Professional Documents
Culture Documents
Code of Commerce
Code of Commerce
COMMERCE branch of human activity; purpose is to bring products to the consumer through
operations habitually and with intent of gain
COMMERCIAL LAW branch of private law which regulates the juridical relations arising from
commercial acts
CHARACTERISTICS OF COMMERCIAL LAW:
1.
1.
universal
2.
2.
uniform
3.
3.
equitable
4.
4.
customary
5.
5.
progressive
1.
2.
3.
4.
5.
6.
7.
OTHERS:
1.
1.
1.
1.
1.
2.
1.
2.
Exceptions:
1.
a.
to continue business of deceased parents through guardian
2.
b.
court authorizes guardian to place minor and property in business
3.
c.
minor is an alien and his national law allows him to be a merchant
1.
5.
Which persons are not allowed to engage in commerce?
1.
1.
1.
1.
1.
1.
a.
suffering accessory penalty of civil interdiction (reclusion
perpetua and reclusion temporal)
2.
b.
those judicially declared insolvent until they can obtain their discharge
3.
c.
prohibited by Constitution and special laws
6.
Aliens
1.
a.
capacitated under his national law to engage in business
2.
b.
engaged in the business in the Philippines not reserved for the Filipinos
3.
c.
after securing license and BOI certificate
7.
Family Code: Either spouse may engage in business; when objected to by the other,
court will look into valid grounds, i.e. serious and moral grounds
8.
BOI Certificate must be obtained by:
1.
a.
alien
2.
b.
foreign firm
9.
Meaning of Philippine National
1.
a.
citizen
2.
b.
domestic corporation wholly owned and organized by Filipinos in the Philippines
3.
c.
Filipino corporation where Filipino capital entitled to vote is at least 60%
10. Query: If a corporation is a shareholder of another corporation, how do you determine
whether the latter corporation is a Filipino national?
14. SEC License issued upon compliance with the following requirements:
1.
a.
proof of compliance with principle of reciprocity
2.
b.
BOI certificate
3.
c.
n articles of incorporation
n by-laws
n names and addresses of resident agents
n principal place of business in the Philippines
1.
2.
d.
e.
proof of solvency
deposit acceptable securities to protect future creditors
2.
1.
2.
3.
1.
5.
Query: How to determine citizenship of shares of the corporation when they are not
held directly by individuals, but in turn held by another entity?
n treasurer
n general manager
n equivalent positions
1.
1.
1.
1.
1.
2.
4.
A Filipino common-law wife of an alien is not barred from engaging in the retail business
provided she uses capital exclusively derived from her paraphernal properties; however, allowing
her common-law alien husband to take part in the management of the retail business would be a
violation of the law.
5.
What doing business means:
1.
a.
soliciting orders, purchases, service contracts;
2.
b.
opening offices whether called liaison offices or branches;
3.
c.
appointing representatives or distributors who are domiciled in the Philippines or
who in any calendar year stay in the country for a period totaling 180 days or more;
4.
d.
participating in the management or supervision or control of any domestic firm,
entity or corporation in the Philippines;
5.
e.
any other act or acts that imply continuity in commercial dealings
6.
When commissioned merchants/investors or commercial brokers act in their own name
in selling foreign products, the foreign firm manufacturing these products is not doing business
in the Philippines.
7.
When a local corporation or person acts in the name of a foreign firm, the latter is doing
business in the Philippines.
8.
The following are NOT doing business:
1.
a.
mere investment as a shareholder by a foreign entity in domestic corporations
duly registered to do business;
2.
b.
exercise of rights as such investor;
3.
c.
having a nominee director or officer to represent interests in such corporation;
4.
d.
appointing a representative or distributor domiciled in the Philippines which
transacts business in its own name and for its own accounts.
1.
Purpose:
1.
a.
to encourage use of and to promote transactions based on trust receipts;
2.
b.
to regulate the use of trust receipts
2.
Definition:
A written/printed document signed by the ENTRUSTEE in favor of the ENTRUSTER whereby the
latter releases the goods, documents or instruments tot he possession of the former upon the
ENTRUSTEES promise to hold said goods in trust for the ENTRUSTER, and to sell the goods, etc.
WITH THE OBLIGATION TO TURN OVER THE PROCEEDS THEREOF TO THE EXTENT OF WHAT IS OWING
TO THE ENTRUSTER; or to return the goods if UNSOLD, or for other purposes.
1.
3.
Trust receipts are denominated in Philippine currency or acceptable and eligible foreign
currency.
1.
4.
ENTRUSTER is not liable as principal or vendor under any sale or contract to sell made by
the ENTRUSTEE.
1.
5.
Risk of loss is borne by the ENTRUSTEE.
1.
6.
Pending the duration of the trust agreement, the ENTRUSTERS security interest cannot
be prejudiced by claims of creditors of the ENTRUSTEE.
1.
7.
Loss of goods pending the dispossession shall not extinguish the obligation to the
ENTRUSTER for the value thereof.
LETTERS OF CREDIT
1.
1.
1.
1.
1.
1.
1.
1.
1.
1.
1.
1.
1.
1.
1.
1.
2.
2.
3.
4.
Kinds:
a.
Commercial Letters of Credit
b.
Travelers Letters of Credit
No protest required in case of dishonor.
Issued to definite persons and not to order, thus, non-negotiable.
Limited to a fixed account.
2.
1.
b.
The law does not apply to executors, administrators, receivers, assignees in
insolvency, or public officers, acting under process.
6.
Obligations when transaction is a bulk sale:
1.
a.
The vendor must deliver to such vendee a written statement of:
n names and addresses of all creditors to whom said vendor or mortgagor may be indebted;
n amount of indebtedness due or owing to each of said creditors
1.
b.
The vendor must apply the purchase money to the pro-rata payment of bona fide claims
of the creditors as shown in the verified statement.
2.
c.
The seller, at least 10 days before the sale, shall:
n make a full detailed inventory of the goods, merchandise, etc., cost price of each article to be
included in the sale
n notify every creditor at least 10 days before transferring possession of the goods, of the price,
terms and conditions of the sale
1.
7.
1.
INSURANCE LAW
1.
1.
1.
1.
1.
1.
Laws applicable to insurance in the order of priority:
1.
a.
Insurance Code
2.
b.
Civil Code
3.
c.
General Principles prevailing on the subject in the US
2.
Contract of Insurance an agreement whereby one undertakes for a consideration to
indemnify another against loss, damage or liability arising from an unknown contingent event.
3.
Contract of Suretyship deemed to be an insurance contract within the meaning of the
Insurance Code, only if made by a surety who or which, as such, is doing an insurance business
4.
Definition of doing an insurance business:
1.
a.
making or proposing to make, as insurer, any insurance contract;
2.
b.
making or proposing to make as a surety, any contract of suretyship as a vocation
and not merely incidental to any other legitimate business or activity of the surety;
3.
c.
doing reinsurance business;
4.
d.
doing or proposing to do any business in the substance equivalent to any of the
foregoing in a manner designed to evade the provisions of the Insurance Code.
5.
Requisites of Insurance:
1.
a.
existence of an insurable interest;
1.
2.
b.
risk of loss;
3.
c.
assumption of risk;
4.
d.
scheme to distribute losses; and
5.
e.
payment of premiums
Note: If only a, b, and c are present, it is not a contract of insurance but a risk shifting device.
6.
1.
2.
3.
4.
5.
6.
1.
7.
7.
1.
2.
3.
(a) any contingent or unknown event, whether past or future, which may damnify a person
having an insurable interest; or
(b) any contingent or unknown event, whether past or future, which may create a liability
against the person insured.
1.
8.
1.
2.
3.
1.
4.
9.
1.
2.
Every person has an insurable interest in the life and health of:
a.
himself, his spouse and his children
b.
any person on whom he depends wholly or in part for education or support, or in
whom he has a pecuniary interest
c.
any person under a legal obligation to him for the payment of money, or
respecting property or services, of which death or illness might prevent the performance
or delay it
d.
any person upon whose life any estate or any interest vested in him depends
Insurable Interest in Property may consist of:
a.
an existing interest
b.
an inchoate interest, founded on an existing interest
3.
c.
an expectancy, coupled with an existing interest out of which the expectancy
arises
Definition of Insurable Interest in Property: Interest in property, whether real or personal, or
any relation thereto, or liability in respect thereof, of such nature that a contemplated peril
might directly damnify the insured.
1.
Category
Insurable Interest in
Property
1. basis
3. amount of insurable
interest
1.
11. General Rule: A change of interest in any part of a thing insured unaccompanied by a
corresponding change in interest in the insurance suspends the insurance to an equivalent
extent, until the interest in the thing and the interest in the insurance are vested in the same
person.
