Note 12 – 10 -21: (vessel is under maritime law) Vessel take in consideration of 3

factors,
1 vessel must utilize a motor power.
2 it must be used as a means of water transportation as
3. must operate as a common carrier.

Vessel is a personal property (a special kind by reason of its value and its
registration requirements) A by nature real property because it must be
registered.
Hypothecary doctrine of limited liability. Will not apply if vessel is insured.

Memorize as when limited liability will apply.

Collision – there must be no fault from ship owner. Article 643.

Whatever kind of limited liability cannot be invoked if there is (?? Negligence)

What are not required to be registered. Warships, Bankas or sailboats, not

motorized.

Marina has 2 functions: 1. it is in charge of the issuance of public convenience as

long as it is Philippine registered vessel.
2. It is also the one that issues other kinds of certificate and licenses.

Even if vessel is personal property, if it is subject to chattel mortgage (can be

registered in marina or registry of deeds).
Yangco vs Lacerna.. There is already a complete loss of the vessel. It was
established that the ship captain was negligent because of overloading.. After it
was determined Yangco invoked limited liability. SC explained, while 567 makes
ship owner liable, moot and academic Yangcos exercise of limited liability and
right of abandonment because the vessel is completely lost.

If you want to invoke limited liability you may do so even if there is only 10% loss.
But must establish that you are not concurrently negligent.

In the case of Heirs of amparo delos santos vs CA, there is claim for damages,
there was overbooking and overloading, the difference is they were already
notified of typhoon, the passengers still boarded the ship. And vessel continued
the voyage. Late voyage because of unregistered loading of cargoes and
passengers.
The lower court found the vessel not guilty of negligence. But revered by higher
courts. While the limited liability rule can apply to death and injury of passengers,
however the court did not allow in this case to apply because there finding of
negligence on the part of shipowner and ship agent. Because they should have
questioned the 4 hour delay in setting sail. 2-4 pm no knowledge of storm, but 6
pm there was already knowledge of storm.
The limited liability will not apply to 3rd parties 838? Liability of death and injury??

If all claims are collated if value is enough to pay death and injury? (28 mins
check)

Persons participating in maritime commerce

Shipowners shipaganet captains etc

Shipowner and shipagent.

The liability of shipagents is solidary with shipowner unlike in civil code. If

shipagent is negligent, shipowner cannot invoke limited liability.

Appointment of shipagent is always revocable.

Can shipagent discharge duties of captain? Yes he can also be the captain.

If not for a definite period he can discharge them anytime. 37 mins. When can he
discharge anytime? Insubordination in serious matters, drunkenness, robbery,
theft, 2 more.

Captains and masters of the vessel.

Responsibility of captain still remains even if vessel is in compulsory pilotage.

The captain still has to be in charge.

Passengers statement vs captains statement, the passenger would prevail.

Captain cannot spend the night away from vessel unless for official business.

Captain will not be liable by reason of force majeur.

Can a captain enter in a contract of loan? NO. not allowed to borrow money on
bottomry. Unless he owns vessel or part of vessel, can do so in proportion of his
ownership of vessel.

Shipagent may enter in loan on bottomry, yes if provided for by stipulation.

Special contracts of Maritime Commerce

Charter parties leases in whole or in part the vessel.

Time – fixed period of time

Voyage – particular voyage

Demise or bareboat – private carrier.

Read planters products.

Charter parties include clauses which governs contract as long as not contrary to
morales, customs, laws.

Jason and paramount clause.

The cogsa will prevail? Even if there is a provision.

Maritime protest. Asked in the bar already.

When there is a Jason clause.

If there was a fire in the port and the vessel is required to be sank.. owner entitled
to gross average.

12 – 12 – 21

Shipwreck if no fault no indemnity to for damage cargoes or passengers. If there

is look for shipcaptain and shipowner or agent.

The owner of the goods are required to pay the expenses for the expected
salvage, and the amount must be paid before the goods may be delivered to
them.

If the capacity of the vessel is not sufficient, in purpose of priority, the goods of
the highest value and smallest volume will be saved.

In Jettison least valuable and the heaviest is the one jettisoned.

Arrival under stress, arrival at the nearest and most convenient port.

Must be due to lack of provisioning, accident of the sea disabling vessel to

navigate, reasonable belief?? Piracy.

Delay ship owner and ship agent liable.

Gross average no contribution sila shippers. Expenses always on the account of

shipowner and shipagent.

Salvage Law

1)Service rendered in order to save or

2) compensation due in saving a derelict.

Derelict may pertain to a vessel or cargo and abandoned not by the owner but
those who the cargoes have been entrusted.

Overland transpo abandonment vs marine transpo abandonment vs maritime

commerce abandonment vs salvage abandonment.

When a person or vessel, common carrier, picked up to a safe place a vessel or

its cargo which has been abandoned(?)

There can be a contract of salvage.

Example:
Vessel B tries to save vessel A that has been abandoned, Act of saving is one of
the concepts. Another concept is after saving vessel A, Vessel B is entitled to a
reward.

Requirement to be compensated:
1) There must be perils of the sea. (if engine trouble, there being no marine
peril, there is only towage not salvage. If contract of towage, there is still
reward but in the concept of towing fees. If salvage indemnification, the
members of the crew who made the save entitled to indemnification, unlike
to ordinary contract of carriage the fees will only pertain to owner of vessel)

2) The vessel is shipwrecked beyond the control the control of the crew and must
be abandoned by the crew

3) It must be voluntarily done.

4) It must be successful in whole or in part.

Who fixes the reward? Usually the RTC unless there is an agreement, XPN if the
agreement is excessive the RTC may alter it.

Will receive shipowner ½ captain ¼ crew ¼

.
Derelict vs res nullus:

derelict refers to vessel or cargo abandoned by the crew.. Cannot be proper

object of occupation.

Jettisoned cargos are not subject of res nullus because they are not abandoned
by owner, can still be valid object of salvage.
When res nullus the one doing the abandonment is the owners themselves. Can
be proper subject of occupation because they already have been abandoned by
the owners.

If no claims made within 3 months from the publication, it will be auctioned and
the proceeds will go to the expenses of the one who salvaged it. If within 3 years
the owners did not claim the proceeds, the proceeds will go to ½ to the crew and
½ to the government.

WARSAW CONVENTION

Applies to international transportation of air by goods and passengers. COGSA

international transportation of goods only.

MONTREAL convention updated WARSAW. In almost all instances same except

the liability.

WARSAW first treaty to address rights of passengers and carriers. Signed 1929
in Warsaw. Amended 1955 in Hague Netherlands and in Guatemala.

Warsaw convention system. Latest is Montreal Convention. Because it is a

convention it only governs the party in the treaty. August 10 2015, Philippines
ratified Montreal Convention.

Warsaw definition of international transpo and Montreal same. Apply same test in
warsaw convention. Only difference is sovereign and state.

Break is a stopover. Whether direct flight or stopover does not matter as long as
point of destination and departure are within a contracting territory. Includes
roundtrip tickets even the stopping place is not party to the convention??
(must be international).

