commercial reviewer

7/26/2019 Commercial Reviewer

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C O M M E R C I AL L AW MEMORY AID

CODE OF COMMERCE

COMMERCE - branch of human activity; purpose is to bring products to the consumerthrough operations habitually and with intent of gain

COMMERCI! !" - branch of private law which regulates the #uridical relations arisingfrom commercial acts

C$RC%ERI&%IC& O' COMMERCI! !"(1. universal2. uniform3. e)uitable4. customary5. progressive

*OR%IO+& O' CO,E O' COMMERCE &%I!! **!IC!E(1. merchants; boo. of merchants and general provision of contracts2. #oint account association

3. commercial barter4. transfers of non-negotiable credits5. commercial contracts of overland transportation6. letters of credit7. maritime commerce

O%$ER&(1. Commerce - bringing products from the manufacturers to the consumers

2. Characteristics of Commerce(a. habitualityb. rapidity - if period is fi/ed0 debtor in delay without need of demand; if contract does

not fi/ period0 1 daysc. intent to #oin

3. Merchant(a. Individuals - legal capacity0 21 years0 or sub#ect to parental authority0 habitually

engaged in commerceb. 3uridical *ersons - commercial and industrial company organi4ed in accordance

with law0 habitually engaged in business

4. 5eneral Rule( Minors cannot engage in commerce E/ceptions(

a. to continue business of deceased parents through guardian

b. court authori4es guardian to place minor and property in businessc. minor is an alien and his national law allows him to be a merchant

5. "hich persons are not allowed to engage in commerce6a. suffering accessory penalty of civil interdiction 7reclusion perpetua and reclusion

temporal8b. those #udicially declared insolvent until they can obtain their dischargec. prohibited by Constitution and special laws

6. liensa. capacitated under his national law to engage in businessb. engaged in the business in the *hilippines not reserved for the 'ilipinosc. after securing license and OI certificate

7. 'amily Code( Either spouse may engage in business; when ob#ected to by the other0court will loo. into valid grounds0 i9e9 serious and moral grounds

8. OI Certificate must be obtained by(a. alienb. foreign firm


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9. Meaning of *hilippine +ationala. citi4enb. domestic corporation wholly owned and organi4ed by 'ilipinos in the *hilippinesc. 'ilipino corporation where 'ilipino capital entitled to vote is at least :

10. Query( If a corporation is a shareholder of another corporation0 how do you determinewhether the latter corporation is a 'ilipino national6

Answer( %he following must concur -a. t least : of the outstanding capital stoc. and entitled to vote of both

corporations are held by citi4ens of the *hilippinesb. t least : of the oard of ,irectors of both corporations are 'ilipinos

11. %enor of OI Certificatea. usiness or activity to be engaged is consistent with the Investment *riorities *lanb. usiness will contribute to the sound and balanced development of the national

economy in a self-sustaining basisc. usiness will not conflict with the Constitution and local lawsd. usiness is not ade)uately e/ploited by 'ilipino nationals

e. +o danger of monopoliesretail? should be associated with and limitedto goods for personal0 family or household use0 consumption and utili4ation9 %he Retail%rade +ationali4ation !aw refers to >consumption goods? or >consumer goods? whichdirectly satisfy human wants and desires and are needed for home and daily life9 E/cludedfrom the law are those goods which are considered generally raw material used in themanufacture of other goods0 or if not0 as one of the component raw material0 or at least aselements utili4ed in the process of production and manufacturing9

2. Elements of "hat Constitutes Retail %rade(a. %he seller habitually engages in selling;b. %he sale is direct to the general public; andc. %he ob#ect of the sale is limited to merchandise0 commodities or goods for

consumption9


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3. 5eneral Rule( fter 1A:=0 only 'ilipinos or corporations whose capital is 1 'ilipinomay engage in retail trade9

4. E/ceptions0 that is0 instances when aliens may engage in retail trade in the *hilippines(a. manufacturer or processor if capital does not e/ceed *B09;b. farmer or agriculturist when selling his products;c. manufacturer or processor selling to industrial or commercial users or consumers

who use the produce to render service to the general public or to produce ormanufacture goods which are sold by them to the public;

d. hotel owners or .eepers of restaurants included or incidental to the hotel business;e. sale by a manufacturer or processor to the 5overnment or its agencies0 including

government owned and controlled corporations

5. Query: $ow to determine citi4enship of shares of the corporation when they are notheld directly by individuals0 but in turn held by another entity6Answer( apply the 5R+,'%$ER R!E0 to wit(

&hares belonging to corporations or partnerships at least : of the capital ofwhich is owned by 'ilipino citi4ens shall be considered as *hilippine nationality0 but if the

percentage of 'ilipino ownership in the corporation or partnership is less than :0 onlythe number of shares corresponding to such percentage shall be counted as of *hilippinenationality9 %hus0 if 10 shares are registered in the name of a corporation orpartnership at least : of the capital stoc. or capital respectively0 of which belong to'ilipino citi4ens0 all of the said shares shall be recorded as owned by 'ilipinos9 ut0 if letDssay0 B of the capital stoc. belongs to 'ilipino citi4ens0 only B0 shares shall becounted as owned by 'ilipinos and the other B0 shares shall be recorded as belongingto aliens9

$owever0 while a corporation with : 'ilipino and = foreign e)uity ownership isconsidered a *hilippine national for purposes of investment0 it is not )ualified to invest in orenter into a #oint venture agreement with corporations or partnerships0 the capital orownership of which under the Constitution or other special laws are limited to 'ilipino

citi4ens only9 $ence0 for purposes of the law0 whatever the percentage of 'ilipinoownership in the owning corporation0 the foreign ownership would always render a portionof its holding in the company as foreign e)uity and would dis)ualify the corporation toengage in retail trade9

ANTI-DUMMY ACT

1. %he ct penali4es 'ilipinos who permit aliens to use them as nominees or dummies toen#oy privileges reserved for 'ilipinos or 'ilipino corporations9 Criminal sanctions areimposed on the president0 manager0 board member or persons in charge of theviolating entity and causing the latter to forfeit its privileges0 rights and franchises9

2. ,is)ualified aliens cannot intervene in the management0 operation0 administration orcontrol of the business reserved to 'ilipinos whether as an officer0 employee or laborer0with or without remuneration0 e/cept when(a. alien ta.es part in technical aspects;b. provided that no 'ilipino can do such technical wor.; andc. with e/press authority from the *resident0 upon the recommendation of the

department head concerned9

3. y way of e/ception0 the following may participate in management(a. liens may be elected to the oard of ,irectors to the e/tent of their allowable

share in the capital of the corporation 7in partially nationali4ed industries89b. registered enterprise may employ foreign nationals in supervisory0 technical0 and

advisory positions for a period of B years sub#ect to e/tension9c. "here ma#ority of stoc.s of a pioneer enterprise is owned by foreign investors0 the

following positions may be held by foreign nationals( president treasurer general manager e)uivalent positions


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4. 'ilipino common-law wife of an alien is not barred from engaging in the retailbusiness provided she uses capital e/clusively derived from her paraphernal properties;however0 allowing her common-law alien husband to ta.e part in the management ofthe retail business would be a violation of the law9

5. "hat doing business means(a. soliciting orders0 purchases0 service contracts;b. opening offices whether called liaison offices or branches;c. appointing representatives or distributors who are domiciled in the *hilippines or

who in any calendar year stay in the country for a period totaling 1 days or more;d. participating in the management or supervision or control of any domestic firm0

entity or corporation in the *hilippines;e. any other act or acts that imply continuity in commercial dealings

6. "hen commissioned merchants


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3. Issued to definite persons and not to order0 thus0 non-negotiable9

4. !imited to a fi/ed account9

PRICE TAGS LAW

1. It re)uires articles of commerce sold at retail to bear prices9

JOINT ACCOUNTS

1. It e/ists when a merchant interests himself in the transaction of another merchant0contributing thereto the amount of capital they may agree upon0 and participating in thefavorable or unfavorable results thereof in the proportion they may determine9

2. 3oint accounts do not adopt a firm name9

3. +o suit may be maintained - investor and third persons dealing with the merchant

conducting business9

4. It is not sub#ect to any formal re)uirement for validity; it may be oral9

BULK SALES LAW

1. *urpose( meant to protect creditors of businessmen against preferential or fraudulenttransfers

