Corp Reviewer Flashcards
(289 cards)
1
Q
Describe the three basic areas where piercing the corporate veil is allowed.
A
- Defeat of public convenience, 2. Fraud cases, 3. Alter ego cases.
2
Q
Define alter ego cases in the context of piercing the corporate veil.
A
Alter ego cases involve a corporation being a mere facade or conduit for another entity, controlled to the extent that it lacks separate existence.
3
Q
How is the alter ego theory applied in legal cases?
A
It is determined through a three-pronged test involving instrumentality or control, fraud, and complete domination over the corporate entity.
4
Q
Do all cases of piercing the corporate veil follow a strict set of rules?
A
No, each case is considered on its own merits as there is no universal guideline.
5
Q
Describe the fraud test in the context of piercing the corporate veil.
A
The fraud test involves using control over the corporation to commit fraud or wrong.
6
Q
Define the instrumentality or control test in the context of piercing the corporate veil.
A
It requires complete domination over the corporation, not just in finances but also in policy and business practices for the transaction in question.
7
Q
Describe the characteristics of a subsidiary corporation according to PNB v. Ritratto Group.
A
A subsidiary corporation is described as a department or division of the parent corporation, uses the parent corporation’s property, has directors who take orders from the parent corporation, and may not observe formal ledger requirements.
8
Q
Define the successor corporation rule in the context of corporate law.
A
The successor corporation rule refers to a situation where a corporation pretends to dissolve or cease but actually continues to exist under a different name.
9
Q
How does the successor corporation rule apply in labor cases according to Claparols v. CIR?
A
It applies when there is a consecutive date of cessation and commencement of a subsequent entity, ownership and control by the former controlling stockholder, and turnover of assets.
10
Q
Describe the indicators pointed out in Livesey v. Binswanger to identify a successor corporation.
A
The indicators include having the same officers, same office, and continuation of the business.
11
Q
What does SME v. De Guzman allow in cases of asset sales between predecessor and successor corporations?
A
It allows for the defense of good faith, stating that the seller can dismiss affected employees but is liable for separation pay, while the buyer is not obliged to absorb the employees but can give preference to qualified separated personnel.
12
Q
How does the rule differ between asset sales and stock sales in terms of employee obligations during a corporate transition?
A
In asset sales, the seller is liable for separation pay, while the buyer is not obliged to absorb employees. In stock sales, a shift in shareholders does not affect the corporation’s existence and continuity.
13
Q
Describe reverse corporate piercing.
A
Reverse corporate piercing makes the corporation liable for the debt of the shareholders, flowing in the opposite direction of traditional corporate veil-piercing.
14
Q
Define sole proprietorship, partnership, and corporation in terms of legal personality.
A
Sole proprietorship is merged with the owner, partnership is separate from the partners, and corporation is a separate legal entity.
15
Q
How does the extent of liability of owners differ between sole proprietorship, partnership, and corporation?
A
In a sole proprietorship and partnership, owners have unlimited liability, while in a corporation, owners have limited liability.
16
Q
Do shareholders have a claim on corporate property in a corporation?
A
No, shareholders do not have a claim on corporate property as it is owned by the corporation as a juridical person.
17
Q
Describe the management structure in a sole proprietorship, partnership, and corporation.
A
In a sole proprietorship, the owner manages the business; in a partnership, management is by partners; in a corporation, it is by the Board of Directors/Trustees.
18
Q
How does insider reverse piercing differ from outsider reverse piercing?
A
Insider reverse piercing involves controlling members ignoring the corporate fiction for personal benefit, while outsider reverse piercing involves a party with a claim against an individual or corporation seeking repayment from a corporation owned by the defendant.
19
Q
Define the concept of piercing the corporate veil.
A
Piercing the corporate veil is a legal decision to treat the rights or liabilities of shareholders and a corporation as the same, disregarding the separate legal personality of the corporation.
20
Q
Describe the power of a sheriff in relation to piercing the corporate veil.
A
A sheriff does not have the power to pierce the corporate veil; this authority belongs to the court.
21
Q
How does the duration or existence differ between a sole proprietorship, partnership, and corporation?
A
A sole proprietorship exists for the life of the owner, a partnership exists as per the partners’ agreement, and a corporation has perpetual existence.
22
Q
Describe the standing doctrine regarding corporations and damages.
A
Corporations are not entitled to moral as they are incapable feelings or mental anguish, with exceptions applying pro hac vice.
23
Q
What actions did BNL Management take in response to concerns the Imperial Bayfront Tower Condominium?
A
BNL Management withheld paying monthly dues, deposited them in escrow, and filed a complaint against Uy, et al., for damages and specific performance.
24
Q
Define the legal concept of a corporation.
A
A corporation is a legal entity created as a separate entity from its owners, with its own rights, responsibilities, and liabilities.
25
How did the building administrator respond to BNL Management's concerns at the condominium?
The building administrator explained issues were due to lack of funds from nonpayment of dues and informed BNL Management of power outage and water disconnection consequences.
26
Describe the court's ruling on BNL Management's claim for moral damages.
The court ruled that BNL Management Corporation is not entitled to moral damages as a corporation is incapable of emotions or feelings.
27
What is the significance of the legal fiction concept in relation to corporations?
Legal fiction means that a corporation is treated as a separate legal entity from its owners, with its own rights and liabilities, despite not being a natural person with emotions or senses.
28
Describe the voting rights of shareholders in a corporation.
One class of shares must always have complete voting rights, while the right to vote of members of any class may be denied in the Articles of Incorporation or By-Laws.
29
Define transfer of membership in a corporation.
Transfer of membership cannot be made without consent of the corporation, and membership is not personal to the stockholder.
30
How can a shareholder vote in a corporation?
Shareholders may always vote by proxy, but this right can be denied in the Articles of Incorporation or By-Laws.
31
Do shareholders have rights upon the transfer of shares in a corporation?
Upon transfer of shares, the seller is no longer part of the corporation, and the transfer may be subject to restrictions noted in the AOI, BL, and stock certificate.
32
Describe the termination of membership in a corporation.
Membership may be terminated according to causes provided in the By-Laws.
33
Define One Person Corporations.
One Person Corporations are entities with a single stockholder, limited to natural persons, trusts, or estates, excluding certain entities like banks, insurance companies, and publicly-listed corporations.
34
How are One Person Corporations different from other corporations in terms of ownership?
One Person Corporations have a single stockholder, while other corporations can have multiple shareholders.
35
Describe a Public Corporation.
A Public Corporation is formed for the government of a portion of the state, aiming for the general good and welfare of the public.
36
Describe the limitations on the number of corporators in a corporation according to the content.
There is no limit to the number of corporators allowed by authorized shares, but not more than 20 according to the Articles of Incorporation.
37
Define the powers exercised by the board in a corporation as per the content.
The powers in a corporation are exercised by the board, which is elected by the stockholders.
38
How are officers elected in a corporation based on the content?
