PATRICIA ALEXANDRIA PEREZ REVISED CORPORATION CODE
11781165
TITLE 16: Investigations, Offenses and Penalties
Guide Questions:
1. Do you agree with some commercial law experts that there is over-criminalization in
the Code by the inclusion of Title XVI particularly the specific offenses from Sec 159 to
169?
2. What are the enforcement powers of the SEC and how would it enable SEC to
investigate and prosecute violations or enhance compliance in a more effective and
expeditious manner?
3. Give two specific instances where the Code expressly provides that the SEC may
exercise its contempt powers.
4. Compare and contrast the provisions on CDO under the Securities Regulation Code
and the Code.
5. What are the specific offenses where the corporation is liable? What are the specific
offenses where other persons are the ones liable and not the corporation? And, what
are the specific offenses where the corporation and directors, officers, responsible
persons and/or third persons are liable?
6. Do you agree with the broad language in some specific offenses specially those that
are anti-fraud? Is this violative of the constitutional requirement of specificity or the
right of the accused to be informed of the nature and cause of the accusation against
him? Why or why not?
7. Review the case of Yujuico v. Quiambao, G.R. No. 180416, [June 2, 2014], 734 PHIL
606-623, had the incident happened under the Code, assuming the acts or omissions
committed constituted a specific offense or offenses under this Title, who among those
involved would be criminally liable?
Lecture Notes:
INTRODUCTION
1. There are two sets of completely new provisions in the Revised Corporation Code,
one is Title XIII, Chapter III on One Person Corporations and the other is Title XVI on
Investigations, Penalties and Offenses.
2. Chapter III is all new because it is the first time that the formation of one person
corporations has been allowed.
3. What is the reason behind the inclusion of the new Title XVI?
• The Securities Regulation Code which serves as the charter of the SEC in
that apart from providing the composition, qualification, and compensation
of SEC officers and employees, it vested SEC with powers, duties and
functions in connection with securities regulation and prescribed
administrative, civil and criminal sanctions for violations of certain
provisions of said law. On the other hand, the old Corporation Code hardly
mentioned SEC nor empowered it to enforce, implement, investigate and
penalize, in no uncertain terms, violations of its provisions.
• The Supreme Court has ruled that there is no corporate criminal liability
under the old Corporation Code. Only directors, trustees, corporate officers
or those personally responsible may be held criminally liable and suffer fine
and/or imprisonment.
1
4. UNCAC pointed out this deficiency to the SEC and recommended that it take steps to
align Philippine corporation law with the rest of the world’s by recognizing corporate
criminal liability and imposing the penalty of a fine on the corporation itself. (See case
of Yujuico v. Quiambao, G.R. No. 180416, [June 2, 2014], 734 PHIL 606-623)
5. Accordingly, in 2012, when SEC drafted its proposed amendments to the old Code, it
included a provision that would make the erring corporation itself criminally liable and
imposed a penalty of fine for any act or omission constituting an offense under the
new law on corporations.
6. While the proposed amendments were being deliberated in Congress, the Supreme
Court decided the case of Ient, et al v Tullett Prebon, GR No. 189158, January 11,
2017, where, in unequivocal language, it ruled that indeed the (old) Corporation Code
did not prescribe penalties for any other violation except under Sec. 144 which,
however, referred to only one offense that is - unjustified refusal or violation of the
right of inspection of a stockholder.
7. This ruling was very timely because it validated that there was indeed a necessity for
the new Code to provide specific offenses for which the corporation itself would be
liable and accordingly penalized with a fine.
8. However, not only the corporation may be liable for the specific offenses, there are at
least two specific offenses where a corporate officer, the auditor or other responsible
officer may be the ones liable and other specific offenses where directors, trustees,
officers and even third persons may be liable together with the corporation.
NO CORPORATE CRIMINAL LIABILITY UNDER THE OLD CODE
A criminal action based on the violation of a
stockholder's right to examine or inspect the
corporate records and the stock and transfer
book of a corporation under the second and
fourth paragraphs of Section 74 of the
Corporation Code can only be maintained
against corporate officers or any other persons
acting on behalf of such corporation.
Xxx
A perusal of the second and fourth paragraphs of Section 74, as well as the first paragraph of
the same section, reveal that they are provisions that obligates a corporation: they prescribe
what books or records a corporation is required to keep; where the corporation shall keep
them; and what are the other obligations of the corporation to its stockholders or members in
relation to such books and records. Hence, by parity of reasoning, the second and fourth
paragraphs of Section 74, including the first paragraph of the same section, can only be violated
by a corporation. 
