02 Reviewer Commercial Law Aquino

1

INTRODUCTION 1.

GENERAL CONCEPTS. 1.01. Commercial law has been defined as that branch of private law which regulates the juridical relations arising from commercial acts and according to which the questions or controversies which may arise therefrom are resolved (Vivante’s Institutiones, p. 3; Espejo de Hinojasa, p. 61 cited in Tolentino, Commentaries and Jurisprudence on the Commercial Laws of the Philippines, 6th Ed., Vol. 1, p. 1). a)

Traditionally, Commercial laws in the Philippines include laws governing the following: (1) commercial documents such as negotiable instruments, warehouse receipts, letters of credit and the like, (2) business organizations like corporations, single proprietorship and joint accounts, (3) commercial contracts like insurance or mortgage, (4) banking regulations, (5) insolvency, (6) securities, (7) intellectual properties, (8) public utilities and other activities or transactions involving commerce.

1.02. Commerce is the mass of acts of human life, which tend to the satisfaction of necessities by means of exchange or of the rendition of services, effected with a purpose of gain and falling within the domain of mercantile laws (ibid.). 2.

APPLICABLE LAWS. 2.01. Code of Commerce — This law was extended to the Philippines by Royal Decree of August 6, 1888. It 1

2

REVIEWER ON COMMERCIAL LAW

took effect on December 1, 1888. However, with the passage of the New Civil Code, only the following are still governed by the Code of Commerce: a)

Merchants, Commercial Registries, Book of Merchants, General Provisions on Commercial Contracts (Arts. 1-63);

b)

Joint Accounts (Arts. 239-243);

c)

Transfer of Non-Negotiable Credits (Arts. 347348);

d)

Overland Transportation (Arts. 349-379);

e)

Letters of Credit (Arts. 567-572); and

f)

Maritime Commerce (Arts. 573-869).

2.02. New Civil Code — The New Civil Code repealed the provisions of the Code of Commerce on: (1) Sales, (2) Partnership, (3) Agency, (4) Loan, (5) Guaranty, and (6) Deposit. Hence, the New Civil Code provisions now govern such contracts. The New Civil Code is likewise the primary governing law on Common Carriers. 2.03. Special Laws — Commercial laws include but are not limited to the following statutes: a)

Corporation Code of the Philippines (Batas Pambansa Blg. 68);

b)

Negotiable Instruments Laws (Act No. 2031);

c)

Insurance Code of the Philippines (Presidential Decree No. 1460 as amended);

d)

Financial Rehabilitation and Insolvency Act of 2010 (Republic Act No. 10142);

e)

Securities Regulation Code (Republic Act No. 8799);

f)

General Banking Law (Republic Act No. 8791);

g)

New Central Bank Act (Republic Act No. 7653);

INTRODUCTION

3

h)

Warehouse Receipts Law (Act No. 2137);

i)

Trust Receipts Law (Presidential Decree No. 115)

j)

Business Name Law (Act No. 3883);

k)

Chattel Mortgage Law (Act No. 1508);

l)

Public Service Law (Commonwealth Act No. 146);

m) Intellectual Property Code (Republic Act No. 8293). 3.

COMMERCIAL CONTRACTS. 3.01. Concept and Formalities. Contracts that are governed by the Code of Commerce are called commercial contracts. a)

In the absence of any requirement under the Code of Commerce or Special Law that certain formalities are required, commercial contracts are valid in whatever form they appear (Arts. 51 and 52, CC). Example: Joint Accounts.

b)

Contracts that are expressly required to be in writing under the Code of Commerce are: (1) Letters of Credit (Art. 267, CC), (2) Loans on Bottomry and Respondentia (Art. 720, CC), and (3) Charter Parties (Art. 652, CC).

