Revised Corporation Code of the Philippines Holders of nonvoting shares shall nevertheless be

Title I entitled to vote on the following matters:

General Provisions Definitions and Classifications
a. Amendment of the articles of incorporation;
Section 1
b. Adoption and amendment of bylaws;
Title of the Code. — This Code shall be known as
the “Revised Corporation Code of the Philippines”. c. Sale, lease, exchange, mortgage, pledge, or
other disposition of all or substantially all of
Section 2
the corporate property;
Corporation Defined.— corporation is an artificial
d. Incurring, creating, or increasing bonded
being created by operation of law, having the right
indebtedness;
of succession and the powers, attributes, and
properties expressly authorized by law or incidental e. Increase or decrease of authorized capital
to its existence. stock;
Section 3 f. Merger or consolidation of the corporation
with another corporation or other
Classes of Corporations. — Corporations formed or
corporations;
organized under this Code may be stock or
nonstock corporations. Stock corporations are g. Investment of corporate funds in another
those which have capital stock divided into shares corporation or business in accordance with
and are authorized to distribute to the holders of this Code; and
such shares, dividends, or allotments of the surplus
h. Dissolution of the corporation.
profits on the basis of the shares held. All other
corporations are nonstock corporations. Except as provided in the immediately preceding
paragraph, the vote required under this Code to
Section 4
approve a particular corporate act shall be deemed
Corporations Created by Special Laws or to refer only to stocks with voting rights.
Charters.— Corporations created by special laws or
The shares or series of shares may or may not
charters shall be governed primarily by the
have a par value: Provided, That banks, trust,
provisions of the special law or charter creating
insurance, and preneed companies, public utilities,
them or applicable to them, supplemented by the
building and loan associations, and other
provisions of this Code, insofar as they are
corporations authorized to obtain or access funds
applicable.
from the public, whether publicly listed or not, shall
Section 5 not be permitted to issue no-par value shares of
stock.
Corporators and Incorporators, Stockholders and
Members.— Corporators are those who compose a Preferred shares of stock issued by a corporation
corporation, whether as stockholders or may be given preference in the distribution of
shareholders in a stock corporation or as members dividends and in the distribution of corporate assets
in a nonstock corporation. Incorporators are those in case of liquidation, or such other
stockholders or members mentioned in the articles preferences: Provided, That preferred shares of
of incorporation as originally forming and stock may be issued only with a stated par value.
composing the corporation and who are signatories The board of directors, where authorized in the
thereof. articles of incorporation, may fix the terms and
conditions of preferred shares of stock or any series
Section 6 thereof: Provided, further, That such terms and
Classification of Shares.— The classification of conditions shall be effective upon filing of a
shares, their corresponding rights, privileges, or certificate thereof with the Securities and
restrictions, and their stated par value, if any, must Exchange Commission, hereinafter referred to as
be indicated in the articles of incorporation. Each the “Commission”.
share shall be equal in all respects to every other Shares of capital stock issued without par value
share, except as otherwise provided in the articles of shall be deemed fully paid and nonassessable and
incorporation and in the certificate of stock. the holder of such shares shall not be liable to the
The shares in stock corporations may be divided corporation or to its creditors in respect
into classes or series of shares, or both. No share thereto: Provided, That no-par value shares must
may be deprived of voting rights except those be issued for a consideration of at least Five
classified and issued as “preferred” or “redeemable” pesos (₱5.00) per share: Provided, further, That
shares, unless otherwise provided in this the entire consideration received by the corporation
Code: Provided, That there shall always be a class for its no-par value shares shall be treated as capital
or series of shares with complete voting rights. and shall not be available for distribution as
dividends.
A corporation may further classify its shares for A corporation with a single stockholder is
the purpose of ensuring compliance with considered a One Person Corporation as described
constitutional or legal requirements. in Title XIII, Chapter III of this Code.
Section 7 Section 11
Founders’ Shares.— Founders’ shares may be Corporate Term.— A corporation shall have
given certain rights and privileges not enjoyed by perpetual existence unless its articles of
the owners of other stocks. Where the exclusive incorporation provides otherwise.
right to vote and be voted for in the election of
Corporations with certificates of incorporation
directors is granted, it must be for a limited period
issued prior to the effectivity of this Code, and
not to exceed five (5) years from the date of
which continue to exist, shall have perpetual
incorporation: Provided, That such exclusive right
existence, unless the corporation, upon a vote of its
shall not be allowed if its exercise will violate
stockholders representing a majority of its
Commonwealth Act No. 108, otherwise known as
outstanding capital stock, notifies the
the “Anti-Dummy Law”; Republic Act No. 7042,
Commission that it elects to retain its specific
otherwise known as the “Foreign Investments
corporate term pursuant to its articles of
Act of 1991”; and other pertinent laws.
incorporation: Provided, That any change in the
Section 8 corporate term under this section is without
prejudice to the appraisal right of dissenting
Redeemable Shares.— Redeemable shares may be stockholders in accordance with the provisions of
issued by the corporation when expressly provided this Code.
in the articles of incorporation. They are shares
which may be purchased by the corporation from A corporate term for a specific period may be
the holders of such shares upon the expiration of a extended or shortened by amending the articles of
fixed period, regardless of the existence of incorporation: Provided, That no extension may be
unrestricted retained earnings in the books of the made earlier than three (3) years prior to the
corporation, and upon such other terms and original or subsequent expiry date(s) unless there
conditions stated in the articles of incorporation and are justifiable reasons for an earlier extension as
the certificate of stock representing the shares, may be determined by the
subject to rules and regulations issued by the Commission: Provided, further, That such
Commission. extension of the corporate term shall take effect
only on the day following the original or subsequent
Section 9 expiry date(s).
Treasury Shares.— Treasury shares are shares of A corporation whose term has expired may apply
stock which have been issued and fully paid for, but for a revival of its corporate existence, together with
subsequently reacquired by the issuing corporation all the rights and privileges under its certificate of
through purchase, redemption, donation, or some incorporation and subject to all of its duties, debts
other lawful means. Such shares may again be and liabilities existing prior to its revival. Upon
disposed of for a reasonable price fixed by the board approval by the Commission, the corporation shall
of directors. be deemed revived and a certificate of revival of
Title II corporate existence shall be issued, giving it
Incorporation and Organization of Private perpetual existence, unless its application for revival
Corporations provides otherwise.
Section 10 No application for revival of certificate of
Number and Qualifications of Incorporators. incorporation of banks, banking and quasi-banking
— Any person, partnership, association or institutions, preneed, insurance and trust companies,
corporation, singly or jointly with others but not non-stock savings and loan associations (NSSLAs),
more than fifteen (15) in number, may organize a pawnshops, corporations engaged in money service
corporation for any lawful purpose or business, and other financial intermediaries shall be
purposes: Provided, That natural persons who are approved by the Commission unless accompanied
licensed to practice a profession, and partnerships or by a favorable recommendation of the appropriate
associations organized for the purpose of government agency.
practicing a profession, shall not be allowed to Section 12
organize as a corporation unless otherwise provided
under special laws. Incorporators who are natural Minimum Capital Stock Not Required of Stock
persons must be of legal age. Corporations. — Stock corporations shall not be
required to have a minimum capital stock, except as
Each incorporator of a stock corporation must own otherwise specifically provided by special law.
or be a subscriber to at least one (1) share of the
capital stock. Section 13
Contents of the Articles of Incorporation. — All Commission in the form of an electronic document,
corporations shall file with the Commission articles in accordance with the Commission’s rules and
of incorporation in any of the official languages, regulations on electronic filing.
duly signed and acknowledged or authenticated, in
such form and manner as may be allowed by the Section 14
Commission, containing substantially the following Form of Articles of Incorporation.— Unless
matters, except as otherwise prescribed by this Code otherwise prescribed by special law, the articles of
or by special law: incorporation of all domestic corporations shall
a. The name of the corporation; comply substantially with the following form:

b. The specific purpose or purposes for which Articles of Incorporation

the corporation is being formed. Where a of
corporation has more than one stated _____________________
purpose, the articles of incorporation shall (Name of Corporation)
indicate the primary purpose and the
secondary purpose or purposes: Provided, The undersigned incorporators, all of legal age,
that a nonstock corporation may not include have voluntarily agreed to form a (stock) (nonstock)
a purpose which would change or contradict corporation under the laws of the Republic of the
its nature as such; Philippines and certify the following:

c. The place where the principal office of the First: That the name of said corporation shall be
corporation is to be located, which must be “_______________, Inc., Corporation or OPC”;
within the Philippines; Second: That the purpose or purposes for which
d. The term for which the corporation is to such corporation is incorporated are: (If there is
exist, if the corporation has not elected more than one purpose, indicate primary and
perpetual existence; secondary purposes);

