Professional Documents
Culture Documents
Indeed, it is not good for judges to engage in business except only to the extent allowed by Rule 5.03
of the Code of Judicial Conduct.
Subject to the provisions of the preceding rule, a judge may hold and manage investments but should not
serve as an officer, director, manager, advisor, or employee of any business except as director of a family business
of the judge.
ANG MGA KAANIB SA IGLESIA NG DIOS KAY KRISTO HESUS VS IGLESIA NG DIOS KAY
KRISTO HESUS (2001)
Parties organizing a corporation must choose a name at their peril; and the use of a name similar to one
adopted by another corporation, whether a business or a nonprofit organization, if misleading or likely to injure in
the exercise of its corporate functions, regardless of intent, may be prevented by the corporation having a prior
right, by a suit for injunction against the new corporation to prevent the use of the name.
CHEMPHIL VS CA (1995)
CORPORATIONS; SHARES OF STOCK; ATTACHMENT THEREOF NEED NOT BE REGISTERED IN
TRANSFER BOOK TO BE EFFECTIVE AS AGAINST THIRD PARTIES. —
REBURIANO VS CA (1999)
DISSOLUTION THEREOF, REPEAL OF ANY LAW OR ANY OTHER FACT OF SIMILAR NATURE.
—As previously mentioned, the law specifically allows a trustee to manage the affairs of the corporation in
liquidation. Consequently, any supervening fact, such as the dissolution of the corporation, repeal of a law, or any
other fact of similar nature would not serve as an effective bar to the enforcement of such right.
CEMCO VS NLI
Stated differently, a tender offer is an offer by the acquiring person to stockholders of a public company
for them to tender their shares therein on the terms specified in the offer. Tender offer is in place to protect
minority shareholders against any scheme that dilutes the share value of their investments. It gives the minority
shareholders the chance to exit the company under reasonable terms, giving them the opportunity to sell their
shares at the same price as those of the majority shareholders.|||
CALTEX VS CA (1992)
DETERMINATION OF NEGOTIABILITY OR NON-NEGOTIABILITY OF INSTRUMENT; RULES.
— On this score, the accepted rule is that the negotiability or nonnegotiability of an instrument is determined
from the writing, that is, from the face of the instrument itself. In the construction of a bill or note, the
intention of the parties is to control, if it can be legally ascertained.
SALAS VS CA (1990)
Under Section 8 of the Negotiable Instruments Law, there are only two ways by which an instrument may
be made payable to order. There must always be a specified person named in the instrument and the bill or note is
to be paid to the person designated in the instrument or to any person to whom he has indorsed and delivered the
same. Without the words "or order" or "to the order of", the instrument is payable only to the person designated
therein and is therefore non-negotiable. Any subsequent purchaser thereof will not enjoy the advantages of being a
holder of a negotiable instrument, but will merely "step into the shoes" of the person designated in the instrument
and will thus be open to all defenses available against the latter.
ILUSORIO VS CA (2002)
In our view, petitioner is precluded from setting up the forgery, assuming there is forgery, due to his own
negligence in entrusting to his secretary his credit cards and checkbook including the verification of his
statements of account.
PCIB VS CA (2001)
ACTION UPON A CHECK PRESCRIBES IN TEN YEARS. — The statute of limitations begins to run
when the bank gives the depositor notice of the payment, which is ordinarily when the check is returned to the
alleged drawer as a voucher with a statement of his account, and an action upon a check is ordinarily governed by
the statutory period applicable to instruments in writing. Our laws on the matter provide that the action upon a
written contract must be brought within ten years from the time the right of action accrues. Hence, the reckoning
time for the prescriptive period begins when the instrument was issued and the corresponding check was returned
by the bank to its depositor (normally a month thereafter).
