Topics to Read and Cases for Digest and

Recitation
A. Adoption of By-Laws
1. Function
o Nakpil vs. IBC, 370 SCRA 653
o PMI Colleges vs. NLRC, 277 SCRA 462

2. Requisites of valid by-laws / Contents / Authority to Elect Additional

Officers
o Fleishcher vs. Botica Nolasco, 47 Phil 583
o Gokongwei, Jr. vs. SEC, 89 SCRA 336, April 11, 1979

3. When to Adopt and File

o Loyola Grand Villas Homeowners [South] Asso., Inc. vs. CA,
276 SCRA 681 (1997)
4. Amendment and / or Rejection of By-laws
o Salafranca vs. Philamlife (Pamplona), 300 SCRA 469 (1998)

Other cases:
o Sawadjaan vs. CA, 459 SCRA 516, June 8, 2005

III. Corporate Powers

A. In General:
General Powers, Theory of General Capacities
1. Power to Sue and Be Sued
o South Cotabato Communications Corp. vs. Sto. Tomas, 638
SCRA 566
o Tam vs. Hon. Makasiar, January 29, 2001

2. Power to Make Donations

o Pirovano vs. Dela Rama, 996 Phil 335

3. Other cases:
o Mariveles Shipyard Corp. v. CA, 415 SCRA 573 (2003)
o United Paragon Mining Corp v. CA, 2006
o Metro Drug Distribution Inc. v. Narciso (2006)

B. Specific Powers
1. Power to increase or decrease capital stock (Sec. 38)
o Madrigal vs. Zamora, 51 SCRA 355
2. Power to deny pre-emptive rights (Sec. 39)
o Majority Stockholders of Ruby Industrial Corp. vs. Lim,
650 SCRA 461 (2011)
o SEC Letter Opinion, March 10, 2000
o Republic vs. Sandiganbayan, December 4, 2000

3. Power to sell or dispose of corporate assets (Sec. 40)

o Y-I Leisure Phils., Inc. vs. Yu, GR No. 207161, Sept. 8,
2015
o Turner vs. Lorenzo Shipping Corp., 636 SCRA 13 (2010)
4. Power to invest corporate funds in another corporation or business
(Sec. 42)
o Gokongwei vs. SEC, 89 SCRA 336
 5. Power to declare dividends (Sec. 43)
a. Kinds: Cash, Property, Stock, Scrip
o Cojuangco vs. Republic, April 24, 2009

b. Declaration, Payment and Record Dates

o Cojuangco, et.al. vs. Sandiganbayan, April 24, 2009

c. Limitation on Retention of Surplus Profits

o CIR vs. CA, 301 SCRA 152

d. Power to enter into management contract (Sec. 44)

o Aurbach vs. Sanitary Wares, 180 SCRA 131 (joint
venture)

e. Power to amend the articles of incorporation (Sec. 16 and 17)

o Republic Planters Bank vs. CA, 216 SCRA 738

f. Ultra-Vires Acts
o Republic vs. Acoje Mining Co., Inc. 7 SCRA 361
o Republic vs. Security Credit and Acceptance Corp., 19
SCRA 58
o AF Realty & Dev. Vs. Dieselman Freight Services, GR No.
111448, Jan. 16, 2002
o Gancayco vs. City Government of Quezon City, 658 SCRA
853, Ocober 11, 2011

6. Doctrine of individuality of subscription

7. Doctrine of equality of shares
8. Trust fund doctrine
o Halley vs. Printwell, Inc., 649 SCRA 116, May 30, 2011

C. Executive Committee
1. Creation
2. Limitation on its powers
o Filipinas Port Services, Inc. vs. Go, et.al., G.R. No.
161886, March 16, 2007
D. Meetings
1. Regular or special
(a) When and where
(b) Notice
o SEC MC No. 15, November 20, 2011 (teleconference,
video conference)
o Expertravel & Tours, Inc. vs. CA, et.al., GR No. 152392,
459 SCRA 147, May 26, 2005

