Most important provisions to memorize. Liabilities of parties: - Engagement to pay - Breach of warranty/ies Section 1. Form of negotiable instruments.

- An instrument to be negotiable must conform to the following requirements: (a) It must be in writing and signed by the maker or drawer; (b) Must contain an unconditional promise or order to pay a sum certain in money; (c) Must be payable on demand, or at a fixed or determinable future time; (d) Must be payable to order or to bearer; and (e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty. Sec. 29. Liability of accommodation party. - An accommodation party is one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder, at the time of taking the instrument, knew him to be only an accommodation party. Sec. 52. What constitutes a holder in due course. - A holder in due course is a holder who has taken the instrument under the following conditions: (a) That it is complete and regular upon its face; (b) That he became the holder of it before it was overdue, and without notice that it has been previously dishonored, if such was the fact; (c) That he took it in good faith and for value; (d) That at the time it was negotiated to him, he had no notice of

any infirmity in the instrument or defect in the title of the person negotiating it. Sec. 60. Liability of maker. - The maker of a negotiable instrument, by making it, engages that he will pay it according to its tenor, and admits the existence of the payee and his then capacity to indorse. Sec. 61. Liability of drawer. - The drawer by drawing the instrument admits the existence of the payee and his then capacity to indorse; and engages that, on due presentment, the instrument will be accepted or paid, or both, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay it. But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder. Sec. 62. Liability of acceptor. - The acceptor, by accepting the instrument, engages that he will pay it according to the tenor of his acceptance and admits: (a) The existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the instrument; and (b) The existence of the payee and his then capacity to indorse. Sec. 64. Liability of irregular indorser. - Where a person, not otherwise a party to an instrument, places thereon his signature in blank before delivery, he is liable as indorser, in accordance with the following rules: (a) If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties. (b) If the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer. (c) If he signs for the accommodation of the payee, he is liable to all parties subsequent to the payee. Sec. 65. Warranty where negotiation by delivery and so forth. Every person negotiating an instrument by delivery or by a qualified indorsement warrants:

(a) That the instrument is genuine and in all respects what it purports to be; (b) That he has a good title to it; (c) That all prior parties had capacity to contract; (d) That he has no knowledge of any fact which would impair the validity of the instrument or render it valueless. But when the negotiation is by delivery only, the warranty extends in favor of no holder other than the immediate transferee. The provisions of subdivision (c) of this section do not apply to a person negotiating public or corporation securities other than bills and notes. Sec. 66. Liability of general indorser. - Every indorser who indorses without qualification, warrants to all subsequent holders in due course: (a) The matters and things mentioned in subdivisions (a), (b), and (c) of the next preceding section; and (b) That the instrument is, at the time of his indorsement, valid and subsisting; And, in addition, he engages that, on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it. Sec. 67. Liability of indorser where paper negotiable by delivery. Where a person places his indorsement on an instrument negotiable by delivery, he incurs all the liability of an indorser. Enforcement of Liabilities: illustration PN: A-B-C-D-E + = present to A if not paid, E gives notice to B,C,D. those without notice DISCHARGED. Basis of liabilities of B,C,D as indorsers under sec. 66.

BEX: A-B-C-D-E = E presents to X for acceptance X Drawee If not accepted/qualifiedly accepted, E serves notice to A,B,C, and D. basis of X he is not party to the instrument, X cannot compel to pay. Hence X can go to secondary parties. Insurance Sec.3 modified by RA 6089 regarding of minors getting contract insurance. Insurance is not a wagering contract hindi pinagkakakitaan INSURABLE INTEREST Connection with the SM of insurance contract. Absence thereof will exonerate insurer. *sec 25 prohibits the party from agreeing for the payment of loss/ wagering. Will consider void or non-existent. - creditor can insured the life of his debtor likewise the employer to his employee. IN PROPERTY even if not the owner of the property. Eg lessee. -existent -inchoate eg. Shareholding, based on the fact that he has a share in the company. - based on expectancy there should be basis. Founded upon the existing interest. *INSURABLE INTEREST IN LIFE vs. INSURABLE INTEREST IN PROPERTY. - unlimited - limited to the actual value of the interest thereon

In case of mortgaged property- mortgagor and mortgagee can insured the same property. *sec 8 deemed interest of the mortgagor pa din. Does not cease to be a party to the original contract. Warranties just like condition, presupposes na may contract na. express or implied, past or future event. Affirmation that certain facts/condition are true. Effect of breach of warranties: gives the insurer the right to rescind.(may exception) If breach without fraud the insurer will only be exonerated from the time the breach occur Concealment and representation goes with the formation of consent. Since insurance contract is a consensual contract. Neglect to communicate what the party ought to communicate. Good faith is not a defense. Occurring at the time of negotiation Representation ur disclosing things. Remedies: rescission

