CORPORATION LAW

OBE Syllabus
(AY 2021-2022)
Atty. Leah JOSE-Sebastian

COURSE DESCRIPTION:

This course introduces students to the Philippines’ legal framework governing

corporations registered in the Securities and Exchange Commission (SEC):

1. Revised Corporation Code (Republic Act No. 11232);

2. Various SEC Memorandum Circulars and rules implementing RA 11232;

3. Related laws such as SEC Reorganization Act (PD No. 902-A), Anti-Dummy Law
(Commonwealth Act No. 108, as amended), Securities Regulation Code (RA 8799),
Foreign Investments Act of 1991 (RA 7042, as amended by RA 8179), Retail Trade
Liberalization Act of 2000 (Republic Act No. 8762), and Philippine Competition
Act (RA 10667); and

4. Related SEC Opinions and En Banc Cases.

This course examines the legal principles of corporation law in the context of –

(i) business operations, whether for profit or non-profit; and

(ii) the enforcement powers of the SEC

and in relation to –

(i) the powers and obligations of corporations,

(ii) the duties of the Board of Directors/Trustees,
(iii) the rights of shareholders/members and other stakeholders, and
(iv) good corporate governance.

Lessons follow the “life cycle” of corporations from incorporation to running the business,
growing the business, and dissolution.

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COURSE OBJECTIVES:

This course seeks to enable Law students -

1. To fully understand the legal framework for the regulation of corporations
in the Philippines and the requirements for compliance with corporation
law;
2. To determine valid and invalid corporate transactions, and Board and
shareholder/member meetings and resolutions;
3. To identify the duties of corporations, Board members, corporate officers
and shareholders/members under corporation law; and
To determine the liabilities of corporations, Board members, corporate officers and
shareholders/members to various stakeholders, and the remedies available to
stakeholders for enforcing those liabilities.

PEDAGOGY:

As far as practicable, we will hold the class like a regular, pre-pandemic class, except
that classes will be held online on the assigned day(s). Recitation will be graded and will
follow the Syllabus.

Practical exercises such as preparation of Articles of Incorporation and By-Laws may be

assigned.

Basis of grades:
Recitation: 30%
Midterm exam: 35%
Final exam: 35%

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 PART I
Aug 28 – Introduction
Sept 4
I. OVERVIEW

A. Historical Background of Commercial Entities and Corporation

Law in the Philippines

1. Sociedades Anonimas
Sec. 191, Corporation Law (Act No. 1459)

Cases:
Mead v McCullough, 21 Phil 95 (1911)
Philippine Products Company v Primateria Societe Anonyme Pour Le
Commerce Exterieur, GR No. L-17160 (1965)

2. Corporation Law (Act No. 1459 of the Philippine Commission, effective

April 1, 1906)

Cases:
Harden v Benguet Consolidated Mining Company, 58 Phil 141 (1933)
Reyes v Blouse, 91 Phil 305 (1952)

3. Anti-Dummy Law (Commonwealth Act No. 108, as amended) (1936)

4. New Civil Code (Republic Act No. 386, 1949) - Title IX, Partnership

5. Bulk Sales Law (Act No. 3952, December 1972)

6. SEC Reorganization Act (PD No. 902-A, March 1976)

7. The Corporation Code (BP Blg. 68, effective May 1, 1980)

8. Revised Securities Act (BP Blg 178, 1982)

9. Foreign Investments Act of 1991 (RA 7042, as amended)

10. Retail Trade Liberalization Act of 2000 (Republic Act No. 8762, March
2000)

11. Securities Regulation Code (RA 8799, July 19, 2000)

12. Revised Corporation Code (RA 11232, effective February 23, 2019)

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B. The Corporation as a Regulated Legal Entity

Corporation Code (“CC”), Sec. 2

Revised Corporation Code (“RCC”), Sec. 2, Sec. 18
RCC, Sec. 177, 178

Civil Code, Art. 44, Art. 45, Civil Code

Civil Code, Art. 1775
1987 Constitution, Art. XII, Sec. 16

Cases:
Sulo ng Bayan v. Gregorio Araneta, Inc., G.R. No. L-31061 August 17, 1976
J.R.S. Express Corp. v. Imperial Insurance, Inc. 11 SCRA 634 (1964)
Vasquez v. Borja, 74 Phil. 560 (1944)
Bataan Shipyard & Engineering v. PCGG, 150 SCRA 181 (1987)
San Juan Structural and Steel Fabricators v. Court of Appeals 296 SCRA 631
(1998)
International Travel & Tour Services v. Court of Appeals, 343 SCRA 674
(2000)
San Fernando Regala Trading v. Cargill Philippines, 707 SCRA 187 (2013)
Mayor v. Tiu, G.R. No. 203770, November 23, 2016

1. Corporate powers; Ultra vires acts

RCC, Sec. 35-43, Sec. 44

Cases:
Magallanes Watercraft Association, Inc. v. Auguis,
G.R. No. 211485, May 30, 2016
Pirovano v. De la Rama Steamship Co., 96 Phil. 335 (1954)

2. The Veil of Corporate Fiction; Piercing the Veil of Corporate

Fiction; Reverse Corporate Piercing

Cases:
Concept Builders, Inc. v. NLRC, 257 SCRA 149 (1996)
General Credit Corp. v. Alsons Dev. and Investment Corp., 513 SCRA
225 (2007)
Zambrano v. Philippine Carpet Manufacturing Corp., G.R. No. 224099,
June 21, 2017

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 California Manufacturing Co. v Advanced Technology System, 824
SCRA 295 (2017)
Aboitiz Equity Venture v. Chiongbian, 729 SCRA 580 (2014)
Halley v. Printwell, 649 SCRA 116 (2001)
Kilosbayan, Inc. v. Guingona, Jr., 232 SCRA 110 (1994)
Mabuhay v. Sembcorp, G.R. No. 212734, December 5, 2018
International Academy of Management and Economics (I/AME) v.
Litton and Company, Inc., GR No. 191525, December 13, 2017

3. The Parent-Subsidiary Relationship (Overview by LJS)

Cases:
Pacific Rehouse Corp. v. Court of Appeals, 719 SCRA 665 (2014)
Maricalum Mining Corp. v Florentino, GR No. 221813, July 23, 2018
ABS-CBN Broadcasting Corporation v. Hilario G.R. No. 193136, July 10,
2019

