Highlights of the Revised Corporation Code

DEAN NILO T. DIVINA

UNIVERSITY OF SANTO TOMAS
 Historical Background of the
Revised Corporation Code
• Republic Act No. 11232, otherwise known as the Revised Corporation Code (hereafter referred to as
“RCC”), was approved by Congress on February 20, 2019. It was signed into law by President Rodrigo R.
Duterte on February 21, 2019 and took effect on February 23, 2019, upon completion of its publication in
Manila Bulletin and Business Mirror, two newspapers of general circulation. Effective upon its publication
on February 21, 2019 an It repealed the 38-year-old Batas Pambansa 68 otherwise known as the Corporation
Code of the Philippines (hereafter referred to as “OCC”)

• The law promotes ease of doing business, hence, the provisions, among others, on one-person corporation,
the option of the corporation to have perpetual existence and the elimination of the minimum subscription
requirement upon incorporation.

• It also adopted best practices on good corporate governance. For instance, the RCC requires certain
items to be contained in the bylaws, minutes and agenda of regular stockholders’ meetings all aimed at
fostering transparency.

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 Historical Background of the
Revised Corporation Code
• The RCC also afforded greater protection to minority stockholders. Thus, it expanded the list of books
and records required to be kept by the corporation available for examination and expanded the remedies
available in case of violation of stockholders’ right of inspection

• It also codified internationally- accepted practices and norms on conducting business. Allowing the
right to vote through electronic communication and sending notices of meeting electronically and
provisions for arbitration mechanism to resolve disputes within the corporation are good examples.

• Finally, it strengthened the powers of the Securities and Exchange Commission (hereafter “SEC”) to
be able to fully exercise its regulatory authority over corporations. Specifically, it enumerated
enforcement provisions and authorized the SEC to administer, investigate and prosecute violation of the
RCC provisions.

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 1. The RCC made it clear that exclusive right of the
holders of the founders shares to vote and be voted as
SECTION 7: directors shall not be allowed if its exercise will
violate Commonwealth Act No. 108 (Anti-Dummy
Founder’s Shares Law), Republic Act No. 7042 (Foreign
Investments Act of 1991), and other pertinent laws.

2. The five-year limitation is counted from date of

incorporation and not from SEC’s approval.

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 1. Unlike the old Corporation Code, which required
incorporators to be natural persons numbering not
less than five, the Code allows partnership,
association or corporation to organize a corporation
without any minimum number of incorporators. In
fact, there can be a corporation with only one
SECTION 10: stockholder, other than a corporation sole, in the
form of a one-person corporation.
Number and
2. The RCC likewise eliminated the residency
Qualifications of requirement for incorporators and expectedly,
retained the legal age requirement for natural-

Incorporators persons-incorporators and ownership of at least one

share of stock of the corporation.

3. Natural persons who are licensed to practice a

profession and partnerships or associations organized
for the purpose of practicing a profession may
organize a corporation only if they are allowed under
special law.

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 1. A corporation shall have perpetual existence unless its
articles of incorporation provides otherwise.

2. Corporations with certificates of incorporation issued

prior to the effectivity of this Code, and which
continue to exist, shall have perpetual existence,
SECTION 11: unless the corporation, upon a vote of its stockholders
representing a majority of its outstanding capital
Corporate Term stock, notifies the SEC that it elects to retain its
specific corporate term pursuant to its articles of
incorporation: Provided, that any change in the
corporate term under this section is without prejudice
to the appraisal right of dissenting stockholders.

3. The period to extend corporate term has been

reduced from five to three years prior to the original
or subsequent expiry date(s).

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 4. Extension of the corporate term shall take effect only
on the day following the original or subsequent expiry
date(s).
SECTION 11:
5. A corporation whose term has expired is not ipso
Corporate Term facto dissolved but may apply for a revival of its
corporate existence. Upon approval by the SEC, the
corporation shall be deemed revived and a certificate
of revival of corporate existence shall be issued, giving
it perpetual existence, unless its application for
revival provides otherwise.

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 SECTION 12: 1. The RCC dispensed with the minimum subscription

Minimum and paid-up capital requirement except as otherwise

provided by special law.

Capital Stock Not 2. After incorporation, however, in case of increase of

capital stock, at least 25% of the increase in capital
Required of Stock stock must be subscribed and at least 25% of the
amount subscribed should be paid in cash or property
the valuation of which is equivalent to at least 25% of
Corporations the subscription.

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 1. Arbitration agreement may be provided in the articles
of incorporation.

