Suggested answers only:

1. Flip co is engaged in a nationalized activity requiring at least 60 percent Filipino

ownership. Its outstanding capital stock consist of 1Million share broken down into
400,000 non-voting preferred shares and 600,000 voting common shares out of
which 20,000 are treasury shares. How many shares of the corporation must be
owned by Filipinos?

Under the Revised Corporation Code certain nationalized activities require at least
60% Filipino ownership both voting and non-voting shares.

In this case, common shares with voting rights is 600,000 shares less the treasury
shares of 20,000 because it has no voting rights, the outstanding voting shares would
be equal to 580,000 shares. And 60 percent of 580,000 shares is equal to 348,000
shares. Moreover, for preferred shares which has no voting rights will be 60 percent
of 400,000 equal to 24,000 shares. Therefore, Filipinos must own 348,000 common
shares and 24,000 preferred shares.

2. Yoongi a director of BTS Corporation. PH, bought substantial shares of its major
supplier, Hybe, Inc. When Hybe, Inc's contracts were taken up by the BTS Corp. Ph.
board, Yoongi not only voted for their approval but influence other directors to do so.
Later, the Hybe, Inc. contacts turned out to be disadvantageous to BTS Corp. Ph and
caused it substantial losses. Discuss the action that maybe pursued against Yoongi
under the revised corporation code,

BTS Corporation PH may sue Yoongi in violation of Section 31 of Corporation code

which provides, that directors who willfully vote for or assent to patently unlawful
acts of the corporation in directing the affairs of the same in conflict with their duty
as directors shall be liable for all damages resulting therefrom suffered by the
corporation.

In this case, Yoongi’s actions of voting on and influencing the approval of contracts
with Hybe, Inc. constitute a clear conflict of interest and breach of fiduciary duty.
Hence, BTS Corporation PH can sue him for damages, and hold him personally liable
for the substantial losses incurred.

3. Ysa Bella, together with three others formed a private corporation pursuant to the
provisions of the revised corporation code of the Philippines. Incorporator Ysa was
elected Director and president-general manager. Part of her emolument is a food
expedition, which the corporation owns. After a few years, Ysa lost her corporate
position, but she refused to return the motor vehicle claiming that as a stockholder
with substantial equity share, she owns that portion of the corporate assets now in
her possession. Is the contention of Ysa valid under the corporation code?

No. Under the Revised Corporation Code, a corporation has a separate legal
personality distinct from its stockholders, directors, and officers.
Applied in this case, corporate assets belong to the corporation itself, not to individual
stockholders, regardless of how much equity they own. Hence, Ysa’s contention is
not valid.

4. F trading corporation owned by X, had financial obligation to its employees. F

trading ceased operations, and was immediately succeeded on the next day by, and
all of its assets were turned over to, the G trading Inc., 90 percent of the subscribed
and shares of which were also owned by X. May the G trading be held liable for the
financial obligation of the F trading corporation to its employees?

No. Under the RCC, corporation is an artificial being created by operation of law, it
has its own distinct personality different from its stockholders.

In this case, X as owner of F trading and also the majority stockholder of G trading
does not result to a merger of the two corporation as one entity. Therefore, G trading
must not be held liable from the obligation of F trading.

5. CA dismissed outright a certiorari petition on the ground that petitioner BDO

leasing and Finance Inc. lacked legal capacity to initiate or file the instant petition on
account of change of name of petitioner BDO from PCI leasing and Finance Inc. to
BDO leasing and Finances Inc. The CA opined that since the board resolution and
special power of attorney issued by the petitioner BDO authorizing its officer to
initiate the appropriate court action on behalf of the company was still under the
name PCI leasing and Finance Inc. and considering that the petitioner BDO has
already changed its name, the aforesaid board resolution and special power of
Attorney have no more binding effect. Was the dismissal proper in accordance with
corporation code?

No. Supreme Court held that, upon change in the name of a corporation does not
create a new corporation. It is the same corporation with a different name.