e. The names, nationalities, and residence Third: That the principal office of the corporation is
addresses of the incorporators; located in the City/Municipality of
_______________, Province of _______________,
f. The number of directors, which shall not be Philippines;
more than fifteen (15) or the number of
trustees which may be more than fifteen Fourth: That the corporation shall have perpetual
(15); existence or a term of _____ years from the date of
issuance of the certificate of incorporation;
g. The names, nationalities, and residence
addresses of persons who shall act as Fifth: That the names, nationalities, and residence
directors or trustees until the first regular addresses of the incorporators of the corporation are
directors or trustees are duly elected and as follows:
qualified in accordance with this Code; Sixth: That the number of directors or trustees of the
h. If it be a stock corporation, the amount of its corporation shall be _____; and the names,
authorized capital stock, number of shares nationalities, and residence addresses of the first
into which it is divided, the par value of directors or trustees of the corporation are as
each, names, nationalities, and residence follows:
addresses of the original subscribers, amount Seventh: That the authorized capital stock of the
subscribed and paid by each on the corporation is _______________ PESOS
subscription, and a statement that some or (₱__________), divided into _______________
all of the shares are without par value, if shares with the par value of _______________
applicable; PESOS (₱__________) per share. (In case all the
i. If it be a nonstock corporation, the amount shares are without par value): That the capital stock
of its capital, the names, nationalities, and of the corporation is _______________ shares
residence addresses of the contributors, and without par value.
amount contributed by each; and (In case some shares have par value and some are
j. Such other matters consistent with law and without par value): That the capital stock of said
which the incorporators may deem necessary corporation consists of _______________ shares, of
and convenient. which _______________ shares have a par value of
_______________ PESOS (₱__________) each,
An arbitration agreement may be provided in the and of which _______________ shares are without
articles of incorporation pursuant to Section 181 of par value.
this Code.
The articles of incorporation and applications for
amendments thereto may be filed with the
Eighth: That the number of shares of the authorized the stockholders representing at least two-thirds (2⁄3)
capital stock above-stated has been subscribed as of the outstanding capital stock, without prejudice
follows: to the appraisal right of dissenting stockholders in
accordance with the provisions of this Code. The
(Modify No. 8 if shares are with no-par value. In articles of incorporation of a nonstock corporation
case the corporation is nonstock, Nos. 7 and 8 of the may be amended by the vote or written assent of
above articles may be modified accordingly, and it majority of the trustees and at least two-thirds (2⁄3)
is sufficient if the articles state the amount of capital of the members.
or money contributed or donated by specified
persons, stating the names, nationalities, and The original and amended articles together shall
residence addresses of the contributors or donors contain all provisions required by law to be set out
and the respective amount given by each.) in the articles of incorporation. Amendments to the
articles shall be indicated by underscoring the
Ninth: That ____________________ has been change or changes made, and a copy thereof duly
elected by the subscribers as Treasurer of the certified under oath by the corporate secretary and a
Corporation to act as such until after the successor majority of the directors or trustees, with a
is duly elected and qualified in accordance with the statement that the amendments have been duly
bylaws, that as Treasurer, authority has been given approved by the required vote of the stockholders or
to receive in the name and for the benefit of the members, shall be submitted to the Commission.
corporation, all subscriptions, contributions or
donations paid or given by the subscribers or The amendments shall take effect upon their
members, who certifies the information set forth in approval by the Commission or from the date of
the seventh and eighth clauses above, and that the filing with the said Commission if not acted upon
paid-up portion of the subscription in cash and/or within six (6) months from the date of filing for a
property for the benefit and credit of the corporation cause not attributable to the corporation.
has been duly received.
Section 16
Tenth: That the incorporators undertake to change
Grounds When Articles of Incorporation or
the name of the corporation immediately upon
Amendment May be Disapproved.— The
receipt of notice from the Commission that another
Commission may disapprove the articles of
corporation, partnership or person has acquired a
incorporation or any amendment thereto if the same
prior right to the use of such name, that the name
is not compliant with the requirements of this
has been declared not distinguishable from a name
Code: Provided, That the Commission shall give the
already registered or reserved for the use of another
incorporators, directors, trustees, or officers a
corporation, or that it is contrary to law, public
reasonable time from receipt of the disapproval
morals, good customs or public policy.
within which to modify the objectionable portions
Eleventh: (Corporations which will engage in any of the articles or amendment. The following are
business or activity reserved for Filipino citizens grounds for such disapproval:
shall provide the following):
a. The articles of incorporation or any
“No transfer of stock or interest which shall reduce amendment thereto is not substantially in
the ownership of Filipino citizens to less than the accordance with the form prescribed herein;
required percentage of capital stock as provided by
b. The purpose or purposes of the corporation
existing laws shall be allowed or permitted to be
are patently unconstitutional, illegal,
recorded in the proper books of the corporation, and
immoral or contrary to government rules and
this restriction shall be indicated in all stock
regulations;
certificates issued by the corporation.”
c. The certification concerning the amount of
IN WITNESS WHEREOF, we have hereunto
capital stock subscribed and/or paid is false;
signed these Articles of Incorporation, this
and
__________ day of __________, 20_____ in the
City/Municipality of _______________, Province d. The required percentage of Filipino
of _______________, Republic of the Philippines. ownership of the capital stock under existing
laws or the Constitution has not been
(Names and signatures of the incorporators) (Name
complied with.
and signature of Treasurer)
Section 15
Amendment of Articles of Incorporation.— Unless
otherwise prescribed by this Code or by special
lawr, and for legitimate purposes, any provision or
matter stated in the articles of incorporation may be
amended by a majority vote of the board of
directors or trustees and the vote or written assent of
No articles of incorporation or amendment to of the incorporators. The incorporators shall then
articles of incorporation of banks, banking and submit their articles of incorporation and bylaws to
quasi-banking institutions, preneed, insurance and the Commission.
trust companies, NSSLAs, pawnshops, and other
If the Commission finds that the submitted
financial intermediaries shall be approved by the
documents and information are fully compliant with
Commission unless accompanied by a favorable
the requirements of this Code, other relevant laws,
recommendation of the appropriate government
rules and regulations, the Commission shall issue
agency to the effect that such articles or amendment
the certificate of incorporation.
is in accordance with law.
A private corporation organized under this Code
Section 17
commences its corporate existence and juridical
Corporate Name.— No corporate name shall be personality from the date the Commission issues the
allowed by the Commission if it is not certificate of incorporation under its official seal
distinguishable from that already reserved or and thereupon the incorporators,
registered for the use of another corporation, or if stockholders/members and their successors shall
such name is already protected by law, or when its constitute a body corporate under the name stated in
use is contrary to existing law, rules and the articles of incorporation for the period of time
regulations. mentioned therein, unless said period is extended or
the corporation is sooner dissolved in accordance
A name is not distinguishable even if it contains one with law.
or more of the following:
Section 19
a. The word “corporation”, “company”,
“incorporated”, “limited”, “limited liability”, De facto Corporations.— The due incorporation of
or an abbreviation of one of such words; and any corporation claiming in good faith to be a
corporation under this Code, and its right to exercise
b. Punctuations, articles, conjunctions,
corporate powers, shall not be inquired into
contractions, prepositions, abbreviations,
collaterally in any private suit to which such
different tenses, spacing, or number of the
corporation may be a party. Such inquiry may be
same word or phrase.
made by the Solicitor General in a quo
The Commission, upon determination that the warranto proceeding.
corporate name is: (1) not distinguishable from a
Section 20
name already reserved or registered for the use of
another corporation; (2) already protected by law; or Corporation by Estoppel.— All persons who
(3) contrary to law, rules and regulations, may assume to act as a corporation knowing it to be
summarily order the corporation to immediately without authority to do so shall be liable as general
cease and desist from using such name and require partners for all debts, liabilities and damages
the corporation to register a new one. The incurred or arising as a result
Commission shall also cause the removal of all thereof: Provided, however, That when any such
visible signages, marks, advertisements, labels, ostensible corporation is sued on any transaction
prints and other effects bearing such corporate entered by it as a corporation or on any tort
name. Upon the approval of the new corporate committed by it as such, it shall not be allowed to
name, the Commission shall issue a certificate of use its lack of corporate personality as a defense.
incorporation under the amended name. Anyone who assumes an obligation to an ostensible
corporation as such cannot resist performance
If the corporation fails to comply with the
thereof on the ground that there was in fact no
Commission’s order, the Commission may hold the
corporation.
corporation and its responsible directors or officers
in contempt and/or hold them administratively, Section 21
civilly and/or criminally liable under this Code and
other applicable laws and/or revoke the registration Effects of Non-Use of Corporate Charter and
of the corporation. Continuous Inoperation.— If a corporation does not
formally organize and commence its business
Section 18 within five (5) years from the date of its
incorporation, its certificate of incorporation shall
Registration, Incorporation and Commencement of
be deemed revoked as of the day following the end
Corporate Existence.— A person or group of
of the five (5)-year period.
persons desiring to incorporate shall submit the
intended corporate name to the Commission for However, if a corporation has commenced its
verification. If the Commission finds that the name business but subsequently becomes inoperative for a
is distinguishable from a name already reserved or period of at least five (5) consecutive years, the
registered for the use of another corporation, not Commission may, after due notice and hearing,
protected by law and is not contrary to law, rules place the corporation under delinquent status.
and regulations, the name shall be reserved in favor
A delinquent corporation shall have a period of two objective and purpose of requiring the
(2) years to resume operations and comply with all election of an independent director, such as
requirements that the Commission shall prescribe. the extent of minority ownership, type of
Upon compliance by the corporation, the financial products or securities issued or
Commission shall issue an order lifting the offered to investors, public interest involved
delinquent status. Failure to comply with the in the nature of business operations, and
requirements and resume operations within the other analogous factors.
period given by the Commission shall cause the
An independent director is a person who, apart from
revocation of the corporation’s certificate of
shareholdings and fees received from the
incorporation.
corporation, is independent of management and free
The Commission shall give reasonable notice to, from any business or other relationship which
and coordinate with the appropriate regulatory could, or could reasonably be perceived to
agency prior to the suspension or revocation of the materially interfere with the exercise of independent
certificate of incorporation of companies under their judgment in carrying out the responsibilities as a
special regulatory jurisdiction. director.
Title III Independent directors must be elected by the
Board of Directors/Trustees and Officers shareholders present or entitled to vote in
Section 22 absentia during the election of directors.
Independent directors shall be subject to rules and
The Board of Directors or Trustees of a regulations governing their qualifications,
Corporation; Qualification and Term.— Unless disqualifications, voting requirements, duration of
otherwise provided in this Code, the board of term and term limit, maximum number of board
directors or trustees shall exercise the corporate memberships and other requirements that the
powers, conduct all business, and control all Commission will prescribe to strengthen their
properties of the corporation. independence and align with international best
Directors shall be elected for a term of one (1) year practices.
from among the holders of stocks registered in the
Section 23
corporation’s books, while trustees shall be elected
for a term not exceeding three (3) years from among Election of Directors or Trustees.— Except when
the members of the corporation. Each director and the exclusive right is reserved for holders of
trustee shall hold office until the successor is founders’ shares under Section 7 of this Code, each
elected and qualified. A director who ceases to own stockholder or member shall have the right to
at least one (1) share of stock or a trustee who nominate any director or trustee who possesses all
ceases to be a member of the corporation shall cease of the qualifications and none of the
to be such. disqualifications set forth in this Code.
The board of the following corporations vested with At all elections of directors or trustees, there must
public interest shall have independent directors be present, either in person or through a
constituting at least twenty percent (20%) of such representative authorized to act by written proxy,
board: the owners of majority of the outstanding capital
stock, or if there be no capital stock, a majority of
a. Corporations covered by Section 17.2 of
the members entitled to vote. When so authorized in
Republic Act No. 8799, otherwise known as
the bylaws or by a majority of the board of
“The Securities Regulation Code”, namely
directors, the stockholders or members may also
those whose securities are registered with
vote through remote communication or in
the Commission, corporations listed with an
absentia: Provided, That the right to vote through
exchange or with assets of at least Fifty
such modes may be exercised in corporations vested
million pesos (₱50,000,000.00) and having
with public interest, notwithstanding the absence of
two hundred (200) or more holders of
a provision in the bylaws of such corporations.
shares, each holding at least one hundred
(100) shares of a class of its equity shares; A stockholder or member who participates through
remote communication or in absentia shall be
b. Banks and quasi-banks, NSSLAs,
deemed present for purposes of quorum.
pawnshops, corporations engaged in money
service business, preneed, trust and The election must be by ballot if requested by any
insurance companies, and other financial voting stockholder or member.
intermediaries; and
In stock corporations, stockholders entitled to vote
c. Other corporations engaged in businesses shall have the right to vote the number of shares of
vested with public interest similar to the stock standing in their own names in the stock
above, as may be determined by the books of the corporation at the time fixed in the
Commission, after taking into account bylaws or where the bylaws are silent, at the time of
relevant factors which are germane to the the election. The said stockholder may: (a) vote
such number of shares for as many persons as there The non-holding of elections and the reasons
are directors to be elected; (b) cumulate said shares therefor shall be reported to the Commission within
and give one (1) candidate as many votes as the thirty (30) days from the date of the scheduled
number of directors to be elected multiplied by the election. The report shall specify a new date for the
number of the shares owned; or (c) distribute them election, which shall not be later than sixty (60)
on the same principle among as many candidates as days from the scheduled date.
may be seen fit: Provided, That the total number of
If no new date has been designated, or if the
votes cast shall not exceed the number of shares
rescheduled election is likewise not held, the
owned by the stockholders as shown in the books of
Commission may, upon the application of a
the corporation multiplied by the whole number of
stockholder, member, director or trustee, and after
directors to be elected: Provided, however, That no
verification of the unjustified non-holding of the
delinquent stock shall be voted. Unless otherwise
election, summarily order that an election be held.
provided in the articles of incorporation or in the
The Commission shall have the power to issue such
bylaws, members of nonstock corporations may cast
orders as may be appropriate, including orders
as many votes as there are trustees to be elected but
directing the issuance of a notice stating the time
may not cast more than one (1) vote for one (1)
and place of the election, designated presiding
candidate. Nominees for directors or trustees
officer, and the record date or dates for the
receiving the highest number of votes shall be
determination of stockholders or members entitled
declared elected.
to vote.
If no election is held, or the owners of majority of
Notwithstanding any provision of the articles of
the outstanding capital stock or majority of the
incorporation or bylaws to the contrary, the shares
members entitled to vote are not present in person,
of stock or membership represented at such meeting
by proxy, or through remote communication or not
and entitled to vote shall constitute a quorum for
voting in absentia at the meeting, such meeting may
purposes of conducting an election under this
be adjourned and the corporation shall proceed in
section.
accordance with Section 25 of this Code.
Should a director, trustee or officer die, resign or in
The directors or trustees elected shall perform their
any manner cease to hold office, the secretary, or
duties as prescribed by law, rules of good corporate
the director, trustee or officer of the corporation,
governance, and bylaws of the corporation.
shall, within seven (7) days from knowledge
Section 24 thereof, report in writing such fact to the
Commission.
Corporate Officers.— Immediately after their
election, the directors of a corporation must Section 26
formally organize and elect: (a) a president, who
Disqualification of Directors, Trustees or Officers.
must be a director; (b) a treasurer, who must be a
— A person shall be disqualified from being a
resident; (c) a secretary, who must be a citizen and
director, trustee or officer of any corporation if,
resident of the Philippines; and (d) such other
within five (5) years prior to the election or
officers as may be provided in the bylaws. If the
appointment as such, the person was:
corporation is vested with public interest, the board
shall also elect a compliance officer. The same a. Convicted by final judgment:
person may hold two (2) or more positions
concurrently, except that no one shall act as 1. Of an offense punishable by
president and secretary or as president and treasurer imprisonment for a period exceeding
at the same time, unless otherwise allowed in this six (6) years;
Code. 2. For violating this Code; and
The officers shall manage the corporation and 3. For violating Republic Act No. 8799,
perform such duties as may be provided in the otherwise known as “The Securities
bylaws and/or as resolved by the board of directors. Regulation Code”;
Section 25 b. Found administratively liable for any
Report of Election of Directors, Trustees and. offense involving fraudulent acts; and
Officers, Non-holding of Election and Cessation c. By a foreign court or equivalent foreign
from Office.— Within thirty (30) days after the regulatory authority for acts, violations or
election of the directors, trustees and officers of the misconduct similar to those enumerated in
corporation, the secretary, or any other officer of the paragraphs (a) and (b) above.
corporation, shall submit to the Commission, the
names, nationalities, shareholdings, and residence The foregoing is without prejudice to qualifications
addresses of the directors, trustees and officers or other disqualifications, which the Commission,
elected. the primary regulatory agency, or the Philippine
Competition Commission may impose in its
promotion of good corporate governance or as a expiration at a meeting called for that purpose.
sanction in its administrative proceedings. When the vacancy arises as a result of removal by
the stockholders or members, the election may be
Section 27 held on the same day of the meeting authorizing the
Removal of Directors or Trustees.— Any director or removal and this fact must be so stated in the
trustee of a corporation may be removed from office agenda and notice of said meeting. In all other
by a vote of the stockholders holding or cases, the election must be held no later than forty-
representing at least two-thirds (2⁄3) of the five (45) days from the time the vacancy arose. A
outstanding capital stock, or in a nonstock director or trustee elected to fill a vacancy shall be
corporation, by a vote of at least two-thirds ( 2⁄3) of referred to as replacement director or trustee and
the members entitled to vote: Provided, That such shall serve only for the unexpired term of the
removal shall take place either at a regular meeting predecessor in office.
of the corporation or at a special meeting called for However, when the vacancy prevents the remaining
the purpose, and in either case, after previous notice directors from constituting a quorum and
to stockholders or members of the corporation of emergency action is required to prevent grave,
the intention to propose such removal at the substantial, and irreparable loss or damage to the
meeting. A special meeting of the stockholders or corporation, the vacancy may be temporarily filled
members for the purpose of removing any director from among the officers of the corporation by
or trustee must be called by the secretary on order unanimous vote of the remaining directors or
of the president, or upon written demand of the trustees. The action by the designated director or
stockholders representing or holding at least a trustee shall be limited to the emergency action
majority of the outstanding capital stock, or a necessary, and the term shall cease within a
majority of the members entitled to vote. If there is reasonable time from the termination of the
no secretary, or if the secretary, despite demand, emergency or upon election of the replacement
fails or refuses to call the special meeting or to give director or trustee, whichever comes earlier. The
notice thereof, the stockholder or member of the corporation must notify the Commission within
corporation signing the demand may call for the three (3) days from the creation of the emergency
meeting by directly addressing the stockholders or board, stating therein the reason for its creation.
members. Notice of the time and place of such
meeting, as well as of the intention to propose such Any directorship or trusteeship to be filled by
removal, must be given by publication or by written reason of an increase in the number of directors or
notice prescribed in this Code. Removal may be trustees shall be filled only by an election at a
with or without cause: Provided, That removal regular or at a special meeting of stockholders or
without cause may not be used to deprive minority members duly called for the purpose, or in the same
stockholders or members of the right of meeting authorizing the increase of directors or
representation to which they may be entitled under trustees if so stated in the notice of the meeting.
Section 23 of this Code.
In all elections to fill vacancies under this section,
The Commission shall, motu proprio or upon the procedure set forth in Sections 23 and 25 of this
verified complaint, and after due notice and hearing, Code shall apply.
order the removal of a director or trustee elected
Section 29
despite the disqualification, or whose
disqualification arose or is discovered subsequent to Compensation of Directors or Trustees.— In the
an election. The removal of a disqualified director absence of any provision in the bylaws fixing their
shall be without prejudice to other sanctions that the compensation, the directors or trustees shall not
Commission may impose on the board of directors receive any compensation in their capacity as such,
or trustees who, with knowledge of the except for reasonable per
disqualification, failed to remove such director or diems: Provided, however, That the stockholders
trustee. representing at least a majority of the outstanding
capital stock or majority of the members may grant
Section 28
directors or trustees with compensation and approve
Vacancies in the Office of Director or Trustee; the amount thereof at a regular or special meeting.
Emergency Board.— Any vacancy occurring in the
In no case shall the total yearly compensation of
board of directors or trustees other than by removal
directors exceed ten percent (10%) of the net
or by expiration of term may be filled by the vote of
income before income tax of the corporation during
at least a majority of the remaining directors or
the preceding year.
trustees, if still constituting a quorum; otherwise,
said vacancies must be filled by the stockholders or Directors or trustees shall not participate in the
members in a regular or special meeting called for determination of their own per diems or
that purpose. compensation.
When the vacancy is due to term expiration, the Corporations vested with pub he interest shall
election shall be held no later than the day of such submit to their shareholders and the Commission,
an annual report of the total compensation of each adverse interest of the directors or trustees involved
of their directors or trustees. is made at such meeting and the contract is fair and
reasonable under the circumstances.
Section 30
Section 32
Liability of Directors, Trustees or Officers.
— Directors or trustees who willfully and Contracts Between Corporations with Interlocking
knowingly vote for or assent to patently unlawful Directors.— Except in cases of fraud, and provided
acts of the corporation or who are guilty of gross the contract is fair and reasonable under the
negligence or bad faith in directing the affairs of the circumstances, a contract between two (2) or more
corporation or acquire any personal or pecuniary corporations having interlocking directors shall not
interest in conflict with their duty as such directors be invalidated on that ground alone: Provided, That
or trustees shall be liable jointly and severally for all if the interest of the interlocking director in one (1)
damages resulting therefrom suffered by the corporation is substantial and the interest in the
corporation, its stockholders or members and other other corporation or corporations is merely nominal,
persons. the contract shall be subject to the provisions of the
preceding section insofar as the latter corporation or
A director, trustee or officer shall not attempt to
corporations are concerned.
acquire, or acquire any interest adverse to the
corporation in respect of any matter which has been Stockholdings exceeding twenty percent (20%) of
reposed in them in confidence, and upon which, the outstanding capital stock shall be considered
equity imposes a disability upon themselves to deal substantial for purposes of interlocking directors.
in their own behalf; otherwise, the said director,
trustee or officer shall be liable as a trustee for the Section 33
corporation and must account for the profits which Disloyalty of a Director.— Where a director, by
otherwise would have accrued to the corporation. virtue of such office, acquires a business
opportunity which should belong to the corporation,
Section 31
thereby obtaining profits to the prejudice of such
Dealings of Directors, Trustees or Officers with the corporation, the director must account for and
Corporation.— A contract of the corporation with refund to the latter all such profits, unless the act
one (1) or more of its directors, trustees, officers or has been ratified by a vote of the stockholders
their spouses and relatives within the fourth civil owning or representing at least two-thirds ( 2⁄3) of the
degree of consanguinity or affinity is voidable, at outstanding capital stock. This provision shall be
the option of such corporation, unless all the applicable, notwithstanding the fact that the director
following conditions are present: risked one’s own funds in the venture.
a. The presence of such director or trustee in Section 34
the board meeting in which the contract was
approved was not necessary to constitute a Executive, Management, and Other Special
quorum for such meeting; Committees.— If the bylaws so provide, the board
may create an executive committee composed of at
b. The vote of such director or trustee was not least three (3) directors. Said committee may act, by
necessary for the approval of the contract; majority vote of all its members, on such specific
matters within the competence of the board, as may
c. The contract is fair and reasonable under the
be delegated to it in the bylaws or by majority vote
circumstances;
of the board, except with respect to the: (a) approval
d. In case of corporations vested with public of any action for which shareholders’ approval is
interest, material contracts are approved by also required; (b) filling of vacancies in the board;
at least two-thirds (2⁄3) of the entire (c) amendment or repeal of bylaws or the adoption
membership of the board, with at least a of new bylaws; (d) amendment or repeal of any
majority of the independent directors voting resolution of the board which by its express terms is