4. Corporate Negligence

Case:
Professional Services, Inc. v. CA, 611 SCRA 282 (2010)

Sept 11

5. Stock Corporation, Non-stock Corporation, and Corporations

Vested with Public Interest

RCC, Sec. 3, Sec. 86, Sec. 87, Sec. 22-24, Sec. 29, Sec. 31, Sec. 46 (k)
RCC, Sec. 62, Sec. 89
RCC, Sec. 177

Cases:
Fairways & Bluewater Resort and Country Club, Inc. v. Corporate
Governance and Finance Department, SEC En Banc Case No. 03-17-424
(2019)
Simex International Manila, Inc. v. Court of Appeals
G.R. No. 88013 March 19, 1990

6. Other vehicles for doing business

Sole proprietorship

Case:

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

Joint Accounts

Case:
Bourns v. Carman, 7 Phil 117 (1906)

Business Trust
Art. 1440-1457, Civil Code
Sec. X 401, X403, Manual of Regulations for Banks, available at
http://www.bsp.gov.ph/downloads/Regulations/MORB/Sep2017MOR
B1.pdf

Partnership
Art. 1767, Art. 1768, Art. 1772, Art. 1828, Art. 1830, Civil Code
Art. 1816, 1817, 1824 and 1839, Civil Code

Cases:
Pioneer Insurance & Surety Corp. v. Court of Appeals, 175 SCRA 668
(1989)
Lim Tong Lim v. Philippine Fishing Gear Industries, Inc., 317 SCRA 728
(1999)

Joint Venture
Philippine Competition Commission Guidelines on the Notification of
Joint Ventures, Sec. 2.1 (b), (c), (d)

Cases:
Aubach v. Sanitary Wares Mfg. Corp., 189 SCRA 130 (1989)
Kilosbayan, Inc. v. Guingona, Jr., 232 SCRA 110 (1994)

Cooperative

Republic Act No. 9520 (Philippine Cooperative Code of 2008)

Art. 3, Art. 4, Art. 6, Arts. 7-16

C. Theories of Formation of a Corporation

1. Theory of Concession

Cases:
Tayag v. Benguet Consolidated, Inc., 26 SCRA 242 (1968)

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 Ang Pue & Co. v. Secretary of Commerce and Industry, 5 SCRA 645
(1962)
Torres v. Court of Appeals, 278 SCRA 793 (1997)

2. Theory of Enterprise Entity

Berle, Adolf A. “The Theory of Enterprise Entity.” Columbia Law

Review, vol. 47, no. 3, 1947, pp. 343–358. JSTOR,
www.jstor.org/stable/1118398.

Cases:
Bache & Co. (Phil.), Inc. v. Ruiz, 37 SCRA 823 (1971)
Philippine Stock Exchange v. Court of Appeals, 281 SCRA 232
Tan Boon Bee & Co. v. Jarencio, 163 SCRA 205 (1988)

Sept 18
D. Classification of corporations

As to the State

1. Public Corporations
Act No. 1459, Sec. 3
GOCC Governance Act of 2011 (Republic Act No. 10149), Sec. 3, pars. (f),
(k), (m), (n), (o) and (p)

Cases:
National Coal Co. v. Collector of Internal Revenue, 46 Phil. 583 (1924)
Cervantes v. Auditor General, 91 Phil. 539 (1952)
Philippine Society for the Prevention of Cruelty to Animals v. COA, 534
SCRA 112 (2007)
Shipside, Inc. v. Court of Appeals, 352 SCRA 334 (2001)
Manila International Airport Authority v. Court of Appeals, 495 SCRA
591 (2006)
Boy Scouts of the Philippines v. COA, GR No. 177131 (June 7, 2011)

2. Quasi-Public Corporations

Case:
Marilao Water Consumers Association v. IAC, 201 SCRA 437 (1991)

3. Private Corporations: Stock and Non-Stock;

Public Companies
CC, Sec. 3; RCC, Sec. 3

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 CC, Sec. 87; RCC, Sec. 86
CC, Sec. 88; RCC, Sec. 87
Rule 3, par. 3.1.16, 2015 IRR, RA 8799 (Securities Regulation Code)

Cases:
Dante Liban v. Richard J Gordon, GR No. 175352, January 18, 2011
Mary Lou Geturbos Torres v. De Leon, GR No. 199440, January 2016
Philippine Veterans Bank v. Callangan, G.R. No. 191995, August 3, 2011
Philippine National Construction Corporation v. Pabion, G.R. No.
131715, December 8, 1999

As to place of incorporation

1. Domestic Corporation
2. Foreign Corporation
Sec. 123, CC; Sec. 140, RCC

As to legal status
1. De Jure Corporation

2. De Facto Corporation
CC, Sec. 20; RCC, Sec. 19

Cases:
The Missionary Sisters of Our Lady of Fatima v. Alzona, GR No. 224307
(2018)
Sawadjaan v. Court of Appeals, 549 SCRA 516 (2005)
Chung Ka Bio v. Intermediate Appellate Court, 163 SCRA 534
Hall v. Piccio 86 Phil 634 (1950)

3. Corporation by Estoppel
CC, Sec. 21; RCC, Sec. 20,

Cases:
Albert v. University Publishing Co., Inc., 13 SCRA 84 (1965)
Lim Tong Lim v. Philippine Fishing Gear Industries, Inc. 317 SCRA 728
Pioneer Insurance & Surety Corp. v. Court of Appeals, 175 SCRA 668
(1989)
Asia Banking Corp. v Standard Products, 46 Phil 145 (1924)
Lozano v. De Los Santos, 274 SCRA 452 (1997)
Paz v. New International Environmental University, Inc., 756 SCRA 284

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 People v. Garcia, 271 SCRA 621 (1997)
International Express Travel and Tour Services, Inc. v. CA, 343 SCRA
674 (2000)

4. Corporation by prescription

Case:
Barlin v. Ramirez, 7 Phil. 41 (1906)

Sept 25
PART II

I. THE SECURITIES AND EXCHANGE COMMISSION

Established under Commonwealth Act No. 83 (The Securities Act, Oct 6, 1936)

