Bar Exam Questions in Mercantile Law 75-89

1975 BAR EXAMINATION

I.

X makes a promissory note payable to bearer, and delivers the same to Y. Y indorses it to Z in this manner: “Pay to Z, sgd. Y”. Later, Z withot indorsing the promissory note trans!ers and delivers the same to ". the note is sbse#ently dishonored by X. $ay " hold X liable% Answer:

Yes, " may hold X liable. &in'e the instrment is payable to bearer on its !a'e, the spe'ial indorsement o! Y did not a!!e't the right o! the holder to negotiate it by mere delivery. (he trans!er and delivery to " by Z, there!ore 'onstitted a valid negotiation, vesting in " all the rights o! a holder. " 'an there!ore hold Y liable. II.

)an a 'reditor be 'ompelled to a''ept payment all in *+'entavo )entral -ank 'oins o! a !orty P/0.001 peso debt% 23plain brie!ly. Answer:

4nder the )entral -ank 5't, the 'reditor in this 'ase 'an be 'ompelled to a''ept payment be'ase it is made in legal tender. 6or denominations !rom 70 'entavos to one peso, 'oins shall be legal tender p to P+0.00. Note:

)oins are legal tender only p to 'ertain amont. 6or denominations !rom P7.00 and above, 'oins shall be legal tender p to P7,000. 6or denominations !rom *+ 'entavos and below, 'oins shall be legal tender p to P700. III.

(o a''ommodate $, drawer o! a promissory note, 5 signed as indorser thereon, and the instrment was negotiated to 8, a holder !or vale. 5t the time 8 took the instrment, he knew 5 to be only an a''ommodation party. 9hen the promissory note was not paid, and 8 dis'overed $ to be withot !nds, he sed 5. 5 pleads in de!ense the !a't that he had indorsed the instrment withot re'eiving vale there!or, and the !rther !a't that 8 knew at the time he took the instrment that 5 had not re'eived any vale or 'onsideration o! any kind !or his indorsement. Is 5 liable% "easons. Answer:

5ssming that thereInstrments has been de presentment and noti'e o! dishonor, 5 is liable to 8. 4nder the egotiable Law, an a''ommodation party shall be liable to a holder !or vale althogh the latter may have known that he was merely an a''ommodation party. La'k or absen'e o! 'onsideration is not de!ense available to an a''ommodation party. I;.

5 postal money order was re'eived by a bookstore as part o! its sales re'eipts, and was later deposited with a bank. (he bank 'leared the money order with the -rea o! Posts, and re'eived its vale o! P*00.00. abot !ive months later, the $anila Post D0*1 X;II.

- borrowed in a wri tten instrment !rom ), a !rien d, the sm o! P7 ,000 with a diam ond ring given in pledge as se'rity !or the debt. 8ow m'h is the ma3imm interest per annm that ) 'an 'harge - !or the loan o! money% "eason. Answer:

(he ma3imm interest per annm that ) 'an 'harge - !or the loan o! money with a pledge is 7/J, sin'e ) is merely a !riend and not a pawnbroker. Note:

(he 4sry Law has been legally none3istent prsant to )- )ir'lar >0+H hen'e, interest 'an now be as lender and borrower may agree pon. X;III. 5 negotiable warehose re'eipts was indorsed by X in !avor o! Y presents the re'eipt to 9, the warehose man, bt 9 re!ses to trn over the goods to Y, wold X be liable% 9old yor answer be the same i! the goods are a'tally given bt they trn ot to be n!it !or the parti'lar prpose intended% 23plain. Answer:

X is not liable to Y i! 9 shold re!se to trn over the goods to Y. an indorser o! a negotiable warehose re'eipt does not warrant that the warehoseman will per!orm his obligation. 8owever, s'h an indorser makes some warranties, among whi'h is that the goods are mer'hantable and !it !or the parti'lar prpose intended. (here!ore, X wold be liable to Y i! 9 delivers the good bt s'h goods are !ond n!it !or the parti'lar prpose intended. Alternative Answer :

5n indorser o! a negotiable, X is not liable to Y i! 9 shold re!se to trn over the goods to Y. 5n indorser o! a negotiable warehose re'eipt is only liable !or brea'h o! his warranties whi'h does not in'lde this parti'lar 'ase. I! the goods are a'tally given by the warehose man to Y, bt said goods trn ot to be n!it !or the parti'lar prpose intended, X will not be liable to Y, in as m'h as there is a warranty on the part o! X regarding this matter in whi'h the goods trn ot to be n!it !or the parti'lar prpose intended. 5lthogh there is s'h a warranty in the law regarding goods, yet that warranty applies e3'lsively to a 'ase where the warranty wold be present i! the goods were dire'tly sold withot any warehose re'eipt.

XIX.

I! today a pers on is gra nted a 'opyright !or a book , !or how lo ng will the 'opyright be valid% I! said person ses a psedonym, how wold this a!!e't the length o! the 'opyright% Answer:

5 'opyright endres dring the li!etime o! the 'reator and !or +0 years a!ter his death. In 'ase he ses psedonym, the 'opyright shall last ntil the end o! +0 years !ollowing the date o! the !irst pbli'ation o! the work. XX.

9hom doe s the assignee in solven'y representCthe deb tor, the 're ditors, the 'ort, et'% )an said assignee in insolven'y take possession o! the assets o! the 'onGgal partnership% Answer:

(he assignee in insolven'y represents the insolvent debtor, the nse'red 'reditors, and se'red 'reditors who as allowed to prove their 'laims and the 'ort whi'h has 'ontrol over him. Provision o! the )ivil )ode **DK states that: &o long as the 'onGgal partnership or absolte 'ommnity sbsists, its property shall not be among the assets to be taken possession o! by the assignee !or the payment o! the insolvent debtor=s obligation, e3'ept inso!ar as the latter have redonded to the bene!it o! !amily. I! it is the hsband who is insolvent, the administration o! the 'onGgal partnership or absolte 'ommnity may, by order o! the 'ort, be trans!erred to the wi!e or to a third person other than the assignee.

1976 BAR EXAMINATION

Ia.

)an a 'orporation validly 'hange its 'orporate name nder its general power to amend its arti'les o! in'orporation% Foes a 'hange in the name o! a 'orporation reslt in its dissoltion% 23plain yor answer. Answer:

Yes, a 'orporation may valid ly 'hange its name nder its gener al power to amend its arti'les o! in'orporation in a''ordan'e with &e'tion 7K o! the )orporation Law. &in'e there is no restri'tion in said se'tion relating to 'hange o! name, there is no reason why a 'orporation 'annot 'hange its name as long as it !ollows the pro'edre laid down by law. (he 'hange in name does not reslt in its dissoltion, sin'e there is no 'hange in its being. @st as a natral person does not 'ease to e3ist de to 'hange o! name, so is the 'orporate e3isten'e not a!!e'ted by a 'hange in 'orporate name. Ib.

X !iled a 'omplaint with the &2) alleging that "ed!ield, In'. had violated the provisions o! the )orporation Law. (he &2) seeks to inspe't the books o! the )orporation. "ed!ield, In'. obGe'ted to the inspe'tion o! its books by the &2) on the grond that X, the 'omplainant, is not a sto'kholder o! the 'orporation. Fe'ide with reasons. Answer:

(he &2) may inspe't the books o! any 'orporation nder its Grisdi'tion in the 'orse o! any investigation it may 'onsi der ne'essary !or the en!or'ement o! the )orporation Law. It 'an do this even on its own initiative, and ths it shold not matter whether the 'omplainant is a sto'kholder or not. IIa

Pedro "eyes applied !or !ire insran'e on his hose. In his appli'ation, it was asked the !ollowing #estion: “Is the hose insred with another Insran'e )ompany% I! so, !or how m'h%” 8is answer was “o”. (he !a't, however, is that the hose had been insred with the 6E4 !or P700,000.00. the appli'ation was approved and made a part o! the poli'y. &bse#ently, a !ire o''rred in a neighboring hose, and spread to the hose o! Pedro "eyes whi'h was 'ompletely brned. Femand !or payment having been re!sed by the insrer, Pedro "eyes !iled a 'omplaint. $ay he re'over% "eason. Answer:

o, Pedro "eyes may not re'over. 8e was gilty o! 'on'ealment or misrepresentation o! a material !a't. (he !a't o! the e3isten'e o! the other insran'e is material be'ase had he answered trth!lly, the insrer wold probably have 'harged him higher premim, or wold have made !rther in#iries, or wold have imposed some other 'onditions in the poli'y to prote't its interest. (he e3isten'e o! a large amont o! insran'e in'reases the moral haard or the temptation to 'ommit arson. )on'ealment o! a material !a't is a grond !or res'ission and is a valid de!ense o! an insrer in an a'tion based on the poli'y. IIb

5 insred his ho se against loss by !ire !o r P700,000.00. (he po li'y provides that t he insrer shall be liable “i! the property insred shall be damaged or destroyed by !ire a!ter payment o! premim, at anytime !rom, !rom @ne 7+, 7>A? to @ne 7+, 7>AA.” (he poli'y

was delivered to 5 on @ne 7/, 7>A?. Instead o! paying the premim in 'ash, 5 issed a promissory note dated @ne 7+, 7>A?, !or the amont o! premim, payable within D0 days. (he note was a''epted. , 7>A?, the property insred was brned. (he insrer re!sed to pay on the grond that the premim had not been paid, and the note did not have the e!!e't o! payment as its vale had not been realied at the time the hose was brned. Fe'ide with reasons. Answer:

&in'e the 'ase given took pla'e a!ter the e!!e'tivity o! the Insran'e )ode, it mst be governed by its provisions. &e'tion AA thereo! provides: “otwithstanding any agreement to the 'ontrary, no poli'y or 'ontra't o! insran'e issed by an insran'e 'ompany is valid and binding nless and ntil the premim thereo! has been paid” )onsidering that this 'ited provision repla'es &e'tion A* o! old Insran'e 5't e3pressly permitting the granting o! 'redit e3tension, the only 'on'lsion is that the lawmaking power intended by the amendment to disallow any agreement postponing payment o! premim, in'lding a grant o! 'redit e3tension. (he issa n'e o! a promissory note postpones payment by granting 'redit e3tension. (here!ore, the insrer is not liable nder this e3press provision o! the new Insran'e )ode. (he 'ase o! Capital Insurance  Surety Co. v. Pla stic Era Co whi'h held that a''eptan'e o! a promissory note 'onstittes waiver o! the stiplation that the insrer will be liable only a!ter the payment o! premim and that in the absen'e o! stiplation as to mode o! payment, a promissory note 'onstittes payment, took pla'e be!ore the Insran'e )ode 'ame into e!!e't and was based on &e'tion A* o! the old Insran'e 5't. It 'an there!ore not be made appli'able to the given 'ase. IIIa.

$onsato, In' drew a 'he'k !or P+,000.00 payable to Fae, In'. drawn against the $anila -ank. (he 'he'k was indorsed and delivered to $artel and )o., whi'h in trn deposited the 'he'k in its 'rrent a''ont with the P-. (he 'he'k was 'leared in de 'orse, and $anila -ank paid P- the amont o! the 'he'k. (wenty days later, it was dis'overed that the signatre o! Fae, In'. was !orged. P- paid $anila -ank and noti!ied $artel and )o. that it had debited its a''ont with the 'orresponding amont. 9ho, as between $artel and )o. and P-, shold bear the loss% Answer:

$artel and )o. shold bear the loss !or two reasons. 6irst, in depositing the 'he'k in itsthat a''ont with the P-, mst haveone, indorsed to the P-. that 5ssming the endorsement wasit a general $artelthe as'he'k endorser warranted the instrment is genine, and valid and sbsisting at the time o! his endorsement. It is there!ore liable !or brea'h o! its warranties. &e'ond, by depositing the 'he'k with the P-, as between it and the P-, the latter merely be'ame a 'olle'ting agent o! $artel. 5ny liability arising ot o! the 'he'k is there!ore 'hargeable by the agent, P-, to the prin'ipal, $artel and )o. !Great Eastern Life Insurance Co. v. "ong#ong  S$ang$ai Ban#% /D Phil. ?A> and &epu'lic v. E'rada% ?+ &)"5 ?K0( IIIb.