to approve the material contract; and not amendable or repealable; and (e) distribution of
cash dividends to the shareholders.
e. In case of an officer, the contract has been
previously authorized by the board of The board of directors may create special
directors. committees of temporary or permanent nature and
determine the members’ term, composition,
Where any of the first three (3) conditions set forth compensation, powers, and responsibilities.
in the preceding paragraph is absent, in the case of a
contract with a director or trustee, such contract Title IV
may be ratified by the vote of the stockholders Powers of Corporations
representing at least two-thirds (2⁄3) of the Section 35
outstanding capital stock or of at least two-thirds
Corporate Powers and Capacity.— Every
(2⁄3) of the members in a meeting called for the
corporation incorporated under this Code has the
purpose: Provided, That full disclosure of the
power and capacity:
 a. To sue and be sued in its corporate name; when allowed in the bylaws or done with the
consent of the stockholder, sent electronically in
b. To have perpetual existence unless the
accordance with the rules and regulations of the
certificate of incorporation provides
Commission on the use of electronic data messages.
otherwise;
In case of extension of corporate term, a dissenting
c. To adopt and use a corporate seal; stockholder may exercise the right of appraisal
under the conditions provided in this Code.
d. To amend its articles of incorporation in
accordance with the provisions of this Code; Section 37
e. To adopt bylaws, not contrary to law, morals Power to Increase or Decrease Capital Stock;
or public policy, and to amend or repeal the Incur, Create or Increase Bonded Indebtedness.
same in accordance with this Code; — No corporation shah increase or decrease its
capital stock or incur, create or increase any bonded
f. In case of stock corporations, to issue or sell indebtedness unless approved by a majority vote of
stocks to subscribers and to sell treasury the board of directors and by two-thirds (2⁄3) of the
stocks in accordance with the provisions of outstanding capital stock at a stockholders’ meeting
this Code; and to admit members to the duly called for the purpose. Written notice of the
corporation if it be a nonstock corporation; time and place of the stockholders’ meeting and the
g. To purchase, receive, take or grant, hold, purpose for said meeting must be sent to the
convey, sell, lease, pledge, mortgage, and stockholders at their places of residence as shown in
otherwise deal with such real and personal the books of the corporation and served on the
property, including securities and bonds of stockholders personally, or through electronic
other corporations, as the transaction of the means recognized in the corporation’s bylaws
lawful business of the corporation may and/or the Commission’s rules as a valid mode for
reasonably and necessarily require, subject service of notices.
to the limitations prescribed by law and the A certificate must be signed by a majority of the
Constitution; directors of the corporation and countersigned by
h. To enter into a partnership, joint venture, the chairperson and secretary of the stockholders’
merger, consolidation, or any other meeting, setting forth:
commercial agreement with natural and a. That the requirements of this section have
juridical persons; been complied with;
i. To make reasonable donations, including b. The amount of the increase or decrease of
those for the public welfare or for hospital, the capital stock;
charitable, cultural, scientific, civic, or
similar purposes: Provided, That no foreign c. In case of an increase of the capital stock,
corporation shall give donations in aid of the amount of capital stock or number of
any political party or candidate or for shares of no-par stock thereof actually
purposes of partisan political activity; subscribed, the names, nationalities and
addresses of the persons subscribing, the
j. To establish pension, retirement, and other amount of capital stock or number of no-par
plans for the benefit of its directors, trustees, stock subscribed by each, and the amount
officers, and employees; and paid by each on the subscription in cash or
k. To exercise such other powers as may be property, or the amount of capital stock or
essential or necessary to carry out its number of shares of no-par stock allotted to
purpose or purposes as stated in the articles each stockholder if such increase is for the
of incorporation. purpose of making effective stock dividend
therefor authorized;
Section 36
d. Any bonded indebtedness to be incurred,
Power to Extend or Shorten Corporate Term.— A created or increased;
private corporation may extend or shorten its term
as stated in the articles of incorporation when e. The amount of stock represented at the
approved by a majority vote of the board of meeting; and
directors or trustees, and ratified at a meeting by the f. The vote authorizing the increase or
stockholders or members representing at least two- decrease of the capital stock, or the
thirds (2⁄3) of the outstanding capital stock or of its incurring, creating or increasing of any
members. Written notice of the proposed action and bonded indebtedness.
the time and place of the meeting shall be sent to
stockholders or members at their respective place of Any increase or decrease in the capital stock or the
residence as shown in the books of the corporation, incurring, creating or increasing of any bonded
and must be deposited to the addressee in the post indebtedness shall require prior approval of the
office with postage prepaid, served personally, or Commission, and where appropriate, of the
Philippine Competition Commission. The known as the “Philippine Competition Act”, and
application with the Commission shall be made other related laws, a corporation may, by a majority
within six (6) months from the date of approval of vote of its board of directors or trustees, sell, lease,
the board of directors and stockholders, which exchange, mortgage, pledge, or otherwise dispose of
period may be extended for justifiable reasons. its property and assets, upon such terms and
conditions and for such consideration, which may
Copies of the certificate shall be kept on file in the
be money, stocks, bonds, or other instruments for
office of the corporation and filed with the
the payment of money or other property or
Commission and attached to the original articles of
consideration, as its board of directors or trustees
incorporation. After approval by the Commission
may deem expedient.
and the issuance by the Commission of its
certificate of filing, the capital stock shall be A sale of all or substantially all of the corporation’s
deemed increased or decreased and the incurring, properties and assets, including its goodwill, must
creating or increasing of any bonded indebtedness be authorized by the vote of the stockholders
authorized, as the certificate of fifing may representing at least two-thirds (2⁄3) of the
declare: Provided, That the Commission shall not outstanding capital stock, or at least two-thirds (2⁄3)
accept for filing any certificate of increase of capital of the members, in a stockholders’ or members’
stock unless accompanied by a sworn statement of meeting duly called for the purpose.
the treasurer of the corporation lawfully holding
In nonstock corporations where there are no
office at the time of the filing of the certificate,
members with voting rights, the vote of at least a
showing that at least twenty-five percent (25%) of
majority of the trustees in office will be sufficient
the increase in capital stock has been subscribed and
authorization for the corporation to enter into any
that at least twenty-five percent (25%) of the
transaction authorized by this section.
amount subscribed has been paid in actual cash to
the corporation or that property, the valuation of The determination of whether or not the sale
which is equal to twenty-five percent (25%) of the involves all or substantially all of the corporation’s
subscription, has been transferred to the properties and assets must be computed based on its
corporation: Provided, further, That no decrease in net asset value, as shown in its latest financial
capital stock shall be approved by the Commission statements. A sale or other disposition shall be
if its effect shall prejudice the rights of corporate deemed to cover substantially all the corporate
creditors. property and assets if thereby the corporation would
be rendered incapable of continuing the business or
Nonstock corporations may incur, create or increase
accomplishing the purpose for which it was
bonded indebtedness when approved by a majority
incorporated.
of the board of trustees and of at least two-thirds
(2⁄3) of the members in a meeting duly called for the Written notice of the proposed action and of the
purpose. time and place for the meeting shall be addressed to
stockholders or members at their places of residence
Bonds issued by a corporation shall be registered
as shown in the books of the corporation and
with the Commission, which shall have the
deposited to the addressee in the post office with
authority to determine the sufficiency of the terms
postage prepaid, served personally, or when allowed
thereof.
by the bylaws or done with the consent of the
Section 38 stockholder, sent electronically: Provided, That any
dissenting stockholder may exercise the right of
Power to Deny Preemptive Right.— All appraisal under the conditions provided in this
stockholders of a stock corporation shah enjoy Code.
preemptive right to subscribe to all issues or
disposition of shares of any class, in proportion to After such authorization or approval by the
their respective shareholdings, unless such right is stockholders or members, the board of directors or
denied by the articles of incorporation or an trustees may, nevertheless, in its discretion, abandon
amendment thereto: Provided, That such such sale, lease, exchange, mortgage, pledge, or
preemptive right shall not extend to shares issued in other disposition of property and assets, subject to
compliance with laws requiring stock offerings or the rights of third parties under any contract relating
minimum stock ownership by the public; or to thereto, without further action or approval by the
shares issued in good faith with the approval of the stockholders or members.
stockholders representing two-thirds (2⁄3) of the
Nothing in this section is intended to restrict the
outstanding capital stock, in exchange for property
power of any corporation, without the authorization
needed for corporate purposes or in payment of a
by the stockholders or members, to sell, lease,
previously contracted debt.
exchange, mortgage, pledge, or otherwise dispose of
Section 39 any of its property and assets if the same is
necessary in the usual and regular course of
Sale or Other Disposition of Assets.— Subject to the business of the corporation or if the proceeds of the
provisions of Republic Act No. 10667, otherwise sale or other disposition of such property and assets
shall be appropriated for the conduct of its to all stockholders on the basis of outstanding stock
remaining business. held by them: Provided, That any cash dividends
due on delinquent stock shall first be applied to the
Section 40 unpaid balance on the subscription plus costs and
Power to Acquire Own Shares.— Provided that the expenses, while stock dividends shall be withheld
corporation has unrestricted retained earnings in its from the delinquent stockholders until their unpaid
books to cover the shares to be purchased or subscription is fully paid: Provided, further, That no
acquired, a stock corporation shall have the power stock dividend shall be issued without the approval
to purchase or acquire its own shares for a of stockholders representing at least two-thirds (2⁄3)
legitimate corporate purpose or purposes, including of the outstanding capital stock at a regular or
the following cases: special meeting duly called for the purpose.
a. To eliminate fractional shares arising out of Stock corporations are prohibited from retaining
stock dividends; surplus profits in excess of one hundred percent
(100%) of their paid-in capital stock, except: (a)
b. To collect or compromise an indebtedness to when justified by definite corporate expansion
the corporation, arising out of unpaid projects or programs approved by the board of
subscription, in a delinquency sale, and to directors; or (b) when the corporation is prohibited
purchase delinquent shares sold during said under any loan agreement with financial institutions
sale; and or creditors, whether local or foreign, from
c. To pay dissenting or withdrawing declaring dividends without their consent, and such
stockholders entitled to payment for their consent has not yet been secured; or (c) when it can
shares under the provisions of this Code. be clearly shown that such retention is necessary
under special circumstances obtaining in the
Section 41 corporation, such as when there is need for special
Power to Invest Corporate Funds in Another reserve for probable contingencies.
Corporation or Business or for Any Other Purpose. Section 43
— Subject to the provisions of this Code, a private
corporation may invest its funds in any other Power to Enter into Management Contract.— No
corporation, business, or for any purpose other than corporation shall conclude a management contract
the primary purpose for which it was organized, with another corporation unless such contract is
when approved by a majority of the board of approved by the board of directors and by
directors or trustees and ratified by the stockholders stockholders owning at least the majority of the
representing at least two-thirds (2⁄3) of the outstanding capital stock, or by at least a majority of
outstanding capital stock, or by at least two-thirds the members in the case of a nonstock corporation,
(2⁄3) of the members in the case of nonstock of both the managing and the managed corporation,
corporations, at a meeting duly called for the at a meeting duly called for the purpose: Provided,
purpose. Notice of the proposed investment and the That (a) where a stockholder or stockholders
time and place of the meeting shall be addressed to representing the same interest of both the managing
each stockholder or member at the place of and the managed corporations own or control more
residence as shown in the books of the corporation than one-third (1⁄3) of the total outstanding capital
and deposited to the addressee in the post office stock entitled to vote of the managing corporation;
with postage prepaid, served personally, or sent or (b) where a majority of theMnembers of the
electronically in accordance with the rules and board of directors of the managing corporation also
regulations of the Commission on the use of constitute a majority of the members of the board of
electronic data message, when allowed by the directors of the managed corporation, then the
bylaws or done with the consent of the management contract must be approved by the
stockholders: Provided, That any dissenting stockholders of the managed corporation owning at
stockholder shall have appraisal right as provided in least two-thirds (2⁄3) of the total outstanding capital
this Code: Provided, however, That where the stock entitled to vote, or by at least two-thirds ( 2⁄3)
investment by the corporation is reasonably of the members in the case of a nonstock
necessary to accomplish its primary purpose as corporation.
stated in the articles of incorporation, the approval These shall apply to any contract whereby a
of the stockholders or members shall not be corporation undertakes to manage or operate all or
necessary. substantially all of the business of another
  corporation, whether such contracts are called
Section 42 service contracts, operating agreements or
otherwise: Provided, however That such service
Power to Declare Dividends.— The board of contracts or operating agreements which relate to
directors of a stock corporation may declare the exploration, development, exploitation or
dividends out of the unrestricted retained earnings utilization of natural resources may be entered into
which shall be payable in cash, property, or in stock
for such periods as may be provided by pertinent mode of notifying the stockholders or
laws or regulations. members thereof;
No management contract shall be entered into for a c. The required quorum in meetings of
period longer than five (5) years for any one (1) stockholders or members and the manner of
term. voting therein;
Section 44 d. The modes by which a stockholder, member,
director, or trustee may attend meetings and
Ultra Vires Acts of Corporations.— No corporation cast their votes;
shall possess or exercise corporate powers other
than those conferred by this Code or by its articles e. The form for proxies of stockholders and
of incorporation and except as necessary or members and the manner of voting them;
incidental to the exercise of the powers conferred.
f. The directors’ or trustees’ qualifications,
Title V duties and responsibilities, the guidelines for
Bylaws setting the compensation of directors or
Section 45 trustees and officers, and the maximum
number of other board representations that
Adoption of Bylaws.— For the adoption of bylaws an independent director or trustee may have
by the corporation, the affirmative vote of the which shall, in no case, be more than the
stockholders representing at least a majority of the number prescribed by the Commission;
outstanding capital stock, or of at least a majority of
the members in case of nonstock corporations, shall g. The time for holding the annual election of
be necessary. The bylaws shall be signed by the directors or trustees and the mode or manner
stockholders or members voting for them and shall of giving notice thereof;
be kept in the principal office of the corporation,
h. The manner of election or appointment and
subject to the inspection of the stockholders or
the term of office of all officers other than
members during office hours. A copy thereof, duly
directors or trustees;
certified by a majority of the directors or trustees
and countersigned by the secretary of the i. The penalties for violation of the bylaws;
corporation, shall be filed with the Commission and
j. In the case of stock corporations, the manner
attached to the original articles of incorporation.
of issuing stock certificates; and
Notwithstanding the provisions of the preceding
k. Such other matters as may be necessary for
paragraph, bylaws may be adopted and filed prior to
the proper or convenient transaction of its
incorporation; in such case, such bylaws shall be
corporate affairs for the promotion of good
approved and signed by all the incorporators and
governance and anti-graft and corruption
submitted to the Commission, together with the
measures.
articles of incorporation.
An arbitration agreement may be provided in the
In all cases, bylaws shall be effective only upon the
bylaws pursuant to Section 181 of this Code.
issuance by the Commission of a certification that
the bylaws are in accordance with this Code. Section 47
The Commission shall not accept for filing the Amendment to Bylaws.— A majority of the board of
bylaws or any amendment thereto of any bank, directors or trustees, and the owners of at least a
banking institution, building and loan association, majority of the outstanding capital stock, or at least
trust company, insurance company, public utility, a majority of the members of a nonstock
educational institution, or other special corporations corporation, at a regular or special meeting duly
governed by special laws, unless accompanied by a called for the purpose, may amend or repeal the
certificate of the appropriate government agency to bylaws or adopt new bylaws. The owners of two-
the effect that such bylaws or amendments are in thirds (2⁄3) of the outstanding capital stock or two-
accordance with law. thirds (2⁄3) of the members in a nonstock corporation
may delegate to the board of directors or trustees the
Section 46
power to gimend or repeal the bylaws or adopt new
Contents of Bylaws.— A private corporation may bylaws: Provided, That any power delegated to the
provide the following in its bylaws: board of directors or trustees to amend or repeal the
bylaws or adopt new bylaws shall be considered as
a. The time, place and manner of calling and
revoked whenever stockholders owning or
conducting regular or special meetings of
representing a majority of the outstanding capital
the directors or trustees;
stock or majority of the members shall so vote at a
b. The time and manner of calling and regular or special meeting.
conducting regular or special meetings and
Whenever the bylaws are amended or new bylaws
are adopted, the corporation shall file with the
Commission such amended or new bylaws and, if governance and the protection of
applicable, the stockholders’ or members’ minority stockholders;
resolution authorizing the delegation of the power to
b. A members’ list for nonstock corporations
amend and/or adopt new bylaws, duly certified
and, for stock corporations, material
under oath by the corporate secretary and a majority
information on the current stockholders, and
of the directors or trustees.
their voting rights;
The amended or new bylaws shall only be effective
c. A detailed, descriptive, balanced and
upon the issuance by the Commission of a
comprehensible assessment of the
certification that the same is in accordance with this
corporation’s performance, which shall
Code and other relevant laws.
include information on any material change
Title VI in the corporation’s business, strategy, and
Meetings other affairs;
Section 48
d. A financial report for the preceding year,
Kinds of Meetings.— Meetings of directors, trustees, which shall include financial statements duly
stockholders, or members may be regular or special. signed and certified in accordance with this
Code and the rules the Commission may
Section 49 prescribe, a statement on the adequacy of the
Regular and Special Meetings of Stockholders or corporation’s internal controls or risk
Members.— Regular meetings of stockholders or management systems, and a statement of all
members shall be held annually on a date fixed in external audit and non-audit fees;
the bylaws, or if not so fixed, on any date after April e. An explanation of the dividend policy and
15 of every year as determined by the board of the fact of payment of dividends or the
directors or trustees: Provided, That written notice reasons for nonpayment thereof;
of regular meetings shall be sent to all stockholders
or members of record at least twenty-one (21) days f. Director or trustee profiles which shall
prior to the meeting, unless a different period is include, among others, their qualifications
required in the bylaws, law, or and relevant experience, length of service in
regulation: Provided, further, That written notice of the corporation, trainings and continuing
regular meetings may be sent to all stockholders or education attended, and their board
members of record through electronic mail or such representations in other corporations;
other manner as the Commission shall allow under
g. A director or trustee attendance report,
its guidelines.
indicating the attendance of each director or
At each regular meeting of stockholders or trustee at each of the meetings of the board
members, the board of directors or trustees shall and its committees and in regular or special
endeavor to present to stockholders or members the stockholder meetings;
following:
h. Appraisals and performance reports for the
a. The minutes of the most recent regular board and the criteria and procedure for
meeting which shall include, among others: assessment;
1. A description of the voting and vote i. A director or trustee compensation report
tabulation procedures used in the prepared in accordance with this Code and
previous meeting; the rules the Commission may prescribe;
2. A description of the opportunity j. Director disclosures on self-dealings and
given to stockholders or members to related party transactions; and/or
ask questions and a record of the
k. The profiles of directors nominated or
questions asked and answers given;
seeking election or reelection.
3. The matters discussed and
A director, trustee, stockholder, or member may
resolutions reached;
propose any other matter for inclusion in the agenda
4. A record of the voting results for at any regular meeting of stockholders or members.
each agenda item;
Special meetings of stockholders or members shall
5. A list of the directors or trustees, be held at any time deemed necessary or as
officers and stockholders or provided in the bylaws: Provided, however, That at
members who attended the meeting; least one (1) week written notice shall be sent to all
and stockholders or members, unless a different period
is provided in the bylaws, law or regulation.
6. Such other items that the
Commission may require in the
interest of good corporate
A stockholder or member may propose the holding purposes of this section, be considered a city or
of a special meeting and items to be included in the municipality.
agenda.
Notice of meetings shall be sent through the means
Notice of any meeting may be waived, expressly or of communication provided in the bylaws, which
impliedly, by any stockholder or member: Provided, notice shall state the time, place and purpose of the
That general waivers of notice in the articles of meetings.
incorporation or the bylaws shall not be
Each notice of meeting shall further be
allowed: Provided, further, That attendance at a
accompanied by the following:
meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting a. The agenda for the meeting;
for the express purpose of objecting to the
transaction of any business because the meeting is b. A proxy form which shall be submitted to
not lawfully called or convened. the corporate secretary within a reasonable
time prior to the meeting;
Whenever for any cause, there is no person
authorized or the person authorized unjustly refuses c. When attendance, participation, and voting
to call a meeting, the Commission, upon petition of are allowed by remote communication or in
a stockholder or member on a showing of good absentia the requirements and procedures to
cause therefor, may issue an order, directing the be followed when a stockholder or member
petitioning stockholder or member to call a meeting elects either option; and
of the corporation by giving proper notice required d. When the meeting is for the election of
by this Code or the bylaws. The petitioning directors or trustees, the requirements and
stockholder or member shall preside thereat until at procedure for nomination and election.
least a majority of the stockholders or members
present have chosen from among themselves, a All proceedings and any business transacted at a
presiding officer. meeting of the stockholders or members, if within
the powers or authority of the corporation, shall be
Unless the bylaws provide for a longer period, the valid even if the meeting is improperly held or
stock and transfer book or membership book shall called: Provided, That all the stockholders or
be closed at least twenty (20) days for regular members of the corporation are present or duly
meetings and seven (7) days for special meetings represented at the meeting and not one of them
before the scheduled date of the meeting. expressly states at the beginning of the meeting that
In case of postponement of stockholders’ or the purpose of their attendance is to object to the
members’ regular meetings, written notice thereof transaction of any business because the meeting is
and the reason therefor shall be sent to all not lawfully called or convened.
stockholders or members of record at least two (2) Section 51
weeks prior to the date of the meeting, unless a
different period is required under the bylaws, law or Quorum in Meetings.— Unless otherwise provided
regulation. in this Code or in the bylaws, a quorum shall consist
of the stockholders representing a majority of the
The right to vote of stockholders or members may outstanding capital stock or a majority of the
be exercised in person, through a proxy, or when so members in the case of nonstock corporations.
authorized in the bylaws, through remote
communication or in absentia. The Commission Section 52
shall issue the rules and regulations governing Regular and Special Meetings of Directors or
participation and voting through remote Trustees; Quorum.— Unless the articles of
communication or in absentia taking into account incorporation or the bylaws provides for a greater
the company’s scale, number of shareholders or majority, a majority of the directors or trustees as
members, structure, and other factors consistent stated in the articles of incorporation shall constitute
with the protection and promotion of shareholders’ a quorum to transact corporate business, and every
or members’ meetings. decision reached by at least a majority of the
Section 50 directors or trustees constituting a quorum, except
for the election of officers which shall require the
Place and Time of Meetings of Stockholders or vote of a majority of all the members of the board,
Members.— Stockholders’ or members’ meetings, shall be valid as a corporate act.
whether regular or special, shall be held in the
principal office of the corporation as set forth in the Regular meetings of the board of directors or
articles of incorporation, or, if not practicable, in the trustees of every corporation shall be held monthly,
city or municipality where the principal office of the unless the bylaws provide otherwise.
corporation is located: Provided, That any city or Special meetings of the board of directors or
municipality in Metro Manila, Metro Cebu, Metro trustees may be held at any time upon the call of the
Davao, and other Metropolitan areas shall, for president or as provided in the bylaws.
Meetings of directors or trustees of corporations Voting Right for Treasury Shares.— Treasury shares
may be held anywhere in or outside of the shall have no voting right as long as such shares
Philippines, unless the bylaws provide otherwise. remain in the Treasury.
Notice of regular or special meetings statirtg the
date, time and place of the meeting must be sent to Section 57
every director or trustee at least two (2) days prior Manner of Voting; Proxies.— Stockholders and
to the scheduled meeting, unless a longer time is members may vote in person or by proxy in all
provided in the bylaws. A director or trustee may meetings of stockholders or members.
waive this requirement, either expressly or
impliedly. When so authorized in the bylaws or by a majority
of the board of directors, the stockholders or
Directors or trustees who cannot physically attend members of corporations may also vote through
or vote at board meetings can participate and vote remote communication or in absentia : Provided,
through remote communication such as That the votes are received before the corporation
videoconferencing, teleconferencing, or other finishes the tally of votes.
alternative modes of communication that allow
them reasonable opportunities to participate. A stockholder or member who participates through
Directors or trustees cannot attend or vote by proxy remote communication or in absentia shall be
at board meetings. deemed present for purposes of quorum.

