THE CORPORATION CODE

TITLE 1: GENERAL PROVISIONS

A. DEFINITIONS AND ATTRIBUTES OF CORPORATIONS 319

1. Scope of the law
2. Definition of a Corporation
3. Attributes of a corporation
a. Artificial person
i. Theory of corporate fiction
b. Created by operation of law
i. Special incorporation law
ii. General incorporation law
c. Right of succession
d. Powers, attributes, rights, and properties expressly authorized by law or incident to its
existence
4. Piercing the veil of corporate entity
5. Instances when the theory of corporate fiction may be disregarded

B. OTHER BUSINESS ORGANIZATIONS 322

1. Distinction between a Partnership and a Corporation
a. Manner of creation
b. Number of incorporators
c. Commencement of juridical personality
d. Powers
e. Management
f. Effect of mismanagement
g. Right of succession
h. Extent of liability to third persons
i. Transferability of interest
j. Term of existence
k. Firm name
l. Dissolution
2. Similarities between a Partnership and a Corporation
a. Juridical personality
b. Act only through agents
c. Composed of an aggregate individual
d. Distributes its profits
e. Law authorizes its organization
f. Taxable
3. Advantages and Disadvantages of being a Corporation
4. Business organizations that are similar to partnerships and corporations
a. Joint stock company
b. Joint account
c. Joint venture
d. Business trust

C. CLASSIFICATIONS AND COMPONENTS 327

1. Corporations as classified in the Corporation Code
a. Stock
b. Non-stock
2. Other classifications of corporations
a. Number of persons
i. Corporation aggregate
ii. Corporation sole
 b. Religious or not
i. Ecclesiastical Corporation
ii. Lay Corporation
c. Charitable or not
i. Eleemosynary Corporation
ii. Civil Corporation
d. Laws of incorporation
i. Domestic Corporation
ii. Foreign Corporation
e. Legal status
i. De jure Corporation
ii. De facto Corporation
f. Public or not
i. Close Corporation
ii. Open Corporation
g. Control
i. Parent or holding Corporation
ii. Subsidiary Corporation
h. True sense or limited sense
i. True Corporation
ii. Quasi- Corporation
 Corporation by prescription
 Corporation by estoppel
i. Public or private purposes
i. Public Corporation (Municipal Corporation)
ii. Private Corporation (Public utilities/Public services Corporation)
3. Under what laws can a corporation be created in the Philippines
a. Special incorporation law
b. General incorporation law
4. Components of a Corporation
a. Corporators
b. Incorporators
c. Stockholders
d. Members
5. Promoters
6. Subscribers

D. CAPITAL STOCK, CAPITAL, AND SHARES 333

1. Different terms on capital stock and capital
a. Capital stock
b. Authorized capital stock
c. Subscribed capital stock
d. Outstanding capital stock
e. Paid-up capital stock
f. Unissued capital stock
g. Capital
h. Circulation capital
i. Working capital
2. Distinguish capital from capital stock
3. Share of stock
4. Nature of share of stock
5. Certificate of stock
6. Distinguish share of capital from certificate of stock
7. Extent of the power of the corporation to classify its shares
8. Presumption established by law with respect to shares of stock
 9. Main classes of shares
a. Par value share
b. No par value share
c. Voting share
d. Non-voting share
e. Common share
f. Preferred share
g. Promotion share
h. Share in escrow
i. Convertible stock
j. Founders’ share
k. Redeemable share
l. Treasury share
10. Consideration for no par value shares
11. Advantages of par value shares
12. Disadvantages of par value shares
13. Advantages of no par value shares
14. Disadvantages of no par value shares
15. Kinds of preferred shares
a. Preferred shares as to Assets
b. Preferred shares as to Dividends
16. Matters when holders of non-voting shares nevertheless be entitled to vote
17. Limitations on the issuance of preferred shares as to assets
18. Kinds of Preferred shares
a. Cumulative preferred share
b. Non-cumulative preferred share
c. Participating preferred share
d. Non-participating preferred share
e. Cumulative-participating preferred share

TITLE 2: INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS

A. INCORPORATION 345
1. Distinguish primary franchise from secondary franchise
2. Steps in the creation of a corporation
a. Promotion
b. Incorporation
c. Formal organization and commencement of business operations
3. Incorporation includes
4. Basic contents of an articles of incorporation
5. Name that may be adopted by a corporation
6. Other limitations on the purpose/s for which a corporation may be formed
7. Main reason for the purpose/s of a corporation
8. Term of corporate existence
9. Qualifications required of incorporators
10. Minimum subscription requirements for incorporation under the Code
11. When does a corporation commence to have a juridical personality

B. CORPORATE CHARTER 351

1. Corporate charter definition
2. Distinguish charter from franchise
3. What constitutes the charter of a corporation
a. Corporations organized under the Corporation Code
b. Corporations created by special laws
 4. Nature of the Corporate Charter
5. Basis pf the power of Congress to amend the charter of a corporation
 Certificate of incorporation
6. Basis of the power of stockholders/members to amend the articles of incorporation
7. Is a meeting required for the amendment of AOI
8. Limitations on the power of a corporation to amend its AOI
9. Grounds when AOI or any amendment thereto may be rejected/disapproved by the SEC
10. Grounds for the suspension/revocation of the certificate of registration of corporation under
Presidential Decree No. 902-A

