ATENEO CENTRAL. BAR OPERATIONS 2017 COMMERCIAL LAW BLUE TIPS PRAYER FOR THE BAR EXAMINATIONS | | (0 God, we come before You tes day. ‘08 we are prepanng/studyng for the bar examinations This is tha most important event in our Wes, ‘one fl of consequences for our own future, ‘and for the hopes and expectations of many who love us and “ae concemed lor ut: our parenis and elatves, ou ends, ‘Our professors who have worked hard to prepare us fort We ask fr help Make cur memories ready to recall a he knowledge wo have stored in tiem by our study Help us to understand the fll meaning of the questions and to see the exact answers Give us the facity of expression to answer ‘Geary and accurately ‘Gwe us peace of sout ‘nat we may not get upeat under the prossure ofthe task ‘We do not ask this by our own ments. ‘We cannot pont o our faith service 1n te pastas deserving of hs special hep. ‘We have in fac been careless and disobedient We ask his from Your Fathery mercy and compession through "Yout Son, our Lord Jesus Chis LUstan to our prayers through the intercession of our Blessed Mother, ‘pavoness of our Univesty and of St. Thomas More, | patron of our Law Schoo. ee ‘Aotte of Cred (LC), a Trust Recelet (TR) and @ Negotiate Instrument (Ni) walk nt @ bar. Aer 18 rounds of ‘inks and neasng cing hous. the bartender asks each one of them, "Do your wives know you are here?” LLC: *1don't have to tl er because we observe the Independence Principe "TR: don’ have tte her Because she trusts me." [NE-"1101d hor 10 times already. She always checks.” “special thanks to Dean Jose Maria Hof, Atty. Ferdinand Negre, Aty. Roel Refran, Dr. Iry Patdu, ‘Alty. Celle Nativided ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS, UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 1 OF 28ATENEO CENTRAL BAR OPERATIONS 2019 ‘COMMERCIAL LAW BLUE TIPS LETTERS OF CREDIT AND TRUST RECEIPTS Q1. What ie the independence principle and how does it apply to letters of credit? Under the Independence principe, the issuing bank's obigalion to pay under the later of credits separate fom the compliance of the partes In the main contract (HSBC v. National Stee! Corporation, 2016). W 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 conact is actually accomplished or not. Under {his principle, banks assume no Habily of responsibity for the form, sufficiency, accuracy, genuineness, faisiieaton oF legal effect of any documents, of forthe general andlor particular conditions stipulated nthe documents oF superimpose thereon (Transfiol Philpanes In. v Luzon Hysre Corporation, 2004) 22, In laters of credit transactions, fraud is an exception to the Independence Principle. Fraud ean also justify the Issuance of an injunction against payment under a letter of credit. What are the ‘requirements for such Injunction to lesue? (PAl) 1), There's clear Proof o fraud; 2) The fraud constitutes fraudulent Abuse of the indo Under the main agreement: and 23) parable Injury might Totow Hf injunction isnot granted or the recovery of damages would be seriously ‘damaged. (Transtots Phiipines Inc. v. Luzon Hytro Corpration, 2006) ident purpose of the leter of erolt and not only fraud 3. Whats the doctrine of strict compliance? “The documents tendered by the seller or beneficiary must strictly conform tothe terms of the ltters of ret, thoy must incude all documents raquires by the letter of credit. Thus, a correspondent bank which departs from {ehat has been stipulated Inthe letter of cred as when i accepts a faulty tender, acts atts own risk and may fot be able to recover trom the buyer or the Issuing bank, as the case may be, the money paid the Denefciary. (Feat Bank v. CA, 1991) 4, Whatis a warehouseman’s len? ‘Awarehouseman's lien i alien enjoyed by the warehouseman on goods deposited wit him or on the proceeds ‘horoot In his hands, for the satisfaction of al lawful charges ‘or slorage and preservation ofthe goods fr all lawful claims for money advanced, interest, insurance, ansportation, labor. weighing, coopering and other Charges and expenses in relation to such goods, for all reasonable charges. and expenses for notice, and BeeBisements ‘of sale, and for sale of the goods where faut had been made in satistying the ‘tarenouseman's len, (Warehouse Recaips Law, Sec. 27) 5, Alex deposited goods for which Billy, a warshousemen, Issued a negotiable warehouse receipt Aihoreln’ the. goods were deliverable to Alex or order. Alex negotlated the receipt to Caloy hereafter, Dario a creditor, secured judgment against Alex and served notice of levy over the ‘goods on the warshousemar 2) To whom should the warehousemen deliver the goods upon demand? “The warehouseman should delver the goods upon demand to Caloy who isa holder of the receipt in good faith and ov waive, The goods cannot be levied upon by the eredior of Alex after i was negotiated to Caloy (Section 25, Negotiable Instruments Law) 'b) Would your answer be th receipt? ‘No, my anewer would not be the same I the warehouseman lsued a non-negotiable warehouse receipt. 0 ao eine worehouseman should deliver the goods to Dario, ifthe notice of levy was served on the suet Coseman prio lo notice given to the warehouseman by Alex or Calo ofthe transfer ofthe non-negotiable serene in such ease, the tile of Caley would be defeated by the notice of levy by Daro(Secton 42, Warehouse Foceipts Law). 26. Whatare the rights of the entruster in a trust receipts transaction? 4) To the proceeds from the sale of goods, documents or nstruments 2} Torte etum of the goods, et. in case of non-sale 3} To enforce al other rghls confered to him under TRL 3} TS Sencar me ust, take possesion ofthe goods or instuments or of proceeds realized therefrom upon te etaut ofthe entrustee +5) Tosa tne goods in a pubic or private sale upon noice to he enrstee in case of default ofthe entustee €} To purchase the goods atthe intonded pubic sale (TRL, Sec. 7) sme if the warehouseman Issued a non-negotiable warehouse ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR ERAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 2OF 28a ATENEO CENTRAL BAR OPERATIONS 2019 COMMERCIAL LAW BLUE TIPS oy, 8 trust receipts transaction covering certain goods, Bank A Is the entruster and 6 Is the ‘trustee. While the trust receipt agreement was stil elective, C, a craditor of B, sought to levy upon such goods. Bank A opposed, however, claiming It had a superior Interest to the goods, While this argument was going on, 0 In good faith purchased the goods from B. B, however, {alled to turn aver the proceeds of the sale to Bank A prompting Bank A to write to Oto recover the goods on the strength of Bank A's security interest 2) Who between Bank A and C is correct? Bank A is correct. The entrusters eecurly interest in goods, documents, o insttuments pursuant to the writen terms ofa ust receipt shall be valid as against al creditors of the enustee forthe duration af the trust receipt ‘agreement, (TRL, Sec. 12) ') Who between Bank A and Dis entitied to the goods? 10 Is entived to the goods. Any purchaser of goods fom an enirustee with right to sel or of docur instruments through their customary form of vanster, who buys the goods. cocuments, or instruments for valve {and in good faith from the entrustee, acquires said goods, documents of nstuments free from the entrust’s secutlyinlerest. (TRL, Sec. 11) 128. Whatare the labilties of the entruster in any sale or contract made by the entrustee? ‘The entuster Is not responsible 38 prncipal or as vendor under any sale oF contract to sell made by the ntustee by vue of such nterest or having given the entusioe the liberty to sell or otherwise dispose of the (goods, documents or insvuments under the terms of the trust receipt ransaction. (TRL, Sec. 8) 29. Does the repossession of the goods under the trust receipt sulfice to satisfy the principal loan obligation? No. The enirustee remains liable for the deficiency after the proceeds of the sale have been applied to the payment of expenses and debt (Land! & Company, et. av. METC, 2004). G10, What ae the remedies avaliable under the Trust Receipt Law? CRIMINAL: The faiure of an entustee to tum over the proceeds of the sale of the goods, documents oF Fotumonts covered by a tust receipt fo the extent ofthe amount owing ofthe entuster or a8 appears in the iat receipt or 1a relum said. goods, documents oF instuments if they were not sold or disposed of in [cordance withthe terms of the trust receipt shal constitute the crime of estala (TRL, See. 13) In order for entrusiees to be vali prosecuted for esata in relation to the Trust Receipts Law, the folowing Clements must be established: JT ay eaceived the subjoct goods in ust or under the obligation to sell the same and to remit the proceeds. thereof to tho enruster, orto return the goods if nt sold; 2) they misappropriated or converted the goods andlor the proceeds ofthe sae: 2) they performed such acts with abuse of confidence tothe damage and prejudice ofthe entuste, nd 3) domand was made on them by the enter fr the remitance ofthe proceeds othe return of the unsold (o0ds (Metropolian Bank and Trust Company v, Jimmy Goand Benjamin Go, 2007). ster commencing criminal ation fr violation ofthe Trust Receipts Law, the enruster may enforce civil Fabity ariing out ofthe Cust receipt n a separate civil action, Under Article 32 ofthe Civil Code, a civil action tae toe” ently separate and dstnet from the cinal action, may be brought by the injured partyin cee er defamation, fraud and physical Injuries. Esta falls under fraud (Prudential Bank v. 1AC, GR. No. 74006, December 8, 1992; Seo also Sarmiento and Limp v. CA, 2002) NEGOTIABLE INSTRUMENTS LAW att, What are the essential formal requisites of a negotiable instrument? (WS-UDON) 1) Wetting: 2}. Signed by the maker or drawer 3} Gontaine on Uncontional promise or order o pay 8 sum certaln in money: 2) Seyoblo on Demand, art # fixed or determinable future time 5). Payable to Order orto bearer: and 2) ioe'e eo bil of exctenge, the drawee must be Named or otherwise lnested therein wih reasonable ‘enainy. (Negotiable Instruments Law, Sec.) G12. Rissued a check for Pim which he used to pay § for kiling his political enemy. 