 (Yujuico v. Quiambao, G.R. No. 180416, [June 2, 2014], 734 PHIL 606-623)
NO CORPORATE CRIMINAL LIABILITY UNDER THE OLD CODE
It is clear then that a criminal action based on the violation of the second or fourth paragraphs of
Section 74 can only be maintained against corporate officers or such other persons that
are acting on behalf of the corporation. Violations of the second and fourth paragraphs of
Section 74 contemplates a situation wherein a corporation, acting thru one of its officers or
agents, denies the right of any of its stockholders to inspect the records, minutes and the
stock and transfer book of such corporation.
PATRICIA ALEXANDRIA PEREZ REVISED CORPORATION CODE
11781165
of said statute's legislative history as to warrant a strict interpretation of its provisions? The
The problem with the petitioners' complaint and the evidence that they submitted during answer is a negative.
preliminary investigation is that they do not establish that respondents were acting on behalf of
STRADEC. Quite the contrary, the scenario painted by the complaint is that the respondents are The Corporation Code was intended as a regulatory measure, not primarily as a penal statute.
merely outgoing officers of STRADEC who, for some reason, withheld and refused to turn-over Sections 31 to 34 in particular were intended to impose exacting standards of fidelity on
the company records of STRADEC; that it is the petitioners who are actually acting on behalf of corporate officers and directors but without unduly impeding them in the discharge of their work
STRADEC; and that STRADEC is actually merely trying to recover custody of the withheld with concerns of litigation. Considering the object and policy of the Corporation Code to
records. encourage the use of the corporate entity as a vehicle for economic growth, we cannot espouse
a strict construction of Sections 31 and 34 as penal offenses in relation to Section 144 in the
(Yujuico v. Quiambao, G.R. No. 180416, [June 2, 2014], 734 PHIL 606-623) absence of unambiguous statutory language and legislative intent to that effect.
When Congress intends to criminalize certain acts it does so in plain, categorical language,
ONLY SPECIFIC OFFENSE IN THE OLD CODE WAS VIOLATION OF THEN SEC 74 otherwise such a statute would be susceptible to constitutional attack. As earlier discussed, this
can be readily seen from the text of Section 45 (j) of Republic Act No. 8189 and Section 74 of
The Secretary of Justice, through the Resolutions dated April 23, 2009 and May 15, 2009, the Corporation Code.
essentially ruled that there was probable cause to hold petitioners, in conspiracy with certain
former directors and officers of respondent Tullet Prebon (Philippines), Inc. (Tullett), criminally We stress that had the Legislature intended to attach penal sanctions to Sections 31 and 34 of
liable for violation of Sections 31 and 34 in relation to Section 144 of the Corporation Code. the Corporation Code it could have expressly stated such intent in the same manner that it did
xxx for Section 74 of the same Code.
The main bone of disagreement among the parties in this case is the applicability of Section 144
of the Corporation Code to Sections 31 and 34 of the same statute such that criminal liability
Ient, et al v. Tullett Prebon, GR 189158, Jan 11, 2017
attaches to violations of Sections 31 and 34.
xxx
ENFORCEMENT POWERS OF THE SEC
Petitioners posit that Section 144 only applies to the provisions of the Corporation Code or its
amendments "not otherwise specifically penalized" by said statute and should not cover
• When the SEC was created in 1936, it was for the same purpose as that of the SEC in
Sections 31 and 34 which both prescribe the "penalties" for their violation; namely, damages,
the US and other countries – securities regulation.
accounting and restitution of profits. On the other hand, respondent and the appellate court have
• It was after a couple of years of existence, that the corporate registration function of
taken the position that the term "penalized" under Section 144 should be interpreted as referring
the then Bureau of Commerce was transferred to the SEC.
to criminal penalty, such as fine or imprisonment, and that it could not possibly contemplate
• Since then, the SEC has been the primary implementing agency of two major laws
"civil" penalties such as damages, accounting or restitution.
namely the general law on corporations now the Revised Corporation Code and the
special law on securities regulation or the Securities Regulation Code.
There is no provision in the Corporation Code using similarly emphatic language that evinces a
• Both laws require the exercise by SEC of enforcement powers pertaining to
categorical legislative intent to treat as a criminal offense each and every violation of that law.
investigation, compulsory processes, coercive powers, and so on. While these powers
Consequently, there is no compelling reason for the Court to construe Section 144 as similarly
are already in the Securities Regulation Code, the SEC is perceived not to possess
employing the term "penalized" or ”penalty" solely in terms of criminal liability.
the same powers relative to the implementation of corporation law as there were not
xxx
expressly granted under the then Corporation Code.
