Republic Act No. 11232

Seventeenth Congress Third Regular Session Begun and held in Metro Manila, on Monday, the twenty-third day of July, two thousand eighteen. REPUBLIC ACT No. 11232 An Act Providing for the Revised Corporation Code of the Philippines Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled: TITLE I GENERAL PROVISIONS DEFINITIONS AND CLASSIFICATIONS Section 1. Title of the Code. - This Code shall be known as the "Revised Corporation Code of the Philipines". Section 2. Corporation Defined. - A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incidental to its existence. Section 3. Classes of Corporations. - Corporations formed or organized under this Code may be stock or nonstock corporations. Stock corporations are those which have capital stock divided into shares and are authorized to distribute to the holders of such shares, dividends, or allotments of the surplus profits on the basis of the shares held. All other corporations are nonstock corporations. Section 4. Corporations Create by Special Laws or Charters. - Corporations created by special laws or charters shall be governed primarily by the provisions of the special law or charter creating them or applicable to them, supplemented by the provisions of this Code, insofar as they are applicable. Section 5. Corporators and Incorporators, Stockholders and Members. - Corporators are those who compose a corporation, whether as stockholders or shareholders in a stock corporation or as a members in a nonstock corporations. Incorporators are those stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation and who are signatories thereof. Section 6. Classification of Shares. - The classification of shares, their corresponding rights, priviledges, restrictions, and their stated par value, if any, must be indic

ated in the articles of incorporations. Each share shall be equal in all respects to every other share, except as otherwise provided in the articles of incorporation. Each share shall be equal in all respects to every other share, except as otherwise provided in the articles of incorporation and in the certificate of stock. The share stock corporations may be divided into classes or series of shares, or both. No share may be deprived of voting rights except those classified and issued as "preferred" or "redeemable" shares, unless otherwise provided in this Code: Provided, That there shall be a class or series of shares with complete voting rights. Holders of nonvoting shares shall nevertheless be entitled to vote on the following matters; (a) Amendment of the articles of incorporation; (b) Adoption and amendment of bylaws; (c) Sale, lease, echange, mortgage, pledge, or other disposition of all or substantially all of the corporate property; (d) Incurring, creating, or increasing bonded indebtedness; (e) Increase or decrease of authorized capital stock; (f) Merger or consolidation of the corporation with another corporation or other corporations; (g) Investment of corporate funds in another corporation or business in accordance with this Code; and (h) Dissolution of the corporation. Except as provided in the immediately preceding paragraph, the vote required under this Code to approve a particular corporate act shall be deemed to refer only to stocks with voting rights. The shares or series of shares may or may not have a par value: Provided, That banks, trust, insurance, and preneed companies, public utilities, building and loan associations, and other corporations authorized to obtain or access funds from the public whether publicly listed or not, shall not be permitted to issue no-par value shares of stock. Preferred shares of stock issued by a corporation may be given preference in the distribution of dividends and in the distribution of corporate assets in case

of liquidation, or such other preferences: Provided, That preferred shares of stock may be issued only with a stated par value. The board of directors, where authorized in the articles of incorporation, may fix the terms and conditions of preferred shares of stock or any series thereof: Provided, further, That such terms and conditions shall be effective upon filing of a certificate thereof with the Securities and Exchange Commission, hereinafter referred to as the "Commission". Shares of capital stock issued without par value shall be deemed fully paid and nonassessable and the holder of such shares shall not be liable to the corporation or to its creditors in respect thereto: Provided, That no-par value shares must be issued for a consideration of at least Five pesos (₱5.00) per share: Provided, further, That the entire consideration received by the corporation for its no-par value shares shall be treated as capital and shall not be available for distribution as dividends. A corporation may further classify its shares for the purpose of ensuring compliance with constitutional or legal requirements. Section 7. Founders' Shares. - Founders' shares may be given certain rights and privileges not enjoyed by the owners of other stock. Where the exclusive right to vote and be voted for in the election of directors is granted, it must be for a limited period not to exceed five (5) years from the date of incorporation: Provided, That such exclusive right shall not be allowed if its exercise will violate Commonwealth Act No. 108, otherwise known as the "Anti-Dummy Law"; Republic Act No. 7042, otherwise known as the "Foreign Investments Act of 1991"; and otherwise known as "Foreign Investments Act of 1991"; and other pertinent laws. Section 8. Redeemable Shares. - Redeemable shares may be issued by the corporation when expressly provided in the articles of incorporation. They are shares which may be purchased by the corporation. They are shares which may be purchased by the