2. %he law covers all transactions0 whether done in good faith or not, or whether or notthe seller is in a state of insolvency0 that fall within the description of what is a >bul.sale?9

3. %ypes of transactions which are treated as >bul. sales?(a. &ale0 transfer0 mortgage or assignments of a stoc. of goods0 wares0 merchandise0

provisions0 or materials otherwise than in the ordinary course of trade;b. &ale transfer0 mortgage or assignments of all0 or substantially all0 of the business of

the vendor0 mortgagor0 transferor0 or assignor;c. &ale0 transfer0 mortgage0 or assignment of all0 or substantially all0 of the fi/tures

and e)uipment used in the business of the vendor0 mortgagor0 transferor0 orassignor9

4. Only creditors at the time of the sale in violation of the law are within the protection ofthe laws and creditors subse)uent to the sale are not covered9

5. Even if the transaction falls within the definition of >bul. sale?0 the following are notdeemed covered by the law(a. If the vendor0 mortgagor0 transferor or assignor produces and delivers a written

waiver of the provisions of the law from his creditors as shown by verifiedstatements;

b. %he law does not apply to e/ecutors0 administrators0 receivers0 assignees ininsolvency0 or public officers0 acting under process9

6. Obligations when transaction is a bul. sale(a. %he vendor must deliver to such vendee a written statement of(

names and addresses of all creditors to whom said vendor or mortgagor maybe indebted;

amount of indebtedness due or owing to each of said creditorsb. %he vendor must apply the purchase money to the pro-rata payment of bona fide

claims of the creditors as shown in the verified statement9c. %he seller0 at least 1 days before the sale0 shall(

ma.e a full detailed inventory of the goods0 merchandise0 etc90 cost price ofeach article to be included in the sale

notify every creditor at least 1 days before transferring possession of thegoods0 of the price0 terms and conditions of the sale


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(b) any contingent or un.nown event0 whether past or future0 which may create aliability against the person insured9

8. Every person has an insurable interest in the life and health of(a. himself0 his spouse and his childrenb. any person on whom he depends wholly or in part for education or support0 or in

whom he has a pecuniary interestc. any person under a legal obligation to him for the payment of money0 or respecting

property or services0 of which death or illness might prevent the performance ordelay it

d. any person upon whose life any estate or any interest vested in him depends

9. Insurable Interest in *roperty may consist of(a. an e/isting interestb. an inchoate interest0 founded on an e/isting interestc. an e/pectancy0 coupled with an e/isting interest out of which the e/pectancy arises

,efinition of Insurable Interest in *roperty( Interest in property0 whether real or

personal0 or any relation thereto0 or liability in respect thereof0 of such nature that acontemplated peril might directly damnify the insured9

10. Instances when Insurable Interest must e/ist(a. Interest in *roperty insured must e/ist when the insurance ta.es effect and when

the loss occurs0 but need not e/ist in the meantime9b. Interest in the !ife or $ealth of a *erson Insured must e/ist when the insurance

ta.es effect0 but need not e/ist thereafter or when the loss occurs9c. eneficiaries of !ife Insurance need not have insurable interest in the life of the

insured9d. eneficiaries of *roperty Insurance must have insurable interest in the property

insured9

Category I!"ra#$e Itere!t % L%&eI!"ra'e

I!"ra#$e Itere!t %Pro(erty

19 basis may be based on pecuniaryinterest0 affinity0 or consanguinity

based purely on pecuniaryinterest

29 when interest must e/ist at the time the policy ta.eseffect EGCE*%( life insuranceta.en by the creditor on thelife of the debtor whereininterest must also e/ist at thetime of the loss

at the time the policy ta.eseffect and at the time of theloss

@9 amount of insurableinterest no limit EGCE*%( if insurableinterest is based on creditor-debtor relationship 7only tothe e/tent of the credit ordebt8

limited to the actual value ofdamage


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12. Revocation of eneficiaries

5eneral Rule( Insurance contracts are revocable9

E/ception( ny person who is forbidden to receive any donation under rticle J@A

of the Civil Code cannot be named beneficiary of a life insurance policy by theperson who cannot ma.e the donation to him9

%he following donations shall be void(a. those made between persons who were guilty of adultery or concubinage at thetime of the donation;

b. those made by persons found guilty of the same criminal offense0 inconsideration thereof;

c. those made to a public officer or his wife0 descendants0 ascendants0 by reasonof his office9

Other *ertinent *rovisions on Revocation((a) %he termination of a subse)uent marriage shall allow the innocent spouse to

revo.e the designation of the other spouse who acted in bad faith as beneficiaryin any insurance policy0 even if such designation be stipulated as irrevocable9

(b) fter the finality of the decree of legal separation0 the innocent spouse may

revo.e the donations as well as the designation of the latter as a beneficiary inany insurance policy0 even if such designation is irrevocable9 %he revocation ofor change in the designation shall ta.e effect upon written notification thereof tothe insured9 %he action to revo.e the donation under this article must bebrought within B years from the time the decree of legal separation has becomefinal9

(c) %he interest of a beneficiary in a life insurance policy shall be forfeited when thebeneficiary is the principal0 accomplice or accessory in willfully bringing aboutthe death of the insured0 in which event0 the nearest relative of the insured shallreceive the proceeds of said insurance if not otherwise dis)ualified9

13. &uspension - a change of interest in any part of a thing insured unaccompanied by acorresponding change of interest in the insurance suspends the insurance to ane)uivalent e/tent until the interest in the thing and the interest in the insurance arevested in the same person9

14. Concealment - a neglect to communicate that which the party .nows or ought tocommunicate

5eneral Rule( %he insured is not re)uired to communicate the nature 7or .ind8 or

the amount of his insurable interest in the life or property insured to the insurer9

E/ception( a9 "hen the insurer ma.es in)uiry from the insured of the nature or

amount of the latterDs insurable interest0 whether in life or property insurance;b. insurance policy must specify the interest of the insured in the

property insured0 if he is not the absolute owner thereof9

concealment0 whether intentional or not0 entitles the in#ured party to rescind acontract of insurance9

Re)uisites(

(a) the party concealing must have .nowledge of the facts concealed;(b) the facts concealed must be material to the ris.;(c) the party is duty bound to disclose such fact to the other;(d) the party concealing ma.es no warranty as to the facts concealed;(e) the other party has no other means of ascertaining the facts concealed9

+ote( n insured need not die of the very disease he failed to reveal to the insurer9

It is sufficient that the non-revelation has misled the insurer in forming his estimateof the disadvantages of the proposed policy or in ma.ing his in)uiries in order to

entitle the insurance company to avoid the contract9 +ote( %he insured is under an obligation to disclose not only such material facts as

are .nown to him0 but also those .nown to his agent where(a. it was the duty of the agent to ac)uire and communicate information of the facts

in )uestion;b. it was possible for the agent0 in the e/ercise of reasonable diligence0 to have

made the communication before the ma.ing of the insurance contract9


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'ailure on the part of the insured to disclose such facts .nown to his agent0 orwholly due to the fault of the agent0 will avoid the policy0 despite the good faith ofthe insured9

15. +either party to the insurance contract is bound to communicate information on thefollowing matters e/cept in answer to the in)uiries of the other(a. those of which the other .nows;b. that which0 in the e/ercise of ordinary care0 the other ought to .now and of which

the former has no reason to suppose his ignorance0 i9e9 political situation0 generalusages of trade;

c. those of which the other waives communication;d. those which prove or tend to prove the e/istence of the ris. e/cluded by a warranty

and which are not otherwise material;e. those which relate to a ris. e/cepted from the policy and which are not otherwise

material9

+either party is bound to communicate his mere opinion0 even upon in)uiry0

because such opinion would add nothing to the appraisal of the application9

"aiver of material facts may be((a) by the terms of the insurance; or(b) by the neglect to ma.e in)uiry as to such facts0 where they are distinctly implied

in other facts which information is communicated

Materiality is to be determined not by the events but solely upon the probable and

reasonable influence of the facts on the party to whom the communication is due informing his estimate of the disadvantages of the proposed contract or in ma.ing hisin)uiries9

Concealment0 whether intentional or not0 entitles the other party to rescind the

contract9

16. RepresentationIt is a factual statement made by the insured at the time of0 or prior to0 the issuance

of the policy0 to give information to the insurer and otherwise induce him to enter into theinsurance contract9

It may be made orally or in writing9

It may be made at the time of0 or before0 the issuance of the policy9

It may be altered or withdrawn before the insurance is effected0 but not afterwards9

representation cannot )ualify an e/press provision in a contract of insurance but it

may )ualify an implied warranty9

representation as to the future is to be deemed a promise unless it appears that it

was merely a statement of belief or an e/pectation9 7must be susceptible of present0

actual .nowledge8 %he statement of an erroneous opinion0 belief or information0 or of an unfulfilled

intention0 will not avoid the contract of insurance0 unless fraudulent9

Right to rescind because of false representation(

a. must be e/ercised previous to the commencement of an action on the contract 7theaction referred to is that to collect a claim on the contract8

b. misrepresentation0 whether intentional or not0 gives the right to rescind

Incontestable Clause( fter a policy of life insurancemadepayable on the death of the

insuredshall have been in force during the lifetime of the insured for a period of 2 yearsfrom the date of its issue or of its last reinstatement0 the insurer cannot prove that thepolicy is void ab initio or is rescindable by reason of the fraudulent concealment or

misrepresentation of the insured or his agent9 E/ceptions( 7a8 absence of insurable ris.

