Scribd Logo
Upload

Welcome to Scribd!

  • 06 2019 ATENEO Commercial Law Blue Tips

    Uploaded by

    Alex Melegrito
    2 views28 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    2 views28 pages

    06 2019 ATENEO Commercial Law Blue Tips

    Uploaded by

    Alex Melegrito

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 28
    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

    You might also like