corporation from the holders of such shares upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation, and upon such other terms and conditions stated in the articles of incorporation and the certificate of stock representing the shares, subject to rules and regulations issued by the Commission. Section 9. Treasury Shares. - Treasury shares are shares of stock which have been issued and fully paid for, but subsequently reacquired by the issuing corporation through purchase, redemption, donation, or some other lawful means. Such shares may again be disposed of for a reasonable price fixed by the board of directors. TITLE II INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS Section 10. Number and Qualifications of Incorporators. - Any person, partnership, association or corporation, singly or jointly with others but not more than fifteen (15) in number, may organize a corporation for any lawful purpose or purposes: Provided, That natural persons who are licensed to practice a profession, and partnerships or associations organized for the purpose of practicing a profession, shall not be allowed to organize as a corporation unless otherwise provided under special laws. Incorporators who are natural persons must be of legal age. Each incorporator of a stock corporation must own or be a subscriber to at least one (1) share of the capital stock. A corporation with a single stockholder is considered a One Person Corporation as described in Title XIII, Chapter III of this Code. Section 11. Corporate Term. - A corporation shall have perpetual existence unless its articles of incorporation provides otherwise. Corporations with certificates of incorporation issued prior to the effectivity of this Code and which continue to exist shall have perpetual existence, unless the corporation, upon a vote of its stockholders representing a majority of its articles of incorporation: Provided, That any change i

n the corporate right of dissenting stockholders in accordance with the provisions of this Code. A corporate term for a specific period may be extended or shortened by amending the articles of incorporation: Provided, That no extension may be made earlier than three (3) years prior to the original or subsequent expiry date(s) unless there are justifiable reasons for an earlier extension as may be determined by the Commission: Provided, further, That such extension of the corporate term shall take effect only on the day following the original or subsequent expiry date(s). A corporation whose term has expired may apply for revival of its corporate existence, together with all the rights and privileges under its certificate of incorporation and subject to all of its duties, debts and liabilities existing prior to its revival. Upon approval by the Commission, the corporation shall be deemed revived and a certificate of revival of corporate existence shall be issued, giving it perpetual existence, unless its application for revival provides otherwise. No application for revival of certificate of incorporation of banks, banking and quasi-banking institutions, preneed, insurance and trust companies, non-stock savings and loan associations (NSSLAs), pawnshops, corporations engaged in money service business, and other financial intermediaries shall be approved by the Commission unless accompanied by a favorable recommendation of the appropriate government agency. Section 12. Minimum Capital Stock Not Required of Stock Corporations. - Stock corporations shall not be required to have minimum capital stock, except as otherwise specially provided by special law. Section 13. Contents of the Articles of Incorporation. - All corporations shall file with the Commission articles of incorporation in any of the official languages, duly signed and acknowledged or authenticated, in such form and manner as may be allowed by the Commission, containing substantially the following matters, e

xcept as otherwise prescribed by this Code or by special law: (a) The name of corporation; (b) The specific purpose or purposes for which the corporation is being formed. Where a corporation has more than one stated purpose, the articles of incorporation hsall indicate the primary purpose and the secondary purpose or purposes: Provided, That a nonstock corporation may not include a purpose which would change or contradict its nature as such; (c) The place where the principal office of the corporation is to be located, which must be within the Philippines; (d) The term for which the corporation is to exist, if the corporation has not elected perpetual existence; (e) The names, nationalities, and residence addresses of the incorporators; (f) The number of directors, which shall not be more than fifteen (15) or the number of trustees which may be more than fifteen (15); (g) The names, nationalities, and residence addresses of persons who shall act as directors or trustees until the first regular directors or trustees are duly elected and qualified in accordance with this Code; (h) If it be a stock corporation, the amount of its authorized capital stock, number of shares into which it is divided, the par value of each, names, nationalities, and subscribers, amount subscribed and paid by each on the subscription, and a statement that some or all of the shares are without par value, if applicable; (i) If it be a nonstock corporation, the amount of its capital, the names, nationalities, and residence addresses of the contributors, and amount contributed by each; and (j) Such other matters consistent with law and which the incorporators may deem necessary and convenient. An arbitration agreement may be provided in the articles of incorporation pursuant to Section 181 of this Code. 1wphi1 The Articles of incorporation and applications for amendments thereto may be filed with the Commission in the form of an electronic document, in accordance with the Commission's rule and r

