Professional Documents
Culture Documents
CORPORATION LAW
a. KINDS OF CORPORATION
1. As to legal status
De Jure Corpora+on - organized in accd. With requirements of law) - substan<al compliance
De Facto Corpora+on - existence of valid law, aAempt in gf to incorporate, use corp powers)
- only colorable compliance - SEC registra<on is needed for de facto existence
2. Corpora+on by Estoppel
- applies when a non-existent corpora<on enters into contracts or dealings with 3rd persons.
- group of persons which holds itself out as corpora<on and enters into a contract with 3rd
person on the strength of such appearance cannot be permiAed to deny its existence in an
ac<on under said contract
- liable as general partners up to their personal proper<es (knowing it to be without
authority to do so) and up to their investment (if not aware of defect)
3. As to Existence of stocks
Stock Corpora+on - which have capital stock is divided into shares and is authorized to
distribute to holders of such shares dividends or allotments from surplus profits
Corporators - who compose corpora<ons, Stockholders or shareholders
Incorporators- are those stockholders or members men<oned in AOI as originally
forming &composing the corpora<on and who are signatories thereof.
Shares:
1. Common Shares- vo<ng shares
2. Preferred shares - given presence in distribu<on of dividends, corp assets (liquida<on)
3. Founders’ shares - given certain rights & privileges not enjoyed by owners of other stocks.
4. Reedemable Shares - shares which may be purchased by the corpora<on upon expira<on
of fixed period (in the nature of loan)
Non-stock Corpora+on - which does not have capital stock and does not issue stocks and
does not distribute dividends
4. As to laws of Incorpora<on
Domes+c Corp - formed, organized or exis<ng under the Philippine Laws
Foreign Corp. - formed, organized or exis<ng other than Phil. Laws
- shall not give dona<ons in aid of any poli<cal or candidate or for purposes of par<san
poli<cal ac<vity
5. As to Control
Holding Corpora+on (Parent Corpora+on) – a corpora<on which owns or is organized to own a
substan<al por<on of another company's vo<ng shares of stock enough to control or influence
the laAer's management,
Subsidiary Corpora+on – It is one which is so related to another corpora<on that the majority of
its directors can be elected either directly or indirectly by such other corpora<on
7. As to number of corporators:
CORPORATION SOLE
- organized and formed by one person which applies to religious corpora<ons for purposes
of administering and managing as trustee, the affairs, property and temporali<es of any
religious denomina<on, sect or church.
- formed by archbishop, bishop, priest, minister rabbi or other presiding elder of religious
denomina<on, sect or church.
no shares of stocks, no payment of dividend
Corpora+on Aggregate formed for the same purpose consists of 2 or more persons
6. Closed Corp. - corp.’s issued stock of all classes held by not more than 20 persons,
exclusive of treasury shares, not list in any stock exchange, all issued stocks subject to 1/
more specified restric<ons
7. Corpora+ons going public - deemed to be “going-public” when it decides to list its shares
in stock exchange or corps. Will make ini<al public offering of its shares
Corp. going private - when it would restrict the SH to certain group/ closely-held corp.
8. Real Estate Investment Trust - established in accd.w/ corpo code and SEC’s IRR w/ a
principal purpose of owning income-genera<ng real estate assets.
COMPOSITION/MEMBERSHIP of BOD
Director Trustees
Elected from among holders of stocks registered Elected by members of non-stock corp
in Corp’s books
Term: 1 yr (coterminous to his shares) Term: 3 yrs (Co terminus to his membership)
2. Not DQ
A person shall be disqualified from being a director, trustee, or officer of any corpora<on if,
within five (5) years prior to the elec<on or appointment as such, the person was:
(a) Convicted by final judgment:
1. Of an offense punishable by imprisonment for a period exceeding six (6) years;
2. For viola<ng the Code; and
3. For viola<ng Republic Act No. 8799, otherwise known as SRC
(b) Found administra<vely liable for any offense involving fraudulent acts; and
(c) By a foreign court or equivalent foreign regulatory authority for acts, viola<ons or misconduct
similar to those enumerated in paragraphs (a) and (b) above.
