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INSURANCE CODE
Security Deposit
1The author of this material is a Senior Assistant City Prosecutor of the City of
Manila. She is also a Commercial Law Professor and Bar Reviewer at San
Sebastian College Recoletos-Manila, Polytechnic University of the Philippines,
Academicus Review Center and Albano Review Center. She also authored two
books in Commercial Law – Handbook in Insurance Law as well as Negotiable
Instruments in a Nutshell with Central Books. Her article “Disneyfication” vis-à-vis
Copyright: Original Stories Lost, appears in 795 SCRA 691.
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Motors, 504 SCRA 53, Capital Insurance and Surety & Co. Inc. vs.
Del Monte Motor Works, Inc., December 9, 2015; J. Bersamin
Ambiguity
Disqualification of Beneficiary
Concealment
Incontestability Clause
Premium Payment
Insurance Claim
Double Insurance
Rescission
Microinsurance
15. Regasco is refilling empty Shellane and Gasul cylinders with its
own product. What was committed?
There is unfair competition. It refers to passing off or
attempting to pass off upon the public of the goods or business
of one person as the goods or business of another with the end
and probable effect of deceiving the public.
Passing off (or palming off) takes place where the
defendant, by imitative devices on the general appearance of
the goods, misleads prospective purchasers into buying his
merchandise under the impression that they are buying that of
his competitors. Thus, the defendant gives his goods the general
appearance of the goods of his competitor with the intention of
deceiving the public that the goods are those of his competitor.
Republic Gas vs. Petron Corp., June 17, 2013, J. Peralta
Copyright
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35. What are the factors considered for the award of statutory
damages?
a. The nature and purpose of the infringing act;
b. The flagrancy of the infringement;
c. Whether the defendant acted in bad faith;
d. The need for deterrence;
e. Any loss that the plaintiff has suffered or is likely to suffer by
reason of the infringement; and
f. Any benefit shown to have accrued to the defendant by
reason of the infringement.
BANKING LAW
AMLA
36. Aside from financial institutions, who else are covered now by
AMLA (as amended by RA 10365)?
a. jewelry dealers in precious metals and precious stones for
transactions in excess of P1M;
b. company service providers which, as a business, provide
any of the following services to third parties:
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48. Can a bank officer be held for DOSRI violation when the bank
officer did not secure a loan in his own name, but was alleged
to have used the name of another person in order to indirectly
secure a loan from the bank?
Yes. The prohibition in Section 83 is broad enough to
cover various modes of borrowing. It covers loans by a bank
director or officer (like herein petitioner) which are made either:
(1) directly, (2) indirectly, (3) for himself, (4) or as the
representative or agent of others. It applies even if the director
or officer is a mere guarantor, indorser or surety for someone
else's loan or is in any manner an obligor for money borrowed
from the bank or loaned by it. The covered transactions are
prohibited unless the approval, reportorial and ceiling
requirements under Section 83 are complied with. The
prohibition is intended to protect the public, especially the
depositors, from the overborrowing of bank funds by bank
officers, directors, stockholders and related interests, as such
overborrowing may lead to bank failures. Soriano vs. People,
February 1, 2010, J. Del Castillo
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50. A father has a joint dollar account with his daughter in Citibank.
The daughter withdrew the funds and opened a new account
with China Bank. Can the father examine the same?
Yes. There is no issue as to the source of the funds. Mary
Margaret Dee declared the source to be Jose Gotianuy. There
is likewise no dispute that these funds in the form of Citibank US
dollar Checks are now deposited with China Bank. As the
owner of the funds unlawfully taken and which are undisputably
now deposited with China Bank, Jose Gotianuy has the right to
inquire into the said deposits. China Banking Corp vs. CA, 511
SCRA 110
51. The borrowers were given copies of the promissory notes after
their execution. Is there substantial compliance with the Truth in
Lending Act?
None. Section 4 of the Truth in Lending Act clearly
provides that the disclosure statement must be furnished prior to
the consummation of the transaction.
The rationale of this provision is to protect users of credit
from a lack of awareness of the true cost thereof, proceeding
from the experience that banks are able to conceal such true
cost by hidden charges, uncertainty of interest rates, deduction
of interests from the loaned amount. The law thereby seeks to
protect debtors by permitting them to fully appreciate the true
cost of their loan, to enable them to give full consent to the
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PDIC
57. Is there a trust receipt transaction when the entruster knew that
the goods are not intended to be sold?
None. The fact that the entruster bank knew even before
the execution of the trust receipt agreements that the
construction materials covered were never intended by the
entrustee for resale or for the manufacture of items to be sold is
sufficient to prove that the transaction was a simple loan and
not a trust receipts transaction. Hur Tin Yang vs. People, August
14, 2013, J. Velasco
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Letters of Credit
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63. Can the bank refuse payment because it will not be able to
collect from the buyer?
No. Under the Independence Principle, an issuing bank
assumes no liability or responsibility "for the form, sufficiency,
accuracy, genuineness, falsification or legal effect of any
documents, or for the general and/or particular conditions
stipulated in the documents or superimposed thereon". Thus, as
long as the proper documents are presented, the issuing bank
has an obligation to pay even if the buyer should later on refuse
payment. Hence, Klockner's refusal to pay carries no effect
whatsoever on HSBC's obligation to pay under the Letter of
Credit. To allow HSBC to refuse to honor the Letter of Credit
simply because it could not collect first from Klockner is to
countenance a breach of the Independence Principle. HSBC
vs. National Steel Corp., February 24, 2016, J. Jardeleza
64. What are the three transactions and three parties in a letter of
credit?
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65. What are the roles of the correspondent bank, notifying bank,
negotiating bank or confirming bank in a letter of credit?
A correspondent bank facilitates the ease of completing
the transactions. A correspondent bank may be a notifying
bank, a negotiating bank or a confirming bank depending on
the nature of the obligations assumed.
A notifying bank undertakes to inform the seller-
beneficiary that a letter of credit exists. It may also have the
duty of transmitting the letter of credit. As its obligation is limited
to this duty, it assumes no liability to pay under the letter of
credit.
A negotiating bank, on the other hand, purchases drafts
at a discount from the seller-beneficiary and presents them to
the issuing bank for payment. Prior to negotiation, a negotiating
bank has no obligation. A contractual relationship between the
negotiating bank and the seller-beneficiary arises only after the
negotiating bank purchases or discounts the drafts.
A confirming bank may honor the letter of credit issued by
another bank or confirms that the letter of credit will be
honored by the issuing bank. A confirming bank essentially
insures that the credit will be paid in accordance with the terms
of the letter of credit. It therefore assumes a direct obligation to
the seller-beneficiary. HSBC vs. National Steel Corp., February
24, 2016, J. Jardeleza
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