A director or trustee who has a potential interest in The corporation shall establish the appropriate
any related party transaction must recuse from requirements and procedures for voting through
voting on the approval of the related party remote communication and in absentia taking into
transaction without prejudice to compliance with account the company’s scale, number of
the requirements of Section 31 of this Code. shareholders or members, structure and other factors
consistent with the basic right of corporate suffrage.
Section 53
Proxies shall be in writing, signed and filed, by the
Who Shall Preside at Meetings.— The chairman or, stockholder or member, in any form authorized in
in his absence, the president shall preside at all the bylaws and received by the corporate secretary
meetings of the directors or trustees as well as of the within a reasonable time before the scheduled
stockholders or members, unless the bylaws provide meeting. Unless otherwise provided in the proxy
otherwise. form, it shall be valid only for the meeting for
which it is intended. No proxy shall be valid and
Section 54
effective for a period longer than five (5) years at
Right to Vote of Secured Creditors and any one time.
Administrators.— In case a stockholder grants
Section 58
security interest in his or her shares in stock
corporations, the stockholder-grantor shall have the Voting Trusts.— One or more stockholders of a
right to attend and vote at meetings of stockholders, stock corporation may create a voting trust for the
unless the secured creditor is expressly given by the purpose of conferring upon a trustee or trustees the
stockholder-grantor such right in writing which is right to vote and other rights pertaining to the shares
recorded in the appropriate corporate books. for a period not exceeding five (5) years at any
time: Provided, That in the case of a voting trust
Executors, administrators, receivers, and other legal
specifically required as a condition in a loan
representatives duly appointed by the court
agreement, said voting trust may be for a period
may,attend and vote in behalf of the stockholders or
exceeding five (5) years but shall automatically
members without need of any written proxy.
expire upon full payment of the loan. A voting trust
Section 55 agreement must be in writing and notarized, and
shall specify the terms and conditions thereof.
Voting in Case of Joint Ownership of Stock.— The
consent of all the co-owners shall be necessary in A certified copy of such agreement shall be filed
voting shares of stock owned jointly by two (2) or with the corporation and with the Commission;
more persons, unless there is a written proxy, signed otherwise, the agreement is ineffective and
by all the co-owners, authorizing one (1) or some of unenforceable. The certificate or certificates of
them or any other person to vote such share or stock covered by the voting trust agreement shall be
shares: Provided, That when the shares are owned cancelled and new ones shall be issued in the name
in an “and/or” capacity by the holders thereof, any of the trustee or trustees, stating that they are issued
one of the joint owners can vote said shares or pursuant to said agreement. The books of the
appoint a proxy therefor. corporation shall state that the transfer in the name
of the trustee or trustees is made pursuant to the
Section 56 voting trust agreement.
The trustee or trustees shall execute and deliver to
the transferors, voting trust certificates, which shall
be transferable in the same manner and with the a. Actual cash paid to the corporation;
same effect as certificates of stock.
b. Property, tangible or intangible, actually
The voting trust agreement filed with the received by the corporation and necessary or
corporation shall be subject to examination by any convenient for its use and lawful purposes at
stockholder of the corporation in the same manner a fair valuation equal to the par or issued
as any other corporate book or record: Provided, value of the stock issued;
That both the trustor and the trustee or trustees may
c. Labor performed for or services actually
exercise the right of inspection of all corporate
rendered to the corporation;
books and records in accordance with the provisions
of this Code. d. Previously incurred indebtedness of the
corporation;
Any other stockholder may transfer the shares to the
same trustee or trustees upon the terms and e. Amounts transferred from unrestricted
conditions stated in the voting trust agreement, and retained earnings to stated capital;
thereupon shall be bound by all the provisions of
said agreement. f. Outstanding shares exchanged for stocks in
the event of reclassification or conversion;
No voting trust agreement shall be entered into for
purposes of circumventing the laws against anti- g. Shares of stock in another corporation;
competitive agreements, abuse of dominant and/or
position, anti-competitive mergers and acquisitions, h. Other generally accepted form of
violation of nationality band capital requirements, or consideration.
for the perpetuation of fraud.
Where the consideration is other than actual cash, or
Unless expressly renewed, all rights granted in a consists of intangible property such as patents or
voting trust agreement shall automatically expire at copyrights, the valuation thereof shall initially be
the end of the agreed period. The voting trust determined by the stockholders or the board of
certificates as well as the certificates of stock in the directors, subject to the approval of the
name of the trustee or trustees shall thereby be Commission.
deemed cancelled and new certificates of stock shall
be reissued in the name of the trustors. Shares of stock shall not be issued in exchange for
promissory notes or future service. The same
The voting trustee or trustees may vote by proxy or considerations provided in this section, insofar as
in any manner authorized under the bylaws unless applicable, may be used for the issuance of bonds
the agreement provides otherwise. by the corporation.
Title VII The issued price of no-par value shares may be
Stocks and Stockholders fixed in the articles of incorporation or by the board
Section 59 of directors pursuant to authority conferred by the
Subscription Contract.— Any contract for the articles of incorporation or the bylaws, or if not so
acquisition of unissued stock in an existing fixed, by the stockholders representing at least a
corporation or a corporation still to be formed shall majority of the outstanding capital stock at a
be deemed a subscription within the meaning of this meeting duly called for the purpose.
Title, notwithstanding the fact that the parties refer Section 62
to it as a purchase or some other contract.
Certificate of Stock and Transfer of Shares.— The
Section 60 capital stock of corporations shall be divided into
Pre-incorporation Subscription.— A subscription of shares for which certificates signed by the president
shares in a corporation still to be formed shall be or vice president, countersigned by the secretary or
irrevocable for a period of at least six (6) months assistant secretary, and sealed with the seal of the
from the date of subscription, unless all of the other corporation shall be issued in accordance with the
subscribers consent to the revocation, or the bylaws. Shares of stock so issued are personal
corporation fails to incorporate within the same property and may be transferred by delivery of the
period or within a longer period stipulated in the certificate or certificates indorsed by the owner, his
contract of subscription. No pre-incorporation attorney-in-fact, or any other person legally
subscription may be revoked after the articles of authorized to make the transfer. No transfer,
incorporation is submitted to the Commission. however, shall be valid, except as between the
parties, until the transfer is recorded in the books of
Section 61 the corporation showing the names of the parties to
the transaction, the date of the transfer, the number
Consideration for Stocks.— Stocks shall not be
of the certificate or certificates, and the number of
issued for a consideration less than the par or issued
shares transferred. The Commission may require
price thereof. Consideration for the issuance of
corporations whose securities are traded in trading
stock may be:
markets and which can reasonably demonstrate their
capability to do so to issue their securities or shares provided, unless the board of directors orders
of stocks in uncertificated or scripless form in otherwise.
accordance with the rules of the Commission.
Section 67
No shares of stock against which the corporation
holds any unpaid claim shall be transferable in the Delinquency Sale.— The board of directors may, by
books of the corporation. resolution, order the sale of delinquent stock and
shall specifically state the amount due on each
Section 63 subscription plus all accrued interest, and the date,
time and place of the sale which shall not be less
Issuance of Stock Certificates.— No certificate of
than thirty (30) days nor more than sixty (60) days
stock shall be issued to a subscriber until the full
from the date the stocks become delinquent.
amount of the subscription together with interest
and expenses (in case of delinquent shares), if any is Notice of the sale, with a copy of the resolution,
due, has been paid. shall be sent to every delinquent stockholder either
personally, by registered mail, or through other
Section 64 means provided in the bylaws. The same shall be
Liability of Directors for Watered Stocks.— A published once a week for two (2) consecutive
director or officer of a corporation who: (a) weeks in a newspaper of general circulation in the
consents to the issuance of stocks for a province or city where the principal office of the
consideration less than its par or issued value; (b) corporation is located.
consents to the issuance of stocks for a Unless the delinquent stockholder pays to the
consideration other than cash, valued in excess of its corporation, on or before the date specified for the
fair value; or (c) having knowledge of the sale of the delinquent stock, the balance due on the
insufficient consideration, does not file a written former’s subscription, plus accrued interest, costs of
objection with the corporate secretary, shall be advertisement and expenses of sale, or unless the
liable to the corporation or its creditors, solidarily board of directors otherwise orders, said delinquent
with the stockholder concerned for the difference stock shall be sold at a public auction to such bidder
between the value received at the time of issuance who shall offer to pay the full amount of the balance
of the stock and the par or issued value of the same. on the subscription together with accrued interest,
Section 65 costs of advertisement and expenses of sale, for the
smallest number of shares or fraction of a share.
Interest on Unpaid Subscriptions.— Subscribers to The stock so purchased shall be transferred to such
stocks shall be liable to the corporation for interest purchaser in the books of the corporation and a
on all unpaid subscriptions from the date of certificate for such stock shall be issued in the
subscription, if so required by and at the rate of purchaser’s favor. The remaining shares, if any,
interest fixed in the subscription contract. If no rate shall be credited in favor of the delinquent
of interest is fixed in the subscription contract, the stockholder who shall likewise be entitled to the
prevailing legal rate shall apply. issuance of a certificate of stock covering such
Section 66 shares.