In a corporation, the Board of Directors elects officers, unless shareholders, as directors, directly elect officers as provided by the Articles of Incorporation.
39
Describe the difference in the dissolution process between any stockholder and the SEC according to the content.
Any stockholder may petition for dissolution for stated grounds, while the SEC may intervene in the management of the corporation in case of deadlocks.
40
What are the restrictions on the types of businesses that can be organized as a close corporation according to the content?
Mining, Oil, Exchange, Banks, Insurance, Public Utility, Educational, and Public Interest businesses cannot be organized as close corporations.
41
Define the concept of pre-emptive rights in a corporation as per the content.
Pre-emptive rights in a corporation are subject to limitations and include the sale of treasury shares and acquisition of properties.
42
How is the appraisal right different in terms of reasons and requirements as outlined in the content?
The appraisal right must be for reasons listed in the Code, while it can be for any cause without the need for unrestricted retained earnings, as long as the corporation would not become insolvent.
43
Describe the role of an arbitration agreement in unlisted corporations according to the content.
An arbitration agreement may be provided in the Articles of Incorporation or By-Laws of unlisted corporations, and arbitration is allowed.
44
How are educational corporations structured in terms of trustees and directors based on the content?
For educational corporations organized as non-stock corporations, trustees shall not be less than five nor more than fifteen, while for stock corporations, the number and term of directors are governed by the provisions on stock corporations.
45
Describe the concept of a de jure corporation mentioned in the content.
A defectively formed corporation that is considered legally valid in all cases except when parties are estopped from defending.
46
Define ultra vires act based on the information provided.
An act by a corporation that goes beyond the powers granted by the Corporation Code or its Articles of Incorporation.
47
How are corporations created by special laws or charters governed according to the content?
They are primarily governed by the provisions of the special law or charter creating them, supplemented by the provisions of the Corporation Code.
48
Do government instrumentalities have the ability to possess corporate powers while retaining their classification?
Yes, a government instrumentality can have corporate powers and still be classified as a government instrumentality, not necessarily a GOCC.
49
Describe the two classes of corporations recognized by the Constitution as per the content.
Private corporations under a general law and GOCCs created by special charters.
50
How does the Constitution restrict the creation of private corporations according to the content?
Private corporations can only be created by a general law applicable to all citizens, prohibiting special charters that grant specific privileges to certain individuals or groups.
51
Describe the role of corporators and incorporators in a corporation.
Corporators are individuals who compose a corporation, either as stockholders in a stock corporation or as members in a nonstock corporation. Incorporators are the stockholders or members mentioned in the articles of incorporation as the original founders of the corporation.
52
What is the significance of being an incorporator in a corporation?
One of the main privileges of being an incorporator is the ability to create the initial rules (bylaws) of a corporation.
53
How do the powers within a corporation differ between corporators and directors/trustees?
The powers of a corporation are held by the directors (stock) or trustees (non-stock), not by the corporators who are essentially the owners.
54
Define the Trust Fund Doctrine in the context of corporate governance.
The Trust Fund Doctrine is in place to protect the creditors of a corporation, considering the subscribed capital as a trust fund for the payment of corporate debts.
55
What is the main purpose of the Trust Fund Doctrine in corporate governance?
The Trust Fund Doctrine aims to ensure that creditors have a right to the subscribed capital for the satisfaction of their claims, prioritizing them over stockholders in the distribution of corporate assets.
56
Describe the relationship between the Board and corporators in the management of a corporation.
The Board holds supreme authority in managing a corporation, while corporators are responsible for selecting and electing the members of the Board.
57
How does the status of an incorporator change if they transfer or lose their membership in a corporation?
Incorporators do not lose their status as incorporators even if they transfer or lose their membership in a corporation.
58
Do corporators have the ultimate decision-making power in a corporation?
No, the ultimate decision-making power in a corporation lies with the directors (stock) or trustees (non-stock), not with the corporators who are the owners.
59
Describe the nature of shares of stock in a.
Shares of stock represent the holder's interest in participating in management, sharing profits, and receiving assets upon liquidation.
60
Define the Doctrine of Equality of Shares in a corporation.
It presumes that all shares issued by a corporation are equal, enjoying the same rights, privileges, and liabilities when the Articles of Incorporation do not specify distinctions.
61
How can shares in stock corporations be divided according to the content?
Shares can be divided into classes or series, ensuring there is always a class with complete voting rights.
62
Do preferred or redeemable shares have voting rights according to the content?
Preferred or redeemable shares may be deprived of voting rights.
63
Describe the ruling in Castillo v. Balinghasay (2004) regarding voting rights of stockholders.
Only holders of preferred or redeemable shares can be deprived of voting rights without their consent.
64
How are nonvoting shares allowed to vote on certain corporate matters according to the content?
Nonvoting shares can vote on specific matters like amending the articles of incorporation or increasing bonded indebtedness, among others, as exceptions to the general rule.
65
Describe what no par value shares are in a corporation.
No par value shares are shares without a stated value in the Articles of Incorporation, deemed fully paid and nonassessable, issued at a minimum price, and treated as capital not available for dividend distribution.
66
Define the limitations on issuing no par value shares in a corporation.
Limitations include a minimum issue price, being fully paid and non-assessable upon issuance, treating all consideration as capital, prohibition on issuing as preferred stock, and restrictions on certain types of corporations.
67
How are shareholders of no par value shares protected from additional capital contributions?
Shareholders of no par value shares are protected as they are deemed fully paid and nonassessable, meaning they cannot be asked for additional paid-in capital or be liable to the corporation or its creditors.
68
Do no par value shares allow for distribution as dividends?
No, the total amount received from issuing no par value shares is treated as capital and cannot be distributed as dividends.
69
Describe the rights of a stockholder in terms of voting in a corporation.
A stockholder has the right to participate in the control and management of the corporation through voting, which is inherent to stock ownership and considered a property right.
70
How can the right to vote of a stockholder be impaired in a corporation?
The right to vote of a stockholder cannot be deprived or essentially impaired without consent, whether by legislative changes, charter amendments, or by-laws modifications.
71
Describe the tax treatment of stock dividends according to the doctrine mentioned in the content.
Stock dividends representing the transfer of surplus to capital account are not subject to tax until the gain is realized.
72
What is the significance of the redemption or cancellation of stock dividends in terms of taxation, as per the content?
Redemption or cancellation of stock dividends can be equivalent to a distribution of taxable dividends, making the proceeds taxable if it represents profits.
73
Define the term 'treasury shares' as mentioned in the content.
Treasury shares are common shares that a company has issued and subsequently repurchased, holding them in its treasury.
74
How did ANSCOR use the redemption of common shares from Don Andres' estate for business purposes?
ANSCOR redeemed shares to partially retire them as treasury shares, aiming to reduce foreign exchange remittances in case cash dividends were declared.
75
Describe the outcome of the tax assessments on ANSCOR's redemption of stocks as per the Court of Tax Appeals decision.
