THESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ COMMERCIAL LAW za. AtoZ VILLASIS LAW CENTER NOVEMBER 2019 EDITION HAND OUT NO. 4, SERIES OF 2019 COMPILED BY Prof. Erickson H. Balmes* DON'T WORRY ABOUT ANYTHING INSTEAD PRAY ABOUT EVERYTHING TELL GOD YOUR NEFDS AND DON'T FORGET TO THANK HIM. FOR HIS ANSWERS AND THE PEACE OF GOD THAT SURPASSES ALL UNDERSTANDING WILL GUIDE YOUR HEARTS AND MINDS IN CHRIST JESUS (Philippians 4:6-7) Acceleration Clause ¢ MCLE and Bar Reviewer in Legal Ethics and Commercial Law, Jurists Bar Review Center, Cosmopolitan Review Center, CPRS Bar Review Center, Luminous Bar Review, Dagupan, Powerhaus Review Center, Chan Robles Internet Review, PCU Bar Review, Albano Review Center, UP Law Center. ‘# Member, Committee on the Suggested Answers to the Bar Exams in Commercial Law and Legal and Judicial Ethics, UP Law Center ¢ Deputy Commissioner, Insurance Commission 1 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. BalnesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ A contractual stipulation that provides for the acceleration of the date of payment in full under certain specified conditions or circumstances such as the failure or inability of a debtor in meeting his amortization schedule on time ‘Admirality Law VILLASIS LAW CENTER The Branch of the Law which deals with maritime matters. Admissibility and Evidential Weight of Electronic Data Message or Electronic Document. In any legal proceedings, nothing in the application of the rules on evidence shall deny the admissibility of an electronic data message or electronic document in evidence - (a) On the sole ground that itis in electronic form; or (b) On the ground that it is not in the standard written form, and the electronic data message or electronic document meeting, and complying with the requirements under Sections 6 or 7 hereof shall be the best evidence of the agreement and transaction contained therein. In assessing the evidential ‘weight of an electronic data message or electronic document, the reliability of the manner in which it was generated, stored or communicated, the reliability of the manner in which its originator was identified, and other relevant factors shall be given due regard. (Section 12, RA 8792) Airway Bill A bill of lading which governs the relationship of shipper and carrier in the transport of goods by air. Antedated Check A check that is dated earlier than when it was actually drawn or delivered to make it appear that it had been drawn earlier but delayed in delivery. Note that it is not invalid for that reason unless it is so drawn for an illegal or fraudulent purpose. Sec. 8, Act 2031- The Negotiable Instruments Law. Bancassurance The bank insurance model (BIM), also sometimes known as bancassurance, is the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance Products, an arrangement in which a bank and an insurance company form a partnership so that the insurance company can sell its products to the bank's client base. (see 2013 Amendments to 1978 Insurance Code) 2 2019 COMMERCIAL LAF from A to Z by Professor Erickson H. BainesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ Bank ‘An entity engaged in the lending of funds obtained in the form of deposits. Sec. 3, RA 8791 — General Banking Law of 2000. Bank Secrecy Law VILLASIS LAW CENTER This is the law which mandates that deposits in banks, including investments in government bonds, are to be considered as absolutely confidential in nature. As such, they may not be inquired into except upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court. The purpose of the law is to encourage the people to deposit their money in the banks and discourage hoarding so that they can be made available as loans to contribute to the economic development of the country. RA 1405- Bank Secrecy Act. Boiler Room Sales A price manipulation scheme in securities trading by the use of high-pressure sales tactics to promote purchases and sales of certain stocks. Boundary System A system whereby the franchise holder of a jeepney or taxi rents out his vehicle for a fixed sum called the boundary to a driver-operator. Business Judgment Rule It states: “Contracts intra vires entered into by the Board of Directors are binding upon the corporation and the courts will not interfere unless such contracts are so unconscionable and oppressive as to amount to wanton desiruction to the rights of the minority, as when plaintiffs aver that the defendants (members of the Board) have concluded a transaction among themselves as will result in serious injury to the plaintiff's stockholders.” Ong Yong vs. Tiu, 401 SCRA 1. Charter Party A maritime contract by virtue of which the owner or the agent of a vessel binds himself to transport merchandise or persons for a fixed price. It is also a contract by which an entire ship, or some principal part thereof part thereof, is