An Act Providing for the Revised Section 4.

Corporations Created by
Corporation Code of the Special Laws or Charters.— Corporations
created by special laws or charters shall
Philippines be governed primarily by the provisions of
Republic Act No. 11232 the special law or charter creating them
or applicable to them, supplemented by
Congress of the Philippines the provisions of this Code, insofar as
they are applicable.
20 February 2019
Section 5. Corporators and Incorporators,
Stockholders and Members.— Corporators
S. No. 1280 are those who compose a corporation,
whether as stockholders or shareholders
H. No. 8374 in a stock corporation or as members in a
nonstock corporation. Incorporators are
Republic of the Philippines
those stockholders or members
Congress of the Philippines
mentioned in the articles of incorporation
Metro Manila
as originally forming and composing the
Seventeenth Congress corporation and who are signatories
Third Regular Session thereof.

Begun and held in Metro Manila, on Section 6. Classification of Shares.— The

Monday, the twenty-third day of July, two classification of shares, their
thousand eighteen. corresponding rights, privileges, or
restrictions, and their stated par value, if
Be it enacted by the Senate and House of any, must be indicated in the articles of
Representatives of the Philippines in incorporation. Each share shall be equal
Congress assembled: in all respects to every other share, except
TITLE I as otherwise provided in the articles of
GENERAL PROVISIONS DEFINITIONS incorporation and in the certificate of
AND CLASSIFICATIONS stock.

Section 1. Title of the Code.— This Code The shares in stock corporations may be
shall be known as the “Revised divided into classes or series of shares, or
Corporation Code of the Philippines”. both. No share may be deprived of voting
rights except those classified and issued
Section 2. Corporation Defined. as “preferred” or “redeemable” shares,
— corporation is an artificial being unless otherwise provided in this
created by operation of law, having the Code: Provided, That there shall always be
right of succession and the powers, a class or series of shares with complete
attributes, and properties expressly voting rights.
authorized by law or incidental to its
existence. Holders of nonvoting shares shall
nevertheless be entitled to vote on the
Section 3. Classes of Corporations. following matters:
— Corporations formed or organized
under this Code may be stock or nonstock (a) Amendment of the articles of
corporations. Stock corporations are incorporation;
those which have capital stock divided (b) Adoption and amendment of bylaws;
into shares and are authorized to
distribute to the holders of such shares, (c) Sale, lease, exchange, mortgage,
dividends, or allotments of the surplus pledge, or other disposition of all or
profits on the basis of the shares held. All substantially all of the corporate property;
other corporations are nonstock
(d) Incurring, creating, or increasing
corporations.
bonded indebtedness;

1
(e) Increase or decrease of authorized treated as capital and shall not be
capital stock; available for distribution as dividends.

(f) Merger or consolidation of the A corporation may further classify its

corporation with another corporation or shares for the purpose of ensuring
other corporations; compliance with constitutional or legal
requirements.
(g) Investment of corporate funds in
another corporation or business in Section 7. Founders’ Shares.— Founders’
accordance with this Code; and shares may be given certain rights and
privileges not enjoyed by the owners of
(h) Dissolution of the corporation. other stocks. Where the exclusive right to
Except as provided in the immediately vote and be voted for in the election of
preceding paragraph, the vote required directors is granted, it must be for a
under this Code to approve a particular limited period not to exceed five (5) years
corporate act shall be deemed to refer from the date of incorporation: Provided,
only to stocks with voting rights. That such exclusive right shall not be
allowed if its exercise will violate
The shares or series of shares may or may Commonwealth Act No. 108, otherwise
not have a par value: Provided, That known as the “Anti-Dummy Law”;
banks, trust, insurance, and preneed Republic Act No. 7042, otherwise known
companies, public utilities, building and as the “Foreign Investments Act of 1991”;
loan associations, and other corporations and other pertinent laws.
authorized to obtain or access funds from
the public, whether publicly listed or not, Section 8. Redeemable Shares.
shall not be permitted to issue no-par — Redeemable shares may be issued by
value shares of stock. the corporation when expressly provided
in the articles of incorporation. They are
Preferred shares of stock issued by a shares which may be purchased by the
corporation may be given preference in corporation from the holders of such
the distribution of dividends and in the shares upon the expiration of a fixed
distribution of corporate assets in case of period, regardless of the existence of
liquidation, or such other unrestricted retained earnings in the
preferences: Provided, That preferred books of the corporation, and upon such
shares of stock may be issued only with a other terms and conditions stated in the
stated par value. The board of directors, articles of incorporation and the
where authorized in the articles of certificate of stock representing the
incorporation, may fix the terms and shares, subject to rules and regulations
conditions of preferred shares of stock or issued by the Commission.
any series thereof: Provided, further, That
such terms and conditions shall be Section 9. Treasury Shares.— Treasury
effective upon filing of a certificate thereof shares are shares of stock which have
with the Securities and Exchange been issued and fully paid for, but
Commission, hereinafter referred to as the subsequently reacquired by the issuing
“Commission”. corporation through purchase,
redemption, donation, or some other
Shares of capital stock issued without par lawful means. Such shares may again be
value shall be deemed fully paid and disposed of for a reasonable price fixed by
nonassessable and the holder of such the board of directors.
shares shall not be liable to the
corporation or to its creditors in respect TITLE II
thereto: Provided, That no-par value INCORPORATION AND ORGANIZATION
shares must be issued for a consideration OF PRIVATE CORPORATIONS
of at least Five pesos (₱5.00) per Section 10. Number and Qualifications of
share: Provided, further, That the entire Incorporators.— Any person, partnership,
consideration received by the corporation association or corporation, singly or
for its no-par value shares shall be

2
jointly with others but not more than A corporation whose term has expired
fifteen (15) in number, may organize a may apply for a revival of its corporate
corporation for any lawful purpose or existence, together with all the rights and
purposes: Provided, That natural persons privileges under its certificate of
who are licensed to practice a profession, incorporation and subject to all of its
and partnerships or associations duties, debts and liabilities existing prior
organized for the purpose of practicing a to its revival. Upon approval by the
profession, shall not be allowed to Commission, the corporation shall be
organize as a corporation unless deemed revived and a certificate of revival
otherwise provided under special laws. of corporate existence shall be issued,
Incorporators who are natural persons giving it perpetual existence, unless its
must be of legal age. application for revival provides otherwise.

Each incorporator of a stock corporation No application for revival of certificate of

must own or be a subscriber to at least incorporation of banks, banking and
one (1) share of the capital stock. quasi-banking institutions, preneed,
insurance and trust companies, non-
A corporation with a single stockholder is stock savings and loan associations
considered a One Person Corporation as (NSSLAs), pawnshops, corporations
described in Title XIII, Chapter III of this engaged in money service business, and
Code. other financial intermediaries shall be
Section 11. Corporate Term.— A approved by the Commission unless
corporation shall have perpetual existence accompanied by a favorable
unless its articles of incorporation recommendation of the appropriate
provides otherwise. government agency.

Corporations with certificates of Section 12. Minimum Capital Stock Not

incorporation issued prior to the Required of Stock Corporations.— Stock
effectivity of this Code, and which corporations shall not be required to have
continue to exist, shall have perpetual a minimum capital stock, except as
existence, unless the corporation, upon a otherwise specifically provided by special
vote of its stockholders representing a law.
majority of its outstanding capital stock, Section 13. Contents of the Articles of
notifies the Commission that it elects to Incorporation.— All corporations shall file
retain its specific corporate term pursuant with the Commission articles of
to its articles of incorporation: Provided, incorporation in any of the official
That any change in the corporate term languages, duly signed and acknowledged
under this section is without prejudice to or authenticated, in such form and
the appraisal right of dissenting manner as may be allowed by the
stockholders in accordance with the Commission, containing substantially the
provisions of this Code. following matters, except as otherwise
A corporate term for a specific period may prescribed by this Code or by special law:
be extended or shortened by amending (a) The name of the corporation;
the articles of incorporation: Provided,
That no extension may be made earlier (b) The specific purpose or purposes for
than three (3) years prior to the original or which the corporation is being formed.
subsequent expiry date(s) unless there are Where a corporation has more than one
justifiable reasons for an earlier extension stated purpose, the articles of
as may be determined by the incorporation shall indicate the primary
Commission: Provided, further, That such purpose and the secondary purpose or
extension of the corporate term shall take purposes: Provided, That a nonstock
effect only on the day following the corporation may not include a purpose
original or subsequent expiry date(s). which would change or contradict its
nature as such;

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Name Nationality Residence
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 the form
of an electronic document, in accordance
_______________ _______________ _______________
with the Commission’s rules and
regulations on electronic filing.
_______________ _______________ _______________
Section 14. Form of Articles of
Incorporation.— Unless otherwise
_______________ _______________ _______________ prescribed by special law, the articles of
incorporation of all domestic corporations
(c) The place where the principal office of shall comply substantially with the
the corporation is to be located, which following form:
must be within the Philippines; Articles of Incorporation
(d) The term for which the corporation is of
to exist, if the corporation has not elected ____________________
perpetual existence; (Name of Corporation)

(e) The names, nationalities, and The undersigned incorporators, all of legal
residence addresses of the incorporators; age, have voluntarily agreed to form a
(stock) (nonstock) corporation under the
(f) The number of directors, which shall laws of the Republic of the Philippines
not be more than fifteen (15) or the and certify the following:
number of trustees which may be more
than fifteen (15); First: That the name of said corporation
shall be “_______________, Inc.,
(g) The names, nationalities, and Corporation or OPC”;
residence addresses of persons who shall
act as directors or trustees until the first Second: That the purpose or purposes for
regular directors or trustees are duly which such corporation is incorporated
elected and qualified in accordance with are: (If there is more than one purpose,
this Code; indicate primary and secondary
purposes);
(h) If it be a stock corporation, the
amount of its authorized capital stock, Third: That the principal office of the
number of shares into which it is divided, corporation is located in the
the par value of each, names, City/Municipality of _______________,
nationalities, and residence addresses of Province of _______________, Philippines;
the original subscribers, amount Fourth: That the corporation shall have
subscribed and paid by each on the perpetual existence or a term of _____
subscription, and a statement that some years from the date of issuance of the
or all of the shares are without par value, certificate of incorporation;
if applicable;
Fifth: That the names, nationalities, and
(i) If it be a nonstock corporation, the residence addresses of the incorporators
amount of its capital, the names, of the corporation are as follows:
nationalities, and residence addresses of
the contributors, and amount contributed Sixth: That the number of directors or trustees
by each; and of the corporation shall be _____; and the
(j) Such other matters consistent with law names, nationalities, and residence addresses
and which the incorporators may deem of the first directors or trustees of the
necessary and convenient. corporation are as follows:

4
 articles may be modified accordingly, and
Name Nationality Residence
it is sufficient if the articles state the
amount of capital or money contributed
_______________ _______________ _______________or donated by specified persons, stating
the names, nationalities, and residence
addresses of the contributors or donors
_______________ _______________ _______________and the respective amount given by each.)

Ninth: That ____________________ has been

_______________ _______________ _______________elected by the subscribers as Treasurer of
the Corporation to act as such until after
_______________ _______________ _______________the successor is duly elected and qualified
in accordance with the bylaws, that as
Treasurer, authority has been given to
_______________ _______________ _______________receive in the name and for the benefit of
the corporation, all subscriptions,
Seventh: That the authorized capital stock contributions or donations paid or given
of the corporation is _______________ by the subscribers or members, who
PESOS (₱__________), divided into certifies the information set forth in the
_______________ shares with the par value seventh and eighth clauses above, and
of _______________ PESOS (₱__________) that the paid-up portion of the
per share. (In case all the shares are subscription in cash and/or property for
without par value): That the capital stock the benefit and credit of the corporation
of the corporation is _______________ has been duly received.
shares without par value.
Tenth: That the incorporators undertake
(In case some shares have par value and to change the name of the corporation
some are without par value): That the immediately upon receipt of notice from
capital stock of said corporation consists the Commission that another corporation,
of _______________ shares, of which partnership or person has acquired a
_______________ shares have a par value of prior right to the use of such name, that
_______________ PESOS (₱__________) each, the name has been declared not
and of which _______________ shares are distinguishable from a name already
without par value. registered or reserved for the use of
another corporation, or that it is contrary
Eighth: That the number of shares of the to law, public morals, good customs or
authorized capital stock above-stated has public policy.
been subscribed as follows:
Eleventh: (Corporations which will engage
No. of
in any business or activity reserved for
Name of Shares Amount Amo Filipino citizens shall provide the
Subscri Nation Subscrib Subscri unt following):
ber ality ed bed Paid
“No transfer of stock or interest which
shall reduce the ownership of Filipino
citizens to less than the required
percentage of capital stock as provided by
existing laws shall be allowed or permitted
to be recorded in the proper books of the
corporation, and this restriction shall be
indicated in all stock certificates issued
by the corporation.”

IN WITNESS WHEREOF, we have hereunto

(Modify No. 8 if shares are with no-par signed these Articles of Incorporation, this
value. In case the corporation is __________ day of __________, 20_____ in
nonstock, Nos. 7 and 8 of the above

5
the City/Municipality of _______________, vote of the stockholders or members, shall
Province of _______________, Republic of the be submitted to the Commission.
Philippines. The amendments shall take effect upon
their approval by the Commission or from
___________________ ____________________ the date of filing with the said
_ Commission if not acted upon within six
(6) months from the date of filing for a
cause not attributable to the corporation.
___________________ ____________________
_ Section 16. Grounds When Articles of
Incorporation or Amendment May be
Disapproved.— The Commission may
___________________ ____________________
disapprove the articles of incorporation or
_
any amendment thereto if the same is not
compliant with the requirements of this
___________________ ____________________ Code: Provided, That the Commission
_ shall give the incorporators, directors,
trustees, or officers a reasonable time
from receipt of the disapproval within
___________________ ____________________ which to modify the objectionable
_ portions of the articles or amendment.
The following are grounds for such
(Names and signatures of the disapproval:
incorporators) (Name and signature of
Treasurer) (a) The articles of incorporation or any
amendment thereto is not substantially in
Section 15. Amendment of Articles of accordance with the form prescribed
Incorporation.— Unless otherwise herein;
prescribed by this Code or by special lawr,
and for legitimate purposes, any provision (b) The purpose or purposes of the
or matter stated in the articles of corporation are patently unconstitutional,
incorporation may be amended by a illegal, immoral or contrary to government
majority vote of the board of directors or rules and regulations;
trustees and the vote or written assent of
(c) The certification concerning the
the stockholders representing at least
amount of capital stock subscribed
two-thirds (2⁄3) of the outstanding capital
and/or paid is false; and
stock, without prejudice to the appraisal
right of dissenting stockholders in (d) The required percentage of Filipino
accordance with the provisions of this ownership of the capital stock under
Code. The articles of incorporation of a existing laws or the Constitution has not
nonstock corporation may be amended by been complied with.
the vote or written assent of majority of
the trustees and at least two-thirds (2⁄3) of No articles of incorporation or amendment
the members. to articles of incorporation of banks,
banking and quasi-banking institutions,
The original and amended articles preneed, insurance and trust companies,
together shall contain all provisions NSSLAs, pawnshops, and other financial
required by law to be set out in the intermediaries shall be approved by the
articles of incorporation. Amendments to Commission unless accompanied by a
the articles shall be indicated by favorable recommendation of the
underscoring the change or changes appropriate government agency to the
made, and a copy thereof duly certified effect that such articles or amendment is
under oath by the corporate secretary and in accordance with law.
a majority of the directors or trustees,
with a statement that the amendments Section 17. Corporate Name.— No
have been duly approved by the required corporate name shall be allowed by the

6
Commission if it is not distinguishable another corporation, not protected by law
from that already reserved or registered and is not contrary to law, rules and
for the use of another corporation, or if regulations, the name shall be reserved in
such name is already protected by law, or favor of the incorporators. The
when its use is contrary to existing law, incorporators shall then submit their
rules and regulations. articles of incorporation and bylaws to the
Commission.
A name is not distinguishable even if it
contains one or more of the following: If the Commission finds that the
submitted documents and information are
(a) The word “corporation”, “company”, fully compliant with the requirements of
“incorporated”, “limited”, “limited this Code, other relevant laws, rules and
liability”, or an abbreviation of one of regulations, the Commission shall issue
such words; and the certificate of incorporation.
(b) Punctuations, articles, conjunctions, A private corporation organized under this
contractions, prepositions, abbreviations, Code commences its corporate existence
different tenses, spacing, or number of and juridical personality from the date the
the same word or phrase. Commission issues the certificate of
The Commission, upon determination incorporation under its official seal and
that the corporate name is: (1) not thereupon the incorporators,
distinguishable from a name already stockholders/members and their
reserved or registered for the use of successors shall constitute a body
another corporation; (2) already protected corporate under the name stated in the
by law; or (3) contrary to law, rules and articles of incorporation for the period of
regulations, may summarily order the time mentioned therein, unless said
corporation to immediately cease and period is extended or the corporation is
desist from using such name and require sooner dissolved in accordance with law.
the corporation to register a new one. The Section 19. De facto Corporations.— The
Commission shall also cause the removal due incorporation of any corporation
of all visible signages, marks, claiming in good faith to be a corporation
advertisements, labels, prints and other under this Code, and its right to exercise
effects bearing such corporate name. corporate powers, shall not be inquired
Upon the approval of the new corporate into collaterally in any private suit to
name, the Commission shall issue a which such corporation may be a party.
certificate of incorporation under the Such inquiry may be made by the
amended name. Solicitor General in a quo
If the corporation fails to comply with the warranto proceeding.
Commission’s order, the Commission may Section 20. Corporation by Estoppel.— All
hold the corporation and its responsible persons who assume to act as a
directors or officers in contempt and/or corporation knowing it to be without
hold them administratively, civilly and/or authority to do so shall be liable as
criminally liable under this Code and general partners for all debts, liabilities
other applicable laws and/or revoke the and damages incurred or arising as a
registration of the corporation. result thereof: Provided, however, That
Section 18. Registration, Incorporation when any such ostensible corporation is
and Commencement of Corporate sued on any transaction entered by it as a
Existence.— A person or group of persons corporation or on any tort committed by it
desiring to incorporate shall submit the as such, it shall not be allowed to use its
intended corporate name to the lack of corporate personality as a defense.
Commission for verification. If the Anyone who assumes an obligation to an
Commission finds that the name is ostensible corporation as such cannot
distinguishable from a name already resist performance thereof on the ground
reserved or registered for the use of that there was in fact no corporation.

