Chapter 13 - Business Torts

Art. 2200: “Indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain ” INTRODUCTION A. The provision contemplates liability for various interference with business interests. B. The interference discussed in chapter include (1) interference with contractual relations; (2) interference with prospective advantage; (3) unfair competition; and (4) securities related fraud. A. STATUTORY PROVISION AND RATIONALE I. INTERFERENCE WITH CONTRACT Art. 1311 “Contracts take effect only between the parties , their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property he received from the decedent. If a contract should contain some stipulation in favor of a third person , he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person” Art. 1313 “Creditors are protected in cases of contracts intended to defraud them” Art. 1314 “Any third person who induces another to violate his contract shall be liable for damages to the other contracting party” GENERAL RULE Only the parties to a contract are bound by the terms of the contract and only a party can file an action for breach or for rescission or annulment thereof. EXCEPTION: Assignees and Heirs (Art. 1311); Contract contains a stipulation in favor of a third party (Art. 1311); Contracts intended to defraud creditors (Art. 1313) It follows that a third person, who is not a party to the contract, cannot be sued by the contracting parties for breach since only parties can breach contractual provisions. An exception to this, was provided by Art. 1314, which is INTERFERENCE WITH CONTRACTUAL RELATIONS.

SO PING BUN VS. Lack of malice. Manuel Tiong. one of the members of Enterprising.Such interference is considered tortious because it violates the rights of the contracting parties to fulfill the contract and to have it fulfilled. The three elements of tort interference are present since So Ping Bun prevailed upon DCCSI to lease the warehouse to his enterprise at the expense of Enterprising. precludes damages. to reap the profits resulting therefrom. Thus. the appellate court correctly confirmed the permanent injunction and nullification of the contracts between DCCSI and Trendsetter. 2014: “No action can be maintained by the winner for the collection of what he has won in a game of chance . The business desire is there to make some gain to the detriment of the contracting parties. the grandson of the managing partner of Trading. Trendsetter Marketing (So Ping Bun's company) asked DCCSI to execute lease contracts in its favor. CONTRACT No tort is committed if the party had already broken the contract and offers to contract with defendant. and as a result. So Ping Bun entered into lease contracts with DCCSI over the same premises. Knowledge on the part of the third person of the existence of the contract (MALICE). Art. But it does not relieve So Ping Bun of the legal liability for entering into contracts and causing breach of existing ones. Enterprising and Manuel Tiong filed an action to nullify the contracts between So Ping Bun and DCCSI and also claimed damages against So Ping Bun for unlawful interference in the lease contracts between DCCSI and Enterprising. But any loser in a game of chance may recover his loss . it was able to deprive Enterprising of its property rights. Later. however. The elements of tort interference are: a) existence of a valid contract. and to compel the performance by the other party. ISSUE: WON there was unlawful interference? HELD: Yes. Tek Hua Enterprising (Enterprising). The successor of Trading. asked So Ping Bun via a letter to vacate the premises within 14 days since he needed it for his textile business. allowed So Ping Bun. Instead. Interference of the third person without legal justification or excuse (PROCUREMENT). (DCCSI) for the lease of several premises which Trading used to store its textiles. No action can be maintained if the contract is void or where the contract is illegal or one that is contrary to public policy. knowledge on the part of the third person of the existence of the contract. CA FACTS: Tek Hua Trading (Trading) entered into agreements with Dee C. Chua & Sons Inc. THEORY: Rights derived from a contract is a property right that entitles each party to protection against all the world and any damage to said property should be compensated. ELEMENTS Existence of a valid contract. to use the premises to store his own textiles. and interference of the third person is without legal justification or excuse. b) c) In this case. without awarding damages. So Ping Bun refused to vacate.