3.02. Perfection. The general rule under the New Civil Code is that contracts are perfected upon the meeting of minds with respect to the object and the consideration. a)

In perfection by correspondence, the applicable rule is the Cognition Theory under which the contract is perfected the moment the offeror learns about the acceptance of his offer by the offeree (Art. 1409, NCC). Thus, Cognition Theory should apply to all consensual contracts that are governed by Commercial laws.

To my wife Felicitas, my children Macaria, Jocelyn, Jose, Jr., and Renato and their families Jose R. Sundiang

To my wife Bea and my children Leona Isabelle, Lean Carlo and Lauren Margaret Timoteo B. Aquino

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PREFACE TO THE FIFTH EDITION The last revision of this work was made when the Fourth Edition was reprinted in March 2010. While less than a year is normally too short to release a new edition, the passage of the Financial Rehabilitation and Insolvency Act of 2010 necessitated the revision of the present work. As a consequence of the same law, discussions on rehabilitation of corporations which were previously included in Part III are now included in the discussions on rehabilitation, insolvency and liquidation of all business organizations in Part V on Credit Transactions. The authors likewise took the opportunity to include new and important cases on other subjects as well as new rules like those pertaining to business names. This edition adheres to the basic aim of the previous editions — to present the core subjects of Commercial Law in a simplified but comprehensive manner. The structure of the book was purposely designed to help students review for the Bar Examinations. The authors extend their heartfelt gratitude to all those who used this book in the past ten years. The authors hope that this new edition will continue to be of help to students and Bar Reviewees. THE AUTHORS

v

vi

PREFACE This book aims to provide law students with materials for careful review of the fundamental principles, doctrines and rules on the cluster of laws that encompasses Commercial Law. Like similar books of its type, this book does not contain extended discussion of the statutory provisions or jurisprudence. It includes rules that are presented in outline form, concise statements of doctrinal pronouncements of the Supreme Court, summary of significant cases, sample bar examination problems and problems based on cases. However, since the book embodies what should be a student’s core knowledge of Commercial Law, it may be used not only by students who are preparing for the bar examinations but also as study guide of students who are taking Commercial Law subjects in law school, especially Commercial Law Review. The present edition incorporates new laws and jurisprudence. For instance, this work includes salient features of the Human Security Act of 2007, Civil Aviation Act of 2008 and the Universally Accessible Cheaper and Quality Medicine Act of 2008. New topics like the laws on real estate mortgage, salvage, and ship mortgage are now included. The authors re-arranged the different parts of the book without deviating from the general format of presentation of the materials. All laws and discussion involving credit transactions are now part of Part V of this volume. The authors, in the preparation of the present edition, are still guided by their belief that there is no such thing as exceedingly early preparation for the bar examinations. Indeed, such preparation should properly start when the law student embarks on his study of law. Every student should heed the vii

caution given by Professor Henry Ballentine who declared that students should not wait for the writing on the wall — “Thou art to be weighed in the balance by bar examiners, Woe unto thee if thou art found wanting.” THE AUTHORS

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CONTENTS

INTRODUCTION 1.

2.

3.

General Concepts....................................................................... 1.01. Commercial Law Defined. .............................................. 1.02. Commerce Defined. ......................................................... Applicable Laws ........................................................................ 2.01. Code of Commerce ........................................................ 2.02. New Civil Code ............................................................. 2.03. Special Laws ................................................................... Commercial Contract ................................................................ 3.01. Concept and Formalities .............................................. 3.02. Perfection of Contracts..................................................

1 1 1 1 1 2 2 3 3 3

PART I NEGOTIABLE INSTRUMENTS LAW 1. 2.

3. 4.

5. 6.