Section 22 imposes the penalty of involuntary dissolution for non-use of corporate charter. The
rest of the above-quoted provisions, like Sections 31 and 34, provide for civil or pecuniary
SEC. 154. INVESTIGATION AND PROSECUTION OF OFFENSES
liabilities for the acts covered therein but what is significant is the fact that, of all these provisions
that provide for consequences other than penal, only Section 74 expressly states that a violation
SEC. 154. Investigation and Prosecution of Offenses. – The Commission may investigate an
thereof is likewise considered an offense under Section 144. If respondent and the Court of
alleged violation of this Code, or of rule, regulation, or order of the Commission.
Appeals are correct, that Section 144 automatically imposes penal sanctions on violations of
provisions for which no criminal penalty was imposed, then such language in Section 74 defining
The Commission may publish its findings, orders, opinions, advisories, or information concerning
a violation thereof as an offense would have been superfluous. There would be no need for
any such violation, as may be relevant to the general public or to the parties concerned, subject
legislators to clarify that, aside from civil liability, violators of Section 74 are exposed to criminal
to the provisions of Republic Act No. 10173, otherwise known as the “Data Privacy Act of 2012”,
liability as well. We agree with petitioners that the lack of specific language imposing criminal
and other pertinent laws.
liability in Sections 31 and 34 shows legislative intent to limit the consequences of their violation
to the civil liabilities mentioned therein. Had it been the intention of the drafters of the law to
The Commission shall give reasonable notice to and coordinate with the appropriate regulatory
define Sections 31 and 34 as offenses, they could have easily included similar language as that
agency prior to any such publication involving companies under their special regulatory
found in Section 74.
jurisdiction.
If we were to employ the same line of reasoning as the majority in United States v. R.L.C.,
NOTES ON SEC 154
would the apparent ambiguities in the text of the Corporation Code disappear with an analysis

2
PATRICIA ALEXANDRIA PEREZ REVISED CORPORATION CODE
11781165
The primary functions of the SEC concerning corporations may be classified as:
a) Regulatory such as registration, requiring reports and other submissions, approving
applications, rule-making, issuing opinions and other regulatory actions;
b) Enforcement including monitoring, acting upon tips, referrals and complaints,
conducting investigations, initiating, by filing, criminal complaints at the prosecutor’s
office; and
c) Quasi-judicial powers including the conduct of administrative proceedings, imposing of
administrative sanctions for any non-compliance or violation, prosecuting or defending
suits involving the SEC as party litigant before the CA and the SC.
Sec 154 definitely refers to enforcement powers specifically investigating any violation or non-
compliance preparatory to conducting administrative proceedings, initiating and filing of criminal
complaints, and, upon permission of the trial prosecutor, prosecuting the corresponding criminal
cases.
Sec 154 expressly allows the SEC to make public the results of its investigation and exercise of
other enforcement powers subject only to the Data Privacy Act. Please note however that in a
succeeding provision particularly on its visitorial powers, the SEC is enjoined from publishing
prematurely results of its inspection and investigation.
SEC. 155. ADMINISTRATION OF OATHS, SUBPOENA OF WITNESSES AND DOCUMENTS
SEC. 155. Administration of Oaths, Subpoena of Witnesses and Documents. – The
Commission, through its designated officer, may administer oaths and affirmations, issue
subpoena and subpoena duces tecum, take testimony in any inquiry or investigation, and may
perform other acts necessary to the proceedings or to the investigation.
NOTES ON SEC 155
This provision was necessitated by SEC’s past experience in inviting representatives of
regulated entities and other persons whose delay or failure to cooperate hampered SEC
investigation. Not being able to subpoena potential witnesses could only derail any investigation.
Before, the SEC handling lawyer had to engage a private lawyer to administer oaths to
complainants, witnesses and applicants and notarize their affidavits and other documents for
submission to SEC.
SEC. 156. CEASE AND DESIST ORDERS
SEC. 156. Cease and Desist Orders. – 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 constituting 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
3
preliminary investigation or criminal prosecution and/or initiate criminal prosecution for any
violation of this Code, rule, or regulation.
NOTES ON SEC 156
Two kinds of CDOs:
• After notice and hearing, the SEC may issue a CDO directing a person to desist from
committing an act, where there is reasonable basis to believe that the person has
violated, or is about to violate the Code, a rule, regulation; and
• The SEC may issue ex parte a CDO 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 CDO shall be valid for a maximum period of
twenty (20) days, without prejudice to the order being made permanent after due
notice and hearing.
