1-A. YES. The foreign corporation can be considered as doing
business in the Philippines.
The law provides for the “Twin Characterization Test” which
provides for the “substance” and “continuance” test. The test
provides that a corporation is considered doing in the Philippines
if an entity is continuing in substance the Primary business of the
Foreign Company.
In the case at bar, the distribution is continuing in substance the
business of the Foreign Company. The distributorship will be
considered as doing business by the Foreign Company.
1-B. YES. ABC Corporation can be considered as a Philippine
Corporation.
While under the Corporation Code, the “Place of Incorporation
Test” is specifically stated which provides that a corporation will
be considered a national where it was incorporated.The re is
however an exception, which is when a corporation that is
incorporated in a Foreign Country but is wholly owned by Filipino
Citizens and is shall therefore be considered as a Philippine
National.
In the case at bar, ABC Corp. was incorporated in Malaysia but is
entirely owned by Philippine Citizens, it can therefore be
considered as a Philippine National.
2. NO. The defence is untenable.
According to jurisprudence, a party is estopped to challenge the
personality of a corporation after having acknowledged the same
by entering into a contract with it.
In the case, the Philippine Company has been transacting
business with the foreign company for several years already.
Therefore, it is already estopped in claiming that the foreign
company has no license in order to escape liability.
3 - A. The Doctrine of Apparent Authority provides that if
through acts of a corporation, a person was lead to believe that a
person connected to a corporation had the authority to deal or
act in behalf of the corporation can no longer claim such act in
invalid due to lack of Authority.
3 - B. The Doctrine of Corporate Opportunity provides that a
Director or Officer of a corporation is prohibited from
appropriating for himself opportunities that should benefit the
corporation due to his duty of loyalty to the corporation. If the
director or officer appropriates it for himself then he will be liable
to give all the benefits he obtains from such opportunity to the
corporation.
4. I will argue that there is no forcible entry and theft because the
cottage and all the personal properties are owned by the
corporation.
The Corporation Code specifically provides that a stockholder
only has inchoate right over the properties of the corporation and
as such they can’t appropriate for themselves the properties of
the corporation without the proper liquidation proceedings.
In the case, it is clear that the cottage and the properties therein
are owned by PR Corporation in its own right and as a separate
juridical entry. Jaime as a stockholder and previous president of
the corporation cannot appropriate the property because he has
no real right over them.
Therefore the case will not prosper.
5 - A. NO. The application for exemption is not needed.
The SRC rules and regulation of 2015 provides that a
corporation is exempt for the registration requirement when the
sale of stock of a corporation is made exclusively to its own
shareholder and no commission or renumeration is paid in
connection to the sale.
5 - B. It depends.
If the subscription is made prior to incorporation, it provides that
no commission or renumeration is to be paid because of such
transaction. Then it is exempt from the registration requirement.
But if there is commission or renumeration in connection of such
subscription, then it is not an exempt transaction.
5 - C. YES. The application for exemption is needed.
The SRC does exempt a transaction involving less than 20
persons from the registration requirement, but it does not provide
that issuance of bonds and notes secured by real estate
mortgage is an exempt transaction.
6. The purchase of the delivery van is a valid action by the
executive committee because it is necessary for the ordinary
conduct of their business.
The declaration and appropriation of the 13th money bonus is
also a valid action because Philippine Labor Laws provides for
the mandatory giving of such bonus and as such the executive
committee acted within the scope of their authority in declaring
such.
The purchase of an office condominium is not valid because the
purchase of real property requires express authority from the
board. Their authority is only for the general management of the
corporation. The purchase of such is not in the ordinary course of
business of the corporation.
Lastly, the declaration of the stock dividend is not valid because
the corporation code provides that the declaration of stock
dividends can only be done by a resolution made by the board of
directors.

7. 3 instances when the Trust Fund doctrine is violated:
First, in the declaration of dividends, there is no unrestrained
earnings there are no unrestricted retained earnings because the
capital of the corporation is gong to be used to pay such
dividends and the capital stands as a trust fund for the payment
of corporate creditors.
Second, the condemnation of the unpaid subscriptions of the
stocks of the corporation because the corporate creditors can go
after the unpaid subscriptions of stockholders in case the
corporation can’t pay its obligations.
Lastly, in the issuance of stocks below their par value because
the proceeds from such sale becomes part of the capital which is
a tryst fund for the payment of corporate creditors.
8. 5 probative factors under the Doctrine of Piercing the veil of
corporate fiction are:
First, majority or almost all the shares of stock of the corporation
is owned by 1 person.
Second, the corporation was instituted by a person after and
during the pendency of a case filed against him and all or most
of his properties are transferred to the new corporation.
Third, the corporation sells its property to a stockholder for a
grossly inadequate price.
Fourth, the board of directors are shown to be merely dummies
of a stockholder who has a controlling interest in the corporation.
Lastly, the corporation only has a usufructuary interest over the
properties of a stockholder and it has no other properties.
The probative factors coupled with the presence of malice or
intent to defraud, are necessary to invoke the Doctrine of
Piercing the Veil of Corporate Fiction because such factors
shows that the corporation is merely being used by a person in
order to shield himself from liability by defrauding his creditors or
his alter-ego.
9. The Mandatory Close-Out Rule provides that when there is
an insufficiency of margin, a call for additional margin shall be
issued promptly by the Broker Dealer to the customer. This vests
the corporation with the obligation, not just the right, to cancel or
otherwise liquidate a customers order, if payment is not received
within three days from the date of purchase.
10. The SEC is incorrect in stating that there is no Quorum.
The corporation code provides that in case of a educational
corporation which is a special corporation, dead members of the
board of trustees are not counted for the purposes of a quorum.
In the case at bar, 7 of the living member-trustees were present
through their proxies, therefore there was a quorum in the
meeting.

The meeting is also valid even if its a “joint trustees and

members meeting” because all of the members of the GCHS
are actually part of the board of trustees and vice versa.

But the amendment in the By-laws of GCHS is void because the

corporation code provides that the amendment of the By-laws,
requires the majority of the board of trustees must approve such
resolution. In the case at bar, only 4 of the trustees voted for
approval of such amendment. Therefore, there was no valid
amendment of the By-laws.