as “preferred” or “redeemable” shares, unless otherwise

provided in this Code: Provided, That there shall always be

a class or series of shares with complete voting rights.
[ REPUBLIC ACT NO. 11232 ]
Holders of nonvoting shares shall nevertheless be
AN ACT PROVIDING FOR THE REVISED entitled to vote on the following matters:
CORPORATION CODE OF THE PHILIPPINES
(a) Amendment of the articles of
incorporation;

TITLE I
GENERAL PROVISIONS DEFINITIONS AND
(b) Adoption and amendment of bylaws;
CLASSIFICATIONS
(c) Sale, lease, exchange, mortgage, pledge,
or other disposition of all or substantially all of the
SECTION. 1. Title of the Code. – This Code shall corporate property;
be known as the “Revised Corporation Code of the
Philippines”.
(d) Incurring, creating, or increasing
bonded indebtedness;
SEC. 2. Corporation Defined. – A corporation is
an artificial being created by operation of law, having the
right of succession and the powers, attributes, and properties (e) Increase or decrease of authorized
expressly authorized by law or incidental to its existence. capital stock;

SEC. 3. Classes of Corporations. – Corporations (f) Merger or consolidation of the

formed or organized under this Code may be stock or corporation with another corporation or other
nonstock corporations. Stock corporations are those which corporations;
have capital stock divided into shares and are authorized to
distribute to the holders of such shares, dividends, or (g) Investment of corporate funds in another
allotments of the surplus profits on the basis of the shares
corporation or business in accordance with this
held. All other corporations are nonstock corporations. Code; and

SEC. 4. Corporations Created by Special Laws or

Charters. – Corporations created by special laws or charters (h) Dissolution of the corporation.
shall be governed primarily by the provisions of the special
law or charter creating them or applicable to them, Except as provided in the immediately preceding
supplemented by the provisions of this Code, insofar as they paragraph, the vote required under this Code to approve a
are applicable. particular corporate act shall be deemed to refer only to
stocks with voting rights.
SEC. 5. Corporators and Incorporators,
Stockholders and Members. – Corporators are those who The shares or series of shares may or may not have
compose a corporation, whether as stockholders or a par value: Provided, That banks, trust, insurance, and
shareholders in a stock corporation or as members in a preneed companies, public utilities, building and loan
nonstock corporation. Incorporators are those stockholders associations, and other corporations authorized to obtain or
or members mentioned in the articles of incorporation as access funds from the public, whether publicly listed or not,
originally forming and composing the corporation and who shall not be permitted to issue no-par value shares of stock.
are signatories thereof.
Preferred shares of stock issued by a corporation
SEC. 6. Classification of Shares. – The may be given preference in the distribution of dividends and
classification of shares, their corresponding rights, in the distribution of corporate assets in case of liquidation,
privileges, or restrictions, and their stated par value, if any, or such other preferences: Provided, That preferred shares of
must be indicated in the articles of incorporation. Each share stock may be issued only with a stated par value. The board
shall be equal in all respects to every other share, except as of directors, where authorized in the articles of
otherwise provided in the articles of incorporation and in the incorporation, may fix the terms and conditions of preferred
certificate of stock. shares of stock or any series thereof: Provided, further, That
such terms and conditions shall be effective upon filing of a
The shares in stock corporations may be divided certificate thereof with the Securities and Exchange
into classes or series of shares, or both. No share may be Commission, hereinafter referred to as the “Commission”.
deprived of voting rights except those classified and issued

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 Shares of capital stock issued without par value
shall be deemed fully paid and nonassessable and the holder Each incorporator of a stock corporation must own
of such shares shall not be liable to the corporation or to its or be a subscriber to at least one (1) share of the capital stock.
creditors in respect thereto: Provided, That no-par value
shares must be issued for a consideration of at least Five A corporation with a single stockholder is
pesos (P5.00) per share: Provided, further, That the entire considered a One Person Corporation as described in Title
consideration received by the corporation for its no-par value XIII, Chapter III of this Code.
shares shall be treated as capital and shall not be available
for distribution as dividends. SEC. 11. Corporate Term. – A corporation shall
have perpetual existence unless its articles of incorporation
A corporation may further classify its shares for provides otherwise.
the purpose of ensuring compliance with constitutional or
legal requirements. Corporations with certificates of incorporation
issued prior to the effectivity of this Code, and which
SEC. 7. Founders’ Shares. – Founders’ shares continue to exist, shall have perpetual existence, unless the
may be given certain rights and privileges not enjoyed by the corporation, upon a vote of its stockholders representing a
owners of other stocks. Where the exclusive right to vote and majority of its outstanding capital stock, notifies the
be voted for in the election of directors is granted, it must be Commission that it elects to retain its specific corporate term
for a limited period not to exceed five (5) years from the date pursuant to its articles of incorporation: Provided, That any
of incorporation: Provided, That such exclusive right shall change in the corporate term under this section is without
not be allowed if its exercise will violate Commonwealth Act prejudice to the appraisal right of dissenting stockholders in
No. 108, otherwise known as the “Anti-Dummy Law”; accordance with the provisions of this Code.
Republic Act No. 7042, otherwise known as the “Foreign
Investments Act of 1991”; and other pertinent laws. A corporate term for a specific period may be
extended or shortened by amending the articles of
SEC. 8. Redeemable Shares. – Redeemable shares incorporation: Provided, That no extension may be made
may be issued by the corporation when expressly provided earlier than three (3) years prior to the original or subsequent
in the articles of incorporation. They are shares which may expiry date(s) unless there are justifiable reasons for an
be purchased by the corporation from the holders of such earlier extension as may be determined by the Commission:
shares upon the expiration of a fixed period, regardless of the Provided, further, That such extension of the corporate term
existence of unrestricted retained earnings in the books of the shall take effect only on the day following the original or
corporation, and upon such other terms and conditions stated subsequent expiry date(s).
in the articles of incorporation and the certificate of stock
representing the shares, subject to rules and regulations A corporation whose term has expired may apply
issued by the Commission. for a revival of its corporate existence, together with all the
rights and privileges under its certificate of incorporation and
SEC. 9. Treasury shares. – Treasury shares are subject to all of its duties, debts and liabilities existing prior
shares of stock which have been issued and fully paid for, to its revival. Upon approval by the Commission, the
but subsequently reacquired by the issuing corporation corporation shall be deemed revived and a certificate of
through purchase, redemption, donation, or some other revival of corporate existence shall be issued, giving it
lawful means. Such shares may again be disposed of for a perpetual existence, unless its application for revival
reasonable price fixed by the board of directors. provides otherwise.

No application for revival of certificate of

TITLE II incorporation of banks, banking and quasibanking
INCORPORATION AND ORGANIZATION OF institutions, preneed, insurance and trust companies, non-
PRIVATE CORPORATIONS stock savings and loan associations (NSSLAs), pawnshops,
corporations engaged in money service business, and other
financial intermediaries shall be approved by the
SEC. 10. Number and Qualifications of Commission unless accompanied by a favorable
Incorporators. – Any person, partnership, association or recommendation of the appropriate government agency.
corporation, singly or jointly with others but not more than
fifteen (15) in number, may organize a corporation for any SEC. 12. Minimum Capital Stock Not Required
lawful purpose or purposes: Provided, That natural persons of Stock Corporations. – Stock corporations shall not be
who are licensed to practice a profession, and partnerships or required to have a minimum capital stock, except as
associations organized for the purpose of practicing a otherwise specifically provided by special law.
profession, shall not be allowed to organize as a corporation
unless otherwise provided under special laws. Incorporators SEC. 13. Contents of the Articles of
who are natural persons must be of legal age. Incorporation. – All corporations shall file with the

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Commission articles of incorporation in any of the official the form of an electronic document, in accordance with the
languages, duly signed and acknowledged or authenticated, Commission’s rules and regulations on electronic filing.
in such form and manner as may be allowed by the
Commission, containing substantially the following matters, SEC. 14. Form of Articles of Incorporation. –
except as otherwise prescribed by this Code or by special Unless otherwise prescribed by special law, the articles of
law: incorporation of all domestic corporations shall comply
substantially with the following form:
(a) The name of the corporation;
Articles of Incorporation of
(b) The specific purpose or purposes for ______________________
which the corporation is being formed. Where a corporation (Name of Corporation)
has more than one stated purpose, the articles of
incorporation shall indicate the primary purpose and the
secondary purpose or purposes: Provided, That a nonstock The undersigned incorporators, all of legal age, have
corporation may not include a purpose which would change voluntarily agreed to form a (stock) (nonstock) corporation
or contradict its nature as such; under the laws of the Republic of the Philippines and certify
the following:
(c) The place where the principal office of
the corporation is to be located, which must be within the First: That the name of said corporation shall be
Philippines; “_______________, Inc., Corporation or
OPC”;
(d) The term for which the corporation is to
exist, if the corporation has not elected perpetual existence; Second: That the purpose or purposes for which such
corporation is incorporated are: (If there is more than one
purpose, indicate primary and secondary purposes);
(e) The names, nationalities, and residence
addresses of the incorporators; Third: That the principal office of the corporation is
located in the City/Municipality of _____________,
(f) The number of directors, which shall not Province of ___________________, Philippines;
be more than fifteen (15) or the number of trustees which
may be more than fifteen (15); Fourth: That the corporation shall have perpetual
existence or a term of ______________ years from the date
(g) The names, nationalities, and residence of issuance of the certificate of incorporation;
addresses of persons who shall act as directors or trustees
until the first regular directors or trustees are duly elected Fifth: That the names, nationalities, and residence
and qualified in accordance with this Code; addresses of the incorporators of the corporation are as
follows:
(h) If it be a stock corporation, the amount
of its authorized capital stock, number of shares into which Name Nationality Residence
it is divided, the par value of each, names, nationalities, and
residence addresses of the original subscribers, amount
subscribed and paid by each on the subscription, and a
statement that some or all of the shares are without par value,
if applicable;

(i) If it be a nonstock corporation, the

Sixth: That the number of directors or trustees of the
amount of its capital, the names, nationalities, and residence
addresses of the contributors, and amount contributed by corporation shall be _________________; and the names,
nationalities, and residence addresses of the first directors or
each; and
trustees of the corporation are as follows:
Name Nationality Residence
(j)Such other matters consistent with law and
which the incorporators may deem necessary and
convenient.

An arbitration agreement may be provided in the articles of

incorporation pursuant to Section 181 of this Code.
The articles of incorporation and applications for
amendments thereto may be filed with the Commission in

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 Seventh: That the authorized capital stock of the
corporation is ______________ PESOS (P________), “No transfer of stock or interest which shall reduce
divided into _____ shares with the par value of the ownership of Filipino citizens to less than the required
____________ PESOS (P_______________) per share. (In percentage of capital stock as provided by existing laws shall
case all the shares are without par value): That the capital be allowed or permitted to be recorded in the proper books
stock of the corporation is __________________________ of the corporation, and this restriction shall be indicated in
shares without par value. all stock certificates issued by the corporation.”

(In case some shares have par value and some are
without par value): That the capital stock of said corporation IN WITNESS WHEREOF, we have hereunto signed
consists of __________________________ shares, of which these Articles of Incorporation, this _______ day of
_______________________ shares have a par value of _____________, 20_____ in the City/Municipality of
_________________ PESOS (P____________) each, and of ______________________, Province of
which _______________________ shares are without par _______________________, Republic of the Philippines.
value.

Eighth: That the number of shares of the authorized

capital stock above-stated has been subscribed as follows:

Name of No. of Shares Amount Amount

Subscriber Nationality Subscribed Subscribed Paid
(Names and signatures of the incorporators)
_______________________________________
(Name and signature of Treasurer)

SEC. 15. Amendment of Articles of

Incorporation. – Unless otherwise prescribed by this Code
(Modify No. 8 if shares are with no-par value. In case or by special law, and for legitimate purposes, any provision
the corporation is nonstock, Nos. 7 and 8 of the above articles or matter stated in the articles of incorporation may be
may be modified accordingly, and it is sufficient if the amended by a majority vote of the board of directors or
articles state the amount of capital or money contributed or trustees and the vote or written assent of the stockholders
donated by specified persons, stating the names, representing at least two-thirds (2/3) of the outstanding
nationalities, and residence addresses of the contributors or capital stock, without prejudice to the appraisal right of
donors and the respective amount given by each.) dissenting stockholders in accordance with the provisions of
this Code. The articles of incorporation of a nonstock
Ninth: That _____________________ has been corporation may be amended by the vote or written assent of
elected by the subscribers as Treasurer of the Corporation to majority of the trustees and at least two-thirds (2/3) of the
act as such until after the successor is duly elected and members.
qualified in accordance with the bylaws, that as Treasurer,
authority has been given to receive in the name and for the The original and amended articles together shall
benefit of the corporation, all subscriptions, contributions or contain all provisions required by law to be set out in the
donations paid or given by the subscribers or members, who articles of incorporation. Amendments to the articles shall be
certifies the information set forth in the seventh and eighth indicated by underscoring the change or changes made, and
clauses above, and that the paid-up portion of the a copy thereof duly certified under oath by the corporate
subscription in cash and/or property for the benefit and credit secretary and a majority of the directors or trustees, with a
of the corporation has been duly received. statement that the amendments have been duly approved by
the required vote of the stockholders or members, shall be
Tenth: That the incorporators undertake to change submitted to the Commission.
the name of the corporation immediately upon receipt of
notice from the Commission that another corporation, The amendments shall take effect upon their approval by the
partnership or person has acquired a prior right to the use of Commission or from the date of filing with the said
such name, that the name has been declared not Commission if not acted upon within six (6) months from the
distinguishable from a name already registered or reserved date of filing for a cause not attributable to the corporation.
for the use of another corporation, or that it is contrary to
law, public morals, good customs or public policy. SEC. 16. Grounds When Articles of
Incorporation or Amendment May be Disapproved. – The
Eleventh: (Corporations which will engage in any Commission may disapprove the articles of incorporation or
business or activity reserved for Filipino citizens shall any amendment thereto if the same is not compliant with the
provide the following):

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requirements of this Code: Provided, That the Commission Commission shall also cause the removal of all visible
shall give the incorporators, directors, trustees, or officers a signages, marks, advertisements, labels, prints and other
reasonable time from receipt of the disapproval within which effects bearing such corporate name. Upon the approval of
to modify the objectionable portions of the articles or the new corporate name, the Commission shall issue a
amendment. The following are grounds for such disapproval: certificate of incorporation under the amended name.

(a) The articles of incorporation or any amendment If the corporation fails to comply with the Commission’s
thereto is not substantially in accordance with the form order, the Commission may hold the corporation and its
prescribed herein; responsible directors or officers in contempt and/or hold
them administratively, civilly and/or criminally liable under
this Code and other applicable laws and/or revoke the
(b) The purpose or purposes of the corporation are registration of the corporation.
patently unconstitutional, illegal, immoral or contrary to
government rules and regulations;
SEC. 18. Registration, Incorporation and
Commencement of Corporate Existence. – A person or
(c) The certification concerning the amount of capital group of persons desiring to incorporate shall submit the
stock subscribed and/or paid is false; and intended corporate name to the Commission for verification.
If the Commission finds that the name is distinguishable
(d) The required percentage of Filipino ownership of from a name already reserved or registered for the use of
the capital stock under existing laws or the Constitution has another corporation, not protected by law and is not contrary
not been complied with. to law, rules and regulations, the name shall be reserved in
favor of the incorporators. The incorporators shall then
No articles of incorporation or amendment to submit their articles of incorporation and bylaws to the
articles of incorporation of banks, banking and quasi- Commission.
banking institutions, preneed, insurance and trust companies,
NSSLAS, pawnshops, and other financial intermediaries If the Commission finds that the submitted
shall be approved by the Commission unless accompanied documents and information are fully compliant with the
by a favorable recommendation of the appropriate requirements of this Code, other relevant laws, rules and
government agency to the effect that such articles or regulations, the Commission shall issue the certificate of
amendment is in accordance with law. incorporation.

SEC. 17. Corporate Name. – No corporate name A private corporation organized under this Code
shall be allowed by the Commission if it is not commences its corporate existence and juridical personality
distinguishable from that already reserved or registered for from the date the Commission issues the certificate of
the use of another corporation, or if such name is already incorporation under its official seal and thereupon the
protected by law, or when its use is contrary to existing law, incorporators, stockholders/members and their successors
rules and regulations. shall constitute a body corporate under the name stated in the
articles of incorporation for the period of time mentioned
A name is not distinguishable even if it contains one or therein, unless said period is extended or the corporation is
more of the following: sooner dissolved in accordance with law.

SEC. 19. De facto Corporations. – The due

(a) The word “corporation”,
incorporation of any corporation claiming in good faith to be
“company”, “incorporated”, “limited”, “limited
a corporation under this Code, and its right to exercise
liability”, or an abbreviation of one of such words;
corporate powers, shall not be inquired into collaterally in
and
any private suit to which such corporation may be a party.
Such inquiry may be made by the Solicitor General in a quo
(b) Punctuations, articles, warranto proceeding.
conjunctions, contractions, prepositions,
abbreviations, different tenses, spacing, or number SEC. 20. Corporation by Estoppel. – All persons
of the same word or phrase. who assume to act as a corporation knowing it to be without
authority to do so shall be liable as general partners for all
The Commission, upon determination that the debts, liabilities and damages incurred or arising as a result
corporate name is: (1) not distinguishable from a name thereof: Provided, however, That when any such ostensible
already reserved or registered for the use of another corporation is sued on any transaction entered by it as a
corporation; (2) already protected by law; or (3) contrary to corporation or on any tort committed by it as such, it shall
law, rules and regulations, may summarily order the not be allowed to use its lack of corporate personality as a
corporation to immediately cease and desist from using such defense. Anyone who assumes an obligation to an ostensible
name and require the corporation to register a new one. The

Page 5 of 41
corporation as such cannot resist performance thereof on the exchange or with assets of at least Fifty million pesos
ground that there was in fact no corporation. (P50,000,000.00) and having two hundred (200) or more
holders of shares, each holding at least one hundred (100)
SEC. 21. Effects of Non-Use of Corporate shares of a class of its equity shares;
Charter and Continuous Inoperation. – If a corporation
does not formally organize and commence its business b) Banks and quasi-banks, NSSLAs, pawnshops,
within five (5) years from the date of its incorporation, its corporations engaged in money service
certificate of incorporation shall be deemed revoked as of the business, pre-need, trust and insurance companies, and other
day following the end of the five (5)-year period. financial intermediaries; and

However, if a corporation has commenced its business but

subsequently becomes inoperative for a period of at least five c) Other corporations engaged in business vested
(5) consecutive years, the Commission may, after due notice with public interest similar to the above, as may be
and hearing, place the corporation under delinquent status. determined by the Commission, after taking into account
relevant factors which are germane to the objective and
A delinquent corporation shall have a period of purpose of requiring the election of an independent director,
two (2) years to resume operations and comply with all such as the extent of minority ownership, type of financial
requirements that the Commission shall prescribe. Upon products or securities issued or offered to investors, public
compliance by the corporation, the Commission shall issue interest involved in the nature of business operations, and
an order lifting the delinquent status. Failure to comply with other analogous factors.
the requirements and resume operations within the period
given by the Commission shall cause the revocation of the An independent director is a person who, apart
corporation’s certificate of incorporation. from shareholdings and fees received from the corporation,
is independent of management and free from any business or
The Commission shall give reasonable notice to, other relationship which could, or could reasonably be
and coordinate with the appropriate regulatory agency prior perceived to materially interfere with the exercise of
to the suspension or revocation of the certificate of independent judgment in carrying out the responsibilities as
incorporation of companies under their special regulatory a director.
jurisdiction.
Independent directors must be elected by the
TITLE III shareholders present or entitled to vote in absentia during the
election of directors. Independent directors shall be subject
BOARD OF DIRECTORS/TRUSTEES AND to rules and regulations governing their qualifications,
OFFICERS disqualifications, voting requirements, duration of term and
term limit, maximum number of board memberships and
SEC. 22. The Board of Directors or Trustees of a other requirements that the Commission will prescribe to
Corporation; Qualification and Term. – Unless otherwise strengthen their independence and align with international
provided in this Code, the board of directors or trustees shall best practices.
exercise the corporate powers, conduct all business, and
control all properties of the corporation. SEC. 23. Election of Directors or Trustees. –
Except when the exclusive right is reserved for holders of
Directors shall be elected for a term of one (1) year from founders’ shares under Section 7 of this Code, each
among the holders of stocks registered in the corporation’s stockholder or member shall have the right to nominate any
books, while trustees shall be elected for a term not director or trustee who possesses all of the qualifications and
exceeding three (3) years from among the members of the none of the disqualifications set forth in this Code.
corporation. Each director and trustee shall hold office until
the successor is elected and qualified. A director who ceases At all elections of directors or trustees, there must
to own at least one (1) share of stock or a trustee who ceases be present, either in person or through a representative
to be a member of the corporation shall cease to be such. authorized to act by written proxy, the owners of majority of
the outstanding capital stock, or if there be no capital stock,
The board of the following corporations vested with public a majority of the members entitled to vote. When so
interest shall have independent directors constituting at least authorized in the bylaws or by a majority of the board of
twenty percent (20%) of such board: directors, the stockholders or members may also vote
through remote communication or in absentia: Provided,
That the right to vote through such modes may be exercised
a) Corporations covered by Section 17.2 of Republic in corporations vested with public interest, notwithstanding
Act No. 8799, otherwise known as “The Securities
the absence of a provision in the bylaws of such corporations.
Regulation Code”, namely those whose securities are
registered with the Commission, corporations listed with an

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 A stockholder or member who participates through Cessation from Office. – Within thirty (30) days after the
remote communication or in absentia, shall be deemed election of the directors, trustees and officers of the
present for purposes of quorum. corporation, the secretary, or any other officer of the
corporation, shall submit to the Commission, the names,
The election must be by ballot if requested by any nationalities, shareholdings, and residence addresses of the
voting stockholder or member. directors, trustees, and officers elected.