or without malice.” . If there had been no contract between Cuddy and Gilchrist. He has no right to be protected against competition. and subsidiarily from the operator or manager of the gambling house” It follows that a third person. or the exercise of like rights of others.e. industry. cannot be sued by such winner. or in the best interest of himself. The right on the part of Gilchrist to enter into a contract with Cuddy for the lease of the film must be fully recognized and admitted by all. If disturbance and annoyance comes as a result of competition. Friendly Society of Operative Stonemasons said: “… it is not sufficient justification that ‘they acted bona fide in the best interests of society of masons’. Chief Justice Wells in Walker vs. unless some superior right by contract or otherwise is interfered with”. GILCHRIST VS. the defense interposed would be tenable. [It is] sufficient justification for interference with plaintiffs right must be an equal or superior right in themselves.from the winner. in their own interests. Nor is it enough that ‘they were not actuated by improper motives. seeking only the good of another and careless of his own advantage. on the ground that he acted on a wrong understanding of his own rights. with legal interest from the time he paid the amount lost. Plaintiff Gilchrist commenced an action applying for a preliminary injunction against the defendants prohibiting them from receiving. in bad faith sets about to break it up. or bona fide. or even that he acted as an altruist. MALICE in the sense of ill-will or spite is not essential. a proprietor of the Eagle Theater of IloIlo.. also obtained from Cuddy a contract for the exhibition of the same film. Whether his motive is to benefit himself or gratify his spite by working mischief to the other is immaterial. defendants Espejo and Zaldarriaga. having knowledge of the existence of the contract relation. to be exhibited in his theatre. who were also operating a theatre in IloIlo. CUDDY FACTS: Gilchrist. an action for interference can be maintained even if the contract is unenforceable. Later. MALICE It is enough if the wrongdoer. i. exhibiting or using said film which was granted by the RTC. but he has a right to be free from malicious and wanton interference. Justice Darling in Read vs. According to Harper. contracted with Cuddy for a film. and that no one can legally excise himself to a man. The unenforceability of the contract is for the protection of the obligor and is personal to him and not available to strangers. disturbance and annoyance. The defendants (herein appellants) contend that they had a right to compete with Gilchrist for the lease of the film ISSUE: WON the right to compete absolves defendants of their liability for interfering in the contract between Gilchrist and Cuddy? HELD: No. of whose contract he procured the breach. but the mere right to compete could not justify the appellants is intentionally inducing Cuddy to take away the plaintiff’s (herein appellee) contractual rights. skill and credit. Cronin said: “Everyone has a right to enjoy the fruits and advantages of his own enterprise. who induced another not to comply with his undertaking to pay the winner. it is damnum absque injuria.

prompted by o mean or improper motive. petitioner was held to be entitled to the whole area upon payment of the whole price. even if there was no malice beyond the desire to make a profit by exhibiting the film in their theatre. petitioner seeks recovery of damages on the ground that said corporation. Although malice in some form is generally supposed to be an essential ingredient in cases of interference with contract relations. or by false or defamatory statements. in bad faith sets about to break it up. maintained her in her defense to the action of specific performance which was finally decided in favour of the petitioner as earlier mentioned which ultimately resulted to the petitioner’s failure to convey the land to a sugar milling company which would have reaped profits. In this case against the respondent corporation. for its own selfish purposes. with a bona fide purpose of benefiting the one who is under . LEGAL JUSTIFICATION In general. ISSUE: WON ill-will or spite on the part of the respondent corporation is necessary to be liable for interference? HELD: No. no question can be made as to the liability of one who interferes with a contract through unlawful means. intimidation. LA CORPORACION DE LOS PADRES AGUSTINOS RECOLETOS FACTS: Teodorica Endencia and herein petitioner entered into a contract of sale where the former became hesitant to sell his lot upon knowing that the total land area of the lot covered by the Torrens title was bigger than what was originally expected. or threats. liable for damage which ensues. In a decision by this court. social policy permits a privilege or justification to intentionally invade the legally protected interests of others only if the defendant acts to promote the interests of others or himself if the interest which he seeks to advance is superior to the interest invaded in social importance. the person using such unlawful means is. A person who detains a professional singer to prevent him from pursuing his contractual commitment to perform at a certain gathering is therefore not only criminally liable but is civilly liable as well under Art. coercion. if performance is perverted by force. but upon the authorities it is enough if the wrong-doer. Whether his motive is to benefit himself or gratify his spite by working mischief to the employer is immaterial. DAYWALT VS. having knowledge of the existence of the contract relations. Malice in the sense of ill-will or spite is not essential. the amount of which is claimed as damages. or by nuisance or riot. therefore. PROCUREMENT It should be observed that according to English and American authorities. while using the property sold to petitioner also. maliciously and without reasonable cause. Thus. Any advice or assistance which they may have given was. the defendants are not relieved from their legal liability for interfering with the contract and causing its breach . 1314. and a third person. unlawfully induced Teodorica Endencia to refrain from the performance of her contract for the sale of the land in question and to withhold delivery to the plaintiff of the Torrens title. under all authorities. Respondent Corporation believed in good faith that the contract could not be enforced and that Teodorica would be wronged if it should be carried into effect. LEGAL JUSTIFICATION If a party enters into contract to go for another upon a journey to a remote and unhealthful climate.In the case at bar. and further.