3. Legal Age
- Corp. officers: Pres- Director, Treasurer - resident, Sec - ci<zen & resident , By-laws
- Manner of Vo<ng: Straight, Cumula<ve Vo<ng for 1 Candidate, Cumula<ve vote by
distribu<on
- How: Personal, Proxy or Remote Communica<on/ In absen<a
- Removal :w/ or w/ out cause - SH represen<ng 2/3 of OCS or Order of SEC in mee<ng
Minority - removed only w/ cause.
Independent directors/ trustees - a person who, apart from shareholdings and fees received
from corpora<on, is independent of management and free from any business or other
rela<onship which could, could reasonably be perceived to materially interfere with the
exercise of independent judgment in carrying out the responsibili<es as a director
- cons<tu<ng at least 20% of such board of corp. vested w/ public interest
(registered w/ SRC whose equity shares listed or with assets of 50M + 200 SH,
Banks & Quasi-Banks, business vested with public interest determined by SEC)
• Piercing the corporate veil is warranted when “the separate personality of a corpora6on is
used as a means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an
exis6ng obliga6on, the circumven6on of statutes, or to confuse legi6mate issues.”
XPN: ra<fies the acts/holds the officer out as a person w/ authority to transact on its behalf.
Apparent authority
is determined by the acts of the principal and not by the acts of the agent. It involves the
ques<on of whether the officer has the power or is clothed with the appearance of having
the power to act for the corp.
A coopera6on may be bound by the leFer sent by its officer if such ac6on has been ra6fied by
the corpora6on or whose benefits have been accepted by the corpora6on.
- Contracts enter with Interlocking Directors of 2/more corp. - valid
Substan<al Interest - stockholdings exceed 20% of OCS
Business Judgment Rule: ques<on of policy or management are leq solely to the honest
decision of officers and the courts are without authority to subs<tute their judgment for the
judgment of the BOD, as long as it acts in good faith.
Self-Dealing Directors
Contracts w/ 1 Dir, their spouse, rela<ve w/in 4th Degree of Consanguinity/ Affinity: voidable
Doctrine of Corporate Opportunity - which should belong to corp.: director who seizes must
account and refund to corp all profits (Disloyalty of Director)
XPN: ra<fied by a vote of SH represen<ng 2/3 of OCS
Interlocking Directors
- a contract between two (2) or more corpora<ons having interlocking directors shall not be
invalidated on that ground alone + Absence of Fraud + Fair and reasonable contract
- If the interest of the interlocking director in one (1) corpora<on is substan<al and the
interest in the other corpora<on or corpora<ons is merely nominal, the contract shall be
subject to the provisions on self-dealing contracts insofar as the laAer corpora<on or
corpora<ons are concerned.
- Not enough jus6fica6on to pierce the veil of corporate fic6on in absence of fraud to other
public policy considera6ons.
Emergency Board
When the vacancy prevents the remaining directors from cons<tu<ng a quorum and
emergency ac<on is required to prevent grave, substan<al, and irreparable loss or damage
to the corpora<on, the vacancy may be filled from among the officers of the corpora<on by
unanimous vote of the remaining directors or trustees.
1) He was a stockholder or member at the <me the acts or transac<ons subject of the ac<on
occurred and at the <me the ac<on was filed;
2) He exerted all reasonable efforts, and alleges the same with par<cularity in the complaint,
to exhaust all remedies available under the ar<cles of incorpora<on, bylaws, laws or rules
governing the corpora<on or partnership to obtain the relief he desires;
3) No appraisal rights are available for the act or acts complained of; and
4) The suit is not a nuisance or harassment suit.
In case of nuisance or harassment suit, the court shall forthwith dismiss the case.
Liability of Directors for watered stocks - to the corpora<on and its creditors
1. Consents for considera<on less than its par/issued value
2. Consents for considera<on other than cash, valued in excess of its fair value
3. Having knowledge of the insufficient considera<on and failed to file his wriAen objec<on
to corp. secretary
Deemed as the cons<tu<on of the corpora<on, contents of the ar<cles of Incorpora<on are
binding not only on the corpora<on but also on its shareholders. Jurisprudence provides for the
ar<cles’ three (3)-fold nature:
1. A contract between the State and the corpora<on;
2. A contract between the corpora<on and its stockholders; and
3. A contract between the stockholders inter se
Rela+onship Test - is one which arises between a stockholder and the corpora<on
- status or rela<onship of the par<es
Nature of Controversy Test - not only rooted on the existence of intra-corporate rela<onship
but also the enforcement of corporate rights and obliga<ons under Corp. Code and the
internal and intra-corporate regulatory rules.