Re-organized under PD 902-A (SEC Re-organization Act, March 11, 1976), as

amended

A. Powers and Functions of the SEC

RCC, Sec. 154 – Sec. 172, Secs. 177, 179, 178, 182
Sec. 5, RA 8799 (Securities Regulation Code or SRC)
See also Sec. 6, SRC
SEC Memorandum Circular No. 11, Series of 2003 (Supervision Over
Registered Corporations)

Note: Sec. 2, 4 and 8 of PD 902-A, as amended, were repealed by RA 8799

Cases:
Philippine Stock Exchange v. Court of Appeals, 281 SCRA 232 (1997)
Concorde Condominium v. Augusto H. Baculio, GR 203678, Feb 17, 2016
SEC v. CJH Development Corporation, G.R. No. 210316, Nov. 28, 2016
Imperial v. Armes, G. R. No. 178842, January 30, 2017
First Philippine Holdings Corporation v. SEC,
G.R. No. 206673, July 28, 2020

II. FORMING THE CORPORATION

A. Incorporation and Organization of Private Corporations in

General

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 RCC, Sec. 3, Sec. 5 - Sec. 21
RCC, Sec. 38, Sec. 45 - Sec. 47, Sec. 59-63, Sec. 65
RCC, Sec. 173, 176, 177, 178, 181
Sec. 3.10, SRC
Rule 3.1.23, Rule 3.1.8, 3.1.2, 2015 SRC IRR
Sec. 37, RA 9266, Architecture Act of 2004

SEC Memorandum Circular No. 16, Series of 2020 (Guidelines on

Authentication of Articles of Incorporation for Registration of New
Domestic Corporations)1

Cases:
Cagayan Fishing Development Co., Inc. v. Sandiko, GR No. L-43350
(December 23, 1937)
Rizal Light & Ice Co. v. Municipality of Morong, Rizal, 25 SCRA 285 (1968)
Vda. De Salvatierra v. Garlitos, 103 Phil 757 (1958)

1. Pre-Incorporation; Pre-Incorporation Subscription

RCC, Sec. 59, Sec. 60

Cases:
Caram, Jr v. Court of Appeals, 151 SCRA 372 (1987)
Fong v. Duenas, GR No. 185592 (June 15, 2015)
Ong Yong v. Tiu, 401 SCRA 1 (2003)

2. Articles of Incorporation
RCC, Sec. 13, Sec. 14

Case:
Lanuza v. Court of Appeals, GR No. 131394 (March 28, 2005)

3. Corporate Name
RCC, Sec. 17, Sec. 159

SEC Memorandum Circular No. 13, Series of 2019 (Amended Guidelines

and Procedures on the Use of Corporate and Partnership Names)

DTI Department Administrative Order No. 18-07, Series of 2018 (Revised

Rules and Regulations Implementing Act No. 3883 Otherwise Known as An

1
SEC Memo Circulars available at the SEC website

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Act to Regulate the Use in Business Transactions of Names Other Than True
Names)

Cases:
Industrial Refractories Corp. v. Court of Appeals, 390 SCRA 252 (2002)
GSIS Family Bank-Thrift Bank v. BPI Family Bank, GR No. 175278
(September 23, 2015)
Indian Chamber of Commerce Phils., Inc. v. Filipino Indian Chamber of
Commerce in the Philippines, GR No. 184008 (August 3, 2016)
De La Salle Montessori v. De La Salle Brothers, GR 205548 (Feb 7 2018)

Oct 2

4. Purpose

SEC Opinion No. 08-24, October 22, 2008 (Advertising: Interpretation of

Purpose Clause)

Cases:
Uy Siuliong v. Director of Commerce and Industry, 40 Phil. 541 (1919)
Collector of Internal Revenue v. Club Filipino, 5 SCRA 321 (1962)
Gala v. Ellice Agro-Industrial Corp., 418 SCRA 431 (2003)

5. Principal Office
RCC, Sec. 13 (c)

SEC Memorandum Circular No. 6, Series of 2016 (Omnibus Guidelines on

Principal Office Address; Address of Each Incorporator, Director, Trustee,
Member)

Case:
Hyatt Elevators and Escalators Corp. v. Goldstar Elevators Phils., Inc., 473
SCRA 705 (2005)

6. Corporate Term
RCC, Sec. 11

SEC Memorandum Circular No. 22, Series of 2020 (Guidelines on

Corporate Term)

SEC Memorandum Circular No. 23, Series of 2019 (Guidelines on Revival

of Expired Corporations)

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7. Corporators; Incorporators
RCC, Sec. 5, Sec. 10, Sec. 164

SEC Memorandum Circular No. 16, Series of 2019 (Guidelines on the

Number and Qualification of Incorporators under the RCC)

SEC Memorandum Circular No. 1, Series of 2021 (Beneficial Ownership

Transparency Guidelines)

Cases:
Care Best International v. SEC, GR. No. 215510 (CA-GR SP No. 104364)
http://www.sec.gov.ph/wp-
content/uploads/2017/07/2017SCDecision_CareBestInternationlInc.pdf
ULEP v. The Legal Clinic, 223 SCRA 378 (1993)

8. Directors/Trustees
RCC, Sec. 13 (g), Sec. 22, Sec. 91

Case:
Ramirez v. Orientalist Co., 38 Phil. 634 (1918)

9. Authorized Capital Stock

RCC, Sec. 12, Sec. 13 (h)

10. Shares of stock/membership shares

RCC, Sec. 6, Sec. 7, Sec. 8, Sec. 9, Sec. 61, Sec. 64
RCC, Sec. 62, Sec. 23, Sec. 173, Sec. 176

Cases:
Garcia v. Lim Chu Sing, 59 Phil 562 (1934)
MR Holdings, Ltd. V. Bajar, 683 SCRA 336 (2012)
Republic Planters Bank v. Agana, 269 SCRA 1 (1997)
Commissioner of Internal Revenue v. Manning, G.R. No. L-28398,
August 6, 1975

11. Par Value Shares

RCC, Sec. 6

12. No Par Value Shares

RCC, Sec. 6, Sec. 13 (h)

Case:
Delpher Trades Corp. v. IAC, 157 SCRA 349 (1998)

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 13. Capital; Subscribed Capital; Outstanding Capital Stock
RCC, Sec. 173

