which have capital stock divided into shares and are

authorized to distribute to the holders of such shares,

dividends, or allotments of the surplus profits on the
basis of the shares held. All other corporations are
Seventeenth Congress nonstock corporations.

Third Regular Session Section 4. Corporations Create by Special Laws or

Charters. - Corporations created by special laws or
Begun and held in Metro Manila, on Monday, the charters shall be governed primarily by the provisions
twenty-third day of July, two thousand eighteen. of the special law or charter creating them or
applicable to them, supplemented by the provisions of
REPUBLIC ACT No. 11232 this Code, insofar as they are applicable.

An Act Providing for the Revised Corporation Section 5. Corporators and Incorporators,
Code of the Philippines Stockholders and Members. - Corporators are those
who compose a corporation, whether as stockholders
or shareholders in a stock corporation or as a
Be it enacted by the Senate and House of
members in a nonstock corporations. Incorporators
Representatives of the Philippine Congress
are those stockholders or members mentioned in the
Assembled:
articles of incorporation as originally forming and
composing the corporation and who are signatories
TITLE I thereof.
GENERAL PROVISIONS
Section 6. Classification of Shares. - The
DEFINITIONS AND CLASSIFICATIONS classification of shares, their corresponding rights,
priviledges, restrictions, and their stated par value, if
Section 1. Title of the Code. - This Code shall be any, must be indicated in the articles of
known as the "Revised Corporation Code of the incorporations. Each share shall be equal in all
Philipines". respects to every other share, except as otherwise
provided in the articles of incorporation. Each share
Section 2. Corporation Defined. - A corporation is an shall be equal in all respects to every other share,
artificial being created by operation of law, having the except as otherwise provided in the articles of
right of succession and the powers, attributes, and incorporation and in the certificate of stock.
properties expressly authorized by law or incidental to
its existence. The share stock corporations may be divided into
classes or series of shares, or both. No share may be
Section 3. Classes of Corporations. - Corporations deprived of voting rights except those classified and
formed or organized under this Code may be stock or issued as "preferred" or "redeemable" shares, unless
nonstock corporations. Stock corporations are those otherwise provided in this Code: Provided, That there

1
shall be a class or series of shares with complete publicly listed or not, shall not be permitted to issue
voting rights. no-par value shares of stock.

Holders of nonvoting shares shall nevertheless be Preferred shares of stock issued by a corporation may
entitled to vote on the following matters; be given preference in the distribution of dividends
and in the distribution of corporate assets in case of
(a) Amendment of the articles of incorporation; liquidation, or such other preferences: Provided, That
preferred shares of stock may be issued only with a
stated par value. The board of directors, where
(b) Adoption and amendment of bylaws;
authorized in the articles of incorporation, may fix the
terms and conditions of preferred shares of stock or
(c) Sale, lease, echange, mortgage, pledge, or other any series thereof: Provided, further,That such terms
disposition of all or substantially all of the corporate and conditions shall be effective upon filing of a
property; certificate thereof with the Securities and Exchange
Commission, hereinafter referred to as the
(d) Incurring, creating, or increasing bonded "Commission".
indebtedness;
Shares of capital stock issued without par value shall
(e) Increase or decrease of authorized capital stock; be deemed fully paid and nonassessable and the
holder of such shares shall not be liable to the
(f) Merger or consolidation of the corporation with corporation or to its creditors in respect
another corporation or other corporations; thereto: Provided, That no-par value shares must be
issued for a consideration of at least Five pesos
(g) Investment of corporate funds in another (₱5.00) per share: Provided, further, That the entire
corporation or business in accordance with this Code; consideration received by the corporation for its no-
and par value shares shall be treated as capital and shall
not be available for distribution as dividends.
(h) Dissolution of the corporation.
A corporation may further classify its shares for the
purpose of ensuring compliance with constitutional or
Except as provided in the immediately preceding
legal requirements.
paragraph, the vote required under this Code to
approve a particular corporate act shall be deemed to
refer only to stocks with voting rights. Section 7. Founders' Shares. - Founders' shares may
be given certain rights and privileges not enjoyed by
the owners of other stock. Where the exclusive right
The shares or series of shares may or may not have a
to vote and be voted for in the election of directors is
par value: Provided, That banks, trust, insurance, and
granted, it must be for a limited period not to exceed
preneed companies, public utilities, building and loan
five (5) years from the date of
associations, and other corporations authorized to
incorporation: Provided, That such exclusive right
obtain or access funds from the public whether

2
shall not be allowed if its exercise will violate licensed to practice a profession, and partnerships or
Commonwealth Act No. 108, otherwise known as the associations organized for the purpose of practicing a
"Anti-Dummy Law"; Republic Act No. 7042, otherwise profession, shall not be allowed to organize as a
known as the "Foreign Investments Act of 1991"; and corporation unless otherwise provided under special
otherwise known as "Foreign Investments Act of laws. Incorporators who are natural persons must be
1991"; and other pertinent laws. of legal age.

Section 8. Redeemable Shares. - Redeemable shares Each incorporator of a stock corporation must own or
may be issued by the corporation when expressly be a subscriber to at least one (1) share of the capital
provided in the articles of incorporation. They are stock.
shares which may be purchased by the corporation.
They are shares which may be purchased by the A corporation with a single stockholder is considered a
corporation from the holders of such shares upon the One Person Corporation as described in Title XIII,
expiration of a fixed period, regardless of the Chapter III of this Code.
existence of unrestricted retained earnings in the
books of the corporation, and upon such other terms
Section 11. Corporate Term. - A corporation shall
and conditions stated in the articles of incorporation
have perpetual existence unless its articles of
and the certificate of stock representing the shares,
incorporation provides otherwise.
subject to rules and regulations issued by the
Commission.
Corporations with certificates of incorporation issued
prior to the effectivity of this Code and which continue
Section 9. Treasury Shares. - Treasury shares are
to exist shall have perpetual existence, unless the
shares of stock which have been issued and fully paid
corporation, upon a vote of its stockholders
for, but subsequently reacquired by the issuing
representing a majority of its articles of
corporation through purchase, redemption, donation,
incorporation: Provided, That any change in the
or some other lawful means. Such shares may again
corporate right of dissenting stockholders in
be disposed of for a reasonable price fixed by the
accordance with the provisions of this Code.
board of directors.
A corporate term for a specific period may be
TITLE II
extended or shortened by amending the articles of
INCORPORATION AND ORGANIZATION OF
incorporation: Provided, That no extension may be
PRIVATE CORPORATIONS
made earlier than three (3) years prior to the original
or subsequent expiry date(s) unless there are
Section 10. Number and Qualifications of justifiable reasons for an earlier extension as may be
Incorporators. - Any person, partnership, association determined by the Commission: Provided,
or corporation, singly or jointly with others but not further, That such extension of the corporate term
more than fifteen (15) in number, may organize a shall take effect only on the day following the original
corporation for any lawful purpose or or subsequent expiry date(s).
purposes: Provided, That natural persons who are

3
A corporation whose term has expired may apply for more than one stated purpose, the articles of
revival of its corporate existence, together with all the incorporation hsall indicate the primary purpose and
rights and privileges under its certificate of the secondary purpose or purposes: Provided, That a
incorporation and subject to all of its duties, debts nonstock corporation may not include a purpose
and liabilities existing prior to its revival. Upon which would change or contradict its nature as such;
approval by the Commission, the corporation shall be
deemed revived and a certificate of revival of (c) The place where the principal office of the
corporate existence shall be issued, giving it corporation is to be located, which must be within the
perpetual existence, unless its application for revival Philippines;
provides otherwise.
(d) The term for which the corporation is to exist, if
No application for revival of certificate of the corporation has not elected perpetual existence;
incorporation of banks, banking and quasi-banking
institutions, preneed, insurance and trust companies,
(e) The names, nationalities, and residence addresses
non-stock savings and loan associations (NSSLAs),
of the incorporators;
pawnshops, corporations engaged in money service
business, and other financial intermediaries shall be
approved by the Commission unless accompanied by (f) The number of directors, which shall not be more
a favorable recommendation of the appropriate than fifteen (15) or the number of trustees which may
government agency. be more than fifteen (15);

Section 12. Minimum Capital Stock Not Required of (g) The names, nationalities, and residence addresses
Stock Corporations. - Stock corporations shall not be of persons who shall act as directors or trustees until
required to have minimum capital stock, except as the first regular directors or trustees are duly elected
otherwise specially provided by special law. and qualified in accordance with this Code;

Section 13. Contents of the Articles of (h) If it be a stock corporation, the amount of its
Incorporation. - All corporations shall file with the authorized capital stock, number of shares into which
Commission articles of incorporation in any of the it is divided, the par value of each, names,
official languages, duly signed and acknowledged or nationalities, and subscribers, amount subscribed and
authenticated, in such form and manner as may be paid by each on the subscription, and a statement
allowed by the Commission, containing substantially that some or all of the shares are without par value, if
the following matters, except as otherwise prescribed applicable;
by this Code or by special law:
(i) If it be a nonstock corporation, the amount of its
(a) The name of corporation; capital, the names, nationalities, and residence
addresses of the contributors, and amount
contributed by each; and
(b) The specific purpose or purposes for which the
corporation is being formed. Where a corporation has

4
(j) Such other matters consistent with law and which Third: That the principal office of the corporation is
the incorporators may deem necessary and located in the City/Municipality of _______________,
convenient. Province of ______________________, Philippines;

An arbitration agreement may be provided in the Fourth: That the corporation shall have perpetual
articles of incorporation pursuant to Section 181 of existence or a term of ___________ years from the
this Code.1âwphi1 date of issuance of the certificate of incorporation;

The Articles of incorporation and applications for Fifth: That the names, nationalities, and residence
amendments thereto may be filed with the addresses of the incorporators of the corporation are
Commission in the form of an electronic document, in as follows:
accordance with the Commission's rule and
regulations on electronic filing.
Name Nationality Residence
Section 14. Form of Articles of Incorporation. - ___________ ___________ ___________
Unless otherwise prescribed by special law, the ___________ ___________ ___________
articles of incorporation of all domestic corporations __ __ __
shall comply substantially with the following form:
___________ ___________ ___________
Articles of Incorporation ___________ ___________ ___________
of __ __ __

___________ ___________ ___________

_____________________ ___________ ___________ ___________
__ __ __
(Name of Corporation)
___________ ___________ ___________
___________ ___________ ___________
The undersigned incorporators, all of legal age, have
__ __ __
voluntarily agreed to form a (stock) (nonstock)
corporation under the laws of the Republic of the ___________ ___________ ___________
Philippines and certify the following: ___________ ___________ ___________
__ __ __
First: That the name of said corporation shall be
"_________________", Inc. Corporation or OPC";
Sixth: That the number if directors or trustees of the
corporation shall be ___________________; and the
Second: That the purpose or purposes for which such names, nationalities, and residence addresses of the
corporation is incorporated are: (If there is more than first directors or trustees of the corporation are as
one purpose, indicate primary and secondary follows:
purposes);

5
1âwphi1 ____________________ shares are without par
value.
Name Nationality Residence

___________ ___________ ___________ Eight: That the number of shares of the authorized
___________ ___________ ___________ capital stock-stated has been subscribed as follows:
__ __ __
Name No. of Amoun
___________ ___________ ___________ Amo
of Nation Shares t
___________ ___________ ___________ unt
Subscr ality Subscri Subscri
__ __ __ Paid
iber bed bed
___________ ___________ ___________
___________ ___________ ___________
__ __ __

___________ ___________ ___________ (Modify No. 8 if shares are with no-par value. In case
___________ ___________ ___________ the corporation is nonstock, Nos. 7 and 8 of the
__ __ __ above articles may be modified accordingly, and it is
sufficient if the articles may be modified accordingly,
___________ ___________ ___________ and it is sufficient if the articles state the amount of
___________ ___________ ___________ capital or money contributed or donated by specified
__ __ __ persons, stating the names, nationalities, and
residence addresses of the contributors or donors and
Seventh: That the authorized capital stock of the the respective amount given by each.)
corporation is ____________________ PESOS
(₱______), dividend into ____ shares with the par Ninth: That _______________________ has been
value of ___________________ PESOS elected by the subscribers as Treasurer of the
(₱_____________) per share. (In case all the shares Corporation to act as such until after the successor is
are without par value): That the capital stock of the duly elected and qualified in accordance with the
corporation is __________________ shares without bylaws, that as Treasurer, authority has been given to
par value. receive in the name and for the benefit of the
corporation, all subscriptions, contributions or
(In case some shares have par value and some are donations paid or given by the subscribers or
without par value): That the capital stock of said members, who certifies the information set forth in
corporation consists of the seventh and eighth clauses above, and that the
________________________________ shares, of paid-up portion of the subscription in cash and/or
which _______________________ shares have a par property for the benefit and credit of the corporation
value of ___________________________PESOS has been duly received.
(₱_______) each, and of which

6
Tenth: That the incorporators undertake to change _____________________________ __________
the name of the corporation immediately upon receipt ___________________
of notice from the Commission that another
corporation, partnership or person has acquired a (Names and signatures of the incorporators)
prior right to the use of such name, that the name
has been declared not distinguishable from a
____________________________
corporation, or that it is contrary to law, public
(Name and signature of Treasurer)
morals, good customs or public policy.

Section 15. Amendment of Articles of

Eleventh: (Corporations which will engage in any
Incorporation. - Unless otherwise prescribed by this
business or activity reserved for Filipino citizens shall
Code or by special law, and for legitimate purposes,
provide the following):
any provision or matter stated in the articles of
incorporation may be amended by a majority vote of
"No transfer of stock or interest which shall reduce the board of directors or trustees and the vote or
the ownership of Filipino citizens to less than the written assent of the stockholders representing at
required percentage of capital stock as provided by least two-thirds (2/3) of the outstanding capital stock,
existing laws shall be allowed or permitted to be without prejudice to the appraisal right of dissenting
recorder in the proper books of the corporation, and stockholders in accordance with the provisions of this
this restriction shall be indicated in all stock Code. The articles of incorporation of a nonstock
certificates issued by the corporation." corporation may be amended by the vote or written
assent of majority of the trustees and at least two-
IN WITNESS WHEREOF, we have hereunto signed thirds (2/3) of the members.
these Articles of Incorporation, this ______ day of
_____, 20___ in the City/Municipality of The original and amended articles together shall
_________________, Province of contain all provisions required by law to be set out in
________________, Republic of the Philippines. the articles of incorporation. Amendments to the
articles 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, with a statement that the
_____________________________ __________ amendments have been duly approved by the
___________________ required vote of the stockholders or members, shall
be submitted to the Commission.
_____________________________ __________
___________________ The amendments shall take effect upon their approval
by the 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.

7
Section 16. Grounds When Articles of Incorporation such name is already protected by law, rules and
or Amendment May be Disapproved. The Commission regulations.
may disapprove the articles of incorporation or any
amendment thereto if the same is not compliant with A name is not distinguishable even if it contains one
the requirements of this Code: Provided, That the or more of the following:
Commission shall give the incorporators, directors,
trustees, or officers as reasonable time from receipt
(a) The word "corporation", "company",
of the disapproval within which to modify the
incorporated", "limited", "limited liability", or an
objectionable portions of the articles or amendment.
abbreviation ofone if such words; and
The following are ground for such disapproval:

(b) Punctuations, articles, conjunctions, contractions,

(a) The articles of incorporation or any amendment
prepositions, abbreviations, different tenses, spacing,
thereto is not substantially in accordance with the
or number of the same word or phrase.
form prescribed herein;

The Commission upon determination that the

(b) The purpose or purposes of the corporation are
corporate name is: (1) not distinguishable from a
patently unconstitutional, illegal, immoral or contrary
name already reserved or registered for the use of
to government rules and regulations;
another corporation; (2) already protected by law; or
(3) contrary to law, rules and regulations, may
(c) The certification concerning the amount of capital summarily order the corporation to immediately cease
stock subscribed and/or paid is false; and and desist from using such name and require the
corporation to register a new one. The Commission
(d) The required percentage of Filipino ownership of shall also cause the removal of all visible signages,
the capital stock under existing laws or the marks, advertisements, labels prints and other effects
Constitution has not been complied with. bearing such coroporate name. Upon the approval of
the new corporate name, the Commission shall issue
No articles of incorporation or amendment to articles a certificate of incorporation under the amended
of incorporation of banks, banking and quasi-banking name.
institutions, preneed, insurance and trust companies,
NSSLAs, pawnshops and other financial intermediaries If the corporation fails to comply with the
shall be approved by the Commission unless Commission's order, the Commission may hold the
accompanied by a favorable recommendation of the corporation and its responsible directors or officers in
appropriate government agency to the effect that contempt and/or hold them administratively, civilly
such articles or amendment is in accordance with law. and/or criminally liable under this Code and other
applicable laws and/or revoke the registration of the
Section 17. Corporation Name. - No corporate name corporation.
shall be allowed by the Commission if it is not
distinguishable from that already reserved or Section 18. Registration, Incorporation and
registered for the use if another corporation, or if Commencement of Corporation Existence. - A person

8
or group of persons desiring to incorporate shall without the authority to do so shall be liable as
submit the intended corporate name to the general partners for all debts, liabilities and damages
Commission for verification. If the Commission finds incurred or arising as a result thereof: Provided,
that the name is distinguishable from a name already however, That when any such ostensible
reserved or registered for the use of another corporation is sued on any transaction entered by its
corporation, not protected by law and is not contrary as a corporation or on any tort committed by it as
to law, rules and regulation, the name shall be such, it shall not be allowed to use on any its lack of
reserved in favor of the incorporators. The corporate personality as a defense. Anyone who
incorporators shall then submit their articles of assumes an obligation to an ostensible corporation as
incorporation and bylaws to the Commission. such cannot resist performance thereof on the ground
that there was in fact no corporation.
If the Commission finds that the submitted document
s and information are fully compliant with the Section 21. Effects of Non-Use of Corporate Charter
requirements of this Code, other relevant laws, rules and Continous Inoperation. - If a corporation does not
and regulations, the Commission shall issue the formally organize and commence its business within
certificate of incorporation. five (5) year from the date of its incorporation, its
certificate of incorporation shall be deemed revoked
A private corporation organized under this Code as of the day following the end of the five (5)-year
commences its corporate existence and juridical period.
personality from the date the Commission issues the
certificate of incorporation under its official seal However, if a corporation has commence its business
thereupon the incorporators, stockholders/members but subsequently becomes inoperative for a period of
and their successors shall constitute a body corporate at least five (5) consecutive years, the Commission
under the name stated in the articles of incorporation may, after due notice and hearing, place the
for the period of time mentioned therein, unless said corporation under delinquent status.
period is extended or the corporation is sooner
dissolved in accordance with law. A delinquent corporation shall have a period of two
(2) years to resume operations and comply with all
Section 19. De facto Corporations. - The due requirements that the Commission shall prescribed.
incorporation of any corporation claiming in good faith Upon the compliance by the corporation, the
to be a corporation under this Code, and its right to Commission shall issue an order lifting the delinquent
exercise corporate powers, shall not be required into status. Failure to comply with the requirements and
collaterally in any private suit to which such resume operations within the period given by the
corporation may be a party. Such inquiry may be Commission shall cause the revocation of the
made by the Solicitor General in a quo corporation's certificate of incorporation.
warranto proceeding.
The Commission shall give reasonable notice to, and
Section 20. Corporation by Estoppel. - All persons coordinate with the appropriate regulatory agency
who assume to act as a corporation knowing it to be prior to the suspension or revocation of the certificate

9
of incorporation of companies under their special (b) Banks and quasi-banks, NSSLAs, pawnshops,
regulatory jurisdiction. corporations engaged in money service business,
preneed, trust and insurance companies and other
TITLE III financial intermediaries; and
BOARD OF DIRECTORS/TRUSTEE AND OFFICERS
(c) Other corporations engaged in businesses vested
Section 22. The Board of Directors or Trustees of a with public interest similar to the above, as may be
Corporation; Qualification and Term. - Unless determined by the Commission, after taking into
otherwise provided in this Code, the board of account relevant factors which are germane to the
directors or trustees shall exercise the corporate objective and purpose of requiring the election of an
powers, condict all business, and control all properties independent director, such as the extent of minority
of the corporation. ownership, type of financial products or securities
issued or offered to investors, public interest involved
in the nature of business operations, and other
Directors shall be elected for a term of one (10 Year
analogous factors.
from among the holders of stocks registered in the
corporation's book while trustees shall be elected for
a term not exceeding three (3) years from among the An independent director is a person who apart from
members of the corporation. Each director and shareholdings and fees received from any business or
trustee shall hold office until the successor is elected other relationship which could, or could reasonable be
and qualified. A director who ceases to own at least received to materially interfere with the exercise of
one (1) share of stock or a trustee who ceases to be a independent judgment in carrying out the
member of the corporation shall cease to be such. responsibilities as a director.

