Corporation Law

Corporation Law Course Outline and Case Digest

Introduction
1. General
2. Kinds of Business Organization
  1. Sole Proprietor
  2. Partnership
  3. Joint Venture
  4. Corporation
3. Historical Background
Definition and Attributes – Filipinas Broadcasting v Ago Medical Center – GR No. 141994, Jan. 17, 2005 – “A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. However, the Court’s statement in Mambulao that “a corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages”
1. Advantages of the Corporate Form of business
2. Disadvantages
3. Distinctions between a corporation and partnership
4. Government power in relation to corporations
Classification of Corporation
1. Stock and Non-stock
  - Collectors v Club Filipino De Cebu – G.R. No. L-12719, May 31, 1962 (55 SCRA 312)
    - “For a stock corporation to exist, two requisites must be complied with, to wit: (1) a capital stock divided into shares and (2) an authority to distribute to the holders of such shares, dividends or allotments of the surplus profits on the basis of the shares held.”
2. Corporations Created by Special Laws
  - PNOC-EDC v NLRC – G.R. No. 79182 September 11, 1991(201 SCRA 487)
    - “The test in determining whether a government-owned or controlled corporation is subject to the Civil Service Law are the manner of its creation, such that government corporations created by special charter are subject to its provisions while those incorporated under the General Corporation Law are not within its coverage. Specifically, having been incorporated under the General Corporation Law was held to be a government owned or controlled corporation whose employees are subject to the provisions of the Labor Code.”
3. Public and Private
  - National Coal Corporation v CIR – G.R. No. L-22619 December 2, 1924 (146 Phil 583)
    - “The mere fact that the Government happens to the majority stockholder does not make it a public corporation. Act No. 2705, as amended by Act No. 2822, makes it subject to all of the provisions of the Corporation Law, in so far as they are not inconsistent with said Act (No. 2705). xxx As a private corporation, it has no greater rights, powers or privileges than any other corporation which might be organized for the same purpose under the Corporation Law, and certainly it was not the intention of the Legislature to give it a preference or right or privilege over other legitimate private corporations…xxx”
4. Ecclesiastical v Lay
5. One Person Corporation
6. Close and Open
7. Parent/Holding, Subsidiaries, and Affiliates
8. Public and Private
9. Quasi-public
10. De jure Corporation
11. De Facto Corporation
12. Corporation by Estoppel
FORMATION AND ORGANIZATION
1. Process of Incorporation
2. Contentof the Article of Incorporation
  1. Prefatory Paragraph
  2. Corporate Name
  3. Cases
    1. Red Line Transport v. Rural Transit – G.R. No. 41570, September 6, 1934
      - The incorporators “constitute a body politic and corporate under the name stated in the certificate.” A corporation has the power “of succession by its corporate name.” The name of a corporation is therefore essential to its existence. It cannot change its name except in the manner provided by the statute. By that name alone is it authorized to transact business. The law gives a corporation no express or implied authority to assume another name that is unappropriated: still less that of another corporation, which is expressly set apart for it and protected by the law. If any corporation could assume at pleasure as an unregistered trade name the name of another corporation, this practice would result in confusion and open the door to frauds and evasions and difficulties of administration and supervision. The policy of the law expressed in our corporation statute and the Code of Commerce is clearly against such a practice.
    2. Universal Mills v. universal Textile Mills – G.R. No. L-28351, July 28, 1977
      - It does not matter that the instance of confusion between the two corporate names was occasioned only by a fire or an extraordinary occurrence. It is precisely the duty of this Commission to prevent such confusion at all times and under all circumstances not only for the purpose of protecting the corporations involved but more so for the protection of the public.
    3. Lyceum of the Philippines v. CA – G.R. No. 101897, March 5, 1993
      - Under the doctrine of secondary meaning, a word or phrase originally incapable of exclusive appropriation with reference to an article in the market, because geographical or otherwise descriptive might nevertheless have been used so long and so exclusively by one producer with reference to this article that, in that trade and to that group of the purchasing public, the word or phrase has come to mean that the article was his produce. This circumstance has been referred to as the distinctiveness into which the name or phrase has evolved through the substantial and exclusive use of the same for a considerable period of time.
3. Purpos Clause
4. Principal Office
  1. Case: Clavecilla Radio System v. Antillon – G.R. No. L-22238, February 18, 1967
5. Term of Existence
6. Incorporators
  1. Qualification and Disqualification
7. Directors and Trustees
  1. Qualification and Disqualification
8. Capitalization
  1. Share of Stock and Classification
  2. Purpose of Classification
    1. Common Shares
    2. Preferred Shares
    3. Par and No-par value Shares
    4. Voting and Non-voting Shares
    5. Founder’s Shares
    6. Redeemable Shares
    7. Treasury Shares
    8. Case: Commission v. Manning – G.R. No. L-28398, August 6, 1975
9. Other matters consistent with Law
10. Restriction and Preference
11. Arbitration Agreement
12. No-Transfer Clause
13. Treasurer Elect
14. Undertaiking to Change Name
15. Execution Clause
16. Acknowledgment
17. Grounds for Disapproval
18. Commencement of Corporate Existence
  1. Case: Cagayan Fishing v. Sandiko, G.R. No. L-43350, December 23, 1937
19. Defective Formed Corporations
20. De facto Corporations
  1. Cases:
    1. Municipality of Malabang v. Benito – G.R. No. 75983, April 15, 1988
    2. Hall v. Piccio – G.R. No. L-2598, June 29, 1950
    3. Lozano v. Delos Santos – G.R. No. 125221, June 19, 1997
    4. Albert v. University Publishing – G.R. No. L-19118, June 16, 1965
    5. Chiang Kai Shiek v. CA – G.R. No. L-58028, April 18, 1989
    6. Asian Banking Corporation v. Standard Product – G.R. No. 22106, September 11, 1924
    7. Salvatierra v. Garlitos – G.R. No. L-11442, May 23, 1958
    8. International Express Travel and Tours v. CA – G.R. No. 119002, October 19, 2000
    9. Georg Grojahn v. Isnani – G.R. No. 109272, August 10, 1994
21. Organization and Commencement of Business
22. Corporate Organization
23. Commencement of Business Transaction
THE CORPORATE CHARTER AND ITS AMENDMENTS
1. The Corporate Charter
  1. The Corporate Charter Theory
    1. Cases:
      1. Sulo ng Bayan v. Araneta
      2. Caram v. CA
      3. Rustan Pulp and Paper Mills v. CA
      4. Cruz v. Dalisay
      5. Palay Inc. v. Clave
      6. Soriano v. CA
  2. Piercing the Veil of Corporate Fiction
    1. Cases:
      1. International Academy of Management and Economics (I/AME) v. Litton and Co., Inc
      2. Palacio v. Fely Transportation Inc.
      3. Marvel Bldg. v. David
      4. Yutico & Sons v. CTA
      5. Commissioner v. Norton & Harrison
      6. La Campana Coffee v. Kaisahan ng mga Manggagawa
      7. Emilio Cano v. CIR
      8. Telephone Engineering v. WCC
      9. Claparols v. CIR
      10. NAFLU v. Ople
      11. AC Ransom v. NLRC
      12. McConnel v. CA
      13. Tan Boon Bee v. Jarencio
      14. Cease v. CA
  3. When not Justified
    1. Cases:
      1. Remo Jr v. IAC – G.R. No. L-67626 April 18, 1989
      2. Del Rosario v. NLRC – G.R. No. 85416 July 24, 1990
      3. Indophil Textile Mills v. Galica – G.R. No. 96490 February 3, 1992
      4. PNB v. Ritratto Group – G.R. No. 142616 July 31, 2001
      5. Pacific Rehaus Corp. v. CA – G.R. No. 199687, March 24, 2014
      6. Yu v. NLRC – G.R. Nos. 111810-11 June 16, 1995
  4. Amendments of the Corporate Charter
  5. Special Amendments
  6. Provisions Subject to Amendments
  7. Change in Corporate Name
    1. Case: Philippine First Insurance v. Hartigan – G.R. No. L-26370 July 31, 1970
  8. Amendment of Corporate Term
    1. Alhambra Cigar v. SEC – G.R. No. L-23606, July 29, 1968
2. Board of Directors/Trustees
  1. Powers of the Board
    1. Classification of Powers
      1. Cases:
        
        Ramirez v. Orientalist
        
        Barreto v. La Previsora
  2. Qualification and Disqualification
    1. Case:
      1. Lee v. CA
      2. Detective and Protective Bureau v. Cloribel
  3. Election and Voting
  4. Other Corporate Officers
  5. Validity and Binding Effects of Actions of Corporate Officers
    1. Cases:
      1. Yao Ka Sin Trading v. CA
      2. Lopez Realty v. Fontecha
      3. Pua Casim v. Neumark
      4. Yu Chuck v. Kong Li Po
      5. Francisco v. GSIS
      6. Board of Liquidators v. Kalaw
      7. Buenaseda v. Bowen & Co.
  6. Removal and Filling Up of Vacancies
    1. Case: Valle Verde Country Club v. Africa
  7. Compensation of Directors/Officers
    1. Cases:
      1. Central Cooperative Exchange v. Tibe
      2. Western Institute of Techology v. Salas
      3. Gov’t v. El Hogar Filipino

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