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OUTLINE FOR COMM’L LAW REVIEW (2018)

LPU –MAKATI (Prof. M.I.P. Romero)

I. DEFINITIONS/ ATTRIBUTES OF A CORPORATION

A. Artificial Being - Sec. 2, Corp. Code; Art. 44 (3), Civil Code

a) Commencement of juridical personality – Sec. 19, Corp. Code


Excellent Quality Apparel v. Win Multiple Rich Builders
578 SCRA 272 (2009)

b) Rights of a juridical person –


Art. 46, Civil Code
Art. III, Sec. 1 and 2, 1987 Consti.
Bache & Co. (Phils.), Inc. v. Ruiz (37 SCRA 823; 1971)
Bataan Shipyard v. PCGG (150 SCRA 181; 1987)
Art. III, Sec. 11, Constitution
Good Shepherd Foundation, Inc. (A.M. No. 09-6-9
SC; 8/19/09)

c) Criminal Liability -- Anti-money Laundering Act


-- Trust Receipts Law(Sec. 13, PD 115)
Ching v. Sec. of Justice (Feb. 6, 2006)

d) Liability for Torts and Negligence


PNB v. CA 83 SCRA 238 (1978)
Prof. Services, Inc. v. CA 611 SCRA 282 (2010)

e) Moral damages -- Q: Is a corp. entitled to moral damages?

ABS-CBN Corp. V. CA (361 Phil. 499; 1999)


Jardine Davies v. CA (GR 128066; 6/19/2000)
Filipinas Broadcasting Network v. AMEC-BCCM
(GR 141994, Jan. 17, 2005)
Crystal, et. al v. BPI (GR 172428, Nov. 2008)
B. Created by Operation of Law – Art. XII, Sec. 16, Constitution

1) Private corporations (distinguish from public corporations)


What is a “public corp.”? Art. 44 (1) and (2), NCC
2) GOCCs
3) Govt. instrumentalities
Mla. Int’l Airport Authority v. CA (GR 155650; 7/20/ 2006)
Boy Scouts of the Phil. v. COA (GR 177131; 6/07/2011)
4) Corp. by prescription

C. Right of Succession – Rationale; Compare with:


Partnership – no right of succession (delectus personae)
Sole proprietorship – no right of succession

D. Express / Implied / Incidental Powers --- Sec. 45, 36-44


Alternatively --- General (Sec. 36) and Specific powers (37- 44)

ll. DOCTRINE OF CORPORATE ENTITY

A. Doctrine/ Effects:

Magsaysay-Labrador v. CA. (1989) 180 SCRA 266


Stockholders of Guanzon v. Reg. of Deeds (1962) 6 SCRA 373
San Juan Structural v. CA (1998) 296 SCRA 631
Palay, Inc. v. Clave (1983) 124 SCRA 640
Tramat Mercantile v. CA (1994) 238 SCRA 14

B. Piercing the Corporate Veil:

Villa Rey Transit v. Ferrer (1968) 25 SCRA 845


Marvel Bldg. v. David (1954) 94 Phil. 376
Concept Builders v. NLRC (1996) 257 SCRA 149
Claparols v. CIR (1965) 65 SCRA 613

C. Parent-Subsidiary Relationship:

Koppel v. Yatco (1946) 77 Phil 496


Jardine Davis Inc. v. JRB Realty (2005) 463 SCRA 555
PNB v. Ritratto Group (2001) 362 SCRA 216
Pantranco v. NLRC. (G.R. No. 170689) March 17, 2009

lII. CLASSES OF CORPORATIONS UNDER THE CORP. CODE

1) Sec. 3, 87, 88 --- stock and non-stock corporation


Valley Golf Club v. Vda. De Caram 585 SCRA 218 (2009)
Coll. of Int. Rev. v. Club Filipino 5 SCRA 321 (1962)

2) Other classes of corporations under the Corporation Code:


Close corporation – Sec. 96
Special corporations – Educational, religious (Title XIII)
Foreign corporations --- Sec. 123
3) 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.

IV. CREATION OF CORPORATION

1) Promotion
-- relate to Sec. 3.10. of Securities Regulation Code
-- relate to Secs. 60 and 61 of Corp. Code
McArthur v. Times Printing Co. 31 Am. St. Rep. 653
Cagayan Fishing v. Sandiko 65 Phil 223
2) Incorporation
3) Formal organization VS. commencement of business – Sec. 22

V. INCORPORATION

1) Steps in incorporation
2) Sections 5, 10 –19, 88, 96, 97
3) Articles of Incorporation–
a) Sec. 14, 15
b) Amendment of A/I – Sec. 16, Relate to:
Sec. 36.4 – power to amend
Sec. 6 – voting rights of non-voting shares
Sec. 81[1]--- appraisal right
Secs. 37, 38, 103 – mere written assent not enough
c) Binding effect of amendment
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)
(include Dissent of J. Carpio)

4) Citizenship requirements --- Sec. 140


--- pertinent provisions of the 1987 Constitution

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


Gamboa v. Teves, et al (GR 176579; June 28, 2011 and Oct. 9, 2012)
SEC Memo Circ. No. 8, s2013 (Guidelines in Fil-Foreign ownership)
Roy v. Herbosa Nov. 22, 2016

-- Foreign Investments Act (FIA) of 1991, as amended


--- other laws imposing maximum foreign equity
--- “Philippine national” under the FIA
--- under the BSP
--- Phil. corporation under the Corp. Code
--- Foreign corporation under the Corp. Code

--- Control Test v. Grandfather Rule


Narra Nickel Mining v. Redmont (G.R. 195580; April 21, 2014)
( include Dissent of J. Leonen)

--- Nationality of corporation sole


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

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

7) Name of corporation – (SEC Memo Circ. 14, Series of 2000)


Lyceum of the Phils. v. CA (1993) 219 SCRA 610
P.C. Javier & Sons, Inc. v. CA (2005) 462 SCRA 36
Industrial Refractories Corp. v. CA (2002) 390 SCRA 252

8) De jure corporations – requisites, powers, liabilities, validity

9) De facto corporations – Sec. 20


(requisites, basis, powers, rights, liabilities, validity )
Municipality of Malabang v. Benito (1969) 27 SCRA 533
Hall v. Piccio (1950) 86 Phil. 603
Cagayan Fishing. v. Sandiko GR L-43350 (12/23/1937)
Pioneer Insurance v. CA (GR 84157) 175 SCRA 668 (1989)

10 ) Corporation by Estoppel – Sec. 21 (rationale, liabilities, validity)


Chiang Kai Shek School v. CA (1989) 172 SCRA 389
Lim Tong Lim v. Phil. Fishing Gear (1999) 317 SCRA 728
Int’l Express Travel v. CA (2000) 343 SCRA 674
Paz v. New Int’l Environmental Universality, Inc. (04/20/2015)

VI. INTERNAL ORGANIZATION OF CORPORATIONS

1) By-laws – Sec. 36 (5); Secs. 46, 47, 48

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


Fleischer v. Botica Nolasco 47 Phil. 583 (1925)
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
China Banking Corp. v. CA (270 SCRA 503)
Valley Golf Club v. Vda. De Caram 585 SCRA 218 (2009)
PMI Colleges v. NLRC 277 SCRA 462 (1997)
Sawadjaan v. CA 459 SCRA 516 (2005)
Long v. Basa GR 134963; Sept. 27, 2001

2) Commencement of Business ---- Sec. 22

3) Election of Directors & Officers --- Sec. 23 and 25