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ar
B
e s
l
ob
I

RA check, drawn against Pigue and payable to the order of Yang and Chow was

an r
deposited to Porki Bank (collecting bank) with the lone indorsement of Yang. Yang was
a
able to get the proceeds of the check after it was cleared by Pigue Bank. Was the check
B
Ch s
properly endorsed?

l e
Answer: No. Where an instrument is payable to the order of two or more payees or

ob
indorsees who are not partners, all must indorse unless the one indorsing has authority to

R
indorse for the others.

an a r
The payment of an instrument over a missing indorsement is the equivalent of payment on
B
C h
a forged indorsement or an unauthorized indorsement in itself in the case of joint payees.
s and which indorses the check upon
e
l This is because in indorsing a check to
A collecting bank, where a check is deposited
b
presentment with the drawee bank, is an indorser.
o guaranteed" and, for all intents and purposes,
the drawee bank, a collecting bank stamps the back of the check with the phrase "all prior
R
endorsements and/or lack of endorsement
ninstrument,
awarranty,
treats the check as a negotiable
a rpaidof antheindorser.
hence, assumes the warranty

B
Ch
Without the collecting bank’s the drawee bank would not have value of
the subject check.
e s
The collecting bank or last indorser, generally suffers thelloss because it has the duty to

o b that the act of presenting

ascertain the genuineness of all prior indorsements considering

has done its duty to ascertain the genuineness ofR

the check for payment to the drawee is an assertion that the party making the presentment

FINANCE CORPORATION, G.R. No. 179952, 4 a n prior indorsements. (METROBANK vs. BA

December 2009) a r
h B
C II
e s
b l
Congee, entrustee under a trust receipt, returned the goods to the entruster as she was
not able to sell the goods. Congee now claims that her obligation
R o to the entrusted has

n r
been extinguished. Is this correct

a B a
h
Answer: NO. A trust receipt is a security agreement, pursuant to which a bank acquires a
Csatisfaction of the loan obligation. Ae
“security interest” in the goods. xxx The initial repossession by the bank of the goods
s
subject of the trust receipt did not result in the full
claim for deficiency would thus be in order. (LANDL & COMPANY INC. , VS. METROPOLITAN
b l
Ro
BANK & TRUST COMPANY G.R. No. 159622, 30 July 2004)

an
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ar III
B
e s
Wasabi was issued a policy which reads: “The insurance of any eligible Lot Purchaser

b l
shall be effective on the date he contracts a loan with the Assured. However, there shall be no
insurance if the application of the Lot Purchaser is not approved by the Company. ” It would

R o
appear that at the time of loss, a loan has been contracted by Wasabi with the Assured

an r
but it is not clear whether the Insurer has approved the insurance application.
a
Determine if the policy is already effective.
B
h
C Assured already became effective s upon contracting a loan with the Assured, another
Answer: While one provision appears to state that the insurance coverage of the clients of
e
l to approve the insurance contract before the same can
become effective.
o b
appears to require the Insurer

R
an in favor of the insured and strictly a ragainstof the
It must be remembered that an insurance contract is a contract adhesion which must be

safeguardh
construed liberally
B insurer in order to

of the insured and in favor of the effectivitysof the insurance contract.

favor C
the latter’s interest. Thus, the vague contractual provision must be construed in

l e
o
The seemingly conflicting provisions must b be harmonized to mean that upon a party’s
Rsame is effective, valid, and binding until terminated by
purchase of a memorial lot on installment from the Assured, an insurance contract covering

the Insurer by disapprovinga theninsurance application. The second sentence

the lot purchaser is created and the
a r is in the nature
of a resolutory condition h which would lead to the cessation of B the insurance contract.
C of the insurer on the insuranceeapplication
Moreover, the mere inaction sof the insurance
must not work to
prejudice the insured; it cannot be interpreted as a termination
l
The termination of the insurance contract by thebinsurer must be explicit and
contract.

