148116404 Review Abella Comm PDF (1)

8/17/2019 148116404 Review Abella Comm PDF (1)

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Commercial Law ReviewDean Eduardo Abella

MORTGAGE

Introduction- Under the NCC (Book V), there are accessory contracts securing principalobligations (special contracts). These include pledge, mortgage, antichresis,guaranty, and suretyship.

Definition- a mortgage is a contract here the property is recorded (in the register o!deeds o! the city and"or pro#ince) to secure a principal obligation

- e$ample% &! a mortgaged property is in Batangas City, it must beregistered in both the City and 'ro#ince o! Batangas (Batangas City isthe pro#incial capital).

- an accessory contract, collateral or security !or an obligation

They are #alid only i! there is a principal contract.

Basic Principles.) ccessory Contract * only e$ists i! there is a principal contract

2.)+ortgagor is the oner o! thing mortgaged

3.)+ortgage is e$tinguished i! the principal obligation is e$tinguished

Scope: &t may be constituted o#er%() 'ersonal 'roperty (Chattel +ortgage)() eal 'roperty (eal state +ortgage)

CM REM

/b0ect 'ersonal property eal property1cope $isting and #alid obligations2 &ncludes !uture obligations

&ncludes #oidable, unen!orceable, rescissible and naturalobligations

3oreclosure $tra0udicial only 4 or 4udicial4 3oreclosure No right o! redemption ight o! edemption

egist ra tion 5 o! mortgagor 6s residence 7location o! property 7 8T/(motor #ehicles)

eturn o! $cess Not re9uired e9uiredClaim !or5e!iciency

- No reco#ery under the ecto8a(NCC :;: on installment saleo! personal property here themortgage is constituted o#er theob0ect o! sale to secure thepayment o! the purchase price).3or ecto 8a to be applied,

mortgage must be constitutedo#er the ob0ect o! the installmentsale.

- eco#ery i! not under theecto 8a3/+% 'rincipal 5ebtor % /bligation is solidary ith the+ortgagor

CHATTEL MORTGAGE

Governing Law: ct No.


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Commercial 8a e#ie5ean duardo bella3irst and 1econd 1emester =-=>

&n 4urisprudence%&n one case there as a house that as sub0ect to a chattel mortgage. Thereason as that the land belonged to one person and the house to another.The Court ruled that as beteen the parties there is a #alid chattel mortgageas under NCC


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b. Notice o! uction 1ale by the 1heri!!"N' a!ter the receipt o!the petition- 'osted in at least > public places,e.g. City"+unicipal @all, Barangay @all, @all o! 4ustice

- there is no la that re9uires the sheri!! or np tomake sure that the notices stay here postedQ: &! somebody took the posted notice, illproceeding be in#alidatedAA: No, it ill not, posting is enough.

- Copy !urnished to the mortgagor at least = days be!orethe auction sale, otherise the sale ould be #oid

c. 1ale to the @ighest Bidder - &! sold to the mortgagee, he has no obligation to deli#er anyamount- &! sold to a third party, the latter deli#ers the amount o! the bid to1"N'

d. Certi!icate o! 1ale

- hoe#er is the highest bidder gets certi!icate o! sale !romsheri!! or notary.

H'(o)*e)ical Q: +ortgagor did not see necessity o! recording release o!mortgage. ent to get a second loan !rom mortgagee. @e merely returned therelease o! mortgage, is the mortgage re#i#edAA: No, obligation it secured is already e$tinguished

REAL ESTATE MORTGAGE

Governing Law: ACT +#+$

&t is a special la creating the right o! the mortgagee to !oreclose the +e$tra0udicially

ow to e!tra"udiciall# foreclose a R$% >>< re!ers to the ule >? o! the ules o! Court

. The +ortgagor must e$pressly authoriFe the mortgagee to sell themortgaged property in case o! de!ault, either in the deed o! mortgageor in a separate instrument- G+'8% &n case o! de!ault, the bank shall be authoriFed to sell,as it is hereby authoriFed to sell.

- &N1U33&C&NT% Banks use printed deeds o! + ith the !olloingpro#ision% H&n case o! de!ault, the Bank can e$tra0udicially !oreclosepursuant to ct No. >>>< is not enough.- Thus no, in case o! de!ault, the bank must be e$pressly authoriFedto sell the property mortgaged.

- Note% 4ust copy the ording"!orm o! the la

. The mortgagee must e$ecute a #eri!ied petitionQ: @o is it initiatedAA: 'repare a #eri!ied petition to !oreclose the +. The sheri!! or anotary public may handle this. The mortgagee himsel! may do it, but itis o!ten the sheri!! or notary public.

- here !iled% 1heri!! or Notary public

- C31 is not re9uired- Note% &t is ironic that the remedy is supposed to be e$tra-0udicial orout o! court and yet sheri!! is not alloed to accept the petition unless

the court !ees re9uired are paid (1C Circular +arch ===)

>. e!erral and 'ayment o! 3ees

:. Notice o! uction 1ale- By hom &ssued% 1heri!!, N'- here% here the property is situated- @o%a) Notice in at least three public places in City or 'ro#ince here theproperty is locatedb) 'ublication in a nespaper o! general circulation, once a eek !orto consecuti#e eeks

- N/T% 'ublisher must be accredited by the court andassigned the publication by ra!!le

- "houl* notice be furnishe* to the mortgagor No because +ublication is constructi-e notice to all .This is o++ose* tothe &/ Foreclosure of Chattel 0ortgages )here notice to themortgagor is require*1

- JT% C/CT 51C&'T&/N /3 '/'T, /therise thenotice ould be #oid

- @o to 'ro#e% sk !or a Certi!icate o! Notice or !!ida#it o!'ublication and a copy o! issue o! the nespaper

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.) Ta$es and charges paid by the highest bidder :.) M interest per month on the ta$es and chargespaid

The 1upreme Court construed this as M per annum.

- To )hom must the amount be ten*ere*:@ighest bidder or 1heri!!"N' conducting the auction, hoe#er is lessintimidating

If ten*er is refuse* % the remedy is speci!ic per!ormance. The amountmay not be consigned because !or consignation to be alloed, theremust be a debt due.

N/T% 'resent the Certi!icate o! Title !rom the egister o! 5eedsith the annotation o! the Certi!icate o! 1ale.

- What is the Certificate of Re*em+tion: &t cancels the certi!icate o!sale

- When is the Re*em+tion Perio*:D% y !rom registration o! certi!icate o! sale (N/T m)

% ?=d or be!ore the registration o! tile o#er the property,

hiche#er comes !irst &3 the mortgagor is a 0uridical personand the mortgagee is a bank (Deneral Banking ct)

- &s the right o! redemption ai#ableA N/. $press ai#ers ithin theperiod o! redemption is not alloed because it is contrary to publicpolicy. @/V, ai#er may be done by not e$ercising the right.

- &s it trans!erableA 1, either onerously or gratuitously.edemption is a real right o#er real property. The right may beinherited by succession

?. c9uisition o! Title

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- When to obtain title to the +ro+erty: hen the period o! redemptione$pired ithout anyone redeeming the property

- (o): aysa. @a#e the 1heri!!"N' issue a 3inal Certi!icate o! 1aleb. $ecute an !!ida#it o! Non-edemption, hich is less

e$pensi#e than the !irstc. 'ay B& the ta$es upon the e$piration o! the redemption

period

- Why *o it: The B& re9uires% () certi!icate authoriFing registrationand () the ta$ clearance certi!icate

a. 51T * ithin !i#e days !rom the month !olloing the e$piry o!the redemption period

b. CDT " ithholding Ta$es * >= days !rom e$piration o! theredemption period

c. VTd. Trans!er Ta$es o! 8DUs

- 'ay the amount o! ta$es to the 8DU

- Update all realty ta$es- /btain a Clearance !rom the local treasurer - Do to the 5 !or the issuance o! a TCT

- What is the ta2 base:Be!ore, it as the bid price.

By reason o! a B& Circular dated 4uly =, the ta$ base is no thehighest o!%(a) Bid 'rice or (b) +arket Value in the Ta$ 5eclaration or (c) B& Valuation

=. 'ossession o! the 'roperty- (o): $ parte petition !or the &ssuance o! a rit o! 'ossession

- &t is in the nature o! a motion- Nature:Deneral ule% +inisterial duty o! the court BUT i! !iled be!ore the endo! the redemption period, a bond is re9uired.$ception% Not ministerial i! there is another person ith a better right.$. 8essee- R&'3: D3 o! pplicantO Thus, the applicant must in9uire into the (a)TCT and (b) rights o! the current possessor to 9uali!y as a buyer ingood !aith2 otherise, he ill ha#e no right o! possession.

&ew 'u#er in good faith doctrine% 8ooking at certi!icate o!title is no longer enough2 you must look at the right o! theperson in actual possession o! the property. 3ailure to do sodoes not 9uali!y one as a buyer in good !aith.

Ca,e% 'erson borroed !rom bank. 'arents e$ecuted a eal state +ortgage.

Borroer issued post-dated checks. The checks ere dishonored. The banksued the borroer !or B'.emedies !or bank are as !ollos%

.) Ci#il Collection.) B'>.) 3oreclosure

3iling o! B' is an abandonment o! the mortgage.&! buyer o! mortgaged land already ons the land and the prior oner does notant to lea#e, !ile an e$ parte 'etition !or &ssuance o! rit o! 'ossession.

-rac)ical Ma))er,: ttach all certi!ied true copies o! documents in the petition

* title, deed o! mortgage, !inal certi!icate o! sale, B& clearance (ta$ clearance,certi!icate authoriFing registration)

-rac)ical Ma))er,: hen egister o! 5eeds issues Certi!icate o! Title, heissues at least , the original and the oner6s copy.There are at least because co-oners may each ant a copy o! thecerti!icate o! title. &n hich case, the co-oners duplicate should be preparedith the original. &! you are buying !rom co-oners, you must get all othercopies so that they may be annotated.

emedy or the issuance o! the rit o! possession is the same in e$tra0udicial!oreclosure, 0udicial !oreclosure and e$ecution sale. There is no remedy i! athird party has a better right.