7
Section 21. Effects of Non-Use of director who ceases to own at least one (1)
Corporate Charter and Continuous share of stock or a trustee who ceases to
Inoperation.— If a corporation does not be a member of the corporation shall
formally organize and commence its cease to be such.
business within five (5) years from the
date of its incorporation, its certificate of The board of the following corporations
incorporation shall be deemed revoked as vested with public interest shall have
of the day following the end of the five (5)- independent directors constituting at
year period. least twenty percent (20%) of such board:

However, if a corporation has commenced (a) Corporations covered by Section 17.2

its business but subsequently becomes of Republic Act No. 8799, otherwise
inoperative for a period of at least five (5) known as “The Securities Regulation
consecutive years, the Commission may, Code”, namely those whose securities are
after due notice and hearing, place the registered with the Commission,
corporation under delinquent status. corporations listed with an exchange or
with assets of at least Fifty million pesos
A delinquent corporation shall have a (₱50,000,000.00) and having two hundred
period of two (2) years to resume (200) or more holders of shares, each
operations and comply with all holding at least one hundred (100) shares
requirements that the Commission shall of a class of its equity shares;
prescribe. Upon compliance by the
corporation, the Commission shall issue (b) Banks and quasi-banks, NSSLAs,
an order lifting the delinquent status. pawnshops, corporations engaged in
Failure to comply with the requirements money service business, preneed, trust
and resume operations within the period and insurance companies, and other
given by the Commission shall cause the financial intermediaries; and
revocation of the corporation’s certificate (c) Other corporations engaged in
of incorporation. businesses vested with public interest
The Commission shall give reasonable similar to the above, as may be
notice to, and coordinate with the determined by the Commission, after
appropriate regulatory agency prior to the taking into account relevant factors which
suspension or revocation of the certificate are germane to the objective and purpose
of incorporation of companies under their of requiring the election of an
special regulatory jurisdiction. independent director, such as the extent
of minority ownership, type of financial
TITLE III products or securities issued or offered to
BOARD OF DIRECTORS/TRUSTEES investors, public interest involved in the
AND OFFICERS nature of business operations, and other
analogous factors.
Section 22. The Board of Directors or
Trustees of a Corporation; Qualification An independent director is a person who,
and Term.— Unless otherwise provided in apart from shareholdings and fees
this Code, the board of directors or received from the corporation, is
trustees shall exercise the corporate independent of management and free
powers, conduct all business, and control from any business or other relationship
all properties of the corporation. which could, or could reasonably be
perceived to materially interfere with the
Directors shall be elected for a term of one exercise of independent judgment in
(1) year from among the holders of stocks carrying out the responsibilities as a
registered in the corporation’s books, director.
while trustees shall be elected for a term
not exceeding three (3) years from among Independent directors must be elected by
the members of the corporation. Each the shareholders present or entitled to
director and trustee shall hold office until vote in absentiaduring the election of
the successor is elected and qualified. A directors. Independent directors shall be

8
subject to rules and regulations governing owned; or (c) distribute them on the same
their qualifications, disqualifications, principle among as many candidates as
voting requirements, duration of term and may be seen fit: Provided, That the total
term limit, maximum number of board number of votes cast shall not exceed the
memberships and other requirements number of shares owned by the
that the Commission will prescribe to stockholders as shown in the books of the
strengthen their independence and align corporation multiplied by the whole
with international best practices. number of directors to be
elected: Provided, however, That no
Section 23. Election of Directors or delinquent stock shall be voted. Unless
Trustees.— Except when the exclusive otherwise provided in the articles of
right is reserved for holders of founders’ incorporation or in the bylaws, members
shares under Section 7 of this Code, each of nonstock corporations may cast as
stockholder or member shall have the many votes as there are trustees to be
right to nominate any director or trustee elected but may not cast more than one
who possesses all of the qualifications (1) vote for one (1) candidate. Nominees
and none of the disqualifications set forth for directors or trustees receiving the
in this Code. highest number of votes shall be declared
At all elections of directors or trustees, elected.
there must be present, either in person or If no election is held, or the owners of
through a representative authorized to act majority of the outstanding capital stock
by written proxy, the owners of majority of or majority of the members entitled to
the outstanding capital stock, or if there vote are not present in person, by proxy,
be no capital stock, a majority of the or through remote communication or not
members entitled to vote. When so voting in absentia at the meeting, such
authorized in the bylaws or by a majority meeting may be adjourned and the
of the board of directors, the stockholders corporation shall proceed in accordance
or members may also vote through remote with Section 25 of this Code.
communication or in absentia: Provided,
That the right to vote through such modes The directors or trustees elected shall
may be exercised in corporations vested perform their duties as prescribed by law,
with public interest, notwithstanding the rules of good corporate governance, and
absence of a provision in the bylaws of bylaws of the corporation.
such corporations.
Section 24. Corporate Officers.
A stockholder or member who participates — Immediately after their election, the
through remote communication or in directors of a corporation must formally
absentia shall be deemed present for organize and elect: (a) a president, who
purposes of quorum. must be a director; (b) a treasurer, who
must be a resident; (c) a secretary, who
The election must be by ballot if requested must be a citizen and resident of the
by any voting stockholder or member. Philippines; and (d) such other officers as
In stock corporations, stockholders may be provided in the bylaws. If the
entitled to vote shall have the right to vote corporation is vested with public interest,
the number of shares of stock standing in the board shall also elect a compliance
their own names in the stock books of the officer. The same person may hold two (2)
corporation at the time fixed in the bylaws or more positions concurrently, except
or where the bylaws are silent, at the time that no one shall act as president and
of the election. The said stockholder may: secretary or as president and treasurer at
(a) vote such number of shares for as the same time, unless otherwise allowed
many persons as there are directors to be in this Code.
elected; (b) cumulate said shares and give The officers shall manage the corporation
one (1) candidate as many votes as the and perform such duties as may be
number of directors to be elected provided in the bylaws and/or as resolved
multiplied by the number of the shares by the board of directors.

9
Section 25. Report of Election of Directors, (5) years prior to the election or
Trustees and. Officers, Non-holding of appointment as such, the person was:
Election and Cessation from Office.
— Within thirty (30) days after the (a) Convicted by final judgment:
election of the directors, trustees and (1) Of an offense punishable by
officers of the corporation, the secretary, imprisonment for a period exceeding six
or any other officer of the corporation, (6) years;
shall submit to the Commission, the
names, nationalities, shareholdings, and (2) For violating this Code; and
residence addresses of the directors,
(3) For violating Republic Act No. 8799,
trustees and officers elected.
otherwise known as “The Securities
The non-holding of elections and the Regulation Code”;
reasons therefor shall be reported to the
(b) Found administratively liable for any
Commission within thirty (30) days from
offense involving fraudulent acts; and
the date of the scheduled election. The
report shall specify a new date for the (c) By a foreign court or equivalent foreign
election, which shall not be later than regulatory authority for acts, violations or
sixty (60) days from the scheduled date. misconduct similar to those enumerated
in paragraphs (a) and (b) above.
If no new date has been designated, or if
the rescheduled election is likewise not The foregoing is without prejudice to
held, the Commission may, upon the qualifications or other disqualifications,
application of a stockholder, member, which the Commission, the primary
director or trustee, and after verification regulatory agency, or the Philippine
of the unjustified non-holding of the Competition Commission may impose in
election, summarily order that an election its promotion of good corporate
be held. The Commission shall have the governance or as a sanction in its
power to issue such orders as may be administrative proceedings.
appropriate, including orders directing
the issuance of a notice stating the time Section 27. Removal of Directors or
and place of the election, designated Trustees.— Any director or trustee of a
presiding officer, and the record date or corporation may be removed from office
dates for the determination of by a vote of the stockholders holding or
stockholders or members entitled to vote. representing at least two-thirds (2⁄3) of the
outstanding capital stock, or in a
Notwithstanding any provision of the nonstock corporation, by a vote of at least
articles of incorporation or bylaws to the two-thirds (2⁄3) of the members entitled to
contrary, the shares of stock or vote: Provided, That such removal shall
membership represented at such meeting take place either at a regular meeting of
and entitled to vote shall constitute a the corporation or at a special meeting
quorum for purposes of conducting an called for the purpose, and in either case,
election under this section. after previous notice to stockholders or
members of the corporation of the
Should a director, trustee or officer die,
intention to propose such removal at the
resign or in any manner cease to hold
meeting. A special meeting of the
office, the secretary, or the director,
stockholders or members for the purpose
trustee or officer of the corporation, shall,
of removing any director or trustee must
within seven (7) days from knowledge
be called by the secretary on order of the
thereof, report in writing such fact to the
president, or upon written demand of the
Commission.
stockholders representing or holding at
Section 26. Disqualification of Directors, least a majority of the outstanding capital
Trustees or Officers.— A person shall be stock, or a majority of the members
disqualified from being a director, trustee entitled to vote. If there is no secretary, or
or officer of any corporation if, within five if the secretary, despite demand, fails or
refuses to call the special meeting or to

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

11
income tax of the corporation during the (b) The vote of such director or trustee
preceding year. was not necessary for the approval of the
contract;
Directors or trustees shall not participate
in the determination of their own per (c) The contract is fair and reasonable
diems or compensation. under the circumstances;

Corporations vested with pub he interest (d) In case of corporations vested with
shall submit to their shareholders and the public interest, material contracts are
Commission, an annual report of the total approved by at least two-thirds (2⁄3) of the
compensation of each of their directors or entire membership of the board, with at
trustees. least a majority of the independent
directors voting to approve the material
Section 30. Liability of Directors, Trustees contract; and
or Officers.— Directors or trustees who
willfully and knowingly vote for or assent (e) In case of an officer, the contract has
to patently unlawful acts of the been previously authorized by the board
corporation or who are guilty of gross of directors.
negligence or bad faith in directing the
affairs of the corporation or acquire any Where any of the first three (3) conditions
personal or pecuniary interest in conflict set forth in the preceding paragraph is
with their duty as such directors or absent, in the case of a contract with a
trustees shall be liable jointly and director or trustee, such contract may be
severally for all damages resulting ratified by the vote of the stockholders
therefrom suffered by the corporation, its representing at least two-thirds (2⁄3) of the
stockholders or members and other outstanding capital stock or of at least
persons. two-thirds (2⁄3) of the members in a
meeting called for the purpose: Provided,
A director, trustee or officer shall not That full disclosure of the adverse interest
attempt to acquire, or acquire any interest of the directors or trustees involved is
adverse to the corporation in respect of made at such meeting and the contract is
any matter which has been reposed in fair and reasonable under the
them in confidence, and upon which, circumstances.
equity imposes a disability upon
themselves to deal in their own behalf; Section 32. Contracts Between
otherwise, the said director, trustee or Corporations with Interlocking Directors.
officer shall be liable as a trustee for the — Except in cases of fraud, and provided
corporation and must account for the the contract is fair and reasonable under
profits which otherwise would have the circumstances, a contract between
accrued to the corporation. two (2) or more corporations having
interlocking directors shall not be
Section 31. Dealings of Directors, invalidated on that ground
Trustees or Officers with the Corporation. alone: Provided, That if the interest of the
— A contract of the corporation with one interlocking director in one (1) corporation
(1) or more of its directors, trustees, is substantial and the interest in the
officers or their spouses and relatives other corporation or corporations is
within the fourth civil degree of merely nominal, the contract shall be
consanguinity or affinity is voidable, at subject to the provisions of the preceding
the option of such corporation, unless all section insofar as the latter corporation or
the following conditions are present: corporations are concerned.

(a) The presence of such director or Stockholdings exceeding twenty percent

trustee in the board meeting in which the (20%) of the outstanding capital stock
contract was approved was not necessary shall be considered substantial for
to constitute a quorum for such meeting; purposes of interlocking directors.

Section 33. Disloyalty of a Director.

— Where a director, by virtue of such

12
office, acquires a business opportunity (d) To amend its articles of incorporation
which should belong to the corporation, in accordance with the provisions of this
thereby obtaining profits to the prejudice Code;
of such corporation, the director must
account for and refund to the latter all (e) To adopt bylaws, not contrary to law,
such profits, unless the act has been morals or public policy, and to amend or
ratified by a vote of the stockholders repeal the same in accordance with this
owning or representing at least two-thirds Code;
(2⁄3) of the outstanding capital stock. This (f) In case of stock corporations, to issue
provision shall be applicable, or sell stocks to subscribers and to sell
notwithstanding the fact that the director treasury stocks in accordance with the
risked one’s own funds in the venture. provisions of this Code; and to admit
Section 34. Executive, Management, and members to the corporation if it be a
Other Special Committees.— If the bylaws nonstock corporation;
so provide, the board may create an (g) To purchase, receive, take or grant,
executive committee composed of at least hold, convey, sell, lease, pledge, mortgage,
three (3) directors. Said committee may and otherwise deal with such real and
act, by majority vote of all its members, personal property, including securities
on such specific matters within the and bonds of other corporations, as the
competence of the board, as may be transaction of the lawful business of the
delegated to it in the bylaws or by corporation may reasonably and
majority vote of the board, except with necessarily require, subject to the
respect to the: (a) approval of any action limitations prescribed by law and the
for which shareholders’ approval is also Constitution;
required; (b) filling of vacancies in the
board; (c) amendment or repeal of bylaws (h) To enter into a partnership, joint
or the adoption of new bylaws; (d) venture, merger, consolidation, or any
amendment or repeal of any resolution of other commercial agreement with natural
the board which by its express terms is and juridical persons;
not amendable or repealable; and (e)
(i) To make reasonable donations,
distribution of cash dividends to the
including those for the public welfare or
shareholders.
for hospital, charitable, cultural,
The board of directors may create special scientific, civic, or similar
committees of temporary or permanent purposes: Provided, That no foreign
nature and determine the members’ term, corporation shall give donations in aid of
composition, compensation, powers, and any political party or candidate or for
responsibilities. purposes of partisan political activity;

TITLE IV (j) To establish pension, retirement, and

POWERS OF CORPORATIONS other plans for the benefit of its directors,
trustees, officers, and employees; and
Section 35. Corporate Powers and
Capacity.— Every corporation (k) To exercise such other powers as may
incorporated under this Code has the be essential or necessary to carry out its
power and capacity: purpose or purposes as stated in the
articles of incorporation.
(a) To sue and be sued in its corporate
name; Section 36. Power to Extend or Shorten
Corporate Term.— A private corporation
(b) To have perpetual existence unless the may extend or shorten its term as stated
certificate of incorporation provides in the articles of incorporation when
otherwise; approved by a majority vote of the board
(c) To adopt and use a corporate seal; of directors or trustees, and ratified at a
meeting by the stockholders or members
representing at least two-thirds (2⁄3) of the

13
outstanding capital stock or of its nationahties and addresses of the persons
members. Written notice of the proposed subscribing, the amount of capital stock
action and the time and place of the or number of no-par stock subscribed by
meeting shall be sent to stockholders or each, and the amount paid by each on the
members at their respective place of subscription in cash or property, or the
residence as shown in the books of the amount of capital stock or number of
corporation, and must be deposited to the shares of no-par stock allotted to each
addressee in the post office with postage stockholder if such increase is for the
prepaid, served personally, or when purpose of making effective stock dividend
allowed in the bylaws or done with the therefor authorized;
consent of the stockholder, sent
electronically in accordance with the rules (d) Any bonded indebtedness to be
and regulations of the Commission on the incurred, created or increased;
use of electronic data messages. In case of (e) The amount of stock represented at the
extension of corporate term, a dissenting meeting; and
stockholder may exercise the right of
appraisal under the conditions provided (f) The vote authorizing the increase or
in this Code. decrease of the capital stock, or the
incurring, creating or increasing of any
Section 37. Power to Increase or bonded indebtedness.
Decrease Capital Stock; Incur, Create or
Increase Bonded Indebtedness.— No Any increase or decrease in the capital
corporation shah increase or decrease its stock or the incurring, creating or
capital stock or incur, create or increase increasing of any bonded indebtedness
any bonded indebtedness unless shall require prior approval of the
approved by a majority vote of the board Commission, and where appropriate, of
of directors and by two-thirds (2⁄3) of the the Philippine Competition Commission.
outstanding capital stock at a The application with the Commission
stockholders’ meeting duly called for the shall be made within six (6) months from
purpose. Written notice of the time and the date of approval of the board of
place of the stockholders’ meeting and the directors and stockholders, which period
purpose for said meeting must be sent to may be extended for justifiable reasons.
the stockholders at their places of
Copies of the certificate shall be kept on
residence as shown in the books of the
file in the office of the corporation and
corporation and served on the
filed with the Commission and attached to
stockholders personally, or through
the original articles of incorporation. After
electronic means recognized in the
approval by the Commission and the
corporation’s bylaws and/or the
issuance by the Commission of its
Commission’s rules as a valid mode for
certificate of filing, the capital stock shall
service of notices.
be deemed increased or decreased and the
A certificate must be signed by a majority incurring, creating or increasing of any
of the directors of the corporation and bonded indebtedness authorized, as the
countersigned by the chairperson and certificate of fifing may declare: Provided,
secretary of the stockholders’ meeting, That the Commission shall not accept for
setting forth: filing any certificate of increase of capital
stock unless accompanied by a sworn
(a) That the requirements of this section statement of the treasurer of the
have been complied with; corporation lawfully holding office at the
(b) The amount of the increase or time of the filing of the certificate,
decrease of the capital stock; showing that at least twenty-five percent
(25%) of the increase in capital stock has
(c) In case of an increase of the capital been subscribed and that at least twenty-
stock, the amount of capital stock or five percent (25%) of the amount
number of shares of no-par stock thereof subscribed has been paid in actual cash
actually subscribed, the names, to the corporation or that property, the

14
valuation of which is equal to twenty-five A sale of all or substantially all of the
percent (25%) of the subscription, has corporation’s properties and assets,
been transferred to the including its goodwill, must be authorized
corporation: Provided, further, That no by the vote of the stockholders
decrease in capital stock shall be representing at least two-thirds (2⁄3) of the
approved by the Commission if its effect outstanding capital stock, or at least two-
shall prejudice the rights of corporate thirds (2⁄3) of the members, in a
creditors. stockholders’ or members’ meeting duly
called for the purpose.
Nonstock corporations may incur, create
or increase bonded indebtedness when In nonstock corporations where there are
approved by a majority of the board of no members with voting rights, the vote of
trustees and of at least two-thirds (2⁄3) of at least a majority of the trustees in office
the members in a meeting duly called for will be sufficient authorization for the
the purpose. corporation to enter into any transaction
authorized by this section.
Bonds issued by a corporation shall be
registered with the Commission, which The determination of whether or not the
shall have the authority to determine the sale involves all or substantially all of the
sufficiency of the terms thereof. corporation’s properties and assets must
be computed based on its net asset value,
Section 38. Power to Deny Preemptive as shown in its latest financial
Right.— All stockholders of a stock statements. A sale or other disposition
corporation shah enjoy preemptive right shall be deemed to cover substantially all
to subscribe to all issues or disposition of the corporate property and assets if
shares of any class, in proportion to their thereby the corporation would be
respective shareholdings, unless such rendered incapable of continuing the
right is denied by the articles of business or accomplishing the purpose
incorporation or an amendment for which it was incorporated.
thereto: Provided, That such preemptive
right shall not extend to shares issued in Written notice of the proposed action and
compliance with laws requiring stock of the time and place for the meeting shall
offerings or minimum stock ownership by be addressed to stockholders or members
the public; or to shares issued in good at their places of residence as shown in
faith with the approval of the stockholders the books of the corporation and
representing two-thirds (2⁄3) of the deposited to the addressee in the post
outstanding capital stock, in exchange for office with postage prepaid, served
property needed for corporate purposes or personally, or when allowed by the bylaws
in payment of a previously contracted or done with the consent of the
debt. stockholder, sent electronically: Provided,
That any dissenting stockholder may
Section 39. Sale or Other Disposition of exercise the right of appraisal under the
Assets.— Subject to the provisions of conditions provided in this Code.
Republic Act No. 10667, otherwise known
as the “Philippine Competition Act”, and After such authorization or approval by
other related laws, a corporation may, by the stockholders or members, the board
a majority vote of its board of directors or of directors or trustees may, nevertheless,
trustees, sell, lease, exchange, mortgage, in its discretion, abandon such sale,
pledge, or otherwise dispose of its lease, exchange, mortgage, pledge, or
property and assets, upon such terms other disposition of property and assets,
and conditions and for such subject to the rights of third parties under
consideration, which may be money, any contract relating thereto, without
stocks, bonds, or other instruments for further action or approval by the
the payment of money or other property stockholders or members.
or consideration, as its board of directors
or trustees may deem expedient. Nothing in this section is intended to
restrict the power of any corporation,

