Commerce MA copy.doc

8/14/2019 Commerce MA copy.doc

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COMMERCIAL LAW MEMORY AID ATENEOCENTRALBAROPERATIONS2002

CODE OF COMMERCE

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

- bringing products from the manufacturers to the consumers

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

CHARACTERISTICS OF COMMERCIAL LAW:

1. universal

2. uniform

3. equitable

4. customary

5. progressive

PORTIONS OF CODE OF COMMERCE STILL APPLICABLE:

1. merchants; book of merchants and general provision of contracts

2. joint account association

3. commercial barter

4. transfers of non-negotiable credits

5. commercial contracts of overland transportation

6. letters of credit

7. maritime commerce

OTHERS:

1. Characteristics o Co!!erce:

a. habituality

b. rapidity -if period is fixed, debtor in delay without need of demand; if contract does notfix period, 10 days

c. intent to join

3. Mercha"t:

a. Individuals - legal capacity, or subject to parental authority, habitually engaged incommerce

b. Juridical Persons- commercial and industrial company organied in accordance withlaw, habitually engaged in business

4. #e"era$ R%$e:

!inors cannot engage in commerceExceptions:

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a. to continue business of deceased parents through guardian

b. court authories guardian to place minor and property in business

c. minor is an alien and his national law allows him to be a merchant

5. Which persons are not allowed to engage in commerce?

a. suffering accessory penalty of civil interdiction "reclusion perpetua and reclusiontemporal#

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

c. prohibited by $onstitution and special laws

6. A$ie"s

a. capacitated under his national law to engage in business

b. engaged in the business in the %hilippines not reserved for the &ilipinos

c. after securing license and '() certificate

7. Fa!i$& Co'e: Either spouse may engage in business; when objected to by the other,court will look into valid grounds, i*e* serious and moral grounds

8. BOI Certiicate must !e o!tained !":

a. alien

b. foreign firm

9. #eaning o Philippine $ational

a. citien

b. domestic corporation wholly owned and organied by &ilipinos in the %hilippines

c. &ilipino corporation where &ilipino capital entitled to vote is at least +0

10. %uer": )f a corporation is a shareholder of another corporation, how do you determinewhether the latter corporation is a &ilipino national

&nswer: The following must concur -

a. .t least +0 of the outstanding capital stock and entitled to vote of both corporationsare held by citiens of the %hilippines

b. .t least +0 of the 'oard of /irectors of both corporations are &ilipinos

11. 'enor o BOI Certiicate

a. 'usiness or activity to be engaged is consistent with the )nvestment %riorities %lan

b. 'usiness will contribute to the sound and balanced development of the nationaleconomy in a self-sustaining basis

c. 'usiness will not conflict with the $onstitution and local laws

d. 'usiness is not adequately exploited by &ilipino nationals

e. o danger of monopoliescombinations in restraint of trade

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12. Basic Principles(Conditions laid down !" BOI

a. resident agent of foreign firm is a &ilipino citien

b. establishment of office in the %hilippines

c. bringing assets tot he %hilippine office as capital

d. complete set of accounting records

13. #erger and Consolidation su!)ect to BOI re*uirements or the issuance o certiicate:

3hen merger and consolidation result in ownership and control of non-&ilipino nationals overmore than 40 of the capital of a consolidated corporation*

14. +EC ,icense issued upon compliance with the ollowing re*uirements:

a. proof of compliance with principle of reciprocity

b. '() certificate

c. .pplicant for license gives required information articles of incorporation by-laws names and addresses of resident agents principal place of business in the %hilippines

d. proof of solvency

e. deposit acceptable securities to protect future creditors

LETTERS OF CREDIT

1. (i"'s:

a. $ommercial 5etters of $redit

b. 6raveler7s 5etters of $redit

2. o protest required in case of dishonor*

3. )ssued to definite persons and not to order, thus, non-negotiable*

4. 5imited to a fixed account*

B)L( SALES LAW

1. Purpose: meant to protect creditors of businessmen against preferential or fraudulenttransfers

2. 6he law covers all transactions, whether done in good faith or not, or whether or not theseller is in a state of insolvency, that fall within the description of what is a 8bulk sale9*

3. '"pes o transactions which are treated as !ul. sales/:

a. :ale, transfer, mortgage or assignments of a stock of goods, wares, merchandise,provisions, or materials otherwise than in the ordinary course of trade;


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b. :ale transfer, mortgage or assignments of all, or substantially all, of the business of thevendor, mortgagor, transferor, or assignor;

c. :ale, transfer, mortgage, or assignment of all, or substantially all, of the fixtures andequipment used in the business of the vendor, mortgagor, transferor, or assignor*

4. (nly creditors at the time of the sale in violation of the law are within the protection of thelaws and creditors subsequent to the sale are not covered*

5. Even i the transaction alls within the deinition o !ul. sale/0 the ollowing are notdeemed covered !" the law:

a. )f the vendor, mortgagor, transferor or assignor produces and delivers a written waiverof the provisions of the law from his creditors as shown by verified statements;

b. 6he law does not apply to executors, administrators, receivers, assignees in insolvency,or public officers, acting under process*

6. O!ligations when transaction is a !ul. sale:

a. The vendor must deliver to such vendee a written statement of:

names and addresses of all creditors to whom said vendor or mortgagor may beindebted;

amount of indebtedness due or owing to each of said creditors

b. The vendor must apply the purchase money to the pro-rata payment of bona fideclaims of the creditors as shown in the verified statement.

c. The seller, at least 10 days before the sale, shall:

make a full detailed inventory of the goods, merchandise, etc*, cost price of eacharticle to be included in the sale

notify every creditor at least 10 days before transferring possession of the goods,of the price, terms and conditions of the sale

d. The purpose of going through the transaction must not be nominal.

7. Conse*uences o 1iolation o 2e*uirements under 34 a!ove stated:

a. hen !"a# above is not complied with, the sale itself is void; the seller will be criminallyliable*

b. hen !"b# above is not complied with,the sale itself is also void; seller is also criminallyliable*

c. hen !"c# is not complied with , the sale is not void; no criminal and civil consequenceson the seller*

d. hen !"d# is not complied with,the transaction itself is void and seller will be criminallyliable* 6he transaction is void not here not because of the 'ulk :ales 5aw but of the

common law principle that if the price in a sale is nominal, it is not real, making thecontract void*

RETAIL TRADE NATIONALI*ATION LAW+

RETAIL TRADE LIBERALI*ATION ACT OF 2000 ,R-A- ./21

Note: $ertain doctrines under the


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+2 repealed


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c* :ales in restaurant operations by a hotel owner or inn-keeper irrespective of theamount of capital, provided that the restaurant is incidental to the hotelbusiness;

d* :ales to the general public, through a single outlet owned by a manufacturer or

products manufactured, processed or assembled in the %hilippines, irrespectiveof capitaliation;

e* :ales to industrial and commercial users or consumers who use the productsbought by them to render service to the general public andor produce ormanufacture goods which are in turn sold by them; or

f* :ales to the government andor its agencies and government-owned andcontrolled corporations*

5. 2ights o ormer natural-!orn 9ilipinos:

a* . natural-born citien of the %hilippines who has lost his %hilippine citienshipbut who resides in the %hilippines shall be granted the same rights as &ilipinocitiens for purposes of retail trade under the .ct*

b* 4atural-born ilipino citi5ens are those who are citiens of the %hilippines frombirth without having to perform any act to acquire or perfect their citienship*

6. 9our categories o 2etail 'rade Enterprises0 or purposes o determining who are*ualiied to I$1E+' in retail trade in the Philippines:

a* Categor" &B @nterprises with paid-up capital of the equivalent in %hilippine%esos of less than C:D2,A00,000*00;

b* Categor" BB @nterprises with a minimum paid-up capital of the equivalent in%hilippine %esos of C:D2,A00,000*00, but less than C:D>,A00,000*00, providedthat in no case shall the investments for establishing a store be less than theequivalent in %hilippine %esos of C:D0,000*00;

c* Categor" CB @nterprises with a paid-up capital of the equivalent in %hilippinepesos of C:D>,A00,000*00 or more, provided that in no case shall theinvestments for establishing a store be less than the equivalent in %hilippine%esos of C:D0,000*00; and

d* Categor" B @nterprises specialiing in high-end or luxury products with a

paid-up capital of the equivalent in %hilippine %esos of C:D2A0,000*00 perstore*

i* 6igh-end or lu7ury goods:goods not necessary for life maintenance andwhose demand is generated by the higher income groups "e*g*, jewelry,designer clothing, footwear, electronics, sporting goods#*