unambiguous. (ETERNAL GARDENS MEMORIAL PARK

R o vs. PHILAMLIFE, G.R. No. 166245, 09

n r
April 2008)

aIV B a
h
C boundary system. For the use ofe the taxicab, s
Kingdao operates a taxicab unit under
Kingdao would regular pay a certain amount to the franchise holder.
b l Kingdao
Kingdao denies being a common carrier and insists that he R o
eventually encountered an accident wherein he was being charged as common carrier.
is merely leasing the
taxicab. Is the charge against Kingdao correct? Why?
a n a r
h B
Answer: YES. Indeed, to exempt from liability the owner
under the “boundary system” on the ground that he C is a
of a public vehicle who operates it
mere lessor would be not only to
e s
mercy of reckless and irresponsible drivers — reckless because the measure of b
abet flagrant violations of the Public Service Law, but also to place the riding public at the l
earnings depends largely upon the number of trips they make and, hence, the speed
R o their
at

the damages they might cause. (SPOUSES HERNANDEZ et al. vs. SPOUSES DOLOR
a n et al, G.R.
which they drive; and irresponsible because most if not all of them are in no position to pay

No. 160286; 30 July 2004)

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B V

e s
l
What are the requisites for filing a derivative suit?
b
o
Answer: The requisites for filing a derivative suit are as follows:
R a) The party bringing suit should be a shareholder as of the time of the act or
an transaction complained of, theBnumber ar of his shares not being material;
Ch b) The party has tried tosexhaust intra-corporate remedies, i.e. , he has made a
demand on the boardlofedirectors for the appropriate relief but the latter has failed
or refused to heed b
o
his plea;

Rof action actually devolves on the corporation, the wrongdoing or

a n been, or being caused to the corporation
c) The cause
harm having
a r and not to the particular
h
stockholder bringing the suit. (FILIPINAS PORT B SERVICES, INC. , et al. vs. Go, et al. ,
C G.R. No. 161886, March 16, 2007);
e s
d) No appraisal rights are availableb l the act/s complained of; and
for

R
e) The suit is not a nuisance
oor harassment suit (Sec.1, Rule 8, Interim Rules of
an Controversies)
Procedure for Intra-Corporate

B a r
C h VI
s
Yaki is engaged in the importation and exportation l
e
occasions, Soba purchased lace products from Yaki with
o b the instruction to deliver the
of lace products. On several

R
purchased goods to a Hong Kong based company. Upon receipt of the goods in Hong

the obligation to deliver the lace products a n

Kong, the products were considered sold. The Hong Kong based company, in turn, had
to the Philippines. Determine whetheraYaki
r
is doing business in the Philippines. h B
C s
e business in
l
Answer: It is not doing business in the Philippines. To be doing or “transacting
b
Ro
the Philippines”, the foreign corporation must actually transact business in the Philippines,
that is, perform specific business transactions within the Philippine territory on a
continuing basis in its own name and for its own account. Actual
within the Philippine territory is an essential requisite for
a nthe Philippines to acquire
transaction of business
a r
h
jurisdiction over a foreign corporation and thus require the foreign corporation to secure a
not transact such kind of business s
B
C
Philippine business license. If a foreign corporation does
in the Philippines, even if it exports its products to the Philippines, the Philippines has no e
b
jurisdiction to require such foreign corporation to secure a Philippine business license. (B.l
VAN ZUIDEN BROS. LTD. vs. GTVL MANUFACTURING INDUSTRIES, INC. , G.R. No. 147905,
28, 2007) R o May

a n
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B VII

e s
l
Under what conditions may the SEC issue a cease and desist order?
b
R o
Answer: There are two essential requirements that must be complied with by the SEC
before it may issue a cease and desist order: First, it must conduct proper investigation or

an r
verification; and Second, there must be a finding that the act or practice, unless restrained,

Ba
will operate as a fraud on investors or is otherwise likely to cause grave or irreparable

Ch s
injury or prejudice to the investing public. (SECURITIES AND EXCHANGE COMMISSION vs.
e
PERFORMANCE FOREIGN EXCHANGE CORP. G.R. 154131, 20 July 2006)
l
ob VIII

