V.

CLASSES OF CORPORATIONS UNDER THE CORPORATION CODE

Section 3, 87, 88
1) Stock Corporation
A corporation which has capital stock divided into shares AND is authorized to distribute to holders of
such shares, dividends or allotments of surplus profits on the basis of the shares held (Sec. 3). For a
stock corporation to exist, the above requisites must be complied with for even if there is a statement of
capital stock, the corporation is still not a stock corporation if dividends are not supposed to be
declared, i.e. there is no distribution of retained earnings.
2) Non-stock
A non-stock corporation is one where no part of its income is distributable as dividends to its members,
trustees or officers (Sec. 87)
College of International Rev. vs Club Filipino (1962)
Other classes of corporations under the Corporation Code:
Close Corporation- One whose articles of incporation provide that 1) all the corporations issued stock
of all classes, exclusive of treasury shares, shall be held on record by not more than a specified number
of persons, not exceeding twenty (20); all the issued stock of all classes shall be subject to one or more
specified restrictions on transfer permitted by this title and 3) the corporation shall not list in any stock
exchange or may any public offering of any of its stock of any class
Special CorporationOthers:

VI. CREATION OF CORPORATION:

1) Promotion
Sec. 3.10 in relation to Sec. 10.1 of the Sec. Regulations Code
3.10. Promoter is a person who, acting alone or with others, takes initiative in founding and organizing
the business or enterprise of the issuer and receives consideration therefor.
-Activities done by promoter for the founding and organizing of the business or enterprise of the issuer.
It includes discovery, investigation and assembly. Promotion is not a formal part of the organization of a
corporation, in as much as it occurs outside the corporate form and theoretically independent thereof.
Hence, a corporation may be formed and organized by the incorporators themselkeves without getting
the services of so-called promoters.

Old Dominion Copper Mining vs Bigelow

2) Incorporation
3) Formal organization and commencement of business operation

VII. INCORPORATION
1) Steps in incorporation
2) Sections 5, 10-19, 88, 96, 97

Sec. 5. Corporators and incorporators, stockholders and members. Corporators are those who compose a corporation, whether as stockholders
or as members. Incorporators are those stockholders or members mentioned
in the articles of incorporation as originally forming and composing 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 members.
Sec. 10. Number and qualifications of incorporators. - Any number of
natural persons not less than five (5) but not more than fifteen (15), all of
legal age and a majority of whom are residents of the Philippines, may form
a private corporation for any lawful purpose or purposes. Each of the
incorporators of s stock corporation must own or be a subscriber to at least
one (1) share of the capital stock of the corporation.
Sec. 11. Corporate term. - A corporation shall exist for a period not
exceeding fifty (50) years from the date of incorporation unless sooner
dissolved or unless said period is extended. The corporate term as originally
stated in the articles of incorporation may be extended for periods not
exceeding fifty (50) years in any single instance by an amendment of the
articles of incorporation, in accordance with this Code; Provided, That no
extension can be made earlier than five (5) 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 Securities and Exchange
Commission.
Sec. 12. Minimum capital stock required of stock corporations. Stock corporations incorporated under this Code shall not be required to
have any minimum authorized capital stock except as otherwise specifically
provided for by special law, and subject to the provisions of the following
section.
Sec. 13. Amount of capital stock to be subscribed and paid for the
purposes of incorporation. - At least twenty-five percent (25%) of the
authorized capital stock as stated in the articles of incorporation must be

subscribed at the time of incorporation, and at least twenty-five (25%) per

cent of the total subscription must be paid upon subscription, the balance to
be payable on a date or dates fixed in the contract of subscription without
need of call, or in the absence of a fixed date or dates, upon call for
payment by the board of directors: Provided, however, That in no case shall
the paid-up capital be less than five Thousand (P5,000.00) pesos.
Sec. 14. Contents of the articles of incorporation. - All corporations
organized under this code shall file with the Securities and Exchange
Commission articles of incorporation in any of the official languages duly
signed and acknowledged by all of the incorporators, containing substantially
the following matters, except as otherwise prescribed by this Code or by
special law:
1. The name of the corporation;
2. The specific purpose or purposes for which the corporation is being
incorporated. Where a corporation has more than one stated purpose, the
articles of incorporation shall state which is the primary purpose and which
is/are he secondary purpose or purposes: Provided, That a non-stock
corporation may not include a purpose which would change or contradict its
nature as such;
3. The place where the principal office of the corporation is to be located,
which must be within the Philippines;
4. The term for which the corporation is to exist;
5. The names, nationalities and residences of the incorporators;
6. The number of directors or trustees, which shall not be less than five (5)
nor more than fifteen (15);
7. The names, nationalities and residences 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;
8. If it be a stock corporation, the amount of its authorized capital stock in
lawful money of the Philippines, the number of shares into which it is
divided, and in case the share are par value shares, the par value of each,
the names, nationalities and residences of the original subscribers, and the
amount subscribed and paid by each on his subscription, and if some or all
of the shares are without par value, such fact must be stated;
9. If it be a non-stock corporation, the amount of its capital, the names,
nationalities and residences of the contributors and the amount contributed
by each; and
10. Such other matters as are not inconsistent with law and which the
incorporators may deem necessary and convenient.
The Securities and Exchange Commission shall not accept the articles of
incorporation of any stock corporation unless accompanied by a sworn
statement of the Treasurer elected by the subscribers showing that at least
twenty-five (25%) percent of the authorized capital stock of the corporation

has been subscribed, and at least twenty-five (25%) of the total subscription
has been fully paid to him in actual cash and/or in property the fair valuation
of which is equal to at least twenty-five (25%) percent of the said
subscription, such paid-up capital being not less than five thousand
(P5,000.00) pesos.
Sec. 15. Forms of Articles of Incorporation. - Unless otherwise
prescribed by special law, articles of incorporation of all domestic
corporations shall comply substantially with the following form:
Sec. 88. Purposes. - Non-stock corporations may be formed or organized for
charitable, religious, educational, professional, cultural, fraternal, literary, scientific,
social, civic service, or similar purposes, like trade, industry, agricultural and like
chambers, or any combination thereof, subject to the special provisions of this Title
governing particular classes of non-stock corporations

Sec. 96. Definition and applicability of Title. - A close corporation,

within the meaning of this Code, is one whose articles of incorporation
provide that: (1) All the corporation's issued stock of all classes, exclusive of
treasury shares, shall be held of record by not more than a specified number
of persons, not exceeding twenty (20); (2) all the issued stock of all classes
shall be subject to one or more specified restrictions on transfer permitted
by this Title; and (3) The corporation shall not list in any stock exchange or
make any public offering of any of its stock of any class. Notwithstanding the
foregoing, a corporation shall not be deemed a close corporation when at
least two-thirds (2/3) of its voting stock or voting rights is owned or
controlled by another corporation which is not a close corporation within the
meaning of this Code.
Any corporation may be incorporated as a close corporation, except mining
or oil companies, stock exchanges, banks, insurance companies, public
utilities, educational institutions and corporations declared to be vested with
public interest in accordance with the provisions of this Code.
The provisions of this Title shall primarily govern close corporations:
Provided, That the provisions of other Titles of this Code shall apply
suppletorily except insofar as this Title otherwise provides.
Sec. 97. Articles of incorporation. - The articles of incorporation of a
close corporation may provide:
1. For a classification of shares or rights and the qualifications for owning or
holding the same and restrictions on their transfers as may be stated
therein, subject to the provisions of the following section;
2. For a classification of directors into one or more classes, each of whom
may be voted for and elected solely by a particular class of stock; and
3. For a greater quorum or voting requirements in meetings of stockholders
or directors than those provided in this Code.

