New Era University

COLLEGE OF LAW
Quezon City

CORPORATION LAW (BUSINESS ORGANIZATION II1

2nd semester, AY 2018-2019

COURSE CONTENT:

I. NATURE AND FORMATION

1. Definition of a corporation - Section 2 of the Corporation Code
2. Tri-Level Existence in the Corporate Setting

A. NATURE OF CORPORATIONS

1. Corporate Attributes

a. Theories in the formation of a corporation

Tayag vs. Benguet Consolidated , 26 SCRA 242 (1968)
A n g Pue & Co. vs. Secretary, 5 SCRA 645 (1962)

1. Theory of Concession
2. Theory of Enterprise Entity

b. Creature of the Law

1. Constitution - Section 16, Article XII of the Constitution
NDC vs. Phil. Veterans Bank, 192 SCRA 257 (1990)
Feliciano vs. COA, GR. No. 147402, January 14, 2004

2. Civil Code - Articles 44 and 45 of the Civil Code

3. Franchise
JRS vs. Imperial Insurance, 11 SCRA 634 (1964)

c. Four attributes of a corporation

d. Advantages and Disadvantages of the Corporate Form

e. The Corporate entity compared with other business endeavors

1. Sole Proprietorship
Mangila vs. Court of Appeals, 435 Phil. 870, 886 (2002)
2. Partnership (Article 1768, 1772 and 1775 of the Civil Code)

1Case list subject to updates based on new jurisprudence

 J. M. Tuazon vs. Bolahos, 95 PHIL 106 [28 May 1954]
3. Joint Venture
Aurbach vs. Sanitary Wares, 180 SCRA 130 (1989)
Primeiink Properties vs. Lazatin, et.ai., G.R. No. 167379, June 27,
2006
4. Business Trusts (Article 1441 of the Civil Code)

The Corporation and the Bill of Rights

1. Equal Protection
Smith Bell vs. Natividad, 40 PHIL 136 (1919)
2. Unreasonable search and seizure
Stonehill vs. Diokno, 20 SCRA 283 (1967)
Bache & Co. vs. Ruiz, 37 SCRA 823 (1971)
3. Self-incrimination
Bataan Shipyard vs. PCGG, 150 SCRA 181 (1987)

Classification Of Corporations

In relation to the State

- Public
- Private
National Coal Co. vs. CIR, 46 PHIL 583 (1924)
Philippine Society vs. COA, GR No. 169752 (2007)
- Quasi-Public
Feliciano, supra
Decision in Liban vs. Gordon, GR No. 175352, July 15, 2009 and
Resolution o f January 18,2011

As to place of incorporation
- Domestic
- Foreign (Section 123 of the Corporation Code)

As to nationality (Section 140 of the Corporation Code)

Tests - Place of Incorporation Control
- Principal Place of Business
- Investment Test

1. Exploitation of Natural Resources

Register o f Deeds vs. Ung Sui Si Temple, 97 PHIL 58 (1955)
2. Public Utilities - Section 11, Art. XII of the Constitution
People vs. Quasha, 93 PHIL 333 (1953)
3. Mass Media - Section 11 (1), Art. XVI of the Constitution
4. Advertising Industry
- Section 11 (2), Art. XVI of the Constitution
5. War-Time test
 Filipinas Compania vs. Christern, 89 PHIL 744 (1952)
6. Grandfather Rule

As to purpose of incorporation
- Municipal
- Religious (Sections 109 and 116 of the Corporation Code)
- Educational (Sections 106 to 108 of the Corporation Code)
(Section 25, BP 232)
- Charitable, Scientific or Vocational
- Business Corporation

As to number of members
- Aggregate Corporation
- Corporation Sole (Sec. 110 to 115 of the Corporation Code)
Roman Catholic Administrator vs. LRC, 102 PHIL 597 (1957)
Republic vs. Villanueva, 114 SCRA 875 (1982)

As to existence of shares (Secs. 3 and 5 of the Corporation Code)

- Stock
- Non-Stock (Sections 87 and 88 of the Corporation Code)
CIR vs. Club Filipino, 5 SCRA 321 (1962)

As to relationship of management and control

- Holding company
- Affiliate company
- Parent and subsidiary company

Close Corporations
- Definition (Section 96 of the Corporation Code)
- Articles of Incorporation Requirements
(Section 97 of the Corporation Code)
- Pre-emptive Rights (Section 102 of the Corporation Code)
-Am endm ent (Section 103 of the Corporation Code)
- Restriction on Transfer of Shares
(Sections 98 and 99 of the Corporation Code)
- Agreements by Stockholder
(Section 100 of the Corporation Code)
- No Necessity of Board (Section 101 of the Corporation Code)
Dulay Enterprises, Inc. vs. CA (G.R. No. 91889 [1993])
- Deadlocks (Section 104 of the Corporation Code)
- Withdrawal and Dissolution (Section 105 of the Corporation Code)
Financing Corp vs. Teodoro, 93 PHIL 678