2019 Bar Exams Updates in Commercial Law SACP Rocille S, Aquino-Tambasacan’ DATA PRIVACY ACT (RA 10173) 1, Whatis personal information Personal information refers to any information whether recor i a material fr or not, fram ‘which the identity ofan individual is apparent or canbe reasonably and directly ascertained bythe eny bolding he information or when pu together with ater Information would areciy and certainly ketiy ‘an indiicua (Se), 2 Whats sensitive personal ivormation? Sensitive persona inlrmaton reer e personal inlormaton: (@) About an indivicua’s race ethnic origin, marital status age, color, and religious, pilosopleal or politi! imiatons: (®) About an individual’ health, education, genetic or sexual ie cf a petson, of to any proceading for {any oflense committe or allege 0 have been commited by such person, the algposal of $e proceedings, oF the sentence of any cour In sueh proceedings: (©) lssued by government agencies peclar Coan individual whic cts, bus not imited to, social security numbers, previous or current heath records, Hcenses of its denials, suspension oF Fevocaon and tax returns: and (6) Specially estabished by an executive order or an act of Congress to belept classiest. (Se. 3) 3. What covered by Data Privacy Ac? ‘hig Act apples to the processing ofall ypes of personal information and to any natural and Juridical person iva in personal normation processing including those. personal Information controllers and processors whe, ahough ot found of established i tne Palippines use equipment that fre locate nthe Philippines, r those who maintain an oie branch or agency in the Plippines subject {the irmedatlysueceecing paragrapt Proved, Tha the requrestente Section 5a compe ith What data senot covered by the la? "This Act doesnot apply fo the flowing: (a) Information abost ay inivkival who ts or waa acer or employee of a government institution tha atest he postion or neon ofthe nasal elu g (1). Theat tat the individual tor was an officer or employee of the government institution (2) Thettbe. business adress and office telephone namberof te nds (3) The classification, salary range and responsbliies ofthe positon helé by che individual and E (4) The name ofthe ladvida on a document prepares by the individual in the course of crployment wikthe government. (©) Information about an Igual wo sor was performing Service under contrat fora government {nstition that relates to the servers perlorme nluding the tes af the contrat, and the name ‘tthe ingielpiven nthe couse of he performance of thse services: (0) IMormation relating to any discretionary pene of 4 fnaneal nature suck 25 che granting of 2 < icense or permit given ay the government tan indvidval, inline ame o the navidua! an ‘thegct nature of tne Dene (©, Peril inormation processed for journalist artistic iterary or research purposes: 49)" Inlormation nocessaty in order to camry out the functions of publle authority which includes the practasingol personal dat for he performance hy the independent central monetary authority and awe enforcement and regulary. aencles of thelr constsionaly and statutory mandated “© finctions Nothing in thi Act shall be construed as to have amended oF repealed RA 1405, a Som Sr the Serncyof Bank Deposits ACE RA 6426, othervse known asthe Foreign - epost Act aha RA 9520, otherwise known 2 the Credit information Systm Ac (CISA) (Anfarmation necessary for banks and ether finapeal Institutions under the jrssicton of the Tndependen: central monetary authori or Banyo Sentral Pps to compy with RA 9520, find RA 9160, 4s amended, oterwise known as the Anti Money Lavndering Act and other applcable iawst and ‘The autor oh pte ia ener Aina ity Prone fhe City af Ma. She asa a Commerc Law Profesor at SanSebeatun Cogs Halts Nama etc: Unversity of he Papen, Uivessdad de Mana Sar Revie at ‘Acari Revie Center nd Albino Reve Center, Pomerat Revlew Canter, New ra Unies and Vist Review Cntr(Persona information orignal coleced from rsidents of foruign jurisdictions in aecordance with the laws of those foeighjorseictons eluding any applicable daa privacy ls, which Is bei processedin the Poppies. See.) ‘What are the requirements in processing of persona inlormaton? "The processing of personal Information shale alowed, subject to compliance with the quirements of ts Act and ocer laws allowing disclosure of iormation tothe pubic and adherence to "hens transparency ena purpose on proprio (2) Golece tor speitiog and lepcimate purpores determined sn dedared belo, or as soon as Feasonaby praccable ate colecton and later pocessed in away compatible with such declare, peed an egtimateprposes on (@) Processed fairy and oul (©) Accurate, relevant and, where necessary fr purposes for whichis tobe Used the processing of personal formation, wept up to date; Inaccurate oF incomplete data must be rectie, Supplemented, destroyed oF thelr her processing restricted (4) Adequate and not excessive inreation to the purposis for wich te) are cllectd and process: {e} —Reted only for as long as necessary for the fulfilment ofthe purposes for which the data was bcained oF forthe establishment, exercise or defense of legal Cais, oF for legitimate business purposes or as provided by law: and (0 Kentina form woh permit dentteation of data subjects for no longe than s necessary forthe purposes for srich the data were collected! and processed: Provided, That personal information Follected or lher purposes may he processed or stores, stats or slemepurpses, ana In fases bid down In law may be stored for longer periods: Provided, farther, That avequate Ssteguatds are guaranteed by sai aws authorizing thelr processing. ‘The persona. informution controller must ensure implementation of personal information processing principles et out herein. (See 17) What are the eter or awl processing of personal infornation? “The processing of persona informacion sale permed dy if a oterwise probed by law, and when at least one ofthe folowing conditions exist G2) The data subject has gen his or er consent {8} The procertng of personal Information fe nacesary and i vated tothe fiilment of «contract withthe data subject or larder to take steps atthe Fequest of the data subject prior entering, tog conn {e) The processing is necessary for colfiplancewith a legal cbligation to which the personal (formation controle fs sublet (2) The processing i neceszary to protct aly important interests ofthe data subject, neu ie and healt {o) The processing is necessary in onder to respond to national emergency, to comply with the requirements of public order and siety, oF fll functions of public authority which necessarily cues the processing of personal data forthe ulliment of its mandate oF (The processing is necesary forthe purposes of the lgtimate fterests pursued by the personal {nfermasion controler o by a third party or parties te whom: the datas disclosed, except where ‘ish ineressareoversiaden by fundamental rights and tres of the dat subjec: which require protection nderthe Philippine Constitution. (Sec: 12) What the rita for tl prods o sent personal inion an peg inortion? ‘The processing of sensitive persona information and pele ifrmation shall be prohibited except inthe following cases: a) Te daa subjct hae given Nc or her consent. specifi tothe pare pH othe processing on 1b the tase of piveged lnformation, all partes tothe exchange have piven their consent priest eracriens guarantee the protection of the senate persona information nd the fe intratin: Provided, tr hat he consent ofthe ata subjects sre nore “Tov orroglan peritn he processing of the senate personal Intomation or the pete {Tre processing necessary io potet he if sh healt ofthe dts subject nother person, and the dna suet to not legally or physically she fo expres ié or her coment ptr to the (a) Tre processing Is necessity to achieve the lawl and noncommercial oojecives of publi Sreiations sd