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Mercantile Law Bar Examination Q & A (1990-2006)
Page
1 of 103
ANSWERS TO BAR EXAMINATION QUESTIONS IN
MERCANTILE LAW ARRANGED BY TOPIC

(1990 2006)
Edited and Arranged by:
Silliman Univer ity C!llege !" La# $at%& '00(

U)dated by:
Dondee
D BAR-Retake 2007
From the ANSWERS TO BAR EXAMINATION QUESTIONS b the U! "AW #OM!"EX $ !%I"I!!INE ASSO#IATION OF "AW S#%OO"S 200&
'()e 2*+ 200*
*er i!n 1++0,'003 Arranged by SULAW Cla
'00(
*er i!n 1++0,'00- U)dated by Dondee
Page
' of 103
FOREWAR,
This work is not intended or sa!e or "o##er"e$ This work is reeware$ It #a% &e ree!% "o'ied and distri&(ted$ It is 'ri#ari!% intended or a!! those who desire to ha)e a dee'er (nderstandin* o the iss(es to("hed &% the Phi!i''ine Bar E+a#inations and its trend$ It is s'e"ia!!% intended or !aw st(dents ro# the 'ro)in"es who, )er% o ten, are re"i'ients o de!i&erate!% distorted notes ro# other (ns"r('(!o(s !aw s"hoo!s and st(dents$ -hare to others this work and %o( wi!! &e ri"h!% rewarded &% God in hea)en$ It is a!so )er% *ood kar#a$
.e wo(!d !ike to seek the ind(!*en"e o the reader or so#e Bar /(estions whi"h are i#'ro'er!% "!assi ied (nder a to'i" and or so#e to'i"s whi"h are i#'ro'er!% or i*norant!% 'hrased, or the a(thors are 0(st Bar Re)iewees who ha)e 're'ared this work whi!e re)iewin* or the Bar E+a#s (nder ti#e "onstraints and within their !i#ited know!ed*e o the !aw$ .e wo(!d !ike to seek the readers ind(!*en"e or a !ot o t%'o*ra'hi"a! errors in this work$ The A(thors 1(!% 22, 2003
4'dated5 1(ne 27, 2007
-er./o) 199002001 Arr2)3e4 b SU"AW #52.. 200& U642te4 b Dondee
-er./o) 199002006
Page
3 of 103 6 2
TA$LE ./ C.NTENTS
0eneral Prin%i)le !" Mer%antile La#
0 70897089
Commercial Transaction (2003)

6969
Joint Account (2000)

2929
Joint Account vs. Partnership (2000) Theory of Cognition vs. Theory of Manifestation ( !!")
;9;9 7 979
6 2 6 2 6 2
76297629
70:970:9
76097609
76697669
$an1ing La#
3939
6 2
76;976;9
#an$s% Applica&ility% 'oreign Currency (eposit Act ) *ecrecy of #an$ (eposits (200+)
2929
#an$s% Collateral *ecurity (2002)

7979
#an$s% *ecrecy of #an$ (eposits, -arnishment (200.)

8989
#an$s, Classifications of #an$s (2002)

:9:9
#an$s, Conservator vs. /eceiver (2000)

6096 09
#an$s, (iligence /e1uire2 ( !!2)

6696 69
#an$s, 3nsolvency, Prohi&ite2 Transactions (2000)

6296 29
#an$s, 3nsolvency, /e1uirements ( !!")

6;96 ;9
#an$s, /estrictions on 4oan Accommo2ations (2002)

6796 79
#an$s, /estrictions on 4oan Accommo2ations (2000)

6396 39
#an$s, *afety (eposit #o5, 4ia&ility

6296 29
#an$s, *ecrecy of #an$ (eposit, AM4C (2000)

6796 79
#an$s, *ecrecy of #an$ (eposit, 65ceptions (2000)

6896 89
#an$s, *ecrecy of #an$ (eposits ( !!0)

6:96 :9
#an$s, *ecrecy of #an$ (eposits ( !! )

2092 09
#an$s, *ecrecy of #an$ (eposits ( !!2)

2692 69
#an$s, *ecrecy of #an$ (eposits ( !!.)

2292 29
#an$s, *ecrecy of #an$ (eposits ( !!+)

2;92 ;9
#an$s, *ecrecy of #an$ (eposits ( !!7) #an$s, *ecrecy of #an$ (eposits (2000)
2792 79 2392 39
6 2 6 2 6 ; 6 ; 6 ; 6 7 6 7 6 7 6 7 6 3 6 3 6 3 6 2 6 2 6 2 6 7 6 7 6 7 6 7 6
76797679
76397639
76297629
76797679
76897689
76:976:9
72097209
72697269
72297229
72;972;9
72797279
72397239
72297229
72797279
72897289
72:972:9
7;097;09
7;697;69
7;297;29
#an$s, *ecrecy of #an$ (eposits, 65ceptions (200.)

2292 29
#an$s, *ecrecy of #an$ (eposits, -arnishment (200 )

2792 79
#*P, /eceivership, Juris2iction ( !!2)

289 289
4egal Ten2er (2000)

2:92:9
P(3C 4a8 vs. *ecrecy of #an$ (eposits Act ( !!")

; 09;09
/esponsi&ilities ) 9&:ectives of #*P ( !!7)

;69;69
Truth in 4en2ing Act ( !! )

; 29;29
Truth in 4en2ing Act (2000)

; ;9;;9
8 6 8 6 8 6 8 6 : 6 : 6 : 6 : 6 : 2 0
77297729
7;;97;;9
7;797;79
7;397;39
7;297;29
7;797;79
7;897;89
7;:97;:9
77097709
77697769
$2l1 Sale La#

;79;79
#ul$ *ales 4a8, Covere2 Transactions ( !!.)

;39;39
#ul$ *ales 4a8, Covere2 Transactions (2000)

;29;29
#ul$ *ales 4a8, Covere2 Transactions (2000)

;79;79
#ul$ *ales 4a8, 65clusions ( !!3)

;89;89
#ul$ *ales 4a8, 9&ligation of the ;en2or ( !!+)

;:9;:9
#ul$ *ales 4a8, 9&ligation of the ;en2or ( !!")

709709
#ul$ *ales 4a8, 9&ligation of the ;en2or (200 )

769769
2 0 2 0 2 0 2 0 2 6 2 6 2 6 2 6
73097309
77;977;9
77797779
77397739
77297729
77797779
77897789
77:977:9
C!n 2mer Pr!te%ti!n La#

729729
Metric *ystem 4a8 ( !!.)

7;97;9
2 6 -er./o) 199002006
73697369

779779
Page
3 of 103
73297329
C!r)!rati!n La#$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$22
#9(% 6lection of Aliens as mem&ers (200+)
7397 39
#9(, Capacity of (irectors ( !!0)

7297 29
#9(, Compensation ( !! )
7797 79
#9(, Conflict of 3nterest ( !!.)

7897 89
#9(, 3nterloc$ing (irectors ( !!+)

7:97 :9
#9(, 3nterloc$ing (irectors ( !!0)

3093 09
#y <4a8s, ;ali2ity, limiting 1ualifications of #9( mem&ers ( !!7)

369369
#y <4a8s, ;ali2ity, limiting 1ualifications of #9( mem&ers (2000)

329329
#y <4a8s, ;ali2ity, limiting 1ualifications of #9( mem&ers (200 )

3;93;9
#y <4a8s, ;ali2ity, limiting 1ualifications of #9( mem&ers (2003)

379379
Close Corporations, (ea2loc$s ( !!+)

33 9339
Close2 Corporation, /estriction, Transfer of shares ( !!.)

329329
Controversy, 3ntra<Corporate ( !!.)

3793 79
Controversy, 3ntra<Corporate ( !!0)

3893 89
Controversy, 3ntra<Corporate ( !!0)

3:93 :9
Controversy, 3ntra<Corporate (2000)

2092 09
Controversy, 3ntra<corporate, Juris2iction ( !!")

2692 69
Corporation *ole, (efinition (200.)

229229
Corporation% 3ssuance of shares of stoc$ to pay for the services (200+)

2;92;9
Corporation% /ight of /epurchase of *hares, Trust 'un2 (octrine (200+)

279279
Corporation% *ole Proprietorship (200.)

239239
Corporation, Articles of 3ncorporation ( !!0)

229229
Corporation, #ul$ *ales 4a8 (200+)

279279
Corporation, #y<la8s (200 ) Corporation, Commencement, Corporate 65istence (2003)

289289 2:92:9
2 2 2 2 2 2 2 2 2 2 2 ; 2 ; 2 ; 2 ; 2 7 2 7 2 7 2 3 2 3 2 3 2 3 2 3 2 2 2 2 2 2 2 2 2 2 2 7 2 8 2
73;973;9
73797379
73397339
73297329
73797379
73897389
73:973:9
72097209
72697269
72297229
72;972;9
72797279
72397239
72297229
72797279
72897289
72:972:9
77097709
77697769
77297729
77;977;9
77797779
77397739
77297729
Corporation, Conversion of *toc$ Corporation (200 )

709709
Corporation, (e 'acto Corporation ( !!.)

769769
Corporation, (issolution, Metho2s of 4i1ui2ation (200 )

729729
Corporation, 3ncorporation, /e1uirements (2000)

7;97;9
Corporation, 3ncorporation, /e1uisites (2002)

779779
Corporation, Meetings, #9( ) *toc$hol2ers ( !!3)

739739
Corporation, =ationality of Corporation ( !!7)

729729
Corporation, =on<*toc$ Corporation ( !!3)

779779
Corporation, Po8er to 3nvest Corporate 'un2s for other Purpose ( !!+)

789789
Corporation, Po8er to 3nvest Corporate 'un2s in another Corporation ( !!0)

7:97:9
Corporation, /ecovery of Moral (amages ( !!7)

809809
Corporation, *eparate Juri2ical Personality ( !!+)

869869
Corporation, *eparate Juri2ical Personality ( !!0)

829829
Corporation, *eparate Juri2ical Personality ( !!0)

8;98;9
Corporation, *eparate Juri2ical Personality ( !!!)

879879
Corporation, *eparate Juri2ical Personality (2000)

839839
Corporation, *eparate Juri2ical Personality (2000)

829829
Corporation, *et<9ff, >npai2 *u&scription ( !!.)

879879
Corporation, *toc$ Corporation (200 )

889889
Corporation, ;ali2ity of Corporate Acts ( !!7)

8:98:9
Corporation, ;ali2ity of Corporate Acts (2002)

:09:09
Corporation, ;oluntary (issolution (2002)

:69:69
Corporation, ;oting Trust Agreement ( !!2)

:29:29
8 2 8 2 8 2 8 2 8 2 : 2 : 2 : 2 : ; 0 ; 0 ; 0 ; 6 ; 6 ; 6 ; 6 ; 2 ; 2 ; 2 ; 2 ; ; ; ; ; ; ; ;
77797779
77897789
77:977:9
78097809
78697869
78297829
78;978;9
78797879
78397839
78297829
78797879
78897889
78:978:9
7:097:09
7:697:69
7:297:29
7:;97:;9
7:797:79
7:397:39
7:297:29
7:797:79
7:897:89
7::97::9
30093009
'00(
Page
( of 103 ; 7 ; 7 ; 7 ; 3 ; 3 ; 3 ; 3 ; 2 ; 2 ; 2 ; 2 ; 2 ; 2 ; 7 ; 7 ; 7 ; 7 ; 8 ; 8 ; 8 ; 8 ; : ; : ; : ; : ;
30693069
(erivative *uit% /e1uisites (200.) *uit% ?atere2 *toc$ ((erivative !!3) (erivative *uit, Close Corporation, Corporate 9pportunity (200+) (erivative *uit, Minority *toc$hol2er (2003) (istinction% (e facto Corporation vs. Corporation &y 6stoppel (200.) (istinction% (ivi2en2s vs. Profit% Cash (ivi2en2 vs. *toc$ (ivi2en2 (200+) (istinction, Private vs. Pu&lic Corporation (200.) (istinction, *toc$ vs. =on<*toc$ Corporation (200.) (ivi2en2s% (eclaration of (ivi2en2s (200+) (ivi2en2s% *ources of (ivi2en2s, Trust 'un2 (octrine (200+) (ivi2en2s, (eclaration of (ivi2en2s ( !!0) (ivi2en2s, (eclaration of (ivi2en2s ( !! ) (ivi2en2s, (eclaration of (ivi2en2s (200 ) (ivi2en2s, /ight, Managing Corporation ( !! ) (octrine of Corporate 9pportunity (200+) 6ffect% 65piration of Corporate Term (200.) 6ffects, Merger of Corporations ( !!!) 6ffects, ?in2ing >p Perio2 of a Corporation ( !!") 6ffects, ?in2ing >p Perio2 of a Corporation (2000) 'oreign Corporation, @(oing #usinessA in the Philippines ( !!7) 'oreign Corporation, @(oing #usinessA in the Philippines, Acts or Activities (2002) 'oreign Corporation, @(oing #usinessA in the Philippines, Test (2002) Joint ;enture, Corporation ( !!0) 4ia&ilities, #9(, Corporate Acts ( !!0) 4ia&ilities, *toc$hol2ersB (irectorsB 9fficers ( !!") Piercing the Corporate ;eil ( !!.) Piercing the Corporate ;eil ( !!0) Piercing the Corporate ;eil (200 ) Piercing the Corporate ;eil (200.) Piercing the Corporate ;eil (2000) Pre <emptive /ight (200 ) Pre <6mptive /ight vs. Appraisal /ight ( !!!) *6C, Juris2iction, Transferre2 Juris2iction ( !!0) *toc$hol2er, (elin1uent, >npai2 *u&scription ( !!") *toc$hol2ers% Preemptive /ight (200.) *toc$hol2ers, Appraisal /ight (2003) *toc$hol2ers, /emoval of 9fficers ) #9( (200 ) *toc$hol2ers, /emoval, Minority (irector ( !! ) *toc$hol2ers, /ights ( !!0) *toc$hol2ers, ;oting Po8er of *toc$hol2ers ( !!0) *toc$s, 3ncrease of Capital *toc$ (200 ) *toc$s, *aleB Transfer of Certificates of *toc$ ( !!0) *toc$s, *aleB Transfer of Certificates of *toc$ (200 ) *toc$s, *aleB Transfer of Certificates of *toc$ (200.) Trust 'un2 (octrine ( !!2) Trust 'un2 (octrine, 3ntra<Corporate Controversy ( !! )
:;9:;9 :79:79 :39:39 :29:29 :79:79 :89:89 ::9::9 60096009 60696069 60296029 60;960;9 60796079 60396039 60296029 60796079 60896089 60:960:9 66096609 66696669 66296629 66;966;9 66796679 66396639 66296629 66796679 66896689 66:966:9 62096209 62696269 62296229 62;962;9 62796279 62396239 62296229 62796279 62896289 62:962:9 6;096;09 6;696;69 6;296;29 6;;96;;9 6;796;79 6;396;39 6;296;29 6;796;79 6;896;89
30293029
30;930;9
30793079
30393039
30293029
30793079
30893089
30:930:9
36093609
36693669
36293629
36;936;9
36793679
36393639
36293629
36793679
36893689
36:936:9
32093209
32693269
32293229
32;932;9
32793279
32393239
: 70 70 70 70 70 76 76 76 72 72 72 72 72
32293229
32793279
32893289
32:932:9
3;093;09
3;693;69
7 2 7 2 7 ;
37;937;9
37093709
37693769
37293729
3;293;29
3;;93;;9
3;793;79
3;393;39
3;293;29
3;793;79
3;893;89
7 ; 7 ; 7 ; 7 7
37793779
37393739
37293729
3;:93;:9
Credit Tran a%ti!n

6;:96;:9
37793779
Chattel Mortgage vs. After<3ncurre2 9&ligations ( !! )

6709 6709
7 7 -er./o) 199002006
37893789
Page
- of 103 7 7 7 7 7 3 7 3 7 3 7 2 7 2 7 2 7 2 7 2 7 7 7 7 7 8 7 8 7 8 7 8 7 : 7 :
32793279 37:937:9
Chattel Mortgage vs. After<3ncurre2 9&ligations ( !!!)

6769 6769
Chattel Mortgage, 'oreclosure ( !!")

6729 6729
33093309
Chattel Mortgage, 98nership of Thing Mortgage2 ( !!0)

67;9 67;9
33693369
Cre2it Transactions ( !!!)

677 96779
33293329
Mortgage ( !!!)
673 96739
33;933;9
Mortgage vs. 4evy (2003)

672 96729
33793379
Mortgage, 65tra:u2icial 'oreclose (2000)

6779677 9
33393339
Mortgage, 'oreclosure (2003)

6789678 9
33293329
Mortgage, 'oreclosure (2003)

67:967: 9
33793379
Mortgage, 'oreclosure of 3mprovements ( !!!)

6309630 9
33893389
Mortgage, 'oreclosure, 6ffect of mere ta$ing &y cre2itor<mortgagor of property ( !!2)

6369636 9
33:933:9
Mortgage, /e2emption Perio2, 'oreclose2 Property (2002)

6329632 9
32093209
Mortgage, /eme2ies (2003)

63;963; 9
32693269
Preference of Cre2its (2002)

63796379
32293229
Promissory =ote% 4ia&ility (200 )

63396339
32;932;9
/eme2ies, Availa&le to Mortgagee<Cre2itor ( !!0)

632 96329
32793279
/eme2ies, Availa&le to Mortgagee<Cre2itor (200 )

637 96379
32393239
/eme2ies, *ecure2 (e&t ( !! ) In 2ran%e La#$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$7:

638 96389 63:963:9
32293229
#eneficiary% 6ffects% 3rrevoca&le #eneficiary (200+)

62096209
#eneficiary% /ights, 3rrevoca&le #eneficiary (200+)

62696269
#eneficiary, 4ife 3nsurance, Prohi&ite2 #eneficiaries ( !!7)

62296229
Concealment, Material Concealment (200 )

62;962;9
Concealment, Material Concealment% 3ncontesta&ility Clause ( !!.)

62796279
Concealment, Material Concealment% 3ncontesta&ility Clause ( !!0) Concealment, Material Concealment% 3ncontesta&ility Clause ( !!")
62396239 62296229
7 : 3 0 3 0 3 0 3 0 3 0 3
32893289
32:932:9
37093709
37693769
37293729
37;937;9
Concealment, Material Concealment, 3ncontesta&ility Clause ( !! )

62796279
Concealment, Material Concealment, 3ncontesta&ility Clause ( !!7)

62896289
3nsura&le 3nterest% #an$ (eposit (2000)

62:96 2:9
3nsura&le 3nterest% Pu&lic 6nemy (2000)

67096 709
3nsura&le 3nterest% *eparate 3nsura&le 3nterest ( !!!)

67696 769
3nsura&le 3nterest, 61uita&le 3nterest ( !! )

67296 729
3nsura&le 3nterest, 4ife vs. Property 3nsurance ( !!")

67;96 7;9
3nsura&le 3nterest, 4ife vs. Property 3nsurance (2000)

67796 779
3nsura&le 3nterest, 4ife vs. Property 3nsurance (2002)

67396 739
3nsura&le 3nterest, Property 3nsurance ( !!.)

67296 729
3nsura&le 3nterest, Property 3nsurance (200 )

67796 779
3nsurance, Cash ) Carry #asis (2003)

6 7896789
3nsurance, Co<3nsurance vs. /e<3nsurance ( !!.)

6 7:967:9
3nsurance, (ou&le 3nsurance (200+)

6 8096809
3nsurance, (ou&le 3nsurance, effect ( !!3)

6 8696869
3nsurance, 6ffects, Payment of Premiums &y 3nstallment (2000)

6 8296829
3nsurance, 4ife 3nsurance, Assignment of Policy ( !! )

6 8;968;9
3nsurance, Perfection of 3nsurance Contracts (2003)

6 8796879
3nsurance, Property 3nsurance, Prescription of Claims ( !!0)

6 8396839
3nsurance, /eturn of Premiums (2000)

6 8296829
3nsure2, Acci2ent Policy (200.)

68796879
3nsure2, Acci2ent vs. *uici2e ( !!0)

68896889
6 3 6 3 6 3 6 3 2 3 2 3 2 3 2 3 2 3 ; 3 ; 3 ; 3 ; 3 ; 3 7 3 7 3 7 3 7 3 7 3 7 3 3 3 3 3 3
37793779
37393739
37293729
37793779
37893789
37:937:9
38093809
38693869
38293829
38;938;9
38793879
38393839
38293829
38793879
38893889
38:938:9
3:093:09
3:693:69
3:293:29
3:;93:;9
3:793:79
3:393:39
3:293:29
'00(
Page
4 of 103 3 2 3 2 3 2 3 2 3 7 3 7 3 7 3 7 3 7 3 8 3 8 3 8 3 : 3 : 3 : 2 0 2 0 2 0 2 0
26392639 3:793:79
3nsure2, Acci2ent vs. *uici2e ( !!3)

6 8:968:9
3nsure2, Acci2ent vs. *uici2e ( !!+)

6 :096:09
3:893:89
3nsurer% 6ffects% *everal 3nsurers (200+)

6:696:6 9
3::93::9
3nsurer, 3r2 Party 4ia&ility ( !!0)

6:296:2 9
20092009
3nsurer, 3r2 Party 4ia&ility (2000)

6:;96:; 9
20692069
3nsurer, 3r2 Party 4ia&ility, =o 'ault 3n2emnity ( !!.)

6:796:7 9
20292029
3nsurer, 3r2 Party 4ia&ility, Cuitclaim ( !!.)

6:396:3 9
20;920;9
3nsurer, AuthoriDe2 (river Clause ( !! )

6:296:2 9
20792079
3nsurer, AuthoriDe2 (river Clause (2003)

6:796:7 9
20392039
3nsurer, AuthoriDe2 (river Clause, vehicle is stolen ( !!3)

6:896:8 9
20292029
3nsurer, -roup 3nsurance, 6mployer<Policy Eol2er (2000)

6::96:: 9
20792079
3nsurer, 4ia&ility of the 3nsurers ( !!0)

2009200 9
20892089
4oss% Actual Total 4oss ( !!0)

2069 2069
20:920:9
4oss% Constructive Total 4oss (200+)

20 292029
26092609
4oss% Total 4oss 9nly ( !!2)

20;9 20;9
26692669
Marine 3nsurance, 3mplie2 ?arranties (2000)

20792 079
26292629
Marine 3nsurance, Peril of the *hip vs. Peril of the *ea ( !!7)
20392 039
26;926;9
Mutual 3nsurance Company, =ature ) (efinition (2000)

202 92029
26792679
Intelle%t2al Pr!)erty
20792079
Copyright ( !!+)
20892089
Copyright, Commissione2 Artist ( !!+)

20:920:9
Copyright, Commissione2 Artist (200.)

26092609
Copyright, 3nfringement ( !!.)

26692669
Copyright, 3nfringement ( !!")

26292629
Copyright, 3nfringement ( !!7) Copyright, 3nfringement (2000)

26;926;9 26792679
2 0 2 0 2 0 2 0 2 6 2 6 2
26292629
26792679
26892689
26:926:9
22092209
22692269
Copyright, Photocopy, 8hen allo8e2 ( !!7)

26392639
3nfringement vs. >nfair Competition ( !!0)

26292629
3nfringement vs. >nfair Competition (2003)

26792679
3nfringement, Juris2iction (2003)

26892689
Patent, =on<Patenta&le 3nventions (2000) Patents% -as<*aving (evice% first to file rule (200+) Patents% 3nfringement, /eme2ies ) (efenses ( !!3)
26: 926:9 22 092209 22 692269
6 2 6 2 6 2 6 2 6 2 6
22892289 22:922:9
22292229
22;922;9
22792279
22392239
22292229
22792279
Patents, 3nfringement ( !!2) Patents, /ights over the 3nvention ( !!0) Tra2emar$ ( !!0) Tra2emar$ ( !!.) Tra2emar$B Test of (ominancy ( !!0) Tra2emar$, 3nfringement ( !! )
22 292229 22 ;922;9 22792279 22392239 22292229 22792279
2 2
2;692;69 2;292;29
2;092;09
2;;92;;9
2;792;79
2;392;39
Tra2emar$, Test of (ominancy ( !!0)

22892289
Tra2ename% 3nternational Affiliation (200+)

22:922:9
2 7 2 7 2 7
2;892;89
2;292;29
2;792;79
In !lven%y 5 C!r)!rate Re%!very

2;092;09
3nsolvency vs. *uspension of Payment ( !!7) 3nsolvency% ;oluntary 3nsolvency (200+)

2;692;69 2;292;29
2 7
27092709
2;:92;:9
3nsolvency, Assets vs. 4ia&ilities ( !!7)

2;;92;;9
3nsolvency, Assignees ( !!0)

2;792;79
3nsolvency, 6ffect, (eclaration of 3nsolvency ( !! )

2;392;39
2 3 2 3 2 3 -er./o) 199002006
27692769
27292729
27;927;9
Page
6 of 103 2 3 2 2 2 2 2 2 2 2 2 7 2 7 2 7 2 7 2 7 2 8 2 8
23392339 27792779
3nsolvency, 'rau2ulent Payment (2002)

2;292;29
3nsolvency, Juris2iction, *ole Proprietorship ( !!0)

2;792;79
27392739
3nsolvency, o&ligations that survive ( !!")

2;892;89
27292729
3nsolvency, ;oluntary 3nsolvency Procee2ing ( !! )

2;:92;:9
27792779
3nsolvency, ;oluntary vs. 3nvoluntary *olvency ( !!+)

27092709
27892789
4a8 on Corporate /ecovery (2003)

27692769
27:927:9
/eha&ilitation, *tay 9r2er (2000)

27292729
23092309
*uspension of Payment vs. 3nsolvency ( !!+)

27;927;9
23692369
*uspension of Payments vs. *tay 9r2er (2003)

27792779
23292329
*uspension of Payments, /eha&ilitation /eceiver ( !!!)

27392739
23;923;9
*uspension of Payments, /eme2ies (2003)

27292729
23792379
Letter
278 92789
27792779
!" Credit
4etter of Cre2it% Mortgage (200+) 4etter of Cre2it, Certification from Consignee ( !!3)
27: 927:9
4etters of Cre2it, 4ia&ility of a confirming an2 notifying &an$ ( !!.)

230923 09
4etters of Cre2it, 4ia&ility of a =otifying #an$ (2003)

236923 69
4etters of Cre2it, Three (istinct Contract /elationships (2002)

232923 29
2 8 2 8 2 : 2 : 2 : 2 :
22692269
23292329
23792379
23892389
23:923:9
22092209
Maritime C!mmer%e
23;923;9
Average, Particular Average vs. -eneral Average (2003)

23 792379
#ottomry ( !!.)
23 392339
Carriage of -oo2s% (eviation% 4ia&ility (200+)

23292 329
Carriage of -oo2s, (eviation, ?hen Proper (200+)

23792 379
Carriage of -oo2s, 65ercise 65traor2inary (iligence (200+)

23892 389
Charter Party ( !! )
2 3:923:9
Charter Party (200.) C9-*A% Prescription of ClaimsFActions (200.)

2 2092209 2269 2269
2 : 7 0 7 0 7 0 7 0 7 0 7 6 7
22292229
22;922;9
22792279
22392239
22292229
22792279
22892289
C9-*A, Prescription of Claims ( !!2)

2229 2229
C9-*A, Prescription of Claims (2000) C9-*A, Prescriptive Perio2 ( !!+)

22;9 22;9 2279 2279
6 7 6 7 2
27292729
22:922:9
27092709
27692769
(octrine of 3nscruta&le 'ault ( !!+)

2239223 9
(octrine of 3nscruta&le 'ault ( !!")

2229222 9
(octrine of 3nscruta&le 'ault ( !!7)

2279227 9
4imite2 4ia&ility /ule ( !!.)

228 92289
4imite2 4ia&ility /ule ( !!")

22: 922:9
4imite2 4ia&ility /ule ( !!!)

270 92709
4imite2 4ia&ility /ule (2000)

276 92769
4imite2 4ia&ility /ule, (octrine of 3nscruta&le 'ault ( !! )

272 92729
4imite2 4ia&ility /ule, -eneral Average 4oss (2000)

27; 927;9
4imite2 4ia&ility /ule, -eneral Average 4oss (2000)

277 92779
7 2 7 2 7 2 7 2 7 2 7 2 7 ; 7 ; 7 ; 7 ; 7 7
28;928;9
27;927;9
27792779
27392739
27292729
27792779
27892789
27:927:9
28092809
28692869
28292829
Nati!nali7ed A%tivitie !r Underta1ing

27392739
=ationaliDe2 Activities or >n2erta$ings ( !!3)

27292729
=ationaliDe2 Activities or >n2erta$ings ( !!.)

27792779
=ationaliDe2 Activities or >n2erta$ings ( !!+)

27892789
/etail Tra2e 4a8 ( !!0)

27: 927:9
/etail Tra2e 4a8 ( !! )

280 92809
/etail Tra2e 4a8 ( !!2)

286 92869
7 7 7 7 7 3 7 3 7 3 7 3 -er./o) 199002006
28792879
28392839
28292829
28792879
28892889
28:928:9
Page
+ of 103 72 72 72 72
2:092:09 2:692:69 2:292:29 2:;92:;9 2:792:79
/etail /etail /etail /etail

2829 28;9 2879 2839
2829
28;9
2879
2839
Tra2e 4a8 ( !!3) Tra2e 4a8 ( !!0) Tra2e 4a8 ( !!0) Tra2e 4a8, Consignment ( !! )
28292829
Neg!tiable In tr2ment La# $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$72 #on2% Cash #on2 vs. *urety #on2 (200.) Chec$s% Crosse2 Chec$s (200+) Chec$s% Crosse2 Chec$s vs. Cancelle2 Chec$s (200.) Chec$s, Crosse2 Chec$ ( !! ) Chec$s, Crosse2 Chec$ ( !!.) Chec$s, Crosse2 Chec$ ( !!+) Chec$s, Crosse2 Chec$ ( !!0) Chec$s, Crosse2 Chec$ ( !!0) Chec$s, 6ffect, Acceptance &y the 2ra8ee &an$ ( !!7) Chec$s, 6ffects, Alterations, Prescriptive Perio2 ( !!0) Chec$s, 'orge2 Chec$, 6ffects (2000) Chec$s, 4ia&ility, (ra8ee #an$ ( !!+) Chec$s, Material Alterations, 4ia&ility ( !!!) Chec$s, Presentment ( !!.) Chec$s, Presentment (2003) Chec$s, ;ali2ity, ?aiver of #an$Gs lia&ility for negligence ( !! ) (efenses, 'orgery (200.) 'orgery, 4ia&ilities, Prior ) *u&se1uent Parties ( !!0) 'orgery, 4ia&ilities, Prior ) *u&se1uent Parties ( !!+) 3ncomplete ) (elivere2 (200.) 3ncomplete an2 (elivere2 (200+)
28 792879 288 92889 28: 928:9 2:0 92:09 2:6 92:69 2:2 92:29 2:; 92:;9 2:7 92:79 2:3 92:39 2:2 92:29 2:7 92:79 2:8 92:89 2:: 92::9 ;00 9;009 ;06 9;069 ;02 9;029 ;0;9;0;9 ; 079;079 ; 039;039 ;029;029 ;079;079 ;089; 089
72 77 77 77 77 78 78 78 78 78 7: 80 80 80 80 80 86 86 86 82 82
2:392:39 2:292:29 2:792:79 2:892:89 2::92::9 70097009 70697069 70297029 70;970;9 70797079 70397039 70297029 70797079 70897089 70:970:9 76097609 76697669 76297629 76;976;9 76797679 76397639 76297629
3ncomplete 3nstruments, 3ncomplete (elivere2 3nstruments vs. 3ncomplete >n2elivere2 3nstrument (2000) 82 3n2orser% 3rregular 3n2orser vs. -eneral 3n2orser (200+)
;0:9;0:9
=egotia&ility ( !!3)
;609;609
=egotia&ility (2002)
;669;669
=egotia&ility, Eol2er in (ue Course ( !!2)

;629;629
=egotia&ility, /e1uisites (2000)

;6;9;6;9
=egotia&le 3nstrument% Am&iguous 3nstruments ( !!7)

;679;67 9
=egotia&le 3nstrument% (efinition ) Characteristics (200+)

;639;63 9
=egotia&le 3nstrument% 32entification (200+)

;629;62 9
=egotia&le 3nstrument% =egotia&le (ocument vs. =egotia&le 3nstrument (200+)

;679;67 9
=egotia&le 3nstrument, =egotia&ility ( !!")

;689;68 9
8 2 8 2 8 ; 8 ; 8 ; 8 7 8 7 8 7 8 3 8 3
76797679
76897689
76:976:9
72097209
72697269
72297229
72;972;9
72797279
72397239
72297229
=egotia&le 3nstruments, #earer 3nstrument ( !!7)

;6:9;6: 9
=egotia&le 3nstruments, #earer 3nstruments ( !!")

;209;20 9
=egotia&le 3nstruments, &earer instruments, lia&ilities of ma$er an2 in2orsers (200 )

;269;26 9
=egotia&le 3nstruments, incomplete an2 un2elivere2 instruments, hol2er in 2ue course (2000)
;229;22 9
=egotia&le 3nstruments, 3ncomplete (elivere2 3nstruments, Comparative =egligence ( !!")

;2;9;2; 9
=egotia&le 3nstruments, $in2s of negotia&le instrument, 8or2s of negotia&ility (2002)

;279;27 9
=egotia&le 3nstruments, /e1uisites ( !!0)

;239;23 9
=otice (ishonor ( !!0)

;2 29;229
Parties, Accommo2ation Party ( !!0)

;279; 279
Parties, Accommo2ation Party ( !! )

;289; 289

;2:9; 2:9
8 3 8 3 8 3 8 2 8 2 8 2 8 7 8 7 8 7 8 7 8 7
72797279
72897289
72:972:9
7;097;09
7;697;69
7;297;29
7;;97;;9
7;797;79
7;397;39
7;297;29
7;797;79
-er./o) 199002006
Page
10 of 103 8 7 8 8 8 8 8 8 8 8 8 8 8 8 8 : 8 : 8 : 8 :
77897789 7;897;89

;; 09;;09
Parties, Accommo2ation Party (2003)

;; 69;;69
7;:97;:9
Parties, Accommo2ation Party (2003)

;; 29;;29
77097709
Parties, Accommo2ation Party (200+)

;; ;9;;;9
77697769
Parties, Eol2er in (ue Course ( !!3)

;; 79;;79
77297729

;; 39;;39
77;977;9

;; 29;;29
77797779

;; 79;;79
77397739
Parties, Eol2er in (ue Course, 3n2orsement in &lan$ (2002)

;; 89;;89
77297729
Place of Payment (2000)

;;:9; ;:9
77797779
P2bli% Servi%e La#

;709;70 9
Certificate of pu&lic Convenience ( !!7)

;769;769
Certificate of Pu&lic Convenience, insepara&ility of certificate an2 vessel ( !!2)

;729;729
Certificate of Pu&lic Convenience, /e1uirements ( !!+)

;7;9;7;9
Po8ers of the Pu&lic *ervice Commission ( !!3)

;77 9;779
Pu&lic utilities (2000)

; 739;739
/evocation of Certificate ( !!3)

;729;729
/evocation of Certificate ( !!3)

;779;779
8 : : 0 : 0 : 0 : 0 : 6 : 6 : 6
73297329
77:977:9
73097309
73697369
73297329
73;973;9
73797379
73397339
Se%2ritie
; 7:9;7:9
;789;789
Reg2lati!n
3nsi2er (200.) 3nsi2er Tra2ing ( !!+)

; 309;309
3nsi2er Tra2ing, Manipulative Practices ( !!.)

; 369;369
Manipulative Practices (200 )

;329;329
*ecurities /egulation Co2e, Purpose ( !!7)

;3;9;3;9
*ecurities, (efinition ( !!0) *ecurities, *elling of *ecurities, Meaning (2002)

;379;379 ;339;339
: 6 : 6 : 2 : 2 : 2 : 2 :
73797379
73897389
73:973:9
72097209
72697269
72297229
Ten2er 9ffer (2002)

;329;3 29
2 : ;
;379;379
72;972;9
72797279
Tran )!rtati!n La# #oun2ary *ystem (200+)

;38 9;389
: ;
72397239
Carriage, #reach of Contract, Presumption of =egligence ( !!0)

;3:9; 3:9
Carriage, #reach of Contract, Presumption of =egligence ( !!")

;209; 209
Carriage, 'ortuitous 6vent ( !!+)

;269; 269
Carriage, 4ia&ility, 4ost #aggage or Acts of Passengers ( !!")

;229; 229
Carriage, Prohi&ite2 ) ;ali2 *tipulations (2002)

;2;9; 2;9
Carriage, ;aluation of (amage2 Cargo ( !!3)

;279; 279
Common Carrier ( !!0)

;239;2 39
Common Carrier, #reach of Contract, (amages (2003)

;229;2 29
Common Carrier, (efenses (2002)

;27 9;279
Common Carrier, (efenses, 'ortuitous 6vents ( !!.)

;28 9;289
Common Carrier, (efenses, 4imitation of 4ia&ility ( !!7)

;2: 9;2:9
Common Carrier, (efenses, 4imitation of 4ia&ility (200 )

;70 9;709
Common Carrier, (uration of 4ia&ility ( !!0)

;769;7 69
Common Carrier, (uty to 65amine #aggages, /ail8ay an2 Airline ( !!2)

;729;7 29
Common Carrier, Test ( !!0)

;7;9;7 ;9
Common Carriers, (efenses ( !!0)

;77 9;779
Common Carriers, 4ia&ility for 4oss ( !! )

;739;7 39
: ; : ; : ; : ; : 7 : 7 : 7 : 7 : 7 : 3 : 3 : 3 : 3 : 3 : 2 : 2 : 2 : 2
72297229
72797279
72897289
72:972:9
77097709
77697769
77297729
77;977;9
77797779
77397739
77297729
77797779
77897789
77:977:9
78097809
78697869
78297829
78;978;9
-er./o) 199002006
Page
11 of 103 :7 :7 :7 :7 :7 :8 :8 :8
7:697:69 78797879 78397839
Common vs. Private Carrier, (efenses (2002) Ha&it *ystem (200+) Ha&it *ystem, Agent of the /egistere2 98ner (200+) Maritime Commerce, #are&oat (2003) Prior 9perator /ule (2003) /egistere2 98ner, Conclusive Presumption ( !!0) Trans <*hipment, #ill of 4a2ing, &in2ing contract ( !!3)
;729;729 ;779 ;779 ;789;789 ;7:9;7:9 ;809;809 ;869;869 ;829;829
78297829
78797879
78897889
78:978:9
7:097:09
Tr2 t Re%ei)t La# Trust /eceipts 4a8, Acts ) 9missions, Covere2 (2000) Trust /eceipts 4a8, 4ia&ility for estafa ( !! ) Trust /eceipts 4a8, 4ia&ility for 6stafa ( !!") Trusts /eceipt 4a8 (2003)
; 8;9;8;9 ;879;879 ;839;839 ;829;829 ;87 9;879
:8 :: :: :: ::
7:297:29
7:297:29
7:;97:;9
7:797:79
7:397:39
U 2ry La# >sury 4a8 ( !!)

;889;889 ;8:9 ;8:9
:: 600
7:897: 89
7:797:79
Ware&!2 e Re%ei)t La#

;:09;:09
#ill of 4a2ing ( !!7)

;:69;:69
(elivery of -oo2s, /e1uisites ( !!7)

;:29;:29
(elivery of the -oo2s ( !! )

;:;9;:;9
-arnishment or Attachment of -oo2s ( !!!)

;:79;:79
=egotia&le (ocuments of Title ( !!2)

;:39;:39
98nership of -oo2s *tore2 ( !!2)

;:29;:29
/ight to the -oo2s (200+)

;: 79;:79
>npai2 *eller, =egotiation of the /eceipt ( !!3)

;:89;:8 9
;ali2ity of stipulations e5cusing 8arehouseman from negligence (2000)

;:: 9;::9
60 0 60 0 60 0 60 0 60 0 60 6 60 6 60 6 60 6
7::97::9 80098009 80698069 80298029 80;980;9 80798079 80398039 80298029 80798079
Mi %ellane!2
7069706 9
70097009
602
808980 89
6nergy /egulatory Commission% Juris2iction ) Po8er (200.) 'our AC3( Pro&lems of Philippine Ju2iciary (2000)
70297029
-overnment (eregulation vs. PrivatiDation of an 3n2ustry (200.)

70;970;9
Political 4a8, ?T9 ( !!!)

70797079
Po8er of the *tate% /egulating of (omestic Tra2e (200.)

70397039
Tariff an2 Customs Co2e% ;iolation of Customs 4a8s (200.)

7029 7029
60 2 60 2 60 2 60 2 60 ; 60 ;
80:980:9 86098609 86698669 86298629 86;986;9 86798679
'00(
Page
1' of 103
0eneral Prin%i)le !" Mer%antile La#

Commercial Transaction (2003) .hat do %o( (nderstand &% the ter# <"o##er"ia! transa"tion=> Is it essentia! that at !east one 'art% to a "ontra"t &e a #er"hant in order to "onsider s("h a "o##er"ia! transa"tion> ?7@A
SUGGESTED ANSWER:
$an1ing La#
,an-s: A$$lica.ilit%: /orei'n Currenc% De$osit Act 0 Secrec% o& ,an- De$osits (2001) 9i Yie!din* Cor'oration i!ed a "o#'!aint a*ainst i)e o its o i"ers or )io!ation o -e"tion ;6 o the Cor'oration Code$ The "or'oration "!ai#ed that the said o i"ers were *(i!t% o ad)an"in* their 'ersona! interests to the 're0(di"e o the "or'oration, and that the% were *ross!% ne*!i*ent in hand!in* its a airs$ Aside ro# do"(#ents and "ontra"ts, the "or'oration a!so s(&#itted in e)iden"e re"ords o the o i"ers 4$-$ Do!!ar de'osits in se)era! &anks o)erseas - Boston Bank, Bank o -witCer!and, and Bank o New York$
Dor their 'art, the o i"ers i!ed a "ri#ina! "o#'!aint a*ainst the dire"tors o 9i Yie!din* Cor'oration or )io!ation o Re'(&!i" A"t No$ 2722, otherwise known as the Dorei*n C(rren"% De'osit A"t o the Phi!i''ines$ The o i"ers a!!e*ed that their &ank de'osits were i!!e*a!!%
A <Co##er"ia! transa"tion= is de ined as $$$$$$ It is not essentia! that at !east one 'art% to the "o##er"ia! transa"tion &e a #er"hant$ .hat is essentia! is that the transa"tion e)in"e an intent to en*a*e in "o##er"e or trade$ Joint Account (2000) .hat is a 0oint a""o(nt> ?2@A
SUGGESTED ANSWER:
A 0oint a""o(nt is a transa"tion o #er"hants where other #er"hants a*ree to "ontri&(te the a#o(nt o "a'ita! a*reed ('on, and 'arti"i'atin* in the a)ora&!e or (n a)ora&!e res(!ts thereo in the 'ro'ortion the% #a% deter#ine$ Joint Account s! "artners#i$ (2000) Distin*(ish 0oint a""o(nt ro# 'artnershi'$ ?;@A
SUGGESTED ANSWER:
.i!! the "o#'!aint i!ed a*ainst the dire"tors o 9i Yie!din* Cor'oration 'ros'er> E+'!ain$
dis"!osed or want o a "o(rt order, and that s("h de'osits were not e)en the s(&0e"t o the "ase a*ainst the#$ aA
SUGGESTED ANSWER:
The o!!owin* are the distin"tions &etween 0oint a""o(nt and 'artnershi'5 ?6A A 'artnershi' has a ir# na#e whi!e a 0oint a""o(nt has none and is "ond("ted in the na#e o the ostensi&!e 'artner$ ?2A .hi!e a 'artnershi' has 0(ridi"a! 'ersona!it% and #a% s(e or &e s(ed (nder its ir# na#e, a 0oint a""o(nt has no 0(ridi"a! 'ersona!it% and "an s(e or &e s(ed on!% in the na#e o the ostensi&!e 'artner$ ?;A .hi!e a 'artnershi' has a "o##on (nd, a 0oint a""o(nt has none$ ?7A .hi!e in a 'artnershi', a!! *enera! 'artners ha)e the ri*ht o #ana*e#ent, in a 0oint a""o(nt, the ostensi&!e 'artner #ana*es its &(siness o'erations$ ?3A .hi!e !iB(idations o a 'artnershi' #a%, &% a*ree#ent, &e entr(sted to a 'artner or 'artners, in a 0oint a""o(nt !iB(idation thereo "an on!% &e done &% the ostensi&!e 'artner$ T#eor% o& Co'nition s! T#eor% o& (ani&estation ()**+) The Ci)i! Code ado'ts the theor% o "o*nition, whi!e the Code o Co##er"e *enera!!% re"o*niCes the theor% o #ani estation, in the 'er e"tion o "ontra"ts$ 9ow do these two theories di er>
SUGGESTED ANSWER:
No, &e"a(se the Dorei*n C(rren"% De'osit A"t ?R$A$ No$ 2722A, in"!(din* its '(niti)e 'ro)isions, re ers to orei*n "(rren"% de'osits a""o(nts "onstit(ted within the Phi!i''ines$ It has no a''!i"ation at a!! to a""o(nts, e)en tho(*h the% are &anks, o'ened and "onstit(ted a&road$ &A .as there a )io!ation o the -e"re"% o Bank De'osits Eaw ?Re'(&!i" A"t No$ 6703A> E+'!ain$
?3@A
SU00ESTE8 ANSWER:
No, &e"a(se the '(niti)e 'ro)isions o the -e"re"% o Bank De'osits Eaw ?R$A$ No$ 6703A, in"!(din* the stat(tor% e+e#'tions 'ro)ided therein, are not a''!i"a&!e to DCD4 a""o(nts, e)en when "onstit(ted !o"a!!%$
?Intengan v. Court of Appeals, G.R. No. 128996, February 15, 2 2A
,an-s: Collateral Securit% (2002)

Andrew is en*a*ed in the &(siness o &(i!din* !ow-"ost ho(sin* (nits (nder "ontra"ts with rea! estate de)e!o'ers$ 9e a''!ied or a !oan o P; Fi!!ion ro# Read% Credit Bank ?the BankA, whi"h reB(ired Andrew to 'ro)ide "o!!atera! se"(rit% or it$ Andrew o ered to assi*n to the Bank his re"ei)a&!es a#o(ntin* to P7 #i!!ion ro# 9o#e B(i!ders De)e!o'#ent Cor'oration ?the O&!i*orA$ The Bank a""e'ted the o er$ A""ordin*!%, Andrew o&tained the !oan and he e+e"(ted a 'ro#issor% note (ndertakin* to 'a% the !oan in (!! in one !(#' s(# on -e'te#&er 6, 2002, to*ether with interest thereon at the rate o 20@ 'er ann(#$ At
4nder the theor% o "o*nition, the a""e'tan"e is "onsidered to e e"ti)e!% &ind the o eror on!% ro# the ti#e it "a#e to his know!ed*e$ 4nder the theor% o #ani estation, the "ontra"t is 'er e"ted at the #o#ent when the a""e'tan"e is de"!ared or #ade &% the o eree$
the sa#e ti#e, Andrew e+e"(ted a Deed o Assi*n#ent in a)or o the Bank assi*nin* to the
Bank his re"ei)a&!es assi*n#ent read5
ro# the O&!i*or$ The deed o
'00(
<I, Andrew Eee, here&% assi*n, trans er and "on)e%, a&so!(te!% and (n"onditiona!!%, to Read% Credit Bank ?hereina ter "a!!ed the BankA a!! o #% ri*ht, tit!e and interest in and to #% a""o(nts re"ei)a&!e ro# 9o#e B(i!ders De)e!o'#ent Cor'oration ?hereina ter "a!!ed the O&!i*orA arisin* ro# de!i)er% o ho(sin* (nits with a tota! "ontra"t 'ri"e o P7,000,000$00, the des"ri'tion and "ontra"t )a!(e o whi"h are atta"hed hereto as Anne+ A ?hereina ter "a!!ed the Re"ei)a&!esA$= <In the e)ent that I sha!! &e (na&!e to 'a% #% o(tstandin* inde&tedness owned to the Bank, the Bank sha!! ha)e the ri*ht, witho(t an% (rther or#a!it% or a"t on its 'art, to "o!!e"t the Re"ei)a&!es ro# the O&!i*or and to a''!% the 'ro"eeds thereo toward 'a%#ent o #% said inde&tedness$= Andrew ai!ed to 'a% the !oan on its d(e date on -e'te#&er 6, 2002$ .hen the Bank atte#'ted to "o!!e"t ro# the O&!i*or, the Bank dis"o)ered that the !atter had a!read% "!osed o'erations and !iB(idated a!! its assets$ The Bank s(ed Andrew or "o!!e"tion, &(t Andrew #o)ed to dis#iss the "o#'!aint on the *ro(nd that the de&t had a!read% &een 'aid &% reason o his e+e"(tion o the a oresaid Deed o Assi*n#ent whi"h, &ein* a&so!(te and (n"onditiona!, was in essen"e a da"ion en 'a*o$ The Bank o''osed the #otion, "ontendin* that the Deed o Assi*n#ent was on!% a se"(rit% or a !oan$ I %o( were the 1(d*e, how wo(!d %o( reso!)e the #otion to dis#iss i!ed &% Andrew> E+'!ain ?3@A
SU00ESTE8 ANSWER:
is its r(it$ Garnish#ent is 'art o the e+e"(tion 'ro"ess$ 4'on ser)i"e o the noti"e o *arnish#ent on the &ank where the de endant de'osited (nds, s("h (nds &e"o#e 'art o the s(&0e"t #atter o !iti*ation$
(Since the question is outside the scope of the Bar Examination, it is recommended that the candidate be given full credit of 5%, whatever ma be his answer, and he be given a bonus if he made an answer in the following manner!"
The #otion to dis#iss sho(!d &e *ranted$ The si#'!e a&so!(te and (n"onditiona! "on)e%an"e e#&odied in the deed o assi*n#ent wo(!d &e o'erati)e, and the assi*n#ent wo(!d "onstit(te essentia!!% a #ode o 'a%#ent or da"ion en 'a*o$ ,an-s: Secrec% o& ,an- De$osits2 Garnis#ment (2003) CDC #aintained a sa)in*s a""o(nt with CBank$ On orders o the FF Re*iona! Tria! Co(rt, the -heri *arnished P30,000 o his a""o(nt, to satis % the 0(d*#ent in a)or o his "reditor, FO$ CDC "o#'!ained that the *arnish#ent )io!ated the Eaw on the -e"re"% o Bank De'osits &e"a(se the e+isten"e o his sa)in*s a""o(nt was dis"!osed to the '(&!i"$ ?3@A Is CDCGs "o#'!aint #eritorio(s or not> Reason &rie !%$
SU00ESTE8 ANSWER:
No$ CDCGs "o#'!aint is not #eritorio(s$ It was he!d in

C!"na #an$"ng Corporat"on v. %rtega, &9 'CRA (55 )19*(+
that 'eso de'osits #a% &e *arnished and the de'ositar% &ank "an "o#'!% with the order o *arnish#ent witho(t )io!atin* the Eaw on the -e"re"% o Bank De'osits$ E+e"(tion is the *oa! o !iti*ation as it
Page
13 of 103
7$
,an-s2 Classi&ications o& ,an-s (2002) There are si+ ?2A "!asses o &anks identi ied in the Genera! Bankin* Eaw o 2000$ Na#e at !east o(r ?7A o the# and e+'!ain the distin*(ishin* "hara"teristi" or (n"tion o ea"h one$ ?3@A
SU00ESTE8 ANSWER:
Rural #an$s H these are those whi"h are or*aniCed 'ri#ari!% to e+tend !oans and other "redit a"i!ities to ar#ers, isher#en or ar# a#i!ies, as we!! as "oo'erati)es, #er"hants, and 'ri)ate and '(&!i" e#'!o%ees and whose o'erations are 'ri#ari!% *o)erned &% the R(ra! Banks A"t o 6::2 ?RA 7;3;A$
3$
An% o(r ?7A o the o!!owin* si+ ?2A "!asses o &anks identi ied in the Genera! Bankin* Eaw o 2002, to wit5
6$
2$
,n"versal #an$s H These are those whi"h (sed to &e "a!!ed e+'anded "o##er"ia! &anks and the o'erations o whi"h are now 'ri#ari!% *o)erned &% the Genera! Bankin* Eaw o 2002$ The% "an e+er"ise the 'owers o an in)est#ent ho(se and in)est in non-a!!ied enter'rises$ The% ha)e the hi*hest "a'ita!iCation reB(ire#ent$ Co--er."al #an$s H These are ordinar% or re*(!ar "o##er"ia! &anks, as distin*(ished ro# a (ni)ersa! &ank$ The% ha)e a !ower "a'ita!iCation reB(ire#ent than (ni)ersa! &anks and "annot e+er"ise the 'owers o an in)est#ent ho(se and in)est in non-a!!ied enter'rises$
/!r"ft #an$s H These &anks ?s("h as sa)in*s and #ort*a*e &anks, sto"k sa)in*s and !oan asso"iations, and 'ri)ate de)e!o'#ent &anksA #a% e+er"ise #ost o the 'owers and (n"tions o a "o##er"ia! &ank e+"e't that the% "annot, a#on* others, o'en "(rrent or "he"k a""o(nts witho(t 'rior Fonetar% Board a''ro)a!, and the% "annot iss(e !etters o "redit$ Their o'erations are *o)erned 'ri#ari!% &% the Thri t Banks A"t o 6::3 ?RA 7:02A$
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2$
Cooperat"ve #an$s H these are those whi"h are or*aniCed 'ri#ari!% to 'ro)ide inan"ia! and "redit ser)i"es to "oo'erati)es and whose o'erations are 'ri#ari!% *o)erned &% the Coo'erati)e Code o the Phi!i''ines ?RA 2:;8A$ Isla-". #an$s H these are those whi"h are or*aniCed 'ri#ari!% to 'ro)ide inan"ia! and "redit ser)i"es in a #anner or transa"tion "onsistent with the Is!a#i" -hariah$ At 'resent, on!% the A! A#anah Is!a#i" In)est#ent Bank o the Phi!i''ines has &een or*aniCed as an Is!a#i" Bank$
,an-s2 Conser ator s! Recei er (2004) Distin*(ish &etween the ro!e o a "onser)ator and that o a re"ei)er o a &ank$ ?2$3@A
SU00ESTE8 ANSWER:
;$
The Conser)ator is a''ointed or a 'eriod not e+"eedin* one ?6A %ear, to take "har*e o the assets, !ia&i!ities, and the #ana*e#ent o a &ank or a B(asi&ank in a state o "ontin(in* ina&i!it%, or (nwi!!in*ness to #aintain a "ondition o !iB(idit% dee#ed adeB(ate to 'rote"t the interest o de'ositors and "reditors$ On the other hand, the Re"ei)er is a''ointed to #ana*e a &ank or B(asi-&ank that is (na&!e to 'a% its !ia&i!ities in
the ordinar% "o(rse o &(siness, or has ins( i"ient rea!iCa&!e assets to #eet its !ia&i!ities, or "annot "ontin(e in &(siness witho(t 'ro&a&!e !osses to its de'ositors or "reditorsI or has wi!! (!!% )io!ated a ina! "ease and desist order, in)o!)in* a"ts or transa"tions a#o(ntin* to ra(d or a dissi'ation o the assets o the instit(tion$ The #ain '(r'ose o the Re"ei)er is to re"o##end the reha&i!itation or !iB(idation o the &ank$
No$ I do not a*ree that there is no )io!ation o the stat(te ?RA ;;7, as a#endedA$ J )io!ated -e" 83 when he "a(sed the 're'aration and iss(an"e o a #ana*ers "he"k
,an-s2 Dili'ence Re5uire6 ()**2) P!a"ido, a &ank de'ositor, !e t his "he"k&ook on his desk at his ho(se$ 4nknown to hi#, a )isitor at the ti#e, noti"in* the sa#e, took a "he"k there ro#, i!!ed it (' in the a#o(nt o P;,000$00 and s(""eeded in en"ashin* the "he"k on the sa#e da%$ P!a"idos a""o(nt was there&% de&ited in the sa#e a#o(nt$
Dis"o)erin* the erroneo(s de&it, P!a"ido de#anded that the &ank "redit hi# with a !ike a#o(nt$ The &ank re (sed on the *ro(nd that P!a"ido was ne*!i*ent in !ea)in* his "he"k&ook on his desk so that he "o(!d not '(t (' the de ense o or*er% or want o a(thorit% (nder the NIE$ The Da"ts dis"!ose that e)en to the naked e%e, there were #arked di eren"es &etween P!a"idos si*nat(re and the one in the "he"k or*ed &% the )isitor$ As &etween P!a"ido and the &ank, who sho(!d &ear the !oss> E+'!ain$
SU00ESTE8 ANSWER:
The &ank sho(!d &ear the !oss$ A drawee &ank #(st e+er"ise the hi*hest di!i*en"e in sa e*(ardin* the a""o(nts o its "!ient-de'ositors$ The &ank is a!so "har*ed with *en(ineness o the si*nat(res o its "(rrent a""o(nt ho!ders$ B(t what "an &e #ore strikin* is that there were #arked di eren"es &etween P!a"idos si*nat(re and the one in the "he"k or*ed &% the )isitor$ Certain!%, P!a"ido was not ne*!i*ent in !ea)in* his "he"k&ook in his own desk ? 0N# v 1u"-po 158 'CRA 582A ,an-s2 7nsol enc%2 "ro#i.ite6 Transactions (2000) The Fonetar% Board o the B-P "!osed 4r&an Bank a ter it en"o(ntered "ri''!in* inan"ia! di i"(!ties that res(!ted in a &ank r(n$ J, one o the #e#&ers o the BOD o the &ank, attended and sta%ed thro(*ho(t the entire #eetin* o the Board that was he!d we!! in ad)an"e o the &ank r(n and &e ore news had &e*(n to tri"k!e to the &(siness "o##(nit% a&o(t the dire inan"ia! 'it the &ank had a!!en into$ I##ediate!% a ter the #eetin*, J "a(sed the 're'aration and iss(an"e o a #ana*ers "he"k 'a%a&!e to hi#se! in the s(# o 3 #i!!ion 'esos eB(i)a!ent to the a#o(nt '!a"ed or in)ested in the &ank &% a &(siness a"B(aintan"e$ 9e now "!ai#s that he is kee'in* the (nds in tr(st or the owner and that he had "o##itted no )io!ation o the Genera! Bankin* A"t ?RA ;;7, as a#endedA or whi"h he sho(!d &e '(nished$ Do %o( a*ree that there has &een no )io!ation o the stat(te> ?;@A
SU00ESTE8 ANSWER:
Page 13 of 103 'a%a&!e to hi#se! in the s(# o P3 #i!!ion$ This is 'a%in* o(t or 'er#ittin* to &e 'aid o(t (nds o the &ank a ter the !atter &e"a#e inso!)ent$ This a"t is 'ena!iCed &% ine o not !ess than P6,000$00 nor #ore than P60,000$00 and &% i#'rison#ent or not !ess than two nor #ore than ten %ears$
deter#ine and "on ir# i the &ank is inso!)ent, and '(&!i" interest reB(ires, to order the !iB(idation o the &ank$ ,an-s2 Restrictions on 8oan Accommo6ations (2002) As 'art o the sa e*(ards a*ainst i#'r(dent &ankin*, the Genera! Bankin* Eaw i#'oses !i#its or restri"tions on !oans and "redit a""o##odations whi"h #a% &e e+tended &% &anks$ Identi % at !east two ?2A o these !i#its or restri"tions and e+'!ain the rationa!e o ea"h o the#$ ?3@A
SU00ESTE8 ANSWER:
,an-s2 7nsol enc%2 Re5uirements ()**+) Gi)e the &asi" reB(ire#ents to &e "o#'!ied with &% the B-P &e ore the Fonetar% Board "an de"!are a &ank inso!)ent, order it "!osed and or&id it ro# doin* (rther &(siness in the Phi!i''ines$
SU00ESTE8 ANSWER:
Be ore the Fonetar% Board "an de"!are a &ank inso!)ent, order it "!osed and or&id it ro# doin* (rther &(siness in the Phi!i''ines, the o!!owin* &asi" reB(ire#ents #(st &e "o#'!ied with &% the B-P, to wit5
6$ There #(st &e an e+a#ination &% the head o the De'art#ent o -('er)ision or his e+a#iners or a*ents into the "ondition o the &ank$
2$
;$
7$
The e+a#ination dis"!oses that the "ondition o the &ank is one o inso!)en"%, or that its "ontin(an"e in &(siness wo(!d in)o!)e 'ro&a&!e !oss to "reditors or de'ositors$ The head o said De'art#ent sha!! in or# in writin* the Fonetar% Board o s("h a"ts$
4'on indin* said in or#ation or state#ent to &e tr(e, the Fonetar% Board sha!! a''oint a re"ei)er to take "har*e o the assets and !ia&i!ities o the &ank$
An% two ?2A o the o!!owin* !i#its or restri"tions on !oan and "redit transa"tions whi"h #a% &e e+tended &% &anks, as 'art o the sa e*(ards a*ainst i#'r(dent &ankin*, to wit5 6$ SB" R(5e. H ?i$e$, -in*!e Borrowers Ei#itA r(!es are those 'ro#(!*ated &% the Ban*ko -entra! n* Pi!i'inas, ('on the a(thorit% o -e"tion ;3 o the Genera! Bankin* Eaw o 2000, whi"h re*(!ate the tota! a#o(nt o !oans, "redit a""o##odations and *(arantees that #a% &e e+tended &% a &ank to an% 'erson, 'artnershi', asso"iation, "or'oration or other entit%$ The r(!es seek to 'rote"t a &ank ro# #akin* e+"essi)e !oans to a sin*!e &orrower &% 'rohi&itin* it ro# !endin* &e%ond a s'e"i ied "ei!in*$
2$ ,OSRI R(5e. H These r(!es 'ro#(!*ated &% the B-P, ('on a(thorit% o -e"tion 3 o the Genera! Bankin* Eaw o 2000, whi"h re*(!ate the a#o(nt o "redit a""o##odations that a &ank #a% e+tend to its
3$
.ithin 20 da%s, the Fonetar% Board sha!!

'00(
;$
dire"tors, o i"ers, sto"kho!ders and their re!ated interests ?th(s, DO-RIA$ Genera!!%, a &anks "redit a""o##odations to its DO-RI #(st &e in the re*(!ar "o(rse o &(siness and on ter#s not !ess a)ora&!e to the &ank than those o ered to non- DO-RI &orrowers$ No "o##er"ia! &ank sha!! #ake an% !oan or dis"o(nt on the se"(rit% o shares o its own "a'ita! sto"k$
de'ositar%$ In the a&sen"e o an% sti'(!ation 'res"ri&in* the de*ree o di!i*en"e reB(ired, that o a *ood ather o a a#i!% is to &e
*er i!n 1++0,'003 Arranged by SULAW Cla '00(
,an-s2 Restrictions on 8oan Accommo6ations (2004) Pio is the 'resident o .estern Bank$ 9is wi e a''!ied or a !oan with the said &ank to inan"e an internet "a e$ The !oan o i"er to!d her that her a''!i"ation wi!! not &e a''ro)ed &e"a(se the *rant o !oans to re!ated interests o &ank dire"tors, o i"ers, and sto"kho!ders is 'rohi&ited &% the Genera! Bankin* Eaw$ E+'!ain whether the !oan o i"er is "orre"t$ ?3@A
SU00ESTE8 ANSWER:
-e"tion ;2 o the Genera! Bankin* Eaw o 2000 does not entire!% 'rohi&it dire"tors or o i"ers o the &ank, dire"t!% or indire"t!%, ro# &orrowin* ro# the &ank$ In this "ase, Pio is the 'resident o .estern Bank, whi"h #akes hi# an o i"er, dire"tor and sto"kho!der o the said &ank$ The Genera! Bankin* Eaw 'ro)ides or additiona! restri"tions to the &ank &e ore it "an !end to its dire"tors or o i"ers$ A written a''ro)a! o the #a0orit% )ote o a!! the dire"tors o the &ank, e+"!(din* the dire"tor "on"erned, is reB(ired$ D(rther#ore, s("h dea!in*s #(st &e ('on ter#s not !ess a)ora&!e to the &ank than those o ered to others ? Section #$%&, 'entral Ban()s *+anual of ,egulations for Ban(s and -ther .inancial /ntermediaries, cited in ,anioso v0 '1, 20,0 3o0 ##45#&, December 6, %777A$ A )io!ation o this 'ro)ision wi!! "a(se his or her 'osition to &e de"!ared )a"ant and the errin* dire"tor or o i"er s(&0e"ted to the 'ena! 'ro)isions o the New Centra! Bank A"t$
,an-s2 Sa&et% De$osit ,o92 8ia.ilit% FN and OP rented a sa et% de'osit &o+ at -IBANK$ The 'arties si*ned a "ontra"t o !ease with the "onditions that5 the &ank is not a de'ositor% o the "ontents o the sa e and has neither the 'ossession nor "ontro! o the sa#eI the &ank ass(#ed no interest in said "ontents and ass(#es no !ia&i!it% in "onne"tion therewith$ The sa et% de'osit &o+ had two ke%ho!es5 one or the *(ard ke% whi"h re#ained with the &ankI and the other or the rentersG ke%$ The &o+ "an &e o'ened on!% with the (se o &oth ke%s$ The renters de'osited "erti i"ates o tit!e in the &o+$ B(t !ater, the% dis"o)ered that the "erti i"ates were *one$ FN and OP now "!ai# or da#a*es ro# -IBANK$ Is the &ank !ia&!e> E+'!ain &rie !%$ ?3@A
SU00ESTE8 ANSWER:
The &ank is !ia&!e, &ased on the de"isions o the -('re#e Co(rt in '1 1gro8/ndustrial Development 'orp0 v0 'ourt of
1ppeals, %#9 S',1 5%& (#99$" and Sia v0 'ourt of 1ppeals, %%% S',1 %5 (#99$"0 In those "ases, the -('re#e Co(rt r(!ed
that the rentin* o(t o sa et% de'osit &o+es is a Lspecial (ind of depositL wherein the &ank is the
Page 1( of 103 o&ser)ed &% the de'ositar%$ An% sti'(!ation e+e#'tin* the de'ositar% ro# an% !ia&i!it% arisin* ro# the !oss o the thin* de'osited wo(!d &e )oid or &ein* "ontrar% to !aw and '(&!i" 'o!i"%$ The de'osit &o+ is !o"ated in the &ank 're#ises and is (nder the a&so!(te "ontro! o the &ank$
,an-s2 Secrec% o& ,an- De$osit2 A(8C (2004)

R(d% is 0o&!ess &(t is re'(ted to &e a 0(eten* o'erator$ 9e has ne)er &een "har*ed or "on)i"ted o an% "ri#e$ 9e #aintains se)era! &ank a""o(nts and has '(r"hased 3 ho(ses and !ots or his "hi!dren ro# the E(ansin* Rea!t%, In"$ -in"e he does not ha)e an% )isi&!e 0o&, the "o#'an% re'orted his '(r"hases to the Anti-Fone% Ea(nderin* Co(n"i! ?AFECA$ Therea ter, AFEC "har*ed hi# with )io!ation o the Anti-Fone% Ea(nderin* Eaw$ 4'on reB(est o the AFEC, the &ank dis"!osed to it R(d%Gs &ank de'osits a#o(ntin* to P600 Fi!!ion$ -(&seB(ent!%, he was "har*ed in "o(rt or )io!ation o the AntiFone% Ea(nderin* Eaw$
6$ Can R(d% #o)e to dis#iss the "ase on the *ro(nd that he has no "ri#ina! re"ord> ?2$3@A
SU00ESTE8 ANSWER:
No$ 4nder the Anti-Fone% Ea(nderin* Eaw, R(d% wo(!d &e *(i!t% o a L#one% !a(nderin* "ri#eL "o##itted when the 'ro"eeds o an L(n!aw (! a"ti)it%,L !ike 0(eten* o'erations, are #ade to a''ear as ha)in* ori*inated ro# !e*iti#ate so(r"es$ The #one% !a(nderin* "ri#e is se'arate ro# the (n!aw (! a"ti)it% o &ein* a 0(eten* o'erator, and reB(ires no 're)io(s "on)i"tion or the (n!aw (! a"ti)it% ?-ee a!so -e"$ ;, Anti- Fone% Ea(nderin* A"t o 2006A$
2$ To raise and !ots In"$ &e ownershi'
(nds or his de ense, R(d% so!d the ho(ses to a riend$ Can E(ansin* Rea!t%, "o#'e!!ed to trans er to the &(%er o the ho(ses and !ots> ?2$3@A
SU00ESTE8 ANSWER:
E(ansin* Rea!t%, In"$ is a rea! estate "o#'an%, hen"e it is not a "o)ered instit(tion (nder -e"tion ; o the Anti- Fone% Ea(nderin* A"t$ On!% &ankin* instit(tions, ins(ran"e "o#'anies, se"(rities dea!ers and &rokers, 're- need "o#'anies and other entities ad#inisterin* or otherwise dea!in* in "(rren"%, "o##odities or inan"ia! deri)ati)es are "o)ered instit(tions$ 9en"e, E(ansin* Rea!t%, In"$ #a% not (se the Anti-Fone% Ea(nderin* A"t to re (se to trans er to the &(%er ownershi' o the ho(ses and !ots$ ;$ In dis"!osin* R(d%Gs &ank a""o(nts to the AFEC, did the &ank )io!ate an% !aw> ?2$3@A
SU00ESTE8 ANSWER:
No, the &ank did not )io!ate an% !aw$ The &ank &ein* s'e"i ied as a L"o)ered instit(tionL (nder the Anti- Fone% Ea(nderin* Eaw, is o&!i*ed to re'ort to the AFEC "o)ered and s(s'i"io(s transa"tions, witho(t there&% )io!atin* an% !aw$ This is one o the e+"e'tions to the -e"re"% o Bank De'osit A"t$
7$ -(''osin* the tit!es o the ho(ses and !ots are in 'ossession o the E(ansin* Rea!t%, In"$, is it (nder o&!i*ation to de!i)er the tit!es to R(d%> ?2$3@A
SU00ESTE8 ANSWER:
a ew h(ndred 'esos in her &ank a""o(nt and that her ne+t "he"k wi!! in a!! 'ro&a&i!it% &o(n"e$ Fanosa wrote this in or#ation in his news'a'er "o!(#n$ Th(s, Gi*i
Yes, it has an o&!i*ation to de!i)er tit!es to R(d%$ As E(ansin* Rea!t%, In"$ is not a "o)ered instit(tion (nder -e"tion ; o the Anti-Fone% Ea(nderin* A"t, it #a% not in)oke this !aw to re (se de!i)er% o the tit!es to R(d%$
,an-s2 Secrec% o& ,an- De$osit2 E9ce$tions (2004)

4nder Re'(&!i" A"t No$6703 ?The Bank -e"re"% EawA, &ank de'osits are "onsidered a&so!(te!% "on identia! and #a% not &e e+a#ined, inB(ired or !ooked into &% an% 'erson, *o)ern#ent o i"ia!, &(rea( or o i"e$
.hat are the e+"e'tions> ?3@A

SU00ESTE8 ANSWER:
The e+"e'tions to the Bank -e"re"% Eaw are the o!!owin*5 6$ -'e"ia! or *enera! e+a#ination o a &ank, a(thoriCed &% the Ban*ko -entra! n* Pi!i'inasG Fonetar% Board, in "onne"tion with a &ank ra(d or serio(s irre*(!arit%$ 2$ E+a#ination &% an inde'endent A(ditor, hired &% the Bank and or the BankGs e+"!(si)e (se$ ;$ Dis"!os(re with the De'ositorGs written 'er#ission$ a$ In "ase o I#'ea"h#ent$ &$ In "ases o Bri&er% or dere!i"tion o d(t% &% a P(&!i" O i"er, ('on order o a "o#'etent "o(rt$ "$ In "ases o #one% de'ositedMin)ested whi"h, in t(rn, is the s(&0e"t o Eiti*ation, ('on order o a "o#'etent Co(rt$ 7$ DO-RI Eoans5 Eoans with their Banks o Bank Dire"tors, O i"ers, -to"kho!ders and re!ated interests$ a$ Eoans in e+"ess o 3@ o the BankGs Ca'ita! N -(r'!(s &$ The Borrower wai)ed his ri*ht as re*ards the -e"re"% o Bank De'osits 3$ Oio!ation o the Anti-Gra t and Corr('t Pra"ti"es A"t$ 2$ Co(' dG etat Eaw ?RA 2:28, O"t 27,6::0A$ 7$ BIR Co##issionerGs a(thorit% to )eri % a de"edentGs Gross Estate and a ta+'a%erGs reB(est or a "o#'ro#ise a*ree#ent d(e to in"a'a"it% to 'a% his ta+ !ia&i!it%$ 8$ Dorei*n C(rren"% De'osits &% orei*n !enders N in)estors (nder PDs 60;7$ :$ Oio!ations o the Anti-Fone% Ea(nderin* Eaw$ 60$ .hen the -tate e+er"isesMin)okes its Po!i"e Power$
(3-:1 BE3E! /t is suggested that an & of the above be given full credit"
,an-s2 Secrec% o& ,an- De$osits ()**0)

Fanosa, a news'a'er "o!(#nist, whi!e #akin* a de'osit in a &ank, o)erheard a 'rett% &ank te!!er in or#in* a "oe#'!o%ee that Gi*i, a we!! known '(&!i" o i"ia!, has 0(st
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i!ed a "o#'!aint with the Cit% Dis"a! o Fani!a or (n!aw (!!% dis"!osin* in or#ation a&o(t her &ank a""o(nt$ aA .i!! the said s(it 'ros'er> E+'!ain %o(r answer$
&A -(''osin* that Gi*i is "har*ed with (n!aw (!!% a"B(irin* wea!th (nder RA 6;7: and that the is"a! iss(ed a subpoena duces tecum or the re"ords o the &ank a""o(nt o Gi*i$ Fa% Gi*i )a!id!% o''ose the said iss(an"e on the *ro(nd that the sa#e )io!ates the !aw on se"re"% o &ank
"ases$ 9en"e Gi*i #a% not )a!id!% o''ose the iss(an"e o a subpoena duces tecum or the &ank re"ords on her$
,an-s2 Secrec% o& ,an- De$osits ()**))

The !aw ?RA 28;2A "reatin* a Co##ission to "ond("t a Thoro(*h Da"t-Dindin* In)esti*ation o the Dai!ed Co(' detat o De" 6:8:, Re"o##end Feas(res to Pre)ent the O""(rren"e o -i#i!ar Atte#'ts At a Oio!ent -eiC(re o Power and or Other P(r'oses, 'ro)ides that the Co##ission #a% ask the Fonetar% Board to dis"!ose in or#ation on andMor to *rant a(thorit% to e+a#ine an% &ank de'osits, tr(st or in)est#ent (nds, or &ankin* transa"tions in the na#e o andMor (ti!iCed &% a 'erson, nat(ra! or 0(ridi"a!, (nder in)esti*ation &% the Co##ission, in an% &ank or &ankin* instit(tion in the Phi!i''ines, when the Co##ission has reasona&!e *ro(nd to &e!ie)e that said de'osits, tr(st or in)est#ent (nds, or &ankin* transa"tions ha)e &een (sed in s(''ort or in (rtheran"e o the o&0e"ti)es o the said "o(' detat$ Does the a&o)e 'ro)ision not )io!ate the Eaw on -e"re"% o Bank De'osits ?RA 6703A>
SU00ESTE8 ANSWER:
de'osits> E+'!ain %o(r answer$

SU00ESTE8 ANSWER:
aA The -e"re"% o Bank De'osits A"t 'rohi&its, s(&0e"t to its e+"!(sionar% "!a(ses, an% 'erson ro# e+a#inin*, inB(irin* or !ookin* into a!! de'osits o whate)er nat(re with &anks or &ankin* instit(tions in the Phi!i''ines whi"h &% !aw are de"!ared <a&so!(te!% "on identia!= in nat(re$ Fanosa who #ere!% o)erheard what a''eared to &e a )a*(e re#ark o a Bank e#'!o%ee to a "oe#'!o%ee and writin* the sa#e in his news'a'er "o!(#n is neither the inB(ir% nor dis"!os(re "onte#'!ated &% !aw$
ALTERNATI*E ANSWER:
aA The "o#'!aint a*ainst Fanosa wi!! not 'ros'er &e"a(se #ere!% writin* a )a*(e re#ark o a Bank e#'!o%ee to a "o-e#'!o%ee is not the dis"!os(re "onte#'!ated &% !aw$ I an%one sho(!d &e !ia&!e, it wi!! &e the &ank e#'!o%ee who dis"!osed the in or#ation$
SU00ESTE8 ANSWER:
&A A#on* the instan"es e+"e'ted ro# the "o)era*e o the -e"re"% o Bank De'osits A"t are Anti-*ra t
The Eaw on -e"re"% o Bank De'osits is itse! #ere!% a stat(tor% ena"t#ent, and it #a%, there ore, &e #odi ied, or a#ended ?s("h as &% 'ro)idin* (rther e+"e'tions there ro#A, or e)en re'ea!ed, e+'ress!% or i#'!ied!%, &% a s(&seB(ent !aw$ The -e"re"% o Bank De'osits A"t did not a#o(nt to a "ontra"t &etween the de'ositors and de'ositor% &anks within the #eanin* o the non- i#'air#ent "!a(se o the Constit(tion$ E)en i it did, the 'o!i"e 'ower o the -tate is s('erior to the non*er i!n 1++0,'00- U)dated by Dondee
i#'air#ent "!a(se$ RA 28;2, "reatin* a "o##ission to "ond("t an in)esti*ation o the ai!ed 6:8: "o(' detat and to re"o##end #eas(res to 're)ent si#i!ar atte#'ts to seiCe 'ower is a )a!id e+er"ise o 'o!i"e 'ower$
i!!e*a!!% a"B(ired 'ro'ert% e+tends to "ases where s("h 'ro'ert% is "on"ea!ed &% &ein* he!d &% or re"orded in the
,an-s2 Secrec% o& ,an- De$osits ()**2) -o"orro re"ei)ed P60,000 ro# a orei*n &ank a!tho(*h she was entit!ed on!% to P6,000$00$ In an a''arent '!an to "on"ea! the erroneo(s!% sent a#o(nt, she o'ened a do!!ar a""o(nt with her !o"a! &ank, de'osited the P60,000 and iss(ed 7 "he"ks in the a#o(nt o P2,000 and 6 "he"k or P6,000 ea"h 'a%a&!e to di erent indi)id(a!s who de'osited the sa#e in their res'e"ti)e do!!ar a""o(nts with di erent !o"a! &anks$ The sender &ank then &ro(*ht a "i)i! s(it &e ore the RTC or the re"o)er% o the erroneo(s!% sent a#o(nt$ In the "o(rse o the tria!, the sender 'resented testi#onies o &ank o i"ia!s to show that the (nds were, in a"t, de'osited in a &ank &% -o"orro and 'aid o(t to se)era! 'ersons, who 'arti"i'ated in the "on"ea!#ent and dissi'ation o the a#o(nt that -o"orro had erroneo(s!% re"ei)ed$ -o"orro #o)ed to strike o(t said testi#onies ro# the re"ord in)okin* the !aw on se"re"% o &ank de'osits$ I %o( were the 1(d*e, wo(!d %o( iss(e an order to strike the# o(t> .h%>
SU00ESTE8 ANSWER:
I wi!! not strike o(t the testi#onies ro# the re"ord$ The testi#onies o &ank o i"ia!s indi"atin* where the B(estioned do!!ar a""o(nts were o'ened in de'ositin* #isa''ro'riated s(#s #(st &e "onsidered as !ikewise in)o!)ed in !iti*ation H one whi"h is a#on* the e+"e'ted "ases (nder the -e"re"% o Bank De'osits A"t )2elon
#an$ v 2ags"no 19 'CRA 6((+
,an-s2 Secrec% o& ,an- De$osits ()**3)

Fi*(e!, a s'e"ia! "(sto#s a*ent is "har*ed &e ore the O#&(ds#an with ha)in* a"B(ired 'ro'ert% o(t o 'ro'ortion to his sa!ar%, in )io!ation o the Anti-Gra t and Corr('t Pra"ti"es A"t$ The O#&(ds#an iss(ed a subpoena duces tecum to the Ban"o de Cin"o "o##andin* its re'resentati)e to (rnish the O#&(ds#an re"ords o transa"tions &% or in the na#e o Fi*(e!, his wi e and "hi!dren$ A se"ond s(&'oena was iss(ed e+'andin* the irst &% in"!(din* the 'rod("tion o re"ords o riends o Fi*(e! in said &ank and in a!! its &ran"hes and e+tension o i"es, s'e"i i"a!!% na#in* the#$
Fi*(e! #o)ed to B(ash the s(&'oenas ar*(in* that the% )io!ate the -e"re"% o Bank De'osits Eaw$ In addition, he "ontends that the s(&'oenas are in the nat(re o < ishin* e+'edition= or <*enera! warrants= and are "onstit(tiona!!% i#'er#issi&!e with res'e"t to 'ri)ate indi)id(a!s who are not (nder in)esti*ation$ Is Fi*(e!s "ontention tena&!e>
SU00ESTE8 ANSWER:
No$ Fi*(e!s "ontention is not tena&!e$ The inB(ir% into
Page 14 of 103 na#e o other 'ersons$ To s(stain Fi*(e!s theor% and restri"t the inB(ir% on!% to 'ro'ert% he!d &% or in the na#e o the *o)ern#ent o i"ia! wo(!d #ake a)ai!a&!e to 'ersons in *o)ern#ent who i!!e*a!!% a"B(ire 'ro'ert% an eas% #eans o e)adin* 'rose"(tion$ A!! the% ha)e to do wo(!d &e to si#'!% '!a"e the 'ro'ert% in the na#e o 'ersons other than their s'o(ses and "hi!dren (Banco .ilipino
Can the "o(rt "o#'e! Pros'erit% and Eastern to dis"!ose the &ank de'osits o Fi"hae!> Dis"(ss (!!%$
SU00ESTE8 ANSWER:
Savings vs0 ;urisima #&# scra 54&< Sec 6 1nti82raft =aw as amended b B; #95"
Yes, as ar as the 'eso a""o(nt is "on"erned$ -e" 2 o RA 6703 a!!ows the dis"!os(re o &ank de'osits in "ase where the #one% de'osited is the s(&0e"t #atter o !iti*ation$ -in"e the "ase i!ed a*ainst Fi"hae! is ai#ed at re"o)erin* the a#o(nt he withdrew ro# the (nds o the 'artnershi', whi"h a#o(nt he a!!e*ed!% de'osited in his a""o(nt, a dis"!os(re o his &ank de'osits wo(!d &e 'ro'er$ No, with res'e"t to the orei*n "(rren"% a""o(nt$ 4nder the Dorei*n C(rren"% Eaw, the e+e#'tion to the 'rohi&ition a*ainst dis"!os(re o in or#ation "on"ernin* &ank de'osits is the written "onsent o the de'ositor$ ,an-s2 Secrec% o& ,an- De$osits ()**:)
6::8 ?20A An ins(ran"e "o#'an% is de!(ded into re!easin* a "he"k to A or P;3th to 'a% or Treas(r% Bi!!s ?T-&i!!sA whi"h A "!ai#s to &e en ro(te on &oard an ar#ored tr("k ro# a *o)ern#ent &ank$ The "he"k is de!i)ered to A who de'osits it to his a""o(nt with JYQ Bank &e ore the ins(ran"e "o#'an% rea!iCes it is a s"a#$ 4'on s("h rea!iCation, the ins(ran"e "o#'an% i!es an a"tion a*ainst A or re"o)er% o the a#o(nt de ra(ded and o&tains a writ o 're!i#inar% atta"h#ent$ In addition to the writ, the Bank is a!so ser)ed a s(&'oena to e+a#ine the a""o(nt re"ords o A$ The Bank de"!ines to 'ro)ide an% in or#ation in res'onse to the writ and #o)es to B(ash the s(&'oena in)okin* se"re"% o &ank
,an-s2 Secrec% o& ,an- De$osits ()**1) Fi"hae! withdrew witho(t a(thorit% (nds o the 'artnershi' in the a#o(nts o P300th and 4-P30th or ser)i"es he "!ai#s he rendered or the &ene it o the 'artnershi'$ 9e de'osited the P300th in his 'ersona! 'eso "(rrent a""o(nt with Pros'erit% Bank and the 4-P30th in his 'ersona! orei*n "(rren"% sa)in*s a""o(nt with Eastern Bank$ The 'artnershi' instit(ted an a"tion in "o(rt a*ainst Fi"hae!, Pros'erit%, and Eastern to "o#'e! Fi"hae! to ret(rn the s(&0e"t (nds to the 'artnershi' and 'endin* !iti*ation to order &oth &anks to disa!!ow an% withdrawa! ro# his a""o(nts$ At the initia! hearin* o the "ase the "o(rt ordered Pros'erit% to 'rod("e the re"ords o Fi"hae!s 'eso "(rrent a""o(nt, and Eastern to 'rod("e the re"ords o his orei*n "(rren"% sa)in*s a""o(nt$
'00(
E+'!ain %o(r answer or "hoi"e &rie !%$ ?3@A

SU00ESTE8 ANSWER:
de'osits (nder RA 6703, as a#ended$ Can the Bank 0(sti ia&!% in)oke RA 6703 and aA not res'ond to the writ and &A B(ash the s(&'oena or e+a#ination> ?3@A
SU00ESTE8 ANSWER:
Yes$ .hether the transa"tion is "onsidered a sa!e or #one% '!a"e#ent does not #ake the #one% <s(&0e"t #atter o !iti*ation= within the #eanin* o -e" 2 o RA 6703 whi"h 'rohi&its the dis"!os(re or inB(ir% into &ank de'osit e+"e't <in "ases where the #one% de'osited or in)ested is the s(&0e"t #atter o !iti*ation= nor wi!! it #atter whether the #one% was <swind!ed$= ,an-s2 Secrec% o& ,an- De$osits (2000)
GP is a s(s'e"ted 0(eten* !ord who is r(#ored to &e en0o%in* 'o!i"e and #i!itar% 'rote"tion$ The en)% o #an% dr(* !ords who had not es"a'ed the dra*net o the !aw, GP was s(##oned to a hearin* o the Co##ittee on Ra"keteerin* and Other -%ndi"ated Cri#es o the 9o(se o Re'resentati)es, whi"h was "ond("tin* a "on*ressiona! in)esti*ation <in aid o !e*is!ation= on the in)o!)e#ent o 'o!i"e and #i!itar% 'ersonne!, and 'ossi&!% e)en o !o"a! *o)ern#ent o i"ia!s, in the i!!e*a! a"ti)ities o s(s'e"ted *a#&!in* and dr(* !ords$ -(&'oenaed to attend the in)esti*ation were o i"ers o "ertain identi ied &anks with a dire"ti)e to the# to &rin* the re"ords and do"(#ents o &ank de'osits o indi)id(a!s #entioned in the s(&'oenas, a#on* the# GP$ GP and the &anks o''osed the 'rod("tion o the &anks re"ords o de'osits on the *ro(nd that no s("h inB(ir% is a!!owed (nder the Eaw on -e"re"% o Bank De'osits ?RA 6703 as a#endedA$ Is the o''osition o GP and the &anks )a!id> E+'!ain$
SU00ESTE8 ANSWER:
Yes$ The o''osition is )a!id$ GP is not a '(&!i" o i"ia!$ The in)esti*ation does not in)o!)e one o the e+"e'tions to the 'rohi&ition a*ainst dis"!os(re o an% in or#ation "on"ernin* &ank de'osits (nder the Eaw on -e"re"% o Bank De'osits$ The Co##ittee "ond("tin* the in)esti*ation is not a "o#'etent "o(rt or the O#&(ds#an a(thoriCed (nder the !aw to iss(e a s(&'oena or the 'rod("tion o the &ank re"ord in)o!)in* s("h dis"!os(re$
,an-s2 Secrec% o& ,an- De$osits2 E9ce$tions (2003)

