CORPORATION CODE PEOPLE vs TAN BOON KONG Facts: During 1924, in Iloilo, Tan Boon Kong as manager of the

Visayan General Supply Co. engaged in the purchase and sale of sugar, bayon, copra, and other native products and as such must pay internal revenue taxes upon is sales. However, he only declared 2.3 million in sales but in actuality the sales amounted to 2.5 million, therefore failing to declare for the purpose of taxation about 200,000, not having paid the government 2,000 in taxes. Upon filing by the defendant of a demurrer, the lower court judge sustained said motion on the ground that the offense charged must be regarded as committed by the corporation and not its officials. Issue: WON the defendant as manager may be held criminally liable. Ruling: The court held that the judge erred in sustaining the motion because it is contrary to a great weight of authority. The court pointed out that, a corporation can act only through its officers and agents where the business itself involves a violation law, the correct rule is that all who participate in it are criminally liable. In the present case, Tan Boon Kong allegedly made a false return for purposes of taxation of the total amount of sales for year 1924. As such, the filing of false returns constitutes a violation of law. Him being the author of the illegal act must be held liable ROMAN CATHOLIC APOSTOLIC ADMINISTRATOR OF DAVAO vs REGISTER OF DEEDS OF DAVAO Facts: Mateo Rodis, a Filipino citizen and resident of Davao, executed a deed of sale of a parcel of land located in the same city in favor of the Roman Catholic Administrator of Davao, a corporation sole organized and existing in accordance with Philippine laws. The incumbent administrator is Msgr. Clovis Thibault, a Canadian citizen. When the deed was presented to the Register of Deeds for registration, it required them to submit an affidavit stating that the ownership of the corporation is 60% Filipino citizens as required under the Constitution.

Roman Catholic stated that it was a corporation sole (meaning only one incorporator) and that the totality of the Catholic population in Davao would become the owner of the property. Register of Deeds doubted this and submitted the case for en consulta in the Land Registration Commission. LRC ruled that the requirement of the Constitution must be followed and since the 60% cannot be complied with, the registration should be denied. Hence, this appeal. Issue: WON the Roman Catholic Apostolic Church, a corporation sole being led by a Canadian citizen, can lawfully acquire lands in the Philippines. Held: YES. Corporation sole a special form of corporation usually associated with the clergy designed to facilitate the exercise of the functions of ownership of the church which was registered as property owner. It is created not only to administer the temporalities of the church or religious society where the corporator belongs, but also to hold and transmit the same to his successor in said officer. The incumbent administrator is not the actual owner of the land but the constituents or those that make up the church, thus it is their nationality that has to be taken into consideration. The corporation sole only holds the property in trust for the benefit of the Roman Catholic faithful. KUKAN vs REYES Facts: March 1998, Kukan, Inc. conducted a bidding for the supply and installation of signages in a building being constructed in Makati City. Morales tendered the winning bid and was awarded the PhP 5 million contract. Some of the items in the project award were later excluded resulting in the corresponding reduction of the contract price to PhP 3,388,502. Despite his compliance with his contractual undertakings, Morales was only paid the amount of PhP 1,976,371.07, leaving a balance of PhP 1,412,130.93, which Kukan, Inc. refused to pay despite demands. Shortchanged, Morales filed a Complaint with the RTC against Kukan, Inc. for a sum of money. RTC ruled in favor of Morales. Morales moved for and secured a writ of execution against Kukan, Inc. The sheriff then levied upon various personal properties found at what was supposed to be Kukan, Inc.s office at Unit 2205, 88

Corporate Center, Salcedo Village, Makati City. Alleging that it owned the properties thus levied and that it was a different corporation from Kukan, Inc., Kukan International Corporation (KIC) filed an Affidavit of Third-Party Claim. Applying the principle of piercing the veil of corporate fiction, that an order be issued for the satisfaction of the judgment debt of Kukan, Inc. with the properties under the name or in the possession of KIC, it being alleged that both corporations are but one and the same entity. Issue: Whether the trial and appellate courts correctly applied the principle of piercing the veil of corporate fiction. Ruling: No. It bears reiterating that piercing the veil of corporate fiction is frowned upon. Accordingly, those who seek to pierce the veil must clearly establish that the separate and distinct personalities of the corporations are set up to justify a wrong, protect fraud, or perpetrate a deception. In the concrete and on the assumption that the RTC has validly acquired jurisdiction over the party concerned, Morales ought to have proved by convincing evidence that Kukan, Inc. was collapsed and thereafter KIC purposely formed and operated to defraud him. Morales has not to us discharged his burden. The levy placed upon the personal properties of Kukan International Corporation is hereby ordered lifted and the personal properties ordered returned to Kukan International Corporation. MONTELIBANO MILLING vs BACOLOD-MURCIA