The articles of incorporation of a close corporation may provide that the

business of the corporation shall be managed by the stockholders of the
corporation rather than by a board of directors. So long as this provision
continues in effect:
1. No meeting of stockholders need be called to elect directors;
2. Unless the context clearly requires otherwise, the stockholders of the
corporation shall be deemed to be directors for the purpose of applying the
provisions of this Code; and
3. The stockholders of the corporation shall be subject to all liabilities of
directors.
The articles of incorporation may likewise provide that all officers or
employees or that specified officers or employees shall be elected or
appointed by the stockholders, instead of by the board of directors.
3) Articles of Incorporation- a) Sec. 14, 15

Sec. 14. Contents of the articles of incorporation. - All corporations

organized under this code shall file with the Securities and Exchange
Commission articles of incorporation in any of the official languages duly
signed and acknowledged by all of the incorporators, containing substantially
the following matters, except as otherwise prescribed by this Code or by
special law:
1. The name of the corporation;
2. The specific purpose or purposes for which the corporation is being
incorporated. Where a corporation has more than one stated purpose, the
articles of incorporation shall state which is the primary purpose and which
is/are he secondary purpose or purposes: Provided, That a non-stock
corporation may not include a purpose which would change or contradict its
nature as such;
3. The place where the principal office of the corporation is to be located,
which must be within the Philippines;
4. The term for which the corporation is to exist;
5. The names, nationalities and residences of the incorporators;
6. The number of directors or trustees, which shall not be less than five (5)
nor more than fifteen (15);
7. The names, nationalities and residences 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;
8. If it be a stock corporation, the amount of its authorized capital stock in
lawful money of the Philippines, the number of shares into which it is
divided, and in case the share are par value shares, the par value of each,
the names, nationalities and residences of the original subscribers, and the

amount subscribed and paid by each on his subscription, and if some or all
of the shares are without par value, such fact must be stated;
9. If it be a non-stock corporation, the amount of its capital, the names,
nationalities and residences of the contributors and the amount contributed
by each; and
10. Such other matters as are not inconsistent with law and which the
incorporators may deem necessary and convenient.
The Securities and Exchange Commission shall not accept the articles of
incorporation of any stock corporation unless accompanied by a sworn
statement of the Treasurer elected by the subscribers showing that at least
twenty-five (25%) percent of the authorized capital stock of the corporation
has been subscribed, and at least twenty-five (25%) of the total subscription
has been fully paid to him in actual cash and/or in property the fair valuation
of which is equal to at least twenty-five (25%) percent of the said
subscription, such paid-up capital being not less than five thousand
(P5,000.00) pesos.
Sec. 15. Forms of Articles of Incorporation. - Unless otherwise
prescribed by special law, articles of incorporation of all domestic
corporations shall comply substantially with the following form:
ARTICLES OF INCORPORATION
OF
__________________________
(Name of Corporation)
KNOW ALL MEN BY THESE PRESENTS:
The undersigned incorporators, all of legal age and a majority of
whom are residents of the Philippines, have this day voluntarily
agreed to form a (stock) (non-stock) corporation under the laws
of the Republic of the Philippines;
AND WE HEREBY CERTIFY:
FIRST: That the name of said corporation shall be
", INC. or CORPORATION";
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 term for which said corporation is to exist is.
years from and after the date of issuance of the certificate of
incorporation;
FIFTH: That the names, nationalities and residences of the
incorporators of the corporation are as follows:
NAME
NATIONALITY
RESIDENCE

.
.
.
.
.
SIXTH: That the number of directors or trustees of the
corporation shall be; and the names, nationalities and
residences of the first directors or trustees of the corporation
are as follows:
NAME
NATIONALITY
RESIDENCE
.
.
.
.
.
SEVENTH: That the authorized capital stock of the corporation
is(P) PESOS in lawful money of the Philippines, divided
intoshares with the par value of(P.) Pesos per share.
(In case all the share are without par value):
That the capital stock of the corporation isshares 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 whichshares are of the par value of. (P.)
PESOS each, and of which. shares are without par value.
EIGHTH: That at least twenty five (25%) per cent of the
authorized capital stock above stated has been subscribed as
follows:
Name of Subscriber Nationality No of Shares Amount
Subscribed Subscribed
NINTH: That the above-named subscribers have paid at least
twenty-five (25%) percent of the total subscription as follows:
Name of Subscriber Amount Subscribed Total Paid-In
(Modify Nos. 8 and 9 if shares are with no par value. In case the
corporation is non-stock, Nos. 7, 8 and 9 of the above 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
residences of the contributors or donors and the respective
amount given by each.)
TENTH: Thathas been elected by the subscribers as Treasurer of
the Corporation to act as such until his successor is duly elected
and qualified in accordance with the by-laws, and that as such
Treasurer, he has been authorized to receive for and in the

name and for the benefit of the corporation, all subscription (or
fees) or contributions or donations paid or given by the
subscribers or members.
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 the capital stock as provided by existing laws
shall be allowed or permitted to recorded 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, thisday of., 19in the City/Municipality of.,
Province of, Republic of the Philippines.
(Names and signatures of the incorporators)
SIGNED IN THE PRESENCE OF:
(Notarial
Acknowledgment)
chanroblesvirtual awlibrar y

TREASURER'S AFFIDAVIT
REPUBLIC OF THE PHILIPPINES )
CITY/MUNICIPALITY OF ) S.S.
PROVINCE OF )
I,., being duly sworn, depose and say:
That I have been elected by the subscribers of the corporation
as Treasurer thereof, to act as such until my successor has been
duly elected and qualified in accordance with the by-laws of the
corporation, and that as such Treasurer, I hereby certify under
oath that at least 25% of the authorized capital stock of the
corporation has been subscribed and at least 25% of the total
subscription has been paid, and received by me, in cash or
property, in the amount of not less than P5,000.00, in
accordance with the Corporation Code.
.
(Signature of Treasurer)
SUBSCRIBED AND SWORN to before me, a Notary Public, for and
in the City/Municipality of. Province of., thisday of..............,
19.......;
by...........................................
with
Res.
Cert.
No..................... issued at................ on....................., 19.........
NOTARY PUBLIC
My commission expires on.........................., 19.......

