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REVIEWER
Negotiable Instruments A bearer instrument is always a bearer
instrument (negotiated by: delivery or special
Section 1. Form of negotiable instruments.- indorsement coupled with delivery)
An instrument to be negotiable must conform to
the following requirements: Nikki may further negotiate the check to Brianna
(a) It must be in writing and signed by the maker by delivery since the instrument was a pay to
or drawer; order of Kristine check, it is a bearer instrument
(b) Must contain an unconditional promise or and may be negotiated by delivery regardless of
order to pay a sum certain in money; the indorsements made
(c) Must be payable on demand, or at a fixed or
determinable future time; Although the promissory note is not a bearer
(d) Must be payable to order or to bearer; and instrument as the phrase bearer Jose Reyes
(e) Where the instrument is addressed to a means Reyes is the bearer, the same is
drawee, he must be named or otherwise nonetheless an order instrument and such
indicated therein with reasonable certainty. complies with the requisites of negotiability
The note is not negotiable. It is not an As an order instrument, the promissory note is
unconditional promise to pay as it restricts the negotiated by indorsement coupled with delivery
payment to the proceeds of the sale of his
jaguar. When the note states that payment will Restrictive Indorsement prohibits further
come from a particular fund, the note is not negotiation of the instrument
negotiable
Presentment of payment is not necessary in
The note is negotiable when the sum or the order to charge the person primarily liable (eg.
amount is certain even if mathematical maker of the promissory note, presentment not
computations are needed in order to determine necessary)
the said sum
Presentment of payment is necessary to charge
The Negotiable Instruments law does not a person secondarily liable (eg. Indorsers)
require for the negotiability of an instrument that
is be signed using the real name of the maker. I promise to pay signed by two or more
The law in section 1 merely requires that it be persons, the liability of such makers is solidary
signed by the maker or drawer and any
signature will be valid provided that he assents Holder for value: note was issued to him to
thereto at the time of signing secure a valid contract of simple loan
What is material is the makers intention of The note is still valid because it was issued
placing her signature on the instrument. pursuant to a valid contract of loan between A
and B and the use of money by B is not part of
GR: Indorsement of the instrument must be in the consideration in the loan
full and not partial
XPN: partial payment = indorsement as to the The receipt is valid and negotiable because
residue despite the phrase non-negotiable it is not the
phrase that would determine whether an
Monique may run after Lou, Ralph, Naldo and instrument is negotiable or not. The basis will be
gina as indorsers when the check is dishonored the tenor of the instrument and not the
because they are secondarily liable phrase/stamp of non-negotiable. The fact that it
was indorsed in blank proves that it may be
st
If Lou (1 indorser) was stricken out, Monique negotiated
cannot go after Lou, Ralph, Naldo and Gina
since Lou is the first indorser and when her Sec. 52. What constitutes a holder in due
name was stricken out, she and all those after
her were discharged from any liability over the course. - A holder in due course is a holder who
instrument has taken the instrument under the following
conditions:
a. That it is complete and regular upon its
No act of kindness however small is ever wasted
COMMREV REVIEWER
Luisa becomes liable if she accepts the bill of (3) Those made to a public officer or his wife,
exchange. She becomes an acceptor or drawee descendants and ascendants, by reason of his
and is liable under the terms and conditions of office.
the acceptance
Article 2012. Any person who is forbidden from
A may validly and effectively negotiate the check receiving any donation under article 739 cannot
as there is no prohibition disallowing minors be named beneficiary of a life insurance policy
from negotiating promissory notes or bills of by the person who cannot make any donation to
exchange. Further only the minor can invoke the him, according to said article.
defense of minority and not prior and
subsequent holders of the check.
One act of sexual intercourse or the acceptance
of an indecent proposal cannot be characterized
As to the requirement that it must contain an as concubinage as they did not portray
unconditional promise to pay a sum certain in themselves as husband and wife, have sexual
money, the promissory note is compliant intercourse in a scandalous circumstance or the
therewith notwithstanding the variance between husband bringing the mistress into the conjugal
the amount written in words and the amount dwelling
written in numbers because it may be remedied
by applying the rule that the amount written in
Constructive total loss: more than of the
words govern. As to the payees, the same is
thing insured must be lost
negotiable notwithstanding multiple payees
A can insure the raffle against theft for 10k
The amount due and payable is 10k because it
because it is the price of the ticket when he
is the amount written in words and as such it
bought it and he will be damnified by its loss to
governs as opposed to the amount written in
the extent of such amount. However, he cannot
numbers
insure the grand prize because such is a
wagering contract which is not covered by
A check, which is payable to the order of cash is
insurance
a bearer instrument and the rule is that a bearer
instrument shall always be a bearer instrument
notwithstanding subsequent indorsements.