The Court of Tax Appeals reversed the tax assessments on the redemptions and exchange of stocks, finding sufficient evidence to overcome the correctness of the assessments.
76
Explain the ruling regarding the taxability of ANSCOR's redemption of stocks according to the content.
The redemption of stocks by ANSCOR was deemed equivalent to the distribution of taxable dividends, making the proceeds taxable as it represented profits.
77
Describe the requirement for terms conditions of shares in the AOI certificate of stock.
The terms and affecting shares must be stated in both the AOI and the certificate of stock.
78
sinking fund in relation to redeemable.
A sinking fund is a fund set up by the corporation to gradually accumulate the amount necessary to meet the redemption price of redeemable shares at specific future dates.
79
How are redeemable shares treated upon redemption according to SEC rules?
Redeemable shares are deemed retired upon redemption, unless the AOI allows for reissuance of such shares.
80
Do redeemable shares require URE before redemption?
Redeemable shares do not require URE (Unrestricted Retained Earnings) before redemption, but there must be sufficient assets to pay creditors and cover operations.
81
Describe the condition under which redemption cannot be made according to SEC opinion.
Redemption cannot be made if it will result in insolvency or the inability of the corporation to meet its obligations.
82
Explain the effect of redemption on redeemable shares according to SEC rules.
Redemption of redeemable shares does not necessarily make them treasury shares; they are deemed retired unless specified otherwise in the AOI.
83
Describe treasury shares in the context of a corporation.
Treasury shares are shares of stock that were once issued and fully paid for by the corporation but were later reacquired through legal means like purchase, redemption, or donation.
84
How are treasury shares different from outstanding shares?
Treasury shares, being fully paid shares re-acquired by the corporation, are not considered outstanding and can be re-issued and resold.
85
Define the treatment of treasury shares in terms of the corporation's assets.
Treasury shares are considered assets of the corporation and are not reverted to unissued shares but can be reissued or resold at a price set by the Board of Directors.
86
What is the requirement for reacquiring shares without affecting the corporate trust fund?
Shares can be reacquired without impacting the corporate trust fund as long as the corporation uses assets up to the extent of its unrestricted retained earnings.
87
Describe the reissuance process of treasury shares.
Treasury shares can be disposed of again at a reasonable price determined by the Board of Directors, with stockholders having preemptive rights unless stated otherwise in the articles of incorporation.
88
Do delinquent stocks have the potential to become treasury stocks?
Yes, delinquent stocks, which are unpaid, can become treasury stocks if the corporation bids on them in the absence of other bidders.
89
Explain the limitations on reissuing treasury shares.
Treasury shares can be re-issued or sold again for a reasonable price set by the Board of Directors, and they cannot be divided or split.
90
Describe the requirement under the Old Corporation regarding the subscription and payment of stock at the time of incorporation for a stock corporation.
At least 25% of the authorized capital stock must be first subscribed at the time of incorporation, with at least 25% of the total subscription to be paid upon subscription.
91
Define the issue in the case of Fong v. Duenas (2015) regarding the misappropriation of cash advance by the Respondent.
The issue was whether or not Respondent misappropriated Petitioner's cash advance, violating the original agreement, which was affirmed as YES.
92
How did Respondent in the case of Fong v. Duenas (2015) err in handling Petitioner's cash advances?
Respondent erred by investing Petitioner's contributions in his own companies instead of using them for the joint venture's capital and incorporation.
93
Describe the doctrine established in Guillen v. Arnado (2017) regarding the business name City Grill Restaurant.
The business name City Grill Restaurant, even if used for a short period, was never dissolved in accordance with the law and had acquired goodwill among residents and customers.
94
Do you think the Respondent in Fong v. Duenas (2015) was justified in using Petitioner's cash advances for his own companies?
No, the Respondent was not justified as the cash advances were meant for the joint venture's capital and incorporation, not for his personal companies.
95
Define the joint venture agreement between Petitioner and Respondent in Fong v. Duenas (2015).
They agreed to contribute to the capital, with the Petitioner providing cash and the Respondent using his two companies, alongside financial documents indicating the combined value.
96
Describe the role of incorporators in forming a.
Incorporators form the corporation and attest to the truthfulness of the proposed corporate charter.
97
Define the doctrine related to the Articles of Incorporation (AOI) regarding incorporators.
The AOI must state the names, nationalities, and residences of the incorporators to inform the public about the individuals organizing the corporation.
98
How does the unauthorized use of aliases by incorporators affect the validity of a corporation's registration?
The unauthorized use of aliases by incorporators constitutes fraud, leading to misrepresentation of identity and potential revocation of the corporation's registration.
99
Do all incorporators need to be subscribers to the capital stock of a corporation?
Yes, all incorporators must subscribe to at least one share of the capital stock.
100
Describe the significance of vigilance against fictitious names among incorporators.
Vigilance against fictitious names is crucial as it can lead to confusion, defeat claims against incorporators, and potentially subject them to personal liabilities.
101
Define the purpose of the majority of incorporators no longer needing Philippine residency according to the RCC.
The RCC removed the Philippine residency requirement to facilitate the incorporation process and attract a more diverse pool of incorporators.
102
Describe the process of extending or short a corporation's term as per the articles incorporation.
endment of AOI is required, and it can be done as early as three years before the term expires, with exceptions for justifiable reasons determined by SEC. Approval by a majority vote of the BOD/T and ratification by at least two-thirds of the OCS or its members are requisites.
103
Define the revival of a corporation with an expired term.
Upon revival, the corporation's term becomes perpetual unless specified otherwise. A favorable recommendation from the regulating government agency is required for certain institutions. The SEC issues a certificate of revival, granting perpetual existence with all rights, privileges, duties, debts, and liabilities.
104
How does a dissenting stockholder benefit during the extension of a corporate term?
A dissenting stockholder may exercise the right of appraisal during the extension of a corporate term.
105
Describe the process for voluntary dissolution of a corporation by controlling stockholders or members.
Controlling stockholders or members must represent at least two-thirds of the OCS/membership in the application for voluntary dissolution. Dissenting stockholders cannot exercise their appraisal right.
106
Do shareholders need to agree to extend or shorten a corporation's term?
Yes, shareholders need to agree by majority vote for the extension or shortening of a corporation's term.
107
Define the significance of the Alhambra Cigar v. SEC (1968) case.
The case established that upon dissolution, a corporation becomes legally dead for all purposes unless statutory authorizations are provided for its continuance for limited and specified purposes incident to complete liquidation of its affairs.
108
Describe the concept of Authorized Capital Stock (ACS) in a corporation.
Authorized Capital Stock is the minimum amount of capital a corporation will receive when it issues all its shares, calculated by multiplying the par value of each share by the total number of shares authorized in the charter.
109
Define Outstanding Capital Stock (OCS) in the context of a corporation.
Outstanding Capital Stock refers to the total shares of stock issued to subscribers or stockholders, regardless of whether they are fully or partially paid, excluding treasury shares.
110
How can one become a stockholder in a corporation according to the content?
