CORPORATION CODE (Batas Pambansa 68) Course Outline: 13/11/2017, 7I49 PM Page 1 of 25

CORPORATION CODE (Batas Pambansa 68)
Course Outline
I. DEFINITIONS, THEORIES & CLASSIFICATIONS (Sections 1-9)

1. Definition (Secs. 2; 45)
• Monfort Hermanos Agricultural Dev. Corp. vs. Monfort III (434 SCRA 27
[2004])
a. Four Attributes of Corporation (Sec.19)

• PNB vs. Andrada Electric & Engineering Co. (381 SCRA 244 [2002])
2. Theories on Corporate Existence and Powers
a. Theory of Concession
• Tayag vs. Benguet Consolidated, Inc. (26 SCRA 242 [1968])
b. Theory of Corporate Business Enterprise or Economic Unit

• PSE vs. CA (281 SCRA 232 [1997])
3. Private Corporations Cannot Be Created By Specific Legislative Act
▪ Sec.16, Art.XII, 1987 Constitution

• Feliciano vs. Commission on Audit (419 SCRA 363 [2004])
4. Basic Advantages of Corporate Organizations
a. Strong Separate Juridical Personality
• DBP vs. NLRC (186 SCRA 841 [1990])
❖ Exceptions
b. Limited Liability to Investors

• Edward A. Keller vs. COB Group Marketing (141 SCRA 86 [1986])
https://cdn.fbsbx.com/v/t59.2708-21/23173715_102104398288…?oh=abcfc6511208ff6c131b8e42df7207b3&oe=5A0BEA77&dl=1 13/11/2017, 7I49 PM

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c. Centralized Management (Sec.23)
d. Free Transferability of Units of Ownership
5. Main Doctrine on Separate Juridical Personality

• Land Bank of the Phils. vs. CA (364 SCRA 375 [2001])
6. Piercing the Veil of Corporate Fiction
a. Types of Piercing Application

• General Credit Corp. vs. Alsons Dev. & Investment (513 SCRA 225 [2007])
b. Distinction Between Alter Ego Piercing & Fraud Piercing

• Lipat vs. Pacific Banking Corp. (402 SCRA 339 [2003])
c. Instances of Application of the Piercing Doctrine

• Sta. Monica Industrial & Dev. Corp. vs. DAR Regional Director for Region
III (555 SCRA 97 [2008])
• Martinez vs. CA (438 SCRA 139 [2004])
d. Who Can Invoke Piercing Doctrine

• Secosa vs. Heirs of Erwin Suarez Francisco (433 SCRA 273 [2004])
e. Effects of the Application of the Piercing Doctrine
f. Nature of Piercing Doctrine – General Rule / Qualifications

• Gala vs. Ellice Agro-Industrial Corp. (418 SCRA 431 [2003])
• R & E Transport, Inc. vs. Latag (422 SCRA 698 [2004])
• Enriquez Security Services vs. Cabotaje (496 SCRA 169 [2006])
g. Tests Evolved To Determine Applicability of Piercing Doctrine

• ASJ Corp. vs. Evangelista (545 SCRA 300 [2006])
h. Fraud Piercing Cases

• Mendoza vs. Banco Real Dev. Bank (470 SCRA 86 [2005])

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• Lafarge Cement Phils. vs. Continental Cement (443 SCRA 522 [2004])
i. Alter-Ego Piercing Cases

• General Credit Corp. vs. Alsons Dev. & Investment Corp. (513 SCRA 225
[2007])
• Sicam vs. Jorge (529 SCRA 443 [2007])
• Jardine Davies, Inc. vs. JRB Realty, Inc. (463 SCRA 555 [2005])
j. Parent-Subsidiary Relationships Warranting Piercing

• De Leon vs. NLRC (358 SCRA 274 [2001])
k. Extent of Legal Effects When Piercing Applied
l. Due Process Issues

• PCGG vs. Sandiganbayan (365 SCRA 538 [2001])
7. Nationality of Corporation (Sec.123)

a. Exploitation of Natural Resources (Section 2, Article XII, 1987 Constitution)

b. Ownership of Land
• J.G. Summit Holdings, Inc. vs. CA (450 SCRA 169 [2005])
c. Public Utilities (Section 11, Article XII, 1987 Constitution)

• People vs. Quasha (93 Phil. 333 [1953])
d. War-Time Test
e.
Investment Test (Sec.3[a] and [b], Foreign Investment Act of 1991,
R.A. No. 7042)
f. Anti-Dummy Law
8. Grandfather Rule (DOJ Opinion No. 18, s. 1989)
9. Issues Pertaining to Corporation as “Person”

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a. Liability for Torts
• PCI Bank vs. CA (350 SCRA 446 [2001])

b. Liability for Crimes
• Ching vs. Secretary of Justice (481 SCRA 602 [2006])
c. Constitutional Rights
d. Non-Entitlement to Moral Damages

• Meralco vs. T.E.A.M. Electronics Corp. (540 SCRA 62 [2007])
e. Practice of Profession
• Acebedo Optical vs. CA (329 SCRA 314 [2000])
10. Classifications of Corporation (Sec. 3)

a. Stock Corporation (Sec.3)
b. Non-Stock Corporation
c. Corporation De Jure
d. De Facto Corporation (Rule on De Facto Corporations – Sec.20;
Requisites)
• Sawadjaan vs. CA (459 SCRA 516 [2005])
e. Corporation by Estoppel (Sec.21)
• Lozano vs. De Los Santos (274 SCRA 452 [1997])

• Int’l Express Travel vs. CA (343 SCRA 674 [2000])
f. Public Corporation
• Polytechnic University vs. CA (368 SCRA 691 [2001])
g. Private Corporation
• Baluyot vs. Holganza (325 SCRA 248 [2000])
h. Corporation Sole (Sec.110) (Sec.111 [2])
i. Domestic Corporation

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j. Foreign Corporation (Sec.123)
11. Corporators (Sec.5) and Incorporators (Sec.10), Stockholders and

Members
12. Shares of Stock (Sec.6)
a. General Rule on Classification of Shares / Exceptions (Sec.6)
• Castillo vs. Balinghasay (440 SCRA 442 [2004])
b. Common Shares
c. Preferred Shares
• Commissioner of Internal Revenue vs. CA (301 SCRA 152 [1999])
d. Par Value Shares

e. No-Par Value Shares (Sec.62)
f. Redeemable Shares (Sec. 8)

• Republic Planters Bank vs. Agana (269 SCRA 1 [1997])
g. Founders’ Shares (Sec. 7)
• Castillo vs. Balinghasay (440 SCRA 442 [2004])
h. Treasury Stocks (Sec. 9)
i. Escrow Shares
13. Reclassification vs. Exchange of Shares
II. ARTICLES OF INCORPORATION: INCORPORATION & ORGANIZATION OF

PRIVATE CORPORATIONS (Sections 10-22)
1. Nature of Articles of Incorporation

• Lanuza vs. CA (454 SCRA 54 [2005])
2. Corporate Name (Secs. 14[1] and 18)

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a. Guidelines in Use of Corporate Names
• Ang Mga Kaanib sa Iglesia ng Dios vs. Iglesia ng Dios Kay Kristo
Hesus (372 SCRA 171 [2001])
b. Change of Corporate Name
c. SEC Still Has Jurisdiction Over Issues Involving Corporate Names
3. Purpose Clauses (Sec.14[2]; 42)

4. Principal Place of Business

• Hyatt Elevators vs. Goldstar Elevators, Phils. (473 SCRA 705 [2005])
5. Corporate Term (Secs. 11; 19)

• NHA vs. CA (456 SCRA 17 [2005])

6. Incorporators (Sec. 10; 14[5])
a. When Incorporators Merely Nominee Shareholders
• Nautica Canning Corp. vs. Yumul (473 SCRA 415 [2005])

7. Minimum Capital Stock Required of Stock Corporations (Secs. 12 &
13)
8. Incorporating Board of Directors (Secs.14[7]; 14[6])
a. Concepts of “Capital Stocks” & “Paid-Up Capital Stock”
• Lanuza vs. CA (454 SCRA 54 [2005])
9. Procedure for Amendment of Articles of Incorporation (Secs.81; 16)
a. When Other Agency Certification Required

b. Grounds When AOI or Amendment May Be Rejected or Disapproved
(Sec.17)

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10.
Effects of Non-use of Corporate Charter & Continuous Inoperation of
Corporation (Sec. 22)
a. Non-User 2 Years

b. Non-User 5 Years
III. BY-LAWS (Sections 46-48)
1. Nature of By-Laws

• China Banking Corp. vs. CA (270 SCRA 503 [1997])
2. Period of Adoption of By-Laws (Sec.46)

• Sawadjaan vs. CA (459 SCRA 516 [2005])
3. How By-Laws Adopted (Sec. 46)
4. Effectivity of By-Laws (Sec. 46)
5. Contents of By-Laws (Sec. 47)

• Salafranca vs. Philamlife (Pamplona) Village Homeowners Association
(300 SCRA 469 [1998])
6. Binding Effect of By-Laws to Third Parties

• PMI Colleges vs. NLRC (277 SCRA 462 [1997])
7. How By-Laws May Be Repealed or New By-Laws Adopted (Sec. 48)
a. With stockholders’ or members’ approval

b. By the Board of Directors/Trustees
IV. BOARD OF DIRECTORS OR TRUSTEES, CORPORATE OFFICERS

(Sections 23-35)
1. “Centralized Management” Doctrine (The Board is the Seat of Corporate

Powers) (Sec.23)

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• Filipinas Port Services vs. Go (518 SCRA 453 [2007])
• Boyer-Roxas vs. CA (211 SCRA 470 [1992])
a. Board Must Act as a Body

• AF Realty & Dev., Inc. vs. Dieselman Freight Services Co. (373 SCRA
385 [2002])
b. Principle on Delegation of Board Power

• San Juan Structural vs. CA (296 SCRA 631 [1998])
2. Business Judgment Rule

• Phil. Associate of Stock Transfer & Registry Agencies, Inc. vs. CA (536
SCRA 61 [2007])
a. Consequences of “Bogus” Board

• Islamic Directorate of Phils. vs. CA (272 SCRA 454 [1997])
b. Remedies in Case of Mismanagement
c. Qualifications & Disqualifications of Board Members (Sec. 27)
• Lee vs. CA (205 SCRA 752 [1992])
3. Election of Directors or Trustees (Sec. 24)
a. Required Attendance at Meeting for Election
b. Manner of Election
c. Time to Determine Voting Right
d. Cumulative Voting
e. Report of Election of Directors, Trustees and Officers (Sec. 26)
• Premium Marble Resources vs. CA (264 SCRA 11 [1996])
f. No Permanent Un-elected Seat in the Board of Directors

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4. Removal of Directors or Trustees (Sec. 28)
• Raniel vs. Jochico (517 SCRA 221 [2007]); See SEC Opinion No.21,
s.2003, addressed to Atty. Juan de Ocampo
a. Vacancy
5. Vacancies in Board (Sec. 29)

• Tan vs. Sycip (499 SCRA 216 [2006])
a. Increase in Board Seats
6. Meetings of the Board
a. Types of Board Meetings
b. Notice
c. Place of Meetings

d. Quorum of Board (Sec. 25)
e. Requisites of Board Meetings
f. Teleconferencing
• Expertravel & Tours vs. CA (459 SCRA 147 [2005])
7. Compensation of Directors (Sec. 30)

• Central Cooperative Exchange vs. Enciso (162 SCRA 706 [1988])
8. Executive Committee (Sec. 35)
9. Corporate Officers (Secs. 25; 92)

a. Coverage of “Corporate Officer” for Purposes of Determining Extent of
Business Judgment of the Board to Hire and Fire

• Pamplona Plantation Company vs. Acosta (510 SCRA 249 [2006])
b. Corporate Officer Privileges
• Kwok vs. Philippine Carpet Mfg. Corp. (457 SCRA 465 [2005])

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c. The President
• Secosa vs. Heirs of Erwin Suarez Francisco (433 SCRA 273 [2004])
• Rovels Enterprises vs. Ocampo (392 SCRA 176 [2002])
d. Vice President
• Ilusorio vs. Ilusorio (540 SCRA 182 [2007])
e. Corporate Secretary
• Civil Service Commission vs. Javier (546 SCRA 485 [2008])
f. Corporate Treasurer/Comptroller
• Atrium Management Corp. vs. CA (353 SCRA 23 [2001])
g. External Auditor
• Bank of P.I. vs. Casa Montessori Internationale (430 SCRA 261

[2004])
10. Duties and Liabilities of Directors, Trustees or Officers
a. Duty of Obedience (Sec. 26)
b. Duty of Diligence (Sec. 31)
• Filipinas Post Services, Inc. vs. Go (518 SCRA 453 [2007])

c. Duty of Loyalty (Secs. 31; 34; 46)
• Gokongwei vs. SEC (89 SCRA 336 [1979])
d. Rules on Liability of Directors, Trustees & Officers (Sec. 31)
• Cebu Country Club vs. Elizagague (542 SCRA 65 [2008])

• Malayang Samahan ng Mga Manggagawa sa M. Greenfields vs.
Ramos (326 SCRA 428 [2000])
e. Liability of Corporation for Acts of Officers

• National Power Corp. vs. CA (273 SCRA 419 [1997])

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f. JSS Practice in the Banking Industry
• Security Bank vs. Cuenca (341 SCRA 781, 804 [2000])
g. Corporate Officers’ Liability for Labor Claims
• A.C. Ransom Labor Union vs. NLRC (142 SCRA 269 [1986])
• Carag vs. NLRC (520 SCRA 28 [2007]) – contrary ruling to A.C.
Ransom Doctrine
h. Dealings of Directors, Trustees or Officers with Corporation (Sec.32)

• Yao Ka Sin Trading vs. CA (209 SCRA 763 [1992])
i. Contracts Between Corporations with Interlocking Directors (Sec. 33)
• DBP vs. CA (363 SCRA 307 [2001])
V. POWERS OF CORPORATIONS (Sections 36-45)
1. Underlying Theory on Power of Corporation
2. Express Powers of Corporations (Sec. 36)
a. Power to Sue and be Sued

• BPI Leasing Corp. vs. CA (416 SCRA 4 [2003])
• Omictin vs. CA (512 SCRA 70 [2007])
b. Power to Sell Land
c. Power to Obtain Bank Loans

• China Banking Corp. vs. CA (270 SCRA 503 [1997])
3. Ultra Vires Doctrine

• Woodchild Holdings vs. Roxas Electric (436 SCRA 235 [2004])
• Atrium Management Corp. vs. CA (353 SCRA 23 [2001])

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a. Doctrine of Ratification
• Yasuma vs. Heirs of Cecilio S. De Villa (499 SCRA 466 [2006])
• National Power Corp. vs. Alonzo-Legasto (443 SCRA 342 [2004])
b. Doctrine of Estoppel

• Lipat vs. Pacific Banking Corp. (402 SCRA 339 [2003])
• People’s Aircargo vs. CA (297 SCRA 170 [1998])
c. Doctrine of Apparent Authority
• Lapulapu Foundation vs. CA (421 SCRA 328 [2004])

• Francisco vs. GSIS (7 SCRA 577 [1963])
d. How Corporation Bound or not Bound by its President

