Professional Documents
Culture Documents
International Travel, Inc. G.R. No. 172954, October 5, 2011)
International Travel, Inc. G.R. No. 172954, October 5, 2011)
NEGOTIABLE INSTRUMENTS
Explain the presumption of consideration in negotiable instruments.
Under the Negotiable Instruments Law, it is presumed that every party to an
instrument acquires the same for a consideration or for value. It devolved upon
the party who claims that there is no consideration to present convincing
evidence to overthrow the presumption and prove that the checks were in fact
issued without valuable consideration. (Engr. Jose E. Cayanan v. North Star
International Travel, Inc. G.R. No. 172954, October 5, 2011)
Who is an accommodation party? What is his liability to the holder?
An accommodation party is one who meets all the three requisites, viz: (1) he
must be a party to the instrument, signing as maker, drawer, acceptor, or
indorser; (2) he must not receive value therefor; and (3) he must sign for the
purpose of lending his name or credit to some other person. An accommodation
party lends his name to enable the accommodated party to obtain credit or to
raise money; he receives no part of the consideration for the instrument but
assumes liability to the other party/ies thereto. The accommodation party is liable
on the instrument to a holder for value even though the holder, at the time of
taking the instrument, knew him or her to be merely an accommodation party, as
if the contract was not for accommodation. (Eusebio Gonzales v. Philippine
Commercial & International Bank, et al., G.R. No. 180257, February 23,
2011)
CORPORATION LAW
Is the Boy Scouts of the Philippines a public corporation?
As presently constituted, the Boy Scouts of the Philippines still remains an
instrumentality of the national government. It is a public corporation created by
law for a public purpose, attached to the DECS pursuant to its Charter and the
Administrative Code of 1987. It is not a private corporation which is required to
be owned or controlled by the government and be economically viable to justify
its existence under a special law. Thus, the test of economic viability clearly does
not apply to public corporations dealing with governmental functions, to which
category the BSP belongs. (Boy Scouts of the Philippines v. Commission on
Audit, G.R. No. 177131, June 7, 2011)
What does the term capital
Constitution mean?
XII of the
The term capital in Section 11, Article XII of the Constitution refers only to
shares of stock entitled to vote in the election of directors, and thus in this case
only to common shares, and not to the total outstanding capital stock comprising
both common and non-voting preferred shares.
thus, clothed the latter with apparent authority such that the parties were made
to believe that the proper person and entity to address was such lawyer.
Apparent authority, or what is sometimes referred to as the "holding
out" theory, or doctrine of ostensible agency, imposes liability, not as
the result of the reality of a contractual relationship, but rather because
of the actions of a principal or an employer in somehow misleading the
public into believing that the relationship or the authority exists. This is
especially true since the company never repudiated the authority of its lawyer
when all the motions, pleadings and court orders were sent not to the office of the
latter but to the office of the company, who in turn, would forward all of the same
to the lawyer. (Megan Sugar Corporation v. Regional Trial Court of Iloilo,
Br. 68, Dumangas, Iloilo; New Frontier Sugar Corp., et al., G.R. No.
170352, June 1, 2011)
How should the Rules on Corporation Rehabilitation be construed?
The Court promulgated the Rules in order to provide a remedy for summary and
non-adversarial rehabilitation proceedings of distressed but viable corporations.
These Rules are to be construed liberally to obtain for the parties a just,
expeditious, and inexpensive disposition of the case. Rehabilitation proceedings in
our jurisdiction have equitable and rehabilitative purposes. They attempt to
provide for the efficient and equitable distribution of an insolvent debtors
remaining assets to its creditors; and to provide debtors with a fresh start by
relieving them of the weight of their outstanding debts and permitting them to
reorganize their affairs. The purpose of rehabilitation proceedings is to enable the
company to gain a new Lease on life and thereby allow creditors to be paid their
claims from its earnings.
The determination of the true and correct amount due a creditor is important in
assessing whether the company may be successfully rehabilitated. It is thus
necessary that the creditor be given the opportunity to be heard by the
rehabilitation court. Hence, even if belated filed, opposition or comment to
rehabilitation should be accepted. (Asia Trust Development Bank v. First
Aikka Development, Inc. and Univac Development, Inc., G.R. No. 179558,
June 1, 2011)
Where should a petition for corporate rehabilitation be filed?
Petitions for rehabilitation pursuant to these Rules shall be filed in the Regional
Trial Court having jurisdiction over the territory where the debtors principal office
is located. (Asia Trust Development Bank v. First Aikka Development, Inc.
and Univac Development, Inc., G.R. No. 179558, June 1, 2011)
When a company has secured a suspension order, is foreclosure of
properties belonging to its stockholders/officers which were mortgaged
to secure the debt of the company also suspended?
NO. These properties are not under the purview of the SEC Suspension Order. PD
902-A vested the SEC with jurisdiction on petitions for suspension of payments
only on corporations, partnerships and associations; not on individual persons.
