CORPORATION LAW Chapter I.

INTRODUCTION
(1) Definition and attributes of a corporation (2) Kinds of business organizations and their differences (3) Jurisdiction of the SEC

Union Glass v. SEC Abe o v. De la Cruz SEC v. CA !agalad v. "re#iere $inancing

Chapter II. CLASSIFICATION OF PRIVATE CORPORATIONS

(1) Stoc% v. &on'Stoc% Corporations

CI( v. Club $ilipino &DC v. "hil. *eterans +an% "ioneer Insurance v. CA

(2) )ther !atters

Chapter III. FORMATION AND ORGANIZATION OF CORPORATION

(1) (e,uire#ents in the for#ation of a corporation (2) Steps in the for#ation of a corporation (a) pro#otion (b) drafting of articles of incorporation (i) Corporate &a#e (ii) (iii) (iv) (v) (vi)

-.ceu# of the "hils. *. CA "urpose Clause "rincipal )ffice /er# of E0istence Incorporators and directors1 nu#bers and ,ualifications Capital stoc%1 subscription1 pa.#ent (c) filing of articles1 pa.#ent of fees (d) e0a#ination of articles1 approval or re ection b. SEC (e) issuance of certificate of incorporation

(3) De $acto Corporations2 (e,uisites (a) User of Corporate "o3ers (b) $or#ation under apparentl. valid statute

!unicipalit. of !alabang v. +enito +ergeron v. 4obbs 4arril v. Davis 4all v. "iccio

(c) Colorable co#pliance 3ith the legal re,uire#ents in good faith

(4) Corporation b. Estoppel

E#pire !fg. *. Stuart "age 5 of 56

-o3ell'7ood3ard v. G( 7oods Asia +an%ing Corp. *. Standard "roducts Cranson v. I+! Salvatierra v. Garlitos Albert v. Universit. "ublishing Co.8 Inc. $leischer v. +otica &olasco Gov9t of the "hils. v. El 4ogar

(5) Internal )rganization2 +.'-a3s

Chapter I*. THE CORPORATE ENTITY

(1) /he /heor. of Corporate Entit.

Stoc%holders of /. Guanzon v. (egister of Deeds Cara# v. CA "ala. v. Clave !agsa.sa. v. -abrador

(2) Disregarding Corporate Entit.

:a; Contrar. to la3 < public polic.1 evasion of liabilit. to govern#ent State v. Standard )il -aguna /rans. v. SSS !arvel +ldg. Corp. v. David
(b) Evasion of liabilit. to creditors

/an +oon +ee v. Jarencio &a#arco v. Associated $inancing Jacinto v. CA Claparols v. CI( Indophil /e0tile !ills v. Calica &A$-U v. )ple *illa'(e. /ransit v. $errer Cease v. CA Delpher /rades v. CA

(c) Evasion of liabilit. < obligation to e#plo.ees

(d) Evasion of liabilit. on contract

(e) Close Corporations

(3) "arent'Subsidiar. (elationship

Garrett v. Southern (ail3a. Koppel :"hils.; v. =atco -iddell v. CI( =utivo v. C/A "age > of 56

"hilvidec v. CA -a Ca#pana Coffee $actor. v. Kaisahan

Chapter *. PROMOTERS CONTRACTS PRIOR TO INCORPORATION

(1) -iabilit. of Corporation for "ro#oter9s Contracts

!cArthur v. /i#es "rinting Co. Clifton v. /o#b Caga.an $ishing Co. v. Sandi%o :Also see Cara# v. CA;

(2) Corporate (ights under "ro#oter9s Contracts

+uilders9 Duntile v. Dunn (izal -ight ? Ice Co. v. "SC and !orong Electric

(3) "ersonal -iabilit. of "ro#oter on "re'Incorporation Contracts

7ells v. $a. ? Egan "ioneer Insurance v. CA 4o3 ? Associates8 Inc. v. +oss @ua%er 4ill v. "arr

(4) Co#pensation of "ro#oters (5) $iduciar. relationship bet3een corporation and pro#oter

)ld Do#inion v. +igelo3

Chapter *I. CORPORATE POWERS :5; :>; :A; :B; General "o3ers of Corporation Specific "o3ers of Corporation I#plied "o3ers /he Ultra *ires Doctrine (epublic of the "hils. *. Aco e !ining Co. Carlos v. !indoro Sugar Co. Govt. of the "hils. v. El 4ogar +issel v. !ichigan Southern "irovano v. De la (a#a Stea#ship 4arden v. +enguet Consolidated !ining