as it were. and (2) special damages Ordinary damages is found in all breaches of contract where the are no special circumstances to distinguish the case specially from other contracts. apart from the actual terms to the contract exists or intervenes. the latter may hold the defendant liable for interfering with a prospective advantage 3." Ordinary damage is assumed as a matter of law to be within the contemplation of the parties Special damage. is such as follows less directly from the breach than ordinary damage. A. 2202 which provides that “In crimes and quasi-delicts. dissuades him from the step. II. even if the result is that the person who breached the contract will be liable for less because of his good faith. EXAMPLE If the defendant. however. To hold the stranger liable for damages in excess of those that could be recovered against the immediate party to the contract would lead to results at once grotesque and unjust. without actual notice of that external condition. "according to the usual course of things. It is not necessary that such damages have been foreseen or could have reasonably been foreseen by the defendant ”. supra) Aquino. proposes that the rule that should apply is that provided under Art. no action will lie. Concerning this sort of damage. could not reasonably be expected to foresee . induced an employer not to hire Mr. It is only found in case where some external condition. the tort committed is appropriately called INTEREFERENCE WITH PROSPECTIVE ADVANTAGE. But if the advice is not disinterested and the persuasion is used for “indirect purpose of benefiting the defendant at the expense of the plaintiff”. La Corporacion. Hadley vs.contract to go. UNFAIR COMPETITION . EXTENT OF LIABILITY Where the damage which a plaintiff seeks to recover as special damage is so far speculative as to be in contemplation of law remote. INTERFERENCE WITH PROSPECTIVE ADVANTAGE If there is no contract yet and the defendant is only being sued for inducing another not to enter into a contract with the plaintiff. to give a turn to affairs and to increase damage in a way that the promisor. (1) the ordinary. natural. namely. as Teodorica Endencia was the party directly bound by the contract. even admitting that it has made itself co-participant in the breach of the contract. supra) The damages recoverable in case of the breach of a contract are two sorts. on the other hand. the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of. notification of the special conditions which make that damage possible cannot render the defendant liable therefor The stranger cannot become more extensively liable in damages for the non-performance of the contract than the party in whose behalf he intermeddles. In all such cases the damages recoverable are such as naturally and generally would result from such a breach. it is obvious that the liability of the defendant corporation. the intermedler is liable if his advice is take and the contract broken (Daywalt vs. with ill will. and in a sense necessary damage. Baxendale (1854) [supra] lays down the definite and just rule that before such damage can be recovered the plaintiff must show that the particular condition which made the damage a possible and likely consequence of the breach was known to the defendant at the time the contract was made. In the case at bar. can in no case exceed hers (Daywalt.

