Mr. Cesar Escosa

January 28, 1985 Mr. Cesar Escosa P. O. Box Ac-459, ACPO Cubao, Quezon City Sir : This refers to your letter dated December 22, 1984 requesting for information on the following queries quoted hereunder: "1. Would it be legally proper for an individual to own and operate a corporation by buying all the outstanding shares of stocks, acquiring thereby all the assets and assuming all the liabilities of said corporation, and act as Board of Directors and Officers thereof? "2. It is proper for an individual to buy all the outstanding shares of stocks, then assemble at least four (4) more buyers as stockholders in order to legally own and operate the corporation as Board of Directors and Officers thereof?" The Corporation Code of the Philippines requires at least five persons to form a corporation. The law provides, thus: "SECTION 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 a stock corporation must own or be a subscriber to at least one (1) share of the capital stock of the corporation." (emphasis supplied) Although there is no specific mention in the law that the said number cannot be reduced after incorporation, it is believed that thereafter, a corporation cannot legally exist with only one owner/stockholder in view of Section 14 of the Corporation Code which requires a mandatory minimum number of the directors which shall not be less than five, each of whom, under Section 23 of the same law, must be an owner of at least one share of the capital stock of the corporation. The law provides, thus: "SECTION 14. Contents of articles of incorporation . xxx xxx xxx 6. The number of directors or trustees, which shall not be less than five (5) nor more than fifteen (15) ..." xxx xxx xxx. (emphasis supplied) "SECTION 23. The board of directors or trustees . xxx xxx xxx Every director must own at least one (1) share of the capital stock of the corporation of which he is a director, which shall stand in his name on the books of the corporation." (emphasis supplied) Considering that under the aforecited provision of the law the members of the board are required to be stockholders of record of the corporation, it follows that there must be at least five (5) stockholders in a corporation. Your first query is therefore answered in the negative. As to your second query, the same is legally feasible, provided that the proposed buyers are qualified to be stockholders/directors of the corporation. Please be advised accordingly. cdll Very truly yours, (SGD.) MANUEL G. ABELLO Chairman