Chapter *II. CONTROL AND MANAGEMENT OF CORPORATION :5; Allocation of "o3er and Control

"age A of 56

Citiban% &A v. Chua

:>; 7ho E0ercises Corporate "o3ers :a; +oard of directors or trustees (a#irez v. )rientalist Co. and $ernandez -opez v. Ericta Cachar. v. !ilin "&+ v. CA

:b; Corporate officers and agents =u Chuc% v. Kong -i "o /he +oard of -i,uidators v. 4eirs of !a0i#o Kala3 Ca#boanga /ransportation v. +achrach !otor Co. Acuna v. +atac "roducers Cooperative !ar%eting Assoc.

:c; +oard Co##ittees 4a.es v. Canada8 Atlantic ? "lant S.S. Co.8 -td.

:d; Stoc%holders or #e#bers +)D and Elec. Co##. of S!+ v. /an Johnston v. Johnston "once v. Encarnacion Detective ? "rotective +ureau v. Cloribel Go%ong3ei v. SEC (o0as v. dela (osa Angeles v. Santos Ca#pbell v. -oe39s Inc. Dela (a#a v. !a'ao Sugar Central Go%ong3ei v. SEC

:A; Devices Affecting Control :a; "ro0. Device In (e Giant "ortland Ce#ent Co. State e0 rel. Everett /rust v. "acific 7a0ed "aper Ale andrino v. De -eon Duff. v. -oft

:i; 7ho pa.sD :b; *oting /rust "age B of 56 Ca#pbell v. -oe39s Inc. (osenfeld v. $airchild Engine

Abercro#bie v. Davies Everett v. Asia +an%ing !ac%in v. &icollet 4otel8 Inc. &IDC v. A,uino

:c; "ooling and voting agree#ents (ingling v. (ingling +ros. +uc% (etail Store v. 4ar%ert !c@uade v. Stoneha# Clar% v. Dodge

:d; Cu#ulative *oting :e; Classification of Shares Gottschal% v. Avalon (ealt.

:f; (estriction on transfer of shares :g; "rescribing ,ualifications for directors1 founder9s shares cf. Go%ong3ei v. SEC :h; !anage#ent contracts Sher#an ? Ellis8 Inc. *. Indiana !utual Casualt.

:i; Unusual voting and ,uoru# re,uire#ents +enintendi v. Kenton 4otel

Chapter *III. DUTIES OF DIRECTORS AND CONTROLLING STOCKHOLDERS :5; Dut. of Diligence2 +usiness Judg#ent (ule )tis ? Co. *. "enns.lvania (ailroad !ontelibano v. +acolod'!urcia !illing -it3in v. Allen 7al%er v. !an Steinberg v. *elasco +arnes v. Andre3s "ool v. "ool $oster v. +o3en -o3ell 4oit ? Co. *. Detig +ates v. Dresser

:a; /he self'dealing director "age E of 56

"alting v. San Jose "etroleu#8 Inc. !ead v. !cCullough "iccard v. Sperr. Corporation

:b; $i0ing co#pensation of directors and officers Govt. v. El 4ogar +arreto v. -a "revisora Central Coop E0change v. /ibe $ogelson v. A#erican 7oolen Co. Kerbs v. California Eastern Air3a.s

:c; Using inside infor#ation Strong v. (epide /a.lor v. 7right Go%ong3ei v. SEC

:d; Seizing corporate opportunit. Singer v. Carlisle Irving /rust v. Deutsch -it3in v. Allen

:e; Interloc%ing directors Globe 7oolen Co. *. Utica Gas ? Electric :>; Close Corporation :A; Dut. of Controlling Interest Insuranshares Corp. *. &orthern $iscal Corporation :B; Dut. to Creditors Chapter IF. THE RIGHT OF INSPECTION :5; +asis of (ight :>; 7hat (ecords Covered :A; E0tent of and -i#itations on (ight :B; 7ho #a. e0ercise (ight :E; (e#edies available if Inspection (efused "ardo v. 4ercules -u#ber Gonzales v. "&+ "age 6 of 56