leased by the ‘owner to another person for a specified time or use. Check A bill of exchange drawn on a bank that is payable on demand signed by the maker or drawer, containing an unconditional promise to pay a sum certain to order or to bearer. Sec. 185, Act 2031- Negotiable Instruments Law. Close Corporation A corporation comprising not more than 20 stockholders whose shares are not generally traded publicly and whose management is vested in the stockholders 3 2019 COMMERCIAL LAF from A to Z by Professor Erickson HK. BalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ themselves. The late Justice Jose C. Campos characterized such a corporation as “a de facto partnership with a corporate shell.” Sec. 96, BP 68 — Corporation Code. Collective Management Organization (CMO) A collective management organisation is generally formed or appointed by copyright holders to manage the rights in their copyright works. Collective management organizations are appointed by copyright owners to administer the licensing of rights, collection of royalties and enforcement of rights on their behalf. Common Carrier VILLASIS LAW CENTER A person, association, firm or corporation engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering its services to the public. Art. 1732, Civil Code. Common Stock A stock which represents the residual ownership interest in the corporation, a basic class of stock ordinarily and usually issued without extraordinary rights or privileges that entitles the shareholder to only a pro rata division of profits. Consolidation A ptocess by which two or more corporations unit to form a new single corporation. Sec. 76, BP 68 — Corporation Code. Corporate Rehabilitation A summary and non-adversarial judicial proceeding in rem by which a debtor corporation suffering from financial difficulties that can lead to its insolvency or bankruptcy, or its creditors holding at least 25 percent of its liabilities, may petition the court having jurisdiction for the distressed corporation to be afforded the opportunity to rehabilitate itself financially so that it can liquidate or pay off its debts and obligations. in other words, it refers to an administrative or judicial process denoting a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency. AM 00-8-10-SC, Dec. 15, 2000; Ruby Industrial Corporation vs. CA, 284 SCRA 445. CRAM-DOWN CLAUSE Section 23, Rule 4 of the Interim Rules of Procedure on Corporate Rehabilitation (Interim Rules) states that a rehabilitation plan may be approved even over the opposition of the creditors holding a majority of the corporation’s total liabilities if there is a showing that rehabilitation is feasible and the opposition of the creditors is manifestly unreasonable. Also known as the “cram-down” clause, this provision, which is currently incorporated in the FRIA, is necessary to curb the majority creditors’ natural a 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. BalnesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ tendency to dictate their own terms and conditions to the rehabilitation, absent due regard to the greater long-term benefit of all stakeholders. Otherwise stated, it forces the creditors to accept the terms and conditions of the rehabilitation plan, preferring long-term viability over immediate but incomplete recovery. (BANK OF THE PHILIPPINE ISLANDS v. SARABIA MANOR HOTEL CORPORATION., G.R. No. 175844, July 29, 2013) : VILLASIS LAW CENTER Demand Deposits All of the liabilities of the BSP and of other banks which are denominated in Philippine currency and are subject to payment in legal tender upon demand by the Presentation of checks. Sec. 58, RA 7653— The New Central Bank Act. Demurrage In maritime law, it refers to the compensation provided for in the contract of affreightment for the detention of the vessel beyond the period of time agreed on for the loading or unloading of cargo. Doctrine of Equivalents The rule stating that an infringement also takes place when a device appropriates a Prior invention by incorporating its innovative concept and, although with some modification and change, performs substantially the same function in substantially the same way to achieve substantially the same result. Smith Kline and Beckman Corporation vs CA, 409 SCRA 33, Doctrine of Directly Vested Authority Found under Section 23 of the Corporation Code which states: Sec. 23. The board of directors or trustees. - Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and ail property of such corporations controlled and held by the board of directors or trustees to be elécted from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year until their successors are elected and qualified. Doctrine of Strict Compliance / Strict Compliance Rule 't is a settled rule in commercial transactions involving letters of credit that the documents tendered must strictly conform