28.

For the past 3 years of its commercial operation, “X” an oil company, has been earning tremendously in
excess of 100% of the corporation’s paid-in capital. All of the stockholders have been claiming that they
share in the profits of the corporation by way of dividends but he Board of Directors failed to lift its
fingers. 
a. Is Corporation “X” guilty of violating a law? If in the affirmative, state the basis. 
b. Are there instances when a corporation shall not be held liable for not declaring
dividends? 
 
29. Ace Cruz subscribed to 100,000 shares of stock of JP Development Corporation, which has a par value of
P5 per share. He paid P250,000 and promised to pay the balance before December 31, 2008. JP
Development Corporation declared a cash dividend on October 15, 2008, payable on December 1, 2008.
For how many shares is Ace Cruz entitled to be paid cash dividends. Explain.  
 
30. The Board of Directors of C Corporation, engaged in the manufacture of food products, acting on a
standing authority of the stockholders to amend the By-Laws, amended the By-Laws so as to disqualify any
stockholder, who is also a stockholder and director of a competitor, from being elected to its Board of
Directors. S, a stockholder holding sufficient shares to assure him a seat in the Board filed a petition with
the Securities and Exchange Commission for the declaration of nullity of the amended By-Laws and the
cancellation of the Certificate of Filing of amended B-Laws. He alleged, among others, that as stockholder,
he had acquired the rights inherent in the stock ownership such as the right to vote and be voted in the
election of directors. Reason upon the merits of the stockholders’ petition.  
 
31. Define “By-Laws”. What are the 2 ways to amend by-laws?  
 
32. What is proxy? What are the legal limitations of proxy? 
 
33. Triple A Corporation was incorporated in 1960, with 500 founders shares and 78 common shares as its
initial capital stock subscription. However, Triple A Corp registered its stock and transfer book only in
1978, and recorded merely 33 common shares as the corporation’s issued and outstanding shares. On May
6, 1992, a special stockholders’ meeting was held. At this meeting, what would have constituted a quorum?
Explain.  
 
34. A distressed company executed a voting trust agreement for a period of 3 years over 60% of the
outstanding paid -up capital shares in favor of a bank to whom it was indebted, with the Bank named as
trustee. Additionally, the Company mortgaged some properties to the Bank. Because of the insolvency of
the Company, the Bank foreclosed the mortgaged properties, and as the highest bidder, acquired said
properties of the Company. The 3-year period prescribed in the Voting Trust Agreement having expired,
the Company demanded the turnover and transfer of all its assets and properties, including the management
and operations of the Company. Does the demand of the Company tally with the concept of a Voting Trust
Agreement? Briefly explain your answer. 
 
35. What are the “primary rules of attribution”? Briefly explain.  
 
36. In a complaint for damages, Zebra Corporation alleged that its President, Anton Molina, suffered mental
anguish, social humiliation and serious anxiety as a result of the tortious acts of Omega Corporation. In its
answer with counterclaim, Omega Corporation alleged that it suffered besmirched reputation because of the
unfounded suit of Zebra Corporation and accordingly claimed for the award of moral damages. May either
corporation recover moral damages based on its allegations in the complaint. Discuss.
ANSWER: It depends. Omega may demand moral damages, if it has a good reputation which is
besmirched, because of the unfounded suit of Zebra; and, if otherwise, it cannot. (BAR 1985).