The board of the following corporations vested with Independent directors must be elected by the
public interest shall have independent directors shareholders present or entitled to vote in
constituting at least twenty percent (20%) of such absentia during the election of directors. Independent
board: directors shall be subject to rules and regulations
governing their qualifications, disqualifications, voting
requirements, duration of term and term limit,
(a) Corporations covered by Section 17.2 of Republic
maximum number of board membership and other
Act No. 8799, otherwise known as "The Securities
requirements that the Commission will prescribed to
Regulation Code", namely those whose securities are
strengthen their independence and align with
registered with the Commission, corporations listed
international best practices.
with an exchange or with assets of at least Fifty
million pesos (50,000,000.00) and having two
hundred (200) or more holders of shares, each Section 23. Election of Directors or Trustees. -
holding at least one hundred (100) shares of a class Except when the exclusive right is reserved for
of its equity shares; holders of founders' shares under Section 7 of this
Code, each stockholder or member shall have the
right to nominate any director or trustee who

10
posseses all of the qualifications and none of the stockholders as shown in the books of the corporation
disqualifications and none of the disqualifications set multiplied by the whole number of directors to be
forth in this Code. elected: Provided, however, That no delinquent stock
shall be voted. Unless otherwise provided in the
At all elections of directors or trustees, there must be articles of incorporation or in the bylaws, members of
present, either in person or through a representative nonstock corporations may cast as many votes as
authorized to act by written proxy, the owners of there are trustees to be elected by may not cast more
majority of the outstanding capital stock, or if there than one (1) vote for one (1) candidate. Nominees for
be no capital stock, a majority of the members directors or trustees receiving the highest number of
entitled to vote. When so authorized in the bylaws or votes shall be declared elected.
by a majority of the board of directors, the
stockholders or members may also vote through If no election is held, or the owners of majority of the
remote communication or in absentia: Provided, That outstanding capital stock or majority of the members
the right to vote through such modes may be entitled to vote are not present in person, by proxy,
exercised in corporations vested with public interest, or through remote communication or not voting in
notwithstanding the absence of a provision in the absentia at the meeting, such meeting may be
bylaws of such corporations. adjourned and the corporation shall proceed in
accordance with Section 25 of this Code.
A stockholder or member who participates through
remote communication or in absentia, shall be The directors or trustees elected shall perform their
deemed present for purposes of quorum. duties as prescribed by law, rules of good corporate
governance, and bylaws of the corporation.
The election must be by ballot if requested by any
voting stockholder or member. Section 24. Corporate Officers. - Immediately after
their election, the directors of a corporation must
In stock corporations, stockholders entitled to vote formally organize an elect: (a) a president, who must
shall have the right to vote the number of shares of be a director; (b) a treasurer, who must be a resident
stock standing in their own names in the stock books of the Philippines; and (d) such other officers as may
of the corporation at the time fixed in the bylaws or be provided in the bylaws. If the corporation is vested
where the bylaws are silent at the time of the with public interest, the board shall also elect
election. The said stockholder may: (a) vote such compliance officer. The same person may hold two
number of shares for as many persons as there are (2) or more positions concurrently, except that no
directors to be elected; (b) cumulate said shares and one shall act as president and secretary or as
give one (1) candidate as many votes as the number president and treasurer at the same time, unless
of directors to be elected multiplied by the number of otherwise allowed in this Code.
shares owned; or (c) distribute them on the same
principle among as many candidates as may be seen The officers shall manage the corporation and
fit: Provided, That the total number of votes cast shall perform such duties as may be provided in the bylaws
not exceed the number of shares owned by the and/or as resolved by the board of directors.

11
Section 25. Report of Election of Directors, Trustees director, trustee or officer of the corporation, shall,
and Officers, Non-holding of Election and Cessation within seven (7) days form knowledge thereof, report
from Office. - Within thirty (30) days after the in writing such fact to the Commission.
election of the directors, trustees and officers of the
corporation, the secretary, or any other officer of the Section 26. Disqualification of Directors, Trustees or
corporation, the secretary, or any other officer of the Officers. - A person shall be disqualified from being a
corporation, shall submit to the Commission, the director, trustee or officer of any corporation if, within
names, nationalities, shareholdings, and residence five (5) years prior to the election or appointment as
addresses of the directors, trustees and officers such, the person was:
elected.
(a) Convicted by final judgment:
The non-holding of elections and the reasons therefor
shall be reported to the Commission within thirty (30)
(1) Of an offense punishable by imprisonment for a
days from the date of the scheduled election. The
period exceeding six (6) years;
report shall specify a new date for the election, which
shall not be later than sixty (60) days from the
scheduled date. (2) For violating this Code; and

If no new date has been designated, or if the (3) For violating Republic Act No. 8799, otherwise
rescheduled election is likewise not held, the known as "The Securities Regulation Code";
Commission may, upon the application of a
stockholder, member, director or trustee, and after (b) Found administratively liable for any offense
verification of the unjustifiable non-holding of the involving fraudulent acts; and
election, summarily order that an election be held.
The Commission shall have the power to issue such (c) By a foreign court or equivalent foreign regulatory
orders as may be appropriate, including other authority for acts, violations or misconduct similar to
directing the issuance of a notice stating the time and those enumerated in paragraphs (a) and (b) above.
place of the election, designated presiding officer, and
the record date or dates for the determination of The foregoing is without prejudice to qualifications or
stockholders or members entitled to vote. other disqualifications, which the Commission, the
primary regulatory agency, or Philippine Competition
Notwithstanding any provision of the articles of Commission may impose in its promotion of good
incorporation or by laws to the contrary, the shares of corporate governance or as a sanction in its
stock or membership represented at such meeting administrative proceedings.
and entitled to vote shall constitute a quorum for
purposes of conducting an election under this section. Section 27. Removal of Director or Trustees. - Any
director or trustee of a corporation may be removed
Should a director, trustee or officer die, resign or in fro office by vote of the stockholders holding or
any manner case to hold office, the secretary or the representing at least two-thirds (2/3) of the

12
outstanding capital stock, or in a nonstock knowledge of the disqualification, failed to remove
corporation, by a vote of at least two-thirds (2/3) of such director or trustee.
the member entitled to vote: Provided, That such
removal shall take place either at a regular meeting Section 28. Vacancies in the Office of Director or
of the corporation or at a special meeting called for Trustee; Emergency Board. - Any vacancy occurring
the purpose, and in either case, after previous notice in the board of directors or trustees other that by
to stockholders or members of the corporation of the removal or expiration of term may be filled by the
intention to propose such removal at the meeting. A vote of at least a majority of the remaining directors
special meeting of the stockholders or members for or trustees, if still constituting a quorum; otherwise,
the purpose of removing any director or trustee must said vacancies must be filled by the stockholders or
be called by the secretary on order of the president, members in a regular or special meeting called for
or upon written demand of stockholders representing that purpose.
or holding at least a majority of the outstanding
capital stock, or a majority of the members entitled to
When the vacancy is due to term expiration, the
vote. If there is no secretary, or the secretary,
election shall be held no later that the day of such
despite demand, fails or refuses to call the special
expiration at a meeting called for that purpose. When
meeting or to give notice thereof, the stockholder or
the vacancy arises as a result of removal by the
member of the corporation signing the demand may
stockholders or members, the election may be held
call the special meeting or to give notice thereof, the
on the same day of the meeting authorizing the
stockholder or member of the corporation signing the
removal and this fact must be so stated in the agenda
demand may call for the meeting by directly
and notice of said meeting. In all other cases, the
addressing the stockholders or members. Notice of
election must be held no later than forty-five (45)
the time and place of such meeting, as well as of the
days from the time the vacancy arose. A director or
intention to propose such removal, must be given by
trustee elected to fill vacancy shall be referred to as
publication or by written notice prescribed in this
replacement director or trustee elected to fill a
Code. Removal may be with or without
vacancy shall be referred to as replacement director
cause: Provided, That removal without cause may not
or trustee and shall serve only for the unexpired term
be used to deprive minority stockholders or members
of the predecessor in office.
of the right representation to which they may be
entitled under Section 23 of this Code.
However, when the vacancy prevents the remaining
directors from consituting a quorum and emergency
The Commission shall, motu propio or upon verified
action is required to prevent grave, substantial, and
complaint, and after due notice and hearing, order
irreparable loss or damage to the corporation, the
the removal of a director or trustee elected despite
vacancy may be temporarily filled from among the
the disqualification, or whose disqualification arose or
officers of the corporation by unanimous vote of the
is discovered subsequent to an election. The removal
remaining directors or trustees. The action by the
of a disqualified director shall be without prejudice to
designated director or trustee shall be limited to the
other sanctions that the Commission may impose on
emergency action necessary, and the term shall cease
the board of directors or trustees who, with
within a reasonable time form the termination of the

13
emergency or upon election of the replacement Corporations vested with public interest shall submit
director or trustee, whichever comes earlier. The to their shareholders and the Commission, an annual
corporation must notify the Commission within three report of the total compensation of each of their
(3) days from the creation of the emergency board, directors or trustees.
stating therein the reason for its creation.
Section 30. Liability of Directors, Trustees or
Any directorship or trusteeship to be filled by a reason Officers. - Directors or trustees who willfully and
of an increase in the number of directors or trustees knowingly vote for or assent to patently unlawful acts
shall be filled only by an election at a regular or at a of the corporation or who are guilty of gross
special meeting of stockholders or members duly negligence or bad faith in directing the affairs of the
called for the purpose, or in the same meeting corporation or acquire any personal or pecuniary
authorizing the increase of directors or trustees if so interest in conflict with their duty as such directors or
stated in the notice of the meeting. trustees shall be liable jointly and severally for all
damages resulting therefrom suffered by the
In all elections to fill vacancies under this section, the corporation, its stockholders or members and other
procedure set forth in Section 23 and 25 of this Code persons.
shall apply.
A director, trustee or officer shall not attempt to
Section 29. Compensation of Directors or Trustees. - acquire, or any interest adverse to the corporation in
In the absence of any provision in the bylaws fixing respect of any matter which has been reposed in
their compensation, the directors or trustees shall not them in confidence, and upon which, equity imposes a
received any compensation in their capacity as such, disability upon themselves to deal in their own behalf;
except for reasonable per diems: Provided, otherwise, the said director, trustee or officer shall be
however, That the stockholders representing at least liable as a trustee for the corporation and must
a majority of the outstanding capital stock or majority account for the profits which otherwise would have
of the members may grant directors or trustees with accrued to the corporation.
compensation and approve the amount thereof at a
regular or special meeting. Section 31. Dealings of Directors, Trustees or
Officers with the Corporation. - A contract of the
In no case shall the total yearly compensation of corporation with one (1) or more of its directors,
directors exceed ten percent (10%) of the net income trustees, officers or their spouses and relatives within
before income tax of the corporation during the the fourth civil degree of consanguinity or affinity is
preceding year. voidable, at the option of such corporation, unless all
the following conditions are present:
Directors or trustees shall not participate in the
determination of their own per diems or (a) The presence of such director or trustee in the
compensation. board meeting in which the contract was approved
was not necessary to constitute a quorum for such
meeting;

14
(b) The vote of such director or trustee was not Stockholding exceeding twenty percent (20%) of the
necessary for the approval of the contract; outstanding capital stock shall be considered
substantial for purposes of interlocking directors.
(c) The contract is fair and reasonable under the
circumstances; Section 33. Disloyalty of a Director. - Where a
director, by virtue of such office, acquires a business
(d) In case of corporations vested with public interest, opportunity which should belong to the corporation,
material contracts are approved by at least a majority thereby obtaining profits to the prejudice of such
of the independent directors voting to approved the corporation, the director must account for and refund
material contract; and to the latter all such profits, unless the act has been
ratified by a vote of the stockholders owning or
representing at least two-thirds (2/3) of the
(e) In case of an officer, the contract has been
outstanding capital stock. This provision shall be
previously authorized by the board of directors.
applicable, nothwithstanding the fact that the director
risked one's own funds in the venture.
Where any of the first three (3) conditions set forth in
the preceding paragraph is absent, in the case of a
Section 34. Executive Management, and Other
contract with a director or trustee, such contract may
Special Committees. - If the bylaws so provide, the
be ratified by the vote of the stockholders
board may create an executive committee composed
representing at least two-thirds (2/3) of the
of at least three (3) directors. Said committee may
outstanding capital stock or of at least two-thirds
act, by majority of vote of all its members, on such
(2/3) of the members in a meeting called for the
specific matters within the competence of the board,
purpose: Provided, That full disclosure of the adverse
as may be delegated to it in the bylaws or by majority
interest of the directors or trustees involved is made
vote of the board, except with respect to the: (a)
at such meeting and the contract is fair and
approval of any action for which shareholders'
reasonable under the circumstances.
approval is also required; (b) filing of vacancies in the
board; (c) amendment or repeal of bylaws or the
Section 32. Contaracts Between Corporations with adoption of new bylaws; (d) amendment or term is
Interlocking Directors. - Except in cases of fraud, and not amendable or repealable; and (e) distribution of
provided the contract is fair and reasonable under the cash divendends to the shareholders.
circumstances a contract between two (2) or more
corporations having interlocking directors shall not be
The board of directors may create special committees
invalidated on that ground alone: Provided, That if the
of temporary or permanent nature and determine the
interest of the interlocking director in one (1)
members' term, composition, compensation, powers,
corporation is substantial and the interest in the other
and responsibilities.
corporation or corporations is merely nominal, the
contract shall be subject to the provisions of the
preceding section insofar as the latter corporation or TITLE IV
corporations are concerned. POWERS OF THE CORPORATIONS

15
Section 35. Corporate Powers and Capacity. - Every scientific, civic, or similar purposes: Provided, That no
corporation incorporated under this Code has the foreign corporation shall give donations in aid of any
power and capacity: political party or candidate or for purpose s of
partisan political activity;
(a) To sue and be sued in its corporate name;
(j) To establish pension, retirement, and other plans
(b) To have perpetual existence unless the certificate for the benefit of its directors, trustees, officers, and
of incorporation provides otherwise; employees; and

(c) To adopt and use a corporate seal; (k) To exercise such other powers as may be
essential or necessary to carry out its purpose or
purposes as stated in the articles of incorporation.
(d) To amend its articles of incorporation in
accordance with the provisions of this Code;
Section 36. Power to Extend or Shorten Corporate
Term. - A private corporation may extend or shorten
(e) To adopt bylaws, not contrary to law, morals or
its term as stated in the articles of incorporation when
public policy, and to amend or repeal the same in
approved by a majority vote of the board of directors
accordance with this Code;
or trustees, and ratified at a meeting by the
stockholders or members representing at least two-
(f) In case of stock corporations, to issue or sell thirds (2/3) of the outstanding capital stock or of its
stocks to subscribers and to sell treasury stocks in membrs. Written notice of the proposed action and
accordance with the provisions of this Code; and to the time and place of the meeting shall be sent to the
admit members to the corporation if it be a nonstock stockholders or members at their respective place of
corporation; residence as shown in the books of the corporation,
and must be deposited to the addressee in the post
(g) To purchase, receive, take or grant, hold, convey, office with postage prepaid, served personally, or
sell, lease, pledge, mortgage, and otherwise deal with when allowed in the bylaws or done with the consent
such real and personal property, including securities of the stockholder, sent electronically in accordance
and bonds of other corporations, as the transaction of with the rules and regulations of the Commission on
the lawful business of the corporation may reasonably the use of electronic data messages. In case of
and necessarily require, subject to the limitations extension of corporate term, a dissenting stockholder
prescribed by law and the constitution; may exercise the right of appraisal under the
conditions provided in this Code.
(h) To enter into a partnership, joint venture, merger,
consolidation, or any other commercial agreement Section 37. Power to increase or Decrease Capital
with natural and juridical persons; Stock; Incur, Create or Increase Bonded
Indebtedness. - No corporation shall increase or
(i) To make reasonable donations, including those for decrease its capital stock or incur, create or increase
the public welfare or for hospital, charitable, cultural, any bonded indebtedness unless approved by a

16
majority vote of the board of directors and by two- (d) Any bonded indebtedness to be incurred, created
thirds (2/3) of the outstanding capital stock at a ot increased;
stockholders' meeting duly called for the purpose.
Written notice of the time and place of the (e) The amount of stock represented at the meeting;
stockholders' meeting and the purpose for said and
meeting must be sent to the stockholders at their
places of residence as shown in the books of the
(f) The vote authorizing the increase or decrease of
corporation served on the stockholders personally, or
capital stock, or incurring, creating or increasing of
through electronic means recognized in the
bonded indebtedness.
corporation's bylaws and/or the Commission's rules as
a valid mode for service of notices.
Any increase or decrease in the capital stock or the
incurring, creating or increasing of any bonded
A certificate must be signed by a majority of the
indebtedness shall require prior approval of the
directors of the corporation and countersigned by the
Commission and where appropriate, of the Philippine
chairperson and secretary of the stockholders'
Competition Commission. The application with the
meeting, setting forth:
Commission shall be made within six (6) months from
the date of approval of the board of directors and
(a) That the requirements of this section have been stockholders, which period may be extended for
complied with; justifiable reasons.

(b) The amount of the increase or decrease of the Copies of the certificate shall be kept on file in the
capital stock; office of the corporation and filed with the
Commission and attached to the original articles of
(c) In case of an increase of the capital stock, the incorporation. After approval by the Commission and
amount of capital stock or number of shares of no-par the issuance by the Commission of its certificate of
stock thereof actually subscribed, the names filing may declare: Provided, That the Commission
nationalities and addresses of the persons shall not accept for filing any certificate of increase of
subscribing, the amount of capital stock or number of capital stock unless accompanied by a sworn
no-par stock subscribed, the names, nationalities and statement of the treasurer of the corporation
addresses of the persons subscribing, the amount of accompanied by a sworn statement of the treasurer of
capital stock or number of no-par stock subscribed by the corporation lawfully holding office at the time of
each, and the amount paid by each on the the filing of the certificate, showing that at least
subscription in cash or property, or the amount of twenty-five percent (25%) of the increase in capital
capital stock or number of shares of no-par stock stock has been subscribed and that at least twenty-
allotted to each stockholder if such increase is for the five percent (25%) of the amount subscribed has
purpose of making effective stock dividend therefor been paid in actual cash to the corporation or that
authorized; property, the valuation of which is equal to twenty-
five percent (25%) of the subscription, has been
transferred to the corporation: Provided, further, That

17
no decrease in capital stock shall be approved by the payment of money or other property or consideration,
Commission if its effect shall prejudice the rights of as its board of directors or trustees may deem
corporate creditors. expedient.