2. Filing of the articles of incorporation or amendments

thereto may be in the form of an electronic document
in accordance with the rules on electronic filing of the
SECTION 13: SEC.

Articles of 3. The articles of incorporation should include an

undertaking to change corporate name immediately
Incorporation upon receipt of notice from the SEC that another
corporation, partnership or person has acquired a
prior right to the use of such name, that the name has
been declared not distinguishable from a name
already registered or reserved for the use of another
corporation, or that it is contrary to law, public
morals, good customs or public policy.

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 4. It provides that the corporation shall have perpetual
existence or a fixed term as may be indicated in the
articles of incorporation.

SECTION 13: 5. There is no need to state that at least twenty five

(25%) per cent of the authorized capital stock above
Articles of stated has been subscribed and that at least twenty-
five (25%) percent of the total subscription have been
Incorporation paid as this double 25% requirement under the OCC
has been deleted.

6. There is a requirement of certification of receipt of

paid-up portion of subscription by the Corporate
Treasurer.

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 1. Detailed guidelines and more requirements for a
corporate name were added.

2. The SEC is also granted the power to summarily order

the corporation to cease and desist from using a
corporate name which did not observe the guidelines
SECTION 17: set under the RCC. The liability of the corporation
and its responsible officers is also provided in case of
Corporate Name failure to comply with the Commission’s order.

3. The primary basis for not allowing corporate name is

that it is not distinguishable from another corporate
name which is reserved or registered for the use of
another corporation whereas under the OCC it is
identical or confusingly similar with a previously
reserved or registered corporate name.

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 1. The period to organize and commence business is fixed at
five years from incorporation. Under the OCC, the
corporation must organize within two years from
incorporation.

SECTION 21: 2. The SEC is given the authority to place a corporation under

Effects of Non-Use delinquent status but only after due notice and hearing, that
is, if a corporation has commenced its business but
subsequently becomes inoperative for a period of at least five

of Corporate (5) consecutive years.

3. A delinquent corporation shall have a period of two (2) years

Charter and to resume operations and comply with all requirements that
the SEC shall prescribe. Upon compliance by the
corporation, the SEC shall issue an order lifting the
Continuous delinquent status. Failure to comply with the requirements
and resume operations within the period given by the SEC

Inoperation shall cause the revocation of the corporation’s certificate of

incorporation.

4. The SEC shall also give reasonable notice to, and coordinate
with the appropriate regulatory agency prior to the
suspension or revocation of the certificate of incorporation
of companies under their special regulatory jurisdiction.

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 SECTION 22:

The Board of 1. The term of a trustee was modified for a period not
exceeding three years from its term of one year in the
Directors or Old Corporation Code.

Trustees of a 2. There is no residence requirement for the members of

the Board.

Corporation; 3. The RCC requires the election of independent

directors for corporation vested with public interest
Qualification who should constitute at least twenty percent (20%)
of such board.

and Term

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 4. The RCC enumerated the corporations that are vested
with public interest; to wit,

SECTION 22: a. Corporations covered by Section 17.2 of Republic Act No.

8799 (The Securities Regulation Code), namely those whose
The Board of securities are registered with the SEC, corporations listed
with an exchange or with assets of at least Fifty million pesos
(₱50,000,000.00) and having two hundred (200) or more
Directors or holders of shares, each holding at least one hundred (100)
shares of a class of its equity shares;

Trustees of a b. Banks and quasi-banks, NSSLAs, pawnshops, corporations

engaged in money service business, preneed, trust and
Corporation; insurance companies, and other financial intermediaries;
and

Qualification c. Other corporations engaged in businesses vested with public

interest similar to the above, as may be determined by the
SEC, after taking into account relevant factors which are
and Term germane to the objective and purpose of requiring the
election of an independent director, such as the extent of
minority ownership, type of financial products or securities
issued or offered to investors, public interest involved in the
nature of business operations, and other analogous factors.
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 SECTION 22:

The Board of
Directors or 5. It defines an independent director as a person who,
apart from shareholdings and fees received from the
Trustees of a corporation, is independent of management and free
from any business or other relationship which could,
or could reasonably be perceived to materially
Corporation; interfere with the exercise of independent judgment
in carrying out the responsibilities as a director.
Qualification
and Term

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 1. The right of each stockholder or member to nominate
any director or trustee is subject to the exclusive right
reserved for holders of founders’ shares to be voted as
directors.
SECTION 23:
2. When so authorized in the bylaws or by a majority of
Election of the board of directors, the stockholders or members
may also vote through remote communication or in
Directors or absentia: Provided, That the right to vote through
such modes may be exercised in corporations vested

Trustees with public interest, notwithstanding the absence of a

provision in the bylaws of such corporations.