(b) cause of loss is an une/pected ris.(c) fraud(d) non-payment of premium(e) violation of conditions relating to naval or military services(f) failure to comply with conditions subse)uent to the occurrence of the

loss


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17. "arranties(

5eneral Rule( +on-performance of a promissory warranty avoids a contract of

insurance9

E/ceptions(a. when before the time for performance of the promissory warranty0 a loss insuredagainst occurs;

b. when before the time of the performance of the warranty0 the act becomesunlawful;

c. when before the time of the performance of the warranty0 said performancebecomes impossible9

statement or a promise set forth in the policy or by reference incorporated therein0

the non-fulfillment of which in any respect and without reference to whether theinsurer was in fact pre#udiced by such non-fulfillment0 renders the policy voidable bythe insurer0 wholly irrespective of the materiality of such statement or promise9

Warraty Re(re!etat%opart of the insurance contract collateral inducementalways written on the policy maybe oral or writtenconclusively presumed material materiality must be provedmust be strictly complied with re)uires substantial truthmade by the insured may be made by insurer or insured

+ote( If there is a breach of warranty0 even if the cause of the loss is a different ris.0

the insurer is entitled to rescind the contract of insurance9

reach must refer to a material warranty0 whether intentional or not9

18. *olicy "hat is a Rider6 It is an additional provision in a policy not part of the body of the

printed form9

Cover +ote( written memorandum of the most important terms of a preliminary

contract of insurance0 intended to give temporary protection pending theinvestigation of the ris. by the insurer0 or until the issuance of a formal policy9

5eneral Rule( Cover notes bind insurer temporarily pending the issuance of the

policy9

E/ception( "here it is merely an ac.nowledgment on behalf of the company that

the latterDs branch office had received from the applicant the insurance premiumand accepted the application sub#ect for processing by the insurance company andthat the latter will either approve or re#ect the same9

Hinds of *olicies(a. Open - the value of the thing insured is not agreed upon0 but is left to be

ascertained at the time of the lossb. Falued - e/presses on its face an agreement that the thing insured shall be

valued at a specific sumc. Running - contemplates successive insurance which provides that the ob#ect of

the policy may be from time to time defined especially as to the sub#ect ofinsurance by additional statements or endorsements

+ote( If an amount is written on the face of an open policy0 it is merely adetermination of the ma/imum limit of recovery and not as the value of thepolicy9

Category O(e Po$%'y )a$"e* Po$%'ywhat needs to be proven inorder to be able to claim

value of property upon loss no need for proof of value ofproperty upon loss

determining value of loss value of property is to beascertained upon loss

value of property upon loss isconclusively stipulated to aspecified amount


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*eriod for commencing an action against the policy( "ithin 1 year from the time

the cause of action accrues0 i9e90 from the time of re#ection of the claim by theinsurer9 ny condition0 stipulation0 or agreement limiting the time to less than 1year is void9

5rounds for Cancellation of a *olicy by the Insurer(

For Policies Other than Life:(1) prior notice of the cancellation to insured(2) notice must be based on the ff9 occurrences after effective date of the

policy(a) non-payment of premiums(b) conviction of a crime arising out of acts increasing the ha4ard insured

against(c) discovery of fraud or material misrepresentation(d) discovery of willful or rec.less acts or omissions increasing the

ha4ard insured against(e) physical changes in the property insured which results in the property

becoming uninsurable(f) determination by the Commissioner that the continuation of the policy

would violate or would place the insurer in violation of the InsuranceCode

(3) notice must be in writing(4) it must be mailed or delivered to the insured at the address shown in the

policy(5) notice must state the ground relied upon and that upon written re)uest of

the insured0 the insurer will furnish facts on which the cancellation isbased

Renewal of the *olicies Other than !ife(

Insurer must mail or deliver to the insured notice of its intention not to renew thepolicy or to condition its renewal upon reduction of limits or elimination of coverageswithin =B days before the policy ends9 Otherwise0 insured entitled to renew the

policy upon payment of the premium due on the effective date of the renewal9

19. *remium

5eneral Rule( +o policy is binding until the premium thereof has been paid9

E/ceptions( 7a8 in case of life or industrial life policy0 whenever the grace period

applies(b) in case of estoppel

Insurer is entitled to payment of premiums as soon as the thing insured is e/posed

to the perils insured against9

"hen insurer entitled to Return of *remiums

a. when the contract is voidable on account of fraud or misrepresentation of the

insurer;b. when on account of facts0 the e/istence of which the insured was ignorantwithout his fault

c. when by any default of the insured other than actual fraud0 the insurer neverincurred any liability under the policy

d. when the insured has become a public enemy and the policy automaticallycanceled 7on the ground of e)uity8

e. in case of over-insurance by several insurers 7ratable return of premiums0proportioned to the amount by which the aggregate sum insured in all policiese/ceed the insurable value of the thing at ris.8

20. !oss

"hen Insurer is !iable(

a. where the peril insured against was the pro/imate cause0 although a peril notcontemplated by the contract may have been the remote cause or even theimmediate cause of the loss

b. where the thing insured is rescued from the peril insured against that wouldotherwise have caused a loss0 if0 in the course of such rescue0 the thing ise/posed to a peril not insured against0 which permanently deprives the insuredof its possession in whole or in part


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c. where loss is caused by efforts to rescue the thing insured from a peril insuredagainst

d. insurer is not e/onerated by a loss caused by simple negligence of the insured ifthe pro/imate cause of the loss is a peril insured against

e. loss0 the immediate cause of which is a peril insured against e/cept when thepro/imate cause is an e/cepted peril

"hen Insurer +ot !iable(

a. where the peril insured against was only a remote causeb. where the peril is specifically e/cepted0 a loss which would not have occurred but

for such peril is thereby e/ceptedc. loss caused by the connivance of the insuredd. loss caused by the willful act of insurede. loss caused by insuredDs negligence0 if it amounts to bad faith

5eneral Rule( %he insurer is not liable for a loss caused by the willful act of the

insured9

E/ception( &uicide Clause in !ife Insurance( Insurer liable in case insured

committed suicide after the policy has been in force for a period of 2 years from thedate of its issue or last reinstatement9 If insured .ills himself within a period of 2years0 insurer is not liable9

E/ception to E/ception( If suicide is committed in a state of insanity0 regardless of

the time of commission0 the insurer is liable9

21. ,ouble Insurance - e/ists where the same person is insured by several insurersseparately in respect to the same sub#ect and interest

Re)uisites( a9 person insured must be the same

b. e/istence of several insurers

c. sub#ect matter insured must be the samed. interest the samee. ris. insured against also the same


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O+er I!"ra'e Do"#$e I!"ra'emay be only one insurer must be 2 or more insurersinsurance covers more than the value ofinsurable interest

insurance may or may not e/ceed the value ofinsurable interest

%he Code prohibits double insurance without the consent of the insurer9

!iability of Insurer(

Insurance ta.enfrom each insurer

---------------------------------- / value of property received K liability of insurer total insurance

22. Reinsurance( process by which an insurer procures a third person to insure himagainst loss or liability by reason of such original insurance9

%he original insured cannot recover from this insurance unless there is a specificgrant0 or assignment of0 the reinsurance contract in favor of the insured0 or a manifestintention of the contracting parties to the reinsurance contract to favor the insured9

5eneral Rule( %he insurer who obtains reinsurance must communicate(

a. all the representations of the original insured; andb. all the .nowledge and information he possesses0 whether

previously or subse)uently ac)uired which are material to the ris.