Doc. No...............;
Page No...............;
Book No..............;
Series of 19..... (7a)
b) Amend,ent of A/I- Sec. 16, Relate to:

Sec. 16. 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
written 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, or the
vote or written assent of at least two-thirds (2/3) of the members if it be a
non-stock corporation.
The original and amended articles together shall contain all provisions
required by law to be set out in the articles of incorporation. Such articles,
as amended 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 stating the fact that said amendment
or amendments have been duly approved by the required vote of the
stockholders or members, shall be submitted to the Securities and Exchange
Commission.
The amendments shall take effect upon their approval by the Securities and
Exchange 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.
Sec. 36 (4)- power to amend
4. To amend its articles of incorporation in accordance with the provisions of this
Code;
Sec 6- voting rights of non-voting shares

Sec. 6. Classification of shares. - The shares of stock of stock

corporations may be divided into classes or series of shares, or both, any of
which classes or series of shares may have such rights, privileges or
restrictions as may be stated in the articles of incorporation: Provided, That
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, further, That there shall always be a class or series of

shares which have complete voting rights. Any or all of the shares or series
of shares may have a par value or have no par value as may be provided for
in the articles of incorporation: Provided, however, That banks, trust
companies, insurance companies, public utilities, and building and loan
associations shall not be permitted to issue no-par value shares of stock.
Preferred shares of stock issued by any corporation may be given preference
in the distribution of the assets of the corporation in case of liquidation and
in the distribution of dividends, or such other preferences as may be stated
in the articles of incorporation which are not violative of the provisions of
this Code: 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, That such terms and conditions shall be
effective upon the filing of a certificate thereof with the Securities and
Exchange Commission.
Shares of capital stock issued without par value shall be deemed fully paid
and non-assessable and the holder of such shares shall not be liable to the
corporation or to its creditors in respect thereto: Provided; That shares
without par value may not be issued for a consideration less than the value
of five (P5.00) pesos 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, furthermore, classify its shares for the purpose of
insuring compliance with constitutional or legal requirements.
Except as otherwise provided in the articles of incorporation and stated in
the certificate of stock, each share shall be equal in all respects to every
other share.
Where the articles of incorporation provide for non-voting shares in the
cases allowed by this Code, the holders of such shares shall nevertheless be
entitled to vote on the following matters:
1. Amendment of the articles of incorporation;
2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other disposition of all or
substantially all of the corporate property;
4. Incurring, creating or increasing bonded indebtedness;
5. Increase or decrease of capital stock;
6. Merger or consolidation of the corporation with another corporation or
other corporations;
7. Investment of corporate funds in another corporation or business in
accordance with this Code; and
8. Dissolution of the corporation.

Except as provided in the immediately preceding paragraph, the vote

necessary to approve a particular corporate act as provided in this Code
shall be deemed to refer only to stocks with voting rights.
Sec. 81- appraisal right

Sec. 81. Instances of appraisal right.- Any stockholder of a corporation

shall have the right to dissent and demand payment of the fair value of his
shares in the following instances:
1. In case any amendment to the articles of incorporation has the effect of
changing or restricting the rights of any stockholder or class of shares, or of
authorizing preferences in any respect superior to those of outstanding
shares of any class, or of extending or shortening the term of corporate
existence;
2. In case of sale, lease, exchange, transfer, mortgage, pledge or other
disposition of all or substantially all of the corporate property and assets as
provided in the Code; and
3. In case of merger or consolidation. (n)
Secs. 37, 38. 103

Sec. 38. 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, at a stockholder's meeting duly called for the purpose, two-thirds (2/3)
of the outstanding capital stock shall favor the increase or diminution of the
capital stock, or the incurring, creating or increasing of any bonded
indebtedness. Written notice of the proposed increase or diminution of the
capital stock or of the incurring, creating, or increasing of any bonded
indebtedness and of the time and place of the stockholder's meeting at
which the proposed increase or diminution of the capital stock or the
incurring or increasing of any bonded indebtedness is to be considered, must
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 duplicate must be signed by a majority of the directors of the
corporation and countersigned by the chairman and the secretary of the
stockholders' meeting, setting forth:
(1) That the requirements of this section have been complied with;
(2) The amount of the increase or diminution of the capital stock;

(3) If 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 residences 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 his subscription in cash or property, or the amount of capital
stock or number of shares of no-par stock allotted to each stock-holder if
such increase is for the purpose of making effective stock dividend therefor
authorized;
(4) Any bonded indebtedness to be incurred, created or increased;
(5) The actual indebtedness of the corporation on the day of the meeting;
(6) The amount of stock represented at the meeting; and
(7) The vote authorizing the increase or diminution of the capital stock, or
the incurring, creating or increasing of any bonded indebtedness.
Any increase or decrease in the capital stock or the incurring, creating or
increasing of any bonded indebtedness shall require prior approval of the
Securities and Exchange Commission.
One of the duplicate certificates shall be kept on file in the office of the
corporation and the other shall be filed with the Securities and Exchange
Commission and attached to the original articles of incorporation. From and
after approval by the Securities and Exchange Commission and the issuance
by the Commission of its certificate of filing, the capital stock shall stand
increased or decreased and the incurring, creating or increasing of any
bonded indebtedness authorized, as the certificate of filing may declare:
Provided, That the Securities and Exchange Commission shall not accept for
filing any certificate of increase of capital stock unless accompanied by the
sworn statement of the treasurer of the corporation lawfully holding office at
the time of the filing of the certificate, showing that at least twenty-five
(25%) percent of such increased capital stock has been subscribed and that
at least twenty-five (25%) percent of the amount subscribed has been paid
either in actual cash to the corporation or that there has been transferred to
the corporation property the valuation of which is equal to twenty-five
(25%) percent of the subscription: Provided, further, That no decrease of
the capital stock shall be approved by the Commission if its effect shall
prejudice the rights of corporate creditors.
Non-stock corporations may incur or create bonded indebtedness, or
increase the same, with the approval by a majority vote of the board of
trustees and of at least two-thirds (2/3) of the members in a meeting duly
called for the purpose.
Bonds issued by a corporation shall be registered with the Securities and
Exchange Commission, which shall have the authority to determine the
sufficiency of the terms thereof. (17a)

Sec. 103. Amendment of articles of incorporation. - Any amendment to the

articles of incorporation which seeks to delete or remove any provision required by
this Title to be contained in the articles of incorporation or to reduce a quorum or
voting requirement stated in said articles of incorporation shall not be valid or
effective unless approved by the affirmative vote of at least two-thirds (2/3) of the
outstanding capital stock, whether with or without voting rights, or of such greater
proportion of shares as may be specifically provided in the articles of incorporation
for amending, deleting or removing any of the aforesaid provisions, at a meeting
duly called for the purpose.

a) Philippine Trust Co. v. Rivera

Facts:
Cooperativa Naval Filipina was duly incorporated with a capital of P100,000, divided into 100 shares at a
par value of P100 each. Among its incorporators was Marciano Rivera, who subscribed for 450 shares,
representing avalue of P45,000. The company however became insolvent. Philippine Trust became its
assignee in bankruptcy.PhilTrust sought to recover of the stock subscription of Rivera, which
admittedly, has never been paid. Rivera contends that he never paid because the stockholders of Naval
issued a resolution shortly after the companys incorporation, stating that the capital shall be reduced
by 50%. As a result, Rivera contends that the subscribers werereleased from the obligation to pay any
unpaid balance of their subscription in excess of 50% of their subscriptions.Rivera further contends that
the subscriptions of the subscribers were 50% cancelled, and certificates of shares of stock were issued
for the said remaining 50% of the subscriptions.
Issue:
Whether such reduction of the capital stock is valid.
Held:
No. SC held that the said resolution is without effect for being:1. An attempted withdrawal of so much
capital from the fund which the companys creditors were entitled
ultimately to rely, and2. For having been effected without compliance with the statutory requirements
of 17 of the Corporation Lawregarding reduction of capital stock, and3. For failure to file a certificate
with the Bureau of Commerce and Industry, showing such reduction.Thus, stockholder is still liable for
the unpaid balance of his subscription.Ratio: Subscriptions to the capital of a corporation constitute a
fund to which creditors have a right to look for satisfaction of their claims and that the assignee in
insolvency can maintain an action upon any unpaid stock subscription in order to realize assets for the
payment of its debts. A corporation has no power to release anoriginal subscriber to its capital stock
from the obligation of paying for his shares, w/o a valuableconsideration for such release; and as against
creditors a reduction of the capital stock can take place only inthe manner and under the conditions