3. A stockholder or member who participates through

remote communication or in absentia, shall be
deemed present for purposes of quorum.

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 SECTION 24: 1. The treasurer is required to be a resident.

Corporate Officers 2. It requires the appointment of a compliance officer for

those corporations vested with public interest.

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 SECTION 25:

Report of Election 1. The non-holding of elections and the reasons therefor

shall be reported to the SEC within thirty (30) days
of Directors, from the date of the scheduled election. The report
shall specify a new date for the election, which shall
Trustees and not be later than sixty (60) days from the scheduled
date.

Officers

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 2. If no new date has been designated, or if the
rescheduled election is likewise not held, the SEC
may, upon the application of a stockholder, member,
director or trustee, and after verification of the
SECTION 25: unjustified non-holding of the election, summarily
order that an election be held. The SEC shall have the
Report of Election power to issue such orders as may be appropriate,
including orders directing the issuance of a notice

of Directors, stating the time and place of the election, designated

presiding officer, and the record date or dates for the
determination of stockholders or members entitled to
Trustees and vote.

Officers Notwithstanding any provision of the articles of

incorporation or bylaws to the contrary, the shares of
stock or membership represented at such meeting and
entitled to vote shall constitute a quorum for purposes of
conducting an election under this section. (This is
referred to as the provision on emergency quorum)

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 1. The SEC has been given the authority, motu
proprio or upon verified complaint, and after due
SECTION 27: notice and hearing, to order the removal of a director
or trustee elected despite the disqualification, or
Removal of whose disqualification arose or is discovered
subsequent to an election.
Directors or 2. The removal of a disqualified director shall be without

Trustees prejudice to other sanctions that the SEC may impose

on the board of directors or trustees who, with
knowledge of the disqualification, failed to remove
such director or trustee.

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 There are now fixed periods within which the
corporations must hold their elections to fill up vacancies
in the director or trustee positions, viz:

1. It also introduced the concept of emergency board.

SECTION 28: The requisites are:

Vacancies in the 1. The vacancy prevents the remaining directors from constituting a
quorum;

Office of Director 2.

3.
Emergency action is required to prevent grave, substantial, and
irreparable loss or damage to the corporation;
The vacancy may be temporarily filled from among the officers of the
corporation;
or Trustee; 4. The appointment must be made by unanimous vote of the remaining
directors or trustees; and,
5. The action by the designated director or trustee shall be limited to
Emergency Board the emergency action necessary, and the term shall cease within a
reasonable time from the termination of the emergency or upon
election of the replacement director or trustee, whichever comes
earlier.

The corporation must notify the SEC within three (3) days from
the creation of the emergency board, stating therein the reason
for its creation.

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 SECTION 29: 1. Section 29 of the RCC clarified that directors or
trustees shall not participate in the determination of
Compensation of their own per diems or compensation.

Directors or 2. It imposed an annual reportorial requirement in

relation to the total compensation of each of the

Trustees directors or trustees for corporations vested with

public interest.

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 SECTION 31: 1. It expands the coverage of self-dealing provision to

Dealings of spouses and relatives within the fourth civil degree of

consanguinity or affinity of the directors, trustees,
officers.
Directors, Trustees 2. In case of corporations vested with public interest,
or Officers with material contracts are approved by at least two-thirds
(2/3) of the entire membership of the board, with at
least a majority of the independent directors voting to
the Corporation approve the material contract.

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 SECTION 35: 1. Corporations are now expressly allowed to enter into a
partnership, join venture or any other commercial
Corporate Powers agreement with natural and juridical persons.

and Capacity 2. It appears that there is no more prohibition for

domestic corporations to donate in favor of political
party or candidate.

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 SECTION 37:

Power to Increase
or Decrease 1. The RCC prescribed a period – six (6) months from
Capital Stock; date of approval of the board and stockholders, to file
the application with the SEC. Such period may be
extended provided there are justifiable reasons for
Incur, Create or such extension.

Increase Bonded
Indebtedness

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 SECTION 39:

Sale or Other 1. Approval of the Philippine Competition SEC should

be obtained for sale and purchase transactions
Disposition of covered by the provisions of Republic Act No. 10667
(Philippine Competition Act).

Assets

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 1. It removed the option of adopting and submitting the
bylaws of the corporation to the SEC within a period
of one month from the former’s incorporation but,
nevertheless, allows filing of the bylaws after
incorporation.