15
without the authorization by the prepaid, served personally, or sent
stockholders or members, to sell, lease, electronically in accordance with the rules
exchange, mortgage, pledge, or otherwise and regulations of the Commission on the
dispose of any of its property and assets if use of electronic data message, when
the same is necessary in the usual and allowed by the bylaws or done with the
regular course of business of the consent of the stockholders: Provided,
corporation or if the proceeds of the sale That any dissenting stockholder shall
or other disposition of such property and have appraisal right as provided in this
assets shall be appropriated for the Code: Provided, however, That where the
conduct of its remaining business. investment by the corporation is
reasonably necessary to accomplish its
Section 40. Power to Acquire Own primary purpose as stated in the articles
Shares.— Provided that the corporation of incorporation, the approval of the
has unrestricted retained earnings in its stockholders or members shall not be
books to cover the shares to be purchased necessary.
or acquired, a stock corporation shall
have the power to purchase or acquire its Section 42. Power to Declare Dividends.
own shares for a legitimate corporate — The board of directors of a stock
purpose or purposes, including the corporation may declare dividends out of
following cases: the unrestricted retained earnings which
shall be payable in cash, property, or in
(a) To eliminate fractional shares arising stock to all stockholders on the basis of
out of stock dividends; outstanding stock held by them: Provided,
(b) To collect or compromise an That any cash dividends due on
indebtedness to the corporation, arising delinquent stock shall first be applied to
out of unpaid subscription, in a the unpaid balance on the subscription
delinquency sale, and to purchase plus costs and expenses, while stock
delinquent shares sold during said sale; dividends shall be withheld from the
and delinquent stockholders until their
unpaid subscription is fully
(c) To pay dissenting or withdrawing paid: Provided, further, That no stock
stockholders entitled to payment for their dividend shall be issued without the
shares under the provisions of this Code. approval of stockholders representing at
least two-thirds (2⁄3) of the outstanding
Section 41. Power to Invest Corporate
capital stock at a regular or special
Funds in Another Corporation or Business
meeting duly called for the purpose.
or for Any Other Purpose.— Subject to the
provisions of this Code, a private Stock corporations are prohibited from
corporation may invest its funds in any retaining surplus profits in excess of one
other corporation, business, or for any hundred percent (100%) of their paid-in
purpose other than the primary purpose capital stock, except: (a) when justified by
for which it was organized, when definite corporate expansion projects or
approved by a majority of the board of programs approved by the board of
directors or trustees and ratified by the directors; or (b) when the corporation is
stockholders representing at least two- prohibited under any loan agreement with
thirds (2⁄3) of the outstanding capital financial institutions or creditors, whether
stock, or by at least two-thirds (2⁄3) of the local or foreign, from declaring dividends
members in the case of nonstock without their consent, and such consent
corporations, at a meeting duly called for has not yet been secured; or (c) when it
the purpose. Notice of the proposed can be clearly shown that such retention
investment and the time and place of the is necessary under special circumstances
meeting shall be addressed to each obtaining in the corporation, such as
stockholder or member at the place of when there is need for special reserve for
residence as shown in the books of the probable contingencies.
corporation and deposited to the
addressee in the post office with postage

16
Section 43. Power to Enter into TITLE V
Management Contract.— No corporation BYLAWS
shall conclude a management contract
with another corporation unless such Section 45. Adoption of Bylaws.— For
contract is approved by the board of the adoption of bylaws by the corporation,
directors and by stockholders owning at the affirmative vote of the stockholders
least the majority of the outstanding representing at least a majority of the
capital stock, or by at least a majority of outstanding capital stock, or of at least a
the members in the case of a nonstock majority of the members in case of
corporation, of both the managing and the nonstock corporations, shall be
managed corporation, at a meeting duly necessary. The bylaws shall be signed by
called for the purpose: Provided, That (a) the stockholders or members voting for
where a stockholder or stockholders them and shall be kept in the principal
representing the same interest of both the office of the corporation, subject to the
managing and the managed corporations inspection of the stockholders or
own or control more than one-third (1⁄3) of members during office hours. A copy
the total outstanding capital stock thereof, duly certified by a majority of the
entitled to vote of the managing directors or trustees and countersigned
corporation; or (b) where a majority of by the secretary of the corporation, shall
theMnembers of the board of directors of be filed with the Commission and
the managing corporation also constitute attached to the original articles of
a majority of the members of the board of incorporation.
directors of the managed corporation, Notwithstanding the provisions of the
then the management contract must be preceding paragraph, bylaws may be
approved by the stockholders of the adopted and filed prior to incorporation;
managed corporation owning at least two- in such case, such bylaws shall be
thirds (2⁄3) of the total outstanding capital approved and signed by all the
stock entitled to vote, or by at least two- incorporators and submitted to the
thirds (2⁄3) of the members in the case of a Commission, together with the articles of
nonstock corporation. incorporation.
These shall apply to any contract whereby In all cases, bylaws shall be effective only
a corporation undertakes to manage or upon the issuance by the Commission of
operate all or substantially all of the a certification that the bylaws are in
business of another corporation, whether accordance with this Code.
such contracts are called service
contracts, operating agreements or The Commission shall not accept for filing
otherwise: Provided, however That such the bylaws or any amendment thereto of
service contracts or operating agreements any bank, banking institution, building
which relate to the exploration, and loan association, trust company,
development, exploitation or utilization of insurance company, public utility,
natural resources may be entered into for educational institution, or other special
such periods as may be provided by corporations governed by special laws,
pertinent laws or regulations. unless accompanied by a certificate of the
appropriate government agency to the
No management contract shall be entered effect that such bylaws or amendments
into for a period longer than five (5) years are in accordance with law.
for any one (1) term.
Section 46. Contents of Bylaws.— A
Section 44. Ultra Vires Acts of private corporation may provide the
Corporations.— No corporation shall following in its bylaws:
possess or exercise corporate powers
other than those conferred by this Code (a) The time, place and manner of calling
or by its articles of incorporation and and conducting regular or special
except as necessary or incidental to the meetings of the directors or trustees;
exercise of the powers conferred.

17
(b) The time and manner of calling and or adopt new bylaws. The owners of two-
conducting regular or special meetings thirds (2⁄3) of the outstanding capital stock
and mode of notifying the stockholders or or two-thirds (2⁄3) of the members in a
members thereof; nonstock corporation may delegate to the
board of directors or trustees the power to
(c) The required quorum in meetings of gimend or repeal the bylaws or adopt new
stockholders or members and the manner bylaws: Provided, That any power
of voting therein; delegated to the board of directors or
(d) The modes by which a stockholder, trustees to amend or repeal the bylaws or
member, director, or trustee may attend adopt new bylaws shall be considered as
meetings and cast their votes; revoked whenever stockholders owning or
representing a majority of the outstanding
(e) The form for proxies of stockholders capital stock or majority of the members
and members and the manner of voting shall so vote at a regular or special
them; meeting.
(f) The directors’ or trustees’ Whenever the bylaws are amended or new
qualifications, duties and responsibilities, bylaws are adopted, the corporation shall
the guidelines for setting the file with the Commission such amended
compensation of directors or trustees and or new bylaws and, if applicable, the
officers, and the maximum number of stockholders’ or members’ resolution
other board representations that an authorizing the delegation of the power to
independent director or trustee may have amend and/or adopt new bylaws, duly
which shall, in no case, be more than the certified under oath by the corporate
number prescribed by the Commission; secretary and a majority of the directors
or trustees.
(g) The time for holding the annual
election of directors or trustees and the The amended or new bylaws shall only be
mode or manner of giving notice thereof; effective upon the issuance by the
Commission of a certification that the
(h) The manner of election or appointment
same is in accordance with this Code and
and the term of office of all officers other
other relevant laws.
than directors or trustees;
TITLE VI
(i) The penalties for violation of the
MEETINGS
bylaws;
Section 48. Kinds of Meetings.
(j) In the case of stock corporations, the
— Meetings of directors, trustees,
manner of issuing stock certificates; and
stockholders, or members may be regular
(k) Such other matters as may be or special.
necessary for the proper or convenient
Section 49. Regular and Special Meetings
transaction of its corporate affairs for the
of Stockholders or Members.— Regular
promotion of good governance and anti-
meetings of stockholders or members
graft and corruption measures.
shall be held annually on a date fixed in
An arbitration agreement may be provided the bylaws, or if not so fixed, on any date
in the bylaws pursuant to Section 181 of after April 15 of every year as determined
this Code. by the board of directors or
trustees: Provided, That written notice of
Section 47. Amendment to Bylaws.— A regular meetings shall be sent to all
majority of the board of directors or stockholders or members of record at
trustees, and the owners of at least a least twenty-one (21) days prior to the
majority of the outstanding capital stock, meeting, unless a different period is
or at least a majority of the members of a required in the bylaws, law, or
nonstock corporation, at a regular or regulation: Provided, further, That written
special meeting duly called for the notice of regular meetings may be sent to
purpose, may amend or repeal the bylaws all stockholders or members of record

18
through electronic mail or such other (e) An explanation of the dividend policy
manner as the Commission shall allow and the fact of payment of dividends or
under its guidelines. the reasons for nonpayment thereof;

At each regular meeting of stockholders or (f) Director or trustee profiles which shall
members, the board of directors or include, among others, their qualifications
trustees shall endeavor to present to and relevant experience, length of service
stockholders or members the following: in the corporation, trainings and
continuing education attended, and their
(a) The minutes of the most recent regular board representations in other
meeting which shall include, among corporations;
others:
(g) A director or trustee attendance report,
(1) A description of the voting and vote indicating the attendance of each director
tabulation procedures used in the or trustee at each of the meetings of the
previous meeting; board and its committees and in regular
(2) A description of the opportunity given or special stockholder meetings;
to stockholders or members to ask (h) Appraisals and performance reports
questions and a record of the questions for the board and the criteria and
asked and answers given; procedure for assessment;
(3) The matters discussed and resolutions (i) A director or trustee compensation
reached; report prepared in accordance with this
(4) A record of the voting results for each Code and the rules the Commission may
agenda item; prescribe;

(5) A list of the directors or trustees, (j) Director disclosures on self-dealings

officers and stockholders or members who and related party transactions; and/or
attended the meeting; and (k) The profiles of directors nominated or
(6) Such other items that the Commission seeking election or reelection.
may require in the interest of good A director, trustee, stockholder, or
corporate governance and the protection member may propose any other matter for
of minority stockholders; inclusion in the agenda at any regular
(b) A members’ list for nonstock meeting of stockholders or members.
corporations and, for stock corporations, Special meetings of stockholders or
material information on the current members shall be held at any time
stockholders, and their voting rights; deemed necessary or as provided in the
(c) A detailed, descriptive, balanced and bylaws: Provided, however, That at least
comprehensible assessment of the one (1) week written notice shall be sent
corporation’s performance, which shall to all stockholders or members, unless a
include information on any material different period is provided in the bylaws,
change in the corporation’s business, law or regulation.
strategy, and other affairs; A stockholder or member may propose the
(d) A financial report for the preceding holding of a special meeting and items to
year, which shall include financial be included in the agenda.
statements duly signed and certified in Notice of any meeting may be waived,
accordance with this Code and the rules expressly or impliedly, by any stockholder
the Commission may prescribe, a or member: Provided, That general
statement on the adequacy of the waivers of notice in the articles of
corporation’s internal controls or risk incorporation or the bylaws shall not be
management systems, and a statement of allowed: Provided, further, That
all external audit and non-audit fees; attendance at a meeting shall constitute a
waiver of notice of such meeting, except

19
when the person attends a meeting for the articles of incorporation, or, if not
express purpose of objecting to the practicable, in the city or municipality
transaction of any business because the where the principal office of the
meeting is not lawfully called or convened. corporation is located: Provided, That any
city or municipality in Metro Manila,
Whenever for any cause, there is no Metro Cebu, Metro Davao, and other
person authorized or the person Metropolitan areas shall, for purposes of
authorized unjustly refuses to call a this section, be considered a city or
meeting, the Commission, upon petition municipality.
of a stockholder or member on a showing
of good cause therefor, may issue an Notice of meetings shall be sent through
order, directing the petitioning the means of communication provided in
stockholder or member to call a meeting the bylaws, which notice shall state the
of the corporation by giving proper notice time, place and purpose of the meetings.
required by this Code or the bylaws. The
petitioning stockholder or member shall Each notice of meeting shall further be
preside thereat until at least a majority of accompanied by the following:
the stockholders or members present (a) The agenda for the meeting;
have chosen from among themselves, a
presiding officer. (b) A proxy form which shall be submitted
to the corporate secretary within a
Unless the bylaws provide for a longer reasonable time prior to the meeting;
period, the stock and transfer book or
membership book shall be closed at least (c) When attendance, participation, and
twenty (20) days for regular meetings and voting are allowed by remote
seven (7) days for special meetings before communication or in absentiathe
the scheduled date of the meeting. requirements and procedures to be
followed when a stockholder or member
In case of postponement of stockholders’ elects either option; and
or members’ regular meetings, written
notice thereof and the reason therefor (d) When the meeting is for the election of
shall be sent to all stockholders or directors or trustees, the requirements
members of record at least two (2) weeks and procedure for nomination and
prior to the date of the meeting, unless a election.
different period is required under the
All proceedings and any business
bylaws, law or regulation.
transacted at a meeting of the
The right to vote of stockholders or stockholders or members, if within the
members may be exercised in person, powers or authority of the corporation,
through a proxy, or when so authorized in shall be valid even if the meeting is
the bylaws, through remote improperly held or called: Provided, That
communication or in absentia. The all the stockholders or members of the
Commission shall issue the rules and corporation are present or duly
regulations governing participation and represented at the meeting and not one of
voting through remote communication them expressly states at the beginning of
or in absentiataking into account the the meeting that the purpose of their
company’s scale, number of shareholders attendance is to object to the transaction
or members, structure, and other factors of any business because the meeting is
consistent with the protection and not lawfully called or convened.
promotion of shareholders’ or members’
Section 51. Quorum in Meetings.
meetings.
— Unless otherwise provided in this Code
Section 50. Place and Time of Meetings of or in the bylaws, a quorum shall consist
Stockholders or Members.— Stockholders’ of the stockholders representing a
or members’ meetings, whether regular or majority of the outstanding capital stock
special, shall be held in the principal or a majority of the members in the case
office of the corporation as set forth in the of nonstock corporations.

20
Section 52. Regular and Special Meetings Section 53. Who Shall Preside at
of Directors or Trustees; Quorum.— Unless Meetings.— The chairman or, in his
the articles of incorporation or the bylaws absence, the president shall preside at all
provides for a greater majority, a majority meetings of the directors or trustees as
of the directors or trustees as stated in well as of the stockholders or members,
the articles of incorporation shall unless the bylaws provide otherwise.
constitute a quorum to transact corporate
business, and every decision reached by Section 54. Right to Vote of Secured
at least a majority of the directors or Creditors and Administrators.— In case a
trustees constituting a quorum, except for stockholder grants security interest in his
the election of officers which shall require or her shares in stock corporations, the
the vote of a majority of all the members stockholder-grantor shall have the right to
of the board, shall be valid as a corporate attend and vote at meetings of
act. stockholders, unless the secured creditor
is expressly given by the stockholder-
Regular meetings of the board of directors grantor such right in writing which is
or trustees of every corporation shall be recorded in the appropriate corporate
held monthly, unless the bylaws provide books.
otherwise.
Executors, administrators, receivers, and
Special meetings of the board of directors other legal representatives duly appointed
or trustees may be held at any time upon by the court may,attend and vote in
the call of the president or as provided in behalf of the stockholders or members
the bylaws. without need of any written proxy.

Meetings of directors or trustees of Section 55. Voting in Case of Joint

corporations may be held anywhere in or Ownership of Stock.— The consent of all
outside of the Philippines, unless the the co-owners shall be necessary in voting
bylaws provide otherwise. Notice of shares of stock owned jointly by two (2) or
regular or special meetings statirtg the more persons, unless there is a written
date, time and place of the meeting must proxy, signed by all the co-owners,
be sent to every director or trustee at least authorizing one (1) or some of them or
two (2) days prior to the scheduled any other person to vote such share or
meeting, unless a longer time is provided shares: Provided, That when the shares
in the bylaws. A director or trustee may are owned in an “and/or” capacity by the
waive this requirement, either expressly holders thereof, any one of the joint
or impliedly. owners can vote said shares or appoint a
proxy therefor.
Directors or trustees who cannot
physically attend or vote at board Section 56. Voting Right for Treasury
meetings can participate and vote through Shares.— Treasury shares shall have no
remote communication such as voting right as long as such shares
videoconferencing, teleconferencing, or remain in the Treasury.
other alternative modes of communication
that allow them reasonable opportunities Section 57. Manner of Voting; Proxies.
to participate. Directors or trustees — Stockholders and members may vote in
cannot attend or vote by proxy at board person or by proxy in all meetings of
meetings. stockholders or members.

A director or trustee who has a potential When so authorized in the bylaws or by a

interest in any related party transaction majority of the board of directors, the
must recuse from voting on the approval stockholders or members of corporations
of the related party transaction without may also vote through remote
prejudice to compliance with the communication or in absentia : Provided,
requirements of Section 31 of this Code. That the votes are received before the
corporation finishes the tally of votes.

21
A stockholder or member who participates The trustee or trustees shall execute and
through remote communication or in deliver to the transferors, voting trust
absentia shall be deemed present for certificates, which shall be transferable in
purposes of quorum. the same manner and with the same
effect as certificates of stock.
The corporation shall establish the
appropriate requirements and procedures The voting trust agreement filed with the
for voting through remote communication corporation shall be subject to
and in absentia taking into account the examination by any stockholder of the
company’s scale, number of shareholders corporation in the same manner as any
or members, structure and other factors other corporate book or record: Provided,
consistent with the basic right of That both the trustor and the trustee or
corporate suffrage. trustees may exercise the right of
inspection of all corporate books and
Proxies shall be in writing, signed and records in accordance with the provisions
filed, by the stockholder or member, in of this Code.
any form authorized in the bylaws and
received by the corporate secretary within Any other stockholder may transfer the
a reasonable time before the scheduled shares to the same trustee or trustees
meeting. Unless otherwise provided in the upon the terms and conditions stated in
proxy form, it shall be valid only for the the voting trust agreement, and
meeting for which it is intended. No proxy thereupon shall be bound by all the
shall be valid and effective for a period provisions of said agreement.
longer than five (5) years at any one time.
No voting trust agreement shall be
Section 58. Voting Trusts.— One or more entered into for purposes of
stockholders of a stock corporation may circumventing the laws against anti-
create a voting trust for the purpose of competitive agreements, abuse of
conferring upon a trustee or trustees the dominant position, anti-competitive
right to vote and other rights pertaining to mergers and acquisitions, violation of
the shares for a period not exceeding five nationality band capital requirements, or
(5) years at any time: Provided, That in for the perpetuation of fraud.
the case of a voting trust specifically
required as a condition in a loan Unless expressly renewed, all rights
agreement, said voting trust may be for a granted in a voting trust agreement shall
period exceeding five (5) years but shall automatically expire at the end of the
automatically expire upon full payment of agreed period. The voting trust certificates
the loan. A voting trust agreement must as well as the certificates of stock in the
be in writing and notarized, and shall name of the trustee or trustees shall
specify the terms and conditions thereof. thereby be deemed cancelled and new
certificates of stock shall be reissued in
A certified copy of such agreement shall the name of the trustors.
be filed with the corporation and with the
Commission; otherwise, the agreement is The voting trustee or trustees may vote by
ineffective and unenforceable. The proxy or in any manner authorized under
certificate or certificates of stock covered the bylaws unless the agreement provides
by the voting trust agreement shall be otherwise.
cancelled and new ones shall be issued in TITLE VII
the name of the trustee or trustees, STOCKS AND STOCKHOLDERS
stating that they are issued pursuant to
said agreement. The books of the Section 59. Subscription Contract.— Any
corporation shall state that the transfer in contract for the acquisition of unissued
the name of the trustee or trustees is stock in an existing corporation or a
made pursuant to the voting trust corporation still to be formed shall be
agreement. deemed a subscription within the
meaning of this Title, notwithstanding the

22
fact that the parties refer to it as a Shares of stock shall not be issued in
purchase or some other contract. exchange for promissory notes or future
service. The same considerations provided
Section 60. Pre-incorporation in this section, insofar as applicable, may
Subscription.— A subscription of shares in be used for the issuance of bonds by the
a corporation still to be formed shall be corporation.
irrevocable for a period of at least six (6)
months from the date of subscription, The issued price of no-par value shares
unless all of the other subscribers may be fixed in the articles of
consent to the revocation, or the incorporation or by the board of directors
corporation fails to incorporate within the pursuant to authority conferred by the
same period or within a longer period articles of incorporation or the bylaws, or
stipulated in the contract of subscription. if not so fixed, by the stockholders
No pre-incorporation subscription may be representing at least a majority of the
revoked after the articles of incorporation outstanding capital stock at a meeting
is submitted to the Commission. duly called for the purpose.