CRISOLOGO VS CA (1985)
CORPORATE OFFICERS HAVE NO POWER TO EXECUTE FOR MERE ACCOMMODATION A
NEGOTIABLE INSTRUMENT OF THE CORPORATION FOR THEIR INDIVIDUAL DEBTS OR
TRANSACTIONS IN WHICH THEY ARE PERSONALLY LIABLE. — Corporate officers, such as the
president and vice-president, have no power to execute for mere accommodation a negotiable
instrument of the corporation for their individual debts or transactions arising from or in relation to matters in
which the corporation has no legitimate concern. Since such accommodation paper cannot thus be enforced against
the corporation, especially since it is not involved in any aspect of the corporate business or operations, the
inescapable conclusion in law and in logic is that the signatories thereof shall be personally liable therefor, as well
as the consequences arising from their acts in connection therewith.
(Philippine National Bank v. Sayo, Jr., G.R. No. 129918, [July 9, 1998], 354 PHIL 211-
251)
The remedies available to a warehouseman, such as private respondents, to enforce his warehouseman's lien are:
(1) To refuse to deliver the goods until his lien is satisfied, pursuant to Section 31 of the Warehouse Receipt Law;
(2) To sell the goods and apply the proceeds thereof to the value of the lien pursuant to Sections 33 and 34 of
the Warehouse Receipts Law; and (3) By other means allowed by law to a creditor against his debtor, for the
collection from the depositor of all charges and advances which the depositor expressly or impliedly contracted
with the warehouseman to pay under Section 32 of the Warehouse Receipt Law; or such other remedies allowed by
law for the enforcement of a lien against personal property under Section 35 of said law. The third remedy is
sought judicially by suing for the unpaid charges.|||
LETTERS OF CREDIT
(Bank of America, NT & SA v. Court of Appeals, G.R. No. 105395, [December 10,
1993])
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (U.C.P.); APPLICATION
TO PHILIPPINE CODE OF COMMERCE. — Being a product of international commerce, the impact of this
commercial instrument transcends national boundaries, and it is thus not uncommon to find a dearth of national
law that can adequately provide for its governance. This country is no exception. Our own Code of Commerce
basically introduces only its concept under Articles 567-572, inclusive, thereof. It is no wonder then why great
reliance has been placed on commercial usage and practice, which, in any case, can be justified by the universal
acceptance of the autonomy of contracts rule. The rules were later developed into what is now known as the
Uniform Customs and Practice for Documentary Credits ("U.C.P.") issued by the International Chamber of
Commerce|||
FEATI BANK & TRUST COMPANY (now CITYTRUST BANKINGCORPORATION), petitioner, vs.
THE COURT OF APPEALS strict compliance
It is a settled rule in commercial transactions involving letters of credit that the documents tendered must
strictly conform to the terms of the letter of credit. The tender of documents by the beneficiary (seller) must
include all documents required by the letter. A correspondent bank which departs from what has been stipulated
under the letter of credit, as when it accepts a faulty tender, acts on its own risks and it may not thereafter be able
to recover from the buyer or the issuing bank, as the case may be, the money thus paid to the beneficiary. Thus the
rule of strict compliance.
VDA. DE JAYME Vs CA
THIRD PARTY MORTGAGE; PERSONS NOT DIRECTLY PARTIES TO A LOAN AGREEMENT
MAY GIVE AS SECURITY THEIR OWN PROPERTIES FOR THE PRINCIPAL TRANSACTION; CASE AT
BAR. — The Deed of Real Estate Mortgage entered into by the Jayme spouses partake of a Third Party
Mortgage under Art. 2085 (3) of the Civil Code. In the case of Lustan vs. CA, et al., this Court held that "so long
as valid consent was given, the fact that the loans were solely for the benefit of (the debtor) would not invalidate
the mortgage with respect to petitioner's property.
BPI FAMILY SAVINGS BANK, INC., petitioner , vs. MARGARITA VDA. DE COSCOLLUELA,
respondent .