Payment of Balance of Subscription.— Subject to Should there be no bidder at the public auction who
the provisions of the subscription contract, the offers to pay the full amount of the balance on the
board of directors may, at any time, declare due and subscription together with accrued interest, costs of
payable to the corporation unpaid subscriptions and advertisement, and expenses of sale, for the smallest
may collect the same or such percentage thereof, in number of shares or fraction of a share, the
either case, with accrued interest, if any, as it may corporation may, subject to the provisions of this
deem necessary. Code, bid for the same, and the total amount due
shall be credited as fully paid in the books of the
Payment of unpaid subscription or any percentage corporation. Title to all the shares of stock covered
thereof, together with any interest accrued, shall be by the subscription shall be vested in the
made on the date specified in the subscription corporation as treasury shares and may be disposed
contract or on the date stated in the call made by the of by said corporation in accordance with the
board. Failure to pay on such date shall render the provisions of this Code.
entire balance due and payable and shall make the
stockholder liable for interest at the legal rate on Section 68
such balance, unless a different interest rate is When Sale May be Questioned.— No action to
provided in the subscription contract. The interest recover delinquent stock sold can be sustained upon
shall be computed from the date specified, until full the ground of irregularity or defect in the notice of
payment of the subscription. If no payment is made sale, or in the sale itself of the delinquent stock,
within thirty (30) days from the said date, all stocks unless the party seeking to maintain such action first
covered by the subscription shall thereupon becoihe pays or tenders to the party holding the stock the
delinquent and shall be subject to sale as hereinafter sum for which the same was sold, with interest from
the date of sale at the legal rate. No such action of the last publication, if no contest has been
shall be maintained unless a complaint is filed presented to the corporation regarding the
within six (6) months from the date of sale. certificate of stock, the right to make such
contest shall be barred and the corporation
Section 69 shall cancel the lost, destroyed or stolen
Court Action to Recover Unpaid Subscription. certificate of stock in its books. In lieu
— Nothing in this Code shall prevent the thereof, the corporation shall issue a new
corporation from collecting through court action, certificate of stock, unless the registered
the amount due on any unpaid subscription, with owner files a bond or other security as may
accrued interest, costs and expenses. be required, effective for a period of one (1)
year, for such amount and in such form and
Section 70 with such sureties as may be satisfactory to
Effect of Delinquency.— No delinquent stock shall the board of directors, in which case a new
be voted for, be entitled to vote, or be represented at certificate may be issued even before the
any stockholder’s meeting, nor shall the holder expiration of the one (1) year period
thereof be entitled to any of the rights of a provided herein. If a contest has been
stockholder except the right to dividends in presented to the corporation or if an action is
accordance with the provisions of this Code, until pending in court regarding the ownership of
and unless payment is made by the holder of such the certificate of stock which has been lost,
delinquent stock for the amount due on the stolen or destroyed, the issuance of the new
subscription with accrued interest, and the costs and certificate of stock in lieu thereof shall be
expenses of advertisement, if any. suspended until the court renders a final
decision regarding the ownership of the
Section 71 certificate of stock which has been lost,
Rights of Unpaid Shares, Nondelinquent.— Holders stolen or destroyed.
of subscribed shares not fully paid which are not Except in case of fraud, bad faith, or negligence on
delinquent shall have all the rights of a stockholder. the part of the corporation and its officers, no action
Section 72 may be brought against any corporation which shall
hpve issued certificate of stock in lieu of those lost,
Lost or Destroyed Certificates.— The following stolen or destroyed pursuant to the procedure above-
procedure shall be followed by a corporation in described.
issuing new certificates of stock in lieu of those
which have been lost, stolen or destroyed: Title VIII
Corporate Books and Records
a. The registered owner of a certificate of stock Section 73
in a corporation or such person’s legal
representative shall file with the corporation Books to be Kept; Stock Transfer Agent.— Every
an affidavit in triplicate setting forth, if corporation shall keep and carefully preserve at its
possible, the circumstances as to how the principal office all information relating to the
certificate was lost, stolen or destroyed, the corporation including, but not limited to:
number of shares represented by such a. The articles of incorporation and bylaws of
certificate, the serial number of the the corporation and all their amendments;
certificate and the name of the corporation
which issued the same. The owner of such b. The current ownership structure and voting
certificate of stock shall also submit such rights of the corporation, including lists of
other information and evidence as may be stockholders or members, group structures,
deemed necessary; and intra-group relations, ownership data, and
beneficial ownership;
b. After verifying the affidavit and other
information and evidence with the books of c. The names and addresses of all the members
the corporation, the corporation shall publish of the board of directors or trustees and the
a notice in a newspaper of general executive officers;
circulation in the place where the d. A record of all business transactions;
corporation has its principal office, once a
week for three (3) consecutive weeks at the e. A record of the resolutions of the board of
expense of the registered owner of the directors or trustees and of the stockholders
certificate of stock which has been lost, or members;
stolen or destroyed. The notice shall state f. Copies of the latest reportorial requirements
the name of the corporation, the name of the submitted to the Commission; and
registered owner, the serial number of the
certificate, the number of shares represented g. The minutes of all meetings of stockholders
by such certificate, and shall state that after or members, or of the board of directors or
the expiration of one (1) year from the date trustees. Such minutes shall set forth in
 detail, among others: the time and place of refusal: Provided, further, That it shall be a defense
the meeting held, how it was authorized, the to any action under this section that the person
notice given, the agenda therefor, whether demanding to examine and copy excerpts from the
the meeting was regular or special, its object corporation’s records and minutes has improperly
if special, those present and absent, and used any information secured through any prior
every act done or ordered done at the examination of the records or minutes of such
meeting. Upon the demand of a director, corporation or of any other corporation, or was not
trustee, stockholder or member, the time acting in good faith or for a legitimate purpose in
when any director, trustee, stockholder or making the demand to examine or reproduce
member entered or left the meeting must be corporate records, or is a competitor, director,
noted in the minutes; and on a similar officer, controlling stockholder or otherwise
demand, the yeas and nays must be taken on represents the interests of a competitor.
any motion or proposition, and a record
If the corporation denies or does not act on a
thereof carefully made. The protest of a
demand for inspection and/or reproduction, the
director, trustee, stockholder or member on
aggrieved party may report such denial or inaction
any action or proposed action must be
to the Commission. Within five (5) days from
recorded in full upon their demand.
receipt of such report, the Commission shall
Corporate records, regardless of the form in which conduct a summary investigation and issue an order
they are stored, shall be open to inspection by any directing the inspection or reproduction of the
director, trustee, stockholder or member of the requested records.
corporation in person or by a representative at
Stock corporations must also keep a stock and
reasonable hours on business days, and a demand in
transfer book, which shall contain a record of all
writing may be made by such director, trustee or
stocks in the names of the stockholders
stockholder at their expense, for copies of such
alphabetically arranged; the installments paid and
records or excerpts from said records. The
unpaid on all stocks for which subscription has been
inspecting or reproducing party shall remain bound
made, and the date of payment of any installment; a
by confidentiality rules under prevailing laws, such
statement of every alienation, sale or transfer of
as the rules on trade secrets or processes under
stock made, the date thereof, by and to whom made;
Republic Act No. 8293, otherwise known as the
and such other entries as the bylaws may prescribe.
“Intellectual Property Code of the Philippines”, as
The stock and transfer book shall be kept in the
amended, Republic Act No. 10173, otherwise
principal office of the corporation or in the office of
known as the “Data Privacy Act of 2012”, Republic
its stock transfer agent and shall be open for
Act No. 8799, otherwise known as “The Securities
inspection by any director or stockholder of the
Regulation Code”, and the Rules of Court.
corporation at reasonable hours on business days.
A requesting party who is not a stockholder or
A stock transfer agent or one engaged principally in
member of record, or is a competitor, director,
the business of registering transfers of stocks in
officer, controlling stockholder or otherwise
behalf of a stock corporation shall be allowed to
represents the interests of a competitor shall have no
operate in the Philippines upon securing a license
right to inspect or demand reproduction of corporate
from the Commission and the payment of a fee to
records.
be fixed by the Commission, which shall be
Any stockholder who shall abuse the rights granted renewable annually: Provided, That a stock
under this section shall be penalized under Section corporation is not precluded from performing or
158 of this Code, without prejudice to the making transfers of its own stocks, in which case all
provisions of Republic Act No. 8293, otherwise the rules and regulations imposed on stock transfer
known as the “Intellectual Property Code of the agents, except the payment of a license fee herein
Philippines”, as amended, and Republic Act No. provided, shall be applicable: Provided, further,
10173, otherwise known as the “Data Privacy Act That the Commission may require stock
of 2012”. corporations which transfer and/or trade stocks in
secondary markets to have an independent transfer
Any officer or agent of the corporation who shall
agent.
refuse to allow the inspection and/or reproduction of
records in accordance with the provisions of this Section 74
Code shall be liable to such director, trustee,
stockholder or member for damages, and in Right to Financial Statements.— A corporation shall
addition, shall be guilty of an offense which shall be furnish a stockholder or member, within ten (10)
punishable under Section 161 of this days from receipt of their written request, its most
Code: Provided, That if such refusal is made recent financial statement, in the form and
pursuant to a resolution or order of the board of substance of the financial reporting required by the
directors or trustees, the liability under this section Commission.
for such action shall be imposed upon the directors At the regular meeting of stockholders or members,
or trustees who voted for such the board of directors or trustees shall present to
such stockholders or members a financial report of The affirmative vote of stockholders representing at
the operations of the corporation for the preceding least two-thirds (2⁄3) of the outstanding capital stock
year, which shall include financial statements, duly of each corporation in the case of stock corporations
signed and certified in accordance with this Code, or at least two-thirds (2⁄3) of the members in the case
and the rules the Commission may prescribe. of nonstock corporations shall be necessary for the
approval of such plan. Any dissenting stockholder
However, if the total assets or total liabilities of the
may exercise the right of appraisal in accordance
corporation are less than Six hundred thousand
with this Code: Provided, That if after the approval
pesos (₱600,000.00), or such other amount as may
by the stockholders of such plan, the board of
be determined appropriate by the Department of
directors decides to abandon the plan, the right of
Finance, the financial statements may be certified
appraisal shall be extinguished.
under oath by the treasurer and the president.
Any amendment to the plan of merger or
Title IX consolidation may be made: Provided, That such
Merger and Consolidation amendment is approved by a majority vote of the
Section 75 respective boards of directors or trustees of all the
Plan of Merger or Consolidation.— Two (2) or constituent corporations and ratified by the
more corporations may merge into a single affirmative vote of stockholders representing at
corporation which shall be one of the constituent least two-thirds (2⁄3) of the outstanding capital stock
corporations or may consolidate into a new single or of two-thirds (2⁄3) of the members of each of the
corporation which shall be the consolidated constituent corporations. Such plan, together with
corporation. any amendment, shall be considered as the
agreement of merger or consolidation.
The board of directors or trustees of each
corporation, party to the merger or consolidation, Section 77
shall approve a plan of merger or consolidation
Articles of Merger or Consolidation.— After the
setting forth the following:
approval by the stockholders or members as
a. The names of the corporations proposing to required by the preceding section, articles of merger
merge or consolidate, hereinafter referred to or articles of consolidation shall be executed by
as the constituent corporations; each of the constituent corporations, to be signed by
the president or vice president and certified by the
b. The terms of the merger or consolidation secretary or assistant secretary of each corporation
and the mode of carrying the same into setting forth:
effect;
a. The plan of the merger or the plan of
c. A statement of the changes, if any, in the consolidation;
articles of incorporation of the surviving
corporation in case of merger; and, in case b. As to stock corporations, the number of
of consolidation, all the statements required shares outstanding, or in the case of
to be set forth in the articles of incorporation nonstock corporations, the number of
for .corporations organized under this Code; members;
and
c. As to each corporation, the number of shares
d. Such other provisions with respect to the or members voting for or against such plan,
proposed merger or consolidation as are respectively;
deemed necessary or desirable.
d. The carrying amounts and fair values of the
Section 76 assets and liabilities of the respective
companies as of the agreed cut-off date;
Stockholders’ or Members’ Approval.— Upon
approval by a majority vote of each of the board of e. The method to be used in the merger or
directors or trustees of the constituent corporations consolidation of accounts of the companies;
of the plan of merger or consolidation, the same f. The provisional or pro forma values, as
shall be submitted for approval by the stockholders merged or consolidated, using the
or members of each of such corporations at separate accounting method; and
corporate meetings duly called for the purpose.
Notice of such meetings shall be given to all g. Such other information as may be prescribed
stockholders or members of the respective by the Commission.
corporations in the same manner as giving notice of
Section 78
regular or special meetings under Section 49 of this
Code. The notice shall state the purpose of the Effectivity of Merger or Consolidation.— The
meeting and include a copy or a summary of the articles of merger or of consolidation, signed and
plan of merger or consolidation. certified as required by this Code, shall be
submitted to the Commission for its
approval: Provided, That in the case of merger or
consolidation of banks or banking institutions, loan liabilities or obligations; and any pending
associations, trust companies, insurance companies, claim, action or proceeding brought by or
public utilities, educational institutions, and other against any constituent corporation may be
special corporations governed by special laws, the prosecuted by or against the surviving or
favorable recommendation of the appropriate consolidated corporation. The rights of
government agency shall first be obtained. If the creditors or liens upon the property of such
Commission is satisfied that the merger or constituent corporations shall not be
consolidation of the corporations concerned is impaired by the merger or consolidation.
consistent with the provisions of this Code and
existing laws, it shall issue a certificate approving Title X
the articles and plan of merger or of consolidation, Appraisal Right
at which time the merger or consolidation shall be Section 80
effective. When the Right of Appraisal May Be Exercised.
If, upon investigation, the Commission has reason — Any stockholder of a corporation shall have the
to believe that the proposed merger or consolidation right to dissent and demand payment of the fair
is contrary to or inconsistent with the provisions of value of the shares in the following instances:
this Code or existing laws, it shall set a hearing to a. In case an amendment to the articles of
give the corporations concerned the opportunity to incorporation has the effect of changing or
be heard. Written notice of the date, time, and place restricting the rights of any stockholder or
of hearing shall be given to each constituent class of shares, or of authorizing preferences
corporation at least two (2) weeks before said in any respect superior to those of
hearing. The Commission shall thereafter proceed outstanding shares of any class, or of
as provided in this Code. extending or shortening the term of
corporate existence;
Section 79
b. In case of sale, lease, exchange, transfer,
Effects of Merger or Consolidation.— The merger
mortgage, pledge or other disposition of all
or consolidation shall have the following effects:
or substantially all of the corporate property
a. The constituent corporations shall become a and assets as provided in this Code;
single corporation which, in case of merger,
c. In case of merger or consolidation; and
shall be the surviving corporation designated
in the plan of merger; and, in case of d. In case of investment of corporate funds for
consolidation, shall be the consolidated any purpose other than the primary purpose
corporation designated in the plan of of the corporation.
consolidation;
Section 81
b. The separate existence of the constituent
corporations shall cease, except that of the How Right is Exercised.— The dissenting
surviving or the consolidated corporation; stockholder who votes against a proposed corporate
action may exercise the right of appraisal by making
c. The surviving or the consolidated a written demand on the corporation for the
corporation shall possess all the rights, payment of the fair value of shares held within
privileges, immunities, and powers and shall thirty (30) days from the date on which the vote was
be subject to all the duties and liabilities of a taken: Provided, That failure to make the demand
corporation organized under this Code; within such period shall be deemed a waiver of the
d. The surviving or the consolidated appraisal right. If the proposed corporate action is
corporation shall possess all the rights, implemented, the corporation shall pay the
privileges, immunities and franchises of stockholder, upon surrender of the certificate or
each constituent corporation; and all real or certificates of stock representing the stockholder‘s
personal property, all receivables due on shares, the fair value thereof as of the day before the
whatever account, including subscriptions to vote was taken, excluding any appreciation or
shares and other choses in action, and every depreciation in anticipation of such corporate
other interest of, belonging to, or due to each action.
constituent corporation, shall be deemed If, within sixty (60) days from the approval of the
transferred to and vested in such surviving corporate action by the stockholders, the
or consolidated corporation without further withdrawing stockholder and the corporation cannot
act or deed; and agree on the fair value of the shares, it shall be
e. The surviving or consolidated corporation determined and appraised by three (3) disinterested
shall be responsible for all the liabilities and persons, one of whom shall be named by the
obligations of each constituent corporation stockholder, another by the corporation, and the
as though such surviving or consolidated third by the two (2) thus chosen. The findings of the
corporation had itself incurred such majority of the appraisers shall be final, and their
award shall be paid by the corporation within thirty certificates bearing such notation are transferred,
(30) days after such award is made: Provided, That and the certificates consequently cancelled, the
no payment shall be made to any dissenting rights of the transferor as a dissenting stockholder
stockholder unless the corporation has unrestricted under this Title shall cease and the transferee shall
retained earnings in its books to cover such have all the rights of a regular stockholder; and all
payment: Provided, further, That upon payment by dividend distributions which would have accrued on
the corporation of the agreed or awarded price, the such shares shall be paid to the transferee.
stockholder shall forthwith transfer the shares to the
corporation. Title XI
Nonstock Corporation
Section 82 Section 86
Effect of Demand and Termination of Right.— From Definition.— For purposes of this Code and subject
the time of demand for payment of the fair value of to its provisions on dissolution, a nonstock
a stockholder’s shares until either the abandonment corporation is one where no part of its income is
of the corporate action involved or the purchase of distributable as dividends to its members, trustees,
the said shares by the corporation, all rights or officers: Provided, That any profit which a
accruing to such shares, including voting and nonstock corporation may obtain incidental to its
dividend rights, shall be suspended in accordance operations shall, whenever necessary or proper, be
with the provisions of this Code, except the right of used for the furtherance of the purpose or purposes
such stockholder to receive payment of the fair for which the corporation was organized, subject to
value thereof: Provided, That if the dissenting the provisions of this Title.
stockholder is not paid the value of the said shares
The provisions governing stock corporations, when
within thirty (30) days after the award, the voting
pertinent, shall be applicable to nonstock
and dividend rights shall immediately be restored.
corporations, except as may be covered by specific
Section 83 provisions of this Title.
When Right to Payment Ceases.— No demand for Section 87
payment under this Title may be withdrawn unless
Purposes.— Nonstock corporations may be formed
the corporation consents thereto. If, however, such
or organized for charitable, religious, educational,
demand for payment is withdrawn with the consent
professional, cultural, fraternal, literary, scientific,
of the corporation, or if the proposed corporate
social, civic service, or similar purposes, like trade,
action is abandoned or rescinded by the corporation
industry, agricultural and like chambers, or any
or disapproved by the Commission where such
combination thereof, subject to the special
approval is necessary, or if the Commission
provisions of this Title governing particular classes
determines that such stockholder is not entitled to
of nonstock corporations.
the appraisal right, then the right of the stockholder
to be paid the fair value of the shares shall cease, Chapter I
the status as the stockholder shall be restored, and Members
all dividend distributions which would have accrued Section 88
on the shares shall be paid to the stockholder.
Right to Vote.— The right of the members of any
Section 84 class or classes to vote may be limited, broadened,
or denied to the extent specified in the articles of
Who Bears Costs of Appraisal.— The costs and
incorporation or the bylaws. Unless so limited,
expenses of appraisal shall be borne by the
broadened, or denied, each member, regardless of
corporation, unless the fair value ascertained by the
class, shall be entitled to one (1) vote.
appraisers is approximately the same as the price
which the corporation may have offered to pay the Unless otherwise provided in the articles of
stockholder, in which case they shall be borne by incorporation or the bylaws, a member may vote by
the latter. In the case of an action to recover such proxy, in accordance with the provisions of this
fair value, all costs and expenses shall be assessed Code. The bylaws may likewise authorize voting
against the corporation, unless the refusal of the through remote communication and/or in absentia.
stockholder to receive payment was unjustified.
Section 89
Section 85
Nontransferability of Membership.— Membership
Notation on Certificates; Rights of Transferee. in a nonstock corporation and all rights arising
— Within ten (10) days after demanding payment therefrom are personal and nontransferable, unless
for shares held, a dissenting stockholder shall the articles of incorporation or the bylaws otherwise
submit the certificates of stock representing the provide.
shares to the corporation for notation that such
shares are dissenting shares. Failure to do so shall, Section 90
at the option of the corporation, terminate the rights
under this Title. If shares represented by the
Termination of Membership.— Membership shall be transferred or conveyed in accordance with
terminated in the manner and for the causes such requirements;
provided in the articles of incorporation or the
c. Assets received and held by the corporation
bylaws. Termination of membership shall
subject to limitations permitting their use
extinguish all rights of a member in the corporation
only for charitable, religious, benevolent,
or in its property, unless otherwise provided in the
educational or similar purposes, but not held
articles of incorporation or the bylaws.
upon a condition requiring return, transfer or
Chapter II conveyance by reason of the dissolution,
Trustees and Officers shall be transferred or conveyed to one (1)
Section 91 or more corporations, societies or
organizations engaged in activities in the
Election and Term of Trustees.— The number of Philippines substantially similar to those of
trustees shall be fixed in the articles of the dissolving corporation according to a
incorporation or bylaws which may or may not be plan of distribution adopted pursuant to this
more than fifteen (15). They shall hold office for Chapter;
not more than three (3) years until their successors
are elected and qualified. Trustees elected to fill d. Assets other than those mentioned in the
vacancies occurring before the expiration of a preceding paragraphs, if any, shall be
particular term shall hold office only for the distributed in accordance with the provisions
unexpired period. of the articles of incorporation or the
bylaws, to the extent that the articles of
Except with respect to independent trustees of incorporation or the bylaws determine the
nonstock corporations vested with public interest, distributive rights of members, or any class
only a member of the corporation shall be elected as or classes of members, or provide for
trustee. distribution; and
Unless otherwise provided in the articles of e. In any other case, assets may be distributed
incorporation or the bylaws, the members may to such persons, societies, organizations or
directly elect officers of a nonstock corporation. corporations, whether or not organized for
Section 92 profit, as may be specified in a plan of
distribution adopted pursuant to this
List of Member’s and Proxies, Place of Meetings. Chapter.
— The corporation shall, at all times, keep a list of
its members and their proxies in the form the Section 94
Commission may require. The list shall be updated Plan of Distribution of Assets.— A plan providing
to reflect the members and proxies of record twenty for the distribution of assets, consistent with the
(20) days prior to any scheduled election. The provisions of this Title, may be adopted by a
bylaws may provide that the members of a nonstock nonstock corporation in the process of dissolution in
corporation may hold their regular or special the following manner:
meetings at any place even outside the place where
the principal office of the corporation is a. The board of trustees shall, by majority vote,
located: Provided, That proper notice is sent to all adopt a resolution recommending a plan of
members indicating the date, time and place of the distribution and directing the submission
meeting: Provided, farther, That the place of thereof to a vote at a regular or special
meeting shall be within Philippine territory. meeting of members having voting rights;
Chapter III b. Each member entitled to vote shall be given
Distribution of Assets in Nonstock corporations a written notice setting forth the proposed
Section 93 plan of distribution or a summary thereof
and the date, time and place of such meeting
Rules of Distribution.— The assets of a nonstock within the time and in the manner provided
corporation undergoing the process of dissolution in this Code for the giving of notice of
for reasons other than those set forth in Section 139 meetings; and
of this Code shall be applied and distributed as
follows: c. Such plan of distribution shall be adopted
upon approval of at least two-thirds (2⁄3) of
a. All liabilities and obligations of the the members having voting rights present or
corporation shall be paid, satisfied and represented by proxy at such meeting.
discharged, or adequate provision shall be
made therefor; Title XII
Close Corporations
b. Assets held by the corporation upon a Section 95
condition requiring return, transfer or
conveyance, and which condition occurs by Definition and Applicability of Title.— A close
reason of the dissolution, shall be returned, corporation, within the meaning of this Code, is one
whose articles of incorporation provides that: (a) all by the stockholders, instead of by the board of
the corporation’s issued stock of all classes, directors.
exclusive of treasury shares, shall be held of record
by not more than a specified number of persons, not Section 97
exceeding twenty (20); (b) all the issued stock of all Validity of Restrictions on Transfer of Shares.
classes shall be subject to one (1) or more specified — Restrictions on the right to transfer shares must
restrictions on transfer permitted by this Title; and appear in the articles of incorporation, in the
(c) the corporation shall not list in any stock bylaws, as well as in the certificate of stock;
exchange or make any public offering of its stocks otherwise, the same shall not be binding on any
of any class. Notwithstanding the foregoing, a purchaser in good faith. Said restrictions shall not
corporation shall not be deemed a close corporation be more onerous than granting the existing
when at least two-thirds (2⁄3) of its voting stock or stockholders or the corporation the option to
voting rights is owned or controlled by another purchase the shares of the transferring stockholder
corporation which is not a close corporation within with such reasonable terms, conditions or period
the meaning of this Code. stated. If, upon the expiration of said period, the
Any corporation may be incorporated as a close existing stockholders or the corporation fails to
corporation, except mining or oil companies, stock exercise the option to purchase, the transferring
exchanges, banks, insurance companies, public stockholder may sell their shares to any third
utilities, educational institutions and corporations person.
declared to be vested with public interest in Section 98
accordance with the provisions of this Code.
Effects of Issuance or Transfer of Stock in Breach
The provisions of this Title shall primarily govern of Qualifying Conditions.—
close corporations: Provided, That other Titles in
this Code shall apply suppletorily, except as a. If a stock of a close corporation is issued or
otherwise provided under this Title. transferred to any person who is not eligible
to be a holder thereof under any provision of
Section 96 the articles of incorporation, and if the
Articles of Incorporation.— The articles of certificate for such stock conspicuously
incorporation of a close corporation may provide shows the qualifications of the persons
for: entitled to be holders of record thereof, such
person is conclusively presumed to have
a. A classification of shares or rights, the notice of the fact of the ineligibility to be a
qualifications for owning or holding the stockholder.
same, and restrictions on their transfers,
subject to the provisions of the following b. If the articles of incorporation of a close
section; corporation states the number of persons, not
exceeding twenty (20), who are entitled to
b. A classification of directors into one (1) or be stockholders of record, and if the
more classes, each of whom may be voted certificate for such stock conspicuously
for and elected solely by a particular class of states such number, and the issuance or
stock; and transfer of stock to any person would cause
the stock to be held by more than such
c. Greater quorum or voting requirements in
number of persons, the person to whom such
meetings of stockholders or directors than
stock is issued or transferred is conclusively
those provided in this Code.
presumed to have notice of this fact.
The articles of incorporation of a close corporation
c. If a stock certificate of a close corporation
may provide that the business of the corporation
conspicuously shows a restriction on transfer
shall be managed by the stockholders of the
of the corporation’s stock and the transferee
corporation rather than by a board of directors. So
acquires the stock in violation of such
long as this provision continues in effect, no
restriction, the transferee is conclusively
meeting of stockholders need be called to elect
presumed to have notice of the fact that the
directors: Provided, That the stockholders of the
stock was acquired in violation of the
corporation shall be deemed to be directors for the
restriction.
purpose of applying the provisions of this Code,
unless the context clearly requires d. Whenever a person to whom stock of a close
otherwise: Provided, further, That the stockholders corporation has been issued or transferred
of the corporation shall be subject to all liabilities of has or is conclusively presumed under this
directors. section to have notice of: (1) the person’s
ineligibility to be a stockholder of the
The articles of incorporation may likewise provide
corporation; or (2) that the transfer of stock
that all officers or employees or that specified
would cause the stock of the corporation to
officers or employees shall be elected or appointed
be held by more than the number of persons
 permitted under its articles of incorporation; e. Stockholders actively engaged in the
or (3) that the transfer violates a restriction management or operation of the business
on transfer of stock, the corporation may, at and affairs of a close corporation shall be
its option, refuse to register the transfer in held to strict fiduciary duties to each other
the name of the transferee. and among themselves. The stockholders
shall be personally liable for corporate torts
e. The provisions of subsection (d) shall not be
unless the corporation has obtained
applicable if the transfer of stock, though
reasonably adequate liability insurance.
contrary to subsections (a), (b) or (c), has
been consented to by all the stockholders of Section 100
the close corporation, or if the close
corporation has amended its articles of When a Board Meeting is Unnecessary or
incorporation in accordance with this Title. Improperly Held.— Unless the bylaws provide
otherwise, any action taken by the directors of a
f. The term “transfer”, as used in this section, close corporation without a meeting called properly
is not limited to a transfer for value. and with due notice shall nevertheless be deemed
valid if:
g. The provisions of this section shall not
impair any right which the transferee may a. Before or after such action is taken, a written
have to either rescind the transfer or recover consent thereto is signed by all the directors;
the stock under any express or implied or
warranty.
b. All the stockholders have actual or implied
Section 99 knowledge of the action and make no
prompt objection in writing; or
Agreements by Stockholders.—
c. The directors are accustomed to take
a. Agreements duly signed and executed by
informal action with the express or implied
and among all stockholders before the
acquiescence of all the stockholders; or
formation and organization of a close
corporation shall survive the incorporation d. All the directors have express or implied
and shall continue to be valid and binding knowledge of the action in question and
between such stockholders, if such be their none of them makes a prompt objection in
intent, to the extent that such agreements are writing.
consistent with the articles of incorporation,
An action within the corporate powers taken at a
irrespective of where the provisions of such
meeting held without proper call or notice is
agreements are contained, except those
deemed ratified by a director who failed to attend,
required by this Title to be embodied in said
unless after having knowledge thereof, the director
articles of incorporation.
promptly files his written objection with the
b. A written agreement signed by two (2) or secretary of the corporation.
more stockholders may provide that in
exercising any voting right, the shares held Section 101
by them shall be voted as provided or as Preemptive Right in Close Corporations.— The
agreed, or in accordance with a procedure preemptive right of stockholders in close
agreed upon by them. corporations shall extend to all stock to be issued,
c. No provision in a written agreement signed including reissuance of treasury shares, whether for
by the stockholders, relating to any phase of money, property or personal services, or in payment
corporate affairs, shall be invalidated of corporate debts, unless the articles of
between the parties on the ground that its incorporation provide otherwise.
effect is to make them partners among Section 102
themselves.
Amendment of Articles of Incorporation.— Any
d. A written agreement among some or all of amendment to the articles of incorporation which
the stockholders in a close corporation shall seeks to delete or remove any provision required by
not be invalidated on the ground that it this Title or to reduce a quorum or voting
relates to the conduct of the business and requirement stated in said articles of incorporation
affairs of the corporation as to restrict or shall require the affirmative vote of at least two-
interfere with the discretion or powers of the thirds (2⁄3) of the outstanding capital stock, whether
board of directors: Provided, That such with or without voting rights, or of such greater
agreement shall impose on the stockholders proportion of shares as may be specifically provided
who are parties thereto the liabilities for in the articles of incorporation for amending,
managerial acts imposed on directors by this deleting or removing any of the aforesaid
Code. provisions, at a meeting duly called for the purpose.
Section 103 written petition to the Commission, compel the
dissolution of such corporation whenever any acts
Deadlocks.— Notwithstanding any contrary
of the directors, officers, or those in control of the
provision in the close corporation’s articles of
corporation are illegal, fraudulent, dishonest,
incorporation, bylaws, or stockholders’ agreement,
oppressive or unfairly prejudicial to the corporation
if the directors or stockholders are so divided on the
or any stockholder, or whenever corporate assets are
management of the corporation’s business and
being misapplied or wasted.
affairs that the votes required for a corporate action
cannot be obtained, with the consequence that the Title XIII
business and affairs of the corporation can no longer Special Corporations
be conducted to the advantage of the stockholders Chapter I
generally, the Commission, upon written petition by Educational corporations
any stockholder, shall have the power to arbitrate Section 105
the dispute. In the exercise of such power, the
Commission shall have authority to make Incorporation.— Educational corporations shall be
appropriate orders, such as: (a) cancelling or governed by special laws and by the general
altering any provision contained in the articles of provisions of this Code.
incorporation, bylaws, or any stockholders’ Section 106
agreement; (b) cancelling, altering or enjoining a
resolution or act of the corporation or its board of Board of Trustees.— Trustees of educational
directors, stockholders, or officers; (c) directing or institutions organized as nonstock corporations shall
prohibiting any act of the corporation or its board of not be less than five (5) nor more than fifteen
directors, stockholders, officers, or other persons (15): Provided, That the number of trustees shall be
party to the action; (d) requiring the purchase at in multiples of five (5).
their fair value of shares of any stockholder, either Unless otherwise provided in the articles of
by the corporation regardless of the availability of incorporation or bylaws, the board of trustees of
unrestricted retained earnings in its.books, or by the incorporated schools, colleges, or other institutions
other stockholders; (e) appointing a provisional of learning shall, as soon as organized, so classify
director; (f) dissolving the corporation; or (g) themselves that the term of office of one-fifth ( 1⁄5) of
granting such other relief as the circumstances may their number shall expire every year. Trustees
warrant. thereafter elected to fill vacancies, occurring before
A provisional director shall be an impartial person the expiration of a particular term, shall hold office
who is neither a stockholder nor a creditor of the only for the unexpired period. Trustees elected
corporation or any of its subsidiaries or affiliates, thereafter to fill vacancies caused by expiration of
and whose further qualifications, if any, may be term shall hold office for five (5) years. A majority
determined by the Commission. A provisional of the trustees shall constitute a quorum for the
director is not a receiver of the corporation and does transaction of business. The powers and authority of
not have the title and powers of a custodian or trustees shall be defined in the bylaws.
receiver. A provisional director shall have all the For institutions organized as stock corporations, the
rights and powers of a duly elected director, number and term of directors shall be governed by
including the right to be notified of and to vote at the provisions on stock corporations.
meetings of directors until removed by order of the
Commission or by all the stockholders. The Chapter II
compensation of the provisional director shall be Religious Corporations
determined by agreement between such director and Section 107
the corporation, subject to approval of the Classes of Religious Corporations.— Religious
Commission, which may fix the compensation corporations may be incorporated by one (1) or
absent an agreement or in the event of disagreement more persons. Such corporations may be classified
between the provisional director and the into corporations sole and religious societies.
corporation.
Religious corporations shall be governed by this
Section 104 Chapter and by the general provisions on nonstock
Withdrawal of Stockholder or Dissolution of corporations insofar as applicable.
Corporation.— In addition and without prejudice to Section 108
other rights and remedies available under this Title,
any stockholder of a close corporation may, for any Corporation Sole.— For the purpose of
reason, compel the corporation to purchase shares administering and managing, as trustee, the affairs,
held at fair value, which shall not be less than the property and temporalities of any religious
par or issued value, when the corporation has denomination, sect or church, a corporation sole
sufficient assets in its books to cover its debts and may be formed by the chief archbishop, bishop,
liabilities exclusive of capital stock: Provided, That priest, minister, rabbi, or other presiding elder of
any stockholder of a close corporation may, by such religious denomination, sect or church.
Section 109 shall be personally held in trust as a corporation
sole, for the use, purpose, exclusive benefit and on
Articles of Incorporation.— In order to become a
behalf of the religious denomination, sect or church,
corporation sole, the chief archbishop, bishop,
including hospitals, schools, colleges, orphan
priest, minister, rabbi, or presiding elder of any
asylums, parsonages, and cemeteries thereof.
religious denomination, sect or church must file
with the Commission articles of incorporation Section 111
setting forth the following:
Acquisition and Alienation of Property.— A
a. That the applicant chief archbishop, bishop, corporation sole may purchase and hold real estate
priest, minister, rabbi, or presiding elder and personal property for its church, charitable,
represents the religious denomination, sect benevolent, or educational purposes, and may
or church which desires to become a receive bequests or gifts for such purposes. Such
corporation sole; corporation may sell or mortgage real property held
by it by obtaining an order for that purpose from the
b. That the rules, regulations and discipline of
Regional Trial Court of the province where the
the religious denomination, sect or church
property is situated upon proof that the notice of the
are consistent with becoming a corporation
application for leave to sell or mortgage has been
sole and do not forbid it;
made through publication or as directed by the
c. That such chief archbishop, bishop, priest, Court, and that it is in the interest of the corporation
minister, rabbi, or presiding elder is charged that leave to sell or mortgage be granted. The
with the administration of the temporalities application for leave to sell or mortgage must be
and the management of the affair’s, estate made by petition, duly verified, by the chief
and properties of the religious denomination, archbishop, bishop, priest, minister, rabbi, or
sect or church within the territorial presiding elder acting as corporation sole, and may
jurisdiction, so described succinctly in the be opposed by any member of the religious
articles of incorporation; denomination, sect or church represented by the
corporation sole: Provided, That in cases where the
d. The manner by which any vacancy rules, regulations, and discipline of the religious
occurring in the office of chief archbishop, denomination, sect or church, religious society, or
bishop, priest, minister, rabbi, or presiding order concerned represented by such corporation
elder is required to be filled, according to the sole regulate the method of acquiring, holding,
rules, regulations or discipline of the selling, and mortgaging real estate and personal
religious denomination, sect or church; and property, such rules, regulations and discipline shall
e. The place where the principal office of the govern, and the intervention of the courts shall not
corporation sole is to be established and be necessary.
located, which place must be within the
Section 112
territory of the Philippines.
Filling of Vacancies.— The successors in office of
The articles of incorporation may include any other
any chief archbishop, bishop, priest, minister, rabbi,
provision not contrary to law for the regulation of
or presiding elder in a corporation sole shall become
the affairs of the corporation.
the corporation sole on their accession to office and
Section 110 shall be permitted to transact business as such upon
filing a copy of their commission, certificate of
Submission of the Articles of Incorporation.— The election, or letters of appointment, duly certified by
articles of incorporation must be verified, by any notary public with the Commission.
affidavit or affirmation of the chief archbishop,
bishop, priest, minister, rabbi, or presiding elder, as During any vacancy in the office of chief
the case may be, and accompanied by a copy of the archbishop, bishop, priest, minister, rabbi, or
commission, certificate of election or letter of presiding elder of any religious denomination, sect
appointment of such chief archbishop, bishop, or church incorporated as a
priest, minister, rabbi, or presiding elder, duly corporation sole, the person or persons authorized
certified to be correct by any notary public. by the rules, regulations or discipline of the
From and after filing with the Commission of the religious denomination, sect or church represented
said articles of incorporation, verified by affidavit by the corporation sole to administer the
or affirmation, and accompanied by the documents temporalities and manage the affairs, estate, and
mentioned in the preceding paragraph, such chief properties of the corporation sole shall exercise all
archbishop, bishop, priest, minister, rabbi, pr the powers and authority of the corporation sole
presiding elder shall become a corporation sole and during such vacancy.
all temporalities, estate and properties of the
Section 113
religious denomination, sect or church theretofore
administered or managed as such chief archbishop, Dissolution.— A corporation sole may be dissolved
bishop, priest, minister, rabbi, or presiding elder and its affairs settled voluntarily by submitting to
the Commission a verified declaration of f. The names, nationalities, and residence
dissolution, setting forth: addresses of the trustees, not less than five
(5) nor more than fifteen (15), elected by the
a. The name of the corporation;
religious society or religious order, or the
b. The reason for dissolution and winding up; diocese, synod, or district organization to
serve for the first year or such other period
c. The authorization for the dissolution of the as may be prescribed by the laws of the
corporation by the particular religious religious society or religious order, or of the
denomination, sect or church; and diocese, synod, or district organization.
d. The names and addresses of the persons who Chapter III
are to supervise the winding up of the affairs One Person Corporations
of the corporation. Section 115
Upon approval of such declaration of dissolution by Applicability of Provisions to One Person
the Commission, the corporation shall cease to carry Corporations.— The provisions of this Title shall
on its operations except for the purpose of winding primarily apply to One Person Corporations. Other
up its affairs. provisions of this Code apply suppletorily, except as
Section 114 otherwise provided in this Title.
Religious Societies.— Unless forbidden by Section 116
competent authority, the Constitution, pertinent, One Person Corporation.— A One Person
rules, regulations, or discipline of the religious Corporation is a corporation with a single
denomination, sect or church of which it is a part, stockholder: Provided, That only a natural person,
any religious society, religious order, diocese, or trust, or an estate may form a One Person
synod, or district organization of any religious Corporation.
denomination, sect or church, may, upon written
consent and/or by an affirmative vote at a meeting Banks and quasi-banks, preneed, trust, insurance,
called for the purpose of at least two-thirds (2⁄3) of public and publicly-listed companies, and non-
its membership, incorporate for the administration chartered government-owned and -controlled
of its temporalities or for the management of its corporations may not incorporate as One Person
affairs, properties, and estate by filing with the Corporations: Provided, further, That a natural
Commission, articles of incorporation verified by person who is licensed to exercise a profession may
the affidavit of the presiding elder, secretary, or not organize as a One Person Corporation for the
clerk or other member of such religious society or purpose of exercising such profession except as
religious order, or diocese, synod, or district otherwise provided under special laws.
organization of the religious denomination, sect or
Section 117
church, setting forth the following:
Minimum Capital Stock Not Required for One
a. That the religious society or religious order,
Person Corporation.— A One Person Corporation
or diocese, synod, or district organization is
shall not be required to have a minimum authorized
a religious organization of a religious
capital stock except as otherwise provided by
denomination, sect or church;
special law.
b. That at least two-thirds (2⁄3) of its
Section 118
membership has given written consent or
has voted to incorporate, at a duly convened Articles of Incorporation.— A One Person
meeting of the body; Corporation shall file articles of incorporation in
accordance with the requirements under Section 14
c. That the incorporation of the religious
of this Code. It shall likewise substantially contain
society or religious order, or diocese, synod,
the following:
or district organization is not forbidden by
competent authority or by the Constitution, a. If the single stockholder is a trust or an
rules, regulations or discipline of the estate., the name, nationality, and residence
religious denomination, sect or church of of the trustee, administrator, executor,
which it forms part; guardian, conservator, custodian, or other
person exercising fiduciary duties together
d. That the religious society or religious order,
with the proof of such authority to act on
or diocese, synod, or district organization
behalf of the trust or estate; and
desires to incorporate for the administration
of its affairs, properties and estate; b. Name, nationality, residence of the nominee
and alternate nominee, and the extent,
e. The place within the Philippines where the
coverage and limitation of the authority.
principal office of the corporation is to be
established and located; and Section 119
Bylaws.— The One Person Corporation is not Section 124
required to submit and file corporate bylaws.
Nominee and Alternate Nominee.— The single
Section 120 stockholder shall designate a nominee and an
alternate nominee who shall, in the event of the
Display of Corporate Name.— A One Person single stockholder’s death or incapacity, take the
Corporation shall indicate the letters “OPC” either place of the single stockholder as director and shall
below or at the end of its corporate name. manage the corporation’s affairs.
Section 121 The articles of incorporation shall state the names,
Single Stockholder as Director, President.— The residence addresses and contact details of the
single stockholder shall be the sole director and nominee and alternate nominee, as well as the
president of the One Person Corporation. extent and limitations of their authority in managing
the affairs of the One Person Corporation.
Section 122
The written consent of the nominee and alternate
Treasurer, Corporate Secretary, and Other nominee shall be attached to the application for
Officers.— Within fifteen (15) days from the incorporation. Such consent may be withdrawn in
issuance of its certificate of incorporation, the One writing any time before the death or incapacity of
Person Corporation shall appoint a treasurer, the single stockholder.
corporate secretary, and other officers as it may
deem necessary, and notify the Commission thereof Section 125
within five (5) days from appointment. Term of Nominee and Alternate Nominee.— When
The single stockholder may not be appointed as the the incapacity of the single stockholder is
corporate secretary. temporary, the nominee shall sit as director and
manage the affairs of the One Person Corporation
A single stockholder who is likewise the self- until the stockholder, by self determination, regains
appointed treasurer of the corporation shall give a the capacity to assume such duties.
bond to the Commission in such a sum as may be
required: Provided, That the said In case of death or permanent incapacity of the
stockholder/treasurer shall undertake in writing to single stockholder, the nominee shall sit as director
faithfully administer the One Person Corporation’s and manage the affairs of the One Person
funds to be received as treasurer, and to disburse Corporation until the legal heirs of the single
and invest the same according to the articles of stockholder have been lawfully determined, and the
incorporation as approved by the Commission. The heirs have designated one of them or have agreed
bond shall be renewed every two (2) years or as that the estate shall be the single stockholder of the
often as may be required. One Person Corporation.