thir srsortions; Provided That such processing remy confined a eats to {he bom fide members ofthese ogartations or thet susoctons: Provided. firth, That the Ssive prsontanormaton are ot Sanstered third pres Provide, fall. Tea eomset of {heat suet wa obtained porto process cessing eS cs othe same is provided for by esting las and rogilations: Provided, That such10, (0) The processing is necessary for purposes of medical treatment, is cated out by a medical Drocioner or a medical trestrien ineittion, ana an adequate level of provecton of personal {eformation is ensured ot (The processing concerns such personal ilormation ast necessary fr the protection of laf rights and interests of natura or legal persons in court proceedings or the establishment exercise ‘defense of egal elaims or ihen provided to goveramentar public authori. (See. 13) Can processing f personal information be subcontracted? "A personal ifarmation controler may subcontract the processing of personal information Provide, Tat the person inlrmation captrolier shall be responsible for ensuring that proper safeguards fare in place to entre te confidentiality of the personal Information procested, prevents use for Unauthorized purposes, and general, comply withthe requiremens of this Act and other laws for facessing af personal information. ‘The personal inorriation processor shall comply with all the Fequirements ofthis Atandother applicable law. (See. 14) Can controllers he compelled to dslose privileged information? ‘No. Personal information controls may fveke che principle of privileged communication aver priviaged information that they Lawl contol or process. Subject To etsing laws and reguasons any Evidence gathered on privileged information sinadesble. (Se. 15) Watare th hs ofthe at sujet? ‘The daa subject ented (2) Seintormed whether ertna Information pertaining him oer sal be ae being have been prose (0), Be farsbed te information Indeated hereunder before the entry of lo her fersona infrmson into te processing sem of the personal informa con oa he next bractilopportuniy i fi) Description of he persona information abe entered int the system; {2}. Purposes or which ny are bel or aetobe processed {3}. » Scopeane:methoa the personal nfermaton processing, {8) Theracipentsor cases of recente fo whom ey are oF maybe dsclosed {5}. Methods tied for automstad access fe are b lowed by the data subject, ane the ‘Seen to whlch such access authored: {o) ‘Tretia ae contact dts the pero inrmaton conta ors represent (9)... reper Jor which tne itrmatign be red and {tthe tstece of thir ght eto access, correction, ax wel asthe right co loge a Compan tetore se Cmmssion fy information saple ordcarto ade the at sje on these mater shall nat be amended thos peor notation of dat subjects Provicet, That the notation under Stbseson (2) shal ot appty soul the personal information beveeded pursuant ta subpoena oF ‘rhe theclection and progning a fr obvos prposs ncuding whe ts aces or he TRrformance fori feadon enact or service or when necessary ordeal in the cote Gran employeremployeteitansip, between the calecior aod te data subject. or when the tnormatonisbengcolered a proces asa eu of pl obgaton: {e)__Ressonale seat pon demand the lowing {i} Gontetsothisor her eraonal information tat were processed {2} Sources tom which personal formation weaned: Nemesan adaresse a eiplent he persona information: Manerby wbich si data were protease Reasons lor the dase o he personal lemation co rcplnts {hraon gr aiomatea proces where the data wl or el tobe made a the sole bass or any decison sigan ates or wer eta subjects Dat ents or her pesonl information concerning te daa sujeck were is cess he nation onan ony an acres he para inormaion conte (©) Dipite the inaccuracy or error im the perso information and have the personal information ‘aptroler correc immediately and accordingly. unless the Fequest vexatious or otherwise “unreasonable Ifthe personal information have been correcte, the personal information controller ‘Shall ensure the acces of bot the new and the eracted formation and the simukancous Feecipt ofthe new and the retract information by Fcipens thereof: Provided, That he third parties who have previously ecelved such processed persona narration sal be inlormed of is Tnaccuracyanditsrctfeaion upon reasonable request ofthe data subject: 6) Stspend, withdraw or order te blocking, removal or destruction o his o her personal information| irom the persona information controls Hing system pon discovery and Substantial proof that the. personal information are incomplete, outdated, ase, unlawhly obtained, sed tor ‘Unauthorized purposes or ae no longer necessary forthe purposes fr which they were collected inthis cae, the personal Information controller may notify third pares who have previowsly receive sch proceswed personal iormaion ane(0) Be indemnitied for any damages sustained due to such inuceurate, incomplete, outdated, tase, ‘niseily obtained or nauthorired use of personal formation (See 16) However, the above isnot aplieable ithe process persona information ave used only for the reeds of seentic and stasaeal research and, of the basis of Such, no aes are caied oul and no ecisions ae len regarding the data subject Provided, Tat the persona inormaton sal be hid under ‘Sviet confidential and hal be used only Tor the decared purpose. The above is azo ot appleable vo processing of personal information gathered or the purpose of fnvestigations in relacion to aay crmana, {Tominisrcveortaxllahiiies tas sujet (See 15) 11 Whatés the right sw ata portabay? ‘The data sue shal have the righ, there personal information is processed by eletromle means “and na suetred and commonly use format to obtain from the personal iormation controler copy of ata uncergoing procesing im an electronic or structured format. whieh ts commonly sed and allows for Turther use by te data subject (Se. 18) 4ny baring talaga basahin ng opi na te [CORPORATION CODE Corporate Name 1. Royal Savings Bank was rename as Comsavings Bank, Inc and lato 2s GSS Fly Bank, a The Bank. BPI Family Hank which had been in existence 17 years beac, opposed on the use of Tay bane Is warranted? Yes, a8 te proposed name Is similar or deceptive dr confusingly sila to that of any existing ‘corporation ort any other nar already protected by aw. I here be tentcl misleading or confsingy similar name to ome already registered by another corporation or partnership withthe SEC, the proposed name mast contain atleast one distinctive word ferent rom the name ofthe company already teystred. “The words "GIS" and “tan” are not sullen distinct words Bat difereniate the corporate ‘name fom BPL. While "G31" is merely an acronym ofthe proper nate by which petitioner i identified the ‘ord "theft smpy a lasieaton of the typ of hank tat petitioner vem the cassiaion of te ‘bani as “shrift fs appended to petitioner's proposed corporate name, twill not make the sid corporate ‘ame distinct trom BPX Family Bank cause the later Ts Uikewise aged th the banking business. The ‘overriding consideration in determining whether 2 perso, using ordinary ere and disriminaton, might me ‘ish is the circumstance that both pettaner and te e thesaiie besiness of banking ‘The ikaltod of cont Tn ees fo Or busines fone corporauan are the “samme or substantially the same to that of another corporation. GSTS Family Bank vs. BPI Family Bank, Seplember 25,2015) Jardeleza 2, What the restriction onthe exclusive right o use «corporate namie? ‘corporation nas right the elusive use of corporate name excep i 4. thecomplainant carporation acquired prior right over the use such corporate name: and 2. theproposed name lente ee dentcal oF 5. deceptive or confusing sia to that of any exiting corporation otto sny ater name slrsady protected by ta oF © pate deceptive, confusing or etrary to existing Law. 6318 Family Bank vs. BPI Family baonk: September 28, 