S. No.

1280 GENERAL PROVISIONS DEFINITIONS AND CLASSIFICATIONS

H. No. 8374

SECTION. 1. Title of the Code. – This Code shall be known as the

“Revised Corporation Code of the Philippines”.

SEC. 2. Corporation Defined. – A corporation is an artificial being

created by operation of law, having the right of succession and the powers,
attributes, and properties expressly authorized by law or incidental to its
existence.

SEC. 3. Classes of Corporations. – Corporations formed or

organized under this Code may be stock or nonstock corporations. Stock
corporations are those which have capital stock divided into shares and are
authorized to distribute to the holders of such shares, dividends, or
Begun and held in Metro Manila, on Monday, allotments of the surplus profits on the basis of the shares held. All other
the twenty-third day of July, two thousand corporations are nonstock corporations.
eighteen.
SEC. 4. Corporations Created by Special Laws or Charters. –
______________ Corporations created by special laws or charters shall be governed primarily
by the provisions of the special law or charter creating them or applicable to
[ REPUBLIC ACT NO. 11232 ] them, supplemented by the provisions of this Code, insofar as they are
applicable.

AN ACT PROVIDING FOR THE REVISED CORPORATION CODE SEC. 5. Corporators and Incorporators, Stockholders and
OF THE PHILIPPINES Members. – Corporators are those who compose a corporation, whether as
stockholders or shareholders in a stock corporation or as members in a
Be it enacted by the Senate and House of nonstock corporation. Incorporators are those stockholders or members
Representatives of the Philippines in Congress mentioned in the articles of incorporation as originally forming and
assembled: composing the corporation and who are signatories thereof.

TITLE I SEC. 6. Classification of Shares. – The classification of shares,

their corresponding rights, privileges, or restrictions, and their stated par
value, if any, must be indicated in the articles of incorporation. Each share

Page 1 of 62
shall be equal in all respects to every other share, except as otherwise
provided in the articles of incorporation and in the certificate of stock. The shares or series of shares may or may not have a par value:
Provided, That banks, trust, insurance, and preneed companies, public
The shares in stock corporations may be divided into classes or utilities, building and loan associations, and other corporations authorized to
series of shares, or both. No share may be deprived of voting rights except obtain or access funds from the public, whether publicly listed or not, shall
those classified and issued as “preferred” or “redeemable” shares, unless not be permitted to issue no-par value shares of stock.
otherwise provided in this Code: Provided, That there shall always be a
class or series of shares with complete voting rights. Preferred shares of stock issued by a corporation may be given
preference in the distribution of dividends and in the distribution of
Holders of nonvoting shares shall nevertheless be entitled to vote on corporate assets in case of liquidation, or such other preferences: Provided,
the following matters: That preferred shares of stock may be issued only with a stated par value.
The board of directors, where authorized in the articles of incorporation,
(a) Amendment of the articles of incorporation; may fix the terms and conditions of preferred shares of stock or any series
thereof: Provided, further, That such terms and conditions shall be effective
(b) Adoption and amendment of bylaws; upon filing of a certificate thereof with the Securities and Exchange
Commission, hereinafter referred to as the “Commission”.
(c) Sale, lease, exchange, mortgage, pledge, or other disposition
of all or substantially all of the corporate property; Shares of capital stock issued without par value shall be deemed
fully paid and nonassessable and the holder of such shares shall not be
(d) Incurring, creating, or increasing bonded indebtedness; liable to the corporation or to its creditors in respect thereto: Provided, That
no-par value shares must be issued for a consideration of at least Five pesos
(e) Increase or decrease of authorized capital stock; (P5.00) per share: Provided, further, That the entire consideration received
by the corporation for its no-par value shares shall be treated as capital and
(f) Merger or consolidation of the corporation with another shall not be available for distribution as dividends.
corporation or other corporations;
A corporation may further classify its shares for the purpose of
(g) Investment of corporate funds in another corporation or ensuring compliance with constitutional or legal requirements.
business in accordance with this Code; and
SEC. 7. Founders’ Shares. – Founders’ shares may be given certain
(h) Dissolution of the corporation. rights and privileges not enjoyed by the owners of other stocks. Where the
exclusive right to vote and be voted for in the election of directors is
Except as provided in the immediately preceding paragraph, the vote granted, it must be for a limited period not to exceed five (5) years from the
required under this Code to approve a particular corporate act shall be date of incorporation: Provided, That such exclusive right shall not be
deemed to refer only to stocks with voting rights. allowed if its exercise will violate Commonwealth Act No. 108, otherwise
Page 2 of 62
known as the “Anti-Dummy Law”; Republic Act No. 7042, otherwise
known as the “Foreign Investments Act of 1991”; and other pertinent laws. Each incorporator of a stock corporation must own or be a
subscriber to at least one (1) share of the capital stock.
SEC. 8. Redeemable Shares. – Redeemable shares may be issued by
the corporation when expressly provided in the articles of incorporation. A corporation with a single stockholder is considered a One Person
They are shares which may be purchased by the corporation from the Corporation as described in Title XIII, Chapter III of this Code.
holders of such shares upon the expiration of a fixed period, regardless of
the existence of unrestricted retained earnings in the books of the SEC. 11. Corporate Term. – A corporation shall have perpetual
corporation, and upon such other terms and conditions stated in the articles existence unless its articles of incorporation provides otherwise.
of incorporation and the certificate of stock representing the shares, subject
to rules and regulations issued by the Commission. Corporations with certificates of incorporation issued prior to the
effectivity of this Code, and which continue to exist, shall have perpetual
SEC. 9. Treasury shares. – Treasury shares are shares of stock existence, unless the corporation, upon a vote of its stockholders
which have been issued and fully paid for, but subsequently reacquired by representing a majority of its outstanding capital stock, notifies the
the issuing corporation through purchase, redemption, donation, or some Commission that it elects to retain its specific corporate term pursuant to its
other lawful means. Such shares may again be disposed of for a reasonable articles of incorporation: Provided, That any change in the corporate term
price fixed by the board of directors. under this section is without prejudice to the appraisal right of dissenting
stockholders in accordance with the provisions of this Code.

A corporate term for a specific period may be extended or shortened

by amending the articles of incorporation: Provided, That no extension may
TITLE II be made earlier than three (3) years prior to the original or subsequent
expiry date(s) unless there are justifiable reasons for an earlier extension as
INCORPORATION AND ORGANIZATION OF PRIVATE may be determined by the Commission: Provided, further, That such
CORPORATIONS extension of the corporate term shall take effect only on the day following
the original or subsequent expiry date(s).
SEC. 10. Number and Qualifications of Incorporators. – Any
person, partnership, association or corporation, singly or jointly with others A corporation whose term has expired may apply for a revival of its
but not more than fifteen (15) in number, may organize a corporation for corporate existence, together with all the rights and privileges under its
any lawful purpose or purposes: Provided, That natural persons who are certificate of incorporation and subject to all of its duties, debts and
licensed to practice a profession, and partnerships or associations organized liabilities existing prior to its revival. Upon approval by the Commission,
for the purpose of practicing a profession, shall not be allowed to organize the corporation shall be deemed revived and a certificate of revival of
as a corporation unless otherwise provided under special laws. corporate existence shall be issued, giving it perpetual existence, unless its
Incorporators who are natural persons must be of legal age. application for revival provides otherwise.
Page 3 of 62
 (d) The term for which the corporation is to exist,
No application for revival of certificate of incorporation of banks, if the corporation has not elected perpetual existence;
banking and quasibanking institutions, preneed, insurance and trust
companies, non-stock savings and loan associations (NSSLAs), pawnshops, (e) The names, nationalities, and residence
corporations engaged in money service business, and other financial addresses of the incorporators;
intermediaries shall be approved by the Commission unless accompanied by
a favorable recommendation of the appropriate government agency. (f) The number of directors, which shall not be
more than fifteen (15) or the number of trustees which may
SEC. 12. Minimum Capital Stock Not Required of Stock be more than fifteen (15);
Corporations. – Stock corporations shall not be required to have a
minimum capital stock, except as otherwise specifically provided by special (g) The names, nationalities, and residence
law. addresses of persons who shall act as directors or trustees
until the first regular directors or trustees are duly elected
SEC. 13. Contents of the Articles of Incorporation. – All and qualified in accordance with this Code;
corporations shall file with the Commission articles of incorporation in any
of the official languages, duly signed and acknowledged or authenticated, in (h) If it be a stock corporation, the amount of its
such form and manner as may be allowed by the Commission, containing authorized capital stock, number of shares into which it is
substantially the following matters, except as otherwise prescribed by this divided, the par value of each, names, nationalities, and
Code or by special law: residence addresses of the original subscribers, amount
subscribed and paid by each on the subscription, and a
(a) The name of the corporation; statement that some or all of the shares are without par
value, if applicable;
(b) The specific purpose or purposes for which
the corporation is being formed. Where a corporation has (i) If it be a nonstock corporation, the amount of
more than one stated purpose, the articles of incorporation its capital, the names, nationalities, and residence addresses
shall indicate the primary purpose and the secondary of the contributors, and amount contributed by each; and
purpose or purposes: Provided, That a nonstock corporation
may not include a purpose which would change or (j)Such other matters consistent with law and which the
contradict its nature as such; incorporators may deem necessary and convenient.

(c) The place where the principal office of the An arbitration agreement may be provided in the articles of incorporation
corporation is to be located, which must be within the pursuant to Section 181 of this Code.
Philippines; The articles of incorporation and applications for amendments
thereto may be filed with the Commission in the form of an electronic
Page 4 of 62
document, in accordance with the Commission’s rules and regulations on Fourth: That the corporation shall have perpetual existence or a term
electronic filing. of ______________ years from the date of issuance of the certificate of
incorporation;
SEC. 14. Form of Articles of Incorporation. – Unless otherwise
prescribed by special law, the articles of incorporation of all domestic Fifth: That the names, nationalities, and residence addresses of the
corporations shall comply substantially with the following form: incorporators of the corporation are as follows:

Articl Name Nationality Residence

es of
Incor
porati
on of
______________________
(Name of Corporation)

Sixth: That the number of directors or trustees of the corporation shall

The undersigned incorporators, all of legal age, have voluntarily be _________________; and the names, nationalities, and residence
agreed to form a (stock) (nonstock) corporation under the laws of the addresses of the first directors or trustees of the corporation are as follows:
Republic of the Philippines and certify the following:

First: That the name of said corporation shall be “_______________, Name Nationality Residence
Inc., Corporation or
OPC”;

Second: That the purpose or purposes for which such corporation is

incorporated are: (If there is more than one purpose, indicate primary and
secondary purposes);
Seventh: That the authorized capital stock of the corporation is
Third: That the principal office of the corporation is located in the ______________ PESOS (P________), divided into _____ shares with the
City/Municipality of par value of ____________ PESOS (P_______________) per share. (In
______________________, Province of _______________________, case all the shares are without par value): That the capital stock of the
Philippines; corporation is __________________________ shares without par value.

Page 5 of 62
 (In case some shares have par value and some are without par value): of the subscription in cash and/or property for the benefit and credit of the
That the capital stock of said corporation consists of corporation has been duly received.
__________________________ shares, of which
Tenth: That the incorporators undertake to change the name of the
_______________________ shares have a par value of
corporation immediately upon receipt of notice from the Commission that
_________________ PESOS (P____________) each, and of which
another corporation, partnership or person has acquired a prior right to the
_______________________ shares are without par value.
use of such name, that the name has been declared not distinguishable from
a name already registered or reserved for the use of another corporation, or
Eighth: That the number of shares of the authorized capital stock that it is contrary to law, public morals, good customs or public policy.
above-stated has been subscribed as follows:
Eleventh: (Corporations which will engage in any business or activity
Name of Nationality No. of Shares Amount reserved for Filipino citizens shall provide the following):
Subscriber Subscribed Subscribed
“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.”

(Modify No. 8 if shares are with no-par value. In case the corporation IN WITNESS WHEREOF, we have hereunto signed these Articles of
is nonstock, Nos. 7 and 8 of the above articles may be modified accordingly, Incorporation, this _______ day of _____________, 20_____ in the
and it is sufficient if the articles state the amount of capital or money City/Municipality of ______________________, Province of
contributed or donated by specified persons, stating the names, nationalities, _______________________, Republic of the Philippines.
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
(Names and signatures of the incorporators)
benefit of the corporation, all subscriptions, contributions or donations paid
______________________________________
or given by the subscribers or members, who certifies the information set
_
forth in the seventh and eighth clauses above, and that the paid-up portion
(Name and signature of Treasurer)

Page 6 of 62
 SEC. 15. Amendment of Articles of Incorporation. – Unless (a) The articles of incorporation or any
otherwise prescribed by this Code or by special law, and for legitimate amendment thereto is not substantially in accordance with
purposes, any provision or matter stated in the articles of incorporation may the form prescribed herein;
be amended by a majority vote of the board of directors or trustees and the
vote or written assent of the stockholders representing at least two-thirds (b) The purpose or purposes of the corporation
(2/3) of the outstanding capital stock, without prejudice to the appraisal are patently unconstitutional, illegal, immoral or contrary to
right of dissenting stockholders in accordance with the provisions of this government rules and regulations;
Code. The articles of incorporation of a nonstock corporation may be
amended by the vote or written assent of majority of the trustees and at least (c) The certification concerning the amount of
two-thirds (2/3) of the members. capital stock subscribed and/or paid is false; and

The original and amended articles together shall contain all (d) The required percentage of Filipino
provisions required by law to be set out in the articles of incorporation. ownership of the capital stock under existing laws or the
Amendments to the articles shall be indicated by underscoring the change or Constitution has not been complied with.
changes made, and a copy thereof duly certified under oath by the corporate
secretary and a majority of the directors or trustees, with a statement that No articles of incorporation or amendment to articles of
the amendments have been duly approved by the required vote of the incorporation of banks, banking and quasi-banking institutions, preneed,
stockholders or members, shall be submitted to the Commission. insurance and trust companies, NSSLAS, pawnshops, and other financial
intermediaries shall be approved by the Commission unless accompanied by
The amendments shall take effect upon their approval by the Commission a favorable recommendation of the appropriate government agency to the
or from the date of filing with the said Commission if not acted upon within effect that such articles or amendment is in accordance with law.
six (6) months from the date of filing for a cause not attributable to the
corporation. SEC. 17. Corporate Name. – No corporate name shall be allowed
by the Commission if it is not distinguishable from that already reserved or
SEC. 16. Grounds When Articles of Incorporation or Amendment registered for the use of another corporation, or if such name is already
May be Disapproved. – The Commission may disapprove the articles of protected by law, or when its use is contrary to existing law, rules and
incorporation or any amendment thereto if the same is not compliant with regulations.
the requirements of this Code: Provided, That the Commission shall give
the incorporators, directors, trustees, or officers a reasonable time from A name is not distinguishable even if it contains one or more of the
receipt of the disapproval within which to modify the objectionable portions following:
of the articles or amendment. The following are grounds for such
disapproval: (a) The word “corporation”, “company”, “incorporated”,
“limited”, “limited liability”, or an abbreviation of one of such
words; and
Page 7 of 62
 relevant laws, rules and regulations, the Commission shall issue the
(b) Punctuations, articles, conjunctions, contractions, certificate of incorporation.
prepositions, abbreviations, different tenses, spacing, or number of
the same word or phrase. A private corporation organized under this Code commences its
corporate existence and juridical personality from the date the Commission
The Commission, upon determination that the corporate name is: (1) issues the certificate of incorporation under its official seal and thereupon
not distinguishable from a name already reserved or registered for the use of the incorporators, stockholders/members and their successors shall
another corporation; (2) already protected by law; or (3) contrary to law, constitute a body corporate under the name stated in the articles of
rules and regulations, may summarily order the corporation to immediately incorporation for the period of time mentioned therein, unless said period is
cease and desist from using such name and require the corporation to extended or the corporation is sooner dissolved in accordance with law.
register a new one. The Commission shall also cause the removal of all
visible signages, marks, advertisements, labels, prints and other effects SEC. 19. De facto Corporations. – The due incorporation of any
bearing such corporate name. Upon the approval of the new corporate corporation claiming in good faith to be a corporation under this Code, and
name, the Commission shall issue a certificate of incorporation under the its right to exercise corporate powers, shall not be inquired into collaterally
amended name. in any private suit to which such corporation may be a party. Such inquiry
may be made by the Solicitor General in a quo warranto proceeding.
If the corporation fails to comply with the Commission’s order, the
Commission may hold the corporation and its responsible directors or SEC. 20. Corporation by Estoppel. – All persons who assume to act
officers in contempt and/or hold them administratively, civilly and/or as a corporation knowing it to be without authority to do so shall be liable
criminally liable under this Code and other applicable laws and/or revoke as general partners for all debts, liabilities and damages incurred or arising
the registration of the corporation. as a result thereof: Provided, however, That when any such ostensible
corporation is sued on any transaction entered by it as a corporation or on
SEC. 18. Registration, Incorporation and Commencement of any tort committed by it as such, it shall not be allowed to use its lack of
Corporate Existence. – A person or group of persons desiring to incorporate corporate personality as a defense. Anyone who assumes an obligation to an
shall submit the intended corporate name to the Commission for ostensible corporation as such cannot resist performance thereof on the
verification. If the Commission finds that the name is distinguishable from ground that there was in fact no corporation.
a name already reserved or registered for the use of another corporation, not
protected by law and is not contrary to law, rules and regulations, the name SEC. 21. Effects of Non-Use of Corporate Charter and
shall be reserved in favor of the incorporators. The incorporators shall then Continuous Inoperation. – If a corporation does not formally organize and
submit their articles of incorporation and bylaws to the Commission. commence its business within five (5) years from the date of its
incorporation, its certificate of incorporation shall be deemed revoked as of
If the Commission finds that the submitted documents and the day following the end of the five (5)-year period.
information are fully compliant with the requirements of this Code, other

Page 8 of 62
 However, if a corporation has commenced its business but subsequently (1) share of stock or a trustee who ceases to be a member of the corporation
becomes inoperative for a period of at least five (5) consecutive years, the shall cease to be such.
Commission may, after due notice and hearing, place the corporation under
delinquent status. The board of the following corporations vested with public interest shall
have independent directors constituting at least twenty percent (20%) of
A delinquent corporation shall have a period of two (2) years to such board:
resume operations and comply with all requirements that the Commission
shall prescribe. Upon compliance by the corporation, the Commission shall a) Corporations covered by Section 17.2 of Republic
issue an order lifting the delinquent status. Failure to comply with the Act No. 8799, otherwise known as “The Securities
requirements and resume operations within the period given by the Regulation Code”, namely those whose securities are
Commission shall cause the revocation of the corporation’s certificate of registered with the Commission, corporations listed with an
incorporation. exchange or with assets of at least Fifty million pesos
(P50,000,000.00) and having two hundred (200) or more
The Commission shall give reasonable notice to, and coordinate holders of shares, each holding at least one hundred (100)
with the appropriate regulatory agency prior to the suspension or revocation shares of a class of its equity shares;
of the certificate of incorporation of companies under their special
regulatory jurisdiction. b) Banks and quasi-banks, NSSLAs, pawnshops,
corporations engaged in money service
business, pre-need, trust and insurance companies, and other financial
TITLE III intermediaries; and

BOARD OF DIRECTORS/TRUSTEES AND OFFICERS

c) Other corporations engaged in business vested with
public interest similar to the above, as may be determined
SEC. 22. The Board of Directors or Trustees of a Corporation; by the Commission, after taking into account relevant
Qualification and Term. – Unless otherwise provided in this Code, the factors which are germane to the objective and purpose of
board of directors or trustees shall exercise the corporate powers, conduct requiring the election of an independent director, such as the
all business, and control all properties of the corporation. extent of minority ownership, type of financial products or
securities issued or offered to investors, public interest
Directors shall be elected for a term of one (1) year from among the holders involved in the nature of business operations, and other
of stocks registered in the corporation’s books, while trustees shall be analogous factors.
elected for a term not exceeding three (3) years from among the members of
the corporation. Each director and trustee shall hold office until the An independent director is a person who, apart from shareholdings
successor is elected and qualified. A director who ceases to own at least one and fees received from the corporation, is independent of management and
free from any business or other relationship which could, or could
Page 9 of 62
reasonably be perceived to materially interfere with the exercise of In stock corporations, stockholders entitled to vote shall have the
independent judgment in carrying out the responsibilities as a director. right to vote the number of shares of stock standing in their own names in
the stock books of the corporation at the time fixed in the bylaws or where
Independent directors must be elected by the shareholders present or the bylaws are silent, at the time of the election. The said stockholder may:
entitled to vote in absentia during the election of directors. Independent (a) vote such number of shares for as many persons as there are directors to
directors shall be subject to rules and regulations governing their be elected; (b) cumulate said shares and give one (1) candidate as many
qualifications, disqualifications, voting requirements, duration of term and votes as the number of directors to be elected multiplied by the number of
term limit, maximum number of board memberships and other requirements the shares owned; or (c) distribute them on the same principle among as
that the Commission will prescribe to strengthen their independence and many candidates as may be seen fit: Provided, That the total number of
align with international best practices. votes cast shall not exceed the number of shares owned by the stockholders
as shown in the books of the corporation multiplied by the whole number of
SEC. 23. Election of Directors or Trustees. – Except when the directors to be elected: Provided, however, That no delinquent stock shall be
exclusive right is reserved for holders of founders’ shares under Section 7 of voted. Unless otherwise provided in the articles of incorporation or in the
this Code, each stockholder or member shall have the right to nominate any bylaws, members of nonstock corporations may cast as many votes as there
director or trustee who possesses all of the qualifications and none of the are trustees to be elected but may not cast more than one (1) vote for one (1)
disqualifications set forth in this Code. candidate. Nominees for directors or trustees receiving the highest number
of votes shall be declared elected.
At all elections of directors or trustees, there must be present, either
in person or through a representative authorized to act by written proxy, the If no election is held, or the owners of majority of the outstanding
owners of majority of the outstanding capital stock, or if there be no capital capital stock or majority of the members entitled to vote are not present in
stock, a majority of the members entitled to vote. When so authorized in the person, by proxy, or through remote communication or not voting in
bylaws or by a majority of the board of directors, the stockholders or absentia at the meeting, such meeting may be adjourned and the corporation
members may also vote through remote communication or in absentia: shall proceed in accordance with Section 25 of this Code.
Provided, That the right to vote through such modes may be exercised in The directors or trustees elected shall perform their duties as
corporations vested with public interest, notwithstanding the absence of a prescribed by law, rules of good corporate governance, and bylaws of the
provision in the bylaws of such corporations. corporation.