Cases:
NTC v. Court of Appeals, 311 SCRA 508 (1999)
Phil. Trust Co. v. Rivera, 44 Phil 469 (1923)

14. By-Laws

Cases:
PMI Colleges v. NLRC, 277 SCRA 462 (1997)
China Banking Corporation v. Court of Appeals, GR No. 117604 (March 26,
1997)
Gokongwei v. SEC, 89 SCRA 337 (1979)
Bernas v. Cinco, 761 SCRA 104

Oct 9
B. Close Corporations (v. Ordinary Stock Corporations)

RCC, Sec. 95 – 104

Cases:
Emilio Cano Enterprises v. CIR, 13 SCRA 291 (1965)
Manuel R. Dulay Enterprises v. CA, 225 SCRA 678 (1993)
Sergio F. Naguiat v. NLRC, 269 SCRA 564 (1997)
San Juan Structural v. CA, 296 SCRA 631 (1998)
Gala v. Ellice Agro-Industrial Corp., 418 SCRA 431 (2003)
Andaya v. Rural Bank of Cabadbaran, 799 SCRA 325 (2016)
Bustos v Millians Shoe, Inc., 824 SCRA 67 (2017)
Florete, Sr. v. Florete, Jr., G.R. Nos. 223321, 02 April 2018

C. One Person Corporation (v. Ordinary Stock Corporations)

RCC, Sec. 115 – Sec. 132

SEC Memorandum Circular No. 7, Series of 2019

Guidelines on Establishment of a One Person Corporation (OPC)

SEC Memorandum Circular No. 27, Series of 2020 (Guidelines for

Conversion Either to OPC or Ordinary Stock Corporation)

Page 13 of 28
D. Non-stock Corporations, Foundations, and Special Corporations

RCC, Secs. 3, 13, 23, Sec. 174

RCC, Secs. 86 – 94
RCC, Secs. 105 – 106, RCC (Educational corporations); Sec. 25, BP Blg. 232

SEC Memorandum Circular No. 8, Series of 2006 (Revised Guidelines on

Foundations)

See also SEC Memorandum Circular No. 15, Series of 2018 (Guidelines for
Protection of NPOs)

SEC Memorandum Circular No. 10, Series of 2016 (Nationality of Non-stock

corporations)

SEC OGC Opinion No. 16-12 (24 May 2016) (Nationality Requirement for
Non-Stock, Non-Profit Corporations)

See also RA 4726 (The Condominium Act), as amended by RA 7899

SEC OGC Opinion No. 14-19 (15 July 2014) (Anti-Dummy Law in
Condominium Corporations)

Cases:
Tan v. Sycip, 499 SCRA 216 (2006)
CIR v. University of Visayas, 1 SCRA 669 (1961)
Commissioner of Internal Revenue v. Club Filipino Inc. de Cebu, 5 SCRA
321 (1962)
People v. Menil, 340 SCRA 125 (2000)
Calatagan Golf Club, Inc. v. Clemente, Jr., 585 SCRA 300 (2009)
Valley Golf & Country Club v. Vda. De Caram, 585 SCRA 218 (2009)
Barayuga v. Adventist University of the Philippines, 655 SCRA 640 (2011)
Ao-as v. CA, 491 SCRA 339 (2006)

Oct 16
Religious Corporations; Corporation Sole

RCC, Secs. 107 – 114

Cases:
Roman Catholic Apostolic Administrator of Davao, Inc. v. LRC and the
Register of Deeds of Davao, 102 Phil. 596 (1957)
Iglesia Evangelica Metodista en las Islas Filipino (IEMELIF) (Corporation
Sole), Inc. v. Lazaro, 624 SCRA 224 (2010)

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 Long v. Basa, 366 SCRA 113 (2001)
Roman Catholic Apostolic Administrator of Davao, Inc. v. LRC and the
Register of Deeds of Davao City, 102 Phil. 596 (1957)
Director of Land v. IAC, 146 SCRA 509 (1986)

Educational Institutions

Case:
Jesus Sacred Heart College v CIR, G.R. No. L-6807, May 24, 1954

Charitable institutions

Cases:
CIR v. St. Luke’s Medical Center, 682 SCRA 66 (2012)
CIR v. St. Luke’s Medical Center, G.R. No. 203514, February 13, 2017

E. Nationality Requirements

RCC, Sec. 7, Sec. 58

SEC OGC Opinion 12-02 (2 February 2012)

Available at https://www.sec.gov.ph/wp-
content/uploads/2015/11/Opinion-No.-12-02.pdf (accessed on 4
September 2019)

SEC OGC Opinion 16-15 (1 June 2016)

Available at http://www.sec.gov.ph/wp-
content/uploads/2015/11/2016Opinions16-15.pdf (accessed on 4
September 2019)

Sec. 3 (a) and (d), RA 7042, as amended

IRR of RA 7042, Rule 1, Sec. 1 (f)
Sec. 2, Art. XII, 1987 Constitution
Sec. 7, Art. XII, 1987 Constitution
Sec. 11, Art. XII, 1987 Constitution
Sec. 11 (1), Art. XVI, 1987 Constitution
Sec. 11 (2), Art. XVI, 1987 Constitution

Commonwealth Act No. 141 (Public Land Act)

Executive Order No. 65 (11th Regular Foreign Investment Negative List)

Page 15 of 28
 SEC Memorandum Circular No. 8, Series of 2013 (Guidelines on
Compliance with Filipino-Foreign ownership)

Cases:
People v. Quasha, 93 Phil 333 (1953)
Register of Deeds of Rizal v. Ung Sui Si Temple, 97 Phil 58 (1955)
Tatad v. Garcia, Jr., 243 SCRA 436 (1995)
JG Summit Holdings, Inc. v. Court of Appeals, G.R. No. 124293, September
24, 2003
Strategic Alliance Dev. Corp. v Radstock Securities Ltd., 607 SCRA 413
(2009)
Gamboa v. Teves, 652 SCRA 690 (2011); 682 SCRA 397 (2012)
Narra Nickel Mining v. Redmont Consolidated Mines Corp., 722 SCRA 382
(2014)
Narra Nickel Mining and Development Corp v. Redmont Consolidated
Mines Corp. (Resolution), 748 SCRA 455 (2015)
Roy III v. Herbosa, 810 SCRA 1 (2016)
Roy III v. Herbosa, GR No. 207246 (Resolution), 18 April 2017
Philippine Contractors Accreditation Board v. Manila Water Company, Inc.
G.R. No. 217590, March 10, 2020

