Professional Documents
Culture Documents
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Exception: Fraud
(b) must contain all the requisites under (b) must contain all the essential terms under Sec.
Sec. 1 of the NIL 2 of the WRL
(d) holder has the right to demand (d) holder has the right to demand the delivery of
payment the goods
(e) the issuer has no lien on the amount (e) the issuer retains a lien on the goods
represented by the instrument
Q: What is the effect of a provision in a negotiable warehouse receipt indicating that it is non-
negotiable?
The negotiable warehouse receipt remains negotiable. The provision indicating non-negotiability
is void.
2. In case of loss of the goods, documents, Entruster may claim damages from
instruments the entrustee (Sec.10)
3. In case of failure to turn over proceeds of Entruster may file a criminal complaint
the sale of the goods, documents or for estafa (Art. 315 (b) of the Revised
instruments or to return the same in case of Penal Code) against the entrustee,
non-sale
Q: A check which has not been encashed cannot discharge an obligation. True or False.
A: False. A check which has not been encashed but has been cleared and credited to the
account of the creditor shall discharge the obligation. It is equivalent to the delivery of cash to
the creditor.
Q: What is a signature per procuration?
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A: This is a notice that the agent has limited authority to sign, and the principal is bound only in
case the agent in so signing acted within the actual limits of his authority.
Q: Distinguish between Incomplete and Undelivered Instrument and Complete but Undelivered
Instrument?
A:
INCOMPLETE and UNDELIVERED COMPLETE but UNDELIVERED
If the same is completed and In the hands of an HDC, valid delivery
negotiated without authority, it will not of the instruments of all parties prior to
be a valid contract as against the the HDC is conclusively presumed.
person whose signature appears
thereon before delivery in the hands of
any holder.
Q: Does the forgery of a signature in a negotiable instrument render the instrument void?
A: No. Only the forged signature is inoperative. The instrument and other genuine signatures
remain to be valid. (Sec. 23, NIL)
Q: In a bearer instrument, all those whose signatures appear prior to the forged signature are not
liable. True or False.
A: False. The Maker/Drawer of an instrument is still liable when the signature of the payee or any
indorser is forged. Indorsement is not necessary for title to pass to the holder. The Maker/Drawer
is not liable only when his signature is forged.
Q: Is the accommodation party released from his obligation when the accommodated party
receives an extension of period of payment?
A: No. The liability of the accommodation party to the HFV is unconditional. To the HFV, he is a
solidary co-debtor of the accommodated party. (Prudencio v. CA, 1986)
Existence of payee
Capacity to indorse at the time of issuance/acceptance of instrument
The instrument is valid and subsisting No knowledge of any fact which would
at the time of his indorsement. impair the validity of the instrument or
render it valueless.
Exceptions: 1. Where the drawer has no right to expect or require that the drawee or acceptor
will pay the instrument;
2. Where the instrument was made or accepted for the indorsers accommodation
and he has no reason to expect that the instrument will be paid if presented.
3. When the instrument was previously dishonored by non-acceptance and no
subsequent acceptance has been made.
Exceptions: 1. Notice of dishonor is not required to be given to the drawer in any of the ff.
cases:
Drawer and drawee are the same;
Drawee is a fictitious person or not having the capacity to contract;
Drawer is the person to whom the instrument is presented for payment;
The drawer has no right to expect or require that the drawee or acceptor
swill honor the instrument;
Where the drawer has countermanded payment. (Sec. 114, NIL)
3. Where the instrument is in the hands of a holder in due course who became so
after the omission to give notice of dishonor by non-acceptance.
Exception: In the hands of an HDC, a materially altered instrument may be enforced according
to the original tenor of the instrument.
Note: There is implied acceptance only when there is failure to return the instrument.
Q: Can a drawee pay the liability on the instrument even without accepting the same?
A: Yes. The actual payment of the amount implies not only the drawees assent to the order of
the drawer and a recognition of his corresponding obligation to pay the aforementioned sum,
but also, his clear compliance with that obligation. (FEBTC vs. Gold Palace Jewellery Co, 2008)
a. That the check may not be encashed; it may only be deposited with the bank;
b. That the check may be negotiated only once to a person who has an account with the
bank; and
c. That it serves as a warning to a holder that the check has been issued for a definite
purpose. (Bataan Cigar v. CA, 1994)
INSURANCE CODE
Q: What are the elements of an Insurance Contract?
A: (PARIS)
(a) Payment of Premium
(b) Assumption of Risk
(c) Risk of Loss
(d) Insurable Interest
(e) Scheme to Distribute the Losses
Q: Does the designated beneficiary in a life insurance policy need to have insurable interest in
the life of the insured?