Transportation by air, when they are in charge of the carrier whether in an

airport, boarded in the aircraft. In short taken in custody of the aircraft or airplane
within airport, or landing outside the airport. Check in already transportation by air
even if still not in plane. No more transportation by air if needed to be transport by
land or by sea. EXAMPLE: Transshipped. Even if constitutes as one contract still
not air transportation. Altho if damaged, there is presumption that it is damaged
by air, unless proved that the damage took place by traspo by land, sea or river.

If passenger is injured on board, embarking, disembarking, or when there is

delay.

Passenger if within premises within a reasonable time, if goods when received.

Same with international.
Montreal or wasrsaw cannot preclude civil laws. Can still file under civil code
even prescribed already in warsaw or montreal. Civil code 4 years.

Where are you supposed to file, it is jurisdictional. If you file in wrong place the
action can be dismissed.

You can file where the carrier is domiciled or where the carrier has a principal
office, where there is an establishment (ticketing office), or the court of the place
of destination.

Notice of claim and prescriptive period are mandatory. Cannot file without it.
Withour notice of claim cannot file an action

COGSA notice of claim within 3 days but not condition precedent

Montreal convention, when it comes to baggage must file within 3 days upon
receipt. If there is delay within 14 days from the time when baggage is received.
(refers to check in baggage)

When it comes to goods, this pertains to goods separate from passengers, not
check in baggage. It would be 7 days from delivery?or receipt?

Action for damage for court within 2 years. If basis is culpa aquillana may file for
civil code.

Overbooking is not prohibited. But carrier shall shoulder expenses.

Montreal convention

Purpose is to harmonize and modernize.

Example, travel to different states of US only, without going out of USA, in

Montral that particular carriage shall not be considered as international transpo.

Successive carriers, transported by different carriers. Example Philippines to

Portland Oregon. Usually enter int successive carrier or combined carrier
agreement. Must transfer from 1 airline to another. Pal to Tokyo, Delta airline
from japan to Seattle, Then Alaskan air to Portland. 3 carriers but considered as
1 operation and considered as international transpo. If one of the flights a
international travel all flights considered as international transpo.

If unchecked baggage, carry on, will it be attributable to common carrier, yes if

damage is caused by their agents.

Montreal After 21 days check in baggage did not arrive, passenger is entitled to
enforce against common carrier whatever rights.
Same not liable if transpo is by land sea or river.

When it comes to damage to cargo carrier is not liable if damage is because

of inherent quality, act of war or armed conflict, defective packing or act of
public authority.

Delay. General rule common carrier is liable for damage occasioned of delay
XPN if delay is caused by force majeure. Impossible to take measures.

Montreal convention pertains to contributory negligence. If carrier able to prove

damage caused because of contributory negligence whether checked or
unchecked baggage. Liability may be reduced in proportion to the contributory
negligence of owner

In 2009 the civil aviation organization provided for limits as to the liability to the
carrier when it comes to international transpo

In montreal, particualry in sections 21 and 22, Aviation is required to review limits

in liability every 5 years.

Special Drawing Rights or SDR. Are artificial currency set by international

monetary fund basis takes consideration of value US, Euro, British Pound,
Japanese Yen, Chinese?

Latest increase is December 28 2019. Article 21,

limit is 128,821 injury or death SDR

5326 delay passenger SDR
1228 delay/damage baggage
22/kg delay or damage cargo
SDR 1 = $1.38

December 31, 2019

Passenger bodily injury limited liability $178,183.92
Delay passenger $7394.53
Delay damage lost baggage $1781.55
Cargo $30.43/kg

When is the carrier not liable, if not due to negligence or when damage due to
negligence of another person.

Can you claim for so much more than the limited liability? YES. IF you have a
special declaration of a higher value.
Timely notice of claims is the same. If you do not file there is prima facie
evidence that you have received it in good condition. Must be made in writing.
Mandatory requirement for notice article 31 par 4 montreal convention.

JURISDICTION is the same, additional, damage resulting to injury or death of

passenger, law allows the case to be filed where passenger has permanent
residence or where commercial agreement was made. Nationality of passenger
not a determining factor, permanent residence is followed.

Filing of action limited or prescriptive period 7 14 21 days. Same 2 years as

warsaw.

Successive carriage same with warsaw.

Public Service Act

Example LTFRB when it comes to pamasahe.

DOE pagtaas ng kuryente.

Unless Exmpt, no public office or utility shall operate without public convenience
certificate.

Certificate of public convenience and necessity.

If transpo, if kalesa does not need certificate of public convenience.

Airships need not have certificate of public convenience. Except fixing the rates.

Common Carriers. De guzman vs CA, considered as common carrier as long as

carry for hire does not matter if for occasion.

Public convenience vs public convenience necessity, public convenience and

necessity needs special law

Prior operator
Prior applicant will apply only if all are equal?

Prior operator will prevail over prior applicant

01 – 18 – 22

REVISED CORPORATION CODE.

Section 2 definition of corporation the same. MEMORIZE.

General powers and special powers of corporation.

Incidental powers or implied powers, there if you take in consideration their

Recall franchise of corporation, the primary franchise or general franchise, theory
of concession, there has to be a law allowing them to incorporate, pertains to the
power given to the individuals to incorporate. Secondary franchise, to act as a
corporation.

Primary franchise ordinarily not transferable unlike secondary franchise or special

franchise which refers to its powers.

Doctrine of separate personality.

Corporation pierce separate fiction – fraud cases and alter ego doctrine – can be
by one person or another corporation

A B C same employees, members, board of directors, same payroll.

Fraud or alter ego.. only courts and administrative tribunal can pierce the veil of
corporate fiction.

If you pierce do you make the stock holders liable or the corporation liable?

EXAMPLE Creditor wants to hold stockholders liable, what does the law
contemplate. FRANCISCO MOTORS VS CA. sued private respondent for
balance for jeepneys. Private respondent was a lawyer, said there should be a
compensation already. Because he represented stockholders of Francisco
corporation in a legal matter. VALID? SC said obligations of shareholders not
obligation of corporation, SC upheld doctrine of separate personality, cannot
pierce veil because no showing that corporation is perpetrating fraud or injustice.
BASED on allegation of private respondent has turned the application of
corporate veil upside down, because the SC said the piercing of corporate veil
will apply only if you want the stockholders be liable for the liability of corporation
and not the other way around which is the corporation be liable for …. . . . ?

As a juridical person a corporation has a nationality and a citizenship of its own.

Aggregate test or control test or war time? Test.

Section 6, preferred shares? 60 of the outsanding shares must be owned by

filipinos and 60% entitled to vote must be owned by Filipinos. If incorporated
abroad and 60% of stocks and voting rights own by Filipinos? You do not qualify,
under foreign investement act 100% Filipino owned those nationalized chuchu, if
incorporated in the Philippines only 60%, but if incorporated outside Philippines
must be 100% filipino owned and voting rights 100%
A corporation with equity with another. Under foreign chuchu double 60 rule. Both
A and B corporation 60% of which are owned by filipinos and voting rights 60%
and board directors of both must be 60% filipinos too.
Will you add the 40%?? If you will consider the 40% for purposes of determining
the citizenship is what you call your grandfather rule.