No act of kindness however small is ever wasted
COMMREV REVIEWER
A can now insure the raffle ticket for 10M since 4. The insurer may grant credit extensionfor
the ticket had already won the grand prize, he the payment of the premium [Makati
has now an expectancy founded on an existing Tuscany Condominium]
interest over the prize. (inchoate interest) 5. Estoppel
Lessor has insurable interest over the The insurer may reject his claim. In the case of
warehouse because he has an expectancy over UCPB v Masagana, the insurer has been
an existing interest (ownership shall pertain to estopped to pay for the insurance claim because
him after the contract of lease) there has been an established customary date of
payment to which UCPB has impliedly permitted.
Lessee has insurable interest over the This principle of estoppel is not applicable in this
warehouse because he will be damnified in case case because A has yet to pay for the annual
the warehouse and its goods are razed by fire premium within the customary date of payment
after the loss of the property has taken place.
For one to be able to procure property Therefor, A cannot claim from the insurer
insurance, one must have an insurable interest
over the property insured, which may be an The date of loss is immaterial in ascertaining
existing interest, inchoate interest based on an whether A can file his claim since it is more
existing right or an expectancy founded on an important to note if there has already been
existing interest. A does not have any insurable payment of the annual premium before the loss
interest over the house prior to the perfection of or it has been paid within the customary date or
the sale as he has no existing right or interest. payment, even after the loss took place
Thus, he cannot insure the house
Irrevocable beneficiary: already has a vested
Negligence: not a ground to deny a claim interest over the proceeds accruing from the
policy upon the death of the insured
A can recover on the policy for as long as the
fire which destroyed the building was not SC case daw: insured cannot include additional
deliberately intended or sought by him. Mere beneficiaries to an irrevocable beneficiary
negligence is not an excepted peril in an because it will diminish the proceeds, which the
insurance against fire unless the contrary is irrevocable beneficiary will receive as a vested
stipulated. Hence, the negligence of A cannot be right
used to defeat the policy
A and B cannot be added as beneficiaries.
Whenever a beneficiary is irrevocably
SEC. 77. An insurer is entitled to payment of the designated, the insurer cannot change or add
premium as soon as the thing insured is beneficiaries to his policy without the consent of
exposed to the peril insured the irrevocable beneficiary
against. Notwithstanding any agreement to the
contrary, no policy or contract of insurance A beneficiary of an insurance policy has a
issued by an insurance company is valid and vested right over the policy and is allowed by law
binding unless and until the premium thereof has to pay the premiums. As his/her payments
been paid, except in the case of a life or an caused the policy to subsist at the time of the
industrial life policy whenever the grace period loss or death of the insured, he/she may claim
provision applies. the indemnity as beneficiary thereof
No act of kindness however small is ever wasted
COMMREV REVIEWER
from ABC insurers since A is underinsured i. Contract between the buyer and seller
against earthquakes because he only insured ii. Contract between the buyer and the bank
the building for 4 million when its value is 10 iii. Contract between the seller and the bank
million. A is deemed to be self insured as
regards to 6 million. Thus, when a partial loss A can only collect 225k from PDIC because the
occurs, the loss will be apportioned to A and the deposits of a person in his savings, current and
insurer as co-insurers. He can recover 4/10 or time deposits are collected and paid in the
40% of the value of the property which is the amount of the total deposit not exceeding 500k.
value covered by the insurance company (pro- The marginal deposits are not covered since the
rata) or the proportional value to be shouldered relationship of the bank and the depositor is not
by the insurer. in the nature of debtor and creditor. Since
marginal deposits are used in opening of letters
The owner of the shipment cannot file a claim on of credit. Likewise, money market placements
the ground of constructive total loss because are expressly not covered by the law even if
there was no constructive total loss since only such placement is treated by the bank in its
80,000 marbles were lost and did not amount to books as deposit
more than of the marbles.