One can become a stockholder by subscribing to shares before or after incorporation, or by acquiring already issued shares.
111
Describe Subscribed Capital Stock (SCS) in a corporation.
Subscribed Capital Stock is the committed amount of capital that the corporation will receive from its existing subscribers, even if full payment is not required upfront.
112
What is the significance of Additional Paid-In Capital (APIC) in a corporation's trust fund?
APIC represents money received above the par value of shares, which is considered part of the trust fund. It includes any amount raised above the authorized capital stock.
113
Explain the concept of Paid-Up Capital Stock in a corporation.
Paid-Up Capital Stock refers to the received or fully paid portion of the subscribed amount, which forms part of the corporation's trust fund.
114
What are the requirements for minimum capital stock in stock corporations under the Revised Corporation Code (RCC)?
Stock corporations are not required to have a minimum capital stock under the RCC, except as specifically provided by special law. The previous requirement of at least 25% subscription and payment upon incorporation has been removed.
115
Describe the process of becoming a stockholder through subscription in a corporation.
Becoming a stockholder through subscription involves offering to subscribe to shares, which is accepted by the corporation. This can happen before or after incorporation, and the consideration may be fully paid or not.
116
Describe the information required to be included in the articles of incorporation of a corporation.
The articles of incorporation must include details such as the number of directors or trustees, their names and addresses, capital stock information, contributors for nonstock corporations, and any other necessary matters.
117
Do incorporators have the flexibility to include additional matters in the articles of incorporation?
Yes, incorporators can include other matters consistent with the law and deemed necessary and convenient.
118
Define the articles of incorporation as a contract document.
The articles of incorporation serve as a basic contract document that defines the charter of the corporation and determines its legal existence.
119
How many parties are involved in the charter of a corporation according to the content?
The charter of a corporation involves three parties: the State and the corporation, the stockholders and the State, and the corporation and its stockholders.
120
Describe the naming requirements for a corporation.
The name must comply with legal standards, be distinguishable from other corporations, and not violate laws, morals, or public policy.
121
Define the purpose statement in the articles of incorporation.
The purpose statement must outline the primary or only purpose of the corporation, avoiding unconstitutional, illegal, or immoral objectives, and not be for professional practice like law or medicine.
122
Describe the concept of residence of a for venue purposes as per the cases Sy. Tyson Enterprises andatt Elevators v Goldstar Elevators.
The residence of a corporation for venue purposes is where its principal office is located, as stated in its Articles of Incorporation, separate from the residence of its president.
123
Define the principal place of business and its significance according to SEC Memorandum Circular No. 6, series of 2016.
The principal place of business is crucial in determining venue in legal actions involving the corporation and in registering chattel mortgages of shares.
124
How are corporations required to disclose principal office and residence addresses of stockholders, officers, directors, or trustees according to SEC regulations?
Corporations must state specific principal office and residence addresses of key individuals in their General Information Sheet (GIS).
125
Describe the consequences of failing to comply with the requirement to specify complete addresses in the Amended Articles of Incorporation by the given deadline.
Failure to comply results in a one-time penalty of P5,000.00 for stock corporations and P2,500.00 for non-stock corporations.
126
How does SEC ease the process for corporations and partnerships when transferring to a new location according to Section 8?
If moving within the same city or municipality, corporations are encouraged to declare the new address in their GIS without amending the Articles. Otherwise, an Amended AOI must be filed within 15 days of transfer.
127
Describe the procedure for corporations with secondary licenses regarding changes in principal office and branch office addresses as per the content.
Corporations with secondary licenses must file an amendment for any change in principal office or branch office addresses as applicable.
128
Describe the process of converting a corporation sole into corporation aggregate in the case of IEMELIF v. Lazaro (2010).
The general membership of IEMELIF voted to change its organizational structure from a corporation sole to a corporation aggregate, which required amending the articles of incorporation with the approval of two-thirds of the members.
129
Define the term 'corporation sole' as mentioned in the content.
A corporation sole is a legal entity consisting of a single incorporated office, typically held by one person, who is the legal representative of the organization.
130
How did the SEC's instruction impact the conversion process in the case of IEMELIF v. Lazaro (2010)?
The SEC instructed IEMELIF to amend its articles of incorporation to properly carry out the conversion from a corporation sole to a corporation aggregate.
131
Describe the role of Bishop Nathanael Lazaro in the conversion process of IEMELIF.
Bishop Nathanael Lazaro, as the General Superintendent of IEMELIF, instructed congregations to discuss and resolve the conversion matter with their members.
132
What was the main issue addressed in the case of IEMELIF v. Lazaro regarding the conversion of corporation sole to corporation aggregate?
The main issue was whether a corporation sole could be converted into a corporation aggregate solely through amending its articles of incorporation.
133
Explain the significance of the two-thirds vote requirement for amending the articles of incorporation in non-stock corporations.
The two-thirds vote requirement ensures a substantial majority agreement among members before any significant changes can be made to the articles of incorporation of a non-stock corporation.
134
Describe the elements of estafa by deceit as in the content.
The elements include false pretense, fraudulent act or means; execution prior to or simultaneously with the fraud; reliance by the offended party; and resulting damage.
135
Define the term 'irrevocable letter of credit' based on the content.
It refers to a financial document issued by a bank that guarantees payment to a seller on behalf of a buyer, and cannot be changed or canceled without the consent of all parties involved.
136
How did the bank mistake RMSI for SPI in the content?
The bank believed that SPI, a subsidiary corporation with a smaller capital, was the same entity as Smartnet Philippines, a division of RMSI, leading to the issuance of credit to the wrong entity.
137
Describe the relationship between RMSI, Smartnet Philippines, and SPI as presented in the content.
Smartnet Philippines was a division of RMSI, while SPI was a subsidiary corporation of RMSI, considered a separate entity. The confusion led to legal issues and an estafa case.
138
Do the interlocking directors of RMSI and SPI bear liability for estafa according to the content?
Yes, evidence indicated that the interlocking directors of RMSI and SPI could be held liable for estafa due to their actions and the confusion surrounding the corporate entities.
139
Explain the significance of Radio Marine amending its name to Smartnet in the context of the content.
The amendment, along with the establishment of Smartnet PH as a subsidiary after being a division of RMSI, was seen as indicative of the interconnected nature of the corporations and their directors' actions, leading to legal consequences.
140
Describe the criteria for when a change of corporate name is necessary.
A change of corporate name is necessary if it is not distinguishable from a name already reserved, contains specific restricted words, is protected by law, or goes against existing regulations.
141
Define the difference between a business or trade name and a corporate name.
A business or trade name is different from a corporate name and must be indicated separately in the articles of incorporation.
142
How does the SEC handle a corporation with a name that is not allowed?
The SEC may issue a Cease and Desist Order, require a new name registration, or remove all visible signages with the prohibited name.
143
Describe the consequences of failing to comply with the SEC's order regarding a corporate name.