4.
e.
a transfer of interest by one of several partners, joint owners in common who are jointly
insured to the others (even though it has been agreed that the insurance shall seize upon the
alienation of the thing insured)
1.
12. Revocation of Beneficiaries
Exception: Any person who is forbidden to receive any donation under Article 739 of the Civil
Code cannot be named beneficiary of a life insurance policy by the person who cannot make the
donation to him.
The following donations shall be void:
1.
a.
those made between persons who were guilty of adultery or concubinage at the time of
the donation;
2.
b.
those made by persons found guilty of the same criminal offense, in consideration
thereof;
3.
c.
those made to a public officer or his wife, descendants, ascendants, by reason of his
office.
(a)
The termination of a subsequent marriage shall allow the innocent spouse to revoke the
designation of the other spouse who acted in bad faith as beneficiary in any insurance policy, even
if such designation be stipulated as irrevocable.
(b) After the finality of the decree of legal separation, the innocent spouse may revoke the
donations as well as the designation of the latter as a beneficiary in any insurance policy, even if
such designation is irrevocable. The revocation of or change in the designation shall take effect
upon written notification thereof to the insured. The action to revoke the donation under this
article must be brought within 5 years from the time the decree of legal separation has become
final.
(c)
The interest of a beneficiary in a life insurance policy shall be forfeited when the
beneficiary is the principal, accomplice or accessory in willfully bringing about the death of the
insured, in which event, the nearest relative of the insured shall receive the proceeds of said
insurance if not otherwise disqualified.
1.
General Rule: The insured is not required to communicate the nature (or kind) or the amount
1.
b.
insurance policy must specify the interest of the insured in the property insured, if he is
not the absolute owner thereof.
A concealment, whether intentional or not, entitles the injured party to rescind a contract of
insurance.
Requisites:
(a)
(b)
(c)
(d)
(e)
the other party has no other means of ascertaining the facts concealed.
Note: An insured need not die of the very disease he failed to reveal to the insurer. It is
sufficient that the non-revelation has misled the insurer in forming his estimate of the
disadvantages of the proposed policy or in making his inquiries in order to entitle the insurance
company to avoid the contract.
Note: The insured is under an obligation to disclose not only such material facts as are known
n Failure on the part of the insured to disclose such facts known to his agent, or wholly due to
the fault of the agent, will avoid the policy, despite the good faith of the insured.
1.
15. Neither party to the insurance contract is bound to communicate information on the
following matters except in answer to the inquiries of the other:
1.
a.
those of which the other knows;
2.
b.
that which, in the exercise of ordinary care, the other ought to know and of
which the former has no reason to suppose his ignorance, i.e. political situation, general
usages of trade;
3.
c.
those of which the other waives communication;
4.
d.
those which prove or tend to prove the existence of the risk excluded by a
warranty and which are not otherwise material;
5.
e.
those which relate to a risk excepted from the policy and which are not
otherwise material.
Neither party is bound to communicate his mere opinion, even upon inquiry, because such
(a)
(b) by the neglect to make inquiry as to such facts, where they are distinctly implied in other
facts which information is communicated
Materiality is to be determined not by the events but solely upon the probable and reasonable
influence of the facts on the party to whom the communication is due in forming his estimate of
the disadvantages of the proposed contract or in making his inquiries.
Concealment, whether intentional or not, entitles the other party to rescind the contract.
1.
16. Representation
It is a factual statement made by the insured at the time of, or prior to, the issuance of the
policy, to give information to the insurer and otherwise induce him to enter into the insurance
contract.
1.
a.
must be exercised previous to the commencement of an action on the contract (the
action referred to is that to collect a claim on the contract)
2.
b.
misrepresentation, whether intentional or not, gives the right to rescind
Incontestable Clause: After a policy of life insurance made payable on the death of the
insuredshall have been in force during the lifetime of the insured for a period of 2 years from
the date of its issue or of its last reinstatement, the insurer cannot prove that the policy is void
ab initio or is rescindable by reason of the fraudulent concealment or misrepresentation of the
insured or his agent.
Exceptions: (a) absence of insurable risk
(b)
(c)
fraud
(d)
non-payment of premium
(e)
(f)
1.
17. Warranties:
General Rule: Non-performance of a promissory warranty avoids a contract of insurance.
Exceptions:
1.
a.
when before the time for performance of the promissory warranty, a loss insured against
occurs;
2.
b.
when before the time of the performance of the warranty, the act becomes unlawful;
3.
c.
when before the time of the performance of the warranty, said performance becomes
impossible.
A statement or a promise set forth in the policy or by reference incorporated therein, the nonfulfillment of which in any respect and without reference to whether the insurer was in fact
prejudiced by such non-fulfillment, renders the policy voidable by the insurer, wholly
irrespective of the materiality of such statement or promise.
Warranty
Representation
collateral inducement
Note: If there is a breach of warranty, even if the cause of the loss is a different risk, the
insurer is entitled to rescind the contract of insurance.
Breach must refer to a material warranty, whether intentional or not.
1.
18. Policy
What is a Rider? It is an additional provision in a policy not part of the body of the printed
form.
Cover Note: written memorandum of the most important terms of a preliminary contract of
insurance, intended to give temporary protection pending the investigation of the risk by the
insurer, or until the issuance of a formal policy.
General Rule: Cover notes bind insurer temporarily pending the issuance of the policy.
Exception: Where it is merely an acknowledgment on behalf of the company that the latters
branch office had received from the applicant the insurance premium and accepted the
application subject for processing by the insurance company and that the latter will either
approve or reject the same.
Kinds of Policies:
1.
a.
Open the value of the thing insured is not agreed upon, but is left to be ascertained at
the time of the loss
2.
b.
Valued expresses on its face an agreement that the thing insured shall be valued at a
specific sum
3.
c.
Running contemplates successive insurance which provides that the object of the policy
may be from time to time defined especially as to the subject of insurance by additional
statements or endorsements
n Note: If an amount is written on the face of an open policy, it is merely a determination of the
maximum limit of recovery and not as the value of the policy.
Category
Open Policy
Valued Policy
value of property is to be
ascertained upon loss
Period for commencing an action against the policy: Within 1 year from the time the cause of
action accrues, i.e., from the time of rejection of the claim by the insurer. Any condition,
stipulation, or agreement limiting the time to less than 1 year is void.
Grounds for Cancellation of a Policy by the Insurer:
(2)
notice must be based on the ff. occurrences after effective date of the policy
(a)
non-payment of premiums
(b)
conviction of a crime arising out of acts increasing the hazard insured against
(c)
(d)
discovery of willful or reckless acts or omissions increasing the hazard insured against
(e)
physical changes in the property insured which results in the property becoming uninsurable
(f)
determination by the Commissioner that the continuation of the policy would violate or
would place the insurer in violation of the Insurance Code
(3)
(4)
it must be mailed or delivered to the insured at the address shown in the policy
(5) notice must state the ground relied upon and that upon written request of the insured, the
insurer will furnish facts on which the cancellation is based
Insurer must mail or deliver to the insured notice of its intention not to renew the policy or to
condition its renewal upon reduction of limits or elimination of coverages within 45 days before
the policy ends. Otherwise, insured entitled to renew the policy upon payment of the premium
due on the effective date of the renewal.
1.
(b)
1.
2.
3.
4.
5.
1.
1.
2.
3.
4.
5.
19. Premium
General Rule: No policy is binding until the premium thereof has been paid.
Exceptions: (a) in case of life or industrial life policy, whenever the grace period applies
in case of estoppel
Insurer is entitled to payment of premiums as soon as the thing insured is exposed to the perils
insured against.
When insurer entitled to Return of Premiums
a.
when the contract is voidable on account of fraud or misrepresentation of the insurer;
b.
when on account of facts, the existence of which the insured was ignorant without his
fault
c.
when by any default of the insured other than actual fraud, the insurer never incurred
any liability under the policy
d.
when the insured has become a public enemy and the policy automatically canceled (on
the ground of equity)
e.
in case of over-insurance by several insurers (ratable return of premiums, proportioned
to the amount by which the aggregate sum insured in all policies exceed the insurable value of
the thing at risk)
20. Loss
When Insurer is Liable:
a.
where the peril insured against was the proximate cause, although a peril not
contemplated by the contract may have been the remote cause or even the immediate cause of
the loss
b.
where the thing insured is rescued from the peril insured against that would otherwise
have caused a loss, if, in the course of such rescue, the thing is exposed to a peril not insured
against, which permanently deprives the insured of its possession in whole or in part
c.
where loss is caused by efforts to rescue the thing insured from a peril insured against
d.
insurer is not exonerated by a loss caused by simple negligence of the insured if the
proximate cause of the loss is a peril insured against
e.
loss, the immediate cause of which is a peril insured against except when the proximate
cause is an excepted peril
When Insurer Not Liable:
1.