• Kwok vs. Phil. Carpet Mfg. Corp. (457 SCRA 465 [2005])
• Nyco Sales Corp. vs. BA Finance Corp. (200 SCRA 637 [1991])
e. Bank Bound by its Manager and Officer

• BPI Family Savings Bank vs. First Metro Investment Corp. (429
SCRA 30 [2004])
f. Doctrine of Laches or “Stale Demands”
• Rovels Enterprises, Inc. vs. Ocampo (391 SCRA 176 [2002])
4. Power to Extend or Shorten Corporate Term (Sec. 37)

• Alhambra Cigar vs. SEC (24 SCRA 269 [1968])
5.
Power to Increase or Decrease Capital Stock; Incur, Create or Increase
Bonded Indebtedness (Sec. 38)
6. Disposition of All or Substantially All Corporate Assets (Sec. 40)

a. Requirements
b. Effect of Non-Compliance
• Caltex (Phils.), Inc. vs. PNOC Shipping and Transport Corp. (498
SCRA 400 [2006])
7. Power to Acquire Own Shares (Sec. 41)

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a. Instances When Corporation May Buy Its Own Stocks
b. Trust Fund Doctrine
• Ong Yong vs. Tiu (401 SCRA 1 [2003])
8. Power to Invest Funds in Another Corporation or Business For Non-Primary

Purpose (Sec. 42)
9. Power to Enter into Management Contract (Sec. 44)
VI. RIGHTS OF STOCKHOLDERS AND MEMBERS (Sections 49-59, et.al.)

• Asia’s Emerging Dragon Corp. vs. DOTC (549 SCRA 44 [2007])
1. Right to Attend Stockholders’ Meetings (Sec. 50)

• Price and Sulu Dev. Co. vs. Martin (58 Phil. 707 [1933])
a. Types of Meetings (Sec. 49)
b. Place and Time of Meetings (Sec. 51)
c. Who May Call Meetings (Sec. 50)
d. Quorum in Meetings (Sec. 52)
• Tan vs. Sycip (499 SCRA 216 [2006])
2. Right to Vote

a. Nature of the Right to Vote
• Cojuangco Jr. vs. Roxas (195 SCRA 797 [1991])

b. Limitations That May Be Placed on Right to Vote (Sec. 6)

c. Right to Vote of Pledgors, Mortgagors and Administrators (Sec.
55)

• Gochan vs. Young (354 SCRA 207 [2001])
d. Voting in Case of Joint Ownership of Stock (Sec. 56)
e. Voting Right for Treasury Shares (Sec. 57)

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f. Proxies (Secs. 58; 59)
• Lee vs. CA (205 SCRA 752 [1992])
g. Voting Trusts (Sec. 59)

• Everett vs. Asia Banking Corp. (49 Phil. 512 [1927])
3. Pre-Emptive Right (Sec. 39)

a. Stock Transactions Covered by Right
b. Pre-emptive Right Not Available
4. Right of First Refusal

• J.G. Summit Holdings vs. CA (450 SCRA 169 [2005])
• Fleischer vs. Botica Nolasco (47 Phil. 583 [1925])
5. Right to Receive Dividends (Sec. 43)
a. Form of Dividends: Cash, Property or Stock
• Cyanamid Phils. vs. CA (322 SCRA 639 [2000])

• Commissioner of Internal Revenue vs. Lincoln Phil. Life Insurance Co.
(379 SCRA 423 [2002])
6. Right to Inspect and Copy Corporate Records (Sec. 74)

a. Books Required to be Kept
• NATU vs. Secretary of Labor (109 SCRA 139 [1981])
b. Rights of Inspection, Examination & Copying
• Veraguth vs. Isabela Sugar Co. (57 Phil. 266 [1932])

• Gokongwei vs. SEC (89 SCRA 336 [1979])
c. Liability for Refusal to Allow Inspection (Sec. 144)
• Gonzales vs. PNB (122 SCRA 489 [1983])
d. Right to Financial Statements (Sec. 75)

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7. Right to File Derivative Suits
a. Nature and Definition
• R.N. Symaco Trading Corp. vs. Santos (467 SCRA 312 [2005])
• Chua vs. CA (443 SCRA 259 [2004])
b. Requisites for Filing of Derivative Suit
• Hornilla vs. Salunat (405 SCRA 220 [2003])

• Gochan vs. Young (354 SCRA 207 [2001])
• Lim vs. Lim-Yu (352 SCRA 216 [2001])
• Evangelista vs. Santos (86 Phil. 387 [1950])

c. Corporation’s Retained Counsel Disqualified to Defend the Director
d. Provisions of the Interim Rules on Intra-Corporate Controversies
8. Appraisal Right
a. When Right of Appraisal May Be Exercised (Secs.11; 16; 40; 42; 77)
b. How Right Exercised
c. Summary of Instances When Right of Appraisal is Lost
d. Who Shoulders Cost of Appraisal
9.
Right to Receive Proportionately the Net Assets of the Corporation After
Dissolution
a. Stockholders and Stock Corporations
• President of PDIC vs. Reyes (460 SCRA 473 [2005])

• Ong Yong vs. Tiu (401 SCRA 1 [2003])
b. Members and Foundations (Secs. 94; 95)