The Eaw on -e"re"% o Bank De'osits 'ro)ides that a!! de'osits o whate)er nat(re with &anks or &ankin* instit(tions are a&so!(te!% "on identia! in nat(re and #a% not &e e+a#ined, inB(ired or !ooked into &% an% 'erson, *o)ern#ent o i"ia!, &(rea( or o i"e$ 9owe)er, the !aw 'ro)ides e+"e'tions in "ertain instan"es$
.hi"h o the o!!owin* #a% not &e a#on* the e+"e'tions5 6$ In "ases o i#'ea"h#ent$ 2$ In "ases in)o!)in* &ri&er% ;$ In "ases in)o!)in* BIR inB(ir%$ 7$ In "ases o anti-*ra t and "orr('t 'ra"ti"es$ 3$ In "ases where the #one% in)o!)ed is the s(&0e"t o !iti*ation$
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16 of 103
4nder -e"tion 2?DA o the Nationa! Interna! Re)en(e Code, the Co##issioner o Interna! Re)en(e "an inB(ire into the de'osits o a de"edent or the '(r'ose o deter#inin* the *ross estate o s("h de"edent$ A'art ro# this "ase, a BIR inB(ir% into &ank de'osits "annot &e #ade$ Th(s, e+"e'tion ; #a% not a!wa%s &e a''!i"a&!e$ T(rnin* to e+"e'tion 7, an inB(ir% into &ank de'osits is 'ossi&!e on!% in 'rose"(tions or (ne+'!ained wea!th (nder the Anti-Gra t and Corr('t Pra"ti"es A"t, a""ordin* to the -('re#e Co(rt in the "ases o ;hilippine
3ational Ban( v0 2anca co, #5 S',1 9# (#9&5" and Banco .ilipino Savings and +ortgage Ban( v0 ;urisima, #&# S',1 54& (#966"0
instan"e o a "reditor o a de'ositor "o)ered &% the said !aw> -tate the reason?sA or %o(r answer$ ?3@A
SU00ESTE8 ANSWER:
No$ The noti"e o *arnish#ent ser)ed on a &ank at the instan"e o a "reditor is not "o)ered &% the Eaw on -e"re"% o Bank De'osits$ Garnish#ent is 0(st a 'art o the 'ro"ess o e+e"(tion$ The #o#ent a noti"e o *arnish#ent is ser)ed on a &ank and there e+ists a de'osit &% the 0(d*#ent de&tor, the &ank is dire"t!% a""o(nta&!e to the sheri , or the &ene it o the 0(d*#ent "reditor, or the who!e a#o(nt o the de'osit$ In s("h e)ent, the a#o(nt o the de'osit &e"o#es, in e e"t, a s(&0e"t o the !iti*ation$ ,S"2 Recei ers#i$2 Juris6iction ()**2) Da#i!% Bank was '!a"ed (nder stat(tor% re"ei)ershi' and s(&seB(ent!% ordered !iB(idated &% the Centra! Bank ?CBA d(e to ra(d and irre*(!arities in its !endin* o'erations whi"h rendered it inso!)ent$ 1(di"ia! 'ro"eedin*s or !iB(idation were therea ter "o##en"ed &% the CB &e ore the RTC$ Da#i!% Bank o''osed the 'etition$ -hort!% therea ter, Da#i!% Bank i!ed in the sa#e "o(rt a s'e"ia! "i)i! a"tion a*ainst the CB seekin* to en0oin and dis#iss the !iB(idation 'ro"eedin* on the *ro(nd o *ra)e a&(se o dis"retion &% the CB$ The "o(rt 'oised to5 6A restrain the CB ro# "!osin* Da#i!% BankI and 2A a(thoriCe Da#i!% Bank to withdraw #one% ro# its de'osits d(rin* the 'enden"% o the "ase$ I %o( were the 1(d*e, wo(!d %o( iss(e s("h orders> .h%>
SU00ESTE8 ANSWER:
9owe)er, a!! other "ases o anti-*ra t and "orr('t 'ra"ti"es wi!! not warrant an inB(ir% into &ank de'osits$ Th(s, e+"e'tion 7 #a% not a!wa%s &e a''!i"a&!e$ Eike an% other e+"e'tion, it #(st &e inter'reted stri"t!%$
E+"e'tions 6, 2 and 3, on the other hand, are 'ro)ided e+'ress!% in the Eaw on -e"re"% o Bank De'ositors$ The% are a)ai!a&!e to de'ositors at a!! ti#es$ ,an-s2 Secrec% o& ,an- De$osits2 Garnis#ment (200)) The Eaw on -e"re"% o Bank De'osits, otherwise known as RA 6703, is intended to en"o(ra*e 'eo'!e to de'osit their #one% in &ankin* instit(tions and a!so to dis"o(ra*e 'ri)ate hoardin* so that the sa#e #a% &e 'ro'er!% (ti!iCed &% &anks to assist in the e"ono#i" de)e!o'#ent o the "o(ntr%$ Is a noti"e o *arnish#ent ser)ed on a &ank at the
'er or#in* si#i!ar (n"tions$

The 'ri#ar% o&0e"ti)e o the B-P is to #aintain 'ri"e sta&i!it% "ond("i)e to a &a!an"ed and s(staina&!e *rowth
No$ The RTC has no a(thorit% to restrain the #onetar% &oard o the B-P ro# stat(tor% a(thorit% to (ndertake re"ei)ershi' and (!ti#ate !iB(idation o a &ank$ An% o''osition to s("h an a"tion "o(!d &e #ade to the "o(rt itse! where assistan"e is so(*ht$ The a"tion o the RTC where the 'ro"eedin* is 'endin* a''ea! ha)e to &e #ade in the Co(rt o A''ea!s$ 8e'al Ten6er (2000) A ter #an% %ears o sho''in* in the Fetro Fani!a area, ho(sewi e 9. has de)e!o'ed the so(nd ha&it o #akin* "ash '(r"hases on!%, none on "redit$ In one sho''in* tri' to Fe*a Fa!!, she *ot the sho"k o her sho''in* !i e or the irst ti#e, a stores s#art sa!es*ir! re (sed to a""e't her "oins in 'a%#ent or a '(r"hase worth not #ore than one h(ndred 'esos$ 9. was 'a%in* se)ent% 'esos in 23- "enta)o "oins and twent% i)e 'esos in 60 "enta)o "oins$ -tran*e as it #a% see#, the sa!es*ir! to!d 9. that her "oins were not <!e*a! tender$= Do %o( a*ree with the sa!es*ir! in res'e"t o her (nderstandin* o <!e*a! tender>= E+'!ain ?2@A
SU00ESTE8 ANSWER:
No$ The sa!es*ir!s (nderstandin* that "oins are not !e*a! tender is not "orre"t$ Coins are !e*a! tender in a#o(nts not e+"eedin* i t% 'esos or deno#inations ro# twent% i)e "enta)os and a&o)e, and in a#o(nts not e+"eedin* twent% 'esos or deno#inations ten "enta)os and !ess$ "D7C 8a; s! Secrec% o& ,an- De$osits Act ()**+) An e#'!o%ee o a !ar*e #an( a"t(rin* ir# earns a sa!ar% whi"h is 0(st a &it #ore than what he needs or a "o# orta&!e !i)in*$ 9e is th(s a&!e to sti!! #aintain a P60,000 sa)in*s a""o(nt, a P20,000 "he"kin* a""o(nt, a P;0,000 #one% #arket '!a"e#ent and a P70,000 tr(st (nd in a #edi(#siCe "o##er"ia! &ank$ aA -tate whi"h o the o(r a""o(nts are dee#ed ins(red &% the PDIC$
&A -tate whi"h o &% the a&o)e a""o(nts are "o)ered
the Eaw on -e"re"% o Bank De'osits$

SU00ESTE8 ANSWER:
aA
The P60th sa)in*s a""o(nt and the P20th "he"kin* a""o(nt are dee#ed ins(red &% the PDIC$ &A The P60th sa)in*s a""o(nt and the P20th "he"kin* a""o(nt are "o)ered &% the Eaw on -e"re"% o Bank De'osits$ Res$onsi.ilities 0 <.=ecti es o& ,S" ()**:) .hat are the res'onsi&i!ities and 'ri#ar% o&0e"ti)es o the B-P> ?3@A
SU00ESTE8 ANSWER:
The B-P sha!! 'ro)ide 'o!i"% dire"tions in the areas o #one%, &ankin* and "redit$ It sha!! ha)e s('er)ision o)er the o'erations o &anks and e+er"ise s("h re*(!ator% 'owers as 'ro)ided in the Centra! Bank A"t and other 'ertinent !aws o)er the o'erations o inan"e "o#'anies and non-&ank inan"ia! instit(tions 'er or#in* B(asi- &ankin* (n"tions, s("h as B(asi-&anks and instit(tions
Page
1+ of 103
o the e"ono#%$ It sha!! 'ro#ote and #aintain #onetar% sta&i!it% and "on)erti&i!it% o the Peso$ Trut# in 8en6in' Act ()**))
Dana Gianina '(r"hased on a ;2 #onth insta!!#ent &asis the !atest #ode! o the Nissan -entra -edan "ar ro# the 1o&e! Cars In"$ In addition to the ad)ertised se!!in* 'ri"e, the !atter i#'osed inan"e "har*es "onsistin* o interests, ees and ser)i"e "har*es$ It did not, howe)er, s(&#it to Dana a written state#ent settin* orth therein the in or#ation reB(ired &% the Tr(th in Eendin* A"t ?RA ;723A$ Ne)erthe!ess, the "onditiona! deed o sa!e whi"h the 'arties e+e"(ted #entioned that the tota! a#o(nt indi"ated therein in"!(ded s("h inan"e "har*es$
&A
A )io!ation o the Tr(th in Eendin* A"t wi!! not ad)erse!% a e"t the )a!idit% o the "ontra"t itse! $
"A
It wo(!d a!!ow Dana to re (se 'a%#ent o inan"ia! "har*es or, i a!read% 'aid, to re"o)er the sa#e$ Dana #a% a!so initiate "ri#ina! "har*es a*ainst the "reditor$
ALTERNATI*E ANSWER:
"A ?Per Att% 1o#&% Paras i ( read the 'ro)isions "!ose!%A 4nder the Tr(th in Eendin* A"t, said inan"ia! "har*es are )a!id, and Dana #a% not re (se 'a%#ent thereo $ On!% "ri#ina! "har*es #a% &e initiated a*ainst the "reditor$ Trut# in 8en6in' Act (2000)
E#&ass% A''!ian"es se!!s ho#e theater "o#'onents that are desi*ned and "(sto#iCed as entertain#ent "enters or "ons(#ers within the #edi(#-to-hi*h 'ri"e &ra"ket$ Fost, i not a!!, o these 'a"ka*es are so!d on insta!!#ent &asis, (s(a!!% &% #eans o "redit "ards a!!owin* a #a+i#(# o ;2 eB(a! #onth!% 'a%#ents$ Pre erred "redit "ards o this t%'e are those iss(ed &% &anks, whi"h re*(!ar!% ho!d #a!! wide sa!es &!itCes 'arti"i'ated in &% a''!ian"e retai!ers !ike E#&ass% A''!ian"es$ Yo( are a &(%er o a ho#e theater "enter at E#&ass% A''!ian"es$ The sa!es"!erk who is attendin* to %o( si#'!% swi'es %o(r "redit "ard on the e!e"troni" a''ro)a! #a"hine ?whi"h #o#entari!% 'rints o(t %o(r "har*e s!i' sin"e %o( ha)e (n!i#ited "reditA, tears the s!i' ro# the #a"hine, hands the sa#e o)er to %o( or %o(r si*nat(re, and
a$ &$ "$
9as there &een s(&stantia! "o#'!ian"e o the a oresaid A"t> I %o(r answer to the ore*oin* B(estion is in the ne*ati)e, what is the e e"t o the )io!ation on the "ontra"t> In the e)ent o a )io!ation o the A"t, what re#edies #a% &e a)ai!ed o &% Dana>
There was no s(&stantia! "o#'!ian"e with the Tr(th in Eendin* A"t$ The !aw 'ro)ides that the "reditor #(st #ake a (!! dis"!os(re o the "redit !ost$ The state#ent that the tota! a#o(nt d(e in"!(des the 'rin"i'a! and the inan"ia! "har*es, witho(t s'e"i %in* the a#o(nts d(e on ea"h 'ortion thereo wo(!d &e ins( i"ient and (na""e'ta&!e$
'00(
SU00ESTE8 ANSWER:
aA
witho(t #ore, 'ro"eeds to arran*e the de!i)er% and insta!!ation o %o(r new ho#e theater s%ste#$ Yo( know %o( wi!! re"ei)e a state#ent on %o(r "redit "ard '(r"hases ro# the &ank "ontainin* an o'tion to 'a% on!% a #ini#(# a#o(nt, whi"h is (s(a!!% 6M;2 o the tota! 'ri"e %o( were "har*ed or %o(r '(r"hase$ Did E#&ass% A''!ian"es "o#'!% with the 'ro)isions o the Tr(th in Eendin* A"t ?RA ;723A>
SU00ESTE8 ANSWER:
es"a!ated, whi!e its "reditor &anks and other inan"ia! instit(tions ti*htened
There is no need or E#&ass% A''!ian"es to "o#'!% with the Tr(th in Eendin* A"t$ The transa"tion is not a sa!e on insta!!#ent &asis$ E#&ass% A''!ian"es is a se!!er on "ash &asis$ It is the "redit "ard "o#'an% whi"h a!!ows the &(%er to en0o% the 'ri)i!e*e o 'a%in* the 'ri"e on insta!!#ent &asis$
$2l1 Sale La#

,ul- Sales 8a;2 Co ere6 Transactions ()**3)
-tanr(s In" a de'art#ent store with o(t!ets in Fakati, Fanda!(%on*, and /(eCon Cit%, is "onte#'!atin* to re (r&ish and reno)ate its Fakati store in order to introd("e the #ost #odern and state o the art eB(i'#ent in #er"handise dis'!a%$ To "arr% o(t its '!an, it intends to se!! AEE o the e+istin* i+t(res and eB(i'#ent ?dis'!a% "ases, wa!! de"orations, (rnit(re, "o(nters, et"$A to Crossroads De'art#ent -tore$ Therea ter, it wi!! &(% and insta!! new i+t(res and eB(i'#ent and "ontin(e o'erations$ Crossroads wants to know ro# %o( as "o(nse!5
6A 2A
.hether the intended sa!e is <&(!k sa!e$= 9ow "an it 'rote"t itse! ro# (t(re "!ai#s o "reditors o -tanr(s$
SU00ESTE8 ANSWER:
6A Yes$ The sa!e in)o!)es a!! i+t(res and eB(i'#ent, not in the ordinar% "o(rse o trade and the re*(!ar 'rose"(tion o &(siness o -tanr(s, In"$ ?-e" 2 A"t ;:32, as a#endedA
2A Crossroads sho(!d reB(ire ro# -tanr(s In"$ s(&#ission o a written wai)er o the B(!k -a!es Eaw &% the "reditors as shown &% )eri ied state#ents or to "o#'!% with the reB(ire#ents o the B(!k -a!es Eaw, that is, the se!!er #(st noti % his "reditors o the ter#s and "onditions o the sa!e, and a!so, &e ore re"ei)in* ro# the )endee an% 'art o the '(r"hase 'ri"e, de!i)er to s("h )endee a written sworn state#ent o the na#es and addresses o a!! his "reditors to*ether with the a#o(nt o inde&tedness d(e to ea"h ?-e" 2 A"t ;:32, a#endedA
,ul- Sales 8a;2 Co ere6 Transactions (2000)

Co#'an% J, en*a*ed in the &(siness o #an( a"t(rin* "ar 'arts and a""essories, o'erates a a"tor% with eB(i'#ent, #a"hiner% and too!s or this '(r'ose$ The #an( a"t(red *oods are so!d who!esa!e to distri&(tors and dea!ers thro(*ho(t the Phi!i''ines$ Co#'an% J was a#on* the &(siness entities ad)erse!% hit &% the 6::7 Asian &(siness "risis$ Its sa!es dro''ed with the de"!ine in "ar sa!es and its o'eratin* "osts
Page '0 of 103 their !oan 'ort o!ios$ Co#'an% J was a"ed with the dis#a! "hoi"e o either s(s'endin* its o'erations or se!!in* its &(siness$ It "hose the !atter$ 9a)in* str("k a dea! with Co#'an% Q, a #ore )ia&!e entit% en*a*ed in the sa#e &(siness, Co#'an% J so!d its entire &(siness to the or#er witho(t #("h an are or an% or# o '(&!i"it%$ In a"t, e)iden"e e+ists that the transa"tion was (rti)e!% entered into to a)oid the 'r%in* e%es o Co#'an% Js "reditors$ The "reditor &anks and other inan"ia! instit(tions s(ed Co#'an% J or )io!ation o the B(!k -a!es Eaw$ De"ide$ ?3@A SU00ESTE8 ANSWER:
&% a #er"hant$ -e"tion 8 o the B(!k -a!es Eaw itse! 'ro)ides that it has no a''!i"ation to e+e"(tors, ad#inistrators, re"ei)ers, assi*nees in inso!)en"%, or '(&!i" o i"ers, a"tin* (nder 'ro"ess$ The B(!k -a!es Eaw on!% a''!ies to the sa!e or en"(#&ran"e o a #er"hant o *oods, #er"handise or "o##odit% done Lin &(!kL as de ined &% the Eaw itse! $ ,ul- Sales 8a;2 E9clusions ()**3) In the ann(a! #eetin* o JYQ Cor'oration, the sto"kho!ders (nani#o(s!% ado'ted a reso!(tion 'ro'osed &% the BOD to se!! s(&stantia!!% a!! the i+t(res and eB(i'#ent (sed in and a&o(t its &(siness$ The President o the Cor'oration a''roa"hed %o( and asked or !e*a! assistan"e to e e"t the sa!e$ 6A .hat ste's sho(!d %o( take so that the sa!e #a% &e )a!id>
2A .hat are the two instan"es when the sa!e, trans er, #ort*a*e or assi*n#ent o sto"k o *oods, wares, #er"handise, 'ro)ision, or #ateria!s otherwise than in the ordinar% "o(rse o trade and the re*(!ar 'rose"(tion o the &(siness o the )endor are not
Co#'an% J )io!ated the B(!k -a!es Eaw when it so!d its entire &(siness to Co#'an% Q (rti)e!% to a)oid the 'r%in* e%es o its "reditors$ Its #an( a"t(red *oods are so!d who!esa!e to distri&(tors and dea!ers$ The sa!e o a!! or s(&stantia!!% a!! o its sto"ks, not in the ordinar% "o(rse o &(siness, "onstit(tes &(!k sa!e$ The transa"tion &ein* a &(!k sa!e, enterin* into s("h transa"tion witho(t "o#'!%in* with the reB(ire#ents o the B(!k -a!es Eaw, Co#'an% J )io!ated said !aw$ ,ul- Sales 8a;2 Co ere6 Transactions (2004) P(rs(ant to a writ o e+e"(tion iss(ed &% the Re*iona! Tria! Co(rt in LE+'ress Bank )$ Don R(&io,L the sheri !e)ied and so!d at '(&!i" a("tion 8 'hoto"o'%in* #a"hines o Don R(&io$ Is the sheri Gs sa!e "o)ered &% the B(!k -a!es Eaw> ?3@A
SU00ESTE8 ANSWER:
dee#ed to &e a sa!e or trans er in &(!k>

SU00ESTE8 ANSWER:
No$ The sa!e &% sheri
at '(&!i" sa!e is not a sa!e

'00(
6A The reB(ire#ents o the B(!k -a!es Eaw #(st &e "o#'!ied with$ The se!!er de!i)ers to the '(r"haser a !ist o his "reditors and the '(r"haser in t(rn noti ies s("h "reditors o the 'ro'osed sa!e at a sti'(!ated ti#e in ad)an"e$
Page '1 of 103
2A I the sa!e and trans er is #ade aA &% the )endor, #ort*a*or, trans eror or assi*nor who 'rod("es and de!i)ers a written wai)er o the 'ro)isions o the B(!k -a!es Eaw ro# his "reditors as shown &% )eri ied state#entI and &A &% a )endor, #ort*a*or, trans eror or assi*nor who is an e+e"(tor, ad#inistrator, re"ei)er, assi*nee in inso!)en"%, or '(&!i" o i"er a"tin* (nder 0(di"ia! 'ro"ess, the sa!e or trans er is not "o)ered &% the B(!k -a!es Eaw$
inde&tedness d(e or owin*, on a""o(nt o the *oods, i+t(res or &(siness s(&0e"t #atter o the &(!k sa!e$
,ul- Sales 8a;2 <.li'ation o& t#e >en6or ()**1) 9o(se o PiCCa ?PiCCaA is the owner and o'erator o a nationwide "hain o 'iCCa o(t!ets$ 9o(se o EiB(or ?EiB(orA is a retai!er o a!! kinds o !iB(or$ 9o(se o Doods ?DoodsA has o ered to '(r"hase a!! o the o(t!ets, eB(i'#ent, i+t(res and (rnit(re o PiCCa$ Doods a!so o ered to '(r"hase ro# EiB(or a!! o its #oderate!% 'ri"ed sto"k "onstit(tin* 30@ o its tota! in)entor%$ Both PiCCa and EiB(or ha)e "reditors$ .hat !e*a! reB(ire#ents #(st PiCCa and EiB(or "o#'!% with in order or Doods to "ons(##ate the transa"tions> Dis"(ss (!!%$
SU00ESTE8 ANSWER:
,ul- Sales 8a;2 <.li'ation o& t#e >en6or (200)) A is a #er"hant en*a*ed in the sa!e o a )ariet% o *oods and #er"handise$ Be"a(se o the e"ono#i" "risis, he in"(rred inde&tedness to J, Y and Q$ Therea ter, A so!d to B a!! the sto"k o *oods and #er"handise$ aA .hat ste's sho(!d A (ndertake to e e"t a )a!id sa!e in &(!k o his *oods to B$ ?2@A$
SU00ESTE8 ANSWER:
A #(st 're'are an a ida)it statin* the na#es o a!! his "reditors, in this "ase, J, Y, and Q, their addresses, the a#o(nt o their "redits and their #at(rit%$ A sho(!d *i)e the a ida)it to B who, in t(rn, sho(!d (rnish a "o'% to ea"h "reditor and noti % the "reditors that there is a 'ro'osed &(!k sa!e in order to ena&!e the !atter to 'rote"t their interests$
&A -(''ose A s(&#itted a a!se state#ent on the s"hed(!e o his "reditors$ .hat is the e e"t o s("h
a!se state#ent as to Oendee B$ ?2@A

SU00ESTE8 ANSWER:
PiCCa and EiB(or #(st 're'are an a ida)it statin* the na#es o a!! their "reditors, their addresses, the a#o(nts o their "redits and their res'e"ti)e #at(rities$ PiCCa and EiB(or #(st s(&#it said a ida)it to Doods whi"h, in t(rn, sho(!d noti % the "reditors a&o(t the transa"tion whi"h is a&o(t to &e "on"!(ded with PiCCa and EiB(or$
ALTERNATI*E ANSWER:
I the )endee does not ha)e know!ed*e o the a!sit% o the s"hed(!e, the sa!e is )a!id$ 9owe)er, i the )endee has know!ed*e o s("h a!sit%, the sa!e is )oid &e"a(se he is in &ad aith$ "A .hat is the ri*ht o "reditors J, Y, and Q i A ai!ed to "o#'!% with the 'ro"ed(reMste's reB(ired &% !aw (nder B(estion !etter ?aA hereo > ?6@A
As ar as EiB(or is "on"erned, it #(st 're'are an a ida)it statin* the na#es o a!! its "reditors, their addresses, the a#o(nts o their "redits and their res'e"ti)e #at(rities$ It #(st s(&#it said a ida)it to its &(%er, who in t(rn, sho(!d noti % the "reditors a&o(t the transa"tion whi"h is a&o(t to &e "on"!(ded with his se!!er$
SU00ESTE8 ANSWER:
The re"o(rse o J, Y, and Q is to B(estion the )a!idit% o the sa!e ro# A to B so as to re"o)er the *oods and #er"handise to satis % their "redits$
B(t as ar as PiCCa is "on"erned, it is not "o)ered &% the B(!k -a!es Eaw$ -o Doods "an "ons(##ate the transa"tion witho(t doin* an%thin*$ ,ul- Sales 8a;2 <.li'ation o& t#e >en6or ()**+) The so!e 'ro'rietor o a #edi(#-siCe *ro"er% sho', en*a*ed in &oth who!esa!e and retai! transa"tions, se!!s the entire &(siness <!o"k, sto"k and &arre!= &e"a(se o his '!an to e#i*rate a&road with his a#i!%$ Is he "o)ered &% the 'ro)isions o the B(!k -a!es Eaw> In the a ir#ati)e, what #(st &e done &% the 'arties so as to "o#'!% with the !aw>
SU00ESTE8 ANSWER:
C!n 2mer Pr!te%ti!n La#

(etric S%stem 8a; ()**3) An*e!ene is a "(sto#er o Fera!"o E!e"tri" Co#'an% ?FECOA$ Be"a(se o the a&r('t rise in e!e"tri"it% rates, An*e!ene "o#'!ained with FECO insistin* that she sho(!d &e "har*ed the or#er rates$ 9owe)er, An*e!ene did not tender an% 'a%#ent$ .hen FECOs e#'!o%ees ser)ed the irst 78ho(r noti"e o dis"onne"tion, An*e!ene 'rotested$ FECO, howe)er, did not i#'!e#ent the 78-ho(r noti"e o dis"onne"tion$ Instead, its e#'!o%ees e+a#ined An*e!enes e!e"tri" #eter, "han*ed the sa#e, and insta!!ed another$ -ti!!, An*e!ene, #ade no tender o 'a%#ent$ FECO ser)ed a se"ond 78-ho(r noti"e o dis"onne"tion on 1(ne 22, 6:87$ It *a)e An*e!ene (nti! 3 '# o 1(ne 23, 6:87 within whi"h to 'a%$ As no 'a%#ent had &een #ade, FECO "(t An*e!enes e!e"tri" ser)i"e on 1(ne 28, 6:87$
Yes$ This is a sa!e o the sto"k o *oods, i+t(res and entire &(siness, not in the ordinar% "o(rse o &(siness or trade o the )endor$ Be ore re"ei)in* ro# the )endee an% 'art o the '(r"hase 'ri"e, the )endor #(st de!i)er to s("h )endee a written state#ent, d(!% sworn, o the na#es and addresses o a!! "reditors to who# said )endor #a% &e inde&ted, to*ether with the a#o(nt o
An*e!ene "ontends that the 78-ho(r written noti"e o

dis"onne"tion r(!e "annot &e in)oked &% FECO

that the de!i)er% to
when there is a &ona ide and 0(st dis'(te as to the a#o(nt d(e as her e!e"tri" "ons(#'tion rate$ Is An*e!enes "ontention )a!id>
SU00ESTE8 ANSWER:
No$ An*e!enes on!% !e*a! re"o(rse in this "ase was to 'a% the e!e"tri" &i!! (nder 'rotest$ 9er ai!(re to do so 0(sti ied FECO to "(t the e!e"tri" ser)i"e
('eni>a v '1 %#6 S %97"
C!r)!rati!n La#
,<D: Election o& Aliens as mem.ers (2001) A Korean nationa! 0oined a "or'oration whi"h is en*a*ed in the (rnit(re #an( a"t(rin* &(siness$ 9e was e!e"ted to the Board o Dire"tors$ To "o#'!e#ent its (rnit(re #an( a"t(rin* &(siness, the "or'oration a!so en*a*ed in the !o**in* &(siness$ .ith the additiona! !o**in* a"ti)it%, "an the Korean nationa! sti!! &e a #e#&er o the Board o Dire"tors> E+'!ain$ ?;@A
SU00ESTE8 ANSWER:
Yes, 0(st as !on* as si+t% 'er"ent ?20@A o the Board o Dire"tors are Di!i'inos$ Cor'orations that are si+t% 'er"ent ?20@A owned &% Di!i'inos "an en*a*e in the &(siness o e+'!oration, de)e!o'#ent and (ti!iCation o nat(ra! reso(r"es$ ?Art$ JII, -e"$ 2, 6:87 Constit(tionA The e!e"tion o a!iens as #e#&ers o the Board O Dire"tors en*a*in* in 'artia!!%nationa!iCed a"ti)ities is a!!owed in 'ro'ortion to their a!!owa&!e 'arti"i'ation or share in the "a'ita! o s("h entities$ ?-e"$ 2-A, Anti- D(##% EawA Nothin* in the a"ts shows that #ore than ort% 'er"ent ?70@A o the Board o Dire"tors are orei*ners$
,<D2 Ca$acit% o& Directors ()**4) Rod#an, the President o TD Co, wrote a !etter to Gre*orio, o erin* to se!! to the !atter 3,000 &a*s o erti!iCer at P600 'er &a*$ Gre*orio si*ned his "on or#it% to the !etter-o er, and 'aid a down'a%#ent o P30th$ A ew da%s !ater, the Cor'orate -e"retar% o TD in or#ed Gre*orio o the de"ision o their BOD not to rati % the !etter o er$ 9owe)er, sin"e Gre*orio had a!read% 'aid the down-'a%#ent, TD de!i)ered 300 &a*s o erti!iCer whi"h Gre*orio a""e'ted$ TD #ade it "!ear that the de!i)er% sho(!d &e "onsidered an entire!% new transa"tion$ Therea ter, Gre*orio so(*ht en or"e#ent o the !etter-o er$ Is there a &indin* "ontra"t or the 3,000 &a*s o erti!iCer> E+'!ain$
SU00ESTE8 ANSWER:
No, there is no &indin* "ontra"t or the 3,000 &a*s o erti!iCer$ Dirst, the a"ts do not indi"ate that Rod#an, the President o TD Co, was a(thoriCed &% the BOD to enter into the said "ontra"t or that he was e#'owered to do so (nder so#e 'ro)ision o the &%-!aws o TD Co$ The a"ts do not a!so indi"ate that Rod#an has &een "!othed with the a''arent 'ower to e+e"(te the "ontra"t or a*ree#ents si#i!ar to it$ -e"ond, TD Co has s'e"i i"a!!% in or#ed Gre*orio that it has not rati ied the "ontra"t or the sa!e o 3,000 &a*s o erti!iCer and
Page
'' of 103
Gre*orio o 300 &a*s, whi"h Gre*orio a""e'ted, is an entire!% new transa"tion$ (?ao @a Sin :rading v '1
2, 5$6%7 Aune #5, #99% %79s4&$"
so(r"ed ro# ABC$ 9is e!!ow dire"tors in ABC "o#'!ained that he sho(!d ha)e *i)en this &(siness to ABC$ 9ow wo(!d %o( de"ide on this #atter>
SU00ESTE8 ANSWER:
,<D2 Com$ensation ()**))

A ter #an% di i"(!t %ears, whi"h "a!!ed or sa"ri i"es on the 'art o the "o#'an%s dire"tors, ABC Fan( a"t(rin* In" was ina!!% earnin* s(&stantia! 'ro its$ Th(s, the President 'ro'osed to the BOD that the dire"tors &e 'aid a &on(s eB(i)a!ent to 63@ o the "o#'an%s net in"o#e &e ore ta+ d(rin* the 're"edin* %ear$ The Presidents 'ro'osa! was (nani#o(s!% a''ro)ed &% the BOD$ A sto"kho!der o ABC B(estioned the &on(s$ Does he ha)e *ro(nds to o&0e"t>
SU00ESTE8 ANSWER:
I wo(!d de"ide in a)or o Fr De Dios$ ABC is en*a*ed in raisin* and se!!in* ho*s in the !o"a! #arket$ The "o#'an% that Fr De Dios had set (' was to en*a*e, as it did, in the e+'ort o 'i*s skins$ There is th(s no "on !i"t o interest &etween Fr$ De Dios and ABC Pi**er In" so as to #ake the "ase a!! within the "on !i"t o interest sit(ation (nder the !aw ?-e" ;7 Cor' CodeA
-bservation! :he term Bconflict of interestC is susceptible to varied views and interpretations0
Yes, the sto"kho!der as a )a!id and !e*a! *ro(nd to o&0e"t to the 'a%#ent to the dire"tors o a &on(s eB(i)a!ent to 63@ o the "o#'an%s net in"o#e$ The !aw 'ro)ides that the tota! ann(a! "o#'ensation o the dire"tors, in the 're"edin* %ear, "annot e+"eed 60@ o the "o#'an%s net in"o#e &e ore in"o#e ta+ ?-e" ;0 Cor' CodeA$ ,<D2 Con&lict o& 7nterest ()**3) ABC Pi**er In" is en*a*ed in raisin* and se!!in* ho*s in the !o"a! #arket$ Fr$ De Dios, one o its dire"tors whi!e tra)e!in* a&road, #et a !eather *oods #an( a"t(rer who was interested in &(%in* 'i* skins ro# the Phi!i''ines$ Fr De Dios set (' a se'arate "o#'an% and started e+'ortin* 'i* skins to his orei*n "onta"t &(t the 'i* skins e+'orted were not
,<D2 7nterloc-in' Directors ()**1) Chito -antos is a dire"tor o &oth P!atin(# Cor'oration and Kwik -i!)er Cor'oration$ 9e owns 6@ o the o(tstandin* "a'ita! sto"k o P!atin(# and 70T o Kwik$ P!atin(# '!ans to enter into a "ontra"t with Kwik that wi!! #ake &oth "o#'anies earn )er% s(&stantia! 'ro its$ The "ontra"t is 'resented at the res'e"ti)e &oard #eetin*s o P!atin(# and Kwik$ 6$ In order that the "ontra"t wi!! not &e )oida&!e, what "onditions wi!! ha)e to &e "o#'!ied with> E+'!ain$ 2$ I these "onditions are not #et, how #a% this "ontra"t &e rati ied> E+'!ain$
SU00ESTE8 ANSWER:
6$ At the #eetin* o the BOD o P!atin(# to a''ro)e the "ontra"t, Chito wo(!d ha)e to #ake s(re that
'00(
mem.ers ()**:)
aA
his 'resen"e as dire"tor at the #eetin* is not ne"essar% to "onstit(te a B(or(# or s("h #eetin*I &A his )ote is not ne"essar% or the a''ro)a! o the "ontra"tI and "A the "ontra"t is air and reasona&!e (nder the "ir"(#stan"es$ At the #eetin* o the BOD o Kwik to a''ro)e the "ontra"t, Chito wo(!d ha)e to #ake s(re that aA there is no ra(d in)o!)edI and &A the "ontra"t is air and reasona&!e (nder the "ir"(#stan"es$
SU00ESTE8 ANSWER:
2$ I the "onditions re!atin* to the B(or(# and reB(ired n(#&er o )otes are not #et, the "ontra"t #(st &e rati ied &% the )ote o sto"kho!ders re'resentin* at !east 2M; o the o(tstandin* "a'ita! sto"k in a #eetin* "a!!ed or the '(r'ose$ D(rther#ore, the ad)erse interest o Chito in the "ontra"t #(st &e dis"!osed and the "ontra"t is air and reasona&!e$ ?-e"s$ ;2 and ;;, BP 28A ,<D2 7nterloc-in' Directors ()**4)
Eeonardo is the Chair#an and President, whi!e Ra'hae! is a Dire"tor o NT Cor'oration$ On one o""asion, NT Co, re'resented &% Eeonardo and A Ent, a sin*!e 'ro'rietorshi' owned &% Ra'hae!, entered into a dea!ershi' a*ree#ent where&% NT Co a''ointed A Ent as e+"!(si)e distri&(tor o its 'rod("ts in Northern E(Con$ Is the dea!ershi' a*ree#ent )a!id> E+'!ain$
SU00ESTE8 ANSWER:
The dea!ershi' a*ree#ent is )oida&!e at the o'tion o NT Co inas#("h as the a"ts do not indi"ate that the sa#e was a''ro)ed &% the BOD o NT Co &e ore it was si*ned or, ass(#in* s("h a''ro)a!, that it was a''ro)ed (nder the o!!owin* "onditions5 6A That the 'resen"e o Ra'hae!, the owner o A Ent, in the #eetin* o the BOD at whi"h the a*ree#ent was a''ro)ed was not ne"essar% to "onstit(te a B(or(# or s("h #eetin*I 2A That the )ote o Ra'hae! was not ne"essar% or the a''ro)a! o the a*ree#entI ;A That the a*ree#ent is air and reasona&!e (nder the "ir"(#stan"es ?-e" ;2 Cor' CodeA
ALTERNATI*E ANSWER:
The dea!ershi' a*ree#ent is )a!id ('on the ass(#'tion that the sa#e was a''ro)ed &% the BOD o NT Co &e ore it was si*ned and that s("h a''ro)a! was #ade (nder the o!!owin* "onditions5 6A That the 'resen"e o Ra'hae!, the owner o A Ent, in the #eetin* o the BOD at whi"h the a*ree#ent was a''ro)ed was not ne"essar% to "onstit(te a B(or(# or s("h #eetin*I 2A That the )ote o Ra'hae! was not ne"essar% or the a''ro)a! o the a*ree#entI ;A That the a*ree#ent is air and reasona&!e (nder the "ir"(#stan"es ?-e" ;2 Cor' CodeA ,%?8a;s2 >ali6it%2 limitin' 5uali&ications o& ,<D
Page
'3 of 103
The BOD o J Co, a"tin* on a standin* a(thorit% o the sto"kho!ders to a#end the &%-!aws, a#ended its &%-!aws so as to disB(a!i % an% o its sto"kho!ders who is a!so a sto"kho!der and dire"tor o a "o#'etitor ro# &ein* e!e"ted to its BOD$
Y, a sto"kho!der ho!din* s( i"ient assets to ass(re hi# o a seat in the BOD, i!ed a 'etition with the -EC or a de"!aration o n(!!it% o the a#ended &%-!aws$ 9e a!!e*ed a#on* other thin*s that as a sto"kho!der, he had a"B(ired ri*hts inherent in sto"k ownershi' s("h as the ri*ht to )ote and &e )oted ('on in the e!e"tion o dire"tors$ Is the sto"kho!ders 'etition tena&!e> ?3@A
SU00ESTE8 ANSWER:
"o#'etition with or is anta*onisti" "or'oration is )a!id$
to the other
,%?8a;s2 >ali6it%2 limitin' 5uali&ications o& ,<D mem.ers (2000)

At the ann(a! sto"kho!ders #eetin* o F- Cor'oration, the sto"kho!ders (nani#o(s!% 'assed a reso!(tion a(thoriCin* the Board o Dire"tors to a#end the "or'orate &%-!aws so as to disB(a!i % an% sto"kho!der who is a!so a dire"tor or sto"kho!der o a "o#'etin* &(siness ro# &ein* e!e"ted to the Board o Dire"tors o F- Cor'oration$ The &%-!aws were a""ordin*!% a#ended$ GK, a sto"kho!der o F- Cor'oration and a #a0orit% sto"kho!der o a "o#'etitor, so(*ht e!e"tion to the Board o Dire"tors o F- Cor'oration$ 9is no#ination was denied on the *ro(nd that he was ine!i*i&!e to r(n or the 'osition$ -eekin* a n(!!i i"ation o the o endin* disB(a!i i"ation 'ro)ision, GK "ons(!ts %o( a&o(t its )a!idit% (nder the Cor'oration Code o the Phi!s$ .hat wo(!d %o(r !e*a! ad)i"e &e> ?;@A
SU00ESTE8 ANSWER:
No$ There is no )ested ri*ht o a sto"kho!der to &e e!e"ted as dire"tor$ .hen a 'erson &(%s sto"k in a "or'oration he does so with the know!ed*e that its a airs are do#inated &% a #a0orit% o the sto"kho!ders$ To this e+tent, the sto"kho!der 'arted with his 'ersona! ri*ht to re*(!ate the dis'osition o his 'ro'ert% whi"h he in)ested in the "a'ita! sto"k o the "or'oration and s(rrendered it to the wi!! o the #a0orit% o his e!!ow in"or'orators or sto"kho!ders$ Cor'orations ha)e the 'ower to #ake &%-!aws de"!arin* a 'erson e#'!o%ed in the ser)i"e o a ri)a! "o#'an% to &e ine!i*i&!e or the Cor'orations BOD$ An a#end#ent whi"h renders a dire"tor ine!i*i&!e, or i e!e"ted, s(&0e"ts hi# to re#o)a!, i he is a!so a dire"tor in a "or'oration whose &(siness is in
The 'ro)ision in the a#ended &%-!aws disB(a!i %in* an% sto"kho!der who is a!so a dire"tor or sto"kho!der o a "o#'etin* &(siness ro# &ein* e!e"ted to the Board o Dire"tors o F- Cor' is )a!id$ The "or'oration is e#'owered to ado't a "ode o &%-!aws or its *o)ern#ent not in"onsistent with the Cor' Code$ -("h disB(a!i %in* 'ro)ision is not in"onsistent with the Cor' Code$ ,%?8a;s2 >ali6it%2 limitin' 5uali&ications o& ,<D mem.ers (200))
Is a &%-!aw 'ro)ision o J Cor'oration <renderin* ine!i*i&!e or i e!e"ted, s(&0e"t to re#o)a!, a dire"tor i he is a!so a dire"tor in a "or'oration whose &(siness is in "o#'etition with or is anta*onisti" to said "or'oration= )a!id and !e*a!> -tate %o(r reasons$ ?3@A$
SU00ESTE8 ANSWER:
"orres'ondin* "!ose "or'oration was in"or'orated$ A ter ; %ears, Ro&ert, Re% and Ben "o(!d not a*ree on the &(siness in
Yes, the &%-!aw 'ro)ision is )a!id$ It is the ri*ht o a "or'oration to 'rote"t itse! a*ainst 'ossi&!e har# and 're0(di"e that #a% &e "a(sed &% its "o#'etitors$ The 'osition o dire"tor is hi*h!% sensiti)e and "on identia!$ To sa% the !east, to a!!ow a 'erson, who is a dire"tor in a "or'oration whose &(siness is in "o#'etition with or is anta*onisti" to J Cor'oration, to &e"o#e a!so a dire"tor in J Cor'oration wo(!d &e har&orin* a "on !i"t o interest whi"h is har# (! to the !atter (2o(ongwei Ar v
SE' 69 S $$& (#949"< 94 S 46 (#967""0
,%?8a;s2 >ali6it%2 limitin' 5uali&ications o& ,<D mem.ers (2003) To 're)ent the entr% o Far!o EnriB(eC, who# it "onsidered as one anta*onisti" to its interests, into its Board o Dire"tors, Ba%an Cor'oration a#ended its arti"!es o in"or'oration and &%-!aws to add "ertain B(a!i i"ations o sto"kho!ders to &e e!e"ted as #e#&ers o its Board o Dire"tors$ .hen 'resented or a''ro)a! at a #eetin* o its sto"kho!ders d(!% "a!!ed or the '(r'ose, the a#end#ents were o)erwhe!#in*!% rati ied$ Far!o EnriB(eC &ro(*ht s(its a*ainst Ba%an Cor'oration to B(estion the a#end#ents$ .o(!d the a"tion 'ros'er> .h%> ?7@A
SU00ESTE8 ANSWER:
(per Dondee" The -C reiterated in the "ase o S+' vs0
SE' decided in 1pril ##, #949, that it is re"o*niCed &% a!! a(thorities that Ge)er% "or'oration has the inherent 'ower to ado't &%-!aws G or its interna! *o)ern#ent, and to re*(!ate the "ond("t and 'res"ri&e the ri*hts and d(ties o its #e#&ers towards itse! and a#on* the#se!)es in re eren"e to the #ana*e#ent o its a airs$GL At "o##on !aw, the r(!e was Lthat the 'ower to #ake and ado't &%- !aws was inherent in e)er% "or'oration as one o its ne"essar% and inse'ara&!e !e*a! in"idents$ And it is sett!ed thro(*ho(t the 4nited -tates that in the a&sen"e o 'ositi)e !e*is!ati)e 'ro)isions !i#itin* it, e)er% 'ri)ate "or'oration has this inherent 'ower as one o its ne"essar% and inse'ara&!e !e*a! in"idents, inde'endent o an% s'e"i i" ena&!in* 'ro)ision in its "harter or in *enera! !aw, s("h 'ower o se! -*o)ern#ent &ein* essentia! to ena&!e the "or'oration to a""o#'!ish the '(r'oses o its "reation$L Close Cor$orations2 Dea6loc-s ()**1)
Ro&ert, Re% and Ben e+e"(ted a 0oint )ent(re a*ree#ent to or# a "!ose "or'oration (nder the Cor' Code the o(tstandin* "a'ita! sto"k o whi"h the three o the# wo(!d eB(a!!% own$ The% a!so 'ro)ided therein that an% "or'orate a"t wo(!d need the )ote o 70@ o the o(tstandin* "a'ita! sto"k$ The ter#s o the a*ree#ent were a""ordin*!% i#'!e#ented and the
Page '3 of 103 whi"h to in)est the (nds o the "or'oration$ Ro&ert wants the dead!o"k &roken$ 6$ .hat are the re#edies a)ai!a&!e to Ro&ert (nder the Cor' "ode to &reak the dead!o"k> E+'!ain$ 2$ Are there an% re#edies to 're)ent the 'ara!%Cation o the &(siness a)ai!a&!e to Ro&ert (nder PD :02A whi!e the 'etition to &reak the dead!o"k is 'endin* !iti*ation> E+'!ain$ SU00ESTE8 ANSWER:
'ri"e o P623,000 on!%$ .hi!e the &%-!aws o -ta$ Ana 'ro)ides that the ri*ht o irst re (sa! "an &e e+er"ised <at a 'ri"e not e+"eedin* 23@ #ore than the 'ar )a!(e o s("h shares, the Arti"!es o In"or'oration si#'!% 'ro)ides that the sto"kho!ders o re"ord <sha!! ha)e 're erentia! ri*ht to '(r"hase said shares$= It is si!ent as to 'ri"in*$ Is Ra ae! &o(nd &% the 'ri"in* 'ro)iso (nder the &%!aws o -ta$ Ana Cor'oration>
SU00ESTE8 ANSWER:
6$ Ro&ert "an 'etition the -EC to ar&itrate the dis'(te, with s("h 'owers as 'ro)ided in -e" 607 o the Cor' Code$ 2$ The -EC "an a''oint a reha&i!itation re"ei)er or a #ana*e#ent "o##ittee$ Close6 Cor$oration2 Restriction2 Trans&er o& s#ares ()**3) Ra ae! inherited ro# his (n"!e 60,000 shares o -ta$ Ana Cor'oration, a "!ose "or'oration$ The shares ha)e a 'ar )a!(e o P60$00 'er share$ Ra ae! noti ied -ta$ Ana that he was se!!in* his shares at P70$00 'er share$ There &ein* no takers a#on* the sto"kho!ders, Ra ae! so!d the sa#e to his "o(sin Oi"ente ?who is not a sto"kho!derA or P700,000$ The Cor'orate -e"retar% re (sed to trans er the shares in Oi"entes na#e in the "or'orate &ooks &e"a(se A!&erto, one o the sto"kho!ders, o''osed the trans er on the *ro(nd that the sa#e )io!ated the &%-!aws$ A!&erto o ered to &(% the shares at P62$30 'er share, as i+ed &% the &%-!aws or a tota!
Yes$ In a "!ose "or'oration, the restri"tion as to the trans er o shares has to &e statedM annotated in the Arti"!es o In"or'oration, the B%-Eaws and the "erti i"ate o sto"k$ This ser)es as noti"e to the 'erson dea!in* with s("h shares !ike Ra ae! in this "ase$ .ith s("h noti"e, he is &o(nd &% the 'ri"in* stated in the B%-!aws$
ALTERNATI*E ANSWER:
No, Ra ae! is not &o(nd &% the 'ri"in* 'ro)iso (nder the B%-!aws o -ta Ana Cor'oration$ 4nder the "or'oration !aw, the restri"tions on the ri*ht to trans er shares #(st a''ear in the arti"!es o in"or'oration and in the &%-!aws as we!! as in the "erti i"ate o sto"k, otherwise, the sa#e sha!! not &e &indin* on an% '(r"haser thereo in *ood aith$ Foreo)er the restri"tion sha!! not &e #ore onero(s than *rantin* the e+istin* sto"kho!ders or the "or'oration the o'tion to '(r"hase the shares o the trans errin* sto"kho!der with s("h reasona&!e ter# or 'eriod stated therein$
'00(
9ere, !i#itin* the 'ri"e to &e 'aid, when the ri*ht o irst re (sa! is e+er"ised, to not #ore than 23@ 'ar )a!(e, witho(t an% B(a!i i"ation whatsoe)er, is not in the arti"!es$ It is #ere!% stated in the B%-!aws$ There ore s("h !i#itation sha!! not &e &indin* on the '(r"haser$
(2oSoc( D Sons D S 2ui Euat /nc v /1' #9 .eb 64 +in ,es"
trans erred to the Co(rts o *enera! 0(risdi"tion or the a''ro'riate REGIONAE TRIAE CO4RT$ Contro ers%2 7ntra?Cor$orate ()**4)
Contro ers%2 7ntra?Cor$orate ()**3)

Be"a(se o disa*ree#ent with the BOD and a threat &% the BOD to e+'e! her or #is"ond("t and ine i"ien"%, Carissa o ered in writin* to resi*n as President and #e#&er o the BOD, and to se!! to the "o#'an% a!! her shares therein or P;00,000$00 9er o er to resi*n was <e e"ti)e as soon as #% shares are (!!% 'aid$= At its #eetin*, the BOD a""e'ted Carissas resi*nation, a''ro)ed her o er to se!! &a"k her shares o sto"k to the "o#'an%, and 'ro#ised to &(% the sto"ks on a sta**ered &asis$ Carissa was in or#ed o the BOD Reso!(tion in a !etter-a*ree#ent to whi"h she a i+ed her "onsent$ The Co#'an%s new President sin*ed the 'ro#issor% note$ A ter 'a%#ent P600,000 the "o#'an% de a(!ted in 'a%in* the &a!an"e o P200,000$
Carissa wants to s(e the Co#'an% to "o!!e"t the &a!an"e$ I %o( were retained &% Carissa as her !aw%er, where wi!! %o( i!e the s(it> AA Ea&or Ar&iterI &A RTCI or "A -EC>
SU00ESTE8 ANSWER:
The RTC has 0(risdi"tion o)er this "ase whi"h in)o!)es intra-"or'orate "ontro)ers%$ As o 2002, the a''!i"a&!e r(!e is that there is a TRAN-DERRED 14RI-DICTION (nder -e"$ 3$2 o the -RC, the Co##issions 0(risdi"tion o)er a!! "ases en(#erated (nder PD :02-A se"$ 3 has &een trans erred to the Co(rts o *enera! 0(risdi"tion or the a''ro'riate Re*iona! Tria! Co(rt$
Contro ers%2 7ntra?Cor$orate ()**4) In 6:70, Fa*no 0oined AFD Co as a 1(nior A""o(ntant$ 9e steadi!% rose ro# the ranks (nti! he &e"a#e AFDs E+e"(ti)e OP$ -(&seB(ent!%, howe)er &e"a(se o his in)o!)e#ent in "ertain ano#a!ies, the AFD BOD "onsidered hi# resi*ned ro# the "o#'an% d(e to !oss o "on iden"e$
A**rie)ed, Fa*no i!ed a "o#'!aint in the -EC B(estionin* the )a!idit% o his ter#ination, and seekin* reinstate#ent to his or#er 'osition, with &a"kwa*es, )a"ation and si"k !ea)e &ene its, 6;th #onth 'a% and Christ#as &on(s, '!(s #ora! and e+e#'!ar% da#a*es, attorne%s ees and "osts$ AFD i!ed a #otion to dis#iss, ar*(in* that the -EC has no 0(risdi"tion o)er "ases o i!!e*a! dis#issa!, and has no 'ower to award da#a*es$
-ho(!d the #otion to dis#iss &e *ranted> E+'!ain$

SU00ESTE8 ANSWER:
As is 3$2 a!!
o 2002, the a''!i"a&!e r(!e is that there a TRAN-DERRED 14RI-DICTION (nder -e"$ o the -RC, the Co##issions 0(risdi"tion o)er "ases en(#erated (nder PD :02-A se"$ 3 has &een
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1enni er and Ga&rie! owned the "ontro!!in* sto"ks in FDD Co and CEO In", &oth a#i!% "or'orations$ D(e to serio(s disa*ree#ents, 1enni er assi*ned a!! her shares in FDD to Ga&rie!, whi!e Ga&rie! assi*ned a!! his shares in CEO to 1enni er$ -(&seB(ent!%, 1enni er and CEO i!ed a "o#'!aint a*ainst Ga&rie! and FDD in the -EC seekin* to re"o)er the "or'orate re"ords and (nds o CEO whi"h Ga&rie! a!!e*ed!% re (sed to t(rn o)er, and whi"h re#ained in the o i"es o FDD$ Is there an intra-"or'orate "ontro)ers% in this "ase>
SU00ESTE8 ANSWER:
It is (rther reB(ired that the dis'(te &e intrinsi"a!!% "onne"ted with the re*(!ation o the "or'oration
(Speed Distributing 'orp0, et al0 v0 'ourt of 1ppeals, et al, 20,0 3o0 #59$5#, +arch #4, %775< /ntestate Estate of 1lexander :0: v0 'ourt of 1ppeals, 20,0 3o0 ##%64%, 1pril #9, %77#"0
Is t!e 'e.ur"t"es an7 89.!ange Co--"ss"on t!e venue for a.t"ons "nvolv"ng "ntra4.orporate .ontrovers"es5 )26+
SU00ESTE8 ANSWER:
Yes, there is an intra-"or'orate "ontro)ers% in this "ase$ The a"t that, when the "o#'!aint a*ainst Ga&rie! and FDD was i!ed with the -EC ?'er 2002, RTCs 1(risdi"tionA, 1enni er and CEO were no !on*er sto"kho!ders o FDD did not di)est the -EC ?'er 2002, RTCs 1(risdi"tionA o its 0(risdi"tion o)er the "ase inas#("h as 1enni er was a or#er sto"kho!der o FDD and the "ontro)ers% arose o(t o this re!ation$ (SE' v '1 2, 9$6$% 1ug %$
9#< %7#s#%5"
No, '(rs(ant to -(&se"tion 3$2 o the -e"(rities Re*(- !ation Code, the B(asi-0(di"ia! 0(risdi"tion o the -e"(rities and E+"han*e Co##ission to hear "or'orate "ases, in"!(din* intra-"or'orate "ontro)ersies, (nder -e"tion 3 o Pres$ De"ree No$ :02A, has &een e+'ress!% trans erred to the desi*nated Re*iona! Tria! Co(rt$ P(rs(ant to a #e#orand(# "ir"(!ar iss(ed &% the -('re#e Co(rt, on!% 'arti"(!ar!% desi*nated RTC s'e"ia! "o##er"ia! "o(rts in ea"h 0(di"ia! re*ion ha)e ori*ina! and e+"!(si)e 0(risdi"tion o)er s("h "ases (See /ntestate Estate of
1lexander :0 : 1pril #9, %77#"0 v0 'ourt of 1ppeals, 20,0 3o0 ##%64%,
Contro ers%2 7ntra?Cor$orate (2004) 3!at "s an "ntra4.orporate .ontroversy5 )86+

SU00ESTE8 ANSWER:
Contro ers%2 7ntra?cor$orate2 Juris6iction ()**+)

1(an was a sto"kho!der o J Co$ 9e owned a tota! o 300 shares e)iden"ed &% Cert o -to"k No 6006$ 9e so!d the shares to Pedro$ A ter *ettin* 'aid, 1(an indorsed and de!i)ered said Certi i"ate o -to"k No 6006 to Pedro$ The o!!owin* da%, 1(an went to the o i"es o the "or'oration and "!ai#ed that his Certi i"ate o -to"k No 6006 was !ost and that, des'ite di!i*ent e orts, the "erti i"ate "o(!d
An intra-"or'orate "ontro)ers% is a "on !i"t &etween sto"kho!ders, #e#&ers or 'artners and the "or'oration, asso"iation or 'artnershi' re*ardin* the re*(!ation o the "or'oration$ The "ontro)ers% #(st arise o(t o intra"or'orate or 'artnershi' re!ations o the 'artiesI or &etween s("h "or'oration, 'artnershi' or asso"iation and the -tate inso ar as it "on"erns their indi)id(a! ran"hises$
not &e !o"ated$ The or#a!ities 'res"ri&ed &% !aw or the re'!a"e#ent o the <!ost= "erti i"ate were "o#'!ied with$ E)ent(a!!% J Co iss(ed in s(&stit(tion o the <!ost= "erti i"ate, Cert o -to"k No 2002$ 1(an orthwith trans erred or )a!(a&!e "onsideration the new "erti i"ate to 1ose who knew nothin* o the 're)io(s sa!e to Pedro$ In ti#e, the "or'oration was "on ronted with the "on !i"tin* "!ai#s o 1ose and Pedro$ The BOD o J Co in)ited %o( to en!i*hten the# on these B(estionsI )iC5
Page '- of 103 sto"k #a% in"!(de !a&or 'er or#ed or or ser)i"es a"t(a!!% rendered to the "or'oration$
Cor$oration: Ri'#t o& Re$urc#ase o& S#ares2 Trust /un6 Doctrine (2001) 4nder what "onditions #a% a sto"k "or'oration a"B(ire its own shares> ?2@A
SU00ESTE8 ANSWER:
aA
I a s(it were to &e initiated in order to reso!)e the "ontro)ers% &etween Pedro and 1ose, sho(!d the #atter &e s(&#itted to the -EC or to the re*(!ar "o(rts>
Between 1ose and Pedro, who# sho(!d the "or'oration so re"o*niCe as the ri*ht (! sto"kho!der>
&A
In !ine with the tr(st (nd do"trine that *enera!!% renders it (n!aw (! or the "or'oration to ret(rn assets to the sto"kho!ders re'resentin* "a'ita!, a "or'oration #a% a"B(ire its own shares onl when there exists in the boo(s unrestricted retained earnings to cover the repurchase of shares0 The '(r'ose o the re'(r"hase o shares #(st &e a !e*iti#ate &(siness '(r'ose o the "or'oration, s("h as to5
6$ 2$ ;$
7$
9ow wo(!d %o( res'ond to the a&o)e B(eries>

SU00ESTE8 ANSWER:
aA The #atter sho(!d &e s(&#itted to the re*(!ar "o(rts H s'e"i i"a!!% in the Re*iona! Tria! Co(rt where the 'rin"i'a! o i"e o the "or'oration is !o"ated$ The "ontro)ers% &etween Pedro and 1ose is not an intra- "or'orate "ontro)ers%$ &A I there is no o)er-iss(an"e o shares res(!tin* ro# the two-transa"tions o 1(an, the "or'oration sho(!d re"o*niCe &oth Pedro and 1ose as ri*ht (! sto"kho!ders$ This is witho(t 're0(di"e to the ri*ht o the "or'oration to "!ai# a*ainst 1(an or the )a!(e o the shares whi"h 1(an so!d to 1ose$ Cor$oration Sole2 De&inition (2003) .hat is a "or'oration so!e>
SU00ESTE8 ANSWER:
EEIFINATE ra"tiona! shares arisin* o(t o sto"k di)idendsI COEEECT or COFPROFI-E an inde&tedness to the "or'oration arisin* o(t o (n'aid s(&s"ri'tion in a de!inB(en"% sa!eI to P4RC9A-E de!inB(ent shares so!d d(rin* the sa!eI and
to PAY dissentin* or withdrawin* sto"kho!ders entit!ed to s("h 'a%#ent (nder the Cor'oration Code$ ?-ees$ 76 and 82, Cor'oration CodeA
Cor$oration: Sole "ro$rietors#i$ (2003)

YK- Tradin* i!ed a "o#'!aint or s'e"i i" 'er or#an"e with da#a*es a*ainst P.C Cor'oration or ai!(re to de!i)er "e#ent ordered &% '!ainti $ In its answer, P.C denied !ia&i!it% on the *ro(nd, inter a!ia, that YK- has no 'ersona!it% to s(e, not &ein* in"or'orated, and that the President o P.C was not a(thoriCed to enter into a "ontra"t with '!ainti &% the P.C Board o Dire"tors, hen"e the "ontra"t is (!tra )ires$ YKTradin* re'!ied that it is a so!e 'ro'rietorshi' owned &% YK-, and that the President o P.C had #ade it a''ear in se)era! !etters 'resented in e)iden"e that he had a(thorit% to si*n "ontra"ts on &eha! o the Board o Dire"tors o P.C$ .i!! the s(it 'ros'er or not> Reason &rie !%$ ?3@A
SU00ESTE8 ANSWER:
-e"tion 660 o the Cor'oration Code de ines a L"or'oration so!eL as one or#ed or the '(r'ose o ad#inisterin* and #ana*in*, as tr(stee, the a airs, 'ro'ert% and te#'ora!ities o an% re!i*io(s deno#ination, se"t or "h(r"h$ It is or#ed &% the "hie ar"h&isho', &isho', 'riest, #inister, ra&&i or other 'residin* e!der o s("h re!i*io(s deno#ination, se"t or "h(r"h$
Cor$oration: 7ssuance o& s#ares o& stoc- to $a% &or t#e ser ices (2001) 1ani"e rendered so#e "ons(!tan"% work or JYQ Cor'oration$ 9er "o#'ensation in"!(ded shares o sto"k therein$ Can JYQ Cor'oration iss(e shares o sto"k to 'a% or the ser)i"es o 1ani"e as its "ons(!tant> Dis"(ss %o(r answer$ ?2@A
SU00ESTE8 ANSWER:
Yes, 'ro)ided the a''ro)a! o sto"kho!ders re'resentin* two-thirds ?2M;A o the o(tstandin* "a'ita! sto"k is o&tained$ A!tho(*h the a"ts indi"ate that the "ons(!tan"% work has a!read% &een LrenderedL "onstit(tin* L're)io(s!% "ontra"ted de&t,L (nder -e"tion ;: o the Cor'oration Code, the 're-e#'ti)e ri*hts o e+istin* sto"kho!ders need not &e res'e"ted Lin 'a%#ent o a 're)io(s!% "ontra"ted de&t,L &(t on!% with the indi"ated sto"kho!dersG a''ro)a!$ 4nder -e"tion 22 o the Cor'oration Code, "onsideration or the iss(an"e o
Yes the s(it wi!! 'ros'er$ As a so!e 'ro'rietorshi', the 'ro'rietor o YK- Tradin* has the "a'a"it% to a"t and the 'ersona!it% to s(e P.C$ It is not ne"essar% or YK- Tradin* to &e in"or'orated &e ore it "an s(e$ On the other hand, P.C is esto''ed ro# assertin* that its President had no a(thorit% to enter into the "ontra"t, "onsiderin* that, in se)era! o P.CGs !etters, it had "!othed its President with a''arent a(thorit% to dea! with YKTradin*$ Cor$oration2 Articles o& 7ncor$oration ()**0) The arti"!es o in"or'oration to &e re*istered in the -EC "ontained the o!!owin* 'ro)isions - aA <Dirst Arti"!e$ The na#e o the "or'oration sha!! &e Toho Farketin* Co#'an%$= &A <Third Arti"!e$ The 'rin"i'a! o i"e o s("h "or'oration sha!! &e !o"ated in Re*ion III,
in
s("h #(ni"i'a!it%
therein
as
'00(
its
Board
Dire"tors #a% desi*nate$=

"A <-e)enth Arti"!e$ The "a'ita! sto"k o the "or'oration is One Fi!!ion Pesos ?P6,000,000A Phi!i''ine C(rren"%$= .hat are %o(r "o##ents and s(**ested "han*es to the 'ro'osed arti"!es>
SU00ESTE8 ANSWER:
Dor s("h a transa"tion to &e )a!id, it reB(ires not on!% the a)ora&!e reso!(tion o the Board o Dire"tors o Di)ine Cor'oration, &(t a!so the rati i"ator% )ote o
aA
On the Dirst Arti"!e, I wo(!d s(**est that the "or'orate na#e indi"ate the a"t o in"or'oration &% (sin* either <Toho Farketin* Cor'oration= or <Toh Farketin* Co#'an%, In"or'orated$= The Third Arti"!e sho(!d indi"ate the Cit% or the F(ni"i'a!it% and the Pro)in"e in the Phi!i''ines, and not #ere!% the re*ion or as its BOD #a% !ater desi*nate, to &e its '!a"e o 'rin"i'a! o i"e$ The -e)enth Arti"!e #(st additiona!!% 'oint o(t the n(#&er o shares into whi"h the "a'ita! sto"k is di)ided, as we!! as the 'ar )a!(e thereo or a state#ent that said sto"k or a 'ortion thereo are witho(t 'ar )a!(e$ ?-e" 67 N 63 Cor' CodeA
&A
"A
Cor$oration2 ,ul- Sales 8a; (2001)

Di)ine Cor'oration is en*a*ed in the #an( a"t(re o *ar#ents or e+'ort$ In the "o(rse o its &(siness, it was a&!e to o&tain !oans ro# indi)id(a!s and inan"in* instit(tions$ 9owe)er, d(e to the dro' in the de#and or *ar#ents in the internationa! #arket, Di)ine Cor'oration "o(!d not #eet its o&!i*ations$ It de"ided to se!! a!! its eB(i'#ent s("h as sewin* #a"hines, 'er#a-'ress #a"hines, hi*h s'eed sewers, "(ttin* ta&!es, ironin* ta&!es, et"$, as we!! as its s(''!ies and #ateria!s to To' Grade Dashion Cor'oration, its "o#'etitor$ ?3@A
6A
9ow wo(!d %o( "!assi % the transa"tion>
SU00ESTE8 ANSWER:
The transa"tions wo(!d "onstit(te a sa!e o Ls(&stantia!!% a!! o the assets o Di)ine Cor'oration "o#'!%in* with the test (nder -e"$ 70 o the Cor'oration Code, the transa"tions not &ein* Lin the ordinar% "o(rse o &(siness,L and one Lthere&% the "or'oration wo(!d &e rendered in"a'a&!e o "ontin(in* the &(siness or a""o#'!ishin* the '(r'ose or whi"h it was in"or'orated$L
ALTERNATI*E ANSWER:
It is a sa!e and trans er in &(!k in "onte#'!ation o the B(!k -a!es Eaw$ 4nder -e"$ 2 o the B(!k -a!es Eaw, a &(!k sa!e in"!(des an% sa!e, trans er, #ort*a*e, or assi*n#ent o a!!, or s(&stantia!!% a!!, o the &(siness or trade thereto ore "ond("ted &% the )endor, #ort*a*or, trans eror, or assi*nor$ This is e+a"t!% what ha''ened in the "ase at &ar$
2A Can Di)ine Cor'oration se!! the a oresaid ite#s to its "o#'etitor, To' Grade Dashion Cor'oration> .hat are the reB(ire#ents to )a!id!% se!! the ite#s>
E+'!ain$
SU00ESTE8 ANSWER:
Page
'4 of 103
sto"kho!ders re'resentin* at !east two-thirds ?2M;A o the o(tstandin* "a'ita! sto"k, as #andated (nder -e"$ 70 o the Cor'oration Code$ The sa!e wo(!d &e )oid in "ase o ai!(re to #eet the twin a''ro)a!s$ (/slamic
Directorate of the ;hilippines v0 'ourt of 1ppeals, 20,0 3o0 ##4694, +a #5, #994"
ALTERNATI*E ANSWER:
Di)ine Cor'oration "an se!! the ite#s to its "o#'etitor, To' Grade Dashion Cor'oration$ 9owe)er, Di)ine Cor'oration #(st "o#'!% with -e"tions ;, 7 and 3 o the B(!k -a!es Eaw, na#e!%5 ?6A de!i)er sworn state#ent o the na#es and addresses o a!! the "reditors to who# the )endor or #ort*a*or #a% &e inde&ted to*ether with the a#o(nt o inde&tedness d(e or owin* to ea"h o the said "reditorsI ?2A a''!% the '(r"hase or #ort*a*e #one% to the 'ro-rata 'a%#ent o &ona ide "!ai#s o the "reditorsI and ?;A #ake a (!! detai!ed in)entor% o the sto"k o *oods, wares, #er"handise, 'ro)isions or #ateria!s, in &(!k, and noti % e)er% "reditor at !east ten ?60A da%s &e ore trans errin* 'ossession$
a""o(nts o the "or'orate de&ts, to ha)e the sa!e o the s(&0e"t #atters to To' Grade Dashion Cor'$, as &ein* L ra(d(!ent and )oidL and o&tain satis a"tion ro# the 'ro'erties whi"h are dee#ed to sti!! &e owned &% Di)ine Cor'oration in s'ite o de!i)er% to the &(%er$ The "reditors "an "o!!e"t on the "redit a*ainst Di)ine Cor'oration, and i it "annot 'a%, the "reditors "an a''!% or atta"h#ent on the 'ro'ert% ra(d(!ent!% so!d$ )'ee
0eople v. 2apoy, G.R. No. &88(6, 'epte-ber 21, 19&2+
7A
In "ase Di)ine Cor'oration )io!ated the !aw, what re#edies are a)ai!a&!e to To' Grade Dashion
Cor'oration a*ainst Di)ine Cor'oration>

SU00ESTE8 ANSWER:
I the sa!e &% Di)ine Cor'oration did not o&tain the reB(ired two-thirds ?2M;A )ote o the o(tstandin* "a'ita! sto"k, then the transa"tion is )oid 0 (/slamic Directorate
of the ;hilippines v0 'ourt of 1ppeals, 20,0 3o, ##4694, +a #5, #994"
;A
9ow wo(!d %o( 'rote"t the interests o the "reditors o Di)ine Cor'oration>
SU00ESTE8 ANSWER:
Considerin* that Di)ine Cor'oration has entered a de a"to sta*e o disso!(tion with the "easin* o its o'erations, I wo(!d in)oke on &eha! o the "reditors the 'rote"tion (nder -e"$ 622 o the Cor'oration Code, that the 'ro"eeds o the sa!e sho(!d irst &e a''!ied towards the sett!e#ent o the o&!i*ations o the "or'oration, &e ore an% a#o(nt "an &e 'aid to the sto"kho!ders$
ALTERNATI*E ANSWER:
To' Grade Dashion Cor'oration "an ha)e the '(r"hase de"!ared )oid and re"o)er the '(r"hase 'ri"e 'aid, as we!! as da#a*es a*ainst the dire"tors and o i"ers who (ndertook the transa"tion in )io!ation o the !aw$
ALTERNATI*E ANSWER:
4nder the B(!k -a!es Eaw, i the 'ro"eeds are notI a''!ied 'ro'ortionate!% towards the sett!e#ent o the
Dor )io!ation o the B(!k -a!es Eaw, the 'rin"i'a! o i"ers o the Di)ine Cor'oration "an &e he!d "ri#ina!!% !ia&!e$ In addition, To' Grade "an s(e Di)ine Cor'oration or da#a*es$ Oio!ation o the B(!k -a!es Eaw wo(!d render s("h a sa!e ra(d(!ent and )oid$ -in"e To' Grade wo(!d &e "o#'e!!ed to ret(rn the *oods to Di)ine Cor'oration,
*ain not a !oss to the "or'oration$
To' Grade "an "o#'e! Di)ine Cor'oration to ret(rn the '(r"hase 'ri"e and 'a% da#a*es$ Cor$oration2 ,%?la;s (200)) -(''ose that the &%-!aws o J Cor', a #inin* ir# 'ro)ides that <The dire"tors sha!! &e re!ie)ed ro# a!! !ia&i!it% or an% "ontra"t entered into &% the "or'oration with an% ir# in whi"h the dire"tors #a% &e interested$= Th(s, dire"tor A a"B(ired "!ai#s whi"h o)er!a''ed with Js "!ai#s and were ne"essar% or the de)e!o'#ent and o'eration o Js #inin* 'ro'erties$ aA Is the &%-!aw 'ro)ision )a!id> .h%> ?;@A
&A .hat ha''ens i dire"tor A is a&!e to "ons(##ate his #inin* "!ai#s o)er and a&o)e that o the
"or'orations "!ai#s> ?2@A

SU00ESTE8 ANSWER:
aA No$ It is in )io!ation o -e"tion ;2 o the Cor' Code$ &A A sho(!d a""o(nt to the "or'oration or the 'ro its whi"h he rea!iCed ro# the transa"tion$ 9e *ra&&ed the &(siness o''ort(nit% ro# the "or'oration$ ?-e"tion ;7, Cor' CodeA Cor$oration2 Commencement2 Cor$orate E9istence (2003)
6$ .hen does a "or'oration a"B(ire "or'orate
e+isten"e>
SU00ESTE8 ANSWER:
2$
CBY N Co$, In"$, re*istered with the -e"(rities and E+"han*e Co##ission its arti"!es o in"or'oration$ It ai!ed, howe)er, or one reason or another, to ha)e its &%-!aws i!ed with, and re*istered &%, the Co##ission$ It ne)erthe!ess transa"ted and did &(siness as a "or'oration or so#eti#e$ A s(it was "o##en"ed &% its #inorit% sto"kho!ders assai!in* the "ontin(ed e+isten"e o CBY N Co$, In"$, &e"a(se o the non-ado'tion and re*istration o its &%-!aws$
.o(!d the a"tion 'ros'er> .h%> ?2@A

SU00ESTE8 ANSWER:
Cor$oration2 Con ersion o& Stoc- Cor$oration (200)) J "o#'an% is a sto"k "or'oration "o#'osed o the Re%es a#i!% en*a*ed in the rea! estate &(siness$ Be"a(se o the re*iona! "risis, the sto"kho!ders de"ided to "on)ert their sto"k "or'oration into a "harita&!e non-sto"k and non-'ro it asso"iation &% a#endin* the arti"!es o in"or'oration$ aA Co(!d this &e !e*a!!% done> .h%> ?;@A &A .o(!d %o(r answer &e the sa#e i at the in"e'tion, J Co#'an% is a non-sto"k "or'oration> .h%> ?2@A
SU00ESTE8 ANSWER:
aA Yes, it "an &e !e*a!!% done$ In "on)ertin* the sto"k "or'oration to a non-sto"k "or'oration &% a #ere a#end#ent o the arti"!es o in"or'oration, the sto"k "or'oration is not distri&(tin* an% o its assets to the sto"kho!ders$ On the "ontrar%, the sto"kho!ders are dee#ed to ha)e wai)ed their ri*ht to share in the 'ro its o the "or'oration whi"h is a
Page
'6 of 103
&A No, #% answer wi!! not &e the sa#e$ In a non-sto"k "or'oration, the #e#&ers are not entit!ed to share in the 'ro its o the "or'oration &e"a(se a!! 'resent and (t(re 'ro its &e!on* to the "or'oration$ In "on)ertin* the nonsto"k "or'oration to a sto"k "or'oration &% a #ere a#end#ent o the Arti"!es o In"or'oration, the nonsto"k "or'oration is dee#ed to ha)e distri&(ted an asset o the "or'oration H i$e$ its 'ro its, a#on* its #e#&ers, witho(t a 'rior disso!(tion o the "or'oration$ 4nder -e" 622, the non-sto"k "or'oration #(st &e disso!)ed irst$
(-bservation! :he question is rather vague more particularl question #b0 :he question does not specif that the conversion is from a non8 stoc( corporation to a stoc( corporation0 :he candidate is li(el to be confused because of the words Bif at the inception, F 'o is a nonstoc( corporation0C Eence, an answer along the same line should be treated with liberalit "
Cor$oration2 Dissolution2 (et#o6s o& 8i5ui6ation (200)) J Cor'oration shortened its "or'orate !i e &% a#endin* its Arti"!es o In"or'oration$ It has no de&ts &(t owns a 'ri#e 'ro'ert% !o"ated in /(eCon Cit%$ 9ow wo(!d the said 'ro'ert% &e !iB(idated a#on* the i)e sto"kho!ders o said "or'oration> Dis"(ss two #ethods o !iB(idation$ ?3@A
SU00ESTE8 ANSWER:
The 'ri#e 'ro'ert% o J Cor'oration "an &e !iB(idated a#on* the i)e sto"kho!ders a ter the 'ro'ert% has &een "on)e%ed &% the "or'oration to the i)e sto"kho!ders, &% di)idin* or 'artitionin* it a#on* the#se!)es in an% two o the o!!owin* wa%s5 6A &% P9Y-ICAE DIOI-ION or PARTITION &ased on the 'ro'ortion o the )a!(es o their sto"kho!din*sI or 2A -EEEING T9E PROPERTY to a third 'erson and di)idin* the 'ro"eeds a#on* the i)e sto"kho!ders in 'ro'ortion to their sto"kho!din*sI or ;A a ter the deter#ination o the )a!(e o the 'ro'ert%, &% A--IGNING or TRAN-DERRING T9E PROPERTY to one sto"kho!der with the o&!i*ation on the 'art o said sto"kho!der to 'a% the other o(r sto"kho!ders the a#o(ntMs in 'ro'ortion to the )a!(e o the sto"kho!din* o ea"h$ Cor$oration2 7ncor$oration2 Re5uirements (2004) .hat is the #ini#(# and #a+i#(# n(#&er o in- "or'orators reB(ired to in"or'orate a sto"k "or'oration>
Cor$oration2 De /acto Cor$oration ()**3) A "or'oration was "reated &% a s'e"ia! !aw$ Eater, the !aw "reatin* it was de"!ared in)a!id$ Fa% s("h "or'oration "!ai# to &e a de a"to "or'oration>
SU00ESTE8 ANSWER:
No$ A 'ri)ate "or'oration #a% &e "reated on!% (nder the Cor'oration Code$ On!% '(&!i" "or'orations #a% &e "reated (nder s'e"ia! !aw$
.here a 'ri)ate "or'oration is "reated (nder a s'e"ia! !aw, there is no atte#'t at a )a!id in"or'oration$ -("h "or'oration "annot "!ai# a de a"to stat(s$
Orti*as
Is this a!so the sa#e #ini#(# and #a+i#(# n(#&er o dire"tors reB(ired in a sto"k "or'oration> ?2$3@A
SU00ESTE8 ANSWER:
4nder -e"tion 60 o the Cor'oration Code, an% n(#&er o nat(ra! 'ersons not !ess than i)e ?3A &(t not #ore than i teen ?63A, a!! o !e*a! a*e and a #a0orit% o who# are residents o the Phi!i''ines, #a% or# a 'ri)ate "or'oration or an% !aw (! '(r'ose$ This is the sa#e #ini#(# and #a+i#(# n(#&er o dire"tors reB(ired in a sto"k "or'oration (nder -e"tion 67?2A o the Cor'oration Code$ Cor$oration2 7ncor$oration2 Resi6enc% Re5uirements (2004) F(st a!! in"or'orators and dire"tors &e residents o the Phi!i''ines> ?2$3@A
SU00ESTE8 ANSWER:
Not a!! dire"tors and in"or'orators need to &e residents o the Phi!i''ines$ 4nder -e"tion 60 o the Cor'oration Code, on!% a #a0orit% o the in"or'orators need to &e residents o the Phi!i''ines$ As 'ro)ided in -e"tion 2; o the sa#e Code, on!% a #a0orit% o the #e#&ers o the Board o Dire"tors need to &e residents o the Phi!i''ines$ Cor$oration2 7ncor$oration2 Re5uisites (2002) Yo( ha)e &een asked to in"or'orate a new "o#'an% to &e "a!!ed D-B -a)in*s N Fort*a*e Bank, In"$ Eist the do"(#ents that %o( #(st s(&#it to the -e"(rities and E+"han*e Co##ission ?-ECA to o&tain a "erti i"ate o in"or'oration or D-B -a)in*s N Fort*a*e Bank, In"$ ?3@A
SU00ESTE8 ANSWER:
The do"(#ents to &e s(&#itted to the -e"(rities and E+"han*e Co##ission ?-ECA to in"or'orate a new "o#'an% to &e "a!!ed D-B -a)in*s N Fort*a*e Bank, In"$, to o&tain the "erti i"ate o in"or'oration or said "o#'an%, are5 6A Arti"!es o In"or'oration 2A Treas(rers A ida)itI ;A Certi i"ate o A(thorit% ro# the Fonetar% Board o the B-PI 7A Oeri i"ation s!i' ro# the re"ords o the -EC whether or not the 'ro'osed na#e has a!read% &een ado'ted &% another "or'oration, 'artnershi' or asso"iationI 3A Eetter (ndertakin* to "han*e the 'ro'osed na#e i a!read% ado'ted &% another "or'oration, 'artnershi' or asso"iationI 2A Bank "erti i"ate o de'osit "on"ernin* the 'aid-(' "a'ita!I 7A Eetter a(thoriCin* the -EC or Fonetar% Board or its d(!% a(thoriCed re'resentati)e to e+a#ine the &ank re"ords re*ardin* the de'osit o the 'aid-(' "a'ita!I 8A Re*istration -heetI Cor$oration2 (eetin's2 ,<D 0 Stoc-#ol6ers ()**3)
4nder the Arti"!es o In"or'oration o Fani!a Ind(stria! Cor', its 'rin"i'a! '!a"e o &(siness sha!! &e in Pasi*, FF$ The 'rin"i'a! "or'orate o i"es are at the
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'+ of 103
Center, Pasi*, FF whi!e its a"tor% 'ro"essin* !eather 'rod("ts, is in Fani!a$ The "or'oration ho!ds its ann(a! sto"kho!ders #eetin* at the Fani!a 9ote! in Fani!a and its BOD #eetin* at a hote! in Fakati FF$ The &%-!aws are si!ent as to the '!a"e o #eetin*s o the sto"kho!ders and dire"tors$ 6A .ho sha!! 'reside at the #eetin* o the dire"tors> 2A Can Tin*, a sto"kho!der, who did not attend the sto"kho!ders ann(a! #eetin* in Fani!a, B(estion the )a!idit% o the "or'orate reso!(tions 'assed at s("h #eetin*>
;A Can the sa#e sto"kho!der B(estion the )a!idit% o the reso!(tions ado'ted &% the BOD at the #eetin*
;A No$ The !aw a!!ows the BOD to ho!d its #eetin* an%where in the Phi!i''ines$ The ho!din* o the BOD #eetin* in Fakati was 'ro'er and the )a!idit% o the reso!(tions ado'ted &% the Board in that #eetin* "annot &e B(estioned$ ?-e" 3; Cor' "odeA Cor$oration2 Nationalit% o& Cor$oration ()**:) .hat is the nationa!it% o a "or'oration or*aniCed and in"or'orated (nder the !aws o a orei*n "o(ntr%, &(t owned 600@ &% Di!i'inos> ?2@A
SU00ESTE8 ANSWER:
he!d in Fakati>
SU00ESTE8 ANSWER:
6A The President 'resides o)er the #eetin* o the dire"tors, i there is no 'osition o Chair#an 'ro)ided in the B%-Eaws$ I there is the 'osition o Chair#an 'ro)ided in the B%-Eaws, the Chair#an 'resides o)er the #eetin* o the Dire"tors ?-e" 37 Cor' CodeA
4nder the "ontro! test o "or'orate nationa!it%, this orei*n "or'oration is o Di!i'ino Nationa!it%$ .here there are *ro(nds or 'ier"in* the )ei! o "or'orate entit%, that is, disre*ardin* the i"tion, the "or'oration wi!! o!!ow the nationa!it% o the "ontro!!in* #e#&ers or sto"kho!ders, sin"e the "or'oration wi!! then &e "onsidered as one and the sa#e$ Cor$oration2 Non?Stoc- Cor$oration ()**3) The AB Fe#oria! Do(ndation was in"or'orated as a non-'ro it, non-sto"k "or'oration in order to esta&!ish and #aintain a !i&rar% and #(se(# in honor o the de"eased 'arents o the in"or'orators$ Its Arti"!es o In"or'oration 'ro)ided or a &oard o tr(stees "o#'osed o 3 in"or'orators, whi"h a(thoriCed to ad#it new #e#&ers$ The Arti"!es o In"or'oration a!so a!!ow the o(ndation to re"ei)e donations ro# #e#&ers$ As o 1an ;0, 6::;, 20 #e#&ers had &een ad#itted &% the BOT$
2A No$ The !aw 'ro)ides that the ann(a! sto"kho!ders #eetin* sha!! &e he!d in the "it% or #(ni"i'a!it% where the 'rin"i'a! o i"e o the Cor'oration is !o"ated$ Dor this '(r'ose, the !aw a!so 'ro)ides that Fetro Fani!a is "onsidered a "it% or #(ni"i'a!it%$ -in"e the 'rin"i'a! '!a"e o &(siness o FIC is Pasi*, FF, the ho!din* o the ann(a! sto"kho!ders #eetin* in Fani!a is 'ro'er$ ?-e" 36 Cor'A
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30 of 103
6A Can the Do(ndation (se the (nds donated to it &% its #e#&ers or '(r"hase o ood and #edi"ine or distri&(tion to the )i"ti#s o the Pinat(&o er('tion>
2A Can the Do(ndation o'erate a s'e"ia!t% resta(rant that "aters to the *enera! '(&!i" in order to a(*#ent its (nds>
in"identa! to, or ne"essar% the "or'oration$

SU00ESTE8 ANSWER:
or the e+isten"e o
;A One o the ori*ina! tr(stees died and the other two resi*ned &e"a(se the% i##i*rated to the 4-$ 9ow wi!! the )a"an"ies in the BOT &e i!!ed>
SU00ESTE8 ANSWER:
6A Yes, ?-e" ;2?:A o the Cor' CodeA as !on* as the a#o(nt o donation is reasona&!e$ 2A I the '(r'oses o the "or'oration are !i#ited to the esta&!ish#ent and #aintenan"e o the !i&rar% and #(se(# as stated in the 'ro&!e#, the o(ndation "annot o'erate a s'e"ia!t% resta(rant that "aters to the *enera! '(&!i"$ In s("h "ase, the a"tion o the o(ndation wi!! &e (!tra )ires$
ALTERNATI*E ANSWER:
2$aA The 'ro"ed(re in se"(rin* the a''ro)a! o the BOD is as o!!ows5 a$ a noti"e o the BOD sho(!d &e sent to a!! the dire"tors$ The noti"e sho(!d state the '(r'ose o the #eetin*$ &$ At the #eetin*, ea"h o the 'ro0e"t sho(!d &e a''ro)ed &% a #a0orit% o the BOD ?not #ere!% a #a0orit% o those 'resent at the #eetin*A 2$&A The 'ro"ed(re in se"(rin* the a''ro)a! o the sto"kho!ders is as o!!ows5 a$ .ritten noti"e o the 'ro'osed in)est#ent and the ti#e and '!a"e o the sto"kho!ders #eetin* sho(!d &e sent to ea"h sto"kho!der at his '!a"e o residen"e as shown on the &ooks o the "or'oration and de'osited to the addressee in the 'ost o i"e with 'osta*e 're'aid, or ser)ed 'ersona!!%$
&$ At the #eetin*, ea"h o the 'ro0e"ts sho(!d &e a''ro)ed &% the sto"kho!ders re'resentin* at !east 2M; o the o(tstandin* "a'ita! sto"k$ ?-e" 72 BP 28A
2A I the a"t o the "or'oration is 0(sti ied &% the se"ondar% '(r'ose o the "or'oration whi"h in"!(des the a"t o o'eratin* a resta(rant, the o(ndation wi!! &e within its 'ower to do so$ ;A -in"e there are on!% 2 o the #e#&ers o the BOT re#ainin* and there is no B(or(#, the )a"an"ies wi!! ha)e to &e i!!ed (' in a s'e"ia! #eetin* o the #e#&ers ?se" 2: Cor'A Cor$oration2 "o;er to 7n est Cor$orate /un6s &or ot#er "ur$ose ()**1)
-tikki Ce#ent Co was or*aniCed 'ri#ari!% or "e#ent #an( a"t(rin*$ Anti"i'atin* s(&stantia! 'ro its, its President 'ro'osed that -tikki in)est in aA a 'ower '!ant 'ro0e"t, &A a "on"rete road 'ro0e"t, and "A B(arr% o'erations or !i#estone in the #an( a"t(re o "e#ent$
Cor$oration2 "o;er to 7n est Cor$orate /un6s in anot#er Cor$oration ()**4) .hen #a% a "or'oration in)est its (nds in another "or'oration or &(siness or or an% other '(r'oses>
SU00ESTE8 ANSWER:
6A 2A
.hat "or'orate a''ro)a!s or )otes are needed or the 'ro'osed in)est#ents> E+'!ain$ Des"ri&e the 'ro"ed(re in se"(rin* these a''ro)a!s$
SU00ESTE8 ANSWER:
6$ 4n!ess the 'ower '!ant and the "on"rete road 'ro0e"t are reasona&!e ne"essar% to the #an( a"t(re o "e#ent &% -tikki ?and the% do not a''ear to &e soA, then the a''ro)a! o said 'ro0e"ts &% a #a0orit% o the BOD and the rati i"ation o s("h a''ro)a! &% the sto"kho!ders re'resentin* at !east 2M; o the o(tstandin* "a'ita! sto"k wo(!d &e ne"essar%$ As or the B(arr% o'erations or !i#estone, the sa#e is an indis'ensa&!e in*redient in the #an( a"t(re o "e#ent and #a%, there ore, &e "onsidered reasona&!% ne"essar% to a""o#'!ish the 'ri#ar% '(r'ose o -tikki$ In s("h "ase, on!% the a''ro)a! o the BOD wo(!d &e ne"essar% ?-e" 72 BP 28A
ALTERNATI*E ANSWER:
A "or'oration #a% in)est its (nds in another "or'oration or &(siness or or an% other '(r'ose other than the 'ri#ar% '(r'ose or whi"h it was or*aniCed when the said in)est#ent is a''ro)ed &% a #a0orit% o the BOD and s("h a''ro)a! is rati ied &% the sto"kho!ders re'resentin* at !east 2M; o the o(tstandin* "a'ita! sto"k$ .ritten noti"e o the 'ro'osed in)est#ent and the date, ti#e and '!a"e o the sto"kho!ders #eetin* at whi"h s("h 'ro'osa! wi!! &e taken (' #(st &e sent to ea"h sto"kho!der$ ?-e" 72 Cor' CodeA
Cor$oration2 Reco er% o& (oral Dama'es ()**:)

