Commercial Law Quiz

it is settled that the right of inspection extends to books and records of the corporation’s wholly-owned subsidiary which are in the corporation's possession and control as it is more in accord with equity, good faith and fair dealing to construe the statutory right of a stockholder to cover such books and records (John Gokongwei, Jr. vs. Securities and Exchange Commission, et al., G.R. No. L-45911, April 11, 1979)

The required quorum for a meeting of the Board of Directors, under general corporate practice, is indicated in the By-laws and not in the Articles of Incorporation. This prac-tice is supported by the fact that both Secs. 14 (Contents of articles on incorporation) and 15 (Form of articles on incorporation) of the Corporation Code (particularly, Sec. 15 do not require mention of the quorum at meetings of the Board in the Articles of Incorporation.

The Filipinos should own 60% of the voting common shares and 60% of the outstanding capital stock (the 580,000 common shares and 400,000 non-voting preferred shares). Treasury shares, while issued shares, do not form part of the outstanding capital stock (SEC-OGC Opinion No. 16-16 June 27, 2016 ). In the case of Jose Roy III v. Teresita Herbosa, the Supreme Court clarified that the term “capital” in Section 11, Article XII of the 1987 Constitution refers to shares with voting rights, as well as with full beneficial ownership. This is precisely because the right to vote in the election of directors, coupled with full beneficial ownership of stocks, translates to effective control of a corporation. It is not necessary that the Filipinos own 60% of each type of shares. Thus, for purposes of determining compliance with the constitutional or statutory ownership, the required percentage of Filipino ownership shall be applied to BOTH (a) the total number of outstanding shares of stock entitled to vote in the election of directors; AND (b) the total number of outstanding shares of stock, whether or not entitled to vote (Jose M. Roy III v. Teresita Herbosa, et al., G.R. No. 207246, April 18, 2017)

Holders of subscribed shares that are not fully paid but also not delinquent retain all stockholder rights. (Section 71 RCC)