E/ception( under automatic reinsurance treaties

Reinsurance ,ouble Insurance1. insurer becomes the insured2. sub#ect matter is the insured ris. or liability3. different ris.s and interests of insured4. there must be consent of original5. one who is original insured has no interest

in the contract of reinsurance which isindependent of the original contract ofinsurance

1. insurer remains the insurer2. sub#ect matter is property3. the same interest and ris. are insured4. insured has to give his consent5. insured is the party in interest in all

contracts

23. Marine Insurance( insures against perils of the sea0 not of the ship

*erils of the &ea *erils of the &hipcovered by marine insurance not covered by marine insurance

denote nature accidents peculiar to the seawhich do not happen by intervention of mannor are to be prevented by human prudence

damage or losses resulting from(1. natural and inevitable action of the sea2. ordinary wear and tear of a ship0 or3. negligent failure of the ship owner to

provide the vessel with proper e)uipmentto convey the cargo under ordinaryconditions

Owner of the &hip has Insurable Interest(

a. in the ship even if it has been chartered by one who promises to pay him in valuein case of loss 7insurer is liable for what insured cannot recover from thecharterer80 even when hypothecated by bottomry 7only the e/cess of its value

over the amount secured by bottomry8 andb. in the freightage0 which according to the ordinary and probable course of things

he would have earned but for the intervention of a peril insured against or otherperil incident to the voyage

Charterer has insurable interest in the ship to the e/tent that he is liable to be damnified

by its loss9


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arratry( ny willful misconduct on the part of the masters or crew0 in pursuance of

some unlawful or fraudulent purpose0 without the consent of the owners and to thepre#udice of the ownerDs interest9

3ettison( Intentional casting overboard of any part of a venture e/posed to a peril0

whether it be of the cargo0 or the shipDs furniture or tac.le0 in the hope of saving therest of the venture9

Insurable Interest in Marine Insurance( ,etermined when one will sustain loss from the

destruction of the sub#ect matter or derive benefit from its preservation9

Charter *arty( Contract by virtue of which the owner or the agent of a vessel binds

himself to transport merchandise or persons for a fi/ed price9 It has also beendefined as a contract by virtue of which the owner or the agent of the vessel for thetransportation of goods or persons from one port to another9

!oan on ottomry( Contract in the nature of a mortgage whereby the owner of a ship

borrows money for the use0 e)uipment or repair of the vessel for a definite term0 andpledges the ship as a security for repayment0 with maritime or e/traordinary intereston the account of the maritime ris.s to be borne by the lender9 It is stipulated in sucha contract that if the ship be lost in the course of the specific voyage or during aspecified limited time caused by any of the perils enumerated in the contract0 thelender shall resolutely lose his money9

!oan on Respondentia( Contract a.in to that of mortgage made on the goods on board

the ship0 and which are to be sold or e/changed in the course of the voyage9 %hegoods serve as the principal security9

'reightage( &ignifies all the benefits derived by the owner0 carriage of his own goods0

or those of others9

Concealment( In marine insurance0 information or the belief or e/pectation of a @ rd

person0 in reference to a material fact is material9 Concealment of the following merely e/onerates the insurer from the resulting

loss therefrom(a. national character of the insuredb. liability of the thing insured to capture and detentionc. liability to sei4ure from breach of foreign laws of traded. want of necessary documentse. use of false and simulated papers

Implied "arranties(a. that the ship is seaworthy - complied with if the ship is seaworthy at the time of

commencement of ris.0 e/cept( 7a8 insurance for a specified length of time - atthe commencement of every voyage it underta.es during that time; 7b8 cargo tobe transshipped at indeterminate port - each vessel upon which cargo is shippedis seaworthy at the commencement of each particular voyage

b. that the vessel shall not engage in illegal venturec. that the vessel shall not deviate from the course of the voyage insuredd. where the nationality or neutrality of a ship or cargo is e/pressly warranted0 it is

implied that the ship will carry the re)uisite documents to show such nationality orneutrality and that it will not carry any documents which may cast reasonablesuspicion thereon

&eaworthiness depends on(a. nature of the shipb. nature of the voyagec. nature of the service

&eaworthiness of the vessel is re)uired only at the commencement of the ris. E/ceptions(


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a. in a %ime *olicy - commencement of every voyage that must be underta.enb. in a Cargo *olicy - commencement of each particular voyagec. in a Foyage *olicy - commencement of each portion of the voyage

,eviation

a. a departure from the course of the voyage insuredb. unreasonable delay in pursuing the voyagec. commencement of an entirely different voyage

"hen is ,eviation proper6

a. when caused by circumstances over which neither the master not the owner of theship has any control

b. when necessary to comply with a warranty or to avoid a peril whether it is insuredagainst or not

c. when made in good faith for the purpose of saving human life or relieving anothervessel in distress

d. when made in good faith and upon reasonable grounds of belief in its necessity toavoid a peril

!oss

a. ctual %otal !oss a total destruction of the thing insured the irretrievable loss of the thing by sin.ing or by being bro.en up any damage to the thing which renders it valueless tot he owner for which he

held it any other event which effectively deprives the owner of possession0 at the port

of destination0 of the thing insureda. Constructive %otal !oss - gives to the person insured the right to abandon

verage - any e/traordinary or additional e/pense incurred during the voyage for the

preservation of the vessel0 cargo0 or both and all damages to the vessel and cargofrom the time it is loaded and the voyage commenced until it ends and the cargounloaded

5eneral verage - an e/pense or damage suffered deliberately in order to save the

vessel0 its cargo0 or both from the real or .nown ris.

bandonment - act of the insured by which0 after a constructive total loss0 he declares

the relin)uishment to the insured of his interest in the thing insured 7where the causeof loss is a peril insured against8(a) more than L thereof in value is actually lost or would have been e/pended to

recover it from the peril(b) it is in#ured to such an e/tent as to reduce its value by more than L(c) if the thing insured is the ship and the voyage cannot be lawfully performed

without incurring an e/pense of more than L of the whole0 or a ris. which aprudent man would not underta.e under the circumstances

(d) if the thing insured is cargo or freightage0 and the voyage cannot be performed onanother ship procured by the master within a reasonable time and with reasonablediligence to forward the cargo without incurring an e/pense or a ris. as statedabove

'reightage cannot be abandoned unless ship is also abandoned9

Re)uisites of a Falid bandonment(

a. must be total and conditionalb. made within a reasonable timec. e/plicit noticed. coupled with actual abandonment

Re)uisites for Falid Faluation in the Falued Marine *olicy(a. insured must have interest at ris.b. there must be no fraud on the insuredDs part


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+otice of bandonment(a. may be oral or in writing 7if oral0 written notice must be submitted within J days

from oral notice8b. must be e/plicitc. must specify the particular cause for abandonmentd. need not be accompanied by proof of interest or loss

cceptance of bandonment

a. may be e/press or implied 7i9e9 silence for unreasonable length of time8b. conclusive upon the parties and admits the loss and sufficiency of abandonmentc. irrevocable0 unless the ground on which it is made is proved to be unfounded

If insurer refuses to accept a valid abandonment - liable as upon actual total loss

pon actual abandonment

a. freightage earned before loss - belongs to the insurer of freightage

b. freightage earned after loss - belongs to insurer of ship

Co-insurance( form of insurance in which the person who insures his property for less

than the entire value is understood to be his own insurer for the difference whiche/ists between the true value of the property and the amount of insurance

Co-insurance applies only where the(

a. insurance ta.en is less than the actual value of the thing insuredb. loss is partial

*rimage - increase in freightage

24. 'ire InsuranceInsurer is liable for loss or damage caused by hostile fire 7fire that escapes from the

place where it was intended to burn and ought to be in8 and not that caused by friendly fire7fire which burns in a place where it is intended to burn89

&cope of 'ire Insurance(

a. fireb. lightningc. windstormsd. tornadoe. earth)ua.ef. other allied ris.s

"hen does alteration in the use or condition entitle the insurer to rescind the contract6a. such alteration violates a provision in the policyb. it was made without the insurerDs consentc. it is done within the insuredDs control0 and it increases the ris. of loss or damage