Q: Can '5Cs be used as chattel mortgaged propertyAA: 8egally, yes.


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DOC.ME!T OF TITLE

Governing Laws:

NCC (1ales)Code o! Commercearehouse eceipts ct

Definition&t is an instrument or document here the bailee acknoledges goods andcontains an undertaking to deli#er the goods

- 5&33 ith &nstrument under the Negotiable &nstruments 8a) Co#erage% NCC co#ers D//51 to be transported or sa!ely kept.N&8 co#ers sums certain in money, e$cept other properties that mayalso be co#ered.) +odes o! ndorsement- &n 5Ts, endorsements must be &N B8CE or 1'C&88

- &n N&s, it may be blank, especially, conditional, 9uali!ied, orrestricti#e

&2am+les of 3ocuments of Title- Bill o! 8ading, issued by common carriers (Code o! Commerce)- arehouse eceipt, issue by arehousemen (under the arehouseeceipts ct and the Deneral Bonded arehouse ct).- Juedan, a arehouse receipt that co#ers rice, sugar, or tobacco

Who issues D(s:

Common carriers

arehousemen

Forms of D(s * to !acilitate trade

. Negotiable &3 it contains ords o! negotiability, i.e. to order, to bearer,or those ith e9ui#alent ords or phrases (e.g. holder, possessor)

. Non-Negotiable

What if it contains 4*eli-er to bearer5 )ith a re* stam+ in big font of4N#NN&6#TIA!$&5: &t is negotiable e#en i! the bailee intends it tobe non-negotiable, as long as it contains ords o! negotiability.

ow to &egotiate Documents of (itle

1. To /rder &nstruments% &ndorsement (Blank or 1pecial) and 5eli#ery. To Bearer% 5eli#ery

&! /riginally To Bearer, then specially endorsed and deli#ered, thetrans!eree must also negotiate by endorsment and deli#ery.N#T&: /nce it has been especially endorsed, negotiate byendorsement and deli#ery all the time therea!ter GC'T &3 the last endorsement is in blank, then 0ust deli#er itsubse9uently

3IFF&R&NC& WIT( NI: ndorsement in a bearer N& has no e!!ect.

/ILL OF LADI!G

Governing Law: Code o! Commerce

)inds:

Bill o! 8ading * Common carrier o! goods by ater

aybill * by trucks on land

iraybill * by aircra!ts, airlines

Formal Re*uirements. &t must be printed. &t must contain the complete name and address o! the printer >. &t must contain the telephone number o! the printer.:. &t must contain the T&N Number o! the printer.

+ontent of B,L (Code o! Commerce)

1.)Complete name and address o! consignor"shipper.

2.)Complete name and address o! consignee.

3.)Complete name and address o! the carrier"shipee (NCC).

4.)Complete description o! goods including marks and markings, e.g.Numbers on crates, Names in pomelo crate !rom 5a#ao


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$ffect of Issuance of a B,L: 5isputable presumption that the carrier recei#edthe goods. &t is not conclusi#e.

Purposes of Documents of (itle and Bills of Lading

1.) s a eceipt

2.) s a ritten Contract beteen parties

3.) s a 1ymbol, standing !or the goods mentioned therein (1ymbol)

AREHO.SE RECEI-T

Governing Law: DN8 B/N55 @/U1 CT go#erns theconduct and business o! arehousing

Who issues WR: arehouseman.

Re*uirements for Issuance

1. nnual license !rom 5T& 5irector.

2. Bond must be posted be!ore the issuance o! a license, to anser !ordamages to goods su!!ered hile the goods are in storage. The bondis coterminous ith the license.

3. &nsurance against !ire o#er all the goods stored in the arehouse.

Is there a +rescribe* minimum area for )arehouses N/N.

What is its *ifference )ith a Customs!on*e* Warehouse: @ is licensed andbonded, hile a customs-bonded @ is a !acility by importers o! ra materials.

What if a )arehouseman issues more co+ies of W( recei+ts: @e must indicate

that it is only a copy and not the original. /therise, he is liable to a T' horecei#e it in D3 and !or #alue&! a arehouseman issues more than one copy o! a arehousereceipt, he should indicate on copies that they are merely copies andnot the original. &! he !ails to indicate it as a copy and a person in good!aith recei#ed the receipt !or #alue, he ould be entitled to the goodsas i! his arehouse receipt ere original.

&egotia'ilit# of W Receipts arehouse receipt is negotiable or non-negotiable.

&ffect of Negotiation: Trans!eree ac9uires the direct right to recei#e goods !romthe arehouseman. @oe#er, the right is conditioned upon the !olloing%

.) 'erson claiming the goods must !irst satis!y the liens o! thearehouseman.

.) @e must surrender the original to the arehouseman.

3.)@e must e$press his illingness to sign the receipt upon deli#ery o!the goods to him.

Liens of the WarehousemanNature: 'ossessory and ai#able by parting ith the goods

.) 1torage !ees

2.)/ther arrangements ith the depositor, e.g. premium and interest !oradditional insurance co#erage

3.)Cost o! packaging and repackaging (though the latter is illegal)

Q% hat should arehouseman do ith the original receiptAA% Cancel it. &! he !ails to cancel it and the receipt !alls into the hands o!someone in good !aith and ho got it !or #alue, arehouseman is liable to the

person.

Q: +ay goods co#ered by a document o! title be le#ied upon on attachment !ore$ecutionAA: es.

$ffect of Loss of -riginal Receipt- The claimant must !ile an action in court to pro#e his onership or right o#erthe goods. &n practice, the claimant merely posts a bond ith thearehouseman.- &t ould be the claimant6s problem because he cannot oblige thearehouseman to deli#er the goods ithout the original receipt- To protect the arehouseman, the claimant must post a bond !or the #alue o!the goods.

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TR.TH I! LE!DI!G ACT

Purpose of the law % To enable persons borroing money or buying goods oninstallment or credit to kno the actual cost in money o! the credit.

istor#: hen cost o! money had gone beyond a pro!itable rate and theinterest as also sub0ect to the usury la, banks thought o! other ays tomake money. Banks started charging di!!erent !ees to a#oid the usury la. &ne!!ect, e#ery mo#e by the bank had a price ('rocessing !ee, application !ee,appraisal !ee). Thus, the la obliges lenders to !ully disclose all chargesbe!ore the consummation o! the transaction.

ow: Di,clo,ure S)a)emen)"'rior to consummation, person lending money or selling on credit"installmentshould deli#er to the debtor a ritten statement shoing the breakdon o! thecharges. Note that this is already a!ter a meeting o! the minds. (1ection :)

Content of 3isclosure "tatement .) Cash 'rice less don payment P amount to be !inanced.) 'ayable in GG installments>.) Total amount to be paid in installments:.) Total Cost

5.)/ther charges

Regulating Bod#: +onetary Board o! the B1' is the body that o#ersees theimplementation o! the la. Violation o! the ct is a crime2 penalty is !ine o!'== to '=== and imprisonment o! at least month but not more than <years.

Ca,e: 1olidbank e$tended a credit line o! '==k to a client, not 0ust as anordinary loan but also as a standby source o! !unds hich earns no interestunless it is dran. hen the borroer dras money, the credit diminishes andhe pays only hat is actually recei#ed. But, there ere accumulated ser#ice!ees hich ere not made a#ailable to the borroer.

Credit 8ine * hen bank sets aside a certain amount !or client thatclient may dra on at any time.

1C did not allo 1olidbank to collect amount because the additional chargesere not indicated in the promissory notes.

&n ==?, there as another case here the !ees ere included in thepromissory notes but there as no deli#ery o! disclosure statements, collectionstill not alloed.

/.L0 SALES LA

Purpose of the law: To protect creditors !rom !raudulent schemes o! their

debtors

.cts covered and regulated %

1. 1ale, assignment, mortgage, or other !orms o! trans!er o! all orsubstantially all o! the stocks o! goods, ares or merchandise otherthan in the ordinary course o! business

2. 1ale, assignment, mortgage, or other !orms o! trans!er o! all orsubstantially all o! the businesses o! a person, the business"esthemsel#es

3. 1ale, assignment, mortgage, or other !orms o! trans!er o! all orsubstantially all o! !i$tures and e9uipment used in the conduct o!business

W(7 All or "ubstantially All: These are e$traordinary trans!ers

Note: Not e#ery sale is co#ered. 1ales in the ordinary course o! business isnot co#ered, e.g. &! all goods ere sold hile engaged in the holesalebusiness.

Re*uirements% +ust be strictly complied ith2 /T@&1, Void sale

1. Noti!y the creditors in riting o! the intended trans!er at least = daysbe!ore the intended transaction

2. 5eli#er to the prospecti#e trans!erees, a sorn statement stating the!ull names and addresses o! creditors and the amounts due them.

3. 3urnish a copy to the 5irector o! the Bureau o! Commerce"Bureau o!5omestic Trade a copy o! the sorn statement

Note: Trans!er ithout compliance ith re9uirements is #oid e#en i! thebuyer acted in D32 the buyer is considered a trustee.

$!emptions from Re*uirements%. 4udicial sales (e$ecution, assignee in insol#ency). 1ales or trans!ers o! property e$empt !rom e$ecution>. 1ale by manu!acturer o! his on products:. ritten ai#er by the creditors

1C% 1ale o! a !oundry shop (@orseshoe maker"metal !abricator)

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SECREC1 OF /A!0 DE-OSITS2R"A" !o" #3%$4

Purpose of the law % To encourage people to deposit their money in banks !orthe purpose o! promoting the national economy.

Scope: &ncludes in#estments in go#ernment securities

Reserve Re*uirementsWhat: 'ercentage o! deposit recei#ed by the bank is to be deposited ith theB1'

(o) much: 'ercentage depends on the deposit liabilities

1. @ighest * Checking. +edium- 1a#ings>. 8o * Time 5eposit

Q: @o does B1' use reser#e re9uirements to manage money supplyA hyis there a need to manage money supplyAA: &! there ere a lot o! money in circulation, prices ould go up. The reser#ere9uirement is also there in order !or the B1' to ha#e money to lend to banks.