orally or in writing. 28. or the device or words thereon. the following shall be deemed guilty of unfair competition: (a) Any person. shall sell his goods giving them the general appearance of goods of another manufacturer or dealer. in unfair competition and for the purpose of deceiving or defrauding another of his legitimate trade or the public in general. and shall be subject to an action therefor. 168. Article XII 1987 Constitution The State shall regulate or prohibit monopolies when the public interest so requires. Any person who. his business or services from those of others. or the devices or words thereon.Art. or who shall commit any acts calculated to produce said result. has a property right in the goodwill of the said goods. 168. Civil Code Unfair competition in agricultural. No combinations in restraint of trade or unfair competition shall be allowed. 2. Sec.)] A. either as to the goods themselves or in the wrapping of the packages in which they are contained. commercial or industrial enterprises or in labor through the use of force. or any false description or representation. trademark or service mark or of himself as the owner of such tradename. business or services so identified. In particular.1. approved June 20. Any person who.3. or by other fraudulent means shall procure from the patent office or from any other office which may hereafter be established by law for the purposes. intimidation. by means of false or fraudulent representation or declarations. trademark or service mark or an entry respecting a tradename. machination or any other unjust. Intellectual Property Code (RA 8293) Section 168. Any person who shall affix. trademark or service mark. whether or not a registered mark is employed. which would be likely to influence purchasers to . 19. the registration of a tradename. or shall give other persons a chance or opportunity to do the same with a like purpose. or in the wrapping of the packages in which they are contained. or his business. Art. or in any other feature of their appearance which would be likely to induce the public to believe that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer. annex. or services for those of the one having established such goodwill. . and shall sell such goods or services. who is selling his goods and gives them the general appearance of goods of another manufacturer or dealer. PASSING OFF AND DISPARAGEMENT OF PRODUCTS Sec. which will be protected in the same manner as other property rights. deceit.168. a false designation of origin. 3. 168. (As amended by Republic Act No. A person who has identified in the mind of the public the goods he manufactures or deals in. 1947. shall be guilty of unfair competition. or in any other feature of their appearance. and without in any way limiting the scope of protection against unfair competition. Regulation and Remedies. Rights. Any person who shall employ deception or any other means contrary to good faith by which he shall pass off the goods manufactured by him or in which he deals.2. 172. Unfair Competition. oppressive or highhanded method shall give rise to a right of action by the person who thereby suffers damage. apply. 186 Revised Penal Code 1. either as to the goods themselves. or use in connection with any goods or services or any container or containers for goods.

LTD. it is the concentration of business in the hands of a few.e. or who otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade. its selling lowgrade oil in Shell containers intending to mislead the the public to the prejudiceof petitioner and attempting to persuade shell dealers to purchase its lowgrade oil which resulted to petitioner's sales. 23 QBD 598) A monopoly embraces any combination the tendency of which is to prevent the competition in the broad and general sense or to control the prices to the detriment of the public. LTD. after driving the competition out of the market (Mogul Steamship Co vs McGregor. the defendant's low grade oil that was sold to the operator was contained in a drum still containing the petitioner's brand or mark 'Shell' thus this action for damages against the defendant on the allegation of unfair competition i.e. vs. L-45911. including lubricating oil. April 11. MISAPPROPRIATION The Court explained that news of current events are not copyrightable and may be regarded as common property.. (Gokongwei vs the SEC GR No.” D. competitors are “under the duty to conduct its own business so as not to unnecessarily or unfairly injure that of the other. Facts: Petitioner sells petroleum products . first grade oil which is marketed using high-grade oil containers bearing the defendant's trademark and the other. (b) Any person who by any artifice.one. INSULAR PETROLEUM REFINING CO. 1979) SHELL COMPANY OF THE PHILIPPINES. or (c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a nature calculated to discredit the goods. Defendant on the other hand collects used lubricating oil refined and marketed to the public at a much lower price than new lubricating oil. In one transaction however. HOWEVER. INTERFERENCE C. the second grade oil marketed using miscellaneous containers or used containers some of which were Shell containers. business or services of another.believe that the goods offered are those of a manufacturer or dealer. Gow & Co. the defendant denied that it has attempted to pass off products as that of another or to pesuade anyone to do the same. From the used oil defendant produces two types of oil. B. or device. MONOPOLIES AND PREDATORY PRICING Defendants can be held liable for unfair competition if they were involved in predatory pricing i. The material consideration in determining its existence is not that prices are raised and competition actually excluded but that power exists to raise prices or exclude competition when desired. Before filing the empty drums the Defendant obliterates the markings of the used drums. In short.. A practice of selling below costs in the short run in the hope of obtaining monopoly gains later. . or any subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose. The packages and containers of its goods bear its trademark labeled or stenciled thereon. In its defense. or who employs any other means calculated to induce the false belief that such person is offering the services of another who has identified such services in the mind of the public. other than the actual manufacturer or dealer.

