Woodworks, Inc.

January 2, 1991 Woodworks, Inc. Suite 305 Equitable Bank Bldg. Paseo de Roxas, Cor. Buendia Makati, Metro Manila Attention : Mr . Miguel S . Arambulo, Jr . (President) Gentlemen : This refers to your letter dated December 4, 1990 requesting extension of the corporate term of your corporation for reasons mentioned therein. cdlex Corporate records on file with this Office disclosed that subject company is a pre-war corporation. Under Article IV of its articles of incorporation, it shall exist for a period of fifty (50) years from and after the date of incorporation on January 28, 1941. Accordingly, its term would expire on January 28, 1991. As stated, you planned to call a stockholders meeting for the purpose of extending its corporate term. However, you are doubtful that the required two-thirds (2/3) vote of the outstanding capital stock necessary for the amendment of its articles of incorporation can be secured due to stockholders' dispute for control of the company. Allegedly, the non-extension of its corporate life would result in the company's default on its financial obligations, contractual commitments to numerous customers, loss of revenue needed by the government and loss of employment of hundreds of employees. Hence, you are requesting for the extension of the company's corporate life. In our jurisdiction, the statutory provision on corporate term is found in Section 11 of the Corporation Code which provides: "SECTION 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." (Emphasis supplied) Since the privilege of extension is purely statutory, all of the statutory conditions precedent must be complied with in order that the extension may be effected. And generally, these conditions must be complied with, and the steps necessary to effect the extension must be taken during the life of the corporation, and before the expiration of its term as originally fixed by its charter or the general law, since, as a rule, the corporation is ipso facto dissolved as that time expires. So, where the extension is by amendment of the articles of incorporation, the amendment must be adopted before that time (8 Fletcher, Sec. 4099) and similarly, the filing and recording of a certificate of extension after that time cannot relate back to the passage of a resolution by the stockholders in favor of the extension so as to save the life of the corporation. (Fletcher, Supra, citing Merges V. Altenbranch, 45, Mont 355. 123 Par. 21) The amended articles of incorporation extending the original term, therefore, should be filed before the expiry date of the original term. Relative to the requirements for the amendment of the articles of incorporation, Section 16 of the Corporation Code provides and we quote: "SECTION 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 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 its 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." (Emphasis supplied) It is, therefore, necessary that the extension of corporate existence should be approved by the required two-thirds (2/3) vote of the outstanding capital stock in favor of the extension. The above provision being mandatory, the requirements embodied therein cannot be dispensed with. LibLex Please be advised accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner