CORPORATION LAW COURSE SYLLABUS

Prof: Retired Judge Ruben A. Corpuz

PART I – DEFINITIONS, THEORIES AND CLASSIFICATIONS

A. Corporation defined (Sec. 2)

Cases: Tayag v. Benguet Consolidated, 26 SCRA 242;

Torres v. CA, 278 SCRA 793
Philippine Stock Exchange, v. CA, 281 SCRA 232

1. Art. XII, Section 16, 1987 Philippine Constitution

Cases: Feliciano v. COA, GR No. 147402, Jan. 14, 2004

2. Four attributes of a Corporation

3. Similarities and Distinction between Partnership and Corporation
4. Corporations Created by Special Laws or Charter

Cases: National Coal Co. v. Collector of Internal Revenue, 46 Phil. 583

Marilao Water Consumers Asso.,Inc. v IAC, 201 SCRA 437

B. Classification of corporation

1. Under the Corporation Code (Sec. 3)

2. Sole and Aggregate
3. Ecclesiastic and Lay
4. Eleemosynary and Civil
5. Domestic and Foreign
6. De jure and de facto corporation

6.1 Requisite of De Facto Corporation

6.2 Quo Warranto

Cases: Sawdjaan v. CA, G.R. No. 141735, June 8, 2005

7. Close and Open Corporation

8. Parent, Subsidiary, and Affiliated
9. Private and Public
10. Corporation by Prescription and Corporation by Estoppel

C. Nationality of Corporation

1. Control test
2. Grandfather rule

Cases: Wilson Gamboa v. Sec. Margarito Teves, G.R. No. 176579, June 28,
2011

D. Corporations created by special laws

E. Corporators and incorporators, stockholders and members (Sec. 5)

F. Corporate juridical personality

1. Doctrine of separate juridical personality (or Doctrine of Corporate Entity

Cases: Cease v. CA G.R. No. 33172, Oct. 18, 1979

2. Doctrine of piercing the veil

a) Grounds for application of doctrine
b) Test in Determining applicability

Cases: CIR v. Norton and Harrison Co., G.R. No. 17618, Aug. 31, 1964
Mcleod v. NLRC, G.R. No. 146667, Jan. 23, 2007

BAR 2001: Based on this case

3. Entitlement to constitutional rights
a) Due process

Cases: Albert v. University Publishing, Inc. G.R. No. 10118, June 16, 1965

b) Equal protection of the law

c) Protection against unreasonable searches and seizure

4. Entitlement to moral damages

Cases: ABS-CBN v. CA, GR No. 128690, Jan. 21, 1999

Coastal Pacific Trading, Inc. v. Sothern Rolling Mills Co., July 28, 2006

5. Libel

Cases: Filipina Broadcasting v. Ago Medical Center, GR. No. 141994, Jan. 17,
2005

6. Liability for torts

Cases: PNB v. CA, G.R. No. GR No. 27155, May 18, 1978

7. Doctrine of corporate negligence

Cases: Professional Services Inc. v. CA, G.R. No. 126297, Feb. 2, 2010

8. Liability for crime

G. CLASSIFICATION FOR SHARES (Sec. 6)

1. Par value or no par value

2. Voting or non-voting
3. Common or preferred
4. Promotion share
5. Share in escrow
6. Convertible stock
7. Founder share (Sec. 7)
8. Redeemable share (Sec. 8)
9. Treasury share (Sec. 9)

BAR 2001: What determines whether a corporation with authorized capital

stock is a stock corporation?
PART II – INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATION

BAR 2002: List the documents that you must submit to Securities and Exchange
Commission to obtain a Certificate of Incorporation of a corporation.

A. Number and qualification of corporation (Sec. 10)

1. Capital stock (distinguish from capital)

2. Authorized capital stock
3. Subscribed capital stock
4. Outstanding capital stock
5. Paid-up capital stock
6. Un-issued capital stock
7. Legal capital (distinguish from capital stock)
8. Par value
9. Certificate of stock

Cases: Kukan International Corp v. Reyes, G.R. No. 182729, Sept. 29, 2010

B. Theory on Multiple Corporate Personalities

C. Minimum Capital Stock and Subcription Requirements

1. Incorporation and organization

a. Promoter
a.1 Liability of promoter
a.2 Liability of corporation for promoter’s contracts

2. Subscription contract

Cases: Jaka Investment Corp v. CIR, G.R. No. 147629, July 28, 2010
Ong Yong v. Tiu, G.R. No. 144476, April 8, 2003

3. Pre-incorporation subscription agreements

4. Consideration for stocks
5. Filipino ownership requirement based on specific constitutional and legal
grounds

BAR 2001: What is meant by a stockholder’s pre-emptive right to a new issuance

of shares?

D. Corporate Term (Sec. 11)

1. Doctrine of Relation (Relating back doctrine)

Cases: Alhambra Cigar v. SEC, G.R.No.L-23606, July 29, 1968

PNB v. CA, G.R. No. 63201, May 27, 1992

E. Articles of Incorporation (Sec. 14)

1. Contents
2. Non-amenable items
3. Doctrine of substantial compliance

F. Ground for rejection

G. Corporate name
H. Commencement of corporate existence

1. Genossenschaft Theory
2. Theory of Concession
3. Theory of corporate enterprise or Economic unit

I. De facto corporation

1. Differences between de jure, de facto and corporation by estoppel

Cases: Seventh Day Adventists v. Seventh Day Adventists, GR No.150416,

July 21, 2006

J. Corporation by estoppel (Sec. 21)

K. Non-use of corporate charter (Sec. 22)

PART III – BOARD OF DIRECTORS / TRUSTEES/ OFFICERS

A. The Board of Directors/Trustees (Sec. 23)

1. Fiduciary duties

B. Election of Directors/Trustees (Sec 24)

1. Methods of voting
a. Straight voting
b. Cumulative voting

2. In a non-stock corporation

C. Corporate Officers, quorum (Sec. 25)

Cases: Matling Industrial and Commercial Group v Coros, G.R.No. 157802,

Oct. 13, 2010

D. Report of Election (Sec. 26)

E. Disqualification of Directors/Trustees/Officers (Sec. 27)

F. Removal of Directors/Trustees (Sec. 28)

BAR 2001: May an officer of a corporation be removed by a mere board

resolution?

G. Vacancies in the Office of Directors/Trustees (Sec. 29)

Cases: Valle Verde Country Club, Inc. v. Africa, G.R.No. 151969, September
4, 2009
Tan v. Sycip, G.R. No. 153468, August 17, 2006

H. Compensation of Directors (Sec. 30)

 I. Liability of Directors/Trusteess/ Officers (Sec. 31)
1. Corporate opportunity doctrine

J. Dealings of Directors, Trustees, or Officers with the Corporation (Sec. 32)

BAR 2001: May a corporation provide in its By-Laws that “the directors be
relieved from all liability for any contract entered into by the corporation”?

K. Contracts between corporations with interlocking directors (Sec. 33)

L. Disloyalty of Directors (Sec. 34)

M. Executive Committee (Sec. 35)

QUESTION: May directors or trustees delegate entire supervision and

control of the corporation to an executive committee?

N. Business Judgment Rule

Cases: Saber v. CA G.R. No. 132981, August 31, 2004

PART IV – POWERS OF CORPORATION

A. Classification of Shares

1. Express powers
2. Implied powers
3. Incidental or inherent powers

Cases: Cebu Bionic Builders Supply v. DBP, G.R. 154366, Nov. 17, 2010
Shipside Inc. v. CA, G.R. No. 143377, Feb. 20, 2001

B. Corporate Powers and Capacity(Sec. 36)

1. General powers, theory of general capacity

2. Specific powers, theory of specific capacity

a. Power to extend or shorten corporate term(Sec. 37)

a.1. Appraisal rights of dissenting stockholders

b. Power to increase or decrease capital stock, or incur, create, increate

bonded indebtedness (Sec. 38)

b.1. Limitation
b.2. Necessity

BAR 2001: What are two ways by which the authorized capital stock of a
Corporation be increased?

c. Power to deny pre-emptive rights(Sec. 39)

c.1 As to treasury shares

 d. Power to sell or dispose corporate assets (Sec. 40)

d.1 Appraisal rights of dissenting stockholders

e. Power to acquire own shares (Sec. 41)

e.1 Conditions for the exercise of the power

e.2 Trust fund doctrine

f. Power to invest corporate funds in another corporation or business (Sec.

42)

g. Power to declare dividends (Sec. 43)

g.1 Concept of dividends (distinguish from profits)

g.2 Classes of dividends
g.3 Unrestricted retained earnings

BAR 2001: What does the law require regarding earnings of the
corporation in excess of 100% of the corporation’s paid-in capital?

h. Power to inter into management contracts (Sec. 44)

i. Ultra-vires acts (Sec. 45)

i.1 Applicability of ultra-vires act doctrine

i.2 Consequencies of ultra-vires acts

Cases: Zomer Dev’t Co. v. International Exchange Bank, G.R. No.