Section 61. Consideration for Stocks. Section 62. Certificate of Stock and
— Stocks shall not be issued for a Transfer of Shares.— The capital stock of
consideration less than the par or issued corporations shall be divided into shares
price thereof. Consideration for the for which certificates signed by the
issuance of stock may be: president or vice president, countersigned
by the secretary or assistant secretary,
(a) Actual cash paid to the corporation; and sealed with the seal of the
(b) Property, tangible or intangible, corporation shall be issued in accordance
actually received by the corporation and with the bylaws. Shares of stock so issued
necessary or convenient for its use and are personal property and may be
lawful purposes at a fair valuation equal transferred by delivery of the certificate or
to the par or issued value of the stock certificates indorsed by the owner, his
issued; attorney-in-fact, or any other person
legally authorized to make the transfer.
(c) Labor performed for or services No transfer, however, shall be valid,
actually rendered to the corporation; except as between the parties, until the
transfer is recorded in the books of the
(d) Previously incurred indebtedness of
corporation showing the names of the
the corporation;
parties to the transaction, the date of the
(e) Amounts transferred from unrestricted transfer, the number of the certificate or
retained earnings to stated capital; certificates, and the number of shares
transferred. The Commission may require
(f) Outstanding shares exchanged for corporations whose securities are traded
stocks in the event of reclassification or in trading markets and which can
conversion; reasonably demonstrate their capability to
do so to issue their securities or shares of
(g) Shares of stock in another corporation;
stocks in uncertificated or scripless form
and/or
in accordance with the rules of the
(h) Other generally accepted form of Commission.
consideration.
No shares of stock against which the
Where the consideration is other than corporation holds any unpaid claim shall
actual cash, or consists of intangible be transferable in the books of the
property such as patents or copyrights, corporation.
the valuation thereof shall initially be
Section 63. Issuance of Stock Certificates.
determined by the stockholders or the
— No certificate of stock shall be issued to
board of directors, subject to the approval
a subscriber until the full amount of the
of the Commission.
subscription together with interest and

23
expenses (in case of delinquent shares), if all stocks covered by the subscription
any is due, has been paid. shall thereupon becoihe delinquent and
shall be subject to sale as hereinafter
Section 64. Liability of Directors for provided, unless the board of directors
Watered Stocks.— A director or officer of a orders otherwise.
corporation who: (a) consents to the
issuance of stocks for a consideration less Section 67. Delinquency Sale.— The
than its par or issued value; (b) consents board of directors may, by resolution,
to the issuance of stocks for a order the sale of delinquent stock and
consideration other than cash, valued in shall specifically state the amount due on
excess of its fair value; or (c) having each subscription plus all accrued
knowledge of the insufficient interest, and the date, time and place of
consideration, does not file a written the sale which shall not be less than
objection with the corporate secretary, thirty (30) days nor more than sixty (60)
shall be liable to the corporation or its days from the date the stocks become
creditors, solidarily with the stockholder delinquent.
concerned for the difference between the
value received at the time of issuance of Notice of the sale, with a copy of the
the stock and the par or issued value of resolution, shall be sent to every
the same. delinquent stockholder either personally,
by registered mail, or through other
Section 65. Interest on Unpaid means provided in the bylaws. The same
Subscriptions.— Subscribers to stocks shall be published once a week for two (2)
shall be liable to the corporation for consecutive weeks in a newspaper of
interest on all unpaid subscriptions from general circulation in the province or city
the date of subscription, if so required by where the principal office of the
and at the rate of interest fixed in the corporation is located.
subscription contract. If no rate of
interest is fixed in the subscription Unless the delinquent stockholder pays to
contract, the prevailing legal rate shall the corporation, on or before the date
apply. specified for the sale of the delinquent
stock, the balance due on the former’s
Section 66. Payment of Balance of subscription, plus accrued interest, costs
Subscription.— Subject to the provisions of advertisement and expenses of sale, or
of the subscription contract, the board of unless the board of directors otherwise
directors may, at any time, declare due orders, said delinquent stock shall be sold
and payable to the corporation unpaid at a public auction to such bidder who
subscriptions and may collect the same or shall offer to pay the full amount of the
such percentage thereof, in either case, balance on the subscription together with
with accrued interest, if any, as it may accrued interest, costs of advertisement
deem necessary. and expenses of sale, for the smallest
number of shares or fraction of a share.
Payment of unpaid subscription or any The stock so purchased shall be
percentage thereof, together with any transferred to such purchaser in the
interest accrued, shall be made on the books of the corporation and a certificate
date specified in the subscription contract for such stock shall be issued in the
or on the date stated in the call made by purchaser’s favor. The remaining shares,
the board. Failure to pay on such date if any, shall be credited in favor of the
shall render the entire balance due and delinquent stockholder who shall likewise
payable and shall make the stockholder be entitled to the issuance of a certificate
liable for interest at the legal rate on such of stock covering such shares.
balance, unless a different interest rate is
provided in the subscription contract. The Should there be no bidder at the public
interest shall be computed from the date auction who offers to pay the full amount
specified, until full payment of the of the balance on the subscription
subscription. If no payment is made together with accrued interest, costs of
within thirty (30) days from the said date, advertisement, and expenses of sale, for

24
the smallest number of shares or fraction issuing new certificates of stock in lieu of
of a share, the corporation may, subject those which have been lost, stolen or
to the provisions of this Code, bid for the destroyed:
same, and the total amount due shall be
credited as fully paid in the books of the (a) The registered owner of a certificate of
corporation. Title to all the shares of stock stock in a corporation or such person’s
covered by the subscription shall be legal representative shall file with the
vested in the corporation as treasury corporation an affidavit in triplicate
shares and may be disposed of by said setting forth, if possible, the
corporation in accordance with the circumstances as to how the certificate
provisions of this Code. was lost, stolen or destroyed, the number
of shares represented by such certificate,
Section 68. When Sale May be the serial number of the certificate and
Questioned.— No action to recover the name of the corporation which issued
delinquent stock sold can be sustained the same. The owner of such certificate of
upon the ground of irregularity or defect stock shall also submit such other
in the notice of sale, or in the sale itself of information and evidence as may be
the delinquent stock, unless the party deemed necessary; and
seeking to maintain such action first pays
or tenders to the party holding the stock (b) After verifying the affidavit and other
the sum for which the same was sold, information and evidence with the books
with interest from the date of sale at the of the corporation, the corporation shall
legal rate. No such action shall be publish a notice in a newspaper of general
maintained unless a complaint is filed circulation in the place where the
within six (6) months from the date of corporation has its principal office, once a
sale. week for three (3) consecutive weeks at
the expense of the registered owner of the
Section 69. Court Action to Recover certificate of stock which has been lost,
Unpaid Subscription.— Nothing in this stolen or destroyed. The notice shall state
Code shall prevent the corporation from the name of the corporation, the name of
collecting through court action, the the registered owner, the serial number of
amount due on any unpaid subscription, the certificate, the number of shares
with accrued interest, costs and expenses. represented by such certificate, and shall
state that after the expiration of one (1)
Section 70. Effect of Delinquency.— No year from the date of the last publication,
delinquent stock shall be voted for, be if no contest has been presented to the
entitled to vote, or be represented at any corporation regarding the certificate of
stockholder’s meeting, nor shall the stock, the right to make such contest
holder thereof be entitled to any of the shall be barred and the corporation shall
rights of a stockholder except the right to cancel the lost, destroyed or stolen
dividends in accordance with the certificate of stock in its books. In lieu
provisions of this Code, until and unless thereof, the corporation shall issue a new
payment is made by the holder of such certificate of stock, unless the registered
delinquent stock for the amount due on owner files a bond or other security as
the subscription with accrued interest, may be required, effective for a period of
and the costs and expenses of one (1) year, for such amount and in such
advertisement, if any. form and with such sureties as may be
Section 71. Rights of Unpaid Shares, satisfactory to the board of directors, in
Nondelinquent.— Holders of subscribed which case a new certificate may be
shares not fully paid which are not issued even before the expiration of the
delinquent shall have all the rights of a one (1) year period provided herein. If a
stockholder. contest has been presented to the
corporation or if an action is pending in
Section 72. Lost or Destroyed court regarding the ownership of the
Certificates.— The following procedure certificate of stock which has been lost,
shall be followed by a corporation in stolen or destroyed, the issuance of the

25
new certificate of stock in lieu thereof stockholder or member, the time when
shall be suspended until the court any director, trustee, stockholder or
renders a final decision regarding the member entered or left the meeting must
ownership of the certificate of stock which be noted in the minutes; and on a similar
has been lost, stolen or destroyed. demand, the yeas and nays must be
taken on any motion or proposition, and a
Except in case of fraud, bad faith, or record thereof carefully made. The protest
negligence on the part of the corporation of a director, trustee, stockholder or
and its officers, no action may be brought member on any action or proposed action
against any corporation which shall hpve must be recorded in full upon their
issued certificate of stock in lieu of those demand.
lost, stolen or destroyed pursuant to the
procedure above-described. Corporate records, regardless of the form
in which they are stored, shall be open to
TITLE VIII inspection by any director, trustee,
CORPORATE BOOKS AND RECORDS stockholder or member of the corporation
Section 73. Books to be Kept; Stock in person or by a representative at
Transfer Agent.— Every corporation shall reasonable hours on business days, and a
keep and carefully preserve at its demand in writing may be made by such
principal office all information relating to director, trustee or stockholder at their
the corporation including, but not limited expense, for copies of such records or
to: excerpts from said records. The inspecting
or reproducing party shall remain bound
(a) The articles of incorporation and by confidentiality rules under prevailing
bylaws of the corporation and all their laws, such as the rules on trade secrets or
amendments; processes under Republic Act No. 8293,
otherwise known as the “Intellectual
(b) The current ownership structure and
Property Code of the Philippines”, as
voting rights of the corporation, including
amended, Republic Act No. 10173,
lists of stockholders or members, group
otherwise known as the “Data Privacy Act
structures, intra-group relations,
of 2012”, Republic Act No. 8799,
ownership data, and beneficial ownership;
otherwise known as “The Securities
(c) The names and addresses of all the Regulation Code”, and the Rules of Court.
members of the board of directors or
A requesting party who is not a
trustees and the executive officers;
stockholder or member of record, or is a
(d) A record of all business transactions; competitor, director, officer, controlling
stockholder or otherwise represents the
(e) A record of the resolutions of the board interests of a competitor shall have no
of directors or trustees and of the right to inspect or demand reproduction
stockholders or members; of corporate records.
(f) Copies of the latest reportorial Any stockholder who shall abuse the
requirements submitted to the rights granted under this section shall be
Commission; and penalized under Section 158 of this Code,
without prejudice to the provisions of
(g) The minutes of all meetings of
Republic Act No. 8293, otherwise known
stockholders or members, or of the board
as the “Intellectual Property Code of the
of directors or trustees. Such minutes
Philippines”, as amended, and Republic
shall set forth in detail, among others: the
Act No. 10173, otherwise known as the
time and place of the meeting held, how it
“Data Privacy Act of 2012”.
was authorized, the notice given, the
agenda therefor, whether the meeting was Any officer or agent of the corporation
regular or special, its object if special, who shall refuse to allow the inspection
those present and absent, and every act and/or reproduction of records in
done or ordered done at the meeting. accordance with the provisions of this
Upon the demand of a director, trustee, Code shall be liable to such director,

26
trustee, stockholder or member for A stock transfer agent or one engaged
damages, and in addition, shall be guilty principally in the business of registering
of an offense which shall be punishable transfers of stocks in behalf of a stock
under Section 161 of this Code: Provided, corporation shall be allowed to operate in
That if such refusal is made pursuant to a the Philippines upon securing a license
resolution or order of the board of from the Commission and the payment of
directors or trustees, the liability under a fee to be fixed by the Commission,
this section for such action shall be which shall be renewable
imposed upon the directors or trustees annually: Provided, That a stock
who voted for such corporation is not precluded from
refusal: Provided, further, That it shall be performing or making transfers of its own
a defense to any action under this section stocks, in which case all the rules and
that the person demanding to examine regulations imposed on stock transfer
and copy excerpts from the corporation’s agents, except the payment of a license
records and minutes has improperly used fee herein provided, shall be
any information secured through any applicable: Provided, further, That the
prior examination of the records or Commission may require stock
minutes of such corporation or of any corporations which transfer and/or trade
other corporation, or was not acting in stocks in secondary markets to have an
good faith or for a legitimate purpose in independent transfer agent.
making the demand to examine or
reproduce corporate records, or is a Section 74. Right to Financial Statements.
competitor, director, officer, controlling — A corporation shall furnish a
stockholder or otherwise represents the stockholder or member, within ten (10)
interests of a competitor. days from receipt of their written request,
its most recent financial statement, in the
If the corporation denies or does not act form and substance of the financial
on a demand for inspection and/or reporting required by the Commission.
reproduction, the aggrieved party may
report such denial or inaction to the At the regular meeting of stockholders or
Commission. Within five (5) days from members, the board of directors or
receipt of such report, the Commission trustees shall present to such
shall conduct a summary investigation stockholders or members a financial
and issue an order directing the report of the operations of the corporation
inspection or reproduction of the for the preceding year, which shall
requested records. include financial statements, duly signed
and certified in accordance with this
Stock corporations must also keep a stock Code, and the rules the Commission may
and transfer book, which shall contain a prescribe.
record of all stocks in the names of the
stockholders alphabetically arranged; the However, if the total assets or total
installments paid and unpaid on all liabilities of the corporation are less than
stocks for which subscription has been Six hundred thousand pesos
made, and the date of payment of any (₱600,000.00), or such other amount as
installment; a statement of every may be determined appropriate by the
alienation, sale or transfer of stock made, Department of Finance, the financial
the date thereof, by and to whom made; statements may be certified under oath by
and such other entries as the bylaws may the treasurer and the president.
prescribe. The stock and transfer book TITLE IX
shall be kept in the principal office of the MERGER AND CONSOLIDATION
corporation or in the office of its stock
transfer agent and shall be open for Section 75. Plan of Merger or
inspection by any director or stockholder Consolidation.— Two (2) or more
of the corporation at reasonable hours on corporations may merge into a single
business days. corporation which shall be one of the
constituent corporations or may

27
consolidate into a new single corporation stockholder may exercise the right of
which shall be the consolidated appraisal in accordance with this
corporation. Code: Provided, That if after the approval
by the stockholders of such plan, the
The board of directors or trustees of each board of directors decides to abandon the
corporation, party to the merger or plan, the right of appraisal shall be
consolidation, shall approve a plan of extinguished.
merger or consolidation setting forth the
following: Any amendment to the plan of merger or
consolidation may be made: Provided,
(a) The names of the corporations That such amendment is approved by a
proposing to merge or consolidate, majority vote of the respective boards of
hereinafter referred to as the constituent directors or trustees of all the constituent
corporations; corporations and ratified by the
(b) The terms of the merger or affirmative vote of stockholders
consolidation and the mode of carrying representing at least two-thirds (2⁄3) of the
the same into effect; outstanding capital stock or of two-thirds
(2⁄3) of the members of each of the
(c) A statement of the changes, if any, in constituent corporations. Such plan,
the articles of incorporation of the together with any amendment, shall be
surviving corporation in case of merger; considered as the agreement of merger or
and, in case of consolidation, all the consolidation.
statements required to be set forth in the
articles of incorporation for .corporations Section 77. Articles of Merger or
organized under this Code; and Consolidation.— After the approval by the
stockholders or members as required by
(d) Such other provisions with respect to the preceding section, articles of merger
the proposed merger or consolidation as or articles of consolidation shall be
are deemed necessary or desirable. executed by each of the constituent
corporations, to be signed by the
Section 76. Stockholders’ or Members’
president or vice president and certified
Approval.— Upon approval by a majority
by the secretary or assistant secretary of
vote of each of the board of directors or
each corporation setting forth:
trustees of the constituent corporations of
the plan of merger or consolidation, the (a) The plan of the merger or the plan of
same shall be submitted for approval by consolidation;
the stockholders or members of each of
such corporations at separate corporate (b) As to stock corporations, the number
meetings duly called for the purpose. of shares outstanding, or in the case of
Notice of such meetings shall be given to nonstock corporations, the number of
all stockholders or members of the members;
respective corporations in the same (c) As to each corporation, the number of
manner as giving notice of regular or shares or members voting for or against
special meetings under Section 49 of this such plan, respectively;
Code. The notice shall state the purpose
of the meeting and include a copy or a (d) The carrying amounts and fair values
summary of the plan of merger or of the assets and liabilities of the
consolidation. respective companies as of the agreed cut-
off date;
The affirmative vote of stockholders
representing at least two-thirds (2⁄3) of the (e) The method to be used in the merger
outstanding capital stock of each or consolidation of accounts of the
corporation in the case of stock companies;
corporations or at least two-thirds (2⁄3) of
the members in the case of nonstock (f) The provisional or pro forma values, as
corporations shall be necessary for the merged or consolidated, using the
approval of such plan. Any dissenting accounting method; and

28
(g) Such other information as may be (c) The surviving or the consolidated
prescribed by the Commission. corporation shall possess all the rights,
privileges, immunities, and powers and
Section 78. Effectivity of Merger or shall be subject to all the duties and
Consolidation.— The articles of merger or liabilities of a corporation organized under
of consolidation, signed and certified as this Code;
required by this Code, shall be submitted
to the Commission for its (d) The surviving or the consolidated
approval: Provided, That in the case of corporation shall possess all the rights,
merger or consolidation of banks or privileges, immunities and franchises of
banking institutions, loan associations, each constituent corporation; and all real
trust companies, insurance companies, or personal property, all receivables due
public utilities, educational institutions, on whatever account, including
and other special corporations governed subscriptions to shares and other choses
by special laws, the favorable in action, and every other interest of,
recommendation of the appropriate belonging to, or due to each constituent
government agency shall first be obtained. corporation, shall be deemed transferred
If the Commission is satisfied that the to and vested in such surviving or
merger or consolidation of the consolidated corporation without further
corporations concerned is consistent with act or deed; and
the provisions of this Code and existing
laws, it shall issue a certificate approving (e) The surviving or consolidated
the articles and plan of merger or of corporation shall be responsible for all the
consolidation, at which time the merger or liabilities and obligations of each
consolidation shall be effective. constituent corporation as though such
surviving or consolidated corporation had
If, upon investigation, the Commission itself incurred such liabilities or
has reason to believe that the proposed obligations; and any pending claim, action
merger or consolidation is contrary to or or proceeding brought by or against any
inconsistent with the provisions of this constituent corporation may be
Code or existing laws, it shall set a prosecuted by or against the surviving or
hearing to give the corporations consolidated corporation. The rights of
concerned the opportunity to be heard. creditors or liens upon the property of
Written notice of the date, time, and place such constituent corporations shall not
of hearing shall be given to each be impaired by the merger or
constituent corporation at least two (2) consolidation.
weeks before said hearing. The
Commission shall thereafter proceed as TITLE X
provided in this Code. APPRAISAL RIGHT

