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Chinese wall is a business term describing an information barrier within an organization that was erected to prevent exchanges or communication that could lead to conflicts of interest. For example, a Chinese wall may be erected to separate and isolate people who make investments from those who are privy to confidential information that could improperly influence the investment decisions. Firms are generally required by law to safeguard insider information and ensure that improper trading does not occur.

The operative theory of the Chinese Wall is that adequate controls over access to inside information will preclude its misuse. This, in the case of a multi-service securities firm, generally means that personnel in the retail sales and investment advisory divisions are denied access to information garnered by the firm's investment banking division. There is no particular uniformity in the precise manner in which either securities firms or other multi-service financial institutions have implemented their particular procedures for dealing with inside information possessed by one of the firm's departments. Common to all Chinese Walls, however, is a policy statement, which need not be particularly formal, prohibiting personnel who have, or are likely to have, material nonpublic information about a publicly-held corporation from communicating that information to personnel in other departments of the firm.5 0 In addition, some firms incorporate the wall concept into ongoing educational programs regarding insider trading, through restrictions on access to files containing (or which may contain) nonpublic information, and through controls on personnel transfers between departments and membership on interdepartmental committees.5 1 Finally, some larger institutions have established an even more formal physical separation of the "problem" department from the remainder of the firm,52 and, with respect to brokerdealer directorships, some firms simply prohibit partners and employees from serving as directors of publicly-held companies. 5 3 In addition to a Chinese Wall policy for isolating information within a firm to those personnel who may utilize it lawfully, some firms have adopted additional internal regulations restricting the firm's investment advisory or retail brokerage personnel from recommending the securities of companies about which the firm has (or is likely to receive) inside information.

A dividend is generally considered to be a cash payment issued to the holders of company stock. However, there are several types of dividends, some of which do not involve the payment of cash to shareholders. These dividend types are: 

Cash dividend. The cash dividend is by far the most common of the dividend types used. On the date of declaration, the board of directors resolves to pay a certain dividend amount in cash to those investors holding the company's stock on a specific date. The date of record is the date on which dividends are assigned to the holders of the company's stock. On the date of payment, the company issues dividend payments.

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Stock dividend. A stock dividend is the issuance by a company of its common stock to its common shareholders without any consideration. If the company issues less than 25 percent of

the total number of previously outstanding shares, then treat the transaction as a stock dividend. If the transaction is for a greater proportion of the previously outstanding shares, then treat the transaction as a stock split. To record a stock dividend, transfer from retained earnings to the capital stock and additional paid-in capital accounts an amount equal to the fair value of the additional shares issued. The fair value of the additional shares issued is based on their fair market value when the dividend is declared. 

Property dividend. A company may issue a non-monetary dividend to investors, rather than making a cash or stock payment. Record this distribution at the fair market value of the assets distributed. Since the fair market value is likely to vary somewhat from the book value of the assets, the company will likely record the variance as a gain or loss. This accounting rule can sometimes lead a business to deliberately issue property dividends in order to alter their taxable and/or reported income.

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Scrip dividend. A company may not have sufficient funds to issue dividends in the near future, so instead it issues a scrip dividend, which is essentially a promissory note (which may or may not include interest) to pay shareholders at a later date. This dividend creates a note payable.

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Liquidating dividend. When the board of directors wishes to return the capital originally contributed by shareholders as a dividend, it is called a liquidating dividend, and may be a precursor to shutting down the business. The accounting for a liquidating dividend is similar to the entries for a cash dividend, except that the funds are considered to come from the additional paid-in capital account. 

Chapter 4. Effect of Parental Authority Upon  the Property of the Children

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Art. 225. The father and the mother shall jointly exercise legal guardianship over the property of the unemancipated common child without the necessity of a court appointment. In case of disagreement, the father's decision shall prevail, unless there is a judicial order to the contrary.  

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Where the market value of the property or the annual income of the child exceeds P50,000, the parent concerned shall be required to furnish a bond in such amount as the court may determine, but not less than ten per centum(10%) of the value of the property or annual income, to guarantee the performance of the obligations prescribed for general guardians. A verified petition for approval of the bond shall be filed in the proper court of the place where the child resides, or, if the child resides in a

foreign country, in the proper court of the place where the property or any part thereof is situated.  

The petition shall be docketed as a summary special proceeding in which all incidents and issues regarding the performance of the obligations referred to in the second paragraph of this Article shall be heard and resolved.

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The ordinary rules on guardianship shall be merely suppletory except when the child is under substitute parental authority, or the guardian is a stranger, or a parent has remarried, in which case the ordinary rules on guardianship shall apply.