Concealment in marine insurance: if one under sec 110 insurer will be exonerated. Implied warranties in marine insurance: seaworthiness, seaworthy at the commencement of the voyage need not be seaworthy at the entire voyage if theres delay in the repair insurer will be exonerated. Will consider breach of warranty of seaworthiness. Time policy; cargo policy; voyage policy. Loss in marine insurance: total or partial: if total: complete compensation from insurance company, if partial: partial loss/compensation only. Actual loss: total destruction, irretrievable loss, becomes valueless. Constructive total loss: right of the party to abandon, test. It is partial loss but it is too much loss. Liability for Average: Even if the insurer of the goods insured shall be answerable for the sacrifice taken. FIRE INSURANCE: Specific risk: hostile fire not friendly fire. Co-insurance: should be stipulated. Apportionment of losses. CASUALTY INSURANCE: accident insurance - Employers liability insurance - Theft insurance - Personal accident insurance - Health insurance CMVLI

LIFE INSURANCE: Measure of life insurable interest; sum fixed in the policy unless susceptible of pecuniary estimation. In case of suicide- after the policy has been enforced for 2yrs. If suicide due to insanity 2yrs will not apply. *transferable even without notice to the insurer. CMVLI No fault indemnity clause- allows recovery of third party/occupant without necessity of proving fault of driver and or common carrier.

CORPO: Control and management of the corporation: sec 21: general powers of board. Most powerful body Business Judgment rule: the power vesting in the board is absolute. In the absence of bad faith the court will not disturb the board. Except: if board action is reversed by the court. Voting: number of shares x number of seat to be filled. Power of corporations: pre-emptive right: in all issuances of share by the corporation. By Stockholders of records. first or prior right to subscribe .a matter of right if the issuance approved by 2/3 representing OCS, shares in exchange of property useful to the business, is pursuant to law. Maybe denied in the article of incorporation. Power to invest corporate funds in another corporation or business for any other purpose: must have vote of BOD and SH, Power to declare dividends: approval of BOD must be concurred by 2/3 of OCS,

MEETINGS: proxies: SH: -allowed in non-stock but should be provided for in the by-laws. Good for 5years. IN BOD- not allowed. *voting trust: enforceable and effective upon approval of SEC. not exceed 5years unless imposed in loan agreement by creditor. All rights pertaining to SH shall be exercised by voting trustee: right to vote: to be voted: and to receive dividend. Consideration for stocks: SEC 62: issued for actual cash paid, property, labor, previously incurred indebtedness, amt transferred from URE to stated capital. Actual cash: foreign currency allowed. Previously incurred: advancement made by creditors or SH, can be converted into equity Offsetting of liability by way of issuing share recorded in the book. From URE: Merger and consolidation: the plan of merger/consolidation must be by majority of B concurred by 2/3 votes of OCS/ members in case of non-stock. The basis for the issuance of share shall be the net worth or asset of the absorbed corporation. effectivity : after approval by the SEC

*non-issuance of share if the merger or consolidation is between the principal and subsidiary. - If the absorbed corporation is insolvent.(capital deficiency) - owned by one and common SH APPRAISAL RIGHT: the right of the dissenting SH. Demanding the FMV of its share.

NON-STOCK CORPORATION: non-profit, not allowed to declare any form of dividends. Except: MUTUAL BENEFIT ASSOCIATION. One vote per every member but may be broadened limited or denied as provided for in the by-laws. NON-TRANSFERABLE of membership. SPECIAL CORPORATION: educational and religious corp. *Educational: prohibition on the board that the management shall be vested in the citizens of the Philippines if stock educ. Corp:? *Religious: corp. sole and aggregate.5 but not more than 15 trustees. Term: perpetual of indefinite. Educ and religious one of the same? NO should be separate. DISSOLUTION: majority of BOD and 2/3 of OCS; NON-voting share is entitled to vote. Voluntary when no creditors are affected: done by petition verified by pres and secretary, 2/3 of OCS , also be done of by shortening corporate term. Via amended AOI by company registration of SEC Voluntary where creditors are affected: Effectivity: upon approval of SEC

FOREIGN CORPORATION: by branch/ Representative office/ subsidiaries/ *Application for license: to SEC, nationalization: should be complied with, securities of deposit: 100k worth of securities maybe in the form of treasury notes/bills. Required to have assign resident agent. Amended license: file petition for amendment. Revocation of license: same as domestic corp. Reportorial requirements of domestic and foreign corp: general information sheet: within 30 days after annual meeting if non the submission shall not be later than January 31 of the following year. Audited Financial Statements: within 120 days from end of fiscal year as stated in the bylaws. SEC retained JURISDICTION: absolute overall supervision corporation and partnership in the Philippines. Intra-corporate issues and election- RTC