Rules(a. policy shall not protect the insured from in#ury conse)uent upon his negligent use

or management of fire0 so long as it is confined to the place where it ought to beb. if it escapes0 even though the insured was negligent0 the insurer is liablec. even though a fire may remain in its proper place0 it may become hostile if it by

accident0 becomes so e/tensive as to be beyond control

Options of the Insurer

a. purchase the property at appraised valuationb. restore the property damaged - contract of insurance is discharged and parties

enter into a new contract of insurance

25. Casualty Insurance( ny in#ury that is intended0 une/pected and unusual0 even thoughit results from an act or even which was intelligently done9


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Insurer is !iable for death


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b. payment of all overdue premiums and any indebtedness to the company uponsaid policy

E/ceptions(a. if cash surrender value has been paidb. if period of e/tension has e/pired

b. Claims &ettlement

nfair Claims &ettlement *ractices((a) .nowingly misrepresenting to claimants pertinent facts or policy provisions

relating to coverage at issue(b) failing to ac.nowledge with reasonable promptness pertinent communications

with respect to claims arising under its policies(c) failing to adopt or implement reasonable standards for the prompt investigation

of claims arising under its policies(d) no attempt in good faith to effectuate prompt0 fair and e)uitable settlement of

claims submitted in which liability has become reasonably clear(e) compelling policy holders to institute suits to recover the amount due under its

policies by offering with no #ustifiable reason an amount substantially less thanthat ultimately recovered in suits brought by them

*roceeds of !ife Insurance - payable within : days after((a) presentation of claims0 and(b) filing of proof of death 7upon failure to pay interest0 at the rate of 2 times the

ceiling prescribed by the Monetary oard unless based on the ground that therate is fraudulent8

*roceeds of *olicies other than !ife - payable((a) upon proof of loss(b) upon ascertainment of loss or damage 7if not made within : days of proof of

loss0 payable in A days8

c. *ower of Commissioner to &uspend


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3. "arehouse Receipt - written ac.nowledgment by a warehouseman that he hasreceived and holds certain goods therein described in store for the person to whom it isissued9

4. +on-negotiable Receipt - receipt deliverable to a specified person9

5. +egotiable Receipt - receipt deliverable to order or to bearer9

6. Essential %erms which M&% be embodied in a "arehouse Receipt(a. location of the warehouseb. date of the issue of the receiptc. consecutive number of the receiptd. statement whether the goods received will be delivered to bearer0 or a specified

person0 or his ordere. rate of storage chargesf. description of the goods or pac.ages containing them for identification purposesg. signature of the warehousemanh. statement of the amount of advances made and of liabilities incurred for which the

warehouseman claims as lien

7. Effect of omission of any of the essential terms(a. %he validity of the warehouse receipt is not affected9b. %he warehouseman shall be held liable for damages to those in#ured by his

omission9c. %he negotiability of the warehouse receipt is not affected9d. %he issuance of a warehouse receipt in the form provided by the law is merely

permissive and directory and not mandatory in the sense that if the re)uirementsare not observed0 then the goods delivered for storage become ordinary deposits9

8. %erms which may be inserted in a "arehouse Receipt( ny other terms e/cept 7a8

those contrary to the provisions of this ct; 7b8 those that would impair awarehousemanDs obligation to e/ercise that degree of care in the safe.eeping of thegoods entrusted to him9

9. Mar.s to be made on a warehouse receipt(a. non-negotiable receipt must be clearly mar.ed non-negotiable or not negotiable0

otherwise0 the holder of the receipt who purchased it for value and who supposed itto be negotiable0 may treat it as negotiable9

b. ,uplicate receipts must be so mar.ed0 otherwise0 the warehouseman is held liablefor all damages suffered by a holder believing the same to be the original9

10. "arranties of a warehouseman as to duplicate receipts(

a. %he duplicate is an accurate copy of the original receipt9b. &uch original receipt is uncancelled at the date of the issue of the duplicate9

11. Effects of alteration on the liability of the warehouseman(a. If the alteration is IMM%ERI! 7the tenor of the receipt is not changed80 whether

fraudulent or not0 authori4ed or not0 the warehouseman is liable on the alteredreceipt according to its original tenor9

b. If the alteration is M%ERI! but %$ORIE,0 the warehouseman is liableaccording to the terms of the altered receipt9

c. If the alteration is M%ERI!0 +%$ORIE, but I++OCE+%!N M,E0 thewarehouseman is liable on the altered receipt according to its original tenor9

d. If the alteration is M%ERI! and 'R,!E+%!N M,E0 the warehouseman isliable((1) to the purchaser of the receipt for value and without notice of the alteration

according to the tenor of the altered receipt(2) to the alterer0 according to the terms of the original receipt(3) to subse)uent purchasers with notice of the alteration0 according to the terms of

the original receipt

12. Effects of misdescription of goods(


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a. warehouseman is under the obligation to deliver the identical property stored withhim and if he fails to do so0 he is liable directly to the owner9

b. s against a bona fide purchaser of a warehouse receipt0 the warehouseman isestopped from denying that he has received the goods described in the receipt9

c. If the description consists merely of mar.s or label upon the goods or upon thepac.ages containing them0 the warehouseman is not liable even if the goods arenot of the .ind as indicated in the mar.s or labels9

13. *rincipal Obligations of a "arehouseman(a. %o ta.e care of the goods entrusted to his safe.eeping

5eneral Rule( warehouseman is re)uired to e/ercise such degree of care

which a reasonable careful owner would e/ercise over similar goods of his own9$e shall be liable for any loss or in#ury to the goods caused by his failure toe/ercise such care9

E/ception( $e shall not be liable for any loss or in#ury which could not have

been avoided by the e/ercise of such care9

E/ception to the E/ception( $e may limit his liability to an agreed value of the

property received in case of loss9 $e cannot stipulate that he will not beresponsible for any loss caused by his negligence9

a. %o deliver the goods to the holder of the receipt or the depositor upon demand0provided demand is accompanied with((1) an offer to satisfy the warehousemanDs lien;(2) an offer to surrender the negotiable receipt properly endorsed9 If the receipt is

non-negotiable0 any person lawfully entitled to the possession of the goods maybe entitled to delivery without surrender of the receipt9

(3) a readiness and willingness to sign an ac.nowledgment that the goods havebeen delivered if such is re)uested by the warehouseman9

14. *ersons to whom goods must be delivered(A. *ersons lawfully entitled to the possession of the goods or his agent(

a9 persons to whom a competent court has ordered the delivery of the goods(1) where a negotiable instrument has been lost or destroyed0 the court may

order delivery to a person upon satisfactory proof of such loss or destructionand upon proper posting of a bond to protect the warehouseman from anyliability or e/pense which he may incur by reason of the original receiptremaining outstanding9

(2) where more than one person claims title or possession of the goods thewarehouseman may re)uire all claimants to interplead9 %he court will thenorder delivery to the person having a better right9

b. an attaching creditor - 5oods0 while in the possession of the warehouseman andcovered by a negotiable receipt0 cannot be attached or levied upon under ane/ecution unless(

(I) the negotiable receipt is first surrendered to the warehouseman0 or(ii) its negotiation is en#oined0 or(iii) the receipt is impounded by the court

c9 to the purchaser in case of sale of the goods by the warehouseman to enforce hislien

d. to the purchaser where perishable or ha4ardous goods are sold at private orpublic sale

B. If goods are covered by a non-negotiable receipt(a. a person entitled to the delivery by the terms of the receipt0 orb. one who has written authority from letter a

C. If goods are covered by a negotiable receipt0 a person in possession of the receipt0the terms of which the goods are deliverable(a. to him or orderb. to bearerc. indorsed to himd. indorsed in blan. by the person whom delivery was promised

15. "hen is there Misdelivery6


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"hen the warehouseman delivers the goods to a person who is not in fact lawfullyentitled to the possession of the goods because(

a. the person does not fall under letter or C above; orb. the person falls under letter or C but prior to delivery0 the warehouseman had

either((1) been re)uested by the person lawfully entitled to the delivery not to ma.e such

delivery0 or(2) had information that the delivery about to be made was to one not lawfully

entitled to the possession of the goods

16. Effects of Misdelivery( %he warehouseman shall be liable for conversion to all having a right to property orpossession of the goods9

17. "hat happens if there is proper delivery or partial delivery but the warehouseman failsto cancel the receipt or record on the receipt of such partial delivery6a. If goods covered by a negotiable warehouse receipt are delivered by a

warehouseman but he fails to ta.e the receipt and cancel it0 then he is still liable to

one who purchases for value and in good faith such receipt9b. If he ma.es partial delivery of the goods but fails to record the partial delivery on the

receipt then he may still be held liable for the entire receipt to one who purchasesfor value and in good faith such receipt9

