CENTRAL PHILIPPINE UNIVERSITY

College of Law
Iloilo City
REVIEW NOTES IN BUSINESS ORGANIZATION II
(Corporation Law)
Atty. Zacarias D. Bedona. Jr.
January 6. 2023

I.

MEETINGS

a. What are the kinds of meetings of directors, trustees, stockholders or members?

b. What are the dates of the regular meetings of the directors or trustees, stockholders or

members?

c. What is quorum in meetings of the directors or trustees. stockholders or members?

II.

QUORUM

a. Omega Corporation has fifteen members of the Board of Directors.

b. Give the number of the Board of Directors to constitute a quorum.

c. Give the vote needed to consider every decision to be valid corporate act.

d. What is quorum for stockholders or members?

e. What is quorum for Board of Directors and Board of Trustees?

III

REMOVAL OF STOCKHOLDERS. DIRECTORS, AND OFFICERS

a.

Edgar is a board director in Alpha Corporation. A majority of the board of directors

wanted to remove him and to sell his shares at public auction for his critical temperament, so he

can no longer attend and participate in stockholders meetings.

 Can the board of directors remove Edgar as board director and stockholder without

cause? Explain.

b.

On May 15, 2021. XYZ Corporation passed a board resolution removing Peter from his

position as General Manager of the said corporation. The By-Laws of XYZ Corporation provide

that the officers are President, Treasurer, and Corporate Secretary. Peter filed a complaint with

SEC, and he alleged that a General Manager could only be removed by the affirmative vote of

the stockholders representing two-thirds of the outstanding capital stock. Is the contention of

Peter legally valid?

c.

Romeo is an undesirable and unreasonable director of RST Corporation. Majority of the

directors wanted to remove Romeo from office as director.

1) May Romeo be removed as director without a just cause? Explain.

2) May Romeo claim a permanent seat in the board? Explain.

d.

Who may remove corporate officers, directors or trustees? Explain.

e.

What constitutes valid removal of directors or trustees?

IV

TERM

a.
 A is a director in a Travel Corporation, who was elected for a one-year term on January

15. 2021. On March 5. 2021. A resigned due to health issues, and was replaced by B. who

assumed as director on March 31. 2021. On May 30. 2021. B died. C was elected in his place.

Until which time should C serve as director? Explain.

b.

The term of CCC Corporation in accordance with its Articles of Incorporation ended last

June 1, 2015. The term was not extended. What will happen to the corporation?

c.

Give the number and term of directors: trustees of a non-stock corporation. and

trustees of non-stock educational corporations

d.

RR Corporation (RR) owns a beach resort with 15 cottages. Julius, the President of RR.

occupied one of the cottages for residential purposes. After Julius' term expired RR wanted to

recover possession of the cottage. Julius refused to surrender the cottage. contending that as

stockholder and former President, he has right to possess the cottage and enjoy the properties

of RR.

Is the contention of Julius correct? Explain

EXECUTIVE COMMITTEE

The Board of Directors of Yankee Corporation created an Executive Committee pursuant

to its By-Laws to manage the affairs of the corporation between board meetings. The Board of

Directors appointed the following members of the Executive Committee: The President: and two
directors. Henry and George. The Executive Committee met and decided on the following

matters:

a. Shorten the corporate term of Yankee Corporation:

b. Purchase a delivery truck for its lumber business:

c. Declaration of PhP100.00 per share cash dividend:

d. Purchase a house and lot for its office:

e. Declaration and approval of 13th month pay bonus.

Are the actions of the Executive Committee valid? Why?

VI

SALARY/COMPENSATION OF DIRECTORS/TRUSTEES

The majority and controlling members of the Board of Directors of X Corporation passed

a Resolution granting compensation to the Chairman. Vice Chairman, Corporate Treasurer and

Corporate Secretary. The majority or controlling members of the Board are also the officers of

the said corporation.

a. Is the grant of salary or compensation to the directors valid? Explain.

b. Is the grant of salary or compensation to the directors who are also officers of the

corporation valid? Explain.