Nonstock corporations may incur, create or increase A sale of all or substantially all of the corporation's
bonded indebtedness when approved by a majority of properties and assets, including its goodwill, must be
the board of trustees and of at least two-thirds (2/3) authorized by the vote of stockholders representing at
of the members in a meeting duly called for the least two-thirds (2/3) of the outstanding capital stock,
purpose. or at least two-thirds (2/3) of the members, meeting
duly called for the purpose.
Bonds issued by a corporation shall be registered with
the Commission, which shall have the authority to In nonstock corporations where there are no
determine the sufficiency of the terms thereof. members with voting rights, the vote of at least a
majority of the trustees in office will be sufficient
Section 38. Power to Deny Preemptive Right. - All authorization for the corporation to enter into any
stockholders of a stock corporation shall enjoy transaction authorized by this section.
preemptive right to subscribe to all issues or
disposition of shares of any class, in proportion to The determination of whether or not the sale involves
their respective shareholdings, unless such right is all or substantially all of the corporation's properties
denied by the articles of incorporation or an and assets must be computed based on its net asset
amendment thereto: Provided, That such preemptive value, as shown in its latest financial statemments. A
right shall not extend to shares issued in compliance sale or other disposition shall be deemed to cover
with laws requiring stock offerings or minimum stock substantially all the corporate property and assets if
ownership by the public; or to shares issued in good thereby the corporation would be rendered incapable
faith with the approval of the stockholders of continuing the business or accomplishing the
representing two-thirds (2/3) of the outstanding purpose of which it was incorporated.
capital stock in exchange for property needed for
corporate purposes or in payment of previously Written notice of the proposed action and of the time
contracted debt. and place for the meeting shall be addressed to
stockholders or members at their places of residence
Section 39. Sale or Other Disposition of Assets. - as shown in the books of the corporation and
Subject to the provisions of Republic Act No. 10667, deposited to the addressee in the post office with
otherwise known as the "Philippine Competition Act", postage prepaid, served personally, or when allowed
and other related laws a corporation may, by a by the bylaws or done with the consent of the
majority vote of its board of directors or trustees, sell, stockholder, sent electronically: Provided, That any
lease, exchange, mortgage, pledge, or otherwise dissenting stockholder may exercise the right of
dispose of its property and assets, upon such terms appraisal under the conditions provided in this Code.
and conditions and for such consideration, which may
be money, stock, bonds, or other instruments for the

18
After such authorization or approval by the (c) To pay dissenting or withdrawing stockholders
stockholders or members, the board of directors or entitled to payment for their shares under the
trustees may, nevertheless, in its discretion, abandon provisions of this Code.
such sale, lease, exchange, mortgage, pledge, or
other disposition of property and assets, subject to Section 41. Power to Invest Corporate Funds in
the rights of third parties under any contract relating Another Corporation or Business or for Any Other
thereto, without further action or approval by the Purpose. - Subject to the provisions of this Code, a
stockholders or members. private corporation may invest its funds in any other
corporation, business, or for any purpose other than
Nothing in this section is intended to restrict the the primary purpose for which it was organized, when
power of any corporation, without the authorization approved by a majority of the board of directors or
by the stockholders or members, to sell, lease, trustees and ratified by the stockholders representing
exchange, mortgage, pledge, or otherwise dispose of at least two-thirds (2/3) of the outstanding capital
any of its property and assets if the same is stock, or by at least two-thirds (2/3) of the
necessary in the usual and regular course of business outstanding capital stock, or by at least two-thirds
of the corporation or if the proceeds of the sale or (2/3) of the members in the case of nonstock
other disposition of such property and assets shall be corporations at a meeting duly called for the purpose.
appropriated for the conduct of its remaining Notice of the proposed investment and the time place
business. of residence as shown in the books of the corporation
and deposited to the addressee in the post office with
Section 40. Power to Acquire Own Shares. - the postage prepaid. Served personally, or sent
Provided, That the corporation has unrestricted electronically in accordance with the rules and
retained earnings in its books to cover the shares to regulations of the Commission on the use of electronic
be purchased or acquired, a stock corporation shall data message, when allowed by the bylaws or done
have the power to purchased or acquired, a stock with the consent of the stockholders: Provided, That
corporation shall have the power to purchase or any dissenting stockholder shall have appraisal right
acquire its own shares for a legitimate corporate as provided in this Code: Provided, however, That
purpose or purposes, including the following cases: where the investment by the corporation is
reasonably necessary to accomplish its primary
purpose as stated in the articles of incorporation, the
(a) To eliminate fractional shares arising out of stock
approval of the stockholders or members shall not be
dividends;
necessary.

(b) To collect or compromise an indebtedness to the

Section 42. Power to Declare Dividends. - The board
corporation, arising out of unpaid subscription, in a
of directors of a stock corporation may declare
delinquency sale, and to purchase delinquent shares
dividends out of the unrestricted retained earnings
sold during said sale; and
which shall be payable in cash, property, or in stock
to all stockholders on the basis of outstanding stock
held by them: Provided, That any cash dividends due
on delinquent stock shall be first be applied to the

19
unpaid balance on th subscription plus costs and of the board of directors of the managed corporation,
expenses, while stock holders until their unpaid then the management contract must be approved by
subscription is fully paid: Provided, further, That no the stockholders of the managed corporation owning
stock dividend shall be issued without the approval of at least two-thirds (2/3) of the total outstanding
stockholders representing at least two-thirds (2/3)of capital stock entitled to vote, or by at least two-thirds
the outstanding capital stock at a regular or special (2/3) of the members in the case of a nonstock
meeting duly called for the purpose. corporation.

Stock corporations are prohibited from restraining These shall apply to any contract whereby a
surplus profits in excess of one hundred percent corporation undertakes to manage or operate all or
(100%} of their paid-in capital stock, except: (a) substantially all of the called services contracts,
when justified by the definite corporate expansion operating agreements or otherwise: Provided,
projects or programs approved by the board of however, That such service contracts or operating
directors; or (b) when the corporation is prohibited agreements which relate to the exploration,
under any loan agreement with financial institutions development exploitation or utilization of natural
or creditors, whether local or foreign, from declaring resources may entered into such periods as may be
dividends without their consent, and such consent has provided by the pertinent laws or regulations.
not yet been secured; or (c) when it can be clearly
shown that such retention is necessary under special No management contracts shall be entered into for
circumstances obtaining in the corporation, such as period longer that five (5) years for any one term.
when there is need for special reserve for probable
contingencies.
Section 44. Ultra Vires Acts of the Corporations. - No
corporation shall possess or exercise corporate
Section 43. Power to Enter into Management powers other than those conferred by this Code or by
Contract. - No corporation shall conclude a its articles of incorporation and except as necessary
management contract with another corporation unless or incidental to the exercise of the powers conferred.
such contract is approved by the board of directors
and by the stockholders owning at least the majority
TITLE V
of the outstanding capital stock, or by at least a
BYLAWS
majority of the members in the case of a nonstock
corporation, or both the managing and the managed
corporation, at a meeting duly called for the Section 45. Adoption of Bylaws. - For the adoption of
purpose: Provided,That (a) where a stockholder or bylaws by the corporation, the affirmative vote of the
stockholders representing the same interest of both stockholders representing at least a majority of the
the managing and the managed corporations own or outstanding capital stock, or of at least a majority of
control more than one-third (1/3) of the total the members in case on nonstock corporations, shall
outstanding capital stock entitled to vote of the be necessary. The bylaws shall be signed by the
managing corporation; or (b) where a majority if the stockholders or members voting for them and shall be
members of the board of directors of the managing kept in the principal office of the corporation, subject
corporation also constitute a majority of the members to the inspection of the stockholders or members

20
during office hours. A copy thereof, duly certified by a (c) The required quorum in meetings of stockholders
majority of the directors or trustees and or members and the manner of voting therein;
countersigned by the secretary of the corporation,
shall be filed with the Commission and attached to the (d) The modes by which a stockholder, member,
original articles of incorporation. director or trustees may attend meetings and cast
their votes;
Notwithstanding the provisions of the preceding
paragraph, bylaws maybe adopted and filed prior to (e) The form for proxies of stockholders and members
incorporation; in such case, such bylaws shall be and the manner of voting them;
approved and signed by all incorporators and
submitted to the Commission, together with the
(f) The directors' or trustees' qualifications, duties and
articles of incorporation.
responsibilities, the guidelines for setting the
compensation of directors or trustees and officers,
In all cases, bylaws shall be effective only upon the and the maximum number of other board
issuance by the Commission of a certification that the representations that an independent director or
bylaws are in accordance with this Code. trustee may have which shall, in no case, be more
than the number prescribed by the Commission;
The Commission shall not accept for filing the bylaws
or any amendment thereto of any bank, banking (g) The time for holding the annual election of
institution, building and loan association, trust directors or trustees and the mode or manner of
company, insurance company, public utility, giving notice thereof;
educational institution, or any other corporations
governed by special laws, unless accompanied by a
(h)The manner of election or appointment and the
certificate of the appropriate government agency to
term of officers other than directors or trustees;
the effect that such by laws or amendments are in
accordance with law.
(i) The penalties for violation of the bylaws;
Section 46. Contents of Bylaws. - A private
corporation may provide the following in its bylaws; (j) In the case of stock corporations, the manner of
issuing stock certificates; and
(a) The time, place and manner of calling and
conducting regular or special meetings of the (k) Such other matters as may be necessary for the
directors or trustees; proper or convenient transaction of its corporate
affairs for the promotion of good governance and
anti-graft and corruption measures.
(b) The time and manner of calling and conducting
regular or special meetings and mode of notifying the
stockholders or members thereof; An arbitration agreement maybe provided in the
bylaws pursuant to Section 181 of this Code .

21
Section 47. Amendment to Bylaws. - A majority of Section 49. Regular and Special Meetings of
the board of directors or trustees, and the owners of Stockholders or Members. - Regular meetings of
at least a majority of the outstanding capital stock, or stockholders or members shall be held annually on a
at least a majority of the members of a nonstock date fixed in the bylaws, or if not so fixed in the
corporation, at a regular or special meeting duly bylaws, or if not so fixed, on any date After April 15
called for the purpose, may amend or repeal the of every year as determined by the board of directors
bylaws or adopt new bylaws. The owner of two-thirds or trustees: Provided, further, That written notice of
(2/3) of the outstanding capital stock or two-third regular meetings may be sent to all stockholders or
(2/3) of the members in a nonstock corporation mat members of record through electronic mail or such
delegate to the board of directors or trustees the other manner as the Commission shall allow under its
power to amend or repeal the bylaws or adopt new guidelines.
bylaws: Provided, That any power delegated to the
board of directors or trustee to amend or repeal the At each regular meeting of stockholders or members,
bylaws or adopt new bylaws shall be considered as the board of directors or trustees shall endeavor to
revoke whenever stockholders owning or representing present to stockholders or members the following:
a majority of the outstanding capital stock or majority
of the members shall so vote at a regular or special
(a) The minutes of the most recent regular meeting
meeting.
which shall include, among others:

Whenever the bylaws are amended or new bylaws are

(1) A description of the voting and the vote tabulation
adopted, the corporation shall file with the
procedures used in the previous meetings;
Commission such amended or new bylaws and, if
applicable, the stockholders' or members' resolution
authorizing the delegation of the power to amend (2) A description of the opportunity given to
and/or adopt new bylaws, duly certified under oath by stockholders or members to ask questions and record
the corporate secretary and majority of the directors of the question s asked and answers given;
or trustees.
(3) The matters discussed and resolutions reached;
The amended or new bylaws shall only be effective
upon the issuance by the Commission of certification (4) A record of the voting results for each agenda
that the same is in accordance with this Code and item;
other relevant laws.
(5) A list of the director or trustees, officers and
TITLE VI stockholders or members who attended the meeting;
MEETINGS and

Section 48. Kinds of Meetings. - Meeting of the (6) Such other items that the Commission may
directors, trustees, stockholders, or members may be require in the interest of good corporate governance
regular or special. and protection of minority stockholders;

22
(b) A members' list for nonstock corporations and, for (j) Director disclosures on self-dealings and related
stock corporations, material information on the party transactions; and/or
current stockholders, and their voting rights;
(k) The profiles of directors nominated ir seeking
(c) A detailed, descriptive, balanced and election or reelection.
comprehensible assessment of the corporation's
performance, which shall include information on any A director, trustee, stockholder, or member may
material change in the corporation's business propose any other matter for inclusion in the agenda
strategy, and other affairs; at may regular meeting of stockholders or members.

(d) A financial report for the preceding year, which Special meetings of stockholders or members shall be
shall include financial statements duly signed and held at any time deemed necessary or as provided in
certified in accordance wit this Code and the rules and the bylaws: Provided, however, That at least one (1)
the Commission may prescribe, a statement on the week written notice shall be sent to all stockholders
adequacy of the corporation's internal controls or risk or members, unless a different period is provided in
management systems, and a statement of all external the bylaws, law or regulation.
audit and non-audit fees;
A stockholder or member may propose the holding of
(e) An explanation of the dividend policy and the fact a special meeting and items to be included in the
of payment of dividends or the reasons for agenda.
nonpayment thereof;
Notice of any meeting may be waived, expressly or
(f) Director or trustee profiles which shall include, impliedly, by any stockholder or
among others, their qualifications and relevant member: Provided, That general waivers of notice in
experience, length of service in the corporation, the articles of incorporation or the bylaws shall not be
trainings and continuing education attended, and their allowed: Provided, further, That attendance at a
board representation in other corporations; meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting
(g) A director or trustee attendance report, indicating for the express purpose of objecting to the
the attendance of each of the meetings of the board transaction of any business because the meeting is
and its committees and in regular or special not lawfully called or convened.
stockholder meetings;
Whenever for any cause, there is no person
(h) Appraisals and performance reports for the board authorized or the person authorized unjustly refuses
and the criteria and procedure for assessment; to call a meeting, the Commission, upon petition of a
stockholder or member on a showing of good cause
(i) A director or trustee compensation report prepared therefor, may issue an order, directing the petitioning
in accordance with this Code and the rules the stockholder or member to call a meeting of he
Commission may prescribe; corporation by giving proper notice required by this

23
Code or the bylaws. The petitioning stockholder or Notice of meetings shall be sent through the means of
member shall preside thereat until at least a majority communication provided in the bylaws, which notice
of the stockholders or members present have chosen shall state the time, place and purpose of the
from among themselves, a presiding officer. meetings.

Unless the bylaws provide for a longer period, the Each notice of meeting shall further be accompanied
stock and transfer book or membership book shall be by the following:
closed at least twenty (20) days for regular meetings
and seven (7) days for special meetings before the (a) The agenda for the meeting;
scheduled sate of the meeting.
(b) A proxy which shall be submitted to the corporate
In case of postponement of stockholders' or members' secretary within a reasonable time prior to the
regular meetings, written notice thereof and the meeting;
reason therefor shall be sent to all stockholders or
members of record at least two (2) weeks prior to the
(c) When attendance, participation, and voting are
date of the meeting, unless a different period is
allowed by remote communication or in absentia, the
required under the bylaws, law or regulation.
requirements and procedures to be followed when a
stockholder or member elects either option; and
The right to vote of stockholders or members may be
exercised in person, through remote communication
(d) When the meeting is for the election of directors
or in absentia. The Commission shall issue the rules
or trustees, the requirements and procedure for
and regulations governing participation and voting
nomination and election.
through remote communication or in absentia, taking
into account the company’s scale, number of
stockholders or members, structure, and other factors All proceedings and any business transacted at a
consistent with the protection and promotion of meeting of the stockholders or members, if within the
shareholders' or members' meetings. powers or authority of the corporation, shall be valid
even if the meeting is improperly held or
called: Provided, That all the stockholders or
Section 50. Place and Time of Meetings of
members of the corporation are present or duly
Stockholders or Members. - Stockholders' or
represented at the meeting and not one of them
members' meetings, whether regular or special, shall
expressly states at the beginning of the meeting that
be held in the principal office of the corporation as set
the purpose of their attendance is to object to the
forth in the articles of incorporation, or if not
transaction of any business because the meeting is
practicable, in the city or municipality where the
not lawfully called or convened.
principal office of the corporation is
located: Provided, That any city of municipality in
Metro Manila, Metro Cebu, Metro Davao, and other Section 51. Quorum in Meetings. - Unless otherwise
Metropolitan areas shall, for purposes of this section, provided in this Code or in the bylaws, a quorum shall
be considered a city or municipality. consist of the stockholders representing a majority of

24
the outstanding capital stock pr a majority of the trustees cannot attend or vote by proxy at board
members in the case of nonstock corporations. meetings.

Section 52. Regular and Special Meetings of A director or trustee who has a potential interest in
Directors or Trustees; Quorum. - Unless the articles any related party transaction must recuse from voting
of incorporation or the bylaws provides for a greater on the approval of the related party transaction
majority, a majority of the directors or trustees as without prejudice to compliance with the requirments
stated in the articles of incorporation shall of Section 31 of this Code.
constitute a quorum to transact corporate business,
and every decision reached by at least a majority of Section 53. Who Shall Preside at Meetings. - The
the directors or trustees constituting a quorum, chairman or, in his absence, the president shall
except for the election of officers which shall require preside at all meetings of the directors or trustees as
the vote of a majority of all the members of the well as of the stockholders or members, unless the
board, shall be valid as a corporate act. bylaws provide otherwise.

Regular meetings of the board of directors or trustees Section 54. Right to Vote of Secures Creditors and
of every corporation shall be held monthly, unless the Administrators. - In case a stockholder grants security
bylaws provide otherwise. interest in his or her shares in stock corporations, the
stockholder-grantor shall have the right to attend and
Special meetings of the board of directors or trustees vote at meetings of stockholders, unless the secured
may be held at any time upon the call of the creditor is expressly given by the stockholder-grantor
president or as provided in the bylaws. such right in writing which is recorded in the
appropriate corporate books.
Meetings of directors or trustees of corporations may
be held anywhere in or outside the Philippines, unless Executors, administrators, receivers, and other legal
the bylaws provide otherwise. Notice of regular or representatives duly appointed by the court may
special meetings stating the date, time and place of attend and vote on behalf of the stockholders or
the meeting must be sent to every director or trustee members without need of any written proxy.
at least two (2) days prior to the scheduled meeting,
unless a longer time is provided in the bylaws. A Section 55. Voting in Case of Joint Ownership of
director or trustee may waive this requirement, either Stock. - The consent of all the co-owners shall be
expressly or impliedly. necessary in voting shares of stock owned jointly by
two (2) or more persons, unless there is a written
Directors or trustees who cannot physically attend or proxy, signed by all the co-owners, authorizing one
vote at board meetings can participate and vote (1) or some of them or any other person to vote such
through remote communication such as share or shares: Provided, That when the shares are
videoconferencing, teleconferencing, or other owned in an "and/or" capacity by the holders thereof,
alternative modes of communication that allow them any one of the joint owners can vote said shares or
reasonable opportunities to participate. Directors or appoint a proxy therefor.

25
Section 56. Voting Right for Treasury Shares. - to the shares for a period not exceeding five (5) years
Treasury shares shall have no voting right as long as at any time: Provided, That in the case of a voting
such shares remain in the Treasury. trust specially required as a condition in a loan
agreement, said voting trust may be for a period
Section 57. Manner of Voting; Proxies. - exceeding five (5) years but shall automatically expire
Stockholders and members may vote in person or upon full payment of the load. A voting trust
proxy in all meetings of stockholders or members agreement must be in writing and notarized, and shall
specify the terms and conditions thereof.
When so authorized in the bylaws or by a majority of
the board of directors, the stockholders or members A certified copy of such agreement shall be filed with
of corporations may also vote through remote the corporation and with the Commission; otherwise,
communication or in absentia: Provided, That the the agreement is ineffective and uneforceable. The
votes are received before the corporation finishes the certificate or certificates of stock covered by the
tally of votes. voting trust agreement shall be cancelled and new
ones shall be issued pursuant to said agreement. The
books of the corporation shall state that the transfer
A stockholder or member who participates through
in the name of the trustee or trustees is made
remote communication or in absentia shall be deemed
pursuant to the voting trust agreement.
present for purposes of quorum.