A stockholder or member who participates through remote SEC. 24. Corporate Officers. – Immediately after their election, the
communication or in absentia, shall be deemed present for purposes of directors of a corporation must formally organize and elect: (a) a president,
quorum. who must be a director; (b) a treasurer, who must be a resident; (c) a
secretary, who must be a citizen and resident of the Philippines; and (d)
The election must be by ballot if requested by any voting such other officers as may be provided in the bylaws. If the corporation is
stockholder or member. vested with public interest, the board shall also elect a compliance officer.
The same person may hold two (2) or more positions concurrently, except

Page 10 of 62
that no one shall act as president and secretary or as president and treasurer corporation, shall, within seven (7) days from knowledge thereof, report in
at the same time, unless otherwise allowed in this Code. writing such fact to the Commission.

The officers shall manage the corporation and perform such duties SEC. 26. Disqualification of Directors, Trustees or Officers. – A
as may be provided in the bylaws and/or as resolved by the board of person shall be disqualified from being a director, trustee or officer of any
directors. corporation if, within five (5) years prior to the election or appointment as
such, the person was:
SEC. 25. Report of Election of Directors, Trustees and Officers,
Non-holding of Election and Cessation from Office. – Within thirty (30) (a) Convicted by final judgment:
days after the election of the directors, trustees and officers of the
corporation, the secretary, or any other officer of the corporation, shall (1) Of an offense punishable by imprisonment for a period
submit to the Commission, the names, nationalities, shareholdings, and exceeding six (6) years;
residence addresses of the directors, trustees, and officers elected.
(2) For violating this Code; and
The non-holding of elections and the reasons therefor shall be
reported to the Commission within thirty (30) days from the date of the (3) For violating Republic Act No. 8799, otherwise known as
scheduled election. The report shall specify a new date for the election, “The Securities Regulation Code”;
which shall not be later than sixty (60) days from the scheduled date.
(b) Found administratively liable for any offense involving
If no new date has been designated, or if the rescheduled election is fraudulent acts; and
likewise not held, the Commission may, upon the application of a
stockholder, member, director or trustee, and after verification of the (c) By a foreign court or equivalent foreign regulatory authority
unjustified non-holding of the election, summarily order that an election be for acts, violations or misconduct similar to those enumerated in
held. The Commission shall have the power to issue such orders as may be paragraphs (a) and (b) above.
appropriate, including orders directing the issuance of a notice stating the
time and place of the election, designated presiding officer, and the record The foregoing is without prejudice to qualifications or other
date or dates for the determination of stockholders or members entitled to disqualifications, which the Commission, the primary regulatory agency, or
vote. the Philippine Competition Commission may impose in its promotion of
Notwithstanding any provision of the articles of incorporation or good corporate governance or as a sanction in its administrative
bylaws to the contrary, the shares of stock or membership represented at proceedings.
such meeting and entitled to vote shall constitute a quorum for purposes of
conducting an election under this section. SEC. 27. Removal of Directors or Trustees. – Any director or
Should a director, trustee or officer die, resign or in any manner trustee of a corporation may be removed from office by a vote of the
cease to hold office, the secretary, or the director, trustee or officer of the stockholders holding or representing at least two-thirds (2/3) of the
Page 11 of 62
outstanding capital stock, or in a nonstock corporation, by a vote of at least stockholders or members in a regular or special meeting called for that
two-thirds (2/3) of the members entitled to vote: Provided, That such purpose.
removal shall take place either at a regular meeting of the corporation or at When the vacancy is due to term expiration, the election shall be
a special meeting called for the purpose, and in either case, after previous held no later than the day of such expiration at a meeting called for that
notice to stockholders or members of the corporation of the intention to purpose. When the vacancy arises as a result of removal by the
propose such removal at the meeting. A special meeting of the stockholders stockholders or members, the election may be held on the same day of the
or members for the purpose of removing any director or trustee must be meeting authorizing the removal and this fact must be so stated in the
called by the secretary on order of the president, or upon written demand of agenda and notice of said meeting. In all other cases, the election must be
the stockholders representing or holding at least a majority of the held no later than forty-five (45) days from the time the vacancy arose. A
outstanding capital stock, or a majority of the members entitled to vote. If director or trustee elected to fill a vacancy shall be referred to as
there is no secretary, or if the secretary, despite demand, fails or refuses to replacement director or trustee and shall serve only for the unexpired term
call the special meeting or to give notice thereof, the stockholder or member of the predecessor in office.
of the corporation signing the demand may call for the meeting by directly
addressing the stockholders or members. Notice of the time and place of However, when the vacancy prevents the remaining directors from
such meeting, as well as of the intention to propose such removal, must be constituting a quorum and emergency action is required to prevent grave,
given by publication or by written notice prescribed in this Code. Removal substantial, and irreparable loss or damage to the corporation, the vacancy
may be with or without cause: Provided, That removal without cause may may be temporarily filled from among the officers of the corporation by
not be used to deprive minority stockholders or members of the right of unanimous vote of the remaining directors or trustees. The action by the
representation to which they may be entitled under Section 23 of this Code. designated director or trustee shall be limited to the emergency action
necessary, and the term shall cease within a reasonable time from the
The Commission shall, motu proprio or upon verified complaint, termination of the emergency or upon election of the replacement director
and after due notice and hearing, order the removal of a director or trustee or trustee, whichever comes earlier. The corporation must notify the
elected despite the disqualification, or whose disqualification arose or is Commission within three (3) days from the creation of the emergency
discovered subsequent to an election. The removal of a disqualified director board, stating therein the reason for its creation.
shall be without prejudice to other sanctions that the Commission may
impose on the board of directors or trustees who, with knowledge of the Any directorship or trusteeship to be filled by reason of an increase
disqualification, failed to remove such director or trustee. in the number of directors or trustees shall be filled only by an election at a
regular or at a special meeting of stockholders or members duly called for
SEC. 28. Vacancies in the Office of Director or Trustee; the purpose, or in the same meeting authorizing the increase of directors or
Emergency Board. – Any vacancy occurring in the board of directors or trustees if so stated in the notice of the meeting.
trustees other than by removal or by expiration of term may be filled by the
vote of at least a majority of the remaining directors or trustees, if still In all elections to fill vacancies under this section, the procedure set
constituting a quorum; otherwise, said vacancies must be filled by the forth in Sections 23 and 25 of this Code shall apply.

Page 12 of 62
 SEC. 29. Compensation of Directors or Trustees. – In the absence
of any provision in the bylaws fixing their compensation, the directors or SEC. 31. Dealings of Directors, Trustees or Officers with the
trustees shall not receive any compensation in their capacity as such, except Corporation. – A contract of the corporation with (1) one or more of its
for reasonable per diems: Provided however, That the stockholders directors, trustees, officers or their spouses and relatives within the fourth
representing at least a majority of the outstanding capital stock or majority civil degree of consanguinity or affinity is voidable, at the option of such
of the members may grant directors or trustees with compensation and corporation, unless all the following conditions are present:
approve the amount thereof at a regular or special meeting.
(a) The presence of such director or trustee in the
In no case shall the total yearly compensation of directors exceed ten board meeting in which the contract was approved was not
(10%) percent of the net income before income tax of the corporation necessary to constitute a quorum for such meeting;
during the preceding year.
(b) The vote of such director or trustee was not
Directors or trustees shall not participate in the determination of necessary for the approval of the contract;
their own per diems or compensation.
(c) The contract is fair and reasonable under the
Corporations vested with public interest shall submit to their circumstances;
shareholders and the Commission, an annual report of the total
compensation of each of their directors or trustees.
(d) In case of corporations vested with public
SEC. 30. Liability of Directors, Trustees or Officers. – Directors or interest, material contracts are approved by at least two-
trustees who willfully and knowingly vote for or assent to patently unlawful thirds (2/3) of the entire membership of the board, with at
acts of the corporation or who are guilty of gross negligence or bad faith in least a majority of the independent directors voting to
directing the affairs of the corporation or acquire any personal or pecuniary approve the material contract; and
interest in conflict with their duty as such directors or trustees shall be liable
jointly and severally for all damages resulting therefrom suffered by the (e) In case of an officer, the contract has been
corporation, its stockholders or members and other persons. previously authorized by the board of directors.

A director, trustee, or officer shall not attempt to acquire, or acquire

any interest adverse to the corporation in respect of any matter which has
been reposed in them in confidence, and upon which, equity imposes a
disability upon themselves to deal in their own behalf; otherwise the said
director, trustee, or officer shall be liable as a trustee for the corporation and
must account for the profits which otherwise would have accrued to the
corporation.
Page 13 of 62
 Where any of the first three (3) conditions set forth in the preceding composed of at least three (3) directors. Said committee may act, by
paragraph is absent, in the case of a contract with a director or trustee, such majority vote of all its members, on such specific matters within the
contract may be ratified by the vote of the stockholders representing at least competence of the board, as may be delegated to it in the bylaws or by
two-thirds (2/3) of the outstanding capital stock or of at least two-thirds majority vote of the board, except with respect to the: (a) approval of any
(2/3) of the members in a meeting called for the purpose: Provided, That action for which shareholders’ approval is also required; (b) filling of
full disclosure of the adverse interest of the directors or trustees involved is vacancies in the board; (c) amendment or repeal of bylaws or the adoption
made at such meeting and the contract is fair and reasonable under the of new bylaws; (d) amendment or repeal of any resolution of the board
circumstances. which by its express terms is not amendable or repealable; and (e)
distribution of cash dividends to the shareholders.
SEC. 32. Contracts Between Corporations with Interlocking
Directors. – Except in cases of fraud, and provided the contract is fair and The board of directors may create special committees of temporary
reasonable under the circumstances, a contract between two (2) or more or permanent nature and determine the members’ term, composition,
corporations having interlocking directors shall not be invalidated on that compensation, powers, and responsibilities.
ground alone: Provided, That if the interest of the interlocking director in
one (1) corporation is substantial and the interest in the other corporation or
corporations is merely nominal, the contract shall be subject to the
provisions of the preceding section insofar as the latter corporation or TITLE IV
corporations are concerned.
POWERS OF CORPORATIONS
Stockholdings exceeding twenty percent (20%) of the outstanding
capital stock shall be considered substantial for purposes of interlocking SEC. 35. Corporate Powers and Capacity. – Every corporation
directors. incorporated under this Code has the power and capacity:

SEC. 33. Disloyalty of a Director. – Where a director, by virtue of (a) To sue and be sued in its corporate name;
such office, acquires a business opportunity which should belong to the
corporation, thereby obtaining profits to the prejudice of such corporation, (b) To have perpetual existence unless the
the director must account for and refund to the latter all such profits, unless certificate of incorporation provides otherwise;
the act has been ratified by a vote of the stockholders owning or
representing at least twothirds (2/3) of the outstanding capital stock. This (c) To adopt and use a corporate seal;
provision shall be applicable, notwithstanding the fact that the director
risked one’s own funds in the venture. (d) To amend its articles of incorporation in
accordance with the provisions of this Code;
SEC. 34. Executive, Management, and Other Special Committees.
– If the bylaws so provide, the board may create an executive committee
Page 14 of 62
 (e) To adopt bylaws, not contrary to law, morals (k) To exercise such other powers as may be
or public policy, and to amend or repeal the same in essential or necessary to carry out its purpose or purposes as
accordance with this Code; stated in the articles of incorporation.

(f) In case of stock corporations, to issue or sell SEC. 36. Power to Extend or Shorten Corporate Term. – A private
stocks to subscribers and to sell treasury stocks in corporation may extend or shorten its term as stated in the articles of
accordance with the provisions of this Code; and to admit incorporation when approved by a majority vote of the board of directors or
members to the corporation if it be a nonstock corporation; trustees, and ratified at a meeting by the stockholders or members
representing at least two-thirds (2/3) of the outstanding capital stock or of
(g) To purchase, receive, take or grant, hold, its members. Written notice of the proposed action and the time and place of
convey, sell, lease, pledge, mortgage, and otherwise deal the meeting shall be sent to stockholders or members at their respective
with such real and personal property, including securities place of residence as shown in the books of the corporation, and must either
and bonds of other corporations, as the transaction of the be deposited to the addressee in the post office with postage prepaid, served
lawful business of the corporation may reasonably and personally, or when allowed in the bylaws or done with the consent of the
necessarily require, subject to the limitations prescribed by stockholder, sent electronically in accordance with the rules and regulations
law and the Constitution; of the Commission on the use of electronic data messages. In case of
extension of corporate term, a dissenting stockholder may exercise the right
(h) To enter into a partnership, joint venture, of appraisal under the conditions provided in this Code.
merger, consolidation, or any other commercial agreement
with natural and juridical persons; SEC. 37. Power to Increase or Decrease Capital Stock; Incur,
Create or Increase Bonded Indebtedness. – No corporation shall increase
(i) To make reasonable donations, including or decrease its capital stock or incur, create or increase any bonded
those for the public welfare or for hospital, charitable, indebtedness unless approved by a majority vote of the board of directors
cultural, scientific, civic, or similar purposes: Provided, and by two-thirds (2/3) of the outstanding capital stock at a stockholders’
That no foreign corporation shall give donations in aid of meeting duly called for the purpose. Written notice of the time and place of
any political party or candidate or for purposes of partisan the stockholders’ meeting and the purpose for said meeting must be sent to
political activity; the stockholders at their places of residence as shown in the books of the
corporation and served on the stockholders personally, or through electronic
(j) To establish pension, retirement, and other means recognized in the corporation’s bylaws and/or the Commission’s
plans for the benefit of its directors, trustees, officers, and rules as a valid mode for service of notices.
employees; and
A certificate must be signed by a majority of the directors of the
corporation and countersigned by the chairperson and secretary of the
stockholders’ meeting, setting forth:

Page 15 of 62
 be deemed increased or decreased and the incurring, creating or increasing
(a) That the requirements of this section have been complied with; of any bonded indebtedness authorized, as the certificate of filing may
declare: Provided, That the Commission shall not accept for filing any
(b) The amount of the increase or decrease of the capital stock; certificate of increase of capital stock unless accompanied by a sworn
statement of the treasurer of the corporation lawfully holding office at the
(c) In case of an increase of the capital stock, the amount of capital time of the filing of the certificate, showing that at least twenty-five percent
stock or number of shares of no-par stock thereof actually (25%) of the increase in capital stock has been subscribed and that at least
subscribed, the names, nationalities and addresses of the persons twenty-five percent (25%) of the amount subscribed has been paid in actual
subscribing, the amount of capital stock or number of no-par stock cash to the corporation or that property, the valuation of which is equal to
subscribed by each, and the amount paid by each on the twenty-five percent (25%) of the subscription, has been transferred to the
subscription in cash or property, or the amount of capital stock or corporation: Provided, further, That no decrease in capital stock shall be
number of shares of no-par stock allotted to each stockholder if approved by the Commission if its effect shall prejudice the rights of
such increase is for the purpose of making effective stock corporate creditors.
dividend therefor authorized;
Nonstock corporations may incur, create or increase bonded
(d) Any bonded indebtedness to be incurred, created or increased; indebtedness when approved by a majority of the board of trustees and of at
least two-thirds (2/3) of the members in a meeting duly called for the
(e) The amount of stock represented at the meeting; and purpose.