prescribed by the statute or the charter or the AOI. Moreoever, strictcompliance with statutory
regulations is necessary. Note: that for reasons 2 and 3, Campos says that 17 has been replaced by
38, and now, even if all therequirements are complied with, if creditors are prejudiced by such
reduction, it is most unlikely that the SEC will approve it.
b) Marcus v. RH Macy
This is a motion to restrain defendant pendente lite from selling products bearing plaintiff's name,
brands and trade-mark below the established price.
Pursuant to the General Business Law ( 369-a et seq.) plaintiff entered into agreements with retail
druggists in the State of New York under which plaintiff did stipulate minimum retail resale prices for its
products. Specifically, this proceeding involves price cutting of "Metrecal", a dietary for weight control.
It is a relatively new product and was first introduced into the New York market in the Fall of 1959. In
view of the public concern with weight control, the court does not doubt that plaintiff's product became
a fast seller in the drug trade. Its very popularity, it would appear, resulted in an increasing degree of
price cutting.
In the Spring of this year, defendant was informed of the existence of fair-trade agreements affecting
Metrecal and of the minimum retail resale price then in force. Nevertheless, the defendant continued to
sell the product at prices less than the established fair-trade levels. This the defendant does not deny,
but urges that there was a complete lack of action by the plaintiff to procure general compliance with
the fair-trade price. The situation is one, in the defendant's view, whereby the Fair Trade Law becomes a
vehicle of discrimination. *323323
If, indeed, the plaintiff, with knowledge of the widespread price cutting of its product, failed to take
effective measures to prevent it, the court would agree with the defendant that both the law and
elemental fairness require a finding that plaintiff had waived or abandoned its rights. Metrecal,
however, as the defendant says, came on the market but several months ago. In the face of reports of
price cutting, an investigation was conducted by the plaintiff, beginning in April, 1960, whereby 800
different retail drug outlets were "shopped". Over 600 of these stores were found to be observing fairtrade prices. Those stores that were found to have cut the price by 10 cents or less were contacted and
agreed to maintain the minimum prices. Over 100 actions were commenced by the plaintiff in the past
three months._ Price lists containing the established fair-trade prices were regularly mailed to the 4,000
druggists in the New York area. These figures disprove defendant's contention that the plaintiff is not
willing to spend the time and effort necessary to enforce fair trade. For that matter, assuming that the
defendant's shoppers did disclose price cutting of Metrecal, the question of whether a particular retailer
is bound by the statutes of the State may not be determined by a contest to see whether plaintiff or
defendant can cite more stores which are abiding by or violating the law. A retailer may not be
permitted to violate the law simply because it can show that some number of other stores are also
violating the law. The question must be resolved by viewing the over-all picture. In any event, as has
been said, the fact that violations are widespread may not redound "to the violators' advantage and
immunizes them from prosecution".__

The court does not question that price cutting is harmful to the plaintiff. The successful operation of its
business is dependent upon retail druggists stocking and promoting its products. Already, as a result of
the activities of the minority of price cutters, other retailers are threatening to discontinue doing
business with the plaintiff. The present and prospective injury to plaintiff's business is obvious. The law
was enacted to "protect *324324 the good will of the trade-mark owner * * *. It proceeds upon the
theory that the sale of identified goods at less than the price fixed by the owner of the mark or brand is
an assault upon the good will and constitutes what the statute denominates `unfair competition'".___
For the reasons stated, the motion is granted. Bond is fixed in the sum of $250. The plaintiff shall move,
in the order to be submitted hereon, for an order setting the case down for trial for a day certain;
dispensing with the right of either party to pretrial discovery and other procedure; eliminating the
necessity for filing a statement of readiness; and requiring the Trial Term Clerk to accept the filing of a
note of issue, upon payment of appropriate fee, upon short notice to defendant's counsel.
It is noted that the actions to which defendant refers, which denied relief pendente lite against other
defendants in August, 1960, are on the Ready Calendar for September, 1960, and will be called on
October 17, 1960. They may not be reached for trial on said date, however, since the order did not
provide for a day certain. Nevertheless, if such actions would be dispositive of the issues raised in the
present action, perhaps all could be consolidated, or the parties might stipulate that the result in one
would be binding on the parties concerned, and the court requested to hold an immediate trial.
c) Iglesia Evangelica Metodista En Las Islas Filipinas inc vs Bishop Lazaro
The present dispute resolves the issue of whether or not a corporation may change its character as a
corporation sole into a corporation aggregate by mere amendment of its articles of incorporation
without first going through the process of dissolution.

The Facts and the Case

In 1909, Bishop Nicolas Zamora established the petitioner Iglesia Evangelica Metodista En Las Islas
Filipinas, Inc. (IEMELIF) as a corporation sole with Bishop Zamora acting as its "General Superintendent."
Thirty-nine years later in 1948, the IEMELIF enacted and registered a by-laws that established a Supreme
Consistory of Elders (the Consistory), made up of church ministers, who were to serve for four years. The
by-laws empowered the Consistory to elect a General Superintendent, a General Secretary, a General
Evangelist, and a Treasurer General who would manage the affairs of the organization. For all intents
and purposes, the Consistory served as the IEMELIFs board of directors.
Apparently, although the IEMELIF remained a corporation sole on paper (with all corporate powers
theoretically lodged in the hands of one member, the General Superintendent), it had always acted like
a corporation aggregate. The Consistory exercised IEMELIFs decision-making powers without ever being
challenged. Subsequently, during its 1973 General Conference, the general membership voted to put