Where the SEC conducted an investigation and determined that a violation has been committed,
whether or not a CDO was issued, the SEC may:
• Proceed administratively against the person pursuant to Sec 158;
• File a criminal complaint (where SEC is the complainant) for violation of the Code, rule
or regulation; or
• Transmit the evidence to the DOJ for the conduct of a preliminary investigation (with
the victim or aggrieved party as the private complainant or upon the initiation of
another government agency) where the charge may involve a penal offense or
violation of a law other than the Corporation Code or Securities Regulation Code;
CDO UNDER THE SRC
There are three distinct bases for the issuance by the SEC of the CDO. The first, allocated by
Section 5 (i), is predicated on a necessity "to prevent fraud or injury to the investing public". No
other requisite or detail is tied to this CDO authorized under Section 5 (i).
The second basis, found in Section 53.3, involves a determination by the SEC that "any person
has engaged or is about to engage in any act or practice constituting a violation of any provision
of this Code, any rule, regulation or order thereunder, or any rule of an Exchange, registered
securities association, clearing agency or other self-regulatory organization". The provision
additionally requires a finding that "there is a reasonable likelihood of continuing [or engaging in]
further or future violations by such person". The maximum duration of the CDO issued under
Section 53.3 is ten (10) days.
The third basis for the issuance of a CDO is Section 64. This CDO is founded on a
determination of an act or practice, which unless restrained, "will operate as a fraud on investors
or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public”.
Section 64.1 plainly provides three segregate instances upon which the SEC may issue
the CDO under this provision: (1) after proper investigation or verification, (2) motu proprio, or
(3) upon verified complaint by any aggrieved party. While no lifetime is expressly specified for
the CDO under Section 64, the respondent to the CDO may file a formal request for the lifting
thereof, which the SEC must hear within fifteen (15) days from filing and decide within ten (10)
days from the hearing.
It appears that the CDO under Section 5 (i) is similar to the CDO under Section 64.1. Both
require a common finding of a need to prevent fraud or injury to the investing public. At the same
time, no mention is made whether the CDO defined under Section 5 (i) may be issued ex-
parte, while the CDO under Section 64.1 requires "grave and irreparable" injury, language
PATRICIA ALEXANDRIA PEREZ REVISED CORPORATION CODE
11781165
absent in Section 5 (i). Notwithstanding the similarities between Section 5 (i) and Section 64.1, it
remains clear that the CDO issued under Section 53.3 is  fine would likely deter the offender corporation.
Yet interestingly, the CDO as contemplated in Section 53.3 or in Section 64, may be issued "ex-
parte" (under Section 53.3) or "without necessity of hearing" (under Section 64.1). Nothing in
these provisions impose a requisite hearing before the CDO may be issued thereunder.
Nonetheless, there are identifiable requisite actions on the part of the SEC that must be
undertaken before the CDO may be issued either under Section 53.3 or Section 64. In the case
of Section 53.3, the SEC must make two findings: (1) that such person has engaged in any such
act or practice, and (2) that there is a reasonable likelihood of continuing, (or engaging in)
further or future violations by such person. In the case of Section 64, the SEC must adjudge that
the act, unless restrained, will operate as a fraud on investors or is otherwise likely to cause
grave or irreparable injury or prejudice to the investing public."  violated, the Commission may impose any or all of the following sanctions, taking into
Noticeably, the CDO is not precisely clear whether it was issued on the basis of Section 5.1,
Section 53.3 or Section 64 of the SRC. The CDO actually refers and cites all three provisions,
yet it is apparent that a singular CDO could not be founded on Section 5.1, Section 53.3 and
Section 64 collectively. At the very least, the CDO under Section 53.3 and under Section 64
have their respective requisites and terms.
GSIS was similarly cagey in its petition before the SEC, it demurring to state whether it was
seeking the CDO under Section 5.1, Section 53.3, or Section 64. Considering that injunctive
relief generally avails upon the showing of a clear legal right to such relief, the inability or
unwillingness to lay bare the precise statutory basis for the prayer for injunction is an obvious
impediment to a successful application. Nonetheless, the error of the SEC in granting
the CDO without stating which kind of CDO it was issuing is more unpardonable, as it is an act
that contravenes due process of law.
(Government Service Insurance System v. Court of Appeals, G.R. Nos. 183905 & 184275, [April
16, 2009], 603 PHIL 676-722)
SEC. 157. CONTEMPT
SEC. 157. Contempt. – Any 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
hearing, 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.
NOTES ON SEC 157
• Contempt order is a very effective means to compel compliance with an order or
decision or subpoena of the SEC.
• Without the power to cite in contempt, the SEC had to seek the issuance of one from
the court and, in case of execution, request the court sheriff to execute its order or
decision.