7. Ho4 A$ie"s !a& i"5est i" retai$ tra'e- 3ct provides for following rules on who may*48E/T or E4+3+E in retail trade enterprises in the )hilippines:

a* $itiens of the %hilippines, natural-born citiens who have lost their %hilippinecitienship but who reside in the %hilippines, and domestic partnerships,associations, and corporations which are wholly-owned by &ilipino citiens, mayengage directly, or invest whollyin local enterprises that will engage in all formsof retail trade in all categories provided;

b* (ther than in exempted transactions, alien individuals, foreign partnerships,associations and corporations and foreign-owned domestic partnerships,associations and corporations may not invest in retail trade enterprises under$ategory . "paid-up capital equivalent in %esos of less than D2*A!# which arereserved exclusively for &ilipino citiens, natural-born citiens who have lost

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their %hil citienship but who reside in %hilippines, and corporations whollyowned by &ilipino citiens*

c* &oreign-owned domestic partnerships, associations and corps may, uponregistration with the :@$ and /6), or in case of foreign-owned singleproprietorships, with the /6), may investin retail trade enterprises as followsE

i. 'nder (ategory &:

1* limited to not more than +0 of total equity of such retailenterprise within the first 2 years after the effectivity of the .ct "orup to !arch, 2002#; and

2* may wholly own such retail enterprises 2 years after effectivity of.ct "i*e*, beginning .pril 2002#;

provided that the investments for establishing a store is less than theequivalent in %hilippine %esos of C:D0,000*00;

ii*'nder (ategory (: may wholly own, provided that investments forestablishing a store is not less than the equivalent in %hilippine %esos ofC:D0,000*00; and

iii* 'nder (ategory 9:may wholly own*

8. or purposes of investment, a mere investor need not organie a corporation, partnership,or association under %hilippine laws before it may invest*

9. 3pply grandfather rule to determine whether an entity is deemed $foreign-owned% to ualifyto engage in retail activities under (ategories &, (, and 9.

a* or purposes of investments, /E( rule:shares belonging to corporations orpartnerships at least +0 of the capital of which his owned by &ilipino citiensshall be considered as of %hilippine nationality, but if percentage of &ilownership is less than +0, only the number of shares corresponding to suchpercentage shall be counted as of %hilippine nationality*

b* 3hile a corp with +0 &ilipino and 40 foreign equity ownership is considereda %hilippine national for purposes of investment, it is not qualified to invest in orenter a joint-venture agreement with corporations or partnerships, the ownershipof which under the $onstitution or special laws are limited to &ilipino citiensonly*

10. Forei6" Retai$ers

a* Implementing 2ules and 2egulations: an individual who is not a &ilipinocitien, or a corporation, partnership, association or entity that is not wholly-owned by &ilipinos, engaged in retail trade*

6his definition seems to include even a domestic partnership or corporation which isnot wholly owned by &ilipinos* 3hen owning entity is a corporation, applygrandfather rule*

!5 Pre*ualiication re*uirements !eore oreign retailer ma" engage or investin a retail store0 all o the must concur:

i* !inimum net worth of

1* C:D200,000,000 of the registrant corporation for $ategories 'and $; and

2* C:DA0,000,000 net worth of registrant corp for $ategory /*

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ii*&ive "A# retailing branches or franchises in operation anywhere aroundthe world unless such retailer has at least one "1# store capitalied at aminimum of C:D2A,000,000;

iii* &ive "A# year track record in retailing; and

iv* ationals from, or juridical entities formed or incorporated incountries which allow the entity of &ilipino retailers shall be allowed toengage in retail trade in %hils*

11. Promotion o locall" manuactured products:

a* &or 10 years after effectivity of .ct, at least 0 of the aggregate cost of thestock inventory of foreign retailers under $ategory ' and $, and 10 for$ategory / shall be made in the %hilippines*

12. Prohi!ited activities o *ualiied oreign retailers: ot allowed to engage in certainretailing activities outside their accredited store through the use of mobile or rolling stores

or carts, the use of sales representatives, door-to-door selling, restaurants and sari-saristores and such other similar retail activities* /etailed list of prohibited activities shall beformulated by /6)*

13. &nti-umm" ,aw applies:&ilipinos may not permit aliens to use them as nominees ordummies to enjoy privileges reserved for &ilipinos or &il corps* /ee below.

ANTI7D)MMY ACT

1. 6he .ct penalies &ilipinos who permit aliens to use them as nominees or dummies toenjoy privileges reserved for &ilipinos or &ilipino corporations*

$riminal sanctions are imposed on the president, manager, board member or persons incharge of the violating entity and causing the latter to forfeit its privileges, rights andfranchises*

2. 9isualified aliens cannot intervene in the management, operation, administration orcontrol of the business reserved to ilipinos whether as an officer, employee or laborer,with or without remuneration, ece3t 4he":

a. alien takes part in technical aspects;

b. provided that no &ilipino can do such technical work; and

c. with express authority from the %resident, upon the recommendation of the departmenthead concerned*

3. B" wa" o exception0 the ollowing ma" participate in management:

a. .liens may be elected to the 'oard of /irectors to the extent of their allowable share inthe capital of the corporation "in partially nationalied industries#*

b. . registered enterprise may employ foreign nationals in supervisory, technical, andadvisory positions for a period of A years subject to extension*

c. 3here majority of stocks of a pioneer enterprise is owned by foreign investors, thefollowing positions may be held by foreign nationalsE president treasurer general manager equivalent positions

4. 3 ilipino common-law wife of an alien is not barred from engaging in the retail businessprovided she uses capital e7clusively derived from her paraphernal properties; however,

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allowing her common-law alien husband to take part in the management of the retailbusiness would be a violation of the law*

5. What doing !usiness means:

a. soliciting orders, purchases, service contracts;

b. opening offices whether called liaison offices or branches;

c. appointing representatives or distributors who are domiciled in the %hilippines or who inany calendar year stay in the country for a period totaling 1=0 days or more;

d. participating in the management or supervision or control of any domestic firm, entity orcorporation in the %hilippines;

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

6. 3hen commissioned merchantsinvestors or commercial brokers act in their own name in

selling foreign products, the foreign firm manufacturing these products is not doingbusiness in the %hilippines*

7. 3hen a local corporation or person acts in the name of a foreign firm, the latter is doingbusiness in the %hilippines*

8. 'he ollowing are $O' doing !usiness:

a. mere investment as a shareholder by a foreign entity in domestic corporations dulyregistered to do business;

b. exercise of rights as such investor;

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

d. appointing a representative or distributor domiciled in the %hilippines which transactsbusiness in its own name and for its own accounts*

TR)ST RECEPTS LAW

1. P%r3ose:

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

b. to regulate the use of trust receipts

2. Dei"itio": . writtenprinted document signed by the @6


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7. 5oss of goods pending the dispossession shall not extinguish the obligation to the@6


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demand or at a fixed or determinable future time a sum certain in money to order or tobearer* ":ec* 12+ )5#

Parties:

a* drawer

b* payee

c* drawee acceptor

7. Chec9 7bill of exchange drawn on a bank and payable on demand* ":ec* 1=A )5#

8. Diere"ce 8et4ee" Pro!issor& Note a"' Bi$$ o Echa"6e

Pro!issor& Note Bi$$ o Echa"6e

Cnconditional promise unconditional order

)nvolves 2 parties involves parties

!aker primarily liable drawer only secondarily liable

only 1 presentment - for payment generally 2 presentments - for acceptanceand for payment

9. Disti"ctio"s 8et4ee" a Chec9 a"' Bi$$ o Echa"6e

CHEC( BOE

- always drawn upon a bank or banker - may or may not be drawn against a bank

- always payable on demand - may be payable on demand or at a fixed ordeterminable future time

- not necessary that it be presented foracceptance

- necessary that it be presented foracceptance

- drawn on a deposit - not drawn on a deposit

- the death of a drawer of a check, withknowledge by the banks, revokes the authority

of the banker to pay

- the death of the drawer of the ordinary billof exchange does not revoke the authority

of the banker to pay

- must be presented for payment within areasonable time after its issue "+ months#

- may be presented for payment within areasonable time after its last negotiation*

10. istinctions !etween a Promissor" $ote and Chec.

