THE CORPORATION CODE OF THE A corporation may, furthermore, classify its

PHILIPPINES shares for the purpose of insuring compliance

with constitutional or legal requirements.
Section 6. Classification of shares. – The
shares of stock of stock corporations may be Except as otherwise provided in the articles of
divided into classes or series of shares, or both, incorporation and stated in the certificate of
any of which classes or series of shares may stock, each share shall be equal in all respects
have such rights, privileges or restrictions as to every other share.
may be stated in the articles of incorporation:
Provided, That no share may be deprived of Where the articles of incorporation provide for
voting rights except those classified and issued non-voting shares in the cases allowed by this
as "preferred" or "redeemable" shares, unless Code, the holders of such shares shall
otherwise provided in this Code: Provided, nevertheless be entitled to vote on the
further, That there shall always be a class or following matters:
series of shares which have complete voting
rights. Any or all of the shares or series of 1. Amendment of the articles of
shares may have a par value or have no par incorporation;
value as may be provided for in the articles of
incorporation: Provided, however, That banks,
2. Adoption and amendment of by-
trust companies, insurance companies, public
laws;
utilities, and building and loan associations
shall not be permitted to issue no-par value
shares of stock. 3. Sale, lease, exchange, mortgage,
pledge or other disposition of all or
substantially all of the corporate
Preferred shares of stock issued by any
property;
corporation may be given preference in the
distribution of the assets of the corporation in
case of liquidation and in the distribution of 4. Incurring, creating or increasing
dividends, or such other preferences as may bonded indebtedness;
be stated in the articles of incorporation which
are not violative of the provisions of this Code: 5. Increase or decrease of capital
Provided, That preferred shares of stock may stock;
be issued only with a stated par value. The
board of directors, where authorized in the 6. Merger or consolidation of the
articles of incorporation, may fix the terms and corporation with another corporation or
conditions of preferred shares of stock or any other corporations;
series thereof: Provided, That such terms and
conditions shall be effective upon the filing of a 7. Investment of corporate funds in
certificate thereof with the Securities and another corporation or business in
Exchange Commission. accordance with this Code; and

Shares of capital stock issued without par 8. Dissolution of the corporation.

