YES, the suit will prosper. As the sole proprietorship, the proprietor of YKS Trading has the capacity to act and the personality to sue PWC. It is not necessary for YKS Trading to be incorporated before it can sue. On the other hand, PWC is stopped from asserting that its President had no authority to enter into the contract, considering that, in several of PWC’s letters, it had clothed its President with apparent authority to deal with YKS Trading.
By the doctrine of apparent authority, the corporation will be estopped from denying the agent’s authority if it knowingly permits one of its officers or any other agent to act within the scope of an apparent authority and it holds him out to the public as possessing the power to do those acts. (Advance Paper Corporation v. Arma Traders Corporation, GR No. 176897, Dec. 11, 2013)
NO, there is no binding contract for the 5,000 bags of fertilizers. First, the facts do not indicate that Rodman, the President of TF Corporation, was authorized by the Board of Directors to enter into the said contract or that he was empowered to do so under some provision of the by-laws of TF. The facts do not also indicate that Rodman has been clothed with the apparent power to execute the contract or agreements similar to it. Second, TF has specifically informed Gregorio that it has not ratified the contract for the sale of 5,000 bags of fertilizer and that the delivery to Gregorio of 500 bags, which Gregorio accepted, is an entirely new transaction.
By the trust fund doctrine subscriptions to the capital stock of a corporation constitute a fund to which the creditors have the right to look for satisfaction of their claims. The scope of the doctrine encompasses not only the capital stock but also other property and assets generally regarded in equity as a trust fund for the payment of corporate debts. (Halley v. Printwell, GR No. 157549, May 30, 2011; Ong v. Tiu, 401 SCRA 1)
The trust fund doctrine means that the capital stock, properties and other assets of a corporation are regarded as equity in trust for the payment of corporate creditors. Stated simply, the trust fund doctrine states that all funds received by the corporation in payment of the shares of stock shall be held in trust for the corporate creditors and other stockholders of the corporation. Under such doctrine, no fund shall be used to buy back the issued shares of stock except only in instances specifically allowed by the Corporation Code.
YES, Mercy can vote all her subscribed shares. Section 72 of the Corporation Code state that holders of subscribed shares not fully paid which are not delinquent shall have all the rights of a stockholder.
1. The right to vote, including the right to appoint a proxy;
2. The right to share in the profits of the corporation, including the right to declare stock dividends;
3. The right to proportionate share of the assets of the corporation upon liquidation;
4. The right of appraisal;
5. The preemptive right to shares;
6. The right to inspect corporate books and records;
7. The right to elect directors;
8. Such other rights as may contractually be granted to the stockholders by the corporation or by special law.
Jaime’s contention is not correct. Jaime may own shares of stock in PR Corporation but such ownership does not entitle him to the possession of any specific property of the corporation or a definite portion thereof. Neither is he a co-owner of a corporate property. Properties registered in the name of the corporation are owned by it as an entity separate and distinct from its stockholders.
Stockholders like Jaime only own shares of stock in the corporation. Such shares of stock do not represent specific corporate property.
a. Yenetic’s AOI cannot be amended to remove the appraisal right of the stockholders on matters requiring their approval in cases where the law grants them such appraisal right, like:
1. In case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence;
2. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets;
3. In case of merger (Section 81 of the Corporation Code);
4. In case of investment of funds in the secondary purpose of the corporation or another business (Section 42)
Appraisal right is a statutory right. It cannot be denied to the stockholders in cases where the law allows such right. For all the other matters under the Corporation Code which require ratificatory approval of the shareholders, the AOI may be formally amended to remove appraisal right, because the right does not exist anyway in those cases.
b. Any provision or matter stated in the AOI may be amended by a majority vote of the board of directors and the vote or written assent of the stockholders representing at least 2/3 of the outstanding capital stock. Stockholders cannot exercise any appraisal right in case of amendment to the articles of incorporation to increase capital stock, because this is not one of the cases allowed by law where appraisal right may be exercised (Articles 81 and 42 of the Corporation Code)
c. The new shares from the unissued shares cannot be validly offered to a new limited group of investors without having to offer to shareholders of record, as pre-emptive rights are not explicitly denied in the AOI. Section 39 of the Corporation Code provides that all stockholders of a stock corporation shall enjoy pre-emptive right to subscribe to all issues or disposition of shares of any class, in proportion to their respective shareholdings. There need not be an explicit grant of preemptive rights in the AOI for it to exercised.
Under Section 42 of the Corporation Code, a corporation may invest its funds in another corporation or business or for any other purposes when approved by a majority of the board of directors or trustees and ratified by the stockholders representing at least two- thirds (2/3) of the outstanding capital stock, or by at least two thirds (2/3) of the members in the case of non- stock corporations, at a stockholder's or member's meeting duly called for the purpose. There must be written notice of the proposed investment and the time and place of the meeting shall be addressed to each stockholder or member at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally.