VII

INDIVIDUAL SUITS. CLASS SUITS AND DERIVATIVE SUITS

a.

What are individual suits, class suits and derivative suits?

b.
 Dy is a minority stockholder of Sparrow Corporation. Go is a member of the Board of

Directors and at the same time President of Sparrow Corporation.

Dy believes that Go is mismanaging the Sparrow Corporation. Hence, as a stockholder

and in behalf of the stockholders, he wanted to sue Go. Is y permitted to institute a derivative

suit for himself and in behalf of the stockholders? Explain.

VIII

LIQUIDATION/DISSOLUTION/TERMINATION

a.

FKC Corporation shortened its corporate life by amending its articles of incorporation. It

has no debts but owns a prime property located at Iloilo City. How would the said property be

liquidated among the five stockholders of FKC Corporation?

b.

XXX Corporation is a bank. The operation of XXX Corporation as a bank was not doing

well. So, to avert any bank run. XXX Corporation, with the approval of the Monetary Board. sold

all its assets and liabilities to ZZZ Banking Corporation which includes all deposit accounts. In

effect then. ZZZ will service all deposits of all depositors of XXX Corporation.

Will the sale of all assets and liabilities of XXX Corporation to ZZZ Banking Corporation

automatically dissolve or terminate the corporate existence of XXX

Corporation?

IX

INTRA-CORPORATE CONTROVERSY

a.
 There is a controversy in the election of the Board of Directors of RS Corporation which

is questionable. Is controversy in the election of the Board of Directors an intra-corporate

controversy?

b.

If a suit were to be initiated as an intra-corporate controversy, should the matter be

submitted to SEC or the regular courts?

MERGER

SS Corporation and YY Corporation have agreed to be merged into one corporation. To

facilitate the merger, both corporations agreed that the merger be made effective March 15.

2021. The Securities and Exchange Commission (SEC) approved the Articles of Merger on May

30. 2021. What is the effective date of merger? Explain.

XI

FOREIGN CORPORATION

a.

What is a Foreign Corporation?

b.

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 a license hence. could not sue

before a Philippine court. Is this defense tenable? Explain your answer.

XII

ONE PERSON CORPORATION (OPC)

a. Who can be a stockholder of an OPC?

b. Who may be appointed officers of an OPC?

c. Is the single stockholder qualified to be president and treasurer or corporate secretary?

d. Is an OPC required to file Articles of Incorporation and By-laws?

XIII

BOOKS TO BE KEPT AT PRINCIPAL OFFICE

What books are required to be kept at the principal office?

XIV

CERTIFICATE OF STOCK AND TRANSFER OF SHARES

a. Is the Chairman or President of a private corporation authorized to make entries on the

stock and transfer book? Why?

b. What is a "Trust fund Doctrine"?

XV

SERVICE OF SUMMONS UPON CORPORATION

a. Is service of summons to a director of a domestic private corporation who owns at least

2/3 of Outstanding Capital Stock binding on the corporation? Discuss your answer.
 XVI

NON-PROFIT, CHARITABLE AND NON-STOCK CORPORATION

a. CIR v. St. Luke’s Medical Center. Inc. (G.R. No. 195909. 26 September 2012), Lung

Center of the Philippines v. Quezon City (G.R. 144104. 29 June 2004)

b. Non-Profit, charitable, or non-stock corporation.

XVII

SECURITIES

a. What are Securities?

b. The Revised Securities Act (B.P. Blg. 178) is designed, in main, to protect public

investors from fraudulent schemes by regulating the sale and disposition of securities,

creating, for this purpose, a Securities and Exchange Commission to ensure proper

compliance with the law. (SEC c. CA. G.R. Nos. 106425 and 106431-32, July 21. 1995)

c. Define:

Insider Trading

Tender Offer Rule

Disclosure Rule

Broker

Issuer

Dealer promoter

xxx