In stock corporations, stockholders entitled to vote The non-holding of elections and the reasons
shall have the right to vote the number of shares of stock therefor shall be reported to the Commission within thirty
standing in their own names in the stock books of the (30) days from the date of the scheduled election. The report
corporation at the time fixed in the bylaws or where the shall specify a new date for the election, which shall not be
bylaws are silent, at the time of the election. The said later than sixty (60) days from the scheduled date.
stockholder may: (a) vote such number of shares for as many
persons as there are directors to be elected; (b) cumulate said If no new date has been designated, or if the
shares and give one (1) candidate as many votes as the rescheduled election is likewise not held, the Commission
number of directors to be elected multiplied by the number may, upon the application of a stockholder, member, director
of the shares owned; or (c) distribute them on the same or trustee, and after verification of the unjustified non-
principle among as many candidates as may be seen fit: holding of the election, summarily order that an election be
Provided, That the total number of votes cast shall not held. The Commission shall have the power to issue such
exceed the number of shares owned by the stockholders as orders as may be appropriate, including orders directing the
shown in the books of the corporation multiplied by the issuance of a notice stating the time and place of the election,
whole number of directors to be elected: Provided, however, designated presiding officer, and the record date or dates for
That no delinquent stock shall be voted. Unless otherwise the determination of stockholders or members entitled to
provided in the articles of incorporation or in the bylaws, vote.
members of nonstock corporations may cast as many votes Notwithstanding any provision of the articles of
as there are trustees to be elected but may not cast more than incorporation or bylaws to the contrary, the shares of stock
one (1) vote for one (1) candidate. Nominees for directors or or membership represented at such meeting and entitled to
trustees receiving the highest number of votes shall be vote shall constitute a quorum for purposes of conducting an
declared elected. election under this section.
Should a director, trustee or officer die, resign or
If no election is held, or the owners of majority of
in any manner cease to hold office, the secretary, or the
the outstanding capital stock or majority of the members
director, trustee or officer of the corporation, shall, within
entitled to vote are not present in person, by proxy, or
seven (7) days from knowledge thereof, report in writing
through remote communication or not voting in absentia at
such fact to the Commission.
the meeting, such meeting may be adjourned and the
corporation shall proceed in accordance with Section 25 of
SEC. 26. Disqualification of Directors, Trustees
this Code.
or Officers. – A person shall be disqualified from being a
The directors or trustees elected shall perform their
director, trustee or officer of any corporation if, within five
duties as prescribed by law, rules of good corporate
(5) years prior to the election or appointment as such, the
governance, and bylaws of the corporation.
person was:
SEC. 24. Corporate Officers. – Immediately after
(a) Convicted by final judgment:
their election, the directors of a corporation must formally
organize and elect: (a) a president, who must be a director;
(b) a treasurer, who must be a resident; (c) a secretary, who (1) Of an offense punishable by
must be a citizen and resident of the Philippines; and (d) such imprisonment for a period exceeding six (6) years;
other officers as may be provided in the bylaws. If the
corporation is vested with public interest, the board shall also (2) For violating this Code; and
elect a compliance officer. The same person may hold two
(2) or more positions concurrently, except that no one shall
act as president and secretary or as president and treasurer at
(3) For violating Republic Act No. 8799,
otherwise known as “The Securities Regulation Code”;
the same time, unless otherwise allowed in this Code.

The officers shall manage the corporation and (b) Found administratively liable for any
perform such duties as may be provided in the bylaws and/or offense involving fraudulent acts; and
as resolved by the board of directors.
(c) By a foreign court or equivalent foreign
SEC. 25. Report of Election of Directors, regulatory authority for acts, violations or misconduct
Trustees and Officers, Non-holding of Election and

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 similar to those enumerated in paragraphs (a) and (b) at a meeting called for that purpose. When the vacancy
above. arises as a result of removal by the stockholders or members,
the election may be held on the same day of the meeting
The foregoing is without prejudice to qualifications or authorizing the removal and this fact must be so stated in the
other disqualifications, which the Commission, the primary agenda and notice of said meeting. In all other cases, the
regulatory agency, or the Philippine Competition election must be held no later than forty-five (45) days from
Commission may impose in its promotion of good corporate the time the vacancy arose. A director or trustee elected to
governance or as a sanction in its administrative fill a vacancy shall be referred to as replacement director or
proceedings. trustee and shall serve only for the unexpired term of the
predecessor in office.
SEC. 27. Removal of Directors or Trustees. – Any
director or trustee of a corporation may be removed from However, when the vacancy prevents the
office by a vote of the stockholders holding or representing remaining directors from constituting a quorum and
at least two-thirds (2/3) of the outstanding capital stock, or emergency action is required to prevent grave, substantial,
in a nonstock corporation, by a vote of at least two-thirds and irreparable loss or damage to the corporation, the
(2/3) of the members entitled to vote: Provided, That such vacancy may be temporarily filled from among the officers
removal shall take place either at a regular meeting of the of the corporation by unanimous vote of the remaining
corporation or at a special meeting called for the purpose, directors or trustees. The action by the designated director or
and in either case, after previous notice to stockholders or trustee shall be limited to the emergency action necessary,
members of the corporation of the intention to propose such and the term shall cease within a reasonable time from the
removal at the meeting. A special meeting of the termination of the emergency or upon election of the
stockholders or members for the purpose of removing any replacement director or trustee, whichever comes earlier.
director or trustee must be called by the secretary on order of The corporation must notify the Commission within three (3)
the president, or upon written demand of the stockholders days from the creation of the emergency board, stating
representing or holding at least a majority of the outstanding therein the reason for its creation.
capital stock, or a majority of the members entitled to vote.
If there is no secretary, or if the secretary, despite demand, Any directorship or trusteeship to be filled by
fails or refuses to call the special meeting or to give notice reason of an increase in the number of directors or trustees
thereof, the stockholder or member of the corporation shall be filled only by an election at a regular or at a special
signing the demand may call for the meeting by directly meeting of stockholders or members duly called for the
addressing the stockholders or members. Notice of the time purpose, or in the same meeting authorizing the increase of
and place of such meeting, as well as of the intention to directors or trustees if so stated in the notice of the meeting.
propose such removal, must be given by publication or by
written notice prescribed in this Code. Removal may be with In all elections to fill vacancies under this section,
or without cause: Provided, That removal without cause may the procedure set forth in Sections 23 and 25 of this Code
not be used to deprive minority stockholders or members of shall apply.
the right of representation to which they may be entitled
under Section 23 of this Code. SEC. 29. Compensation of Directors or Trustees.
– In the absence of any provision in the bylaws fixing their
The Commission shall, motu proprio or upon compensation, the directors or trustees shall not receive any
verified complaint, and after due notice and hearing, order compensation in their capacity as such, except for reasonable
the removal of a director or trustee elected despite the per diems: Provided however, That the stockholders
disqualification, or whose disqualification arose or is representing at least a majority of the outstanding capital
discovered subsequent to an election. The removal of a stock or majority of the members may grant directors or
disqualified director shall be without prejudice to other trustees with compensation and approve the amount thereof
sanctions that the Commission may impose on the board of at a regular or special meeting.
directors or trustees who, with knowledge of the
disqualification, failed to remove such director or trustee. In no case shall the total yearly compensation of
directors exceed ten (10%) percent of the net income before
SEC. 28. Vacancies in the Office of Director or income tax of the corporation during the preceding year.
Trustee; Emergency Board. – Any vacancy occurring in the
board of directors or trustees other than by removal or by Directors or trustees shall not participate in the
expiration of term may be filled by the vote of at least a determination of their own per diems or compensation.
majority of the remaining directors or trustees, if still
constituting a quorum; otherwise, said vacancies must be Corporations vested with public interest shall
filled by the stockholders or members in a regular or special submit to their shareholders and the Commission, an annual
meeting called for that purpose. report of the total compensation of each of their directors or
When the vacancy is due to term expiration, the trustees.
election shall be held no later than the day of such expiration

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 SEC. 30. Liability of Directors, Trustees or SEC. 32. Contracts Between Corporations with
Officers. – Directors or trustees who willfully and Interlocking Directors. – Except in cases of fraud, and
knowingly vote for or assent to patently unlawful acts of the provided the contract is fair and reasonable under the
corporation or who are guilty of gross negligence or bad faith circumstances, a contract between two (2) or more
in directing the affairs of the corporation or acquire any corporations having interlocking directors shall not be
personal or pecuniary interest in conflict with their duty as invalidated on that ground alone: Provided, That if the
such directors or trustees shall be liable jointly and severally interest of the interlocking director in one (1) corporation is
for all damages resulting therefrom suffered by the substantial and the interest in the other corporation or
corporation, its stockholders or members and other persons. corporations is merely nominal, the contract shall be subject
to the provisions of the preceding section insofar as the latter
A director, trustee, or officer shall not attempt to corporation or corporations are concerned.
acquire, or acquire any interest adverse to the corporation in
respect of any matter which has been reposed in them in Stockholdings exceeding twenty percent (20%) of
confidence, and upon which, equity imposes a disability the outstanding capital stock shall be considered substantial
upon themselves to deal in their own behalf; otherwise the for purposes of interlocking directors.
said director, trustee, or officer shall be liable as a trustee for
the corporation and must account for the profits which SEC. 33. Disloyalty of a Director. – Where a
otherwise would have accrued to the corporation. director, by virtue of such office, acquires a business
opportunity which should belong to the corporation, thereby
SEC. 31. Dealings of Directors, Trustees or obtaining profits to the prejudice of such corporation, the
Officers with the Corporation. – A contract of the director must account for and refund to the latter all such
corporation with (1) one or more of its directors, trustees, profits, unless the act has been ratified by a vote of the
officers or their spouses and relatives within the fourth civil stockholders owning or representing at least twothirds (2/3)
degree of consanguinity or affinity is voidable, at the option of the outstanding capital stock. This provision shall be
of such corporation, unless all the following conditions are applicable, notwithstanding the fact that the director risked
present: one’s own funds in the venture.

(a) The presence of such director or trustee SEC. 34. Executive, Management, and Other
in the board meeting in which the contract was approved was Special Committees. – If the bylaws so provide, the board
not necessary to constitute a quorum for such meeting; may create an executive committee composed of at least
three (3) directors. Said committee may act, by majority vote
of all its members, on such specific matters within the
(b) The vote of such director or trustee was competence of the board, as may be delegated to it in the
not necessary for the approval of the contract; bylaws or by majority vote of the board, except with respect
to the: (a) approval of any action for which shareholders’
(c) The contract is fair and reasonable under approval is also required; (b) filling of vacancies in the
the circumstances; board; (c) amendment or repeal of bylaws or the adoption of
new bylaws; (d) amendment or repeal of any resolution of
the board which by its express terms is not amendable or
(d) In case of corporations vested with repealable; and (e) distribution of cash dividends to the
public interest, material contracts are approved by at least shareholders.
two-thirds (2/3) of the entire membership of the board, with
at least a majority of the independent directors voting to The board of directors may create special
approve the material contract; and committees of temporary or permanent nature and determine
the members’ term, composition, compensation, powers, and
(e) In case of an officer, the contract has responsibilities.
been previously authorized by the board of directors.
TITLE IV
Where any of the first three (3) conditions set forth POWERS OF CORPORATIONS
in the preceding paragraph is absent, in the case of a contract
with a director or trustee, such contract may be ratified by SEC. 35. Corporate Powers and Capacity. – Every
the vote of the stockholders representing at least two-thirds corporation incorporated under this Code has the power and
(2/3) of the outstanding capital stock or of at least two-thirds capacity:
(2/3) of the members in a meeting called for the purpose:
Provided, That full disclosure of the adverse interest of the
directors or trustees involved is made at such meeting and
(a) To sue and be sued in its corporate
name;
the contract is fair and reasonable under the circumstances.

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 (b) To have perpetual existence unless the the bylaws or done with the consent of the stockholder, sent
certificate of incorporation provides otherwise; electronically in accordance with the rules and regulations of
the Commission on the use of electronic data messages. In
case of extension of corporate term, a dissenting stockholder
(c) To adopt and use a corporate seal; may exercise the right of appraisal under the conditions
provided in this Code.
(d) To amend its articles of incorporation in
accordance with the provisions of this Code; SEC. 37. Power to Increase or Decrease Capital
Stock; Incur, Create or Increase Bonded Indebtedness. –
(e) To adopt bylaws, not contrary to law, No corporation shall increase or decrease its capital stock or
morals or public policy, and to amend or repeal the same in incur, create or increase any bonded indebtedness unless
accordance with this Code; approved by a majority vote of the board of directors and by
two-thirds (2/3) of the outstanding capital stock at a
stockholders’ meeting duly called for the purpose. Written
(f) In case of stock corporations, to issue or
notice of the time and place of the stockholders’ meeting and
sell stocks to subscribers and to sell treasury stocks in
the purpose for said meeting must be sent to the stockholders
accordance with the provisions of this Code; and to admit
at their places of residence as shown in the books of the
members to the corporation if it be a nonstock corporation;
corporation and served on the stockholders personally, or
through electronic means recognized in the corporation’s
(g) To purchase, receive, take or grant, hold, bylaws and/or the Commission’s rules as a valid mode for
convey, sell, lease, pledge, mortgage, and otherwise deal service of notices.
with such real and personal property, including securities
and bonds of other corporations, as the transaction of the A certificate must be signed by a majority of the
lawful business of the corporation may reasonably and directors of the corporation and countersigned by the
necessarily require, subject to the limitations prescribed by chairperson and secretary of the stockholders’ meeting,
law and the Constitution; setting forth:

(h) To enter into a partnership, joint (a) That the requirements of this section have been
venture, merger, consolidation, or any other commercial complied with;
agreement with natural and juridical persons;

(b) The amount of the increase or decrease of the

(i) To make reasonable donations, capital stock;
including those for the public welfare or for hospital,
charitable, cultural, scientific, civic, or similar purposes:
Provided, That no foreign corporation shall give donations (c) In case of an increase of the capital stock, the
in aid of any political party or candidate or for purposes of amount of capital stock or number of shares of
partisan political activity; no-par stock thereof actually subscribed, the
names, nationalities and addresses of the
persons subscribing, the amount of capital
(j) To establish pension, retirement, and stock or number of no-par stock subscribed by
other plans for the benefit of its directors, trustees, officers, each, and the amount paid by each on the
and employees; and subscription in cash or property, or the amount
of capital stock or number of shares of no-par
(k) To exercise such other powers as may be stock allotted to each stockholder if such
essential or necessary to carry out its purpose or purposes as increase is for the purpose of making effective
stated in the articles of incorporation. stock dividend therefor authorized;

SEC. 36. Power to Extend or Shorten Corporate (d) Any bonded indebtedness to be incurred,
Term. – A private corporation may extend or shorten its term created or increased;
as stated in the articles of incorporation when approved by a
majority vote of the board of directors or trustees, and
ratified at a meeting by the stockholders or members (e) The amount of stock represented at the
representing at least two-thirds (2/3) of the outstanding meeting; and
capital stock or of its members. Written notice of the
proposed action and the time and place of the meeting shall (f) The vote authorizing the increase or decrease of
be sent to stockholders or members at their respective place the capital stock, or the incurring, creating or
of residence as shown in the books of the corporation, and increasing of any bonded indebtedness.
must either be deposited to the addressee in the post office
with postage prepaid, served personally, or when allowed in