60% of 450k 150k. . .. 73% filipino 27% Japanese.. The SEC however has
decided to to away with the strict implementation of the grandfather rule. April 14
and December 7 1993, decided to do away with grandfather rule. It adopted
control test, because 450k shares are owned by B corp and 60% of those are
owned by Japanese, no consideration anymore of the 40% of the 450k. Short of
60% therefore not filipino nationality.

Different if 60% filipino owned.

1987 constitution what are reserved only to Filipino nationals

Landmark cases 1968 lumber 1993? People vs manera? BUT in 1999 case of
ABSCBN it said that people vs malero? Lumber vs pnb only obiter dictum..
corporation has no feelings.

2005 agro? If corporation is offended party in libel or defamation case it can

recover moral damage. Civil code, limited only to libel and defamation.

Corporations cannot be held liable for crimes except if statutes include

corporations can be liable for doing or failing to do something.

Example TB 115? Trust treceipts law holds corporations liable, holding board of
directors liable.

Stock corporation, if divided by shares and distributed by shareholders, for profit ,

anything outside is non stock.

General corp,

Classification of shares, Doctrine of equality of shares, applicable to stock

corporations. No shares in non stock. Shares in stock corp, can be classified
according to privileges, restriction, rights, it must be expressly indicated in AOI,
without it, the presumption is all shares are equal. DOCTRINE OF EQUALITY OF
SHARES

Assuming there is a classification, common shares or preferred shares, par value

and no par value, shares with voting rights and without, redeemable shares under
section 6. Next section. Redeemable, founders.
Common and preferred. Common enjoy equal rights privileges and restrictions.
Distributions of assets equal. But the corporation may also issue preferred
shares, generally the preference pertain to the preference of the distribution of
dividends and distribution of assets. They are not considered as creditors, it
means if there is no unrestricted retained earnings, can only be used when
dissolved is there preference upon distribution. There must be dividends. If you
are a preferred share holder you must be always issued with par value. And as a
preferred share holder you can be deprived from your voting rights

Those referred and redeemable shares are the only once who may be deprived
of their voting rights. Common share holders generally cannot be deprived of
their voting rights, XPTN if they are founders shares, only for a limited period of 5
years??

You must always have a series of shares that have voting rights.

2/3 of members?? MAKINIG KASIIIII??

Even you are a preferred who is deprived, but may still vote under 8 instances
under section 6, these are also the instances where 2/3 concurrent vote are
required.

Voting basic right

NEXT MEETING PAR VALUE NO PAR< REDEEMABLE TREASURY.

01 22 022

If you are an owner of share of stock or your stock holding represent you
participation or interest in management of corporation. Share in form of
dividends, and inchoate interest upon winding up.

Participation visavi your share holdings equality of shares.

Doctrine of equality of shares, all shares are deemed equals specially if AOI and
certificate of stock are silent.

Assuming that you want to classify your shares, all can be common, all can be
with voting rights, all can be par all can be no par.

When made? By incorporators when incorporating because they must be

indicated in AOI

If you did not state in AOI, and you want to reclassify can you change? Yes, by
means of amending the AOI, the stockholders have the right to dissent and
withdraw their shares.
Capital stock, that will be subscribed and paid for, when law speaks of an
amount, it means that the shares that are issued are with par value, stock will be
converted in authorized capital stock. To be authorized capital stock it must have
par value, if no par value you have capital stock but you don’t have authorized
capital stock.

Example, 10M authorized capital stock, (authorized capital stock means shares
are with par value) you have 1 million shares, par value of each of your share is
10 pesos. It will be the minimum amount as to how much you will have to buy
your share, if less than par there is watering of stock.

If shares has no par value, it has no authorized capital stock but it has capital
stock. There has to be always an issued value.

No par value shares are deemed fully paid and non assessible, so if issued value
is 10 pesos and corporation said its 20 you are indebted for 10 pesos, THIS IS
NOT ALLOWED. Trust fund cannot apply because there is no more subscription?

Subscribed capital stocks are subscribed, need not be fully paid or paid up if with
par value, but if no par value they are deemed fully paid. EXAMPLE A
coprorattion issued 10 million shares, and Ms. Vallones acquired 10 shares, this
is called subscribed capital stock, now if Ms. V paid it completely, it is now fully
paid nad subscribed share, she is now entitled certificate of stock, Ms. V she now
negotiates cert of stock to Mr. A, mr. A will not be a subscriber, because he is not
an original holder, he did not acquire it directly from the corporation. Subscribed
stocks are issued shares from corporation.

Ms V, 10 shares, and they are also considered as outstanding capital stock.

Outstanding capital stock are considered as shares held other than by the
corporation, not yet considered as paid up until fully paid.

All outstanding capital are subscribed BUT Not all kind subscribed stocks are
considered as outstanding capital stock example treasury shares.

No par value must be atleast 5 pesos (under the old not less than 5). What are
the conditions for non par, 1 they are deemed fully paid and non assessible. 2
capital not less than chuchuchu? Should be used in the conduct of the
corporation.

Example B 50 shares par value subscribed 25 shares unpaid, under trust fund
doctrine corporation can sue B for the unpaid 25 shares. UNLIKE IF no par value,
B is no longer liable to corporation.

You have share of stock with par value of 10 and issued value of 20 and mr A
wants to sell/buy it for 50, this is market value. Is it actual value? Not necessarily,
the actual value will depend on how the corporation is doing, if it is doing well or
declining. Issued value should always be equivalnt if not more than par value.

PREFERRED SHARES are always issued with par value. Banks, insurance, etc
public policy requires always have par value.
FOUNDERS SHARES, must appear in the AOI, founders share are not limited
only to right to vote and be voted, they may be given other rights and privileges.
IF the privilege or tight given to founders pertain to the right to vote and be voted
upon, the law provides for a limitation, up to a maximum of 5 years only.
CANNOT be EXTENDED. From date of incorporation. What will happened after
lapse? They will be converted to common shares. ONE AMENDMENT this
exclusive right to be voted and to vote, should not be violative to anti dummy law
or foreign investment acts.

REDEEMABLE shares, issued by corporations and fully paid for but redeemed or
reacquired by corporation, there must be sufficient assets not necessarily with
unrestricted retained earnings. VS TREASURY shares which needs to have
unrestricted retained earning to be able to redeem. There is preexisting contract
with redeemable shares, it is not violating trust doctrine. When redeeming is only
pursuant to contract.

SINKING FUND, a fund set up by corporation through a deposit in a trusted bank,

gradual deposit of cash, which will be used to redeem the redeemable shares.

WHY do we issue redeemable and preferred shares, because you want to

encourage subscription, it is the initial capital.

TREASURY SHARES, are shares that has been issued and are fully paid for,
and has been reacquired by the corporation which needs to have restricted
unretained earnings. May reacquire delinquent shares. corporation will put it in
public auction, and the corporation may bid.

SECTION 10 change concept of corporation, you are allowed to incorporate

singly or jointly provided not more than 15. Corporation as single stock holder, is
one person corporation 116. Compared to previous corporation, did away with
the minimum of 5 incorporators.