to the terms of the letter of credit. The tender of documents by the beneficiary (seller) must include all documents required by the letter. A correspondent bank which departs from what has been stipulated under the letter of credit, as when it accepts a faulty tender, acts on its own risks and it may not thereafter be able to recover from the buyer or the issuing bank, as the case may be, the money thus paid to the beneficiary Thus the rule of strict compliance. In the United States, commercial transactions involving letters of credit s 2019 COMMERCIAL LAW from A to Z by Professor Erickson A. BalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ are governed by the rule of strict compliance. in the Philippines, the same holds true. (FEATI BANK & TRUST COMPANY (now CITYTRUST BANKING CORPORATION), vs.THE COURT OF APPEALS, G.R. No. 94209, April 30, 1991) Doing Business VILLASIS LAW CENTER This phrase includes soliciting orders, selling products, service contracts, opening offices, appointing representatives or distributors domiciled in the Philippines, oF staying in the country for 180 days or more, or participating in the management or Control of any domestic business or enterprise in the Philippines, or any other act that implies @ continuity of commercial dealings as a business organization. It doos not, however, include mere investment as a stockholder by a foreign entity in domestic corporations, nor having a nominee director or officer to represent its interest in such, corporation, or having a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account. See, 3(d), RA 7042 — Foreign Investments Act of 1991. Domestic Air Carrier An air carrier who is a citizen of the Philippines, including one who is not a citizen of the Philippines but is authorized by the CAA to engage in domestic air transportation. Sec.3(t), RA 776- The Civil Aeronautics Act. Domestic Air Commerce Air commerce that is carried on within the territorial limits of the Philippines. Sec. 3(u), RA 776- The Civil Aeronautics Act Domestic Air Transportation The conduct of air transportation within the territorial limits of the Philippines. Sec 3(v) , RA 776- The Civil Aeronautics Act. DosRI An acronym that refers to “directors, officers, stockholders and their related interestssuch that their transactions are closely supervised and monitored by the BSP. A bank's credit accommodation to its DOSRI, for example must not be on terms which are more favorable than those extended to non-DOSRI borrowers. Sec 36, RA 7653- New Central Bank Act. Dragnet Clause Also known as blanket clause, it is a clause in a mortgage contract which is specifically phrased to include all debts of past or future origins, Such a clause enables the parties to provide continuous dealings, the nature or extent which may not be known or anticipated at the time, thus avoiding the expense and inconvenience of executing a new security on each new transaction. However, such @ clause will not be extended to cover future advances if the lender gives and the 6 2019 COMMERCIAL LAW trom A to Z by Professor Erickson H. BalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ borrower accepts other securities for the subsequent loans. Prudential Bank vs. Alviar, 464 SCRA 353. Fraud Exception Principle A principle in letters of credit transaction which provides that ‘fraud exception” exists when the beneficiary, for the purpose of drawing on the credit, fraudulently presents to the confirming bank, documents that contain, expressly or by implication, material representations of fact that to his knowledge are untrue. (TRANSFIELD PHILIPPINES, INC., vs. LUZON HYDRO CORPORATION, et. al. G.R. No. 146717, November 22, 2004) Holder in Due Course VILLASIS LAW CENTER A holder who has taken the negotiable instrument under the following conditions: (a) that is complete and regular upon its face; (b) that he became the holder of it before it was overdue, and without notice that it has previously been dishonored, if such was the fact; (c) that he took it in good faith and for value; and (d) at the time it was negotiated to him, he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it. Sec. 52, Act 2031- Negotiable Instruments Law. Howey Test The Howey test is a three step process used to determine if a product or offering is an investment contract, or in other words, a security. The test stems from a 1946 Supreme court case involving the Secunties and Exchange Commission versus W. J. Howey Company. The court found that an investment contract is an investment of money or other tangible consideration in a common enterprise with reasonable expectations of profit derived solely from the efforts of others, i.e. investing money into a business where a profit is gained without effort on the investor's part is a security. An investment contract under the Howey Test was defined as follows: 1. an investment of money due to 2. an expectation of profits arising from 3. a common enterprise 4. which depends solely on the efforts of a promoter or third party Hype and Dump A price manipulation scheme in securities trading which involves buying activity at increasingly higher prices and then selling in the market at the higher prices. Incorporators Stockholders or members mentioned in the Articles of Incorporation as originally forming and comprising the corporation and who are signatories thereof. 