18. !awful e/cuses for refusal to deliver goods(a. %he warehouseman can refuse to deliver the goods if he has ac)uired title or right

to the possession of the goods((1) directly or indirectly from a transfer made by the depositor at the time of the

deposit for storage or subse)uent thereto; or(2) from the warehousemanDs lien

b. If someone other than the depositor or person claiming under the depositor has aclaim to the title or possession of the goods and the warehouseman has informationof such claim0 the warehouseman shall be e/cused from liability for refusing todeliver the goods either to the depositor or person claiming under him until he hashad a reasonable time to ascertain the validity of the adverse claim or to bring legalproceedings to compel all claimants to interplead9

c. %he warehouseman will not be re)uired to deliver the goods if such had been lost9ut this is without pre#udice to liabilities which may be incurred by him due to suchloss9

d. %he warehouseman having a valid lien against the person demanding the goods

may refuse to deliver the goods to him until the lien is satisfied9

e. If goods have been lawfully sold or disposed of because of their perishable orha4ardous nature0 the warehouseman shall not be liable for failure to deliver thegoods9

19. warehouseman cannot refuse to deliver goods to the depositor or to a personclaiming under him on the ground that adverse title to the goods belongs to a thirdperson9

20. Rules as regards Co-mingling of ,eposited 5oods(

5eneral Rule( warehouseman may not co-mingle goods belonging to different

depositors or belonging to the same depositor for which separate receipts had beenissued9

E/ception( warehouseman may co-mingle fungible goods of the same .ind and

grade provided he is authori4ed by agreement or by custom9

21. Effect of Co-mingling of 5oods(a. %he different owners become co-owners of the whole mass9


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b. %he warehouseman shall be severally liable to each depositor for the care andredelivery of his share of such mass to the same e/tent and under the samecircumstances as if the goods had been .ept separate9

22. Remedies of a Creditor( 7the debtor being the owner of the negotiable receipt8 Creditors of the depositors0 before negotiation0 may protect themselves by obtaining awrit of preliminary in#unction and serve the same on the depositor before he has a chanceto negotiate the receipt9 Once en#oined0 there will be no longer a danger that a @rdpersonwill be pre#udiced so the goods may now be attached0 levied upon0 or that the vendorDs lienor the right of stoppage in transit be e/ercised9

23. "arehousemanDs !ien

E/tent of "arehousemanDs !ien(

warehouseman shall have a lien on goods deposited or on the proceeds thereofin his hands for(

a. all lawful charges for storage and preservation of the goodsb. all lawful claims for money advances0 interest0 insurance0 transportation0 labor0

weighing0 cooperating and other charges and e/penses in relation to such

goodsc. all reasonable charges and e/penses for notice and advertisements of sale and

for sale of the goods where default has been made in satisfying the warehouselien

5oods &ub#ect to lien(a. goods belonging to the depositor who is liable to the warehouseman as debtor

whenever such goods are deposited andb. goods belonging to other persons stored by the depositor who is liable to the

warehouseman as debtor with authority to ma.e a valid pledge

$ow is a lien enforced6

a. by refusing to deliver the goods until the lien is satisfiedb. by causing the e/tra#udicial sale of the property and applying the proceeds to the

value of the lienc. by filing a civil action for unpaid charges or by way of counterclaim in an action to

recover the property from him

$ow is a lien lost6a. when the warehouseman voluntarily surrenders possession of the goods without

re)uiring payment of his lien; orb. when the warehouseman wrongfully refuses to deliver the goods when a demand

is made with which he is bound to comply

24. +egotiation and %ransfer of Receipts $ow do we negotiate a receipt deliverable to order6

a. by indorsing it in blan. thereby ma.ing it deliverable to bearer orb. by special indorsement - which would re)uire further indorsements for further

negotiations9In both cases0 the indorsements must be coupled with delivery9

$ow do we negotiate a receipt deliverable to bearer6

%here is no need to indorse for negotiation9 *hysical delivery of the instrument willsuffice9 ut if the instrument is indorsed specially0 the bearer character of the receipt isdestroyed and for further negotiation0 there will be a need for indorsement9

"ho may negotiate warehouse receipts6a. the owner of the receipt0 orb. the person to whom possession of the receipt was entrusted to by the owner

Rights ac)uired by a person to whom the receipt has been negotiated(a. the title of the person negotiating the receipt over the goods covered by the

receipt


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b. the title of the person 7depositor or owner8 to whose order by the terms of thereceipt the goods were to be delivered

c. the direct obligation of the warehouseman to hold possession of the goods forhim0 as if the warehouseman directly contracted with him

May non negotiable receipts be negotiated6

+o0 even if the receipt is indorsed0 the transferee ac)uires no additional right9 %hatis why they are called non negotiable receipts9 ut they may be transferred or assignedby delivery9

Rights of a person to whom a non negotiable receipt has been transferred(

a. the title to the goods as against the transferorb. the right to notify the warehouseman of the transfer thereof andc. the right thereafter to ac)uire the obligation of the warehouseman to hold the

goods for him

,istinction between a non negotiable receipt from a negotiable receipt with regard to

attachment or e/ecution upon goods(

+on-negotiable Receipt +egotiable Receipt*rior to notification of the warehouseman bythe transferor or transferee0 thewarehouseman is not bound to the transfereewhose right may be defeated by a levy of anattachment or e/ecution upon the goods bythe creditor of the transferor or by anotification to such warehouseman of thesubse)uent sale of the goods9

%he goods cannot be attached or levied underan e/ecution unless the receipt be firstsurrendered to the warehouseman or itsnegotiation en#oined9

Rights of a person to whom a negotiable receipt has been transferred0 not indorsed(a. the right to the goods as against the transferorb. the right to compel the transferor to indorse the receipt9 ut if the intention of the

parties is that the receipt should merely be transferred0 the transferee has noright to re)uire the transferor to indorse the receipt9

+ote( +egotiation ta.es effect as of the time when the indorsement is actuallymade9

"arranties of a person negotiating or transferring a receipt(

a. the receipt is genuineb. he has a legal right to negotiate or transfer itc. he has .nowledge that would impair the validity or worth of the receipt andd. he has a right to transfer the title to the goods and that the goods are

merchantable

holder for security of a receipt 7mortgagee or pledgee8 who in good faith accepts

payment of the debt from a person does not warrant the genuineness of the receiptnot the )uality or )uantity of the goods therein described9

It is the duty of the purchaser0 mortgagee or pledgee of goods for which a negotiable

receipt has been issued to re)uire the negotiation of the receipt to him0 otherwise hisfailure will have the same effect as an e/press authori4ation on his part to the seller0mortgagor0 or pledgor in possession of such receipt to ma.e any subse)uentnegotiation9 %he subse)uent purchaser must have ta.en the receipt in good faithand for value9

bona fide purchaser of a negotiable warehouse receipt ac)uires title to the goods

where he purchases from the ownerDs agent within the actual or apparent scope ofhis authority9 In sum0 negotiation is valid despite having been made in breach oftrust9

,istinctions between a negotiable instrument and a negotiable warehouse receipt(


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+egotiable Instrument +egotiable "arehouse Receipt"hen a negotiable instrument is altereddeliberately0 it becomes null and void9

"hen a warehouse receipt is altered0 it is stillvalid but it may be enforced only inaccordance with its original tenor9

If a negotiable instrument is originally payableto bearer0 it will always remain so payableregardless of the way it is indorsed0 whetherspecially or in blan.9

If a warehouse receipt0 payable to bearer0 isindorsed specially0 it will be converted into areceipt deliverable to order and can only benegotiated further by indorsement anddelivery9

holder in due course may be able to obtaina title better than that which the party whonegotiated the instrument to him had9

n indorsee even if a holder in due courseobtains only such title as the personnegotiating has over the goods9

%he indorsement of a negotiable instrumenthas a double effect9 It is at the same time aconveyance of the instrument and a contractthe indorser has with the indorsee that oncertain conditions0 the indorser will pay theinstrument if the party primarily liable fails to

do so9

%he indorsement of a warehouse receiptamounts merely to a conveyance by theindorser9 ccordingly0 an indorser of a receiptshall not be liable to the holder if0 for e/ample0the warehouseman fails to deliver the goodsbecause they were lost due to his fault or

negligence9

GENERAL BONDED WARE,OUSE LAW

ny warehouseman receiving commodities for 7a8 storage; 7b8 milling; 7c8 co-mingling

must(a. obtain prior license from the ureau of Commerceb. file a bond in an amount e)uivalent to @@ 1


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4. bsolutely ,is)ualified to become Merchantsa. serving penalty of civil interdictionb. insolventc. absolutely dis)ualified by special laws

5. Relatively ,is)ualifieda. #udicial and prosecuting officials in active serviceb. administrative0 economic0 military chiefsc. government collection agents and custodian of fundsd. stoc. and commercial bro.erse. by special laws cannot trade in specified territories

6. oo.s a Merchant must .eepa. boo. of inventories and balances0 statement of assets0 liabilities and capitalb. #ournal of day to day operationsc. ledger for classifying accountsd. copying boo. for letters and telegrams; if #uridical person0 include boo. of minutes

and stoc. and transfer boo.

