CORP.

LAW OUTLINE 5 (RCCP)

Prof. M.I.P. Romero

Vlll. CAPITAL STRUCTURE OF CORPORATIONS

A. Concepts:
1) Shares of Stock vis-a-vis Stock Certificate
2) Authorized Capital Stock
3) Subscribed Capital Stock
4) Paid-in Capital
5) Compare Sec. 14 (par. 9) with Sec. 37 (par. 4) re sworn
statement of treasurer
6) Outstanding Capital Stock – Sec. 173
7) Watered stock - Sec. 64

B. Trust Fund Doctrine - vis-a-vis corporate assets

- vis-a-vis subscribed capital stock

Phil. Trust Co. v. Rivera 44 Phil. 469

Central Textile Mills v. NWPC (Aug. 7, 1996)
Ong Yong v. Tiu G.R. 144476; 4/8/2003
Halley v. Printwell, Inc. G.R. 157549; May 30, 2011

C. Doctrine of Equality of Shares – Sec. 6, par.1

Castillo v. Balinghasay Oct. 18, 2004

D. Classification of Shares – Rationale

- Sec. 6, 7, 8, 9

KNOW the Concepts:

a) Par value shares
b) No par value shares – Sec. 61 (last par.)
Delpher Trades Corp. v. IAC (1988) 157 SCRA 349
- issued price
- meaning of “deemed fully paid and non-assessable”
 c) Common shares - Sec. 6
d) Preferred shares - Sec. 6 ;
KNOW the concepts of the ff. types of preferred shares ---
cumulative, participating, non-cumulative, non-participating )
e) Redeemable shares - Sec. 8
-- Republic Planters Bank v. Agana ( Mar. 3, 1997)

f) Founders’ shares - Sec. 7

g) Treasury shares - Sec. 9 relate to Secs. 173 and 56
h) Voting shares - Sec. 6
i) Non-voting shares - Sec. 6
j) Be familiar w/ section 6 (a) up to (h)

E. CASE on Conversion of shares ---

(Just understand the concept of conversion ---- COCOFED v. RP.

GR Nos. 177857-58; 178193; 180705 [Sept. 17, 2009]

F. STOCKS & STOCKHOLDERS

Sec. 59 -72, 173

1) Consideration for shares -----

Garcia v. Lim Chu Sing 59 Phil. 562 (1934)

Apodaca v. NLRC 172 SCRA 442 (1989)
National Exchange vs Dexter 51 Phil. 601 (1928)

2) Unpaid subscriptions -----

a) Rights of Unpaid Shares

b) Distinguish From Delinquent Shares
c) Indivisibility of Subscription

4) Nature/Function of Stock Certificates ----

Tan v. SEC (206 SCRA 740)

5) Proof of Ownership of Shares ----

Nautica Canning Corp. Yumul GR 164588 (Oct. 19, 2005)

Lao v. Lao GR 170585 (Oct 6, 2008)
Borgona v. Abra Valley GR 204089 (July 29, 2015)

6) Restrictions on Transfer of Shares ---

Fleischer v. Botica Nolasco (1925) 47 Phil. 583

Thomson v. CA (298 SCRA 280)
Rural Bank of Salinas, Inc. v. CA (210 SCRA 510)

7) Validity of Transfers / Registration of Shares

OBJECTIVE is to know the procedure for a valid transfer of

shares. After reading the cases, you must be able to weave them
together and make a summary of the procedure .

Razon v. IAC GR 74306 (March 16, 1992)

Rural Bank of Lipa GR 124535      (Sept. 28, 2001)
Torres v. CA GR 120138 (Sept. 5, 1997)
Ponce v. Alsons Cement GR 139802 ( Dec. 10, 2002)
Rural Bank of Salinas, Inc. v. CA June 26, 1992
Lim Tay v. CA GR 126891 (Aug. 5, 1998)
Hager v. Bryan 19 PHIL 138 (1911)
Bitong v. CA July 13, 1998
Lee v. Trocino, et al. GR 164648 (June 19, 2009)

8) Unauthorized Transfers ----

Santamaria vs. Hongkong 89 Phil. 780 (1951)

De los Santos vs. McGrath 96 Phil. 577(1955)
Guy v. Guy GR 189486   (Sept. 5, 2012)

9) Collateral Transfers ---

China Banking Corp. v. CA GR 117604 (Mar. 26, 1997)

Uson v. Diosomito (61 Phil. 535; 1935)
Chemphil Export & Import v. CA (Dec. 12, 1995)
lX. PRE-EMPTIVE RIGHT – Secs. 38 and 101

a) Purpose; when given; waiver

b) Distinguish from pre-emptive rt in a close corp – Sec. 101
c) Distinguish from Right of First Refusal

Makati Sports Club, Inc. v. Cheng GR 178523 (June 16, 2010)

X. APPRAISAL RIGHT – Secs. 80- 85; relate to Secs. 36, 41 and 104

Marcus v. RH Macy 74 N.E. 2d 228 (1947)

Turner v. Lorenzo Shipping GR 157479      Nov. 24, 2010