7 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. BalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ Independent Director A person who is independent of management and free from any business or other relationship which can interfere with his exercise of independent judgment in carrying out his responsibilities as a director of a corporation or association. Also referred to as “outside” director, he is a person other than an officer or employee of the corporation, its parent or subsidiaries, or any other individual having a relationship with the corporation, which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Sec. 38, RA 8799- The Securities Regulation Code. VILLASIS LAW CE NTER Independent Principle of Letters of Credit / Doctrine of Independence The engagement of the issuing bank to pay the seller once the draft and the required shipping documents are presented to it. In tum, this arrangement assures the seller of prompt payment, independent of any breach of the main sales contract. By this so-called "independence principle," the bank determines compliance with the letter of credit only by examining the shipping documents presented: it is precluded from determining whether the main contract is actually accomplished or not Banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or for the general and/or Particular conditions stipulated in the documents or superimposed thereon; nor do they assume any liability or responsibility for the description, weight, quality, condition, packing, delivery, value or existence of the goods represented by any documents, or for the good faith or acts and/or omissions, soivency, performance or standing of the consignor, the carriers, or the insurers of the goods, or any other person whomsoever. The so-called "independence principle" assures the seller or the beneficiary of prompt payment independent of any breach of the main contract and precludes the issuing bank from determining whether the main contract is actually accomplished or not. (LAND BANK OF THE PHILIPPINES, vs. MONET’S EXPORT AND MANUFACTURING CORPORATION, et. al., G.R. No. 161865. March 10, 2008). Insider A person whose position or relationship gives him access to material information which is not generally available the public. Insider Information Access to material information concerning securities or their issuers that is not generally available to the public 8 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. BalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ Insider Trading A fraudulent transaction involving securities perpetrated by a person in possession of material information that is generally not available to the public. Sec. 27, RA 8799- Securities Regulation Code. Insolvency The state or condition of a debtor who, possessing sufficient property to cover all his debts, foresees the impossibility of meeting them when they respectively fall due. Insurable Interest An essential element in an insurance contract, it refers to the relationship which the insurer has over the person or thing being insured such that he stands to gain financially from the preservation of the subject matter insured or suffer pecuniary damage from its loss or destruction. For example, a creditor has an insurable interest in the life of his debtor to the extent of his indebtedness. Insurance Adjuster VILLASIS LAW CENTER Any person or legal entity which acts for and on behalf of an insurer in the adjustment of claims arising from the policies issued by such insurer. Insurance Contract An agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. This aleatory contract is commonly referred to as an insurance policy. Sec. 2, PD 1460 — The Insurance Code of 1978 Intellectual Property Concept of ownership pertaining to the “works” or creations of the mind, as protected by copyrights, patents, and trademarks. Generally, it refers to a creation or product of the mind which qualifies for legal protection e.g., a novel or an invention. Interbank Settlement A term that refers to the facilities maintained by the BSP to serve as a clearing house in the settlement of banking and financial transactions. Sec. 102, RA 7653 — New Central Bank Act. Interlocking Directorships A situation which exists whenever two or more corporations which have dealings with one another have the same persons as members of their respective board of