Can a Professional Organized as One Person Corporation in the Philippines?

When the Revised Corporation Code (RCC) becomes effective on February 23, 2019, One Person Corporation (OPC) is one of its major revisions.  As defined under Section 116 of the law, an OPC is a corporation with a single stockholder.  SEC Memorandum Circular No. 7, Series of 2019 provides for the Guidelines on the Establishment of OPC.  This specific circular was published in Manila Bulletin and Manila Standards on May 1, 2019.

Now the interesting question is, can a professional organized as One Person Corporation in the Philippines?

The general rule is that professionals cannot form a corporation for the purpose of exercising their profession. This goes for both an ordinary corporation, that is, more than 2 incorporators, and an OPC. 

What is the exception to this general rule? Answer - if provided under special laws (Sec. 116, RCC).

And what are those professions where their particular law governing them allows such professional to incorporate? These are the following:

1.      Aeronautical engineering (Sec. 28, PD No. 1570)

2.      Agricultural and biosystems engineering (Sec. 29, RA 10915)

3.      Architecture (Sec. 37, RA 9266)

4.      Chemistry (Sec. 35, RA 10657)

5.      Electronics engineering (Sec. 28, RA 9292)

6.      Environmental planning (Sec. 25, RA 10587)

7.      Forestry (Sec. 25, RA 10690)

8.      Guidance and counseling (Sec. 27, RA 9258)

9.      Interior design (Sec.26, RA 10350)

10.  Landscape architecture (Sec. 26, RA 9053)

11.  Naval architecture (Sec. 30[g], RA 10698)

12.  Psychology (Sec. 33, RA 10029)

13.  Real estate service (real estate consultant, real estate appraiser, real estate assessor, real estate broker and real estate sales person) (Sec. 32, RA 9646)

14.  Sanitary engineering (Sec. 30, RA 1364) and

15.  Social work (Sec. 1[c], RA 4373, as amended)

These are the professions in which corporate practice is allowed.  And these corporate practices are allowed subject to the requirements and conditions under the pertinent professional regulatory law.

Question: Is there an accountancy in the enumeration?  Answer - there is none.  Do we have a legal basis for this?  The answer is yes.  Under Sec. 28 of RA 9298 – Accountancy Law of 2004, it is expressly stated there that accountants are not allowed to practice as a corporate entity. Last sentence of the provision says “The Securities and Exchange Commission shall not register any corporation organized for the practice of public accountancy”.   What is the reason behind the law?  Personal qualifications for such practice cannot be possessed by a corporation.

Accountants may form either a sole proprietorship or partnership for the practice of profession but may not form a corporation, whether ordinary corporation or OPC, to practice as such.

Question: What about a foreigner, can a foreigner form an OPC in the Philippines? 

Answer: Yes. A foreign natural person may put up such corporation, subject to the applicable constitutional and statutory restrictions on foreign participation in certain investment areas or activities. (Sec. 15 of SEC MC No. 7, Series of 2019).

The Philippine Constitution and certain statutes provide some limitations as to the extent to which foreigners can own and operate businesses in the Philippines.  This is the so-called foreign investment negative list.  The latest negative list is that signed by President Duterte last June 27, 2022 - Executive Order No. 175 also known as the Twelfth Negative List. Foreign ownership is limited by mandate of the constitution, specific laws, and for reasons of security, defense, risk to health and morals and protection of small and medium scale enterprises.

I hope this gives you a working knowledge as to what kind of professionals may incorporate in the Philippines.

The above post does not create a lawyer-client relationship between you and me. While I am a lawyer, I am not your lawyer. It is still best for you to engage the services of your lawyer to address your specific legal concerns, if there is any.

Finally, the write ups stated above was written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future legal developments on the subject matter under discussion.

Thank you for dropping by. I hope we can spend time together here in my website during your coffee break.