2019 BUSORG2 OUTLINE 3

Prof. M.I.P. Romero

V. CLASSES OF CORPORATIONS UNDER THE CORP. CODE

1. Sec. 3, 87, 88 --- stock and non-stock corporation

Valley Golf Club v. Vda. De Caram 585 SCRA 218 (2009)
Coll. of Int. Rev. v. Club Filipino 5 SCRA 321 (1962)

2. Other classes of corporations under the Corporation Code:

Close corporation – Sec. 96

Special corporations – Educational, religious (Title XIII)
Foreign corporations --- Sec. 123

Others: subsidiary (wholly-owned v. majority owned), affiliate,

parent/holding company, joint venture corporation, open vs.
close, lay vs. religious, eleemosynary vs. civil corp., etc.

GOVERNED primarily by specific titles, then suppletorily by the

other applicable provisions of the Corp. Code

VI. CREATION OF CORPORATION

A. Promotion (relate to Sec. 3.10. of Securities Regulation Code)

McArthur v. Times Printing Co. 31 Am. St. Rep. 653

Cagayan Fishing v. Sandiko 65 Phil 223 (1937)
Caram v. CA June 30, 1987

B. Incorporation

1) Steps in incorporation

2) Sections 5, 10 –19, 88, 96, 97

3) Articles of Incorporation–
a) Sec. 14, 15
b) Amendment of A/I – Sec. 16, Relate to:
Sec. 36.4 – power to amend
Sec. 6 – voting rights of non-voting shares
Sec. 81[1]--- appraisal right
Secs. 37, 38, 103 – re written assent

c) Binding effect of amendment

Phil. Trust Co. v. Rivera 44 Phil. 469 (1923)

Marcus v. RH Macy 74 N.E. 2d 228 (1947)
Iglesia Evangelica v. Bishop Lazaro (G.R. 184088, July 6, 2010)
(see dissent of J. Carpio)

4) Name of corporation – (SEC Memo Circ. 14, Series of 2000)

Republic Planters Bank v. CA GR 93073 (Dec. 21,1992)

Armco Steel Corp. v. SEC (L-54580; Dec. 29, 1987)
P.C. Javier & Sons, Inc. v. CA June 29, 2005
Industrial Refractories Corp. v. CA Oct. 3, 2002
Ang Kaanib sa Iglesia ng Dios kay Kristo Hesus v. Iglesia ng Dios
kay Cristo Jesus Dec. 12, 2001
GSIS Family Bank v. BPI Family Bank Sept. 23, 2015

5) Residence of corporation -
Young Auto Supply Co. v. CA (1993) 223 SCRA 670

6) Citizenship requirements --- Sec. 140

--- pertinent provisions of the 1987 Constitution

--- meaning of CAPITAL under Sec. 11, Art. 12 of the Constitution

Gamboa v. Teves, et al June 28, 2011 and Oct. 9, 2012
SEC Memo Circ. No. 8, s2013 (Guidelines in Fil-Foreign ownership)
Roy v. Herbosa Nov. 22, 2016 and April 18, 2017

-- Foreign Investments Act (FIA) of 1991, as amended

--- other laws imposing maximum foreign equity
--- “Philippine national” under the FIA
--- Phil. corporation under the Corp. Code
 --- Foreign corporation under the Corp. Code

--- Control Test v. Grandfather Rule

Narra Nickel Mining v. Redmont April 21, 2014 and Jan. 28, 2015
(see dissent of J. Leonen)

--- Nationality of corporation sole

Roman Catholic Apostolic Admin. of Davao (102 Phil.596)

7) De jure corporations – requisites, powers, liabilities, validity

8) De facto corporations – Sec. 20

(requisites, basis, powers, rights, liabilities, validity )

Pioneer Insurance v. CA (GR 84157) 175 SCRA 668 (1989)

Municipality of Malabang v. Benito (1969) 27 SCRA 533
Hall v. Piccio (1950) 86 Phil. 603
Cagayan Fishing. v. Sandiko GR L-43350 (12/23/1937)
Harill v. Davis (1909) 168 F. 187

9 ) Corporation by Estoppel – Sec. 21 (rationale, liabilities, validity)

Chiang Kai Shek School v. CA (1989) 172 SCRA 389

Lim Tong Lim v. Phil. Fishing Gear (1999) 317 SCRA 728
Int’l Express Travel v. CA (2000) 343 SCRA 674
Paz v. New Int'l Environmental Universality, Inc." (April 20, 2015)

10) Corps. that are neither de jure, de facto, nor by estoppel

C. Formal organization versus commencement of business – Sec. 19