directors. s 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. PalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN® International Reserves This term generally refers to the retention of holdings of assets in gold and foreign currencies in an amount that is adequate to meet any foreseeable net demands on the BSP for foreign currencies by maintaining the intemational stability and Convertibilty of the Philippine peso into other freely convertible currencies primarily for current payments for foreign trade and invisibles. Secs. 64-65, RA 7653- New Central Bank Act fron Clad Rule VILLASIS LAW CENTER Prohibits the countermanding of payment of certified checks Intra-Corporate Controversy A controversy characterized by disagreements arising among or between a Corporation’s board of directors, business associates, officers, partners, Stockholders, members or associates regarding an act or acts amounting to fraud or the commission of any device or scheme which may be detrimental to the public or the interests of the squabbling directors, stockholders, partners, etc. AM 01-2-04 SC, April 1, 2001 Law Merchant The body of laws governing commercia! transactions involving international traders, merchants and mariners which grew out of customs and practices. It figures prominently in the common Jaw trom which evolved much of our mercantile law as ‘embodied in our Code of Commerce and other commercial laws today. Legal Recognition of Eiectronic Data Message under the E-Commerce Act Information shall not be denied legal effect, validity or enforceability solely on the grounds that it is in the data message purporting to give rise to such legal effect, or that itis merely referred to in that electronic data message. (Section 6, RA 8792) Legal Tender All notes and coins issued by the BSP and fully guaranteed by the government as Payment for all debts may not be refused as payment except in the case of coins exceeding certain amounts, depending on their denominations. For example, more than twenty pesos’ worth of ten centavo coins may not be considered as legal tender. Sec. 52, RA 7653- the New Central Bank Act. Letter of Credit ‘An engagement by a bank or other person made at the request of a customer that the issuer will honor drafts or other demands for payment upon compliance with the Conditions specified in the letter of credit. The Code of Commerce vaguely defines letters of credit as “those issued by one merchant to another for the purpose of 10 2019 COMMERCIAL LAF from A to Z by Professor Erickson H. BalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ attending to a commercial transaction.” Prudential Bank vs. Intermediate Appellate Court, 216 SCRA 257. A letter of credit is a financial device developed by merchants as a convenient and relatively safe mode of dealing with sales of goods to satisfy the seemingly itreconcilable interests of a seller, who refuses to part with his goods before he is Paid, and a buyer, who wants to have control of the goods before paying. To break the impasse, the buyer may be required to contract a bank to issue a letter of credit in favor of the seller so that, by virtue of the letter of credit, the issuing bank can authorize the seller to draw drafts and engage to pay them upon their presentment simultaneously with the tender of documents required by the letter of credit. The buyer and the seller agree on what documents are to be presented for payment, but ordinarily they are documents of title evidencing or attesting to the shipment of the goods to the buyer. (LAND BANK OF THE PHILIPPINES, vs. MONET'S EXPORT AND MANUFACTURING CORPORATION, et. al, G.R. No. 161865. March 10, 2008). Liberty and Prosperity Doctrine A judicial philosophy espoused by Chief Justice Artemio V. Panganiban which advances the view that ‘in cases involving liberty, the scales of justice should weigh heavily against the government, and in favor of the poor, the oppressed, the marginalized, the dispossessed, and the weak; but in conflicts primarily concerned with economic policies, courts must be deferential to the political branches of government, namely, the Presidency and Congress; hence. as a rule, courts will not Pass upon the merits or wisdom of economic policies, for these matters have been left by the people to the President and Congress to evaluate and decide.” Bayan Muna vs. Ermita, GR No. 169638, April 25, 2006; La Bugal-B'Laan Tribal Association, Inc. vs. Ramos, 445 SCRA 1 Marking the Close VILLASIS LAW CENTER A price manipulation device in securities transactions which involves the buying and selling of securities at the close of trading in an effort to alter the closing price of the security. Maritime Law The body of laws that is derived from historical and traditional practices relating to seabome commerce and all such transactions involving ships, seamen, carriage of goods by sea and naval