BUS.

ORG2 OUTLINE (2017)

Prof. M.I.P. Romero

Vlll. CAPITAL STRUCTURE OF CORPORATIONS

A. Concepts:
1) Capital vis-à-vis Capital Stock
2) Shares of Stock vis-à-vis Stock Certificate
3) Authorized Capital Stock
4) Subscribed Capital Stock
5) Paid-in Capital
6) Outstanding Capital Stock – Sec. 137
7) Watered stock - Sec. 65

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

- vis-à-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.5

Castillo v. Balinghasay Oct. 18, 2004

D. Classification of Shares – Rationale

- Sec. 6, 7, 8, 9

a) Par value shares

b) No par value shares – Sec. 62;
Delpher Trades Corp. v. IAC (1988) 157 SCRA 349
- issued price
- “deemed fully paid and non-assessable”
c) Common shares
d) Preferred shares – may be voting or non-voting; other types
e) Redeemable shares
f) Founders’ shares
g) Treasury shares
e) Voting shares
f) Non-voting shares
E. OTHER CASES ---

Gamboa v. Teves, et al (GR 176579; 6/28/ 2011 and 10/ 9/ 2012)

Relate to SEC Memo Circ. 8, s2013 (Guidelines in Fil-Foreign ownership)
Republic Planters Bank v. Agana ( GR 51765; Mar. 3, 1997)
COCOFED v. RP. (GR Nos. 177857-58; 178193; 180705
promulgated Sept. 17, 2009) re conversion of shares

F. STOCKS & STOCKHOLDERS

Sec. 60 -73, 137, 90

1) Consideration for shares -----

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

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

2) Unpaid subscriptions -----

Velasco vs Poizat 37 Phil. 802 (1918)

Lingayen Gulf Electric vs Baltazar 93 Phil. 404 (1953)
Da Silva vs Aboitiz 44 Phil. 755 (1923)
Lumanlan vs Cura 59 Phil. 746 (1934)
China Banking Corp. v. CA GR 117604 (Mar. 26, 1997)

3) Rights of Unpaid Shares ---- Indivisibility of Subscription

Fua Cun v. Summers, et al. 44 Phil. 704 (1923)

Baltazar v. Lingayen Gulf 14 SCRA 522 (1965)
Nava v. Peers Mktg. Corp. 76 SCRA 65 (1976)
Fua Cun doctrine prevails. Baltazar abandoned.

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

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

Torres v. CA
Rural Bank of Lipa
Rivera v. Florendo
Lim Tay v. CA
Ponce v. Alsons Cement
Rural Bank of Salinas, Inc. v. CA
Hager v. Bryan
Bitong v. CA
Abejo v. De la Cruz
Lee v. Trocino, et al.
(278 SCRA 793)
GR 124535 (Sept. 28, 2001)
144 SCRA 647 (1986)
GR 126891 (Aug. 5, 1998)
GR 139802 ( Dec. 10, 2002)
(210 SCRA 510)
19 PHIL 138 (1911)
292 SCRA 503
149 SCRA 654 (1987)
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 ---

Bachrach Motors v. Ledesma 64 Phil. 681 (1937)

Uson v. Diosomito (61 Phil. 535; 1935)
Chua Guan vs. Samahang Magsasaka 62 Phil. 473 (1935)
Chemphil Export & Import v. CA (Dec. 12, 1995)

lX. PRE-EMPTIVE RIGHT – Sec. 39 and 102

Purpose; when given; waiver
Distinguish from Right of First Refusal.
Distinguish from pre-emptive rt in a close corp
 Makati Sports Club, Inc. v. Cheng GR 178523 (June 16, 2010)

X. APPRAISAL RIGHT – Secs. 81- 86; relate to Sec. 42 and 105

Marcus v. RH Macy 74 N.E. 2d 228 (1947)
Turner v. Lorenzo Shipping GR 157479 Nov. 24, 2010