ATENEO DE MANILA LAW SCHOOL

Rockwell Center, Makati City

PHILIPPINE
CORPORATE LAW

OPENING LECTURE
By

DEAN CESAR L. VILLANUEVA, B.S.C., C.P.A, LL.B., LL.M., FAICD, D.J.S.

 HOUSEKEEPING
1. CORPORATE LAW – A 4 - UNIT COURSE
 Corporate Practice Course
 Mergers & Acquisition Course
 Corporate Rehabilitation and Insolvency

2. JOINT CLASSES : (a) Lecture on Special Topics

(b) Catch-up and Integration

of Lessons

CORPORATE LAW CLV LECTURES

HOUSEKEEPING

3. BASES OF FINAL GRADE:

40% Recitation (about 150 cases)
20% Mid-Term Exams Grade
40% Final Exams Grade

4. RULES IN RECITATION GRADES:

60% When absent Medical Certificates required; cannot
exceed two (2) instances in the semester

70% For “Pass”

CORPORATE LAW CLV LECTURES

HOUSEKEEPING

5. COURSE OUTLINE:
a. Need to keep up-to-date because of many
cases assigned
b. Basis of Class Discussions and Exams

6. CONDUCT OF CLASSES:
 There are no stupid
questions
 Queries to e-mail address:
cvillanueva@vgslaw.com

7. NO PRESCRIBED TEXTBOOK
CORPORATE LAW CLV LECTURES
 INTRODUCTION TO CORPORATE LAW

1. HOW IT USED TO BE 25 YEARS AGO (1986) –

Considered a “Technical Course”, likened to Tax

2. THE SETTING TODAY: Economic Growth/Financial Crisis

Globalization
Corporate Governance Reforms
E-commerce and What Lies Ahead

3. USED TO BE: CORPORATE LAW WAS TAUGHT

AHEAD OF PARTNERSHIP AND TAUGHT IN THE
SAME SEMESTER AS AGENCY.

CORPORATE LAW CLV LECTURES

INTRODUCTION TO THE STUDY OF CORPORATE LAW

4. BASIC PRINCIPLES IN AGENCY AND PARTNERSHIP

4.1. AGENCY
<http://deanclv.wordpress.com/dean-clv-on-agency-law/>

 Essentially a contractual relationship

 Representative and Fiduciary in nature
Essentially Revocable in nature
Agent must account for all profits and
earnings
 Preparatory to achieve a main contract or objective
 Agent not liable when acting within the scope of his
authority

CORPORATE LAW CLV LECTURES

INTRODUCTION TO THE STUDY OF CORPORATE LAW

4.2. PARTNERSHIP
<http://deanclv.wordpress.com/dean-clv-on-partnership-law>
<http://deanclv.wordpress.com/dean-clv-on-joint-ventures/>
 Essentially contractual in nature
 When elements of (a) contribution to a common fund for
purpose of venture and (b) intent to divide profits among
themselves
Partnership is formed
With a Juridical Personality separate and distinct from the
partners
 Mutual Agency among the partners
 Principle of Delectus Personarae
 Partners liable for Partnership debts even to properties not
invested into the partnership venture (Doctrine of
“Unlimited Liability”)

CORPORATE LAW CLV LECTURES

INTRODUCTION TO THE STUDY OF CORPORATE LAW

5. HISTORY OF PHILIPPINE CORPORATE LAW

5.1. The Spanish Code of Commerce

5.2. The Corporation Law (Act 1459; 1 April 1906)

– Was weary of the size and potency of

Corporate Enterprises
– Contained prohibitory provisions on cross
ownership of corporations and of owning land
5.3. Corporation Code (May, 1980)
5.4. Pres. Decree No. 902-A
5.5. Reversal of Trend: Securities Regulation Code

CORPORATE LAW CLV LECTURES

 BUSINESS THESIS OF THE STUDY OF
CORPORATE LAW

1. THE “CORPORATION” CONCEPT

“ . . . A corporation is an artificial being
created by operation of law, having the right
of succession and the powers, attributes and
properties expressly authorized by law or
incident to its existence.”
Sec. 2, corporation code

CORPORATE LAW CLV LECTURES

BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

ATTRIBUTES OF CORPORATION

JURIDICAL PERSON - “A corporation is an artificial

being”

CREATURE OF THE LAW - “Created by operation of law”

SEPARATE JURIDICAL - “With a right of succession”

PERSONALITY

CREATURE OF LIMITED POWERS - Has only such

“powers, attributes and properties expressly
authorized by law or incident to its existence”