value shall be deemed fully paid and non-
assessable and the holder of such shares shall Except as provided in the immediately
not be liable to the corporation or to its creditors preceding paragraph, the vote necessary to
in respect thereto: Provided; That shares approve a particular corporate act as provided
without par value may not be issued for a in this Code shall be deemed to refer only to
consideration less than the value of five stocks with voting rights. (5a
(P5.00) pesos per share: Provided, further,
That the entire consideration received by the
corporation for its no-par value shares shall be
Section 28. Removal of directors or trustees. –
treated as capital and shall not be available for
Any director or trustee of a corporation may be
distribution as dividends.
removed from office by a vote of the permitted by this Title; and (3) The corporation
stockholders holding or representing at least shall not list in any stock exchange or make any
two-thirds (2/3) of the outstanding capital stock, public offering of any of its stock of any class.
or if the corporation be a non-stock corporation, Notwithstanding the foregoing, a corporation
by a vote of at least two-thirds (2/3) of the shall not be deemed a close corporation when
members entitled to vote: Provided, That such at least two-thirds (2/3) of its voting stock or
removal shall take place either at a regular voting rights is owned or controlled by another
meeting of the corporation or at a special corporation which is not a close corporation
meeting called for the purpose, and in either within the meaning of this Code.
case, after previous notice to stockholders or
members of the corporation of the intention to Any corporation may be incorporated as a
propose such removal at the meeting. A close corporation, except mining or oil
special meeting of the stockholders or companies, stock exchanges, banks,
members of a corporation for the purpose of insurance companies, public utilities,
removal of directors or trustees, or any of them, educational institutions and corporations
must be called by the secretary on order of the declared to be vested with public interest in
president or on the written demand of the accordance with the provisions of this Code.
stockholders representing or holding at least a
majority of the outstanding capital stock, or, if it The provisions of this Title shall primarily
be a non-stock corporation, on the written govern close corporations: Provided, That the
demand of a majority of the members entitled provisions of other Titles of this Code shall
to vote. Should the secretary fail or refuse to apply suppletorily except insofar as this Title
call the special meeting upon such demand or otherwise provides.
fail or refuse to give the notice, or if there is no
secretary, the call for the meeting may be
addressed directly to the stockholders or
members by any stockholder or member of the
corporation signing the demand. Notice of the STRIKES AND LOCKOUTS
time and place of such meeting, as well as of
the intention to propose such removal, must be Article 263. Strikes, picketing and lockouts.
given by publication or by written notice
prescribed in this Code. Removal may be with It is the policy of the State to encourage free
or without cause: Provided, That removal trade unionism and free collective bargaining.
without cause may not be used to deprive
minority stockholders or members of the right Workers shall have the right to engage in
of representation to which they may be entitled concerted activities for purposes of collective
under Section 24 of this Code. bargaining or for their mutual benefit and
protection. The right of legitimate labor
organizations to strike and picket and of
employers to lockout, consistent with the
national interest, shall continue to be
CLOSE CORPORATIONS recognized and respected. However, no labor
union may strike and no employer may declare
Section 96. Definition and applicability of a lockout on grounds involving inter-union and
Title. - A close corporation, within the meaning intra-union disputes.
of this Code, is one whose articles of
incorporation provide that: (1) All the In case of bargaining deadlocks, the duly
corporation’s issued stock of all classes, certified or recognized bargaining agent may
exclusive of treasury shares, shall be held of file a notice of strike or the employer may file a
record by not more than a specified number of notice of lockout with the Ministry at least 30
persons, not exceeding twenty (20); (2) all the day before the intended date thereof. In cases
issued stock of all classes shall be subject to of unfair labor practice, the period of notice
one or more specified restrictions on transfer shall be 15 days and in the absence of a duly
certified or recognized bargaining agent, the lockout in an industry indispensable to the
notice of strike may be filed by any legitimate national interest, the Secretary of Labor and
labor organization in behalf of its members. Employment may assume jurisdiction over the
However, in case of dismissal from dispute and decide it or certify the same to the
employment of union officers duly elected in Commission for compulsory arbitration. Such
accordance with the union constitution and by- assumption or certification shall have the effect
laws, which may constitute union busting, of automatically enjoining the intended or
where the existence of the union is threatened, impending strike or lockout as specified in the
the 15-day cooling-off period shall not apply assumption or certification order. If one has
and the union may take action immediately. (As already taken place at the time of assumption
amended by Executive Order No. 111, or certification, all striking or locked out
December 24, 1986) employees shall immediately return-to-work
and the employer shall immediately resume
The notice must be in accordance with such operations and readmit all workers under the
implementing rules and regulations as the same terms and conditions prevailing before
Minister of Labor and Employment may the strike or lockout. The Secretary of Labor
promulgate. and Employment or the Commission may seek
the assistance of law enforcement agencies to
During the cooling-off period, it shall be the ensure compliance with this provision as well
duty of the Ministry to exert all efforts at as with such orders as he may issue to enforce
mediation and conciliation to effect a voluntary the same.
settlement. Should the dispute remain
unsettled until the lapse of the requisite number In line with the national concern for and the
of days from the mandatory filing of the notice, highest respect accorded to the right of
the labor union may strike or the employer may patients to life and health, strikes and lockouts
declare a lockout. in hospitals, clinics and similar medical
institutions shall, to every extent possible, be
A decision to declare a strike must be approved avoided, and all serious efforts, not only by
by a majority of the total union membership in labor and management but government as
the bargaining unit concerned, obtained by well, be exhausted to substantially minimize, if
secret ballot in meetings or referenda called for not prevent, their adverse effects on such life
that purpose. A decision to declare a lockout and health, through the exercise, however
must be approved by a majority of the board of legitimate, by labor of its right to strike and by
directors of the corporation or association or of management to lockout. In labor disputes
the partners in a partnership, obtained by adversely affecting the continued operation of
secret ballot in a meeting called for that such hospitals, clinics or medical institutions, it
purpose. The decision shall be valid for the shall be the duty of the striking union or locking-
duration of the dispute based on substantially out employer to provide and maintain an
the same grounds considered when the strike effective skeletal workforce of medical and
or lockout vote was taken. The Ministry may, at other health personnel, whose movement and
its own initiative or upon the request of any services shall be unhampered and
affected party, supervise the conduct of the unrestricted, as are necessary to insure the
secret balloting. In every case, the union or the proper and adequate protection of the life and
employer shall furnish the Ministry the results health of its patients, most especially
of the voting at least seven days before the emergency cases, for the duration of the strike
intended strike or lockout, subject to the or lockout. In such cases, therefore, the
cooling-off period herein provided. (As Secretary of Labor and Employment may
amended by Batas Pambansa Bilang 130, immediately assume, within twenty four (24)
August 21, 1981 and further amended by hours from knowledge of the occurrence of
Executive Order No. 111, December 24, 1986) such a strike or lockout, jurisdiction over the
same or certify it to the Commission for
compulsory arbitration. For this purpose, the
When, in his opinion, there exists a labor
contending parties are strictly enjoined to
dispute causing or likely to cause a strike or
comply with such orders, prohibitions and/or
injunctions as are issued by the Secretary of
Labor and Employment or the Commission,
under pain of immediate disciplinary action,
including dismissal or loss of employment
status or payment by the locking-out employer
of backwages, damages and other affirmative
relief, even criminal prosecution against either
or both of them.

The foregoing notwithstanding, the President

of the Philippines shall not be precluded from
determining the industries that, in his opinion,
are indispensable to the national interest, and
from intervening at any time and assuming
jurisdiction over any such labor dispute in order
to settle or terminate the same.

Before or at any stage of the compulsory

arbitration process, the parties may opt to
submit their dispute to voluntary arbitration.

The Secretary of Labor and Employment, the

Commission or the voluntary arbitrator shall
decide or resolve the dispute, as the case may
be. The decision of the President, the
Secretary of Labor and Employment, the
Commission or the voluntary arbitrator shall be
final and executory ten (10) calendar days after
receipt thereof by the parties. (As amended by
Section 27, Republic Act No. 6715, March 21,
1989)