Consequences may include contempt charges, administrative, civil, or criminal liabilities for the corporation and its directors, and potential revocation of the certificate of registration.
144
Do you need shareholder approval for a change of corporate name?
Yes, a change of corporate name requires the approval of the majority of the board and at least 2/3 of the stockholders, unless the articles of incorporation specify a higher threshold.
145
What are some words that may restrict a corporate name change?
Words like 'corporation', 'company', 'incorporated', 'limited', or their abbreviations may restrict a corporate name change.
146
Describe the role of a promoter in formation of a corporation.
A brings together individuals interested the enterprise, aids in securing subscriptions, formulates initial business plans, and may acquire necessary rights and for the future corporation.
147
What is the process for registering a corporate name with the SEC?
Incorporators, directors, or trustees must submit the intended name for verification. Once verified, the name is reserved for the incorporators.
148
Define the Certificate of Incorporation (CI) and when it is issued.
The CI is a document issued by the SEC under its official seal, marking the commencement of the corporation's juridical personality.
149
How does a corporation acquire its juridical personality according to the content?
Juridical personality begins upon the issuance of the Certificate of Incorporation by the SEC, after the submission and approval of Articles of Incorporation and bylaws.
150
Describe the consequences of failing to file the Articles of Incorporation (AOI) with the SEC.
Failure to file the AOI prevents the incorporation of the proposed corporation, leading to no juridical personality or even de facto corporation status.
151
What actions can the SEC take if fraud is discovered in the process of obtaining the certificate of incorporation?
If fraud is found, the SEC can revoke the certificate after proper notice and hearing, as seen in the case of Chung Ka Bio v. IAC (1988).
152
Describe the De Facto Corporation Rule.
The De Facto Corporation Rule states that individuals sued by a corporation cannot use lack of the corporation's personality as a defense.
153
Define de facto corporation.
A de facto corporation is an entity that has not been fully incorporated but is treated as a corporation due to colorable compliance with legal requirements and the assumption of corporate powers.
154
How can the juridical personality of a corporation be challenged?
The juridical personality of a corporation can be challenged in a quo warranto proceeding brought by the Solicitor General.
155
Do private individuals have the right to inquire into the incorporation of a corporation in a private suit?
No, private individuals cannot inquire into the incorporation of a corporation in a private suit; such inquiries can only be made by the Solicitor General in a quo warranto proceeding.
156
Describe the requisites for a de facto corporation.
The requisites for a de facto corporation include the existence of a valid statute for incorporation, colorable compliance with legal requirements in good faith, and the use of corporate powers.
157
What are the essential requirements for the existence of a de facto corporation according to the Seventh Day Adventist vs. Northeastern Mindanao case?
The essential requirements are the existence of a valid law for incorporation, a good faith attempt to incorporate, and the assumption of corporate powers.
158
Describe the doctrine discussed in the case of Pioneer Insurance v. CA (1989)
The doctrine states that individuals who attempt to form a corporation but fail, and conduct business under the corporate name, may not necessarily be considered partners if their intention was not to create a partnership.
159
Define the partnership relation between stockholders and directors in the absence of an agreement
In the absence of an agreement, a partnership relation will not be implied between certain stockholders and other stockholders who are also directors, making the former not automatically liable for debts illegally contracted by the latter.
160
How did Jacob Lim's actions lead to the case against him in Pioneer Insurance v. CA (1989)?
Jacob Lim convinced individuals to contribute funds for a proposed airline corporation, failed to incorporate the corporation, defaulted on payments, and was ordered to reimburse the contributors.
161
Do individuals who only subscribe for stock in a proposed corporation that is never legally formed become partners with other subscribers who engage in business under the corporation's name?
No, individuals who only subscribe for stock in a proposed corporation that is never legally formed do not become partners with others who engage in business under the corporation's name.
162
Describe the outcome of the case involving Lim, Bormaheco, Cervanteses, and Maglana in Pioneer Insurance v. CA (1989)
Lim was ordered to reimburse the contributors for the funds they provided to set up the corporation that was never incorporated.
163
How did the Supreme Court rule regarding Lim's obligation to reimburse the contributors in Pioneer Insurance v. CA (1989)?
The Supreme Court ruled that Lim, despite his representations, never intended to set up the corporation with the contributors and was therefore required to reimburse them for their contributions.
164
Describe the doctrine of corporation by estoppel.
The doctrine states that a person acting on behalf of a corporation that does not legally exist becomes personally liable for contracts or acts performed as an agent.
165
Define corporation by estoppel.
It is a legal principle where a person who acts on behalf of a non-existent corporation assumes liability for contracts or actions performed as an agent.
166
How does the doctrine of corporation by estoppel apply to third parties?
It applies when a third party tries to avoid liability on a contract due to defective incorporation, even if they have benefited from the contract.
167
Do officers or agents of a voluntary unincorporated association have personal liability for contracts entered into by the association?
Yes, officers or agents of such associations can be personally liable for contracts as the association itself may lack the power to enter into or ratify contracts.
168
Describe the situation in which the doctrine of corporation by estoppel may be invoked.
It can be invoked when a party deals with an entity in a way that recognizes and admits its existence, even if the entity is defectively incorporated.
169
How did the Court of Appeals apply the doctrine of corporation by estoppel in the case of Int’l. Express Travel & Tour Services, Inc. v. CA?
The CA held that the petitioner recognized the existence of the Federation through its dealings, applying the doctrine of corporation by estoppel to prevent the petitioner from denying the Federation's corporate existence.
170
Describe the consequences of a corporation not organizing and commencing business within five years of its incorporation.
The certificate of incorporation is deemed revoked.
171
What happens if a corporation becomes inoperative for at least five consecutive years?
It may be placed under delinquent status.
172
How long does a delinquent corporation have to resume operations after being placed under delinquent status?
Two years.
173
Define delinquent status for a corporation as per the content.
A status where the corporation has ceased operations and must resume within a specified period.
174
What action does the Commission take if a delinquent corporation fails to resume operations within the given period?
It revokes the corporation's certificate of incorporation.
175
Describe the requirement for the SEC before suspending or revoking a corporation's certificate of incorporation.
The SEC must notify and coordinate with the appropriate regulatory agency.
176
Describe the term of directors in stock corporations.
One-year term.
177
Define the Doctrine of Centralized Management in corporations.
BOD/T exercises corporate powers, conducts business, and controls properties unless specified otherwise.
178
How is the main decision-making authority of a corporation defined?
The BOD/T oversees the corporation's affairs.
179
Do corporate officers have the authority to bind the corporation?
Yes, if they act within the bounds of their authority.
180
Describe the exception to the general rule that corporate officers' acts are binding upon the corporation.
When officers act in excess of their authority, their actions cannot bind the corporation.
181
How can the BOD delegate corporate powers according to ABS-CBN v. CA (1999)?
The BOD may delegate powers to an executive committee, officials, or contracted manager for specific purposes.
182
Describe the process of electing directors or trustees in a according to the provided content.