R$DIS+-/&(I&G F.+ILI(0 - 'romissory notes are used as security

Note: &t is illegal !or a bank o!!icer or employee to disclose any in!ormationregarding bank deposits and go#ernment securities.

&2ce+tions%

1. ritten authority !rom depositor himsel! * 1el! e$planatory

. &n case o! impeachment * e$. Clarissa /campo3. Court order in case o! bribery, dereliction o! duty o! public o!!icer,

#iolation o! nti-gra!t and Corrupt 'ractices ct, e$tending to thespouses and relati#es, close !riends and associates in cases o! DC'

4. here deposit is the sub0ect matter o! litigation * +ust be readliterally, e.g. settlement o! estate2 i!e channels !unds out o! acorporation

) To engage in allied enterprises:) To e$ercise the poers o! a corporation

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s a matter o! right, only commercial banks should accept deposits in checkingaccounts"current accounts"commercial accounts"demand deposit

.) +ay issue letters o! credit.) 8end money>.) Trading o! go#ernment securities:.) 3oreign transactions


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I,lamic /an6,

Note: There is only one, oned by the go#ernment o! the 5B' as a controlling1@.

Why: There are no interests earned on deposits because it is consideredimmoral, but there may be pro!it sharing.

LE!DI!G MO!E1

Is the ban9 allo)e* to len* any amountNo. The amount o! money lent must be secured by titled real properties and itmust be sub0ect to the 1ingle Borroer6s 8imit, the ma$imum amount hichany borroer may borro. 5/1& may borro !rom banks on the conditionthat it is appro#ed by the B/5 in a meeting o! the B/5 ith 9uorum, ithoutcounting the o!!icer in#ol#ed in the 9uorum and appro#al #otes, unless the loan

is part o! a package, e.g. !ringe bene!its.

What is the amount of the "!$: =M o! net orth o! the bank but may beincreased by =M o! its net orth pro#ided that the additional liabilities o! anyborroer are ade9uately secured by trust receipts, shipping documents,arehouse receipts or other similar documents trans!erring or securing titleco#ering readily marketable, non-perishable goods hich must be !ully co#eredby insurance.

3o the "!$ an* 3#"RI inclu*e legitimate interests only No, it includesillegitimate interests.

What is the reme*y for "!$: S'ndica)ed Loan, here loans !rom se#eral

banks are obtained.

If secure* by real +ro+erty: 8oans may be secured by eal 'roperty2 hoe#er,according to 1ection >L, the ma$imum amount that may be lent is L


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Under the Deneral Banking ct, bank should cause to be published at leaste#ery 9uarter their !inancial statements.

Clearin8 Hou,e * Bangko Central 8ending !acility !or purpose o! collectingchecks dran on one bank but deposited in another.

$. B'& Eatipunan depositor deposited checks !rom other banks such as+etrobank and llied Bank.

Clearing house is here banks sap checks they recei#ed dran on otherbanks. 'hysically there is no cash in#ol#ed, but transactions recorded.

Under present rules, i! ithin : hours a bank dishonors check, check shouldbe returned or else considered cleared.

Bank cannot declare di#idends i! clearing house account are o#erdran. Thereis only mo#ement o! cash i! clearing house account is o#erdran.

-HILI--I!E DE-OSITI!S.RA!CE CODE

istor#&n the ?K=s to the L=s, there ere so many bank closures leading to the losso! the public6s con!idence. To restore !aith in banking that is #ital to theeconomy, the Uni!orm Currency ct as repealed and the '5&C as created.

What is insured: 1a#ings, current, time deposits (credit-debtor relationship).The '5&C insures only deposits in sa#ings, current or time accounts, not anyother in#estments e#en i! made ith or through a bank. &t e$cludes money

market transactions, and marginal deposits (amount re9uired to open a 8"C).

Q: hy are money market placements not insured in '5&CAA: They are not deposits but in#estments. There is no debtor-creditorrelationship.

Mone' Mar6e) -lacemen), * transactions through bank but bank isnot borroer. Borroers are other corporations that need to borro!or a short time. eason !or +oney +arket 'lacements is that normalloans take time. Bank is an intermediary beteen the borroer andlender in the +oney +arket 'lacement.

&t is lending to another person. d#anced is that in case o! bankclosure, you make get 'romissory Note by borroer.

What is the ma!imum indemnit#: '


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mounteco#erable by 1ir

??=k

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!ew Cen)ral /an6 Ac)

Purpose of law: Because o! the bankruptcy o! the Central Bank, the Bangko1entral as created, ha#ing a corporate e$istence and is controlled by a

board, the +onetary Board.

+omposition of %B

1. B1' Do#ernor. The B1' Do#ernor has a term o! K years, e$cepthen it is to !ill a #acancy !or an une$pired term. @e may be re-appointed once !or a total term o! years.

. Cabinet +ember * depends on the 'resident ho to send, currently itis 5T& 1ecretary

3. < 3ulltime members !rom the pri#ate sector *so that the B1' ill notbecome a dumping ground o! political lame ducks. 'ri#ate sectorrepresentati#es need not necessarily be !rom pri#ately oned pri#atecorporations. They may come !rom D/CCs such as the 5B', 111,D1&1 but the appointment is staggered !or a K-year term. They may

be re-appointed once !or a total term o! years.

Prohi'ition to 2oin Private Ban1s ithin the period o! years !romseparation !rom the +onetary Board, neither the go#ernor nor the !ull timedirectors may ser#e in any capacity in corporations under the super#ision o!the +onetary Board (banks, 9uasi-banks and in#estment houses), e$cept i! heould be representing the interest o! the 'hilippine Do#ernment.

Business: The +onetary Board is obliged to meet e#ery other eek becauseit has to closely monitor the prices and take action. &n e#ery meeting, thereshould be a 9uorum o! at least :. To pass a resolution, at least : membersshould concur. &! the Do#ernor cannot attend, he should send a 5eputyDo#ernor. &! the 1ecretary can6t attend, he should send an Undersecretary.

Functions of the BSP .) 1uper#ision o! the banking system.) +anages currency and money supply>.) Dold purchasing

Q; hat is MO!E1AA: ny medium o! e$change, anything could be money

%one# vs3 +urrenc# Currency is de!ined by la as notes and coins issued by the B1' and are incirculation.

Currency has 9uali!ications%

1.) &ssued by the B1'.) &n circulation, meaning out o! the B1' #aults

TRI"< o! the note present.. &t must ha#e at least one set o! complete serial numbers>. &t must ha#e at least one signature present

4. There must be no intentional de!acement (&t6s a crime). B1' issued acircular !or banks not to accept !or deposit or replacement notesshoing intentional de!acement.

Coins ha#e a much longer e$istence. 5amaged coins may also be replaced i!there is no sign o! !iling, clipping or per!oration2 the reason !or this is that the

metal content ould be diminished. &deally, the amount stated is the total costo! making coins2 hoe#er, 'hilippine coins are orth more than their stated#alue.

&n case o! possession o! damages coins, the possessor is presumed to ha#ecaused the damage.

The year in !ront o! the coin is the year it as minted.

Q: hat is LEGAL TE!DERAA: 8egal tender is currency in such 9uantity prescribed by la to be acceptedin payment o! obligations.

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16/71


ll 'hilippine notes are legal tender !or all obligations. @oe#er, coins arelegal tender only up to a certain amount.

+onetary Board Circular changed the amount o! hat may be legal tender!or coins. ll centa#o coins are legal tender up to -#%% hile all one peso

coins are legal tender up to -#%%%. Contrast this ith the la that states that!or coins orth = centa#os or less, they are legal tender only up to '=, hilecoins orth < centa#os and up are legal tender only up to '


17/71


LETTER OF CREDIT

Governing law: Code o! Commerce, hich deals ith merchants.

Definition: L,+ - &t is a letter addressed by a merchant to another merchant to enable theperson names in the letter to attend to a commercial transaction.- !orm o! bank !acility or accommodation to enable persons to ha#e acommercial transaction here the buyer is assured o! the deli#ery o! the goodshe is buying and the seller is assured o! payment.

What is a +-%%$R+I.L (R.&S.+(I-& &t is buy and sell.

Who is a %$R+.&( @e is a person, natural or 0uridical,ha#ing the capacity to engage in commerce and regularly engages in it

4Regularly engages5 means habitual, not necessarily a big #olume o!transaction

&! a natural person%.) t least ; years o! age.) ith the capacity to enter into contracts o! sale

&! a 0uridical person * partnerships and stock corporations.) /rganiFed according to la.) 1C Certi!icate o! egistration (corporations)

Persons Involved

1. The sender or maker, ho is a merchant

2.The addressee ho is also a merchant, and3. The bene!iciary or person name in the letter ho may or may not be amerchant.

Re*uirements for a Letter of +redit

1.) The person to hom credit is e$tended is stated. &t must not be abearer instrument.

2.) The amount or ma$imum amount o! credit to be e$tended to thatperson shall be stated. &t must not be an open 8"C. ddressee mustnot ha#e the discretion as to ho much is to be gi#en under the 8"C.

&! the re9uirements are not met, it is called a Le))er o7 Recommenda)ion. letter o! credit cannot be in negotiable !orm.

Q: hy is there a need to speci!icy the bene!iciaryA hy not 0ust bearer ororderAA: Because o! obligations to each other.