GR: Corp. Officer cannot be held liable for acts done in his official capacity
Unless he was guilty of malice or bad faith
Finding of personal liability against a director, trustee or a corp. officer requires the
concurrence of these 2 requisites:
(1) a clear allega6on in the complaint of gross negligence, bad faith or malice, fraud; and
(2) clear and convincing proof of said grounds relied upon in the complaint sufficient to
overcome the burden of proof borne by the complainant.
Absent any finding how was a corporate officer who willfully and knowingly assented to
patently unlawful acts of the laFer, he cannot be held personally liable for the corporate
liabili6es arising from the instant case.
Liability of affiliated Company is not liability of a parent corpora6on. Only when the
corpora6on personality is used and abused to avoid liability or to commit fraud, will
disregard the separate juridical personality or, the piercing the veil will apply.
It is well seFled that the mere ownership by a single stockholder or by another corpora6on of
all or nearly all of the capital stock of corpora6on is a not itself sufficient ground for
disregarding the separate corporate personality.
Corporate Power
One of the powers expressly granted by law to corpora6ons is the power to sue. As with
other corporate powers, the power to sue is lodged in the BOD, ac6ng as a collegial body.
Absence of any clear authority from the BOD, charter or by laws, no suit may be maintained
on behalf of the corpora6on. A case insStuted by a corporaSon without authority from its
BOD is subject to dismissal on the ground of failure to state cause of acSon. Such authority
may be derived from the by laws or from a specific act of the BOD.
Total outstanding capital stocks (OCS) is without dis6nc6on as to the disputed or undisputed
shares of stock as the basis in determining the presence of quorum.
Outstanding capital stock as used in the Code, means the total shares of stock issued under
binding subscrip6on agreements to subscribers or SH, whether or not fully of par6ally paid,
except treasury shares.
7. In case of Merger, Surviving or consolidated corpora6on shall be responsible and liable for
all the liabili6es and obliga6ons of each of the cons6tuent corpora6ons in the same manner
as if such surviving or consolidated corpora6on had itself incurred such liabili6es or
obliga6ons; and any pending claim, ac6on or proceeding brought by or against any of such
cons6tuent corps may be prosecuted by or against the surviving or consolidated corp.
DissoluSon
Every Corpora6on whose corporate existence has been legally terminated to con6nue as a
body corporate for 3 hears aeer the 6me when it would have been dissolved. This con6nued
existence would only be for the purposes of “prosecuSng and defensing suits by or against
it and enabling it to seVle and close its affairs, to dispose of and convey its property and to
distribute its assets.”
Any new business in which the dissolved corporaSon would engage in, other than those
for the purpose of liquidaSon, will be a void transacSon because of the non-existence of
the corporate party.
INTELLECTUAL PROPERTY
COPYRIGHT 1
- purely a statutory right, original intellectual crea+ons in the literary and ar+s+c domain
are copyrightable which are protected from the moment of their crea<on.
- infringement of copyright: good faith is not a defense in malum prohibitum
- lasts during the life<me of the author plus 50 years aqer the author’s death.
In the case of joint authorship, the economic rights shall be protected during the life<me of
the last surviving author plus 50 years aqer such author’s death.
1. Idea, procedure, system method or opera<on, concept, principle, discovery/ mere data
2. News or the event itself
Television news footage is an expression of the news. Copyright protects the manner of expression of
news reports, "the par6cular form or colloca6on of words in which the writer has communicated it"
The mere act of rebroadcas6ng without authority from the owner of the broadcast gives rise to the
probability that a crime was commiFed under the Intellectual Property Code.
Broadcas6ng organiza6ons have not only copyright on but also neighboring rights over their
broadcasts. Copyrightability of a work is different from fair use of a work for purposes of news
repor6ng.
3. Official text of a legisla<ve, administra<ve or legal nature, as well as any official transla<on
4. Work of the Government
XPN: prior approval by the appropriate government agency;
5. Statutes, rules and regula<ons, and speeches, lectures, sermons, addresses, and
disserta<ons, pronounced, read or rendered in courts of jus<ce, before administra<ve
agencies, in delibera<ve assemblies and in mee<ngs of public character.