things right by changing IEMELIFs organizational structure from a corporation sole to a corporation
aggregate. On May 7, 1973 the Securities and Exchange Commission (SEC) approved the vote. For some
reasons, however, the corporate papers of the IEMELIF remained unaltered as a corporation sole.
Only in 2001, about 28 years later, did the issue reemerge. In answer to a query from the IEMELIF, the
SEC replied on April 3, 2001 that, although the SEC Commissioner did not in 1948 object to the
conversion of the IEMELIF into a corporation aggregate, that conversion was not properly carried out
and documented. The SEC said that the IEMELIF needed to amend its articles of incorporation for that
purpose.1
Acting on this advice, the Consistory resolved to convert the IEMELIF to a corporation aggregate.
Respondent Bishop Nathanael Lazaro, its General Superintendent, instructed all their congregations to
take up the matter with their respective members for resolution. Subsequently, the general
membership approved the conversion, prompting the IEMELIF to file amended articles of incorporation
with the SEC. Bishop Lazaro filed an affidavit-certification in support of the conversion.2
Petitioners Reverend Nestor Pineda, et al., which belonged to a faction that did not support the
conversion, filed a civil case for "Enforcement of Property Rights of Corporation Sole, Declaration of
Nullity of Amended Articles of Incorporation from Corporation Sole to Corporation Aggregate with
Application for Preliminary Injunction and/or Temporary Restraining Order" in IEMELIFs name against
respondent members of its Consistory before the Regional Trial Court (RTC) of Manila.3 Petitioners claim
that a complete shift from IEMELIFs status as a corporation sole to a corporation aggregate required,
not just an amendment of the IEMELIFs articles of incorporation, but a complete dissolution of the
existing corporation sole followed by a re-incorporation.
Unimpressed, the RTC dismissed the action in its October 19, 2005 decision.4 It held that, while the
Corporation Code on Religious Corporations (Chapter II, Title XIII) has no provision governing the
amendment of the articles of incorporation of a corporation sole, its Section 109 provides that religious
corporations shall be governed additionally "by the provisions on non-stock corporations insofar as they
may be applicable." The RTC thus held that Section 16 of the Code5 that governed amendments of the
articles of incorporation of non-stock corporations applied to corporations sole as well. What IEMELIF
needed to authorize the amendment was merely the vote or written assent of at least two-thirds of the
IEMELIF membership.
Petitioners Pineda, et al. appealed the RTC decision to the Court of Appeals (CA).6 On October 31, 2007
the CA rendered a decision,7 affirming that of the RTC. Petitioners moved for reconsideration, but the
CA denied it by its resolution of August 1, 2008,8 hence, the present petition for review before this
Court.
The Issue Presented
The only issue presented in this case is whether or not the CA erred in affirming the RTC ruling that a
corporation sole may be converted into a corporation aggregate by mere amendment of its articles of
incorporation.

The Courts Ruling

Petitioners Pineda, et al. insist that, since the Corporation Code does not have any provision that allows
a corporation sole to convert into a corporation aggregate by mere amendment of its articles of
incorporation, the conversion can take place only by first dissolving IEMELIF, the corporation sole, and
afterwards by creating a new corporation in its place.
Religious corporations are governed by Sections 109 through 116 of the Corporation Code. In a 2009
case involving IEMELIF, the Court distinguished a corporation sole from a corporation aggregate.9 Citing
Section 110 of the Corporation Code, the Court said that a corporation sole is "one formed by the chief
archbishop, bishop, priest, minister, rabbi or other presiding elder of a religious denomination, sect, or
church, for the purpose of administering or managing, as trustee, the affairs, properties and
temporalities of such religious denomination, sect or church." A corporation aggregate formed for the
same purpose, on the other hand, consists of two or more persons.
True, the Corporation Code provides no specific mechanism for amending the articles of incorporation
of a corporation sole. But, as the RTC correctly held, Section 109 of the Corporation Code allows the
application to religious corporations of the general provisions governing non-stock corporations.
For non-stock corporations, the power to amend its articles of incorporation lies in its members. The
code requires two-thirds of their votes for the approval of such an amendment. So how will this
requirement apply to a corporation sole that has technically but one member (the head of the religious
organization) who holds in his hands its broad corporate powers over the properties, rights, and
interests of his religious organization?
Although a non-stock corporation has a personality that is distinct from those of its members who
established it, its articles of incorporation cannot be amended solely through the action of its board of
trustees. The amendment needs the concurrence of at least two-thirds of its membership. If such
approval mechanism is made to operate in a corporation sole, its one member in whom all the powers
of the corporation technically belongs, needs to get the concurrence of two-thirds of its membership.
The one member, here the General Superintendent, is but a trustee, according to Section 110 of the
Corporation Code, of its membership.1avvphi1
There is no point to dissolving the corporation sole of one member to enable the corporation aggregate
to emerge from it. Whether it is a non-stock corporation or a corporation sole, the corporate being
remains distinct from its members, whatever be their number. The increase in the number of its
corporate membership does not change the complexion of its corporate responsibility to third parties.
The one member, with the concurrence of two-thirds of the membership of the organization for whom
he acts as trustee, can self-will the amendment. He can, with membership concurrence, increase the
technical number of the members of the corporation from "sole" or one to the greater number
authorized by its amended articles.

Here, the evidence shows that the IEMELIFs General Superintendent, respondent Bishop Lazaro, who
embodied the corporation sole, had obtained, not only the approval of the Consistory that drew up
corporate policies, but also that of the required two-thirds vote of its membership.1avvphi1
The amendment of the articles of incorporation, as correctly put by the CA, requires merely that a) the
amendment is not contrary to any provision or requirement under the Corporation Code, and that b) it
is for a legitimate purpose. Section 17 of the Corporation Code10 provides that amendment shall be
disapproved if, among others, the prescribed form of the articles of incorporation or amendment to it is
not observed, or if the purpose or purposes of the corporation are patently unconstitutional, illegal,
immoral, or contrary to government rules and regulations, or if the required percentage of ownership is
not complied with. These impediments do not appear in the case of IEMELIF.
Besides, as the CA noted, the IEMELIF worked out the amendment of its articles of incorporation upon
the initiative and advice of the SEC. The latters interpretation and application of the Corporation Code is
entitled to respect and recognition, barring any divergence from applicable laws. Considering its
experience and specialized capabilities in the area of corporation law, the SECs prior action on the
IEMELIF issue should be accorded great weight.
WHEREFORE, the Court DENIES the petition and AFFIRMS the October 31, 2007 decision and August 1,
2008 resolution of the Court of Appeals in CA-G.R. SP 92640.
SO ORDERED.
4) a. Citizenship requirements- Sec. 140
-pertinent provisions of the Consti
-meaning of Capital under Sec. 11, Art. 12 of the Consti
Section 11. No franchise, certificate, or any other form of authorization for the operation of a
public utility shall be granted except to citizens of the Philippines or to corporations or
associations organized under the laws of the Philippines, at least sixty per centum of whose
capital is owned by such citizens; nor shall such franchise, certificate, or authorization be
exclusive in character or for a longer period than fifty years. Neither shall any such franchise or
right be granted except under the condition that it shall be subject to amendment, alteration, or
repeal by the Congress when the common good so requires. The State shall encourage equity
participation in public utilities by the general public. The participation of foreign investors in the
governing body of any public utility enterprise shall be limited to their proportionate share in its
capital, and all the executive and managing officers of such corporation or association must be
citizens of the Philippines.
Control Test vs Grandfather Rule
Sec Memo Circ. No. 8 series of 2013 Guidelines on Compliance with the Filipino- Foreign Ownership
Requirements.

