Corporation Law Course Syllabus

Part I – General Provisions

A. Corporation, defined (Sec. 2)

Case:
a. Tayag v. Benguet Consolidated, 26 SCRA 242
b. Torres v. Court of Appeals, 278 SCRA 793
c. Philippine Stock Exchange, Inc. v. Court of Appeals, 281 SCRA 232

1. Art. XII Section 16, 1987 Philippine Constitution

Case:
a. Feliciano v. COA, GR No. 147402, January 14, 2004

2. Attributes of a Corporation
3. Similarities and Distinctions between Contract of Partnership and Corporations
4. Corporations Created by Special Laws or Charter

Cases:
a. National Coal Co. v. Collector of Internal Revenue, 46 Phil. 583
b. Marilao Water Consumers Association, Inc. v. IAC, 201 SCRA 437

B. Classification of corporations

1. Under the Corporation Code (Sec. 3)

2. Sole and Aggregate
3. Ecclesiastic and Lay
4. Eleemosynary and Civil
5. Domestic and Foreign
6. De jure and de facto corporations

6.1 Requisite of De Facto Corporation

6.2 Quo Warranto

Cases:

a. Sawadjaan v. Court of Appeals, G.R. No. 141735, June 8, 2005

7. Close and Open Corporation

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8. Parent, Subsidiary, and Affiliated
9. Private and Public
10. Corporation by Prescription and Corporation by Estoppel

C. Nationality of corporations

1. Control test
2. Grandfather rule

Case:

a. Wilson Gamboa v. Sec. Margarito Teves, GR NO. 176579, June 28, 2011

D. Corporations created by special laws (Sec. 4)

E. Corporators and incorporators, stockholders and members (Sec. 5)

F. Corporate juridical personality

1. Doctrine of separate juridical personality (or Doctrine of Corporate Entity

Case:

a. Cease v. CA, GR NO. 33172, October 18, 1979

2. Doctrine of piercing the corporate veil

a) Grounds for application of doctrine

b) Test in determining applicability

Cases:

a. CIR v. Norton and Harrison Company, G.R. No. 17618, August 31, 1964
b. McLeod v. NLRC, GR No. 146667, January 23, 2007
c. De Asis and Co. v. Court of Appeals, GR No. L-61549, May 27, 1985
d. Martinez v. Court of Appeals, GR NO. 131673, September 10, 2004
e. Solidbank Corporation v. Mindanao Ferroalloy Corporation,, GR No. 153535, July
28, 2005
f. Yamamoto v. Nishino Leather Industries, Inc., GR No. 150 283, April 16, 2008
g. ASJ Corporation v. Sps. Evangelista, GR NO. 158086, February 14, 2008

3. Entitlement to constitutional rights

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a) Due process

Case:

a. Albert v. University Publishing, Inc. G.R. No. 10118, June 16, 1965)

b) Equal protection of the law

c) Protection against unreasonable searches and seizure

4. Entitlement to Moral Damages

Case:

a. ABS-CBN v. Court of Appeals, GR NO. 128690, January 21, 1999

b. Coastal Pacific Trading, Inc. v. Sothern Rolling Mills, Co., Inc., July 28, 2006

5. Libel

Case:
a. Filipinas Broadcasting v. Ago Medical Center, GR No. 141994, January 17, 2005

6. Liability for torts

Cases:
a. PNB v. CA, GR NO. 27155, May 18, 1978

7. Doctrine of Corporate Negligence

Case:
a. Professional Services Inc., v. Court of Appeals, G.R. No. 126297, Feb. 2, 2010

8. Liability for crime

G. Classification of Shares (Sec. 6)

(see new provision in RA 11232)

1. Par value vs. no par value

2. Voting vs. non-voting
3. Common vs preferred
4. Promotion share

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5. Founder’s share (Sec. 7) (see changes in sec 7 of RA 11232)
6. Redeemable share (Sec. 8) * see changes in RA 11232
7. Treasury share (Sec. 9)

Part II – Incorporation and Organization of Private Corporations

A. Number and qualifications of incorporators (Sec. 10) * see changes in the new
RA

1. Capital stock
2. Authorized (see Section 12, RA 11232)
3. Subscribed capital stock ( Sec 13)
4. Outstanding capital stock
5. Paid-up capital stock
6. Unissued capital stock
7. Certificate of stock