Definition of Negotiable Instrument ...................................... Requisites of Negotiability ..................................................... 2.01. Negotiation Defined ...................................................... 2.02. How Negotiability is Determined .............................. Governing Law .......................................................................... Functions of Negotiable Instruments ..................................... 4.01. Enumeration of Functions ............................................ 4.02. What is Legal Tender .................................................... 4.03. Coins as Legal Tender ................................................... Distinctive Features of Negotiable Instruments ................... Kinds of Negotiable Instruments ............................................ 6.01. Bill of Exchange ............................................................. 6.02. Promissory Note ............................................................ 6.03. Kinds of Bill of Exchange ............................................. 6.04. Kinds of Promissory Note ............................................ 6.05. Bill of Exchange treated as Promissory Note ............ 6.06. Distinctions ..................................................................... ix

5 5 6 6 6 7 7 7 8 8 8 8 8 9 9 10 10

7. 8.

9.

10. 11. 12. 13.

14.

15.

16. 17. 18.

6.07. Negotiability of Certain Documents ........................... Persons/Parties Involved ......................................................... Distinctions ................................................................................. 8.01. Negotiable and Non-Negotiable Instruments ........... 8.02. Negotiability and Assignability .................................. Requisites of Negotiability ....................................................... 9.01. In Writing signed by Maker or Drawer. ..................... 9.02. Unconditional Promise or Order ................................ 9.03. Sum Certain in Money .................................................. 9.04. When Payable ............................................................... 9.05. Payable to Order or Bearer ........................................... 9.06. Identification of Drawee ............................................... Omissions and Additional Provisions .................................. Transfer and Negotiation.......................................................... Holders ....................................................................................... Real and Personal Defenses ..................................................... 13.01. Distinctions .................................................................... 13.02. Forgery ............................................................................ 13.03. Complete and Incomplete Instruments...................... 13.04. Insertion of Wrong Date ............................................... 13.05. Material Alteration ........................................................ 13.06. Fraud .............................................................................. 13.07. Failure of, Absence of, or Illicit Consideration.......................................................... 13.08. Minority or Incapacity ................................................. 13.09. Prescription .................................................................... Secondary and Primary Liability ............................................ 14.01. Liability of Maker, Drawer, and Acceptor ................. 14.02. Warranties of Qualified and General Indorser .......... 14.03. Accommodation Party .................................................. How to Enforce Liability .......................................................... 15.01. Enforcement of Primary Liability................................ 15.02. Enforcement of Secondary Liability ........................... 15.03. Presentment for Payment ............................................. 15.04. Presentment for Acceptance......................................... 15.05. Acceptance ..................................................................... 15.06. Notice of Dishonor ........................................................ 15.07. Protest ............................................................................. 15.08. Acceptance for Honor ................................................... 15.09. Payment for Honor........................................................ Bills-in-Set ................................................................................... Discharge .................................................................................... Checks ......................................................................................... x

11 12 13 13 13 14 14 15 18 19 21 24 24 27 32 39 40 40 45 48 49 49 50 51 52 53 53 54 55 57 57 57 59 61 62 64 67 68 69 70 71 72

PART II INSURANCE CODE 1. 2. 3. 4.

5. 6.

7.

8. 9. 10. 11.

12.

13. 14. 15. 16. 17. 18. 19.

Definitions .............................................................................. Characteristics of Insurance Contract.................................... Elements of Insurance .............................................................. Perfection of Insurance Contract ............................................. 4.01. Cover Notes ................................................................ 4.02. The Policy (Contents, Cancellation, Kinds, Rider) ...................................................... Types of Insurance Contracts ................................................... Parties ......................................................................................... 6.01. Insurer .............................................................................. 6.02. Insured ............................................................................. 6.03. Beneficiary ........................................................................ Insurable Interest ...................................................................... 7.01. Basic Concepts ............................................................... 7.02. Property and Life Insurance Distinguished .............. 7.03. Mortgagor and Mortgagee .......................................... 7.04. Insurable Interest Retained by Mortgagor ................ 7.05. Assignor and Beneficiary ............................................ 7.06. Expectancy ...................................................................... 7.07. Effect of Change of Interest. ........................................ Risks Insured Against ............................................................... Premium ..................................................................................... Transfer of Policy ....................................................................... Devices for Ascertaining and Controlling the Risk and Loss ............................................................. 11.01. Primary Concerns ......................................................... 11.02. Devices Defined ............................................................ 11.03. Concealment ............................................................... 11.04. Representation................................................................ 11.05. Warranty.......................................................................... 11.06. Warranty and Representation Distinguished ............ 11.07. Other Insurance Clause .............................................. Incontestability Clause ............................................................. Double Insurance and Reinsurance ........................................ Loss and Claims Settlement ..................................................... Prescription ................................................................................ Right of Subrogation ................................................................. Marine Insurance ..................................................................... Fire Insurance ........................................................................... Casualty Insurance .................................................................... xi