2. On the contents of the bylaws, it included provisions

on mode of notice to stockholders or members
SECTION 46: thereof; modes of attendance of stockholder, member,
director or trustee during meetings and casting their
Contents of Bylaws votes; the maximum number of other board
representations that an independent director or
trustee may have which shall, in no case, be more
than the number prescribed by the SEC; and,
promotion of good governance and anti-graft
measures.

3. It also allows the inclusion of an arbitration

agreement in the bylaws.

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 1. It specified that if the bylaws is silent, the regular
SECTION 48: stockholders’ meeting shall be held on any date after

Kinds of Meetings April 15 of every year.

2. Written notice of regular meetings shall now be sent

(Meetings of directors, at least 21 days prior to the meeting, compared to two
weeks prior under the old Code.
trustees, stockholders, or
members may be regular 3. Written notice of regular meetings may be sent to all
stockholders or members of record through electronic
or special) mail or such other manner as the Commission shall
allow under its guidelines.

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 4. At each regular meeting of stockholders or members,
the board of directors or trustees shall endeavor to
present to stockholders or members the following:

a. The minutes of the most recent regular meeting which shall

SECTION 48:
Kinds of Meetings
(Meetings of directors,
trustees, stockholders, or
members may be regular
or special)
include, among others:
i. A description of the voting and vote tabulation
procedures used in the previous meeting;
ii. A description of the opportunity given to stockholders or
members to ask questions and a record of the questions
asked and answers given;
iii. The matters discussed and resolutions reached;
iv. A record of the voting results for each agenda item;
v. A list of the directors or trustees, officers and
stockholders or members who attended the meeting; and
vi. Such other items that the Commission may require in the
interest of good corporate governance and the protection
of minority stockholders;

b. b. A members’ list for nonstock corporations and, for stock

corporations, material information on the current stockholders,
and their voting rights;

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 4. At each regular meeting of stockholders or members,
the board of directors or trustees shall endeavor to
present to stockholders or members the following:

c. A detailed, descriptive, balanced and comprehensible

SECTION 48: assessment of the corporation’s performance, which shall
include information on any material change in the corporation’s
Kinds of Meetings business, strategy, and other affairs;

(Meetings of directors, d. A financial report for the preceding year, which shall include
financial statements duly signed and certified in accordance
trustees, stockholders, or with this Code and the rules the Commission may prescribe, a
statement on the adequacy of the corporation’s internal
members may be regular controls or risk management systems, and a statement of all
external audit and non-audit fees;
or special) e. An explanation of the dividend policy and the fact of payment
of dividends or the reasons for nonpayment thereof;

f. Director or trustee profiles which shall include, among others,

their qualifications and relevant experience, length of service in
the corporation, trainings and continuing education attended,
and their board representations in other corporations;
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 4. At each regular meeting of stockholders or members,
the board of directors or trustees shall endeavor to
present to stockholders or members the following:

g. A director or trustee attendance report, indicating the

SECTION 48: attendance of each director or trustee at each of the meetings of
the board and its committees and in regular or special
Kinds of Meetings stockholder meetings;

(Meetings of directors, h. Appraisals and performance reports for the board and the
criteria and procedure for assessment;
trustees, stockholders, or i. A director or trustee compensation report prepared in
members may be regular accordance with this Code and the rules the Commission may
prescribe;
or special) j. Director disclosures on self-dealings and related party
transactions; and/or

k. The profiles of directors nominated or seeking election or

reelection.

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 SECTION 48:
Kinds of Meetings
(Meetings of directors,
trustees, stockholders, or
members may be regular
or special)
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5. The right to vote of stockholders or members may be
exercised in person, through a proxy, or when so
authorized in the bylaws, through remote
communication or in absentia. The Commission shall
issue the rules and regulations governing
participation and voting through remote
communication or in absentia, taking into account
the company’s scale, number of shareholders or
members, structure, and other factors consistent with
the protection and promotion of shareholders’ or
members’ meetings.
 1. The RCC added shares of stock in another corporation
SECTION 61: and other generally accepted form of consideration in
Consideration for the enumeration of consideration for stocks.

2. Stockholders can now participate in the

Stocks determination of valuation of a consideration other
than actual cash.

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 1. It required all information about the corporation to
be preserved, and expanded the list of records
required to be kept by the corporation in its principal
office.
SECTION 73:
2. Inspecting/reproducing party is bound by
Books to be Kept; confidentiality rules. However, a person who is not a
stockholder or member of record, a competitor, or

Stock Transfer who represents interests of a competitor is prohibited

to inspect/reproduce corporate records.