12) Gan be the check be considered a negotiable instrument? ‘Yes, the check can be considered a negotiable instrument even if i was issued to pay S to kil his poltical YeSaantrhevelty ofthe consideration i not one Of te requisites of @ negoible Instruments (Section 1. Fekaote nseumonts Law.jk merely consitute @ defect of We (Section 85, NL). {THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EAAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 3 OF 28ATENEO CENTRAL !AR OPERATIONS 2049) COMMERCIAL LAW BLUE TIPS +) Does $ have a cause of action against R In case of dishonor by the drawoe bank? No, S does not have a eause of action against Rin case of dishonor of the check by he drawee bank. Sis not 9 holder in due course, thus, R ean raise the defense that the check was issued for an llega! consideration ‘Section 88, NL). 6) I'S negotiated the check to T, who accepted it in good falth and for value, may R be held secondarly lable by T? (2007 BAR EXAM, PERLAS-BERNABE) Yes, R may be held secondatiy lable by T who took the check in good faith and for value, Tis a holder n due course, R cannot raise the defense of ilagaly of he consideration, because T took the check from the defect of lite of $ (Section 57, NL) 13, What are the effects ofa forged signature? General Rule: The forged is inoperative, Hence, no right to reala the Instrument, or give a discharge there. oF niece payment mere! agit any pry Meets canbe acaured Bough oF under such algntire (So. 23 ny 14, Who are the persons precluded from setting up the defense of forgery? 1). Those who by thar act, silence, or negigance, are estopped from setting up the defense of forgery 2) Those who warrant or admit the genuineness ofthe signatures in question (Sec. 23, NIL), namely: a) Indorsers (Sec. 68, NIL) ) acceptors (See. 62, Nit) ©) Persone negotiating by delivery (Sec. 64, IL) 15, What are the legal consequences when a drawee benk honors a forged check? In the case ofa forged check, the drawee bank it considered es peying out of is own funds and cannot charge the amount 50 pald to the depositor The drawee bank, however. can go against the collecing bank Ifthe ‘olecting bank indorses a check bearing a forged indorsement snd presents tio the drawee bank. In ts case, itis the collecting bank that guarantees all prior indorsementsinclucing the forged indorsement sel. Therefore, the collecting bark is the one held uitmately lable (Traders Royal Bank vs. Radio Philpoine Notwork, Inc. 2002), Q16, What are the rights of aholder in due course? ‘Anoldet in due course 1) Holds the instrument free from any defect of tile of prior partes 2) Free from defenses available to prior parties among themselves, and 3) May enforce payment of the intrument for the ful amount thereof against all parties lable thereon. (See. ‘57, NIL) 17, What are the rights of aholder who is not holder in due course? (OPID) 4) May sue in his Own name, 2}, May receive Payment and itis in due cours, the insrumentis discharged 53) Hols the Instrument subject to the same defenses as fit were non-negotiable, 42) ithe Derives his te through 8 hoizerin due course and is nota party To any fraud or legally thereto, has fl the nights of euch holder in due course (Sec. 87 & $8, NIL) Q18. Whatis a check? ‘A check ie 9 bil of exchange drawn on a bank and payable on demand. (NIL, Sec. 185) Q19, Whats a crossed check? ‘A check is crossed specially when the name of a particular banker or company Is wrilen between paral fnes ‘Seawn transversaly on the face of the check. A check is crossed generally when the words “and company" or ‘oting is written between te parallel lines. (Go v. Metrobank, 2010) (@20, What are the following effects of crossing a check based on Jurisprudence? 1) The check may not be encashed but only deposited in the bank 2} The check may be negotiated only once —o one who has an account witha bank 3) The act of crossing the check serves as warning o the holder thal the check has been issued for a definte ‘purpose go that he must inquire if he has received the check pursuant to that purpose, ctherwise, he is nota folder in due course (Bataan Cigar v. CA, 1994) Q2i. When does a Check Operates as an Assignment of Fund? [A check of iself does not operate as an assignment of any part ofthe funds tothe credit ofthe crawor withthe Bonk and the bank is not Habla tothe holder unless and unt accepts or cartes the check. (See. 189, NIL) THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 4 OF 28ATENEO CENTRAL COMMERCIAL LAW BLUE TIPS INSURANCE 022. What may be insured? Any contingent or unknown event, whether past of future, which may damniy @ person having an insurable Intorest, or ereate a lability against him, may be insured agalnst. (Sec. 9, insurance Cod) 923, Can an employer tke out insurance to cover lables to which Ita directors and officers may be exposed? Any contingent or unknown event which may damily an employer of create a cvect lilly against the ‘employer on account ofa iabity upon its directors or officers, may be Insured against. (Sec.3, IC) 2s, Can an employer take out insurance on the life ofits directors and officers with the proceeds Payable tothe employer? ‘Yes. Every parson has an insurable interest In the Me of any person on whom he has a pecuniary interest (Sec. 10, Insurance Cade) A business has an Interest in ciectors and key employaes who are important tothe ‘organization ana which expects to receive some necessary gain from the continuation of thei Ives or some Financia loss rom their death (De Leon, The Insurance Code ofthe Philppines) 225. _ When is a contract of insurance perfected? ‘A contract of insurance must be assented to by both panles ether in person or by their agents, There can be no Conivact of insurance unless the minds of the partis ave met In agreement. Under the Cognition thaory, the Insured applicant must receive notice ofthe acceptance, which isthe notice of approval ofthe policy. So long 3s, ‘an application for insurance has not been either accopled a rejected, tis merely an offeror proposal to make & Contract. (Steamship Mutual Underwriting Association v. Subic Lins, 2017) G26. What constitutes insurable interest in property? Every interest in property, whether real or personal, or any relation thereto, or laity in respect thereof, of such nature that a contemplated peril might crectly damrify the insured, is an insurable interest. (Soc. 13, IC) G27. Distinguish insurable interest in lfe and property insurance? Basie ‘May be based on pecuniary interest, afi or ‘Based on pecuniary interest ‘consanguinity eae When interest Must Exist Inile insurance (save that effected by creditor on ie Of debtor, enough that insurable nterost exists at | Must exat when the insurance takes effect and when the time the poly takes effect and need not exist at | the loss occurs, bul need not exist in the meantime the time ofthe loss “Amount of esurable Interest ‘General Rule: No iit Except: insurable interests based on creditor bor relationship (only to the extent of the crecit or eb) mites to the actual value of damago! injury loss Beneficiary need not possess an insurable interest in| Person to whom loss is payable must have insurable the Fo of the insured interest in the property insured Pores 'Adovbl insurance exists whara the same person is insured | Amount of insurance is beyond tho valu of insureds 6 Seeralinsurors separa mrespec tthe same utjct | insurable interest. When Dee is oversnaurance by dove ‘and interest, insurance. the insurers ee proportionately able and are rot ‘Sach roqulod to pay fer the whoo loss, The sued tay not “Tere may be no ove-nsurance as when the sum totalot| "recover mae han the mount os insurable nteret, ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS, UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED, PAGE 5 OF 28ATENEO CENTRAL BAR OPERATIONS 2019 COMMERCIAL LAW BLUE TIPS Lanett ened ‘he amounts 0 poles issued doesnot exceed insurable _ Incest. Always several insurers May be ony one insure 229. What a Reinsurance Contract? It's one by which an insurer (the direct dat) pe a ed 1 direct insurer or cedant) procures a tied person (the reinsurer) to Insure him iganst loss or lability by eagon of such orginal insurance (See. 97. 1C) A contract of reinsurance is @ separate and distinct arrangement fromthe original contact of insurance, whose Contracted risk is insured in the reinsurance agreement. (Avon v. CA, 1997) The reinsure's contractual relationship Is withthe direct Insurer, nol the orginal insured, and the latter has no interest in and 's generally ‘not privy tothe contract of reinsurance. becauee the subject cf such contracts is the drect insurer's risk and not the risk assumed under the orignal poy. (See. 100, 1) 1230. _ Differentiate double Insurance and reinsuranc BLE INSURANCE REINSURANCE ‘Orginal insurer becomes the insured insofer asthe Insurers remain asthe insurer ofthe original insured, mc baconaee ie Nie ‘Subject of couble insurance is property ‘Subject of reinsurance is orginal insurer's Ask. ach ineurerin double insurance insures the same | The reinsurance pobcy and the original insurance interest. olcy insure diferent interests. (Original insured has no interest inthe contract of Insuredis tho partyin interest in all insurance contracts | reinsurance which fs independent of the orignal ‘contract of insurance, Treured has to give his consent to each insurance | Consent of orginal insured to the reinsurance poy pliey Ts not necessary 031, What is the No Fault indemnity Clause? ‘Any eaim fr death or inury of any passenger cr third party under @ compulsory motor vehicle insurance shall Byseid without the necasslty of proving faut or negigence of any kind. The indemnity in respect of any one argon shal not exceed P'15,000.00 provided they are under oath, the folowing proofs shall be sufficient: 1). Police report ofthe accident 2}. Death certcate and evidence sufficient to establish the proper payee 3} Reuial report and evidence of medical oF hosptal disbursement in respec of which refund is claimed. aim may be made against ane motor vehicle only, (See. 38, 10) (032, When willthe insurer in a life insurance policy be held liable in cases involving sulcide? 