co$panies, p blic tilities, and b ilding and loan associations shall not be per$itted to iss e no%par val e shares of stock. Preferred shares of stock iss ed by any corporation $ay be given preference in the distrib tion of the assets of the corporation in case of li* idation and in the distrib tion of dividends, or s ch other preferences as $ay be stated in the articles of incorporation which are not violative of the provisions of this Code) Provided, That preferred shares of stock $ay be iss ed only with a stated par val e. The board of directors, where a thori"ed in the articles of incorporation, $ay fi! the ter$s and conditions of preferred shares of stock or any series thereof) Provided, That s ch ter$s and conditions shall be effective pon the filing of a certificate thereof with the +ec rities and ,!change Co$$ission. +hares of capital stock iss ed witho t par val e shall be dee$ed f lly paid and non%assessable and the holder of s ch shares shall not be liable to the corporation or to its creditors in respect thereto) Provided- That shares witho t par val e $ay not be iss ed for a consideration less than the val e of five (P..//) pesos per share) Provided, f rther, That the entire consideration received by the corporation for its no%par val e shares shall be treated as capital and shall not be available for distrib tion as dividends.

A corporation $ay, f rther$ore, classify its shares for the p rpose of ins ring co$pliance with constit tional or legal re* ire$ents. ,!cept as otherwise provided in the articles of incorporation and stated in the certificate of stock, each share shall be e* al in all respects to every other share. 0here the articles of incorporation provide for non%voting shares in the cases allowed by this Code, the holders of s ch shares shall nevertheless be entitled to vote on the following $atters) 1. A$end$ent of the articles of incorporation#. Adoption and a$end$ent of by%laws&. +ale, lease, e!change, $ortgage, pledge or other disposition of all or s bstantially all of the corporate property(. 'nc rring, creating or increasing bonded indebtedness.. 'ncrease or decrease of capital stock2. 3erger or consolidation of the corporation with another corporation or other corporations4. 'nvest$ent of corporate f nds in another corporation or b siness in accordance with this Codeand 5. 6issol tion of the corporation. ,!cept as provided in the i$$ediately preceding paragraph, the vote necessary to approve a partic lar corporate act as provided in this Code shall be dee$ed to refer only to stocks with voting rights. (.a) Secti n '" Founders shares. 7o nders8 shares classified as s ch in the articles of incorporation $ay be given certain rights and privileges not en9oyed by the owners of other stocks, provided that where the e!cl sive right to vote and be voted for in the election of directors is granted, it $ st be for a li$ited period not to e!ceed five (.) years s b9ect to the approval of the +ec rities and ,!change Co$$ission. The five%year period shall co$$ence fro$ the date of the aforesaid approval by the +ec rities and ,!change Co$$ission. (n) Secti n 8" edeemable shares. :edee$able shares $ay be iss ed by the corporation when e!pressly so provided in the articles of incorporation. They $ay be p rchased or taken p by the corporation pon the e!piration of a fi!ed period, regardless of the e!istence of nrestricted retained earnings in the books of the corporation, and pon s ch other ter$s and conditions as $ay be stated in the articles of incorporation, which ter$s and conditions $ st also be stated in the certificate of stock representing said shares. (n) Secti n (" Treasury shares. Treas ry shares are shares of stock which have been iss ed and f lly paid for, b t s bse* ently reac* ired by the iss ing corporation by p rchase, rede$ption, donation or thro gh so$e other lawf l $eans. + ch shares $ay again be disposed of for a reasonable price fi!ed by the board of directors. (n) TITLE II INCORPORATION AND ORGANI)ATION OF PRIVATE CORPORATIONS Secti n !*" !umber and "ualifications of incorporators. Any n $ber of nat ral persons not less than five (.) b t not $ore than fifteen (1.), all of legal age and a $a9ority of who$ are residents of the Philippines, $ay for$ a private corporation for any lawf l p rpose or p rposes. ,ach of the incorporators of s stock corporation $ st own or be a s bscriber to at least one (1) share of the capital stock of the corporation. (2a) Secti n !!" Corporate term. A corporation shall e!ist for a period not e!ceeding fifty (./) years fro$ the date of incorporation nless sooner dissolved or nless said period is e!tended. The corporate ter$ as originally stated in the articles of incorporation $ay be e!tended for periods not e!ceeding fifty (./) years in any single instance by an a$end$ent of the articles of incorporation, in accordance with this Code- Provided, That no e!tension can be $ade earlier than five (.) years prior to the original or s bse* ent e!piry date(s) nless there are 9 stifiable reasons for an earlier e!tension as $ay be deter$ined by the +ec rities and ,!change Co$$ission. (2) Secti n !#" #inimum capital stock re"uired of stock corporations. +tock corporations incorporated nder this Code shall not be re* ired to have any $ini$ $ a thori"ed capital stock e!cept as otherwise specifically provided for by special law, and s b9ect to the provisions of the following section.

Secti n !$" $mount of capital stock to be subscribed and paid for the purposes of incorporation. At least twenty%five percent (#.;) of the a thori"ed capital stock as stated in the articles of incorporation $ st be s bscribed at the ti$e of incorporation, and at least twenty%five (#.;) per cent of the total s bscription $ st be paid pon s bscription, the balance to be payable on a date or dates fi!ed in the contract of s bscription witho t need of call, or in the absence of a fi!ed date or dates, pon call for pay$ent by the board of directors) Provided, however, That in no case shall the paid% p capital be less than five Tho sand (P.,///.//) pesos. (n) Secti n !%" Contents of the articles of incorporation. All corporations organi"ed nder this code shall file with the +ec rities and ,!change Co$$ission articles of incorporation in any of the official lang ages d ly signed and acknowledged by all of the incorporators, containing s bstantially the following $atters, e!cept as otherwise prescribed by this Code or by special law) 1. The na$e of the corporation#. The specific p rpose or p rposes for which the corporation is being incorporated. 0here a corporation has $ore than one stated p rpose, the articles of incorporation shall state which is the pri$ary p rpose and which is<are the secondary p rpose or p rposes) Provided, That a non%stock corporation $ay not incl de a p rpose which wo ld change or contradict its nat re as s ch&. The place where the principal office of the corporation is to be located, which $ st be within the Philippines(. The ter$ for which the corporation is to e!ist.. The na$es, nationalities and residences of the incorporators2. The n $ber of directors or tr stees, which shall not be less than five (.) nor $ore than fifteen (1.)4. The na$es, nationalities and residences of persons who shall act as directors or tr stees ntil the first reg lar directors or tr stees are d ly elected and * alified in accordance with this Code5. 'f it be a stock corporation, the a$o nt of its a thori"ed capital stock in lawf l $oney of the Philippines, the n $ber of shares into which it is divided, and in case the share are par val e shares, the par val e of each, the na$es, nationalities and residences of the original s bscribers, and the a$o nt s bscribed and paid by each on his s bscription, and if so$e or all of the shares are witho t par val e, s ch fact $ st be stated=. 'f it be a non%stock corporation, the a$o nt of its capital, the na$es, nationalities and residences of the contrib tors and the a$o nt contrib ted by each- and 1/. + ch other $atters as are not inconsistent with law and which the incorporators $ay dee$ necessary and convenient. The +ec rities and ,!change Co$$ission shall not accept the articles of incorporation of any stock corporation nless acco$panied by a sworn state$ent of the Treas rer elected by the s bscribers showing that at least twenty%five (#.;) percent of the a thori"ed capital stock of the corporation has been s bscribed, and at least twenty%five (#.;) of the total s bscription has been f lly paid to hi$ in act al cash and<or in property the fair val ation of which is e* al to at least twenty%five (#.;) percent of the said s bscription, s ch paid% p capital being not less than five tho sand (P.,///.//) pesos. Secti n !&" Forms of $rticles of %ncorporation. >nless otherwise prescribed by special law, articles of incorporation of all do$estic corporations shall co$ply s bstantially with the following for$) A:T'C?,+ @7 'AC@:P@:AT'@A @7 BBBBBBBBBBBBBBBBBBBBBBBBBB (Aa$e of Corporation) CA@0 A?? 3,A DE TF,+, P:,+,AT+) The ndersigned incorporators, all of legal age and a $a9ority of who$ are residents of the Philippines, have this day vol ntarily agreed to for$ a (stock) (non%stock) corporation nder the laws of the :ep blic of the PhilippinesAA6 0, F,:,DE C,:T'7E) 7':+T) That the na$e of said corporation shall be "BBBBBBBBBBBBBBBBBBBBB, 'AC. or

C@:P@:AT'@A"+,C@A6) That the p rpose or p rposes for which s ch corporation is incorporated are) ('f there is $ore than one p rpose, indicate pri$ary and secondary p rposes)TF':6) That the principal office of the corporation is located in the City<3 nicipality of BBBBBBBBBBBBBBBBBBBBBBBB, Province of BBBBBBBBBBBBBBBBBBBBBBB, Philippines7@>:TF) That the ter$ for which said corporation is to e!ist is BBBBBBBBBBBBB years fro$ and after the date of iss ance of the certificate of incorporation7'7TF) That the na$es, nationalities and residences of the incorporators of the corporation are as follows) AA3, AAT'@AA?'TE :,+'6,AC, BBBBBBBBBBBB BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBB BBBBBBBBBBBB BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBB BBBBBBBBBBBB BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBB BBBBBBBBBBBB BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBB BBBBBBBBBBBB BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBB +'GTF) That the n $ber of directors or tr stees of the corporation shall be BBBBBBB- and the na$es, nationalities and residences of the first directors or tr stees of the corporation are as follows) AA3, AAT'@AA?'TE :,+'6,AC, BBBBBBBBBBBB BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBB BBBBBBBBBBBB BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBB BBBBBBBBBBBB BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBB BBBBBBBBBBBB BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBB BBBBBBBBBBBB BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBB +,H,ATF) That the a thori"ed capital stock of the corporation is BBBBBBBBBBBBBBBBBBBBBB (PBBBBBBBBBBB) P,+@+ in lawf l $oney of the Philippines, divided into BBBBBBBBBB shares with the par val e of BBBBBBBBBBBBBBBBBBBB (PBBBBBBBBBBBBB) Pesos per share. ('n case all the share are witho t par val e)) That the capital stock of the corporation is BBBBBBBBBBBBBB shares witho t par val e. ('n case so$e shares have par val e and so$e are witho t par val e)) That the capital stock of said corporation consists of BBBBBBBBBBBBB shares of which BBBBBBBBBBBBBB shares are of the par val e of BBBBBBBBBBBBBBBBB (PBBBBBBBBBBBB) P,+@+ each, and of which BBBBBBBBBBBBBBBBB shares are witho t par val e. ,'IFTF) That at least twenty five (#.;) per cent of the a thori"ed capital stock above stated has been s bscribed as follows) Aa$e of Ao. of +hares A$o nt Aationality + bscriber + bscribed + bscribed BBBBBBBBBBBB BBBBBBBBBBBB BBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBBBBBB BBBBBB BBBBBBBBBBBB BBBBBBBBBBBB BBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBBBBBB BBBBBB BBBBBBBBBBBB BBBBBBBBBBBB BBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBBBBBB BBBBBB BBBBBBBBBBBB BBBBBBBBBBBB BBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB

BBBBBBB BBBBBBB BBBBBB BBBBBBBBBBBB BBBBBBBBBBBB BBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBBBBBB BBBBBB BBBBBBBBBBBB BBBBBBBBBBBB BBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB BBBBBBB BBBBBB A'ATF) That the above%na$ed s bscribers have paid at least twenty%five (#.;) percent of the total s bscription as follows) Aa$e of Total A$o nt + bscribed + bscriber Paid%'n BBBBBBBBBBBB BBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB B BBBBBBBBBBBB BBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB B BBBBBBBBBBBB BBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB B BBBBBBBBBBBB BBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB B BBBBBBBBBBBB BBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBB B (3odify Aos. 5 and = if shares are with no par val e. 'n case the corporation is non%stock, Aos. 4, 5 and = of the above articles $ay be $odified accordingly, and it is s fficient if the articles state the a$o nt of capital or $oney contrib ted or donated by specified persons, stating the na$es, nationalities and residences of the contrib tors or donors and the respective a$o nt given by each.) T,ATF) That BBBBBBBBBBBBBBBBBBBBB has been elected by the s bscribers as Treas rer of the Corporation to act as s ch ntil his s ccessor is d ly elected and * alified in accordance with the by%laws, and that as s ch Treas rer, he has been a thori"ed to receive for and in the na$e and for the benefit of the corporation, all s bscription (or fees) or contrib tions or donations paid or given by the s bscribers or $e$bers. ,?,H,ATF) (Corporations which will engage in any b siness or activity reserved for 7ilipino citi"ens shall provide the following)) "Ao transfer of stock or interest which shall red ce the ownership of 7ilipino citi"ens to less than the re* ired percentage of the capital stock as provided by e!isting laws shall be allowed or per$itted to be recorded in the proper books of the corporation and this restriction shall be indicated in all stock certificates iss ed by the corporation." 'A 0'TA,++ 0F,:,@7, we have here nto signed these Articles of 'ncorporation, this BBBBBBBBBB day of BBBBBBBBBBBBBBBB, 1= BBBBBB in the City<3 nicipality of BBBBBBBBBBBBBBBBBBBB, Province of BBBBBBBBBBBBBBBBBBBBBBBB, :ep blic of the Philippines. BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB (Aa$es and signat res of the incorporators) +'IA,6 'A TF, P:,+,AC, @7) BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB (Aotarial Acknowledg$ent) T:,A+>:,:8+ A77'6AH'T :,P>D?'C @7 TF, PF'?'PP'A,+) C'TE<3>A'C'PA?'TE @7 ) +.+. P:@H'AC, @7 ) ', BBBBBBBBBBBBBBBBBBBB, being d ly sworn, depose and say) That ' have been elected by the s bscribers of the corporation as Treas rer thereof, to act as s ch ntil $y s ccessor has been d ly elected and * alified in accordance with the by%laws of the corporation, and that as s ch Treas rer, ' hereby certify nder oath that at least #.; of the a thori"ed capital stock of the corporation has been s bscribed and at least #.; of the total

s bscription has been paid, and received by $e, in cash or property, in the a$o nt of not less than P.,///.//, in accordance with the Corporation Code. BBBBBBBBBBBBBBBBBBBB (+ignat re of Treas rer) +>D+C:'D,6 AA6 +0@:A to before $e, a Aotary P blic, for and in the City<3 nicipality ofBBBBBBBBBBBBBBBBBBBProvince of BBBBBBBBBBBBBBBBBBBBB, this BBBBBBB day of BBBBBBBBBBB, 1= BBBBB- by BBBBBBBBBBBBBBBBBB with :es. Cert. Ao. BBBBBBBBBBB iss ed at BBBBBBBBBBBBBBBBBBBBBBB on BBBBBBBBBBBB, 1= BBBBBB A@TA:E P>D?'C 3y co$$ission e!pires on BBBBBBBBB, 1= BBBBB 6oc. Ao. BBBBBBBBBPage Ao. BBBBBBBBBDook Ao. BBBBBBBB+eries of 1=BBBB (4a) Secti n !6" $mendment of $rticles of %ncorporation. >nless otherwise prescribed by this Code or by special law, and for legiti$ate p rposes, any provision or $atter stated in the articles of incorporation $ay be a$ended by a $a9ority vote of the board of directors or tr stees and the vote or written assent of the stockholders representing at least two%thirds (#<&) of the o tstanding capital stock, witho t pre9 dice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code, or the vote or written assent of at least two%thirds (#<&) of the $e$bers if it be a non%stock corporation. The original and a$ended articles together shall contain all provisions re* ired by law to be set o t in the articles of incorporation. + ch articles, as a$ended shall be indicated by nderscoring the change or changes $ade, and a copy thereof d ly certified nder oath by the corporate secretary and a $a9ority of the directors or tr stees stating the fact that said a$end$ent or a$end$ents have been d ly approved by the re* ired vote of the stockholders or $e$bers, shall be s b$itted to the +ec rities and ,!change Co$$ission. The a$end$ents shall take effect pon their approval by the +ec rities and ,!change Co$$ission or fro$ the date of filing with the said Co$$ission if not acted pon within si! (2) $onths fro$ the date of filing for a ca se not attrib table to the corporation. Secti n !'" &rounds when articles of incorporation or amendment may be re'ected or disappro(ed. The +ec rities and ,!change Co$$ission $ay re9ect the articles of incorporation or disapprove any a$end$ent thereto if the sa$e is not in co$pliance with the re* ire$ents of this Code) Provided, That the Co$$ission shall give the incorporators a reasonable ti$e within which to correct or $odify the ob9ectionable portions of the articles or a$end$ent. The following are gro nds for s ch re9ection or disapproval) 1. That the articles of incorporation or any a$end$ent thereto is not s bstantially in accordance with the for$ prescribed herein#. That the p rpose or p rposes of the corporation are patently nconstit tional, illegal, i$$oral, or contrary to govern$ent r les and reg lations&. That the Treas rer8s Affidavit concerning the a$o nt of capital stock s bscribed and<or paid is false(. That the percentage of ownership of the capital stock to be owned by citi"ens of the Philippines has not been co$plied with as re* ired by e!isting laws or the Constit tion. Ao articles of incorporation or a$end$ent to articles of incorporation of banks, banking and * asi% banking instit tions, b ilding and loan associations, tr st co$panies and other financial inter$ediaries, ins rance co$panies, p blic tilities, ed cational instit tions, and other corporations governed by special laws shall be accepted or approved by the Co$$ission nless acco$panied by a favorable reco$$endation of the appropriate govern$ent agency to the effect that s ch articles or a$end$ent is in accordance with law. (n) Secti n !8" Corporate name. Ao corporate na$e $ay be allowed by the +ec rities and ,!change Co$$ission if the proposed na$e is identical or deceptively or conf singly si$ilar to that of any e!isting corporation or to any other na$e already protected by law or is patently deceptive,

