COURSE CONTENT/SYLLABUS:

I. NATURE AND FORMATION

1. Definition of a corporation -
SEC. 2. Corporation Defined. – A corporation is an artificial being created by operation of
law, having the right of succession and the powers, attributes, and properties expressly
authorized by law or incidental to its existence.

2. Tri-Level Existence in the Corporate Setting

1-The corporation is a juridical entity or juridical function which views the relationshipbetween State and
corporation.

2-The corporate setting provided for contractual relationships on the following:

a. Between the corporation and its agents to act in the real world such as itsdirectors and officers
(governed suppletorily by Law on Agency)

b. Between the corporation and its shareholders/membersc. Between and among the shareholdersd.
Between the corporation and third parties (essentially governed by contract lawand labor law when
it comes to relationship with officers and employees)
3-Corporation is a going concern. Thus, the corporation becomes in its operation, abusiness economic
unit, a business enterprise.

A. NATURE OF CORPORATIONS
1. Corporate Attributes
a. Theories in the formation of a corporation
⬜ Tayag vs. Benguet Consolidated, 26 SCRA 242 (1968)
⬜ Ang Pue & Co. vs. Secretary, 5 SCRA 645 (1962)
1. Theory of Concession
2. Theory of Enterprise Entity

b. Creature of the Law

1. Constitution - Section 16, Article XII of the Constitution
⬜ NDC vs. Phil. Veterans Bank, 192 SCRA 257 (1990)
⬜ Feliciano vs. COA, GR. No. 147402, January 14, 2004
2. Civil Code - Articles 44 and 45 of the Civil Code
3. Franchise
⬜ JRS vs. Imperial Insurance, 11 SCRA 634 (1964)
c. Advantages and Disadvantages of the Corporate Form

d. The Corporate entity compared with other business endeavors

1. Sole Proprietorship
⬜ Mangila vs. Court of Appeals, 435 Phil. 870, 886 (2002)
2. Partnership (Article 1768, 1772 and 1775 of the Civil Code)
⬜ J. M. Tuazon vs. Bolaños, 95 PHIL 106 [28 May 1954]
3. Joint Venture
⬜ Aurbach vs. Sanitary Wares, 180 SCRA 130 (1989)
⬜ Primelink Properties vs. Lazatin, et.al., G.R. No. 167379, June 27, 2006

4. Business Trusts (Article 1441 of the Civil Code)

e. The Corporation and the Bill of Rights

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

2. Classification Of Corporations
a. In relation to the State
- Public
- Private
⬜ National Coal Co. vs. CIR, 46 PHIL 583 (1924)
⬜ Philippine Society vs. COA, GR No. 169752 (2007)
- Quasi-Public
⬜ Feliciano, supra
⬜ Decision in Liban vs. Gordon, GR No. 175352, July 15, 2009 and Resolution of January 18, 2011

b. As to place of incorporation
- Domestic
- Foreign

c. As to nationality (Section 140 of the Corporation Code)

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

1. Exploitation of Natural Resources

⬜ Register of Deeds vs. Ung Sui Si Temple, 97 PHIL 58 (1955)

2. Public Utilities - Section 11, Art. XII of the Constitution

⬜ People vs. Quasha, 93 PHIL 333 (1953)

3. Mass Media - Section 11 (1), Art. XVI of the Constitution

4. Advertising Industry
- Section 11 (2), Art. XVI of the Constitution

5. War-Time test
⬜ Filipinas Compania vs. Christern, 89 PHIL 744 (1952)

6. Grandfather Rule

d. As to purpose of incorporation
- Municipal
- Religious
- Educational
- Charitable, Scientific or Vocational
- Business Corporation

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

- One Person Corporation

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

- Stock
- Non-Stock (Sections 87 and 88 of the Corporation Code)
⬜ CIR vs. Club Filipino, 5 SCRA 321 (1962)
 g. As to relationship of management and control
- Holding company
- Affiliate company
- Parent and subsidiary company

h. Close Corporations
- Definition (Section 96 of the Corporation Code)
- Articles of Incorporation Requirements (Section 97 of the Corporation Code)
- Pre-emptive Rights (Section 102 of the Corporation Code)
- Amendment (Section 103 of the Corporation Code)

B. FORMATION OF CORPORATIONS
1. Organizing the Corporation
a. Promoters (Section 2 [r] of the Revised Securities Act [BP 178])
(Sections 60 and 61 of the Corporation Code)

⬜ Cagayan Fishing Development vs. Sandiko (65 PHIL 223 [1937])

⬜ Rizal Light & Ice Co. vs. Municipality, 25 SCRA 285 (1968)
⬜ Caram, Jr. vs. CA, 151 SCRA 372 (1987)

b. Subscription Contracts
(Sections 60 and 72 of the Corporation Code)
⬜ Trillana vs. Quezon College, 93 PHIL 383

i. Purchase Agreement
⬜ Bayla vs. Silang Traffic, Co., 73 PHIL 557 (1942)

ii. Pre-Incorporation Subscription

(Sec. 61 of the Corporation Code)
- Offer Theory
- Contract Theory

iii. Release from subscription obligation

⬜ Velasco vs. Poizat, 37 PHIL 802
⬜ PNB vs. Bitulok Sawmill, Inc., 23 SCRA 1366

2. Formalities in Organizing
a. Generally
⬜ Government of the PI vs. Manila Railroad, 103 PHIL 757 (1929)
⬜ Rural Bank of Salinas vs. CA, 210 SCRA 510 (1992)

b. Articles of Incorporation
1. Procedure and Documentary Requirements
- As to contents and form (Section 14 and 15)
-As to corporate name (Section 18)
⬜ Red Line Transit vs. Rural Transit, 60 PHIL 549 (1934)
⬜ Philippine Insurance vs. Hartigan, 34 SCRA 252 (1970)
⬜ Universal Mills vs. Universal Textile, 78 SCRA 62 (1977)
⬜ Ang mga Kaanib sa Iglesia ng Dios kay Kristo Hesus vs. Iglesia ng Dios kay Cristo Hesus, GR No.
137592, December 12, 2001