Partners or person exercising profession cannot incorporate. Unlike in other

countries. 31, 15 can be incorporators 16 can be original subscribers

Section 11, old corporation has right of succession it has no right to exist
perpetually. New corporations have perpetual existence.

Revival in relation to doctrine of ??? old, if you are unable to file within the
prescribed time your application to extend corporate term, you can no longer
exist as corporation. NEW there is application for revival of corporation, will be
issued certificate of revival, you will acquire again all your rights and all your
privileges, also your duties and liabilities.

PAST?? 3 years within the date before expiration?? DOCTRINE OF

RELATIONS? If through your fault you can continue to exist but will not apply
doctrine of relations, must file for revival.

No more minimum capital stock or subscription.

Section 14 of old code now section 13. 13 contents 14 forms.

In relation to section 13, additional provision is arbitration agreement. It will give

parties the option not automatically sue right away in court but refer matter to
arbitrator section 181 rules in arbitration, you can only incorporate arbitration
provided it will involve only intra-corporate disputes. 181 arbitration cannot cover
crimes and 1 of the parties to problem is a third person.

When it comes to AOI, AOI is the charter and contractual relations of the state
with the corporation, stock holders with corporation etc. BIBLE which the
corporation exists. FIRST will appear is name. PURPOSE clause, you are
allowed to group your purposes, can be primary and secondary. 1 primary
purpose only, if other purposes not aligned allied or incidental to primary, they
can be classified as secondary purpose. ACTUALLY engaging with one of
secondary purpose. LIMITATION, secondary purposes not unlawful, unlawful if
incompatible with primary purpose. EXAMPLE primary banking, and secondary
insurance.

ALICIA gala vs AGRO? Collateral attack cannot be filed. It must be direct attack
against the purpose of corporation. SUM of money case Cannot attack validity
and legality cannot attack secondary purpose because.

For 1 person corporation, you must be a natural person, trust or estate.

01 – 25 – 22

When are you allowing those without voting rights to vote? WHEN THERE is
amendment in the AOI. Once filed, it will take effect as soon as certificate is
issued, BUT it can be impliedly approve, when there is failure of SEC to act
without fault of the corporation, and effectivity will be date of filing itself. IF
compliant with all requisite, SEC must issue within 6 months certificate approving
AMMENDMENT of AOI.
BASIC RIGHT of Corporation cannot amend everything, like names of
incorporators, if against the nature of the corporation, EXAMPLE non stock
cannot convert it into stock corporation? Cannot be amended for purpose of
impairing rights or creating obligations. IN RELATION to converting non stock to
stock, possible to convert stock into non stock corporation.

This provision in corporate name is a new provision, it must be distinguishable. If

you read provision of law, there is provision about suffixes. San Miguel
corporation vs san Miguel incorporation.

If you insist Mang Donald the SEC can hold you liable, directors liable. Does not
dissolve corporation, just needs to amend name.

Reservation of corporate name online.

Section 19 de facto corporation. Minimum requirement is a certificate of

incorporation. It is not enough that you have submitted your articles of
incorporation, THERE IS NO SUCH THING AS IMPLIED INCORPORATION only
amendment only. Considering a de facto corporation is treated as a corporation
until existence is attacked by a solicitor general in a quo warranto proceeding. 3
requisites, 1 a law creating it (cannot be a special law because there is charter), 2
attempt in good faith to incorporate, 3 ???. YOU MUST file a quo warranto
proceeding, there cannot be a collateral attack, LIKE THE LEGALITY of the
purpose it cannot be attacked collaterally.

IF you have a corporation that was dully incorporated albeit irregularly, there are
also instances where corporations that acts without or is not dully incorporated,
CORPORATION BY ESTOPPEL. Liability will extend to your personal
properties?

Example A corporation is not incorporated, liability will be like general partners, A

corporation are liable for personal capacity, cannot raise the defense of separate
personality, A, is already estopped in raising defense. IF IN GOOD FAITH A
believe it was incorporated when it was not, there is still a corporation for the
purpose of holding it liable, still will be liable BUT only up to the extent of their
share holdings in the corporation.

WHAT ABOUT 3rd persons A corporation in estoppel, entered in transaction to B,

and A was able to deliver obligation to B, and A is suing B to be held liable, CAN
B USE as defense lack of corporate personality? NO, B cannot resist
performance. B entered into a contract and has now an obligation.

INTERNATIONAL express travel inc vs CA 2020 case?

Period of 2 years, must commence operation. Under old law, there is chance
when articles of incorporation may be revoked, if it is attributable to your fault.
Under new corporation code extended to 5 years, AOI shall be deemed revoked
on the day following the 5 th year. If you commenced business and became
inoperative. The law provides that if you fail to operate for 5 consecutive years,
SEC can declare you as a delinquent corporation, you will be given by SEC
another opportunity to operate and assume business within a 2 year period. If
complied with, SEC will lift status of delinquency. If it lapses without compliance,
the SEC will revoke certificate of incorporation.

BOD, board of directors or trustees. If corporate act does not require vote of
stock holders or members it is left to BOD and trustees. SH and members
Recourse are voting? Another option is to remove Director or Trustee. As far as
exercise of corporate powers left to board.

BUSINESS JUDGEMENT RULE. No one not even the court has authority to
substitute their judgements as long as the business judgements are exercised in
good faith. Error in judgment done in good faith, that resulted in loses, still cannot
be held liable.

Are not allowed to vote in proxy in attending meetings in Board meetings. Only in
stockholders meetings. In order to be a director you must be an owner of atleast
1 share in a case of a stock corporation. Term 1 year, BOD, 3 years BOT.

During term of office you let go of share holdings, that will disqualify you from
being a member of the BOARD. Must be a shareholder the entire time.

UNDER the new code there is an independent director. Corporations that are
vested with public interest, you should have independent directors, 20% of the
members of the board. Banks, trusts, insurance companies, capitalization is 50M
and above, if you collect money from the public. Must be independent of
management and business relations that can affect his judgement.

Under old law majority must be residence, NO LONGER a residency requirement

in the new Code.

How are directors voted? They cannot be appointed or designated, nor automatic
membership.

Constituting a quorum, WHEN it comes to quorum, different, but in election, its

majority.

To be elected as director, is your presence required? NO. when it comes to stock

corporation, 1 share is 1 vote.???

Under revised corporation, you may use cumulative voting or straight voting.
Cumulative, multiply number of shares as many directors elected. Straight voting,
number of shares can give to as many directors you want to vote. If 10 shares
you still have 50 votes, you have to divide votes, you can only vote max 10??

Delinquent holders cannot vote. Where else can you be deprived to vote? If
exclusive right to vote is given to founders share holders.

1 Member is entitled to 1 vote only. In non stock corporations.

Voting in absentia, you can no longer be physically present to cast you vote. How
is this done? Video conferencing. If allowed in By laws, or allowed by majority
vote of Board of directors. If corporation involved is a normal corporation.
Because if you are a corpo vested with public interest even if there is no by laws
or majority vote, YOU MAY STILL VOTE IN ABSENTIA.