conf sing or contrary to e!isting laws. 0hen a change in the corporate na$e is approved, the Co$$ission shall iss e an a$ended certificate of incorporation nder the a$ended na$e. (n) Secti n !(" Commencement of corporate e)istence. A private corporation for$ed or organi"ed nder this Code co$$ences to have corporate e!istence and 9 ridical personality and is dee$ed incorporated fro$ the date the +ec rities and ,!change Co$$ission iss es a certificate of incorporation nder its official seal- and there pon the incorporators, stockholders<$e$bers and their s ccessors shall constit te a body politic and corporate nder the na$e stated in the articles of incorporation for the period of ti$e $entioned therein, nless said period is e!tended or the corporation is sooner dissolved in accordance with law. (n) Secti n #*" *e facto corporations. The d e incorporation of any corporation clai$ing in good faith to be a corporation nder this Code, and its right to e!ercise corporate powers, shall not be in* ired into collaterally in any private s it to which s ch corporation $ay be a party. + ch in* iry $ay be $ade by the +olicitor Ieneral in a * o warranto proceeding. (n) Secti n #!" Corporation by estoppel. All persons who ass $e to act as a corporation knowing it to be witho t a thority to do so shall be liable as general partners for all debts, liabilities and da$ages inc rred or arising as a res lt thereof) Provided, however, That when any s ch ostensible corporation is s ed on any transaction entered by it as a corporation or on any tort co$$itted by it as s ch, it shall not be allowed to se as a defense its lack of corporate personality. @n who ass $es an obligation to an ostensible corporation as s ch, cannot resist perfor$ance thereof on the gro nd that there was in fact no corporation. (n) Secti n ##" +ffects on non,use of corporate charter and continuous inoperation of a corporation. 'f a corporation does not for$ally organi"e and co$$ence the transaction of its b siness or the constr ction of its works within two (#) years fro$ the date of its incorporation, its corporate powers cease and the corporation shall be dee$ed dissolved. Fowever, if a corporation has co$$enced the transaction of its b siness b t s bse* ently beco$es contin o sly inoperative for a period of at least five (.) years, the sa$e shall be a gro nd for the s spension or revocation of its corporate franchise or certificate of incorporation. (1=a) This provision shall not apply if the fail re to organi"e, co$$ence the transaction of its b sinesses or the constr ction of its works, or to contin o sly operate is d e to ca ses beyond the control of the corporation as $ay be deter$ined by the +ec rities and ,!change Co$$ission. TITLE III BOARD OF DIRECTORS+TR,STEES AND OFFICERS Secti n #$" The board of directors or trustees. >nless otherwise provided in this Code, the corporate powers of all corporations for$ed nder this Code shall be e!ercised, all b siness cond cted and all property of s ch corporations controlled and held by the board of directors or tr stees to be elected fro$ a$ong the holders of stocks, or where there is no stock, fro$ a$ong the $e$bers of the corporation, who shall hold office for one (1) year ntil their s ccessors are elected and * alified. (#5a) ,very director $ st own at least one (1) share of the capital stock of the corporation of which he is a director, which share shall stand in his na$e on the books of the corporation. Any director who ceases to be the owner of at least one (1) share of the capital stock of the corporation of which he is a director shall thereby cease to be a director. Tr stees of non%stock corporations $ st be $e$bers thereof. A $a9ority of the directors or tr stees of all corporations organi"ed nder this Code $ st be residents of the Philippines. Secti n #%" +lection of directors or trustees. At all elections of directors or tr stees, there $ st be present, either in person or by representative a thori"ed to act by written pro!y, the owners of a $a9ority of the o tstanding capital stock, or if there be no capital stock, a $a9ority of the $e$bers entitled to vote. The election $ st be by ballot if re* ested by any voting stockholder or $e$ber. 'n stock corporations, every stockholder entitled to vote shall have the right to vote in person or by pro!y the n $ber of shares of stock standing, at the ti$e fi!ed in the by%laws, in his own na$e on the stock books of the corporation, or where the by%laws are silent, at the ti$e of the election- and said stockholder $ay vote s ch n $ber of shares for as $any persons as there are directors to be elected or he $ay c $ late said shares and give one candidate as $any votes as the n $ber of

directors to be elected $ ltiplied by the n $ber of his shares shall e* al, or he $ay distrib te the$ on the sa$e principle a$ong as $any candidates as he shall see fit) Provided, That the total n $ber of votes cast by hi$ shall not e!ceed the n $ber of shares owned by hi$ as shown in the books of the corporation $ ltiplied by the whole n $ber of directors to be elected) Provided, however, That no delin* ent stock shall be voted. >nless otherwise provided in the articles of incorporation or in the by%laws, $e$bers of corporations which have no capital stock $ay cast as $any votes as there are tr stees to be elected b t $ay not cast $ore than one vote for one candidate. Candidates receiving the highest n $ber of votes shall be declared elected. Any $eeting of the stockholders or $e$bers called for an election $ay ad9o rn fro$ day to day or fro$ ti$e to ti$e b t not sine die or indefinitely if, for any reason, no election is held, or if there are not present or represented by pro!y, at the $eeting, the owners of a $a9ority of the o tstanding capital stock, or if there be no capital stock, a $a9ority of the $e$bers entitled to vote. (&1a) Secti n #&" Corporate officers, "uorum. '$$ediately after their election, the directors of a corporation $ st for$ally organi"e by the election of a president, who shall be a director, a treas rer who $ay or $ay not be a director, a secretary who shall be a resident and citi"en of the Philippines, and s ch other officers as $ay be provided for in the by%laws. Any two (#) or $ore positions $ay be held conc rrently by the sa$e person, e!cept that no one shall act as president and secretary or as president and treas rer at the sa$e ti$e. The directors or tr stees and officers to be elected shall perfor$ the d ties en9oined on the$ by law and the by%laws of the corporation. >nless the articles of incorporation or the by%laws provide for a greater $a9ority, a $a9ority of the n $ber of directors or tr stees as fi!ed in the articles of incorporation shall constit te a * or $ for the transaction of corporate b siness, and every decision of at least a $a9ority of the directors or tr stees present at a $eeting at which there is a * or $ shall be valid as a corporate act, e!cept for the election of officers which shall re* ire the vote of a $a9ority of all the $e$bers of the board. 6irectors or tr stees cannot attend or vote by pro!y at board $eetings. (&&a) Secti n #6" eport of election of directors, trustees and officers. 0ithin thirty (&/) days after the election of the directors, tr stees and officers of the corporation, the secretary, or any other officer of the corporation, shall s b$it to the +ec rities and ,!change Co$$ission, the na$es, nationalities and residences of the directors, tr stees, and officers elected. +ho ld a director, tr stee or officer die, resign or in any $anner cease to hold office, his heirs in case of his death, the secretary, or any other officer of the corporation, or the director, tr stee or officer hi$self, shall i$$ediately report s ch fact to the +ec rities and ,!change Co$$ission. (n) Secti n #'" *is"ualification of directors, trustees or officers. Ao person convicted by final 9 dg$ent of an offense p nishable by i$prison$ent for a period e!ceeding si! (2) years, or a violation of this Code co$$itted within five (.) years prior to the date of his election or appoint$ent, shall * alify as a director, tr stee or officer of any corporation. (n) Secti n #8" emo(al of directors or trustees. Any director or tr stee of a corporation $ay be re$oved fro$ office by a vote of the stockholders holding or representing at least two%thirds (#<&) of the o tstanding capital stock, or if the corporation be a non%stock corporation, by a vote of at least two%thirds (#<&) of the $e$bers entitled to vote) Provided, That s ch re$oval shall take place either at a reg lar $eeting of the corporation or at a special $eeting called for the p rpose, and in either case, after previo s notice to stockholders or $e$bers of the corporation of the intention to propose s ch re$oval at the $eeting. A special $eeting of the stockholders or $e$bers of a corporation for the p rpose of re$oval of directors or tr stees, or any of the$, $ st be called by the secretary on order of the president or on the written de$and of the stockholders representing or holding at least a $a9ority of the o tstanding capital stock, or, if it be a non%stock corporation, on the written de$and of a $a9ority of the $e$bers entitled to vote. +ho ld the secretary fail or ref se to call the special $eeting pon s ch de$and or fail or ref se to give the notice, or if there is no secretary, the call for the $eeting $ay be addressed directly to the stockholders or $e$bers by any stockholder or $e$ber of the corporation signing the de$and. Aotice of the ti$e and place of s ch $eeting, as well as of the intention to propose s ch re$oval, $ st be given by p blication or by written notice prescribed in this Code. :e$oval $ay be with or witho t ca se) Provided, That

re$oval witho t ca se $ay not be sed to deprive $inority stockholders or $e$bers of the right of representation to which they $ay be entitled nder +ection #( of this Code. (n) Secti n #(" -acancies in the office of director or trustee. Any vacancy occ rring in the board of directors or tr stees other than by re$oval by the stockholders or $e$bers or by e!piration of ter$, $ay be filled by the vote of at least a $a9ority of the re$aining directors or tr stees, if still constit ting a * or $- otherwise, said vacancies $ st be filled by the stockholders in a reg lar or special $eeting called for that p rpose. A director or tr stee so elected to fill a vacancy shall be elected only or the ne!pired ter$ of his predecessor in office. Any directorship or tr steeship to be filled by reason of an increase in the n $ber of directors or tr stees shall be filled only by an election at a reg lar or at a special $eeting of stockholders or $e$bers d ly called for the p rpose, or in the sa$e $eeting a thori"ing the increase of directors or tr stees if so stated in the notice of the $eeting. (n) Secti n $*" Compensation of directors. 'n the absence of any provision in the by%laws fi!ing their co$pensation, the directors shall not receive any co$pensation, as s ch directors, e!cept for reasonable per die$s) Provided, however, That any s ch co$pensation other than per die$s $ay be granted to directors by the vote of the stockholders representing at least a $a9ority of the o tstanding capital stock at a reg lar or special stockholders8 $eeting. 'n no case shall the total yearly co$pensation of directors, as s ch directors, e!ceed ten (1/;) percent of the net inco$e before inco$e ta! of the corporation d ring the preceding year. (n) Secti n $!" .iability of directors, trustees or officers. % 6irectors or tr stees who willf lly and knowingly vote for or assent to patently nlawf l acts of the corporation or who are g ilty of gross negligence or bad faith in directing the affairs of the corporation or ac* ire any personal or pec niary interest in conflict with their d ty as s ch directors or tr stees shall be liable 9ointly and severally for all da$ages res lting therefro$ s ffered by the corporation, its stockholders or $e$bers and other persons. 0hen a director, tr stee or officer atte$pts to ac* ire or ac* ire, in violation of his d ty, any interest adverse to the corporation in respect of any $atter which has been reposed in hi$ in confidence, as to which e* ity i$poses a disability pon hi$ to deal in his own behalf, he shall be liable as a tr stee for the corporation and $ st acco nt for the profits which otherwise wo ld have accr ed to the corporation. (n) Secti n $#" *ealings of directors, trustees or officers with the corporation. A contract of the corporation with one or $ore of its directors or tr stees or officers is voidable, at the option of s ch corporation, nless all the following conditions are present) 1. That the presence of s ch director or tr stee in the board $eeting in which the contract was approved was not necessary to constit te a * or $ for s ch $eeting#. That the vote of s ch director or tr stee was not necessary for the approval of the contract&. That the contract is fair and reasonable nder the circ $stances- and (. That in case of an officer, the contract has been previo sly a thori"ed by the board of directors. 0here any of the first two conditions set forth in the preceding paragraph is absent, in the case of a contract with a director or tr stee, s ch contract $ay be ratified by the vote of the stockholders representing at least two%thirds (#<&) of the o tstanding capital stock or of at least two%thirds (#<&) of the $e$bers in a $eeting called for the p rpose) Provided, That f ll disclos re of the adverse interest of the directors or tr stees involved is $ade at s ch $eeting) Provided, however, That the contract is fair and reasonable nder the circ $stances. (n) Secti n $$" Contracts between corporations with interlocking directors. ,!cept in cases of fra d, and provided the contract is fair and reasonable nder the circ $stances, a contract between two or $ore corporations having interlocking directors shall not be invalidated on that gro nd alone) Provided, That if the interest of the interlocking director in one corporation is s bstantial and his interest in the other corporation or corporations is $erely no$inal, he shall be s b9ect to the provisions of the preceding section insofar as the latter corporation or corporations are concerned. +tockholdings e!ceeding twenty (#/;) percent of the o tstanding capital stock shall be considered s bstantial for p rposes of interlocking directors. (n) Secti n $%" *isloyalty of a director. 0here a director, by virt e of his office, ac* ires for hi$self

a b siness opport nity which sho ld belong to the corporation, thereby obtaining profits to the pre9 dice of s ch corporation, he $ st acco nt to the latter for all s ch profits by ref nding the sa$e, nless his act has been ratified by a vote of the stockholders owning or representing at least two%thirds (#<&) of the o tstanding capital stock. This provision shall be applicable, notwithstanding the fact that the director risked his own f nds in the vent re. (n) Secti n $&" +)ecuti(e committee. The by%laws of a corporation $ay create an e!ec tive co$$ittee, co$posed of not less than three $e$bers of the board, to be appointed by the board. +aid co$$ittee $ay act, by $a9ority vote of all its $e$bers, on s ch specific $atters within the co$petence of the board, as $ay be delegated to it in the by%laws or on a $a9ority vote of the board, e!cept with respect to) (1) approval of any action for which shareholders8 approval is also re* ired(#) the filing of vacancies in the board- (&) the a$end$ent or repeal of by%laws or the adoption of new by%laws- (() the a$end$ent or repeal of any resol tion of the board which by its e!press ter$s is not so a$endable or repealable- and (.) a distrib tion of cash dividends to the shareholders. TITLE IV PO-ERS OF CORPORATIONS Secti n $6" Corporate powers and capacity. ,very corporation incorporated nder this Code has the power and capacity) 1. To s e and be s ed in its corporate na$e#. @f s ccession by its corporate na$e for the period of ti$e stated in the articles of incorporation and the certificate of incorporation&. To adopt and se a corporate seal(. To a$end its articles of incorporation in accordance with the provisions of this Code.. To adopt by%laws, not contrary to law, $orals, or p blic policy, and to a$end or repeal the sa$e in accordance with this Code2. 'n case of stock corporations, to iss e or sell stocks to s bscribers and to sell stocks to s bscribers and to sell treas ry stocks in accordance with the provisions of this Code- and to ad$it $e$bers to the corporation if it be a non%stock corporation4. To p rchase, receive, take or grant, hold, convey, sell, lease, pledge, $ortgage and otherwise deal with s ch real and personal property, incl ding sec rities and bonds of other corporations, as the transaction of the lawf l b siness of the corporation $ay reasonably and necessarily re* ire, s b9ect to the li$itations prescribed by law and the Constit tion5. To enter into $erger or consolidation with other corporations as provided in this Code=. To $ake reasonable donations, incl ding those for the p blic welfare or for hospital, charitable, c lt ral, scientific, civic, or si$ilar p rposes) Provided, That no corporation, do$estic or foreign, shall give donations in aid of any political party or candidate or for p rposes of partisan political activity1/. To establish pension, retire$ent, and other plans for the benefit of its directors, tr stees, officers and e$ployees- and 11. To e!ercise s ch other powers as $ay be essential or necessary to carry o t its p rpose or p rposes as stated in the articles of incorporation. (1&a) Secti n $'" Power to e)tend or shorten corporate term. A private corporation $ay e!tend or shorten its ter$ as stated in the articles of incorporation when approved by a $a9ority vote of the board of directors or tr stees and ratified at a $eeting by the stockholders representing at least two% thirds (#<&) of the o tstanding capital stock or by at least two%thirds (#<&) of the $e$bers in case of non%stock corporations. 0ritten notice of the proposed action and of the ti$e and place of the $eeting shall be addressed to each stockholder or $e$ber at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally) Provided, That in case of e!tension of corporate ter$, any dissenting stockholder $ay e!ercise his appraisal right nder the conditions provided in this code. (n) Secti n $8" Power to increase or decrease capital stock/ incur, create or increase bonded indebtedness. Ao corporation shall increase or decrease its capital stock or inc r, create or increase any bonded indebtedness nless approved by a $a9ority vote of the board of directors and, at a stockholder8s $eeting d ly called for the p rpose, two%thirds (#<&) of the o tstanding capital