A letter of credit is not a negotiable instrument
The marine insurance policy covered 200,000 under the provisions of the NIL. A bank letter or
marbles so the basis of computing the total loss credit may not be negotiated because it is
would be the policy executed in favor of a particular person
A prospective buyer can insure the property The use of the word order makes the same
against fire because he has an inchoate interest negotiable and not a valid letter or credit
over the house. Sec 14 of the Insurance code
provides that an inchoate interest founded on an Strict compliance rule: requisites of a letter of
existing interest or right can be insured credit must be complied with
XYZ corp is also not liable for conversion as it is If the CC failed to act on the claim , its should be
a juridical peson and it is a basic precept in filed in court within 1 year from the delivery to
criminal law that juridical persons cannot be the arrastre operator; if not delivered, the action
liable criminally because they cannot be put in should be filed in court within 1 year from the
jail when found guilty unless the statute time the goods should have been delivered
otherwise provide that they be criminally liable
and punished with fines. Since the RPC does The parties may not stipulate in writing to
not provide, XYZ corp is not liable. shorten the period because it is contrary to
public policy but the period may be extended
When the original receipt was lost, A should go
to court and establish his rights over the goods. Demand letter: it does not stop the running of
The court will require him to post a bond. The the prescriptive period. The 1 year prescriptive
court thereafter will order the warehouseman to period is provided by COGSA and not by the
deliver the goods to A civil code
No act of kindness however small is ever wasted
COMMREV REVIEWER
The carrier may not set up the defense of
The parties may validly stipulate in writing to fortuitous event because it was not the
suspend the running of the period to file the proximate and only cause of the injuries suffered
claim during the pendency of a negotiation for by the passengers. The CC was negligent in
amicable settlement. It is not prohibited under overloading the bus. If not for the flat tire, they
the law, it is among the matters the parties can could have reached their destination safely.
stipulate on and ultimately it promotes the Their negligence was the proximate cause and
settlement of the case and the prevention of a not the storm. When there is human intervention
trial which caused the injuries, fortuitous event is not
a valid defense.
Breach of Contract of Carriage: file in court to
allow recovery from the CC an action for The demurrer must fail. CC are bound to
damages arising from breach of contract of exercise utmost diligence of a very cautious
carriage because the carrier failed to exercise person in the transportation of passengers.
extraordinary diligence in the carriage of goods. Thus, when there is death or injury arising from
The lost or damaged goods creates a such carriage, the carrier presumed liable. It has
presumption of negligence against the carrier the burden of proof to substantiate its claim that
it exercised the prescribed diligence of a very
Defense of CC: if the CC can prove that the cautious person. In this case, notwithstanding
proximate cause of the loss of the goods is the the failure to submit any evidence by the
character of the goods, then the CC may be plaintiffs, the demurrer must fail as the CC is
absolved from liability. (eg. Assumption of risk burdened to discharge its liability
that it may perish upon its transport)
Mortgage
A cannot claim the worth of the articles as
evidenced by the receipt amounting to 2k. To be Affidavit of GF: binds third persons
entitled to the actual or full amount of 20k, he (constructive notice) -> to be registered.
must not only prove that the actual worth of the Absence of AoGF still binds the parties and does
products but must actually declare the actual it not affect their obligations
and pay for the corresponding additional fare.
PAL is only liable for 2k. 10 day notice: cannot be waived by the
mortgagor because it was not implemented by
The NCC does not require that a common law for his favor but for third persons.
carrier should be by way of a motorized vehicle
or mode of transportation. It can be any form A deed of contractual sale is valid in so far as
provided it is offered to the public, whether transferring ownership after full payment has
general or a limited segment, for compensation been effected
or for a fee. In this case, the chute made by A is
an accepted mode of transportation which will Chattel mortgage over vessels must be
qualify A to be a common carrier despite the fact registered with the MARINA as stated in the ship
that is not motorized because A charges a fee mortgage decree law whose vessel is registered
for its use and makes it available to anyone in the Philippines.
A is not considered a common carrier although Chattel mortgage is registered in the books of
his neighbors pay him 1k per month. He is only the issuing corporation and likewise registered in
an accommodation and A does not offer the the city or province of the principal place of
service to the public. Moreover, A is not business of the corporation
engaged in the business of transportation
Machineries of the tenant placed in the building
They may sue the carrier for damages because of another is treated as personal property unless
it was negligent in transporting them. The bus placed in the place where the owner is
was overloaded which caused the flat tire. Their conducting his business which will be treated as
injuries will be compensated by the damages real property
awarded to them because the CC committed a
breach of their contract of carriage Ownership of the thing is essential to make the
mortgage valid
No act of kindness however small is ever wasted
COMMREV REVIEWER
Procedural requirements for foreclosure of REM being a manufacturer of school desks and chairs
is not covered by the BSL.