manufactured sugar and resulting molasses, besides other concessions, but extending the operation of the milling contract from the original 30 years to 45 years. The Board of Directors of the appellee Bacolod-Murcia Milling Co., Inc., adopted a resolution granting further concessions to the planters over and above those contained in the printed Amended Milling Contract. The appellants initiated the present action, contending that three Negros sugar centrals with a total annual production exceeding one-third of the production of all the sugar central mills in the province, had already granted increased participation (of 62.5%) to their planters, and that under the resolution the appellee had become obligated to grant similar concessions to the plaintiffs. The appellee Bacolod-Murcia Milling Co., inc., resisted the claim, and defended by urging that the stipulations contained in the resolution were made without consideration; that the resolution in question was, therefore, null and void ab initio, being in effect a donation that was ultra vires and beyond the powers of the corporate directors to adopt. Issue: WON the board resolution is an ultra vires act and in effect a donation from the board of directors? Held: No. There can be no doubt that the directors of the appellee company had authority to modify the proposed terms of the Amended Milling Contract for the purpose of making its terms more acceptable to the other contracting parties. As the resolution in question was passed in good faith by the board of directors, it is valid and binding, and whether or not it will cause losses or decrease the profits of the central, the court has no authority to review them. Whether the business of a corporation should be operated at a loss during depression, or close down at a smaller loss, is a purely business and economic problem to be determined by the directors of the corporation and not by the court. The appellee Bacolod-Murcia Milling Company is, under the terms of its Resolution of August 20, 1936, duty bound to grant similar increases to plaintiffsappellants herein. MSCI VS NWPC On January 11, 1990, Asturias Sugar Central, Inc. (ASCI, for brevity), executed a Memorandum of Agreement with Monomer

Facts: Plaintiffs-appellants, Alfredo Montelibano, Alejandro Montelibano, and the Limited co-partnership Gonzaga and Company, had been and are sugar planters adhered to the defendant-appellees sugar central mill under identical milling contracts. Originally executed in 1919, said contracts were stipulated to be in force for 30 years starting with the 1920-21 crop, and provided that the resulting product should be divided in the ratio of 45% for the mill and 55% for the planters. Sometime in 1936, it was proposed to execute amended milling contracts, increasing the planters share to 60% of the

Trading Industries, Inc. (MTII, for brevity), whereby MTII shall acquire the assets of ASCI by way of a Deed of Assignment provided that an entirely new organization in place of MTII shall be organized, which new corporation shall be the assignee of the assets of ASCI. By virtue of this Agreement, a new corporation was organized and incorporated on February 15, 1990 under the corporate name Monomer Sugar Central, Inc. or MSCI, the private respondent herein. On January 16, 1991, MSCI applied for exemption from the coverage of Wage Order No. RO VI-01 issued by the Board on the ground that it is a distressed employer. The petitioner herein MSCI-NACUSIP Local Chapter (Union, for brevity), in opposition, maintained that MSCI is not distressed; that respondent applicant has not complied with the requirements for exemption; and that the financial statements submitted by MSCI do not reflect the true and valid financial status of the company, and that the paid-up capital would have been higher than P5 million and thus impairment would have been lower than 25% had the pre-organization agreement between ASCI and MTII been complied with. The Board held that the paid-up capital of MSCI on the aforesaid dates was actually P64,688,528.00 and not P5 million as claimed by MSCI in its application for exemption and, thus, the established losses amounting to P3,400,738.00 constitute an impairment of only 5.25% of the true paid-up capital of P64 million plus,[2] which losses are not enough to meet the required 25% impairment requirement. The loans or advances extended by MTII, the other party to the Agreement, to MSCI should allegedly be treated as additional investments to MSCI[3] and must therefore be included in computing respondent's paid-up capital. Issue: WON the loans and advances extended to MSCI can be qualified as an increase in its capital stock Ruling: Commission aptly observed that the loans and advances of MTII to respondent MSCI cannot be treated as investments, unless the corresponding shares of stocks are issued. But as it turned out, such loans and advances were in

