Legalese 2009 (Week 24)


Appraisal right – right of a stockholder to demand payment of the fair value of his shares, after dissenting from a proposed corporate action involving a fundamental change in the corporation (as specified by law). (see Corporation Code of the Philippines, p. 655 [2006]).


Any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of his shares in the following instances: (1) In case of any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence; (2) In case of sale, lease, exchange transfer, mortgage,pledge or other disposition of all or substantially all of the corporate property and assets as provided in this Code; (3) In case of merger or consolidation. (Corporation Code, sec. 81).


The appraisal right does not normally belong to a stockholder as a matter of absolute right; otherwise a stockholder can withdraw from a corporation anytime by returning his share and getting back his capital. (see Corporation Code of the Philippines, p. 656 [2006]).


The stockholders of a corporation approved the amendment of its articles of incorporation to change the place of its principal office from Makati City to Davao City, where the corporation’s factory is located. As a result, stockholders’ meetings will now be held in Davao City. Stockholder A objected to the amendment because he lives in Manila and he does not want to attend stockholders’ meetings in Davao City. Is Stockholder A entitled to exercise appraisal right under the circumstances?