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COURSE OUTLINE FOR CORPORATION LAW

E. Distribution of profits and losses


F. Principle of delectus personae
G. Dissolution, winding up and termination of
partnership

A. CORPORATION LAW
2. Corporation Law
I. Introduction
1.1 What are the different forms of business
organizations?
-

Sole proprietorships
Partnerships
Business trust
Joint stock company
Cooperatives
Other business forms such as a joint venture

2.1 Historical Background of Corporate Law


- Evolution of Private Corporation in 3 waves
- Scope of the Code
- Art. XII, Section VI of the Constitution
SEC. 16. The Congress, shall not, except by
general law, provide for the formation,
organization, or regulation of private corporations.
Government-owned or controlled corporations
may be created or established by special charters
in the interest of the common good and subject to
the test of economic viability

1.2 Review provisions on Partnership (Review


Articles 1767-1867)

Cases : 1) Bourns vs. Carman, 7 Phils. 117


(1906)

A. Definition (Art. 1767)


B. Essential requistes of a Partnership CCPP
C. Kinds of Partnership
c.1 Accdg to object
a) universal partnership of all present
property/profit
b) particular partnership
c.2 Accdg to liability of partners general or limited
D. Kinds of Partners - as to liability, contribution,
mgmt& as to third persons

2) Harden v. Benguet Consolidated


Mining Co., 58 Phils.
141 (1933)
3) Benguet Consolidated Mining Co. Vs.
Mariano Pineda 098 Phil
711
G.R. No. L-7231 | 1956-03-28

4) Dante V. Liban, et al vs. Richard J.


Gordon,GRN, 175352 ,
July 15, 2009

En Banc Resolution of the Court in in


the same case of
Liban, issued on January 18, 2011
1.2 Definition of a Corporation, its nature and
attributes (Sec 2)
- What is the theory of Concession? Distinguish
it from the Genossenchaft Theory.
- Theory of Corporate Business Enterprise or
Economic Unit
- Four Attributes of a Corporation
- Main Doctrine of Separate Juridical
Personality
Cases : 5) Tayag v. Benguet Consolidated, 26
SCRa 242 (1968)
6) Arnold v. Willits & Patterson
Limited, 44 Phils. 634 (1923)
7) Pantranco Employees Asso., et al.
Vs. NLRC, et al.,G.R.
No. 170689 | 2009-03-17
8) Ruperto Suldao Vs. Cimech
System Construction, Inc.,
G.R. No. 171392 | 2006-10-30
1.3 Advantages/Disadvantages of a Corporation
- Corporation as a person
- Entitlement to damages
- Liability for torts
- Liability for crimes

Cases : 9) Mambulao Lumber Co. v. PNB. 22


SCRA 359 (1969)
10) ABS-CBN v. Court of Appeals, 310
SCRA 572 (1999)
11) National Power Corp. vs. Philipp
Brothers Oceanic, Inc.,
G.R. No. 126204 | 2001-11-20
12) Meralco v. T.E.A.M Electronics
Corporation 540 SCRA
62 (2007)
13) Ching vs. Sec. of Justice, 481
SCRA 602 (2006)
1.4 Citizenship/Nationality of a Corporation see
Sec. 123 and Sec. 149
- What are the tests to determine nationality of a
corporation?
- Understanding the control test
- What is the grandfather rule?
14) J.G. Summit Holdings, Inc. vs CA,
et al, G.R.No.124293 |
2005-01-31

1.5 Doctrine of Piercing the Veil of Corporate


Entity/Fiction
Grounds for application of doctrine fraud,
alter ego and equity cases
Proof Required to disregard corporate
fiction