*eraguth v. Isabela Sugar Co. Go%ong3ei v. SEC Co uangco v. (o0as

Chapter F. DERIVATIVE SUITS :5; &ature and +asis of derivative suit2 distinguished fro# individual and representative suit :>; (e,uire#ents relating to derivative suits Evangelista v. Santos (epublic +an% v. Cuaderno (e.es v. /an S!C v. Kahn

Chapter FI. FINANCING THE CORPORATION :5; Sources of $inancing :>; Capital Structure :A; Capital and Capital Stoc% Distinguished :B; Shares of Stoc%2 Kinds :a; Co##on stoc%s :b; "referred stoc%s (i) "reference as to dividends "articipating v. &on'participating Cu#ulative v. &on'Cu#ulative Discretionar. Dividend /.pe !andator. Dividend /.pe Earned cu#ulative or dividend credit t.pe

(ii) As to voting right Elling3ood v. 7olf9s 4ead )il (efining

(iii) "reference upon li,uidation 4a. v. 4a.

(iv) "reference stoc%holder is not a creditor Augusta /rust Co. *. Augusta 4allo3ell

:c; "ar or no par shares

"age G of 56

:d; /reasur. Shares :e; (edee#able Shares :f; $ounder9s Shares :E; &ature of Subscription Contract Garcia v. -i# Chu Sing

:a; "re'incorporation subscription Utah 4otel Co. *. !adsen 7allace v. Eclipse "ocahontas Coal Co.

:b; "ost'incorporation subscription +a.la v. Silang /raffic Co.

:6; /he "re'E#ptive (ight to Shares :a; +asis of (ight :b; E0tent and li#itations under Code :c; In close corporations :d; 7aiver of pre'e#ptive right :e; 7hen issue is in breach of trust :f; (e#edies 3hen denied Sto%es v. Continental /urst Co. /ho# v. +alti#ore /rust Co. $uller v. Krogh Dunsla. v. Avenue !. Garage ? (epair (oss /ransport Inc. v. Crothers

:G; Debt Securities :a; $or# of borro3ings :b; +onds and Debentures :c; Convertible Securities1 stoc% options !eritt'Chap#an ? Scott Corp. v. &e3 =or% /rust Co.

:d; 4.brid Securities John Kelle. Co. v. CI( "age H of 56

Jordan Co. v. Allen

:e; /he /rust Indenture Aladdin 4otel Co. v. +loo#

Chapter FII. CONSIDERATION FOR ISSUANCE OF SHARES :5; $or# of Consideration :>; -iabilit. on 7atered Stoc%s /riple0 Shoe Co. *. (ice ? 4utchins8 Inc. !cCart. v. -angdeau (hode v. Doc%'hop Co. +ing Crosb. !inute !aid Corp. *. Eaton

:A; 4o3 "a.#ent of Shares Enforced :a; Delin,uenc. sale1 re,uisites :b; Court Action *elasco v. "oizat -inga.en Gulf Electric v. +altazar !iranda v. /arlac (ice !ill Co. Da Silva v. Aboitiz &ational E0change v. De0ter -u#anlan v. Cura

:B; Effect of Delin,uenc. :E; (ights and )bligations of 4olders of Unpaid but &on'delin,uent Stoc% $ua Cun v. Su##ers +altazar v. -inga.en Gulf Electric "o3er &ava v. "eers !ar%eting

:6; Issuance of Certificate :G; -ost or Destro.ed Certificate Chapter FIII. DIVIDENDS AND PURCHASE BY CORPORATION OF ITS OWN SHARES :5; $or# of Dividends &ielson ? Co. v. -epanto Consolidated !ining Co.

:>; Source of Dividends +er%s +roadcasting Co. v. Cra##er "age I of 56

-ich v. United States (ubber

:A; Dividend Declaration discretionar. 3ith +oard JK J5 Keough v. St. "aul !il% Co. Dodge v. $ord !otor Co.

:B; "reference as to Dividends J> JA 7abash (ail3a. Co. *. +arcla. +ur% v. )tta3a Gas ? Electric Co.

:E; 7hen (ight to Dividends *ests1 (ights of /ransferee JB !cClaran v. Crescent "lanning !ill

:6; -iabilit. for Illegal Dividends :G; "urchase b. Corporation of its o3n shares Chapter FI*. AMENDMENTS OF CHARTER :5; A#end#ent b. -egislature :>; A#end#ent b. Stoc%holders :a; -i#itations on po3er :b; Grounds for re ection of a#end#ent :c; A#end#ent changing stoc%holder9s rights JE !arcus v. (4 !ac.