The trustee or trustees shall execute and deliver to

The corporation shall establish the appropriate
the transferors, voting trust certificates, which shall
requirements and procedures for voting through
be transferable in the same manner and with the
remote communication and in absentia, taking into
same effect as certificates of stock.
account the company's scale, number of shareholders
or members, structure and other factors consistent
with the basic right of corporate suffrage. The voting trust agreement filed with the corporation
shall be subject to examination by any stockholder of
the corporation in the same manner as any other
Proxies shall be in writing, signed and filed, by the
corporate book or record: Provided, That both the
stockholder or member, in any form authorized in the
trustor and the trustee or trustees may exercise the
bylaws and received by the corporate secretary within
right of inspection of all corporate books and records
a reasonable time before the scheduled meeting.
in accordance with the provisions of this Code.
Unless otherwise provided in the proxy form, it shall
be valid only for the meeting for which it is intended.
No proxy shall be valid and effective for a period Any other stockholder may transfer the shares to the
longer than five (5) years at any one time. same trustee or trustees upon the term and
conditions stated in the voting trust agreement, and
thereupon shall be bound by all the provisions of said
Section 58. Voting Trusts. - One or more
agreement.
stockholders of stock corporation may create a voting
trust for the purpose of conferring upon a trustee or
trustees the right to vote and other rights pertaining

26
No voting trust agreement shall be entered into for Section 61. Consideration for Stocks. - Stocks shall
purposes of circumventing the laws against anti- not be issued for a consideration less than the par or
competitive agreements, abuse of dominant position, issued price thereof. Consideration for the issuance of
anti-competitive mergers and acquisitions, violation of stock may be:
nationality and capital requirements, or for the
perpetuation of fraud. (a) Actual cash paid to the corporation;

Unless expressly renewed, all rights granted in a (b) Property, tangible or intangible, actually received
voting trust agreement shall automatically expire at by the corporation and necessary or convenient for its
the end of the agreed period. The voting trust use and lawful purposes at a fair valuation equal to
certificates as well as the certificate of stock in the the par or issued value of the stock issued;
name of the trustees shall thereby be deemed
cancelled and new certificates of stock shall be
(c) Labor performed for or services actually rendered
reissued in the name of the trustors.
to the corporation;

The voting trustee or trustees may vote by proxy or

(d) Previously incurred indebtedness of the
in any manner authorized under the bylaws unless
corporation;
the agreement provides otherwise.
(e) Amounts transferred from unrestricted retained
TITLE VII
earnings to stated capital;
STOCKS AND STOCKHOLDERS
(f) Outstanding shares exchanged for stocks in the
Section 59. Subscription Contract. - Any contract for event of reclassification or conversion;
the acquisition of unissued stock in an existing
corporation or a corporation still to be formed shall be
deemed a subscription within the meaning of this (g) Shares of stock in another corporation; and/or
Title, notwithsatnding the fact that the parties refer to
it as a purchase or some other contract. (h) Other generally accepted form of consideration.

Section 60. Pre-incorporation Subscription. - A Where the consideration is other than actual cash, or
subscription of shares in a corporation till to be consists of intangible property such as patents or
formed shall be irrevocable for a period of at least six copyrights, the valuation thereof shall initially be
(6) months from the date of subscription, unless all of determined by the stockholders or the board of
the other subscribers consent to the revocation, or directors, subject to the approval of the Commission.
the corporation fails to incorporate wuthin the same
period or within a longer period stipulated in the Shares of stock shall not be issued in exchange for
contract of subscription. No pre-incorporation is promissory notes or future service. The same
submitted to the Commission . considerations provided in this section, insofar as

27
applicable, may be used for the issuance or bonds by Section 63. Issuance of Stock Certificates. - No
the corporation. certificate of stock shall be issued to a subscriber until
the full amount of subscription together with interest
The issued price of no-par value shares may be fixed and expenses (in case of delinquent shares), if any is
in the articles of incorporation or by the board of due, has been paid.
directors pursuant to authority conferred by the
articles of incorporation or the bylaws, or if not so Section 64. Liability of Directors for Watered
fixed, by the stockholders representing at least a Stocks. - A director or officer of a corporation who:
majority of the outstanding capital stock at a meeting (a) consents to the issuance of stocks for a
duly called for the purpose. consideration less than its par or issued value: (b)
consents to the issuance of stocks for the
Section 62. Certificate of Stock and Transfer of consideration other than cash, valued in excess of its
Shares. - The capital stock of corporations shall be fair value; or (c) having knowledge of the insufficient
divided into shares for which certificates signed by the consideration, does not file written objection with the
president or vice president, countersigned by the corporate secretary, shall be liable to the corporation
secretary or assistant secretary, and sealed with the or its creditors, solidarily with the stockholder
seal of the corporation shall be issued in accordance concerned for the differnce between the value receive
with the bylaws. Shares of stock so issued are at the time of issuance of the stock and the par or
personal property and may be transferred by delivery issued value of the same.
of the certificate or certificates indorsed by the owner,
his attorney-in-fact, or any other person legally Section 65. Interest on Unpaid Subscriptions. -
authorized to make the transfer. No transfer, Subscribers to stock shall be liable to the corporation
however, shall be valid, except as between the for interest on all unpaid subscriptions from the date
parties, until the transfer is recorded in the books of of subscription, if so required by and at the rate of
the corporation showing the names of the parties to interest fixed in the subscription contract. If no rate of
the transaction, the date of the transfer, the number interest is fixed in the subscription contract. If no rate
of the certificate or certificates, and the number of of interest is fixed in the subscription contract, the
shares transferred. The Commission may require prevailing legal rate shall apply.
corporations whose securities are traded in trading
markets and which can reasonably demonstrate their Section 66. Payment of Balance of Subscription. -
capability to do so to issue their securities or shares Subject to the provisions of the subscription contract,
of stocks in uncertificated or scripless form in the board of directors may, at any time, declare due
accordance with the rules of the Commission. and payable to the corporation unpaid subscription
and may collect the same or such percentage thereof,
No shares of stock against which the corporation in either case, with accrued interest, if any, as it may
holds any unpaid claim shall be transferable in the dem necessary.
books of the corporation.
Payment of unpaid subscription or any percentage
thereof, together with any interest accrued, shall be

28
made on the date specified in the subscription board of directors otherwise orders, said delinquent
contract or on the date stated in the call made by the stock shall be sold at a public auction to such bidder
board. Failure to pay on such date shall render the who shall offer to pay the full amount of the balance
entire balance due and payable and shall make the on the subscription together with accrued interest,
stockholder liable for interest at the legal rate on such costs of advertisement and expenses of sale, for the
balance, unless a different interest at the legal rate smallest number of shares or fraction of a share. The
on such balance, unless a different interest rate is stock so purchased shall be transferred to such
provided in the subscription contract. The interest purchaser in the books of the corporation and a
shall be computed from the date specified, until full certificate for such stock shall be issued in the
payment of the subscription. If no payment is made purchaser's favor. The remaining shares, if any, shall
within thirty (30) days from the said sate, all stocks be credited in favor of the delinquent stockholder who
covered by the subscription shall thereupon become shall likewise be entitled to the issuance of a
delinquent and shall be subject to sale as hereinafter certificate of stock covering such shares.
provided, unless the board of directors orders
otherwise. Should there be no bidder at the public auction who
offers to pay the full amount of the balance on the
Section 67. Delinquency Sale. - The board of subscription together with accrued interest, costs of
directors may, by resolution, order the sale of advertisement, and expenses of sale, for the smallest
delinquent stock and shall specifically state the number of shares or fraction of a share, the
amount due on each subscription plus all accrued corporation may, subject to the provisions of this
interest, and the date, time and place of the sale Code, bid for the same, and the total amount due
which shall not be less than thirty (30) days nor more shall be credited as fully paid in the books of the
than sixty (60) days from the date the stock become corporation. Title to all the shares of stock covered by
delinquent. the subscription shall be vested in the corporation as
treasury shares and may be disposed of by said
Notice of the salem, with a copy of the resolution, corporation in accordance with the provisions of this
shall be sent to every delinquent stockholder either Code.
personally, by registered mail, or through other
means provided in the bylaws. The same shall be Section 68. When Sale May be Questioned. - No
published once a week for two (2) consecutive weeks action to recover delinquent stock sold can be
in newspaper of general circulation in the province or sustained upon the ground of irregularity or defect in
city where the principal office of the corporation is the notice of sale, or in the sale itself of the
located. delinquent stock, unless the party seeking to maintain
such action first pays or tenders to the party holding
Unless the delinquent stockholder pays to the the sum for which the same was sold with interest
corporation, o or before the date specified for the sale from the date of sale at the legal rate. No such action
of the delinquent stock, the balance due on the shall be maintained unless a complaint is filed within
former's subscription, plus accrued interest, costs of six (6) months from the date of sale.
advertisement and expenses of sale, or unless the

29
Section 69. Court Action to Recover Unpaid (b) After verifying the affidavit and other information
Subscription. - Nothing in this Code shall prevent the and evidence with the books of the corporation shall
corporation fro collecting through court action, the publish a notice in a newspaper of general circulation
amount due on any unpaid subscription, with accrued in the place where the corporation has its principal
interest, costs and expenses. office, once a week for three (3) consecutive weeks at
the expense of the registered owner of the certificate
Section 70. Effect of Delinquency. - No delinquent of stock which has been lost, stolen or destroyed. The
stock shall be voted for, be entitled to vote, or be notice shall state the name of the corporation, the
represented at any stockholder's meeting, nor shall name of the registered owner, the serial number of
the holder thereof be entitled to any of the rights of a the certificate, the number of shares represented by
stockholder except the right to dividends in such certificate, and shall state that after the
accordance with the provisions of this Code, until and expiration of one (1) year from the date of the last
unless payment is made by the holder of such publication, if no contest has been presented to the
delinquent stock for the amount due on the corporation regarding the certificate of stock, the
distribution with accrued interest, and the costs and right to make such contest shall be barred and the
expenses of advertisement, if any. corporation shall cancel the lost, destroyed or stolen
certificate of stock, the right to make such contest
shall be barred and the corporation shall cancel the
Section 71. Rights of Unpaid Shares,
lost, destroyed or stolen certificate of stock in its
Nondelinquent. - Holders of subscribed shares not
books. In lieu thereof, the corporation shall issue a
fully paid which are not delinquent shall have all the
new certificate of stock, unless the registered owner
rights of a stockholder.
files a bond or other security as may be required,
effective for a period of one (1) year, for such amount
Section 72. Lost or Destroyed Certificates. The and in such form and with such sureties as may be
following procedure shall be followed by a corporation satisfactory to the board of directors, in which case a
in issuing new certificates of stock in lieu of those new certificate may be issued even before the
which have been lost, stolen or destroyed: expiration of one (1) year period provided herein. If a
contest has been presented to the corporation or if an
(a) The registered owner of a certificate of stock in a action is pending in court regarding the ownership of
corporation or such person's legal representative shall the certificate of stock which has been lost, stolen in
file with the corporation an affidavit in triplicate lieu thereof shall be suspended until the court renders
setting forth, if possible, the circumstances as to how a final decision regarding the ownership of the
the certificate was lost, stolen or destroyed, the certificate of stock which has been lost, stolen ore
number of shares represented by such certificate, the destroyed.
serial number of the certificate and the name of the
corporation which issued the same. The owner of such Except in case of fraud, bad faith, or negligence on
certificate of stock shall also submit such other the part of the corporation and its officers, no action
information and evidence as may be deemed may be brought against any corporation which shall
necessary; and have issued certificate of stock in lieu of those lost,

30
stolen or destroyed pursuant to the procedure above- its object if special, those present and absent, and
described. every act done or ordered done at the meeting. Upon
the demand of a director trustee, stockholder or
TITLE VIII member, the time when any director, trustee,
CORPORATE BOOKS AND RECORDS stockholder or member entered or left the meeting
must be noted in the minutes; and on a similar
demand, the yeas and nays must be taken on any
Section 73. Books to be Kept; Stock Transfer
motion or proposition, and a record thereof carefully
Agent. - Every corporation shall keep and carefully
made. The protest of a director, trustee, stock holder
preserve at its principal office all information relating
or member on any action or proposed action must be
to the corporation including, but not limited to:
recorded in full upon their demand.

(a) The articles of incorporation and bylaws of the

Corporate records, regardless of the form in which
corporation and all their amendments;
they are stored, shall be open to inspection by any
director, trustee, stockholder or member of the
(b) The current ownership structure and voting rights corporation in person or by a representative at
of the corporation, including lists of stockholders or reasonable hours on business days, and a demand in
members group structures, intra-group relations, writing may be made by such director, trustee or
ownership data, and beneficial ownership. stockholder at their expense, for copies of such
records or excerpts from said records. The inspecting
(c) The names and addresses of all the members of or reproducing party shall remain bound by
the board of directors or trustees and the executive confidentiality rules under prevailing laws, such as the
officers; rules on trade secrets or processes under Republic Act
No. 8293, otherwise known as the "Intellectual
(d) A record of all business transactions; Property Code of the Philippines", as amended,
Republic Act No. 10173, otherwise known as the
(e) A record of the resolutions of the board of "Data Privacy Act of 2012" Republic Act No. 8799,
directors or trustees and of the stockholders or otherwise known as "The Securities Regulation Code",
members; and the Rules of Court.

(f) Copies of the latest reportorial requirements A requesting party who is not a stockholder or
submitted to the Commission; and member of record, or is a competitor, director, officer,
controlling stockholder or otherwise represents the
interests of a competitor shall have no right to inspect
(g) The minutes of all meetings of stockholders or
or demand reproduction of corporate records.
members, or of the board of directors or trsutees.
Such minutes shall set forth in detail among others;
the time and the place of the meeting held, how it Any stockholder who shall abuse the rights granted
was authorized, the notice given, the agenda under this section shall be penalized under Section
therefor, whether the meeting was regular or special, 158 of this Code, without prejudice to the provisions

31
of Republic Act No. 8293, otherwise known as the stocks for which subscription has been made, and the
"Intellectual Property Code of the Philippines", as date of payment of any installment; a statement of
amended, and Republic Act No. 10173, otherwise every alienation, sale or transfer of stock made, the
known as the "Data Privacy Act of 2012". date thereof, by and to whom made; and such other
entries as the bylaws may prescribed, The stock and
Any officer or agent of the corporation who shall transfer book shall be kept in the principal office of
refuse to allow the inspection and/or reproduction of the corporation or in the office of its stock transfer
records in accordance with the provisions of this Code agent and shall be open or inspection by any director
shall be liable to such director, trustee, stockholder or or stockholder of the corporation at reasonable hours
member for damages, and in addition, shall be guilty on business days.
of an offense which shall be punishable under Section
161 of this Code: Provided, That if such refusal is A stock transfer agent or one engaged principally in
made pursuant to a resolution or order of the board of the business of registering transfers of stocks in
directors or trustees, the liability under this section behalf of a stock corporation shall be allowed to
for such action shall be imposed upon the directors or operate in the Philippines upon securing a license
trustees who voted for such refusal: Provided, from the Commission and the payment of a fee to be
further,That it shall be a defense to any action under fixed by the Commission, which shall be renewable
this section that the person demanding to examine annually: Provided, That a stock corporation is not
and copy excerpts from the corporation's record or precluded from performing or making transfer of its
minutes of such corporation or of any other own stocks, in which case all the rules and regulations
corporation, or was not acting in good faith or of any imposed on stock transfer agents, except the
other corporation or was not acting in good faith or payment of a license fee herein provided, shall be
for a legitimate purpose in making the demand to applicable: Provided, further, That the Commission
examine or reproduce corporate records or is a may require stock corporations which transfer and/or
competitor, director, officer, controlling stockholder or trade stocks in secondary markets to have an
otherwise represents the interest of a competitor. independent transfer agent.

If the corporation denies or does not act on a demand Section 74. Right to Financial Statements. - A
for inspection and/or reproduction, the aggrieved corporation shall furnish a stockholder or member,
party may report such denial or inaction to the within ten (10) days from receipt of their written
Commission Within five (5) days from receipt of such request, its most recent financial statement, in the
report, the Commission shall conduct a summary form and substance of the financial reporting required
investigation and issue an order directing the by the Commission.
inspection or reproduction of the requested records.
At the regular meeting of stockholders or members,
Stock corporations must also keep a stock and the board of directors or trustees shall present to
transfer book, which shall contain a record of all such stockholders or members a financial report of
stocks in the names of the stockholders alphabetically the operations of the corporation for the preceding
arranged; the installments paid and unpaid on all year, which shall include financial statements, duly

32
signed and certified in accordance with this Code, and incorporation for corporations organized under this
the rules the Commission may prescribe. Code; and

However, if the total assets or total liabilities of the (d) Such other provisions with respect to the
corporation are less than Six hundred thousand pesos proposed merger or consolidation as are deemed
(₱600,000.00), or such other amount as may be necessary or desirable.
determined appropriate by the Department of
Finance, the financial statements may be certified Section 76. Stockholders' or Members' Approval. -
under oath by the treasurer and the president. Upon approval by a majority vote of each of the board
of directors or trustees of the constituent corporations
TITLE IX of the plan of merger or consolidation, the same shall
be submitted for approval by the stockholders or
MERGER AND CONSOLIDATION members of each of such corporations at separate
corporate meetings duly called for the purpose. Notice
of such meetings shall be given to all stockholders or
Section 75. Plan of Merger or Consolidation. - Two
members of the respective corporations in the same
(2) or more corporations may merge into a single
manner as giving notice of regular or special meetings
corporation which shall be one of the constituents
under Section 49 of this Code. The notice shall state
corporations or may consolidate into a new single
the purpose of the meeting and include a copy or a
corporation which shall be the consolidated
summary of the plan of merger or consolidation.
corporation.