Section 79. Effects of Merger or Section 80. When the Right of Appraisal
Consolidation.— The merger or May Be Exercised.— Any stockholder of a
consolidation shall have the following corporation shall have the right to dissent
effects: and demand payment of the fair value of
the shares in the following instances:
(a) The constituent corporations shall
become a single corporation which, in (a) In case an amendment to the articles
case of merger, shall be the surviving of incorporation has the effect of changing
corporation designated in the plan of or restricting the rights of any stockholder
merger; and, in case of consolidation, or class of shares, or of authorizing
shall be the consolidated corporation preferences in any respect superior to
designated in the plan of consolidation; those of outstanding shares of any class,
or of extending or shortening the term of
(b) The separate existence of the corporate existence;
constituent corporations shall cease,
except that of the surviving or the (b) In case of sale, lease, exchange,
consolidated corporation; transfer, mortgage, pledge or other

29
disposition of all or substantially all of the stockholder’s shares until either the
corporate property and assets as provided abandonment of the corporate action
in this Code; involved or the purchase of the said
shares by the corporation, all rights
(c) In case of merger or consolidation; and accruing to such shares, including voting
(d) In case of investment of corporate and dividend rights, shall be suspended
funds for any purpose other than the in accordance with the provisions of this
primary purpose of the corporation. Code, except the right of such stockholder
to receive payment of the fair value
Section 81. How Right is Exercised.— The thereof: Provided, That if the dissenting
dissenting stockholder who votes against stockholder is not paid the value of the
a proposed corporate action may exercise said shares within thirty (30) days after
the right of appraisal by making a written the award, the voting and dividend rights
demand on the corporation for the shall immediately be restored.
payment of the fair value of shares held
within thirty (30) days from the date on Section 83. When Right to Payment
which the vote was taken: Provided, That Ceases.— No demand for payment under
failure to make the demand within such this Title may be withdrawn unless the
period shall be deemed a waiver of the corporation consents thereto. If, however,
appraisal right. If the proposed corporate such demand for payment is withdrawn
action is implemented, the corporation with the consent of the corporation, or if
shall pay the stockholder, upon surrender the proposed corporate action is
of the certificate or certificates of stock abandoned or rescinded by the
representing the stockholder‘s shares, the corporation or disapproved by the
fair value thereof as of the day before the Commission where such approval is
vote was taken, excluding any necessary, or if the Commission
appreciation or depreciation in determines that such stockholder is not
anticipation of such corporate action. entitled to the appraisal right, then the
right of the stockholder to be paid the fair
If, within sixty (60) days from the approval value of the shares shall cease, the status
of the corporate action by the as the stockholder shall be restored, and
stockholders, the withdrawing all dividend distributions which would
stockholder and the corporation cannot have accrued on the shares shall be paid
agree on the fair value of the shares, it to the stockholder.
shall be determined and appraised by
three (3) disinterested persons, one of Section 84. Who Bears Costs of
whom shall be named by the stockholder, Appraisal.— The costs and expenses of
another by the corporation, and the third appraisal shall be borne by the
by the two (2) thus chosen. The findings corporation, unless the fair value
of the majority of the appraisers shall be ascertained by the appraisers is
final, and their award shall be paid by the approximately the same as the price
corporation within thirty (30) days after which the corporation may have offered to
such award is made: Provided, That no pay the stockholder, in which case they
payment shall be made to any dissenting shall be borne by the latter. In the case of
stockholder unless the corporation has an action to recover such fair value, all
unrestricted retained earnings in its costs and expenses shall be assessed
books to cover such against the corporation, unless the
payment: Provided, further, That upon refusal of the stockholder to receive
payment by the corporation of the agreed payment was unjustified.
or awarded price, the stockholder shall Section 85. Notation on Certificates;
forthwith transfer the shares to the Rights of Transferee.— Within ten (10)
corporation. days after demanding payment for shares
Section 82. Effect of Demand and held, a dissenting stockholder shall
Termination of Right.— From the time of submit the certificates of stock
demand for payment of the fair value of a representing the shares to the corporation

30
for notation that such shares are incorporation or the bylaws. Unless so
dissenting shares. Failure to do so shall, limited, broadened, or denied, each
at the option of the corporation, terminate member, regardless of class, shall be
the rights under this Title. If shares entitled to one (1) vote.
represented by the certificates bearing
such notation are transferred, and the Unless otherwise provided in the articles
certificates consequently cancelled, the of incorporation or the bylaws, a member
rights of the transferor as a dissenting may vote by proxy, in accordance with the
stockholder under this Title shall cease provisions of this Code. The bylaws may
and the transferee shall have all the likewise authorize voting through remote
rights of a regular stockholder; and all communication and/or in absentia.
dividend distributions which would have Section 89. Nontransferability of
accrued on such shares shall be paid to Membership.— Membership in a nonstock
the transferee. corporation and all rights arising
TITLE XI therefrom are personal and
NONSTOCK CORPORATION nontransferable, unless the articles of
incorporation or the bylaws otherwise
Section 86. Definition.— For purposes of provide.
this Code and subject to its provisions on
dissolution, a nonstock corporation is one Section 90. Termination of Membership.
where no part of its income is — Membership shall be terminated in the
distributable as dividends to its members, manner and for the causes provided in
trustees, or officers: Provided, That any the articles of incorporation or the bylaws.
profit which a nonstock corporation may Termination of membership shall
obtain incidental to its operations shall, extinguish all rights of a member in the
whenever necessary or proper, be used for corporation or in its property, unless
the furtherance of the purpose or otherwise provided in the articles of
purposes for which the corporation was incorporation or the bylaws.
organized, subject to the provisions of this Chapter II
Title. Trustees and Officers
The provisions governing stock Section 91. Election and Term of
corporations, when pertinent, shall be Trustees.— The number of trustees shall
applicable to nonstock corporations, be fixed in the articles of incorporation or
except as may be covered by specific bylaws which may or may not be more
provisions of this Title. than fifteen (15). They shall hold office for
Section 87. Purposes.— Nonstock not more than three (3) years until their
corporations may be formed or organized successors are elected and qualified.
for charitable, religious, educational, Trustees elected to fill vacancies occurring
professional, cultural, fraternal, literary, before the expiration of a particular term
scientific, social, civic service, or similar shall hold office only for the unexpired
purposes, like trade, industry, period.
agricultural and like chambers, or any Except with respect to independent
combination thereof, subject to the trustees of nonstock corporations vested
special provisions of this Title governing with public interest, only a member of the
particular classes of nonstock corporation shall be elected as trustee.
corporations.
Unless otherwise provided in the articles
Chapter I of incorporation or the bylaws, the
Members members may directly elect officers of a
Section 88. Right to Vote.— The right of nonstock corporation.
the members of any class or classes to Section 92. List of Member’s and Proxies,
vote may be limited, broadened, or denied Place of Meetings.— The corporation shall,
to the extent specified in the articles of at all times, keep a list of its members

31
and their proxies in the form the provisions of the articles of incorporation
Commission may require. The list shall be or the bylaws, to the extent that the
updated to reflect the members and articles of incorporation or the bylaws
proxies of record twenty (20) days prior to determine the distributive rights of
any scheduled election. The bylaws may members, or any class or classes of
provide that the members of a nonstock members, or provide for distribution; and
corporation may hold their regular or
special meetings at any place even outside (e) In any other case, assets may be
the place where the principal office of the distributed to such persons, societies,
corporation is located: Provided, That organizations or corporations, whether or
proper notice is sent to all members not organized for profit, as may be
indicating the date, time and place of the specified in a plan of distribution adopted
meeting: Provided, farther, That the place pursuant to this Chapter.
of meeting shall be within Philippine Section 94. Plan of Distribution of Assets.
territory. — A plan providing for the distribution of
Chapter III assets, consistent with the provisions of
Distribution of Assets in Nonstock this Title, may be adopted by a nonstock
corporations corporation in the process of dissolution
in the following manner:
Section 93. Rules of Distribution.— The
assets of a nonstock corporation (a) The board of trustees shall, by majority
undergoing the process of dissolution for vote, adopt a resolution recommending a
reasons other than those set forth in plan of distribution and directing the
Section 139 of this Code shall be applied submission thereof to a vote at a regular
and distributed as follows: or special meeting of members having
voting rights;
(a) All liabilities and obligations of the
corporation shall be paid, satisfied and (b) Each member entitled to vote shall be
discharged, or adequate provision shall be given a written notice setting forth the
made therefor; proposed plan of distribution or a
summary thereof and the date, time and
(b) Assets held by the corporation upon a place of such meeting within the time and
condition requiring return, transfer or in the manner provided in this Code for
conveyance, and which condition occurs the giving of notice of meetings; and
by reason of the dissolution, shall be
returned, transferred or conveyed in (c) Such plan of distribution shall be
accordance with such requirements; adopted upon approval of at least two-
thirds (2⁄3) of the members having voting
(c) Assets received and held by the rights present or represented by proxy at
corporation subject to limitations such meeting.
permitting their use only for charitable,
religious, benevolent, educational or TITLE XII
similar purposes, but not held upon a CLOSE CORPORATIONS
condition requiring return, transfer or Section 95. Definition and Applicability of
conveyance by reason of the dissolution, Title.— A close corporation, within the
shall be transferred or conveyed to one (1) meaning of this Code, is one whose
or more corporations, societies or articles of incorporation provides that: (a)
organizations engaged in activities in the all the corporation’s issued stock of all
Philippines substantially similar to those classes, exclusive of treasury shares, shall
of the dissolving corporation according to be held of record by not more than a
a plan of distribution adopted pursuant to specified number of persons, not
this Chapter; exceeding twenty (20); (b) all the issued
(d) Assets other than those mentioned in stock of all classes shall be subject to one
the preceding paragraphs, if any, shall be (1) or more specified restrictions on
distributed in accordance with the transfer permitted by this Title; and (c)
the corporation shall not list in any stock

32
exchange or make any public offering of stockholders of the corporation shall be
its stocks of any class. Notwithstanding subject to all liabilities of directors.
the foregoing, a corporation shall not be
deemed a close corporation when at least The articles of incorporation may likewise
two-thirds (2⁄3) of its voting stock or voting provide that all officers or employees or
rights is owned or controlled by another that specified officers or employees shall
corporation which is not a close be elected or appointed by the
corporation within the meaning of this stockholders, instead of by the board of
Code. directors.

Any corporation may be incorporated as a Section 97. Validity of Restrictions on

close corporation, except mining or oil Transfer of Shares.— Restrictions on the
companies, stock exchanges, banks, right to transfer shares must appear in
insurance companies, public utilities, the articles of incorporation, in the
educational institutions and corporations bylaws, as well as in the certificate of
declared to be vested with public interest stock; otherwise, the same shall not be
in accordance with the provisions of this binding on any purchaser in good faith.
Code. Said restrictions shall not be more
onerous than granting the existing
The provisions of this Title shall primarily stockholders or the corporation the option
govern close corporations: Provided, That to purchase the shares of the transferring
other Titles in this Code shall apply stockholder with such reasonable terms,
suppletorily, except as otherwise provided conditions or period stated. If, upon the
under this Title. expiration of said period, the existing
stockholders or the corporation fails to
Section 96. Articles of Incorporation. exercise the option to purchase, the
— The articles of incorporation of a close transferring stockholder may sell their
corporation may provide for: shares to any third person.
(a) A classification of shares or rights, the Section 98. Effects of Issuance or
qualifications for owning or holding the Transfer of Stock in Breach of Qualifying
same, and restrictions on their transfers, Conditions.—
subject to the provisions of the following
section; (a) If a stock of a close corporation is
issued or transferred to any person who is
(b) A classification of directors into one (1) not eligible to be a holder thereof under
or more classes, each of whom may be any provision of the articles of
voted for and elected solely by a particular incorporation, and if the certificate for
class of stock; and such stock conspicuously shows the
(c) Greater quorum or voting requirements qualifications of the persons entitled to be
in meetings of stockholders or directors holders of record thereof, such person is
than those provided in this Code. conclusively presumed to have notice of
the fact of the ineligibility to be a
The articles of incorporation of a close stockholder.
corporation may provide that the business
of the corporation shall be managed by (b) If the articles of incorporation of a
the stockholders of the corporation rather close corporation states the number of
than by a board of directors. So long as persons, not exceeding twenty (20), who
this provision continues in effect, no are entitled to be stockholders of record,
meeting of stockholders need be called to and if the certificate for such stock
elect directors: Provided, That the conspicuously states such number, and
stockholders of the corporation shall be the issuance or transfer of stock to any
deemed to be directors for the purpose of person would cause the stock to be held
applying the provisions of this Code, by more than such number of persons,
unless the context clearly requires the person to whom such stock is issued
otherwise: Provided, further, That the or transferred is conclusively presumed to
have notice of this fact.

33
(c) If a stock certificate of a close provisions of such agreements are
corporation conspicuously shows a contained, except those required by this
restriction on transfer of the corporation’s Title to be embodied in said articles of
stock and the transferee acquires the incorporation.
stock in violation of such restriction, the
transferee is conclusively presumed to (b) A written agreement signed by two (2)
have notice of the fact that the stock was or more stockholders may provide that in
acquired in violation of the restriction. exercising any voting right, the shares
held by them shall be voted as provided or
(d) Whenever a person to whom stock of a as agreed, or in accordance with a
close corporation has been issued or procedure agreed upon by them.
transferred has or is conclusively
presumed under this section to have (c) No provision in a written agreement
notice of: (1) the person’s ineligibility to be signed by the stockholders, relating to
a stockholder of the corporation; or (2) any phase of corporate affairs, shall be
that the transfer of stock would cause the invalidated between the parties on the
stock of the corporation to be held by ground that its effect is to make them
more than the number of persons partners among themselves.
permitted under its articles of (d) A written agreement among some or all
incorporation; or (3) that the transfer of the stockholders in a close corporation
violates a restriction on transfer of stock, shall not be invalidated on the ground
the corporation may, at its option, refuse that it relates to the conduct of the
to register the transfer in the name of the business and affairs of the corporation as
transferee. to restrict or interfere with the discretion
(e) The provisions of subsection (d) shall or powers of the board of
not be applicable if the transfer of stock, directors: Provided, That such agreement
though contrary to subsections (a), (b) or shall impose on the stockholders who are
(c), has been consented to by all the parties thereto the liabilities for
stockholders of the close corporation, or if managerial acts imposed on directors by
the close corporation has amended its this Code.
articles of incorporation in accordance (e) Stockholders actively engaged in the
with this Title. management or operation of the business
(f) The term “transfer”, as used in this and affairs of a close corporation shall be
section, is not limited to a transfer for held to strict fiduciary duties to each
value. other and among themselves. The
stockholders shall be personally liable for
(g) The provisions of this section shall not corporate torts unless the corporation has
impair any right which the transferee may obtained reasonably adequate liability
have to either rescind the transfer or insurance.
recover the stock under any express or
implied warranty. Section 100. When a Board Meeting is
Unnecessary or Improperly Held.— Unless
Section 99. Agreements by Stockholders. the bylaws provide otherwise, any action
— taken by the directors of a close
corporation without a meeting called
(a) Agreements duly signed and executed properly and with due notice shall
by and among all stockholders before the nevertheless be deemed valid if:
formation and organization of a close
corporation shall survive the (a) Before or after such action is taken, a
incorporation and shall continue to be written consent thereto is signed by all
valid and binding between such the directors; or
stockholders, if such be their intent, to
the extent that such agreements are (b) All the stockholders have actual or
consistent with the articles of implied knowledge of the action and make
incorporation, irrespective of where the no prompt objection in writing; or

34
(c) The directors are accustomed to take petition by any stockholder, shall have
informal action with the express or the power to arbitrate the dispute. In the
implied acquiescence of all the exercise of such power, the Commission
stockholders; or shall have authority to make appropriate
orders, such as: (a) cancelling or altering
(d) All the directors have express or any provision contained in the articles of
implied knowledge of the action in incorporation, bylaws, or any
question and none of them makes a stockholders’ agreement; (b) cancelling,
prompt objection in writing. altering or enjoining a resolution or act of
An action within the corporate powers the corporation or its board of directors,
taken at a meeting held without proper stockholders, or officers; (c) directing or
call or notice is deemed ratified by a prohibiting any act of the corporation or
director who failed to attend, unless after its board of directors, stockholders,
having knowledge thereof, the director officers, or other persons party to the
promptly files his written objection with action; (d) requiring the purchase at their
the secretary of the corporation. fair value of shares of any stockholder,
either by the corporation regardless of the
Section 101. Preemptive Right in Close availability of unrestricted retained
Corporations.— The preemptive right of earnings in its.books, or by the other
stockholders in close corporations shall stockholders; (e) appointing a provisional
extend to all stock to be issued, including director; (f) dissolving the corporation; or
reissuance of treasury shares, whether for (g) granting such other relief as the
money, property or personal services, or circumstances may warrant.
in payment of corporate debts, unless the
articles of incorporation provide A provisional director shall be an
otherwise. impartial person who is neither a
stockholder nor a creditor of the
Section 102. Amendment of Articles of corporation or any of its subsidiaries or
Incorporation.— Any amendment to the affiliates, and whose further
articles of incorporation which seeks to qualifications, if any, may be determined
delete or remove any provision required by the Commission. A provisional director
by this Title or to reduce a quorum or is not a receiver of the corporation and
voting requirement stated in said articles does not have the title and powers of a
of incorporation shall require the custodian or receiver. A provisional
affirmative vote of at least two-thirds (2⁄3) director shall have all the rights and
of the outstanding capital stock, whether powers of a duly elected director,
with or without voting rights, or of such including the right to be notified of and to
greater proportion of shares as may be vote at meetings of directors until
specifically provided in the articles of removed by order of the Commission or by
incorporation for amending, deleting or all the stockholders. The compensation of
removing any of the aforesaid provisions, the provisional director shall be
at a meeting duly called for the purpose. determined by agreement between such
director and the corporation, subject to
Section 103. Deadlocks.
approval of the Commission, which may
— Notwithstanding any contrary provision
fix the compensation absent an
in the close corporation’s articles of
agreement or in the event of disagreement
incorporation, bylaws, or stockholders’
between the provisional director and the
agreement, if the directors or stockholders
corporation.
are so divided on the management of the
corporation’s business and affairs that Section 104. Withdrawal of Stockholder
the votes required for a corporate action or Dissolution of Corporation.— In addition
cannot be obtained, with the consequence and without prejudice to other rights and
that the business and affairs of the remedies available under this Title, any
corporation can no longer be conducted to stockholder of a close corporation may,
the advantage of the stockholders for any reason, compel the corporation to
generally, the Commission, upon written purchase shares held at fair value, which