4) If suicide is commited after the poly has been in force for 2 years ffom its issue of last reinstatement, Unless the policy provides for a shorter period 2) Wsutade s commited in a sate of insanity (regardless of te dat of commission) (See, 189, 12) 033, Whats an incontestablity clause? itis & provision inlaw which provides that after a policy of life insurance made payable on the death ofthe ‘hatred shat have been in force during the liletime ofthe insured for a period of 2 years ftom the date of ts Mue'or ents last reinstatement, the insurer cannot prove that the policy is void ab into or is rescinatble by eae oP rmedulent concealment oF msrepresentation ofthe insured or his agent. (Mana Bankers v. Aban, 2013) Whichever is earter, between: 1) Within 2 years from the dato of issuance or ts ast reinstatement or ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 6 OF 28ATENEO CENTRAL SCRE TONS 20 COMMERCIAL LAW BLUE TIPS. 2) Upon the insurer's death (Insular Life Assuranco Go. v. Khu, 2016; Sun Lio v. Sibys, 2016) 235. 6 months after A was issued # life Insurance policy, he died Ina car accident. The insurer denied the claim made on the policy, asserting that It had discovered that A had concealed the fact that prior to the issuance of the iife insurance policy, he hed been treated for Stage 3 cancer. The Insurer claimed thet it was exercising Its right to rescind well within the two year contestability Period. Can a claim against the insurer sill be made? Yes. Section 48 regulates the actions of both the Insurer and the insured. Under the provision, an Insurer is Given two years — rom the effect ofa ie insurance contract and while the insured is alive — to discover or rove that the policy Is void ab iio of 's rescindable by reason of the fraudulent concealment oF Imisrepresontaion ofthe insured or hie agent. After the two-yea" period lapses, or wien the insured des win ‘he period, the insurer must make good on the policy, even though tho policy was obtained by favs, concealment, or misrepresentaton. (Sun Life of Canede-Philppines, Inc. v. Sibye, 2016) 036, Can an insured change his beneficiary in allie insurance? Yes, uniess he expressly waived tis right. However nthe event the insured does not change the beneficiary uring his feline, the designation shall be revocable. (Sec. 17, 1C) 037, What are the excoptions to the rule that no polley or contract of insurance issued by an Insurance company is valid and binding unless and until the premium thereof has been paid? 4) tn case of We or industria life policy, whenever the grace petiod provision piles (See. 77, IC) 2} Where the insurer acknowledged in the policy of contrat of insurance itself the receipt of premium, even if ‘premium has not been actually paid (See. 78, 'C); '3) Where the parties agreed that premium payment shall be in installments and partial payment has been ‘made atthe ime of oss: 14), Where the insurer grantad the insured a crit term forthe payment ofthe premium, and loss occurs before the expiration of tha term: 55) Where the insurer is in estoppel a8 when it has consistently granted a 60 to 80-day credit term for the payment of premiums. (Gaisano v. Development insurance and Surety Corp, 2017) @38, When can concealment be # ground for rescission of an insurance contract? 41) Acnegiect to communicate that which a party knows and ought to communicate, Is called @ concealment (See. 26, 10) 2) concealment whether intentional or uninlentional entiles the Injured party to rescind a contract of insurance. (Sec. 27, 1G) 1039, A person applying for insurance concealed the fact that he had cancer. During the effectivity of the contract, he was shot and died. The Insurer refuses to pay, clalming that there was Concealment. The heirs claim that” the cause of death hes nothing to do with the mattor Concealed. Are the helrs entitled tothe premiums? No. Materialty is to be determined not by the event, but solely by the probable and reasonable iniuence ofthe ‘hole upon the pary fo whom the communication Is duo, in forming his estimate of the disadvantages of the vRoposea contrac. orin making hs inqutes (Sec. 37,10). Tho insure is specially requred to decose to the crepe matters relating fo his health, The information which the insured faled to disclose were material and ‘Riovant to the epproval and Issuance ofthe insurance policy. The insured need not de ofthe disease he hac Teer ciseose to the insurer. tis sufficient thal his non-disclosure misled the insurer in forming his estimates ie teks fo the proposed insurance potcy Fin makiag inquires. (Sunife v. CA, 248 SCRA 268) ‘TRANSPORTATION {Q40, Whatis the degree of dilgence required of Common Carriers? ‘Common caries are require to exercise extraordinary gence. (Art. 1723, NCC) an .cquital of the accused-employee in a case of reckless Imprudence proof of the exercise ordinary dillgence by the common carrier-employer? io, Atle 31 ofthe Civil Code provides, when the civil action is based on an obigaion not arising from the act Momission complained of esa felony, such ev action may proceed independently ofthe criminal proceedings Sha rogardlose of the result ofthe later. Inthe Instant case, must be stressed that the acton fled by pettioner aaa reSopendent civ acton, which remains separate and distinct from any criminal prosecution based on the Sate Set Not being deemed Insbluted Inthe criminal action based on culpa ciminal, @ rung onthe culpability SF the offender wil have no bearing 09 said independent civil action based on an ently diferent cause of Shion, Le. culpa contractual Heirs Ochoa v. G&S Transport Corporation, 2011) ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS, UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 7 OF 28ATENEO CENTRAL ————__ COMMERCIAL LAW BLUE TIPS 242, Ajeopney owned by ‘Aleeoney owed by X driven by ¥ was tavorsing San Manuel, Tarlac when the right whee! ofthe Ieep detached causing ito ski on the oppo rt tim, a bus driven by A vas approaching, iting the rear part ofthe ngers an physical injures an th re col injuries suffered by he veanayhtsstners a to jeepney? Box ‘hance apply? “nble for negigenee and breach of contract. The moment a passenger dies or fs njured, the cartier lo have been af faut orto have acted neghgenly. and this disputable presumplion may oniy be © by evidence that he Rad ebserved extraordinary eigence (At 1793, 1758 and 1756 ofthe New Con! * thal he death or mary ofthe passenger was due toa fortutous event ine of last clear chanee provides that where both partes are nagigent bul the negligent act of one Is appreciably later m poi of ma than thal of the other, or where its impossible {o determine whose fault or eaiaence brought about the aecurtence ofthe incident. the one who had he lst clear ooportniy to avoid the Impending harm But faled to do 80, is chargeable wih tne consequence arising therefrom. The application of the doctine of last clear chance dass not apply when passenger demands responsibilty rom the carer to Yorce ls contractual obigation (Ph. Rabbi Bus Lines, Inc vs. Intermediate Appeliate Court 1990) 43. What is the test to determine whether one is a common carrier of goods? (P-BET) ‘The test for determining whether a person i @ common carrier of goods are 1) Engagement in the business of carving goods for others as 9 Public employment. holding himse to ‘engage in the tranepor of goods as a business and nol as a casual endeavor 2) Underiakes to carry goods ofthe kind which his Business supports: |3) Underiakes 10 cary tne goods by an Esiabished method and route: anc 42) Transportation is for hie. A pipeine network for hve, carving pevoleum, is a common earcier. (First Pht Indusinal v. CA, 1998) 44, When can a commen carrier become a private carrier? It is only when the parties enter into bareboat or demise charter that 9 common cartier Becomes private (Loadstor Shipping Co. v. Proneer Asia ins, 2006) Under the demise or bareboat charter of the vessel, the (Ranterer mans the vessel wih his own peope and becomes, in effect, the owner pro hacvice, subec to kabiiy {0 olners for gamages caused by negigence. To create @ cemise the owner of a vessel must completely and fexclusively relinquish possession. (Puromines, Inc. vCA, 1983) Wher it involves only & contract of afreightment, the common carter remains as such. in @ contract of Sremntment, whether time of voyave charter, the sNpowner relains possession and contol of the ship Stnough it leases part or all of ts space to transport goods or passengers. (Loadstar Shypping Co. v. Pioneer ‘Aslan, 2006) ‘G45. A.common cartier is responsible for the loss, destruction or deterioration of the goods in its possession. What are the exceptions to this rule? Inthe loss, destruction, or deteroraion is due to any ofthe folowing causes: 4) Flood, storm, earthquake, ighning or other natural disaster of calamity 2}, Aetol the puble enemy in war, whether international or cvs 5). Aet or omission ofthe shipper or owner ofthe goods 4} The cheracter ofthe goods or defects in the packing or nthe conainers 13) Order or act of competent public authonty (Art 1734, NCC) 1Q46, Is @ common carrier who transports goods excused on account of the theft or robbery of the ‘goods It transports? For eases other than those enumerated under Ar 1734, a common carer is presumed to have been at