Stockholders or members have the right to nominate directors who meet the qualifications, must be present or represented at elections, can vote through remote communication or in absentia, and may vote by ballot if requested.
183
What is the requirement for stockholders or members to be present at elections of directors or trustees in a corporation?
They must be present in person or through a representative authorized by written proxy, owning a majority of the outstanding capital stock or entitled members.
184
Define cumulate voting in the context of electing directors in a stock corporation.
Cumulate voting allows a stockholder to concentrate their votes on a single candidate or distribute them among multiple candidates based on the number of directors to be elected.
185
How can stockholders vote in a stock corporation when electing directors according to the bylaws or in the absence of specific provisions?
They can vote the number of shares they own for as many candidates as there are directors, cumulate their shares for specific candidates, or distribute them among multiple candidates.
186
Describe the voting rights of members in nonstock corporations when electing trustees.
Members of nonstock corporations can cast as many votes as there are trustees to be elected.
187
Explain the provision regarding delinquent stock in the context of voting for directors in a corporation.
Delinquent stock cannot be voted, as stated unless otherwise provided in the articles of incorporation or bylaws.
188
Describe the process of electing corporate officers in corporation according to the Corporation Code.
Directors must formally organize and elect a president, treasurer, secretary, and other officers as provided in the bylaws. If the corporation has public interest, a compliance officer must also be elected.
189
What are the roles of corporate officers in managing a corporation?
They execute Board of Directors decisions, manage corporate affairs, and perform duties as outlined in the bylaws or resolved by the board.
190
Define the distinction between corporate officers and non-corporate officers based on the Corporation Code.
Corporate officers must be expressly mentioned in the bylaws, are terminated at will, and fall under intra-corporate disputes under the jurisdiction of the RTC.
191
How is a corporate officer differentiated from an ordinary employee or officer according to legal precedents?
A corporate officer is created under the corporation's charter or bylaws and elected by directors or stockholders, distinguishing them from regular employees.
192
Describe the conditions that must be met for an individual to be considered a corporate officer in a corporation.
The position must be created in the corporation's charter or bylaws, and the officer must be elected by directors or stockholders.
193
Define an intra-corporate dispute and explain its relevance to corporate officers.
An intra-corporate dispute involves issues related to corporate governance, such as the appointment or dismissal of corporate officers, falling under the jurisdiction of trial courts.
194
Describe the role of a Block G2024 Reviewer in ensuring compliance within a corporation.
The Block G2024 Reviewer ensures that board members and corporate officers comply with the law, corporate charter, and by-laws.
195
Define the Doctrine of Apparent Authority in corporate transactions.
The Doctrine of Apparent Authority states that if a corporation allows an officer to act within the scope of apparent authority, it cannot later deny the authority of that officer to a third party who acted in good faith.
196
How can a corporation ratify the unauthorized act of a corporate officer, according to the case of Yasuma v. Da Villa (2006)?
A corporation can ratify the act of an unauthorized corporate officer, even if unauthorized, thereby validating the action taken.
197
Do the same person hold the positions of President and Secretary concurrently in a corporation, according to the general rule?
No, the general rule states that the same person cannot hold the positions of President and Secretary concurrently in a corporation.
198
Describe the qualifications required for a Director, President, and Treasurer in a corporation according to the provided content.
Directors must be Filipino citizens, Presidents must be residents, and Treasurers must be residents and Filipino citizens, subject to specific industry regulations.
199
How can the existence of apparent authority be ascertained in a corporation, as per the case of APC v. Arma (2013)?
Apparent authority can be derived from the general manner in which the corporation holds out an officer as having the power to act or through acquiescence in the officer's actions.
200
Describe the issue in the case of Velarde. Lopez (2004).
The case involves a dispute over remuneration between a stockholder and officer of a corporation and the corporation itself, questioning the jurisdiction of the RTC over a labor dispute.
201
Define the doctrine discussed in the case of Velarde v. Lopez (2004).
The doctrine states that issues of remuneration involving a stockholder and officer of a corporation are considered corporate controversies falling under the Corporation Code.
202
How did the disagreement between Velarde and Lopez, Inc. arise in the case?
The disagreement arose when Velarde claimed that a loan from Lopez, Inc. was meant to be repaid through services to Sky Vision, but the set-off against retirement benefits led to a dispute.
203
Do you think the RTC had jurisdiction over the counterclaim in the Velarde v. Lopez case?
Yes, the RTC had jurisdiction as the case involved a corporate officer's dismissal and other corporate-related issues, not solely a labor dispute.
204
Describe Velarde's position regarding the loan and retirement benefits in the case.
Velarde argued that the loan was intended to be repaid through service to Sky Vision, but retirement made this impossible, leading to the disagreement over the set-off against retirement benefits.
205
How did the court view Velarde's claim for unpaid salaries and benefits in the case?
The court determined that jurisdiction over claims for unpaid salaries, benefits, and other corporate-related issues belonged to the SEC, even if they included money claims by a corporate officer.
206
Define the role of the SEC in corporate disputes like the one in Velarde v. Lopez (2004).
The SEC has jurisdiction over claims related to unpaid salaries, benefits, and other corporate matters, even if they involve money claims by corporate officers.
207
Describe the involvement of Lopez, Inc. in the dispute with Velarde in the case.
Lopez, Inc. lent money to Velarde, which led to a disagreement over the repayment terms and the subsequent set-off against Velarde's retirement benefits, resulting in a legal action before the RTC.
208
Describe the process of holding elections for a corporation as per the Corporation Code.
The process involves issuing a notice with the time and place of the election, the presiding officer, and the record date for determining eligible voters. A quorum is constituted by the shares or memberships entitled to vote.
209
Define the duty of reporting a change in director, trustee, or officer to the SEC.
The duty involves reporting in writing to the SEC within 7 days of knowing the reason for the individual ceasing to hold office.
210
How does the Corporation Code mandate the submission of information to the SEC regarding directors, trustees, and officers?
It requires submitting the names, nationalities, and residences of the elected individuals within 30 days.
211
Do you need authorization from a duly constituted Board of Directors to file a case on behalf of a corporation?
Yes, authorization from the Board of Directors is required to file a case on behalf of a corporation.
212
Describe the outcome of the case involving Premium Marbles Resources, Inc. v. CA.
The case was dismissed as the officers lacked the legal capacity to sue on behalf of the corporation without proper authorization from the Board of Directors.
213
How did the Court of Appeals rule in the case of Premium Marbles Resources, Inc. v. CA?
The Court of Appeals affirmed the dismissal of the case, stating that the officers did not have the legal capacity to sue on behalf of the corporation without proper authorization.
214
Describe the doctrine regarding filling vacancies in board of directors caused by the expiration of member's term.
The doctrine states that such vacancies should be filled by the corporation's stockholders.
215
Define hold-over capacity in the context of board membership.
Hold-over capacity refers to continuing to serve in the board after the term has expired until a replacement is elected.