PN CHEC(

- there are two "2# parties, the maker and thepayee

- there are three "# parties, the drawer, thedrawee bank and the payee

- may be drawn against any person, notnecessarily a bank

- always drawn against a bank

- may be payable on demand or at a fixed ordeterminable future time

-always payable on demand

- a promise to pay - an order to pay

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11. Other 9orms o $egotia!le Instruments:

a. certificates of deposits

b. trade acceptances

c. bonds in the nature of promissory notes

d. drafts which are bills of exchange drawn by 1 bank to another

e. letters of credit

12. Tr%st Recei3t 7a security transaction intended to aid in the financing of importers andretailers who do not have sufficient funds to finance their transaction and acquire creditexcept to use as collateral the merchandise imported

13. Re%isites o a Ne6otia8$e Note ,PN1: ,S)DO1

*t must:

a. be in writing signed by the drawer

b. contains an %nconditional promise or order to pay a sum certain in money

c. be payable on 'emand or at a fixed determinable future time

d. be payable to order or to bearer ":ec* 1 )5#

14. Re%isites o a Ne6otia8$e Bi$$ ,BOE1: ,S)DOC1*t must:

a* be in writing signed by the drawer

b* contains an %nconditional promise or order to pay a sum certain in money

c* be payable on 'emand or at a fixed determinable future time

d* be payable to order or to bearer

e* the drawee must be named or otherwise indicated with reasonable certainty ":ec* 1)5#

Notes o" Sectio" ;:

- *n order to be negotiable, there must be a writing of some kind, else there would benothing to be negotiated or passed from hand to hand* 6he writing may be in ink, printor pencil* )t may be upon parchment, cloth, leather or any other substitute of paper*

- *t must be signed by the maer or drawer. )t may consist of mere initials or evennumbers, but the holder must prove that what is written is intended as a signature ofthe person sought to be charged*

- 6he 'ill must contain an order, something more than the mere asking of a favor*

- :um payable must be in money only* )t cannot be made payable in goods, wares, ormerchandise or in property*

- . drawee7s name may be filled in under :ection 14 of the )5

15. etermination o negotia!ilit"

a* by the provisions of the egotiable )nstrument 5aw, particularly :ection 1 thereof

b* by considering the whole instrument

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c* by what appears on the face of the instrument and not elsewhere

K*n determining is the instrument is negotiable , only the instrument itself and no other, mustbe examined and compared with the requirements stated in :ec* 1*

)f it appears on the instrument that it lacks one of the requirements, it is not negotiable andthe provisions of the )5 do not govern the instrument* 6he requirement lacking cannot besupplied by using a separate instrument in which that requirement which is lackingappears*

16. +um is certain even i it is to !e paid with:

a. interest

b. in installments

c. in installments with acceleration clause

d. with exchange

e. costs of collection or attorney7s fees ":ec* 2 )5#

17. ;eneral 2ule: 6he promise or order should not depend on a contingent event* *f it isconditional,it is non-negotiable*

Exceptions:

a. indication of particular fund from which the acceptor disburses himself after payment

b. statement of the transaction which gives rise to the instrument* ":ec* )5#

&ut an order or promise to pay out of a particular fund is not unconditional

Notes o" Sectio"

- ;imitation on the provision, it cannot require something illegal*

- There are two inds of judgements by confessionE a# cognovit actionem b# relictaverificatione

- (onfessions of judgementin the %hilippines are void as against public policy*

- )f the choice lies with the debtor, the instrument is rendered non-negotiable*

20. 'he validit" and negotia!ilit" o an instrument is not aected !" the act that:

a* it is not dated

b* does not specify the value given or that any had been given

c* does not specify the place where it is drawn or payable

d* bears a seal

e* designates the kind of current money in which payment is to be made ":ec* + )5#

21. Instrument is pa"a!le upon demand i:

a. it is expressed to be so payable on sight or upon presentation

b. no period of payment is stipulated

c. issued, accepted, or endorsed after maturity ":ec* > )5#

here an instrument is issued, accepted or indorsed when overdue , it is, as regards to the

person so issuing, accepting, or indorsing it, payable on demand*

Notes o" Sectio" /

- if the time for payment is left blank "as opposed to being omitted#, it may properly beconsidered as an incomplete instrument and fall under the provisions of :ec* 14, 1A, or 1+depending on how the instrument is delivered*

22. Instrument is pa"a!le to order:

- where it is drawn payable to the order of a specified person or

- to a specified person or his order

It ma" !e drawn pa"a!le to the order o:

a* a payee who is not a maker, drawer, or drawee

b* the drawer or maker

c* the drawee

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d* two or more payees jointly

e* one or some of several payees

f* the holder of an office for the time being ":ec* = )5#

Notes o" Sectio" .

- 6he payee must be named or otherwise indicated therein with reasonable certainty*

- *f there is no payee, there would be no one to indorse the instrument payable to order*6herefore useless to be considered negotiable*

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a. incomplete but delivered instrument ":ec* 14 )5#

b. complete but undelivered ":ec* 1+ )5#

c. complete and delivered issued without consideration or a consideration consisting of a

promise which was not fulfilled ":ec 2= )5#

26.


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32. Per Proc%ratio" 7 operates as notice that the agent has a limited authority to sign*

Eects:

- the principal in only bound if the agent acted within the limits of the authority given

-the person who takes the instrument is bound to inquire into the extent and nature ofthe authority given* ":ec* 21 )5#

33. #e"era$ r%$e: )nfants and corporations incur no liability by their indorsement orassignment of an instrument* ":ec* 22 )5#

Eects:

- no liability attached to the infant or the corporation

- the instrument is still valid and the indorsee acquires title

34. #e"era$ r%$e: a signature which is forged or made without authority is wholly inoperative*

Eects:

a* no right to retain

b* no right to give a discharge

c* no right to enforce payment can be acquired* ":ec* 2 )5#

Ece3tio":

-the party against whom it is sought to be enforced is precluded from setting up theforgery or want of authority*

Notes o" Sectio" 2J

- the indorser under :ec* =0

- when excused under :ec* =2

- when the instrument has been dishonored by non-acceptance under :ec* =

64.


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Notes o" Sectio" ..

- payment must be made to the possessor of the instrument

- possession of the note by the maker is presumptive evidence that it has been paid

67. Notice o Disho"or !a& 8e 6i5e":

a* by or on behalf or the holder

b* by or on behalf of any party whoE

- is a party to the instrument and might be compelled to pay the instrument

- to a holder who having taken it up would have a right of reimbursement from the partyto whom notice is given* ":ec* J0 )5#

68. Notice:

a* may be written or oral ":ec* J+#b* written notice need not be signed or may be supplemented by verbal communication

":ec* JA#

c* may be by personal delivery or by mail ":ec* J+#

69. $otice ma" !e waived either expressl" or implied:

a* before the time of giving notice has arrived

b* after the omission to give due notice ":ec* 10J )5#

70. Protest !a& 8e 4ai5e':

Eects:

- deemed a waiver of presentment and notice of dishonor as well ":ec* 111 )5#

Notes o" Sectio" ;;;

- 3here notice is waived, presentment is not waived

- 3here presentment is waived, notice is also waived

- 3here protest is waived, notice and presentment is waived

71. Notice o Disho"or- given by the holder to the parties secondarily liable, drawer andeach indorser, that the instrument was dishonored by non-acceptance or non-payment bythe draweemaker

#e"era$ r%$e: .ny drawer or indorser to whom such notice is not given is discharged*

Ece3tio"s:

a* 3aiver ":ec* 10J#

b* otice is dispensed ":ec* 112#

c* ot necessary to /rawer ":ec* 114#

d* ot necessary to )ndorser ":ec* 11A#

- if notice is delayed, delay may be e7cused":ec* 11#

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72. Instances when $otice o ishonor $ot $ecessar" to rawer

a. drawer and drawee same person

b. drawee is a fictitiousincapacitated person

c. drawer is the person to whom presentment for payment is made

d. drawer has no right to expect that the drawee will acceptpay the instrument ":ec* 114)5#

73. Instances when $otice $ot 2e*uired to Indorser

a. drawee was a fictitiousincapacitated person and the indorser was aware of such at thetime of indorsement

b. indorser is the person to whom instrument was presented for payment

c. instrument madeaccepted for his accommodation ":ec* 11A )5#

74. (mission to give notice of dishonor by non-acceptance does not prejudice a F/$ ":ec*11> )5#

75. %rotest only necessary for a foreign bill of exchange* %rotest for other negotiableinstruments is optional* ":ec* 11= )5#

76. Ca%ses o Dischar6e o the I"str%!e"t

a. payment by the debtor

b. payment by accommodated party

c. intentional cancellation by holder of instrument

d. any other act discharging a simple monetary obligation

e. debtor becomes holder of the instrument atafter maturity in his own right " :ec 11J)5#

Notes o" Sectio" ;;?

