EIGHTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
S E N A T E
S. No. 1084
*19 
OCT-1 
P 2 X ) 9
re:-.
Introduced by Senator Ralph G. Recto
AN ACT
ESTABLISHING THE TAX REGIME OF ONE PERSON CORPORATIONS, 
AMENDING FOR THIS PURPOSE SECTION 22(B) OF THE NATIONAL 
INTERNAL REVENUE CODE OF 1997, AS AMENDED
EXPLANATORY NOTE
This proposed measure seeks to establish the tax regime of One Person 
Corporation (OPC). The concept of OPC has been introduced in our jurisdiction for 
the first time through Republic Act No. 11232, otherwise known as the Revised 
Corporation Code of the Philippines, which took effect on February 23, 2019.
The Revised Corporation Code provides that OPC is a corporation with a 
single stockholder and that it may only be formed by a natural person, trust or an 
estate. It is also provided that the single stockholder shall be the sole director and 
president of the OPC.
Under OPC concept, an individual natural person, by himself, may now 
establish a corporation to pursue any commercial activity. Just like an ordinary 
corporation, OPC type of business organization has a personality separate and 
distinct from the single stockholder composing it. Therefore, the liability of the OPC 
is not a liability of the single stockholder. The liability is limited only to the extent of 
single stockholder's subscribed capital contribution to the OPC.
However, for income tax purposes, the tax regime of OPC is not clear. The 
National Internal Revenue Code (NIRC) of 1997, as amended, defines "corporation"
1


as including partnerships, no matter how created or organized, joint-stock 
companies, joint accounts (cuentas en participacion), associations, or insurance 
companies, but does not include general professional partnerships and a joint 
venture or consortium formed for the purpose of undertaking construction projects 
or engaging in petroleum, coal, geothermal and other energy operations pursuant to 
an operating consortium agreement under a service contract with the Government.
When the NIRC was enacted, what the legislators had in mind at that time 
with regard to the concept of corporation is an organization or association of two or 
more persons. This is very evident from the enumeration of organizations or 
associations as included in the definition of corporation for income tax purposes such 
as partnerships and joint accounts, among others.
Under the principle of "ejusdem generid', where a general word or phrase 
follows an enumeration of particular and specific words of the same class or where 
the latter follow the former, the general word or phrase is to be construed to 
include, or to be restricted to persons, things or cases akin to, resembling, or of the 
same kind or class as those specifically mentioned. Applying this principle, OPC may 
not be considered as corporation for income tax purposes because it did not fall 
under the same category as partnerships, joint accounts and associations as the 
latter are formed or organized by two or more persons.
Hence, the inclusion of OPC in the definition of "corporation" under the NIRC 
is necessary to remove ambiguity or avoid different interpretations whether or not 
OPC is a corporation for income tax purposes.
In view of the foregoing, the approval of this bill is earnestly sought.
Xp h g ^
/jiao


EIGHTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
e ii' ■.? ; -
•fn .T
•19 
OCT -1  
P2-Q9
S E N A T E
1084
S. No.
Introduced by Senator Ralph G. Recto
AN ACT
ESTABLISHING THE TAX REGIME OF ONE PERSON CORPORATIONS, 
AMENDING FOR THIS PURPOSE SECTION 22(B) OF THE NATIONAL 
INTERNAL REVENUE CODE OF 1997, AS AMENDED
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assem bled:
1 
Section 1. Section 22(B) of the National Internal Revenue Code of 1997, as
2 
amended, is hereby further amended to read as follows:
3 
"SEC. 22. Definitions. -  When used in this Title:
4 
"(A) XXX
5 
"(B) 
The 
term 
'corporation' 
shall 
include 
ONE 
PERSON
6 
CORPORATIONS, partnerships, no matter how created or organized, joint-
7 
stock companies, joint accounts {cuentas en participacion), associations, or
8 
insurance companies, but does not include general professional partnerships
9 
and a joint venture or consortium formed for the purpose of undertaking
10 
construction projects or engaging in petroleum, coal, geothermal and other
11 
energy operations pursuant to an operating consortium agreement under a
12 
service contract with the Government. 'General professional partnerships' are
13 
partnerships formed by persons for the sole purpose of exercising their
14 
common profession, no part of the income of which is derived from engaging
15 
in any trade or business.
16 
"xxx"


1 
Sec. 2. Implementing Rules and Regulations (IRR). -  Within thirty (30) days
2 
from the effectivity of this Act, the Secretary of Finance, upon the recommendation
3 
of the Commissioner of Internal Revenue, shall promulgate the necessary rules and
4 
regulations for its effective implementation.
5 
Sec. 3. Repealing Clause. -  
All laws, acts, decrees, executive orders,
6 
issuances, and rules and regulations or parts thereof which are contrary to and
7 
inconsistent with this Act are hereby repealed, amended or modified accordingly.
8 
Sec. 4. 
Effectivity. -  This Act shall take effect fifteen (15) days after its
9 
complete publication in the Official Gazette or in at least two (2) newspapers of 
10 
general circulation.
Approved,!