:d; Effectivit. of a#end#ent :e; Special a#end#ents :5; Increase of capital stoc% :>; Decrease of capital stoc% J6 "hilippine /rust Co. *. (ivera

:A; Change in corporate ter# :f; A#end#ents in close corporations Chapter F*. TRANSFER OF SHARES :5; !anner and Effectivit. of /ransfer
(a) Indorse#ent of stoc% certificate1 registration in corporate boo%s

"age 5K of 56

(b) Effect of lac% of registration

Uson v. Dioso#ito

(c) &o registration of transfer of unpaid shares (d) (e#ed. if registration refused

(ivera v. $lorendo

:>; (estrictions on /ransfer1 Close Corporations

(a) General rule2 free transferabilit. of shares (b) E0ceptions2 in close corporations (c) Intrinsic validit. of various %inds of restrictions (1) Consent restriction (2) )ption restriction (3) "rescribing ,ualifications of stoc%holders (4) (edee#able co##on stoc%

:d; $or#al validit. of restrictions :A; Unauthorized /ransfers :a; Certificate indorsed in blan%1 3hen ,uasi'negotiable :b; $orged transfers Santa#aria v. 4ong%ong ? Shanghai +an%ing De los Santos v. !cGrath8 Att.. General

:B; Collateral /ransfers Chua Guan v. Sa#ahang !agsasa%a

:E; &on'transferabilit. and ter#ination of #e#bership in non'stoc% corporations Chapter F*I. DISSOLUTION :5; Cause of Dissolution
(a) E0piration of original8 e0tended or shortened ter# (b) *oluntar. dissolution 3hen no creditors affected

"age 55 of 56

(c) *oluntar. dissolution 3hen creditors affected (d) Dissolution b. #inorit. in close corporations

$inancing Corporation v. /eodoro

(e) $ailure to organize and co##ence business1 cessation of business for E .ears (f) Involuntar. dissolution (1) (evocation of certificate of registration b. SEC (2) @uo 7arranto proceedings

(epublic v. +isa.a -and /rans. Co.

:>; Effects of Dissolution1 7inding up and li,uidation :a; -oss of uridical personalit. JG &ational Abaca Corp. v. "ore

:b; E0ecutor. contracts :c; !ethods of li,uidation :d; Distribution of assets after pa.#ent of debts China +an%ing Corp. v. !ichelin ? Co. (epublic v. !ars#an Develop#ent /an Chiong +io v. CI(

:A; Distribution of Assets of &on'stoc% corporations Chapter F*II. CORPORATE COMBINATIONS :5; "urposes of Co#binations1 !ethods :>; !erger and Consolidation :a; &ature and distinction :b; )nl. de facto #erger under Corporation -a3 :c; E0press authorit. to #erge granted b. code1 re,uire#ents :d; (e#edies of creditors and dissenting stoc%holders1 appraisal right :A; Sale of substantiall. all assets :a; -egal re,uire#ents "age 5> of 56

:b; &o assu#ption of liabilities1 e0ceptions :c; (e#edies of dissenting stoc%holders1 appraisal right :d; Co#pared 3ith #erger and consolidation (e.es v. +louse Ed3ard J. &ell Co. v. "acific $ar#s

Chapter F*III. FOREIGN CORPORATIONS :5; Definition8 Status :>; !ethods of Entr. of Invest#ent :A; "er#itted Areas of Invest#ent :a; "artiall. nationalized areas :b; "referred areas1 incentives for invest#ent therein :c; &on'preferred areas of invest#ent :B; -egal (e,uire#ents "rior to /ransaction of +usiness :a; +)I certificate :b; SEC license to do business :c; Certificate fro# appropriate govern#ent agenc. :E; Effects of $ailure to Secure SEC license !arshall 7ells v. Elser Atlantic !utual v. Cebu Stevedoring General Gar#ents Corp. v. Director of "atents -e Che#ise -acoste v. $ernandez 4o#e Insurance v. Eastern Shipping