 Kukan International Corp. v. Reyes, G.R No. 182729, Sept. 29, 2010

B. Minimum capital stock and subscription requirements

1. Incorporation and organization

a. Promoter
a.1) Liability of promoter
a.2b) Liability of corporation for promoter’s contracts
 Cagayan Fishing v. Sandiko, GR No. L-43350, 23 Dec 1937
 Caram v. CA, Gr No. L-48627, 30 June 1987
 Pioneer Insurance v. CA, Gr No. 84197, 28 July 1989
2. Subscription contract
 Jaka Investments Corp. v. CIR, GR No. 147629, July 28, 2010
3. Pre-incorporation subscription agreements
4. Consideration for stocks
5. Filipino ownership requirement based on specific constitutional and legal
grounds

D. Corporate term (Sec. 11) * see new provision)

E. Articles of incorporation (see new provision)

 Lanuza vs CA, G.R. No. 131394.March 28, 2005
1. Contents
2. Non-amendable items
3. Doctrine of substantial compliance

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4. Primary purpose
 Uy Siulong v. Director, GR No. L- 15429, 1 Dec 1919
5. Principal place of business
 Davao Light and Power Co. v. CA, 20 Aug 2001, GR No. 111685
F. Ground for rejection (Sec. 17) (see new provision)

G. Corporate name (Sec. 18) (see new provision)

 Industrial Refractories v. CA, G.R. No. 122174.October 3, 2002
 Lyceum of the Phil. v. CA, G.R. No. 101897 March 5, 1993
H. Commencement of corporate existence (Sec. 19) ( see new provisio n
I. De facto corporation and corporation by estoppel (Sec. 20) (see new provisions)

1. Differences between de jure, de facto and corporation by estoppels

 Sawadjaan v. Court of Appeals, G.R. No. 141735, June 8, 2005

J. Non-use of corporate charter (Sec. 22)

 Loyola Grand Villas v. CA, 1997 Aug 7, G.R. No. 117188
 INTERNATIONAL EXPRESS TRAVEL & TOUR SERVICES vs
CA, G.R. No. 119002. October 19, 2000

Part III – Board of Directors/Trustees/Officers ( see new provision)

A. The Board of Directors of Trustees

1. Fiduciary duties
2. Requirements
a) Qualifications
 Villafuerte v. Moreno, G.R. No. 186566, 02 Oct 2009
3. Term of Office/holdover
 Seneres v. COMELEC and Robles, April 16, 2009, G.R. No. 178678
B. Election of directors or trustees
C. Corporate officers, quorum
 Matling Industrial and Commercial Coorp. V. Coros, G.R. No.
157802, October 13, 2010
D. Report of election
E. Disqualification of directors, trustees or officers
F. Removal of directors or trustees
G. Vacancies in the office of director or trustee
 Valle Verde Country Club, Inc. v. Africa, G.R. No. 151969,
September 4, 2009
H. Compensation of directors
 Singson, et al. v. COA, August 9, 2010, G.R. No. 159355
I. Liability of directors, trustees or officers

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 1. Corporate opportunity doctrine
J. Dealings of directors, trustees or officers with the corporation
K. Contracts between corporations with interlocking directors
L. Disloyalty of a director

M. Executive committee
O. Business Judgment Rule
 Philippine Association of Stock Transfer and Registry Agencies,
Inc. vs CA, GR No L. 137321, 15 Oct 2007
P. Three fold duties of a directors and officers

Part IV – Powers of Corporations (see new provisions)

A. Classification of powers

1. Express powers, Implied powers, and Incidental or inherent powers

 Cebu Bionic Builders Supply, Inc. v. DBP, GR No. 154366,
November 17, 2010
 Shipside Incorporated v. CA, GR No. 143377, February 20, 2001
B. Corporate powers and capacity
1. General powers, theory of general capacity
2. Specific powers, theory of specific capacity
a) Power to extend or shorten corporate term
a.1) Appraisal right of dissenting stockholders
b) Power to increase or decrease capital stock or incur, create, increase
bonded indebtedness
b.1) Limitation
b.2) Necessity
c) Power to deny pre-emptive rights
c.1) As to treasury shares
d) Power to sell or dispose of corporate assets (Sec. 40)
d.1) Appraisal right of dissenting stockholder
e) Power to acquire own shares (Sec. 41)
e.1) Conditions for the exercise of the power
e.2) Trust fund doctrine
f) Power to invest corporate funds in another corporation or business (Sec. 42)
g) Power to declare dividends (Sec. 43)
g.1) Concept of dividends (distinguished from profits)
g.2) Classes of dividends
g.3) Unrestricted retained earnings
h) Power to enter into management contract
i) Ultra vires acts