fact treated as liabilities of MSCI to MTII. The treatment by the Board of these loans as part of MSCI's capital stock without satisfying certain mandatory requirements is proscribed under Section 38 of the Corporation Code. The requirements were unquestionably not observed in this case. Henceforth, the paid-up capital stock of MSCI for the period covered by the application for exemption still stood at P5 million. The losses, amounting to P3,400,738.00 impaired MSCI's paid-up capital of P5 million by as much as 68% enough to qualify MSCI as a distressed employer. Respondent Commission thus acted well within its jurisdiction in granting MSCI full exemption from Wage Order No. RO VI-01 as a distressed employer. HI-YIELD REALTY vs CA Facts: On July 31, 2003, Roberto H. Torres (Roberto), for and on behalf of Honorio Torres & Sons, Inc. (HTSI), filed a Petition for Annulment of Real Estate Mortgage and Foreclosure Sale3 over two parcels of land located in Marikina and Quezon City. The suit was filed against Leonora, Ma. Theresa, Glenn and Stephanie, all surnamed Torres, the Register of Deeds of Marikina and Quezon City, and petitioner Hi-Yield Realty, Inc. (Hi-Yield). Petitioner moved to dismiss the petition on grounds of improper venue and payment of insufficient docket fees. The RTC denied said motion in an Order4 dated January 22, 2004. The trial court held that the case was, in nature, a real action in the form of a derivative suit cognizable by a special commercial court pursuant to Administrative Matter No. 00-11-03-SC.5 Petitioner sought reconsideration, but its motion was denied Issue: whether the action to annul the real estate mortgage and foreclosure sale is a mere incident of the derivative suit.

Ruling: Both the RTC and Court of Appeals ruled that the action is in the form of a derivative suit although captioned as a petition for annulment of real estate mortgage and foreclosure sale. A derivative action is a suit by a shareholder to enforce a corporate cause of action.16 Under the Corporation Code, where a corporation is an

injured party, its power to sue is lodged with its board of directors or trustees. But an individual stockholder may be permitted to institute a derivative suit on behalf of the corporation in order to protect or vindicate corporate rights whenever the officials of the corporation refuse to sue, or are the ones to be sued, or hold control of the corporation. In such actions, the corporation is the real party-in-interest while the suing stockholder, on behalf of the corporation, is only a nominal party. Requisites before a stockholder can file a derivative suit: a) the party bringing suit should be a shareholder as of the time of the act or transaction complained of, the number of his shares not being material; b) he has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief but the latter has failed or refused to heed his plea; and c) the cause of action actually devolves on the corporation, the wrongdoing or harm having been, or being caused to the corporation and not to the particular stockholder bringing the suit. For a derivative suit to prosper, the minority stockholder suing for and on behalf of the corporation must allege in his complaint that he is suing on a derivative cause of action on behalf of the corporation and all other stockholders similarly situated who may wish to join him in the suit; that earnest efforts were made to reach a compromise among family members/stockholders before he filed the case. The Court finds that Roberto had satisfied these requirements. REPUBLIC PLANTERS BANK vs AGANA Facts: On 18 September 1961, the RobesFrancisco Realty & Development Corporation (RFRDC) secured a loan from the Republic Planters Bank in the amount of P120,000.00. As part of the proceeds of the loan, preferred shares of stocks were issued to RFRDC through its officers then, Adalia F. Robes and one Carlos F. Robes. In other words, instead of giving the legal tender totaling to the full amount of the loan, which is P120,000.00, the Bank lent such amount partially in the form of money and