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Gamboa vs. Teves

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Petitioner submits that the 40 percent foreign equity limitation in domestic public utilities refers only to common shares because such shares are entitled to vote and it is through voting that control over a corporation is exercised. Petitioner posits that the term capital in Section 11, Article XII of the Constitution refers to the ownership of common capital stock subscribed and outstanding, which class of shares alone, under the corporate set-up of PLDT, can vote and elect members of the board of directors. It is undisputed that PLDTs non-voting preferred shares are held mostly by Filipino citizens. Respondents, on the other hand, do not offer any definition of the term capital in Section 11, Article XII of the Constitution. More importantly, private respondents Nazareno and Pangilinan of PLDT do not dispute that more than 40 percent of the common shares of PLDT are held by foreigners. Issue: Whether the term capital in Section 11, Article XII of the Constitution refers to the total common shares only or to the total outstanding capital stock (combined total of common and non-voting preferred shares) of PLDT, a public utility. Held: We agree with petitioner and petitioners-in-intervention. 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 the present case only to common shares, and not to the total outstanding capital stock comprising both common and non-voting preferred shares.

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Indisputably, one of the rights of a stockholder is the right to participate in the control or management of the corporation.43 This is exercised through his vote in the election of directors because it is the board of directors that controls or manages the corporation.44 In the absence of provisions in the articles of incorporation denying voting rights to preferred shares, preferred shares have the same voting rights as common shares. However, preferred shareholders are often excluded from any control, that is, deprived of the right to vote in the election of directors and on other matters, on the theory that the preferred shareholders are merely investors in the corporation for income in the same manner as bondholders.45 In fact, under the Corporation Code only preferred or redeemable shares can be deprived of the right to vote.46 Common shares cannot be deprived of the right to vote in any corporate meeting, and any provision in the articles of incorporation restricting the right of common shareholders to vote is invalid.47

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Considering that common shares have voting rights which translate to control, as opposed to preferred shares which usually have no voting rights, the term capital in Section 11, Article XII of the Constitution refers only to common shares. However, if the preferred shares also have the right to vote in the election of directors, then the term capital shall include such preferred shares because the right to participate in the control or management of the corporation is exercised through the right to vote in the election of directors. In short, the term capital in Section 11, Article XII of the Constitution refers only to shares of stock that can vote in the election of directors.

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This interpretation is consistent with the intent of the framers of the Constitution to place in the hands of Filipino citizens the control and management of public utilities. As revealed in the deliberations of the Constitutional Commission, capital refers to the voting stock or controlling interest Thus, 60 percent of the capital assumes, or should result in, controlling interest in the corporation. Reinforcing this interpretation of the term capital, as referring to controlling interest or shares entitled to vote, is the definition of a Philippine national in the Foreign Investments Act of 1991, to wit; Section 3.XXX XXX XXX a corporation organized under the laws of the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines.

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Mere legal title is insufficient to meet the 60 percent Filipino-owned capital required in the Constitution. Full beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights, is

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required. The legal and beneficial ownership of 60 percent of the outstanding capital stock must rest in the hands of Filipino nationals in accordance with the constitutional mandate. Otherwise, the corporation is considered as nonPhilippine national[s]. To construe broadly the term capital as the total outstanding capital stock, including both common and non-voting preferred shares, grossly contravenes the intent and letter of the Constitution that the State shall develop a selfreliant and independent national economy effectively controlled by Filipinos. A broad definition unjustifiably disregards who owns the all-important voting stock, which necessarily equates to control of the public utility. Hence, it was ruled that the term capital in Section 11, Article XII of the 1987 Constitution refers only to shares of stock entitled to vote in the election of directors, and thus in the present case only to common shares, and not to the total outstanding capital stock (common and non-voting preferred shares). Control Test- The first case is the ‘liberal rule’, later coined by the SEC as the Control Test in its 30 May 1990 Opinion, and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which states, ‘(s)hares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of Philippine nationality.’ Under the liberal Control Test, there is no need to further trace the ownership of the 60% (or more) Filipino stockholdings of the Investing Corporation since a corporation which is at least 60% Filipino-owned is considered as Filipino. Grandfather Rule - The second case is the Strict Rule or the Grandfather Rule Proper and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which states, "but if the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the number of shares corresponding to such percentage shall be counted as of Philippine nationality." Under the Strict Rule or Grandfather Rule Proper, the combined totals in the Investing Corporation and the Investee Corporation must be traced (i.e., "grandfathered") to determine the total percentage of Filipino ownership.

Narra Nickel Mining vs. Redmont Consolidate Mines Petitioner, being a foreign corporations, are not entitle to Mineral Product Sharing Agreements. SC held there was doubt as to petitioner’s nationality since a 100% Canadian-owned firm, MBMI, Inc., effectively owns 60% of the common stock of the petitioners by owning equity interest of petitioners’ other majority corporate shareholders Issue: Whether or not Grandfather Rule can be applied jointly with Control test in determining the nationality of corporate entities for purposes of determining compliance with Sec.2, Art. XII of the Constitution (60-40 equity ownership)