2015;) Jardeleza 4. Canam orfanization apply for registration of a corporate name “Samahan ag Manggagawa 2 Hanjin _Shipyar when some the members ofthe Samaan are not employees of te shipyard? No. The propssed name is identi or deeply oF contssingy smart hat of ay esting “experation ot ny eer name sendy prtaced yaw as pate cep conning or cOnrary eee tne plicy undeiying the prohibition aginst the registration of such 4 corporate name Is the svowanee of fat upon the pubic whieh wold have ceasion to cea! with the ety concerned, the ‘aston at legal obligations an dts, and the reetion of eificalis of administration and supervision ter corporations Tevsould be misieaing fr the members of Samahan to use "Hain Shipyara”in snare a could ve the wcong impression that all of es members are employed by Hann. Samahan ng Mangoagawa so Hanjin Shipyard vs Bureau of Labor Relations, October 14,2015; Mendoza 4 Cans corporation sea corporate namie the name of defunct corporation? "Yes. A corporation 1 ipsa facto dissolved as soon as its term of existonce expires. The name of 2 ‘isolved em shall uot be alowed to be used by ocerMems within thre (3) Years afer the approval f the tissoivtion ofthe corporation by the Commission, unless allowed by the last stockhowers representing ot least majrty ofthe atstaning capital stock ofthe fasolve firs, Indian Chamber of Commerce, Phil Inc.vs Fipino tndian Chamber of Commerce inthe Phils, Ine, August 3, 2016,} ardelecaSeoucateJurkdleal Personaliteand Piercing the Veitaf Corporate Fiction 20. Whats the tree-pronged testo determine the application of te alter ego theory? an Control nat mere majority or compete stack contol, but compete damnation. not ony of finances ‘vot policy and business prtice in respect to the transaction atcked so that the corporate enti {stn thitransaction haat the re no separate mind, wil oF existence a its ov: Sten control met have Boe sed by the defendant to comic rave or wrong, to perpetiate the ‘lation ofa statutory or other postive legal dy, o shonest and unjust atin contravention of ai agli anc Thealoresait contol an breach of dusy must have proximataly caused the injury oF unjust loss complained of rata ws. Ng Wee, GR Nos 220926 eta, July, 2017.) Velasco Vira owned majority ofthe Power Merge shares: he I nat only the company president be also ovens ‘374996 out of 375,000 oft suerte apa stock The remainder was lt for the nominal corporstors ‘ole business. The reported address of petitioner Virats and the principal office of Power Merge are even ‘ne and the same Power Merge never operated $0 perorm ts business functions, ut forthe bene of ‘Virsa, speccally, to ful his obligations under the Waiver and Quitlay. Can Virata then be held to [answer for itis ot Power Merge Corporation? "Yes. A corporation is an entky separate and distinct fom its stockhelders and trom other corporations to which fe may be connected. Bu his separate and distinct personality of corporation is ‘meray a fiction crested by law for convenience an to promote jstice. When te nodon of separateyardical personality fs used (2) to defeat public convenience, jostify wrong, protet aud ot defend crime; (2) as 2 Eevie to defeat the labor laws; or (3) when the corporation is metey an adjunct a business condul oF an ‘iter ego of another corporation, tal separate personality ofthe corporation ay be elsregarded or he vel ‘ot conporate eon perced ina ve Ng Wee, GA Nos, 220926 eal. July, 2017, Velasco ‘What do you mean by “acing in bad or with gros nepligence in directing the corporate als"? Bad ath imports a dishonest purpose or sme mora obliquity nd Eonscovs doing of rang not simply bad judgment or egigence Iemeans breach af a known duty traugh some motive or interest Fi tll partes ofthe nature of fraud. Piercing the corporate vali ofder to Rol. corporate officers ‘ersonaly able forthe corporation's debts requires thatthe bad ath or wrongdoing ofthe director must Bettas cet and convincingly as had ah never presumed. Plomeer Insurance Surety Corp 8. ‘Morning Star Travel & Tours, Inc, uly 8, 2015;]-Leonen ‘Cantie writ be enlorces agains the olicers who were ot pleaded! ‘Yes Thevellof corporate son can be pleted, and responsible corporat directors anoles oF even a separate but related corporation, maybe pleaded and els answerable sliarly na labar case, ‘rem after final judgment an on exection, 20 ng 95 itis established that sach persons have debberstely ‘ed the corporate Vice to unjusty evade the fxgment obigation, or have resorted to fraud bad fath or rhalce in doing so. When the sill of a-seporate corporate lean Is used to commit wrongdoing and ‘pproorowsy ete tesponsbiliy, the courts andthe Iga authorities na labor cae have not hesitated to “Step in and shatter the sud Shleld and deny the ual protections to the-offenting party even afer fina Icgrent. The key element the presence af fraud, malice or bad faith. Bad faith doesnot connote bac cgment or negigence but imports dishonest purpose or some moral obliquity ané conscious doing of ‘orang trans breachof aknown duty though some moive of intrest orl wil partakes of te nature ‘ol iraud, Guillermo vs Uson March 7, 2016;]Peratia ‘Canstachoo secure loans third persons? No Ad an edatonalinstistion, UM may'net secure the loans of third persons Securing loans of +r persons ios among the purposes for hich was established. The mortgage contracts executed do Shot bind UML They were executed without authority from UM as these were found to be spurious oF nn cee corporations are artical ences granted legs! personales upon their creation by thelr “ncoeporaors in accordance with law Unie mataral persons they have no inherent powers. Third persons Geng wt crprscons canon nue tat corpora ate pores up ose peo ean ‘with eomportions to determine thelr competence ae expresiy defined by the law and their articles of Incomporaton, ‘eorporstion may exerts is powers only within those deintions. Corporate acts that are outside those express definitions nder the lw or articles of incorporation or those ‘commited outside the abject torwhich «corporation screatec” are ultra vires. "Tne only exception otis le when act are necessary and ncdental to carry out x corporation's purposes, an fo the exercise of powers conferred by the Corporation Code ang under a corporation's hielo incorporation. Univers of Mindanao, Inc vs. BSP, January 11,2016, Leonen ‘Whats aceation? Ratlfication sa voluntary and deliberate confirmation or adoption ofa previous unauthorted ac. It converts the unauthorized act an agent ia an act ofthe principal cures he lek f consent athe teof the execution of the contract entered into by che representative, making the contract valid and enforeable No act by UM ean e interpreted as anything close to ratification Iwas nt shown that issued 3 resolution raving the execution of the mortgage contracts. fe was ot shown thal recelved proceeds of the loans secured by the martgage cntract There wat also no showing that eceved any consideration forthe execution of che morgage contract It even appears that petitioner was unaware 0 the morgage anracts uni respondent notifies io is desire to foretiose the mortyaged properties ‘Ratieation must be knowingly and voluntary dene. UN's ack of knowledge about the mortgage ‘executed ints name peclodes an interpreta that there was anyexfetion oni part Acts a an aticer| that are not authorized by the board of diectors/trstees don bind the corporation unless the ‘corporation ratifies the acs o hols the ofcer out as a person with authority to transact on is beball Untversity of Mindanco, mvs. BSP January 11,2016 J. Loonen 1 Wharare che swo 1ypes ef authorities conferred upon a corporate oftee or agent in dealing with third persons? ‘These are actual authory and apparent authority. Actual auznonity ean elther he express or implied Express actual authority refers to the power eiegate to the agent by te corporation while an