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STUDY GUIDE ON THE CORPORATION CODE

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THE CORPORATION CODE
Batas Pambansa Blg. 68 (1980)

1 NATURE OF CORPORATIONS
1.1 Concept of the corporation (Sec. 2)
1.2 Advantages and disadvantages of the corporate form
1.3 Differentiated from partnerships and other business organizations
1.4 The Constitution (Art. XII, Sec. 16) and government regulation of corporations (SEC
Memorandum Circular No. 11, dated August 5, 2003)
1.5 Kinds of corporations
(a) Stock (Sec. 3);
(b) Non-stock (Secs. 3 and 87);
(c) Close (Secs. 96, et seq.);
(d) Registered, listed, reporting (Sec. 3 [1][O], SRC IRR), and public (Sec. 3 [1][M], SRC
IRR) corporations;
(e) De factor (Sec. 20);
(f) Corporation by estoppel (Sec. 21)
(g) Educational (Secs. 106, et seq,; RA 7789, amending Sec. 25, Chap. 3, of the
Education Act of 1982);
(h) Religious corporation sole and aggregate (Secs. 109, et seq.);
(i) Special charter (Sec. 4);
(j) Foreign (Secs. 123, et seq.);
(k) Government-owned and controlled corporations;
(l) Homeowners associations (Secs. 4 and 26, RA 8763, approved March 7, 2000)
1.6 Cases:
(a) Lozano v de los Santos and Anda, GR 125221, June 19, 1997;
(b) Liban, et al. V Gordon, GR 175352, July 15, 2009 (en banc); reconsidered, January
18, 2011(en banc); see RA 10072, known as the Philippine Red Cross Act of 2009,
approved onn April 29, 2010.
(c) Gamboa v Teves, et al., GR 176579, June 28, 2011 (en banc) ; reconsidered October
9, 2012 (en banc).

2 FORMATION AND ORGANIZATION OF CORPORATIONS
2.1 Who may form a corporation? (Sec. 10)
2.2 Steps in the formation of a corporation
(a) Promotion
(b) Drafting of Articles of Incorporation
(i) What should be contained in the Articles of Incorporation?
a. Corporate name (Sec. 18; SEC Memorandum Circular No. 14-00, dated
October 24, 2000, re Revised Guidelines on the Approval of Corporate
and Partnership Names; SEC Memorandum Circular No. 12, dated
December 23, 2008, re Business or Trade Names);
b. Primary purpose (Sec. 14);
c. Secondary purpose or purposes (Sec. 14);

