Admu Barops Commercial Law

7/24/2019 Admu Barops Commercial Law

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CODE OF COMMERCE

COMMERCE branch of human activity; purpose is to bring products to the consumer

through operations habitually and with intent of gain

COMMERCIAL LAW branch of private law which regulates the juridical relations arising

from commercial acts

CHARACTERISTICS OF COMMERCIAL LAW:

1.1. universal

2.2. uniform

3.3. equitable

4.4. customary

.. progressive

!"#$%"&' "( )"*+ "( )",,+#)+ '$%-- !!-%)/-+0

1.1. merchants; boo of merchants and general provision of contracts

2.2. joint account association

3.3. commercial barter

4.4. transfers of nonnegotiable credits

.. commercial contracts of overland transportation

.. letters of credit

.. maritime commerce

"$5+#'0

1.1. )ommerce bringing products from the manufacturers to the consumers

1.2. )haracteristics of )ommerce0

1.a. habituality

2.b. rapidity if period is 67ed8 debtor in delay without need of demand; if contract does not 67period8 19 days

3.c. intent to join

1.3. ,erchant0

1.a. %ndividuals legal capacity8 21 years8 or subject to parental authority8 habitually engaged in

commerce

2.b. :uridical !ersons commercial and industrial company organied in accordance with law8

habitually engaged in business

1.4.

1.a. su?ering accessory penalty of civil interdiction @reclusion perpetuaand reclusion temporalA

2.b. those judicially declared insolvent until they can obtain their discharge

3.c. prohibited by )onstitution and special laws


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1.. liens

1.a. capacitated under his national law to engage in business

2.b. engaged in the business in the !hilippines not reserved for the (ilipinos

3.c. after securing license and /"% certi6cate

1.. (amily )ode0 +ither spouse may engage in business; when objected to by the other8 court

will loo into valid grounds8 i.e. serious and moral grounds

1.B. /"% )erti6cate must be obtained by0

1.a. alien

2.b. foreign 6rm

1.C. ,eaning of !hilippine &ational

1.a. citien

2.b. domestic corporation wholly owned and organied by (ilipinos in the !hilippines

3.c. (ilipino corporation where (ilipino capital entitled to vote is at least 9D

1.19. Query0 %f a corporation is a shareholder of another corporation8 how do you determine

whether the latter corporation is a (ilipino national>

Answer0 $he following must concur

1.a. t least 9D of the outstanding capital stoc and entitled to vote of both corporations are

held by citiens of the !hilippines

2.b. t least 9D of the /oard of *irectors of both corporations are (ilipinos

1.11. $enor of /"% )erti6cate

1.a. /usiness or activity to be engaged is consistent with the %nvestment !riorities !lan

2.b. /usiness will contribute to the sound and balanced development of the national economy in

a selfsustaining basis

3.c. /usiness will not conEict with the )onstitution and local laws

4.d. /usiness is not adequately e7ploited by (ilipino nationals

.e. &o danger of monopoliesFcombinations in restraint of trade

1.12. /asic !rinciplesF)onditions laid down by /"%

1.a. resident agent of foreign 6rm is a (ilipino citien

2.b. establishment of oGce in the !hilippines

3.c. bringing assets tot he !hilippine oGce as capital

4.d. complete set of accounting records

1.13. ,erger and )onsolidation subject to /"% requirements for the issuance of certi6cate0

=hen merger and consolidation result in ownership and control of non(ilipino nationals over

more than 49D of the capital of a consolidated corporation.

1.14. '+) -icense issued upon compliance with the following requirements0

1.a. proof of compliance with principle of reciprocity

2.b. /"% certi6cate

3.c. pplicant for license gives required information

n articles of incorporation

n bylaws

n names and addresses of resident agents


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n principal place of business in the !hilippines

1.d. proof of solvency

2.e. deposit acceptable securities to protect future creditors

RETAIL TRADE NATIONALIZATION LAW

@&ote0 ,aterial on the #etail $rade -iberaliation -aw will not be included in this reviewer.

'upplement to followA1.1. #etail $rade any act8 occupation8 or calling of habitually selling direct to the general public8

merchandise8 commodities8 or goods for consumption

:urisprudence has held that the term HretailI should be associated with and limited to goods

for personal8 family or household use8 consumption and utiliation. $he #etail $rade

&ationaliation -aw refers to Hconsumption goodsI or Hconsumer goodsI which directly satisfy

human wants and desires and are needed for home and daily life. +7cluded from the law are

those goods which are considered generally raw material used in the manufacture of other

goods8 or if not8 as one of the component raw material8 or at least as elements utilied in the

process of production and manufacturing.

1.2. +lements of =hat )onstitutes #etail $rade0

1.a. $he seller habitually engages in selling;

2.b. $he sale is direct to the general public; and

3.c. $he object of the sale is limited to merchandise8 commodities or goods for consumption.

1.3.


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5owever8 while a corporation with 9D (ilipino and 49D foreign equity ownership is

considered a !hilippine national for purposes of investment8 it is not quali6ed to invest in or

enter into a joint venture agreement with corporations or partnerships8 the capital or

ownership of which under the )onstitution or other special laws are limited to (ilipino citiens

only. 5ence8 for purposes of the law8 whatever the percentage of (ilipino ownership in the

owning corporation8 the foreign ownership would always render a portion of its holding in the

company as foreign equity and would disqualify the corporation to engage in retail trade.

ANTI-DUMMY ACT

1.1. $he ct penalies (ilipinos who permit aliens to use them as nominees or dummies to enjoy

privileges reserved for (ilipinos or (ilipino corporations. )riminal sanctions are imposed on the

president8 manager8 board member or persons in charge of the violating entity and causing the latter

to forfeit its privileges8 rights and franchises.

1.2. *isquali6ed aliens cannot intervene in the management8 operation8 administration or control

of the business reserved to (ilipinos whether as an oGcer8 employee or laborer8 with or without

remuneration8 e7cept when0

1.a. alien taes part in technical aspects;2.b. provided that no (ilipino can do such technical wor; and

3.c. with e7press authority from the !resident8 upon the recommendation of the department head

concerned.

1.3. /y way of e7ception8 the following may participate in management0

1.a. liens may be elected to the /oard of *irectors to the e7tent of their allowable share in the

capital of the corporation @in partially nationalied industriesA.

2.b. registered enterprise may employ foreign nationals in supervisory8 technical8 and advisory

positions for a period of years subject to e7tension.

3.c. =here majority of stocs of a pioneer enterprise is owned by foreign investors8 the following

positions may be held by foreign nationals0

n president

n treasurer

n general manager

n equivalent positions

1.4. (ilipino commonlaw wife of an alien is not barred from engaging in the retail business

provided she uses capital e7clusively derived from her paraphernal properties; however8 allowing her

commonlaw alien husband to tae part in the management of the retail business would be a

violation of the law.

1.. =hat doing business means0

1.a. soliciting orders8 purchases8 service contracts;

2.b. opening oGces whether called liaison oGces or branches;

3.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 1B9 days or more;

4.d. participating in the management or supervision or control of any domestic 6rm8 entity or

corporation in the !hilippines;

.e. any other act or acts that imply continuity in commercial dealings


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1.. =hen commissioned merchantsFinvestors or commercial broers act in their own name in

selling foreign products8 the foreign 6rm manufacturing these products is not doing business in the

!hilippines.

1.. =hen a local corporation or person acts in the name of a foreign 6rm8 the latter is doing

business in the !hilippines.

1.B. $he following are &"$ doing business01.a. mere investment as a shareholder by a foreign entity in domestic corporations duly

registered to do business;

2.b. e7ercise of rights as such investor;

3.c. having a nominee director or oGcer to represent interests in such corporation;

4.d. appointing a representative or distributor domiciled in the !hilippines which transacts

business in its own name and for its own accounts.

2.1. !urpose0

1.a. to encourage use of and to promote transactions based on trust receipts;

2.b. to regulate the use of trust receipts

TRUST RECEIPTS LAW

1.2. *e6nition0

writtenFprinted document signed by the +&$#J'$++ in favor of the +&$#J'$+# whereby the

latter releases the goods8 documents or instruments tot he possession of the former upon the

+&$#J'$++K' promise to hold said goods in trust for the +&$#J'$+#8 and to sell the goods8

etc. =%$5 $5+ "/-%


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!OINT ACCOUNTS

1.1. %t e7ists when a merchant interests himself in the transaction of another merchant8

contributing thereto the amount of capital they may agree upon8 and participating in the favorable or

unfavorable results thereof in the proportion they may determine.

1.2. :oint accounts do not adopt a 6rm name.

1.3. &o suit may be maintained investor and third persons dealing with the merchantconducting business.

1.4. %t is not subject to any formal requirement for validity; it may be oral.