egulations on electronic filing. Section 14. Form of Articles of Incorporation. - Unless otherwise prescribed by special law, the articles of incorporation of all domestic corporations shall comply substantially with the following form: Articles of Incorporation of (Name of Corporation) The undersigned incorporators, all of legal age, have voluntarily agreed to form a (stock) (nonstock) corporation under the laws of the Republic of the Philippines and certify the following: First: That the name of said corporation shall be "_________________", Inc. Corporation or OPC"; Second: That the purpose or purposes for which such corporation is incorporated are: (If there is more than one purpose, indicate primary and secondary purposes); Third: That the principal office of the corporation is located in the City/Municipality of _______________, Province of ______________________, Philippines; Fourth: That the corporation shall have perpetual existence or a term of ___________ years from the date of issuance of the certificate of incorporation; Fifth: That the names, nationalities, and residence addresses of the incorporators of the corporation are as follows: Name Nationality Residence Sixth: That the number if directors or trustees of the corporation shall be ___________________; and the names, nationalities, and residence addresses of the first directors or trustees of the corporation are as follows: Name Nationality Residence

1wphi1 Seventh: That the authorized capital stock of the corporation is ____________________ PESOS (₱______), dividend into ____ shares with the par value of ___________________ PESOS (₱_____________) per share. (In case all the shares are without par value): That the capital stock of the corporation is __________________ shares without par value. (In case some shares have par value and some are without par value): That the capital stock of said corporation consists of ________________________________ shares, of which _______________________ shares have a par value of ___________________________PESOS (₱_______) each, and of which ____________________ shares are without par value. Eight: That the number of shares of the authorized capital stock-stated has been subscribed as follows: Name of Subscriber Nationality No. of Shares Subscribed Amount Subscribed Amount Paid (Modify No. 8 if shares are with no-par value. In case the corporation is nonstock, Nos. 7 and 8 of the above articles may be modified accordingly, and it is sufficient if the articles may be modified accordingly, and it is sufficient if the articles state the amount of capital or money contributed or donated by specified persons, stating the names, nationalities, and residence addresses of the contributors or donors and the respective amount given by each.) Ninth: That _______________________ has been elected by the subscribers as Treasurer of the Corporation to act as such until after the successor is duly elected and qualified in accordance with the bylaws, that as Treasurer, authority has been given to receive in the name and for the benefit of the corporation, all subscriptions, contributions or donations paid or given by the subscribers or members, who certifies the information set fort

h in the seventh and eighth clauses above, and that the paid-up portion of the subscription in cash and/or property for the benefit and credit of the corporation has been duly received. Tenth: That the incorporators undertake to change the name of the corporation immediately upon receipt of notice from the Commission that another corporation, partnership or person has acquired a prior right to the use of such name, that the name has been declared not distinguishable from a corporation, or that it is contrary to law, public morals, good customs or public policy. Eleventh: (Corporations which will engage in any business or activity reserved for Filipino citizens shall provide the following): "No transfer of stock or interest which shall reduce the ownership of Filipino citizens to less than the required percentage of capital stock as provided by existing laws shall be allowed or permitted to be recorder in the proper books of the corporation, and this restriction shall be indicated in all stock certificates issued by the corporation." IN WITNESS WHEREOF, we have hereunto signed these Articles of Incorporation, this ______ day of _____, 20___ in the City/Municipality of _________________, Province of ________________, Republic of the Philippines. (Names and signatures of the incorporators) (Name and signature of Treasurer) Section 15. Amendment of Articles of Incorporation. - Unless otherwise prescribed by this Code or by special law, and for legitimate purposes, any provision or matter stated in the articles of incorporation may be amended by a majority vote of the board of directors or trustees and the vote or writ

ten assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code. The articles of incorporation of a nonstock corporation may be amended by the vote or written assent of majority of the trustees and at least two-thirds (2/3) of the members. The original and amended articles together shall contain all provisions required by law to be set out in the articles of incorporation. Amendments to the articles shall be indicated by underscoring the change or changes made, and a copy thereof duly certified under oath by the corporate secretary and a majority of the directors or trustees, with a statement that the amendments have been duly approved by the required vote of the stockholders or members, shall be submitted to the Commission. The amendments shall take effect upon their approval by the Commission or from the date of filing with the said Commission if not acted upon within six (6) months from the date of filing for a cause not attributable to the corporation. Section 16. Grounds When Articles of Incorporation or Amendment May be Disapproved. The Commission may disapprove the articles of incorporation or any amendment thereto if the same is not compliant with the requirements of this Code: Provided, That the Commission shall give the incorporators, directors, trustees, or officers as reasonable time from receipt of the disapproval within which to modify the objectionable portions of the articles or amendment. The following are ground for such disapproval: (a) The articles of incorporation or any amendment thereto is not substantially in accordance with the form prescribed herein; (b) The purpose or purposes of the corporation are patently unconstitutional, illegal, immoral or contrary to government rules and regulations; (c) The certification concerning the amount of capital stock subscribed and/or paid is false; and