Section 3. All Corporate Secretaries of covered corporations are directed to monitor and observe
compliance with the provisions on ownership requirements provided in the Constitution, the FIA, its IRR,
other applicable laws, rules and regulations and with the provisions of this Circular. The Corporate
Secretary cannot delegate the responsibility of complying with the provisions of this Circular without the
express authority from the Board of Directors or Trustees, as the case may be. Section 4. This Circular
shall take effect immediately after its publication in two (2) national newspapers of general circulation,
provided: that all existing covered corporations which are non-compliant with Section 2 hereof shall be
given a period of one (1) year from the effectivity of this Circular within which to comply with said
ownership requirement. The Commission may extend the period of compliance but only in meritorious
and exceptional cases, and upon proper petition. Failure to comply with this Circular shall subject the
juridical entity, any person, and the corporateofficers responsible, to sanctions provided in Section 14 of
the Foreign Investments Act of 1991, as amended.
Nickel Mining vs Redmont
GAMBOA vs TEVES, et al
The Philippine Supreme Court has issued a decision that may have a significant impact on how local
nationality requirements (i.e., constitutional and statutory provisions requiring minimum Filipino
ownership in certain industries) must be construed and applied. Enterprises such as
telecommunications, media, advertising and land ownership are subject to such nationality
requirements.
The case of Gamboa v. Teves, et al. (G.R. No. 176579, 28 June 2011) involved a petition that questioned
foreign ownership levels in the common shares of Philippine Long Distance Telephone Company, a
corporation engaged in telecommunications and therefore covered by Article XII, Section 11 of the
Constitutional; this provision imposes a 40% equity cap on the foreign ownership in the capital of
public utilities. It has been PLDTs position that the term capital refers to the outstanding capital stock,
such that foreigners can own more than 40% of a corporations voting shares for as long as foreign
ownership of total outstanding shares (i.e., voting and non-voting shares) do not exceed 40%. PLDTs
capital structure pre-Gamboa decision reflected this position.
The Supreme Court held that the term capital, as used in the article refers only to shares of stock
entitled to vote in the election of directors. The ruling in Gamboa also contained statements, which,
while arguably obiter dicta, may, if implemented, further restrict possible foreign interest in nationalized
and partly-nationalized industries. These include a statement that the 60-40 Filipino-foreign ownership
requirement must apply separately to each class of shares, whether common preferred non-voting,
preferred voting, or any other class of shares.

-Foreign Investments Act (FIA) of 1991 as amended

-other laws imposing maximum foreign equity

b) Nationality Corporation
-Philippine National under the FIA
The term "Philippine national" shall mean a citizen of the Philippines; of a domestic partnership or
association wholly owned by citizens of the Philippines; or a corporation organized under the laws of
the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to
vote is owned and held by citizens of the Philippines; or a corporation organiied abroad and registered
as doing business in the Philippines under the Corporation Code of, ) which one hundred percent
(100%)of the capital stock outstanding and entitled to voteis whollyownedby Filipinosor a
trusteeoffundsforpensionor other employee retirement or separation benefits, where the trustee is a
Philippine national and at least sixty percent (60%)of the fund will accrue to the benefit of Philippine
nationals: Provided, That where a corporation and its non- Filipino stockholders own stocks in a
Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent (60%)of the
capital stock outstanding and entitled to vote of each of both corporations must be owned and held
by citizens of the Philippines and at least sixty percent (60%)of the members of the Board of Directors
of each of both corporations must be citizens of the Philippines, in order that the corporation, shall be
considered a "Philippine national.'t! [Emphasis supplied]
-Under the BSP
-Philippine corporation under the Corp. Cpde
-Nationality of corporation code

5) Residence of Corporation
Young Auto Supply Co. vs CA
Facts:
Young Auto Supply Co Inc. (YASCO) represented by Nemesio Garcia, its president, Nelson Garcia and
Vicente Sy, sold all of their shares of stock in Consolidated Marketing & Development Corporation
(CMDC) to Roxas. Purchase Price: 8M; Downpayment: 4M; Balance: 4M in four postdated checks of 1M
each. 2. After the execution of the agreement, Roxas took full control of the four markets of CMDC.
However, the vendors held on to the stock certificates of CMDC as security pending full payment of the
balance of the purchase price. 3. The first check representing the downpayment was honored by the
drawee bank but the four other checks representing the balance of 4M was dishonored. In the
meantime, Roxas sold one of the markets to a third party for the amount of 600K, leaving a balance of
3.4M. 4. Nelson Garcia and Vicente Sy assigned all their rights and title to the proceeds of the sale of
CMDC shares to Nemesio Garcia. 5. Petitioners filed a complaint against Roxas in the RTC praying that

Roxas be ordered to pay petitioners the sum of 3.4M or that full control of the three markets be turned
over to YASCO and Garcia.
The complaint also prayed for the forfeiture of the partial payment of P4,600,000.00 and the payment of
attorney's fees and costs.
6.Failing to submit his answer, the trial court declared Roxas in default. The order of default was,
however, lifted upon motion of Roxas.
7.Roxas filed a motion to dismiss. After a hearing, wherein testimonial and documentary evidence were
presented by both parties, the trial court denied Roxas' motion to dismiss.
8.After receiving said order, Roxas filed another motion for extension of time to submit his answer. He
also filed a motion for reconsideration, which the trial court denied for being pro-forma.
9. Roxas was again declared in default, on the ground that his motion for reconsideration did not toll the
running of the period to file his answer.
10. On 3 May 1991, Roxas filed an unverified Motion to Lift the Order of Default which was not
accompanied with the required affidavit of merit. But without waiting for the resolution of the motion,
he filed a petition for certiorari with the Court of Appeals. The Court of Appeals dismissal of the
complaint on the ground of improper venue.
11. A subsequent motion for reconsideration by YASCO was to no avail. YASCO and Garcia filed the
petition.
Issue:
Whether the venue for the case against YASCO and Garcia in Cebu City was improperly laid.
Held:
A corporation has no residence in the same sense in which this term is applied to a natural person. But
for practical purposes, a corporation is in a metaphysical sense a resident of the place where its principal
office is located as stated in the articles of incorporation. The Corporation Code precisely requires each
corporation to specify in its articles of incorporation the "place where the principal office of the
corporation is to be located which must be within the Philippines." The purpose of this requirement is to
fix the residence of a corporation in a definite place, instead of allowing it to be ambulatory. Actions
cannot be filed against a corporation in any place where the corporation maintains its branch offices.
The Court ruled that to allow an action to be instituted in any place where the corporation has branch
offices, would create confusion and work untold inconvenience to said entity. By the same token, a
corporation cannot be allowed to file personal actions in a place other than its principal place of
business unless such a place is also the residence of a co-plaintiff or a defendant. With the finding that
the residence of YASCO for purposes of venue is in Cebu City, where its principal place of business is
located, it becomes unnecessary to decide whether Garcia is also a resident of Cebu City and whether

Roxas was in estoppel from questioning the choice of Cebu City as the venue. The decision of the Court
of Appeals was set aside
6) Name of Corporation
Philips Export B.V. vs CA
FACTS:
Philips Export B.V. (PEBV) filed with the SEC for the cancellation of the word Philips the corporate
name of Standard Philips Corporation in view of its prior registration with the Bureau of Patents and the
SEC. However, Standard Philips refused to amend its Articles of Incorporation so PEBV filed with the SEC
a petition for the issuance of a Writ of Preliminary Injunction, however this was denied ruling that it can
only be done when the corporate names are identical and they have at least 2 words different. This was
affirmed by the SEC en banc and the Court of Appeals thus the case at bar.
ISSUE:
Whether or not Standard Philips can be enjoined from using Philips in its corporate name
RULING: YES
A corporations right to use its corporate and trade name is a property right, a right in rem, which it may
assert and protect against the whole world. According to Sec. 18 of the Corporation Code, no corporate
name may be allowed if the proposed name is identical or deceptively confusingly similar to that of any
existing corporation or to any other name already protected by law or is patently deceptive, confusing
or contrary to existing law.
For the prohibition to apply, 2 requisites must be present:
(1) the complainant corporation must have acquired a prior right over the use of such corporate name
and
(2) the proposed name is either identical or deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or patently deceptive, confusing or contrary
to existing law.
With regard to the 1st requisite, PEBV adopted the name Philips part of its name 26 years before
Standard Philips. As regards the 2nd, the test for the existence of confusing similarity is whether the
similarity is such as to mislead a person using ordinary care and discrimination. Standard Philips only
contains one word, Standard, different from that of PEBV. The 2 companies products are also the
same, or cover the same line of products. Although PEBV primarily deals with electrical products, it has
also shipped to its subsidiaries machines and parts which fall under the classification of chains, rollers,
belts, bearings and cutting saw, the goods which Standard Philips also produce. Also, among Standard
Philips primary purposes are to buy, sell trade x x x electrical wiring devices, electrical component,
electrical supplies. Given these, there is nothing to prevent Standard Philips from dealing in the same