affairs. It is also referred to as Admiralty Law. Merger A corporate act which involves the merger into a single corporation of two or more corporations resulting in one of the constituent corporations, that is, a single 11 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. BalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ corporation emerges from the conjoined corporations. Sec. 76, BP 68 — Corporation Code. Monetary Board The governing body which exercises the powers and functions of the BSP comprised of seven members appointed by the President for a term of six years. Sec. 6, RA 7653- The New Central Bank Act. Negotiable Instrument A formal document of payment which may be passed on from one person to another. To be negotiable under the law, however, the instrument must conform to the following requirements: (a)it must be in writing, signed by the drawer or maker; (b) it must contain an unconditional promise or order to pay a sum certain in money; (c) it must be payable on demand or at a fixed or determinable future time; (d) it must be payable to order or to bearer; and (e) when addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty. Sec. 1, Act 2031 — The Negotiable Instruments Law. Negotiable Receipt It is a receipt wherein it is stated that the goods received will be delivered to the bearer or to the order of any person named in such receipt. Note that a provision in the receipt which says that it is non-negotiable is void. Sec 5, Act 2137- The Warehouse Receipts Law. Non-Stock Corporation VILLASIS LAW CENTER A corporation formed for charitable, religious, educational, professional, cultural, fratemal, literary, scientific, social, civic service, or similar purposes, like trade, industry, agricultural and like chambers or any combination thereof, where no part of Xs Income ts distributable as dividends to its members, trustees, or officers. Secs. 87-88, BP 68 — Corporation Code. Painting the Tape A practice referting to the manipulation of the price of securities which involves engaging in a series of usually shady transactions to give the impression of activity of price movement. . Patent The term may refer to either the grant of rights, or the instrument containing the grant (letters patent), giving an inventor a monopoly on his invention for 20 years without renewal. Sec. 118.2, RA 8293 — The Intellectual Property Code. 12 2019 COMMERCIAL LAW from A to Z by Professor Erickson Aw BaluesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ Patent Infringement The making, using, offering for sale, selling, or importing a patented product or a product obtained directly or indirectly from a patented process, or the use of a patented process without the authorization of the patentee. Sec. 76, RA 8293 - The Intellectual Property Code. Patentability Right to intellectual property ownership referring to any technical solution of a problem in any field of human activity which is new, involves an inventive step, and is industrially applicable. It may relate to a product, process, or an improvement thereto. Sec. 21, RA 8293 — The Intellectual Property Code; Art. 27, Par. 1, TRIPS Agreement. Patentable Invention A product or process that provides a technical solution to a problem in any field of human activity which is new, involves an inventive step, and is industrially applicable. Sec. 21, RA 8923 — The Intellectual Property Code. Perils of the Sea A term in maritime law which refers to losses of an extraordinary nature, or which arise from some overwhelming power, which cannot be guarded against by the erdinary exertion of human skill and prudence. Roque vs. intermediate Appellate Court, 139 SCRA 596. Peacrn ene VILLASIS LAW CENTER As opposed to perils of the sea, this term refers to losses, which, in the ordinary course of events, result from the natural and inevitable action of the sea, from the ordinary wear and tear of the ship, or from the negligent failure of the ship's owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions. Roque vs. Intermediate Appellate Court, 130 SCRA 596. Piercing the Veil of Corporate Fiction A legal doctrine that will disregard a corporation's distinct juridical personality when the notion of its separate legal entity is used to defeat public convenience, Justify wrong, protect fraud, or defend crime. The law will regard the corporation as an association of persons, or, in the case of two corporations, merge them into one. Thus, when the corporation is the mere alter ego or business conduit of a person, it may be disregarded. Yutivo vs. CTA, 1 SCRA 160. Ponzi Scheme A fraudulent investment program that offers impossibly high returns and pays these retums to early investors out of the accumulated capital contributed by the later 13 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. BalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ investors. Named