VP Sara Duterte camp says non-declaration of dividends not illegal

ASM, Philippine Canadian Inquirer
September 23, 2026

Photo courtesy: Multiple Sources

MANILA, Philippines — Vice President Sara Duterte’s defense team stressed that a corporation’s failure to declare dividends is not, by itself, illegal under Philippine corporate law, as the Senate impeachment court continued examining companies linked to her declared business interests.

During Day 28 of Duterte’s impeachment trial on Tuesday, defense lawyer Justin Nicol Gular questioned Securities and Exchange Commission (SEC) Company Registration and Monitoring Department Director Gerardo del Rosario about Section 42 of the Revised Corporation Code.

Asked whether a corporation was committing an illegal act simply by not declaring dividends, Del Rosario replied that it was not.

Gular also pointed out that Section 42 gives a stock corporation’s board of directors the power to declare dividends from unrestricted retained earnings but does not require dividends to be declared in every instance.

Republic Act No. 11232, or the Revised Corporation Code, states that a board of directors “may declare dividends” from unrestricted retained earnings. The same provision prohibits stock corporations from retaining surplus profits exceeding 100 percent of their paid-in capital, subject to specified exceptions.

Those exceptions include approved corporate expansion projects, restrictions under loan agreements that prevent the declaration of dividends without creditors’ consent, and special circumstances requiring reserves for probable contingencies.

Del Rosario agreed during cross-examination that the restriction applies to the retention of surplus profits beyond the threshold set by law rather than to the mere absence of dividend declarations.

The issue surfaced as the prosecution examined the finances of companies associated with business interests listed in Duterte’s Statements of Assets, Liabilities and Net Worth.

House prosecution member and Lanao del Sur 1st District Rep. Zia Alonto Adiong later argued that the absence of dividend declarations from some companies raised questions about the sources behind the increase in Duterte’s declared net worth over the years. His statement represented the prosecution’s position and did not establish that the absence of dividends was itself unlawful.

SEC records presented during the hearings showed that some companies examined by the impeachment court did not declare dividends during certain periods. Del Rosario also testified that dividends may only be declared from unrestricted retained earnings and that companies operating with a deficit cannot legally distribute dividends from nonexistent unrestricted profits.

The testimony forms part of the impeachment court’s continuing examination of allegations concerning Duterte’s declared wealth, business interests, and disclosures in her SALNs.