75 76 78 81 83 84 87 88 88 89 90 92 92 97 99 102 104 105 105 106 107 109 110 110 110 111 116 116 117 118 120 122 126 130 131 132 144 146

20. 21. 22. 23. 24.

Compulsory Motor Vehicle Liability Insurance .................... Suretyship ................................................................................... Life Insurance ............................................................................. Variable Contract ...................................................................... Powers of the Insurance Commisioner ..................................

148 154 154 155 155

PART III BUSINESS ORGANIZATIONS A.

BASIC TYPES OF BUSINESS ORGANIZATIONS ............... 1. Individuals and Sole Proprietorship ............................. 1.01. Business Name Law ............................................. 1.02. Merchants under Code of Commerce ............... 2. Partnerships ...................................................................... 3. Joint-Accounts (Cuentas en Participacion) ...................... 4. Business Trust .................................................................. 5. Joint Venture ..................................................................... 6. Cooperatives .....................................................................

159 159 159 161 165 165 166 166 167

B. CORPORATION CODE OF THE PHILIPPINES ...................... 1. Corporation Defined ....................................................... 1.01. Enumeration of Attributes .................................. 2. Discussion of Attributes ................................................. 2.01. Artificial Being/Separate Personality ............... 2.02. Created by Operation of Law ............................ 2.03. Right of Succession .............................................. 2.04. Powers, Attributes and Properties .................... 3. Classifications and Distinctions ..................................... 4. Advantages and Disadvantages of Corporate Form .. 5. Components of a Corporation ....................................... 6. Formation .......................................................................... 6.01. Articles of Incorporation ..................................... 6.02. Amendment of Articles of Incorporation ......... 6.03. Suspension and Cancellation of Certificate .... 7. By-Laws ............................................................................ 8. Powers of a Corporation ................................................. 8.01. Kinds ..................................................................... 8.02. Express Powers .................................................... 8.03. Ultra Vires Acts .................................................... 8.04. Exercise of Powers by Board, Officers and Stockholders ........................................ 8.05. Acquisition of its own Shares ............................ 8.06. Dividends .............................................................

167 167 167 168 168 178 180 180 180 186 187 191 191 195 196 196 198 198 199 200

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202 207 207

8.07. 8.08.

Sale of All or Substantially All Properties ........ Increase or Decrease of Authorized Capital ........................................................... Directors and Officers .................................................... Trust Fund Doctrine ....................................................... Stockholders and Shares ................................................ 11.01. Subscription Contracts ....................................... 11.02. Shares of Stocks ................................................... Certificate of Stock .......................................................... Transfer of Shares ............................................................ Rights and Obligations of Stockholders ...................... 14.01. Enumeration ......................................................... 14.02. Suits by Stockholders/Members ....................... 14.03. Pre-emptive Right ................................................ 14.04. Right to Vote ......................................................... 14.05. Appraisal Right .................................................... Collection of Unpaid Subscription ................................ Books of the Corporation ................................................ Merger vs. Consolidation .............................................. Non-Use of Corporate Charter ..................................... Dissolution ........................................................................ Liquidation ....................................................................... Foreign Corporations ...................................................... Close Corporations .......................................................... Non-Stock Corporations ................................................. Religious Corporations ...................................................

