BASSIG, SANDY JOY B.

Problem 1

Stockholders; Appraisal Right (2007)

Q: What is the meaning of a stockholder’s appraisal right?

- Appraisal right is the right of stockholder, who dissents from a fundamental or extraordinary corporate
action, to demand payment of the fair value of his shares. It is the right of a stockholder to withdraw from the
corporation and demand payment of the fair value of his shares after dissenting form certain corporate acts involving
fundamental changes in the corporate structure (Section 81, Corporation Code).

Q: Can T exercise the right of appraisal? Reason briefly?

- No, T cannot exercise the right of appraisal in this case. When S transferred his shares to T and T was
issued new stock certificates, the appraisal right of S ceased, and T acquired all the rights of a regular stockholder.
The transfer of shares from S to T constitutes an abandonment of the appraisal right of S. All the T acquired from
the issuance of new stock certificated was the rights of a regular stockholders (Section 86, Corporation Code).

Trust Fund Doctrine (2007)

Q: No.VI. Discuss the trust fund doctrine. (5%)

- 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 (Boman Environmental Development
Corporation v. Court of Appeals, 167 SCRA 540 [1988]).

Problem 2

Dividends; Declaration of Dividends (2008)

Q: For how many shares is Ace Cruz entitled to be paid cash dividends? Explain. (2%)

- Under Sec. 71, only when a stockholder has been declared delinquent do his rights as stockholder become
suspended. It means therefore that a stockholder who has not paid the full subscription, provided he is not declared
delinquent has complete exercise of all of his rights, including the right to receive dividends. But any cash dividends
due on delinquent stock shall first be applied to the unpaid balance of the subscription (Sec. 43, Corporation Code).

Q: On December 1, 2008, can Ace Cruz compel JP Development Corporation to issue to him the stock certificate
corresponding to the P25, 000 paid by him? (2%)

-No, Ace Cruz cannot compel JP Development Corporation to issue him the stock certificate for the P
25,000.00. No Certificate of Stock can be issued to a subscriber until the full amount of his subscription together
with interest and expense, if any is due, has been paid. A Subscription is one, entire and indivisible whole contract
which cannot be divided into portions. The stockholder is not entitled to a Certificate of Stock until he has remitted
the full amount of his subscription (Sec. 64, Corporation Code; SEC Opinion [January 6, 1989]).