• In the past, a corporation using a name that, by prior registration, already belonged to
another corporation, may refuse to bring down its signages or continue to use the
prohibited name despite the SEC final order or resolution. Usually, the aggrieved
corporation may have to file a case for unfair competition and/or damages before the
ordinary courts to enjoin the offender corporation from using the prohibited name.
4
• The prospect of a SEC contempt order and the resulting penalty in the form of a daily
• Under Sec 161 (Violation of Duty to Maintain Records), the imposable criminal
penalties are without prejudice to the SEC’s exercise of its contempt powers while
under Sec 17 (Corporate Name), the SEC may hold the responsible directors or
officers in contempt for failure to comply with its order to stop using an unauthorized
name.
SEC. 158. ADMINISTRATIVE SANCTIONS
SEC. 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
consideration the extent of participation, nature, effects, frequency and seriousness of the
violation:
A. Imposition of a fine ranging from Five thousand pesos (P5,000.00) to Two million
pesos (P2,000,000.00), and not more than One thousand pesos (P1,000.00) for each
day of continuing violation but in no case to exceed Two million pesos
(P2,000,000.00);
B. Issuance of a 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.
NOTES ON SEC 158
The SEC is a quasi-judicial agency that has the power to try and decide administrative
proceedings involving violation of any provision of the Code, rules or regulations, or any of its
orders has been violated. Accordingly, if there is a finding of liability, it may impose any of the
sanctions under Sec 158.
Take note that in choosing which sanction to impose, the SEC amy consider the extent of
participation, nature, effects, frequency and seriousness of the violation.
Further, there is a range when it comes to the amount of administrative fine. Where the violation
is continuing, a daily fine for each day of continuing violation is imposable but not exceeding the
total daily fine of P2 million.
Other sanctions may be a permanent cease and desist order , suspension or revocation of the
certificate of incorporation and dissolution of the corporation. Take note that the grounds for
involuntary dissolution in Sec 138 are not meant to be exclusive, such that dissolution may be
imposed as an administrative sanction precisely where it has been determined that the
corporation had committed a violation of a provision of the Code, rules or regulations or any
order of the SEC.
However, the special sanction of forfeiture, together with involuntary dissolution, is imposable
only under the conditions enumerated in Sec 138 ( e). Remember that for Sec 138 ( e) to apply,
there must already be a final judgment that the corporation was responsible for the acts and
offenses particularly mentioned therein. In addition, for the sanction of civil forfeiture to be
carried out, the SEC still has to file the corresponding petition therefor with the appropriate
court .
INTRODUCTION TO SPECIFIC OFFENSES
PATRICIA ALEXANDRIA PEREZ REVISED CORPORATION CODE
11781165
The ten specific offenses from Secs. 159 to 169 may be classified into the following:
1. Directly arising from a violation of a provision of the Code
a) Unauthorized use of corporate name
b) Violation of disqualification provision
2. Non-compliance with corporate governance related provisions or requirements
a) Violation of duty to maintain records, to allows inspection or reproduction
b) Willful certification of incomplete, inaccurate, false or misleading statements
or reports
c) Independent auditor collusion
3. Anti-fraud provisions
a) Obtaining corporate registration through fraud
b) Fraudulent conduct of business
c) Retaliation against whistleblower
4. Anti-graft measures
a) Acting as intermediaries for graft and corrupt practices
b) Engaging intermediaries for graft and corrupt practices
c) Tolerating graft and corrupt practices
SEC. 159. Unauthorized Use of Corporate Name
SEC. 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).
NOTES ON SEC 159
• The Code prohibits the use of a corporate name that is not distinguishable from that
already used by another, or a name protected by law, or when its use is contrary to
existing law, rules and regulation.
• A prerequisite for liability to attach is that the SEC had already determined that the
corporation cannot use the name and, therefore, had issued a summary order for the
corporation to cease and desist from using the name, and the corporation failed to
comply (Sec. 17).
• Apart being criminally liable under Sec. 159, the offending corporation may also be
liable administratively and civilly. The SEC may initiate an administrative case and
impose any of the sanction under Sec. 158. The aggrieved corporation, if any, may
also file a civil case for damages that it may have incurred from the unauthorized use
of its name based on tort or, if warranted under the IP Code, infringement of
trademark or unfair competition.
SEC. 160. VIOLATION OF DISQUALIFICATION PROVISION
SEC. 160. Violation of Disqualification Provision; Penalties. – When, despite the knowledge of
the existence of a 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 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
5
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).
NOTES ON SEC. 160
• Liability under this section requires the willful act of holding office and the willful
concealment of a disqualification by the director, trustee or officer concerned.