E. Derivative Suit: Remedies to Enforce Personal Liability

o Legaspi Towers 300 vs. Muer, et.al., G.R. No. 170783,
June 18, 2012
o Lisam Enterprise vs. BDO, April 23, 2012
o STRADEC vs. Radstock & PNCC, December 4, 2009
o Yu vs. Yukayguan, June 18, 2009

F. Other Cases
o Harpoon vs. Francisco, March 2, 2011
o Polymer Rubber Corp and Ang vs. Salamuding, G.R. No.
185160, July 24, 2013
 o Laborte vs. Pagsanjan Tourism Consumers’ Cooperative,
713 SCRA 536, January 15, 2014
o Lozada vs. Mendoza, G.R. No. 196134, October 12, 2016

VI. STOCKHOLDERS AND MEMBERS

A. Fundamental rights of a stockholder

1. Managerial rights
2. Proprietary rights
(a) Right to dividends
o Cojuangco vs. Sandiganbayan, 586 SCRA 790, April 24,
2009
o SEC MC No. 11, Series of 2008
(b) Right of appraisal
(c) Right to inspect
o Ang-Abaya vs. Ang, GR No. 178511, 573 SCRA 129,
December 4, 2008
(d) Preemptive right
o Majority Stockholders of Ruby Industrial Corporation vs.
Lim, G.R. No. 165887, June 6, 2011
o See Benito vs. Securities, G. R. No. L-56655, July 25, 1983
and compare it with SEC-OGC Opinion No. 11-41 dated
October 5, 2011
(e) Right to vote
o Republic vs. Sandiganbayan, 402 SCRA 84 (2003)
o Transmiddle East (Phils) vs. Sandiganbayan, et.al., GR No.
172556, 490 SCRA 455, June 9, 2006
o Tan vs. Sycip, G.R. No. 153468, August 17, 2006
o Bernas vs. Cinco, G.R. Nos. 163356-57, July 1, 2015
o SEC-OGC Opinion No. 13-13 dated December 5, 2013

(f) Demand accounting

o Chateau de Baie Condominium Corp. vs. Sps. Raymond
and Ma. Rosario Moreno, GR No. 186271, 644 SCRA 288,
February 23, 2011

3. Remedial Rights
c. Derivative Suit
o Filipinas Port Services, Inc., et.al. vs. Go, et.al., GR No.
161886, 518 SCRA 453, March 16, 2007
o Hi-Yield Realty, Inc. vs. CA, GR No. 168863, 590 SCRA
548, June 23, 2009
o Nestor Ching and Andrew Wellington, G.R. No. 174353,
September 10, 2014
d. Intra-corporate Dispute*
i. Relationship Test
ii. Controversy Test
o People vs. Fernandez and Jajime Umezawa, GR No.
149403, 452 SCRA 736, March 4, 2005
o Edito Gulfo, et.al. vs. Jose Ancheta, GR No. 175301, 678
SCRA 459, August 15, 2012
o Philippine Communications Satellite Corp and Philcomsat
Holding Corp. vs. Sandiganbayan and PCGG, G.R. No.
203023, June 17, 2015
 o Concorde Condominium Inc. vs. Baculio, et.al., G.R. No.
203678, February 17, 2016 – Jurisdiction on Intra-
Corporate Controversy

D. Meetings
2. Who calls the meetings
o Bernas vs. Cinco, GR Nos. 163356-57, July 1, 2015

3. Who Could Attend and Vote

o Ponce vs. Encarnacion, 94 Phil 81

6. Quorum
o Tan vs. Sycip, 499 SCRA 216 (2006)
o Javellana vs. Tayo, December 29, 1962

VII. CAPITAL AFFAIRS

A. Acquisition and Ownership of Shares in a Corporation; Extent of
Proprietary Right
o Forest Hills Golf & Country Club vs. Vertex Sales and Trading, 692
SCRA 706 (2013)
o Cojuangco vs. Republic, April 12, 2011

B. Consideration for Stocks (Sec. 62)

o Apodaca vs. NLRC, 172 SCRA 442

C. Certificate of Stock
1. Nature of the Certificate
o Makati Sports Club, Inc. vs. Cheng, G.R. No. 178523, June 16,
2010
o Lao and Lao vs. Lao, G.R. No. 170585, October 6, 2008