agen’ imple auhonty can be measured by Bis oF her Dri acts wien have been raed by the corporation cr whose Denefie have been accepted BY the corporation. ‘On the other hand, apparent authority 4 hased on the pineple of estoppa. If may also be ascertain throug (1) the general manner by which the corporasion holds out an aicer ot agent 3+ having power to ato in ther words, tne apparent authority with which cates hi actin genera ot (@) the acquiescence in his acts of 3 partclar naire, wth actual or constructive knowledge threo, ‘whether within of without the scope of hi onary powers ‘Apparent authority is determines by the acts of the principal and not by the acts ofthe agent. (Calubad v.Rlearcen Development Corp, G.R No. 202364, August 30,2017, Leone 12 Rcarcen was 2 domestic corporation engaged in renting aut realestate It. was the registered owner of a parce of land. I's president, Stary, sting in behalf ofthe corporation, 0k ai loans and smite the tle to the tand to Calubad as collateral. The loans were noe paléFesulting tothe foreclosure ofthe ‘origage:Ricareen claimed was not aware ofthe ransaconsiaken. "Can the corporation be Held ‘able tr eketoan? ‘Yes. It as within Mariym's scape of authority 1 for and enter ito cnteacs in Rcaree's Dbehal Her broad autharty rom Ricsren can he seen wt how te corporate secrecy ented her wth blanieyet signed shects of paper tobe Used at bar discretion. She aso had posession of the owners dupieate copy ofthe anette covering the property margaged to Calubad ‘aldbad could nt be faulted for camtnaing to ranst with Marlyn because Riearcen clothed her with apparent authori. lt appeared that Riateenslcers knew othe morgage comtrats ener nto ‘Marin in Riaroo'sbehaifas proven By the sued BDO checks as payments fo the monthly interest and the principal loon. Club, as an tnnocent thin party dealing in good faith with Maniyn, sbould not be made to fuffer because of Rcarcen's nogigoneh sn conducting ke own Dasinert afar. I 3 private Corporation intentanally regent eather ts oicers with apparent power to peor ats fri the ‘orporation wil be estopped to-deny that such apparent authorty Is real. as to innocent third persons Seating in good faith with sueh afcers oF agente Calubad vs. Ricarcen Development Corp, GR. No 202364, August 30,2027, Leonen 13, tent ane Schulze were tasked withthe establishment of 4 Phiipine subsidiary of Tradition Asia to be ‘nowt as Traction Phiippines “Tradition Paiippines wae reystered withthe SEC i lent and Shao, among aches armed as ncerporaors and iret nis Ailes of Incoeporation ge 0 Vilaion (lormerty Prescent an Managing Director of Tule) and Chuldan (formerly & member af “hues Woard of Directors) wore charges sth ssng thet former postions in Tlltt to sabotage sid amgany by orchestrating the mass resignation of is entre brokering sa in order for them to jin “Fragiion Poiippines They violates Sections 21 and 34 of the Corporation Cade which made ther cn ender Section 144. Would violation Sections 31 abe! 84 cary erin ably? TNO. The lack of speci language imposing criminal xbity i Sections 81 and 34 shows lepleiator {mento limit the consoquences of thelr lation to the evil ales mentioned thereln. Had It Been the {mention the drafters ofthe law ta define Sections 31 and 24 as olenses they could have easly Wntuded Sma languages that found i Section 74 ‘Under the rule o ei, whenever the court i faced with two possibie interpretations a 3 penal statue, one that is pejucitl tothe accused ané smother tat avarabe t hi, the rule calls Tor the ‘Aopion a an interpretation which is more lenient to the accused. lent vx Tullete Prebon (Pils) I, GR. ‘Nas. 189158 and 189530, January 11,2017, J Leonardo-De Castro Disposition and Transfer of Shares 14 Comlea! acts be ratte? ‘Na. Subsequent ratification mace by the stockholders dl nat cute the substantive item, the elec having set im tthe time th void act was done. The detect acs int the very authority ofthe persons15. who mace the cll or he meeting egal acs ofa carpratcn which contemplate the doing oan act which ‘Scontrary to law, moras or public order, or contravenes sve rules publi policy or pub uly are void ‘They cannot serve ae bass tors court actin, nor aequlre val by pertormance, atieation oF estoppel. "distinction should be made between corporate ais. of contracts which reel and those wich are merely ultra vires. fhe former contemplates the doing ofan act which are contrary 10 lat, moral oF public policy or public dy and are vod. They cannot sere as basis ofa court action nar acquire vay by performance, ralifstion or estoppel Mere ultra vires acts, on the other hand. oF thse which are not legal fr void ab initio, but are not merely within the scope of the articles of incorporation, are merey voldable ‘fndmay become binding and enforceable hen rated by the stockhadars. Bernas vs. Cinco, July 1, 2015; Peres Would inbertance of she shares of stock automatically afford an her the rights of a majoriy stocker? No. Under Se 63 al transfers of shares of tock mst be registered in che corporate books fn order to be binding onthe corporation An owner of shares of stock cannet be accorded the rights petalning toa $ocknlder- sach ae the right ell fora meeting andthe right to ve or he voted for = i hisownership St such share snot recondes nthe Stack and Transler Book. FS, Velasco Co, Ine. ws: Madrid November 11,2015; .Perias- Bernabe ‘Blghtoonspect Records 16 w. 28 ». ‘Ongico, member of EMTODA, learned that EMTODA's funds were missing He requested copie ofthe ‘Association's documents pursuant to his right to examine recorés under Section 74 However, Singson the Sceretary ol BHTODA. deni his request. Wills complaint or violation ofa stockholde's ight to examine ‘onporate records under Section 74 prosper? ‘Yes Te proveany violation under the alorementiontl provisions tis necessary that: | a director, trustee, stockholder oF member has mace a prt demand tn-vnting for 3 copy of fexcerpis from the corporations records or minutes; b.—ny alice or agent ofthe concerned! corporation shal refuse to allow the said recto, cruste, Socktoier or member ofthe cporstion fo examine and capy sab excerpts ‘cues reals mage pursuant fo a reslstlon or order of tae BOD, he diy under this section Forsuch action sal be imposed upon the director, rusts who voted for such refs and 4 ehere the acer or agent ofthe corporation ses up the defense tat the person semanding to ‘Gumine and copy excerpts from the Corporion'sreords-and minutes has properly used ay Information secutes through ay prior examination of the records or riguts of such corporation tr was not acting in GF ot for 8 leita prpose In mating his demand, the contrary Must Be Shown oF proved Roque vs: People, G.t.NO:211108, june 7, 2017, Tijam cappears that the registration of BMTODA as.e.corporayon with che Skt was revoked. What s the effect of the revocation on the st? ‘None, The revocation of Corporation's Cericate of Registration doesnot automaticly warrant te extinction ofthe conporation ela tat ierights and lables are Ukewisealtogeher extinguished, "The termination ofthe hie af furdialentiy does not, by Kel, cause te extinction oF dination ofthe rights and lables of such ent nar those fis owners and creditors. Roque vs. People, GRNo. 211108 June, 2017 J. Tham i he resent fat crn conn se on for proving ob’ saeolng na congue A suckerfict srma lace rence th ler i hare he cretion expe pen of eesti remington cane nsec omnerp. Acree Laistee dy te per ontsenathe orange seen he oct ac ate raoas ee ace i deta ot scene crpectn bn were eres be hers sesh comeraton hs rp oe sae rpc ery a ne Ripe sch ownership presse emt teen he oerson athe nase a : ian area's sare nsec respon sean arener te “signers raat Clg ny 292015 1 ersamin hat thar sick nd rant bok S18) ‘tnx inc cua erence mais anthings ordinal ae sould be writen iter, erp enn ay bcd sappy none ncr ream sme, eotoarbetnch cn