R
an r
Are trust accounts also protected under RA 1405 (Bank Secrecy Law)? May trust
a
accounts be examined in connection with a plunder case without violating the law?
B
Ch e s
Answer: RA 1405 is broad enough to cover trust accounts because the term “deposit” as

bl
used in RA 1405 is to be understood broadly and not limited only to accounts which give
rise to a creditor-debtor relationship between the depositor and the bank. If the money

Ro
deposited under an account may be used by banks for authorized loans to third persons,
then such account, regardless of whether it creates a creditor-debtor relationship between

an ar
the depositor and the bank, falls under the category of accounts which the law precisely

B
Ch
seeks to protect for the purpose of boosting the economic development of the country.
s
(EJERCITO vs. SANDIGANBAYAN AND PEOPLE OF THE PHILIPPINES, G.R. No. 157294-95,
e
l
30 November 2006)

IX
o b
R
an r
Machang Realty was incorporated to hold and purchase real properties in trust for
Pigue Bank. This was conceived by Pigue Bank in view of the limit on a bank’s
Ba
Ch s
allowable investments in real estate to 50% of its capital assets. In the implementation

e
of the trust agreement, Pigue Bank sold to Machang Realty some of its real properties

bl
while the latter simultaneously leased to the former the properties for 20 years.

Ro
Eventually, Machang repudiated the trust, claimed the titles for itself and demanded
payment of rentals, deposits and goodwill, with a threat to eject Pigue Bank. Pigue

an r
Bank filed a complaint for reconveyance of the properties against Machang Realty. Will
the case prosper?
B a
C h
Answer: The agreement between the parties adverted to as an implied trust is contrary to s
law. Thus, while the sale and lease of the subject property is genuine and binding upon the
l e
o b
parties, the implied trust cannot be enforced even assuming the parties intended to create
it. xxx "the courts will not assist the payor in achieving his improper purpose by enforcing a
R
resultant trust for him in accordance with the ‘clean hands’ doctrine. " Pigue Bank cannot

a n
thus demand reconveyance of the property based on its alleged implied trust relationship

h
with Machang Realty.

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 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

a r
B delicto, thus, no affirmative relief should be given to one against
e s should not be allowed to dispute the sale of its lands to Machang
The parties being in pari
the other. Pigue Bank

b l Machang Realty be allowed to further collect rent from Pigue Bank. The
Realty nor should

trust too
clean hands doctrine will not allow the creation nor the use of a juridical relation such as a

R neither
subvert, directly or indirectly, the law. Neither party came to court with clean

n
hands;
a2009) r REALTY, et al. vs. COURT OF APPEALS, 7 April
will obtain relief from the court as the one who seeks equity and justice
must come to court with clean hands. (TALA
a
h B
C e s
b l X

Sometime in 1986 or o 1987, Bento Co. , a foreign company and Yaki, Inc. , a local
R sell,into
company, orally entered a dealership agreement whereby Bento granted Yaki

a n
the right to market, distribute,
a r
install, and service its products to end-user

h doing business in the Philippines? B

customers within the Philippines. Under what condition/s may Bento Co. be

C
considered
e s
Answer: Following the Foreign Investment
b lAct (FIA) and its IRR, the appointment of a
R o
distributor in the Philippines is not sufficient to constitute "doing business" unless it is
under the full control of the foreign corporation. On the other hand, if the distributor is an
nand its own account, the latter cannotaberconsidered to be
independent entity which buys and distributes products, other than those of the foreign
a Bthe determination of
corporation, for its own name
h
doing business in the Philippines.
C
It should be kept in mind that
s
whether a foreign corporation is doing business in
of the attendant circumstances. (Steelcase, Inc. v. Designl
the
e
Philippines must be judged in light

b
International Selections, Inc. ,

o
G.R. No. 171995, April 18, 2012)

XI R
a n a r
h
In what cases is the buyer of the assets liable for the debts of the seller? B
C s
As a rule, a corporation that purchases the assets of another will not be liable
of the selling corporation, provided the former acted in good faith b lepaidfor the
and
debts
adequate