A: It depends. If the owner of the policy and the insured is one and the same, the designated
beneficiary need not have an insurable interest in the life of such insured. BUT, if the owner of the
policy took out an insurance on the life of another, the beneficiary needs to have insurable
interest in the life of such insured.
Q: What are the distinctions between insurable interest in life and in property insurance?
A:
INSURABLE INTEREST IN
INSURABLE INTEREST IN LIFE
PROPERTY
Limited to actual
Unlimited (save in life insurance effected by a
Extent value of the interest
creditor on the life of the debtor)
thereon
Must exist when the
insurance takes
Time when
effect and when the
Insurable Interest Must exist at the time the insurance takes effect
loss occurs, BUT need
Must Exist
not exist in the
meantime
Expectation of
Benefit to Be Must have legal basis Need NOT have legal basis
Derived
Need not have insurable interest in the life of the
insured if the insured himself secured the policy.
Must have insurable
Beneficiarys
interest over the thing
Interest But if the insurance was obtained by the
insured
beneficiary, the latter must have insurable
interest over the life of the insured. (SUNDIANG)
Q: What are the distinctions between double insurance and over insurance?
A:
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INSURABLE INTEREST IN
INSURABLE INTEREST IN LIFE
PROPERTY
Limited to actual
Unlimited (save in life insurance effected by a
Extent value of the interest
creditor on the life of the debtor)
thereon
Must exist when the
insurance takes
Time when
effect and when the
Insurable Interest Must exist at the time the insurance takes effect
loss occurs, BUT need
Must Exist
not exist in the
meantime
Expectation of
Benefit to Be Must have legal basis Need NOT have legal basis
Derived
Need not have insurable interest over the life of
Must have insurable the insured if the insured himself secured the
Beneficiarys
interest over the thing policy. But if the insurance was obtained by the
Interest
insured beneficiary, the latter must have insurable
interest over the life of the insured. (SUNDIANG)
Q: Is a policy issued at a time where no premium payment has yet been made valid and
binding?
A: No. Sec. 77, states that No insurance policy issued or renewal is valid and binding until actual
payment of the premium. Any agreement to the contrary is void. However, there are
exceptions.
Exceptions: 1. In case of life and industrial life whenever the grace period provision applies (Sec.
77).
2. Where there is an acknowledgment in the contract or policy of insurance that
the premium has already been paid (Sec. 78)
3. Where there is an agreement to grant the insured credit term for the payment of
the premium despite full awareness of Sec. 77.
4. Where there is an agreement allowing the insured to pay premium in installment
and partial payment has been made at the time of the loss (See Makati Tuscany
vs. CA)
5. Where the parties are barred by estoppel (See UCPB vs, Masagana)
A: Reinstatement is available at anytime within 3 years from date of default, unless the cash
surrender value is already paid or the extension has already expired.
Q: Is the insurer entitled to rescind the contract even if the death or loss is due to a cause not
related to the concealed matter?
A: Yes. Concealment vitiates the consent of the insurer.
Q: In a fire insurance, a notice of loss is always required to enable the insured to recover. True or
False.
A: False. When the insurer has actual knowledge of the loss, the requirement of notice of loss is
done away with.
Q: When the stipulation on the period to file action is less than one year an therefor void, what
period is applicable?
A: 10 years. The period to file action under contract.
TRANSPORTATION LAW
Q: When does extraordinary diligence for goods commence?
A: Extraordinary diligence starts from the time the goods are loaded into the vessels.
Q: When does extraordinary diligence for goods cease?
A: Extraordinary diligence ends when the goods are discharged and delivered to the consignee.
Q: What are the kinds of passenger baggage and the laws applicable to them?
A: 1. Passenger baggage in the custody of the passenger (e.g. carry-on luggage). These are
considered as necessary deposits. Articles 1998, 2000-2003 apply.
2. Passenger baggage not in the custody of the passenger (e.g. checked-in luggage). Arts.
1733-1753 on extraordinary diligence apply. The liability is greater for baggage that is in the
custody of the carrier in contrast if such is in the possession of the passenger.
Q: What is the common carriers responsibility with respect to acts of co-passengers or strangers?
A: A common carrier is responsible for injuries suffered by a passenger on account of the willful
acts or negligence of other passengers or of strangers, if the common carrier's employees
through the exercise of the diligence of a good father of a family could have prevented or
stopped the act or omission. (Art. 1763, Civil Code)
Q: In what kind of charter is the charterer deemed the owner pro hac vice of the vessel?
A: Demise/Bareboat charter. Under the demise or bareboat charter, the charterer will generally
be regarded as the owner for the voyage or service stipulated. The charterer mans the vessel
with his own people and becomes the owner pro hac vice, subject to liability to others for
damages caused by negligence. To create a demise, the owner of a vessel must completely
and exclusively relinquish possession, command and navigation thereof to the charterer.