For purposes of quorum those who manifest that will vote in absentia and ??? will
be counted.

Once you have members of the board, you must also elect your officers.

What does the law require, you must have a president that is a director, a
stockholder. VICE PRESIDENT, if the vice will perform functions of pres, then the
vice must also be a director.

Treasurer must atleast be a resident of the Philippines. Secretary must be a

resident and citizen of Philippines.

Can they hold concurrent? Pres cannot be at the same time secretary or a
treasurer.

If vested with public interest, you may also choose to elect a compliance officer.

Disqualification of directors. Added crimes to which a director might have been

convicted to disqualify him. Not convicted 5 years prior, final judgement, of crime
with more than 6 years imprisonment. Must not have violated corporation code or
revised corporation code. Must have not been administrative held liable for
fraudulent activities.

When it comes to removal of directors, in business judgement rule, they may

remove with 2/3s vote of outstanding capital stock, or 2/3 members. IF without
cause it must not be for the prejudice of minority stock holders.

If an officer? Do you need 2/3 vote? NOT anymore.

There are instances by reason of removal or expiration there will be vacancies. In

case of filling up. The vacancies may be filled up only by SH when: 1, when the
cause is removal, 2, if it is by expiration of term, 3, increase in the number of
directors, and 4, (death, resigned, abandoned, sold shares) when the cause of
vacancy is due to other causes, but remaining members no longer constitute a
quorum, the stockholders will be the one that will fill it up (if there is quorum the
board MAY fill up vacancy by majority vote).

Quorum is based on the number of board not the present. Example 9 board, 1
died and 1 resigned. It will be majority of 9. You need 5 to constitute a quorum.
And in majority of 5 to elect is 3 is needed. Once you have been elected, your
term will be up to what time is left.

Another EXCEPTION is the EMERGENCY board, when there is no more

quorum, there is and urgent important matter that needs to be act on, will cause
grave and irreparable damage to corporation, the members may choose among
officers, that will constitute as temporary member of the board only for that
emergency matter. And powers and designation will cease to exist when
emergency ceases to exist or another director is elected whichever comes first.

LIABILITIES. Actions cannot be questioned. But does not mean they cannot be
held liable. 3 core duties of the board, OBEDIENCE, DILIGENCE LOYALTY, 31
32 33. Self-dealing directors, contracts between interlocking directors, and
usurpation of corporate opportunities. Effect make him jointly and solidarily liable
to corporation and stock holders in proportion to the loses,

Self dealing directors, is not bawal but is discouraged. EXAMPLE corporation by

way of resolution, bought land, and director who is selling land to corporation. No
real bargaining there will be conflict of interest. An amendment it now extends to
spouse and relatives up to 4 th degree of consanguinity and affinity. Contract is
only voidable at the option of the corporation. Contract is valid, if the presence of
director is not necessary to constitute the quorum or his vote is not necessary to
approve the act and the contract is fair and reasonable. WHAT IF his presence or
vote is necessary? Is it void? NO it can be ratified by 2/3 vote of SH or members,
provided that there is full disclosure and contract is fair and reasonable.

Corporations vested with public interest aside from 2/3 votes of SH, it will require
QUALIFIED MAJORIY 2/3 vote of board with majority of the votes constituting of
the independent directors.

Interlocking directors are like self dealing not prohibited and not invalidated by
that ground alone. No real bargaining. There are 2 corporations and both of them
having the same directors. If interest of 1 common director has substantial
interest (EXCEEDS 20% of outstanding capital stock) and his interest in
another is nominal there will be a problem. RULE is the same as that of self
dealing directors.

Business opportunity, there is DOCTRINE of corporate opportunity, usurping the

opportunity of corporation where you are a director. EXAMPLE corporation has a
parcel of land and you also have. You sold you land instead of the corporation,
the law says iff it is proven, then you will be holding in trust whatever you got from
that business and you will refund whatever you got from that business. The
corporation MUST BE ABLE TO enter into business with that opportunity. You
must stand in equal footing with the corporation.

Aside from the members of the board you can also have several committees. For
minor transactions or ordinary transactions. Under old laws it must be mentioned
in by laws. In new laws the authority to create is vested in the members of the
board. Provided that 3 of the members must be members of the board. If function
pertains exclusively to the board executive committee cannot function. Executive
committee is also protected by business judgement rule.

01 – 02 – 2022

By Laws – for own government of corporation and individuals. Internal

government of the corporation vs AOI AOI is the charter its state of being. Part of
assuming corporate function, must make by laws. Under the rules for purposes of
adoption of bylaws required vote is majority. Take note, rule is the same, adopt
bylaws with AOI. Or submit AOI and submit bylaws after. ONLY DISTINCTION
WITH OLD AND NEW in case of post adoption of bylaws the one month period
has been removed. Soon as possible. By laws should be effective upon issuance
of SEC certification. In post incorporation, once submitted bylaws, SEC will issue
certificate.

Must be consistent with AOI, not against laws must not create obligations. AOI
will prevail in conflict.

Bylaws will have an effect only on the corporation, stock holders, members,
managers, directors. BUT NO EFFECT ON EMPLOYEES, or subordinates.
Unless they have actual knowledge. Neither are 3 rd persons that have no
knowledge.

PMI colleges vs NLRC 277 452.. 3 rd party enters contract with corporation, via
chairman who is not authorized by bylaws of corporation. SC said the fact you
have authorized signatories should not and cannot bind 3 rd parties who have no
actual knowledge.

Always request for secretary’s certificate or board resolution.

The contents of bylaws, SC included the adoption of private corporations, where

stockholders may be allowed to vote by remote communication or in absentia.

It’s not compulsory, if you do not want to adopt the modes.

When it comes to amendment of bylaws, majority of directors or trustees,
majority vote of SH or members, if done by all.

In adopting there is concurrence of members or SH, when it comes to

amendment it can be done by the members of the board or members of board of
trustees, but delegation must be with approval of SH or members with 2/3 vote.
Revocation of delegation will only require majority.

In case of gokongwei, SC sustained validity in amendment of bylaws whereby

SH or members of competitive corporation is disqualified, you cannot serve two
masters at the same time.

Meetings of SH and directors, regular and special. READ CODAL OF

MEETINGS OF SH. As to when, what is included in notice, where.. in annual
meeting there is revision as to when to hold meeting. DIRECTORS MONTHLY
MEETING. SH annually. Whatever date of bylaws will be meeting of SH, if no
date will schedule after April 15 any time of the year..

Notice of meeting, 21 days, a new term is introduced, which allows sending

notice via electronic mail. Just like before notice of meeting may be waived.
Question meeting because lack of notice? If you did not receive notice and
attended it will be deemed as waiver on you part.

Special meetings, can be scheduled. But in between can still call for special
meetings.. where should it be held, ideally in the principal office of corporation,
you can hold it anywhere within city or municipality where principal business is
located.

Notice of special meetings, should be given atleast 1 week before scheduled

special meeting, can be waived.

Can board with concurrence of SH provide general waiver for meetings? NO. it is
not allowed.