)inds%

1.)Dome,)ic * all parties in the same country2 good !or K months

2.) Forei8n * di!!erent countries2 good !or months

Who issues L,+s: Commercial banks as a general rule are alloed to issueletters o! credit, but +onetary Board may allo other banks to issue 8etters o!Credit.

ow do L,+s wor1 . Buyer and seller are insecure. Buyer goes to the !ull ser#ice branch o! a bank to open a 8"C in !a#or

o! the seller >. Bank re9uires a marginal deposit, the amount re9uired by banks o!

the purpose o! opening 8"C:. Bank remits the amount to the seller only a!ter the seller presents

proo! o! deli#ery

&2am+leB'& JC re9uests B'& Cebu to open a 8"C in !a#or o! a seller in Cebu.B'& Cebu communicates to the Cebuano seller to ship the goods and uponproo! o! such deli#ery, B'& Cebu ill pay him. 1hipper thus ships the goodsand the shipping company issues a bill o! lading. &! the goods are deli#ered tothe common carrier and it issues a B"8, it is considered as deli#ery to thebuyer.

B'& Cebu gets the B"8 !rom the seller, pays the seller, !orards the B"8 to B'&+anila.Buyer pays B'& +anila, claims the B"8, and recei#es the goods under the B"8!rom the carrier.

What is the 'enefit of L,+s to 'an1s1er#ice !ees and interest on ad#ance.

&2am+le: 'urchase price is '==k. The marginal deposit re9uired is'=k, !rom hich the bank ad#ances ';=k to the seller. &nterest onthe ';=k ad#anced by the bank is payable by the buyer to the bank.

What is a Letter of +redit 4 (rust Receipt Line

L


18/71


trust receipt is a receipt ith undertakings. &n lieu o! a ==M marginaldeposit, the buyer has the option to e$ecute a Trust eceipt in addition to themarginal deposit. Under the Trust eceipt, the bank releases the B"8 toenable the buyer to ac9uire the goods hich he ould sell and either (a) usethe proceeds thereo! in paying the bank ithin a stipulated period, and"or (b)return the goods unsold.

What are (R/S( R$+$IP(S - trust receipt is a receipt ith undertakings.- &n a trust receipt transaction, the entruster, ho has security interests o#erthe goods, entrusts those goods to the entrustee so that the entrustee may sellthose goods and remit the proceeds o! the sale ithin the stipulated period. &!the amount oing to the entruster has not been met ithin the period, theentrustee is to return the goods not sold.- Trust receipts are issued to guarantee debts due to !ailure to pay the amountbank ad#anced in the 8etter o! Credit.

/nderta1ings of the $ntrustee. To sell the goods and !rom the proceeds o! the sale, remit the amount

oing to the entruster ithin the period stipulated. The proceedsmentioned include the pro!its as long as there is still an amount oingto the entrustee.

. &! the amount oed cannot be remitted, to return the goods ithin theperiod.

Parties to a (,R - ntrustee- ntruster, ho has security interests o#er the goods, e.g. holder o! a B"8hich is a document o! title

1C% &n a T, the entruster is the theoretical oner o! the goods as head#anced the !ull payment o! the goods.

Note: Trust receipts may be beteen indi#iduals

$ffect of Returning Goods to $ntruster - The entrustee has the option o! returning all o! the goods to the entruster i!the due date is near and he has not sold the goods to a#oid a prosecution !oresta!a. &n this e#ent, the bank ould be the one to sell the goods and deductthe proceeds !rom the debt o! the entrustee.- eturning the goods does not e$tinguish the obligation to pay the amountad#anced by the bank.

Wh# is there a need for the (rust Receipts Law:The bankruptcy o! bank became rampant !rom their !ailure to collect !romborroing importers ho did not remit any amount to the banks a!ter they ha#e

claimed the goods. The '.5. regulating trust receipts as made to protect thebanking system. The '5 re9uires the entrustee to insure the goods against allrisks.

+onse*uences of the $ntrustee5s Failure:- Be!ore, there are to #ies

. Violation o! a T is a criminal act under rt. >< o! the 'C.. Violation o! a T only leads to ci#il liability.- N/, the T 8a e$plicitly pro#ides !or criminal liability and re9uires theentrustee to insure the goods against all risks.

hen a document has the same stipulations as a promissory note along ithundertakings present in a trust receipt, then it is still considered a trust receipt.

&n banks, the transaction is o!ten called an 8"C-T" line because o! theinterrelation o! the transactions.

+R$DI( I&S(.LL%$&( S.L$S - &t is the use o! T but is not a trust receipt by pro#ision o! la because thebuyer did not intend to sell the goods sold but to use it .

;


19/71


COMMO! CARRIERS

Definition: common carrier is a person natural or 0uridical ho is regularlyengaged in the transportation o! goods, passengers or both, o!!ering itsser#ices to the public !or a !ee.

$lements.) Transporting goods, passengers or both..) /!!ering ser#ice to the public>.) 3or a !ee

The common carrier is at liberty to transport hat they ant.

Q% hat is the HpublicIAA% &t is not necessarily the general public2 it may merely be a narro segmento! the public, e.g. school bus operator is a common carrier2 pipeline is alsoconsidered a common carrier, transporting !uel, and its clients are 1hell andCalte$.

Q: 5o you need a motor #ehicleAA: No.

Importance of +lassification: The diligence re9uired o! a common carrier ise$traordinary diligence.

+.RRI.G$ -F G--DS

When to e!ercise $D:6eneral Rule: $traordinary diligence is to be e$ercised henthe goods are unconditionally placed at the disposal o! the common carrier,until the goods shall ha#e been deli#ered to the consignee oruntil consignee has been in!ormed o! arri#al o! the goods and gi#en areasonable opportunity to claim the goods.

easonable opportunity is dependent upon the circumstances.

&2ce+tion: hen the shipper e$ercises the right o! stoppage in transitu.Q: &n case o! stoppage in transit, hat is the relationship o! the common carrierto the shipperAA: The common carrier is merely a bailee, here the diligence re9uired is onlythat o! a good !ather o! a !amily.

&2ce+tion to the e2ce+tion: ordinary 5iligence i! the shipper asks !or deli#eryback to himsel!.

Q% &s the common carrier an insurer o! the goodsAA: No, the common carrier is not an insurer against all risks related totransportation.

When ma# the ++ avoid lia'ilit# for loss or damage to goods:.) hen the pro$imate and only cause is a storm, earth9uake, lightning,

or other natural calamity..) hen the pro$imate and only cause is an act o! a public enemy in

times o! ar, hether ci#il or international.>.) hen the pro$imate and only cause is the character o! goods or a

de!ect in the container or packaging.:.) hen the pro$imate and only cause is the act or omission o! the

shipper himsel!.


20/71


There are prestations in a bilateral contract to transport. ith respect to thecarrier its prestation is the promise o! the shipper to pay the !are. ith respecto! the shipper, it is the promise o! the carrier to transport the goods.

Standards of +are:

1.)Utmost diligence o! a #ery cautious person (transportation o! person)

2.) $traordinary diligence (transportation o! goods)

3.)Dood !ather o! a !amily.

Note: There is no name !or the standard o! care in beteene$traordinary diligence and that o! a good !ather o! !amily.

The shipper also has the obligation to minimiFe damage to itsel!.

+.RRI.G$ -F P.SS$&G$RS

Q: hen should diligence startAA: hen the carrier agrees to take in the person as a passenger.

Q: +ay the passenger and the carrier stipulate a loer standard o! careAA: No

Q: &s a common carrier insurer against all risksAA: No, it is not, BUT in case o! mechanical de!ects or hen a common carrier#iolates a tra!!ic rule, the common carrier is alays l iable.

$mplo#ees5 &egligence: The common carrier shall be liable !or actsor omission o! its employees although said employees may ha#eacted ithout or in e$cess o! their authority

Stranger5s &egligence: 3or acts or omissions o! other passengers orthird persons, i! the common carrier could ha#e pre#ent death or

in0ury by merely e$ercising the diligence o! a good !ather o! a !amilyand it !ailed to do so, the carrier is liable.

Q: hen may a common carrier be liable !or moral damagesAA: &n the !olloing instances%

.) 5eath o! passengers *in !a#or o! the heirs.) hen passenger su!!ers physical in0uries>.) hen the common carrier acts in bad !aith

common carrier is liable !or moral damages against a aitlisted passengerhose number is called, gi#en a boarding pass, alloed to proceed to the pre-departure area but not alloed to board.

CARRIAGE OF GOODS /1 SEA ACT

Bac1ground The C/D1 is a la o! merican origin2 it as made part o! our las duringthe merican occupation.

&n case o! con!lict beteen the Code o! Commerce and the C/D1, the!ormer pre#ails due to speci!ic pro#ision in the C/D1.

Scope of +-GS.&t co#ers the shipment o! goods by sea coming !rom another country into the'hilippines. The shipment o! goods must be co#ered by a B"8.&t is not applicable to%

.) &nter-island or coast-ise shipping.) 1hipment o! li#estock

3.) Those not co#ered by B8:.) Be!ore, C/D1 does not apply also to shipment o! goods on deck.

But N/, there is no more transportation on deck because goods are

transported only #ia containers.

Salient Features

• Time o! !iling claims%o pparent 8oss or 5amage% 3ile it right aay, immediately

ith the carrier o Not pparent% > days !rom deli#ery

Note: Under general la (Ci#il Code and Code o! Commerce), theclaim must be !iled right aay i! the damage is apparent2 i! it is notapparent, it must be !iled ithin :h !rom deli#ery (Code o!Commerce).

• ctions o! the Carrier on the Claimo 1ettle it right aay

o Not to act on it

o e0ect the claim.

What is the reme*y of the consignee in case of re;ection: &! the claimis denied, the claim should be !iled in court ithin year !rom thedeli#ery o! the goods by the common carrier to the arrastre operator.This is because the trans!er o! the goods !rom the carrier to thearrastre is documented in a tally sheet a!ter an ocular inspection bythe arrastre operator. hen the arrastre recei#es the goods, it

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21/71


inspects the goods and lists the de!ects in the tally sheet. &! there arede!ects !ound, they are !ormaliFed in the Bad /rder 3orm.

Q: &s the !iling o! a claim ith the common carrier a condition precedent toreco#er !rom the carrier by complaint in courtAA: Under C/D1, no, it is not re9uired. But under the Code o! Commerce, it

is a condition precedent and thus constitutes the cause o! action.