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 Any increase or decrease in the capital stock or the mortgage, pledge, or otherwise dispose of its property and
incurring, creating or increasing of any bonded indebtedness assets, upon such terms and conditions and for such
shall require prior approval of the Commission, and where consideration, which may be money, stocks, bonds, or other
appropriate, of the Philippine Competition Commission. The instruments for the payment of money or other property or
application with the Commission shall be made within six consideration, as its board of directors or trustees may deem
(6) months from the date of approval of the board of directors expedient.
and stockholders, which period may be extended for
justifiable reasons. A sale of all or substantially all of the corporation’s
properties and assets, including its goodwill, must be
Copies of the certificate shall be kept on file in the authorized by the vote of the stockholders representing at
office of the corporation and filed with the Commission and least two-thirds (2/3) of the outstanding capital stock, or at
attached to the original articles of incorporation. After least two-thirds (2/3) of the members, in a stockholders’ or
approval by the Commission and the issuance by the members’ meeting duly called for the purpose.
Commission of its certificate of filing, the capital stock shall
be deemed increased or decreased and the incurring, creating In nonstock corporations where there are no
or increasing of any bonded indebtedness authorized, as the members with voting rights, the vote of at least a majority
certificate of filing may declare: Provided, That the of the trustees in office will be sufficient authorization for
Commission shall not accept for filing any certificate of the corporation to enter into any transaction authorized by
increase of capital stock unless accompanied by a sworn this section.
statement of the treasurer of the corporation lawfully holding
office at the time of the filing of the certificate, showing that The determination of whether or not the sale involves
at least twenty-five percent (25%) of the increase in capital all or substantially all of the corporation’s properties and
stock has been subscribed and that at least twenty-five assets must be computed based on its net asset value, as
percent (25%) of the amount subscribed has been paid in shown in its latest financial statements. A sale or other
actual cash to the corporation or that property, the valuation disposition shall be deemed to cover substantially all the
of which is equal to twenty-five percent (25%) of the corporate property and assets if thereby the corporation
subscription, has been transferred to the corporation: would be rendered incapable of continuing the business or
Provided, further, That no decrease in capital stock shall be accomplishing the purpose for which it was incorporated.
approved by the Commission if its effect shall prejudice the
rights of corporate creditors. Written notice of the proposed action and of the time
and place for the meeting shall be addressed to stockholders
Nonstock corporations may incur, create or increase or members at their places of residence as shown in the books
bonded indebtedness when approved by a majority of the of the corporation and deposited to the addressee in the post
board of trustees and of at least two-thirds (2/3) of the office with postage prepaid, served personally, or when
members in a meeting duly called for the purpose. allowed by the bylaws or done with the consent of the
stockholder, sent electronically: Provided, That any
Bonds issued by a corporation shall be registered dissenting stockholder may exercise the right of appraisal
with the Commission, which shall have the authority to under the conditions provided in this Code.
determine the sufficiency of the terms thereof.
After such authorization or approval by the
SEC. 38. Power to Deny Preemptive Right. – All stockholders or members, the board of directors or trustees
stockholders of a stock corporation shall enjoy preemptive may, nevertheless, in its discretion, abandon such sale, lease,
right to subscribe to all issues or disposition of shares of any exchange, mortgage, pledge, or other disposition of property
class, in proportion to their respective shareholdings, unless and assets, subject to the rights of third parties under any
such right is denied by the articles of incorporation or an contract relating thereto, without further action or approval
amendment thereto: Provided, That such preemptive right by the stockholders or members.
shall not extend to shares issued in compliance with laws
requiring stock offerings or minimum stock ownership by Nothing in this section is intended to restrict the
the public; or to shares issued in good faith with the approval power of any corporation, without the authorization by the
of the stockholders representing two-thirds (2/3) of the stockholders or members, to sell, lease, exchange, mortgage,
outstanding capital stock, in exchange for property needed pledge, or otherwise dispose of any of its property and assets
for corporate purposes or in payment of a previously if the same is necessary in the usual and regular course of
contracted debt. business of the corporation or if the proceeds of the sale or
other disposition of such property and assets shall be
SEC. 39. Sale or Other Disposition of Assets. – appropriated for the conduct of its remaining business.
Subject to the provisions of Republic Act No. 10667,
otherwise known as “Philippine Competition Act”, and other
related laws, a corporation may, by a majority vote of its SEC. 40. Power to Acquire Own Shares. – Provided
board of directors or trustees, sell, lease, exchange, that the corporation has unrestricted retained earnings in its

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books to cover the shares to be purchased or acquired, a stock Stock corporations are prohibited from retaining
corporation shall have the power to purchase or acquire its surplus profits in excess of one hundred percent (100%) of
own shares for a legitimate corporate purpose or purposes, their paid-in capital stock, except: (a) when justified by
including the following cases: definite corporate expansion projects or programs approved
by the board of directors; or (b) when the corporation is
(a) To eliminate fractional shares arising prohibited under any loan agreement with financial
out of stock dividends; institutions or creditors, whether local or foreign, from
declaring dividends without their consent, and such consent
has not yet been secured; or (c) when it can be clearly shown
(b) To collect or compromise an that such retention is necessary under special circumstances
indebtedness to the corporation, arising out of unpaid obtaining in the corporation, such as when there is need for
subscription, in a delinquency sale, and to purchase special reserve for probable contingencies.
delinquent shares sold during said sale; and
SEC. 43. Power to Enter into Management
(c) To pay dissenting or withdrawing Contract. – No corporation shall conclude a management
stockholders entitled to payment for their shares under the contract with another corporation unless such contract is
provisions of this Code. approved by the board of directors and by stockholders
owning at least the majority of the outstanding capital stock,
SEC. 41. Power to Invest Corporate Funds in or by at least a majority of the members in the case of a
Another Corporation or Business or for Any Other nonstock corporation, of both the managing and the managed
Purpose. – Subject to the provisions of this Code, a private corporation, at a meeting duly called for the purpose:
corporation may invest its funds in any other corporation, Provided, That (a) where a stockholder or stockholders
business, or for any purpose other than the primary purpose representing the same interest of both the managing and the
for which it was organized, when approved by a majority of managed corporations own or control more than one-third
the board of directors or trustees and ratified by the (1/3) of the total outstanding capital stock entitled to vote of
stockholders representing at least two-thirds (2/3) of the the managing corporation; or (b) where a majority of the
outstanding capital stock, or by at least two thirds (2/3) of members of the board of directors of the managing
the members in the case of nonstock corporations, at a corporation also constitute a majority of the members of the
meeting duly called for the purpose. Notice of the proposed board of directors of the managed corporation, then the
investment and the time and place of the meeting shall be management contract must be approved by the stockholders
addressed to each stockholder or member at the place of of the managed corporation owning at least two-thirds (2/3)
residence as shown in the books of the corporation and of the total outstanding capital stock entitled to vote, or by at
deposited to the addressee in the post office with postage least two-thirds (2/3) of the members in the case of a
prepaid, served personally, or sent electronically in nonstock corporation.
accordance with the rules and regulations of the Commission
on the use of electronic data message, when allowed by the These shall apply to any contract whereby a
bylaws or done with the consent of the stockholders: corporation undertakes to manage or operate all or
Provided, That any dissenting stockholder shall have substantially all of the business of another corporation,
appraisal right as provided in this Code: Provided, however, whether such contracts are called service contracts, operating
That where the investment by the corporation is reasonably agreements or otherwise: Provided, however, That such
necessary to accomplish its primary purpose as stated in the service contracts or operating agreements which relate to the
articles of incorporation, the approval of the stockholders or exploration, development, exploitation or utilization of
members shall not be necessary. natural resources may be entered into for such periods as
may be provided by the pertinent laws or regulations.
SEC. 42. Power to Declare Dividends. – The board
of directors of a stock corporation may declare dividends out No management contract shall be entered into for a
of the unrestricted retained earnings which shall be payable period longer than five (5) years for any one (1) term.
in cash, property, or in stock to all stockholders on the basis
of outstanding stock held by them: Provided, That any cash SEC. 44. Ultra Vires Acts of Corporations. – No
dividends due on delinquent stock shall first be applied to the corporation shall possess or exercise corporate powers other
unpaid balance on the subscription plus costs and expenses, than those conferred by this Code or by its articles of
while stock dividends shall be withheld from the delinquent incorporation and except as necessary or incidental to the
stockholders until their unpaid subscription is fully paid: exercise of the powers conferred.
Provided, further, That no stock dividend shall be issued
without the approval of stockholders representing at least TITLE V
two-thirds (2/3) of the outstanding capital stock at a regular
BYLAWS
or special meeting duly called for the purpose.

SEC. 45. Adoption of Bylaws. – For the adoption

of bylaws by the corporation, the affirmative vote of the

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stockholders representing at least a majority of the case, be more than the number prescribed by the
outstanding capital stock, or of at least a majority of the Commission;
members in case of nonstock corporations, shall be
necessary. The bylaws shall be signed by the stockholders or (g) The time for holding the annual election
members voting for them and shall be kept in the principal of directors or trustees and the mode or manner of giving
office of the corporation, subject to the inspection of the notice thereof;
stockholders or members during office hours. A copy
thereof, duly certified by a majority of the directors or
trustees and countersigned by the secretary of the (h) The manner of election or appointment
corporation, shall be filed with the Commission and attached and the term of office of all officers other than directors or
to the original articles of incorporation. trustees;

Notwithstanding the provisions of the preceding (i) The penalties for violation of the
paragraph, bylaws may be adopted and filed prior to bylaws;
incorporation; in such case, such bylaws shall be approved
and signed by all the incorporators and submitted to the (j) In the case of stock corporations, the
Commission, together with the articles of incorporation. manner of issuing stock certificates; and

In all cases, bylaws shall be effective only upon

(k) Such other matters as may be necessary
the issuance by the Commission of a certification that the
for the proper or convenient transaction of its corporate
bylaws are in accordance with this Code.
affairs for the promotion of good governance and anti-graft
and corruption measures.
The Commission shall not accept for filing the
bylaws or any amendment thereto of any bank, banking
An arbitration agreement may be provided in the
institution, building and loan association, trust company,
bylaws pursuant to Section 181 of this Code.
insurance company, public utility, educational institution, or
other special corporations governed by special laws, unless
SEC. 47. Amendment to Bylaws. – A majority of
accompanied by a certificate of the appropriate government
the board of directors or trustees, and the owners of at least
agency to the effect that such bylaws or amendments are in
a majority of the outstanding capital stock, or at least a
accordance with law.
majority of the members of a nonstock corporation, at a
regular or special meeting duly called for the purpose, may
SEC. 46. Contents of Bylaws. – A private
amend or repeal the bylaws or adopt new bylaws. The
corporation may provide the following in its bylaws:
owners of two-thirds (2/3) of the outstanding capital stock or
two-thirds (2/3) of the members in a nonstock corporation
(a) The time, place and manner of calling may delegate to the board of directors or trustees the power
and conducting regular or special meetings of the directors to amend or repeal the bylaws or adopt new bylaws:
or trustees; Provided, That any power delegated to the board of directors
or trustees to amend or repeal the bylaws or adopt new
(b) The time and manner of calling and bylaws shall be considered as revoked whenever
conducting regular or special meetings and mode of stockholders owning or representing a majority of the
notifying the stockholders or members thereof; outstanding capital stock or majority of the members shall so
vote at a regular or special meeting.
(c) The required quorum in meetings of
Whenever the bylaws are amended or new bylaws
stockholders or members and the manner of voting therein;
are adopted, the corporation shall file with the Commission
such amended or new bylaws and, if applicable, the
(d) The modes by which a stockholder, stockholders’ or members’ resolution authorizing the
member, director, or trustee may attend meetings and cast delegation of the power to amend and/or adopt new bylaws,
their votes; duly certified under oath by the corporate secretary and a
majority of the directors or trustees.
(e) The form for proxies of stockholders
and members and the manner of voting them; The amended or new bylaws shall only be effective
upon the issuance by the Commission of a certification that
the same is in accordance with this Code and other relevant
(f) The directors’ or trustees’ qualifications,
laws.
duties and responsibilities, the guidelines for setting the
compensation of directors or trustees and officers, and the
maximum number of other board representations that an
independent director or trustee may have which shall, in no

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 TITLE VI c) A detailed, descriptive,
MEETINGS balanced and comprehensible assessment of the
corporation’s performance, which shall include
information on any material change in the
SEC. 48. Kinds of Meetings. – Meetings of
corporation’s business, strategy, and other affairs;
directors, trustees, stockholders, or members may be regular
or special.
d) A financial report for the
SEC. 49. Regular and Special Meetings of preceding year, which shall include financial
Stockholders or Members. – Regular meetings of statements duly signed and certified in accordance
stockholders or members shall be held annually on a date with this Code and the rules the Commission may
fixed in the bylaws, or if not so fixed, on any date after April prescribe, a statement on the adequacy of the
15 of every year as determined by the board of directors or corporation’s internal controls or risk
trustees: Provided, That written notice of regular meetings management systems, and a statement of all
shall be sent to all stockholders or members of record at least external audit and non-audit fees;
twenty-one (21) days prior to the meeting, unless a different
period is required in the bylaws, law, or regulation: e) An explanation of the
Provided, further, That written notice of regular meetings dividend policy and the fact of payment of
may be sent to all stockholders or members of record through dividends or the reasons
electronic mail or such other manner as the Commission for nonpayment thereof;
shall allow under its guidelines.
f) Director or trustee profiles
At each regular meeting of stockholders or which shall include, among others, their
members, the board of directors or trustees shall endeavor to qualifications and relevant experience, length of
present to stockholders or members the following: service in the corporation, trainings and
a) The minutes of the most recent regular meeting continuing education attended, and their board
which shall include, among others: representations in other corporations;

(1) A description of the voting and vote g) A director or trustee

tabulation procedures used in the previous meeting; attendance report, indicating the attendance of
each director or trustee at each of the meetings of
the board and its committees and in regular or
(2) A description of the opportunity given to special stockholder meetings;
stockholders or members to ask questions and a record
of the questions asked and answers given;
h) Appraisals and performance
reports for the board and the criteria and procedure
(3) The matters discussed and resolutions for
reached; assessment;

(4) A record of the voting results for each i) A director or trustee

agenda item; compensation report prepared in accordance with
this Code and the
(5) A list of the directors or trustees, officers rules the Commission may prescribe;
and stockholders or members who attended the
meeting; and j) Director disclosures on self-
dealings and related party transactions; and/or
(6) Such other items that the Commission
may require in the interest of good corporate k) The profiles of directors
governance and the protection of minority nominated or seeking election or reelection.
stockholders.
A director, trustee, stockholder, or member may
b) A members’ list for nonstock propose any other matter for inclusion in the agenda at any
corporations and, for stock corporations, material regular meeting of stockholders or members.
information on the current stockholders, and their voting
rights; Special meetings of stockholders or members shall
be held at any time deemed necessary or as provided in the
bylaws: Provided, however, That at least one (1) week
written notice shall be sent to all stockholders or members,

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unless a different period is provided in the bylaws, law or areas shall, for purposes of this section, be considered a city
regulation. or municipality.

A stockholder or member may propose the holding Notice of meetings shall be sent through the means
of a special meeting and items to be included in the agenda. of communication provided in the bylaws, which notice shall
state the time, place and purpose of the meetings.
Notice of any meeting may be waived, expressly
or impliedly, by any stockholder or member: Provided, That Each notice of meeting shall further be
general waivers of notice in the articles of incorporation or accompanied by the following:
the bylaws shall not be allowed: Provided, further, That
attendance at a meeting shall constitute a waiver of notice of (a) The agenda for the meeting;
such meeting, except when the person attends a meeting for
the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or (b) A proxy form which shall be submitted
convened. to the corporate secretary within a reasonable time prior to
the meeting;
Whenever for any cause, there is no person
authorized or the person authorized unjustly refuses to call a (c) When attendance, participation, and
meeting, the Commission, upon petition of a stockholder or voting are allowed by remote communication or in absentia,
member on a showing of good cause therefor, may issue an the requirements and procedures to be followed when a
order directing the petitioning stockholder or member to call stockholder or member elects either option; and
a meeting of the corporation by giving proper notice required
by this Code or the bylaws. The petitioning stockholder or (d) When the meeting is for the election of
member shall preside thereat until at least a majority of the directors or trustees, the requirements and procedure for
stockholders or members present have chosen from among nomination and election.
themselves, a presiding officer.
All proceedings and any business transacted at a
Unless the bylaws provide for a longer period, the meeting of the stockholders or members, if within the powers
stock and transfer book or membership book shall be closed or authority of the corporation, shall be valid even if the
at least twenty (20) days for regular meetings and seven (7) meeting is improperly held or called: Provided, That all the
days for special meetings before the scheduled date of the stockholders or members of the corporation are present or
meeting. duly represented at the meeting and not one of them
expressly states at the beginning of the meeting that the
In case of postponement of stockholders’ or purpose of their attendance is to object to the transaction of
members’ regular meetings, written notice thereof and the any business because the meeting is not lawfully called or
reason therefor shall be sent to all stockholders or members convened.
of record at least two (2) weeks prior to the date of the
meeting, unless a different period is required under the SEC. 51. Quorum in Meetings. – Unless
bylaws, law or regulation. otherwise provided in this Code or in the bylaws, a quorum
shall consist of the stockholders representing a majority of
The right to vote of stockholders or members may the outstanding capital stock or a majority of the members in
be exercised in person, through a proxy, or when so the case of nonstock corporations.
authorized in the bylaws, through remote communication or
in absentia. The Commission shall issue the rules and SEC. 52. Regular and Special Meetings of
regulations governing participation and voting through Directors or Trustees; Quorum. – Unless the articles of
remote communication or in absentia, taking into account incorporation or the bylaws provides for a greater majority,
the company’s scale, number of shareholders or members, a majority of the directors or trustees as stated in the articles
structure, and other factors consistent with the protection and of incorporation shall constitute a quorum to transact
promotion of shareholders’ or member’s meetings. corporate business, and every decision reached by at least a
majority of the directors or trustees constituting a quorum,
SEC. 50. Place and Time of Meetings of except for the election of officers which shall require the vote
Stockholders or Members. – Stockholders’ or members’ of a majority of all the members of the board, shall be valid
meetings, whether regular or special, shall be held in the as a corporate act.
principal office of the corporation as set forth in the articles
of incorporation, or, if not practicable, in the city or Regular meetings of the board of directors or
municipality where the principal office of the corporation is trustees of every corporation shall be held monthly, unless
located: Provided, That any city or municipality in Metro the bylaws provide otherwise.
Manila, Metro Cebu, Metro Davao, and other Metropolitan

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 Special meetings of the board of directors or SEC. 57. Manner of Voting; Proxies. –
trustees may be held at any time upon the call of the president Stockholders and members may vote in person or by proxy
or as provided in the bylaws. in all meetings of stockholders or members.

Meetings of directors or trustees of corporations When so authorized in the bylaws or by a majority

may be held anywhere in or outside of the Philippines, unless of the board of directors, the stockholders or members of
the bylaws provide otherwise. Notice of regular or special corporations may also vote through remote communication
meetings stating the date, time and place of the meeting must or in absentia: Provided, That the votes are received before
be sent to every director or trustee at least two (2) days prior the corporation finishes the tally of votes.
to the scheduled meeting, unless a longer time is provided in
the bylaws. A director or trustee may waive this requirement, A stockholder or member who participates through
either expressly or impliedly. remote communication or in absentia, shall be deemed
present for purposes of quorum.
Directors or trustees who cannot physically attend
or vote at board meetings can participate and vote through The corporation shall establish the appropriate
remote communication such as videoconferencing, requirements and procedures for voting through remote
teleconferencing, or other alternative modes of communication and in absentia, taking into account the
communication that allow them reasonable opportunities to company’s scale, number of shareholders or members,
participate. Directors or trustees cannot attend or vote by structure and other factors consistent with the basic right of
proxy at board meetings. corporate suffrage.

A director or trustee who has a potential interest in Proxies shall be in writing, signed and filed, by the
any related party transaction must recuse from voting on the stockholder or member, in any form authorized in the bylaws
approval of the related party transaction without prejudice to and received by the corporate secretary within a reasonable
compliance with the requirements of Section 31 of this Code. time before the scheduled meeting. Unless otherwise
provided in the proxy form, it shall be valid only for the
SEC. 53. Who Shall Preside at Meetings. – The meeting for which it is intended. No proxy shall be valid and
chairman or, in his absence, the president shall preside at all effective for a period longer than five (5) years at any one
meetings of the directors or trustees as well as of the time.
stockholders or members, unless the bylaws provide
otherwise. SEC. 58. Voting Trusts. – One or more
stockholders of a stock corporation may create a voting trust
SEC. 54. Right to Vote of Secured Creditors and for the purpose of conferring upon a trustee or trustees the
Administrators. – In case a stockholder grants security right to vote and other rights pertaining to the shares for a
interest in his or her shares in stock corporations, the period not exceeding five (5) years at any time: Provided,
stockholder-grantor shall have the right to attend and vote at That in the case of a voting trust specifically required as a
meetings of stockholders, unless the secured creditor is condition in a loan agreement, said voting trust may be for a
expressly given by the stockholder-grantor such right in period exceeding five (5) years but shall automatically expire
writing which is recorded in the appropriate corporate books. upon full payment of the loan. A voting trust agreement must
be in writing and notarized, and shall specify the terms and
Executors, administrators, receivers, and other conditions thereof. A certified copy of such agreement shall
legal representatives duly appointed by the court may attend be filed with the corporation and with the Commission;
and vote in behalf of the stockholders or members without otherwise, the agreement is ineffective and unenforceable.
need of any written proxy. The certificate or certificates of stock covered by the voting
trust agreement shall be cancelled and new ones shall be
SEC. 55. Voting in Case of Joint Ownership of issued in the name of the trustee or trustees, stating that they
Stock. – The consent of all the co-owners shall be necessary are issued pursuant to said agreement. The books of the
in voting shares of stock owned jointly by two (2) or more corporation shall state that the transfer in the name of the
persons, unless there is a written proxy, signed by all the co- trustee or trustees is made pursuant to the voting trust
owners, authorizing one (1) or some of them or any other agreement.
person to vote such share or shares: Provided, That when the
shares are owned in an “and/or” capacity by the holders The trustee or trustees shall execute and deliver to
thereof, any one of the joint owners can vote said shares or the transferors, voting trust certificates, which shall be
appoint a proxy therefor. transferable in the same manner and with the same effect as
certificates of stock.
SEC. 56. Voting Right for Treasury Shares. –
Treasury shares shall have no voting right as long as such The voting trust agreement filed with the
shares remain in the Treasury. corporation shall be subject to examination by any
stockholder of the corporation in the same manner as any

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other corporate book or record: Provided, That both the valuation equal to the par or issued value of the stock
trustor and the trustee or trustees may exercise the right of issued;
inspection of all corporate books and records in accordance
with the provisions of this Code. (c) Labor performed for or services actually
rendered to the corporation;
Any other stockholder may transfer the shares to
the same trustee or trustees upon the terms and conditions
stated in the voting trust agreement, and thereupon shall be (d) Previously incurred indebtedness of the
corporation;
bound by all the provisions of said agreement.