In a "o#'!aint i!ed a*ainst JYQ Cor'oration, E(Con Tradin* Cor'oration a!!e*ed that its President N Genera! Fana*er, who is a!so a sto"kho!der, s( ered #enta! an*(ish, ri*ht, so"ia! h(#i!iation and serio(s an+iet% as a res(!t o the tort(o(s a"ts o JYQ Cor'oration$
6$ The #a0orit% )ote o the BOD is ne"essar%$ The in)est#ent in aA a 'ower '!ant 'ro0e"t, &A a "on"rete road 'ro0e"t, and "A B(arr% o'erations o !i#estone (sed in the #an( a"t(re o "e#ent, is within the e+'ress or i#'!ied 'ower o the "or'oration, or at !east the sa#e is
In its "o(nter"!ai#, JYQ Co "!ai#ed to ha)e s( ered #ora! da#a*es d(e to &es#ir"hed re'(tation or *oodwi!! as a res(!t o E(Con Tradin* Cos "o#'!aint$ 6A Fa% E(Con Tradin* Co re"o)er da#a*es &ased on the a!!e*ations o the "o#'!aint> ?2@A 2A Fa% JYQ Co re"o)er #ora! da#a*es> ?;@A
SU00ESTE8 ANSWER:
No$ A "or'oration, &ein* an arti i"ia! 'erson whi"h has no ee!in*s, e#otions or senses, and whi"h "annot e+'erien"e 'h%si"a! s( erin* or #enta!
an*(ish, is not entit!ed to #ora! da#a*es$
ALTERNATI*E ANSWER:
'00(
Yes$ .hen a 0(ridi"a! 'erson has a *ood re'(tation that is de&ased, res(!tin* in so"ia! h(#i!iation, #ora! da#a*es #a% &e awarded$ Foreo)er, *oodwi!! "an &e "onsidered an asset o the "or'oration$
/A:8 N%/8; In the "ase o F#N In.. vs A28C,
The tria! "o(rt erred in ho!din* Di"k -e!don, President and GF o T(rt!e, 0oint!% and se)era!!% !ia&!e with T(rt!e$ In iss(in* the "he"k iss(ed to -ha#ron and, therea ter,
<anuary 1*, 2 5, the -C r(!ed thatI DBNI "ontends that AFEC is not entit!ed to #ora! da#a*es &e"a(se it is a "or'oration$
A 0(ridi"a! 'erson is *enera!!% not entit!ed to #ora! da#a*es &e"a(se, (n!ike a nat(ra! 'erson, it "annot e+'erien"e 'h%si"a! s( erin* or s("h senti#ents as wo(nded ee!in*s, serio(s an+iet%, #enta! an*(ish or #ora! sho"k$ The Co(rt o A''ea!s "ites Fa#&(!ao E(#&er Co$ )$ PNB, et a!$ to 0(sti % the award o #ora! da#a*es$ 9owe)er, the Co(rtGs state#ent in Fa#&(!ao that La "or'oration #a% ha)e a *ood re'(tation whi"h, i &es#ir"hed, #a% a!so &e a *ro(nd or the award o #ora! da#a*esL is an o&iter di"t(#$
Ne)erthe!ess, AFECGs "!ai# or #ora! da#a*es a!!s (nder ite# 7 o Arti"!e 226: o the Ci)i! Code$ This 'ro)ision e+'ress!% a(thoriCes the re"o)er% o #ora! da#a*es in "ases o !i&e!, s!ander or an% other or# o de a#ation$ Arti"!e 226:?7A does not B(a!i % whether the '!ainti is a nat(ra! or 0(ridi"a! 'erson$ There ore, a 0(ridi"a! 'erson s("h as a "or'oration "an )a!id!% "o#'!ain or !i&e! or an% other or# o de a#ation and "!ai# or #ora! da#a*es$ Foreo)er, where the &road"ast is !i&e!o(s 'er se, the !aw i#'!ies da#a*es$ In s("h a "ase, e)iden"e o an honest #istake or the want o "hara"ter or re'(tation o the 'art% !i&e!ed *oes on!% in #iti*ation o da#a*es$ Neither in s("h a "ase is the '!ainti reB(ired to introd("e e)iden"e o a"t(a! da#a*es as a "ondition 're"edent to the re"o)er% o so#e da#a*es$ In this "ase, the &road"asts are !i&e!o(s 'er se$ Th(s, AFEC is entit!ed to #ora! da#a*es$ Cor$oration2 Se$arate Juri6ical "ersonalit% ()**1) Rona!d -ha# doin* &(siness (nder the na#e o -9AFRON Fa"hineries ?-ha#ronA so!d to T(rt!e Fer"anti!e ?T(rt!eA a diese! ar# tra"tor$ In 'a%#ent, T(rt!es President and Fana*er Di"k -e!don iss(ed a "he"k or P30th in a)or o -ha#ron$ A week !ater, T(rt!e so!d the tra"tor to Bri""io Ind(stries ?Bri""ioA or P20th$ Bri""io dis"o)ered that the en*ine o the tra"tor was re"onditioned so he re (sed to 'a% T(rt!e$ As a res(!t, Di"k -e!don ordered <-to' Pa%#ent= o the "he"k iss(ed to -ha#ron$ -ha#ron s(ed T(rt!e and Di"k -e!don$ -ha#ron o&tained a a)ora&!e 0(d*#ent ho!din* "o-de endants T(rt!e and Di"k -e!don 0oint!% and se)era!!% !ia&!e$
Co##ent on the de"ision o the tria! "o(rt$ Dis"(ss (!!%$
SU00ESTE8 ANSWER:
Page 31 of 103 sto''in* 'a%#ent thereo , -e!don was a"tin* in his "a'a"it% as an o i"er o T(rt!e$ 9e was not a"tin* in his 'ersona! "a'a"it%$ D(rther#ore, no a"ts ha)e &een 'ro)ided whi"h wo(!d indi"ate that the a"tion o -e!don was di"tated &% an intent to de ra(d -ha#ron &% hi#se! or in "o!!(sion with T(rt!e$ 9a)in* a"ted in what he "onsidered as his d(t% as an o i"er o the "or'oration, -e!don sho(!d not &e he!d 'ersona!!% !ia&!e$
re'resent
s'e"i i" "or'orate 'ro'ert%$ (,ebecca Bo er8,oxas v '1 2, #776&& Aul #5, 9% %##s547" Cor$oration2 Se$arate Juri6ical "ersonalit% ()**4) Ri"hard owns :0@ o the shares o the "a'ita! sto"k o GOF Co$ On one o""asion, GOF re'resented &% Ri"hard as President and Genera! Fana*er e+e"(ted a "ontra"t to se!! a s(&di)ision !ot in a)or o To#as$ Dor ai!(re o GOF to de)e!o' the s(&di)ision, To#as i!ed an a"tion or res"ission and da#a*es a*ainst GOF and Ri"hard$ .i!! the a"tion 'ros'er> E+'!ain$
SU00ESTE8 ANSWER:
Cor$oration2 Se$arate Juri6ical "ersonalit% ()**4)

PR Co owns a &ea"h resort with se)era! "otta*es$ 1ai#e, the President o PR, o""('ied one o the "otta*es or residentia! '(r'oses$ A ter 1ai#es ter# e+'ired, PR wanted to re"o)er 'ossession o the "otta*e$ 1ai#e re (sed to s(rrender the "otta*e, "ontendin* that as a sto"kho!der and or#er President, he has a ri*ht to 'ossess and en0o% the 'ro'erties o the "or'oration$
Is 1ai#es "ontention "orre"t> E+'!ain$

SU00ESTE8 ANSWER:
1ai#es "ontention is not "orre"t$ 1ai#e #a% own shares o sto"k in PR Cor' &(t s("h ownershi' does not entit!e hi# to the 'ossession o an% s'e"i i" 'ro'ert% o the "or'oration or a de inite 'ortion thereo $ Neither is he a "o-owner o "or'orate 'ro'ert%$ Pro'erties re*istered in the na#e o the "or'oration are owned &% it as an entit% se'arate and distin"t ro# its sto"kho!ders$ -to"kho!ders !ike 1ai#e on!% own shares o sto"k in the "or'oration$ -("h shares o sto"k do not
The a"tion #a% 'ros'er a*ainst GOF &(t de inite!% not a*ainst Ri"hard$ Ri"hard has a !e*a! 'ersona!it% se'arate and distin"t ro# that o GOF$ I he sin*ed the "ontra"t to se!!, he did so as the President and Genera! Fana*er o GOF and not in his 'ersona! "a'a"it%$ Fere ownershi' &% Ri"hard o :0@ o the "a'ita! sto"k o GOF is not o itse! s( i"ient *ro(nd to disre*ard his se'arate !e*a! 'ersona!it% a&sent a showin*, or e+a#'!e that he a"ted #a!i"io(s!% or in &ad aith (E;2 'onst 'o v '1 2, #7$$4% An %%,9%
%#7s%$7"
Cor$oration2 Se$arate Juri6ical "ersonalit% ()***) As a res(!t o 'erennia! &(siness !osses, a "or'orations net worth has &een wi'ed o(t$ In a"t, it is now in ne*ati)e territor%$ Nonethe!ess, the sto"kho!ders did not !ike to *i)e ('$ Creditor-&anks, howe)er, do not share the "on iden"e o the sto"kho!ders and re (se to *rant #ore !oans$ aA .hat too!s are a)ai!a&!e to the sto"kho!ders to re'!enish "a'ita!> ?;@A
&A
Ass(#in* that the "or'oration "ontin(es to o'erate e)en with de'!eted "a'ita!, wo(!d the sto"kho!ders or the #ana*ers &e so!idari!% !ia&!e or the o&!i*ations in"(rred &% the "or'oration> E+'!ain$
Nine indi)id(a!s or#ed a 'ri)ate "or'oration '(rs(ant to the 'ro)isions o the Cor'oration Code o the
?;@A
SU00ESTE8 ANSWER:
aA In the a"e o the re (sa! o the "reditor-&anks to *rant #ore !oans, the o!!owin* are too!s a)ai!a&!e to the sto"kho!ders to re'!enish "a'ita!, to wit5 6A additiona! s(&s"ri'tion to shares o sto"k o the "or'oration &% sto"kho!ders or &% in)estorsI 2A ad)an"es &% the sto"kho!ders to the "or'orationI
;A 'a%#ent o (n'aid s(&s"ri'tion &% the
sto"kho!ders$
SU00ESTE8 ANSWER:
&A No$ As a *enera! r(!e, the sto"kho!ders or the #ana*ers "annot &e he!d so!idari!% !ia&!e or the o&!i*ations in"(rred &% the "or'oration$ The "or'oration has a se'arate and distin"t 'ersona!it% ro# that o the sto"kho!ders or #ana*ers$ The !atter are 'res(#ed to &e a"tin* in *ood aith in "ontin(in* the o'eration o the "or'oration$ The o&!i*ations in"(rred &% the "or'oration are those o the "or'oration whi"h a!one is !ia&!e there or$ 9owe)er, when the "or'oration is a!read% inso!)ent, the dire"tors and o i"ers &e"o#e tr(stees o the &(siness and assets o the "or'oration or the &ene it o the "reditors and are !ia&!e or ne*!i*en"e or #is#ana*e#ent$
Cor$oration2 Se$arate Juri6ical "ersonalit% (2000) Far(!as Creati)e Te"hno!o*% In"$, an e&(siness enter'rise en*a*ed in the #an( a"t(re o "o#'(ter #edia a""essoriesI rents an o i"e and store s'a"e at a "o##er"ia! &(i!din* owned &% J$ Bein* a start-(' "o#'an%, Far(!as en0o%ed so#e !enien"% in its rent 'a%#entsI &(t a ter three %ears, J '(t a sto' to it and asked Far(!as 'resident and *enera! #ana*er, Y, who is a sto"kho!der, to 'a% the &a"k renta!s a#o(ntin* to a h(ndred tho(sand 'esos or to )a"ate the 're#ises at the end o the #onth$ Far(!as neither 'aid its de&t nor )a"ated the 're#ises$ J s(ed Far(!as and Y or "o!!e"tion o the (n'aid renta!s, '!(s interest and "osts o !iti*ation$ .i!! the s(it 'ros'er a*ainst J> A*ainst Y> ?3@A
SU00ESTE8 ANSWER:
Yes, the s(it wi!! 'ros'er a*ainst Far(!as$ It is the one rentin* the o i"e and store s'a"e, as !essee, ro# the owner o the &(i!din*, J, as !essor$
B(t the s(it a*ainst Y wi!! not 'ros'er$ Y, as 'resident and *enera! #ana*er, and a!so sto"kho!der o Far(!as Creati)e Te"hno!o*%, In"$, has a !e*a! 'ersona!it% se'arate and distin"t ro# that o the "or'oration$ The !ia&i!it% o the "or'oration is that o the "or'oration and not that o its o i"ers and sto"kho!ders who are not !ia&!e or "or'orate !ia&i!ities$
Cor$oration2 Se$arate Juri6ical "ersonalit% (2000)
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Phi!i''ines ?BP 28A$ In"or'orator - was e!e"ted dire"tor and 'resident H *enera! #ana*er$ Part o his e#o!(#ent is a Dord E+'edition, whi"h the "or'oration owns$ A ter a ew %ears, - !ost his "or'orate 'ositions &(t he re (sed to ret(rn the #otor )ehi"!e "!ai#in* that as a sto"kho!der with a s(&stantia! eB(it% share, he owns that 'ortion o the "or'orate assets now in his 'ossession$ Is the "ontention o - )a!id> E+'!ain ?3@A
SU00ESTE8 ANSWER:
P600,000$00 There was no "a!! or noti"e or the 'a%#ent o the (n'aid s(&s"ri'tion$ Oi"tor B(estioned the set-o $ 6A Fa% FAIA set-o the (n'aid s(&s"ri'tion with )i"tors "!ai# or sa!aries> 2A .o(!d %o(r answer &e the sa#e i indeed there had &een a "a!! or the (n'aid s(&s"ri'tion>
SU00ESTE8 ANSWER:
6A No$ FAIA "annot seto the (n'aid s(&s"ri'tion with Oi"tors "!ai# or sa!aries$ The (n'aid s(&s"ri'tion is not %et d(e as there is no "a!!$
No$ The "ontention o - is not )a!id$ The Dord E+'edition is owned &% the "or'oration$ The "or'oration has a !e*a! 'ersona!it% se'arate and distin"t ro# that o its sto"kho!der$ .hat the "or'oration owns is its own 'ro'ert% and not the 'ro'ert% o an% sto"kho!der e)en how s(&stantia! the eB(it% share that sto"kho!der owns$
2A Yes$ The reason is that Oi"tor is entit!ed to the

'a%#ent o his sa!aries whi"h FAIA has no ri*ht to withho!d in 'a%#ent o (n'aid s(&s"ri'tion$ To do so wo(!d )io!ate Ea&or Eaws (1podaco v 3=,' #4% S 55%"
Cor$oration2 Stoc- Cor$oration (200))

<JY= is a re"reationa! "!(& whi"h was or*aniCed to o'erate a *o! "o(rse or its #e#&ers with an ori*ina! a(thoriCed "a'ita! sto"k o P600F$ The arti"!es o in"or'oration nor the &%-!aws did not 'ro)ide or distri&(tion o di)idends a!tho(*h there is a 'ro)ision that a ter its disso!(tion, the assets sha!! &e *i)en to a "harita&!e "or'oration$ Is <JY= a sto"k "or'oration> Gi)e reasons or %o(r answer> ?3@A
SU00ESTE8 ANSWER:
Cor$oration2 Set?<&&2 Un$ai6 Su.scri$tion ()**3) Oi"tor was e#'!o%ed in FAIA Cor'oration$ 9e s(&s"ri&ed to 6,300 shares o the "or'oration at P600 'er share or a tota! o P630,000$ 9e #ade an initia! down 'a%#ent o P;7,300$00$ 9e was a''ointed President and Genera! Fana*er$ Be"a(se o his disa*ree#ent with the BOD, he resi*ned and de#anded 'a%#ent o his (n'aid sa!aries, his "ost o !i)in* a!!owan"e, his &on(s, and rei#&(rse#ent o his *aso!ine and re'resentation e+'enses$ FAIA Cor'oration ad#its that it owed Oi"tor P70,000$ &(t to!d hi# that this wi!! &e a''!ied to the (n'aid &a!an"e o his s(&s"ri'tion in the a#o(nt o
JY is a sto"k "or'oration &e"a(se it is or*aniCed as a sto"k "or'oration and there is no 'rohi&ition in its Arti"!es o In"or'oration or its &%-!aws or it to de"!are di)idends$ .hen a "or'oration is or*aniCed as a sto"k "or'oration and its arti"!es o In"or'oration or B%Eaws
are si!ent, the "or'oration is dee#ed to ha)e the 'ower to de"!are di)idends (nder -e" 7;$ -in"e it has the 'ower to de"!are di)idends, JY is a sto"k "or'oration$
The 'ro)ision o the Arti"!es o In"or'oration that at disso!(tion the assets o the "or'oration sha!! &e *i)en to a "harita&!e "or'oration does not 'rohi&it the "or'oration ro# de"!arin* di)idends &e ore disso!(tion$
Cor'oration de"!ared and 'aid "ash di)idends witho(t a''ro)a! o the sto"kho!ders$
Cor$oration2 >ali6it% o& Cor$orate Acts ()**:)

The sto"kho!ders o Peo'!e Power In" ?PPIA a''ro)ed two reso!(tions in a s'e"ia! sto"kho!ders #eetin*5
aA Reso!(tion in"reasin* the a(thoriCed "a'ita! sto"k o PPII and &A Reso!(tion a(thoriCin* the BOD to iss(e, or "ash 'a%#ent, the new shares ro# the 'ro'osed "a'ita! sto"k in"rease in a)or o o(tside in)estors who are non-sto"kho!ders$ The ore*oin* reso!(tions were a''ro)ed &% sto"kho!ders re'resentin* ::@ o the tota! o(tstandin* "a'ita! sto"k$ The so!e dissenter was 1i##% Forato who owned 6@ o the sto"k$ 6$ Are the reso!(tions &indin* on the "or'oration and its sto"kho!ders in"!(din* 1i##% Forato, the dissentin* sto"kho!der> ?;@A 2$ .hat re#edies, i an%, are a)ai!a&!e to Forato> ?2@A
SU00ESTE8 ANSWER:
6$ No$ The reso!(tions are not &indin* "or'oration and its sto"kho!ders 1i##% Forato$ .hi!e these reso!(tions were &% the sto"kho!ders, the dire"tors a''ro)a!, reB(ired &% !aw in s("h "ase, does not e+ist$
on the in"!(din* a''ro)ed whi"h is
2$ 1i##% Forato "an 'etition the -EC ?Now RTCA to de"!are the 2 reso!(tions, as we!! as an% and a!! a"tions taken &% the BOD there(nder, n(!! and )oid$ Cor$oration2 >ali6it% o& Cor$orate Acts (2002) .hi"h o the o!!owin* "or'orate a"ts are )a!id, )oid, or )oida&!e> Indi"ate %o(r answer &% writin* the 'ara*ra'h n(#&er o the B(er%, o!!owed &% %o(r "orres'ondin* answer as <Oa!id,= <Ooid,= or <Ooida&!e,= as the "ase #a% &e$ I %o(r answer is <Ooid,= e+'!ain %o(r answer$ In "ase o a <Ooida&!e= answer, s'e"i % what "onditions #(st &e 'resent or "o#'!ied with to #ake the "or'orate a"t )a!id$ ?3@A
6A JE Doods Cor'oration, whi"h is en*a*ed in the astood &(siness, entered into a "ontra"t with its President 1ose Cr(C, where&% the !atter wo(!d s(''!% the "or'oration with its #eat and 'o(!tr%
reB(ire#ents$
SU00ESTE8 ANSWER:
Ooida&!e H A "ontra"t o the "or'oration with one or #ore o its dire"tors or tr(stees or o i"ers is )oida&!e, at the o'tion o s("h "or'oration ?-e" ;2, Cor'oration CodeA$ 2A The Board o Dire"tors o JE Doods
Page SU00ESTE8 ANSWER:
33 of 103
ter#$ This is done &% a#end#ent o arti"!es o in"or'oration$
the
Oa!id ;A JE Doods Cor'oration *(aranteed the !oan o its sister "o#'an% JE Feat Prod("ts, In"$
SU00ESTE8 ANSWER:
Ooid H This is an (!tra )ires a"t on 'art o JE Doods Cor'oration, and is not one o the 'owers 'ro)ided or in -e"$ ;2 o the Cor'oration Code$ Cor$oration2 >oluntar% Dissolution (2002)
Na#e three ?;A #ethods &% whi"h a sto"k "or'oration #a% &e )o!(ntari!% disso!)ed$ E+'!ain ea"h #ethod$ ?3@A
SU00ESTE8 ANSWER:
Cor$oration2 >otin' Trust A'reement ()**2) A distressed "o#'an% e+e"(ted a )otin* tr(st a*ree#ent or a 'eriod o three %ears o)er 20@ o its o(tstandin* 'aid (' shares in a)or o a &ank to who# it was inde&ted, with the Bank na#ed as tr(stee$ Additiona!!%, the Co#'an% #ort*a*ed a!! its 'ro'erties to the Bank$ Be"a(se o the inso!)en"% o the Co#'an%, the Bank ore"!osed the #ort*a*ed 'ro'erties, and as the hi*hest &idder, a"B(ired said 'ro'erties and assets o the Co#'an%$
The three-%ear 'eriod 'res"ri&ed in the Ootin* Tr(st A*ree#ent ha)in* e+'ired, the "o#'an% de#anded the t(rn-o)er and trans er o a!! its assets and 'ro'erties, in"!(din* the #ana*e#ent and o'eration o the Co#'an%, "!ai#in* that (nder the Ootin* Tr(st A*ree#ent, the Bank was "onstit(ted as tr(stee o the #ana*e#ent and o'erations o the Co#'an%$
The three ?;A #ethods &% whi"h a sto"k "or'oration #a% &e )o!(ntari!% disso!)ed are5 6A Oo!(ntar% Disso!(tion where no "reditors are a e"ted$ This is done &% a #a0orit% )ote o the dire"tors, and reso!(tion o at !east 2M; )ote o sto"kho!ders, s(&#itted to the -e"(rities and E+"han*e Co##ission$ 2A Oo!(ntar% disso!(tion where "reditors are a e"ted$ This is done &% a 'etition or disso!(tion whi"h #(st &e i!ed with the -e"(rities and E+"han*e Co##ission, si*ned &% a #a0orit% o the #e#&ers o the &oard o dire"tors, )eri ied &% the 'resident or se"retar%, and ('on a ir#ati)e )ote o sto"kho!ders re'resentin* at !east 2M; o the o(tstandin* "a'ita! sto"k$ ;A Disso!(tion &% shortenin* o the "or'orate
Does the de#and o the Co#'an% ta!!% with the "on"e't o a Ootin* Tr(st A*ree#ent> E+'!ain &rie !%$
SU00ESTE8 ANSWER:
The de#and o the "o#'an% does not ta!!% with the "on"e't o a Ootin* Tr(st A*ree#ent$ The Ootin* Tr(st A*ree#ent #ere!% "on)e%s to the tr(stee the ri*ht to )ote the shares o *rantorMs$ The "onseB(en"e o ore"!os(re o the #ort*a*ed 'ro'erties wo(!d &e a!ien to the Ootin* Tr(st A*ree#ent and its e e"ts$
Mercantile Law Bar Examination Q & A (1990-2006) N.TE: 9)er 8 !ndee: T&e la# im )ly )r!vide t&ata v!ting tr2 tagreem enti an agreem entin #riting #&ereby !ne !r m !re t!%1&!lder !" a %!r)!rati!n %!n entt! tran "er&i !r t&eir &are t! a tr2 tee in !rdert! ve tin t&e latterv!ting !r !t&er rig&t )ertaining t! aid &are "!r a )eri!d n!t e;%eeding "ive year 2)!n t&e "2l"illm ent!" tat2t!ry %!nditi!n and 2%& !t&er term and %!nditi!n )e%i"ied in t&e agreem ent< T&e "ive year,)eri!d m ay be e;tended in %a e #&ere t&e v!ting tr2 t i e;e%2ted )2r 2ant t! a l!an agreem ent#&ereby t&e )eri!d i m ade %!ntingent2)!n "2ll )aym ent!" t&e l!an<
Under e%ti!n (+ !" t&e C !r)!rati!n C !de= 2)ra= a v!ting tr2 t agreem ent m ay %!n"er 2)!n a tr2 tee n!t !nly t&e t!%1&!lder> v!ting rig&t b2tal ! !t&errig&t )ertaining t! &i &are a l!ng a t&e v!ting tr2 tagreem enti n!tentered ?"!r t&e )2r)! e !" %ir%2m venting t&e la# again tm !n!)!lie and illegal%!m binati!n in re traint!" trade !r2 ed "!r)2r)! e !" "ra2d<? 9 e%ti!n (+= (t& )aragra)& !" t&e C !r)!rati!n C !de:< T&2 = t&e traditi!nal %!n%e)t !" a v!ting tr2 t agreem ent )rim arily intended t! ingle !2ta t!%1&!lder> rig&tt! v!te irrev!%abl "!r a "r!m &i !t&er rig&t a 2%& and m ade a legal devi%e lim ited d2rati!n m ay in )ra%ti%e be%!m e
'ersons a!!e*ed to ha)e
#&ereby a tran "er !" t&e t!%1&!lder &are i e""e%ted 2b@e%tt! t&e )e%i"i% )r!vi i!n !" t&e v!ting tr2 tagreem ent< T&e e;e%2ti!n !" a v!ting tr2 t agreem ent= t&ere"!re= m ay %reat a di%&!t!m y bet#een t&e eA2itable !r bene"i%ial !#ner &i) !" t&e %!r)!rate &are !" a t!%1&!lder= !n t&e !ne &and= and t&e legaltitle t&eret! !n t&e !t&er &and< (Lee vs !A" #e$ %" 1992)
Deri ati e Suit: Re5uisites (2003)

AA, a #inorit% sto"kho!der, i!ed a s(it a*ainst BB, CC, DD, and EE, the ho!ders o #a0orit% shares o FOP Cor'oration, or a!!e*ed #isa''ro'riation o "or'orate (nds$ The "o#'!aint a)erred, inter a!ia, that FOP Cor'oration is the "or'oration in whose &eha! and or whose &ene it the deri)ati)e s(it is &ro(*ht$ In their "a'a"it% as #e#&ers o the Board o Dire"tors, the #a0orit% sto"kho!ders ado'ted a reso!(tion a(thoriCin* FOP Cor'oration to withdraw the s(it$ P(rs(ant to said reso!(tion, the "or'orate "o(nse! i!ed a Fotion to Dis#iss in the na#e o the FOP Cor'oration$ -ho(!d the #otion &e *ranted or denied> Reason &rie !%$ ?3@A
SU00ESTE8 ANSWER:
No$ A!! the reB(isites or a )a!id deri)ati)e s(it e+ist in this "ase$ Dirst, AA was e+e#'t ro# e+ha(stin* his re#edies within the "or'oration, and did not ha)e to #ake a de#and on the Board o Dire"tors or the !atter to s(e$ 9ere, s("h a de#and wo(!d &e (ti!e, sin"e the dire"tors who "o#'rise the #a0orit% ?na#e!%, BB, CC, DD and EEA are the ones *(i!t% o the wron* "o#'!ained o $ -e"ond, AA a''ears to &e sto"kho!der at the ti#e the a!!e*ed #isa''ro'riation o "or'orate (nds$
Third, the s(it is &ro(*ht on &eha! and or the &ene it o FOP Cor'oration$ In this "onne"tion, it was he!d in
'onmart (;hils0" /nc0 v0 Securities and Exchange 'ommission, #96 S',1 4$ (#99#" that to *rant to
the "or'oration "on"erned the ri*ht o withdrawin* or dis#issin* the s(it, at the instan"e o the #a0orit% sto"kho!ders and dire"tors who the#se!)es are the
Page 33 of 103 "o##itted the &rea"h o tr(st a*ainst the interests o the "or'oration wo(!d &e to e#as"(!ate the ri*ht o #inorit% sto"kho!ders to seek redress or the "or'oration$ Di!in* s("h a"tion as a deri)ati)e s(it e)en &% a !one sto"kho!der is one o the 'rote"tions e+tended &% !aw to #inorit% sto"kho!ders a*ainst a&(ses o the #a0orit%$
'!a"e &e ore he &e"a#e a sto"kho!der$ 9owe)er, i the a"t "o#'!ained o is a "ontin(in* one, A #a% do so$
2A No$ In a deri)ati)e s(it, the a"tion is instit(tedM

&ro(*ht in the na#e o a "or'oration and re!ie s are 'ra%ed or therein or the "or'oration, &% a #inorit% sto"kho!der$ The !aw does not B(a!i % the ter# <#inorit%= in ter#s o the n(#&er o shares owned &% a sto"kho!der &rin*in* the a"tion in &eha! o the "or'oration$ (S+' v @han #4& S',1
556"
Deri ati e Suit: Watere6 Stoc- ()**3) A &e"a#e a sto"kho!der o Pri#e Rea! Estate Cor'oration ?PRECA on 1(!% 60, 6::6, when he was *i)en one share &% another sto"kho!der to B(a!i % hi# as a dire"tor$ A was not re-e!e"ted dire"tor in the 1(!% 6, 6::2 ann(a! #eetin* &(t he "ontin(ed to &e a re*istered shareho!der o PREC$ .hen he was sti!! a dire"tor, A dis"o)ered that on 1an 3, 6::6, PREC iss(ed ree o "har*e 60,000 shares to J a !aw%er who assisted in a "o(rt "ase in)o!)in* PREC$ 6A Can A now &rin* an a"tion in the na#e o the "or'oration to B(estion the iss(an"e o the shares to J witho(t re"ei)in* an% 'a%#ent> 2A Can J B(estion the ri*ht o A to s(e hi# in &eha! o the "or'oration on the *ro(nd that A has on!% one share in his na#e> ;A Cannot the shares iss(ed to J &e "onsidered as watered sto"k>
SU00ESTE8 ANSWER:
;A No$ .ATERED -9ARE- are those so!d &% "or'oration or !ess than the 'arM&ook )a!(e$ In instant "ase, it wi!! de'end ('on the )a!(e ser)i"es rendered in re!ation to the tota! 'ar )a!(e o shares$
the the o the
Deri ati e Suit2 Close Cor$oration2 Cor$orate <$$ortunit% (2001)

Fa!%n, -"hiera and 1aC are the dire"tors o Patio In)est#ents, a "!ose "or'oration or#ed to r(n the Patio Ca e, an a! res"o "o ee sho' in Fakati Cit%$ In 2000, Patio Ca e &e*an e+'erien"in* inan"ia! re)erses, "onseB(ent!%, so#e o the "he"ks it iss(ed to its &e)era*e distri&(tors and e#'!o%ees &o(n"ed$
6A As a *enera! r(!e, A "annot &rin* a deri)ati)e s(it in the na#e o the "or'oration "on"ernin* an a"t that took
In O"to&er 200;, -"hiera in or#ed Fa!%n that she o(nd a !o"ation or a se"ond "a e in Ta*(i* Cit%$ Fa!%n o&0e"ted &e"a(se o the dire inan"ia! "ondition o the "or'oration$
-o#eti#e in A'ri! 2007, Fa!%n !earned a&o(t Dort Patio Ca e !o"ated in Ta*(i* Cit% and that its de)e!o'#ent was (ndertaken &% a new "or'oration known as Dort Patio, In"$, where &oth -"hiera and 1aC are dire"tors$ Fa!%n a!so o(nd that -"hiera and 1aC, on &eha! o Patio In)est#ents, had o&tained a !oan o P300,000$00 ro# PBCo# Bank, or the '(r'ose o o'enin* Dort Patio Ca e$ This !oan was se"(red &% the assets o Patio In)est#ents and 'ersona!!% *(aranteed &% -"hiera and 1aC$ Fa!%n then i!ed a "or'orate deri)ati)e a"tion &e ore the Re*iona! Tria! Co(rt o Fakati Cit% a*ainst -"hiera and 1aC, a!!e*in* that the two dire"tors had &rea"hed their id("iar% d(ties &% #isa''ro'riatin* #one% and assets o Patio In)est#ents in the o'eration o Dort Patio Ca e$ ?3@A 6A Did -"hiera and 1aC )io!ate the 'rin"i'!e o "or'orate o''ort(nit%> E+'!ain$
SU00ESTE8 ANSWER:
"o#'an%s "a'ita! were ultra vires i not, indeed, #ade in )io!ation o !aw$ -he i!ed a deri)ati)e s(it seekin* to
Yes$ A!tho(*h Fa!%n re (sed the &(siness &e ore, ne)erthe!ess, (sin* the reso(r"es and "redit standin* o the "o#'an%, -"hiera and 1aC "!ear!% de#onstrated that the &(siness "o(!d ha)e &een s(""ess (!!% '(rs(ed in the na#e o the "!ose "or'oration$ Fore i#'ortant!%, -"hiera and 1aC are *(i!t% o di)ertin* the reso(r"es o the "!ose "or'oration to another entit%, eB(i)a!ent to ra(d and &ad aith$ 2A .as it 'ro'er or Fa!%n to i!e a deri)ati)e s(it with a 'ra%er or in0(n"ti)e re!ie > E+'!ain$
SU00ESTE8 ANSWER:
A!tho(*h it is a "!ose "or'oration, ne)erthe!ess the 'rin"i'!es o se'arate 0(ridi"a! 'ersona!it% sti!! a''!%$ The &(siness o the "or'oration is sti!! se'arate and distin"t ro# the 'ro'rietar% interests o its sto"kho!ders and dire"tors$ ConseB(ent!%, sin"e the &(siness o''ort(nit% and the reso(r"eGs (sed 'ertain to the "!ose "or'oration, the standin* to s(e and to re"o)er re#ains with the "!ose "or'oration and not with Fa!%n$ There ore, it is sti!! ne"essar% to i!e a deri)ati)e s(it on &eha! o the "!ose "or'oration, a!tho(*h the 'ro"eedin*s wo(!d &e *o)erned (nder the Interi# R(!es o Pro"ed(re or Intra- Cor'orate Dis'(tes$ ;A Ass(#in* that a deri)ati)e s(it is 'ro'erI #a% the a"tion "ontin(e i the "or'oration is disso!)ed d(rin*
the 'enden"% o the s(it> E+'!ain$

SU00ESTE8 ANSWER:
Yes, or in s'ite o the disso!(tion o an% "or'oration, it re#ains a 0(ridi"a! 'erson or '(r'ose o disso!(tion or three %ears ro# the date o disso!(tion, 're"ise!% one o the '(r'oses is to a!!ow the windin*-(' o its a airs, in"!(din* the ter#ination o 'endin* s(its$ Deri ati e Suit2 (inorit% Stoc-#ol6er (2003)
Gina -e)i!!a, a #inorit% sto"kho!der o Ba%an Cor'oration, e!t that )ario(s in)est#ents o the
Page 3( of 103 n(!!i % the B(estioned in)est#ents$ .o(!d her a"tion 'ros'er> .h%> SU00ESTE8 ANSWER:
de&ts, !ia&i!ities and da#a*es in"(rred or arisin* as a res(!t o their a"tions$ Distinction: Di i6en6s s! "ro&it: Cas# Di i6en6 s! Stoc- Di i6en6 (2001) Distin*(ish di)idend ro# 'ro itI "ash di)idend ro# sto"k di)idend$ ?2@A
SU00ESTE8 ANSWER:
Yes, she is a!read% a sto"kho!der at the ti#e the a!!e*ed #isa''ro'riation o "or'orate (nds$ And that i!in* s("h a"tion as a deri)ati)e s(it e)en &% a !one sto"kho!der is one o the 'rote"tions e+tended &% !aw to #inorit% sto"kho!ders a*ainst a&(ses o the #a0orit%$ Ne)erthe!ess, Gina #(st irst e+ha(st an% ad#inistrati)e re#edies &e ore her s(it &e "onsider in "o(rt$ Distinction: De &acto Cor$oration s! Cor$oration .% Esto$$el (2003) Is there a di eren"e &etween a de a"to "or'oration and a "or'oration &% esto''e!> E+'!ain &rie !%$ ?2@A
SU00ESTE8 ANSWER:
PRODIT- are resid(a! a#o(nts re'resentin* ret(rn o "a'ita! a ter ded("tin* a!! "or'orate "osts and e+'enses ro# re)en(es$ The a""(#(!ated 'ro its, ro# %ear to %ear, re'resent the "or'orate retained earnin*s ro# whi"h the di)idends "an &e de"!ared$ CA-9 DIOIDEND- re'resent an a"t(a! distri&(tion o a""(#(!ated 'ro its to the sto"kho!ders as a ret(rn on their in)est#ents$ De"!aration o "ash di)idends reB(ires on!% the a''ro)a! o the #a0orit% o the Board o Dire"tors in a 'ro'er reso!(tion$ -TOCK DIOIDEND- are si#'!% trans ers o retained earnin*s to "a'ita! sto"k, there&% in"reasin* the n(#&er o shares o sto"ks o ea"h sto"kho!der with no reB(ired "ash "ontri&(tion$ A two-thirds )ote o the sto"kho!ders, "o('!ed with a #a0orit% )ote o the Board o Dire"tors, is needed to de"!are sto"k di)idends$ Distinction2 "ri ate s! "u.lic Cor$oration (2003) Distin*(ish "!ear!% a 'ri)ate "or'oration ro# a '(&!i" "or'oration
SU00ESTE8 ANSWER:
A DE DACTO CORPORATION is one whi"h a"t(a!!% e+ists or a!! 'ra"ti"a! '(r'oses as a "or'oration &(t whi"h has no !e*a! ri*ht to "or'orate e+isten"e as a*ainst the -tate$ It is essentia! to the e+isten"e o a de a"to "or'oration that there &e ?6A a )a!id !aw (nder whi"h a "or'oration #i*ht &e in"or'orated, ?2A a &ona ide atte#'t to or*aniCe as a "or'oration (nder s("h !aw, and ?;A a"t(a! (se or e+er"ise in *ood aith o "or'orate 'owers "on erred ('on it &% !aw$ A CORPORATION BY E-TOPPEE e+ists when 'ersons ass(#e to a"t as a "or'oration knowin* it to &e witho(t a(thorit% to do so$ In this "ase, those 'ersons wi!! &e !ia&!e as *enera! 'artners or a!!
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A PRIOATE CORPORATION is one or#ed or so#e 'ri)ate '(r'ose, &ene it or end, whi!e a P4BEIC CORPORATION is or#ed or the *o)ern#ent o a 'ortion o the -tate or the *enera! *ood or we! are$ The tr(e test is the '(r'ose o the "or'oration$ I the "or'oration is "reated or 'o!iti"a! or '(&!i" '(r'ose "onne"ted with the ad#inistration o *o)ern#ent, then it is a '(&!i" "or'oration$ I not, it is a 'ri)ate "or'oration a!tho(*h the who!e or s(&stantia!!% the who!e interest in the "or'oration &e!on*s to the -tate$ A '(&!i" "or'oration is "reated &% s'e"ia! !e*is!ation or a"t o Con*ress$ A 'ri)ate "or'oration #(st &e or*aniCed (nder the Cor'oration Code$
Di i6en6s2 Declaration o& Di i6en6s ()**0)

At !east 2M; o the sto"kho!ders o -o!ar Cor'oration, #eetin* ('on the re"o##endation o the BOD, de"!ared a 30@ sto"k di)idend d(rin* their ann(a! #eetin*$ The noti"e o the ann(a! sto"kho!ders #eetin* did not #ention an%thin* a&o(t a sto"k di)idend de"!aration$ The #atter was taken (' on!% (nder the ite# <other &(siness= in the a*enda o the #eetin*$ C$K$ -enwa, a sto"kho!der, who re"ei)ed his "o'% o the noti"e &(t did not attend the #eetin*, s(&seB(ent!% !earned a&o(t the 30@ sto"k di)idend de"!aration$ 9e desires to ha)e the sto"k di)idend de"!aration "an"e!!ed and set aside, and wishes to retain %o(r ser)i"es as a !aw%er or the '(r'ose$ .i!! %o( a""e't the "ase> Dis"(ss with reasons$
SU00ESTE8 ANSWER:
Distinction2 Stoc- s! Non?Stoc- Cor$oration (2003) Distin*(ish "!ear!% a sto"k "or'oration ro# a nonsto"k "or'oration$
SU00ESTE8 ANSWER:
A sto"k "or'oration is one that has "a'ita! sto"k di)ided into shares and is a(thoriCed to distri&(te to the ho!ders o s("h shares di)idends or a!!ot#ents o the s(r'!(s 'ro its on the &asis o the shares he!d$ A!! other "or'orations are non-sto"k "or'orations$ Di i6en6s: Declaration o& Di i6en6s (2001) 4nder what "ir"(#stan"es #a% a "or'oration de"!are di)idends> ?2@AG
SU00ESTE8 ANSWER:
I wi!! not a""e't the "ase$ -e" 7; o the Cor' Code states that no sto"k di)idend sha!! &e iss(ed witho(t the a''ro)a! o the sto"kho!ders re'resentin* not !ess than 2M; o the o(tstandin* "a'ita! sto"k at a re*(!ar or s'e"ia! #eetin* d(!% "a!!ed or that '(r'ose$ Con or#a&!% with -e" 30 o the Cor' Code, a written noti"e o the ho!din* o the re*(!ar #eetin* sent to the shareho!ders wi!! s( i"e$ The noti"e itse! s'e"i ied the said s(&0e"t #atter$
ALTERNATI*E ANSWER:
No or# o di)idends "an &e de"!ared and 'aid &% the "or'oration e+"e't ro# (nrestri"ted retained earnin*s a''earin* on its &ooks$ Di)idends #(st &e 'aid in a#o(nts 'ro'ortiona! to a!! sto"kho!ders on the &asis o o(tstandin* sto"k he!d &% the#$ Cash or 'ro'ert% di)idends, "an &e de"!ared ro# s("h (nrestri"ted retained earnin*s &% a 'ro'er reso!(tion o the Board o Dire"tors$ -to"k di)idends, howe)er, #(st &e de"!ared &% a 'ro'er reso!(tion o the Board o Dire"tors ro# e+istin* (nrestri"ted retained earnin*s and rati ied &% sto"kho!ders re'resentin* at !east two-thirds ?2M8A o the o(tstandin* "a'ita! sto"k o the "or'oration, o&tained in a #eetin* d(!% "a!!ed or the '(r'ose$ ?-e"$ 7;, Cor'oration CodeA Di i6en6s: Sources o& Di i6en6s2 Trust /un6 Doctrine (2001) Dro# what (nds are "ash and sto"k di)idends so(r"ed> E+'!ain wh%$ ?2@A
SU00ESTE8 ANSWER:
Yes, I wi!! a""e't the "ase$ The 'ro&!e# does not indi"ate that there is a"tion &% the BOD whi"h is a!so ne"essar% or the de"!aration o 30@ sto"k di)idend$ Di i6en6s2 Declaration o& Di i6en6s ()**)) D(rin* the ann(a! sto"kho!ders #eetin*, RiCa, a sto"kho!der 'ro'osed to the &od% that a 'art o the "or'orations (nreser)ed earned s(r'!(s &e "a'ita!iCed and sto"k di)idends &e distri&(ted to the sto"kho!ders, ar*(in* that as owners o the "o#'an%, the sto"kho!ders, &% a #a0orit% )ote, "an do an%thin*$ As "hair#an o the #eetin*, how wo(!d %o( r(!e on the #otion to de"!are sto"k di)idends>
SU00ESTE8 ANSWER:
As the "hair#an o the #eetin*, I wo(!d r(!e a*ainst the #otion "onsiderin* that a de"!aration o sto"k di)idends sho(!d initia!!% &e taken &% the BOD and therea ter to &e "on"(rred in &% a 2M; )ote o the sto"kho!ders ?-e" 7; Cor' CodeA$ There is no 'rohi&ition, howe)er, a*ainst the sto"kho!ders reso!)in* to re"o##end to the BOD that it "onsider a de"!aration o sto"k di)idends or "on"(rren"e therea ter &% the sto"kho!ders$
A!! "ash and sto"k di)idends are a!wa%s 'aid o(t o the (nrestri"ted retained earnin*s ?a!so "a!!ed s(r'!(s 'ro itA o the "or'oration$ I the "or'oration has no (nrestri"ted retained earnin*s, the di)idends wo(!d ha)e to &e so(r"ed ro# the "a'ita! sto"k$ This is i!!e*a!$ It )io!ates the LTR4-T D4ND DOCTRINEL that 'ro)ides that the "a'ita! sto"k o the "or'oration is a tr(st (nd to &e ke't inta"t d(rin* the !i e o the "or'oration or the &ene it o the "reditors o the "or'oration$ ('ommissioner of
/nternal8 ,evenue v0 'ourt of 1ppealG, 20,0 3o0 #7654&, Aanuar %7, #999< Boman Environmental Development 'orp0 v0 'ourt of 1ppeals, 20,0 3o0 446&7, 3ovember %%, #966< and Steinberg v0 Helasco, 20,0 3o0 $75&7, +arch #%,#9%9"
Di i6en6s2 Declaration o& Di i6en6s (200))

Dor the 'ast three %ears o its "o##er"ia! o'eration, J, an oi! "o#'an%, has &een earnin* tre#endo(s!% in e+"ess o 600@ o the "or'orations 'aid-in "a'ita!$ A!! o the sto"kho!ders ha)e &een "!ai#in* that the% share in the 'ro its o the "or'oration &% wa% o di)idends &(t the Board o Dire"tors ai!ed to !i t its in*er$
aA Is Cor'oration J *(i!t% o )io!atin* a !aw> I in the a ir#ati)e, state the &asis ?2@A
SU00ESTE8 ANSWER:
Cor'oration J is *(i!t% o )io!atin* -e"tion 7; o the Cor' Code$ This 'ro)ision 'rohi&its sto"k
"or'orations
*er i!n 1++0,'003 Arranged by SULAW Cla '00( *er i!n 1++0,'00- U)dated by Dondee
ro# retainin* s(r'!(s 'ro its in e+"ess o 600@ o their 'aid-in "a'ita!$ &A Are there instan"es when a "or'oration sha!! not &e he!d !ia&!e or not de"!arin* di)idends> ?;@A
SU00ESTE8 ANSWER:
dire"tors and o i"ers$ .hen a dire"tor, tr(stee or o i"er atte#'ts to a"B(ire or
The instan"es when a "or'oration sha!! not &e he!d !ia&!e or not de"!arin* di)idends are5 6A when 0(sti ied &% de inite "or'orate e+'ansion 'ro0e"ts or 'ro*ra#s a''ro)ed &% the BODI or 2A when the "or'oration is 'rohi&ited (nder an% !oan a*ree#ent with an% inan"ia! instit(tion or "reditor, whether !o"a! or orei*n, ro# de"!arin* di)idends witho(t its or his "onsent, and s("h "onsent has not %et &een se"(redI or ;A when it "an &e "!ear!% shown that s("h retention is ne"essar% (nder s'e"ia! "ir"(#stan"es o&tainin* in the "or'oration, s("h as when there is need or s'e"ia! reser)e or 'ro&a&!e "ontin*en"ies$ Di i6en6s2 Ri'#t2 (ana'in' Cor$oration ()**)) ABC Fana*e#ent In"$ 'resented to the DED Finin* Co, the dra t o its 'ro'osed Fana*e#ent Contra"t$ As an in"enti)e, ABC in"!(ded in the ter#s o "o#'ensation that ABC wo(!d &e entit!ed to 60@ o an% sto"k di)idend whi"h DED #a% de"!are d(rin* the !i eti#e o the Fana*e#ent Contra"t$ .o(!d %o( a''ro)e o s("h 'ro)ision> I not, what wo(!d %o( s(**est as an a!ternati)e>
SU00ESTE8 ANSWER:
I wo(!d not a''ro)e a 'ro'osed sti'(!ation in the #ana*e#ent "ontra"t that the #ana*in* "or'oration, as an additiona! "o#'ensation to it, sho(!d &e entit!ed to 60@ o an% sto"k di)idend that #a% &e de"!ared$ -to"kho!ders are the on!% ones entit!ed to re"ei)e sto"k di)idends (3ielsen D 'o v =epanto +ining %& s 5&9" I wo(!d add that the (ns(&s"ri&ed "a'ita! sto"k o a "or'oration #a% on!% &e iss(ed or "ash or 'ro'ert% or or ser)i"es a!read% rendered "onstit(tin* a de#anda&!e de&t ?-e" 22 Cor' CodeA$ As an a!ternati)e, I wo(!d s(**est that the #ana*in* "or'oration sho(!d instead &e *i)en a net 'ro it 'arti"i'ation and, i it !ater so desires, to then "on)ert the a#o(nt that #a% &e d(e there&% to eB(it% or shares o sto"k at no !ess than the 'ar )a!(e thereo $
Doctrine o& Cor$orate <$$ortunit% (2001) Brie !% dis"(ss the do"trine o "or'orate o''ort(nit%$ ?2@A
SU00ESTE8 ANSWER:
In &rie , the do"trine disB(a!i ies a dire"tor, tr(stee or o i"er ro# a''ro'riatin* or his 'ersona! &ene it a transa"tion or o''ort(nit% that 'ertains to the "or'oration, and whi"h (nder the d(t% o !o%a!t% he sho(!d irst &rin* to the "or'oration or its (se or e+'!oitation$ The do"trine o "or'orate o''ort(nit% is an en or"e#ent o the d(t% o !o%a!t% o "or'orate
a"B(ires, in )io!ation o his d(t%, an interest ad)erse to the "or'oration in res'e"t o an% #atter whi"h has &een re'osed in hi# in "on iden"e, he sha!! &e !ia&!e as a tr(stee or the "or'oration and #(st a""o(nt or the 'ro its whi"h otherwise wo(!d ha)e a""r(ed to the "or'oration$ EB(it% i#'oses !ia&i!it% ('on hi# not to dea! or his own &ene it$ ?-e"$ ;6, Cor'oration CodeA
Page 34 of 103
no !on*er o't to renew the !ease$ JYQ Cor'$ "o(ntered that withstandin* the !a'se o its "or'orate ter# it sti!! has the ri*ht to renew the !ease &e"a(se no B(o warranto 'ro"eedin*s or in)o!(ntar% disso!(tion o JYQ Cor'$ has &een instit(ted &% the O i"e o the -o!i"itor Genera!$
Is the "ontention o JYQ Cor'$ #eritorio(s> E+'!ain &rie !%$ ?3@A

SU00ESTE8 ANSWER:
4nder -e"$ ;7 o the Cor'oration Code where a dire"tor, &% )irt(e o his o i"e, a"B(ires or hi#se! a &(siness o''ort(nit% whi"h sho(!d &e!on* to the "or'oration, there&% o&tainin* 'ro its to the 're0(di"e o s("h "or'oration, he #(st a""o(nt to the !atter or a!! s("h 'ro its &% re (ndin* the sa#e, (n!ess his a"t has &een rati ied &% a )ote o the sto"kho!ders ownin* or re'resentin* at !east two-thirds ?2M8A o the o(tstandin* "a'ita! sto"k$ E&&ect: E9$iration o& Cor$orate Term (2003)
JYQ Cor'oration entered into a "ontra"t o !ease with ABC, In"$, o)er a 'ie"e o rea! estate or a ter# o 20 %ears, renewa&!e or another 20 %ears, 'ro)ided that JYQGs "or'orate ter# is e+tended in a""ordan"e with !aw$ Do(r %ears a ter the ter# o JYQ Cor'oration e+'ired, &(t sti!! within the 'eriod a!!owed &% the !ease "ontra"t or the e+tension o the !ease 'eriod, JYQ Cor'$ noti ied ABC, In"$, that it is e+er"isin* the o'tion to e+tend the !ease$ ABC, In"$, o&0e"ted to the 'ro'osed e+tension, ar*(in* that sin"e the "or'orate !i e o JYQ Cor'$ had e+'ired, it "o(!d
JYQ Cor'orationGs "ontention is not #eritorio(s$ Based on the r(!in* o the -('re#e Co(rt in ;hilippine 3ational Ban( vs0 './ of ,i>al, %79 S',1 (#99%"0 JYQ Cor'$ was disso!)ed i'so a"to ('on the e+'iration o its ori*ina! ter#$ It "eased to &e a &od% "or'orate or the '(r'ose o "ontin(in* the &(siness or whi"h it was or*aniCed, e+"e't on!% or '(r'oses "onne"ted with its windin* (' or !iB(idation$ E+tendin* the !ease is not an a"t to wind (' or !iB(idate JYQ Cor'$Gs a airs$ It is "ontrar% to the idea o windin* (' the a airs o the "or'oration$
E&&ects2 (er'er o& Cor$orations ()***) Two "or'orations a*reed to #er*e$ The% then e+e"(ted an a*ree#ent s'e"i %in* the s(r)i)in* "or'oration and the a&sor&ed "or'oration$ 4nder the a*ree#ent o #er*er dated No)e#&er 3, 6::8, the s(r)i)in* "or'oration a"B(ired a!! the ri*hts, 'ro'erties and !ia&i!ities o the a&sor&ed "or'oration$
6A .hat wo(!d ha''en to the a&sor&ed "or'oration> F(st the a&sor&ed "or'oration (ndertake disso!(tion and the windin* (' 'ro"ed(res> E+'!ain
%o(r answer$ ?;@A

SU00ESTE8 ANSWER:
No$ There is no need or the a&sor&ed "or'oration to (ndertake disso!(tion and windin* (' 'ro"ed(re$ As a res(!t o the #er*er, the a&sor&ed "or'oration is a(to#ati"a!!% disso!)ed and its assets and !ia&i!ities are a"B(ired and ass(#ed &% the s(r)i)in* "or'oration$ 2A Pendin* a''ro)a! o the #er*er &% the -EC, #a% the s(r)i)in* "or'oration a!read% instit(te s(its to "o!!e"t a!! re"ei)a&!es d(e to the a&sor&ed "or'oration ro#
In"or'oration o G9/ Cor' shortenin* its "or'orate !i e to on!% 23 %ears in a""ordan"e with -e" 620 o the Cor'
its "(sto#ers> E+'!ain %o(r answer$ ?;@A

SU00ESTE8 ANSWER:
No$ The #er*er does not &e"o#e e e"ti)e (nti! and (n!ess a''ro)ed &% the -EC$ Be ore a''ro)a! &% the -EC o the #er*er, the s(r)i)in* "or'oration has no !e*a! 'ersona!it% with res'e"t to re"ei)a&!es d(e to the a&sor&ed "or'oration$
;A A "ase was i!ed a*ainst a "(sto#er to "o!!e"t on the 'ro#issor% note iss(ed &% hi# a ter the date o the #er*er a*ree#ent$ The "(sto#er raised the de ense that whi!e the re"ei)a&!es as o the date o the #er*er a*ree#ent was trans erred to the s(r)i)in* "or'oration, those re"ei)a&!es whi"h were "reated a ter the #er*er a*ree#ent re#ained to &e owned &% the a&sor&ed "or'oration$ These re"ei)a&!es wo(!d &e distri&(ted to the sto"kho!ders "on or#a&!% with the disso!(tion and !iB(idation 'ro"ed(res (nder the New Cor'oration Code>
Dis"(ss the #erits o this ar*(#ent$ ?;@A

SU00ESTE8 ANSWER:
.hether the re"ei)a&!e was in"(rred &% the a&sor&ed "or'oration &e ore or a ter the #er*er a*ree#ent, or &e ore or a ter the a''ro)a! thereo &% the -EC, the said re"ei)a&!e wo(!d sti!! &e!on* to the s(r)i)in* "or'oration (nder -e" 80 o the Cor'$ Code whi"h does not #ake an% distin"tion as to the assets and !ia&i!ities o the a&sor&ed "or'oration that the s(r)i)in* "or'oration wo(!d inherit$ E&&ects2 Win6in' U$ "erio6 o& a Cor$oration ()**+) The "or'oration, on"e disso!)ed, therea ter "ontin(es to &e a &od% "or'orate or three %ears or '(r'oses o 'rose"(tin* and de endin* s(its &% and a*ainst it and o ena&!in* it to sett!e and "!ose its a airs, "(!#inatin* in the ina! dis'osition and distri&(tion o its re#ainin* assets$ I the ; %ear e+tended !i e e+'ires witho(t a tr(stee or re"ei)er &ein* desi*nated &% the "or'oration within that 'eriod and &% that ti#e ?e+'ir% o the ; %ear e+tended ter#A, the "or'orate !iB(idation is not %et o)er, how, i at a!!, "an a ina! sett!e#ent o the "or'orate a airs &e #ade>
SU00ESTE8 ANSWER:
The !iB(idation "an "ontin(e with the windin* ('$ The #e#&ers o the BOD "an "ontin(e with the windin* o the "or'orate a airs (nti! ina! !iB(idation$ The% "an a"t as tr(stees or re"ei)ers or this '(r'ose$ E&&ects2 Win6in' U$ "erio6 o& a Cor$oration (2000)
The -EC a''ro)ed the a#end#ent o the Arti"!es o
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Code$ As shortened, the "or'oration "ontin(ed its &(siness o'erations (nti! Fa% ;0, 6::7, the !ast da% o its "or'orate e+isten"e$ Prior to said date, there were a n(#&er o 'endin* "i)i! a"tions, o )ar%in* nat(re &(t #ost!% #one% "!ai#s i!ed &% "reditors, none o whi"h was e+'e"ted to &e "o#'!eted or reso!)ed within i)e %ears ro# Fa% ;0, 6::7$ I the "reditors had so(*ht %o(r 'ro essiona! he!' at that ti#e a&o(t whether or not their "ases "o(!d &e '(rs(ed &e%ond Fa% ;0, 6::7, what wo(!d ha)e &een %o(r ad)i"e> ?2@A
SU00ESTE8 ANSWER:
t&at)eri!d= t&e b!ard !" dire%t!r 9!rtr2 tee : it el"= m ay be )erm itted t! ! %!ntin2e a ?tr2 tee ? by legal im )li%ati!n t! %!m )let t&e %!r)!rate liA2idati!n< (&E&'(!)LA &*(L(&&(+E'" (+! " vs ,*E !)-., )# A&&EAL'" /0 . +o 1%1211 +ovem$er 2%" 200% 3)
/orei'n Cor$oration2 @Doin' ,usinessA in t#e "#ili$$ines ()**:) .hen is a orei*n "or'oration dee#ed to &e <doin* &(siness in the Phi!i''ines>= ?;@A
SU00ESTE8 ANSWER:
The "ases "an &e '(rs(ed e)en &e%ond Fa% ;0, 6::7, the !ast da% o the "or'orate e+isten"e o G9/ Cor'$ The Cor'oration is not a"t(a!!% disso!)ed ('on the e+'iration o its "or'orate ter#$ There is sti!! the 'eriod or !iB(idation or windin* ('$
N.TE: Under Se%ti!n 1''
!" t&e C !r)!rati!n C !de= a %!r)!rati!n #&! e %!r)!rate e;i ten%e i term inated in any m anner%!ntin2e t! be a b!dy %!r)!rate "!rt&ree 93: year a"terit di !l2ti!n "!r)2r)! e !" )r! e%2ting and de"ending 2it by and again titand t! enable itt! ettle and %l! e it a""air = %2lm inating in t&e di )! iti!n and di trib2ti!n !" it rem aining a et< Itm ay= d2ring t&e t&ree,yearterm = a))!inta tr2 tee !ra re%eiver#&! m ay a%tbey!nd t&at)eri!d<
A orei*n "or'oration is dee#ed to &e <doin* &(siness in the Phi!i''ines= i it is "ontin(in* the &od% or s(&stan"e o the &(siness or enter'rise or whi"h it was or*aniCed$ It is the intention o an entit% to "ontin(e the &od% o its &(siness in the "o(ntr%$ The *rant and e+tension o :0- da% "redit ter#s o a orei*n "or'oration to a do#esti" "or'oration or e)er% '(r"hase shows an intention to "ontin(e transa"tin* with the !atter$ /orei'n Cor$oration2 @Doin' ,usinessA in t#e "#ili$$ines2 Acts or Acti ities (2002) Gi)e at !east three ?;A e+a#'!es o the a"ts or a"ti)ities that are s'e"i i"a!!% identi ied (nder o(r orei*n in)est#ent !aws as "onstit(tin* <doin* &(siness= in the Phi!i''ines ?;@A
SU00ESTE8 ANSWER:
T&e term inati!n !" t&e li"e !" a %!r)!rate entity d!e n!tby it el" %a2 e t&e e;tin%ti!n !r dim in2ti!n !" t&e rig&t and liabilitie !" 2%& entity< '4 I" t&e t&ree, yeare;tended li"e &a e;)ired #it&!2ta tr2 tee !r re%eiver &aving been e;)re ly de ignated by t&e %!r)!rati!n= #it&in
An% three ?;A o the o!!owin* a"ts or a"ti)ities "onstit(te <doin* &(siness= in the Phi!i''ines (nder o(r orei*n in)est#ent !aws5 6$ -o!i"itin* orders
Page
3+ of 103
2$ ;$ 7$ 3$
O'enin* o i"es &% whate)er na#e Parti"i'atin* in the #ana*e#ent, s('er)ision or "ontro! o an% do#esti" entit% Enterin* into ser)i"e "ontra"ts A''ointin* re'resentati)es or distri&(tors, o'eratin* (nder the "ontro! o the orei*n entit%, who is do#i"i!ed in the Phi!i''ines or who sta%s in the "o(ntr% or a 'eriod or 'eriods tota!in* at !east 680 da%s in an% "a!endar %ear$
3A .hen he is #ade, &% a s'e"i i" 'ro)ision o !aw,

to 'ersona!!% answer or the "or'orate a"tion$
(:ramat +ercantile /nc v '1 2, ###776, 3ov 4, 95 %$6s#5"
8ia.ilities2 Stoc-#ol6ersB DirectorsB <&&icers ()**+)

A, B, and C are shareho!ders o JYQ Co$ A has an (n'aid s(&s"ri'tion o P600th, Bs shares are (!!% 'aid (', whi!e C owns on!% no#ina! &(t (!!% 'aid (' shares and is a dire"tor and o i"er$ JYQ &e"o#es inso!)ent, and it is esta&!ished that the inso!)en"% is the res(!t o ra(d(!ent 'ra"ti"es within the "o#'an%$ I %o( were "o(nse! or a "reditor o JYQ, wo(!d %o( ad)ise !e*a! a"tion a*ainst A, B, and C>
SU00ESTE8 ANSWER:
/orei'n Cor$oration2 @Doin' ,usinessA in t#e "#ili$$ines2 Test (2002) .hat is the !e*a! test or deter#inin* i an (n!i"ensed orei*n "or'oration is doin* &(siness in the Phi!i''ines> ?2@A
SU00ESTE8 ANSWER:
The test is whether or not the (n!i"ensed orei*n "or'oration has 'er or#ed an a"t or a"ts that i#'!% a "ontin(it% o "o##er"ia! dea!in*s or arran*e#ents, and "onte#'!ate to that e+tent the 'er or#an"e o a"ts or works, or the e+er"ise o so#e o the (n"tions nor#a!!% in"ident to, and in 'ro*ressi)e 'rose"(tion o , "o##er"ia! *ain or o the '(r'ose and o&0e"t o the &(siness "or'oration$ Joint >enture2 Cor$oration ()**4) Fa% a "or'oration enter into a 0oint )ent(re>
SU00ESTE8 ANSWER:
aA As to AS an a"tion "an &e &ro(*ht a*ainst A or P600th whi"h is the a#o(nt o (n'aid s(&s"ri'tion$ -in"e the "or'oration is inso!)ent, the !i#it o the sto"kho!ders !ia&i!it% to the "reditor is on!% (' to the e+tent o his (n'aid s(&s"ri'tion$
&A As to BS there is no "a(se o a"tion a*ainst B &e"a(se he has a!read% (!!% 'aid or his s(&s"ri'tion$ As stated ear!ier, the !i#it o the sto"kho!ders !ia&i!it% to the "reditor o the "or'oration, when the !atter &e"o#es inso!)ent, is the e+tent o his s(&s"ri'tion$
"A As to CS an a"tion "an &e i!ed a*ainst C, not as sto"kho!der &e"a(se he has a!read% 'aid (' the shares, &(t in his "a'a"it% as dire"tor and o i"er &e"a(se o the "or'orations inso!)en"% &ein* the res(!t o ra(d(!ent 'ra"ti"es within the "o#'an%$ Dire"tors are !ia&!e 0oint!% and se)era!!% or da#a*es s(stained &% the "or'oration, sto"kho!ders or other 'ersons res(!tin* ro# *ross ne*!i*en"e or &ad aith in dire"tin* the a airs o the "or'oration$ ?-e" ;6 Cor' CodeA
A "or'oration #a% enter into a 0oint )ent(re$ 9owe)er, inas#("h as the ter# R0oint )ent(re has no 're"ise !e*a! de inition, it #a% take )ario(s or#s$ It "o(!d take the or# o a si#'!e 'oo!in* o reso(r"es ?not in)o!)in* in"or'orationA &etween two or #ore "or'orations or a s'e"i i" 'ro0e"t, '(r'ose or (ndertakin*, or or a !i#ited ti#e$ It #a% in)o!)e the "reation o a #ore or#a! str("t(re and, hen"e, the or#ation o a "or'oration$ I the 0oint )ent(re wo(!d in)o!)e the "reation o a 'artnershi', as the ter# is (nderstood (nder the Ci)i! Code, then a "or'oration "annot &e a 'art% to it$
"iercin' t#e Cor$orate >eil ()**3)

Fr$ Pa&!o, a ri"h #er"hant in his ear!% orties, was a de endant in a !aws(it whi"h "o(!d s(&0e"t hi# to s(&stantia! da#a*es$ A %ear &e ore the "o(rt rendered 0(d*#ent, Pa&!o so(*ht his !aw%ers ad)i"e on how to '!an his estate to a)oid ta+es$ 9is !aw%er s(**ested that he sho(!d or# a "or'oration with hi#se! , his wi e and his "hi!dren ?a!! st(dents and sti!! (ne#'!o%edA as sto"kho!ders and then trans er a!! his assets and !ia&i!ities to this "or'oration$ Fr Pa&!o o!!owed the re"o##endation o his !aw%er$ 6 %ear !ater, the "o(rt rendered 0(d*#ent a*ainst Pa&!o and the '!ainti so(*ht to en or"e this 0(d*#ent$ The sheri , howe)er, "o(!d not !o"ate an% 'ro'ert% in the na#e o Pa&!o and there ore ret(rned the writ o e+e"(tion (nsatis ied$ .hat re#ed%, i an%, is a)ai!a&!e to the '!ainti >
S',1 $59" (Delpher :rades 'orp v /1' #54
8ia.ilities2 ,<D2 Cor$orate Acts ()**4) .hen #a% a "or'orate dire"tor, tr(stee, or o i"er &e he!d 'ersona!!% !ia&!e with the "or'oration>
SU00ESTE8 ANSWER:
A "or'orate dire"tor, tr(stee or o i"er #a% &e he!d 'ersona!!% !ia&!e with the "or'oration (nder the o!!owin* "ir"(#stan"es5 6A .hen he assents to a 'atent!% (n!aw (! a"t o the "or'orationI 2A .hen he a"ts in &ad aith or with *ross ne*!i*en"e in dire"tin* the a airs o the "or'oration, or in "on !i"t with the interest o the "or'oration res(!tin* in da#a*es to the "or'oration, its sto"kho!ders or other 'ersonsI ;A .hen he "onsents to the iss(an"e o watered sto"ks or who, ha)in* know!ed*e thereo , does not orthwith i!e with the "or'orate se"retar% his written o&0e"tion theretoI 7A .hen he a*rees to ho!d hi#se! 'ersona!!% and so!idari!% !ia&!e with the "or'orationI or
e+isten"e o
SU00ESTE8 ANSWER:
The '!ainti "an a)ai! hi#se! o the do"trine o 'ier"in* the )ei! o "or'orate i"tion whi"h "an &e in)oked when a "or'oration is or#ed or (sed in a)oidin* a 0(st o&!i*ation$ .hi!e it is tr(e that a a#i!% "or'oration #a% &e or*aniCed to '(rs(e an estate ta+I '!annin*, whi"h is
not 'er se i!!e*a! or (n!aw (! the a"t(a! settin*s, howe)er, indi"ate the a !aws(it that "o(!d s(&0e"t Pa&!o to a
"iercin' t#e Cor$orate >eil (2004)

70797079
s(&stantia! a#o(nt o da#a*es$ It wo(!d th(s &e di i"(!t or Pa&!o to "on)in"in*!% assert that the in"or'oration o the a#i!% "or'oration was intended #ere!% as a "ase o <estate ta+ '!annin*$= (:an Boon
Bee v Aarencio 5#$$4 $7Aune66"
"iercin' t#e Cor$orate >eil ()**4) E Co so!d its assets to F In" a ter "o#'!%in* with the reB(ire#ents o the B(!k -a!es Eaw$ -(&seB(ent!%, one o the "reditors o E Co tried to "o!!e"t the a#o(nt d(e it, &(t o(nd o(t that E Co had no #ore assets !e t$ The "reditor then s(ed F In" on the theor% that F In" is a #ere a!ter e*o o E Co$ .i!! the s(it 'ros'er> E+'!ain$
SU00ESTE8 ANSWER:
The s(it wi!! not 'ros'er$ The sa!e &% E Co o its assets to F In" does not res(!t in the trans er o the !ia&i!ities o the !atter to, nor in the ass(#'tion thereo &%, the or#er$ The a"ts *i)en do not indi"ate that s("h trans er or ass(#'tion took '!a"e or was sti'(!ated ('on &% the 'arties in their a*ree#ent$ D(rther#ore, the sa!e &% E Co o its assets is a sa!e o its 'ro'ert%$ It does not in)o!)e the sa!e o the shares o sto"k o the "or'oration &e!on*in* to its sto"kho!ders$ There is there ore no #er*er or "onso!idation that took '!a"e$ E Co "ontin(es to e+ist and re#ains !ia&!e to the "reditor$
"iercin' t#e Cor$orate >eil (200))

P!ainti s i!ed a "o!!e"tion a"tion a*ainst J Cor'oration$ 4'on e+e"(tion o the "o(rts de"ision, J Cor'oration was o(nd to &e witho(t assets$ Therea ter '!ainti s i!ed an a"tion a*ainst its 'resent and 'ast sto"kho!der Y Cor'oration whi"h owned s(&stantia!!% a!! o the sto"ks o J Cor'oration$ The two "or'orations ha)e the sa#e &oard o dire"tors and Y Cor'oration inan"ed the o'erations o J Cor'oration$ Fa% Y Cor'oration &e he!d !ia&!e or the de&ts o J Cor'oration> .h%> ?3@A
SU00ESTE8 ANSWER:
Yes, Y Cor'oration #a% &e he!d !ia&!e or the de&ts o J Cor'oration$ The do"trine o 'ier"in* the )ei! o "or'oration i"tion a''!ies to this "ase$ The two "or'orations ha)e the sa#e &oard o dire"tors and Y Cor'oration owned s(&stantia!!% a!! o the sto"ks o J Cor'oration, whi"h a"ts 0(sti % the "on"!(sion that the !atter is #ere!% an e+tension o the 'ersona!it% o the or#er, and that the or#er "ontro!s the 'o!i"ies o the !atter$ Added to this is the a"t that Y Cor'oration "ontro!s the inan"es o J Cor'oration whi"h is #ere!% an ad0(n"t, &(siness "ond(it or a!ter e*o o Y Cor'oration ('/, v 3orton D Earrison 'o ## S 4#5 (#9&5""
"iercin' t#e Cor$orate >eil (2003) 9ow does one 'ier"e the )ei! o "or'orate i"tion>
SU00ESTE8 ANSWER:
The )ei! o "or'orate i"tion #a% &e 'ier"ed &% 'ro)in* in "o(rt that the notion o !e*a! entit% is &ein* (sed to de eat '(&!i" "on)enien"e, 0(sti % wron*, 'rote"t ra(d, or de end "ri#e or the entit% is 0(st an instr(#ent or a!ter e*o or ad0(n"t o another entit% or 'erson$
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%775"0
.hat is the do"trine o L'ier"in* the )ei! o "or'orate entit%>L E+'!ain$

SU00ESTE8 ANSWER:
7A 8A :A
60A
E)ade the !aw (! o&!i*ations o the "or'oration !ike a 0(d*#ent "redit (Sibagat :imber 'orp0 v0
2arcia, 20,0 3o0 ##%55&, December ##, #99%"0
The do"trine o L'ier"in* the )ei! o "or'orate entit%,L is the do"trine that a!!ows the "o(rts to !ook &ehind the se'arate 0(ridi"a! 'ersona!it% o a "or'oration and treat the "or'oration as an asso"iation o 'ersons and there&% #ake the indi)id(a! a"tors 'ersona!!% !ia&!e or "or'orate !ia&i!ities$ The i"tion o "or'orate identit% is disre*arded and the indi)id(a!s "o#'risin* it "an &e treated identi"a!!%$ The sto"kho!ders "an &e he!d dire"t!% !ia&!e or "or'orate o&!i*ations, e)en to the e+tent o their 'ersona! assets ('oncept Builders v0 3=,', +arabe, et al, 20,0 3o0 #764$5, +a %9, #99&"$ /o =!at ."r.u-stan.es ="ll t!e 7o.tr"ne apply5 )2.56+ The do"trine is a''!i"a&!e when the notion o !e*a! entit% is (sed to S 6A De eat '(&!i" "on)enien"e$ 2A 1(sti % wron*$ ;A Prote"t ra(d$ 7A De end "ri#e (;3B v0 1ndrada Electric, 20,0 3o0 #5%9$&, 1pril #4, %77%"$ 3A -hie!d a )io!ation o the 'ros"ri'tion a*ainst or(# sho''in* (.irst ;hilippine /nternational
Ban( v0 'ourt of Aanuar %5, #99&"0 1ppeals, 20,0 3o0 #$45$4,
Es"a'e !ia&i!it% arisin* ro# a de&t (1rcilla v0

'ourt of #99%"0 1ppeals, 20,0 3o0 66##$, -ctober %$,
A)oid in"!(sion o "or'orate assets as 'art o the estate o the de"edent ('ease v0 'ourt of
1ppeals, 20,0 3o0 =8$56&#, -ctober #6, #949"0
To 'ro#ote o&0e"ti)es
or
to
shie!d
(n air
(Hillanueva v0 1dre, 20,0 3o0 676&$, 1pril %4, #969"0
"re?em$ti e Ri'#t (200))

-(''ose that J Cor'oration has a!read% iss(ed the 6000 ori*ina!!% a(thoriCed shares o the "or'oration so that its BOD and sto"kho!ders wish to in"rease Js a(thoriCed "a'ita! sto"k$ A ter "o#'!%in* with the reB(ire#ents o the !aw on in"rease o "a'ita! sto"k, J iss(ed an additiona! 6000 shares o the sa#e )a!(e$ aA Ass(#e that the sto"kho!der A 'resent!% ho!ds 200 o(t o the 6000 ori*ina! shares$ .o(!d A ha)e a 're-e#'ti)e ri*ht to 200 o the new iss(e o 6000 shares> .h%> ?;@A
&A .hen sho(!d sto"kho!der A e+er"ise the 'ree#'ti)e ri*ht> ?2@A

SU00ESTE8 ANSWER:
2A
.ork ineB(ities a#on* #e#&ers o the "or'oration interna!!%, in)o!)in* no ri*hts o the '(&!i" or third 'ersons (Secosa v0 Eeirs
ofErwin Suare> .rancisco, 20,0 3o0 #5&#75, Aune %9,
aA Yes, A wo(!d ha)e a 're-e#'ti)e ri*ht to 200 o the new iss(e o 6000 shares$ A is a sto"kho!der o re"ord ho!din* 200 shares in J Cor'o$ A""ordin* to the Cor' Code, ea"h sto"kho!der has the 're-e#'ti)e ri*ht to a!! iss(es o shares #ade &% the "or'oration in 'ro'ortion to
'00(
the n(#&er o shares he ho!ds on re"ord in the "or'oration$ &A Pre-e#'ti)e ri*ht #(st &e e+er"ised in a""ordan"e with the Arti"!es o In"or'oration or the B%-Eaws$ .hen the Arti"!es o In"or'oration and the B%-Eaws are si!ent, the BOD #a% i+ a reasona&!e ti#e within whi"h the sto"kho!ders #a% e+er"ise the ri*ht$ "re?Em$ti e Ri'#t s! A$$raisal Ri'#t ()***) ABC Cor'oration has an a(thoriCed "a'ita! sto"k o P6F di)ided into 30,000 "o##on shares and 30,000 're erred shares$ At its in"e'tion, the Cor'oration o ered or s(&s"ri'tion a!! the "o##on shares$ 9owe)er, on!% 70,000 shares were s(&s"ri&ed$ Re"ent!%, the dire"tors tho(*ht o raisin* additiona! "a'ita! and de"ided to o er to the '(&!i" a!! the a(thoriCed shares o the Cor'oration at their #arket )a!(e$ aA .o(!d Fr$ J, a sto"kho!der ho!din* 7,000 shares, ha)e 're-e#'ti)e ri*hts to the re#ainin* 60,000 shares> ?2@A &A .o(!d Fr$ J ha)e 're-e#'ti)e ri*hts to the 30,000 're erred shares> ?2@A "A Ass(#in* that the e+istin* sto"kho!ders are entit!ed to 're-e#'ti)e ri*hts, at what 'ri"e wi!! the shares &e o ered> ?2@A dA Ass(#in* a sto"kho!der disa*rees with the iss(an"e o new shares and the 'ri"in* or the shares, #a% the sto"kho!der in)oke his a''raisa! ri*hts and de#and 'a%#ent or his shareho!din*s> ?2@A
SU00ESTE8 ANSWER:
'ri"e i+ed &% the BOD, whi"h sha!! not &e !ess than the 'ar )a!(e o s("h shares$
a$ Yes$ Fr$ J, a sto"kho!der ho!din* 7,000 shares, has 're-e#'ti)e ri*ht to the re#ainin* 60,000 shares$ A!! sto"kho!ders o a sto"k "or'oration sha!! en0o% 're- e#'ti)e ri*ht to s(&s"ri&e to a!! iss(es or dis'osition o shares o an% "!ass, in 'ro'ortion to their res'e"ti)e shareho!din*s$
ALTERNATI*E ANSWER<
a$ No, Fr J does not ha)e 're-e#'ti)e ri*ht o)er the re#ainin* 60,000 shares &e"a(se these shares ha)e a!read% &een o ered at in"or'oration and he "hose not to s(&s"ri&e to the#$ 9e, there ore, has wai)ed his ri*ht thereto and the "or'oration #a% o er the# to an%one$
SU00ESTE8 ANSWER:
&$ Yes$ Fr$ J wo(!d ha)e 're-e#'ti)e ri*hts to the 30,000 're erred shares$ A!! sto"kho!ders o a sto"k "or'oration sha!! en0o% 're-e#'ti)e ri*ht to s(&s"ri&e to a!! iss(es or dis'osition o shares o an% "!ass, in 'ro'ortion to their res'e"ti)e shareho!din*s$
ALTERNATI*E ANSWER:
&$ Yes, Fr$ J has 'ree#'ti)e ri*ht o)er the 30,000 're erred shares &e"a(se the% were not o ered &e ore &% the "or'oration or s(&s"ri'tion$
SU00ESTE8 ANSWER:
"$ The shares wi!! &e o ered to e+istin* sto"kho!ders, who are entit!ed to 'ree#'ti)e ri*ht, at a
Page SU00ESTE8 ANSWER:
31 of 103
d$ No, the sto"kho!der #a% not e+er"ise a''raisa! ri*ht &e"a(se the #atter that he dissented ro# is not one o those where ri*ht o a''raisa! is a)ai!a&!e (nder the "or'oration "ode$ SEC2 Juris6iction2 Trans&erre6 Juris6iction ()**4) .hat is the ori*ina! and e+"!(si)e 0(risdi"tion o the -EC>
SU00ESTE8 ANSWER:
The -EC has ori*ina! and e+"!(si)e 0(risdi"tion o)er "ases in)o!)in*5 aA De)i"es or s"he#es a#o(ntin* to ra(d and #isre'resentationI &A Contro)ersies arisin* o(t o intra-"or'orate or 'artnershi' re!ationsI "A Contro)ersies in the e!e"tion or a''oint#ent o dire"tors, o i"ers, et"I dA Petitions to &e de"!ared in a state o s(s'ension o 'a%#ents ?-e" 3 PD :02-AA The RT# has 0(risdi"tion o)er the "ases whi"h in)o!)es intra-"or'orate "ontro)ers%$ As o 2002, the a''!i"a&!e r(!e is that there is a TRAN-DERRED 14RI-DICTION (nder -e"$ 3$2 o the -RC, the Co##issions 0(risdi"tion o)er a!! "ases en(#erated (nder PD :02-A se"$ 3 has &een trans erred to the Co(rts o *enera! 0(risdi"tion or the a''ro'riate Re*iona! Tria! Co(rt$
TABE N.TE:
Stoc-#ol6er2 Delin5uent2 Un$ai6 Su.scri$tion ()**+) The BOD o a "or'oration, &% a )ote o ten in a)or o one a*ainst, de"!ared d(e and 'a%a&!e a!! (n'aid s(&s"ri'tion to the "a'ita! sto"k$ The !one dissentin* dire"tor ai!ed to 'a% on d(e date, i$e$, 6: -e't 6::7, his (n'aid s(&s"ri'tion$ Other than the shares wherein he was (na&!e to "o#'!ete 'a%#ent, he did not own an% share in the "or'oration$ On 2; -e't 6::7, he was in or#ed &% the BOD that, (n!ess d(e 'a%#ent is #eanwhi!e re"ei)ed, he5 aA "o(!d no !on*er ser)e as a dire"tor o the "or'oration orthwith5 &A wo(!d not &e entit!ed to the "ash and sto"k di)idends whi"h were de"!ared and 'a%a&!e on 27 -e' 6::7I and "A "o(!d not )ote in the sto"kho!ders #eetin* s"hed(!ed to take '!a"e on 22 -e't 6::7$ .as the a"tion o the BOD on ea"h o the ore*oin* #atters )a!id>
SU00ESTE8 ANSWER:
aA No$ The 'eriod o ;0 da%s within whi"h the sto"kho!der "an 'a% the (n'aid s(&s"ri'tion had not %et e+'ired$
&A No$ The de!inB(en"% did not de'ri)e the sto"kho!der o his ri*ht to re"ei)e di)idends de"!ared$ 9owe)er, the "ash di)idend de"!ared #a% &e a''!ied &% the "or'oration to the (n'aid s(&s"ri'tion$ ?-e" 76 Cor' CodeA
'00(
"A No$ The 'eriod o ;0 da%s within whi"h the sto"kho!der "an 'a% the (n'aid s(&s"ri'tion had not %et e+'ired$ Stoc-#ol6ers: "reem$ti e Ri'#t (2003) The Board o Dire"tors o ABC, In"$, a do#esti" "or'oration, 'assed a reso!(tion a(thoriCin* additiona! iss(an"e o shares o sto"ks witho(t noti"e nor a''ro)a! o the sto"kho!ders$ DJ, a sto"kho!der, o&0e"ted to the iss(an"e, "ontendin* that it )io!ated his ri*ht o 're- e#'tion to the (niss(ed shares$ Is his "ontention tena&!e> E+'!ain &rie !%$ ?3@A
SU00ESTE8 ANSWER:
JYQ Cor'oration is a&!e to e!e"t on!% 6 dire"tor and there ore,
Yes$ DJGs "ontention is tena&!e$ 4nder -e"tion ;: o the Cor'oration Code, a!! sto"kho!ders o ABC, In"$ en0o% 'ree#'ti)e ri*ht to s(&s"ri&e to a!! iss(es o shares o an% "!ass, in"!(din* the reiss(an"e o treas(r% shares in 'ro'ortion to their res'e"ti)e shareho!din*s$
Stoc-#ol6ers2 A$$raisal Ri'#t (2003) In what instan"es #a% the ri*ht o a''raisa! &e a)ai!ed o (nder the Cor'oration Code>
SU00ESTE8 ANSWER:
-ECTION 86$ Instan"es o A''raisa! Ri*ht$ S An% sto"kho!der o a "or'oration sha!! ha)e the ri*ht to dissent and de#and 'a%#ent o the air )a!(e o his shares in the o!!owin* instan"es5 6$ In "ase an% a#end#ent to the arti"!es o in"or'oration has the e e"t o "han*in* or restri"tin* the ri*hts o an% sto"kho!ders or "!ass o shares, or o a(thoriCin* 're eren"es in an% res'e"t s('erior to those o o(tstandin* shares o an% "!ass, or o e+tendin* or shortenin* the ter# o "or'orate e+isten"eI 2$ In "ase o sa!e, !ease, e+"han*e, trans er, #ort*a*e, '!ed*e or other dis'osition o a!! or s(&stantia!!% a!! o the "or'orate 'ro'ert% and assets as 'ro)ided in the CodeI and ;$ In "ase o #er*er or "onso!idation$ ?nA Stoc-#ol6ers2 Remo al o& <&&icers 0 ,<D (200))
In 6:::, Cor'oration A 'assed a &oard reso!(tion re#o)in* J ro# his 'osition as #ana*er o said "or'oration$ The &%-!aws o A "or'oration 'ro)ides that the o i"ers are the 'resident, )i"e-'resident, treas(rer and se"retar%$ 4'on "o#'!aint i!ed with the -EC, it he!d that a #ana*er "o(!d &e re#o)ed &% #ere reso!(tion o the &oard o dire"tors$ On #otion or re"onsideration, J a!!e*ed that he "o(!d on!% &e re#o)ed &% the a ir#ati)e )ote o the sto"kho!ders re'resentin* 2M; o the o(tstandin* "a'ita! sto"k$ Is Js "ontention !e*a!!% tena&!e$ .h%> ?3@A
SU00ESTE8 ANSWER:
No$ -to"kho!ders a''ro)a! is ne"essar% on!% or the re#o)a! o the #e#&ers o the BOD$ Dor the re#o)a! o a "or'orate o i"er or e#'!o%ee, the )ote o the BOD is s( i"ient or the '(r'ose$ Stoc-#ol6ers2 Remo al2 (inorit% Director ()**))
Ass(#in* that the #inorit% &!o"k o the
Page 3' of 103 the #a0orit% sto"kho!ders "an a!wa%s #(ster a 2M; )ote, wo(!d %o( a!!ow the #a0orit% sto"kho!ders to re#o)e the one dire"tor re'resentin* the #inorit%> SU00ESTE8 ANSWER:
No$ I wi!! not a!!ow the #a0orit% sto"kho!ders to re#o)e the dire"tor$ .hi!e the sto"kho!ders #a%, &% a 2M; )ote, re#o)e a dire"tor, the !aw a!so 'ro)ides, howe)er, that his ri*ht #a% not, witho(t 0(st "a(se, &e e+er"ised so as to de'ri)e the #inorit% o re'resentation in the BOD (Sec %6 'orp code< 2ovIt vs
1goncillo 57p$56"
Fer"% s(&s"ri&ed to 6,000 shares o sto"k o Rosario Cor'oration$ -he 'aid 23@ o said s(&s"ri'tion$ D(rin* the sto"kho!ders #eetin*, "an Fer"% )ote a!! her s(&s"ri&ed shares> E+'!ain$
SU00ESTE8 ANSWER:
Yes, Fer"% "an )ote a!! her s(&s"ri&ed shares$ -e"tion 72 o the Cor'oration Code states that ho!ders o s(&s"ri&ed shares not (!!% 'aid whi"h are not de!inB(ent sha!! ha)e a!! the ri*hts o a sto"kho!der$ Stoc-s2 7ncrease o& Ca$ital Stoc- (200)) -(''ose J Cor'oration has an a(thoriCed "a'ita! sto"k o P6F di)ided into 600,000 shares o sto"k with 'ar )a!(e o P60 ea"h$ aA Gi)e two wa%s where&% said a(thoriCed "a'ita! sto"k #a% &e in"reased to a&o(t P6$3F$ ?;@A &A Gi)e three 'ra"ti"a! reasons or a "or'oration to in"rease its "a'ita! sto"k ?2@A
SU00ESTE8 ANSWER:
Stoc-#ol6ers2 Ri'#ts ()**4) .hat are the ri*hts o a sto"kho!der>

SU00ESTE8 ANSWER:
The ri*hts o a sto"kho!der are as o!!ows5 6A The ri*ht to )ote, in"!(din* the ri*ht to a''oint a 'ro+%I 2A The ri*ht to share in the 'ro its o the "or'oration, in"!(din* the ri*ht to de"!are sto"k di)idendsI ;A The ri*ht to a 'ro'ortionate share o the assets o the "or'oration ('on !iB(idationI 7A The ri*ht o a''raisa!I 3A The 're-e#'ti)e ri*ht to sharesI 2A The ri*ht to ins'e"t "or'orate &ooks and re"ordsI 7A The ri*ht to e!e"t dire"torsI 8A -("h other ri*hts as #a% "ontra"t(a!!% &e *ranted to the sto"kho!ders &% the "or'oration or &% s'e"ia! !aw$ Stoc-#ol6ers2 >otin' "o;er o& Stoc-#ol6ers ()**0)
aA Two wa%s o in"reasin* the A(thoriCed Ca'ita! -to"k o J "or'oration to P6$3F are5 6A In"rease the n(#&er o shares ro# 600,000 to 630,000 shares with the sa#e 'ar )a!(e o P60$00 ea"h$ 2A In"rease 'ar )a!(e o 600,000 shares to P63$00 ea"h$ &A Three 'ra"ti"a! reasons or a "or'oration to in"rease its "a'ita! sto"k are5 6A to *enerate #ore workin* "a'ita!I
2A to ha)e #ore shares with whi"h to 'a% or the a"B(isition o #ore assets !ike a"B(isition o "o#'an% "ar, sto"ks, ho(se, #a"hiner% or &(sinessI and ;A to ha)e e+tra share with whi"h to "o)er or #eet the reB(ire#ent or de"!aration o sto"k di)idend$ Stoc-s2 SaleB Trans&er o& Certi&icates o& Stoc- ()**4) Arno!d has in his na#e 6,000 shares o the "a'ita! sto"k o ABC Co as e)iden"ed &% a sto"k "erti i"ate$ Arno!d de!i)ered the sto"k "erti i"ate to -te)en who now "!ai#s to &e the rea! owner o the shares, ha)in* 'aid or Arno!ds s(&s"ri'tion$ ABC re (sed to re"o*niCe and re*ister -te)ens ownershi'$ Is the re (sa! 0(sti ied> E+'!ain$
SU00ESTE8 ANSWER:
has &een (n!aw (!!% de'ri)ed thereo , #a% re"o)er it ro# the 'erson in 'ossession o the sa#e$= ?Art 33: NCCA Stoc-s2 SaleB Trans&er o& Certi&icates o& Stoc- (2003) Do(r #onths &e ore his death, PJ assi*ned 600 shares o sto"k re*istered in his na#e in a)or o his wi e and his
ABCs re (sa! to re"o*niCe and re*ister -te)ens ownershi' is 0(sti ied$ The a"ts indi"ate that the sto"k "erti i"ate or the 6,000 shares in B(estion is in the na#e o Arno!d$ A!tho(*h the "erti i"ate was de!i)ered &% Arno!d to -te)en, the a"ts do not indi"ate that the "erti i"ate was d(!% endorsed &% Arno!d at the ti#e it was de!i)ered to -te)en or that the 'ro"ed(re or the e e"ti)e trans er o shares o sto"k set o(t in the &%-!aws o ABC Co, i an%, was o&ser)ed$ -in"e the "erti i"ate was not endorsed in a)or o -te)en ?or an%&od% e!se or that #atterA, the on!% "on"!(sion "o(!d &e no other than that the shares in B(estion sti!! &e!on* to Arno!d$ (,a>on v /1' 2, 45$7&
+ar #&,9% %74s%$5"
Stoc-s2 SaleB Trans&er o& Certi&icates o& Stoc- (200))