stock shall favor the increase or di$in tion of the capital stock, or the inc rring, creating or increasing of any bonded indebtedness. 0ritten notice of the proposed increase or di$in tion of the capital stock or of the inc rring, creating, or increasing of any bonded indebtedness and of the ti$e and place of the stockholder8s $eeting at which the proposed increase or di$in tion of the capital stock or the inc rring or increasing of any bonded indebtedness is to be considered, $ st be addressed to each stockholder at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally. A certificate in d plicate $ st be signed by a $a9ority of the directors of the corporation and co ntersigned by the chair$an and the secretary of the stockholders8 $eeting, setting forth) (1) That the re* ire$ents of this section have been co$plied with(#) The a$o nt of the increase or di$in tion of the capital stock(&) 'f an increase of the capital stock, the a$o nt of capital stock or n $ber of shares of no%par stock thereof act ally s bscribed, the na$es, nationalities and residences of the persons s bscribing, the a$o nt of capital stock or n $ber of no%par stock s bscribed by each, and the a$o nt paid by each on his s bscription in cash or property, or the a$o nt of capital stock or n $ber of shares of no%par stock allotted to each stock%holder if s ch increase is for the p rpose of $aking effective stock dividend therefor a thori"ed(() Any bonded indebtedness to be inc rred, created or increased(.) The act al indebtedness of the corporation on the day of the $eeting(2) The a$o nt of stock represented at the $eeting- and (4) The vote a thori"ing the increase or di$in tion of the capital stock, or the inc rring, creating or increasing of any bonded indebtedness. Any increase or decrease in the capital stock or the inc rring, creating or increasing of any bonded indebtedness shall re* ire prior approval of the +ec rities and ,!change Co$$ission. @ne of the d plicate certificates shall be kept on file in the office of the corporation and the other shall be filed with the +ec rities and ,!change Co$$ission and attached to the original articles of incorporation. 7ro$ and after approval by the +ec rities and ,!change Co$$ission and the iss ance by the Co$$ission of its certificate of filing, the capital stock shall stand increased or decreased and the inc rring, creating or increasing of any bonded indebtedness a thori"ed, as the certificate of filing $ay declare) Provided, That the +ec rities and ,!change Co$$ission shall not accept for filing any certificate of increase of capital stock nless acco$panied by the sworn state$ent of the treas rer of the corporation lawf lly holding office at the ti$e of the filing of the certificate, showing that at least twenty%five (#.;) percent of s ch increased capital stock has been s bscribed and that at least twenty%five (#.;) percent of the a$o nt s bscribed has been paid either in act al cash to the corporation or that there has been transferred to the corporation property the val ation of which is e* al to twenty%five (#.;) percent of the s bscription) Provided, f rther, That no decrease of the capital stock shall be approved by the Co$$ission if its effect shall pre9 dice the rights of corporate creditors. Aon%stock corporations $ay inc r or create bonded indebtedness, or increase the sa$e, with the approval by a $a9ority vote of the board of tr stees and of at least two%thirds (#<&) of the $e$bers in a $eeting d ly called for the p rpose. Donds iss ed by a corporation shall be registered with the +ec rities and ,!change Co$$ission, which shall have the a thority to deter$ine the s fficiency of the ter$s thereof. (14a) Secti n $(" Power to deny pre,empti(e right. All stockholders of a stock corporation shall en9oy pre%e$ptive right to s bscribe to all iss es or disposition of shares of any class, in proportion to their respective shareholdings, nless s ch right is denied by the articles of incorporation or an a$end$ent thereto) Provided, That s ch pre%e$ptive right shall not e!tend to shares to be iss ed in co$pliance with laws re* iring stock offerings or $ini$ $ stock ownership by the p blic- or to shares to be iss ed in good faith with the approval of the stockholders representing two%thirds (#<&) of the o tstanding capital stock, in e!change for property needed for corporate p rposes or in pay$ent of a previo sly contracted debt. Secti n %*" 0ale or other disposition of assets. + b9ect to the provisions of e!isting laws on illegal co$binations and $onopolies, a corporation $ay, by a $a9ority vote of its board of directors or

tr stees, sell, lease, e!change, $ortgage, pledge or otherwise dispose of all or s bstantially all of its property and assets, incl ding its goodwill, pon s ch ter$s and conditions and for s ch consideration, which $ay be $oney, stocks, bonds or other instr $ents for the pay$ent of $oney or other property or consideration, as its board of directors or tr stees $ay dee$ e!pedient, when a thori"ed by the vote of the stockholders representing at least two%thirds (#<&) of the o tstanding capital stock, or in case of non%stock corporation, by the vote of at least to two%thirds (#<&) of the $e$bers, in a stockholder8s or $e$ber8s $eeting d ly called for the p rpose. 0ritten notice of the proposed action and of the ti$e and place of the $eeting shall be addressed to each stockholder or $e$ber at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally) Provided, That any dissenting stockholder $ay e!ercise his appraisal right nder the conditions provided in this Code. A sale or other disposition shall be dee$ed to cover s bstantially all the corporate property and assets if thereby the corporation wo ld be rendered incapable of contin ing the b siness or acco$plishing the p rpose for which it was incorporated. After s ch a thori"ation or approval by the stockholders or $e$bers, the board of directors or tr stees $ay, nevertheless, in its discretion, abandon s ch sale, lease, e!change, $ortgage, pledge or other disposition of property and assets, s b9ect to the rights of third parties nder any contract relating thereto, witho t f rther action or approval by the stockholders or $e$bers. Aothing in this section is intended to restrict the power of any corporation, witho t the a thori"ation by the stockholders or $e$bers, to sell, lease, e!change, $ortgage, pledge or otherwise dispose of any of its property and assets if the sa$e is necessary in the s al and reg lar co rse of b siness of said corporation or if the proceeds of the sale or other disposition of s ch property and assets be appropriated for the cond ct of its re$aining b siness. 'n non%stock corporations where there are no $e$bers with voting rights, the vote of at least a $a9ority of the tr stees in office will be s fficient a thori"ation for the corporation to enter into any transaction a thori"ed by this section. Secti n %!" Power to ac"uire own shares. A stock corporation shall have the power to p rchase or ac* ire its own shares for a legiti$ate corporate p rpose or p rposes, incl ding b t not li$ited to the following cases) Provided, That the corporation has nrestricted retained earnings in its books to cover the shares to be p rchased or ac* ired) 1. To eli$inate fractional shares arising o t of stock dividends#. To collect or co$pro$ise an indebtedness to the corporation, arising o t of npaid s bscription, in a delin* ency sale, and to p rchase delin* ent shares sold d ring said sale- and &. To pay dissenting or withdrawing stockholders entitled to pay$ent for their shares nder the provisions of this Code. (a) Secti n %#" Power to in(est corporate funds in another corporation or business or for any other purpose. + b9ect to the provisions of this Code, a private corporation $ay invest its f nds in any other corporation or b siness or for any p rpose other than the pri$ary p rpose for which it was organi"ed when approved by a $a9ority of the board of directors or tr stees and ratified by the stockholders representing at least two%thirds (#<&) of the o tstanding capital stock, or by at least two thirds (#<&) of the $e$bers in the case of non%stock corporations, at a stockholder8s or $e$ber8s $eeting d ly called for the p rpose. 0ritten notice of the proposed invest$ent and the ti$e and place of the $eeting shall be addressed to each stockholder or $e$ber at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally) Provided, That any dissenting stockholder shall have appraisal right as provided in this Code) Provided, however, That where the invest$ent by the corporation is reasonably necessary to acco$plish its pri$ary p rpose as stated in the articles of incorporation, the approval of the stockholders or $e$bers shall not be necessary. (14 1<#a) Secti n %$" Power to declare di(idends.% The board of directors of a stock corporation $ay declare dividends o t of the nrestricted retained earnings which shall be payable in cash, in property, or in stock to all stockholders on the basis of o tstanding stock held by the$) Provided, That any cash dividends d e on delin* ent stock shall first be applied to the npaid balance on the s bscription pl s costs and e!penses, while stock dividends shall be withheld fro$ the delin* ent stockholder

ntil his npaid s bscription is f lly paid) Provided, f rther, That no stock dividend shall be iss ed witho t the approval of stockholders representing not less than two%thirds (#<&) of the o tstanding capital stock at a reg lar or special $eeting d ly called for the p rpose. (12a) +tock corporations are prohibited fro$ retaining s rpl s profits in e!cess of one h ndred (1//;) percent of their paid%in capital stock, e!cept) (1) when 9 stified by definite corporate e!pansion pro9ects or progra$s approved by the board of directors- or (#) when the corporation is prohibited nder any loan agree$ent with any financial instit tion or creditor, whether local or foreign, fro$ declaring dividends witho t its<his consent, and s ch consent has not yet been sec red- or (&) when it can be clearly shown that s ch retention is necessary nder special circ $stances obtaining in the corporation, s ch as when there is need for special reserve for probable contingencies. (n) Secti n %%" Power to enter into management contract. Ao corporation shall concl de a $anage$ent contract with another corporation nless s ch contract shall have been approved by the board of directors and by stockholders owning at least the $a9ority of the o tstanding capital stock, or by at least a $a9ority of the $e$bers in the case of a non%stock corporation, of both the $anaging and the $anaged corporation, at a $eeting d ly called for the p rpose) Provided, That (1) where a stockholder or stockholders representing the sa$e interest of both the $anaging and the $anaged corporations own or control $ore than one%third (1<&) of the total o tstanding capital stock entitled to vote of the $anaging corporation- or (#) where a $a9ority of the $e$bers of the board of directors of the $anaging corporation also constit te a $a9ority of the $e$bers of the board of directors of the $anaged corporation, then the $anage$ent contract $ st be approved by the stockholders of the $anaged corporation owning at least two%thirds (#<&) of the total o tstanding capital stock entitled to vote, or by at least two%thirds (#<&) of the $e$bers in the case of a non%stock corporation. Ao $anage$ent contract shall be entered into for a period longer than five years for any one ter$. The provisions of the ne!t preceding paragraph shall apply to any contract whereby a corporation ndertakes to $anage or operate all or s bstantially all of the b siness of another corporation, whether s ch contracts are called service contracts, operating agree$ents or otherwise) Provided, however, That s ch service contracts or operating agree$ents which relate to the e!ploration, develop$ent, e!ploitation or tili"ation of nat ral reso rces $ay be entered into for s ch periods as $ay be provided by the pertinent laws or reg lations. (n) Secti n %&" >ltra vires acts of corporations. Ao corporation nder this Code shall possess or e!ercise any corporate powers e!cept those conferred by this Code or by its articles of incorporation and e!cept s ch as are necessary or incidental to the e!ercise of the powers so conferred. (n) TITLE V B. LA-S Secti n %6" $doption of by,laws. ,very corporation for$ed nder this Code $ st, within one (1) $onth after receipt of official notice of the iss ance of its certificate of incorporation by the +ec rities and ,!change Co$$ission, adopt a code of by%laws for its govern$ent not inconsistent with this Code. 7or the adoption of by%laws by the corporation the affir$ative vote of the stockholders representing at least a $a9ority of the o tstanding capital stock, or of at least a $a9ority of the $e$bers in case of non%stock corporations, shall be necessary. The by%laws shall be signed by the stockholders or $e$bers voting for the$ and shall be kept in the principal office of the corporation, s b9ect to the inspection of the stockholders or $e$bers d ring office ho rs. A copy thereof, d ly certified to by a $a9ority of the directors or tr stees co ntersigned by the secretary of the corporation, shall be filed with the +ec rities and ,!change Co$$ission which shall be attached to the original articles of incorporation. Aotwithstanding the provisions of the preceding paragraph, by%laws $ay be adopted and filed prior to incorporation- in s ch case, s ch by%laws shall be approved and signed by all the incorporators and s b$itted to the +ec rities and ,!change Co$$ission, together with the articles of incorporation. 'n all cases, by%laws shall be effective only pon the iss ance by the +ec rities and ,!change Co$$ission of a certification that the by%laws are not inconsistent with this Code. The +ec rities and ,!change Co$$ission shall not accept for filing the by%laws or any a$end$ent

thereto of any bank, banking instit tion, b ilding and loan association, tr st co$pany, ins rance co$pany, p blic tility, ed cational instit tion or other special corporations governed by special laws, nless acco$panied by a certificate of the appropriate govern$ent agency to the effect that s ch by%laws or a$end$ents are in accordance with law. (#/a) Secti n %'" Contents of by,laws. + b9ect to the provisions of the Constit tion, this Code, other special laws, and the articles of incorporation, a private corporation $ay provide in its by%laws for) 1. The ti$e, place and $anner of calling and cond cting reg lar or special $eetings of the directors or tr stees#. The ti$e and $anner of calling and cond cting reg lar or special $eetings of the stockholders or $e$bers&. The re* ired * or $ in $eetings of stockholders or $e$bers and the $anner of voting therein(. The for$ for pro!ies of stockholders and $e$bers and the $anner of voting the$.. The * alifications, d ties and co$pensation of directors or tr stees, officers and e$ployees2. The ti$e for holding the ann al election of directors of tr stees and the $ode or $anner of giving notice thereof4. The $anner of election or appoint$ent and the ter$ of office of all officers other than directors or tr stees5. The penalties for violation of the by%laws=. 'n the case of stock corporations, the $anner of iss ing stock certificates- and 1/. + ch other $atters as $ay be necessary for the proper or convenient transaction of its corporate b siness and affairs. (#1a) Secti n %8" $mendments to by,laws. The board of directors or tr stees, by a $a9ority vote thereof, and the owners of at least a $a9ority of the o tstanding capital stock, or at least a $a9ority of the $e$bers of a non%stock corporation, at a reg lar or special $eeting d ly called for the p rpose, $ay a$end or repeal any by%laws or adopt new by%laws. The owners of two%thirds (#<&) of the o tstanding capital stock or two%thirds (#<&) of the $e$bers in a non%stock corporation $ay delegate to the board of directors or tr stees the power to a$end or repeal any by%laws or adopt new by%laws) Provided, That any power delegated to the board of directors or tr stees to a$end or repeal any by%laws or adopt new by%laws shall be considered as revoked whenever stockholders owning or representing a $a9ority of the o tstanding capital stock or a $a9ority of the $e$bers in non%stock corporations, shall so vote at a reg lar or special $eeting. 0henever any a$end$ent or new by%laws are adopted, s ch a$end$ent or new by%laws shall be attached to the original by%laws in the office of the corporation, and a copy thereof, d ly certified nder oath by the corporate secretary and a $a9ority of the directors or tr stees, shall be filed with the +ec rities and ,!change Co$$ission the sa$e to be attached to the original articles of incorporation and original by%laws. The a$ended or new by%laws shall only be effective pon the iss ance by the +ec rities and ,!change Co$$ission of a certification that the sa$e are not inconsistent with this Code. (##a and #&a) TITLE VI /EETINGS Secti n %(" 1inds of meetings. 3eetings of directors, tr stees, stockholders, or $e$bers $ay be reg lar or special. (n) Secti n &*" egular and special meetings of stockholders or members. % :eg lar $eetings of stockholders or $e$bers shall be held ann ally on a date fi!ed in the by%laws, or if not so fi!ed, on any date in April of every year as deter$ined by the board of directors or tr stees) Provided, That written notice of reg lar $eetings shall be sent to all stockholders or $e$bers of record at least two (#) weeks prior to the $eeting, nless a different period is re* ired by the by%laws. +pecial $eetings of stockholders or $e$bers shall be held at any ti$e dee$ed necessary or as provided in the by%laws) Provided, however, That at least one (1) week written notice shall be sent to all stockholders or $e$bers, nless otherwise provided in the by%laws. Aotice of any $eeting $ay be waived, e!pressly or i$pliedly, by any stockholder or $e$ber. 0henever, for any ca se, there is no person a thori"ed to call a $eeting, the +ec rities and