fault or fo nave acted negigently. The tha or the robbery of te goods is nota fortuitous event or a force majeure Nevertheless, a common carer may absolve iself of labily: (1) i it proves that it exercised extreordinary Uiagence in iransporting and safekeeping the goods; or (2) 4 k stipulated (0 limit ts Habily for the loss, Gelsiston or deteriraton of the goods to degree less than extraordinary dilgence. (Torres-Madrid Brokerage, Inc. v. FEB Misui Marine Insurance Co . In, 2016) G47, Does @ tortious conduct of common carrier personnel fall within the purview of the Warsaw Convention? ‘Yes, The passengers action against the aitine carrer arising tom alleged conirontationel incident between essenger and fight attendant on international fight is governed exclusively by the Warsaw Convention, even hough the incident allegedly involved intentonal misconduct by the fight attendant. The Convention creates no xcepton for an injury sulfered a8 a resi of ntenional nficion oF emotonal distress. (Edna Diago Lhuilir v. British Airways, 2070) ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS, UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 8 OF 28ATENEO CENTRAL owe COMMERCIAL LAW BLUE TIPS 248, What are the tim applicable? LUrtation on Li Ww Convention? When are limitations on Habilty not 1} For each passenger ianted ta 250,000 francs Joo a ceed baggage mk 1 20 anes par hogan ‘hand carry envted to §,000 franes per passenger not aval of this lation when: (WOWW) 1) ttl msconduct 2). Delauit amounting to wif misconduct 2) Accopting passongare without teket 8) Accepting goods witout airway bil or baggage witout baggage check 249, A purchased airline tickets from an airline company, specifying that he wanted on afternoon flight: A, however, missed his Tight because he was issued one with a morning schedule, A sued the alrtine company, 2) The alrine company contended that the extraordinary diligence required of it 2 8 common cartier commences only when the passenger boards the fight. fs it correct? [No The obligation of the airine to exercise extracrdinary aiigence commences. upon the issuance of the coniract of earage, Ticketng, as the act of soung the Contract of cariage, «= necessaniy weluded in the exercise of exraorainary digence. (Many, Jr. v. Cebu Ar. Inc, 2016) b) The airline company was able to demonstrate that it had explained all relevant information on the ticket to A. A argues that as @ paying passenger, he Is not bound by any standard of diligence. Is A correct? ‘No. The duly ofan aifine to disclose all the necessary information inthe contract of carriage does nol remove {he correlative abigalion ofthe passenger Io exercise ordinary ciigence nthe conduc of hs of her affairs. The passenger is stil expected 10 read through the fight information in the contract of cariage before making his o her purenase. If he or she fais to exercise the ordinary Gligence expected of passengers. any resuling damage shouldbe borne by te passenger (Manay,J7-v. Cotu Ar, Inc, 2076) (050. x "back-hauled” goods for merchants from Manila to Pangasinan. Such back-hauling was done On a peviodie or eesasional rather than regular or scheduled manner. Can X be a common carrier? ‘Yes. There is no distinction between a person oF enterprise ollring transportation service on a regular or {chadulod basis and one offering such service 09 an aecasinal, episodic or unscheduled bass. (De Gueman v A, 1986) 251. Is aconsignee, who is nota signatory to abil of ling, bound by the stipulations therein absent ‘ny proof that it consented thereto? No. However, once the bil of lading is recelved by the consignee who does not object to any terms of Ripulations contained therein, i consliles as an acceptance ol the conivact and of all of ts terms and Condiions, of which the acceptor has actual o constuelve noice. A consignee, although not a signatory may become a party to be contract by ‘9) agency, between the consignee and the shippericonsignr Bhonegutiocal acceptance ofthe bilo aging deliveres to tne consignee, with full Knowledge of Is contents {}avatiment ofthe stipulation pour aus. (MOF Company Ine v. San Vang Brokerage Corporation, 2009) CORPORATION LAW 1052, Whatis the place of incorporation test? [According (othe place of incorporation tes, the nationally of corporation is determined by the county under tsnose lows it has been organized and registered (Sec. 129, Corporation Code) 052. Whatis the Control Test? In cases involving properties, business or industies reserved for Flipios, in adélion to the place of Incorporation test, the nationality of @ corporation is determined by the nationally of the “controling stocknolders* Under the Conte! Test, shares belonging to corporations or parnerships at least 60% ofthe capital of which is ‘owned by Filpno zens shall be consigered as of Philippine nationality. Under the liberal Conrot Tos, there fro need fo futher race the ownership ofthe 60% (or more) Fipino stockholdings of tha Investing Corporation ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 9 OF 28ATENEO CENTRAL BAR OPERATIONS 2019 COMMERCIAL LAW BLUE TIPS et fica camraion whch sat Wat Gi Foro owned cosuered os Fo. Nar Neko Ming ard Development Corp. v. Redmont Consolidated Mines Corp . 2014) ° 54, What is the grandfather rule? ‘The Granatather Rule i he method by which he percentage of Fipino eau i a corpration engaged in natonalzed andlor party nalionaizes” seas of activites, povided Tor under te Consul ond. oer ‘atonatzation laws. fs computed, in cares where corporate shareholders are present. by alrbutng te nationality ofthe socond or even subsequent ter of ownership 10 determine the noonaty of he copeate Sharohokder (Nora Neko Mtning v Reamont. 2015) 1255, Whon do you apply the grandfather rule? ‘The Control Testis sti! he prevaiing mode of determinng whether oF Nt a corporation is Fino corporation, hon there is doubt ia the minds ofthe court, Based on the allendant facts and circumstances ofthe case, the 60-40 Fiipino-equily ownership nthe corporation t'may apply the "grandfather rule” (Narre Nickel Ming v Redmont, 2044) NOTE: Applicaton of the “granafather rule® does nol eschew the “conto! fet, but that infact is supplements the conta est, a8 implements the ilent ofthe Fipinization prowsions ofthe Constitution 56. How do you determine compli no-oreign ownership requirements. for corporations engaged in nationalized or partly nationalized industries? ‘The requiced percentage of Filipino ownership shal be applied to BOTH: (a) The total number of oustanding shares of stock entitled to vote in the elaction of ects; AND_(O) The total number of outstanding shares of ‘lock, whether or nt entitles to vote in the election of deectors. SEC MC. 8, sores of 2013) NOTE: SEC MC No, 8, series of 2013 is not contrary to Court's dotiiton and interpretation of the te “capa ‘in Gamboa v. Teves. (Roy v. Herbose, 2016) 57. When isa Filipino considered a "benelicial owner” of a specific stock? Ite Filipino erect oF indirectly through any contact of arrangement, has the voting power andlor investment returns power over the "specie slack’, than such pio i Ihe beneficial owner” ofthat “specif stock” Th, that “opecte stock i counted as part ofthe 60% Flipino ownership requirement under tne Gonsiuion. (Roy v Herbosa, 2017), 258, What are the instances wherein you can apply the piercing the corporate vell doctrine? ‘Authoities are agreed on atleast three (3) basic areas where piercing the vel, with which the law covers and ‘Bolates the corporation trom any other legal ently to which « may be related, is alowed. These are 4) defeat of puble convenience, as when the corporation is used as vehicle for the evasion of existing obigaton; 2) fraud cases or when the corporate eniy is used fo ustiy wrong, protect ud, or defend a etme: oF 3) afer ego cases, where the corporation is merely 2 farce since i a mere aller ego or business condut of Derson oF where the Corporation i £0 organized and controled and ts aflaks ave 30 conduc as t0 make Rmmerey an instrumentality, agency, conduit or adunet of another corporation. (General Croat Corp. ‘Asons Dev. and Investment Corp. 2007) 059, What are the elements ofa defacto corporation? 1), Vak aw under which incorporated; 2}. Attempt in good faith to incorporate of “colorable compliance 43). Assumption of corporate powers: and 4} Issuance by the SEC of a certicate of incorporation. (Arnold Mal v. Precio, 1950) usprudence is seltled that “he fing of aces of incorporation and the issuance of the cortiicale of ingoporaton are essential for Ine existence of a de facto corporation” (Missionary Sistrs of Our Lady of Fatima v. Aizona, 2018) (060. What is a corporation by estopper? ‘There is @ corporation by estoppel when persons assume to act as a corporation knowing i to be without authority 1 do so. Such as when an ostensible corporation represents tse tothe public To be 3 corporation in is eatoral box despite k not being incorporated. (Macasao! v. Co, J, 2073) ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 10 OF 28ml ATENEO CENTRAL le) COMMERCIAL LAW BLUE TIPS. 61. Can directors be represented by proxy at board meetings? No. directors or trustees cannot atend ar vote by proxy al board meetings. (Sec 25. Corp Code) 62, Can a corporate officer delegate to a th er delegate to a tied party the management and operations of 4 corporation without prior approval ofthe board of arectors? ™ (Petas-Berabe) No Tis pronouncement fotos te wa-onrencea ue tala corporation exerses is Boers togh ts Doar of crectrs andor a dy auoneee cers ond agers xcaptm retances where the Corporaton Code reauressackholr approval cenbn spese aos [rom v Rodrigues 2079) 263, When isa Director, Trustee, or Officer personally lable with the corporation? GENERAL RULE: Corporate personaly isa shel against persona! habilty of corporate offcers. (Consolidated Bank v. Court of Appeals. 