- discharge of the instrument discharges all the parties thereto

- payment must be in due course, and by the principal debtor or on his behalf

- if payment is not made by the principal debtor, payment only cancels the liability of thepayor and those obligated after him but does not discharge the instrument*

- payment by an accommodation party does not discharge the instrument*

77. Dischar6e o Seco"'ar& Parties:

a. any act discharging the instrument

b. cancellation of indorser7s signature by indorsers

c. discharge of prior party

d. tender of payment by prior party

e. release of principal debtor

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f. extension of payment by the holderpostponement of right to enforce without assent ofsecondary parties and without reservation of right of recourse against secondary parties":ec 120 )5#

78. Ri6hts o a 3art& seco"'ari$& $ia8$e 4ho 3a&s:

-the instrument is not discharged

- the party is remitted to his former rights as to all prior parties

- the party may strike out his own and all subsequent indorsements

- the party may negotiate the instrument again

Ece3tio":

- an instrument cannot be renegotiated where it is payable to order of a rdperson andhas been paid by the drawer

- and instrument cannot be renegotiated where is was made or accepted foraccommodation and it has been paid by the party accommodated*

>=* Re"%"ciatio" 8& a ho$'er 'ischar6es a" i"str%!e"t 4he":

a* it is absolute and unconditional

b* made in favor of a person primarily liable

c* made at or after maturity of the instrument

d* in writing or the instrument is delivered up to the person primarily liable ":ec* 122 )5#

Notes o" Sectio" ;22

- if renounced in favor of a party secondarily liable, only he is exonerated from liabilityand all parties subsequent to him

- discharge by novation is allowed

79. #e"era$ r%$e: hen materially altered, without the consent of all parties liable, theinstrument is avoided e7cept as against:

a* the party who has made the alteration

b* the party who authoried or assented to the alteration*

c* subsequent indorsers

Ece3tio":

- if in the hands of a F/$, may be enforced according to its original tenor

Notes o" Sectio" ;2=

- there is no distinction between fraudulent and innocent alteration

80. Materia$ A$teratio"B an alternation is said to be material if it alters the effect of theinstrument*

=nder +ection >8 the ollowing changes are considered material alterations:

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a* dates

b* the sum payable

c* time and place of payment

d* number or relations of the parties

e* medium or currency for payment

f* adding a place of payment where no place is specified

g* any other which alters the affect of the instrument

81. I"sta"ces 4here a BOE !a& 8e treate' as a PN:

a* where the drawer and the drawee are one and the same

b* where the drawee is a fictitious person

c* where the drawee has no capacity to contract ":ec* 10 )5#

The holder has the option to treat it as a &>E or a )4

82. 3cceptance is the signification by the drawee of his assent to the order of the drawer* )t isan act by which a person on whom the '(@ is drawn assents to the request of the drawerto pay it* ":ec* 12 )5#

&cceptance ma" !e:

a* actual

b* constructive

c* general ":ec* 140#

d* qualified ":ec* 141#

2e*uisites o actual acceptance:

- in writing

- signed by the drawee

- must not express that the drawee will perform his promise by any other means thanpayment of money

- communicated or delivered to the holder

./- A ho$'er has the ri6ht:

a* require that acceptance be written on the bill and if refused, treat it as if dishonored":ec* 1#

b* refuse to accept a qualified acceptance and may treat it as dishonored ":ec* 142#

..- Co"str%cti5e Acce3ta"ce:

a* where the drawee to whom the bill has been delivered destroys it

b* the drawee refuses within 24 hrs after such delivery or within such time as is given, toreturn the bill accepted or not* ":ec* 1> )5#

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Notes o" Sectio" ;


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- it must be made on the same date of dishonor, by a notaryrespectable citien of theplace in the presence of 2 credible witnesses so recourse to secondary parties

J2* Acce3ta"ce or Ho"or ":ec* 1+1 )5#B an acceptance of a bill made by a strangerto it before maturirty, where the drawee of the bill has:

a* refused to accept it

b* and the bill has been protested for non-acceptance

c* or where the bill has been protested for better security

Re%isites or acce3ta"ce or ho"or:

- the bill must have been previously protested a# for non-acceptance b# or for bettersecurity

- the bill is not overdue at the time of the acceptance for honor

- the acceptor for honor must be a stranger to the bill

- the holder must give his consent

Notes o" Acce3ta"ce or Ho"or

- Purpose: to save the credit of the parties to the instrument or some party to it as thedrawer, drawee, or indorser or somebody else*

- .cceptor for honor is liable to the holder and to all the parties to the bill subsequent tothe party for whose honor he has accepted ":ec* 1+4#

@A5 = )5#

INS)RANCE LAW

1. ,aws applica!le to insurance in the order o priorit":

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a. )nsurance $ode

b. $ivil $ode

c. General %rinciples prevailing on the subject in the C:

2. Co"tract o I"s%ra"ce 7an agreement whereby one undertakes for a consideration toindemnify another against loss, damage or liability arising from an unknown contingentevent

3. Co"tract o S%ret&shi3 7deemed to be an insurance contract within the meaning of the)nsurance $ode, only if made by a surety who or which, as such, is doing an insurancebusiness

4. Dei"itio" o @'oi"6 a" i"s%ra"ce 8%si"ess:

a. making or proposing to make, as insurer, any insurance contract;

b. making or proposing to make as a surety, any contract of suretyship as a vocation andnot merely incidental to any other legitimate business or activity of the surety;

c. doing reinsurance business;

d. doing or proposing to do any business in the substance equivalent to any of theforegoing in a manner designed to evade the provisions of the )nsurance $ode*

5. Re%isites o I"s%ra"ce:

a. existence of an insurable interest;

b. risk of loss;

c. assumption of risk;

d. scheme to distribute losses; and

e. payment of premiums

Note: )f only a, b, and c are present, it is not a contract of insurance but a risk shiftingdevice*

6. Characteristics o a" i"s%ra"ce co"tract:

a. consensual

b. voluntary

c. aleatory- depends upon some contingent event; however, it is not a wagering nor agambling contract

d. e7ecuted as to the insured after payment of the premium

e. e7ecutoryas to insurer - not executed until payment for a loss

f. personal - each party takes into account the character, credit and the conduct of theother

g. conditional - liability is based on the happening of the event insured against

7. Parties to a co"tract o I"s%ra"ce:

a. insurer -party who assumes the risk or undertakes to indemnify the insured or to pay acertain sum on the happening of a specified contingency

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b. insured - person in whose favor the contract is operative, and who is indemnifiedagainst, or is to receive a certain sum upon the happening of a specified contingency

c. !eneiciar" -may or may not be the same as the insured

What perils ma" !e insured?

(a) any contingent or unknown event, whether past or future, which may damnify a personhaving an insurable interest; or

(b) any contingent or unknown event, whether past or future, which may create a liabilityagainst the person insured*

8. Ever" person has an insura!le interest in the lie and health o:

a. himself, his spouse and his children

b. any person on whom he depends wholly or in part for education or support, or in whomhe has a pecuniary interest

c. any person under a legal obligation to him for the payment of money, or respectingproperty or services, of which death or illness might prevent the performance or delay it

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

9. Insura!le Interest in Propert" ma" consist o:

a. an existing interest

b. an inchoate interest, founded on an existing interest

c. an expectancy, coupled with an existing interest out of which the expectancy arises

9efinition of *nsurable *nterest in )roperty: )nterest in property, whether real orpersonal, or any relation thereto, or liability in respect thereof, of such nature that acontemplated peril might directly damnify the insured*

10. I"sta"ces 4he" I"s%ra8$e I"terest !%st eist:

a. *nterest in )roperty insuredmust exist when the insurance takes effect and when theloss occurs, but need not exist in the meantime*

b. *nterest in the ;ife or 6ealth of a )erson *nsured must exist when the insurance takeseffect, but need not exist thereafter or when the loss occurs*

c. &eneficiaries of ;ife *nsurance need not have insurable interest in the life of theinsured*

d. &eneficiaries of )roperty *nsurancemust have insurable interest in the property insured*

Cate6or& I"s%ra8$e I"terest i" Lie

I"s%ra"ce

I"s%ra8$e I"terest i"

