Chapter 7 - Control and Management of Corps

Question 1

Villongco v. Yabut (2018)

Answer 1

he Court ruled that the basis for determining quorum is the total outstanding capital stocks, WITHOUT distinction as to disputed or undisputed shares of stock. It is settled that unissued stocks may not be voted or considered in determining whether a quorum is present in a stockholders’ meeting. Only stocks actually issued and outstanding may be voted. Thus, for stock corporations, the quorum is based on the number of outstanding voting stocks. The distinction of undisputed or disputed shares of stocks is not provided for in the law or the jurisprudence.

Question 2

Ramirez v. Orientalist (1918)

Answer 2

If a corporation
(a) knowingly permits one of its officers, or any other agent, to do acts within the scope of an apparent authority and thus
(b) holds him out to the public as possessing power to do those acts, and
(c) the agent’s acts or conduct has produced a change of position to the third party’s detriment

EFFECT:
The corporation will, as against anyone who has in good faith dealt with the corporation through such agent, be estopped from denying his authority.

Question 3

Lopez v. Ericta

Answer 3

The premise that abstentions can be construed as acquiescence is but a prima facie presumption. If there is clear evidence to the contrary, it would be best to inquire into the facts and circumstances which attended the voting.

Question 4

Expert Travel Tours v. CA

Answer 4

SC held that the courts may take judicial notice that business transactions may be made by individuals through teleconferencing. Teleconferencing and videoconferencing of members of board of directors of private corporations is a reality

Question 5

Citibank v. Chua

Answer 5

Corporate powers may thus be directly conferred upon corporate officers or agents by statute, the articles of incorporation, the by-laws or by resolution or other act of the board of directors. In this case, a resolution of the Board of Directors of Citibank appointing an attorney in fact to represent and bind it during the pre-trial conference of the case at bar is not necessary because its by-laws allow its officers, the Executing Officer and the Secretary Pro-Tem, to execute a power of attorney to a designated bank officer

Question 6

Corporate hierarchy

Answer 6

(1) the board of directors, which is responsible for corporate policies and the general management of the business affairs of the corporation;
(2) the officers, who in theory execute the policies laid down by the board, but in practice often have wide latitude in determining the course of business operations; and
(3) the stockholders who have the residual power over fundamental corporate changes, like amendments of the articles of incorporation.

Question 7

Boyer-Roxas v. CA

Answer 7

While shares of stock constitute personal property, they do not represent property of the corporation. A share of stock only typifies an aliquot part of the corporation’s property, or the right to share in its proceeds to that extent when distributed according to law and equity but its holder is not the owner of any part of the capital of the corporation. Nor is he entitled to the possession of any definite portion of its property or assets. The stockholder is not a co-owner or tenant in common of the corporate propert

Question 8

Woodchild Holdings v. Roxas Electric

Answer 8

Based on the Resolution of the Board of Directors of RECCI, Roxas was not specifically authorized to grant a right of way in favor of WHI on a portion of Lot 1, nor to agree to sell to WHI a portion thereof. In other words, the consent of RECCI to the assailed provisions in the agreement was not obtained; hence, the assailed provisions are not binding on it.

Question 9

Yu Chuck v. Kong Li Po

Answer 9

An officer or agent who has general control and management of the corporation’s business, or a specific part thereof, may bind the corporation by the employment of such agent and employees as are usual and necessary in the conduct of such business. But the contracts of employment must be reasonable

Question 10

Board of Liquidators v. Heirs of Kalaw

Answer 10

A corporate officer intrusted with the general management and control of its business, has implied authority to make any contract or do any other act which is necessary or appropriate to the conduct of the ordinary business of the corporation. As such officer, he may, without any special authority from the Board of Directors perform all acts of an ordinary nature, which by usage or necessity are incident to his office, and may bind the corporation by contracts in matters arising in the usual course of business. In the case at bar, the practice of the corporation has been to allow its general manager to negotiate and execute contracts in its copra trading activities

Question 11

Advance Papers v. Arma Traders (2009)

Answer 11

In this case, Arma Traders bestowed upon Tan and Uy broad powers by allowing them to transact with third persons without the necessary written authority from its non-performing board of directors.