Considering, therefore, that, in the case at bar, petitioner had already instituted extrajudicial foreclosure
proceedings of the mortgaged property, it is now barred from availing itself of a personal action for the collection
of the indebtedness.
ACME SHOE, RUBBER & PLASTIC CORPORATION and CHUA PAC, petitioners, vs. HON. COURT
OF APPEALS
While a pledge, real estate mortgage, or antichresis may exceptionally secure after-incurred obligations so
long as these future debts are accurately described, a chattel mortgage, however, can only cover obligations
existing at the time the mortgage is constituted. Although a promise expressed in a chattel mortgage to include
debts that are yet to be contracted can be a binding commitment that can be compelled upon, the security itself,
however, does not come into existence or arise until after a chattel mortgage agreement covering the newly
contracted debt is executed either by concluding a fresh chattel mortgage or by amending the old contract
conformably with the form prescribed by the Chattel Mortgage Law.
Theory of Concession
The Philippine jurisprudence adopted the Concession or fiat theory, which states that a corporation is conceived as
an artificial person owing existence through creation by a foreign power. Further, a corporation has without any
existence until it has received the imprimatur of the State acting according to law, through the SEC.
A director shall refund to the corporation all the profits he realizes on a business opportunity which:
1. The corporation is financially able to undertake;
2. From its nature, is in line with corporations business and is of practical advantage to it; and
3. The corporation has an interest or a reasonable expectancy. (ibid)
NOTE: The rule shall be applied notwithstanding the fact that the director risked his own funds in the venture.
However, if such act is ratified by a vote of the stockholders representing at least 2/3 of the outstanding capital
stock, the director is excused from remitting the profit realized.
INSIDER TRADING
A purchase or sale made by an insider, or such insider’s spouse or his relative by affinity or consanguinity within
the second degree, legitimate or common-law, shall be presumed to be effected while in possession of material
non-public information if transacted after such information came into existence but prior to the public
dissemination of such information, and lapse of reasonable time for the market to absorb such information.
Principle of reciprocity - It allows Filipino citizens to do business in the foreign state or country. This is merely
prescribed as a requirement to secure a license and not an essential element of being a foreign corporation.
"Commodity Futures Contract" shall refer to an agreement to buy or sell a specified quantity and grade of a
commodity at a future date at a price established at the floor of the exchange.
A commodity futures contract, being a specie of securities, is valid and enforceable as its terms are governed by
special laws, notably the Revised Securities Act and the Revised Rules and Regulations on Commodity Futures
Trading issued by the Securities and Exchange Commission (SEC) and approved by the Monetary Board of the
Central Bank; hence, the Civil Code is not the controlling piece of legislation.
Negotiable Instrument
It is a written contract for the payment of money which is intended as a substitute for money and passes from one person to
another as money, in such a manner as to give a holder in due course the right to hold the instrument free from defenses available
to prior parties (Sundiang Sr. & Aquino, 2011).
Requisites of Negotiability
An instrument to be negotiable must conform to the following requirements: (WU-POA)
1. It must be in Writing and signed by the maker or drawer;
2. Must contain an Unconditional promise or order to pay a sum certain in money;
3. Must be Payable on demand, or at a fixed or determinable future time;
4. Must be payable to Order or to bearer; and
5. Where the instrument is Addressed to a drawee, he must be named or otherwise indicated therein with reasonable
certainty (NIL, Sec.1).
NOTE: Fraud in factum exists in those cases in NOTE: Fraud in inducement relates to the quality,
which a person, without negligence, has signed an quantity, value or character of the consideration of
instrument, but was deceived as to the character of the instrument. Here, deceit is not in the character
the instrument and without knowledge of it, as of the instrument but in its amount or terms. This
where a note was signed by one under the belief exists when a person is induced to sign a note for
that he was signing as a witness to a deed. This the price of a worthless stock which was
kind of fraud is a real defense because there is no fraudulently represented by the payee as to its
contract, since the person did not know what he value. Such type of fraud is only a personal defense
was signing (De Leon, 2010). because it does not prevent a contract (De Leon,
2010).