VII. SHARES OF STOCK, STOCK CERTIFICATES & SUBSCRIPTION AGREEMENTS
(Sections 60-73)

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1. Principles on Shares under Code (Sec.12)
• President of PDIC vs. Reyes (460 SCRA 473 [2005])

• Commissioner of Internal Revenue vs. CA (301 SCRA 152 [1999])
2. Subscription Agreement
a. Not Governed by Ordinary Sales Contract Doctrine (Sec. 60)
b. Contractual Nature of a Subscription Agreement
3. Pre-Incorporation Subscription (Sec. 61)
4. Consideration for Stocks (Sec. 62)
5. Issued Price or Par Value (Sec. 62)
a. Shares are Personal Property (Sec. 63)
6. Certificate of Stock (Sec. 63)
• Bitong vs. CA (292 SCRA 503 [1998])
a. Rule on Issuance of Certificate of Stock (Sec. 64)
• Pacific Basin Securities Co. vs. Oriental Petroleum & Minerals Corp. (531
SCRA 667 [2007])
• Tan vs. SEC (206 SCRA 740 [1992])
b. Certificates Only Evidence of the Shares Covered
• Republic vs. Estate of Hans Menzi (475 SCRA 20 [2005])

• Ponce vs. Alsons Cement Corp. (393 SCRA 602 [2002])
c. Quasi-Negotiable Character of Stock Certificate

• Rural Bank of Lipa City vs. CA (366 SCRA 188 [2001])
d. Manner of Dealing with Transfer or Assignment of Stock Certificates
e. Limits of Value of Certificate of Stock on Determining Stockholders
f. Assignment of Stock Certificate By Way of Security (Equitable

Mortgage)

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• Asset Privatization Trust vs. Sandiganbayan (341 SCRA 551, 560 [2000])
7. Transfer of Shares (Sec. 63)
• Batangas Laguna Tayabas Bus Co. vs. Bitanga (362 SCRA 635 [2001])
• Bitong vs. CA (292 SCRA 304 [1998])
• Chua Guan vs. Samahang Magsasaka (62 Phil. 472 [1935])
a. Non-Exclusivity of Sec. 63 on Modes of Registration
• Rural Bank of Lipa City vs. CA (supra.)

• Torres vs. CA (278 SCRA 793 [1997])
8. Stock and Transfer Book (Sec. 74)
• Provident International Resources Corp. vs. Venus (554 SCRA 540 [2008])
• Lanuza vs. CA (454 SCRA 54 [2005])
9. Shares Held in Trust
• Neugene Marketing vs. CA (303 SCRA 295 [1999])
10. Liability of Directors for Watered Stocks (Sec. 65)
11. Liability for Unpaid Subscription (Secs. 66; 67)
12. Share Delinquency (Sec. 71)
a. Delinquency Sale (Secs. 67-70; 73)
13. Lost or Destroyed Certificates (Sec. 73)
VIII. ACQUISITIONS & TRANSFERS, MERGERS & CONSOLIDATIONS

(Sections 76-80)
1. Acquisitions and Transfers
a. General Rule on Obligation of Transferee of Assets for Debts &

Obligations of Transferor
• Edward J. Nell Co. vs. Pacific (15 SCRA 415 [1965])

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b. “Assets-Only” Transfers
• Sundowner Devt. Corp. vs. Drilon (180 SCRA 14 [1989])
c. Business Enterprise Transfers (Sec. 40)
• Caltex (Phils.), Inc. vs. PNOC Shipping & Transport Corp. (498 SCRA
400 [2006])
• Garcia vs. SSS Legal & Collection (540 SCRA 459 [2007])
• Barayoga vs. Asset Privatization Trust (473 SCRA 690 [2005])
d. Equity Transfers

• Phil. Veterans Investment Dev. Corp. vs. CA (181 SCRA 669 [1990])
• Manlimos vs. NLRC (242 SCRA 145 [1995])
2. Mergers and Consolidations
a. How Done (Secs. 76-79)
• Poliand Industrial Ltd. vs. NDC (467 SCRA 500 [2005])
b. Effects of Merger / Consolidation (Sec. 80)
• PNB vs. Andrada Electric & Engineering Co. (381 SCRA 244 [2002])
• Babst vs. CA (350 SCRA 341 [2001])
3. Spin-Offs
• SMC Employees Union-PTGWO vs. Confessor (262 SCRA 81 [1996])
IX. NON-STOCK CORPORATIONS (Secs. 87-95)
1. Definition (Sec. 87)
• Manila Sanitarium vs. Gabuco (7 SCRA 14 [1963])

• Collector of Internal Revenue vs. Club Filipino (5 SCRA 321 [1962])
2. Eleemosynary Purposes (Sec. 88)
a. Eleemosinary Purpose and Non-Distribution of Profits

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• People vs. Menilu (G.R. Nos. 115054-66, Sep.12, 1999)
b. Non-Applicability of the Nationalization Laws
3. Right to Vote (Sec. 89)
• Republic vs. COCOFED (372 SCRA 462 [2001])
4. Non-transferability of Membership (Sec. 90)
5. Termination of Membership (Sec. 91)
• Tan vs. Sycip (499 SCRA 216 [2006])
6. Election and Term of Trustees (Sec. 92)
7. Place of Meetings (Sec. 93)
8. Rules of Distribution of Assets in Case of Dissolution (Sec. 94)
9. Procedure for Plan of Distribution (Sec. 95)
10. Conversion of Non-Stock to Stock Corporation
11. Foundations
X. CLOSE CORPORATIONS (Sections 96-105)
1. Concept of Close Corporation