5 pr'hased some mer'handise !rom - !or P7,000.00. ot having any 'ash, 5 o!!ered to pay in 'he'k. - re!sed to a''ept the 'he'k nless it is indorsed by X. X endorsed 5=s 'he'k, and -, knowing that X had not re'eived vale !or indorsing the 'he'k, a''epted it. 4pon matrity, - presented the 'he'k !or payment. Payment was re!sed !or la'k o! !nds. - gave noti'e o! dishonor, in a''ordan'e with law to X. X re!sed to pay. Is X liable to -% "easons.

Answer:

Yes, X is liable to -. X, as a''ommodation indorser, is liable to a holder !or vale althogh the latter may know that he is a mere a''ommodation party. - is a holder !or vale. X as indorser agreed to pay shold the 'he'k be dishonored pon de presentment, provided he is given a noti'e o! dishonor. X is there!ore liable to -. &e's. *> and ??, IL and )ng *iong v. *ing, ** &)"5 A7D1 I;a.

5 was granted by the -oard o! (ransportation a 'erti!i'ate o! pbl i' 'onv enien'e to operate +0 provin'ial bses, plying between Ilo'os orte and $anila passing throgh "ial 5vene 23tension then right on Foroteo @ose. -e'ase o! tra!!i' 'ongestion between the hors o! A and > o='lo'k in the morning, and / to K o='lo'k in the evening, a mni'ipal ordinan'e was passed prohibiting provin'ial bses !rom entering $anila on those hors bt allowing them to se one shttle bs !or every + bses. 5 'hallenged the validity o! the ordinan'e, on the grond that it in!ringes on his 'erti!i'ate o! pbli' 'onvenien'e, and that he had a'#ired a vested right to enter $anila at anytime o! the day, thr a!orementioned rote. Fe'ide with reasons. Answer:

(he ordinan'e is valid. 4nder its 'harter, the )ity o! $anila has the power to reglate the se o! its streets. (his 'harter is a spe'ial law and there!ore prevails over the Pbli' &ervi'e 5't. )onse#ently, the power o! the -, any stiplation in an obligation 'ontra'ted in the Philippines whi'h obliges payment in Philippine 'rren'y is de'lared against pbli' poli'y and is nll and void.

;IIa. $ay the !ollowing be de'lared insolvernt% 71 $arried womanH *1 PartnershipH D1 Insane person 23plain yor answer. Answer:

71 Yes, a married woman may be de'lared insolvent in respe't to her own debts. *1 4nder the Insol ven'y Law, a partnership may be de'lared insolvent, either in a volntary or involntary insolven'y pro'eeding. D1 5n insane person 'an be de'lared ins olvent in involntary pro'eedings as long as his interests are prote'ted by a dly appointed gardian. 8e 'annot however !ile a petition !or volntary insolven'y be'ase he la'ks legal 'apa'ity to a't. ;IIb. 5 broght an a'tion against - !or sm o! money. &bse#ently - was de'lared insolvent in an insolven'y pro'eeding. Yo are a 'reditor o! -, what shold yo do in 'onne'tion with the a'tion broght by 5 against - to prote't yor interest% "easons. Answer:

I wold !ile an appli'ation !or the sspension o! the pro'eedings o! the 'ase broght by 5 against -, sin'e the 'laim is nse'red. &e'tion 7K, Insolven'y Law1 ;IIIa. 71 9hat is an n'laim ed balan'e within the meaning o! the 4n'l aimed -alan'e Law% *1 9hat is the dty o! the bank with respe't to the n'laimed balan'es% D1 In general, what shold the government do with respe't to the n'laimed balan'es% Answer:

(he 4n'laimed -alan'es Law was e3'lded !rom the s'ope o! the e3amination #estions, by e3press statement in the 'ir'lar sent to all deans.1 ;IIIb. the )ity 6is' al o! $anila re#ired the $anila -anking )orporation to prod'e at a hearing the re'ords o! bank deposits o! 5l!redo &antos. (he $anila -anking )orporation re!sed, alleging that dis'losre o! bank deposits is prohibited by ".5. o. 7/0+. (hreatened with prose'tion, the )orporation !iled an a'tion !or de'latory Gdgment. $ay the 'ort 'ompel the $anila -anking )orporation to dis'lose the bank deposits o! 5l!redo &antos% Answer:

4nder the law, all deposits with banks are absoltely 'on!idential and may not be in#ired into by any government o!!i'ial e3'ept pon written permission o! the depositor, or in 'ases o! impea'hment, or pon order o! a 'ompetent 'ort in 'ases o! bribery, dereli'tion o! dty o! pbli' o!!i'ials, or in 'ases where the money deposited is the sbGe't matter o! litigation. 4nless the 'ase o! 5l!redo &antos 'omes nder one o! these e3'eptions, the 'ort 'annot 'ompel the $anila -anking )orp., to dis'lose his bank deposits. &e'tion *, ".5. 7/0+1 IXa.

X applies !or reg istration in his !a vor the tr adename “Loving )are” !or a hair dye on the grond that he has been sing said tradename !or almost D years be!ore !iling his appli'ation. Y opposes the appli 'ation on the grond that he has been sing the

tradename “Loving )are” with the same design !or hair pomade whi'h is registered in his name sin'e 7>?D. X replied that althogh the said trademark was registered in Y=s name it was however, !or a di!!erent arti'le. )an X=s appli'ation be sstained% "easons. Answer:

X=s appli'ation 'annot be sstained. 5lthogh the trademark he applied !or is !or a di!!erent arti'le, hair dye and hair pomade are both preparations !or hair grooming, and the se o! the same mark !or both is likely to 'on!se or de'eive pr'hasers as to the srcin and sor'e o! the goods. IXb.

Is a letter o! 'redit a 'ommer'ial transa'tion% 23plain yor answer. Is it governed by the IL% "eason. Answer:

Yes, it is a 'ommer'ial transa'tion be'ase it is 'overed by the )ode o! )ommer'e, and a''ompanies a 'ommer'ial transa'tion. It is not a negotiable instrment be'ase it is not !or a sm 'ertain in money and is not payable to order or to bearer bt is issed in the name o! a spe'i!ied person. Xa.

In a 'ase where three persons 'laim the right to possession o! 'ertain goods stored in a warehose, what shold the warehoseman do% Answer:

8e shold re#ire the 'laimants to interplead, either in an a'tion broght against him !or nondelivery or in an srcinal sit broght by him. &e'tion 7A, 9arehose "e'eipts Law1. Xb.

9hen may a warehoseman be liable !or an y loss or inG ry to th e goods stored in his warehose althogh he is not negligent% 5nswer: 8e may be liable in the !ollowing 'ases: 71 9here he has e3pressly agreed to be liab le !or any loss even whe re he is not negligentH or *1 I! the warehoseman has and violated thethem 'ontra't, like when goods in a parti'lar pla'e stores in another pla'eH he or agrees to store the D1 9here the loss takes pla'e a!ter the warehoseman 'onverted the goods.

1977 BAR EXAMINATION

Ia.

$aria, ** ye ars o! age, wi!e o! @a ime, wants to emb ark in the pr od'tion and e3port o! handi'ra!ts with a 'apital o! P*00,000.00 and name the bsiness “$aria=s 8ose o! 8andi'ra!ts”. $ay $aria law!lly engage in 'ommer'e and pt the 8ose o! 8andi'ra!ts% Answer:

Yes, $aria may law!lly engage in 'ommer'e and pt p the 8ose o! 8andi'ra!ts. 5lthogh, at !irst glan'e, it wold seem that her hsband=s athoriation appearing in a pbli' instrment is ne'essary, prsant to &e'tion ? o! the )ode o! )ommer'e whi'h states that: “5 married woman having rea'hed *7 years o! age, may engage in 'ommer'e with her hsband=s athoriation appearing in a pbli' instrment whi'h shall be registered in the mer'antile registry,” the said provision o! the ew )ivil )ode: 7. “5rt. D>. 5 married woman, *7 years o! age or over , is #ali!ied !or all a't s o! 'ivil li!e, e3'ept in 'ases spe'i!ied by law” *. “5rt. 77A. (he wi!e may e3er'ise any pro!ession or o''pation or engage in bsiness. 8owever, the hsband may obGe't, provided: a. 8is in'ome is s!!i'ient !or the !amily, a''ording to its so'ial standing, and b. 8is opposition is !onded on serios and valid gronds. In 'ase o! disagreement on this #estion, the parents and grandparents as well as the !amily 'onsel, i! any, shall be 'onslted. I! no agreement is still arrived at, the 'ort will de'ide whatever may be proper and in the best interest o! the !amily. D. “5rt. 77D. (he hsband mst be Goined in all sits by or against the wi!e, e3'ept: 333 K1 I! the litigation is in'idental to the pro!ession o''pation or bsiness in whi'h she is engaged.” Ib.

$ay @aime, $aria=s hsband, interpose any obGe'tion, and on what gronds% Answer:

Yes, @aime may interpose obGe'tions, bt only on the gronds provided by 5rt. 77 o! )ivil )ode. 5''ording to 77A o! ew )ivil )ode: the “(he wi!e may e3er'ise anythe pro!ession or o''pation or5rt. engage in the bsiness. 8owever, hsband may obGe't, provided: 71 8is in'ome is s!!i'ient !or the !amily, a''ording to its so'ial standing, and *1 8is opposition is !onded on serios and valid gronds. I'.

(he bsiness !ailed and res lted in losses. I! @aim e volntarily 'onsented to $aria=s bsiness a'tivity, what properties shall answer !or her obligations% Answer:

@aime, having volntarily 'onsented to $aria=s bsiness a'tivity, her paraphernal properties, as well as those o! their 'onGgal partnership or absolte 'ommnity, shall be liable !or the losses reslting !rom the !ailre o! $aria=s bsiness.

Id.

I! @aime opposed the bsiness ventre, what properties are liable% 5nswer: I! @aime has obGe'ted to his wi!e=s engagement in bsiness and his obGe'tion, being based on serios and valid gronds andBor on the s!!i'ien'y o! his in'ome !or the !amily a''ording to its so'ial standing, has been Gdi'ially pheld by the 'ort, then only $aria=s paraphernal properties will be liable, and not those o! their 'onGgal partnership or absolte 'ommnity, e3'ept inso!ar as her obligations have redonded to the bene!it o! the !amily, and to that e3tent only.

II.

Pedro writes ot a 'he'k !or P 7,000.00 in !a vor o! @o se or o rder against his ' rrent a''ont with -ank o! 5meri'a. @an steals the 'he'k, erases the name o! @ose and sperimposes his own name. @an deposits the 'he'k at )itibank and a!ter 'learing, @an withdraws the amont and abs'onds. 4pon dis'overy by Pedro o! the material alteration, he lodged a 'omplaint at the -ank o! 5meri'a, who debited the amont to Pedro. -ank o! 5meri'a demands reimbrsement !or )itibank whi'h re!ses on the grond that it only a'ted as an agent !or 'olle'tion. 9ho bears the loss% 9hy% Answer:

(he -ank o! 5meri'a shall bear the loss. 4ndisptedly, it is liable to Pedro drawer1 !or the amont o! the 'he'k, !or the simple reason that his order on the 'he'k was to pay “@ose or order,” and @ose or his order” was not paid. -arring a 'ase o! notorios negligen'e on his part, Pedro has a right to be 'redited or reimbrsed !or the amont taken !rom his a''ont. ? made permanent and e!!e'tive immediately the provisional in'rease o! rates by PLF( previosly so athoried on the grond among others, that pbli' interest wold be served thereby. Pending appeal to the &preme )ort o! -) )ase o. A0D/>?, PLF( !iled on 6ebrary *A, 7>AD with the -oard o! )ommni'ations s''essor to the Pbli' &ervi'e )ommission1 another appli'ation !or an a'rosstheboard in'rease o! /0J o! its present athoried rates do'keted as -) )ase o. AD077. AD, the -oard o! )ommni'ations issed an 1 he shall be so liable, i! prior to s'h delivery he had either: a1 -een re#ested, by or on behal! o! the person law !lly entitled to a right o! property or possession in the goods, not to make s'h delivery, or b1 8old in!ormation that the delivery abot to be made was to one not law!lly entitled to the possession o! the goods. (he delivery o! the goods by a warehoseman to the depositor a!ter re'eiving noti'e o! the adverse 'laim or title o! a third person renders the warehoseman liable !or 'onversion i! s'h 'laim or title is good. In the instant 'ase, his re'eipt o! a noti'e o! garnishment shold have s!!i'iently warned him that there is an adverse 'laim on the goods, and when, notwithstanding s'h legal pro'ess, he delivered the same to a third person, he may be liable !or 'onversion i! s'h 'laim or title is good.