215 215 224 228 228 230 236 236 239 239 241 242 242 244 245 248 249 252 253 256 256 260 262 265

C. SECURITIES REGULATIONS CODE (SRC) ............................. 1. Powers and Function of SEC .......................................... 1.01 Transferred Jurisdiction to RTC ........................ 2. Securities Defined ........................................................... 3. Definition of Terms ......................................................... 4. How Public is Protected ................................................. 5. Rules on Registration of Securities ................................ 6. Exempt Securities............................................................. 7. Exempt Transactions........................................................ 8. Grounds for Revocation of Registration ....................... 9. Manipulation of Security Prices..................................... 10. Put, Call and Straddle ..................................................... 11. Unlawful Sale and Purchase of Securities .................... 12. Insider ................................................................................ 13. Tender Offer ...................................................................... 14. Margin Trading ................................................................ 15. Violations of SRC .............................................................

267 267 269 270 270 273 274 275 276 279 280 282 282 283 285 288 289

9. 10. 11.

12. 13. 14.

15. 16. 17. 18. 19. 20. 21. 22. 23. 24.

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213

PART IV BANKING LAWS 1.

Banks Defined................................................................... 1.01. Nature of Business ............................................... 1.02. Authority to Incorporate and Operate .............. Classification of Banks ................................................... Functions of Banks ........................................................... Deposit Function .............................................................. 4.01. Deposit Governed by Law on Simple Loan................................................. 4.02. Depositors ............................................................. 4.03. Kinds of Deposit .................................................. 4.04. Other Accounts .................................................... 4.05. Secrecy of Bank Deposits ................................... 4.06. Garnishment of Deposits .................................... 4.07. Deposit Insurance with PDIC ............................ 4.08. Unclaimed Balances Law ................................... Loan Function of Banks .................................................. 5.01. Basic Rules/Restrictions ..................................... 5.02. DOSRI Accounts .................................................. 5.03. Collaterals ............................................................. Prohibited Acts of Borrowers ......................................... Ownership of Banks ........................................................ 7.01. Foreign Ownership .............................................. 7.02. Filipino Stockholdings ........................................ 7.03. Family Groups ...................................................... Directors and Officers ..................................................... Liquidity and Security Regulations .............................. Ownership of Real Property........................................... Loan to Banks ................................................................... Conservatorship ............................................................... Receivership and Liquidation ........................................ Trust Operations............................................................... The Bangko Sentral ng Pilipinas ....................................

290 291 292 292 294 295

RELATED LAWS ....................................................................... 1. Anti-Money Laundering Act ......................................... 2. Truth in Lending Act ...................................................... 3. Consumer Act .................................................................. 4. Human Security Act of 2007 ...........................................

327 327 332 335 337

2. 3. 4.

5.

6. 7.

8. 9. 10. 11. 12. 13. 14. 15. A.

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295 296 296 298 298 302 303 305 306 306 307 309 311 311 311 312 313 313 315 316 317 317 318 322 323

PART V CREDIT TRANSACTIONS A.

WAREHOUSE RECEIPTS LAW .............................................. 1. Definitions ......................................................................... 2. Functions of Documents of Title .................................... 3. Negotiability of Warehouse Receipts ............................ 4. Formalities ....................................................................... 5. Negotiation of Warehouse Receipts .............................. 6. Effects of Negotiation ...................................................... 7. Persons Who May Negotiate ......................................... 8. Warranties ........................................................................ 9. Non-Negotiable Receipts ................................................ 10. Defense for Non-Delivery or Misdelivery ................... 11. Warehouseman’s Lien ..................................................... 12. Adverse Claimant ........................................................... 13. Attachment or Levy .........................................................

341 341 342 342 342 344 345 348 349 350 351 354 355 355

B. C.

GENERAL BONDED WAREHOUSE LAW ........................... LETTERS OF CREDIT ............................................................... 1. Definition .......................................................................... 2. Governing Laws ............................................................... 3. Parties ............................................................................... 4. Independent Contracts.................................................... 4.01. Independence Principle ...................................... 4.02. Banks Deal with Documents Only .................... 4.03. Fraud Exception .................................................. 5. Kinds ..................................................................................