2.
a.
where the peril insured against was only a remote cause
b.
where the peril is specifically excepted, a loss which would not have occurred but for
such peril is thereby excepted
3.
c.
loss caused by the connivance of the insured
4.
d.
loss caused by the willful act of insured
5.
e.
loss caused by insureds negligence, if it amounts to bad faith
General Rule: The insurer is not liable for a loss caused by the willful act of the insured.
Exception: Suicide Clause in Life Insurance: Insurer liable in case insured committed suicide
after the policy has been in force for a period of 2 years from the date of its issue or last
reinstatement. If insured kills himself within a period of 2 years, insurer is not liable.
b.
c.
d.
e.
Over Insurance
Double Insurance
The Code prohibits double insurance without the consent of the insurer.
Liability of Insurer:
Insurance taken
from each insurer
- x
1.
22. Reinsurance: A process by which an insurer procures a third person to insure him against
loss or liability by reason of such original insurance.
The original insured cannot recover from this insurance unless there is a specific grant, or
assignment of, the reinsurance contract in favor of the insured, or a manifest intention of the
contracting parties to the reinsurance contract to favor the insured.
1.
2.
Reinsurance
1.
2.
1.
insurer becomes the insured
2.
subject matter is the insured risk
or liability
3.
3.
different risks and interests of
insured
4.
4.
there must be consent of original
5.
5.
one who is original insured has no
Double Insurance
6.
7.
8.
9.
10.
1.
1.
a.
in the ship even if it has been chartered by one who promises to pay him in value in case
of loss (insurer is liable for what insured cannot recover from the charterer), even when
hypothecated by bottomry (only the excess of its value over the amount secured by bottomry)
and
2.
b.
in the freightage, which according to the ordinary and probable course of things he
would have earned but for the intervention of a peril insured against or other peril incident to
the voyage
Charterer has insurable interest in the ship to the extent that he is liable to be damnified by its
loss.
Barratry: Any willful misconduct on the part of the masters or crew, in pursuance of some
unlawful or fraudulent purpose, without the consent of the owners and to the prejudice of the
owners interest.
Jettison: Intentional casting overboard of any part of a venture exposed to a peril, whether it
be of the cargo, or the ships furniture or tackle, in the hope of saving the rest of the venture.
Insurable Interest in Marine Insurance: Determined when one will sustain loss from the
virtue of which the owner or the agent of the vessel for the transportation of goods or persons
from one port to another.
Loan on Bottomry: Contract in the nature of a mortgage whereby the owner of a ship borrows
money for the use, equipment or repair of the vessel for a definite term, and pledges the ship as
a security for repayment, with maritime or extraordinary interest on the account of the
maritime risks to be borne by the lender. It is stipulated in such a contract that if the ship be
lost in the course of the specific voyage or during a specified limited time caused by any of the
perils enumerated in the contract, the lender shall resolutely lose his money.
Loan on Respondentia: Contract akin to that of mortgage made on the goods on board the
ship, and which are to be sold or exchanged in the course of the voyage. The goods serve as the
principal security.
Freightage: Signifies all the benefits derived by the owner, carriage of his own goods, or those
of others.
Concealment: In marine insurance, information or the belief or expectation of a 3 rd person, in
reference to a material fact is material.
n Concealment of the following merely exonerates the insurer from the resulting loss therefrom:
1.
2.
3.
4.
5.
a.
national character of the insured
b.
liability of the thing insured to capture and detention
c.
liability to seizure from breach of foreign laws of trade
d.
want of necessary documents
e.
use of false and simulated papers
Implied Warranties:
1.
a.
that the ship is seaworthy complied with if the ship is seaworthy at the time of
commencement of risk, except: (a) insurance for a specified length of time at the
commencement of every voyage it undertakes during that time; (b) cargo to be transshipped at
indeterminate port each vessel upon which cargo is shipped is seaworthy at the
commencement of each particular voyage
2.
b.
that the vessel shall not engage in illegal venture
3.
c.
that the vessel shall not deviate from the course of the voyage insured
4.
d.
where the nationality or neutrality of a ship or cargo is expressly warranted, it is implied
that the ship will carry the requisite documents to show such nationality or neutrality and that it
will not carry any documents which may cast reasonable suspicion thereon
a.
b.
c.
a.
2.
3.
b.
in a Cargo Policy commencement of each particular voyage
c.
in a Voyage Policy commencement of each portion of the voyage
Deviation
1.
2.
3.
a.
b.
c.
When
1.
a.
when caused by circumstances over which neither the master not the owner of the ship
has any control
2.
b.
when necessary to comply with a warranty or to avoid a peril whether it is insured
against or not
3.
c.
when made in good faith for the purpose of saving human life or relieving another vessel
in distress
4.
d.
when made in good faith and upon reasonable grounds of belief in its necessity to avoid
a peril
Loss
1.
a.
b.
Constructive Total Loss gives to the person insured the right to abandon
Average any extraordinary or additional expense incurred during the voyage for the
preservation of the vessel, cargo, or both and all damages to the vessel and cargo from the time
it is loaded and the voyage commenced until it ends and the cargo unloaded
General Average an expense or damage suffered deliberately in order to save the vessel, its
(a) more than thereof in value is actually lost or would have been expended to recover it from
the peril
(b)
(c)
if the thing insured is the ship and the voyage cannot be lawfully performed without
incurring an expense of more than of the whole, or a risk which a prudent man would not
undertake under the circumstances
(d) if the thing insured is cargo or freightage, and the voyage cannot be performed on another
ship procured by the master within a reasonable time and with reasonable diligence to forward
the cargo without incurring an expense or a risk as stated above
1.
2.
3.
4.
a.
must be total and conditional
b.
made within a reasonable time
c.
explicit notice
d.
coupled with actual abandonment
Requisites for Valid Valuation in the Valued Marine Policy:
1.
2.
a.
insured must have interest at risk
b.
there must be no fraud on the insureds part
Notice of Abandonment:
1.
a.
may be oral or in writing (if oral, written notice must be submitted within 7 days from
oral notice)
2.
b.
must be explicit
3.
c.
must specify the particular cause for abandonment
4.
d.
need not be accompanied by proof of interest or loss
Acceptance of Abandonment
1.
2.
3.
a.
may be express or implied (i.e. silence for unreasonable length of time)
b.
conclusive upon the parties and admits the loss and sufficiency of abandonment
c.
irrevocable, unless the ground on which it is made is proved to be unfounded
If insurer refuses to accept a valid abandonment liable as upon actual total loss
Upon actual abandonment
1.
2.
a.
freightage earned before loss belongs to the insurer of freightage
b.
freightage earned after loss belongs to insurer of ship
Co-insurance: form of insurance in which the person who insures his property for less than the
entire value is understood to be his own insurer for the difference which exists between the true
value of the property and the amount of insurance
Co-insurance applies only where the:
1.
2.
a.
insurance taken is less than the actual value of the thing insured
b.
loss is partial
Primage increase in freightage
1.
Insurer is liable for loss or damage caused by hostile fire (fire that escapes from the place where it
was intended to burn and ought to be in) and not that caused by friendly fire (fire which burns in
a place where it is intended to burn).
1.
2.
3.
4.
5.
6.
a.
b.
c.
d.
e.
f.
When
1.
2.
3.
a.
such alteration violates a provision in the policy
b.
it was made without the insurers consent
c.
it is done within the insureds control, and it increases the risk of loss or damage
Rules:
fire
lightning
windstorms
tornado
earthquake
other allied risks
does alteration in the use or condition entitle the insurer to rescind the contract?
1.
a.
policy shall not protect the insured from injury consequent upon his negligent use or
management of fire, so long as it is confined to the place where it ought to be
2.
b.
if it escapes, even though the insured was negligent, the insurer is liable
3.
c.
even though a fire may remain in its proper place, it may become hostile if it by
accident, becomes so extensive as to be beyond control
a.
purchase the property at appraised valuation
b.
restore the property damaged contract of insurance is discharged and parties enter
into a new contract of insurance
1.