promote the development of the capital market. to the definitiveness to which we are bound. whether written or electronic in character.. irrespective to whom how the sale is made. be deported without further proceedings after service of sentence. vs. contract. makes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading. bonds.Issue: WON defendant was guilty of unfair competition? SHELL COMPANY OF THE PHILIPPINES. debentures. willfully or negligently. and if such officer is an alien. or any person who. participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate. suffer a fine of not less than Fifty thousand pesos (P50. or the rules and regulations promulgated by the Commission under authority thereof. Section 73. contrary to law. association or entity responsible for the violation. The single transaction at bar will not render defendant’s act an unfair competition. and therefore unfair competition is born. he shall in addition to the penalties prescribed. causes damage to another. 20. INSULAR PETROLEUM REFINING CO. partnership or association or other juridical entity. in a registration statement filed under this Code. in a measure. ” SECURITY RELATED TORTS Art. shall. It includes: (a) Shares of stocks. “ As no inflexible rule can be laid down as to what will constitute unfair competition. ensure full and fair disclosure about securities. protect investors. enhance the democratization of wealth.000. can there be a conclusion that the buying public has been misled or will be misled. .. Section 3. instruments. minimize if not totally eliminate insider trading and other fraudulent or manipulative devices and practices which create distortions in the free market. If the offender is a corporation.00) nor more than Five million pesos (P5. partnership.000. or both in the discretion of the court. shall indemnify the latter for the same. asset-backed securities. as each case is . Definition of Terms. Declaration of State Policy..000. LTD. the determination of whether unfair competition was committed in the case at bar. much in the same way that the appearance of one’s swallow does not make a season summer. – Any person who violates any of the provisions of this Code. "Securities" are shares. must have to depend upon the facts found by the Court of Appeals. Every person who. encourage the widest participation of ownership in enterprises. notes evidences of indebtedness.3. upon conviction. LTD. – The State shall establish a socially conscious. . Penalties.00) or imprisonment of not less than seven (7) years nor more than twenty-one (21) years. Not just because a manufacturer used a container still bearing a competitor’s markings in the sale of one’s products. the penalty may in the discretion of the court be imposed upon such juridical entity and upon the officer or officers of the corporation. this Securities Regulation Code is hereby enacted. free market that regulates itself. a law unto itself and as unfair competition is always a question of fact ..1. Republic Act 8799 The Securities Regulation Code Section 2. To achieve these ends.

2. in such form and with such substance as the Commission may prescribe. scheme. shall be made available to each prospective purchaser. 8. – It shall be unlawful for any person. The Commission may conditionally approve the registration statement under such terms as it may deem necessary. certifies of deposit for a future subscription. Engage in any act. 26. certificates of interest or participation in a profit sharing agreement. as the case may be. Section 58. This Code shall be administered by the Securities and Exchange Commission A. 8. or accepts or declines an invitation for tender of a security.4. or artifice to defraud. The Commission may specify the terms and conditions under which any written communication. A record of the registration of securities shall be kept in Register Securities in which shall be recorded orders entered by the Commission with respect such securities. trust certificates. information on the securities. shall be liable to any other person who purchases or sells any security. MISSTATEMENTS Section 8. Such register and all documents or information with the respect to the securities registered therein shall be open to public inspection at reasonable hours on business days. in connection with the purchase or sale of any securities to: 26.3.2. without a registration statement duly filed with and approved by the Commission. Fraudulent Transactions. in the light of the circumstances under which they were made. (c) Fractional undivided interests in oil. FRAUD Section 26. grants or refuses to grant any proxy. Civil Liability of Fraud in Connection with Securities Transactions .1. 20 or 26.– 8. gas or other mineral rights.1. directly or indirectly. Employ any device. transaction. certificates of participation. 8. (e) Certificates of assignments. practice or course of business which operates or would operate as a fraud or deceit upon any person. B. consent or authorization.(b) Investment contracts. including any summary prospectus.2. not misleading.3. for the damages sustained by such other person as a result of such act or transaction. . Prior to such sale. Obtain money or property by means of any untrue statement of a material fact of any omission to state a material fact necessary in order to make the statements made. (d) Derivatives like option and warrants. or any rule or regulation of the Commission thereunder. Requirement of Registration of Securities. or 26. – Any person who engages in any act or transaction in violation of Sections 19. shall be deemed not to constitute an offer for sale under this Section. Securities shall not be sold or offered for sale or distribution within the Philippines. and (g) Other instruments as may in the future be determined by the Commission. voting trust certificates or similar instruments (f) Proprietary or nonproprietary membership certificates in corporations.