Tests in Determining applicability


Illustrations when corporate fiction is
established
Sunio Doctrine
15) General Credit Corp. Vs. Alsons
Devt., G.R. No.
154975 | 2007-01-29
16) Mel Velarde vs Lopez Inc, G.R. No.
153886 | 2004-01-14
17) Heirs of Ramon Durano, Sr vs. Uy
G.R. No.
136456 | 2000-10-24 (2000)
18) Philippine National Bank v.
Ritratto Group, Inc.
G.R. No. 142616 | 2001-07-31
19) Sunio vs.NLRC,127 SCRA 390
1.6.) Classes of Corporations (Secs. 3 and 4)
1.6.1 Stock and Non stock Corporation
Cases : 20) Collector of Internal revenue v. Club
Filipino, Inc. de Cebu,
5 SCRA 321 (1962)
1.6.2 Other Classes of a corporation
21) Shipside Inc vs. Court of Appeals,
G.R. No. 1433 | 2001-0220
22) Roman Catholic Apostolic vs.
Register of Deeds of Davao
City, 102 Phils. 596 (1957)

1.6.3 Composition/Components of a Corporation


(Sec. 5)
- Three other classes of persons who play an
important role in the
incorporation of persons
- What is a promoter?
- Liability of a promoter
- Liability of a corporation for promoters
contracts
- Theory of Continuing Offer
1.6.4 Capital Stock of a Corporation (2
Components)
1.6.5 Three (3) basic policies on share classification
1.6.6 Classification of Shares ( Section 6)
General Rule and Exceptions (1st paragraph )
Classification of shares common,
preferred, par value, no par value shares,
redeemable shares, founders shares;
treasury shares (Secs. 7-9)
Instances when even non voting shares can
vote : AASI IMID
Cases : 23 ) PLDT vs. NTC, 539 SCRA 365
(2007)
24) Gamboa vs Teves, G.R. No.
176579 | 2011-06-28 (read
also the dissenting opinion of
Justice Velasco)
25) Republic Planters Bank v.
Agana, 269 SCRA 1 (1997)
26) Commissioner of Internal
Revenue v. CA 301 SCRA

152 (1999)
II. INCORPORATION AND ORGANIZATION OF
PRIVATE CORPORATIONS
2.1 Number and qualifications of incorporators
2.2 Steps in organizing a corporation
2.3 Corporate term
2.4 Minimum Capital Stock and Subscription Required
of Stock Corporations
Sec. 13
Trust Fund Doctrine
Three (3) instances when where the Trust
Fund doctrine allows the distribution of
corporate capital assets
Case : 27) Ong Yiung vs. Tiu 401 SCRA 1
(2003)
2.5 Articles of Incorporation
Form and contents
Procedure for Amendment of Articles of
Incorporation
Non- amendable items of the Articles of
Incorporation
Grounds for Rejection or Disapproval of the
Articles of Incorporation
Case : 28) Lanuza vs. Court of Appeals, 454
SCRA 54 (2005)
29) Kaanib sa Iglesia ng Dios Kay
Kristo Hesus, HSK sa
Bansang Pilipinas, Inc. vs. Iglesia
ng Dios Kay Cristo

Hesus, Haligi at Suhay ng


Katotohanan or AK(IDKJHSK)BP vs. IDCJ-HSK, G.R.N
137592, December 12,
2001
30) Hyatt Elevators vs. Goldstar
Elevators, Phils., 473 SCRA
705 (2005)
2.6 Corporate Name (compare with Trade name and
Business Name)
- Limitations on use of corporate name
31) Philips Export B. V vs. Court of Appeals
206 SCRA 457
32) Industrial Refractories Corp. vs. Court
of Appeals, 390 SCRA
252 (2002)
2.7 Commencement of Corporate Existence
2.8 Non user 2 yrs vs. Non User 5 years (Sec. 22)
2.9 De facto corporation vs.Corporation by Estoppel
2.10 Effect of Non Use of Corporate Charter
Cases :
33) Sawadjaan vs. Court of Appeals 459 SCRA
516 (2005)
34) Pioneer Insurance and Surety Corporation
vs. CA 175 SCRA 668
(1989)
35) Merill Lynch Futures v. Court of Appeas,
211 SCRA 824 (1992)
36) Intl Express Travel v. Court of Appeals 343
SCRA 674 (2000)