• This section imposes in addition to a fine the penalty of permanent disqualification
from being a director, trustee or officer of any corporation.
• When the violation is injurious or detrimental to the public, the fine is higher.
• In the case of independent directors, there may be qualifications imposed not only
under Sec the Code, but also under the Code of Corporate Governance for Publicly
Listed Companies, public companies and other corporations vested with public
interest, by-laws, SEC rules or regulations.
SEC. 161. VIOLATION OF DUTY TO MAINTAIN RECORDS, TO ALLOW THEIR INSPECTION
OR REPRODUCTION
SEC. 161. Violation of Duty to Maintain Records, to 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.
NOTES ON SEC 161
1. The provisions pertinent to the specific offense penalized in Sec 161 are:
• Sec 45 – adoption of bylaws
• Sec 73 - books to be kept
• Sec 92 – list of members and proxies
• Sec 128 – minutes book
• Sec 177 – reportorial requirements
• Other rules and provisions on inspection and reproduction
2. The act penalized is “unjustified failure or refusal” to comply with the above provisions
all aimed at protecting the stockholder’s right of inspection and reproduction
3. Not only the corporation but also those responsible for keeping and maintaining
corporate records may be liable
4. Take note that under Sec 73, it is expressly provided that an office or agent of the
corporation who shall refuse to allow inspection and/or reproduction of records shall
be liable to the requesting stockholder for damages and in addition shall be guilty of
the offense punishable under Sec 161. Further, the aggrieved stockholder may report
the failure or refusal to the SEC who may issue a summary order within 5 days
ordering the inspection and reproduction. Impliedly, the refusal or failure to comply
with such order may give rise to contempt.
PATRICIA ALEXANDRIA PEREZ REVISED CORPORATION CODE
11781165
SEC. 162. WILLFUL CERTIFICATION OF INCOMPLETE, INACCURATE, FALSE, OR
MISLEADING STATEMENTS OR REPORTS
SEC. 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 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).
NOTES ON SEC 162
• While it is the Corporation that is liable under Sec 162, the corporate officer that may
be held equally liable under Sec. 171 is the corporate secretary whose principal duties
include submitting the general information sheet (GIS), report on the resignation,
death or removal of a director, secretary’s certificates of board resolutions in
connection with applications to the SEC. and the like.
• There may be officers other than the corporate secretary who may also be liable under
Sec 171 in relation to Sec 162. The treasurer certifies to the articles of incorporation
while the auditor, the financial statements. With respect to submission of reports on
corporate governance, independent directors are required to certify such reports. Sec
162 in fact refers to other “responsible person”.
• Similar to Sec 160, the act constituting the offense under Sec 162 must be “willful” and
the person certifying should have known that the report contains incomplete,
inaccurate, false or misleading information or statements.
SEC. 163. INDEPENDENT AUDITOR COLLUSION
SEC. 163. Independent Auditor Collusion; Penalties. – 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).
NOTES ON SEC 163
1. Take note that under Sec 162 it is the independent auditor and the colluding director
or representatives or responsible officer of the corporation
2. Take note too that what is penalized is the act of certifying the the corporation’s
financial statements where these:
• Were incomplete or inaccurate;
• Failed to give a fair and accurate presentation of the corporation’s condition;
or
• Contained false or misleading statements.
3. And where the financial statements were fraudulent or caused injury to the general
public, the fine is higher.
6
4. Knowledge on the part of the independent auditor of the falsity of his certification is an
essential element of this offense.
5. The auditor’s collusion with corporate officers or representatives must likewise be
substantiated.
SEC. 164. OBTAINING CORPORATE REGISTRATION THROUGH FRAUD
SEC. 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).
NOTES ON SEC 164
1. The person liable under Sec 164 is anyone responsible for the fraud and/or directly or
indirectly assisted in obtaining registration through fraud.
2. This specific offense was one of the acts under PD 902-A that would have resulted in
the suspension or revocation of a corporation’s registration with the SEC:
“To suspend, or revoke, after proper notice and hearing, the franchise or
certificate of registration of corporations, partnerships or associations, upon
any of the grounds provided by law, including the following: 
1. Fraud in procuring its certificate of registration; x x x”
3. Procuring corporate registration through fraud is also a ground for involuntary
dissolution under Sec 138 (d).
4. In the past, the SEC usually did not initiate criminal prosecution for obtaining
registration through fraud because it was not a penal nor statutory offense. It was left
to aggrieved party, if any, to file a criminal complaint for falsification, use of falsified
document and the like.
SEC. 165. FRAUDULENT CONDUCT OF BUSINESS
SEC. 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).