Section 123 The alternate nominee shall sit as director and

manage the One Person Corporation in case of the
Special Functions of the Corporate Secretary.— In nominee’s inability, incapacity, death, or refusal to
addition to the functions designated by the One discharge the functions as director and manager of
Person Corporation, the corporate secretary shall: the corporation, and only for the same term and
a. Be responsible for maintaining the minutes under the same conditions applicable to the
book and/or records of the corporation; nominee.

b. Notify the nominee or alternate nominee of Section 126

the death or incapacity of the single Change of Nominee or Alternate Nominee.— The
stockholder, which notice shall be given no single stockholder may, at any time, change its
later than five (5) days from such nominee and alternate nominee by submitting to the
occurrence; Commission the names of the new nominees and
c. Notify the Commission of the death of the their corresponding written consent. For this
single stockholder within five (5) days from purpose, the articles of incorporation need not be
such occurrence and stating in such notice amended.
the names, residence addresses, and contact Section 127
details of all known legal heirs; and
Minutes Book.— A One Person Corporation shall
d. Call the nominee or alternate nominee and maintain a minutes book which shall contain all
the known legal heirs to a meeting and actions, decisions, and resolutions taken by the One
advise the legal heirs with regard to, among Person Corporation.
others, the election of a new director,
amendment of the articles of incorporation, Section 128
and other ancillary and/or consequential
Records in Lieu of Meetings.— When action is
matters.
needed on any matter, it shall be sufficient to
prepare a written resolution, signed and dated by the Conversion from an Ordinary Corporation to a One
single stockholder, and recorded in the minutes Person Corporation.— When a single stockholder
book of the One Person Corporation. The date of acquires all the stocks of an ordinary stock
recording in the minutes book shall be deemed to be corporation, the latter may apply for conversion into
the date of the meeting for all purposes under this a One Person Corporation, subject to the submission
Code. of such documents as the Commission may require.
If the application for conversion is approved, the
Section 129 Commission shall issue a certificate of filing of
Reportorial Requirements.— The One Person amended articles of incorporation reflecting the
Corporation shall submit the following within such conversion. The One Person Corporation converted
period as the Commission may prescribe: from an ordinary stock corporation shall succeed the
latter and be legally responsible for all the latter’s
a. Annual financial statements audited by an outstanding liabilities as of the date of conversion.
independent certified public
accountant: Provided, That if the total assets Section 132
or total liabilities of the corporation are less
Conversion from a One Person Corporation to an
than Six hundred thousand pesos
Ordinary Stock Corporation.— A One Person
(₱600,000.00), the financial statements shall
Corporation may be converted into an ordinary
be certified under oath by the corporation’s
stock corporation after due notice to the
treasurer and president;
Commission of such fact and of the circumstances
b. A report containing explanations or leading to the conversion, and after compliance with
comments by the president on every all other requirements for stock corporations under
qualification, reservation, or adverse remark this Code and applicable rules. Such notice shall be
or disclaimer made by the auditor in the filed with the Commission within sixty (60) days
latter’s report; from the occurrence of the circumstances leading to
the conversion into an ordinary stock corporation. If
c. A disclosure of all self-dealings and related all requirements have been complied with, the
party transactions entered into between the Commission shall issue a certificate of fifing of
One Person Corporation and the single amended articles of incorporation reflecting the
stockholder; and conversion.
d. Other reports as the Commission may In case of death of the single stockholder, the
require. nominee or alternate nominee shall transfer the
For purposes of this provision, the fiscal year of a shares to the duly designated legal heir or estate
One Person Corporation shall be that set forth in its within seven (7) days from receipt of either an
articles of incorporation or, in the absence thereof, affidavit of heirship or self-adjudication executed
the calendar year. by a sole heir, or any other legal document
declaring the legal heirs of the single stockholder
The Commission may place the corporation under and notify the Commission of the transfer. Within
delinquent status should the corporation fail to sixty (60) days from the transfer of the shares, the
submit the reportorial requirements three (3) times, legal heirs shall notify the Commission of their
consecutively or intermittently, within a period of decision to either wind up and dissolve the One
five (5) years. Person Corporation or convert it into an ordinary
Section 130 stock corporation.

Liability of Single Shareholder.— A sole The ordinary stock corporation converted from a
shareholder claiming limited liability has the burden One Person Corporation shall succeed the latter and
of affirmatively showing that the corporation was be legally responsible for all the latter’s outstanding
adequately financed. liabilities as of the date of conversion.