Asckand ter whose wc ar he nae ees Ser ecle ange upabetcaby fe nae pa gion a tock or wach Stetepton tbe me, athe date of pament tees stereo evry aenton seo Tasch taeh mace’ ete teet soy ano esa ich ter ee ay be rth br A ck sn user beak peer mee ot peso rp an crc nei pron he an en scr sho saan te vrs crore se sonnet shown ox corr o See ans air: Hwee sh te ‘eae ser carports cre nt nyse plc an ha oc xt dct lt aes anus wach rian ae Sse wen here na genera 720, a. Ea a 2 held thatthe records and minutes ofa corporaion are not conclusive even against the corporaten but are prima lacie evidence ony, and tay be upeached or even contradicted by other competent evidence, Ts, [aol evicence may be adie to supply omissions im the records or expain ambiguities, o contrac, such record. Insigne vs Abra Valley Colleges, In. July29, 2015; .Bersamin {sacorporateseertary mandated to record attachments in the sek and transter book? Ne Only abso Wansfers of shates of stack ae ruled fo he ecorde inthe corporation's stock and tanster book inorder to have force and fle: a gaint third persone Attachment of hares are fol considered "transfer" and nee! not be recorded in the corporation stock and transfer book. Chattel ‘orepage sver share stock ed not be reitered in the corporations stole raneer book nash as cate! mortgage over shares of stock dacs not Involve a "transfer of shares” and that only absolute {tanstersofsharesof stock ae request tobe recorded i the corperstion= stack an raster book in ardor tohave"Yorce ad elects against third persons” A transer isthe at by which che owner of thing divers to another wit the igen a passing, ‘the right which he has no the latter an hats morgage nat within the meaning of such term. “The requirement thatthe transter shall be recorded nthe books ofthe corpation to be valid as against thir petsons has reference oly to absolute transfers of abselute conveyance o he ownership OF {tito a share” Ferro Chenueals vs Garce, October 5,2016:). Peres Whats the procedure to etee valid transfer of stocks? {a) there must be delivery a the stack certificate (0) the cetiate most be endorsed bythe owner for his atomey infact o other person egaly authorized o male the transfer; and (e)o be val agalst ‘hird pares, the wransfer must be recordin he books ofthe corporation. Cis the deiner of the cetifeate, coupled with the endorsement by the owner or he duly authorized representative that is the operative act of transfer of shares fam Whe orighal wer to the transferee Ina sale of shares at toe, peal deeryof a tok certieate none othe essential region forthe transfer of ownership of the stocks purchase The delivery contemplated in Section 63, however, pertains tothe delivery of the certificate of shares by the transferor to the tranaere, that from the ‘original stockhoier named in the eertfeste tothe person or entity the stockholder was transfering the Shares o, whether by sale o some other vald form of absolute conveyance of ewnersp. Shares of stock nay be transferred by delivery fo the transfer of the cerieae propery Indorsed Tie maybe vested In the tarsfree by the delivery ofthe duly indorsed certMeate of stock Teng vs SEC February 17, 2016.) eves Is surrender of the ceriicates of stock + requisite efor registration ofthe unser may be made inthe ‘corporate books and forthe issuance of pew ceifeates mite stead? 'No. Section 63 ofthe Corporation Gade prescribes the manner by which # share of stock may be transferred. The pravision on the translor of sates of stocks contemplate no reset 3 19 wham Ey ‘may be transferred or sol. As cwner of personal property a sharehlder sat liberty to dispose of them in FRvor of whomsoever he plesses, withast any aeration inthis respec, han the nea! provisions aw ; ‘The night of 9 transletee/assignee to have socks transferred to his name Isa lnerent Fight owing fom his ownership the stbeex A carporation cannot create restrictions in stock awsees. 19 teanslerring stock he secretary Of 8 conporation acts im purely minstealexpaciy. and does hot ty {0 decide the guestlon a owmership. ‘Neverthees, tobe valid against third parties and the conporation, the transer must be recorded oF registeres i te Books of corporation. Teng vs SEG February 17,2016.) Reyes \hy i reistration of the ranstér necessary? ‘he, enable the transferee to exercise all the rights of 2 stockholder twe, to inform the _goeporaton of ay change share ownership so that tam ascertain the persons ented othe rights and “Subject o heats af stoctholder and thre, to avoid Netiou or auduent transfers. “=> The only sale way to accomplish the hypothecation a share of tack fo the transferee to insist on “theesenment and delivery ofthe orfcte si to ota the transterof the Legal ile Bln te books ‘ot theorporation by the cancellation ofthe cotieate andthe issuance o 2 new one oie pam fegtaton atthe tranter tn the books ofthe conporstlon the transferee may now then ‘exersae al he igh ofa stockholder, whic nlade the right to have tok transferred to hs tame. Prom the corporation's point of view. the transfer Is no eflecve unl His recorded. Unless and unl such ‘recording mae, the demand forthe fsance of stock rerfestos to the alleged tanalere has na el basis The stock and ranster books the basis for ascertaining the persons ened tothe rights and subject to the laiies ofa stockAoider: Where a translree ts not yet recognized as Stockholder. the corporation lsunder no specie legal duty to ssue soc cerseates nthe transferees mame Teng vs SEG February 17, 2016 J Reyes ‘Whats the procedure forse issuance of new cericates of stock inthe name of transleree? et the certteates rst be signed by the president oF vice-president, countersigned by the secretary assists secretary, and sealed withthe seal of the corporation. Second, delivery of the celticae ts an essen element of Iesuance TRa. te par vale. a5 to par value shares, of the fll25, 7. 28. 2. a. sibscripton as to no par value shares, must first be fully pad. Fourth, the orginal cerincate must be ‘Surrendered where the person requesting the lstance ofa certicatesa transferee froma stockholder. “The surrender ofthe original cericate of stock s necessary before the fsuance of anew one so thatthe od certificate may be canceled. A corporation snot bound and cannot be required to isue «new Certificate uniess the original ceraieate fs produced and surendered, Surrender and cancelation of the old ertifieates serve to protect oe only the corporation but the leptimate shareholder andthe publi as well SS itensures that there is ony one document covering a pacar share of stock: Teng vs. SEC February 17,2016) Reyes ‘ita action for injunction fled by a corporation generally eto prevent the enforcement by a stockholder of is right inspection? "No. The Corporation Code provides that stockholder has the right to inspect the records ofall business transactions of the corporation and the minutes of ary meeting a reasonable hours on business {ays The stockholder may demand in wing fora copy of excerpts from these records or minutes, at his ‘expense, The righ to Inspect nder Section 74 is subject wo certain limlations. However, hese mations tre expressly provided as defenses iy atone fled under Section 74. Thus, corporations objections tothe Fight to inspect must be used as defense ‘The peion fa pre-empive achon unjustly intended to impede and restrain the stockolders! rights. a stockholder demands the Inspection of corporate books, te corporation could refuse to heed to ‘ich demand, When the corporation denies the stockholders of such right the latter could then go to court fd enforce their rights. Its then thatthe corporation could st up its defenses and the reasons forthe Genial of such right. This, the proper remedy svallabe forthe enforcement of te right of inspection 1s “undoubtedly the vr of manda tobe filed by the stockholders and nota pettion fr injunction fled by ‘the