Regulatory Framework for Business Transactions (RFBT) Practice Review

Flashcards covering various legal concepts and definitions from the Regulatory Framework for Business Transactions transcript, including contracts, obligations, corporations, labor standards, and special laws like AMLA and Data Privacy.

Relativity of contracts

A principle stating that contracts take effect only between the parties, their assigns, and heirs, except where rights and obligations are not transmissible by nature, stipulation, or law.

Mutuality of contracts

A principle holding that a contract must be binding to both parties and its validity and effectivity cannot be left to the will of only one party.

Warranty against eviction

A warranty inherent in a contract of sale, whether or not mentioned, where the seller guarantees the buyer's peaceful possession of the thing sold.

Pacto de retro sale

A type of sale where the title and ownership of the property are immediately vested in the vendee subject to the resolutory condition of repurchase by the vendor within a stipulated period.

Equity of redemption

The right of a mortgagor in a judicial foreclosure to redeem the mortgaged property after default but before the sale or confirmation of the sale by the court.

Fraud (Dolo)

Within the context of performance of an obligation, it is the intentional evasion of the faithful performance of the obligation.

Fortuitous event

An event independent of the will of the debtor that is unforeseeable or unavoidable, rendering it absolutely impossible for the debtor to fulfill an obligation in a normal manner.

Legal compensation

A mode of extinguishing obligations that occurs when two persons, in their own right, are creditors and debtors of each other, involving liquidated and demandable debts of the same kind.

Autonomy of contracts

A principle holding that parties are bound not only by what has been expressly provided for in the contract but also to the natural consequences that flow out of such agreement.

Maceda Law (RA 4726)

A law providing protection to buyers of real estate on installment payments, including rights to a grace period and cash surrender value upon cancellation after paying at least two years of installments.

Cash Surrender Value

Under the Maceda Law, the amount a buyer is entitled to receive upon contract cancellation; for those who paid between 2 to 5 years, it is $50\%$ of total payments, increasing by $5\%$ every year after 5 years up to a maximum of $90\%$.

Pro-rata liability

The liability of partners, including industrial partners, for partnership contracts when all partnership assets have been exhausted, meaning they are liable in proportion to their interest.

Trust Fund Doctrine

A legal concept stating that the capital stock, property, and assets of a corporation are held in trust for the benefit of its creditors.

Business Judgment Rule

A doctrine protecting corporate directors and officers from personal liability for business decisions made in good faith, with due care, and in the best interest of the corporation.

Doctrine of Individuality of Subscription

A principle stating that a stock subscription is a single, entire, and indivisible contract, requiring full payment for the entire subscription before any share certificate can be issued.

Ultra vires act

An act committed by a corporation that is outside the scope of the express or implied powers conferred upon it by its Articles of Incorporation or the law.

Appraisal Right

The right of a stockholder to dissent and demand payment of the fair value of his or her shares in specific instances like amendment of Articles of Incorporation or merger.

Night Shift Differential

Additional compensation of $10\%$ of an employee's regular wage for each hour of work performed between 10 p.m. and 6 a.m.

Service Incentive Leave (SIL)

A paid leave of $5$ days granted to an employee who has rendered at least one year of service.

Functional Equivalency Doctrine

A principle in e-commerce ensuring that electronic records and signatures are not denied validity simply because they exist in electronic form.

Sensitive Personal Information

Under the Data Privacy Act, information regarding an individual’s race, ethnic origin, marital status, age, color, religious/philosophical/political affiliations, health, education, or social security numbers.

Safe Harbor Provision

A provision in the Anti-Money Laundering Act protecting covered persons or institutions from civil, criminal, and administrative liability when reporting suspicious transactions to the AMLC in good faith.

Covered Transaction (Banking)

Any single transaction in cash or other equivalent monetary instrument involving a total amount exceeding $P500,000$ within one banking day.

Maximum Deposit Insurance Coverage (MDIC)

Refers to the amount due to any bonafide depositor for legitimate deposits in an insured bank as of the date of closure, which is $P1,000,000$ per depositor per bank as of 2025.

Test of Dominancy

A test used in trademark law to determine infringement by focusing on the similarity of the prevalent features of competing marks which might create confusion.

Approved Budget for the Contract (ABC)

In government procurement, it refers to the budget for the contract duly approved by the Head of the Procuring Entity.