In this case BDO’s change of name, does not affect its legal capacity to file a petition
or engage in legal proceedings. Therefore, CA’s dismissal is not proper according to
corporation code.

6. 3 out of 5 directors of Oh Corporation resolved to sell substantially all of its

corporate assets to Wow incorporated. Is the action of the board of directors valid?

Yes. Under RCC, sale of all or substantially all of the corporation's properties and
assets, must be authorized by the vote of at least two-thirds of the members, meeting
duly called for the purpose.

In this case, since 2/3 of 5 is 3, the resolution of the board for that purpose is valid.

7. Layla, Miya, Kimy, Lesley, and Karrie are the original members of the Board of
Directors of the land of the dawn incorporate. The only interest of Kimmy is that 50
percent of the corporation’s stock were pledged to her. Layla and Miya died in a
vehicular accident caused by Johnson. May Kimmy, Lesley and Karrie hold a board
meeting to fill in the vacancies in the board?
No. Under RCC any vacancy occurring in the board of directors other than by removal
or expiration of term may be filled by the vote of at least a majority of the remaining
directors if still constituting a quorum.

In this case, Kimmy is not an elected director of Land of the Dawn Inc. Her interest
lies in the pledge of 50% of the corporation’s stock, but this does not make her a
director. Only Leslie and Karrie are directors which does not constitute a quorum in
the members composed of five. Therefore voting cannot be had due to lack of
quorum.

8. A Foreign company has been exporting goods to a Philippine company for several
years now. When the Philippine Company failed to pay the latest exportation, the
foreign company sued to collect in the Philippines. The Philippine company interposed
the defense that the foreign company was doing business in the Philippines without
license; hence, could not sue before a Philippine court. Is this defense tenable?

Yes. Under RCC, a foreign corporation must obtain a license from the Securities and
Exchange Commission to do business in the Philippines. Without such a license, a
foreign company generally cannot maintain or initiate a lawsuit in Philippine courts.

9. The board of directors of FIRST incorporated unanimously adopted a resolution

directing its management to issue as fully paid 10,000 common shares to Atty. Flores
for successfully prosecuting in favor of FIRST the derivative suit filed by a minority
stockholder over mismanagement of corporate affairs. If the issuance of the 10,000
common shares in the name of Atty. Flores is by way of stock dividends to be credited
from the unrestricted retained earnings of FIRST, would such issuance be valid?

No. Under Section 42 of RCC The board of directors 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
them.

In this case, Atty. Flores is not a stockholder, and thus ineligible to receive stock
dividends.

10. May the composition of the Board of directors of a corporation be validly reduce
to two?

No. Under the RCC, the number of directors shall not be less than five (5) nor more
than fifteen (15), as may be fixed in the articles of incorporation.

11. Mr. GDR signed a written subscription for 100 shares of stock of CRMD
incorporated, paying 25% of the amount thereof. The corporation subsequently
became insolvent due to a series of financial reverses. Mr. GDR demanded from the
corporate secretary the stock certificates of corresponding 25 shares which he
claimed were already paid. Since the corporation was insolvent, Mr.GDR refused to
pay for his unpaid subscription.
a. can the corporate secretary validly refuse to issue stock certificates in the name
of Mr. GDR for 25 shares despite the payment of 25% of the subscription of 100
shares?

b. Is Mr. GDR correct in refusing to pay for the remaining shares, the company being
already insolvent?

(walang answer Malaki naman nakuha mo sir, kunting presentation lang may flaw

Yung di ko sinagotan ibig sabihin tama sagot mo)

13. Datu Commercial Corporation a public-listed company with the Philippine Stocks
Exchange, incorporated. Kidlat, a close corporation investing into 91% of its
outstanding capital. The chairman, president, and executive vice president of DCC
are incorporators of KCC, each holding 3% of the outstanding capital stock. The AOI
of KCC provided:

1. A limit on the number of shareholders, which shall never exceed five.

2. A right of first refusal

3. A prohibition on the shares from being listed or being publicly offered. Pending the
issuance by the SEC of the certificate of registration the vice president of KCC entered
into long term contract of lease on behalf of KCC, which was declared therein as
undergoing incorporation with SEC.

