VALID/INVALID/EXPLAIN THE ANSWER

FORMATION OF A CORPORATION; WHEN START

The juridical personality and capacity to contract of a corporation cannot be given retroactive effect. (Finals, 2s, 06-07) (Section 1; Section 19;
Section 36; McArthur vs. Times Printing; Caram vs. CA)

SEC JURISDICTION

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Sagasa Transp. Corp. (STC), a corporation engaged in the operation of a fleet of taxis had the immediate need to upgrade its vehicles.
Although the business of STC generated revenues, the Corporation did not have sufficient capital to pay for the vehicles it wanted to acquire.
Mando Rugas, an importer of reconditioned vehicles, confirmed his interest in investing in STC. Mando agreed to convey 60 Coronas for P30M
worth of shares, under a swap arrangement. In the event of STC holds in abeyance the issuance of the shares of stock in favor of Mando, does
the latter have the right to institute the appropriate action before the SEC to compel the issuance of his stock certificate? (Finals, Unknown
date) (SEC Jurisdiction; Abejo vs. CA)

PRIMARY PURPOSE CLAUSE; CORPORATE POWERS; ULTRA VIRES ACTS

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The “primary purpose clause” of a corporation delineates and limits the exercise by the corporation of corporate authority as provided under
the Code. (Midterms, 2s, 07-08) (Sec14: Contents of AOI; Section 36: Corporate Powers and Capacity; Section 45: Ultra Vire Acts)

PARENT-SUBSIDIARY
A “parent corporation” inevitably participates directly in the control, management, and supervision of the business of the subsidiary (Sec23:
who controls the corporation; Garnett vs. Southern Railway: ownership of stock alone is not automatically an indicia that corp is a parent
corporation; Jardine Davies vs. JRB Realty Inc: Control determines if parent. (Midterms, 2s, 07-08)

PRE-EMPTIVE RIGHT

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Section 39 of the Code grants stockholders the right to subscribe to all issuances of stock by the corporation. However, such right can be
denied, with the conformity of a 2/3 vote of the stockholders. What would be the justifications which would support the denial of such right?
(Finals, 1s,08-09) (Section 39, Corpo Code)

PRE-EMPTIVE RIGHT; PREFERENTIAL RIGHT

A provision in the by-laws of a corporation requiring a disposing stockholder to offer the latter’s shares of stock to the corporation prior to any
disposition may be upheld and favorably considered by the Courts provided…the corporation will be required to exercise the right to purchase
the shares w/n a definite period of time (Finals, 1s,08-09) (Fleishcer vs. Botica Nolasco)

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CONSIDERATION FOR SHARES FULL PAYMENT; BENEFITS
Explain the advantages accruing to a stockholder who has made full payment for the latter’s subscription to the shares of stock of a
corporation (Finals, 1s,08-09)

CONSIDERATION FOR SHARES FULL PAYMENT; BENEFITS; PROPRIETARY RIGHTS

Stockhlders who have not fully paid, and who paid in full, their subscriptions to the shares of stock of a corporation, respectively, exercise and
enjoy the same proprietary rights. (Malabo so not known if what year) (Section 72; Section 43)

CONSIDERATION OF SHARES; 3P; BENEFIT TO THE CORPORATION; BENEFIT TO SHAREHOLDER

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The purchase of outstanding and issued shares of stock of a corporation by a third party from a stockholder does not redound to the benefit of
the corporation. (Finals, 2s, 06-07)
The business of PC proved to be extremely lucrative to PC and MD. Owing to the annual revenues realied by PC, Mr. Herbo Laryo (HL), the
controlling stockholder of Botica ng Bayan, Inc., the largest drugstore chain in the Country (BBI), offered PP and MD the opportunity to acquire
50% equity interest in BBI. HL disclosed to PP and MD that the unissued and unsubscribed shares of stock of BBI will be earmarked for the
subscription of PC, PP, and MD (or the designated party). Would the acceptance of the aforementioned offer redound to the benefit of PC, PP,
and MD, respectively? What actions should be implemented to complete said subscription? (Finals, 2s, 06-07)

RIGHTS; PROPRIETARY RIGHTS; SHAREHOLDERS; ASSETS AND PROPERTY OF CORPORATION; TRANSFER

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Nana Langin appears as the stockholder of record of 60% of the authorized capital stock of Biyaya Corp. Nana executed a Deed of Assignment
in favor of her 6 nieces, pro-indiviso, for the latter’s shares of stock covered by a single stock certificate. Both documents (the stock certificate
was indorsed by Nana) were surrendered by Nana to the Corporate Secretary. With the execution of the aforestated documents, can the
nieces of Nana assert proprietary rights over the shares of stock of Nana? (Finals, 1s,08-09)

RIGHTS; PROPRIETARY RIGHTS; SHAREHOLDERS; DISSOLUTION; CO-OWNERSHIP

Upon dissolution, and after settlement of the obligations of the corporation, the remaining property and assets of the corporation shall be co-
owned by the stockholders prior to subsequent distribution of the same. (Finals, 2s, 06-07)