(1) where the purchaser expressly or impliedly agrees to assume R o

consideration for such assets, except when any of the following circumstances
the debts; (2)
is present:
where the
transaction amounts to a consolidation or merger of the n r
a corporations; (3) where the

B a
h
purchasing corporation is merely a continuation of the selling corporation; and (4) where

s
debts. (Ma. Corina C. Jiao, et. al. v. National C
the selling corporation fraudulently enters into the transaction to escape liability for those
Labor Relations Commission, Global e
Business Bank, Inc. , et. al. , G.R. No. 182331, April 18, 2012)
b l
XII
Ro
The spouses Yang and Chow secured a manager’s check from Porkia
n
Bank to satisfy
their obligation to Ebi Company. However, the check remained in
the spouses but Ebi Company was advised that is it availableC
h the possession of
for withdrawal. Since

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more than 10 years passed without the amount of the check being withdrawn, Porki
Bank reported it to the Bureau of Treasury as among its “unclaimed balances”.
B
Should the amount corresponding to the check be considered part of the Porki

e s
Bank’s “unclaimed balances” and therefore, could be the subject of an escheat
proceedings?
b l
R o
Answer: The mere issuance of a manager’s check does not ipso facto work as an automatic
transfer of funds to the account of the payee. In case the procurer of the manager’s or

an a r
cashier’s check retains custody of the instrument, does not tender it to the intended payee,
B
Ch
or fails to make an effective delivery, it cannot be said that delivery of the check has taken
place.
e s
Since there was no delivery,lpresentment of the check to the bank for payment did not
occur. An order to debitb
R o the account of the spouses was never made. As a result, the
assigned fund is deemed to remain part of the account of the spouses who procured the
n r
Manager’s Check. The doctrine that the deposit represented by a manager’s check
automaticallyapasses to the payee is inapplicable, a
B should have been informed that
because the instrument- although
acceptedh
s10 years, and that it may be subjected to
in advance- remained undelivered. The spouses
C had been left inactive for more than
the deposit
e
l
b June 13, 2012)
escheat proceedings if left unclaimed. (Rizal Commercial Banking Corporation v. Hi-Tri

o
Development Corporation, G.R. No. 192413,

R XIII
a n a r
h
Nowan, then suffering from diabetes, secured a pension plan Bmonths
from Chow Pension
C
September 15, 1998, Nowan died before his pension plane
Plans. On October 30, 1997, the plan was issued. Eleven s later or on

of Nowan are now demanding from Chow but the b l matured.

latter
The beneficiaries
declined the claim on the
ground that Nowan was on maintenance medicine
pension plan states that “After this AgreementR
oat the time he signed the plan. The
has remained in force for one (1) year,
we can no longer contest for health reasons
an anyhasclaim a
for insurance under this r
you are not insurable at the time you h bought this pension program by reason B
Agreement, except for the reason that installment not been paid (lapsed), or that

C afterwards, the one (1) year econtestabilitys of age. If

period shall start again on the date of approval of your request for l
this Agreement lapses but is reinstated

Decide whether the claim of the heirs of Nowan is in order.

o b reinstatement. ”

R
a n or misrepresentation
Answer: The incontestability clause above-cited precludes the insurer from disowning
liability under the policy it issued on the ground of concealment a r
regarding the health of the insured after a year of itsh B
s
issuance. Since Nowan died on the
C
eleventh month following the issuance of his plan, the one year incontestability period has
e
not yet set in. Consequently, Chow was not barred from questioning Lourdes’ entitlement
b l
Ro
to the benefits of her husband’s pension plan. (Florendo v. Philam Plans, G.R. No. 186983,
February 22, 2012)

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B XIV

e s
b l
The Chois are engaged in the business of transporting students from their respective
residences in Paranaque City to Porke Technical Institute in Makati City. The Chows

R o
contracted the Chois to transport their child, Chili, to and from Porke. Are the Chois
engaged in common carrier business?
n
Answer: Despite catering to a limiteda
abecause r
they held themselves outB
clientele, the Chois operated as common carrier
h
C students s within or near where they operated the service and
as a ready transportation indiscriminately to the
e
of a particular school living
l
Zarate, G.R. No. 157917, b
for a fee. (Spouses Teodoro and Nanette Perena v. Spouses Nicolas and Teresita L.