Q: hen goods are insured and turned o#er to the arrestre operator and lossor damage is determined, here and hen should the claim by the insurer be!iledAA: Claim o! the consignee must be !iled ith the insurer also ithin one year!rom deli#ery to the arrestre operator. The insurer merely subrogates andsteps into the rights o! the insured.

Q: &! the insurer did not act on the claim o! the insured until a!ter y, can itin#ol#e prescriptionAA: No. 'rescription beteen the insurer and the insured is as stated in theinsurance policy or &nsurance Code.

Q: hat i! the goods are not annotated as damaged in the tally sheet or badorder !orm upon turno#er to the arratre, but the goods are damaged uponturno#er by the arrastre to the consigneeAA: The suit should be against the arrastre on the basis o! 9uasi-delict sincethere is no pre-e$isting contractual relation beteen the arrastre and theconsignee.

Q: &! the goods are insured but no claim is made by the insured against theinsurer ithin year !rom deli#ery o! goods, is the claim against the insurerbarred a!ter one yearAA: No.

Q: hat i! there is no damage annotation on the tally sheet, and the customs

broker recei#ed the goods !rom the arrastre, but upon deli#ery by the customsbroker to the consigee, there is damage hich is not annotated on the deli#eryreceiptAA: 1ue the broker on the basis o! breach o! contract o! carriage, because thecustoms broker is a common carrier. The ruling is that a customs broker hoo!!ers to transport goods to client as part o! ser#ices 9uali!ies as a commoncarrier.

Q: &n case o! missing goods, or, i! the #essel arri#es but the goods are not o!!-loaded, hen should the claim be !iledA

A: ithin one year !rom the last day hen the carrier had the last chance todeli#er the goods to the arrastre operator, e.g. be!ore the ship sails to anotherport.

Q: &! the prescripti#e period is about to e$pire, can the consignee e$tend it bysending a 5emand 8etter to the carrierA

A: No.

ADMIRALT1

6ualifications to 'e a 7essel % Not e#ery atercra!t is a #essel2 it has to ha#ethe !olloing 9uali!ications%

.) &t must not be a mere accessory to another atercra!t (e$. 8i!eboats).) &t must be registered ith the +&N>.) &t must be used to transport goods, passengers or both:.) &t is seagoing

Q: ho may on a #esselAA: nybody. &! a #essel is oned by more than one person, there is a

disputable presumption that a partnership e$ists.

#pothecar# Rule The limited liability o! a shiponer.&t is the #alue o! the #essel, plus

earned !reightage plusinsurance, i! any.

Q: ho participates in admiraltyAA: Those in#ol#ed in na#igation (cre) and housekeeping (compliment)

+rew of a 7essel %#"4 Ca()ain

The title ca()ain is used to re!er to the commanding o!!icer o! a ship

that goes abroad.The title ma,)er is used to re!er to the commanding o!!icer o! a shipthat is engaged in local"inter-island tra#el.

ship captain has three roles%a. epresent the oner o! the #essel

b. Be the technical director o! the #esselc. epresent the country here the #essel isregistered.

2.)Ma)e, (st, nd, >rd etc.)


22/71


3.)En8ineer,.

+ontracts in .dmiralt# %.) Charter party.) Bottomry>.) espondentia

:.) +arine &nsurance

+harter Part# 3efinition: contract o! lease o#er a #essel

in*s:

1.) Bareboat"demise, here the lessor pro#ides only the #essel, ithoutcre, stores (things you eat), pro#isions (ater and !uel).

.) !!reightment

3.) Time-charter, or a lease !or a speci!ic term o! the #essel, ith storesand pro#isions

4.) Voyage-charter, or a lease o! a #essel !or a #oyage or series o!#oyages, ith stores and pro#isions.

ccording to the 1upreme Court, the true charter is the bareboat charter.The time and #oyage charter are merely subtypes o! a!!reightment, hich is acontract o! carriage.

Ship .gent: Corporation representing the oner in e#ery port here the#essel may make a call or stop. The ship agent is in charge o! pro#isioning the#essel.

Q: hat ill be the liability o! a ship agent !or procurement o! pro#isionsAA: ship agent is solidarily liable ith the ship oner !or contracts entered into!or pro#isions o! the #essel. This liability is di!!erent !rom that o! a mere agent,

ho is not liable i! he discloses his principal and acts ithin the authority gi#enhim.

us'anding .gent % gent in charge o! !reightage and settlement o! a#erages

Q: hat are A


23/71


b. #oidance o! piratesc. 8oss o! pro#isionsd. ccident that renders the #essel incapable o!

prosecuting the #oyage

>.) 1hipreck

Q: &s the oner o! a barge a party to a contract o! carriageAA: No, he is not a party, unless the barge is sel!-propelled. The contractingparty is the oner o! the toing #essel.

(hree 8ones of time in +ollision%

1.) Fir,) )ime * anytime the danger o! collision appears.

2.)Second )ime * !rom the time the danger appears until it becomes apractical certainty

3.) T*ird )ime * !rom the time it becomes a practical certainty to impact.

D-+(RI&$ -F I&S+R/(.BL$ F./L(:&! there is a collision o! to #essels and it cannot be determined ho is at !ault,each bears his on loss. @oe#er, both ship-oners are solidarily liable !orthe damage to all cargoes.

ARSA CO!


24/71


-./LIC SER< Constitution, it as the 'ublic 1er#ice Commission.No, it is regulated by di!!erent go#ernment agencies% 5/TC, 8T3B, CB,+&N, 8DUs (lakes, ri#ers)

ow to engage in pu'lic service. pplication by petition. @earing

3. &ssuance o! a CERTIFICATE OF -./LIC CO!


25/71


FOREIG! I! acti#ities that are e$clusi#ely !or 3ilipinose8g8 those relating to ammunition and !irearms (unless the 1ecretaryo! National 5e!ense consents), pyrotechnics, nightclubs, beerhouses,steambaths, and massage parlours.

•Inward Remittance% !oreigner may also on ==M o! a domesticmarket enterprise i! the !oreigner remits and makes an in#estmentorth R==k or e9ui#alent but not in areas here there are healthrelated risks e$. Bars, beer houses, massage parlors, sauna baths,dancing halls.&??9 R&0ITTANC&:

• &! the enterprise ad#ances technology, as determined by the5/1T and hires more than


26/71


I!TELLECT.AL -RO-ERT1 CODE

Governing Law: &ntellectual 'roperty Code. &t is a compilation o! old las onpatent, copyright, trade marks, trade names, ser#ice names, ser#ice marks.The Code is administered by the &ntellectual 'roperty /!!ice. The head is the

5irector-Deneral ho must be at least := years o! age and a layer. The termo! the 5irector-Deneral is < years, eligible !or a single re-appointment.@oe#er, the !irst 5irector-Deneral appointed has a term o! L years ithout re-appointment.

)inds of Intellectual Properties:.) 'atents.) Copyrights

3.) &ndustrial 5esigns

4.) 8ayout or Topography o! &ntegrated Circuits. Capable o! industrial application

What is &$W:&t is ne i! it is not part o! prior art and i! it is a di!!erent technology.eg. @eat-operated microphone

What is an I&7$&(I7$ S($P:GR: &t in#ol#es an in#enti#e step i! it is not 0ust nely disco#ered butin#ol#ed a process o! trying this and that until one !inds hat orks.

eg. G tripped and !ell on carabao grass, !ace !irst and disco#ered itsmagical e!!ect on pimples. This cannot be patented because it is merelydisco#ered ithout any in#enti#e step. BUT &3 G !irst tried gua#a lea#es,then malunggay lea#es, then garlic, then chili, and then !lour to make a

paste to cure pimples, then such in#ol#ed an in#enti#e step and is thuspatentable.

E: +icroorganismseg Those hich impro#e the digesti#e process or eat garbage.

What is I&D/S(RI.L .PPLI+.(I-&:The in#ention de#elops a ne industry or an e$isting one !or massproduction o! the in#ention. &t could lead to de#elopment o! ne ore$isting industry.

What are not patenta'le inventions9

1. T*o,e con)rar' )o law, eg substitutes !or shabu or prohibitedingredients

2. T*o,e con)rar' )o moral, or (ublic order , eg #ibrator hich mo#esback and !orth at di!!erent speeds. @/V, though these maynot be patentable, they may be mass produced because their massproduction is not prohibited by la.

3. Mere conce(), or idea,, eg sound makes people mo#e3" Ma)*ema)ical ,olu)ion,

5. Sur8ical (rocedure,, eg horiFontal cut !or caesarian birth.@/V, the gadgets used are patentable.

(o whom are patents issued9 . &n#entor

2. Co-oners &3 to or more in#ented it UN811 there is an agreementto the contrary

>. /ne ho !irst !iles an application &3 the in#ention as arri#ed at byto or more persons indi#idually and independently

4. mployer &3 the employee-in#entor as hired to ork on thein#ention, UN811 there is agreement to the contraryeg. Chemist is hired by V/N to ork on makeup products


27/71


The patent symbol H'I and number are already in the in#ention itsel!.

ow long is the duration of a patent:=y !rom the !iling o! the application(o) soon *oes the a++licant get the +atent: /nly god knos

What are the )I&DS -F LI+$&SI&G

1.


28/71


businesses in order to kno ho to sue. This is needed !or signs orprinted documents.

What is a (R.D$%.R) &t is a sign, emblem, or mark that a person uses to identi!y and distinguish his

products !rom that o! others.

What is a S$R7I+$ &.%$ &t is the name, sign, emblem, or mark that is used to identi!y ser#ice (eg. Doodear 1er#itek, apide). &t co#ers both things and ser#ices.

What is the D/R.(I-& -F PR-($+(I-&: =y, ith limitless reneals. Buta!ter !i#e years, the oner must !ile an a!!ida#it o! use (5eclaration o! ctualUse) o! the Trademark or Trade name ith the &'/ o#er the past period.