A is the re*istered owner o -to"k Certi i"ate No$ 000066$ 9e entr(sted the 'ossession o said "erti i"ate to his &est riend B who &orrowed the said endorsed "erti i"ate to s(''ort Bs a''!i"ation or 'ass'ort ?or or a '(r'ose other than trans erA$ B(t B so!d the "erti i"ate to J, a &ona ide '(r"haser who re!ied on the endorsed "erti i"ates and &e!ie)ed hi# to &e the owner thereo $
aA Can A "!ai# the shares o sto"k ro# J> E+'!ain ?;@A

&A .o(!d %o(r answer &e the sa#e i sto"k A !ost the
"erti i"ate in B(estion or i it was sto!en ro# hi#> ?2@A

SU00ESTE8 ANSWER:
aA No$ Ass(#in* that the shares were a!read% trans erred to B, A "annot "!ai# the shares o sto"k ro# J$ The "erti i"ate o sto"k "o)erin* said shares ha)e &een d(!% endorsed &% A and entr(sted &% hi# to B$ B% his said a"ts, A is now esto''ed ro# "!ai#in* said shares ro# J, a &ona ide '(r"haser who re!ied on the endorse#ent &% A o the "erti i"ate o sto"k$ &A Yes$ In the "ase where the "erti i"ate o sto"k was !ost or sto!e ro# A, A has a ri*ht to "!ai# the "erti i"ate o sto"k ro# the thie who has no ri*ht or tit!e to the sa#e$ <One who has !ost an% #o)a&!e or
Page 33 of 103 "hi!dren$ The% then &ro(*ht the deed o assi*n#ent to the 'ro'er "or'orate o i"ers or re*istration with the reB(est or the trans er in the "or'orationGs sto"k and trans er &ooks o the assi*ned shares, the "an"e!!ation o the sto"k "erti i"ates in PJGs na#e, and the iss(an"e o new sto"k "erti i"ates in the na#es o his wi e and his "hi!dren as the new owners$ The o i"ers o the Cor'oration denied the reB(est on the *ro(nd that another heir is "ontestin* the )a!idit% o the deed o assi*n#ent$ Fa% the Cor'oration &e "o#'e!!ed &% #anda#(s to re*ister the shares o sto"k in the na#es o the assi*nees> E+'!ain &rie !%$ ?3@A SU00ESTE8 ANSWER:
a#o(nt so that said or#er President i!ed s(it or "o!!e"tion o the &a!an"e &e ore the -EC$ aA 4nder what "onditions is a sto"k "or'oration e#'owered to a"B(ire its own shares>
&A Is the arran*e#ent &etween the "or'oration and its President "o)ered &% the tr(st (nd do"trine> E+'!ain
%o(r answers &rie !%$

SU00ESTE8 ANSWER:
aA A sto"k "or'oration #a% on!% a"B(ire its own shares o sto"k i the tr(st (nd do"trine is not i#'aired$ This is to sa%, or instan"e, that it #a% '(r"hase its own shares o sto"k &% (ti!iCin* #ere!% its s(r'!(s 'ro its o)er and a&o)e the s(&s"ri&ed "a'ita! o the "or'oration$
ALTERNATI*E ANSWER:
Yes$ The "or'oration #a% &e "o#'e!!ed &% #anda#(s to re*ister the shares o sto"k in the na#e o the assi*nee$ The on!% !e*a! !i#itation i#'osed &% -e"tion 2; o the Cor'oration Code is when the Cor'oration ho!ds an% (n'aid "!ai# a*ainst the shares intended to &e trans erred$ The a!!e*ed "!ai# o another heir o PJ is not s( i"ient to den% the iss(an"e o new "erti i"ates o sto"k to his wi e and "hi!dren$ It wo(!d &e otherwise i the trans ereeGs tit!e to the shares has no 'ri#a a"ie )a!idit% or is (n"ertain$ Trust /un6 Doctrine ()**2) A Cor'oration e+e"(ted a 'ro#issor% note &indin* itse! to 'a% its PresidentMDire"tor, who had tendered his resi*nation, a "ertain s(# in 'a%#ent o the !atters shares and interests in the "o#'an%$ The "or'oration de a(!ted in 'a%in* the (!!
aA ?an answer en(#eratin* the instan"es or "ases (nder the Cor'oration Code where the Cor' a!!ows the a"B(isition o shares s("h as in the sto"kho!ders e+er"ise o a''raisa! ri*ht, ai!(re o &ids in the sa!e o de!inB(ent shares, et"$A
SU00ESTE8 ANSWER:
&A The arran*e#ent &etween the "or'oration and its President to the e+tent that it "a!!s or the 'a%#ent o the !atters shares is "o)ered &% the tr(st (nd do"trine$ The on!% e+"e'tions ro# the tr(st (nd do"trine are the rede#'tion o redee#a&!e shares and, in the "ase o "!ose "or'oration, when there sho(!d &e a dead!o"k and the -EC orders the 'a%#ent o the a''raised )a!(e o a sto"kho!ders share$ Trust /un6 Doctrine2 7ntra?Cor$orate Contro ers% ()**))
Page
33 of 103
On De"e#&er 2, 6:88, A, an in"or'orator and the Genera! Fana*er o the Pa0e F(!ti Dar#s Co, resi*ned as GF and so!d to the "or'oration his shares o sto"ks in the "or'oration or P;00th, the &ook )a!(e thereo , 'a%a&!e as o!!ows5 aA P600th as down 'a%#entI &A P600th on or &e ore ;6 1(!%6:8:I and "A the re#ainin* &a!an"e o P600th on or &e ore ;0 -e' 6:8:$ A 'ro#issor% note, with an a""e!eration "!a(se, was e+e"(ted &% the "or'oration or the (n'aid &a!an"e$
C#attel (ort'a'e s! A&ter?7ncurre6 <.li'ations ()***) On De"e#&er 6, 6::2, Borrower e+e"(ted a "hatte! #ort*a*e in a)or o the Bank to se"(re a !oan o P;F$ In d(e ti#e the !oan was 'aid$ On De"e#&er 6, 6::7, Borrower o&tained another !oan or P2F whi"h the Bank *ranted (nder the sa#e se"(rit% as that whi"h se"(red the irst !oan$ Dor the se"ond !oan, Borrower #ere!% de!i)ered a 'ro#issor% noteI no new "hatte! #ort*a*e a*ree#ent was e+e"(ted as the 'arties re!ied on a 'ro)ision in the 6::2 "hatte! #ort*a*e a*ree#ent whi"h in"!(ded (t(re de&ts as a#on* the o&!i*ations se"(red &% the #ort*a*e$ The 'ro)ision reads5
<In "ase the Fort*a*or e+e"(tes s(&seB(ent 'ro#issor% note or notes either as a renewa!, as an e+tension, or as a new !oan, this #ort*a*e sha!! a!so stand as se"(rit% or the 'a%#ent o said 'ro#issor% note or notes witho(t ne"essit% o e+e"(tin* a new "ontra"t and this #ort*a*e sha!! ha)e the sa#e or"e and e e"t as i the said 'ro#issor% note or notes were e+istin* on date hereo $=
The "or'oration ai!ed to 'a% the irst insta!!#ent on d(e date$ A then s(ed Pa0e on the 'ro#issor% note in the RTC$ aA Does the "o(rt ha)e 0(risdi"tion o)er the "ase>
&A .o(!d %o(r answer &e the sa#e i A instead so!d his shares to his riend Fa&e! and the !atter i!ed a "ase with the RTC a*ainst the "or'oration to "o#'e! it to re*ister the sa!e and to iss(e new "erti i"ates o sto"k in her
na#e>
SU00ESTE8 ANSWER:
aA The RTC has 0(risdi"tion o)er the "ase$ The -C said that a "or'oration #a% on!% &(% its own shares o sto"k i it has eno(*h s(r'!(s 'ro its there ore$ &A F% answer wo(!d &e the sa#e$ An a"tion to "o#'e! a "or'oration to re*ister a sa!e and to iss(e new "erti i"ates o sto"k is itse! an intra-"or'orate #atter that e+"!(si)e!% !ies with the RTC$ The RTC has 0(risdi"tion o)er the "ases whi"h in)o!)es intra-"or'orate "ontro)ers%$ As o 2002, the a''!i"a&!e r(!e is that there is a TRAN-DERRED 14RI-DICTION (nder -e"$ 3$2 o the -RC, the Co##issions 0(risdi"tion o)er a!! "ases en(#erated (nder PD :02-A se"$ 3 has &een trans erred to the Co(rts o *enera! 0(risdi"tion or the a''ro'riate Re*iona! Tria! Co(rt$
TABE N.TE:
As Borrower ai!ed to 'a% the se"ond !oan, the Bank 'ro"eeded to ore"!ose the Chatte! Fort*a*e$Borrower s(ed the Bank "!ai#in* that the #ort*a*e was no !on*er in or"e$ Borrower "!ai#ed that a resh "hatte! #ort*a*e sho(!d ha)e &een e+e"(ted when the se"ond !oan was *ranted$ aA De"ide the "ase and ratio"inate$ ?7@A &A -(''ose the "hatte! #ort*a*e was not re*istered, wo(!d its )a!idit% and e e"ti)eness &e i#'aired> E+'!ain$ ?7@A
SU00ESTE8 ANSWER:
Credit Tran a%ti!n

C#attel (ort'a'e s! A&ter?7ncurre6 <.li'ations ()**)) To se"(re the 'a%#ent o an ear!ier !oan o P20,000 as we!! as s(&seB(ent !oans whi"h her riend Noreen, wo(!d e+tend to her, Karen e+e"(ted in a)or o Noreen a "hatte! #ort*a*e o)er her ?KarenA "ar$ Is the #ort*a*e )a!id>
SU00ESTE8 ANSWER:
a$ The ore"!os(re o the "hatte! #ort*a*e re*ardin* the se"ond !oan is not )a!id$ A "hatte! #ort*a*e "annot )a!id!% se"(re a ter in"(rred o&!i*ations$ The a ida)it o *ood aith reB(ired (nder the "hatte! #ort*a*e !aw e+'ress!% 'ro)ides that <the ore*oin* #ort*a*e is #ade or se"(rin* the o&!i*ation s'e"i ied in the "onditions hereo , and or no other '(r'ose$= The a ter-in"(rred o&!i*ation not &ein* s'e"i ied in the a ida)it, is not se"(red &% #ort*a*e$ &$ Yes$ The "hatte! #ort*a*e is not )a!id as a*ainst an% 'erson, e+"e't the #ort*a*or, his e+e"(tors and ad#inistrators$ C#attel (ort'a'e2 /oreclosure ()**+)
RitC &o(*ht a new "ar on insta!!#ents whi"h 'ro)ided or an a""e!eration "!a(se in the e)ent o de a(!t$ To se"(re 'a%#ent o the (n'aid insta!!#ents, as and when d(e, he "onstit(ted two "hatte! #ort*a*es, i$e$, one o)er his )er% o!d "ar and the other "o)erin* the new "ar that he had 0(st &o(*ht as a oresaid, on insta!!#ents$ A ter RitC de a(!ted on three insta!!#ents, the se!!er-#ort*a*ee ore"!osed on the o!d "ar$ The 'ro"eeds o the ore"!os(re were not eno(*h to satis % the d(e o&!i*ationI hen"e, he si#i!ar!% so(*ht to
A "hatte! #ort*a*e "annot e e"ti)e!% se"(re a terin"(rred o&!i*ations$ .hi!e a sti'(!ation to in"!(de a terin"(rred o&!i*ations in a "hatte! #ort*a*e is itse! not in)a!id, the o&!i*ation "annot, howe)er, &e dee#ed a(to#ati"a!!% se"(red &% that #ort*a*e (nti! a ter a new "hatte! #ort*a*e or an addend(# to the ori*ina! "hatte! #ort*a*e is e+e"(ted to "o)er the o&!i*ation a ter it has &een a"t(a!!% in"(rred$ A""ordin*!%, (n!ess s("h s(''!e#ents are #ade, the "hatte! #ort*a*e in the 'ro&!e# *i)en wo(!d &e dee#ed to se"(re on!% the !oan o P20,000 (Sec 5 1ct #575< Belgian 'atholic
+issionaries v +agallanes ;ress 59p&54"
ore"!ose on the new "ar$

.o(!d the se!!er-#ort*a*ee &e !e*a!!% 0(sti ied in ore"!osin* on this se"ond "hatte! #ort*a*e>
SU00ESTE8 ANSWER:
No$ The two #ort*a*es were e+e"(ted to se"(re the 'a%#ent o the (n'aid insta!!#ents or the '(r"hase o a new "ar$ .hen the #ort*a*e on the o!d "ar was ore"!osed, the se!!er-#ort*a*ee is dee#ed to ha)e reno(n"ed a!! other ri*hts$ A ore"!os(re o additiona! 'ro'ert%, that is, the new "ar "o)ered &% the se"ond #ort*a*e wo(!d &e a n(!!it%$ C#attel (ort'a'e2 <;ners#i$ o& T#in' (ort'a'e6 ()**0)
Qonee, who !i)es in B(!a"an, &o(*ht a 6:88 #ode! To%ota Coro!!a sedan on 1(!% 6, 6:8: ro# Anade!aida, who !i)es in /(eCon Cit%, or P;00th, 'a%in* P630th as down'a%#ent and 'ro#isin* to 'a% the &a!an"e in ; eB(a! B(arter!% insta!!#ents &e*innin* O"to&er 6, 6:8:$ Anade!aida e+e"(ted a deed o sa!e o the )ehi"!e in a)or o Qonee and, to se"(re the (n'aid &a!an"e o the '(r"hase 'ri"e, had Qonee e+e"(te a deed o "hatte! #ort*a*e on the )ehi"!e in Anade!aidas a)or$
Fort*a*e Eaw reB(ires the re*istration to &e #ade in the O i"e o the Re*ister o Deeds o the 'ro)in"e where the #ort*a*or resides and a!so in whi"h the 'ro'ert% is
Ten da%s a ter the e+e"(tion o the a&o)e#entioned do"(#ents, Qonee had the "ar trans erred and re*istered in her na#e$ Conte#'oraneo(s!%, Anade!aida had the "hatte! #ort*a*e on the "ar re*istered in the Chatte! Fort*a*e Re*istr% o the O i"e o the Re*ister o Deeds o /(eCon Cit%$ In -e' 6:8:, Qonee so!d the sedan to 1i#&o witho(t te!!in* the !atter that the "ar was #ort*a*ed to Anade!aida$ .hen Qonee ai!ed to 'a% the irst insta!!#ent on O"to&er 6, 6:8:, Anade!aida went to see Qonee and dis"o)ered that the !atter had so!d the "ar to 1i#&o$
aA 1i#&o re (sed to *i)e (' the "ar on the *ro(nd that the "hatte! #ort*a*e e+e"(ted &% Qonee in a)or o Anade!aida is not )a!id &e"a(se it was e+e"(ted &e ore the "ar was re*istered in Qonees na#e, i$e$, &e ore Qonee &e"a#e the re*istered owner o the "ar$ Is the said ar*(#ent #eritorio(s> E+'!ain %o(r answer$ &A 1i#&o a!so ar*(ed that e)en i the "hatte! #ort*a*e is )a!id, it "annot a e"t hi# &e"a(se it was not 'ro'er!% re*istered with the *o)ern#ent o i"es where it sho(!d &e re*istered$ .hat *o)ern#ent o i"e is 1i#&o re errin* to>
SU00ESTE8 ANSWER:
aA 1i#&os ar*(#ent is not #eritorio(s$ Qonee &e"a#e the owner o the 'ro'ert% ('on de!i)er%I re*istration is not essentia! to )est that ownershi' in the &(%er$ The e+e"(tion o the "hatte! #ort*a*e &% the &(%er in a)or o the se!!er, in a"t, "an de#onstrate the )estin* o s("h ownershi' to the #ort*a*or$
&A 1i#&o was re errin* to the Re*ister o Deeds o B(!a"an where Qonee was a resident$ The Chatte!
Page
3( of 103 sit(ated
as we!! as the ETO where the )ehi"!e is re*istered$ ?-e" 7 Chatte! Fort*a*e EawA Cre6it Transactions ()***) Oario(s &(%ers o !ots in a s(&di)ision &ro(*ht a"tions to "o#'e! either or &oth the de)e!o'er and the &ank to !ease and de!i)er ree and "!ear the tit!es to their res'e"ti)e !ots$
The 'ro&!e# arose &e"a(se notwithstandin* 'rior sa!es #ost!% on insta!!#ents H #ade &% the de)e!o'er to &(%ers, de)e!o'er had #ort*a*ed the who!e s(&di)ision to a "o##er"ia! &ank$ The #ort*a*e was d(!% e+e"(ted and re*istered with the a''ro'riate *o)ern#enta! a*en"ies$ 9owe)er, as the !ot &(%ers were "o#'!ete!% (naware o the #ort*a*e !ien o the &ank, the% re!i*io(s!% 'aid the insta!!#ents d(e (nder their sa!e "ontra"ts$
the Bar /(estions in Fer"anti!e Eaw, as it is within Ci)i! Eaw, it is s(**ested that whate)er answer is *i)en &% the e+a#inee, or the !a"k o answer sho(!d &e *i)en (!! "redit$ I the e+a#inee *i)es a *ood answer, he sho(!d &e *i)en additiona! "redit$
SU00ESTE8 ANSWER:
a$ No$ The &ank #a% not dis'ossess the 'rior '(r"hasers o the indi)id(a! !ots, #("h !ess reB(ire the# to 'a% or the said !ots$ The &ank has to res'e"t the ri*hts o the 'rior '(r"hasers o the indi)id(a! !ots$ The '(r"hasers ha)e the o'tion to 'a% the insta!!#ents o the #ort*a*ee$ &$ The &ank has to res'e"t the ri*hts o the &(%ers with re#ainin* (n'aid insta!!#ents$ The '(r"haser has the o'tion to 'a% the insta!!#ents to the #ort*a*ee who sho(!d a''!% the 'a%#ents to the #ort*a*e inde&tedness$
As the de)e!o'er ai!ed to 'a% its !oan, the #ort*a*e was ore"!osed and the who!e s(&di)ision was a"B(ired &% the &ank as the hi*hest &idder$ aA Fa% the &ank dis'ossess 'rior '(r"hasers o indi)id(a! !ots or, a!ternati)e!%, reB(ire the# to 'a% a*ain or the 'aid !ots> Dis"(ss ?;@A &A .hat are the ri*hts o the &ank )is-T-)is those &(%ers with re#ainin* (n'aid insta!!#ents> Dis"(ss$ ?;@A
Re"o##endation5 -in"e the s(&0e"t #atter o these two ?2A B(estions is not in"!(ded within the s"o'e o
(ort'a'e ()***) De&tor '(r"hased a "o#'an% 'a%a&!e in the "ontra"t o sa!e, trans erred ('on (!!
'ar"e! o !and ro# a rea!t% i)e %ear!% insta!!#ents$ 4nder tit!e to the !ot wo(!d &e 'a%#ent o the '(r"hase 'ri"e$
B(t e)en &e ore (!! 'a%#ent, de&tor "onstr("ted a ho(se on the !ot$ -o#eti#e therea ter, de&tor #ort*a*ed the ho(se to se"(re his o&!i*ation arisin* ro# the iss(an"e o a &ond needed in the "ond("t o his &(siness$ The #ort*a*e was d(!% re*istered with the 'ro'er "hatte! #ort*a*e re*istr%$
s(ret% "o#'an%$ (ort'a'e s! 8e % (2003)
Di)e %ears !ater a ter "o#'!etin* 'a%#ent o the '(r"hase 'ri"e, de&tor o&tained tit!e to the !ot$ And e)en as the "hatte! #ort*a*e on the ho(se was sti!! s(&sistin*, de&tor #ort*a*ed to a &ank the !ot and i#'ro)e#ent thereon to se"(re a !oan$ This rea! estate #ort*a*e was d(!% re*istered and annotated at the &a"k o the tit!e$
D(e to &(siness re)erses, de&tor ai!ed to 'a% his "reditors$ The "hatte! #ort*a*e was ore"!osed when the de&tor ai!ed to rei#&(rse the s(ret% "o#'an% or 'a%#ents #ade on the &ond$ In the ore"!os(re sa!e, the s(ret% "o#'an% was awarded the ho(se as the hi*hest &idder$ On!% a ter the ore"!os(re sa!e did the s(ret% "o#'an% !earn o the rea! estate #ort*a*e in a)or o the !endin* in)estor on the !ot and the i#'ro)e#ent thereon$ I##ediate!%, it i!ed a "o#'!aint 'ra%in* or the e+"!(sion o the ho(se ro# the rea! estate #ort*a*e$ It was s(&#itted that as the "hatte! #ort*a*e was e+e"(ted and re*istered ahead, it was s('erior to the rea! estate #ort*a*e$
On the s(**estion that a "hatte! #ort*a*e on a ho(se- a rea! 'ro'ert%- was a n(!!it%, the s(ret% "o#'an% "o(ntered that when the "hatte! #ort*a*e was e+e"(ted, de&tor was not %et the owner o the !ot on whi"h the ho(se was &(i!t$ A""ordin*!%, the ho(se was a 'ersona! 'ro'ert% and a 'ro'er s(&0e"t o a "hatte! #ort*a*e$
a$ Dis"(ss the )a!idit% o the 'osition taken &% the s(ret% "o#'an%$ ?;@A &$ .ho has a &etter "!ai# to the ho(se, the s(ret% "o#'an% or the !endin* in)estor> E+'!ain ?;@A
"$ .o(!d the 'osition o the s(ret% "o#'an% &e &o!stered &% the a"t that it a"B(ired tit!e in a ore"!os(re sa!e
"ond("ted &% the Pro)in"ia! -heri $ E+'!ain ?;@A

SU00ESTE8 ANSWER:
aA The ho(se is a!wa%s a rea! 'ro'ert% e)en tho(*h it was "onstr("ted on a !and not &e!on*in* to the &(i!der$ 9owe)er, the 'arties #a% treat it as a 'ersona! 'ro'ert% and "onstit(te a "hatte! #ort*a*e thereon$ -("h #ort*a*e sha!! &e )a!id and &indin* &(t on!% on the 'arties$ It wi!! not &ind or a e"t third 'arties$
&A The !endin* in)estor has a &etter "!ai# to the ho(se$ The rea! estate #ort*a*e "o)erin* the ho(se and !ot was d(!% re*istered and &inds the 'arties and third 'ersons$ On the other hand, the "hatte! #ort*a*e on the ho(se se"(rin* the "redit o the s(ret% "o#'an% did not a e"t the ri*hts o third 'arties s("h as the !endin* in)estor des'ite re*istration o the "hatte! #ort*a*e$
"A No$ The "hatte! #ort*a*e o)er the ho(se whi"h was ore"!osed did not a e"t the ri*hts o third 'arties !ike the !endin* in)estor$ -in"e the third 'arties are not &o(nd &% the "hatte! #ort*a*e, the% are not a!so &o(nd &% an% en or"e#ent o its 'ro)isions$ The ore"!os(re o s("h "hatte! #ort*a*e did not &o!ster or add an%thin* to the 'osition o the
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To 'a% or her !oan o&tained ro# -te!a, EiCa "onstit(ted in -te!as a)or a "hatte! #ort*a*e o)er an e!e"tri" *enerator$ Ce"i!, a "reditor o EiCa, !e)ied on atta"h#ent the *enerator$ -te!a i!ed a third 'art% "!ai#$ Ce"i! o''osed the "!ai#$ R(!e on their "on !i"tin* "!ai#s$
SU00ESTE8 ANSWER:
(ort'a'e2 E9tra=u6icial /oreclose (2004)

A rea! estate #ort*a*e #a% &e ore"!osed 0(di"ia!!% or e+tra0(di"ia!!%$ In what instan"e #a% a #ort*a*ee e+tra0(di"ia!!% ore"!ose a rea! estate #ort*a*e> ?3@A
SU00ESTE8 ANSWER:
ore"!os(re sa!e was not eno(*h to !iB(idate the o&!i*ation$ The &ank s(ed or de i"ien"%$ In their answer, 1anette and 1eanne did not den% the e+isten"e o the !oan nor the a"t o their de a(!t$ The%, howe)er, inter'osed the de enses that the 'ri"e at the a("tion was e+tre#e!% !ow and that their !oan, des'ite the !oan do"(#ents, was a !on*-ter# !oan whi"h had not %et #at(red$ I %o( were the 0(d*e, how wo(!d %o( r(!e on the "ase> .h%> ?2@A
SU00ESTE8 ANSWER:
.hen a sa!e is #ade (nder a s'e"ia! 'ower inserted or atta"hed to an% rea!-estate #ort*a*e, therea ter *i)en as se"(rit% or the 'a%#ent o #one% or the (! i!!#ent o an% other o&!i*ation, then the #ort*a*ee #a% e+tra0(di"ia!!% ore"!ose the rea! estate #ort*a*e ?-e"$ 6, A"t No$ ;6;3, as a#endedA$ (ort'a'e2 /oreclosure (2003) Fa% the sa!e at '(&!i" a("tion &% a &ank o a 'ro'ert% #ort*a*ed to it &e n(!!i ied &e"a(se the 'ri"e was e+tre#e!% !ow> .h%>
SU00ESTE8 ANSWER:
(ort'a'e2 /oreclosure o& 7m$ro ements ()***) Borrower o&tained a !oan a*ainst the se"(rit% o a #ort*a*e on a 'ar"e! o !and$ .hi!e the #ort*a*e was s(&sistin*, &orrower !eased or i t% %ears the #ort*a*ed 'ro'ert% to Eand De)e!o'#ent Co#'an% ?EDCA$ The #ort*a*ee was d(!% ad)ised o the !ease$ Therea ter, EDC "onstr("ted on the #ort*a*ed 'ro'ert% an o i"e "ondo#ini(#$ Borrower de a(!ted on his !oan and #ort*a*ee ore"!osed the #ort*a*e$ At the ore"!os(re sa!e, the #ort*a*ee was awarded the 'ro'ert% as the hi*hest &idder$ The "orres'ondin* Certi i"ate o -a!e was e+e"(ted and a ter the !a'se o one %ear, tit!e was "onso!idated in the na#e o #ort*a*ee$ Fort*a*ee then a''!ied with the RTC or the iss(an"e o a writ o 'ossession not on!% o)er the !and &(t a!so the "ondo#ini(# &(i!din*$ The #ort*a*ee "ontended that the #ort*a*e in"!(ded a!! a""essions, i#'ro)e#ents and a""essories o(nd on the #ort*a*ed 'ro'ert%$
(ort'a'e2 /oreclosure (2003) Be"a(se o ai!(re o 1anette and 1eanne to 'a% their !oan to J Bank, the !atter ore"!osed on the #ort*a*e "onstit(ted on their 'ro'ert% whi"h was '(t (' &% the# as se"(rit% or the 'a%#ent o the !oan$ The 'ri"e 'aid or the 'ro'ert% at the
SU00ESTE8 ANSWER:
EDC "o(ntered that it had &(i!t on the #ort*a*ed 'ro'ert% with the 'rior know!ed*e o #ort*a*ee whi"h had re"ei)ed or#a! noti"e o the !ease$ aA 9ow wo(!d %o( reso!)e the dis'(te &etween the #ort*a*ee and EDC> ?;@A
&A Is the #ort*a*ee entit!ed to the !ease renta!s d(e
ro# EDC (nder the !ease a*ree#ent> ?;@A

Re.o--en7at"on; Since the subJect matter of these two (%" questions is not included within the scope of the Bar Kuestions in +ercantile =aw, as it is within 'ivil =aw, it is suggested that whatever answer is given b the examinee, or the lac( of answer should be given full credit0 /f the examinee gives a good answer, he should be given additional credit0
SU00ESTE8 ANSWER:
a$ The #ort*a*ee has a &etter ri*ht than EDC$ The #ort*a*e e+tends to the i#'ro)e#ents introd("ed on the !and, with the de"!arations, a#'!i i"ations, and !i#itations esta&!ished &% !aw, whether the estate re#ains in the 'ossession o the #ort*a*or or 'asses into the hands o a third 'erson ?Art 2627 NCCA$ The noti"e *i)en &% EDC to the #ort*a*ee was not eno(*h to re#o)e the &(i!din* ro# "o)era*e o the #ort*a*e "onsiderin* that the &(i!din* was &(i!t a ter the #ort*a*e was "onstit(ted and the noti"e was on!% as re*ards the !ease and not as to the "onstr("tion o the &(i!din*$ -in"e the #ort*a*ee was in or#ed o the !ease and did not o&0e"t to it, the #ort*a*ee &e"a#e &o(nd &% the ter#s o the !ease when it a"B(ired the 'ro'ert% as the hi*hest &idder$ 9en"e, the #ort*a*ee ste's into the shoes o the #ort*a*or and a"B(ires the ri*hts o the !essor (nder Art 6728 o the NCC$ This 'ro)ision *i)es the !essor the ri*ht to a''ro'riate the "ondo#ini(# &(i!din* &(t a ter 'a%in* the !essee ha! o the )a!(e o the &(i!din* at that ti#e$ -ho(!d the !essor re (se to rei#&(rse said a#o(nt, the !essee #a% re#o)e the i#'ro)e#ent e)en tho(*h the !and wi!! s( er da#a*e there&%$
1 t Alternative An #er:
a$ The #ort*a*ee has a &etter ri*ht to the &(i!din*$ 4nder Art 2627 o the NCC, the #ort*a*e e+tends to a!! i#'ro)e#ents on the #ort*a*ed 'ro'ert% re*ard!ess o who and when the i#'ro)e#ents were introd("ed$ EDC "annot "o#'!ain otherwise, &e"a(se it knew that the 'ro'ert% it was !easin* was #ort*a*ed when it &(i!t the "ondo#ini(#$
'nd alternative An #er:
a$ Ass(#in* that the o i"e "ondo#ini(# was d(!% "onstit(ted (nder the Condo#ini(# Eaw, &e ore EDC "o(!d )a!id!% "onstit(te the sa#e as a "ondo#ini(#, it sho(!d "a(se to &e re"orded in the re*ister o deeds o the 'ro)in"e or "it% where the !and is sit(ated an ena&!in* or #aster deed showin*, a#on* others, a "erti i"ate o the re*istered owner and o a!! re*istered ho!ders o an% !ien or en"(#&ran"e on the 'ro'ert% that the% "onsent to the re*istration o the deed$ ?-e" 7$ RA 7722A$ I the #ort*a*ee *a)e its "onsent thereto, then EDC sho(!d 're)ai!$ I no "onsent was *i)en, the "ondo#ini(# was in"!(ded in the #ort*a*e$
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ore"!os(re o the #ort*a*e>

SU00ESTE8 ANSWER:
&$ The !ease renta!s &e!on* to the #ort*a*or$ 9owe)er, the #ort*a*e e+tends to renta!s not %et re"ei)ed when the o&!i*ation &e"o#es d(e and the #ort*a*ee #a% ran a ter the said renta!s or the 'a%#ent o the #ort*a*e de&t$ (ort'a'e2 /oreclosure2 E&&ect o& mere ta-in' .% cre6itor? mort'a'or o& $ro$ert% ()**2)
J N Co o&tained a !oan ro# a !o"a! &ank in the a#o(nt o P300th, #ort*a*in* as se"(rit% there ore its rea! 'ro'ert%$ -(&seB(ent!%, the "o#'an% a''!ied with the sa#e &ank or a Eetter o Credit ?ECA or P200th in a)or o a orei*n &ank to "o)er the i#'ortation o #a"hiner%$ To *(arantee 'a%#ent o the o&!i*ation (nder the EC, the "o#'an% and its President and Treas(rer e+e"(ted a s(ret% a*ree#ent in the !o"a! &anks a)or$
6A The takin* o 'ossession o the #a"hiner% &% the &ank did not res(!t in (!! 'a%#ent o the o&!i*ations owin* ro# the "o#'an% and its o i"ers$ The takin* o s("h 'ossession #(st &e "onsidered #ere!% as a #eas(re in order to 'rote"t or (rther sa e*(ard the &anks se"(rit% interest$ Dacion en pago "an on!% &e "onsidered as ha)in* taken '!a"e when a "reditor a""e'ts and a''ro'riates the ownershi' o the *oods in 'a%#ent o a d(e o&!i*ation$
(;3B v ;ineda #94 s #"
2A The #ere takin* o 'ossession o #ort*a*ed assets does not a#o(nt to ore"!os(re$ Dore"!os(re reB(ires a sa!e at '(&!i" a("tion$ The ore"!os(re, there ore, has not as %et &een e e"ted$ (ort'a'e2 Re6em$tion "erio62 /oreclose6 "ro$ert% (2002) Pri#eti#e Cor'oration ?the BorrowerA o&tained a P60 Fi!!ion, i)e-%ear ter# !oan ro# 4ni)ersa! Bank ?the BankA in 6::2$ As se"(rit% or the !oan and as reB(ired &% the Bank, the Borrower *a)e the o!!owin* "o!!atera! se"(rit% in a)or o the Bank5
6A a rea! estate #ort*a*e o)er the !and and &(i!din* owned &% the Borrower and !o"ated in /(eCon Cit%I
The #a"hiner% arri)ed and was re!eased to the "o#'an% (nder a tr(st re"ei't a*ree#ent$ As the "o#'an% de a(!ted in the 'a%#ent o its o&!i*ations, the &ank took 'ossession o the i#'orted #a"hiner%$ At the sa#e ti#e, it so(*ht to ore"!ose the #ort*a*ed 'ro'ert% and to ho!d the "o#'an% as we!! as its President and Treas(rer, !ia&!e (nder the -(ret% A*ree#ent$ Did the takin* o 'ossession o the #a"hiner% &% the &ank res(!t in the 6A (!! 'a%#ent o the o&!i*ations o the "o#'an% and its o i"ers, and 2A
2A the 0oint and se)era! 'ro#issor% note o Pr$ Pri#o Ti#&o!, the President o the BorrowerI and ;A a rea! estate #ort*a*e o)er the residentia! ho(se and !ot owned &% Fr$ Ti#&o!, a!so !o"ated in /(eCon Cit%$
'00(
Be"a(se o &(siness re)erses, neither the Borrower nor Fr$ Ti#&o! was a&!e to 'a% the !oan$ In 1(ne 2006, the Bank e+tra0(di"ia!!% ore"!osed the two rea! estate #ort*a*es, with the Bank as the on!% &idder in the ore"!os(re sa!e$ On -e'te#&er 62, 2006, the "erti i"ates o sa!e o the two 'ro'erties in a)or o the Bank were re*istered with the Re*ister o Deeds o /(eCon Cit%$
?7A B(rea( o Interna! Re)en(e H or (n'aid )a!(e- added ta+es a#o(ntin* to P;0,000$
Ten #onths !ater, &oth the Borrower and Fr$ Ti#&o! were a&!e to raise s( i"ient (nds to redee# their res'e"ti)e 'ro'erties ro# the Bank, &(t the Bank re (sed to 'er#it rede#'tion on the *ro(nd that the 'eriod or rede#'tion had a!read% e+'ired, so that the Bank now has a&so!(te ownershi' o &oth 'ro'erties$ The Borrower and Fr$ Ti#&o! "a#e to %o( toda%, -e'te#&er 63, 2002, to ind o(t i the 'osition o the Bank is "orre"t$ .hat wo(!d &e %o(r answer> -tate %o(r reasons ?3@A$
SU00ESTE8 ANSWER:
6$
.ith res'e"t to the rea! estate #ort*a*e o)er the !and and &(i!din* owned &% the Borrower, Pri#eti#e Cor'oration, a 0(ridi"a! &od%, the 'eriod o rede#'tion is on!% three ?;A #onths, whi"h 'eriod a!read% e+'ired$ As to the rea! estate #ort*a*e o)er the residentia! ho(se and !ot owned &% Fr$ Ti#&o!, the 'eriod o rede#'tion is one ?6A %ear ro# the date o re*istration o the "erti i"ate o sa!e, whi"h 'eriod has not %et e+'ired in this "ase$
2$
(ort'a'e2 Reme6ies (2003)

Car#akers, In"$, so!d a #otor )ehi"!e on insta!!#ent &asis to Chari Paredes$ The transa"tion was re !e"ted on a 'ro#issor% note e+e"(ted &% Chari in a)or o Car#akers$ The note was se"(red &% a #ort*a*e o)er the "ar$ Conte#'oraneo(s with the e+e"(tion o the note and the #ort*a*e deed, Car#akers, In"$, assi*ned the instr(#ents sans re"o(rse to Ade!antado Dinan"e Cor'oration$ Chari de a(!ted in her o&!i*ations$ Co(!d Ade!antado Dinan"e "or'oration take a"tion a*ainst &oth Car#akers In"$, and Chari> .h%> ?2@A
SU00ESTE8 ANSWER:
"re&erence o& Cre6its (2002) As o 1(ne 6, 2002, EdCo -%ste#s Cor'oration ?EdCoA was inde&ted to the o!!owin* "reditors5 ?6A A"e EB(i'#ent -(''!ies H or )ario(s 'ersona! "o#'(ters and a""essories so!d to EdCo on "redit a#o(ntin* to P;00,000$ ?2A 9and%#an Gara*e H or #e"hani"a! re'airs ?'arts and ser)i"eA 'er or#ed on EdCos "o#'an% "ar a#o(ntin* to P60,000$ ?;A 1ose!%n Re%es H or#er e#'!o%ee o EdCo who s(ed EdCo or (n!aw (! ter#ination o e#'!o%#ent and was a&!e to o&tain a ina! 0(d*#ent a*ainst EdCo or P600,000$
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?3A Inte*rit% Bank H whi"h *ranted EdCo a !oan in 2006 in the a#o(nt o P300,000$ The !oan was not se"(red &% an% asset o EdCo, &(t it was *(aranteed (n"onditiona!!% and so!idari!% &% EdCos President and "ontro!!in* sto"kho!der, Ed(ardo Q$ On*, as a""o##odation s(ret%$ The !oan d(e to Inte*rit% Bank e!! d(e on 1(ne 63, 2002$ Des'ite '!eas or e+tension o 'a%#ent &% EdCo, the &ank de#anded i##ediate 'a%#ent$ Be"a(se the &ank threatened to 'ro"eed a*ainst the s(ret%, Ed(ardo Q$ On*, EdCo de"ided to 'a% (' a!! its o&!i*ations to Inte*rit% Bank$ On 1(ne 20, 2002, EdCo 'aid to Inte*rit% Bank the (!! 'rin"i'a! a#o(nt o P300,000, '!(s a""r(ed interests a#o(ntin* to P33,000$ As a res(!t, EdCo had hard!% an% "ash !e t or o'erations and de"ided to "!ose its &(siness$ A ter 'a%in* the (n'aid sa!aries o its e#'!o%ees, EdCo i!ed a 'etition or inso!)en"% on 1(!% 6, 2002$ 9ow wo(!d %o(, as 0(d*e in the inso!)en"% 'ro"eedin*s, rank the res'e"ti)e "redits or "!ai#s o the i)e ?3A "reditors #entioned a&o)e in ter#s o 're eren"e or 'riorit% a*ainst ea"h other> ?3@A
SU00ESTE8 ANSWER:
?6A No$ 7 H "!ai# o the BIR or (n'aid )a!(e added ta+es ?2A No$ ; H "!ai# o 1ose!%n Re%es or 4n!aw (! ter#ination ?;A No$ 6 H "!ai# o A"e eB(i'#ent -(''!ies as an (n'aid se!!erI and ?7A No$ 3 H "!ai# o Inte*rit% Bank$ "romissor% Note: 8ia.ilit% (200)) J, Y and Q si*ned a 'ro#issor% note in a)or o A statin*5 <.e 'ro#ise to 'a% A on De"e#&er ;6, 2006 the s(# o P3,000$00= .hen the note e!! d(e, A s(ed J and Y who '(t (' the de ense that A sho(!d ha)e i#'!eaded Q$ Is the de ense )a!id> .h%> ?3@A
SU00ESTE8 ANSWER:
The de ense is not )a!id$ The !ia&i!it% o J, Y, and Q (nder the 'ro#issor% note is 0oint$ -("h &ein* the "ase, Q is not an indis'ensa&!e 'art%$ The a"t that A did not i#'!ead Q wi!! not 're)ent A ro# "o!!e"tin* the 'ro'ortionate share o J and Y in the 'a%#ent o the !oan$ (-bservation! Even if the liabilit of F, ?, and L is solidar , the defense would still not be valid" Reme6ies2 A aila.le to (ort'a'ee?Cre6itor ()**4)
Dindin* a 27-#onth 'a%#ent '!an attra"ti)e, An0o '(r"hased a Ta#araw DJ ro# To%ota /C$ 9e 'aid a down-'a%#ent o P600th and o&tained inan"in* or the &a!an"e ro# IO4 Co$ 9e e+e"(ted a "hatte! #ort*a*e
The "!ai# o 9and%#an Gara*e or P60,000 has a s'e"i i" !ien on the "ar re'aired$ The re#ainin* o(r ?7A "!ai#s ha)e 're eren"e or 'riorit% a*ainst ea"h other in the o!!owin* order5
o)er the )ehi"!e in a)or o IO4$ .hen An0o de a(!ted, IO4 ore"!osed the "hatte! #ort*a*e, and so(*ht to re"o)er the de i"ien"%$ Fa% IO4 sti!! re"o)er the de i"ien"%> E+'!ain$
SU00ESTE8 ANSWER:
in his na#e and a "hatte! #ort*a*e o)er his ; "ars and 6 Is(C( "ar*o tr("k$
IO4 #a% no !on*er re"o)er the de i"ien"%$ 4nder Art 6787 o the NCC, in a "ontra"t o sa!e o 'ersona! 'ro'ert% the 'ri"e o whi"h is 'a%a&!e in insta!!#ents, the )endor #a%, a#on* se)era! o'tions, ore"!ose the "hatte! #ort*a*e on the thin* so!d, i one has &een "onstit(ted, sho(!d the )endees ai!(re to 'a% "o)er two or #ore insta!!#ents$ In s("h "ase, howe)er, the )endor sha!! ha)e no (rther a"tion a*ainst the '(r"haser to re"o)er an% (n'aid &a!an"e o the 'ri"e and an% a*ree#ent to the "ontrar% is )oid$ .hi!e the *i)en a"ts did not e+'!i"it!% state that An0os ai!(re to 'a% "o)ered 2 or #ore insta!!#ents, this #a% sa e!% &e 'res(#ed &e"a(se the ri*ht o IO4 Co to ore"!ose the "hatte! #ort*a*e (nder the "ir"(#stan"es is 're#ised on An0os ai!(re to 'a% 2 or #ore insta!!#ents$ The ore"!os(re wo(!d not ha)e &een )a!id i it were not so$ ?The *i)en a"ts did not a!so state e+'!i"it!% whether An0os de a(!t was a 'a%#ent de a(!t or a de a(!t arisin* ro# a &rea"h o a ne*ati)e '!ed*e or &rea"h o a warrant%$ In s("h "ase, howe)er, IO4 Co#'an% wo(!d not ha)e &een a&!e to ore"!ose the "hatte! #ort*a*e )a!id!% as s("h ore"!os(re, (nder the "ir"(#stan"es "onte#'!ated &% the !aw, "o(!d on!% &e e e"ted or a 'a%#ent de a(!t "o)erin* two or #ore insta!!#entsA (=uis ,idad v .ilipinas /nvestment and .inance 'o 2, =8$967& Aan%4,6$ #%7s%5&"
Reme6ies2 A aila.le to (ort'a'ee?Cre6itor (200)) De&tor <A= iss(ed a 'ro#issor% note in the a#o(nt o P60F in a)or o "o##er"ia! &ank Y se"(red &% #ort*a*e o his 'ro'erties worth P;0F$ .hen A ai!ed to 'a% his inde&tedness, des'ite de#ands #ade &% &ank Y, the !atter instit(ted a "o!!e"tion s(it to en or"e 'a%#ent o the P60F a""o(nt$ -(&seB(ent!%, &ank Y a!so i!ed ore"!os(re 'ro"eedin*s a*ainst A or se"(rit% *i)en or the a""o(nt$ I %o( were the 0(d*e, how wo(!d %o( reso!)e the two "ases> ?3@A
SU00ESTE8 ANSWER:
The "ase or "o!!e"tion wi!! &e a!!owed to 'ro"eed$ B(t the ore"!os(re 'ro"eedin*s ha)e to &e dis#issed$ In instit(tin* ore"!os(re 'ro"eedin*s, a ter i!in* a "o!!e"tion "ase in)o!)in* the sa#e a""o(nt or transa"tion, &ank Y is *(i!t% o s'!ittin* a "a(se o a"tion$ The !oan o P60F is the 'rin"i'a! o&!i*ation whi!e the #ort*a*e se"(rin* the sa#e is #ere!% an a""essor% to said !oan o&!i*ation$ The "o!!e"tion o the !oan and the ore"!os(re o the #ort*a*e se"(rin* said !oan "onstit(te one and the sa#e "a(se o a"tion$ The i!in* o the "o!!e"tion "ase &ars the s(&seB(ent i!in* o the ore"!os(re 'ro"eedin*s$
Reme6ies2 Secure6 De.t ()**)) To se"(re the 'a%#ent o his !oan o P200th, A e+e"(ted in a)or o the An*e!es Bankin* Co in 6 do"(#ent, a rea! estate #ort*a*e o)er ; !ots re*istered
Page
3+ of 103
4'on his ai!(re to 'a% the !oan on d(e date, the &ank ore"!osed the #ort*a*e on the ; !ots, whi"h were s(&seB(ent!% so!d or on!% P::th at the ore"!os(re sa!e$ Therea ter, the &ank i!ed an ordinar% a"tion or the "o!!e"tion o the de i"ien"%$ A "ontended that the #ort*a*e "ontra"t he e+e"(ted was indi)isi&!e and "onseB(ent!%, the &ank had no !e*a! ri*ht to ore"!ose on!% the rea! estate #ort*a*e and !ea)e o(t the "hatte! #ort*a*e, and then s(e hi# or a s(''osed de i"ien"% 0(d*#ent$ I %o( were the 1(d*e, wo(!d %o( s(stain the "ontention o A>
SU00ESTE8 ANSWER:
The indi)isi&i!it% o a "ontra"t o rea! se"(rit%, s("h as a rea! estate #ort*a*e or a "hatte! #ort*a*e, on!% #eans that a di)ision or a 'artia! 'a%#ent o a se"(red o&!i*ation does not warrant a "orres'ondin* di)ision or 'ro'ortionate red("tion o the se"(rit% *i)en$ A "reditor in s("h se"(red de&ts #a% '(rs(e the re#ed% o ore"!os(re, in 'art or in (!!, or i!e an ordinar% a"tion or "o!!e"tion on an% a#o(nt d(e$ A a)ora&!e 0(d*#ent "an warrant an iss(an"e o a writ o e+e"(tion on an% 'ro'ert%, not e+e#'t ro# e+e"(tion, &e!on*in* to the 0(d*#ent de&tor$ There sho(!d &e no !e*a! o&sta"!e or a "reditor to wai)e, in (!! or in 'art, his ri*ht to ore"!os(re on "ontra"ts o rea! se"(rit%$
I I were the 1(d*e, I wo(!d dis#iss the a"tion as &ein* 're#at(re sin"e the 'ro'er re#ed% wo(!d &e to "o#'!ete the ore"!os(re o the #ort*a*es and on!% therea ter "an there &% an a"tion or "o!!e"tion o an% de i"ien"%$ In 'altex v /1' (2, 454$7, %5 1ug 69" , the re#edies on a se"(red de&t, said the "o(rt, are either an a"tion to "o!!e"t or to ore"!ose a "ontra"t o rea! se"(rit%$ These re#edies are a!ternati)e re#edies, a!tho(*h an a"tion or an% de i"ien"% is not 're"!(ded, s(&0e"t to "ertain e+"e'tions s("h as those stated in Art 6787 o the Ci)i! Code, &% a ore"!os(re on the #ort*a*es$ .hi!e the a"t(a! settin*s in the "ase o Suria v /1' ($7 Aune 64" are not si#i!ar to the a"ts *i)en in the 'ro&!e#, the -C i#'!ied that ore"!os(re as a re#ed% in se"(red o&!i*ations #(st irst &e a)ai!ed o &% a "reditor in 're eren"e to other re#edies that #i*ht a!so &e in)oked &% hi#$
ALTERNATI*E ANSWER:
In 2ran%e La#
,ene&iciar%: E&&ects: 7rre oca.le ,ene&iciar% (2001)
.hat are the e e"ts o an irre)o"a&!e desi*nation o a &ene i"iar% (nder the Ins(ran"e Code> E+'!ain$ ?2@A
SUGGESTED ANSWER:
The irre)o"a&!e desi*nation *i)es the &ene i"iar% a )ested ri*ht o)er Ei e Ins(ran"e$ The Ins(red "annot a"t to di)est the irre)o"a&!e &ene i"iar%, in who!e or in 'art, witho(t the &ene i"iar%Gs "onsent$ To &e s'e"i i"5
?6A The &ene i"iar% desi*nated in a !i e ins(ran"e

"ontra"t "annot &e "han*ed witho(t the "onsent o the &ene i"iar% &e"a(se he has a )ested interest in the 'o!i"% (;hilamlife v0 ;ineda, 20,0 3o0 55%#&,
Aul #9,
#969, citing 2crcio v0 Sun =ife, 20,0 3o0 %$47$, September %6, #9%5< and 2o v0 ,edfern, 20,0 3o0 54475, 1pril %5, #65#"<
de"eased and P(rita, the desi*nated &ene i"iar%$ D(e to s("h i!!i"it
?2A Neither
"an the Ins(red take the "ash s(rrender )a!(e, assi*n or e)en &orrow on said 'o!i"% witho(t the &ene i"iar%Gs "onsent (3ario
v0 ;hilamlife, 20,0 3o0 %%49&, Aune %&, #9&4"<
?;A The Ins(red "annot add another &ene i"iar%

&e"a(se that wo(!d red("e the a#o(nt whi"h the irst &ene i"iar% #a% re"o)er and there ore ad)erse!% a e"t his )ested ri*ht (2o
v0 ,edfem, 20,0 3o0 54475, 1pril %5, #95#"<
?7A 4n!ess the 'o!i"% a!!ows, the Ins(red "annot e)en desi*nate another &ene i"iar% sho(!d the ori*ina! &ene i"iar% 'rede"ease hi#$ 9is estate a"B(ires the &ene i"iar%Gs )ested ri*ht ('on his deathI and
?3A The Ins(red "annot a!!ow his "reditors to atta"h or

e+e"(te on the 'o!i"%$ (;hilamlife v0 ;ineda,
20,0 3o0 55%#&, Aul #9, #969"
,ene&iciar%: Ri'#ts2 7rre oca.le ,ene&iciar% (2001)

1a"o& o&tained a !i e ins(ran"e 'o!i"% or P6 Fi!!ion desi*natin* irre)o"a&!% Diwata, a riend, as his &ene i"iar%$ 1a"o&, howe)er, "han*ed his #ind and wants Yo& and 1o0o, his other riends, to &e in"!(ded as &ene i"iaries "onsiderin* that the 'ro"eeds o the 'o!i"% are s( i"ient or the three riends$ Can 1a"o& sti!! add Yo& and 1o0o as his &ene i"iaries> E+'!ain$ ?2@A
SUGGESTED ANSWER:
No, 1a"o& "an no !on*er add Yo& and 1o0o as his &ene i"iaries in addition to Diwata$ As the irre)o"a&!e &ene i"iar%, Diwata has a"B(ired a)ested ri*ht o)er 1a"o&Gs !i e ins(ran"e 'o!i"%$ An% additiona! &ene i"iaries wi!! red("e the a#o(nt whi"h Diwata, as the irst &ene i"iar%, #a% re"o)er, whi"h wi!! ad)erse!% a e"t her )ested ri*ht$ (2o v0 ,edfern, 20,0 3o0 54475, 1pril %5, #95#" ,ene&iciar%2 8i&e 7nsurance2 "ro#i.ite6 ,ene&iciaries ()**:) 1(an de !a Cr(C was iss(ed Po!i"% No$ 8888 o the Fid!and Ei e Ins(ran"e Co on a who!e !i e '!an or P20,000 on A(*(st 6:, 6:8:$ 1(an is #arried to C%nthia with who# he has three !e*iti#ate "hi!dren$ 9e, howe)er, desi*nated P(rita, his "o##on-!aw wi e, as the re)o"a&!e &ene i"iar%$ 1(an re erred to P(rita in his a''!i"ation and 'o!i"% as the !e*a! wi e$ ; %ears !ater, 1(an died$ P(rita i!ed her "!ai# or the 'ro"eeds o the 'o!i"% as the desi*nated &ene i"iar% therein$ The widow, C%nthia, a!so i!ed a "!ai# as the !e*a! wi e$ To who# sho(!d the 'ro"eeds o the ins(ran"e 'o!i"% &e awarded> ?3@A
SUGGESTED ANSWER:
The 'ro"eeds o the ins(ran"e 'o!i"% sha!! &e awarded to the E-TATE o 1(an de !a Cr(C$ P(rita, the "o##on- !aw-wi e, is disB(a!i ied as the &ene i"iar% o the de"eased &e"a(se o i!!i"it re!ation &etween the
Page (0 of 103 re!ation, P(rita "annot &e a donee o the de"eased$ 9en"e, she "annot a!so &e his &ene i"iar%$
Concealment2 (aterial Concealment (200)) A a''!ied or a non-#edi"a! !i e ins(ran"e$ The ins(red did not in or# the ins(rer that one week 'rior to his a''!i"ation or ins(ran"e, he was e+a#ined and "on ined at -t$ E(kes 9os'ita! where he was dia*nosed or !(n* "an"er$ The ins(red soon therea ter died in a '!ane "rash$ Is the ins(rer !ia&!e "onsiderin* that the a"t "on"ea!ed had no &earin* with the "a(se o death o the ins(red> .h%> ?3@A
SUGGESTED ANSWER:
The &ene i"iaries "ontend that the "o#'an% had no ri*ht to res"ind the "ontra"t as res"ission #(st &e done <d(rin* the !i eti#e= o the ins(red within two %ears and 'rior to the "o##en"e#ent o the a"tion$ Is the "ontention o the &ene i"iaries tena&!e>
SUGGESTED ANSWER:
No$ The in"ontesta&i!it% "!a(se does not a''!%$ The ins(red dies within !ess than two %ears ro# the iss(an"e o the 'o!i"% on -e'te#&er 2;, 6::0$ The ins(red died on A'ri! 22, 6::2, or !ess than 2 %ears ro# -e'te#&er 2;, 6::0$
The ri*ht o the ins(rer to res"ind is on!% !ost i the &ene i"iar% has "o##en"ed an a"tion on the 'o!i"%$ There is no s("h a"tion in this "ase$ (:an v '1 #45 s #5$"
No$ The "on"ea!ed a"t is #ateria! to the a''ro)a! and iss(an"e o the ins(ran"e 'o!i"%$ It is we!! sett!ed that the ins(red need not die o the disease he ai!ed to dis"!ose to the ins(rer$ It is s( i"ient that his nondis"!os(re #is!ed the ins(rer in or#in* his esti#ate o the risks o the 'ro'osed ins(ran"e 'o!i"% or in #akin* inB(iries$
Concealment2 (aterial Concealment: 7ncontesta.ilit% Clause ()**4)

1(an 'ro"(red a <non-#edi"a!= !i e ins(ran"e ro# Good Ei e Ins(ran"e$ 9e desi*nated his wi e, Petra, as the &ene i"iar%$ Ear!ier, in his a''!i"ation in res'onse to the B(estion as to whether or not he had e)er &een hos'ita!iCed, he answered in the ne*ati)e$ 9e or*ot to #ention his "on ine#ent at the Kidne% 9os'ita!$ A ter 1(an died in a '!ane "rash, Petra i!ed a "!ai# with Good Ei e$ Dis"o)erin* 1(ans 're)io(s hos'ita!iCation, Good Ei e re0e"ted Petras "!ai# on the *ro(nd o "on"ea!#ent and #isre'resentation$ Petra s(ed Good Ei e, in)okin* *ood aith on 'art o 1(an$
Concealment2 (aterial Concealment: 7ncontesta.ilit% Clause ()**3) On -e'te#&er 2;, 6::0, Tan took a !i e ins(ran"e 'o!i"% ro# Phi!a#$ The 'o!i"% was iss(ed on No)e#&er 2, 6::0$ 9e died on A'ri! 22, 6::2 o he'ato#a$ The ins(ran"e "o#'an% denied the &ene i"iaries "!ai# and res"inded the 'o!i"% &% reason o a!!e*ed #isre'resentation and "on"ea!#ent o #ateria! a"ts #ade &% Tan in his a''!i"ation$ It ret(rned the 're#i(#s 'aid$
"on"ea!#ent or #isre'resentation o
the ins(red$
.i!! Petras s(it 'ros'er> E+'!ain$

SUGGESTED ANSWER:
No, Petras s(it wi!! not 'ros'er ?ass(#in* that the 'o!i"% o !i e ins(ran"e has &een in or"e or a 'eriod o !ess than 2 %ears ro# the date o its iss(eA$ The #atters whi"h 1(an ai!ed to dis"!ose was #ateria! and re!e)ant to the a''ro)a! and iss(an"e o the ins(ran"e 'o!i"%$ The% wo(!d ha)e a e"ted Good Ei es a"tion on his a''!i"ation, either &% a''ro)in* it with the "orres'ondin* ad0(st#ent or a hi*her 're#i(# or re0e"tin* the sa#e$ Foreo)er, a dis"!os(re #a% ha)e warranted a #edi"a! e+a#ination o 1(an &% Good Ei e in order or it to reasona&!% assess the risk in)o!)ed in a""e'tin* the a''!i"ation$ In an% "ase, *ood aith is no de ense in "on"ea!#ent$ The wai)er o a #edi"a! e+a#ination in the Rnon-#edi"a! !i e ins(ran"e ro# Good Ei e #akes it e)en #ore ne"essar% that 1(an s(''!% "o#'!ete in or#ation a&o(t his 're)io(s hos'ita!iCation or s("h in or#ation "onstit(tes an i#'ortant a"tor whi"h Good Ei e takes into "onsideration in de"idin* whether to iss(e the 'o!i"% or not$ (See Sunlife 1ssurance 'o of 'anada v '1 2, #75#$5,
Aune %%, #995 %55 s %&6"
I the 'o!i"% o !i e ins(ran"e has &een in or"e or a 'eriod o 2 %ears or #ore ro# the date o its iss(e ?on whi"h 'oint the *i)en a"ts are )a*(eA then Good Ei e "an no !on*er 'ro)e that the 'o!i"% is )oid a& initio or is res"indi&!e &% reason o the ra(d(!ent "on"ea!#ent or #isre'resentation o 1(an ? -e" 78 Ins CodeA
Concealment2 (aterial Concealment: 7ncontesta.ilit% Clause ()**+) The ass(red answers <No= to the B(estion in the a''!i"ation or a !i e 'o!i"%5 <Are %o( s( erin* ro# an% or# o heart i!!ness>= In a"t, the ass(red has &een a heart 'atient or #an% %ears$ On 7 -e' 6::6, the ass(red is ki!!ed in a '!ane "rash$ The ins(ran"e "o#'an% denies the "!ai# or ins(ran"e 'ro"eeds and ret(rns the 're#i(#s 'aid$ Is the de"ision o the ins(ran"e "o#'an% 0(sti ied>
SUGGESTED ANSWER:
Ass(#in* that the in"ontesta&i!it% "!a(se does not a''!% &e"a(se the 'o!i"% has not &een in or"e or 2 %ears, ro# the date o iss(e, d(rin* the !i eti#e o the ins(red, the de"ision o the ins(ran"e "o#'an% not to 'a% is 0(sti ied$ There was ra(d(!ent "on"ea!#ent$ It is not #ateria! that the ins(red died o a di erent "a(se than the a"t "on"ea!ed$ The a"t "on"ea!ed, that is heart ai!#ent, is #ateria! to the deter#ination &% the ins(ran"e "o#'an% whether or not to a""e't the a''!i"ation or ins(ran"e and to reB(ire the #edi"a! e+a#ination o the ins(red$
9owe)er, i the in"ontesta&i!it% "!a(se whi"h a''!ies to the ins(ran"e 'o!i"% "o)erin* the !i e o the ins(red had &een in or"e or 2 %ears ro# iss(an"e thereo , the ins(ran"e "o#'an% wo(!d not &e 0(sti ied in den%in* the "!ai# or 'ro"eeds o the ins(ran"e and in ret(rnin* the 're#i(# 'aid$ In that "ase, the ins(rer "annot 'ro)e the 'o!i"% )oid a& initio or res"indi&!e &% reason o ra(d(!ent
Page
(1 of 103
Concealment2 (aterial Concealment2 7ncontesta.ilit% Clause ()**)) Att% Ro&erto took o(t a !i e ins(ran"e 'o!i"% ro# the Dana Ins Co ?DICA on 6 -e' 6:8:$ On ;6 A(* 6::0, Ro&erto died$ DIC re (sed to 'a% his &ene i"iaries &e"a(se it dis"o)ered that Ro&ert had #isre'resented "ertain #ateria! a"ts in his a''!i"ation$ The &ene i"iaries s(ed on the &asis that DIC "an "ontest the )a!idit% o the ins(ran"e 'o!i"% on!% within 2 %ears ro# the date o iss(e and d(rin* the !i eti#e o the ins(red$ De"ide the "ase$
SUGGESTED ANSWER:
Renato was iss(ed a !i e ins(ran"e 'o!i"% on 1an(ar% 2, 6::0$ 9e "on"ea!ed the a"t that ; %ears 'rior to the iss(an"e o his !i e ins(ran"e 'o!i"%, he had &een seein* a do"tor a&o(t his heart ai!#ent$ On Far"h 6, 6::2, Renato died o heart ai!(re$ Fa% the heirs i!e a "!ai# on the 'ro"eeds o the !i e ins(ran"e 'o!i"% o Renato> ?3@A
SUGGESTED ANSWER:
Yes$ The !i e ins(ran"e 'o!i"% in B(estion was iss(ed on 1an(ar% :, 6::0$ Fore than 2 %ears had e!a'sed when Renato, the ins(red, died on Far"h 6, 6::2$ The in"ontesta&i!it% "!a(se a''!ies$
INC%N/8'/A#I>I/? C>A,'8
I wo(!d r(!e in a)or o the ins(ran"e "o#'an%$ The in"ontesta&i!it% "!a(se, a''!ies on!% i the 'o!i"% had &een in e e"t or at !east 2 %ears$ The 2 %ear 'eriod is "o(nted ro# the ti#e the ins(ran"e &e"o#es e e"ti)e (nti! the death o the ins(red and not therea ter (:an v '1 2, 56755 %9Aun#969"
A8TERNAT7>E ANSWER:
I wo(!d r(!e in a)or o the ins(ran"e "o#'an%$ A!tho(*h an ins(rer #a% not res"ind the "ontra"t on *ro(nd o #isre'resentation a ter an a"tion is "o##en"ed or re"o)er% (nder the 'o!i"%, the ins(rer is not 're"!(ded ro# in)okin* the *ro(nd o #isre'resentation as a de ense in the a"tion or re"o)er%$ This is a!ri*ht sin"e the &ar 'ro&!e# is not "o)ered %et &% the in"ontesta&i!it% "!a(se$
The ins(rer has two %ears ro# the date o iss(an"e o the ins(ran"e "ontra"t or o its !ast reinstate#ent within whi"h to "ontest the 'o!i"%, whether or not, the ins(red sti!! !i)es within s("h 'eriod$ A ter two %ears, the de enses o "on"ea!#ent or #isre'resentation, no #atter how 'atent or we!! o(nded, no !on*er !ie$
Concealment2 (aterial Concealment2 7ncontesta.ilit% Clause ()**:)

7nsura.le 7nterest: ,an- De$osit (2000) BD has a &ank de'osit o ha! a #i!!ion 'esos$ -in"e the !i#it o the ins(ran"e "o)era*e o the Phi!i''ine De'osit Ins(ran"e Cor' ?PDICA ?RA ;3:6A is on!% one tenth o BDs de'osit, he wo(!d !ike so#e 'rote"tion or the e+"ess &% takin* o(t an ins(ran"e a*ainst a!! risks or "ontin*en"ies o !oss arisin* ro# an% (nso(nd or (nsa e &ankin* 'ra"ti"es in"!(din* (n oreseen ad)erse e e"ts o
the "ontin(in* "risis in)o!)in* the &ankin* and inan"ia! se"tor in the Asian re*ion$ Does BD ha)e an ins(ra&!e interest within the #eanin* o the Ins(ran"e Code o the Phi!i''ines ?PD6720A> ?2@A
SUGGESTED ANSWER:
ins(ran"e is "ontrar% to !aw is (ntena&!e$ There is no !aw 'ro)idin* that do(&!e ins(ran"e is i!!e*a! 'er se$
Yes$ BD has ins(ra&!e interest in his &ank de'osit$ In "ase o !oss o said de'osit, #ore 'arti"(!ar!% to the e+tent o the a#o(nt in e+"ess o the !i#it "o)ered &% the PDIC A"t, PBD wi!! &e da#ni ied$ 9e wi!! s( er 'e"(niar% !oss o P;00,000$00, that is, his &ank de'osit o ha! a #i!!ion 'esos #in(s P200,000$00 whi"h is the #a+i#(# a#o(nt re"o)era&!e ro# the PDIC$
7nsura.le 7nterest: "u.lic Enem% (2000) Fa% a #e#&er o the FIED or its &reakawa% *ro(', the A&( -a%%a , &e ins(red with a "o#'an% !i"ensed to do &(siness (nder the Ins(ran"e Code o the Phi!s ?PD 6720A> E+'!ain$ ?;@A
SUGGESTED ANSWER:
A #e#&er o the FIED or the A&( -a%%a #a% &e ins(red with a "o#'an% !i"ensed to do &(siness (nder the Ins(ran"e Code o the Phi!s$ .hat is 'rohi&ited to &e ins(red is a '(&!i" ene#%$ A '(&!i" ene#% is a "itiCen or nationa! o a "o(ntr% with whi"h the Phi!i''ines is at war$ -("h #e#&er o the FIED or the A&( -a%%a is not a "itiCen or nationa! o another "o(ntr%, &(t o the Phi!i''ines$ 7nsura.le 7nterest: Se$arate 7nsura.le 7nterest ()***) A &(siness#an in the *ro"er% &(siness o&tained ro# Dirst Ins(ran"e an ins(ran"e 'o!i"% or P3F to (!!% "o)er his sto"ks-in-trade ro# the risk o ire$ Three #onths therea ter, a ire o a""identa! ori*in &roke o(t and "o#'!ete!% destro%ed the *ro"er% in"!(din* his sto"ks-in-trade$ This 'ro#'ted the &(siness#an to i!e with Dirst Ins(ran"e a "!ai# or i)e #i!!ion 'esos re'resentin* the (!! )a!(e o his *oods$
Dirst Ins(ran"e denied the "!ai# &e"a(se it dis"o)ered that at the ti#e o the !oss, the sto"ks-in-trade were #ort*a*ed to a "reditor who !ikewise o&tained ro# -e"ond Ins(ran"e Co#'an% ire ins(ran"e "o)era*e or the sto"ks at their (!! )a!(e o P3F$
aA &A
"A
Fa% the &(siness#an and the "reditor o&tain se'arate ins(ran"e "o)era*es o)er the sa#e sto"ks- in-trade> E+'!ain ?;@A Dirst Ins(ran"e re (sed to 'a% "!ai#in* that do(&!e ins(ran"e is "ontrar% to !aw$ Is this "ontention tena&!e> ?;@A
-(''ose %o( are the 1(d*e, how #("h wo(!d %o( a!!ow the &(siness#an and the "reditor to re"o)er
SUGGESTED ANSWER:
ro# their res'e"ti)e ins(rers$ E+'!ain ?;@A
aA Yes$ The &(siness#an, as owner, and the "reditor, as #ort*a*ee, ha)e se'arate ins(ra&!e interests in the sa#e sto"ks-in-trade$ Ea"h #a% ins(re s("h interest to 'rote"t his own se'arate interest$
&A The "ontention o Dirst Ins(ran"e that do(&!e
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Foreo)er, in the 'ro&!e# at hand, there is no do(&!e ins(ran"e &e"a(se the ins(red with the Dirst Ins(ran"e is di erent ro# the ins(red with the -e"ond Ins(ran"e Co#'an%$ The sa#e is tr(e with res'e"t to the interests ins(red in the two 'o!i"ies$ "A As 1(d*e, I wo(!d a!!ow the &(siness#an to re"o)er his tota! !oss o P3F re'resentin* the (!! )a!(e o his *oods whi"h were !ost thro(*h ire$ As to the "reditor, I wo(!d a!!ow hi# to re"o)er the a#o(nt to the e+tent o or eB(i)a!ent to the )a!(e o the "redit he e+tended to the &(siness#an or the sto"ks-intrade whi"h were #ort*a*ed &% the &(siness#an$ 7nsura.le 7nterest2 E5uita.le 7nterest ()**)) A 'ie"e o #a"hiner% was shi''ed to Fr Pa&!o on the &asis o CND Fani!a$ Pa&!o ins(red said #a"hiner% with the Ta!a*a Fer"hants Ins Co ?Ta#i"A or !oss or da#a*e d(rin* the )o%a*e$ The )esse! sank en ro(te to Fani!a$ Pa&!o then i!ed a "!ai# with Ta#i" whi"h was denied or the reason that 'rior to de!i)er, Pa&!o had no ins(ra&!e interest$ De"ide the "ase$
SUGGESTED ANSWER:
7nsura.le 7nterest2 8i&e s! "ro$ert% 7nsurance ()**+) aA A o&tains a ire ins(ran"e on his ho(se and as a *enero(s *est(re na#es his nei*h&or as the &ene i"iar%$ I As ho(se is destro%ed &% ire, "an B s(""ess (!!% "!ai# a*ainst the 'o!i"%>
&A A o&tains ins(ran"e o)er his !i e and na#es his nei*h&or B the &ene i"iar% &e"a(se o As se"ret !o)e or B$ I A dies, "an B s(""ess (!!% "!ai# a*ainst the
'o!i"%>
SUGGESTED ANSWER:
aA No$ In 'ro'ert% ins(ran"e, the &ene i"iar% #(st ha)e ins(ra&!e interest in the 'ro'ert% ins(red$ ?-e" 68 Ins CodeA$ B does not ha)e ins(ra&!e interest in the ho(se ins(red$ &A Yes$ In !i e ins(ran"e, it is not reB(ired that the &ene i"iar% #(st ha)e ins(ra&!e interest in the !i e o the ins(red$ It was the ins(red hi#se! who took the 'o!i"% on his own !i e$ 7nsura.le 7nterest2 8i&e s! "ro$ert% 7nsurance (2000)
I-, an e!der!% &a"he!or with no known re!ati)es, o&tained !i e ins(ran"e "o)era*e or P230,000$00 ro# -tar&rite Ins(ran"e Cor'oration, an entit% !i"ensed to en*a*e in the ins(ra&!e &(siness (nder the Ins(ran"e Code o the Phi!i''ines ?PD6720A$ 9e a!so ins(red his residentia! ho(se or twi"e that a#o(nt within the sa#e "or'oration$ 9e i##ediate!% assi*ned a!! his ri*hts to the ins(ran"e 'ro"eeds to BJ, a riend-"o#'anion !i)in* with hi#$ Three %ears !ater, I- died in a ire that *(tted his ins(red ho(se two da%s a ter he had so!d it$ There is
Pa&!o had an e+istin* ins(ra&!e interest on the 'ie"e o #a"hiner% he &o(*ht$ The '(r"hase o *oods (nder a 'er e"ted "ontra"t o sa!e a!read% )ests eB(ita&!e interest on the 'ro'ert% in a)or o the &(%er e)en whi!e it is 'endin* de!i)er% (.ilipino
+erchants /ns 'o v '1 2, 65#55 %63ov#969"
'00(
6::;$
no e)iden"e o s(i"ide or arson or in)o!)e#ent o BJ in these e)ents$ BJ de#anded 'a%#ent o the ins(ran"e 'ro"eeds ro# the two 'o!i"ies, the 're#i(#s or whi"h I- had &een aith (!!% 'a%in* d(rin* a!! the ti#e he was a!i)e$ -tar&rite re (sed 'a%#ent, "ontendin* that BJ had no ins(ra&!e interest and there ore was not entit!ed to re"ei)e the 'ro"eeds ro# I-s ins(ran"e "o)era*e on his !i e and a!so on his 'ro'ert%$ Is -tar&rites "ontention )a!id> E+'!ain> ?3@A
SUGGESTED ANSWER:
-tar&rite is "orre"t with res'e"t to the ins(ran"e "o)era*e on the 'ro'ert% o I-$ The &ene i"iar% in the 'ro'ert% ins(ran"e 'o!i"% or the assi*nee thereo #(st ha)e ins(ra&!e interest in the 'ro'ert% ins(red$ BJ, a #ere riend-"o#'anion o I-, has no ins(ra&!e interest in the residentia! ho(se o I-$ BJ is not entit!ed to re"ei)e the 'ro"eeds ro# I-s ins(ran"e on his 'ro'ert%$ As to the ins(ran"e "o)era*e on the !i e o I-, BJ is entit!ed to re"ei)e the 'ro"eeds$ There is no reB(ire#ent that BJ sho(!d ha)e ins(ra&!e interest in the !i e o I-$ It was I- hi#se! who took the ins(ran"e on his own !i e$
7nsura.le 7nterest2 8i&e s! "ro$ert% 7nsurance (2002) Distin*(ish ins(ra&!e interest in 'ro'ert% ins(ran"e ro# ins(ra&!e interest in !i e ins(ran"e$ ?3@A
SUGGESTED ANSWER:
aA
In 'ro'ert% ins(ran"e, the e+'e"tation o &ene it #(st ha)e a !e*a! &asis$ In !i e ins(ran"e, the e+'e"tation o &ene it to &e deri)ed ro# the "ontin(ed e+isten"e o a !i e need not ha)e an% !e*a! &asis$
&A In 'ro'ert% ins(ran"e, the a"t(a! )a!(e o the interest therein is the !i#it o the ins(ran"e that "an )a!id!% &e '!a"ed thereon$ In !i e ins(ran"e, there is no !i#it to the a#o(nt o ins(ran"e that #a% &e taken ('on !i e$ "A In 'ro'ert% ins(ran"e, an interest ins(red #(st e+ist when the ins(ran"e takes e e"t and when the !oss o""(rs &(t need not e+ist in the #eanti#e$ In !i e ins(ran"e, it is eno(*h that ins(ra&!e interest e+ists at the ti#e when the "ontra"t is #ade &(t it need not e+ist at the ti#e o !oss$
7nsura.le 7nterest2 "ro$ert% 7nsurance ()**3) In a "i)i! s(it, the Co(rt ordered Ben0ie to 'a% Nat P300,000$00$ To e+e"(te the 0(d*#ent, the sheri !e)ied ('on Ben0ies re*istered 'ro'ert% ?a 'ar"e! o !and and the &(i!din* thereonA,and so!d the sa#e at '(&!i" a("tion to Nat, the hi*hest &idder$ The !atter, on Far"h 68, 6::2, re*istered with the Re*ister o Deeds the "erti i"ate o sa!e iss(ed to hi# &% the sheri $ Feanwhi!e, on 1an(ar% 27, 6::;, Ben0ie ins(red with Gara'a! Ins(ran"e or P6,000,000$00 the sa#e &(i!din* that was so!d at '(&!i" a("tion to Nat$ Ben0ie ai!ed to redee# the 'ro'ert% &% Far"h 68,
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SUGGESTED ANSWER:
On Far"h 6:, 6::;, a ire raCed the &(i!din* to the *ro(nd$ Gara'a! Ins(ran"e re (sed to #ake *ood its o&!i*ation to Ben0ie (nder the ins(ran"e "ontra"t$ 6A Is Gara'a! Ins(ran"e !e*a!!% 0(sti ied in re (sin* 'a%#ent to Ben0ie> 2A Is Nat entit!ed to "o!!e"t on the ins(ran"e 'o!i"%>
SUGGESTED ANSWER:
6AYes$ At the ti#e o the !oss, Ben0ie was no !on*er the owner o the 'ro'ert% ins(red as he ai!ed to redee# the 'ro'ert%$ The !aw reB(ires in 'ro'ert% ins(ran"e that a 'erson "an re"o)er the 'ro"eeds o the 'o!i"% i he has ins(ra&!e interest at the ti#e o the iss(an"e o the 'o!i"% and a!so at the ti#e when the !oss o""(rs$ At the ti#e o ire, Ben0ie no !on*er had ins(ra&!e interest in the 'ro'ert% ins(red$ 2A No$ .hi!e at the ti#e o the !oss he had ins(ra&!e interest in the &(i!din*, as he was the owner thereo , Nat did not ha)e an% interest in the 'o!i"%$ There was no a(to#ati" trans er "!a(se in the 'o!i"% that wo(!d *i)e hi# s("h interest in the 'o!i"%$ 7nsura.le 7nterest2 "ro$ert% 7nsurance (200)) 1/, owner o a "ondo#ini(# (nit, ins(red the sa#e a*ainst ire with the JYQ Ins(ran"e Co$, and #ade the !oss 'a%a&!e to his &rother, FE/$ In "ase o !oss &% ire o the said "ondo#ini(# (nit, who #a% re"o)er on the ire ins(ran"e 'o!i"%> -tate the reason?sA or %o(r answer$ ?3@A
1/ "an re"o)er on the ire ins(ran"e 'o!i"% or the !oss o said "ondo#ini(# (nit$ 9e has the ins(ra&!e interest as owner-ins(red$ As &ene i"iar% in the ire ins(ran"e 'o!i"%, FE/ "annot re"o)er on the ire ins(ran"e 'o!i"%$ Dor the &ene i"iar% to re"o)er on the ire or 'ro'ert% ins(ran"e 'o!i"%, it is reB(ired that he #(st ha)e ins(ra&!e interest in the 'ro'ert% ins(red$ In this "ase, FE/ does not ha)e ins(ra&!e interest in the "ondo#ini(# (nit$ 7nsurance2 Cas# 0 Carr% ,asis (2003) .hat is #eant &% <"ash and "arr%= in the &(siness o ins(ran"e>
SUGGESTED ANSWER:
7nsurance2 Co?7nsurance s! Re?7nsurance ()**3) Distin*(ish "o-ins(ran"e ro# re-ins(ran"e$

SUGGESTED ANSWER:
CO-IN-4RANCE is the 'er"enta*e in the )a!(e o the ins(red 'ro'ert% whi"h the ins(red hi#se! ass(#es or (ndertakes to a"t as ins(rer to the e+tent o the de i"ien"% in the ins(ran"e o the ins(red 'ro'ert%$ In "ase o !oss or da#a*e, the ins(rer wi!! &e !ia&!e on!% or s("h 'ro'ortion o the !oss or da#a*e as the a#o(nt o ins(ran"e &ears to the desi*nated 'er"enta*e o the (!! )a!(e o the 'ro'ert% ins(red$
REIN-4RANCE is where the ins(rer 'ro"(res a third 'art%, "a!!ed the reins(rer, to ins(re hi# a*ainst !ia&i!it% &% reason o s("h ori*ina! ins(ran"e$ Basi"a!!%, a
'00(
reins(ran"e is an ins(ran"e a*ainst !ia&i!it% whi"h the ori*ina! ins(rer #a% in"(r in a)or o the ori*ina! ins(red$ 7nsurance2 Dou.le 7nsurance (2001) .hen does do(&!e ins(ran"e e+ist> ?2@A
SUGGESTED ANSWER:
o the 'o!i"%$ Can Dran"is re"o)er ro# the Penins(!a Ins(ran"e Co#'an%> ?3@A
SU00ESTE8 ANSWER:
4nder -e"tion :; o the Ins(ran"e Code, there is do(&!e ins(ran"e when there is o)er-ins(ran"e with two or #ore "o#'anies, "o)erin* the sa#e 'ro'ert%, the sa#e ins(ra&!e interest and the sa#e risk$ Do(&!e ins(ran"e e+ists where the sa#e 'erson is ins(red &% se)era! ins(rers se'arate!% in res'e"t o the sa#e s(&0e"t #atter and interests$
(2eagonia v0 'ourt of 1ppeals, 20,0 3o0 ##55%4, .ebruar &, #995"
7nsurance2 Dou.le 7nsurance2 e&&ect ()**3)

1(!ie and A!#a or#ed a &(siness 'artnershi'$ 4nder the &(siness na#e Pino -ho', the 'artnershi' en*a*ed in a sa!e o "onstr("tion #ateria!s$ 1(!ie ins(red the sto"ks in trade o Pino -ho' with .GC Ins(ran"e Co or P;30th$ -(&seB(ent!%, she a*ain *ot an ins(ran"e "ontra"t with R-I or P6# and then ro# EIC or P200th$ A ire o (nknown ori*in *(tted the store o the 'artnershi'$ 1(!ie i!ed her "!ai#s with the three ins(ran"e "o#'anies$ 9owe)er, her "!ai#s were denied se'arate!% or &rea"h o 'o!i"% "ondition whi"h reB(ired the ins(red to *i)e noti"e o an% ins(ran"e e e"ted "o)erin* the sto"ks in trade$ 1(!ie went to "o(rt and "ontended that she sho(!d not &e &!a#ed or the o#ission, a!!e*in* that the ins(ran"e a*ents or .GC, R-I and EIC knew o the e+isten"e o the additiona! ins(ran"e "o)era*es and that she was not in or#ed a&o(t the reB(ire#ent that s("h other or additiona! ins(ran"e sho(!d &e stated in the 'o!i"%$
Is the "ontention o 1(!ie tena&!e> E+'!ain$ Fa% she re"o)er on her ire ins(ran"e 'o!i"ies> E+'!ain$
SUGGESTED ANSWER:
6A No$ An ins(red is reB(ired to dis"!ose the other ins(ran"es "o)erin* the s(&0e"t #atter o the ins(ran"e &ein* a''!ied or$ (3ew =ife Ent v '1 %74 s &&9"
2A No, &e"a(se she is *(i!t% o )io!ation o a warrant%M "ondition$ 7nsurance2 E&&ects2 "a%ment o& "remiums .% 7nstallment (2004) The Penins(!a Ins(ran"e Co#'an% o ered to ins(re Dran"isG &rand new "ar a*ainst a!! risks in the s(# o PI Fi!!ion or 6 %ear$ The 'o!i"% was iss(ed with the 're#i(# i+ed at 620,000$00 'a%a&!e in 2 #onths$ Dran"is on!% 'aid the irst two #onths insta!!#ents$ Des'ite de#ands, he ai!ed to 'a% the s(&seB(ent insta!!#ents$ Di)e #onths a ter the iss(an"e o the 'o!i"%, the )ehi"!e was "arna''ed$ Dran"is i!ed with the ins(ran"e "o#'an% a "!ai# or its )a!(e$ 9owe)er, the "o#'an% denied his "!ai# on the *ro(nd that he ai!ed to 'a% the 're#i(# res(!tin* in the "an"e!!ation
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Yes, when ins(red and ins(rer ha)e a*reed to the 'a%#ent o 're#i(# &% insta!!#ents and 'artia! 'a%#ent has &een #ade at the ti#e o !oss, then the ins(rer &e"o#es !ia&!e$ .hen the "ar !oss ha''ened on the 3th #onth, the si+ #onths a*reed 'eriod o 'a%#ent had not %et e!a'sed (M';B 2eneral /nsurance v0 +asagana :elamart, 20,0 3o0 #$4#4%, 1pril 5, %77#"$ Dran"is "an re"o)er ro# Penins(!a Ins(ran"e Co#'an%, &(t the !atter has the ri*ht to ded("t the a#o(nt o (n'aid 're#i(# ro# the ins(ran"e 'ro"eeds$
're"!(de the assi*nee ro# "!ai#in* ri*hts (nder the 'o!i"%$ The ai!(re o noti"e did not, howe)er, a)oid the 'o!i"%I hen"e, ('on the death o 1ose, the 'ro"eeds wo(!d, in the a&sen"e o a desi*nated &ene i"iar%, *o to the estate o the ins(red$ The estate, in t(rn, wo(!d &e !ia&!e or the !oan o P30,000 owin* in a)or o Y$ 7nsurance2 "er&ection o& 7nsurance Contracts (2003)
1osie Gat&onton o&tained ro# .arrant% Ins(ran"e Cor'oration a "o#'rehensi)e #otor )ehi"!e ins(ran"e to "o)er her &rand new a(to#o&i!e$ -he 'aid, and the ins(rer a""e'ted 'a%#ent in "he"k$ Be ore the "he"k "o(!d &e en"ashed, 1osie was in)o!)ed in a #otor )ehi"!e a""ident where her "ar &e"a#e a tota! wre"k$ -he so(*ht 'a%#ent ro# the ins(rer$ Co(!d the ins(rer &e #ade !ia&!e (nder the ins(ran"e "o)era*e> ?2@A
SUGGESTED ANSWER:
7nsurance2 8i&e 7nsurance2 Assi'nment o& "olic% ()**)) The 'o!i"% o ins(ran"e ('on his !i e, with a a"e )a!(e o P600th was assi*ned &% 1ose, a #arried #an with 2 !e*iti#ate "hi!dren, to his ne'hew Y as se"(rit% or a !oan o P30th$ 9e did not *i)e the ins(rer an% written noti"e o s("h assi*n#ent des'ite the e+'!i"it 'ro)ision to that e e"t in the 'o!i"%$ 1ose died$ 4'on the "!ai# on the 'o!i"% &% the assi*nee, the ins(rer re (sed to 'a% on the *ro(nd that it was not noti ied o the assi*n#ent$ 4'on the other hand, the heirs o 1ose "ontended that Y is not entit!ed to an% a#o(nt (nder the 'o!i"% &e"a(se the assi*n#ent witho(t d(e noti"e to the ins(rer was )oid$ Reso!)e the iss(es$
SUGGESTED ANSWER:
?'er DondeeA Yes, &e"a(se there was a 'er e"ted "ontra"t o ins(ran"e the #o#ent there is a #eetin* o the #inds with res'e"t to the o&0e"t and the "a(se o 'a%#ent$ The 'a%#ent o "he"k is a )a!id 'a%#ent (n!ess ('on en"ash#ent the "he"k &o(n"ed$ 7nsurance2 "ro$ert% 7nsurance2 "rescri$tion o& Claims ()**4) Ro&in ins(red his &(i!din* a*ainst ire with EDG Ass(ran"e$ The ins(ran"e 'o!i"% "ontained the (s(a! sti'(!ation that an% a"tion or s(it #(st &e i!ed within one %ear a ter the re0e"tion o the "!ai#$
A !i e ins(ran"e is assi*na&!e$ A 'ro)ision, howe)er, in the 'o!i"% statin* that written noti"e o s("h an assi*n#ent sho(!d &e *i)en to the ins(rer is )a!id ?-e"s 686-682 Ins CodeA$ The ai!(re o the noti"e o assi*n#ent wo(!d th(s
A ter his &(i!din* &(rned down, Ro&in i!ed his "!ai# or ire !oss with EDG$ On De& 28, 6::7, EDG denied Ro&ins "!ai#$ On A'ri! ;, 6::7, Ro&in so(*ht re"onsideration o the denia!, &(t EDG reiterated its 'osition$ On Far"h 20, 6::3, Ro&in "o##en"ed 0(di"ia! a"tion a*ainst EDG$ -ho(!d Ro&ins a"tion &e *i)en d(e "o(rse> E+'!ain$
SUGGESTED ANSWER:
'00(
No, Ro&ins a"tion sho(!d not &e *i)en d(e "o(rse$ Is i!in* o the reB(est or re"onsideration did not s(s'end the r(nnin* o the 'res"ri'ti)e 'eriod o one %ear sti'(!ated in the ins(ran"e 'o!i"%$ Th(s, when ro&in "o##en"ed 0(di"ia! a"tion a*ainst EDG Ass(ran"e on Far"h 20, 6::3, his a&i!it% to do so had a!read% 'res"ri&ed$ The one-%ear 'eriod is "o(nted ro# De& 28, 6::7 when EDG denied Ro&ins "!ai#, not ro# the date ?'res(#a&!% a ter A'ri! ;, 6::7A when EDG reiterated its 'osition den%in* Ro&ins "!ai#$ The reason or this r(!e is to ins(re that "!ai#s a*ainst ins(ran"e "o#'anies are 'ro#'t!% sett!ed and that ins(ran"e s(its are &ro(*ht &% the ins(red whi!e the e)iden"e as to the ori*in and "a(se o the destr("tion has not %et disa''eared$ (See Sun /ns -ffice =td v '1 gr
6945#, +ar #$ 9# #95s#9$"
7nsurance2 Return o& "remiums (2000) Na#e at !east three instan"es when an ins(red is entit!ed to a ret(rn o the 're#i(# 'aid$
SUGGESTED ANSWER:
9owe)er, in
Three instan"es when an ins(red is entit!ed to a ret(rn o 're#i(# 'aid are5 6$ To the .9OEE PREFI4F, i no 'art o his interest in the thin* ins(red &e e+'osed to an% o the 'eri!s ins(red a*ainst$
2$ .here the ins(ran"e is #ade or a de inite 'eriod o ti#e and the ins(red s(rrenders his 'o!i"%, to s("h 'ortion o the 're#i(# as "orres'onds with the (ne+'ired ti#e at a 'ro rata rate, (n!ess a short 'eriod rate has &een a*reed ('on and a''ears on the a"e o the 'o!i"%, a ter ded("tin* ro# the who!e 're#i(# an% "!ai# or !oss or da#a*e (nder the 'o!i"% whi"h has 're)io(s!% a""r(ed$
;$
.hen the "ontra"t is )oida&!e on a""o(nt o the ra(d or #isre'resentation o the ins(rer or o his a*ent or on a""o(nt o a"ts the e+isten"e o whi"h the ins(red was i*norant witho(t his a(!tI or when, &% an% de a(!t o the ins(red other than a"t(a! ra(d, the ins(rer ne)er in"(rred an% !ia&i!it% (nder the 'o!i"%$
A8TERNAT7>E 7NSTANCE:
In "ase o an o)er ins(ran"e &% se)era! ins(rers, the ins(red is entit!ed to a rata&!e ret(rn o the 're#i(#, 'ro'ortioned to the a#o(nt &% whi"h the a**re*ate s(# ins(red in a!! the 'o!i"ies e+"eeds the ins(ra&!e )a!(e o the thin* at risk$ 7nsure62 Acci6ent "olic% (2003)
CNI ins(re -AF (nder a ho#eownerGs 'o!i"% a*ainst "!ai#s or a""identa! in0(ries &% nei*h&ors$ -AFGs #inor
Page
(( of 103 son,
/ns D Suret 'o #4s559"