35
shall not be less than the par or issued Section 107. Classes of Religious
value, when the corporation has sufficient Corporations.— Religious corporations
assets in its books to cover its debts and may be incorporated by one (1) or more
liabilities exclusive of capital persons. Such corporations may be
stock: Provided, That any stockholder of a classified into corporations sole and
close corporation may, by written petition religious societies.
to the Commission, compel the
dissolution of such corporation whenever Religious corporations shall be governed
any acts of the directors, officers, or those by this Chapter and by the general
in control of the corporation are illegal, provisions on nonstock corporations
fraudulent, dishonest, oppressive or insofar as applicable.
unfairly prejudicial to the corporation or Section 108. Corporation Sole.— For the
any stockholder, or whenever corporate purpose of administering and managing,
assets are being misapplied or wasted. as trustee, the affairs, property and
TITLE XIII temporalities of any religious
SPECIAL CORPORATIONS denomination, sect or church, a
corporation sole may be formed by the
Chapter I chief archbishop, bishop, priest, minister,
Educational corporations rabbi, or other presiding elder of such
religious denomination, sect or church.
Section 105. Incorporation.— Educational
corporations shall be governed by special Section 109. Articles of Incorporation.
laws and by the general provisions of this — In order to become a corporation sole,
Code. the chief archbishop, bishop, priest,
minister, rabbi, or presiding elder of any
Section 106. Board of Trustees. religious denomination, sect or church
— Trustees of educational institutions must file with the Commission articles of
organized as nonstock corporations shall incorporation setting forth the following:
not be less than five (5) nor more than
fifteen (15): Provided, That the number of (a) That the applicant chief archbishop,
trustees shall be in multiples of five (5). bishop, priest, minister, rabbi, or
presiding elder represents the religious
Unless otherwise provided in the articles denomination, sect or church which
of incorporation or bylaws, the board of desires to become a corporation sole;
trustees of incorporated schools, colleges,
or other institutions of learning shall, as (b) That the rules, regulations and
soon as organized, so classify themselves discipline of the religious denomination,
that the term of office of one-fifth (1⁄5) of sect or church are consistent with
their number shall expire every year. becoming a corporation sole and do not
Trustees thereafter elected to fill forbid it;
vacancies, occurring before the expiration
of a particular term, shall hold office only (c) That such chief archbishop, bishop,
for the unexpired period. Trustees elected priest, minister, rabbi, or presiding elder
thereafter to fill vacancies caused by is charged with the administration of the
expiration of term shall hold office for five temporalities and the management of the
(5) years. A majority of the trustees shall affair’s, estate and properties of the
constitute a quorum for the transaction of religious denomination, sect or church
business. The powers and authority of within the territorial jurisdiction, so
trustees shall be defined in the bylaws. described succinctly in the articles of
incorporation;
For institutions organized as stock
corporations, the number and term of (d) The manner by which any vacancy
directors shall be governed by the occurring in the office of chief archbishop,
provisions on stock corporations. bishop, priest, minister, rabbi, or
presiding elder is required to be filled,
Chapter II according to the rules, regulations or
Religious Corporations

36
discipline of the religious denomination, province where the property is situated
sect or church; and upon proof that the notice of the
application for leave to sell or mortgage
(e) The place where the principal office of has been made through publication or as
the corporation sole is to be established directed by the Court, and that it is in the
and located, which place must be within interest of the corporation that leave to
the territory of the Philippines. sell or mortgage be granted. The
The articles of incorporation may include application for leave to sell or mortgage
any other provision not contrary to law for must be made by petition, duly verified,
the regulation of the affairs of the by the chief archbishop, bishop, priest,
corporation. minister, rabbi, or presiding elder acting
as corporation sole, and may be opposed
Section 110. Submission of the Articles of by any member of the religious
Incorporation.— The articles of denomination, sect or church represented
incorporation must be verified, by by the corporation sole: Provided, That in
affidavit or affirmation of the chief cases where the rules, regulations, and
archbishop, bishop, priest, minister, discipline of the religious denomination,
rabbi, or presiding elder, as the case may sect or church, religious society, or order
be, and accompanied by a copy of the concerned represented by such
commission, certificate of election or letter corporation sole regulate the method of
of appointment of such chief archbishop, acquiring, holding, selling, and
bishop, priest, minister, rabbi, or mortgaging real estate and personal
presiding elder, duly certified to be correct property, such rules, regulations and
by any notary public. discipline shall govern, and the
intervention of the courts shall not be
From and after filing with the Commission
necessary.
of the said articles of incorporation,
verified by affidavit or affirmation, and Section 112. Filling of Vacancies.— The
accompanied by the documents successors in office of any chief
mentioned in the preceding paragraph, archbishop, bishop, priest, minister,
such chief archbishop, bishop, priest, rabbi, or presiding elder in a corporation
minister, rabbi, pr presiding elder shall sole shall become the corporation sole on
become a corporation sole and all their accession to office and shall be
temporalities, estate and properties of the permitted to transact business as such
religious denomination, sect or church upon filing a copy of their commission,
theretofore administered or managed as certificate of election, or letters of
such chief archbishop, bishop, priest, appointment, duly certified by any notary
minister, rabbi, or presiding elder shall be public with the Commission.
personally held in trust as a corporation
sole, for the use, purpose, exclusive During any vacancy in the office of chief
benefit and on behalf of the religious archbishop, bishop, priest, minister,
denomination, sect or church, including rabbi, or presiding elder of any religious
hospitals, schools, colleges, orphan denomination, sect or church
asylums, parsonages, and cemeteries incorporated as a
thereof. corporation sole, the person or persons
Section 111. Acquisition and Alienation of authorized by the rules, regulations or
Property.— A corporation sole may discipline of the religious denomination,
purchase and hold real estate and sect or church represented by the
personal property for its church, corporation sole to administer the
charitable, benevolent, or educational temporalities and manage the affairs,
purposes, and may receive bequests or estate, and properties of the corporation
gifts for such purposes. Such corporation sole shall exercise all the powers and
may sell or mortgage real property held by authority of the corporation sole during
it by obtaining an order for that purpose such vacancy.
from the Regional Trial Court of the

37
Section 113. Dissolution.— A corporation (c) That the incorporation of the religious
sole may be dissolved and its affairs society or religious order, or diocese,
settled voluntarily by submitting to the synod, or district organization is not
Commission a verified declaration of forbidden by competent authority or by
dissolution, setting forth: the Constitution, rules, regulations or
discipline of the religious denomination,
(a) The name of the corporation; sect or church of which it forms part;
(b) The reason for dissolution and winding (d) That the religious society or religious
up; order, or diocese, synod, or district
(c) The authorization for the dissolution of organization desires to incorporate for the
the corporation by the particular religious administration of its affairs, properties
denomination, sect or church; and and estate;

(d) The names and addresses of the (e) The place within the Philippines where
persons who are to supervise the winding the principal office of the corporation is to
up of the affairs of the corporation. be established and located; and

Upon approval of such declaration of (f) The names, nationalities, and residence
dissolution by the Commission, the addresses of the trustees, not less than
corporation shall cease to carry on its five (5) nor more than fifteen (15), elected
operations except for the purpose of by the religious society or religious order,
winding up its affairs. or the diocese, synod, or district
organization to serve for the first year or
Section 114. Religious Societies.— Unless such other period as may be prescribed
forbidden by competent authority, the by the laws of the religious society or
Constitution, pertinent, rules, religious order, or of the diocese, synod,
regulations, or discipline of the religious or district organization.
denomination, sect or church of which it
is a part, any religious society, religious Chapter III
order, diocese, or synod, or district One Person Corporations
organization of any religious Section 115. Applicability of Provisions to
denomination, sect or church, may, upon One Person Corporations.— The provisions
written consent and/or by an affirmative of this Title shall primarily apply to One
vote at a meeting called for the purpose of Person Corporations. Other provisions of
at least two-thirds (2⁄3) of its membership, this Code apply suppletorily, except as
incorporate for the administration of its otherwise provided in this Title.
temporalities or for the management of its
affairs, properties, and estate by filing Section 116. One Person Corporation.— A
with the Commission, articles of One Person Corporation is a corporation
incorporation verified by the affidavit of with a single stockholder: Provided, That
the presiding elder, secretary, or clerk or only a natural person, trust, or an estate
other member of such religious society or may form a One Person Corporation.
religious order, or diocese, synod, or
district organization of the religious Banks and quasi-banks, preneed, trust,
denomination, sect or church, setting insurance, public and publicly-listed
forth the following: companies, and non-chartered
government-owned and -controlled
(a) That the religious society or religious corporations may not incorporate as One
order, or diocese, synod, or district Person Corporations: Provided, further,
organization is a religious organization of That a natural person who is licensed to
a religious denomination, sect or church; exercise a profession may not organize as
a One Person Corporation for the purpose
(b) That at least two-thirds (2⁄3) of its of exercising such profession except as
membership has given written consent or otherwise provided under special laws.
has voted to incorporate, at a duly
convened meeting of the body;

38
Section 117. Minimum Capital Stock Not Commission in such a sum as may be
Required for One Person Corporation.— A required: Provided, That the said
One Person Corporation shall not be stockholder/treasurer shall undertake in
required to have a minimum authorized writing to faithfully administer the One
capital stock except as otherwise provided Person Corporation’s funds to be received
by special law. as treasurer, and to disburse and invest
the same according to the articles of
Section 118. Articles of Incorporation.— A incorporation as approved by the
One Person Corporation shall file articles Commission. The bond shall be renewed
of incorporation in accordance with the every two (2) years or as often as may be
requirements under Section 14 of this required.
Code. It shall likewise substantially
contain the following: Section 123. Special Functions of the
Corporate Secretary.— In addition to the
(a) If the single stockholder is a trust or functions designated by the One Person
an estate., the name, nationality, and Corporation, the corporate secretary shall:
residence of the trustee, administrator,
executor, guardian, conservator, (a) Be responsible for maintaining the
custodian, or other person exercising minutes book and/or records of the
fiduciary duties together with the proof of corporation;
such authority to act on behalf of the
trust or estate; and (b) Notify the nominee or alternate
nominee of the death or incapacity of the
(b) Name, nationality, residence of the single stockholder, which notice shall be
nominee and alternate nominee, and the given no later than five (5) days from such
extent, coverage and limitation of the occurrence;
authority.
(c) Notify the Commission of the death of
Section 119. Bylaws.— The One Person the single stockholder within five (5) days
Corporation is not required to submit and from such occurrence and stating in such
file corporate bylaws. notice the names, residence addresses,
and contact details of all known legal
Section 120. Display of Corporate Name. heirs; and
— A One Person Corporation shall
indicate the letters “OPC” either below or (d) Call the nominee or alternate nominee
at the end of its corporate name. and the known legal heirs to a meeting
and advise the legal heirs with regard to,
Section 121. Single Stockholder as among others, the election of a new
Director, President.— The single director, amendment of the articles of
stockholder shall be the sole director and incorporation, and other ancillary and/or
president of the One Person Corporation. consequential matters.
Section 122. Treasurer, Corporate Section 124. Nominee and Alternate
Secretary, and Other Officers.— Within Nominee.— The single stockholder shall
fifteen (15) days from the issuance of its designate a nominee and an alternate
certificate of incorporation, the One nominee who shall, in the event of the
Person Corporation shall appoint a single stockholder’s death or incapacity,
treasurer, corporate secretary, and other take the place of the single stockholder as
officers as it may deem necessary, and director and shall manage the
notify the Commission thereof within five corporation’s affairs.
(5) days from appointment.
The articles of incorporation shall state
The single stockholder may not be the names, residence addresses and
appointed as the corporate secretary. contact details of the nominee and
A single stockholder who is likewise the alternate nominee, as well as the extent
self-appointed treasurer of the and limitations of their authority in
corporation shall give a bond to the managing the affairs of the One Person
Corporation.

39
The written consent of the nominee and stockholder, and recorded in the minutes
alternate nominee shall be attached to the book of the One Person Corporation. The
application for incorporation. Such date of recording in the minutes book
consent may be withdrawn in writing any shall be deemed to be the date of the
time before the death or incapacity of the meeting for all purposes under this Code.
single stockholder.
Section 129. Reportorial Requirements.
Section 125. Term of Nominee and — The One Person Corporation shall
Alternate Nominee.— When the incapacity submit the following within such period
of the single stockholder is temporary, the as the Commission may prescribe:
nominee shall sit as director and manage
the affairs of the One Person Corporation (a) Annual financial statements audited
until the stockholder, by self by an independent certified public
determination, regains the capacity to accountant: Provided, That if the total
assume such duties. assets or total liabilities of the corporation
are less than Six hundred thousand pesos
In case of death or permanent incapacity (₱600,000.00), the financial statements
of the single stockholder, the nominee shall be certified under oath by the
shall sit as director and manage the corporation’s treasurer and president;
affairs of the One Person Corporation
until the legal heirs of the single (b) A report containing explanations or
stockholder have been lawfully comments by the president on every
determined, and the heirs have qualification, reservation, or adverse
designated one of them or have agreed remark or disclaimer made by the auditor
that the estate shall be the single in the latter’s report;
stockholder of the One Person (c) A disclosure of all self-dealings and
Corporation. related party transactions entered into
The alternate nominee shall sit as director between the One Person Corporation and
and manage the One Person Corporation the single stockholder; and
in case of the nominee’s inability, (d) Other reports as the Commission may
incapacity, death, or refusal to discharge require.
the functions as director and manager of
the corporation, and only for the same For purposes of this provision, the fiscal
term and under the same conditions year of a One Person Corporation shall be
applicable to the nominee. that set forth in its articles of
incorporation or, in the absence thereof,
Section 126. Change of Nominee or the calendar year.
Alternate Nominee.— The single
stockholder may, at any time, change its The Commission may place the
nominee and alternate nominee by corporation under delinquent status
submitting to the Commission the names should the corporation fail to submit the
of the new nominees and their reportorial requirements three (3) times,
corresponding written consent. For this consecutively or intermittently, within a
purpose, the articles of incorporation period of five (5) years.
need not be amended.
Section 130. Liability of Single
Section 127. Minutes Book.— A One Shareholder.— A sole shareholder
Person Corporation shall maintain a claiming limited liability has the burden
minutes book which shall contain all of affirmatively showing that the
actions, decisions, and resolutions taken corporation was adequately financed.
by the One Person Corporation.
Where the single stockholder cannot
Section 128. Records in Lieu of Meetings. prove that the property of the One Person
— When action is needed on any matter, Corporation is independent of the
it shall be sufficient to prepare a written stockholder’s personal property, the
resolution, signed and dated by the single stockholder shall be jointly and severally

40
liable for the debts and other liabilities of decision to either wind up and dissolve
the One Person Corporation. the One Person Corporation or convert it
into an ordinary stock corporation.
The principles of piercing the corporate
veil applies with equal force to One Person The ordinary stock corporation converted
Corporations as with other corporations. from a One Person Corporation shall
succeed the latter and be legally
Section 131. Conversion from an responsible for all the latter’s outstanding
Ordinary Corporation to a One Person liabilities as of the date of conversion.
Corporation.— When a single stockholder
acquires all the stocks of an ordinary TITLE XIV
stock corporation, the latter may apply for DISSOLUTION
conversion into a One Person
Corporation, subject to the submission of Section 133. Methods of Dissolution.— A
such documents as the Commission may corporation formed or organized under
require. If the application for conversion is the provisions of this Code may be
approved, the Commission shall issue a dissolved voluntarily or involuntarily.
certificate of filing of amended articles of Section 134. Voluntary Dissolution Where
incorporation reflecting the conversion. No Creditors are Affected.— If dissolution
The One Person Corporation converted of a corporation does not prejudice the
from an ordinary stock corporation shall rights of any creditor having a claim
succeed the latter and be legally against it, the dissolution may be effected
responsible for all the latter’s outstanding by majority vote of the board of directors
liabilities as of the date of conversion. or trustees, and by a resolution adopted
Section 132. Conversion from a One by the affirmative vote of the stockholders
Person Corporation to an Ordinary Stock owning at least majority of the
Corporation.— A One Person Corporation outstanding capital stock or majority of
may be converted into an ordinary stock the members of a meeting to be held upon
corporation after due notice to the the call of the directors or trustees.
Commission of such fact and of the At least twenty (20) days prior to the
circumstances leading to the conversion, meeting, notice shall be given to each
and after compliance with all other shareholder or member of record
requirements for stock corporations under personally, by registered mail, or by any
this Code and applicable rules. Such means authorized under its bylaws,
notice shall be filed with the Commission whether or not entitled to vote at the
within sixty (60) days from the occurrence meeting, in the manner provided in
of the circumstances leading to the Section 50 of this Code and shall state
conversion into an ordinary stock that the purpose of the meeting is to vote
corporation. If all requirements have been on the dissolution of the corporation.
complied with, the Commission shall Notice of the time, place, and object of the
issue a certificate of fifing of amended meeting shall be published once prior to
articles of incorporation reflecting the the date of the meeting in a newspaper
conversion. published in the place where the principal
In case of death of the single stockholder, office of said corporation is located, or if
the nominee or alternate nominee shall no newspaper is published in such place,
transfer the shares to the duly designated in a newspaper of general circulation in
legal heir or estate within seven (7) days the Philippines.
from receipt of either an affidavit of A verified request for dissolution shall be
heirship or self-adjudication executed by filed with the Commission stating: (a) the
a sole heir, or any other legal document reason for the dissolution; (b) the form,
declaring the legal heirs of the single manner, and time when the notices were
stockholder and notify the Commission of given; (c) names of the stockholders and
the transfer. Within sixty (60) days from directors or members and trustees who
the transfer of the shares, the legal heirs approved the dissolution; (d) the date,
shall notify the Commission of their

41
place, and time of the meeting in which copy of the resolution authorizing the
the vote was made; and (e) details of dissolution, certified by a majority of the
publication. board of directors or trustees and
countersigned by the secretary of the
The corporation shall submit the following corporation; and (2) a list of all its
to the Commission: (1) a copy of the creditors.
resolution authorizing the dissolution,
certified by a majority of the board of If the petition is sufficient in form and
directors or trustees and countersigned substance, the Commission shall, by an
by the secretary of the corporation; (2) order reciting the purpose of the petition,
proof of publication; and (3) favorable fix a deadline for filing objections to the
recommendation from the appropriate petition which date shall not be less than
regulatory agency, when necessary. thirty (30) days nor more than sixty (60)
days after the entry of the order. Before
Within fifteen (15) days from receipt of the such date, a copy of the order shall be
verified request for dissolution, and in the published at least once a week for three
absence of any withdrawal within said (3) consecutive weeks in a newspaper of
period, the Commission shall approve the general circulation published in the
request and issue the certificate of municipality or city where the principal
dissolution. The dissolution shall take office of the corporation is situated, or if
effect only upon the issuance by the there be no such newspaper, then in a
Commission of a certificate of dissolution. newspaper of general circulation in the
No application for dissolution of banks, Philippines, and a similar copy shall be
banking and quasi-banking institutions, posted for three (3) consecutive weeks in
preneed, insurance and trust companies, three (3) public places in such
NSSLAs, pawnshops, and other financial municipality or city.
intermediaries shall be approved by the Upon five (5) days’ notice, given after the
Commission unless accompanied by a date on which the right to file objections
favorable recommendation of the as fixed in the order has expired, the
appropriate government agency. Commission shall proceed to hear the
Section 135. Voluntary Dissolution Where petition and try any issue raised in the
Creditors are Affected; Procedure and objections filed; and if no such objection
Contents of Petition.—Where the is sufficient, and the material allegations
dissolution of a corporation may prejudice of the petition are true, it shall render
the rights of any creditor, a verified judgment dissolving the corporation and
petition for dissolution shall be filed with directing such disposition of its assets as
the Commission. The petition shall be justice requires, and may appoint a
signed by a majority of the corporation’s receiver to collect such assets and pay the
board of directors or trustees, verified by debts of the corporation.
its president or secretary or one of its The dissolution shall take effect only upon
directors or trustees, and shall set forth the issuance by the Commission of a
all claims and demands against it, and certificate of dissolution.
that its dissolution was resolved upon by
the affirmative vote of the stockholders Section 136. Dissolution by Shortening
representing at least two-thirds (2⁄3) of the Corporate Term.— A voluntary dissolution
outstanding capital stock or at least two- may be effected by amending the articles
thirds (2⁄3) of the members at a meeting of of incorporation to shorten the corporate
its stockholders or members called for term pursuant to the provisions of this
that purpose. The petition shall likewise Code. A copy of the amended articles of
state: (a) the reason for the dissolution; incorporation shall be submitted to the
(b) the form, manner, and time when the Commission in accordance with this
notices were given; and (c) the date, place, Code.
and time of the meeting in which the vote
was made. The corporation shall submit Upon the expiration of the shortened
to the Commission the following: (1) a term, as stated in the approved amended

