I.

a) Yes, the increase in the authorized capital stock validly approved. Under Revised
Corporation Code, states that it requires 2/3 of the outstanding capital stock and
a majority vote of the board of directors in the meeting called for the purpose of
the increase of the authorized capital stock to be validly approve. In this case, the
Board of Directors owns 90% of the voting shares. This would mean that I would
be sufficient enough to meet the requirements of having the authorize capital
stock increased.

b)

1.Yes. A dissenting stockholder can exercise his/her appraisal right. Under

Revised Corporation Code, the right of appraisal can be exercise by the
dissenting stockholder if he voted against a corporate action.

2. Under Revised Corporation Code, it is required to have at least 25 percent of

the increase in the capital stock be subscribed and at least 25 percent of the
amount has been paid in actual cash to the corporation.

II.
a) The bylaws is used to guide the internal management of a corporation

b) No. bylaws is needed for a corporation to be workable

c) Yes. The contention of Mark Christian is Tenable. While the law requires the
filing of the by-laws within the period of 1 month, it does not expressly provide for
the consequences of its non-filing. However, the consequences of non-filing have
been rectified by P.D. 902-A which granted the SEC then the power to: suspend
or revoke after proper notice and hearing, among others, the certificate of
registration of a corporation for its failure to file the by-laws within the required
period. Failure to file and adopt by-laws would thus, not result to the automatic
dissolution of the corporation. PD 902-A is categorical and specific; it is merely a
ground for suspension/ revocation or corporate franchise. Meaning, there must
be Notice and Hearing
III.
a) Under the doctrine of separate personality of a corporation this enables it to act
as though it were a person. As an artificial being, it may own properties, transact
and commit acts expressly authorized by law or incidental to its existence. While
the exceptions are that under the Doctrine of “Piercing the veil of corporate entity
the court looks at the corporation as a mere collection of individuals or an
aggregation of persons undertaking business as a group, disregarding the
separate juridical personality of the corporation unifying the group. Another
formulation of this doctrine is that when two business enterprises are owned,
conducted and controlled by the same parties, both law and equity will, when
necessary to protect the rights of third parties, disregard the legal fiction that two
corporations are distinct entities and treat them as identical or as one and the
same.

b) Yes. the application of the doctrine of piercing the veil of corporate fiction is
proper, when two business enterprises are owned and controlled by the same
parties, when necessary to protect the rights of a third party will disregard the
legal fiction that 2 corporations are distinct entities and treat them as the same. In
this case, Twinkle Corporation and Sparkle Corporation are same corporation
therefore twinkle corporation can levy a personal property can be claimed from
Sparkle Corporation as they are one and same corporation.

IV.
a) The term "quorum" has been defined as that number of members of the body
which, when legally as assembled in their proper places, will enable the body to
transact its proper business, or, in other words, that number that makes a lawful
body and gives it power to pass a law or ordinance or do any other valid
corporate act.

b) No, The provision is not valid because under Sec 52 of the Revised Corporation
Code, “states that unless the articles of incorporation or the bylaws provides for a
greater majority, a majority of the directors or trustees as stated in the articles of
incorporation shall constitute a quorum to transact corporate business, and every
decision reached by at least a majority of the directors or trustees constituting a
quorum, except for the election of officers which shall require the vote of a
majority of all the members of the board, shall be valid as a corporate act”. In the
case at bar only 40% of the members of the entire membership and not the
greater majority.
 c) The Court is incorrect, A quorum shall consist of the stockholders representing a
majority of the outstanding capital stock or a majority of the members in the case
of nonstock corporations. For stock corporations, the ‘quorum’ referred to in Sec
52 of the Corporation Code is based on the number of outstanding voting stocks.