line of business of electrical devices. The use of Philips by Standard Philips tends to show its intention
to ride on the popularity and established goodwill of PEBV.
Lyceym of the Philippines
Armco Steel Corp vs SEC
ARMCO STEEL CORPORATION (OF THE PHILIPPINES), petitioner,
vs.
SECURITIES AND EXCHANGE COMMISSION, ARMCO STEEL CORPORATION (of Ohio,
U.S.A.) and ARMCO MARSTEEL ALLOY CORPORATION, respondents.

GANCAYCO, J.:
On July 1, 1965 ARMCO Steel Corporation, a corporation organized in Ohio, U.S.A., hereinafter
called ARMCO-OHIO, obtained from the Philippine Patent Office, Certificate of Registration No.
11750 for its trademark consisting of the word "ARMCO" and a triangular device for "ferrous metals
and ferrous metal castings and forgings." On April 14, 1971, pursuant to trademark rules, the
petitioner filed with the said patent office an "Affidavit of Use" for said trademark, which was
subsequently accepted and for which the Patent Office issued the corresponding notice of
acceptance of "Affidavit of Use."
ARMCO Marsteel-Alloy Corporation was also incorporated on July 11, 1972 under its original name
Marsteel Alloy Company, Inc. but on March 28, 1973 its name was changed to ARMCO-Marsteel
Alloy Corporation hereinafter called ARMCO-Marsteel, by amendment of its Articles of Incorporation
after the ARMCO-Ohio purchased 40% of its capital stock. Both said corporations are engaged in
the manufacture of steel products. Its article of incorporation in part reads as follows as to its
purposes: "to manufacture, process ... and deal in all kinds, form, and combinations of iron, steel or
other metals and all or any products or articles particularly consisting of iron, steel or other metals ....
.
On the other hand ARMCO Steel Corporation was incorporated in the Philippines on April 25, 1973,
hereinafter called ARMCO-Philippines. A pertinent portion of its articles of incorporation provides as
among its purposes: "to contract, fabricate ... manufacture ... regarding pipelines, steel frames ... ."
ARMCO-Ohio and ARMCO-Marsteel then filed a petition in the Securities and Exchange
Commission (SEC) to compel ARMCO-Philippines to change its corporate name on the ground that
it is very similar, if not exactly the same as the name of one of the petitioners, which is docketed as
SEC Case No. 1187. In due course an order was issued by the SEC on February 14, 1975 granting
the petition, the dispositive part of which reads as follows:
In view of the foregoing, the respondent, ARMCO STEEL CORPORATION, is hereby
ordered to take out 'ARMCO' and substitute another word in lieu thereof in its
corporate name by amending the articles of incorporation to that effect, within thirty
(30) days from date of receipt of a copy of this Order; after which, three (3) copies of
the amended articles of incorporation, duly certified by a majority of the board of
directors and countersigned by the president and secretary of the corporation, shall
be submitted to this Commission, together with the corresponding filing fees, as
required by law. 1

A motion for reconsideration of the said order was filed by said respondent on March 6. 1975 but this
was denied in, an order of April 16, 1965 as the motion was filed out of time, a copy of the
questioned order having been received by respondent on February 18, 1975 so that said order had
become final and executory. 2 A motion for reconsideration filed by respondent to set aside said order of
April 16, 1965 was also denied by the SEC on June 23, 1975. 3 An appeal was interposed by respondent
to the Court of Appeals which was docketed as CA G.R. No. 04448-R but the appeal was dismissed in a
resolution of January 13, 1976, on the ground that the appeal was perfected beyond the reglementary
period allowed by law.

On March 22, 1976 said respondent amended its articles of incorporation by changing its name to
"ARMCO structures, Inc." which was filed with and approved by the SEC.
Nevertheless, in an order of January 6, 1977, the SEC issued an order requiring respondent, its
directors and officers to comply with the aforesaid order of the Commission of February 14, 1975
within ten (10) days from notice thereof. 5
A manifestation and motion was filed by respondent informing SEC that it had already changed its
corporate name with the approval of the SEC to ARMCO Structures, Inc. in substantial compliance
with the said order or in the alternative prayed for a hearing to determine if there is a confusing
similarity between the names of the petitioners on one hand and the ARMCO Structures, Inc. on the
other.
Petitioners then filed a comment to said manifestation alleging that the change of name of said
respondent was not done in good faith and is not in accordance with the order of the Commission of
February 14, 1975 so that drastic action should be taken against the respondent and its officers.
Subsequently, petitioners filed a motion to cite said respondent, its directors and officers in contempt
for disobeying the orders of February 14, 1975 and January 6, 1977. In an order of August 31, 1977,
the SEC finding that the respondent, its directors, and officers have not complied with the final order
of February 14, 1975 required them to appeal before the Commission on September 22, 1977 at
10:00 o'clock in the morning to show cause why they should not be punished for contempt by the
Commission. 6
After the hearing the parties submitted their respective memoranda. In another order of January 17,
1979, the SEC finding that the respondent did not make the proper disclosure of the circumstances
when it amended its articles of incorporation and submitted the same for the approval of the SEC
thus said respondent, its directors, and officers were ordered within ten (10) days from notice to
comply with the order of February 14, 1975. An appeal was interposed by the respondent to the
SEC en banc. The Commission en banc in an order of December 14, 1979 dismissed the appeal for
lack of merit. 7
Hence, the herein petition for review filed by ARMCO-Philippines wherein it seeks the reversal of the
orders of the SEC of December 14, 1979 and August 6, 1980 and that the order of February 14,
1975 be declared functus oficio for having been substantially complied with by the petitioner. The
grounds of the petition are as follows:
I
THE SECURITIES AND EXCHANGE COMMISSION ERRED WHEN IT DID NOT
CONSIDER ITS ORDER DATED FEBRUARY 14,1975 FUNCTUS OFFICIO
PURSUANT TO THE LEGAL MAXIM CESSANTE LEGIS RATIONE CESSAT ET
IPSA LEX' AFTER PETITIONER HAD SUBSTANTIALLY COMPLIED IN GOOD
FAITH WITH SAID ORDER AND SAID COMPLIANCE HAD ACHIEVED THE