"UL# SALES LAW

1.1. !urpose0 meant to protect creditors of businessmen against preferential or fraudulent

transfers

1.2. $he law covers all transactions8 whether done in good faith or not, or whether or not the

seller is in a state of insolvency8 that fall within the description of what is a Hbul sale.I

1.3. $ypes of transactions which are treated as Hbul salesI0

1.a. 'ale8 transfer8 mortgage or assignments of a stoc of goods8 wares8 merchandise8 provisions8or materials otherwise than in the ordinary course of trade;

2.b. 'ale transfer8 mortgage or assignments of all8 or substantially all8 of the business of the

vendor8 mortgagor8 transferor8 or assignor;

3.c. 'ale8 transfer8 mortgage8 or assignment of all8 or substantially all8 of the 67tures and

equipment used in the business of the vendor8 mortgagor8 transferor8 or assignor.

1.4. "nly creditors at the time of the sale in violation of the law are within the protection of the

laws and creditors subsequent to the sale are not covered.

1.. +ven if the transaction falls within the de6nition of Hbul saleI8 the following are not deemed

covered by the law0

1.a. %f the vendor8 mortgagor8 transferor or assignor produces and delivers a written waiver of theprovisions of the law from his creditors as shown by veri6ed statements;

2.b. $he law does not apply to e7ecutors8 administrators8 receivers8 assignees in insolvency8 or

public oGcers8 acting under process.

1.. "bligations when transaction is a bul sale0

1.a. $he vendor must deliver to such vendee a written statement of0

n names and addresses of all creditors to whom said vendor or mortgagor may be indebted;

n amount of indebtedness due or owing to each of said creditors

1.b. $he vendor must apply the purchase money to the prorata payment of bona 6de claims of

the creditors as shown in the veri6ed statement.

2.c. $he seller8 at least 19 days before the sale8 shall0

n mae a full detailed inventory of the goods8 merchandise8 etc.8 cost price of each article to

be included in the sale

n notify every creditor at least 19 days before transferring possession of the goods8 of the

price8 terms and conditions of the sale

1.. )onsequences of Liolation of #equirements under O above stated0


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1.a. =hen @aA above is not complied with8 the sale itself is void; the seller will be criminally

liable.

2.b. =hen @bA above is not complied with8 the sale itself is also void; seller is also criminally

liable.

3.c. =hen @cA is not complied with8 the sale is not void; no criminal liability on the seller.

INSURANCE LAW

1.1. -aws applicable to insurance in the order of priority0

1.a. %nsurance )ode

2.b. )ivil )ode

3.c.


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=hat perils may be insured>

@aA any contingent or unnown event8 whether past or future8 which may damnify a person

having an insurable interest; or

@bA any contingent or unnown event8 whether past or future8 which may create a liability

against the person insured.

1.B. +very person has an insurable interest in the life and health of0

1.a. himself8 his spouse and his children

2.b. any person on whom he depends wholly or in part for education or support8 or in whom he

has a pecuniary interest

3.c. any person under a legal obligation to him for the payment of money8 or respecting property

or services8 of which death or illness might prevent the performance or delay it

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

1.C. %nsurable %nterest in !roperty may consist of0

1.a. an e7isting interest2.b. an inchoate interest8 founded on an e7isting interest

3.c. an e7pectancy8 coupled with an e7isting interest out of which the e7pectancy arises

*e6nition of %nsurable %nterest in !roperty0 %nterest in property8 whether real or personal8 or any

relation thereto8 or liability in respect thereof8 of such nature that a contemplated peril might directly

damnify the insured.

1.19. %nstances when %nsurable %nterest must e7ist0

1.a. %nterest in !roperty insured must e7ist when the insurance taes e?ect and when the loss

occurs8 but need not e7ist in the meantime.

2.b. %nterest in the -ife or 5ealth of a !erson %nsured must e7ist when the insurance taes e?ect8

but need not e7ist thereafter or when the loss occurs.

3.c. /ene6ciaries of -ife %nsurance need not have insurable interest in the life of the insured.

4.d. /ene6ciaries of !roperty %nsurance must have insurable interest in the property insured.

Category Insurable Interest in Life

Insurance

Insurable Interest in Property

1. basis may be based on pecuniary

interest, affinity, or

consanguinity

based purely on pecuniary

interest

2. when interest must exist at the time the policy takes effect

EXCEP! life insurance takenby the creditor on the life of thedebtor wherein interest must also

exist at the time of the loss

at the time the policy takes effect

and at the time of the loss

". amount of insurable interest no limit EXCEP! if insurableinterest is based on creditor#

debtor relationship $only to the

extent of the credit or debt%

limited to the actual &alue ofdamage'in(ury'loss

1.11. ene$%& R'&e: change of interest in any part of a thing insured unaccompanied by a


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corresponding change in interest in the insurance suspends the insurance to an equivalent e7tent8

until the interest in the thing and the interest in the insurance are vested in the same person.

Exceptions0 a. %n case of life8 health8 and accident insurance

1.b. when the change in interest results after the occurrence of an injury which results in a loss

2.c. a change of interest in one or more several distinct things8 separately insured by one policy

3.d. a change in the interest by will or succession on the death of the insured @interest passes to

the heirsA

4.e. a transfer of interest by one of several partners8 joint owners in common who are jointly

insured to the others @even though it has been agreed that the insurance shall seie upon the

alienation of the thing insuredA

1.()* Re+oc%tion o, "eneci%$ies

ene$%& R'&e: %nsurance contracts are revocable.

Exception: ny person who is forbidden to receive any donation under rticle 3C of the )ivil )ode

cannot be named bene6ciary of a life insurance policy by the person who cannot mae the donation

to him.

$he following donations shall be void0

1.a. those made between persons who were guilty of adultery or concubinage at the time of the

donation;

2.b. those made by persons found guilty of the same criminal o?ense8 in consideration thereof;

3.c. those made to a public oGcer or his wife8 descendants8 ascendants8 by reason of his oGce.

"ther !ertinent !rovisions on #evocation0

@aA $he termination of a subsequent marriage shall allow the innocent spouse to revoe the

designation of the other spouse who acted in bad faith as bene6ciary in any insurance policy8

even if such designation be stipulated as irrevocable.

@bA fter the 6nality of the decree of legal separation8 the innocent spouse may revoe thedonations as well as the designation of the latter as a bene6ciary in any insurance policy8

even if such designation is irrevocable. $he revocation of or change in the designation shall

tae e?ect upon written noti6cation thereof to the insured. $he action to revoe the donation

under this article must be brought within years from the time the decree of legal separation

has become 6nal.

@cA $he interest of a bene6ciary in a life insurance policy shall be forfeited when the

bene6ciary is the principal8 accomplice or accessory in willfully bringing about the death of

the insured8 in which event8 the nearest relative of the insured shall receive the proceeds of

said insurance if not otherwise disquali6ed.

1.13. 'uspension a change of interest in any part of a thing insured unaccompanied by a

corresponding change of interest in the insurance suspends the insurance to an equivalent e7tent

until the interest in the thing and the interest in the insurance are vested in the same person.

1.14. )oncealment a neglect to communicate that which the party nows or ought to

communicate


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+7ception0 a. =hen the insurer maes inquiry from the insured of the nature or amount of the

latterKs insurable interest8 whether in life or property insurance;

1.b. insurance policy must specify the interest of the insured in the property insured8 if he is not

the absolute owner thereof.

concealment8 whether intentional or not8 entitles the injured party to rescind a contract of

insurance.#equisites0

@aA the party concealing must have nowledge of the facts concealed;

@bA the facts concealed must be material to the ris;

@cA the party is duty bound to disclose such fact to the other;

@dA the party concealing maes no warranty as to the facts concealed;

@eA the other party has no other means of ascertaining the facts concealed.

&ote0 n insured need not die of the very disease he failed to reveal to the insurer. %t is suGcient

that the nonrevelation has misled the insurer in forming his estimate of the disadvantages of theproposed policy or in maing his inquiries in order to entitle the insurance company to avoid the

contract.

&ote0 $he insured is under an obligation to disclose not only such material facts as are nown to

him8 but also those nown to his agent where0

1.a. it was the duty of the agent to acquire and communicate information of the facts in question;

2.b. it was possible for the agent8 in the e7ercise of reasonable diligence8 to have made the

communication before the maing of the insurance contract.

n (ailure on the part of the insured to disclose such facts nown to his agent8 or wholly due to

the fault of the agent8 will avoid the policy8 despite the good faith of the insured.

1.1. &either party to the insurance contract is bound to communicate information on the following

matters e7cept in answer to the inquiries of the other0

1.a. those of which the other nows;

2.b. that which8 in the e7ercise of ordinary care8 the other ought to now and of which the former

has no reason to suppose his ignorance8 i.e. political situation8 general usages of trade;

3.c. those of which the other waives communication;

4.d. those which prove or tend to prove the e7istence of the ris e7cluded by a warranty and

which are not otherwise material;

.e. those which relate to a ris e7cepted from the policy and which are not otherwise material.