,!change Co$$ission, pon petition of a stockholder or $e$ber on a showing of good ca se therefor, $ay iss e an order to the petitioning stockholder or $e$ber directing hi$ to call a $eeting of the corporation by giving proper notice re* ired by this Code or by the by%laws. The petitioning stockholder or $e$ber shall preside thereat ntil at least a $a9ority of the stockholders or $e$bers present have chosen one of their n $ber as presiding officer. (#(, #2) Secti n &!" Place and time of meetings of stockholders of members. +tockholder8s or $e$ber8s $eetings, whether reg lar or special, shall be held in the city or $ nicipality where the principal office of the corporation is located, and if practicable in the principal office of the corporation) Provided, That 3etro 3anila shall, for p rposes of this section, be considered a city or $ nicipality. Aotice of $eetings shall be in writing, and the ti$e and place thereof stated therein. All proceedings had and any b siness transacted at any $eeting of the stockholders or $e$bers, if within the powers or a thority of the corporation, shall be valid even if the $eeting be i$properly held or called, provided all the stockholders or $e$bers of the corporation are present or d ly represented at the $eeting. (#( and #.) Secti n &#" 2uorum in meetings. >nless otherwise provided for in this Code or in the by%laws, a * or $ shall consist of the stockholders representing a $a9ority of the o tstanding capital stock or a $a9ority of the $e$bers in the case of non%stock corporations. (n) Secti n &$" egular and special meetings of directors or trustees. :eg lar $eetings of the board of directors or tr stees of every corporation shall be held $onthly, nless the by%laws provide otherwise. +pecial $eetings of the board of directors or tr stees $ay be held at any ti$e pon the call of the president or as provided in the by%laws. 3eetings of directors or tr stees of corporations $ay be held anywhere in or o tside of the Philippines, nless the by%laws provide otherwise. Aotice of reg lar or special $eetings stating the date, ti$e and place of the $eeting $ st be sent to every director or tr stee at least one (1) day prior to the sched led $eeting, nless otherwise provided by the by%laws. A director or tr stee $ay waive this re* ire$ent, either e!pressly or i$pliedly. (n) Secti n &%" 3ho shall preside at meetings. The president shall preside at all $eetings of the directors or tr stee as well as of the stockholders or $e$bers, nless the by%laws provide otherwise. (n) Secti n &&" ight to (ote of pledgors, mortgagors, and administrators. 'n case of pledged or $ortgaged shares in stock corporations, the pledgor or $ortgagor shall have the right to attend and vote at $eetings of stockholders, nless the pledgee or $ortgagee is e!pressly given by the pledgor or $ortgagor s ch right in writing which is recorded on the appropriate corporate books. (n) ,!ec tors, ad$inistrators, receivers, and other legal representatives d ly appointed by the co rt $ay attend and vote in behalf of the stockholders or $e$bers witho t need of any written pro!y. (#4a) Secti n &6" -oting in case of 'oint ownership of stock. 'n case of shares of stock owned 9ointly by two or $ore persons, in order to vote the sa$e, the consent of all the co%owners shall be necessary, nless there is a written pro!y, signed by all the co%owners, a thori"ing one or so$e of the$ or any other person to vote s ch share or shares) Provided, That when the shares are owned in an "and<or" capacity by the holders thereof, any one of the 9oint owners can vote said shares or appoint a pro!y therefor. (n) Secti n &'" -oting right for treasury shares. Treas ry shares shall have no voting right as long as s ch shares re$ain in the Treas ry. (n) Secti n &8" Pro)ies. +tockholders and $e$bers $ay vote in person or by pro!y in all $eetings of stockholders or $e$bers. Pro!ies shall in writing, signed by the stockholder or $e$ber and filed before the sched led $eeting with the corporate secretary. >nless otherwise provided in the pro!y, it shall be valid only for the $eeting for which it is intended. Ao pro!y shall be valid and effective for a period longer than five (.) years at any one ti$e. (n) Secti n &(" -oting trusts. @ne or $ore stockholders of a stock corporation $ay create a voting tr st for the p rpose of conferring pon a tr stee or tr stees the right to vote and other rights

pertaining to the shares for a period not e!ceeding five (.) years at any ti$e) Provided, That in the case of a voting tr st specifically re* ired as a condition in a loan agree$ent, said voting tr st $ay be for a period e!ceeding five (.) years b t shall a to$atically e!pire pon f ll pay$ent of the loan. A voting tr st agree$ent $ st be in writing and notari"ed, and shall specify the ter$s and conditions thereof. A certified copy of s ch agree$ent shall be filed with the corporation and with the +ec rities and ,!change Co$$ission- otherwise, said agree$ent is ineffective and nenforceable. The certificate or certificates of stock covered by the voting tr st agree$ent shall be cancelled and new ones shall be iss ed in the na$e of the tr stee or tr stees stating that they are iss ed p rs ant to said agree$ent. 'n the books of the corporation, it shall be noted that the transfer in the na$e of the tr stee or tr stees is $ade p rs ant to said voting tr st agree$ent. The tr stee or tr stees shall e!ec te and deliver to the transferors voting tr st certificates, which shall be transferable in the sa$e $anner and with the sa$e effect as certificates of stock. The voting tr st agree$ent filed with the corporation shall be s b9ect to e!a$ination by any stockholder of the corporation in the sa$e $anner as any other corporate book or record) Provided, That both the transferor and the tr stee or tr stees $ay e!ercise the right of inspection of all corporate books and records in accordance with the provisions of this Code. Any other stockholder $ay transfer his shares to the sa$e tr stee or tr stees pon the ter$s and conditions stated in the voting tr st agree$ent, and there pon shall be bo nd by all the provisions of said agree$ent. Ao voting tr st agree$ent shall be entered into for the p rpose of circ $venting the law against $onopolies and illegal co$binations in restraint of trade or sed for p rposes of fra d. >nless e!pressly renewed, all rights granted in a voting tr st agree$ent shall a to$atically e!pire at the end of the agreed period, and the voting tr st certificates as well as the certificates of stock in the na$e of the tr stee or tr stees shall thereby be dee$ed cancelled and new certificates of stock shall be reiss ed in the na$e of the transferors. The voting tr stee or tr stees $ay vote by pro!y nless the agree$ent provides otherwise. (&2a) TITLE VII STOC0S AND STOC0HOLDERS Secti n 6*" 0ubscription contract. Any contract for the ac* isition of niss ed stock in an e!isting corporation or a corporation still to be for$ed shall be dee$ed a s bscription within the $eaning of this Title, notwithstanding the fact that the parties refer to it as a p rchase or so$e other contract. (n) Secti n 6!" Pre,incorporation subscription. A s bscription for shares of stock of a corporation still to be for$ed shall be irrevocable for a period of at least si! (2) $onths fro$ the date of s bscription, nless all of the other s bscribers consent to the revocation, or nless the incorporation of said corporation fails to $ateriali"e within said period or within a longer period as $ay be stip lated in the contract of s bscription) Provided, That no pre%incorporation s bscription $ay be revoked after the s b$ission of the articles of incorporation to the +ec rities and ,!change Co$$ission. (n) Secti n 6#" Consideration for stocks. +tocks shall not be iss ed for a consideration less than the par or iss ed price thereof. Consideration for the iss ance of stock $ay be any or a co$bination of any two or $ore of the following) 1. Act al cash paid to the corporation#. Property, tangible or intangible, act ally received by the corporation and necessary or convenient for its se and lawf l p rposes at a fair val ation e* al to the par or iss ed val e of the stock iss ed&. ?abor perfor$ed for or services act ally rendered to the corporation(. Previo sly inc rred indebtedness of the corporation.. A$o nts transferred fro$ nrestricted retained earnings to stated capital- and 2. @ tstanding shares e!changed for stocks in the event of reclassification or conversion. 0here the consideration is other than act al cash, or consists of intangible property s ch as patents of copyrights, the val ation thereof shall initially be deter$ined by the incorporators or the board of directors, s b9ect to approval by the +ec rities and ,!change Co$$ission. +hares of stock shall not be iss ed in e!change for pro$issory notes or f t re service.

The sa$e considerations provided for in this section, insofar as they $ay be applicable, $ay be sed for the iss ance of bonds by the corporation. The iss ed price of no%par val e shares $ay be fi!ed in the articles of incorporation or by the board of directors p rs ant to a thority conferred pon it by the articles of incorporation or the by%laws, or in the absence thereof, by the stockholders representing at least a $a9ority of the o tstanding capital stock at a $eeting d ly called for the p rpose. (. and 12) Secti n 6$" Certificate of stock and transfer of shares . The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice president, co ntersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be iss ed in accordance with the by%laws. +hares of stock so iss ed are personal property and $ay be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney%in%fact or other person legally a thori"ed to $ake the transfer. Ao transfer, however, shall be valid, e!cept as between the parties, ntil the transfer is recorded in the books of the corporation showing the na$es of the parties to the transaction, the date of the transfer, the n $ber of the certificate or certificates and the n $ber of shares transferred. Ao shares of stock against which the corporation holds any npaid clai$ shall be transferable in the books of the corporation. (&.) Secti n 6%" %ssuance of stock certificates. Ao certificate of stock shall be iss ed to a s bscriber ntil the f ll a$o nt of his s bscription together with interest and e!penses (in case of delin* ent shares), if any is d e, has been paid. (&4) Secti n 6&" .iability of directors for watered stocks . Any director or officer of a corporation consenting to the iss ance of stocks for a consideration less than its par or iss ed val e or for a consideration in any for$ other than cash, val ed in e!cess of its fair val e, or who, having knowledge thereof, does not forthwith e!press his ob9ection in writing and file the sa$e with the corporate secretary, shall be solidarily, liable with the stockholder concerned to the corporation and its creditors for the difference between the fair val e received at the ti$e of iss ance of the stock and the par or iss ed val e of the sa$e. (n) Secti n 66" %nterest on unpaid subscriptions. + bscribers for stock shall pay to the corporation interest on all npaid s bscriptions fro$ the date of s bscription, if so re* ired by, and at the rate of interest fi!ed in the by%laws. 'f no rate of interest is fi!ed in the by%laws, s ch rate shall be dee$ed to be the legal rate. (&4) Secti n 6'" Payment of balance of subscription. + b9ect to the provisions of the contract of s bscription, the board of directors of any stock corporation $ay at any ti$e declare d e and payable to the corporation npaid s bscriptions to the capital stock and $ay collect the sa$e or s ch percentage thereof, in either case with accr ed interest, if any, as it $ay dee$ necessary. Pay$ent of any npaid s bscription or any percentage thereof, together with the interest accr ed, if any, shall be $ade on the date specified in the contract of s bscription or on the date stated in the call $ade by the board. 7ail re to pay on s ch date shall render the entire balance d e and payable and shall $ake the stockholder liable for interest at the legal rate on s ch balance, nless a different rate of interest is provided in the by%laws, co$p ted fro$ s ch date ntil f ll pay$ent. 'f within thirty (&/) days fro$ the said date no pay$ent is $ade, all stocks covered by said s bscription shall there pon beco$e delin* ent and shall be s b9ect to sale as hereinafter provided, nless the board of directors orders otherwise. (&5) Secti n 68" *elin"uency sale. The board of directors $ay, by resol tion, order the sale of delin* ent stock and shall specifically state the a$o nt d e on each s bscription pl s all accr ed interest, and the date, ti$e and place of the sale which shall not be less than thirty (&/) days nor $ore than si!ty (2/) days fro$ the date the stocks beco$e delin* ent. Aotice of said sale, with a copy of the resol tion, shall be sent to every delin* ent stockholder either personally or by registered $ail. The sa$e shall f rther$ore be p blished once a week for two (#) consec tive weeks in a newspaper of general circ lation in the province or city where the principal office of the corporation is located. >nless the delin* ent stockholder pays to the corporation, on or before the date specified for the sale of the delin* ent stock, the balance d e on his s bscription, pl s accr ed interest, costs of

advertise$ent and e!penses of sale, or nless the board of directors otherwise orders, said delin* ent stock shall be sold at p blic a ction to s ch bidder who shall offer to pay the f ll a$o nt of the balance on the s bscription together with accr ed interest, costs of advertise$ent and e!penses of sale, for the s$allest n $ber of shares or fraction of a share. The stock so p rchased shall be transferred to s ch p rchaser in the books of the corporation and a certificate for s ch stock shall be iss ed in his favor. The re$aining shares, if any, shall be credited in favor of the delin* ent stockholder who shall likewise be entitled to the iss ance of a certificate of stock covering s ch shares. +ho ld there be no bidder at the p blic a ction who offers to pay the f ll a$o nt of the balance on the s bscription together with accr ed interest, costs of advertise$ent and e!penses of sale, for the s$allest n $ber of shares or fraction of a share, the corporation $ay, s b9ect to the provisions of this Code, bid for the sa$e, and the total a$o nt d e shall be credited as paid in f ll in the books of the corporation. Title to all the shares of stock covered by the s bscription shall be vested in the corporation as treas ry shares and $ay be disposed of by said corporation in accordance with the provisions of this Code. (&=a%(2a) Secti n 6(" 3hen sale may be "uestioned. Ao action to recover delin* ent stock sold can be s stained pon the gro nd of irreg larity or defect in the notice of sale, or in the sale itself of the delin* ent stock, nless the party seeking to $aintain s ch action first pays or tenders to the party holding the stock the s $ for which the sa$e was sold, with interest fro$ the date of sale at the legal rate- and no s ch action shall be $aintained nless it is co$$enced by the filing of a co$plaint within si! (2) $onths fro$ the date of sale. ((4a) Secti n '*" Court action to reco(er unpaid subscription. Aothing in this Code shall prevent the corporation fro$ collecting by action in a co rt of proper 9 risdiction the a$o nt d e on any npaid s bscription, with accr ed interest, costs and e!penses. ((=a) Secti n '!" +ffect of delin"uency. Ao delin* ent stock shall be voted for or be entitled to vote or to representation at any stockholder8s $eeting, nor shall the holder thereof be entitled to any of the rights of a stockholder e!cept the right to dividends in accordance with the provisions of this Code, ntil and nless he pays the a$o nt d e on his s bscription with accr ed interest, and the costs and e!penses of advertise$ent, if any. (./a) Secti n '#" ights of unpaid shares. Folders of s bscribed shares not f lly paid which are not delin* ent shall have all the rights of a stockholder. (n) Secti n '$" .ost or destroyed certificates. The following proced re shall be followed for the iss ance by a corporation of new certificates of stock in lie of those which have been lost, stolen or destroyed) 1. The registered owner of a certificate of stock in a corporation or his legal representative shall file with the corporation an affidavit in triplicate setting forth, if possible, the circ $stances as to how the certificate was lost, stolen or destroyed, the n $ber of shares represented by s ch certificate, the serial n $ber of the certificate and the na$e of the corporation which iss ed the sa$e. Fe shall also s b$it s ch other infor$ation and evidence which he $ay dee$ necessary#. After verifying the affidavit and other infor$ation and evidence with the books of the corporation, said corporation shall p blish a notice in a newspaper of general circ lation p blished in the place where the corporation has its principal office, once a week for three (&) consec tive weeks at the e!pense of the registered owner of the certificate of stock which has been lost, stolen or destroyed. The notice shall state the na$e of said corporation, the na$e of the registered owner and the serial n $ber of said certificate, and the n $ber of shares represented by s ch certificate, and that after the e!piration of one (1) year fro$ the date of the last p blication, if no contest has been presented to said corporation regarding said certificate of stock, the right to $ake s ch contest shall be barred and said corporation shall cancel in its books the certificate of stock which has been lost, stolen or destroyed and iss e in lie thereof new certificate of stock, nless the registered owner files a bond or other sec rity in lie thereof as $ay be re* ired, effective for a period of one (1) year, for s ch a$o nt and in s ch for$ and with s ch s reties as $ay be satisfactory to the board of directors, in which case a new certificate $ay be iss ed even before the e!piration of the one (1) year period provided herein) Provided, That if a contest has been presented to said