NOTES ON SEC 165
Jurisprudence defines "fraud" as the voluntary execution of a wrongful act, or a willful omission,
knowing and intending the effects which naturally and necessarily arise from such act or
omission. In its general sense, fraud is deemed to comprise anything calculated to deceive,
including all acts and omissions and concealment involving a breach of legal or equitable duty,
trust, or confidence justly reposed, resulting in damage to another, or by which an undue and
unconscientious advantage is taken of another. Fraud is also described as embracing all
multifarious means which human ingenuity can device, and which are resorted to by one
individual to secure an advantage over another by false suggestions or by suppression of truth
and includes all surprise, trick, cunning, dissembling, and any unfair way by which another is
cheated. 
PATRICIA ALEXANDRIA PEREZ REVISED CORPORATION CODE
11781165
(Virata v. Ng Wee, G.R. Nos. 220926, 221058, 221109, 221135 & 221218, [July 5, 2017], 813
PHIL 252-355)
To be sure, fraud comprises "anything calculated to deceive, including all acts, omissions, and
concealment involving a breach of legal duty or equitable duty, trust, or confidence justly
reposed, resulting in damage to another, or by which an undue and unconscientious advantage
is taken of another." In this light, the Dys' and Sps. Delgado's deliberate simulation of the sale
intended to obtain loan proceeds from and to prejudice Philbank clearly constitutes fraudulent
conduct. As such, Sps. Delgado cannot now be allowed to deny the validity of the mortgage
executed by the Dys in favor of Philbank as to hold otherwise would effectively sanction their
blatant bad faith to Philbank's detriment.
(Philippine Banking Corp. v. Dy, G.R. No. 183774, [November 14, 2012], 698 PHIL 750-759)
In the case In the Matter of Investor's Management Co., it was cautioned that "the broad
language of the anti-fraud provisions", which include the provisions on insider trading,
should not be "circumscribed by fine distinctions and rigid classifications." The ambit of
anti-fraud provisions is necessarily broad so as to embrace the infinite variety of
deceptive conduct.  employees, agents, or representatives are engaged in graft and corrupt practices, the
(Securities and Exchange Commission v. Interport Resources Corp. , G.R. No. 135808, [October
6, 2008], 588 PHIL 651-731)
 Sec 165 has some similarity, in terms of the broad language, to a specific offense
penalized under Sec 26 of the SRC which states:
o Sec. 26 Fraudulent Transaction – It shall be unlawful for any person, directly
or indirectly, in connection with the purchase or sale of any securities to:
26.1. employ any device, scheme or artifice to defraud;
xxx
26.3. engage in any act, transaction, practice, or course of business which
operates or would operate as a fraud or deceit upon any person.
The third prong is the "harm" test. This test requires the plaintiff to show that the defendant's
control, exerted in a fraudulent, illegal or otherwise unfair manner toward it, caused the harm
suffered. A causal connection between the fraudulent conduct committed through the
instrumentality of the subsidiary and the injury suffered or the damage incurred by the plaintiff
should be established. The plaintiff must prove that, unless the corporate veil is pierced, it will
have been treated unjustly by the defendant's exercise of control and improper use of the
corporate form and, thereby, suffer damages.
(Maricalum Mining Corp. v. Florentino, G.R. Nos. 221813 & 222723, [July 23, 2018])
SEC. 166. ACTING AS INTERMEDIARIES FOR GRAFT AND CORRUPT PRACTICES
SEC. 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).
7
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.
NOTES ON SEC 166
• This specific offense is only the first of three specific offenses that are in the nature of
anti-graft provisions.
• The act constituting the offense is a corporation intentionally created for fraud
particularly to act as an intermediary in the commission of any graft and corrupt
practices.
• An illustration I give on this is – a corporation is registered with the SEC with a primary
purpose such as trading or importing but the real purpose is just to use its name as
“consignee” of goods being smuggled into customs. If said goods are intercepted, law
enforcement would find it difficult to trace who is responsible, because the consignee
is merely a shell company, with no assets, non-operating, or one with fictitious names
and addresses. In some instances, these corporations are dissolved within 6 months.
• Sec 166 is proactive because where there is a finding that any of its directors, officers,
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. In other words,
bona fide corporations are expected to have these safeguards and code of ethics not
only to avoid prosecution but also in observance of good corporate governance.
SEC. 167. ENGAGING INTERMEDIARIES FOR GRAFT AND CORRUPT PRACTICES
SEC. 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 pesos
(P100,000.00) to One million pesos (P1,000,000.00).
NOTES ON SEC 167
• This section applies to all corporations including those that are into lawful business
operations.
