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The law allows the re-organization of two or more corporations to either merge into a single corporation which shall be one of the constituent corporations, or consolidate into a single new corporation, which shall be the consolidated corporation. Title IX of the Revised Corporation Code covers the rules on mergers and consolidation in the Philippines.

1. What is a Merger/Consolidation?

A Merger is defined as the re-organization of two or more corporations that results in their consolidating into a single corporation, which is one of the constituent corporations, one disappearing or dissolving and the other surviving.   

On the other hand, a Consolidation is the union of two or more existing corporations to form a new corporation called the consolidated corporation.

2. What are the requirements of the SEC for the completion of a merger or consolidation?

The Corporation Code provides the following steps for merger or consolidation: 

(1)   The board of each corporation draws up a plan of merger or consolidation. Such plan must include any amendment, if necessary, to the articles of incorporation of the surviving corporation, or in case of consolidation, all the statements required in the articles of incorporation of a corporation. 

(2)   Submission of plan to stockholders or members of each corporation for approval. A meeting must be called and at least two (2) weeks’ notice must be sent to all stockholders or members, personally or by registered mail. A summary of the plan must be attached to the notice. The vote of two-thirds of the members or of stockholders representing two thirds of the outstanding capital stock will be needed. Appraisal rights, when proper, must be respected. 

(3)   Execution of the formal agreement, referred to as the articles of merger or consolidation, by the corporate officers of each constituent corporation. These take the place of the articles of incorporation of the consolidated corporation, or amend the articles of incorporation of the surviving corporation. 

(4)   Submission of said articles of merger or consolidation to the SEC for approval. 

(5)   If necessary, the SEC shall set a hearing, notifying all corporations concerned at least two weeks before. 

(6)   Issuance of certificate of merger or consolidation.

3. What are the effects of a merger or consolidation?

Section 79 of the Revised Corporation Code, provides for the effects of a merger or consolidation, as follows: 

(1)   The constituent corporations shall become a single corporation which, in case of merger, shall be the surviving corporation designated in the plan of merger; and, in case of consolidation, shall be the consolidated corporation designated in the plan of consolidation; 

(2)   The separate existence of the constituent corporations shall cease, except that of the surviving or the consolidated corporation; 

(3)   The surviving or the consolidated corporation shall possess all the rights, privileges, immunities, and powers and shall be subject to all the duties and liabilities of a corporation organized under this Code; 

(4)   The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and franchises of each constituent corporation; and all real or personal property, all receivables due on whatever account, including subscriptions to shares and other choses in action, and every other interest of, belonging to, or due to each constituent corporation, shall be deemed transferred to and vested in such surviving or consolidated corporation without further act or deed; and 

(5)   The surviving or consolidated corporation shall be responsible for all the liabilities and obligations of each constituent corporation as though such surviving or consolidated corporation had itself incurred such liabilities or obligations; and any pending claim, action or proceeding brought by or against any constituent corporation may be prosecuted by or against the surviving or consolidated corporation. The rights of creditors or liens upon the property of such constituent corporations shall not be impaired by the merger or consolidation. 

4. When is the effectivity of the merger/ consolidation?

The merger/consolidation takes effect upon the issuance of the SEC of a certificate approving the plan of merger/ consolidation.

5. What are the tax implications of a merger/consolidation?

A. On “Tax- Free” Exchanges

As a general rule, the gain or loss on the sale or exchange of property shall be recognized and will be taxable. The rule provides for exceptions such as the “tax-free” exchanges which refer to those instances enumerated in Section 40(C)(2) of the National Internal Revenue Code (NIRC) of 1997 that are not subject to Income Tax, Capital Gains Tax, Documentary Stamp Tax and/or Value-added Tax, as the case may be.

In general, there are two kinds of “tax-free” exchange: (1) transfer to a controlled corporation; and, (2) merger or consolidation.

In the first instance, no gain or loss shall be recognized if property is transferred to a corporation by a person in exchange for stock or unit of participation in such corporation of which as a result of such exchange said person, alone or together with others, not exceeding four persons, gains or maintains control of said corporation.