&either party is bound to communicate his mere opinion8 even upon inquiry8 because such opinion

would add nothing to the appraisal of the application.

=aiver of material facts may be0

@aA by the terms of the insurance; or

@bA by the neglect to mae inquiry as to such facts8 where they are distinctly implied in

other facts which information is communicated

,ateriality is to be determined not by the events but solely upon the probable and reasonable

inEuence of the facts on the party to whom the communication is due in forming his estimate of the


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disadvantages of the proposed contract or in maing his inquiries.

)oncealment8 whether intentional or not8 entitles the other party to rescind the contract.

1.1. #epresentation

%t is a factual statement made by the insured at the time of8 or prior to8 the issuance of the

policy8 to give information to the insurer and otherwise induce him to enter into the insurance

contract.

%t may be made orally or in writing.

%t may be made at the time of8 or before8 the issuance of the policy.

%t may be altered or withdrawn before the insurance is e?ected8 but not afterwards.

representation cannot qualify an e7press provision in a contract of insurance but it may qualify an

implied warranty.

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

statement of belief or an e7pectation. @must be susceptible of present8 actual nowledgeA

$he statement of an erroneous opinion8 belief or information8 or of an unful6lled intention8 will not

avoid the contract of insurance8 unless fraudulent.

#ight to rescind because of false representation0

1.a. must be e7ercised previous to the commencement of an action on the contract @the action

referred to is that to collect a claim on the contractA

2.b. misrepresentation8 whether intentional or not8 gives the right to rescind

%ncontestable )lause0 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 years from the date of its issue

or of its last reinstatement8 the insurer cannot prove that the policy is void ab initio or is rescindable

by reason of the fraudulent concealment or misrepresentation of the insured or his agent.

+7ceptions0 @aA absence of insurable ris

@bA cause of loss is an une7pected ris

@cA fraud

@dA nonpayment of premium

@eA violation of conditions relating to naval or military services

@fA failure to comply with conditions subsequent to the occurrence of the loss

1.1. =arranties0


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the materiality of such statement or promise.

Warranty Representation

part of the insurance contract collateral inducementalways written on the policy maybe oral or written

conclusi&ely presumed material materiality must be pro&ed

must be strictly complied with re)uires substantial truth

made by the insured may be made by insurer or insured&ote0 %f there is a breach of warranty8 even if the cause of the loss is a di?erent ris8 the insurer is

entitled to rescind the contract of insurance.

/reach must refer to a material warranty8 whether intentional or not.

1.1B. !olicy

=hat is a #ider> %t is an additional provision in a policy not part of the body of the printed form.

)over &ote0 written memorandum of the most important terms of a preliminary contract of

insurance8 intended to give temporary protection pending the investigation of the ris by the insurer8

or until the issuance of a formal policy.


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@bA conviction of a crime arising out of acts increasing the haard insured against

@cA discovery of fraud or material misrepresentation

@dA discovery of willful or recless acts or omissions increasing the haard insured against

@eA physical changes in the property insured which results in the property becoming

uninsurable@fA determination by the )ommissioner that the continuation of the policy would violate or

would place the insurer in violation of the %nsurance )ode

@3A notice must be in writing

@4A it must be mailed or delivered to the insured at the address shown in the policy

@A notice must state the ground relied upon and that upon written request of the insured8

the insurer will furnish facts on which the cancellation is based

#enewal of the !olicies "ther than -ife0

%nsurer must mail or deliver to the insured notice of its intention not to renew the policy or to

condition its renewal upon reduction of limits or elimination of coverages within 4 days

before the policy ends. "therwise8 insured entitled to renew the policy upon payment of the

premium due on the eective date of the renewal.

1.1C. !remium


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3.c. where loss is caused by e?orts to rescue the thing insured from a peril insured against

4.d. insurer is not e7onerated by a loss caused by simple negligence of the insured if the

pro7imate cause of the loss is a peril insured against

.e. loss8 the immediate cause of which is a peril insured against e7cept when the pro7imate

cause is an e7cepted peril

=hen %nsurer &ot -iable0

1.a. where the peril insured against was only a remote cause

2.b. where the peril is speci6cally e7cepted8 a loss which would not have occurred but for such

peril is thereby e7cepted

3.c. loss caused by the connivance of the insured

4.d. loss caused by the willful act of insured

.e. loss caused by insuredKs negligence8 if it amounts to bad faith


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1.a. all the representations of the original insured; and

2.b. all the nowledge and information he possesses8 whether previously or subsequently

acquired which are material to the ris

+7ception0 under automatic reinsurance treaties

Reinsurance Double Insurance

1. 1. insurer becomes the insured2. 2. sub(ect matter is the insured risk or liability

". ". different risks and interests of insured

+. +. there must be consent of original

. . one who is original insured has no interest

in the contract of reinsurance which is

independent of the original contract of insurance

-. 1. insurer remains the insurer

. 2. sub(ect matter is property

/. ". the same interest and risk are insured

0. +. insured has to gi&e his consent

1.. insured is the party in interest in allcontracts

1.23. ,arine %nsurance0 insures against perils of the sea8 not of the ship

Perils of the Sea Perils of the Ship

co&ered by marine insurance not co&ered by marine insurance

denote nature accidents peculiar to the sea which

do not happen by inter&ention of man nor are to

be pre&ented by human prudence

damage or losses resulting from!

1. 1. natural and ine&itable action of the sea

2. 2. ordinary wear and tear of a ship, or

". ". negligent failure of the ship owner to

pro&ide the &essel with proper e)uipment to

con&ey the cargo under ordinary conditions"wner of the 'hip has %nsurable %nterest0

1.a. in the ship even if it has been chartered by one who promises to pay him in value in case of

loss @insurer is liable for what insured cannot recover from the chartererA8 even when hypothecated

by bottomry @only the e7cess of its value over the amount secured by bottomryA and

2.b. in the freightage8 which according to the ordinary and probable course of things he would

have earned but for the intervention of a peril insured against or other peril incident to the voyage

)harterer has insurable interest in the ship to the e7tent that he is liable to be damni6ed by its loss.

/arratry0 ny willful misconduct on the part of the masters or crew8 in pursuance of some unlawful

or fraudulent purpose8 without the consent of the owners and to the prejudice of the ownerKs interest.

:ettison0 %ntentional casting overboard of any part of a venture e7posed to a peril8 whether it be of

the cargo8 or the shipKs furniture or tacle8 in the hope of saving the rest of the venture.

%nsurable %nterest in ,arine %nsurance0 *etermined when one will sustain loss from the destruction

of the subject matter or derive bene6t from its preservation.

)harter !arty0 )ontract by virtue of which the owner or the agent of a vessel binds himself to

transport merchandise or persons for a 67ed price. %t has also been de6ned as a contract by virtue of

which the owner or the agent of the vessel for the transportation of goods or persons from one port


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to another.

-oan on /ottomry0 )ontract in the nature of a mortgage whereby the owner of a ship borrows

money for the use8 equipment or repair of the vessel for a de6nite term8 and pledges the ship as a

security for repayment8 with maritime or e7traordinary interest on the account of the maritime riss

to be borne by the lender. %t is stipulated in such a contract that if the ship be lost in the course of

the speci6c voyage or during a speci6ed limited time caused by any of the perils enumerated in the

contract8 the lender shall resolutely lose his money.

-oan on #espondentia0 )ontract ain to that of mortgage made on the goods on board the ship8 and

which are to be sold or e7changed in the course of the voyage. $he goods serve as the principal

security.

(reightage0 'igni6es all the bene6ts derived by the owner8 carriage of his own goods8 or those of

others.