356 357 357 357 358 359 359 360 360 360

D. E. F.

TRUST RECEIPTS LAW ........................................................... BULK SALES LAW.................................................................... MORTGAGE .............................................................................. 1. Common Requisites......................................................... 2. Real Estate Mortgage ....................................................... 3. Chattel Mortgage .............................................................

361 367 368 368 369 374

G. H.

RECTO LAW .............................................................................. FINANCIAL REHABILITATION AND INSOLVENCY ACT OF 2010 ................................................................... 1. Policies and Definitions .................................................. 2. Excluded Debtors ............................................................. 3. Rehabilitation ................................................................... 4. Out-of-Court Rehabilitation ...........................................

378

xv

379 379 384 384 391

5. 6. 7. 8. 9.

Suspension of Payment ................................................... Liquidation of Individual Debtor .................................. Liquidation Process ......................................................... Distribution of Assets (Concurrence and Preference of Credits) ................................................................ Cross-Boarder Insolvency ...............................................

392 396 398 400 405

PART VI TRANSPORTATION AND PUBLIC UTILITIES A.

B.

GENERAL CONCEPTS ............................................................ 1. Concept of Common Carriers ........................................ 1.01. Test ......................................................................... 1.02. Common Carriers and Private Carriers Distinguished ................................. 2. Governing Laws ............................................................... 3. Extraordinary Diligence and Presumption of Negligence .......................................................... 4. Defenses of Common Carriers ....................................... 5. Duration of Liability ....................................................... 6. Liability for Acts of Employees and Passengers ......... 7. Limiting Stipulations ....................................................... 7.01. Stipulation Reducing Degree Diligence............ 7.02. Valid Stipulations ................................................. 7.03. Invalid Stipulations ............................................. 7.04. Carriage of Goods by Sea Act (COGSA)........... 7.05. Purposes ................................................................ 8. Registered Owner Rule and Kabit System ................... 9. Concurrent Causes of Action ......................................... 10. Passenger’s Baggages ..................................................... 11. Successive Carriers ..........................................................

415 416 420 424 425 425 425 426 426 427 428 429 431 431

MARITIME LAW ....................................................................... 12. General Concepts ........................................................... 12.01. Maritime Law Defined...................................... 12.02. Vessel Defined ................................................... 13. Limited Liability Rule ..................................................... 14. Maritime Protest............................................................... 15. Collision ........................................................................... 16. Arrival Under Stress ........................................................ 17. Persons Involved in Maritime Commerce .................. 17.01. Ship Agents ...........................................................

432 432 432 432 433 435 435 437 437 437

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407 407 407 410 414

18. 19. 20. 21. 22. 23.

24.

C.

D.

17.02. Captains and Masters .......................................... 17.03. Officers and Crew ................................................ 17.04. Supercargoes ........................................................ 17.05. Desertion .............................................................. General and Particular Average .................................... Charter Party .................................................................... Bill of Lading ................................................................... Loans on Bottomry and Respondentia ......................... Procedure and Prescriptive Period for Claims ........... Ship Mortgage Decree .................................................... 23.01. Who may Constitute Mortgage ......................... 23.02. Formal Requirements .......................................... 23.03. Arrest and Foreclosure ........................................ 23.04. Concurrence and Preference of Credits ............ 23.05. Maritime Lien ....................................................... Salvage Law ...................................................................... 24.01. Definition of Salvage .......................................... 24.02. Requirements for Compensation ....................... 24.03. Amount of Reward or Compensation .............. 24.04. Persons Entitled to Reward ................................