0;: %n*er the IPC, the 3eclaration must be file* y from fi ling an* Byfrom the fifth anni-ersary .B>8>, BD18

Wh# do #ou need to register (rademar1s or (rade namesTo en0oin the use by others or to !ile a suit !or in!ringement

+ertain Rules

$!clusivit#: /nce a T+ or TN is registered in the name o! a person,no other person may use a ,imilar or con7u,in8l' ,imilar name ormar6 in connection ith a ,imilar or clo,el'rela)ed (roduc).

eg. ou can6t use 5el +onte in connection ith !oodstu!! butyou can use it !or underear.

Trade names may be trade marks at the same time, but both must beregistered to be protected. eg 1electa is a trade name and ho it ispackaged is a trade mark

Trade names and +arks include ser#ice name and mark Taste is not protected.

3irst to 3ile 1ystem2 prior use is not re9uired

What is the D-+(RI&$ -F +-L-R.BL$ I%I(.(I-& Under this doctrine, there is colorable imitation hen a person gi#es hisproduct an appearance that is ,imilar or con7u,in8l' ,imilar in appearanceto the product o! another calcula)ed to make the ordinary buyer belie#e thathis product is the same as the product o! another.

0;: %n*er ;uris+ru*ence, it is such a close or ingenious imitation as tobe calculate* to *ecei-e or*inary +ersons or such a resemblance tothe original as to *ecei-e an or*inary +urchaser gi-ing such attention

as a +urchaser usually gi-es, as to cause him to +urchase the onesu++osing it to be the other .

Q: ho is an ordinary buyerAA: Buyer relying on the general appearance, images, and colorcombinations o! products.

$amples%

1. Bottles o! 5el +onte are patented. /ne case in#ol#ed the 1unshinebrand o! ketchup that used the bottles o! 5el +onte because theoner o! 1unshine could not a!!ord to make his on bottles. Themanu!acturer replaced the labels o! the bottles but the labels had thesame color combination. dd to this the !act that the bottles hadmarkings that they ere products o! 5el +onte. &t as not ordinarybuyers that ere misled but also those that read the labels.

2. Beer na Beer Case. &n the L=s, sia Breery created Beer na Beer(Beer housen) that had the same taste as 1an +iguel (pale pilsen),but sia Breery also used the same shape o! bottles. The 1upreme

Court held that there as no un!air competition, applying the holistictest. The beer o! B could not be mistaken !or 1an +iguel becausethe prices o! the !ormer are cheaper.

TO TESTS TO DETERMI!E I!FRI!GEME!T%

1.) DOMI!A!C1 TEST * hen the pre#alent !eaturesare likely to con!use one product ith another. To determinehether there is possible con!usion beteen products, lookinto the dominant !eatures.

2.) HOLISTIC TEST * consider not 0ust the pre#alent!eatures but also other !actors. #en i! there is similarity,there is likelihood that they ill not be con!used ith eachother.

&2am+le of 3ominancy Test .) Con#erse #s Custombuil t * both shoes use thesame star logo

2.) laska ll 'urpose +ilk #s lacta &n!ant'reparation * not likely to be con!used ith each otherbecause each is used !or di!!erent purposes. /ne i! in!ant!ormula, the other is co6s milk.

&2am+les of N#T C$#"&$7R&$AT&3 PR#3%CT"5el +onte in shoes.

;


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sso in cigarettes.

What is the D-+(RI&$ -F S$+-&D.R0 %$.&I&G hen a name is used so long and so e$clusi#ely to identi!y a product, thathene#er the name is mentioned, re!erence is readily made to said product,although the name is not registered because it is not registrable, no other

person may use that name in connection ith a similar or closely relatedproduct.

Why *o )e ha-e this *octrine: Because not all names are registrable.

Deographic ords or names

Deneric

5escripti#e

Names, sign, or portrait o! 'ast 'residents, UN811 the idoconsent6s

3lags and simulations

Coat o! arms and simulations

CO-1RIGHT

Scope of +op#right /ther intellectual creations, such as books, musical compositions, adaptations,song lyrics, melodies, photos, computer programs, and slogans.

&-($

Copyright is one property and the copyrighted ork isanother property.

There is copyright !or the lyrics and another !or the melody insongs. daptation o! musical compositions are orks patterneda!ter the orks o! others

'atterns o! TV and radio programs are not copyrightable

Who owns cop#right

1. &ntellectual creator

2. Co-creators &3 or more persons created the same, UN811 there isan agreement to the contrary. There is no !irst to !ile doctrine due toimpossibility o! making the same intellectual creation.

3. mployer &3 the person is hired to do intellectual creation, UN811there is an agreement to the contrary.

4. mployee &3 he is hired to do another thing, e#en though done duringork hours.


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. 'ersonal use, one copy only

2. Juotations o! portions !rom books, ith acknoledgement>. 3air use o! legitimate computer programs, eg one computer, one

program

4. 8ibraries ith old books may reproduce these books so long as theyare no longer being published. @oe#er, this is only !or library use

and not !or resale.. esidents o! a country that participated in an international con#ention

here the 'hilippines also participated.:. CitiFens o! countries that o!!er reciprocal rights to 3ilipinos.

Q: +ay !oreign corporation, not registered ith the 1C as a !oreigncorporation, sue in our courts !or the protection o! intellectual property rightsA

A: es, 'hilippines is part o! 'aris Con#ention !or 'rotection o! &ntellectual'roperty ights.

0;: As long as there is reci+rocity8

>=


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I!S.RA!CE LA

What is I&S/R.&+$ &nsurance is a contract hereby one person, knon as the insurer, agrees toindemni!y another person, knon as the insured, against loss, damage, or

liability arising !rom an unknon or contingent e#ent.What is an .SS/R.&+$: &t is a li!e insurance initiated by thebene!iciary himsel!.

Who are the P.R(I$S (- .& I&S/R.&+$ . &nsured. &nsurer >. ssured

What are the +.R.+($RIS(I+S of an Insurance

1. leatory contract. &t in#ol#es the assumption o! risks

2. &ndemnity contract. &t is not a agering contract here one in#estsand hopes to pro!it. &n insurance, one in#ests to be restored to the

same status prior to the risk happening. The insured does not e$pectto pro!it.

3. isk-distributing. &t is not a risk-shi!ting de#ice as guarantees orsuretyships.

Insure* *oes not e2+ect to +rofit:e$ ne car is insured against the!t so that in case o! loss, the insurergi#es the insured money to ac9uire another car.&n li!e, the money is gi#en not to buy another person but to di#ert andassuage the !eeling o! loss

What is R$I&S/R.&+$ The insurer insures the same risk ith another. eg our li!e is insured ith

!or '=+. Then !inds out that you are entering politics, and thus thechances o! dying increased. thus goes to B to reinsure your li!e !or 'K+.Thus, hen you die, pays only ':+ !rom his on !unds, hile B pays !or'K+.

J% &! the insurance company is bankrupt, can the bene!iciary claim!rom the reinsurerA &t cannot, because there as no pri#ity o!contract. @oe#er, the bene!iciary may still !ile ith the bankruptcycourt because the claims against the reinsurer are part o! therecei#ables o! the corporation. The reinsurance ill be part o! the bulko! assets o! the insurance and be distributed according to the Ci#ilCode pro#isions on pre!erence o! credits

Who ma# 'e an I&S/R$R

1. GR: Onl' COR-ORATIO!S may be insurers, N/T indi#iduals orpartnerships.E: In,ular Li7e (pre#iously a limited partnership but no a mutualbene!it company)

Why: In cases of in*i-i*uals or +artnershi+s, they may +re*eceasethe insure*

2. Certi!icate o! uthority (a yearly license) must be obtained !rom the&nsurance Commissioner. The insurer must !irst obtain a clearance!rom the &C, ho ill issue a !ormal indorsement o! incorporationpapers to 1C. The &nsurance Commission prescribes a minimumpaid-up capital !or insurers. 3or non-li!e insurance it must be '


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• nother upon hom one depends !or support

• /ne ho is obliged to pay him a sum o! money or hose death maydelay the per!ormance o! an obligation, eg 5ebtors, obligors

• nother upon hose li!e an estate depends, eg usu!ructuary hosells his usu!ruct to another, reser#ista in reser#a troncal

When must Insura'le Interest e!ist9 t the time the insurance is taken2 therea!ter it need no longer e$ist.

J% &! one is insuring a debtor, !or ho long is the insurance e!!ecti#eA % Theoretically, there is no limit. &nsurance is e!!ecti#e e#en a!terpayment because insurable interest in li!e insurance should e$ist onlyhen it is taken. @oe#er, in practice, it is only up to the end o! theobligation.

J% hat is meant by Hupon hose li!e an estate dependsIA % n e$ample is hen the assignee insures the li!e o! an assignor. nother e$ample is in case o! reser#e troncal, the li!e i ! the reser#ista isinsured.

ow does one get to 'e insured9 /ne must !ile an application !or insurance co#erage ith the insurer. Theapplication !orm asks basis in!ormation and representations.

What are R$PR$S$&(.(I-&S These are matters truth!ully stated by the application in the application !orm,hich in!ormation may in!luence the insurer in acting on the application.

What are %ISR$PR$S$&(.(I-&SUntruth!ul statements on matters hich may in!luence the insurer in acting onthe application.

What is +-&+$.L%$&( &t is the omission or neglect to communicate hat one knos and ought tocommunicate.

What is the +-&S$6/$&+$ -F %ISR$PR$S$&(.(I-& The misrepresentation o! a material !act entitles the insurer to rescind thepolicy.

Who *etermines materiality: &t is the insurer because materiality isdetermined by the in!luence hich the misrepresentation orconcealment has on the insurer in assessing the risk it is to assume.

Case of "un $ife Cana*a: The person applied !or insuranceco#erage. &n the application !orm, there as a 9uestion on hether ornot the applicant had any consultation or treatment ith a doctor !orthe past to years. &t as not ansered, and the policy as issued.The insured then died !rom a plane crash. &t as disco#ered by the

insurer that the insured had been pre#iously hospitaliFed !or a heartcondition. The policy as there!ore rescinded and re!used to be paidbecause o! concealment o! a material !act. The 1C a!!irmed theinsurer. *a) i, concealed or mi,re(re,en)ed need no) be )*e(ro9ima)e cau,e o7 dea)*" @/V, the insurer must re!und thepremiums paid.

