November 12 Corpo notes

Pre-incorporation	Compliance with statutory requirements	Submission of constitutive documents	SEC issuance of certificate of registration	Commencement of corporate existence/ exercise of corporate authority	Winding up/ dissolution	receipt of outstanding dividends
Contributions Determination of contributions	Pooling of contributions Conveyance of contributions (in trust) Execution of constitutive documents	Issuance of certifiction Contributions in trust Payment of filing fees Deeds of conveyance of proprietary rights	Review compliance requirements Confirmation of contributions	Reading of contributions as payment for subscriptions Constituting of governing body/management Internal relationships (1) stockholders (2)board (3) state (governmental regulatory agencies) -third party accomodations	End of existence (1) collation of property/assets/rights (2) settlement of obligations

Private corporation - not municipal corporation, not GOCC

*Once certificate of registration issued, relationship between parties differ:

Now, second party becomes indispensable

-originator lose identity and participation

SEC 2: Corporation defined

Issuance of certificate of registration confirms:

(a) original contributors are qualified

(b) extent of contributions are pooled; consolidation of property rights

© contemplated powers, goals, objectives of the contributors are legitimate

(d) no legal impediment from reaching the stage

What happens to those responsible with putting up corporation?

Contributors:

Pre-incorporations: contributor pa rin

After pooling of contribution, existence of corporration: conveyed to corporation, with consideration of pro-rata share in corporate vehicle

Beneficial ownership

-individually, walang resources; with pooling, increase resources with promise of return

Corp, artificial being: can't act on its own

Contributors > now can participate in determination of how contribution would be used

But whatever they do, their act is attributed to the corporation

…any gains or loss is attributed to the corporate entity

Corporate interaction: internal relations and external relations (with 3p)

(1) contractual: transactions w/ 3P

(2) statutory: by law

*there might be instances when stockholders liable aside from corporate entity

The stockholders can freely dispose their shares of stocks: different from value

NDC vs. PVB

-Agrix assets now gone

-new law imposed that mortgages executed on their properties now removed

UNION Glass…

Different from case when…

Case w/o corporation: Contributors contribute the facilities in the glass plant	Case w/ corporation: contributors contribute money to buy glass plant
-they own the individual facilities, but not the whole plant, and not shares of stocks -w/o consensus, no glass plant -more problematic: *how to determine contribution in losses and assets	contributors own stock, corporation owns the glass plant -not so problematic: You don't own anything, you just have shares of stock so liability limited to the proportion of the stocks you own…(Limited liability)

For 2nd and 3rd stages: there must be consensus reached

-for certain professions, you can't incorporate

e.g. partnership in law - not a corporation

In pulling out:

If contribute facilities: pag may nagpull out, mawawala lahat

But if corp: pull-out ok lang. Pull out stocks, entity, interest

Doesn't affect the property for the business (right of succession)

Rights and obligations among themselves vis a vis corporation and board members…?

In contribution of facility: none

If transfer of equity shares:

Transferee steps into the shoes of transferor

>transferor now disregarded by corporation

>previous contributionof transferor now owned by corporation;  what is desposed of is the share

The contributors should have reached consensus to be part of a corporation: to comply with statute

Statute and contributors go hand in hand

If contributors didn't comply, eh di no corporation. If no statute: may be mere partnership

At first glance, shareholders = investors

PIONEER INSURANCE CASE

-2 planes

-reqd: surety by Pioneer insurance (required by JDA)

B4: indemnity agreements

Sir: by CM< ownership transferred to Lim because he can't constitute CM if he's not the owner of the property

Indemnity agreement:

The contributors would indemnify pioneer for damages

-would kick in only when pioneer pays for them

So pioneer had 2 options:

*foreclose mortgage - w/c it did

*recover from the indemnity agreement

(court applied recto law: once foreclosed, you can't recover deficiency)

-if the corporation purchased the plane (instead of only Mr. Lim), they would be liable as a corporation - not individually

-it was unclear WON Mr. Lim wanted to make a corporation - why make indemnity arrangement if they wanted a corporation? Why make themselves liable?

If corporation: corporation would be liable

UNION GLASS
-same with Pioneer: Separate security made by the individual stockholders

-DBP was able to acquire seats because of conversion of interest on loans to equity

-pioneer was not able to meet its obligation: dacion en pago in favor of DBP

-all assets: pero wala nang liability (plus note that the security made by the individual stockholders were not resorted to)

-with the Dacion en pago, did they lose anything? …

-they claim that the transaction was not profitable

-DBP=stockholder=creditor (conflict of interest)

NDC v Philippine Veteran's bank

-capital infusion: government lent the loan

-Pag na-reach na with corp ung receipt of outstanding dividends, wala nang matitira sa corporation

Shareholders = investors

(kasi, even if your contribution is small, you can still expect returns)