XIX.

X wrote and pblished a story e3a'tly similar to an npblished 'opyrighted story o! 5. 5 ses X !or in!ringement o! )opyright. It was, however, 'on'lsively proven that X was not aware that the story o! 5 was prote'ted by 'opyright. Is X liable% 5nswer with reasons.

Answer:

X is liable !or in!ringement o! 'opyright. 5s de!ined, in!ringement o! a 'opyright 'onsists in the doing by any person, withot the 'onsent o! owner o! the 'opyright, o! anything the sole right to whi'h is 'on!erred by the statte on the owner o! the 'opyright.

2vidently, the animus furandi, or intention to pirate, is not an essential element o! in!ringementH and ignoran'e o! the 'opyright, or honest intention, a!!ords no de!ense to an a'tion !or in!ringement. (he athor=s property is absolte when per!e'ted by 'opyright, and the intent o! prpose o! an invasion is nowhere made an e3'se !or it. XXI.

-asilio invents and se'res registration o! pat ent o! a mini threshing ma'hine whi'h he man!a'tres. "dy, his employee, assisted him in the a'tal making o! the ma'hine. Later, a!ter resigning !rom his employment with -asilio, "dy boght tools and e#ipments to man!a'tre similar minithreshing ma'hine whi'h he sold !or his own bene!it. 9hat legal steps will yo take i! yo were hired as 'onsel o! -asilio to prote't his rights% Answer:

5s 'onsel !or -asilio, I will institte the !ollowing steps: “9ithin / years !rom the 'ommission o! a'ts o! in!ringement, I will bring a 'ivil a'tion !or in!ringement o! patent be!ore the proper 'ort to re'over !rom the in!ringer damages sstained by reason o! the in!ringement. In the same 'ivil a'tion I will se're an inGn'tion to enGoin the in!ringer !rom the se o! s'h patented invention.” “I! a!ter a !inal Gdgment is rendered by the )ort agains t the in!ri nger, he repeated the in!ringement, I will again institte a 'ivil a'tion !or damages with a prayer !or the issan'e o! a writ o! inGn'tion, as well as 'riminal a'tion !or repetition o! in!ringement.”

1978

Ia.

BAR EXAMINATION

5 signed a blank 'he'k whi'h he inadvertently le!t on his desk at his 2s'olta ?*1 IIb.

5 !inal de'ision promlgated by the )ort o! 5ppeals a!!irmed the payment by $ Line , In'. o! the overtime 'ompensation to its +0 employees in the amont o! P7+0,000.00. (he 'ase was remanded by the )6I, -ohol, so that the )ompany may present eviden'e o! overtime 'ompensation already paid by it to said +0 employees. (he -ohol 'ort set the 'ase !or hearing, bt the same was postponed several times on motions o! the )ompany. $eanwhile, said )ompany !iled a petition !or volntary insolven'y in )6I, )eb. (he s'hedle anne3ed to the petition named only two 'reditors, X !or P70*,000.00 and Y !or PK0,000.00. its +0 employees, to whom it was already ordered by a !inal de'ision o! the )ort o! 5ppeals to pay overtime 'ompensation, were not in'lded in the &hedle. 5!ter adGdi'ation o! insolven'y and ele'tion o! assignee in the )6I, )eb, the said +0 employees were allowed to intervene. (hey then moved to dismiss the insolven'y pro'eedings. Fe'ide with reasons. Answer:

Yes, the motion o! the +0 employees to dismiss the volntary insolven'y pro'eedings !iled by $ Line, In'., in the )6I in )eb, shall be granted. 4nder the 'ir'mstan'es, the $ Line, In'., a'ted in gross bad !aith in the !iling o! the petition !or insolven'y, in violation o! the prpose !or whi'h the Insolven'y Law was ena'ted. (he nonin'lsion o! its said +0 employees in the s'hedle 'ompletely vitiated the insolven'y pro'eedings. See In re Estate of +indanao +otor Line% Inc. , +A &)"5 >K1 IIIa.

A+, a !ire pol i'y, insring a bilding and its 'ont ents, was del ivered to the insred 'ompany. -y agreement, it was allowed to pay the premim within D0 days. A?, it paid the premim by means o! a 'he'k postdated @anary 7?, 7>A?. (he 'he'k was deposited by the insran'e 'ompany only on 6ebrary *0, bt the 'he'k bon'ed, althogh @anary 7>, the insred has a s!!i'ient bank balan'e. 1 ;Ia.

(he plainti!!, as sbrogee o! the 'onsignee, sed the de!endant, a 'ontra'tor and operator o! arrastre servi'e in the port o! $anila, !or its !ailre to deliver one 'ase o! mer'handise 'onsisting o! ele'troni' spare parts shipped !rom 2rope whi'h it re'eived !rom the 'arrier. (hedate a'tion broght period o! / years, bt a!ter the lapse o! 7 year, !rom the the was goods sholdwithin havethe been delivered. Invoking the provisions o! the )arriage o! Eoods by &ea 5't, the lower 'ort dismissed the 'omplaint on the grond that it was !iled a!ter 7 year !rom the time that the 'ase o! a'tion a''red. 9as the lower 'ort Gsti!ied in dismissing the 'omplaint% 9hy% Answer:

“-0J o! the sbs'ribed shares o! whi'h were also owned by X. $ay the 2 &teel )orporation be held liable !or the !inan'ial obligation o! the ) &teel and ail )o. In' to its employees%

Answer:

Yes. 2 &teel )orporation may be held liable !or the !inan'ial obligation o! the ) &teel and ail )o., In'. to its employees, nder the rle o! “pier'ing the veil o! 'orporate !i'tion”. It is very obvios that 2 &teel )orporation seeks the prote'tive shield o! a 'orporate !i'tion whose veil in the present 'ase 'old, and shold, be pier'ed as it was deliberately designed to evade the !inan'ial obligation o! ) steel and ail )o. In'., to its employees. Claparols v. Court of Industrial &elations, ?+ &))"5 ?7D1 ;IIIb. Petitioner is a 'orporation sole organied and e3isting in a''ordan'e with Philippine Laws, with $sgr. (rdea, in a )anadian 'itien, as a'tal in'mbent. It presented !or registration a deed o! sale to the "egister o! Feeds o! )eb who denied it !or la'k o! proo! that at least ?0J o! the 'apital, property or assets o! the 'orporation sole is owned or 'ontrolled by 6ilipino 'itiens. 9as the a'tion o! the "egister o! Feeds 'orre't% Eive reasons !or yor answer% Answer:

o. the a'tion o! the "egister o! Feeds was not 'orre't. (he re#irement o! at least ?0J o! 6ilipino 'apital was never intended to apply to 'orporations sole, be'ase: 71 )orporation sole is 'omposed o! only personH *1 (he 'orporation sole is only the administrator and not the owner o! the temporalitiesH D1 &aid temporalities belong to the !aith!lH and /1 )orporation sole has no nationality.  &oman Cat$olic )postolic )dm. 2f ,avao% Inc. v. Land &eg. Co., E.". LK/+7, Fe'ember *0, 7>+A1. IXa.

X )o. was an ope rator o! 'stoms bonded warehose. -y virte o! a !orged permit to deliver imported goods, prportedly issed by the -rea o! )stoms, 5 was able to obtain delivery o! 700 bales o! 'otton worth P?0,000 !rom X )o. Fe to wrong delivery, X )o. !iled against 5 a 'omplaint !or re'overy o! the vale o! the 'otton and damages. 9ill the sit prosper% Fe'ide and give reasons. Answer:

o. the sit will not prosper. X )o. had yet no 'ase o! a'tion against 5, sin'e the real parties interested in the bales o! 'otton who were the depositor, 'onsignee, or shipper bales o! 'otton, the have )ommissioners o! X )stoms Internal "evenewith withrespe't respe'ttoto the dties andand ta3es1 not yet sed )o. !or and damages or !or re'overy o! the bales o! 'otton or the 'orresponding dties and ta3es.  Consolidated *erminals% Inc. v. )rte3 ,evelopment Co.% Inc.?D &)"5 /?1 IXb.

(o garantee the payment o! his obligation, the de!endant 5 mortgaged to the plainti!! his sgar, then stored in a warehose in &an 6ernando, Pampanga athoriing said plainti!! -1 to sell the sgar in 'ase he 51 !ailed to pay. Fring the initial days o! martial rle in late 7>A*, all o! 5=s sgar were brned or looted in the warehose. Plainti!! - sed de!endant 5 !or payment o! the obligation. 71 9ill the sit prosper% 23plain. *1 9ho shall bear the loss o! the mor tgaged sgar% Eive reasons. Answer

:

71 Yes. -=s sit will prosper. (he mor tgagee, -, a!ter the loss o! the sgar in a warehose, may still re'over on the obligation o! the mortgagor, as an ordinary 'reditor, he having lost already his se'rity.  +artinez v. P$ilipiine 4ational Ban#, L /0K0, &ept. *7, 7>+D1 *1 $r. 5, the mortgagor, shall bear the loss o! the mortgaged sgar. (he mortgagee, not being the owner o! the mortgaged sgar, does not s!!er the loss. &aid goods are to be regarded as lost on a''ont o! the real owner, the mortgagor.  +artinez v. P$ilipiine 4ational Ban#, L/0K0, &ept. *7, 7>+D1 Xa.

(he trademark L+/1, or ntil the e3piration o! the term o! the partnership, whi'hever event 'omes !irst. IIb.

X applied !or a lett er o! 'r edit with the -a nk o! 5meri'a in !av or o! an e3 port 'ompany lo'ated in Paris, 6ran'e. (he appli'ation provides that the dra!t mst be drawn and presented not later than $ay D7, 7>AK, and X agreed to pay at matrity any amont that might be drawn or paid pon the !aith o! the appli'ant=s 'redit and to reimbrse the bank in said manner. AK, a dra!t was negotiated by the -ank o! 5meri'a=s 'orrespondent bank in Paris against X=s 'reditH this was then paid by the -ank o! 5meri'a at the rate prevailing. (he date o! matrity o! the dra!t was 5gst *?, 7>AK. -e!ore the date o! matrity bt a!ter the 'orrespondent bank had paid the dra!t, the 6ren'h !ran' devalated. 5t what rate shold X pay the -ank o! 5meri'a in Philippine pesos, at the rate o! the !ran' prevailing on $ay D0, 7>AK, or at its devaled rate on 5gst *?, 7>AK% "eason. Answer:

X shold pay the -ank o! 5meri'a at the rate o! the !ran' prevailin g on $ay D0, 7>AK, the date when the -ank o! 5meri'a=s 'orrespondent bank in Paris, 6ran'e, paid the letter o! 'redit to the e3port 'ompany in 6ren'h 6ran', the letter o! 'redit having been 'onsmmated at that time. Belman Cia.% Incorprada v. Central Ban# of t$e P$ilippines , L707>+, ov. *>, 7>+K1 IIIa.

(he agent in Favao o! the insred “5” was employed to ship “5”=s 'opra to $anila and to 'ommni'ate the shipment to the byer “5” in $anila. (he said agent wrote the owner o! the 'opra annon'ing the sailing o! the ship, bt !ailed to state that the ship had rn a grond, whi'h !a't he already knew be!ore annon'ing the sailing. “5,” the byer o! the 'opra, in all good !aith, took ot a marine insran'e on the 'opra. (he 'opra was badly damaged and was a total loss. )an the insred re'over on the poli'y% "eason. Answer:

(he insred may not re'over on the poli'y, sin'e the sbGe't matter o! the marine insran'e at the time o! 'ontra'ting the insran'e was already lost. 5n interest in property insred mst e3ist when the insran'e takes e!!e't and when the loss o''rs. IIIb.