No voting trust agreement shall be entered into for (e) Amounts transferred from unrestricted
purposes of circumventing the laws against anti-competitive retained earnings to stated capital;
agreements, abuse of dominant position, anti-competitive
mergers and acquisitions, violation of nationality and capital (f) Outstanding shares exchanged for
requirements, or for the perpetuation of fraud. stocks in the event of reclassification or conversion;

Unless expressly renewed, all rights granted in a

(g) Shares of stock in another corporation;
voting trust agreement shall automatically expire at the end
and/or
of the agreed period. The voting trust certificates as well as
the certificates of stock in the name of the trustee or trustees
shall thereby be deemed cancelled and new certificates of (h) Other generally accepted form of
stock shall be reissued in the name of the trustors. consideration.

The voting trustee or trustees may vote by proxy Where the consideration is other than actual cash, or
or in any manner authorized under the bylaws unless the consists of intangible property such as patents or copyrights,
agreement provides otherwise. the valuation thereof shall initially be determined by the
stockholders or the board of directors, subject to the approval
of the Commission.
TITLE VII
STOCKS AND STOCKHOLDERS Shares of stock shall not be issued in exchange for
promissory notes or future service. The same considerations
SEC. 59. Subscription Contract. – Any contract provided in this section, insofar as applicable, may be used
for the acquisition of unissued stock in an existing for the issuance of bonds by the corporation.
corporation or a corporation still to be formed shall be
The issued price of no-par value shares may be
deemed a subscription within the meaning of this Title,
fixed in the articles of incorporation or by the board of
notwithstanding the fact that the parties refer to it as a
directors pursuant to authority conferred by the articles of
purchase or some other contract.
incorporation or the bylaws, or if not so fixed, by the
stockholders representing at least a majority of the
SEC. 60. Pre-incorporation Subscription. – A
outstanding capital stock at a meeting duly called for the
subscription of shares in a corporation still to be formed shall
purpose.
be irrevocable for a period of at least six (6) months from the
date of subscription, unless all of the other subscribers
SEC. 62. Certificate of Stock and Transfer of
consent to the revocation, or the corporation fails to
Shares. – The capital stock of corporations shall be divided
incorporate within the same period or within a longer period
into shares for which certificates signed by the president or
stipulated in the contract of subscription. No pre-
vice president, countersigned by the secretary or assistant
incorporation subscription may be revoked after the articles
secretary, and sealed with the seal of the corporation shall be
of incorporation is submitted to the Commission.
issued in accordance with the bylaws. Shares of stock so
issued are personal property and may be transferred by
SEC. 61. Consideration for Stocks. – Stocks shall delivery of the certificate or certificates indorsed by the
not be issued for a consideration less than the par or issued owner, his attorneyin-fact, or any other person legally
price thereof. Consideration for the issuance of stock may authorized to make the transfer. No transfer, however, shall
be: be valid, except as between the parties, until the transfer is
recorded in the books of the corporation showing the names
(a) Actual cash paid to the corporation; of the parties to the transaction, the date of the transfer, the
number of the certificate or certificates, and the number of
(b) Property, tangible or intangible, actually shares transferred. The Commission may require
received by the corporation and necessary or corporations whose securities are traded in trading markets
convenient for its use and lawful purposes at a fair and which can reasonably demonstrate their capability to do
so to issue their securities or shares of stocks in

Page 17 of 41
uncertificated or scripless form in accordance with the rules place of the sale which shall not be less than thirty (30) days
of the Commission. nor more than sixty (60) days from the date the stocks
become delinquent.
No shares of stock against which the corporation
holds any unpaid claim shall be transferable in the books of Notice of the sale, with a copy of the resolution,
the corporation. shall be sent to every delinquent stockholder either
personally, by registered mail, or through other means
SEC. 63. Issuance of Stock Certificates. – No provided in the bylaws. The same shall be published once a
certificate of stock shall be issued to a subscriber until the week for two (2) consecutive weeks in a newspaper of
full amount of the subscription together with interest and general circulation in the province or city where the principal
expenses (in case of delinquent shares), if any is due, has office of the corporation is located.
been paid.
Unless the delinquent stockholder pays to the
SEC. 64. Liability of Directors for Watered corporation, on or before the date specified for the sale of the
Stocks. – A director or officer of a corporation who: (a) delinquent stock, the balance due on the former’s
consents to the issuance of stocks for a consideration less subscription, plus accrued interest, costs of advertisement
than its par or issued value; (b) consents to the issuance of and expenses of sale, or unless the board of directors
stocks for a consideration other than cash, valued in excess otherwise orders, said delinquent stock shall be sold at a
of its fair value; or (c) having knowledge of the insufficient public auction to such bidder who shall offer to pay the full
consideration, does not file a written objection with the amount of the balance on the subscription together with
corporate secretary, shall be liable to the corporation or its accrued interest, costs of advertisement and expenses of sale,
creditors, solidarily with the stockholder concerned for the for the smallest number of shares or fraction of a share. The
difference between the value received at the time of issuance stock so purchased shall be transferred to such purchaser in
of the stock and the par or issued value of the same. the books of the corporation and a certificate for such stock
shall be issued in the purchaser’s favor. The remaining
SEC. 65. Interest on Unpaid Subscriptions. – shares, if any, shall be credited in favor of the delinquent
Subscribers to stocks shall be liable to the corporation for stockholder who shall likewise be entitled to the issuance of
interest on all unpaid subscriptions from the date of a certificate of stock covering such shares.
subscription, if so required by and at the rate of interest fixed
in the subscription contract. If no rate of interest is fixed in Should there be no bidder at the public auction
the subscription contract, the prevailing legal rate shall who offers to pay the full amount of the balance on the
apply. subscription together with accrued interest, costs of
advertisement, and expenses of sale, for the smallest number
SEC. 66. Payment of Balance of Subscription. – of shares or fraction of a share, the corporation may, subject
Subject to the provisions of the subscription contract, the to the provisions of this Code, bid for the same, and the total
board of directors may, at any time, declare due and payable amount due shall be credited as fully paid in the books of the
to the corporation unpaid subscriptions and may collect the corporation. Title to all the shares of stock covered by the
same or such percentage thereof, in either case, with accrued subscription shall be vested in the corporation as treasury
interest, if any, as it may deem necessary. shares and may be disposed of by said corporation in
accordance with the provisions of this Code.
Payment of unpaid subscription or any percentage
thereof, together with any interest accrued shall be made on SEC. 68. When Sale May be Questioned. – No
the date specified in the subscription contract or on the date action to recover delinquent stock sold can be sustained upon
stated in the call made by the board. Failure to pay on such the ground of irregularity or defect in the notice of sale, or in
date shall render the entire balance due and payable and shall the sale itself of the delinquent stock, unless the party
make the stockholder liable for interest at the legal rate on seeking to maintain such action first pays or tenders to the
such balance, unless a different interest rate is provided in party holding the stock the sum for which the same was sold,
the subscription contract. The interest shall be computed with interest from the date of sale at the legal rate. No such
from the date specified, until full payment of the action shall be maintained unless a complaint is filed within
subscription. If no payment is made within thirty (30) days six (6) months from the date of sale.
from the said date, all stocks covered by the subscription
shall thereupon become delinquent and shall be subject to SEC. 69. Court Action to Recover Unpaid
sale as hereinafter provided, unless the board of directors Subscription. – Nothing in this Code shall prevent the
orders otherwise. corporation from collecting through court action, the amount
due on any unpaid subscription, with accrued interest, costs
SEC. 67. Delinquency Sale. – The board of and expenses.
directors may, by resolution, order the sale of delinquent
stock and shall specifically state the amount due on each SEC. 70. Effect of Delinquency. – No delinquent
subscription plus all accrued interest, and the date, time and stock shall be voted for, be entitled to vote, or be represented

Page 18 of 41
at any stockholder’s meeting, nor shall the holder thereof be Except in case of fraud, bad faith, or negligence on
entitled to any of the rights of a stockholder except the right the part of the corporation and its officers, no action may be
to dividends in accordance with the provisions of this Code, brought against any corporation which shall have issued
until and unless payment is made by the holder of such certificate of stock in lieu of those lost, stolen or destroyed
delinquent stock for the amount due on the subscription with pursuant to the procedure above-described.
accrued interest, and the costs and expenses of
advertisement, if any.
TITLE VIII
SEC. 71. Rights of Unpaid Shares, CORPORATE BOOKS AND RECORDS
Nondelinquent. – Holders of subscribed shares not fully
paid which are not delinquent shall have all the rights of a SEC. 73. Books to be Kept; Stock Transfer
stockholder. Agent. – Every corporation shall keep and carefully preserve
at its principal office all information relating to the
SEC. 72. Lost or Destroyed Certificates. – The corporation including, but not limited to:
following procedure shall be followed by a corporation in
issuing new certificates of stock in lieu of those which have
been lost, stolen or destroyed:
(a) The articles of incorporation and bylaws
of the corporation and all their amendments;

(a) The registered owner of a certificate of

(b) The current ownership structure and
stock in a corporation or such person’s legal representative
voting rights of the corporation, including lists of
shall file with the corporation an affidavit in triplicate setting
stockholders or members, group structures, intra-group
forth, if possible, the circumstances as to how the certificate
relations, ownership data, and beneficial ownership;
was lost, stolen or destroyed, the number of shares
represented by such certificate, the serial number of the
certificate and the name of the corporation which issued the (c) The names and addresses of all the
same. The owner of such certificate of stock shall also members of the board of directors or trustees and the
submit such other information and evidence as may be executive officers;
deemed necessary; and
(d) A record of all business transactions;
(b) After verifying the affidavit and other
information and evidence with the books of the corporation, (e) A record of the resolutions of the board
the corporation shall publish a notice in a newspaper of of directors or trustees and of the stockholders or members;
general circulation in the place where the corporation has its
principal office, once a week for three (3) consecutive weeks
at the expense of the registered owner of the certificate of
(f) Copies of the latest reportorial
requirements submitted to the Commission; and
stock which has been lost, stolen or destroyed. The notice
shall state the name of the corporation, the name of the
registered owner, the serial number of the certificate, the (g) The minutes of all meetings of
number of shares represented by such certificate, and shall stockholders or members, or of the board of directors or
state that after the expiration of one (1) year from the date of trustees. Such minutes shall set forth in detail, among others:
the last publication, if no contest has been presented to the the time and place of the meeting held, how it was
corporation regarding the certificate of stock, the right to authorized, the notice given, the agenda therefor, whether the
make such contest shall be barred and the corporation shall meeting was regular or special, its object if special, those
cancel the lost, destroyed or stolen certificate of stock in its present and absent, and every act done or ordered done at the
books. In lieu thereof, the corporation shall issue a new meeting. Upon the demand of a director, trustee, stockholder
certificate of stock, unless the registered owner files a bond or member, the time when any director, trustee, stockholder
or other security as may be required, effective for a period of or member entered or left the meeting must be noted in the
one (1) year, for such amount and in such form and with such minutes; and on a similar demand, the yeas and nays must be
sureties as may be satisfactory to the board of directors, in taken on any motion or proposition, and a record thereof
which case a new certificate may be issued even before the carefully made. The protest of a director, trustee, stockholder
expiration of the one (1) year period provided herein. If a or member on any action or proposed action must be
contest has been presented to the corporation or if an action recorded in full upon their demand.
is pending in court regarding the ownership of the certificate
of stock which has been lost, stolen or destroyed, the Corporate records, regardless of the form in which
issuance of the new certificate of stock in lieu thereof shall they are stored, shall be open to inspection by any director,
be suspended until the court renders a final decision trustee, stockholder or member of the corporation in person
regarding the ownership of the certificate of stock which has or by a representative at reasonable hours on business days,
been lost, stolen or destroyed. and a demand in writing may be made by such director,
trustee or stockholder at their expense, for copies of such

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records or excerpts from said records. The inspecting or and transfer book shall be kept in the principal office of the
reproducing party shall remain bound by confidentiality corporation or in the office of its stock transfer agent and
rules under prevailing laws, such as the rules on trade secrets shall be open for inspection by any director or stockholder of
or processes under Republic Act No. 8293, otherwise known the corporation at reasonable hours on business days.
as the “Intellectual Property Code of the Philippines”, as
amended, Republic Act No. 10173, otherwise known as the A stock transfer agent or one engaged principally in
“Data Privacy Act of 2012”, Republic Act No. 8799, the business of registering transfers of stocks in behalf of a
otherwise known as stock corporation shall be allowed to operate in the
“The Securities Regulation Code”, and the Rules of Court. Philippines upon securing a license from the Commission
and the payment of a fee to be fixed by the Commission,
A requesting party who is not a stockholder or which shall be renewable annually: Provided, That a stock
member of record, or is a competitor, director, officer, corporation is not precluded from performing or making
controlling stockholder or otherwise represents the interests transfers of its own stocks, in which case all the rules and
of a competitor shall have no right to inspect or demand regulations imposed on stock transfer agents, except the
reproduction of corporate records. payment of a license fee herein provided, shall be applicable:
Provided, further, That the Commission may require stock
Any stockholder who shall abuse the rights granted corporations which transfer and/or trade stocks in secondary
under this section shall be penalized under Section 158 of markets to have an independent transfer agent.
this Code, without prejudice to the provisions of Republic
Act No. 8293, otherwise known as the “Intellectual Property SEC. 74. Right to Financial Statements. – A
Code of the Philippines”, as amended, and Republic Act No. corporation shall furnish a stockholder or member, within
10173, otherwise known as the “Data Privacy Act of 2012”. ten (10) days from receipt of their written request, its most
recent financial statement, in the form and substance of the
Any officer or agent of the corporation who shall financial reporting required by the Commission.
refuse to allow the inspection and/or reproduction of records
in accordance with the provisions of this Code shall be liable At the regular meeting of stockholders or members,
to such director, trustee, stockholder or member for the board of directors or trustees shall present to such
damages, and in addition, shall be guilty of an offense which stockholders or members a financial report of the operations
shall be punishable under Section 161 of this Code: of the corporation for the preceding year, which shall include
Provided, That if such refusal is made pursuant to a financial statements, duly signed and certified in accordance
resolution or order of the board of directors or trustees, the with this Code, and the rules the Commission may prescribe.
liability under this section for such action shall be imposed
upon the directors or trustees who voted for such refusal: However, if the total assets or total liabilities of the
Provided, further, That it shall be a defense to any action corporation is less than Six hundred thousand pesos
under this section that the person demanding to examine and (P600,000.00), or such other amount as may be determined
copy excerpts from the corporation’s records and minutes appropriate by the Department of Finance, the financial
has improperly used any information secured through any statements may be certified under oath by the treasurer and
prior examination of the records or minutes of such the president.
corporation or of any other corporation, or was not acting in
good faith or for a legitimate purpose in making the demand
TITLE IX
to examine or reproduce corporate records, or is a
competitor, director, officer, controlling stockholder or
MERGER AND CONSOLIDATION
otherwise represents the interests of a competitor.
SEC. 75. Plan of Merger or Consolidation. – Two
If the corporation denies or does not act on a demand (2) or more corporations may merge into a single corporation
for inspection and/or reproduction, the aggrieved party may which shall be one of the constituent corporations or may
report such to the Commission. Within five (5) days from consolidate into a new single corporation which shall be the
receipt of such report, the Commission shall conduct a consolidated corporation.
summary investigation and issue an order directing the
inspection or reproduction of the requested records. The board of directors or trustees of each
corporation, party to the merger or consolidation, shall
Stock corporations must also keep a stock and approve a plan of merger or consolidation setting forth the
transfer book, which shall contain a record of all stocks in following:
the names of the stockholders alphabetically arranged; the
installments paid and unpaid on all stocks for which (a) The names of the corporations
subscription has been made, and the date of payment of any proposing to merge or consolidate, hereinafter referred to as
installment; a statement of every alienation, sale or transfer the constituent corporations;
of stock made, the date thereof, by and to whom made; and
such other entries as the bylaws may prescribe. The stock

Page 20 of 41
 (b) The terms of the merger or consolidation (b) As to stock corporations, the number of
and the mode of carrying the same into effect; shares outstanding, or in the case of nonstock corporations,
the number of members;
(c) A statement of the changes, if any, in the
articles of incorporation of the surviving corporation in case (c) As to each corporation, the number of
of merger; and, in case of consolidation, all the statements shares or members voting for or against such plan,
required to be set forth in the articles of incorporation for respectively;
corporations organized under this Code; and
(d) The carrying amounts and fair values of
(d) Such other provisions with respect to the the assets and liabilities of the respective companies as of the
proposed merger or consolidation as are deemed necessary agreed cut-off date;
or desirable.
(e) The method to be used in the merger or
SEC. 76. Stockholders’ or Members’ Approval. – consolidation of accounts of the companies;
Upon approval by a majority vote of each of the board of
directors or trustees of the constituent corporations of the
plan of merger or consolidation, the same shall be submitted (f) The provisional or pro forma values, as
merged or consolidated, using the accounting method; and
for approval by the stockholders or members of each of such
corporations at separate corporate meetings duly called for
the purpose. Notice of such meetings shall be given to all (g) Such other information as may be
stockholders or members of the respective corporations in prescribed by the Commission.
the same manner as giving notice of regular or special
meetings under Section 49 of this Code. The notice shall SEC. 78. Effectivity of Merger or Consolidation. –
state the purpose of the meeting and include a copy or a The articles of merger or of consolidation, signed and
summary of the plan of merger or consolidation. certified as required by this Code, shall be submitted to the
Commission for its approval: Provided, That in the case of
The affirmative vote of stockholders representing at merger or consolidation of banks or banking institutions,
least two-thirds (2/3) of the outstanding capital stock of each loan associations, trust companies, insurance companies,
corporation in the case of stock corporations or at least two- public utilities, educational institutions, and other special
thirds (2/3) of the members in the case of nonstock corporations governed by special laws, the favorable
corporations shall be necessary for the approval of such plan. recommendation of the appropriate government agency shall
Any dissenting stockholder may exercise the right of first be obtained. If the Commission is satisfied that the
appraisal in accordance with this Code: Provided, That if merger or consolidation of the corporations concerned is
after the approval by the stockholders of such plan, the board consistent with the provisions of this Code and existing laws,
of directors decides to abandon the plan, the right of it shall issue a certificate approving the articles and plan of
appraisal shall be extinguished. merger or of consolidation, at which time the merger or
consolidation shall be effective.
Any amendment to the plan of merger or
consolidation may be made: Provided, That such amendment If, upon investigation, the Commission has reason to
is approved by a majority vote of the respective boards of believe that the proposed merger or consolidation is contrary
directors or trustees of all the constituent corporations and to or inconsistent with the provisions of this Code or existing
ratified by the affirmative vote of stockholders representing laws, it shall set a hearing to give the corporations concerned
at least two-thirds (2/3) of the outstanding capital stock or of the opportunity to be heard. Written notice of the date, time,
two-thirds (2/3) of the members of each of the constituent and place of hearing shall be given to each constituent
corporations. Such plan, together with any amendment, shall corporation at least two (2) weeks before said hearing. The
be considered as the agreement of merger or consolidation. Commission shall thereafter proceed as provided in this
Code.
SEC. 77. Articles of Merger or Consolidation. –
After the approval by the stockholders or members as SEC. 79. Effects of Merger or Consolidation. – The
required by the preceding section, articles of merger or merger or consolidation shall have the following effects:
articles of consolidation shall be executed by each of the
constituent corporations, to be signed by the president or vice (a) The constituent corporations shall
president and certified by the secretary or assistant secretary become a single corporation which, in case of merger, shall
of each corporation setting forth: be the surviving corporation designated in the plan of
merger; and, in case of consolidation, shall be the
(a) The plan of the merger or the plan of consolidated corporation designated in the plan of
consolidation; consolidation;

