Revised Corporation Code: Title XVI – Investigations, Offenses, and Penalties

TITLE XVI – INVESTIGATIONS, OFFENSES, AND PENALTIES

Section 154. Investigation and Prosecution of Offenses. – The Commission may investigate an alleged violation of this Code, or of a rule, regulation, or order of the Commission.

The Commission may publish its findings, orders, opinion, advisories, or information concerning any such violation, as may be relevant to the general public or to the parties concerned, subject to the provisions of Republic Act No. 10173, otherwise known as the “Data Privacy Act of 2012”, and other pertinent laws.

The Commission shall give reasonable notice to and coordinate with the appropriate regulatory agency prior to any such publication involving companies under their regulatory jurisdiction.

Section 155. Administering Oaths, Subpoena of Witnesses and Documents. – The Commission, through its designated officer, may administer oaths and affirmations, issue subpoena and sub poena duces tecum, take testimony in any inquiry or investigation, and may perform other act as necessary to the proceedings or to the investigation.

Section 156. Cease and Desist Order. – Whenever the Commission has reasonable basis to believe that a person has violated, or is about to violate this Code, a rule, regulation, or order of the Commission, it may direct such person to desist from committing the act constitution the violation.

The Commission may issue a cease and desist order ex parte to enjoin an act or practice which is fraudulent or can be reasonably expected to cause significant, imminent, and irreparable danger or injury to public safety or welfare. The ex parte order shall be valid for a maximum period of twenty (20) days, without prejudice to the order being made permanent after due notice and hearing.

Thereafter, the Commission may proceed administratively against such person in accordance with Section 158 of this Code, and/ or transmit evidence to the Department of Justice for preliminary investigation or criminal prosecution and/ or initiate criminal prosecution for any violation of this Code, rule, or regulation.

Section 157. Contempt. – A person who, without justifiable cause, fails or refuses to comply with any lawful order, decision, or subpoena issued by the Commission shall, after due notice and hearinig, be held in contempt and fined in an amount not exceeding Thirty thousand pesos (P30,000.00). When the refusal amounts to clear and open defiance of the Commission’s order, decision, or subpoena, the Commission may impose a daily fine of One thousand pesos (P1,000.00) until the order, decision, or subpoena is complied with.

Section 158. Administrative sanctions. –  If, after due notice and hearing, the Commission finds that any provision of this Code, rules or regulations, or any of the Commission’s orders has been violated, the Commission may impose any or all of the following sanctions, taking into consideration the extent of participation, nature, effects, frequency and seriousness of the violation:

• (a) Imposition of fine ranging from Five thousand pesos (P5,000.00) to Two million pesos (P2,000,000.00), and not more than One thousand pesos for each day of continuing violation but in no case to exceed Two million pesos (P2,000,000.00);
• (b) Issuance of permanent cease and desist order;
• (c) Suspension or revocation of the certificate of incorporation; and,
• (d) Dissolution of the corporation and forfeiture of its assets under the conditions in Title XIV of this Code.

Section 159. Unauthorized Use of Corporate Name; Penalties. – 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).

Section 160. Violation of Disqualification Provision; Penalties. – When, despite the knowledge of the existence of ground for disqualification as provided in Section 26 of this Code, a director, trustee or officer willfully holds office, or willfully conceals such disqualification, such director, trustee or officer shall be punished with a find 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 fine ranging from Twenty thousand pesos (P20,000.00) to Four hundred thousand pesos (P400,00.00).

Section 161. Violation of Duty to Maintain Records, Allow their Inspection or Reproduction; Penalties. – 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 (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 under this section shall be without prejudice to the Commission’s exercise of its contempt powers under Section 157 hereof.

Section 162. Willful Certification of Incomplete, Inaccurate, False, or Misleading Statements or Reports; Penalties. – Any person who willfully certifies a report required under this 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 responsible person may also be punished with a fine ranging from Forty thousand pesos (P40,000.00) to Four hundred thousand pesos (P400,00.00).

Section 163. Independent Auditor Collusion; Penalties. – An independent auditor, who in collusion with the corporation’s directors or representatives, certifies the corporations financial statement 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).

Section 164. Obtaining Corporate Registration Through Fraud; Penalties. – 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).

Section 165. Fraudulent Conduct of Business; Penalties. – 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).

Section 166.   Acting as Intermediaries for Graft and Corrupt Practices; Penalties. – 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 under this section.

Section 167. Engaging Intermediaries for Graft and Corrupt Practices; Penalties. – 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 to One million pesos (P1,000,000.00).

Section 168. Tolerating Graft and Corrupt Practices; Penalties. – 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 (P500,00.00) to One million pesos (P1,000,000.00).

Section 169. 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 this 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).

Section 170. Other Violations of the Code; Separate Liability. – Violations of any of the 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 (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: Provided, That such dissolution shall not preclude the institution of appropriate action against the director, trustee, or officer of the corporation responsible for said violation: Provided, further, That nothing in this section shall be construed to repeal other causes for dissolution of a corporation provided in this Code.

Section 171. 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.

Section 172. Liability of Aiders and Abettors or Other Secondary Liability. – Anyone who shall aid, abet, counsel, command, induce, or cause any violation of this 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.

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