In the second instance, no gain or loss shall be recognized if in pursuance of a plan of merger or consolidation — (a) a corporation, which is a party to a merger or consolidation, exchanges property solely for stock in a corporation, which is a party to the merger or consolidation; or, (b) a shareholder exchanges stock in a corporation, which is a party to the merger or consolidation, solely for the stock of another corporation also a party to the merger or consolidation; or, (c) a security holder of a corporation, which is a party to the merger or consolidation, exchanges his securities in such corporation, solely for stock or securities in another corporation, a party to the merger or consolidation.  

A subsequent sale or disposition of the shares of stock will be taxable based on the historical or original cost or “Substituted basis” of the shares. Thus, to that extent, the said “tax-free” exchange, is not really tax-free, but merely a deferral. In determining the gains or losses in subsequent transfers, the BIR issued guidelines under Revenue Regulation No. 18-2001 provides that the “Substituted Basis” or the original or historical cost of the properties or shares are considered in determining the taxable gains or losses in later transfers.  

With the above requirements, the taxpayer must prove in a very clear manner that it is entitled to such exemption, and must obtain a certification or ruling signed by the Commissioner of Internal Revenue on the availment of “tax-free” exchange. The rules provide for penalties in case of non-compliance with the guidelines.             

B. Common Taxes imposed on mergers & consolidations not covered under the “tax- free” exchanges           

Capital Gains Tax on the purchase of shares

The shares of a target Philippine company may be acquired through a direct purchase. Gains from the sale are considered Philippine-source income and are thus taxable in the Philippines regardless of the place of sale. A Capital gains tax (CGT) of 15% of the gain is imposed on both domestic and foreign sellers.  

Value added tax

In asset acquisitions, a 12% Value Added Tax (VAT) is imposed on the gross selling price of the assets purchased in the ordinary course of business or of assets originally intended for use in the ordinary course of business.

Documentary Stamp Tax            

In “tax-free” exchanges, no DST is due on the deed transferring the property. However, the shares of stock issued in exchange for the property is subject to DST if it is for the purpose of an original issuance of shares.   

6. Are there any Notification Thresholds imposed by the Government for certain Mergers?

Yes. On 11 February 2020, the Philippine Competition Commission (“PCC”) issued its Resolution No. 02-2020 which adjusted the compulsory notification of mergers & acquisitions (“M&As”) pursuant to Memorandum Circular No. 18-001.

In the said resolution, the PCC adjusted the M&As’ notification thresholds, effective on 1 March 2020, as follows:

A. When the Size of Party exceeds Six Billion Pesos (Php 6,000,000,000.00)

The adjusted rate shall also apply to the joint venture transactions under Rule 4, Section 3(b) of the IRR.

Based on the Guidelines on the Computation of Merger Notification Thresholds (the “Guidelines”), issued by the PCC, the Size of Party pertains to the computation of the aggregate value of the assets in the Philippines and revenues from sales in, into, or from, the Philippines of the filing Ultimate Parent Entity (“UPE”), including all entities that it controls, directly or indirectly.

On the other hand, the Size of Transaction pertains to the computation of the value of the assets being acquired or/and gross revenues generated by the assets being acquired, or of the acquired entity and entities it controls, depending on the type of transaction provided under Rule 4, Section 3(b) and (d), as amended.  A copy of the Guidelines may be accessed here –



As its dictionary meaning goes, to hire is to employ, to engage, to appoint, to enlist, to sign up or to secure the services of someone. Hiring refers to the process of engaging somebody for his service. Whatever relationship will result from that hiring will depend on the agreement and its execution. Any businessman can definitely run a business without hiring anyone. It is a given that he and his partners can do everything on their own if they choose to. 

But can the businessman run his business with the help of another without having to be an employer? Still definitely yes.

Hiring somebody in running your business does not necessarily have to be hiring him as an employee. Indeed, the businessman has the prerogative of hiring the services of freelancers and consultants, without having to shoulder the obligations of an employer under the Labor Code. While the relationship between an employer and an employee is specifically governed by the Labor Code, engaging freelancers and consultants should be subject to the provisions of contract law in general.

The only concern is this. How can you tell if the person you are hiring will not be considered by law as an employee? How can you be so sure that he will not come to you later and invoke his rights to labor benefits and to security of tenure?