7. *robative Falue of MerchantDs oo.a. evidence against merchants themselvesb. in case of conflicts between 2 boo.s - that which s properly .ept prevailsc. if one .eeps boo.s and the other does not and cannot e/plain why0 the former

prevailsd. if both boo.s are properly .ept and there is a conflict0 other proofs can be resorted

to

8. Commercial Contracts by Correspondence are perfected from the moment the offereeaccepts the offer0 even before .nowledge of said acceptance by the offeror9 %his doesnot apply to deposit0 guaranty0 sales0 loan0 agency0 partnership9

9. 3oint ccount *artnership - business arrangement whereby 2 or more persons interestthemselves in the business of another by ma.ing contributions thereto and participatingin the results thereofa. only one member is ostensible0 others are silentb. no common namec. only ostensible partners can sue


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c. debtor free from aggravation


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c. represents the government of the country under whose flag he navigates

12. !oan on ottomry - made by shipowner


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c. it cannot be determined which of the 2 vessels caused the collision - each vesselshall suffer its own damages0 and both shall be solidarily responsible for the lossesand damages occasioned to their cargoes 7Inscrutable 'ault8

23. Error in E/tremis - sudden movement made by a faultless vessel during the @ rd4one ofcollision with another vessel which is at fault0 even if the said movement is wrong0 noresponsibility will fall on said vessel

24. &hipwrec. - denotes all types of loss< wrec. of a vessel at sea either by beingswallowed up by the waves0 by running against another vessel or thing at sea or oncoast where the vessel is rendered incapable of navigation

25. &alvage - the compensation allowed to persons by whose voluntary assistance a shipat sea or her cargo or both have been saved in whole or in part from an impendingperil0 or such property recovered from actual peril or loss0 in cases of shipwrec.s0derelict or recapture; a service which one person renders to the owner of a ship orgoods by his own labor0 preserving the goods or ship which the owner or thoseentrusted with the care of them either abandoned in distress at sea or are unable to

protect and secure; a permit is re)uired to engage in the salvage business

26. ,erelict - a ship or cargo which is abandoned and deserted at sea by those who are incharge of it0 without any hope of recovering it0 or without any intention of returning it

27. Elements of a Falid &alvage(a. a marine perilb. service voluntarily rendered when not re)uired as an e/isting duty or from special

contractc. success0 in whole or in part0 or that the services rendered contributed to such

success

28. Contract of %owage - contract whereby a vessel usually motori4ed pulls another fromone place to another for compensation9 It is a contract of services9

29. ,ifference between %owage and &alvage(&alvage %owage

crew of salvaging ship is entitled to salvage0and can loo. to the salvaged vessel for itsshare

crew of the towing ship does not have anyinterest or rights with the remunerationpursuant to the contract

salvor ta.es possession and may retainpossession until he is paid

tower has no possessory lien; only an actionfor recovery of sum of money

court has power to reduce the amount ofremuneration if unconscionable

court has no power to change amount intowage even if unconscionable

CARRIAGEOFGOODSBYSEAACT

1. "hen pplicable(a. contracts for the carriage of goodsb. by seac. to and from *hilippine portsd. in foreign trade

2. +otice of !oss or damage must be given in writing to the carrier or his agent at the portof discharge or at the time of the removal of the goods into the custody of the personentitled to delivery9 If the loss or damage is not apparent0 the notice must be givenwithin @ days of delivery9 $owever0 the carrier shall be discharged from all liability inrespect of loss or damage of goods unless suit is brought within 1 year after delivery ofthe goods or the date when the goods should have been delivered9 +otice of loss0 ifnot given0 that fact shall not affect or pre#udice the right of the shipper to bring suitwithin the 1 year prescriptive period9

WARSAWCON)ENTION


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1. "hen pplicable(a. international transport by airb. transport of persons0 baggage0 or goods

2. !iabilities under the Convention(a. damage sustained in the event of the death or wounding of a passenger ta.ing

place on board the aircraft or in the course of any of the operations of embar.ing ordisembar.ing

b. loss or damage to any chec. baggage or goods sustained during the transport byair

c. delay in the transport by air of passengers0 baggage0 or goods

Enumeration of causes of action as above stated is not an e/clusive list9 7+orthwest

irlines vs9 Cancer8

3. Meaning of %ransport by ir - period during which the baggage or goods are in chargeof the carrier0 whether in an airport or on board an aircraft0 or in the case of landingoutside an airport0 in any place whatsoever

4. ction for damages must be brought at the option of the plaintiff0 either(a. before the court of the domicile of the carrier;b. court of principal place of business of carrier;c. court where he has a place of business through which the contract has been made;d. before the court at the place of destination

5. Convention provides for a limitation of liability(a. for each passenger - limited to 12B0 francsb. for goods and chec.ed in baggage - limited to 2B francs per .ilogramc. for hand carry - limited to B0 francs per passenger

"hen can you not avail of this limitation6

(1) willful misconduct

(2) default amounting to willful misconduct(3) accepting passengers without tic.et(4) accepting goods without airway bill or baggage without baggage chec.

6. %he right to damages shall be e/tinguished if an action is not brought within 2 yearsfrom the date of arrival at the destination0 or from the date on which the aircraft ought tohave arrived0 or from the date on which the transportation stopped9

7. +otice re)uirement( damage to baggage ( within @ days from receipt damage to goods( within J days from receipt delay( within 21 days from receipt

'ailure to file written notice0 no action shall lie against the carrier0 save in the case of

fraud on his part9

8. +otice Re)uirements(COGSA Co*e o& Coer'e War!a. Co+et%o

loss


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accidental0 and done for a general business purpose any common carrier0 shipyard0electric light0 heat and power and public utility9

2. *ublic tility - business or service engaged in regularly supplying the public with somecommodity or service of public conse)uence such as electricity0 gas0 water0transportation0 telephone or telegraph service9

3. *rior Operator Rule - before permitting a new operator to invade the territory of anotheralready established0 the prior operator must be given an opportunity to e/tend itsservice to meet the public needs in the matter of transportation9

4. *rior pplicant Rule - presupposes a situation where two interested persons apply for aC*C in the same community over which no person has yet been granted a C*C tooperate9 If both applicants e)ual0 then the applicant who applied first will be given theC*C9

5. ,istinctions between C*Cs and C*C+sCertificate of *ublic Convenience Certificate of *ublic Convenience and

+ecessityany authori4ation to operate a public serviceissued by the appropriate government agency

issued by the appropriate government agencyto a public service to which any politicalsubdivision has granted a franchise

an authori4ation issued by the propergovernment agency for the operation of publicservices for which no franchise0 eithermunicipal or legislative is re)uired by law

an authori4ation issued by the propergovernment agency for the operation of publicservices for which a franchise is re)uired bylaw

6. Re)uirements of C*C and franchise(a. 'ilipino citi4enshipb. financial capacity

c. public convenience

CORPORATIONLAW

1. ,octrine of Corporate Opportunity - a director is made to account to his corporation0gains and profits from transactions entered into by him


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a. 'ounders &hares - given rights and privileges not en#oyed by owners of otherstoc.s; right to vote


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c. merger and consolidationd. investment of funds in another corporation


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31. %he power of removal of directors that may be e/ercised with or without cause cannotapply to the director representing the minority shareholders9 $e may only be removedwith cause9

32. 5eneral Rule( If surplus profits e/ceed the re)uirements the corporation shall declaredividends9 %his is compulsory if the surplus is e)ual