2. Negotiability
o De Los Santos vs. Astraquillo vs. Howard Mcgrath, G.R. No. L-
4818, February 28, 1955
Requirements for valid transfers of stocks
o Simny Guy vs. Gilbert Guy, GR No. 189486, 680 SCRA 214,
September 5, 2012
o Fil-Estate Gold and Development, Inc. vs. Vertex Sales and
Trading, Inc., G.R. No. 202079, June 10, 2013

3. Right to Transfer Shares / Validity of Restrictions on Right

o Makati Sports Club vs. Cheng, June 16, 2010
o Thompson vs. CA, 298 SCRA 280

4. Transfer of Shares of Stock and Registration

o Musni Puno vs. Puno Enterprises, September 11, 2009
o Rural Bank of Lipa vs. CA, GR No. 124535, September 28, 2001
o Delos Santos vs. Republic, January 26, 2000

D. Watered stocks
1. Definition
2. Liability of directors for watered stocks
3. Trust fund doctrine for liability for watered stocks
o Ong Yong, et.al. vs. David S. Tiu, et.al., GR No. 144476,
April 8, 2003
o Cuenca vs. Atas, et.al., G.R. No. 146214, October 5, 2007
 E. Payment of balance of subscription
1. Notice requirement
o China Banking Corp. vs. CA, et.al., March 26, 1997
o Halley vs. Printwell, Inc., G.R. No. 157549, May 30, 2011

F. Sale of delinquent shares

1. Effect of delinquency
o Valley Golf and Country Club vs. Vda. De Caram, G.R. No.
158805, April 16, 2009
o Calatagan Golf Club Inc. vs. Clemente, G.R. No. 165443,
April 16, 2009

G. Alienation of shares
1. Sale of a portion of shares not fully paid
o Nava vs Peers Mktg Corp and Fua Cun vs Summers, 44 Phil
234 compared with
o Baltazar vs. Lingayen Gulf, 14 SCRA 522

VIII. CORPORATE BOOKS AND RECORDS

Cases
o Gokongwei v. SEC, 278 SCRA 793 (1997) 1
o Forest Hill Golf & Country Club vs. Vertex Sales and Trading, Inc.,
692 SCRA 706 (2013)
o Teng vs. SEC, GR No. 184332, February 17, 2016
o Provident International Resources Corp. vs. Venus, 554 SCRA 540
(2008)

IX. MERGER AND CONSOLIDATION

Read: Philippine Competition Act (Sec. 17, Sec. 20, 21 of RA No. 10667)
Cases:
o SME Bank, Inc. vs. De Guzman, 707 SCRA 35 (2013)
o Poliand Industrial Ltd. vs. National Development Co., et.al., GR Nos.
143866-67, 467 SCRA 500, August 22, 2005
o Bank of Commerce vs. RPN, Inc., GR No. 195615, April 21, 2014
o The Philippine Geothermal Inc. Employees Union vs. Unocal
Philippines, G.R. No. 190187, September 28, 2016

X. DISSOLUTION AND LIQUIDATION

A. Modes of dissolution
1. Voluntary
(a) Where no creditors are affected
o Vesagas vs. Court of Appeals, G.R. No. 142924, December
5, 2001

2. Involuntary
(a) By expiration of corporate term
o PNB v. Court of First Instance of Rizal, Pasig, Br. XXI,
209 SCRA 294 (1992)
(b) Dissolution by the SEC on grounds under existing laws
o In re: Petition for Assistance in the Liquidation of the
Rural Bank of Bokod (Benguet), Inc., PDIC vs. BIR, G.R.
 No. 158261, December 18, 2006 (Involuntary Dissolution
and Liquidation of a Corporation under the Corporation
Code vs. Dissolution of a banking corporation under the
New Central Bank Act)

READ: LIQUIDATION
o SEC-OGC Opinion 14-29, October 22, 2014
o SEC-OGC Opinion 15-09, August 27, 2015

1. Conveyance to a trustee within a 3-year period

o Knecht v. United Cigarette Corp., 384 SCRA 48 (2002)