5 !ire insran'e poli'y in !avo r o! the insr ed 'ontained a stip lation that the ins red shall give noti'e to the 'ompany o! any insran'es already e!!e'ted or whi'h may sbse#ently be e!!e'ted, 'overing the property insred and that nless s'h noti'e be given be!ore the o''rren'e o! any loss, all bene!its shall be !or!eited. (he !a'e o! the poli'y bore the annotation “)oinsran'e de'lared.” (he things insred were brned. It trned ot that several insran'es were obtained on the same goods !or the same term. (he insrer re!sed to pay on the grond o! 'on'ealment. $ay the insred re'over% "eason. Answer:

Yes, the insred may re'over sin'e there is no 'on'ealment. (he !a'e o! the poli'y bore already the annotation, “)oinsran'e de'lared” whi'h is a noti'e to the insrer as to the e3isten'e o! other insran'e 'ontra'ts on the property insre d. Een. Insran'e N &rety )orporation v. g 8a, L7/DAD, @an. D0, 7>?01 I;a.

$arine insran'e was se'red pon goods on board a ship whi'h departed !rom $adagas'ar withot any to the insrer o! the that (his the ship had been reportedtoat$anila, Lloyd o! London asdis'losre seen at sea, deep in water and!a't leaky. report trned ot later to be wrong be'ase the ship was at no time dring the voyage leaky or in troble, bt was lost throgh another insred risk. (he insrer re!ses to pay the insred, 'laiming 'on'ealment. (he insred 'onters that the !a't not dis'losed was erroneos and did not in'rease the risk and there!ore immaterial. Fe'ide the dispte with reasons.

Answer:

(he insred may not re'over !rom the insrer. (he in!ormation that the ship in #estion was seen at sea, deep in water and leaky, althogh erroneos, was material, and its 'on'ealment entitled the insrer to res'ind the 'ontra't o! insran'e.

I;b.

5 was driving a Geepn ey registered in the na me o! -. (he Ge epney, while being driven negligently by 5, hit and inGred X, so X sed - !or damages. (he de!ense o! - was that he had sold the Geepney to ) and that X shold se ). "le on -=s de!ense with reasons. Answer:

5ssming the said Geepney in #estion to be not a 'ommon 'arrier or pbli' servi'e, and 5 was the driver o! ), the a'tal owner, althogh not yet registered in his name, then ), and not - the registered owner1, shall be liable to X. 2mployer ) shall be liable !or damages 'ased by his employee a'ting within the s'ope o! his assigned task. 5rt. *7K0, )ivil )ode1 ;a.

5, in $a nila, shipped on boar d a vessel o! -, 'ha irs to be se d in the res tarant o! 'onsignee ) in )eb. o date !or delivery or indemnity !or delay was stiplated. (he 'hairs, however, were not 'laimed promptly by ) and were shipped by mistake ba'k to $anila, where it was dis'overed and reshipped to )eb. -y the time the 'hairs arrived, the date o! inagration o! the movie hose passed by and it had to be postponed. ) brings a'tion !or damages against -, 'laiming loss o! pro!its dring the )hristmas season when he e3pe'ted the movie hose to be opened. Fe'ide the 'ase with reasons. Answer:

), may bring a'tion !or damages against - !or loss o! pro!its. (he obligation o! the 'arrier to 'arry 'argo in'ldes the dty not to delay their transportation, so that i! the 'arrier is gilty o! delay in the shipment o! the 'argo, 'asing damages to 'onsignee, it will be liable. *an Liao v. )merican President Lines, LA*K0, @anary *0, 7>+?1 ;b.

9hile at sea, the 'aptain o! vessel 5 re'eived distress signals !rom vessel -, and vessel 5 responded and !ond vessel - with engine !ailre and dri!ting o!! 'orse. 4pon a''eptan'e by vessel - and towed it sa!ely to port. (here was no grave marine peril be'ase the sea was smooth and vessel - was !ar !rom the ro'ks. In a sit !or 'ompensation !or towage, who are entitled to re'over, the owner, the 'rew, or both% Eive brie! reasons. Answer:

9here the 'ontra't 'reated is one !or towage, and not !or salvage, like that stated in the #estion, only the shipowner o! the towing vessel, to the e3'lsion o! the 'rew o! the said vessel, may be entitled to 'ompensation. (he towage in #estion was not salvage o! the vessel -, sin'e there was no marine peril whi'h wold endanger the said vessel. Barrios v. Carlos ). Go *$ong  Co., L7A7>*, $ar'h D0, 7>?D1 ;Ia.

9hen as a reslt o! a s' 'ess!l salvage, both shi p 5 and the 'ar go therein are save d, against whom shold the salvage allowan'e be 'harged and in what proportion, i! any% Answer:

(he salvage allow an'e shall be a 'harge on the owner o! the ship or ship itsel!, and the owners o! the 'argo or 'argo itsel!, so salvaged, and in proportion to their respe'tive vale.

;Ib.

5 bs line =s servi'e between $anila and $alo los is sati s!a'tory. 5 new road is opened between said points, and a new 'arrier applies !or a 'erti!i'ate o! pbli' 'onvenien'e to operate a bs line along the new road. (he old bs line opposes, 'laiming that it shold !irst be given an opportnity to e3tend its servi'e. 9hi'h party shold prevail% "eason. Answer:

9here all 'onditions being e#al, priority in the !iling o! the appli'ation !or a 'erti!i'ate o! pbli' 'onvenien'e be'omes an important !a'tor in the granting thereo!H so the new 'arrier who applies !irst shall prevail.  Batangas *ransportation Co.% v. 2rlanes, +* Phil., /++1. ;IIa. 5 sbs'ribed to 700 shares o! sto' k o! 'orporation X with par vale o! P700 .00 ea'h, paying P*,+00.00 on his sbs'ription. &bse#ently, 5 asked -, the president o! the 'orporation, to release him !rom his sbs'ription. - 'onsented provided that 5 !or!eits to the 'ompany what he already paid. 5 agreed and - gave him a 'erti!i'ate o! release. ot long a!terwards, X went into insolven' y and an assignee was appointed. (he assignee now seeks to 'olle't !rom 5 the npaid balan'e o! his sbs'ription. Fe'ide the dispte with reasons. Answer:

(he assignee o! the insolvent X 'orporation may 'olle't !rom 5 the npaid balan'e o! his sbs'ription. (he president o! a 'orporation has no legal 'apa'ity to release as sbs'riber !rom his npaid sbs'ription. (he insolven'y o! X 'orporation makes all sbs'ription payable on demand withot 'all and re'overable in an a'tion institted by the assignee.  6elasco v. Poizat, DA Phil. K0*1 ;IIb. In the arti'les o! in'orporation o! ( )orporation, 77 members were named to 'onstitte the board o! dire'tors. (hese 77 ele'ted !rom among themselves a se'retarytreasrer bt did not ele't a president. (he board sed to hold meetings to transa't bsiness whi'h was done throgh the se'retarytreasrer. In a pro'eeding to !or!eit its 'harter, the #estion was posed as to whether the 'orporation may be 'onsidered to have !ormally organied. "esolve the #estion. Answer:

Yes, the ( )orporation may be 'onsidered to have !ormally organied. It appearing that the 'orporation, !rom the very day o! its !ormation, had its governing board, whi'h dire'ted its a!!airs, as well as a treasrer and 'lerk, and that, throgh these instrmentalities, it a'tally !n'tioned and engaged in the bsiness !or whi'h it was organied, said 'orporation 'annot be held to have !or!eited its 'harter simply be'ase it has no president. Perez v. Balamaceda, /0 ?1 ;IIIa. -, an alien 'ommer'ial bank doing bsin ess in the Philippines was paid by a 6ilipino debtor, ), who had no other assets, with a pie'e o! land lo'ated in -la'an. In the meantime that there were no byers yet o! the land, - soght to have the land registered in its name by the "egister o! Feeds o! -la'an. -t the "egister o! Feeds re!sed to register it on the grond that the said bank, -, is alien owned and there!ore the trans!er

violates the 'onstittional prohibition o! alien holding o! private agri'ltral land. (he bank, -, 'ontends that "epbli' 5't DDA, the Eeneral -anking 5't, in se'tion *+'1 athories 'ommer'ial banks to pr'hase and hold real estate as shall be 'onveyed to it in satis!a'tion o! debts previosly 'ontra'ted in the 'orse o! its dealings. Fe'ide the dispte with reasons. Answer:

Yes, the "egister o! Feeds may legally re!se to register the land in #estion in the name o! -, an alien 'ommer'ial bank, de to 'onstittional provision that the disposition, e3ploitation or tiliation o! any o! the natral resor'es o! the Philippines, or to 'orporations or asso'iations at least ?0J o! the 'apital o! whi'h is owned by s'h 'itiens. &e'. >, 5rt. XI;, )onstittion o! the Philippines.1 ;IIIb. 5, in 8olla nd, shipped on board a vessel owned by -, +00 'ase s o! 'anned milk to 'onsignee ) in Iloilo. 4pon arrival, the vessel dis'harged the 'anned milk into the 'stody and possession o! the arrastre operator appointed by the -rea o! )stoms. In the -ill o! Lading, it was stiplated that the vessel is no longer liable !or the 'argo pon its delivery to the hands o! the 'stoms athorities. (he 'argo 'he'ker o! the arrastre !ond the 'argo to be in good order. 4pon delivery to the 'onsignee, a marine srveyor !ond *0 'ases o! milk missing. ) sed - !or the vale o! the *0 missing 'ases on the grond that nder the 'ontra't o! 'arriage - was obliged to deliver the 'argo sa!ely to the 'onsignee and that the stiplation limiting the liability o! the 'arrier is 'ontrary to morals and pbli' poli'y. - dis'laims liability !or short delivery. Fe'ide the dispte, with reasons. Answer:

Yes, - may dis'laim liability !or short delivery. (he stiplation is valid be'ase nothing therein is 'ontrary to morals or pbli' poli'y, said stiplation being adopted to mitigate the responsibility o! the 'arrier. IXa.

)reditor 5 !iled a'tion !or re' overy o! a sm o! money ag ainst debtor -, and se' red a preliminary atta'hment on a personal property o! -. &bse#ently, - e3e'ted a deed o! 'hattel mortgage over the same property in !avor o! ), who !iled a third party 'laim over the property atta'hed. 5 now !iles a motion !or disapproval o! the third party 'laim. ) opposes thesale, motion the grond themeantime 'hattel mortgage being he in the natre to o! a 'onditional title on passed to himthat in the and there!ore is entitled possession o! the property. Fe'ide the motion and opposition. Answer:

5=s motion !or disapproval o! )=s third party 'laim may be sstained, be'ase ) was merely a 'hattel mortgagee. )hattel mortgage is merely a se'rity !or a loan and does not trans!er title o! the property mortgaged to the 'hattel mortgagee.  Serra v. &odriguez, L*++/?, 5pril **, 7>A/H +? &)"5 +DK1. )=s allegation that the 'hattel mortgage being in the natre o! a 'onditional sale, 'annot be sstained. (he old view that a 'hattel mortgage is a 'onditional sale has been e3pressly repdiated by the new )ivil )ode. 5rt. *7/0, )ivil )odeH Serra v. &odriguez% supra1

IXb.

5, owner o! negotiable warehose re'eipt !or toba''o, sold and indorsed it the re'eipt1 to -, with the nderstanding that - wold pay a!ter * days. (herea!ter, - pledged it to ) by indorsement, to se're a previos debt to ), who did not know that - had not paid 5. -e!ore - 'old pay 5, - died. 5 now ses ) to re'over the vale o! the npaid re'eipt. Fe'ide the 'ase with brie! reason. Answer:

5=s a'tion 'annot prosper. (he negotiable warehose re'eipt, being dly indorsed and negotiated, ) had a per!e't right to a''ept the said warehose re'eipt !rom - in se'rity o! pree3isting debts. &e'. /A, 9arehose re'eipts LawH and &iy )ong -ieng N )o., In'. v. 8ongkong N &hanghai -anking )orp., +? Phils. +>K1. Xa.

AK, 5 'onvened his pri n'ipal 'reditors, in'lding -, and in! ormed them that he was in a state o! insolven'y. Onowing o! this, - immediately trans!erred his 'redit against the property o! 5 lo'ated in another Grisdi'tion to ), a 'lose relative, who immediately !iled a'tion in said Grisdi'tion against 5 and atta'hed the property o! 5. Later, a petition !or insolven'y was !iled by 5, and F was appointed assignee. Learning o! the trans!er, F now ses - !or damages. )an F re'over% Eive reasons. Answer:

F may not se - !or damages. 4nder the Insolven'y Law, F may have the atta'hment made by ) dissolve i! levied within one month ne3t pre'eding the 'ommen'ement o! the insolven'y pro'eedings. &e'. D*, Insolven'y Law.1 Xb.