Question 12

How to be corporate officer as opposed to regular officer

Answer 12

(1) The creation of the position is under the corporation’s charter or by-laws; and
(2) the election of the officer is by the directors or stockholders.

Question 13

Jurisdiction over termination of corporate officers

Answer 13

A corporate officer’s dismissal is always a corporate act, or an intracorporate controversy and the nature is not altered by the reason or wisdom with which the Board of Directors may have in taking such action. The determination of the rights of a corporate officer dismissed from his employment, as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts

Question 14

Cacho v. Balagtas

Answer 14

the use of the phrase “one or more” in relation to the establishment of vice president positions without particular exception indicates an intention to give petitioner North Star’s Board ample freedom to make several vice- president positions available. To require that particular designation/variation of each vice-president (i.e., executive vice president) be specified and enumerated is to invalidate the by-laws’ true intention and to encroach upon petitioner North Star’s inherent right and authority to adopt its own set of rules and regulations to govern its internal affairs. Thus, “Executive Vice President” should fall under “one or more Vice Presidents” in the by-laws of North Star, making it a corporate office

Question 15

Grace Christian v. CA

Answer 15

The board of directors of corporations must be elected from among the stockholders or members. No provision of the by-laws can be adopted if it is contrary to law. Practice, no matter how long continued, cannot give rise to any vested right if it is contrary to law

Question 16

Ponce v. Encarnacion

Answer 16

Whenever, from any cause, there is no person authorized to call a meeting, or when the officer authorized to do so refuses, fails or neglects to call a meeting, any judge of a CFI on the showing of good cause therefor, may issue an order to any stockholder or member of a corporation, directing him to call a meeting of the corporation by giving the proper notice required by this Act or by-laws.

Question 17

Lao v. Yao Bio Lim

Answer 17

While it is true that Section 50 requires a notice two (2) weeks prior to the meeting,” it also provides an exception by stating “unless a different period is required by the by-laws.”

Question 18

Lim v. Moldex land

Answer 18

The Corporation Code clearly provides that a director or trustee must be a member of record of the corporation. The power of proxy is merely to vote. If said proxy is not a member in his own right, he cannot be elected as a director or proxy. Thus, in order for Moldex to exercise its membership rights and privileges, it necessarily has to appoint its representatives

Question 19

To fill vacancies/elect a board member

Answer 19

Mere majority vote (50%+1)

Question 20

To remove a board member

Answer 20

A vote of stockholders representing at least two-thirds of the subscribed capital stock entitled to vote

Question 21

Angeles v. Santos

Answer 21

here corporate directors are guilty of a breach of trust — not of mere error of judgment or abuse of discretion — and intracorporate remedy is futile or useless, a stockholder may institute a suit in behalf of himself and other stockholders and for the benefit of the corporation, to bring about a redress of the wrong inflicted directly upon the corporation and indirectly upon the stockholders.

Question 22

Bernas v. Cinco

Answer 22

Relative to the powers of the Board of Directors, nowhere in the Corporation Code or in the MSC bylaws can it be gathered that the Oversight Committee is authorized to step in wherever there is breach of fiduciary duty and call a special meeting for the purpose of removing the existing officers and electing their replacements even if such call was made upon the request of shareholders.

Question 23

Dela Rama v. Ma-ao Sugar

Answer 23

The investment by a sugar central in the equity of a sugar bag manufacturing company falls within the implied powers of the sugar central as part of its primary purpose and does not need ratification by the stockholders.

Question 24

In Re Giant Portland Cement

Answer 24

The record owner may, therefore, be the mere nominal owner, or, technically, a trustee for the holder of the certificate, but legally he is still a stockholder in the corporation, and so far as the corporation is concerned, like the usual trustee, ordinarily has the right to vote the stock standing in his name.

Question 25

Alejandrino v. De Leon

Answer 25

The Court held that it is not, as there is no showing that pledging shares and irrevocable proxies are acts that a shareholder could not and should not do. It is also not a case of bribery, as the loan agreement is not imbued with public interest.

Question 26

Everett v. Asia Banking

Answer 26

When the Board of Directors in a Corporation is under the complete control of the principal defendants in the case and it is obvious that a demand upon the board of directors to institute an action and prosecute the same effectively would be useless, the action may be brought by one or more of the stockholders without such demand.