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39. &EC 3urisdictiona. original and e/clusive #urisdiction

(1) fraudulent devices and schemes employed by directors detrimental to publicinterest

(2) intra-corporate disputes and with the state in relation to their franchise and rightto e/ist as such

(3) controversies in the election0 appointment of directors0 trustees0 etc9(4) petition to be declared in a state of suspension of payments

b. 5rounds for &uspension


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6. cts *rohibiteda. manipulation of security pricesb. manipulation of deceptive devicesc. artificial measures of price controld. fraudulent transactionse. insider tradingf. false prospectus0 communications0 reports

SECRECYOFBANKDEPOSITS

1. ,eposits in ban.s0 including government ban.s0 may not be in)uired into by anyperson0 e/cept(a. if depositor agrees in writingb. impeachment casesc. by court order in cases of bribery and dereliction of duty against public officialsd. deposit is sub#ect of litigatione. anti-graft casesf. general and special e/amination of ban. order of the Monetary oard of ban. fraud

or serious irregularityg. re-e/amination made by an independent auditor hired by a ban. to conduct its

regular trust

LAWSONINTELLECTUALCREATION

Co(yr%g/t

1. "hat "or.s are not *rotected(a. any idea0 procedure0 system0 method or operation0 concept0 principle0 discovery0 or

mere data as such0 even if they are e/pressed0 e/plained0 illustrated or embodied ina wor.; news of the day or other miscellaneous facts0 having the character of mere

items of press information0 or any official te/t of a legislative0 administrative or legalnature as well as any official translation thereof

b. wor.s of the governmentc. statutes0 rules0 and regulations of government agencies and officesd. speeches0 lectures0 sermons0 addresses and dissertations0 pronounced or rendered

in courts of #ustices or nay administrative agencies in deliberative assemblies andmeetings of public character

2. 'air se of a Copyrighted "or. is not Infringementa. for criticism0 comment0 news reporting0 teaching0 research0 scholarship0 and similar

purposesb. decompilation( the reproduction of the code and translation of the forms of the

computer program with other programs

3. 'actors to Consider in ,etermining 'air se(a. purpose and character of the use0 including whether such use is of a commercial

nature or for no profit or educational purposesb. nature of the copyrighted wor.c. amount and substantiality of the portion used in relation to the copyrighted wor. as

a wholed. effect of use upon the potential mar.et for a value of the copyrighted wor.

4. %erms of the *rotectiona. copyrighted wor.( lifetime of creator plus B years after death 7to be computed on

the 1stday of 3anuary of the year following the death8b. performances not incorporated in recordings( B years from end of year in which

the performance too. placec. sound or image and sound recordings and performances incorporated therein( B

years from end of the year in which the recording too. placed. broadcasts( 2 years from the date the broadcast too. place

5. Remedies for Infringementa. in#unction


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b. actual damages0 including legal costs and other e/penses0 as he may have incurreddue to the infringement as well as the profits the infringer may have made due tosuch infringement

c. impounding of articles during pendency of the actiond. destruction of all infringing copies and


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5. Inventive &tep - an invention involves an inventive step0 if having regard to the prior art0it is not obvious to a person s.illed in the art at the time of the filing date of priority dateof the application claiming the invention

6. Industrial pplicability - an invention is considered industrially applicable if it can beproduced and used in the industry

7. %he 'irst-to-'ile &ystem - if 2 or more persons have made the invention separately andindependently of each other0 the right to the patent belongs to the person who filed anapplication for such invention0 or where 2 or more applications are filed for the sameinvention0 the right of the patent belongs to the person who has the earliest filing dateor the earliest priority date

nder this system0 the patent is granted to the inventor who filed his patent applicationearlier than others thus simplifying the determination of who is entitled to own the patent9 %he 'irst-to-'ile &ystem increases the rights of the inventor by(

a. guaranteeing the confidentiality of the application prior to its publicationb. giving the inventor inchoate rights against an infringer after the publication of the

application and before the grant of the patent andc. e/panding the rights of the inventor to institute cancellation proceedings for the

duration of the term of the patent9 Cancellation proceedings may be filed at anytime during the term of the patent9

nder this system0 the applicant declared by final court order as having the right to thepatent may(

a. prosecute the application as his own application in place of the original applicantb. file a new patent application in respect of the same inventionc. re)uest that the application be refused ord. see. the cancellation of the patent0 if one has already been issued

8. "hat is the difference between novelty in patents and originality in copyright6 +ovelty in *atents - even if you do not .now of any previous creation0 as long as apatent on the same creation has already been published anywhere in the world0 youcannot claim novelty9 +o access tot he other creation is no defense9 Originality in Copyright - even if there is same creation0 as long as you do not copyyour own creation0 it is still considered an original creation9 +o access to the previouscreation is a defense9

9. +on-*re#udicial ,isclosure%he disclosure of information contained in the application during the 12 months

preceding the filing date or the priority date of the application shall not pre#udice theapplicant on the ground of lac. of novelty if such disclosure was made by 7a8 inventor; 7b8 a

patent office and the information was contained

10. %erm of *atent - 2 years from the filing date of the application

11. 5rounds for Compulsory !icensing(a. national emergency or other circumstances of e/treme urgencyb. where public interest0 national security0 health or the development of other vital

sectors of the national economy as determined by the appropriate agency of thegovernment so re)uires

c. where a #udicial or administrative body has determined that the manner ofe/ploitation by the owner of the patent or his licensee is anti-competitive

d. in case of public non-commercial use of the patent by the patentee0 withoutsatisfactory reason

e. if not being wor.ed in the *hilippines on a commercial scale

12. In case of Compulsory !icensing of *atents involving &emi-conductor %echnology0 thelicense may be granted only in case of public non-commercial use or to remedy apractice determined after #udicial or administrative process to be anti-competitive

13. tility Models - an invention )ualifies for registration as a utility model if it is new andindustrially applicable


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- no inventive step re)uired for registration - no search and e/amination re)uired14. %erm *rotection - J years after the filing date of application without possibility of

renewal

15. Industrial ,esign - any composition of lines or colors or any @ dimensional form0whether or not associated with lines or colors

Industrial ,esigns essentially dictated by technical or functional considerations toobtain a technical result or those that are contrary to public order0 health or morals shall notbe protected

16. %erm of *rotection - B years from filing date of application0 renewable for not more than2 consecutive periods of B years each

I!o$+e'y La.

1. ,istinguish &uspension of *ayment and Insolvency&uspension of *ayment Insolvency

debtor has enough assets to meet liabilitiesbut cannot meet them as they fall due

debtor has more liabilities than assets

always initiated by debtor initiated by creditors


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d. Fessels( *hil9 Coastguard

7. %o be valid against @rdpersons(a. affidavit of good faithb. contract must be registered

8. 5eneral Rule( In Chattel Mortgage0 there is recovery of deficiency #udgment9 E/ception( when Recto !aw applies

9. Re)uisites of CM!(a. constituted to secure the fulfillment of principal obligationb. mortgagor is absolute owner of the thing mortgagedc. persons constituting the mortgage have the free disposal of the property and in the

absence thereof0 they be legally authori4ed for the purposed. recorded to bind @rdpersons

10. 'ormal Re)uisites of CM(a. substantial compliance with form in &ec9 B of CM!

b. signed by at least 2 witnessesc. must contain an affidavit of good faithd. certificate of oath 7notarial ac.nowledgment8

11. ffidavit of 5ood 'aith - where the parties severally swear that the mortgage is madefor the purpose of securing the obligation specified and for no other purpose and thatthe same is a #ust and valid obligation and not one entered into for fraud

- property given in CM must be described to enable the partiesor any other person after reasonable in)uiry and investigation to identify it

12. 'uture property may not be covered by CM but when such property is a(a. renewal of0 or in substitution for goods on hand when the mortgage was e/ecuted0

orb. purchased with proceeds 7not of your own money8 of said goods0 said property may

be covered by CM

13. Criminal cts - removal of chattel to another city or province without written consent ofmortgagee0 selling property already pledged0 or mortgaged without written consent ofmortgagee

14. chattel mortgage may be foreclosed #udicially or e/tra-#udicially0 in the latter case0before a notary or sheriff0 or creditor or mortgagee when stipulated0 even without needof notice 7when mortgagee forecloses8

1B9 *actum Commissorium applies to Chattel Mortgage9

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