Employee or not, the person you are hiring, of course, has rights. The only difference is that, in simple terms, the rights of an employee are defined by the Labor Code while the rights of a non- employee are defined by the terms of his contract. In general, we can say that an employment relationship is more restrictive in nature while a consultancy or freelance agreement has more leeway.

Control is the single most important factor in determining whether the person you hired is an employee. This pertains to control over the means and methods of doing the work. Generally, the employee’s work performance is subject to your control while a consultant’s service is not, except only as to the desired result. While the employee does his work under your supervision, the consultant renders service using his own means, styles and methods, free from your control; your only concern is the delivery of the result. To otherwise ensure which kind of relationship you are getting into, it is important to define everything under a written contract, especially if your intention is to enter into a consultancy agreement. Not only that, you have to make sure that the actual execution is consistent with what is written.



To hire someone as an employee or a consultant will depend on three important factors. 

First is control. An employee is someone you supervise from the get go, from the processing of the work all the way up to the delivery of the output. A consultant is someone you control only with respect to the output. An employee reports in your office on a regular basis, say for at least 8 hours, and is subject to your company policy including rules on attendance and punctuality. A consultant is not required to report at your office on a regular basis. He may have his own office and may service other clients. So deciding whether to hire an employee or to engage the services of a consultant depends on how much control you want to exercise. 

Second is professional expertise. A consultant is generally perceived to be an expert in a particular area. He is usually a professional with vast experience in his field of expertise, like a lawyer, an accountant, an engineer, etc. While this may also be true with respect to an employee, an employee is usually someone who needs further guidance, training and close supervision. 

Third is your hiring goal. What type of service do you want to get by hiring? What particular need do you want to address? If you need someone on a regular basis for at least 8 hours a day under your close supervision, then hire an employee. But if you need someone for his known expertise, without necessarily having to be supervised, then engage a consultant.



The preferential use of voluntary modes in settling disputes between workers and employers for the promotion of industrial peace is well recognized in the Constitution and the labor laws. 

Any labor issue may be settled by the company and the employee between themselves. They can do the settlement right at the workplace, often times with the assistance of a notary public to make the agreement under oath. The only concern here is that there are instances where an employee still files a labor case, even after the settlement to question its validity by raising issues on voluntariness of the settlement, sufficiency of the consideration, etc. Once a labor case is filed, the Labor Arbiter cannot just dismiss the case by reason of the previous settlement signed before a notary public, as he is still mandated to look into the complaint and evaluate its merits, unless the complainant withdraws the case.

This is where the process of “walk-in settlement” at the National Labor Relations Commission comes in. This can be completed on the same day that it is initiated. If the company and the employee have already decided to settle, it may not be enough to execute the settlement before a notary public. Just to put aside the possibility that the employee will still file a case after signing a quitclaim, the company has the option of presenting the settlement agreement to the Labor Arbiter’s Office right away precisely for the purpose of executing the settlement there and asking the Labor Arbiter to approve it. The parties need only to go to the NLRC, where the employee will fill out the usual complaint form but with the note that it is for “walk-in settlement”.

After accomplishing the complaint form, the matter will be raffled off to a Labor Arbiter, who shall then meet the parties, ask questions to confirm that the complainant is entering into a settlement voluntarily and that he understands the terms of the settlement, including the effect of receiving any compromise amount from the company. Once the Labor Arbiter is satisfied that the settlement is voluntary, reasonable and valid, he will ask the complainant to sign a quitclaim in favor of the company, waiving all his rights in relation to the complaint. The quitclaim will then be the basis for the Labor Arbiter to issue an Order recognizing and approving the settlement. This Order shall be binding on the parties and shall be considered as “with prejudice”, which serves to prevent the complainant from pursuing any further action against the company with respect to the issues raised in the complaint. 

Indeed, while a settlement between the company and the employee before a notary public is always welcome, if given a choice, there is nothing better than having the settlement executed right before the Labor Arbiter if only to remove any chance that the issue that has been settled will only be raised again in a labor complaint.

In essence, a “walk-in settlement” has the same effect as any other settlement of labor complaints executed before the Labor Arbiter. The only difference is that in a “walk-in settlement”, the complainant has already decided to enter into a settlement at the time that he is filing the complaint and he, along with the company, would merely want the Labor Arbiter to sign off on it. This cannot be said of the usual labor complaints where the complainant and the company have yet to explore the possibility of settlement.