)oncealment0 %n marine insurance8 information or the belief or e7pectation of a 3rdperson8 in

reference to a material fact is material.

n )oncealment of the following merely e7onerates the insurer from the resulting loss

therefrom0

1.a. national character of the insured

2.b. liability of the thing insured to capture and detention

3.c. liability to seiure from breach of foreign laws of trade

4.d. want of necessary documents

.e. use of false and simulated papers

%mplied =arranties0

1.a. that the ship is seaworthy complied with if the ship is seaworthy at the time of

commencement of ris8 e7cept0 @aA insurance for a speci6ed length of time at the commencement

of every voyage it undertaes during that time; @bA cargo to be transshipped at indeterminate port each vessel upon which cargo is shipped is seaworthy at the commencement of each particular

voyage

2.b. that the vessel shall not engage in illegal venture

3.c. that the vessel shall not deviate from the course of the voyage insured

4.d. where the nationality or neutrality of a ship or cargo is e7pressly warranted8 it is implied that

the ship will carry the requisite documents to show such nationality or neutrality and that it will not

carry any documents which may cast reasonable suspicion thereon

'eaworthiness depends on0

1.a. nature of the ship

2.b. nature of the voyage3.c. nature of the service

n 'eaworthiness of the vessel is required only at the commencement of the ris

n +7ceptions0

1.a. in a $ime !olicy commencement of every voyage that must be undertaen

2.b. in a )argo !olicy commencement of each particular voyage

3.c. in a Loyage !olicy commencement of each portion of the voyage


17/46

*eviation

1.a. a departure from the course of the voyage insured

2.b. unreasonable delay in pursuing the voyage

3.c. commencement of an entirely di?erent voyage

=hen is *eviation proper>

1.a. when caused by circumstances over which neither the master not the owner of the ship has

any control

2.b. when necessary to comply with a warranty or to avoid a peril whether it is insured against or

not

3.c. when made in good faith for the purpose of saving human life or relieving another vessel in

distress

4.d. when made in good faith and upon reasonable grounds of belief in its necessity to avoid a

peril

-oss

1.a. ctual $otal -oss

n a total destruction of the thing insured

n the irretrievable loss of the thing by sining or by being broen up

n any damage to the thing which renders it valueless tot he owner for which he held it

n any other event which e?ectively deprives the owner of possession8 at the port of

destination8 of the thing insured

1.b. )onstructive $otal -oss gives to the person insured the right to abandon

verage any e7traordinary or additional e7pense incurred during the voyage for the preservation

of the vessel8 cargo8 or both and all damages to the vessel and cargo from the time it is loaded and

the voyage commenced until it ends and the cargo unloaded


18/46

(reightage cannot be abandoned unless ship is also abandoned.

#equisites of a Lalid bandonment0

1.a. must be total and conditional

2.b. made within a reasonable time

3.c. e7plicit notice

4.d. coupled with actual abandonment#equisites for Lalid Laluation in the Lalued ,arine !olicy0

1.a. insured must have interest at ris

2.b. there must be no fraud on the insuredKs part

&otice of bandonment0

1.a. may be oral or in writing @if oral8 written notice must be submitted within days from oral

noticeA

2.b. must be e7plicit

3.c. must specify the particular cause for abandonment

4.d. need not be accompanied by proof of interest or losscceptance of bandonment

1.a. may be e7press or implied @i.e. silence for unreasonable length of timeA

2.b. conclusive upon the parties and admits the loss and suGciency of abandonment

3.c. irrevocable8 unless the ground on which it is made is proved to be unfounded

%f insurer refuses to accept a valid abandonment liable as upon actual total loss

Jpon actual abandonment

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

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

)oinsurance0 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 di?erence which e7ists between the true

value of the property and the amount of insurance

)oinsurance applies only where the0

1.a. insurance taen is less than the actual value of the thing insured

2.b. loss is partial

!rimage increase in freightage

1.24. (ire %nsurance

%nsurer is liable for loss or damage caused by hostile 6re @6re that escapes from the placewhere it was intended to burn and ought to be inA and not that caused by friendly 6re @6re

which burns in a place where it is intended to burnA.

'cope of (ire %nsurance0

1.a. 6re

2.b. lightning

3.c. windstorms

4.d. tornado


19/46

.e. earthquae

.f. other allied riss

=hen does alteration in the use or condition entitle the insurer to rescind the contract>

1.a. such alteration violates a provision in the policy

2.b. it was made without the insurerKs consent

3.c. it is done within the insuredKs control8 and it increases the ris of loss or damage#ules0

1.a. policy shall not protect the insured from injury consequent upon his negligent use or

management of 6re8 so long as it is con6ned to the place where it ought to be

2.b. if it escapes8 even though the insured was negligent8 the insurer is liable

3.c. even though a 6re may remain in its proper place8 it may become hostile if it by accident8

becomes so e7tensive as to be beyond control

"ptions of the %nsurer

1.a. purchase the property at appraised valuation

2.b. restore the property damaged contract of insurance is discharged and parties enter into anew contract of insurance

1.2. )asualty %nsurance0 ny injury that is intended8 une7pected and unusual8 even though it

results from an act or even which was intelligently done.

%nsurer is -iable for deathFinjury to insured0

1.a. by his own hand while insane

2.b. by taing poison by mistae

3.c. by overdoes of drugs administered or taen by mistae8 by ignorance or material

pathological conditions

4.d. by une7pected bacterial infection consequent upon doing acts8 even though such acts were

intentionally done

.e. by unprovoed violence of others

)ompulsory ,otor Lehicle -iability %nsurance

!ersons subject to ),L-%0

1.a. motor vehicle owner or one who is the actual legal owner of a motor vehicle in whose name

such vehicle is registered with the -$"

2.b. land transport operator or one who is the owner of a motor vehicle or vehicles being used for

conveying passengers for compensation @including school busesA

&o (ault %ndemnity )lause0 $he insurance company shall pay any claim for death or bodily injuries

sustained by a passenger or 3rdparty without the necessity of proving fault or negligence of any indsubject to certain conditions. $his does not apply to property damage.

1.2. 'uretyship an agreement whereby the surety guarantees the performance of the principal orobligor of an obligation or undertaing in favor of a 3rdparty called the obligee

1.2. -ife %nsurance0 an insurance in human life and insurance appertaining thereto or connected

therewith may be payable0

1.a. on the death of the insured

2.b. on his surviving a speci6ed period

3.c. otherwise8 contingently on the continuance or cessation of life


20/46

@b and c refer to endowment or annuitiesA

Jses and )ommon Ninds of -ife %nsurance0

1.a. =hole -ife or "rdinary !olicies here8 the insured agrees to pay annual8 semiannual or

quarterly premiums while he lives. $he insurer agrees to pay the face value of the policy upon the

death of the insured.

2.b. -imited !ayment -ife !olicy premiums paid only for a speci6ed period of years.3.c. $erm !olicy insurerKs liability arises only upon the death of the insured within the agreed

term as period. %f the latter survives the period8 the contract terminates and the insurer is not liable

4.d. +ndowment !olicy insurer agrees to pay a certain sum to the insured if the latter outlives a

designated period; if he dies before that time8 the proceeds are paid to the bene6ciary

.e. -ife nnuity debtor binds himself to pay an annual pension or income during the life of one

or more persons in consideration of a capital consisting of money or other property8 whose ownership

is transferred to him with the burden of income

1.2B. $he /usiness of %nsurance

1.a. -ife or +ndowment !olicies


21/46

!roceeds of -ife %nsurance payable within 9 days after0

@aA presentation of claims8 and

@bA 6ling of proof of death @upon failure to pay interest8 at the rate of 2 times the ceiling

prescribed by the ,onetary /oard unless based on the ground that the rate is fraudulentA

!roceeds of !olicies other than -ife payable0@aA upon proof of loss

@bA upon ascertainment of loss or damage @if not made within 9 days of proof of loss8

payable in C9 daysA

1.c. !ower of )ommissioner to 'uspendF#evoe -icense

@aA if insurance contract is in unsound condition

@bA if it has failed to comply with the provisions of law or regulations obligatory upon it

@cA its conditions or methods of business s such as to render its proceedings haardous to

the public or to its policy holders

@dA that its paid up capital stoc8 or its available cash assets8 or its security deposits8 as the

case may be8 is impaired or de6cient

@eA that the margin of solvency required of each company is de6cient

%nsurance gent any person who for compensation solicits or obtains insurance on behalf of

any insurance company or transacts for a person other than himself an application for a policy

or contract of insurance to or from such company or o?ers or assumes to act in negotiating of

such insurance. 5e must be 6rst licensed as such before doing any acts as insurance agent.

%nsurance /roer any person for any compensation8 commission or any other thing of value8acts8 or aids in any manner in soliciting8 negotiating or procuring the maing of any insurance

contract or in placing ris or taing out insurance8 on behalf of an insured other than himself.

license is required.

WAREHOUSE RECEIPTS LAW

1.1. =arehouse a building or place where goods are deposited and stored for pro6t.

1.2. =arehouseman person lawfully engaged in the business of storing goods for pro6t.

"nly a warehouseman may issue warehouse receipts.

1.3. =arehouse #eceipt written acnowledgment by a warehouseman that he has received and

holds certain goods therein described in store for the person to whom it is issued.

1.4. &onnegotiable #eceipt receipt deliverable to a speci6ed person.

1.. &egotiable #eceipt receipt deliverable to order or to bearer.

1.. +ssential $erms which ,J'$ be embodied in a =arehouse #eceipt0

1.a. location of the warehouse

2.b. date of the issue of the receipt

3.c. consecutive number of the receipt


22/46

4.d. statement whether the goods received will be delivered to bearer8 or a speci6ed person8 or

his order

.e. rate of storage charges

.f. description of the goods or pacages containing them for identi6cation purposes

.g. signature of the warehouseman

B.h. statement of the amount of advances made and of liabilities incurred for which the

warehouseman claims as lien

1.. +?ect of omission of any of the essential terms0

1.a. $he validity of the warehouse receipt is not a?ected.

2.b. $he warehouseman shall be held liable for damages to those injured by his omission.