The affirmative vote of stockholders representing at

The board of directors or trustees of each corporation,
least two-thirds (2/3) of the outstanding capital stock
party to the merger or consolidation, shall approved a
of each corporation in the case of stock corporations
plan of merger or consolidation, shall approved a plan
or at least two-thirds (2/3) of the members in the
of merger or consolidation, shall approve a plan of
case of nonstock corporations shall be necessary for
merger or consolidation setting forth the following:
the approval of such plan. Any dissenting stockholder
may exercise the right of appraisal in accordance with
(a) The names of the corporations proposing to merge this Code: Provided, That if after the approval by the
or consolidate hereinafter referred to as the stockholders of such plan, the board of directors
constituent corporations; decides to abandon the plan, the right of appraisal
shall be extinguished.
(b) The terms of the merger or consolidation and the
mode of carrying the same into effect; Any amendment to the plan of merger or
consolidation may be made: Provided, That such
(c) A statement of the changes, if any, in the articles amendment is approved by a majority vote of the
of incorporation of the surviving corporation in case of respective boards of directors or trustees of all the
merger; and, in case of consolidation, all the constituents corporations and ratified by the
statements required to be set forth in the articles of affirmative vote of stockholders representing at least

33
two-thirds (2/3) of the outstanding capital stock or of Section 78. Effectivity of Merger or Consolidation. -
two-thirds (2/3) of the members of each of the The articles of merger or of consolidation, signed and
constituents corporations. Such plan, together with certified as required by this Code, shall be submitted
any amendment, shall be considered as the to the Commission for its approval: Provided, That in
agreement of merger or consolidation. the case of merger or consolidation of banks or
banking institutions, loan associations, trust
Section 77. Articles of Merger or Consolidation. - companies, insurance companies, public utilities,
After the approval by the stockholders or members as educational institutions, and other special
required by the preceding section, articles of merger corporations governed by special laws, the favorable
or articles of consolidation shall be executed by each recommendation of the appropriate government
of the constituent corporations, to be signed by the agency shall first be obtained. If the Commission is
president or vice president and certified by the satisfied that the merger or consolidation of the
secretary or assistant secretary of each corporation corporations concerned is consistent with the
setting forth provisions of this Code and existing laws, it shall issue
a certificate approving the articles and plan or merger
or of consolidation, at which time the merger or
(a) The plan of the merger or the plan of
consolidation shall be effective.
consolidation;

If upon investigation, the Commission has reason to

(b) As to stock corporations, the number of shares
believe that the proposed merger or consolidation is
outstanding, or in the case of nonstock corporations,
contrary to or inconsistent with he provisions of this
the number of members;
Code or existing laws, it shall set a hearing to give
the corporations concerned the opportunity to be
(c) As to each corporation, the number of shares or heard. Written notice of the date, time, and place of
members voting for or against such plan, hearing shall be given to each constituent corporation
respectively; at least two (2) weeks before said hearing. The
Commission shall thereafter proceed as provided in
(d) The carrying amounts and fair values of the assets this Code.
and liabilities of the respective companies as of the
agreed cut-off date; Section 79. Effects of Merger or Consolidation. - The
merger of consolidation shall have the following
(e) The method to be used in the merger or effects:
consolidation of accounts of the companies;
(a) The constituent corporations shall become a single
(f) The provisional or pro forma values, as merged or corporation shall become a single corporation which,
consolidated, using the accounting method; and in case of merger, shall be the surviving corporation
designated in the plan of merger; and in case of
(g) Such other information as may be prescribed by consolidation, shall be the consolidated corporation
the Commission. designated in the plan of consolidation;

34
(b) The separate existence of the constituent (b) In case of sale, lease, exchange, transfer,
corporations shall cease, except that of the surviving mortgage, pledge or other disposition of all or
or the consolidated corporation; substantially all of the corporate property and assets
as provided in this Code;
(c) The surviving or the consolidated corporation shall
possess all the right, privileges, immunities and (c) In case of merger or consolidation; and
franchises of each constituent corporation; and all
real or personal property, all receivables due on (d) In case of investment of corporate funds for any
whatever account, including subscriptions to shares purpose other than the primary purpose of the
and other choses in action, and every other interest corporation.
of, belonging to, or due to each constituents
corporation, shall be deemed transferred to and
Section 81. How Right is Exercised. - The dissenting
vested in such surviving or consolidated corporation
stockholder who votes against a proposed corporate
as though such surviving or consolidated corporation
action may exercise the right of appraisal by making a
had itself incurred such liabilities or obligations; and
written demand on the corporation for the payment of
any pending claim, action or proceeding brought by or
the fair value of shares held within thirty (30) days
against any constituent corporation may be
from the date on which the vote was
prosecuted by or against the surviving or consolidated
taken: Provided, That failure to make the demand
corporation. The rights of creditors or liens upon the
within such perios shall be deemed a waiver of the
property of such constituent corporations shall not be
appraisal right. If the proposed corporate action is
impaired by the merger or consolidation.
implemented, the corporation shall pay the
stockholder, upon surrender of the certificate or
TITLE X certificates of stock representing the stockholder's
shares, the fair value thereof as of the day before the
APPRAISAL RIGHT vote was taken excluding any appreciation or
depreciation in anticipation of such corporate action.
Section 80. When the Right of Appraisal May Be
Exercised. - Any stockholder of a corporation shall If, within sixty (60) days form the approval of the
have the right to dissent and demand payment of the corporate action by the stockholders, the withdrawing
fair value of the shares in the following instances: stockholder and the corporation cannot agree on the
fair value of the shares, it shall be determined and
(a) In case an amendment to the articles of appraised by three (3) disinterested persons, one of
incorporation has the effect of changing or restricting whom shall be named by the stockholder, another by
the rights of any stockholder or class of shares, or of the corporation and the third by the two (2) thus
authorizing preferences in any respect superior to chosen. The findings of the majority of the appraisers
those of outstanding shares of any class, or of shall be final, and their award shall be paid by the
extending or shortening the term of corporate corporation within thirty (30) days after such award is
existence; made: Provided, That no payment shall be made to
any dissenting stockholder or unless the corporation

35
has unrestricted retained earnings in its books to refusal of the stockholder or receive payment was
cover such payment: Provided, further, That upon unjustified.
payment by the corporation of the agreed or awarded
price, the stockholder shall forthwith transfer the Section 85. Notation on Certificates; Rights of
shares to the corporation. Transferee. - Within ten (10) days after demanding
payment for shares held, a dissenting stockholder
Section 82. Effect of Demand and Termination of shall submit the certificates of stock representing the
Right. - From the time of demand for payment of the shares to the corporation for notation that such
fair value of a stockholder's shares until either the representing the shares to the corporation for
abandonment of the corporate action involved or the notation that such shares are dissenting shares.
purchase of the said shares by the corporation, all Failure to do so shall, at the option of the corporation,
rights accruing to such shares, including voting and terminate the rights under this Title. If shares
dividend rights shall immediately be restored. represented by the certificates bearing such notation
are transferred, and the certificates consequently
Section 83. When Right to Payment Ceases. - No cancelled, the rights of the transferor as a dissenting
demand for payment under this Title may be stockholder under this Title shall cease and the
withdrawn unless the corporation consents thereto. If, transferee shall have all the rights of a regular
however, such demand for payment is withdrawn with stockholder; and all dividend distributions which
the consent of the corporation, or if the proposed would have accrued on such shares shall be paid to
corporate action is abandoned or rescinded by the the transferee.
corporation or disapproved by the Commission where
such approval is necessary, or if the Commission TITLE XI
where such stockholder is not entitled to the appraisal NONSTOCK CORPORATION
right, then the right of the stockholder to be paid the
fair value of the shares shall cease, the status as the Section 86. Definition. - For purposes of this Code
stockholder shall be restored, and all dividend and subject to its provisions on dissolution, a
distributions which would have accrued on the shares nonstock corporation is one where no part of its
shall be paid to the stockholder. income is distributable as dividends to its members,
trustees, or officers: Provided, That any profit which a
Section 84. Who Bears Costs of Appraisal. - The nonstock corporation may obtain incidental to its
costs and expenses of appraisal shall be borne by the operations shall, whenever necessary or proper, be
corporation, unless the fair value ascertained by used for the furtherance of the purpose of purposes
appraisers is approximately the same as the price for which the corporation was organized, subject to
which the corporation may have offered to pay the the provisions of this Title.
stockholder, in which the corporation may have
offered to pay the stockholder, in which case they The provisions governing the stock corporations,
shall be borne by the latter. In the case of an action when pertinent, shall be applicable to nonstock
to recover such fair value, all costs and expenses corporations except as may be covered by specific
shall be assessed against the corporation, unless the provisions of this Title.

36
Section 87. Purposes. - Nonstock corporations may CHAPTER II
be formed or organized for charitable, religious, TRUSTEES AND OFFICERS
educational, professional, cultural, fraternal, literary,
scientific, social, civic service, or similar purposes. like Section 91. Election and Term of Trustees. - The
trade industry, agricultural and like chambers, or any number of trustees shall be fixed in the articles of
combination thereof, subject to the special provisions incorporation or bylaw which may or may not be more
of this Title governing particular classes of nonstock than fifteen (15). They shall hold office for not more
corporations. than three (3) years until their successors are elected
and qualified. Trustees elected to fill vacancies
CHAPTER I occurring before the expiration of a particular term
MEMBERS shall hold office for the unexpired period.

Section 88. Right to Vote. - The right of the Except with respect to independent trustees of
members of any class or classes to vote may be nonstock corporation shall be elected as trustee.
limited, broadened, or denied to the extent specified
in the articles of incorporation or the bylaws. Unless Unless otherwise provided in the articles of
so limited, broadened, or denied, each member, incorporation or the bylaws, the members may
regardless of class, shall be entitled to one (1) vote. directly elect officers of a nonstock corporation.

Unless otherwise provided in the articles of Section 92. List of Members and Proxies, Place of
incorporation or the bylaws, a member may vote by Meetings. - The corporation shall, at all times, keep a
proxy, in accordance with the provisions of this Code. list of its members and their proxies of record twenty
The bylaws may likewise authorize voting through (20) days prior to any scheduled election. The bylaws
remote communication and/or in absentia. may provide that the members of a nonstock
corporation may hold their regular or special meetings
Section 89. Nontransferability of Membership. - at any place even outside the place where the
Membership in a nonstock corporation and all rights principal office of the corporation is
arising therefrom are personal and nontransferable, located: Provided, That proper notice is sent to all
unless the articles of incorporation or the bylaws members indicating the date, time, and place of
otherwise provide. meeting: Provided, further, That the place of meeting
shall be within the Philippine territory.
Section 90. Termination of Membership. -
Membership shall be terminated in the manner and CHAPTER III
for the cause provided in the articles of incorporation DISRIBUTION OF ASSETS IN NONSTOCK
or the bylaws. Termination of membership shall CORPORATIONS
extinguish all rights of a member in the corporation or
in its property, unless otherwise provided in the Section 93. Rules of Distribution. - The assets of a
articles of incorporation or the bylaws. nonstock corporation undergoing the process of
dissolution for reasons other than those set forth in

37
Section 139 of this Code shall be applied and Section 94. Plan of Distribution of Assets. - A plan
distributed as follows: providing for the distribution of assets, consistent
with the provisions of this Title, may be adopted by a
(a) All liabilities and obligations of the corporation nonstock corporation in the process of dissolution in
shall be paid, satisfied and discharged, or adequate the following manner:
provision shall be made therefor:
(a) The board of trustees shall, by majority vote,
(b) Assets held by the corporation upon a condition adopt a resolution recommending a plan of
requiring return, transfer or conveyed in accordance distribution and directing the submission thereof to a
with such requirements; vote at a regular or special meeting of members
having voting rights;
(c) Assets received and held by the corporation
subject to limitations permitting their use only for (b) Each member entitled to vote shall be given a
charitable religious, benevolent, educational or similar written notice setting forth the proposed plan of
purpose, but not held upon a condition requiring distribution or summary thereof and the date, time
return, transfer or conveyance by reason of the and place of such meeting within the time and in the
dissolution, shall be transferred or conveyed to one manner provided in this Code for the giving of notice
(1) or more corporations, societies or organizations of meetings; and
engaged in activities in the Philippines substantially
similar to those of the dissolving corporation (c) Such plan of distribution shall be adopted upon
according to a plan of distribution adopted pursuant approval of at least two-thirds (2/3) of the members
to this Chapter; having voting rights present or represented by proxy
at such meeting.
(d) Assets other than those mentioned in the
preceding paragraphs, if any, shall be distributed in TITLE XII
accordance with the provisions of the articles of CLOSE CORPORATIONS
incorporation or the bylaws, to the extent that the
articles of incorporation or the bylaws extent that the Section 95. Definition and Applicability of Title. - A
articles of incorporation or the bylaws determine the close corporation, within the meaning of this Code, is
distributive rights of members, or any class or classes one whose articles of incorporation provides that: (a)
of members, or provide for distribution; and all the corporation's issued stock of all classes,
exclusive of treasury shares, shall be held of record
(e) In any other case, assets may be distributed to by not more than a specified number of persons, not
such person, societies, organizations or corporations, exceeding twenty (20); (b) all the issued stock of all
whether or not organized for profit, as may be classes shall be subject to one (1) or more specified
specified in a plan of distribution adopted pursuant to restrictions on transfer permitted by this Title; and (c)
this Chapter. the corporation shall not list in any stock exchange or
make any public offering of its stocks of any class.
Nothwithstanding the foregoing, a corporation shall

38
not be deemed a close corporation when at least two- rather than by a board of directors. So long as this
thirds (2/3) of its voting stock or voting rights is provision continues in effect, no meeting of
owned or controlled by another corporation which is stockholders need be called to elect
not a close corporation within the meaning of this directors: Provided, That the stockholders of the
Code. corporation shall be deemed to be directors for the
purpose of applying the provisions of this Code,
Any corporation may be incorporated as a close unless the context clearly requires
corporation, except mining or oil companies, stock otherwise: Provided, further, That the stockholders of
exchanges, banks, insurance companies, public the corporation shall be subject to all liabilities of
utilities, educational institutions and corporations directors.
declared to be vested with public interest in
accordance with the provisions of this Code. The articles of incorporation may likewise provide that
all officers ro employees or that specified officers or
The provisions of this Title shall primarily govern close employees shall be elected or appointed by the
corporations: Provided, That other Titles shall stockholders, instead of by the board of directors.
primarily govern close corporations: Provided, That
other Titles in this Code shall apply suppletorily, Section 97. Validity of Restrictions on Transfer of
except as otherwise provided under this Title. Shares. - Restrictions on the right to transfer shares
must appear in the articles of incorporation, in the
Section 96. Articles of Incorporation. - The articles of bylaws, as well as in the certificate of stock;
incorporation of a close corporation may provide for: otherwise, the same shall not be binding on any
purchaser in good faith. Said restrictions shall not
more onerous than granting the existing stockholders
(a) A classification of shares or rights, the
or the corporation the option to purchase the shares
qualifications for owning or holding the same, and
of the transferring stockholder may sell their shares
restictions on their transfers, subject to the provisions
to any third person.
of the following section;

Section 98. Effects if Issuance or Transfer of Stock in

(b) A classification of director into one (1) or more
Breach of Qualifying Conditions. -
classes, each of whom may be voted for and elected
solely by a particular class of stock; and
(a) If a stock of a close corporation is issued or
transferred to any person who is not eligible to be a
(c) Greater quorum or voting requirements in the
holder thereof under any provision of the articles of
meetings of stockholders or directors than those
incorporation, and if the certificate for such stock
provided in this Code.
conspicuously shows the qualifications of the persons
entitled to be holders of record thereof, such person
The articles of incorporation of a close corporation is conclusively presumed to have notice of the fact of
may provide that the business of the corporation may the ineligibility to be a stockholder.
provide that the business of the corporation shall be
managed by the stockholders of the corporation

39
(b) If the articles of incorporation of a close (f) The term "transfer", as used in this section, is not
corporation states the number of persons, not limited to a transfeer for value.
exceeding twenty (20), who are entitled to be
stockholders of record, and if the certificate for such (g) The provisions of this section shall not impair any
stock conspicuously states such number, and the right which the transferee may have to either rescind
issuance or transfer of stock to any person would the transfer or recover the stock under any express or
cause the stock to be held by more than such number implied warranty.
of persons, the person to whom such stock is issued
of transferred is conclusively presumed to have notice
Section 99. Agreements by Stockholders. -
of this fact.

(a) Agreements duly signed and executed by and

(c) If a stock certificate of a close corporation
among all stockholders before the formation and
conspicuously shows a restriction on transfer of the
organization of a close corporation shall survive the
corporation has been issued or transferred has or is
incorporation and shall continue to be valid and
conclusively presumed to have notice of the fact that
binding between such stockholders, if such be their
the stock in violation of such restriction, the
intent, to the extent that such agreements are
transferee is conclusively presumed to have notice of
consistent with the articles of incorporation,
the fact that the stock was acquired in violation of the
irrespective of where the provisions of such
restriction.
agreements are contained except those required by
this Title to be embodied in said articles of
(d) Whenever a person to whom stock of a close incorporation.
corporation has been issued or transferred has or is
conclusively presumed under this section to have
(b) A written agreement signed by two (2) or more
notice of: (1) the person's ineligibility to be a
stockholders may provide that in exercising any
stockholder of the corporation; or (2) that the
voting right, the shares held by them shall be voted
transfer of stock would cause the stock of the
as provided or as agreed, or in accordance with a
corporation to be held by more than the number of
procedure agreed upon by them.
persons permitted under its articles of incorporation ;
or (3) that the transfer violates a restriction on
transfer of stock, the corporation may, at its option, (c) No provision in a written agreement signed by the
refuse to register the tansfer in the name of the stockholders, relating to any phase of corporate
transferee. affairs, shall be invalidated between the parties on
the ground that its effect is to make them partners
among themselves.
(e) The provisions of subsection (d) shall not be
applicable if the transfer of stock, though contrary to
subsections (a), (b) or (c), has been consented to by (d) A written agreement among some or all the
all stockholders of the close corporation, or if the stockholders in a close corporation shall not be
close corporation has amended its articles of invalidated on the ground that it relates to the
incorporation in accordance with this Title. conduct of the business and affairs of the corporation
as to restrict or interfere with the discretion or powers

40
of the board of directors: Provided, That such his written objection with the secretary of the
agreement shall impose on the stockholders who are corporation.
parties thereto the liabilities for managerial acts
imposed on directors by this Code. Section 101. Preemptive Right in Close
Corporations. - The preemptive right of stockholders
(e) Stockholders actively engaged in the management in close corporations shall extend to all stock to be
or operation of the business and affairs of a close issues, including reissuance of services, or in payment
corporation shall be held to strict fiduciary duties to or corporate debts, unless the article s of
each other and among themselves. The stockholders incorporation provide otherwise.
shall be personally liable for corporate torts unless the
corporation has obtained reasonably adequate liability Section 102. Amendment of Articles of
insurance. Incorporation. - Any amendment to the articles of
incorporation which seeks to delete or remove any
Section 100. When a Board Meeting is Unnecessary provision required by this Title or to reduce a quorum
or Improperly Held. - Unless the bylaws provide or voting requirement stated in said articles of
otherwise, any action taken by the directors of a close incorporation shall require affirmative vote of at least
corporation without a meeting called properly and two-thirds (2/3) of the outstanding capital, whether
with due notice shall nevertheless be deemed valid if: with or without voting rights, or of such greater
proportion of shares as may be specifically provided
(a) Before or after such action is taken, a written in the articles of incorporation for amending, deleting
consent thereto is signed by all the directors; or or removing any of the aforesaid provisions, at a
meeting duly called for this purpose.
(b) All the stockholders have actual or implied
knowledge of the action and make no prompt Section 103. Deadlocks. Nowithstanding any
objection in writing; or contrary provision in the close corporation's articles of
incorporation, bylaws, or stockholders' agreement, if
the directors or stockholders are so divided on the
(c) The directors are accustomed to take informal
management of the corporation's business and affairs
action with the express or implied acquiescence of all
that the votes required for a corporate action canot
the stockholders; or
be obtained, with the consequence that the business
and affairs that the votes required for that the
(d) All the directors have express or implied business of the corporation can lo longer be
knowledge of the action in question and none of them conducted to the advantage of the stockholders
makes prompt objection in writing. generally, the Commission, upon written petition by
any stockholder, shall have the power to arbitrate the
An action within the corporate powers taken at a dispute. In the exercise o such power, the
meeting held without proper call or notice is deemed Commission shall have authority to make appropriate
ratified by a director who failed to attend, unless after orders, such as: (a) cancelling or altering any
having knowledge thereof, the director promptly files provision contained in the articles of incorporation,

41
bylaws, ot any stockholders' agreement; (b) directors, officers, or those in control of the
cancelling, altering or enjoining a resolution or act of corporation are illegal, fraudulent, dishonest,
the corporation or its board of directors, stockholders, oppressive or unfairly prejudicial to the corporation or
officers, or other person party to the action; (d) any stockholder, or whenever corporate assets are
requiring the purchase at their fair value of shares of being misapplied or wasted.
any stockholder, either by the corporation regardless
of the availability or unrestricted retained earnings in TITLE XIII
its, books or by the other stockholder; (e) appointing SPECIAL CORPORATIONS
a provisional director; (f) dissolving the corporation;
or (g) granting such other relief as the circumstances
CHAPTER I
may warrant.
EDUCATIONAL CORPORATIONS