2001) EXCEPTIONS: Personal labilly of a corporate drctor, tustee or oicer along (although not necessary) wih the corporation may attach a a rule, only when: (ABC-WAL) (Tramat Mercontie v CA, 1994) 1) He Assents to a patent unlawful act of the corporation (See 31, Co Code) 2). Bad faith or gross negigence n airecing its affaws (Sec 31, Corp Code): 3) Confit of interest resulting in damage to the corpraton, is stockholders or other persons (Soe. 37 & 34, Corp Code) 4) He consents to he issuance of Watered stocks or, having knowledge tnereot, he does not forthwith He wth the corporate secretary his writen objection thereto (Sec. 68, Corp Code). '5) He Agrees to hold himself personaly and solani Kale withthe corporation, 6) He is made personaly lable by a specie provision of Law (Seo 44, Corp Code) 264, Can a corporate officer, without authority rom the board of directors file a case on behalf of the ‘corporation? ‘No, Thus, ithas been observed that the power of @ corporation to sue and be sued in any courts lodged wit the board of directors Mal exercises ts corporate powers. It necessaty folows that “an itawidual corporate bier cannot solely exercise any corporate power pertaining othe corporation wrnoul autho tom the boars ot directors Hence, since petitoner is 3 corporation, the certification atlached to Hs complaint Sled with the RTC must be tcxecuted by an officer or member ofthe board of crectors 0” by one who Is Guy authorized by a resolution of the board of irectors: otherwise. the complaint wil have 10 be dismissed, (Phulppne Numsmac and “Antiquarian Society v Aquino, 2017) G65. Can the board of directors be held lable for alleged errors in judgment, thereby causing losses to the corporation? No Ifthe cause ofthe losses i merely an error n business judgment, not amounting to bad fath or negligence, Groctors andlor oftcers are rol lable. For them lo be held accountaba, the mismanagement and the resulting {Sseos on account thereol are not the only matters to be proven. ie lkewise necessary 10 show thatthe rectors andor offcers aclod in bad fath and with malco in doing the assaiod acts. (Flprnas Port Services, Inc v. Cruz 2007) 066. Can the Securities and Exchange Commission (SEC), pursuant to its regulatory powers over the Philippine Stock Exchange (PSE), reverse the PSE's management decision to deny the listing of Securlties of an applicant company? ‘No. The PSE's management prerogatives are not under the abscluto contol ofthe SEC. The PSE I, after al, @ Corporation suthorzes by is corporale ranchise To engage in ls proposed and duly approved business. Guestons of poly and of management azo lft (0 the honest decison of the officers and arectors of @ forporation, and the cours are wihout author to substlute thew judgment forthe judgment ofthe boars of rectors Thus, notwithstanding the feguatory power of the SEC over the PSE, and the vesultant autrty to reverse the PSE's decision in mallers of appicaton for ising inthe market, the SEC may exercise Such power only ifthe PSE's jdgment is attended by Bac faith. (Prippine Stock Exchange, Inc. v Cout of Appoels. 1997) 067, What are utra vires acts? ‘These are acts done by a corporation outside of those conferred by the corporation code or by ts AO! and those that are not necessary or meidenta othe exercise ofthe powers so conferred. See 45, Corp. Code) 68, May ultra vires acts be ratified? ‘The corporation may raily the unauthonzed acts of is corporate officer Ratification means thatthe prin Yountanly adopts, contams and gives sanction fo some unauthorized act of is agent on is behal. I th Voumtary choice, knowingly mad, whieh amounts 1 raiicallon of what was (heretofore unauthorized and ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS. UNAUTHORIZED USE AND REPROUCTION OF THIS MATERIAL IS PROMIBITED. PAGE 11 OF 28> ATENEO CENTRAL [BAR OPERATIONS 2014 COMMERCIAL LAW BLUE TIPS becomes tne autnorzed act of he party 40 making the ralfcation Th substance of te doctnine is confrmation afer conduc. amoung fa substi fo a pro auhortyRaeaton can Oe made ether express of Impey ike silence oF acquiescence and accoptance of banelts (Yasuma v Hows of Gecito De Vile, GR No 150350, 2006) legavor acts, however. cannot be rated. (Bernas v Cinco, 2015) 269. Discuss the trust fund doctrine. Tho “Trust Fund” doctine considers the subscnbed capa! a8 a ust fund for the payment of the debs of the ‘corporation, fo which the creditors may look for saistacion Unt the iguiabon ofthe corporation, part of the Subscribed capital may be returned or released to the stockholder (excep! im the redempiion of redeemabie shares) without violating this principle. Thus, dividends must never impair the subscribed capt, subscnption Commitments cannot be condoned or remitted: nor ean the corporation buy ts own shares using the subscribed capital as the consideration therefor. (National Telecommuricatons Commission v. Court of Appeats. 1999) aro. re erositors' rights limited to requiting the payment of unpaid subscriptions? No. The trust fund docinne is not imted to reaching he stockholders’ unpaid subscriptions. The scope of the ‘doctine wen the corporation te meoivent encompasses nel only Dw capital stock, bul also other property and fassets generally regardes in equly as a trust fund for the payment of corporate debs. (Haley v.Prntwel Inc 2011) G71, Whats the doctrine of equality ofs Under the doctrine of equally of shares — al stocks issued by the corporation are presumed equal with te Same prieges and lables, provided that the Articles of Incorporation Is sienl on Such diferences. (CIR v Cour ef Appeals, 1999) 0? G72. May A, a transferee of shares of stock, initiate on action for mandamus compelling R Corp to record transfer of shares ints stock and transfer book? ‘Yes. tis already setled junsprudence thal the registration of a transfer of shares of slock is ministerial duty on ihe port of the corporation Aggieved parties may then reson 10 the remedy of mandamus to compel Corperations that wrongly or unjustifably reluse 10 record the transl orto issue new certficales of siock. {Ine remedy is avaiable even upon the mance af & Bona ae transieree who is able to wstabish a clear legal fon to the registration of the transler. TNs legal nght inherently ows trom the transferees established ‘Camership ofthe stocks, aright that has been recognizes by the Court (Andaya v, Rural Bank of Cabsaboren tn, 2076) 273. What are the rules on declaration of dividends? Corporations may only declare alvisends out of unrestricted retanec earnings, Stock corporations are prohibited from retaining Surplus protis i excess of 100% percent oftheir pain capital ‘look, except 1). When justified by define corporate expansion projects or programs approved by the boars of directors 2} When the corporation prohbted under any Joan agreement wit any fmancial institution or credtor, liniher focal or foreign, from declaring diigengs winoutishis consent, and such consent has not yet been secured 13) When i can be clear shown thal such retention Is necessary under special circumstances obtaining inthe Corporation, such as when there fs need for specal reserve for probable contingencies. (CC, Soe. 43), G74, What are the limitations to # stockholder’ right to inspect corporate records? (BIG) 4). The right of inspection shout! be exercised at reasonable hours on business days; 2} The person demanding fo examine the records has not moroperiy used any information secured. through any previous examination ofthe records of such corporation, and 3) The demand is made in goo¢ fat o fora legitimate purpose. ‘As regards the last two kmitaions, a corporation that wishes to setup thes Inspection bears the burcon of proof. (se v. Woe, 2010) ‘rounds a8 a delense in retsing 1a75, Can a stockholder invoke the right to inspect the corporation's records of the books of the utiness transactions, minutes of the meetings, and financial statements, even after It has dissolved? ‘Yes, Secs. 122 and 145 of ho Corp. Code provide thatthe boty corporate contiwes for three years after [ATENEO CENTRAL, JAR OPERATIONS 2019 . COMMERCIAL LAW BLUE TIPS 1). Discoveries, scientific theories and mathematica mathematical methods 2) Schemes and methods o! performing menial acts. paying games or doing business 3). Programs for computers or software ae Fonte a, COMPLE OF sofware AF auch prtcad ce copyighl a may frm prof patentable 4). Methods for reatment of the human or animal body 5) Plant varieties or animal breeds (but plant vaneies are protected under the Pant Varieties Protection Act) 125. What are the rights conferred by a patent? {An owner ofa patent has the following rights 1) Toran sci te unauotes making ng, olen est, slig pring of stein 2) To restrain or prohibi the unauthorized manufacturing. deaing in, using, seting or offering forsale, oF Ingoting ofa product obiaines from a patened process 3) To assign or transfer by succession the patent, and to conclude Keensing contracts for 1 Code) 2126, What are the limitetions on patent rights? (PEMMS) ‘No patent intingement arses inthe folowing cicumstances 41). Aets done Privately and on 2 non-commercial scale of for a non-commercial purpose 2} Moking o using exclusively forthe purpose of Experiments tnt relat to the subject matte of the patented lnvontio, 1) Preparation for individual cases, ina pharmacy of by a medical professional, of Medicine in accordance ‘win a medical prescription 4) Use of a patented product that has been put on the {national exhaustion of rights] 15) Inventions used inary Ship, vessel. a Philippines temporanly or aecidentaly that are used exclusively land vehicle (Sec. 72, 1P Code) Market in he Phiippines by the owner of the product craft, olan vetile of any her county entering the tretory of the forthe needs of te shi, vessel, a¥crat, or ‘at2r. When cana person fie a criminal ation fo patent nfringerent? one invingernent is repeated by ininger or by anyone In connivance wth him i 1 ne i ecGen al, winout pegs fo nuulon of cv action or damages. be cimialy hale Fe enge on sal poserbe 3 year om date of commission of nme. (See. G4. 