Bonds issued by a corporation shall be registered with the

(f) The vote authorizing the increase or decrease of the capital stock,
Commission, which shall have the authority to determine the sufficiency of
or the incurring, creating or increasing of any bonded
the terms thereof.
indebtedness.
SEC. 38. Power to Deny Preemptive Right. – All stockholders of a
Any increase or decrease in the capital stock or the incurring, creating
stock corporation shall enjoy preemptive right to subscribe to all issues or
or increasing of any bonded indebtedness shall require prior approval of the
disposition of shares of any class, in proportion to their respective
Commission, and where appropriate, of the Philippine Competition
shareholdings, unless such right is denied by the articles of incorporation or
Commission. The application with the Commission shall be made within six
an amendment thereto: Provided, That such preemptive right shall not
(6) months from the date of approval of the board of directors and
extend to shares issued in compliance with laws requiring stock offerings or
stockholders, which period may be extended for justifiable reasons.
minimum stock ownership by the public; or to shares issued in good faith
with the approval of the stockholders representing two-thirds (2/3) of the
Copies of the certificate shall be kept on file in the office of the
outstanding capital stock, in exchange for property needed for corporate
corporation and filed with the Commission and attached to the original
purposes or in payment of a previously contracted debt.
articles of incorporation. After approval by the Commission and the
issuance by the Commission of its certificate of filing, the capital stock shall
Page 16 of 62
 SEC. 39. Sale or Other Disposition of Assets. – Subject to the sent electronically: Provided, That any dissenting stockholder may exercise
provisions of Republic Act No. 10667, otherwise known as “Philippine the right of appraisal under the conditions provided in this Code.
Competition Act”, and other related laws, a corporation may, by a majority
vote of its board of directors or trustees, sell, lease, exchange, mortgage, After such authorization or approval by the stockholders or members,
pledge, or otherwise dispose of its property and assets, upon such terms and the board of directors or trustees may, nevertheless, in its discretion,
conditions and for such consideration, which may be money, stocks, bonds, abandon such sale, lease, exchange, mortgage, pledge, or other disposition
or other instruments for the payment of money or other property or of property and assets, subject to the rights of third parties under any
consideration, as its board of directors or trustees may deem expedient. contract relating thereto, without further action or approval by the
stockholders or members.
A sale of all or substantially all of the corporation’s properties and
assets, including its goodwill, must be authorized by the vote of the Nothing in this section is intended to restrict the power of any
stockholders representing at least two-thirds (2/3) of the outstanding capital corporation, without the authorization by the stockholders or members, to
stock, or at least two-thirds (2/3) of the members, in a stockholders’ or sell, lease, exchange, mortgage, pledge, or otherwise dispose of any of its
members’ meeting duly called for the purpose. property and assets if the same is necessary in the usual and regular course
of business of the corporation or if the proceeds of the sale or other
In nonstock corporations where there are no members with voting disposition of such property and assets shall be appropriated for the conduct
rights, the vote of at least a majority of the trustees in office will be of its remaining business.
sufficient authorization for the corporation to enter into any transaction
authorized by this section.
SEC. 40. Power to Acquire Own Shares. – Provided that the
The determination of whether or not the sale involves all or corporation has unrestricted retained earnings in its books to cover the
substantially all of the corporation’s properties and assets must be computed shares to be purchased or acquired, a stock corporation shall have the power
based on its net asset value, as shown in its latest financial statements. A to purchase or acquire its own shares for a legitimate corporate purpose or
sale or other disposition shall be deemed to cover substantially all the purposes, including the following cases:
corporate property and assets if thereby the corporation would be rendered
incapable of continuing the business or accomplishing the purpose for (a) To eliminate fractional shares arising out of
which it was incorporated. stock dividends;

Written notice of the proposed action and of the time and place for the (b) To collect or compromise an indebtedness to
meeting shall be addressed to stockholders or members at their places of the corporation, arising out of unpaid subscription, in a
residence as shown in the books of the corporation and deposited to the delinquency sale, and to purchase delinquent shares sold
addressee in the post office with postage prepaid, served personally, or during said sale; and
when allowed by the bylaws or done with the consent of the stockholder,

Page 17 of 62
 (c) To pay dissenting or withdrawing two-thirds (2/3) of the outstanding capital stock at a regular or special
stockholders entitled to payment for their shares under the meeting duly called for the purpose.
provisions of this Code.
Stock corporations are prohibited from retaining surplus profits in
SEC. 41. Power to Invest Corporate Funds in Another Corporation excess of one hundred percent (100%) of their paid-in capital stock, except:
or Business or for Any Other Purpose. – Subject to the provisions of this (a) when justified by definite corporate expansion projects or programs
Code, a private corporation may invest its funds in any other corporation, approved by the board of directors; or (b) when the corporation is
business, or for any purpose other than the primary purpose for which it was prohibited under any loan agreement with financial institutions or creditors,
organized, when approved by a majority of the board of directors or trustees whether local or foreign, from declaring dividends without their consent,
and ratified by the stockholders representing at least two-thirds (2/3) of the and such consent has not yet been secured; or (c) when it can be clearly
outstanding capital stock, or by at least two thirds (2/3) of the members in shown that such retention is necessary under special circumstances
the case of nonstock corporations, at a meeting duly called for the purpose. obtaining in the corporation, such as when there is need for special reserve
Notice of the proposed investment and the time and place of the meeting for probable contingencies.
shall be addressed to each stockholder or member at the place of residence
as shown in the books of the corporation and deposited to the addressee in SEC. 43. Power to Enter into Management Contract. – No
the post office with postage prepaid, served personally, or sent corporation shall conclude a management contract with another corporation
electronically in accordance with the rules and regulations of the unless such contract is approved by the board of directors and by
Commission on the use of electronic data message, when allowed by the stockholders owning at least the majority of the outstanding capital stock, or
bylaws or done with the consent of the stockholders: Provided, That any by at least a majority of the members in the case of a nonstock corporation,
dissenting stockholder shall have appraisal right as provided in this Code: of both the managing and the managed corporation, at a meeting duly called
Provided, however, That where the investment by the corporation is for the purpose: Provided, That (a) where a stockholder or stockholders
reasonably necessary to accomplish its primary purpose as stated in the representing the same interest of both the managing and the managed
articles of incorporation, the approval of the stockholders or members shall corporations own or control more than one-third (1/3) of the total
not be necessary. outstanding capital stock entitled to vote of the managing corporation; or (b)
where a majority of the members of the board of directors of the managing
SEC. 42. Power to Declare Dividends. – The board of directors of a corporation also constitute a majority of the members of the board of
stock corporation may declare dividends out of the unrestricted retained directors of the managed corporation, then the management contract must
earnings which shall be payable in cash, property, or in stock to all be approved by the stockholders of the managed corporation owning at least
stockholders on the basis of outstanding stock held by them: Provided, That two-thirds (2/3) of the total outstanding capital stock entitled to vote, or by
any cash dividends due on delinquent stock shall first be applied to the at least two-thirds (2/3) of the members in the case of a nonstock
unpaid balance on the subscription plus costs and expenses, while stock corporation.
dividends shall be withheld from the delinquent stockholders until their
unpaid subscription is fully paid: Provided, further, That no stock dividend These shall apply to any contract whereby a corporation undertakes to
shall be issued without the approval of stockholders representing at least manage or operate all or substantially all of the business of another

Page 18 of 62
corporation, whether such contracts are called service contracts, operating
agreements or otherwise: Provided, however, That such service contracts or In all cases, bylaws shall be effective only upon the issuance by the
operating agreements which relate to the exploration, development, Commission of a certification that the bylaws are in accordance with this
exploitation or utilization of natural resources may be entered into for such Code.
periods as may be provided by the pertinent laws or regulations.
The Commission shall not accept for filing the bylaws or any
No management contract shall be entered into for a period longer than amendment thereto of any bank, banking institution, building and loan
five (5) years for any one (1) term. association, trust company, insurance company, public utility, educational
institution, or other special corporations governed by special laws, unless
SEC. 44. Ultra Vires Acts of Corporations. – No corporation shall accompanied by a certificate of the appropriate government agency to the
possess or exercise corporate powers other than those conferred by this effect that such bylaws or amendments are in accordance with law.
Code or by its articles of incorporation and except as necessary or incidental
to the exercise of the powers conferred. SEC. 46. Contents of Bylaws. – A private corporation may provide
the following in its bylaws:

TITLE V (a) The time, place and manner of calling and

conducting regular or special meetings of the directors or
trustees;
BYLAWS
(b) The time and manner of calling and
SEC. 45. Adoption of Bylaws. – For the adoption of bylaws by the
conducting regular or special meetings and mode of
corporation, the affirmative vote of the stockholders representing at least a
notifying the stockholders or members thereof;
majority of the outstanding capital stock, or of at least a majority of the
members in case of nonstock corporations, shall be necessary. The bylaws
(c) The required quorum in meetings of
shall be signed by the stockholders or members voting for them and shall be
stockholders or members and the manner of voting therein;
kept in the principal office of the corporation, subject to the inspection of
the stockholders or members during office hours. A copy thereof, duly
certified by a majority of the directors or trustees and countersigned by the (d) The modes by which a stockholder, member,
secretary of the corporation, shall be filed with the Commission and director, or trustee may attend meetings and cast their votes;
attached to the original articles of incorporation.
(e) The form for proxies of stockholders and
Notwithstanding the provisions of the preceding paragraph, bylaws members and the manner of voting them;
may be adopted and filed prior to incorporation; in such case, such bylaws
shall be approved and signed by all the incorporators and submitted to the (f) The directors’ or trustees’ qualifications,
Commission, together with the articles of incorporation. duties and responsibilities, the guidelines for setting the
Page 19 of 62
 compensation of directors or trustees and officers, and the power to amend or repeal the bylaws or adopt new bylaws: Provided, That
maximum number of other board representations that an any power delegated to the board of directors or trustees to amend or repeal
independent director or trustee may have which shall, in no the bylaws or adopt new bylaws shall be considered as revoked whenever
case, be more than the number prescribed by the stockholders owning or representing a majority of the outstanding capital
Commission; stock or majority of the members shall so vote at a regular or special
meeting.
(g) The time for holding the annual election of
directors or trustees and the mode or manner of giving Whenever the bylaws are amended or new bylaws are adopted, the
notice thereof; corporation shall file with the Commission such amended or new bylaws
and, if applicable, the stockholders’ or members’ resolution authorizing the
(h) The manner of election or appointment and delegation of the power to amend and/or adopt new bylaws, duly certified
the term of office of all officers other than directors or under oath by the corporate secretary and a majority of the directors or
trustees; trustees.

(i) The penalties for violation of the bylaws; The amended or new bylaws shall only be effective upon the issuance
by the Commission of a certification that the same is in accordance with this
(j) In the case of stock corporations, the manner Code and other relevant laws.
of issuing stock certificates; and

(k) Such other matters as may be necessary for TITLE VI

the proper or convenient transaction of its corporate affairs
for the promotion of good governance and anti-graft and MEETINGS
corruption measures.
SEC. 48. Kinds of Meetings. – Meetings of directors, trustees,
An arbitration agreement may be provided in the bylaws pursuant to stockholders, or members may be regular or special.
Section 181 of this Code.
SEC. 49. Regular and Special Meetings of Stockholders or
SEC. 47. Amendment to Bylaws. – A majority of the board of Members. – Regular meetings of stockholders or members shall be held
directors or trustees, and the owners of at least a majority of the outstanding annually on a date fixed in the bylaws, or if not so fixed, on any date after
capital stock, or at least a majority of the members of a nonstock April 15 of every year as determined by the board of directors or trustees:
corporation, at a regular or special meeting duly called for the purpose, may Provided, That written notice of regular meetings shall be sent to all
amend or repeal the bylaws or adopt new bylaws. The owners of two-thirds stockholders or members of record at least twenty-one (21) days prior to the
(2/3) of the outstanding capital stock or two-thirds (2/3) of the members in a meeting, unless a different period is required in the bylaws, law, or
nonstock corporation may delegate to the board of directors or trustees the regulation: Provided, further, That written notice of regular meetings may
Page 20 of 62
be sent to all stockholders or members of record through electronic mail or information on any material change in the corporation’s business,
such other manner as the Commission shall allow under its guidelines. strategy, and other affairs;

At each regular meeting of stockholders or members, the board of d) A financial report for the preceding year, which shall
directors or trustees shall endeavor to present to stockholders or members include financial statements duly signed and certified in accordance
the following: with this Code and the rules the Commission may prescribe, a
statement on the adequacy of the corporation’s internal controls or
a) The minutes of the most recent regular meeting which shall
risk management systems, and a statement of all external audit and
include, among others:
non-audit fees;
(1) A description of the voting and vote tabulation procedures e) An explanation of the dividend policy and the fact of
used in the previous meeting; payment of dividends or the reasons
for nonpayment thereof;
(2) A description of the opportunity given to stockholders or
members to ask questions and a record of the questions asked and
f) Director or trustee profiles which shall include,
answers given;
among others, their qualifications and relevant experience, length of
service in the corporation, trainings and continuing education
(3) The matters discussed and resolutions reached; attended, and their board representations in other corporations;

(4) A record of the voting results for each agenda item; g) A director or trustee attendance report, indicating the
attendance of each director or trustee at each of the meetings of the
(5) A list of the directors or trustees, officers and stockholders or board and its committees and in regular or special stockholder
members who attended the meeting; and meetings;

(6) Such other items that the Commission may require in the h) Appraisals and performance reports for the board and
interest of good corporate governance and the protection of minority the criteria and procedure for
stockholders. assessment;

b) A members’ list for nonstock corporations and, for i) A director or trustee compensation report prepared in
stock corporations, material accordance with this Code and the
information on the current stockholders, and their voting rights; rules the Commission may prescribe;

c) A detailed, descriptive, balanced and comprehensible j) Director disclosures on self-dealings and related
assessment of the corporation’s performance, which shall include party transactions; and/or
Page 21 of 62
 Unless the bylaws provide for a longer period, the stock and transfer
k) The profiles of directors nominated or seeking book or membership book shall be closed at least twenty (20) days for
election or reelection. regular meetings and seven (7) days for special meetings before the
scheduled date of the meeting.
A director, trustee, stockholder, or member may propose any other
matter for inclusion in the agenda at any regular meeting of stockholders or In case of postponement of stockholders’ or members’ regular
members. meetings, written notice thereof and the reason therefor shall be sent to all
stockholders or members of record at least two (2) weeks prior to the date
Special meetings of stockholders or members shall be held at any of the meeting, unless a different period is required under the bylaws, law or
time deemed necessary or as provided in the bylaws: Provided, however, regulation.
That at least one (1) week written notice shall be sent to all stockholders or
members, unless a different period is provided in the bylaws, law or The right to vote of stockholders or members may be exercised in
regulation. person, through a proxy, or when so authorized in the bylaws, through
remote communication or in absentia. The Commission shall issue the rules
A stockholder or member may propose the holding of a special and regulations governing participation and voting through remote
meeting and items to be included in the agenda. communication or in absentia, taking into account the company’s scale,
number of shareholders or members, structure, and other factors consistent
Notice of any meeting may be waived, expressly or impliedly, by with the protection and promotion of shareholders’ or member’s meetings.
any stockholder or member: Provided, That general waivers of notice in the
articles of incorporation or the bylaws shall not be allowed: Provided, SEC. 50. Place and Time of Meetings of Stockholders or Members.
further, That attendance at a meeting shall constitute a waiver of notice of – Stockholders’ or members’ meetings, whether regular or special, shall be
such meeting, except when the person attends a meeting for the express held in the principal office of the corporation as set forth in the articles of
purpose of objecting to the transaction of any business because the meeting incorporation, or, if not practicable, in the city or municipality where the
is not lawfully called or convened. principal office of the corporation is located: Provided, That any city or
municipality in Metro Manila, Metro Cebu, Metro Davao, and other
Whenever for any cause, there is no person authorized or the person Metropolitan areas shall, for purposes of this section, be considered a city or
authorized unjustly refuses to call a meeting, the Commission, upon petition municipality.
of a stockholder or member on a showing of good cause therefor, may issue
an order directing the petitioning stockholder or member to call a meeting Notice of meetings shall be sent through the means of
of the corporation by giving proper notice required by this Code or the communication provided in the bylaws, which notice shall state the time,
bylaws. The petitioning stockholder or member shall preside thereat until at place and purpose of the meetings.
least a majority of the stockholders or members present have chosen from
among themselves, a presiding officer. Each notice of meeting shall further be accompanied by the
following:
Page 22 of 62
 business, and every decision reached by at least a majority of the directors
(a) The agenda for the meeting; or trustees constituting a quorum, except for the election of officers which
shall require the vote of a majority of all the members of the board, shall be
(b) A proxy form which shall be submitted to the valid as a corporate act.
corporate secretary within a reasonable time prior to the
meeting; Regular meetings of the board of directors or trustees of every
corporation shall be held monthly, unless the bylaws provide otherwise.
(c) When attendance, participation, and voting
are allowed by remote communication or in absentia, the Special meetings of the board of directors or trustees may be held at
requirements and procedures to be followed when a any time upon the call of the president or as provided in the bylaws.
stockholder or member elects either option; and
Meetings of directors or trustees of corporations may be held
(d) When the meeting is for the election of anywhere in or outside of the Philippines, unless the bylaws provide
directors or trustees, the requirements and procedure for otherwise. Notice of regular or special meetings stating the date, time and
nomination and election. place of the meeting must be sent to every director or trustee at least two (2)
days prior to the scheduled meeting, unless a longer time is provided in the
All proceedings and any business transacted at a meeting of the bylaws. A director or trustee may waive this requirement, either expressly or
stockholders or members, if within the powers or authority of the impliedly.
corporation, shall be valid even if the meeting is improperly held or called:
Provided, That all the stockholders or members of the corporation are Directors or trustees who cannot physically attend or vote at board
present or duly represented at the meeting and not one of them expressly meetings can participate and vote through remote communication such as
states at the beginning of the meeting that the purpose of their attendance is videoconferencing, teleconferencing, or other alternative modes of
to object to the transaction of any business because the meeting is not communication that allow them reasonable opportunities to participate.
lawfully called or convened. Directors or trustees cannot attend or vote by proxy at board meetings.

SEC. 51. Quorum in Meetings. – Unless otherwise provided in this A director or trustee who has a potential interest in any related party
Code or in the bylaws, a quorum shall consist of the stockholders transaction must recuse from voting on the approval of the related party
representing a majority of the outstanding capital stock or a majority of the transaction without prejudice to compliance with the requirements of
members in the case of nonstock corporations. Section 31 of this Code.

SEC. 52. Regular and Special Meetings of Directors or Trustees; SEC. 53. Who Shall Preside at Meetings. – The chairman or, in his
Quorum. – Unless the articles of incorporation or the bylaws provides for a absence, the president shall preside at all meetings of the directors or
greater majority, a majority of the directors or trustees as stated in the trustees as well as of the stockholders or members, unless the bylaws
articles of incorporation shall constitute a quorum to transact corporate provide otherwise.
Page 23 of 62
 SEC. 54. Right to Vote of Secured Creditors and Administrators. – The corporation shall establish the appropriate requirements and
In case a stockholder grants security interest in his or her shares in stock procedures for voting through remote communication and in absentia,
corporations, the stockholder-grantor shall have the right to attend and vote taking into account the company’s scale, number of shareholders or
at meetings of stockholders, unless the secured creditor is expressly given members, structure and other factors consistent with the basic right of
by the stockholder-grantor such right in writing which is recorded in the corporate suffrage.
appropriate corporate books.
Proxies shall be in writing, signed and filed, by the stockholder or
Executors, administrators, receivers, and other legal representatives member, in any form authorized in the bylaws and received by the corporate
duly appointed by the court may attend and vote in behalf of the secretary within a reasonable time before the scheduled meeting. Unless
stockholders or members without need of any written proxy. otherwise provided in the proxy form, it shall be valid only for the meeting
for which it is intended. No proxy shall be valid and effective for a period
SEC. 55. Voting in Case of Joint Ownership of Stock. – The longer than five (5) years at any one time.
consent of all the co-owners shall be necessary in voting shares of stock
owned jointly by two (2) or more persons, unless there is a written proxy, SEC. 58. Voting Trusts. – One or more stockholders of a stock
signed by all the co-owners, authorizing one (1) or some of them or any corporation may create a voting trust for the purpose of conferring upon a
other person to vote such share or shares: Provided, That when the shares trustee or trustees the right to vote and other rights pertaining to the shares
are owned in an “and/or” capacity by the holders thereof, any one of the for a period not exceeding five (5) years at any time: Provided, That in the
joint owners can vote said shares or appoint a proxy therefor. case of a voting trust specifically required as a condition in a loan
agreement, said voting trust may be for a period exceeding five (5) years
SEC. 56. Voting Right for Treasury Shares. – Treasury shares shall but shall automatically expire upon full payment of the loan. A voting trust
have no voting right as long as such shares remain in the Treasury. agreement must be in writing and notarized, and shall specify the terms and
conditions thereof. A certified copy of such agreement shall be filed with
SEC. 57. Manner of Voting; Proxies. – Stockholders and members the corporation and with the Commission; otherwise, the agreement is
may vote in person or by proxy in all meetings of stockholders or members. ineffective and unenforceable. The certificate or certificates of stock
covered by the voting trust agreement shall be cancelled and new ones shall
When so authorized in the bylaws or by a majority of the board of be issued in the name of the trustee or trustees, stating that they are issued
directors, the stockholders or members of corporations may also vote pursuant to said agreement. The books of the corporation shall state that the
through remote communication or in absentia: Provided, That the votes are transfer in the name of the trustee or trustees is made pursuant to the voting
received before the corporation finishes the tally of votes. trust agreement.