3.c. $he negotiability of the warehouse receipt is not a?ected.

4.d. $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 requirements are not observed8 then the

goods delivered for storage become ordinary deposits.

1.B. $erms which may be inserted in a =arehouse #eceipt0 ny other terms e7cept @aA those

contrary to the provisions of this ct; @bA those that would impair a warehousemanKs obligation to

e7ercise that degree of care in the safeeeping of the goods entrusted to him

1.C. ,ars to be made on a warehouse receipt0

1.a. nonnegotiable receipt must be clearly mared nonnegotiable or not negotiable8

otherwise8 the holder of the receipt who purchased it for value and who supposed it to be negotiable8

may treat it as negotiable.

2.b. *uplicate receipts must be so mared8 otherwise8 the warehouseman is held liable for all

damages su?ered by a holder believing the same to be the original.

1.19. =arranties of a warehouseman as to duplicate receipts0

1.a. $he duplicate is an accurate copy of the original receipt.

2.b. 'uch original receipt is uncancelled at the date of the issue of the duplicate.

1.11. +?ects of alteration on the liability of the warehouseman0

1.a. %f the alteration is %,,$+#%- @the tenor of the receipt is not changedA8 whether fraudulent

or not8 authoried or not8 the warehouseman is liable on the altered receipt according to its original

tenor.

2.b. %f the alteration is ,$+#%- but J$5"#%R+*8 the warehouseman is liable according to the

terms of the altered receipt.

3.c. %f the alteration is ,$+#%-8 J&J$5"#%R+* but %&&")+&$-S ,*+8 the warehouseman is

liable on the altered receipt according to its original tenor.

4.d. %f the alteration is ,$+#%- and (#J*J-+&$-S ,*+8 the warehouseman is liable0

@1A to the purchaser of the receipt for value and without notice of the alteration according to

the tenor of the altered receipt

@2A to the alterer8 according to the terms of the original receipt

@3A to subsequent purchasers with notice of the alteration8 according to the terms of the

original receipt

1.12. +?ects of misdescription of goods0

1.a. warehouseman is under the obligation to deliver the identical property stored with him and

if he fails to do so8 he is liable directly to the owner.


23/46

2.b. s against a bona 6de purchaser of a warehouse receipt8 the warehouseman is estopped

from denying that he has received the goods described in the receipt.

3.c. %f the description consists merely of mars or label upon the goods or upon the pacages

containing them8 the warehouseman is not liable even if the goods are not of the ind as indicated in

the mars or labels.

1.13. !rincipal "bligations of a =arehouseman0

1.a. $o tae care of the goods entrusted to his safeeeping


24/46

1.d. to the purchaser where perishable or haardous goods are sold at private or public sale

1./. %f goods are covered by a nonnegotiable receipt0

1.a. a person entitled to the delivery by the terms of the receipt8 or

2.b. one who has written authority from letter a

1.). %f goods are covered by a negotiable receipt8 a person in possession of the receipt8 the terms

of which the goods are deliverable01.a. to him or order

2.b. to bearer

3.c. indorsed to him

4.d. indorsed in blan by the person whom delivery was promised

1.1. =hen is there ,isdelivery>

=hen the warehouseman delivers the goods to a person who is not in fact lawfully entitled to

the possession of the goods because0

1.a. the person does not fall under letter / or ) above; or

2.b. the person falls under letter / or ) but prior to delivery8 the warehouseman had either0

@1A been requested by the person lawfully entitled to the delivery not to mae such delivery8

or

@2A had information that the delivery about to be made was to one not lawfully entitled to

the possession of the goods

1.1. +?ects of ,isdelivery0

$he warehouseman shall be liable for conversion to all having a right to property or

possession of the goods.

1.1. =hat happens if there is proper delivery or partial delivery but the warehouseman fails to

cancel the receipt or record on the receipt of such partial delivery>

1.a. %f goods covered by a negotiable warehouse receipt are delivered by a warehouseman but he

fails to tae the receipt and cancel it8 then he is still liable to one who purchases for value and in

good faith such receipt.

2.b. %f he maes 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 purchases for value and in good faith

such receipt.

1.1B. -awful e7cuses for refusal to deliver goods0

1.a. $he warehouseman can refuse to deliver the goods if he has acquired title or right to the

possession of the goods0

@1A directly or indirectly from a transfer made by the depositor at the time of the deposit for

storage or subsequent thereto; or

@2A from the warehousemanKs lien

1.b. %f someone other than the depositor or person claiming under the depositor has a claim to

the title or possession of the goods and the warehouseman has information of such claim8 the

warehouseman shall be e7cused from liability for refusing to deliver the goods either to the depositor

or person claiming under him until he has had a reasonable time to ascertain the validity of the


25/46

adverse claim or to bring legal proceedings to compel all claimants to interplead.

1.c. $he warehouseman will not be required to deliver the goods if such had been lost. /ut this is

without prejudice to liabilities which may be incurred by him due to such loss.

1.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 satis6ed.

1.e. %f goods have been lawfully sold or disposed of because of their perishable or haardous

nature8 the warehouseman shall not be liable for failure to deliver the goods.

1.1C. warehouseman cannot refuse to deliver goods to the depositor or to a person claiming

under him on the ground that adverse title to the goods belongs to a third person.

1.29. #ules as regards )omingling of *eposited


26/46

2.b. by causing the e7trajudicial sale of the property and applying the proceeds to the value of

the lien

3.c. by 6ling a civil action for unpaid charges or by way of counterclaim in an action to recover

the property from him

5ow is a lien lost>

1.a. when the warehouseman voluntarily surrenders possession of the goods without requiringpayment of his lien; or

2.b. when the warehouseman wrongfully refuses to deliver the goods when a demand is made

with which he is bound to comply

1.24. &egotiation and $ransfer of #eceipts

5ow do we negotiate a receipt deliverable to order>

1.a. by indorsing it in blan thereby maing it deliverable to bearer or

2.b. by special indorsement which would require further indorsements for further negotiations.

%n both cases8 the indorsements must be coupled with delivery.

5ow do we negotiate a receipt deliverable to bearer>

$here is no need to indorse for negotiation. !hysical delivery of the instrument will suGce.

/ut if the instrument is indorsed specially8 the bearer character of the receipt is destroyed

and for further negotiation8 there will be a need for indorsement.

=ho may negotiate warehouse receipts>

1.a. the owner of the receipt8 or

2.b. the person to whom possession of the receipt was entrusted to by the owner

#ights acquired by a person to whom the receipt has been negotiated0

1.a. the title of the person negotiating the receipt over the goods covered by the receipt2.b. the title of the person @depositor or ownerA to whose order by the terms of the receipt the

goods were to be delivered

3.c. the direct obligation of the warehouseman to hold possession of the goods for him8 as if the

warehouseman directly contracted with him

,ay non negotiable receipts be negotiated>

&o8 even if the receipt is indorsed8 the transferee acquires no additional right. $hat is why

they are called non negotiable receipts. /ut they may be transferred or assigned by delivery.

#ights of a person to whom a non negotiable receipt has been transferred0

1.a. the title to the goods as against the transferor2.b. the right to notify the warehouseman of the transfer thereof and

3.c. the right thereafter to acquire 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

e7ecution upon goods0

Nonnegotiable Receipt Negotiable Receipt

Prior to notification of the warehouseman by thetransferor or transferee, the warehouseman is not

he goods cannot be attached or le&ied under anexecution unless the receipt be first surrendered


27/46

bound to the transferee whose right may be

defeated by a le&y of an attachment or execution

upon the goods by the creditor of the transferor

or by a notification to such warehouseman of thesubse)uent sale of the goods.

to the warehouseman or its negotiation en(oined.

#ights of a person to whom a negotiable receipt has been transferred8 not indorsed0

1.a. the right to the goods as against the transferor

2.b. the right to compel the transferor to indorse the receipt. /ut if the intention of the parties is

that the receipt should merely be transferred8 the transferee has no right to require the transferor to

indorse the receipt.

&ote0 &egotiation taes e?ect as of the time when the indorsement is actually made.

=arranties of a person negotiating or transferring a receipt0

1.a. the receipt is genuine

2.b. he has a legal right to negotiate or transfer it

3.c. he has nowledge that would impair the validity or worth of the receipt and

4.d. he has a right to transfer the title to the goods and that the goods are merchantable

holder for security of a receipt @mortgagee or pledgeeA who in good faith accepts payment of the

debt from a person does not warrant the genuineness of the receipt not the quality or quantity of the

goods therein described.

%t is the duty of the purchaser8 mortgagee or pledgee of goods for which a negotiable receipt has

been issued to require the negotiation of the receipt to him8 otherwise his failure will have the same

e?ect as an e7press authoriation on his part to the seller8 mortgagor8 or pledgor in possession of

such receipt to mae any subsequent negotiation. $he subsequent purchaser must have taen the

receipt in good faith and for value.

bona 6de purchaser of a negotiable warehouse receipt acquires title to the goods where he

purchases from the ownerKs agent within the actual or apparent scope of his authority. %n sum8

negotiation is valid despite having been made in breach of trust.