1P Code) @128. How are trademark rights acquiced? The hts na mark shal be acquire through reisraton made vally in accordance withthe provision of his law, (See. 122. IP Code) 129, What are the requirements for egistrabilty of a mark? (PERLAS-BERNABE) The mark must be visble and distinctive, Distincwveness may ler be Inherent or (rerlad tough use (secondary mearig) Generc marks (2g. LYCEUM for school) can never become a aeite while suggestive marks (eg. LA SALLE [or a schoo!) are inherently distinctive. Descriptive marks Heer FRANCIS ls geographical desciptive of tho place Sl Francs St.) are alo not csinctveuness these 0.8,$ acauire secondary meaning. (Shang Properties v I. Francis Development, 2014) {@130, What are the tests in determining confusing similarity between marks? Which isthe prevalling test? ‘To detormine whether a mark is confusingly simi wih that of notre, the Cour has developed two (2) tess: Te Somnaney and hots teats. Whi tne Court has ime and again ried thatthe application ofthe lest is on tre cote caze bast, upon the passage of the IPC, tho tend has been to veer away fom the usage of the Ronste test and to focus more on the usage of te domnancy test. (ABS-CEN Publishing v. Drector ‘Trademarks, 2018) 131. Are well-known marks protected inthe Philippines? YYos. A matk that Is identical wit, or confusingly similar to, oF constiutes @ translavon of mark which i¢ Zcosicered by the competent author ofthe Philppnes to be wel-Anown internationally anc in the Phisppines, Shomer or not lip rogstered here, as being aesdy tho mark of @ person over than the appican for Tealsraton, nd used foridential or simlar goods or services cannot be registered, 2132. What constitutes use ofa trademark in the Philippines? (PERLAS-BERNABE} The “use which the law requires te maintain the registration of @ mark must be genuine, ‘and not merely token... genuine use may be characonzed a8 @ bona fde Use which resis o tangs to result, in ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 21 OF 28ATENEO CENTRAL Bak Orta TIONS 201 ae ‘COMMERCIAL LAW BLUE TIPS ee me uNEINS COMMER C OL LAW ELI) fone way oF another. into a commercial interaction oF vans 2 om transaction inthe oveinary course o! trade. (W Land Fr use of the mark on the internet, must be shown Mat the owner has actualy transacted, of atthe very last ition in erder to bo considered 96 having used the face makin re stay Couee ao ae uae a suns song of onset commerce ‘Country is therefore imperative. (d.) ena sroweg “ “ (2499, What are the distinctions between trademark infringement and unfalr competion? (PERLAS: BERNABE) The distinctions between su or trademark intingement and unfair compatien: 1), The former is the unauthorized use ofa trademark, whereas the ltr isthe passing off of one's goods 35 those of another: 2) Fraudulent intent is unnecessary nthe former, whe dis essental inthe later; and 53) In the former, prior regisraton ofthe trademark sa pre-requsita fo the action, while i isnot necessary in the later” (Cov. Spouses Young, 2014) 134. What are the requirements for copyrightabilty? (1) Uterary or aniste work that i (2) orginal, i, independent created, and (3) wit modicum degree of creatviy, Q135. When does copyright attach? From the moment of creation; Nence, registration Is not required (@136. What are the rights of @ copyright holder? “The exelisive igh to carry out, authorize or prevent the ftowing acts: 41), Reproduction ofthe work or substantial portion ofthe work: 2} Dramalization, tanslaton... or ater ranrmaton of tho work: [derivative works) 23} The fest pubbe disrbuton of the cxiginal and each copy of te work by sale or other forms of transfer of ‘ownership international exhauston of rhs) 4) Ranta of te orignal or a copy of an audiovisual or cinematographic work 5) Pubic depiay of the anginal ora copy ofthe work 8} Public performance ofthe work and J) Other communication othe publc othe work, e. on te Internet (Sec. 177, IP Code) 2137, What are the works not subject fo copyright? No protection shail extend to any idea, racedute. system, method or operation, concept. principe, discovery or Moro data as such. even f they are expressed, explained. ustraled or embodied in @ work; news of the day Traitor miscalaneous facis having the character of mere lems af press information; or any oficial ext of & ‘Mplsalve, agmiasvave of logal alue. 9s wel as an offal onsation thereof, (Sec. 175, IP Code) While arcat events are news of he day are mere facts nol protected by copyright, ideo Coverage ofthe events are irony works having undergone processing with modicum degree of creatviy 0138. Are works by the government copyrightable? No. No copyright shall subsist in any work of tne Government of the Pippines. However, prior approval ofthe Jovermen egency or ofice where the work is created shal be necessary for expotation of such work fr Bernt Such agency or ofice may, among athe ings, impose as a condition the payment of royalties. No prior Spproval or concitons shall be required forthe use of ary purpose of statutes, rules and regulations, and sercches lectures, sermons, addresses, and dsseralions, pronounced, read oF rendered in courts of justice, Beto administrative agencies, in delberalve assembles and in meatings of puble character (Sec. 176.1, IP Code) 139, What are tho rules on copyright ownership? ‘Soc. 178) ‘Orginal eray anc are work ‘Auth of he work Wns ofjont omersip (Co-auhors ee ee To tre empiyee te raatono tne work sno par of is eguar dues ‘employment othe employer he wor isthe resut of his roglary-aesined duis ‘THE @LUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 22 OF 26CENTRAL OPERATIONS 2015, COMMERCIAL LAW BLUE TIPS ‘Ownership betongs tothe person who commissioned the wok bul the copyright (Commissioned works 140, What is fair use and what ar its loments? The fair use of copyrighled work for ericism, news regating, teaching (incuding multiple copies fr classroom use). esearch, and similar purposes snot an iningerent ot copyget, ‘The omens fe (PuChe = NaC ‘ASuE) " mre ‘ 1), Purpose & Character ofthe use 2) The *ranslormative test” is generally used in reviewing the purpose and character of the usage of the ‘oprtighted work... whether the copy of the work adds “new expression, meaning or message" to lranstorm ‘into something eis 3) Nature ofthe Copyrightes work 4) ‘Amount & Substanisly ofthe portion used in relation tothe whole thing as a whole '5) Effect of the use: on the potential market or the velue ofthe copyrighted work (Seo. 185) ‘The fact that a work is unpublished shall nol by isl bar a fining of fai use i such finding is made upon consideration of al te above factors. (ABS-CBN v, Gazon, 2015), at4t. When isa "When 3 person benef from the infnging activity of ancther person who commits an infringement ifthe person benefing has been given notice of the infanging actly ang has the right and ably to contol the actives of the other person, [Sec. 216 (b), IP Code] 12142, When ie a person liable for contributory infringement? When, with knowiedge of an infinging actly, induces, causes or materially contibutes to the infringing conduct of another. (See. 216, IP Code) ANTLMONEY LAUNDERING ACT 143, What are covered transactions? 1). Transaction in cash or ather equivalent monetary instrument exceeding $00,000 within 1 banking day 2) Transaction with or involving dealers of jewelry, precious metals, ana precious stones in cash or other equivalent monetary inatumon 3) Casino eash transaction exceeding 5,000,000 oF is equivalent in other currency. (See. 3(8), AMLA, a8 amended} 2144, What are the covered persons under the AMLA? 41). Banks and al ther enttes, including thet subsidies and afiates, supervised or regulated by BSP; 2) Insurance companies, pre-need companies. and all lher persons supervised or reguated by the Insurance ‘Commission 3) SEC supervsedireguiated personsienties tke the tertiles managing secures or rendering services as lnvestmont agents, advisor, or constants; Mutua fund, closed-end investment companies. common trast funds, pre-need companies: and other eniies administering! deaing in cureney, commodities oF financial erivaves based thereon, valuable objects, cia substtutes and other similar’ monetary inswuments property. 4) Jewelry and precious metals dealers; 5) Company service providers which, as a business, provide any ofthe fllowing services to third parties! 2) Acting a 2 Formation agent of juedical persons. ') Acting as (or arranging for snother person o aci as) a Director or corporate secretary of a corporation, 2 partner ofa partnership. ora simiar positon in relation to other uniccal persons €) Provicing a registered office, business acdress of Accommodation, corespendence or administrative ‘adcress for company, 2 parnarship or anyother legal person ot arrangement ang 1) Acting as (or arranging for another person o ct as) a Nominee shareholger for anather person: 6) Persons, nclucing lawyers, accountants and other professionals who provide any ofthe following services! {8} Managing of client money, secutites or other assets; management of Bank, savings or secures ‘accounts; organization of Contbutions for the creation, operetion or management of companies, and creation, operation or management of Juridical persons or arrangements, ang buying and seling business entities 7) Casinos, incuding inernel and ship-based casinos. wit tespect othe casino cash transactions relat to ‘heir gaming operations. (See. 3, AMLA, as amended) ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 23 OF 28(EO CENTRAL ROPERATIONS 2019, ee ae ree COMMERCIAL LAW BLUE TIPS mmr ciaL LAW BLUE TIPS NOTE: "Covered persone’ Professionals in relation to nfo fre authorized to pracioe in ‘he Phiippines and shall continue to be subject lo the provisions of their respective codes of conduct ansior rotessnnah vb he reciente (at) © ‘ folessional responsibty o any of ts amendments (id) 2145, “What are the baste obligations for covered persons/institutions? 