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RIGHTS; PROPRIETARY RIGHTS; SHAREHOLDERS; DIVIDENDS; TRANSFER
Nana Langin appears as the stockholder of record of 60% of the authorized capital stock of Biyaya Corp. Nana executed a Deed of Assignment
in favor of her 6 nieces, pro-indiviso, for the latter’s shares of stock covered by a single stock certificate. Both documents (the stock certificate
was indorsed by Nana) were surrendered by Nana to the Corporate Secretary. In the event dividends were declared by Biyaya Corp. prior to
the conveyance by Nana of her shares of stock, would Nana have the right to receive such dividends? Would the conveyance by Nana of her
original shares of stock to her nieces deem to include the said dividends? (Finals, 1s,08-09)

RIGHTS; MANAGEMENT RIGHTS; SHAREHOLDERS; TRANSFER

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Nana Langin appears as the stockholder of record of 60% of the authorized capital stock of Biyaya Corp. Nana executed a Deed of Assignment
in favor of her 6 nieces, pro-indiviso, for the latter’s shares of stock covered by a single stock certificate. Both documents (the stock certificate
was indorsed by Nana) were surrendered by Nana to the Corporate Secretary. Considering the shares conveyed to the nieces cover a
controlling interest in Biyaya Corp. and will command a premium, how do you preserve and maintain such control and value among nieces?
(Finals, 1s,08-09)

The business of PC proved to be extremely lucrative to PC and MD. Owing to the annual revenues realied by PC, Mr. Herbo Laryo (HL), the
controlling stockholder of Botica ng Bayan, Inc., the largest drugstore chain in the Country (BBI), offered PP and MD the opportunity to acquire
50% equity interest in BBI. HL disclosed to PP and MD that the unissued and unsubscribed shares of stock of BBI will be earmarked for the

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subscription of PC, PP, and MD (or the designated party). After considering the opportunities arising from the offer of HL, PP and MD seek your
learned counsel on the following points, namely: (1) who would you recommend as the appropriate party/ies who will subscribe to the shares
of stock of BBI? (2) what will be the payment for such subscription and (3) with such investment, how will you ensure that PP and MD
participate in the control and management of PC and BBI? (Finals, 2s, 06-07)

RIGHTS; TRANSFER
The rights and title vested in favor of transferees of stock certificates indorsed in blank are not dependent on the rights and title of their
immediate predecessors in interest (unknown date, mukhang finals) (Section 9, NIL: if indorsed in blank, payable to bearer; Section 34, NIL:
Indorsement in blank specifies no indorsee…payable to bearer, negotiated by delivery; Section 63, CC; Sta Maria vs. HKSB)

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RIGHTS; MANAGEMENT RIGHTS; PROPRIETARY RIGHTS; SHAREHOLDERS; EXTENT
The extent of the amount of investment of a stockholder determines the latter’s participation in (i) the control and management of the
corporation; (ii) the profits realized from such investment (Finals, 2s, 06-07)

CLOSED CORPORATION; MANAGEMENT RIGHTS; SHAREHOLDERS; LIABILITY

Stockholders of a “closed corporation” under the Code, who directly participate in the control and management of the corporation, are
solidarily liable for the obligations of the corporation. (Finals, 2s, 06-07)

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CONSIDERATION FOR SHARES; PROPERTY; CORPORATE ACTIONS; CONTROL AND MANAGEMENT
Sagasa Transp. Corp. (STC), a corporation engaged in the operation of a fleet of taxis had the immediate need to upgrade its vehicles.
Although the business of STC generated revenues, the Corporation did not have sufficient capital to pay for the vehicles it wanted to acquire.
Mando Rugas, an importer of reconditioned vehicles, confirmed his interest in investing in STC. Mando agreed to convey 60 Coronas for P30M
worth of shares, under a swap arrangement. What corporate actions have to be implemented by STC for the purpose of acquiring the vehicles
of Mando? (Finals, unknown date) (Section 62; Section 39)

Sagasa Transp. Corp. (STC), a corporation engaged in the operation of a fleet of taxis had the immediate need to upgrade its vehicles.
Although the business of STC generated revenues, the Corporation did not have sufficient capital to pay for the vehicles it wanted to acquire.

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Mando Rugas, an importer of reconditioned vehicles, confirmed his interest in investing in STC. Mando agreed to convey 60 Coronas for P30M
worth of shares, under a swap arrangement. In the event of STC holds in abeyance the issuance of the shares of stock in favor of Mando, does
the latter have the right to institute the appropriate action before the SEC to compel the issuance of his stock certificate? (Finals, Unknown
date) (SEC Jurisdiction; Abejo vs. CA)
No samplex, but there’s answers…topics:

Indorsement/Transfer of shares: Section 63

Director Requirement: Section 23 – at least 1 share of stock

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