Agent 3. A stockholder who shall abuse the right to

inspect/reproduce shall be penalized under the
provisions of the following laws:

a. RCC
b. Intellectual Property Code of the Philippines;
c. Data Privacy Act of 2012.

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 4. The SEC may require presence of an independent
transfer agent in case the stock transfer corporation
SECTION 73: transfers or trades stocks in secondary markets.

Books to be Kept; 5. It expanded the remedies available to a stockholder

exercising his right of inspection in that if the

Stock Transfer corporation denies or does not act on a demand for

inspection and/or reproduction, the aggrieved party
may report such denial or inaction to the SEC. Within
Agent five (5) days from receipt of such report, the SEC shall
conduct a summary investigation and issue an order
directing the inspection or reproduction of the
requested records.

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 The articles of merger should now include:

1. The carrying amounts and fair values of the assets and

SECTION 75: liabilities of the respective companies as of the agreed

Plan of Merger or cut-off date;

2. The method to be used in the merger or consolidation

Consolidation of accounts of the companies;

3. The provisional or proforma values, as merged or

consolidated, using the accounting method; and

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 1. It provides that non-stock corporations shall, at all
times, keep a list of its members and their proxies in
the form the SEC may require. Further, the list shall
be updated to reflect the members and proxies of
SECTION 87: record twenty (20) days prior to any scheduled

Purposes election.

2. It deleted the holding of office by the trustees for 3

batches or on staggered basis and allowed non-
members to become an independent trustee in case of
nonstock corporations vested with public interest.

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 TITLE XIV
Dissolution
1. The affirmative votes of stockholders needed to effect a dissolution (where no creditors are affected) were
decreased from two-thirds (2/3) to a mere majority of the outstanding capital stock or majority of the
members of the meeting.

2. To apply for dissolution with the Commission, a verified request for dissolution must be filed by the
Corporation, in addition to a certified and countersigned copy of the resolution, proof of publication, and
favorable recommendation from the appropriate regulatory agency, when necessary. The Commission
must also act within fifteen (15) days from receipt of the request.

3. It imposed additional documentary requirements for dissolution

4. It distinguished the effectivity of dissolution in case of expiration of shortened term and expiration of the
original term. Upon the expiration of the shortened term, as stated in the approved amended articles of
incorporation, the corporation shall be deemed dissolved without any further proceedings, subject to the
provisions of this Code on liquidation. In the case of expiration of corporate term, dissolution shall
automatically take effect on the day following the last day of the corporate term stated in the articles of
incorporation, without the need for the issuance by the Commission of a certificate of dissolution.

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 TITLE XIV
Dissolution
5. It includes a provision for withdrawal of request for dissolution . The withdrawal shall be submitted no
later than fifteen (15) days from receipt by the SEC of the request for dissolution. Upon receipt of a
withdrawal of request for dissolution, the SEC shall withhold action on the request for dissolution and
shall, after investigation:

a. make a pronouncement that the request for dissolution is deemed withdrawn;

b. direct a joint meeting of the board of directors or trustees and the stockholders or members for the
purpose of ascertaining whether to proceed with dissolution; or

c. issue such other orders as it may deem appropriate

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 TITLE XIV
Dissolution
6. It expanded the grounds for involuntary dissolution to include:

a. Upon receipt of a lawful court order dissolving the corporation;

b. Upon finding by final judgment that the corporation procured its incorporation through fraud;

c. Upon finding by final judgment that the corporation:

i. Was created for the purpose of committing, concealing or aiding the commission of securities
violations, smuggling, tax evasion, money laundering, or graft and corrupt practices;

ii. Committed or aided in the commission of securities violations, smuggling, tax evasion, money
laundering, or graft and corrupt practices, and its stockholders knew; and

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 TITLE XIV
Dissolution
7. Repeatedly and knowingly tolerated the commission of graft and corrupt practices or other fraudulent or
illegal acts by its directors, trustees, officers, or employees.

8. It allows the SEC to dissolve the corporation motu proprio or upon filing of verified complaint by any
interested party for any of the involuntary grounds for dissolution.

It allows for forfeiture of assets of those corporations dissolved involuntarily for commission of fraud and
other specified offenses.

SECTION 139. Corporate Liquidation.

1. It provided that the liquidation of banks shall be covered by the New Central Bank Act and the Philippine
Deposit Insurance Corporation Charter.

2. In case of escheat, the properties shall revert to the national government based on RCC. The Old Code,
however, previously provided that such properties will be escheated to the city or municipality where such
are located.