Deriva+ve works are also protected as new works, provided that it does not affect the
exis<ng copyright on original works.
a. drama<za<ons, transla<ons, adapta<ons, abridgements, arrangements, and other
altera<ons of literary music work;
1 These include books, pamphlets, ar<cles and other wri<ngs; periodicals and newspapers; lectures,
sermons, addresses, disserta<ons prepared for oral delivery; leAers; drama<c or drama<co-musical
composi<ons; choreographic works or entertainment in dumb shows; musical composi<ons;
drawing, pain<ng, architecture, sculpture, engraving, lithography; models or designs for works of art;
original ornamental designs or models for ar<cles of manufacture; illustra<ons, maps, plans,
sketches, charts and three-dimensional works rela<ve to geography, topography, architecture or
science; drawings or plas<c works of a scien<fic or technical character; photographic works including
works produced by a process analogous to photography; lantern slides; audiovisual works and
cinematographic works and works produced by a process analogous to cinematography or any
process for making audio-visual recordings; pictorial illustra<ons and adver<sements and computer
programs.
b. collec<ons of literary, scholarly or ar<s<c works, and compila<ons of data and other
materials which are original by reason of the selec<on or coordina<on or arrangement of
their contents.
- Decompila<on, which is the reproduc<on of the code and transla<on of the forms of the
computer programs to achieve the inter-operability of an independently created computer
program with other programs, may also cons<tute fair use.
Copy right Infringement - without consent of the owner, Good faith is not a defense.
1. Directly commits infringement
2. Benefits from infringing the ac<vity
- may file injunc<on, claim actual damages and require delivery under oath for impounding,
for destruc<on, moral and exemplary damages.
MORAL RIGHTS
Right to AAribu<on - To require that the authorship of the works be aAributed to him,
(Paternity Right) in par<cular; the right that his name, as far as prac<cable, be
indicated in a prominent way on the copies, and in connec<on
with the public use of his work;
Altera<on and Non- - To make any altera<ons of his work prior to, or to withhold it
Publica<on Right from publica<on;
Right to - To object to any distor<on, mu<la<on or other modifica<on of,
Preserva<on of or other derogatory ac<on in rela<on to, his work which would
Integrity be prejudicial to his honor or reputa<on
Right against False - To restrain the use of his name with respect to any work not of
AAribu<on his own crea<on or in a distorted version of his work
Economic Rights: the author has the exclusive right to carry out, authorize or prevent the:
1. Reproduc<on of the work or substan<al por<on of the work;
2. Drama<za<on, transla<on, adapta<on, abridgment, arrangement or other transforma<on of
the work;
3. The first public distribu<on of the original and each copy of the work by sale or other forms
of transfer of ownership;
4. Rental of the original or a copy of an audio-visual or cinematographic work, a work
embodied in a sound recording, a computer program, a compila<on of data and other
materials or a musical work in graphic form, irrespec<ve of the ownership of the original or
the copy which is the subject of the rental;
5. Public display of the original or a copy of the work;
6. Public performance of the work; and
7. Other communica<on to the public of the work.
INSURANCE LAW
- agreement whereby one undertakes for a considera<on to indemnify another against loss,
damage or liability arising from an unknown or con<ngent event.
Characteris<cs:
1. Consensual /Cogni<on - acceptance of the offer must be given or known to the insured
2. Uberrimae Fidei (utmost good faith)
- must communicate to the other, in good faith, all facts within his knowledge which
are material to the contract and as to which he makes no warranty, and which the
other has not the means of ascertaining.
3. Contract of Indeminity (Non-life)
4. Aleatory Contract
5. Condi<onal contract
6. Personal contract
Classes
1. Marine -insured past events if loss could not have been known by ordinary means of communica<on
2. Fire - No<ce of Loss shall be given without unnecessary delay
3. Casualty
4. Suretyship
5. Life
6. Micro-insurance
7. Compulsory Motor Vehicle Liability Insurance - directly insures against liability. The insurer’s
liability accrues immediately upon the occurrence of the injury upon which liability depends, and
does not depend on the recovery of judgment by the injured party against the insured.