(d) The required percentage of Filipino ownership of the capital stock under existing laws or the Constitution has not been complied with. No articles of incorporation or amendment to articles of incorporation of banks, banking and quasi-banking institutions, preneed, insurance and trust companies, NSSLAs, pawnshops and other financial intermediaries shall be approved by the Commission unless accompanied by a favorable recommendation of the appropriate government agency to the effect that such articles or amendment is in accordance with law. Section 17. Corporation Name. - No corporate name shall be allowed by the Commission if it is not distinguishable from that already reserved or registered for the use if another corporation, or if such name is already protected by law, rules and regulations. A name is not distinguishable even if it contains one or more of the following: (a) The word "corporation", "company", incorporated", "limited", "limited liability", or an abbreviation ofone if such words; and (b) Punctuations, articles, conjunctions, contractions, prepositions, abbreviations, different tenses, spacing, or number of the same word or phrase. The Commission upon determination that the corporate name is: (1) not distinguishable from a name already reserved or registered for the use of another corporation; (2) already protected by law; or (3) contrary to law, rules and regulations, may summarily order the corporation to immediately cease and desist from using such name and require the corporation to register a new one. The Commission shall also cause the removal of all visible signages, marks, advertisements, labels prints and other effects bearing such coroporate name. Upon the approval of the new corporate name, the Commission shall issue a certificate of incorporation under the amended name. If the corporation fails to comply with the Commission's order, the Commission may hold the corporation and its responsible directors or officers in contempt and/or hold

them administratively, civilly and/or criminally liable under this Code and other applicable laws and/or revoke the registration of the corporation. Section 18. Registration, Incorporation and Commencement of Corporation Existence. - A person or group of persons desiring to incorporate shall submit the intended corporate name to the Commission for verification. If the Commission finds that the name is distinguishable from a name already reserved or registered for the use of another corporation, not protected by law and is not contrary to law, rules and regulation, the name shall be reserved in favor of the incorporators. The incorporators shall then submit their articles of incorporation and bylaws to the Commission. If the Commission finds that the submitted document s and information are fully compliant with the requirements of this Code, other relevant laws, rules and regulations, the Commission shall issue the certificate of incorporation. A private corporation organized under this Code commences its corporate existence and juridical personality from the date the Commission issues the certificate of incorporation under its official seal thereupon the incorporators, stockholders/members and their successors shall constitute a body corporate under the name stated in the articles of incorporation for the period of time mentioned therein, unless said period is extended or the corporation is sooner dissolved in accordance with law. Section 19. De facto Corporations. - The due incorporation of any corporation claiming in good faith to be a corporation under this Code, and its right to exercise corporate powers, shall not be required into collaterally in any private suit to which such corporation may be a party. Such inquiry may be made by the Solicitor General in a quo warranto proceeding. Section 20. Corporation by Estoppel. - All persons who assume to act as a corporation knowing it to be without the authority to do so shall be liable as general partners for all deb

ts, liabilities and damages incurred or arising as a result thereof: Provided, however, That when any such ostensible corporation is sued on any transaction entered by its as a corporation or on any tort committed by it as such, it shall not be allowed to use on any its lack of corporate personality as a defense. Anyone who assumes an obligation to an ostensible corporation as such cannot resist performance thereof on the ground that there was in fact no corporation. Section 21. Effects of Non-Use of Corporate Charter and Continous Inoperation. - If a corporation does not formally organize and commence its business within five (5) year from the date of its incorporation, its certificate of incorporation shall be deemed revoked as of the day following the end of the five (5)-year period. However, if a corporation has commence its business but subsequently becomes inoperative for a period of at least five (5) consecutive years, the Commission may, after due notice and hearing, place the corporation under delinquent status. A delinquent corporation shall have a period of two (2) years to resume operations and comply with all requirements that the Commission shall prescribed. Upon the compliance by the corporation, the Commission shall issue an order lifting the delinquent status. Failure to comply with the requirements and resume operations within the period given by the Commission shall cause the revocation of the corporation's certificate of incorporation. The Commission shall give reasonable notice to, and coordinate with the appropriate regulatory agency prior to the suspension or revocation of the certificate of incorporation of companies under their special regulatory jurisdiction. TITLE III BOARD OF DIRECTORS/TRUSTEE AND OFFICERS Section 22. The Board of Directors or Trustees of a Corporation; Qualification and Term. - Unless otherwise provided in this Code, the board of directors or trustees shall exercise the corporate powers, condict all business, and control