CORPORATE LAW CLV LECTURES

BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

TRI- LEVEL “LEGAL RELATIONSHIPS” IN

THE CORPORATE SETTING
____________________________________________________

I. JURIDICAL ENTITY LEVEL

 Views the relationship between State and the corporation

II. INTRA-CORPORATE CONTRACT LEVEL

 Views the relationships between and among the members
of “corporate family”

III. “EXTRA-CORPORATE” CONTRACT LEVEL

 Views the relationship between corporation and “outsiders”

CORPORATE LAW CLV LECTURES

BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

I. JURIDICAL ENTITY LEVEL

 Relationship Between State and Corporation

Covered by Section 2, Corporation Code

Essentially Governed by Corporate Law

Principles

Animated by Contract Law Doctrines

Under the aegis Constitutional Principles

CORPORATE LAW CLV LECTURES

BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

II. INTRA-CORPORATE RELATIONSHIPS

1. Between Corporation and its Agents (Directors
and Officers)
 Governed by Corporate Law, Law on Agency and Trust;
and in some case by Labor Law principles

2. Between Corporation and Shareholders/Members

 Governed by Corporate Law, supplemented by
Contract Law Doctrines

3. Between and Among Stockholders/Members in

Common Venture
 Governed by Corporate Law, supplemented by
Contract Law Doctrines

CORPORATE LAW CLV LECTURES

BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

III. EXTRA-CORPORATE RELATIONSHIPS

1. Between Corporation and its Employees
 Governed by Labor Law, but in limited cases by the
Business Judgment Rule of Corporate Law

2. Between Corporation and its Contract Creditors

 Governed by Contract Law, particularly Mutuum and
Credit Transactions principles

3. Between Corporation and Other Claimants

 Governed by Quasi-Delicts or Torts principles and
principles in Human Relationships

CORPORATE LAW CLV LECTURES

BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

TRI- LEVEL “EXISTENCE” IN

THE CORPORATE SETTING
_______________________________________________________

I. “ASSETS-ONLY” LEVEL
 Aggregation of Assets and Resources

II. “BUSINESS ENTERPRISE” LEVEL

 Economic unit or the “going concern”

III. “JURIDICAL ENTITY” LEVEL

 The business or endeavor pursued in the
medium of the corporation
Defines the “Subject Matter” of Contract
Determines the Applicable Law
CORPORATE LAW CLV LECTURES
BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

1. CORPORATE VEHICLE IS A COMPLEX FORM OF

OWNERSHIP-MANAGEMENT SYSTEM AND ITS
UNDERLYING BASIS IS “CONTRACT”.

2. THE DEMANDS OF COMMERCE:

(a) Corporation Essentially a Medium of Pursuing
Commercial Transactions
(b) Equity versus Debt Investments

CORPORATE LAW CLV LECTURES

BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

3. OUTLINE SHOWS OUR DISCUSSIONS

BASED ON MAJOR TOPICS

 STRONG JURIDICAL PERSONALITY

 LIMITED LIABILITY
 CENTRALIZED MANAGEMENT
 FREE-TRANSFERABILITY OF UNITS OF
OWNERSHIP (SHARES OF STOCK)

CORPORATE LAW CLV LECTURES

BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

4. CORPORATE LAW ESSENTIALLY FROM COMMON

LAW TRADITION; THE IMPETUS OF COMMERCE

5. DIFFERENCE IN APPROACHES BETWEEN CIVIL

LAW AND COMMON LAW

6. PROPER TREATMENT OF THE CORPORATION

CODE AND OF CORPORATE LAW

CORPORATE LAW CLV LECTURES

BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

7. UNDERLYING FUNCTION OF PRIVATE CORPORATIONS

“… the Corporation Code should be given a

reasonable or liberal construction which will
best execute its purpose, even though such
construction is not within its strict literal
interpretation. A strict construction should not
be permitted to defeat the policy and purpose of
the Code. Therefore, ‘a literal interpretation is to
be rejected if it would be unjust or lead to
absurd results.”
Soriano v. Offshore Shipping and Manning Corp., 177 SCRA 513, 519 (1989)

CORPORATE LAW CLV LECTURES

BUSINESS THESIS OF THE STUDY OF CORPORATE LAW

“… It is worthy to mention that decisions of our

courts have frequently enunciated the principle
that the intent of the Legislature will govern. Thus,
the Corporation Code should be given a judicious,
not stern and discordant interpretation, which will
promote and uplift the development of trade
relations and which will encourage friendly
commercial intercourse among corporations
provided that its primordial end (protection of
public interest) is served.”
SEC Opinion No. 04-36, 15 June 2004

8. THE ROLE OF THE CORPORATE LAWYER

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