I. Case Problems:

1."A" is the president of X Co. who use d his own properties to secure and guaranty a loan for the corporation's operational needs from Z Financial lnc. When the funds were released, "B" the chairman of the board misappropriated P l0million for his personal use. The minority stockholders later charged "B" of estafa under the Revised Penal Code and which was subsequently filed before a regular court. In the meantime, and by virtue of the misappropriation, the majority of the Board and Stockholders filed a petition for suspension of payment for all claims against the corporation which was granted by the proper forum.

a."B" files a motion to dismiss the estafa case alleging that since the matter involves an intra-corporate controversy the case falls within the exclusive jurisdiction of the Special Commercial Court. Rule and explain. (5pts)

b.After the grants of the suspension of the payments order, Z financial Inc. proceeds to extra-judicially foreclose on the properties of "A" who moves for exception on that all actions for claim against the corporation has been suspended. Rule and Explain. (5pts)

2.Z Corp. was registered in 1978 or before the effectivity of the Corporation Code. The by laws of the corporation allow it to issue Certificates of Stock covering the corresponding number of shares which the subscriber may have already paid. "A" subscribed to 1M shares with a par value of P 1.00 per share and have paid P500,000.00 on his subscription. He now compels the corporation to issue a Stock Certificate covering 500,000 shares.

a.The corporation seeks your counsel. What advise will you give? Explain. (l0pts)

Assume that "A" is now the owner of Stock Certificate No. 008, "B", his brother stole the certificate, forged the signature of A and sold the same to "C" who is a purchaser in good faith and for value.

b.Who has a better right over the shares covered by Stock Certificate No. 008? "A" or "C"? Explain. (5pts)

Assume that C transfers Stock Cert. 008 to D who is also a bona fide purchaser. Will D acquire title? Explain (5pts)

Assume that before C transferred the shares, he surrendered Stock Cert. 008 to the corporate secretary for registration /cancellation and for the issuance of a new stock certificate in his (C's) favor. The corporation cancelled Stock Cert. 008 and issued Stock Cert 010 in the name of C who thereafter transferred the latter certificate by endorsing and delivering it to D.

c.Will D acquire title? Explain (5pts)

d.Will A be deprived of his title? Explain (5pts)

Assume that the corporation has unissued and unsubscribed shares worth P20M and the corporation wants to issue them at the par value of P1.00 per share instead of its fair market value of P2.00 per share.

e.They seek your counsel if they can be so issued at P1.00. What advise will you give? Explain

Further assume that the corporation enters into a contract of sale /purchase of some of its remaining unsubscribed share with X who pays a down payment of 50% with a condition that he (X) will not be considered a stockholder until the full payment of the acquisition cost and that then and only then shall he be issued a stock certificate. Pending payment of the balance, the properties, inventories and all assets of the corporation was razed by fire.The corporation now wants to collect the unpaid portion of the acquisition cost of the shares.X seeks exception in that the contract is one of sale and the obligation of the parties is reciprocal and dependent on one another.

f.Rule and Explain.

3.X is the owner of IM shares are being traded at P1.00 per share. He has an account in two broker firms, B1 and B2. He directs B1 to sell 250T shares at 10.30 at P1.25 per share and at 10.32, he directs B2 to buy the same number of shares at the same price.

a.Can X be held liable for wash sale and matched order? Explain

b.If he sells shares of stock which he does not own, what un lawful act will be commit?