corporation. PhillppineAssocated Smelting and Refining Corp. vs. Ldm, October 5, 2016 J.Leonen Does a stockholder sil have the ight t Inspect after the expiration ofthe corporation's er? "Yee The corporation continues tobe a body corporate for three (3) years after its dissolution for purposes of prosecuting and defending sults by and against it and for enabling it to sete and close its "ita culminating in the dposiin and distribution of is rewaining assets The termination ofthe ie of & juridical entity does not by ielf cate the extinction or diminution of the rights and lables of uch entity for those of fr owners and ereditors. Further, Sections 122 and 145 ofthe Corporation Code explicitly provide for the continuation ofthe ‘body corporate fr thre years after disoltion. The rights and remedies against, or lables of the offers hall nok be removed or impaired by reason of the dissolution of the corporation Corollary then, a Stocktoiers right to inspect corporate records subsists during the period of iqldation. Chua vs. People, ‘August 26, 2016 J. Reyes Whatare the requirements fora stockholders specal meeting tobe valid? ‘Certain requirements must be moet with respect to notice, quorum and place, One of the requirements fs 2 Previous written notice sent to all stockholders at least one (1) week prior to the ‘Scheduled meeting tales otherwise provided inthe bylaws. Guy vs Guy. April 19,2016 J Sereno ‘Was there compliance withthe notice requirement when mal was sent in time but not received in tine by ‘he stocked? “Yeu No irregularity exists Inthe maling ofthe notice caling forthe special stcknolders meeting since i abides by whats sted in the by-iws. Date of actual reclp by the adresse is immaterial. Guy ‘Gay, April 19,2016}. Sereno Wo is a“sockholder of record"? "A person who desires to be recognized as stockholder for the purpose of exercising stockholders _rght must secure standing by having his ownership of share recorded onthe stock and transfer book. Only ‘dee wise ownership of shares are duly registered in the stock and transer book are considered ‘Aacilers ofvecor and are etd to all gh of stockholder Gay vs. Gey, APH 19, 2016 J. Sereno i of shares whose shares are unrecorded » stockholder of record?. What Is the purpose of “Nb! itt registration is accomplished, the transfer, though valid between the parties, cannot be etiectiveas against the corporation. Thus, the unrecorded transferee cannot vote nor be voted for: The purpose of ristation {s two-fold to enable the transferee to exerise al the righ of stockholder, Ficloding the Fight te vote and tobe voted for, and to inform the corporation of any change in share fownership so that ie can ascertain the persons ented to the rights and subject to the lables of a ‘Sockhlder Until challenged ina proper proceeding, stockhelder of record hasa righ to participate in any ‘eeting: his vote can be propery counted to determine whether a snckcholders' resolution was approved, ‘espite the cain ofthe allege transferee. On the other hand, a person who has purehased stock, and Who ‘Selves tobe rcognizedas a stockholder forthe purpose of voting must secure sucha standing by having the transfer recorded on the corporate books. Until the transfer Is registered, the transferee Is not a Ssockholder bat an outsider. Guy v- Guy April 19, 2016, Sereno ‘Astockolder was noted 4 days belore an election, Is ths valid notice?Yes. The by-laws may pravide « period shorter than the 2 wooks notice provided for by the corporacion Code, due to Whe ise ofthe phrase "unless a dileent period i raquifed by the Dy-aws leafor vs icdican, March 9, 2016 | Reyes 32) | Whatisa meetings what ares requirements? Meeting” applies o every duly convened assembly ether of stockholders, members, directors trustees, or managers for any legl purpose ofthe transaction of business of 3 common interest Ic meetings ray ether be Fegular or special. A stockholder’ cr members’ meeting must comply With the following “Tae moetng mest be hed on the date fixed inthe Uae o in accordance wth ae Prior wntten notice of sich meeting must be sent al sccktolders/embers of recor ‘emus be called bythe proper pay emus be eld a the proper placed ‘Quoruey and wong requirements must De met: lm vs Moldex Land, tne, Gk No. 20603 January 25,2017.) Mendoza 33, Whatis quorum and how sit computed? ‘Aaquorum shall consist ofthe stockholders representing a jority ofthe oustanding capa stock majonty ofthe members in the case of on stuck comporations "Thus, fot Stock corporations, the qorum base on te namber of outstanding wong Stocks we for non stock corporation only Una where seta ing members with ling night shall be counted in ‘determining the eisence ofa quorum. 2 "The bass tn determining the presence of quorum in non stock corporations isthe numerical ‘equivalent of ll members wno ae entitled to ots unless some oter basis is provided by the BY Laws of the corporation. The qualification "with wong rights" simpy recognizes the power of a nomstock ‘corporation to limit orden the right Vote of any ts mem bers ‘Applving the law an Canocor'sBy-Laves, there ate 100 members ina non stack coporation, 60 ‘of whi are members mgood standing, hen the presence ot 50% plus Lf thase members in good standing ‘will constitute 4 quorum. Thus, 31 members in ood standing wil sufce in order to considera meting ‘ald ae regards the presence of quorum, The 31 members wil stray nave texerise hel voting rgh= ‘Accordingy tere was no orn curing the meting considering tat aly 29 ofthe 108 ant bnyyers were present. Lmvs Moldex Land, Inc. Git Ne. 206038, January 25.2017.) Mendoza 34 Cana prony be eleced asdlrectr or ruse? Mo. Wale Moldex may rightly designate presies o representatives he fatter, hosewve, cannot be elected as irectors oF trustees af Condacor Fst the Corporation Coce clearly provides that a director trtrastee must be a member of record of tbe corporation. Further, the power af the proxy = merely to ve. {sig proxy fs nota member tn his oven right Recannot be lected as a crectot ae poe Lm Ws: Mex Land, ine. ER. No. 206088 January 28,2017.4.Mendoza Derivative Sule 35, Whavarethe requirements fora derivative suit prosper? Section Rule the Interim Rules provides The person fing the sule must be a stockholder or member atthe time the acts or transactions subject the ation occurred and the time the ation was le >. He mise hive exerted al reaconabie ellors, até alleges the same sith particulary in the amplant to exhaust all remedies svlable under the articles of incorpo Fules governing the corperstion or parnership oon che rele he deste to, by aw, laws oF € 5 Noappraisatnghts are avilable forthe act or acts complained of an © Tresuttenot a nutance or harasement sit Amg vx. Spouses Ang. Jane 19,2013; JCarpo; also *Pavest mits Golf and Counary Club Ine. vs. FILEState Properties, ne, GR. NO 206643, July 20, © 2016 bDetCasutto 36, Tie tale of shares tothe diferent entitles wore being nlifie va «class /indival suit by certain ‘ockbolders being sgaict the aw They prayed thatthe ene capa! structure be recone. Is the actomby the Sockhlers via class/indivicua sult warranted? "Wo While the stockholders were permitted to seek ell they sould have dane so not in their unique capacity as indivils or ara group of stockholders but place a the corporation sll heeugh 3 Adervative sat. "The specie provisions averted to signiy aleve wrongdoing commited agains the “corporation itsett and at unighely to the stockmnders. A lation a Sections 23 aya 25 of ne Corporation {Cade — on how decision making i vested nthe board of directors and on the board's quorum quirement hres thea deel wae wrongly made for the entire corporation. ot jst with respec 0 aml of ‘rocktoiers, Section 6 specially mentions that a dvetar's of aiee’s ably forthe issuance of ‘Watered steckin violation o Seon 62 tr sada ta the exporaton and ks cretors” not any specie Stockholder. Transfers of shares