all properties of the corporation. Directors shall be elected for a term of one (10 Year from among the holders of stocks registered in the corporation's book while trustees shall be elected for a term not exceeding three (3) years from among the members of the corporation. Each director and trustee shall hold office until the successor is elected and qualified. A director who ceases to own at least one (1) share of stock or a trustee who ceases to be a member of the corporation shall cease to be such. The board of the following corporations vested with public interest shall have independent directors constituting at least twenty percent (20%) of such board: (a) Corporations covered by Section 17.2 of Republic Act No. 8799, otherwise known as "The Securities Regulation Code", namely those whose securities are registered with the Commission, corporations listed with an exchange or with assets of at least Fifty million pesos (50,000,000.00) and having two hundred (200) or more holders of shares, each holding at least one hundred (100) shares of a class of its equity shares; (b) Banks and quasi-banks, NSSLAs, pawnshops, corporations engaged in money service business, preneed, trust and insurance companies and other financial intermediaries; and (c) Other corporations engaged in businesses vested with public interest similar to the above, as may be determined by the Commission, after taking into account relevant factors which are germane to the objective and purpose of requiring the election of an independent director, such as the extent of minority ownership, type of financial products or securities issued or offered to investors, public interest involved in the nature of business operations, and other analogous factors. An independent director is a person who apart from shareholdings and fees received from any business or other relationship which could, or could reasonable be received to materially interfere with the exercise of independent judgment in carrying out t

he responsibilities as a director. Independent directors must be elected by the shareholders present or entitled to vote in absentia during the election of directors. Independent directors shall be subject to rules and regulations governing their qualifications, disqualifications, voting requirements, duration of term and term limit, maximum number of board membership and other requirements that the Commission will prescribed to strengthen their independence and align with international best practices. Section 23. Election of Directors or Trustees. - Except when the exclusive right is reserved for holders of founders' shares under Section 7 of this Code, each stockholder or member shall have the right to nominate any director or trustee who posseses all of the qualifications and none of the disqualifications and none of the disqualifications set forth in this Code. At all elections of directors or trustees, there must be present, either in person or through a representative authorized to act by written proxy, the owners of majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote. When so authorized in the bylaws or by a majority of the board of directors, the stockholders or members may also vote through remote communication or in absentia Provided, That the right to vote through such modes may be exercised in corporations vested with public interest, notwithstanding the absence of a provision in the bylaws of such corporations. A stockholder or member who participates through remote communication or in absentia , shall be deemed present for purposes of quorum. The election must be by ballot if requested by any voting stockholder or member. In stock corporations, stockholders entitled to vote shall have the right to vote the number of shares of stock standing in their own names in the stock books of the corporation at the time fixed in the bylaws or where the bylaws are silent at the time of the electio

n. The said stockholder may: (a) vote such number of shares for as many persons as there are directors to be elected; (b) cumulate said shares and give one (1) candidate as many votes as the number of directors to be elected multiplied by the number of shares owned; or (c) distribute them on the same principle among as many candidates as may be seen fit: Provided, That the total number of votes cast shall not exceed the number of shares owned by the stockholders as shown in the books of the corporation multiplied by the whole number of directors to be elected: Provided, however, That no delinquent stock shall be voted. Unless otherwise provided in the articles of incorporation or in the bylaws, members of nonstock corporations may cast as many votes as there are trustees to be elected by may not cast more than one (1) vote for one (1) candidate. Nominees for directors or trustees receiving the highest number of votes shall be declared elected. If no election is held, or the owners of majority of the outstanding capital stock or majority of the members entitled to vote are not present in person, by proxy, or through remote communication or not voting in absentia at the meeting, such meeting may be adjourned and the corporation shall proceed in accordance with Section 25 of this Code. The directors or trustees elected shall perform their duties as prescribed by law, rules of good corporate governance, and bylaws of the corporation. Section 24. Corporate Officers. - Immediately after their election, the directors of a corporation must formally organize an elect: (a) a president, who must be a director; (b) a treasurer, who must be a resident; (c) a secretary, who must be a citizen and resident of the Philippines; and (d) such other officers as may be provided in the bylaws. If the corporation is vested with public interest, the board shall also elect compliance officer. The same person may hold two (2) or more positions concurrently, except that no one shall act as pre