2. Requirements for Close Corporation (Sec. 96)
• Manuel R. Dulay Ent. vs. CA (225 SCRA 678 [1993])

• San Juan Structural vs. CA (296 SCRA 631 [1998])
3. Restrictions on Transfers (Secs. 98; 99)

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4. Pre-emptive Right in Close Corporations (Sec. 102)
5. Management by Stockholders
• Torres vs. CA (278 SCRA 793 [1997])
6. Agreements by Stockholders (Sec. 100)
7. When Board Meeting is Unnecessary (Sec. 101)
8. Corporate Tort for Close Corporations
• Sergio F. Naguiat vs. NLRC (269 SCRA 564 [1997])
9. Deadlocks (Secs. 104; 105)
10. Amendment of Articles of Incorporation (Sec. 103)
XI. SPECIAL CORPORATIONS (Sections 106-116)
1. Educational Corporations (Secs. 106-108)
2. Religious Corporations (Secs. 109-116)
a. Classes of Religious Corporations (Sec. 109)

• Long vs. Basa (366 SCRA 113 [2001])
3. Corporation Sole (Sec. 110)
a. Articles of Incorporation (Sec. 111)
b. Acquisition and Alienation of Property (Sec. 113)
c. Filling of Vacancies (Sec. 114)
d. Dissolution (Sec. 115)
4. Religious Societies (Sec. 116)

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5. Condominium Corporations
a. Condominium Corps. Not Per Se Engaged in For-Profit-Activities

• Yamane vs. BA Lepanto Condominium Corp. (474 SCRA 258 [2005])
b. Master Deed of Restrictions

• Twin Towers Condominium Corp. vs. CA (398 SCRA 203 [2003])
c. Association Dues
d. Validity of House Rules
e. Agency With Proper Jurisdiction Over Condominium Matters
XII. CORPORATE DISSOLUTION, LIQUIDATION AND REINCORPORATION

(Sections 117-122)
1. Corporate Dissolution
a. Nature of Dissolution
• Republic vs. Tancinco (394 SCRA 386 [2002])
b. Methods of Corporate Dissolution (Sec. 117)
(1) Voluntary dissolution (Secs. 118 & 119)
(2) Involuntary dissolution (Sec. 121)
(3) Expiration of corporate term (Sec. 122)

(4) Shortening of corporate term (Sec. 120)
(5) Failure to organize and commence business within 2 years from date
of issuance of certificate of incorporation; or

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(6) Legislative dissolution
• PNB vs. CFI of Rizal, Pasig, Br. XXI (209 SCRA 294 [1992])
c. Voluntary Dissolution
(1) Without Debts (Sec. 11) – Administrative Proceedings
(2) With Debts (Sec. 119) – Quasi-Judicial Proceedings
(3) Shorten Corporate Term (Sec. 120)
d. Final Returns for Dissolving Corporations
• BPI vs. CA (363 SCRA 840 [2001])
e. Involuntary Dissolution (Sec. 121)
2. Corporate Liquidation (Sec. 122)
a. Nature of Corporate Liquidation

• PVBank Employees Union-N.U.B.E. vs. Vega (360 SCRA 33 [2001])
b. Methods of Corporate Liquidation
c. Liquidation Effected by the Board of Directors & Officers of the Dissolved

Corporation
• De Guzman vs. NLRC (211 SCRA 723 [1992])

• China Banking Corp. vs. M. Michelin & Cie (58 Phil. 261 [1933])
d.
Liquidation Effected by Transferring the Corporate Assets to a
Trustee or
Receiver (Sec. 122)
• Pepsi-Cola Products Phils., Inc. vs. CA (443 SCRA 571 [2004])

• Knecht vs. United Cigarette Corp. (384 SCRA 48 [2002])
e. Escheat to the Government (Sec. 122)

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3. Reincorporation
• Chung Ka Bio vs. IAC (163 SCRA 534 [1988])
XIII. FOREIGN CORPORATIONS (Sections 123-136)
1. Definition (Sec. 123)
• Avon Insurance PLC vs. CA (278 SCRA 312 [1997])

• European Resources and Technologies, Inc. vs. Ingenieuburo Birkhanh+Nolte
(435 SCRA 246 [2004])
2. Necessity To Obtain License To Do Business (Sec. 123)
• Agilent Technologies Singapore (PTE) Ltd. vs. Integrated Silicon Technology

Phil. Corp. (427 SCRA 593 [2004])
3. Suability of Foreign Corporations (Sec. 133)
• B. Van Zuiden Bros., Ltds vs. GTVL Manufacturing Industries (523 SCRA 233
[2007])
• Rimbunan Hijau Group of Companies vs. Oriental Wood Processing Corp.
(470 SCRA 650 [2005])
4. Definition of “Doing Business” (Sec. 3[d] of Foreign Investment Act of 1991,

