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Textbook:
PHILIPPINE CORPORATE LAW (Latest Edition)
by: Atty. Cesar L Villanueva
Grading System:
Recitation - 30%
Quizzes - 10%
Prelim - 20%
Midterms - 20%
Finals - 20%
I HISTORICAL BACKGROUND
1 Philippine Corporate Law:1[2] Sort of Codification of American Corporate
Law
Harden v Benguet Consolidated Mining, 58 Phil 141 (1933)
2 The Corporation Law
3 The Corporation Code
4 Proper Treatment of Philippine Corporate Law
II CONCEPTS
1 Definition (Section 2; Articles 44(3), 45, 46, and 1775, Civil Code)
Monfort Hermanos Agricultural Dev. Corp. v. Monfort III, 434 SCRA 27 (2004)
2 Tri-Level Existence of the Corporation
(a) Aggregation of Assets and Resources
(b) Business Enterprise or Economic Unit
(c) Juridical Entity
3 Relationships Involved in a Corporate Setting
(a) Juridical Entity Level
(b) Contractual Relationship Level
Between the corporation and its agents or representatives
Between the corporation and its shareholders or members
Between and among the shareholders in a common venture
Between the corporation and third-parties or "outsiders"
4 Theories on the Formation of Corporation:
(a) Theory of Concession
Tayag v Benguet Consolidated, 26 SCRA 242 [1968])
International Express Travel & Tour Services, Inc v Court of Appeals, 343
SCRA 674 (2000)
Torres v Court of Appeals, 278 SCRA 793 (1997)
Ang Pue & Co v Sec of Commerce and Industry, 5 SCRA 645 (1962)
(b) Theory of Enterprise Entity
1
PSE v Court of Appeals, 281 SCRA 232 (1997)
Tan Boon Bee & Co, Inc v Jarencio, 163 SCRA 205 (1988)
5 Four Attributes of a Corporation from its Statutory Definition:
(a) A corporation is an artificial being
(b) Created by operation of law
(c) With right of succession
(d) Has the powers, attributes and properties expressly authorized by
law or incident to its existence
Reynoso IV v. Court of Appeals, 345 SCRA 335 (2000)
Shipslide, Inc. v Court of Appeals, 352 SCRA 334 (2001)
6 Advantages and Disadvantages of Corporate Form:
(a) Four Basic Advantageous Characteristics of Corporate Organization:
(i) STRONG LEGAL PERSONALITY
Remo, Jr v IAC, 172 SCRA 405 (1989)
PLDT v. NTC, 190 SCRA 717 (1990)
DBP v. NLRC, 186 SCRA 841 (1990)
(ii) LIMITED LIABILITY TO INVESTORS AND OFFICERS
Edward Keller v. COB Group Marketing, 141 SCRA 86 (1986)
PNB v. Hydro Resources Contractors Corp., 693 SCRA 294 (2013)
Halley v. Printwell, Inc. 649 SCRA 116 (2011)
Land Bank of the Philippines v. Court of Appeals, 364 SCRA 375 (2001)
San Juan Structural and Steel Fabricators, Inc v Court of Appeals, 296
SCRA 631 (1998)
Consolidated Bank and Trust Corp v Court of Appeals, 356 SCRA 671(2001)
Malayang Samahan ng mga Manggagawa sa M Greenfield v Ramos, 357
SCRA 77 (2001)
(iii) FREE TRANSFERABILITY OF UNITS OF OWNERSHIP FOR INVESTORS
(iv) CENTRALIZED MANAGEMENT
(b) Disadvantages:
(i) Abuse of corporate management
(ii) Abuse of limited liability feature
(iii) Cost of maintenance
(iv) Double taxation Sec 24(B)(2), 1997 NIRC; Sec 27(D)(4), 1997 NIRC;
Sec 29, 1997 NIRC
7 COMPARED WITH OTHER BUSINESS MEDIA
4 Distribution of Risk, Profit and Control 4
(a) Sole Proprietorships
(b) Partnerships and Other Associations (Arts 1768 and 1775, Civil Code)
- Can a defective attempt o form a corporation result at least in the
formation of a partnership?
Pioneer Insurance v Court of Appeals, 175 SCRA 668 (1989)
(c) Joint Ventures
Kilosbayan, Inc v Guingona, Jr, 232 SCRA 110 (1994)
(d) Cooperatives (Art 3, RA No 6938)
Corpuz v Grospe, 333 SCRA 425 (2000)
(e) Business Trusts (Article 1442, Civil Code)
(f) Sociedades Annimas
2
Mead v McCullough, 21 Phil 95,106 (1911)
Benguet Consolidated Mining Co v Pineda, 98 Phil 711 (1956)
Phil Product Co v Primateria Societe Anonyme, 15 SCRA 301 (1965)
(g) Cuentas En Participacion - Article 239 of the Code of Commerce
Bourns v Carman, 7 Phil 117 (1906)
3
Filipinas Broadcasting Network v. Ago Medical and Educational Center, 448
SCRA 413 (2005)
Acebedo Optical Co. v. Court of Appeals, 329 SCRA 314 (2000)
Mambulao Lumber Co v Philippine National Bank, 22 SCRA 359 (1968)
APT v Court of Appeals, 300 SCRA 579 (1998)
Prime White Cement Corp v IAC, 220 SCRA 103 (1993)
LBC Express, Inc v Court of Appeals, 236 SCRA 602 (1994)
Acme Shoe, Rubber & Plastic Corp v Court of Appeals, 260 SCRA 714 (1996)
Solid Homes, Inc v Court of Appeals, 275 SCRA 267 (1997)
ABS-CBN Broadcasting Corp v Court of Appeals, 301 SCRA 589 (1999)
4
DOJ Opinion 163, s 1973; SEC Opinion dated 15 July 1991, XXV
SEC QUARTERLY BULLETIN, (No 4December, 1991), at p 31
Cable Industry
(d) Advertising Business (Sec 11(2), Art XVI, 1987 Constitution)
(e) War-Time Test
Filipinas Compania de Seguros v Christern, Huenefeld & Co, Inc, 89 Phil 54
[1951]
Davis Winship v Philippine Trust Co, 90 Phil 744 [1952]
Haw Pia v China Banking Corp, 80 Phil 604 [1948]
(f) Investment Test as to "Philippine Nationals" (Sec 3(a) &(b), RA 7042,
Foreign Investments Act of 1992)
(g) Special Classifications (Sec 140)