*istinctions between a negotiable instrument and a negotiable warehouse receipt0

Negotiable Instru!ent Negotiable Warehouse Receipt

hen a negotiable instrument is altered

deliberately, it becomes null and &oid.

hen a warehouse receipt is altered, it is still

&alid but it may be enforced only in accordance

with its original tenor.3f a negotiable instrument is originally payable to

bearer, it will always remain so payable

regardless of the way it is indorsed, whether

specially or in blank.

3f a warehouse receipt, payable to bearer, is

indorsed specially, it will be con&erted into a

receipt deli&erable to order and can only be

negotiated further by indorsement and deli&ery.4 holder in due course may be able to obtain a

title better than that which the party who

negotiated the instrument to him had.

4n indorsee e&en if a holder in due course

obtains only such title as the person negotiating

has o&er the goods.he indorsement of a negotiable instrument has a

double effect. 3t is at the same time a

con&eyance of the instrument and a contract theindorser has with the indorsee that on certain

conditions, the indorser will pay the instrument if

he indorsement of a warehouse receipt amounts

merely to a con&eyance by the indorser.

4ccordingly, an indorser of a receipt shall not beliable to the holder if, for example, the

warehouseman fails to deli&er the goods because


28/46

the party primarily liable fails to do so. they were lost due to his fault or negligence.

ENERAL "ONDED WAREHOUSE LAW

ny warehouseman receiving commodities for @aA storage; @bA milling; @cA comingling must0

1.a. obtain prior license from the /ureau of )ommerce

2.b. 6le a bond in an amount equivalent to 33 1F3 D of the capacity of the warehouse against

which bond depositors may sue directly

3.c. open to the public8 no discrimination allowed

4.d. liable for double maret value should he accept goods in e7cess of the capacity of warehouse

if goods are damaged or destroyed

&ote0 for palay and corn license8 a bond with the &ational


29/46

1.. /oos a ,erchant must eep

1.a. boo of inventories and balances8 statement of assets8 liabilities and capital

2.b. journal of day to day operations

3.c. ledger for classifying accounts

4.d. copying boo for letters and telegrams; if juridical person8 include boo of minutes and stoc

and transfer boo

1.. !robative Lalue of ,erchantKs /oo

1.a. evidence against merchants themselves

2.b. in case of conEicts between 2 boos that which s properly ept prevails

3.c. if one eeps boos and the other does not and cannot e7plain why8 the former prevails

4.d. if both boos are properly ept and there is a conEict8 other proofs can be resorted to

1.B. )ommercial )ontracts by )orrespondence are perfected from the moment the o?eree

accepts the o?er8 even before nowledge of said acceptance by the o?eror. $his does not apply to

deposit8 guaranty8 sales8 loan8 agency8 partnership.

1.C. :oint ccount !artnership business arrangement whereby 2 or more persons interest

themselves in the business of another by maing contributions thereto and participating in the

results thereof

1.a. only one member is ostensible8 others are silent

2.b. no common name

3.c. only ostensible partners can sueFbe sued

4.d. no juridical personality

T$%nspo$t%tion L%0

1.1. )ontract of $ransportation contract whereby a certain person or association of persons

obligate themselves to transport persons8 things8 news8 from one place to another for a 67ed price

1.2. !arties to the )ontract of $ransportation0

1.a. 'hipper one who gives rise to the contract of transportation by agreeing to deliver the

things or news to be transported8 or to present his own person or those of other or others in the case

of transportation of passengers

2.b. )arrierF)onductor one who binds himself to transport persons8 things8 or news8 as the case

may be8 or one employed in or engaged in the business of carrying goods for others for hire

1.3. )ommon )arrier person8 corporation8 6rm8 association engaged in the business of carrying

or transporting passengers8 goods or both8 by land8 water8 air8 for compensation8 o?ering services to

the public; must e7ercise e7traordinary diligence

!rivate )arrier not engaged in the business of carrying; no public employment; undertaes

to deliver goodsFpassengers for compensation; requires only ordinary diligence

4. #equisites of )aso (ortuito

1.a. event independent of human will

2.b. occurrence maes it impossible for debtor to perform in normal manner

3.c. debtor free from aggravationFparticipation

4.d. impossible to foresee or avoid

1.. )ontributory negligence does not entitle passengers to recover moralFe7emplary damages.

1.. /ill of -ading written acnowledgment of receipt of goods and agreement to transport them


30/46

to a speci6c place to a person named or his carrier

%t is not indispensable to the creation of a contract of carriage. $he contract itself arises from

the moment goods are delivered by shipper to carrier and the carrier agrees to carry them.

$he function of the /ill of -ading0 the legal basis of the contract between the shipper and

carrier shall be the bills of lading8 by the contents of which all disputes which may arise with

regard to their e7ecution and ful6llment shall be decided8 no e7ceptions being admissible

other than forgery or material errors in the drafting thereof.

)arrierKs responsibility starts from the moment he receives unconditionally the merchandise

personally or through an agent and lasts until he delivers them actually or constructively to

the consignee or his agent.

,ere delay in the delivery of goods to consignee does not give right to refuse goods only

breach of contract8 ergo damages. %f delay is unreasonable8 then he may refuse to accept

and mae carrier liable for conversion.

1.. Lessels those engaged in navigation8 whether coastwise or on the high seas8 including

Eoating docs8 pontoons8 dredges8 scows and any other Eoating apparatus destined for the services

of the industry or maritime commerce

1.B. !ersons !articipating in ,aritime )ommerce0

1.a. ship owner andFor ship agent

2.b. captain or master

3.c. other oGcers of the vessel

4.d. supercargo

1.C. -iability of 'hip owners and 'hip agents0

1.a. civil liability for the acts of the captain

2.b. civil liability for contracts entered into by the captain to repair8 equip and provision the

vessel8 provided that the amount claimed was invested for the bene6t of the vessel3.c. civil liability for indemnities in favor of 3rdpersons which may arise from the conduct of thecaptain in the care of the goods which the vessel carried8 as well as for the safety of the passengerstransported

'hip ownerFship agent not liable for the obligations contracted by the captain if the latter e7ceeds

his powers and privileges inherent in his position of those which may have been conferred upon him

by the former. 5owever8 if the amount claimed were made use of for the bene6t of the vessel8 the

ship owner or ship agent is liable.

1.19. *octrine of -imited -iability liability of shipowners is limited to amount of interest in said

vessel because of the real and hypothecary nature of maritime law such that where the vessel is

entirely lost8 the obligation is e7tinguished.

+7ceptions0 @1A vessel is not abandoned

@2A claims under wormenKs compensation

@3A injuryFdamage due to shipownerKs fault

@4A vessel is insured

$he doctrine also applies for claims due to death or injuries to passengers8 aside from claims for


31/46

goods.

%n abandoning the vessel8 there is no procedure to be followed. $here is neither a prescriptive

period within which the ship owner can mae the abandonment. 5e may do so for so long as he is

not estopped from invoing the same or do acts inconsistent with abandonment.

1.11. #oles of the )aptain0

1.a. general agent of the ship owner

2.b. technical director of the vessels

3.c. represents the government of the country under whose Eag he navigates

1.12. -oan on /ottomry made by shipownerFship agent guaranteed by vessel itself8 repayable

upon arrival at destination

1.13. -oan %n #espondentia taen on security of the cargo repayable upon the safe arrival at cargo

destination

1.14. ccidents and *amages in ,aritime )ommerce0

1.a. verages

2.b. rrivals Jnder 'tress

3.c. )ollisions4.d. 'hipwrecs

1.1. verage0

1.a. all e7traordinary or accidental e7penses which may be incurred during the voyage for the

preservation of the vessel or cargo or both

2.b. all damages or deterioration which the vessel may su?er from the time it puts to sea at the

port of departure until it casts anchor at the port of destination8 and those su?ered by the

merchandise from the time they are loaded in the port of shipment until they are unloaded in the

port of their consignment

1.1. 'imple verage e7pensesFdamages caused to the vesselFcargo not inured to common

bene6t and pro6t of all the persons interested in the vessel and her cargo; borne by respectiveowners

1.1.