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 TITLE XV
Foreign Corporations
1. A foreign corporation, except if it is a foreign banking or insurance corporation, is required to deposit
shares of stock, debt securities or any financial instrument determined suitable by the Commission within
sixty (60) days after the issuance of the license to transact business in the Philippines.

2. The actual market value of the deposit requirement was increased from ₱100,000.00 to ₱500,000.00. The
threshold within which the foreign corporation must deposit additional securities was also increased from
₱5 Million to ₱10 Million.

3. If the resident agent is a domestic corporation, it must also be of sound financial standing and must
provide a certification from the Commission that it is in good standing

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 RCC Penalizes the Following Acts

PROVISION CONTENT PENALTY

SECTION 159. The unauthorized use of a corporate name

Unauthorized Use of Corporate Name;
Penalties.
Fine for unauthorized use of a corporate
shall be punished with a fine ranging from
name. The fine amounts to ₱10,000.00 to
Ten thousand pesos (₱10,000.00) to Two
₱200,000.00.
hundred thousand pesos (₱200,000.00).

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 RCC Penalizes the Following Acts
PROVISION CONTENT PENALTY

When, despite the knowledge of the existence

of a ground for disqualification as provided in
Section 26 of this Code, a director, trustee or
• Penalty for willfully holding office
officer willfully holds office, or willfully
despite disqualification or willfully
conceals such disqualification, such director,
concealing such disqualification. The
trustee or officer shall be punished with a fine
fine ranges from ₱10,000.00 to
SECTION 160. ranging from Ten thousand pesos (₱10,000.00)
₱200,000.00 and at the discretion of the
to Two hundred thousand pesos
court, and shall be permanently
(₱200,000.00) at the discretion of the court,
Violation of Disqualification Provision; disqualified from being a director, trustee
and shall be permanently disqualified from
Penalties. or officer of any corporation.
being a director, trustee or officer of any
corporation. When the violation of this
• If the violation is injurious or
provision is injurious or detrimental to the
detrimental to the public. The fine
public, the penalty shall be a fine ranging from
ranges from ₱20,000.00 to ₱400,000.00.
Twenty thousand pesos (₱20,000.00) to
Four hundred thousand pesos
(₱400,000.00).

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 RCC Penalizes the Following Acts
PROVISION
SECTION 161.
Violation of Duty to Maintain Records,
to Allow their Inspection or
Reproduction; Penalties.
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CONTENT PENALTY
The unjustified failure or refusal by the
corporation, or by those responsible for
keeping and maintaining corporate records, to
comply with Sections 45, 73, 92, 128, 177 and
other pertinent rules and provisions of this
Code on inspection and reproduction of
records shall be punished with a fine ranging
from Ten thousand pesos (₱10,000.00) to Two
hundred thousand pesos (₱200,000.00), at the
Penalty for unjustified failure or refusal to
discretion of the court, taking into
keep, maintain, and allow inspection or
consideration the seriousness of
the violation and its implications. When the
reproduction of records. The fine ranges
from ₱10,000.00 to ₱400,000.00, without
violation of this provision is injurious or
prejudice to the contempt powers of the SEC.
detrimental to the public, the penalty is a fine
ranging from Twenty thousand pesos
(₱20,000.00) to Four hundred thousand
pesos (₱400,000.00).
The penalties imposed under this section shall
be without prejudice to the SEC’s exercise of
its contempt powers under
Section 157 hereof.
 RCC Penalizes the Following Acts
PROVISION
SECTION 162.
Willful Certification of Incomplete,
Inaccurate, False or Misleading
Statements or Reports; Penalties.
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CONTENT PENALTY
Any person who willfully certifies a report
required under this Code, knowing that the
same contains incomplete, inaccurate,
• Fine for willfully certifying erroneous
false, or misleading information or
reports. The fine ranges from ₱20,000.00
statements, shall be punished with a fine
to ₱200,000.00.
ranging from Twenty thousand pesos
(₱20,000.00) to Two hundred thousand
• When the wrongful certification is
pesos (₱200,000.00). When the wrongful
injurious or detrimental to the public.
certification is injurious or detrimental to the
The fine ranges from ₱40,000.00 to
public, the auditor or the responsible person
₱400,000.00.
may also be punished with a fine ranging from
Forty thousand pesos (₱40,000.00) to Four
hundred thousand pesos (₱400,000.00).
 RCC Penalizes the Following Acts
PROVISION CONTENT PENALTY
An independent auditor who, in collusion
with the corporation’s directors or
representatives, certifies the corporation’s
financial statements despite its
incompleteness or inaccuracy, its failure to
give a fair and accurate presentation of the
corporation’s condition, or despite containing
SECTION 163. false or misleading statements, shall be
Fine for colluding independent auditors.
punished with a fine ranging from Eighty
The fine ranges from ₱80,000.00 to
Independent Auditor Collusion; thousand pesos (₱80,000.00) to Five
₱600,000.00.
Penalties. hundred thousand pesos (₱500,000.00).
When the statement or report certified is
fraudulent, or has the effect of causing injury
to the general public, the auditor or
responsible officer may be punished with a
fine ranging from One hundred
thousand pesos (₱100,000.00) to
Six hundred thousand pesos (₱600,000.00).