o
August 29, 2012)

R
a n XV
a r
h
What are the two types of confusion arising from B the use of similar or colorable
C
imitation marks?
e s
Answer: Section 22, IPC covers two types b lof confusion: a) confusion of goods (product
R
one product in the belief that he was
o
confusion), “in which event the ordinarily prudent purchaser would be induced to purchase
purchasing the other” and b) confusion of business

an thebe goods
(source or origin confusion), “though
assumed to originate with a
r the defendant’s
of the parties are different,

B that there is some

h
product is such as might reasonably
s
the plaintiff, and the

connection betweenC
public would then be deceived either into that belief or into the belief
the plaintiff and defendant, which,ein fact, does not exist. ”
(MCDONALD’S CORPORATION, et al. vs. L.C. BIG MAK BURGER,
b l INC. , et al. ,G.R. No. 143993,
August 18, 2004)
R o
a n
XVI
a r
Explain the Doctrine of Equivalents. h B
C s
eplace when a
Answer: The doctrine of equivalents provides that an infringement also takes
b l
Ro
device appropriates a prior invention by incorporating its innovative concept and, although
with some modification and change, performs substantially the same function in

an 2003) r
substantially the same way to achieve substantially the same result. (SMITH KLINE
BECKMAN CORPORATION vs. CA, et al. , G.R. No. 126627, 14 August
B a
XVII
C h s
l e
depositor? o b
When a co-depositor inquires into the deposit, does he need the written consent of the other

R
Answer: A co-payee in a check deposited in a bank is likewise a co-depositor. n
a by the said
No written

h
consent therefore of the other co-payee is needed in an inquiry of the deposits

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B
s
co-depositor. (CHINA BANKING CORPORATION vs. COURT OF APPEALS, G.R. No. 140687, 18
e
l
December 2006)
b
R o XVIII

n r
Soba issued a note in this wise: “I promise to pay the sum of ten thousand
a(P200,000.00) pesos to Bento on ora
Bfor this note until I shall have paid it in full. (Sgd)
before December 23, 2013. I will not sell the
h Bento then indorsed thes
compressor which stands as security
C Soba”
the instrument negotiable?l(b) e Did
note to Ramen. Answer the following questions: (a) Is

b
Ramen acquire title to the credit of Bento?

Answer:
R o
an is not negotiable as it is not payable
(a) The instrument
a rorder or bearer.
to
B negotiation but by assignment.
C h sto the obligor as well as infirmities in the
e
(b) Ramen acquired title to the instrument not through

instrument. b l
Hence, his claim is subject to defenses available

Ro XIX
Explain the “Rule of Strict a
n a r
h Compliance”.
B
s
Ctransactions involving letters of credit,e documents tendered by the
l Letter of Credit, i.e. they must
Answer: In commercial

b
seller/ beneficiary must strictly conform to the terms of the
ohas been stipulated under the letter
include all the documents required by the Letter of Credit (Feati Bank vs. CA, 196 SCRA 576).
Thus, a correspondent bank which departs from what
R
able to recover from the buyer or the issuinga n
of credit, as when it accepts a faulty tender, acts on its own risks and may not thereafter be
a
bank the money thus paid to the beneficiary.
r
h B
s
Hence, the rule of strict compliance.
C XX e
b l
Explain the “Fraud Exception Principle”.
Ro
Answer: Fraud or the “fraud exception rule” is the exception to
a nthe independence principle. a r
payment under a standby credit may qualify as fraudh
As held in Transfield, the untruthfulness of a certificate accompanying a demand for
B
C sufficient to support an injunction
against payment. The remedy for fraudulent abuse is an injunction. However, injunctione
s
should not be granted unless: (a) there is clear proof of fraud; (b) the fraud constitutes
b l
fraudulent abuse of the independent purpose of the letter of credit and not only
under the main agreement; and (c) irreparable injury might follow if injunction
o fraud
R is not
an
granted or the recovery of damages would be seriously damaged.

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