corporation or if an action is pending in co rt regarding the ownership of said certificate of stock which has been lost, stolen or destroyed, the iss ance of the new certificate of stock in lie thereof shall be s spended ntil the final decision by the co rt regarding the ownership of said certificate of stock which has been lost, stolen or destroyed. ,!cept in case of fra d, bad faith, or negligence on the part of the corporation and its officers, no action $ay be bro ght against any corporation which shall have iss ed certificate of stock in lie of those lost, stolen or destroyed p rs ant to the proced re above%described. (:.A. #/1a) TITLE VIII CORPORATE BOO0S AND RECORDS Secti n '%" Books to be kept/ stock transfer agent . ,very corporation shall keep and caref lly preserve at its principal office a record of all b siness transactions and $in tes of all $eetings of stockholders or $e$bers, or of the board of directors or tr stees, in which shall be set forth in detail the ti$e and place of holding the $eeting, how a thori"ed, the notice given, whether the $eeting was reg lar or special, if special its ob9ect, those present and absent, and every act done or ordered done at the $eeting. >pon the de$and of any director, tr stee, stockholder or $e$ber, the ti$e when any director, tr stee, stockholder or $e$ber entered or left the $eeting $ st be noted in the $in tes- and on a si$ilar de$and, the yeas and nays $ st be taken on any $otion or proposition, and a record thereof caref lly $ade. The protest of any director, tr stee, stockholder or $e$ber on any action or proposed action $ st be recorded in f ll on his de$and. The records of all b siness transactions of the corporation and the $in tes of any $eetings shall be open to inspection by any director, tr stee, stockholder or $e$ber of the corporation at reasonable ho rs on b siness days and he $ay de$and, in writing, for a copy of e!cerpts fro$ said records or $in tes, at his e!pense. Any officer or agent of the corporation who shall ref se to allow any director, tr stees, stockholder or $e$ber of the corporation to e!a$ine and copy e!cerpts fro$ its records or $in tes, in accordance with the provisions of this Code, shall be liable to s ch director, tr stee, stockholder or $e$ber for da$ages, and in addition, shall be g ilty of an offense which shall be p nishable nder +ection 1(( of this Code) Provided, That if s ch ref sal is $ade p rs ant to a resol tion or order of the board of directors or tr stees, the liability nder this section for s ch action shall be i$posed pon the directors or tr stees who voted for s ch ref sal) and Provided, f rther, That it shall be a defense to any action nder this section that the person de$anding to e!a$ine and copy e!cerpts fro$ the corporation8s records and $in tes has i$properly sed any infor$ation sec red thro gh any prior e!a$ination of the records or $in tes of s ch corporation or of any other corporation, or was not acting in good faith or for a legiti$ate p rpose in $aking his de$and. +tock corporations $ st also keep a book to be known as the "stock and transfer book", in which $ st be kept a record of all stocks in the na$es of the stockholders alphabetically arranged- the install$ents paid and npaid on all stock for which s bscription has been $ade, and the date of pay$ent of any install$ent- a state$ent of every alienation, sale or transfer of stock $ade, the date thereof, and by and to who$ $ade- and s ch other entries as the by%laws $ay prescribe. The stock and transfer book shall be kept in the principal office of the corporation or in the office of its stock transfer agent and shall be open for inspection by any director or stockholder of the corporation at reasonable ho rs on b siness days. Ao stock transfer agent or one engaged principally in the b siness of registering transfers of stocks in behalf of a stock corporation shall be allowed to operate in the Philippines nless he sec res a license fro$ the +ec rities and ,!change Co$$ission and pays a fee as $ay be fi!ed by the Co$$ission, which shall be renewable ann ally) Provided, That a stock corporation is not precl ded fro$ perfor$ing or $aking transfer of its own stocks, in which case all the r les and reg lations i$posed on stock transfer agents, e!cept the pay$ent of a license fee herein provided, shall be applicable. (.1a and &#a- P.D. Ao. #25.) Secti n '&" ight to financial statements. 0ithin ten (1/) days fro$ receipt of a written re* est of any stockholder or $e$ber, the corporation shall f rnish to hi$ its $ost recent financial state$ent, which shall incl de a balance sheet as of the end of the last ta!able year and a profit or loss state$ent for said ta!able year, showing in reasonable detail its assets and liabilities and the res lt

of its operations. At the reg lar $eeting of stockholders or $e$bers, the board of directors or tr stees shall present to s ch stockholders or $e$bers a financial report of the operations of the corporation for the preceding year, which shall incl de financial state$ents, d ly signed and certified by an independent certified p blic acco ntant. Fowever, if the paid% p capital of the corporation is less than P./,///.//, the financial state$ents $ay be certified nder oath by the treas rer or any responsible officer of the corporation. (n) TITLE I1 /ERGER AND CONSOLIDATION Secti n '6" Plan or merger of consolidation . Two or $ore corporations $ay $erge into a single corporation which shall be one of the constit ent corporations or $ay consolidate into a new single corporation which shall be the consolidated corporation. The board of directors or tr stees of each corporation, party to the $erger or consolidation, shall approve a plan of $erger or consolidation setting forth the following) 1. The na$es of the corporations proposing to $erge or consolidate, hereinafter referred to as the constit ent corporations#. The ter$s of the $erger or consolidation and the $ode of carrying the sa$e into effect&. A state$ent of the changes, if any, in the articles of incorporation of the s rviving corporation in case of $erger- and, with respect to the consolidated corporation in case of consolidation, all the state$ents re* ired to be set forth in the articles of incorporation for corporations organi"ed nder this Code- and (. + ch other provisions with respect to the proposed $erger or consolidation as are dee$ed necessary or desirable. (n) Secti n ''" 0tockholders or members appro(al. >pon approval by $a9ority vote of each of the board of directors or tr stees of the constit ent corporations of the plan of $erger or consolidation, the sa$e shall be s b$itted for approval by the stockholders or $e$bers of each of s ch corporations at separate corporate $eetings d ly called for the p rpose. Aotice of s ch $eetings shall be given to all stockholders or $e$bers of the respective corporations, at least two (#) weeks prior to the date of the $eeting, either personally or by registered $ail. +aid notice shall state the p rpose of the $eeting and shall incl de a copy or a s $$ary of the plan of $erger or consolidation. The affir$ative vote of stockholders representing at least two%thirds (#<&) of the o tstanding capital stock of each corporation in the case of stock corporations or at least two%thirds (#<&) of the $e$bers in the case of non%stock corporations shall be necessary for the approval of s ch plan. Any dissenting stockholder in stock corporations $ay e!ercise his appraisal right in accordance with the Code) Provided, That if after the approval by the stockholders of s ch plan, the board of directors decides to abandon the plan, the appraisal right shall be e!ting ished. Any a$end$ent to the plan of $erger or consolidation $ay be $ade, provided s ch a$end$ent is approved by $a9ority vote of the respective boards of directors or tr stees of all the constit ent corporations and ratified by the affir$ative vote of stockholders representing at least two%thirds (#<&) of the o tstanding capital stock or of two%thirds (#<&) of the $e$bers of each of the constit ent corporations. + ch plan, together with any a$end$ent, shall be considered as the agree$ent of $erger or consolidation. (n) Secti n '8" Articles of $erger or consolidation. After the approval by the stockholders or $e$bers as re* ired by the preceding section, articles of $erger or articles of consolidation shall be e!ec ted by each of the constit ent corporations, to be signed by the president or vice%president and certified by the secretary or assistant secretary of each corporation setting forth) 1. The plan of the $erger or the plan of consolidation#. As to stock corporations, the n $ber of shares o tstanding, or in the case of non%stock corporations, the n $ber of $e$bers- and &. As to each corporation, the n $ber of shares or $e$bers voting for and against s ch plan, respectively. (n) Secti n '(" ,ffectivity of $erger or consolidation. The articles of $erger or of consolidation, signed and certified as herein above re* ired, shall be s b$itted to the +ec rities and ,!change

Co$$ission in * adr plicate for its approval) Provided, That in the case of $erger or consolidation of banks or banking instit tions, b ilding and loan associations, tr st co$panies, ins rance co$panies, p blic tilities, ed cational instit tions and other special corporations governed by special laws, the favorable reco$$endation of the appropriate govern$ent agency shall first be obtained. 'f the Co$$ission is satisfied that the $erger or consolidation of the corporations concerned is not inconsistent with the provisions of this Code and e!isting laws, it shall iss e a certificate of $erger or of consolidation, at which ti$e the $erger or consolidation shall be effective. 'f, pon investigation, the +ec rities and ,!change Co$$ission has reason to believe that the proposed $erger or consolidation is contrary to or inconsistent with the provisions of this Code or e!isting laws, it shall set a hearing to give the corporations concerned the opport nity to be heard. 0ritten notice of the date, ti$e and place of hearing shall be given to each constit ent corporation at least two (#) weeks before said hearing. The Co$$ission shall thereafter proceed as provided in this Code. (n) Secti n 8*" ,ffects of $erger or consolidation. The $erger or consolidation shall have the following effects) 1. The constit ent corporations shall beco$e a single corporation which, in case of $erger, shall be the s rviving corporation designated in the plan of $erger- and, in case of consolidation, shall be the consolidated corporation designated in the plan of consolidation#. The separate e!istence of the constit ent corporations shall cease, e!cept that of the s rviving or the consolidated corporation&. The s rviving or the consolidated corporation shall possess all the rights, privileges, i$$ nities and powers and shall be s b9ect to all the d ties and liabilities of a corporation organi"ed nder this Code(. The s rviving or the consolidated corporation shall there pon and thereafter possess all the rights, privileges, i$$ nities and franchises of each of the constit ent corporations- and all property, real or personal, and all receivables d e on whatever acco nt, incl ding s bscriptions to shares and other choses in action, and all and every other interest of, or belonging to, or d e to each constit ent corporation, shall be dee$ed transferred to and vested in s ch s rviving or consolidated corporation witho t f rther act or deed- and .. The s rviving or consolidated corporation shall be responsible and liable for all the liabilities and obligations of each of the constit ent corporations in the sa$e $anner as if s ch s rviving or consolidated corporation had itself inc rred s ch liabilities or obligations- and any pending clai$, action or proceeding bro ght by or against any of s ch constit ent corporations $ay be prosec ted by or against the s rviving or consolidated corporation. The rights of creditors or liens pon the property of any of s ch constit ent corporations shall not be i$paired by s ch $erger or consolidation. (n) TITLE 1 APPRAISAL RIGHT Secti n 8!" 'nstances of appraisal right. Any stockholder of a corporation shall have the right to dissent and de$and pay$ent of the fair val e of his shares in the following instances) 1. 'n case any a$end$ent to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of a thori"ing preferences in any respect s perior to those of o tstanding shares of any class, or of e!tending or shortening the ter$ of corporate e!istence#. 'n case of sale, lease, e!change, transfer, $ortgage, pledge or other disposition of all or s bstantially all of the corporate property and assets as provided in the Code- and &. 'n case of $erger or consolidation. (n) Secti n 8#" 4ow right is e)ercised. The appraisal right $ay be e!ercised by any stockholder who shall have voted against the proposed corporate action, by $aking a written de$and on the corporation within thirty (&/) days after the date on which the vote was taken for pay$ent of the fair val e of his shares) Provided, That fail re to $ake the de$and within s ch period shall be dee$ed a waiver of the appraisal right. 'f the proposed corporate action is i$ple$ented or affected,

the corporation shall pay to s ch stockholder, pon s rrender of the certificate or certificates of stock representing his shares, the fair val e thereof as of the day prior to the date on which the vote was taken, e!cl ding any appreciation or depreciation in anticipation of s ch corporate action. 'f within a period of si!ty (2/) days fro$ the date the corporate action was approved by the stockholders, the withdrawing stockholder and the corporation cannot agree on the fair val e of the shares, it shall be deter$ined and appraised by three (&) disinterested persons, one of who$ shall be na$ed by the stockholder, another by the corporation, and the third by the two th s chosen. The findings of the $a9ority of the appraisers shall be final, and their award shall be paid by the corporation within thirty (&/) days after s ch award is $ade) Provided, That no pay$ent shall be $ade to any dissenting stockholder nless the corporation has nrestricted retained earnings in its books to cover s ch pay$ent) and Provided, f rther, That pon pay$ent by the corporation of the agreed or awarded price, the stockholder shall forthwith transfer his shares to the corporation. (n) Secti n 8$" +ffect of demand and termination of right. 7ro$ the ti$e of de$and for pay$ent of the fair val e of a stockholder8s shares ntil either the abandon$ent of the corporate action involved or the p rchase of the said shares by the corporation, all rights accr ing to s ch shares, incl ding voting and dividend rights, shall be s spended in accordance with the provisions of this Code, e!cept the right of s ch stockholder to receive pay$ent of the fair val e thereof) Provided, That if the dissenting stockholder is not paid the val e of his shares within &/ days after the award, his voting and dividend rights shall i$$ediately be restored. (n) Secti n 8%" 3hen right to payment ceases. Ao de$and for pay$ent nder this Title $ay be withdrawn nless the corporation consents thereto. 'f, however, s ch de$and for pay$ent is withdrawn with the consent of the corporation, or if the proposed corporate action is abandoned or rescinded by the corporation or disapproved by the +ec rities and ,!change Co$$ission where s ch approval is necessary, or if the +ec rities and ,!change Co$$ission deter$ines that s ch stockholder is not entitled to the appraisal right, then the right of said stockholder to be paid the fair val e of his shares shall cease, his stat s as a stockholder shall there pon be restored, and all dividend distrib tions which wo ld have accr ed on his shares shall be paid to hi$. (n) Secti n 8&" 3ho bears costs of appraisal. The costs and e!penses of appraisal shall be borne by the corporation, nless the fair val e ascertained by the appraisers is appro!i$ately the sa$e as the price which the corporation $ay have offered to pay the stockholder, in which case they shall be borne by the latter. 'n the case of an action to recover s ch fair val e, all costs and e!penses shall be assessed against the corporation, nless the ref sal of the stockholder to receive pay$ent was n9 stified. (n) Secti n 86" !otation on certificates/ rights of transferee. 0ithin ten (1/) days after de$anding pay$ent for his shares, a dissenting stockholder shall s b$it the certificates of stock representing his shares to the corporation for notation thereon that s ch shares are dissenting shares. Fis fail re to do so shall, at the option of the corporation, ter$inate his rights nder this Title. 'f shares represented by the certificates bearing s ch notation are transferred, and the certificates conse* ently cancelled, the rights of the transferor as a dissenting stockholder nder this Title shall cease and the transferee shall have all the rights of a reg lar stockholder- and all dividend distrib tions which wo ld have accr ed on s ch shares shall be paid to the transferee. (n) TITLE 1I NON2STOC0 CORPORATIONS Secti n 8'" 6efinition. 7or the p rposes of this Code, a non%stock corporation is one where no part of its inco$e is distrib table as dividends to its $e$bers, tr stees, or officers, s b9ect to the provisions of this Code on dissol tion) Provided, That any profit which a non%stock corporation $ay obtain as an incident to its operations shall, whenever necessary or proper, be sed for the f rtherance of the p rpose or p rposes for which the corporation was organi"ed, s b9ect to the provisions of this Title. The provisions governing stock corporation, when pertinent, shall be applicable to non%stock corporations, e!cept as $ay be covered by specific provisions of this Title. (n) Secti n 88" P rposes. Aon%stock corporations $ay be for$ed or organi"ed for charitable, religio s, ed cational, professional, c lt ral, fraternal, literary, scientific, social, civic service, or

si$ilar p rposes, like trade, ind stry, agric lt ral and like cha$bers, or any co$bination thereof, s b9ect to the special provisions of this Title governing partic lar classes of non%stock corporations. (n) CHAPTER I /E/BERS Secti n 8(" ight to (ote. The right of the $e$bers of any class or classes to vote $ay be li$ited, broadened or denied to the e!tent specified in the articles of incorporation or the by%laws. >nless so li$ited, broadened or denied, each $e$ber, regardless of class, shall be entitled to one vote. >nless otherwise provided in the articles of incorporation or the by%laws, a $e$ber $ay vote by pro!y in accordance with the provisions of this Code. (n) Hoting by $ail or other si$ilar $eans by $e$bers of non%stock corporations $ay be a thori"ed by the by%laws of non%stock corporations with the approval of, and nder s ch conditions which $ay be prescribed by, the +ec rities and ,!change Co$$ission. Secti n (*" Aon%transferability of $e$bership. 3e$bership in a non%stock corporation and all rights arising therefro$ are personal and non%transferable, nless the articles of incorporation or the by%laws otherwise provide. (n) Secti n (!" Ter$ination of $e$bership. 3e$bership shall be ter$inated in the $anner and for the ca ses provided in the articles of incorporation or the by%laws. Ter$ination of $e$bership shall have the effect of e!ting ishing all rights of a $e$ber in the corporation or in its property, nless otherwise provided in the articles of incorporation or the by%laws. (n) CHAPTER II TR,STEES AND OFFICES Secti n (#" +lection and term of trustees. >nless otherwise provided in the articles of incorporation or the by%laws, the board of tr stees of non%stock corporations, which $ay be $ore than fifteen (1.) in n $ber as $ay be fi!ed in their articles of incorporation or by%laws, shall, as soon as organi"ed, so classify the$selves that the ter$ of office of one%third (1<&) of their n $ber shall e!pire every year- and s bse* ent elections of tr stees co$prising one%third (1<&) of the board of tr stees shall be held ann ally and tr stees so elected shall have a ter$ of three (&) years. Tr stees thereafter elected to fill vacancies occ rring before the e!piration of a partic lar ter$ shall hold office only for the ne!pired period. Ao person shall be elected as tr stee nless he is a $e$ber of the corporation. >nless otherwise provided in the articles of incorporation or the by%laws, officers of a non%stock corporation $ay be directly elected by the $e$bers. (n) Secti n ($" Place of meetings. The by%laws $ay provide that the $e$bers of a non%stock corporation $ay hold their reg lar or special $eetings at any place even o tside the place where the principal office of the corporation is located) Provided, That proper notice is sent to all $e$bers indicating the date, ti$e and place of the $eeting) and Provided, f rther, That the place of $eeting shall be within the Philippines. (n) CHAPTER III DISTRIB,TION OF ASSETS IN NON2STOC0 CORPORATIONS Secti n (%" ules of distribution. 'n case dissol tion of a non%stock corporation in accordance with the provisions of this Code, its assets shall be applied and distrib ted as follows) 1. All liabilities and obligations of the corporation shall be paid, satisfied and discharged, or ade* ate provision shall be $ade therefore#. Assets held by the corporation pon a condition re* iring ret rn, transfer or conveyance, and which condition occ rs by reason of the dissol tion, shall be ret rned, transferred or conveyed in accordance with s ch re* ire$ents&. Assets received and held by the corporation s b9ect to li$itations per$itting their se only for charitable, religio s, benevolent, ed cational or si$ilar p rposes, b t not held pon a condition re* iring ret rn, transfer or conveyance by reason of the dissol tion, shall be transferred or conveyed to one or $ore corporations, societies or organi"ations engaged in activities in the Philippines s bstantially si$ilar to those of the dissolving corporation according to a plan of distrib tion adopted p rs ant to this Chapter-

