Commercil law B Q

Absolute Timber Co. (ATC) has been engaged in the logging business in lsabela. To secure one of
its shipments of logs to be transported by Andok Shipping Co., ATC purchased a marine policy with
an "all risks" provision. Because of a strong typhoon then hitting Northern Luzon, the vessel sank
and the shipment of logs was totally lost. ATC filed its claim, but the insurer denied the claim on
several grounds, namely: (1) the vessel had not been seaworthy; (2) the vessel's crew had lacked
sufficient training; (3) the improper loading of the logs on only one side of the vessel had led to the
tilting of the ship to that side during the stormy voyage; and (4) the extremely bad weather had been
a fortuitous event.

ATC now seeks your legal advice to know if its claim was sustainable. What is your advice? Explain
your answer. (3%)

ATC’s claim is sustainable. The all-risk policy that ATC procured from the insurer insures
against all causes of conceivable loss or damage except when the loss or damage was due to fraud
or intentional misconduct committed by ATC. The grounds of denial that the insurer invoked are not
due to the fraud or intentional misconduct of ATC

II

TRUE or FALSE – Explain briefly your answer

(a) A conviction under the Trust Receipts Law shall bar a prosecution for estafa under the Revised
Penal Code. (2%)

(b) The term capital in relation to public utilities under Sec. 11, Art. XII of the 1987 Constitution refers
to the total outstanding capital stock comprising both common and non-voting preferred shares. (2%)

(c) Forgery is a real defense but may only be raised against a holder not in due course. (2%)

(d) News reports are not copyrightable. (2%)

(e) The law on life insurance prohibits double insurance. (2%)

a. FALSE. This is so because under the Trust Receipts Law, conviction therein is a conviction
of estafa under the Revised Penal code. Thus, another prosecution of estafa is not allowed and it is
prejudicial to the accused.

b. TRUE. The Supreme Court has held that the required percentage of Filipino ownership shall
be applied to the total number of outstanding shares of stocks whether or not entitled to vote in the
election of directors.

d. TRUE, news reports are not subject to copyright by express provision of the Intellectual
Property Code. It is the expression of the news that is copyrightable.

e. FALSE. Double insurance only applies to property insurance.

III

PA Assurance (PA) was incorporated in 1980 to engage in the sale of pre-need educational plans. It
sold open-ended educational plans which guaranteed the payment of tuition and other fees to
planholders irrespective of the cost at the time of availment. It also engaged in the sale of fixed value
plans which guaranteed the payment of a pre-determined amount to planholders. In 1982, PA was
among the country’s top corporations. However, it subsequently suffered financial difficulties.

On September 8, 2005, PA filed a Petition for Corporate Rehabilitation before the Regional Trial
Court (RTC) of Makati City. On October 17, 2005, ten (10) plan holders filed an Opposition and
Motion to Exclude Planholders from Stay Order on the ground that planholders are not creditors as
they (planholders) have a trust relationship with PA. Are the planholders correct? (4%)

No. The plan-holders are not correct. Under the FRIA, a creditor is defined as any natural or
juridical person against the debtor that arose on or before the commencement date.

Here, the planholders are natural person that has claim against PA. Hence, the planholders
are creditors and should be included in the Stay Order.

IV

On September 25, 2013, Danny Marcial (Danny) procured an insurance on his life with a face value
of P5,000,000.00 from RN Insurance Company (RN), with his wife Tina Marcial(Tina) as sole
beneficiary. On the same day, Danny issued an undated check to RN for the full amount of the
premium. On October 1, 2013, RN issued the policy covering Danny’s life insurance. On October 5,
2013, Danny met a tragic accident and died. Tina claimed the insurance benefit, but RN was quick to
deny the claim because at the time of Danny’s death, the check was not yet encashed and therefore
the premium remained unpaid.

Is RN correct? Will your answer be the same if the check is dated October 15, 2013? (4%)

No. RN is not correct. The contract of insurance was consummated after the issuance of the
check by Danny for the full amount of premium and the unconditional delivery of an insurance policy
of RN to Danny. By accepting the PDC, RN has effectively granted credit to Danny to pay the
premium.

My answer will still be the same even if the check is dated October 15, 2013. This is so
because the policy was issued unconditionally and RN issued it even if he only accepted a check
dated October 15, 2013.

Under the law, upon the issuance of policy and giving credit or grace period for the payment
of the premium, shall make the insurance contract effective.

A. Discuss the three-fold character of a bill of lading. (3%)

B. What is a "Jason clause" in a charter party? (2%)

C. Are common carriers liable for injuries to passengers even if they have observed ordinary
diligence and care? Explain. (2%)

A. A bill of lading is considered a receipt for the goods shipped to the common carrier.

It also serves as the contract by which three parties, namely the shipper, carrier and the
consignee under take specific responsibilities and assumed stipulated obligations.

Third, it is the evidence of the existence of the contract of carriage providing the terms
and conditions thereof.

B. Jason clause provides that a shipowner, provided he had exercised due diligence to make
the ship seaworthy and properly manned, equipped and supplied, could claim a general average
contribution from cargo, even where the damage was caused by faulty navigation of the
vessel, provided that the bill of lading excluded liability for such faults.

C. Yes, common carriers are liable to injuries to passengers even if the carriers observed
ordinary diligence and care because the obligation imposed upon them by law is to exercise
extraordinary diligence.

VI

A foreign company has been exporting goods to a Philippine company for several years now. When
the Philippine company failed to pay the latest exportation, the foreign company sued to collect in
the Philippines. The Philippine company interposed the defense that the foreign company was doing
business in the Philippines without a license; hence, could not sue before a Philippine court. Is this
defense tenable? Explain your answer. (3%)

The defense is not tenable. The mere act of exporting from one’s own country, without doing
any specific commercial act within the territory of the importing country cannot be deemed as doing
business in the importing country. Thus, the foreign company may sue in the Philippines despite lack
of license to do business in the Philippines.
 VII

What does "doing business in the Philippines" under the Foreign Investments Act of 1991 mean?
(5%)

The phrase “doing business in the Philippines” under the Foreign Investment Act of 1991
include soliciting orders, service contracts; opening offices in the Philippines or who in any calendar
year stay in the Philippines for a period or periods totalling 180 days or more; participating in the
management of a business or any other act or acts that imply continuity of commercial dealings or
arrangements.

VIII

ABC Corp. is engaged in the pawnshop business involving cellphones, laptops and other gadgets of
value. In order to expand its business and attract investors, it offered to any person who invests at
least Pl 00,000.00 a "Promissory Note" where it obligated itself to pay the holder a 50% return on
investment within one month. Due to the attractive offer, many individuals invested in the company
but not one of them was able to realize any profit after one month.

Has ABC Corp. violated any law with its scheme? Explain. (5%)

Yes, ABC Corporation violated the provisions of Securities Regulation Code that prohibits
sale of securities to the public, like promissory notes, without a registration statement filed and
approved by Securities and Exchange Commission.