C. DE JURE AND DE FACTO CORPORATIONS/ CORPORATION BY ESTOPPEL 356

1. De jure corporation
2. Kinds of defective corporation
a. De facto corporation
b. Corporation by estoppel
c. Corporation by prescription
3. De facto corporation
4. Requisites of de facto corporation
5. Examples of defects which will preclude the creation even of a de facto corporation
6. Examples of defects which do not preclude the creation of a de facto corporation
7. Who can question the validity of corporate existence?
8. Rules on liability where a corporation by estoppel is present
9. Conditions precedent
10. Conditions subsequent
11. Formal organization and commencement of business operations include

TITLE 3: BOARD OF DIRECTORS/TRUSTEES/OFFICERS 362

1. Basic rules on the board of directors/trustees

2. General limitations on the powers of the board of directors/trustees
3. May a corporation enter into a contract of partnership?
4. May the president of a corporation act by virtue of a resolution approved at an annual meeting of
stockholders/members empowering said officer to enter into a contract and in behalf of the
corporation?
5. Requisites for a valid board meeting
6. Qualifications required by the Corporation Code of directors in a stock corporation
7. Qualifications required by the Corporation Code of trustees in a non-stock corporation
8. May additional qualifications for directors be prescribed by the by-laws?
9. Methods of voting for directors in stock corporations
a. Straight voting
b. Cumulative voting for one candidate
c. Cumulative voting by distribution

~
TITLE 4: POWERS OF THE CORPORATION 376

1. Does the corporation have the power to do all acts not expressly or impliedly prohibited by law?
2. Classification of corporate powers
a. Express
i. Power of succession
ii. Power to have a corporate name
iii. Power to adopt a corporate seal
iv. Power to acquire, hold or dispose property as its business may reasonably require
v. Power to adopt and amend its bylaws
b. Implied
c. Incidental powers
3. General powers expressly given to corporations
4. Classification of Implied Powers 378
a. Acts in the usual course of business
b. Acts to protect debts owing to the corporation
c. Acts which involve embarking on a different line of business
d. Acts which are partly or wholly designed to protect or aid employees
e. Acts to increase the business of the corporation
5. Other powers expressly conferred by other specific provisions of the Code
6. Limitations on the power of a corporation to extend its term
7. Power to increase/decrease in the capital stock of a corporation
8. Limitations on the power to increase/decrease in the capital stock
9. Legal basis of the corporate power to incur bond indebtedness
10. Stockholders right of pre-emption 381
a. Reasons underlying the right of pre-emption
b. Remedies of the stockholder in case his pre-emptive right is denied
11. Sale or Disposition of all or substantially all of its Assets
12. Power to acquire its own shares 384
a. Limitations on the power of the corporation to purchase or acquire its own shares
b. Cases when the corporation may purchase or acquire its own shares
13. Power to Invest Corporate Funds in Another Corporation or Business for Any Other Purpose
14. Power to Declare Dividends 387
a. Retained earnings
b. Kinds of dividend
c. Revocation
d. Effects of declar
e. Declaration of dividend
f. Distinction between cash dividend and stock dividend
15. Powers of the corporation to enter into a management contract 395
16. Ultra vires act 395
17. Intra vires act

TITLE 5: BY - LAWS 397

TITLE 6: MEETINGS 401

1. Kinds of meetings
2. Requisites of a valid meeting
3. Proper place for holding meetings
4. Proper person to call a meeting
5. Various voting proportions required for the approval of certain corporate acts
6. Manner by which a stockholder or member may vote
7. Proxy
8. Voting trust agreement 407
a. Purposes
 b. Limitations
9. Voting trust certificate
10. Powers of a voting trustee
11. Distinction between proxy and voting trust

TITLE 7: STOCKS AND STOCKHOLDERS 411

1. Subscription contract
2. Sources of corporate assets
3. Issue of stock
4. Different modes of issuance of shares
5. For what consideration may stock be issued?
6. Distinguish subscription of share from purchase of shares
7. Requisites for the validity of stock transfer
8. Effects of the failure to register a transfer of shares
9. Nature of the relation of a stockholder in a corporation
10. Rights and remedies of stockholders
11. Derivative suit
12. Watered stock
13. Liability to unpaid subscriptions
14. Remedies available to the corporation to enforce payment of stock subscription
15. Call
16. Assessment
17. Stock delinquent
18. Highest bidder

TITLE 8: CORPORATE BOOKS AND RECORDS 424

TITLE 9: MERGER AND CONSOLIDATION 427
TITLE 10: APPRAISAL RIGHT 430
TITLE 11: NON-STOCK CORPORATION 431
TITLE 12: CLOSE CORPORATIONS 435
TITLE 13: SPECIAL CORPORATIONS 438

CHAPTER III: ONE PERSON CORPORATIONS

TITLE 14: DISSOLUTION 441

TITLE 15: FOREIGN CORPORATIONS 446
TITLE 16: MISCELLANEOUS PROVISIONS 448