CORP.

LAW OUTLINE 3 (RCCP)

Prof. M.I.P. Romero

CORPORATION DE JURE, DE FACTO, AND BY ESTOPPEL

1) De jure corporations –Sec. 18, par. 3;

Requisites, powers, liabilities, validity

2) De facto corporations – Sec. 19

- DISTINGUISH from de jure corps.

- Requisites, basis, powers, rights, liabilities, validity

Hall v. Piccio (1950) 86 Phil. 603

Municipality of Malabang v. Benito (1969) 27 SCRA 533

3) Corporation by Estoppel – Sec. 20

- Rationale, liabilities, validity

- Rule 3, Sec. 15 of the 2019 amendments to the 1997 Rules of

Civil Procedure

“Section 15. Entity without juridical personality as defendant. - When

two or more persons not organized as an entity with juridical personality
enter into a transaction, they may be sued under the name by which they
are generally or commonly known.

“In the answer of such defendant, the names and addresses of the
persons composing said entity must all be revealed.”

Chiang Kai Shek School v. CA (1989) 172 SCRA 389

Lim Tong Lim v. Phil. Fishing Gear (1999) 317 SCRA 728
Pioneer Insurance v. CA (GR 84157) 175 SCRA 668 (1989)
Int’l Express Travel v. CA (2000) 343 SCRA 674
Paz v. New Int'l Environmental Universality, Inc. (April 20, 2015)
CLASSES OF CORPORATIONS UNDER THE RCCP

1. Sec. 3, 86, 87--- stock and non-stock corporation

2. Other classes of corporations under the RCCP:

One Person Corp. – Sec. 116

Close corporation – Sec. 95
Special corporations – Educational, Religious (Title XIII)
Foreign corporations --- Sec. 140

Others: subsidiary (wholly-owned v. majority owned), affiliate,

parent/holding company, joint venture corporation, open vs.
close, lay vs. religious, eleemosynary vs. civil corp., etc.

GOVERNED primarily by specific titles, then suppletorily by the

other applicable provisions of the Corp. Code

CREATION OF CORPORATION

1) Steps in incorporation

2) Sections 5, 10 –14

Know the salient points of the ff:

* SEC Memo Circ. No. 16, series of 2019 (Guidelines on
Number and Qualifications of Incorporators under the RCCP)

* SEC Memo Circ. No. 6, series of 2016 (Omnibus Guidelines

on Principal Office Address; Address of Each Incorporator, Director,
Trustee, Member)

* SEC Memo Circ. No. 7, series of 2019 (Guidelines on

Establishment of a One Person Corporation)

3) Name of corporation – Sec 17, 18, 14 par Tenth

 * SEC Memo Circ. No. 13, series of 2019 (Amended Guidelines
and Procedures on Use of Corporate & Partnership Names) Know
salient points, specifically the distinguishabilty test vs. the likelihood of
confusion test.

Republic Planters Bank v. CA GR 93073 Dec. 21,1992

Carebest Int’l v. SEC G.R. 215510 (Mar. 16, 2015)
and CA-GR SP No. 104364 ( Sept. 13, 2013)

4) Purpose (s) - primary and secondary

5) Term – Sec. 11 on default term, revival of term, change in corp. term

* SEC MC No. 23 s. 2019 – (Guidelines on the Revival of Expired

Corporations) Know salient points

6) Residence of corporation -
Young Auto Supply Co. v. CA (1993) 223 SCRA 670

7) Nationality requirements ---

7.a) - pertinent provisions of the 1987 Constitution

- meaning of CAPITAL under Sec. 11, Art. 12 of Constitution

Gamboa v. Teves, et al June 28, 2011 and Oct. 9, 2012

SEC Memo Circ. No. 8, s2013 (Guidelines in Fil-Foreign ownership)
Roy v. Herbosa Nov. 22, 2016 and April 18, 2017

7.b) R. A. 11659 amending the Public Service Act

- Know the salient features
- Relate to Gamboa v. Teves and Roy v. Herbosa cases

*** Public utilities subject to 40% cap under the 1987 Constitution:
1) distribution and transmission of electricity
2) petroleum pipeline transmission systems
3) water distribution systems
4) seaports
 5) public utility vehicles (includes TCN and TVNS)

*** EXCLUDED from “public utilities”. Thus up to 100% foreign:

1) telecommunications
2) domestic shipping
3) railways and subways
4) airlines
5) expressways and tollways
6) airports

7.c) Know the salient features of the ff:

--- R.A. 11595 (effectivity date Jan. 25, 2022) further liberalizing the
retail trade in the Philippines)
--- R. A. 11647, amending the FIA (signed into law March 2, 2022)
-- Foreign Investments Act (FIA) of 1991, as amended (general)
--- other laws imposing maximum foreign equity

7.d) Definition under the FIA and the RCCP

--- “Philippine national” under the FIA

--- Phil. corporation under the RCCP
--- Foreign corporation under the RCCP

7.e) Control Test v. Grandfather Rule

Narra Nickel Mining v. Redmont April 21, 2014 and Jan. 28, 2015
(see DISSENTING OPINION of J. Leonen)

7.f) Nationality of corporation sole

Roman Catholic Apostolic Admin. of Davao (102 Phil.596)

8) Amendment of A/I – Sec. 15, 16, Relate to:

Sec. 35 (d) – power to amend
Sec. 6 – voting rights of non-voting shares
Sec. 80 (a) --- appraisal right

Phil. Trust Co. v. Rivera 44 Phil. 469 (1923)

Marcus v. RH Macy 74 N.E. 2d 228 (1947)
Iglesia Evangelica v. Bishop Lazaro (G.R. 184088, July 6, 2010)
 (see dissent of J. Carpio)

INTERNAL ORGANIZATION OF CORPORATIONS

1) By-laws – Sec. 35 (e); Secs. 45- 47, 119

a) Concept of by-laws
b) By-laws vs. Articles of Incorporation
c) Contents of by-laws
d) Procedure for adoption – before and after incorporation
e) Effectivity
f) Requisites for validity
g) Binding effect of by-laws
h) Amendment of by-laws and effectivity date
i) Delegation of power to amend B/L – votes required
j) Revocation of delegated power – votes required

Cases: Loyola Grand Villas v. CA (1997) 276 SCRA 681

Gokongwei Jr. v. SEC, et al. 89 SCRA 336 (1979)
Grace Christian HS v. CA (GR 108905; Oct. 23, 1997)
Salafranca v. Philamlife Homeowners Asso. 300 SCRA 469
Fleischer v. Botica Nolasco (1925) 47 Phil. 583
PMI Colleges v. NLRC 277 SCRA 462 (1997)
Sawadjaan v. CA 459 SCRA 516 (2005)
SMC v. Mandaue Packing Products 467 SCRA 107 (2005)
Long v. Basa G.R. 134963 - 64 (Sept. 27, 2001)

2) Commencement of Business ---- Sec. 18, 21