2. By management committee or rehabilitation receiver

3. Liquidation after three (3) years

o Reburiano vs. CA, 301 SCRA 342 (1999)

o Alabang Development Corp. vs. Alabang Hills Village
Association, GR No. 187456, June 2, 2014

4. Other cases
o Yngson vs. PNB, G.R. No. 171132, August 15, 2012
o Aguirre vs. FQB+7, Inc., G.R. No. 170770, January 9, 2013 2
o Vigilia vs. Phil. College of Criminology, 698 SCRA 247 (2013) 3

XI. OTHER CORPORATIONS

A. Close corporations (Sec 96)
Cases:
o Gala vs. Ellice Agro-Industrial Corp., G.R. No. 156819,
December 11, 2003
o Naguiat vs. NLRC, 269 SCRA 54

B. Non-stock corporations
Cases:
o Valley Golf & Country Club, Inc. vs. Caram, GR No. 158805,
April 16, 2009
o Calatagan Golf & Country Club, Inc. vs. Caram, GR No. 165443,
April 16, 2009
o Funa vs. Manila Economic and Cultural Office and COA, G.R.
No. 193462, February 4, 2014

C. Religious corporations
1. Corporation sole
(a) Nationality
o IEMELIF vs. Bishop Lazaro, GR No. 184088, July 6, 2010
o IEMELIF vs. Juane, September 18, 2009

2. Religious societies / Religious Corporations / Corporation

Aggregate
o Alfredo Long vs. Lydia Basa, GR Nos. 134963-64,
September 27, 2001

D. Educational corporations
o Petronilo Barayuga vs. Adventist University of the Philippines,
et.al., GR No. 168008, 655 SCRA 640, August 17, 2011
 E. FOREIGN CORPORATIONS
1. Definition and Rights
o Global Business Holdings, Inc. vs. Surecomp Software, G.R. No.
173463, October 13, 2010

2. Appointment of a Resident Agent

o Expertravel &Tours, Inc. vs. Court of Appeals and Korean
Airlines, G.R. No. 152392, May 26, 2005 4

3. Amendment of License
o Schmid and Oberly vs. RJL, October 18, 1988

4. Doctrine of "doing business"

A. Jurisprudential Tests

i. Twin characterization test (Continuity Test and Substance Test)

o Mentholatum Co. vs. Mangaliman, 72 Phil 524

ii. Contract Test

o Gonzales vs. Raquiza, 180 SCRA 254
o Agilent Technologies vs. Integrated Silicon Technology, GR
No. 154618, April 14, 2004, 427 SCRA 593
o European Resources and Technologies, Inc., et.al. vs.
Ingenieuburo Birkham, et.al., GR No. 159586, 435 SCRA
246, July 26, 2004
o B. Van Zuiden vs. GTVL Manufacturing Industries, Inc., GR
No. 147905, May 28, 2007

B. Personality to Sue
o Lorenzo Shipping Corp. v. Chubb & Sons, Inc., et al., 431
SCRA 266 (2004)

C. Suability of Foreign Corporation

o Read: Doctrine of Quasi-Estoppel by Acceptance of Benefits
o Communication Materials and Design, Inc., G.R. No.
102223, August 22, 1996

D. Instances when unlicensed foreign corporations may be allowed to sue

- Isolated transactions
o Sasot, et.al. vs. People of the Philippines, GR No. 143193,
462 SCRA 138, June 29, 2005
o Rimbunan Hijau Group of Companies vs. Oriental Wood
Processing Corporation, G.R. No. 152228, September 23,
2005

E. Other Cases
o Sehwani vs. In and Out Burger, 536 SCRA 225
o SBMA vs. Universal International Group of Taiwan, September
14, 2000 5

Securities and Exchange Commission Law

(PD 902-A as amended by RA 8799 or the SRC)

I. State Policy / Purposes

o Abacus Securities Corp. vs. Ampil, 483 SCRA 315 (2006)
II. Entities under Absolute Jurisdiction, Supervision and Control of the SEC (Sec.
3, PD 902-A)