partially in the form of stock certificates numbered 3204 and 3205, each for 400 shares with a par value of P10.00 per share, or for P4,000.00 each, for a total of P8,000.00. Said stock certificates were in the name of Adalia F. Robes and Carlos F. Robes, who subsequently, however, endorsed his shares in favor of Adalia F. Robes. Said certificates of stock bear the following terms and conditions: "The Preferred Stock shall have the following rights, preferences, qualifications and limitations, to wit: 1. Of the right to receive a quarterly dividend of 1%, cumulative and participating. xxx 2. That such preferred shares may be redeemed, by the system of drawing lots, at any time after 2 years from the date of issue at the option of the Corporation." On 31 January 1979, RFRDC and Robes proceeded against the Bank and filed a complaint anchored on their alleged rights to collect dividends under the preferred shares in question and to have the bank redeem the same under the terms and conditions of the stock certificates. The bank filed a Motion to Dismiss 3 private respondents' Complaint on the following grounds: (1) that the trial court had no jurisdiction over the subject-matter of the action; (2) that the action was unenforceable under substantive law; and (3) that the action was barred by the statute of limitations and/or laches. The bank's Motion to Dismiss was denied by the trial court in an order dated 16 March 1979. The bank then filed its Answer on 2 May 1979. Thereafter, the trial court gave the parties 10 days from 30 July 1979 to submit their respective memoranda after the submission of which the case would be deemed submitted for resolution. On 7 September 1979, the trial court rendered the decision in favor of RFRDC and Robes; ordering the bank to pay RFRDC and Robes the face value of the stock certificates as redemption price, plus 1% quarterly interest thereon until full payment. The bank filed the petition for certiorari with the Supreme Court, essentially on pure questions of law. Issues: 1. Whether the bank can be compelled to redeem the preferred shares issued to RFRDC and Robes. 2. Whether RFRDC and Robes are entitled to the payment of certain rate of interest on the stocks as a matter of right without

necessity of a prior declaration of dividend. Ruling: 1. While the stock certificate does allow redemption, the option to do so was clearly vested in the bank. The redemption therefore is clearly the type known as "optional". Thus, except as otherwise provided in the stock certificate, the redemption rests entirely with the corporation and the stockholder is without right to either compel or refuse the redemption of its stock. Furthermore, the terms and conditions set forth therein use the word "may". It is a settled doctrine in statutory construction that the word "may" denotes discretion, and cannot be construed as having a mandatory effect. The redemption of said shares cannot be allowed. The Central Bank made a finding that the Bank has been suffering from chronic reserve deficiency, and that such finding resulted in a directive, issued on 31 January 1973 by then Gov. G. S. Licaros of the Central Bank, to the President and Acting Chairman of the Board of the bank prohibiting the latter from redeeming any preferred share, on the ground that said redemption would reduce the assets of the Bank to the prejudice of its depositors and creditors. Redemption of preferred shares was prohibited for a just and valid reason. The directive issued by the Central Bank Governor was obviously meant to preserve the status quo, and to prevent the financial ruin of a banking institution that would have resulted in adverse repercussions, not only to its depositors and creditors, but also to the banking industry as a whole. The directive, in limiting the exercise of a right granted by law to a corporate entity, may thus be considered as an exercise of police power. 2. Both Section 16 of the Corporation Law and Section 43 of the present Corporation Code prohibit the issuance of any stock dividend without the approval of stockholders, representing not less than two-thirds (2/3) of the outstanding capital stock at a regular or special meeting duly called for the purpose. These provisions underscore the fact that payment of dividends to a stockholder is not a matter of right but a matter of consensus. Furthermore, "interest bearing stocks", on which the corporation agrees absolutely to pay interest before dividends are paid to common stockholders, is legal only when

construed as requiring payment of interest as dividends from net earnings or surplus only. In compelling the bank to redeem the shares and to pay the corresponding dividends, the Trial committed grave abuse of discretion amounting to lack or excess of jurisdiction in ignoring both the terms and conditions specified in the stock certificate, as well as the clear mandate of the law. SECURITIES CORPORATION CODE PHILIPPINE ASSOCIATION OF STOCK TRANSFER AND REGISTRY AGENCIES, INC., vs CA Facts: Petitioner Philippine Association of Stock Transfer and Registry Agencies, Inc. is an association of stock transfer agents principally engaged in the registration of stock transfers in the stock-and-transfer book of corporations. On May 10, 1996, petitioners Board of Directors unanimously approved a resolution allowing its members to increase the transfer processing fee they charge their clients from P45 per certificate to P75 per certificate, effective July 1, 1996; and eventually to P100 per certificate, effective October 1, 1996. The resolution also authorized the imposition of a processing fee for the cancellation of stock certificates at P20 per certificate effective July 1, 1996. According to petitioner, the rates had to be increased since it had been over five years since the old rates were fixed and an increase of its fees was needed to sustain the financial viability of the association and upgrade facilities and services. Philippine Association of Securities Brokers and Dealers, Inc. registered its objection to the measure advanced by petitioner and requested the SEC to defer its implementation. On June 27, 1996, the SEC advised petitioner to hold in abeyance the implementation of the increases until the matter was cleared with all the parties concerned. Petitioner nonetheless proceeded with the implementation of the increased fees. Issue: WON the SEC has the power to regulate fees. Ruling: The regulatory and supervisory powers of the Commission under Section 40 of the then