BOY, in0(red ; "hi!dren o PO-, a nei*h&or, who s(ed -AF or da#a*es$ -AFGs !aw%er was ATT, who was 'aid or his ser)i"es &% the ins(rer or re'ortin* 'eriodi"a!!% on the "ase to CNI$ In one re'ort, ATT dis"!osed to CNI that a ter his in)esti*ations, he o(nd the in0(ries to the ; "hi!dren not a""identa! &(t intentiona!$ -AF !ost the "ase in "o(rt, and PO- was awarded one #i!!ion 'esos in da#a*es whi"h he so(*ht to "o!!e"t ro# the ins(rer$ B(t CNI (sed ATTs re'ort to den% the "!ai# on the *ro(nd that the in0(ries to PO-Gs ; "hi!dren were intentiona!, hen"e e+"!(ded ro# the 'o!i"%Gs "o)era*e$ PO- "o(ntered that CNI was esto''ed ro# (sin* ATTs re'ort &e"a(se it was (nethi"a! or ATT to 'ro)ide 're0(di"ia! in or#ation a*ainst his "!ient to the ins(rer, CNI$ .ho sho(!d 're)ai!5 the "!ai#ant, PO-I or the ins(rer, CNI> De"ide with reasons &rie !%$ ?3@A
SUGGESTED ANSWER:
CNI is not esto''ed ro# (sin* ATTGs re'ort, &e"a(se CNI, in the irst '!a"e, "o##issioned it and 'aid ATT or it$ On the other hand, ATT has no "on !i"t o interest &e"a(se -AF and CNI are on the sa#e side S their interests &ein* "on*r(ent with ea"h other, na#e!%, to o''ose PO-Gs "!ai#$ It "annot &e said that ATT has (sed the in or#ation to the disad)anta*e or 're0(di"e o -AF$
.inman 2eneral 1ssurance 'orp0 v0 'ourt of 1ppeals,
%#$ S',1 59$ (#99%", it was e+'!ained that there is no
La""identL in the "onte+t o an a""ident 'o!i"%, i it is the nat(ra! res(!t o the ins(redGs )o!(ntar% a"t, (na""o#'anied &% an%thin* (n oreseen e+"e't the in0(r%$ There is no a""ident when a de!i&erate a"t is 'er or#ed, (n!ess so#e additiona! and (n oreseen ha''enin* o""(rs that &rin*s a&o(t the in0(r%$ This e!e#ent o de!i&erateness is not "!ear!% shown ro# the a"ts o the "ase, es'e"ia!!% "onsiderin* the a"t that BOY is a #inor, and the in0(red 'arties are a!so "hi!dren$ A""ordin*!%, it is 'ossi&!e that CNI #a% not 'ros'er$ ATTGs re'ort is not "on"!(si)e on PO- or the "o(rt$
7nsure62 Acci6ent s! Suici6e ()**0) E(is was the ho!der o an a""ident ins(ran"e 'o!i"% e e"ti)e No) 6, 6:88 to O"t ;6, 6:8:$ At a &o+in* "ontest he!d on 1an 6, 6:8: and s'onsored &% his e#'!o%er, he s!i''ed and was hit on the a"t &% his o''onent so he e!! and his head hit one o the 'osts o the &o+in* rin*$ 9e was rendered (n"ons"io(s and was dead on arri)a! at the hos'ita! d(e to <intra-"rania! he#orrha*e$= Can his ather who is a &ene i"iar% (nder said ins(ran"e 'o!i"% s(""ess (!!% "!ai# inde#nit% ro# the ins(ran"e "o#'an%> E+'!ain$
SUGGESTED ANSWER:
Yes, the ather who is a &ene i"iar% (nder the a""identa! ins(ran"e "an s(""ess (!!% "!ai# inde#nit% or the death o the ins(red$ C!ear!%, the 'ro+i#ate "a(se o death was the &o+in* "ontest$ Death s(stained in a &o+in* "ontest is an a""ident 0 (De la 'ru> v 'apital
s(i"ide
7nsure62 Acci6ent s! Suici6e ()**3) - Ins(ran"e Co iss(ed a 'ersona! a""ident 'o!i"% to Bo& Tan with a a"e )a!(e o P300th$ In the e)enin* o -e' 3, 6::2, a ter his &irthda% 'art%, Tan was in a ha''% #ood &(t not dr(nk$ 9e was '!a%in* with his hand *(n, ro# whi"h he 're)io(s!% re#o)ed the #a*aCine$ As his se"retar% was wat"hin* te!e)ision, he stood in ront o her and 'ointed the *(n at her$ -he '(shed it aside and said that it #a% &e !oaded$ 9e ass(red her that it was not and then 'ointed it at his te#'!e$ The ne+t #o#ent, there was an e+'!osion and Tan s!(#'ed to the !oor !i e!ess$ The wi e o the de"eased so(*ht 'a%#ent on the 'o!i"% &(t her "!ai# was re0e"ted$ The ins(ran"e "o#'an% a*reed that there was no s(i"ide$ 9owe)er, it was the s(&#ission o the ins(ran"e "o#'an% that there was no a""ident$ In s(''ort thereo , it "ontended aA that there was no a""ident when a de!i&erate a"t was 'er or#ed (n!ess so#e additiona!, (ne+'e"ted, inde'endent and (n oreseen ha''enin* o""(r whi"h 'rod("es or &rin*s a&o(t the in0(r% or deathI and &A that the ins(red wi!! (!!% e+'osed hi#se! to need!ess 'eri! and th(s re#o)ed hi#se! ro# the "o)era*e o the ins(ran"e 'o!i"%$ Are the two "ontentions o the ins(ran"e "o#'an% tena&!e> E+'!ain$
SUGGESTED ANSWER:
No$ These two "ontentions are not tena&!e$ The ins(rer is !ia&!e or in0(r% or death e)en d(e to the ins(reds *ross ne*!i*en"e$ The a"t that the ins(red re#o)ed the #a*aCine ro# the hand *(n #eans that the ins(red did not wi!! (!!% e+'ose hi#se! to need!ess 'eri!$ At #ost, the ins(red is on!% *(i!t% o ne*!i*en"e (Sun /ns v '1 %## s 555" 7nsure62 Acci6ent s! Suici6e ()**1)
-(n-Foon Ins(ran"e iss(ed a Persona! A""ident Po!i"% to 9enr% D% with a a"e )a!(e o P300th$ A 'ro)ision in the 'o!i"% states that <the "o#'an% sha!! not &e !ia&!e in res'e"t o <&odi!% in0(r% "onseB(ent ('on the ins(red 'erson atte#'tin* to "o##it s(i"ide or wi!! (!!% e+'osin* hi#se! to need!ess 'eri! e+"e't in an atte#'t to sa)e h(#an !i e$= -i+ #onths !ater 9enr% D% died o a &(!!et wo(nd in his head$ In)esti*ation showed that one e)enin* 9enr% was in a ha''% #ood a!tho(*h he was not dr(nk$ 9e was '!a%in* with his hand*(n ro# whi"h he had 're)io(s!% re#o)ed its #a*aCine$ 9e 'ointed the *(n at his sister who *ot s"ared$ 9e ass(red her it was not !oaded$ 9e then 'ointed the *(n at his te#'!e and '(!!ed the tri**er$ The *(n ired and 9enr% s!(#'ed on the !oor$ 9enr%s wi e Be)er!%, as the desi*nated &ene i"iar%, so(*ht to "o!!e"t (nder the 'o!i"%$ -(n-Foon Ins(ran"e re0e"ted her "!ai# on the *ro(nd that the death o 9enr% was not a""identa!$ Be)er!% s(ed the ins(rer$
De"ide and Dis"(ss (!!%$

SUGGESTED ANSWER:
Be)er!% "an re"o)er the 'ro"eeds o the 'o!i"% ro# the ins(rer$ The death o the ins(red was not d(e to
Page (- of 103 or wi!! (! e+'os(re to need!ess 'eri! whi"h are e+"e'ted risks$ The ins(reds a"t was '(re!% an a"t o ne*!i*en"e whi"h is "o)ered &% the 'o!i"% and or whi"h the ins(red *ot the ins(ran"e or his 'rote"tion$ In a"t, he re#o)ed the #a*aCine ro# the *(n and when he 'ointed the *(n to his te#'!e he did so &e"a(se he tho(*ht that it was sa e or hi# to do so$ 9e did so to ass(re his sister that the *(n was har#!ess$ There is none in the 'o!i"% that wo(!d re!ie)e the ins(rer o !ia&i!it% or the death o the ins(red sin"e the death was an a""ident$
.hi!e dri)in* his "ar a!on* ED-A, Cesar sideswi'ed Ro&erto, "a(sin* in0(ries to the !atter, Ro&erto s(ed Cesar and the third 'art% !ia&i!it% ins(rer or da#a*es andMor ins(ran"e 'ro"eeds$ The ins(ran"e "o#'an% #o)ed to dis#iss the "o#'!aint, "ontendin* that the !ia&i!it% o Cesar has not %et &een deter#ined with ina!it%$ aA Is the "ontention o the ins(rer "orre"t> E+'!ain$ &A Fa% the ins(rer &e he!d !ia&!e with Cesar>
SUGGESTED ANSWER:
7nsurer: E&&ects: Se eral 7nsurers (2001) .hat is the nat(re o the !ia&i!it% o the se)era! ins(rers in do(&!e ins(ran"e> E+'!ain$ ?2@A
SUGGESTED ANSWER:
The nat(re o the !ia&i!it% o the se)era! ins(rers in do(&!e ins(ran"e is that ea"h ins(rer is &o(nd to the "ontri&(te rata&!% to the !oss in 'ro'ortion to the a#o(nt or whi"h he is !ia&!e (nder his "ontra"t as 'ro)ided or &% -e" :7 o ICP 'ar$ The rata&!e "ontri&(tion o ea"h o ea"h ins(rer wi!! &e deter#ined &ased on the o!!owin* or#(!a5 AFO4NT OD POEICY di)ided &% TOTAE IN-4RANCE TAKEN #(!ti'!ied &% EO-- U EIABIEITY OD T9E IN-4RER$
A8TERNAT7>E ANSWER:
No, the "ontention o the ins(rer is not "orre"t$ There is no need to wait or the de"ision o the "o(rt deter#inin* Cesars !ia&i!it% with ina!it% &e ore the third 'art% !ia&i!it% ins(rer "o(!d &e s(ed$ The o""(rren"e o the in0(r% to Ro&erto i##ediate!% *a)e rise to the !ia&i!it% o the ins(rer (nder its 'o!i"%$ In other words, where an ins(ran"e 'o!i"% ins(res dire"t!% a*ainst !ia&i!it%, the ins(rers !ia&i!it% a""r(es i##ediate!% ('on the o""(rren"e o the in0(r% or e)ent ('on whi"h the !ia&i!it% de'ends (Sherman Shafer v Audge ,:' -longapo
'it Branch 45 2, l846656, 3ov #5 66 #&4s$6&"
Ea"h ins(rer is &o(nd, as &etween hi#se! and other ins(rers, to "ontri&(te rata&!% to the !oss in 'ro'ortion to the a#o(nt or whi"h he is !ia&!e (nder his "ontra"t$ ?-e"$ :7, Ins(ran"e CodeA 7nsurer2 3r6 "art% 8ia.ilit% ()**4)
The ins(rer "annot &e he!d so!idari!% !ia&!e with Cesar$ The !ia&i!it% o the ins(rer is &ased on "ontra"t whi!e that o Cesar is &ased on tort$ I the ins(rer were so!idari!% !ia&!e with Cesar, it "o(!d &e #ade to 'a% #ore than the a#o(nt stated in the 'o!i"%$ This wo(!d, howe)er, &e "ontrar% to the 'rin"i'!es (nder!%in* ins(ran"e "ontra"ts$ On the other hand, i the ins(rer were so!idari!% !ia&!e with Cesar and it is #ade to 'a% on!% (' to the a#o(nt
stated in (nder!%in*
the ins(ran"e 'o!i"%, the 'rin"i'!es so!idar% o&!i*ations wo(!d &e )io!ated 0
a*ainst Ra(!$ .hen Ca!a de#anded rei#&(rse#ent ro# Ra(!, the !atter re (sed sa%in* that he had a!read% 'aid
(+ala an /ns 'o v '1 2, =8$&5#$ Sep %&, 66 #&5s5$&< .iguracion vda de +aglana v 'onsolacion 2, &757& 1ug &, 9% %#%s%&6"
7nsurer2 3r6 "art% 8ia.ilit% (2000)

J was ridin* a s(&(r&an (ti!it% )ehi"!e ?-4OA "o)ered &% a "o#'rehensi)e #otor )ehi"!e !ia&i!it% ins(ran"e ?CFOEIA (nderwritten &% DastPa% Ins(ran"e Co#'an% when it "o!!ided with a s'eedin* &(s owned &% RF Tra)e! In"$ The "o!!ision res(!ted in serio(s in0(ries to JI Y, a 'assen*er o the &(sI and Q, a 'edestrian waitin* or a ride at the s"ene o the "o!!ision$ The 'o!i"e re'ort esta&!ished that the &(s was the o endin* )ehi"!e$ The &(s had CFOEI 'o!i"% iss(ed &% Dra*on Ins Co$ J, Y, and Q 0oint!% s(ed RF Tra)e! and Dra*on Ins or inde#nit% (nder the Ins(ran"e Code o the Phi!s ?PD6720A$ The !ower "o(rt a''!ied the <no a(!t= inde#nit% 'o!i"% o the stat(te, dis#issed the s(it a*ainst RF Tra)e!, and ordered Dra*on Ins to 'a% inde#nit% to a!! three '!ainti s$ Do %o( a*ree with the "o(rts 0(d*#ent> E+'!ain ?2@A
SUGGESTED ANSWER:
No$ The "a(se o a"tion o Y is &ased on the "ontra"t o "arria*e, whi!e that o J and Q is &ased on torts$ The "o(rt sho(!d not ha)e dis#issed the s(it a*ainst RF Tra)e!$ The "o(rt sho(!d ha)e ordered Dra*on Ins to 'a% ea"h o J, Y , and Q to the e+tent o the ins(ran"e "o)era*e, &(t whate)er a#o(nt is a*reed ('on in the 'o!i"% sho(!d &e answered irst &% RF Tra)e! and the s(""eedin* a#o(nt sho(!d &e 'aid &% Dra*on Ins(ran"e (' to the a#o(nt o the ins(ran"e "o)era*e$ The e+"ess o the "!ai#s o J, Y, and Q, o)er and a&o)e s("h ins(ran"e "o)era*e, i an%, sho(!d &e answered or 'aid &% RF Tra)e!$ 7nsurer2 3r6 "art% 8ia.ilit%2 No /ault 7n6emnit% ()**3) .hat is %o(r (nderstandin* o a <no a(!t inde#nit%= "!a(se o(nd in an ins(ran"e 'o!i"%>
SUGGESTED ANSWER:
4nder the <NO DA4ET INDEFNITY= "!a(se, an% "!ai# or death or in0(r% o an% 'assen*er or third 'art% sha!! &e 'aid witho(t the ne"essit% o 'ro)in* a(!t or ne*!i*en"e o an% kind$ The inde#nit% in res'e"t o an% one 'erson sha!! not e+"eed P3,000$00, 'ro)ided the% are (nder oath, the o!!owin* 'roo s sha!! &e s( i"ient5
6$ 2$
;$
'o!i"e re'ort o the a""identI and death "erti i"ate and e)iden"e s( i"ient to esta&!ish the 'ro'er 'a%eeI or
#edi"a! re'ort and e)iden"e o #edi"a! or hos'ita! dis&(rse#ent in res'e"t o whi"h re (nd is "!ai#ed$
7$
C!ai# #a% &e #ade a*ainst one #otor )ehi"!e on!%$
7nsurer2 3r6 "art% 8ia.ilit%2 Cuitclaim ()**3)

Ra(!s tr("k &(#'ed the "ar owned &% E(C$ The "ar was ins(red &% Ca!a Ins(ran"e$ Dor the da#a*e "a(sed, Ca!a 'aid E(C P3,000$00 in a#i"a&!e sett!e#ent$ E(C e+e"(ted a re!ease o "!ai#, s(&ro*atin* Ca!a to a!! her ri*hts
Page
(4 of 103
ro# dri)in* s("h #otor )ehi"!e &% order o a "o(rt$ D(rin* the e e"ti)it% o the 'o!i"%, the "ar, then dri)en &% -her%! herse! , who had no dri)ers !i"ense, #et an a""ident and was e+tensi)e!% da#a*ed$ The esti#ated "ost o re'air was P70th$ -her%! i##ediate!% noti ied JYQ, &(t the !atter re (sed to 'a% on the 'o!i"% a!!e*in* that -her%! )io!ated the ter#s thereo when she dro)e it witho(t a dri)ers !i"ense$ Is the ins(rer "orre"t>
SUGGESTED ANSWER:
E(C P7,300 or the da#a*e to the "ar as e)iden"ed &% a re!ease o "!ai# e+e"(ted &% E(C dis"har*in* Ra(!$ -o Ca!a de#anded rei#&(rse#ent ro# E(C, who re (sed to 'a%, sa%in* that the tota! da#a*e to the "ar was P:,300$00 -in"e Ca!a 'aid P3,000 on!%, E(C "ontends that she was entit!ed to *o a ter Ra(! to "!ai# the additiona! P7,300$00 6A Is Ca!a, as s(&ro*ee o E(C, entit!ed to rei#&(rse#ent ro# Ra(!> 2A Fa% Ca!a re"o)er what it has 'aid E(C>
SUGGESTED ANSWER:
6A No$ E(C e+e"(ted a re!ease in a)or o Ra(!

(+anila +ahogan +fg 'orp v '1 2, 5%45&, #% -ct #964"
The ins(rer was not "orre"t in den%in* the "!ai# sin"e the 'ro)iso <that the 'erson dri)in* is 'er#itted in a""ordan"e with the !i"ensin*, et"$= B(a!i ied on!% a 'erson dri)in* the )ehi"!e other than the ins(red at the ti#e o the a""ident (;alermo v
; ramid /ns 'o 2, $&567 $# +a 66"
A8TERNAT7>E ANSWER:
2A Yes$ Ca!a !ost its ri*ht a*ainst Ra(! &e"a(se o

the re!ease e+e"(ted &% E(C$ -in"e the re!ease was #ade witho(t the "onsent o Ca!a, Ca!a #a% re"o)er the a#o(nt o P3,000 or# E(C (+anila
+ahogan +fg 'orp v '1 2, 5%45&, #% -ct #964"0
7nsurer2 Aut#oriDe6 Dri er Clause ()**))

-her%! ins(red her new!% a"B(ired "ar, a Nissan Fa+i#a a*ainst an% !oss or da#a*e or P30th and a*ainst ;rd 'art% !ia&i!it% or P20th with the JYQ Ins Co$ 4nder the 'o!i"%, the "ar #(st &e dri)en on!% &% an a(thoriCed dri)er who is either5 6A the ins(red, or 2A an% 'erson dri)in* on the ins(reds order or with his 'er#ission5 'ro)ided that the 'erson dri)in* is 'er#itted in a""ordan"e with the !i"ensin* or other !aws or re*(!ations to dri)e the #otor )ehi"!e and is not disB(a!i ied
The ins(rer is "orre"t$ The "!a(se <a(thoriCed dri)er= in the 'o!i"% e)ident!% a''!ies to &oth the ins(red and an% other 'erson dri)in* the )ehi"!e at the ti#e o the a""ident$ The ter# <a(thoriCed dri)er= sho(!d &e "onstr(ed as a 'erson who is a(thoriCed &% !aw to dri)er the )ehi"!e (;e>a v 1li(pala #&7s$#" 7nsurer2 Aut#oriDe6 Dri er Clause (2003)
Ri"k de !a Cr(C ins(red his 'assen*er 0ee'ne% with Asiati" Ins(rers, In"$ The 'o!i"% 'ro)ided that the a(thoriCed dri)er o the )ehi"!e sho(!d ha)e a )a!id and e+istin* dri)ers !i"ense$ The 'assen*er 0ee'ne% o Ri"k de !a Cr(C whi"h was at the ti#e dri)en &% 1a% Cr(C,
Seguros v '1 %76 s 564"
i*(red in an a""ident res(!tin* in the death o a 'assen*er$ At the ti#e o the a""ident, 1a% Cr(C was !i"ensed to dri)e &(t it was "on is"ated &% an ETO a*ent who iss(ed hi# a Tra i" Oio!ation Re'ort ?TORA 0(st #in(tes &e ore the a""ident$ Co(!d Asiati" Ins(rers, In"$, &e #ade !ia&!e (nder its 'o!i"%> .h%> ?2@A
SUGGESTED ANSWER:
2A The 'ro#issor% note is not a e"ted &% whate)er &e a!!s the s(&0e"t #atter o the a""essor% "ontra"t$ The
Asiati" Ins(rers, In"$, sho(!d &e #ade !ia&!e (nder the 'o!i"%$ The a"t that the dri)er was #ere!% ho!din* a TOR does not )io!ate the "ondition that the dri)er sho(!d ha)e a )a!id and e+istin* dri)ers !i"ense$ Besides, s("h a "ondition sho(!d &e disre*arded &e"a(se what is in)o!)ed is a 'assen*er 0ee'ne%, and what is in)o!)ed here is not own da#a*e ins(ran"e &(t third 'art% !ia&i!it% where the in0(red 'art% is a third 'art% not 'ri)% to the "ontra"t o ins(ran"e$ 7nsurer2 Aut#oriDe6 Dri er Clause2 e#icle is stolen ()**3)
9E ins(red his &rand new "ar with P Ins Co or "o#'rehensi)e "o)era*e wherein the ins(ran"e "o#'an% (ndertook to inde#ni % hi# a*ainst !oss or da#a*e to the "ar aA &% a""identa! "o!!ision $$$ &A &% ire, e+terna! e+'!osion, &(r*!ar%, or the t, and "A #a!i"io(s a"t$
A ter a #onth, the "ar was "arna''ed whi!e 'arked in the 'arkin* s'a"e in ront o the Inter"ontinenta! 9ote! in Fakati$ 9Es wi e who was dri)in* said "ar &e ore it was "arna''ed re'orted i##ediate!% the in"ident to )ario(s *o)ern#ent a*en"ies in "o#'!ian"e with the ins(ran"e reB(ire#ents$ Be"a(se the "ar "o(!d not &e re"o)ered, 9E i!ed a "!ai# or the !oss o the "ar with the ins(ran"e "o#'an% &(t it was denied on the *ro(nd that his wi e who was dri)in* the "ar when it was "arna''ed was in the 'ossession o an e+'ired dri)ers !i"ense, a )io!ation o the <a(thoriCed dri)er= "!a(se o the ins(ran"e "o#'an%$ 6A Fa% the ins(ran"e "o#'an% &e he!d !ia&!e to inde#ni % 9E or the !oss o the ins(red )ehi"!e> E+'!ain$
2A -(''osin* that the "ar was &ro(*ht &% 9E on insta!!#ent &asis and there were insta!!#ents d(e and 'a%a&!e &e ore the !oss o the "ar as we!! as insta!!#ents not %et 'a%a&!e$ Be"a(se o the !oss o the "ar, the )endor de#anded ro# 9E the (n'aid &a!an"e o the 'ro#issor% note$ 9E resisted the de#and and "!ai#ed that he was on!% !ia&!e or the insta!!#ents d(e and 'a%a&!e &e ore the !oss o the "ar &(t no !on*er !ia&!e or other insta!!#ents not %et
SUGGESTED ANSWER:
d(e at the ti#e o the !oss o the "ar$ De"ide$
6A Yes$ The "ar was !ost d(e to the t$ .hat a''!ies in

this "ase is the <the t= "!a(se, and not the <a(thoriCed dri)er= "!a(se$ It is i##ateria! that 9Es wi e was dri)in* the "ar with an e+'ired dri)ers !i"ense at the ti#e it was "arna''ed 0 (;erla 'ompania de
Page
(6 of 103 (n'aid
ins(rer$
&a!an"e on the 'ro#issor% note sho(!d &e 'aid and not on!% the insta!!#ents d(e and 'a%a&!e &e ore the !oss o the "ar$ 7nsurer2 Grou$ 7nsurance2 Em$lo%er?"olic% Eol6er (2000)
J "o#'an% 'ro"(red a *ro(' a""ident ins(ran"e 'o!i"% or its "onstr("tion e#'!o%ees )ario(s!% assi*ned to its 'ro)in"ia! in rastr("t(re 'ro0e"ts$ Y Ins(ran"e Co#'an% (nderwrote the "o)era*e, the 're#i(#s o whi"h were 'aid or entire!% &% J Co#'an% witho(t an% e#'!o%ee "ontri&(tions$ .hi!e the 'o!i"% was in e e"t, i)e o the "o)ered e#'!o%ees 'erished at sea on their wa% to their 'ro)in"ia! assi*n#ents$ Their wi)es s(ed Y Ins(ran"e Co#'an% or 'a%#ent o death &ene its (nder the 'o!i"%$ .hi!e the s(it was 'endin*, the wi)es si*ned a 'ower o attorne% desi*natin* J Co#'an% e+e"(ti)e, P1, as their a(thoriCed re'resentati)e to enter into a sett!e#ent with the ins(ran"e "o#'an%$ .hen a sett!e#ent was rea"hed, P1 instr("ted the ins(ran"e "o#'an% to iss(e the sett!e#ent "he"k to the order o J Co#'an%, whi"h wi!! (ndertake the 'a%#ent to the indi)id(a! "!ai#ants o their res'e"ti)e shares$ P1 #isa''ro'riated the sett!e#ent a#o(nt and the wi)es '(rs(ed their "ase a*ainst Y Ins(ran"e Co$ .i!! the s(it 'ros'er> E+'!ain ?;@A
SUGGESTED ANSWER:
7nsurer2 8ia.ilit% o& t#e 7nsurers ()**0) aA -(''ose that Dort(ne owns a ho(se )a!(ed at P200th and ins(red the sa#e a*ainst ire with ; ins(ran"e "o#'anies as o!!ows5 J H P700th Y H P200th Q H P200th
In the a&sen"e o an% sti'(!ation in the 'o!i"ies ro# whi"h ins(ran"e "o#'an% or "o#'anies #a% Dort(ne re"o)er in "ase ire sho(!d destro% his ho(se "o#'!ete!%>
SUGGESTED ANSWER:
Dort(ne #a% re"o)er ro# the ins(rers in s("h order as he #a% se!e"t (' to their "on"(rrent !ia&i!it% ?-e" :7 Ins CodeA -25(e4 !o5/7 &A I ea"h o the ire ins(ran"e 'o!i"ies o&tained &% Dort(ne in the 'ro&!e# ?aA is a )a!(ed 'o!i"% and the )a!(e o his ho(se was i+ed in ea"h o the 'o!i"ies at P6#, how #("h wo(!d Dort(ne re"o)er ro# J i he has a!read% o&tained (!! 'a%#ent on the ins(ran"e 'o!i"ies iss(ed &% Y and Q>
SUGGESTED ANSWER:
Yes$ The s(it wi!! 'ros'er$ Y Ins Co is !ia&!e$ J Co, thro(*h its e+e"(ti)e, P1, a"ted as a*ent o Y Ins Co$ The !atter is th(s &o(nd &% the #is"ond("t o its a*ent$ It is the (s(a! 'ra"ti"e in the *ro(' ins(ran"e &(siness that the e#'!o%er-'o!i"% ho!der is the a*ent o the
Dort(ne #a% sti!! re"o)er on!% the &a!an"e o P200,000 ro# J ins(ran"e "o#'an% sin"e the ins(red #a% on!% re"o)er (' to the e+tent o his !oss$
A8TERNAT7>E:
9a)in* a!read% o&tained (!! 'a%#ent on the ins(ran"e 'o!i"ies iss(ed &% Y and Q, Dort(ne #a% no !on*er re"o)er ro# J ins(ran"e 'o!i"%$ O6e) !o5/7 "A I ea"h o the 'o!i"ies o&tained &% Dort(ne in the 'ro&!e# ?aA a&o)e is an o'en 'o!i"% and it was i##ediate!% deter#ined a ter the ire that the )a!(e o Dort(nes ho(se was P2$7#, how #("h #a% he "o!!e"t ro# J,Y and Q>
SUGGESTED ANSWER:
Page (+ of 103 hired 'ro essiona!s to a !oat the )esse! or P:00,000$00$ .hen re- !oated, the )esse! needed re'airs esti#ated at P2,000,000$00$ The ins(ran"e "o#'an% re (sed to 'a% the "!ai# o the shi' owner, statin* that there was <no "onstr("ti)e tota! !oss$= aA .as there <"onstr("ti)e tota! !oss= to entit!e the shi' owner to re"o)er ro# the ins(ran"e "o#'an%> E+'!ain$
&A
.as it 'ro'er or the shi' owner to send a noti"e o a&andon#ent to the ins(ran"e "o#'an%> E+'!ain$
In an o'en 'o!i"%, the ins(red #a% re"o)er his tota! !oss (' to the a#o(nt o the ins(ran"e "o)er$ Th(s, the e+tent o re"o)er% wo(!d &e P700th ro# J, P200th ro# Y, and P200th ro# Q$ dA In 'ro&!e# ?aA, what is the e+tent o the !ia&i!it% o the ins(ran"e "o#'anies a#on* the#se!)es>
SUGGESTED ANSWER:
SUGGESTED ANSWER:
?3@A
In 'ro&!e# ?aA, the ins(ran"e "o#'anies a#on* the#se!)es wo(!d &e !ia&!e, )iC5 J H 7M62 o P200th U P200th Y H 2M62 o P200th U P600th Q H 2M62 o P200th U P;00th eA -(''osin* in 'ro&!e# ?aA a&o)e, Dort(ne was a&!e to "o!!e"t ro# &oth Y and Q, #a% he kee' the entire a#o(nt he was a&!e to "o!!e"t ro# the said 2 ins(ran"e "o#'anies>
SUGGESTED ANSWER:
No, there was no L"onstr("ti)e tota! !ossL &e"a(se the )esse! was re !oated and the "osts o re !oatin* '!(s the needed re'airs ?P 2$: Fi!!ionA wi!! not &e #ore than three- o(rths o the )a!(e o the )esse!$ A "onstr("ti)e tota! !oss is one whi"h *i)es to a 'erson ins(red a ri*ht to a&andon$ ?-e", 6;6, Ins(ran"e CodeA There wo(!d ha)e &een a "onstr("ti)e tota! !oss had the )esse! FN Pear!% -he!!s s( er !oss or needed re !oatin* and re'airs o #ore than the reB(ired threeo(rths o its )a!(e, i$e$, #ore than P;0$0 Fi!!ion
(Sec0 #$9, /nsurance 'ode, cited in -riental 1ssurance v0 'ourt of 1ppeals and ;anama Saw +ill, 20,0 3o0 9575%, 1ugust 9, #99#"
9owe)er, the ins(ran"e "o#'an% sha!! 'a% or the tota! "osts o re !oatin* and needed re'airs ?P2$: Fi!!ionA$ "A .as it 'ro'er or the shi' owner to send a noti"e o a&andon#ent to the ins(ran"e "o#'an%> E+'!ain$
No, he "an on!% &e inde#ni ied or his !oss, not 'ro it there&%I hen"e he #(st ret(rn P200th o the P800th he was a&!e to "o!!e"t$ 8oss: Actual Total 8oss ()**4)
RC Cor'oration '(r"hased ri"e ro# Thai!and, whi"h it intended to se!! !o"a!!%$ D(e to stor#% weather, the shi' "arr%in* the ri"e &e"a#e s(&#er*ed in sea water, and with it the ri"e "ar*o$ .hen the "ar*o arri)ed in Fani!a, RC i!ed a "!ai# or tota! !oss with the ins(rer, &e"a(se the ri"e was no !on*er it or h(#an "ons(#'tion$ Ad#itted!%, the ri"e "o(!d sti!! &e (sed as ani#a! eed$ Is RCs "!ai# or tota! !oss 0(sti ied> E+'!ain$
SUGGESTED ANSWER:
SUGGESTED ANSWER:
No, it was not 'ro'er or the shi' owner to send a noti"e o a&andon#ent to the ins(ran"e "o#'an% &e"a(se a&andon#ent "an on!% &e a)ai!ed o when, in a #arine ins(ran"e "ontra"t, the a#o(nt to &e e+'ended to re"o)er the )esse! wo(!d ha)e &een #ore than three- o(rths o its )a!(e$ Oesse! FN Pear!% -he!!s needed on!% P2$: Fi!!ion, whi"h does not #eet the reB(ired threeo(rths o its )a!(e to #erit a&andon#ent$ ?-e"tion 6;:, Ins(ran"e Code, "ited in
-riental 1ssurance v0 'ourt of 1ppeals and ;anama Saiv +ill, 20,0 3o0 9575%, 1ugust 9, #99#"
Yes, RCs "!ai# or tota! !oss is 0(sti ied$ The ri"e, whi"h was i#'orted ro# Thai!and or sa!e !o"a!!%, is o&)io(s!% intended or "ons(#'tion &% the '(&!i"$ The "o#'!ete 'h%si"a! destr("tion o the ri"e is not essentia! to "onstit(te an a"t(a! tota! !oss$ -("h a !oss e+ists in this "ase sin"e the ri"e, ha)in* &een soaked in sea water and there&% rendered (n it or h(#an "ons(#'tion, has &e"o#e tota!!% (se!ess or the '(r'ose or whi"h it was i#'orted (;an +ala an /ns 'o v '1 gr
95747 Sep 5, #99#"
8oss: Total 8oss <nl% ()**2)

An ins(ran"e "o#'an% iss(ed a #arine ins(ran"e 'o!i"% "o)erin* a shi'#ent &% sea ro# Findoro to Batan*as o 6,000 'ie"es o Findoro *arden stones a*ainst <tota! !oss on!%$= The stones were !oaded in two !i*hters, the irst with 200 'ie"es and the se"ond with 700 'ie"es$ Be"a(se o ro(*h seas, da#a*e was "a(sed the se"ond !i*hter res(!tin* in the !oss o ;23 o(t o the 700 'ie"es$ The owner o the shi'#ent i!ed "!ai#s a*ainst the ins(ran"e "o#'an% on the *ro(nd o "onstr("ti)e tota! !oss inas#("h as #ore than V o the )a!(e o the stones had &een !ost in one o the !i*hters$
8oss: Constructi e Total 8oss (2001)

FMO Pear!% -he!!s, a 'assen*er and "ar*o )esse!, was ins(red or P70,000,000$00 a*ainst <"onstr("ti)e tota! !oss$= D(e to a t%'hoon, it sank near Pa!awan$ E("ki!%, there were no "as(a!ties, on!% in0(red 'assen*ers$ The shi' owner sent a noti"e o a&andon#ent o his interest o)er the )esse! to the ins(ran"e "o#'an% whi"h then
Is the ins(ran"e "o#'an% !ia&!e (nder its 'o!i"%> .h%>

SUGGESTED ANSWER:
The ins(ran"e "o#'an% is not !ia&!e (nder its 'o!i"% "o)erin* a*ainst <tota! !oss on!%= the shi'#ent o 6,000 'ie"es o Findoro *arden stones$ There is no "onstr("ti)e tota! !oss that "an "!ai#ed sin"e the V r(!e is
to &e "o#'(ted on the tota! 6,000 'ie"es o Findoro

Page
-0 of 103
*arden stones "o)ered &% the sin*!e 'o!i"% "o)era*e (see -riental 1ssurance 'o v '1 %77 s 559" (arine 7nsurance2 7m$lie6 Warranties (2000) .hat warranties are i#'!ied in #arine ins(ran"e>
SUGGESTED ANSWER:
a$
to 'rint, re'rint, '(&!ish, "o'%, distri&(te, #(!ti'!%, se!! and #ake 'hoto*ra'hs, 'hoto en*ra)in*s, and 'i"toria! i!!(strations o the worksI to #ake an% trans!ation or other )ersion or e+tra"ts or arran*e#ents or ada'tation thereo I to dra#atiCe i it &e a non-dra#ati" workI to "on)ert it into a non-dra#ati" work i it &e a dra#aI to "o#'!ete or e+e"(te it i it &e a #ode! or desi*nI to e+hi&it, 'er or#, re'resent, 'rod("e or re'rod("e the work in an% #anner or &% an% #ethod whate)er or 'ro it or otherwiseI i not re'rod("ed in "o'ies or sa!e, to se!! an% #an(s"ri'ts or an% re"ord whatsoe)er thereo I to #ake an% other (se or dis'osition o work "onsistent with the !aws o the !and the
The o!!owin* warranties are i#'!ied in #arine ins(ran"e5 6A That the shi' is seaworth% to #ake the )o%a*e andMor to take in "ertain "ar*oes 2A That the shi' sha!! not de)iate ro# the )o%a*e ins(redI ;A That the shi' sha!! "arr% the ne"essar% do"(#ents to show nationa!it% or ne(tra!it% and that it wi!! not "arr% an% do"(#ent whi"h wi!! "ast reasona&!e s(s'i"ion thereonI 7A That the shi' sha!! not "arr% "ontra&and, es'e"ia!!% i it is #akin* a )o%a*e thro(*h &e!!i*erent waters$ (arine 7nsurance2 "eril o& t#e S#i$ s! "eril o& t#e Sea ()**:)
A #arine ins(ran"e 'o!i"% on a "ar*o states that <the ins(rer sha!! &e !ia&!e or !osses in"ident to 'eri!s o the sea$= D(rin* the )o%a*e, seawater entered the "o#'art#ent where the "ar*o was stored d(e to the de e"ti)e drain'i'e o the shi'$ The ins(red i!ed an a"tion on the 'o!i"% or re"o)er% o the da#a*es "a(sed to the "ar*o$ Fa% the ins(red re"o)er da#a*es> ?3@A
SUGGESTED ANSWER:
&$
"$
d$
Co$%ri'#t2 Commissione6 Artist ()**1) -o!id In)est#ent 9o(se "o##issioned Fon B!an"o and his son -te)e, &oth noted artists, to 'aint a #(ra! or the Fain Eo&&% o the new &(i!din* o -o!id or a "ontra"t 'ri"e o P2#$ aA who owns the #(ra!> E+'!ain &A .ho owns the "o'%ri*ht o the #(ra!> E+'!ain$
SUGGESTED ANSWER:
No$ The 'ro+i#ate "a(se o the da#a*e to the "ar*o ins(red was the de e"ti)e drain'i'e o the shi'$ This is 'eri! o the shi', and not 'eri! o the sea$ The de e"t in the drain'i'e was the res(!t o the ordinar% (se o the shi'$ To re"o)er (nder a #arine ins(ran"e 'o!i"%, the 'ro+i#ate "a(se o the !oss or da#a*e #(st &e 'eri! o the sea$ (utual 7nsurance Com$an%2 Nature 0 De&inition (2004) .hat is a #(t(a! ins(ran"e "o#'an% or asso"iation>
SU00ESTE8 ANSWER:
aA -o!id owns the #(ra!$ -o!id was the one who "o##issioned the artists to do the work and 'aid or the work in the s(# o P2# &A4n!ess there is a sti'(!ation to the "ontrar% in the "ontra"t, the "o'%ri*ht sha!! &e!on* in 0oint ownershi' to -o!id and Fon and -te)e$ Co$%ri'#t2 Commissione6 Artist (2003) BR and CT are noted artists whose 'aintin*s are hi*h!% 'riCed &% "o!!e"tors$ Dr$ DE "o##issioned the# to 'aint a #(ra! at the #ain !o&&% o his new hos'ita! or "hi!dren$ Both a*reed to "o!!a&orate on the 'ro0e"t or a tota! ee o two #i!!ion 'esos to &e eB(a!!% di)ided &etween the#$ It was a!so a*reed that Dr$ DE had to 'ro)ide a!! the #ateria!s or the 'aintin* and 'a% or the wa*es o te"hni"ians and !a&orers needed or the work on the 'ro0e"t$ Ass(#e that the 'ro0e"t is "o#'!eted and &oth BR and CT are (!!% 'aid the a#o(nt o P2F as artistsG ee &% DE$ 4nder the !aw on inte!!e"t(a! 'ro'ert%, who wi!! own the #(ra!> .ho wi!! own the "o'%ri*ht in the #(ra!> .h%> E+'!ain$ ?3@A
SUGGESTED ANSWER:
A #(t(a! !i e ins(ran"e "or'oration is a "oo'erati)e that 'ro#otes the we! are o its own #e#&ers, with the #one% "o!!e"ted ro# a#on* the#se!)es and so!e!% or their own 'rote"tion and not or 'ro it$ Fe#&ers are &oth the ins(rer and ins(red$ A #(t(a! !i e ins(ran"e "o#'an% has no "a'ita! sto"k and re!ies so!e!% ('on its "ontri&(tions or 're#i(#s to #eet (ne+'e"ted !osses, "ontin*en"ies and e+'enses (,epublic v0 Sunlife, 20,0 3o #56765, -ctober #5, %775"0
Intelle%t2al Pr!)erty
Co$%ri'#t ()**1) .hat inte!!e"t(a! 'ro'ert% ri*hts are 'rote"ted &% "o'%ri*ht>
SUGGESTED ANSWER:
-e" 3 o PD 7: 'ro)ides that Co'%ri*ht sha!! "onsist in the e+"!(si)e ri*ht5
4nder -e"tion 678$7 o the Inte!!e"t(a! Pro'ert% Code, in "ase o "o##issioned work, the "reator ?in the a&sen"e o a written sti'(!ation to the "ontrar%A owns the "o'%ri*ht, &(t the work itse! &e!on*s to the 'erson who "o##issioned its "reation$ A""ordin*!%, the #(ra! &e!on*s to DE$ 9owe)er, BR and CT own the "o'%ri*ht, sin"e there is no sti'(!ation to the "ontrar%$
Co$%ri'#t2 7n&rin'ement ()**3)

Page
-1 of 103
The Oi"toria 9ote! "hain re'rod("es )ideota'es, distri&(tes the "o'ies thereo to its hote!s and #akes the# a)ai!a&!e to hote! *(ests or )iewin* in the hote! *(est roo#s$ It "har*es a se'arate no#ina! ee or the (se o the )ideota'e '!a%er$ 6A Can the Oi"toria 9ote! &e en0oined or in rin*in* "o'%ri*hts and he!d !ia&!e or da#a*es> 2A .o(!d it #ake an% di eren"e i Oi"toria 9ote! does not "har*e an% ee or the (se o the )ideota'e>
SUGGESTED ANSWER:
EiCa "annot &e he!d !ia&!e or in rin*e#ent o "o'%ri*ht sin"e (nder the Inte!!e"t(a! Pro'ert% Code, one o the !i#itations to the "o'%ri*ht is the #akin* o B(otations ro# a '(&!ished work or '(r'ose o an% 0(di"ia! 'ro"eedin*s or or *i)in* o 'ro essoria! ad)i"e &% !e*a! 'ra"titioner, 'ro)ided that the so(r"e and na#e o the a(thor are identi ied ?-ee -e"tion 687$6WkX o the Inte!!e"t(a! Pro'ert% Code o the Phi!i''inesA$
6A Yes$ Oi"toria 9ote! has no ri*ht to (se s("h )ideo ta'es in its hote! &(siness witho(t the "onsent o the "reatorM owner o the "o'%ri*ht$
Co$%ri'#t2 "#otoco$%2 ;#en allo;e6 ()**:) Fa% a 'erson ha)e 'hoto"o'ies o so#e 'a*es o the &ook o Pro essor Rosario #ade witho(t )io!atin* the "o'%ri*ht !aw> ?;@A
SUGGESTED ANSWER:
2A No$ The (se o the )ideota'es is or &(siness and not

#ere!% or ho#e "ons(#'tion$ (.ilipino Societ
'omposers, 1uthors ;ublishers v :an #56 s 5&#< pd #966" of
Co$%ri'#t2 7n&rin'ement ()**+)

In an a"tion or da#a*es on a""o(nt o an in rin*e#ent o a "o'%ri*ht, the de endant ?the a!!e*ed 'irateA raised the de ense that he was (naware that what he had "o'ied was a "o'%ri*ht #ateria!$ .o(!d this de ense &e )a!id>
SUGGESTED ANSWER:
Yes$ The 'ri)ate re'rod("tion o a '(&!ished work in a sin*!e "o'%, where the re'rod("tion is #ade &% a nat(ra! 'erson e+"!(si)e!% or resear"h and 'ri)ate st(d%, is 'er#itted, witho(t the a(thoriCation o the owner o the "o'%ri*ht in the work$ 7n&rin'ement s! Un&air Com$etition ()**4) .hat is the distin"tion &etween in rin*e#ent and (n air "o#'etition>
SUGGESTED ANSWER:
No$ An intention to 'irate is not an e!e#ent o in rin*e#ent$ 9en"e, an honest intention is no de ense to an a"tion or in rin*e#ent$
A8TERNAT7>E ANSWER:
Yes$ The owner o the "o'%ri*ht #(st #ake others aware that the #ateria! in B(estion is (nder or "o)ered &% a "o'%ri*ht$ This is done &% the *i)in* o s("h noti"e at a 'ro#inent 'ortion o the "o'%ri*ht #ateria!$ .hen the a!!e*ed 'irate is th(s #ade aware thereo , his a"t o 'iratin* the "o'% #ateria! wi!! "onstit(te in rin*e#ent$
The distin"tion &etween in rin*e#ent ?'res(#a&!% trade#arkA and (n air "o#'etition are as o!!ows5 6A In rin*e#ent o trade#ark is the (na(thoriCed (se o a trade#ark, whereas (n air "o#'etition is the 'assin* o o ones *oods as those o anotherI
2A Dra(d(!ent intent is (nne"essar% in in rin*e#ent o trade#ark, whereas ra(d(!ent intent is essentia! in (n air "o#'etitionI
;A The 'rior re*istration o
Co$%ri'#t2 7n&rin'ement ()**:) 1(an Ja)ier wrote and '(&!ished a stor% si#i!ar to an (n'(&!ished "o'%ri*hted stor% o Fano!in* -antia*o$ It was, howe)er, "on"!(si)e!% 'ro)en that 1(an Ja)ier was not aware that the stor% o Fano!in* -antia*o was 'rote"ted &% "o'%ri*ht$ Fano!in* -antia*o s(ed 1(an Ja)ier or in rin*e#ent o "o'%ri*ht$ Is 1(an Ja)ier !ia&!e> ?2@A
SUGGESTED ANSWER:
the trade#ark is a 'rereB(isite to an a"tion or in rin*e#ent o trade#ark, whereas re*istration o the trade#ark is not ne"essar% in (n air "o#'etition$
(Del +onte 'orp v '1 46$%5 Aan %5,97 #6#s5#7"
7n&rin'ement s! Un&air Com$etition (2003) In what wa% is an in rin*e#ent o a trade#ark si#i!ar to that whi"h 'ertains to (n air "o#'etition>
SUGGESTED ANSWER:
Yes$ 1(an Ja)ier is !ia&!e or in rin*e#ent o "o'%ri*ht$ It is not ne"essar% that 1(an Ja)ier is aware that the stor% o Fano!in* -antia*o was 'rote"ted &% "o'%ri*ht$ The work o Fano!in* -antia*o is 'rote"ted at the ti#e o its "reation$ Co$%ri'#t2 7n&rin'ement (2004) In a written !e*a! o'inion or a "!ient on the di eren"e &etween a''renti"eshi' and !earnershi', EiCa B(oted witho(t 'er#ission a !a&or !aw e+'ertGs "o##ent a''earin* in his &ook entit!ed LAnnotations on the Ea&or Code$L Can the !a&or !aw e+'ert ho!d EiCa !ia&!e or in rin*e#ent o "o'%ri*ht or B(otin* a 'ortion o his &ook witho(t his 'er#ission> ?3@A
SU00ESTE8 ANSWER:
7n&rin'ement2 Juris6iction (2003)

K-: Cor'oration, a orei*n "or'oration a!!e*in* itse! to &e the re*istered owner o trade#ark <K-:= and !o*o <K=, i!ed an Inter Partes "ase with the Inte!!e"t(a! Pro'ert% O i"e a*ainst Kanin Cor'oration or the "an"e!!ation o the !atters #ark <K-:= and !o*o <K$= D(rin* the 'enden"% o the "ase &e ore the IPO, Kanin Cor'oration &ro(*ht s(it a*ainst K-: Cor'oration &e ore the RTC or in rin*e#ent and da#a*es$ Co(!d the a"tion &e ore the RTC 'ros'er> .h%>
SUGGESTED ANSWER:
"atent2 Non?"atenta.le 7n entions (2004)

-(''osin* A!&ert Einstein were a!i)e toda% and he i!ed with the Inte!!e"t(a! Pro'ert% O i"e ?IPOA an a''!i"ation or 'atent or his theor% o re!ati)it% e+'ressed in the
'00(
or#(!a EU#"2$ The IPO disa''ro)ed EinsteinGs a''!i"ation on the *ro(nd that his theor% o re!ati)it% is not 'atenta&!e$ Is the IPOGs a"tion "orre"t> ?3@A
SU00ESTE8 ANSWER:
e#'!o%ees$ In the irst '!a"e, 1oa& did not "o##ission an% o the two e#'!o%ees to in)ent the de)i"e, and its
Yes, the IPO is "orre"t &e"a(se (nder the Inte!!e"t(a! Pro'ert% Code, dis"o)eries, s"ienti i" theories and #athe#ati"a! #ethods, are "!assi ied to &e as Lnon- 'atenta&!e in)entions$L EinteinGs theor% o re!ati)it% a!!s within the "ate*or% o &ein* a non-'atenta&!e Ls"ienti i" theor%$L "atents: Gas?Sa in' De ice: &irst to &ile rule (2001)
CeCar works in a "ar #an( a"t(rin* "o#'an% owned &% 1oa&$ CeCar is B(ite inno)ati)e and !o)es to tinker with thin*s$ .ith the #ateria!s and 'arts o the "ar, he was a&!e to in)ent a *as-sa)in* de)i"e that wi!! ena&!e "ars to "ons(#e !ess *as$ Dran"is, a "o-worker, saw how CeCar "reated the de)i"e and !ikewise, "a#e (' with a si#i!ar *ad*et, a!so (sin* s"ra' #ateria!s and s'are 'arts o the "o#'an%$ Therea ter, Dran"is i!ed an a''!i"ation or re*istration o his de)i"e with the B(rea( o Patents$ Ei*hteen #onths !ater, CeCar i!ed his a''!i"ation or the re*istration o his de)i"e with the B(rea( o Patents$
6A
Is the *as-sa)in* de)i"e 'atenta&!e> E+'!ain$
SUGGESTED ANSWER:
Yes, the *as-sa)in* de)i"e is 'atenta&!e &e"a(se it 'ro)ides a te"hni"a! so!(tion to a 'ro&!e# in a ie!d o h(#an a"ti)it%$ It is new and in)o!)es an in)enti)e ste', and "ertain!% ind(stria!!% a''!i"a&!e$ It there ore (! i!!s the reB(isites #andated &% the inte!!e"t(a! Pro'ert% Code or what is 'atenta&!e$
2A Ass(#in* that it is 'atenta&!e, who is entit!ed to the 'atent> .hat, i an%, is the re#ed% o the !osin*
'art%>
SUGGESTED ANSWER:
CeCar is entit!ed to the 'atent &e"a(se he was the rea! in)entor$ Dran"is, "o'%in* ro# the work o CeCar, "annot "!ai# the essentia! "riteria o an in)entor, who #(st 'ossess essentia! e!e#ents o no)e!t%, ori*ina!it% and 're"eden"e to &e entit!ed to 'rote"tion$ Ne)erthe!ess, (nder the L irst to i!e r(!e,L Dran"is a''!i"ation wo(!d ha)e to &e *i)en 'riorit%$ CeCar, howe)er, has within three #onths ro# the de"ision, to ha)e it "an"e!!ed as the ri*ht (! in)entorI or within one %ear ro# '(&!i"ation, to i!e an a"tion to 'ro)e his 'riorit% to the in)ention, whi"h has &een taken ro# hi# and ra(d(!ent!% re*istered &% Dran"is$ ;A -(''osin* 1oa& *ot wind o the in)entions o his e#'!o%ees and a!so !aid "!ai# to the 'atents, assertin* that CeCar and Dran"is were (sin* his #ateria!s and "o#'an% ti#e in #akin* the de)i"es, wi!! his "!ai# 're)ai! o)er those o his e#'!o%ees>
SUGGESTED ANSWER:
E+'!ain$
No, 1oa&Gs "!ai# "annot 're)ai! o)er those o
his
Page -' of 103 in)ention did not a!! within their re*(!ar d(ties$ .hat 're)ai!s is the 'ro)ision o the Inte!!e"t(a! Pro'ert% Code that ho!ds that the in)ention &e!on*s to the e#'!o%ee, i the in)enti)e a"ti)it% is not a 'art o his re*(!ar d(ties, e)en i he (ses the ti#e, a"i!ities and #ateria!s o the e#'!o%er$
&$ "$
d$
Patent is not new or 'atenta&!e -'e"i i"ation o the in)ention does not "o#'!% with -e" 67
Patent was iss(ed not to the tr(e and a"t(a! in)entor, desi*ner or a(thor o the (ti!it% #ode! or the '!ainti did not deri)e his ri*hts ro# the tr(e and a"t(a! in)entor, desi*ner or a(thor o the (ti!it% #ode! ?-e" 28 RA 623 as a#endedA
"atents: 7n&rin'ement2 Reme6ies 0 De&enses ()**3) Derdie is a 'atent owner o a "ertain in)ention$ 9e dis"o)ered that his in)ention is &ein* in rin*ed &% 1ohann$ 6A .hat are the re#edies a)ai!a&!e to Derdie a*ainst 1ohann> 2A I %o( were the !aw%er o 1ohann in the in rin*e#ent s(it, what are the de enses that %o(r "!ient "an assert>
SUGGESTED ANSWER:
6A The a*ainst a$ &$ "$
o!!owin* re#edies are a)ai!a&!e to Derdie 1ohann$ seiCe and destro% in0(n"tion da#a*es in s("h a#o(nt #a% ha)e &een o&tained ro# the (se o the in)ention i 'ro'er!% transa"ted whi"h "an &e #ore than what the in rin*er ?1ohann A re"ei)ed$ d$ Attorne%s ees and "ost
"atents2 7n&rin'ement ()**2) In an a"tion or in rin*e#ent o 'atent, the a!!e*ed in rin*er de ended hi#se! &% statin* 6A that the 'atent iss(ed &% the Patent O i"e was not rea!!% an in)ention whi"h was 'atenta&!eI 2A that he had no intent to in rin*e so that there was no a"tiona&!e "ase or in rin*e#entI and ;A that there was no e+a"t d('!i"ation o the 'atentees e+istin* 'atent &(t on!% a #inor i#'ro)e#ent$ .ith those de enses, wo(!d %o( e+e#'t the a!!e*ed )io!ator ro# !ia&i!it%> .h%>
SUGGESTED ANSWER:
2A These are the de enses that "an &e asserted in an in rin*e#ent s(it5 a$ Patent is in)a!id ?-e" 73 RA 623, as a#endedA
I wo(!d not e+e#'t the a!!e*ed )io!ator ro# !ia&i!it% or the o!!owin* reasons5 6A A 'atent on"e iss(ed &% the Patent O i"e raises a 'res(#'tion that the arti"!e is 'atenta&!eI it "an, howe)er &e shown otherwise ?-e" 73 RA 623A$ A #ere state#ent or a!!e*ation is not eno(*h to destro% that 'res(#'tion$ ?1quas v de =eon $7 Aan 6% =8 $%#&7A 2A An intention to in rin*e is not ne"essar% nor an e!e#ent in a "ase or in rin*e#ent o a 'atent$
'00(
itse! $
A8TERNAT7>E ANSWER:
;A
There is no need o e+a"t d('!i"ation o the 'atentees e+istin* 'atent s("h as when the i#'ro)e#ent #ade &% another is #ere!% #inor
v Benito, 5#p4#$" $ To &e inde'endent!% 'atenta&!e, an i#'ro)e#ent o an e+istin* 'atented in)ention #(st &e a #a0or i#'ro)e#ent (1quas v de =eon =8$%#&7 $7Aan6%" (.ran(
Fedi"a! dr(*s #a% &e 'ro"(red on!% ('on 'res"ri'tion #ade &% a d(!% !i"ensed 'h%si"ian$ The 'ossi&i!it% o
"atents2 Ri'#ts o er t#e 7n ention ()**0) Che"he in)ented a de)i"e that "an "on)ert rainwater into a(to#o&i!e (e!$ -he asked Fa"on, a !aw%er, to assist in *ettin* her in)ention 'atented$ Fa"on s(**ested that the% or# a "or'oration with other riends and ha)e the "or'oration a''!% or the 'atent, 80@ o the shares o sto"k thereo to &e s(&s"ri&ed &% Che"he and 3@ &% Fa"on$ The "or'oration was or#ed and the 'atent a''!i"ation was i!ed$ 9owe)er, Che"he died ; #onths !ater o a heart atta"k$ Dran"o, the estran*ed h(s&and o Che"he, "ontested the a''!i"ation o the "or'oration and i!ed his own 'atent a''!i"ation as the so!e s(r)i)in* heir o Che"he$ De"ide the iss(e with reasons$
SUGGESTED ANSWER:
The estran*ed h(s&and o Che"ke "annot s(""ess (!!% "ontest the a''!i"ation$ The ri*ht o)er in)entions a""r(e ro# the #o#ent o "reation and as a ri*ht it "an !aw (!!% &e assi*ned$ On"e the tit!e thereto is )ested in the trans eree, the !atter has the ri*ht to a''!% or its re*istration$ The estran*ed h(s&and o Che"he, i not disB(a!i ied to inherit, #ere!% wo(!d s(""eed to the interest o Che"he$
3ote! 1n examinee who answers on the basis of the issue of validit of the transfer of patent as a valid consideration for subscription of the shares of stoc(s should be given due credit0
Tra6emar- ()**0)
In 6:88, the Dood and Dr(* Ad#inistration a''ro)ed the !a&e!s s(&#itted &% T(r&o Cor'oration or its new dr(* &rand na#e, <A+i!on$= T(r&o is now a''!%in* with the B(rea( o Patents, Trade#arks and Te"hno!o*% Trans er or the re*istration o said &rand na#e$ It was s(&seB(ent!% "on ir#ed that <A""i!onne= is a *eneri" ter# or a "!ass o anti- (n*a! dr(*s and is (sed as s("h &% the #edi"a! 'ro ession and the 'har#a"e(ti"a! ind(str%, and that it is (sed as a *eneri" "he#i"a! na#e in )ario(s s"ienti i" and 'ro essiona! '(&!i"ations$ A "o#'etin* dr(* #an( a"t(rer asks %o( to "ontest the re*istration o the &rand na#e <A+i!on= &% T(r&o$
.hat wi!! %o( ad)i"e &e>

SUGGESTED ANSWER:
The a''!i"ation or re*istration &% T(r&o Cor'oration #a% &e "ontested$ The Trade#ark Eaw wo(!d not a!!ow the re*istration o a trade#ark whi"h, when a''!ied to or (sed in "onne"tion with his 'rod("ts, is #ere!% des"ri'ti)e or de"e'ti)e!% #isdes"ri'ti)e o the#$ Con (sion "an res(!t ro# the (se o <A+i!on= as the *eneri" 'rod("t
Page
-3 of 103
de"e'tion "o(!d &e rather re#ote$ -in"e it "annot rea!!% &e said that 'h%si"ians "an &e so easi!% de"ei)ed &% s("h trade#ark as <A+i!on,= it #a% &e hard to e+'e"t an o''osition thereto to s(""eed$
AN<TEER ANSWER:
"erti i"ate iss(ed to Ea&er*e In"$ It does not in"!(de &rie s and (nderwear whi"h are di erent 'rod("ts 'rote"ted &% Ear&er*es trade#ark$ 1G "an re*ister the trade#ark <PR4TE= to "o)er its &rie s and (nderwear (.aberge /nc v /1' %#5 s $#&" Tra6emar-B Test o& Dominanc% ()**4) .hat is the <test o do#inan"%>=
SUGGESTED ANSWER:
The a''!i"ation or re*istration o T(r&o Cor'oration #a% &e "ontested$ The a"t(a! settin*s do not indi"ate that there had &een 'rior (se or at !east 2 #onths o the trade#ark <A+i!on$= Tra6emar- ()**3)
Ea&er*e, In"$, #an( a"t(res and #arkets a tersha)e !otion, sha)in* "rea#, deodorant, ta!"(# 'owder and toi!et soa', (sin* the trade#ark <PR4T=, whi"h is re*istered with the Phi! Patent O i"e$ Ea&er*e does not #an( a"t(re &rie s and (nderwear and these ite#s are not s'e"i ied in the "erti i"ate o re*istration$
The test o do#inan"% reB(ires that i the "o#'etin* trade#ark "ontains the #ain or essentia! eat(res o another and "on (sion and de"e'tion is !ike!% to res(!t, in rin*e#ent takes '!a"e$ D('!i"ation or i#itation is not ne"essar%I not is it ne"essar% that the in rin*in* !a&e! sho(!d s(**est an e ort to i#itate$ -i#i!arit% in siCe, or# and "o!or, whi!e re!e)ant, is not "on"!(si)e$ (1sia Brewer v '1 2, #7$55$ Aul5,9$ %%5s5$4"
1G who #an( a"t(res &rie s and (nderwear, wants to know whether, (nder o(r !aws, he "an (se and re*ister the trade#ark <PR4TE= or his #er"handise$ .hat is %o(r ad)i"e>
SUGGESTED ANSWER:
Yes$ The trade#ark re*istered in the na#e o Ea&er*e In" "o)ers on!% a ter-sha)e !otion, sha)in* "rea#, deodorant, ta!"(# 'owder and toi!et soa'$ It does not "o)er &rie s and (nderwear$ The !i#it o the trade#ark is stated in the
Tra6emar-2 7n&rin'ement ()**)) -on% is a re*istered trade#ark or TO, stereo, radio, "a#eras, &eta#a+ and other e!e"troni" 'rod("ts$ A !o"a! "o#'an%, Best Fan( a"t(rin* In" 'rod("ed e!e"tri" ans whi"h it so!d (nder the trade#ark -on% witho(t the "onsent o -on%$ -on% s(ed Best Fan( a"t(rin* or in rin*e#ent$ De"ide the "ase$
SUGGESTED ANSWER:
There is no in rin*e#ent$ In order that a "ase or in rin*e#ent o trade#ark "an 'ros'er, the 'rod("ts on whi"h the trade#ark is (sed #(st &e o the sa#e kind$ The e!e"tri" ans 'rod("ed &% Best Fan( a"t(rin* "annot
'00(
&ene its o
&e said to &e si#i!ar to s("h 'rod("ts as TO, stereo and radio sets or "a#eras or &eta#a+ 'rod("ts o -on%$
A8TERNAT7>E ANSWER:
There is in rin*e#ent$ I the owner o a trade#ark whi"h #an( a"t(res "ertain t%'es o *oods "o(!d reasona&!% &e e+'e"ted to en*a*e in the #an( a"t(re o another 'rod("t (sin* the sa#e trade#ark, another 'art% who (ses the trade#ark or that 'rod("t "an &e he!d !ia&!e or (sin* that trade#ark$ 4sin* this standard, in rin*e#ent e+ists &e"a(se -on% "an &e reasona&!% e+'e"ted to (se s("h trade#ark on e!e"tri" ans$
Tra6emar-2 Test o& Dominanc% ()**4) N Cor'oration #an( a"t(res r(&&er shoes (nder the trade#ark <1ordann= whi"h hit the Phi! #arket in 6:83, and re*istered its trade#ark with the B(rea( o Patents, Trade#arks and Te"hno!o*% ?BPTTTA in 6::0$ PK Co#'an% a!so #an( a"t(res r(&&er shoes with the trade#ark <1a)orski= whi"h it re*istered with BPTTT in 6:78$ In 6::2, PK Co ado'ted and "o'ied the desi*n o N Cor'orations <1ordann= r(&&er shoes, &oth as to sha'e and "o!or, &(t retained the trade#ark <1a)orski= on its 'rod("ts$ Fa% PK Co#'an% &e he!d !ia&!e to N Co> E+'!ain$
SUGGESTED ANSWER:
PK Co #a% &e !ia&!e or (n air!% "o#'etin* a*ainst N Co$ B% "o'%in* the desi*n, sha'e and "o!or o N Cor'orations <1ordann= r(&&er shoes and (sin* the sa#e in its r(&&er shoes trade#arked <1a)orski,= PK is o&)io(s!% tr%in* to 'ass o its shoes or those o N$ It is o no #o#ent that he trade#ark <1a)orski= was re*istered ahead o the trade#ark <1ordann$= Priorit% in re*istration is not #ateria! in an a"tion or (n air "o#'etition as distin*(ished ro# an a"tion or in rin*e#ent o trade#ark$ The &asis o an a"tion or (n air "o#'etition is "on (sin* and #is!eadin* si#i!arit% in *enera! a''earan"e, not si#i!arit% o trade#arks
('onverse ,ubber 'o v Aacinto ,ubber D ;lastics 'o 2, %45%5 and $7575, 1pr%6,67 94s#56"
Tra6ename: 7nternational A&&iliation (2001) - De)e!o'#ent Cor'oration s(ed -han*ri!a Cor'oration or (sin* the <-= !o*o and the tradena#e <-han*ri!a=$ The or#er "!ai#s that it was the irst to re*ister the !o*o and the tradena#e in the Phi!i''ines and that it had &een (sin* the sa#e in its resta(rant &(siness$ -han*ri!a Cor'oration "o(nters that it is an a i!iate o an internationa! or*aniCation whi"h has &een (sin* s("h !o*o and tradena#e <-han*ri!a= or o)er 20 %ears$ 9owe)er, -han*ri!a Cor'oration re*istered the tradena#e and !o*o in the Phi!i''ines on!% a ter the s(it was i!ed$ .hi"h o the two "or'orations has a &etter ri*ht to (se the !o*o and the tradena#e> E+'!ain$
SUGGESTED ANSWER:
- De)e!o'#ent Cor'oration has a &etter ri*ht to (se the !o*o and the tradena#e, sin"e the 'rote"ti)e
Page
-3 of 103
&A
the !aw are "on erred &% the a"t o re*istration and not &% (se$ A!tho(*h -han*ri!a Cor'orationGs 'arent had (sed the tradena#e and !o*o !on* &e ore, the 'rote"tion o the !aws wi!! &e or - De)e!o'#ent Cor'oration &e"a(se it was the irst entit% to re*ister the inte!!e"t(a! 'ro'erties$ @o= 7oes t!e "nternat"onal aff"l"at"on '!angr"la Corporat"on affe.t t!e out.o-e t!e 7"spute5 89pla"n. )56+
SUGGESTED ANSWER:
than his assets, whi!e in s(s'ension o 'a%#ents, assets o the de&tor are #ore than his !ia&i!ities$ In inso!)en"%, the assets o the de&tor are to &e "on)erted into "ash or distri&(tion a#on* his "reditors, whi!e in s(s'ension o 'a%#ents, the de&tor is on!% askin* or ti#e within whi"h to "on)ert his roCen assets into !iB(id "ash with whi"h to 'a% his o&!i*ations when the !atter a!! d(e$
of of
7nsol enc%: >oluntar% 7nsol enc% (2001)

Aaron, a we!!-known ar"hite"t, is s( erin* ro# inan"ia! re)erses$ 9e has o(r "reditors with a tota! "!ai# o P22 Fi!!ion$ Des'ite his intention to 'a% these o&!i*ations, his "(rrent assets are ins( i"ient to "o)er a!! o the#$ 9is "reditors are a&o(t to s(e hi#$ ConseB(ent!%, he was "onstrained to i!e a 'etition or inso!)en"%$ ?3@A
The internationa! a i!iation o -han*ri!a Cor'oration #a% &e "riti"a! in the e)ent that its a i!iates or 'arent "o#'an% a&road had re*istered in a orei*n 0(risdi"tion the tradena#e and the !o*o$ A we!!known #ark and tradena#e is s(&0e"t to 'rote"tion (nder Treat% o Paris or the Prote"tion o Inte!!e"t(a! Pro'ert% to whi"h the Phi!i''ines is a #e#&er$
aA
In !lven%y 5 C!r)!rate Re%!very

7nsol enc% s! Sus$ension o& "a%ment ()**:) Distin*(ish inso!)en"% ro# s(s'ension o 'a%#ents$ ?;@A
SUGGESTED ANSWER:
SUGGESTED ANSWER:
-in"e Aaron was #ere!% or"ed &% "ir"(#stan"es to 'etition the "o(rt to de"!are hi# inso!)ent, "an the 0(d*e 'ro'er!% treat the 'etition as one or in)o!(ntar% inso!)en"%> E+'!ain$
aA
In inso!)en"%, the !ia&i!ities o the de&tor are #ore
No$ This is a "ase or )o!(ntar% inso!)en"% &e"a(se this was i!ed &% an inso!)ent de&tor owin* de&ts e+"eedin* the a#o(nt o P6,000$00 (nder -e"tion 67 o the Inso!)en"% Eaw$ 4nder -e"tion 20 o the Inso!)en"% Eaw, the 'etition #(st &e i!ed &% three or #ore "reditors$ In the "ase at &ar, it is Aaron, the de&tor, who i!ed the inso!)en"% 'ro"eedin*s$
'00(
d(e "o(rse to the
&A
I Aaron is de"!ared an inso!)ent &% the "o(rt, what wo(!d &e the e e"t, i an%, o s("h de"!aration on
SUGGESTED ANSWER:
his "reditors> E+'!ain$
A de"!aration &% the "o(rt that the 'etitioner is inso!)ent wi!! ha)e the o!!owin* e e"ts5 6A The sheri sha!! take 'ossession o a!! assets o the de&tor (nti! the a''oint#ent o a re"ei)er or assi*neeI
2A Pa%#ent to the de&tor o an% de&ts d(e to hi# and the de!i)er% to the de&tor o an% 'ro'ert% &e!on*in* to hi#, and the trans er o an% 'ro'ert% &% hi# are or&iddenI
;A A!! "i)i! 'ro"eedin*s 'endin* a*ainst the inso!)ent sha!! &e sta%edI and 7A Fort*a*es and '!ed*es are not a e"ted &% the order de"!arin* a 'erson inso!)ent$ ?-e"$ 3:, Inso!)en"% EawA
"A Ass(#in* that, Aaron has *(arantors or his de&ts, are the *(arantors re!eased ro# their o&!i*ations on"e Aaron is dis"har*ed ro# his de&ts> E+'!ain$
SUGGESTED ANSWER:
No, 're"ise!% (nder the 'rin"i'!e o e+"(ssion, the !ia&i!it% o the *(arantors arises on!% a ter the e+ha(stion o the assets o the 'rin"i'a! o&!i*or$ The e e"t o dis"har*e #ere!% "on ir#s e+ha(stion o the assets o the o&!i*or a)ai!a&!e to his "reditors$
A8TERNAT7>E ANSWER:
Yes$ Arti"!e 2072 o the Ci)i! Code 'ro)ides5 The o&!i*ation o the *(arantor is e+tin*(ished at the sa#e ti#e as that o the de&tor, and or the sa#e "a(ses as a!! other o&!i*ations$ dA .hat re#edies are a)ai!a&!e to the *(arantors in "ase the% are #ade to 'a% the "reditors> E+'!ain$
SUGGESTED ANSWER:
4nder Arti"!e 2086, the *(arantor #a% set (' a*ainst the "reditor a!! the de enses that 'ertain to the 'rin"i'a! de&tor$ The dis"har*e o&tained &% Aaron on the 'rin"i'a! o&!i*ation "an now &e (sed as a de ense &% the *(arantors a*ainst the "reditors$ The *(arantors are a!so entit!ed to inde#nit% (nder Arti"!e 2022 o the Ci)i! Code$ 7nsol enc%2 Assets s! 8ia.ilities ()**:) 9ora"io o'ened a "o ee sho' (sin* #one% &orrowed ro# inan"ia! instit(tions$ A ter ; #onths, 9ora"io !e t or the 4- with the intent o de ra(din* his "reditors$ .hi!e his !ia&i!ities are worth P6$2#, his assets, howe)er are worth P6$3#$ Fa% 9ora"io &e de"!ared inso!)ent> ?2@A
SUGGESTED ANSWER:
No$ 9ora"io #a% not &e de"!ared inso!)ent$ 9is assets worth P6$3# are #ore than his !ia&i!ities worth P6$2#$
7nsol enc%2 Assi'nees ()**4)

On 1(ne 62, 6::3, Oi"ente o&tained a writ o 're!i#inar% atta"h#ent a*ainst Car!ito$ The !e)% on Car!itos 'ro'ert% o""(rred on 1(ne 23, 6::3$ On 1(!% 2:, 6::3, another "reditor i!ed a 'etition or in)o!(ntar% inso!)en"% a*ainst Car!ito$ The inso!)en"% "o(rt *a)e
Page -( of 103 'etition$ In the #eanti#e, the "ase i!ed &% Oi"ente 'ro"eeded and res(!ted in a 0(d*#ent award in a)or o Oi"ente$ Fa% the 0(d*#ent o&tained &% Oi"ente &e en or"ed inde'endent!% o the inso!)en"% 'ro"eedin*s> E+'!ain$ SUGGESTED ANSWER:
aA
Dor&id the 'a%#ent to the de&tor o an% de&t d(e to hi# and the de!i)er% to hi# o an% 'ro'ert% &e!on*in* to hi#I &A Dor&id the trans er o an% 'ro'ert% &% hi#I and "A -ta% o a!! "i)i! 'ro"eedin*s a*ainst the inso!)ent &(t ore"!os(re #a% &e a!!owed ?-e"s 68 N 27 Inso!)en"% EawA 7nsol enc%2 /rau6ulent "a%ment (2002) As o 1(ne 6, 2002, EdCo -%ste#s Cor'oration ?EdCoA was inde&ted to the o!!owin* "reditors5 aA A"e EB(i'#ent -(''!ies H or )ario(s 'ersona! "o#'(ters and a""essories so!d to EdCo on "redit a#o(ntin* to P;00,000$ &A 9and%#an Gara*e H or #e"hani"a! re'airs ?'arts and ser)i"eA 'er or#ed on EdCos "o#'an% "ar a#o(ntin* to P60,000$ "A 1ose!%n Re%es H or#er e#'!o%ee o EdCo who s(ed EdCo or (n!aw (! ter#ination o e#'!o%#ent and was a&!e to o&tain a ina! 0(d*#ent a*ainst EdCo or P600,000$ dA B(rea( o Interna! Re)en(e H or (n'aid )a!(e- added ta+es a#o(ntin* to P;0,000$ eA Inte*rit% Bank H whi"h *ranted EdCo a !oan in 2006 in the a#o(nt o P300,000$ The !oan was not se"(red &% an% asset o EdCo, &(t it was *(aranteed (n"onditiona!!% and so!idari!% &% EdCos President and "ontro!!in* sto"kho!der, Ed(ardo Q$ On*, as a""o##odation s(ret%$
The !oan d(e to Inte*rit% Bank e!! d(e on 1(ne 63, 2002$ Des'ite '!eas or e+tension o 'a%#ent &% EdCo, the
The 0(d*#ent o&tained &% Oi"ente "an &e en or"ed inde'endent!% o the inso!)en"% 'ro"eedin*s$ 4nder -e" ;2 o the Inso!)en"% Eaw, the assi*n#ent to the assi*nee o a!! the rea! and 'ersona! 'ro'ert%, estate and e e"ts o the de&tor #ade &% the "!erk o the "o(rt sha!! )a"ate and set aside an% 0(d*#ent entered in an% a"tion "o##en"ed with ;0 da%s i##ediate!% 'rior to the "o##en"e#ent o inso!)en"% 'ro"eedin*s$ In this "ase, howe)er, the a"tion i!ed &% Oi"ente a*ainst Car!ito was "o##en"ed &% Oi"ente not !ater than 1(ne 62, 6::3 ?the a"ts on this 'oint are not "!earA when Oi"ente o&tained a writ o 're!i#inar% atta"h#ent a*ainst Car!ito or #ore than ;0 da%s &e ore the 'etition or in)o!(ntar% inso!)en"% was i!ed a*ainst Car!ito &% his other "reditors$ ?i$e$ on 1(!% 2:, 6::3A (,adiola8:oshiba ;hil v
/1' 2, 45%%% Aul #6,9# #99s$4$"
7nsol enc%2 E&&ect2 Declaration o& 7nsol enc% ()**)) .hat are the e e"ts o a 0(d*#ent in inso!)en"% in Oo!(ntar% Inso!)en"% "ases>
SUGGESTED ANSWER:
The ad0(di"ation or de"!aration o inso!)en"% &% the "o(rt, a ter hearin* or de a(!t, sha!! ha)e the o!!owin* e e"ts5
&ank de#anded i##ediate 'a%#ent$ Be"a(se the &ank threatened to 'ro"eed a*ainst the s(ret%, Ed(ardo Q$ On*, EdCo de"ided to 'a% (' a!! its o&!i*ations to Inte*rit% Bank$ On 1(ne 20, 2002, EdCo 'aid to Inte*rit% Bank the (!! 'rin"i'a! a#o(nt o P300,000, '!(s a""r(ed interests a#o(ntin* to P33,000$ As a res(!t, EdCo had hard!% an% "ash !e t or o'erations and de"ided to "!ose its &(siness$ A ter 'a%in* the (n'aid sa!aries o its e#'!o%ees, EdCo i!ed a 'etition or inso!)en"% on 1(!% 6, 2002$ In the inso!)en"% 'ro"eedin*s in "o(rt, the assi*nee in inso!)en"% so(*ht to in)a!idate the 'a%#ent #ade &% EdCo to Inte*rit% Bank or &ein* a ra(d(!ent trans er &e"a(se it was #ade within ;0 da%s &e ore the i!in* o the inso!)en"% 'etition$ In de ense, Inte*rit% Bank asserted that the 'a%#ent to it was or a !e*iti#ate de&t that was not "o)ered &% the 'rohi&ition &e"a(se it was <a )a!(a&!e 'e"(niar% "onsideration #ade in *ood aith,= th(s a!!in* within the e+"e'tion s'e"i ied in the Inso!)en"% Eaw$ As 0(d*e in the 'endin* inso!)en"% "ase, how wo(!d %o( de"ide the res'e"ti)e "ontentions o the assi*nee in inso!)en"% and o Inte*rit% Bank> E+'!ain ?3@A
SUGGESTED ANSWER:
his &rothers and sisters witho(t re*isterin* the sa#e with the -EC &e"a(se his sa!e is an e+e#'ted transa"tion &ein* iso!ated and not a sa!e to the '(&!i"$ 7nsol enc%2 o.li'ations t#at sur i e ()**+)
The "ontention o the assi*nee in inso!)en"% is "orre"t$ The 'a%#ent #ade &% EdCo to Inte*rit% Bank was a ra(d(!ent 're eren"e or 'a%#ent, &ein* #ade within thirt% ?;0A da%s &e ore the i!in* o the inso!)en"% 'etition$ 7nsol enc%2 Juris6iction2 Sole "ro$rietors#i$ ()**0) One da% 1err% 9aw, doin* &(siness (nder the na#e -tar!i*ht Enter'rise, a so!e 'ro'rietorshi', inds hi#se! short on "ash and (na&!e to 'a% his de&ts as the% a!! d(e a!tho(*h he has s( i"ient 'ro'ert% to "o)er s("h de&ts$ 9e asks %o(, as his retained "o(nse!, or ad)i"e on the o!!owin* B(eries5 aA -ho(!d he i!e a 'etition with the -EC to &e de"!ared in a state o s(s'ension o 'a%#ents in )iew o the said inan"ia! "ondition he a"es> E+'!ain %o(r answer$
&A -ho(!d he se!! 'ro it 'arti"i'ation "erti i"ates to his 60 &rothers and sisters in order to raise "ash or his
&(siness> E+'!ain$
SUGGESTED ANSWER:
aA I wo(!d "o(nse! 1err% to i!e the Petition or -(s'ension o Pa%#ent with the ordinar% "o(rts, rather than the -EC$ -ECs 0(risdi"tion o)er s("h "ases is "on ined on!% to 'etitions i!ed &% "or'orations and 'artnershi's (nder its re*(!ator% 'owers$
&A Instead o se!!in* 'ro it 'arti"i'ation "erti i"ates, I wo(!d (r*e 1err% to enter into a 'artnershi' or to in"or'orate in order to raise "ash or his &(siness$
A8TERNAT7>E ANSWER:
&A 1err% #a% se!! 'ro it 'arti"i'ation "erti i"ates to
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An inso!)ent de&tor, a ter !aw (! dis"har*e o!!owin* an ad0(di"ation o inso!)en"%, is re!eased ro#, *enera!!%, a!! de&ts, "!ai#s, !ia&i!ities and de#ands whi"h are or ha)e &een 'ro)ed a*ainst his estate$ Gi)e 3 o&!i*ations o the inso!)ent de&tor to s(r)i)e$
SUGGESTED ANSWER:
7nsol enc%2 >oluntar% s! 7n oluntar% Sol enc% ()**1) Distin*(ish &etween )o!(ntar% inso!)en"% and in)o!(ntar% inso!)en"%$
SUGGESTED ANSWER:
The 3 o&!i*ations o the inso!)ent de&tor that s(r)i)e are as o!!ows5 6$ Ta+es and assess#ents d(e the *o)ern#ent, nationa! or !o"a!I 2$ O&!i*ations arisin* ro# e#&eCC!e#ent or ra(dI ;$ O&!i*ation o an% 'erson !ia&!e with the inso!)ent de&tor or the sa#e de&t, either as a so!idar% "o- de&tor, s(ret%, *(arantor, 'artner, indorser or otherwise$ 7$ A!i#on% or "!ai# or s(''ortI and 3$ De&ts not 'ro)a&!e a*ainst the estate ?s("h as a terin"(rred o&!i*ationsA o , or not in"!(ded in the s"hed(!e s(&#itted &%, the inso!)ent de&tor$ 7nsol enc%2 >oluntar% 7nsol enc% "rocee6in' ()**)) Is the iss(an"e o an order, de"!arin* a 'etition in a Oo!(ntar% Inso!)en"% 'ro"eedin* inso!)ent, #andator% ('on the "o(rt>
SUGGESTED ANSWER:
In )o!(ntar% inso!)en"%, it is the de&tor hi#se! who i!es the 'etition or inso!)en"%, whi!e in in)o!(ntar% inso!)en"%, at !east ; "reditors are the ones who i!e the 'etition or inso!)en"% a*ainst the inso!)ent de&tor$
A8TERNAT7>E ANSWER:
The o!!owin* are the distin"tions5 6$ In in)o!(ntar% inso!)en"%, ; or #ore "reditors are reB(ired, whereas in )o!(ntar% inso!)en"%, one "reditor #a% &e s( i"ientI 2$ In in)o!(ntar% inso!)en"%, the "reditors #(st &e residents o the Phi!i''ines, whose "redits or de#and a""r(ed in the Phi!i''ines, and none o the "reditors has &e"o#e a "reditor &% assi*n#ent within ;0 da%s 'rior to the i!in* o the 'etition, whereas in )o!(ntar% inso!)en"%, these are not reB(ired$ ;$ In in)o!(ntar% inso!)en"%, the de&tor #(st ha)e done an% o the a"ts o inso!)en"% as en(#erated &% -e" 20, whereas in )o!(ntar% inso!)en"%, the de&tor #(st not ha)e done an% o said a"ts$
7$ In in)o!(ntar% inso!)en"%, the a#o(nt o inde&tedness #(st not &e !ess than P6,000 whereas in )o!(ntar% inso!)en"%, it #(st e+"eed P6,000$
Ass(#in* that the 'etition was in d(e or# and s(&stan"e and that the assets o the 'etitioner are !ess than his !ia&i!ities, the "o(rt #(st ad0(di"ate the inso!)en"% ?-e" 68 Inso!)en"% EawA
3$
In in)o!(ntar% inso!)en"%, the 'etition #(st &e a""o#'anied &% a &ond, whereas s("h is not reB(ired in )o!(ntar% inso!)en"%$
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8a; on Cor$orate Reco er% (2003)