)ompany X sold its wine nder the brand “"ose” -randy, and it be'ame very poplar. &o, X registered the trademark “"ose” !or its brandy. &bse#ently, )ompany Y man!a'tred bi'y'les and sold it nder the name o! “"ose”. )ompany X now ses )ompany Y !or violation o! the (rademark Law. "le on the dispte. Answer:

o, there is no violation o! the (rademark Law. )ompany X=s registered trademark “"ose” is on its brandy wine1, while )ompany Y=s on its bi'y'le. (here is #ite a di!!eren'e between brandy wines1 and bi'y'lesH hen'e, it 'an be said that )ompany Y=spbli'. trademark “"ose” on bi'y'les wold not likely 'ase 'on!sion on the part o! the bying

1980 BAR EXAMINATION

7. @an de la )r si gns a promi ssory note pay able to Pedro Lim or beare r, and delivers it personally to Pedro Lim. (he latter somehow mispla'es the said note and )arlos "os !inds the note lying arond the 'orridor o! the bilding. )arlos "os endorses the promi ssory note to @ana -ond, !or vale , by !orging the signatre o! Pedro Lim. $ay @ana -ond hold @an de la )r liable on the note% Answer:

It depends. 5 promissory note payable to Pedro Lim or bearer is a bearer negotiable instrment, being payable to a person named therein or bearer. It is negotiated by mere delivery, and no need to indorse it to @ana -ond, in order to make the latter a holder. 8owever, )arlos "os, who !ond it, endorsed it by !orging the signatre o! Pedro Lim. (here!ore, @ana -ond may hold @an de la )r liable on the note, i! the !ormer is a holder in de 'orseH bt no, i! @ana -ond is not a holder in de 'orse. *. (he -oard o! Fire'tors o! “X” )orporation, with the nanimos athority and approval o! its sto'kholders in a meeting 'alled !or the prpose, sells to “Y” )orporation !or P70$, sbstantially all o! the 'orporation=s assets 'onsisting o! pie'es o! ma'hinery, !i3tres and e#ipment sed in the bsiness o! said 'orporation. “Z” a 'reditor, now #estions the sale as !radlent, and there!ore, nll and void. Answer:

5ssming that X )orporation was engaged in retail bsiness, and there!ore the -lk &ales Law is appli'able, Z, a 'reditor may #estion the sale as !radlent be'ase X )orporation 71 did not make detailed inventory o! what wold be sold and give noti'e thereo! to 'reditors, and *1 did not deliver a sworn statement o! the names and addresses o! all 'reditors to X )orporation, prsant to law D.

5 bookstore re'eived + postal money o rders totaling P7,000 as part o! its sal es re'eipts, and deposited the same with a bank. 5 day a!ter, the bank tried to 'lear them with the -rea o! Posts. It trned ot, however, that the postal money orders were irreglarly issed thereby prompting the -rea o! Posts to serve noti'e pon all banks not to pay the orderso!i!P7,000 presented payment. (he!rom -rea Posts'learing !rther a''ont. in!ormed 6or the its bank thatmoney the amont had!or been ded'ted the o! bank=s part, the bank debited the book store=s a''ont with the same amont. 5 'omplaint was !iled by the bookstore against the -rea o! Posts and the bank !or the re'overy o! the sm o! P7,000, whi'h, however, was dismissed by the trial 'ort. (he bookstore appealed 'ontending that the postal money orders are negotiable instrments and that their natre 'old not have been a!!e'ted by the noti'e sent by the -rea o! Post to the banks. 8ow wold yo resolve the 'ontroversy% Answer:

(he 'ontention o! the bookstore that postal money orders are negotiable instrments 'annot be sstained. Postal money orders, being nder the restri'tions and limitations o!

the posta l laws, do not 'onta in n'onditional promise or order, as re#ired by the egotiable Instrments Law.  Sec. /  78 also Bolognesi v. 1.S.% /9: Fe'. 77;8 < )m. =ur. :0/8 also P$ilippine Education Co.% Inc. v. Soriano% 7: SC&) ;9< .1 /. “X” )orporation owns ++J o! “Y” )orporation, whi'h has an otstanding loan a''ommodation o! PD0 $illion with 5-) -anking )orporation. “X” )orporation, whi'h has no otstanding loan, applies !or a loan o! P70 $illion with 5-) -anking )orporation to !inan'e its e3pansion program. (he o!!i' ers o! “X” and “Y” )orporation are not the sameH neither are the sto'kholders o! ea'h 'orporation identi'al. (he nimpaired 'apital and srpls o! 5-) -anking )orporation is P*00 $illion. )old the bank grant the loan nder e3isting banking laws% Answer:

o. 5-) -anking )orporation may not grant the loan o! P70 $illion to X )orporation. 5lthogh X )orporation owns ++J o! Y )orporation whi'h has an otstanding loan a''ommodation o! PD0 $illion with 5-) -anking )orporation, yet s'h loan a''ommodation belong e3'lsively to Y )orporation, and not to X )orporation, ea'h one o! them having separate and distin't Gridi'al personality !rom other. 4nder the banking law, there mst be s!!i'ient se'rity !or any loan to be made. +. “6”, a natralied 6ilipino 'itien, a'#ired ownership o! a gro'ery store engaged in wholesale and retail bsiness wherein !i!teen persons are employed, three o! whom are )hinese, long employed by the previos owners. Prsant to the 5ntiFmmy Law, “6” re#ests the permission o! the President o! the Philippines, throgh the $inistry o! (rade, to allow him to retain the three )hinese. “6” 'onte nds that their employment is not prohibited by the "etail (rade Law whi'h merely restri'ts the ownership o! retail trade bsiness to 6ilipinosH neither does the 5ntiFmmy Law ban employment o! aliens to positions whi'h do not relate to the management, operation, administration or 'ontrol o! enterprise. In other words, “6” maintains that these aliens are o''pying non'ontrol positions in the !irm. -esides, “6” 'ontends that being a 6ilipino owner o! the bsiness, he is not 'overed by the provisions o! the "etail (rade Law. 8ow valid are “6=s” argments% Answer:

6=s argments are ntenable. (he 5ntiFmmy Law is a 'omplement o! the "etail (rade 5't in the sense that it is designed to make e!!e'tive its aims and prposes, and both tend to a''omplish the same obGe'tive, either by e3'lding aliens !rom owning any retail trade or by banning their employment i! the trade is owned by 6ilipinos, and the employment o! a person who is not a 6ilipino 'itien, even in a minor or 'leri'al or non'ontrol position is prohibited. (he reason is obvios: to plg the loophole or 'lose any avene that an ns'rplos alien may resort to !lot the law or de!eat its prpose.  -ing v. "ernaez, $ar'h D7, 7>?*H / &)"5 K0/1 ?. Interlink (rading )ompany e3tends a loan to “E” !or his medi'al e3penses abroad in the sm o! 4&70,000.00, with interest at the rate o! 7/J per annm, payable 7*0 days !rom

date thereo!, sbGe't to the 'ondition that “E” pays Interlink (rading )ompany pon matrity in the same 'rren'y, that is, 4& dollars. “E” wold like to pay his indebtedness in Philippine 'rren'y be'ase he has no 4& dollars to pay o!! the obligation. (he 'ompany insists, however, that “E” pays them in 4& dollars as stiplated. 9hose position wold yo phold% Answer:

I wold phold the position o! E. I! there wold be a stiplation in any domesti' obligation to pay in a 'rren'y other than the Philippine 'rren'y, said stiplation is nll and void as 'ontrary to pbli' poli'y, and there!ore to be paid in Philippine 'rren'y. (he problem does not !all within any o! the e3'eptions provided !or by the law. A. “8” opens a letter o! 'redit with 5-) -anking )orporation !or the importation o! +00 'ases o! -la'k Label 9hisky with an invoi'e vale o! 4&+0,000.00. the goods and the 'overing do'ments arrive and “8” wold like to take the possession o! the +00 'ases o! whisky nder a trst re'eipt. (he bank agrees to release the goods to him nder the trst re'eipt, sbGe't to the 'ondition that “8” holds the +00 'ases in trst !or the bank, and !or him to trn over the pro'eeds o! the sale o! said whisky, or to retrn the goods in the event o! their nonsale within >0 days !rom date thereo!. “8” sells the +00 'ases to varios 'stomers bt !ails to trn over the pro'eeds within the period stiplated, despite repeated demands !rom 5-) -anking )orporation. (he bank !iles an esta!a 'ase against “8” with the )ity 6is'al o! $anila. In his de!ense, “8” 'ontends that he shold not be held liable be'ase the transa'tion emanates !rom a letter o! 'redit, whi'h he 'laims, is 'ivil in natre. 8e invokes the 'onstittional provision that no one shold be imprisoned !or nonpayment o! indebtedness. I! yo were the )ity 6is'al, wold yo !ile the 'ase% Answer:

Yes, I wold !ile the esta!a 'ase against 8, i! I were the )ity 6is'al. (he !ailre o! 8, entrstee, to trn over the pro'eeds o! +00 Label 9hisky, by a trst re'eipt, to the e3tent o! the amont o! 'ases owing o! to-la'k the entrster, within 'overed the period stiplated, to 5-) -anking )orporation, entrster, shall 'onstitte the 'rime o! esta!a, by e3press stattory provision. (he de!ense o! 8, there!ore, is ntenable. K. “I”, a bran'h manager o! a bank, in res ponse to a noti'e o! garnishment, dis'loses to the &heri!! o! Pasig the otstanding deposit balan'e o! Gdgment debtor "oy &evilla with the bank as o! the date o! re'eipt o! the a!orementioned garnishment noti'e. "oy &evilla !iles a 'riminal 'omplaint with damages against the bank !or dis'losing his depository balan'e withot his 'onsent in violation o! ".5. 7/0+, whi'h absoltely prohibits the dis'losre o! any in!ormation 'on'erning bank deposits. 9old the 'omplaint prosper%

Answer:

o, the 'riminal 'omplaint against the bank by "oy &evilla wold not prosper. (he prohibition against e3amination o!, or in#iry into, a bank deposit, does not pre'lde its being garnished to insre satis!a'tion o! a Gdgment. Indeed, there is no real in#iry in s'h a 'ase, and i! the e3isten'e o! the deposit is dis'losed, the dis'losre is prely in'idental to the e3e'tion pro'ess. >. “O” borrows P*00,000.00 !rom 2ternity -anking )orporation whi'h, in a''ordan'e with its 'redit 'riteria, grants the loan against the se'rity o! a plsh 'ondominim nit with an appraised vale o! P7.+ $illion. 5-) )redit &ervi'es In'., a 'orporation engaged in the gathering o! 'redit in!ormation, sends a letter to the bank in#iring abot any property o! “O” whi'h the bank holds and, i! any, to !rnish the des'ription o! the property. @ose &antos, ;i'epresident o! the bank, in his reply thereto, dis'loses the details o! the property mortgaged. Fid the bank o!!i'er violate any e3isting legal provision% Answer:

(he bank o!!i'er, @ose &antos, did not violate any e3isting legal provision. (he "epbli' 5't prohibiting dis'losre o!, or in#iry into, deposits with any banking instittion, and the Eeneral -anking 5't do not prohib it s'h dis'losre on the detail s o! the property mortgaged with a bank. 70. “L” borrows P+0,000 !rom “$” payable D?0 days a!ter date, at 7*J interest per annm. (o se're the loan, “L” mortgages his hose nd lot in !avor o! “$”. (o prote't himsel! !rom 'ertain 'ontingen'ies, “$” insres the hose !or the !ll amont o! the loan with "o'k Insran'e )ompany. 5 !ire breaks ot and brns the hose and “$” 'olle'ts !rom the insran'e 'ompany the !ll vale o! the insran'e. 4pon matrity o! the loan, the insran'e 'ompany demands payment !rom “L”. the latter re!ses to pay on the grond that the loan had been e3tingished by the insran'e payment whi'h “$” re'eived !ro m the insran'e 'ompany. 8e arges that he has not entered into any that loanit or 'ontra't o! whatever natre bt withit is theworse insran'e !rther 'ontends is bad enogh to lose a hose i! one 'ompany. has to pay8e o!! a paid obligation to somebody who has not e3tended any loan to him. -esides, he states, that the insran'e payment shold inre to his bene!it be'ase he owns the hose. Pass pon the merits o! “L=s” 'ontentions. Answer:

either the loan o! L was e3tingished by the insran'e payment whi'h $ re'eived !rom the insran'e 'ompanyH nor the insran'e payment inres to L=s bene!itH what was then insred was the interest o! $, the se'red 'reditor, and not the interest o! L, so the pro'eeds shall be applied e3'lsively to the proper interest o! $. L=s argment that he has not entered into any loan or 'ontra't o! whatever natre with the insran'e 'ompany is also ntenable. 9hen the se'red 'reditor=s interest in the mortgaged property o! the mortgagor, L, was insred and said property wold be brned,

the insran'e 'ompany had to pay the insred, $, and payment by the insrer to the insred 'reates legal sbrogation and makes the insrer an assignee on e#ity to rn a!ter the mortgagor, L. &aid right o! the insrer is not dependent pon nor does it grow ot o!, any privity o! 'ontra't, or pon written assignment o! 'laim, and payment to insred makes the insrer an assignee in e#ityH ths, L=s 'onsent to said sbrogation is not ne'essary. 5rt. 00>A?H A0 &)"5 D*D1 77. “” owns a 'ondominim nit presently insred with 8oly Insran'e )o. !or P7 $illion. “” later sells the 'ondominim nit to “H K> &)"5 +/>.1 7D. “M”, a wellknown artist, designs !or “P” a personalied )hristmas 'ard wit h an artisti' moti! depi'ting a Philippine rral )hristmas s'ene with a woman and a 'hild, a nipa ht adorned with starshaped lanterns and a man astride a 'arabao beside a tree. 4nderneath the design appears the name “M”. “"” orders !rom “M” +00 o! s'h )hristmas 'ards and distribtes them to his !riends. 5 year later, “X” 'opies and prints the same design !or his albm o! )hristmas 'ards intended !or sale to the general pbli'. &everal 'stomers order )hristmas 'ards !rom “X” with the same design as that printed !or “"”. “M” !iles a sit against “X” 'laiming damages nder the )opyright Law despite his !ailre to 'opyright the work mentioned above. 8e !rther 'laims that the printing or pbli'ation o! the design he prepared !or “"” was spe'ial and limited. Fe'ide the 'ase. Answer:

o, M=s sit against X 'laiming !or damages nder the !ormer )opyright Law 'annot prosper de to his !ailre to 'opyright his work. 6ailre to 'opyright a work, renders the intelle'tal 'reation pbli' property and the athor loses the e3'lsive right to 'ontrol sbse#ent pbli'ation by others.  Santos v. +cCulloug$ Printing Co. , 0+.

7?. ;essel “4” and “;” 'ollided with ea'h other 'asing damage to both vessels. ;essel “4” had the last 'lear 'han'e to avoid the 'ollision bt !ailed to do so. 71 Is the do'tr ine o! last 'le ar 'han'e in tort appl i'able to 'olli sions o! vessels at sea nder the )ode o! )ommer'e% 9hi'h vessel shold sholder liability !or the damage s!!ered by both vessels and by the 'argo% *1 5ssme that the neglig en'e o! the 'apt ain o! vess el “4” was the pro3 imate 'ase o! 'ollision, while the negligen'e o! be thedeemed 'aptain imptable% o! vessel “;” was merely 'ontribtory. (o whi'h vessel shold the 'ollision Answer:

71 (he do'trine o! last 'lear 'han'e in tort is not appli'able to 'ollision o! vessels at sea nder the )ode o! )ommer'e, and the 'ase is deemed as i! the 'ollision is imptable to both vesselsH ths, ea'h one o! the vessels shall s!!er her own damage, and both shall be solidarily liable !or the damages o''asioned to their 'argoeas.  C. B. .1 illiams v. angco% 0< P$il. A98 Sarasola v. Sontua% @< P$il 7A; *1 (he 'ollision shall be deemed imptable also to both vess els, as in the pre'eding answer to o. 7 #estion. &in'e the “do'trine o! 'ontribtory negligen'e” in tort is not also appli'able to 'ollisions o! vessel at sea nder the )ode o! )ommer'e, the 'ase is deemed as i! the 'ollision is imptable to both vessels.  Gov?t of t$e P.I. v. P$il. Steams$ip Co. Inc.% @@ P$il. 7;:1

7A. “9” 'onstr'ts a residential hose on a rented land belonging to “X”. (o enable him to !inish the hose, “9” borrows P+0,000.00 !rom @et &avings bank and mortgages his hose as se'rity. -y mtal agreement, “9” e3e'tes a 'hattel mortgage on the residential hose in !avor o! the bank. Is the 'hattel mortgage on “9=s” residential hose sitated on a rented land belonging to “X” valid and en!or'eable% Answer:

(he validity o! the 'hattel mortgage on 9=s residential hose sitated on a rented land belonging to X may be re'ognied between the 'ontra'ting parties, prin'ipally pon the prin'iple o! estoppelsH ths, the validity o! the 'hattel mortgage in #estion 'annot be assailed by one o! the parties to the 'ontra't o! mortgage, prin'ipally on the do'trine o! estoppels. 4avarro v. Pineda% 4ov. 7>% /:A78 : SC&) A7A 1 7K. “Y” )ompany 'onv enes its prin'ipal 'reditors in an in!ormal meet ing and in!orms them that it is in a state o! insolven'y. “Z”, one o! the 'reditors attending the meeting, !inds ot that in the balan'e sheet distribted, mention is made o! a )+/ plane owned by the 'ompany in the 4nited &tates. (herepon, “Z” e3e'tes a deed o! assignment , trans!erring his 'redits or re'eivables !rom “Y” 'ompany to a sbsidiary in the 4.&. (he latter, in a proper legal a'tion, atta'hes and disposes o! the plane to answer !or 'redit assigned by “Z”. &bse#ently, “Y” )ompany !iles a petition !or volntary insolven'y. 8as “Z” violated any provision o! the Insolven'y Law thereby making it liable !or damages !or having disposed o! his 'redit or re'eivables !rom the 'ompany in !avor o! a sbsidiary in the 4.&.% Answer:

Z who is a 'reditor, may not be liable !or damages, nder the Insolven'y Law. (he assignee may, however, nder the powers granted to him by the insolvent debtor and take possession thereo!, within the limits provided by law. Sec. 7A% Insolvency Law1 7>. 5shley $an!a'tring )ompany, a man!a'trer in 6ran'e o! a 'ertain brand o! 'igarette paper, appoints “X” )ompany the e3'lsive agent to sell its paper in the Philippines. 5mong its 'stomers are wellknown 'igarette man!a'trers in the Philippines. “Y” )ompany imports !rom a dealer in 6ran'e the same 'igarette paper whi'h 5shley $an!a'tring )ompany prod'es, and sells it to several otlets. (he dealer in 6ran'e has no restri'tion whatsoever !rom the man!a'trer regarding the sale o! s'h paper !or e3port, nor did “Y” )ompany have any dealings with “X” )ompany. onetheless, “Y” )ompany is !lly aware o! the e3'lsive right o! “X” )ompany to handle the distribtorship o! the said 'igarette paper in the Philippines. Is “Y” )ompany liable !or n!air 'ompetition nder the (rademark Law, as amended, and 'old it be enGoined !rom selling said 'igarette paper%

Answer:

o, Y )ompany is not liable !or n!air 'ompe tition nder the (rademark Law. First )lternative &easonCI! X )ompany has s!!ered any damage, it is merely the indire't reslt o! legitimate 'ompetition in bsiness, !rom whi'h no right o! a'tion 'an arise. 9.2. 8 :A SC&) 0:A0. (he &2) approved the amendment. (he (rial )ort, however, was not noti!ied thereo!, so that pro'eedings therein 'ontined ntil $ay +, 7>A/, when “F” learning o! the dissoltion, #estioned the personality o! the

'orporation to 'ontine prose'ting the 'ase. “F” alleged that sin'e the 'orporation had already been dissolved bt had not taken steps to wind p its a!!airs and trans!er its assets to a trstee or assignee within the Dyear period as provide d nder &e's. AA and AK o! the )orporation Law now &e'. 7** o! the )orporation )ode1, it had 'eased to e3ist !or all prposes. Fe'ide the 'ase, with reasons. Answer:

“F=s” allegation is ntenable. 9here a 'orporation was dissolved dring the penden'y o! an a'tion in 'ort and the D years passed already a!ter said dissoltion, having no trstee appointed a''ording to law &e'. 7**, )orporation )ode1, its 'onsel who prose'ted and represented the interest o! the 'orporation may be 'onsidered a trstee o! said 'orporation may be 'onsidered a trstee o! said 'orporation, at least to the matter in litigation, to 'ontine the said litigation. Gelano v. Court of )ppeals% LD7:>;>% Fe'. 0@% /:9/ 1 7D. “XYZ” is a )ondominim )orporation within the meaning o! ".5. /A*?, the )ondom inim Law. It bilt 'ondominim nits within $anila and o!!ered the same !or sale. “5” boght one nit on installment basis nder a )ontra't to -y and &ell, whi'h provided that “5”, pon !ll payment o! the 'ontra't pri'e, shall be entitled to the ownership o! the nit so pr'hased and to shares o! sto'k pertaining thereto in the 'ondominim 'orporation. “5” de!alted in the payment o! his installments and “XYZ” !iled a 'ase in )ort !or 'olle'tion o! overde a''onts. “5” !iled a motion to dismiss the 'ase on the grond that the 'ontroversy between him and “XYZ” arose ot o! intra'orporate relations between sto'kholders, he being a sto'kholder o! “XYZ” already and, there!ore, the 'ontroversy is within the Grisdi'tion o! &2) nder P.F. o. >0*5. (he 'ort dismissed the 'ase and dire'ted the parties to ventilate their 'ontroversy be!ore the &2). Is the 8 :< SC&) /;9 1 b1 @mbo )ookware )orporation o! 4.&.5. is entitled to se o! the trademark “@mbo” !or being the !irst ser o! said trademark in the Philippines.  )sri o#o Co.% Ltd.% v. -ee Boc% =an. 0>% /:A/8 / SC&) / 1. 5lso, it is well settled that one may be de'lared n!air

'ompetitor even i! his 'ompeting mark is registered.  Par#e% ,avis  Co. v. -iu Foo  Co.% A> P$il. :091 7?. “XYZ” 9arehosing )orporation re'eives !rom “5” D0 bales o! 'otton !or deposit in said warehose !or whi'h a negotiable re'eipt was issed. 9hile the goods were stored in said warehose, “)” obtains Gdgment against “5” !or the re'overy o! a sm o! money. (he sheri!! pro'eeded to levy pon the goods pon a writ o! e3e'tion and dire'ted the warehoseman to deliver the goods. Is the warehoseman nder obligation to 'omply with the sheri!!=s order% 9hy% Answer:

o, the warehoseman is not nder obligation to 'omply with the sheri!!=s order. I! goods are delivered to a warehoseman by the owner or by a person whose a't wold bind the owner, and a negotiable re'eipt is issed !or them, they 'annot therea!ter, while in the possession o! the warehoseman, be atta'hed by garnishment or otherwise, or be levied pon nder e3e'tion, nless the re'eipt be !irst srrendered to the warehoseman, or its negotiation enGoined. Sec. 0;% are$ouse &eceipts Law.1 7A. “I” has invented a 'ertain devi'e, whi'h when atta'hed to the engine o! a motor vehi'le wold 't the 'onsmption o! gasoline by +0J. 9ithot se'ring a patent there!ore, he started man!a'tring the gadget in large #antities and promoted it sales. 5n ingenios “@” boght one gadget, dismantled and stdied it, and in de time was himsel! man!a'tring an identi'al devi'e. -e!ore o!!ering it !or sale, “@” se'red a patent !or his devi'e whi'h he 'alled “Easopid”. “I” learns o! the patent and desires to se're his own patent bt !earing that he might be sed !or in!ringement o! patent, seeks yor legal advi'e. 8ow 'an yo help him% 23plain brie!ly. Answer:

It depends. “I” may still apply !or a patent o! his invention, he being the !irst tre and a'tal inventor, anda'tal have inventorH the patent o! “@” bethat 'an'elled, !or having been issed to onewithin who is not the tre and provided “I” shall !ile the appli'ation !or patent 7 year !rom the time o! his sale o! his said devi'e in the PhilippinesH otherwise, withot those re#irements abovestated, “I” may no longer apply !or a patent on his said invention. Secs. :% /> and 09 Patent Law1 7K. K0, “5” obtained a !inal Gdgment !rom the )ort o! 5ppeal s ordering “-” to pay him the sm o! P+,000 as overtime 'ompensation. (he 'ase was remanded to the lower 'ort so that “-” 'old present eviden'e o! overtime 'ompensation already paid to “5”. Fring the penden'y o! the 'ase, “-” !iled a petition !or volntary insolven'y in another 'ort, sbmitting a s'hedle o! 'reditors, whi'h did not in'lde “5”.

