CORPORATION LAW REVIEWER

JOSEPH DAVE E. BERMIL JD-2

1. Appraisal right is the right of the stockholder to demand the payment of the fair value of his shares after
dissenting against a proposed corporate act in the cases specified by law. Appraisal right is a statutory
right. It cannot be denied to the stockholders in cases where the law allows such right. That no payment
shall be made to any dissenting stockholder unless the corporation has unrestricted retained earnings in
its books to cover such payment. Any stockholder of a corporation shall have the right to dissent and
demand payment of the fair value of the shares in the following instances:

A. In case an amendment to the articles of incorporation has the effect of changing the rights of any
stockholder or class of shares, or of authorizing preferences in any respect superior to those of
outstanding shares of any class, or of extending or shortening the term.
B. sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of
the corporate property and assets as provided in this Code;
C. In case of merger or consolidation
D. investment of corporate funds for any purpose other than the primary purpose of the corporation.

2.
A. Yes, the exercise of the appraisal right is correct, ABC Corp Proposed to amend its AOI to deny
the pre-emptive right of its stockholders. C may have the right to dissent because such action has
the effect of changing the rights of any stockholder one of the ground a stockholder may exercise
an appraisal right
B. No he is not yet entitled to such payment the law provides that no payment shall be made to any
dissenting stockholder unless the corporation has unrestricted retained earnings in its books to
cover such payment. In the case the corporation has not yet have unrestricted retained Earnings.

3. In case of a merger or consolidation to be effective it requires the majority vote of the Board of
Directors and the ratification by vote of the stockholder’s representing at least 2/3 of the outstanding
Capital stock, in a meeting called for such purpose.

4. A corporation may furnish financial statements to stock holders when declaring dividends.

5.
A. No the corporation is not liable all the elements require in issuing a replacement certificate is are
satisfied. The law provides that if the procedure was followed under Sec. 72 of the Revised Corporation
Code procedure that the corporation must follow in issuing new certificates of stock in lieu of those
which have been lost, stolen or destroyed, after one year from the last publication, if no contest is made,
the corporation cancels the lost certificate and issues a new one.
B. Yes, the corporation may have compelled to cancel the replacement If a contest or court action is
pending regarding ownership, the issuance of a new certificate is suspended until a final court decision.
Legal action against the corporation is not possible unless fraud, bad faith, or negligence is proven.

6. Watered stocks are stocks that are offered less than its stated value. It is a bargain to the buyer
7. The corporate secretary is Justified in declining the request because The law provides that if its only
between parties, the requisite for a valid transfer is merely the delivery of the certificate indorsed by the
 CORPORATION LAW REVIEWER
owner but in this case, in order to be valid as against third persons and the corporation and its
shareholders, the transfer of shares must be entered and noted upon the books of the corporation so as to
show the names of the parties to the transaction, the date of the transfer, the number of the certificate,
and the number of shares transferred. What happened is that X endorsed a blank Certificate as between
them it was valid but to bind the corporation such requirement against on the number of the certificate,
and the number of shares transferred must be stated

8. The allowable forms of consideration for the issuance of under the Revised Corporation code are stock ,
cash, property
9. A foreign corporation is one, organized, or existing under laws other than those of the Philippines and
whose laws allow Filipino citizens and corporations to do business in its own country or State. It shall
have the right to do business in the Philippines after obtaining a license for that purpose in accordance
with this Code and a certificate of authority from the appropriate government agency.
Juris prudence provides that a Foreign Corporation Doing business in the Philippines must cover
transactions and series of transactions in pursuit of the main business goals of the corporation and done
with the intent to continue the same in the Philippines.
10. Yes, The By-law rule means that questions of policy and management are left to the sound discretion
and honest decision of the officers and directors of a corporation provided that it is not ultra vires, and
the courts are without authority to substitute their judgment for the judgment of the board of directors.
11. Yes, the law provides that foreign corporation transacting business in the Philippines without a license
shall be permitted to maintain or intervene in any action, suit or proceeding in any court or
administrative agency of the Philippines; but such corporation may be sued or proceeded against before
Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine
laws.

In other words, a foreign corporation doing business in the country, without a license, cannot sue but can
be sued. It is not the absence of the prescribed license but the doing of business in the Philippines
without such license which debars the foreign corporation from access to our courts

12. The limitations of a no par value shares are

A. Banks, trust, insurance and preneed companies, and building and loan associations, and other
corporations authorized to obtain or access funds from the public, whether publicly listed or not,
shall not be permitted to issue no-par value shares of stock
B. Preferred shares of stock of a corporation may be issued only with a stated par value
C. Shares of capital stock issued without par value shall be deemed fully paid and non-assessable
and the holder of such shares shall not be liable to the corporation or to its creditors in respect
thereto.
D. Shares without par value must be issued for consideration at least 5 pesos per share
E. The entire consideration received by the corporation for this no-par value shares shall be treated
as capital, and, therefore, shall not be available for distribution as dividends.

13. No, they cannot have declared can no longer declare a dividend of P50,000. The Revise corporation
code provides that a corporation after 5 years of its incorporation and did not start doing business is
deemed not to have done business at all.
 CORPORATION LAW REVIEWER
14. The legal ground for such action are
15. As to the judge ruling
16.
A. The claim of B is not valid because A private corporation may invest its funds in any other
corporation, business, or for any purpose other than the primary purpose for which it was
organized, when approved by a majority of the board of directors or trustees and ratified by the
stockholders representing at least two-thirds (2/3) of the outstanding capital stock, or by at least
two- thirds (2/3) of the members in the case of nonstock corporations, at a meeting duly called
for An ultra vires act which is not an illegal act, may be ratified.
B. The Ratification made by the board is validate the act of the president because in the meeting
they ratified the investment made by the president because of that ratification An ultra vires act
which is not an illegal act, may be ratified.

17. Yes the The board of directors (majority of the quorum) of a stock corporation may declare dividends
out of the unrestricted retained earnings which shall be payable in cash, property, or in stock to all
stockholders on the basis of outstanding stock held by themThat any cash dividends due on delinquent
stock shall first be applied to the unpaid balance on the subscription plus costs and expenses, while stock
dividends shall be withheld from the delinquent stockholders until their unpaid subscription is fully paid:
Provided, further, That no stock dividend shall be issued without the approval of stockholders
representing at least two-thirds (2/3) of the outstanding capital stock at a regular or special meeting duly
called for the purpose

18. In instance that the can’t remaining board of directors may fill the vacancies when the remaining are not
in quorum because Revised Corporation Code provides that Any vacancy occurring in the board of
directors or trustees other that by removal or expiration of term may be filled by the vote of at least a
majority of the remaining directors or trustees, if still constituting a quorum, thus it must constitute
quorum

19. The article of incorporation offers the ultimate evidence of the nature and purpose of a corporation and
defines the contractual relationships between the State and the corporation, the stockholders and the
State, and the corporation and the stockholders. For a stock corporation, the articles of incorporation
may be amended by at least a majority vote of the board of directors and the vote or written assent of the
stockholders representing at least two-thirds (2/3) of the outstanding capital stock.
For a non-stock corporation, the articles of incorporation may be amended by the vote or written assent
of majority of the trustees and at least two-thirds (2/3) of its members.

20. The ground to disqualification of a director are

a. Fraud
b. Criminally liable for a crime
c. A bylaw which provides as a ground for disqualification for being a director or stockholder of a
competing corporation or representing an interest in conflict with or adverse to the corporation
from being elected to the board of directors is valid.
CORPORATION LAW REVIEWER