25. Casualty Insurance: Any injury that is intended, unexpected and unusual, even though it
results from an act or even which was intelligently done.
a.
by his own hand while insane
b.
by taking poison by mistake
c.
by overdoes of drugs administered or taken by mistake, by ignorance or material
pathological conditions
4.
d.
by unexpected bacterial infection consequent upon doing acts, even though such acts
were intentionally done
5.
e.
by unprovoked violence of others
a.
motor vehicle owner or one who is the actual legal owner of a motor vehicle in whose
name such vehicle is registered with the LTO
2.
b.
land transport operator or one who is the owner of a motor vehicle or vehicles being
used for conveying passengers for compensation (including school buses)
No Fault Indemnity Clause: The insurance company shall pay any claim for death or bodily
injuries sustained by a passenger or 3rd party without the necessity of proving fault or negligence
of any kind subject to certain conditions. This does not apply to property damage.
1.
26. Suretyship an agreement whereby the surety guarantees the performance of the
principal or obligor of an obligation or undertaking in favor of a 3 rd party called the obligee
1.
27. Life Insurance: an insurance in human life and insurance appertaining thereto or
connected therewith may be payable:
1.
a.
on the death of the insured
2.
b.
on his surviving a specified period
3.
c.
otherwise, contingently on the continuance or cessation of life
1.
2.
3.
4.
5.
1.
Grace Period 30 days for the payment of any premium due after the first premium has been paid
Period of Incontestability after the lapse of 2 years from the date of issue or date of approval of
last reinstatement
Reinstatement of Policy within 3 years from the date of default of premium, upon:
1.
2.
a.
b.
Exceptions:
1.
2.
1.
a.
b.
b.
(b)
failing to adopt or implement reasonable standards for the prompt investigation of claims
no attempt in good faith to effectuate prompt, fair and equitable settlement of claims
compelling policy holders to institute suits to recover the amount due under its policies by
offering with no justifiable reason an amount substantially less than that ultimately recovered in
suits brought by them
Proceeds of Life Insurance payable within 60 days after:
(a)
(b) filing of proof of death (upon failure to pay interest, at the rate of 2 times the ceiling
prescribed by the Monetary Board unless based on the ground that the rate is fraudulent)
Proceeds of Policies other than Life payable:
(a)
(b) upon ascertainment of loss or damage (if not made within 60 days of proof of loss, payable in
90 days)
1.
c.
(a)
(b)
if it has failed to comply with the provisions of law or regulations obligatory upon it
(c)
its conditions or methods of business s such as to render its proceedings hazardous to the
that its paid up capital stock, or its available cash assets, or its security deposits, as the case
Insurance Agent any person who for compensation solicits or obtains insurance on behalf of any
insurance company or transacts for a person other than himself an application for a policy or
contract of insurance to or from such company or offers or assumes to act in negotiating of such
insurance. He must be first licensed as such before doing any acts as insurance agent.
Insurance Broker any person for any compensation, commission or any other thing of value, acts,
or aids in any manner in soliciting, negotiating or procuring the making of any insurance contract
or in placing risk or taking out insurance, on behalf of an insured other than himself. A license is
required.
WAREHOUSE RECEIPTS LAW
1.
1.
1.
1.
1.
1.
1.
1.
1.
1.
1.
Warehouse a building or place where goods are deposited and stored for profit.
2.
Warehouseman person lawfully engaged in the business of storing goods for profit.
Only a warehouseman may issue warehouse receipts.
3.
Warehouse Receipt written acknowledgment by a warehouseman that he has received
and holds certain goods therein described in store for the person to whom it is issued.
4.
Non-negotiable Receipt receipt deliverable to a specified person.
5.
Negotiable Receipt receipt deliverable to order or to bearer.
6.
Essential Terms which MUST be embodied in a Warehouse Receipt:
1.
a.
location of the warehouse
2.
b.
date of the issue of the receipt
3.
c.
consecutive number of the receipt
4.
d.
statement whether the goods received will be delivered to bearer, or a specified
person, or his order
5.
e.
rate of storage charges
6.
f.
description of the goods or packages containing them for identification
purposes
7.
g.
signature of the warehouseman
8.
h.
statement of the amount of advances made and of liabilities incurred for which
the warehouseman claims as lien
7.
Effect of omission of any of the essential terms:
1.
a.
The validity of the warehouse receipt is not affected.
2.
b.
The warehouseman shall be held liable for damages to those injured by his
omission.
3.
c.
The negotiability of the warehouse receipt is not affected.
4.
d.
The issuance of a warehouse receipt in the form provided by the law is merely
permissive and directory and not mandatory in the sense that if the requirements are not
observed, then the goods delivered for storage become ordinary deposits.
8.
Terms which may be inserted in a Warehouse Receipt: Any other terms except (a) those
contrary to the provisions of this Act; (b) those that would impair a warehousemans obligation
to exercise that degree of care in the safekeeping of the goods entrusted to him
9.
Marks to be made on a warehouse receipt:
1.
a.
A non-negotiable receipt must be clearly marked non-negotiable or not
negotiable, otherwise, the holder of the receipt who purchased it for value and who
supposed it to be negotiable, may treat it as negotiable.
2.
b.
Duplicate receipts must be so marked, otherwise, the warehouseman is held
liable for all damages suffered by a holder believing the same to be the original.
10. Warranties of a warehouseman as to duplicate receipts:
1.
a.
The duplicate is an accurate copy of the original receipt.
2.
b.
Such original receipt is uncancelled at the date of the issue of the duplicate.
11. Effects of alteration on the liability of the warehouseman:
1.
a.
If the alteration is IMMATERIAL (the tenor of the receipt is not changed),
whether fraudulent or not, authorized or not, the warehouseman is liable on the altered
receipt according to its original tenor.
2.
b.
If the alteration is MATERIAL but AUTHORIZED, the warehouseman is liable
according to the terms of the altered receipt.
3.
c.
If the alteration is MATERIAL, UNAUTHORIZED but INNOCENTLY MADE, the
warehouseman is liable on the altered receipt according to its original tenor.
4.
d.
If the alteration is MATERIAL and FRAUDULENTLY MADE, the warehouseman is
liable:
1.
(1) to the purchaser of the receipt for value and without notice of the alteration according to
the tenor of the altered receipt
(2)
(3)
to subsequent purchasers with notice of the alteration, according to the terms of the original
receipt
1.
1.
careful owner would exercise over similar goods of his own. He shall be liable for any loss or
injury to the goods caused by his failure to exercise such care.
Exception: He shall not be liable for any loss or injury which could not have been avoided by
received in case of loss. He cannot stipulate that he will not be responsible for any loss caused
by his negligence.
1.
b.
To deliver the goods to the holder of the receipt or the depositor upon demand,
provided demand is accompanied with:
(1)
(2)
an offer to surrender the negotiable receipt properly endorsed. If the receipt is non-
negotiable, any person lawfully entitled to the possession of the goods may be entitled to delivery
without surrender of the receipt.
(3) a readiness and willingness to sign an acknowledgment that the goods have been delivered if
such is requested by the warehouseman.
1.
a. persons to whom a competent court has ordered the delivery of the goods
(1)
where a negotiable instrument has been lost or destroyed, the court may order delivery to a
person upon satisfactory proof of such loss or destruction and upon proper posting of a bond to
protect the warehouseman from any liability or expense which he may incur by reason of the
original receipt remaining outstanding.
(2)
where more than one person claims title or possession of the goods the warehouseman may
require all claimants to interplead. The court will then order delivery to the person having a
better right.
1.
b.
an attaching creditor Goods, while in the possession of the warehouseman and covered
by a negotiable receipt, cannot be attached or levied upon under an execution unless:
(I)
(ii)
d.
B.
1.
2.
1.
C.
terms
1.
2.
3.
4.
1.
15.
to the purchaser where perishable or hazardous goods are sold at private or public sale
If goods are covered by a non-negotiable receipt:
a.
a person entitled to the delivery by the terms of the receipt, or
b.
one who has written authority from letter a
If goods are covered by a negotiable receipt, a person in possession of the receipt, the
of which the goods are deliverable:
a.
to him or order
b.
to bearer
c.
indorsed to him
d.
indorsed in blank by the person whom delivery was promised
When is there Misdelivery?
When the warehouseman delivers the goods to a person who is not in fact lawfully entitled to the
possession of the goods because:
1.
2.
(1)
a.
b.
been requested by the person lawfully entitled to the delivery not to make such delivery, or
(2) had information that the delivery about to be made was to one not lawfully entitled to the
possession of the goods
1.
The warehouseman shall be liable for conversion to all having a right to property or possession of
the goods.
1.
17. What happens if there is proper delivery or partial delivery but the warehouseman fails to
cancel the receipt or record on the receipt of such partial delivery?
1.
a.
If goods covered by a negotiable warehouse receipt are delivered by a
warehouseman but he fails to take the receipt and cancel it, then he is still liable to one
who purchases for value and in good faith such receipt.