J Cor'oration a''!ied or its reha&i!itation and s(&#itted a reha&i!itation '!an whi"h "a!!ed or the entr% &% it into a 0oint )ent(re a*ree#ent with Y Cor'oration$ 4nder the a*ree#ent, Y Cor'oration was to !end to J Cor'oration its "redit a"i!ities with "ertain &anks to o&tain (nds not on!% to o'erate J Cor'oration &(t a!so or a 'art thereo in the a#o(nt o P6 #i!!ion as initia! de'osit in a sinkin* (nd to &e a(*#ented ann(a!!% in a#o(nts eB(i)a!ent to 60@ o the %ear!% in"o#e ro# its o'eration o the &(siness o J Cor'oration$ Dro# this (nd the "reditors o J Cor'oration were to &e 'aid ann(a!!%, startin* ro# the se"ond %ear o o'erations, with the entire inde&tedness to &e !iB(idated in 63 %ears$ The "reditors o J Cor'oration o&0e"ted to the '!an &e"a(se Y Cor'oration wo(!d &e takin* o)er the &(siness and assets o J Cor'oration$ Co(!d the "o(rt a''ro)e the '!an des'ite the o&0e"tions o the "reditors o J Cor'oration and "o(!d the "reditors &e "o#'e!!ed to o!!ow the '!an> Co(!d Y Cor'oration, in #ana*in* the &(siness o J Cor'oration in the #eanti#e, &e dee#ed to ha)e taken-o)er J Cor'oration itse! > ?2@A
SUGGESTED ANSWER:
6$
In s(s'ension o 'a%#ents, the de&tor has s( i"ient 'ro'ert% to "o)er a!! his de&ts &(t oresees the i#'ossi&i!it% o #eetin* the# when the% res'e"ti)e!% a!! d(e, whereas, in inso!)en"%, the de&tor does not ha)e s( i"ient 'ro'ert% to 'a% a!! his de&ts in (!!I
In s(s'ension o 'a%#ents, the '(r'ose is to s(s'end or de!a% 'a%#ent o de&ts whi"h re#ain (na e"ted a!tho(*h a 'ost'one#ent o 'a%#ent is de"!ared, whereas, in inso!)en"%, the o&0e"t is to o&tain dis"har*e ro# a!! de&ts and !ia&i!it%I
2$
;$
In s(s'ension o 'a%#ents, no !i#it or the a#o(nt o inde&tedness is reB(ired, whereas, in inso!)en"%, the de&ts #(st e+"eed P6,000 in "ase o )o!(ntar% inso!)en"%, or #(st not &e !ess than P6,000 in "ase o in)o!(ntar% inso!)en"%$
Sus$ension o& "a%ments s! Sta% <r6er (2003) Distin*(ish the sta% order in "or'orate reha&i!itation ro# a de"!aration in a state o s(s'ension o 'a%#ents> ?7@A
SUGGESTED ANSWER:
Re#a.ilitation2 Sta% <r6er (2004) The B!(e -tar Cor'oration i!ed with the Re*iona! Tria! Co(rt a 'etition or reha&i!itation on the *ro(nd that it oresaw the i#'ossi&i!it% o 'a%in* its o&!i*ations as the% a!! d(e$ Dindin* the 'etition s( i"ient in or# and s(&stan"e, the "o(rt iss(ed an Order a''ointin* a reha&i!itation re"ei)er and sta%in* the en or"e#ent o a!! "!ai#s a*ainst the "or'oration$ 3!at "s t!e rat"onale for t!e 'tay %r7er5 )56+
SU00ESTE8 ANSWER:
Sus$ension o& "a%ments2 Re#a.ilitation Recei er ()***) De&tor Cor'oration and its 'rin"i'a! sto"kho!ders i!ed with the -e"(rities and E+"han*e Co##ission ?-ECA a 'etition or reha&i!itation and de"!aration o a state o s(s'ension o 'a%#ents (nder PD :02A$ The o&0e"ti)e was or -EC to take "ontro! o the "or'oration and a!! its assets and !ia&i!ities, earnin*s and o'erations, and to deter#ine the easi&i!it% o "ontin(in* o'erations and reha&i!itatin* the "o#'an% or the &ene it o in)estors and "reditors$ Genera!!%, the (nse"(red "reditors had #ani ested wi!!in*ness to "oo'erate with De&tor Cor'oration$ The se"(red "reditors, howe)er, e+'ressed serio(s o&0e"tions and reser)ations$ Dirst Bank had a!read% initiated 0(di"ia! ore"!os(re 'ro"eedin*s on the #ort*a*e "onstit(ted on the a"tor% o De&tor Cor'oration$
-e"ond Bank had a!read% initiated ore"!os(re 'ro"eedin*s on a third-'art% #ort*a*e "onstit(ted on "ertain assets o the 'rin"i'a! sto"kho!ders$
The '(r'ose o the sta% order is intended to *i)e the #ana*e#ent "o##ittee or reha&i!itation re"ei)er the !eewa% to #ake the &(siness )ia&!e a*ain, witho(t ha)in* to di)ert attention and reso(r"es to !iti*ation in )ario(s ora (;hilippine 1irlines v0 Spouses @urang(ing, et
al, 20,0 3o0 #5&&96, September %5, %77%< B. Eomes, /nc0 v0 'ourt of 1ppeals, 20,0 3os0 4&649 D 44#5$, -ctober $, #997< ,ubberworld N;hils0O /nc0 v0 3=,', 20,0 3o0 #%&44$, 1pril #5, #999< SobreJuanite v0 1SB Dev0 'orp0, 20,0 3o0 #&5&45, September $7, %775"0 It a!so 're)ents a
"reditor ro# o&tainin* an ad)anta*e or 're eren"e o)er another with res'e"t to a"tions a*ainst the "or'oration (.inasia /nvestments and .inance 'orp v0 'ourt of 1ppeals, 20 ,0 3o0 #7477%, -ctober 4,#995"$
Sus$ension o& "a%ment s! 7nsol enc% ()**1) Distin*(ish &etween s(s'ension o 'a%#ents and inso!)en"%$
SUGGESTED ANSWER:
Third Bank had a!read% i!ed a s(it a*ainst the 'rin"i'a! sto"kho!ders who had he!d the#se!)es !ia&!e 0oint!% and se)era!!% or the !oans o De&tor Cor'oration with said Bank$ A ter hearin*, the -EC dire"ted the a''oint#ent o a reha&i!itation re"ei)er and ordered the s(s'ension o a!! a"tions and "!ai#s a*ainst the De&tor "or'oration as we!! as a*ainst the 'rin"i'a! sto"kho!ders$ aA Dis"(ss the )a!idit% o the -EC order or s(s'ension> ?2@A
In s(s'ension o 'a%#ents, the de&tor is not inso!)ent$ 9e on!% needs ti#e within whi"h to "on)ert his assetMs into "ash with whi"h to 'a% his o&!i*ations when the% a!! d(e$ In the "ase o inso!)en"%, the de&tor is inso!)ent, that is, his assets are !ess than his !ia&i!ities$
A8TERNAT7>E ANSWER:
The o!!owin* are the distin"tions5
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&A "A dA eA A
Dis"(ss the e e"ts o the -EC order o s(s'ension on the 0(di"ia! ore"!os(re 'ro"eedin*s initiated &% Dirst Bank$ ?2@A .o(!d the order o s(s'ension ha)e an% e e"t on the ore"!os(re 'ro"eedin*s initiated &% -e"ond Bank> E+'!ain ?2@A .o(!d the order o s(s'ension ha)e an% e e"t on the s(it i!ed &% Third Bank> E+'!ain$ ?2@A .hat are the !e*a! "onseB(en"es o a reha&i!itation re"ei)ershi'> ?2@A .hat #eas(res #a% the re"ei)er take to 'reser)e the assets o De&tor Cor'oration> ?2@A
reha&i!itation in a""ordan"e with a reha&i!itation '!an a''ro)ed &% the -EC$

SUGGESTED ANSWER:
$ To 'reser)e the assets o the De&tor Cor'oration, the re"ei)er #a% take "(stod% o , and "ontro! o)er, a!! the e+istin* assets and 'ro'ert% o the "or'orationI e)a!(ate e+istin* assets and !ia&i!ities, earnin*s and o'erations o the "or'orationI and deter#ine the &est wa% to sa!)a*e and 'rote"t the interest o the in)estors and "reditors$
SUGGESTED ANSWER:
a$ The -EC order o s(s'ension o 'a%#ent is )a!id with res'e"t to the de&tor "or'oration, &(t not with res'e"t to the 'rin"i'a! sto"kho!ders$ The -EC has 0(risdi"tion to de"!are s(s'ension o 'a%#ents with res'e"t to "or'orations, 'artnershi' or asso"iations, &(t not with res'e"t to indi)id(a!s$
SUGGESTED ANSWER:
Sus$ension o& "a%ments2 Reme6ies (2003) .hen is the re#ed% o de"!aration in a state o s(s'ension o 'a%#ents a)ai!a&!e to a "or'oration>
SUGGESTED ANSWER:
?'er dondeeA This re#ed% is a)ai!a&!e to a "or'oration when it e+'erien"es ina&i!it% to 'a% oneGs de&ts and !ia&i!ities, and where the 'etitionin* "or'oration either5
6$
2$
&$ The -EC order o s(s'ension o 'a%#ent s(s'ended the 0(di"ia! 'ro"eedin*s initiated &% the Dirst Bank$ A""ordin* to the -('re#e Co(rt in a !ine o "ases, the s(s'ension order a''!ies to se"(red "reditors and to the a"tion to en or"e the se"(rit% a*ainst the "or'oration re*ard!ess o the sta*e thereo $
SUGGESTED ANSWER:
has s( i"ient 'ro'ert% to "o)er a!! its de&ts &(t oresees the i#'ossi&i!it% o #eetin* the# when the% a!! d(e ?so!)ent &(t i!!iB(idA or
has no s( i"ient 'ro'ert% ?inso!)entA &(t is (nder the #ana*e#ent o a reha&i!itation re"ei)er or a #ana*e#ent "o##ittee, the a''!i"a&!e !aw is P$D$ No$ :02-A '(rs(ant to -e"$ 3 'ar$
Letter !" Credit

8etter o& Cre6it: (ort'a'e (2001) Ri"ardo #ort*a*ed his ish'ond to AC Bank to se"(re a P6 Fi!!ion !oan$ In a se'arate transa"tion, he o'ened a !etter o "redit with the sa#e &ank or P300,000$00 in a)or o 9- Bank, a orei*n &ank, to '(r"hase o(t&oard #otors$ Eikewise, Ri"ardo e+e"(ted a -(ret% A*ree#ent in a)or o AC Bank$ The o(t&oard #otors arri)ed and were de!i)ered to Ri"ardo, &(t he was not a&!e to 'a% the '(r"hase 'ri"e thereo $ aA Can AC Bank take 'ossession o the o(t&oard #otors> .h%>
&A Can AC Bank a!so the
SUGGESTED ANSWER:
"$ The order o s(s'ension o 'a%#ents s(s'ended the ore"!os(re 'ro"eedin*s initiated &% the -e"ond Bank$ .hi!e the ore"!os(re is a*ainst the 'ro'ert% o a third 'art%, it is in rea!it% an a"tion to "o!!e"t the 'rin"i'a! o&!i*ation owned &% the "or'oration$ D(rin* the ti#e that the 'a%#ent o the 'rin"i'a! o&!i*ation is s(s'ended, the de&tor "or'oration is "onsidered to &e not in de a(!t and, there ore, e)en the ri*ht to en or"e the se"(rit%, whether owned &% the de&tor-"or'oration or o a third 'art%, has not %et arisen$
A8TERNAT7>E ANSWER:
"$ The s(s'ension order does not a''!% to a third 'art% #ort*a*e &e"a(se in s("h a "ase, the "redit is not %et &ein* en or"ed a*ainst the "or'oration &(t a*ainst the third 'art% #ort*a*ors 'ro'ert%$
SUGGESTED ANSWER:
ore"!ose the #ort*a*e o)er
d$ Dor the sa#e reason as in ?"A, the order o s(s'ension o 'a%#ents s(s'ended the s(it i!ed &% Third Bank a*ainst the 'rin"i'a! sto"kho!ders$
A8TERNAT7>E ANSWER:
ish'ond> E+'!ain$ ?3@A No, or AC Bank has no !e*a! standin*, #("h !ess a !ien, on the o(t&oard #otors$ Inso ar as AC Bank is "on"erned, it has 'ri)it% with the 'erson o Ri"ardo (nder the -(ret% A*ree#ent, and a !ien on the ish'ond &ased on the rea! estate #ort*a*e "onstit(ted therein$
aA
d$ The a"tion a*ainst the 'rin"i'a! sto"kho!ders s(ret% in a)or o the "or'oration is not s(s'ended as it is not an a"tion a*ainst the "or'oration &(t a*ainst the sto"kho!ders whose 'ersona!it% is se'arate ro# that o the "or'oration$
SUGGESTED ANSWER:
e$ 4nder PD :02A, the a''oint#ent o a reha&i!itation re"ei)er wi!! s(s'end a!! a"tions or "!ai#s a*ainst the "or'oration and the "or'oration wi!! &e '!a"ed (nder
&A Yes, &(t on!% to en or"e 'a%#ent o the 'rin"i'a! !oan o P6#i!!ion se"(red &% the rea! estate #ort*a*e on the ish'ond 8etter o& Cre6it2 Certi&ication &rom Consi'nee ()**3)
'00(
in"(r an% !ia&i!it%$ 8etters o& Cre6it2 8ia.ilit% o& a Noti&%in' ,an- (2003) aA .hat !ia&i!it%, i an% is in"(rred &% an ad)isin* or noti %in* &ank in a !etter o "redit transa"tion>
BO a*reed to se!! to AC, a -hi' and Fer"handise Broker, 2,300 "(&i" #eters o !o*s at P27 'er "(&i" #eter DOB$ A ter ins'e"tin* the !o*s, CD iss(ed a '(r"hase order$
On the arran*e#ents #ade ('on instr("tion o the "onsi*nee, 9NT Cor'oration o EA, Ca!i ornia, the -P Bank o EA iss(ed an irre)o"a&!e !etter o "redit a)ai!a&!e at si*ht in a)or o BO or the tota! '(r"hase 'ri"e o the !o*s$ The !etter o "redit was #ai!ed to DE Bank with the instr("tion <to orward it to the &ene i"iar%$= The !etter o "redit 'ro)ided that the dra t to &e drawn is on -P Bank and that it &e a""o#'anied &%, a#on* other thin*s, a "erti i"ation ro# AC, statin* that the !o*s ha)e &een a''ro)ed 'rior shi'#ent in a""ordan"e with the ter#s and "onditions o the '(r"hase order$ Be ore !oadin* on the )esse! "hartered &% AC, the !o*s were ins'e"ted &% "(sto# ins'e"tors and re'resentati)es o the B(rea( o Dorestr%, who "erti ied to the *ood "ondition and e+'orta&i!it% o the !o*s$ A ter the !oadin* was "o#'!eted, the Chie Fate o the )esse! iss(ed a #ate re"ei't o the "ar*o whi"h stated that the !o*s are in *ood "ondition$ 9owe)er, AC re (sed to iss(e the reB(ired "erti i"ation in the !etter o "redit$ Be"a(se o the a&sen"e o "erti i"ation, DE Bank re (sed to ad)an"e 'a%#ent on the !etter o "redit$
6A Fa% De Bank &e he!d !ia&!e (nder the !etter o "redit> E+'!ain$ 2A 4nder the a"ts a&o)e, the se!!er, BO, ar*(ed that DE Bank, &% a""e'tin* the o&!i*ation to noti % hi# that the irre)o"a&!e !etter o "redit has &een trans#itted to it on his &eha! , has "on ir#ed the !etter o "redit$ ConseB(ent!%, DE Bank is !ia&!e (nder the !etter o "redit$ Is the ar*(#ent tena&!e> E+'!ain$
SUGGESTED ANSWER:
6A No$ The !etter o "redit 'ro)ides as a "ondition a

"erti i"ation o AC$ .itho(t s("h "erti i"ation, there is no o&!i*ation on the 'art o DE Bank to ad)an"e 'a%#ent o the !etter o "redit$ (.eati Ban( v '1
#9& S 54&"
2A No$ DE Bank #a% ha)e "on ir#ed the !etter o "redit

when it noti ied BO, that an irre)o"a&!e !etter o "redit has &een trans#itted to it on its &eha! $ B(t the "onditions in the !etter o "redit #(st irst &e "o#'!ied with, na#e!% that the dra t &e a""o#'anied &% a "erti i"ation ro# AC$ D(rther, "on ir#ation o a !etter o "redit #(st &e e+'ressed$ (.eati
Ban( v '1 #9& s 54&"
8etters o& Cre6it2 8ia.ilit% o& a con&irmin' an6 noti&%in' .an- ()**3) In !etters o "redit in &ankin* transa"tions, distin*(ish the !ia&i!it% o a "on ir#in* &ank ro# a noti %in* &ank$
SUGGESTED ANSWER:
In "ase an%thin* wron* ha''ens to the !etter o "redit, a "on ir#in* &ank in"(rs !ia&i!it% or the a#o(nt o the !etter o "redit, whi!e a noti %in* &ank does not
Page SUGGESTED ANSWER:
-+ of 103
6A
It in"(rs no !ia&i!it% (n!ess it is a!so the ne*otiatin* &ank

&A Bra)o Bank re"ei)ed ro# Cis"o Bank &% re*istered #ai! an irre)o"a&!e !etter o "redit iss(ed &% De!ta Bank or the a""o(nt o Y Co#'an% in the a#o(nt o 4-P60,000,000 to "o)er the sa!e o "anned r(it 0(i"es$ The &ene i"iar% o the !etter o "redit was J Cor'oration whi"h !ater on 'artia!!% a)ai!ed itse! o the !etter o "redit &% s(&#ittin* to Bra)o Bank a!! do"(#ents re!ati)e to the shi'#ent o the "ans o r(it 0(i"es$ Bra)o Bank 'aid J Cor'oration or its 'artia! a)ai!#ent$ Eater, howe)er, it re (sed (rther a)ai!#ent &e"a(se o s(s'i"ions o ra(d &ein* 'ra"ti"ed ('on it and, instead , s(ed J Cor'oration to re"o)er what it had 'aid the !atter$ 9ow wo(!d %o( r(!e i %o( were the 0(d*e to de"ide the
Between the a''!i"antM&(%erMi#'orter and the &ene i"iar%Mse!!erMe+'orter H The a''!i"antM&(%erMi#'orter is the one who 'ro"(res the !etter o "redit and o&!i*es hi#se! to rei#&(rse the iss(in* &ank ('on re"ei't o the do"(#ents o tit!e, whi!e the &ene i"iar%Mse!!erMe+'orter is the one who in "o#'!ian"e with the "ontra"t o sa!e shi's the *oods to the &(%er and de!i)ers the do"(#ents o tit!e and dra t to the iss(in* &ank to re"o)er 'a%#ent or the *oods$ Their re!ationshi' is *o)erned &% the "ontra"t o sa!e$
SUGGESTED ANSWER:
"ontro)ers%> ?2@A
2A Between the iss(in* &ank and the &ene i"iar%Mse!!erMe+'orter H The iss(in* &ank is the one that iss(es the !etter o "redit and (ndertakes to 'a% the se!!er ('on re"ei't o the dra t and 'ro'er do"(#ents o tit!e and to s(rrender the do"(#ents to the &(%er ('on rei#&(rse#ent$ Their re!ationshi' is *o)erned &% the ter#s o the !etter o "redit iss(ed &% the &ank$ ;A Between the iss(in* &ank and the a''!i"antM&(%erMi#'orter H Their re!ationshi' is *o)erned &% the ter#s o the a''!i"ation and a*ree#ent or the iss(an"e o the !etter o "redit &% the &ank$
8etters o& Cre6it2 T#ree Distinct Contract Relations#i$s (2002) E+'!ain the three ?;A distin"t &(t intertwined "ontra"t re!ationshi's that are indis'ensa&!e in a !etter o "redit transa"tion$
SUGGESTED ANSWER:
The three ?;A distin"t &(t intertwined "ontra"t re!ationshi's that are indis'ensa&!e in a !etter o "redit transa"tion are5
Maritime C!mmer%e
A era'e2 "articular A era'e s! General A era'e (2003)
SUGGESTED ANSWER:
FMO I!o* de Fani!a with a "ar*o o 300 tons o iron ore !e t the Port o Qa#&oan*a Cit% &o(nd or Fani!a$ Dor one reason or another, FMO I!o* de Fani!a hit a s(&#er*ed o&sta"!e "a(sin* it to sink a!on* with its "ar*o$ A sa!)or, -a!)ador, In"$, was "ontra"ted to re !oat the )esse! or P6 Fi!!ion$ .hat kind o a)era*e was the re !oatin* ee o P6 #i!!ion, and or whose a""o(nt sho(!d it &e> .h%> ?7@A
SUGGESTED ANSWER:
Parti"(!ar A)era*e$ The owner o the )esse! sha!! sho(!der the a)era*e$ Genera!!% s'eakin*, si#'!e or 'arti"(!ar a)era*es in"!(de a!! e+'enses and da#a*es "a(sed to the )esse! or "ar*o whi"h ha)e not in(red to the "o##on &ene it ?Art$ 80:, and are, there ore, to &e &orne on!% &% the owner o the 'ro'ert% whi"h *a)e rise to the sa#e ?Art$ 860A whi!e *enera! or *ross a)era*es in"!(de La!! the da#a*es and e+'enses whi"h are de!i&erate!% "a(sed in order to sa)e the )esse!, its "ar*o, or &oth at the sa#e ti#e, ro# a rea! and known riskL ?Art$ 866A$ Bein* or the "o##on &ene it, *ross a)era*es are to &e &orne &% the owners o the arti"!es sa)ed ?Art$ 862A$ In the 'resent "ase there is no 'roo that the )esse! had to &e '(t a !oat to sa)e it ro# an i##inent dan*er$
,ottomr% ()**3)
Gi*i o&tained a !oan ro# 1o0o Cor'oration, 'a%a&!e in insta!!#ents$ Gi*i e+e"(ted a "hatte! #ort*a*e in a)or o 1o0o where&% she trans erred <in a)or o 1o0o, its s(""essors and assi*ns, a!! her tit!e, ri*hts $$$ to a )esse! o whi"h Gi*i is the a&so!(te owner$= The "hatte! #ort*a*e was re*istered with the Phi!i''ine Coast G(ard '(rs(ant to PD 6326$ Gi*i de a(!ted and had a tota! a""o(nta&i!it% o P;F$ B(t 1o0o "o(!d not ore"!ose the #ort*a*e on the )esse! &e"a(se it sank d(rin* a t%'hoon$
Feanwhi!e, E(tan* Cor'oration whi"h rendered sa!)a*e ser)i"es or re !oatin* the )esse! s(ed Gi*i$ .hose !ien sho(!d &e *i)en 're eren"e, that o 1o0o or E(tan*>
SUGGESTED ANSWER:
E(tan* Cor'orations !ien sho(!d &e *i)en 're eren"e$ The !ien o 1o0o &% )irt(e o a !oan o &otto#r% was e+tin*(ished when the )esse! sank$ 4nder s("h !oan on &otto#r% 1o0o a"ted not on!% as "reditor &(t a!so as ins(rer$ 1o0os ri*ht to re"o)er the a#o(nt o the !oan is 'redi"ated on the sa e arri)a! o the )esse! at the 'ort o destination$ The ri*ht was !ost when the )esse! sank ?-e" 67 PD 6326A Carria'e o& Goo6s: De iation: 8ia.ilit% (2001) On a "!ear weather, FMO -(ndo, "arr%in* ins(red "ar*o, !e t the 'ort o Fani!a &o(nd or Ce&($ .hi!e at sea, the )esse! en"o(ntered a stron* t%'hoon or"in* the "a'tain to steer the )esse! to the nearest is!and where it sta%ed or se)en da%s$ The )esse! ran o(t o 'ro)isions or its 'assen*ers$ ConseB(ent!%, the )esse! 'ro"eeded to Ee%te to re'!enish its s(''!ies$ Ass(#in* that the "ar*o was da#a*ed &e"a(se o s("h de)iation, who &etween the ins(ran"e "o#'an% and the owner o the "ar*o &ears the !oss> E+'!ain$
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The ins(ran"e "o#'an% sho(!d &ear the !oss to the "ar*o &e"a(se the de)iation o the )esse! was 'ro'er in order to a)oid a 'eri!, whi"h was the stron* t%'hoon$ The r(nnin* o(t o 'ro)isions was a dire"t "onseB(en"e o the 'ro'er de)iation in order to a)oid the 'eri! o the t%'hoon$
A8TERNAT7>E ANSWER:
The owner o the "ar*o &ears the !oss &e"a(se in the "ase at &ar, the% sta%ed too !on* at the is!and, #akin* it an i#'ro'er de)iation$ E)er% de)iation not s'e"i ied in -e"$ 627 is i#'ro'er$ ?-e"$ 623, Ins(ran"e CodeA Carria'e o& Goo6s2 De iation2 W#en "ro$er (2001) 4nder what "ir"(#stan"es "an a )esse! 'ro'er!% 'ro"eed to a 'ort other than its 'ort o destination> E+'!ain$ ?7@A
SUGGESTED ANSWER:
Dili'ence (2001) -tar -hi''in* Eines a""e'ted 600 "artons o sardines ro# Faster to &e de!i)ered to 333 Co#'an% in Fani!a$ On!% 88 "artons were de!i)ered, howe)er, these were in &ad "ondition$ 333 Co#'an% "!ai#ed ro# -tar -hi''in* Eines the )a!(e o the #issin* *oods, as we!! as the da#a*ed *oods$ -tar -hi''in* Eines re (sed &e"a(se the or#er ai!ed to 'resent a &i!! o !adin*$ Reso!)e with reasons the "!ai# o 333 Co#'an%$ ?7@A
SUGGESTED ANSWER:
De)iation is 'ro'er5 aA when "a(sed &% "ir"(#stan"es o)er whi"h neither the #aster nor the owner o the shi' has an% "ontro!I &A when ne"essar% to "o#'!% with a warrant% or a)oid a 'eri!, whether or not the 'eri! is ins(red a*ainstI "A when #ade in *ood aith, and ('on reasona&!e *ro(nds o &e!ie in its ne"essit% to a)oid a 'eri!I or dA when in *ood aith, or the '(r'ose o sa)in* h(#an !i e, or re!ie)in* another )esse! in distress$ ?-e"$ 627, Ins(ran"e CodeA Carria'e o& Goo6s2 E9ercise E9traor6inar%
The "!ai# o 333 Co#'an% is #eritorio(s, e)en i it ai!s to 'resent a &i!! o !adin*$ A!tho(*h a &i!! o !adin* is the &est e)iden"e o the "ontra"t o "arria*e or "ar*o, ne)erthe!ess s("h "ontra"t "an e+ist e)en witho(t a &i!! o !adin*$ Eike an% other "ontra"t, a "ontra"t o "arria*e is a #eetin* o #inds that *i)es rise to an o&!i*ation on the 'art o the "arrier to trans'ort the *oods$ 1(ris'r(den"e has he!d that the #o#ent the "arrier re"ei)es the "ar*o or trans'ort, then its d(t% to e+er"ise e+traordinar% di!i*en"e arises0 ('ia0 +aritima v0 /nsurance 'o0 of 3orth
1merica, 20,0 3o0 =8#69&5, -ctober $7, #9&5< 3egre v0 'abahug Shipping D 'o0, 20,0 3o0 =8#9&79, 1pril %9, #9&&"
A8TERNAT7>E ANSWER:
-tar -hi''in* Eines "an re (se to honor 333 Co#'an%Gs "!ai# or the #issin* and da#a*ed *oods$ The Bi!! o Eadin* is the do"(#ent o tit!e that !e*a!!% esta&!ishes the ownershi' o 333 Co#'an% o)er said *oods$ 333 needs to 'resent the Bi!! o Eadin* to !e*a!!% "!ai# said *oods$
(3ational Mnion .ire /nsurance of ;ittsburg v0 Stolt83ielaen, 20,0 3o0 64956, 1pril %&, #997"
C#arter "art% ()**))

The -aad De) Co enters into a )o%a*e "harter with JYQ o)er the !atters )esse!, the FO Ead%Eo)e$ Be ore the -aad "o(!d !oad it, JYQ so!d Ead% Eo)e to Os!o& Fariti#e Co whi"h de"ided to !oad it or its own a""o(nt$ aA Fa% JYQ -hi''in* Co )a!id!% ask or the res"ission o the "harter 'art%> I so, "an -aad re"o)er da#a*es> To what e+tent> &A I Os!o& did not !oad it or its own a""o(nt, is it &o(nd &% the "harter 'art%>
"A E+'!ain the #eanin* o <owner 'ro ha" )i"e o the )esse!$= In what kind o "harter 'art% does this o&tain>
SUGGESTED ANSWER:
'00(
aA JYQ #a% ask or the res"ission o the "harter 'art% i , as in this "ase, it so!d the )esse! &e ore the "harterer has &e*(n to !oad the )esse! and the '(r"haser !oads it or his own a""o(nt$ -aad #a% re"o)er da#a*es to the e+tent o its !osses ?Art 28: Code o Co##er"eA &A I Os!o& did not !oad Ead% Eo)e or its own a""o(nt, it wo(!d &e &o(nd &% the "harter 'art%, &(t JYQ wo(!d ha)e to inde#ni % Os!o& i it was not in or#ed o the Charter Part% at the ti#e o sa!e$ ?Art 28: Code o Co##er"eA
"A The ter# <Owner Pro 9a" Oi"e o

(=itonJua Shipping 'o 5#9#7 #71ug#969"
the Oesse!,= is *enera!!% (nderstood to &e the "harterer o the )esse! in the "ase o &are&oat or de#ise "harter
v 3ational SeamenIs Board 2,
C#arter "art% (2003)

4nder a "harter 'art%, JJO Tradin* Co#'an% shi''ed s(*ar to Co"a-Co!a Co#'an% thro(*h -- Ne*ros -hi''in* Cor'$, ins(red &% Ca'ito! Ins(ran"e Co#'an%$ The "ar*o arri)ed &(t with shorta*es$ Co"a-Co!a de#anded ro# Ca'ito! Ins(ran"e Co$ P300$000 in sett!e#ent or JJO Tradin*$ The FF Re*iona! Tria! Co(rt, where the "i)i! s(it was i!ed, La&so!)ed the ins(ran"e "o#'an%, de"!arin* that (nder the Code o Co##er"e, the shi''in* a*ent is "i)i!!% !ia&!e or da#a*es in a)or o third 'ersons d(e to the "ond("t o the "arrierGs "a'tain, and the sti'(!ation in the "harter 'art% e+e#'tin* the owner ro# !ia&i!it% is not a*ainst '(&!i" 'o!i"%$ Co"a-Co!a a''ea!ed$ .i!! its a''ea! 'ros'er> Reason &rie !%$ ?3@A
SUGGESTED ANSWER:
No$ The a''ea! o Co"a-Co!a wi!! not 'ros'er$ 4nder Arti"!e 387 o the Code o Co##er"e, the shi''in* a*ent is "i)i!!% !ia&!e or da#a*es in a)or o third 'ersons d(e to the "ond("t o the "arrierGs "a'tain, and the shi''in* a*ent "an e+e#'t hi#se! there ro# on!% &% a&andonin* the )esse! with a!! his eB(i'#ent and the rei*ht he #a% ha)e earned d(rin* the )o%a*e$ On the other hand, ass(#in* there is &are&oat "harter, the sti'(!ation in the "harter 'art% e+e#'tin* the owner ro# !ia&i!it% is not a*ainst '(&!i" 'o!i"% &e"a(se the '(&!i" at !ar*e is not in)o!)ed (Eome /nsurance 'o0 v0 1merican Steamship
1gencies, /nc0, %$ S',1%5 (#9&6"0
C<GSA: "rescri$tion o& ClaimsFActions (2003)
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41 of 103
AA entered into a "ontra"t with BB thr( CC to trans'ort !adiesG wear ro# Fani!a to Dran"e with transhi'#ent at Taiwan$ -o#ehow the *oods were not !oaded at Taiwan on ti#e$ 9en"e, when the *oods arri)ed in Dran"e, the% arri)ed Lo -seasonL and AA was 'aid on!% or one-ha! the )a!(e &% the &(%er$ AA "!ai#ed da#a*es ro# the shi''in* "o#'an% and its a*ent$ The de ense o the res'ondents was 'res"ri'tion$ Considerin* that the !adiesG wear s( ered L!oss o )a!(e,L as "!ai#ed &% AA, sho(!d the 'res"ri'ti)e 'eriod &e one %ear (nder the Carria*e o Goods &% -ea A"t, or ten %ears (nder the Ci)i! Code> E+'!ain &rie !%$ ?3@A
SUGGESTED ANSWER:
the NCC 'res"ri'ti)e 'eriods, in"!(din* Art 6633 o the NCC wi!! a''!% (1ng v 'ompania +aritama #$$ s
&77"
The a''!i"a&!e 'res"ri'ti)e 'eriod is ten %ears (nder the Ci)i! Code$ The one-%ear 'res"ri'ti)e 'eriod (nder the Carria*e o Goods &% -ea A"t a''!ies in "ases o !oss or da#a*es to the "ar*o$ The ter# L!ossL as inter'reted &% the -('re#e Co(rt in +itsui -0S0@0 =ines =td0 v0 'ourt of 1ppeals, %64 S',1 $&& (#996" , "onte#'!ates a sit(ation where no de!i)er% at a!! was #ade &% the "arrier o the *oods &e"a(se the sa#e had 'erished or *one o(t o "o##er"e deteriorated or de"a%ed whi!e in transit$ In the 'resent "ase, the shi'#ent o !adiesG wear was a"t(a!!% de!i)ered$ The L!oss o )a!(eL is not the tota! !oss "onte#'!ated &% the Carria*e o Goods &% -ea A"t$
C<GSA2 "rescri$tion o& Claims ()**2)

A !o"a! "onsi*nee so(*ht to en or"e 0(di"ia!!% a "!ai# a*ainst the "arrier or !oss o a shi'#ent o dr(#s o !(&ri"atin* oi! ro# 1a'an (nder the Carria*e o Goods &% -ea A"t ?COG-AA a ter the "arrier had re0e"ted its de#and$ The "arrier '!eaded in its Answer the a ir#ati)e de ense o 'res"ri'tion (nder the 'ro)isions o said A"t inas#("h as the s(it was &ro(*ht &% the "onsi*nee a ter one ?6A %ear ro# the de!i)er% o the *oods$ In t(rn, the "onsi*nee "ontended that the 'eriod o 'res"ri'tion was s(s'ended &% the written e+tra0(di"ia! de#and it had #ade a*ainst the "arrier within the one- %ear 'eriod, '(rs(ant to Arti"!e 6633 o the Ci)i! Code 'ro)idin* that the 'res"ri'tion o a"tions is interr('ted when there is a written e+tra0(di"ia! de#and &% the "reditors$
aA 9as the a"tion in a"t 'res"ri&ed> .h%> &A I the "onsi*nees a"tion were 'redi"ated on #isde!i)er% or "on)ersion o the *oods, wo(!d %o(r answer &e the sa#e> E+'!ain &rie !%$
SUGGESTED ANSWER:
aA The a"tion taken &% the !o"a! "onsi*nee has, in

a"t, 'res"ri&ed$ The 'eriod o one %ear (nder the Carria*e o Goods &% -ea A"t ?COG-AA is not interr('ted &% a written e+tra0(di"ia! de#and$ The 'ro)isions o Art 6633 o the NCC #ere!% a''!% to 'res"ri'ti)e 'eriods 'ro)ided or in said Code and not to s'e"ia! !aws s("h as COG-A e+"e't when otherwise 'ro)ided$ (Dole v +aritime 'o #56 s ##6"0 the "onsi*nees a"tion were 'redi"ated on #isde!i)er% or "on)ersion o *oods, the 'ro)isions o the COG-A wo(!d &e ina''!i"a&!e$ In these "ases,
&A I
C<GSA2 "rescri$tion o& Claims (2000) RC i#'orted "o#'(ter #other&oards ro# the 4nited -tates and had the# shi''ed to Fani!a a&oard an o"ean- *oin* "ar*o shi' owned &% BC -hi''in* Co#'an%$ .hen the "ar*o arri)ed at Fani!a sea'ort and de!i)ered to RC, the "rate a''eared inta"tI &(t ('on ins'e"tion o the "ontents, RC dis"o)ered that the ite#s inside had a!! &een &ad!% da#a*ed$ 9e did not i!e an% noti"e o da#a*e or an%thin* with an%one, !east o a!! with BC -hi''in* Co#'an%$ .hat he did was to 'ro"eed dire"t!% to %o(r o i"e to "ons(!t %o( a&o(t whether he sho(!d ha)e *i)en a noti"e o da#a*e and how !on* a ti#e he had to initiate a s(it (nder the 'ro)isions o the Carria*e o Goods &% -ea A"t ?CA 23A$ .hat wo(!d %o(r ad)i"e &e> ?2@A
SUGGESTED ANSWER:
Doctrine o& 7nscruta.le /ault ()**+) E+'!ain the do"trine in Fariti#e a""idents H Do"trine o Ins"r(ta&!e Da(!t
F% ad)i"e wo(!d &e that RC sho(!d *i)e noti"e o the da#a*e s(stained &% the "ar*o within ; da%s and that he has to i!e the s(it to re"o)er the da#a*e s(stained &% the "ar*o within one %ear ro# the date o the de!i)er% o the "ar*o to hi#$ C<GSA2 "rescri$ti e "erio6 ()**1) .hat is the 'res"ri'ti)e 'eriod or a"tions in)o!)in* !ost or da#a*ed "ar*o (nder the Carria*e o Goods &% -ea A"t>
SUGGESTED ANSWER:
ONE YEAR a ter the de!i)er% o the *oods or the date when the *oods sho(!d ha)e &een de!i)ered ?-e" ;?2A, COG-AA Doctrine o& 7nscruta.le /ault ()**1) 6$ 2 )esse!s "o#in* ro# the o''osite dire"tions "o!!ided with ea"h other d(e to a(!t i#'(ta&!e to &oth$ .hat are the !ia&i!ities o the two )esse!s with res'e"t to the da#a*e "a(sed to the# and their "ar*oes> E+'!ain$ 2$ I it "annot &e deter#ined whi"h o the two )esse!s was at a(!t res(!tin* in the "o!!ision, whi"h 'art% sho(!d &ear the da#a*e "a(sed to the )esse!s and the "ar*oes> E+'!ain$ ;$ .hi"h 'art% sho(!d &ear the da#a*e to the )esse!s and the "ar*oes i the "a(se o the "o!!ision was a ort(ito(s e)ent> E+'!ain$
SUGGESTED ANSWER:
6$ Ea"h )esse! #(st &ear its own da#a*e$ Both o the# were at a(!t$ ?Art 827, Code o Co##er"eA
2$ Ea"h o the# sho(!d &ear their res'e"ti)e da#a*es$ -in"e it "annot &e deter#ined as to whi"h )esse! is at a(!t$ This is the do"trine o <ins"r(ta&!e a(!t$= ;$ No 'art% sha!! &e he!d !ia&!e sin"e the "a(se o the "o!!ision is ort(ito(s e)ent$ The "arrier is not an ins(rer$
Page SUGGESTED ANSWER:
4' of 103
4nder the <do"trine o ins"r(ta&!e a(!t,= where a(!t is esta&!ished &(t it "annot &e deter#ined whi"h o the two )esse!s were at a(!t, &oth sha!! &e dee#ed to ha)e &een at a(!t$ Doctrine o& 7nscruta.le /ault ()**:) A se)ere t%'hoon was ra*in* when the )esse! -- Fasdaa# "o!!ided with FO Prin"es$ It is "on"eded that the t%'hoon was the #a0or "a(se o the "o!!ision, a!tho(*h there was a )er% stron* 'ossi&i!it% that it "o(!d ha)e &een a)oided i the "a'tain o -Fasdaa# was not dr(nk and the "a'tain o the FO Prin"es was not as!ee' at the ti#e o "o!!isions$ .ho sho(!d &ear the da#a*es to the )esse!s and their "ar*oes> ?3@A
SUGGESTED ANSWER:
6A .hat do %o( (nderstand o the <r(!e= in)oked &% I"hi> 2A Are there e+"e'tions to the <!i#ited !ia&i!it% r(!e=>
SUGGESTED ANSWER:
6A B% <!i#ited !ia&i!it% r(!e= is #eant that the !ia&i!it% o a shi'owner or da#a*es in "ase o !oss is !i#ited to the )a!(e o the )esse! in)o!)ed$ 9is other 'ro'erties "annot &e rea"hed &% the 'arties entit!ed to da#a*es$
2A Yes$ .hen the shi' owner o the )esse! in)o!)ed is *(i!t% o ne*!i*en"e, the <!i#ited !ia&i!it% r(!e= does not a''!%$ In s("h "ase, the shi' owner is !ia&!e to the (!! e+tent o the da#a*es s(stained &% the a**rie)ed 'arties
(+ecenas v '1 #67 s 6$"
The shi'owners o -- Fasdaa# and FO Prin"ess sha!! ea"h &ear their res'e"ti)e !oss o )esse!s$ Dor the !osses and da#a*es s( ered &% their "ar*oes &oth shi'owners are so!idari!% !ia&!e$ 8imite6 8ia.ilit% Rule ()**3)
Toni, a "o'ra dea!er, !oaded 6000 sa"ks o "o'ra on &oard the )esse! FO Toni"hi ?a "o##on "arrier en*a*ed in "oastwise trade owned &% I"hiA or shi'#ent ro# P(erto Ga!era to Fani!a$ The "ar*o did not rea"h Fani!a &e"a(se the )esse! "a'siCed and sank with a!! its "ar*o$
8imite6 8ia.ilit% Rule ()**+) E+'!ain the do"trine in Fariti#e a""idents H The Do"trine o Ei#ited Eia&i!it%
SUGGESTED ANSWER:
4nder the <do"trine o !i#ited !ia&i!it%= the e+"!(si)e!% rea! and h%'othe"ar% nat(re o #ariti#e !aw o'erates to !i#it the !ia&i!it% o the shi'owner to the )a!(e o the )esse!, earned rei*hta*e and 'ro"eeds o the ins(ran"e$ 9owe)er, s("h do"trine does not a''!% i the shi'owner and the "a'tain are *(i!t% o ne*!i*en"e$ 8imite6 8ia.ilit% Rule ()***)
Thinkin* that the i#'endin* t%'hoon was sti!! 27 ho(rs awa%, FO Pioneer !e t 'ort to sai! or Ee%te$ That was a #is"a!"(!ation o the t%'hoon si*na!s &% &oth the shi'*er i!n 1++0,'00- U)dated by Dondee
.hen Toni s(ed I"hi or da#a*es &ased on &rea"h o "ontra"t, the !atter in)oked the <!i#ited !ia&i!it% r(!e$=
owner and the "a'tain as the t%'hoon "a#e ear!ier and o)ertook the )esse!$ The )esse! sank and a n(#&er o 'assen*ers disa''eared with it$ Re!ati)es o the #issin* 'assen*ers "!ai#ed da#a*es a*ainst the shi'owner$ The shi'owner set (' the de ense that (nder the do"trine o !i#ited !ia&i!it%, his !ia&i!it% was "o-e+tensi)e with his interest in the )esse!$ As the )esse! was tota!!% !ost, his !ia&i!it% had a!so &een e+tin*(ished$ a$ 9ow wi!! %o( ad)i"e the "!ai#ants> Dis"(ss the do"trine o !i#ited !ia&i!it% in #ariti#e !aw$ ?;@A
&$ Ass(#in* the that the )esse! was ins(red, #a%
and #an% o its 'assen*ers drowned and died$ A!! its "ar*oes were !ost$ The "o!!ision o""(rred at ni*htti#e &(t the sea was "a!#, the weather air and )isi&i!it% was *ood$ Prior to the "o!!ision and whi!e sti!! 7 na(ti"a! #i!es a'art, Don
"!ai#ants *o a ter the ins(ran"e 'ro"eeds> ?;@A

SUGGESTED ANSWER:
a$ 4nder the do"trine o !i#ited !ia&i!it% in #ariti#e !aw, the !ia&i!it% o the shi'owner arisin* ro# the o'eration o a shi' is "on ined to the )esse!, eB(i'#ent, and rei*ht, or ins(ran"e, i an%, so that i the shi'owner a&andoned the shi', eB(i'#ent, and rei*ht, his !ia&i!it% is e+tin*(ished$ 9owe)er, the do"trine o !i#ited !ia&i!it% does not a''!% when the shi'owner or "a'tain is *(i!t% o ne*!i*en"e$ &$ Yes$ In "ase o a !ost )esse!, the "!ai#ants #a% *o a ter the 'ro"eeds o the ins(ran"e "o)erin* the )esse!$ 8imite6 8ia.ilit% Rule (2000)
FO Fari'osa, one o i)e 'assen*er shi's owned &% Farina Na)i*ation Co, sank o the "oast o Findoro whi!e en ro(te to I!oi!o Cit%$ Fore than 200 'assen*ers 'erished in the disaster$ E)iden"e showed that the shi' "a'tain i*nored t%'hoon &(!!etins iss(ed &% Pa*-asa d(rin* the 27-ho(r 'eriod i##ediate!% 'rior to the )esse!s de'art(re ro# Fani!a$ The &(!!etins warned a!! t%'es o sea "ra ts to a)oid the t%'hoons e+'e"ted 'ath near Findoro$ To #ake #atters worse, he took #ore !oad than was a!!owed or the shi's rated "a'a"it%$ -(ed or da#a*es &% the )i"ti#s s(r)i)in* re!ati)es, Farina Na) Co "ontended 6A that its !ia&i!it%, i an%, had &een e+tin*(ished with the sinkin* o FO Fari'osaI and 2A that ass(#in* it had not &een so e+tin*(ished, s("h !ia&i!it% sho(!d &e !i#ited to the !oss o the "ar*o$ Are these "ontentions #eritorio(s in the "onte+t o a''!i"a&!e 'ro)isions o the Code o Co##er"e> ?;@A
SUGGESTED ANSWER:
Yes$ The "ontentions o Farina Na) Co are #eritorio(s$ The "a'tain o FO Fari'osa is *(i!t% o ne*!i*en"e in i*norin* the t%'hoon &(!!etins iss(ed &% PAGA-A and in o)er!oadin* the )esse!$ B(t on!% the "a'tain o the )esse! FO Fari'osa is *(i!t% o ne*!i*en"e$ The shi' owner is not$ There ore, the shi' owner "an in)oke the do"trine o !i#ited !ia&i!it%$ 8imite6 8ia.ilit% Rule2 Doctrine o& 7nscruta.le /ault ()**))
In a "o!!ision &etween FMT Fani!a, a tanker, and FMO Don C!aro, an inter-is!and )esse!, Don C!aro sank
Page
43 of 103
SUGGESTED ANSWER:
C!aro a!read% si*hted Fani!a on its radar s"reen$ Fani!a had no radar eB(i'#ent$ As or s'eed, Don C!aro was twi"e as ast as Fani!a$
At the ti#e o the "o!!ision, Fani!a ai!ed to o!!ow R(!e 6: o the Internationa! R(!es o the Road whi"h reB(ires 2 )esse!s #eetin* head on to "han*e their "o(rse &% ea"h )esse! steerin* to star&oard ?ri*htA so that ea"h )esse! #a% 'ass on the 'ort side ?!e tA o the other$ Fani!a si*na!ed that it wo(!d t(rn to the 'ort side and steered a""ordin*!%, th(s res(!tin* in the "o!!ision$ Don C!aros "a'tain was o -d(t% and was ha)in* a drink at the shi's &ar at the ti#e o the "o!!ision$
Yes, &(t s(&0e"t to the do"trine o !i#ited !ia&i!it%$ The do"trine is to the e e"t that the !ia&i!it% o the shi'owners wo(!d on!% &e to the e+tent o an% re#ainin* )a!(e o the )esse!, 'ro"eeds o ins(ran"e, i an%, and earned rei*hta*e$ Gi)en the a"t(a! settin*s, the shi'owner hi#se! was not *(i!t% o ne*!i*en"e and, there ore, the do"trine "an we!! a''!% (1mparo de los Santos v '1 #6& s &9" 8imite6 8ia.ilit% Rule2 General A era'e 8oss (2000) J -hi''in* Co#'an% s'ent a!#ost a ort(ne in re ittin* and re'airin* its !(+(r% 'assen*er )esse!, the FO Farina, whi"h '!ied the inter-is!and ro(tes o the "o#'an% ro# Ea 4nion in the north to Da)ao Cit% in the so(th$ The FO Farina #et an (nti#e!% ate d(rin* its 'ost-re'air )o%a*e$ It sank o the "oast o Qa#&a!es whi!e en ro(te to Ea 4nion ro# Fani!a$ The in)esti*ation showed that the "a'tain a!one was ne*!i*ent$ There were no "as(a!ties in that disaster$ Da"ed with a "!ai# or the 'a%#ent o the re ittin* and re'air, J -hi''in* "o#'an% asserted e+e#'tion ro# !ia&i!it% on the &asis o the h%'othe"ar% or !i#ited !ia&i!it% r(!e (nder Arti"!e 387 o the Code o Co##er"e$ Is J -hi''in* Co#'an%s assertion )a!id> E+'!ain ?;@A$
SUGGESTED ANSWER:
SUGGESTED ANSWER:
aA .ho wo(!d %o( ho!d !ia&!e or the "o!!ision> &A I Don C!aro was at a(!t, #a% the heirs o the 'assen*ers who died and the owners o the "ar*oes re"o)er da#a*es ro# the owner o said )esse!>
I "an ho!d the 2 )esse!s !ia&!e$ In the 'ro&!e# *i)en, whether on the &asis o the a"t(a! settin*s or (nder the do"trine o ins"r(ta&!e a(!t, &oth )esse!s "an &e said to ha)e &een *(i!t% o ne*!i*en"e$ The !ia&i!it% o the 2 "arriers or the death or in0(r% o 'assen*ers and or the !oss o or da#a*e to the *oods arisin* ro# the "o!!ision is so!idar%$ Neither "arrier #a% in)oke the do"trine o !ast "!ear "han"e whi"h "an on!% &e re!e)ant, i at a!!, &etween the two )esse!s &(t not on the "!ai#s #ade &% 'assen*ers or shi''ers
(=itonJua Shipping v 3ational Seamen Board 2, 5#9#7 #71ug#969"
No$ The assertion o J -hi''in* Co#'an% is not )a!id$ The tota! destr("tion o the )esse! does not a e"t the !ia&i!it% o the shi' owner or re'airs on the )esse! "o#'!eted &e ore its !oss$ 8imite6 8ia.ilit% Rule2 General A era'e 8oss (2000)
FO -('erDast, a 'assen*er-"ar*o )esse! owned &% -D -hi''in* Co#'an% '!%in* the inter-is!and ro(tes, was on its wa% to Qa#&oan*a Cit% ro# the Fani!a 'ort when it a""identa!!%, and witho(t a(!t or ne*!i*en"e o an%one on the shi', hit a h(*e !oatin* o&0e"t$ The a""ident "a(sed da#a*e to the )esse! and !oss o an a""o#'an%in* "rated "ar*o o 'assen*er PR$ In order to !i*hten the )esse! and sa)e it ro# sinkin* and in order to a)oid risk o da#a*e to or !oss o the rest o the shi''ed ite#s ?none o whi"h was !o"ated on the de"kA, so#e had to &e 0ettisoned$ -D -hi''in* had the )esse! re'aired at its 'ort o destination$ -D -hi''in* therea ter i!ed a "o#'!aint de#andin* a!! the other "ar*o owners to share in the tota! re'air "osts in"(rred &% the "o#'an% and in the )a!(e o the !ost and 0ettisoned "ar*oes$ In answer to the "o#'!aint, the shi''ers so!e "ontention was that, (nder the Code o Co##er"e, ea"h da#a*ed 'art% sho(!d &ear its or his own da#a*e and those that did not s( er an% !oss or da#a*e were not o&!i*ated to #ake an% "ontri&(tion in a)or o those who did$ Is the shi''ers "ontention )a!id> E+'!ain ?2@A
SUGGESTED ANSWER:
Page 43 of 103 and a!so the a"t that A does not ha)e the #eans and reso(r"es to in)est P300th in the se"(rit% a*en"%$ A8TERNAT7>E ANSWER:
6A The 'rose"(tor #a% esta&!ish the a"t that the P300th wo(!d "onstit(te a #a0or in)est#ent and %et A is not e)en e!e"ted #e#&er o the BOD or one o the o i"ers$ D(rther#ore, it #a% a!so &e shown that A does not e)en ha)e the #eans to raise the a#o(nt o P300th and that the o i"ers or #a0orit% o the dire"tors are orei*ners$
SUGGESTED ANSWER:
2A No$ The #ere a"t o &ein* a "o##on !aw wi e o a orei*ner does not &rin* her within the a#&it o the Anti-D(##% Eaw$
A8TERNAT7>E ANSWER:
2A Yes$ Bein* a "o##on !aw wi e, it "an &e 'res(#ed that she is the one r(nnin* the &(siness, whi"h raises a 'ri#a a"ie 'res(#'tion o )io!ation o the Anti-d(##% Eaw, ?RA 2087A$ NationaliDe6 Acti ities or Un6erta-in's ()**3) Ce!este, a do#esti" "or'oration who!!% owned &% Di!i'ino "itiCens, is en*a*ed in tradin* and o'erates as *enera! "ontra"tor$ It &(%s and rese!!s the 'rod("ts o Fati!de, a do#esti" "or'oration, :0@ o whose "a'ita! sto"k is owned &% a!iens$ A!! o Fati!des *oods are #ade in the Phi!i''ines ro# #ateria!s o(nd or 'rod("ed in the Phi!i''ines$ On the other hand, EC/ Inte*rated is a 600@ Di!i'ino owned "or'oration and #an( a"t(rer o as&estos 'rod("ts$ Ce!este and EC/ took 'art in a '(&!i" &iddin* "ond("ted &% F.-- or its as&estos 'i'e reB(ire#ents$ Ce!este won the &id, ha)in* o ered 6;@ !ower than that o ered &% EC/I and F.-awarded the "ontra"t to s(''!% its as&estos 'i'es to Ce!este$ EC/ so(*ht to n(!!i % the award in a)or o Ce!este$ 6A Is Ce!este &arred (nder the D!a* Eaw ro# takin* 'art in &iddin*s to s(''!% the *o)ern#ent> 2A Did Ce!este and Fati!de )io!ate the AntiD(##% Eaw> ;A Did Ce!este and Fati!de )io!ate the Retai! Trade Nationa!iCation Eaw> E+'!ain$
SUGGESTED ANSWER:
No$ The shi''ers "ontention is not )a!id$ The owners o the "ar*o 0ettisoned, to sa)e the )esse! ro# sinkin* and to sa)e the rest o the "ar*oes, are entit!ed to "ontri&(tion$ The 0ettisonin* o said "ar*oes "onstit(te *enera! a)era*e !oss whi"h entit!es the owners thereo to "ontri&(tion ro# the owner o the )esse! and a!so ro# the owners o the "ar*oes sa)ed$ -D -hi''in* is not entit!ed to "ontri&(tionM rei#&(rse#ent or the "osts o re'airs on the )esse! ro# the shi''ers$
Nati!nali7ed A%tivitie !r Underta1ing

NationaliDe6 Acti ities or Un6erta-in's ()**3) 6A A in)ested P300th in a se"(rit% a*en"% on O"to&er ;0, 6::0$ 9e was "har*ed with &ein* a d(##% o his riend, a orei*ner$ I %o( were the 'rose"(tor, what e)iden"e "an %o( 'resent to 'ro)e )io!ation o the Anti-D(##% Eaw> 2A 1(ana de !a Cr(C, a "o##on !aw wi e o a orei*ner wrested the "ontro! o a te!e)ision ir#$ At the instan"e o the #inorit% *ro(' o the ir#, she was "har*ed with )io!ation o the Anti-D(##% Eaw$ Fa% she &e "on)i"ted &% the #ere a"t that she is a "o##on !aw wi e o a orei*ner> E+'!ain$
SUGGESTED ANSWER:
6A No$ The #ateria!s o ered in the &ids s(&#itted are #ade in the Phi!i''ines ro# arti"!es 'rod("ed or *rown in the Phi!i''ines, and the &idder, Ce!este, is a do#esti" entit%$ The D!a* Eaw does not a''!%$ It "an &e in)oked on!% a*ainst a &idder who is not a do#esti" entit%, or a*ainst a do#esti" entit% who o ers i#'orted #ateria!s$
6A A a!!ows or 'er#its the (se or e+'!oitation or en0o%#ent o a ri*ht, 'ri)i!e*e or &(siness, the e+er"ise or en0o%#ent o whi"h is e+'ress!% reser)ed &% the Constit(tion or the !aws to "itiCens o the Phi!i''ines, &% the orei*ner not 'ossessin* the reB(isites 'res"ri&ed &% the Constit(tion or the !aws o the Phi!i''ines$ The 'rose"(tor sho(!d 'ro)e the a&o)e e!e#ents o the "ri#e
2A No, sin"e Ce!este is #ere!% a dea!er o Fati!de and not an a!ter e*o o the !atter$ Ce!este &(%s and se!!s on its own a""o(nt the 'rod("ts o Fati!de$
;A Fati!de did not )io!ate the Retai! Trade Eaw sin"e it does not se!! its 'rod("ts to "ons(#ers, &(t to dea!ers who rese!! the#$ Neither did Ce!este )io!ate the Retai! Trade Eaw sin"e, in the irst '!a"e, it is not
'rohi&ited to
en*a*e in retai! trade$ Besides, Fati!des sa!e o the as&estos 'rod("ts to Ce!este, &ein* who!esa!e, the transa"tion is not "o)ered &% the Retai! Trade Eaw
(1sbestos /ntegrated v ;eralta #55 S %#$"
the "ase o "or'orations, on!% 600@ Di!i'ino owned "o#'anies to en*a*e in retai! trade$
&A A"#e #a% in)est in the rea!t% "or'oration, on the ass(#'tion that the &a!an"e o 20@ o ownershi' o the !atter "or'oration, is Di!i'ino owned sin"e the !aw #ere!%
NationaliDe6 Acti ities or Un6erta-in's ()**1) G!o&a! KE Fa!a%sia, a 600@ Fa!a%sian owned "or'oration, desires to &(i!d a hote! &ea"h resort in -a#a! Is!and, Da)ao Cit%, to take ad)anta*e o the in"reased tra i" o to(rists and &oost the to(ris# ind(str% o the Phi!i''ines$ 6$ Ass(#in* that G!o&a! has 4-P600F to in)est in a hote! &ea"h resort in the Phi!i''ines, #a% it &e a!!owed to a"B(ire the !and on whi"h to &(i!d the resort> I so, (nder what ter#s and "onditions #a% G!o&a! a"B(ire the !and> Dis"(ss (!!%$ 2$ Fa% G!o&a! &e a!!owed to #ana*e the hote! &ea"h resort> E+'!ain$ ;$ Fa% G!o&a! &e a!!owed to o'erate resta(rants within the hote! &ea"h resort> E+'!ain$
SUGGESTED ANSWER:
6$ G!o&a! "an se"(re a !ease on the !and$ As a "or'oration with a Fa!a%sian nationa!it%, G!o&a! "annot own the !and$ 2$ Yes, G!o&a! "an #ana*e the hote! &ea"h resort$ There is no !aw 'rohi&itin* it ro# #ana*in* the resort$ ;$ G!o&a! #a% &e a!!owed to o'erate resta(rants within the &ea"h resort$ This is 'art o the o'eration o the resort$ Retail Tra6e 8a; ()**0) A"#e Tradin* Co In", a tradin* "o#'an% who!!% owned &% orei*n sto"kho!ders, was 'ers(aded &% Pa(!o A!)a, a Di!i'ino, to in)est in 20@ o the o(tstandin* shares o sto"k o a "or'oration he is or#in* whi"h wi!! en*a*e in the de'art#ent store &(siness ?the <de'art#ent store "or'oration=A$ Pa(!o a!so (r*ed A"#e to in)est in 70@ o the o(tstandin* shares o sto"k o the rea!t% "or'oration he is '(ttin* (' to own the !and on whi"h the de'art#ent store wi!! &e &(i!t ?the <rea!t% "or'oration=A$ aA Fa% A"#e in)est in the said de'art#ent store "or'oration> E+'!ain %o(r answer$ &A Fa% A"#e in)est in the rea!t% "or'oration> Dis"(ss$
"A Fa% the President o A"#e, a orei*ner, sit in the BOD o the said de'art#ent store "or'oration> Fa% he &e a dire"tor o the rea!t% "or'oration> Dis"(ss$ Fa% the Treas(rer o A"#e, another orei*ner, o""('% the sa#e 'osition in the said de'art#ent store "or'oration> Fa% he &e the treas(rer o the
dA
SUGGESTED ANSWER:
said rea!t% "or'oration> E+'!ain$
aA A"#e #a% not in)est in the de'art#ent store "or'oration sin"e the Retai! Trade A"t a!!ows, in
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4( of 103 reB(ires
"or'orate
20@ Di!i'ino ownershi'$
ho!din*
in
!and
!aw re!ationshi'sA o a orei*ner in the retai! trade &(siness, raises the 'res(#'tion that she has )io!ated the Anti- D(##% Eaw$ 9en"e, the wi e is &arred ro# en*a*in* in the retai! trade &(siness$ Retail Tra6e 8a; ()**2)
A Coo'erati)e '(r"hased ro# Y Co on insta!!#ents a ri"e #i!! and #ade a down 'a%#ent there ore$ As se"(rit% or the 'a%#ent o the &a!an"e, the Coo'erati)e e+e"(ted a "hatte! #ort*a*e in a)or o Y Cor'oration$ Y Co in t(rn assi*ned its ri*hts to the "hatte! #ort*a*e to Q Co a 3@ orei*n owned "o#'an% doin* &(siness in the Phi!i''ines$ The "oo'erati)e therea ter #ade insta!!#ent 'a%#ents to Q Co$
"A The Anti-d(##% Eaw a!!ows &oard re'resentation to the e+tent o a"t(a! and 'er#issi&!e orei*n in)est#ents in "or'orations$ A""ordin*!%, the President o A"#e #a% no sit in the BOD o the de'art#ent store "or'oration &(t "an do so in the rea!t% "or'oration$ dA The Treas(rer o A"#e #a% not ho!d that 'osition either in the de'art#ent store "or'oration or in the rea!t% "or'oration sin"e the Anti-D(##% Eaw 'rohi&its the e#'!o%#ent o a!iens in s("h nationa!iCed areas o &(siness e+"e't those that "a!! or hi*h!% te"hni"a! B(a!i i"ations$ Retail Tra6e 8a; ()**)) Is the Di!i'ino "o##on-!aw wi e o a orei*ner &arred ro# en*a*in* in the retai! &(siness>
SUGGESTED ANSWER:
A Di!i'ino "o##on-!aw wi e o a orei*ner is not &arred ro# en*a*in* in retai! &(siness$ On the ass(#'tion that she a"ts or and in her own &eha! , and a&sent a )io!ation o the Anti-D(##% Eaw whi"h 'rohi&its a orei*ner ro# &ein* either the rea! 'ro'rietor or an e#'!o%ee o a 'erson en*a*ed in the retai! trade, she wo(!d &e )io!atin* the Retai! Trade A"t$
A8TERNAT7>E ANSWER:
Be"a(se the Coo'erati)e was (na&!e to #eet its o&!i*ations in (!!, Q Co i!ed a*ainst it a "o(rt s(it or "o!!e"tion$ The Coo' resisted "ontendin* that Q Co was i!!e*a!!% en*a*ed in the retai! trade &(siness or ha)in* so!d a "ons(#er *ood as o''osed to a 'rod("er ite#$ The Coo' a!so a!!e*ed that Q had )io!ated the Anti- D(##% Eaw$ Is Q *(i!t% o )io!atin* the Retai! Trade Eaw and the Anti-D(##% Eaw> .h%>
SUGGESTED ANSWER:
An en*a*e#ent &% a wi e ?in"!(din* "o##on*er i!n 1++0,'003 Arranged by SULAW Cla '00(
Q Co is not *(i!t% o )io!atin* the Retai! Trade Eaw and the Anti-D(##% Eaw$ The ter# RETAIE (nder the Retai! Trade A"t reB(ires that the se!!er #(st &e ha&it(a!!% en*a*ed in se!!in* to the *enera! '(&!i" "ons(#'tion *oods$ B% "ons(#'tion *oods are #eant <'ersona!, a#i!% and ho(seho!d= '(r'oses$ A Ri"e Fi!!
does not a!! (nder the "ate*or%$ Neither does it a''ear that Q is ha&it(a!!% en*a*ed in se!!in* to the *enera! '(&!i" that "o##odit%$ -in"e there is no )io!ation o the Retai! Trade Eaw, there wo(!d !ikewise &% no )io!ation o the Anti-D(##% Eaw$ Retail Tra6e 8a; ()**3) A orei*n ir# is en*a*ed in the &(siness o #an( a"t(rin* and se!!in* r(&&er 'rod("ts to dea!ers who in t(rn se!! the# to others$ It a!so se!!s dire"t!% to a*ri"(!t(ra! enter'rises, a(to#oti)e asse#&!% '!ants, '(&!i" (ti!ities whi"h &(% the# in !ar*e &(!k, and to its o i"ers and e#'!o%ees$ 6A Is there )io!ation o the Retai! Trade Eaw> E+'!ain$
2A Fa% said ir# o'erate a "anteen inside the 're#ises o its '!ant e+"!(si)e!% or its o i"ia!s and e#'!o%ees witho(t )io!atin* the Retai! Trade A"t> E+'!ain$
SUGGESTED ANSWER:
o!!owin* "(sto#ers5 aA *o)ern#ent o i"es whi"h (se the *enerators d(rin* &rowno(ts to render '(&!i" ser)i"e, &A a*ri"(!t(ra! enter'rises whi"h (ti!iCe the *enerators as
6A On the ass(#'tion that the orei*n ir# is doin*

&(siness in the Phi!i''ines, the sa!e to the dea!ers o a*ri"(!t(ra! enter'rises, a(to#oti)e asse#&!% '!ants, and '(&!i" (ti!ities is who!esa!e and, there ore, not in )io!ation o the Retai! Trade A"t (B. 2oodrich v ,e es #%#
s $&$"
2A Yes$ The o'eration o the "anteen inside the 're#ises e+"!(si)e!% or its o i"ers and e#'!o%ees, wo(!d a#o(nt to an in'(t in the #an( a"t(rin* 'ro"ess and, there ore, does not )io!ate the Retai! Trade A"t$ Retail Tra6e 8a; ()**4) .ith a "a'ita! o P2th Faria o'erates a sta!! at a '(&!i" #arket$ -he #an( a"t(res soa' that she se!!s to the *enera! '(&!i"$ 9er "o##on !aw h(s&and, FaEee, who has a 'endin* 'etition or nat(ra!iCation, o""asiona!!% inan"es the '(r"hase o *oods or resa!e, and assists in the #ana*e#ent o the &(siness$ Is there a )io!ation o the Retai! Trade Eaw> E+'!ain$
SUGGESTED ANSWER:
No, there is no )io!ation o the Retai! Trade Eaw$ Faria is a #an( a"t(rer who se!!s to the *enera! '(&!i", thro(*h her sta!! in the '(&!i" #arket, the soa' whi"h she #an( a"t(res$ Inas#("h as her "a'ita! does not e+"eed P3th ?it is on!% P2thA then she is "onsidered (nder -e" 7a o the Retai! Trade Eaw as not en*a*ed in the <retai! &(siness$= Inas#("h as Farias &(siness is not a <retai! &(siness,= then the reB(ire#ent in -e" 6 o the Retai! Trade Eaw that on!% Phi!i''ine nationa!s sha!! en*a*e, dire"t!%, or indire"t!%, in the retai! &(siness is ina''!i"a&!e$ Dor this reason, the 'arti"i'ation o Fa Eee, Farias "o##on Eaw h(s&and, in the #ana*e#ent o the &(siness wo(!d not &e a )io!ation o the Retai! Trade Eaw in re!ation to the Anti-D(##% Eaw$
Retail Tra6e 8a; ()**4)

EE In", a do#esti" "or'oration with orei*n eB(it%, #an( a"t(res e!e"tri" *enerators, and se!!s the# to the
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4- of 103 &a"k('
SUGGESTED ANSWER:
in the 'ro"essin* o *oods, "A a"tories, and dA its own e#'!o%ees$ Is EE en*a*ed in retai! trade> E+'!ain$
SUGGESTED ANSWER:
The sa!e &% EE o *enerators to *o)ern#ent o i"es, a*ri"(!t(ra! enter'rises and a"tories are o(tside the s"o'e o the ter# <retai! &(siness= and #a%, there ore, &e #ade &% the said "or'oration$ 9owe)er, sa!es o *enerators &% EE to its own e#'!o%ees "onstit(te retai! sa!es and are 'ros"ri&ed$ 4nder the a#end#ent to the Retai! Trade Eaw introd("ed &% PD 767, the ter# <retai! &(siness= sha!! not in"!(de a #an( a"t(rer ?s("h as EEA se!!in* to ind(stria! and "o##er"ia! (sers or "ons(#ers who (se the 'rod("ts &o(*ht &% the# to render ser)i"e to the *enera! '(&!i" ?e* *o)ern#ent o i"esA andMor to 'rod("e or #an( a"t(re *oods whi"h are in t(rn so!d &% the# ?e* a*ri"(!t(ra! enter'rises and a"toriesA$ (2ood ear :ires v ,e es Sr 2r
$77&$, Al %, 6$ #%$s%4$"0
aA The irst arran*e#ent wo(!d not &e in )io!ation o the Retai! Trade Eaw$ The !aw a''!ies on!% when the sa!e is dire"t to the *enera! '(&!i"$ A dea!er &(%s and se!!s or and in his own &eha! and, there ore, the sa!e to the *enera! '(&!i" is #ade &% the dea!er and not &% the #an( a"t(rer (+arsman D
'o v .irst %7Aune#966"
A8TERNAT7>E ANSWER:
'oconut
'ontrol
'o
2,$965#
aA The irst arran*e#ent )io!ates the Retai! Trade Eaw &e"a(se when ABC <"onsi*ned= the t%'ewriters, the transa"tion was one o "onsi*n#ent sa!e$ In "onsi*n#ent sa!e, an a*en"% re!ationshi' is "reated so it is as i ABC se!!s dire"t!% to the '(&!i" thro(*h its a*ents$
SUGGESTED ANSWER:
Retail Tra6e 8a;2 Consi'nment ()**)) ABC Fan( a"t(rin* In", a "o#'an% who!!% owned &% orei*n nationa!s, #an( a"t(res t%'ewriters whi"h ABC distri&(tes to the *enera! '(&!i" in 2 wa%s5 6$ ABC "onsi*ns its t%'ewriters to inde'endent dea!ers who in t(rn se!! the# to the '(&!i"I and,
2$ Thro(*h indi)id(a!s, who are not e#'!o%ees o ABC, and who are 'aid stri"t!% on a "o##ission
&A The se"ond arran*e#ent wo(!d &e )io!ati)e o the Retai! Trade Eaw, sin"e the sa!e is done thro(*h indi)id(a!s &ein* 'aid stri"t!% on a "o##ission &asis$ The said indi)id(a!s wo(!d then &e a"tin* #ere!% as a*ents o the #an( a"t(rer$ -a!es, there ore, #ade &% s("h a*ents are dee#ed dire"t sa!es &% the #an( a"t(rer$
A8TERNAT7>E ANSWER:
&A The 2nd arran*e#ent is not )io!ati)e o the Retai! Trade Eaw &e"a(se t%'ewriters are not "ons(#'tion *oods or *oods or 'ersona!, ho(seho!d and a#i!% (se$
Neg!tiable In tr2ment La#

,on6: Cas# ,on6 s! Suret% ,on6 (2003) Distin*(ish "!ear!% "ash &ond ro# s(ret% &ond$
&asis or ea"h sa!e$ Do these arran*e#ents )io!ate the Retai! Trade Eaw>
'00(
Mercantile Law Bar Examination Q & A (1990-2006) SUGGESTED ANSWER:
ho!d otherwise wo(!d a!so "ontra)ene the &asi" r(!es o (n0(st enri"h#ent$ E)en in ne*otia&!e instr(#ents, the
A -4RETY BOND is iss(ed &% a s(ret% or ins(ran"e "o#'an% in a)or o a desi*nated &ene i"iar%, '(rs(ant to whi"h s("h "o#'an% a"ts as a s(ret% to the de&tor or o&!i*or o s("h &ene i"iar%$ A CA-9 BOND is a se"(rit% in the or# o "ash esta&!ished &% a *(arantor or s(ret% to se"(re the o&!i*ation o another$ C#ec-s: Crosse6 C#ec-s (2001) .hat is a "rossed "he"k> .hat are the e e"ts o "rossin* a "he"k> E+'!ain$
SUGGESTED ANSWER:
A Crossed Che"k (nder a""e'ted &ankin* 'ra"ti"e, "rossin* a "he"k is done &% writin* two 'ara!!e! !ines dia*ona!!% on the !e t to' 'ortion o the "he"ks$ The "rossin* is s'e"ia! where the na#e o the &ank or a &(siness instit(tion is written &etween the two 'ara!!e! !ines, whi"h #eans that the drawee sho(!d 'a% on!% with the inter)ention o that "o#'an%$
8ffe.ts of Crosse7 C!e.$s 6A The "he"k #a% not &e en"ashed &(t on!% de'osited in the &ank$ 2A The "he"k #a% &e ne*otiated on!% on"eS to one who has an a""o(nt with a &ank$ ;A The a"t o "rossin* the "he"k ser)es as a warnin* to the ho!der that the "he"k has &een iss(ed or a de inite '(r'ose, so that he #(st inB(ire i he has re"ei)ed the "he"k '(rs(ant to that '(r'oseI otherwise, he is not a ho!der in d(e "o(rse$ C#ec-s: Crosse6 C#ec-s s! Cancelle6 C#ec-s (2003) Distin*(ish "!ear!% ?6A "rossed "he"ks ro# "an"e!!ed "he"ksI
SUGGESTED ANSWER:
A "rossed "he"k is one with two 'ara!!e! !ines drawn dia*ona!!% a"ross its a"e or a"ross a "orner thereo $ On the other hand, a "an"e!!ed "he"k is one #arked or sta#'ed L'aidL andMor L"an"e!!edL &% or on &eha! o a drawee &ank to indi"ate 'a%#ent thereo $ C#ec-s2 Crosse6 C#ec- ()**)) Fr Pa&!o so(*ht to &orrow P200th ro# Fr Car!os$ Car!os a*reed to !oan the a#o(nt in the or# o a 'ostdated "he"k whi"h was "rossed ?i$e$ 2 'ara!!e! !ines dia*ona!!% drawn on the to' !e t 'ortion o the "he"kA$ Be ore the d(e date o the "he"k, Pa&!o dis"o(nted it with No&!e On d(e date, No&!e de'osited the "he"k with his &ank$ The "he"k was dishonored$ No&!e s(ed Pa&!o$ The "o(rt dis#issed No&!es "o#'!aint$ .as the "o(rts de"ision "orre"t>
SUGGESTED ANSWER:
The "o(rts de"ision was in"orre"t$ Pa&!o and Car!os, &ein* i##ediate 'arties to the instr(#ent, are *o)erned &% the r(!es o 'ri)it%$ Gi)en the a"t(a! "ir"(#stan"es o the 'ro&!e#, Pa&!o has no )a!id e+"(se ro# den%in* !ia&i!it%, (State investment Eouse v /1' 2, 4%4&5
#$Aul #969"0
Pa&!o (ndo(&ted!% had &ene ited in the transa"tion$ To
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44 of 103
Ci)i! Code and other !aws o *enera! a''!i"ation "an sti!! a''!% s(''!etori!%$
A8TERNAT7>E ANSWER:
The dis#issa! &% the "o(rt was "orre"t$ A "he"k whether or not 'ost-dated or "rossed, is sti!! a ne*otia&!e instr(#ent and (n!ess Pa&!o is a *enera! indorser, whi"h is not e+'ressed in the a"t(a! settin*s, he "annot &e he!d !ia&!e or the dishonor o the instr(#ent$ In State /nvestment Eouse v /1' (2, 4%4&5 #$Aul#969", the "o(rt did not *o so ar as to ho!d that the a"t o "rossin* wo(!d render the instr(#ent non-ne*otia&!e$
A8TERNAT7>E ANSWER:
In State
/nvestment Eouse v /1' (2, 4%4&5 #$Aul#969", the -C "onsidered a "rossed "he"k as
s(&0e"tin* a s(&seB(ent ho!der thereo to the "ontra"t(a! "o)enants o the 'a%or and the 'a%ee$ I s("h were the "ase, then the instr(#ent is not one whi"h "an sti!! &e said to "ontain an (n"onditiona! 'ro#ise to 'a% or order a s(# "ertain in #one%$ In the trans er o non-ne*otia&!e "redits &% assi*n#ent, the trans eror does not ass(#e !ia&i!it% or the a(!t o the de&tor or o&!i*or$ A""ordin*!% the "o(rts de"ision was "orre"t$
A8TERNAT7>E ANSWER:
C#ec-s2 Crosse6 C#ec- ()**3) Po Press iss(ed in a)or o 1ose a 'ostdated "rossed "he"k, in 'a%#ent o news'rint whi"h 1ose 'ro#ised to de!i)er$ 1ose so!d and ne*otiated the "he"k to E+"e! In"$ at a dis"o(nt$ E+"e! did not ask 1ose the '(r'ose o "rossin* the "he"k$ -in"e 1ose ai!ed to de!i)er the news'rint, Po ordered the drawee &ank to sto' 'a%#ent on the "he"k$ E orts o E+"e! to "o!!e"t ro# Po ai!ed$ E+"e! wants to know ro# %o( as "o(nse!5 6A .hat are the e e"ts o "rossin* a "he"k> 2A .hether as se"ond indorser and ho!der o the "rossed "he"k, is it a ho!der in d(e "o(rse> ;A .hether Pos de ense o !a"k o "onsideration as a*ainst 1ose is a!so a)ai!a&!e as a*ainst E+"e!>
SUGGESTED ANSWER:
Yes$ The "he"k is "rossed$ It sho(!d ha)e orewarned Fr$ No&!e that it was iss(ed or a s'e"i i" '(r'ose$ 9en"e, Fr No&!e "o(!d not &e a ho!der in d(e "o(rse$ 9e is s(&0e"t to the 'ersona! de ense o &rea"h o tr(stM a*ree#ent &% Fr$ Pa&!o$ -("h de ense is a)ai!a&!e in a)or o Fr Car!os a*ainst Fr No&!e$
6A The e e"ts o "rossin* a "he"k are5 a$ The "he"k is or de'osit on!% in the a""o(nt o the 'a%ee &$ The "he"k #a% &e indorsed on!% on"e in a)or o a 'erson who has an a""o(nt with a &ank "$ The "he"k is iss(ed or a s'e"i i" '(r'ose and the 'erson who takes it not in a""ordan"e with said '(r'ose does not &e"o#e a ho!der in d(e "o(rse and is not entit!ed to 'a%#ent there(nder$
2A No$ It is a "rossed "he"k and E+"e! did not take it in a""ordan"e with the '(r'ose or whi"h the "he"k was iss(ed$ Dai!(re on its 'art to inB(ire as to said '(r'ose,
're)ented E+"e! ro# &e"o#in* a ho!der in d(e "o(rse, as s("h ai!(re or re (sa! "onstit(ted &ad aith$ ;A Yes$ Not &ein* a ho!der in d(e "o(rse, E+"e! is s(&0e"t to the 'ersona! de ense whi"h Po Press "an set (' a*ainst 1ose (State /nvestment Eouse v /1' #45 S $#7" C#ec-s2 Crosse6 C#ec- ()**1) On O"t 62, 6::;, Che!sea -trai*hts, a "or' en*a*ed in the #an( a"t(re o "i*arettes, ordered ro# Foises 2,000 &a!es o to&a""o$ Che!sea iss(ed to Foises two "rossed "he"ks 'ostdated 63 Far :7 and 63 A'r :7 in (!! 'a%#ent there or$ On 6: 1an :7 Foises so!d to Dra*on In)est#ent 9o(se at a dis"o(nt the two "he"ks drawn &% Che!sea in his a)or$ Foises ai!ed to de!i)er the &a!es o to&a""o as a*reed des'ite Che!seas de#and$ ConseB(ent!%, on 6 Far :7 Che!sea iss(ed a <sto' 'a%#ent= order on the 2 "he"ks iss(ed to Foises$ Dra*on, "!ai#in* to &e a ho!der in d(e "o(rse, i!ed a "o#'!aint or "o!!e"tion a*ainst Che!sea or the )a!(e o the "he"ks$ R(!e on the "o#'!aint o Dra*on$ Gi)e %o(r !e*a! &asis$
SUGGESTED ANSWER:
6::2$ 4'on re"ei't o the "he"k, CD B%tes dis"o(nted the "he"k with D(nd 9o(se$
Dra*on "annot "o!!e"t ro# Che!sea$ The instr(#ents are "rossed "he"ks whi"h were intended to 'a% or the 2,000 &a!es o to&a""o to &e de!i)ered to Foises$ It was there ore the o&!i*ation o Dra*on to inB(ire as to the '(r'ose o the iss(an"e o the 2 "rossed "he"ks &e ore "a(sin* the# to &e dis"o(nted$ Dai!(re on its 'art to #ake s("h inB(ir%, whi"h res(!ted in its &ad aith, Dra*on "annot "!ai# to &e a ho!der in d(e "o(rse$ Foreo)er, the "he"ks were so!d, not endorsed, &% hi# to Dra*on whi"h did not &e"o#e a ho!der in d(e "o(rse$ Not &ein* a ho!der in d(e "o(rse, Dra*on is s(&0e"t to the 'ersona! de ense on the 'art o Che!sea "on"ernin* the &rea"h o tr(st on the 'art o Foises Ei# in not "o#'!%in* with his o&!i*ation to de!i)er the 2000 &a!es o to&a""o$ C#ec-s2 Crosse6 C#ec- ()**4) .hat are the e e"ts o "rossin* a "he"k>
SUGGESTED ANSWER:
The e e"ts o "rossin* a "he"k are as o!!ows5 a$ The "he"k #a% not &e en"ashed &(t on!% de'osited in a &ankI &$ The "he"k #a% &e ne*otiated on!% on"e to one who has an a""o(nt with a &ankI "$ The a"t o "rossin* a "he"k ser)es as a warnin* to the ho!der thereo that the "he"k has &een iss(ed or a de inite '(r'ose so that the ho!der #(st inB(ire i he has re"ei)ed the "he"k '(rs(ant to that '(r'ose, otherwise he is not a ho!der in d(e "o(rse (See Bataan 'igar and 'igarette .actor , /nc0
v '1 2, 9$756, +ar $, #995< %$7 s &5$"
C#ec-s2 Crosse6 C#ec- ()**4) On Far"h 6, 6::2, Penti(# Co#'an% ordered a "o#'(ter ro# CD B%tes, and iss(ed a "rossed "he"k in the a#o(nt o P;0,000 'ost-dated Far ;6,
Page
46 of 103
On A'ri! 6, 6::2, Penti(# sto''ed 'a%#ent o the "he"k or ai!(re o CD B%tes to de!i)er the "o#'(ter$ Th(s, when D(nd 9o(se de'osited the "he"k, the drawee &ank dishonored it$ I D(nd 9o(se i!es a "o#'!aint a*ainst Penti(# and CD B%tes or the 'a%#ent o the dishonored "he"k, wi!! the "o#'!aint 'ros'er> E+'!ain$ SUGGESTED ANSWER:5
The "o#'!aint i!ed &% D(nd 9o(se a*ainst Penti(# wi!! not 'ros'er &(t the one a*ainst CD B%tes wi!!$ D(nd 9o(se is not a ho!der in d(e "o(rse and, there ore, Penti(# "an raise the de ense o ai!(re o "onsideration a*ainst it$ The "he"k in B(estion was iss(ed &% Penti(# to 'a% or a "o#'(ter that it ordered ro# CD B%tes$ The "o#'(ter not ha)in* &een de!i)ered, there was a ai!(re o "onsideration$ The "he"k dis"o(nted with D(nd 9o(se &% CD B%tes is a "rossed "he"k and this sho(!d ha)e '(t D(nd 9o(se on inB(ir%$ It sho(!d ha)e as"ertained the tit!e o CD B%tes to the "he"k or the nat(re o the !atters 'ossession$ Dai!in* in this res'e"t, D(nd 9o(se is dee#ed *(i!t% o *ross ne*!i*en"e a#o(ntin* to !e*a! a&sen"e o *ood aith and, th(s, not a ho!der in d(e "o(rse$ D(nd 9o(se "an "o!!e"t ro# CD B%tes as the !atter was the i##ediate indorser o the "he"k$ (See Bataan 'igar and
'igarette .actor v '1 et al %$7 s &5$ 2, 9$756 +ar $, 95"
J draws a "he"k a*ainst his "(rrent a""o(nt with the Orti*as &ran"h o Boni a"io Bank in a)or o B$ A!tho(*h J does not ha)e s( i"ient (nds, the &ank honors the "he"k when it is 'resented or 'a%#ent$ A''arent!%, J has "ons'ired with the &anks &ookkee'er so that his !ed*er "ard wo(!d show that he sti!! has s( i"ient (nds$ The &ank i!es an a"tion or re"o)er% o the a#o(nt 'aid to B &e"a(se the "he"k 'resented has no s( i"ient (nds$ De"ide the "ase ?3@A
SUGGESTED ANSWER:
The &ank "annot re"o)er the a#o(nt 'aid to B or the "he"k$ .hen the &ank honored the "he"k, it &e"a#e an a""e'tor$ As a""e'tor, the &ank &e"a#e 'ri#ari!% and dire"t!% !ia&!e to the 'a%eeMho!der B$ The re"o(rse o the &ank sho(!d &e a*ainst J and its &ookkee'er who "ons'ired to #ake Js !ed*er show that he has s( i"ient (nds$
A8TERNAT7>E ANSWER:
The &ank "an re"o)er ro# B$ indebiti &e"a(se there is 'a%#ent B when s("h 'a%#ent is not d(e$ &% J to B as 'a%ee had no s( i"ient
This is solutio &% the &ank to The "he"k iss(ed (nds$
C#ec-s2 E&&ects2 Alterations2 "rescri$ti e "erio6 ()**4)

.i!!ia# iss(ed to A!&ert a "he"k or P60,000 drawn on JF Bank$ A!&ert a!tered the a#o(nt o the "he"k to P260,000 and de'osited the "he"k to his a""o(nt with ND Bank$ .hen ND Bank 'resented the "he"k or
C#ec-s2 E&&ect2 Acce$tance .% t#e 6ra;ee .an- ()**:)

'a%#ent thro(*h the C!earin* 9o(se, JF Bank honored it$ Therea ter, A!&ert withdrew the P260,000 and "!osed his a""o(nt$ .hen the "he"k was ret(rned to hi# a ter a #onth, .i!!ia# dis"o)ered the a!teration$ JF Bank re"redited P260,000 to .i!!ia#s "(rrent a""o(nt, and so(*ht rei#&(rse#ent ro# ND Bank$ ND Bank re (sed, "!ai#in* that JF Bank ai!ed to ret(rn the a!tered "he"k to it within 27 ho(r "!earin* 'eriod$ .ho, as &etween, JF Bank and ND Bank, sho(!d &ear the !oss> E+'!ain$
SUGGESTED ANSWER:
drawee-&ank &ears the !oss ne*!i*en"e o the drawer hi#se! , the re#ed% o the drawee-&ank is a*ainst the 'art% res'onsi&!e or the or*er%$ Otherwise,
ND Bank sho(!d &ear the !oss i JF Bank ret(rned the a!tered "he"k to ND Bank within twent% o(r ho(rs a ter its dis"o)er% o the a!teration$ 4nder the *i)en a"ts, .i!!ia# dis"o)ered the a!teration when the a!tered "he"k was ret(rned to hi# a ter a #onth$ It #a% sa e!% &e ass(#ed that .i!!ia# i##ediate!% ad)ised JF Bank o s("h a"t and that the !atter 'ro#'t!% noti ied ND Bank therea ter$ Centra! Bank Cir"(!ar No$ :, as a#ended, on whi"h the de"isions o the -('re#e Co(rt in Eong(ong D Shanghai Ban(ing 'orp v ;eopleIs Ban( D :rust 'o and ,epublic Ban( vs '1 were &ased was e+'ress!% "an"e!!ed and s('erseded &% CB No ;67 dated De" 2; 6:70$ The !atter was in t(rn a#ended &% CB Cir"(!ar No 380, dated -e't 6:, 6:77$ As to a!tered "he"ks, the new r(!es 'ro)ide that the drawee &ank "an sti!! ret(rn the# e)en a ter 7500 '# o the ne+t da% 'ro)ided it does so within 27 ho(rs ro# dis"o)er% o the a!teration &(t in no e)ent &e%ond the 'eriod i+ed or 'ro)ided &% !aw or i!in* o a !e*a! a"tion &% the ret(rnin* &ank a*ainst the &ank sendin* the sa#e$ Ass(#in* that the re!ationshi' &etween the drawee &ank and the "o!!e"tin* &ank is e)iden"ed &% so#e written do"(#ent, the 'res"ri'ti)e 'eriod wo(!d &e 60 %ears$ ('ampos, 3/= 5th ed 5558 555"
A8TERNAT7>E ANSWER:
JF Bank sho(!d &ear the !oss$ .hen the drawee &ank ?JF BankA ai!ed to ret(rn the a!tered "he"k to the "o!!e"tin* &ank ?ND BankA within the 27 ho(r "!earin* 'eriod 'ro)ided in -e" 7" o CB Cir"(!ar :, dated De& 67, 6:7:, the !atter is a&so!)ed ro# !ia&i!it%$ (See ESB' v ;BD: 'o 2, =8%6%%& Sep $7
#947< $5 s #57< also ,ep Ban( v '1 2, 5%4%5 1pr %%, #99# #9& s #77"
C#ec-s2 /or'e6 C#ec-2 E&&ects (2004) Dis"(ss the !e*a! "onseB(en"es when a &ank honors a or*ed "he"k$ ?3@A
SU00ESTE8 ANSWER:
The !e*a! "onseB(en"es when a &ank honors a or*ed "he"k are as o!!ows5 ?aA Whe) ,r28er9. S/3)2t(re /. For3e4: Drawee&ank &% a""e'tin* the "he"k "annot set (' the de ense o or*er%, &e"a(se &% a""e'tin* the instr(#ent, the drawee &ank ad#its the *en(ineness o si*nat(re o drawer (B;/ .amil Ban( vs0 Buenaventura
20,0 3o0 #56#9&, September $7, %775< 3egotiable /nstruments =aw"0 Section %$,
4n!ess a
or*er% is attri&(ta&!e to the
a(!t or
Page
4+ of 103
(B;/ .amil Ban( v0 Buenaventura,
(;hilippine 3ational Ban( v0 'ourt of 1ppeals, 20,0 3o0 =8%&77#, -ctober %9, #9&6"0
A drawee-&ank 'a%in* on a or*ed "he"k #(st &e "onsidered as 'a%in* o(t o its (nds and "annot "har*e the a#o(nt to the drawer
20,0 3o0 #56#9&, September $7, %775"0
(Samsung 'onstruction 'o0 ;hils, v0 .ar East Ban(, 20,0 3o0 #%97#5, 1ugust #$, %775"0 I the drawee-
?&A For3e4 !2 ee9. S/3)2t(re: .hen drawee-&ank 'a%s the or*ed "he"k, it #(st &e "onsidered as 'a%in* o(t o its (nds and "annot "har*e the a#o(nt so 'aid to the a""o(nt o the de'ositor$ In s("h "ase, the &ank &e"o#es !ia&!e sin"e its 'ri#ar% d(t% is to )eri % the a(thenti"it% o the 'a%eeGs si*nat(re (:raders ,o al
Ban( v0 ,adio ;hilippines 3etwor(, 20,0 3o0 #$65#7, -ctober #7, %77%< Pestmont Ban( v0 -ng, 20,0 3o0 #$%5&7, Aanuar $7, %77%"0
&ank has "har*ed drawerGs a""o(nt, the !atter "an re"o)er s("h a#o(nt ro# the drawee-&ank
(1ssociated Ban( v0 'ourt of 1ppeals, 20,0 3o0 #74$6%, Aanuar $#, #99&< Ban( of ;0 /0 v0 'ase +ontessori /nternationale, 20,0 3o0 #59555, +a %6, %775"0
9owe)er, the drawer #a% &e 're"!(ded or esto''ed ro# settin* (' the de ense o or*er% as a*ainst the drawee- &ank, when it is shown that the drawer hi#se! had &een *(i!t% o *ross ne*!i*en"e as to ha)e a"i!itated the or*er% ?+etropolitan Paterwor(s
v0 'ourt of 1ppeals, 20,0 3o0 =8 &%95$, #5$ S',1 %7, Aul #5, #96&A$
(3-:1 BE3E! :he question does not qualif the term *forged chec(*0 1n answer addressing the liabilities of a drawer should be deemed sufficient0 1nswers addressing liabilities of parties should li(ewise be given full credit"
?"A For3e4 I)4or.eme)t5 DrawerGs a""o(nt "annot &e "har*ed, and i "har*ed, he "an re"o)er ro# the drawee&ank
(1ssociated Ban( v0 'ourt of 1ppeals, 20,0 3o0 #74$6% Aanuar $#,#99&"0
Drawer has no "a(se o a"tion a*ainst "o!!e"tin* &ank, sin"e the d(t% o "o!!e"tin* &ank is on!% to the 'a%ee$ A "o!!e"tin* &ank is not *(i!t% o ne*!i*en"e o)er a or*ed indorse#ent on "he"ks or it has no wa% o as"ertainin* the a(thorit% o the endorse#ent and when it "a(sed the "he"ks to 'ass thro(*h the "!earin* ho(se &e ore a!!owin* withdrawa! o the 'ro"eeds thereo
(+anila =ighter :ransportation, /nc0 v0 'ourt of 1ppeals, 20,0 3o0 57$4$, .ebruar #5, #997"0 On
,r28ee B2); <er.(. #o55e7t/)3 B2); S .hen the si*nat(re o the drawer is or*ed, as &etween the drawee&ank and "o!!e"tin* &ank, the drawee-&ank s(stains the !oss, sin"e the "o!!e"tin* &ank does not *(arantee the si*nat(re o the drawer$ The 'a%#ent o the "he"k &% the drawee &ank "onstit(tes the 'ro+i#ate ne*!i*en"e sin"e it has the d(t% to know the si*nat(re o its "!ient-drawer$
the other hand, a "o!!e"tin* &ank whi"h endorses a "he"k &earin* a or*ed endorse#ent and 'resents it to the drawee &ank *(arantees a!! 'rior endorse#ents in"!(din* the or*ed endorse#ent itse! and sho(!d &e he!d !ia&!e
there or
SUGGESTED ANSWER:
(:raders ,o al Ban( v0 ,;3, 20,0 3o0 #$65#7, -ctober #7, %77%"0
a$ No$ The seria! n(#&er is not a #ateria! 'arti"(!ar o the "he"k$ Its a!teration does not "onstit(te #ateria!
Drawee-&ank "an re"o)er ro# the "o!!e"tin* &ank (2reat Eastern =ife /ns0 'o0 v0
Eong(ong D Shanghai Ban(, 20,0 3o0 #6&54, 1ugust %$,#9%%" &e"a(se e)en i the
indorse#ent on the "he"k de'osited &% the &ankGs "!ient is or*ed, "o!!e"tin* &ank is &o(nd &% its warranties as an indorser and "annot set (' de ense o or*er% as a*ainst drawee &ank (1ssociated Ban( v0 'ourt of
1ppeals, 20,0 3o0 #74$6%, Aanuar $#, #99&"0
C#ec-s2 8ia.ilit%2 Dra;ee ,an- ()**1)

