Crimes punished under the New Corporation Code

Crimes punished under the New Corporation Code Image

Republic Act No. 11232 or the Revised Corporation Code of the Philippines

In the Philippines, the law which provides for the formation, organization, or regulation of private corporations is Batas Pambansa Bilang 68, otherwise known as “The Corporation Code of the Philippines”.

In 2019, BP Blg. 68 has been repealed by Republic Act No. 11232, otherwise known as the Revised corporation code of the Philippines (“Revised Corporation Code”).

The Revised corporation code provides that the Securities and Exchange Commission (“SEC”) may investigate an alleged violation of the Revised corporation code, or of rule, regulation, or order of the SEC.

Crimes under the New Law

Under the Revised corporation code, the following are the punishable crimes and their penalties:

  • Unauthorized Use of Corporate Name

The unauthorized use of a corporate name shall be punished with a fine ranging from Ten thousand pesos (P10,000.00) to Two hundred thousand pesos (P200,000.00).

  • Violation of Disqualification Provision

When, despite the knowledge of the existence of a ground for disqualification as provided in the Revised corporation code, a director, trustee or officer willfully holds office, or willfully conceals such disqualification, such director, trustee or officer shall be punished with a fine ranging from Ten thousand pesos (P10,000.00) to Two hundred thousand pesos (P200,000.00) at the discretion of the court, and shall be permanently disqualified from being a director, trustee or officer of any corporation.

When the violation of this provision is injurious or detrimental to the public, the penalty shall be a fine ranging from Twenty thousand pesos (P20,000.00) to Four hundred thousand pesos (P400,000.00).

  • Violation of Duty to Maintain Records, to Allow their Inspection or Reproduction

The unjustified failure or refusal by the corporation, or by those responsible for keeping and maintaining corporate records, to comply with the provisions and other pertinent rules the Revised corporation code on inspection and reproduction of records shall be punished with a fine ranging from Ten thousand pesos (P10,000.00) to Two hundred thousand pesos (P200,000.00), at the discretion of the court, taking into consideration the seriousness of the violation and its implications.

When the violation of this provision is injurious or detrimental to the public, the penalty is a fine ranging from Twenty thousand pesos (P20,000.00) to Four hundred thousand pesos (P400,000.00). The penalties imposed shall be without prejudice to the Commission’s exercise of its contempt powers

  • Willful Certification of Incomplete, Inaccurate, False, or Misleading Statements or Reports

Any person who willfully certifies a report required under the Revised corporation code, knowing that the same contains incomplete, inaccurate, false, or misleading information or statements, shall be punished with a fine ranging from Twenty thousand pesos (P20,000.00) to Two hundred thousand pesos (P200,000.00).

When the wrongful certification is injurious or detrimental to the public, the auditor or the responsible person may also be punished with a fine ranging from Forty thousand pesos (P40,000.00) to Four hundred thousand pesos (P400,000.00).

  • Independent Auditor Collusion

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 false or misleading statements, shall be punished with a fine ranging from Eighty thousand pesos (P80,000.00) to Five hundred thousand pesos (P500,000.00).

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 (P100,000.00) to Six hundred thousand pesos (P600,000.00).

  • Obtaining Corporate Registration Through Fraud

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 (P200,000.00) to Two million pesos (P2,000,000.00).

When the violation of this provision is injurious or detrimental to the public, the penalty is a fine ranging from Four hundred thousand pesos (P400,000.00) to Five million pesos (P5,000,000.00).

  • Fraudulent Conduct of Business

A corporation that conducts its business through fraud shall be punished with a fine ranging from Two hundred thousand pesos (P200,000.00) to Two million pesos (P2,000,000.00).

When the violation of this provision is injurious or detrimental to the public, the penalty is a fine ranging from Four hundred thousand pesos (P400,000.00) to Five million pesos (P5,000,000.00).

  • Acting as Intermediaries for Graft and Corrupt Practices

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 (P100,000.00) to Five million pesos (P5,000,000.00).

When there is a finding that any of its directors, officers, employees, agents, or representatives are engaged in graft and corrupt practices, the corporation’s failure to install:

(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.

  • Engaging Intermediaries for Graft and Corrupt Practices

A corporation that appoints an intermediary who engages in graft and corrupt practices for the corporation’s benefit or interest shall be punished with a fine ranging from One hundred thousand pesos (P100,000.00) to One million pesos (P1,000,000.00).

  • Tolerating Graft and Corrupt Practices

A director, trustee, or officer who knowingly fails to sanction, report, or file the appropriate action with proper agencies, allows or tolerates the graft and corrupt practices or fraudulent acts committed by a corporation’s directors, trustees, officers, or employees shall be punished with a fine ranging from Five hundred thousand pesos (P500,000.00) to One million pesos (P1,000,000.00).

  • Retaliation Against Whistleblowers

A whistleblower refers to any person who provides truthful information relating to the commission or possible commission of any offense or violation under the Revised corporation code.

Any person who, knowingly and with intent to retaliate, commits acts detrimental to a whistleblower such as interfering with the lawful employment or livelihood of the whistleblower, shall, at the discretion of the court, be punished with a fine ranging from One hundred thousand pesos (P100,000.00) to One million pesos (P1,000,000.00).

Other Violations of the Revised Corporation Code

Violations of any of the other provisions of the Revised corporation code or its amendments not otherwise specifically penalized therein shall be punished by a fine of not less than Ten thousand pesos (P10,000.00) but not more than One million pesos (P1,000,000.00).

If the violation is committed by a corporation, the same may, after notice and hearing, be dissolved in appropriate proceedings before the Commission. Such dissolution shall not preclude the institution of appropriate action against the director, trustee, or officer of the corporation responsible for said violation.

Who are Liable?

  • Liability of Directors, Trustees, Officers, or Other Employees

If the offender is a corporation, the penalty may, at the discretion of the court, be imposed upon such corporation and/or upon its directors, trustees, stockholders, members, officers, or employees responsible for the violation or indispensable to its commission.

  • Liability of Aiders and Abettors and Other Secondary Liability

Anyone who shall aid, abet, counsel, command, induce, or cause any violation of the Revised corporation code, or any rule, regulation, or order of the Commission shall be punished with a fine not exceeding that imposed on the principal offenders, at the discretion of the court, after taking into account their participation in the offense.

About Nicolas and De Vega Law Offices

If you need assistance in corporate law, commercial law, corporate or commercial litigation, or civil or other criminal law-related issues,  we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com.

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