37) Lozano vs. Delos Santos, 272 SCRA 452


(1997)
38) Seventh Day Adventist Conference Church
vs. Northeastern
Mindanao Mission of 7th Day Adv, Inc,
GRN. 150416,21Jul 2006
III. BOARD OF DIRECTORS/TRUSTEES/OFFICERS
3.1 Centralized Management Doctrine The Board is
the seat/repository of
corporate powers
39) Filipinas Port Services vs. Go 518 SCR 453
(2007)
40) San Juan Structural vs. Court of Appeals,
296 SCRA 632 (1998)
3.2 Business Judgment Rule and its exceptions
41) Montelibano v. Bacolod Murcia Milling 5
SCRA 36 (1962)
42) Phil. Stock Exchange, Inc., v. CA, 282
SCRA 232 (1997)
3.3 Qualifications and Disqualifications of the Board of
Directors,
3.4 Compensation of Directors
Case : 43) Western Institute of Technology
Inc. vs. Salas 278
SCRA 216 (1997)
3.5 Three fold duties of directors, trustees and
corporate officers (Sec 31 vs. Sec. 34)

Cases : 44) Board of Liquidators vs. Kalaw,


20SCRA 987(1967)
45) Benguet Electric Cooperative vs.
NLRC209 SCRA 55
(1992)
46) People's Aircargo and
Warehousing Co. Inc.v. CA, 297
SCRA 170-1998
47) Easycall Communications Phils.,
Inc. vs. Edward King,
Gr No. 145901, Dec. 15, 2005 (Who are
corporate Officers?)
48) Premium Marble Resources vs. CA
353 SCRA 23 (2001)
3.6. Doctrine of Corporate Opportunity
3.7 Requisites of Board Meetings; Quorum of the
Board
3.8 Election of Directors or Trustees cumulative
voting
Cases : 49)Gokongwei vs. SEC 89SCRA 336
(1979)
50) Aurbach v. Sanitary Wares
Manufacturing Corp. 189
SCRA
130 (1989)
51) Expertravel & Tours v. Court of
Appeals, 459 SCRA 147
(2005)
3.9 Removal and Vacancy of Directors
Case : 52) Tan vs. Sycip, 499 SCRA 216 (2006)
3.10 Derivative Suits

Cases : 53) Bitong vs. CA -292 SCRA 503


(1998)
54) Republic Bank vs. Cuaderno 19
SCRA 671
3.11 Interlocking Directors
3. 12 Dealings of Directors, Trustees, Officers
3.13. Executive Committee
IV. POWERS OF A CORPORATION
4.1 Corporate Powers and Capacity Very impt (Sec. 36)
Express
Incidental
Implied
Cases : 55) Reynoso IV vs. Court of Appeals, 345
SCRA 335 (2000)
56) Nestle Phils. Inc., vs. CA 203 SCRA 504
(1991)
57) Atrium Management Corp vs. CA G.R.
No. 109491 Feb 28,
2001
4.2 Extending or Shortening Corporate term
4.3 Increasing or decreasing capital stock
4.4 Pre-emptive rights and the power to deny preemptive rights
What is pre-emptive right?
Purpose of pre-emptive right
Issue vs disposition under Section 39

Case :58) Dee vs. SEC, 199 SCRA 238 (1991)


5. Sale or disposition of Assets
Bulk Sales Law
6. Acquiring own shares
7. Investing Corporate funds in another corporation or
business
8. Declaring dividends
Cash dividends
Stock dividends
Case : 59) Nielson and Co. v Lepanto
Consolidated Mining Co.,Inc. 26
SCRA 540 (1968)
60) Wise and Co. v. Meer 78 Phil. 655
(1947)
9. Ultra Vires Acts of a Corporation
Case : 61) Woodchild Holdings vs. Roxas
Electric 436 SCRA 235
(2004)
62) Pirovano v. Dela Rama Steamship
Co., 96 Phil. 355 (1954)
10. Doctrine of Ratification
63) Yasuma vs. Heirs of Cecillio S. de
Villa, 499 SCR 466 (2006)
V. BY LAWS
1. Nature of by- laws
2. Contents of by- laws
3. Amendments or repeals