Fario G(C#an iss(ed to 9onesto -antos a "he"k or P30th as 'a%#ent or a 2nd hand "ar$ .itho(t the know!ed*e o Fario, 9onesto "han*ed the a#o(nt to P630th whi"h a!teration "o(!d not &e dete"ted &% the naked e%e$ 9onesto de'osited the a!tered "he"k with -h(re Bank whi"h orwarded the sa#e to Pro*ressi)e Bank or 'a%#ent$ Pro*ressi)e Bank witho(t noti"in* the a!teration 'aid the "he"k, de&itin* P630th ro# the a""o(nt o Fario$ 9onesto withdrew the a#o(nt o P63th ro# -h(re Bank and disa''eared$ A ter re"ei)in* his &ank state#ent, Fario dis"o)ered the a!teration and de#anded restit(tion ro# Pro*ressi)e Bank$
Dis"(ss (!!% the ri*hts and the !ia&i!ities o the 'arties "on"erned$
SUGGESTED ANSWER:
The de#and o Fario or restit(tion o the a#o(nt o P630,000 to his a""o(nt is tena&!e$ Pro*ressi)e Bank has no ri*ht to ded("t said a#o(nt ro# Farios a""o(nt sin"e the order o Fario is di erent$ Foreo)er, Pro*ressi)e Bank is !ia&!e or the ne*!i*en"e o its e#'!o%ees in not noti"in* the a!teration whi"h, tho(*h it "annot &e dete"ted &% the naked e%e, "o(!d &e dete"ted &% a #a*ni %in* instr(#ent (sed &% te!!ers$ As &etween Pro*ressi)e Bank and -h(re Bank, it is the or#er that sho(!d &ear the !oss$ Pro*ressi)e Bank ai!ed to noti % -h(re Bank that there was so#ethin* wron* with the "he"k within the "!earin* ho(r r(!e o 27 ho(rs$
C#ec-s2 (aterial Alterations2 8ia.ilit% ()***) A "he"k or P30,000$00 was drawn a*ainst drawee &ank and #ade 'a%a&!e to JYQ Farketin* or order$ The "he"k was de'osited with 'a%ees a""o(nt at ABC Bank whi"h then sent the "he"k or "!earin* to drawee &ank$ Drawee &ank re (sed to honor the "he"k on *ro(nd that the seria! n(#&er thereo had &een a!tered$ JYQ #arketin* s(ed drawee &ank$ a$ Is it 'ro'er or the drawee &ank to dishonor the "he"k or the reason that it had &een a!tered> E+'!ain ?2@A
&$ In instant s(it, drawee &ank "ontended that JYQ Farketin* as 'a%ee "o(!d not s(e the drawee &ank as there was no 'ri)it% &etween then$ Drawee theoriCed that there was no &asis to #ake it !ia&!e or the
"he"k$ Is this "ontention "orre"t> E+'!ain$ ?;@A
Page
60 of 103 a!teration
o the instr(#ent$ The seria! n(#&er is not #ateria! to the ne*otia&i!it% o the instr(#ent$ &$ Yes$ As a *enera! r(!e, the drawee is not !ia&!e (nder the "he"k &e"a(se there is no 'ri)it% o "ontra"t &etween JYQ Farketin*, as 'a%ee, and ABC Bank as the drawee &ank$ 9owe)er, i the a"tion taken &% the &ank is an a&(se o ri*ht whi"h "a(sed da#a*e not on!% to the iss(er o the "he"k &(t a!so to the 'a%ee, the 'a%ee has a "a(se o a"tion (nder B(asi-de!i"t$ C#ec-s2 "resentment ()**3) Ge##a drew a "he"k on -e'te#&er 6;, 6::0$ The ho!der 'resented the "he"k to the drawee &ank on!% on Far"h 3, 6::7$ The &ank dishonored the "he"k on the sa#e date$ A ter dishonor &% the drawee &ank, the ho!der *a)e a or#a! noti"e o dishonor to Ge##a thro(*h a !etter dated A'ri! 27, 6::7$ 6A .hat is #eant &% <(nreasona&!e ti#e= as a''!ied to 'resent#ent> 2A Is Ge##a !ia&!e to the ho!der>
SUGGESTED ANSWER:
d(e to the *i)in* o the noti"e o dishonor &e%ond the 'eriod a!!owed &% !aw$ The *i)in* o noti"e o dishonor on A'ri! 27, 6::7 is #ore than one ?6A #onth ro# Far"h 3, 6::7 when the "he"k was dishonored$ -in"e it is not shown that Ge##a and the ho!der resided in the sa#e '!a"e, the 'eriod within whi"h to *i)e noti"e o dishonor #(st &e the sa#e ti#e that the noti"e wo(!d rea"h Ge##a i sent &% #ai!$ ?NIE -e" 60; N 607I Dar East Rea!t% In)est#ent In" ) CA 622 - 232A
A8TERNAT7>E ANSWER:
2A Ge##a "an sti!! &e !ia&!e (nder the ori*ina! "ontra"t or the "onsideration o whi"h the "he"k was iss(ed$ C#ec-s2 "resentment (2003) A &ank iss(es its own "he"k$ Fa% the ho!der ho!d the &ank !ia&!e there(nder i he ai!s to H 'ro)e 'resent#ent or 'a%#ent, or 'resent the &i!! to the drawee or a""e'tan"e> E+'!ain %o(r answers$ ?7@A
SUGGESTED ANSWER:
6A As a''!ied to 'resent#ent or 'a%#ent, <reasona&!e ti#e5 is #eant not #ore than 2 #onths ro# the date o iss(e$ Be%ond said 'eriod, it is <(nreasona&!e ti#e= and the "he"k &e"o#es sta!e$
2A No$ Aside or# the "he"k &ein* a!read% sta!e, Ge##a is a!so dis"har*ed or# !ia&i!it% (nder the "he"k, &ein* a drawer and a 'erson whose !ia&i!it% is se"ondar%, this is
C#ec-s2 >ali6it%2 Wai er o& ,an-Gs lia.ilit% &or ne'li'ence ()**)) Fr$ Ei# iss(ed a "he"k drawn a*ainst BPI Bank in a)or o Fr Y( as 'a%#ent o "ertain shares o sto"k whi"h he '(r"hased$ On the sa#e da% that he iss(ed the "he"k to Y(, Ei# ordered BPI to sto' 'a%#ent$ Per standard &ankin* 'ra"ti"e, Ei# was #ade to si*n a wai)er o BPIs
dA A*ainst who# "an 1(!ian ha)e the ri*ht o re"o(rse>
!ia&i!it% in the e)ent that it sho(!d 'a% Y( thro(*h o)ersi*ht or inad)erten"e$ Des'ite the sto' order &% Ei#, BPI ne)erthe!ess 'aid Y( ('on 'resentation o the "he"k$ Ei# s(ed BPI or 'a%in* a*ainst his order$ De"ide the "ase$
SUGGESTED ANSWER:
In the e)ent that Fr$ Ei#, in a"t, had s( i"ient !e*a! reasons to iss(e the sto' 'a%#ent order, he #a% s(e BPI or 'a%in* a*ainst his order$ The wai)er e+e"(ted &% Fr Ei# did not #ean that it need not e+er"ise d(e di!i*en"e to 'rote"t the interest o its a""o(nt ho!der$ It is not a#iss to state that the drawee, (n!ess the instr(#ent has ear!ier &een a""e'ted &% it, is not &o(nd to honor 'a%#ent to the ho!der o the "he"k that there&% e+"!(des it ro# an% !ia&i!it% i it were to "o#'!% with its sto' 'a%#ent order ?-e" 26 NIEA
A8TERNAT7>E ANSWER:
6::6 2&A BPI wo(!d not &e !ia&!e to Fr Ei#$ Fr Ei# and BPI are *o)erned &% their own a*ree#ent$ The wai)er e+e"(ted &% Fr Ei#, neither &ein* one o (t(re ra(d or *ross ne*!i*en"e, wo(!d &e )a!id$ The 'ro&!e# does not indi"ate the e+isten"e o ra(d or *ross ne*!i*en"e on the 'art o BPI so as to warrant !ia&i!it% on its 'art$
De&enses2 /or'er% (2003) CJ #aintained a "he"kin* a""o(nt with 4BANK, Fakati Bran"h$ One o his "he"ks in a st(& o i t% was #issin*$ Eater, he dis"o)ered that Fs$ DY or*ed his si*nat(re and s(""eeded to en"ash P63,000 ro# another &ran"h o the &ank$ DY was a&!e to en"ash the "he"k when ET, a riend, *(aranteed d(e e+e"(tion, sa%in* that she was a ho!der in d(e "o(rse$ Can CJ re"o)er the #one% ro# the &ank> Reason &rie !%$ ?3@A
SUGGESTED ANSWER:
Yes, CJ "an re"o)er ro# the &ank$ 4nder -e"tion 2; o the Ne*otia&!e Instr(#ents Eaw, or*er% is a rea! de ense$ The or*ed "he"k is who!!% ino'erati)e in re!ation to CJ$ CJ "annot &e he!d !ia&!e thereon &% an%one, not e)en &% a ho!der in d(e "o(rse$ 4nder a or*ed si*nat(re o the drawer, there is no )a!id instr(#ent that wo(!d *i)e rise to a "ontra"t whi"h "an &e the &asis or so(r"e o !ia&i!it% on the 'art o the drawer$ The drawee &ank has no ri*ht or a(thorit% to to("h the drawerGs (nds de'osited with the drawee &ank$ /or'er%2 8ia.ilities2 "rior 0 Su.se5uent "arties ()**0) 1ose !oaned Fario so#e #one% and, to e)iden"e his inde&tedness, Fario e+e"(ted and de!i)ered to 1ose a 'ro#issor% note 'a%a&!e to his order$ 1ose endorsed the note to Pa&!o$ Bert ra(d(!ent!% o&tained the note ro# Pa&!o and endorsed it to 1(!ian &% or*in* Pa&!os si*nat(re$ 1(!ian endorsed the note to Ca#i!o$ aA Fa% Ca#i!o en or"e the said 'ro#issor% note a*ainst Fario and 1ose> &A Fa% Ca#i!o *o a*ainst Pa&!o> "A Fa% Ca#i!o en or"e said note a*ainst 1(!ian>
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eA Fa% Pa&!o re"o)er ro# either Fario or 1ose>

SUGGESTED ANSWER:
aA Ca#i!o #a% not en or"e said 'ro#issor% note a*ainst Fario and 1ose$ The 'ro#issor% note at the ti#e o or*er% &ein* 'a%a&!e to order, the si*nat(re o Pa&!o was essentia! or the instr(#ent to 'ass tit!e to s(&seB(ent 'arties$ A or*ed si*nat(re was ino'erati)e ?-e" 2; NIEA$ A""ordin*!%, the 'arties &e ore the or*er% are not 0(ridi"a!!% re!ated to 'arties a ter the or*er% to a!!ow s("h en or"e#ent$ &A Ca#i!o #a% not *o a*ainst Pa&!o, the !atter not ha)in* indorsed the instr(#ent$ "A Ca#i!o #a% en or"e the instr(#ent a*ainst 1(!ian &e"a(se o his s'e"ia! indorse#ent to Ca#i!o, there&% #akin* hi# se"ondari!% !ia&!e, &oth &ein* 'arties a ter the or*er%$ dA 1(!ian, in t(rn, #a% en or"e the instr(#ent a*ainst Bert who, &% his or*er%, has rendered hi#se! 'ri#ari!% !ia&!e$
eA Pa&!o 'reser)es his ri*ht to re"o)er ro# either Fario or 1ose who re#ain 'arties 0(ridi"a!!% re!ated to hi#$ Fario is sti!! "onsidered 'ri#ari!% !ia&!e to Pa&!o$ Pa&!o #a%, in "ase o dishonor, *o a ter 1ose who, &% his s'e"ia!
distinguish between blan( and special indorsements of prior parties which can thereb materiall alter the above suggested answers0 :he problem did not clearl indicate the (ind of indorsements made0 /or'er%2 8ia.ilities2 "rior 0 Su.se5uent "arties ()**1) A!e+ iss(ed a ne*otia&!e PN ?'ro#issor% noteA 'a%a&!e to Benito or order in 'a%#ent o "ertain *oods$ Benito indorsed the PN to Ce!so in 'a%#ent o an e+istin* o&!i*ation$ Eater A!e+ o(nd the *oods to &e de e"ti)e$ .hi!e in Ce!sos 'ossession the PN was sto!en &% Dennis who or*ed Ce!sos si*nat(re and dis"o(nted it with Ed*ar, a #one% !ender who did not #ake inB(iries a&o(t the PN$ Ed*ar indorsed the PN to De!i+, a ho!der in d(e "o(rse$ .hen De!i+ de#anded 'a%#ent o the PN ro# A!e+ the !atter re (sed to 'a%$ Dennis "o(!d no !on*er &e !o"ated$ 6$ .hat are the ri*hts o De!i+, i an%, a*ainst A!e+, Benito, Ce!so and Ed*ar> E+'!ain
2$ Does Ce!so ha)e an% ri*ht a*ainst A!e+, Benito and
De!i+> E+'!ain$
SUGGESTED ANSWER:
indorse#ent, is se"ondari!% !ia&!e$ 3ote! /t is possible that an answer might

6$ De!i+ has no ri*ht to "!ai# a*ainst A!e+, Benito and Ce!so who are 'arties 'rior to the or*er% o Ce!sos si*nat(re &% Dennis$ Parties to an instr(#ent who are s("h 'rior to the or*er% "annot &e he!d !ia&!e &% an% 'art% who &e"a#e s("h at or s(&seB(ent to the or*er%$ 9owe)er, Ed*ar, who &e"a#e a 'art% to the instr(#ent s(&seB(ent to the or*er% and who indorsed the sa#e to De!i+, "an &e he!d !ia&!e &% the !atter$
2$ Ce!so has the ri*ht to "o!!e"t ro# A!e+ and Benito$ Ce!so is a 'art% s(&seB(ent to the two$ 9owe)er, Ce!so has no ri*ht to "!ai# a*ainst De!i+ who is a 'art% s(&seB(ent to Ce!so ?-e" 20 and 22 NIEA 7ncom$lete 0 Deli ere6 (2003)
AJ, a &(siness#an, was 're'arin* or a &(siness tri' a&road$ As he (s(a!!% did in the 'ast, he si*ned se)era! "he"ks in &!ank and entr(sted the# to his se"retar% with instr("tion to sa e*(ard the# and i!! the# o(t on!% when reB(ired to 'a% a""o(nts d(rin* his a&sen"e$ OB, his se"retar%, i!!ed o(t one o the "he"ks &% '!a"in* her na#e as the 'a%ee$ -he i!!ed o(t the a#o(nt, endorsed and de!i)ered the "he"k to KC, who a""e'ted it in *ood aith or 'a%#ent o *e#s that KC so!d to OB$ Eater, OB to!d AJ o what she did with re*rets$ AJ ti#e!% dire"ted the &ank to dishonor the "he"k$ Co(!d AJ &e he!d !ia&!e to KC> Answer and reason &rie !%$ ?3@A
SUGGESTED ANSWER:
or his o&!i*ations$ R(th i!!ed one "he"k with her na#e as 'a%ee, '!a"ed P;0,000$00 thereon, endorsed and
Yes$ AJ "o(!d &e he!d !ia&!e to KC$ This is a "ase o an in"o#'!ete "he"k, whi"h has &een de!i)ered$ 4nder -e"tion 67 o the Ne*otia&!e Instr(#ents Eaw, KC, as a ho!der in d(e "o(rse, "an en or"e 'a%#ent o the "he"k as i it had &een i!!ed (' stri"t!% in a""ordan"e with the a(thorit% *i)en &% AJ to OB and within a reasona&!e ti#e$ 7ncom$lete an6 Deli ere6 (2001)
Brad was in des'erate need o #one% to 'a% his de&t to Pete, a !oan shark$ Pete threatened to take Brads !i e i he ai!ed to 'a%$ Brad and Pete went to see -eYorita Iso&e!, Brads ri"h "o(sin, and asked her i she "o(!d si*n a 'ro#issor% note in his a)or in the a#o(nt o P60,000$00 to 'a% Pete$ Dearin* that Pete wo(!d ki!! Brad, -eYorita Iso&e! a""eded to the reB(est$ -he a i+ed her si*nat(re on a 'ie"e o 'a'er with the ass(ran"e o Brad that he wi!! 0(st i!! it (' !ater$ Brad then i!!ed (' the &!ank 'a'er, #akin* a 'ro#issor% note or the a#o(nt o P600,000$00$ 9e then indorsed and de!i)ered the sa#e to Pete, who a""e'ted the note as 'a%#ent o the de&t$
.hat de ense or de enses "an -eYorita Iso&e! set (' a*ainst Pete> E+'!ain$ ?;@A
SUGGESTED ANSWER:
The de ense ?'ersona! de enseA whi"h -eYorita Iso&e! "an set (' a*ainst Pete is that the a#o(nt o P600,000$00 is not in a""ordan"e with the a(thorit% *i)en to her to Brad ?in the 'resen"e o PeteA and that Pete was not a ho!der in d(e "o(rse or a"tin* in &ad aith when a""e'ted the note as 'a%#ent des'ite his know!ed*e that it was on!% 60,000$00 that was a!!owed &% -eYorita Iso&e! d(rin* their #eetin* with Brad$
7ncom$lete 7nstruments2 7ncom$lete Deli ere6 7nstruments s! 7ncom$lete Un6eli ere6 7nstrument (2004)
1(n was a&o(t to !ea)e or a &(siness tri'$ As his (s(a! 'ra"ti"e, he si*ned se)era! &!ank "he"ks$ 9e instr("ted R(th, his se"retar%, to i!! the# as 'a%#ent
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it to Farie$ -he a""e'ted the "he"k in *ood aith as 'a%#ent or *oods she de!i)ered to R(th$ E)ent(a!!%, R(th re*retted what she did and a'o!o*iCed to 1(n$ I##ediate!% he dire"ted the drawee &ank to dishonor the "he"k$ .hen Farie en"ashed the "he"k, it was dishonored$ 6$ Is 1(n !ia&!e to Farie> ?3@A
SU00ESTE8 ANSWER:
i "o#'!eted and ne*otiated witho(t a(thorit%, &e a )a!id "ontra"t in the hands o an% ho!der, as a*ainst an% 'erson, in"!(din* 1(n, whose si*nat(re was '!a"ed thereon &e ore de!i)er%$ -("h de ense is a rea! de ense e)en a*ainst a ho!der in d(e "o(rse, a)ai!a&!e to a 'art% !ike 1(n whose si*nat(re a''eared 'rior to de!i)er%$
Yes$ This "o)ers the de!i)er% o an in"o#'!ete instr(- #ent, (nder -e"tion 67 o the Ne*otia&!e Instr(#ents Eaw, whi"h 'ro)ides that there was 'ri#a a"ie a(thorit% on the 'art o R(th to i!!-(' an% o the #ateria! 'arti"(!ars thereo $ 9a)in* done so, and when it is irst "o#'!eted &e ore it is ne*otiated to a ho!der in d(e "o(rse !ike Farie, it is )a!id or a!! '(r'oses, and Farie #a% en or"e it within a reasona&!e ti#e, as i it had &een i!!ed (' stri"t!% in a""ordan"e with the a(thorit% *i)en$
7n6orser: 7rre'ular 7n6orser s! General 7n6orser (2001) Distin*(ish an irre*(!ar indorser ro# a *enera! indorser$ ?;@A
SUGGESTED ANSWER:
Irre*(!ar Indorser is not a 'art% to the instr(#ent &(t he '!a"es his si*nat(re in &!ank &e ore de!i)er%$ 9e is not a 'art% &(t he &e"o#es one &e"a(se o his si*nat(re in the instr(#ent$ Be"a(se his si*nat(re he is "onsidered an indorser and he is !ia&!e to the 'arties in the instr(#ent$
2$ -(''osin* the "he"k was sto!en whi!e in R(thGs 'ossession and a thie i!!ed the &!ank "he"k, endorsed and de!i)ered it to Farie in 'a%#ent or the *oods he '(r"hased ro# her, is 1(n !ia&!e to Farie i the "he"k is dishonored> ?3@A
SU00ESTE8 ANSWER:
.hi!e, a Genera! Indorser warrants that the instr(#ent is *en(ine, that he has a *ood tit!e to it, that a!! 'rior 'arties had "a'a"it% to "ontra"tI that the instr(#ent at the ti#e o the indorse#ent is )a!id and s(&sistin*I and that on d(e 'resent#ent, the instr(#ent wi!! &e a""e'ted or 'aid or &oth a""e'ted and 'aid a""ordin* to its tenor, and that i it is dishonored, he wi!! 'a% i the ne"essar% 'ro"eedin*s or dishonor are #ade$ Ne'otia.ilit% ()**3) Dis"(ss the ne*otia&i!it% or non-ne*otia&i!it% o the o!!owin* notes 6A Fani!a, -e'te#&er 6, 6::;
No$ E)en tho(*h Farie is a ho!der in d(e "o(rse, this is an in"o#'!ete and (nde!i)ered instr(#ent, "o)ered &% -e"tion 63 o the Ne*otia&!e Instr(#ents Eaw$ .here an in"o#'!ete instr(#ent has not &een de!i)ered, it wi!! not,
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P2,300$00 I 'ro#ise to 'a% Pedro -an 1(an or order the s(# o P2,300$ ?-*d$A Noe! Castro 2A Fani!a, 1(ne ;, 6::; P60,000$00 Dor )a!(e re"ei)ed, I 'ro#ise to 'a% -er*io Dee or order the s(# o P60,000$00 in i)e ?3A insta!!#ents, with the irst insta!!#ent 'a%a&!e on O"to&er 3, 6::; and the other insta!!#ents on or &e ore the i th da% o the s(""eedin* #onth or therea ter$ ?-*d$A Eito Oi!!a
SUGGESTED ANSWER:
&A Para*ra'h 2 H ne*otia&i!it% is <NOT ADDECTED= The interest is to &e "o#'(ted at a 'arti"(!ar ti#e and is deter#ina&!e$ It does not #ake the s(# (n"ertain or the 'ro#ise "onditiona!$ "A Para*ra'h ; H ne*otia&i!it% is <ADDECTED$= Gi)in* the #aker the o'tion renders the 'ro#ise "onditiona! dA Para*ra'h 7 H ne*otia&i!it% is <NOT ADDECTED$= Gi)in* the o'tion to the ho!der does not #ake the 'ro#ise "onditiona!$ Ne'otia.ilit%2 Eol6er in Due Course ()**2) Per!a &ro(*ht a #otor "ar 'a%a&!e on insta!!#ents ro# A(to#oti)e Co#'an% or P230th$ -he #ade a down 'a%#ent o P30th and e+e"(ted a 'ro#issor% note or the &a!an"e$ The "o#'an% s(&seB(ent!% indorsed the note to Re!ia&!e Dinan"e Cor'oration whi"h inan"ed the '(r"hase$ The 'ro#issor% note read5
<Dor )a!(e re"ei)ed, I 'ro#ised to 'a% A(to#oti)e Co#'an% or order at its o i"e in Ee*as'i Cit%, the s(# o P200,000$00 with interest at twe!)e ?62@A 'er"ent 'er ann(#, 'a%a&!e in eB(a! insta!!#ents o P20,000$00 #onth!% or ten ?60A #onths startin* O"to&er 26, 6::6$
The 'ro#issor% note is ne*otia&!e as it "o#'!ies with -e" 6, NIE$ Dirst!%, it is in writin* and si*ned &% the #aker, Noe! Castro$ -e"ond!%, the 'ro#ise is (n"onditiona! to 'a% a s(# "ertain in #one%, that is, P2,300$00 Third!%, it is 'a%a&!e on de#and as no date o #at(rit% is s'e"i ied$ Do(rth, it is 'a%a&!e to order$ The 'ro#issor% note is ne*otia&!e$ A!! the reB(ire#ents o -e" 6 NIE are "o#'!ied with$ The s(# to &e 'aid is sti!! "ertain des'ite that the s(# is to &e 'aid &% insta!!#ents ?-e" 2& NIEA Ne'otia.ilit% (2002)
.hi"h o the o!!owin* sti'(!ations or eat(res o a 'ro#issor% note ?PNA a e"t or do not a e"t its ne*otia&i!it%, ass(#in* that the PN is otherwise ne*otia&!e> Indi"ate %o(r answer &% writin* the 'ara*ra'h n(#&er o the sti'(!ation or eat(re o the PN as shown &e!ow and %o(r "orres'ondin* answer, either <A e"ted= or <Not a e"ted$= E+'!ain ?3@A$
Fani!a -e'te#&er 26, 6::6$ ?s*dA Per!a

Pa% to the order o Re!ia&!e Dinan"e Cor'oration$ A(to#oti)e Co#'an%
B%5 ?-*dA Fana*er

Be"a(se Per!a de a(!ted in the 'a%#ent o her insta!!#ents, Re!ia&!e Dinan"e Cor'oration initiated a "ase a*ainst her or a s(# o #one%$ Per!a ar*(ed that the 'ro#issor% note is #ere!% an assi*n#ent o "redit, a non-ne*otia&!e instr(#ent o'en to a!! de enses a)ai!a&!e to the assi*nor and, there ore, Re!ia&!e Dinan"e Cor'oration is not a ho!der in d(e "o(rse$
aA The date o the PN is <De&r(ar% ;0, 2002$= &A The PN &ears interest 'a%a&!e on the !ast da% o ea"h "a!endar B(arter at a rate eB(a! to i)e 'er"ent ?3@A a&o)e the then 're)ai!in* :6-da% Treas(r% Bi!! rate as '(&!ished at the &e*innin* o s("h "a!endar B(arter$ "A The PN *i)es the #aker the o'tion to #ake 'a%#ent either in #one% or in B(antit% o 'a!a% or eB(i)a!ent )a!(e$ dA The PN *i)es the ho!der the o'tion either to reB(ire 'a%#ent in #one% or to reB(ire the #aker to ser)e as the &od%*(ard or es"ort o the ho!der or ;0 da%s$
SUGGESTED ANSWER:
aA Is the 'ro#issor% note a #ere assi*n#ent o "redit or a ne*otia&!e instr(#ent> .h%> &A Is Re!ia&!e Dinan"e Cor' a ho!der in d(e "o(rse> E+'!ain &rie !%$
SUGGESTED ANSWER:
aA The 'ro#issor% note in the 'ro&!e# is a ne*otia&!e instr(#ent, &ein* in "o#'!ian"e with the 'ro)isions o -e" 6 NIE$ Neither the a"t that the 'a%a&!e s(# is to &e 'aid with interest nor that the #at(rities are in stated insta!!#ents renders (n"ertain the a#o(nt 'a%a&!e ?-e" 2 NIEA &A Yes, Re!ia&!e Dinan"e Cor'oration is a ho!der in d(e "o(rse *i)en the a"t(a! settin*s$ -aid "or'oration a''arent!% took the 'ro#issor% note or )a!(e, and there are no indi"ations that it a"B(ired it in &ad aith (Sec 5% 3/= see Salas v '1 #6# s %9&" Ne'otia.ilit%2 Re5uisites (2000)
aA
Para*ra'h 6 H ne*otia&i!it% is <NOT ADDECTED$= The date is not one o the reB(ire#ents or ne*otia&i!it%$
'00(
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aA FP &o(*ht a (sed "e!! 'hone ro# 1R$ 1R 're erred "ash &(t FP is a riend so 1R a""e'ted FRs 'ro#issor% note or P60,000$ 1R tho(*ht o "on)ertin* the note into "ash &% endorsin* it to his &rother KR$ The 'ro#issor% note is a 'ie"e o 'a'er with the o!!owin* hand-'rinted notation5 <FP .IEE PAY 1R TEN T9O4-AND PE-O- IN PAYFENT DOR 9ICEEEP9ONE 6 .EEK DROF TODAY$= Be!ow this notation FPs si*nat(re with <8M6M00= ne+t to it, indi"atin* the date o the 'ro#issor% note$ .hen 1R 'resented FPs note to KR, the !atter said it was not a ne*otia&!e instr(#ent (nder the !aw and so "o(!d not &e a )a!id s(&stit(te or "ash$ 1R took the o''osite )iew, insistin* on the notes ne*otia&i!it%$ Yo( are asked to re eree$ .hi"h o the o''osin* )iews is "orre"t> &A T9 is an indorsee o a 'ro#issor% note that si#'!% states5 <PAY TO 14AN TAN OR ORDER 700 PE-O-$= The note has no date, no '!a"e o 'a%#ent and no "onsideration #entioned$ It was si*ned &% FK and written (nder his !etterhead s'e"i %in* the address, whi"h ha''ens to &e his residen"e$ T9 a""e'ted the 'ro#issor% note as 'a%#ent or ser)i"es rendered to -9, who in t(rn re"ei)ed the note ro# 1(an Tan as 'a%#ent or a 're'aid "e!! 'hone "ard worth 730 'esos$ The 'a%ee a"know!ed*ed ha)in* re"ei)ed the note on A(*(st 6, 2000$ A Bar re)iewee had to!d T9, who ha''ens to &e %o(r riend, that T9 is not a ho!der in d(e "o(rse (nder Arti"!e 32 o the Ne*otia&!e Instr(#ents Eaw ?A"t 20;6A and there ore does not en0o% the ri*hts and 'rote"tion (nder the stat(te$ T9 asks or o(r ad)i"e s'e"i i"a!!% in "onne"tion with the note &ein* (ndated and not #entionin* a '!a"e o 'a%#ent and an% "onsideration$ .hat wo(!d %o(r ad)i"e &e> ?2@A$
SUGGESTED ANSWER:
Ne'otia.le 7nstrument: De&inition 0 C#aracteristics (2001) .hat is a ne*otia&!e instr(#ent> Gi)e the "hara"teristi"s o a ne*otia&!e instr(#ent$ ?2@A
SUGGESTED ANSWER:
Ne*otia&!e Instr(#ent is a written "ontra"t or the 'a%#ent o #one% whi"h is intended as a s(&stit(te or #one% and 'asses ro# one 'erson to another as #one%, in s("h a #anner as to *i)e a ho!der in d(e "o(rse the ri*ht to ho!d the instr(#ent ree ro# de enses a)ai!a&!e to 'rior 'arties$ -("h instr(#ent #(st "o#'!% with -e"$ 6 o the Ne*otia&!e Instr(#ent Eaw to &e "onsidered ne*otia&!e$ The "hara"teristi"s o a ne*otia&!e instr(#ent areI 6A Ne*otia&i!it% - That B(a!it% or attri&(te where&% a &i!!, note or "he"k 'asses or #a% 'ass ro# hand to hand, si#i!ar to #one%, so as to *i)e the ho!der in d(e "o(rse the ri*ht to ho!d the instr(#ent and "o!!e"t the s(# 'a%a&!e or hi#se! ree ro# de enses$ 2A A""(#(!ation o -e"ondar% Contra"ts as the% are trans erred ro# one 'erson to another$ Ne'otia.le 7nstrument: 76enti&ication (2001)
-tate and e+'!ain whether the o!!owin* are ne*otia&!e instr(#ents (nder the Ne*otia&!e Instr(#ents Eaw5 ?3@A
6A Posta! Fone% OrderI

2A A "erti i"ate o ti#e de'osit whi"h states <This is to "erti % that &earer has de'osited in this &ank the s(# o DO4R T9O4-AND PE-O- ?P7,000$00A on!%, re'a%a&!e to the de'ositor 200 da%s a ter date$=
;A Eetters o "reditI 7A .areho(se re"ei'tsI 3A Treas(r% warrants 'a%a&!e ro# a s'e"i i" (nd$
SUGGESTED ANSWER:
aA KR is ri*ht$ The 'ro#issor% note is not ne*otia&!e$ It is not iss(ed to order or &earer$ There is no word o ne*otia&i!it% "ontainin* therein$ It is not iss(ed in a""ordan"e with -e"tion 6 o the Ne*otia&!e Instr(#ents Eaw &A The a"t that the instr(#ent is (ndated and does not #ention the '!a"e o 'a%#ent does not #i!itate a*ainst its &ein* ne*otia&!e$ The date and '!a"e o 'a%#ent are not #ateria! 'arti"(!ars reB(ired to #ake an instr(#ent ne*otia&!e$ The a"t that no #ention is #ade o an% "onsideration is not #ateria!$ Consideration is 'res(#ed$ Ne'otia.le 7nstrument: Am.i'uous 7nstruments ()**:) 9ow do %o( treat a ne*otia&!e instr(#ent that is so a#&i*(o(s that there is do(&t whether it is a &i!! or a note> ?3@A
SUGGESTED ANSWER:
6A Posta! Fone% Order H Non-Ne*otia&!e as it is *o)erned &% 'osta! r(!es and re*(!ation whi"h #a% &e in"onsistent with the NIE and it "an on!% &e ne*otiated on"e$ 2A A "erti i"ate o ti#e de'osit whi"h states <This is to "erti % that &earer has de'osited in this &ank the s(# o DO4R T9O4-AND PE-O?P7,000$00A on!%, re'a%a&!e to the de'ositor 200 da%s a ter date$= H Non-Ne*otia&!e as it does not "o#'!% with the reB(isites o -e"$ 6 o NIE ;A Eetters o "redit - Non-Ne*otia&!e 7A .areho(se re"ei'ts - Non-Ne*otia&!e or the sa#e as Bi!! o Eadin* it #ere!% re'resents *ood, not #one%$ 3A Treas(r% warrants 'a%a&!e ro# a s'e"i i" (nd - Non-Ne*otia&!e &ein* 'a%a&!e o(t o a 'arti"(!ar (nd$
6$ .here a ne*otia&!e instr(#ent is so a#&i*(o(s that there is do(&t whether it is a &i!! or a note, the ho!der #a% treat it either as a &i!! o e+"han*e or a 'ro#issor% note at his e!e"tion$
'00(
Ne'otia.le 7nstrument: Ne'otia.le Document s! Ne'otia.le 7nstrument (2001) Distin*(ish a ne*otia&!e do"(#ent ro# a ne*otia&!e instr(#ent$ ?2@A
SUGGESTED ANSWER:
Page 6( of 103 !atter &e"a#e a ho!der thereo $ As s("h ho!der, Na'o!eon "an 'ro"eed a*ainst Ri"hard C!inton$
Ne*otia&!e Instr(#ent ha)e reB(isites o -e"$ 6 o the NIE, a ho!der o this instr(#ent ha)e ri*ht o re"o(rse a*ainst inter#ediate 'arties who are se"ondari!% !ia&!e, 9o!der in d(e "o(rse #a% ha)e ri*hts &etter than trans eror, its s(&0e"t is #one% and the Instr(#ent itse! is 'ro'ert% o )a!(e$
On the other hand, ne*otia&!e do"(#ent does not "ontain reB(isites o -e"$ 6 o NIE, it has no se"ondar% !ia&i!it% o inter#ediate 'arties, trans eree #ere!% ste's into the shoes o the trans eror, its s(&0e"t are *oods and the instr(#ent is #ere!% e)iden"e o tit!eI thin* o )a!(e are the *oods #entioned in the do"(#ent$
Ne'otia.le 7nstruments2 ,earer 7nstruments ()**+) A de!i)ers a &earer instr(#ent to B$ B then s'e"ia!!% indorses it to C and C !ater indorses it in &!ank to D$ E stea!s the instr(#ent ro# D and, or*in* the si*nat(re o D, s(""eeds in <ne*otiatin*= it to D who a"B(ires the instr(#ent in *ood aith and or )a!(e$ aA I , or an% reason, the drawee &ank re (ses to honor the "he"k, "an D en or"e the instr(#ent a*ainst the drawer>
&A In "ase o the dishonor o the "he"k &% &oth the drawee and the drawer, "an D ho!d an% o B, C and D
!ia&!e se"ondari!% on the instr(#ent>

SUGGESTED ANSWER:
Ne'otia.le 7nstrument2 Ne'otia.ilit% ()**+) Can a &i!! o e+"han*e or a 'ro#issor% note B(a!i % as a ne*otia&!e instr(#ent i H a$ it is not datedI or &$ the da% and the #onth, &(t not the %ear o its #at(rit%, is *i)enI or "$ it is 'a%a&!e to <"ash= or d$ it na#es two a!ternati)e drawees
SUGGESTED ANSWER:
aA Yes$ The instr(#ent was 'a%a&!e to &earer as it was a &earer instr(#ent$ It "o(!d &e ne*otiated &% #ere de!i)er% des'ite the 'resen"e o s'e"ia! indorse#ents$ The or*ed si*nat(re is (nne"essar% to 'res(#e the 0(ridi"a! re!ation &etween or a#on* the 'arties 'rior to the or*er% and the 'arties a ter the or*er%$ The on!% 'art% who "an raise the de ense o or*er% a*ainst a ho!der in d(e "o(rse is the 'erson whose si*nat(re is or*ed$ &A On!% B and C "an &e he!d !ia&!e &% D$ The instr(#ent at the ti#e o the or*er% was 'a%a&!e to &earer, &ein* a &earer instr(#ent$ Foreo)er, the instr(#ent was indorsed in &!ank &% C to D$ D, whose si*nat(re was or*ed &% E "annot &e he!d !ia&!e &% D$ Ne'otia.le 7nstruments2 .earer instruments2 lia.ilities o& ma-er an6 in6orsers (200)) A iss(ed a 'ro#issor% note 'a%a&!e to B or &earer$ A de!i)ered the note to B$ B indorsed the note to C$ C '!a"ed the note in his drawer, whi"h was sto!en &% the 0anitor J$ J indorsed the note to D &% or*in* Cs si*nat(re$ D indorsed the note to E who in t(rn de!i)ered the note to D, a ho!der in d(e "o(rse, witho(t indorse#ent$ Dis"(ss the indi)id(a! !ia&i!ities to D o A, B and C$ ?3@A
SUGGESTED ANSWER:
aA Yes$ Date is not a #ateria! 'arti"(!ar reB(ired &% -e" 6 NIE or the ne*otia&i!it% o an instr(#ent$ &A No$ The ti#e or 'a%#ent is not deter#ina&!e in this "ase$ The %ear is not stated$ "A Yes$ -e" :d NIE #akes the instr(#ent 'a%a&!e to &earer &e"a(se the na#e o the 'a%ee does not '(r'ort to &e the na#e o an% 'erson$ dA A &i!! #a% not &e addressed to two or #ore drawees in the a!ternati)e or in s(""ession, to &e ne*otia&!e ?-e" 628 NIEA$ To do so #akes the order "onditiona!$ Ne'otia.le 7nstruments2 ,earer 7nstrument ()**:) Ri"hard C!inton #akes a 'ro#issor% note 'a%a&!e to &earer and de!i)ers the sa#e to A(rora Pa*e$ A(rora Pa*e, howe)er, endorses it to J in this #anner5 <Pa%a&!e to J$ -i*ned5 A(rora Pa*e$= Eater, J, witho(t endorsin* the 'ro#issor% note, trans ers and de!i)ers the sa#e to Na'o!eon$ The note is s(&seB(ent!% dishonored &% Ri"hard C!inton$ Fa% Na'o!eon 'ro"eed a*ainst Ri"hard C!inton or the note> ?3@A
SUGGESTED ANSWER:
A is !ia&!e to D$ As the #aker o the 'ro#issor% note, A is dire"t!% or 'ri#ari!% !ia&!e to D, who is a ho!der in d(e "o(rse$ Des'ite the 'resen"e o the s'e"ia! indorse#ents on the note, these do not detra"t ro# the a"t that a &earer instr(#ent, !ike the 'ro#issor% note in B(estion, is a!wa%s ne*otia&!e &% #ere de!i)er%, (nti! it is indorsed restri"ti)e!% <Dor De'osit On!%$=
B, as a *enera! indorser, is !ia&!e to D se"ondari!%, and warrants that the instr(#ent is *en(ine and in a!! res'e"ts what it '(r'orts to &eI that he has *ood tit!e to itI that a!! 'rior 'arties had "a'a"it% to "ontra"tI that he has no know!ed*e o an% a"t whi"h wo(!d i#'air the )a!idit% o the instr(#ent or render it )a!(e!essI that at the ti#e o his indorse#ent, the instr(#ent is )a!id and s(&sistin*I and that on d(e 'resent#ent, it sha!! &e
Yes$ Ri"hard C!inton is !ia&!e to Na'o!eon (nder the 'ro#issor% note$ The note #ade &% Ri"hard C!inton is a &earer instr(#ent$ Des'ite s'e"ia! indorse#ent #ade &% A(rora Pa*e thereon, the note re#ained a &earer instr(#ent and "an &e ne*otiated &% #ere de!i)er%$ .hen J de!i)ered and trans erred the note to Na'o!eon, the
a""e'ted or 'aid, or &oth, a""ordin* to its tenor, and that i it &e dishonored and the ne"essar%
'ro"eedin*s on dishonor
Page
6- of 103
&e d(!% taken, he wi!! 'a% the a#o(nt thereo to the ho!der, or to an% s(&seB(ent indorser who #a% &e "o#'e!!ed to 'a%$ C is not !ia&!e to D sin"e the !atter "annot tra"e his tit!e to the or#er$ The si*nat(re o C in the s(''osed indorse#ent &% hi# to D was or*ed &% J$ C "an raise the de ense o or*er% sin"e it was his si*nat(re that was or*ed$
A8TERNAT7>E ANSWER:
As a *enera! endorser, B is se"ondari!% !ia&!e to D$ C is !ia&!e to D sin"e it is d(e to the ne*!i*en"e o C in '!a"in* the note in his drawer that ena&!ed J to stea! the sa#e and or*e the si*nat(re o C re!ati)e to the indorse#ent in a)or o D$ As &etween C and D who are &oth inno"ent 'arties, it is C whose ne*!i*en"e is the 'ro+i#ate "a(se o the !oss$ 9en"e C sho(!d s( er the !oss$
Ne'otia.le 7nstruments2 incom$lete an6 un6eli ere6 instruments2 #ol6er in 6ue course (2000) PN #akes a 'ro#issor% note or P3,000$00, &(t !ea)es the na#e o the 'a%ee in &!ank &e"a(se he wanted to )eri % its "orre"t s'e!!in* irst$ 9e #ind!ess!% !e t the note on to' o his desk at the end o the workda%$ .hen he ret(rned the o!!owin* #ornin*, the note was #issin*$ It t(rned (' !ater when J 'resented it to PN or 'a%#ent$ Be ore J, T, who t(rned o(t to ha)e i!"hed the note ro# PNs o i"e, had endorsed the note a ter insertin* his own na#e in the &!ank s'a"e as the 'a%ee$ PN dishonored the note, "ontendin* that he did not a(thoriCe its "o#'!etion and de!i)er%$ B(t J said he had no 'arti"i'ation in, or know!ed*e a&o(t, the 'i! era*e and a!teration o the note and there ore he en0o%s the ri*hts o a ho!der in d(e "o(rse (nder the Ne*otia&!e Instr(#ents Eaw$ .ho is "orre"t and wh%> ?;@A
&A Can the 'a%ee in a 'ro#issor% note &e a <ho!der in d(e "o(rse= within the #eanin* o the Ne*otia&!e Instr(#ents Eaw ?A"t 20;6A> E+'!ain %o(r answer$ ?2@A
SUGGESTED ANSWER:
A, sin*!e 'ro'rietor o a &(siness "on"ern, is a&o(t to !ea)e or a &(siness tri' and, as he so o ten does on these o""asions, si*ns se)era! "he"ks in &!ank$ 9e instr("ts B, his se"retar%, to sa ekee' the "he"ks and i!! the# o(t when and as reB(ired to 'a% a""o(nts d(rin* his a&sen"e$ B i!!s o(t one o the "he"ks &% '!a"in* her na#e as 'a%ee, i!!s in the a#o(nt, endorses and de!i)ers the "he"k to C who a""e'ts it in *ood aith as 'a%#ent or *oods so!d to B$ B re*rets her a"tion and te!!s A what she did$ A dire"ts the Bank in ti#e to dishonor the "he"k$ .hen C en"ashes the "he"k, it is dishonored$
Can A &e he!d !ia&!e to C>

SUGGESTED ANSWER:
Yes, A "an &e he!d !ia&!e to C, ass(#in* that the !atter *a)e noti"e o dishonor to A$ This is a "ase o an in"o#'!ete instr(#ent &(t de!i)ered as it was entr(sted to B, the se"retar% o A$ Foreo)er, (nder the do"trine o "o#'arati)e ne*!i*en"e, as &etween A and C, &oth inno"ent 'arties, it was the ne*!i*en"e o A in entr(stin* the "he"k to B whi"h is the 'ro+i#ate "a(se o the !oss$
Ne'otia.le 7nstruments2 -in6s o& ne'otia.le instrument2 ;or6s o& ne'otia.ilit% (2002) A$ De ine the o!!owin*5 ?6A a ne*otia&!e 'ro#issor% note, ?2A a &i!! o e+"han*e and ?;A a "he"k$ ?;@A B$ Yo( are Pedro Cr(C$ Dra t the a''ro'riate "ontra"t !an*(a*e or ?6A %o(r ne*otia&!e 'ro#issor% note and ?2A %o(r "he"k, ea"h "ontainin* the essentia! e!e#ents o a ne*otia&!e instr(#ent ?2@A
SUGGESTED ANSWER:
A$ ?6A A ne*otia&!e 'ro#issor% note is an (n"onditiona! 'ro#ise in writin* #ade &% one 'erson to another, si*ned &% the #aker, en*a*in* to 'a% on de#and or at a i+ed or deter#ina&!e (t(re ti#e, a s(# "ertain in #one% to order or &earer$
?2A A &i!! o e+"han*e is an (n"onditiona! order in writin* addressed &% one 'erson to another, si*ned &% the 'erson *i)in* it, reB(irin* the 'erson to who# it is addressed to 'a% on de#and or at a i+ed or deter#ina&!e (t(re ti#e a s(# "ertain in #one% to order or to &earer$
aA PN is ri*ht$ The instr(#ent is in"o#'!ete and (nde!i)ered$ It did not "reate an% "ontra"t that wo(!d &ind PN to an o&!i*ation to 'a% the a#o(nt thereo $ &A A 'a%ee in a 'ro#issor% note "annot &e a <ho!der in d(e "o(rse= within the #eanin* o the Ne*otia&!e Instr(#ents Eaw, &e"a(se a 'a%ee is an i##ediate 'art% in re!ation to the #aker$ The 'a%ee is s(&0e"t to whate)er de enses, rea! o 'ersona!, a)ai!a&!e to the #aker o the
?;A A "he"k is a &i!! o e+"han*e drawn on a &ank 'a%a&!e on de#and$ B$ ?6A Ne*otia&!e 'ro#issor% note <-e'te#&er 63, 2002 <Dor )a!(e re"ei)ed, I here&% 'ro#ise to 'a% 1(an -antos or order the s(# o TEN T9O4-AND PE-O- ?P60,000A thirt% ?;0A da%s ro# date hereo $ ?-i*nedA Pedro Cr(C
'ro#issor% note$
A8TERNAT7>E ANSWER:
&A A 'a%ee "an &e a <ho!der in d(e "o(rse$= A ho!der is de ined as the 'a%ee or indorsee o the instr(#ent who is in 'ossession o it$ E)er% ho!der is dee#ed 'ri#a a"ie to &e a ho!der in d(e "o(rse$ Ne'otia.le 7nstruments2 7ncom$lete Deli ere6 7nstruments2 Com$arati e Ne'li'ence ()**+)
to5 Phi!i''ine Nationa! Bank

Es"o!ta, Fani!a Bran"h=

ABC
Ne'otia.le 7nstruments2 Re5uisites ()**4) .hat are the reB(isites o a ne*otia&!e instr(#ent>
SUGGESTED ANSWER:
The reB(isites o a ne*otia&!e instr(#ent are as o!!ows5 aA It #(st &e in writin* and si*ned &% the #aker or drawerI &A It #(st "ontain an (n"onditiona! 'ro#ise or order to 'a% a s(# "ertain in #one%I "A It #(st &e 'a%a&!e to order or to &earerI and dA .here the instr(#ent is addressed to a drawee, he #(st &e na#ed or otherwise indi"ated therein with reasona&!e "ertaint%$ ?-e" 6 NIEA Notice Dis#onor ()**4) .hen is noti"e o dishonor not reB(ired to &e *i)en to the drawer>
SUGGESTED ANSWER:
Noti"e o dishonor is not reB(ired to &e *i)en to the drawer in an% o the o!!owin* "ases5 aA .here the drawer and drawee are the sa#e 'ersonI &A .hen the drawee is a i"titio(s 'erson or a 'erson not ha)in* "a'a"it% to "ontra"tI "A .hen the drawer is the 'erson to who# the instr(#ent is 'resented or 'a%#entI dA .here the drawer has no ri*ht to e+'e"t or reB(ire that the drawee or a""e'tor wi!! honor the instr(#entI eA .here the drawer has "o(nter#anded 'a%#ent ?-e" 667 NIEA "arties2 Accommo6ation "art% ()**0)
To a""o##odate Car#en, #aker o a 'ro#issor% note, 1or*e si*ned as indorser thereon, and the instr(#ent was ne*otiated to Ra %, a ho!der or )a!(e$ At the ti#e Ra % took the instr(#ent, he knew 1or*e to &e an a""o#odation 'art% on!%$ .hen the 'ro#issor% note was not 'aid, and Ra % dis"o)ered that Car#en had no (nds, he s(ed 1or*e$ 1or*e '!eads in de ense the a"t that he had endorsed the instr(#ent witho(t re"ei)in* )a!(e there or, and the (rther a"t that Ra % knew that at the ti#e he took the instr(#ent 1or*e had not re"ei)ed an% )a!(e or "onsideration o an% kind or his indorse#ent$
Is 1or*e !ia&!e> Dis"(ss$

SUGGESTED ANSWER:
Yes$ 1or*e is !ia&!e$ -e" 2: o the NIE 'ro)ides that an a""o##odation 'art% is !ia&!e on the instr(#ent to a ho!der or )a!(e, notwithstandin* the ho!der at the ti#e o takin* said instr(#ent knew hi# to &e on!% an a""o##odation 'art%$ This is the nat(re or the essen"e o a""o##odation$ "arties2 Accommo6ation "art% ()**))
On 1(ne 6, 6::0, A o&tained a !oan o P600th ro# B, 'a%a&!e not !ater than 20De"6::0$ B reB(ired A to iss(e hi# a "he"k or that a#o(nt to &e dated 20De"6::0$ -in"e he does not ha)e an% "he"kin* a""o(nt, A, with the know!ed*e o B, reB(ested his riend, C, President o -aad Bankin* Cor' ?-aadA to a""o##odate hi#$ C a*reed, he si*ned a "he"k or the a oresaid a#o(nt dated 20De" 6::0, drawn a*ainst -aads a""o(nt with the
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Co##er"ia! Bankin* Co$ The B%-!aws o -aad reB(ires that "he"ks iss(ed &% it #(st &e si*ned &% the President and the Treas(rer or the Oi"e-President$ -in"e the Treas(rer was a&sent, C reB(ested the Oi"ePresident to "o-si*n the "he"k, whi"h the !atter re!("tant!% did$ The "he"k was de!i)ered to B$ The "he"k was dishonored ('on 'resent#ent on d(e date or ins( i"ien"% o (nds$
"arties2 Accommo6ation "art% ()**4) Nora a''!ied or a !oan o P600th with B4R Bank$ B% wa% o a""o##odation, Noras sister, Oi!#a, e+e"(ted a 'ro#issor% note in a)or o B4R Bank$ .hen Nora de a(!ted, B4R Bank s(ed Oi!#a, des'ite its know!ed*e that Oi!#a re"ei)ed no 'art o the !oan$ Fa% Oi!#a &e he!d !ia&!e> E+'!ain$
SUGGESTED ANSWER:
aA Is -aad !ia&!e on the "he"k as an a""o##odation 'art%> &A I it is not, who then, (nder the a&o)e a"ts, isMare the a""o##odation 'art%>
SUGGESTED ANSWER:
Yes, Oi!#a #a% &e he!d !ia&!e$ Oi!#a is an a""o##odation 'art%$ As s("h, she is !ia&!e on the instr(#ent to a ho!der or )a!(e s("h as B4R Bank$ This is tr(e e)en i B4R Bank was aware at the ti#e it took the instr(#ent that Oi!#a is #ere!% an a""o##odation 'art% and re"ei)ed no 'art o the !oan (See Sec %9, 3/=< Eulalio ;rudencio v '1 2, =8$55$9,
Aul #5, 6& #5$ s 4"
a$A -aad is not !ia&!e on the "he"k as an a""o##odation 'art%$ The a"t o the "or'oration in a""o##odatin* a riend o the President, is (!tra )ires ('risologo8Aose v '1 2, 67599, #5Sep#969"0 .hi!e it #a% &e !e*a!!% 'ossi&!e or the "or'oration, whose &(siness is to 'ro)ide inan"ia! a""o##odations in the ordinar% "o(rse o &(siness, s("h as one *i)en &% a inan"in* "o#'an% to &e an a""o##odation 'art%, this sit(ation, howe)er, is not the "ase in the &ar 'ro&!e#$
&A Considerin* that &oth the President and Oi"ePresident were si*natories to the a""o##odation, the% the#se!)es "an &e s(&0e"t to the !ia&i!ities o a""o##odation 'arties to the instr(#ent in their 'ersona! "a'a"it% ('risologo8Aose v '1 #5Sep#969"
"arties2 Accommo6ation "art% ()**:)

Dor the '(r'ose o !endin* his na#e witho(t re"ei)in* )a!(e there ore, Pedro #akes a note or P20,000 'a%a&!e to the order o J who in t(rn ne*otiates it to Y, the !atter knowin* that Pedro is not a 'art% or )a!(e$
6$ Fa% Y re"o)er ro# Pedro i the !atter inter'oses the a&sen"e o "onsideration> ?;@A
2$ -(''osin* (nder the sa#e a"ts, Pedro 'a%s the said P20,000 #a% he re"o)er the sa#e a#o(nt ro# J> ?2@A
SUGGESTED ANSWER:
6$ Yes$ Y "an re"o)er ro# Pedro$ Pedro is an a""o##odation 'art%$ A&sen"e o "onsideration is in the nat(re o an a""o##odation$ De ense o a&sen"e o "onsideration "annot &e )a!id!% inter'osed &% a""o##odation 'art% a*ainst a ho!der in d(e "o(rse$
'00(
a""o##odation 'art%> E+'!ain$ ?2@A

SUGGESTED ANSWER:
2$ I Pedro 'a%s the said P20,000 to Y, Pedro "an re"o)er the a#o(nt ro# J$ J is the a""o##odated 'art% or the 'art% (!ti#ate!% !ia&!e or the instr(#ent$ Pedro is on!% an a""o##odation 'art%$ Otherwise, it wo(!d &e (n0(st enri"h#ent on the 'art o J i he is not to 'a% Pedro$
"arties2 Accommo6ation "art% (2003) -(san Kawada &orrowed P300,000 ro# JYQ Bank whi"h reB(ired her, to*ether with Rose Re%es who did not re"ei)e an% a#o(nt ro# the &ank, to e+e"(te a 'ro#issor% note 'a%a&!e to the &ank, or its order on stated #at(rities$ The note was e+e"(ted as so a*reed$ .hat kind o !ia&i!it% was in"(rred &% Rose, that o an a""o##odation 'art% or that o a so!idar% de&tor> E+'!ain$ ?7@A
SUGGESTED ANSWER:
?'er DondeeA Rose #a% &e he!d !ia&!e$ Rose is an a""o##odation 'art%$ A&sen"e o "onsideration is in the nat(re o an a""o##odation$ De ense o a&sen"e o "onsideration "annot &e )a!id!% inter'osed &% a""o##odation 'art% a*ainst a ho!der in d(e "o(rse$
"arties2 Accommo6ation "art% (2003) 1(an -% '(r"hased ro# <A= A''!ian"e Center one *enerator set on insta!!#ent with "hatte! #ort*a*e in a)or o the )endor$ A ter *ettin* ho!d o the *enerator set, 1(an -% i##ediate!% so!d it witho(t "onsent o the )endor$ 1(an -% was "ri#ina!!% "har*ed with esta a$ To sett!e the "ase e+tra 0(di"ia!!%, 1(an -% 'aid the s(# o P20,000 and or the &a!an"e o P3,000$00 he e+e"(ted a 'ro#issor% note or said a#o(nt with Ben Eo'eC as an a""o##odation 'art%$ 1(an -% ai!ed to 'a% the &a!an"e$ 6A .hat is the !ia&i!it% o Ben Eo'eC as an a""o##odation 'art%> E+'!ain$ 2A .hat is the !ia&i!it% o 1(an -%>
SUGGESTED ANSWER:
6A Ben Eo'eC, as an a""o##odation 'art%, is !ia&!e as #aker to the ho!der (' to the s(# o P3,000 e)en i he did not re"ei)e an% "onsideration or the 'ro#issor% note$ This is the nat(re o a""o##odation$ B(t Ben Eo'eC "an ask or rei#&(rse#ent ro# 1(an -%, the a""o##odation 'art%$ 2A 1(an -% is !ia&!e to the e+tent o P3,000 in the hands o a ho!der in d(e "o(rse ?-e" 67 NIEA$ I Ben Eo'eC 'aid the 'ro#issor% note, 1(an -% has the o&!i*ation to rei#&(rse Ben Eo'eC or the a#o(nt 'aid$ I 1(an -% 'a%s dire"t!% to the ho!der o the 'ro#issor% note, or he 'a%s Ben Eo'eC or the rei#&(rse#ent o the 'a%#ent &% the !atter to the ho!der, the instr(#ent is dis"har*ed$
"arties2 Accommo6ation "art% (2001) Da*(! has a &(siness arran*e#ent with Da"(ndo$ The !atter wo(!d !end #one% to another, thro(*h Da*(!, whose na#e wo(!d a''ear in the 'ro#issor% note as the !ender$ Da*(! wo(!d then i##ediate!% indorse the note to Da"(ndo$ Is Da*(! an
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66 of 103
YE-Z Da*(! is an a""o##odation 'art% &e"a(se in the "ase at &ar, he is essentia!!%, a 'erson who si*ns as #aker witho(t re"ei)in* an% "onsideration, si*ns as an a""o##odation 'art% #ere!% or the '(r'ose o !endin* the "redit o his na#e$ And as an a""o##odation 'art% he "annot set (' !a"k o "onsideration a*ainst an% ho!der, e)en as to one who is not a ho!der in d(e "o(rse$
"o##itted &% E)e!%n a*ainst Earr% whi"h is 0(st a 'ersona! de ense$ B(t ha)in* taken the instr(#ent ro# De)i, a ho!der in d(e "o(rse, Ba&% has a!! the ri*hts o a ho!der in d(e "o(rse$ Ba&% did not 'arti"i'ate in the &rea"h o tr(st "o##itted &% E)e!%n who i!!ed the &!ank &(t i!!ed (' the instr(#ent with P3,000 instead o P6,000 as instr("ted &% Earr% ?-e" 38 NIEA "arties2 Eol6er in Due Course ()**4) .hat "onstit(tes a ho!der in d(e "o(rse>
SUGGESTED ANSWER:
"arties2 Eol6er in Due Course ()**3)

Earr% iss(ed a ne*otia&!e 'ro#issor% note to E)e!%n and a(thoriCed the !atter to i!! (' the a#o(nt in &!ank with his !oan a""o(nt in the s(# o P6,000$ 9owe)er, E)e!%n inserted P3,000 in )io!ation o the instr("tion$ -he ne*otiated the note to 1(!ie who had know!ed*e o the in ir#it%$ 1(!ie in t(rn ne*otiated said note to De)i or )a!(e and who had no know!ed*e o the in ir#it%$
6A Can De)i en or"e the note a*ainst Earr% and i she "an, or how #("h> E+'!ain$ 2A -(''osin* De)i endorses the note to Ba&% or )a!(e &(t who has know!ed*e o the in ir#it%, "an the !atter en or"e the note a*ainst Earr%>
SUGGESTED ANSWER:
A ho!der in d(e "o(rse is one who has taken the instr(#ent (nder the o!!owin* "onditions5 6$ That it is "o#'!ete and re*(!ar ('on its a"eI 2$ That he &e"a#e ho!der o it &e ore it was o)erd(e and witho(t noti"e that it had &een 're)io(s!% dishonored, i s("h was the a"tI ;$ That he took it in *ood aith and or )a!(eI 7$ That at the ti#e it was ne*otiated to hi#, he had no noti"e o an% in ir#it% in the instr(#ent or de e"t in the tit!e o the 'erson ne*otiatin* it$ ?-e" 32, NIEA "arties2 Eol6er in Due Course ()**4) 6::2 2$2A E)a iss(ed to I#e!da a "he"k in the a#o(nt o P30th 'ost-dated -e' ;0, 6::3, as se"(rit% or a dia#ond rin* to &e so!d on "o##ission$ On -e' 63, 6::3, I#e!da ne*otiated the "he"k to FT in)est#ent whi"h 'aid the a#o(nt o P70th to her$ E)a ai!ed to se!! the rin*, so she ret(rned it to I#e!da on -e' 6:, 6::3$ 4na&!e to retrie)e her "he"k, E)a withdrew
6A Yes, De)i "an en or"e the ne*otia&!e 'ro#issor% note a*ainst Earr% in the a#o(nt o P3,000$ De)i is a ho!der in d(e "o(rse and the &rea"h o tr(st "o##itted &% E)e!%n "annot &e set (' &% Earr% a*ainst De)i &e"a(se it is a 'ersona! de ense$ As a ho!der in d(e "o(rse, De)i is not s(&0e"t to s("h 'ersona! de ense$ 2A Yes$ Ba&% is not a ho!der in d(e "o(rse &e"a(se she has know!ed*e o the &rea"h o tr(st
her (nds ro# the drawee &ank$ Th(s, when FT In)est#ent 'resented the "he"k or 'a%#ent, the drawee &ank dishonored it$ Eater on, when FT In)est#ent s(ed her, E)a raised the de ense o a&sen"e o "onsideration, the "he"k ha)in* &een iss(ed #ere!% as se"(rit% or the rin* that she "o(!d not se!!$ Does E)a ha)e a )a!id de ense> E+'!ain$
SUGGESTED ANSWER:
'resented it to AB or 'a%#ent$ .hen asked &% AB, G9 said CD
No$ E)a does not ha)e a )a!id de ense$ Dirst, FT In)est#ent is a ho!der in d(e "o(rse and, as s("h, ho!ds the 'ostdated "he"k ree ro# an% de e"t o tit!e o 'rior 'arties and ro# de enses a)ai!a&!e to 'rior 'arties a#on* the#se!)es$ E)a "an in)oke the de ense o a&sen"e o "onsideration a*ainst FT In)est#ent on!% i the !atter was 'ri)% to the '(r'ose or whi"h the "he"ks were iss(ed and, there ore, not a ho!der in d(e "o(rse$ -e"ond, it is not a *ro(nd or the dis"har*e o the 'ostdated "he"k as a*ainst a ho!der in d(e "o(rse that it was iss(ed #ere!% as se"(rit%$ The on!% *ro(nds or the dis"har*e o ne*otia&!e instr(#ents are those set orth in -e" 66: o the NIE and none o those *ro(nds are a)ai!a&!e to E)a$ The !atter #a% not (ni!atera!!% dis"har*e herse! ro# her !ia&i!it% &% the #ere e+'edien"% o withdrawin* her (nds ro# the drawee &ank$ (State /nvestments v '1 2, #7##&$, Aan ##, 9$ %#4s$%"0
"arties2 Eol6er in Due Course ()**:) J #akes a 'ro#issor% note or P60,000 'a%a&!e to A, a #inor, to he!' hi# &(% s"hoo! &ooks$ A endorses the note to B or )a!(e, who in t(rn endorses the note to C$ C knows A is a #inor$ I C s(es J on the note, "an J set (' the de enses o #inorit% and !a"k o "onsideration> ?;@A
SUGGESTED ANSWER:
Yes$ C is not a ho!der in d(e "o(rse$ The 'ro#issor% note is not a ne*otia&!e instr(#ent as it does not "ontain an% word o ne*otia&i!it%, that is, order or &ear, or words o si#i!ar #eanin* or i#'ort$ Not &ein* a ho!der in d(e "o(rse, C is to s(&0e"t s("h 'ersona! de enses o #inorit% and !a"k o "onsideration$ C is a #ere assi*nee who is s(&0e"t to a!! de enses$
A8TERNAT7>E ANSWER:
J "annot set (' the de ense o the #inorit% o A$ De ense o #inorit% is a)ai!a&!e to the #inor on!%$ -("h de ense is not a)ai!a&!e to J$ J "annot set (' the de ense a*ainst C$ Ea"k o "onsideration is a 'ersona! de ense whi"h is on!% a)ai!a&!e &etween i##ediate 'arties or a*ainst 'arties who are not ho!ders in d(e "o(rse$ Cs know!ed*e that A is a #inor does not 're)ent C ro# &ein* a ho!der in d(e "o(rse$ C took the 'ro#issor% note ro# a ho!der or )a!(e, B$ "arties2 Eol6er in Due Course2 7n6orsement in .lan(2002)
A$ AB iss(ed a 'ro#issor% note or P6,000 'a%a&!e to CD or his order on -e'te#&er 63, 2002$ CD indorsed the note in &!ank and de!i)ered the sa#e to ED$ G9 sto!e the note ro# ED and on -e'te#&er 67, 2002
Page 6+ of 103 *a)e hi# the note in 'a%#ent or two "a)ans o ri"e$ AB there ore 'aid G9 P6,00 on the sa#e date$ On -e'te#&er 63, 2002, ED dis"o)ered that the note o AB was not in his 'ossession and he went to AB$ It was then that ED o(nd o(t that AB had a!read% #ade 'a%#ent on the note$ Can ED sti!! "!ai# 'a%#ent ro# AB> .h%> ?;@A B$ As a seB(e! to the sa#e a"ts narrated a&o)e, ED, o(t o 'it% or AB who had a!read% 'aid P6,000$00 to G9, de"ided to or*i)e AB and instead *o a ter CD who indorsed the note in &!ank to hi#$ Is CD sti!! !ia&!e to ED &% )irt(e o the indorse#ent in &!ank> .h%> ?2@A SUGGESTED ANSWER:
o i"e o the "or'orate se"retar% o PJ Bank d(rin* &ankin* ho(rs$ ON #at(rit% date, RP was at the a oresaid o i"e read% to 'a% the note &(t PN did not show ('$ .hat PN !ater did was to s(e JE or the a"e )a!(e o the note, '!(s interest and "osts$ .i!! the s(it 'ros'er> E+'!ain$ ?3@A
SUGGESTED ANSWER:
Yes$ The s(it wi!! 'ros'er as ar as the a"e )a!(e o the note is "on"erned, &(t not with res'e"t to the interest d(e s(&seB(ent to the #at(rit% o the note and the "osts o "o!!e"tion$ RP was read% and wi!!in* to 'a% the note at the s'e"i ied '!a"e o 'a%#ent on the s'e"i ied #at(rit% date, &(t PN did not show ('$ PN !ost his ri*ht to re"o)er the interest d(e s(&seB(ent to the #at(rit% o the note and the "osts o "o!!e"tion$
A$ No$ ED "annot "!ai# 'a%#ent ro# AB$ ED is not a ho!der o the 'ro#issor% note$ To #ake the 'resent#ent or 'a%#ent, it is ne"essar% to e+hi&it the instr(#ent, whi"h ED "annot do &e"a(se he is not in 'ossession thereo $ B$ No, &e"a(se CD ne*otiated the instr(#ent &% de!i)er%$ "lace o& "a%ment (2000) PN is the ho!der o a ne*otia&!e 'ro#issor% note within the #eanin* o the Ne*otia&!e Instr(#ents Eaw ?A"t 20;6A$ The note was ori*ina!!% iss(ed &% RP to JE as 'a%ee$ JE indorsed the note to PN or *oods &o(*ht &% JE$ The note #entions the '!a"e o 'a%#ent on the s'e"i ied #at(rit% date as the
P2bli% Servi%e La#

Certi&icate o& $u.lic Con enience ()**:) The Baton* Baka! Cor'oration i!ed with the Board o Ener*% an a''!i"ation or a Certi i"ate o P(&!i" Con)enien"e or the '(r'ose o s(''!%in* e!e"tri" 'ower and !i*hts to the a"tor% and its e#'!o%ees !i)in* within the "o#'o(nd$ The a''!i"ation was o''osed &% the B(!a"an E!e"tri" Cor'oration "ontendin* that the Baton* Baka! Cor'oration has not se"(red a ran"hise to o'erate and #aintain an e!e"tri" '!ant$ Is the o''ositions "ontention "orre"t> ?3@A
SUGGESTED ANSWER:
No$ A "erti i"ate o '(&!i" "on)enien"e #a% &e *ranted to Baton* Baka! Cor'oration, tho(*h not 'ossessin* a
"o;ers o& t#e "u.lic Ser ice Commission ()**3)

The Cit% o Fani!a 'assed an ordinan"e &annin* 'ro)in"ia! &(ses ro# the "it%$ The ordinan"e was "ha!!en*ed as in)a!id (nder the P(&!i" -er)i"e A"t &% J
!e*is!ati)e ran"hise, i it #eets a!! the other reB(ire#ents$ There is nothin* in the !aw nor the Constit(tion, whi"h indi"ates that a !e*is!ati)e ran"hise is ne"essar% or reB(ired or an entit% to o'erate as s(''!ier o e!e"tri" 'ower and !i*ht to its a"tor% and its e#'!o%ees !i)in* within the "o#'o(nd$ Certi&icate o& "u.lic Con enience2 inse$ara.ilit% o& certi&icate an6 essel ()**2) Antonio was *ranted a Certi i"ate o P(&!i" Con)enien"e ?CPCA in 6:82 to o'erate a err% &etween Findoro and Batan*as (sin* the #otor )esse! <FO Eot(s$= 9e sto''ed o'erations in 6:88 d(e to (nser)i"ea&i!it% o the )esse!$ In 6:8:, Basi!io was *ranted a CPC or the sa#e ro(te$ A ter a ew #onths, he dis"o)ered that Car!os was o'eratin* on his ro(te (nder Antonios CPC$ Be"a(se Basi!io i!ed a "o#'!aint or i!!e*a! o'erations with the Fariti#e Ind(str% A(thorit%, Antonio and Car!os 0oint!% i!ed an a''!i"ation or sa!e and trans er o Antonios CPC and s(&stit(tion o the )esse! <FO Eot(s= with another owned &% Car!os$ -ho(!d Antonios and Car!os 0oint a''!i"ation &e a''ro)ed> Gi)er %o(r reasons$
SUGGESTED ANSWER:
The 0oint a''!i"ation o Antonio and Car!os or the sa!e and trans er o Antonios CPC and s(&stit(tion o the )esse! FO Eot(s with another )esse! owned &% the trans eree sho(!d not &e a''ro)ed$ The "erti i"ate o '(&!i" "on)enien"e and FO Eot(s are inse'ara&!e$ The (nser)i"ea&i!it% o the )esse! "o)ered &% the "erti i"ate had !ikewise rendered ine e"ti)e the "erti i"ate itse! , and the ho!der thereo #a% not !e*a!!% trans er the sa#e to another$ ('ohon v '1 #66 s 4#9"0
Certi&icate o& "u.lic Con enience2 Re5uirements ()**1) .hat reB(ire#ents #(st &e #et &e ore a "erti i"ate o '(&!i" "on)enien"e #a% &e *ranted (nder the P(&!i" -er)i"e A"t>
SUGGESTED ANSWER:
The o!!owin* are the reB(ire#ents or the *rantin* o a "erti i"ate o '(&!i" "on)enien"e, to wit5 aA The a''!i"ant #(st &e a "itiCen o the Phi!i''ines, or a "or'oration, "o-'artnershi' or asso"iation or*aniCed (nder the !aws o the Phi!i''ines and at !east 20@ o the sto"k o 'aid-(' "a'ita! o whi"h #(st &e!on* to "itiCens o the Phi!i''ines$ ?-e" 62a, CA 672, as a#endedA &A The a''!i"ant #(st 'ro)e '(&!i" ne"essit%$ "A The a''!i"ant #(st 'ro)e that the o'eration o the '(&!i" ser)i"e 'ro'osed and the a(thoriCation to do &(siness wi!! 'ro#ote the '(&!i" interest in a 'ro'er and s(ita&!e #anner$ ?-e" 62a CA 672 as a#endedA dA The a''!i"ant #(st &e inan"ia!!% "a'a&!e o (ndertakin* the 'ro'osed ser)i"e and #eetin* the res'onsi&i!ities in"ident to its o'eration$
who had a "erti i"ate o '(&!i" "on)enien"e to o'erate a(totr("ks with i+ed ro(tes ro# "ertain towns in B(!a"an and RiCa! to Fani!a and within Fani!a$ Dirst!%, he "!ai#ed that the ordinan"e was n(!! and )oid &e"a(se, a#on* other thin*s, it in e e"t a#ends his "erti i"ate o '(&!i" "on)enien"e, a thin* whi"h on!% the P(&!i" -er)i"e Co##ission "an do (nder -e" 62 ?#A o the P(&!i" -er)i"e A"t$ 4nder said se"tion, the Co##ission is e#'owered to a#end, #odi %, or re)oke a "erti i"ate o '(&!i" "on)enien"e a ter noti"e and hearin*$ -e"ond!%, he "ontended that e)en i the ordinan"e was )a!id, it is on!% the Co##ission whi"h "an reB(ire "o#'!ian"e with its 'ro)isions (nder -e" 67 ?0A o said A"t and sin"e the i#'!e#entation o the ordinan"e was witho(t san"tion or a''ro)a! o the Co##ission, its en or"e#ent was (na(thoriCed and i!!e*a!$
Page +0 of 103
or s('ersede the re*(!ator% 'ower o !o"a! *o)ern#ents o)er #otor tra i" in the streets s(&0e"t to their "ontro!$
(=agman v 'it of +anila #4 s 549" "u.lic utilities (2000)

... Co##(ni"ations In"$ is an e-"o##er"e "o#'an% whose 'resent &(siness a"ti)it% is !i#ited to 'ro)idin* its "!ients with a!! t%'es o in or#ation te"hno!o*% hardware$ It '!ans to re- o"(s its "or'orate dire"tion o *rad(a!!% "on)ertin* itse! into a (!! "on)er*en"e or*aniCation$ Towards this o&0e"ti)e, the "o#'an% has &een a**ressi)e!% a"B(irin* te!e"o##(ni"ations &(sinesses and &road"ast #edia enter'rises, and "onso!idatin* their "or'orate str("t(res$ The (!ti#ate '!an is to ha)e on!% two or*aniCations5 one to own the a"i!ities o the "o#&ined &(sinesses and to de)e!o' and 'rod("e "ontent #ateria!s, and another to o'erate the a"i!ities and 'ro)ide #ass #edia and "o##er"ia! te!e"o##(ni"ations ser)i"es$ ... Co##(ni"ations wi!! &e the !a*shi' entit% whi"h wi!! own the a"i!ities o the "on*!o#erate and 'ro)ide "ontent to the other new "or'oration whi"h, in t(rn, wi!! o'erate those a"i!ities and 'ro)ide the ser)i"es$ ... Co##(ni"ations seeks %o(r 'ro essiona! ad)i"e on whether or not its reor*aniCed &(siness a"ti)it% wo(!d &e "onsidered a '(&!i" (ti!it% reB(irin* a ran"hise or "erti i"ate or an% other or# o a(thoriCation ro# the *o)ern#ent$ .hat wi!! &e %o(r ad)i"e> E+'!ain ?3@A
SUGGESTED ANSWER:
6A Fa% the re!ian"e o J on -e"tion 62 ?#A o the P(&!i" -er)i"e A"t &e s(stained> E+'!ain$ 2A .as J "orre"t in his "ontention that (nder -e"tion 67 ?0A o the P(&!i" -er)i"e A"t it is on!% the Co##issioner whi"h "an reB(ire "o#'!ian"e with the 'ro)isions o the ordinan"e> E+'!ain$
SUGGESTED ANSWER:
6A No$ The 'ower )ested in the P(&!i" -er)i"e Co##ission (nder -e" 62# is s(&ordinate to the a(thorit% o the Cit% o Fani!a (nder -e" 68 ?hhA o its re)ised "harter to s('erintend, re*(!ate or "ontro! the streets o the "it% o Fani!a$ ?Ea*#an ) Cit% o Fani!a 67 s 37:A
2A No$ The 'owers "on erred &% !aw ('on the P(&!i" -er)i"e Co##ission were not desi*ned to den%
The reor*aniCed &(siness a"ti)it% o ... Co##(ni"ations In"$ wo(!d not &e "onsidered a '(&!i" (ti!it% reB(irin* a ran"hise or "erti i"ate or an% other or# o a(thoriCation ro# the *o)ern#ent$ It owns the a"i!ities, &(t does not o'erate the#$ Re ocation o& Certi&icate ()**3) 6A Ro&ert is a ho!der o a "erti i"ate o '(&!i" "on)enien"e to o'erate a ta+i"a& ser)i"e in Fani!a and s(&(r&s$ One e)enin*, one o his ta+i"a& (nits was &oarded &% three ro&&ers as the% es"a'ed a ter sta*in* a ho!d-('$ Be"a(se o said in"ident, the ETDRB re)oked the "erti i"ate o '(&!i" "on)enien"e o Ro&ert on the *ro(nd that said o'erator ai!ed to render sa e, 'ro'er and adeB(ate ser)i"e as reB(ired (nder -e" 6:a o the P(&!i" -er)i"e A"t$ aA .as the re)o"ation o the "erti i"ate o '(&!i" "on)enien"e o Ro&ert 0(sti ied> E+'!ain$ &A .hen "an the Co##ission ?BoardA e+er"ise its 'ower to s(s'end or re)oke "erti i"ate o '(&!i" "on)enien"e>
SUGGESTED ANSWER:
assess whether it is desira&!e to #ake a tender o er or DOP "o#'an%, a dr(* #an( a"t(rer$ OB o)erheard in the
6aA No$ A sin*!e ho!d-(' in"ident whi"h does not !ink Ro&erts ta+i"a& "annot &e "onstr(ed that he rendered a ser)i"e that is (nsa e, inadeB(ate and i#'ro'er (+an>anal v 1useJo #&5 s $&" 6&A 4nder -e" 6:a o the P(&!i" -er)i"e A"t, the Co##ission ?BoardA "an s(s'end or re)oke a "erti i"ate o '(&!i" "on)enien"e when the o'erator ai!s to 'ro)ide a ser)i"e that is sa e, 'ro'er or adeB(ate, and re (ses to render an% ser)i"e whi"h "an &e reasona&!% de#anded and (rnished$ Re ocation o& Certi&icate ()**3)
Pe'a%, a ho!der o a "erti i"ate o '(&!i" "on)enien"e, ai!ed to re*ister to the "o#'!ete n(#&er o (nits reB(ired &% her "erti i"ate$ 9owe)er, she tried to 0(sti % s("h ai!(re &% the a""idents that a!!e*ed!% &e e!! her, "!ai#in* that she was so sho"ked and &(rdened &% the s(""essi)e a""idents and #is ort(nes that she did not know what she was doin*, she was "on (sed and thrown o tan*ent #o#entari!%, a!tho(*h she a!wa%s had the #one% and inan"ia! a&i!it% to &(% new tr("ks and re'air the destro%ed one$ Are the reasons *i)en &% Pe'a% s( i"ient *ro(nds to e+"(se her ro# "o#'!etin* (nits> E+'!ain$
SUGGESTED ANSWER:
No$ The reasons *i)en &% Pe'a% are not s( i"ient *ro(nds to e+"(se her ro# "o#'!etin* her (nits$ The sa#e "o(!d &e (ndertaken &% her "hi!dren or &% other a(thoriCed re'resentati)es ?-e" 62n P(& -er) A"tI 9a!i!i ) 9erras 60 s 72:A
Se%2ritie Reg2lati!n
7nsi6er (2003)
Fs$ OB was e#'!o%ed in FA- In)est#ent Bank$ .IC, a #edi"a! dr(* "o#'an%, retained the Bank to
Page +1 of 103 "o(rse o her work the '!ans o .IC$ B% herse! and thr( asso"iates, she '(r"hased DOP sto"ks a)ai!a&!e at the sto"k e+"han*e 'ri"ed at P20 'er share$ .hen .ICGs tender o er was anno(n"ed, DOP sto"ks 0(#'ed to P;0 'er share$ Th(s OB earned a siCa&!e 'ro it$ Is OB !ia&!e or &rea"h and #is(se o "on identia! or insider in or#ation *ained ro# her e#'!o%#ent> Is she a!so !ia&!e or da#a*es to se!!ers or &(%ers with who# she traded> I so, what is the #eas(re o s("h da#a*es> E+'!ain &rie !%$ ?3@A SUGGESTED ANSWER:
award$ 7nsi6er Tra6in' ()**1)

4nder the Re)ised -e"(rities A"t, it is (n!aw (! or an insider to se!! or &(% a se"(rit% o the iss(er i he knows a a"t o s'e"ia! si*ni i"an"e with res'e"t to the iss(er or the se"(rit% that is not *enera!!% a)ai!a&!e, witho(t dis"!osin* s("h a"t to the other 'art%$
OB is an insider ?as de ined in -(&se"tion ;$8?;A o the -e"(rities Re*(!ation CodeA sin"e she is an e#'!o%ee o the Bank, the inan"ia! ad)iser o DOP, and this re!ationshi' *i)es her a""ess to #ateria! in or#ation a&o(t the iss(er ?DOPA and the !atterGs se"(rities ?sharesA, whi"h in or#ation is not *enera!!% a)ai!a&!e to the '(&!i"$ A""ordin*!%, OB is *(i!t% o insider tradin* (nder -e"tion 27 o the -e"(rities Re*(!ation Code, whi"h reB(ires dis"!os(re when tradin* in se"(rities$
;$aA .hat does the ter# <insider= #ean as (sed in the Re)ised -e"(rities a"t> ;$&A .hen is a a"t "onsidered to &e <o s'e"ia! si*ni i"an"e= (nder the sa#e A"t> ;$"A .hat are the !ia&i!ities o a 'erson who )io!ates the 'ertinent 'ro)isions o the Re)ised -e"(rities A"t re*ardin* the (n air (se o inside in or#ation>
SUGGESTED ANSWER:
OB is a!so !ia&!e or da#a*es to se!!ers or &(%ers with who# she traded$ 4nder -(&se"tion 2;$6 o the -e"(rities Re*(!ation Code, the da#a*es awarded "o(!d &e an a#o(nt not e+"eedin* tri'!e the a#o(nt o the transa"tion '!(s a"t(a! da#a*es$ E+e#'!ar% da#a*es #a% a!so &e awarded in "ase o &ad aith, ra(d, #a!e)o!en"e or wantonness in the )io!ation o the -e"(rities Re*(!ation Code or its i#'!e#entin* r(!es$ The "o(rt is a!so a(thoriCed to award attorne%Gs ees not e+"eedin* ;0@ o the
;a$ <Insider= #eans 6A the iss(er, 2A a dire"tor or o i"er o , or a 'erson "ontro!!in*, "ontro!!ed &%, or (nder "o##on "ontro! with, the iss(er, ;A a 'erson whose re!ationshi' or or#er re!ationshi' to the iss(er *i)es or *a)e hi# a""ess to a a"t o s'e"ia! si*ni i"an"e a&o(t the iss(er or the se"(rit% that is not *enera!!% a)ai!a&!e, or 7A a 'erson who !earns s("h a a"t ro# an% o the ore*oin* insiders with know!ed*e that the 'erson ro# who# he !earns the a"t is s("h an insider ?-e" ;0&, R-AA
;&$ It is one whi"h, in addition to &ein* #ateria!, wo(!d &e !ike!% to a e"t the #arket 'ri"e o a se"(rit% to a si*ni i"ant e+tent on &ein* #ade *enera!!% a)ai!a&!e, or one whi"h a reasona&!e 'erson wo(!d "onsider es'e"ia!!%
i#'ortant (nder the "ir"(#stan"es in deter#inin* his "o(rse o a"tion in the !i*ht o s("h a"tors as the de*ree o its s'e"i i"it%, the e+tent o its di eren"e ro# in or#ation *enera!!% a)ai!a&!e 're)io(s!%, and its nat(re and re!ia&i!it%$ ?-e"$ ;0", R-AA
;"$ The 'erson #a% &e !ia&!e to 6A a ine o not !ess than P3th nor #ore than P300th or 2A i#'rison#ent o not !ess than 7 %ears nor #ore than 26 %ears, ;A or &oth s("h ine and i#'rison#ent in the dis"retion o the "o(rt$
(ani$ulati e "ractices (200)) -(''ose A is the owner o se)era! ina"ti)e se"(rities$ To "reate an a''earan"e o a"ti)e tradin* or s("h se"(rities,
I the 'erson is a "or'oration, 'artnershi', asso"iation or other 0(ridi"a! entit%, the 'ena!t% sha!! &e i#'osed ('on the o i"ers o the "or'oration, et"$ res'onsi&!e or the )io!ation$ And i s("h an o i"er is an a!ien, he sha!!, in addition to the 'ena!ties 'res"ri&ed, &e de'orted witho(t (rther 'ro"eedin*s a ter ser)i"e o senten"e$ ?-e" 32 R-AA 7nsi6er Tra6in'2 (ani$ulati e "ractices ()**3)
6A Gi)e a "ase where a 'erson who is not an iss(in* "or'oration, dire"tor or o i"er thereo , or a 'erson "ontro!!in*, "ontro!!ed &% or (nder "o##on "ontro! with the iss(in* "or'oration, is a!so "onsidered an <insider$=
2A In -e"(rities Eaw, what is a <shortswin*= transa"tion$ ;A In <insider tradin*,= what is a < a"t o s'e"ia! si*ni i"an"e=>
SUGGESTED ANSWER:
6A It #a% &e a "ase where a 'erson, whose re!ationshi' or or#er re!ationshi' to the iss(er *i)es or *a)e hi# a""ess to a a"t o s'e"ia! si*ni i"an"e a&o(t the iss(er or the se"(rit% that is not *enera!!% a)ai!a&!e, or a 'erson, who !earns s("h a a"t ro# an% o the insiders, with know!ed*e that the 'erson ro# who# he !earns the a"t, is s("h an insider ?-e" ;0, 'ar ?&A Re) -e"(rities A"tA
2A A <shortswin*= is a transa"tion where a 'erson &(%s se"(rities and se!!s or dis'oses o the sa#e within a 'eriod o si+ ?2A #onths$
A8TERNAT7>E ANSWER:
2A It is a '(r"hase &% an% 'erson or the iss(er or an% 'erson "ontro!!in*, "ontro!!ed &%, or (nder "o##on "ontro! with the iss(er, or a '(r"hase s(&0e"t to the "ontro! o the iss(er or an% s("h 'erson, res(!tin* in &ene i"ia! ownershi' o #ore than 60@ o an% "!ass o shares ?-e" ;2 R -e" A"tA ;A In <insider tradin*,= a < a"t o s'e"ia! si*ni i"an"e= is, in addition to &ein* #ateria!, s("h a"t as wo(!d !ike!%, on &ein* #ade *enera!!% a)ai!a&!e, to a e"t the #arket 'ri"e o a se"(rit% to a si*ni i"ant e+tent, or whi"h a reasona&!e 'erson wo(!d "onsider as es'e"ia!!% i#'ortant (nder the "ir"(#stan"es in deter#inin* his "o(rse o a"tion in the !i*ht o s("h a"tors as the de*ree o its s'e"i i"it%, the e+tent o its di eren"e ro# in or#ation *enera!!% a)ai!a&!e 're)io(s!%, and its nat(re and re!ia&i!it% ?-e" ;0 'ar " R-e"A"tA
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A "onni)es with B &% whi"h A wi!! o er or sa!e so#e o his se"(rities and B wi!! &(% the# at a "ertain i+ed 'ri"e, with the (nderstandin* that a!tho(*h there wo(!d &e an a''arent sa!e, A wi!! retain the &ene i"ia! ownershi' thereo $ aA Is the arran*e#ent !aw (!> ?;@A &A I the sa!e #ateria!iCes, what is it "a!!ed> ?2@A
SUGGESTED ANSWER:
"or'orate assets$ Instr(#ents *i)in* to their !e*a! ho!ders ri*hts to #one% or other 'ro'ert%I the% are there ore instr(#ents whi"h ha)e intrinsi" )a!(e and are re"o*niCed and (sed as s("h in the re*(!ar "hanne!s o "o##er"e$
(3ote! Sec %a of the ,evised Securities 1ct does not reall define the term Qsecurities0I"
Securities2 Sellin' o& Securities2 (eanin' (2002)