A stockholder or member who participates through remote The trustee or trustees shall execute and deliver to the transferors,
communication or in absentia, shall be deemed present for purposes of voting trust certificates, which shall be transferable in the same manner and
quorum. with the same effect as certificates of stock.
Page 24 of 62
 SEC. 60. Pre-incorporation Subscription. – A subscription of
The voting trust agreement filed with the corporation shall be shares in a corporation still to be formed shall be irrevocable for a period of
subject to examination by any stockholder of the corporation in the same at least six (6) months from the date of subscription, unless all of the other
manner as any other corporate book or record: Provided, That both the subscribers consent to the revocation, or the corporation fails to incorporate
trustor and the trustee or trustees may exercise the right of inspection of all within the same period or within a longer period stipulated in the contract of
corporate books and records in accordance with the provisions of this Code. subscription. No pre-incorporation subscription may be revoked after the
articles of incorporation is submitted to the Commission.
Any other stockholder may transfer the shares to the same trustee or
trustees upon the terms and conditions stated in the voting trust agreement, SEC. 61. Consideration for Stocks. – Stocks shall not be issued for
and thereupon shall be bound by all the provisions of said agreement. a consideration less than the par or issued price thereof. Consideration for
the issuance of stock may be:
No voting trust agreement shall be entered into for purposes of (a) Actual cash paid to the corporation;
circumventing the laws against anti-competitive agreements, abuse of
dominant position, anti-competitive mergers and acquisitions, violation of (b) Property, tangible or intangible, actually received by the
nationality and capital requirements, or for the perpetuation of fraud. corporation and necessary or convenient for its use and lawful
purposes at a fair valuation equal to the par or issued value of the
Unless expressly renewed, all rights granted in a voting trust stock issued;
agreement shall automatically expire at the end of the agreed period. The
voting trust certificates as well as the certificates of stock in the name of the (c) Labor performed for or services actually rendered to the
trustee or trustees shall thereby be deemed cancelled and new certificates of corporation;
stock shall be reissued in the name of the trustors.
(d) Previously incurred indebtedness of the corporation;
The voting trustee or trustees may vote by proxy or in any manner
authorized under the bylaws unless the agreement provides otherwise. (e) Amounts transferred from unrestricted retained earnings to
stated capital;

TITLE VII STOCKS AND STOCKHOLDERS (f) Outstanding shares exchanged for stocks in the event of
reclassification or conversion;
SEC. 59. Subscription Contract. – Any contract for the acquisition
of unissued stock in an existing corporation or a corporation still to be (g) Shares of stock in another corporation; and/or
formed shall be deemed a subscription within the meaning of this Title,
notwithstanding the fact that the parties refer to it as a purchase or some (h) Other generally accepted form of consideration.
other contract.

Page 25 of 62
 Where the consideration is other than actual cash, or consists of SEC. 63. Issuance of Stock Certificates. – No certificate of stock
intangible property such as patents or copyrights, the valuation thereof shall shall be issued to a subscriber until the full amount of the subscription
initially be determined by the stockholders or the board of directors, subject together with interest and expenses (in case of delinquent shares), if any is
to the approval of the Commission. due, has been paid.

Shares of stock shall not be issued in exchange for promissory notes SEC. 64. Liability of Directors for Watered Stocks. – A director or
or future service. The same considerations provided in this section, insofar officer of a corporation who: (a) consents to the issuance of stocks for a
as applicable, may be used for the issuance of bonds by the corporation. consideration less than its par or issued value; (b) consents to the issuance
of stocks for a consideration other than cash, valued in excess of its fair
The issued price of no-par value shares may be fixed in the articles
value; or (c) having knowledge of the insufficient consideration, does not
of incorporation or by the board of directors pursuant to authority conferred
file a written objection with the corporate secretary, shall be liable to the
by the articles of incorporation or the bylaws, or if not so fixed, by the
corporation or its creditors, solidarily with the stockholder concerned for the
stockholders representing at least a majority of the outstanding capital stock
difference between the value received at the time of issuance of the stock
at a meeting duly called for the purpose.
and the par or issued value of the same.
SEC. 62. Certificate of Stock and Transfer of Shares. – The capital
SEC. 65. Interest on Unpaid Subscriptions. – Subscribers to stocks
stock of corporations shall be divided into shares for which certificates
shall be liable to the corporation for interest on all unpaid subscriptions
signed by the president or vice president, countersigned by the secretary or
from the date of subscription, if so required by and at the rate of interest
assistant secretary, and sealed with the seal of the corporation shall be
fixed in the subscription contract. If no rate of interest is fixed in the
issued in accordance with the bylaws. Shares of stock so issued are personal
subscription contract, the prevailing legal rate shall apply.
property and may be transferred by delivery of the certificate or certificates
indorsed by the owner, his attorneyin-fact, or any other person legally
authorized to make the transfer. No transfer, however, shall be valid, except SEC. 66. Payment of Balance of Subscription. – Subject to the
as between the parties, until the transfer is recorded in the books of the provisions of the subscription contract, the board of directors may, at any
corporation showing the names of the parties to the transaction, the date of time, declare due and payable to the corporation unpaid subscriptions and
the transfer, the number of the certificate or certificates, and the number of may collect the same or such percentage thereof, in either case, with
shares transferred. The Commission may require corporations whose accrued interest, if any, as it may deem necessary.
securities are traded in trading markets and which can reasonably
demonstrate their capability to do so to issue their securities or shares of Payment of unpaid subscription or any percentage thereof, together
stocks in uncertificated or scripless form in accordance with the rules of the with any interest accrued shall be made on the date specified in the
Commission. subscription contract or on the date stated in the call made by the board.
Failure to pay on such date shall render the entire balance due and payable
No shares of stock against which the corporation holds any unpaid and shall make the stockholder liable for interest at the legal rate on such
claim shall be transferable in the books of the corporation. balance, unless a different interest rate is provided in the subscription
contract. The interest shall be computed from the date specified, until full
Page 26 of 62
payment of the subscription. If no payment is made within thirty (30) days interest, costs of advertisement, and expenses of sale, for the smallest
from the said date, all stocks covered by the subscription shall thereupon number of shares or fraction of a share, the corporation may, subject to the
become delinquent and shall be subject to sale as hereinafter provided, provisions of this Code, bid for the same, and the total amount due shall be
unless the board of directors orders otherwise. credited as fully paid in the books of the corporation. Title to all the shares
of stock covered by the subscription shall be vested in the corporation as
SEC. 67. Delinquency Sale. – The board of directors may, by treasury shares and may be disposed of by said corporation in accordance
resolution, order the sale of delinquent stock and shall specifically state the with the provisions of this Code.
amount due on each subscription plus all accrued interest, and the date, time
and place of the sale which shall not be less than thirty (30) days nor more SEC. 68. When Sale May be Questioned. – No action to recover
than sixty (60) days from the date the stocks become delinquent. delinquent stock sold can be sustained upon the ground of irregularity or
defect in the notice of sale, or in the sale itself of the delinquent stock,
Notice of the sale, with a copy of the resolution, shall be sent to unless the party seeking to maintain such action first pays or tenders to the
every delinquent stockholder either personally, by registered mail, or party holding the stock the sum for which the same was sold, with interest
through other means provided in the bylaws. The same shall be published from the date of sale at the legal rate. No such action shall be maintained
once a week for two (2) consecutive weeks in a newspaper of general unless a complaint is filed within six (6) months from the date of sale.
circulation in the province or city where the principal office of the
corporation is located. SEC. 69. Court Action to Recover Unpaid Subscription. – Nothing
in this Code shall prevent the corporation from collecting through court
Unless the delinquent stockholder pays to the corporation, on or action, the amount due on any unpaid subscription, with accrued interest,
before the date specified for the sale of the delinquent stock, the balance costs and expenses.
due on the former’s subscription, plus accrued interest, costs of
advertisement and expenses of sale, or unless the board of directors SEC. 70. Effect of Delinquency. – No delinquent stock shall be
otherwise orders, said delinquent stock shall be sold at a public auction to voted for, be entitled to vote, or be represented at any stockholder’s
such bidder who shall offer to pay the full amount of the balance on the meeting, nor shall the holder thereof be entitled to any of the rights of a
subscription together with accrued interest, costs of advertisement and stockholder except the right to dividends in accordance with the provisions
expenses of sale, for the smallest number of shares or fraction of a share. of this Code, until and unless payment is made by the holder of such
The stock so purchased shall be transferred to such purchaser in the books delinquent stock for the amount due on the subscription with accrued
of the corporation and a certificate for such stock shall be issued in the interest, and the costs and expenses of advertisement, if any.
purchaser’s favor. The remaining shares, if any, shall be credited in favor of
the delinquent stockholder who shall likewise be entitled to the issuance of SEC. 71. Rights of Unpaid Shares, Nondelinquent. – Holders of
a certificate of stock covering such shares. subscribed shares not fully paid which are not delinquent shall have all the
rights of a stockholder.
Should there be no bidder at the public auction who offers to pay the
full amount of the balance on the subscription together with accrued
Page 27 of 62
 SEC. 72. Lost or Destroyed Certificates. – The following procedure and with such sureties as may be satisfactory to the board of
shall be followed by a corporation in issuing new certificates of stock in lieu directors, in which case a new certificate may be issued
of those which have been lost, stolen or destroyed: even before the expiration of the one (1) year period
provided herein. If a contest has been presented to the
(a) The registered owner of a certificate of stock corporation or if an action is pending in court regarding the
in a corporation or such person’s legal representative shall ownership of the certificate of stock which has been lost,
file with the corporation an affidavit in triplicate setting stolen or destroyed, the issuance of the new certificate of
forth, if possible, the circumstances as to how the certificate stock in lieu thereof shall be suspended until the court
was lost, stolen or destroyed, the number of shares renders a final decision regarding the ownership of the
represented by such certificate, the serial number of the certificate of stock which has been lost, stolen or destroyed.
certificate and the name of the corporation which issued the
same. The owner of such certificate of stock shall also Except in case of fraud, bad faith, or negligence on the part of the
submit such other information and evidence as may be corporation and its officers, no action may be brought against any
deemed necessary; and corporation which shall have issued certificate of stock in lieu of those lost,
stolen or destroyed pursuant to the procedure above-described.
(b) After verifying the affidavit and other TITLE VIII
information and evidence with the books of the corporation,
the corporation shall publish a notice in a newspaper of CORPORATE BOOKS AND RECORDS
general circulation in the place where the corporation has its
principal office, once a week for three (3) consecutive SEC. 73. Books to be Kept; Stock Transfer Agent. – Every
weeks at the expense of the registered owner of the corporation shall keep and carefully preserve at its principal office all
certificate of stock which has been lost, stolen or destroyed. information relating to the corporation including, but not limited to:
The notice shall state the name of the corporation, the name
of the registered owner, the serial number of the certificate, (a) The articles of incorporation and bylaws of
the number of shares represented by such certificate, and the corporation and all their amendments;
shall state that after the expiration of one (1) year from the
date of the last publication, if no contest has been presented (b) The current ownership structure and voting
to the corporation regarding the certificate of stock, the right rights of the corporation, including lists of stockholders or
to make such contest shall be barred and the corporation members, group structures, intra-group relations, ownership
shall cancel the lost, destroyed or stolen certificate of stock data, and beneficial ownership;
in its books. In lieu thereof, the corporation shall issue a
new certificate of stock, unless the registered owner files a (c) The names and addresses of all the members
bond or other security as may be required, effective for a of the board of directors or trustees and the executive
period of one (1) year, for such amount and in such form officers;
Page 28 of 62
 Republic Act No. 10173, otherwise known as the “Data Privacy Act of
(d) A record of all business transactions; 2012”, Republic Act No. 8799, otherwise known as
“The Securities Regulation Code”, and the Rules of Court.
(e) A record of the resolutions of the board of
directors or trustees and of the stockholders or members; A requesting party who is not a stockholder or member of record, or is
a competitor, director, officer, controlling stockholder or otherwise
(f) Copies of the latest reportorial requirements represents the interests of a competitor shall have no right to inspect or
submitted to the Commission; and demand reproduction of corporate records.

(g) The minutes of all meetings of stockholders Any stockholder who shall abuse the rights granted under this section
or members, or of the board of directors or trustees. Such shall be penalized under Section 158 of this Code, without prejudice to the
minutes shall set forth in detail, among others: the time and provisions of Republic Act No. 8293, otherwise known as the “Intellectual
place of the meeting held, how it was authorized, the notice Property Code of the Philippines”, as amended, and Republic Act No.
given, the agenda therefor, whether the meeting was regular 10173, otherwise known as the “Data Privacy Act of 2012”.
or special, its object if special, those present and absent, and
every act done or ordered done at the meeting. Upon the Any officer or agent of the corporation who shall refuse to allow the
demand of a director, trustee, stockholder or member, the inspection and/or reproduction of records in accordance with the provisions
time when any director, trustee, stockholder or member of this Code shall be liable to such director, trustee, stockholder or member
entered or left the meeting must be noted in the minutes; for damages, and in addition, shall be guilty of an offense which shall be
and on a similar demand, the yeas and nays must be taken punishable under Section 161 of this Code: Provided, That if such refusal is
on any motion or proposition, and a record thereof carefully made pursuant to a resolution or order of the board of directors or trustees,
made. The protest of a director, trustee, stockholder or the liability under this section for such action shall be imposed upon the
member on any action or proposed action must be recorded directors or trustees who voted for such refusal: Provided, further, That it
in full upon their demand. shall be a defense to any action under this section that the person
demanding to examine and copy excerpts from the corporation’s records
Corporate records, regardless of the form in which they are stored, and minutes has improperly used any information secured through any prior
shall be open to inspection by any director, trustee, stockholder or member examination of the records or minutes of such corporation or of any other
of the corporation in person or by a representative at reasonable hours on corporation, or was not acting in good faith or for a legitimate purpose in
business days, and a demand in writing may be made by such director, making the demand to examine or reproduce corporate records, or is a
trustee or stockholder at their expense, for copies of such records or competitor, director, officer, controlling stockholder or otherwise represents
excerpts from said records. The inspecting or reproducing party shall the interests of a competitor.
remain bound by confidentiality rules under prevailing laws, such as the
rules on trade secrets or processes under Republic Act No. 8293, otherwise If the corporation denies or does not act on a demand for inspection
known as the “Intellectual Property Code of the Philippines”, as amended, and/or reproduction, the aggrieved party may report such to the
Page 29 of 62
Commission. Within five (5) days from receipt of such report, the financial report of the operations of the corporation for the preceding year,
Commission shall conduct a summary investigation and issue an order which shall include financial statements, duly signed and certified in
directing the inspection or reproduction of the requested records. accordance with this Code, and the rules the Commission may prescribe.