Is DCC qualified to be an incorporator of KCC although it is a juridical entity?

Yes. Under section 95 of RCC, a corporation shall not be deemed a close corporation
when at least two-thirds (2/3) of its voting stock or voting rights is owned or
controlled by another corporation which is not a close corporation within the meaning
of this Code.

In this case, the AOI of KCC does not prohibit a juridical person to be an incorporator,
and it only own 3 percent of the total shares, hence, DCC is qualified as incorporator
without affecting its nature as close corporation.

14. In June 2025, DEF Corporation sent notices to its stockholders informing them of
the corporation’s issuance of new share of stock. The notice included reminder that,
pursuant to DEF corp’s AOI any stockholder who fails to exercise his or her pre-
emptive rights within 3 weeks from receipt of notice would be considered to have
waived the same. Ms. Z a stockholder of EF corps failed to exercise her pre-emptive
right within the said period. However, she claimed that she did not validly waived her
right to do so because a waiver must be expressed in writing. Is Ms. Z’s contention
correct?

No. Under RCC, Pre-emptive right must be exercised within the period stated in the
notice of the stockholder.
Applied in this case, since the articles of incorporation of DEF Corporation explicitly
state that failure to exercise the right within three (3) weeks constitutes a waiver,
Ms. Z’s inaction within this period is a valid waiver of her pre-emptive rights.

15. FAD was in dire straits. In order to firm up its financial standing, it agreed to
entertain the merger and takeover offer of DEC, the leading company in their line of
business. Ella, major stockholder of FA corp. strongly oppose the merger and
takeover. The matter of the merger and takeover by DEC was included in the agenda
of the next meeting of FADS board of directors. However, owing to ELLA’s serious
illness that required her to seek urgent medical treatment and care in China, she
failed to attend the meeting and was consequently unable to cast her vote. The board
of directors approved the merger and takeover. At the time of the meeting, FAD corp
had been in the red for a number of years owing to its recurring business losses and
reverses. Ella seeks your legal advice regarding her right as stockholder opposed to
corporate action. Explain your answer.

Ella should invoke her appraisal right.

Section 80 of RCC provides that any stockholder who dissents from certain corporate
actions, including mergers or consolidations, may exercise their appraisal right and
demand payment of the fair value of their shares.

Ella may invoke her appraisal right by formally expressing her opposition and
demanding payment for the fair value of her shares. Her absence from the meeting
does not invalidate her right to dissent from the merger and takeover.

16. Eudora Electric Corporation resolved to increase its authorized capital stock from
100 Million shares with par value of 1. Pesos to 500Milliion shares with par value of
1. Discuss the requirements under section 37 of RCC that Eudora electric need to
comply in terms of:

a. voting requirements,

b. minimum subscripton and payment.

(tama yata answer mo ditto sir)

17. May a foreign national organize, incorporate and wholly own the following
businesses?

1. Manufacturing corporation-Yes, The Foreign Investments Act (FIA) allows 100%

foreign ownership in sectors not included in the Foreign Investment Negative List
(FINL).

2. Recruitment agency- No, Under Article 27 of the Labor Code of the Philippines, the
operation of recruitment and placement agencies is reserved for Filipino citizens or
corporations with at least 75% Filipino ownership.
3. Advertising company- No, the 1987 Philippine Constitution limits ownership of
advertising companies to at least 70% Filipino-owned entities. Foreign ownership is
capped at 30%.

4. Retail trading- Yes, if the foreign national invests at least PHP 125 million in initial
paid-up capital, they can wholly own a retail business.

5. Mass media. - No, the 1987 Philippine Constitution mandates that mass media
must be 100% Filipino-owned. Foreign ownership is completely prohibited.

Prepared by:

Villaflor N. Vinte Jr.