F. Other Relevant Prohibitions

RCC, Sec. 159, 164

Anti-Dummy Law, Commonwealth Act No. 108

Case:
Marsman & Company, Inc. v. First Coconut Central Co., GR No. L-39841
(June 20, 1988)

PART III
Oct 23
I. RUNNING THE CORPORATION

A. The Board of Directors/Trustees and Officers: Qualifications,

Powers, Duties, Liabilities
Sec. 22-34, RCC
Sec. 44, 47, 64, 66, 67, 171, 184
Sec. 72-74, 91, 92, 177, RCC

Page 16 of 28
Sec. 160-172, RCC

SEC Memorandum Circular No. 10, Series of 2019 (Rules on Material

Related Party Transactions for Publicly Listed Companies)

2015 IRR, Securities Regulation Code (RA 8799) Rule 38

SEC Memorandum Circular No. 16, Series of 2002 (Guidelines on the

Nomination and Election of Independent Directors)

SEC Memorandum Circular No. 20, Series of 2020 (SEC Rules on

Independent Directors for Exchanges)

1. Authority of the Board of Directors for Corporate Acts

Cases:
Angeles v. Santos, 64 Phil. 697 (1937)
Montelibano v. Bacolod-Murcia Milling Co., 5 SCRA 36 (1962)
Boyer-Roxas v. CA, 211 SCRA 470 (1992) \Premium Marble Resources v.
CA, 264 SCRA 11 (1996)
Traders Royal Bank v. Court of Appeals, 269 SCRA 15 (1997)
Manila Metal Container Corp. v. PNB, 511 SCRA 444 (2006)
Monfort Hermanos Agricultural Dev. Corp. v. Monfort III, 434 SCRA 27
(2004)
Associated Bank v. Pronstroller, 558 SCRA 113 (2008)
Advance Paper Corp. v. Arma Traders Corp., 712 SCRA 313 (2013)
Lopez Realty v. Spouses Tanjangco, 739 SCRA 644 (2014)
Toms v. Rodriguez, 761 SCRA 679 (2015); 797 SCRA 60 (2016)

2. Three-fold duty of Board Directors

RCC, Sec. 30 – Sec. 34

Cases:
Strategic Alliance Dev. Corp. v. Radstock Securities Ltd., 607 SCRA 413
(2009)
Ient v. Tullett Prebon (Phils.), Inc., 814 SCRA 184 (2017)
Steinberg v. Velasco, 52 Phil. 953 (1929)
Gokongwei, Jr. v. SEC, 89 SCRA 336 (1979)
Western Institute of Technology, Inc. v. Salas, 278 SCRA 216 (1997)

3. Executive Committee
RCC, Sec. 34

Page 17 of 28
Case:
Filipinas Port Services v. Go, 518 SCRA 453 (2007)

4. Corporate officers
RCC, Sec. 24

Cases:
Francisco v. GSIS, 7 SCRA 577 (1963)
Board of Liquidators v. Heirs of Maximo M. Kalaw, 20 SCRA 987 (1967)
Safic Alcan & Cie v. Imperial Vegetable Oil Co., 355 SCRA 559 (2001)
Lipat v. Pacific Banking Corp., 402 SCRA 339 (2003)
Woodchild Holdings, Inc. v. Roxas Electric Constructions Co., 436 SCRA
235 (2004)
Civil Service Commission v Javier, G.R. No. 173264 (2008)
Westmont Bank v. Inland Construction and Dev. Corp., 582 SCRA 230
(2009)
Matling Industrial and Commercial Corp. v. Coros, 633 SCRA 12 (2010)
WQPP Marketing Communications, v. Galera, 616 SCRA 422 (2010)
Georg v. Holy Trinity College, Inc., 797 SCRA 550 (2016)
Wesleyan University-Philippines v. Maglaya, Sr., 815 SCRA 171 (2017)
Malcaba v. ProHealth Pharma Phils., Inc., G.R. No. 209085, 06 June 2018
Colegio Medico-Farmaceutico de Filipinas, Inc. v. Lim, G.R. No. 212034
(July 2, 2018)

5. Self-dealing directors; conflict of interest

RCC, Sec. 31, Sec. 32, Sec. 33

Cases:
Hornilla v. Salunat, 405 SCRA 220 (2003)
Gokongwei v. SEC, 89 SCRA 336 (1979)
Prime White Cement Corp. v. IAC, 220 SCRA 103 (1993)
Agdao Landless Residents Assn. v. Maramion, 806 SCRA 74 (2016)

6. Personal liability of directors and officers

RCC, Sec. 30, Sec. 33, Sec. 64
RCC, Sec. 160 Sec. 168, Sec. 171

Cases:
People v. Tan Boon Kong, 54 Phil. 607 (1930)
Tramat Mercantile, Inc. v. CA, 238 SCRA 14 (1994)
McLeod v. NLRC, 512 SCRA 222 (2007)
Pantranco Employees Assn. (PEA-PTGWO) v. NLRC, 581 SCRA 598 (2009)

Page 18 of 28
 People v. Chowdury, 325 SCRA 572 (2000)
Ching v. Secretary of Justice, 481 SCRA 602 (2006)
Republic Gas Corp. v. Petron Corp., 698 SCRA 666 (2013)
Federated Dealers Assn. v. Del Rosario, 808 SCRA 272 (2016)

Oct 30 – Midterm Exam

Nov 6
B. Corporate Governance

SEC Memo Circular No. 6, Series of 2009 (Revised Code of Corporate

Governance), as amended by SEC Memo Circular No. 9, Series of
2014
SEC Memo Circular No. 19, Series of 2016 (Code of Corporate Governance
for Publicly Listed Companies)

Cases:
Strategic Alliance Dev. Corp. v. Radstock Securities Ltd., 607 SCRA 413
(2009)
Sanchez v. Republic, 603 SCRA 229 (2009)
Torres, Jr. v. Court of Appeals, 278 SCRA 793 (1997)