(. Assets other than those $entioned in the preceding paragraphs, if any, shall be distrib ted in accordance with the provisions of the articles of incorporation or the by%laws, to the e!tent that the articles of incorporation or the by%laws, deter$ine the distrib tive rights of $e$bers, or any class or classes of $e$bers, or provide for distrib tion- and .. 'n any other case, assets $ay be distrib ted to s ch persons, societies, organi"ations or corporations, whether or not organi"ed for profit, as $ay be specified in a plan of distrib tion adopted p rs ant to this Chapter. (n) Secti n (&" Plan of distribution of assets. A plan providing for the distrib tion of assets, not inconsistent with the provisions of this Title, $ay be adopted by a non%stock corporation in the process of dissol tion in the following $anner) The board of tr stees shall, by $a9ority vote, adopt a resol tion reco$$ending a plan of distrib tion and directing the s b$ission thereof to a vote at a reg lar or special $eeting of $e$bers having voting rights. 0ritten notice setting forth the proposed plan of distrib tion or a s $$ary thereof and the date, ti$e and place of s ch $eeting shall be given to each $e$ber entitled to vote, within the ti$e and in the $anner provided in this Code for the giving of notice of $eetings to $e$bers. + ch plan of distrib tion shall be adopted pon approval of at least two% thirds (#<&) of the $e$bers having voting rights present or represented by pro!y at s ch $eeting. (n) TITLE 1II CLOSE CORPORATIONS Secti n (6" *efinition and applicability of Title. % A close corporation, within the $eaning of this Code, is one whose articles of incorporation provide that) (1) All the corporation8s iss ed stock of all classes, e!cl sive of treas ry shares, shall be held of record by not $ore than a specified n $ber of persons, not e!ceeding twenty (#/)- (#) all the iss ed stock of all classes shall be s b9ect to one or $ore specified restrictions on transfer per$itted by this Title- and (&) The corporation shall not list in any stock e!change or $ake any p blic offering of any of its stock of any class. Aotwithstanding the foregoing, a corporation shall not be dee$ed a close corporation when at least two%thirds (#<&) of its voting stock or voting rights is owned or controlled by another corporation which is not a close corporation within the $eaning of this Code. Any corporation $ay be incorporated as a close corporation, e!cept $ining or oil co$panies, stock e!changes, banks, ins rance co$panies, p blic tilities, ed cational instit tions and corporations declared to be vested with p blic interest in accordance with the provisions of this Code. The provisions of this Title shall pri$arily govern close corporations) Provided, That the provisions of other Titles of this Code shall apply s ppletorily e!cept insofar as this Title otherwise provides. Secti n ('" $rticles of incorporation. The articles of incorporation of a close corporation $ay provide) 1. 7or a classification of shares or rights and the * alifications for owning or holding the sa$e and restrictions on their transfers as $ay be stated therein, s b9ect to the provisions of the following section#. 7or a classification of directors into one or $ore classes, each of who$ $ay be voted for and elected solely by a partic lar class of stock- and &. 7or a greater * or $ or voting re* ire$ents in $eetings of stockholders or directors than those provided in this Code. The articles of incorporation of a close corporation $ay provide that the b siness of the corporation shall be $anaged by the stockholders of the corporation rather than by a board of directors. +o long as this provision contin es in effect) 1. Ao $eeting of stockholders need be called to elect directors#. >nless the conte!t clearly re* ires otherwise, the stockholders of the corporation shall be dee$ed to be directors for the p rpose of applying the provisions of this Code- and &. The stockholders of the corporation shall be s b9ect to all liabilities of directors. The articles of incorporation $ay likewise provide that all officers or e$ployees or that specified officers or e$ployees shall be elected or appointed by the stockholders, instead of by the board of directors.

Secti n (8" -alidity of restrictions on transfer of shares. :estrictions on the right to transfer shares $ st appear in the articles of incorporation and in the by%laws as well as in the certificate of stock- otherwise, the sa$e shall not be binding on any p rchaser thereof in good faith. +aid restrictions shall not be $ore onero s than granting the e!isting stockholders or the corporation the option to p rchase the shares of the transferring stockholder with s ch reasonable ter$s, conditions or period stated therein. 'f pon the e!piration of said period, the e!isting stockholders or the corporation fails to e!ercise the option to p rchase, the transferring stockholder $ay sell his shares to any third person. Secti n ((" +ffects of issuance or transfer of stock in breach of "ualifying conditions. % 1. 'f stock of a close corporation is iss ed or transferred to any person who is not entitled nder any provision of the articles of incorporation to be a holder of record of its stock, and if the certificate for s ch stock conspic o sly shows the * alifications of the persons entitled to be holders of record thereof, s ch person is concl sively pres $ed to have notice of the fact of his ineligibility to be a stockholder. #. 'f the articles of incorporation of a close corporation states the n $ber of persons, not e!ceeding twenty (#/), who are entitled to be holders of record of its stock, and if the certificate for s ch stock conspic o sly states s ch n $ber, and if the iss ance or transfer of stock to any person wo ld ca se the stock to be held by $ore than s ch n $ber of persons, the person to who$ s ch stock is iss ed or transferred is concl sively pres $ed to have notice of this fact. &. 'f a stock certificate of any close corporation conspic o sly shows a restriction on transfer of stock of the corporation, the transferee of the stock is concl sively pres $ed to have notice of the fact that he has ac* ired stock in violation of the restriction, if s ch ac* isition violates the restriction. (. 0henever any person to who$ stock of a close corporation has been iss ed or transferred has, or is concl sively pres $ed nder this section to have, notice either (a) that he is a person not eligible to be a holder of stock of the corporation, or (b) that transfer of stock to hi$ wo ld ca se the stock of the corporation to be held by $ore than the n $ber of persons per$itted by its articles of incorporation to hold stock of the corporation, or (c) that the transfer of stock is in violation of a restriction on transfer of stock, the corporation $ay, at its option, ref se to register the transfer of stock in the na$e of the transferee. .. The provisions of s bsection (() shall not be applicable if the transfer of stock, tho gh contrary to s bsections (1), (#) or (&), has been consented to by all the stockholders of the close corporation, or if the close corporation has a$ended its articles of incorporation in accordance with this Title. 2. The ter$ "transfer", as sed in this section, is not li$ited to a transfer for val e. 4. The provisions of this section shall not i$pair any right which the transferee $ay have to rescind the transfer or to recover nder any applicable warranty, e!press or i$plied. Secti n !**" $greements by stockholders. % 1. Agree$ents by and a$ong stockholders e!ec ted before the for$ation and organi"ation of a close corporation, signed by all stockholders, shall s rvive the incorporation of s ch corporation and shall contin e to be valid and binding between and a$ong s ch stockholders, if s ch be their intent, to the e!tent that s ch agree$ents are not inconsistent with the articles of incorporation, irrespective of where the provisions of s ch agree$ents are contained, e!cept those re* ired by this Title to be e$bodied in said articles of incorporation. #. An agree$ent between two or $ore stockholders, if in writing and signed by the parties thereto, $ay provide that in e!ercising any voting rights, the shares held by the$ shall be voted as therein provided, or as they $ay agree, or as deter$ined in accordance with a proced re agreed pon by the$. &. Ao provision in any written agree$ent signed by the stockholders, relating to any phase of the corporate affairs, shall be invalidated as between the parties on the gro nd that its effect is to $ake the$ partners a$ong the$selves. (. A written agree$ent a$ong so$e or all of the stockholders in a close corporation shall not be invalidated on the gro nd that it so relates to the cond ct of the b siness and affairs of the corporation as to restrict or interfere with the discretion or powers of the board of directors)

Provided, That s ch agree$ent shall i$pose on the stockholders who are parties thereto the liabilities for $anagerial acts i$posed by this Code on directors. .. To the e!tent that the stockholders are actively engaged in the $anage$ent or operation of the b siness and affairs of a close corporation, the stockholders shall be held to strict fid ciary d ties to each other and a$ong the$selves. +aid stockholders shall be personally liable for corporate torts nless the corporation has obtained reasonably ade* ate liability ins rance. Secti n !*!" 3hen board meeting is unnecessary or improperly held. % >nless the by%laws provide otherwise, any action by the directors of a close corporation witho t a $eeting shall nevertheless be dee$ed valid if) 1. Defore or after s ch action is taken, written consent thereto is signed by all the directors- or #. All the stockholders have act al or i$plied knowledge of the action and $ake no pro$pt ob9ection thereto in writing- or &. The directors are acc sto$ed to take infor$al action with the e!press or i$plied ac* iescence of all the stockholders- or (. All the directors have e!press or i$plied knowledge of the action in * estion and none of the$ $akes pro$pt ob9ection thereto in writing. 'f a director8s $eeting is held witho t proper call or notice, an action taken therein within the corporate powers is dee$ed ratified by a director who failed to attend, nless he pro$ptly files his written ob9ection with the secretary of the corporation after having knowledge thereof. Secti n !*#" Pre,empti(e right in close corporations. The pre%e$ptive right of stockholders in close corporations shall e!tend to all stock to be iss ed, incl ding reiss ance of treas ry shares, whether for $oney, property or personal services, or in pay$ent of corporate debts, nless the articles of incorporation provide otherwise. Secti n !*$" $mendment of articles of incorporation. Any a$end$ent to the articles of incorporation which seeks to delete or re$ove any provision re* ired by this Title to be contained in the articles of incorporation or to red ce a * or $ or voting re* ire$ent stated in said articles of incorporation shall not be valid or effective nless approved by the affir$ative vote of at least two% thirds (#<&) of the o tstanding capital stock, whether with or witho t voting rights, or of s ch greater proportion of shares as $ay be specifically provided in the articles of incorporation for a$ending, deleting or re$oving any of the aforesaid provisions, at a $eeting d ly called for the p rpose. Secti n !*%" *eadlocks. Aotwithstanding any contrary provision in the articles of incorporation or by%laws or agree$ent of stockholders of a close corporation, if the directors or stockholders are so divided respecting the $anage$ent of the corporation8s b siness and affairs that the votes re* ired for any corporate action cannot be obtained, with the conse* ence that the b siness and affairs of the corporation can no longer be cond cted to the advantage of the stockholders generally, the +ec rities and ,!change Co$$ission, pon written petition by any stockholder, shall have the power to arbitrate the disp te. 'n the e!ercise of s ch power, the Co$$ission shall have a thority to $ake s ch order as it dee$s appropriate, incl ding an order) (1) cancelling or altering any provision contained in the articles of incorporation, by%laws, or any stockholder8s agree$ent- (#) cancelling, altering or en9oining any resol tion or act of the corporation or its board of directors, stockholders, or officers- (&) directing or prohibiting any act of the corporation or its board of directors, stockholders, officers, or other persons party to the action- (() re* iring the p rchase at their fair val e of shares of any stockholder, either by the corporation regardless of the availability of nrestricted retained earnings in its books, or by the other stockholders- (.) appointing a provisional director- (2) dissolving the corporation- or (4) granting s ch other relief as the circ $stances $ay warrant. A provisional director shall be an i$partial person who is neither a stockholder nor a creditor of the corporation or of any s bsidiary or affiliate of the corporation, and whose f rther * alifications, if any, $ay be deter$ined by the Co$$ission. A provisional director is not a receiver of the corporation and does not have the title and powers of a c stodian or receiver. A provisional director shall have all the rights and powers of a d ly elected director of the corporation, incl ding the right to notice of and to vote at $eetings of directors, ntil s ch ti$e as he shall be re$oved by order of

the Co$$ission or by all the stockholders. Fis co$pensation shall be deter$ined by agree$ent between hi$ and the corporation s b9ect to approval of the Co$$ission, which $ay fi! his co$pensation in the absence of agree$ent or in the event of disagree$ent between the provisional director and the corporation. Secti n !*&" 3ithdrawal of stockholder or dissolution of corporation. 'n addition and witho t pre9 dice to other rights and re$edies available to a stockholder nder this Title, any stockholder of a close corporation $ay, for any reason, co$pel the said corporation to p rchase his shares at their fair val e, which shall not be less than their par or iss ed val e, when the corporation has s fficient assets in its books to cover its debts and liabilities e!cl sive of capital stock) Provided, That any stockholder of a close corporation $ay, by written petition to the +ec rities and ,!change Co$$ission, co$pel the dissol tion of s ch corporation whenever any of acts of the directors, officers or those in control of the corporation is illegal, or fra d lent, or dishonest, or oppressive or nfairly pre9 dicial to the corporation or any stockholder, or whenever corporate assets are being $isapplied or wasted. TITLE 1III SPECIAL CORPORATIONS CHAPTER I 2 ED,CATIONAL CORPORATIONS Secti n !*6" %ncorporation. ,d cational corporations shall be governed by special laws and by the general provisions of this Code. (n) Secti n !*'" Pre,re"uisites to incorporation. ,!cept pon favorable reco$$endation of the 3inistry of ,d cation and C lt re, the +ec rities and ,!change Co$$ission shall not accept or approve the articles of incorporation and by%laws of any ed cational instit tion. (125a) Secti n !*8" Board of trustees. Tr stees of ed cational instit tions organi"ed as non%stock corporations shall not be less than five (.) nor $ore than fifteen (1.)) Provided, however, That the n $ber of tr stees shall be in $ ltiples of five (.). >nless otherwise provided in the articles of incorporation on the by%laws, the board of tr stees of incorporated schools, colleges, or other instit tions of learning shall, as soon as organi"ed, so classify the$selves that the ter$ of office of one%fifth (1<.) of their n $ber shall e!pire every year. Tr stees thereafter elected to fill vacancies, occ rring before the e!piration of a partic lar ter$, shall hold office only for the ne!pired period. Tr stees elected thereafter to fill vacancies ca sed by e!piration of ter$ shall hold office for five (.) years. A $a9ority of the tr stees shall constit te a * or $ for the transaction of b siness. The powers and a thority of tr stees shall be defined in the by%laws. 7or instit tions organi"ed as stock corporations, the n $ber and ter$ of directors shall be governed by the provisions on stock corporations. (12=a) CHAPTER II RELIGIO,S CORPORATIONS Secti n !*(" Classes of religious corporations. :eligio s corporations $ay be incorporated by one or $ore persons. + ch corporations $ay be classified into corporations sole and religio s societies. :eligio s corporations shall be governed by this Chapter and by the general provisions on non% stock corporations insofar as they $ay be applicable. (n) Secti n !!*. Corporation sole. 7or the p rpose of ad$inistering and $anaging, as tr stee, the affairs, property and te$poralities of any religio s deno$ination, sect or ch rch, a corporation sole $ay be for$ed by the chief archbishop, bishop, priest, $inister, rabbi or other presiding elder of s ch religio s deno$ination, sect or ch rch. (1.(a) Secti n !!!" $rticles of incorporation. 'n order to beco$e a corporation sole, the chief archbishop, bishop, priest, $inister, rabbi or presiding elder of any religio s deno$ination, sect or ch rch $ st file with the +ec rities and ,!change Co$$ission articles of incorporation setting forth the following) 1. That he is the chief archbishop, bishop, priest, $inister, rabbi or presiding elder of his religio s deno$ination, sect or ch rch and that he desires to beco$e a corporation sole#. That the r les, reg lations and discipline of his religio s deno$ination, sect or ch rch are not