WARSAW CONVENTION AND CIVIL AVIATION LAWS ............................................................ 25. Warsaw Convention ........................................................ 25.01. Transportation by Air Defined ........................... 25.02. Damage or Injury for Which Carrier is Liable .......................................................... 25.03. Limit of Liability of Carrier ................................ 25.04. Tort Liability ......................................................... 25.05. Jurisdiction/Venue .............................................. 26. Civil Aviation ................................................................... 26.01. Definitions ............................................................. 26.02. Inspection of Aircraft ........................................... 26.03. Nationality and Ownership of Aircraft ............ PUBLIC SERVICE ACT............................................................. 27. Public Service Act ............................................................ 27.01. Agencies that Replaced the Public Service Commission ..................................... 27.02. Conditions for Issuance of Certificate of Public Convenience and Necessity (CPCN) ................................. 27.03. Certificate of Public Convenience (CPC) as Property .................................................... xvii

437 438 439 439 439 444 444 445 446 448 448 449 450 450 451 452 452 452 452 453 453 453 454 454 454 455 456 456 457 458 460 461 461 461

462 462

27.04. CPC and CPCN Distinguished .......................... 27.05. Prior Operator Rule ............................................. 27.06. Grounds for Revocation of Certificate .............. 27.07. Notice and Hearing ............................................. 27.08. Franchise Defined ................................................ 27.09. Public Utility Defined.......................................... 27.10. Rate Regulation .................................................... 27.11. Foreign Equity ...................................................... 27.12 Non-Exclusivity of Franchise ..............................

462 462 463 463 464 465 466 468 469

PART VII INTELLECTUAL PROPERTY CODE 1. 2. 3.

4. 5.

6.

State Policies .................................................................... Kinds of Intellectual Property ........................................ International Law Related Provisions........................... 3.01. Reciprocity ............................................................ 3.02. National Treatment .............................................. 3.03. Most-Favoured-Nation Treatment..................... Intellectual Property Office ............................................ Copyright .......................................................................... 5.01. Definitions ............................................................. 5.02. Civil Code Provisions .......................................... 5.03. When Rights are Conferred ................................ 5.04. Who Owns the Copyright................................... 5.05. Duration of Copyright......................................... 5.06. Copyrightable Objects ......................................... 5.07. Unprotected Works .............................................. 5.08. Rights of Authors ................................................. 5.09. Publisher’s Rights ................................................ 5.10. Acts that Do Not Infringe Copyright ................ 5.11. Fair Use.................................................................. 5.12. Importation for Personal Purposes ................... 5.13. Infringement ......................................................... Trademarks ....................................................................... 6.01. Functions ............................................................... 6.02. Acquisition of Marks ........................................... 6.03. Marks that Cannot be Registered ...................... 6.04. Limitations ............................................................ 6.05. Internationally Well-Known Marks .................. 6.06. Rights Conferred .................................................. 6.07. Duration ............................................................... xviii

470 471 473 473 473 473 474 475 475 475 476 476 477 478 479 481 482 482 484 484 485 488 488 488 490 491 492 492 493

7.

8.

6.08. Infringement ......................................................... 493 6.09. Protection of Tradename ..................................... 499 6.10. Unfair Competition.............................................. 499 6.11. Inter-Partes Cases................................................. 500 Patents ............................................................................... 504 7.01. Definitions, Requisites and Purposes ............... 504 7.02. Classes of Patentable Inventions ....................... 506 7.03. Non-Patentable Inventions ................................. 506 7.04. Person Entitled to Right ...................................... 507 7.05. Limitations of Patent Rights ............................... 507 7.06. Prejudicial Disclosure .......................................... 509 7.07. Non-Prejudicial Disclosure ................................. 509 7.08. Term of a Patent ................................................... 509 7.09. Infringement ......................................................... 509 7.10. Compulsory Licensing ........................................ 511 7.11. Concept of Divisional Applications .................. 513 Trade Secrets ..................................................................... 515 8.01. Applicable Laws................................................... 516 8.02. Factors.......................................................................... 516

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