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 RCC Penalizes the Following Acts
PROVISION
SECTION 164.
Obtaining Corporate Registration
Through Fraud; Penalties.
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CONTENT PENALTY
Those responsible for the formation of a
corporation through fraud, or who assisted
directly or indirectly therein, shall be
punished with a fine ranging from Two
hundred thousand pesos (₱200,000.00) to
Fine for fraudulent incorporation. The fine
Two million pesos (₱2,000,000.00). When
ranges from ₱200,000.00 to ₱5 Million.
the violation of this provision is injurious or
detrimental to the public, the penalty is a fine
ranging from Four hundred thousand pesos
(₱400,000.00) to Five million pesos
(₱5,000,000.00).
 RCC Penalizes the Following Acts

PROVISION CONTENT PENALTY

A corporation that conducts its business

through fraud shall be punished with a fine
• Fine for fraudulent conduct of
ranging from Two hundred thousand
SECTION 165. business. The fine ranges from
pesos (₱200,000.00) to Two million pesos
₱200,000.00 to ₱2 Million.
(₱2,000,000.00). When the violation of this
Fraudulent Conduct of Business; provision is injurious or detrimental to the
• If violation is injurious or detrimental
Penalties. public, the penalty is a fine
to the public. The fine ranges from
ranging from Four hundred thousand pesos
₱400,000.00 to ₱5 Million.
(₱400,000.00) to Five million pesos
(₱5,000,000.00).

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 RCC Penalizes the Following Acts
PROVISION CONTENT PENALTY
A corporation used for fraud, or for
committing or concealing graft and corrupt
practices as defined under pertinent statutes,
shall be liable for a fine ranging from One
hundred thousand pesos (₱100,000.00) to
Five million pesos (₱5,000,000.00).
When there is a finding that any of its
SECTION 166. directors, officers, employees, agents, or
Fine for using the corporation for fraud or
representatives are engaged in graft and
for committing or concealing graft and
Acting as Intermediaries for Graft and corrupt practices, the corporation’s failure to
corrupt practices. The fine ranges from
Corrupt Practices; install:
₱100,000.00 to ₱5 Million.
Penalties.
a. safeguards for the transparent and lawful
delivery of services; and

b. policies, code of ethics, and procedures

against graft and corruption shall be
prima facie evidence of corporate
liability under this section.

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 RCC Penalizes the Following Acts

PROVISION CONTENT PENALTY

A corporation that appoints an intermediary

SECTION 167.
Engaging Intermediaries for Graft and
Corrupt Practices; Penalties.
who engages in graft and corrupt practices for
the corporation’s benefit or interest shall be
punished with a fine ranging from One
hundred thousand pesos (₱100,000.00) to
One million pesos (₱1,000,000.00).
Fine for appointing an intermediary to
engage in graft and corrupt practices for
the benefit of the corporation. The fine
ranges from ₱100,000.00 to ₱1 Million.

A director, trustee, or officer who knowingly

fails to sanction, report, or file the appropriate
SECTION 168. action with proper agencies, allows or
Fine for knowingly tolerating graft and
tolerates the graft and corrupt practices or
corrupt practices or fraudulent acts. The
fraudulent acts committed by a corporation’s
Tolerating Graft and Corrupt Practices; fine ranges from ₱500,000.00 to ₱1
directors, trustees, officers, or employees shall
Penalties. Million.
be punished with a fine ranging from Five
hundred thousand pesos (₱500,000.00) to
One million pesos (₱1,000,000.00).

