Under Philippine law, the corporate term is a fundamental aspect of a corporation's existence, as it specifies the period during which the corporation is legally recognized and permitted to operate. This provision is governed primarily by the Revised Corporation Code of the Philippines (Republic Act No. 11232), which overhauled the original Corporation Code (Batas Pambansa Blg. 68). The corporate term's duration, renewal, extension, and perpetuity are key considerations for business operations, legal compliance, and shareholder interests. Here's an in-depth analysis of these provisions:

1. Definition of Corporate Term

The corporate term refers to the lifespan of a corporation as indicated in its Articles of Incorporation. This term is the period during which a corporation has legal existence, entitling it to engage in lawful business activities.
Historically, under the old Corporation Code, the corporate term was fixed, typically limited to 50 years, with the option to renew. The Revised Corporation Code, however, made significant changes to this rule, allowing for more flexibility.

2. Perpetual Corporate Term under the Revised Corporation Code

The Revised Corporation Code (RA No. 11232), effective February 23, 2019, introduced a key amendment by allowing corporations to exist perpetually, unless a specific term is stated in the Articles of Incorporation.
Section 11 of the Revised Corporation Code states that “a corporation shall have perpetual existence unless its articles of incorporation provide otherwise.”
This amendment reflects a shift in corporate philosophy, recognizing the enduring nature of many corporations and reducing the administrative burden of renewing corporate terms every few decades.

3. Significance of the Perpetual Corporate Term

The perpetual term offers advantages to both businesses and shareholders:
- Operational Stability: The perpetual term reduces uncertainties associated with the expiration of the corporate term, encouraging long-term investments.
- Cost-Efficiency: Corporations no longer need to undergo the process of amending their articles to renew their corporate term, which can save significant administrative and legal expenses.
- Enhanced Investment Appeal: Investors are more likely to invest in companies with perpetual existence, as they see them as more stable and sustainable.
This shift towards perpetuity aligns Philippine corporate law with global standards and the practices of various jurisdictions that recognize perpetual corporate existence.

4. Option for a Fixed Corporate Term

Despite the default rule of perpetual existence, corporations may still elect a fixed term by expressly stating it in the Articles of Incorporation.
Corporations might choose a fixed term for several strategic reasons, such as:
- Project-Based Entities: Companies established for a specific project or with a limited scope may prefer a fixed term.
- Family Corporations: Some family-owned corporations may impose a fixed term to limit corporate lifespan across generations.
Corporations opting for a fixed term are required to comply with the procedures for dissolution and liquidation at the end of the term unless they amend their articles to extend or convert to a perpetual term.

5. Amendment of Corporate Term

Corporations with a fixed term under the old law or by choice under the Revised Corporation Code can extend or convert to a perpetual term by amending their Articles of Incorporation.
Procedure:
- The amendment must be approved by a vote of at least a majority of the Board of Directors or Trustees and the stockholders representing at least two-thirds of the outstanding capital stock, or at least two-thirds of the members, in the case of non-stock corporations.
- The amendment must be filed with the Securities and Exchange Commission (SEC), along with the prescribed filing fees and required documentation.
Effectivity: The corporate term extension or conversion to perpetuity becomes effective upon SEC approval, marking the updated corporate term in the corporation’s Articles of Incorporation.

6. Dissolution and Liquidation upon Expiration of Corporate Term

If a corporation reaches the end of its fixed term without extending it, it is deemed dissolved.
Section 139 of the Revised Corporation Code outlines the process of liquidation for dissolved corporations. Upon dissolution, the corporation must cease its operations, except for activities necessary to settle and liquidate its affairs.
The Board of Directors or a duly designated liquidator is responsible for:
- Settling the corporation’s debts and obligations;
- Distributing any remaining assets to shareholders or members, according to the liquidation plan.
The corporation retains its legal personality for three years after its dissolution to wind up affairs and finalize asset distribution.

7. Transitory Provisions for Existing Corporations under the Revised Corporation Code

Corporations existing before the enactment of the Revised Corporation Code are allowed to transition to perpetual existence, regardless of the original term stated in their Articles.
If no action is taken, these corporations remain governed by their original fixed term until it expires or is extended.
This provision ensures that corporations are not involuntarily converted to perpetual entities, respecting the intentions of original incorporators.

8. Implications for Stakeholders and Compliance

Shareholders: The perpetual corporate term can affect shareholders’ valuation of their holdings, as it removes the imminent expiration of corporate life.
Creditors: Creditors may view perpetual corporations as lower risk, potentially influencing credit terms and interest rates.
Government and Regulatory Bodies: The SEC monitors corporate term declarations and amendments as part of its regulatory oversight, ensuring compliance with the Revised Corporation Code and facilitating public access to accurate corporate information.

Summary

The Revised Corporation Code has shifted Philippine corporate law toward a more flexible, investor-friendly environment by adopting the perpetual corporate term as a default.
The perpetual term reduces administrative and financial burdens on corporations and aligns with global corporate practices, while corporations still retain the right to opt for a fixed term if deemed strategically appropriate.
Procedures for amendments to corporate terms, either to extend or convert to perpetual, are simplified but require regulatory compliance and shareholder approval.
These provisions provide corporations, stakeholders, and the public with a robust framework for business stability and continuity.

In essence, the corporate term provisions under Philippine law reflect a modernization of corporate governance standards, facilitating smoother business operations while respecting the autonomy of corporations in defining their operational timelines.