1. What is CYBERLIBEL?

It is a public and malicious imputation of a crime, or of a vice or defect, real or imaginary, or any act, omission, condition, status, or circumstance tending to cause the dishonor, discredit, or contempt a person, or to blacken the memory of one who is dead. Such acts are committed through a computer system .

2. What are the acts punishable and their corresponding penalties?

3. Are the following defenses valid?

“Eh, totoo naman”
General Rule: Every defamatory imputation is presumed to be malicious, even if it be true, if no good intention and justifiable motive for making it is shown

“Eh, di ko naman sya pinangalanan”
It is not necessary that the person be named, if apparent or if the publication contains matters of description from which others reading the article may know the person alluded to

“Eh, kami-kami lang naman ang nakabasa”
It is not required that the person defamed has read or heard about the libelous remark, what is material is that a third person has read or heard the libelous statement

Section 4 (c)(4) of RA 10175
Disini vs Secretary of Justice, GR No. 203335, 11 February 2014
First paragraph of Art. 354, Revised Penal Code.
Manila Bulletin Publishing Corporation & Ruther Batuigas vs. Victor Domingo, et al., G.R. No. 170341, 5 July 2017.



Data protection and privacy should not hinder the government from collecting, using, and sharing personal information during this time of public health emergency.

The direction is lawful and straightforward.



Privacy Commissioner

Back to Basics:
Personal Information vs Sensitive Personal Information

Personal Information

  • refers to any information whether recorded in a material form or not from which the identity of an individual is apparent or can be reasonably and directly, or

  • when put together with other information would directly and certainly identify an individual

Sensitive Personal Information

  • race, ethnic origin, marital status, age, color, and religious, philosophical or political affiliations.
  • health, education, genetic or sexual life of a person, or to any proceeding for any offense committed or alleged to have been committed by such person
  • social security numbers, previous or current health records, licenses or its denials, suspension or revocation, and tax returns
  • specifically established by an executive order or an act of Congress to be kept classified

Criteria for Lawful Processing of Personal Information

Allowed when at least one of the following conditions exists:

(a) consent

(b) necessary to protect vitally important interests of the data subject;

(c) necessary in order to respond to national emergency, public order and safety; or

(d) legitimate interests of the controller.

Criteria for Lawful Processing of Sensitive Personal Information

Processing is prohibited, except in the following cases:

(a) consent

(b) necessary to protect the life and health of the data subject or another person, and the data subject is not legally or physically able to express his or her consent;

(c) necessary for purposes of medical treatment; or

(d) necessary for the protection of lawful rights and interests

General Data Privacy Principles

Personal information must be:

  • Collected and processed for specified and legitimate purposes;
  • Processed fairly and lawfully;
  • Accurate, relevant;
  • Adequate and not excessive;

Can we collect the details (name, contact details, and travel history) of all persons who will be entering our building

Yes, the building or office administrators may collect such personal data but only as may be necessary with what is required by the DOH.

Is a consent form necessary?

  • No.
  • The basis for data collection and processing is not consent but the protection of lawful rights and interests
  • It is advisable, though, to provide a privacy notice informing the visitors of the purpose and basis of the collection of such personal data.

Can an employer ask its employees to submit declaration forms that provide personal data (i.e. travel history, contacts, symptoms)?

  • Yes, employers may collect such personal data.

Can the employer disclose the personal data collected from employees to third parties?

  • ONLY to the DOH and other appropriate government agencies
  • and following all existing protocols on the matter.

Does an employer need to ask for the consent of an employee who is a PUI for COVID-19 when disclosing the PUI’s data to his contacts?

  • Contact tracing should be done only upon the authority, guidance, and instruction of the DOH.

If a PUI has been proven positive of the COVID-19, can I freely disclose the identity to everyone within the company? The purpose is to inform those who may have had contact with the person so they can be tested and monitored as well

  • disclosure of the identity of the patient shall be limited to the DOH personnel only, following the PUM/PUI protocol.
  • The company may make the necessary notices internally without disclosing the identity of the person who is COVID-19 positive.
  • The proper authority that does contact tracing is the DOH.

Can our company issue a press release or statement relating to our employee, who is a confirmed case for COVID-19?