Pro3ert&>5 !asis may be based on pecuniaryinterest, affinity, orconsanguinity

based purely on pecuniaryinterest

85 when interest must exist at the time the policy takeseffect @I$@%6E lifeinsurance taken by the

at the time the policy takeseffect and at the time of theloss

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creditor on the life of thedebtor wherein interest mustalso exist at the time of theloss

A5 amount o insura!le

interest

no limit @I$@%6E if insurable

interest is based on creditor-debtor relationship "only tothe extent of the credit ordebt#

limited to the actual value of

damageinjuryloss

11. #e"era$ R%$e:

. change of interest in any part of a thing insured unaccompanied by a correspondingchange in interest in the insurance suspends the insurance to an equivalent extent, until theinterest in the thing and the interest in the insurance are vested in the same person*

Ece3tio"s:a* )n case of life, health, and accident insurance

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

c. a change of interest in one or more several distinct things, separately insuredby one policy

d. a change in the interest by will or succession on the death of the insured"interest passes to the heirs#

e. a transfer of interest by one of several partners, joint owners in common whoare jointly insured to the others "even though it has been agreed that the

insurance shall seie upon the alienation of the thing insured#

12. Re5ocatio" o Be"eiciaries

#e"era$ R%$e: )nsurance contracts are revocable*

Ece3tio": .ny person who is forbidden to receive any donation under .rticle >J ofthe $ivil $ode cannot be named beneficiary of a life insurance policy by the person whocannot make the donation to him*

'he ollowing donations shall !e void:

a. those made between persons who were guilty of adultery or concubinage at thetime of the donation;

b. those made by persons found guilty of the same criminal offense, in considerationthereof;

c. those made to a public officer or his wife, descendants, ascendants, by reason ofhis office*

Other Perti"e"t Pro5isio"s o" Re5ocatio":

(a) 6he termination of a subsequent marriage shall allow the innocent spouse to revoke

the designation of the other spouse who acted in bad faith as beneficiary in anyinsurance policy, even if such designation be stipulated as irrevocable*

(b) .fter the finality of the decree of legal separation, the innocent spouse may revokethe donations as well as the designation of the latter as a beneficiary in anyinsurance policy, even if such designation is irrevocable* 6he revocation of orchange in the designation shall take effect upon written notification thereof to the

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insured* 6he action to revoke the donation under this article must be brought withinA years from the time the decree of legal separation has become final*

(c) 6he interest of a beneficiary in a life insurance policy shall be forfeited when thebeneficiary is the principal, accomplice or accessory in willfully bringing about thedeath of the insured, in which event, the nearest relative of the insured shall receive

the proceeds of said insurance if not otherwise disqualified*

13. Co"cea$!e"t 7 a neglect to communicate that which the party knows or ought tocommunicate #e"era$ R%$e: 6he insured is not required to communicate the nature "or kind# or the

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

Ece3tio":

a* 3hen the insurer makes inquiry from the insured of the nature or amount of thelatter7s insurable interest, whether in life or property insurance;

b* insurance policy must specify the interest of the insured in the property insured,if he is not the absolute owner thereof*

3 concealment, whether intentional or not, entitles the injured party to rescind a

contract of insurance.

2e*uisites:

(a) the party concealing must have knowledge of the facts concealed;

(b) the facts concealed must be material to the risk;

(c) the party is duty bound to disclose such fact to the other;

(d) the party concealing makes no warranty as to the facts concealed;

(e) the other party has no other means of ascertaining the facts concealed*

Note:3n insured need not die of the very disease he failed to reveal to the insurer* )tis sufficient that the non-revelation has misled the insurer in forming his estimate of thedisadvantages of the proposed policy or in making his inquiries in order to entitle theinsurance company to avoid the contract*

Note: The insured is under an obligation to disclose not only such material facts as arenown to him, but also those nown to his agent where:

a. it was the duty of the agent to acquire and communicate information of the facts inquestion;

b. it was possible for the agent, in the exercise of reasonable diligence, to have madethe communication before the making of the insurance contract*

ailure on the part of the insured to disclose such facts nown to his agent, orwholly due to the fault of the agent, will avoid the policy, despite the good faith ofthe insured*

14. $either part" to the insurance contract is !ound to communicate inormation on theollowing matters except in answer to the in*uiries o the other:

a. those of which the other knows;

b. that which, in the exercise of ordinary care, the other ought to know and of which theformer has no reason to suppose his ignorance, i*e* political situation, general usagesof trade;

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c. those of which the other waives communication;

d. those which prove or tend to prove the existence of the risk excluded by a warranty andwhich are not otherwise material;

e. those which relate to a risk excepted from the policy and which are not otherwisematerial*

either party is bound to communicate his mere opinion, even upon inquiry, becausesuch opinion would add nothing to the appraisal of the application*

Waiver o material acts ma" !e:

(a) by the terms of the insurance; or

(b) by the neglect to make inquiry as to such facts, where they are distinctly implied inother facts which information is communicated

ateriality is to be determined not by the events but solely upon the probable andreasonable influence of the facts on the party to whom the communication is due informing his estimate of the disadvantages of the proposed contract or in making hisinquiries*

$oncealment, whether intentional or not, entitles the other party to rescind the contract*

15. Re3rese"tatio"

)t is a factual statement made by the insured at the time of, or prior to, the issuance ofthe policy, to give information to the insurer and otherwise induce him to enter into theinsurance contract*

)t may be made orally or in writing*

)t may be made at the time of, or before, the issuance of the policy*

)t may be altered or withdrawn before the insurance is effected, but not afterwards*

. representation cannot qualify an express provision in a contract of insurance but it mayqualify an implied warranty*

. representation as to the future is to be deemed a promise unless it appears that it wasmerely a statement of belief or an expectation* "must be susceptible of present, actualknowledge#

6he statement of an erroneous opinion, belief or information, or of an unfulfilled intention,will not avoid the contract of insurance, unless fraudulent*

2ight to rescind !ecause o alse representation:

a. must be exercised previous to the commencement of an action on the contract "theaction referred to is that to collect a claim on the contract#

b. misrepresentation, whether intentional or not, gives the right to rescind

I"co"testa8$e C$a%se: .fter a policy of life insurancemadepayable on the death of theinsuredshall have been in force during the lifetime of the insured for a period of ? yearsfrom the date of its issue or of its last reinstatement, the insurer cannot prove that thepolicy is void ab initio or is rescindable by reason of the fraudulent concealment ormisrepresentation of the insured or his agent*

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Ece3tio"s:

"a# absence of insurable risk

(b) cause of loss is an unexpected risk

(c) fraud

(d) non-payment of premium(e) violation of conditions relating to naval or military services

(f) failure to comply with conditions subsequent to the occurrence of the loss

16. Warra"ties:

#e"era$ R%$e: on-performance of a promissory warranty avoids a contract ofinsurance*

Ece3tio"s:

a. when before the time for performance of the promissory warranty, a loss insuredagainst occurs;

b. when before the time of the performance of the warranty, the act becomes unlawful;

c. when before the time of the performance of the warranty, said performancebecomes impossible*

. statement or a promise set forth in the policy or by reference incorporated therein, thenon-fulfillment of which in any respect and without reference to whether the insurer wasin fact prejudiced by such non-fulfillment, renders the policy voidable by the insurer,wholly irrespective of the materiality of such statement or promise*

Warra"t& Re3rese"tatio"

part of the insurance contract collateral inducement

always written on the policy maybe oral or written

conclusively presumed material materiality must be proved

must be strictly complied with requires substantial truth

made by the insured may be made by insurer or insured

Note: *f there is a breach of warranty, even if the cause of the loss is a different risk,the insurer is entitled to rescind the contract of insurance*

'reach must refer to a material warranty, whether intentional or not*

17. Po$ic&

What is a 2ider? )t is an additional provision in a policy not part of the body of the

printed form*

. rider, clause, warranty or endorsement to be binding must be pasted orattached to the policy and its descriptive titles or name must be mentioned andwritten on the policy7s blank spaces

)f the rider is pasted or attached at the time the policy is issued the signature ofthe insured is not necessary to make it binding*

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(b) conviction of a crime arising out of acts increasing the haard insuredagainst

(c) discovery of fraud or material misrepresentation

(d) discovery of willful or reckless acts or omissions increasing the haard

insured against

(e) physical changes in the property insured which results in the propertybecoming uninsurable