+an the insurer rescind the polic# at an# t ime9N/. yO

What is the +-&($S(.BILI(0 P$RI-D9

• s a general rule, the insurer is entitled to rescind the policy onl'wi)*in )wo 'ear, 7rom )*e la,) rein,)a)emen) or 7rom i,,uance o7 )*e(olic'. /T@&1, a!ter the to-year period, the insurer can no longercontest the insurability o! the insured.

• GC'TO &n cases o! FRA.D OF THE


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eg 'roperty is orth '+ but the !ire insurance taken is only !or':==k.

What is the effect in case of loss:

• &n case o! total loss, the insurer pays the amount insured in !ull.

• &n case o! partial loss, the insurer only pays the amount insuredin proportion to the total #alue o! the thing insured

eg 'roperty is orth '+, and is insured !or ':==k. &! theloss in estimated at '==k, the amount o! the indemnity isonly :=M (:==k " +) o! '==k, hich is ';=k.

What is +-;I&S/R.&+$ &t is similar to co-onership and e$ists only in practice. &t can arise in tosituations% in double insurance and in under insurance (!ull and partial loss).

D-/BL$ I&S/R.&+$: hen the same thing and the same interestare insured against the same risk ith more than one insurer. Thereare thus to or more insurers ho apportions the indemnity to the

e$tent o! the amount agreed upon under the policy. &t is #alid as longas the total insurance co#erage is ithin the insurable interest.

/&D$R;I&S/R.&+$: &n case o! partial losses.

&2am+le B: 'roperty is orth '+. &t is insured ith !or '


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LIFE I!S.RA!CE

What is Life Insurance: &t is the policy here the insurer agrees to pay theindemnity in case the insured dies. &t includes casualty insurance, hich alsoinsures against death, hether natural or accidental

What are the )I&DS -F P-LI+I$S I& LIF$ I&S/R.&+$

1. TERM, or hen the insurance co#erage is !or a de!inite period agreedupon at the beginning. The parties agree on a period o! insuranceco#erage. The premium is lo because it does not ha#e non-!or!eiture #alues.

a. &! the insured sur#i#es, the policy e$pires.b. s a general rule, the sur#i#ing insured does not get

anything.

c. The e$ception is a contract o! E!DOME!T, here theinsured ill recei#e the !ace #alue o! the policy i! he sur#i#esthe e$piration o! the term but he is no longer insured. &! hedies ithin the term, the amount ill be paid to hisbene!iciary.

2. ORDI!AR1, or hen there is no term and the insured remainsinsured as long as he pays the premium. The duration depends onthe contract or policy. 'remiums are thus payable !or as long as theinsured is ali#e.

a. BUT T@ N/+8 8&+&T &N '/8&C&1 &1 == 1/85O Upon reaching such age, the amount o! the policy ispaid because the contract o! insurance had lapsed. s tothe insurer, the insured already died.

b. There are #ariations o! li!e insurance. = pay li!e is hen theinsured pays !or the !ull premiums !or = years hile pay li!e

at K< is hen the insured pays the premiums until the age o!K


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><


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What are PR$%I/%S These are the amounts the insured has promised to pay the insurer to keepthe policy acti#e.

ow is it computed in Propert# Insurance

s a general rule, they are computed on an annual basis and !ully paid in

ad#ance.

(o) are +remiums +ai*: CASH O! DELI


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What are L-SS$S in Propert# Insurance9

1. -ARTIAL, or hen only a part o! the thing insured is lost. There ispartial loss only in property insurance.

2. TOTAL, or hen the thing is lost in its entirety.

!%T in %arine Insurance, total loss can either be:

a" ACT.ALb" CO!STR.CTI


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a. 'ay the cash #alue

b. eplace the thing ith another property o! the same kind and 9ualityNote: This is common in motor #ehicle insurance, hereother insured abandoned the insured thing to the insurer.&nsurer sal#ages parts !rom the #ehicles le!t to replace thoseneeded in the currently insured #ehicle. @oe#er,

replacement needs to be in good condition

FIRE I!S.RA!CE

Scope of Insurance: 1trictly speaking, !ire insurance includes earth9uakeinsurance, but in practice the !ire insurance e$cludes earth9uake as a risk.The insured and insurer negotiate as to its inclusion here the insurer checksthe plans and !oundation o! the property.

': If you )ant to -ary the +olicy, ho) *o you -ary it

% /n the policy, the insurer adds a rider.

': What is a ri*er % &n a policy, the rider is a strip o! paper containing a stipulation #arying hatis printed. The rider is glued to the policy. n authoriFed representati#e o! theinsurer signs it.

What are the )inds of Fire

1. Friendl' 7ire, used !or bene!icial purposes.

2. Ho,)ile 7ire, damages property. hen !riendly !ire goes out o!control, it becomes hostile.

What is the amount of insurance: &! you are going to insure your house orstructure, the insurer ill normally insure it !or ac9uisition or replacement cost.@igher premiums are paid !or the replacement cost.

TIP: 5o not insure the !oundation because it ould not be destroyedby !ire.

When is the insurer not lia'le: &n !ire insurance, the insurer ill not be liableto pay the indemnity i! there as breach o! a arranty.

- A77irma)ive warran)' * representations- -romi,,or' warran)' * undertakings e$. ou ill not bring intoyour house to tanks o! 8'D.

J% hat i! the house burns because o! the insured6s negligenceA % The insured may still reco#er. &t is only hen the insured breaches apromissory arranty or intentionally acts to cause damage that he may notreco#er.

CAS.ALT1 OR ACCIDE!T I!S.RA!CE

What is casualt# insurance9 here the insurer pays indemnity upon thedeath o! the insured or upon the loss o! certain body parties due to anaccident. &t is generally used only !or loss o! body parts but it no includesaccidental death.

What is the sco+e of +rotection: &ndemnities are added ith additionalpremium.

What are compensa'le 'od# parts9 ither eye2 ither arm2 ither 8egThe !ull amount o! insurance co#erage is gi#en !or loss o! both eyes, botharms, or both legs. &! you lose only one o! each, indemnity shall only be . &!

you lose one arm and one leg, the indemnity is still .&n the 'hilippines, e do not ha#e insurance !or indi#idual body parts.

MARI!E I!S.RA!CE

What is %arine Insurance: &t is insurance o#er a #essel, its !reightage, itscargoes, and its e$pected pro!its !rom cargoes, against loss, damage, orliability arising !rom the perils o! the sea (N/T perils o! the ship).

What is the e!tent of insura'le interest:

/3 T@ 1@&' /N% Value o! the #essel, 811 the amount o! loan onbottomry

/3 T@ CD/ /N% Value o! the cargo, 811 the amount o! loanon respondentia

Why *e*uct the amount of the loans: The borroer loses his interest e9ualto the amount loaned because i! the thing is destroyed, it need not pay.

What is the difference 'etween fire and marine insurance:&n !ire insurance, the obligation o! the insurer to pay continues to e$ist e#en i!the house is burned.

>;


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&n marine insurance, the obligation to pay the loan, in case there are loans onbottomry and respondentia, is e$tinguished i! the #essel is destroyed or sinks,or hen the cargo is lost. The #alue o! the oner6s interest is already paid.

What are the P$RILS -F ($ S$.These are the danger and risks related to the action o! the ind and ater.These are risks related to na#igation.

What are P$RILS -F ($ SIP These relate to the physical condition o! the #essel, to the incompetence o! thecre, or both.

N#T&: +arine insurance does not co#er perils o! the ship BCU1in e#ery contract o! marine insurance (either o#er the #essel or thecargo), there is an implied arranty that the #essel is seaorthy.

What is S$.W-R(I&$SS: 1eaorthiness is a relati#e term inrelation to cargoes. #essel may be brand ne but absent anyre!rigerating !acilities, then it ould not be seaorthy !or ra meat. &tould, hoe#er, be seaorthy !or l i#estock.

Wh# does the warrant# appl# to cargo owners: Because he canchoose the shipping company to be used.

What happens when the insurer pa#s the insured9 hen the insurer paysthe indemnity, he is subrogated to the rights o! the insured and can run a!terthe person"s ho cause the loss or damage.

TIP: &! you are counsel !or the insurer and you !ile a claim based onthe subrogation, present a 55 /3 1UB/DT&/N and a C/'/3 T@ &N1UNC '/8&C. The deed o! subrogation pro#es thesubrogation but not the contract o! insurance. Thus, pro#e the latterith the best proo!% policy.

What are the )I&DS -F L-SS$S in %arine Insurance9 8osses may be partial or total. Total loss may be actual or constructi#e. Thereis CO!STR.CTI?


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!EGOTIA/LE I!STR.ME!TSLA

.pplica'ilit# of the Law:&t is an obsolete la but there are still pro#isions hich are still in practice.Thus, it must be read it ith the Ci#il Code.

What are I&S(R/%$&(S These are instruments o! credit hich in#ol#e money e$cept hen theinstrument gi#es the holder the right to deli#er another thing. They could beeither a promissory note or a bill o! e$change, knon as money substitutes.They can be assigned or negotiated.

When negotiate*: &! the instrument 9uali!ies as negotiable undersection .When assigne*: &! it does not 9uali!y under sec.

What are PR-%ISS-R0 &-($S

These instruments o! credit here the obligor ho borros money !romanother or incurs the obligation to another, binds himsel! to pay.

What is a BILL -F $>+.&G$ &t in#ol#es obligations but instead o! the obligor binding himsel! to pay, heorders another person to pay.