2 Sov saenratona mut coasay acon sore (neal 2) Must conduct institutional Risk Management (Sec. 2 1 Rule 15); " 3) Gates tiney incr eroen Fenen born Nyon Se Re 6) 2146. What are deemed “suspicious wansactions"? (CUSP-UA) ‘Transactions, regardiess ofthe amount involves, where any ofthe flowing cvreumstances axis: 1) Amount involved is not commensurate wih he business or financial Capacity of he cent: 2) No Underiyng legal or vade obligation, purpose or economic jsticaion 3) Clients iransaction is Stuctured order to avod being th Subject af reporting requirements under the Act: 4) Circumstances relating to the vansacton which are observes to deviate fom ine Profle ofthe lent andlor the cients past transactions wih the covered insttuton 5) Client isnot properly tsenied: 8) Transaction is in a way releted fo an Unlawful acy or offense under this Act that is about tobe, is being ‘or has been commited: ot 7) Analogous vansactions (See. (6-1), AMLA, a8 amended) 147, What isthe safe harbor provision? ‘No administrative, criminal or civ or civil proceedings shall ie against any person for having made a covered transaction report in the regular performance of nis duties and m goed faith whether ov nol such reporting results in any criminal prosecution under AMLA or any ather Philippine law (BSP Circular 706 dated January 5, 2011) [Check IRR of AMLA Sec. 5, 2018) 2148. Under what circumstances may AMLC apply for an ex-parte bank inquiry with our courts, and if 50, with which court In particular should it file such application? ‘Tne AMLC may inquire into bank deposits upon order of the court when there is probable cause thatthe bank deposits are related tothe crime or uniawlul acivites eotines In Secon 3(1) and 4 of the AMLA. Jurisdiction for ‘such applcaion is vested upon the Cour of Appeals. (Sec. 11, AMLA) 2149, Differentiate a Bank Deposit Inquiry Order from a Freeze Order. ‘nk 2 ont nonce insttens rewind tn Bark Sewey | acriy tom Beg raraaced wiht ale‘ owarshp Cas there ‘ANG shal fle before the CA an ex pate appicaton era Bi | The ANLG may fie before the CA, ‘order when Ht Pas been ostabished tha theo ws probabis | appieston ex pero afer determination tha proeble cause ‘ase tal the deposits or nvesmens wowed ae nay way {ents that any manelay instument or peepedy ary wy felatesto amoney uncer ofense, ‘elated to an urawfut achvty The Freeze order shal Be ‘Mec mediately and shal be fora ped of onthe exceptons: No cout order ic roqured in the lotowig (G).Kenappng “for tansom under” Ar. 267. HPC; | Raqurements 10 be observed in the issuance of Freeze {2} volatons of me Gonprenensive Dangerous Dogs Act ct | oer 2002 (RA NO 9165, Secs. 45.6 8.910, 12 13 14.15| a. No prior crminal charge. pendency of a case, o¢ and 18) comcton for an uniawf acy or ML once i (3) Hacking and other votatons under R.A No. 6235 rocossary forth commencement eine resolution of {G) Destructive arson and Ynurder under the RPC. cling 2 petition for reece order ‘hose perpetrate by terrarits agaist nor-comatan persont |b, No asset shal be fazen the reuse ofa ond emia targets ‘anciate for an electoral offee during an election (5) Felonies or oftensos of 3 nature similar to hose meriinns | porod Shove, which are punishable under te penl tows cr cine’ |. Ro-cout sat sue a tempcary restraining order or counties and wo iunctonagaiat any freeze ores except {6} Teransm and conspiracy to corms terri ae eine ‘he Supreme Cour ‘ad penalized under RA No. 9372 RA. NO 10767, Sec 2) ELECTRONIC COMMERCE ACT 2150, What isan electronic deta message? ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR, EXAMINATIONS, UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED, PAGE 24 OF 28ATENEO CENTRAL BAR OPERATIONS 2018 COMMERCIAL LAW BLUE TIPS Electronic dato message celers to informal cones Se ern on Yonerated. son, recened of soved by elaconc, optical or similar Legal Recognition: information shal! form of an electronic data message. ‘message. (Soc. 6, RA 8702) Nol be deni valuty or enforceabsity soley on he ground tna Risin he OF that merely Incorporated By relevance in that electronic data 151. Whats an electronic document? Electronic document refers to informal information oF the representation of infemation, data, fiques, symbols or other Ides of wile expression deserbed 0 how fopresei,y hicn natin oan oloaon extinguished, or by whieh a fact may be orove and armed. whi is receive, recorded, Yanamted, sored. Processed, retrieved or produced electonically [Sec 5). RA 8792) Legal recognition: Electronic documents shail have the legal effect vacty of enforcesbilty as any other document or legal weting. (See. 7, RA 8792) 2152. What s an electronic signature? Electronic signature reers to any dstnctive mark, chetcteristic andlor sound in electronic form. representing the identty of a person and attached to or logialy associated wih the electronic dala message oF electron ‘ecument oF any methodology or procedures eraployes or adoptea by a person and executed of adopted by Such person with the intention of authenieating oF approving an electronic data message or electronic ‘ocument. (See. S(e). RA 8792) {Q153, What is the presumption relating to electronic signatures? In any proceedings involving an electronic signature, it shall be presumed that 41). The electronic signature isthe signature of the person fo whom i coreates: nd 2} The electone signature was affixed by that person wih the intention of sxgning or approving the electronic document unless the person relying on the eeconeal signed electronic documert knows or has noticed OF defects in or urvelbity of te signature or falance on the electronic signature is rot reasonable under the creumstances. (See. 9, RA 8792) {Q454, What isthe obligation of confidentiality? Except for the purposes authorized under the Electronic Commerce Act any person who obiained access 10 ny alectonic key, electron dala message of olectronc document, book, register. corespondence, ‘tdrmaton, or ther materal pursuant (0 any powers conferrea uncer this Act, shall not convey to oF share the ‘Same with any other person (Soc. 32. RA 8792) DATA PRIVAGY ACT Tiss. Whole acata subject? Data subject eters to an individual whose personal information's procossed. (Sec. 3(¢). Data Privacy Act] Thus, ‘Corporations are not entitle to data privacy rights Q156, How Is the processing of personal information done? Processing refers to any operation performed upon the personal dala including, but not limited to: collection, Pcsing. organization, siorage, updating oF modification, revieval consultation, use. consoldation, blocking, brasure o destruction (Sec. 3). OPA {a157, Why does sensitive personal information require a higher degree of protection? SSenstve personal information ike an individual's health eduction or genetic data requires a higher degree of protecbon because ther unlaw use might lead 19 discrimination, idetty thet, damage to reputation and other fiks, 188, Can the company deny 2 stockholder's request for list of stockholders of the company on the {ground that stockholders have net given their consent tothe disclosure? No. Consent is just one ofthe cera for lawiul processing cf personal information under the DPA. in this case ‘closure Is allowed pursuant to law oF regulation. Unser the Corporation Cade, stockholders have the right fo inspect. 2159. Whats the right to be forgotten? ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 25 OF 28TENEO CENTRAL BAR OPERATIONS 2019, COMMERCIAL LAW BLUE TIPS Its the right to erasure or blocking of personal cata when Po longer necessary forthe purpose of callacton, whan the ight of data subjects are atveady being wolated a 2160. Can the rights of data subject be limited? YES. The righ of cata subjects may not apply or may be tnted for 1). Scientific and statistical research 2) Investigations in relation to any criminal, administrative or tax abilities FINANCIAL REHABILITATION, INSOLVENCY, LIQUIDATION and SUSPENSION OF PAYMENTS and FLSP Rul FRIA sought to maximize he chances oth survival the business oa ancy stressed company o& Individual by providing 4 different remedies, to wit: ” {Gout sponse rena 2. Pre-pockaged enabinaton, 3. Outer cour ot noma rervctring agreement or ehabitaton plan; and 4 Uauton Q161._Key concepts: Rehabilitation, Insolvent, Liquldation and Suspension of Payments, REHABILITATION: It isthe restoration ofthe debtor oa condion of successful operation and solvency, it 's shown that its continuance of operation is economicaly feasible and us creditors can recover by way ofthe resent valve of payments projected in the plan, more ifthe debtor continues as a going concern than i it is Immeciately tquidated. INSOLVENT: Its the financial condition ofa debtor tat is gonerally unable to pay Ws or his Habits as they {all due Inthe ordinary course of business or has labities that are greater than ts asses. LIQUIDATION: There ae 3 kinds of iqudations under the FRIA: 1) Voluntary Liquidation: An insolvent dedior may apply for Bquidatlon by fing @ verfied petton for quidation wath the court establishing hs insolvency. (See. 90, FRIA) 2) Involuntary Liquidation’ 3 or more creditors the aggregate of whese claims is atleast 1 millon poses or at least 25% of the subscribed capta stock or partners contributions of the debior, whichever fs higher, may ‘apply for and seek the liquidation of ar insolvent debtor by fling a peltian fer lquldation ofthe debtor wit the cour. (Sec. 81, FRIA) 3) Conversion by the Court into Liquidation Proceedings: During the pendency of court-supervised or pre ‘negotiated rehabilitation proceedings, the court may ofder the conversion of vehabiltaion proceedings 10 liquidation