Sec. 23. Forged signature; effect of. - When a signature is forged or made without the
authority of the person whose signature it purports to be, it is wholly inoperative, and no
right to retain the instrument, or to give a discharge therefor, or to enforce payment
thereof against any party thereto, can be acquired through or under such signature,
unless the party against whom it is sought to enforce such right is precluded from setting
up the forgery or want of authority.
Material alteration
It is any change in the instrument which affects or changes the liability of the parties in any way. It means an unauthorized
change in an instrument that purports to modify in any respect the obligation of a party or an unauthorized addition of
words or numbers or other change to an incomplete instrument relating to the obligation of a party.
Instances that constitute material alteration
Any alteration which changes:
1. Date
2. Sum payable, either for principal or interest
3. The time or place of payment
4. Number or the relations of the parties
5. Currency in which payment is to be made
6. Adds a place of payment where no place is specified
7. Any other change or addition which alters the effect of the instrument (NIL, Sec. 125.)
Qualified Endorser:
Warrants that the:
a. Instrument is genuine;
b. He has good title to it;
c. Capacity to contract of all prior parties; and;
d. No knowledge of any fact which would impair the validity of the instrument. (NIL, Sec.65)
NOTE: He is liable to all parties who derive their title through his indorsement.
General Indorser:
a. Warrants that:
i. Instrument is genuine
ii. He had good title to it
iii. All prior parties had capacity to contract
iv. Instrument, at the time of indorse- ment, was valid and subsisting;
ON A WAREHOUSE RECEIPT
A person who, for value, negotiates or transfers a receipt by indorsement or delivery, including one who assigns for value a
claim secured by a receipt, unless a contrary intention appears warrants(GRIT):
1. Receipt is Genuine
2. Legal Right to negotiate or transfer it
3. No knowledge of defects that may Impair the validity or worth of the receipt
4. That he has a right to Transfer title to the goods and that the goods are merchantable or fit for a particular purpose
whenever such warranties would have been to transfer without a receipt of goods represented thereby (WHR Law, Sec. 44).
NOTE: The indorsee does not guarantee that the warehouseman will comply with his duties (WHR Law, Sec. 45).
CHARGES COVERED BY A WAREHOUSEMAN’S LIEN
(PMA)
1. Charges for storage and Preservation of the goods (insurance and others may be included as long as it is stipulated)
2. Money advanced, interest, insurance, transportation, labor, weighing, coopering and other charges and expenses in
relation to such goods
3. Charges and expenses for notice, and Advertisements of sale, and for sale of the goods where default had been made in
satisfying the warehouseman’s lien (WHR Law, Sec. 27).
Provided, the terms and conditions of the credit are complied with (Uniform Customs & Practice for Documentary Credits, Art.
2).
NOTE: By the Doctrine of Independence, the relationship among: a) the issuing bank and the beneficiary; b) the issuing bank and
the applicant; and c) the beneficiary and the applicant while interrelated are separate, distinct and independent of one another.
Grandfather rule – Nationality is attributed to the percentage of equity in the corporation used in nationalized or partly
nationalized area. This test is an exception to the Control Test and was applied by the SEC in several cases.
Three-pronged test to determine the application of the alter ego/ instrumentality theory:
1. Control, not mere majority or complete stock control, but complete domination, not only of finances but of
policy and business practice in respect to the transaction attacked so that the corporate entity as to this
transaction had at the time no separate mind, will or existence of its own (Instrumentality or Control test);
2. Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the
violation of a statutory or other positive legal duty, or dishonest and unjust act in contravention of plaintiff’s
legal right; (Fraud test) and
3. The aforesaid control and breach of duty must have proximately caused the injury or unjust loss
complained of (Harm test).