inconsistent with his beco$ing a corporation sole and do not forbid it&. That as s ch chief archbishop, bishop, priest, $inister, rabbi or presiding elder, he is charged with the ad$inistration of the te$poralities and the $anage$ent of the affairs, estate and properties of his religio s deno$ination, sect or ch rch within his territorial 9 risdiction, describing s ch territorial 9 risdiction(. The $anner in which any vacancy occ rring in the office of chief archbishop, bishop, priest, $inister, rabbi of presiding elder is re* ired to be filled, according to the r les, reg lations or discipline of the religio s deno$ination, sect or ch rch to which he belongs- and .. The place where the principal office of the corporation sole is to be established and located, which place $ st be within the Philippines. The articles of incorporation $ay incl de any other provision not contrary to law for the reg lation of the affairs of the corporation. (n) Secti n !!#" 0ubmission of the articles of incorporation. The articles of incorporation $ st be verified, before filing, by affidavit or affir$ation of the chief archbishop, bishop, priest, $inister, rabbi or presiding elder, as the case $ay be, and acco$panied by a copy of the co$$ission, certificate of election or letter of appoint$ent of s ch chief archbishop, bishop, priest, $inister, rabbi or presiding elder, d ly certified to be correct by any notary p blic. 7ro$ and after the filing with the +ec rities and ,!change Co$$ission of the said articles of incorporation, verified by affidavit or affir$ation, and acco$panied by the doc $ents $entioned in the preceding paragraph, s ch chief archbishop, bishop, priest, $inister, rabbi or presiding elder shall beco$e a corporation sole and all te$poralities, estate and properties of the religio s deno$ination, sect or ch rch theretofore ad$inistered or $anaged by hi$ as s ch chief archbishop, bishop, priest, $inister, rabbi or presiding elder shall be held in tr st by hi$ as a corporation sole, for the se, p rpose, behalf and sole benefit of his religio s deno$ination, sect or ch rch, incl ding hospitals, schools, colleges, orphan asyl $s, parsonages and ce$eteries thereof. (n) Secti n !!$" $c"uisition and alienation of property. Any corporation sole $ay p rchase and hold real estate and personal property for its ch rch, charitable, benevolent or ed cational p rposes, and $ay receive be* ests or gifts for s ch p rposes. + ch corporation $ay sell or $ortgage real property held by it by obtaining an order for that p rpose fro$ the Co rt of 7irst 'nstance of the province where the property is sit ated pon proof $ade to the satisfaction of the co rt that notice of the application for leave to sell or $ortgage has been given by p blication or otherwise in s ch $anner and for s ch ti$e as said co rt $ay have directed, and that it is to the interest of the corporation that leave to sell or $ortgage sho ld be granted. The application for leave to sell or $ortgage $ st be $ade by petition, d ly verified, by the chief archbishop, bishop, priest, $inister, rabbi or presiding elder acting as corporation sole, and $ay be opposed by any $e$ber of the religio s deno$ination, sect or ch rch represented by the corporation sole) Provided, That in cases where the r les, reg lations and discipline of the religio s deno$ination, sect or ch rch, religio s society or order concerned represented by s ch corporation sole reg late the $ethod of ac* iring, holding, selling and $ortgaging real estate and personal property, s ch r les, reg lations and discipline shall control, and the intervention of the co rts shall not be necessary. (1.=a) Secti n !!%" Filling of (acancies. The s ccessors in office of any chief archbishop, bishop, priest, $inister, rabbi or presiding elder in a corporation sole shall beco$e the corporation sole on their accession to office and shall be per$itted to transact b siness as s ch on the filing with the +ec rities and ,!change Co$$ission of a copy of their co$$ission, certificate of election, or letters of appoint$ent, d ly certified by any notary p blic. 6 ring any vacancy in the office of chief archbishop, bishop, priest, $inister, rabbi or presiding elder of any religio s deno$ination, sect or ch rch incorporated as a corporation sole, the person or persons a thori"ed and e$powered by the r les, reg lations or discipline of the religio s deno$ination, sect or ch rch represented by the corporation sole to ad$inister the te$poralities and $anage the affairs, estate and properties of the corporation sole d ring the vacancy shall e!ercise all the powers and a thority of the corporation sole d ring s ch vacancy. (1.5a) Secti n !!&" *issolution. A corporation sole $ay be dissolved and its affairs settled vol ntarily by s b$itting to the +ec rities and ,!change Co$$ission a verified declaration of dissol tion.

The declaration of dissol tion shall set forth) 1. The na$e of the corporation#. The reason for dissol tion and winding p&. The a thori"ation for the dissol tion of the corporation by the partic lar religio s deno$ination, sect or ch rch(. The na$es and addresses of the persons who are to s pervise the winding p of the affairs of the corporation. >pon approval of s ch declaration of dissol tion by the +ec rities and ,!change Co$$ission, the corporation shall cease to carry on its operations e!cept for the p rpose of winding p its affairs. (n) Secti n !!6" eligious societies. Any religio s society or religio s order, or any diocese, synod, or district organi"ation of any religio s deno$ination, sect or ch rch, nless forbidden by the constit tion, r les, reg lations, or discipline of the religio s deno$ination, sect or ch rch of which it is a part, or by co$petent a thority, $ay, pon written consent and<or by an affir$ative vote at a $eeting called for the p rpose of at least two%thirds (#<&) of its $e$bership, incorporate for the ad$inistration of its te$poralities or for the $anage$ent of its affairs, properties and estate by filing with the +ec rities and ,!change Co$$ission, articles of incorporation verified by the affidavit of the presiding elder, secretary, or clerk or other $e$ber of s ch religio s society or religio s order, or diocese, synod, or district organi"ation of the religio s deno$ination, sect or ch rch, setting forth the following) 1. That the religio s society or religio s order, or diocese, synod, or district organi"ation is a religio s organi"ation of a religio s deno$ination, sect or ch rch#. That at least two%thirds (#<&) of its $e$bership have given their written consent or have voted to incorporate, at a d ly convened $eeting of the body&. That the incorporation of the religio s society or religio s order, or diocese, synod, or district organi"ation desiring to incorporate is not forbidden by co$petent a thority or by the constit tion, r les, reg lations or discipline of the religio s deno$ination, sect, or ch rch of which it for$s a part(. That the religio s society or religio s order, or diocese, synod, or district organi"ation desires to incorporate for the ad$inistration of its affairs, properties and estate.. The place where the principal office of the corporation is to be established and located, which place $ st be within the Philippines- and 2. The na$es, nationalities, and residences of the tr stees elected by the religio s society or religio s order, or the diocese, synod, or district organi"ation to serve for the first year or s ch other period as $ay be prescribed by the laws of the religio s society or religio s order, or of the diocese, synod, or district organi"ation, the board of tr stees to be not less than five (.) nor $ore than fifteen (1.). (12/a) TITLE 1IV DISSOL,TION Secti n !!'" 3ethods of dissol tion. A corporation for$ed or organi"ed nder the provisions of this Code $ay be dissolved vol ntarily or invol ntarily. (n) Secti n !!8" Hol ntary dissol tion where no creditors are affected. 'f dissol tion of a corporation does not pre9 dice the rights of any creditor having a clai$ against it, the dissol tion $ay be effected by $a9ority vote of the board of directors or tr stees, and by a resol tion d ly adopted by the affir$ative vote of the stockholders owning at least two%thirds (#<&) of the o tstanding capital stock or of at least two%thirds (#<&) of the $e$bers of a $eeting to be held pon call of the directors or tr stees after p blication of the notice of ti$e, place and ob9ect of the $eeting for three (&) consec tive weeks in a newspaper p blished in the place where the principal office of said corporation is located- and if no newspaper is p blished in s ch place, then in a newspaper of general circ lation in the Philippines, after sending s ch notice to each stockholder or $e$ber either by registered $ail or by personal delivery at least thirty (&/) days prior to said $eeting. A copy of the resol tion a thori"ing the dissol tion shall be certified by a $a9ority of the board of directors or tr stees and co ntersigned by the secretary of the corporation. The +ec rities and ,!change Co$$ission shall there pon iss e the certificate of dissol tion. (2#a)

Secti n !!(" Hol ntary dissol tion where creditors are affected. 0here the dissol tion of a corporation $ay pre9 dice the rights of any creditor, the petition for dissol tion shall be filed with the +ec rities and ,!change Co$$ission. The petition shall be signed by a $a9ority of its board of directors or tr stees or other officers having the $anage$ent of its affairs, verified by its president or secretary or one of its directors or tr stees, and shall set forth all clai$s and de$ands against it, and that its dissol tion was resolved pon by the affir$ative vote of the stockholders representing at least two%thirds (#<&) of the o tstanding capital stock or by at least two%thirds (#<&) of the $e$bers at a $eeting of its stockholders or $e$bers called for that p rpose. 'f the petition is s fficient in for$ and s bstance, the Co$$ission shall, by an order reciting the p rpose of the petition, fi! a date on or before which ob9ections thereto $ay be filed by any person, which date shall not be less than thirty (&/) days nor $ore than si!ty (2/) days after the entry of the order. Defore s ch date, a copy of the order shall be p blished at least once a week for three (&) consec tive weeks in a newspaper of general circ lation p blished in the $ nicipality or city where the principal office of the corporation is sit ated, or if there be no s ch newspaper, then in a newspaper of general circ lation in the Philippines, and a si$ilar copy shall be posted for three (&) consec tive weeks in three (&) p blic places in s ch $ nicipality or city. >pon five (.) day8s notice, given after the date on which the right to file ob9ections as fi!ed in the order has e!pired, the Co$$ission shall proceed to hear the petition and try any iss e $ade by the ob9ections filed- and if no s ch ob9ection is s fficient, and the $aterial allegations of the petition are tr e, it shall render 9 dg$ent dissolving the corporation and directing s ch disposition of its assets as 9 stice re* ires, and $ay appoint a receiver to collect s ch assets and pay the debts of the corporation. (: le 1/(, :Ca) Secti n !#*" *issolution by shortening corporate term. A vol ntary dissol tion $ay be effected by a$ending the articles of incorporation to shorten the corporate ter$ p rs ant to the provisions of this Code. A copy of the a$ended articles of incorporation shall be s b$itted to the +ec rities and ,!change Co$$ission in accordance with this Code. >pon approval of the a$ended articles of incorporation of the e!piration of the shortened ter$, as the case $ay be, the corporation shall be dee$ed dissolved witho t any f rther proceedings, s b9ect to the provisions of this Code on li* idation. (n) Secti n !#!" %n(oluntary dissolution. A corporation $ay be dissolved by the +ec rities and ,!change Co$$ission pon filing of a verified co$plaint and after proper notice and hearing on the gro nds provided by e!isting laws, r les and reg lations. (n) Secti n !##" Corporate li"uidation. ,very corporation whose charter e!pires by its own li$itation or is ann lled by forfeit re or otherwise, or whose corporate e!istence for other p rposes is ter$inated in any other $anner, shall nevertheless be contin ed as a body corporate for three (&) years after the ti$e when it wo ld have been so dissolved, for the p rpose of prosec ting and defending s its by or against it and enabling it to settle and close its affairs, to dispose of and convey its property and to distrib te its assets, b t not for the p rpose of contin ing the b siness for which it was established. At any ti$e d ring said three (&) years, the corporation is a thori"ed and e$powered to convey all of its property to tr stees for the benefit of stockholders, $e$bers, creditors, and other persons in interest. 7ro$ and after any s ch conveyance by the corporation of its property in tr st for the benefit of its stockholders, $e$bers, creditors and others in interest, all interest which the corporation had in the property ter$inates, the legal interest vests in the tr stees, and the beneficial interest in the stockholders, $e$bers, creditors or other persons in interest. >pon the winding p of the corporate affairs, any asset distrib table to any creditor or stockholder or $e$ber who is nknown or cannot be fo nd shall be escheated to the city or $ nicipality where s ch assets are located. ,!cept by decrease of capital stock and as otherwise allowed by this Code, no corporation shall distrib te any of its assets or property e!cept pon lawf l dissol tion and after pay$ent of all its debts and liabilities. (44a, 5=a, 12a) TITLE 1V FOREIGN CORPORATIONS

Secti n !#$" *efinition and rights of foreign corporations. 7or the p rposes of this Code, a foreign corporation is one for$ed, organi"ed or e!isting nder any laws other than those of the Philippines and whose laws allow 7ilipino citi"ens and corporations to do b siness in its own co ntry or state. 't shall have the right to transact b siness in the Philippines after it shall have obtained a license to transact b siness in this co ntry in accordance with this Code and a certificate of a thority fro$ the appropriate govern$ent agency. (n) Secti n !#%" $pplication to e)isting foreign corporations. ,very foreign corporation which on the date of the effectivity of this Code is a thori"ed to do b siness in the Philippines nder a license therefore iss ed to it, shall contin e to have s ch a thority nder the ter$s and condition of its license, s b9ect to the provisions of this Code and other special laws. (n) Secti n !#&" $pplication for a license. A foreign corporation applying for a license to transact b siness in the Philippines shall s b$it to the +ec rities and ,!change Co$$ission a copy of its articles of incorporation and by%laws, certified in accordance with law, and their translation to an official lang age of the Philippines, if necessary. The application shall be nder oath and, nless already stated in its articles of incorporation, shall specifically set forth the following) 1. The date and ter$ of incorporation#. The address, incl ding the street n $ber, of the principal office of the corporation in the co ntry or state of incorporation&. The na$e and address of its resident agent a thori"ed to accept s $$ons and process in all legal proceedings and, pending the establish$ent of a local office, all notices affecting the corporation(. The place in the Philippines where the corporation intends to operate.. The specific p rpose or p rposes which the corporation intends to p rs e in the transaction of its b siness in the Philippines) Provided, That said p rpose or p rposes are those specifically stated in the certificate of a thority iss ed by the appropriate govern$ent agency2. The na$es and addresses of the present directors and officers of the corporation4. A state$ent of its a thori"ed capital stock and the aggregate n $ber of shares which the corporation has a thority to iss e, ite$i"ed by classes, par val e of shares, shares witho t par val e, and series, if any5. A state$ent of its o tstanding capital stock and the aggregate n $ber of shares which the corporation has iss ed, ite$i"ed by classes, par val e of shares, shares witho t par val e, and series, if any=. A state$ent of the a$o nt act ally paid in- and 1/. + ch additional infor$ation as $ay be necessary or appropriate in order to enable the +ec rities and ,!change Co$$ission to deter$ine whether s ch corporation is entitled to a license to transact b siness in the Philippines, and to deter$ine and assess the fees payable. Attached to the application for license shall be a d ly e!ec ted certificate nder oath by the a thori"ed official or officials of the 9 risdiction of its incorporation, attesting to the fact that the laws of the co ntry or state of the applicant allow 7ilipino citi"ens and corporations to do b siness therein, and that the applicant is an e!isting corporation in good standing. 'f s ch certificate is in a foreign lang age, a translation thereof in ,nglish nder oath of the translator shall be attached thereto. The application for a license to transact b siness in the Philippines shall likewise be acco$panied by a state$ent nder oath of the president or any other person a thori"ed by the corporation, showing to the satisfaction of the +ec rities and ,!change Co$$ission and other govern$ental agency in the proper cases that the applicant is solvent and in so nd financial condition, and setting forth the assets and liabilities of the corporation as of the date not e!ceeding one (1) year i$$ediately prior to the filing of the application. 7oreign banking, financial and ins rance corporations shall, in addition to the above re* ire$ents, co$ply with the provisions of e!isting laws applicable to the$. 'n the case of all other foreign corporations, no application for license to transact b siness in the Philippines shall be accepted by the +ec rities and ,!change Co$$ission witho t previo s a thority fro$ the appropriate govern$ent agency, whenever re* ired by law. (25a) Secti n !#6" %ssuance of a license. 'f the +ec rities and ,!change Co$$ission is satisfied that