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1.1C. rrivals under 'tress arrival of the vessel at a port not of destination on account of @aA lac

of provisions; @bA wellfounded fear of seiure; @cA by reason of accident of the sea disabling it to

navigate

=hen &ot -awful0

1.a. lac of provisions due to negligence to carry according to usage and customs

2.b. ris of enemy not well nown or manifest3.c. defect of vessel due to improper repair

4.d. malice8 negligence8 lac of foresight or sill of captain

1.29. )ollision impact of 2 vessels both of which are moving

1.21. llision striing of a moving vessel against one that is stationary

1.22. )ases of )ollision0

1.a. due to the fault8 negligence or lac of sill of the captain8 sailing mate or the complement of

the vessel ship owner liable for the losses and damages @)ulpable (aultA

2.b. due to fortuitous event or force majeure each vessel and its cargo shall bear its own

damages @(ortuitousA

3.c. it cannot be determined which of the 2 vessels caused the collision each vessel shall su?er

its own damages8 and both shall be solidarily responsible for the losses and damages occasioned to

their cargoes @%nscrutable (aultA

1.23. +rror in +7tremis sudden movement made by a faultless vessel during the 3rdone ofcollision with another vessel which is at fault8 even if the said movement is wrong8 no responsibilitywill fall on said vessel

1.24. 'hipwrec denotes all types of lossF wrec of a vessel at sea either by being swallowed up by

the waves8 by running against another vessel or thing at sea or on coast where the vessel is

rendered incapable of navigation

1.2. 'alvage the compensation allowed to persons by whose voluntary assistance a ship at sea

or her cargo or both have been saved in whole or in part from an impending peril8 or such property

recovered from actual peril or loss8 in cases of shipwrecs8 derelict or recapture; a service which one

person renders to the owner of a ship or goods by his own labor8 preserving the goods or ship which

the owner or those entrusted with the care of them either abandoned in distress at sea or are unable

to protect and secure; a permit is required to engage in the salvage business

1.2. *erelict a ship or cargo which is abandoned and deserted at sea by those who are in charge

of it8 without any hope of recovering it8 or without any intention of returning it

1.2. +lements of a Lalid 'alvage0

1.a. a marine peril

2.b. service voluntarily rendered when not required as an e7isting duty or from special contract

3.c. success8 in whole or in part8 or that the services rendered contributed to such success

1.2B. )ontract of $owage contract whereby a vessel usually motoried pulls another from one

place to another for compensation. %t is a contract of services.

1.)1* Di2e$ence 3et0een To0%4e %n5 S%&+%4e:

Salvage "o#age

crew of sal&aging ship is entitled to sal&age, andcan look to the sal&aged &essel for its share

crew of the towing ship does not ha&e anyinterest or rights with the remuneration pursuant


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to the contract

sal&or takes possession and may retain

possession until he is paid

tower has no possessory lien5 only an action for

reco&ery of sum of money

court has power to reduce the amount ofremuneration if unconscionable

court has no power to change amount in towagee&en if unconscionable

C%$$i%4e o, oo5s 3/ Se% Act

1.1. =hen pplicable01.a. contracts for the carriage of goods

2.b. by sea

3.c. to and from !hilippine ports

4.d. in foreign trade

1.2. &otice of -oss or damage must be given in writing to the carrier or his agent at the port of

discharge or at the time of the removal of the goods into the custody of the person entitled to

delivery. %f the loss or damage is not apparent8 the notice must be given within 3 days of delivery.

5owever8 the carrier shall be discharged from all liability in respect of loss or damage of goods unless

suit is brought within 1 year after delivery of the goods or the date when the goods should have been

delivered. &otice of loss8 if not given8 that fact shall not a?ect or prejudice the right of the shipper to

bring suit within the 1 year prescriptive period.

W%$s%0 Con+ention

1.1. =hen pplicable0

1.a. international transport by air

2.b. transport of persons8 baggage8 or goods

1.2. -iabilities under the )onvention0

1.a. damage sustained in the event of the death or wounding of a passenger taing place on

board the aircraft or in the course of any of the operations of embaring or disembaring

2.b. loss or damage to any chec baggage or goods sustained during the transport by air

3.c. delay in the transport by air of passengers8 baggage8 or goods+numeration of causes of action as above stated is not an e7clusive list. @&orthwest irlines vs.

)ancerA

1.3. ,eaning of $ransport by ir period during which the baggage or goods are in charge of the

carrier8 whether in an airport or on board an aircraft8 or in the case of landing outside an airport8 in

any place whatsoever

1.4. ction for damages must be brought at the option of the plainti?8 either0

1.a. before the court of the domicile of the carrier;

2.b. court of principal place of business of carrier;

3.c. court where he has a place of business through which the contract has been made;

4.d. before the court at the place of destination

1.. )onvention provides for a limitation of liability0

1.a. for each passenger limited to 128999 francs

2.b. for goods and checed in baggage limited to 29 francs per ilogram

3.c. for hand carry limited to 8999 francs per passenger

=hen can you not avail of this limitation>

@1A willful misconduct


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@2A default amounting to willful misconduct

@3A accepting passengers without ticet

@4A accepting goods without airway bill or baggage without baggage chec

1.. $he right to damages shall be e7tinguished if an action is not brought within 2 years from the

date of arrival at the destination8 or from the date on which the aircraft ought to have arrived8 or

from the date on which the transportation stopped.

1.. &otice requirement0 damage to baggage 0 within 3 days from receipt

damage to goods0 within days from receipt

delay0 within 21 days from receipt

(ailure to 6le written notice8 no action shall lie against the carrier8 save in the case of fraud on his

part.

1.B. Notice Re6'i$e.ents:

CO$S% Code of Co!!erce Warsa# Conventionloss'damage apparent protest at time of receipt

of goods

protest at time of receipt

of goods

loss'damage notapparent

protest within " daysfrom deli&ery

protest within 2+ hoursafter receipt

damage of baggage protest within " days

from receiptdamage of goods within days from

receipt

delay within 21 days fromreceipt

P'3&ic Se$+ice Act

1.1. +very person that may own8 operate8 manage8 control in the !hilippines8 for

hireFcompensation with generalFlimited clientele whether permanent8 occasional8 accidental8 and

done for a general business purpose any common carrier8 shipyard8 electric light8 heat and power

and public utility.

1.2. !ublic Jtility business or service engaged in regularly supplying the public with some

commodity or service of public consequence such as electricity8 gas8 water8 transportation8 telephone

or telegraph service.

1.3. !rior "perator #ule before permitting a new operator to invade the territory of another

already established8 the prior operator must be given an opportunity to e7tend its service to meet

the public needs in the matter of transportation.

1.4. !rior pplicant #ule presupposes a situation where two interested persons apply for a )!)

in the same community over which no person has yet been granted a )!) to operate. %f both

applicants equal8 then the applicant who applied 6rst will be given the )!).

1.. Distinctions 3et0een CPCs %n5 CPCNs

Certificate of Public Convenience Certificate of Public Convenience and Necessity

any authori6ation to operate a public ser&iceissued by the appropriate go&ernment agency

issued by the appropriate go&ernment agency toa public ser&ice to which any political


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subdi&ision has granted a franchise

an authori6ation issued by the proper go&ernment

agency for the operation of public ser&ices for

which no franchise, either municipal orlegislati&e is re)uired by law

an authori6ation issued by the proper go&ernment

agency for the operation of public ser&ices for

which a franchise is re)uired by law

1.. Re6'i$e.ents o, CPC %n5 ,$%nc7ise:

1.a. (ilipino citienship2.b. 6nancial capacity

3.c. public convenience

Co$po$%tion L%0

1.1. *octrine of )orporate "pportunity a director is made to account to his corporation8 gains

and pro6ts from transactions entered into by himFanother competing corporation in which he has

substantial interest8 which should have been a transaction undertaen by the corporation. $his s a

breach of 6duciary relationship.

1.2. *octrine of !iercing the Leil of )orporate +ntity it is to disregard for justi6able reasons by

the state the 6ction of juridical personality of the corporation separate and distinct from the persons

composing it

1.3. *e :ure )orporation corporation formed with all the requirements of law

1.4. *e (acto )orporation corporation defectively formed from a bona 6de attempt to

incorporate under the e7isting law and e7ercises corporate powers

1.. )orporation by +stoppel a group of persons which holds itself out as a corporation andenters into a contract with 3rdpersons on the strength of such appearance cannot be permitted todeny its e7istence in an action under said contract

1.. )orporation by !rescription body not lawfully organied as a corporation but has been

recognied by immemorial usage as a corporation with rights and duties maintainable by law @e7.