R.A. No. 7042)

• Mentholatum vs. Mangaliman (72 Phil. 524 [1941])
• Mavest (USA), Inc. vs. Sampaguita Garment Corp. (470 SCRA 440 [2005])
(1) Service Contracts May Not Be “Doing Business”
(2)
Execution of Assignment Contracts Per Se Does Not Determine Doing
Business

• Far East International vs. Kogyo (6 SCRA 725 [1962])
(3) Reinsurance Does Not Per Se Constitute Doing Business
5. Issuance of License (Sec. 126)
6. Grounds for Revocation of License (Sec. 134)
7. Consequences of Not Obtaining License (Secs. 133-134)

Page 23 of 25
a.
Why Foreign Corporations Not Doing Business Not Required to Obtain
License
b. Status of Contracts Entered Into Without Requisite License To Do

Business
• Home Insurance Co. vs. Eastern Shipping Lines (123 SCRA 424 [1983])
• Top-Weld Manufacturing vs. ECED, S.A. (138 SCRA 118 [1985])
c. Doctrine of Estoppel
• Merrill Lynch Futures, Inc. vs. CA (211 SCRA 824 [1992])
• Communication Materials and Design, Inc. vs. CA (260 SCRA 673
[1996])
d.
Legal Standing of Foreign Corporations to Sue on Corporate Names,
Tradenames and Trademarks
• General Garments vs. Director of Patents (41 SCRA 50 [1971])

• Converse Rubber vs. Universal Rubber Products (147 SCRA 154 [1987])
e. Allegation in Pleadings Filed By Foreign Corporations

• New York Marine Managers vs. CA (249 SCRA 416 [1995])
• French Oil Mills Machinery vs. CA (295 SCRA 462 [1998])
f. “Isolated Transactions”
• Lorenzo Shipping vs. Chubb and Sons, Inc. (431 SCRA 266 [2004])
8. Suits Against Foreign Corporations Not Doing Business

• Hahn vs. CA (266 SCRA 537 [1997])
• Signetics Corp. vs. CA (225 SCRA 737 [1993])
9. Domicile and Residence of Foreign Corporations
• Northwest Orient Airlines vs. CA (241 SCRA 192 [1995])

• FBA Aircraft vs. Zosa (110 SCRA 1 [1981])
10. Resident Agent (Secs. 127 & 128)

• Expertravel & Tours, Inc. vs. CA (459 SCRA 147 [2005])
11. Laws Applicable to Foreign Corporations (Sec. 129)

Page 24 of 25
• Grey vs. Insular Lumber Co. (67 Phil. 139 [1938])
12. Amendment of Articles of Incorporation (Sec. 130)
13. Merger and Consolidation (Sec. 132)
14. Revocation of License To Do Business (Secs. 134 and 135)
15. Withdrawal (Sec. 136)
-nothing follows-
16

Page 25 of 25

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CORPORATION CODE (Batas Pambansa 68)

I. ​DEFINITIONS, THEORIES & CLASSIFICATIONS (Sections 1-9)

a. ​Four Attributes of Corporation (Sec.19)

2. Theories on Corporate Existence and Powers

b. ​Theory of Corporate Business Enterprise or Economic Unit

3. Private Corporations Cannot Be Created By Specific Legislative Act

▪ Sec.16, Art.XII, 1987 Constitution

4. Basic Advantages of Corporate Organizations

a. Strong Separate Juridical Personality

• DBP vs. NLRC (186 SCRA 841 [1990])

b. ​Limited Liability to Investors ​

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​ d. ​Free Transferability of Units of Ownership

​5. Main Doctrine on Separate Juridical Personality ​

6. Piercing the Veil of Corporate Fiction

a. ​Types of Piercing Application ​

​ b. ​Distinction Between Alter Ego Piercing & Fraud Piercing

​ c. ​Instances of Application of the Piercing Doctrine

d. ​Who Can Invoke Piercing Doctrine

e. ​Effects of the Application of the Piercing Doctrine

​ f. ​Nature of Piercing Doctrine – General Rule / Qualifications

g. ​Tests Evolved To Determine Applicability of Piercing Doctrine

h. ​Fraud Piercing Cases

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i. ​Alter-Ego Piercing Cases

j. ​Parent-Subsidiary Relationships Warranting Piercing ​

k. ​Extent of Legal Effects When Piercing Applied

l. ​Due Process Issues

7. Nationality of Corporation (Sec.123)

• J.G. Summit Holdings, Inc. vs. CA (450 SCRA 169 [2005])

c. ​Public Utilities (Section 11, Article XII, 1987 Constitution)

8. Grandfather Rule (DOJ Opinion No. 18, s. 1989) ​

​9. Issues Pertaining to Corporation as “Person” ​

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​ d. ​Non-Entitlement to Moral Damages

10. Classifications of Corporation (Sec. 3) ​

• Sawadjaan vs. CA (459 SCRA 516 [2005])

e. Corporation by Estoppel (Sec.21)

• Lozano vs. De Los Santos (274 SCRA 452 [1997])

• Baluyot vs. Holganza (325 SCRA 248 [2000])

h. Corporation Sole (Sec.110) (Sec.111 [2]) ​

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11. ​Corporators (Sec.5) and Incorporators (Sec.10), Stockholders and