DE FACTO CORPORATION
A de facto corporation is one which actually exists for all practical purposes as a corporation but which has no
legal right to corporate existence as against the State. (8 Fletcher, pp. 62-63)
Requisites of a de facto corporation (LAP)
1. Organized under a valid Law.
2. Attempt in good faith to form a corporation according to the requirements of the law (Colorable
Compliance).
NOTE: Issuance of Certificate of Incorporation by SEC is a minimum requirement for the formation of the
corporation in good faith.(Sundiang Sr. & Aquino, 2009)
3. Use of corporate Powers - The corporation must have performed the acts which are peculiar to a
corporation like entering into a subscription agreement, adopting by-laws, and electing directors (Actual
User).
Issuance of stock dividends Majority of the quorum of the Vote representing 2/3 of the
BOD outstanding capital stock
Amendment to articles of Majority vote of the BOD Vote representing 2/3 of the
incorporation outstanding capital stock
Grant of compensation to Approval of the Board Majority vote of the outstanding
directors capital stock
Extending or shortening the Majority vote of the BOD Vote representing 2/3 of the
corporate term outstanding capital stock
Increase or decrease of capital Majority vote of the BOD Vote representing 2/3 of the
stock outstanding capital stock
To incur, create, or increase Majority vote of the BOD Vote representing 2/3 of the
bonded indebtedness outstanding capital stock
Deny Pre-emptive Right Majority vote of the BOD Vote representing 2/3 of the
(CC, Sec. 39) outstanding capital stock
Investment of corporate funds in Majority vote of the BOD Vote representing 2/3 of the
another corporation or business outstanding capital stock
or for any other purpose other
than the primary purpose
The sale or other disposition of all Majority vote of the board Vote representing 2/3 of the
or substantially all of the outstanding capital stock
corporate assets
Merger or consolidation Majority vote of the BOD Vote representing 2/3 of the
outstanding capital stock
Voluntary dissolution Majority vote of the BOD Vote representing 2/3 of the
outstanding capital stock
To adopt a plan of distribution of Majority vote of the Trustees 2/3 of the members having voting
assets of a non-stock corporation ri
Unrestricted Retained Earnings shall include accumulated profits and gains realized out of the normal and
continuous operations of the company after deducting therefrom distributions of stockholders and transfers
to capital stock or other accounts. It does NOT include:
1. Funds appropriated by its BOD for corporate expansion projects or programs;
2. Funds covered by a restriction for dividend declaration under a loan agreement;
3. Funds required to be retained under special circumstances obtaining in the corporation such as when there
is a need for a special reserve for probable circumstances.
Management contract
A management contract is any contract whereby a corporation undertakes to manage or operate all or
substantially all of the business of another corporation, whether such contracts are called service contracts,
operating agreements or otherwise. A corporation under management is bound by the acts of the managing
corporation and is estopped to deny its authority.
EXECUTIVE COMMITTEE
An executive committee is a body created by the by-laws and composed of not less than three members of the
board which, subject to the statutory limitations, has all the authority of the board to the extent provided in
the board resolution or by-laws. The committee may act by a majority vote of all of its members. (CC, Sec. 35)
NOTE: An executive committee can only be created by virtue of a provision in the by-laws and that in the
absence of such by-law provision, the board of directors cannot simply create or appoint an executive
committee to perform some of its functions. (SEC Opinion, Sept. 27, 1993)
Derivative suit – one brought by one or more stockholders or members in the name and on behalf of the
corporation to redress wrongs committed against it or to protect or vindicate corporate rights, whenever the
officials of the corporation refuse to sue or are the ones to be sued or hold control of the corporation.
Requisites for the existence of a derivative suit (C-SENA)
1. Corporate cause of action: the cause of action must devolve upon the corporation itself; the wrongdoing
or harm having been caused to the corporation and not to the particular stockholder brining the suit (Reyes v.