(f) determination by the $ommissioner that the continuation of the policywould violate or would place the insurer in violation of the )nsurance$ode

(3) notice must be in writing

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

policy

(5) notice must state the ground relied upon and that upon written request of theinsured, the insurer will furnish facts on which the cancellation is based

Re"e4a$ o the Po$icies Other tha" Lie:

)nsurer must mail or deliver to the insured notice of its intention not to renew thepolicy or to condition its renewal upon reduction of limits or elimination of coverageswithin 4A days before the policy ends* >therwise,insured entitled to renew the policyupon payment of the premium due on the effective date of the renewal*

18. Pre!i%!

#e"era$ R%$e: o policy is binding until the premium thereof has been paid*

Ece3tio"s:

"a# in case of life or industrial life policy, whenever the grace period applies

(b) in case of estoppel

)nsurer is entitled to payment of premiums as soon as the thing insured is exposed tothe perils insured against*

Whe" i"s%rer e"tit$e' to Ret%r" o Pre!i%!s

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

b. when on account of facts, the existence of which the insured was ignorant withouthis fault

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

d. when the insured has become a public enemy and the policy automatically canceled"on the ground of equity#

e. in case of over-insurance by several insurers "ratable return of premiums,proportioned to the amount by which the aggregate sum insured in all policiesexceed the insurable value of the thing at risk#

19. Loss

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Whe" I"s%rer is Lia8$e:

a. where the peril insured against was the proximate cause, although a peril notcontemplated by the contract may have been the remote cause or even theimmediate cause of the loss

b. where the thing insured is rescued from the peril insured against that wouldotherwise have caused a loss, if, in the course of such rescue, the thing is exposedto a peril not insured against, which permanently deprives the insured of itspossession in whole or in part

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

d. insurer is not exonerated by a loss caused by simple negligence of the insured if theproximate cause of the loss is a peril insured against

e. loss, the immediate cause of which is a peril insured against except when theproximate cause is an excepted peril

Whe" I"s%rer Not Lia8$e:

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

b. where the peril is specifically excepted, a loss which would not have occurred but forsuch peril is thereby excepted

c. loss caused by the connivance of the insured

d. loss caused by the willful act of insured

e. loss caused by insured7s negligence, if it amounts to bad faith

#e"era$ R%$e: 6he insurer is not liable for a loss caused by the willful act of theinsured*

Ece3tio": /uicide (lause in ;ife *nsurance: )nsurer liable in case insured committedsuicide after the policy has been in force for a period of 2 years from the date of itsissue or last reinstatement* )f insured kills himself within a period of 2 years, insurer isnot liable*

Ece3tio" to Ece3tio": )f suicide is committed in a state of insanity, regardless of thetime of commission, the insurer is liable*

20. Do%8$e I"s%ra"ce 7 exists where the same person is insured by several insurersseparately in respect to the same subject and interest

Re%isites:

a* person insured must be the same

b. existence of several insurers

c. subject matter insured must be the same

d. interest the same

e. risk insured against also the same

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O5er I"s%ra"ce Do%8$e I"s%ra"ce

may be only one insurer must be 2 or more insurers

insurance covers more than the value ofinsurable interest

insurance may or may not exceed the value ofinsurable interest

The (ode prohibits double insurance without the consent of the insurer.

,ia!ilit" o Insurer:

)nsurance takenfrom each insurer

---------------------------------- x value of property received L liability of insurer total insurance

21. Rei"s%ra"ce: . process by which an insurer procures a third person to insure him againstloss or liability by reason of such original insurance*

6he original insured cannot recover from this insurance unless there is a specific grant, or

assignment of, the reinsurance contract in favor of the insured, or a manifest intention of thecontracting parties to the reinsurance contract to favor the insured*

#e"era$ R%$e: The insurer who obtains reinsurance must communicate:

a. all the representations of the original insured; and

b. all the knowledge and information he possesses, whether previously orsubsequently acquired which are material to the risk

Ece3tio": under automatic reinsurance treaties when two or more insurancecompanies agree in advance that each will reinsure a part of any line of insurance takenby the other* "in this instance, the contract is self-executing and the obligation attachesautomatically on acceptance of a risk by the reinsured*#

Rei"s%ra"ce Do%8$e I"s%ra"ce

1. insurer becomes the insured

2. subject matter is the insured risk or liability

3. different risks and interests of insured

4. there must be consent of original

5. one who is original insured has no interestin the contract of reinsurance which isindependent of the original contract ofinsurance

1. insurer remains the insurer

2. subject matter is property

3. the same interest and risk are insured

4. insured has to give his consent

5. insured is the party in interest in allcontracts

22. Mari"e I"s%ra"ce: insures against perils of the sea, not of the ship

Peri$s o the Sea Peri$s o the Shi3

covered by marine insurance not covered by marine insurance

denote nature accidents peculiar to the seawhich do not happen by intervention of man

damage or losses resulting fromE

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nor are to be prevented by human prudence 1. natural and inevitable action of the sea

2. ordinary wear and tear of a ship, or

3. negligent failure of the ship owner toprovide the vessel with proper equipment

to convey the cargo under ordinaryconditions

O4"er o the Shi3 has I"s%ra8$e I"terest:

a. in the ship even if it has been chartered by one who promises to pay him in value incase of loss "insurer is liable for what insured cannot recover from the charterer#,even when hypothecated by bottomry "only the excess of its value over the amountsecured by bottomry# and

b. in the freightage, 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 perilincident to the voyage

(harterer has insurable interest in the ship to the extent that he is liable to be damnified byits loss*

Barratr&:

.ny willful misconduct on the part of the masters or crew, in pursuance of someunlawful or fraudulent purpose, without the consent of the owners and to the prejudice ofthe owner7s interest*

ettiso":

)ntentional casting overboard of any part of a venture exposed to a peril, whether it beof the cargo, or the ship7s furniture or tackle, in the hope of saving the rest of the venture*

Insura!le Interest in #arine Insurance:

/etermined when one will sustain loss from the destruction of the subject matter orderive benefit from its preservation*

Charter Part&:

$ontract by virtue of which the owner or the agent of a vessel binds himself totransport merchandise or persons for a fixed price* )t has also been defined as a contractby virtue of which the owner or the agent of the vessel for the transportation of goods orpersons from one port to another*

Loa" o" Botto!r&:

$ontract in the nature of a mortgage whereby the owner of a ship borrows money forthe use, equipment or repair of the vessel for a definite term, and pledges the ship as asecurity for repayment, with maritime or extraordinary interest on the account of the maritimerisks to be borne by the lender* )t is stipulated in such a contract that if the ship be lost inthe course of the specific voyage or during a specified limited time caused by any of the

perils enumerated in the contract, the lender shall resolutely lose his money*

Loa" o" Res3o"'e"tia:

$ontract akin to that of mortgage made on the goods on board the ship, and which areto be sold or exchanged in the course of the voyage* 6he goods serve as the principalsecurity*

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Frei6hta6e:

:ignifies all the benefits derived by the owner, carriage of his own goods, or those ofothers*

(oncealment: *n marine insurance, information or the belief or e7pectation of a @rdperson,

in reference to a material fact is material.

(oncealment of the following merely e7onerates the insurer from the resulting losstherefrom:

a. national character of the insured

b. liability of the thing insured to capture and detention

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

d. want of necessary documents

e. use of false and simulated papers

I!3$ie' Warra"ties:

a. that the ship is seaworthy - complied with if the ship is seaworthy at the time ofcommencement of risk, e7cept:

"a# insurance for a specified length of time - at the commencement of everyvoyage it undertakes during that time;

"b# cargo to be transshipped at indeterminate port - each vessel upon whichcargo is shipped is seaworthy at the commencement of each particularvoyage

b. that the vessel shall not engage in illegal venture

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

d. where the nationality or neutrality of a ship or cargo is e7pressly warranted, it isimplied that the ship will carry the requisite documents to show such nationality orneutrality and that it will not carry any documents which may cast reasonable

suspicion thereon

+eaworthiness depends on:

a. nature of the ship

b. nature of the voyage

c. nature of the service

/eaworthiness of the vessel is reuired only at the commencement of the ris

Exceptions:

a. in a Time )olicy- commencement of every voyage that must be undertaken

b. in a (argo )olicy- commencement of each particular voyage

c. in a 8oyage )olicy- commencement of each portion of the voyage

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De5iatio"

a. a departure from the course of the voyage insured

b. unreasonable delay in pursuing the voyage

c. commencement of an entirely different voyage

When is eviation proper?