Stock corporations must also keep a stock and transfer book, which However, if the total assets or total liabilities of the corporation is less
shall contain a record of all stocks in the names of the stockholders than Six hundred thousand pesos (P600,000.00), or such other amount as
alphabetically arranged; the installments paid and unpaid on all stocks for may be determined appropriate by the Department of Finance, the financial
which subscription has been made, and the date of payment of any statements may be certified under oath by the treasurer and the president.
installment; a statement of every alienation, sale or transfer of stock made,
the date thereof, by and to whom made; and such other entries as the bylaws TITLE IX
may prescribe. The stock and transfer book shall be kept in the principal
office of the corporation or in the office of its stock transfer agent and shall MERGER AND CONSOLIDATION
be open for inspection by any director or stockholder of the corporation at
reasonable hours on business days. SEC. 75. Plan of Merger or Consolidation. – Two (2) or more
corporations may merge into a single corporation which shall be one of the
A stock transfer agent or one engaged principally in the business of constituent corporations or may consolidate into a new single corporation
registering transfers of stocks in behalf of a stock corporation shall be which shall be the consolidated corporation.
allowed to operate in the Philippines upon securing a license from the
Commission and the payment of a fee to be fixed by the Commission, The board of directors or trustees of each corporation, party to the
which shall be renewable annually: Provided, That a stock corporation is merger or consolidation, shall approve a plan of merger or consolidation
not precluded from performing or making transfers of its own stocks, in setting forth the following:
which case all the rules and regulations imposed on stock transfer agents,
except the payment of a license fee herein provided, shall be applicable: (a) The names of the corporations proposing to
Provided, further, That the Commission may require stock corporations merge or consolidate, hereinafter referred to as the
which transfer and/or trade stocks in secondary markets to have an constituent corporations;
independent transfer agent.
(b) The terms of the merger or consolidation and
SEC. 74. Right to Financial Statements. – A corporation shall furnish the mode of carrying the same into effect;
a stockholder or member, within ten (10) days from receipt of their written
request, its most recent financial statement, in the form and substance of the (c) A statement of the changes, if any, in the
financial reporting required by the Commission. articles of incorporation of the surviving corporation in case
of merger; and, in case of consolidation, all the statements
At the regular meeting of stockholders or members, the board of required to be set forth in the articles of incorporation for
directors or trustees shall present to such stockholders or members a corporations organized under this Code; and
Page 30 of 62
 SEC. 77. Articles of Merger or Consolidation. – After the approval
(d) Such other provisions with respect to the by the stockholders or members as required by the preceding section,
proposed merger or consolidation as are deemed necessary articles of merger or articles of consolidation shall be executed by each of
or desirable. the constituent corporations, to be signed by the president or vice president
and certified by the secretary or assistant secretary of each corporation
SEC. 76. Stockholders’ or Members’ Approval. – Upon approval by a setting forth:
majority vote of each of the board of directors or trustees of the constituent
corporations of the plan of merger or consolidation, the same shall be (a) The plan of the merger or the plan of
submitted for approval by the stockholders or members of each of such consolidation;
corporations at separate corporate meetings duly called for the purpose.
Notice of such meetings shall be given to all stockholders or members of (b) As to stock corporations, the number of
the respective corporations in the same manner as giving notice of regular shares outstanding, or in the case of nonstock corporations,
or special meetings under Section 49 of this Code. The notice shall state the the number of members;
purpose of the meeting and include a copy or a summary of the plan of
merger or consolidation. (c) As to each corporation, the number of shares
or members voting for or against such plan, respectively;
The affirmative vote of stockholders representing at least two-thirds
(2/3) of the outstanding capital stock of each corporation in the case of (d) The carrying amounts and fair values of the
stock corporations or at least two-thirds (2/3) of the members in the case of assets and liabilities of the respective companies as of the
nonstock corporations shall be necessary for the approval of such plan. Any agreed cut-off date;
dissenting stockholder may exercise the right of appraisal in accordance
with this Code: Provided, That if after the approval by the stockholders of (e) The method to be used in the merger or
such plan, the board of directors decides to abandon the plan, the right of consolidation of accounts of the companies;
appraisal shall be extinguished.
(f) The provisional or pro forma values, as
Any amendment to the plan of merger or consolidation may be made: merged or consolidated, using the accounting method; and
Provided, That such amendment is approved by a majority vote of the
respective boards of directors or trustees of all the constituent corporations (g) Such other information as may be prescribed
and ratified by the affirmative vote of stockholders representing at least by the Commission.
two-thirds (2/3) of the outstanding capital stock or of two-thirds (2/3) of the
members of each of the constituent corporations. Such plan, together with SEC. 78. Effectivity of Merger or Consolidation. – The articles of
any amendment, shall be considered as the agreement of merger or merger or of consolidation, signed and certified as required by this Code,
consolidation. shall be submitted to the Commission for its approval: Provided, That in the
case of merger or consolidation of banks or banking institutions, loan
Page 31 of 62
associations, trust companies, insurance companies, public utilities,
educational institutions, and other special corporations governed by special (d) The surviving or the consolidated corporation
laws, the favorable recommendation of the appropriate government agency shall possess all the rights, privileges, immunities and
shall first be obtained. If the Commission is satisfied that the merger or franchises of each constituent corporation; and all real or
consolidation of the corporations concerned is consistent with the personal property, all receivables due on whatever account,
provisions of this Code and existing laws, it shall issue a certificate including subscriptions to shares and other choses in action,
approving the articles and plan of merger or of consolidation, at which time and every other interest of, belonging to, or due to each
the merger or consolidation shall be effective. constituent corporation, shall be deemed transferred to and
vested in such surviving or consolidated corporation without
If, upon investigation, the Commission has reason to believe that the further act or deed; and
proposed merger or consolidation is contrary to or inconsistent with the
provisions of this Code or existing laws, it shall set a hearing to give the (e) The surviving or consolidated corporation
corporations concerned the opportunity to be heard. Written notice of the shall be responsible for all the liabilities and obligations of
date, time, and place of hearing shall be given to each constituent each constituent corporation as though such surviving or
corporation at least two (2) weeks before said hearing. The Commission consolidated corporation had itself incurred such liabilities
shall thereafter proceed as provided in this Code. or obligations; and any pending claim, action or proceeding
brought by or against any constituent corporation may be
SEC. 79. Effects of Merger or Consolidation. – The merger or prosecuted by or against the surviving or consolidated
consolidation shall have the following effects: corporation. The rights of creditors or liens upon the
property of such constituent corporations shall not be
(a) The constituent corporations shall become a impaired by the merger or consolidation.
single corporation which, in case of merger, shall be the
surviving corporation designated in the plan of merger; and,
in case of consolidation, shall be the consolidated TITLE X
corporation designated in the plan of consolidation;
APPRAISAL RIGHT
(b) The separate existence of the constituent
corporations shall cease, except that of the surviving or the SEC. 80. When the Right of Appraisal May Be Exercised. – Any
consolidated corporation; stockholder of a corporation shall have the right to dissent and demand
payment of the fair value of the shares in the following instances:
(c) The surviving or the consolidated corporation
shall possess all the rights, privileges, immunities, and (a) In case an amendment to the articles of
powers and shall be subject to all the duties and liabilities of incorporation has the effect of changing or restricting the
a corporation organized under this Code; rights of any stockholder or class of shares, or of
Page 32 of 62
 authorizing preferences in any respect superior to those of such award is made: Provided, That no payment shall be made to any
outstanding shares of any class, or of extending or dissenting stockholder unless the corporation has unrestricted retained
shortening the term of corporate existence; earnings in its books to cover such payment: Provided, further, That upon
payment by the corporation of the agreed or awarded price, the stockholder
(b) In case of sale, lease, exchange, transfer, shall forthwith transfer the shares to the corporation.
mortgage, pledge or other disposition of all or substantially
all of the corporate property and assets as provided in this SEC. 82. Effect of Demand and Termination of Right. – From the
Code; time of demand for payment of the fair value of a stockholder’s shares until
either the abandonment of the corporate action involved or the purchase of
(c) In case of merger or consolidation; and the said shares by the corporation, all rights accruing to such shares,
including voting and dividend rights, shall be suspended in accordance with
(d) In case of investment of corporate funds for the provisions of this Code, except the right of such stockholder to receive
any purpose other than the primary purpose of the payment of the fair value thereof: Provided, That if the dissenting
corporation. stockholder is not paid the value of the said shares within thirty (30) days
after the award, the voting and dividend rights shall immediately be
SEC. 81. How Right is Exercised. – The dissenting stockholder who restored.
votes against a proposed corporate action may exercise the right of appraisal
by making a written demand on the corporation for the payment of the fair SEC. 83. When Right to Payment Ceases. – No demand for payment
value of shares held within thirty (30) days from the date on which the vote under this Title may be withdrawn unless the corporation consents thereto.
was taken: Provided, That failure to make the demand within such period If, however, such demand for payment is withdrawn with the consent of the
shall be deemed a waiver of the appraisal right. If the proposed corporate corporation, or if the proposed corporate action is abandoned or rescinded
action is implemented, the corporation shall pay the stockholder, upon by the corporation or disapproved by the Commission where such approval
surrender of the certificate or certificates of stock representing the is necessary, or if the Commission determines that such stockholder is not
stockholder’s shares, the fair value thereof as of the day before the vote was entitled to the appraisal right, then the right of the stockholder to be paid the
taken, excluding any appreciation or depreciation in anticipation of such fair value of the shares shall cease, the status as the stockholder shall be
corporate action. restored, and all dividend distributions which would have accrued on the
shares shall be paid to the stockholder.
If, within sixty (60) days from the approval of the corporate action by
the stockholders, the withdrawing stockholder and the corporation cannot SEC. 84. Who Bears Costs of Appraisal. – The costs and expenses of
agree on the fair value of the shares, it shall be determined and appraised by appraisal shall be borne by the corporation, unless the fair value ascertained
three (3) disinterested persons, one of whom shall be named by the by the appraisers is approximately the same as the price which the
stockholder, another by the corporation, and the third by the two (2) thus corporation may have offered to pay the stockholder, in which case they
chosen. The findings of the majority of the appraisers shall be final, and shall be borne by the latter. In the case of an action to recover such fair
their award shall be paid by the corporation within thirty (30) days after
Page 33 of 62
value, all costs and expenses shall be assessed against the corporation, fraternal, literary, scientific, social, civic service, or similar purposes, like
unless the refusal of the stockholder to receive payment was unjustified. trade, industry, agricultural and like chambers, or any combination thereof,
subject to the special provisions of this Title governing particular classes of
SEC. 85. Notation on Certificates; Rights of Transferee. – Within ten nonstock corporations.
(10) days after demanding payment for shares held, a dissenting stockholder
shall submit the certificates of stock representing the shares to the
corporation for notation that such shares are dissenting shares. Failure to do CHAPTER I
so shall, at the option of the corporation, terminate the rights under this
Title. If shares represented by the certificates bearing such notation are MEMBERS
transferred, and the certificates consequently cancelled, the rights of the
transferor as a dissenting stockholder under this Title shall cease and the SEC. 88. Right to Vote. – The right of the members of any class or
transferee shall have all the rights of a regular stockholder; and all dividend classes to vote may be limited, broadened, or denied to the extent specified
distributions which would have accrued on such shares shall be paid to the in the articles of incorporation or the bylaws. Unless so limited, broadened,
transferee. or denied, each member, regardless of class, shall be entitled to one (1) vote.

Unless otherwise provided in the articles of incorporation or the

TITLE XI bylaws, a member may vote by proxy, in accordance with the provisions of
this Code. The bylaws may likewise authorize voting through remote
NONSTOCK CORPORATION communication and/or in absentia.

SEC. 86. Definition. – For purposes of this Code and subject to its SEC. 89. Nontransferability of Membership. – Membership in a
provisions on dissolution, a nonstock corporation is one where no part of its nonstock corporation and all rights arising therefrom are personal and non-
income is distributable as dividends to its members, trustees, or officers: transferable, unless the articles of incorporation or the bylaws otherwise
Provided, That any profit which a nonstock corporation may obtain provide.
incidental to its operations shall, whenever necessary or proper, be used for
the furtherance of the purpose or purposes for which the corporation was SEC. 90. Termination of Membership. – Membership shall be
organized, subject to the provisions of this Title. terminated in the manner and for the causes provided in the articles of
incorporation or the bylaws. Termination of membership shall extinguish all
The provisions governing stock corporations, when pertinent, shall be rights of a member in the corporation or in its property, unless otherwise
applicable to nonstock corporations, except as may be covered by specific provided in the articles of incorporation or the bylaws.
provisions of this Title.

SEC. 87. Purposes. – Nonstock corporations may be formed or CHAPTER II

organized for charitable, religious, educational, professional, cultural,
Page 34 of 62
 TRUSTEES AND OFFICERS
DISTRIBUTION OF ASSETS IN NONSTOCK CORPORATIONS
SEC. 91. Election and Term of Trustees. – The number of trustees
shall be fixed in the articles of incorporation or bylaws which may or may SEC. 93. Rules of Distribution. – The assets of a nonstock
not be more than fifteen (15). They shall hold office for not more than three corporation undergoing the process of dissolution for reasons other than
(3) years until their successors are elected and qualified. Trustees elected to those set forth in Section 139 of this Code, shall be applied and distributed
fill vacancies occurring before the expiration of a particular term shall hold as follows:
office only for the unexpired period.
(a) All liabilities and obligations of the
Except with respect to independent trustees of nonstock corporations corporation shall be paid, satisfied and discharged, or
vested with public interest, only a member of the corporation shall be adequate provision shall be made therefor;
elected as trustee.
(b) Assets held by the corporation upon a
Unless otherwise provided in the articles of incorporation or the condition requiring return, transfer or conveyance, and
bylaws, the members may directly elect officers of a nonstock corporation. which condition occurs by reason of the dissolution, shall be
returned, transferred or conveyed in accordance with such
SEC. 92. List of Members and Proxies, Place of Meetings. – The requirements;
corporation shall, at all times, keep a list of its members and their proxies in
the form the Commission may require. The list shall be updated to reflect (c) Assets received and held by the corporation
the members and proxies of record twenty (20) days prior to any scheduled subject to limitations permitting their use only for
election. The bylaws may provide that the members of a nonstock charitable, religious, benevolent, educational or similar
corporation may hold their regular or special meetings at any place even purposes, but not held upon a condition requiring return,
outside the place where the principal office of the corporation is located: transfer or conveyance by reason of the dissolution, shall be
Provided, That proper notice is sent to all members indicating the date, time transferred or conveyed to one (1) or more corporations,
and place of the meeting: Provided, further, That the place of meeting shall societies or organizations engaged in activities in the
be within Philippine territory. Philippines substantially similar to those of the dissolving
corporation according to a plan of distribution adopted
pursuant to this Chapter;

(d) Assets other than those mentioned in the

preceding paragraphs, if any, shall be distributed in
accordance with the provisions of the articles of
incorporation or the bylaws, to the extent that the articles of
CHAPTER III incorporation or the bylaws determine the distributive rights
Page 35 of 62
 of members, or any class or classes of members, or provide SEC. 95. Definition and Applicability of Title. – A close corporation,
for distribution; and within the meaning of this Code, is one whose articles of incorporation
provides that: (a) all the corporation’s issued stock of all classes, exclusive
(e) In any other case, assets may be distributed to of treasury shares, shall be held of record by not more than a specified
such persons, societies, organizations or corporations, number of persons, not exceeding twenty (20); (b) all the issued stock of all
whether or not organized for profit, as may be specified in a classes shall be subject to one or more specified restrictions on transfer
plan of distribution adopted pursuant to this Chapter. permitted by this Title; and (c) the corporation shall not list in any stock
exchange or make any public offering of its stocks of any class.
SEC. 94. Plan of Distribution of Assets. – A plan providing for the Notwithstanding the foregoing, a corporation shall not be deemed a close
distribution of assets, consistent with the provisions of this Title, may be corporation when at least two-thirds (2/3) of its voting stock or voting rights
adopted by a nonstock corporation in the process of dissolution in the is owned or controlled by another corporation which is not a close
following manner: corporation within the meaning of this Code.

a) The board of trustees shall, by majority vote, Any corporation may be incorporated as a close corporation, except
adopt a resolution recommending a plan of distribution and mining or oil companies, stock exchanges, banks, insurance companies,
directing the submission thereof to a vote at a regular or public utilities, educational institutions and corporations declared to be
special meeting of members having voting rights; vested with public interest in accordance with the provisions of this Code.

b) Each member entitled to vote shall be given a The provisions of this Title shall primarily govern close corporations:
written notice setting forth the proposed plan of distribution Provided, That other Titles in this Code shall apply suppletorily, except as
or a summary thereof and the date, time and place of such otherwise provided under this Title.
meeting within the time and in the manner provided in this
Code for the giving of notice of meetings; and SEC. 96. Articles of Incorporation. – The articles of incorporation of
a close corporation may provide for:
c) Such plan of distribution shall be adopted
upon approval of at least two-thirds (2/3) of the (a) A classification of shares or rights, the
members having voting rights present or represented by proxy at such qualifications for owning or holding the same, and
meeting. restrictions on their transfers, subject to the provisions of the
following section;
TITLE XII
(b) A classification of directors into one (1) or
CLOSE CORPORATIONS more classes, each of whom may be voted for and elected
solely by a particular class of stock; and

Page 36 of 62
 (c) Greater quorum or voting requirements in thereof under any provision of the articles of incorporation,
meetings of stockholders or directors than those provided in and if the certificate for such stock conspicuously shows the
this Code. qualifications of the persons entitled to be holders of record
thereof, such person is conclusively presumed to have
The articles of incorporation of a close corporation may provide that notice of the fact of the ineligibility to be a stockholder.
the business of the corporation shall be managed by the stockholders of the
corporation rather than by a board of directors. So long as this provision (b) If the articles of incorporation of a close
continues in effect, no meeting of stockholders need be called to elect corporation states the number of persons, not exceeding
directors: Provided, That the stockholders of the corporation shall be twenty (20), who are entitled to be stockholders of record,
deemed to be directors for the purpose of applying the provisions of this and if the certificate for such stock conspicuously states
Code, unless the context clearly requires otherwise: Provided, further, That such number, and the issuance or transfer of stock to any
the stockholders of the corporation shall be subject to all liabilities of person would cause the stock to be held by more than such
directors. number of persons, the person to whom such stock is issued
or transferred is conclusively presumed to have notice of
The articles of incorporation may likewise provide that all officers or this fact.
employees or that specified officers or employees shall be elected or
appointed by the stockholders, instead of by the board of directors. (c) If a stock certificate of a close corporation
conspicuously shows a restriction on transfer of the
SEC. 97. Validity of Restrictions on Transfer of Shares. – corporation’s stock and the transferee acquires the stock in
Restrictions on the right to transfer shares must appear in the articles of violation of such restriction, the transferee is conclusively
incorporation, in the bylaws, as well as in the certificate of stock; otherwise, presumed to have notice of the fact that the stock was
the same shall not be binding on any purchaser in good faith. Said acquired in violation of the restriction.
restrictions shall not be more onerous than granting the existing
stockholders or the corporation the option to purchase the shares of the (d) Whenever a person to whom stock of a close
transferring stockholder with such reasonable terms, conditions or period corporation has been issued or transferred has or is
stated. If, upon the expiration of said period, the existing stockholders or the conclusively presumed under this section to have notice of:
corporation fails to exercise the option to purchase, the transferring (1) the person’s ineligibility to be a stockholder of the
stockholder may sell their shares to any third person. corporation; or (2) that the transfer of stock would cause the
stock of the corporation to be held by more than the number
SEC. 98. Effects of Issuance or Transfer of Stock in Breach of of persons permitted under its articles of incorporation; or
Qualifying Conditions. – (3) that the transfer violates a restriction on transfer of
stock, and the corporation may, at its option, refuse to
(a) If a stock of a close corporation is issued or register the transfer in the name of the transferee.
transferred to any person who is not eligible to be a holder
Page 37 of 62
 (e) The provisions of subsection (d) shall not be (c) No provision in a written agreement signed by
applicable if the transfer of stock, though contrary to the stockholders, relating to any phase of corporate affairs,
subsections (a), (b) or (c), has been consented to by all the shall be invalidated between the parties on the ground that
stockholders of the close corporation, or if the close its effect is to make them partners among themselves.
corporation has amended its articles of incorporation in
accordance with this Title. (d) A written agreement among some or all of the
stockholders in a close corporation shall not be invalidated
(f) The term “transfer”, as used in this section, is on the ground that it relates to the conduct of the business
not limited to a transfer for value. and affairs of the corporation as to restrict or interfere with
the discretion or powers of the board of directors: Provided,
(g) The provisions of this section shall not impair That such agreement shall impose on the stockholders who
any right which the transferee may have to either rescind the are parties thereto the liabilities for managerial acts imposed
transfer or recover the stock under any express or implied on directors by this Code.
warranty.
(e) Stockholders actively engaged in the
management or operation of the business and affairs of a
SEC. 99. Agreements by Stockholders. – close corporation shall be held to strict fiduciary duties to
each other and among themselves. The stockholders shall be
(a) Agreements duly signed and executed by and personally liable for corporate torts unless the corporation
among all stockholders before the formation and has obtained reasonably adequate liability insurance.
organization of a close corporation shall survive the
incorporation and shall continue to be valid and binding SEC. 100. When a Board Meeting is Unnecessary or Improperly
between such stockholders, if such be their intent, to the Held. – Unless the bylaws provide otherwise, any action taken by the
extent that such agreements are consistent with the articles directors of a close corporation without a meeting called properly and with
of incorporation, irrespective of where the provisions of due notice shall nevertheless be deemed valid if:
such agreements are contained, except those required by this
Title to be embodied in said articles of incorporation. (a) Before or after such action is taken, a written
consent thereto is signed by all the directors; or
(b) A written agreement signed by two (2) or
more stockholders may provide that in exercising any voting (b) All the stockholders have actual or implied
right, the shares held by them shall be voted as provided or knowledge of the action and make no prompt objection in
as agreed, or in accordance with a procedure agreed upon by writing; or
them.

Page 38 of 62
 (c) The directors are accustomed to take informal business and affairs of the corporation can no longer be conducted to the
action with the express or implied acquiescence of all the advantage of the stockholders generally, the Commission, upon written
stockholders; or petition by any stockholder, shall have the power to arbitrate the dispute. In
the exercise of such power, the Commission shall have authority to make
(d) All the directors have express or implied appropriate orders, such as: (a) cancelling or altering any provision
knowledge of the action in question and none of them contained in the articles of incorporation, bylaws, or any stockholder’s
makes a prompt objection in writing. agreement; (b) cancelling, altering or enjoining a resolution or act of the
corporation or its board of directors, stockholders, or officers; (c) directing
An action within the corporate powers taken at a meeting held without or prohibiting any act of the corporation or its board of directors,
proper call or notice, is deemed ratified by a director who failed to attend, stockholders, officers, or other persons party to the action; (d) requiring the
unless after having knowledge thereof, the director promptly files his purchase at their fair value of shares of any stockholder, either by the
written objection with the secretary of the corporation. corporation regardless of the availability of unrestricted retained earnings in
its books, or by the other stockholders; (e) appointing a provisional director;
SEC. 101. Preemptive Right in Close Corporations. – The (f) dissolving the corporation; or (g) granting such other relief as the
preemptive right of stockholders in close corporations shall extend to all circumstances may warrant.
stock to be issued, including reissuance of treasury shares, whether for
money, property or personal services, or in payment of corporate debts, A provisional director shall be an impartial person who is neither a
unless the articles of incorporation provide otherwise. stockholder nor a creditor of the corporation or any of its subsidiaries or
affiliates, and whose further qualifications, if any, may be determined by the
SEC. 102. Amendment of Articles of Incorporation. – Any Commission. A provisional director is not a receiver of the corporation and
amendment to the articles of incorporation which seeks to delete or remove does not have the title and powers of a custodian or receiver. A provisional
any provision required by this Title or to reduce a quorum or voting director shall have all the rights and powers of a duly elected director,
requirement stated in said articles of incorporation shall require the including the right to be notified of and to vote at meetings of directors until
affirmative vote of at least two-thirds (2/3) of the outstanding capital stock, removed by order of the Commission or by all the stockholders. The
whether with or without voting rights, or of such greater proportion of compensation of the provisional director shall be determined by agreement
shares as may be specifically provided in the articles of incorporation for between such director and the corporation, subject to approval of the
amending, deleting or removing any of the aforesaid provisions, at a Commission, which may fix the compensation absent an agreement or in
meeting duly called for the purpose. the event of disagreement between the provisional director and the
corporation.
SEC. 103. Deadlocks. – Notwithstanding any contrary provision in
the close corporation’s articles of incorporation, bylaws, or stockholders’ SEC. 104. Withdrawal of Stockholder or Dissolution of
agreement, if the directors or stockholders are so divided on the Corporation. – In addition and without prejudice to other rights and
management of the corporation’s business and affairs that the votes required remedies available under this Title, any stockholder of a close corporation
for a corporate action cannot be obtained, with the consequence that the may, for any reason, compel the corporation to purchase shares held at fair

Page 39 of 62
value, which shall not be less than the par or issued value, when the for the transaction of business. The powers and authority of trustees shall be
corporation has sufficient assets in its books to cover its debts and liabilities defined in the bylaws.
exclusive of capital stock: Provided, That any stockholder of a close
corporation may, by written petition to the Commission, compel the For institutions organized as stock corporations, the number and term
dissolution of such corporation whenever any of acts of the directors, of directors shall be governed by the provisions on stock corporations.
officers, or those in control of the corporation is illegal, fraudulent,
dishonest, oppressive or unfairly prejudicial to the corporation or any
stockholder, or whenever corporate assets are being misapplied or wasted. CHAPTER II

RELIGIOUS CORPORATIONS
TITLE XIII
SEC. 107. Classes of Religious Corporations. – Religious
SPECIAL CORPORATIONS corporations may be incorporated by one or more persons. Such
corporations may be classified into corporations sole and religious societies.
CHAPTER I
Religious corporations shall be governed by this Chapter and by the
EDUCATIONAL CORPORATIONS general provisions on nonstock corporations insofar as applicable.