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 (b) The separate existence of the constituent
corporations shall cease, except that of the surviving or the SEC. 81. How Right is Exercised. – The dissenting
consolidated corporation; stockholder who votes against a proposed corporate action
may exercise the right of appraisal by making a written
demand on the corporation for the payment of the fair value
(c) The surviving or the consolidated
of shares held within thirty (30) days from the date on which
corporation shall possess all the rights, privileges,
the vote was taken: Provided, That failure to make the
immunities, and powers and shall be subject to all the duties
demand within such period shall be deemed a waiver of the
and liabilities of a corporation organized under this Code;
appraisal right. If the proposed corporate action is
implemented, the corporation shall pay the stockholder,
(d) The surviving or the consolidated upon surrender of the certificate or certificates of stock
corporation shall possess all the rights, privileges, representing the stockholder’s shares, the fair value thereof
immunities and franchises of each constituent corporation; as of the day before the vote was taken, excluding any
and all real or personal property, all receivables due on appreciation or depreciation in anticipation of such corporate
whatever account, including subscriptions to shares and action.
other choses in action, and every other interest of, belonging
to, or due to each constituent corporation, shall be deemed If, within sixty (60) days from the approval of the
transferred to and vested in such surviving or consolidated corporate action by the stockholders, the withdrawing
corporation without further act or deed; and stockholder and the corporation cannot agree on the fair
value of the shares, it shall be determined and appraised by
(e) The surviving or consolidated three (3) disinterested persons, one of whom shall be named
corporation shall be responsible for all the liabilities and by the stockholder, another by the corporation, and the third
obligations of each constituent corporation as though such by the two (2) thus chosen. The findings of the majority of
surviving or consolidated corporation had itself incurred the appraisers shall be final, and their award shall be paid by
such liabilities or obligations; and any pending claim, action the corporation within thirty (30) days after such award is
or proceeding brought by or against any constituent made: Provided, That no payment shall be made to any
corporation may be prosecuted by or against the surviving or dissenting stockholder unless the corporation has
consolidated corporation. The rights of creditors or liens unrestricted retained earnings in its books to cover such
upon the property of such constituent corporations shall not payment: Provided, further, That upon payment by the
be impaired by the merger or consolidation. corporation of the agreed or awarded price, the stockholder
shall forthwith transfer the shares to the corporation.

SEC. 82. Effect of Demand and Termination of

TITLE X
Right. – From the time of demand for payment of the fair
APPRAISAL RIGHT value of a stockholder’s shares until either the abandonment
of the corporate action involved or the purchase of the said
SEC. 80. When the Right of Appraisal May Be shares by the corporation, all rights accruing to such shares,
Exercised. – Any stockholder of a corporation shall have the including voting and dividend rights, shall be suspended in
right to dissent and demand payment of the fair value of the accordance with the provisions of this Code, except the right
shares in the following instances: of such stockholder to receive payment of the fair value
thereof: Provided, That if the dissenting stockholder is not
paid the value of the said shares within thirty (30) days after
(a) In case an amendment to the articles of
the award, the voting and dividend rights shall immediately
incorporation has the effect of changing or restricting the
be restored.
rights of any stockholder or class of shares, or of authorizing
preferences in any respect superior to those of outstanding
shares of any class, or of extending or shortening the term of SEC. 83. When Right to Payment Ceases. – No
corporate existence; demand for payment under this Title may be withdrawn
unless the corporation consents thereto. If, however, such
demand for payment is withdrawn with the consent of the
(b) In case of sale, lease, exchange, transfer, corporation, or if the proposed corporate action is abandoned
mortgage, pledge or other disposition of all or substantially or rescinded by the corporation or disapproved by the
all of the corporate property and assets as provided in this Commission where such approval is necessary, or if the
Code; Commission determines that such stockholder is not entitled
to the appraisal right, then the right of the stockholder to be
(c) In case of merger or consolidation; and paid the fair value of the shares shall cease, the status as the
stockholder shall be restored, and all dividend distributions
(d) In case of investment of corporate funds which would have accrued on the shares shall be paid to the
for any purpose other than the primary purpose of the stockholder.
corporation.

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 SEC. 84. Who Bears Costs of Appraisal. – The costs or the bylaws. Unless so limited, broadened, or denied, each
and expenses of appraisal shall be borne by the corporation, member, regardless of class, shall be entitled to one (1) vote.
unless the fair value ascertained by the appraisers is
approximately the same as the price which the corporation Unless otherwise provided in the articles of
may have offered to pay the stockholder, in which case they incorporation or the bylaws, a member may vote by proxy,
shall be borne by the latter. In the case of an action to recover in accordance with the provisions of this Code. The bylaws
such fair value, all costs and expenses shall be assessed may likewise authorize voting through remote
against the corporation, unless the refusal of the stockholder communication and/or in absentia.
to receive payment was unjustified.
SEC. 89. Nontransferability of Membership. –
SEC. 85. Notation on Certificates; Rights of Membership in a nonstock corporation and all rights arising
Transferee. – Within ten (10) days after demanding payment therefrom are personal and non-transferable, unless the
for shares held, a dissenting stockholder shall submit the articles of incorporation or the bylaws otherwise provide.
certificates of stock representing the shares to the
corporation for notation that such shares are dissenting SEC. 90. Termination of Membership. –
shares. Failure to do so shall, at the option of the corporation, Membership shall be terminated in the manner and for the
terminate the rights under this Title. If shares represented by causes provided in the articles of incorporation or the
the certificates bearing such notation are transferred, and the bylaws. Termination of membership shall extinguish all
certificates consequently cancelled, the rights of the rights of a member in the corporation or in its property,
transferor as a dissenting stockholder under this Title shall unless otherwise provided in the articles of incorporation or
cease and the transferee shall have all the rights of a regular the bylaws.
stockholder; and all dividend distributions which would have
accrued on such shares shall be paid to the transferee.
CHAPTER II
TITLE XI
NONSTOCK CORPORATION TRUSTEES AND OFFICERS

SEC. 86. Definition. – For purposes of this Code and SEC. 91. Election and Term of Trustees. – The
subject to its provisions on dissolution, a nonstock number of trustees shall be fixed in the articles of
corporation is one where no part of its income is distributable incorporation or bylaws which may or may not be more than
as dividends to its members, trustees, or officers: Provided, fifteen (15). They shall hold office for not more than three
That any profit which a nonstock corporation may obtain (3) years until their successors are elected and qualified.
incidental to its operations shall, whenever necessary or Trustees elected to fill vacancies occurring before the
proper, be used for the furtherance of the purpose or purposes expiration of a particular term shall hold office only for the
for which the corporation was organized, subject to the unexpired period.
provisions of this Title.
Except with respect to independent trustees of
The provisions governing stock corporations, when nonstock corporations vested with public interest, only a
pertinent, shall be applicable to nonstock corporations, member of the corporation shall be elected as trustee.
except as may be covered by specific provisions of this Title.
Unless otherwise provided in the articles of
SEC. 87. Purposes. – Nonstock corporations may be incorporation or the bylaws, the members may directly elect
formed or organized for charitable, religious, educational, officers of a nonstock corporation.
professional, cultural, fraternal, literary, scientific, social,
civic service, or similar purposes, like trade, industry, SEC. 92. List of Members and Proxies, Place of
agricultural and like chambers, or any combination thereof, Meetings. – The corporation shall, at all times, keep a list of
subject to the special provisions of this Title governing its members and their proxies in the form the Commission
particular classes of nonstock corporations. may require. The list shall be updated to reflect the members
and proxies of record twenty (20) days prior to any scheduled
election. The bylaws may provide that the members of a
nonstock corporation may hold their regular or special
CHAPTER I
meetings at any place even outside the place where the
principal office of the corporation is located: Provided, That
MEMBERS
proper notice is sent to all members indicating the date, time
and place of the meeting: Provided, further, That the place
SEC. 88. Right to Vote. – The right of the members
of meeting shall be within Philippine territory.
of any class or classes to vote may be limited, broadened, or
denied to the extent specified in the articles of incorporation

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 CHAPTER III b) Each member entitled to vote shall be
given a written notice setting forth the proposed plan of
DISTRIBUTION OF ASSETS IN NONSTOCK distribution or a summary thereof and the date, time and
CORPORATIONS place of such meeting within the time and in the manner
provided in this Code for the giving of notice of meetings;
and
SEC. 93. Rules of Distribution. – The assets of a
nonstock corporation undergoing the process of dissolution
for reasons other than those set forth in Section 139 of this
c) Such plan of distribution shall be
adopted upon approval of at least two-thirds (2/3) of the
Code, shall be applied and distributed as follows:
members having voting rights present or represented by
proxy at such meeting.
(a) All liabilities and obligations of the
corporation shall be paid, satisfied and discharged, or
adequate provision shall be made therefor; TITLE XII
CLOSE CORPORATIONS
(b) Assets held by the corporation upon a
condition requiring return, transfer or conveyance, and SEC. 95. Definition and Applicability of Title. – A
which condition occurs by reason of the dissolution, shall be close corporation, within the meaning of this Code, is one
returned, transferred or conveyed in accordance with such whose articles of incorporation provides that: (a) all the
requirements; corporation’s issued stock of all classes, exclusive of
treasury shares, shall be held of record by not more than a
(c) Assets received and held by the specified number of persons, not exceeding twenty (20); (b)
corporation subject to limitations permitting their use only all the issued stock of all classes shall be subject to one or
for charitable, religious, benevolent, educational or similar more specified restrictions on transfer permitted by this
purposes, but not held upon a condition requiring return, Title; and (c) the corporation shall not list in any stock
transfer or conveyance by reason of the dissolution, shall be exchange or make any public offering of its stocks of any
transferred or conveyed to one (1) or more corporations, class. Notwithstanding the foregoing, a corporation shall not
societies or organizations engaged in activities in the be deemed a close corporation when at least two-thirds (2/3)
Philippines substantially similar to those of the dissolving of its voting stock or voting rights is owned or controlled by
corporation according to a plan of distribution adopted another corporation which is not a close corporation within
pursuant to this Chapter; the meaning of this Code.

(d) Assets other than those mentioned in the Any corporation may be incorporated as a close
preceding paragraphs, if any, shall be distributed in corporation, except mining or oil companies, stock
accordance with the provisions of the articles of exchanges, banks, insurance companies, public utilities,
incorporation or the bylaws, to the extent that the articles of educational institutions and corporations declared to be
incorporation or the bylaws determine the distributive rights vested with public interest in accordance with the provisions
of members, or any class or classes of members, or provide of this Code.
for distribution; and
The provisions of this Title shall primarily govern
close corporations: Provided, That other Titles in this Code
(e) In any other case, assets may be
shall apply suppletorily, except as otherwise provided under
distributed to such persons, societies, organizations or
this Title.
corporations, whether or not organized for profit, as may be
specified in a plan of distribution adopted pursuant to this
SEC. 96. Articles of Incorporation. – The articles of
Chapter.
incorporation of a close corporation may provide for:
SEC. 94. Plan of Distribution of Assets. – A plan
providing for the distribution of assets, consistent with the (a) A classification of shares or rights, the
provisions of this Title, may be adopted by a nonstock qualifications for owning or holding the same, and
corporation in the process of dissolution in the following restrictions on their transfers, subject to the provisions of the
manner: following section;

a) The board of trustees shall, by majority (b) A classification of directors into one (1)
vote, adopt a resolution recommending a plan of distribution or more classes, each of whom may be voted for and elected
and directing the submission thereof to a vote at a regular or solely by a particular class of stock; and
special meeting of members having voting rights;

Page 24 of 41
 (c) Greater quorum or voting requirements in violation of such restriction, the transferee is conclusively
in meetings of stockholders or directors than those provided presumed to have notice of the fact that the stock was
in this Code. acquired in violation of the restriction.

The articles of incorporation of a close corporation (d) Whenever a person to whom stock of a
may provide that the business of the corporation shall be close corporation has been issued or transferred has or is
managed by the stockholders of the corporation rather than conclusively presumed under this section to have notice of:
by a board of directors. So long as this provision continues (1) the person’s ineligibility to be a stockholder of the
in effect, no meeting of stockholders need be called to elect corporation; or (2) that the transfer of stock would cause the
directors: Provided, That the stockholders of the corporation stock of the corporation to be held by more than the number
shall be deemed to be directors for the purpose of applying of persons permitted under its articles of incorporation; or
the provisions of this Code, unless the context clearly (3) that the transfer violates a restriction on transfer of stock,
requires otherwise: Provided, further, That the stockholders and the corporation may, at its option, refuse to register the
of the corporation shall be subject to all liabilities of transfer in the name of the transferee.
directors.
(e) The provisions of subsection (d) shall
The articles of incorporation may likewise provide not be applicable if the transfer of stock, though contrary to
that all officers or employees or that specified officers or subsections (a), (b) or (c), has been consented to by all the
employees shall be elected or appointed by the stockholders, stockholders of the close corporation, or if the close
instead of by the board of directors. corporation has amended its articles of incorporation in
accordance with this Title.
SEC. 97. Validity of Restrictions on Transfer of
Shares. – Restrictions on the right to transfer shares must
appear in the articles of incorporation, in the bylaws, as well (f) The term “transfer”, as used in this
as in the certificate of stock; otherwise, the same shall not be section, is not limited to a transfer for value.
binding on any purchaser in good faith. Said restrictions shall
not be more onerous than granting the existing stockholders (g) The provisions of this section shall not
or the corporation the option to purchase the shares of the impair any right which the transferee may have to either
transferring stockholder with such reasonable terms, rescind the transfer or recover the stock under any express or
conditions or period stated. If, upon the expiration of said implied warranty.
period, the existing stockholders or the corporation fails to
exercise the option to purchase, the transferring stockholder
may sell their shares to any third person. SEC. 99. Agreements by Stockholders. –

SEC. 98. Effects of Issuance or Transfer of Stock (a) Agreements duly signed and executed
in Breach of Qualifying Conditions. – by and among all stockholders before the formation and
organization of a close corporation shall survive the
(a) If a stock of a close corporation is issued incorporation and shall continue to be valid and binding
or transferred to any person who is not eligible to be a holder between such stockholders, if such be their intent, to the
thereof under any provision of the articles of incorporation, extent that such agreements are consistent with the articles
and if the certificate for such stock conspicuously shows the of incorporation, irrespective of where the provisions of such
qualifications of the persons entitled to be holders of record agreements are contained, except those required by this Title
thereof, such person is conclusively presumed to have notice to be embodied in said articles of incorporation.
of the fact of the ineligibility to be a stockholder.
(b) A written agreement signed by two (2)
(b) If the articles of incorporation of a close or more stockholders may provide that in exercising any
corporation states the number of persons, not exceeding voting right, the shares held by them shall be voted as
twenty (20), who are entitled to be stockholders of record, provided or as agreed, or in accordance with a procedure
and if the certificate for such stock conspicuously states such agreed upon by them.
number, and the issuance or transfer of stock to any person
would cause the stock to be held by more than such number (c) No provision in a written agreement
of persons, the person to whom such stock is issued or signed by the stockholders, relating to any phase of corporate
transferred is conclusively presumed to have notice of this affairs, shall be invalidated between the parties on the ground
fact. that its effect is to make them partners among themselves.

(c) If a stock certificate of a close (d) A written agreement among some or all
corporation conspicuously shows a restriction on transfer of of the stockholders in a close corporation shall not be
the corporation’s stock and the transferee acquires the stock invalidated on the ground that it relates to the conduct of the

Page 25 of 41
business and affairs of the corporation as to restrict or
interfere with the discretion or powers of the board of SEC. 103. Deadlocks. – Notwithstanding any
directors: Provided, That such agreement shall impose on the contrary provision in the close corporation’s articles of
stockholders who are parties thereto the liabilities for incorporation, bylaws, or stockholders’ agreement, if the
managerial acts imposed on directors by this Code. directors or stockholders are so divided on the management
of the corporation’s business and affairs that the votes
(e) Stockholders actively engaged in the required for a corporate action cannot be obtained, with the
management or operation of the business and affairs of a consequence that the business and affairs of the corporation
close corporation shall be held to strict fiduciary duties to can no longer be conducted to the advantage of the
each other and among themselves. The stockholders shall be stockholders generally, the Commission, upon written
personally liable for corporate torts unless the corporation petition by any stockholder, shall have the power to arbitrate
has obtained reasonably adequate liability insurance. the dispute. In the exercise of such power, the Commission
shall have authority to make appropriate orders, such as: (a)
SEC. 100. When a Board Meeting is Unnecessary cancelling or altering any provision contained in the articles
or Improperly Held. – Unless the bylaws provide otherwise, of incorporation, bylaws, or any stockholder’s agreement;
any action taken by the directors of a close corporation (b) cancelling, altering or enjoining a resolution or act of the
without a meeting called properly and with due notice shall corporation or its board of directors, stockholders, or
nevertheless be deemed valid if: officers; (c) directing or prohibiting any act of the
corporation or its board of directors, stockholders, officers,
or other persons party to the action; (d) requiring the
(a) Before or after such action is taken, a purchase at their fair value of shares of any stockholder,
written consent thereto is signed by all the directors; or either by the corporation regardless of the availability of
unrestricted retained earnings in its books, or by the other
(b) All the stockholders have actual or stockholders; (e) appointing a provisional director; (f)
implied knowledge of the action and make no prompt dissolving the corporation; or (g) granting such other relief
objection in writing; or as the circumstances may warrant.