“5” learned o! the petition and in de time !iled a motion to dismiss the insolven'y pro'eedings. “-” 'ontended that as “5=s” 'laim is merely in'hoate, the same not being !inally de'ided, it 'annot be in'lded in a s'hedle o! 'reditors and liabilities. Is “-=s” 'ontention tenable% 9hy% Answer:

“-=s” 'ontention is not tenable. 4nder the 'ir'mstan'es, “-” a'ted in gross bad !aith in the !iling o! petition !or insolven'y, in violation o! the prpose !or whi'h Insolven'y Law was ena'ted. (he de'ision o! the )ort o! 5ppeals ordering “-” to pay “5” the sm o! P+,000 on overtime 'ompensation was already a !inal Gdgment, and, there!ore, no longer in'hoate. (he in'lsion o! “5” in the &'hedle will 'ompletely vitiate the insolven'y pro'eedings.  In 1 &e Estate of +indanao +otor Line% Inc.% +ay 09% /:K7. (he 'orporation also has an nrestri'ted retained earnings in its book amonting to PDA+,000. &in'e the 'orporation needed the 'ash srpls to 'arry ot its e3pansion proGe'ts, the board o! dire'tors, in its meeting held on @anary +, 7>K*, approved a resoltion de'laring and ordering the issan'e o! +0J sto'k dividends in lie o! 'ash dividends. a1 9as the resoltion de'laring the issan'e o! sto'k dividends valid% 23plain yor answer. b1 9hat step or ste ps nee d be tak en in order that the de' ision o! the boa rd 'ol d be implemented% &tate the re#ired vote. Answer:

a1 Yes, the resoltion o! the -oard Fire'torso!de'laring the issan'e o! @7% sto'k dividends was valid, bt still ins!!i'ient !oro!prposes sto'k dividend.  Sec. Corporation Code1 b1 (he a!oresaid approval o! the -oard o! Fire'tors !or the de'laration o! sto'k dividends shall still be approved by the sto'kholders representing not less than *BD o! the otstanding 'apital sto'k, at a reglar or spe'ial meeting 'alled !or the prpose. In addition, there mst be the in'rease o! the athoried 'apital sto'k at least to a''ommodate the sto'k divid ends, to be approved by the &2), inasm'h as the athoried 'apital sto'k o! Palmavera )orporation was !lly sbs'ribed already.  Secs. 79  @7% Corporation Code1 D. $r. )r pr'hased !rom $r. Eman shares o! sto'k o! a mining 'orporation, whi'h shares were 'overed by several 'erti!i'ates indorsed in blank by $r. ;irgilio $ali' in whose name

the same were registered in the books o! the 'orporation. It was later dis'overed that the said shares had never been sold or otherwise disposed o! by $r. ;irgilio $ali', bt had been stolen !rom where they were kept. 9ho is entitled to said shares, $r. )r or $r. $ali'% "eason. Answer:

$r. $ali' is entitled to said shares. 5''ording to the )orporation )ode, no trans!er o! the shares o! sto'k shall be valid, e3'ept as between the parties, ntil the trans!er is re'orded in the books o! the 'orporation. o s'h entry in the name o! $r. )r having been made, it !ollows that the trans!er allegedly e!!e'ted by $r. Eman to $r. )r, is valid between themselves, bt it does not bind $r. $ali', who is not a party to said alleged transa'tion. In other words, the same is absoltely void, inso!ar as $r. $ali' is 'on'erned.  Sec. A7% Corporation Code8 ,e Los Santos v. +cGrat$% LD@9/9% Fe'. 09% /:;; 1 /.

“5” owns a hose val ed at P+0 ,000 whi'h he had insred against !ire !o r P700,000. 8e obtained a loan !rom “-” in the amont o! P700,000, and to se're payment thereo!, he e3e'ted a deed o! mortgage on the hose, bt withot assigning the insran'e poli'y to the latter. 6or “5=s” !ailre to pay the loan pon matrity, “-” initiated !ore'losre pro'eedings and in the ensing pbli' sale, the hose was sold by the sheri!! to “-” as highest bidder. Immediately pon issan'e o! the sheri!!=s 'erti!i'ate o! sale in his !avor, “-” insred the hose against !ire !or P7*0,000 with another insran'e 'ompany. In order to redeem the hose, “5” borrowed P700,000 !rom “)” and, as se'rity devi'e, he assigned the insran'e poli'y o! P700,000 to “)”. 8owever, be!ore “5” 'old pay “-” his obligation o! P700,000, the hose was a''identally and totally brned. Foes “5”, “-” or “)” have any insran'e interest in the hose% $ay “5”, “-” and “)” re'over nder the poli'ies% I! so, how m'h% Answer:

5s to 5: 8e has insrable interest in his hose, an e3isting interest, bt only !or P+0,000, the vale o! the said hose. -t, when he assigned it to ), said 5 had no more interest in his insran'e poli'y, and 5 'annot anymore re'over on said insran'e poli'y. 5s to -: 8e has insrable interest on 5=s hose, having an interest !onded pon an e3isting btP+0,000. only !or P+0,000, the vale o! 5=s hose, and there!ore, he 'an re'over only the interest, amont o! 5s to ): 8e has no insrable interest on 5=s hose, being mere 'ontingent or e3pe'tant interest not !onded on an a'tal right or valid 'ontra't to 5=s hoseH besides, the assignment to him o! 5=s insran'e poli'y was not approved by the insrerH hen'e, ) 'annot re'over. +. 5n inter island vessel, insred !or P* $ against “total and 'onst r'tive total loss,” sank in 7+0 !t o! water one mile o!! Parana#e dring a typhoon. 5!ter the typhoon, the ship owner gave written noti'e o! abandonment o! his interest in the entire snken ship to the insran'e 'ompany. "e!sing to a''ept the o!!er o! abandonment, the insrer hired salvors to re!loat the vessel at a total 'ost o! P/0,000. -e'ase the re!loated vessel needed repairs, the insrer issed invitations to bid !or repairs. &everal !irms sbmitted separate sealed bids

ranging !rom P7.* $ to P7.D $ !or the 'omplete re!rbishing andBor restoration o! the vessel to its srcinal 'ondition. D>, it had been e3porting tennis ra'kets nder the trademark “&mash $!g. )o.”, and that a!ter the trademark and tradename be'ame !amiliar to 6ilipino 'onsmers, de!endant $alakas began man!a'tring similar prod'ts nder the same trademark and tradename whi'h he registered with the Philippine Patent /K, &mash (ennis ra'kets prod'ed by the !oreign 'orporation were no longer imported in the Philippines. (he 'omplaint !ailed to allege that its trademark or tradename has been registered with the Philippine Patents @% Fe'. 09%a'tion /:A: *. X )orporation is in need o! land on whi 'h to 'onst r't an additional !a'tory to be sed in the e3pansion o! its bsiness @ose )r owns a pie'e o! land in (agaytay, "ial, whi'h is ideal !or the prpose, and the 'orporation o!!ers to by it at a !air pri'e. @ose is willing to part with the land on 'ondition that he be paid in shares o! sto'ks o! the 'orporation. (he -oard o! Fire'tors de'ides to a''ept the terms o! @ose, bt sin'e the athoried 'apital sto'k o! the 'orporation has been !lly sbs'ribed, it proposes to in'rease the 'apital sto'k so that it 'an 'onsmmate the sale o! the land. (he proposal, in'lding the pr'hase o! @ose=s land in e3'hange !or the new shares was sbmitted to the sto'kholders in a meeting 'alled !or the prpose.

Pedro "eyes, who has 700 shares in the 'orpo ration, alleging that he and all other sto'kholders have a preemptive right to the new shares, insists that the 'orporation isse to him his proportionate #ota o! the new shares whi'h he o!!ers to by in 'ash. 8olders o! K0J o! the otstanding 'apital sto'k are in !avor o! the proposal to in'rease the 'apital sto'k, in'lding the e3'hange o! @ose=s land !or new shares o! sto'k. Is Pedro "eyes within his rights in 'laiming a preemptive right% 23plain. Answer:

Pedro "eyes, who has 700 shares in the 'orporation, has no preemptive right in this 'asse. 4nder the )orporation )ode &e'.D>1, al sto'kholders shall enGoy the preemptive right to sbs'ribe to all isses o! shares in proportion to their respe'tive shareholdings. 8owever, nder the same provisions, s'h preemptive right does not e3ist when shares are issed in e3'hange !or property needed !or 'orporate prposes, provided sto'kholders representing *BD o! the sbs'ribed 'apital sto'k approve s'h issan'e. (here!ore, sine more than *BD o! the sto'ks !avored the proposal, Pedro "eyes 'annot insist on the preemptive right, otherwise he will in e!!e't make it impossible !or the 'orporation to a'#ire @ose )r=s land whi'h it needs !or its new !a'tory. D. I! the minority sto'kholders in a sto'k 'orporation 'mlate their votes so that they 'old be assred o! being represented in the -oard o! Fire'tors, what assran'e do they have that the dire'torBs representing them wold not be removed, 'onsidering that nder the )orporation )ode, a dire'tor “may be removed !rom o!!i'e with or withot 'ase by the vote o! the sto'kholders holding or representing at least *BD o! the otstanding 'apital sto'k% Answer:

5lthogh the )orporation )ode allows removal o! a dire'tor with or withot 'ase, it 'ontains a proviso to the e!!e't that s'h removal, i! withot 'ase, 'annot be sed to deprive the minority sto'kholders o! their right to representation throgh the se o! 'mlative voting. (here!ore, the minority sto'kholders who 'mlate their votes to ele't a representative to the -oard o! Fire'tors 'an be assred o! his 'ontinan'e in o!!i'e dring his term, nless he gives Gst 'ase !or his removal. /.