  • Announcements should come from the DOH or other appropriate government agencies.
  • The government should only make the official announcement regarding COVID-19 cases in the country.
  • Anyone with relevant information should immediately relay it to the DOH for proper handling.

Can the DOH publicly disclose more detailed information of the frequented locations of the persons positive for COVID-19 to inform the public better and help prevent the transmission of the virus?

  • Yes.
  • The DOH can provide information about the frequented locations of the persons positive for COVID-19 without giving details that would identify individuals.

Security of Personal Information Work from Home Arrangement

Implement reasonable and appropriate:

  • Organizational Measures – company to regularly monitor staff accessibility
  • Physical Measures – keep physical files organized, avoid unnecessary print outs, safekeep devices
  • Technical Measures – password protect devices, log out after every use, ensure proper email send out intended for the protection of personal information against any accidental or unlawful destruction, alteration and disclosure, as well as against any other unlawful processing

Important Point to Remember

  • Use BCC for email blasts and bulletins to clients:


Prior to the issuance of the Rule on Precautionary Hold Departure Order, there was no mechanism to bar persons suspected of committing crimes from flying out of the country to avoid prosecution, until a case shall have been filed with the court. To apply for a Hold Departure Order, a criminal case should already be pending before the Regional Trial Court (RTC), and an order should be given by the RTC, directing the Bureau of Immigration to prevent the departure of the person/s named therein. To address this gap, the Supreme Court approved A.M. No. 18-07-05-SC, or the Rule on Precautionary Hold Departure Order. The Rule was approved on 7 August 2018.

What is a Precautionary HDO (PHDO)?

It is an order in writing, issued by a court, commanding the Bureau of Immigration (BI) to prevent any attempt by a person suspected of a crime to depart from the Philippines. It is issued ex parte in cases involving crimes where:

  • the minimum penalty is at least 6 years and 1 day; or
  • when the offender is a foreigner regardless of the imposable penalty

How is this different from an HDO?

While a criminal case should be pending before the Regional Trial Court before an HDO can be applied for, a PHDO can be secured despite the fact that the case has not yet been filed before the court, and is still pending preliminary investigation.

How is a PHDO secured?

Upon motion by a private complainant in a criminal complaint filed before the city or provincial prosecutor; and upon a preliminary determination by the prosecutor of probable cause based on the complaint and its attachments, the prosecutor may then apply for a PHDO with any RTC, within whose territorial jurisdiction the alleged crime was committed.

For compelling reasons, it may be filed in any RTC within the judicial region where the alleged crime was committed. RTCs of Manila, QC, Cebu, Iloilo, Davao, and CDO may also act upon applications filed by the prosecutor, based on complaints instituted by the NBI, regardless where the alleged crime was committed.

The application made by the prosecutor with the RTC shall include a copy of the complaint-affidavit, and, if available, information on the personal details, passport number and photograph of the respondent.

The judge shall personally examine the applicant and the witnesses, under oath, through searching questions and answers in writing.

The court shall furnish the BI with a duly certified copy of the PHDO within 24 hours from issuance.

What are the grounds for its issuance?

  • Upon determination by a judge that:
    • Probable cause exists; and,
    • There is a high probability that the respondent will depart from the Philippines to evade arrest and the prosecution of the crime.

How does the result of the Preliminary Investigation (PI) affect the PHDO?

  • If the prosecutor resolves to dismiss the complaint after PI – the respondent may use this as a ground for the lifting of the PHDO with the RTC.
  • If the prosecutor finds probable cause and files the information – the case with the RTC which issued the PHDO, shall be consolidated with the court where the information is filed.

How can a respondent apply for the temporary lifting of the PHDO?

  • The respondent may file a verified motion before the RTC which issued the PHDO for its temporary lifting, on the ground that, based on the complaint-affidavit or evidence that he/she may present:
    • there is doubt that probable cause exists; or,
    • he/she is not a flight risk.
  • Provided, that the respondent posts a bond in an amount to be determined by the court;
  • Provided, further, that the lifting shall be without prejudice to the resolution of the PI.


Foreign nationals who intend to engage in employment in the Philippines are required to secure permission from the Department of Labor and Employment (DOLE), subject to certain exemptions and exclusions. In the case of a non-resident alien, the employment permit may only be issued after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired..

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