• An example is where a corporation get a deficiency assessment and third parties
called “fixers” offer their services to benefit or protect the corporation by employing
short cuts to “settle” the assessment.
• This section, however, uses the word “appoint” which may refer not only to an
independent contractor but to someone hired or employed by the corporation to act as
intermediary to engage in graft and corrupt practices.
SEC. 168. TOLERATING GRAFT AND CORRUPT PRACTICES
SEC. 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 (P500,000.00) to One million pesos (P1,000,000.00).
NOTES ON SEC 168
PATRICIA ALEXANDRIA PEREZ REVISED CORPORATION CODE
11781165
1. Several acts/omissions are punishable under Sec 168. Further, it is not the
corporation which is liable but a director, trustee or officer who knowingly:
• Fails to sanction,
• Fails to report,
• Fails to file the appropriate action with proper agencies, or
• Allows or tolerates graft and corrupt practices or fraudulent acts committed
by other directors, trustees, officers or employees
2. It is an offense of omission or inaction.
3. Take note that the graft and corrupt practices or fraudulent acts that were not
sanctioned or reported or acted upon or allowed and tolerated were those committed
by other directors, trustees or officers, and employees.
SEC. 169. RETALIATION AGAINST WHISTLEBLOWERS
SEC. 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).
NOTES ON SEC 169
• In a corporate setting, it is usually an insider who witnesses any wrongdoing on the
part of the directors, officers or employees.
• A whistleblower in the context of Sec 169 is defined as any person who provides
truthful information relating to the commission or possible commission of any offense
or violation under the Code.
• The whistleblower is more often than not an insider more likely an employee.
• The person liable under Sec 169 is one 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.
• Sec 169 may involve a parallel prosecution under RA 6081 An Act Providing for a
Witness Protection, Security and Benefit Program and for Other Purposes where it is
an offense for anyone to harass a witness under the Program.
SEC. 170. OTHER VIOLATIONS OF THE CODE
SEC. 170. Other Violations of the Code; Separate Liability. – 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 (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 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.
NOTES ON SEC 170
8
• Sec. 170 is what was Sec 144 under the old Code. However, it is more effective as a
catch all provision than the old Sec 144.
• Sec 170 reiterates that dissolution is a penalty against a corporation that is liable for
violations of the Code. It is likewise clear under Sec 138 involuntary dissolution may
be a consequence of a lawful court order dissolving the corporation or a finding by
final judgment (without qualification as arising from a criminal or civil action) as well as
under Sec 158 where dissolution is available as an administrative sanction.
• A dissolution under Sec 170 shall not preclude the institution of appropriate action
against the director, trustee, or officer of the corporation responsible for the violation:
• Nothing in Sec 170 shall be construed to repeal the other causes for dissolution of a
corporation provided in this Code (e.g. Secs 138 and 158).
• Sec 170 further provides that liability for any of the specific offenses shall be separate
from any other administrative, civil, or criminal liability under the Code and other laws
(including the Revised Penal Code).
SEC. 171. LIABILITY OF DIRECTORS, TRUSTEES, OFFICERS, OR OTHER EMPLOYEES
SEC. 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.
NOTES ON SEC 171
• As pointed out, while several of the specific offenses from Sec 159 to 169 identify the
corporation as the one liable, others refer to specific individuals such as a director,
trustee, officer, employee, auditor, responsible person to be equally liable or solely
liable.
• Sec. 171 clarifies, however, that 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.
• Hence, even if the section providing for a specific offense mentions only the
corporation as being liable, this does not preclude the persons named in Sec. 171
from being held liable together with the corporation or, even if the corporation itself is
exonerated, such persons may be held solely liable.
SEC. 172. LIABILITY OF AIDERS AND ABETTORS AND OTHER SECONDARY LIABILITY
SEC. 172. Liability of Aiders and Abettors and 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.
NOTES ON SEC 172
• The last section under this Title, Sec 172 is the last nail in the coffin so to speak.
Anyone else who may not have been identified as liable for any of the specific
offenses under Secs 159 to 160, and the other violations under Sec 170, may still be
liable under Sec 172.
PATRICIA ALEXANDRIA PEREZ REVISED CORPORATION CODE
11781165
• Thus, anyone who shall aid, abet, counsel, command, induce, or cause any violation
of the Code, or any rule, regulation, or order of the SEC may 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.

QUESTION

Review the case of Yujuico v. Quiambao, G.R. No. 180416, [June 2, 2014], 734 PHIL 606-623,
had the incident happened under the Code, assuming the acts or omissions committed
constituted a specific offense or offenses under this Title, who among those involved would be
criminally liable?