III. Powers and Functions of the SEC (Sec. 5, RA 8799 in rel. to Sec. 6, PD 902-
A)
A. Regulatory
B. Adjudicative

CASES
o Arranza vs. BF Homes, Inc., June 19, 2000 6
o SEC vs. GMA Network, Inc., 575 SCRA 113 (2009)

IV. Original and Exclusive Jurisdiction of the Regional Trial Court

V. Devices or Schemes Amounting to Fraud or Misrepresentation

o Alleje vs. CA, 240 SCRA 495
o Sesbreno vs. CA, 240 SCRA 606

VI. Controversies Arising Out of Intra-Corporate or Partnership Relations

o Aguirre vs. FQb7, January 9, 2013 7
o Go, Lim, et.al. vs. Distinction Properties, April 25, 2012

VII. Controversies in the Election or Appointment / Dismissal of Corporate

Officers
o Real vs. Sangu Phil., January 19, 2011
o March II Marketing vs. Joson, December 12, 2011
o Matling vs. Coros, October 13, 2010
o Garcia vs. Eastern Telecom, April 16, 2009

VIII. Petitions for Declaration in the State of Suspension of Payments

o RA 10142, The Financial Rehabilitation and Insolvency Act of 2010
o AM No. 12-12-11-SC 2013 Financial Rehabilitation Rules of Procedure
o Express Investment vs. BayanTel, December 5, 2012
o Advent Capital vs. Alcantara, January 25, 2012 8
o Siochi Fishery vs. BPI, October 19, 2011

Securities Regulation Code (R.A. No. 8799) and Related Laws

[2015 SRC-IRR]

I. Overview of the Financial Markets

A. Capital Markets
B. Non-Capital Markets

II. Registration of Securities

A. Securities, Defined (Section 3.1)
B. Investment Contract
i. Definition (Rule 26.2, 2015 SRC-IRR)
ii. Requisites of Investment Contract
iii. Cases
o Baviera vs. Paglinawan, 515 SCRA 170, GR No. 168380,
February 8, 2007
o SEC vs. Prosperity.Com, Inc., G.R. No. 164197, January 25,
2012
 o SEC, et.al. vs. CJH Dev. Corp. et.al., G.R. No. 210316,
November 28, 2016

III. Securities required to be registered (Sec. 8)

A. General rule
B. Exceptions
1. Exempt securities (Section 9.1, SRC)
2. Exempt transactions (Section 10, SRC)

C. Cases
o Philippine Stock Exchange vs. SEC, 281 SCRA 232 (1997) 9
o Gabionza vs. CA, 565 SCRA 38 (2008) 10

IV. Public Companies

o Philippine Veterans Bank vs. Callangan, August 3, 2011
V. Limitations on Action for False Registration Statement (Sec. 62)
VI. Trading in Securities
A. Margin Requirements (Sec. 48) and Restriction on Borrowings (Sec. 49)
B. Brokers / Dealers: Chinese Wall; Self-Regulatory Organizations; Stock
Exchange; Securities-Related Organizations (SROs); Securities
Associations
o Nicolas vs. CA, 288 SCRA 307 (1998)

C. Fraudulent Transactions (Sec. 26)

o SEC vs. CA, 246 SCRA 738

D. Insider’s Duty to Disclose When Trading (Sec. 27)

1. Insider Defined
2. Disclosure Regulations for Publicly-Listed Shares
o Union Bank of the Philippines vs. SEC, June 6, 2001

VII. Protection of Shareholder’s Interest

A. Tender Offers (Sec. 19)
o CEMCO vs. National Life, August 7, 2007
o Osmena III vs. SSS of the Philippines, 533 SCRA 313 (2007) 11

Other Cases:
o Abacus Securities Corp. vs. Ampil, GR. No. 160016, February 27,
2006
o Yuico vs. Quiambao, 513 SCRA 208, 29 January 2007
o CEMCO Holdings, Inc. vs. National Life Insurance Company, Inc.,
GR No. 171815, August 7, 2007
o Philippine Veterans Bank vs. Justina Callangan, etc. and/or the
SEC, GR No. 191995, 655 SCRA 150, August 3, 2011