Special meetings should be held but persons who are supposed to call it does
not call, can SH call? NO.. SH must go to SEC, and SEC will call for the meeting.

SH or Members are allowed to vote through proxy, remote communication or in

absentia, if allowed by bylaws, but Directors may not, but they are allowed to
attend via remote communication or in absentia.

SH to determine quorum, majority of SH of outstanding capital stock. When not in

quorum even if majority are present, WHEN matter to resolve will require
concurrent vote of 2/3.
In election of officers, for purposes of approving particular act or resolution.
Majority of numbers? Will require concurrent vote of 2/3 of outstanding capital
stock. Need 5 votes (if 9)

Amendment of AOI, majority of all members, 9 quorum 5 the required number of

vote is still 5? As opposed to entering contract, 9 quorum 5 but to adopt
resolution need only 3.

No longer the president who will preside, it will be the chairman, unless chairman
is absent.

VP? Required to be a director also and a shareholder because it will take over
presidents job.

Secured creditors, are they allowed to attend meetings? Borrow money and
secure principal obligation with shares of stocks of corpo. Will they be allowed to
attend meetings? YES but it must be dully recorded in book of corporation.

Co owner of stock, vote must consent in voting. Unless 1 is dully authorized.

Section 56?66? treasury hares have not voting rights while they remain in the
treasury.

Proxy must be in writing must be signed by the stock holder, cannot be verbal
agreement. It must be submitted to corporate secretary. It will determine if there
is a quorum. Will be valid only for a specific meeting. If specific proxy, unless it is
a continuing proxy, continuous period to vote not exceeding 5 years.

EXAMPLE, andres designated proxy, can be for a specific meeting only. It would
be different if andres entered a voting trust agreement, andres will tranfer not
only right to attend meetings and right to vote, he will transfer all other rights and
obligations. The trustee will have more rights compared to a proxy.

Andres Certificate will be cancelled and trustee will be the pro hac vice owner of
certificates. Cannot exceed 5 years unless it is subject to loan, it will end until
loan is paid.

Voting trust agreement must also be filed with the SEC. Ms. Pineda will become
the legal owner during this time, can exercise all the rights of the stock holders,
all the privileges, she can be voted as member of the board. She has right to
inspect books. Andres may vote but pineda must issue andres proxy.

How do you acquire shares, 1 by subscription or 2 purchase. Subscription,

contract where we acquire unissued stocks.
Acquisition by purchase, but not unissued shares, EXAMPLE, felizarte
subscribed for 10 shares, subsequently she offered her shares to ms alcantara,
ms alcantara will become a share holder by purchase. WHY DO WE need to
make a distinction, as for purchase, you can purchase only after incorporation. 2
you must pay in full in purchase. Must be paid shares for transfer to be
recognized by the corporation. In purchase it can be condoned by the seller.

In subscription you can subscribe in a non existing corporation. Unlike, purchase,

you do not need to pay right away. When there is subscription there can be no
condonation. There can be subscription without a contract. It need not be in
writing. Your name is in the AOI if pre incorporation, not governed by statute of
frauds. XPT if you are an original subscriber and you name appears in AOI, even
if your name does not appear in the book, then you are considered as a stock
holder.

In a subscription contract, if not pre incorporation it will be the corporation and

the subscriber. In pre incorporation, subscriber. EXAMPLE, del rosario, bona C D
E, prior to incorporation the 5 can already subscribe. Subscription contract Valid
and binding among them. Cannot withdraw without the consent of other
subscribers.

Subscription contract need not be in writing. TRUST FUND DOCTRINE,

properties, all other assets, equity in trust for the payment of all creditors.
Subscribed capital are part of trust fund doctrine. Creditors can go directly
against the unpaid subscribers.
Pre incorporation, once they have already filed in SEC, non of them are allowed
to withdraw.

Increase of capital stock once approved only until it will form part of trust fund
doctrine.

When will trust fund doctrine be violated, IF corporation condones payment of

subscription. If declared dividends without unrestricted retained earnings, if
allowed appraisal rights without unrestricted retained earnings, watering of
stocks.

Subscription of shares is the capital of the corporation.

Preincorporation subscription, despite the non existence of the corporation, the

subscription contract is valid and binding among holders or subcribers, valid for 6
months. May still withdraw provided the other subscribers consented. Provided
the AOI has not been filed with the SEC. if it has been filed already, pending
approval of contract, cannot withdraw anymore his subscription. IF 6 months
lapse while it is still pending, YOU may now withdraw without the consent of
others.
As far as considerations is concerned, shares of stock in another corpo allowed
as payment. ANO ANG BAWAL? Promissory note. AND FUTURE LABOR OR
labor yet to be performed.

Watered stocks, issued shares less than par or issued value. Violative of trust
fund doctrine.

Tangible property. Over valuation tantamount to watering of stock. Tumatanggap

ng bayad for less than its value.

Labor already performed or services already performed, are consideration,

EXAMPLE bonus for performance of services, corporation can give bonus.

Certificate of stocks, are quasi negotiable instrument, they are not negotiable
because they are not compliant with nego section 1. Quasi because, certificate of
stock may be transferred through indorse and delivery. But must be recorded in
the corporate book of accounts.

If lost stocks, you may transfer via deed of assignment of stocks, and that deed
will be recorded in the books. (stock must be fully paid, if not fully paid, transfer
will be valid only to the parties.)

Need not to be recorded yet? Only transfers are recorded in book. If shares are
unpaid, there can be no transfer in the book of corporation just yet.

China banking corporation vs CA 270 503 unpaid claims, means unpaid

subscription, not any kind of indebtedness to corporation. EXAMPLE, full paid
shares made assignment, and obtained loans from corporation. Wants to record,
assignment, corporation does not want to, SC said corpo may not refuse, unpaid
claim is the subscription and not any other indebtedness arising from other
claims.

Can stock holder be restricted from transferring shares? stocks partake as a

property, BASIC right to transfer it. EVEN IF UNPAID may still transfer. If unpaid
cannot have it acknowledge in book but still may transfer.

REMEDY ACTION FOR MANDAMUS if corpo does not want to record the
transfer, but there must be a demand initially and corporation refused.

The certificate of stock must be signed by pres or vice and secretary or assistant
sec, must be delivered to stock holder, indicate number of shares and par value
of shares, MUST be surrendered if transferee is asking to transfer in its name

BALTAZAR vs gulf case, not applicable anymore, there was partial payment of
shares. EXAMPLE 100 stocks and paid 50 shares, in baltazar, they wanted to
issue 50 certificate of stock. BUT NOW A SUBSCRIPTION CONTRACT is one
entire indivisible contract. Must pay full payment first to be able to pay full amount
of subscription. Section 33? 63? 1 whole and entire indivisible contract.