SEC. 105. Incorporation. – Educational corporations shall be SEC. 108. Corporation sole. – For the purpose of administering and
governed by special laws and by the general provisions of this Code. managing, as trustee, the affairs, property and temporalities of any religious
denomination, sect or church, a corporation sole may be formed by the chief
SEC. 106. Board of Trustees. –Trustees of educational institutions archbishop, bishop, priest, minister, rabbi, or other presiding elder of such
organized as nonstock corporations shall not be less than five (5) nor more religious denomination, sect, or church.
than fifteen (15): Provided, That the number of trustees shall be in multiples
of five (5). SEC. 109. Articles of incorporation. – In order to become a
corporation sole, the chief archbishop, bishop, priest, minister, rabbi or
Unless otherwise provided in the articles of incorporation or bylaws, presiding elder of any religious denomination, sect or church must file with
the board of trustees of incorporated schools, colleges, or other institutions the Commission articles of incorporation setting forth the following:
of learning shall, as soon as organized, so classify themselves that the term
of office of one-fifth (1/5) of their number shall expire every year. Trustees (a) That the applicant chief archbishop, bishop,
thereafter elected to fill vacancies, occurring before the expiration of a priest, minister, rabbi, or presiding elder represents the
particular term, shall hold office only for the unexpired period. Trustees religious denomination, sect, or church which desires to
elected thereafter to fill vacancies caused by expiration of term shall hold become a corporation sole;
office for five (5) years. A majority of the trustees shall constitute a quorum
Page 40 of 62
 (b) That the rules, regulations and discipline of From and after filing with the Commission of the said articles of
the religious denomination, sect or church are consistent incorporation, verified by affidavit or affirmation, and accompanied by the
with becoming a corporation sole and do not forbid it; documents mentioned in the preceding paragraph, such chief archbishop,
bishop, priest, minister, rabbi, or presiding elder shall become a corporation
(c) That such chief archbishop, bishop, priest, sole and all temporalities, estate and properties of the religious
minister, rabbi, or presiding elder is charged with the denomination, sect or church theretofore administered or managed as such
administration of the temporalities and the management of chief archbishop, bishop, priest, minister, rabbi, or presiding elder shall be
the affairs, estate and properties of the religious personally held in trust as a corporation sole, for the use, purpose, exclusive
denomination, sect or church within the territorial benefit and on behalf of the religious denomination, sect or church,
jurisdiction, so described succinctly in the articles of including hospitals, schools, colleges, orphan asylums, parsonages, and
incorporation; cemeteries thereof.

(d) The manner by which any vacancy occurring SEC. 111. Acquisition and Alienation of Property. – A corporation
in the office of chief archbishop, bishop, priest, minister, sole may purchase and hold real estate and personal property for its church,
rabbi, or presiding elder is required to be filled, according to charitable, benevolent, or educational purposes, and may receive bequests
the rules, regulations or discipline of the religious or gifts for such purposes. Such corporation may sell or mortgage real
denomination, sect or church; and property held by it by obtaining an order for that purpose from the Regional
Trial Court of the province where the property is situated upon proof that
(e) The place where the principal office of the the notice of the application for leave to sell or mortgage has been made
corporation sole is to be established and located, which through publication or as directed by the Court, and that it is in the interest
place must be within the territory of the Philippines. of the corporation that leave to sell or mortgage be granted. The application
for leave to sell or mortgage must be made by petition, duly verified, by the
The articles of incorporation may include any other provision not chief archbishop, bishop, priest, minister, rabbi, or presiding elder acting as
contrary to law for the regulation of the affairs of the corporation. corporation sole, and may be opposed by any member of the religious
denomination, sect or church represented by the corporation sole: Provided,
SEC. 110. Submission of the Articles of Incorporation. – The articles That in cases where the rules, regulations, and discipline of the religious
of incorporation must be verified, by affidavit or affirmation of the chief denomination, sect or church, religious society, or order concerned
archbishop, bishop, priest, minister, rabbi, or presiding elder, as the case represented by such corporation sole regulate the method of acquiring,
may be, and accompanied by a copy of the commission, certificate of holding, selling, and mortgaging real estate and personal property, such
election or letter of appointment of such chief archbishop, bishop, priest, rules, regulations and discipline shall govern, and the intervention of the
minister, rabbi, or presiding elder, duly certified to be correct by any notary courts shall not be necessary.
public.
SEC. 112. Filling of Vacancies. – The successors in office of any
chief archbishop, bishop, priest, minister, rabbi, or presiding elder in a

Page 41 of 62
corporation sole shall become the corporation sole on their accession to religious denomination, sect or church of which it is a part, any religious
office and shall be permitted to transact business as such upon filing a copy society, religious order, diocese, synod, or district organization of any
of their commission, certificate of election, or letters of appointment, duly religious denomination, sect or church, may, upon written consent and/or by
certified by any notary public with the Commission. an affirmative vote at a meeting called for the purpose of at least two-thirds
(2/3) of its membership, incorporate for the administration of its
During any vacancy in the office of chief archbishop, bishop, priest, temporalities or for the management of its affairs, properties, and estate by
minister, rabbi, or presiding elder of any religious denomination, sect or filing with the Commission, articles of incorporation verified by the
church incorporated as a corporation sole, the person or persons authorized affidavit of the presiding elder, secretary, or clerk or other member of such
by the rules, regulations or discipline of the religious denomination, sect or religious society or religious order, or diocese, synod, or district
church represented by the corporation sole to administer the temporalities organization of the religious denomination, sect or church, setting forth the
and manage the affairs, estate, and properties of the corporation sole shall following:
exercise all the powers and authority of the corporation sole during such
vacancy. (a) That the religious society or religious order,
or diocese, synod, or district organization is a religious
SEC. 113. Dissolution. – A corporation sole may be dissolved and its organization of a religious denomination, sect or church;
affairs settled voluntarily by submitting to the Commission a verified
declaration of dissolution, setting forth: (b) That at least two-thirds (2/3) of its
membership has given written consent or has voted to
(a) The name of the corporation; incorporate, at a duly convened meeting of the body;

(b) The reason for dissolution and winding up; (c) That the incorporation of the religious society
or religious order, or diocese, synod, or district organization
(c) The authorization for the dissolution of the corporation by is not forbidden by competent authority or by the
the particular religious denomination, sect or church; and Constitution, rules, regulations or discipline of the religious
denomination, sect or church of which it forms part;
(d) The names and addresses of the persons who are to supervise
the winding up of the affairs of the corporation. (d) That the religious society or religious order,
or diocese, synod, or district organization desires to
Upon approval of such declaration of dissolution by the Commission, incorporate for the administration of its affairs, properties
the corporation shall cease to carry on its operations except for the purpose and estate;
of winding up its affairs.
(e) The place within the Philippines where the
SEC. 114. Religious Societies. – Unless forbidden by competent principal office of the corporation is to be established and
authority, the Constitution, pertinent rules, regulations, or discipline of the located; and
Page 42 of 62
 (f) The names, nationalities, and residence SEC. 118. Articles of Incorporation. – A One Person Corporation
addresses of the trustees, not less than five (5) nor more than shall file articles of incorporation in accordance with the requirements
fifteen (15), elected by the religious society or religious under Section 14 of this Code. It shall likewise substantially contain the
order, or the diocese, synod, or district organization to serve following:
for the first year or such other period as may be prescribed
by the laws of the religious society or religious order, or of (a) If the single stockholder is a trust or an estate,
the diocese, synod, or district organization. the name, nationality, and residence of the trustee,
administrator, executor, guardian, conservator, custodian, or
other person exercising fiduciary duties together with the
CHAPTER III proof of such authority to act on behalf of the trust or estate;
and
ONE PERSON CORPORATIONS
(b) Name, nationality, residence of the nominee
SEC. 115. Applicability of Provisions to One Person Corporations. and alternate nominee, and the extent, coverage and
– The provisions of this Title shall primarily apply to One Person limitation of the authority.
Corporations. Other provisions of this Code apply suppletorily, except as
otherwise provided in this Title. SEC. 119. Bylaws. – The One Person Corporation is not required to
submit and file corporate bylaws.
SEC. 116. One Person Corporation. – A One Person Corporation is
a corporation with a single stockholder: Provided, That only a natural SEC. 120. Display of Corporate Name. – A One Person Corporation
person, trust, or an estate may form a One Person Corporation. shall indicate the letters “OPC” either below or at the end of its corporate
name.
Banks and quasi-banks, pre-need, trust, insurance, public and
publicly-listed companies, and non-chartered government-owned and - SEC. 121. Single Stockholder as Director, President. – The single
controlled corporations may not incorporate as One Person Corporations: stockholder shall be the sole director and president of the One Person
Provided, further, That a natural person who is licensed to exercise a Corporation.
profession may not organize as a One Person Corporation for the purpose of
exercising such profession except as otherwise provided under special laws. SEC. 122. Treasurer, Corporate Secretary, and Other Officers. –
Within fifteen (15) days from the issuance of its certificate of incorporation,
SEC. 117. Minimum Capital Stock Required for One Person the One Person Corporation shall appoint a treasurer, corporate secretary,
Corporation. – A One Person Corporation shall not be required to have a and other officers as it may deem necessary, and notify the Commission
minimum authorized capital stock except as otherwise provided by special thereof within five (5) days from appointment.
law.
Page 43 of 62
 The single stockholder may not be appointed as the corporate
secretary. SEC. 124. Nominee and Alternate Nominee. – The single
stockholder shall designate a nominee and an alternate nominee who shall,
A single stockholder who is likewise the self-appointed treasurer of in the event of the single stockholder’s death or incapacity, take the place of
the corporation shall give a bond to the Commission in such a sum as may the single stockholder as director and shall manage the corporation’s affairs.
be required: Provided, That the said stockholder/treasurer shall undertake in
writing to faithfully administer the One Person The articles of incorporation shall state the names, residence
Corporation’s funds to be received as treasurer, and to disburse and invest addresses and contact details of the nominee and alternate nominee, as well
the same according to the articles of incorporation as approved by the as the extent and limitations of their authority in managing the affairs of the
Commission. The bond shall be renewed every two (2) years or as often as One Person Corporation.
may be required.
The written consent of the nominee and alternate nominee shall be
SEC. 123. Special Functions of the Corporate Secretary. – In attached to the application for incorporation. Such consent may be
addition to the functions designated by the One Person Corporation, the withdrawn in writing any time before the death or incapacity of the single
corporate secretary shall: stockholder.

(a) Be responsible for maintaining the minutes SEC. 125. Term of Nominee and Alternate Nominee. – When the
book and/or records of the corporation; incapacity of the single stockholder is temporary, the nominee shall sit as
director and manage the affairs of the One Person Corporation until the
(b) Notify the nominee or alternate nominee of stockholder, by self determination, regains the capacity to assume such
the death or incapacity of the single stockholder, which duties.
notice shall be given no later than five (5) days from such
occurrence; In case of death or permanent incapacity of the single stockholder,
the nominee shall sit as director and manage the affairs of the One Person
(c) Notify the Commission of the death of the Corporation until the legal heirs of the single stockholder have been
single stockholder within five (5) days from such lawfully determined, and the heirs have designated one of them or have
occurrence and stating in such notice the names, residence agreed that the estate shall be the single stockholder of the One Person
addresses, and contact details of all known legal heirs; and Corporation.

(d) Call the nominee or alternate nominee and the The alternate nominee shall sit as director and manage the One
known legal heirs to a meeting and advise the legal heirs Person Corporation in case of the nominee’s inability, incapacity, death, or
with regard to, among others, the election of a new director, refusal to discharge the functions as director and manager of the
amendment of the articles of incorporation, and other corporation, and only for the same term and under the same conditions
ancillary and/or consequential matters. applicable to the nominee.
Page 44 of 62
 SEC. 126. Change of Nominee or Alternate Nominee. – The single (d) Other reports as the Commission may require.
stockholder may, at any time, change its nominee and alternate nominee by
submitting to the Commission the names of the new nominees and their For purposes of this provision, the fiscal year of a One Person
corresponding written consent. For this purpose, the articles of Corporation shall be that set forth in its articles of incorporation or, in the
incorporation need not be amended. absence thereof, the calendar year.

SEC. 127. Minutes Book. – A One Person Corporation shall The Commission may place the corporation under delinquent status
maintain a minutes book which shall contain all actions, decisions, and should the corporation fail to submit the reportorial requirements three (3)
resolutions taken by the One Person Corporation. times, consecutively or intermittently, within a period of five (5) years.

SEC. 128. Records in Lieu of Meetings. – When action is needed on SEC. 130. Liability of Single Shareholder. – A sole shareholder
any matter, it shall be sufficient to prepare a written resolution, signed and claiming limited liability has the burden of affirmatively showing that the
dated by the single stockholder, and recorded in the minutes book of the corporation was adequately financed.
One Person Corporation. The date of recording in the minutes book shall be
deemed to be the date of the meeting for all purposes under this Code. Where the single stockholder cannot prove that the property of the
One Person Corporation is independent of the stockholder’s personal
SEC. 129. Reportorial Requirements. – The One Person property, the stockholder shall be jointly and severally liable for the debts
Corporation shall submit the following within such period as the and other liabilities of the One Person Corporation.
Commission may prescribe:
The principles of piercing the corporate veil applies with equal force
(a) Annual financial statements audited by an independent to One Person Corporations as with other corporations.
certified public accountant: Provided, That if the total assets or total
liabilities of the corporation are less than Six Hundred Thousand Pesos SEC. 131. Conversion from an Ordinary Corporation to a One
(P600,000.00), the financial statements shall be certified under oath by Person Corporation. – When a single stockholder acquires all the stocks of
the corporation’s treasurer and president. an ordinary stock corporation, the latter may apply for conversion into a
One Person Corporation, subject to the submission of such documents as
(b) A report containing explanations or comments by the the Commission may require. If the application for conversion is approved,
president on every qualification, reservation, or adverse remark or the Commission shall issue a certificate of filing of amended articles of
disclaimer made by the auditor in the latter’s report; incorporation reflecting the conversion. The One Person Corporation
converted from an ordinary stock corporation shall succeed the latter and be
(c) A disclosure of all self-dealings and related party legally responsible for all the latter’s outstanding liabilities as of the date of
transactions entered into between the conversion.
One Person Corporation and the single stockholder; and
Page 45 of 62
 SEC. 132. Conversion from a One Person Corporation to an
Ordinary Stock Corporation. – A One Person Corporation may be SEC. 134. Voluntary Dissolution Where No Creditors are Affected.
converted into an ordinary stock corporation after due notice to the – If dissolution of a corporation does not prejudice the rights of any creditor
Commission of such fact and of the circumstances leading to the having a claim against it, the dissolution may be effected by majority vote
conversion, and after compliance with all other requirements for stock of the board of directors or trustees, and by a resolution adopted by the
corporations under this Code and applicable rules. Such notice shall be affirmative vote of the stockholders owning at least majority of the
filed with the Commission within sixty (60) days from the occurrence of the outstanding capital stock or majority of the members of a meeting to be held
circumstances leading to the conversion into an ordinary stock corporation. upon the call of the directors or trustees.
If all requirements have been complied with, the Commission shall issue a
certificate of filing of amended articles of incorporation reflecting the At least twenty (20) days prior to the meeting, notice shall be given
conversion. to each shareholder or member of record personally, by registered mail, or
by any means authorized under its bylaws whether or not entitled to vote at
In case of death of the single stockholder, the nominee or alternate the meeting, in the manner provided in Section 50 of this Code and shall
nominee shall transfer the shares to the duly designated legal heir or estate state that the purpose of the meeting is to vote on the dissolution of the
within seven (7) days from receipt of either an affidavit of heirship or self- corporation. Notice of the time, place, and object of the meeting shall be
adjudication executed by a sole heir, or any other legal document declaring published once prior to the date of the meeting in a newspaper published in
the legal heirs of the single stockholder and notify the Commission of the the place where the principal office of said corporation is located, or if no
transfer. Within sixty (60) days from the transfer of the shares, the legal newspaper is published in such place, in a newspaper of general circulation
heirs shall notify the Commission of their decision to either wind up and in the Philippines.
dissolve the One Person Corporation or convert it into an ordinary stock
corporation. A verified request for dissolution shall be filed with the Commission
stating: (a) the reason for the dissolution; (b) the form, manner, and time
The ordinary stock corporation converted from a One Person when the notices were given; (c) names of the stockholders and directors or
Corporation shall succeed the latter and be legally responsible for all the members and trustees who approved the dissolution; (d) the date, place, and
latter’s outstanding liabilities as of the date of conversion. time of the meeting in which the vote was made; and (e) details of
publication.