(Puromines v. CA)
Q: What is the concept of inscrutable fault?
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A: It arises when it cannot be decided which one of the two vessels was the cause of the
collision. As such, each one shall be liable for its own damages, and both shall be jointly
responsible for the losses and damages suffered by their cargoes. (Article 828, Code of
Commerce).
Q: What is the effect of absence of notice of loss or damage on the right of the shipper sue?
A: The absence of a notice shall not affect or prejudice the right of the shipper to bring suit
within one year after the delivery of the goods or the date when the goods should have been
delivered. (Sec. 3 (6), COGSA)
drivers compensation.
Q: Is the owner-lessor of the vehicle under a boundary system liable for damages in case of
injuries to persons?
A: Yes. To exempt from liability the owner of a public vehicle who operates it under the
"boundary system" on the ground that he is a mere lessor would be not only to abet flagrant
violations of the Public Service Law, but also to place the riding public at the mercy of reckless
and irresponsible drivers. (Sps. Hernandez v. CA, 2004)
Q: Can the Warsaw Convention apply if the place of departure and place of destination is within
the territory of a single High Contracting Party?
A. Yes. If there is an agreed stopping place which is under the sovereignty or authority of
another power, even though the power is not a party to the Warsaw Convention.
Q: What are the different limitations of liability under the Warsaw Convention?
A:
LIMITATIONS
1. Passengers GR: $100,000
E: Agreement on a higher limit
The foregoing limits are not applicable where the damage is caused by willful misconduct.
CORPORATION LAW
Q: What is the Control Test?
A: It is a method of determining the nationality of a corporation. A corporation shall be
considered a Filipino corporation if the Filipino ownership of its capital stock is at least 60%, and
where the 60-40 Filipino-alien equity ownership is NOT in doubt (SEC Opinion dated 6 November
1989; DOJ Opinion No. 18, s. 1989).
b) The certificate must be endorsed by the owner or his attorney-in-fact or other persons
legally authorized to make the transfer; and
c) To be valid against third parties, the transfer must be recorded in the books of the
corporation.
(Bitong v. Court of Appeals, G.R. No. 123553, July 13, 1998)
other hand, a right of first refusal arises only by virtue of contract stipulations, by which the right is
strictly construed against the right of person to dispose or deal with their property.
Q: Can there be a sale of a portion of partially paid shares? Of all partially paid shares?
A: There can be NO sale of a portion of partially paid shares but there can be a sale of all
partially paid shares. The SEC has opined on several occasions that a stockholder who has not
paid the full amount of his subscription cannot transfer part of his subscription in view of the
indivisible nature of a subscription contract. The reason behind the principle of disallowing
transfer of not fully paid subscription to several transferee is that it would be difficult to determine
whether or not the partial payments made should be applied as full payment for the
corresponding number of shares which can only be covered by such payment or as
proportional payment to each and all of the entire number of subscribed shares, and it would
be difficult to determine the unpaid balance to be assumed by each transferee. (Villanueva,
2001)
On the other hand, the SEC has opined that the entire subscription, although not yet fully paid,
may be transferred to a single transferee, who as a result of the transfer must assume the unpaid
balance. It is necessary, however, to secure the consent of the corporation since the transfer of
subscription rights and obligations contemplates a novation of contract which under Article 1293
of the Civil code cannot be made without the consent if the creditor. (Villanueva, 2001)
a) Under the Constitution, the amendment, alteration, or repeal of the corporate franchise
of a public utility shall be made only when the common good so requires;
b) Under Section 145 of the Code, it is provided that: No right or remedy in favor of or
against any corporation, its stockholders, members, directors, trustees, or officers, nor any
liability incurred by any such corporation, stockholders, members, directors, trustees, or
officers, shall be removed or impaired either by the subsequent dissolution of said
corporation or by any subsequent amendment or repeal of this Code or of any part
thereof;
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c) While Congress may provide for the dissolution of a corporation, it cannot impair the
obligation of existing contracts between the corporation and third persons, or take away
the vested rights of its creditors. (De Leon, 2010)
BANKING LAWS
Q: What are the deposits covered by the Law on Secrecy of Bank Deposits?
A: All deposits of whatever nature with banks or banking institutions in the Philippines are hereby
considered as of an absolutely confidential nature and may not be examined. These include
investments in bonds issued by the Philippine Government, its political subdivisions and its
instrumentalities.
PATENTS
Q: What is the first-to-file rule?