A provisional director shall be an impartial person who

Section 105. Incorporation. - Education corporations
is neither a stockholder nor a creditor of the
shall be governed by special laws and by the general
corporation or any of its subsidiaries or affiliates, and
provisions of this Code.
whose further qualifications, if any, may be
determined by the Commission. A provisional director
is not a receiver of the corporation and does not have Section 106. Board of Trustees. - Trustees of
the title and powers of a custodian or receiver. A educational institutions organized as nonstock
provisional director shall have all the rights and corporations shall not be less than five (5) nor more
powers of a duly elected director, including the right than fifteen (15): Provided, That the number of
to be notified of and to vote at meetings of directors trustees shall be in multiples of five (5).
until removed by order of the Commission pr by all
the stockholders. The compensation of the provisional Unless otherwise provided in the articles of
director shall be determined by agreement between incorporation or bylaws, the board of trustees of
such provisional director and the corporation. incorporated schools, colleges, or other institutions of
learning shall, as soon as organized, so classify
Section 104. Withdrawal of Stockholder or themeselves that the term of office of one-fifth (1/5)
Dissolution of Corporation. - In addition and without of their number shall expire every year. Trustees
prejudice to other rights and remedies available under thereafter elected to fill vacancies, occurring before
this Title, any stockholder of a close corporation may, the expiration of a particular term shall hold office
for any reason, compel the corporation to purchase only for the unexpired period. Trustees elected
shares held at fair value, which shall not be less than thereafter to fill vacancies caused by expiration of
the par or issued value, when the corporation has term shall hold office for five (5) years. A majority of
sufficient assets in its books to cover its debts and the trustees shall constitute a quorum for the
liabilities exclusive of capital stock: Provided,That any transaction of business. The powers and authority of
stockholder of a close corporation may, by written trustees shall be defined in the bylaws.
petition to the Commission, compel the dissolution of
such corporation whenever any acts of the directors,
officers or those in control whenever any acts of the

42
For institutions organized as stock corporations, the (b) That the rules, regulations and discipline of the
number and term of directors shall be governed by religious denomination, sect or church are consistent
the provisions on stock corporations. with becoming a corporation sole and do not forbid it;

CHAPTER II (c) That such chief archbishop, bishop, priest,

RELIGIOUS CORPORATIONS minister, rabbi or presiding elder is charged with the
administration of the temporalities and the
Section 107. Classes of Religious Corporations. - management of the affairs, estate and properties of
Religious corporations may be incorporated by one the religious denomination, sect or church within the
(1) or more persons. Such corporations may be territorial jurisdiction, so described succinctly in the
classified into corporations sole and religious articles of incorporation;
societies.
(d) The manner by which vacancy occurring in the
Religious corporations shall be governed by this office of chief archbishop, bishop, priest, rabbi or
Chapter and by the general provisions on nonstock presiding elder is required to be filled, according to
corporations insofar as applicable. the rules, regulations or discipline of the religious
denomination, sect or church; and
Section 108. Corporation Sole. - For the purpose of
administering and managing, as trustee, the affairs, (e) The place where the principals office of the
property and temporalities of any religious corporation sole is to be established and located,
denomination, sect or church, a corporation sole may which place must be within the territory of the
be formed by the chief archbishop, bishop, priest, Philippines.
minister, rabbi, or other presiding elder of such
religious denomination, sect or church. The articles of incorporation may include any other
provisions not contrary to law for the regulation of the
Section 109. Articles of Incorporation. - In order to affairs of the corporation.
become a corporation sole, the chief archbishop,
bishop, priest, minister, rabbi, or presiding elder of Section 110. Submission of the Articles of
any religious denomination, sect or church must file Incorporation. - The articles of the incorporation must
with the Commission articles of incorporation setting be verified, bu affidavit or affirmation of the chief
forth the following: archbishop, bishop, priest, minister, rabbi, presiding
elder, as the case may be, and accompanied by a
(a) That the applicant chief archbishop, bishop, priest. copy of the commission, certificate of election or
Minister, rabbi, or presiding elder represents the letter of appointment of such chief archbishop,
religious denomination, set or church which desires to bishop, priest, minister, rabbi or presiding elder, as
become a corporation sole; the case may be, and accompanied by a copy of the
commission, certificate of election or letter of
appointment of such chief archbishop, bishop, priest,

43
minister, rabbi, or presiding elder, duly certified to be denomination, set or church, religious society, or
correct by any notary public. colder concerned represented by such corporation
sole regulate the method of acquiring, holding,
From and after filing with the Commission of the said selling, and mortgaging real estate and personal
articles of incorporation, verified by affidavit or property, such rules, regulations and discipline shall
affirmation, and accompanied by the documents govern, and the intervention of the courts shall not be
mentioned in the preceding paragraph, such chief necessary.
archbishop, bishop, priest, minister, rabbi, or
presiding elder shall become a corporation sole and all Section 112. Filling of Vacancies. - The successor in
temporalities, estate and properties of the religious the office of any chief archbishop, bishop, priest,
denomination, sect or church theretofore minister, rabbi, or presiding elder in a corporation
administered or manage as such chief archbishop, sole shall become the corporation sole on their
bishop, priest, minister, rabbi, or presiding elder shall accession to office and shall be permitted to transact
be personally held in trust as a corporation sole, for business as such upon filing a copy of their
the use, purpose, exclusive benefit and on behalf of commission, certificate of election, or letters of
the religious denomination, sect or church, including appointment, duly certified by any notary public with
hospitals, schools, colleges, orphan asylums the Commission.
parsonages, and cemeteries thereof.
During any vacancy in the office of chief archbishop,
Section 111. Acquisition and Alienation of Property. - bishop, priest, minister, rabbi, or presiding elder of
A corporation sole may purchase and hold real estate any donomination, sect or church incorporated as a
and personal property for each church, charitable, corporate sole, the person or persons authorized by
benevolent, or educational purposes, and may the rules, regulations or discipline of the religious
received bequests or gifts for such purposes. Such denomination, sect or church represented by the
corporation may sell or mortgage real property held corporation sole to administer the temporalities and
by it by obtaining an order for that purpose from the manage the affairs, estate, and properties of the
Regional Trial Court of the province where the corporation sole shall exercise all the powers and
property is situated upon proof that the notice of the authority of the corporation sole during such vacancy.
application for leave to sell or mortgage has been
made through publication or as directed by the Court, Section 113. Dissolution. - A corporation sole may
and that it is in the interest of the corporation that be dissolve and its affairs settled voluntarily by
leave to sell or mortgage be granted. The application submitting to the Commission a verified declaration of
for leave to sell or mortgage must be made by dissolution, setting forth:
petition, duly verified, by the chief archbishop,
bishop, priest, minister, rabbi, or presiding elder
(a) The name of the corporation;
acting as corporation sole, and may be opposed by
any member of the religious denomination, sect or
church represented by the corporation (b) The reason of dissolution and winding up;
sole: Provided, That in cases where the rules,
regulations, and discipline of the religious

44
(c) The authorization for the dissolution of the (b) That at least two-thirds (2/3) of its membership
corporation by the particular religious denomination, has given written consent or has voted to incorporate,
sect or church; and at a duly convened meeting of the body;

(d) The names and addresses of the persons who are (c) That the incorporation of the religious society or
to supervise the winding up of the affairs of the religious order, or diocese, synod, or district
corporation. organization is not forbidden by competent, authority
or by the Constitution, rules, regulations or discipline
Upon approval of such declaration of dissolution by of the religious denomination, sect or church of which
the Commission, the corporation shall cease to carry it forms part;
on its operations except for the purpose of winding up
its affairs. (d) That the religious society or religious order, or
diocese, synod, or district organization desires to
Section 114. Religious Societies. - Unless forbidden incorporate for the administration of its affairs,
by the competent authority, the Constitution, properties and estate;
pertinent, rules,regulations, or discipline of the
religious denomination, sect or church of which it is (e) The place within the Philippines where the
part, any religious society, religious order, diocese, or principal office of the corporation is to be established
synod, or district organization of any religious and located; and
denomination, sect or church, may, upon written
consent and/or by an affirmative vote at a meeting (f) The names, nationalities, and residence addresses
called for the purpose of at least two-thirds (2/3) of of the trustees, not less than five (5) no more than
its membership, incorporate for the administration of fifteen (15), elected by the religious society or
its temporalities or for the management of its affairs, religious order, or the diocese, synod or district
properties, and estate by filing the management of its organization to serve for the first year or such other
affairs, properties, and estate by filing with the period as may be prescribed by the laws of the
Commission, articles of incorporation verified by the religious society or religious order, or of the diocese,
affidavit of the presiding elder, secretary, or clerk or synod, or district organization.
other member of such religious society or religious
denomination, sect or church, setting forth the
CHAPTER III
following:
ONE PERSON CORPORATIONS

(a) That the religious society or religious order, or

Section 115. Applicability of Provisions to One
diocese, synod, or district organization is a religious
Person Corporations. - The provisions of this Title
organization of religious denomination, sect or
shall primarily apply to One Person Corporations.
church;
Other provisions of this Code apply suppletory, except
as otherwise provided in this Title.

45
Section 116. One Person Corporation. - A One Section 119. Bylaws. - The One Person Corporation
Person Corporation is a corporation with a single is not required to submit and file corporate bylaws.
stockholder: Provided, That only a natural person,
trust, or an estate may form a One Person Section 120. Display of Corporate Name. - A One
Corporation. Person Corporation shall indicate the letters "OPC"
either below or at the end of its corporate name.
Banks and quasi-banks, preneed, trust, insurance,
public and publicly-listed companies, and non- Section 121. Single Stockholder as Director,
chartered government-owned and -controlled President. - The single stockholder shall be the sole
corporations may not incorporate as ONe Person director and president of the One Person Corporation.
Corporations: Provided, further, That a natural person
who is licensed to exercise a profession may not
Section 122. Treasurer, Corporate Secretary, and
organize as a One Person Corporation for the purpose
Other Officers. - Within fifteen (15) days from the
of exercising such profession except as otherwise
issuance of its certificate or incorporation, the One
provided under special laws.
Person Corporation shall appoint a treasurer,
corporate secretary, and other officers as it may
Section 117. Minimum Capital Stock Not Required deem necessary, and notify the Commission thereof
for One Person Corporation. - A One Person within five (5) days from appointment.
Corporation shall not be required to have a minimum
authorized capital stock except as otherwise provided
The single stockholder may not be appointed as the
by special law.
corporate secretary.

Section 118. Articles of Incorporation. A One Person

A single stockholder who is likewise the self-appointed
Corporation shall file articles of incorporation in
treasurer of the corporation shall give a bond to the
accordance with the requirements under Section 14 of
Commission in such a sum as may be
this Code. It shall likewise substantially contain the
required: Provided, That the said
following:
stockholder/treasurer shall undertake in writing to
faithfully administer the One person Corporation's
(a) If the single stockholder is a trust or an estate, funds to be received as treasurer, and to disburse and
the name, nationality, and residence of the trustee, invest the same according to the articles of
administrator, executor, guardian, conservator, incorporation as approved by the Commission. The
custodian, or other person exercising fiduciary duties bond shall be renewed every two (2) years or as often
together with the proof of such authority to act on as may be required.
behalf of the trust or estate; and
Section 123. Special Functions of the Corporate
(b) Name, nationality, residence of the nominee and Secretary. - In addition to the functions designated by
alternate nominee, and the extent, coverage and the One Person Corporation, the corporate secretary
limitation of the authority. shall:

46
(a) Be responsible for maintaining the minutes book been lawfully determined, and the heors have
and/or records of the corporation; designated one of them or have agreed that the
estate shall be the single stockholder of the One
(b) Notify the nominee or alternate nominee of the Person Corporation.
death or incapacity of the single stockholder, which
notice shall be given no later than five (5) days from The alternate nominee shall sit as director and
such occurrence; manage the One Person Corporation in case of the
nominee's inability, incapacity, death, or refusal to
(c) Notify the Commission of the death of the single discharge the functions as director and manager of
stockholder within five (5) days from such occurrence the corporation, and only for the same term and
and stating in such notice he names, residence under the same conditions applicable to the nominee.
addresses, and contact details of all known legal
heirs; and Section 126. Change of Nominee or Alternate
Nominee. - The singe stockholder may, at any time,
(d) Call the nominee or alternate nominee and the change its nominee and alternate nominee by
known legal heir to meeting and advise the legal heirs submitting to the Commission the names of the new
with regard to, among others, the election of a new nominees and their corresponding written consent.
director, amendment of the articles of incorporation, For this purpose, the articles of incorporation need
and other ancillary and/or consequential matters. not be amended.

Section 124. Nominee and Alternate Nominee. - The Section 127. Minute Book. - A One Person
single stockholder shall designate a nominee and an Corporation shall maintain a minutes book which shall
alternate nominee who shall, in the event of the contain all actions, decisions, and resolutions taken
single stockholder's death or incapacity, take the by the One Person Corporation.
place of the single stockholder as director and shall
manage the corporation's affairs. Section 128. Records in Lieu of Meetings. - When
action is needed on any matter, it shall be sufficient
The articles of incorporation shall state the names, to prepare a written resolution, signed and dated by
residence addresses and contact details of the the single stockholder; and recorded in the minutes
nominee and alternate nominee, as well as the extent book of the One Person Corporation. The date of
and limitations of their authority in managing the recording in the minutes for all purposes under this
affairs of the One Person Corporation until the Code.
stockholder, by self determination, regains the
capacity to assume such duties. Section 129. Reportorial Requirements. - The One
Person Corporation shall submit the following within
In case of death or permanent incapacity of the single such period as the Commission may prescribe:
stockholder, the nominee shall sot as director and
manage the affairs of the One Person Corporation (a) Annual financial statements audited by an
until the legal heirs of the single stockholder have independent certified public

47
accountant: Provided, That if the total assets or total The principles of piercing the corporate veil applies
liabilities of the corporation are less than Six hundred with equal force to One Person Corporations as with
thousand pesos (₱600,000.00), the financial other corporations.
statements shall be certified under oath by the
corporation's treasurer and president; Section 131. Conversion from an Ordinary
Corporation to a One Person Corporation. When a
(b) A report containing explanations or comments by single stockholder acquires all the stocks of an
the president on every qualification, reservation, or ordinary stock corporation, the later may apply for
adverse remark or disclaimer made by the auditor in conversion into a One Person Corporation, subject to
the latter's report; the submission of such documents as the Commission
may require. If the application for conversion is
(c) A disclosure of all self-dealings and related party approved, the Commission shall issue a certificate of
transactions entered into between the One Person filing of amended articles of incorporation reflecting
Corporation and the single stockholder; and the conversion. The One Person Corporation
converted from an ordinary stock corporation shall
succeed the later and be legally responsible for all the
(d) Other reports as the Commission may require.
latter's outstanding liabilities as of the date of
conversion.
For the purpose of this provision, the fiscal year of a
One Person Corporation shall be that set forth in its
Section 132. Conversion from One Person
articles of incorporation or, in the absence thereof,
Corporation to an Ordinary Stock Corporation. - A
the calendar year.
One Person Corporation may be converted into an
ordinary stock corporation after due notice to the
The Commission may place the corporation fail to Commission of such fact and of the circumstances
submit the reportorial requirements three (3) times, leading to the conversion, and after compliance with
consecutively or intermittently, within a period of five all other requirements for stock corporations under
(5) years. this Code and applicable rules. Such notice shall be
filed with the Commission within sixty (60) days from
Section 130. Liability of Single Shareholder. - A sole the occurrence of the circumstances leading to the
shareholder claiming limited liability has the burden of conversion into an ordinary stock corporation. If all
affirmatively showing that the corporation was requirement a have been complied with, the
adequately financed. Commission shall issue a certificate of filing or
amended articles of incorporation reflecting the
Where the single stockholder cannot prove that the conversion.
property of the One Person Corporation is
independent of the stockholder's personal property, In case of death if the single stockholder, the
the stockholder shall be jointly and severally liable for nominee or alternate nominee shall transfer the
the debts and other liabilities of the One Person shares to the duly designated legal heir or estate
Corporation. within seven (7) days from receipt of either an

48
affidavit of heirship or self-adjudication executed by a dissolution of the corporation. Notice of the time,
sole heir, or any other legal document declaring the place and object of th meeting shall be published once
legal heirs of the single stockholder and notify the prior to the date of the meeting in a newspaper
Commission of the transfer. Within sixty (60) days published in the place where the principal office of
from the transfer of the shares, the legal heirs shall said corporation is located, or if general circulation in
notify the Commission of their decision to either wind the Philipines.
up and dissolve the One Person Corporation or
convert it into an ordinary stock corporation. A verified request for dissolution shall be filed with
the Commission stating: (a) the reason for the
The ordinary stock corporation converted from One dissolution; (b) the form, manner, and time when the
Person Corporation shall succeed the latter and be notices were given; (c) names of the stockholders and
legally responsible for all the latter's outstanding directors or members and trustees who approved the
liabilities as of the date of conversion. dissolution; (d) the date, place, and time of the
meeting in which the vote was made; and (e) details
TITLE XIV of publication.
DISSOLUTION
The corporation shall submit the following to the
Section 133. Methods of Dissolution. - A corporation Commission: (1) a copy of the resolution authorizing
formed or organized under the provisions of this Code the dissolution, certified by a majority of the board of
may be dissolved voluntarily or involuntarily. directors or trustees and countersigned by the
secretary of the corporation; (2) proof of publication;
and (3) favorable recommendation form the
Section 134. Voluntarily Dissolution Where No
appropriate regulatory agency, when necessary.
Creditors are Affected. - If dissolution of a corporation
does not prejudice the rights of any creditor having a
claim against it, the dissolution may be effected by Within fifteen (15) days from receipt of the verified
majority vote of the board of directors or trustees, request for dissolution, and in the absence of any
and by a resolution adopted by the affirmative vote of withdrawal within said period, the Commission shall
the stockholders owning at least majority of the approved the request and issue the certificate of
outstanding capital stock or majority of the members dissolution. The dissolution shall take effect only upon
fo a meeting to be held upon the call of the directors the issuance by the Commission of certificate of
or trustees. dissolution.

At least twenty (20) days prior to the meeting, notice No application for dissolution of banks, banking and
shall be given to each shareholder or member of quasi-banking institutions, preneed, insurance and
record personally, by registered mail, or by any trust companies, NSSLAs, pawnshops, and other
means authorized under its bylaws, whether or not financial intermediaries shall be approved by the
entitled to vote at the meeting, in the manner Commission unless accompanied by a favorable
provided in Section 50 of this Code and shall state recommendation of the appropriate government
that the purpose of the meeting is to vote on the agency.