the issuer at the time of the filing of the registration statement or any part. (g) Every underwriter with respect to such security.12. or as having prepared or certified any report or valuation which is used in connection with the registration statement. or a person performing similar functions.1. The registration statement shall include any prospectus required or permitted to be delivered under Subsections 8. which purports to have been prepared or certified by him. supplement or amendment thereof with respect to which his liability is asserted. or valuation. Any person acquiring a security. report. 56. or a partner in. and 8. I shall be registered through the filing by the issuer in the main office of the Commission. which shall be filed with the registration statement. has been named as having prepared or certified any part of the registration statement. or a partner in. (c) Every person who is named in the registration statement as being or about to become a director of. unless it is proved that at the time of such acquisition he knew of such untrue statement or omission: (a) The issuer and every person who signed the registration statement: (b) Every person who was a director of. Section 59. or any other person performing similar functions. Civil Liabilities on Account of False Registration Statement.1. with his written consent.Section 12. – Any person who willfully participates in any act or transaction in violation of Section 24 shall be liable to any person . If the person who acquired the security did so after the issuer has made generally available to its security holders an income statement covering a period of at least twelve (12) months beginning from the effective date of the registration statement. the issuer and whose written consent thereto is filed with the registration statement. but such reliance may be established without proof of the reading of the registration statement by such person. in such form and containing such information and document as the Commission prescribe. THE PLAINTIFF AND THE DEFENDANTS Section 56. Civil Liability for Manipulation of Security Prices . the registration statement of which or any part thereof contains on its effectivity an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make such statements not misleading. of a sworn registration statement with the respect to such securities. . (d) Every auditor or auditing firm named as having certified any financial statements used in connection with the registration statement or prospectus. (e) Every person who. CIVIL LIABILITIES False Registration Statement. All securities required to be registered under Subsection 8. with respect to that portion of the registration statement which purports to have been contributed by him. may sue and recover damages from the following enumerated persons. 56. with respect to the statement. and who suffers damage.3.2. 8.2.4. then the right of recovery under this subsection shall be conditioned on proof that such person acquired the security relying upon such untrue statement in the registration statement or relying upon the registration statement and not knowing of such income statement . Procedure of Registration Securities. (f) Every selling shareholder who contributed to and certified as to the accuracy of a portion of the registration statement.