#oman )atholicA

1.. $rust (und *octrine the subscribed capital stoc of the corporation is a trust fund for the

payment of debts of the corporation which the creditors have the right to loo up to satisfy their

credits. )orporations may not dissipate this and the creditors may sue the stocholders directly for

their unpaid subscriptions

1.B. Loting 'hares

1.a. (ounders 'hares given rights and privileges not enjoyed by owners of other stocs; right to

voteFbe voted in the election of directors shall not e7ceed years

Non-8otin4 S7%$es

1.a. !referred 'hares issued only with par value; given preference in distribution of assets in

liquidation and in payment of dividends and other preferences stated in the articles of incorporation2.b. #edeemable 'hares e7pressly provided in articles; have to be purchasedFtaen up upon

e7piration of period of said shares purchased whether or not there is unrestricted retained earnings

3.c. $reasury 'tocs stocs previously issued and fully paid for and reacquired by the

corporation through lawful means @purchase8 donation8 etc.A

1.C. +7ceptions where holders of nonvoting shares may vote0

1.a. amendments of articles of incorporation

2.b. adoptionFamendment of bylaws


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3.c. increaseFdecrease of bonded indebtedness

4.d. increaseFdecrease of capital stoc

.e. saleFdisposition of allFsubstantially all corporate property

.f. mergerFconsolidation of corporation

.g. investment of funds in another corporationFanother business purpose

B.h. corporate dissolution

1.19. !referred )umulative !articipating 'hare of 'toc share entitling its holder to preference in

the payment of dividends ahead of common stocholders and to be paid the dividends ahead of

common stocholders and to be paid the dividends due for prior years and to participate further with

common stocholders in dividend declarations

1.11. !romotion 'toc for 'ervices #endered !rior to %ncorporation +scrow 'toc stoc depositedwith a 3rdperson to be delivered to stocholderFassignor after complying with certain conditions usually payment of full subscription price

1.12. "verissued 'toc stoc issued in e7cess of authoried capital stoc; null and void

1.13. =atered 'toc stoc issued gratuitously8 moneyFproperty less than par value8 services less

than par value8 dividends where no surplus pro6ts e7ist

1.14. )erti6cate of 'toc written acnowledgment by the corporation of the stocholderKs interest

in the corporation. %t is the personal property and may be mortgagedFpledged. $ransfer binds the

corporation when it is recorded in the corporate boos. stocholder who does not pay his

subscription is not entitled to the issue of a stoc certi6cate. $he total par value of the stocs

subscribed by him should 6rst be paid.

1.1. )hattel mortgage of shares registered with the #egistrar of *eeds need not be registered in

corporate boos to bind third parties because corporate boos only cover absolute transfers. /ut the

pledgeeFmortgagee may not have voting rights unless stated in the contract and registered in the

corporate name.

1.1. ,ethods of )ollection of Jnpaid 'ubscription1.a. call8 delinquency and sale at public auction of delinquent shares

2.b. ordinary civil action

3.c. collection from cash dividends and other amounts due to stocholders if allowed by by

lawsFagreed to by him

1.1. corporation can reacquire stocs in the following cases0

1.a. eliminate fractional shares

2.b. corporate indebtedness arising from unpaid subscriptions

3.c. purchase delinquent shares

4.d. e7ercise of appraisal right

1.1B. #ight of ppraisal1.a. amending articles8 changing8 restricting8 enlarging stocholderKs rightsFe7tending8 shortening

corporate life

2.b. saleFdisposition of allFsubstantially all of corporate assets

3.c. merger and consolidation

4.d. investment of funds in another corporationFfor a di?erent purpose

1.1C.


37/46

3.c. treasurerKs aGdavit false

4.d. noncompliance with required (ilipino stoc ownership

1.29. )orporation must organie within 2 years from issuance of certi6cate of incorporation.

Ho0 to o$4%ni9e

1.a. adoption of bylaws

2.b. election of /oard of *irectors3.c. election of oGcers

/ut from issuance of certi6cate8 it acquires juridical personality

1.21. ,erger one corporation absorbs the other and remains in e7istence while the other is

dissolved

1.22. )onsolidation a new corporation is created and the consolidating corporations are

e7tinguished

1.23. $heory of


38/46

may deem 6t. )umulative voting is a matter of right in a stoc corporation. %n a nonstoc

corporation8 it cannot be utilied unless allowed by the bylawsFarticles

1.31. $he power of removal of directors that may be e7ercised with or without cause cannot apply

to the director representing the minority shareholders. 5e may only be removed with cause.

1.32.


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@A recovery of misdelivered property

@A where the unlicensed foreign corporation has a domestic corporation

1.3B. #eligious )orporations

1.a. )orporation 'ole special form of corporation; associated with the clergy and consists of 1

person only and his successors; incorporated by law giving them legal capacity and advantage

2.b. )lose )orporations one whose articles provide that its shares shall not be held by morethan 29 persons; its issued stoc shall be subject to one or more restrictions on transfer and shall not

be listed in any stoc e7changeFmae public o?ering

3.c. &onstoc )orporation one where no part of its income is distributable to its members and

shall be used in furtherance of the purpose of which it was organied

1.3C. '+) :urisdiction

1.a. original and e7clusive jurisdiction

@1A fraudulent devices and schemes employed by directors detrimental to public interest

@2A intracorporate disputes and with the state in relation to their franchise and right to e7ist

as such

@3A controversies in the election8 appointment of directors8 trustees8 etc.

@4A petition to be declared in a state of suspension of payments

1.b.


40/46

.e. issued by receiverFtrustee of an insolvent approved by the court

.f. policy of insurance issued by insurance corporation supervised by the insurance commission

.g. securityFrightFinterest in real property including subdivision lotFcondominium supervised by

the ,inistry of 5uman 'ettlements

B.h. pension plans regulated by /%#F%nsurance )ommission

1.3. +7empt $ransactions

1.a. judicial sale by e7ecution8 etc. in insolvency

2.b. sale of pledged propertyFforeclosed property to liquidate an obligation

3.c. isolated transactions on securities done by ownerFagent

4.d. stoc transfers emanating from mergers and consolidations

.e. preincorporation subscription

.f. securities issued by public service operator to broaden equity base

1.4.


41/46

1.1. =hat =ors are not !rotected0

1.a. any idea8 procedure8 system8 method or operation8 concept8 principle8 discovery8 or mere

data as such8 even if they are e7pressed8 e7plained8 illustrated or embodied in a wor; news of the

day or other miscellaneous facts8 having the character of mere items of press information8 or any

oGcial te7t of a legislative8 administrative or legal nature as well as any oGcial translation thereof

2.b. wors of the government

3.c. statutes8 rules8 and regulations of government agencies and oGces4.d. speeches8 lectures8 sermons8 addresses and dissertations8 pronounced or rendered in courts

of justices or nay administrative agencies in deliberative assemblies and meetings of public

character

1.2. (air Jse of a )opyrighted =or is not %nfringement

1.a. for criticism8 comment8 news reporting8 teaching8 research8 scholarship8 and similar purposes

2.b. decompilation0 the reproduction of the code and translation of the forms of the computer

program with other programs

1.3. (actors to )onsider in *etermining (air Jse0

1.a. purpose and character of the use8 including whether such use is of a commercial nature or

for no pro6t or educational purposes2.b. nature of the copyrighted wor

3.c. amount and substantiality of the portion used in relation to the copyrighted wor as a whole

4.d. e?ect of use upon the potential maret for a value of the copyrighted wor

1.4. $erms of the !rotection1.a. copyrighted wor0 lifetime of creator plus 9 years after death @to be computed on the1stday of :anuary of the year following the deathA

2.b. performances not incorporated in recordings0 9 years from end of year in which the

performance too place

3.c. sound or image and sound recordings and performances incorporated therein0 9 years from

end of the year in which the recording too place

4.d. broadcasts0 29 years from the date the broadcast too place

1.. #emedies for %nfringement

1.a. injunction

2.b. actual damages8 including legal costs and other e7penses8 as he may have incurred due to

the infringement as well as the pro6ts the infringer may have made due to such infringement

3.c. impounding of articles during pendency of the action

4.d. destruction of all infringing copies andFor devices

.e. moral and e7emplary damages

1.. )riminal !enalties

1.a. imprisonment of 1 to 3 years plus 6ne of !98999 to !198999 for the 6rst o?ense

2.b. imprisonment of 3 years and 1 day to years plus 6ne ranging from !198999 to !998999for the 2ndo?ense3.c. imprisonment of years and 1 day to C years plus 6ne of !998999 to !189998999 for the3rdFsubsequent o?enses

%& -- )'+'8 subsidiary imprisonment in cases of insolvency

1.. !resumptions0

1.a. !resumption of copyright in the wor of other subject matter to which the action related

2.b. !lainti? is presumed to be the owner of the copyright


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3.c. $he natural person whose name is indicated on a wor in the usual manner as the author

shall8 in the absence of proof to the contrary8 be presumed to be the author of the wor. $his is

applicable even if the name is a pseudonym8 where the pseudonym leaves no doubt as to the

identity of the author.

1.B. !rescription0 &o damages may be recovered after 4 years from time the cause of action

arose.

P%tents

1.1. !atentable %nventions any technical solution of a problem in any 6eld o human activity that

is new8 involve an inventive step and is industrially applicable shall be patentable. %t may be or may

relate to as product8 or process or an improvement of any of the foregoing.

1.2. &on!atentable %nventions

1.a. discoveries8 scienti6c theories and mathematical methods

2.b. schemes8 rules and methods of performing mental acts8 playing games or doing business8

and programs for computers

3.c. methods for trea

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Admu Barops Commercial Law

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