the applicant has co$plied with all the re* ire$ents of this Code and other special laws, r les and reg lations, the Co$$ission shall iss e a license to the applicant to transact b siness in the Philippines for the p rpose or p rposes specified in s ch license. >pon iss ance of the license, s ch foreign corporation $ay co$$ence to transact b siness in the Philippines and contin e to do so for as long as it retains its a thority to act as a corporation nder the laws of the co ntry or state of its incorporation, nless s ch license is sooner s rrendered, revoked, s spended or ann lled in accordance with this Code or other special laws. 0ithin si!ty (2/) days after the iss ance of the license to transact b siness in the Philippines, the license, e!cept foreign banking or ins rance corporation, shall deposit with the +ec rities and ,!change Co$$ission for the benefit of present and f t re creditors of the licensee in the Philippines, sec rities satisfactory to the +ec rities and ,!change Co$$ission, consisting of bonds or other evidence of indebtedness of the Iovern$ent of the Philippines, its political s bdivisions and instr $entalities, or of govern$ent%owned or controlled corporations and entities, shares of stock in "registered enterprises" as this ter$ is defined in :ep blic Act Ao. .152, shares of stock in do$estic corporations registered in the stock e!change, or shares of stock in do$estic ins rance co$panies and banks, or any co$bination of these kinds of sec rities, with an act al $arket val e of at least one h ndred tho sand (P1//,///.) pesos- Provided, however, That within si! (2) $onths after each fiscal year of the licensee, the +ec rities and ,!change Co$$ission shall re* ire the licensee to deposit additional sec rities e* ivalent in act al $arket val e to two (#;) percent of the a$o nt by which the licensee8s gross inco$e for that fiscal year e!ceeds five $illion (P.,///,///.//) pesos. The +ec rities and ,!change Co$$ission shall also re* ire deposit of additional sec rities if the act al $arket val e of the sec rities on deposit has decreased by at least ten (1/;) percent of their act al $arket val e at the ti$e they were deposited. The +ec rities and ,!change Co$$ission $ay at its discretion release part of the additional sec rities deposited with it if the gross inco$e of the licensee has decreased, or if the act al $arket val e of the total sec rities on deposit has increased, by $ore than ten (1/;) percent of the act al $arket val e of the sec rities at the ti$e they were deposited. The +ec rities and ,!change Co$$ission $ay, fro$ ti$e to ti$e, allow the licensee to s bstit te other sec rities for those already on deposit as long as the licensee is solvent. + ch licensee shall be entitled to collect the interest or dividends on the sec rities deposited. 'n the event the licensee ceases to do b siness in the Philippines, the sec rities deposited as aforesaid shall be ret rned, pon the licensee8s application therefor and pon proof to the satisfaction of the +ec rities and ,!change Co$$ission that the licensee has no liability to Philippine residents, incl ding the Iovern$ent of the :ep blic of the Philippines. (n) Secti n !#'" 3ho may be a resident agent. A resident agent $ay be either an individ al residing in the Philippines or a do$estic corporation lawf lly transacting b siness in the Philippines) Provided, That in the case of an individ al, he $ st be of good $oral character and of so nd financial standing. (n) Secti n !#8" esident agent/ ser(ice of process. The +ec rities and ,!change Co$$ission shall re* ire as a condition precedent to the iss ance of the license to transact b siness in the Philippines by any foreign corporation that s ch corporation file with the +ec rities and ,!change Co$$ission a written power of attorney designating so$e person who $ st be a resident of the Philippines, on who$ any s $$ons and other legal processes $ay be served in all actions or other legal proceedings against s ch corporation, and consenting that service pon s ch resident agent shall be ad$itted and held as valid as if served pon the d ly a thori"ed officers of the foreign corporation at its ho$e office. Any s ch foreign corporation shall likewise e!ec te and file with the +ec rities and ,!change Co$$ission an agree$ent or stip lation, e!ec ted by the proper a thorities of said corporation, in for$ and s bstance as follows) "The (na$e of foreign corporation) does hereby stip late and agree, in consideration of its being granted by the +ec rities and ,!change Co$$ission a license to transact b siness in the Philippines, that if at any ti$e said corporation shall cease to transact b siness in the Philippines, or shall be witho t any resident agent in the Philippines on who$ any s $$ons or other legal processes $ay be served, then in any action or proceeding arising o t of any b siness or transaction which occ rred in the Philippines, service of any s $$ons or other legal process $ay be $ade

pon the +ec rities and ,!change Co$$ission and that s ch service shall have the sa$e force and effect as if $ade pon the d ly%a thori"ed officers of the corporation at its ho$e office." 0henever s ch service of s $$ons or other process shall be $ade pon the +ec rities and ,!change Co$$ission, the Co$$ission shall, within ten (1/) days thereafter, trans$it by $ail a copy of s ch s $$ons or other legal process to the corporation at its ho$e or principal office. The sending of s ch copy by the Co$$ission shall be necessary part of and shall co$plete s ch service. All e!penses inc rred by the Co$$ission for s ch service shall be paid in advance by the party at whose instance the service is $ade. 'n case of a change of address of the resident agent, it shall be his or its d ty to i$$ediately notify in writing the +ec rities and ,!change Co$$ission of the new address. (4#a- and n) Secti n !#(" .aw applicable. Any foreign corporation lawf lly doing b siness in the Philippines shall be bo nd by all laws, r les and reg lations applicable to do$estic corporations of the sa$e class, e!cept s ch only as provide for the creation, for$ation, organi"ation or dissol tion of corporations or those which fi! the relations, liabilities, responsibilities, or d ties of stockholders, $e$bers, or officers of corporations to each other or to the corporation. (4&a) Secti n !$*" $mendments to articles of incorporation or by,laws of foreign corporations. 0henever the articles of incorporation or by%laws of a foreign corporation a thori"ed to transact b siness in the Philippines are a$ended, s ch foreign corporation shall, within si!ty (2/) days after the a$end$ent beco$es effective, file with the +ec rities and ,!change Co$$ission, and in the proper cases with the appropriate govern$ent agency, a d ly a thenticated copy of the articles of incorporation or by%laws, as a$ended, indicating clearly in capital letters or by nderscoring the change or changes $ade, d ly certified by the a thori"ed official or officials of the co ntry or state of incorporation. The filing thereof shall not of itself enlarge or alter the p rpose or p rposes for which s ch corporation is a thori"ed to transact b siness in the Philippines. (n) Secti n !$!" $mended license. A foreign corporation a thori"ed to transact b siness in the Philippines shall obtain an a$ended license in the event it changes its corporate na$e, or desires to p rs e in the Philippines other or additional p rposes, by s b$itting an application therefor to the +ec rities and ,!change Co$$ission, favorably endorsed by the appropriate govern$ent agency in the proper cases. (n) Secti n !$#" #erger or consolidation in(ol(ing a foreign corporation licensed in the Philippines. @ne or $ore foreign corporations a thori"ed to transact b siness in the Philippines $ay $erge or consolidate with any do$estic corporation or corporations if s ch is per$itted nder Philippine laws and by the law of its incorporation) Provided, That the re* ire$ents on $erger or consolidation as provided in this Code are followed. 0henever a foreign corporation a thori"ed to transact b siness in the Philippines shall be a party to a $erger or consolidation in its ho$e co ntry or state as per$itted by the law of its incorporation, s ch foreign corporation shall, within si!ty (2/) days after s ch $erger or consolidation beco$es effective, file with the +ec rities and ,!change Co$$ission, and in proper cases with the appropriate govern$ent agency, a copy of the articles of $erger or consolidation d ly a thenticated by the proper official or officials of the co ntry or state nder the laws of which $erger or consolidation was effected) Provided, however, That if the absorbed corporation is the foreign corporation doing b siness in the Philippines, the latter shall at the sa$e ti$e file a petition for withdrawal of its license in accordance with this Title. (n) Secti n !$$" *oing business without a license. Ao foreign corporation transacting b siness in the Philippines witho t a license, or its s ccessors or assigns, shall be per$itted to $aintain or intervene in any action, s it or proceeding in any co rt or ad$inistrative agency of the Philippinesb t s ch corporation $ay be s ed or proceeded against before Philippine co rts or ad$inistrative trib nals on any valid ca se of action recogni"ed nder Philippine laws. (2=a) Secti n !$%" e(ocation of license. 0itho t pre9 dice to other gro nds provided by special laws, the license of a foreign corporation to transact b siness in the Philippines $ay be revoked or s spended by the +ec rities and ,!change Co$$ission pon any of the following gro nds) 1. 7ail re to file its ann al report or pay any fees as re* ired by this Code#. 7ail re to appoint and $aintain a resident agent in the Philippines as re* ired by this Title-

&. 7ail re, after change of its resident agent or of his address, to s b$it to the +ec rities and ,!change Co$$ission a state$ent of s ch change as re* ired by this Title(. 7ail re to s b$it to the +ec rities and ,!change Co$$ission an a thenticated copy of any a$end$ent to its articles of incorporation or by%laws or of any articles of $erger or consolidation within the ti$e prescribed by this Title.. A $isrepresentation of any $aterial $atter in any application, report, affidavit or other doc $ent s b$itted by s ch corporation p rs ant to this Title2. 7ail re to pay any and all ta!es, i$posts, assess$ents or penalties, if any, lawf lly d e to the Philippine Iovern$ent or any of its agencies or political s bdivisions4. Transacting b siness in the Philippines o tside of the p rpose or p rposes for which s ch corporation is a thori"ed nder its license5. Transacting b siness in the Philippines as agent of or acting for and in behalf of any foreign corporation or entity not d ly licensed to do b siness in the Philippines- or =. Any other gro nd as wo ld render it nfit to transact b siness in the Philippines. (n) Secti n !$&" %ssuance of certificate of re(ocation. >pon the revocation of any s ch license to transact b siness in the Philippines, the +ec rities and ,!change Co$$ission shall iss e a corresponding certificate of revocation, f rnishing a copy thereof to the appropriate govern$ent agency in the proper cases. The +ec rities and ,!change Co$$ission shall also $ail to the corporation at its registered office in the Philippines a notice of s ch revocation acco$panied by a copy of the certificate of revocation. (n) Secti n !$6" 3ithdrawal of foreign corporations. + b9ect to e!isting laws and reg lations, a foreign corporation licensed to transact b siness in the Philippines $ay be allowed to withdraw fro$ the Philippines by filing a petition for withdrawal of license. Ao certificate of withdrawal shall be iss ed by the +ec rities and ,!change Co$$ission nless all the following re* ire$ents are $et1. All clai$s which have accr ed in the Philippines have been paid, co$pro$ised or settled#. All ta!es, i$posts, assess$ents, and penalties, if any, lawf lly d e to the Philippine Iovern$ent or any of its agencies or political s bdivisions have been paid- and &. The petition for withdrawal of license has been p blished once a week for three (&) consec tive weeks in a newspaper of general circ lation in the Philippines. TITLE 1VI /ISCELLANEO,S PROVISIONS Secti n !$'" 5utstanding capital stock defined. The ter$ "o tstanding capital stock", as sed in this Code, $eans the total shares of stock iss ed nder binding s bscription agree$ents to s bscribers or stockholders, whether or not f lly or partially paid, e!cept treas ry shares. (n) Secti n !$8" *esignation of go(erning boards. The provisions of specific provisions of this Code to the contrary notwithstanding, non%stock or special corporations $ay, thro gh their articles of incorporation or their by%laws, designate their governing boards by any na$e other than as board of tr stees. (n) Secti n !$(" %ncorporation and other fees. The +ec rities and ,!change Co$$ission is hereby a thori"ed to collect and receive fees as a thori"ed by law or by r les and reg lations pro$ lgated by the Co$$ission.67wphi6 (n) Secti n !%*" 0tock ownership in certain corporations. P rs ant to the d ties specified by Article G'H of the Constit tion, the Aational ,cono$ic and 6evelop$ent A thority shall, fro$ ti$e to ti$e, $ake a deter$ination of whether the corporate vehicle has been sed by any corporation or by b siness or ind stry to fr strate the provisions thereof or of applicable laws, and shall s b$it to the Datasang Pa$bansa, whenever dee$ed necessary, a report of its findings, incl ding reco$$endations for their prevention or correction. 3a!i$ $ li$its $ay be set by the Datasang Pa$bansa for stockholdings in corporations declared by it to be vested with a p blic interest p rs ant to the provisions of this section, belonging to individ als or gro ps of individ als related to each other by consang inity or affinity or by close b siness interests, or whenever it is necessary to achieve national ob9ectives, prevent illegal

$onopolies or co$binations in restraint or trade, or to i$ple$ent national econo$ic policies declared in laws, r les and reg lations designed to pro$ote the general welfare and foster econo$ic develop$ent. 'n reco$$ending to the Datasang Pa$bansa corporations, b sinesses or ind stries to be declared vested with a p blic interest and in for$ lating proposals for li$itations on stock ownership, the Aational ,cono$ic and 6evelop$ent A thority shall consider the type and nat re of the ind stry, the si"e of the enterprise, the econo$ies of scale, the geographic location, the e!tent of 7ilipino ownership, the labor intensity of the activity, the e!port potential, as well as other factors which are ger$ane to the reali"ation and pro$otion of b siness and ind stry. Secti n !%!" $nnual report or corporations. ,very corporation, do$estic or foreign, lawf lly doing b siness in the Philippines shall s b$it to the +ec rities and ,!change Co$$ission an ann al report of its operations, together with a financial state$ent of its assets and liabilities, certified by any independent certified p blic acco ntant in appropriate cases, covering the preceding fiscal year and s ch other re* ire$ents as the +ec rities and ,!change Co$$ission $ay re* ire. + ch report shall be s b$itted within s ch period as $ay be prescribed by the +ec rities and ,!change Co$$ission. (n) Secti n !%#" Confidential nature of e)amination results. All interrogatories propo nded by the +ec rities and ,!change Co$$ission and the answers thereto, as well as the res lts of any e!a$ination $ade by the Co$$ission or by any other official a thori"ed by law to $ake an e!a$ination of the operations, books and records of any corporation, shall be kept strictly confidential, e!cept insofar as the law $ay re* ire the sa$e to be $ade p blic or where s ch interrogatories, answers or res lts are necessary to be presented as evidence before any co rt. (n) Secti n !%$" ule,making power of the 0ecurities and +)change Commission. The +ec rities and ,!change Co$$ission shall have the power and a thority to i$ple$ent the provisions of this Code, and to pro$ lgate r les and reg lations reasonably necessary to enable it to perfor$ its d ties here nder, partic larly in the prevention of fra d and ab ses on the part of the controlling stockholders, $e$bers, directors, tr stees or officers. (n) Secti n !%%" -iolations of the Code. Hiolations of any of the provisions of this Code or its a$end$ents not otherwise specifically penali"ed therein shall be p nished by a fine of not less than one tho sand (P1,///.//) pesos b t not $ore than ten tho sand (P1/,///.//) pesos or by i$prison$ent for not less than thirty (&/) days b t not $ore than five (.) years, or both, in the discretion of the co rt. 'f the violation is co$$itted by a corporation, the sa$e $ay, after notice and hearing, be dissolved in appropriate proceedings before the +ec rities and ,!change Co$$ission) Provided, That s ch dissol tion shall not precl de the instit tion of appropriate action against the director, tr stee or officer of the corporation responsible for said violation) Provided, f rther, That nothing in this section shall be constr ed to repeal the other ca ses for dissol tion of a corporation provided in this Code. (1=/ 1<# a) Secti n !%&" $mendment or repeal. Ao right or re$edy in favor of or against any corporation, its stockholders, $e$bers, directors, tr stees, or officers, nor any liability inc rred by any s ch corporation, stockholders, $e$bers, directors, tr stees, or officers, shall be re$oved or i$paired either by the s bse* ent dissol tion of said corporation or by any s bse* ent a$end$ent or repeal of this Code or of any part thereof. (n) Secti n !%6" epealing clause. ,!cept as e!pressly provided by this Code, all laws or parts thereof inconsistent with any provision of this Code shall be dee$ed repealed. (n) Secti n !%'" 0eparability of pro(isions. +ho ld any provision of this Code or any part thereof be declared invalid or nconstit tional, the other provisions, so far as they are separable, shall re$ain in force. (n) Secti n !%8" $pplicability to e)isting corporations. All corporations lawf lly e!isting and doing b siness in the Philippines on the date of the effectivity of this Code and heretofore a thori"ed, licensed or registered by the +ec rities and ,!change Co$$ission, shall be dee$ed to have been a thori"ed, licensed or registered nder the provisions of this Code, s b9ect to the ter$s and conditions of its license, and shall be governed by the provisions hereof) Provided, That if any s ch corporation is affected by the new re* ire$ents of this Code, said corporation shall, nless

otherwise herein provided, be given a period of not $ore than two (#) years fro$ the effectivity of this Code within which to co$ply with the sa$e. (n) Secti n !%(" +ffecti(ity. This Code shall take effect i$$ediately pon its approval. Approved, 3ay 1, 1=5/ The ?awphil Pro9ect % Arellano ?aw 7o ndation