Revised Securities Act, in our view, were broad enough to include the power to regulate petitioners fees. Indeed, Section 47 gave the Commission the power to enjoin motu proprio any act or practice of petitioner which could cause grave or irreparable injury or prejudice to the investing public. The intentional omission in the law of any qualification as to what acts or practices are subject to the control and supervision of the SEC under Section 47 confirms the broad extent of the SECs regulatory powers over the operations of securities-related organizations like petitioner. UNION BANK VS SEC Facts: On April 4, 1997, petitioner Union Bank sought the opinion of Chairman Perfecto Yasay, Jr. of respondent Commission as to the applicability and coverage of the Full Material Disclosure Rule on banks, contending that said rules, in effect, amend Section 5 (a) (3) of the Revised Securities Act which exempts securities issued or guaranteed by banking institutions from the registration requirement provided by Section 4 of the same Act. Chairman Yasay replied and informed the petitioner that while the requirements of registration do not apply to securities of banks which are exempt under Section 5(a) (3) of the Revised Securities Act, however, banks with a class of securities listed for trading on the Philippine Stock Exchange, Inc. are covered by certain Revised Securities Act Rules governing the filing of various reports with respondent Commission. On July 17, 1997, respondent Commission wrote petitioner, enjoining the latter to show cause why it should not be penalized for its failure to submit a Proxy/Information Statement in connection with its annual meeting held on May 23, 1997, in violation of respondent Commissions Full Material Disclosure Rule. Issue: WON petitioner is required to comply with the respondent SECs full disclosure rules. Held: The petition is not meritorious. Section 5 of the Revised Securities Act states that: Sec 5. Exempt Securities. (a) Except as expressly provided, the requirement of registration under subsection (a) of Section four of this Act shall not apply to any of the

following classes of securities: (3) Any security issued or guaranteed by any banking institution authorized to do business in the Philippines, the business of which is substantially confined to banking, or a financial institution licensed to engage in quasi-banking, and is supervised by the Central Bank. This provision exempts from registration the securities issued by banking or financial institutions mentioned in the law. Nowhere does it state or even imply that petitioner, as a listed corporation, is exempt from complying with the reports required by the assailed RSA Implementing Rules. It must be emphasized that petitioner is a commercial banking corporation listed in the stock exchange. Thus, it must adhere not only to banking and other allied special laws, but also to the rules promulgated by Respondent SEC, the government entity tasked not only with the enforcement of the Revised Securities Act, but also with the supervision of all corporations, partnerships or associations which are grantees of government-issued primary franchises and/or licenses or permits to operate in the Philippines. That petitioner is under the supervision of the Bangko Sentral ng Pilipinas (BSP) and the Philippine Stock Exchange (PSE) does not exempt it from complying with the continuing disclosure requirements embodied in the assailed Rules. Petitioner, as a bank, is primarily subject to the control of the BSP; and as a corporation trading its securities in the stock market, it is under the supervision of the SEC. It must be pointed out that even the PSE is under the control and supervision of respondent. There is no over-supervision here. Each regulating authority operates within the sphere of its powers. That stringent requirements are imposed is understandable, considering the paramount importance given to the interests of the investing public. Otherwise stated, the mere fact that in regard to its banking functions, petitioner is already subject to the supervision of the BSP does not exempt the former from reasonable disclosure regulations issued by the SEC. These regulations are meant to assure full, fair and accurate disclosure of information for the protection of investors in the stock market. Imposing such regulations is a function within the jurisdiction of the SEC. Since petitioner