150694, March 13, 2009
Republic v. Acoje Mining Inc. G.R. No. L-18062, Feb 28, 1963

i.3 Ratification

j. Doctrine of apparent authority

Cases: Westmont Bank v. Inland Construction, G.R. No. 123650, March

23, 2009
BPI Family Savings Bank v. First Metro Investment Corp, G.R.
No. 132390, May 21, 2004

k. Doctrine of individuality of subscription

l. Doctrine of equality of shares

m. Trust fund doctrine

PART V - BY LAWS

A. Adoption of By-Laws (Sec. 46)

a) Requisite of valid by-laws

b) Binding effects

b) Contents (Sec. 47)

 d) Amendments (Sec. 48)

Cases: PMI Colleges v. NLRC, G.R. No. 121466, Aug. 15, 1997

PART VI –MEETINGS

A. Kinds (Sec. 49-51)

B. Place and time of meetings

Cases: Expert Travel & Tours v. CA, G.R. No. 152392, May 26, 2005

C. Quorum (Sec. 52)

D. Regular and Special Meetings of Directors or Trustees (Sec. 53)

D.1 Business judgment rule

D.2 Solidary liabilities for damages

E. Who shall preside (Sec. 54)

F. Pledgors, mortgagors, and administrators (Sec. 55)

G. Voting in case of joint ownership (Sec. 56)

H. Voting right for treasury shares (Sec. 57)

I. Proxies (Sec. 58)

J. Voting trust (Sec. 59)

Cases: Lee v. CA, G.R. No.14441, Dec. 17, 1996

PART VII - STOCKS, CERTIFICATES, AND STOCKHOLDERS

A. Rights of Stockholders in General

B. Derivative Suit

C. Liabilities of Stockholders

D. Subscription Contract (Sec. 60)

E. Pre-incorporation Subscription (Sec. 61)

F. Certificate of Stock
1. Nature of the certificate
2. Uncertified Shares
3. Negotiability
4. Requirement for valid transfer of stocks
BAR 2001
5. Issuance
6. Full Payment
7. Payment pro-rata
 8. Stock and Transfer Book
9. Lost or destroyed cerficates
10. Situs of the shares of stock

G. Consideration for Stocks (Sec. 62)

H. Certificate of Stock and Transfer of Shares (Sec. 63)

I. Issuance of Stock Certificate (Sec. 64)

J. Liability of Directors for Watered Stocks (Sec. 65)

K. Interest on unpaid subscription (Sec. 66)

L. Payment of Balance (Sec. 67)

M. Delinquency Sale (Sec. 68)

N. When sale may be questioned (69)

O. Court Action to Recover Unpaid Subscription (Sec. 70)

P. Effect of Delinquency (Sec. 71)

Q. Rights of Unpaid Shares (Sec. 72)

R. Lost or Destroyed Certificates (Sec. 73)

PART VIII- CORPORATE BOOKS AND RECORDS (Sec. 73-74)

A. Contents

B. Who may make valid entries.

PART IX – MERGER AND CONSOLIDATION

A. Merger and Consolidation (Sec. 76)

B. Approval Required (Sec. 77)

C. Articles of Merger and Consolidation (Sec. 78)

D. Effectivity (Sec. 79)

E. Effects (Sec. 80)

PART IX – APPRAISAL RIGHT

A. Instances of Appraisal Right (Sec. 81)

B. How Right is Exercised (Sec. 82)

C. Effect of Demand and Termination of Right(Sec. 83)

D. When Right to Payment Ceases (Sec. 84)

E. Who Bears Cost of Appraisal(Sec. 85)

F. Notation on Certificates: Rights of Transferee (Sec. 86)

PART XI – NON-STOCK CORPORATION

A. Definition (Sec. 87)

B. Purposes (Sec. 88)

C. Members Right to Vote (Sec. 89)

D. Non-transferability of membership (Sec. 90)

E. Termination of Membership (Sec. 91)

F. Election and Term of Trustees (Sec. 92)

G. Place of Meetings (Sec. 93)

BAR 2001: May a stock corporation be converted into non-stock?

PART XII - DISTRIBUTION OF ASSETS ON NON-STOCK CORPORATION

A. Rules of Distribution (Sec. 94)

B. Plan of Distribution of Assets (Sec. 95)

PART XIII – CLOSE CORPORATION

A. Distribution and Applicability of Title (Sec. 96)

B Articles of Incorporation (Sec. 97)

C. Validity of Restriction on Transfer of Shares (Sec. 98)

D. Effects of Issuance or Transfer of Stock in Breach of Qualifying Conditions (Sec.

99)