sident and secretary or as president and treasurer at the same time, unless otherwise allowed in this Code. The officers shall manage the corporation and perform such duties as may be provided in the bylaws and/or as resolved by the board of directors. Section 25. Report of Election of Directors, Trustees and Officers, Non-holding of Election and Cessation from Office. - Within thirty (30) days after the election of the directors, trustees and officers of the corporation, the secretary, or any other officer of the corporation, the secretary, or any other officer of the corporation, shall submit to the Commission, the names, nationalities, shareholdings, and residence addresses of the directors, trustees and officers elected. The non-holding of elections and the reasons therefor shall be reported to the Commission within thirty (30) days from the date of the scheduled election. The report shall specify a new date for the election, which shall not be later than sixty (60) days from the scheduled date. If no new date has been designated, or if the rescheduled election is likewise not held, the Commission may, upon the application of a stockholder, member, director or trustee, and after verification of the unjustifiable non-holding of the election, summarily order that an election be held. The Commission shall have the power to issue such orders as may be appropriate, including other directing the issuance of a notice stating the time and place of the election, designated presiding officer, and the record date or dates for the determination of stockholders or members entitled to vote. Notwithstanding any provision of the articles of incorporation or by laws to the contrary, the shares of stock or membership represented at such meeting and entitled to vote shall constitute a quo rum for purposes of conducting an election under this section. Should a director, trustee or officer die, resign or in any manner case to hold office, the secretary or the director, trustee or of

ficer of the corporation, shall, within seven (7) days form knowledge thereof, report in writing such fact to the Commission. Section 26. Disqualification of Directors, Trustees or Officers. - A person shall be disqualified from being a director, trustee or officer of any corporation if, within five (5) years prior to the election or appointment as such, the person was: (a) Convicted by final judgment: (1) Of an offense punishable by imprisonment for a period exceeding six (6) years; (2) For violating this Code; and (3) For violating Republic Act No. 8799, otherwise known as "The Securities Regulation Code"; (b) Found administratively liable for any offense involving fraudulent acts; and (c) By a foreign court or equivalent foreign regulatory authority for acts, violations or misconduct similar to those enumerated in paragraphs (a) and (b) above. The foregoing is without prejudice to qualifications or other disqualifications, which the Commission, the primary regulatory agency, or Philippine Competition Commission may impose in its promotion of good corporate governance or as a sanction in its administrative proceedings. Section 27. Removal of Director or Trustees. - Any director or trustee of a corporation may be removed fro office by vote of the stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock, or in a nonstock corporation, by a vote of at least two-thirds (2/3) of the member entitled to vote: Provided, That such removal shall take place either at a regular meeting of the corporation or at a special meeting called for the purpose, and in either case, after previous notice to stockholders or members of the corporation of the intention to propose such removal at the meeting. A special meeting of the stockholders or members for the purpose of removing any director or trustee must be called by the secretary on order of the president, or upon written demand of stockholders representing or holding at least a majority of the

outstanding capital stock, or a majority of the members entitled to vote. If there is no secretary, or the secretary, despite demand, fails or refuses to call the special meeting or to give notice thereof, the stockholder or member of the corporation signing the demand may call the special meeting or to give notice thereof, the stockholder or member of the corporation signing the demand may call for the meeting by directly addressing the stockholders or members. Notice of the time and place of such meeting, as well as of the intention to propose such removal, must be given by publication or by written notice prescribed in this Code. Removal may be with or without cause: Provided, That removal without cause may not be used to deprive minority stockholders or members of the right representation to which they may be entitled under Section 23 of this Code. The Commission shall, motu propio or upon verified complaint, and after due notice and hearing, order the removal of a director or trustee elected despite the disqualification, or whose disqualification arose or is discovered subsequent to an election. The removal of a disqualified director shall be without prejudice to other sanctions that the Commission may impose on the board of directors or trustees who, with knowledge of the disqualification, failed to remove such director or trustee. Section 28. Vacancies in the Office of Director or Trustee; Emergency Board. - Any vacancy occurring in the board of directors or trustees other that by removal or expiration of term may be filled by the vote of at least a majority of the remaining directors or trustees, if still constituting a quo rum; otherwise, said vacancies must be filled by the stockholders or members in a regular or special meeting called for that purpose. When the vacancy is due to term expiration, the election shall be held no later that the day of such expiration at a meeting called for that purpose. When the vacancy arises as a result of removal by the s