​12. ​Shares of Stock (Sec.6)

​a. General Rule on Classification of Shares / Exceptions (Sec.6)

• Castillo vs. Balinghasay (440 SCRA 442 [2004])

​c. Preferred Shares

• Commissioner of Internal Revenue vs. CA (301 SCRA 152 [1999])

d. Par Value Shares

f. Redeemable Shares ​ (Sec. 8)

g. Founders’ Shares (Sec. 7)

• Castillo vs. Balinghasay (440 SCRA 442 [2004])

h. Treasury Stocks (Sec. 9) ​

​13. ​Reclassification vs. Exchange of Shares ​

II. ​ARTICLES OF INCORPORATION: INCORPORATION & ORGANIZATION OF

​1. ​Nature of Articles of Incorporation

​2. ​Corporate Name (Secs. 14[1] and 18)

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b. Change of Corporate Name

c. SEC Still Has Jurisdiction Over Issues Involving Corporate Names ​

​3. ​Purpose Clauses (Sec.14[2]; 42)

​4. ​Principal Place of Business

​5. ​Corporate Term (Secs. 11; 19)

I. DEFINITIONS, THEORIES & CLASSIFICATIONS (Sections 1-9)

a. Four Attributes of Corporation (Sec.19)

b. Theory of Corporate Business Enterprise or Economic Unit

b. Limited Liability to Investors

d. Free Transferability of Units of Ownership

5. Main Doctrine on Separate Juridical Personality

a. Types of Piercing Application

b. Distinction Between Alter Ego Piercing & Fraud Piercing

c. Instances of Application of the Piercing Doctrine

d. Who Can Invoke Piercing Doctrine

e. Effects of the Application of the Piercing Doctrine

f. Nature of Piercing Doctrine – General Rule / Qualifications

g. Tests Evolved To Determine Applicability of Piercing Doctrine

h. Fraud Piercing Cases

i. Alter-Ego Piercing Cases

j. Parent-Subsidiary Relationships Warranting Piercing

k. Extent of Legal Effects When Piercing Applied

l. Due Process Issues

c. Public Utilities (Section 11, Article XII, 1987 Constitution)

8. Grandfather Rule (DOJ Opinion No. 18, s. 1989)

9. Issues Pertaining to Corporation as “Person”

d. Non-Entitlement to Moral Damages

10. Classifications of Corporation (Sec. 3)

h. Corporation Sole (Sec.110) (Sec.111 [2])

11. Corporators (Sec.5) and Incorporators (Sec.10), Stockholders and

12. Shares of Stock (Sec.6)

a. General Rule on Classification of Shares / Exceptions (Sec.6)

c. Preferred Shares

f. Redeemable Shares (Sec. 8)

h. Treasury Stocks (Sec. 9)

13. Reclassification vs. Exchange of Shares

II. ARTICLES OF INCORPORATION: INCORPORATION & ORGANIZATION OF

1. Nature of Articles of Incorporation

2. Corporate Name (Secs. 14[1] and 18)

c. SEC Still Has Jurisdiction Over Issues Involving Corporate Names

3. Purpose Clauses (Sec.14[2]; 42)

4. Principal Place of Business

5. Corporate Term (Secs. 11; 19)

a. When Incorporators Merely Nominee Shareholders

8. Incorporating Board of Directors (Secs.14[7]; 14[6])

a. Concepts of “Capital Stocks” & “Paid-Up Capital Stock”

9. Procedure for Amendment of Articles of Incorporation (Secs.81; 16)

a. When Other Agency Certification Required

a. Non-User 2 Years

III. BY-LAWS (Sections 46-48)

1. Nature of By-Laws

2. Period of Adoption of By-Laws (Sec.46)

3. How By-Laws Adopted (Sec. 46)

4. Effectivity of By-Laws (Sec. 46)

5. Contents of By-Laws (Sec. 47)

6. Binding Effect of By-Laws to Third Parties

a. With stockholders’ or members’ approval

IV. BOARD OF DIRECTORS OR TRUSTEES, CORPORATE OFFICERS

1. “Centralized Management” Doctrine (The Board is the Seat of Corporate

a. Board Must Act as a Body

b. Principle on Delegation of Board Power

2. Business Judgment Rule

a. Consequences of “Bogus” Board

b. Remedies in Case of Mismanagement

c. Qualifications & Disqualifications of Board Members (Sec. 27)

3. Election of Directors or Trustees (Sec. 24)

a. Required Attendance at Meeting for Election

b. Manner of Election

c. Time to Determine Voting Right

d. Cumulative Voting

e. Report of Election of Directors, Trustees and Officers (Sec. 26)

f. No Permanent Un-elected Seat in the Board of Directors

5. Vacancies in Board (Sec. 29)

a. Increase in Board Seats

6. Meetings of the Board

a. Types of Board Meetings

c. Place of Meetings

e. Requisites of Board Meetings

7. Compensation of Directors (Sec. 30)

8. Executive Committee (Sec. 35)

9. Corporate Officers (Secs. 25; 92)

Business Judgment of the Board to Hire and Fire

b. Corporate Officer Privileges

d. Vice President

e. Corporate Secretary