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 RCC Penalizes the Following Acts

PROVISION CONTENT PENALTY

A whistleblower refers to any person who

SECTION 169.
Retaliation Against Whistleblowers.
provides truthful information relating to the
SEC or possible SEC of any offense or violation
under this Code. Any person who, knowingly
and with intent to retaliate, commits acts
Fine for retaliatory acts against
detrimental to a whistleblower such as
whistleblowers. The fine ranges from
interfering with the lawful employment or
₱100,000.00 to ₱1 Million.
livelihood of the whistleblower, shall, at the
discretion of the court, be punished with a
fine ranging from One hundred thousand
pesos (₱100,000.00) to One million pesos
(₱1,000,000.00).

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 RCC Penalizes the Following Acts
PROVISION CONTENT PENALTY
Violations of any of the other provisions of
this Code or its amendments not otherwise
specifically penalized therein shall be
punished by a fine of not less than Ten
thousand pesos (₱10,000.00) but not
more than One million pesos
(₱1,000,000.00). If the violation is committed
by a corporation, the same may, after notice
Fine for other violations. The range of
SECTION 170. and hearing, be dissolved n appropriate
fines was increased from ₱1,000.00 –
proceedings before the SEC: Provided, That
₱10,000.00 (Corporation Code of the
such dissolution shall not preclude the
Other Violations of the Code; Separate Philippines) to ₱10,000.00 – ₱1 Million.
institution of appropriate action against the
Liability. The penalty of imprisonment was also
director, trustee, or officer of the corporation
removed.
responsible for said violation: Provided,
further, That nothing in this section shall be
construed to repeal the other causes for
dissolution of a corporation provided in this
Code. Liability for any of the foregoing
offenses shall be separate from any other
administrative, civil, or criminal liability
under this Code and other laws.

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 What is a
One-Person
Corporation?

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 ONE-PERSON CORPORATION
Characteristics
1. It has a single stockholder;

2. It is not required to have a minimum authorized capital stock except as otherwise provided by special law.
Further, no portion of the authorized capital is required to be paid up at the time of the incorporation,
unless otherwise required by applicable laws or regulations. (Sec. 117 of the RCC and Sec. 8 of MC No. 7);

3. It is not required to submit and file corporate bylaws. (Section 119, RCC);
1. It is required to indicate the letters “OPC” either below or at the end of its corporate name (Section 120, RCC);
2. The single stockholder shall be the sole director and president of the One Person Corporation (Section 121, RCC);
3. The single stockholder is required to designate a nominee and an alternate nominee who shall, in the event of the
single stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage the
corporation’s affairs (Section 124, RCC);
4. The liability of the single stockholder shall be limited to his subscription to the corporation; provided that the
corporation is adequately financed;
5. He must prove that the property of the One Person Corporation is independent of the stockholder’s personal
property; and,
6. There is no ground to pierce the veil of corporate fiction

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 ONE-PERSON CORPORATION
Characteristics
1. It has a single stockholder;

2. It is not required to have a minimum authorized capital stock except as otherwise provided by special law. Further, no
portion of the authorized capital is required to be paid up at the time of the incorporation, unless otherwise required by
applicable laws or regulations. (Sec. 117 of the RCC and Sec. 8 of MC No. 7);

3. It is not required to submit and file corporate bylaws. (Section 119, RCC);
1. It is required to indicate the letters “OPC” either below or at the end of its corporate name (Section 120, RCC);
2. The single stockholder shall be the sole director and president of the One Person Corporation (Section 121, RCC);
3. The single stockholder is required to designate a nominee and an alternate nominee who shall, in the event of the single
stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage the corporation’s
affairs (Section 124, RCC);
4. The liability of the single stockholder shall be limited to his subscription to the corporation; provided that the corporation
is adequately financed;
5. He must prove that the property of the One Person Corporation is independent of the stockholder’s personal property;
and,
6. There is no ground to pierce the veil of corporate fiction

Otherwise, the sole stockholder shall be jointly and severally liable for the debts and other liabilities of the One Person Corporation.
(Section 130, RCC)

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 Sole Proprietorship One Person Corporation

Has no separate legal personality from the proprietor Has a legal personality separate and distinct from the sole
conducting the business. stockholder of the corporation.

The assets of the one person corporation are not owned by its
The assets of the sole proprietorship are similarly owned by
sole stockholder unless the one-person corporation is not
the proprietor conducting the business.
adequately-financed and/or the assets.

The obligations that the sole proprietorship incurred in The obligations of the corporation can not be enforced against
conducting the business may be enforced against the its sole stockholder unless the situation warrants piercing the
proprietor. veil of corporate fiction.

Registered with the DTI. Registered with the SEC.

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 For a more comprehensive discussion of the RCC- check out the soon to be launched:

“Questions and Answers on the Revised Corporation Code”

By Yours Truly

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Thank you.