Private individuals and their privately owned properties cannot be placed under
the jurisdiction of the SEC in a petition for suspension of payments. The SEC has
no jurisdiction over private individuals relative to any petition for suspension of
payments, whether the private individual is a petitioner or a co-petitioner. The
SECs jurisdiction is limited only to corporations and corporate assets; it has no
jurisdiction over the properties of private individuals or natural persons, even if
suspended during corporate rehabilitation, more so, since the prime purpose of
the criminal action is to punish the offender in order to deter him and others from
committing the same or similar offense, to isolate him from society, reform and
rehabilitate him or, in general, to maintain social order. It would be absurd for one
who has engaged in criminal conduct could escape punishment by the mere filing
of a petition for rehabilitation by the corporation of which he is an officer. The
prosecution of the officers of the corporation has no bearing on the pending
rehabilitation of the corporation, especially since they are charged in their
individual capacities. (Jose Marcel Panlilio, et al. v. Regional Trial Court,
etc., People of the Philippines and Social Security System, G.R. No.
173846, February 2, 2011)
Is execution of judgment against the corporation also covered by a stay
order?
All pending actions, including the execution of the judgment against the
corporation, should be suspended pending termination of the rehabilitation
proceedings. Jurisprudence is settled that the suspension of proceedings referred
to in the law uniformly applies to all actions for claims filed against a
corporation, partnership or association under management or receivership,
without distinction, except only those expenses incurred in the ordinary course of
business. (Agripino V. Molina v. Pacific Plans, Inc., G.R. No. 165476,
August 15, 2011)
A stockholder demands accounting of association dues from a
condominium corporation. Is this intra-corporate in nature? Will
foreclosure sale prevent such stockholder from questioning the
assessments?
Yes, this case involves an intra-corporate dispute. Just because the property has
already been sold extra-judicially does not mean that the questioned assessments
have now become legal and valid or that they have become immaterial. In fact,
the validity of the foreclosure depends on the legality of the assessments and the
issue must be determined by the court if only to insure that the owner was not
deprived of her property without having been heard. (Chateu de Baie
Condominium Corp. v. Sps. Raymond and Ma. Rosario Moreno, G.R. No.
186271, February 23, 2011)
What is the applicable term of office of the trustees of an educational
stock corporation?
Section 108 of the Corporation Code determines the membership and number of
trustees in an educational corporation. The second paragraph of the provision,
although setting the term of the members of the Board of Trustees at five years,
contains a proviso expressly subjecting the duration to what is otherwise provided
in the articles of incorporation or by-laws of the educational corporation. Hence, if
the by-laws of such corporation provide for a term of two years, such term shall
prevail. It follows that the officers appointed by the trustees should also serve for
the same term. (Petronilo J. Barayuga v. Adventist University of the
Philippines, et al., G.R. No. 168008, August 17, 2011)
Are employment contracts automatically assumed by the surviving
corporation in a merger, even in the absence of an express stipulation in
the articles of merger or the merger plan?
Yes but only after the SEC has approved the merger. However, nothing in this
Resolution shall impair the right of an employer to terminate the employment of
the absorbed employees for a lawful or authorized cause or the right of such an
employee to resign, retire or otherwise sever his employment, whether before or
after the merger, subject to existing contractual obligations. (Bank of the
Philippine Islands v. BPI Employees Union-Davao Chapter-Federation of
Unions in BPI Unibank, G.R. No. 164301, October 19, 2011)
SECURITIES REGULATION CODE
What is a public company under the Securities Regulation Code? Is this
limited to companies whose shares of stock are publicly listed?
Subsections 17.1 and 17.2 of the SRC and Rule 3(1)(m) of the Amended
Implementing Rules and Regulations of the SRC, it is clear that a "public
company," as contemplated by the SRC, is not limited to a company whose shares
of stock are publicly listed; even companies whose shares are offered only to a
specific group of people, are considered a public company, provided they meet
the requirements enumerated in the SRC such as existence of (i) assets exceeding
P50,000,000.00 and (ii) 395,998 shareholders. (Philippine Veterans Bank v.
Justina Callangan, etc. and/or the Securities and Exchange Commission,
G.R. No. 191995, August 03, 2011)
What is an investment contract?
An investment contract is a contract, transaction, or scheme where a person
invests his money in a common enterprise and is led to expect profits primarily
from the efforts of others. The United States Supreme Court held in Securities and
Exchange Commission v. W.J. Howey Co. that, for an investment contract to exist,
the following elements, referred to as the Howey test must concur: (1) a contract,
transaction, or scheme; (2) an investment of money; (3) investment is made in a
common enterprise; (4) expectation of profits; and (5) profits arising primarily
from the efforts of others.
Sale of internet website does not fall under investment contract as the buyers do
not invest money in the company that it could use for running some business that
would generate profits for the investors. (Securities and Exchange
Commission v. Prosperity.Com Inc., G.R. No. 164197, January 25, 2012)
GENERAL BONDED WAREHOUSE ACT
What is a Continuing Bond?
A continuing bond is one that has no fixed expiration date and may be cancelled
only by the obligee, by the Insurance Commission and by the court.
(Country Bankers Insurance Corporation v. Antonio Lagman, G.R.
No. 165487, July 13, 2011)