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

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

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

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

Loss

a. Act%a$ Tota$ Loss

a total destruction of the thing insured

the irretrievable loss of the thing by sinking or by being broken up

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

any other event which effectively deprives the owner of possession, at the port ofdestination, of the thing insured

a. Co"str%cti5e Tota$ Loss- gives to the person insured the right to abandon

&verage - any extraordinary or additional expense incurred during the voyage for thepreservation of the vessel, cargo, 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

;eneral &verage - an expense or damage suffered deliberately in order to save thevessel, its cargo, or both from the real or known risk

&!andonment - act of the insured by which, after a constructive total loss, he declares therelinquishment to the insured of his interest in the thing insured "where the cause of lossis a peril insured against#

(a) more than M thereof in value is actually lost or would have been expended to recoverit from the peril

(b) it is injured to such an extent as to reduce its value by more than M

(c) if the thing insured is the ship and the voyage cannot be lawfully performed withoutincurring an expense of more than M of the whole, or a risk which a prudent manwould not undertake under the circumstances

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Primage -increase in freightage

23. Fire I"s%ra"ce

)nsurer is liable for loss or damage caused by hostile fire "fire that escapes from theplace where it was intended to burn and ought to be in# and not that caused by friendly fire"fire which burns in a place where it is intended to burn#*

Sco3e o Fire I"s%ra"ce:

a. fire

b. lightning

c. windstorms

d. tornado

e. earthquake

f. other allied risks

When does alteration in the use or condition entitle the insurer to rescind the

contract?

a. such alteration violates a provision in the policy

b. it was made without the insurer7s consent

c. it is done within the insured7s control, and it increases the risk of loss or damage

R%$es:

a. policy shall not protect the insured from injury consequent upon his negligent use ormanagement of fire, so long as it is confined to the place where it ought to be

b. if it escapes, even though the insured was negligent, the insurer is liable

c. even though a fire may remain in its proper place, it may become hostile if it byaccident, becomes so extensive as to be beyond control

Options o the Insurer

a. purchase the property at appraised valuation

b. restore the property damaged - contract of insurance is discharged and parties enterinto a new contract of insurance

24. Cas%a$t& I"s%ra"ce:

.ny injury that is intended, unexpected and unusual, even though it results from an actor even which was intelligently done*

Insurer is ,ia!le or death(in)ur" to insured:

a. by his own hand while insane

b. by taking poison by mistake

c. by overdoes of drugs administered or taken by mistake, by ignorance or materialpathological conditions

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d. by unexpected bacterial infection consequent upon doing acts, even though suchacts were intentionally done

e. by unprovoked violence of others

Co!3%$sor& Motor ehic$e Lia8i$it& I"s%ra"ce

Perso"s s%8ect to CMLI:

a. motor vehicle owner or one who is the actual legal owner of a motor vehicle inwhose name such vehicle is registered with the 56(

b. land transport operator or one who is the owner of a motor vehicle or vehicles beingused for conveying passengers for compensation "including school buses#

No Fa%$t I"'e!"it& C$a%se:

6he insurance company shall pay any claim for death or bodily injuries sustained bya passenger or rdparty without the necessity of proving fault or negligence of any kind

subject to certain conditions* 6his does not apply to property damage* )t is in the nature ofpreliminary indemnity pending final determination as to which party is at fault or negligent*

'he ollowing are the rules on claims under the said provisions:

"1# claim shall be made upon the insurer of the vehicle on which he is riding, embarkingor disembarking;

"2# if claimant is not a passenger, he shall claim for the person who is directly at fault;

"# this is subject to final determination as to the party who is negligent or who is atfault;

"4# payment is subject to reimbursement from the party at fault or negligent*

25. S%ret&shi3 7 an agreement whereby the surety guarantees the performance of theprincipal or obligor of an obligation or undertaking in favor of a rdparty called the obligee

26. Lie I"s%ra"ce:

an insurance in human life and insurance appertaining thereto or connected therewithmay be payable:

a. on the death of the insured

b. on his surviving a specified period

c. otherwise, contingently on the continuance or cessation of life

"b and c refer to endowment or annuities#

)ses a"' Co!!o" (i"'s o Lie I"s%ra"ce:

a. Whole ,ie or Ordinar" Policies- here, the insured agrees to pay annual, semi-annual or quarterly premiums while he lives* 6he insurer agrees to pay the face

value of the policy upon the death of the insured*

b. ,imited Pa"ment ,ie Polic"- premiums paid only for a specified period of years*

c. 'erm Polic"- insurer7s liability arises only upon the death of the insured within theagreed term as period* )f the latter survives the period, the contract terminates andthe insurer is not liable

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d. Endowment Polic"- insurer agrees to pay a certain sum to the insured if the latteroutlives a designated period; if he dies before that time, the proceeds are paid tothe beneficiary

e. ,ie &nnuit"- debtor binds himself to pay an annual pension or income during thelife of one or more persons in consideration of a capital consisting of money or

other property, whose ownership is transferred to him with the burden of income

27. The B%si"ess o I"s%ra"ce

a. Lie or E"'o4!e"t Po$icies

;race Period- 0 days for the payment of any premium due after the first premiumhas been paid

Period o Incontesta!ilit"- after the lapse of 2 years from the date of issue or dateof approval of last reinstatement

2einstatement o Polic"- within @ years from the date of default of premium, upon:

a. production of evidence of insurability, and

b. payment of all overdue premiums and any indebtedness to the company upon saidpolicy

Exceptions:

a. if cash surrender value has been paid

b. if period of extension has expired

b. C$ai!s Sett$e!e"t

=nair Claims +ettlement Practices:

(a) knowingly misrepresenting to claimants pertinent facts or policy provisions relating tocoverage at issue

(b) failing to acknowledge with reasonable promptness pertinent communications with

respect to claims arising under its policies

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

(d) no attempt in good faith to effectuate prompt, fair and equitable settlement of claimssubmitted in which liability has become reasonably clear

(e) compelling policy holders to institute suits to recover the amount due under itspolicies by offering with no justifiable reason an amount substantially less than thatultimately recovered in suits brought by them

Proceeds o ,ie Insurance- payable within +0 days afterE

(a) presentation of claims, and

(b) filing of proof of death "upon failure to pay interest, at the rate of 2 times the ceilingprescribed by the !onetary 'oard unless based on the ground that the rate isfraudulent#

Procee's o Po$icies other tha" Lie-payable:

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b* 6o direct the management, operations and administrationof the $orporation;

c* 6o appoint, fix the remunerations and remove all officersand employees of the $orporation, subject to the $ivil :ervice 5aw; and

d* 6o authorie such expenditures by the $orporation as arein the interest of the effective administration and operation of the $orporation*

>* .ny obligation of a bank which is payable at the office of thebank located outside of the %hilippines shall not be a deposit for any of the purposes ofthis .ct or included as part of the total deposits or of the insured deposit*

=* .ny insured bank which is incorporated under the laws of the%hilippines which maintains a branch outside the %hilippines may elect to include forinsurance its deposit obligation payable only at such branch*

J* .ny bank or banking institution which is engaged in the business

of receiving deposits may insure its deposit liabilities with the $orporation*

10. The factors to be considered by the &oard of 9irectors for theapproval of the application:

a* the financial history and condition of the 'ank,

b* the adequacy of its capital structure,

c* its future earning prospects,

d* the general character of its management,

e* the convenience and needs of the community to beserved by the 'ank and

f* whether or not its corporate powers are consistent withthe purposes of the .ct*

11* 6he 'oard of /irectors must also determine that the bank7sassets in excess of its capital requirements are adequate to enable it to meet all itsliabilities to depositors and other creditors as shown by the books of the bank*

12* 6he assessment rate shall be determined by the 'oard of

/irectors but shall not exceed one-twelfth of one per centum per annum* 6he semiannualassessment for each insured bank shall be in the amount of the product of one-half "12#the assessment rate multiplied by the assessment base*

1* .lthough the assessment base shall be the amount of the liabilityof the bank for deposits, without any deduction for indebtedness of depositors, the bankmay

"1# deduct

"i# from the deposit balance due to an insured bank the deposit balance duefrom such insured bank "other than trust funds deposited by it in such bank#which is subject to an immediate withdrawal; and

"ii# cash items as determined by either of the following methods, at the option ofthe bankE

"a# by multiplying by 2 the total of the cash items forwarded forcollection on the assessment base days "being the days on whichthe average deposits are computed# and cash items held forclearings at the close of business on said days, which are in the