C. Election Contests
Rule 6, Interim Rules of Procedure for Intra-Corporate Controversies
A.M. No. 01-2-04-SC. March 13, 2001

Cases:
SEC v. Court of Appeals, 739 SCRA 99 (2014)
Ricafort v. Dicdican, 787 SCRA 163 (2016)

D. Board Meetings

Sec. 48, 49, 52, 53, 56, RCC

Sec. 72-74, 92, RCC
SEC Memo Circular No. 6, Series of 2020 (Teleconferencing Guidelines)

Cases:
Lopez v. Ericta, 45 SCRA 539 (1972)
People v. Dumlao, 580 SCRA 409 (2009)
Lopez Realty, Inc. v. Spouses Tanjangco, 739 SCRA 644 (2014)

Page 19 of 28
 Valle Verde Country Club, Inc. v. Africa, 598 SCRA 202 (2009)

E. Stockholders/Members: Rights, Limitations, Liabilities and

Remedies

RCC, Sec. 6, Sec. 23, 27-29

RCC, Sec. 38, Sec. 42, 45, 47
RCC, Sec. 62, 65-69, 70-71
RCC, Sec. 73-74, 80-84, in relation to Sec. 15, 41
RCC, Sec. 88-90, Sec. 139

SEC Memo Circular No. 15, Series of 2019 (Beneficial Ownership

Information in 2019 Revised GIS)

Interim Rules of Procedure Governing Intra-Corporate Controversies (A.M.

No. 01-2-04-SC, 01 April 2001)

SEC Memorandum Circular No. 14, Series of 2020 (For Publicly Listed
Companies: Shareholders’ Right to Put Items in the Agenda for
Regular/Special Stockholders’ Meetings)

SEC Memorandum Circular No. 12, Series of 2020 (For PLC: Shareholders’
Approval on Sale of Corporate Assets)

SEC Memorandum Circular No. 25, Series of 2020 (Guidelines: Complaints

re Right to Inspect/Reproduce Corporate Records)
Identify the right
pay the subscription
1. Right to vote
RCC, Sec. 6, Sec. 23, Sec. 25, Sec. 46 (d), Sec. 50, Sec. 57, Sec. 88
RCC, Sec. 70, Sec. 71, Sec. 82

Cases:
Baltazar v. Lingayen Gulf Elect. Power Co., 14 SCRA 522 (1965)
Batangas Laguna Tayabas Bus Company, Inc. v. Bitanga, 362 SCRA 635
(2001)
Tan v. Sycip, 499 SCRA 216 (2006)
Raniel v. Jochico, 517 SCRA 221 (2007)
Villongco v. Yabut, G.R. Nos. 225022 & 225024, 05 Feb. 2018

2. Right to issuance of certificate of stock

RCC, Sec. 62, Sec. 63

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Forest Hills Golf & Country Club v. Vertex Sales and Trading, Inc., 692
SCRA 706 (2013)
Bachrach Motor Co. v. Lacson Ledesma, 64 Phil. 681 (1937)

3. Right to transfer (or not to transfer) shares of stock

RCC, Sec. 62

Cases:
Lambert v. Fox, 26 Phil. 588 (1914)
Fleishcher v. Botica Nolasco, 47 Phil. 583 (1925)
Padgett v. Babcock & Templeton, Inc., 59 Phil. 232 (1933)
De los Santos v. Republic, 96 Phil. 577 (1955)
Tan v. SEC, 206 SCRA 740 (1992)
Makati Sports Club, Inc. v. Cheng, 621 SCRA 103 (2010)

4. Right to register transfer of shares in the books of the

corporation
RCC, Sec. 62

Cases:
Rural Bank of Salinas, Inc. v. CA, 210 SCRA 510
Ponce v. Alsons Cement Corp., 393 SCRA 602 (2002)
Nava v. Peers Marketing Corp., 74 SCRA 65 (1976)
Teng v. SEC, 784 SCRA 216 (2016)
Interport Resources Corp. v. SSI, 792 SCRA 155 (2016)
Andaya v. Rural Bank of Cabadbaran, 799 SCRA 325 (2016)
Tee Ling Kiat v. Ayala Corp., G.R. No. 192530, 07 March 2018

5. Right to inspect corporate records

RCC, Sec. 73, Sec. 74, Sec. 161

Cases:
Gonzales v. PNB, 122 SCRA 489 (1983)
Nautica Canny Corp. v. Yumul, 473 SCRA 415 (2005)
Ang-Abaya v. Ang, 573 SCRA 129 (2008)
Chua v. People, 801 SCRA 436 (2016)
PASAR Corp. v. Lim, 804 SCRA 600 (2016)

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Nov 13

6. Right to file derivative suit

Interim Rules of Procedure Governing Intra-Corporate Controversies (A.M.
No. 01-2-04-SC, 01 April 2001)

Cases:
Pascual v. Orozco, 19 Phil. 83 (1911)
Bitong v. Court of Appeals, 292 SCRA 503 (1998)
Gochan v. Young, 354 SCRA 207 (2001)
Chua v. Court of Appeals, 443 SCRA 259 (2004)
Yu v. Yukayguan, 589 SCRA 588 (2009)
Guy v. Guy, 680 SCRA 214 (2012)
Ang v. Ang, 699 SCRA 272 (2013)
Ching v. Subic Bay Golf and Country Club, Inc., 734 SCRA 569 (2014)
Villamor, Jr. v. Umale, 736 SCRA 325 (2014)

7. Pre-emptive right
RCC, Sec. 38
SEC-OGC Opinion No. 11-41 (Pre-emptive rights)
SEC-OGC Opinion No. 19-15 (Pre-emptive rights)

Majority Stockholders of Ruby Industrial Corp. v. Lim, 650 SCRA 461 (2011)
JG Summit Holdings, Inc. v. Court of Appeals, G.R. No. 124293, September
24, 2003

8. Right to dividends
RCC, Sec. 42

Cases:
Cojuangco v. Sandiganbayan, 586 SCRA 790 (2009)
Stockholders of F. Guanson and Sons, Inc. v. Register of Deeds of Manila, 6
SCRA 373 (1962)
Republic Planters Bank v. Agana, 269 SCRA 1 (1997)
Commissioner of Internal Revenue v. Manning, G.R. No. L-28398,
August 6, 1975