2. As to purpose (Section 14 [2])

⬜ Uy Siullong vs. Director, 40 PHIL 514 (1919)

3. As to principal office (Section 14 [3])

⬜ Clavecilla vs. Antillon, 19 SCRA 379 (1967)
 4. As to Corporate Term (Section 11)
⬜ Alhambra Cigar & Cigarette vs. SEC, 25 SCRA 269 (1968)
⬜ Benguet Consolidated vs. Pineda, 98 PHIL 711 (1956)

5. As to number and residency of Incorporators (Section 10)

6. As to minimum capitalization (Section 12)

7. As to subscription and paid-up requirements (Section 13)

8. Grounds for Disapproval (Section 17)

⬜ Asuncion vs. De Yriate, 28 PHIL 67 (1914)

9. Commencement of Corporate Existence (Section 19)

c. By-Laws
⬜ Loyola Grand Villas vs. CA, GR No. 117188 [07 August 1997]
⬜ PMI Colleges vs. NLRC, GR No. 121466 [15 August 1997]
⬜ Pena vs. CA, 193 SCRA 7117 (1991)

a. Adoption Procedure (Section 46)

b. Contents (Section 47)
c. Amendments (Section 48)

C. RECOGNITION AND DISREGARD OF CORPORATENESS

1. Separate Juridical Personality

⬜ Santos vs. NLRC, GR No. 101699 [13 March 1996]
⬜ Stockholders of F. Guanzon vs. Register, 6 SCRA 373 (1962)
⬜ Manila Gas vs. CIR, 62 PHIL 895 (1936)
⬜ Magsaysay-Labrador vs. CA, 180 SCRA 266 (1989)
⬜ Good Earth vs. CA, 194 SCRA 544 (1991)

2. Defective Incorporation
1. De jure
2. De facto (Section 20 of the Corporation Code)
i. Rationale for the doctrine
⬜ Tayko vs. Capistrano, 53 PHIL 866 (1928)

ii. Requisites
⬜ Fernandez vs. Cuerva, 21 SCRA 1095 (1967)
⬜ Hall vs. Piccio, 86 PHIL 603 (1950)
⬜ Benguet Consolidated vs. Pineda, 98 PHIL 711 (1956).

3. Corporation by estoppel (Sec 21 of the Corporation Code)

i. Rationale for the doctrine
⬜ Asia Banking vs. Standard Products, 46 PHIL 144 (1924)
⬜ Vda. De Salvatierra vs. Garlitos, 103 PHIL 757 (1958)
⬜ Albert vs. University Publishing, 13 SCRA 84 (1965)
⬜ Lim vs. Philippine Fishing Gear (G.R. No. 136448 [1999])

3. Piercing the veil of corporate fiction

⬜ Umali vs. CA, 189 SCRA 529 (1990)
⬜ Koppel (Phil) vs. Yafco, 77 PHIL 496 (1946)
⬜ Tantongco vs. Kaisahan, 106 PHIL 199 (1959)
⬜ Robledo vs. NLRC, 238 SCRA 52 [1994]
 a. Fraud cases
⬜ Gregorio Araneta, Inc. vs. Tuazon, 91 PHIL 786 (1952)
⬜ Palacio vs. Fely Transportation Co., 5 SCRA 1011 (1962)
⬜ Panay, Inc. vs. Clave, 124 SCRA 636 (1983)
⬜ Pabalan vs. NLRC, 184 SCRA 495 (1990)
⬜ Del Rosario vs. NLRC, 187 SCRA 777 (1990)
⬜ Villia Rey Transit vs. Ferrer, 25 SCRA 845 (1968)

b. Alter ego cases

⬜ Arnold vs. Willets and Paterson, Ltd., 44 PHIL 634 (1923)
⬜ La Campana Coffee vs. Kaisahan, 93 PHIL 160 (1953)
⬜ Yutivo Sons Hardware vs. CTA, 1 SCRA 160 (1961)
⬜ Liddell & Co. vs. Collector, 2 SCRA 632 (1961)
⬜ Ramirez Telephone vs. Bank of America, 29 SCRA 191
⬜ Guatson Intemational vs. NLRC (GR No. 100322 [1994])
⬜ Concept Builders, Inc. vs. NLRC (GR No. 108734 [1996])

c. Equity cases
⬜ TESCO vs. WCC, 104 SCRA 354 (1981)
⬜ AD Santos vs. Vasquez, 22 SCRA 1158 (1968)

4. Due Process
⬜ McConnel vs. CA, 1 SCRA 723 91961)
⬜ Emilio Cano Enterprises vs. CIR, 13 SCRA 291 (1965)
⬜ NAMARCO vs. Associated Finance Co. Inc., 19 SCRA 962
⬜ Jacinto vs. CA, 198 SCRA 211 (1992)
⬜ Arcilla vs. CA, 215 SCRA 120 (1986)
⬜ AC Ransom Labor Union vs. NLRC, 142 SCRA 269
⬜ Lim vs. NLRC, 171 SCRA 328 (1989)
⬜ De Guzman vs. NLRC, 211 SCRA 723 (1992)

5. Anti-Trust Issues
⬜ Garcia vs. Executive Secretary (G.R. No. 132451 [1999])
⬜ Standard Oil Co. vs. US, 221 U.S. 1 (1910)