Hon. RTC of Makati Br. 142, G.R. No. 165744, August 11, 2008);
2. Stockholder: the party bringing the suit must be a stockholder
a. At the time the acts or transactions subject of the action occurred and
b. at the time the action was filed
NOTE: if the cause of action is continuing in nature, the only requisite is that the party is a
stockholder at the time the action was filed. (Dean Divina’s Lecture, April 29, 2015)
3. Exhaustion of all intra-corporate remedies available under the AOI, By-Laws, laws or rules governing the
corporation or partnership to obtain the relief he desires;
4. Not a Nuisance or Harassment suit;
5. Appraisal right is not available. (Rule 8 of the Interim Rules of Procedure Governing Intra-Corporate
Controversies, cited in Anthony S. Yu, et al., v. Joseph S. Yukayguan, et al., G.R. No. 177549, June 18, 2009)
Investment contract – is a contract, transaction or scheme whereby a person invests his money in a common
enterprise and is led to expect profits primarily from the efforts of others.
Howey Test
For an investment contract to exist, the following elements must concur: (CICEE)
a. A contract, transaction or scheme;
b. An investment of money;
c. Investment is made in a common enterprise;
d. Expectation of profits; and
e. Profits arising primarily from the effort of others
EXEMPT SECURITIES
(PC-RIBO)
1. Any security issued or guaranteed by the Government of the Philippines, or by any political subdivision or
agency thereof, or by any person controlled or supervised by, and acting as an instrumentality of said
government.
2. Any security issued or guaranteed by the government of any Country with which the Philippines maintains
diplomatic relations, or by any state, province or political subdivision thereof on the basis of reciprocity.
Provided, that the SEC may require compliance with the form and content of disclosures the Commission may
prescribe.
3. Certificates issued by a Receiver or by a trustee in bankruptcy duly approved by the proper adjudicatory
body.
4. Any security or its derivatives the sale or transfer of which, by law, is under the supervision and regulation
of the Office of Insurance Commission, Housing and Land Use Regulatory Board, or the Bureau of Internal
Revenue.
5. Any security issued by a Bank except its own shares of stock (which serves to promote the sale of securities
issued by heavily regulated banks).
6. Other securities as determined by the SEC by rule or regulation, after public hearing. (SRC, Sec. 9)
EXEMPT TRANSACTIONS
(JuDe ISCaRIOT’S Ex-20-QB’s)
1. Any JUdicial sale, or sale by an executor, administrator, guardian, receiver or trustee in insolvency or
bankruptcy;
2. Those sold by a pledge holder, mortgagee, or any other similar lien holder, to liquidate a bona fide debt a
security pledged in good faith as security for such Debt;
3. Those sold or offered for sale in an Isolated transaction for the owner’s account and the owner not being an
underwriter;
4. Distribution by the corporation of Securities to its stock holders or other security holders as stock
dividends or distribution out of surplus;
5. Sale of CApital stock of a corporation to its own stockholders exclusively wherein no commission or
remuneration is paid or given directly or indirectly in connection with the sale of such capital stock;
NOTE: Also, this sale must not involve an underwriter or financial advisor
6. Bonds or notes secured by a mortgage upon Real estate or tangible personal property, where the entire
mortgage together with all the bonds or notes secured thereby are sold to a single purchaser at a single sale;
7. Issue and delivery of any security in exchange for any other security of the same Issuer pursuant to the
right of conversion entitling the holder of the security surrendered in exchange to make such conversion.