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Held: Yes. the Control Test can be, as it has been, applied jointly withthe Grandfather Rule to determine the observance of foreign ownership restriction in nationalized economic activities. The Control Test and the Grandfather Rule are not, as it were, incompatible ownership-determinant methods that canonly be applied alternative to each other. Rather, these methodscan, if appropriate, be used cumulatively in the determination of the ownership and control of corporations engaged in fully or partly nationalized activities, as the mining operation involved in this case or the operation of public utilities as in Gamboa or Bayantel. The Grandfather Rule, standing alone, should not be used to determine the Filipino ownership and control in a corporation, as it could result in an otherwise foreign corporation rendered qualified to perform nationalized or partly nationalized activities. Hence, it is only when the Control Test is first complied with that the Grandfather Rule may be applied. Put in another manner, if the subject corporation’s Filipino equity falls below the threshold 60%, the corporation is immediately considered foreign-owned, in which case, the needto resort to the Grandfather Rule disappears. On the other hand, a corporation that complies with the 60-40 Filipino to foreign equity requirement can be considered a Filipino corporation if there is no doubtas to who has the "beneficial ownership" and "control" of the corporation. In that instance, there is no need fora dissection or further inquiry on the ownership of the corporate shareholders in both the investing and investee corporation or the application of the Grandfather Rule.12 As a corollary rule, even if the 60-40 Filipino to foreign equity ratio is apparently met by the subject or investee corporation, a resort to the Grandfather Rule is necessary if doubt existsas to the locusof the "beneficial ownership" and "control." In this case, a further investigation as to the nationality of the personalities with the beneficial ownership and control of the corporate shareholders in both the investing and investee corporations is necessary. As explained in the April 21,2012 Decision, the "doubt" that demands the application of the Grandfather Rule in addition to or in tandem with the Control Test is not confined to, or more bluntly, does not refer to the fact that the apparent Filipino ownership of the corporation’s equity falls below the 60% threshold. Rather, "doubt" refers to various indicia that the "beneficial ownership" and "control" of the corporation do not in fact reside in Filipino shareholders but in foreign stakeholders. Cagayan Fishing vs. Sandiko Manuel Tabora owner of 4 parcels of land located in Aparri, Cagayan de Oro mortgaged with PNB to guarantee a payment of loan. Thereafter, he sold the 4 parcels of land to Cagayan Fishing Dev., Inc., whom at that time was under the process of incorporation. The transfer made by the Tabora to Cagayan Fishing was made almost 5 months before the incorporation of the company. A year later, the company adopted a resolution to sell the 4 parcels of land to Teodoro Sandiko and executed promissory note in favor to Cagayan fishing and subject to mortgages in favor of PNB. Sandiko failed to pay the promissory note. Cagayan fishing filed an action against Sandiko with the trial court. The trial court rendered the sale deed of sale made between Sandiko and Cagayan Fishing is invalid.

1.Whether Cagayan Fishing Dev’t. has juridical capacity to enter into the contract. 2. Can promoters of a corporation act as agents of a corporation? RULING: 1. The transfer made by Tabora to the Cagayan Fishing Development Co., Inc., plaintiff herein, was effected on May 31, 1930 and the actual incorporation of said company was effected later on October 22, 1930. In other words, the transfer was made almost five months before the incorporation of the company.

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A duly organized corporation has the power to purchase and hold such real property as the purposes for which such corporation was formed may permit and for this purpose may enter into such contracts as may be necessary. But before a corporation may be said to be lawfully organized, many things have to be done. Among other things, the law requires the filing of articles of incorporation. Although there is a presumption that all the requirements of law have been complied with, in the case before us it can not be denied that the plaintiff was not yet incorporated when it entered into the contract of sale. The contract itself referred to the plaintiff as “una sociedad en vias de incorporacion.” It was not even a de facto corporation at the time. Not being in legal existence then, it did not possess juridical capacity to enter into the contract. “Corporations are creatures of the law, and can only come into existence in the manner prescribed by law. As has already been stated, general laws authorizing the formation of corporations are general offers to any persons who may bring themselves within their provisions; and if conditions precedent are prescribed in the statute, or certain acts are required to be done, they are terms of the offer, and must be complied with substantially before legal corporate existence can be acquired.” “That a corporation should have a full and complete organization and existence as an entity before it can enter into any kind of a contract or transact any business, would seem to be self evident. . . . A corporation, until organized, has no being, franchises or faculties. Nor do those engaged in bringing it into being have any power to bind it by contract, unless so authorized by the charter. Until organized as authorized by the charter there is not a corporation, nor does it possess franchises or faculties for it or others to exercise, until it acquires a complete existence.” 2. The contract here was entered into not only between Manuel Tabora and a non-existent corporation but between Manuel Tabora as owner of four parcels of land on the one hand and the same Manuel Tabora, his wife and others, as mere promoters of a corporation on the other hand. For reasons that are self-evident, these promoters could not have acted as agents for a projected corporation since that which had no legal existence could have no agent. A corporation, until organized, has no life and therefore no faculties. It is, as it were, a child in ventre sa mere. This is not saying that under no circumstances may the acts of promoters of a corporation be ratified by the corporation if and when subsequently organized. There are, of course, exceptions , but under the peculiar facts and circumstances of the present case we decline to extend the doctrine of ratification which would result in the commission of injustice or fraud to the candid and unwary. The transfer by Manuel Tabora to the Cagayan Fishing Development Company, Inc. was null because at the time it was effected the corporation was non-existent, we deem it unnecessary to discuss this point. Municipality of Malabang vs Pangandapun Benito Balindong