proceedings pursuant to: a fncing thal the debtor is Insolvent and there le no substantial Jkelnood for him to successtuly rehabitate,falure to confirm a Rehabitaton Plan within 1 year from the fing ofthe petiton to confim, falure of renabltation and voluntary lauidaion. (See. 92, FRIA) [SUSPENSION OF PAYMENTS: A state where the individual detior possesses sufficient property to cover all bis debis but foreseeing the Impossibity of meeting them when they respectively fal due, and files a verfied peltion in court to be deciared in such state, ataching a scheduin of debts and labs, inventory of assets, ‘and a proposed agreement with his cedtors. (Sec. 94. FRIA) (162. Whatis the responsibilty of a Rehabiltation Receiver? ‘The rehabittation receive's duly prior to the cour’ approval of the plan isto study the best way to rehabilitate the debicr, and to ensure that the value ofthe debtor's properties is reasonably maintained; and after approv to implement the ehabillation plan. (d,) 2163, Who determines the feasibility of the Rehabilitation Plan? [Notwithstancing the credentis of tne court-appointed rehabltation receiver, the duly 10 determine the feasbilty ofthe rehabilitation of the deblor rests wih the cour. (I) 164, When should the remedy of Rehabilitation be denied? The remedy of rehabilitation should Le denied to corporations whose insolvency appears to be ieversibe and whose sole purpose Isto delay ne enforcement of any of the rights of the credtore, which is rendered obvious by: 41) The absence ofa sound and workable business plon; 2) Baseless and unexplained assumptions. targets, and goals; and 3) Speeutatve capt infusion or complete ick thereo or he executlon ofthe business pan, a in his case, THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS, UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 26 OF 28ATENEO CENTRAL, BAR OPERATIONS 2019 COMMERCIAL LAW BLUE TIPS FRehabltaton must be accorded only ate a jucicous regard of a stakeholders ntcests 0) 165. Explain the Standstil Period. {is the period agrees upon by ‘court oF informal restructuring! ‘and enforceable not oni agar W debior and ts creditors to enable them to negotile and ener into an out-of workout agreement cr Rehabitalion Plan. A stanosil period shal be etecice tthe contracung partes but aso againe he olner creditors provided that 3). Such agreement is approved by crestor representing more than 50% ol he total Rabies of the erosion 2) Notice ofthe standstitispubished ina newapaper of general eiclaton ine Phnpines eres soso 2 consecutive weeks; and ie won ne ees 3), The stadt pros shal not excoes 120 days rom te date ois eect (Sec 85, PRIA: AME 12-1211 ‘SC, Rule, Sacton 5a) 166. When is there a Failure of Rehabilitation? ‘There is failure of rehabilitation inthe folowing cases: 1). Dismissal of potion by the court 2). Debtor fats t submit a rehabiaion pen 53) Under the plan submited, here is no substantaltkethond that the deblor can be rehabiltated within a reasonable peros '4) The pian ors amendment is approved by the cour but in the implementation, the debtor fail to perfor 4s ‘biigations thereunder or there isa fature to zeaize the objectives of the plan: '5)_ Commission of raudin securing the approval ofthe plan or ts amendment. (8) Other analogous crcumstances as may be detned by the rules of procedure. (Sec. 74. FRIA) 167. How is the Pre-Negotlated Rehabilitation inated and what isthe effect? {An insolvent debtor, by itself or jointly with any of ts ceive may fle a veried petition withthe court for te ‘approval of a pre-nogotiated rahabltaton plan which has Been endorsed o approved by 1), creditors holding at least % ofthe total abies ofthe debtor 2), including creditors halding more than 50% ofthe total secured clsims ofthe debtor and 3) unsecured crits holding more than 60% ofthe toll unsecured clams ofthe debtor. (See. 76, FRIA) ‘The court has 120 days to approve the pre-negotsted rehabiiiaton plan, I shall have the same effects as confemation of 8 rehabilitation plan (Sec. 81, 82, FRIA) 1a168, Whats the Cram Down Power of the Rehebiltation Court? ‘The Cram Down Power slows tho rehatitation court to approve a habitation plan even over the opposition of crecttors elcing & majority of he total abies of te dedto fis judgment, the rehabitation ofthe debtor is feasible and the oppostion of the credtors 1s manfestly unreasonable. lie necessary lo curb the monty ‘ocitors' natural tendency to dla ther own terms and Conditions to the rehabilaton. “absent Gue regard the greater long-term benefit of all stakeholders. Otherwise staed, n binds the eredtors to the terme and ‘canditons of the rehabltaton plan (Vieoro-Aauino v, Pacife Pans. Ine, 2014) 169, What are the etfects of stay or suspension order? (CJDP) 1) Suspend at actions or proceedings, in court or othe-wise, forte enforcement of Claims against the debtor 2) Suspend all actions to enforce any Judgment, attachment or other provisional remedies against the debtor, 3) Prohibit the debtor from seling, encumbering, trantesnng or Disposing in any manner any of ts properties excep in tne ordinary course of business: ané 4) Prohbit the debter from making any Payment of is lables outstanding a¢ of he commencement date ‘except as may be provided herein. (FRIA, Sec. 15(q)) 170, Actions oxciuded from the Stay Order (Sec. 18, especially DEF) 1) Cases aready pending appeal inthe SC as ofthe commencement date 2) Cases pending oF fe at a speciaized court or quasi agency whichis capable of resolving the claim ‘more quickly, fay and efcienty than the court; 3) To the enforcement of claims against sureies an other persons soldarly lable with the debtor, and thd party or accommodation mortgapors as wol a issues of leters of cred, unless the property subject's ‘ecessary for he renaditaion ofthe debtor 4) To any form of action of customers or cllents of 2 securities market participant to recover of ‘otherwise clalm moneys and securities entrusted to the latter im the ordinary course of business a3 Well as any action of such securlles market participant oF appropriate regulatory agency or sel ‘regulatory organization to pay or sett such claims or liabilities: THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR, EXAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 27 OF 28ATENEO CENTRAL AR OPERATIONS 2019 i ra a tl the SRC; ” for any transactions settied for ie debior, 7) Any criminal action against the individual deblor or owner, partner, director re 9 br partner director oof oer of a debor. (Sec. 18, GI7t- Does the stay or suspension order cover non-monetary claims against the debtor-corporation? 1ee, A Stay (oF suspension order shall suspend all actions or proceedings in court or otherwise, for he enforcement ofall caims against the debtor. The term ‘ciaims’ 1s not limited lo monelaty cians tet neuen claims of whatever nature and kind against the debior. (Panlilo vs. RTO, 2011) ‘2172. X Corp is under Rehabilitation. There Is a pending criminal case for violation of the Bouncing Checks Law flied against the President of X Corp by the creditor as some checks Issued by X Corp through the President bounced. Should the eriminal case be suspended? ‘No, One of the exceptions to the Stay or Suspension Order is @ enminal case against the individual debtor or ‘owner, dector or officer (ike the President) of the debiar under rehabitation, (Section 18/g), FRIA, Panli vs, RTC, 2011) 2173, Willa Stay or Suspension Order atfect claims against sureties and other persons solidarl Hable to the debtor, third party or accommodation mortgagers, or Issuers of letters of credit? No unless the property subject of the tiré party or accommodation morigage is necessary fr the rehabiltation ‘of the debior as determined by the court upon recommendation by the rehablitaton tecewer. (Sec 48 c Pa) 174, _X Corp has bank deposits with BankCo. At the same time, X Corp Is indebted fo BankCo. After X Corp filed a petition for Rehabilitation, BankCo set off the bank deposit against the unpald loon ‘obligation of X Corp. A Commencement Order was subsequently Issued pursuant 10 the ‘Corporate Rehabilitation of X Corp. Does the Commencement Order have any effect on the otf? Yes. A Commencement Order serves as the legal basis for rendering null and void any set off after the commencement date of any debt owed tothe debtor by any o! the debtor creditors. The commencement Cate ‘refers to the date on which ine court issued the Commencoment Order, which shall be reiroactve la the Gate of the fing of he petion. (See 4) & 17(c), FRIA) 175, How does FRIA protect the clients of securities markt participants” being liquidated? For purposes of investor protection, tade-elated claims of clients or customers of a securties market paricpent are deemed to have absolute priority ove al ofer insofar as trade-elated agsate which incluge ‘ash, secuttes, tracing ight and other assets owned and used by the paricipantin the ordinary course of te business. (See. 136. FAIA) 176. Effects of Liquidation Order 1), Debior sha be doomed dissolved and its corporate oF juridical existence terminate, 2) Legal tle to and contol of all the assets of the debtor shall be deemed vested inthe lauidator of, pending hig election or appointment, ith the court except those that may be exemot rom execution 3) Contracts of the debtor shall be deemed terminated andor breached, unless the lauidator declares ctherwise and the contracting party agrees within 90 days ftom the date of his assumption of otce; 4) No separate action for the collection of an unsecured clam shall be alowed. Actions pending will be twansferres tothe Liquidator for hie to accopt and sate or contest 5) No foreclosure proceeding shall be alowed for 180 days, (Sec. 113, FRIA) ‘THE BLUE TIPS ARE EXCLUSIVELY FOR THE USE OF ATENEO BAR TAKERS FOR THE 2019 BAR EXAMINATIONS. UNAUTHORIZED USE AND REPRODUCTION OF THIS MATERIAL IS PROHIBITED. PAGE 26 OF 28