Any person who engages in any act or transactions in willful violation of any rule or regulation promulgated by the Commission under Section 11 or 16. shall be liable in a suit brought by any investor who. proves that such investor knew the information or would have purchased or sold at the same price regardless of disclosure of the information to him. (4) DAMAGES 4. The said court may award damages in the amount not exceeding triple the amount of the transactions plus actual damages.1. and to the same extent as. An insider who violates Subsection 27. (3) DEFENSES The defendants are free from liability if they can prove that at the time of acquisition. purchased or sold securities of the same class unless such insider. or any rule or regulation thereunder. 4. – 61. However.1 Nature and Extent. the plaintiff knew of the untrue statement or omission. – 60. or person in the case of a tender offer.1 with. 60. by communicating material nonpublic information. or other unfair or abusive practices with respect to commodity future contracts. or such person in the case of a tender offer. shall be jointly and severally liable under Subsection 61.4 (a). the Commission by rule shall prescribe the elements of proof required for recovery and any limitations on the amount of damages that may be imposed. by purchasing or selling a security while in possession of material information not generally available to the public. contemporaneously with the purchase or sale of securities that is the subject of the violation.4 (a)(I).2 Joint and Several Liability If two or more persons are held liable as defendants. or any rule or regulation thereunder.1. . Courts are authorized to award attorney’s fees not exceeding 30% of the award. Section 61.2. shall be liable to any other person sustaining damages as a result of such act or transaction. manipulation.1 by reason of his purchase or sale of a security. The suit authorized under Sections 56 to 61. Any insider who violates Subsection 27.3 or any person in the case of a tender offer who violates Subsection 27.1 and any person in the case of a tender offer who violates Subsection 27. undue speculation. they shall be jointly and severally liable for the payment of damages. 61. which the Commission denominates at the time of issuance as intended to prohibit fraud in the offer and sale of pre-need plans or to prohibit fraud. may be filed before the Regional Trial Court. any person who becomes liable for the payment of such damages may recover contribution from any other person who. Civil Liability with Respect to Commodity Futures Contracts and Pre-need Plans. fictitious transactions. Exemplary damages may also be awarded. As to each such rule or regulation so denominated. to whom the communication was directed and who is liable under Subsection 61. Civil Liability on Account of Insider Trading .who shall purchase or sell any security at a price which was affected by such act or transaction. if sued separately. and the person so injured may sue to recover the damages sustained as a result of such act or transaction. Section 60.2. the insider.

1. recover their contribution to the liability from the issuers. of such untruth or omission. In no event shall an such action be brought to enforce a liability created under Section 56 or Subsection 57. for damages caused by such reliance. by the use of any means or instruments of transportation or communication. and relying upon such statement shall have purchased or sold a security at a price which was affected by such statement. shall be liable to any person who. or for damages if he no longer owns the security. stockholders. b. who may sue to recover the consideration paid for such security with interest thereon. not misleading (the purchaser not knowing of such untruth or omission).1 (b0 more than five (5) years after the sale. or. Limitation of Actions.1 (a) more than five (5) years after the security was bona fide offered to the public. whether or not exempted by the provisions of this Code. shall be liable to the person purchasing such security from him. 57. or document filed pursuant to this Code or any rule or regulation thereunder. Any person who: (a) Offers to sell or sells a security in violation of Chapter III. Communications and Reports. directors and other officers of the issuer or persons occupying similar position. However. Prospectus and the like Section 57. brought within two (2) yeas after the violation upon which it is based. unless the former was guilty of fraudulent representation and the latter was not. Civil Liabilities Arising in Connection With Prospectus. or under Subsection 57. No action shall be maintained to enforce any liability created under Section 56 or 57 of this Code unless brought within two (2) years after the discovery of the untrue statement or the omission. unless. which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements. issuer may recover amount contributed to the liability.2. by means of a prospectus or other written or oral communication. in the light of the circumstances under which they were made. All persons held liable shall contribute equally to the total liability adjudged. and in the exercise of reasonable care could not have known. or (b) Offers to sell or sells a security. 57. c. 62. No action shall be maintained to enforce any liability created under any other provision of this Code unless brought within two (20 years after the discovery of the facts constituting the cause of action and within five (5) years after such cause of action accrued.1 (a).2. if the action is to enforce a liability created under Subsection 57. unless the person sued shall prove that he acted in good faith and had no knowledge that such statement was false or misleading.would have been liable to make the same payment. – 62.1. Statute of Limitations Section 62. which statement as at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact. less the amount of any income received thereon. upon the tender of such security. Any person who shall make or cause to be made any statement in any report. . and who shall fail in the burden of proof that he did not know. In no case shall the principal. not knowing that such statement was false or misleading.

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