216
How should the secretary or relevant officer report the death, resignation, or cessation of a director, trustee, or officer to the Commission?
They should report in writing within seven days from knowledge of the event.
217
Do the remaining directors of a corporation's board, constituting a quorum, have the authority to elect another director to fill a vacancy caused by the resignation of a hold-over director?
No, according to the ruling in the case, the remaining directors cannot appoint a successor in such a scenario.
218
Describe the situation where Roxas and Ramirez were elected to the VVCC Board of Directors.
Roxas replaced Dinglasan, while Ramirez replaced Makalintal, both being elected by the board members.
219
What was Africa's argument regarding the election of Roxas and Ramirez to the VVCC Board of Directors?
Africa argued that the vacancies should have been filled by stockholders in a meeting called for that purpose, not by the remaining board members.
220
Describe the power to remove a director or trustee in a corporation.
Shareholders or members who elected the director or trustee have the power to remove them.
221
Define the process of removing a disqualified director or trustee.
The Commission can order the removal of a director or trustee elected despite disqualification, with due notice and hearing.
222
How can directors avoid liability when removing a disqualified director or trustee?
Directors must call a special stockholders' meeting to elect a replacement director to avoid liability for enabling the disqualified director to hold office.
223
Do directors have the authority to remove a co-director in a corporation?
Directors cannot remove a co-director but can remove a corporate officer.
224
Describe the modes of removal for a director or trustee in a corporation.
A director or trustee can be removed in a regular meeting of the corporation or in a special meeting called specifically for their removal.
225
How is a special meeting called to remove a director or trustee in a corporation?
The Secretary is dutybound to call the special meeting on the order of the President or upon written demand of the majority shareholders or members.
226
Describe the power of directors in appointing officers and agents in a corporation.
Directors in a corporation have the power to appoint officers and agents, and as part of this power, they can also discharge those appointed.
227
Define the doctrine regarding the removal of directors or trustees in a corporation by stockholders or members.
The doctrine states that only stockholders or members of a corporation have the power to remove the directors or trustees elected by them, as specified in Section 28 of the Corporation Code.
228
How did the conflict between the petitioners and respondents in the case start?
The conflict began when petitioners questioned respondents' plan to enter into a joint venture with the Butuan Doctors' Hospital and College, Inc.
229
Do the directors have the authority to remove corporate officers in a corporation?
Yes, the corporation's Board of Directors can validly remove corporate officers, as seen in the case where Raniel was removed as corporate secretary, treasurer, and administrator of the Dialysis Clinic.
230
Describe the outcome of the Special Stockholders' Meeting in the case.
During the meeting, the stockholders present removed the petitioners as directors of Nephro, leading to a dispute over their removal.
231
What was the final decision regarding the removal of petitioners from Nephro by the Board of Directors?
The SEC and the CA both ruled that the removal of the petitioners from Nephro by the Board of Directors was valid, citing sufficient grounds for the removal of Raniel as an officer due to loss of trust and confidence.
232
Describe the process of filling a vacancy in the board of directors or trustees due to an emergency situation.
In an emergency situation, a director or trustee may temporarily fill the vacancy until the emergency ceases or a replacement is elected.
233
Define the term 'holdover period' in the context of board vacancies.
The holdover period refers to the time during which a person continues to serve in a position beyond the expiration of their term until a successor is elected or appointed.
234
How is a vacancy in the board of directors or trustees due to an increase in the number of directors or trustees typically filled?
Such vacancies are usually filled through an election at a regular or special meeting of shareholders or members duly called for the purpose.
235
Do all remaining directors or trustees have the obligation to fill vacancies in the board?
No, filling vacancies in the board by the remaining directors or trustees constituting a quorum is permissive, not mandatory.
236
Describe the ruling in Valle Verde v. Africa regarding board vacancies during a holdover period.
According to Valle Verde v. Africa, a term does not include the holdover period, preventing the board from replacing the person acting in a holdover capacity.
237
How does Tan v. Sycip (2006) clarify the process of filling vacancies in the board of directors or trustees?
Tan v. Sycip (2006) states that trustees may fill vacancies in the board as long as those remaining constitute a quorum, and the filling of vacancies is permissive, not mandatory.
238
Define the term 'management committee' in the context of board vacancies.
A management committee is a temporary committee that may be formed if only one director remains and cannot form an emergency board, typically requested from the SEC to manage the company temporarily.
239
Describe the timeline within which a vacancy in the board of directors or trustees must be filled after it arises.
A vacancy in the board must be filled within 45 days from the time the vacancy arose.
240
Do corporations have the flexibility to choose how vacancies in their respective boards are filled?
Yes, corporations have the choice to fill vacancies in their boards either by the remaining directors constituting a quorum or by the stockholders or members in a regular or special meeting called for the purpose.
241
Describe the general rule regarding compensation for directors or trustees.
Directors or trustees cannot be paid compensation, only reasonable per diems.
242
What is the limitation on the total compensation of all directors or trustees according to the content?
The total compensation of all directors or trustees cannot exceed 10% of the net income before tax of the preceding year.
243
How can directors or trustees receive compensation according to the content?
Directors or trustees can receive compensation if allowed by a majority of shareholders or provided for in the bylaws.
244
Define the doctrine mentioned in the content regarding directors or trustees' compensation.
Directors or trustees are generally not entitled to salary or other compensation when they perform only the usual and ordinary duties of their office.
245
What is the exception to the general rule of no compensation for directors or trustees as per the content?
Directors or trustees can receive compensation if allowed by a majority of shareholders or provided for in the bylaws.
246
Describe the process for determining compensation for corporate officers according to the content.
Compensation for corporate officers is subject to negotiations between the corporation and the officer, and the officers cannot participate in its formulation.
247
Describe the requisites for a derivative suit as outlined in SMC v. Khan (1989).
The party suing must be a shareholder at the time of the act complained of, exhaust intra-corporate remedies, and the cause of action must affect the corporation.
248
Define a derivative suit based on the case BSP v. Campa (2016).
A stockholder's right to sue on behalf of the corporation when directors or officers violate their fiduciary duties.
249
How are suits by stockholders or members classified according to Legaspi v. Muer (2012)?
They can be individual suits, class suits, or derivative suits based on who the wrong is done to.
250
Do individual stockholders have the right to institute a derivative suit according to Ching v. Subic (2014)?
Yes, to protect corporate rights when officials refuse to sue or are the ones to be sued.
251
Describe the ruling in Gochan v. Young (2001) regarding stockholders filing a derivative suit.
Persons not registered as stockholders can file a derivative suit if they are bona fide stockholders.
252
Explain the requirement for a stockholder bringing a derivative action according to the content.
They must have been a stockholder at the time of the act being complained of.
253
Describe the composition of an executive committee per the provided content.
An committee must be composed at least three directors.
254
Describe the test for determining if an act is in direct furtherance of a corporation's business.
The act must be fairly incident to the express powers, reasonably necessary for their exercise, and in direct and immediate furtherance of the corporation's business.