Where the single stockholder cannot prove that the Title XIV
property of the One Person Corporation is Dissolution
independent of the stockholder’s personal property, Section 133
the stockholder shall be jointly and severally liable Methods of Dissolution.— A corporation formed or
for the debts and other liabilities of the One Person organized under the provisions of this Code may be
Corporation. dissolved voluntarily or involuntarily.
The principles of piercing the corporate veil applies Section 134
with equal force to One Person Corporations as with
other corporations. Voluntary Dissolution Where No Creditors are
Affected.— If dissolution of a corporation does not
Section 131 prejudice the rights of any creditor having a claim
against it, the dissolution may be effected by
majority vote of the board of directors or trustees,
and by a resolution adopted by the affirmative vote of its directors or trustees, and shall set forth all
of the stockholders owning at least majority of the claims and demands against it, and that its
outstanding capital stock or majority of the dissolution was resolved upon by the affirmative
members of a meeting to be held upon the call of vote of the stockholders representing at least two-
the directors or trustees. thirds (2⁄3) of the outstanding capital stock or at least
two-thirds (2⁄3) of the members at a meeting of its
At least twenty (20) days prior to the meeting,
stockholders or members called for that purpose.
notice shall be given to each shareholder or member
The petition shall likewise state: (a) the reason for
of record personally, by registered mail, or by any
the dissolution; (b) the form, manner, and time
means authorized under its bylaws, whether or not
when the notices were given; and (c) the date, place,
entitled to vote at the meeting, in the manner
and time of the meeting in which the vote was
provided in Section 50 of this Code and shall state
made. The corporation shall submit to the
that the purpose of the meeting is to vote on the
Commission the following: (1) a copy of the
dissolution of the corporation. Notice of the time,
resolution authorizing the dissolution, certified by a
place, and object of the meeting shall be published
majority of the board of directors or trustees and
once prior to the date of the meeting in a newspaper
countersigned by the secretary of the corporation;
published in the place where the principal office of
and (2) a list of all its creditors.
said corporation is located, or if no newspaper is
published in such place, in a newspaper of general If the petition is sufficient in form and substance,
circulation in the Philippines. the Commission shall, by an order reciting the
purpose of the petition, fix a deadline for filing
A verified request for dissolution shall be filed with
objections to the petition which date shall not be
the Commission stating: (a) the reason for the
less than thirty (30) days nor more than sixty (60)
dissolution; (b) the form, manner, and time when
days after the entry of the order. Before such date, a
the notices were given; (c) names of the
copy of the order shall be published at least once a
stockholders and directors or members and trustees
week for three (3) consecutive weeks in a
who approved the dissolution; (d) the date, place,
newspaper of general circulation published in the
and time of the meeting in which the vote was
municipality or city where the principal office of the
made; and (e) details of publication.
corporation is situated, or if there be no such
The corporation shall submit the following to the newspaper, then in a newspaper of general
Commission: (1) a copy of the resolution circulation in the Philippines, and a similar copy
authorizing the dissolution, certified by a majority shall be posted for three (3) consecutive weeks in
of the board of directors or trustees and three (3) public places in such municipality or city.
countersigned by the secretary of the corporation;
Upon five (5) days’ notice, given after the date on
(2) proof of publication; and (3) favorable
which the right to file objections as fixed in the
recommendation from the appropriate regulatory
order has expired, the Commission shall proceed to
agency, when necessary.
hear the petition and try any issue raised in the
Within fifteen (15) days from receipt of the verified objections filed; and if no such objection is
request for dissolution, and in the absence of any sufficient, and the material allegations of the
withdrawal within said period, the Commission petition are true, it shall render judgment dissolving
shall approve the request and issue the certificate of the corporation and directing such disposition of its
dissolution. The dissolution shall take effect only assets as justice requires, and may appoint a
upon the issuance by the Commission of a receiver to collect such assets and pay the debts of
certificate of dissolution. the corporation.
No application for dissolution of banks, banking The dissolution shall take effect only upon the
and quasi-banking institutions, preneed, insurance issuance by the Commission of a certificate of
and trust companies, NSSLAs, pawnshops, and dissolution.
other financial intermediaries shall be approved by
Section 136
the Commission unless accompanied by a favorable
recommendation of the appropriate government Dissolution by Shortening Corporate Term.— A
agency. voluntary dissolution may be effected by amending
the articles of incorporation to shorten the corporate
Section 135
term pursuant to the provisions of this Code. A copy
Voluntary Dissolution Where Creditors are of the amended articles of incorporation shall be
Affected; Procedure and Contents of Petition. submitted to the Commission in accordance with
— Where the dissolution of a corporation may this Code.
prejudice the rights of any creditor, a verified
Upon the expiration of the shortened term, as stated
petition for dissolution shall be filed with the
in the approved amended articles of incorporation,
Commission. The petition shall be signed by a
the corporation shall be deemed dissolved without
majority of the corporation’s board of directors or
any further proceedings, subject to the provisions of
trustees, verified by its president or secretary or one
this Code on liquidation.
In the case of expiration of corporate term, 2. Committed or aided in the
dissolution shall automatically take effect on the commission of securities violations,
day following the last day of the corporate term smuggling, tax evasion, money
stated in the articles of incorporation, without the laundering, or graft and corrupt
need for the issuance by the Commission of a practices, and its stockholders knew
certificate of dissolution. of the same; and
Section 137 3. Repeatedly and knowingly tolerated
the commission of graft and corrupt
Withdrawal of Request and Petition for Dissolution. practices or other fraudulent or
— A withdrawal of the request for dissolution shall illegal acts by its directors, trustees,
be made in writing, duly verified by any officers, or employees.
incorporator, director, trustee, shareholder, or
member and signed by the same number of If the corporation is ordered dissolved by final
incorporators, directors, trustees, shareholders, or judgment pursuant to the grounds set forth in
members necessary to request for dissolution as set subparagraph (e) hereof, its assets, after payment of
forth in the foregoing sections. The withdrawal shall its liabilities, shall, upon petition of the Commission
be submitted no later than fifteen (15) days from with the appropriate court, be forfeited in favor of
receipt by the Commission of the request for the national government. Such forfeiture shall be
dissolution. Upon receipt of a withdrawal of request without prejudice to the rights of innocent
for dissolution, the Commission shall withhold stockholders and employees for services rendered,
action on the request for dissolution and shall, after and to the application of other penalty or sanction
investigation: (a) make a pronouncement that the under this Code or other laws.
request for dissolution is deemed withdrawn; (b)
The Commission shall give reasonable notice to,
direct a joint meeting of the board of directors or
and coordinate with, the appropriate regulatory
trustees and the stockholders or members for the
agency prior to the involuntary dissolution of
purpose of ascertaining whether to proceed with
companies under their special regulatory
dissolution; or (c) issue such other orders as it may
jurisdiction.
deem appropriate.
Section 139
A withdrawal of the petition for dissolution shall be
in the form of a motion and similar in substance to a Corporate Liquidation.— Except for banks, which
withdrawal of request for dissolution but shall be shall be covered by the applicable provisions of
verified and filed prior to publication of the order Republic Act No. 7653, otherwise known as “The
setting the deadline for filing objections to the New Central Bank Act”, as amended, and Republic
petition. Act No. 3591, otherwise known as the Philippine
Deposit Insurance Corporation Charter, as amended,
Section 138
every corporation whose charter expires pursuant to
Involuntary Dissolution.— A corporation may be its articles of incorporation, is annulled by
dissolved by the Commission motu proprio or upon forfeiture, or whose corporate existence is
filing of a verified complaint by any interested terminated in any other manner, shall nevertheless
party. The following may be grounds for dissolution remain as a body corporate for three (3) years after
of the corporation: the effective date of dissolution, for the purpose of
prosecuting and defending suits by or against it and
a. Non-use of corporate charter as provided enabling it to settle and close its affairs, dispose of
under Section 21 of this Code; and convey its property, and distribute its assets, but
b. Continuous inoperation of a corporation as not for the purpose of continuing the business for
provided under Section 21 of this Code; which it was established.
c. Upon receipt of a lawful court order At any time during said three (3) years, the
dissolving the corporation; corporation is authorized and empowered to convey
all of its property to trustees for the benefit of
d. Upon finding by final judgment that the stockholders, members, creditors and other persons
corporation procured its incorporation in interest. After any such conveyance by the
through fraud; corporation of its property in trust for the benefit of
e. Upon finding by final judgment that the its stockholders, members, creditors and others in
corporation: interest, all interest which the corporation had in the
property terminates, the legal interest vests in the
1. Was created for the purpose of trustees, and the beneficial interest in the
committing, concealing or aidihg the stockholders, members, creditors or other persons-
commission of securities violations, in-interest.
smuggling, tax evasion, money
laundering, or graft and corrupt Except as otherwise provided for in Sections 93 and
practices; 94 of this Code, upon the winding up of corporate
affairs, any asset distributable to any creditor or purposes are those specifically stated in the
stockholder or member who is unknown or cannot certificate of authority issued by the
be found shall be escheated in favor of the national appropriate government agency;
government.
f. The names and addresses of the present
Except by decrease of capital stock and as otherwise directors and officers of the corporation;
allowed by this Code, no corporation shall distribute
g. A statement of its authorized capital stock
any of its assets or property except upon lawful
and the aggregate number of shares which
dissolution and after payment of all its debts and
the corporation has authority to issue,
liabilities.
itemized by class, par value of shares, shares
Title XV without par value, and series, if any;
Foreign Corporations
h. A statement of its outstanding capital stock -
Section 140
and the aggregate number of shares which
Definition and Rights of Foreign Corporations. the corporation has issued, itemized by
— For purposes of this Code, a foreign corporation class, par value of shares, shares without par
is one formed, organized or existing under laws value, and series, if any;
other than those of the Philippines’ and whose laws
i. A statement of the amount actually paid in;
allow Filipino citizens and corporations to do
and
business in its own country or State. It shall have
the right to transact business in the Philippines after j. Such additional information as may be
obtaining a license for that purpose in accordance necessary or appropriate in order to enable
with this Code and a certificate of authority from the Commission to determine whether such
the appropriate government agency. corporation is entitled to a license to transact
business in the Philippines, and to determine
Section 141
and assess the fees payable.
Application to Existing Foreign Corporations.
Attached to the application for license shall be a
— Every foreign corporation which, on the date of
certificate under oath duly executed by the
the effectivity of this Code, is authorized to do
authorized official or officials of the jurisdiction of
business in the Philippines under a license issued to
its incorporation, attesting to the fact that the laws
it shall continue to have such authority under the
of the country or State of the applicant allow
terms and conditions of its license, subject to the
Filipino citizens and corporations to do business
provisions of this Code and other special laws.
therein, and that the applicant is an existing
Section 142 corporation in good standing. If the certificate is in
a foreign language, a translation thereof in English
Application for a License.— foreign corporation under oath of the translator shall be attached to the
applying for a license to transact business in the application.
Philippines shall submit to the Commission a copy
of its articles of incorporation and bylaws, certified The application for a license to transact business in
in accordance with law, and their translation to an the Philippines shall likewise be accompanied by a
official language of the Philippines, if necessary. statement under oath of the president or any other
The application shall be under oath and, unless person authorized by the corporation, showing to
already stated in its articles of incorporation, shall the satisfaction of the Commission and when
specifically set forth the following: appropriate, other governmental agencies that the
applicant is solvent and in sound financial
a. The date and term of incorporation; condition, setting forth the assets and liabilities of
b. The address, including the street number, of the corporation as of the date not exceeding one (1)
the principal office of the corporation in the year immediately prior to the filing of the
country or State of incorporation; application.

c. The name and address of its resident agent Foreign banking, financial, and insurance
authorized to accept summons and process corporations shall, in addition to the above
in all legal proceedings and all notices requirements, comply with the provisions of
affecting the corporation, pending the existing laws applicable to them. In the case of all
establishment of a local office; other foreign corporations, no application for
license to transact business in the Philippines shall
d. The place in the Philippines where the be accepted by the Commission without previous
corporation intends to operate; authority from the appropriate government agency,
e. The specific purpose or purposes which the whenever required by law.
corporation intends to pursue in the Section 143
transaction of its business in the
Philippines: Provided, That said purpose or Issuance of a License.— If the Commission is
satisfied that the applicant has complied with all the
requirements of this Code and other special laws, Philippines. For purposes of computing the
rules and regulations, the Commission shall issue a securities deposit, the composition of gross income
license to transact business in the Philippines to the and allowable deductions therefrom shall be in
applicant for the purpose or purposes specified in accordance with the rules of the Commission.
such license. Upon issuance of the license, such
foreign corporation may commence to transact Section 144
business in the Philippines and continue to do so for Who May be a Resident Agent.— A resident agent
as long as it retains its authority to act as a may be either an individual residing in the
corporation under the laws of the country or State of Philippines or a domestic corporation lawfully
its incorporation, unless such license is sooner transacting business in the Philippines: Provided,
surrendered, revoked, suspended, or annulled in That an individual resident agent must be of good
accordance with this Code or other special laws. moral character and of sound financial
Within sixty (60) days after the issuance of the standing: Provided, further, That in case of a
license to transact business in the Philippines, the domestic corporation who will act as a resident
licensee, except foreign banking or insurahce agent, it must likewise be of sound financial
corporations, shall deposit with the Commission for standing and must show proof that it is in good
the benefit of present and future creditors of the standing as certified by the Commission.
licensee in the Philippines, securities satisfactory to
the Commission, consisting of bonds or other Section 145
evidence of indebtedness of the Government of the Resident Agent; Service of Process.— As a
Philippines, its political subdivisions and condition to the issuance of the license for a foreign
instrumentalities, or of government-owned or - corporation to transact business in the Philippines,
controlled corporations and entities, shares of stock such corporation shall file with the Commission a
or debt securities that are registered under Republic written power of attorney designating a person who
Act No. 8799, otherwise known as “The Securities must be a resident of the Philippines, on whom
Regulation Code”, shares of stock in domestic summons and other legal processes may be served
corporations listed in the stock exchange, shares of in all actions or other legal proceedings against such
stock in domestic insurance companies and banks, corporation, and consenting that service upon such
any financial instrument determined suitable by the resident agent shall be admitted and held as valid as
Commission, or any combination thereof with an if served upon the duly authorized officers of the
actual market value of at least Five hundred foreign corporation at its home office. Such foreign
thousand pesos (₱500,000.00) or such other amount corporation shall likewise execute and file with the
that may be set by the Commission an agreement or stipulation, executed
Commission: Provided, however, That within six by the proper authorities of said corporation, in
(6) months after each fiscal year of the licensee, the form and substance as follows:
Commission shall require the licensee to deposit
additional securities or financial instruments “The (name of foreign corporation) hereby
equivalent in actual market value to two percent stipulates and agrees, in consideration of being
(2%) of the amount by which the licensee’s gross granted a license to transact business in the
income for that fiscal year exceeds Ten million Philippines, that if the corporation shall cease to
pesos (₱10,000,000.00). The Commission shall also transact business in the Philippines, or shall be
require the deposit of additional securities or without any resident agent in the Philippines on
financial instruments if the actual market value of whom any summons or other legal process may be
the deposited securities or financial instruments has served, then service of any summons or other legal
decreased by at least ten percent (10%) of their process may be made upon the Commission in any
actual market value at the time they were deposited. action or proceeding arising out of any business or
The Commission may, at its discretion, release part transaction which occurred in the Philippines and
of the additional deposit if the gross income of the such service shall have the same force and effect as
licensee has decreased, or if the actual market value if made upon the duly authorized officers of the
of the total deposit has increased, by more than ten corporation at its home office.”
percent (10%) of their actual market value at the Whenever such service of summons or other
time they were deposited. The Commission may, process is made upon the Commission, the
from time to time, allow the licensee to make Commission shall, within ten (10) days thereafter,
substitute deposits for those already on deposit as transmit by mail a copy of such summons or other
long as the licensee is solvent. Such licensee shall legal process to the corporation at its home or
be entitled to collect the interest or dividends on principal office. The sending of such copy by the
such-deposits. In the event the licensee ceases to do Commission shall be a necessary part of and shall
business in the Philippines, its deposits shall be complete such service. All expenses incurred by the
returned, upon the licensee’s application and upon Commission for such service shall be paid in
proof to the satisfaction of the Commission that the advance by the party at whose instance the service
licensee has no liability to Philippine residents, is made.
including the Government of the Republic of the
It shall be the duty of the resident agent to agency, a copy of the articles of merger or
immediately notify the Commission in writing of consolidation duly authenticated by the proper
any change in the resident agent’s address. official or officials of the country or State under
whose laws the merger or consolidation was
Section 146 effected: Provided, however, That if the absorbed
Law Applicable.— A foreign corporation lawfully corporation is the foreign corporation doing
doing business in the Philippines shall be bound by business in the Philippines, the latter shall at the
all laws, rules and regulations applicable to same time file a petition for withdrawal of its
domestic corporations of the same class, except license in accordance with this Title.
those which provide for the creation, formation,
Section 150
organization or dissolution of corporations or those
which fix the relations, liabilities, responsibilities, Doing Business Without a License.— No foreign
or duties of stockholders, members, or officers of corporation transacting business in the Philippines
corporations to each other or to the corporation. without a license, or its successors or assigns, shall
be permitted to maintain or intervene in any action,
Section 147 suit or proceeding in any court or administrative
Amendments to Articles of Incorporation or Bylaws agency of the Philippines; but such corporation may
of Foreign Corporations.— Whenever the articles be sued or proceeded against before Philippine
of incorporation or bylaws of a foreign corporation courts or administrative tribunals on any valid cause
authorized to transact business in the Philippines are of action recognized under Philippine laws.
amended, such foreign corporation shall, within
Section 151
sixty (60) days after the amendment becomes
effective, file with the Commission, and in proper Revocation of License.— Without prejudice to other
cases, with the appropriate government agency, a grounds provided under special laws, the license of
duly authenticated copy of the amended articles of a foreign corporation to transact business in the
incorporation or bylaws, indicating clearly in capital Philippines may be revoked or suspended by the
letters or underscoring the change or changes made, Commission upon any of the following grounds:
duly certified by the authorized official or officials
a. Failure to file its annual report or pay any
of the country or State of incorporation. Such filing
fees as required by this Code;
shall not in itself enlarge or alter the purpose or
purposes for which such corporation is authorized to b. Failure to appoint and maintain a resident
transact business in the Philippines. agent in the Philippines as required by this
Title;
Section 148
c. Failure, after change of its resident agent or
Amended License.— A foreign corporation
address, to submit to the Commission a
authorized to transact business in the Philippines
statement of such change as required by this
shall obtain an amended license in the event it
Title;
changes its corporate name, or desires to pursue
other or additional purposes in the Philippines, by d. Failure to submit to the Commission an
submitting an application with the Commission, authenticated copy of any amendment to its
favorably endorsed by the appropriate government articles of incorporation or bylaws or of any
agency in the proper cases. articles of merger or consolidation within
the time prescribed by this Title;
Section 149
e. A misrepresentation of any material matter
Merger or Consolidation Involving a Foreign
in any application, report, affidavit or other
Corporation Licensed in the Philippines.— One or
document submitted by such corporation
more foreign corporations authorized to transact
pursuant to this Title;
business in the Philippines may merge or
consolidate with any domestic corporation or f. Failure to pay any and all taxes, imposts,
corporations if permitted under Philippine laws and assessments or penalties, if any, lawfully
by the law of its incorporation: Provided, That the due to the Philippine Government or any of
requirements on merger or consolidation as its agencies or political subdivisions;
provided in this Code are followed.
g. Transacting business in the Philippines
Whenever a foreign corporation authorized to outside of the purpose or purposes for which
transact business in the Philippines shall be a party such corporation is authorized under its
to a merger or consolidation in its home country or license;
State as permitted by the law authorizing its
h. Transacting business in the Philippines as
incorporation, such foreign corporation shall, within
agent of or acting on behalf of any foreign
sixty (60) days after the effectivity of such merger
corporation or entity not duly licensed to do
or consolidation, file with the Commission, and in
business in the Philippines; or
proper cases, with the appropriate government
 i. Any other ground as would render it unfit to designated officer, may administer oaths and
transact business in the Philippines. affirmations, issue subpoena and subpoena duces
tecum take testimony in any inquiry or
Section 152 investigation, and may perform other acts necessary
Issuance of Certificate of Revocation.— Upon the to the proceedings or to the investigation.
revocation of the license to transact business in the
Section 156
Philippines, the Commission shall issue a
corresponding certificate of revocation, furnishing a Cease and Desist Orders.— Whenever the
copy thereof to the appropriate government agency Commission has reasonable basis to believe that a
in the proper cases. person has violated, or is about to violate this Code,
a rule, regulation, or order of the Commission, it
The Commission shall also mail the notice and copy
may direct such person to desist from Committing
of the certificate of revocation to the corporation, at
the act constituting the violation.
its .registered office in the Philippines.
The Commission may issue a cease and desist
Section 153 order ex parte to enjoin an act or practice which is
Withdrawal of Foreign Corporations.— Subject to fraudulent or can be reasonably expected to cause
existing laws and regulations, a foreign corporation significant, imminent, and irreparable danger or
licensed to transact business in the Philippines may injury to public safety or welfare. The ex
be allowed to withdraw from the Philippines by parte order shall be valid for a maximum period of
filing a petition for withdrawal of license. No twenty (20) days, without prejudice to the order
certificate of withdrawal shall be issued by the being made permanent after due notice and hearing.
Commission unless all the following requirements Thereafter, the Commission may proceed
are met: administratively against such person in accordance
a. All claims which have accrued in the with Section 158 of this Code, and/or transmit
Philippines have been paid, compromised or evidence to the Department of Justice for
settled; preliminary investigation or criminal prosecution
and/or initiate criminal prosecution for any violation
b. All taxes, imposts, assessments, and of this Code, rule, or regulation.
penalties, if any, lawfully due to the
Philippine Government or any of its Section 157
agencies or political subdivisions, have been
Contempt.— Any person who, without justifiable
paid; and
cause, fails or refuses to comply with any lawful
c. The petition for withdrawal of license has order, decision, or subpoena issued by the
been published once a week for three (3) Commission shall, after due notice and hearing, be
consecutive weeks in a newspaper of general held in contempt and fined in an amount not
circulation in the Philippines. exceeding Thirty thousand pesos (₱30,000.00).
When the refusal amounts to clear and open
Title XVI defiance of the Commission’s order, decision,
Investigations, Offenses, and Penalties or subpoena the Commission may impose a daily
Section 154 fine of One thousand pesos (₱1,000.00) until the
Investigation and Prosecution of Offenses.— The order, decision, or subpoena is complied with.
Commission may investigate an alleged violation of Section 158
this Code, or of a rule, regulation, or order of the
Commission. Administrative Sanctions.— If, after due notice and
hearing, the Commission finds that any provision of
The Commission may publish its findings, orders, this Code, rules or regulations, or any of the
opinions, advisories, or information concerning any Commission’s orders has been violated, the
such violation, as may be relevant to the general Commission may impose any or all of the following
public or to the parties concerned, subject to the sanctions, taking into consideration the extent of
provisions of Republic Act No. 10173, otherwise participation, nature, effects, frequency and
known as the “Data Privacy Act of 2012”, and other seriousness of the violation:
pertinent laws.
a. Imposition of a fine ranging from Five
The Commission shall give reasonable notice to and thousand pesos (₱5,000.00) to Two million
coordinate with the appropriate regulatory agency pesos (₱2,000,000.00), and not more than
prior to any such publication involving companies One thousand pesos (₱1,000.00) for each
under their regulatory jurisdiction. day of continuing violation but in no case to
Section 155 exceed Two million pesos (₱2,000,000.00);