2.
b.
If he makes partial delivery of the goods but fails to record the partial delivery
on the receipt then he may still be held liable for the entire receipt to one who purchases
for value and in good faith such receipt.
1.
18. Lawful excuses for refusal to deliver goods:
1.
a.
The warehouseman can refuse to deliver the goods if he has acquired title or
right to the possession of the goods:
(1) directly or indirectly from a transfer made by the depositor at the time of the deposit for
storage or subsequent thereto; or
(2)
1.
b.
If someone other than the depositor or person claiming under the depositor has a claim
to the title or possession of the goods and the warehouseman has information of such claim, the
warehouseman shall be excused from liability for refusing to deliver the goods either to the
depositor or person claiming under him until he has had a reasonable time to ascertain the
validity of the adverse claim or to bring legal proceedings to compel all claimants to interplead.
1.
c.
The warehouseman will not be required to deliver the goods if such had been lost. But
this is without prejudice to liabilities which may be incurred by him due to such loss.
1.
d.
The warehouseman having a valid lien against the person demanding the goods may
refuse to deliver the goods to him until the lien is satisfied.
1.
e.
If goods have been lawfully sold or disposed of because of their perishable or hazardous
nature, the warehouseman shall not be liable for failure to deliver the goods.
1.
19. A warehouseman cannot refuse to deliver goods to the depositor or to a person claiming
under him on the ground that adverse title to the goods belongs to a third person.
1.
20. Rules as regards Co-mingling of Deposited Goods:
General Rule: A warehouseman may not co-mingle goods belonging to different depositors or
belonging to the same depositor for which separate receipts had been issued.
Exception: A warehouseman may co-mingle fungible goods of the same kind and grade
Creditors of the depositors, before negotiation, may protect themselves by obtaining a writ of
preliminary injunction and serve the same on the depositor before he has a chance to negotiate
the receipt. Once enjoined, there will be no longer a danger that a 3rd person will be prejudiced
so the goods may now be attached, levied upon, or that the vendors lien or the right of stoppage
in transit be exercised.
1.
23. Warehousemans Lien
a.
all lawful charges for storage and preservation of the goods
b.
all lawful claims for money advances, interest, insurance, transportation, labor,
weighing, cooperating and other charges and expenses in relation to such goods
3.
c.
all reasonable charges and expenses for notice and advertisements of sale and for sale of
the goods where default has been made in satisfying the warehouse lien
a.
goods belonging to the depositor who is liable to the warehouseman as debtor whenever
such goods are deposited and
2.
b.
goods belonging to other persons stored by the depositor who is liable to the
warehouseman as debtor with authority to make a valid pledge
a.
by refusing to deliver the goods until the lien is satisfied
b.
by causing the extrajudicial sale of the property and applying the proceeds to the value
of the lien
3.
c.
by filing a civil action for unpaid charges or by way of counterclaim in an action to
recover the property from him
a.
when the warehouseman voluntarily surrenders possession of the goods without requiring
payment of his lien; or
2.
b.
when the warehouseman wrongfully refuses to deliver the goods when a demand is made
with which he is bound to comply
1.
1.
2.
There is no need to indorse for negotiation. Physical delivery of the instrument will suffice. But if
the instrument is indorsed specially, the bearer character of the receipt is destroyed and for
further negotiation, there will be a need for indorsement.
1.
2.
a.
the owner of the receipt, or
b.
the person to whom possession of the receipt was entrusted to by the owner
Rights acquired by a person to whom the receipt has been negotiated:
1.
2.
a.
the title of the person negotiating the receipt over the goods covered by the receipt
b.
the title of the person (depositor or owner) to whose order by the terms of the receipt
the goods were to be delivered
3.
c.
the direct obligation of the warehouseman to hold possession of the goods for him, as if
the warehouseman directly contracted with him
No, even if the receipt is indorsed, the transferee acquires no additional right. That is why they
are called non negotiable receipts. But they may be transferred or assigned by delivery.
1.
2.
3.
Non-negotiable Receipt
Prior to notification of the warehouseman by the
transferor or transferee, the warehouseman is
not bound to the transferee whose right may be
defeated by a levy of an attachment or
execution upon the goods by the creditor of the
transferor or by a notification to such
warehouseman of the subsequent sale of the
goods.
Negotiable Receipt
Rights of a person to whom a negotiable receipt has been transferred, not indorsed:
1.
2.
a.
the right to the goods as against the transferor
b.
the right to compel the transferor to indorse the receipt. But if the intention of the
parties is that the receipt should merely be transferred, the transferee has no right to require
the transferor to indorse the receipt.
Note: Negotiation takes effect as of the time when the indorsement is actually made.
1.
2.
3.
4.
a.
the receipt is genuine
b.
he has a legal right to negotiate or transfer it
c.
he has knowledge that would impair the validity or worth of the receipt and
d.
he has a right to transfer the title to the goods and that the goods are merchantable
A holder for security of a receipt (mortgagee or pledgee) who in good faith accepts payment of
the debt from a person does not warrant the genuineness of the receipt not the quality or
quantity of the goods therein described.
It is the duty of the purchaser, mortgagee or pledgee of goods for which a negotiable receipt
has been issued to require the negotiation of the receipt to him, otherwise his failure will have
the same effect as an express authorization on his part to the seller, mortgagor, or pledgor in
possession of such receipt to make any subsequent negotiation. The subsequent purchaser must
have taken the receipt in good faith and for value.
A bona fide purchaser of a negotiable warehouse receipt acquires title to the goods where he
purchases from the owners agent within the actual or apparent scope of his authority. In sum,
negotiation is valid despite having been made in breach of trust.
Distinctions between a negotiable instrument and a negotiable warehouse receipt:
Negotiable Instrument
Any warehouseman receiving commodities for (a) storage; (b) milling; (c) co-mingling must:
1.
2.
a.
obtain prior license from the Bureau of Commerce
b.
file a bond in an amount equivalent to 33 1/3 % of the capacity of the warehouse against
which bond depositors may sue directly
3.
c.
open to the public, no discrimination allowed
4.
d.
liable for double market value should he accept goods in excess of the capacity of
warehouse if goods are damaged or destroyed
Note: for palay and corn license, a bond with the National Grains Authority is required; also an
insurance cover is required.
1.
1.
1.
2.
3.
1.
1.
1.
1.
1.
2.
2.
1.
3.
4.
c.
ledger for classifying accounts
d.
copying book for letters and telegrams; if juridical person, include book of
minutes and stock and transfer book
1.
7.
Probative Value of Merchants Book
1.
a.
evidence against merchants themselves
2.
b.
in case of conflicts between 2 books that which s properly kept prevails
3.
c.
if one keeps books and the other does not and cannot explain why, the former
prevails
4.
d.
if both books are properly kept and there is a conflict, other proofs can be
resorted to
1.
8.
Commercial Contracts by Correspondence are perfected from the moment the offeree
accepts the offer, even before knowledge of said acceptance by the offeror. This does not apply
to deposit, guaranty, sales, loan, agency, partnership.
1.
9.
Joint Account Partnership business arrangement whereby 2 or more persons interest
themselves in the business of another by making contributions thereto and participating in the
results thereof
1.
a.
only one member is ostensible, others are silent
2.
b.
no common name
3.
c.
only ostensible partners can sue/be sued
4.
d.
no juridical personality
Transportation Law
1.
1.
Contract of Transportation contract whereby a certain person or association of persons
obligate themselves to transport persons, things, news, from one place to another for a fixed
price
1.
2.
Parties to the Contract of Transportation:
1.
a.
Shipper one who gives rise to the contract of transportation by agreeing to
deliver the things or news to be transported, or to present his own person or those of
other or others in the case of transportation of passengers
2.
b.
Carrier/Conductor one who binds himself to transport persons, things, or news,
as the case may be, or one employed in or engaged in the business of carrying goods for
others for hire
1.
3.
Common Carrier person, corporation, firm, association engaged in the business of
carrying or transporting passengers, goods or both, by land, water, air, for compensation,
offering services to the public; must exercise extraordinary diligence
Private Carrier not engaged in the business of carrying; no public employment; undertakes to
deliver goods/passengers for compensation; requires only ordinary diligence
4. Requisites of Caso Fortuito
1.
2.
3.
4.
a.
b.
c.
d.
1.
5.
Contributory negligence does not entitle passengers to recover moral/exemplary
damages.
1.
6.
Bill of Lading written acknowledgment of receipt of goods and agreement to transport
them to a specific place to a person named or his carrier
It is not indispensable to the creation of a contract of carriage. The contract itself arises from the
moment goods are delivered by shipper to carrier and the carrier agrees to carry them.