opted to trade its shares in the exchange, then it must abide by the reasonable rules imposed by the SEC. NICOLAS VS CA Facts: Nicolas and Buan entered into a Portfolio Management Agreement, wherein the former was to manage the stock transactions of the latter for a period of three months with an automatic renewal clause. However, upon the initiative of the private Buan the agreement was terminated, and thereafter he requested for an accounting of all transactions made by the petitioner. 3 weeks after the termination of the agreement, Nicolas demanded from Buan an amount representing his alleged management fees as provided for in the Portfolio Management Agreement. But the demands went unheeded, much to the chagrin of the petitioner. Rebuffed, petitioner filed a complaint or collection of sum of money against the private respondent before the trial court. In his answer, Buan contended that petitioner mismanaged his transactions resulting in losses, thus, he was not entitled to any management fees. After hearing, the trial court rendered its decision in favor of Nicolas, ordering Buan to pay him for the management fees, attorneys fees and expenses of litigation. Buan appealed the decision to the CA. Finding merit in his case, the appellate court reversed the trial courts finding and ruled against Nicolas. Petitioners MR was denied by the same court. Issue: WON the CA committed reversible error in overturning the decision of the RTC Ruling: NO; To begin with, petitioner has the burden to prove that the transaction realized gains or profits to entitle him to said management fees, as provided in the Agreement: xxx For his services, the INVESTOR agrees to pay the PORTFOLIO MANAGER 20% of all realized profits every end of the month. xxx Accordingly, petitioner submitted the profit and loss statements for the covered, showing a total profit of P341,318.34, of which 20% would represent his management fees amounting to P68,263.70. The CA declared that these documents have no probative value. Unfortunately, the profit and loss statements presented by the petitioner are nothing but bare assertions, devoid of any concrete basis or specifics as to the method of arriving at the amounts indicated in the documents. They are at

best just self-serving statements. In fact, it did not even state when the stocks were purchased, the type of stocks bought, when the stocks were sold, etc. The statements simply tabulate the number of shares acquired from each company, a column for profit and the last column for loss. The statements were not [even] authenticated by an auditor, nor by the person who caused the preparation of the same. In short, no evidentiary value can be attributed to the profit and loss statements submitted by the petitioner. These documents can hardly be considered a credible or true reflection of the transactions. We find that petitioner has not proven the amounts indicated adequately. Lastly, the futility of petitioners action became more pronounced by the fact that he traded securities for the account of others without the necessary license from the SEC. Clearly, such omission was in violation of Section 19 of the Revised Securities Act which provides that no broker shall sell any securities unless he is registered with the SEC. Stock market trading, a technical and highly specialized institution in the Philippines, must be entrusted to individuals with proven integrity, competence and knowledge, who have due regard to the requirements of the law. LOPEZ LOCSIN LEDESMA vs CA Facts: On August 14 and 26,1969 CMS Stock Brokerage, Inc. (CMS for short) sold to Lopez, Locsin, Ledesma and Co., Inc., (LLL for short) on the floor of the Makati Stock Exchange, among others, 2,650 Benguet Consolidated shares for the total price of P297,650.00. CMS, however, failed to deliver to LLL the 2,650 Benguet Consolidated shares. LLL refused to accept delivery at that late time since its clients for whom the purchases were made had "elected to cancel" the orders. CMS replied that, pursuant to the Rules and Regulations of the Makati Stock Exchange, LLL had no right to cancel its orders. LLL refused to acknowledge receipt of and sign the covering disposal letter. What CMS did was to deposit the letter with the Office of the Stock Exchange's Executive Secretary with the notation: "Refused Acceptance pending decision of the Exchange." Issue: What is the governing law between the contract entered into by the parties. Ruling: There is no dispute that the exchange contracts in question were drawn up on the floor

of the Makati Stock Exchange between two (2) member stockbrokers, CMS as the seller and LLL, as the buyer for and on orders of the third parties. As members of the stock exchange, they are bound by the rules and by-laws of the exchange. The rule at issue in the instant case is Section I, Article V of the Rules and Regulations. It reads: In the event of a Selling Member failing to make delivery within a reasonable period of time of shares sold under delayed delivery contract, it shall be the Buying Member duty to advise the Selling Member in writing giving him 1 full business day from the time of receipt of said letter of demand to make delivery. The Buying Member shall obtain a written receipt from the Selling Member on the duplicate copy of the letter of demand. This receipt must state the time of delivery of the letter of demand to the Selling Member. Fifteen days shall be considered a reasonable period of time within which to effect delivery unless otherwise stated in the sales contract. In the event a Selling Member is unable to make delivery within said period, the Buying Member shall deliver a copy of his letter of demand to the Chairman of the Floor Trading & Arbitration Committee who may purchase the shares for the Selling Member's Account. It would, therefore, be safe to say that unless the buying member timely notifies the seller that he is canceling his orders, then the orders placed by the buying member still stand.