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Prepared by Prof. Tristan A. Catindig as of June 24, 2013. All rights reserved.
d. D. Principal office (Sec. 14; SEC Circular No. 3, dated February 16, 2006,
re Principal Office Address, etc);
e. Term (Sec. 11);
f. Corporators and incorporators (Secs. 5 and 10);
g. Incorporating directors (Sec. 14);
h. Capital:
i. Authorized (Sec. 12);
ii. Subscribed (Sec. 13);
iii. Paid-up (Sec. 13);
iv. Additional paid-in capital, paid-in surplus, or premium;
v. Outstanding;
vi. Issued.
i. Classification of shares:
i. Common (Sec. 6);
ii. Preferred (Sec. 6);
iii. Cumulative;
iv. Participating;
v. Convertible;
vi. Redeemable (Sec. 8; SEC Rules Governing Redeemable and
Treasury Shares [CCP No. 1], dated April 26, 1982; Republic
Planters Bank v Agana, et al., GR 51765, March 3, 1997);
vii. Par value and no par value shares (Sec. 6);
viii. Founders shares (Sec. 7);
ix. Treasury (Sec. 9; see SEC Rules Governing Redeemable and
Treasury Shares, op. cit.).
j. Subscribers (Sec. 14);
k. Treasurer-in-trust (Sec. 15);
l. Special provisions:
i. Expanded pre-emptive rights;
ii. Right of first refusal;
iii. High quorum and/or high voting requirements.
(ii) Documents accompanying the Articles (Secs. 15 and 17; SEC Rules on
Documentary Requirements for Registration of Corporations and
Partnerships as of January 3, 2005)
(c) Filing of Articles of Incorporation and payment o fees
(d) Examination, approval or rejection of Articles of Incorporation by SEC (Sec. 17; Sec.
6[k], PD 902-A)
(e) Issuance of Certificate of Incorporation and beginning of corporate existence (Sec.
19)
2.3 Cases:
(a) Castillo, et al. v Balinghasay, et al., GR 150976, October 18, 2004;
(b) J.G. Summit Holdings, Inc. v CA, GR 124293, January 31, 2005;
(c) P.C. Javier & Sons, Inc., et al. V CA, et al., GR 129552, June 29, 2005 ;
(d) Hyatt Elevators v Goldstar Elevators Phils., GR 161026, October 24, 2005.
2.4 Internal organization of the corporation
(a) Adoption and approval of By-laws (Secs. 46, et seq.)
(i) When to adopt and file (Sec. 46);
(ii) Contents (Sec. 47).
(b) Election of directors
(c) Commencement of business (Sec. 22; SEC Rules on Suspension/Revocation of the
Certificate of Registration of Corporations dated December 29, 1992)
(i) Non-use of charter;
(ii) Continuous inoperation.
2.5 Cases:
(a) Loyola Grand Villas Homeowners (South) Association, Inc. v CA, et al., GR 117188,
August 7, 1997;
(b) Sawadjaan v CA, GR 141735, June 8, 2005.
2.6 Amendment of Articles of Incorporation and By-laws (Secs. 16, 17, and 48)
(a) Procedure
(b) Date of effectivity of amendment
3 THE CORPORATE ENTITY
3.1 Distinct personality
(a) Doctrine of separate juridical personality
(b) Piercing the veil of corporate fiction
(i) When applied;
(ii) When not applied;
(iii) Consequences when veil is pierced.
3.2 Cases:
(a) De Leon, et al. v NLRC, et al., GR 112661, May 30, 2001 ;
(b) Lipat, et al. v Pacific Banking, et al., GR 142435, April 30, 2003 ;
(c) Pamplona Plantation Co., Inc. v Tinghil, et al., GR 159121, February 3, 2005;
(d) Mobilia Products, Inc. v Umezawa, G.R. 149357, March 4, 2005;
(e) Jardine Davies, Inc. v JRB Realty, Inc., GR 151438, July 15, 2005;
(f) Mendoza, et al. v Banco Real Development Bank, GR 140923, September 16, 2005;
(g) Apex Mining Co., Inc. v Southeast Minanao Gold Mining Corp., et al., GR 152613,
June 23, 2006;
(h) Excellent Quality Apparel, Inc v Win Multi Rich Builders, Inc., GR 175048, February
10, 2009;
(i) Pantranco Employees Association, et al. v NLRC, et al., GR No. 170689, March 17,
2009 ;
(j) Rivera v United Laboratories, Inc., GR 155639, April 22, 2009.
3.3 Entitlement of corporation to moral damages (see Filipinas Broadcasting Network v Ago
Medical and Educational Center, et al., GR 141994, January 17, 2005)
3.4 Corporate liabilities:
(a) Contractual
(b) For torts
(c) For crimes
4 POWERS OF CORPORATIONS
4.1 In general (Sec. 36)
4.2 Specific powers
(a) To extend or shorten corporate term (Sec. 37; compare with Sec. 81;
(b) To increase or decrease capital stock (Sec. 38);
(c) To incur, create or increase bonded indebtedness (Sec. 38);
(d) To deny pre-emptive rights (Sec. 39);
(e) To sell or otherwise dispose of corporate assets (Sec. 40);
(f) To acquire own shares (Sec. 41);
(g) To invest corporate funds in another corporation or business (Sec. 42);
(h) To declare dividends (Sec. 43);
(i) Cash;
(ii) Stock;
(iii) Property;
(iv) Interim;
(v) Record date;
(vi) Limitation on retention of surplus profits.
(i) To enter into management contracts (Sec. 44).
4.3 Additional material: SEC Memorandum Circular No. 11, dated December 5, 2008, re
Guidelines on the Determination of Retained Earnings Available for Dividend
Declaration, particularly the last paragraph of Section 5.
4.4 Implied powers
4.5 Ultra vires acts (Sec. 45)
5 STOCKHOLDERS
6 BOARD OF DIRECTORS
7 OFFICERS
8 MEETINGS
9 BOOKS AND RECORDS
10 MERGERS AND CONSOLIDATIONS
11 NON-STOCK CORPORATIONS
12 CLOSE CORPORATIONS
13 EDUCATIONAL CORPORATIONS
14 RELIGIOUS CORPORATIONS
15 DISSOLUTION
16 FOREIGN CORPORATIONS

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