Corporation Merger and Consolidation Act

Resulting corporation and transfer of assets

Section 1 provides that upon merger or consolidation and the proceedings had under the Act, “all property, rights, franchises, and privileges by law vested” in the merged or consolidated corporations are transferred to and vested in the corporation into which the merger or consolidation is made.
Section 3 provides that upon perfecting the merger or consolidation, the merging or consolidating corporations are “deemed and taken as one corporation” under the terms and conditions of the agreement.
Section 3 mandates that “all and singular” rights, privileges, franchises, property (real and personal), debts due on whatever account, and interests created and rights of way are transferred to and vested in the new corporation “without further act or deed.”
Section 3 provides that title to real estate vested by deed or otherwise in either corporation is not impaired by reason of the Act.
Section 3 preserves creditors’ rights and liens: rights of creditors and liens upon the property of either corporation remain “unimpaired.”

Creditors, liabilities, and continuity

Section 3 states that creditor rights and liens are preserved unimpaired.
Section 3 provides that the respective corporations “shall be deemed to continue in existence” for the purpose of preserving the same (credits/claims and liens), even as the merger results in one corporation.
Section 3 requires that all debts, liabilities, and duties of each merging corporation attach to the new corporation and be enforced against it “to the same extent” as if incurred or contracted by the new corporation.
Section 3 ties enforcement to the new corporation through the merger’s legal effect, with no additional deed or act required for transfer of interests and rights.

Governance and merger agreement requirements

Section 2(a) requires the boards of directors of the corporations proposing to merge or consolidate to enter into a joint agreement under the corporate seals of their respective corporations.
Section 2(a) requires the joint agreement to prescribe the terms and conditions of the merger or consolidation, including the mode of carrying the same into effect and the name of the new corporation (where applicable).
Section 2(a) requires the agreement to state the number, names, and places of residence of the directors and principal officers of the new or consolidated corporation, who hold office until successors are chosen and qualified under law or the bylaws.
Section 2(a) requires the agreement to state the aggregate principal amount and the rate of interest of the bonds, if any, the number of shares and the par value of each share proposed for issuance, and—if capital stock is divided into classes—the classes and the terms on which issued.
Section 2(a) requires the agreement to provide the manner of converting the capital stock of each merging or consolidating corporation into the stock or obligations of the new corporation, and, for a new corporation, how and when succeeding directors and principal officers are chosen or appointed.
Section 2(a) requires the agreement to include other provisions and details as the boards deem necessary or convenient to perfect the merger or consolidation.

Stockholder approval and notice

Section 2(b) requires the joint agreement to be submitted to the stockholders of each corporation separately at a meeting called for that purpose.
Section 2(b) requires notice of the meeting to be given by publication at least six times a week, for two successive weeks in a newspaper published in or near the place where the corporation’s principal office in the Philippine Islands is located.
Section 2(b) requires notice of the meeting to be mailed at least ten days prior to the meeting to the last known post-office address of each stockholder of record.
Section 2(b) provides that, at each meeting, the agreement is considered and adopted or rejected through a vote by ballot, taken in person or by proxy, with each share entitling the holder to one vote.
Section 2(b) provides that adoption requires a majority of all the votes cast at each of such meetings to be in favor of the agreement, consolidation, and merger.

Regulatory approval and filing process

Section 2(b) requires certification of adoption: if the voting requirement is met, the fact must be certified by the president, or one of the vice-presidents, under the corporate seal and attested by the secretary of each corporation.
Section 2(b) requires acknowledgment of the certificates by the president or vice-president signing and the secretary before an officer authorized to administer oaths.
Section 2(b) requires submission to the Public Utility Commission with the certificates and a copy of the agreement, and gives the Commission authority to “ascertain and declare” whether applicants complied with the Act and are entitled to the merger or consolidation applied for.
Section 2(b) provides that the Commission must issue or refuse a certificate accordingly.
Section 2(b) provides that once issued, the agreement, certificate, and the Commission’s order are certified to the chief of the division of archives, patents, copyrights, trademarks, and corporations of the Bureau of Commerce and Industry, and filed as prescribed by existing law for filing original articles of incorporation.
Section 2(b) provides that the merger or consolidation becomes complete upon filing in that manner, and the corporation may proceed to carry out the agreement’s details and transact the business for which formed.

Dissenters’ appraisal and purchase of shares

Section 2(b) grants dissenters a right to appraisal: a stockholder who did not give assent and is dissatisfied must signify dissent by notice in writing served on the president, secretary, or treasurer of the new corporation.
Section 2(b) requires the dissent notice to be served “at any time within three months after” the meeting of the corporation that acted on the agreement.
Section 2(b) provides that the dissenting stockholder is entitled to receive the fair cash value of the stock “as of the day before the vote” for the agreement or consolidation.
Section 2(b) requires appraisal if value is not agreed: three disinterested persons resident in the Philippine Islands are appointed by the judge of the Court of First Instance of the province where the dissatisfied stockholder’s corporation has its principal office.
Section 2(b) requires the judge to make the appointment on reasonable notice upon application of either party.
Section 2(b) provides that upon payment of the agreed appraised value and interest thereon, the stockholder must deliver the stock certificate if issued; if no certificate was issued, the stockholder must make a due assignment of all rights in respect of the stock to the merged or consolidated corporation.
Section 2(b) authorizes reissuance: the corporation may thereafter, in lieu of the dissenters’ stock, reissue the same amount of stock to any other person or persons.

Corporate effect: offices, principal office, notices

Section 4 requires the new corporation, as soon as convenient after the merger or consolidation, to establish a principal office in the Philippine Islands.
Section 4 requires public notice of the principal office in a newspaper published in the city of Manila.
Section 4 requires filing a memorandum of the principal office in the division of archives, patents, copyrights, trademarks, and corporations of the Bureau of Commerce and Industry.

Litigation and substitution in pending cases

Section 5 provides that suits may be brought by and maintained against the new corporation in any courts of the Philippine Islands “in the same manner as any other corporation formed under the Corporation Law.”
Section 6 provides that any action or proceeding pending by or against any consolidated corporation may be prosecuted to judgment as if the consolidation had not taken place, or the new corporation may be substituted in its place.

Corporate powers, bonds, mortgages, and stock

Section 7 provides that the merged or consolidated corporation has all powers and is subject to the restrictions imposed on corporations of the same class formed under the Corporation Law, unless otherwise provided by the Act.
Section 7 authorizes the merged or consolidated corporation to do and perform things necessary to carry out the merger agreement, including issuing bonds and other evidences of debt.
Section 7 authorizes securing bonds and evidences of debt by mortgage or deed of trust on all its business, property, and franchises, or any part thereof.
Section 7 authorizes issuing stock as well, and provides that the new corporation is not prevented from thereafter issuing bonds, entering into obligations, securing them by deed of trust or otherwise, or issuing stock in the same manner as any other corporation organized under the Corporation Law.

Repeal and effectivity

Section 8 repeals all Acts or parts of Acts inconsistent with the Act.
Section 9 provides that the Act takes effect on its approval.
The Act was Approved, March 6, 1918, and it took effect on that approval date.