tockholders or members, the election may be held on the same day of the meeting authorizing the removal and this fact must be so stated in the agenda and notice of said meeting. In all other cases, the election must be held no later than forty-five (45) days from the time the vacancy arose. A director or trustee elected to fill vacancy shall be referred to as replacement director or trustee elected to fill a vacancy shall be referred to as replacement director or trustee and shall serve only for the unexpired term of the predecessor in office. However, when the vacancy prevents the remaining directors from consituting a quo rum and emergency action is required to prevent grave, substantial, and irreparable loss or damage to the corporation, the vacancy may be temporarily filled from among the officers of the corporation by unanimous vote of the remaining directors or trustees. The action by the designated director or trustee shall be limited to the emergency action necessary, and the term shall cease within a reasonable time form the termination of the emergency or upon election of the replacement director or trustee, whichever comes earlier. The corporation must notify the Commission within three (3) days from the creation of the emergency board, stating therein the reason for its creation. Any directorship or trusteeship to be filled by a reason of an increase in the number of directors or trustees shall be filled only by an election at a regular or at a special meeting of stockholders or members duly called for the purpose, or in the same meeting authorizing the increase of directors or trustees if so stated in the notice of the meeting. In all elections to fill vacancies under this section, the procedure set forth in Section 23 and 25 of this Code shall apply. Section 29. Compensation of Directors or Trustees. - In the absence of any provision in the bylaws fixing their compensation, the directors or trustees shall not received any compensation in their capacity

as such, except for reasonable per diems: Provided, however, That the stockholders representing at least a majority of the outstanding capital stock or majority of the members may grant directors or trustees with compensation and approve the amount thereof at a regular or special meeting. In no case shall the total yearly compensation of directors exceed ten percent (10%) of the net income before income tax of the corporation during the preceding year. Directors or trustees shall not participate in the determination of their own per diems or compensation. Corporations vested with public interest shall submit to their shareholders and the Commission, an annual report of the total compensation of each of their directors or trustees. Section 30. Liability of Directors, Trustees or Officers. - Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. A director, trustee or officer shall not attempt to acquire, or any interest adverse to the corporation in respect of any matter which has been reposed in them in confidence, and upon which, equity imposes a disability upon themselves to deal in their own behalf; otherwise, the said director, trustee or officer shall be liable as a trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation. Section 31. Dealings of Directors, Trustees or Officers with the Corporation. - A contract of the corporation with one (1) or more of its directors, trustees, officers or their spouses and relatives within the fourth civil degree of consanguinity or affinity is voidable, at the option

of such corporation, unless all the following conditions are present: (a) The presence of such director or trustee in the board meeting in which the contract was approved was not necessary to constitute a quo rum for such meeting; (b) The vote of such director or trustee was not necessary for the approval of the contract; (c) The contract is fair and reasonable under the circumstances; (d) In case of corporations vested with public interest, material contracts are approved by at least a majority of the independent directors voting to approved the material contract; and (e) In case of an officer, the contract has been previously authorized by the board of directors. Where any of the first three (3) conditions set forth in the preceding paragraph is absent, in the case of a contract with a director or trustee, such contract may be ratified by the vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or of at least two-thirds (2/3) of the members in a meeting called for the purpose: Provided, That full disclosure of the adverse interest of the directors or trustees involved is made at such meeting and the contract is fair and reasonable under the circumstances. Section 32. Contaracts Between Corporations with Interlocking Directors. - Except in cases of fraud, and provided the contract is fair and reasonable under the circumstances a contract between two (2) or more corporations having interlocking directors shall not be invalidated on that ground alone: Provided, That if the interest of the interlocking director in one (1) corporation is substantial and the interest in the other corporation or corporations is merely nominal, the contract shall be subject to the provisions of the preceding section insofar as the latter corporation or corporations are concerned. Stockholding exceeding twenty percent (20%) of the outstanding capital stock shall be considered substantial for purposes of interlocking directors. Section 33. Disloy