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 (i) Applicability of ultra vires doctrine
(ii) Consequences of ultra vires acts

 Zomer Development Company, Inc. v. International Exchange

Bank, GR No. 150694, March 13, 2009
 Republic v. Acoje Mining, Inc. GR No. L-18062, February 28, 1963

(iii) Ratification

j) Doctrine of apparent authority

 Westmont Bank v. Inland Construction and Development Corp.,
GR No. 123650, March 23, 2009
 BPI Family Savings Bank v. First Metro Investment Corp, GR No.
132390, May 21, 2004
k) Doctrine of individuality of subscription
l) Doctrine of equality of shares
m) Trust fund doctrine

Part V – By Laws

A. Adoption of by-laws
a) Requisites of valid by-laws
b) Binding effects
c) Contents
d) Amendments

PMI Colleges v. NLRC, GR NO. 121466, August 15, 1997

Part VI – Meetings

A. Kinds
1. Necessity of meetings

B. Place and time of meeting of stockholders or members

 Expertravel & Tours, Inc. v. Court of Appeals, G.R. No. 152392,

May 26, 2005

C. Quorum
1. Requisites for a valid meeting of stockholders
2. Specific number of votes required by law

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D. Regular and special meetings of directors or trustees
1. Business judgment rule
2. Solidary liabilities for damages
E. Who shall preside
F. Pledgors, mortgagors and administrators
G. Voting in case of joint ownership
H. Voting right for treasury shares
I. Proxies
K. Voting trust
 Lee vs. Court of Appeals, G.R. No. 14441, Dec. 17, 1996

Title VII – Stocks and Stockholders

A. Rights of stockholders in general
B. Derivative suit
C. Liabilities of stockholders
D. Subscription contract
E. Pre-incorporation subscription
F. Certificate of stock
1. Nature of the certificate
2. Uncertificated shares
3. Negotiability
4. Requirements for valid transfer of stocks
5. Issuance
6. Full payment
7. Payment pro-rata
8. Stock and transfer book
9. Lost or destroyed certificates
10. Situs of the shares of stock
G. Consideration for stocks
H. Certificate of stock and transfer of shares
I. Issuance of stock certificate
J. Liability of directors for watered stocks
K. Interest on unpaid subscription
L. Payment of balance
M. Delinquency sale
N. When sale may be questioned
O. Court action to recover unpaid subscription
P. Effect of delinquency
Q. Rights of unpaid shares
R. Lost or destroyed certificates

Part VIII – Corporate Books and Records

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A. Contents
B Who may make valid entries

Part IX – Merger and Consolidation

A. Merger and consolidation
B. Approval required
C. Articles of merger or consolidation

D. Effectivity

E. Effects

Part X – Appraisal Right

A. Instances of appraisal right (Sec. 81)

B. How right is exercised (Sec. 82)

C. Effect of demand and termination of right (Sec. 83)

D. When right to payment ceases (Sec. 84)

E. Who bears costs of appraisal (Sec. 85)

F. Notation on certificates; rights of transferee (Sec. 86)

Part XI – Non-Stock Corporations

A. Definition
B. Purposes
C. Members right to vote
D. Non-transferability of membership
E. Termination of membership
F. Election and term of trustees
G. Place of meetings

Part XII – Distribution of Assets in Non-Stock Corporations

A. Rules of distribution
B. Plan of distribution of assets

Part XIII – Close Corporations

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A. Definition and applicability of Title

B. Articles of incorporation
C. Validity of restrictions on transfer of shares
D. Effects of issuance or transfer of stock in breach of qualifying conditions
E. Agreements by stockholders
F. When board meeting is unnecessary or improperly held

G. Pre-emptive right in close corporations

H. Amendment of articles of incorporation
I. Deadlocks
J. Withdrawal of stockholder or dissolution of corporation

Part XIV – Dissolution

A. Methods of dissolution

B. Voluntary dissolution where no creditors are affected

C. Voluntary dissolution where creditors are affected

D. Dissolution by shortening corporate term

E. Involuntary dissolution
F. Corporate liquidation

Part XVI – Foreign Corporations

A. Definition and rights of foreign corporations (Sec. 123)

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