42
articles of incorporation, the corporation (b) Continuous inoperation of a
shall be deemed dissolved without any corporation as provided under Section 21
further proceedings, subject to the of this Code;
provisions of this Code on liquidation.
(c) Upon receipt of a lawful court order
In the case of expiration of corporate dissolving the corporation;
term, dissolution shall automatically take
effect on the day following the last day of (d) Upon finding by final judgment that
the corporate term stated in the articles of the corporation procured its incorporation
incorporation, without the need for the through fraud;
issuance by the Commission of a (e) Upon finding by final judgment that
certificate of dissolution. the corporation:
Section 137. Withdrawal of Request and (1) Was created for the purpose of
Petition for Dissolution.— A withdrawal of committing, concealing or aidihg the
the request for dissolution shall be made commission of securities violations,
in writing, duly verified by any smuggling, tax evasion, money
incorporator, director, trustee, laundering, or graft and corrupt practices;
shareholder, or member and signed by
the same number of incorporators, (2) Committed or aided in the commission
directors, trustees, shareholders, or of securities violations, smuggling, tax
members necessary to request for evasion, money laundering, or graft and
dissolution as set forth in the foregoing corrupt practices, and its stockholders
sections. The withdrawal shall be knew of the same; and
submitted no later than fifteen (15) days
(3) Repeatedly and knowingly tolerated
from receipt by the Commission of the
the commission of graft and corrupt
request for dissolution. Upon receipt of a
practices or other fraudulent or illegal
withdrawal of request for dissolution, the
acts by its directors, trustees, officers, or
Commission shall withhold action on the
employees.
request for dissolution and shall, after
investigation: (a) make a pronouncement If the corporation is ordered dissolved by
that the request for dissolution is deemed final judgment pursuant to the grounds
withdrawn; (b) direct a joint meeting of set forth in subparagraph (e) hereof, its
the board of directors or trustees and the assets, after payment of its liabilities,
stockholders or members for the purpose shall, upon petition of the Commission
of ascertaining whether to proceed with with the appropriate court, be forfeited in
dissolution; or (c) issue such other orders favor of the national government. Such
as it may deem appropriate. forfeiture shall be without prejudice to the
rights of innocent stockholders and
A withdrawal of the petition for
employees for services rendered, and to
dissolution shall be in the form of a
the application of other penalty or
motion and similar in substance to a
sanction under this Code or other laws.
withdrawal of request for dissolution but
shall be verified and filed prior to The Commission shall give reasonable
publication of the order setting the notice to, and coordinate with, the
deadline for filing objections to the appropriate regulatory agency prior to the
petition. involuntary dissolution of companies
under their special regulatory jurisdiction.
Section 138. Involuntary Dissolution.— A
corporation may be dissolved by the Section 139. Corporate Liquidation.
Commission motu proprio or upon filing of — Except for banks, which shall be
a verified complaint by any interested covered by the applicable provisions of
party. The following may be grounds for Republic Act No. 7653, otherwise known
dissolution of the corporation: as “The New Central Bank Act”, as
amended, and Republic Act No. 3591,
(a) Non-use of corporate charter as
otherwise known as the Philippine
provided under Section 21 of this Code;

43
Deposit Insurance Corporation Charter, transact business in the Philippines after
as amended, every corporation whose obtaining a license for that purpose in
charter expires pursuant to its articles of accordance with this Code and a
incorporation, is annulled by forfeiture, or certificate of authority from the
whose corporate existence is terminated appropriate government agency.
in any other manner, shall nevertheless
remain as a body corporate for three (3) Section 141. Application to Existing
years after the effective date of Foreign Corporations.— Every foreign
dissolution, for the purpose of corporation which, on the date of the
prosecuting and defending suits by or effectivity of this Code, is authorized to do
against it and enabling it to settle and business in the Philippines under a
close its affairs, dispose of and convey its license issued to it shall continue to have
property, and distribute its assets, but such authority under the terms and
not for the purpose of continuing the conditions of its license, subject to the
business for which it was established. provisions of this Code and other special
laws.
At any time during said three (3) years,
the corporation is authorized and Section 142. Application for a License.
empowered to convey all of its property to — foreign corporation applying for a
trustees for the benefit of stockholders, license to transact business in the
members, creditors and other persons in Philippines shall submit to the
interest. After any such conveyance by Commission a copy of its articles of
the corporation of its property in trust for incorporation and bylaws, certified in
the benefit of its stockholders, members, accordance with law, and their translation
creditors and others in interest, all to an official language of the Philippines,
interest which the corporation had in the if necessary. The application shall be
property terminates, the legal interest under oath and, unless already stated in
vests in the trustees, and the beneficial its articles of incorporation, shall
interest in the stockholders, members, specifically set forth the following:
creditors or other persons-in-interest. (a) The date and term of incorporation;
Except as otherwise provided for in (b) The address, including the street
Sections 93 and 94 of this Code, upon the number, of the principal office of the
winding up of corporate affairs, any asset corporation in the country or State of
distributable to any creditor or incorporation;
stockholder or member who is unknown
or cannot be found shall be escheated in (c) The name and address of its resident
favor of the national government. agent authorized to accept summons and
process in all legal proceedings and all
Except by decrease of capital stock and as notices affecting the corporation, pending
otherwise allowed by this Code, no the establishment of a local office;
corporation shall distribute any of its
assets or property except upon lawful (d) The place in the Philippines where the
dissolution and after payment of all its corporation intends to operate;
debts and liabilities.
(e) The specific purpose or purposes
TITLE XV which the corporation intends to pursue
FOREIGN CORPORATIONS in the transaction of its business in the
Philippines: Provided, That said purpose
Section 140. Definition and Rights of or purposes are those specifically stated
Foreign Corporations.— For purposes of in the certificate of authority issued by
this Code, a foreign corporation is one the appropriate government agency;
formed, organized or existing under laws
other than those of the Philippines’ and (f) The names and addresses of the
whose laws allow Filipino citizens and present directors and officers of the
corporations to do business in its own corporation;
country or State. It shall have the right to

44
(g) A statement of its authorized capital provisions of existing laws applicable to
stock and the aggregate number of shares them. In the case of all other foreign
which the corporation has authority to corporations, no application for license to
issue, itemized by class, par value of transact business in the Philippines shall
shares, shares without par value, and be accepted by the Commission without
series, if any; previous authority from the appropriate
government agency, whenever required by
(h) A statement of its outstanding capital law.
stock -and the aggregate number of
shares which the corporation has issued, Section 143. Issuance of a License.— If
itemized by class, par value of shares, the Commission is satisfied that the
shares without par value, and series, if applicant has complied with all the
any; requirements of this Code and other
special laws, rules and regulations, the
(i) A statement of the amount actually Commission shall issue a license to
paid in; and transact business in the Philippines to the
(j) Such additional information as may be applicant for the purpose or purposes
necessary or appropriate in order to specified in such license. Upon issuance
enable the Commission to determine of the license, such foreign corporation
whether such corporation is entitled to a may commence to transact business in
license to transact business in the the Philippines and continue to do so for
Philippines, and to determine and assess as long as it retains its authority to act as
the fees payable. a corporation under the laws of the
country or State of its incorporation,
Attached to the application for license unless such license is sooner
shall be a certificate under oath duly surrendered, revoked, suspended, or
executed by the authorized official or annulled in accordance with this Code or
officials of the jurisdiction of its other special laws. Within sixty (60) days
incorporation, attesting to the fact that after the issuance of the license to
the laws of the country or State of the transact business in the Philippines, the
applicant allow Filipino citizens and licensee, except foreign banking or
corporations to do business therein, and insurahce corporations, shall deposit with
that the applicant is an existing the Commission for the benefit of present
corporation in good standing. If the and future creditors of the licensee in the
certificate is in a foreign language, a Philippines, securities satisfactory to the
translation thereof in English under oath Commission, consisting of bonds or other
of the translator shall be attached to the evidence of indebtedness of the
application. Government of the Philippines, its
political subdivisions and
The application for a license to transact
instrumentalities, or of government-
business in the Philippines shall likewise
owned or -controlled corporations and
be accompanied by a statement under
entities, shares of stock or debt securities
oath of the president or any other person
that are registered under Republic Act No.
authorized by the corporation, showing to
8799, otherwise known as “The Securities
the satisfaction of the Commission and
Regulation Code”, shares of stock in
when appropriate, other governmental
domestic corporations listed in the stock
agencies that the applicant is solvent and
exchange, shares of stock in domestic
in sound financial condition, setting forth
insurance companies and banks, any
the assets and liabilities of the
financial instrument determined suitable
corporation as of the date not exceeding
by the Commission, or any combination
one (1) year immediately prior to the filing
thereof with an actual market value of at
of the application.
least Five hundred thousand pesos
Foreign banking, financial, and insurance (₱500,000.00) or such other amount that
corporations shall, in addition to the may be set by the
above requirements, comply with the Commission: Provided, however, That
within six (6) months after each fiscal

45
year of the licensee, the Commission shall Section 145. Resident Agent; Service of
require the licensee to deposit additional Process.— As a condition to the issuance
securities or financial instruments of the license for a foreign corporation to
equivalent in actual market value to two transact business in the Philippines, such
percent (2%) of the amount by which the corporation shall file with the Commission
licensee’s gross income for that fiscal year a written power of attorney designating a
exceeds Ten million pesos person who must be a resident of the
(₱10,000,000.00). The Commission shall Philippines, on whom summons and other
also require the deposit of additional legal processes may be served in all
securities or financial instruments if the actions or other legal proceedings against
actual market value of the deposited such corporation, and consenting that
securities or financial instruments has service upon such resident agent shall be
decreased by at least ten percent (10%) of admitted and held as valid as if served
their actual market value at the time they upon the duly authorized officers of the
were deposited. The Commission may, at foreign corporation at its home office.
its discretion, release part of the Such foreign corporation shall likewise
additional deposit if the gross income of execute and file with the Commission an
the licensee has decreased, or if the agreement or stipulation, executed by the
actual market value of the total deposit proper authorities of said corporation, in
has increased, by more than ten percent form and substance as follows:
(10%) of their actual market value at the
time they were deposited. The “The (name of foreign corporation) hereby
Commission may, from time to time, allow stipulates and agrees, in consideration of
the licensee to make substitute deposits being granted a license to transact
for those already on deposit as long as the business in the Philippines, that if the
licensee is solvent. Such licensee shall be corporation shall cease to transact
entitled to collect the interest or dividends business in the Philippines, or shall be
on such-deposits. In the event the without any resident agent in the
licensee ceases to do business in the Philippines on whom any summons or
Philippines, its deposits shall be returned, other legal process may be served, then
upon the licensee’s application and upon service of any summons or other legal
proof to the satisfaction of the process may be made upon the
Commission that the licensee has no Commission in any action or proceeding
liability to Philippine residents, including arising out of any business or transaction
the Government of the Republic of the which occurred in the Philippines and
Philippines. For purposes of computing such service shall have the same force
the securities deposit, the composition of and effect as if made upon the duly
gross income and allowable deductions authorized officers of the corporation at
therefrom shall be in accordance with the its home office.”
rules of the Commission. Whenever such service of summons or
Section 144. Who May be a Resident other process is made upon the
Agent.— A resident agent may be either Commission, the Commission shall,
an individual residing in the Philippines within ten (10) days thereafter, transmit
or a domestic corporation lawfully by mail a copy of such summons or other
transacting business in the legal process to the corporation at its
Philippines: Provided, That an individual home or principal office. The sending of
resident agent must be of good moral such copy by the Commission shall be a
character and of sound financial necessary part of and shall complete such
standing: Provided, further, That in case service. All expenses incurred by the
of a domestic corporation who will act as Commission for such service shall be paid
a resident agent, it must likewise be of in advance by the party at whose instance
sound financial standing and must show the service is made.
proof that it is in good standing as It shall be the duty of the resident agent
certified by the Commission. to immediately notify the Commission in

46
writing of any change in the resident Philippine laws and by the law of its
agent’s address. incorporation: Provided, That the
requirements on merger or consolidation
Section 146. Law Applicable.— A foreign as provided in this Code are followed.
corporation lawfully doing business in the
Philippines shall be bound by all laws, Whenever a foreign corporation
rules and regulations applicable to authorized to transact business in the
domestic corporations of the same class, Philippines shall be a party to a merger or
except those which provide for the consolidation in its home country or State
creation, formation, organization or as permitted by the law authorizing its
dissolution of corporations or those which incorporation, such foreign corporation
fix the relations, liabilities, shall, within sixty (60) days after the
responsibilities, or duties of stockholders, effectivity of such merger or consolidation,
members, or officers of corporations to file with the Commission, and in proper
each other or to the corporation. cases, with the appropriate government
agency, a copy of the articles of merger or
Section 147. Amendments to Articles of consolidation duly authenticated by the
Incorporation or Bylaws of Foreign proper official or officials of the country or
Corporations.— Whenever the articles of State under whose laws the merger or
incorporation or bylaws of a foreign consolidation was
corporation authorized to transact effected: Provided, however, That if the
business in the Philippines are amended, absorbed corporation is the foreign
such foreign corporation shall, within corporation doing business in the
sixty (60) days after the amendment Philippines, the latter shall at the same
becomes effective, file with the time file a petition for withdrawal of its
Commission, and in proper cases, with license in accordance with this Title.
the appropriate government agency, a
duly authenticated copy of the amended Section 150. Doing Business Without a
articles of incorporation or bylaws, License.— No foreign corporation
indicating clearly in capital letters or transacting business in the Philippines
underscoring the change or changes without a license, or its successors or
made, duly certified by the authorized assigns, shall be permitted to maintain or
official or officials of the country or State intervene in any action, suit or proceeding
of incorporation. Such filing shall not in in any court or administrative agency of
itself enlarge or alter the purpose or the Philippines; but such corporation may
purposes for which such corporation is be sued or proceeded against before
authorized to transact business in the Philippine courts or administrative
Philippines. tribunals on any valid cause of action
recognized under Philippine laws.
Section 148. Amended License.— A
foreign corporation authorized to transact Section 151. Revocation of License.
business in the Philippines shall obtain — Without prejudice to other grounds
an amended license in the event it provided under special laws, the license of
changes its corporate name, or desires to a foreign corporation to transact business
pursue other or additional purposes in in the Philippines may be revoked or
the Philippines, by submitting an suspended by the Commission upon any
application with the Commission, of the following grounds:
favorably endorsed by the appropriate
government agency in the proper cases. (a) Failure to file its annual report or pay
any fees as required by this Code;
Section 149. Merger or Consolidation
Involving a Foreign Corporation Licensed (b) Failure to appoint and maintain a
in the Philippines.—One or more foreign resident agent in the Philippines as
corporations authorized to transact required by this Title;
business in the Philippines may merge or (c) Failure, after change of its resident
consolidate with any domestic corporation agent or address, to submit to the
or corporations if permitted under

47
Commission a statement of such change Commission unless all the following
as required by this Title; requirements are met:

(d) Failure to submit to the Commission (a) All claims which have accrued in the
an authenticated copy of any amendment Philippines have been paid, compromised
to its articles of incorporation or bylaws or or settled;
of any articles of merger or consolidation
within the time prescribed by this Title; (b) All taxes, imposts, assessments, and
penalties, if any, lawfully due to the
(e) A misrepresentation of any material Philippine Government or any of its
matter in any application, report, affidavit agencies or political subdivisions, have
or other document submitted by such been paid; and
corporation pursuant to this Title;
(c) The petition for withdrawal of license
(f) Failure to pay any and all taxes, has been published once a week for three
imposts, assessments or penalties, if any, (3) consecutive weeks in a newspaper of
lawfully due to the Philippine Government general circulation in the Philippines.
or any of its agencies or political
subdivisions; TITLE XVI
INVESTIGATIONS, OFFENSES, AND
(g) Transacting business in the PENALTIES
Philippines outside of the purpose or
purposes for which such corporation is Section 154. Investigation and
authorized under its license; Prosecution of Offenses.— The
Commission may investigate an alleged
(h) Transacting business in the violation of this Code, or of a rule,
Philippines as agent of or acting on behalf regulation, or order of the Commission.
of any foreign corporation or entity not
duly licensed to do business in the The Commission may publish its findings,
Philippines; or orders, opinions, advisories, or
information concerning any such
(i) Any other ground as would render it violation, as may be relevant to the
unfit to transact business in the general public or to the parties concerned,
Philippines. subject to the provisions of Republic Act
No. 10173, otherwise known as the “Data
Section 152. Issuance of Certificate of Privacy Act of 2012”, and other pertinent
Revocation.— Upon the revocation of the laws.
license to transact business in the
Philippines, the Commission shall issue a The Commission shall give reasonable
corresponding certificate of revocation, notice to and coordinate with the
furnishing a copy thereof to the appropriate regulatory agency prior to any
appropriate government agency in the such publication involving companies
proper cases. under their regulatory jurisdiction.