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process of collection and which the bank has paid in the regularcourse of business or credited to deposit accounts; or

"b# by deducting the total of cash items forwarded for collection on theassessment base days and cash items held for clearing at the closeof business on said days, which are in the process of collection and

which the bank has paid in the regular course of business orcredited to deposit accounts, plus such uncollected items paid orcredited on preceding days which are in the process of collectionE%rovided, 6hat the 'oard of /irectors may define the terms NcashitemsN, Nprocess of collectionN, and Nuncollected itemsN and shall fixthe maximum period for which any such item may be deducted; and

"2# may exclude from its assessment base

"i# drafts drawn by it on deposit accounts in other banks which are issued in theregular course of business; and the amount of devices or authoriationsissued by it for cash letters received, directing that its deposit account in the

sending bank be charged with the amount thereof; and

"ii# cash funds which are received and held solely for the purpose of securing aliability to the bank but not in an amount in excess of such liability, andwhich are not subject to withdrawal by the obligor and are carried in aspecial non-interest bearing account designated to properly show theirpurpose*

14* @ach insured bank, as a condition to the right to make any suchdeduction or exclusion in determining its assessment base, shall maintain such records aswill readily permit verification of the correctness thereof*

1A. The insured ban must file a certified statement:

i* on or before the 1Athof ?uly of each year, showingfor the + months ending on the preceding ?une 0 the amount of the assessment baseand the amount of the semiannual assessment due to the $orporation for the periodending on the following /ecember thirty-one and pay to the $orporation the amount ofthe semiannual assessment it is required to certify*

ii* on or before the 1Ath day of ?anuary of each year,each insured bank shall file a similar certified statement for the six months ending onthe preceding /ecember thirty-one and shall pay to the $orporation the amount of thesemiannual assessment for the period ending on the following ?une thirty which it is

required to certify*

1+* .ny insured bank which fails to file any certified statementrequired to be filed by it in connection with determining the amount of any assessmentpayable by the bank to the %/)$ may be compelled to file such statement by mandatoryinjunction or other appropriate remedy in a suit brought for such purpose by the %/)$against the bank and any officer or officers thereof in any court of the %hilippines ofcompetent jurisdiction in which such bank is located*

1>* 6he %/)$, in a suit brought in any court of competent jurisdiction,shall be entitled to recover from any insured bank the amount of any unpaid assessmentlawfully payable by such insured bank to the %/)$, whether or not such bank shall havefiled any such certified statement and whether or not suit shall have been brought tocompel the bank to file any such statement*

1=* o action or proceeding shall be brought for recovery of anyassessment due to the %/)$ or for the recovering of any amount paid to the %/)$ inexcess of the amount due to it, unless such action or proceeding shall have been broughtwithin five years after the right accrued for which the claim is made, except where theinsured bank has made or filed with the %/)$ a false or fraudulent certified statement withthe intent of evade, in a whole or in part, the payment of assessment, in which case the

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claim shall not have been deemed to have accrued until the discovery by the %/)$ that thecertified statement is false fraudulent*

1J* :hould any insured bank fail or refuse to pay any assessmentrequired to be paid and should the bank not correct such failure or refusal within thirty daysafter written notice has been given by the %/)$ to an officer of the bank, stating that the

bank has failed or refused to pay as required by law the insured status of such bank shallbe terminated by the 'oard of /irectors*

20* 6he remedies provided in this subsection and in the twopreceding subsections shall not be construed as limiting any other remedies against aninsured bank but shall be in addition thereto*

8>5 'ermination o +tatus as an insured !an.:

"a# .ny insured bank may, upon not less than ninety days, writtennotice to the $orporation, and to the /evelopment 'ank of the %hilippines if it owns orholds as pledges any preferred stock, capital notes, or debentures of such bank,

terminate its status as an insured bank*

"b# 'y the %/)$E

3hen the 'oard finds that an insured bank or its directors or trustees have

o continued unsafe or unsound practices in conducting the business of the bank

o have knowingly or negligently permitted any of its officers or agents to violateany provisions of any law or regulation to which the insured bank is subject,

6he 'oard shall first give to the $entral 'ank a statement with respect to such

practices or violations for the purpose of securing the correction thereof and shallgive a copy thereof to the bank*

Cnless such correction shall be made within 120 days or such shorter period of timeas the $entral 'ank shall require, the 'oard, if it shall determine to proceed further,shall give to the bank not less than 0 daysO written notice of intention to determinethe status of the bank as an insured bank, and shall fix a time and place for ahearing before the 'oard or before a person designated by it to conduct suchhearing, at which evidence may be produced, and upon such evidence the 'oardshall make written findings which shall be conclusive*

Cnless the bank shall appear at the hearing, it shall be deemed to have consented

to the termination of its status as an insured bank*

)f the 'oard shall find that any unsafe or unsound practice or violation specified insuch notice has been established and has not been corrected within the time aboveprescribed in which to make such correction, the 'oard may order that the insuredstatus of the bank be terminated*

6he $orporation may publish notice of such termination and the bank shall givenotice of such termination to each of the depositors at his last address of record onthe books of the bank*

.fter the termination of the insured status of any bank, the insured deposits of eachdepositor in the bank on the date of such termination, less all subsequentwithdrawals from any deposits of such depositor, shall continue for a period of twoyears to be insured, and the bank shall continue to pay to the $orporationassessments as in the case of an insured bank during such period*

22* 6he %/)$, upon the payment of any depositor shall besubrogated to all rights of the depositor against the closed bank to the extent of suchpayment, but such depositor shall retain his claim for any uninsured portion of his deposit*

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2* 6he %/)$ may withhold payment of the insured deposit in aclosed bank as may be required to provide for the payment of any liability of the depositoras a stockholder of the closed bank, or of any liability of the depositor to the closed bank orits receiver, which is not offset against the claim due from such bank, pending thedetermination and payment of such liability by such depositor or any other person liable

therefor*

24* .fter the %/)$ has given at least months notice to thedepositor, he must claim his insured deposit from the %/)$ within 1= months after the$entral 'ank or proper court shall have ordered the conversion of the assets of the closedbank into money* (therwise, all rights of the depositor against the %/)$ with respect to theinsured deposit shall be barred, and all rights of the depositor against the closed bank andits shareholders or the receivership estate to which the %/)$ may have becomesubrogated, shall thereupon revert to the depositor*

2A* .ll notes, debentures, bonds, or such obligations issued by the$orporation shall be exempt from taxation*

845 &cts !" the insured !an. which need consent rom the PIC:

"1# merge or consolidate with any noninsured bank or institution or convert into anoninsured bank or institution

"2# assume liability to pay any deposits made in, or similar liabilities of, any noninsuredbank or institution

"# transfer assets to any noninsured bank or institution in consideration of theassumption of liabilities for any portion of the deposits made in such insured bank*

TRANSPORTATION LAW

1. Co"tract o Tra"s3ortatio"- contract whereby a certain person or association of personsobligate themselves to transport persons, things, news, from one place to another for afixed price

2. Parties to the Co"tract o Tra"s3ortatio":

a. +hipper - one who gives rise to the contract of transportation by agreeing to deliver thethings or news to be transported, or to present his own person or those of other orothers in the case of transportation of passengers

b. Carrier(Conductor- one who binds himself to transport persons, things, or news, asthe case may be, or one employed in or engaged in the business of carrying goods forothers for hire

c. Consignee B the party to whom the carrier is to deliver the things being transported;one to whom the carrier may lawfully make delivery in accordance with its contract ofcarriage "shipper and consignee may be the same person#

3. Co!!o" Carrier - person, corporation, firm, association engaged in the business ofcarrying or transporting passengers, goods or both, by land, water, air, for compensation,offering services to the public; must e7ercise e7traordinary diligence

Pri5ate Carrier - not engaged in the business of carrying; no public employment;undertakes to deliver goodspassengers for compensation; reuires only ordinary diligence

3 common carrier is )E/'E9 negligent when there is a breach of its contract. *t

has to prove it e7ercised E>9 in order to escape liability.

4* Re%isites o Caso Fort%ito

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a. event independent of human will

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

c. debtor free from aggravationparticipation

d. impossible to foresee or avoid5. (ontributory negligencedoes not entitle passengers to recover moralexemplary damages*

6. Bi$$ o La'i"6- written acknowledgment of receipt of goods and agreement to transportthem to a specific place to a person named or his carrier

Documents

Commerce MA copy.doc