The function of the Bill of Lading: the legal basis of the contract between the shipper and carrier
shall be the bills of lading, by the contents of which all disputes which may arise with regard to
their execution and fulfillment shall be decided, no exceptions being admissible other than
forgery or material errors in the drafting thereof.
Carriers responsibility starts from the moment he receives unconditionally the merchandise
personally or through an agent and lasts until he delivers them actually or constructively to the
consignee or his agent.
Mere delay in the delivery of goods to consignee does not give right to refuse goods only breach
of contract, ergo damages. If delay is unreasonable, then he may refuse to accept and make
carrier liable for conversion.
1.
7.
Vessels those engaged in navigation, whether coastwise or on the high seas, including
floating docks, pontoons, dredges, scows and any other floating apparatus destined for the
services of the industry or maritime commerce
1.
8.
Persons Participating in Maritime Commerce:
1.
a.
ship owner and/or ship agent
2.
b.
captain or master
3.
c.
other officers of the vessel
4.
d.
supercargo
1.
9.
Liability of Ship owners and Ship agents:
1.
a.
civil liability for the acts of the captain
2.
b.
civil liability for contracts entered into by the captain to repair, equip and
provision the vessel, provided that the amount claimed was invested for the benefit of
the vessel
3.
c.
civil liability for indemnities in favor of 3 rd persons which may arise from the
conduct of the captain in the care of the goods which the vessel carried, as well as for
the safety of the passengers transported
Ship owner/ship agent not liable for the obligations contracted by the captain if the latter
exceeds his powers and privileges inherent in his position of those which may have been
conferred upon him by the former. However, if the amount claimed were made use of for the
benefit of the vessel, the ship owner or ship agent is liable.
1.
10. Doctrine of Limited Liability liability of shipowners is limited to amount of interest in
said vessel because of the real and hypothecary nature of maritime law such that where the
vessel is entirely lost, the obligation is extinguished.
(3)
(4)
vessel is insured
The doctrine also applies for claims due to death or injuries to passengers, aside from claims
for goods.
In abandoning the vessel, there is no procedure to be followed. There is neither a prescriptive
1.
1.
1.
1.
1.
1.
1.
period within which the ship owner can make the abandonment. He may do so for so long as he
is not estopped from invoking the same or do acts inconsistent with abandonment.
11. Roles of the Captain:
1.
a.
general agent of the ship owner
2.
b.
technical director of the vessels
3.
c.
represents the government of the country under whose flag he navigates
12. Loan on Bottomry made by shipowner/ship agent guaranteed by vessel itself, repayable
upon arrival at destination
13. Loan In Respondentia taken on security of the cargo repayable upon the safe arrival at
cargo destination
14. Accidents and Damages in Maritime Commerce:
1.
a.
Averages
2.
b.
Arrivals Under Stress
3.
c.
Collisions
4.
d.
Shipwrecks
15. Average:
1.
a.
all extraordinary or accidental expenses which may be incurred during the
voyage for the preservation of the vessel or cargo or both
2.
b.
all damages or deterioration which the vessel may suffer from the time it puts to
sea at the port of departure until it casts anchor at the port of destination, and those
suffered by the merchandise from the time they are loaded in the port of shipment until
they are unloaded in the port of their consignment
16. Simple Average expenses/damages caused to the vessel/cargo not inured to common
benefit and profit of all the persons interested in the vessel and her cargo; borne by respective
owners
17. General Average expenses/damages deliberately caused in order to save the vessel, its
cargo or both from a real and known risk
Requisites:
1.
2.
3.
a.
b.
c.
deliberately incurred
intended to save vessel and cargo or both
from real and known risk
4.
1.
d.
there is success
18. Formalities for Incurring Gross Average:
1.
a.
there must be an assembly of the sailing mate and other officers with the
captain including those with interests in the cargo
2.
b.
there must be a resolution of the captain
3.
c.
the resolution shall be entered in the log book, with the reasons and motives and
the votes for and against the resolution
4.
d.
the minutes shall be signed by the parties
5.
e.
within 24 hours upon arrival at the first port the captain makes, he shall deliver
one copy of these minutes to the maritime judicial authority thereat
1.
19. Arrivals under Stress arrival of the vessel at a port not of destination on account of (a)
lack of provisions; (b) well-founded fear of seizure; (c) by reason of accident of the sea disabling
it to navigate
a.
lack of provisions due to negligence to carry according to usage and customs
b.
risk of enemy not well known or manifest
c.
defect of vessel due to improper repair
d.
malice, negligence, lack of foresight or skill of captain
20. Collision impact of 2 vessels both of which are moving
21. Allision striking of a moving vessel against one that is stationary
22. Cases of Collision:
1.
a.
due to the fault, negligence or lack of skill of the captain, sailing mate or the
complement of the vessel ship owner liable for the losses and damages (Culpable Fault)
2.
b.
due to fortuitous event or force majeure each vessel and its cargo shall bear its
own damages (Fortuitous)
3.
c.
it cannot be determined which of the 2 vessels caused the collision each vessel
shall suffer its own damages, and both shall be solidarily responsible for the losses and
damages occasioned to their cargoes (Inscrutable Fault)
1.
23. Error in Extremis sudden movement made by a faultless vessel during the 3 rd zone of
collision with another vessel which is at fault, even if the said movement is wrong, no
responsibility will fall on said vessel
1.
24. Shipwreck denotes all types of loss/ wreck of a vessel at sea either by being swallowed
up by the waves, by running against another vessel or thing at sea or on coast where the vessel
is rendered incapable of navigation
1.
25. Salvage the compensation allowed to persons by whose voluntary assistance a ship at sea
or her cargo or both have been saved in whole or in part from an impending peril, or such
property recovered from actual peril or loss, in cases of shipwrecks, derelict or recapture; a
service which one person renders to the owner of a ship or goods by his own labor, preserving
the goods or ship which the owner or those entrusted with the care of them either abandoned in
distress at sea or are unable to protect and secure; a permit is required to engage in the salvage
business
1.
26. Derelict a ship or cargo which is abandoned and deserted at sea by those who are in
charge of it, without any hope of recovering it, or without any intention of returning it
1.
27. Elements of a Valid Salvage:
1.
a.
a marine peril
2.
b.
service voluntarily rendered when not required as an existing duty or from
special contract
3.
c.
success, in whole or in part, or that the services rendered contributed to such
success
1.
28. Contract of Towage contract whereby a vessel usually motorized pulls another from one
place to another for compensation. It is a contract of services.
1.
29. Difference between Towage and Salvage:
Salvage
Towage
3.
c.
delay in the transport by air of passengers, baggage, or goods
Enumeration of causes of action as above stated is not an exclusive list. (Northwest Airlines vs.
Cancer)
1.
3.
Meaning of Transport by Air period during which the baggage or goods are in charge of
the carrier, whether in an airport or on board an aircraft, or in the case of landing outside an
airport, in any place whatsoever
1.
4.
Action for damages must be brought at the option of the plaintiff, either:
1.
a.
before the court of the domicile of the carrier;
2.
b.
court of principal place of business of carrier;
3.
c.
court where he has a place of business through which the contract has been
made;
4.
d.
before the court at the place of destination
1.
5.
Convention provides for a limitation of liability:
1.
a.
for each passenger limited to 125,000 francs
2.
b.
for goods and checked in baggage limited to 250 francs per kilogram
3.
c.
for hand carry limited to 5,000 francs per passenger
(1)
willful misconduct
(2)
(3)
(4)
1.
6.
The right to damages shall be extinguished if an action is not brought within 2 years
from the date of arrival at the destination, or from the date on which the aircraft ought to have
arrived, or from the date on which the transportation stopped.
1.
7.
Notice requirement: damage to baggage : within 3 days from receipt
1.
Failure to file written notice, no action shall lie against the carrier, save in the case of fraud on
his part.
8.
Notice Requirements:
COGSA
Code of Commerce
loss/damage apparent
protest at time of
receipt of goods
protest at time of
receipt of goods
loss/damage not
apparent
protest within 24
hours after receipt
Warsaw Convention
damage of baggage
damage of goods
delay
1.
6.
1.
2.
3.
Corporation Law
1.
1.
Doctrine of Corporate Opportunity a director is made to account to his corporation,
gains and profits from transactions entered into by him/another competing corporation in which
he has substantial interest, which should have been a transaction undertaken by the
corporation. This s a breach of fiduciary relationship.
1.
2.