made in violation ofthe registration raquiremencin Section 63 are mali find thus enable the corporation iotmpgn the transi. Hlorete vs: Foret, january 20,2016, | Leonen ical canal derive sl?8 Individual sits are ed when ta caus faction belongs othe individual stckbolder personally, and note the stockto\ders a8 grip or othe corporation denial of ight to inspection and denial of ‘ividonds oa stockolder. I the cause cf action belongs to group of scackilders, sch as when the rights olated belong to preferred stackholders, a class or representative suit may be Med to protect the “tockhoers nthe group ‘A dorvative sults an action Red by stockholders to enforce 2 corporate action. A derivative sul therefor, concerns a wrong to the corgation self, The real party it Inte is the corporation, not the ‘Mocktlders ing the sot The stockholders are technically nominal partes but are nonetnelss the active ‘persis who pursue tie action for and on behalf the corporation, “The fact that stackolders suffer from 2 wrong dane to O involving corporation doesnot vest in them a sweeping lees a Suen thir own capacity. ‘Wren the object fsa specifi steko or adefinite cass of stocktolders an individual suit class/representatve sult ust be resorted to, When te objec ofthe wrong done he corporation sel or the whole body of stock and property without any severance or distribution among individsal Molders {sa derivative uit that a stockholder must resoreto. Moret vs. Fore January’ 20,2016, eonen A stockholder, Madi Ra a derivative su on hehal of Forest il to compel Fi-state to complete the golf course and country chub project. He allogd tha demand letters were sent to the Board of Dieetrs of Forest Hilebut they di noc heed I Wil hese suice? ‘Note failed to silege with parila i the complaint hat he exerted al reasonable efforts to ‘exhause all remedies avallable under the aries of incorporation, by-laws, or rules governing the ‘orporation that na apprael rights are avable for heats of acs complained of andhat the sts nota tsenee ra harassrent sult Although the Complaint aleged that demand letters were sent to te Boar of Directors of Forest Hills and tat these were needed. these allegations wil ot sufce. Forest Hills Golf ‘and Country lab Inc vs. F-Estate Properties Inc, GR, No 206649, July 20,2076 J Det Casto Merger and Consolidation * 40, What rete eftecs ofa merger! Uncer Se. 0, these ate at Se constuent corporations stall become 3 single corporation which, incase of merger, shall be the surviving corporation designated inthe plan of reer ad, Incase of consolidation, stall be the consolidate corporation designated i he plan of consoiation, '»_Theseparate existence ofthe constituent corporations shal cease, except at ofthe surviving oF {he consolidates conporation a <9) The surviang o the consolidated corporation shal possess al Ue eights privileges, mites and powersnd habe sublee foal the des and lables of a corporation organized under ths code: $ 4 Thesurviving or the consolidated corprason shal thereupon and thereater possess all che hts, priges munities ad fanchises ofeach afte constituent corporations nd all property, rea br personal, und al receinbles due on whatever account Inca substrpsions fo shares and ftherchosesin action and alland every other interes oor belonging a oF duet each constitient Corporation, shall be-taken and deemed Yo be traslerved to and vested in such surviving or ‘consolidated corporation without futher at oF dee ‘e_Thesursving othe conslldatedtorporation shal be responibie and lable for ll he Hablties nu ablgationsot each of the cnattuen corporations Inthe same manner as if ach surviving or onsoldate’ corporation had itself incurred such Vibie o obligations; and any claim, action or ‘proceeding pending by or against any of uch consent corporations ay be prosecuted by oF ‘Mainst the sundving or conslated corporation, asthe ease may be. Neither the rights of creditors 2 norany len upon the property of any of suc consituent eorporavions shall be impaited by sich © Ieiger or comlidation. Phillppine Geothermal, Ine. Employees Unton vs. Unocal Phils Inc. © September 74, 2016,| Leonen leat she ester of merger onthe employees ofthe absorbed corporation? vest Nabe. The surviving corporation automatically assumes the employment contracts of the absorbed Such thatthe absorbed corporations employees become pat ofthe manpower complement of fhe surviviig corporation. This cqusivon of ll asset, Interests and lade ofthe absorbed corporation ‘necessaily includes the rights and sbligations of the absorbed corporation under its employment contrac CConsequemy the sorviving corporation becomes bound bythe employmen: contracts entered inc By the Sbsorved corporation These employment contracts are not termined ‘They subsist uniess thelr fermination allowed by aw Instr they are not ented separation pay. Phlippine Geothermal. nc. Employees Union vs. Unocel Pils, Inc, September 28,2016, ]-Leonen ‘Cormoration Sole a. Spouses Cruz ave stockholders and oficers of Milla Shoes Inc a clase corporation. Cam their personal ‘properties ae being made abe for corporate indebtedness? ‘No. The doctrine of separate juridcal personality provides that 2 corporation has a legal personality separate and distinc rom that of people compesing fe Stockvolders ofa Corporation enjoy the nPrinciple of ltd ably the corporate deb not the debt ofthe stockholder. Thus, being am ofcer ora ‘Stockholder af corporation does not rake one's property te property alsa the corporation, ‘Aso, ony Section 100, paragraph Sof the Corporation Code expt provides for personal lity ‘of stockholders of close corporation vi: See 10DAgreements by sackvolders ~~ xe = sax To the eatent that he stockholéers are actively engaged Inthe mianagement ar operaion ofthe businem and affairs af a close corporation, the stockholders shall be hel to tt Nduciary ties to each ‘ther and among therseies Sa stockholders shall he personally Hable for corporate torts unless the corporation has abtated reasonably adequate ability insurance ‘The requirements unde te sid provision were not met Bustos vs: Mlllans Shoes, Inc, G.R. No. 185024, ‘Aprit24, 2017,} Sereno SECURITIES REGULATION CODE Powers ofthese 1. “Ate separate notices and hearings for suspension ad revocaion of reqlstatio a secures and permit > ‘them to the public requires? No. Due notice simply means the information that mst he ven of made to a parislar persn or to the pubite within 3 legally mandated period atime so that ls recipient wl Rave the opportunity 0 "respond to situation orto allegations that fect te india’ or publics eg rights or utes. The SRC {id nat provide for any separate notice f hearing to revoke there w:s already substantial compliance when ‘URPHI was given opporcunty ta be heard. SEC vx, Universal Righifield Property Holdings, Inc. (URPH), July 20,2018:) Peratea 2 Isthe revocation of registration of securities and pert to el ther to the publi exercise ofthe SEC's ua jical power oro regsltary power? itis regulatory power. “guts dca function” s 9 term which applies tothe action, dscretion, ‘, of public adminisratve officers or odes, who are requires to investigate fats, or ascetan the ‘estence of fac, hold hearings and draw conclisions fam them, asa basis fo har ofical action and to feverise discretion ofa Juda mature. Although Section 1.1 of the SRC raglfes de notice and hearing, before issuing an order of revocation, the SU does no perform such auasiudiial functions and exercise lscretion a jadical nature inthe exercise och regulatory power I nether sets actealconteeverses| Involving rights which are legally demandable and enlorceable, nor adhcicaes private rights and ‘bligatons im cases of adversarial nature Rather, when the SEC exerises Is incidental power 0 conduit “Teminisrve hearing and mace decisions fe ane son the cours te performance ol regulatory and Jaye eoforement incon. SEC vs Universal