Opinion No. 20-02 Re:Corporate Term under the Corporation Code

OFFICE OF THE GENERAL COUNSEL Securities and Exchange Commission Republic of the Philippines Department of Finance

03 November 2020

Re: Corporate Term under the Corporation Code. SEC-0GC Opinion No. 20-02

Facilities Centre Bldg.. Unit Nos. 28 & 30, 2nd Floor, No. 548 Shaw Blvd., Mandaluyong City OLIVA FIRME & ASSOCIATES LAW FIRM

Attention: ATTY. AHDA B. PAJO

Dear Atty. Pajo:

already been deemed amended to the effect that SOS-CV Calbayog now has perpetual Philippines ("RCC"), without performing any positive act. for an opinion on whether the corporate term of your client, the SOS CHILDREN'S VILLAGE CALBAYOG, INC. ("SOS-CV Calbayog"), in its Articles of Incorporation has existence pursuant to Republic Act No. 11232 or the Revised Corporation Code of the This refers to your letter dated 13 July 2020 (the "Letter-Request") requesting

making its corporate term effective until 2 February2020 only. Hence, your query. force which limited the corporate term of corporations to fifty (50) years1, thus February 1970, when Batas Pambansa Blg. 68 or the Corporation Code was still in In the Letter-Request, you stated that SOS-CV Calbayog was incorporated on 2

We answer in the affirmative.

Paragraph 2, Section 11 of the RCC provides:

accordance with the provisions of this Code." (Emphasis ours) corporate term pursuant to its articles of incorporation. Provided, That any change in the corporate term under this section is without prejudice to the appraisal right of dissenting stockholders in 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 outstanding capital stock, notifies the Commission that it elects to retain its specific "Corporations with certificates of incorporation issued prior to

20202 provides: Furthermore, Section 2(a) of SEC Memorandum Circular No. 22 Series of

2 SEC Memorandum Circular No. 22, Series of 2020, Guidelines on Corporate Term. 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) 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.' 1"Section 11-A corporation shall exist for a period not exceeding fifty (50) years from the date of years in any single instance by an amendment of the articles of incorporation, in accordance with this

Page 2 of 2

Code of the Philippines) and Act No. 1459 (The Corporation Law) "Section 2. Corporations Incorporated under B.P. No. 68 (Corporation

vote of its stockholders representing a two-thirds (2/3) of its corporation." (Emphasis ours) shares, or a majority of the members, in case of a non-stock corporation. Provided that, for all other provisions to be amended in one same amended articles of incorporation, the required vote should be vote of majority of its Board of Directors or Trustees and outstanding capital stock or members, in case of a non-stock a majority of its outstanding capital stock including the non-voting The corporate term of a corporation with certificate of incorporation issued prior to the effectivity of the RCC and corporation._The corporation, subject to payment of filing fees, may amend Article Four to reflect its perpetual corporate term in its Articles of Incorporation, by a vote of majority of its Board of Directors or Trustees and by a vote of its stockholders representing which continue to exist, shall be deemed perpetual upon the effectivity of the RCC, without any action on the part of the

you have posed in your Letter-Request, and which in the like manner, is applicable in required if they intend to limit their corporate term to a certain period. This Commission has already issued previous Opinions3 addressing the same query which your case. which continues to exist after the effectivity of the RCC, are ipso jure granted perpetual existence without any further action on their part. Given this, the Articles of Incorporation of all corporations who satisfies the requirements under Section 11 of the RCC and MC 22 Series of 2020 are deemed amended to the effect that their corporate term is now perpetual. A positive act on the part of corporations is only Based on the afore-quoted provisions, corporations existing prior to, and

facts relied upon are different, this opinion shall be rendered void. Commission in other cases or upon the courts whether of similar or dissimilar circumstances.4 If, upon further inquiry or investigation, it will be disclosed that the on the facts and circumstances disclosed, and relevant solely to the particular issue raised therein. It shall not be used in the nature of a standing rule binding upon the It shall be understood that the foregoing opinion is rendered and based solely

Please be guided accordingly.

Respectfully yours,

wfmwbLaumm ROMUALDC. PADILLA General Counsel

3SEC-OGC Opinion No. 19-16 dated 15 April 2019 addressed to Paner Hosaka and Ypil and SEC-OGC Opinion No. 19-47 dated 05 September 2019 addressed to Du-Baladad and Associates. 4SEC Memorandum Circular No. 15, Series of 2003, No.7