Administration of Oaths, Subpoena of Witnesses b. Issuance of a permanent cease and desist

and Documents.— The Commission, through its order;
 c. Suspension or revocation of the certificate of (₱200,000.00). When the wrongful certification is
incorporation; and injurious or detrimental to the public, the auditor or
the responsible person may also be punished with a
d. Dissolution of the corporation and forfeiture
fine ranging from Forty thousand pesos
of its assets under the conditions in Title
(₱40,000.00) to Four hundred thousand pesos
XIV of this Code.
(₱400,000.00).
Section 159
Section 163
Unauthorized Use of Corporate Name; Penalties.
Independent Auditor Collusion; Penalties.— An
— The unauthorized use of a corporate name shall
independent auditor who, in collusion with the
be punished with a fine ranging from Ten thousand
corporation’s directors or representatives, certifies
pesos (₱10,000.00) to Two hundred thousand pesos
the corporation’s financial statements despite its
(₱200,000.00).
incompleteness or inaccuracy, its failure to give a
Section 160 fair and accurate presentation of the corporation’s
condition, or despite containing false or misleading
Violation of Disqualification Provision; Penalties. statements, shall be punished with a fine ranging
— When, despite the knowledge of the existence of from Eighty thousand pesos (₱80,000.00) to Five
a ground for disqualification as provided in Section hundred thousand pesos (₱500,000.00). When the
26 of this Code, a director, trustee or officer statement or report certified is fraudulent, or has the
willfully holds office, or willfully conceals such effect of causing injury to the general public, the
disqualification, such director, trustee or officer auditor or responsible officer may be punished with
shall be punished with a fine ranging from Ten a fine ranging from One hundred thousand pesos
thousand pesos (₱10,000.00) to Two hundred (₱100,000.00) to Six hundred thousand pesos
thousand pesos (₱200,000.00) at the discretion of (₱600,000.00).
the court, and shall be permanently disqualified
from being a director, trustee or officer of any Section 164
corporation. When the violation of this provision is
Obtaining Corporate Registration Through Fraud;
injurious or detrimental to the public, the penalty
Penalties.— Those responsible for the formation of
shall be a fine ranging from Twenty thousand pesos
a corporation through fraud, or who assisted directly
(₱20,000.00) to Four hundred thousand pesos
or indirectly therein, shall be punished with a fine
(₱400,000.00).
ranging from Two hundred thousand pesos
Section 161 (₱200,000.00) to Two million pesos
(₱2,000,000.00). When the violation of this
Violation of Duty to Maintain Records, to Allow provision is injurious or detrimental to the public,
their Inspection or Reproduction; Penalties.— The the penalty is a fine ranging from Four hundred
unjustified failure or refusal by the corporation, or thousand pesos (₱400,000.00) to Five million pesos
by those responsible for keeping and maintaining (₱5,000,000.00).
corporate records, to comply with Sections 45, 73,
92, 128, 177 and other pertinent rules and Section 165
provisions of this Code on inspection and
Fraudulent Conduct of Business; Penalties.— A
reproduction of records shall be punished with a
corporation that conducts its business through fraud
fine ranging from Ten thousand pesos (₱10,000.00)
shall be punished with a fine ranging from Two
to Two hundred thousand pesos (₱200,000.00), at
hundred thousand pesos (₱200,000.00) to Two
the discretion of the court, taking into consideration
million pesos (₱2,000,000.00). When the violation
the seriousness of the violation and its implications.
of this provision is injurious or detrimental to the
When the violation of this provision is injurious or
public, the penalty is a fine ranging from Four
detrimental to the public, the penalty is a fine
hundred thousand pesos (₱400,000.00) to Five
ranging from Twenty thousand pesos (₱20,000.00)
million pesos (₱5,000,000.00).
to Four hundred thousand pesos (₱400,000.00).
Section 166
The penalties imposed under this section shall be
without prejudice to the Commission’s exercise of Acting as Intermediaries for Graft and Corrupt
its contempt powers under Section 157 hereof. Practices; Penalties.— A corporation used for
fraud, or for committing or concealing graft and
Section 162
corrupt practices as defined under pertinent statutes,
Willful Certification of Incomplete, Inaccurate, shall be liable for a fine ranging from One hundred
False? or Misleading Statements or Reports; thousand pesos (₱100,000.00) to Five million pesos
Penalties.— Any person who willfully certifies a (₱5,000,000.00).
report required under this Code, knowing that the
When there is a finding that any of its directors,
same contains incomplete, inaccurate, false, or
officers, employees, agents, or representatives are
misleading information or statements, shall be
engaged in graft and corrupt practices, the
punished with a fine ranging from Twenty thousand
corporation’s failure to install: (a) safeguards for the
pesos (₱20,000.00) to Two hundred thousand pesos
transparent and lawful delivery of services; and (b) Section 171
policies, code of ethics, and procedures against graft
Liability of Directors, Trustees, Officers, or Other
and corruption shall be prima facie evidence of
Employees.— If the offender is a corporation, the
corporate liability under this section.
penalty may, at the discretion of the court, be
Section 167 imposed upon such corporation and/or upon its
directors, trustees, stockholders, members, officers,
Engaging Intermediaries for Graft and Corrupt or employees responsible for the violation or
Practices; Penalties.— corporation that appoints an indispensable to its commission.
intermediary who engages in graft and corrupt
practices for the corporation’s benefit or interest Section 172
shall be punished with a fine ranging from One
Liability of Aiders and Abettors and Other
hundred thousand pesos (₱100,000.00) to One
Secondary Liability.— Anyone who shall aid, abet,
million pesos (₱1,000,000.00).
counsel, command, induce, or cause any violation
Section 168 of this Code, or any rule, regulation, or order of the
Commission shall be punished with a fine not
Tolerating Graft and Corrupt Practices; Penalties. exceeding that imposed on the principal offenders,
— A director, trustee, or officer who knowingly at the discretion of the court, after taking into
fails to sanction, report, or file the appropriate account their participation in the offense.
action with proper agencies, allows or tolerates the
graft and corrupt practices or fraudulent acts Title XVII
committed by a corporation’s directors, trustees, Miscellaneous Provisions
officers, or employees shall be punished with a fine Section 173
ranging from Five hundred thousand pesos
Outstanding Capital Stock Defined.— The term
(₱500,000.00) to One million pesos
“outstanding capital stock”, as used in this Code,
(₱1,000,000.00).
shall mean the total shares of stock issued under
Section 169 binding subscription contracts to subscribers or
stockholders, whether fully or partially paid, except
Retaliation Against Whistleblowers.— A treasury shares.
whistleblower refers to any person who provides
truthful information relating to the commission or Section 174
possible commission of any offense or violation
Designation of Governing Boards.— The provisions
under this Code. Any person who, knowingly and
of specific provisions of this Code to the contrary
with intent to retaliate, commits acts detrimental to
notwithstanding, nonstock or special corporations
a whistleblower such as interfering with the lawful
may, through their articles of incorporation or their
employment or livelihood of the whistleblower,
bylaws, designate their governing boards by any
shall, at the discretion of the court, be punished with
name other than as board of trustees.
a fine ranging from One hundred thousand pesos
(₱100,000.00) to One million pesos Section 175
(₱1,000,000.00).
Collection and Use of Registration, Incorporation
Section 170 and Other Fees.— For a more effective
implementation of this Code, the Commission is
Other Violations of the Code; Separate Liability.
hereby authorized to collect, retain, and use fees,
— Violations of any of the other provisions of this
fines, and other charges pursuant to this Code and
Code or its amendments not otherwise specifically
its rules and regulations. The amount collected shall
penalized therein shall be punished by a fine of not
be deposited and maintained in a separate account
less than Ten thousand pesos (₱10,000.00) but not
which shall form a fund for its modernization and to
more than One million pesos (₱1,000,000.00). If the
augment its operational expenses such as, but not
violation is committed by a corporation, the same
limited to, capital outlay, increase in compensation
may, after notice and hearing, be dissolved in
and benefits comparable with prevailing rates in the
appropriate proceedings before the
private sector, reasonable employee allowance,
Commission: Provided, That such dissolution shall
employee health care services, and other insurance,
not preclude the institution of appropriate action
employee career advancement and
against the director, trustee, or officer of the
professionalization, legal assistance, seminars, and
corporation responsible for said
other professional fees.
violation: Provided, further, That nothing in this
section shall be construed to repeal the other causes Section 176
for dissolution of a corporation provided in this
Code. Stock Ownership in Corporations.— Pursuant to the
duties specified by Article XIV of the Constitution,
Liability for any of the foregoing offenses shall be the National Economic and Development Authority
separate from any other administrative, civil, or (NEDA) shall, from time to time, determine if the
criminal liability under this Code and other laws. corporate vehicle has been used by any corporation,
business, or industry to frustrate the provisions of The Commission may place the corporation under
this Code or applicable laws, and shall submit to delinquent status in case of failure to submit the
Congress, whenever deemed necessary, a report of reportorial requirements three (3) times,
its findings, including recommendations for their consecutively or intermittently, within a period of
prevention or correction. five (5) years. The Commission shall give
reasonable notice to and coordinate with the
The Congress of the Philippines may set maximum
appropriate regulatory agency prior to placing on
limits for stock ownership of individuals or groups
delinquent status companies under their special
of individuals related to each other by
regulatory jurisdiction.
consanguinity, affinity, or by close business
interests, in corporations declared to be vested with Any person required to file a report with the
public interest pursuant to the provisions of this Commission may redact confidential information
section, or whenever necessary to prevent anti- from such required report: Provided, That such
competitive practices as provided in Republic Act confidential information shall be filed in a
No. 10667, otherwise known as the “Philippine supplemental report prominently labelled
Competition Act”, or to implement national “confidential”, together with a request for
economic policies designed to promote general confidential treatment of the report and the specific
welfare and economic development, as declared in grounds for the grant thereof.
laws, rules and regulations.
Section 178
In recommending to the Congress which
corporations, businesses and industries will be Visitorial Power and Confidential Nature of
declared as vested with public interest, and in Examination Results.— The Commission shall
formulating proposals for limitations on stock exercise visitorial powers over all corporations,
ownership, the NEDA shall consider the type and which powers shall include the examination and
nature of the industry, size of the enterprise, inspection of records, regulation and supervision of
economies of scale, geographic location, extent of activities, enforcement of compliance, and
Filipino ownership, labor intensity of the activity, imposition of sanctions in accordance with this
export potential, as well as other factors which are Code.
germane to the realization and promotion of Should the corporation, without justifiable cause,
business and industry. refuse or obstruct the Commission’s exercise of its
visitorial powers, the Commission may revoke its
Section 177
certificate of incorporation, without prejudice to the
Reportorial Requirements of Corporations. imposition of other penalties and sanctions under
— Except as otherwise provided in this Code or in this Code.
the rules issued by the Commission, every
All interrogatories propounded by the Commission
corporation, domestic or foreign, doing business in
and the answers thereto, as well as the results of any
the Philippines shall submit to the Commission:
examination made by the Commission or by any
a. Annual financial statements audited by an other official authorized by law to make an
independent certified public examination of the operations, books, and records of
accountant: Provided, That if the total assets any corporation, shall be kept strictly confidential,
or total liabilities of the corporation are less except when the law requires the same to be made
than Six hundred thousand pesos public, when necessary for the Commission to take
(₱600,000.00), the financial statements shall action to protect the public or to issue orders in the
be certified under oath by the corporation’s exercise of its powers under this Code, or where
treasurer or chief financial officer; and such interrogatories, answers or results are
necessary to be presented as evidence before any
b. A general information sheet.
court.
Corporations vested with public interest must also
Section 179
submit the following:
Powers, Functions, and Jurisdiction of the
1. A director or trustee compensation report;
Commission.— The Commission shall have the
and
power and authority to:
2. A director or trustee appraisal or
a. Exercise supervision and jurisdiction over
performance report and the standards or
all corporations and persons acting on their
criteria used to assess each, director or
behalf, except as otherwise provided under
trustee.
this Code;
The reportorial requirements shall be submitted
b. Pursuant to Presidential Decree No. 902-A..
annually and within such period as may be
retain jurisdiction over pending cases
prescribed by the Commission.
involving intra-corporate disputes submitted
for final resolution. The Commission shall
 retain jurisdiction over pending suspension o. Formulate and enforce standards, guidelines,
of payment/rehabilitation cases filed as of 30 policies, rules and regulations to carry out
June 2000 until finally disposed; the provisions of this Code; and
c. Impose sanctions for the violation of this p. Exercise such other powers provided by law
Code, its implementing rules and orders of or those which may be necessary or
the Commission; incidental to carrying out the powers
expressly granted to the Commission.
d. Promote corporate governance and the
protection of minority investors, through, In imposing penalties and additional monitoring and
among others, the issuance of rules and supervision requirements, the Commission shall
regulations consistent with international best take into consideration the size, nature of the
practices; business, and capacity of the corporation.
e. Issue opinions to clarify the application of No court below the Court of Appeals shall have
laws, rules and regulations; jurisdiction to issue a restraining order, preliminary
injunction, or preliminary mandatory injunction in
f. Issue cease and desist orders ex parte to
any case, dispute, or controversy that directly or
prevent imminent fraud or injury to the
indirectly interferes with the exercise of the powers,
public;
duties and responsibilities of the Commission that
g. Hold corporations in direct and indirect falls exclusively within its jurisdiction.
contempt;
Section 180
h. Issue subpoena duces tecum and summon
Development and Implementation of Electronic
witnesses to appear in proceedings before
Filing and Monitoring System.— The Commission
the Commission;
shall develop and implement an electronic filing and
i. In appropriate cases, order the examination, monitoring system. The Commission shall
search and seizure of documents, papers, promulgate rules to facilitate and expedite, among
files and records, and books of accounts of others, corporate name reservation and registration,
any entity or person under investigation as incorporation, submission of reports, notices, and
may be necessary for the proper disposition documents required under this Code, and sharing of
of the cases, subject to the provisions of pertinent information with other government
existing laws; agencies.
j. Suspend or revoke the certificate of Section 181
incorporation after proper notice and
Arbitration for Corporations.— An arbitration
hearing;
agreement may be provided in the articles of
k. Dissolve or impose sanctions on incorporation or bylaws of a corporation. When
corporations, upon final court order, for such an agreement is in place, disputes between the
committing, aiding in the commission of, or corporation, its stockholders or members, which
in any manner furthering securities arise from the implementation of the articles of
violations, smuggling, tax evasion, money incorporation or bylaws, or from intra-corporate
laundering, graft and corrupt practices, or relations, shall be referred to arbitration. A dispute
other fraudulent or illegal acts; shall be nonarbitrable when it involves criminal
offenses and interests of third parties.
l. Issue writs of execution and attachment to
enforce payment of fees, administrative The arbitration agreement shall be binding on the
fines, and other dues collectible under this corporation, its directors, trustees, officers, and
Code; executives or managers.
m. Prescribe the number of independent To be enforceable, the arbitration agreement should
directors and the minimum criteria in indicate the number of arbitrators and the procedure
determining the independence of a director; for their appointment. The power to appoint the
arbitrators forming the arbitral tribunal shall be
n. Impose or recommend new modes by which
granted to a designated independent third party.
a stockholder, member, director, or trustee
Should the third party fail to appoint the arbitrators
may attend meetings or cast their votes, as
in the manner and within the period specified in the
technology may allow, taking into account
arbitration agreement, the parties may request the
the company’s scale, number of
Commission to appoint the arbitrators. In any case,
shareholders or members, structure, and
arbitrators must be accredited or must belong to
other factors consistent with the basic right
organizations accredited for the purpose of
of corporate suffrage;
arbitration.
The arbitral tribunal shall have the power to rule on
its own jurisdiction and on questions relating to the
validity of the arbitration agreement. When an intra- corporation or by any subsequent amendment or
corporate dispute is filed with a Regional Trial repeal of this Code or of any part thereof.
Court, the court shall dismiss the case before the
termination of the pretrial conference, if it Section 185
determines that an arbitration agreement is written Applicability to Existing Corporations. — A
in the corporation’s articles of incorporation, corporation lawfully existing and doing business in
bylaws, or in a separate agreement. the Philippines affected by the new requirements of
The arbitral tribunal shall have the power to grant this Code shall be given a period of not more than
interim measures necessary to ensure enforcement two (2) years from the effectivity of this Act within
of the award, prevent a miscarriage of justice, or which to comply.
otherwise protect the rights of the parties. Section 186
A final arbitral award under this section shall be Separability Clause. — If any provision of this Act
executory after the lapse of fifteen (15) days from is declared invalid or unconstitutional, the other
receipt thereof by the parties and shall be stayed provisions hereof which are not affected thereby
only by the filing of a bond or the issuance by the shall continue to be in full force and effect.
appellate court of an injunctive writ.
Section 187
The Commission shall formulate the rules and
regulations, which shall govern arbitration under Repealing Clause.— Batas Pambansa Big. 68,
this section, subject to existing laws on arbitration. otherwise known as “The Corporation Code of the
Philippines”, is hereby repealed. Any law,
Section 182 presidential decree or issuance, executive order,
Jurisdiction Over Party-List Organizations.— The letter of instruction, administrative order, rule or
powers, authorities, and responsibilities of the regulation contrary to or inconsistent with any
Commission involving party-list organizations are provision of this Act is hereby repealed or modified
transferred to the Commission on Elections accordingly.
(COMELEC). Section 188
Within six (6) months after the effectivity of this Effectivity. — This Act shall take effect upon
Act, the monitoring, supervision, and regulation of completion of its publication in the Official
such corporations shall be deemed automatically Gazette or in at least two (2) newspapers of general
transferred to the COMELEC. circulation.
For this purpose, the COMELEC, in coordination
with the Commission, shall promulgate the
corresponding implementing rules for the transfer of
jurisdiction over the abovementioned corporations.
Section 183
Applicability of the Code.— Nothing in this Act
shall be construed as amending existing provisions
of special laws governing the registration,
regulation, monitoring and supervision of special
corporations such as banks, nonbank financial
institutions and insurance companies.
Notwithstanding any provision to the contrary,
regulators such as the Bangko Sentral ng Pilipinas
and the Insurance Commission shall exercise
primary authority over special corporations such as
banks, nonbank financial institutions, and insurance
companies under their supervision and regulation.
Section 184
Effect of Amendment or Repeal of This Code, or the
Dissolution of a Corporation.— No right or remedy
in favor of or against any corporation, its
stockholders, members, directors, trustees, or
officers, nor any liability incurred by any such
corporation, stockholders, members, directors,
trustees, or officers, shall be removed or impaired
either by the subsequent dissolution of said