TITLE XIV The corporation shall submit the following to the Commission: (1) a
copy of the resolution authorizing the dissolution, certified by a majority of
DISSOLUTION the board of directors or trustees and countersigned by the secretary of the
corporation; (2) proof of publication; and (3) favorable recommendation
SEC. 133. Methods of Dissolution. – A corporation formed or from the appropriate regulatory agency, when necessary.
organized under the provisions of this Code may be dissolved voluntarily or
involuntarily.
Page 46 of 62
 Within fifteen (15) days from receipt of the verified request for date, a copy of the order shall be published at least once a week for three (3)
dissolution, and in the absence of any withdrawal within said period, the consecutive weeks in a newspaper of general circulation published in the
Commission shall approve the request and issue the certificate of municipality or city where the principal office of the corporation is situated,
dissolution. The dissolution shall take effect only upon the issuance by the or if there be no such newspaper, then in a newspaper of general circulation
Commission of a certificate of dissolution. in the Philippines, and a similar copy shall be posted for three (3)
consecutive weeks in three (3) public places in such municipality or city.
No application for dissolution of banks, banking and quasi-banking
institutions, preneed, insurance and trust companies, NSSLAs, pawnshops, Upon five (5) days’ notice, given after the date on which the right to
and other financial intermediaries shall be approved by the Commission file objections as fixed in the order has expired, the Commission shall
unless accompanied by a favorable recommendation of the appropriate proceed to hear the petition and try any issue raised in the objections filed;
government agency. and if no such objection is sufficient, and the material allegations of the
petition are true, it shall render judgment dissolving the corporation and
SEC. 135. Voluntary Dissolution Where Creditors are Affected; directing such disposition of its assets as justice requires, and may appoint a
Procedure and Contents of Petition. – Where the dissolution of a receiver to collect such assets and pay the debts of the corporation.
corporation may prejudice the rights of any creditor, a verified petition for
dissolution shall be filed with the Commission. The petition shall be signed The dissolution shall take effect only upon the issuance by the
by a majority of the corporation’s board of directors or trustees, verified by Commission of a certificate of dissolution.
its president or secretary or one of its directors or trustees, and shall set
forth all claims and demands against it, and that its dissolution was resolved SEC. 136. Dissolution by Shortening Corporate Term. – A
upon by the affirmative vote of the stockholders representing at least two- voluntary dissolution may be effected by amending the articles of
thirds (2/3) of the outstanding capital stock or at least two-thirds (2/3) of the incorporation to shorten the corporate term pursuant to the provisions of this
members at a meeting of its stockholders or members called for that Code. A copy of the amended articles of incorporation shall be submitted to
purpose. The petition shall likewise state: (a) the reason for the dissolution; the Commission in accordance with this Code.
(b) the form, manner, and time when the notices were given; and (c) the
date, place, and time of the meeting in which the vote was made. The Upon the expiration of the shortened term, as stated in the approved
corporation shall submit to the Commission the following: (1) a copy of the amended articles of incorporation, the corporation shall be deemed
resolution authorizing the dissolution, certified by a majority of the board of dissolved without any further proceedings, subject to the provisions of this
directors or trustees and countersigned by the secretary of the corporation; Code on liquidation.
and (2) a list of all its creditors.
In the case of expiration of corporate term, dissolution shall
If the petition is sufficient in form and substance, the Commission automatically take effect on the day following the last day of the corporate
shall, by an order reciting the purpose of the petition, fix a deadline for term stated in the articles of incorporation, without the need for the issuance
filing objections to the petition which date shall not be less than thirty (30) by the Commission of a certificate of dissolution.
days nor more than sixty (60) days after the entry of the order. Before such

Page 47 of 62
 SEC. 137. Withdrawal of Request and Petition for Dissolution. – A (d) Upon finding by final judgment that the corporation
withdrawal of the request for dissolution shall be made in writing, duly procured its incorporation through fraud;
verified by any incorporator, director, trustee, shareholder, or member and
signed by the same number of incorporators, directors, trustees, (e) Upon finding by final judgment that the corporation:
shareholders, or members necessary to request for dissolution as set forth in
the foregoing sections. The withdrawal shall be submitted no later than (1) Was created for the purpose of committing,
fifteen (15) days from receipt by the Commission of the request for concealing or aiding the commission of securities violations,
dissolution. Upon receipt of a withdrawal of request for dissolution, the smuggling, tax evasion, money laundering, or graft and
Commission shall withhold action on the request for dissolution and shall, corrupt practices;
after investigation: (a) make a pronouncement that the request for
dissolution is deemed withdrawn; (b) direct a joint meeting of the board of (2) Committed or aided in the commission of
directors or trustees and the stockholders or members for the purpose of securities violations, smuggling, tax evasion, money
ascertaining whether to proceed with dissolution; or (c) issue such other laundering, or graft and corrupt practices, and its
orders as it may deem appropriate. stockholders knew; and

A withdrawal of the petition for dissolution shall be in the form of a (3) Repeatedly and knowingly tolerated the
motion and similar in substance to a withdrawal of request for dissolution commission of graft and corrupt practices or other
but shall be verified and filed prior to publication of the order setting the fraudulent or illegal acts by its directors, trustees, officers,
deadline for filing objections to the petition. or employees.

SEC. 138. Involuntary Dissolution. – A corporation may be If the corporation is ordered dissolved by final judgment pursuant to
dissolved by the Commission motu proprio or upon filing of a verified the grounds set forth in subparagraph (e) hereof, its assets, after payment of
complaint by any interested party. The following may be grounds for its liabilities, shall, upon petition of the Commission with the appropriate
dissolution of the corporation: court, be forfeited in favor of the national government. Such forfeiture shall
be without prejudice to the rights of innocent stockholders and employees
(a) Non-use of corporate charter as provided under for services rendered, and to the application of other penalty or sanction
Section 21 of this Code; under this Code or other laws.

(b) Continuous inoperation of a corporation as provided The Commission shall give reasonable notice to, and coordinate
under Section 21 of this Code; with, the appropriate regulatory agency prior to the involuntary dissolution
of companies under their special regulatory jurisdiction.
(c) Upon receipt of a lawful court order dissolving the
corporation; SEC. 139. Corporate Liquidation. – Except for banks, which shall
be covered by the applicable provisions of Republic Act No. 7653,
Page 48 of 62
otherwise known as the “New Central Bank Act”, as amended, and SEC. 140. Definition and Rights of Foreign Corporations. – For
Republic Act No. 3591, otherwise known as the Philippine Deposit purposes of this Code, a foreign corporation is one formed, organized or
Insurance Corporation Charter, as amended, every corporation whose existing under laws other than those of the Philippines’ and whose laws
charter expires pursuant to its articles of incorporation, is annulled by allow Filipino citizens and corporations to do business in its own country or
forfeiture, or whose corporate existence is terminated in any other manner, State. It shall have the right to transact business in the Philippines after
shall nevertheless remain as a body corporate for three (3) years after the obtaining a license for that purpose in accordance with this Code and a
effective date of dissolution, for the purpose of prosecuting and defending certificate of authority from the appropriate government agency.
suits by or against it and enabling it to settle and close its affairs, dispose of
and convey its property, and distribute its assets, but not for the purpose of SEC. 141. Application to Existing Foreign Corporations. – Every
continuing the business for which it was established. foreign corporation which, on the date of the effectivity of this Code, is
authorized to do business in the Philippines under a license issued to it shall
At any time during said three (3) years, the corporation is authorized continue to have such authority under the terms and conditions of its
and empowered to convey all of its property to trustees for the benefit of license, subject to the provisions of this Code and other special laws.
stockholders, members, creditors and other persons in interest. After any
such conveyance by the corporation of its property in trust for the benefit of SEC. 142. Application for a License. – A foreign corporation
its stockholders, members, creditors and others in interest, all interest which applying for a license to transact business in the Philippines shall submit to
the corporation had in the property terminates, the legal interest vests in the the Commission a copy of its articles of incorporation and bylaws, certified
trustees, and the beneficial interest in the stockholders, members, creditors in accordance with law, and their translation to an official language of the
or other persons-in-interest. Philippines, if necessary. The application shall be under oath and, unless
already stated in its articles of incorporation, shall specifically set forth the
Except as otherwise provided for in Sections 93 and 94 of this Code, following:
upon the winding up of corporate affairs, any asset distributable to any
creditor or stockholder or member who is unknown or cannot be found shall (a) The date and term of incorporation;
be escheated in favor of the national government.
(b) The address, including the street number, of
Except by decrease of capital stock and as otherwise allowed by this the principal office of the corporation in the country or State
Code, no corporation shall distribute any of its assets or property except of incorporation;
upon lawful dissolution and after payment of all its debts and liabilities.
(c) The name and address of its resident agent
authorized to accept summons and process in all legal
TITLE XV proceedings and all notices affecting the corporation,
pending the establishment of a local office;
FOREIGN CORPORATIONS

Page 49 of 62
 (d) The place in the Philippines where the applicant allow Filipino citizens and corporations to do business therein,
corporation intends to operate; and that the applicant is an existing corporation in good standing. If the
certificate is in a foreign language, a translation thereof in English under
(e) The specific purpose or purposes which the oath of the translator shall be attached to the application.
corporation intends to pursue in the transaction of its
business in the Philippines: Provided, That said purpose or The application for a license to transact business in the Philippines
purposes are those specifically stated in the certificate of shall likewise be accompanied by a statement under oath of the president or
authority issued by the appropriate government agency; any other person authorized by the corporation, showing to the satisfaction
of the Commission and when appropriate, other governmental agencies that
(f) The names and addresses of the present the applicant is solvent and in sound financial condition, setting forth the
directors and officers of the corporation; assets and liabilities of the corporation as of the date not exceeding one (1)
year immediately prior to the filing of the application.
(g) A statement of its authorized capital stock and
the aggregate number of shares which the corporation has Foreign banking, financial, and insurance corporations shall, in
authority to issue, itemized by class, par value of shares, addition to the above requirements, comply with the provisions of existing
shares without par value, and series, if any; laws applicable to them. In the case of all other foreign corporations, no
application for license to transact business in the Philippines shall be
(h) A statement of its outstanding capital stock accepted by the Commission without previous authority from the
and the aggregate number of shares which the corporation appropriate government agency, whenever required by law.
has issued, itemized by class, par value of shares, shares
without par value, and series, if any; SEC. 143. Issuance of a License. – If the Commission is satisfied that
the applicant has complied with all the requirements of this Code and other
(i) A statement of the amount actually paid in; special laws, rules and regulations, the Commission shall issue a license to
and transact business in the Philippines to the applicant for the purpose or
purposes specified in such license. Upon issuance of the license, such
(j) Such additional information as may be foreign corporation may commence to transact business in the Philippines
necessary or appropriate in order to enable the Commission and continue to do so for as long as it retains its authority to act as a
to determine whether such corporation is entitled to a corporation under the laws of the country or State of its incorporation,
license to transact business in the Philippines, and to unless such license is sooner surrendered, revoked, suspended, or annulled
determine and assess the fees payable. in accordance with this Code or other special laws. Within sixty (60) days
after the issuance of the license to transact business in the Philippines, the
Attached to the application for license shall be a certificate under oath licensee, except foreign banking or insurance corporations, shall deposit
duly executed by the authorized official or officials of the jurisdiction of its with the Commission for the benefit of present and future creditors of the
incorporation, attesting to the fact that the laws of the country or State of the licensee in the Philippines, securities satisfactory to the Commission,

Page 50 of 62
consisting of bonds or other evidence of indebtedness of the Government of lawfully transacting business in the Philippines: Provided, That an
the Philippines, its political subdivisions and instrumentalities, or of individual resident agent must be of good moral character and of sound
government-owned or -controlled corporations and entities, shares of stock financial standing: Provided, further, That in case of a domestic corporation
or debt securities that are registered under Republic Act No. 8799, who will act as a resident agent, it must likewise be of sound financial
otherwise known as “The Securities Regulation Code”, shares of stock in standing and must show proof that it is in good standing as certified by the
domestic corporations listed in the stock exchange, shares of stock in Commission.
domestic insurance companies and banks, any financial instrument
determined suitable by the Commission, or any combination thereof with an SEC. 145. Resident Agent; Service of Process. – As a condition to the
actual market value of at least Five hundred thousand pesos (P500,000.00) issuance of the license for a foreign corporation to transact business in the
or such other amount that may be set by the Commission: Provided, Philippines, such corporation shall file with the Commission a written
however, That within six (6) months after each fiscal year of the licensee, power of attorney designating a person who must be a resident of the
the Commission shall require the licensee to deposit additional securities or Philippines, on whom summons and other legal processes may be served in
financial instruments equivalent in actual market value to two percent (2%) all actions or other legal proceedings against such corporation, and
of the amount by which the licensee’s gross income for that fiscal year consenting that service upon such resident agent shall be admitted and held
exceeds Ten million pesos (P10,000,000.00). The Commission shall also as valid as if served upon the duly authorized officers of the foreign
require the deposit of additional securities or financial instruments if the corporation at its home office. Such foreign corporation shall likewise
actual market value of the deposited securities or financial instruments has execute and file with the Commission an agreement or stipulation, executed
decreased by at least ten percent (10%) of their actual market value at the by the proper authorities of said corporation, in form and substance as
time they were deposited. The Commission may, at its discretion, release follows:
part of the additional deposit if the gross income of the licensee has
decreased, or if the actual market value of the total deposit has increased, by “The (name of foreign corporation) hereby stipulates and agrees, in
more than ten percent (10%) of their actual market value at the time they consideration of being granted a license to transact business in the
were deposited. The Commission may, from time to time, allow the licensee Philippines, that if the corporation shall cease to transact business in the
to make substitute deposits for those already on deposit as long as the Philippines, or shall be without any resident agent in the Philippines on
licensee is solvent. Such licensee shall be entitled to collect the interest or whom any summons or other legal processes may be served, then service of
dividends on such deposits. In the event the licensee ceases to do business any summons or other legal process may be made upon the Commission in
in the Philippines, its deposits shall be returned, upon the licensee’s any action or proceeding arising out of any business or transaction which
application and upon proof to the satisfaction of the Commission that the occurred in the Philippines and such service shall have the same force and
licensee has no liability to Philippine residents, including the Government effect as if made upon the duly authorized officers of the corporation at its
of the Republic of the Philippines. For purposes of computing the securities home office.”
deposit, the composition of gross income and allowable deductions
therefrom shall be in accordance with the rules of the Commission. Whenever such service of summons or other process is made upon the
Commission, the Commission shall, within ten (10) days thereafter, transmit
SEC. 144. Who May be a Resident Agent. – A resident agent may be by mail a copy of such summons or other legal process to the corporation at
either an individual residing in the Philippines or a domestic corporation
Page 51 of 62
its home or principal office. The sending of such copy by the Commission
shall be a necessary part of and shall complete such service. All expenses SEC. 149. Merger or Consolidation Involving a Foreign
incurred by the Commission for such service shall be paid in advance by the Corporation Licensed in the Philippines. – One or more foreign
party at whose instance the service is made. corporations authorized to transact business in the Philippines may merge or
consolidate with any domestic corporation or corporations if permitted
It shall be the duty of the resident agent to immediately notify the under Philippine laws and by the law of its incorporation: Provided, That
Commission in writing of any change in the resident agent’s address. the requirements on merger or consolidation as provided in this Code are
followed.
SEC. 146. Law Applicable. – A foreign corporation lawfully doing
business in the Philippines shall be bound by all laws, rules and regulations Whenever a foreign corporation authorized to transact business in the
applicable to domestic corporations of the same class, except those which Philippines shall be a party to a merger or consolidation in its home country
provide for the creation, formation, organization or dissolution of or State as permitted by the law authorizing its incorporation, such foreign
corporations or those which fix the relations, liabilities, responsibilities, or corporation shall, within sixty (60) days after the effectivity of such merger
duties of stockholders, members, or officers of corporations to each other or or consolidation, file with the Commission, and in proper cases, with the
to the corporation. appropriate government agency, a copy of the articles of merger or
consolidation duly authenticated by the proper official or officials of the
SEC. 147. Amendments to Articles of Incorporation or Bylaws of country or State under whose laws the merger or consolidation was
Foreign Corporations. – Whenever the articles of incorporation or bylaws effected: Provided, however, That if the absorbed corporation is the foreign
of a foreign corporation authorized to transact business in the Philippines corporation doing business in the Philippines, the latter shall at the same
are amended, such foreign corporation shall, within sixty (60) days after the time file a petition for withdrawal of its license in accordance with this
amendment becomes effective, file with the Commission, and in the proper Title.
cases, with the appropriate government agency, a duly authenticated copy of
the amended articles of incorporation or bylaws, indicating clearly in capital SEC. 150. Doing Business Without a License. – No foreign
letters or underscoring the change or changes made, duly certified by the corporation transacting business in the Philippines without a license, or its
authorized official or officials of the country or State of incorporation. Such successors or assigns, shall be permitted to maintain or intervene in any
filing shall not in itself enlarge or alter the purpose or purposes for which action, suit or proceeding in any court or administrative agency of the
such corporation is authorized to transact business in the Philippines. Philippines; but such corporation may be sued or proceeded against before
Philippine courts or administrative tribunals on any valid cause of action
SEC. 148. Amended License. – A foreign corporation authorized to recognized under Philippine laws.
transact business in the Philippines shall obtain an amended license in the
event it changes its corporate name, or desires to pursue other or additional SEC. 151. Revocation of License. – Without prejudice to other
purposes in the Philippines, by submitting an application with the grounds provided under special laws, the license of a foreign corporation to
Commission, favorably endorsed by the appropriate government agency in transact business in the Philippines may be revoked or suspended by the
the proper cases. Commission upon any of the following grounds:
Page 52 of 62
 (i) Any other ground as would render it unfit to
(a) Failure to file its annual report or pay any fees transact business in the Philippines.
as required by this Code;
SEC. 152. Issuance of Certificate of Revocation. – Upon the
(b) Failure to appoint and maintain a resident revocation of the license to transact business in the Philippines, the
agent in the Philippines as required by this Commission shall issue a corresponding certificate of revocation, furnishing
Title; a copy thereof to the appropriate government agency in the proper cases.

(c) Failure, after change of its resident agent or The Commission shall also mail the notice and copy of the certificate
address, to submit to the Commission a statement of such of revocation to the corporation, at its registered office in the Philippines.
change as required by this Title;
SEC. 153. Withdrawal of Foreign Corporations. – Subject to existing
(d) Failure to submit to the Commission an laws and regulations, a foreign corporation licensed to transact business in
authenticated copy of any amendment to its articles of the Philippines may be allowed to withdraw from the Philippines by filing a
incorporation or bylaws or of any articles of merger or petition for withdrawal of license. No certificate of withdrawal shall be
consolidation within the time prescribed by this Title; issued by the Commission unless all the following requirements are met:

(e) A misrepresentation of any material matter in (a) All claims which have accrued in the Philippines have been
any application, report, affidavit or other document paid, compromised or settled;
submitted by such corporation pursuant to this Title;
(b) All taxes, imposts, assessments, and penalties, if any,
(f) Failure to pay any and all taxes, imposts, lawfully due to the Philippine
assessments or penalties, if any, lawfully due to the Government or any of its agencies or political subdivisions, have been paid;
Philippine Government or any of its agencies or political and
subdivisions;
(c) The petition for withdrawal of license has been published
(g) Transacting business in the Philippines once a week for three (3) consecutive weeks in a newspaper of
outside of the purpose or purposes for which such general circulation in the Philippines.
corporation is authorized under its license;

(h) Transacting business in the Philippines as TITLE XVI

agent of or acting on behalf of any foreign corporation or
entity not duly licensed to do business in the Philippines; or INVESTIGATIONS, OFFENSES, AND PENALTIES

Page 53 of 62
 SEC. 154. Investigation and Prosecution of Offenses. – The evidence to the Department of Justice for preliminary investigation or
Commission may investigate an alleged violation of this Code, or of rule, criminal prosecution and/or initiate criminal prosecution for any violation of
regulation, or order of the Commission. this Code, rule, or regulation.