255
Define the power to guarantee or secure obligations within a corporation.
It must be within the Articles of Incorporation and in furtherance of the business purpose, such as validly mortgaging corporate assets to secure another corporation's obligation.
256
How does jurisprudence in Cagayan Valley v. CIR (2008) address the power to sue and be sued within a corporation?
It states that certain officials or employees like the Chairperson, President, General Manager, Personnel Officer, or Employment Specialist can sign verification and certification without a board resolution.
257
Do individual stockholders have the power to file a derivative suit on behalf of a corporation?
Yes, if the corporation's officials refuse to sue, are the ones to be sued, or hold control, individual stockholders can file a derivative suit.
258
Describe the principle stated in BPI Leasing v. CA (2003) regarding the powers of corporations.
Corporations only have powers expressly conferred by the Corporation Code or implied/incidental to their existence, and physical acts like signing documents require authorization by natural persons or the board.
259
How is the power to purchase real property typically vested within a corporation?
The power to purchase real property is usually vested in the board of directors or trustees, who may appoint agents to negotiate for purchases.
260
Describe the concept of ultra vires acts in relation to corporations.
Ultra vires acts are actions taken by a corporation that fall outside the scope of its defined legal powers and objectives.
261
Define the term 'ultra vires' and differentiate it from an illegal act.
Ultra vires refers to actions beyond a corporation's legal powers, which can be voidable. It is distinct from illegal acts, which are void and cannot be validated.
262
How can an ultra vires act be enforced despite being voidable?
An ultra vires act can be enforced through performance, ratification, or estoppel.
263
Do ultra vires acts have the potential to be validated under certain circumstances?
Yes, ultra vires acts may be validated through performance, ratification, or estoppel.
264
Describe the case of Atrium Mgt. Corp. v. CA (2001) in relation to ultra vires acts.
The case involved the issuance of post-dated checks by Hi-Cement, which was initially deemed an ultra vires act but later found to be within the scope of valid corporate actions.
265
How did the Court of Appeals rule regarding the issuance of the post-dated checks in the Atrium Mgt. Corp. v. CA case?
The Court of Appeals absolved Hi-Cement from liability, stating that the issuance of the checks was not an ultra vires act as it was within the corporation's valid powers.
266
Describe Theory of Specific Capacity in relation to the powers of a corporation.
The Theory of Specific Capacity states that a corporation can only exercise powers that are expressly or impliedly given to it.
267
Define pre-emptive rights in the context of corporate powers.
Pre-emptive rights refer to the right of existing shareholders to maintain their proportional ownership in the company by purchasing additional shares before they are offered to the public.
268
How does a corporation typically declare dividends according to the content?
A corporation declares dividends through a Board of Directors resolution, which can be in the form of cash dividends or stock dividends.
269
Do all actions related to corporate powers require the same level of shareholder approval?
No, different actions such as amending the Articles of Incorporation or declaring dividends may require varying levels of shareholder approval, ranging from a simple majority to a two-thirds majority.
270
Describe the process for a corporation to acquire its own shares according to the content.
A corporation can acquire its own shares by following the procedures outlined in Section 40, which may not necessarily require shareholder approval.
271
How are actions requiring ratification of shareholders different from those requiring approval in terms of decision-making within a corporation?
Actions requiring ratification typically involve more significant decisions such as mergers or investments, and they need a higher level of shareholder support (2/3 majority) compared to actions requiring approval (simple majority or 2/3 majority).
272
Describe the concept of extending the corporate term and its impact on shareholders.
Extending the corporate term novates the corporate contract with each shareholder, prolonging the corporate relationship beyond the original term.
273
Define the process required for a corporation to increase or decrease its capital stock.
A corporation needs approval from the majority of the board of directors and two-thirds of the outstanding capital stock at a stockholders' meeting to increase or decrease its capital stock.
274
How can a corporation incur, create, or increase bonded indebtedness according to Sec. 37?
A corporation can incur, create, or increase bonded indebtedness by obtaining approval from the board of directors and two-thirds of the outstanding capital stock at a stockholders' meeting.
275
Do shareholders have the right of appraisal when the corporate term is shortened?
No, shortening the corporate term does not trigger the right of appraisal as it does not violate the original contractual intent.
276
Describe the requirements for notifying stockholders about a meeting to approve changes in capital stock or bonded indebtedness.
Written notice of the meeting's time, place, and purpose must be sent to stockholders at their residences and served personally or through recognized electronic means.
277
What information must be included in a certificate signed by the directors regarding changes in capital stock or bonded indebtedness?
The certificate must include compliance with requirements, the amount of change in capital stock, details of subscriptions, bonded indebtedness, stock represented at the meeting, and the vote authorizing the change.
278
Describe the timeline for making an application the Commission after approval of the board of and stockholders.
The application with Commission should be made within six (6) months from the date of approval, with the possibility of extension for just reasons.
279
Define the prior approval required by the Philippine Competition Commission in certain situations related to a corporation's capital stock or bonded indebtedness.
Prior approval is needed for any increase or decrease in capital stock or incurring, creating, or increasing bonded indebtedness.
280
How can the right of appraisal be exercised in cases of an increase in capital stock?
The right of appraisal can be exercised in cases of capital stock increase as it may dilute the proportionate interest of a stockholder in the corporation.
281
Describe the scenario where the right of appraisal cannot be exercised in cases of a decrease in capital stock.
The right of appraisal cannot be exercised in cases of a decrease in capital stock as it would involve returning part of the investments of stockholders, including dissenting stockholders.
282
Do dissenting stockholders have the right of appraisal when a corporation validly incurs, creates, or increases bonded indebtedness?
No, dissenting stockholders cannot exercise the right of appraisal in such cases as it would drain the corporation's financial resources needed for corporate affairs.
283
Describe the exemption authority of the Commission regarding transactions not covered by registration requirements.
The Commission may exempt transactions not covered by registration requirements if it deems enforcement unnecessary in the public interest or for investor protection due to the small amount involved or limited public offering character.
284
Describe the doctrine regarding contracts entered into by the Board of Directors of a corporation.
Contracts entered into by the BOD are binding unless unconscionable and oppressive to the minority.
285
Define the laissez faire rule in the context of business judgments by the board of directors.
The laissez faire rule dictates that courts should not interfere with business decisions of the board.
286
How does the social contract in the corporate family impact decision-making in a corporation?
The social contract vests the decision-making power in the board of directors, not the courts.
287
Do courts typically override the business judgment of the board of directors?
Courts are hesitant to override the business judgment of the board.
288
Describe the issue in the case of Ong v. Tiu regarding FLADC filing a petition for the issuance of a certificate of decrease of stock.
The issue was whether the court can compel FLADC to file such a petition, which the court held as an improper judicial intrusion.
289
Explain the outcome of the case of Ong v. Tiu regarding the Pre-Subscription Agreement between the Ongs and the Tius.
The agreement was rescinded, the original investment of the Ongs was returned, and most assets were awarded to the Tius.