49
Section 135. Voluntary Dissolution Where Creditors Upon five (5) days' notice given after the date on
are Affected; Procedure and Contents of Petition. - which the right to file objections as fixed in the order
Where the dissolution of a corporation may prejudice has expired, the Commission shall proceed to hear
the rights of any creditor; a verified petition for the petition and try any issue raised in the objections
dissolution shall be filed with the Commission. The filed; and if no such obejection is sufficient, and the
petition shall be signed by a majority of the material allegations of the petition are true, it shall
corporation's board of directors or trustees, verified render judgment dissolving the corporation and
by its president or secretary or one of its director or directing such disposition of its assets as justice
trustees, and shall set forth all claims and demands requires, and may appoint a receiver to collect such
against it, and that its dissolution was resolved upon assets and pay the debts of the corporation.
by the affirmative vote of the stockholders
representing at least two-thirds (2/3) of the The dissolution shall take effect only upon the
outstanding capital stock or at least two-thirds (2/3) issuance by the Commission of a certificate of
of the member at a meeting of its stockholder or dissolution.
members called for that purpose. The petition shall
likewise state: (a) the reason for the dissolution; (b)
Section 136. Dissolution by Shortening Corporation
the form, manner, and time when the notices where
Term. - A voluntary dissolution may be effected by
given; and (c) the date, place and time of the
amending the articles of incorporation to shorten the
meeting in which vote was made. The corporation
corporate term pursuant to the provisions of this
shall submit to the Commission the following: (1) a
Code. A copy of the amended articles of incorporation
copy of the resolution authorizing the dissolution,
shall be submitted to the Commission in accordance
certified by a majority of the board of directors or
with this Code.
trustees and countersigned by the secretary of the
corporation; and (2) a list of all its creditors.
Upon the expiration of the shortened term, as stated
in the approved amended articles of incorporation,
If the petition is sufficient in form and substance, the
the corporation shall be deemed dissolve without any
Commission shall by an order reciting the purpose of
further proceedings, subject to the provisions of this
the petition, fix a deadline for filing objections to the
Code on liquidation.
petition which date shall not be less than thirty (30)
days nor more than sixty (60) days after the entry of
the order. Before such date, a copy of the order shall In the case of expiration of corporate term,
be published at lease one week for three (3) dissolution shall automatically take effect on the day
consecutive weeks in a newspaper of general of the following the last day of the corporate term
circulation published in the municipality or city where stated in the articles of incorporation without the
the principal office of the corporation is situated, or if need for the issuance by the Commission of a
there be no such newspaper, then in a newspaper of certificate of dissolution.
general circulation in the Philippines, and a similar
copy shall be posted for three (3) consecutive weeks Section 137. Withdrawal of Request and Petition for
in three (3) public places in such municipality or city. Dissolution. - A withdrawal of the request for
dissolution shall be made in writing, duly verified by

50
any incorporator, director, trustees, shareholder, or (c) Upon receipt of a lawful court order dissolving the
member and signed by the same number of corporation;
incorporators, directors, trustees, shareholder, or
member and signed by the same number of (d) Upon finding by the final judgment that the
incorporators, directors, trustees, shareholders, or corporation procured its incorporation through fraud;
members necessary to request for dissolution as set
forth in the foregoing sections. The withdrawal shall
(e) Upon finding by final judgment that the
be submitted no later than fifteen (15) days
corporation:
from receipt by the Commission of the request for
dissolution, the Commission shall withhold action on
the request for dissolution and shall, after (1) Was created for the purpose of committing,
investigation: (a) make a pronouncement that the concealing or aiding the commission of securities
request for dissolution is deemed withdrawn; (b) violation, smuggling, tax evasion, money laundering,
direct joint meeting of the board of directors or or graft and corrupt practices;
trustees and the stockholders or members for the
purpose of ascertaining whether to proceed with (2) Committed or aided in the commission of
dissolution; or (c) issue such other orders as it may securities violations, smuggling, tax evasion, money
deem appropriate. laundering, or graft and corrupt practices, and its
stockholders knew of the same; and
A withdrawal of the petition for dissolution shall be in
the form of a motion and similar in substance to a (3) Repeatedly and knowingly tolerated the
withdrawal of request for dissolution but shall be commission of graft and corrupt practices or other
verified and filed prior to publication of the order fraudulent or illegal acts by its directors, trustees,
setting the deadline for filing objections to the officers, or employees.
petition.
If the corporation is ordered dissolved by final
Section 138. Involuntary Dissolution. - A corporation judgment pursuant to the grounds set forth in
may be dissolve by the Commission motu propio or subparagraph (e) hereof, its assets, after payment of
upon filing of a verified complaint by any interested its liabilities, shall upon petition of the Commission
party. The following may be grounds for dissolution of with the appropriate court, be forfeited in favor of the
the corporation: national government. Such forfeiture shall be without
prejudice to the rights of innocent stockholders and
(a) None-use of corporate charter as provided under employees for services rendered, and to the
Section 21 of his Code; application for other penalty or sanction under this
Code or other laws.
(b) Continuous inoperation of a corporation as
provided under Section 21 of this Code; The Commission shall give reasonable notice to, and
coordinate with, the appropriate regulatory agency
prior to the involuntary dissolution of companies
under their special regulatory jurisdiction.

51
Section 139. Corporate Liquidation. - Except for any of its assets or property except upon lawful
banks, which shall be covered by the applicable dissolution and after payment of all its debts and
provisions of Republic Act No. 7653, otherwise known liabilities.
as "The New Central Bank Act", as amended, and
Republic Act No. 3591, otherwise known as the TITLE XV
Philippine Deposit Insurance Corporation Charter, as FOREIGN CORPORATIONS
amended, every corporation whose charter expires
pursuant to its article of incorporation is annulled by
Section 140. Definition of Righs of Foreign
forfeiture, or whose corporate existence is terminated
Corporations. - For purposes of this Code, a foreign
in any other manner, shall nevertheless remain as a
corporation is one formed, organized or existing
body corporate for three (3) years after the effective
under laws other than those of the Philippines' and
date of dissolution, for the purpose of prosecuting and
whose laws allow Filipino citizens and corporations to
defending suits by or against it and enabling it to
do business in its own country or State. It shall have
settle and close its affairs, dispose of and convey its
the right to transact business in the Philippines after
property, and distribute its assets, but not for the
obtaining a license for that purpose in accordance
purpose of continuing the business for which it was
with this Code and certificate of authority from the
established.
appropriate government agency.

At any time during said three (3) years, the

Section 141. Application to Existing Foreign
corporation is authorized and empowered to convey
Corporations. - Every foreign corporation which, on
all of its property to trustees for the benefit of
the date of the effectivity of this Code, is authorized
stockholders, members, creditors, and other persons
to do business in the Philippines under a license
in interest. After any such conveyance by the
issued to it shall continue to have such authority
corporation of its property in trust for the benefit of
under the terms and conditions of its license, subject
its stockholders, members, creditors and others in to the provisions of this Code and other special laws.
interest, all interest which the corporation had in the
property terminates, the legal interest vests in the
trustees, and the beneficial interest in the Section 142. Application ofr a License. - A foreign
stockholders, members, creditors or other persons-in- corporation applying for a license to transact buisness
interest. in the Philippines shall submit to the Commission a
copy of its articles of incorporation and bylaws,
certified in accordance with law, and their translation
Except as otherwise provided for in Section 93 and 94
to an official language of the Philippines, if necessary.
of this Code, upon the winding up of corporate affairs,
The application shall be under oath and, unless
any asset distributable to any creditor or stockholder
already stated in its articles of incorporation, shall
or member who is unknown or cannot be found shall
specifically set forth the following:
be escheated in favor of the national government.

(a) The date and term of incorporation;

Except by decrease of capital stock and as otherwise
allowed by this Code, no corporation shall distribute

52
(b) the address including the street number, of the license to transact business in the Philippines, and
principal office of the corporation in the country or determine and assess the fees payable.
State of incorporation;
Attached to the application for license shall be a
(c) The name and address of its resident agent certificate under oath duly executed by the authorized
authorized to accept summons and process in all legal official or officials of the jurisdiction of its
proceedings and all notices affecting the corporation, incorporation, attesting to the fact the laws of the
pending the establishment of a local office; country or State of the applicant allow Filipino citizens
and corporations to do business therein, and that the
(d) The place in the Philippines where the corporation applicant is an existing corporation in good standing.
intends to operate; If the certificate is in a foreign language, a translation
thereof in English under oath of the translator shall be
attached to the application.
(e) The specific purpose or purposes which the
corporation intends to pursue in the transaction of its
business in the Philippines: Provided, That said The application for a license to transact business in
purpose or purposes are those specifically stated in the Philippines shall likewise be accompanied by a
the certificate of authority issued by the appropriate statement under oath of the president or any other
government agency; person authorized by the corporation, showing to the
satisfaction of the Commission and when appropriate,
other governmental agencies that the applicant is
(f) The names and addresses of the present directors
solvent and in sound financial condition, setting forth
and officers of the corporation;
the assets and liabilities of the corporation as of the
date not exceeding one (1) year immediately prior to
(g) A statement of its authorized capital stock and the the filing of the application.
aggregate number of shares which the corporation
has authority to issue, itemized by class, par value of
Foreign banking, financial, and insurance corporations
shares, shares without par value, and series, if any;
shall, in addition to the above requirements, comply
with the provisions of existing laws applicable to
(h) A statement of its outstanding capital stock and them. In the case of all other foreign corporations, no
the aggregate number of shares which the application for license to transact business in the
corporation has issued, itemized by class, par value of Philippines shall be accepted by the Commission
shares, shares without par value, and series, if any; without previous authority from the appropriate
government agency, whether required by law.
(i) A statement of the amount actually paid in; and
Section 143. Issuance of a License. - If the
(j) Such additional information as may be necessary Commission is satisfied that the applicant has
or appropriate in order to enable the Commission to complied with all the requirements of this Code and
determine whether such corporation is entitled to a other special laws, rules and regulations, the
Commission shall issue a license to transact business

53
in the Philippines to the applicant for the purpose or at least ten percent (10%) of their actual market
purposes specified in such license. Upon issuance of value at the time they were deposited, The
the license, such foreign corporation may commence Commission may, at its discretion, release part of the
to transact business in the Philippines and continue to additional deposit if the gross income of the licensee
do so for as long as it retains authority to act as a has decreased, or if the actual market value of the
corporation under the laws of the country or State of total deposit has increased, by more than ten percent
its incorporation, unless such license is sooner (10%) of their actual market value at the time they
surrendered, revoked suspended, or annulled in were deposited. The Commission may, from time to
accordance with this Code or other special laws. time, allow the licensee to make substitute deposits
Within sixty (60) days after the issuance of the of those already on deposit as long as the licensee is
license to transact business in the Philippines, the solvent. Shall licensee is entitled to collect the
licensee, except foreign banking or insurance interest or dividends on such-deposits. In the event
corporations, shall deposit with the Commission for the licensee ceases to do business in the Philippines,
the benefit of present and future creditors of the its deposits shall be returned, upon the licensee's
licensee in the Philippines, securities satisfactorily to application and upon proof to the satisfaction of the
the Commission, consisting of bonds or other Commission that the licensee has no liability to the
evidence of the indebtedness of the Government of Philippine residents, including the Government of the
the Philippines, its political subdivisions and Republic of the Philippines. For purposes of computing
instrumentalities, or of government-owned or - the securities deposits, the composition of gross
controlled corporations and entities, shares of stock income and allowable deductions therefrom shall be in
or debt securities that are registered under Republic accordance with the rules of the Commission.
Act No. 8799, otherwise known as "The Securities
Regulation Code", shares of stock in domestic Section 144. Who May be a Resident Agent. - A
corporations listed in the stock exchange, shares of resident agent may be either an individual residing in
stock in domestic insurance companies and banks, the Philippines or a domestic corporation lawfully
any financial instrument determined suitable by the transacting business in the Philippines: Provided, That
Commission, or any combination thereof with an an individual resident agent must be of good moral
actual market value of at least Five hundred thousand character and of sound financial standing: Provided,
pesos (₱500,000.00) or such other amount that may further, That in case of a domestic corporation who
be set by the Commission: Provided, however, That will act as a resident agent, it must be likewise be of
within six (6) months after each fiscal year of the sound financial standing and must show proof that it
licensee, the Commission shall require the licensee to is in good standing as certified by the Commission.
deposit additional securities or financial instruments
equivalent in actual market value to two percent (2%)
Section 145. Rsident Agent; Service of Process. - As
of the amount by which the licensee's gross income
a condition to the issuance of the license for a foreign
for that fiscal year exceeds Ten million pesos
corporation to transact business in the Philippines,
(₱10,000,000.00). The Commission shall also require
such corporation shall file with he Commission a
the licensee to deposit additional securities financial
written power of attorney designating a person who
instruments if the actual market of the deposited
must be a resident of the Philippines, on whom
securities or financial instruments has decreased by
summons and other legal processes may be served in

54
all actions or other legal processes may be served in Section 146. Law Applicable. - A foreign corporation
all actions or legal proceedings against such lawfully doing business in the Philippines shall be
corporation, and consenting that service upon such bound by all laws, rules and regulations applicable to
resident agent shall be admitted and held as valid if domestic corporations of the same class, except those
served upon the duly authorized officers of foreign which provide for the creation, formation,
corporation shall likewise execute and file with the organization or dissolution of corporations or those
Commission an agreement or stipulation, executed by which fix the relations, liabilities, responsibilities, or
the proper authorities of said corporation, in form and duties of stockholders, members or officers of
substance as follows: corporations to each other or to the corporation.

"The (name of foreign corporation) hereby stipulates Section 147. Amendments to Articles of
and agrees, in consideration of being granted a Incorporation or Bylaws of Foreign Corporations. -
license to transact business in the Philippines, that if Whenever the article of incorporation or bylaws of a
the corporation shall cease to transact business in the foreign corporation authorized to transact business in
Philipines, or shall be without any resident agent in the Philippines are amended, such foreign corporation
the Philippines on whom any summons or other legal shall, within sixty (60) days after the amendment
process may be served, then service of any summons becomes effective, file with the Commission, and in
or other legal process may be made upon the proper cases, with the appropriate government
Commission in any action or proceeding arising out of agency, a duly authenticated copy of the amendment
any business or transaction which occurred in the articles of incorporation or bylaws, indicating clearly
Philippines and such service shall have the same force in capital letters or underscoring the change or
and effect as if made upon the duly authorized changes made, duly certified by the authorized official
officers of the corporation at its home office." or officials of the country or State of incorporation.
Such filing shall not in itself enlarge or alter the
Whenever such service of summons or other process purpose or purposes for which such corporation is
is made upon the Commission, the Commission shall, authorized to transact business in the Philippines.
within ten (10) days thereafter, transmit by mail a
copy of such summons or other legal process to the Section 148. Amended License. - A foreign
corporation at its home or principal office. The corporation authorized to transact business in the
sending of such copy by the Commission shall be Philippines shall obtain an amended license in the
necessary part of and shall complete such service. All event it changes its corporate name, or desires to
expenses incurred by the Commission for such service pursue other or additional purposes in the Philippines,
shall be paid in advance by the party at whose by submitting an application with the Commission,
instance the service is made. favorably endorsed by the appropriate government
agency in the proper cases.
It shall be the duty of the resident agent to
immediately notify the Commission in writing of any Section 149. Merger or Consolidation Involving a
change in the resident agent's address. Foreign Corporation Licensed in the Philippines. - One
or more foreign corporations authorized to transact

55
business in the Philippines may merge or consolidate (a) Failure to file its annual report or pay any fees as
with any domestic corporation or corporations if required by this Code;
permitted under Philippine laws and by the law of its
incorporation: Provided, That the requirements on (b) Failure to appoint and maintain a resident agent
merger or consolidation as provided in this Code are in the Philippines as required by this Title;
followed.
(c) Failure, after change of its resident agent or
Whenever a foreign corporation authorized to transact address, to submit to the Commission a statement of
business in the Philippines shall be a party to merger such change as required by this Title;
or consolidation in its home country or State as
permitted by the law authorizing its incorporation,
(d) Failure to submit to the Commission an
such foreign corporation shall, within sixty (60) days
authenticated copy of any amendment to its articles
after the effectivity of such merger or consolidation,
of incorporation or bylaws or of any articles of merger
file with the Commission, and in proper cases, with
or consolidation within the time prescribed by this
the appropriate government agency, a copy of the
Title;
articles of merger or consolidation was
effected: Provided, however, That if the abosrbed
corporation is the foreign corporation doing business (e) A misrepresentation of any material mater in any
in the Philippines, the latter shall at the same time file application, report, affidavit or other document
a petition for withdrawal of its license in accordance submitted by such corporation pursuant to this Title;
with this Title.
(f) Failure to pay any and all taxes, imposts,
Section 150. Doing Business Without a License. - No assessments or penalties, if any, lawfully due to the
foreign corporation transacting business in the Philippine Government or any of its agencies or
Philippines without a license, or its successor or political subdivisions;
assigns, shall be permitted to maintain or intervene in
any action, suit or proceeding in any court or (g) Transacting business in the Philippines outside of
administrative agency of the Philippines; but such the purpose or purposes for which such corporation is
corporation may be sued or proceeded against before authorized under its license;
the Philippin courts or administrative tribunals on any
valid cause of action recognized under Philippine laws. (h) Transacting business in the Philippines as agent of
or acting on behalf of any foreign corporation or
Section 151. Revocation of License. - Without entity not duly licensed to do business in the
prejudice to other grounds provided under special Philippine; or
laws, the license of a foreign corporation to transact
business in the Philippines may be revoked or (i) Any other ground as would render it unfit to
suspended by the Commission upon any of the transact business in the Philippines.
following grounds:

56
Section 152. Issuance of Certificate of Revocation. - The Commission may publish its findings, orders,
Upon the revocation of the license to transact opinions, advisories, or information concerning any
business in the Philippines, the Commission shall such violation, as may be relevant to the general
issue a corresponding certificate of revocation, public or to the parties concerned, subject to the
furnishing a copy thereof to the appropriate provisions of Republic Act No. 10173, otherwise
government agency in the proper cases. known as the "Data Privacy Act of 2012", and other
pertinent laws.
The Commission shall also mail the notice and copy of
the certificate of revocation to the corporation, at its The Commission shall give reasonable notice to and
registered office in the Philippines. coordinate with the appropriate regulatory agency
prior to any such publication involving companies
Section 153. Withdrawal of Foreign Corporations. - under their regulatory jurisdiction.
Subject to existing laws and regulations, a foreign
corporation licensed to transact business in the Section 155. Administration of Oaths, Subpoena of
Philippines may be allowed to withdraw from the Witnesses and Documents. - The Commission,
Philippines by filing a petition for withdrawal of through its designated officer, may administer oaths
license. No certificate of withdrawal shall be issued by and affirmations, issue subpoena and subpoena duces
the Commission unless all the following requirements tecum, take testimony in any inquiry or investigation,
are met: and may perform other acts necessary to the
proceedings or to the investigation.
(a) All claims which have accrued in the Philippines
have been paid, compromised or settled; Section 156. Cease and Desist Orders. - Whenever
the Commission has reasonable basis to believe that a
(b) All taxes, imposts, assessments, and penalties, if person has violated, or is about to violate this Code, a
any, agencies or political subdivisions, have been rule, regulation, or order of the Commission, it may
paid; and direct such person to desist from committing the act
constituting the violation.
(c) The petition ofr withdrawal of license has been
published once a week for three (3) consecutive The Commission may issue a cease and desist
weeks in a newspaper of general circulation in the order ex parte to enjoin an act or practice which is
Philippines. fraudulent or can be reasonably expected to cause
significant, imminent, and irreparable danger or injury
to public safety or welfare. The ex parte order shall be
TITLE XVI
valid for a maximum period of twenty (20) says,
INVESTIGATIONS, OFFENSES, AND PENALTIES
without prejudice to the order being made permanent
after due notice and hearing.
Section 154. Investigation and Prosecution of
Offenses. - The Commission may investigate an
Thereafter the Commission may proceed
alleged violation of this Code, or of a rule, regulation,
administratively against such person in accordance
or order of the Commission.