The Commission shall also mail the notice Section 155. Administration of Oaths,
and copy of the certificate of revocation to Subpoena of Witnesses and Documents.
the corporation, at its .registered office in — The Commission, through its
the Philippines. designated officer, may administer oaths
and affirmations,
Section 153. Withdrawal of Foreign issue subpoena and subpoena duces
Corporations.— Subject to existing laws tecum take testimony in any inquiry or
and regulations, a foreign corporation investigation, and may perform other acts
licensed to transact business in the necessary to the proceedings or to the
Philippines may be allowed to withdraw investigation.
from the Philippines by filing a petition for
withdrawal of license. No certificate of Section 156. Cease and Desist Orders.
withdrawal shall be issued by the — Whenever the Commission has
reasonable basis to believe that a person

48
has violated, or is about to violate this (₱1,000.00) for each day of continuing
Code, a rule, regulation, or order of the violation but in no case to exceed Two
Commission, it may direct such person to million pesos (₱2,000,000.00);
desist from Committing the act
constituting the violation. (b) Issuance of a permanent cease and
desist order;
The Commission may issue a cease and
desist order ex parte to enjoin an act or (c) Suspension or revocation of the
practice which is fraudulent or can be certificate of incorporation; and
reasonably expected to cause significant, (d) Dissolution of the corporation and
imminent, and irreparable danger or forfeiture of its assets under the
injury to public safety or welfare. The ex conditions in Title XIV of this Code.
parte order shall be valid for a maximum
period of twenty (20) days, without Section 159. Unauthorized Use of
prejudice to the order being made Corporate Name; Penalties.— The
permanent after due notice and hearing. unauthorized use of a corporate name
shall be punished with a fine ranging
Thereafter, the Commission may proceed from Ten thousand pesos (₱10,000.00) to
administratively against such person in Two hundred thousand pesos
accordance with Section 158 of this Code, (₱200,000.00).
and/or transmit evidence to the
Department of Justice for preliminary Section 160. Violation of Disqualification
investigation or criminal prosecution Provision; Penalties.— When, despite the
and/or initiate criminal prosecution for knowledge of the existence of a ground for
any violation of this Code, rule, or disqualification as provided in Section 26
regulation. of this Code, a director, trustee or officer
willfully holds office, or willfully conceals
Section 157. Contempt.— Any person such disqualification, such director,
who, without justifiable cause, fails or trustee or officer shall be punished with a
refuses to comply with any lawful order, fine ranging from Ten thousand pesos
decision, or subpoena issued by the (₱10,000.00) to Two hundred thousand
Commission shall, after due notice and pesos (₱200,000.00) at the discretion of
hearing, be held in contempt and fined in the court, and shall be permanently
an amount not exceeding Thirty thousand disqualified from being a director, trustee
pesos (₱30,000.00). When the refusal or officer of any corporation. When the
amounts to clear and open defiance of the violation of this provision is injurious or
Commission’s order, decision, detrimental to the public, the penalty
or subpoena the Commission may impose shall be a fine ranging from Twenty
a daily fine of One thousand pesos thousand pesos (₱20,000.00) to Four
(₱1,000.00) until the order, decision, hundred thousand pesos (₱400,000.00).
or subpoena is complied with.
Section 161. Violation of Duty to Maintain
Section 158. Administrative Sanctions. Records, to Allow their Inspection or
— If, after due notice and hearing, the Reproduction; Penalties.— The unjustified
Commission finds that any provision of failure or refusal by the corporation, or by
this Code, rules or regulations, or any of those responsible for keeping and
the Commission’s orders has been maintaining corporate records, to comply
violated, the Commission may impose any with Sections 45, 73, 92, 128, 177 and
or all of the following sanctions, taking other pertinent rules and provisions of
into consideration the extent of this Code on inspection and reproduction
participation, nature, effects, frequency of records shall be punished with a fine
and seriousness of the violation: ranging from Ten thousand pesos
(a) Imposition of a fine ranging from Five (₱10,000.00) to Two hundred thousand
thousand pesos (₱5,000.00) to Two pesos (₱200,000.00), at the discretion of
million pesos (₱2,000,000.00), and not the court, taking into consideration the
more than One thousand pesos seriousness of the violation and its

49
implications. When the violation of this shall be punished with a fine ranging
provision is injurious or detrimental to from Two hundred thousand pesos
the public, the penalty is a fine ranging (₱200,000.00) to Two million pesos
from Twenty thousand pesos (₱20,000.00) (₱2,000,000.00). When the violation of
to Four hundred thousand pesos this provision is injurious or detrimental
(₱400,000.00). to the public, the penalty is a fine ranging
from Four hundred thousand pesos
The penalties imposed under this section (₱400,000.00) to Five million pesos
shall be without prejudice to the (₱5,000,000.00).
Commission’s exercise of its contempt
powers under Section 157 hereof. Section 165. Fraudulent Conduct of
Business; Penalties.— A corporation that
Section 162. Willful Certification of conducts its business through fraud shall
Incomplete, Inaccurate, False? or be punished with a fine ranging from Two
Misleading Statements or Reports; hundred thousand pesos (₱200,000.00) to
Penalties.— Any person who willfully Two million pesos (₱2,000,000.00). When
certifies a report required under this the violation of this provision is injurious
Code, knowing that the same contains or detrimental to the public, the penalty is
incomplete, inaccurate, false, or a fine ranging from Four hundred
misleading information or statements, thousand pesos (₱400,000.00) to Five
shall be punished with a fine ranging million pesos (₱5,000,000.00).
from Twenty thousand pesos (₱20,000.00)
to Two hundred thousand pesos Section 166. Acting as Intermediaries for
(₱200,000.00). When the wrongful Graft and Corrupt Practices; Penalties.— A
certification is injurious or detrimental to corporation used for fraud, or for
the public, the auditor or the responsible committing or concealing graft and
person may also be punished with a fine corrupt practices as defined under
ranging from Forty thousand pesos pertinent statutes, shall be liable for a
(₱40,000.00) to Four hundred thousand fine ranging from One hundred thousand
pesos (₱400,000.00). pesos (₱100,000.00) to Five million pesos
(₱5,000,000.00).
Section 163. Independent Auditor
Collusion; Penalties.— An independent When there is a finding that any of its
auditor who, in collusion with the directors, officers, employees, agents, or
corporation’s directors or representatives, representatives are engaged in graft and
certifies the corporation’s financial corrupt practices, the corporation’s failure
statements despite its incompleteness or to install: (a) safeguards for the
inaccuracy, its failure to give a fair and transparent and lawful delivery of
accurate presentation of the corporation’s services; and (b) policies, code of ethics,
condition, or despite containing false or and procedures against graft and
misleading statements, shall be punished corruption shall be prima facie evidence of
with a fine ranging from Eighty thousand corporate liability under this section.
pesos (₱80,000.00) to Five hundred
thousand pesos (₱500,000.00). When the Section 167. Engaging Intermediaries for
statement or report certified is fraudulent, Graft and Corrupt Practices; Penalties.
or has the effect of causing injury to the — corporation that appoints an
general public, the auditor or responsible intermediary who engages in graft and
officer may be punished with a fine corrupt practices for the corporation’s
ranging from One hundred thousand benefit or interest shall be punished with
pesos (₱100,000.00) to Six hundred a fine ranging from One hundred
thousand pesos (₱600,000.00). thousand pesos (₱100,000.00) to One
million pesos (₱1,000,000.00).
Section 164. Obtaining Corporate
Registration Through Fraud; Penalties. Section 168. Tolerating Graft and Corrupt
— Those responsible for the formation of Practices; Penalties.— A director, trustee,
a corporation through fraud, or who or officer who knowingly fails to sanction,
assisted directly or indirectly therein, report, or file the appropriate action with

50
proper agencies, allows or tolerates the members, officers, or employees
graft and corrupt practices or fraudulent responsible for the violation or
acts committed by a corporation’s indispensable to its commission.
directors, trustees, officers, or employees
shall be punished with a fine ranging Section 172. Liability of Aiders and
from Five hundred thousand pesos Abettors and Other Secondary Liability.
(₱500,000.00) to One million pesos — Anyone who shall aid, abet, counsel,
(₱1,000,000.00). command, induce, or cause any violation
of this Code, or any rule, regulation, or
Section 169. Retaliation Against order of the Commission shall be
Whistleblowers.— A whistleblower refers punished with a fine not exceeding that
to any person who provides truthful imposed on the principal offenders, at the
information relating to the commission or discretion of the court, after taking into
possible commission of any offense or account their participation in the offense.
violation under this Code. Any person
who, knowingly and with intent to TITLE XVII
retaliate, commits acts detrimental to a MISCELLANEOUS PROVISIONS
whistleblower such as interfering with the Section 173. Outstanding Capital Stock
lawful employment or livelihood of the Defined.— The term “outstanding capital
whistleblower, shall, at the discretion of stock”, as used in this Code, shall mean
the court, be punished with a fine ranging the total shares of stock issued under
from One hundred thousand pesos binding subscription contracts to
(₱100,000.00) to One million pesos subscribers or stockholders, whether fully
(₱1,000,000.00). or partially paid, except treasury shares.
Section 170. Other Violations of the Code; Section 174. Designation of Governing
Separate Liability.— Violations of any of Boards.— The provisions of specific
the other provisions of this Code or its provisions of this Code to the contrary
amendments not otherwise specifically notwithstanding, nonstock or special
penalized therein shall be punished by a corporations may, through their articles
fine of not less than Ten thousand pesos of incorporation or their bylaws, designate
(₱10,000.00) but not more than One their governing boards by any name other
million pesos (₱1,000,000.00). If the than as board of trustees.
violation is committed by a corporation,
the same may, after notice and hearing, Section 175. Collection and Use of
be dissolved in appropriate proceedings Registration, Incorporation and Other Fees.
before the Commission: Provided, That — For a more effective implementation of
such dissolution shall not preclude the this Code, the Commission is hereby
institution of appropriate action against authorized to collect, retain, and use fees,
the director, trustee, or officer of the fines, and other charges pursuant to this
corporation responsible for said Code and its rules and regulations. The
violation: Provided, further, That nothing amount collected shall be deposited and
in this section shall be construed to maintained in a separate account which
repeal the other causes for dissolution of shall form a fund for its modernization
a corporation provided in this Code. and to augment its operational expenses
such as, but not limited to, capital outlay,
Liability for any of the foregoing offenses increase in compensation and benefits
shall be separate from any other comparable with prevailing rates in the
administrative, civil, or criminal liability private sector, reasonable employee
under this Code and other laws. allowance, employee health care services,
Section 171. Liability of Directors, and other insurance, employee career
Trustees, Officers, or Other Employees.— If advancement and professionalization,
the offender is a corporation, the penalty legal assistance, seminars, and other
may, at the discretion of the court, be professional fees.
imposed upon such corporation and/or
upon its directors, trustees, stockholders,

51
Section 176. Stock Ownership in are less than Six hundred thousand pesos
Corporations.— Pursuant to the duties (₱600,000.00), the financial statements
specified by Article XIV of the shall be certified under oath by the
Constitution, the National Economic and corporation’s treasurer or chief financial
Development Authority (NEDA) shall, from officer; and
time to time, determine if the corporate
vehicle has been used by any corporation, (b) A general information sheet.
business, or industry to frustrate the Corporations vested with public interest
provisions of this Code or applicable laws, must also submit the following:
and shall submit to Congress, whenever
deemed necessary, a report of its findings, (1) A director or trustee compensation
including recommendations for their report; and
prevention or correction.
(2) A director or trustee appraisal or
The Congress of the Philippines may set performance report and the standards or
maximum limits for stock ownership of criteria used to assess each, director or
individuals or groups of individuals trustee.
related to each other by consanguinity,
The reportorial requirements shall be
affinity, or by close business interests, in
submitted annually and within such
corporations declared to be vested with
period as may be prescribed by the
public interest pursuant to the provisions
Commission.
of this section, or whenever necessary to
prevent anti-competitive practices as The Commission may place the
provided in Republic Act No. 10667, corporation under delinquent status in
otherwise known as the “Philippine case of failure to submit the reportorial
Competition Act”, or to implement requirements three (3) times,
national economic policies designed to consecutively or intermittently, within a
promote general welfare and economic period of five (5) years. The Commission
development, as declared in laws, rules shall give reasonable notice to and
and regulations. coordinate with the appropriate regulatory
agency prior to placing on delinquent
In recommending to the Congress which
status companies under their special
corporations, businesses and industries
regulatory jurisdiction.
will be declared as vested with public
interest, and in formulating proposals for Any person required to file a report with
limitations on stock ownership, the NEDA the Commission may redact confidential
shall consider the type and nature of the information from such required
industry, size of the enterprise, economies report: Provided, That such confidential
of scale, geographic location, extent of information shall be filed in a
Filipino ownership, labor intensity of the supplemental report prominently labelled
activity, export potential, as well as other “confidential”, together with a request for
factors which are germane to the confidential treatment of the report and
realization and promotion of business and the specific grounds for the grant thereof.
industry.
Section 178. Visitorial Power and
Section 177. Reportorial Requirements of Confidential Nature of Examination
Corporations.— Except as otherwise Results.— The Commission shall exercise
provided in this Code or in the rules visitorial powers over all corporations,
issued by the Commission, every which powers shall include the
corporation, domestic or foreign, doing examination and inspection of records,
business in the Philippines shall submit regulation and supervision of activities,
to the Commission: enforcement of compliance, and
imposition of sanctions in accordance
(a) Annual financial statements audited
with this Code.
by an independent certified public
accountant: Provided, That if the total
assets or total liabilities of the corporation

52
Should the corporation, without (f) Issue cease and desist orders ex
justifiable cause, refuse or obstruct the parte to prevent imminent fraud or injury
Commission’s exercise of its visitorial to the public;
powers, the Commission may revoke its
certificate of incorporation, without (g) Hold corporations in direct and
prejudice to the imposition of other indirect contempt;
penalties and sanctions under this Code. (h) Issue subpoena duces tecum and
All interrogatories propounded by the summon witnesses to appear in
Commission and the answers thereto, as proceedings before the Commission;
well as the results of any examination (i) In appropriate cases, order the
made by the Commission or by any other examination, search and seizure of
official authorized by law to make an documents, papers, files and records, and
examination of the operations, books, and books of accounts of any entity or person
records of any corporation, shall be kept under investigation as may be necessary
strictly confidential, except when the law for the proper disposition of the cases,
requires the same to be made public, subject to the provisions of existing laws;
when necessary for the Commission to
take action to protect the public or to (j) Suspend or revoke the certificate of
issue orders in the exercise of its powers incorporation after proper notice and
under this Code, or where such hearing;
interrogatories, answers or results are
(k) Dissolve or impose sanctions on
necessary to be presented as evidence
corporations, upon final court order, for
before any court.
committing, aiding in the commission of,
Section 179. Powers, Functions, and or in any manner furthering securities
Jurisdiction of the Commission.— The violations, smuggling, tax evasion, money
Commission shall have the power and laundering, graft and corrupt practices, or
authority to: other fraudulent or illegal acts;

(a) Exercise supervision and jurisdiction (l) Issue writs of execution and
over all corporations and persons acting attachment to enforce payment of fees,
on their behalf, except as otherwise administrative fines, and other dues
provided under this Code; collectible under this Code;

(b) Pursuant to Presidential Decree No. (m) Prescribe the number of independent
902-A.. retain jurisdiction over pending directors and the minimum criteria in
cases involving intra-corporate disputes determining the independence of a
submitted for final resolution. The director;
Commission shall retain jurisdiction over
(n) Impose or recommend new modes by
pending suspension of
which a stockholder, member, director, or
payment/rehabilitation cases filed as of
trustee may attend meetings or cast their
30 June 2000 until finally disposed;
votes, as technology may allow, taking
(c) Impose sanctions for the violation of into account the company’s scale, number
this Code, its implementing rules and of shareholders or members, structure,
orders of the Commission; and other factors consistent with the
basic right of corporate suffrage;
(d) Promote corporate governance and the
protection of minority investors, through, (o) Formulate and enforce standards,
among others, the issuance of rules and guidelines, policies, rules and regulations
regulations consistent with international to carry out the provisions of this Code;
best practices; and

(e) Issue opinions to clarify the application (p) Exercise such other powers provided
of laws, rules and regulations; by law or those which may be necessary
or incidental to carrying out the powers
expressly granted to the Commission.

53
In imposing penalties and additional manner and within the period specified in
monitoring and supervision requirements, the arbitration agreement, the parties
the Commission shall take into may request the Commission to appoint
consideration the size, nature of the the arbitrators. In any case, arbitrators
business, and capacity of the corporation. must be accredited or must belong to
organizations accredited for the purpose
No court below the Court of Appeals shall of arbitration.
have jurisdiction to issue a restraining
order, preliminary injunction, or The arbitral tribunal shall have the power
preliminary mandatory injunction in any to rule on its own jurisdiction and on
case, dispute, or controversy that directly questions relating to the validity of the
or indirectly interferes with the exercise of arbitration agreement. When an intra-
the powers, duties and responsibilities of corporate dispute is filed with a Regional
the Commission that falls exclusively Trial Court, the court shall dismiss the
within its jurisdiction. case before the termination of the pretrial
conference, if it determines that an
Section 180. Development and arbitration agreement is written in the
Implementation of Electronic Filing and corporation’s articles of incorporation,
Monitoring System.— The Commission bylaws, or in a separate agreement.
shall develop and implement an electronic
filing and monitoring system. The The arbitral tribunal shall have the power
Commission shall promulgate rules to to grant interim measures necessary to
facilitate and expedite, among others, ensure enforcement of the award, prevent
corporate name reservation and a miscarriage of justice, or otherwise
registration, incorporation, submission of protect the rights of the parties.
reports, notices, and documents required
under this Code, and sharing of pertinent A final arbitral award under this section
information with other government shall be executory after the lapse of fifteen
agencies. (15) days from receipt thereof by the
parties and shall be stayed only by the
Section 181. Arbitration for Corporations. filing of a bond or the issuance by the
— An arbitration agreement may be appellate court of an injunctive writ.
provided in the articles of incorporation or
bylaws of a corporation. When such an The Commission shall formulate the rules
agreement is in place, disputes between and regulations, which shall govern
the corporation, its stockholders or arbitration under this section, subject to
members, which arise from the existing laws on arbitration.
implementation of the articles of Section 182. Jurisdiction Over Party-List
incorporation or bylaws, or from intra- Organizations.— The powers, authorities,
corporate relations, shall be referred to and responsibilities of the Commission
arbitration. A dispute shall be involving party-list organizations are
nonarbitrable when it involves criminal transferred to the Commission on
offenses and interests of third parties. Elections (COMELEC).
The arbitration agreement shall be Within six (6) months after the effectivity
binding on the corporation, its directors, of this Act, the monitoring, supervision,
trustees, officers, and executives or and regulation of such corporations shall
managers. be deemed automatically transferred to
To be enforceable, the arbitration the COMELEC.
agreement should indicate the number of For this purpose, the COMELEC, in
arbitrators and the procedure for their coordination with the Commission, shall
appointment. The power to appoint the promulgate the corresponding
arbitrators forming the arbitral tribunal implementing rules for the transfer of
shall be granted to a designated jurisdiction over the abovementioned
independent third party. Should the third corporations.
party fail to appoint the arbitrators in the

54
Section 183. Applicability of the Code. Section 188. Effectivity.— This Act shall
— Nothing in this Act shall be construed take effect upon completion of its
as amending existing provisions of special publication in the Official Gazette or in at
laws governing the registration, least two (2) newspapers of general
regulation, monitoring and supervision of circulation.
special corporations such as banks,
nonbank financial institutions and
insurance companies. Approved,
Notwithstanding any provision to the (Sgd)
contrary, regulators such as the Bangko GLORIA MACAPAGAL-ARROYO
Sentral ng Pilipinas and the Insurance Speaker of the House of Representatives
Commission shall exercise primary
authority over special corporations such This Act which is a consolidation of Senate Bill No. 1280
as banks, nonbank financial institutions, the House of Representatives hn November 28, 2018.
and insurance companies under their
(Sgd)
supervision and regulation.
DANTE ROBERTO P. MALING
Section 184. Effect of Amendment or Acting Secretary General
Repeal of This Code, or the Dissolution of a House of Representatives
Corporation.— No right or remedy in favor
(Sgd)
of or against any corporation, its
RODRIGO ROA DUTERTE
stockholders, members, directors,
President of the Philippines
trustees, or officers, nor any liability
incurred by any such corporation,
stockholders, members, directors,
trustees, or officers, shall be removed or Approved: February 20, 2019.
impaired either by the subsequent
dissolution of said corporation or by any
subsequent amendment or repeal of this
Code or of any part thereof.

Section 185. Applicability to Existing

Corporations.— 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.

Section 186. Separability Clause.— If any

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

Section 187. Repealing Clause.— Batas

Pambansa Big. 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.

55