(c) The directors are accustomed to take A provisional director shall be an impartial person
informal action with the express or implied acquiescence of who is neither a stockholder nor a creditor of the corporation
all the stockholders; or or any of its subsidiaries or affiliates, and whose further
qualifications, if any, may be determined by the
Commission. A provisional director is not a receiver of the
(d) All the directors have express or implied
corporation and does not have the title and powers of a
knowledge of the action in question and none of them makes
custodian or receiver. A provisional director shall have all
a prompt objection in writing.
the rights and powers of a duly elected director, including the
right to be notified of and to vote at meetings of directors
An action within the corporate powers taken at a until removed by order of the Commission or by all the
meeting held without proper call or notice, is deemed ratified stockholders. The compensation of the provisional director
by a director who failed to attend, unless after having shall be determined by agreement between such director and
knowledge thereof, the director promptly files his written the corporation, subject to approval of the Commission,
objection with the secretary of the corporation. which may fix the compensation absent an agreement or in
the event of disagreement between the provisional director
SEC. 101. Preemptive Right in Close Corporations. and the corporation.
– The preemptive right of stockholders in close corporations
shall extend to all stock to be issued, including reissuance of
SEC. 104. Withdrawal of Stockholder or
treasury shares, whether for money, property or personal Dissolution of Corporation. – In addition and without
services, or in payment of corporate debts, unless the articles prejudice to other rights and remedies available under this
of incorporation provide otherwise. Title, any stockholder of a close corporation may, for any
reason, compel the corporation to purchase shares held at fair
SEC. 102. Amendment of Articles of Incorporation. value, which shall not be less than the par or issued value,
– Any amendment to the articles of incorporation which when the corporation has sufficient assets in its books to
seeks to delete or remove any provision required by this Title cover its debts and liabilities exclusive of capital stock:
or to reduce a quorum or voting requirement stated in said Provided, That any stockholder of a close corporation may,
articles of incorporation shall require the affirmative vote of by written petition to the Commission, compel the
at least two-thirds (2/3) of the outstanding capital stock, dissolution of such corporation whenever any of acts of the
whether with or without voting rights, or of such greater directors, officers, or those in control of the corporation is
proportion of shares as may be specifically provided in the illegal, fraudulent, dishonest, oppressive or unfairly
articles of incorporation for amending, deleting or removing prejudicial to the corporation or any stockholder, or
any of the aforesaid provisions, at a meeting duly called for whenever corporate assets are being misapplied or wasted.
the purpose.

Page 26 of 41
 SEC. 109. Articles of incorporation. – In order to
TITLE XIII become a corporation sole, the chief archbishop, bishop,
SPECIAL CORPORATIONS priest, minister, rabbi or presiding elder of any religious
denomination, sect or church must file with the Commission
articles of incorporation setting forth the following:
CHAPTER I
(a) That the applicant chief archbishop,
EDUCATIONAL CORPORATIONS bishop, priest, minister, rabbi, or presiding elder represents
the religious denomination, sect, or church which desires to
become a corporation sole;
SEC. 105. Incorporation. – Educational
corporations shall be governed by special laws and by the
general provisions of this Code. (b) That the rules, regulations and discipline
of the religious denomination, sect or church are consistent
SEC. 106. Board of Trustees. –Trustees of with becoming a corporation sole and do not forbid it;
educational institutions organized as nonstock corporations
shall not be less than five (5) nor more than fifteen (15): (c) That such chief archbishop, bishop,
Provided, That the number of trustees shall be in multiples priest, minister, rabbi, or presiding elder is charged with the
of five (5). administration of the temporalities and the management of
the affairs, estate and properties of the religious
Unless otherwise provided in the articles of denomination, sect or church within the territorial
incorporation or bylaws, the board of trustees of jurisdiction, so described succinctly in the articles of
incorporated schools, colleges, or other institutions of incorporation;
learning shall, as soon as organized, so classify themselves
that the term of office of one-fifth (1/5) of their number shall (d) The manner by which any vacancy
expire every year. Trustees thereafter elected to fill occurring in the office of chief archbishop, bishop, priest,
vacancies, occurring before the expiration of a particular minister, rabbi, or presiding elder is required to be filled,
term, shall hold office only for the unexpired period. according to the rules, regulations or discipline of the
Trustees elected thereafter to fill vacancies caused by religious denomination, sect or church; and
expiration of term shall hold office for five (5) years. A
majority of the trustees shall constitute a quorum for the
transaction of business. The powers and authority of trustees (e) The place where the principal office of
shall be defined in the bylaws. the corporation sole is to be established and located, which
place must be within the territory of the Philippines.
For institutions organized as stock corporations, the
number and term of directors shall be governed by the The articles of incorporation may include any other
provisions on stock corporations. provision not contrary to law for the regulation of the affairs
of the corporation.

CHAPTER II SEC. 110. Submission of the Articles of

Incorporation. – The articles of incorporation must be
RELIGIOUS CORPORATIONS verified, by affidavit or affirmation of the chief archbishop,
bishop, priest, minister, rabbi, or presiding elder, as the case
may be, and accompanied by a copy of the commission,
SEC. 107. Classes of Religious Corporations. –
certificate of election or letter of appointment of such chief
Religious corporations may be incorporated by one or more
archbishop, bishop, priest, minister, rabbi, or presiding elder,
persons. Such corporations may be classified into
duly certified to be correct by any notary public.
corporations sole and religious societies.
From and after filing with the Commission of the
Religious corporations shall be governed by this
said articles of incorporation, verified by affidavit or
Chapter and by the general provisions on nonstock
affirmation, and accompanied by the documents mentioned
corporations insofar as applicable.
in the preceding paragraph, such chief archbishop, bishop,
priest, minister, rabbi, or presiding elder shall become a
SEC. 108. Corporation sole. – For the purpose of corporation sole and all temporalities, estate and properties
administering and managing, as trustee, the affairs, property of the religious denomination, sect or church theretofore
and temporalities of any religious denomination, sect or administered or managed as such chief archbishop, bishop,
church, a corporation sole may be formed by the chief priest, minister, rabbi, or presiding elder shall be personally
archbishop, bishop, priest, minister, rabbi, or other presiding held in trust as a corporation sole, for the use, purpose,
elder of such religious denomination, sect, or church. exclusive benefit and on behalf of the religious
denomination, sect or church, including hospitals, schools,

Page 27 of 41
colleges, orphan asylums, parsonages, and cemeteries (c) The authorization for the dissolution of
thereof. the corporation by the particular religious denomination,
sect or church; and
SEC. 111. Acquisition and Alienation of Property.
– A corporation sole may purchase and hold real estate and
personal property for its church, charitable, benevolent, or
(d) The names and addresses of the persons
who are to supervise the winding up of the affairs of the
educational purposes, and may receive bequests or gifts for
corporation.
such purposes. Such corporation may sell or mortgage real
property held by it by obtaining an order for that purpose
from the Regional Trial Court of the province where the Upon approval of such declaration of dissolution by
property is situated upon proof that the notice of the the Commission, the corporation shall cease to carry on its
operations except for the purpose of winding up its affairs.
application for leave to sell or mortgage has been made
through publication or as directed by the Court, and that it is
in the interest of the corporation that leave to sell or mortgage SEC. 114. Religious Societies. – Unless forbidden
be granted. The application for leave to sell or mortgage must by competent authority, the Constitution, pertinent rules,
be made by petition, duly verified, by the chief archbishop, regulations, or discipline of the religious denomination, sect
bishop, priest, minister, rabbi, or presiding elder acting as or church of which it is a part, any religious society, religious
corporation sole, and may be opposed by any member of the order, diocese, synod, or district organization of any
religious denomination, sect or church represented by the religious denomination, sect or church, may, upon written
corporation sole: Provided, That in cases where the rules, consent and/or by an affirmative vote at a meeting called for
regulations, and discipline of the religious denomination, the purpose of at least two-thirds (2/3) of its membership,
sect or church, religious society, or order concerned incorporate for the administration of its temporalities or for
represented by such corporation sole regulate the method of the management of its affairs, properties, and estate by filing
acquiring, holding, selling, and mortgaging real estate and with the Commission, articles of incorporation verified by
personal property, such rules, regulations and discipline shall the affidavit of the presiding elder, secretary, or clerk or
govern, and the intervention of the courts shall not be other member of such religious society or religious order, or
necessary. diocese, synod, or district organization of the religious
denomination, sect or church, setting forth the following:
SEC. 112. Filling of Vacancies. – The successors in
office of any chief archbishop, bishop, priest, minister, rabbi, (a) That the religious society or religious
or presiding elder in a corporation sole shall become the order, or diocese, synod, or district organization is a religious
corporation sole on their accession to office and shall be organization of a religious denomination, sect or church;
permitted to transact business as such upon filing a copy of
their commission, certificate of election, or letters of (b) That at least two-thirds (2/3) of its
appointment, duly certified by any notary public with the membership has given written consent or has voted to
Commission. incorporate, at a duly convened meeting of the body;

During any vacancy in the office of chief archbishop,

bishop, priest, minister, rabbi, or presiding elder of any
(c) That the incorporation of the religious
society or religious order, or diocese, synod, or district
religious denomination, sect or church incorporated as a
organization is not forbidden by competent authority or by
corporation sole, the person or persons authorized by the
the Constitution, rules, regulations or discipline of the
rules, regulations or discipline of the religious denomination,
religious denomination, sect or church of which it forms part;
sect or church represented by the corporation sole to
administer the temporalities and manage the affairs, estate,
and properties of the corporation sole shall exercise all the (d) That the religious society or religious
powers and authority of the corporation sole during such order, or diocese, synod, or district organization desires to
vacancy. incorporate for the administration of its affairs, properties
and estate;
SEC. 113. Dissolution. – A corporation sole may be
dissolved and its affairs settled voluntarily by submitting to (e) The place within the Philippines where
the Commission a verified declaration of dissolution, setting the principal office of the corporation is to be established and
forth: located; and

(a) The name of the corporation; (f) The names, nationalities, and residence
addresses of the trustees, not less than five (5) nor more than
(b) The reason for dissolution and winding fifteen (15), elected by the religious society or religious
up; order, or the diocese, synod, or district organization to serve
for the first year or such other period as may be prescribed

Page 28 of 41
by the laws of the religious society or religious order, or of SEC. 121. Single Stockholder as Director,
the diocese, synod, or district organization. President. – The single stockholder shall be the sole director
and president of the One Person Corporation.
CHAPTER III
SEC. 122. Treasurer, Corporate Secretary, and
Other Officers. – Within fifteen (15) days from the issuance
ONE PERSON CORPORATIONS of its certificate of incorporation, the One Person
Corporation shall appoint a treasurer, corporate secretary,
SEC. 115. Applicability of Provisions to One and other officers as it may deem necessary, and notify the
Person Corporations. – The provisions of this Title shall Commission thereof within five (5) days from appointment.
primarily apply to One Person Corporations. Other
provisions of this Code apply suppletorily, except as The single stockholder may not be appointed as
otherwise provided in this Title. the corporate secretary.

SEC. 116. One Person Corporation. – A One A single stockholder who is likewise the self-
Person Corporation is a corporation with a single appointed treasurer of the corporation shall give a bond to
stockholder: Provided, That only a natural person, trust, or the Commission in such a sum as may be required: Provided,
an estate may form a One Person Corporation. That the said stockholder/treasurer shall undertake in writing
to faithfully administer the One Person
Banks and quasi-banks, pre-need, trust, insurance, Corporation’s funds to be received as treasurer, and to
public and publicly-listed companies, and non-chartered disburse and invest the same according to the articles of
government-owned and -controlled corporations may not incorporation as approved by the Commission. The bond
incorporate as One Person Corporations: Provided, further, shall be renewed every two (2) years or as often as may be
That a natural person who is licensed to exercise a profession required.
may not organize as a One Person Corporation for the
purpose of exercising such profession except as otherwise SEC. 123. Special Functions of the Corporate
provided under special laws. Secretary. – In addition to the functions designated by the
One Person Corporation, the corporate secretary shall:
SEC. 117. Minimum Capital Stock Required for
One Person Corporation. – A One Person Corporation shall (a) Be responsible for maintaining the
not be required to have a minimum authorized capital stock minutes book and/or records of the corporation;
except as otherwise provided by special law.

SEC. 118. Articles of Incorporation. – A One

(b) Notify the nominee or alternate nominee
of the death or incapacity of the single stockholder, which
Person Corporation shall file articles of incorporation in
notice shall be given no later than five (5) days from such
accordance with the requirements under Section 14 of this
occurrence;
Code. It shall likewise substantially contain the following:

(a) If the single stockholder is a trust or an

(c) Notify the Commission of the death of
the single stockholder within five (5) days from such
estate, the name, nationality, and residence of the trustee,
occurrence and stating in such notice the names, residence
administrator, executor, guardian, conservator, custodian, or
addresses, and contact details of all known legal heirs; and
other person exercising fiduciary duties together with the
proof of such authority to act on behalf of the trust or estate;
and (d) Call the nominee or alternate nominee
and the known legal heirs to a meeting and advise the legal
heirs with regard to, among others, the election of a new
(b) Name, nationality, residence of the
director, amendment of the articles of incorporation, and
nominee and alternate nominee, and the extent, coverage and
other ancillary and/or consequential matters.
limitation of the authority.
SEC. 124. Nominee and Alternate Nominee. –
SEC. 119. Bylaws. – The One Person Corporation
The single stockholder shall designate a nominee and an
is not required to submit and file corporate bylaws.
alternate nominee who shall, in the event of the single
stockholder’s death or incapacity, take the place of the single
SEC. 120. Display of Corporate Name. – A One
stockholder as director and shall manage the corporation’s
Person Corporation shall indicate the letters “OPC” either
affairs.
below or at the end of its corporate name.
The articles of incorporation shall state the names,
residence addresses and contact details of the nominee and
alternate nominee, as well as the extent and limitations of

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their authority in managing the affairs of the One Person (P600,000.00), the financial statements shall be
Corporation. certified under oath by the corporation’s treasurer and
president.
The written consent of the nominee and alternate
nominee shall be attached to the application for (b) A report containing explanations or
incorporation. Such consent may be withdrawn in writing comments by the president on every qualification,
any time before the death or incapacity of the single reservation, or adverse remark or disclaimer made by
stockholder. the auditor in the latter’s report;

SEC. 125. Term of Nominee and Alternate

Nominee. – When the incapacity of the single stockholder (c) A disclosure of all self-dealings and
is temporary, the nominee shall sit as director and manage related party transactions entered into between the
the affairs of the One Person Corporation until the One Person Corporation and the single stockholder; and
stockholder, by self determination, regains the capacity to
assume such duties. (d) Other reports as the Commission may
require.
In case of death or permanent incapacity of the
single stockholder, the nominee shall sit as director and For purposes of this provision, the fiscal year of a
manage the affairs of the One Person Corporation until the One Person Corporation shall be that set forth in its articles
legal heirs of the single stockholder have been lawfully of incorporation or, in the absence thereof, the calendar year.
determined, and the heirs have designated one of them or
have agreed that the estate shall be the single stockholder of The Commission may place the corporation under
the One Person Corporation. delinquent status should the corporation fail to submit the
reportorial requirements three (3) times, consecutively or
The alternate nominee shall sit as director and intermittently, within a period of five (5) years.
manage the One Person Corporation in case of the
nominee’s inability, incapacity, death, or refusal to SEC. 130. Liability of Single Shareholder. – A
discharge the functions as director and manager of the sole shareholder claiming limited liability has the burden of
corporation, and only for the same term and under the same affirmatively showing that the corporation was adequately
conditions applicable to the nominee. financed.

SEC. 126. Change of Nominee or Alternate Where the single stockholder cannot prove that the
Nominee. – The single stockholder may, at any time, change property of the One Person Corporation is independent of the
its nominee and alternate nominee by submitting to the stockholder’s personal property, the stockholder shall be
Commission the names of the new nominees and their jointly and severally liable for the debts and other liabilities
corresponding written consent. For this purpose, the articles of the One Person Corporation.
of incorporation need not be amended.
The principles of piercing the corporate veil applies
SEC. 127. Minutes Book. – A One Person with equal force to One Person Corporations as with other
Corporation shall maintain a minutes book which shall corporations.
contain all actions, decisions, and resolutions taken by the
One Person Corporation. SEC. 131. Conversion from an Ordinary
Corporation to a One Person Corporation. – When a single
SEC. 128. Records in Lieu of Meetings. – When stockholder acquires all the stocks of an ordinary stock
action is needed on any matter, it shall be sufficient to corporation, the latter may apply for conversion into a One
prepare a written resolution, signed and dated by the single Person Corporation, subject to the submission of such
stockholder, and recorded in the minutes book of the One documents as the Commission may require. If the
Person Corporation. The date of recording in the minutes application for conversion is approved, the Commission
book shall be deemed to be the date of the meeting for all shall issue a certificate of filing of amended articles of
purposes under this Code. incorporation reflecting the conversion. The One Person
Corporation converted from an ordinary stock corporation
SEC. 129. Reportorial Requirements. – The One shall succeed the latter and be legally responsible for all the
Person Corporation shall submit the following within such latter’s outstanding liabilities as of the date of conversion.
period as the Commission may prescribe:
SEC. 132. Conversion from a One Person
(a) Annual financial statements audited by Corporation to an Ordinary Stock Corporation. – A One
an independent certified public accountant: Provided, Person Corporation may be converted into an ordinary stock
That if the total assets or total liabilities of the corporation after due notice to the Commission of such fact
corporation are less than Six Hundred Thousand Pesos and of the circumstances leading to the conversion, and after

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compliance with all other requirements for stock dissolution; (b) the form, manner, and time when the notices
corporations under this Code and applicable rules. Such were given; (c) names of the stockholders and directors or
notice shall be filed with the Commission within sixty (60) members and trustees who approved the dissolution; (d) the
days from the occurrence of the circumstances leading to the date, place, and time of the meeting in which the vote was
conversion into an ordinary stock corporation. If all made; and (e) details of publication.
requirements have been complied with, the Commission
shall issue a certificate of filing of amended articles of The corporation shall submit the following to the
incorporation reflecting the conversion. Commission: (1) a copy of the resolution authorizing the
dissolution, certified by a majority of the board of directors
In case of death of the single stockholder, the or trustees and countersigned by the secretary of the
nominee or alternate nominee shall transfer the shares to the corporation; (2) proof of publication; and (3) favorable
duly designated legal heir or estate within seven (7) days recommendation from the appropriate regulatory agency,
from receipt of either an affidavit of heirship or self- when necessary.
adjudication executed by a sole heir, or any other legal
document declaring the legal heirs of the single stockholder Within fifteen (15) days from receipt of the
and notify the Commission of the transfer. Within sixty (60) verified request for dissolution, and in the absence of any
days from the transfer of the shares, the legal heirs shall withdrawal within said period, the Commission shall
notify the Commission of their decision to either wind up and approve the request and issue the certificate of dissolution.
dissolve the One Person Corporation or convert it into an The dissolution shall take effect only upon the issuance by
ordinary stock corporation. the Commission of a certificate of dissolution.