A: The first-to-file rule states that: If two (2) or more persons have made the invention separately
and independently of each other the right to the patent shall belong to the person who filed an
application for such invention; Where two or more applications are filed for the same invention
patent will issue to the applicant who has the earliest filing date or, the earliest priority date; If
two or more applications for the same invention have the same filing date or priority date, the
patent will be issued jointly to all applicants (Sec. 29)
Note: The rule is opposite to that in copyright. In copyright, the one who commissioned the work
owns the work but the copyright remains with the author or creator.
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Criminal Action. The criminal action herein provided shall prescribe in three (3) years from
date of the commission of the crime.
Q: Can a patent applicant file an action against an infringer after publication of his application?
A: No. The applicant can only file an action after the grant of patent. (Sec. 46)
Note: This is not the same with copyright and trademark. For these other two, a single act of
infringement is punishable as a crime.
Trademarks
Q: Distinguish trademarks/service marls from tradenames.
A:
TRADEMARK/SERVICE MARK TRADENAME
Definition Any visible sign capable of It is the name or designation
distinguishing the goods identifying or distinguishing an
(trademark) or services (service enterprise (Sec. 121.3). It is any
mark) of an enterprise and shall individual name or surname,
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Q: What are the two tests in determining confusing similarity between marks?
A:
DOMINANCY TEST HOLISTIC TEST
The dominancy test focuses on the similarity of The holistic test requires the court to consider
the prevalent features of the competing the entirety of the marks as applied to the
trademarks that might cause confusion. products, including the labels and packaging,
in determining confusing similarity
Q: Is a third party who makes use of his name which forms part of the registered trademark of
another liable for infringement?
A: No. Registration of the mark shall not confer on the registered owner the right to preclude
third parties from using bona fide their names, addresses, pseudonyms, a geographical name, or
exact indications concerning the kind, quality, quantity, destination, value, place of origin, or
time of production or of supply, of their goods or services: Provided, That such use is confined to
the purposes of mere identification or information and cannot mislead the public as to the
source of the goods or services.
Q: What is the effect of failure to give notice on a civil action for damages?
A: Failure to give notice shall not entitle the registered owner to recover profits or damages.
Q: Can the registration of/application for collective mark be subject of a license contract?
A: No. The registration of a collective mark, or an application therefor shall not be the subject of
a license contract.
Copyright
Q: What are the basic principles in Copyright?
A: 1. Works are protected by the sole fact of their creation. (Sec.172.2)
2. Protection extends only to the expression of an idea, not the idea itself. (Sec 175)
3. The copyright is distinct from the property in the material object subject to it. (Sec 181
Q: What are the exceptions to the rule allowing claim for deficiency?
A: 1. Sale of things pledged (Art. 2115, Civil Code)
2. Foreclosure of chattel mortgage on personal property sold on installment basis (see Art.
1484, Civil Code)
Q: What is the effect of lack of proof of petitioner's special authority to foreclose on the petition
for extrajudicial foreclosure?
A: The Clerk of Court as Ex-Officio Sheriff is precluded from acting on the application for
extrajudicial foreclosure (First Marbella Condominium Assoc. Inc. v. Gatmaytan, 2008; See A.M.
No. 99-10-05-0, supra)
Q: Does the pendency of an action for annulment of sale suspend the running of the redemption
period?
A: No. The institution of an action for annulment of sale does not suspend the running of the
redemption period (China Banking Corp. v. Sps. Martir, 2009)
Q: Does the pendency of an action for annulment of sale stay the issuance of a writ or render
ineffective one already issued?
A: No. The pendency of an action for annulment does not stay the issuance of the writ nor
render ineffective a writ already issued (Sec. 8, as amended)
Q: The issuance of writ of possession becomes a ministerial duty after the lapse of the
redemption period. True or False.
A: False. It is ministerial duty to issue writ of possession to purchaser even during redemption
period (Villanueva v. Cherdan Lending Investors Corp., 2010). However, a bond has to be
posted.
Exceptions: 1. If it appears that there is a third party in possession of the property who is claiming
a right adverse to that of the debtor/mortgagor. (Villanueva v. Cherdan Lending
Investors Corp., 2010)
2. If it would work as an injustice. (Cometa v. CA, 1987; Barican v. IAC, 1988; Sulit v.
CA, 1998)
Q: Are deposits in Foreign Currency Deposit Unit Accounts exempt from the examination of
deposits?
A: No. Examination of accounts under Sec. 11, AMLA is mandated notwithstanding the
provisions of the Secrecy of Bank Deposits Act, the Foreign Currency Deposits Act, the GBL and
other laws
(2) a trader which purchases products (2) if exporting a portion of its output
domestically and exports sixty percent fails to consistently export at least sixty
(60%) or more of such purchases. percent (60%) thereof
Exception: When foreign ownership in domestic market enterprises is prohibited or limited under
the Constitution, existing law or the Foreign Negative Investment List (Sec. 7)