RE : Peace Community Action Group (PCAG) Inc.

November 10, 2003 SEC OPINION NO. 55-03 Mr. Valentin L. Coliflores PCRG Camp Crame Quezon City RE : Peace Community Action Group (PCAG) Inc. S i r : This refers to your request for advice on how to remove and replace incorporators who committed grave offense against the subject-corporation. Likewise, you want to know the minimum incorporators required by SEC. In your letter, you stated that the subject-corporation is represented by its five (5) incorporators. We regret to inform you that incorporators as such cannot be removed or replaced. Section 5 of the Corporation Code of the Philippines (the Code) defines incorporators as "those stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation and are signatories thereof ," (Emphasis supplied).The name of the incorporators will always appear in the articles of incorporation and cannot be changed, deleted or amended for the reason that the same is fait accompli or accomplished fact at the time of incorporation (SEC Opinion dated 18 December 1980, Mr. Pedro B. Adriatico). Such being the case, "incorporators" who are automatically members or stockholders remain as incorporators in the same manner as the corporation or association remains as such until the same is dissolved. However, your association, through Article VI of your by-laws, may validly exercise its authority and prerogative to suspend, expel and terminate members, to wit: aSITDC "Suspension, expulsion and termination of membership, shall be in accordance with the rules and regulations of the association. Any member of the association may file charges against a member by filing a written complaint with the Secretary of the association. The Board of Trustees shall call a special meeting necessary to suspend a member; provided that where the penalty is expulsion, the affirmative vote of majority of all the members of the association shall be necessary." As regards your query on the minimum number of incorporators, please be informed that the minimum number of incorporators required is five (5) under Section 10 of the Corporation Code. As additional information, quoted hereunder is Section 28 of the Code, thus: " Removal of directors or trustees . Any director or trustee of a corporation may be removed from office by a vote of the stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock, or if the corporation be a non-stock corporation, by a vote of at least two-thirds (2/3) of the members entitled to vote: Provided, That such removal shall take place either at a regular meeting of the corporation or at a special meeting called for the purpose, and in either case, after previous notice to stockholders or members of the corporation of the intention to propose such removal at the meeting. A special meeting of the stockholders or members of a corporation for the purpose of removal of directors or trustees, or any of them, must be called by the secretary on order of the president or on the written demand of the stockholders representing or holding at least a majority of the outstanding capital stock, or, if it be a non-stock corporation, on the written demand of a majority of the members entitled to vote. Should the secretary fail or refuse to call the special meeting upon such demand or 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 time and place of such meeting, as well as of the intention to propose such removal, must be given by publication or by written notice prescribed in this Code. Removal may be with or without cause: Provided, That removal without cause may not be used to deprive minority stockholders or members of the right of representation to which they may be entitled under Section 24 of this Code." We hope we have fully addressed your concerns. TIAEac Very truly yours, (SGD.) VERNETTE G. UMALI-PACO General Counsel