ASKED DATI SA EXAMS. A subscribed to 100 shares and paid 25% of the
amount. Corpo became insolvent. A wanted cert of stocks issued for 25%. And
refused to pay the 75% because corporation is insolvent. CORPORATION may
refuse under section 63, must fully pay subscription to be able to receive
certificate. If corporation is insolvent there is no need for call, all unpaid
subscriptions becomes due and demandable. (WAS NOT RECORDED)

Liability
.
02-02-2022

Payment of balance. General rule, unpaid subscription is not due without a call.
Cannot file action for collection for a sum of money without a call. XPN 1 when
there is a subscription contract and in subscription contract date of payment is
indicated. No need for a call. 2 nd instance is when the corporation becomes
insolvent.

What if corporation owes employee a salary, and that employee is an unpaid

subscriber. Can corporation, apply salary? Apocada case, corporation cannot
deduct salary. SC There has to be a call first, it is not due and demandable. And
if you apply, even if there is a call, you cannot deprive employee of salary.
Against labor laws. CAN THE employee with his consent agree to have his salary
used? YES.

IF 30 days have lapse frome time of call or date of payment has arrived as
indicated in subscription contract. The Shareholdings will be declared as
delinquent. Corporation will now be given remedies to be able to collect. WHAT
ARE THE REMEDIES, delinquency sale, the corporation also has an option to
file in court for sum of money. Section 68? 67? 69?

If corporation will opt for delinquency sale, the winning bidder is the one willing to
pay in full for the smallest number of shares.

If you are the delinquent shareholder, you have under the law the right to
question the legality of the sale. File complaint 6 months from said sale.

Delinquency effect, you shall not vote and you cannot be voted, cannot attend
meeting, even in proxy. Delinquent SH is not entitled to all rights except to
receive dividends. If cash dividends it will be applied to unpaid subscription, if
stock dividends it will be suspended.

IF not delinquent only unpaid, you have all the rights. Only right not available is
issuance of certificate of stock and the right to have transfer recorded.
74 scra 65 naga case, no court action of mandamus to compel, if corporation has
unpaid share and certificate has not been given? Shares transferred were unpaid
shares. corporation refused to register transfer. Shareholders filed for
mandamus, SC held it will not prosper, because shares are unpaid shares.
VALID only between the parties.

May also file an action, derivative suit, individual action, representative

suit/action.

No derivative suit in RCC, suit brought by 1 or more SH in behalf of the

corporation, to redress wrong committed against it or protect their rights,
whenever the persons who should file refused to do so or they are the ones who
will be sued.

They are recognized under RA 8799. Regarding intracorporate controversies.

Intracorporate disputes are filed in Regional Trial Courts.

Requirements to file derivative.. 1 SH must be a SH of record at the time action

was filed. 2 SH must have exerted all efforts and this exhaustion of remedies
must be indicated with particularity in the complaint. 3. There must not be an
available appraisal right. 4

DAMI WALA

03-02-2022

Closed corporations, 3 requirements indicated in AOI, all issued stocks must be

held by not more than by 20 persons. This numerical limit is mandatory. Must be
expressly indicated in AOI, 2. Indicated in AOI restriction of transfer of shares,
restrictive in the sense that the law provide right to the already existing SH to first
refuse the offer of transfer. Existing has option to refuse. EXAMPLE Andres
cannot sell share to others until offered to pre existing SH. PREEMPTIVE right it
is the corporation who is offering shares, in closed corpo it is the SH. They are
given a specific number of days to exercise right of first refusal. 3. AOI must also
indicate that the stock has not been listed in stock exchange or any kind of public
offering.

SAN JUAN Struc INC case, spouses A and B bought stock of C corporation.
Extent of sharholdings after purchasing shares are 99.866%.. they are alleging
that they are already a corporation. SC said no, does not make a closed corpo, if
3 are not indicated in AOI.

The following cannot be a closed corporation. CAN a corporation be a SH in a

closed corporation? YES it can. Must not be holding atleast 2/3 voting rights if B
corporation is not closed corpo. IF B is an ordinary corpo, it should not exceed
2/3 vote of A corporation. A corporation will cease to be a closed corporation. IF
vested with public interest, cannot be a closed corporation. The NUMERICAL
LIMIT of 20 IS MANDATORY. EXAMPLE if A is SH of B corpo a closed corpo,
and A dies, the 20th owner of stock, and has 5 compulsary heirs, if allowed the
corporation will cease to be a closed corporation. IF corporation wants to retain,
the remedy is for the heirs to designate only as 1 representative. START OF
RECORDING OR they can incorporate, the heirs of the deceased must
incorporate a closed incorporation if they form atleast 2/3.

One important thing is it can be indicated in the AOI is that the business can be
managed by the SH and not by the board of directors. They will be personally
liable and can be liable for damages. IF SH decide they will manage, and closed
corporation did not acquire liability insurance, their liability will be personal.

Another is the restriction of transfer, it is mandatory. Must appear in AOI and the
certificate of stock, this is in relation to transfer. In order to determine whether the
transferee is a purchaser in good faith, if in good faith it will have an effect as to
whether the purchase is binding. IF the restriction of transfer is there and you
opted to purchase and you are not a purchaser in good faith. This right of first
refusal can be waived, PROVIDED that there is a consent of all SH AND that
there is an amendment in the AOI, because the requirement is MANDATORY. In
which case the corporation can no longer be a closed corporation.

RELIGIUOS corporation, before one corporation, it is corporation sole if only 1

incorporator, religious can be one or more incorporator. It is not really mandatory
for religious corporations to register to incorporate. IF they do not incorporate
they will not acquire juridical personality, and the creator are the persons who will
be sued. 3 kinds Corporation SOLE, corporation aggregate, and ordinary non
stock corporation.

Corporation sole, Apostolic vicariate of PPC, Bishop Socrates is the corporation

sole, it used to be Bishop Arigo. BYLAWS is not necessary in corporation sole,
ONE PERSON corporation is also not required to adopt bylaws. TAKE NOTE of
capacity of corporation sole to acquire and dispose properties, when it comes to
disposition there must be a prior approval of RTC where the property is located,
XPN if there are guidelines in the church where corporation sole is affiliated then
that is followed.

One person corporation, Chapter 3 in special corpo, includes 1 person corpo, self
explanatory, corpo with single stock holder. SINGLY, in both instances it must be
a natural person, a trust or estate. XPN corporation sole??? IF a corporation is
engaged in trust business, JURIDICAL person not allowed. Cannot incorporate
as 1 person if your purpose is for your profession. UNLESS there is a special law
allowing it. BUT can I put up a one person corporation as a lawyer? YES if it has
nothing to do with the profession. NO MINIMUM authorized capital stock unless
there is a special law requiring it.

How does the AOI look like in OPC, must comply with section 14, ordinary AOI,
must also appear in OPC. If trust name of trustee, if estate then name of admin.
MUST HAVE NOMINEE AND ALTERNATE NOMINEE. Written consent of
nominees. IN AOI MUST include the extent and power of Nominee or alternate
nominee. Can they be changed? YES, all he needs to do is send new nominee
and alternate nominee. Must have atleast treasurer. But you can be all of them.
XPN corporate secretary, because one of the functions is to notify the heirs, the
creditors, ETC. If he designates himself as treasurer he must post a BOND and
this BOND is renewed every 2 years. Within 15 days from incorporation must
meet officers? And must submit to SEC.