The ordinary stock corporation converted from a No application for dissolution of banks, banking
One Person Corporation shall succeed the latter and be and quasi-banking institutions, preneed, insurance and trust
legally responsible for all the latter’s outstanding liabilities companies, NSSLAs, pawnshops, and other financial
as of the date of conversion. intermediaries shall be approved by the Commission unless
accompanied by a favorable recommendation of the
appropriate government agency.
TITLE XIV
DISSOLUTION SEC. 135. Voluntary Dissolution Where
Creditors are Affected; Procedure and Contents of Petition.
SEC. 133. Methods of Dissolution. – A – Where the dissolution of a corporation may prejudice the
corporation formed or organized under the provisions of this rights of any creditor, a verified petition for dissolution shall
Code may be dissolved voluntarily or involuntarily. be filed with the Commission. The petition shall be signed
by a majority of the corporation’s board of directors or
SEC. 134. Voluntary Dissolution Where No trustees, verified by its president or secretary or one of its
Creditors are Affected. – If dissolution of a corporation does directors or trustees, and shall set forth all claims and
not prejudice the rights of any creditor having a claim against demands against it, and that its dissolution was resolved
it, the dissolution may be effected by majority vote of the upon by the affirmative vote of the stockholders representing
board of directors or trustees, and by a resolution adopted by at least two-thirds (2/3) of the outstanding capital stock or at
the affirmative vote of the stockholders owning at least least two-thirds (2/3) of the members at a meeting of its
majority of the outstanding capital stock or majority of the stockholders or members called for that purpose. The
members of a meeting to be held upon the call of the petition shall likewise state: (a) the reason for the
directors or trustees. dissolution; (b) the form, manner, and time when the notices
were given; and (c) the date, place, and time of the meeting
At least twenty (20) days prior to the meeting, in which the vote was made. The corporation shall submit
notice shall be given to each shareholder or member of to the Commission the following: (1) a copy of the resolution
record personally, by registered mail, or by any means authorizing the dissolution, certified by a majority of the
authorized under its bylaws whether or not entitled to vote at board of directors or trustees and countersigned by the
the meeting, in the manner provided in Section 50 of this secretary of the corporation; and (2) a list of all its creditors.
Code and shall state that the purpose of the meeting is to vote
on the dissolution of the corporation. Notice of the time, If the petition is sufficient in form and substance,
place, and object of the meeting shall be published once prior the Commission shall, by an order reciting the purpose of the
to the date of the meeting in a newspaper published in the petition, fix a deadline for filing objections to the petition
place where the principal office of said corporation is which date shall not be less than thirty (30) days nor more
located, or if no newspaper is published in such place, in a than sixty (60) days after the entry of the order. Before such
newspaper of general circulation in the Philippines. date, a copy of the order shall be published at least once a
week for three (3) consecutive weeks in a newspaper of
A verified request for dissolution shall be filed general circulation published in the municipality or city
with the Commission stating: (a) the reason for the where the principal office of the corporation is situated, or if

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there be no such newspaper, then in a newspaper of general and filed prior to publication of the order setting the deadline
circulation in the Philippines, and a similar copy shall be for filing objections to the petition.
posted for three (3) consecutive weeks in three (3) public
places in such municipality or city. SEC. 138. Involuntary Dissolution. – A
corporation may be dissolved by the Commission motu
Upon five (5) days’ notice, given after the date on proprio or upon filing of a verified complaint by any
which the right to file objections as fixed in the order has interested party. The following may be grounds for
expired, the Commission shall proceed to hear the petition dissolution of the corporation:
and try any issue raised in the objections filed; and if no such
objection is sufficient, and the material allegations of the (a) Non-use of corporate charter
petition are true, it shall render judgment dissolving the as provided under Section 21 of this Code;
corporation and directing such disposition of its assets as
justice requires, and may appoint a receiver to collect such
assets and pay the debts of the corporation.
(b) Continuous inoperation of a
corporation as provided under Section 21 of this
Code;
The dissolution shall take effect only upon the
issuance by the Commission of a certificate of dissolution.
(c) Upon receipt of a lawful court
SEC. 136. Dissolution by Shortening Corporate order dissolving the corporation;
Term. – A voluntary dissolution may be effected by
amending the articles of incorporation to shorten the (d) Upon finding by final
corporate term pursuant to the provisions of this Code. A judgment that the corporation procured its
copy of the amended articles of incorporation shall be incorporation through fraud;
submitted to the Commission in accordance with this Code.
(e) Upon finding by final
Upon the expiration of the shortened term, as judgment that the corporation:
stated in the approved amended articles of incorporation, the
corporation shall be deemed dissolved without any further
proceedings, subject to the provisions of this Code on (1) Was created for the purpose of
liquidation. committing, concealing or aiding the commission of
securities violations, smuggling, tax evasion, money
In the case of expiration of corporate term, laundering, or graft and corrupt practices;
dissolution shall automatically take effect on the day
following the last day of the corporate term stated in the (2) Committed or aided in the commission
articles of incorporation, without the need for the issuance of securities violations, smuggling, tax evasion, money
by the Commission of a certificate of dissolution. laundering, or graft and corrupt practices, and its
stockholders knew; and
SEC. 137. Withdrawal of Request and Petition
for Dissolution. – A withdrawal of the request for (3) Repeatedly and knowingly tolerated the
dissolution shall be made in writing, duly verified by any commission of graft and corrupt practices or other fraudulent
incorporator, director, trustee, shareholder, or member and or illegal acts by its directors, trustees, officers, or
signed by the same number of incorporators, directors, employees.
trustees, shareholders, or members necessary to request for
dissolution as set forth in the foregoing sections. The If the corporation is ordered dissolved by final
withdrawal shall be submitted no later than fifteen (15) days judgment pursuant to the grounds set forth in subparagraph
from receipt by the Commission of the request for (e) hereof, its assets, after payment of its liabilities, shall,
dissolution. Upon receipt of a withdrawal of request for upon petition of the Commission with the appropriate court,
dissolution, the Commission shall withhold action on the be forfeited in favor of the national government. Such
request for dissolution and shall, after investigation: (a) forfeiture shall be without prejudice to the rights of innocent
make a pronouncement that the request for dissolution is stockholders and employees for services rendered, and to the
deemed withdrawn; (b) direct a joint meeting of the board of application of other penalty or sanction under this Code or
directors or trustees and the stockholders or members for the other laws.
purpose of ascertaining whether to proceed with dissolution;
or (c) issue such other orders as it may deem appropriate. The Commission shall give reasonable notice to,
and coordinate with, the appropriate regulatory agency prior
A withdrawal of the petition for dissolution shall to the involuntary dissolution of companies under their
be in the form of a motion and similar in substance to a special regulatory jurisdiction.
withdrawal of request for dissolution but shall be verified

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 SEC. 139. Corporate Liquidation. – Except for
banks, which shall be covered by the applicable provisions SEC. 142. Application for a License. – A foreign
of Republic Act No. 7653, otherwise known as the “New corporation applying for a license to transact business in the
Central Bank Act”, as amended, and Republic Act No. 3591, Philippines shall submit to the Commission a copy of its
otherwise known as the Philippine Deposit Insurance articles of incorporation and bylaws, certified in accordance
Corporation Charter, as amended, every corporation whose with law, and their translation to an official language of the
charter expires pursuant to its articles of incorporation, is Philippines, if necessary. The application shall be under oath
annulled by forfeiture, or whose corporate existence is and, unless already stated in its articles of incorporation,
terminated in any other manner, shall nevertheless remain as shall specifically set forth the following:
a body corporate for three (3) years after the effective date
of dissolution, for the purpose of prosecuting and defending (a) The date and term of incorporation;
suits by or against it and enabling it to settle and close its
affairs, dispose of and convey its property, and distribute its
assets, but not for the purpose of continuing the business for (b) The address, including the street
which it was established. number, of the principal office of the corporation in the
country or State of incorporation;
At any time during said three (3) years, the
corporation is authorized and empowered to convey all of its (c) The name and address of its resident
property to trustees for the benefit of stockholders, members, agent authorized to accept summons and process in all legal
creditors and other persons in interest. After any such proceedings and all notices affecting the corporation,
conveyance by the corporation of its property in trust for the pending the establishment of a local office;
benefit of its stockholders, members, creditors and others in
interest, all interest which the corporation had in the property (d) The place in the Philippines where the
terminates, the legal interest vests in the trustees, and the corporation intends to operate;
beneficial interest in the stockholders, members, creditors or
other persons-in-interest.
(e) The specific purpose or purposes which
the corporation intends to pursue in the transaction of its
Except as otherwise provided for in Sections 93
business in the Philippines: Provided, That said purpose or
and 94 of this Code, upon the winding up of corporate affairs,
purposes are those specifically stated in the certificate of
any asset distributable to any creditor or stockholder or
authority issued by the appropriate government agency;
member who is unknown or cannot be found shall be
escheated in favor of the national government.
(f) The names and addresses of the present
Except by decrease of capital stock and as directors and officers of the corporation;
otherwise allowed by this Code, no corporation shall
distribute any of its assets or property except upon lawful (g) A statement of its authorized capital
dissolution and after payment of all its debts and liabilities. stock and the aggregate number of shares which the
corporation has authority to issue, itemized by class, par
TITLE XV value of shares, shares without par value, and series, if any;
FOREIGN CORPORATIONS
(h) A statement of its outstanding capital
stock and the aggregate number of shares which the
SEC. 140. Definition and Rights of Foreign corporation has issued, itemized by class, par value of shares,
Corporations. – For purposes of this Code, a foreign shares without par value, and series, if any;
corporation is one formed, organized or existing under laws
other than those of the Philippines’ and whose laws allow
Filipino citizens and corporations to do business in its own (i) A statement of the amount actually paid
country or State. It shall have the right to transact business in; and
in the Philippines after obtaining a license for that purpose
in accordance with this Code and a certificate of authority (j) Such additional information as may be
from the appropriate government agency. necessary or appropriate in order to enable the Commission
to determine whether such corporation is entitled to a license
SEC. 141. Application to Existing Foreign to transact business in the Philippines, and to determine and
Corporations. – Every foreign corporation which, on the assess the fees payable.
date of the effectivity of this Code, is authorized to do
business in the Philippines under a license issued to it shall Attached to the application for license shall be a
continue to have such authority under the terms and certificate under oath duly executed by the authorized
conditions of its license, subject to the provisions of this official or officials of the jurisdiction of its incorporation,
Code and other special laws. attesting to the fact that the laws of the country or State of

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the applicant allow Filipino citizens and corporations to do amount by which the licensee’s gross income for that fiscal
business therein, and that the applicant is an existing year exceeds Ten million pesos (P10,000,000.00). The
corporation in good standing. If the certificate is in a foreign Commission shall also require the deposit of additional
language, a translation thereof in English under oath of the securities or financial instruments if the actual market value
translator shall be attached to the application. of the deposited securities or financial instruments has
decreased by at least ten percent (10%) of their actual market
The application for a license to transact business in value at the time they were deposited. The Commission may,
the Philippines shall likewise be accompanied by a statement at its discretion, release part of the additional deposit if the
under oath of the president or any other person authorized by gross income of the licensee has decreased, or if the actual
the corporation, showing to the satisfaction of the market value of the total deposit has increased, by more than
Commission and when appropriate, other governmental ten percent (10%) of their actual market value at the time
agencies that the applicant is solvent and in sound financial they were deposited. The Commission may, from time to
condition, setting forth the assets and liabilities of the time, allow the licensee to make substitute deposits for those
corporation as of the date not exceeding one (1) year already on deposit as long as the licensee is solvent. Such
immediately prior to the filing of the application. licensee shall be entitled to collect the interest or dividends
on such deposits. In the event the licensee ceases to do
Foreign banking, financial, and insurance business in the Philippines, its deposits shall be returned,
corporations shall, in addition to the above requirements, upon the licensee’s application and upon proof to the
comply with the provisions of existing laws applicable to satisfaction of the Commission that the licensee has no
them. In the case of all other foreign corporations, no liability to Philippine residents, including the Government of
application for license to transact business in the Philippines the Republic of the Philippines. For purposes of computing
shall be accepted by the Commission without previous the securities deposit, the composition of gross income and
authority from the appropriate government agency, allowable deductions therefrom shall be in accordance with
whenever required by law. the rules of the Commission.

SEC. 143. Issuance of a License. – If the SEC. 144. Who May be a Resident Agent. – A
Commission is satisfied that the applicant has complied with resident agent may be either an individual residing in the
all the requirements of this Code and other special laws, rules Philippines or a domestic corporation lawfully transacting
and regulations, the Commission shall issue a license to business in the Philippines: Provided, That an individual
transact business in the Philippines to the applicant for the resident agent must be of good moral character and of sound
purpose or purposes specified in such license. Upon issuance financial standing: Provided, further, That in case of a
of the license, such foreign corporation may commence to domestic corporation who will act as a resident agent, it must
transact business in the Philippines and continue to do so for likewise be of sound financial standing and must show proof
as long as it retains its authority to act as a corporation under that it is in good standing as certified by the Commission.
the laws of the country or State of its incorporation, unless
such license is sooner surrendered, revoked, suspended, or SEC. 145. Resident Agent; Service of Process. – As
annulled in accordance with this Code or other special laws. a condition to the issuance of the license for a foreign
Within sixty (60) days after the issuance of the license to corporation to transact business in the Philippines, such
transact business in the Philippines, the licensee, except corporation shall file with the Commission a written power
foreign banking or insurance corporations, shall deposit with of attorney designating a person who must be a resident of
the Commission for the benefit of present and future the Philippines, on whom summons and other legal
creditors of the licensee in the Philippines, securities processes may be served in all actions or other legal
satisfactory to the Commission, consisting of bonds or other proceedings against such corporation, and consenting that
evidence of indebtedness of the Government of the service upon such resident agent shall be admitted and held
Philippines, its political subdivisions and instrumentalities, as valid as if served upon the duly authorized officers of the
or of government-owned or -controlled corporations and foreign corporation at its home office. Such foreign
entities, shares of stock or debt securities that are registered corporation shall likewise execute and file with the
under Republic Act No. 8799, otherwise known as “The Commission an agreement or stipulation, executed by the
Securities Regulation Code”, shares of stock in domestic proper authorities of said corporation, in form and substance
corporations listed in the stock exchange, shares of stock in as follows:
domestic insurance companies and banks, any financial
instrument determined suitable by the Commission, or any “The (name of foreign corporation) hereby stipulates
combination thereof with an actual market value of at least and agrees, in consideration of being granted a license to
Five hundred thousand pesos (P500,000.00) or such other transact business in the Philippines, that if the corporation
amount that may be set by the Commission: Provided, shall cease to transact business in the Philippines, or shall be
however, That within six (6) months after each fiscal year of without any resident agent in the Philippines on whom any
the licensee, the Commission shall require the licensee to summons or other legal processes may be served, then
deposit additional securities or financial instruments service of any summons or other legal process may be made
equivalent in actual market value to two percent (2%) of the upon the Commission in any action or proceeding arising out

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of any business or transaction which occurred in the requirements on merger or consolidation as provided in this
Philippines and such service shall have the same force and Code are followed.
effect as if made upon the duly authorized officers of the
corporation at its home office.” Whenever a foreign corporation authorized to
transact business in the Philippines shall be a party to a
Whenever such service of summons or other process merger or consolidation in its home country or State as
is made upon the Commission, the Commission shall, within permitted by the law authorizing its incorporation, such
ten (10) days thereafter, transmit by mail a copy of such foreign corporation shall, within sixty (60) days after the
summons or other legal process to the corporation at its home effectivity of such merger or consolidation, file with the
or principal office. The sending of such copy by the Commission, and in proper cases, with the appropriate
Commission shall be a necessary part of and shall complete government agency, a copy of the articles of merger or
such service. All expenses incurred by the Commission for consolidation duly authenticated by the proper official or
such service shall be paid in advance by the party at whose officials of the country or State under whose laws the merger
instance the service is made. or consolidation was effected: Provided, however, That if the
absorbed corporation is the foreign corporation doing
It shall be the duty of the resident agent to business in the Philippines, the latter shall at the same time
immediately notify the Commission in writing of any change file a petition for withdrawal of its license in accordance with
in the resident agent’s address. this Title.

SEC. 146. Law Applicable. – A foreign corporation SEC. 150. Doing Business Without a License. – No
lawfully doing business in the Philippines shall be bound by foreign corporation transacting business in the Philippines
all laws, rules and regulations applicable to domestic without a license, or its successors or assigns, shall be
corporations of the same class, except those which provide permitted to maintain or intervene in any action, suit or
for the creation, formation, organization or dissolution of proceeding in any court or administrative agency of the
corporations or those which fix the relations, liabilities, Philippines; but such corporation may be sued or proceeded
responsibilities, or duties of stockholders, members, or against before Philippine courts or administrative tribunals
officers of corporations to each other or to the corporation. on any valid cause of action recognized under Philippine
laws.
SEC. 147. Amendments to Articles of Incorporation
or Bylaws of Foreign Corporations. – Whenever the articles SEC. 151. Revocation of License. – Without
of incorporation or bylaws of a foreign corporation prejudice to other grounds provided under special laws, the
authorized to transact business in the Philippines are license of a foreign corporation to transact business in the
amended, such foreign corporation shall, within sixty (60) Philippines may be revoked or suspended by the
days after the amendment becomes effective, file with the Commission upon any of the following grounds:
Commission, and in the proper cases, with the appropriate
government agency, a duly authenticated copy of the (a) Failure to file its annual report or pay
amended articles of incorporation or bylaws, indicating any fees as required by this Code;
clearly in capital letters or underscoring the change or
changes made, duly certified by the authorized official or
officials of the country or State of incorporation. Such filing (b) Failure to appoint and maintain a
shall not in itself enlarge or alter the purpose or purposes for resident agent in the Philippines as required by this
which such corporation is authorized to transact business in Title;
the Philippines.
(c) Failure, after change of its resident agent
SEC. 148. Amended License. – A foreign or address, to submit to the Commission a statement of such
corporation authorized to transact business in the Philippines change as required by this Title;
shall obtain an amended license in the event it changes its
corporate name, or desires to pursue other or additional (d) Failure to submit to the Commission an
purposes in the Philippines, by submitting an application authenticated copy of any amendment to its articles of
with the Commission, favorably endorsed by the appropriate incorporation or bylaws or of any articles of merger or
government agency in the proper cases. consolidation within the time prescribed by this Title;

SEC. 149. Merger or Consolidation Involving a

(e) A misrepresentation of any material
Foreign Corporation Licensed in the Philippines. – One or
matter in any application, report, affidavit or other document
more foreign corporations authorized to transact business in
submitted by such corporation pursuant to this Title;
the Philippines may merge or consolidate with any domestic
corporation or corporations if permitted under Philippine
laws and by the law of its incorporation: Provided, That the (f) Failure to pay any and all taxes, imposts,
assessments or penalties, if any, lawfully due to the

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Philippine Government or any of its agencies or political violation, as may be relevant to the general public or to the
subdivisions; parties concerned, subject to the provisions of Republic Act
No. 10173, otherwise known as the “Data Privacy Act of
(g) Transacting business in the Philippines 2012”, and other pertinent laws.
outside of the purpose or purposes for which such
corporation is authorized under its license; The Commission shall give reasonable notice to
and coordinate with the appropriate regulatory agency prior
to any such publication involving companies under their
(h) Transacting business in the Philippines
special regulatory jurisdiction.
as agent of or acting on behalf of any foreign corporation or
entity not duly licensed to do business in the Philippines; or
SEC. 155. Administration of Oaths, Subpoena
of Witnesses and Documents. – The Commission, through
(i) Any other ground as would render it its designated officer, may administer oaths and
unfit to transact business in the Philippines. affirmations, issue subpoena and subpoena duces tecum,
take testimony in any inquiry or investigation, and may
SEC. 152. Issuance of Certificate of Revocation. – perform other acts necessary to the proceedings or to the
Upon the revocation of the license to transact business in the investigation.
Philippines, the Commission shall issue a corresponding
certificate of revocation, furnishing a copy thereof to the SEC. 156. Cease and Desist Orders. – Whenever
appropriate government agency in the proper cases. the Commission has reasonable basis to believe that a person
has violated, or is about to violate this Code, a rule,
The Commission shall also mail the notice and copy regulation, or order of the Commission, it may direct such
of the certificate of revocation to the corporation, at its person to desist from committing the act constituting the
registered office in the Philippines. violation.

SEC. 153. Withdrawal of Foreign Corporations. – The Commission may issue a cease and desist
Subject to existing laws and regulations, a foreign order ex parte to enjoin an act or practice which is fraudulent
corporation licensed to transact business in the Philippines or can be reasonably expected to cause significant,
may be allowed to withdraw from the Philippines by filing a imminent, and irreparable danger or injury to public safety
petition for withdrawal of license. No certificate of or welfare. The ex parte order shall be valid for a maximum
withdrawal shall be issued by the Commission unless all the period of twenty (20) days, without prejudice to the order
following requirements are met: being made permanent after due notice and hearing.