:6; 7hat Constitutes /ransacting +usiness !entholatu# v. !angali#an $acilities !anage#ent Corp. v. de la )sa !err.l -.nch $utures v. CA "acific *egetable )il v. Singson Aetna Casualt. ? Suret. Co. v. "acific Star -ine /op3eld !anuel v. ECED Anta# Consolidated v. CA

:G; 4o3 Courts Ac,uire Jurisdiction over $oreign Corporations "age 5A of 56

General Corp. of the "hils. v. Union Insurance

:H; -a3s Governing -icensed $oreign Corporations :I; !erger of -icensed $oreign Corporation :5K; 7ithdra3al of $oreign Corporation :55; (evocation and Suspension of -icense :5>; E0isting -icensed $oreign Corporations Chapter FIF. SPECIAL AND MISCELLANEOUS PROVISIONS :5; Educational corporations :a; Stoc% or non'stoc% :b; /e#porar. per#it :c; Govern#ent recognition :d; Special re,uire#ent to be Universit. :e; Incorporation under the Code :f; Educational foundations :>; (eligious corporations :a; Corporation sole :b; (eligious societies :A; Close Corporations :B; !iscellaneous "rovisions

"age 5B of 56

GUIDE QUESTIONS: Chapter I. I&/()DUC/I)&

(1) 7hat are the %inds of corporationsD Differentiate the# fro# each other. (2) 7hat advantages does a corporation have over other %inds of business organizationsD 7hat are

the disadvantages of a corporationD Chapter II. C-ASSI$ICA/I)& )$ "(I*A/E C)(")(A/I)&S

(1) Differentiate stoc% and non'stoc% corporations. (2) 7hat is the restrictions of the different provisions of the Corporation Code 3ith respect to these >

corporationsD :e.g.8 b.'la3s8 ,uoru#8 etc.; Chapter III. $)(!A/I)& < )(GA&ICA/I)&

''' !a%e a table.

(1) 7hat are the statutor. re,uire#ents in the for#ation of a corporationD (2) 7hat are the steps in the for#ation of a corporationD (a) 7hat are the re,uired contents in the articles of incorporation :A)I;D

:A; 7hat is a de facto corporationD Distinguish this fro# a corporation b. estoppel. (4) Can a corporation transact business as a de facto corporation 3hile the application is still pending at the SECD :cf. 4all v. "iccio; (5) 7hat corporate officers are re,uired b. la3D (6) 7hen does a corporation9s corporate po3ers ceaseD Chapter I*. C)(")(A/E E&/I/=
(1) (2) (3) (4) (5)

7hat is the theor. of corporate entit.D 7hen can the veil of corporate entit. be piercedD 7hat are the effects of piercing the veil of corporate fictionD 7hat is a parent'subsidiar. relationshipD 7hen #a. it be disregarded b. the courtsD 7hat are the criteria b. 3hich a subsidiar. can be considered a #ere instru#entalit. of the parent co#pan.D :cf. Garrett v. Southern (ail3a.;

Chapter *. "()!)/E(9S C)&/(AC/S "(I)( /) I&C)(")(A/I)&

(1) Under 3hat circu#stances can a pro#oter be held liableD 7hen is he e0e#pt fro# liabilit.D (2) 7hen can a corporation assu#e the obligations and liabilities of a pro#oterD

Chapter *I. C)(")(A/E ")7E(S

(1) (2) (3) (4) (5)

7hat are the corporate po3ers conferred b. la3D 7hat are the i#plied po3ersD 7hat is the ultra vires doctrineD 7hat are the legal conse,uences of ultra vires actsD 7hat is the ,uoru# re,uire#ent for2 :a; +oard #eetings "age 5E of 56

:b; Stoc%holders9 #eetings :6; 7hat is the nu#erical re,uire#ent for2 :a; Election of directors :b; (e#oval of directors :c; !erger and consolidation (d) A#end#ent of b.'la3s (7) 7hat are the devices affecting control of the corporationD Distinguish the# fro# each other. Chapter *II. C)&/()- A&D !A&AGE!E&/ )$ C)(")(A/I)&
(1) (2) (3) (4) (5)

7hat are the A LlevelsM of corporate control < po3erD 7hat are the po3ers of the +)DD 7hat are the po3ers of the corporate officersD 7hat are the po3ers of the stoc%holdersD 7hat are the various devices used to 3rest<preserve controlD Differentiate the# fro# each other. 7hat are their advantages < disadvantagesD

"age 56 of 56