What are the R$6/IR$%$&(S F-R &$G-(I.BILI(0a3 PR-%ISS-R0 &-($

1. &t must be in riting and signed by the maker . &t must contain an unconditional promise to pay a sum certain in

money

>. &t must be payable on demand, or at a !i$ed, or determinable !uturetime

:. &t must be payable to order or bearer

'3 BILLS -F $>+.&G$

1. &t must be in riting and signed by the draer

2. &t must contain an unconditional order to pay a sum certain in money>. &t must be payable on demand, or at a !i$ed, or determinable !uture

time:. &t must be payable to order or bearer


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': If the instrument *oes not meet the requirements of sec8B, or it is nonnegotiable, is it -ali* % 1, negotiability is di!!erent !rom #alidity. &t is also trans!errable but byassignment.

? nd : B3 P.0 . S/% +$R(.I& I& %-&$0

What does it mean: hat is to be paid is sure to be money.D% &nstruments in#ol#e money% The instrument is still negotiable i! it gi#es the holder the right todemand the deli#ery o! another thing. The right must be gi#en to theholder, and N/T the draer, maker, or draee. /therise, theinstrument is only non-negotiable2 it is still #alid. eg H& promise to pay'=k on or be!ore pril , ??, or at the option o! the holder, & agreeto deli#er a pig instead.I

&2am+le: Promise to +ay bearer one thousan* is &NV8&5 because it statedno currency.

&2am+le: pro#ision !or payment o! interest at an agreed rate is #alid. H&promise to pay bearer '>=k on or be!ore 5ecember >, =, together ithinterest o! M per month.I This is #alid. &! the date o! reckoning o! the interestdoes not appear, then it is the date o! issue. &! the date o! issue is not stated,then the holder may insert the true date o! issue.

D.($ -F ISS/$ is not re9uired in 1ec. but it is not totallyirrele#ant. &t is merely not re9uired !or negotiability but it is importantin relation to the obligation to pay interests.

P-S(D.($D: 5ate o! issue is stated in the !uture .&($D.($D: 5ate o! issue is stated in the pastN#T&: nte- and post-dating do not a!!ect negotiability but coulda!!ect rights o! holder and liabilities o! maker or draer.

&2am+le: H& promise to pay bearer '>=k on or be!ore pril , =, ithinterest.I This is #alid because the interest rate ould then be the legal rate o!M pa, i! no rate is stated.

&2am+le: H& promise to pay bearer '>=k on or be!ore pril , =, ithinterest o! >=M.I This is #alid e#en i! there is no indication as to the !re9uencyo! interest payment. &n such case, payment ould only be once.

What if the instrument is pa#a'le in installments

&n case o! stated installments, there must be cer)ain)' in the amount o! e#eryinstallment and date o! payment or hen e#ery installment is payable.

&2am+le: H& promise to pay B, '=k in to e9ual monthly installments.I This isN/T ND/T&B8. Though the amount is determinable, there is noindication as to hen it is payable.

What is a DI7ISIBL$ -BLIG.(I-&: hen the amount o! the obligation ispayable in stated installments, it is a di#isible obligation that may be per!ormedin parts.

What is the $ffect of a Divisi'le -'ligation:&! the obligor de!aultson the !irst installment, the creditor cannot sue yet !or the entireobligation because the period had not yet lapsed, as pro#ided underthe Ci#il Code. The creditor6s remedy is to put an accelera)ionclau,e"

N#T&: &t is also a sum certain e#en i! there is a pro#iso !or compoundedinterests, the payment o! attorney6s !ees, costs o! suit and e$penses o!litigation. Negotiability is also not a!!ected by a statement o! the transactionthat ga#e rise to the issuance o! an instrument.

@rd : P.0.BL$ -& D$%.&D= .( . FI>$D (I%$=-R .( . D$($R%I&.BL$ F/(/R$ (I%$

When is the instrument P.0.BL$ -& D$%.&Dhen it is so stated to be payable on demand orhen no date is mentioned as to payment (pure obligation), or hen it is payable on sight.

eg hen the creditor demands payment, literally, and noperiod is in#ol#ed. The creditor, upon handing the money tothe debtor, collects the same to minutes later.

When is it P.0.BL$ .( . FI>$D (I%$ hen the obligor is to pay /N a particular dateor /N / B3/ a particular date.

H/n or be!oreI is construed !a#orably to the debtor. Under the Ci#ilCode, hen the period is !i$ed, the creditor cannot demand payment,and neither can the debtor demand acceptance earlier than theperiod. But under the N&8, the creditor must accept the amount e#eni! it is tendered be!ore the e$piration o! the period.

When is it P.0.BL$ .( . D$($R%I&.BL$ F/(/R$ (I%$

:


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&!, !or e$ample, it is payable ithin elected senators. &t not #alid i! the period states Hon or a!ter pril , =Ibecause it is not determinable.

What is the remed# in case of uncertaint# in period9 sk the court to !i$ the period.

:

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Ath: P.0.BL$ (- -RD$R -R (- B$.R$R

What is pa#a'le to order or to 'earerCThese are the ORDS OR -HRASES OF !EGOTIA/ILIT1" The instrumentcan also use HholderI or HpossessorI. &t is important to kno the presence o!these ords to determine the manner o! negotiation.

When is it an -RD$R I&S(R/%$&( stipulation that an instrument is HN/N-ND/T&B8I is immaterial becauseit is alays payable to order in the !olloing cases%

'ay to 4ose CruF or order

'ay to the order o! 4ose CruF

'ay to the order o! 4ose CruF and 'edro (0oint here there are topayees)

'ay to the order o! 4ose CruF or 'edro CruF (se#eral)

'ay to the order o! the holder o! o!!ice !or the time being

ow is an order instrument negotiated9By &ndorsement o! the holder, !olloed by deli#ery. /therise, the negotiation

ould be ine!!ecti#e"

When is it a B$.R$R I&S(R/%$&(

'ay to bearer

'ay to 4ose CruF or bearer (N/T Hto bearer 4ose CruFI here thedesignation o! HbearerI is only descripti#e and thus the instrument isnon-negotiable)

'ay to order o! Batman (to the order o! a !ictitious person and such!act must be knon to the person making it so payable)

'ay to the order o! dol! @itler (to the order o! a non-e$isting personand such !act must be knon to the person making it so payable)

'ay to the order o! cash (to the order o! a payee ho does not purportto be a name o! any person)

hen the last indorsement is in blank

ow is a 'earer instrument negotiated9 By mere deli#ery. ny indorsement is a mere surplusage.

What are the $FF$+(S -F D$LI7$R0

1. &! the instrument is signed and deli#ered but there are blanks therein,then the holder-deli#eree has the implied authority to !ill in the blanksaccording to the true agreement o! the parties

2. &! the instrument is not yet deli#ered, then it cannot be en!orcedagainst the maker or draer. &t is unen!orceable.

3. &! the instrument is already completed but not yet deli#ered, and it !allsinto the hands o! a holder in due course, then the @5C is protectedand his rights are not sub0ect to personal de!enses GC'T 3orgery.

Who are LI.BL$ /&D$R . &$G-(I.BL$ I&S(R/%$&(

1. '/+&11/ N/T% +aker

2. B&88 /3 GC@ND% 5raer and the 5raee ho ccepts

3. 'N"B% ndorsers:. 3orgers

Who are $ndorsersndorsers are persons ho sign the instrument. /nly those hose signature

appears in the instrument are liable thereon. &n cases o! negotiation bydeli#ery, they are liable only to the immediate trans!eree.

What is the lia'ilit# of $ndorsers9Their liability may either be general or irregular, as hen they sign theinstrument but they ha#e no concern therein.

%a# the# sign through agents9 1, as long as the agent discloses theprincipal and acts ithin the scope o! his authority.

:>

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What is &$G-(I.(I-& Negotiation is the trans!er o! an instrument as to constitute the trans!eree theholder thereo!.

What are the %-D$S -F &$G-(I.(I&G .& I&S(R/%$&( . /5% &ndorsement and 5eli#er . B% 5eli#ery

What is an I&D-RS$%$&( &t is negotiation through the signature o! the person ho has the right o#er theinstrument or document.

Where is the indorsement placed9The la is silent.- &t is customary to be made at the back so as not to con!use theendorser6s signature ith that o! the maker or draer, especially incases o! 'Ns stating H& promise to payI and there are to signaturesappear, the result being the to signatures treated as co-makers.- &t may also be made in an ALLO!GE, or a separate sheet o! paperattached to the instrument here the indorsements can be made.

.re there limits on the num'er of indorsements9 Under the N&8, there are none. BUT under a Circular o! the +onetaryBoard, banks are prohibited !rom accepting any check ith more thanone endorsement to a#oid !orgeries against banks.

What are the )I&DS -F I&D-RS$%$&(

1. I! /LA!0, hen the holder merely signs his name

2. S-ECIAL, hen the trans!eree is named and the holder signsthe same. The indorsement need not contain the ords o!negotiability, eg H'ay to 4ose CruFI. 1uch ords are re9uiredonly on the !ace o! the instrument and not on speci!icendorsements.

eg H'ay to order o! 4ose CruF onlyI is a special andrestricti#e endorsement.

3. CO!DITIO!AL, as hen it states H'ay to G only i! he graduateson +arch =>I. This is also a special indorsement and hichdoes not a!!ect negotiability.

4. Q.ALIFIED, i! the holder adds Hithout recourseI to hissignature. There is no recourse to him i! the instrument isdishonored.

5. RESTRICTI


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account o! the payee. &t may thus be endorsed only once, ie !or deposit to thepayee6s account.

$a "uerte Cigarette Com+any -8 "I(I: The cigarette company sold itsproducts through agents. The clients deposited post-dated checksith the agents ho rediscounted the same ith 1&@& butappropriated the proceeds. The clients re!used to pay the checksbecause the products ere not deli#ered to them. 1&@& thus !ailed tocollect. &t as not considered as a @5C.

&! there are alterations it might not appear regular upon its !ace, itmight be considered irregular.

? nd : I& G--D F.I( .&D F-R 7.L/$

When is it ac*uired I& G--D F.I(:hen the transaction is abo#e !raud.

When it is ac*uired F-R 7.L/$

hen the ac9uisitions is !or a #aluable consideration under the la oncontracts, and

hen the consideration is not contrary to la, morals, good customs,public or