The Commission may publish its findings, orders, opinions, SEC. 157. Contempt. – Any person who, without justifiable cause,
advisories, or information concerning any such violation, as may be fails or refuses to comply with any lawful order, decision, or subpoena
relevant to the general public or to the parties concerned, subject to the issued by the Commission shall, after due notice and hearing, be held in
provisions of Republic Act No. 10173, otherwise known as the “Data contempt and fined in an amount not exceeding Thirty thousand pesos
Privacy Act of 2012”, and other pertinent laws. (P30,000.00). When the refusal amounts to clear and open defiance of the
Commission’s order, decision, or subpoena, the Commission may impose a
The Commission shall give reasonable notice to and coordinate with daily fine of One thousand pesos (P1,000.00) until the order, decision, or
the appropriate regulatory agency prior to any such publication involving subpoena is complied with.
companies under their special regulatory jurisdiction.
SEC. 158. Administrative Sanctions. – If, after due notice and
SEC. 155. Administration of Oaths, Subpoena of Witnesses and hearing, the Commission finds that any provision of this Code, rules or
Documents. – The Commission, through its designated officer, may regulations, or any of the Commission’s orders has been violated, the
administer oaths and affirmations, issue subpoena and subpoena duces Commission may impose any or all of the following sanctions, taking into
tecum, take testimony in any inquiry or investigation, and may perform consideration the extent of participation, nature, effects, frequency and
other acts necessary to the proceedings or to the investigation. seriousness of the violation:

SEC. 156. Cease and Desist Orders. – Whenever the Commission (a) Imposition of a fine ranging from Five thousand pesos
has reasonable basis to believe that a person has violated, or is about to (P5,000.00) to Two million pesos (P2,000,000.00), and not more than
violate this Code, a rule, regulation, or order of the Commission, it may One thousand pesos (P1,000.00) for each day of continuing violation but
direct such person to desist from committing the act constituting the in no case to exceed Two million pesos (P2,000,000.00);
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 practice which is fraudulent or can be reasonably expected (C) Suspension or revocation of the certificate of incorporation; and
to cause significant, imminent, and irreparable danger or injury to public
safety or welfare. The ex parte order shall be valid for a maximum period of (d) Dissolution of the corporation and forfeiture of its assets under
twenty (20) days, without prejudice to the order being made permanent after the conditions in Title XIV of this Code.
due notice and hearing.
SEC. 159. Unauthorized Use of Corporate Name; Penalties. – The
Thereafter, the Commission may proceed administratively against unauthorized use of a corporate name shall be punished with a fine ranging
such person in accordance with Section 158 of this Code, and/or transmit
Page 54 of 62
from Ten thousand pesos (P10,000.00) to Two hundred thousand pesos certifies a report required under this Code, knowing that the same contains
(P200,000.00). incomplete, inaccurate, false, or misleading information or statements, shall
be punished with a fine ranging from Twenty thousand pesos (P20,000.00)
SEC. 160. Violation of Disqualification Provision; Penalties. – to Two hundred thousand pesos (P200,000.00). When the wrongful
When, despite the knowledge of the existence of a ground for certification is injurious or detrimental to the public, the auditor or the
disqualification as provided in Section 26 of this Code, a director, trustee or responsible person may also be punished with a fine ranging from Forty
officer willfully holds office, or willfully conceals such disqualification, thousand pesos (P40,000.00) to Four hundred thousand pesos
such director, trustee or officer shall be punished with a fine ranging from (P400,000.00).
Ten thousand pesos (P10,000.00) to Two hundred thousand pesos
(P200,000.00) at the discretion of the court, and shall be permanently SEC. 163. Independent Auditor Collusion; Penalties. – An
disqualified from being a director, trustee or officer of any corporation. independent auditor who, in collusion with the corporation’s directors or
When the violation of this provision is injurious or detrimental to the public, representatives, certifies the corporation’s financial statements despite its
the penalty shall be a fine ranging from Twenty thousand pesos incompleteness or inaccuracy, its failure to give a fair and accurate
(P20,000.00) to Four hundred thousand pesos (P400,000.00). presentation of the corporation’s condition, or despite containing false or
misleading statements, shall be punished with a fine ranging from Eighty
SEC. 161. Violation of Duty to Maintain Records, to Allow their thousand pesos (P80,000.00) to Five hundred thousand pesos
Inspection or Reproduction; Penalties. – The unjustified failure or refusal (P500,000.00). When the statement or report certified is fraudulent, or has
by the corporation, or by those responsible for keeping and maintaining the effect of causing injury to the general public, the auditor or responsible
corporate records, to comply with Sections 45, 73, 92, 128, 177 and other officer may be punished with a fine ranging from One hundred thousand
pertinent rules and provisions of this Code on inspection and reproduction pesos (P100,000.00) to Six hundred thousand pesos (P600,000.00).
of records shall be punished with a fine ranging from Ten thousand pesos
(P10,000.00) to Two hundred thousand pesos (P200,000.00), at the SEC. 164. Obtaining Corporate Registration Through Fraud;
discretion of the court, taking into consideration the seriousness of the Penalties. – Those responsible for the formation of a corporation through
violation and its implications. When the violation of this provision is fraud, or who assisted directly or indirectly therein, shall be punished with a
injurious or detrimental to the public, the penalty is a fine ranging from fine ranging from Two hundred thousand pesos (P200,000.00) to Two
Twenty thousand pesos (P20,000.00) to Four hundred thousand pesos million pesos (P2,000,000.00). When the violation of this provision is
(P400,000.00). injurious or detrimental to the public, the penalty is a fine ranging from
Four hundred thousand pesos (P400,000.00) to Five million pesos
The penalties imposed under this section shall be without prejudice to (P5,000,000.00).
the Commission’s exercise of its contempt powers under Section 157
hereof. SEC. 165. Fraudulent Conduct of Business; Penalties. – A
corporation that conducts its business through fraud shall be punished with
SEC. 162. Willful Certification of Incomplete, Inaccurate, False, or a fine ranging from Two hundred thousand pesos (P200,000.00) to Two
Misleading Statements or Reports; Penalties. – Any person who willfully million pesos (P2,000,000.00). When the violation of this provision is

Page 55 of 62
injurious or detrimental to the public, the penalty is a fine ranging from Code. Any person who, knowingly and with intent to retaliate, commits acts
Four hundred thousand pesos (P400,000.00) to Five million pesos detrimental to a whistleblower such as interfering with the lawful
(P5,000,000.00). employment or livelihood of the whistleblower, shall, at the discretion of
the court, be punished with a fine ranging from One hundred thousand
SEC. 166. Acting as Intermediaries for Graft and Corrupt pesos (P100,000.00) to One million pesos (P1,000,000.00).
Practices; Penalties. – A corporation used for fraud, or for committing or
concealing graft and corrupt practices as defined under pertinent statutes, SEC. 170. Other Violations of the Code; Separate Liability. –
shall be liable for a fine ranging from One hundred thousand pesos Violations of any of the other provisions of this Code or its amendments not
(P100,000.00) to Five million pesos (P5,000,000.00). otherwise specifically penalized therein shall be punished by a fine of not
less than Ten thousand pesos (P10,000.00) but not more than One million
When there is a finding that any of its directors, officers, employees, pesos (P1,000,000.00). If the violation is committed by a corporation, the
agents, or representatives are engaged in graft and corrupt practices, the same may, after notice and hearing, be dissolved in appropriate proceedings
corporation’s failure to install: (a) safeguards for the transparent and lawful before the Commission: Provided, That such dissolution shall not preclude
delivery of services; and (b) policies, code of ethics, and procedures against the institution of appropriate action against the director, trustee, or officer of
graft and corruption shall be prima facie evidence of corporate liability the corporation responsible for said violation: Provided, further, That
under this section. nothing in this section shall be construed to repeal the other causes for
dissolution of a corporation provided in this Code.
SEC. 167. Engaging Intermediaries for Graft and Corrupt
Practices; Penalties. – A corporation that appoints an intermediary who Liability for any of the foregoing offenses shall be separate from any
engages in graft and corrupt practices for the corporation’s benefit or other administrative, civil, or criminal liability under this Code and other
interest shall be punished with a fine ranging from One hundred thousand laws.
pesos (P100,000.00) to One million pesos (P1,000,000.00).
SEC. 171. Liability of Directors, Trustees, Officers, or Other
SEC. 168. Tolerating Graft and Corrupt Practices; Penalties. – A Employees. – If the offender is a corporation, the penalty may, at the
director, trustee, or officer who knowingly fails to sanction, report, or file discretion of the court, be imposed upon such corporation and/or upon its
the appropriate action with proper agencies, allows or tolerates the graft and directors, trustees, stockholders, members, officers, or employees
corrupt practices or fraudulent acts committed by a corporation’s directors, responsible for the violation or indispensable to its commission.
trustees, officers, or employees shall be punished with a fine ranging from
Five hundred thousand pesos (P500,000.00) to One million pesos SEC. 172. Liability of Aiders and Abettors and Other Secondary
(P1,000,000.00). Liability. – Anyone who shall aid, abet, counsel, command, induce, or cause
any violation of this Code, or any rule, regulation, or order of the
SEC. 169. Retaliation Against Whistleblowers. – A whistleblower Commission shall be punished with a fine not exceeding that imposed on
refers to any person who provides truthful information relating to the the principal offenders, at the discretion of the court, after taking into
commission or possible commission of any offense or violation under this account their participation in the offense.
Page 56 of 62
 Congress, whenever deemed necessary, a report of its findings, including
recommendations for their prevention or correction.
TITLE XVII
The Congress of the Philippines may set maximum limits for stock
ownership of individuals or groups of individuals related to each other by
MISCELLANEOUS PROVISIONS
consanguinity, affinity, or by close business interests, in corporations
declared to be vested with public interest pursuant to the provisions of this
SEC. 173. Outstanding Capital Stock Defined. – The term section, or whenever necessary to prevent anti-competitive practices as
“outstanding capital stock”, as used in this Code, shall mean the total shares provided in Republic Act No. 10667, otherwise known as the “Philippine
of stock issued under binding subscription contracts to subscribers or Competition Act”, or to implement national economic policies designed to
stockholders, whether fully or partially paid, except treasury shares. promote general welfare and economic development, as declared in laws,
rules, and regulations.
SEC. 174. Designation of Governing Boards. – The provisions of
specific provisions of this Code to the contrary notwithstanding, nonstock In recommending to the Congress which corporations, businesses and
or special corporations may, through their articles of incorporation or their industries will be declared as vested with public interest, and in formulating
bylaws, designate their governing boards by any name other than as board proposals for limitations on stock ownership, the NEDA shall consider the
of trustees. type and nature of the industry, size of the enterprise, economies of scale,
geographic location, extent of Filipino ownership, labor intensity of the
SEC. 175. Collection and Use of Registration, Incorporation and activity, export potential, as well as other factors which are germane to the
Other Fees. – For a more effective implementation of this Code, the realization and promotion of business and industry.
Commission is hereby authorized to collect, retain, and use fees, fines, and
other charges pursuant to this Code and its rules and regulations. The SEC. 177. Reportorial Requirements of Corporations. – Except as
amount collected shall be deposited and maintained in a separate account otherwise provided in this Code or in the rules issued by the Commission,
which shall form a fund for its modernization and to augment its operational every corporation, domestic or foreign, doing business in the Philippines
expenses such as, but not limited to, capital outlay, increase in shall submit to the Commission:
compensation and benefits comparable with prevailing rates in the private
sector, reasonable employee allowance, employee health care services, and (a) Annual financial statements audited by an independent
other insurance, employee career advancement and professionalization, certified public accountant: Provided, That if the total assets or total
legal assistance, seminars, and other professional fees. liabilities of the corporation are less than Six hundred thousand pesos
(P600,000.00), the financial statements shall be certified under oath by
SEC. 176. Stock Ownership in Corporations. – Pursuant to the duties the corporation’s treasurer or chief financial officer; and
specified by Article XIV of the Constitution, the National Economic and
Development Authority (NEDA) shall, from time to time, determine if the (b) A general information sheet.
corporate vehicle has been used by any corporation, business, or industry to
frustrate the provisions of this Code or applicable laws, and shall submit to
Page 57 of 62
 Corporations vested with public interest must also submit the
following: All interrogatories propounded by the Commission and the answers
thereto, as well as the results of any examination made by the Commission
(1) A director or trustee compensation report; and or by any other official authorized by law to make an examination of the
operations, books, and records of any corporation, shall be kept strictly
(2) A director or trustee appraisal or performance report and the confidential, except when the law requires the same to be made public,
standards or criteria used to assess each director or trustee. when necessary for the Commission to take action to protect the public or to
issue orders in the exercise of its powers under this Code, or where such
The reportorial requirements shall be submitted annually and within interrogatories, answers or results are necessary to be presented as evidence
such period as may be prescribed by the Commission. before any court.

The Commission may place the corporation under delinquent status in SEC. 179. Powers, Functions, and Jurisdiction of the Commission.
case of failure to submit the reportorial requirements three (3) times, – The Commission shall have the power and authority to:
consecutively or intermittently, within a period of five (5) years. The
Commission shall give reasonable notice to and coordinate with the (a) Exercise supervision and jurisdiction over all
appropriate regulatory agency prior to placing under delinquent status corporations and persons acting on their behalf, except as
companies under their special regulatory jurisdiction. otherwise provided under this Code;

Any person required to file a report with the Commission may redact (b) Pursuant to Presidential Decree No. 902-A,
confidential information from such required report: Provided, That such retain jurisdiction over pending cases involving intra-
confidential information shall be filed in a supplemental report prominently corporate disputes submitted for final resolution. The
labelled “confidential”, together with a request for confidential treatment of Commission shall retain jurisdiction over pending
the report and the specific grounds for the grant thereof. suspension of payment/rehabilitation cases filed as of 30
June 2000 until finally disposed;
SEC. 178. Visitorial Power and Confidential Nature of Examination
Results. – The Commission shall exercise visitorial powers over all (c) Impose sanctions for the violation of this
corporations, which powers shall include the examination and inspection of Code, its implementing rules and orders of the Commission;
records, regulation and supervision of activities, enforcement of
compliance, and imposition of sanctions in accordance with this Code. (d) Promote corporate governance and the
protection of minority investors, through, among others, the
Should the corporation, without justifiable cause, refuse or obstruct issuance of rules and regulations consistent with
the Commission’s exercise of its visitorial powers, the Commission may international best practices;
revoke its certificate of incorporation, without prejudice to the imposition of
other penalties and sanctions under this Code.
Page 58 of 62
 (e) Issue opinions to clarify the application of
laws, rules, and regulations; (n) Impose or recommend new modes by which a
stockholder, member, director, or trustee may attend
(f) Issue cease and desist orders ex parte to meetings or cast their votes, as technology may allow,
prevent imminent fraud or injury to the public; taking into account the company’s scale, number of
shareholders or members, structure, and other factors
(g) Hold corporations in direct and indirect consistent with the basic right of corporate suffrage;
contempt;
(o) Formulate and enforce standards, guidelines,
(h) Issue subpoena duces tecum and summon policies, rules and regulations to carry out the provisions of
witnesses to appear in proceedings before the Commission; this Code; and

(i) In appropriate cases, order the examination, (p) Exercise such other powers provided by law
search and seizure of documents, papers, files and records, or those which may be necessary or incidental to carrying
and books of accounts of any entity or person under out the powers expressly granted to the Commission.
investigation as may be necessary for the proper disposition
of the cases, subject to the provisions of existing laws; In imposing penalties and additional monitoring and supervision
requirements, the Commission shall take into consideration the size, nature
(j) Suspend or revoke the certificate of of the business, and capacity of the corporation.
incorporation after proper notice and hearing;
No court below the Court of Appeals shall have jurisdiction to issue a
(k) Dissolve or impose sanctions on corporations, restraining order, preliminary injunction, or preliminary mandatory
upon final court order, for committing, aiding in the injunction in any case, dispute, or controversy that directly or indirectly
commission of, or in any manner furthering securities interferes with the exercise of the powers, duties and responsibilities of the
violations, smuggling, tax evasion, money laundering, graft Commission that falls exclusively within its jurisdiction.
and corrupt practices, or other fraudulent or illegal acts;
SEC. 180. Development and Implementation of Electronic Filing
(l) Issue writs of execution and attachment to and Monitoring System. – The Commission shall develop and implement
enforce payment of fees, administrative fines, and other an electronic filing and monitoring system. The Commission shall
dues collectible under this Code; promulgate rules to facilitate and expedite, among others, corporate name
reservation and registration, incorporation, submission of reports, notices,
(m) Prescribe the number of independent directors and documents required under this Code, and sharing of pertinent
and the minimum criteria in determining the independence information with other government agencies.
of a director;
Page 59 of 62
 SEC. 181. Arbitration for Corporations. – An arbitration agreement stayed only by the filing of a bond or the issuance by the appellate court of
may be provided in the articles of incorporation or bylaws of an unlisted an injunctive writ.
corporation. When such an agreement is in place, disputes between the
corporation, its stockholders or members, which arise from the The Commission shall formulate the rules and regulations, which shall
implementation of the articles of incorporation or bylaws, or from intra- govern arbitration under this section, subject to existing laws on arbitration.
corporate relations, shall be referred to arbitration. A dispute shall be
nonarbitrable when it involves criminal offenses and interests of third SEC. 182. Jurisdiction Over Party-List Organizations. – The powers,
parties. authorities, and responsibilities of the Commission involving party-list
organizations are transferred to the Commission on Elections (COMELEC).
The arbitration agreement shall be binding on the corporation, its
directors, trustees, officers, and executives or managers. Within six (6) months after the effectivity of this Act, the monitoring,
supervision, and regulation of such corporations shall be deemed
To be enforceable, the arbitration agreement should indicate the automatically transferred to the COMELEC.
number of arbitrators and the procedure for their appointment. The power to
appoint the arbitrators forming the arbitral tribunal shall be granted to a For this purpose, the COMELEC, in coordination with the
designated independent third party. Should the third party fail to appoint the Commission, shall promulgate the corresponding implementing rules for the
arbitrators in the manner and within the period specified in the arbitration transfer of jurisdiction over the abovementioned corporations.
agreement, the parties may request the Commission to appoint the
arbitrators. In any case, arbitrators must be accredited or must belong to SEC. 183. Applicability of the Code. – Nothing in this law shall be
organizations accredited for the purpose of arbitration. construed as amending existing provisions of special laws governing the
registration, regulation, monitoring and supervision of special corporations
The arbitral tribunal shall have the power to rule on its own such as banks, nonbank financial institutions and insurance companies.
jurisdiction and on questions relating to the validity of the arbitration
agreement. When an intra-corporate dispute is filed with a Regional Trial Notwithstanding any provision to the contrary, regulators such as the
Court, the court shall dismiss the case before the termination of the pretrial Bangko Sentral ng Pilipinas and the Insurance Commission shall exercise
conference, if it determines that an arbitration agreement is written in the primary authority over special corporations such as banks, nonbank
corporation’s articles of incorporation, bylaws, or in a separate agreement. financial institutions, and insurance companies under their supervision and
regulation.
The arbitral tribunal shall have the power to grant interim measures
necessary to ensure enforcement of the award, prevent a miscarriage of SEC. 184. Effect of Amendment or Repeal of This Code, or the
justice, or otherwise protect the rights of the parties. Dissolution of a Corporation. – No right or remedy in favor of or against
any corporation, its stockholders, members, directors, trustees, or officers,
A final arbitral award under this section shall be executory after the nor any liability incurred by any such corporation, stockholders, members,
lapse of fifteen (15) days from receipt thereof by the parties and shall be directors, trustees, or officers, shall be removed or impaired either by the
Page 60 of 62
subsequent dissolution of said corporation or by any subsequent amendment
or repeal of this Code or of any part thereof.

SEC. 185. Applicability to Existing Corporation. – A corporation

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

SEC. 186. Separability Clause. – If any provision of this Act is

declared invalid or unconstitutional, other provisions hereof which are not
affected thereby shall continue to be in full force and effect. This Act which is a consolidation of Senate Bill No. 1280 and House
Bill No. 8374 by the Senate and House of Representatives on November 28,
SEC. 187. Repealing clause. – Batas Pambansa Blg. 68, otherwise 2018.
known as “The Corporation Code of the Philippines”, is hereby repealed.
Any law, presidential decree or issuance, executive order, letter of
instruction, administrative order, rule or regulation contrary to or
inconsistent with any provision of this Act is hereby repealed or modified
accordingly.

SEC. 188. Effectivity. – This Act shall take effect upon completion of
its publication in the Official Gazette or in at least two (2) newspapers of
general circulation.

Page 61 of 62
 Published in Manila Bulletin and Business Mirror on February 23,
2019.

Page 62 of 62