PURPOSE OF THE ORDER, BY CHANGING ITS CORPORATE NAME WITH THE

APPROVAL OF SAID COMMISSION.
II
THE COMMISSION ERRED WHEN IT DID NOT FIND THAT ITS APPROVAL OF
PETITIONER'S AMENDED ARTICLES OF INCORPORATION CHANGING
PETITIONER'S CORPORATE NAME FROM "ARMCO STEEL CORPORATION" TO
"ARMCO STRUCTURES, INCORPORATED" WAS REGULAR AND LEGAL.
III
THE COMMISSION ERRED WHEN IT DID NOT FIND THAT PRIVATE
RESPONDENTS WERE NO LONGER ENTITLED TO THE RELIEF AWARDED BY
THE ORDER DATED FEBRUARY 14,1975 CONSIDERING THAT SAID ORDER
HAD BECOME FUNCTUS OFFICIO AND FURTHER ENFORCEMENT THEREOF
WILL BE INEQUITABLE AS IT WILL DEPRIVE PETITIONER OF EQUAL
PROTECTION OF LAWS.
IV
THE COMMISSION ERRED WHEN, THERE BEING A DISPUTE AS TO WHETHER
OR NOT THE PURPOSE OF THE ORDER DATED FEBRUARY 14,1975 HAD
BEEN COMPLIED WITH AND WHETHER THERE WAS STILL CONFUSING
SIMILARITY BETWEEN THE CORPORATE NAMES OF RESPONDENTS AND
THE NEW NAME OF PETITIONER, IT DID NOT GRANT PETITIONER'S PRAYER
THAT A HEART NG BE HELD TO THRESH THE ISSUE."
The Court finds no merit in the petition.
The order of the public respondent SEC of February 14, 1975 which has long become final and
executory clearly spells out that petitioner must "take out ARMCO and substitute another word in lieu
thereof in its corporate name by amending the articles of incorporation to that effect, ... ." Far from
complying with said order petitioner amended its corporate name into ARMCO Structures, Inc., and
secured its approval by the SEC on March 22, 1976. That this amendment was made by petitioner
without the knowledge of the proper authorities of the SEC is home by the fact that thereafter on
January 6, 1977 an order was issued by the SEC requiring petitioner, its board of directors, and
officers to comply with the order of the Commission of February 14, 1975. When the attention of the
SEC was called by petitioner that the change of corporate name had been undertaken by it to
ARMCO Structures, Inc. and asked that it be considered as a substantial compliance with the order
of February 14, 1975, the SEC in its order of January 17, 1979 speaking through its hearing officer
Antonio R. Manabat ruled as follows:
The Order of February 14, 1975, cannot but be clearer than what it purports to
require or demand from respondent. Under in no distinct terms, it enjoins the removal
or deletion of the word 'Armco' from respondent's corporate name, which was not so
complied with. The Commission, therefore, cannot give its imprimatur to the new
corporate name because there was no compliance at all.
The fact that the Securities and Exchange Commission issued its certificate of filing
of amended articles of incorporation on March 22, 1976, is nothing but an illusory
approval of the change of corporate name and a self-induced protection from the

Commission to further exact compliance of the Order of February 14, 1975. Craftily,
the Securities and Exchange Commission and/or its administrative personnel were
made to issue such certificate during its unguarded moment. Verily, the certificate
could not have been issued were it not for such lapses or had respondent been in
good faith by making the proper disclosures of the circumstances which led it to
amend its articles of incorporation.
Correctly pointed out by petitioners, a 'new determination as to whether or not there
is confusing similarity between petitioners' names and that of 'Armco Structures,
Incorporated,' cannot be ordered without transgression on the rule of, or the
decisional law on, finality of judgment. 8
The Court finds that the said amendment in the corporate name of petitioner is not in substantial
compliance with the order of February 14, 1975. Indeed it is in contravention therewith. To repeat,
the order was for the removal of the word "ARMCO" from the corporate name of the petitioner which
it failed to do. And even if this change of corporate name was erroneously accepted and approved in
the SEC it cannot thereby legalize nor change what is clearly unauthorized if not contemptuous act
of petitioner in securing the registration of a new corporate name against the very order of the SEC
of February 14, 1975. Certainly the said order of February 14, 1975 is not rendered functus
oficio thereby. Had petitioner revealed at the time of the registration of its amended corporate name
that there was the said order, the registration of the amended corporate name could not have been
accepted and approved by the persons in-charge of the registration. The actuations in this respect of
petitioner are far from regular much less in good faith.
The arguments of the petitioner that the SEC had approved the registration of several other entities
with one principal word common to all as "ARMCO," and that there is no confusing similarity
between the corporate names of respondents and the new name of petitioner, would indeed in effect
be reopening the final and executory order of the SEC of February 14, 1975 which had already
foreclosed the issue. Indeed, in said final order the SEC made the following findings which are
conclusive and well-taken:
The only question for resolution in this case is whether therespondent's name
ARMCO STEEL CORPORATION is similar, if not Identical with that of petitioner,
ARMCO STEEL CORPORATION (of Ohio, U.S.A.) and of petitioner, ARMCOMARSTEEL ALLOY CORPORATION, as to create uncertainty and confusion in the
minds of the public.
By mere looking at the names it is clear that the name of petitioner, ARMCO STEEL
CORPORATION (of Ohio, U.S.A.), and that of the respondent, ARMCO STEEL
CORPORATION, are not only similar but Identical and the words "of Ohio, U.S.A.,"
are being used only to Identify petitioner ARMCO STEEL-OHIO as a U.S.
corporation.
It is indisputable that ARMCO-STEEL-OHIO, having patented the term 'Armco' as
part of its trademark on its steel products, is entitled to protection in the use thereof in
the Philippines. The term "Armco" is now being used on the products being
manufactured and sold in this country by Armco-Marsteel by virtue of its tie-up with
ARMCO-STEEL-OHIO. Clearly, the two companies have the right to the exclusive
use and enjoyment of said term.
ARMCO STEEL-PHILIPPINES, has not only an Identical name but also a similar line
of business, as shown above, as that of ARMCO STEEL- OHIO. People who are

buying and using products bearing the trademark "Armco" might be led to believe
that such products are manufactured by the respondent, when in fact, they might
actually be produced by the petitioners. Thus, the goodwill that should grow and
inure to the benefit of petitioners could be impaired and prejudiced by the continued
use of the same term by the respondent.
Obviously, the petition for review is designed to further delay if not simply evade compliance with the
said final and executory SEC order. Petitioner also seeks a review of the orders of execution of the
SEC of the said February 14, 1975 order. An order or resolution granting execution of the final
judgment cannot be appealed 9otherwise there will be no end to the litigation. 10
WHEREFORE, the petition is DISMISSED for lack of merit with costs against petitioner. This
decision is immediately executory.
SO ORDERED.

PC Javier and Sons vs CA

Industrial Refractories Corp. vs CA

7) De Jure Corporations- requisites, powers, liabilities, validity

8) De facto corporations- Sec. 20 (requisites, basis, powers, rights liabilities, validity)

Pioneer Insurance vs CA
Municipality of Malabang vs Benito
Hall vs Piccio
Cagayan Fishing vs Sandiko
Harill vs Davis

CORPORATION BY ESTOPPEL- Sec. 21 (rationale, liabilities, validity)

Asia Banking vs Std. Products Co.
Cranson vs IBM Corp
Salvatierra vs Garlitos et al
Albert vs University Publishing Co.

Chiang Kai Shek School vs CA

Lim Tong Lim vs Philippine Fishing Gear
Intl Express Travel vs CA
10) Corporations that are neither de jure, de facto nor by estoppels