However, for nonstock corporations, only those who are actual, living members
with voting rights shall be counted in determining the existence of a quorum
during members’ meetings. Dead members shall not be counted. unless
otherwise provided in this Code or in the bylaws,

V.
a) A share of stock is a unit into which capital stock is divided.

b) Shares of capital stock issued without par value shall be deemed fully paid and
nonassessable and the holder of such shares shall not be liable to the
corporation or to its creditors in respect thereto: Provided, That no-par value
shares must be issued for a consideration of at least Five pesos (P5.00) per
share: Provided, further, That the entire consideration received by the
corporation for its no-par value shares shall be treated as capital and shall not be
available for distribution as dividends.

c) Watered stocks are stocks which are issued for a consideration less than
its par or issued value, or for a consideration other than cash, valued in excess of
its fair value

d) Yes, the acquisition by the corporation is valid. Under section 40 this code.
States that provided that the corporation has unrestricted retained earnings in its
books to cover the shares to be purchased or acquired, a stock corporation shall
have the power to purchase or acquire its own shares for a legitimate corporate
purpose or purposes.

VI.
a) Dividends are payments made by a corporation to its respective shareholders.
 It may be given or paid in the form of stock (stock dividends and stock splits),
scrip (a promise to pay at a future date), or property (typically commodities or
goods from inventory). It should not be from corporations’ capital.

b) Not all corporations are allowed to distribute dividend. One example of this is the
Non-stock corporations wherein they do not issue stock and distribute dividends
to their members because they are created not for profit but for the public good
and welfare.

c) Yes, the suit will prosper. Under Corporation law, it is being defined that a
certificate of stock is a written instrument signed by the proper officer of a
corporation stating or acknowledging that the person named in the document is
the owner of a designated number of shares of its stock. It is prima facie
evidence that the holder is a shareholder of a corporation. In the case at bar,
Ernestine who owns a certificate of stock. Therefore, he is entitled to receive 1%
of the quarterly dividend.

VII.
a) The business judgment rule stands for the principle that courts will not second
guess the business judgment of corporate managers and will find the duty of care
has been met so long as the fiduciary executed a reasonably informed, good
faith, rational judgment without the presence of a conflict of interest. The burden
of proof lies with the plaintiff to prove that this standard has not been met. If the
plaintiff meets the burden, the defendant fiduciary can still meet the duty of care
by showing entire fairness, meaning that both a fair process was used to reach
the decision and that the decision produced a substantively fair outcome for the
corporation's shareholders.

b) In an instance wherein a director of a corporation takes an action that affects the

corporation, and a plaintiff sues, alleging that the director violated the duty of
care to the corporation. This is the time the business judgement rule may be
apply.

c) Yes, Henrique as a director of the company violated the duty of care of his
company. It the case at bar despite being disadvantageous to the corporation, he
made a contract and being ratified by the stockholders owning 75% of the
outstanding capital of the corporation. this proves that he made the contract in a
bad faith. the court then can evaluate the case based on that business
judgement rule
VIII.
a) The doctrine of centralized management unless otherwise provided in this law,
the board of directors or trustees shall exercise the corporate powers, conduct all
business, and control all properties of the corporation.

b) Executive committee composed of at least three (3) directors. Said committee

may act, by majority vote of all its members, on such specific matters within the
competence of the board, as may be delegated to it in the bylaws or by majority
vote of the board, except with respect to the: (a) approval of any action for which
shareholders’ approval is also required; (b) filling of vacancies in the board; (c)
amendment or repeal of bylaws or the adoption of new bylaws; (d) amendment or
repeal of any resolution of the board which by its express terms is not amendable
or repealable; and (e) distribution of cash dividends to the shareholders.

Emergency Board. – Any vacancy occurring in the board of directors or trustees

other than by removal or by expiration of term may be filled by the vote of at least
a majority of the remaining directors or trustees, if still constituting a quorum;
otherwise, said vacancies must be filled by the stockholders or members in a
regular or special meeting called for that purpose

c)

IX.
a) Redeemable shares are shares which may be purchased by
the corporation from the holders of such shares upon the
expiration of a fixed period, regardless of the existence of
unrestricted retained earnings in the books of the corporation,
and upon such other terms and conditions stated in the
articles of incorporation and the certificate of stock
 representing the shares, subject to rules and regulations

issued by the Commission.

b)