Principal Object and Purpose Test - if the assump<on of risk or indemnifica<on is the
subject or the purpose of the contract, it is Insurance.
Double insurance exists where the same person is insured by several insurers separately in
respect to same subject and interest.
Over insurance occurs when property is insured for an amount in excess of its value.
Co-insurance is a form of insurance in which the person who insures his property for less
than the en<re value is understood to be his own insurer for the difference which exists
between the true value of the property and the amount of insurance.
It is a contract through which the insurer procures a third person to insure him against loss
or liability by reason of such original insurance. In every reinsurance, the original contract
of insurance and the contract of reinsurance are separate and dis<nct from each other and
covered by separate policies.
(1) Mortgagor has separate and dis+nct insurable interest over the mortgaged property.
Mortgagor - as an owner to the extent of its value
Mortgagee or Creditor - loss of collateral of obliga<on, extent of its debt
(2) Creditor has interest suscep<ble of exact pecuniary measurement , hence he can recover
limited to the amount of obliga<on. Life Insurance Contract became a contract of Indemnity.
Concealment
- neglect to communicate that which a party knows and ought to communicate
- whether inten<onal or uninten<onal en<tles the injured party to rescind a contract
Representa<ons
- collateral inducement , need not to be wriAen, established material, substan<ally true
Warran<es
- part of contract, wriAen on policy, rider presumed to be material, strictly complied with
Incontestability Clause
GR: Insurer cannot prove the policy is void or is rescindable aqer the policy of life insurance
made payable on death of insured which has been in force for a period of 2 years from the
date of issue or its last reinstatement
XPN:
1. Lack of Insurable Interest
2. Caused of the death/ Disqualified
3. Premiums not been paid
4. Military or Naval Condi<ons
5. Vicious Fraud
6. Failed to furnish proof of Death
7. Ac<on not have been brought within the specified <me.
Leonen Cases:
The Insurance Code dispenses with proof of fraudulent intent in cases of rescission due to
concealment, but not so in cases of rescission due to false representaSons
Insurance Claim; Proof of loser : Can the insurer validly deny an insurance claim for the failure of
the insured to submit addi6onal documents which the insurer required aeer acknowledging
liability?
No the insurer cannot validly deny an insurance claim if the insured fails to submit addi6onal
documents aeer the the insurer has acknowledged its liability. When the insurer recognized
his liability to pay the claim, there is a waiver by the insurer of any defect in the proof loss.
Contract of surety stands secondary to the principal obliga6on, the surety’s liability is direct,
primary and absolute, albeit limited to the amount for which the contract of surety is issued.
The surerty’s liability aVaches the moment a demand for payment is made by the creditor.
In a contract of suretyship, one party called the surety, guarantees the performance by the
principal, of an obliga6on or undertaking in favor of another party, called the obligee.
Personal informa6on
- refers to any informa<on whether recorded in a material form or not, from which the
iden<ty of an individual is apparent or can be reasonably and directly ascertained by the
en<ty holding the informa<on, or when put together with other informa<on would directly
and certainly iden<fy an individual.
GR: Processing of sensi<ve personal info and privileged info shall be prohibited
XPN:
1. Data subject consents
2. Provided by law
3. To protect life and health of data subject which not legally/physically able to
4. Lawful and noncommercial purposes
5. Medical treatment purposes
6. Necessary for protec<on of lawful rights and interest in court proceedings.
Extraterritorial Applica<on
Act applies to the processing of all types of personal informa+on and to any natural and
juridical person involved in personal informa<on processing including those personal
informa<on controllers and processors who, although not found or established in the
Philippines, use equipment that are located in the Philippines, or those who maintain an
office, branch or agency in the Philippines
Principles Processing of
Rights of Data subject (CODE FAID) personal data
1. Correct 1. Transparency
2. Object
2. Legi<mate- Purpose,
3. Damages
4. Erasure Necessity, Balancing
5. Furnished the informa<on before entry 3. Propor<onality
6. Access
7. Informed
8. Data Portability is a right which grants a person the right to obtain a copy of his or her
personal informa+on being processed by an organiza+on or another person, if such
processing is done via electronic means, and the data is being processed in a structured
and commonly used format.