Favorite Bar Areas of Justice Ramon Paul L. Hernando [Part 4] - Nationality of corporation; Control test; "grandfather rule" (2016, Bar) - The rule is that no stock dividend shall be issued without the approval of stockholders representing at least 2/3 of the outstanding capital stock at a regular or special meeting called for the purpose. As to other forms of dividends: ANS. [ a mere majority of the quorum of the Board of Directors applies]. (2011, Bar). Real Estate Mortgage - Auction sale; required republication of notice (2011, Bar). -The mortgagor's unqualified free disposal of his property for the mortgage to be valid. (2011, Bar). - X, at Y’s request, executed a Real Estate Mortgage (REM) on his (X’s) land to secure Y's loan from Z. Z successfully foreclosed the REM when Y defaulted on the loan but half of Y's obligation remained unpaid. May Z sue X to enforce his right to the deficiency? ANS. [No, because X is not Z’s debtor]. (2011, Bar). Armando, a resident of Manila, borrowed P3-million from Bernardo, offering as security his 500 shares of stock worth P1.5-million in Xerxes Corporation, and his 2007 BMW sedan, valued at P2-million. The mortgage on the shares of stock was registered in the Office of the Register of Deeds of Makati City where Xerxes Corporation has its principal office. The mortgage on the car was registered in the Office of the Register of Deeds of Manila. Armando executed a single Affidavit of Good Faith, covering both mortgages. Armando defaulted on the payment of his obligation; thus, Bernardo foreclosed on the two chattel mortgages. Armando filed suit to nullify the foreclosure and the mortgages, raising the following issues: • The execution of only one Affidavit of Good Faith for both mortgages invalidated the two mortgages; (2%) and • The mortgage on the shares of stocks should have been registered in the Office of the Register of Deeds of Manila where he resides, as well as in the stock and transfer book of Xerxes Corporation. (3%) Rule on the foregoing issues with reasons. • Assume that Bernardo extrajudicially foreclosed on the mortgages, and both the car and the shares of stock were sold at public auction. If the proceeds from such public sale should be P1-million short of Armando’s total obligation, can Bernardo recover the deficiency? Why or why not? (2%) (2009, Bar). Anti-Money Laundering Law Under the Anti-Money Laundering Law, a covered institution is required to maintain a system of verifying the true identity of their clients as well as persons purporting to act on behalf of [such clients]. (2011, Bar). It is settled that neither par value nor book value is an accurate indicator of the fair value of a share of stock of a corporation. As to unpaid subscriptions to its shares of stock, as they are regarded as corporate assets, they should be included in the [book value]. (2011, Bar). - In elections for the Board of Trustees of non-stock corporations, members may cast as many votes as there are trustees to be elected but may not cast more than one vote for one candidate. This is true - [unless otherwise provided in the Articles of Incorporation or in the By-laws]. (2011, Bar). -In case of disagreement between the corporation and a withdrawing stockholder who exercises his appraisal right regarding the fair value of his shares, a three-member group shall by majority vote resolve the issue with finality. May the wife of the withdrawing stockholder be named to the threemember group? Ans. [No, the wife of the withdrawing shareholder is not a disinterested person]. (2011, Bar). - Z wrote out an instrument that states: "Pay to X the amount of Php1 Million for collection only. Signed, Z." X indorsed it to his creditor, Y, to whom he owed Php1 million. Y now wants to collect and satisfy X's debt through the Php1 million on the check. May he validly do so? ANS. [No, since X is merely an agent of Z, his only right being to collect]. (2011, Bar). - A law was passed disqualifying former members of Congress from sitting in the Board of Directors of government-owned or controlled corporations. Because of this, the Board of Directors of ABC Corp., a government-owned and controlled corporation, disqualified C, a former Congressman, from continuing to sit as one of its members. [since the disqualification takes effect by operation of law, it is sufficient that he was declared no longer a member of the board]. (2011, Bar). - In a signature by procuration, the principal is bound only in case the agent acted within the actual limits of his authority. The signature of the agent in such a case operates as notice that he has ANS. [a limited authority to sign]. (2011, Bar). [END OF PART 4] fb_@PhilJuris https://bit.ly/3hg0Zxc