Right of redemption: period 1 year from the
registration of the certificate of sale. No express The sale made by A was not valid because A
waiver because it is contrary to law. He may failed to execute an affidavit or a sworn
waive such right impliedly by not exercising the declaration to inform his creditors of the sale and
right of redemption. He may likewise transfer to indicate the amount and nature of his loans.
such right to his heirs or successors in interest The bulk sales law is applicable in this case
because his sales per day only averages about
Mortgage is only an accessory to the principal 2k and his sudden sale of his entire goods in the
obligation. If the principal obligations has been warehouse which is 1M worth brings the
extinguished, the mortgage is likewise transaction under the BSL although A was not
extinguished insolvent. The sale creates a presumption of
status and thus necessitates notice to the
Mortgagee(bank) and Mortgagor (Juridical creditors in order to protect their interest.
person), the period of redemption is 3 months
from the date of sale or before the certificate of Trust Receipts Law
sale is registered whichever comes first
Requisites to be covered by the TRL:
Bulk Sales Law a. That the entrustee shall remit the proceeds of
the sale to the entrustor
BSL law applies when a seller sells all or b. That the entrustee shall return the goods to the
substantially all of his goods, merchandise or entrustor is it is not sold
wares not in the ordinary course of business. In
order for such sale to be valid he must inform his Note: In order that a person may be criminally
creditors and deliver a sworn statement liable under Art. 315 (estafa) of the RPC
pursuant to the TRL, the document that he
Execution sale (writ of execution by judgment of signed must be a trust receipt
the RTC) is not covered by the bulk sales law
and there is no need to comply with the A deed of sale with reservation of title will not be
requirements because there is no more fraud to covered by the TRL. It must contain the
creditors to be taken into consideration requisites either in a statement or stipulated
Bulk sales law covers sale, assignment, A deed of sale with reservation of title is not
mortgage, transfer of all or substantially all of: considered a trust receipt that would make A
1. Goods, stock, wares and merchandise liable for estafa
2. Fixtures and equipments
3. The business itself The TRL only covers transactions wherein the
entrustee is entrusted by the entrustor of the
Bulk sales law does not cover the ff: goods for the purpose of selling it to other
1. Judicial sales persons. In this case, A cannot be deemed an
2. Sale of exempt articles entrustee because he was not entrusted of the
3. Sale of TV set for the purpose of selling it to others but
4. Sale of goods which are owned and for his personal use. The fact that he sold it
manufactured by him subsequently is immaterial
The owner is not liable under the BSL when the The entrustee bears the risk of loss. Further,
main business of the owner is repairing even assuming that the entrustor as owner
automobiles and the sale of spare parts is bears the loss, the entrustee nonetheless must
merely incidental to its business and thus not pay the former the price of the goods
considered as those enumerated to which BSL
covers. The entrustee who procures the goods and
thereafter receives the same with the obligation
The sale is valid. The BSL only covers to sell the same and remit the proceeds to the
merchants who are engaged in buying and entrustor or if not sold, return the same to the
selling of goods, wares, merchandise, etc. A latter. Although the entrustor in the owner of the
goods, his participation is limited to the financing
No act of kindness however small is ever wasted
COMMREV REVIEWER
of the goods. If the goods are stolen, it is the c. It must be capable of industrial
entrustee who should be liable application
The interest and penalty in this case may be Gas saving device is patentable as it complies
collected, as the contract does not fall within the with the requisites. (refer to requisites above)
TRL act. The TRL act applies to loans and not to
contracts of lease. In the present case, the The discovery of the effect of berries, discovery
parties may validly enter into a contract and of herbal medicine, discovery of specie of a bird
agree on the interests and penalties in case of cannot be patented
failure to pay the rentals
A is entitled to the patent because the inventor is
Banking: the one who is entitled to the patent even if B
registered it first. The first to file rule will not
Bancassurance: A bank cannot engage in apply because it is only applicable if an invention
insurance business even if it has enough capital. was made independently. In this case, B only
However, it may sell insurance provided that it copied As methods to come up with the
owns 5% equity of the insurance company invention.
whose insurance it sells
The IPO is correct in disapproving Einsteins
Tender of payment: centavo coins-100php; application because mere concepts and theories
peso coins-1000php are not patentable.