8. Broker’s transactions executed upon customer’s Orders, on any registered Exchange or other Trading
market
9. Share Subscriptions in capital stock prior to incorporation or in pursuance of an increase in its authorized
capital stock under the Corporation Code when no expense is incurred, or no commission, compensation or
remuneration is paid or given in connection with the sale or disposition of such securities, and only when the
purpose for soliciting, giving or taking of such subscriptions is to comply with the requirements of such law as
to the percentage of the capital stock of a corporation which should be subscribed before it can be registered
and duly incorporated, or its authorized capital increased;
10. EXchange of securities by the issuer with its existing security holders exclusively, when no commission or
other remuneration is paid or
given directly or indirectly for soliciting such exchange;
11. Sale by issuer to fewer than 20 persons in the Philippines during any 12 month period, otherwise known
as private placement transactions;
12. Sale of securities to any number of the following Qualified Buyers:
a. banks,
b. registered investment houses,
c. insurance companies,
d. pension funds or retirement plans maintained by the Government of the Philippines or any
political subdivision thereof or managed by a bank or other persons authorized by the Bangko
Sentral to engage in trust functions, investment companies, and
e. other persons or entities ruled qualified by the SEC on the basis of such factors such as financial
sophistication, net worth, knowledge, and experience in financial and business matters, or amount of
assets under management. (SRC, Sec. 10.1)
RATIONALE: Although the securities themselves must still be registered, the sale or issue need not be
registered because the investors involved herein are considered as highly sophisticated investors or
specialized investors and as such, have a greater risk tolerance or do not need strict protection from the
Commission.
FRAUDULENT TRANSACTIONS
The following are considered as fraudulent transactions: (EUF)
1. Employment of any device, scheme or artifice to defraud investors;
2. Obtaining money or property by means of any untrue statement of a material fact or any omission to
state a material fact necessary in order to make the statement made not misleading;
3. Engaging in any act, transaction, practice or course of business, which operates as a fraud or deceit upon
any person
Material non-public information
1. Information about the issuer or the security has not been generally disclosed to the public and would
likely affect the market price of the security after being disseminated to the public and the lapse of a
reasonable time for the market to absorb the information; or
2. Would be considered by a reasonable person important under the circumstances in determining his
course of action whether to buy, sell or hold a security. (SRC, Sec. 27.2)
Public company
The following are considered as public company:
1. Those listed on an exchange; or
2. Those with assets of at least PHP 50M and having 200 shareholders owning at least 100 shares each.
3. Those companies that have an effective registration statement under Section 12 of the SRC
Margin trading
A kind of trading that allows a broker to advance for the customer/investor part of the purchase price of
the security and to keep the same security as collateral for such advance
Theory of Concession
The Philippine jurisprudence adopted the Concession or fiat theory, which states that a corporation is
conceived as an artificial person owing existence through creation by a foreign power. Further, a
corporation has without any existence until it has received the imprimatur of the State acting
according to law, through the SEC.
A director shall refund to the corporation all the profits he realizes on a business opportunity which:
1. The corporation is financially able to undertake;
2. From its nature, is in line with corporations business and is of practical advantage to it; and
3. The corporation has an interest or a reasonable expectancy. (ibid)
NOTE: The rule shall be applied notwithstanding the fact that the director risked his own funds in the
venture.
However, if such act is ratified by a vote of the stockholders representing at least 2/3 of the
outstanding capital stock, the director is excused from remitting the profit realized.
INSIDER TRADING
A purchase or sale made by an insider, or such insider’s spouse or his relative by affinity or
consanguinity within the second degree, legitimate or common-law, shall be presumed to be effected
while in possession of material non-public information if transacted after such information came into
existence but prior to the public dissemination of such information, and lapse of reasonable time for
the market to absorb such information.
Principle of reciprocity - It allows Filipino citizens to do business in the foreign state or country.
This is merely prescribed as a requirement to secure a license and not an essential element of being a
foreign corporation.
"Commodity Futures Contract" shall refer to an agreement to buy or sell a specified quantity and
grade of a commodity at a future date at a price established at the floor of the exchange.
A commodity futures contract, being a specie of securities, is valid and enforceable as its terms are
governed by special laws, notably the Revised Securities Act and the Revised Rules and Regulations
on Commodity Futures Trading issued by the Securities and Exchange Commission (SEC) and
approved by the Monetary Board of the Central Bank; hence, the Civil Code is not the controlling
piece of legislation.