9. Appraisal right
RCC, Sec. 80 – Sec. 85

Case:
Turner v. Lorenzo Shipping Corp., 636 SCRA 13 (2010)

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 10. Termination of Membership

Sec. 90, RCC

Valley Golf & Country Club v. Vda. De Caram, 585 SCRA 218 (2009)

11. Rights of Founders’ share shareholders

Sec. 7, RCC
SEC-OGC Opinion No. 10-02 (Founders’ shares in a close corporation)

F. Stockholders’/Members’ Meetings and Voting at Meetings

RCC, Sec. 48-51, Sec. 54-58, Sec. 88

SEC Memo Circular No. 6, Series of 2020 (Teleconferencing Guidelines)

SEC Memo Circular No. 3, Series of 2020 (Notice of Regular Meetings of
Stockholders/Members)
SEC Memo Circular No. 7, Series of 2021 (Calling of Special Stockholders’
Meeting - for PLCs)

Cases:
Tan v. Sycip, 499 SCRA 216 (2006)
GSIS v. Court of Appeals, 585 SCRA 679 (2009)
Lee v. Court of Appeals, 205 SCRA 752 (1992)
Ricafort v. Dicdican, 787 SCRA 163 (2016)
Guy v. Guy, 790 SCRA 288 (2016)
Lim v. Moldex Land, Inc., 815 SCRA 619 (2017)
Lydia Lao v Yao Bio Lim, GR 201306, August 9, 2017

II. ENGAGING IN BUSINESS

A. Authorized acts and powers of the corporation; standards of

conduct

RCC, Sec. 35-43, Sec. 45, Sec. 69, Sec. 72-74

RCC, Sec. 159-161, Sec. 164-167, Sec. 176-178
Act No. 3952, as amended (Bulk Sales Law)

SEC Memorandum Circular No. 11, Series of 2008 (December 5, 2008)

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 Guidelines on the Determination of Retained Earnings Available for
Dividend Declaration

1982 Rules Governing Redeemable and Treasury Shares

SEC-OGC Opinion No. 19-03 (February 14, 2019)

Re Computation of Retained Earnings Available for Dividend Declaration

SEC-OGC Opinion No. 19-20 (May 27, 2019)

Re Redemption of Preferred Shares; Subscribed Capital Stock

SEC Opinion, 29 February 1980

SEC Opinion No. 16-22, 04 October 2016

Sec. 22 and 23, Commonwealth Act No. 141

SEC OGC Opinion No. 16-15, 1 June 2016
Sec. 2-A, Commonwealth Act No. 108, Anti-Dummy Law

Nov 20
Cases:
Pilipinas Loan Co. v. SEC, 356 SCRA 193 (2001)
Umale v. ASB Realty Corp., 652 SCRA 215 (2011)
Tam Wing Tak v. Makasiar, 350 SCRA 475 (2001)
Citibank, N.A. v. Chua, 220 SCRA 75 (1993)
Luneta Motor Co. v. A.D. Santos, Inc., 5 SCRA 809 (1962)
Turner v. Lorenzo Shipping Corp., 636 SCRA 13 (2010)
Boman Environmental Dev. Corp. v. CA, 167 SCRA 540 (1988)
Central Textile Mills v. NWPC, 260 SCRA 368 (1996)
Litonjua v. Eternit Corp., 490 SCRA 204 (2006)
De la Rama v. Ma-ao Sugar Central Co., 27 SCRA 247 (1969)
Nielson & Co. v. Lepanto Consolidated Mining, 26 SCRA 540 (1968)
San Juan Structural v. Court of Appeals, 296 SCRA 631 (1998)
China Banking Corp. v. Court of Appeals, 270 SCRA 503 (1997)
Atrium Management Corp. v. Court of Appeals, 353 SCRA 23 (2001)
Caltex (Phils.), Inc. v. PNOC Shipping and Transport Corp., 498 SCRA 400
(2006)
Pirovano v. De la Rama Steamship Co., 96 Phil. 335 (1954)
University of Mindanao v. Bangko Sentral ng Pilipinas, 778 SCRA 458
(2016)
Harden v. Benguet Consolidated Mining Co., 58 Phil. 140 (1933)
Manila Electric Co. v. Nordec Philippines, 861 SCRA 515 (2018)
Philippine Numismatic v Genesis Aquino, GR No. 206617 (Jan 30 2017)
Abrogar v. Cosmos Bottling Company, G.R. No. 164749, March 15, 2017
Ongkingco v. Sugiyama, GR No. 217787, September 18, 2019

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 Nov 27

B. Growing the business: Merger, Consolidation, Acquisition, Joint

Venture

Overview of M&As by LJS

RCC, Sec. 75 – 79
SEC Opinion No. 14, Series of 2002, 15 Nov. 2002

RA 10667, Philippine Competition Act, Sec. 16, 17, 20, 21

IRR, RA 10667, Rule 4, as amended

PCC Resolution 02-2020 (Adjustment of the Thresholds for Compulsory

Notification of Mergers and Acquisitions)

Republic Act No. 11494 (Bayanihan to Recover as One Act)

Sec. 4 (eee)
PCC Rules for the Implementation of Sec. 4 (eee) of RA 11494

Cases:
Edward J. Nell Co. v. Pacific, 15 SCRA 415 (1965)
Central Azucarera del Danao v. CA, 137 SCRA 295 (1985)
Sundowner Dev. Corp. v. Drilon, 180 SCRA 14 (1989)
PHIVIDEC v. Court of Appeals, 181 SCRA 669 (1990)
Filipinas Port Services v. NLRC, 200 SCRA 773 (1991)
Pepsi-Cola Bottling Co., v. NLRC, 210 SCRA 277 (1992)
SMC Employees Union-PTGWO v. Confessor, 262 SCRA 81 (1996)
PNB v. Andrada Electric & Engineering Co., 381 SCRA 244 (2002)
Poliand Industrial Ltd. V. NDC, 467 SCRA 500 (2005)
Barayoga v. APT, 473 SCRA 690 (2005)
BPI v. BPI Employees Union, 658 SCRA 828 (2011)
Bank of Commerce v. RPN 9, 722 SCRA 520 (2014)
Bank of Commerce v. Radio Philippines Network, Inc., 722 SCRA 529
(2014)
Y-I Leisure Phils., Inc. v. Yu, 770 SCRA 56 (2015)
The Philippine Geothermal, Inc. Employees Union v. Unocal Philippines,
Inc., GR No. 190187, September 28, 2016
Spouses Ong v. BPI Family Savings Bank, Inc., G.R. No. 208638, 24 Jan
2018