4. Effectivity of by laws
Cases : 64) Loyola Grand Villas Homeowners
(South) Association Inc. v.
CA. 276 SCRA 681 (1997)
65) San Miguel Corp. v. Mandaue Packing
Product Plants UnionFFW, 467 SCRA 107 (2005)
69) China Banking Corporation v. CA 270
SCRA 503 (1997)
70) PMI Colleges v. NLRC 277 SCRA 462
(1997)
VI. MEETINGS
1. Kinds of meetings of the Stockholders and Board
of Directors
2. Meetings of Stockholders
3. Meetings of Directors/Trustees
4. Right to vote in Special cases

Right to vote of pledgors, mortgagors and


administrators of shares of stocks
Right to vote of joiint membership stock
Voting of treasury stocks
Proxy
Voting trust

Cases : 72) Cojuangco vs. Roxas `95 SCRA 797


(1991)
Read again Tan vs. Sycip and Lanuza
cases

73) Lee v. CA, 205 SCRA 752


VII. STOCKS AND STOCKHOLDERS
1. Subscription contract
2. Pre-incorporation subscription
3. Consideration for stocks
4. Certificate of stock and transfer of shares
5. Issuance of Stock Certificate
6. Watered stocks
7. Payment of Balance of Subscription
8. Delinquency Sale
Cases : 74) Nautica Canning Corp vs. Yumul, GR
No. 1644588, Oct. 19,
2005 (stockholder)
75) Republic of the Philippines vs. Estate
of Hans Menzi, et. Al
G.R. No. 152578, November 23, 2005
76) Rural Bank of LIpa City vs. CA , GR
No. 124535, 28 Sept.
2001

VIII CORPORATE BOOKS AND RECORDS.


1. Corporate Books required to be kept
Case :77) Provident International Resources
Corp. vs Venus, 554
SCRA 540 (2008)

78) NATU v. Secretary of Labor, 109


SCRA 139 (1981)
79) Torres, Jr. v. CA, 278 SCRA 793
(1997)
2. Right to financial statement
Cases :80) W.G. Philpotts v. Phil
Manufacturing Co. 40 Phil 471
(1919)
81) Gonzales vs. PNB (122SCRA 489)
1983)
IX- MERGER AND CONSOLIDATION

1.
2.
3.
4.

Difference between merger from consolidation


Stockholders or members approval
Articles of merger or consolidation
Effects of merger or consolidation
Cases : 82) Polland Industrial Ltd. VS. NDC
467 SCRA 500 (2005)
83) Babst vs. CA, 350 SCRA 341
(2001)
X APPRAISAL RIGHT
1. Instances of appraisal right
2. How right is exercised
3. Effect of demand and Termination of Right
XI - NON STOCK CORPORATIONS
XII - CLOSE CORPORATIONS
XIII - SPECIAL CORPORATIONS
G.R. No. 184088

July 6, 2010

IGLESIA EVANGELICA METODISTA EN LAS ISLAS


FILIPINAS (IEMELIF) (Corporation Sole), INC., et al
vs. BISHOP NATHANAEL LAZARO, et al acting
individually and as members of the Supreme
Consistory of Elders and those claiming under the
Corporation Aggregate, Respondents.

XIV - DISSOLUTION
XV - FOREIGN CORPORATION
Cases : 84) The Mentholatum Co., Inc c.
Mangaliman, et alG.R. No. L47701 June 27, 1941
85) Top-Weld Manufacturing ,Inc. v.
ECED SA 138 SCRA
118(1985)
86) Avon Insurance PLCv. CA, 278
SCRA 312
XVI - MISCELLANEOUS PROVISIONS
Part II Important Provisions of the Securities
Regulation Code
Part III- Interim Rules of Procedure on Corporate
Rehabiltation
Part IV - Rules on Intracorporate Controversies
Cases : 87) IBC v, Jalandoon G.R. No. 148152,
Nov. 18, 2005

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