Doctrine of Piercing the Veil of Corporate Entity it is to disregard for justifiable reasons
by the state the fiction of juridical personality of the corporation separate and distinct from the
persons composing it
1.
1.
1.
1.
1.
1.
3.
De Jure Corporation corporation formed with all the requirements of law
4.
De Facto Corporation corporation defectively formed from a bona fide attempt to
incorporate under the existing law and exercises corporate powers
5.
Corporation by Estoppel a group of persons which holds itself out as a corporation and
enters into a contract with 3rd persons on the strength of such appearance cannot be permitted
to deny its existence in an action under said contract
6.
Corporation by Prescription body not lawfully organized as a corporation but has been
recognized by immemorial usage as a corporation with rights and duties maintainable by law (ex.
Roman Catholic)
7.
Trust Fund Doctrine the subscribed capital stock of the corporation is a trust fund for
the payment of debts of the corporation which the creditors have the right to look up to satisfy
their credits. Corporations may not dissipate this and the creditors may sue the stockholders
directly for their unpaid subscriptions
8.
Voting Shares
1.
a.
Founders Shares given rights and privileges not enjoyed by owners of other
stocks; right to vote/be voted in the election of directors shall not exceed 5 years
Non-Voting Shares
1.
a.
Preferred Shares issued only with par value; given preference in distribution of assets
in liquidation and in payment of dividends and other preferences stated in the articles of
incorporation
2.
b.
Redeemable Shares expressly provided in articles; have to be purchased/taken up upon
expiration of period of said shares purchased whether or not there is unrestricted retained
earnings
3.
c.
Treasury Stocks stocks previously issued and fully paid for and reacquired by the
corporation through lawful means (purchase, donation, etc.)
1.
9.
Exceptions where holders of non-voting shares may vote:
1.
a.
amendments of articles of incorporation
2.
b.
adoption/amendment of by-laws
3.
c.
increase/decrease of bonded indebtedness
4.
d.
increase/decrease of capital stock
5.
e.
sale/disposition of all/substantially all corporate property
6.
f.
merger/consolidation of corporation
7.
g.
investment of funds in another corporation/another business purpose
8.
h.
corporate dissolution
1.
10. Preferred Cumulative Participating Share of Stock share entitling its holder to preference
in the payment of dividends ahead of common stockholders and to be paid the dividends ahead
of common stockholders and to be paid the dividends due for prior years and to participate
further with common stockholders in dividend declarations
1.
11. Promotion Stock for Services Rendered Prior to Incorporation Escrow Stock stock
deposited with a 3rd person to be delivered to stockholder/assignor after complying with certain
conditions usually payment of full subscription price
1.
12. Over-issued Stock stock issued in excess of authorized capital stock; null and void
1.
13. Watered Stock stock issued gratuitously, money/property less than par value, services
less than par value, dividends where no surplus profits exist
1.
1.
1.
1.
1.
1.
1.
How to organize?
1.
a.
adoption of by-laws
2.
b.
election of Board of Directors
3.
c.
election of officers
But from issuance of certificate, it acquires juridical personality
1.
21. Merger one corporation absorbs the other and remains in existence while the other is
dissolved
1.
22. Consolidation a new corporation is created and the consolidating corporations are
extinguished
1.
23. Theory of General Capacity a corporation is said to hold such powers as are not
prohibited/withheld from it by general law
1.
1.
1.
1.
1.
1.
1.
1.
1.
24. Theory of Special Capacity the corporation cannot exercise powers except those
expressly/impliedly given
25. Concession Theory a group of persons wanting to create a corporation will have to
execute documents and comply with requirements set by the state before being given corporate
personality; merely a privilege; state may provide causes for which the privilege may be
withdrawn
26. Acts requiring majority vote of stockholder:
1.
a.
filing of issue value of no par value share
2.
b.
adoption, amendment, repeal of by-laws
3.
c.
compensation and other per diems for directors
27. Where similar acts have been approved by the directors as a matter of general practice,
custom and policy, the general manager may bind the company even without formal
authorization of the board of directors
28. Powers of stockholders:
1.
a.
a direct participation in management where his vote is needed to approve
certain corporate actions
2.
b.
indirect participation in management to vote or remove directors
3.
c.
proprietary rights
4.
d.
remedial rights
29. Voting Trust Agreement an agreement between a group of stockholders and trustee for a
term not exceeding 5 years in which control over the stocks is lodged in the trustee. The
purpose is for controlling the voting.
1.
a.
in writing, notarized and filed with the SEC and the corporation
2.
b.
period not exceeding 5 years
3.
c.
cannot be entered into to circumvent the laws against monopolies, illegal
combinations in restraint of trade in fraud
30. Cumulative Voting the number of votes that a shareholders number of shares multiplied
by the number of directors may give all said votes to one candidate or he may distribute them as
he may deem fit. Cumulative voting is a matter of right in a stock corporation. In a non-stock
corporation, it cannot be utilized unless allowed by the by-laws/articles
31. The power of removal of directors that may be exercised with or without cause cannot
apply to the director representing the minority shareholders. He may only be removed with
cause.
32. General Rule: If surplus profits exceed the requirements the corporation shall declare
dividends. This is compulsory if the surplus is equal/or more than the paid-up capital.
Exceptions:
1.
2.
3.
1.
a.
justified by approved expansion projects
b.
prohibited by creditor to declare dividends
c.
retention is necessary under existing circumstances
33. Business Judgment Rule decisions made by a corporations management body shall not
be interfered with even by the courts unless such acts are oppressive/unconscionable as to
violate the rights of the minority
1.
1.
34. Individual Suit one brought to assert a right of a stockholder peculiar to himself
35. Representative Suit brought by the stockholder in his own behalf and in behalf of other
stockholders similarly situated, having common cause against the corporation
1.
36. Derivative Suit brought by a stockholder for and in behalf of the corporation to
protect/vindicate corporate rights after he has exhausted intra-corporate remedies
Requisites:
1.
2.
3.
a.
cause of action in favor of the corporation
b.
refusal of corporation to sue
c.
injury to the corporation
Although corporations dissolved have 3 years to wind up, they can convey their properties to a
trustee who can continue the suit beyond the 3 year period. The lawyer who handled the case
in the trial court may be considered as trustee for the dissolved corporation with respect to the
matter in litigation only even if no appointment was extended to him. (Selano vs. CA)
In a case filed before dissolution, it may continue even beyond the 3 year period until final
determination of litigation. Otherwise, the corporation in liquidation would lose what justly
belongs to them/be exempt from payment of obligations because of a technicality.
1.
37. Foreign Corporations
1.
a.
Doing Business continuity of commercial dealings incident to prosecution of
purpose and object of the organization. Isolated, occasional or casual transactions do not
amount to engaging in business. But where the isolated act is not incidental/casual but
indicates the foreign corporations intention to do other business, said single act
constitutes engaging in business in the Philippines
2.
b.
Instances when unlicensed foreign corporations can sue:
(1)
isolated transactions
(2)
(3)
(4)
(6)
1.
2.
1.
b.
Close Corporations one whose articles provide that its shares shall not be held
by more than 20 persons; its issued stock shall be subject to one or more restrictions on
transfer and shall not be listed in any stock exchange/make public offering
3.
c.
Non-stock Corporation one where no part of its income is distributable to its
members and shall be used in furtherance of the purpose of which it was organized
39. SEC Jurisdiction
1.
a.
original and exclusive jurisdiction
(1)
(2)
intra-corporate disputes and with the state in relation to their franchise and right to exist as
such
(3)
(4)
1.
b.
(1)
(2)
(3)
(4)
(5)
(6)
(7)
a.
b.
2.
1.
2.
exempt securities
securities emanating from exempt transactions
Exempt Securities
a.
issued by the government subdivisions/instrumentalities
b.
issued by foreign government which the Philippines has diplomatic relations
3.
4.
5.
6.
7.
1.
1.
1.
1.
8.
3.
1.
2.
3.
4.
5.
6.
4.
1.
2.
3.
4.
5.
5.
1.
2.
3.
4.
5.
6.
1.
2.
3.
4.
5.