III. CORPORATE DISSOLUTION AND LIQUIDATION

Page 25 of 28
 Sec. 21, RCC
Sec. 133 – Sec. 139, RCC
Sec. 6 (h), RCC
Sec. 104, RCC
Sec. 113, RCC
Art. 93, 94, RCC
Sec. 146, RCC
Sec. 158, 170, 184, RCC
PD 902-A, Sec. 6 (i)
See SEC Memorandum Circular No. 13, Series of 2019, paragraph nos. 14 and
16

Dec 4

Cases:
Vesagas v. Court of Appeals, 371 SCRA 509 (2002)
BPI v. Court of Appeals, 363 SCRA 840 (2001)
Chase v. Buencamino, 136 SCRA 365 (1985)
Majority Stockholders of Ruby Industrial Corp. v. Lim, 650 SCRA 461 (2011)
Buenaflor v. Camarines Industry, 108 Phil. 472 (1960)
Alhambra Cigar & Cigarette Mfg. Co. v. SEC, 24 SCRA 269 (1968)
Republic v. Tancinco, 394 SCRA 386 (2002)
Aguirre II v. FQB+7, Inc., 688 SCRA 242 (2013)
Vigilla v. Philippine College of Criminology., 698 SCRA 247 (2013)
Chua v. People, 801 SCRA 436, 449 (2016)
Reyes v. Bancom Dev. Corp., G.R. No. 190286, 11 Jan. 2018
Rich v. Paloma III, G.R. No. 210538, 07 March 2018
PVB Employees Union-N.U.B.E. v. Vega, 360 SCRA 33 (2001)
Yu v. Yukayguan, 589 SCRA 588 (2009)
De Guzman v. NLRC, 211 SCRA 723 (1992)
Sumera v. Valencia, 67 Phil. 721 (1939)
Gelano v. Court of Appeals, 103 SCRA 90 (1981)
Clemente v. Court of Appeals, 242 SCRA 717 (1995)
Alabang Dev. Corp. v. Alabang Hills Village Assn., 724 SCRA 321 (2014)
Chung Ka Bio v. IAC, 163 SCRA 534 (1988)
Chua v. People, G.R. No. 216146, August 24, 2016

IV. ENFORCEMENT: VIOLATIONS AND PENALTIES

Secs. 154-179, RCC

Sec. 27, second paragraph, in relation to Sec. 160, RCC
Sec. 138 (c), (d), (e), RCC

Page 26 of 28
 Sec. 151, RCC

Cases:
Virata v. Ng Wee, G.R. No. 220926, July 5, 2017
Virata v. Ng Wee, G.R. No. 220926, March 21, 2018

Corporate criminal liability under special laws

Cases:
Home Insurance Co. v. Eastern Shipping Lines, 123 SCRA 424 (1983)
Ient v. Tullett Prebon (Phils.), Inc., 814 SCRA 184 (2017)
Ambassador Hotel, Inc. v. Social Security System 827 SCRA 641 (2017)

V. FOREIGN CORPORATIONS Dec 11

RCC, Sec. 140-153

IRR, RA 7042 (Foreign Investments Act), Rule 1 (c), (f)
SEC-OGC Opinion No. 18-18 (16 November 2018)
Re Merger of a Domestic Corporation with a Foreign Corporation Licensed to
Do Business in the Philippines
SEC OGC Opinion No. 12-14 (28 August 2012)
Re Merger of Two Foreign Corporations
RA 8756 (amending EO 226, Omnibus Investments Code of 1987), Secs. 2-4
RA 7042 (Foreign Investments Act of 1991), as amended, Sec. 3 (d); IRR, RA
7042, as amended, Sec. 1 (f)

SEC Memorandum Circular No. 30, Series of 2020 (Revision of GIS for Foreign
Corporations to Include Beneficial Ownership Information)

Cases:
Avon Insurance PLC v. CA, 278 SCRA 312 (1997)
Marshall-Wells v. Elser, 46 Phil. 71 (1924)
Home Insurance Co. v. Eastern Shipping Lines, 123 SCRA 424 (1983)
MR. Holdings, Ltd. V. Bajar, 380 SCRA 617 (2002)
Marubeni Nederland B.V. v. Tensuan, 190 SCRA 105 (1990)
Granger Associates v. Microwave Systems, Inc., 189 SCRA 631 (1990)
Mentholatum Co., Inc. v. Mangaliman, 72 Phil. 525 (1941)
B. Van Zuiden Bros., Ltd v. GTVL Manufacturing Industries, Inc., 523 SCRA
233 (2007)
Aetna Casualty & Surety Co. v. Pacific Star Line, 80 SCRA 635 (1977)
Agilent Technologies Singapore (PTE) Ltd. v. Integrated Silicon Technology
Phil. Corp., 427 SCRA 593 (2004)

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European Resources and Technologies, Inc. v. Ingenieuburo Birkhanh + Nolte
435 SCRA 246 (2004)
Western Equipment & Supply Co. v. Reyes, 51 Phil. 115 (1927)
Antam Consolidated v. Court of Appeals, 143 SCRA 288 (1986)
Atlantic Mutual Inc. v. Cebu Stevedoring Co., 17 SCRA 1037 (1966)
Communication Materials v. Court of Appeals, 260 SCRA 673 (1996)
Top-Weld Mfg. v. ECED, 119 SCRA 118 (1985)
Merrill Lynch Futures, Inc. v. CA, 211 SCRA 824 (1992)
Eriks Ltd. v. CA, 267 SCRA 567 (1997)
Avon Insurance PLC v. CA, 278 SCRA 312 (1997)
Linger & Fisher GMBH v. IAC, 125 SCRA 522 (1983)

Dec 18 – Wrap-up; Presentation of AOIs and By-Laws per group

Jan 8, 2022 – Final exam
- Nothing follows -

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