Rightfeld Property Hollings, Inc (URPH), Jub 20,2015; Perot 3. What doyou mean by Howey test? (54) "The Howey test, named after the landmark ease of Secures and Exchange Commission v. Wj Howey Cs used to determine whether or not the security elng offered takes the for ofan investment contrac Under the Howey test he flowing must coneu lor an investment coneac test (1) canta, transaction or aches’ (2) am investment of money, (3) investment made In a common enterprise: (4) ‘epectation of profits and (5) profi arising primarily fom the eller of others Viraua vx Ng Wee, GR Nos. 220826 etal, July $2017, J. Velasco Songayon alammo.a? Edveow. © 4. Wincor was sling to the public shares in the Power Merge credit inthe for of investment contract |Wincorp wold matehanvestors wich pre-screened corporate horawers it nee of inaneiaasssance All the monies infised bythe Investors are pooled im an account maintained by Wincor. The investors were [promised that they would earn substantial retumsfrom their investments. Is there a proper investient Eontracinthe ease? ‘Yes The investment of money, pursuant toa contract, is made in 4 common enterprise. The ‘vests expect pre without doing snything other than to imves. a the pris would aise fom the ‘tions of Wincor in matching the investors with che borewers. Wiraka v3. Ng Wee, GR. Nos. 220926 ‘a July 5, 2017, 1 Velasco nwen-coeporate Gontensersy 5. -Whatare the elerents of a intra-corprate controversy? "The folowing ements mst concur (a) the status or relationship ofthe partes, and [by the nature of the question that ithe subject oftheir controversy. “The frst element reguites thatthe controversy mist arise ou of a-corporate of partnersip relations between any or allo he partes and the corporation, partnership, o association of which they are ocknoliers, members ot associates, between any OF all of them and the corporation, partnership oF ‘elation of which they are stockholders, mienbers oF astochitesrerpectivey an "bebween Such onporation, partnership association athe State Insoar as ve concen the inatidual franchises. The ‘Sicond element regres tbat the este aman the partes be nrinsicaly connected wi he epulation of 2the corporation. IF the nature of the controversy involves matters that are purely lvl in character, recess, the case doce aot inva an inrs-corporste controversy "This, to be considered as a intra-corporatecspute, the ese (a) must aise out ol intra-corporate or partershiprelaons and (Othe mature ofthe question sujet of te controversy must be such ts inernsclly coonecte! with the regulation ofthe corporation or the enforcement ofthe parties nights ane tilgntions under the Corporation Cade and the incr regulatory vules af the corporation gure ¥. PQB+7, IG 688 SCRA 242, January 9, 2015, De Casto, Vitaiano fed, im his capacity ae stockholder In tehatf of FQB, In, a complaint for inea corporate {iste injunction, inspection o corporate books and records against respondent Bocobo, 2 member ofthe board of FQS*7. Vitalin learned of # Genera Information Sheet indicating substantive changes with espect tothe composition of direors and series o FQU, with Bocodo asthe culprit. During the {nal cabo informe the court that FQBs 7s Certificate of Registration was already revoked for is fare to campy with the SEC reporcotal requirements: What isthe eifect ofthe susequentcissoluton of 3 ‘corporation on af easing Inraconporate dispute, which doesnot cnstitte a continuation of corporate barnes? ‘None. Section 122 ofthe Corporation Code prohibits #dissoived corporation from continuing its busine, but allows ito continae with» nite perstity ih erder to settle nd close ts afar tncTuding Iescomplete liguidation. The dissolution af the corporation simply prombis rom continuing its Busnes However, despite such dissolution. de partes imvalved In te Itgation are stl corporate actors. The isolation doesnot automatically convert the patties into total strangers or change the nea-cerporate ‘lationship. Nlther does i charge nr terminate exiting causes of ales. wich arase Decause ofthe ‘Corporate es bowen the patties. Aguirre» FQB*7, ING 688 SCRA 242, January 9, 2073, J. Del Castle Renato Real was remove from his position a¢ Manager throug Board Resolution adopted by respondent ‘corporation's Board of Directors. Peitoner complained that he 2s neither noted af te Board Meeting ‘uring which sai board resotion was passea nor formally charge with any infacion. He just received from respondent eter stating that he has been erminated trom service. Respondent, onthe oer hand, refutes petitioner's cai of Weal cisissal by alleging that ater peioner was appontes Manager he ‘committed gross acts of misconduct detrimental tothe company since 2000. Iss cismissal an intra ‘corporate controversy? No The fac thatthe parties involved inthe controversy areal stockholders or thatthe partes involved are the stacholdere and the corporation doesnot neessiily pace the dispute within the ab of the jrsdction ofthe RTC. The better pac tobe falowed in Oeterning jutsdicion over acase should be to consider concurrent factors suchas the sats oF relationship ofthe partes or the nature ofthe ‘question haf sujet of tet controversy "“Gorporate aficers are those oicers of the corporation who are given that character by the Ccarpration Cade or by the corporation's byaus. There ae thee specific aces whom a corporation ‘must have incr Section 25 ofthe Corporation Gade. These are the president secrelay an the (reasurer ‘The numberof officers snot limited to these three. A.corporation may have sch ater oftiers 26 may be provided for by ts byte ike, a Bot Ite fo, te vce president Caster auditor oF geperal Manager. $e murber of comporateoficers is thus hnites by ae and by the corporation's Bylaws Respondents clam Ha petitioner was appointed Manager oy virtue of Section t, Article 1V of respondent corporation's By-Law We have however examined the records af hscase and we find nothing to prove that pettoners sppointment wat made pursuant o the above quoted provision of respondent Corporations y-laws>Ne-copy of board reslution appointing petitioner as Manager of any otter document showing that he -was appointed to sad position by action of the board was submited by Fespandenis What ne fond ingtead were mere alegatiogs of respondents in tei various pleadings that petitioner ras appotnted ac. Manager of respondent corporation nd nothing more. Reals. Sangu Philippines Inc. 640:SCRA 67, January 19,2011, Del Castillo. isa domes cove corporation owned bythe Dy-sibtings. DTT alge that Johany C:Dy, an employee ‘in iteMantlla branch, had "squancered cash sales nd stocks" fromthe branch either [or his personal Agee ortiat of Peter C Dyan Ramon C-Dy. To prevent further losees, DTT decide to cosets Monta {ad the doors ofthe branch store weldea shut. However respondents forcibly opened the fesand have continanily deprived # of the use of the same. Is Wis an inavcorporate ‘No. Fist it contains no allegation that the Getendants therein are stckholders of the corporation. “The complaint even denied Johnny asa DTT employee The complain also does na allege thatthe other etendantstheren nave acted in their capacity ae ockholders tn depriving DTT of access to its Monti branch Second, the nature of the controversy doesnot involve an intra-corporate dspate. The complaint for tjuncton asks the RTC to order respondents to caae from: controling DTTT's Monta branch ané alow [DFTtause the same Itdoes not allege that it arose out ofa disagreement between te sockholders. Rather, {he complaint state that Jehan, DIvTs employee, eliced wih covrespondents Peter an Ramon i forcibly opening the Monta branch store and prevensng DTT from using the property ‘Third DTT asked the RTC to (1) proven respondents from physically possessing is branch store: and (2 allaw DTT to have access anc control ofthe bulidng, Newbee nits complaint dié DTTL. ask for a