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

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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%
70%

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

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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
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CORPORATE LAW

INTRODUCTION
1.

TO

CORPORATE LAW

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.
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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
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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)
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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

5.3. 5.4. 5.5.

Contained prohibitory provisions on cross ownership of corporations and of owning land

Corporation Code (May, 1980)

Pres. Decree No. 902-A
Reversal of Trend: Securities Regulation Code
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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

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ATTRIBUTES OF CORPORATION
JURIDICAL PERSON CREATURE OF THE LAW
- A corporation is an artificial being -

Created by operation of law

With a right of succession

SEPARATE JURIDICAL PERSONALITY CREATURE

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OF

- Has only such powers, attributes and properties expressly authorized by law or incident to its existence
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LIMITED POWERS

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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

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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

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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

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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

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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

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1. CORPORATE VEHICLE IS A COMPLEX FORM OF

OWNERSHIP-MANAGEMENT SYSTEM UNDERLYING BASIS IS CONTRACT.

2. THE DEMANDS OF COMMERCE:
(a)

AND ITS

Corporation Essentially a Medium of Pursuing Commercial Transactions

(b)

Equity versus Debt Investments

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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)
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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

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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)

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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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