E. Agreements by Stockholders (Sec. 100)

F. When Board Meeting Is Unnecessary or Improperly Held (Sec. 101)

G. Pre-emptive Right in Close Corporation (Sec. 102

H. Amendment of Articles of Incorporation (Sec. 103)

I. Deadlocks (Sec. 104)

J. Withdrawal of Stockholder or Dissolution of Corporation (Sec. 105)

PART XIV – SPECIAL CORPORATIONS

A. Educational Corporation

1. Incorporation (Sec. 106)

2. Pre-requisites to incorporation (Sec. 107)
3. Board of trustees (Sec. 108)

B. Religious Corporations

1. Classes of religious corporations (Sec 108)

2. Corporation sole (Sec. 110)
3. Articles of Incorporation (Sec. 111)
4. Submission of articles of incorporation (Sec. 112)
5. Acquisition and alienation of property (Sec. 113)
6. Filing of vacancies (Sec. 114)
7. Dissolution (Sec. 115)
8. Religious societies (Sec. 116)

PART XV – DISSOLUTION

A. Methods of dissolution (Sec. 117)

B. Voluntary dissolution where no creditors are affected (Sec. 118)
C. Voluntary dissolution where creditors are affected (Sec. 119)
D. Dissolution by shortening corporate term (Sec. 120)
E. Involuntary dissolution(Sec. 121)
F. Corporate liquidation (Sec. 122)

BAR 2001: “X” Corporation shortened its corporate life by amending its articles of
incorporation. It has no debts but owns a prime property located in Quezon City.
How would the said property be liquidated among the five stockholders of said
corporation? Discuss two methods of liquidation.

BAR 2002: Name three (3) methods by which a stock corporation may be
voluntarily dissolved. Explain each method.

PART XVI – FOREIGN CORORATIONS

A. Definition and rights of foreign corporations (123)

B. Application to existing foreign corporations( 124)

C Application for a license (Sec. 125)

D. Issuance of a license (Sec. 126)

E. Who may be a resident agent (Sec. 127)

F. Resident agent, service of process (Sec. 128)

G. Law applicable (Sec. 129)

H. Amended license (Sec. 131)

I. Merger or consolidation involving a foreign corporation licensed in the

Philippines (Sec. 132)
J. Doing business without a license (Sec. 133)

K. Revocation of license (Sec. 134)

L. Issuance of certificate of revocation (Sec. 135)

M. Withdrawal of foreign corporations (Sec. 136)

BAR 2002:
A. What is the legal test for determining if an unlicensed foreign corporation is
doing business in the Philippines?

B. Give at least three (3) examples of the acts or activities that are specifically
identified under our foreign investment laws as constituting “doing business
in the Philippines.

GOOD LUCK!

RAC/Jan. 18, 2019

Some Introductory Matters:

1. Corporation law is just a part of a BAR subject Commercial Law. Sometimes

there are as many as ten (10) questions asked, like the BAR exam in 2002.

2. Compared with conditions in 1983, where the study of law was limited to
textbooks, library resources like the SCRA, and lectures, today has a lot of study aids
and facilities, particularly the internet and CDs. I prepared the syllabus while
vacationing in the U.S.A. and it was not a problem having no law library or
Philippine law references. All I needed was to open the internet. You have a
question in your mind, google it and it’s there. So let’s take advantage of all the
facilities provided. Having been a judge, I know that there is a regularly updated CD
on cases starting 1990. So request or borrow a copy from a friendly judge, if any,
and you do not need to go to the library for case digest. For case digests, you also
google.

3. Having been a law professor in St. Louis University, College of Law, for many
years, I have known intelligent law students who did not make it in their first take
of the Bar. One big factor, I theorized, had something to do with penmanship. There
is one good advice to improve penmanship. Start by making your letters “big and
round.” A good friend of mine took the Bar 4 times. Before the 4th take, we advised
him not review anymore. He would spend all his time improving his handwriting.
And he made it. He has been a councilor of Baguio City for several terms.

4. As student, and soon as a Bar examinee, consider a serious focus on the following:
a) of course a mastery of the subjects, b) review your grammar, humbly asking
comment from friends, c) understand what a logical presentation means, and d)
improve your handwriting.

In my years of teaching logic, in SLU undergraduate courses, I understood logic to be

a principle of consistency, a conclusion necessarily following premises. In
answering or solving legal problems, the premises are evidence established by facts
or objects and testimonies, documents, and legal bases. All of these should
necessitate a conclusion. The pattern is the same: If p (facts, documents, law), then
q (conclusion). But indeed it is p. Therefore, q. You can observe this pattern in all
court decisions.

5. I prepared a syllabus for this course. I am passing around a piece of paper where
you will write your name, cell phone number, and email address (2x). I will email
you a copy of the syllabus.

6. Lets budget our time: You have two exams, midterms and finals. We have 16
parts and thus, we should be able to study 8 parts before midterm, and the other 8
parts before finals.