after Charles Ponzi, the most famous of all American swindlers who perfected this scheme in the US in the 1940s. People vs. Balasa, 295 SCRA 49. Postdated Check A check that is dated later than when it was drawn or delivered, that is, to take effect from the later date. It is not invalid for that reason unless it is so drawn for an illegal or fraudulent purpose. The person to whom such a check is delivered acquires title thereto on the date of delivery, however. Sec. 12, Act 2031- The Negotiable Instruments Law. Pre-emptive Right The right of a stockholder to maintain his proportionate equity in a stock corporation by subscribing to all issues or disposition of shares of any class, in proportion to his shareholding, unless such right is denied in the Articles of incorporation. Sec. 39, BP 68 — Corporation Code. Preferred Stock A class of stock in a corporation which is given preference in the distribution of dividends, as well as the assets of the corporation in case of liquidation, along with other preferences as stated in the articles of incorporation. It may be issued only with a stated par value. Sec.6 BP 68- Corporation Code Pie eiveed Glad MILLASIS LAW CENTER plan is a com provides Under the Securities Regulation Code, apreneet fract whict for the performance of future services for the payment of future monetary considerations at the time of actual need, for which plan holders pay in cash or installment at stated prices, with or without interest or insurance coverage and includes life, pension, education, interment, and other plans which the SEC may rom ti approve. Sec. 3(9), RA 8799 - The Securities Regulation Code. Presumption Relating to Electronic Signatures under the E-Commerce Act In any proceedings involving an electronic signature, it shall be presumed that - (a) The electronic signature is the signature of the person to whom it correlates; and (b) The electronic signature was affixed by that person with the intention of signing or approving the electronic document unless the person relying on the electronically signed electronic document knows or has noticed of defects in or unreliability of the signature or reliance on the electronic signature is not reasonable under the circumstances. (Section 9, RA 8792) 1a 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. BalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN Prior Art In the law on intellectual property, it refers to anything that has been made available to the public anywhere in the world, before the filing date of a patent thereon, thus making it unpatentable. Sec. 24, RA 8923 - The Intellectual Property Code. Promissory Note An unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money to order or to bearer. Note that it thereby becomes negotiable. ‘Where the note is drawn to the maker's own order, it is not complete until endorsed by him. Sec. 184, Act 2031 ~ The Negotiable instruments Law. Public Use Use by the public, the essential feature of which is that it is not confined to privileged individuals, but is open to the indefinite public. It is this indefinite or unrestricted Quality that gives it its public character. Public use is not synonymous with public interest; the true criterion by which to judge the character of the use is whether the public may enjoy it by right or only by permission. JG Summit Holdings vs. CA, 412 SCRA 10; lloilo Ice and Cold Storage Co. vs. Public Utility Board, 44 Phil 551. Public Utility VILLASIS LAW CENTE = A business or service engaged in regularly supplying the ‘public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone, or telegraph service. The term implies public use and “service.” National Power Corporation vs. CA 279 SCRA 506. Pyramid Sales Scheme Also known as Chain Distribution Plan, itis a sales device whereby a person, upon condition that he makes an investment, is granted by the manufacturer or his representative a right to recruit for profit one or more additional persons who will also be granted such right to recruit upon condition of making similar investments — if the Profits of the person employing such a pian are derived primarily from the recruitment of other persons into the plan rather than from the sale of consumer products, services and credit. Sec. 4(k), RA 7394 — Consumer Act of the Philiopines; People vs. Balasa, 295 SCRA 49. Rights Management Information Means information which identifies the work , sound recording or performance ; the author of the work, producer of the sound recording or performer of the performance; the owner of any right in the work, sound recording or information about the terms and conditions of the use of the work, sound recording or performance; and any number or code that represent such information when any of these items is attached 1s 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. BainesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ ‘0 a copy of the works . sound recording or fixation or performance or appears in Conjunction with the communication to the public of a work, sound recording or Performance.” (Section 171.3 of Republic Act No. 10372, AN ACT AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT NO. 8293, OTHERWISE KNOWN AS. THE “INTELLECTUAL PROPERTY CODE CF THE PHILIPPINES". AND FOR OTHER PURPOSES) Safe Harbor Provision No administrative, criminal or civil proceedings, shall lie against any person for having made a covered transaction report in the regular performance of his duties and in good faith, whether or not such reporting results in any criminal prosecution under this Act or any other Philippine law. (RA 9160, Section 9, paragraph C) Securities Shares, participation, or interests in a corporation or in a commercial enterprise or profit-making venture as evidenced by a certificate, contract, or instrument, whether written or electronic in character. Sec.3, RA 8799- The Securities Regulation Code Share of Stock An intangible right representing the proportionate interest of its holder to the ownership and management of a corporation. It is usually evidenced by a document called the stock certificate. Shelter Rule VILLASIS LAW CENTE: A person who does not qualify as an HOC can, nonetheless, acquire the rights and Privileges of an HDC if he derives his ttle to the instrument through an HOC. Special Endorsement A special endorsement under the negotiable instruments law specifying the person 'o whom, or to whose order, the instrument is to be payable, and the endorsement of Such endorsee is necessary to the further negotiation of the instrument, usually a check. Tender Offer An offer legally required to be made by a person or group of persons acting in concert to the shareholders of a corporation when there is an infent to acquire at least 15 percent of any class of securities in a listed corporation with assets of at least 50 million pesos and with 200 or more stockholders owning at least 10 shares each, or if the intent is to acquire at ieast 30 percent of such equily over a period of 12 months. Sec 19, RA 8799- Securities Regulation Code. as 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. BalnesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPENO Trademark A visible sign capable of distinguishing the goods of an enterprise and shalll include a stamped or marked container of goods. Sec. 121.1, RA 8293 — Intellectual Property Code. Transnational Corporation | A corporation that has a recognized legal existence in several countries which may be operating as a local branch or a duly incorporated domestic corporation. TRIPS An acronym which refers to the agreement on Trade-Related Aspects of Intellectual Property Rights by virtue of which various nations bound themselves to modify their respective laws governing intellectual property rights to harmonize them in accordance with the requirements for membership in the World Trade Organization (WTO), Trust Receipt A security transaction intended to aid in financing importers and retailers who do not have sufficient funds to finance the importation or purchase of merchandise, and who may not be able to acquire credit except through utilization, as collateral, of the merchandise imported or purchased, Trustee VILLASIS LAW CENTE A person who is appointed by the court to carry out the provisions ofa Trust. Unity of invention An application for a patent which relates to one invention only or to a group of inventions forming a single general inventive concept. Sec. 38, RA 8923 - The Intellectual Property Code. Warsaw Convention The popular reference to a treaty entitled Convention for Unification of Certain Rules Relating to International Transportation by Air, duly ratified by the Senate and which became applicable to the Philippines on’ February 9, 1951. It governs the international carriage of passengers and goods by air among the nations which have duly acceded to it, Well-known Mark One which a competent authority in the Philippines has designated to be well-known internationally and in the Philippines. In determining whether a mark is well-known, account is taken of the knowledge of the relevant sector of the public, rather than the Public at large, including knowledge in the Philippines which has been obtained as a 17 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. BalmesTHESE NOTES ARE MEANT TO BE SHARED, SHARING THEM IS A GOOD KARMA WAITING TO HAPPEN@ result of the promotion of the mark. Sec 123.1 (e) and (f), RA 8923- The Intellectual Property Code. FOR WHEN WE ARE AT OUR WEAKEST, OUR HEAVENLY FATHER IS AT HIS STRONGEST! GooD LUCK GOD BLESS CONGRATULATIONS WRasta ikaw LORD! ALL RIGHTS RESERVED NOVEMBER 5, 2019 BATANGAS CITY AND CITY OF MANILA VILLASIS | AW CENTE” ANMDG 18 2019 COMMERCIAL LAW from A to Z by Professor Erickson H. Balues