(a) All claims which have accrued in the Thereafter, the Commission may proceed
Philippines have been paid, compromised or settled; administratively against such person in accordance with
Section 158 of this Code, and/or transmit evidence to the
(b) All taxes, imposts, assessments, and Department of Justice for preliminary investigation or
penalties, if any, lawfully due to the Philippine criminal prosecution and/or initiate criminal prosecution for
Government or any of its agencies or political subdivisions, any violation of this Code, rule, or regulation.
have been paid; and
SEC. 157. Contempt. – Any person who, without
justifiable cause, fails or refuses to comply with any lawful
(c) The petition for withdrawal of license order, decision, or subpoena issued by the Commission shall,
has been published once a week for three (3)
after due notice and hearing, be held in contempt and fined
consecutive weeks in a newspaper of general
in an amount not exceeding Thirty thousand pesos
circulation in the Philippines.
(P30,000.00). When the refusal amounts to clear and open
defiance of the Commission’s order, decision, or subpoena,
TITLE XVI the Commission may impose a daily fine of One thousand
INVESTIGATIONS, OFFENSES, AND pesos (P1,000.00) until the order, decision, or subpoena is
PENALTIES complied with.

SEC. 158. Administrative Sanctions. – If, after

SEC. 154. Investigation and Prosecution of due notice and hearing, the Commission finds that any
Offenses. – The Commission may investigate an alleged provision of this Code, rules or regulations, or any of the
violation of this Code, or of rule, regulation, or order of the Commission’s orders has been violated, the Commission
Commission. may impose any or all of the following sanctions, taking
into consideration the extent of participation, nature,
The Commission may publish its findings, orders, effects, frequency and seriousness of the violation:
opinions, advisories, or information concerning any such

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 (a) Imposition of a fine ranging from Five incomplete, inaccurate, false, or misleading information or
thousand pesos (P5,000.00) to Two million pesos statements, shall be punished with a fine ranging from
(P2,000,000.00), and not more than One thousand Twenty thousand pesos (P20,000.00) to Two hundred
pesos (P1,000.00) for each day of continuing violation thousand pesos (P200,000.00). When the wrongful
but in no case to exceed Two million pesos certification is injurious or detrimental to the public, the
(P2,000,000.00); auditor or the responsible person may also be punished with
a fine ranging from Forty thousand pesos (P40,000.00) to
Four hundred thousand pesos (P400,000.00).
(b) Issuance of a permanent cease and
desist order;
SEC. 163. Independent Auditor Collusion;
Penalties. – An independent auditor who, in collusion with
(C) Suspension or revocation of the certificate of
the corporation’s directors or representatives, certifies the
incorporation; and
corporation’s financial statements despite its incompleteness
or inaccuracy, its failure to give a fair and accurate
(d) Dissolution of the corporation and forfeiture of
presentation of the corporation’s condition, or despite
its assets under the conditions in Title XIV of this Code.
containing false or misleading statements, shall be punished
with a fine ranging from Eighty thousand pesos (P80,000.00)
SEC. 159. Unauthorized Use of Corporate Name;
to Five hundred thousand pesos (P500,000.00). When the
Penalties. – The unauthorized use of a corporate name shall
statement or report certified is fraudulent, or has the effect of
be punished with a fine ranging from Ten thousand pesos
causing injury to the general public, the auditor or
(P10,000.00) to Two hundred thousand pesos (P200,000.00).
responsible officer may be punished with a fine ranging from
One hundred thousand pesos (P100,000.00) to Six hundred
SEC. 160. Violation of Disqualification Provision; thousand pesos (P600,000.00).
Penalties. – When, despite the knowledge of the existence
of a ground for disqualification as provided in Section 26 of
SEC. 164. Obtaining Corporate Registration
this Code, a director, trustee or officer willfully holds office,
Through Fraud; Penalties. – Those responsible for the
or willfully conceals such disqualification, such director,
formation of a corporation through fraud, or who assisted
trustee or officer shall be punished with a fine ranging from
directly or indirectly therein, shall be punished with a fine
Ten thousand pesos (P10,000.00) to Two hundred thousand
ranging from Two hundred thousand pesos (P200,000.00) to
pesos (P200,000.00) at the discretion of the court, and shall
Two million pesos (P2,000,000.00). When the violation of
be permanently disqualified from being a director, trustee or
this provision is injurious or detrimental to the public, the
officer of any corporation. When the violation of this
penalty is a fine ranging from Four hundred thousand pesos
provision is injurious or detrimental to the public, the penalty
(P400,000.00) to Five million pesos (P5,000,000.00).
shall be a fine ranging from Twenty thousand pesos
(P20,000.00) to Four hundred thousand pesos
SEC. 165. Fraudulent Conduct of Business;
(P400,000.00).
Penalties. – A corporation that conducts its business through
fraud shall be punished with a fine ranging from Two
SEC. 161. Violation of Duty to Maintain Records, hundred thousand pesos (P200,000.00) to Two million pesos
to Allow their Inspection or Reproduction; Penalties. – The
(P2,000,000.00). When the violation of this provision is
unjustified failure or refusal by the corporation, or by those
injurious or detrimental to the public, the penalty is a fine
responsible for keeping and maintaining corporate records,
ranging from Four hundred thousand pesos (P400,000.00) to
to comply with Sections 45, 73, 92, 128, 177 and other
Five million pesos (P5,000,000.00).
pertinent rules and provisions of this Code on inspection and
reproduction of records shall be punished with a fine ranging
SEC. 166. Acting as Intermediaries for Graft and
from Ten thousand pesos (P10,000.00) to Two hundred
Corrupt Practices; Penalties. – A corporation used for
thousand pesos (P200,000.00), at the discretion of the court,
fraud, or for committing or concealing graft and corrupt
taking into consideration the seriousness of the violation and
practices as defined under pertinent statutes, shall be liable
its implications. When the violation of this provision is
for a fine ranging from One hundred thousand pesos
injurious or detrimental to the public, the penalty is a fine
(P100,000.00) to Five million pesos (P5,000,000.00).
ranging from Twenty thousand pesos (P20,000.00) to Four
hundred thousand pesos (P400,000.00).
When there is a finding that any of its directors,
officers, employees, agents, or representatives are engaged
The penalties imposed under this section shall be
in graft and corrupt practices, the corporation’s failure to
without prejudice to the Commission’s exercise of its
install: (a) safeguards for the transparent and lawful delivery
contempt powers under Section 157 hereof.
of services; and (b) policies, code of ethics, and procedures
against graft and corruption shall be prima facie evidence of
SEC. 162. Willful Certification of Incomplete,
corporate liability under this section.
Inaccurate, False, or Misleading Statements or Reports;
Penalties. – Any person who willfully certifies a report
required under this Code, knowing that the same contains

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 SEC. 167. Engaging Intermediaries for Graft and the principal offenders, at the discretion of the court, after
Corrupt Practices; Penalties. – A corporation that appoints taking into account their participation in the offense.
an intermediary who engages in graft and corrupt practices
for the corporation’s benefit or interest shall be punished
with a fine ranging from One hundred thousand pesos TITLE XVII
(P100,000.00) to One million pesos (P1,000,000.00). MISCELLANEOUS PROVISIONS
SEC. 168. Tolerating Graft and Corrupt Practices;
Penalties. – A director, trustee, or officer who knowingly SEC. 173. Outstanding Capital Stock Defined. –
fails to sanction, report, or file the appropriate action with The term “outstanding capital stock”, as used in this Code,
proper agencies, allows or tolerates the graft and corrupt shall mean the total shares of stock issued under binding
practices or fraudulent acts committed by a corporation’s subscription contracts to subscribers or stockholders,
directors, trustees, officers, or employees shall be punished whether fully or partially paid, except treasury shares.
with a fine ranging from Five hundred thousand pesos
(P500,000.00) to One million pesos (P1,000,000.00). SEC. 174. Designation of Governing Boards. – The
provisions of specific provisions of this Code to the contrary
SEC. 169. Retaliation Against Whistleblowers. – A notwithstanding, nonstock or special corporations may,
whistleblower refers to any person who provides truthful through their articles of incorporation or their bylaws,
information relating to the commission or possible designate their governing boards by any name other than as
commission of any offense or violation under this Code. Any board of trustees.
person who, knowingly and with intent to retaliate, commits
acts detrimental to a whistleblower such as interfering with SEC. 175. Collection and Use of Registration,
the lawful employment or livelihood of the whistleblower, Incorporation and Other Fees. – For a more effective
shall, at the discretion of the court, be punished with a fine implementation of this Code, the Commission is hereby
ranging from One hundred thousand pesos (P100,000.00) to authorized to collect, retain, and use fees, fines, and other
One million pesos (P1,000,000.00). charges pursuant to this Code and its rules and regulations.
The amount collected shall be deposited and maintained in a
SEC. 170. Other Violations of the Code; Separate separate account which shall form a fund for its
Liability. – Violations of any of the other provisions of this modernization and to augment its operational expenses such
Code or its amendments not otherwise specifically penalized as, but not limited to, capital outlay, increase in
therein shall be punished by a fine of not less than Ten compensation and benefits comparable with prevailing rates
thousand pesos (P10,000.00) but not more than One million in the private sector, reasonable employee allowance,
pesos (P1,000,000.00). If the violation is committed by a employee health care services, and other insurance,
corporation, the same may, after notice and hearing, be employee career advancement and professionalization, legal
dissolved in appropriate proceedings before the assistance, seminars, and other professional fees.
Commission: Provided, That such dissolution shall not
preclude the institution of appropriate action against the SEC. 176. Stock Ownership in Corporations. –
director, trustee, or officer of the corporation responsible for Pursuant to the duties specified by Article XIV of the
said violation: Provided, further, That nothing in this section Constitution, the National Economic and Development
shall be construed to repeal the other causes for dissolution Authority (NEDA) shall, from time to time, determine if the
of a corporation provided in this Code. corporate vehicle has been used by any corporation,
business, or industry to frustrate the provisions of this Code
Liability for any of the foregoing offenses shall be or applicable laws, and shall submit to Congress, whenever
separate from any other administrative, civil, or criminal deemed necessary, a report of its findings, including
liability under this Code and other laws. recommendations for their prevention or correction.

SEC. 171. Liability of Directors, Trustees, Officers, The Congress of the Philippines may set maximum
or Other Employees. – If the offender is a corporation, the limits for stock ownership of individuals or groups of
penalty may, at the discretion of the court, be imposed upon individuals related to each other by consanguinity, affinity,
such corporation and/or upon its directors, trustees, or by close business interests, in corporations declared to be
stockholders, members, officers, or employees responsible vested with public interest pursuant to the provisions of this
for the violation or indispensable to its commission. section, or whenever necessary to prevent anti-competitive
practices as provided in Republic Act No. 10667, otherwise
known as the “Philippine Competition Act”, or to implement
SEC. 172. Liability of Aiders and Abettors and
national economic policies designed to promote general
Other Secondary Liability. – Anyone who shall aid, abet,
welfare and economic development, as declared in laws,
counsel, command, induce, or cause any violation of this
rules, and regulations.
Code, or any rule, regulation, or order of the Commission
shall be punished with a fine not exceeding that imposed on
In recommending to the Congress which
corporations, businesses and industries will be declared as

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vested with public interest, and in formulating proposals for records, regulation and supervision of activities,
limitations on stock ownership, the NEDA shall consider the enforcement of compliance, and imposition of sanctions in
type and nature of the industry, size of the enterprise, accordance with this Code.
economies of scale, geographic location, extent of Filipino
ownership, labor intensity of the activity, export potential, as Should the corporation, without justifiable cause,
well as other factors which are germane to the realization and refuse or obstruct the Commission’s exercise of its visitorial
promotion of business and industry. powers, the Commission may revoke its certificate of
incorporation, without prejudice to the imposition of other
SEC. 177. Reportorial Requirements of penalties and sanctions under this Code.
Corporations. – Except as otherwise provided in this Code
or in the rules issued by the Commission, every corporation, All interrogatories propounded by the Commission
domestic or foreign, doing business in the Philippines shall and the answers thereto, as well as the results of any
submit to the Commission: examination made by the Commission or by any other
official authorized by law to make an examination of the
(a) Annual financial statements audited by operations, books, and records of any corporation, shall be
an independent certified public accountant: Provided, kept strictly confidential, except when the law requires the
That if the total assets or total liabilities of the same to be made public, when necessary for the Commission
corporation are less than Six hundred thousand pesos to take action to protect the public or to issue orders in the
(P600,000.00), the financial statements shall be certified exercise of its powers under this Code, or where such
under oath by the corporation’s treasurer or chief interrogatories, answers or results are necessary to be
financial officer; and presented as evidence before any court.

SEC. 179. Powers, Functions, and Jurisdiction of

(b) A general information sheet.
the Commission. – The Commission shall have the power
and authority to:
Corporations vested with public interest must also
submit the following:
(a) Exercise supervision and jurisdiction
over all corporations and persons acting on their behalf,
(1) A director or trustee compensation
except as otherwise provided under this Code;
report; and

(b) Pursuant to Presidential Decree No.

(2) A director or trustee appraisal or
902-A, retain jurisdiction over pending cases involving
performance report and the standards or criteria used to
intra-corporate disputes submitted for final resolution. The
assess each director or trustee.
Commission shall retain jurisdiction over pending
suspension of payment/rehabilitation cases filed as of 30
The reportorial requirements shall be submitted June 2000 until finally disposed;
annually and within such period as may be prescribed by the
Commission.
(c) Impose sanctions for the violation of this
The Commission may place the corporation under Code, its implementing rules and orders of the Commission;
delinquent status in case of failure to submit the reportorial
requirements three (3) times, consecutively or intermittently, (d) Promote corporate governance and the
within a period of five (5) years. The Commission shall give protection of minority investors, through, among others, the
reasonable notice to and coordinate with the appropriate issuance of rules and regulations consistent with
regulatory agency prior to placing under delinquent status international best practices;
companies under their special regulatory jurisdiction.
(e) Issue opinions to clarify the application
Any person required to file a report with the of laws, rules, and regulations;
Commission may redact confidential information from such
required report: Provided, That such confidential
information shall be filed in a supplemental report
(f) Issue cease and desist orders ex parte to
prevent imminent fraud or injury to the public;
prominently labelled “confidential”, together with a request
for confidential treatment of the report and the specific
grounds for the grant thereof. (g) Hold corporations in direct and indirect
contempt;
SEC. 178. Visitorial Power and Confidential
Nature of Examination Results. – The Commission shall (h) Issue subpoena duces tecum and
exercise visitorial powers over all corporations, which summon witnesses to appear in proceedings before the
powers shall include the examination and inspection of Commission;

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 promulgate rules to facilitate and expedite, among others,
(i) In appropriate cases, order the corporate name reservation and registration, incorporation,
examination, search and seizure of documents, papers, files submission of reports, notices, and documents required
and records, and books of accounts of any entity or person under this Code, and sharing of pertinent information with
under investigation as may be necessary for the proper other government agencies.
disposition of the cases, subject to the provisions of existing
laws; SEC. 181. Arbitration for Corporations. – An
arbitration agreement may be provided in the articles of
incorporation or bylaws of an unlisted corporation. When
(j) Suspend or revoke the certificate of
such an agreement is in place, disputes between the
incorporation after proper notice and hearing;
corporation, its stockholders or members, which arise from
the implementation of the articles of incorporation or
(k) Dissolve or impose sanctions on bylaws, or from intra-corporate relations, shall be referred to
corporations, upon final court order, for committing, aiding arbitration. A dispute shall be nonarbitrable when it involves
in the commission of, or in any manner furthering securities criminal offenses and interests of third parties.
violations, smuggling, tax evasion, money laundering, graft
and corrupt practices, or other fraudulent or illegal acts; The arbitration agreement shall be binding on the
corporation, its directors, trustees, officers, and executives or
(l) Issue writs of execution and attachment managers.
to enforce payment of fees, administrative fines, and other
dues collectible under this Code; To be enforceable, the arbitration agreement should
indicate the number of arbitrators and the procedure for their
(m) Prescribe the number of independent appointment. The power to appoint the arbitrators forming
directors and the minimum criteria in determining the the arbitral tribunal shall be granted to a designated
independence of a director; independent third party. Should the third party fail to appoint
the arbitrators in the manner and within the period specified
in the arbitration agreement, the parties may request the
(n) Impose or recommend new modes by Commission to appoint the arbitrators. In any case,
which a stockholder, member, director, or trustee may attend arbitrators must be accredited or must belong to
meetings or cast their votes, as technology may allow, taking organizations accredited for the purpose of arbitration.
into account the company’s scale, number of shareholders or
members, structure, and other factors consistent with the The arbitral tribunal shall have the power to rule on
basic right of corporate suffrage; its own jurisdiction and on questions relating to the validity
of the arbitration agreement. When an intra-corporate
(o) Formulate and enforce standards, dispute is filed with a Regional Trial Court, the court shall
guidelines, policies, rules and regulations to carry out the dismiss the case before the termination of the pretrial
provisions of this Code; and conference, if it determines that an arbitration agreement is
written in the corporation’s articles of incorporation, bylaws,
(p) Exercise such other powers provided by or in a separate agreement.
law or those which may be necessary or incidental to
carrying out the powers expressly granted to the The arbitral tribunal shall have the power to grant
Commission. interim measures necessary to ensure enforcement of the
award, prevent a miscarriage of justice, or otherwise protect
In imposing penalties and additional monitoring the rights of the parties.
and supervision requirements, the Commission shall take
into consideration the size, nature of the business, and A final arbitral award under this section shall be
capacity of the corporation. executory after the lapse of fifteen (15) days from receipt
thereof by the parties and shall be stayed only by the filing
No court below the Court of Appeals shall have of a bond or the issuance by the appellate court of an
jurisdiction to issue a restraining order, preliminary injunctive writ.
injunction, or preliminary mandatory injunction in any case,
dispute, or controversy that directly or indirectly interferes The Commission shall formulate the rules and
with the exercise of the powers, duties and responsibilities of regulations, which shall govern arbitration under this
the Commission that falls exclusively within its jurisdiction. section, subject to existing laws on arbitration.

SEC. 180. Development and Implementation of SEC. 182. Jurisdiction Over Party-List
Electronic Filing and Monitoring System. – The Organizations. – The powers, authorities, and
Commission shall develop and implement an electronic responsibilities of the Commission involving party-list
filing and monitoring system. The Commission shall

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organizations are transferred to the Commission on Elections
(COMELEC).

Within six (6) months after the effectivity of this Act,

the monitoring, supervision, and regulation of such
corporations shall be deemed automatically transferred to the
COMELEC.

For this purpose, the COMELEC, in coordination

with the Commission, shall promulgate the corresponding
implementing rules for the transfer of jurisdiction over the
abovementioned corporations.

SEC. 183. Applicability of the Code. – Nothing in

this law shall be construed as amending existing provisions
of special laws governing the registration, regulation,
monitoring and supervision of special corporations such as
banks, nonbank financial institutions and insurance
companies.

Notwithstanding any provision to the contrary,

regulators such as the Bangko Sentral ng Pilipinas and the
Insurance Commission shall exercise primary authority over
special corporations such as banks, nonbank financial
institutions, and insurance companies under their
supervision and regulation.

SEC. 184. Effect of Amendment or Repeal of This

Code, or the Dissolution of a Corporation. – No right or
remedy in favor of or against any corporation, its
stockholders, members, directors, trustees, or officers, nor
any liability incurred by any such corporation, stockholders,
members, directors, trustees, or officers, shall be removed or
impaired either by the subsequent dissolution of said
corporation or by any subsequent amendment or repeal of
this Code or of any part thereof.

SEC. 185. Applicability to Existing Corporation. –

A corporation lawfully existing and doing business in the
Philippines affected by the new requirements of this Code
shall be given a period of not more than two (2) years from
the effectivity of this Act within which to comply.

SEC. 186. Separability Clause. – If any provision of

this Act is declared invalid or unconstitutional, other
provisions hereof which are not affected thereby shall
continue to be in full force and effect.

SEC. 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 provision of this Act is hereby repealed
or modified accordingly.

SEC. 188. Effectivity. – This Act shall take effect

upon completion of its publication in the Official Gazette or
in at least two (2) newspapers of general circulation.

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