Section 16.

AMENDMENT OF ARTICLES
OF INCORPORATION.
Limitations in the amendment of the articles of
Incorporation:
i. The amendment must be for legitimate purposes and must not be
contrary to the Corporation Code and special laws.
ii. The amendment must be approved by a majority of the board of
directors or board of trustees;
iii. The amendment requires the vote or written assent of stockholders
representing 2/3 of the outstanding capital stock or 2/3 members if it
be a non-stock corporation;
iv. The original & amended articles together shall contain provisions
required by law to be set out in the articles of incorporations. Such
articles, as amended, shall be indicated by underscoring the changes
made;
v. Certification under oath by the corporate secretary & a majority
of the board of directors or board of trustees stating the fact that
said amendments have been duly approved by the required vote
of the stockholders or members, shall be submitted to the SEC;
vi. The amendment must approved by the SEC;
vii. The amendment must be accompanied by a favorable
recommendation of appropriate government agency in cases of:
Banks;
Banking and quasi-banking institutions;
Trust companies and other financial intermediaries;
Insurance companies;
Public Utilities;
Educational Insitutions; and
Othe corporations governed by special laws.
Section 17. GROUNDS WHEN ARTICLES OF
INCORPORATION OR AMENDMENT MAY BE
REJECTED OR DISAPPROVED..

1. The articles or amendment is not substantially in accordance

with the form prescribed herein;
2. The purpose or purposes of the corporation are patently
unconstitutional, illegal, immoral, pr contrary to government
rules &regulations;
3. That the Tresures Affidavit concerning the amount of capital
stock subscribed and/or paid is false
4. That the percentage of ownership of the capital stock to be
owned by citizens of the Philippines has not been complied
with as required by exsiting laws or the Constitution.
 Note: Before rejecting the articles of incorporation or
disapprove its amendments, the SEC should give the
incorporators reasonable time within which to correct or
modify the objectionable portions of the articles or
amendments.

Section 18. Corporate Name.

When a corporate name cannot be used :
a) Names which are identical, deceptively or confusingly similar to
that of any existing corporation including internationally known
foreign corporation through not used in the Philippines;
b) Name already protected by law;
c) Name which is contrary to law, morals or public policy.
SECTION 19. Commencement of
corporate existence.
A corporation comes into existence upon the issuance of the
certificate of incorporation. Then and only then will it acquire
juridical personality.

SECTION 20. DE FACTO CORPORATIONS.

Requisites of a De Facto Corporation:
1) Valid law under which the corporation was incorporated.
2) Attempt in good faith form a corporation according to the
requirements of the law. Here the SC requires that you must
have filed with the SEC articles of incorporation. For instance
the majority if the directors are not residents of the Philippines
or the statements regarding the paid up capital stock is not true,
those are defects that may make the corporation de facto.
 3) User of corporate powers. The corporation must have performed
acts which are peculiar to a corporation like entering into a
subscription agreement, adopting by-laws, electing directors.
4) It must act in good faith.So the moment, for example there is a
decision declaring the corporation was nit validly created, it can no
longer claim good faith.

Questioning the validity of the corporate existence.

The existence of a de facto corporation shall not be inquired into a
collaterally in any private suit to which such corporation may be a party.
Such inquiry may be made by the Solicitor General in a direct
proceeding(i.e.,quo warranto proceeding.
SECTION 21. CORPORATION BY ESTOPPEL.
It is a status acquired by persons wo assume to
act as a corporation knowing it to be without
authority. Such persons shall be liable as general
partners for all debts, liabilities and damages
incurred or arising as a result thereof.
The doctrine of corporation by estoppel may apply
to alleged corporation or to a third party transacting
with the former.
The principle of estoppel cannot be invoke in favor
of a person who is a member of the association
and therefore must be presumed to know that
there is no a corporation.
Section 22. effects on non-use of
corporate charter and continuous
inoperation of a corporation.
I. Failure to formally organize and communicate the transaction of its
business or the construction of its works within two(2) years from the
date of its incorporation.
The corporations powers cease and the corporation shall be
deemed dissolved.
II. Continuous inoperation for at least five(5) years.
It is a ground for suspension or revocation of its corporation
franchise or certificate of incorporation.
This is not automatic because under the law, the SEC should
afford due process, meaning notice and heariong.

Note: The two(2) year and five(5) year rule are not applicable if the
failure to organize or continuously operate is due to causes beyond
the control of the corporation.