Special functions of corporate secretary, in charge of minutes, everytime SH

decided on something, it must be recorded in the corporate book. Required to
notify nominee or alternate nominee in case of in capacity or death. Until a new
SH is designated or nominated by the heirs of the one person corporation.
Notifying the heirs is also one of the functions of corporate secretary. ]

The NOMINEE will notify heirs to elect new SH. The SH may decide the estate
will be the SH to be represented by the administrator. Can they withdraw after
giving consent? YES. So long as the withdrawal is done during the lifetime of
OPC.

Alternate, to replace nominee if refuses or dies.

HOW LONG? It depends, if it is only incapacity, and temporary, until such time
the single stockholder will assume his functions. In case of death or permanent
incapacity, they will continue to act as manager until heirs have designated one
of them or estate of deceased as stockholder of OPC.

OPC must submit reports, not necessarily GIS (for SEC to know if there is
change in SH etc), must submit annual financial statement, and must be audited
by independent public accountant, must report findings, comments, replies
answers.

Must report self dealing transactions. Must report 3 consecutive months, in 5

years? Will be put in delinquent status. No provision howl long and when lifted.
Then apply delinquent in normal, comply within the period of 2 years.

One person corpo and SH in case of doubt, you do not apply separate juridical
personality, you pierce, because it always incumbent upon SH to prove that his
properties and OPC are separate, and liabilities and obligations are separate. In
case of one person, ONLY the court can PIERCE BUT the burden of proof is
upon the SH. Only up to the extent of your contribution if you prove separate. 100
\M only invested 10M can only be up to 10M.

Can an ordinary corporation convert to OPC, YES, if a single SH acquired all

Stocks, May ask SEC to convert ordinary corporation to OPC, amend AOI. AND
VICE VERSA.

Dissolution, extinguishment of franchise. How does it die? 2 modes, voluntary

and involuntary. VOLUNTARY, file to SEC when no creditors affected and with
creditors affected. MAIN DISTINCTIONS. Hearing, opportunity on the part of
creditors to object and given opportunity to file case. Unlike no creditors, submit
requirements, publish, then can have certificate. 2 kinds of voluntary, TAKE note,
it will only take effect upon issuance of certificate of dissolution. Is it the same
when it comes to shortening of term? DO you need certificate from SEC? NO.
there was already participation of SEC when you filed the amendment of
incorporation from SEC. dissolved automatically the day after the term indicated
in AOI. What if SEC did not issue certificate of filing. WILL STILL be dissolved,
because after 6 months deemed approved. UNLESS if there is increase in stock,
MUST WAIT for certificate because of 25% subscription and 25% paid up.

MERGER another form of death. This dissolved corporations because of merger

or consolidation, will not proceed to winding up or liquidation.

Involuntary, SEC moto proprio, or instance of interested parties, CHECK

ROUNDS, major parts, NONE USE OF CORPORATE charter, OR continuous
inoperation, CHECK SECTION 126, final judgement of court, incorporated
through fraud, participated illegal activities, IF DE FACTO can be dissolved quo
warranto, IF you are placed in rehabilitation, RTC will appoint receiver or
management committee. EFFECT it will suspend all claims MWSS case. BUT IF
DESPITE all this cannot revive anymore, it will also recommend for the
dissolution of corporation.

EFFECTS of dissolution, can no longer continue business for what it was

established for. Will continue to exist for 3 years for winding up and liquidation.
Then will cease to exist. AFTER dissolution only sole business is to wind up.

Foreign corporations. What are foreign corporations, incorporation temp? 2

things must exist, 1 corporation must have been organized or existing other than
the laws of Philippines, 2 reciprocity rule, country must allow Philippines to do
business in country.

Provided it acquires license to do business and acquires certificate of authority

from appropriate government agency IT can do business in phil.

Section 150, if no license, 1 IT can be sued, 2 cannot sue nor can it intervene in
existing case. It will not have any personality.
Why are we requiring license, for courts to acquire jurisdiction for foreign
corporation. Local courts cannot acquire jurisdiction over personality if has no
license. WHO issues? SEC. one of requisite among others, must designate
resident agent, aent must be natural person or individual residing in Philippines,
must be good moral character and sound financial standing. CAN domestic
corporation be designated as agent? YES provided that domestic corpo has
sound financial standing and show proof that it has good standing as certified by
SEC. Example delinquent not allowed, if delisted, if OPC if not submitting
required financial report. He must be residing in Philippines IT CAN BE A
FOREIGNER as long sa a permanent residence of Philippines.

What is power of resident agent. Is limited only to receiving summons or services

of legal processes. Resident agent is not the attorney in fact of foreign corpo,
CANNOT file complaint or initiatory pleading, MUST be expressly authorized by
foreign corporation to be able to do that.

What would constitute doing business in the Philippines, mentalaton vs

mangalina. 72 phil 524? Twin characterization test, consists of substance test
and continuity test, IF foreign corporation in substance exercising the purpose
where it was created, in Philippines, and substance is continuing, then applying
characterization it is doing business in the Philippines. NOT one time transaction.
Continuing. If isolated transaction but by virtue of contract you can see that it has
intention to continue business in Philippines then it is doing business. Check
Facts and intent. In one particular case, it was held it is doing business when it
already put up headquarters in Philippines. Foreign insurance, issued 12 marine
policies, covering blah blah in Philippines, is considered doing business.
SETTLEMENT agent collects premiums from policeis issued in the Philipines is
said conducting business in Philippines.

What about if foreign corporation is selling goods, and has designated ?? it

depeds, lachines lacoste? Vs honorable Fernandez may 21, said foreign
corporation not doing business. The distributor that was supposed to distribute in
the Philippines was acting on its own account, not acting for and on behalf of the
corporation. Ako bahala sa marketing, pricing, etc. then that distributorship
agreement is not doing business in the phil.

138 scra 188 again distributorship, but in this case, distributorship agreement
was so restrictive, that the distributor only distributes, but the terms is in
accordance of what the foreign corporation dictates, THIS is doing business in
the Philippines.

Foreign investment act of 1991, doing business definition enumeration not

exclusive. When you solicit orders, entering contract of servicese, opening offices
with liason officer, appointment of distributorship but take into account of the
case. Representative for 180 days.
The following is not doing business. Mere investment in domestic corporation.
Exercise of right of shareholder in domestic corporation ex. business not
nationalize activity. If you simply made a publication or advertised in phil but not
doing business, but those who wants to do business must go to your country.

What are the rules that will govern the laws of country where it was incorporated.
The laws of country where created will be followed, rights of SH, intracoporaate,
foreign laws will be followed.

Sect 149 allows foreign corporations to merge or consolidate with domestic

corpo, mergers of corporations in country where they were ???? Example, A
corporation foreign japan, doing business in Philippines, has license, A corpo
merger with another foreign corpo in japan, A Licensed became the absorbed
corporation, can the suriving perform business in phil? NO, the absorbed
corporation must withdraw licens, and suriving must apply new license.

Foreign corpo allowed to sue even if no license, if to protect intellectual property.

Provided that, subject to reciprocity rule.