GR: a depositor can recover the full amount of The fair use and intellectual property code states
his deposit from PDIC upon closure of the bank that annotations made or taken for the purpose
provided the amount will not exceed the of research or formulating legal opinions cannot
maximum limit of 500k per depositor and per be considered infringement
bank
Infringement or copyright does not cover:
The law on secrecy of bank deposits has a. Personal use
exceptions on its applicability and that includes if b. Research and Instruction purposes
said deposits are under litigation, upon order of c. Government use with the obligation to
the court and the likes pay for royalty
ABC corp is not a stock corporation. A stock Removal of a Director: he may be removed
corporation is operated for the purpose of profits. upon majority vote of directors and ratification of
In this case, ABC corp is a non stock corporation 2/3 of the stockholders. However, he may not be
because its AOI and by laws do not provide removed without cause if he is a director
distribution of dividends upon dissolution but representing the minority
rather it will give its assets to a charitable
institution upon dissolution Note: the 2/3 OCS vote only applies to removal.
An employee cannot invoke such voting to be
A president of a corporation must be a director, elected as director.
owns atleast 1 share (common or preffered), he
is not a treasurer or corporate secretary of the Yes, XYZ corp can issue shares of stock to A as
said corporation. long as it is stipulated and such is ratified by 2/3
of the OCS
Dividends may be given or distributed if there
were no prior losses for as long as there are The deadlock shall be resolved by filing a
surplus profits. In this case, there were no petition with the RTC for a provisional director.
surplus profits dividends may not be distributed. The provisional director will vote in order to
Likewise, if there are losses, it must be break the deadlock. The provisional director
prioritized before the distribution of dividends must be an uninterested third party
No act of kindness however small is ever wasted
COMMREV REVIEWER
Dissolution: the corporation may not enter into artificial being and has a separate and distinct
new contracts since it ceased to be an artificial personality from the stockholders. The mere fact
being. It has no capacity to contract. It may only that A is a controlling stockholder does not
continue business or activities which are related warrant piercing of the corporate veil in the
to the winding up process absence of clear and convincing evidence that
the corporation was established to commit fraud,
The corporation should now undergo liquidation etc.
and winding up. It should settle any liabilities it
has and liquidate its assets Section 64 provides that a stock certificate will
be issued only upon full payment of the
Creditors have a period of 3 years from subscription
expiration of term to file their claims
Steps when the stockholder lost his
The corporation cannot enter into new contracts certificate:
upon expiration of its term because it ceases to
be an artificial being a. File an affidavit of loss to the corporate
secretary
Watered stock: the value of shares is lower b. The corporate secretary verifies the
than the par value and book value. Issuance of affidavit
the same is not valid c. Publication of the notice of the loss must
be made once a week for 3 consecutive
The persons receiving the said shares, the weeks in a newspaper of general
directors who approved the issuance of the circulation in the place where the
same and the directors who did not object to the principal office of the corporation is
issuance of the same shall be liable located
d. The stockholder has to wait for 1 year
Section 52 of the corporation code provides that from the last publication before he may
in a stockholders meeting, the presence of be issued a new certificate unless he
stockholders representing majority of the OCS files a bond
constitutes a quorum. In this case, since the bulk
of the OCS is owned by A while B, C, D and E The 2M net income after tax may be entirely
only owns 1 share each, the presence of A used for cash dividends provided there is no
already constitutes a quorum diminution of the paid up capital during the
preceding year/s. if the corporation experienced
Section 25 provides that in a board meeting, the losses and the paid up capital was diminished,
presence of the majority of the number of the total paid up capital must be returned first
directors constitute a quorum. In this case, there and if there is an excess, such may be
are only 5 directors and the majority of 5 is 3. distributed as dividends
Hence, at least 3 of them constitutes a quorum
The position of Manager is different from a
Amendment of AOI: Director. The latter needs the 2/3 votes of the
OCS while the former, no such requirement is
a. Majority vote of the BOD needed
b. Ratification of the Stockholders
representing at least 2/3of the OCS If the sale materializes, A becomes a trustee of
c. Submit to the SEC the amended AOI by the shares and he will hold it in trust for B. under
copying verbatim the original and the NCC, one who holds a thing but does not
inserting the changes which should be have the beneficial ownership of such thing is a
indicated as amended mere trustee and the beneficial owner is the
d. The amendment becomes effective beneficiary. The relationship is called trust
upon the approval of the SEC or the relationship
date of filing if the SEC fails to act on the
amendment for 6 months Replacement of a Director:
Corporate creditors cannot sue A in his personal a. Call a special stockholders meeting for
capacity for collection of corporate debts. the purpose of electing a replacement
Section 2 provides that a corporation is an
No act of kindness however small is ever wasted
COMMREV REVIEWER
b. If the remaining BOD still constitute a
quorum, they can choose a replacement
by a resolution approved by majority of
the directors present in the meeting
No act of kindness however small is ever wasted