2002 ?68A EB(it% On!ine Cor'oration ?EOEA, a New York "or'oration, has a se"(rities &rokera*e ser)i"e on the Internet a ter o&tainin* a!! reB(isite 4$-$ !i"enses and 'er#its to do so$ EOEs we&site ?www$eon!ine$$"o#A, whi"h is hosted &% a ser)er in D!orida, ena&!es Internet (sers to trade on-!ine in se"(rities !isted in the )ario(s sto"k e+"han*es in the 4$-$ EOE &(%s and se!!s 4$-$ !isted se"(rities or the a""o(nts o its "!ients a!! o)er the wor!d, who "on)e% their &(% and se!! instr("tions to EOE thro(*h the Internet$ EOE has no o i"es, e#'!o%ees or re'resentati)es o(tside the 4$-$ The we&site has i"ons or #an% "o(ntries, in"!(din* an i"on <Dor Di!i'ino Traders= "ontainin* the da%s 'ri"es o 4$-$ !isted se"(rities e+'ressed in 4$-$ do!!ars and their Phi!i''ine 'eso eB(i)a!ent$ Gra"e GonCa!es, a resident o Fakati, is a re*(!ar "(sto#er o the we&site and has &een '(r"hasin* and se!!in* se"(rities thro(*h EOE with the (se o her A#eri"an E+'ress "redit "ard$ Gra"e has ne)er tra)e!ed o(tside the Phi!i''ines$ A ter a series o erroneo(s sto"k 'i"ks, she had in"(rred a net inde&tedness o 4-P;0,000$ with EOE, at whi"h ti#e she "an"e!!ed her A#eri"an E+'ress "redit "ard$ A ter a
aA No$ The arran*e#ent is not !aw (!$ It is an arti i"ia! #ani'(!ation o the 'ri"e o se"(rities$ This is 'rohi&ited &% the -e"(rities Re*(!ation Code$ &A I the sa!e #ateria!iCes, it is "a!!ed a wash sa!e or si#(!ated sa!e$ Securities Re'ulation Co6e2 "ur$ose ()**:) .hat is the 'rin"i'a! '(r'ose o !aws and re*(!ations *o)ernin* se"(rities in the Phi!i''ines> ?2@A
SUGGESTED ANSWER:
The 'rin"i'a! '(r'ose o !aws and re*(!ations *o)ernin* se"(rities in the Phi!i''ines is to 'rote"t the '(&!i" a*ainst the ne ario(s 'ra"ti"es o (ns"r('(!o(s &rokers and sa!es#en in se!!in* se"(rities$ Securities2 De&inition ()**4) De ine se"(rities
SUGGESTED ANSWER:
-to"ks, &onds notes, "on)erti&!e de&ent(res, warrants or other do"(#ents that re'resent a share in a "o#'an% or a de&t owned &% a "o#'an% or *o)ern#ent entit%$ E)iden"es o o&!i*ations to 'a% #one% or o ri*hts to 'arti"i'ate in earnin*s and distri&(tion o
E+'resswa%, Ba!dos "a& i*(red in a "o!!ision, ki!!in* his
n(#&er o de#and !etters sent to Gra"e, a!! o the# (nanswered, EOE, thro(*h a Fakati !aw ir#, i!ed a "o#'!aint or "o!!e"tion a*ainst Gra"e with the Re*iona! Tria! Co(rt o Fakati$ Gra"e, thro(*h her !aw%er, i!ed a #otion to dis#iss on the *ro(nd that EOE ?aA was doin* &(siness in the Phi!i''ines witho(t a !i"ense and was there ore &arred ro# &rin*in* s(it and ?&A )io!ated the -e"(rities Re*(!ation Code &% se!!in* or o erin* to se!! se"(rities within the Phi!i''ines witho(t re*isterin* the se"(rities with the Phi!i''ine -EC and th(s "a#e to "o(rt <with (n"!ean hands$= EOE o''osed the #otion to dis#iss, "ontendin* that it had ne)er esta&!ished a 'h%si"a! 'resen"e in the Phi!i''ines, and that a!! o the a"ti)ities re!ated to '!ainti s tradin* in 4$-$ se"(rities a!! trans'ired o(tside the Phi!i''ines$ I %o( are the 0(d*e, de"ide the #otion to dis#iss &% r(!in* on the res'e"ti)e "ontentions o the 'arties on the &asis o the a"ts 'resented a&o)e$ ?60@A
SUGGESTED ANSWER:
The *ro(nds o the #otion to dis#iss are &oth (ntena&!e$ EOE is not doin* &(siness in the Phi!i''ines, and it did not )io!ate the -e"(rites A"t, &e"a(se it was not se!!in* se"(rities in the "o(ntr%$ The "ontention o EOE is "orre"t, &e"a(se it ne)er did an% &(siness in the Phi!i''ines$ A!! its transa"tions in B(estion were "ons(##ated o(tside the Phi!i''ines$ Ten6er <&&er (2002) 2002 ?2A A$ .hat is a tender o er>
B$ In what instan"es is a tender o er reB(ired to &e
#ade>
SUGGESTED ANSWER:
A$ Tender o er is a '(&!i"!% anno(n"ed intention o a 'erson a"tin* a!one or in "on"ert with other 'ersons to a"B(ire eB(it% se"(rities o a '(&!i" "o#'an%$ It #a% a!so &e de ined as a #ethod o takin* o)er a "o#'an% &% askin* sto"kho!ders to se!! their shares at a 'ri"e hi*her than the "(rrent #arket 'ri"e and on a 'arti"(!ar date$
B$ Instan"es where tender o er is reB(ired to &e #ade5 aA The 'erson intends to a"B(ire 63@ or #ore o the eB(it% share o a '(&!i" "o#'an% '(rs(ant to an a*ree#ent #ade &etween or a#on* the 'erson and one or #ore se!!ers$ &A The 'erson intends to a"B(ire ;0@ or #ore o the eB(it% shares o a '(&!i" "o#'an% within a 'eriod o 62 #onths$ "A The 'erson intends to a"B(ire eB(it% shares o a '(&!i" "o#'an% that wo(!d res(!t in ownershi' o #ore than 30@ o the said shares$
Tran )!rtati!n La#

,oun6ar% S%stem (2001)
Ba!do is a dri)er o Ye!!ow Ca& Co#'an% (nder the &o(ndar% s%ste#$ .hi!e "r(isin* a!on* the -o(th
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'assen*er, Pietro$ The heirs o Pietro s(ed Ye!!ow Ca& Co#'an% or da#a*es, &(t the !atter re (sed to 'a% the heirs, insistin* that it is not !ia&!e &e"a(se Ba!do is not its e#'!o%ee$ Reso!)e with reasons$ ?2@A
SUGGESTED ANSWER:
"(!'a "ontra"t(a!, the "arriers ne*!i*en"e is 'res(#ed ('on the &rea"h o "ontra"t$ The &(rden o 'roo instead wo(!d !ie on 1i##% to esta&!ish that des'ite an e+er"ise o (t#ost di!i*en"e the "o!!ision "o(!d not ha)e &een a)oided$ Carria'e2 ,reac# o& Contract2 "resum$tion o& Ne'li'ence ()**+) In a "o(rt "ase in)o!)in* "!ai#s or da#a*es arisin* ro# death and in0(r% o &(s 'assen*ers, "o(nse! or the &(s o'erator i!es a de#(rrer to e)iden"e ar*(in* that the "o#'!aint sho(!d &e dis#issed &e"a(se the '!ainti s did not s(&#it an% e)iden"e that the o'erator or its e#'!o%ees were ne*!i*ent$ I %o( were the 0(d*e, wo(!d %o( dis#iss the "o#'!aint>
SUGGESTED ANSWER:
Ye!!ow Ca& Co#'an% sha!! &e !ia&!e with Ba!do, on a so!idar% &asis, or the death o 'assen*er Pietro$ Ba!do is an e#'!o%ee o Ye!!ow Ca& (nder the &o(ndar% s%ste#$ As s("h, the death o 'assen*er Pietro is &rea"h o "ontra"t o "arria*e, #akin* &oth the "o##on "arrier Ye!!ow Ca& and its e#'!o%ee, Ba!do, so!idari!% !ia&!e$
(Eernande> v0 Dolor, 20,, 3o0 #&7%6&, Aul $7, %775"
Carria'e2 ,reac# o& Contract2 "resum$tion o& Ne'li'ence ()**0) Peter so hai!ed a ta+i"a& owned and o'erated &% 1i##% Chen* and dri)en &% 9er#ie CorteC$ Peter asked CorteC to take hi# to his o i"e in Fa!ate$ On the wa% to Fa!ate, the ta+i"a& "o!!ided with a 'assen*er 0ee'ne%, as a res(!t o whi"h Peter was in0(red, i$e$, he ra"t(red his !e t !e*$ Peter s(ed 1i##% or da#a*es, &ased ('on a "ontra"t o "arria*e, and Peter won$ 1i##% wanted to "ha!!en*e the de"ision &e ore the -C on the *ro(nd that the tria! "o(rt erred in not #akin* an e+'ress indin* as to whether or not 1i##% was res'onsi&!e or the "o!!ision and, hen"e, "i)i!!% !ia&!e to Peter$ 9e went to see %o( or ad)i"e$ .hat wi!! %o( te!! hi#> E+'!ain$
SUGGESTED ANSWER:
No$ In the "arria*e o 'assen*ers, the ai!(re o the "o##on "arrier to &rin* the 'assen*ers sa e!% to their destination i##ediate!% raises the 'res(#'tion that s("h ai!(re is attri&(ta&!e to the "arriers a(!t or ne*!i*en"e$ In the "ase at &ar, the a"t o death and in0(r% o the &(s 'assen*ers raises the 'res(#'tion o a(!t or ne*!i*en"e on the 'art o the "arrier$ The "arrier #(st re&(t s("h 'res(#'tion$ Otherwise, the "on"!(sion "an &e 'ro'er!% #ade that the "arrier ai!ed to e+er"ise e+traordinar% di!i*en"e as reB(ired &% !aw$
Carria'e2 /ortuitous E ent ()**1)

F$ DiCon Tr("kin* entered into a ha(!in* "ontra"t with Dair*oods Co where&% the or#er &o(nd itse! to ha(! the !atters 2000 sa"ks o -o%a &ean #ea! ro# Fani!a
I wi!! "o(nse! 1i##% to desist ro# "ha!!en*in* the de"ision$ The a"tion o Peter &ein* &ased on
!adin* (n!ess
SUGGESTED ANSWER:
Port Area to Ca!a#&a, Ea*(na$ To "arr% o(t aith (!!% its o&!i*ation DiCon s(&"ontra"ted with Enri"o Re%es the de!i)er% o 700 sa"ks o the -o%a &ean #ea!$ Aside ro# the dri)er, three #a!e e#'!o%ees o Re%es rode on the tr("k with the "ar*o$ .hi!e the tr("k was on its wa% to Ea*(na two stran*ers s(dden!% sto''ed the tr("k and hi0a"ked the "ar*o$ In)esti*ation &% the 'o!i"e dis"!osed that one o the hi0a"kers was ar#ed with a &!aded wea'on whi!e the other was (nar#ed$ Dor ai!(re to de!i)er the 700 sa"ks, Dair*oods s(ed DiCon or da#a*es$ DiCon in t(rn set (' a ;rd 'art% "o#'!aint a*ainst Re%es whi"h the !atter re*istered on the *ro(nd that the !oss was d(e to or"e #a0e(re$
Did the hi0a"kin* "onstit(te or"e #a0e(re to e+"(!'ate Re%es ro# an% !ia&i!it% to DiCon> Dis"(ss (!!%$
SUGGESTED ANSWER:
the shi''er or owner de"!ares a hi*her )a!(e ?3@A
No$ The hi0a"kin* in this "ase "annot &e "onsidered or"e #a0e(re$ On!% one o the two hi0a"kers was ar#ed with a &!aded wea'on$ As a*ainst the 7 #a!e e#'!o%ees o Re%es, 2 hi0a"kers, with on!% one o the# &ein* ar#ed with a &!aded wea'on, "annot &e "onsidered or"e #a0e(re$ The hi0a"kers did not a"t with *ra)e or irresisti&!e threat, )io!en"e or or"e$ Carria'e2 8ia.ilit%2 8ost ,a''a'e or Acts o& "assen'ers ()**+)
6::7 ?63A Antonio, a 'a%in* 'assen*er, &oarded a &(s &o(nd or Batan*as Cit%$ 9e "hose a seat at the ront row, near the &(s dri)er, and to!d the &(s dri)er that he had )a!(a&!e ite#s in his hand "arried &a* whi"h he then '!a"ed &eside the dri)ers seat$ Not ha)in* s!e't or 27 ho(rs, he reB(ested the dri)er to kee' an e%e on the &a* sho(!d he doCe o d(rin* the tri'$ .hi!e Antonio was as!ee', another 'assen*er took the &a* awa% and a!i*hted at Ca!a#&a, Ea*(na$ Co(!d the "o##on "arrier &e he!d !ia&!e &% Antonio or the !oss>
SUGGESTED ANSWER:
Yes$ Ordinari!%, the "o##on "arrier is not !ia&!e or a"ts o other 'assen*ers$ B(t the "o##on "arrier "annot re!ie)e itse! ro# !ia&i!it% i the "o##on "arriers e#'!o%ees "o(!d ha)e 're)ented the a"t or o#ission &% e+er"isin* d(e di!i*en"e$ In this "ase, the 'assen*er asked the dri)er to kee' an e%e on the &a* whi"h was '!a"ed &eside the dri)ers seat$ I the dri)er e+er"ised d(e di!i*en"e, he "o(!d ha)e 're)ented the !oss o the &a*$
Carria'e2 "ro#i.ite6 0 >ali6 Sti$ulations (2002) Dis"(ss whether or not the o!!owin* sti'(!ations in a "ontra"t o "arria*e o a "o##on "arrier are )a!id5 6$ a sti'(!ation !i#itin* the s(# that #a% &e re"o)ered &% the shi''er or owner to :0@ o the )a!(e o the *oods in "ase o !oss d(e to the t$
2$ a sti'(!ation that in the e)ent o !oss, destr("tion or deterioration o *oods on a""o(nt o the de e"ti)e "ondition o the )ehi"!e (sed in the "ontra"t o "arria*e, the "arriers !ia&i!it% is !i#ited to the )a!(e o the *oods a''earin* in the &i!! o
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6$ 2$
The sti'(!ation is "onsidered (nreasona&!e, (n0(st and "ontrar% to '(&!i" 'o!i"% (nder Arti"!e 6773 o the Ci)i! Code$ The sti'(!ation !i#itin* the "arriers !ia&i!it% to the )a!(e o the *oods a''earin* in the &i!! o !adin* (n!ess the shi''er or owner de"!ares a hi*her )a!(e, is e+'ress!% re"o*niCed in Arti"!e 677: o the Ci)i! Code$
the "arria*e o "ar*o to the .arsaw Con)ention$ Fa% the a!!e*ation o EG Air!ines &e s(stained> E+'!ain$
SUGGESTED ANSWER:
Carria'e2 >aluation o& Dama'e6 Car'o ()**3)

A shi''ed thirteen 'ie"es o !(**a*e thro(*h EG Air!ines ro# Teheran to Fani!a as e)iden"ed &% EG Air .a%&i!! whi"h dis"!osed that the a"t(a! *ross wei*ht o the !(**a*e was 680 k*$ Q did not de"!are an in)entor% o the "ontents or the )a!(e o the 6; 'ie"es o !(**a*e$ A ter the said 'ie"es o !(**a*e arri)ed in Fani!a, the "onsi*nee was a&!e to "!ai# ro# the "ar*o &roker on!% 62 'ie"es, with a tota! wei*ht o 677 k*$ J ad)ised the air!ine o the !oss o one o the 6; 'ie"es o !(**a*e and o the "ontents thereo $ E orts o the air!ine to tra"e the #issin* !(**a*e were r(it!ess$ -in"e the air!ine ai!ed to "o#'!% with the de#and o J to 'rod("e the #issin* !(**a*e, J i!ed an a"tion or &rea"h o "ontra"t with da#a*es a*ainst EG Air!ines$ In its answer, EG Air!ines a!!e*ed that the .arsaw Con)ention whi"h !i#its the !ia&i!it% o the "arrier, i an%, with res'e"t to "ar*o to a s(# o P20 'er ki!o or P:$07 'er 'o(nd, (n!ess a hi*her )a!(e is de"!ared in ad)an"e and additiona! "har*es are 'aid &% the 'assen*er and the "onditions o the "ontra"t as set orth in the air wa%&i!!, e+'ress!% s(&0e"t the "ontra"t o
Yes$ 4n!ess the "ontents o a "ar*o are de"!ared or the "ontents o a !ost !(**a*e are 'ro)ed &% the satis a"tor% e)iden"e other than the se! -ser)in* de"!aration o one 'art%, the "ontra"t sho(!d &e en or"ed as it is the on!% reasona&!e &asis to arri)e at a 0(st award$ The 'assen*er or shi''er is &o(nd &% the ter#s o the 'assen*er ti"ket or the wa%&i!!$ (;anama v ,apadas %79 s
&4"
Common Carrier ()**4) De ine a "o##on "arrier>

SUGGESTED ANSWER:
A "o##on "arrier is a 'erson, "or'oration, ir# or asso"iation en*a*ed in the &(siness o "arr%in* or trans'ortin* 'assen*ers or *oods or &oth, &% !and, water or air or "o#'ensation, o erin* its ser)i"es to the '(&!i" ?Art 67;2, Ci)i! CodeA Common Carrier2 ,reac# o& Contract2 Dama'es (2003)
Oi)ian Fartin was &ooked &% PAE, whi"h a"ted as a ti"ketin* a*ent o Dar East Air!ines, or a ro(nd tri' !i*ht on the !atters air"ra t, ro# Fani!a-9on*kon*-Fani!a$ The ti"ket was "(t &% an e#'!o%ee o PAE$ The ti"ket showed that Oi)ian was s"hed(!ed to !ea)e Fani!a at 35;0 '$#$ on 03 1an(ar% 2002 a&oard Dar Easts D!i*ht D007$ Oi)ian arri)ed at the Nino% AB(ino Internationa! Air'ort an ho(r &e ore the ti#e s"hed(!ed in her ti"ket, &(t was to!d that Dar Easts D!i*ht D007 had !e t at 62560 '$#$ It
si*n the sti'(!ation and in a"t had not e)en read it$
t(rned o(t that the ti"ket was inad)ertent!% "(t and wron*!% worded$ PAE e#'!o%ees #annin* the air'orts *ro(nd ser)i"es ne)erthe!ess s"hed(!ed her to !% two ho(rs !ater a&oard their '!ane$ -he a*reed and arri)ed in 9on*kon* sa e!%$ The air"ra t (sed &% Dar East Air!ines de)e!o'ed en*ine tro(&!e, and did not #ake it to 9on*kon* &(t ret(rned to Fani!a$ Oi)ian s(ed &oth air!ines, PAE and Dar East, or da#a*es &e"a(se o her ha)in* (na&!e to take the Dar East !i*ht$ Co(!d either or &oth air!ines &e he!d !ia&!e to Oi)ian> .h%> ?2@A
SUGGESTED ANSWER:
?'er dondeeA No, there was &rea"h o "ontra"t and that she was a""o##odated we!! with the assistan"e o PAE e#'!o%ees to take the !i*ht witho(t (nd(e de!a%$ Common Carrier2 De&enses (2002) .h% is the de ense o d(e di!i*en"e in the se!e"tion and s('er)ision o an e#'!o%ee not a)ai!a&!e to a "o##on "arrier> ?2@A
SUGGESTED ANSWER:
The de ense o d(e di!i*en"e in the se!e"tion and s('er)ision o an e#'!o%ee is not a)ai!a&!e to a "o##on "arrier &e"a(se the de*ree o di!i*en"e reB(ired o a "o##on "arrier is not the di!i*en"e o a *ood ather o a a#i!% &(t e+traordinar% di!i*en"e, i$e$, di!i*en"e o the *reatest ski!! and (t#ost oresi*ht$ Common Carrier2 De&enses2 /ortuitous E ents ()**3) Farites, a 'a%in* &(s 'assen*er, was hit a&o)e her !e t e%e &% a stone h(r!ed at the &(s &% an (nidenti ied &%stander as the &(s was s'eedin* thro(*h the Nationa! 9i*hwa%$ The &(s owners 'ersonne! !ost no ti#e in &rin*in* Farites to the 'ro)in"ia! hos'ita! where she was "on ined and treated$ Farites wants to s(e the &(s "o#'an% or da#a*es and seeks %o(r ad)i"e whether she "an !e*a!!% ho!d the &(s "o#'an% !ia&!e$ .hat wi!! %o( ad)ise her>
SUGGESTED ANSWER:
Farites "an not !e*a!!% ho!d the &(s "o#'an% !ia&!e$ There is no showin* that an% s("h in"ident 're)io(s!% ha''ened so as to i#'ose an o&!i*ation on 'art o the 'ersonne! o the &(s "o#'an% to warn the 'assen*ers and to take the ne"essar% 're"a(tion$ -("h h(r!in* o a stone "onstit(tes ort(ito(s e)ent in this "ase$ The &(s "o#'an% is not an ins(rer$ (;ilapil v '1 #67 s $5&"
Common Carrier2 De&enses2 8imitation o& 8ia.ilit% ()**:) J took a '!ane ro# Fani!a &o(nd or Da)ao )ia Ce&( where there was a "han*e o '!anes$ J arri)ed in Da)ao sa e!% &(t to his dis#a%, his two s(it"ases were !e t &ehind in Ce&($ The air!ine "o#'an% ass(red J that the s(it"ases wo(!d "o#e in the ne+t !i*ht &(t the% ne)er did$
J "!ai#ed P2,000 or the !oss o &oth s(it"ases, &(t the air!ine was wi!!in* to 'a% on!% P300 &e"a(se the air!ine ti"ket sti'(!ated that (n!ess a hi*her )a!(e was de"!ared, an% "!ai# or !oss "annot e+"eed P230 or ea"h 'ie"e o !(**a*e$ J reasoned o(t that he did not
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+( of 103
CodeA &A The de enses a)ai!a&!e to an% "o##on "arrier to !i#it or e+e#'t it ro# !ia&i!it% are5 6$ o&ser)an"e o e+traordinar% di!i*en"e, 2$ or the 'ro+i#ate "a(se o the in"ident is a ort(ito(s e)ent or or"e #a0e(re, ;$ a"t or o#ission o the shi''er or owner o the *oods, 7$ the "hara"ter o the *oods or de e"ts in the 'a"kin* or in the "ontainers, and 3$ order or a"t o "o#'etent '(&!i" a(thorit%, witho(t the "o##on "arrier &ein* *(i!t% o e)en si#'!e ne*!i*en"e ?Arti"!e 67;7, NCCA$ Common Carrier2 Duration o& 8ia.ilit% ()**4)
A &(s o GE Transit on its wa% to Da)ao sto''ed to ena&!e a 'assen*er to a!i*ht$ At that #o#ent, -antia*o, who had &een waitin* or a ride, &oarded the &(s$ 9owe)er, the &(s dri)er ai!ed to noti"e -antia*o who was sti!! standin* on the &(s '!at or#, and ste''ed on the a""e!erator$ Be"a(se o the s(dden #otion, -antia*o s!i''ed and e!! down s( erin* serio(s in0(ries$
J did not de"!are a *reater )a!(e des'ite the a"t that the "!erk had "a!!ed his attention to the sti'(!ation in the ti"ket$ De"ide the "ase ?3@A
SUGGESTED ANSWER:
E)en i he did not si*n the ti"ket, J is &o(nd &% the sti'(!ation that an% "!ai# or !oss "annot e+"eed P230 or ea"h !(**a*e$ 9e did not de"!are a hi*her )a!(e$ J is entit!ed to P300 or the two !(**a*es !ost$ Common Carrier2 De&enses2 8imitation o& 8ia.ilit% (200)) -(''ose A was ridin* on an air'!ane o a "o##on "arrier when the a""ident ha''ened and A s( ered serio(s in0(ries$ In an a"tion &% A a*ainst the "o##on "arrier, the !atter "!ai#ed that 6A there was a sti'(!ation in the ti"ket iss(ed to A a&so!(te!% e+e#'tin* the "arrier ro# !ia&i!it% ro# the 'assen*ers death or in0(ries ad noti"es were 'osted &% the "o##on "arrier dis'ensin* with the e+traordinar% di!i*en"e o the "arrier, and 2A A was *i)en a dis"o(nt on his '!ane are there&% red("in* the !ia&i!it% o the "o##on "arrier with res'e"t to A in 'arti"(!ar$ aA Are those )a!id de enses> ?6@A &A .hat are the de enses a)ai!a&!e to an% "o##on "arrier to !i#it or e+e#'t it ro# !ia&i!it%> ?7@A
SUGGESTED ANSWER:
Fa% -antia*o ho!d GE Transit !ia&!e or &rea"h o "ontra"t o "arria*e> E+'!ain$

SUGGESTED ANSWER:
aA No$ These are not )a!id de enses &e"a(se the% are "ontrar% to !aw as the% are in )io!ation o the e+traordinar% di!i*en"e reB(ired o "o##on "arriers$ ?Arti"!e 6737, 6738 New Ci)i!
-antia*o #a% ho!d GE Transit !ia&!e or &rea"h o "ontra"t o "arria*e$ It was the d(t% o the dri)er, when he sto''ed the &(s, to do no a"t that wo(!d ha)e the e e"t o in"reasin* the 'eri! to a 'assen*er s("h as -antia*o whi!e he was atte#'tin* to &oard the sa#e$ .hen a &(s is not in #otion there is no ne"essit% or a
'erson who wants to ride the sa#e to si*na! his intention to &oard$ A '(&!i" (ti!it% &(s, on"e it sto's, is in e e"t #akin* a "ontin(o(s o er to &(s riders$ It is the d(t% o "o##on "arriers o 'assen*ers to sto' their "on)e%an"es or a reasona&!e !en*th o ti#e in order to a ord 'assen*ers an o''ort(nit% to &oard and enter, and the% are !ia&!e or in0(ries s( ered &% &oardin* 'assen*ers res(!tin* ro# the s(dden startin* (' or 0erkin* o their "on)e%an"es whi!e the% are doin* so$ -antia*o, &% ste''in* and standin* on the '!at or# o the &(s, is a!read% "onsidered a 'assen*er and is entit!ed to a!! the ri*hts and 'rote"tion 'ertainin* to a "ontra"t o "arria*e$
re*(!ar or s"hed(!ed tri's$ It does not e)en ha)e a "erti i"ate o '(&!i" "on)enien"e$
(Dangwa :rans 'o v '1 9556% -ct 4,9# %7%s545" Common Carrier2 Dut% to E9amine ,a''a'es2 Rail;a% an6 Airline ()**2)
Farino was a 'assen*er on a train$ Another 'assen*er, 1(an"ho, had taken a *a!!on o *aso!ine '!a"ed in a '!asti" &a* into the sa#e "oa"h where Farino was ridin*$ The *aso!ine i*nited and e+'!oded "a(sin* in0(r% to Farino who i!ed a "i)i! s(it or da#a*es a*ainst the rai!wa% "o#'an% "!ai#in* that 1(an"ho sho(!d ha)e &een s(&0e"ted to ins'e"tion &% its "ond("tor$
The rai!wa% "o#'an% dis"!ai#ed !ia&i!it% res(!tin* ro# the e+'!osion "ontendin* that it was (naware o the "ontents o the '!asti" &a* and in)okin* the ri*ht o 1(an"ho to 'ri)a"%$ aA -ho(!d the rai!wa% "o#'an% &e he!d !ia&!e or da#a*es>
&A I it were an air!ine "o#'an% in)o!)ed, wo(!d %o(r
answer &e the sa#e> E+'!ain &rie !%$

SUGGESTED ANSWER:
aA No$ The rai!wa% "o#'an% is not !ia&!e or da#a*es$ In o)er!and trans'ortation, the "o##on "arrier is not &o(nd nor e#'owered to #ake an e+a#ination on the "ontents o 'a"ka*es or &a*s, 'arti"(!ar!% those hand"arried &% 'assen*ers$
&A I it were an air!ine "o#'an%, the "o##on "arrier sho(!d &e #ade !ia&!e$ In "ase o air "arriers, it is not !aw (! to "arr% !a##a&!e #ateria!s in 'assen*er air"ra ts, and air!ine "o#'anies #a% o'en and in)esti*ate s(s'i"io(s 'a"ka*es and "ar*oes ?RA 22;3A
Common Carrier2 Test ()**4) .hat is the test or deter#inin* whether or not one is a "o##on "arrier>
SUGGESTED ANSWER:
The test or deter#inin* whether or not one is a "o##on "arrier is whether the 'erson or entit%, or so#e &(siness '(r'ose and with *enera! or !i#ited "!iente!e, o ers the ser)i"e o "arr%in* or trans'ortin* 'assen*ers or *oods or &oth or "o#'ensation$ Common Carriers2 De&enses ()**4) 6A AF Tr("kin*, a s#a!! "o#'an%, o'erates two tr("ks or hire on se!e"ti)e &asis$ It "aters on!% to a ew "(sto#ers, and its tr("ks do not #ake
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On one o""asion, Re%na!do "ontra"ted AF to trans'ort or a ee, 600 sa"ks o ri"e ro# Fani!a to Tar!a"$ 9owe)er, AF ai!ed to de!i)er the "ar*o, &e"a(se its tr("k was hi0a"ked when the dri)er sto''ed in B(!a"an to )isit his *ir! riend$ aA Fa% Re%na!do ho!d AF !ia&!e as a "o##on "arrier>
&A Fa% AF set (' the hi0a"kin* as a de ense to
one who o ers ser)i"es or so!i"its &(siness on!% ro# a narrow se*#ent o the *enera! 'o'(!ation
(;edro de 2u>man v '1 =8546%% Dec %%,66 #&6s&#%"
SUGGESTED ANSWER:
SUGGESTED ANSWER:
de eat Re%na!dos "!ai#>
aA Re%na!do #a% ho!d AF Tr("kin* !ia&!e as a "o##on "arrier$ The a"ts that AF Tr("kin* o'erates on!% two tr("ks or hire on a se!e"ti)e &asis, "aters on!% to a ew "(sto#ers, does not #ake re*(!ar or s"hed(!ed tri's, and does not ha)e a "erti i"ate o '(&!i" "on)enien"e are o no #o#ent as the !aw does not distin*(ish &etween one whose 'rin"i'a! &(siness a"ti)it% is the "arr%in* o 'ersons or *oods or &oth and an%one who does s("h "arr%in* on!% as an an"i!!ar% a"ti)it%, the !aw a)oids #akin* an% distin"tion &etween a 'erson or enter'rise o erin* trans'ortation ser)i"e on a re*(!ar or s"hed(!ed &asis and one o erin* s("h ser)i"e on an o""asiona!, e'isodi" or (ns"hed(!ed &asis, and
the !aw re rains ro# #akin* a distin"tion &etween a "arrier o erin* its ser)i"es to the *enera! '(&!i" and
&A AF Tr("kin* #a% not set (' the hi0a"kin* as a de ense to de eat Re%na!dos "!ai# as the a"ts *i)en do not indi"ate that the sa#e was attended &% the (se o *ra)e or irresisti&!e threat, )io!en"e, or or"e$ It wo(!d a''ear that the tr("k was !e t (nattended &% its dri)er and was taken whi!e he was )isitin* his *ir! riend$ ?;edro de 2u>man v '1 =8546%% Dec %%,66 #&6 scra &#%A$
Common Carriers2 8ia.ilit% &or 8oss ()**))

A!e0andor Ca#a!in* o A!e*ria, Ce&(, is en*a*ed in &(%in* "o'ra, "har"oa!, irewood, and (sed &ott!es and in rese!!in* the# in Ce&( Cit%$ 9e (ses 2 &i* Is(C( tr("ks or the '(r'oseI howe)er, he has no "erti i"ate o '(&!i" "on)enien"e or ran"hise to do &(siness as a "o##on "arrier$ On the ret(rn tri's to A!e*ria, he !oads his tr("ks with )ario(s #er"handise o other #er"hants in A!e*ria and the nei*h&orin* #(ni"i'a!ities o Badian and Ginati!an$ 9e "har*es the# rei*ht rates #("h !ower than the re*(!ar rates$ In one o the ret(rn tri's, whi"h !e t Ce&( Cit% at 85;0 '$#$ 6 "ar*o tr("k was !oaded with se)era! &o+es o sardines, )a!(ed at P600th, &e!on*in* to one o his "(sto#ers, Pedro Ra&or$ .hi!e 'assin* the Ci*Ca* road &etween Car"ar and Bari!i, Ce&(, whi"h is #idwa% &etween Ce&( Cit% and A!e*ria, the tr("k was hi0a"ked &% ; ar#ed #en who took a!! the &o+es o
'00(
sardines and kidna''ed the dri)er and his he!'er, re!easin* the# in Ce&( Cit% on!% 2 da%s !ater$ Pedro Ra&or so(*ht to re"o)er ro# A!e0andro the )a!(e o the sardines$ The !atter "ontends that he is not !ia&!e there ore &e"a(se he is not a "o##on "arrier (nder the Ci)i! Code and, e)en *rantin* or the sake o ar*(#ent that he is, he is not !ia&!e or the o""(rren"e o the !oss as it was d(e to a "a(se &e%ond his "ontro!$ I %o( were the 0(d*e, wo(!d %o( s(stain the "ontention o A!e0andro>
SUGGESTED ANSWER:
Page +4 of 103 'o!i"% and there ore )oid and ine+istent$ ?Art$ 670:W6X, Ci)i! CodeA
Ha.it S%stem2 A'ent o& t#e Re'istere6 <;ner (2001)

Pro"o'io '(r"hased an Is(C( 'assen*er 0ee'ne% ro# Enten*, a ho!der o a "erti i"ate o '(&!i" "on)enien"e or the o'eration o '(&!i" (ti!it% )ehi"!e '!%in* the Ca!a#&a-Eos BaYos ro(te$ .hi!e Pro"o'io "ontin(ed o erin* the 0ee'ne% or '(&!i" trans'ort ser)i"es, he did not ha)e the re*istration o the )ehi"!e trans erred in his na#e$ Neither did he se"(re or hi#se! a "erti i"ate o '(&!i" "on)enien"e or its o'eration$ Th(s, 'er the re"ords o the Eand Trans'ortation Dran"hisin* and Re*(!ator% Board, Enten* re#ained its re*istered owner and o'erator$ One da%, whi!e the 0ee'ne% was tra)e!in* so(th&o(nd, it "o!!ided with a ten-whee!er tr("k owned &% E##an(e!$ The dri)er o the tr("k ad#itted res'onsi&i!it% or the a""ident, e+'!ainin* that the tr("k !ost its &rakes$
I I were the 1(d*e, I wo(!d ho!d A!e0andro as ha)in* en*a*ed as a "o##on "arrier$ A 'erson who o ers his ser)i"es to "arr% 'assen*ers or *oods or a ee is a "o##on "arrier re*ard!ess o whether he has a "erti i"ate o '(&!i" "on)enien"e or not, whether it is his #ain &(siness or in"identa! to s("h &(siness, whether it is s"hed(!ed or (ns"hed(!ed ser)i"e, and whether he o ers his ser)i"es to the *enera! '(&!i" or to a !i#ited ew (De
2u>man v '1 2, 546%% %4Dec#966"
I wi!! howe)er, s(stain the "ontention o A!e0andro that he is not !ia&!e or the !oss o the *oods$ A "o##on "arrier is not an ins(rer o the "ar*o$ I it "an &e esta&!ished that the !oss, des'ite the e+er"ise o e+traordinar% di!i*en"e, "o(!d not ha)e &een a)oided, !ia&i!it% does not ens(e a*ainst the "arrier$ The hi0a"kin* &% ; ar#ed #en o the tr("k (sed &% A!e0andro is one o s("h "ases (De 2u>man v '1 2, 546%% %4Dec#966"0
Pro"o'io s(ed E##an(e! or da#a*es, &(t the !atter #o)ed to dis#iss the "ase on the *ro(nd that Pro"o'io is not the rea! 'art% in interest sin"e he is not the re*istered owner o the 0ee'ne%$ Reso!)e the #otion with reasons$ ?;@A
SUGGESTED ANSWER:
Common s! "ri ate Carrier2 De&enses (2002) Na#e two ?2A "hara"teristi"s whi"h di erentiate a "o##on "arrier ro# a 'ri)ate "arrier$ ?;@A$
SUGGESTED ANSWER:
Two ?2A "hara"teristi"s that di erentiate a "o##on "arrier ro# a 'ri)ate "arrier are5 6$ A "o##on "arrier o ers its ser)i"e to the '(&!i"I a 'ri)ate "arrier does not$ 2$ A "o##on "arrier is reB(ired to o&ser)e e+traordinar% di!i*en"eI a 'ri)ate "arrier is not so reB(ired$
The #otion to dis#iss sho(!d &e denied &e"a(se Pro"o'io, as the rea! owner o the 0ee'ne%, is the rea! 'art% in interest$ Pro"o'io a!!s (nder the Ka&it s%ste#$ 9owe)er, the !e*a! restri"tion as re*ards the Ka&it s%ste# does not a''!% in this "ase &e"a(se the '(&!i" at !ar*e is not de"ei)ed nor in)o!)ed$ (=im v0 'ourt of 1ppeals, 20,0 3o0 #%56#4, Aanuar #&, %77%, citing Baliwag :ransit v0 'ourt of 1ppeals, 20,0 3o0 5459$, Aanuar 4, #964"
In an% e)ent, Pro"o'rio is dee#ed to &e Lthe a*entL o the re*istered owner$ (.irst +ala an =easing v0 'ourt of 1ppeals, 20,0 3o0 9#$46, Aune 9,#99%< and *.* :ransit 'o0, /nc0 v0 3=,', 20,0 3os, 66#9589&, Aanuar %4, #995" (aritime Commerce2 ,are.oat (2003)
Dor the trans'ortation o its "ar*o ro# the Port o Fani!a to the Port o Ko&e, 1a'an, Osawa N Co$, "hartered <&are&oat= FMO I!o* o Kara*atan Cor'oration$ FMO I!o* #et a sea a""ident res(!tin* in the !oss o the "ar*o and the death o so#e o the sea#en #annin* the )esse!$ .ho sho(!d &ear the !oss o the "ar*o and the death o the sea#en> .h%> ?7@A
SUGGESTED ANSWER:
Ha.it S%stem (2001) Dis"(ss the <ka&it s%ste#= in !and trans'ortation and its !e*a! "onseB(en"es$ ?2@A
SUGGESTED ANSWER:
The ka&it s%ste# is an arran*e#ent where a 'erson *ranted a "erti i"ate o '(&!i" "on)enien"e a!!ows other 'ersons to o'erate their #otor )ehi"!es (nder his !i"ense, or a ee or 'er"enta*e o their earnings (=im
v0 'ourt of 1ppeals and 2on>ale>, 20,, 3o0 #%56#4, Aanuar #&, %77%, citing Baliwag :rannit v0 'ourt of 1ppeals, 20,0 3o0 5459$, Aanuar 4, #964" The !aw
en0oinin* the ka&it s%ste# ai#s to identi % the 'erson res'onsi&!e or an a""ident in order to 'rote"t the ridin* '(&!i"$ The 'o!i"% has no or"e when the '(&!i" at !ar*e is neither de"ei)ed nor in)o!)ed$ The !aw does not 'ena!iCe the 'arties to a ka&it a*ree#ent$ B(t the ka&it s%ste# is "ontrar% to '(&!i"
?'er DondeeA Osawa and Co$ sha!! &ear the !oss &e"a(se (nder a de#ise or &are&oat "harter, the "harterer ?Osawa N Co$A #ans the )esse! with his own 'eo'!e and &e"o#es, in e e"t, the owner or the )o%a*e or ser)i"e sti'(!ated, s(&0e"t to !ia&i!it% or da#a*es "a(sed &% ne*!i*en"e$ "rior <$erator Rule (2003) Ba%an B(s Eines had &een o'eratin* satis a"tori!% a &(s ser)i"e o)er the ro(te Fani!a to Tar!a" and )i"e
)ersa )ia the F"Arth(r 9i*hwa%$ .ith the ('*radin* o the new North E+'resswa%, Ba%an B(s Eines
ser)i"e &e"a#e
see#in*!% inadeB(ate des'ite its e orts o i#'ro)in* the sa#e$ Pasok Trans'ortation, In"$, now a''!ies or the iss(an"e to it &% the Eand Trans'ortation Dran"hisin* and Re*(!ator% Board o a "erti i"ate o '(&!i" "on)enien"e or the sa#e Fani!a-Tar!a"-Fani!a ro(te$ Co(!d Ba%an B(s Eines, In"$, in)oke the <'rior o'erator= r(!es a*ainst Pasok Trans'ortation, In"$> .h%> ?2@A
SUGGESTED ANSWER:
thro(*h O Containers Eines, s'e"i %in* the reB(ire#ents o the !etter o "redit$ 9owe)er, the &i!! o !adin* iss(ed &% the shi''in* !ines &ore the notation
?'er DondeeA No, Ba%an B(s Eines, In"$, "annot in)oke the <'rior o'erator= r(!es a*ainst Pasok Trans'ortation, In"$ &e"a(se s("h <Prior or O!d O'erator R(!e= (nder the P(&!i" -er)i"e A"t on!% a''!ies as a 'o!i"% o the !aw o the P(&!i" -er)i"e Co##ission to iss(e a "erti i"ate o '(&!i" "on)enien"e to a se"ond o'erator when 'rior o'erator is renderin* s( i"ient, adeB(ate and satis a"tor% ser)i"e, and who in a!! thin*s and res'e"ts is "o#'!%in* with the r(!e and re*(!ation o the Co##ission$ In the a"ts o the "ase at &ar, Ba%an B(s Eines ser)i"e &e"a#e see#in*!% inadeB(ate des'ite its e orts o i#'ro)in* the sa#e$ 9en"e, in the interest o 'ro)idin* e i"ient '(&!i" trans'ort ser)i"es, the (se o the G'rior o'eratorG and the G'riorit% o i!in*G r(!es sha!! is (ntena&!e n this "ase$
Re'istere6 <;ner2 Conclusi e "resum$tion ()**0) 1ohnn% owns a -arao 0ee'ne%$ 9e asked his nei*h&or Oan i he "o(!d o'erate the said 0ee'ne% (nder Oans "erti i"ate o '(&!i" "on)enien"e$ Oan a*reed and, a""ordin*!%, 1ohnn% re*istered his 0ee'ne% (nder Oan na#e$
On 1(ne 60, 6::0, one o the 'assen*er 0ee'ne%s o'erated &% Oan &(#'ed To#as$ To#as was in0(red and in d(e ti#e, he i!ed a "o#'!aint or da#a*es a*ainst Oan and his dri)er or the in0(ries he s( ered$ The "o(rt rendered 0(d*#ent in a)or o To#as and ordered Oan and his dri)er, 0oint!% and se)era!!%, to 'a% To#as a"t(a! and #ora! da#a*es, attorne%s ees, and "osts$ The -heri !e)ied on the 0ee'ne% &e!on*in* to 1ohnn% &(t re*istered in the na#e o Oan$ 1ohnn% i!ed a ;rd 'art% "!ai# with the -heri a!!e*in* ownershi' o the 0ee'ne% !e)ied ('on and statin* that the 0ee'ne% was re*istered in the na#e o Oan #ere!% to ena&!e 1ohnn% to #ake (se o Oans "erti i"ate o '(&!i" "on)enien"e$
Fa% the -heri 'ro"eed with the '(&!i" a("tion o 1ohnn%s 0ee'ne%$ Dis"(ss with reasons$
SUGGESTED ANSWER:
Yes, the -heri #a% 'ro"eed with the a("tion sa!e o 1ohnn%s 0ee'ne%$ In "onte#'!ation o !aw as re*ards the '(&!i" and third 'ersons, the )ehi"!e is "onsidered the 'ro'ert% o the re*istered o'erator (Santos v Sibug #75
S 5%7"
Trans?S#i$ment2 ,ill o& 8a6in'2 .in6in' contract ()**3)

1RT In" entered into a "ontra"t with C Co o 1a'an to e+'ort anahaw ans )a!(ed at P2;,000$ As 'a%#ent thereo , a !etter o "redit was iss(ed to 1RT &% the &(%er$ The !etter o "redit reB(ired the iss(an"e o an on-&oard &i!! o !adin* and 'rohi&ited the transshi'#ent$ The President o 1RT then "ontra"ted a shi''in* a*ent to shi' the anahaw ans
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<re"ei)ed or shi'#ent= and "ontained an entr% indi"atin* transshi'#ent in 9on*kon*$ The President o 1RT 'ersona!!% re"ei)ed and si*ned the &i!! o !adin* and des'ite the entries, he de!i)ered the "orres'ondin* "he"k in 'a%#ent o the rei*ht$ The shi'#ent was de!i)ered at the 'ort o dis"har*e &(t the &(%er re (sed to a""e't the anahaw ans &e"a(se there was no on-&oard &i!! o !adin*, and there was transshi'#ent sin"e the *oods were trans erred in 9on*kon* ro# FO Pa"i i", the eeder )esse!, to FO Orienta!, a #other )esse!$ 1RT ar*(ed that the sa#e "annot &e "onsidered transshi'#ent &e"a(se &oth )esse!s &e!on* to the sa#e shi''in* "o#'an%$ 6A .as there transshi'#ent> E+'!ain
2A 1RT (rther ar*(ed that ass(#in* that there was transshi'#ent, it "annot &e dee#ed to ha)e a*reed thereto e)en i it si*ned the &i!! o !adin* "ontainin* s("h entr% &e"a(se it was #ade known to the shi''in* !ines ro# the start that transshi'#ent was 'rohi&ited (nder the !etter o "redit and that, there ore, it had no intention to a!!ow transshi'#ent o the s(&0e"t "ar*o$ Is the ar*(#ent tena&!e> Reason$
SUGGESTED ANSWER:
#&5$#4, .ebruar &, %77&< 'olinares v0 'ourt of 1ppeals, 20,0 3o0 976%6, September 5, %777< -ng v0 'ourt of 1ppeals, 20,0 3o0 ##9656, 1pril %9, %77$"0
6A Yes$ Transshi'#ent is the a"t o takin* "ar*o o(t o one shi' and !oadin* it in another$ It is i##ateria! whether or not the sa#e 'erson, ir#, or entit% owns the two )esse!s$ ?Fa*e!!an ) CA 206 s 602A
2A No$ 1RT is &o(nd &% the ter#s o the &i!! o !adin* when it a""e'ted the &i!! o !adin* with (!! know!ed*e o its "ontents whi"h in"!(ded transshi'#ent in 9on*kon*$ A""e'tan"e (nder s("h "ir"(#stan"es #akes the &i!! o !adin* a &indin* "ontra"t$ ?Fa*e!!an ) Ca 206 s 602A
Tr2 t Re%ei)t La#

Trust Recei$ts 8a;2 Acts 0 <missions2 Co ere6 (2004) 3!at a.ts or o-"ss"ons are penal"Ae7 un7er t!e /rust Re.e"pts >a=5 )2.56+
SU00ESTE8 ANSWER:
The Tr(st Re"ei'ts Eaw ?P$D$ No$ 663A de"!ares the ai!(re to t(rn o)er *oods or 'ro"eeds rea!iCed ro# sa!e thereo , as a "ri#ina! o ense (nder Art$ ;63?!A?&A o Re)ised Pena! Code$ The !aw is )io!ated whene)er the entr(stee or 'erson to who# tr(st re"ei'ts were iss(ed ai!s to5 ?aA ret(rn the *oods "o)ered &% the tr(st re"ei'tsI or ?&A ret(rn the 'ro"eeds o the sa!e o said *oods
(+etropolitan Ban( v0 :onda, 20,0 3o0 #$55$&, 1ugust #&, %777"0
Is la.$ of "ntent to 7efrau7 a bar to t!e prose.ut"on of t!ese a.ts or o-"ss"ons5 )2.56+
SU00ESTE8 ANSWER:
No$ The Tr(st Re"ei'ts Eaw is )io!ated whene)er the entr(stee ai!s to5 ?6A t(rn o)er the 'ro"eeds o the sa!e o the *oods, or ?2A ret(rn the *oods "o)ered &% the tr(st re"ei'ts i the *oods are not so!d$ The #ere ai!(re to a""o(nt or ret(rn *i)es rise to the "ri#e whi"h is #a!(# 'rohi&it(#$ There is no reB(ire#ent to 'ro)e intent to de ra(d ?'hing v0 Secretar of Austice, 20,0 3o0
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Trust Recei$ts 8a;2 8ia.ilit% &or esta&a ()**))

Fr$ No&!e, as the President o ABC Tradin* In" e+e"(ted a tr(st re"ei't in a)or o BPI Bank to se"(re the i#'ortation &% his "o#'an% o "ertain *oods$ A ter re!ease and sa!e o the i#'orted *oods, the 'ro"eeds ro# the sa!e were not t(rned o)er to BPI$ .o(!d BPI &e 0(sti ied in i!in* a "ase or esta a a*ainst No&!e>
SUGGESTED ANSWER:
Trusts Recei$t 8a; (2003) PB N Co$, In"$, a #an( a"t(rer o stee! and stee!
'rod("ts, i#'orted "ertain raw #ateria!s or (se &% it in the #an( a"t(re o its 'rod("ts$ The i#'ortation was e e"ted thro(*h a tr(st re"ei't arran*e#ent with AB Bankin* "or'oration$ .hen it a''!ied or the iss(an"e &% AB Bankin* Cor'oration o a !etter o "redit, PB N Co$, In"$, did not #ake an% re'resentation to the &ank that it wo(!d &e se!!in* what it had i#'orted$ It ai!ed to 'a% the &ank$ .hen de#and was #ade ('on it to a""o(nt or the i#'ortation, to ret(rn the arti"!es, or to t(rn-o)er the 'ro"eeds o the sa!e thereo to the &ank, PB N Co$, In"$, a!so ai!ed$ The &ank s(ed PB N Co$s President who was the si*nator% o the tr(st re"ei't or esta a$ The President '(t (' the de ense that he "o(!d not &e #ade !ia&!e &e"a(se there was no de"eit res(!tin* in the )io!ation o the tr(st re"ei't$ 9e a!so s(&#itted that there was no )io!ation o the tr(st re"ei't &e"a(se the raw #ateria!s were not so!d &(t (sed &% the "or'oration in the #an( a"t(re o its 'rod("ts$ .o(!d those de enses &e s(staina&!e> .h%> ?2@A
SUGGESTED ANSWER:
BPI wo(!d &e 0(sti ied in i!in* a "ase or esta a (nder PD 663 a*ainst No&!e$ The a"t that the tr(st re"ei't was iss(ed in a)or o a &ank, instead o a se!!er, to se"(re the i#'ortation o the *oods did not 're"!(de the a''!i"ation o the Tr(st Re"ei't Eaw$ ?PD 663A 4nder the !aw, an% o i"er or e#'!o%ee o a "or'oration res'onsi&!e or the )io!ation o a tr(st re"ei't is s(&0e"t to the 'ena! !ia&i!it% there(nder (Sia v ;eople #&&s&55"
A8TERNAT7>E ANSWER:
The i!in* o a "ase or esta a (nder the 'ena! 'ro)isions o the RPC wo(!d not &e 0(sti ied$ It has &een he!d in Sia v ;eople (#&# s &55" that "or'orate o i"ers and dire"tors are not "ri#ina!!% !ia&!e or a )io!ation o said Code$ 2 "onditions are reB(ired &e ore a "or'orate o i"er #a% &e "ri#ina!!% !ia&!e or an o ense "o##itted &% the "or'orationI )iC5 6$ There #(st &e a s'e"i i" 'ro)ision o !aw #andatin* a "or'oration to a"t or not to a"tI and 2$ There #(st &e an e+'!i"it state#ent in the !aw itse! that, in "ase o s("h )io!ation &% a "or'oration, the o i"ers and dire"tors thereo are to &e 'ersona!!% and "ri#ina!!% !ia&!e there ore$
No, the de enses are not s(staina&!e$ The !a"k o de"eit sho(!d not &e s(stained &e"a(se the #ere ai!(re to a""o(nt or the i#'ortation, or ret(rn the arti"!es "onstit(tes the a&(se o "on iden"e in the "ri#e o esta a$ The a"t that the *oods arent so!d &(t are (sed in the #an( a"t(re o its 'rod("ts is i##ateria! &e"a(se a )io!ation o the tr(st re"ei'ts !aw ha''ened when it ai!ed to a""o(nt or the *oods or ret(rn the# to the Bank ('on de#and$
U 2ry La#
Usur% 8a; ()**) Borrower o&tained a !oan ro# a #one% !endin* enter'rise or whi"h he iss(ed a 'ro#issor% note (ndertakin* to 'a% at the end o a 'eriod o ;0 da%s the 'rin"i'a! '!(s interest at the rate 3$3@ 'er #onth '!(s 2@ 'er ann(# as ser)i"e "har*e$ On #at(rit% o the !oan, &orrower ai!ed to 'a% the 'rin"i'a! de&t as we!! as the sti'(!ated interest and ser)i"e "har*e$ 9en"e, he was s(ed$ 6$ 9ow wo(!d %o( dis'ose o the iss(es raised &% the &orrower> 2$ That the sti'(!ated interest rate is e+"essi)e and (n"ons"iona&!e> ?;@A ;$ Is the interest rate (s(rio(s> ?;@A
,ecommendation! Since the subJect matter of these two (%" questions is not included within the scope of the Bar Kuestions in +ercantile =aw, it is suggested that whatever answer is given b the examinee, or the lac( of answer should be given full credit0 /f the examinee gives a good answer, he should be given additional credit0
SUGGESTED ANSWER:
These "onditions are not #et in the 'ena! 'ro)isions o the RPC on tr(st re"ei'ts$ Trust Recei$ts 8a;2 8ia.ilit% &or Esta&a ()**+)
A &(%s *oods ro# a orei*n s(''!ier (sin* his "redit !ine with a &ank to 'a% or the *oods$ 4'on arri)a! o the *oods at the 'ier, the &ank reB(ires A to si*n a tr(st re"ei't &e ore A is a!!owed to take de!i)er% o the *oods$ The tr(st re"ei't "ontains the (s(a! !an*(a*e$ A dis'oses o the *oods and re"ei)es 'a%#ent &(t does not 'a% the &ank$ The &ank i!es a "ri#ina! a"tion a*ainst A or )io!ation o the Tr(st Re"ei'ts Eaw$ A asserts that the tr(st re"ei't is on!% to se"(re his de&t and that a "ri#ina! a"tion "annot !ie a*ainst hi# &e"a(se that wo(!d &e )io!ati)e o his "onstit(tiona! ri*ht a*ainst <i#'rison#ent or non'a%#ent o a de&t$= Is he "orre"t>
SUGGESTED ANSWER:
No$ Oio!ation o a tr(st re"ei't is "ri#ina! as it is '(nished as esta a (nder Art ;63 o the RPC$ There is a '(&!i" 'o!i"% in)o!)ed whi"h is to ass(re the entr(ster the rei#&(rse#ent o the a#o(nt ad)an"ed or the &a!an"e thereo or the *oods s(&0e"t o the tr(st re"ei't$ The e+e"(tion o the tr(st re"ei't or the (se thereo 'ro#otes the s#ooth !ow o "o##er"e as it he!'s the i#'orter or &(%er o the *oods "o)ered there&%$
a$ The rate o interest o 3$3@ 'er #onth is e+"essi)e and (n"ons"iona&!e$
'00(
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100 of 103
&$ The interest "annot &e "onsidered (s(rio(s$ The 4s(r% Eaw has &een s(s'ended in its a''!i"ation, and the interest rates are #ade < !oatin*$=
;$
and readiness and wi!!in*ness to si*n when the *oods are de!i)ered i so reB(ested &% the wareho(se#an ?-e" 8 .areho(se Re"ei'ts EawA$
Ware&!2 e Re%ei)t La#

,ill o& 8a6in' ()**:) 6$ .hat do %o( (nderstand &% a <&i!! o !adin*>= ?2@A 2$ E+'!ain the two- o!d "hara"ter o a <&i!! o !adin*$= ?;@A
SUGGESTED ANSWER:
Garnis#ment or Attac#ment o& Goo6s ()***) A .areho(se Co#'an% re"ei)ed or sa ekee'in* 6000 &a*s o ri"e ro# a #er"hant$ To e)iden"e the transa"tion, the .areho(se Co#'an% iss(ed a re"ei't e+'ress!% 'ro)idin* that the *oods &e de!i)ered to the order o said #er"hant$
A #onth a ter, a "reditor o&tained 0(d*#ent a*ainst the said #er"hant or a s(# o #one%$ The sheri 'ro"eeded to !e)% on the ri"e and dire"ted the .areho(se Co#'an% to de!i)er to hi# the de'osited ri"e$
6$ A &i!! o !adin* #a% &e de ined as a written a"know!ed*e#ent o the re"ei't o *oods and an a*ree#ent to trans'ort and to de!i)er the# at a s'e"i ied '!a"e to a 'erson na#ed therein or on his order$
2$ A &i!! o !adin* has a two- o!d "hara"ter, na#e!%, aA it is a re"ei't o the *oods to &e trans'ortedI and &A it "onstit(tes a "ontra"t o "arria*e o the *oods$ Deli er% o& Goo6s2 Re5uisites ()**:)
E(Con .areho(sin* Co re"ei)ed ro# Pedro 200 "a)ans o ri"e or de'osit in its wareho(se or whi"h a ne*otia&!e re"ei't was iss(ed$ .hi!e the *oods were stored in said wareho(se, Ci"ero o&tained a 0(d*#ent a*ainst Pedro or the re"o)er o a s(# o #one%$ The sheri 'ro"eeded to !e)% ('on the *oods on a writ o e+e"(tion and dire"ted the wareho(se#an to de!i)er the *oods$ Is the wareho(se#an (nder o&!i*ation to "o#'!% with the sheri s order> ?3@A
SUGGESTED ANSWER:
a$ .hat ad)i"e wi!! %o( *i)e the .areho(se Co#'an%> E+'!ain ?2@A &$ Ass(#in* that a week 'rior to the !e)%, the re"ei't was so!d to a ri"e #i!! on the &asis o whi"h it i!ed a "!ai# with the sheri $ .o(!d the ri"e #i!! ha)e &etter ri*hts to the ri"e than the "reditor> E+'!ain %o(r answer$ ?2@A
SUGGESTED ANSWER:
No$ There was a )a!id ne*otia&!e re"ei't as there was a )a!id de!i)er% o 200 "a)ans o ri"e or de'osit$ In s("h "ase, the wareho(se#an ?E.CA is not o&!i*ed to de!i)er the 200 "a)ans o ri"e de'osited to an% 'erson, e+"e't to the one who "an "o#'!% with se" 8 o the .areho(se Re"ei'ts Eaw, na#e!%5 6$ s(rrender the re"ei't o whi"h he is a ho!derI 2$ wi!!in* to si*n a re"ei't or the de!i)er% o the *oodsI and ;$ 'a%s the wareho(se#ans !iens that is, his ees and ad)an"es, i an%$ The sheri "annot "o#'!% with these reB(isites es'e"ia!!% the irst, as he is not the ho!der o the re"ei't$ Deli er% o& t#e Goo6s ()**)) .hen is a wareho(se#an &o(nd to de!i)er the *oods, ('on a de#and #ade either &% the ho!der o a re"ei't or the *oods or &% the de'ositor>
SUGGESTED ANSWER:
a$ The 6000 &a*s o ri"e were de!i)ered to the .areho(se Co#'an% &% a #er"hant, and a ne*otia&!e re"ei't was iss(ed there or$ The ri"e "annot therea ter, whi!e in the 'ossession o the .areho(se Co#'an%, &e atta"hed &% *arnish#ent or otherwise, or &e !e)ied ('on (nder an e+e"(tion (n!ess the re"ei't &e irst s(rrendered to the wareho(se#an, or its ne*otiation en0oined$ The .areho(se Co#'an% "annot &e "o#'e!!ed to de!i)er the a"t(a! 'ossession o the ri"e (nti! the re"ei't is s(rrendered to it or i#'o(nded &% the "o(rt$
&$ Yes$ The ri"e #i!!, as a ho!der or )a!(e o the re"ei't, has a &etter ri*ht to the ri"e than the "reditor$ It is the ri"e #i!! that "an s(rrender the re"ei't whi"h is in its 'ossession and "an "o#'!% with the other reB(ire#ents whi"h wi!! o&!i*e the wareho(se#an to de!i)er the ri"e, na#e!%, to si*n a re"ei't or the de!i)er% o the ri"e, and to 'a% the wareho(se#ans !iens and ees and other "har*es$ Ne'otia.le Documents o& Title ()**2) Dor a "ar*o o #a"hiner% shi''ed ro# a&road to a s(*ar "entra! in D(#a*(ete, Ne*ros Orienta!, the Bi!! o Eadin* ?BMEA sti'(!ated <to shi''ers order,= with noti"e o arri)a! to &e addressed to the Centra!$ The "ar*o arri)ed at its destination and was re!eased to the Centra! witho(t s(rrender o the BME on the &asis o the !atters (ndertakin* to ho!d the "arrier ree and har#!ess ro# an% !ia&i!it%$ -(&seB(ent!%, a Bank to who# the "entra! was inde&ted, "!ai#ed the "ar*o and 'resented the ori*ina! o the BME statin* that the Centra! had ai!ed to sett!e its o&!i*ations with the Bank$ .as there #isde!i)er% &% the "arrier to the s(*ar "entra! "onsiderin* the non-s(rrender o the BME> .h%>
The wareho(se#an is &o(nd to de!i)er the *oods ('on de#and #ade either &% the ho!der o the re"ei't or the *oods or &% the de'ositor i the de#and is a""o#'anied &% 6$ an o er to satis % the wareho(se#ans !ien, 2$ an o er to s(rrender the re"ei't, i ne*otia&!e, with s("h indorse#ents as wo(!d &e ne"essar% or the ne*otiation thereo ,
SUGGESTED ANSWER:
na#e$
*er i!n 1++0,'003 Arranged by SULAW Cla *er i!n 1++0,'00- U)dated by Dondee '00(
?2A I -N .areho(se Cor'oration is (n"ertain as to who is entit!ed to the 'ro'ert%, what is the 'ro'er
SUGGESTED ANSWER:
re"o(rse o the "or'oration> E+'!ain$
There was no #isde!i)er% &% the "arrier sin"e the "ar*o was "onsidered "onsi*ned to the -(*ar "entra! 'er the <-hi''ers Order= ?Eastern -hi''in* Eines ) CA 6:0 s 362A
A8TERNAT7>E ANSWER:
There was #isde!i)er%$ The BME was a ne*otia&!e do"(#ent o tit!e &e"a(se it was to the <-hi''ers Order$= 9en"e, the "o##on "arrier sho(!d ha)e de!i)ered the "ar*o to the Centra! on!% ('on s(rrender o the BME$ The non-s(rrender o the BME wi!! #ake it !ia&!e to ho!ders in d(e "o(rse$
<;ners#i$ o& Goo6s Store6 ()**2) To *(arantee the 'a%#ent o a !oan o&tained ro# a &ank, Ra(! '!ed*ed 300 &a!es o to&a""o de'osited in a wareho(se to said &ank and endorsed in &!ank the wareho(se re"ei't$ Be ore Ra(! "o(!d 'a% or the !oan, the to&a""o disa''eared ro# the wareho(se$ .ho sho(!d &ear the !oss H the '!ed*or or the &ank> .h%>
SUGGESTED ANSWER:
The '!ed*or sho(!d &ear the !oss$ In the '!ed*e o a wareho(se re"ei't the ownershi' o the *oods re#ain with de'ositor or his trans eree$ An% "ontra"t or rea! se"(rit%, a#on* the# a '!ed*e, does not a#o(nt to or res(!t in an ass(#'tion o risk o !oss &% the "reditor$ The .areho(se Re"ei'ts Eaw did not de)iate ro# this r(!e$ Ri'#t to t#e Goo6s (2001)
1o0o de'osited se)era! "artons o *oods with -N .areho(se Cor'oration$ The "orres'ondin* wareho(se re"ei't was iss(ed to the order o 1o0o$ 9e endorsed the wareho(se re"ei't to E1 who 'aid the )a!(e o the *oods de'osited$ Be ore E1 "o(!d withdraw the *oods, Fe!"hor in or#ed -N .areho(se Cor'oration that the *oods &e!on*ed to hi# and were taken &% 1o0o witho(t his "onsent$ Fe!"hor wants to *et the *oods, &(t E1 a!so wants to withdraw the sa#e$ ?3@A
.ho has a &etter ri*ht to the *oods> .h%>
SUGGESTED ANSWER:
E1 has a &etter ri*ht to the *oods, &ein* "o)ered &% a ne*otia&!e do"(#ent o tit!e, na#e!% the wareho(se re"ei'ts iss(ed to the Lorder o 1o0o$L 4nder the -a!es 'ro)isions o the Ci)i! Code on ne*otia&!e do"(#ents o tit!e, and (nder the 'ro)isions o the .areho(se Re"ei'ts Eaw, when *oods de'osited with the &ai!ee are "o)ered &% a ne*otia&!e do"(#ent o tit!e, the endorse#ent and de!i)er% o the do"(#ent trans ers ownershi' o the *oods to the trans eree$ B% o'eration o !aw, the trans eree o&tains the dire"t o&!i*ation o the &ai!ee to ho!d the *oods in his na#e$L ?Art$ 636;, Ci)i! CodeI -e"tion 76, .areho(se Re"ei'ts EawA -in"e E1 is the ho!der o the wareho(se re"ei't, he has the &etter ri*ht to the *oods$ -N .areho(se is o&!i*ed to ho!d the *oods in his
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Eaw$ >ali6it% o& sti$ulations e9cusin' ;are#ouseman &rom ne'li'ence (2000)

- stored hardware #ateria!s in the &onded wareho(se o ., a !i"ensed wareho(se#an (nder the Genera! Bonded .areho(se Eaw ?A"t ;8:; as a#endedA$ . iss(ed the "orres'ondin* wareho(se re"ei't in the or# he ordinari!% (ses or s("h '(r'ose in the "o(rse o his &(siness$ A!! the essentia! ter#s reB(ired (nder -e"tion 2 o the .areho(se Re"ei'ts Eaw ?A"t 26;7 as a#endedA are e#&odied in the or#$ In addition, the re"ei't iss(ed to - "ontains a sti'(!ation that . wo(!d not &e res'onsi&!e or the !oss o a!! or an% 'ortion o the hardware #ateria!s "o)ered &% the re"ei't e)en i s("h !oss is "a(sed &% the ne*!i*en"e o . or his re'resentati)es or e#'!o%ees$ - endorsed and ne*otiated the wareho(se re"ei't to B, who de#anded de!i)er% o the *oods$ . "o(!d not de!i)er &e"a(se the *oods were nowhere to &e o(nd in his wareho(se$ 9e "!ai#s he is not !ia&!e &e"a(se o the ree- ro#-!ia&i!it% "!a(se sti'(!ated in the re"ei't$ Do %o( a*ree with .s "ontention> E+'!ain$ ?3@A
SUGGESTED ANSWER:
-N .areho(se "an i!e an INTERPEEADER to "o#'e! E1 and Fe!"hor to !iti*ate a*ainst ea"h other or the ownershi' o the *oods$ -e"$ 67 o the .areho(se Re"ei'ts Eaw states, LI #ore than one 'erson "!ai#s the tit!e or 'ossession o the *oods, the wareho(se #a%, either as a de ense to an a"tion &ro(*ht a*ainst hi# or non-de!i)er% o the *oods or as an ori*ina! s(it, whi"he)er is a''ro'riate, reB(ire a!! known "!ai#ants to inter'!ead$L Un$ai6 Seller2 Ne'otiation o& t#e Recei$t ()**3) A '(r"hased ro# - 630 "a)ans o 'a!a% on "redit$ A de'osited the 'a!a% in .s wareho(se$ . iss(ed to A a ne*otia&!e wareho(se re"ei't in the na#e o A$ Therea ter, A ne*otiated the re"ei't to B who '(r"hased the said re"ei't or )a!(e and in *ood aith$ "A .ho has a &etter ri*ht to the de'osit, -, the (n'aid )endor or &, the '(r"haser o the re"ei't or )a!(e and in *ood aith> .h%> dA .hen "an the wareho(se#an &e o&!i*ed to de!i)er the 'a!a% to A>
SUGGESTED ANSWER:
7$ B has a &etter ri*ht than -$ The ri*ht o the (n'aid se!!er, -, to the *oods was de eated &% the a"t o A in endorsin* the re"ei't to B$ 8$ The wareho(se#an "an &e o&!i*ed to de!i)er the 'a!a% to A i B ne*otiates &a"k the re"ei't to A$ In that "ase, A &e"o#es a ho!der a*ain o the re"ei't, and A "an "o#'!% with -e" 8 o the .areho(se Re"ei'ts
No$ I do not a*ree with the "ontention o .$ The sti'(!ation that . wo(!d not &e res'onsi&!e or the !oss o a!! or an% 'ortion o the hardware #ateria!s "o)ered &% the re"ei't e)en i s("h !oss is "a(sed &% the ne*!i*en"e o . or his re'resentati)e or e#'!o%ees is )oid$ The !aw reB(ires that a wareho(se#an sho(!d e+er"ise d(e di!i*en"e in the "are and "(stod% o the thin*s de'osited in his wareho(se$
answer"
Mi %ellane!2
Ener'% Re'ulator% Commission: Juris6iction 0 "o;er (2003)
CG, a"(sto#er, s(ed FERAECO in the FF Re*iona! Tria! Co(rt to dis"!ose the &asis o the "o#'(tation o the '(r"hased 'ower ad0(st#ent ?PPAA$ The tria! "o(rt r(!ed it had no 0(risdi"tion o)er the "ase &e"a(se, as "ontended &% the de endant, the "(sto#er not on!% de#anded a &reakdown o FERAECOGs &i!! with res'e"t to PPA &(t B(estioned as we!! the i#'osition o the PPA, a #atter to &e de"ided &% the Board o Ener*%, the re*(!ator% a*en"% whi"h sho(!d a!so ha)e 0(risdi"tion o)er the instant s(it$ Is the tria! "o(rtGs r(!in* "orre"t or not> Reason &rie !%$ ?3@A
SUGGESTED ANSWER:
The tria! "o(rtGs r(!in* is "orre"t$ As he!d in Fani!a E!e"tri" Co#'an% )$ Co(rt o A''ea!s, 276-CRA 767 ?6::7A, the Board o Ener*% had the 'ower to re*(!ate and i+ 'ower rates to &e "har*ed &% ran"hised e!e"tri" (ti!ities !ike FERAECO$ In a"t '(rs(ant to E+e"(ti)e Order No$ 778 ?A'ri! 67, 6::8A, this 'ower has &een trans erred to the Ener*% Re*(!ator% Board ?now the Ener*% Re*(!ator% Co##issionA$ 4nder -e"tion 7;?(A o the E!e"tri" Power Ind(str% Re or# A"t o 2006, the Ener*% Re*(!ator% Co##ission has ori*ina! and e+"!(si)e 0(risdi"tion o)er a!! "ases "ontestin* 'ower rates$ /our AC7D "ro.lems o& "#ili$$ine Ju6iciar% (2004) In se)era! 'o!i"% addresses e+tensi)e!% "o)ered &% #edia sin"e his a''oint#ent on De"e#&er 26, 2003, Chie 1(sti"e Arte#io O$ Pan*ani&an )owed to !ea)e a 0(di"iar% "hara"teriCed &% L o(r InsL and to o"(s in so!)in* the L o(r ACIDL 'ro&!e#s that "orrode the ad#inistration o 0(sti"e in o(r "o(ntr%$ E+'!ain this L o(r InsL and L o(r ACIDL 'ro&!e#s$
SU00ESTE8 ANSWER:
4'on ass(#in* his o i"e, Chie 1(sti"e Pan*ani&an )owed to !ead a 0(di"iar% "hara"teriCed &% the L o(r Ins5L Inte*rit%, Inde'enden"e, Ind(str% and Inte!!i*en"eI one that is #ora!!% "o(ra*eo(s to resist in !(en"e, inter eren"e, indi eren"e and inso!en"e$ 9e en)isions a 0(di"iar% that is i#'er)io(s to the '!a*(e o (nd(e in !(en"e &ro(*ht a&o(t &% kinshi', re!ationshi', riendshi' and e!!owshi'$ 9e "a!!s on the 0(di"iar% to &att!e the LDo(r ACIDL 'ro&!e#s "orrodin* o(r 0(sti"e s%ste#5 ?6A !i#ited a""ess to 0(sti"e &% the 'oorI ?2A "orr('tionI ?;A in"o#'eten"eI and ?7A de!a% in the de!i)er% o B(a!it% 0(d*#ents$ The 0(di"ia! de'art#ent sho(!d dis"har*e its (n"tions with trans'aren"%, a""o(nta&i!it% and di*nit%$
(3-:1 BE3E! /t is respectfull suggested that all Bar 'andidates receive a %05% bonus for the above question regardless of the
Page
10' of 103
2$ The Chie 1(sti"e a!so said that the 0(di"iar% #(st Lsa e*(ard the !i&ert%L and Ln(rt(re the 'ros'erit%L o o(r 'eo'!e$ E+'!ain this 'hi!oso'h%$ Cite De"isions o the -('re#e Co(rt i#'!e#entin* ea"h o these twin &ea"ons o the Chie 1(sti"e$ ?2$3@A
SU00ESTE8 ANSWER:
of Execu8 tive ;rivilege (Senate of the ;hilippines v0 Ermita, 20,0 3o0 #&9444, 1pril %7, %77&"0
On the other hand, "ases that re!ate to Ln(rt(rin* the 'ros'erit%L o the 'eo'!e in"!(de the B(estion the "onstit(tiona!it% o the Finin* Eaw (=a Bugal8B)=aan v0 ,amos, 20,0 3o0 #%466%, Dec0 #, %775 A and the .TO A*ree#ent ?:anada v0 1ngara, 20,0 ##6%95, +a %,#994A$
The Chie 1(sti"eGs 'hi!oso'h% L-a e*(ardin* Ei&ert%, N(rt(rin* Pros'erit%L e#&odies the -('re#e Co(rtGs a''roa"h in de"ision-#akin* in the e+er"ise o its "onstit(tiona! 'ower o 0(di"ia! re)iew whi"h 'ro)ides5 In "ases in)o!)in* !i&ert%, the s"a!es o 0(sti"e sho(!d wei*ht hea)i!% a*ainst *o)ern#ent and in a)or o the 'oor, the o''ressed, the #ar*ina!iCed, the dis'ossessed and the weakI and that !aws and a"tion that restri"t (nda#enta! ri*hts "o#e to the "o(rt Lwith a hea)% 'res(#'tion a*ainst their "onstit(tiona! )a!idit%$ On the other hand, as a *enera! r(!e, the -('re#e Co(rt #(st ado't a de erentia! or res'e"t (! attit(de towards a"tions taken &% the *o)ern#enta! a*en"ies that ha)e 'ri#ar% res'onsi&i!it% or the e"ono#i" de)e!o'#ent o the "o(ntr%I and on!% when an a"t has &een "!ear!% #ade or e+e"(ted with *ra)e a&(se o dis"retion does the Co(rt *et in)o!)ed in 'o!i"% iss(es$
Go ernment Dere'ulation s! "ri atiDation o& an 7n6ustr% (2003)

.hat is the di eren"e &etween *o)ern#ent dere*(!ation and the 'ri)atiCation o an ind(str%> E+'!ain &rie !%$ ?2@A
SUGGESTED ANSWER:
Go)ern#ent dere*(!ation is the re!a+ation or re#o)a! o re*(!ator% "onstraints on ir#s or indi)id(a!s, with a )iew to 'ro#otin* "o#'etition and #arket-oriented a''roa"hes toward 'ri"in*, o(t'(t, entr%, and other re!ated e"ono#i" de"isions$ Pri)atiCation o an ind(str% re ers to the trans er o ownershi' and "ontro! &% the *o)ern#ent o assets, ir#s and o'erations in an ind(str% to 'ri)ate in)estors$ "olitical 8a;2 WT< ()***)
Go)ern#ent '!ans to i#'ose an additiona! d(t% on i#'orted s(*ar on to' o the "(rrent tari rate$ The intent is to ens(re that the !anded "ost o s(*ar sha!! not &e !ower than P800 'er &a*$ This is the 'ri"e at whi"h !o"a!!% 'rod("ed s(*ar wo(!d &e so!d in order to ena&!e s(*ar 'rod("ers to rea!iCe reasona&!e 'ro its$ .itho(t
De"isions i#'!e#entin* the Lsa e*(ardin* o !i&ert%L in- "!(de those in)o!)in* the "onstit(tiona!it% o Presidentia! Pro"!a#ation No$ 6067 (David v0 1rro o, 20,0 3o0 #4#$97, +a $, %77&"< the validit of 'alibrated ;re8emptive ,esponse (';," and B0;0 Big0 667 or the ;ublic 1ssembl 1ct (Ba an v0 Ermita, 20,0 3o0 #&9656, 1pril %5, %77&"< and the legalit of Executive -rder 3o0 5&5 and the ;resident)s exercise
Page
103 of 103
this additiona! d(t%, the "(rrent !ow 'ri"e o s(*ar in the wor!d #arket wi!! s(re!% '(!! the do#esti" 'ri"e to !e)e!s !ower than the "ost to 'rod("er do#esti" s(*ar H a sit(ation that "o(!d s'e!! the de#ise o the Phi! s(*ar ind(str%$ 2$ Dis"(ss the )a!idit% o this 'ro'osa! to i#'ose an additiona! !e)% on i#'orted s(*ar ?;@A 7$ .o(!d the 'ro'osa! &e "onsistent with the tenets o the .or!d Trade Or*aniCation ?.TOA> ?;@A
Re"o##endation5 -in"e the s(&0e"t #atter o these two ?2A B(estions is not in"!(ded within the s"o'e o the Bar /(estions in Fer"anti!e Eaw, it is s(**ested that whate)er answer is *i)en &% the e+a#inee, or the !a"k o answer sho(!d &e *i)en (!! "redit$ I the e+a#inee *i)es a *ood answer, he sho(!d &e *i)en additiona! "redit$
SUGGESTED ANSWER:
eB(a! 'rote"tion o !aw "!a(se o the Constit(tion$ Do(rth, there is no i#'air#ent o d(e 'ro"ess here &e"a(se )io!ators o the !aw wi!! &e '(nished on!% a ter L'ro'er tria!$L Di th, the iss(e o L0(st "o#'ensationL does not arise, &e"a(se the 'ro'ert% o Frs$ BC is not &ein* e+'ro'riated$ On the "ontrar%, as a "itiCen o EOF, Frs$ BC is ree!% a!!owed to en*a*e in do#esti" ti#&er trade in EOF$ Tari&& an6 Customs Co6e: >iolation o& Customs 8a;s (2003) The Co!!e"tor o C(sto#s ordered the seiC(re and or eit(re o new e!e"troni" a''!ian"es shi''ed &% TON Cor'$ ro# 9on*kon* or )io!ation o "(sto#s !aws &e"a(se the% were a!se!% de"!ared as (sed o i"e eB(i'#ent and then (nder)a!(ed or '(r'oses o "(sto#s d(ties$ TON i!ed a "o#'!aint &e ore the FF Re*iona! Tria! Co(rt or re'!e)in, a!!e*in* that the C(sto#s o i"ia!s erred in the "!assi i"ation and )a!(ation o its shi'#ent, as we!! as in the iss(an"e o the warrant o seiC(re$ The Co!!e"tor #o)ed to dis#iss the s(it or !a"k o 0(risdi"tion on the 'art o the tria! "o(rt$ -ho(!d the Co!!e"torGs #otion &e *ranted or denied> Reason &rie !%$ ?3@A
SUGGESTED ANSWER:
;$ The 'ro'osa! to i#'ose an additiona! d(t% on i#'orted s(*ar on to' o the "(rrent tari rate is )a!id, not &ein* 'rohi&ited &% the Constit(tion$ It wo(!d ena&!e 'rod("ers to rea!iCe reasona&!e 'ro its, and wo(!d a!!ow the s(*ar ind(str% o the "o(ntr% to s(r)i)e$ 7$ No$ The 'ro'osa! wo(!d not &e "onsistent with the tenets o the .TO whi"h "a!! or the !i&era!iCation o trade$ 9owe)er, s("h 'ro'osa! #a% &e a""e'ta&!e within the a!!owa&!e 'eriod (nder the .TO or ad0(st#ent o the !o"a! ind(str% "o;er o& t#e State: Re'ulatin' o& Domestic Tra6e (2003) In its e+er"ise o 'o!i"e 'ower and &(siness re*(!ation, the !e*is!at(re o EOF -tate 'assed a !aw 'rohi&itin* a!iens ro# en*a*in* in do#esti" ti#&er trade$ Oio!ators in"!(din* d(##ies wo(!d, a ter 'ro'er tria!, &e ined and i#'risoned or de'orted$ Frs$ BC, a "itiCen o EOF &(t #arried to QC, an a!ien #er"hant o PNG, i!ed s(it to in)a!idate the !aw or e+e#'t ro# its "o)era*e their ti#&er &(siness$
-he "ontended that the !aw is, inter a!ia, *ra)e!% o''ressi)e and dis"ri#inator%$ It )io!ated the 4ni)ersa! De"!aration o 9(#an Ri*hts ?4D9RA 'assed in 6:78 &% the 4nited Nations, o whi"h EOF is a #e#&er, she said, as we!! as the re"i'ro"it% 'ro)isions o the .or!d Trade Or*aniCation ?.TOA A*ree#ent o 6::7, o whi"h PNG and EOF are 'arties$ Aside ro# den%in* the# eB(a! 'rote"tion, a""ordin* to BC, the !aw wi!! a!so de'ri)e her a#i!% their !i)e!ihood witho(t d(e 'ro"ess nor 0(st "o#'ensation$ Ass(#in* that the !e*a! s%ste# o EOF is si#i!ar to o(rs, wo(!d Frs$ BCGs "ontention &e tena&!e or not> Reason &rie !%$ ?3@A
SUGGESTED ANSWER:
The Co!!e"torGs #otion sho(!d &e *ranted$ 4nder -e"tion 202?*A o the Tari and C(sto#s Code, the B(rea( o C(sto#s has e+"!(si)e ori*ina! 0(risdi"tion o)er seiC(re and or eit(re "ases (nder the tari and "(sto#s !aws$
NOTE5 ?This B(estion is o(tside the "o)era*e o the Bar E+a#inations$ It is there ore re"o##ended that whate)er answer #ade &% the "andidate sho(!d &e *i)en (!! "redit$A
Frs$ BCGs "ontention is not tena&!e$ Dirst, the 4D9R does not '(r'ort to !i#it the ri*ht o states ?!ike EOFA to re*(!ate do#esti" trade$ -e"ond, the .TO A*ree#ent in)o!)es internationa! trade &etween states or *o)ern#ents, not do#esti" trade in ti#&er or other "o##odities$ Third, nationa!it% is an a""e'ted nor# or #akin* "!assi i"ations that do not r(n "o(nter to the
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Mercantile Law Bar Examination Q & A (1990-2006)

ANSWERS TO BAR EXAMINATION QUESTIONS IN

MERCANTILE LAW ARRANGED BY TOPIC

Silliman Univer ity C!llege !" La# $at%& '00(

'()e 2*+ 200*

*er i!n 1++0,'003 Arranged by SULAW Cla

*er i!n 1++0,'00- U)dated by Dondee

Mercantile Law Bar Examination Q & A (1990-2006)

4'dated5 1(ne 27, 2007

-er./o) 199002001 Arr2)3e4 b SU"AW #52.. 200& U642te4 b Dondee

Mercantile Law Bar Examination Q & A (1990-2006)

Commercial Transaction (2003)

Joint Account (2000)

#an$s% Collateral *ecurity (2002)

#an$s% *ecrecy of #an$ (eposits, -arnishment (200.)

#an$s, Classifications of #an$s (2002)

#an$s, Conservator vs. /eceiver (2000)

#an$s, (iligence /e1uire2 ( !!2)

#an$s, 3nsolvency, Prohi&ite2 Transactions (2000)

#an$s, 3nsolvency, /e1uirements ( !!")

#an$s, /estrictions on 4oan Accommo2ations (2002)

#an$s, /estrictions on 4oan Accommo2ations (2000)

#an$s, *afety (eposit #o5, 4ia&ility

#an$s, *ecrecy of #an$ (eposit, AM4C (2000)

#an$s, *ecrecy of #an$ (eposit, 65ceptions (2000)

#an$s, *ecrecy of #an$ (eposits ( !!0)

#an$s, *ecrecy of #an$ (eposits ( !! )

#an$s, *ecrecy of #an$ (eposits ( !!2)

#an$s, *ecrecy of #an$ (eposits ( !!.)

#an$s, *ecrecy of #an$ (eposits ( !!+)

#an$s, *ecrecy of #an$ (eposits, 65ceptions (200.)

#an$s, *ecrecy of #an$ (eposits, -arnishment (200 )

#*P, /eceivership, Juris2iction ( !!2)

4egal Ten2er (2000)

P(3C 4a8 vs. *ecrecy of #an$ (eposits Act ( !!")

/esponsi&ilities ) 9&:ectives of #*P ( !!7)

Truth in 4en2ing Act ( !! )

Truth in 4en2ing Act (2000)

$2l1 Sale La#

#ul$ *ales 4a8, Covere2 Transactions ( !!.)

#ul$ *ales 4a8, Covere2 Transactions (2000)

#ul$ *ales 4a8, Covere2 Transactions (2000)

#ul$ *ales 4a8, 65clusions ( !!3)

#ul$ *ales 4a8, 9&ligation of the ;en2or ( !!+)

#ul$ *ales 4a8, 9&ligation of the ;en2or ( !!")

#ul$ *ales 4a8, 9&ligation of the ;en2or (200 )

C!n 2mer Pr!te%ti!n La#

Metric *ystem 4a8 ( !!.)

-er./o) 199002001 Arr2)3e4 b SU"AW #52.. 200& U642te4 b Dondee

Mercantile Law Bar Examination Q & A (1990-2006)

#9(, Capacity of (irectors ( !!0)

#9(, Conflict of 3nterest ( !!.)

#9(, 3nterloc$ing (irectors ( !!+)

#9(, 3nterloc$ing (irectors ( !!0)

#y <4a8s, ;ali2ity, limiting 1ualifications of #9( mem&ers ( !!7)

#y <4a8s, ;ali2ity, limiting 1ualifications of #9( mem&ers (2000)

#y <4a8s, ;ali2ity, limiting 1ualifications of #9( mem&ers (200 )

#y <4a8s, ;ali2ity, limiting 1ualifications of #9( mem&ers (2003)

Close Corporations, (ea2loc$s ( !!+)

Close2 Corporation, /estriction, Transfer of shares ( !!.)

Controversy, 3ntra<Corporate ( !!.)

Controversy, 3ntra<Corporate ( !!0)

Controversy, 3ntra<Corporate ( !!0)

'()e 2+ 200

Corporation, et<9ff, >npai2 u&scription ( !!.)