alty of a Director. - Where a director, by virtue of such office, acquires a business opportunity which should belong to the corporation, thereby obtaining profits to the prejudice of such corporation, the director must account for and refund to the latter all such profits, unless the act has been ratified by a vote of the stockholders owning or representing at least two-thirds (2/3) of the outstanding capital stock. This provision shall be applicable nothwithstanding the fact that the director risked one's own funds in the venture. Section 34. Executive Management, and Other Special Committees. - If the bylaws so provide, the board may create an executive committee composed of at least three (3) directors. Said committee may act, by majority of vote of all its members, on such specific matters within the competence of the board, as may be delegated to it in the bylaws or by majority vote of the board, except with respect to the: (a) approval of any action for which shareholders' approval is also required; (b) filing of vacancies in the board; (c) amendment or repeal of bylaws or the adoption of new bylaws; (d) amendment or term is not amendable or repealable; and (e) distribution of cash divendends to the shareholders. The board of directors may create special committees of temporary or permanent nature and determine the members' term, composition, compensation, powers, and responsibilities. TITLE IV POWERS OF THE CORPORATIONS Section 35. Corporate Powers and Capacity. - Every corporation incorporated under this Code has the power and capacity: (a) To sue and be sued in its corporate name; (b) To have perpetual existence unless the certificate of incorporation provides otherwise; (c) To adopt and use a corporate seal; (d) To amend its articles of incorporation in accordance with the provisions of this Code; (e) To adopt bylaws, not contrary to law, morals or public policy, and to amend or repeal the same in accordance with this Code; (f) In case of stock corporat

ions, to issue or sell stocks to subscribers and to sell treasury stocks in accordance with the provisions of this Code; and to admit members to the corporation if it be a nonstock corporation; (g) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and otherwise deal with such real and personal property, including securities and bonds of other corporations, as the transaction of the lawful business of the corporation may reasonably and necessarily require, subject to the limitations prescribed by law and the constitution; (h) To enter into a partnership, joint venture, merger, consolidation, or any other commercial agreement with natural and juridical persons; (i) To make reasonable donations, including those for the public welfare or for hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, That no foreign corporation shall give donations in aid of any political party or candidate or for purpose s of partisan political activity; (j) To establish pension, retirement, and other plans for the benefit of its directors, trustees, officers, and employees; and (k) To exercise such other powers as may be essential or necessary to carry out its purpose or purposes as stated in the articles of incorporation. Section 36. Power to Extend or Shorten Corporate Term. - A private corporation may extend or shorten its term as stated in the articles of incorporation when approved by a majority vote of the board of directors or trustees, and ratified at a meeting by the stockholders or members representing at least two-thirds (2/3) of the outstanding capital stock or of its membrs. Written notice of the proposed action and the time and place of the meeting shall be sent to the stockholders or members at their respective place of residence as shown in the books of the corporation, and must be deposited to the addressee in the post office with postage prepaid, served personally, or when allowed in the bylaws or done with the co

nsent of the stockholder, sent electronically in accordance with the rules and regulations of the Commission on the use of electronic data messages. In case of extension of corporate term, a dissenting stockholder may exercise the right of appraisal under the conditions provided in this Code. Section 37. Power to increase or Decrease Capital Stock; Incur, Create or Increase Bonded Indebtedness. - No corporation shall increase or decrease its capital stock or incur, create or increase any bonded indebtedness unless approved by a majority vote of the board of directors and by two-thirds (2/3) of the outstanding capital stock at a stockholders' meeting duly called for the purpose. Written notice of the time and place of the stockholders' meeting and the purpose for said meeting must be sent to the stockholders at their places of residence as shown in the books of the corporation served on the stockholders personally, or through electronic means recognized in the corporation's bylaws and/or the Commission's rules as a valid mode for service of notices. A certificate must be signed by a majority of the directors of the corporation and countersigned by the chairperson and secretary of the stockholders' meeting, setting forth: (a) That the requirements of this section have been complied with; (b) The amount of the increase or decrease of the capital stock; (c) In case of an increase of the capital stock, the amount of capital stock or number of shares of no-par stock thereof actually subscribed, the names nationalities and addresses of the persons subscribing, the amount of capital stock or number of no-par stock subscribed, the names, nationalities and addresses of the persons subscribing, the amount of capital stock or number of no-par stock subscribed by each, and the amount paid by each on the subscription in cash or property, or the amount of capital stock or number of shares of no-par stock allotted to each stockholder if such increase is for the purpose of making ef