6.
c.
issued by receiver/trustee of an insolvent approved by the court
d.
issued by building and loan association
e.
issued by receiver/trustee of an insolvent approved by the court
f.
policy of insurance issued by insurance corporation supervised by the insurance
commission
g.
security/right/interest in real property including subdivision lot/condominium
supervised by the Ministry of Human Settlements
h.
pension plans regulated by BIR/Insurance Commission
Exempt Transactions
a.
judicial sale by execution, etc. in insolvency
b.
sale of pledged property/foreclosed property to liquidate an obligation
c.
isolated transactions on securities done by owner/agent
d.
stock transfers emanating from mergers and consolidations
e.
pre-incorporation subscription
f.
securities issued by public service operator to broaden equity base
Grounds for Rejection of Registration
a.
application incomplete/untruthful/omits to state a material fact
b.
issuer/registrant insolvent, violated code/ SEC rules, engages in fraudulent
transactions
c.
issuers business not sound
d.
officer, director, stockholders of issuers is disqualified
e.
issue would prejudice the public
Grounds for Revocation
a.
issuer insolvent
b.
violated of Code/SEC rules
c.
fraudulent transaction
d.
dishonesty by issuer/misrepresented prospectus
e.
does not conduct business in accordance with law
Acts Prohibited
a.
manipulation of security prices
b.
manipulation of deceptive devices
c.
artificial measures of price control
d.
fraudulent transactions
e.
insider trading
f.
false prospectus, communications, reports
6.
f.
general and special examination of bank order of the Monetary Board of bank
fraud or serious irregularity
7.
g.
re-examination made by an independent auditor hired by a bank to conduct its
regular trust
2.
3.
4.
1.
2.
1.
2.
1.
3.
1.
2.
3.
1.
4.
4.
1.
2.
3.
1.
4.
5.
1.
2.
3.
4.
1.
5.
6.
1.
e.
moral and exemplary damages
Criminal Penalties
a.
imprisonment of 1 to 3 years plus fine of P50,000 to P150,000 for the first
offense
2.
b.
imprisonment of 3 years and 1 day to 6 years plus fine ranging from P150,000 to
P500,000 for the 2nd offense
3.
c.
imprisonment of 6 years and 1 day to 9 years plus fine of P500,000 to P1,000,000
for the 3rd/subsequent offenses
7.
1.
Presumptions:
a.
Presumption of copyright in the work of other subject matter to which the
action related
2.
b.
Plaintiff is presumed to be the owner of the copyright
3.
c.
The natural person whose name is indicated on a work in the usual manner as
the author shall, in the absence of proof to the contrary, be presumed to be the author of
the work. This is applicable even if the name is a pseudonym, where the pseudonym
leaves no doubt as to the identity of the author.
1.
8.
Prescription: No damages may be recovered after 4 years from time the cause of action
arose.
Patents
1.
1.
Patentable Inventions any technical solution of a problem in any field o human activity
that is new, involve an inventive step and is industrially applicable shall be patentable. It may
be or may relate to as product, or process or an improvement of any of the foregoing.
1.
2.
Non-Patentable Inventions
1.
a.
discoveries, scientific theories and mathematical methods
2.
b.
schemes, rules and methods of performing mental acts, playing games or doing
business, and programs for computers
3.
c.
methods for treatment of the human or animal body by surgery or therapy and
diagnostic methods practiced on the human or animal body
Exception: products and composition for use in any of these methods
1.
d.
plant varieties or animal breeds or essentially biological process for the production of
plants and animals
e.
f.
3.
1.
2.
3.
aesthetic creations
contrary to public order or morality
Requisites of Patentability
a.
new, novelty
b.
involves an inventive step;
c.
is industrially applicable
1.
4.
Novelty
The novelty requirement in the Code is absolute. Thus, an invention is not considered new if it
forms part of a prior art. A prior art consists of:
1.
2.
1.
1.
1.
a.
anything which has been made available to the public anywhere in the world before the
filing date or the priority date of the application, or
b.
the whole contents of an application for a patent, utility model, or industrial design
registration, published in the IPO gazette, filed or effective in the Philippines, with a filing or
priority date that is earlier than the filing or priority date of the application, provided that the
application which has validly claimed the filing date of an earlier application (priority date) is
prior art with effect as of the filing date of such earlier application, and provided further, that
the applicant and the inventor identified in both applications are not one and the same
5.
Inventive Step an invention involves an inventive step, if having regard to the prior art,
it is not obvious to a person skilled in the art at the time of the filing date of priority date of the
application claiming the invention
6.
Industrial Applicability an invention is considered industrially applicable if it can be
produced and used in the industry
7.
The First-to-File System if 2 or more persons have made the invention separately and
independently of each other, the right to the patent belongs to the person who filed an
application for such invention, or where 2 or more applications are filed for the same invention,
the right of the patent belongs to the person who has the earliest filing date or the earliest
priority date
Under this system, the patent is granted to the inventor who filed his patent application earlier
than others thus simplifying the determination of who is entitled to own the patent.
The First-to-File System increases the rights of the inventor by:
1.
2.
a.
guaranteeing the confidentiality of the application prior to its publication
b.
giving the inventor inchoate rights against an infringer after the publication of the
application and before the grant of the patent and
3.
c.
expanding the rights of the inventor to institute cancellation proceedings for the
duration of the term of the patent. Cancellation proceedings may be filed at any time during
the term of the patent.
Under this system, the applicant declared by final court order as having the right to the patent
may:
1.
2.
3.
4.
1.
a.
b.
c.
d.
8.
prosecute the application as his own application in place of the original applicant
file a new patent application in respect of the same invention
request that the application be refused or
seek the cancellation of the patent, if one has already been issued
What is the difference between novelty in patents and originality in copyright?
Novelty in Patents even if you do not know of any previous creation, as long as a patent on the
same creation has already been published anywhere in the world, you cannot claim novelty. No
access tot he other creation is no defense.
Originality in Copyright even if there is same creation, as long as you do not copy your own
creation, it is still considered an original creation. No access to the previous creation is a
defense.
1.
9.
Non-Prejudicial Disclosure
The disclosure of information contained in the application during the 12 months preceding the
filing date or the priority date of the application shall not prejudice the applicant on the ground
of lack of novelty if such disclosure was made by (a) inventor; (b) a patent office and the
information was contained
1.
1.
10. Term of Patent 20 years from the filing date of the application
11. Grounds for Compulsory Licensing:
1.
a.
national emergency or other circumstances of extreme urgency
2.
b.
where public interest, national security, health or the development of other
vital sectors of the national economy as determined by the appropriate agency of the
government so requires
3.
c.
where a judicial or administrative body has determined that the manner of
exploitation by the owner of the patent or his licensee is anti-competitive
4.
d.
in case of public non-commercial use of the patent by the patentee, without
satisfactory reason
5.
e.
if not being worked in the Philippines on a commercial scale
1.
12. In case of Compulsory Licensing of Patents involving Semi-conductor Technology, the
license may be granted only in case of public non-commercial use or to remedy a practice
determined after judicial or administrative process to be anti-competitive
1.
13. Utility Models an invention qualifies for registration as a utility model if it is new and
industrially applicable
14. Term Protection 7 years after the filing date of application without possibility of renewal
15. Industrial Design any composition of lines or colors or any 3 dimensional form, whether
or not associated with lines or colors
1.
16. Term of Protection 5 years from filing date of application, renewable for not more than 2
consecutive periods of 5 years each
Insolvency Law
1.
1.
Distinguish Suspension of Payment and Insolvency
Suspension of Payment
Insolvency
1.
2.
Fraudulent Preference any act of insolvent which gives rise/has tendency to give
preference to a creditor to the assets of the insolvent prejudicial to the right of other creditors
of said insolvent
1.
3.
Effect on Actions Upon Adjudication of Insolvency
1.
a.
suits pending in court
(1)
(2)
(3)
1.
1.
b.
4.
1.
2.
3.
4.
5.
6.
suit not yet filed cannot be filed anymore, but claims may be presented to assignee
Debts and Obligations not Affected by Discharge of Insolvent
a.
assessments due to national and local government
b.
debts due to fraud/embezzlement
c.
debts in which he is bound solidarily
d.
alimony
e.
corporate debts
f.
debts not included in the schedule submitted by debtor
1.
1.
4.
7.
1.
2.
8.
d.
Vessels: Phil. Coastguard
To be valid against 3rdpersons:
a.
affidavit of good faith
b.
contract must be registered
General Rule: In Chattel Mortgage, there is recovery of deficiency judgment.
12. Future property may not be covered by CM but when such property is a:
1.
a.
renewal of, or in substitution for goods on hand when the mortgage was
executed, or
2.
b.
purchased with proceeds (not of your own money) of said goods, said property
may be covered by CM
1.
13. Criminal Acts removal of chattel to another city or province without written consent of
mortgagee, selling property already pledged, or mortgaged without written consent of
mortgagee
1.
14. A chattel mortgage may be foreclosed judicially or extra-judicially, in the latter case,
before a notary or sheriff, or creditor or mortgagee when stipulated, even without need of
notice (when mortgagee forecloses)
Reference:
Commercial Law Memory Aid
Ateneo Central Bar Operations 2001