57
with Section 158 of this Code, and/or transmit (d) Dissolution of the corporation and forfeiture of its
evidence to the Department of Justice for preliminary assets under the conditions in Title XIV of this Code.
investigation or criminal prosecution and/or initiate
criminal prosecution for any violation of this Code, Section 159. Unauthorized Use of Corporate Name;
rule, or regulation. Penalties. - The unauthorized use of corporate name
shall be punished with a fine ranging from Ten
Section 157. Contempt. - Any person who, without thousand pesos (₱10,000.00) to Two hundred
justifiable cause, fails or refuses to comply with any thousand pesos (₱200,000.00).
lawful order, decision, or subpoena issued by the
Commission shall, after due notice and hearing, be Section 160. Violation of Disqualification Provision;
held in contempt and fined in an amount not Penalties. - When, despite the knwoledge of the
exceeding Thirty thousand pesos (₱30,000.00). When existence of a ground for disqualification as provided
the refusal amounts to clear and open defiance of the in Section 26 of this Code, a director, trustee or
Commission's order, decision, or subpoena, the officer willfully holds office, or willfully conceals such
Commission may impose a daily fine of One thousand disqualification, such director, trustee or officer shall
pesos (₱1,000.00) until the order, decision, be punished with a fine ranging from Ten thousand
or subpoena is complied with. pesos (₱10,000.00) to Two hundred thousand pesos
(₱200,000.00) at the discretion of the court, and shall
Section 158. Administrative Sanctions. - If, after due be permanently disqualified from being a director,
notice and hearing, the Commission finds that any trustee or officer of any corporation. When the
provision of this Code, rules or regulations, or any of violation of this provision is injurious or detrimental to
the Commission's orders has been violated, the the public, the penalty shall be a fine ranging from
Commission may impose any or all of the following Twenty thousand pesos (₱20,000.00) to Four hundred
sanctions, taking into consideration the extent of thousand pesos (₱400,000.00).
participation, nature, effects, frequency and
seriousness of the violation: Section 161. Violation of Duty to Maintain Records,
to Allow their Inspection or Reproduction; Penalties. -
(a) Imposition of a fine ranging from Five thousand The unjustified failure or refusal by the corporation,
pesos (₱5,000.00) to Two million pesos or by those responsible for keeping and maintaining
(₱2,000,000.00), and not more that One thousand corporate records, to comply with Section s 45, 73,
pesos (₱1,000.00) for each day of continuing violation 92, 128, 177 and other pertinent rules and provisions
but in no case to exceed Two million pesos of this Code on inspection and reproduction of records
(₱2,000,000.00); shall be punished with a fine ranging from Ten
thousand pesos (₱10,000.00) to Two hundred
(b) Issuance of the permanent cease and desist thousand pesos (₱200,000.00), at the discretion of
order; the court, taking into consideration the seriousness of
the violation and its implications. When the violation
of this provision is injurious or detrimental to the
(c) Suspension or revocation of the certificate of
public, the penalty is a fine ranging from Twenty
incorporation; and

58
thousand pesos (₱20,000.00) to Four hundred Section 164. Obtaining Corporate Registration
thousand pesos (₱400,000.00). Through Fraud; Penalties. - Those responsible for the
formation of a corporation through fraud, or who
The penalties impose under this section shall be assisted directly or indirectly therein, shall be
without prejudice to the Commission's exercise of its punished with a fine ranging from Two hundred
contempt powers under Section 157 hereof. thousand pesos (₱200,000.00) to Two million pesos
(₱2,000,000.00). When the violation of this provision
is injurious or detrimental to the public, the penalty is
Section 162. Willful Certification of Incomplete,
a fine ranging from Four hundred thousand pesos
Inaccurate, False; or Misleading Statements or
(₱400,000.00) to Five million pesos, (₱5,000,000.00).
Reports; Penalties. - Any person who willfully certifies
a report required under this Code, knowing that
the same contains incomplete, inaccurate, false, or Section 165. Fraudulent Conduct of Business;
misleading information or statements, shall be Penalties. - A corporation that conduct its business
punished with a fine ranging from Twenty thousand through fraud shall be punished with a fine ranging
pesos (₱20,000.00) to Two hundred thousand pesos from Two hundred thousand pesos (₱200,000.00) to
(₱200,000.00). When the wrongful certification is Two million pesos (₱2,000,000.00). When the
injurious or detrimental to the public, the auditor or violation of this provision is injurious or detrimental to
the responsible person may also be punished with a the public, the penalty is a fine ranging from Four
fine ranging from Forty thousand pesos (₱40,000.00) hundred thousand pesos (₱400,000.00) to Five million
to Four hundred thousand pesos (₱400,000.00). pesos (₱5,000,000.00).

Section 163. Independent Auditor Collusion; Section 166. Acting as Intermediaries for Graft and
Penalties. - An independent auditor who, in collusion Corrupt Practices; Penalties. - A corporation used for
with the corporation's directors or representatives, fraud, or for committing or concealing graft and
certifies the corporation's financial statements despite corrupt practices as defined under pertinent statutes,
its incompleteness or inaccuracy, its failure to give a shall be liable for a fine ranging from One hundred
fair and accurate presentation of the corporation's thousand pesos (₱100,000.00) to Five million pesos
condition, or despite containing false or misleading (₱5,000,000.00).
statements, shall be punished with a fine ranging
from Eighty thousand pesos (₱80,000.00) to Five When there is a finding that any of its directors,
hundred thousand pesos (₱500,000.00). When the officers, employees, agents, or representatives are
statement or report certified is fraudulent, or has the engaged in graft and corrupt practices, the
effect of causing injury to the general public, the corporation's failure to install:
auditor or responsible officer may be punished with a
fine ranging from One hundred thousand pesos (a) safeguards for the transparent and lawful delivery
(₱100,000.00) to Six hundred thousand pesos of services; and (b) policies, code of ethics, and
(₱600,000.00). procedures against graft and corruption shall
be prima facie evidence of corporate liability under
this section.

59
Section 167. Engaging Intermediaries for Graft and Commission; Provided, That such dissolution shall not
Corrupt Practices; Penalties. - A corruption that preclude the institution of appropriate action against
appoints an intermediary who engages in graft and the director, trustee, or officer of the corporation
corrupt practices for the corporation's benefit or responsible for said violation: Provided, further, That
interest shall be punished with a fine ranging from nothing in this section shall be construed to repeal the
One hundred thousand pesos (₱100,000.00) to One other causes for dissolution of corporation provided in
million pesos (₱1,000,000.00). this Code.

Section 168. Tolerating Graft and Corrupt Practices; Liability for any of the foregoing offenses shall be
Penalties. - A director, trustee, or officer who separate from any other administrative, civil, or
knowingly fails to sanction, report, or file the criminal liability under this Code and other laws.
appropriate action with proper agencies, allows or
tolerates the graft and corrupt practices or fraudulent Section 171. Liability of Directors, Trustees, Officers,
acts committed by a corporation's directors, trustees, or Other Employees. - If the offender is a corporation,
officers, or employees shall be punished with a fine the penalty may, at the discretion of the court, be
ranging from Five hundred thousand pesos imposed upon such corporation and/or upon its
(₱500,000.00) to One million pesos (₱1,000,000.00). directors, trustees, stockholders. members, officers,
or employees responsible for the violation or
Section 169. Retaliation Against Whistleblowers. - A indispensable to its commission.
whistleblower refers to any person who provides
truthful information relating to the commission or Section 172. Liability of Aiders and Abettors and
possible commission of any offense or violation under Other Secondarr Liability. - Anyone who shall aid,
this Code. Any person who, knowingly and with intent abet, counsel, command, induce, or cause any
to retaliate, commits acts detrimental to a violation of this Code, or any rule regulation or order
whistleblower such as interfering with the lawful of the Commission shall be punished with a fine not
employment or livelihood of the whistleblower, shall, exceeding that imposed on the principal offenders, at
at the discretion of the court, be punished with a fine the discretion of the court, after taking into account
ranging from One hundred thousand (₱100,000.00) to their participation in the offense.
One million (₱1,000,000.00).
TITLE XVII
Section 170. Other Violations of the Code; Separate MISCELLANEOUS PROVISIONS
Liability. - Violation of any of the other provisions of
this Code or its amendments not otherwise
Section 173. Outstanding Capital Stock Defined. -
specifically penalized therein shall be punished by a
The term "outstanding capital stock", as used in this
fine of not less than Ten thousand pesos
Code, shall mean the total shares of stock issued
(₱10,000.00) but not more than One million pesos
under binding subscription contracts to subscribers or
(₱1,000,000.00). If the violation is committed by a
stockholders, whether fully or partially paid, except
corporation, the same may, after notice and hearing,
treasury shares.
be dissolved in appropriate proceedings before the

60
Section 174. Designation of Governing Boards. - The affinity, or by close business interests, in corporations
provisions of specific provisions of this Code to the declared to be vested with public interest pursuant to
contrary notwithstanding, nonstock or special the provisions of this section, or whenever necessary
corporations may, through their articles of to prevent anti-competitive practices as provided in
incorporation pr their bylaws, designated their Republic Act No. 10667, otherwise known as the
governing boards by any other than as board of "Philippine Competition Act", or to implement national
trustees. economic policies designed to promote general
welfare and economic development, as declared in
Section 175. Collection and Use of Registration, laws, rules and regulations.
Incorporation and Other Fees. - For a more
implementation of this Code, the Commission os In recommending to the Congress which corporations,
hereby authorized to collect, retain and use fees, businesses and industries will be declared as vested
fines, and other charges pursuant to this Code and its with public interest, and in formulating proposals for
rules and regulations. The amount collected shall be limitations on stock ownership, the NEDA shall
deposited and maintained in a separate account which consider the type and nature of the industry, size of
shall form a fund for its modernization and to the enterprise, economies of scale, geographic
augment its operational expenses such as, but not location, extent of Filipino ownership, labor intensity
limited to, capital outlay, increase in compensation of the activity, export potential, as well as other
and benefits comparable with prevailing rates in the factors which are germane to the realization and
private sector, reasonable employee allowance, promotion of business and industry.
employee health care services, and other insurance,
employee career advancement and Section 177. Reportorial Requirements of
professionalization, legal assistance, seminars, and Corporations. - Except as otherwise provided in this
other professional fees. Code or in the rules issued by the Commission, every
corporation, domestic or foreign, doing business in
Section 176. Stock Ownership in Corporations. - the Philippines shall submit to the Commission:
Pursuant to the duties specified by Article XIV of the
Constitution, the National Economic and Development (a) Annual financial statements audited by an
Authority (NEDA) shall, from time to time, determine independent certified public
if the corporate vehicle has been used by any accountant: Provided, That if the total assets or total
corporation, business, or industry to frustrate the liabilities of the corporation are less than Six hundred
provisions of this Code or applicable laws, and shall thousand pesos (₱600,000.00), the financial
submit to Congress, whenever deemed necessary, a statements shall be certified under oath by the
report of its findings, including recommendations for corporation’s treasurer or chief financial officer; and
their prevention or correction.
(b) A general information sheet.
The Congress of the Philippines may set maximum
limits for stock ownership of individuals or groups of
Corporations vested with public interest must also
individuals related to each other by consanguinity,
submit the following:

61
(1) A director or trustee compensation report; and certificate of incorporation, without prejudice to the
imposition of other penalties and sanctions under this
(2) A director or trustee appraisal or performance Code.
report and the standards or criteria used to assess
each, director or trustee. All interrogatories propounded by the Commission
and the answers thereto, as well as the results of any
The reportorial requirements shall be submitted examination made by the Commission or by any other
annually and within such period as may be prescribed official authorized by law to make an examination of
by the Commission. the operations, books, and records of any
corporation, shall be kept strictly confidential, except
when the law requires the same to be made public,
The Commission may place the corporation under
when necessary for the Commission to take action to
delinquent status in case of failure to submit the
protect the public or to issue orders in the exercise of
reportorial requirements three (3) times,
its powers under this Code, or where such
consecutively or intermittently, within a period of five
interrogatories, answers or results are necessary to
(5) years. The Commission shall give reasonable
be presented as evidence before any court.
notice to and coordinate with the appropriate
regulatory agency prior to placing on delinquent
status companies under their special regulatory Section 179. Powers, Functions, and Jurisdiction of
jurisdiction. the Commission. - The Commission shall have the
power and authority to:
Any person required to file a report with the
Commission may redact confidential information from (a) Exercise supervision and jurisdiction over all
such required report: Provided, That such confidential corporations and persons acting on their behalf,
information shall be filed in a supplemental report except as otherwise provided under this Code;
prominently labelled "confidential", together with a
request for confidential treatment of the report and (b) Pursuant to Presidential Decree No. 902-A, retain
the specific grounds for the grant thereof. jurisdiction over pending cases involving intra-
corporate disputes submitted for final resolution. The
Section 178. Visitorial Power and Confidential Nature Commission shall retain jurisdiction over pending
of Examination Results. - The Commission shall suspension of payment/rehabilitation cases filed as of
exercise visitorial powers over all corporations, which 30 June 2000 until finally disposed;
powers shall include the examination and inspection
of records, regulation and supervision of activities, (c) Impose sanctions for the violation of this Code, its
enforcement of compliance, and imposition of implementing rules and orders of the Commission;
sanctions in accordance with this Code.
(d) Promote corporate governance and the protection
Should the corporation, without justifiable cause, of minority investors, through, among others, the
refuse or obstruct the Commission’s exercise of its issuance of rules and regulations consistent with
visitorial powers, the Commission may revoke its international best practices;

62
(e) Issue opinions to clarify the application of laws, (n) Impose or recommend new modes by which a
rules and regulations; stockholder, member, director, or trustee may attend
meetings or cast their votes, as technology may
(f) Issue cease and desist orders ex parte to prevent allow, taking into account the company’s scale,
imminent fraud or injury to the public; number of shareholders or members, structure, and
other factors consistent with the basic right of
corporate suffrage;
(g) Hold corporations in direct and indirect contempt;

(o) Formulate and enforce standards, guidelines,

(h) Issue subpoena duces tecum and summon
policies, rules and regulations to carry out the
witnesses to appear in proceedings before the
provisions of this Code; and
Commission;

(p) Exercise such other powers provided by law or

(i) In appropriate cases, order the examination,
those which may be necessary or incidental to
search and seizure of documents, papers, files and
carrying out the powers expressly granted to the
records, and books of accounts of any entity or
Commission.
person under investigation as may be necessary for
the proper disposition of the cases, subject to the
provisions of existing laws; In imposing penalties and additional monitoring and
supervision requirements, the Commission shall take
into consideration the size, nature of the business,
(j) Suspend or revoke the certificate of incorporation
and capacity of the corporation.
after proper notice and hearing;

No court below the Court of Appeals shall have

(k) Dissolve or impose sanctions on corporations,
jurisdiction to issue a restraining order, preliminary
upon final court order, for committing, aiding in the
injunction, or preliminary mandatory injunction in any
commission of, or in any manner furthering securities
case, dispute, or controversy that directly or indirectly
violations, smuggling, tax evasion, money laundering,
interferes with the exercise of the powers, duties and
graft and corrupt practices, or other fraudulent or
illegal acts; responsibilities of the Commission that falls
exclusively within its jurisdiction.

(l) Issue writs of execution and attachment to enforce

Section 180. Development and Implementation of
payment of fees, administrative fines, and other dues
Electronic Filing and Monitoring System. - The
collectible under this Code;
Commission shall develop and implement an
electronic filing and monitoring system. The
(m) Prescribe the number of independent directors Commission shall promulgate rules to facilitate and
and the minimum criteria in determining the expedite, among others, corporate name reservation
independence of a director; and registration, incorporation, submission of reports,
notices, and documents required under this Code, and

63
sharing of pertinent information with other corporation’s articles of incorporation, bylaws, or in a
government agencies. separate agreement.

Section 181. Arbitration for Corporations. - An The arbitral tribunal shall have the power to grant
arbitration agreement may be provided in the articles interim measures necessary to ensure enforcement of
of incorporation or bylaws of a corporation. When the award, prevent a miscarriage of justice, or
such an agreement is in place, disputes between the otherwise protect the rights of the parties.
corporation, its stockholders or members, which arise
from the implementation of the articles of A final arbitral award under this section shall be
incorporation or bylaws, or from intra-corporate executory after the lapse of fifteen (15) days from
relations, shall be referred to arbitration. A dispute receipt thereof by the parties and shall be stayed only
shall be nonarbitrable when it involves criminal by the filing of a bond or the issuance by the
offenses and interests of third parties. appellate court of an injunctive writ.

The arbitration agreement shall be binding on the The Commission shall formulate the rules and
corporation, its directors, trustees, officers, and regulations, which shall govern arbitration under this
executives or managers. section, subject to existing laws on arbitration.

To be enforceable, the arbitration agreement should Section 182. Jurisdiction Over Party-List
indicate the number of arbitrators and the procedure Organizations. - The powers, authorities, and
for their appointment. The power to appoint the responsibilities of the Commission involving party-list
arbitrators forming the arbitral tribunal shall be organizations are transferred to the Commission on
granted to a designated independent third party. Elections (COMELEC).
Should the third party fail to appoint the arbitrators in
the manner and within the period specified in the
Within six (6) months after the effectivity of this Act,
arbitration agreement, the parties may request the
the monitoring, supervision, and regulation of such
Commission to appoint the arbitrators. In any case,
corporations shall be deemed automatically
arbitrators must be accredited or must belong to
transferred to the COMELEC.
organizations accredited for the purpose of
arbitration.
For this purpose, the COMELEC, in coordination with
the Commission, shall promulgate the corresponding
The arbitral tribunal shall have the power to rule on
implementing rules for the transfer of jurisdiction over
its own jurisdiction and on questions relating to the
the abovementioned corporations.
validity of the arbitration agreement. When an intra-
corporate dispute is filed with a Regional Trial Court,
the court shall dismiss the case before the Section 183. Applicability of the Code. - Nothing in
termination of the pretrial conference, if it determines this Act shall be construed as amending existing
that an arbitration agreement is written in the provisions of special laws governing the registration,
regulation, monitoring and supervision of special

64
corporations such as banks, nonbank financial provision of this Act is hereby repealed or modified
institutions and insurance companies. accordingly..

Notwithstanding any provision to the contrary, Section 188. Effectivity. - This Act shall take effect
regulators such as the Bangko Sentral ng Pilipinas upon completion of its publication in the Official
and the Insurance Commission shall exercise primary Gazette or in at least two (2) newspaper of general
authority over special corporations such as banks, circulation.
nonbank financial institutions, and insurance
companies under their supervision and regulation. Approved,

Section 184. Effect of Amendment or Repeal of This GLORIA MACAPAGAL-ARROYO

Code, or the Dissolution of a Corporation. - No right Speaker of the House of Representatives
or remedy in favor of or against any corporation, its
stockholders, members, directors, trustees, or
VICENTE C. SOTTO III
officers, nor any liability incurred by any such
President of the Senate
corporation, stockholders, members, directors,
trustees, or officers, shall be removed or impaired
either by the subsequent dissolution of said This Act which is a consolidation of Senate Bill No.
corporation or by any subsequent amendment or 1280 and House Bill No. 8374 was passed by the
repeal of this Code or of any part thereof. Senate and the House of Representatives on
November 28, 2018.
Section 185. Applicability to Existing Corporations. -
A corporation lawfully existing and doing business in DANTE ROBERTO P. MALING
the Philippines affected by the new requirements of Acting Secretary General
this Code shall be given a period of not more than House of Representatives
two (2) years from the effectivity of this Act within
which to comply. MYRA MARIE D. VILLARICA
Secretary of the Senate
Section 186. Separability Clause. - If any provision
of this Act is declared invalid or unconstitutional, the Approved: February 20, 2019
other provisions hereof are not affect thereby shall
continue to be in full force and effect. (Sgd.) RODRIGO ROA DUTERTE
President of the Philippines
Section 187. Repealing Clause. - Batas Pambansa
Blg. 68, otherwise known as "The Corporation Code of
the Philippines", is hereby repealed. Any law,
presidential decree or issuance, executive order,
letter of instruction, administrative order, rule or
regulation contrary to or inconsistent with any

65