CORPORATION AND BASIC SECURITIES LAW
Atty. Ronalyn V. Puatu-Suguitan
Saturday, 6:00 - 9:00 pm
I. INTRODUCTION
A. General
B. Kinds of Business Organizations
1. Sole Proprietorship
a) Yon Mitori vs. Union Bank, GR No.
225538, October 14, 2020
2. Partnership
3. Joint Venture
4. Corporation
a) Advantages / Disadvantages of the corporate form of
business
b) Distinctions between a corporation and partnership
c) Government power in relation to corporations
C. Historical Background
II. Definition & Attributes (R.A. No. 11232, Section 2)
1. Concession Theory
Tayag vs Benguet Consolidated, Nov. 29, 1968*
2. Doctrine of Separate Judicial Personality
Lim vs. Court of Appeals, G.R. No.124715, January 24, 2000, 380*
Stradcom vs Orpilla, July 2, 2018*
The Linden Suites vs Meridien, GR 211969, Oct. 4, 2021*
a. Stockholders’ interest in Corporate properties
Wise & Co. vs Man Sung Lung, 69 Phil 309*
Saw vs CA, 195 SCRA 740*
b. Separate Obligations
Vasquez vs De Borja, 74 Phil 560*
c. Limited Liability Rule
d. As to rights
Stonehill vs Diokno, June 19, 1967*
Manila Gas Corp vs CIR, 62 Phil 895*
e. Liability for Torts
PNB vs CA. 83 SCRA 237, 1978*
f. Entitlement to moral damages (Art. 2219[7], Civil Code)
Meralco vs TEAM Electronics, Dec. 13, 2007*
Eternal Gardens vs Perlas, Sept. 7, 2020*
Noelle Whessoe vs Independent Testing, Nov. 7, 2018*
Arco Pulp and Paper vs. Lim, GR 206806, June 25, 2014*
g. Liability for Crimes
Ching vs Secretary of Justice, Feb. 6, 2006*
3. Doctrine of Piercing the Corporate Veil; Liability of Directors and
Officers
a. Kinds of Piercing
i. Traditional veil-piercing action
ii. Reverse Piercing action
b. Three-pronged Control Test
4. Nationality of Corporations
a. Place of Incorporation Test
b. Wartime Control Test
c. Investment Test
d. Control Test vs. Grandfather Rule
Gamboa vs. Teves (G.R. No. 176579, June 28, 2011; October 9,
2012)*
SEC Memorandum Circular No. 8 series of 2013 - Guidelines on
the Compliance of with Filipino-Foreign Ownership Requirements
Prescribed in the Constitution and/or Existing Laws by Corporations
engaged in Nationalized and Partly Nationalized Activities
Narra Nickel Mining vs. Redmont Mines (722 SCRA, April 21,
2014; MR January 28, 2015 re majority decision)*
Roy III vs. Herbosa (GR No. 207246, November 11, 2016; April 18,
2017)*
5. Trust Fund Doctrine
B. Kinds of Corporation
1. Stock Corporation – R.A. No. 11232, Section 3
2. Non-Stock Corporation –R.A. No. 11232, Sections 86-87
3. Close Corporation –R.A. No. 11232, Section 95
4. Educational Corporations –R.A. No. 11232, Section 105
5. Religious Corporation– R.A. No. 11232, Sections 107-08
6. One Person Corporation— R.A. No. 11232, Section 115
C. Incorporation and Organization
1. Number and Qualification of Incorporators –R.A. No. 11232,
Section 10, 2. Corporate Name –R.A. No. 11232, Section 14, 17-18
3. Capitalization – R.A. No. 11232, Section 12
4. Corporate Term – R.A. No. 11232, Section 11
5. Classification of Shares – R.A. No. 11232, Sections 6-9
6. Articles of Incorporation - R.A. No. 11232, Sections 13-15
7. By-Laws - R.A. No. 11232, Sections 45-47
8. Corporate Officers –R.A. No. 11232, Section 24
9. De Facto Corporation –R.A. No. 11232, Section 19
10. Corporation by Estoppel –R.A. No. 11232, Section 20
D. Directors and Trustees
1. Qualifications and Disqualifications – R.A. No. 11232,
Sections 22-26 2. Elections –R.A. No. 11232, Sections 23 and
25, 91
3. Independent Directors –R.A. No. 11323, Section 22
4. Term, Holdover, and Removal –R.A. No. 11232, Section 22
and 27 5. Compensation – R.A. No. 11232, Section 29
6. Vacancy –R.A. No. 11232, Sections 28 and 25
7. Voting Requirements
8. Duties and Liabilities
9. Doctrine of Centralized Management
10. Business Judgment Rule
11. Doctrine of Apparent Authority
12. Doctrine of Ratification or Estoppel
1
E. Powers of Corporations; Incidental Powers; Ultra Vires Doctrine (R.A.
No. 11232, Sections 35-44)
F. Stockholders and Members
1. Doctrine of Equality of Shares
2. Participation in Management; Voting Requirements
3. Proprietary Rights
a. Right to Dividends –R.A. No. 11232, Section 42
b. Right to Inspection –R.A. No. 11232, Sections 73-74
c. Pre-Emptive Right –R.A. No. 11232, Section 38
e. Appraisal Right –R.A. No. 1123, Sections 80-85
4. Derivative Suit/Intra-Corporate Suit
5. Delinquency –R.A. No. 11232, Sections 67-70
6. Certificate of Stock –R.A. No. 11232, Sections 62 and 63
G. Mergers and Consolidations – R.A. No. 11232, Sections 75-79
1. Asset Only Transfer
2. Business Enterprise Transfer
H. Corporate Dissolution and Liquidation (R.A. No. 11232, Sections 133-138)
I. Foreign Corporations –R.A. No. 11232, Sections 140-153
1. Personality to Sue and Suability
2. Foreign Investments Act (R.A. No. 7042, as amended by R.A. No.
11647) a. “Doing Business in the Philippines”
b. Registration Requirement– Section 5, RA 7042, as amended
c. Nationalized Activities and the Negative List
VIII. SECURITIES REGULATION CODE (R.A. No. 8799)
A. Framework for Regulating of Securities Trading – R.A. No. 8799,
Sections 8-10 B. Concept of Securities; Howey Test – R.A. No. 8799,
Section 3