5 owns 700 ot o! 70,000 shares in the $an!a'trer=s -ank. 8e !iled a sit against - !or damages to an brea'h o! 'ontra't. 5 se'res a !avorable Gdgment against bt !ails tode obtain !ll alleged satis!a'tion thereo!. 5 re'eives a tip that - has a big time deposit with $an!a'trer=s -ank. - is not aware that 5 is a sto'kholder in the said bank. 5 goes to the bank and demands the right to inspe't the re'ords o! the bank to !ind ot whether - has indeed s'h a time deposit and how m'h. (he bank manager re!ses to a''ede to his demand. 5 threatens to se him on the grond that as a sto'kholder o! the 'orporation, he is given by the )orporation )ode the right to inspe't all the books o! the 'orporation. Is 5 entitled to look at s'h re'ords% 23plain. Answer:

o. nder the &e're'y o! -ank Feposits Law, all bank deposits o! whatever natre are 'onsidered as absoltely 'on!idential in natre and may not be in#ired into by any person

e3'ept nder spe'i!ied 'ir'mstan'es. (his 'ase does not 'ome nder any o! these e3'eptions. (he deposit is not the sbGe't matter o! the a'tion against -. 5lthogh it is tre that nder the )orporation )ode a sto'kholder has the right to inspe't all the bsiness re'ords o! his 'orporation, s'h right mst give way to the limitations set !orth nder the spe'ial law mentioned, whi'h was intended to en'orage deposits in banking instittions. 6rthermore, the right o! inspe'tion shold be e3er'ised in 'onne'tion with the interest o! the sto'kholder in the 'orporation and not in relation to s'h an e3traneos matt er as the 'ase in #estion. +. In @ne 7>K7, @an applied !or a li!e insran'e poli'y with a doble indemnity provision in 'ase o! death by a''ident. Fespite an e3press in#iry in the appli'ation !orm !or insran'e, he did not mention the !a't that he had s!!ered !rom viral hepatitis the previos year. 5s @an had !lly re'overed !rom the disease, the medi'al e3amination per!ormed by the insran'e 'ompany=s physi'ian did not reveal s'h previos illness, and showed that @an was healthy and was an insrable risk. (he poli'y was issed !orthwith. In $ar'h 7>KD, @an died in an atomobile a''ident. &bse#ent investigation revealed that @an was negligent in not having his brakes 'he'ked. (he insran'e 'ompany re!sed to pay @an=s wi!e, the designated bene!i'iary, on two gronds: that @an was gilty o! !radlent 'on'ealment o! his liver ailment, and that @an=s death was 'ased by his own negligen'e. (he poli'y is silent as to the e!!e't o! the insred=s negligen'e on the right to re'over therender. @an=s wi!e insists that she has a right to re'over be'ase @an=s death was 'ased by an a''ident whi'h had nothing to do whatsoever with his liver ailment. &he there!ore insists on doble indemnity. a1 Is she entitled to any in demnity% 23plain. b1 I! @an=s a''ident o''rred in @ly 7>KD, wold yor answer be the same% Answer:

a1

o, she is not entitled to any indemnity. 5lthogh @an did not die o! a liv er ailment, the !a't o! his 'on'ealment vitiated the insrer=s 'onsent to the 'ontra't o! insran'e. 4nder the Insran'e )ode, 'on'ealment o! a material !a't is a grond !or res'ission. 5nd materiality is determined by the whi'hpon 'ased death the probable and reasonable in!len'e not o! the !a't event 'on'ealed the the other partybt in by !orming his estimate o! the disadvantages o! the proposed 'ontra't, or in making in#iries. I! the insrer had known o! @an=s previos liver ailment, it wold in all probabilities have at least made more detailed in#iries abot it or make a spe'ial e3amination o! his liver !n'tion, or perhaps even 'harge a higher premim be'ase o! the greater risk involved. (he 'on'ealment was there!ore o! a material !a't, relieving the insrer !rom any liability on the poli'y, regardless o! the 'ase o! death. &in'e the insrer is relieved !rom liability, the #estion as to whether the event was an a''ident or not be'omes moot. In any 'ase, nder the Insran'e )ode, negligen'e o! the insred or o! others does not e3onerate the insrer.

b1

$y 'on'lsion wold be di!!erent. (he insrer wold be liable despite the !rad lent 'on'ealment be'ase the poli'y has be'ome n'ontestable sin'e more than * years had elapsed !rom the date thereo!

?. Friving his 'ar one night, 5 'rossed an interse'tion as the signal light trned green. &ddenly he saw an old woman 'rossing the street Gst a !ew !eet !rom his 'ar. 8e applied his brakes immediately, bt Gst the same, he hit the woman who trned ot to be senile already. 8e broght her to the nearest hospital where she was 'on!ined !or D days de to her inGries. 4pon her dis'harge, 5 had to pay the hospital bill whi'h amonted to P*,000 in'lding Xrays, do'tor=s !ees and medi'ines. -eing 'overed by the 'omplsory liability poli'y re#ired o! all vehi'le owners nder the Insran'e )ode, 5 pre!erred the matter to his insran'e 'ompany, whi'h re!sed to reimbrse him, 'laiming that sin'e 5 was not at !alt it was admitted that he was not speeding or in any way negligent1, there was no third party liability !or whi'h the insran'e 'ompany 'old be liable nder 5=s poli'y. Is the insran'e 'ompany liable to reimbrse 5 !or the hospital e3penses% 23plain. Answer:

Yes, the insran'e 'ompany is liable provided 5 'an present the poli'e report o! the a''ident and the medi'al report as well as the hospital re'eipts. (he Insran'e )ode has the “no!alt” provision imposing liability !or any 'laim !or death or inGry to any third party nder the 'omplsory motor vehi'le liability insran'e. 4nder the provision, the insran'e 'ompany may be held liable !or the ma3imm amont o! P+,000 withot ne'essity o! proving !alt or negligen'e o! any kind, provided the a!orementioned proo!s are sbmitted nder oath. Note:

&e'. D>7 o! "5 o. 70?0A now provides that the total indemnity in respe't o! any person shall not be less than P7+,000.00. A. 5 shipped 700 pie'es o! plywood !rom Favao )it y to $anila. 8e took a marine insran'e poli'y to insre the shipment against loss or damage de to “perils o! the sea, barratry, !ir, Gettison, pirates and other s'h perils”. 9hen the ship le!t the port o! Favao, the shipman in 'harge !orgot to se're one o! the portholes, thr whi'h sea water seeped dring the voyage, damaging the plywood. 5 !iled a 'laim against the insran'e 'ompany whi'h re!sed to pay on the grond that the loss or damage a peril o! the sea or any o! the 'overed by the It was or admitted was that not the de sea to was reasonably 'alm dring the risks voyage and that no poli'y. strong winds waves were en'ontered by the vessel. 8ow wold yo de'ide the 'ase% 23plain. Answer:

I wold de'ide in !avor o! the insred 5 be'ase the insrer was gilty o! brea'h o! the implied warranty o! seaworthiness. (he Insran'e )ode provides that in every 'ontra't o! marine insran'e, there is a warranty that the ship is seaworthy at the 'ommen'ement o! the risk. &eaworthiness re!ers not only to the str'tre o! the ship bt also as to its being properly laden. In other words, a ship whi'h is seaworthy !or the insran'e on the ship, may, by reason o! being n!it to re'eive the 'argo, be nseaworthy !or the prpose o! insran'e pon the 'argo. In this 'ase, the !a't that the porthole was not se'red at the port o! departre made the ship nseaworthy as !ar as the 'argo o! plywood was

'on'erned. (hs, the insrer shold be liable !or the damage thereto althogh the loss was not one de to perils insred against. K. (he $; $aliksi, laden with 'argo, was on its way !rom $anila to Favao. (yphoon -ebeng whi'h had been last reported as leaving the Philippine area, sddenly 'hanged its 'orse withot giving enogh time !or warning, and met $; $aliksi with all her strength. In order to lighten the vessel and prevent it !rom sinking, the )aptain, a!ter taking the proper steps, de'ided to Gettison part o! the 'argo. 5mong those Gettisoned were *0 barrels o! petrolem whi'h had been loaded on de'k with the 'onsent o! the shipper, @an "eyes. &ome big 'rates below de'k were also Gettisoned. (he storm gradally sbsided, and the $; $aliksi, althogh it s!!ered some damage, remained seaworthy and 'ontined on its way to Favao. ;isibility was still poor so that the vessel kept its light on. 5bot * hors later, the 'aptain and the 'rew o! the $; $aliksi sddenly saw another ship, withot any lights on, was a !ew meters away !rom its port side and wold apparently 'ross its path. (hey blew their whistles to warn the other vessel, at the same time trying to veer !rom its path. In spite o! this, the $; $aliksi was hit on its port side and sbse#ently sank. It appeared that the wat'h o! the other vessel, the $; $alakas, had !allen asleep. (he $; $alakas took the 'aptain and the 'rew o! $; $aliksi on board, and was able to salvage part o! the $; $aliksi=s 'argo and 'arried this also on board. Fis'ss brie!ly the rights andBor liabilities, i! any, o! @an "eyes, the owners o! the 'rates Gettisoned, the owners o! the 'argo saved, and the owners o! $; $aliksi ad the $; $alakas, respe'tively. Answer:

@an "eyes and the other owners o! the 'argo Gettisoned are entitled to 'ontribtion !or general average. 5ll the re#isites !or the proper general average are present: the Gettisoning was made deliberately !or the prpose o! saving both the vessel and its 'argo !rom imminent danger, and the vessel was saved. (his right to 'ontribtion sbsists althogh the ship sbse#ently sank be'ase the sinking was de to another and sbse#ent a''ident. @an "eyes has the right to 'ontribtion althogh his goods were loaded on be de'k be'ase petrolem de in!lammable allowed to be and in !a't mst loaded on de'k and not in to theitshold 5rt. K++ natre, )ode o!is)ommer'e1 -esides, "eyes knew and 'onsented to his 'argo being loaded on de'k. 8owever, only the 'argo saved !rom both risks i.e. typhoon and 'ollision1 'an be made sbGe't to s'h 'ontribtion, a!ter ded'ting the e3penses !or saving them. (he 'argo saved dring the typhoon bt lost as a reslt o! the 'ollision 'annot be made to 'ontribte althogh they also bene!ited !rom the Gettisoning. (heir 'omplete lose e3tingished any obligation on their part to be sbGe't to 'ontribtion !or general average. (he owner o! the $; $alakas is o! 'orse liable !or the damages to the $; $aliksi as well as to the owner o! the 'argo lost de to the 'ollision, be'ase s'h 'ollision was de to the negligen'e o! its wat'hman. 8owever, s'h 'ivil liability is limited to the vale o! the vessel $; $alakas with all its apprtenan'es and !reightage earned dring the voyage. 4nless o! 'orse it is 'overed by insran'e.

>.

5 and his 'lassmates take a bs !rom 4P to Miapo. is more than D0J only * aliens may sit in X=s board. KD, $r. P resigned !rom 5LP85 and pr'hased the 'ompany hose he had been o''pying. 5 !ew days later, a !ire o''rred reslting in the death o! $r. P and the destr'tion o! the hose. 9hat are the rights o! 5LP85 a1 agains t $tal Li!e Insran'e )ompa ny on the li!e insran'e poli'y% b1 against -eta Insran'e )ompany on the !ire insran'e% Answer:

a1 5LP85 'an re'over against $tal Li!e Insran'e )o. in the li!e insran'e poli'y as its insrable interest in the li!e o! the person insred, $r. P, e3isted when the insran'e took e!!e't. In li!e insran'e, insrable interest need not e3ist therea!ter or when the loss o''rred. b1 5LP85 'annot re'over !rom -eta Insran'e )o. sin'e an interest in the property insred mst e3ist not only when the insran'e took e!!e't bt also when the loss o''rs. &in'e the !ire that destroyed the insred=s hose took e!!e't a!ter 5LP85 had sold the hose to $r. P, the insrable interest o! 5LP85 in the property insred was no longer e3isting when the loss o''rred. +. K*, @an applied !or a li!e insran'e poli'y with 5'me Li!e Insran'e )o. (he poli'y was issed to @an on @ne D0, 7>K* bt the date o! isse, as appearing on the poli'y was $ay 7+, 7>K*, the date o! his appli'ation. @an sbse#ently realied that some o! his answers in the insran'e appli'ation were erroneos. 5''ordingly, he spplied the insran'e 'ompany with the 'orre't replies. 8owever, his letter to the insran'e 'ompany was lost in the mails. @an died @ne 7, 7>K/.

(he insran'e 'ompany now re!ses to pay @an=s bene!i 'iary 'ontending that @an misrepresented the state o! his health at the time o! his appli'ation. Is the insran'e 'ompany liable% &tate yor reason. Answer:

Yes. (he in'ontestability 'lase that mst be 'ontained in every individal li!e insran'e poli'y re!ers to the date o! its isse as shown in the poli'y. &in'e the poli'y o! li!e insran'e had been in !or'e dring the li!etime o! the insred, @an, !or a period o! * years !rom $ay 7+, 7>K*, the date o! isse as shown in the poli'y, the poli'y has be'ome in'ontestable. (he insran'e 'ompany 'an no longer prove that the poli'y is void a' initio or res'indable by reason !radlent 'on'ealment or misrepresentation o! the insred. ?. (o se're a loan o! P70 $, < mortgaged his bild ing to ). in a''or dan'e with the loan arrangements, < had the property insred with 5'me Insran'e )ompany !or P70 $ with ) as the bene!i'iary. ) also took an insran'e on the bilding pon his own interest with -eta Insran'e )o. !or P+ $. (he bilding was totally destroyed by !ire, a peril insred against in both insran'e poli'ies. It was sbse#ently determined that the !ire had been intentionally started by < and that, in violation o! the loan agreement, < had been storing in!lammable materials in the bilding. 8ow m'h 'an ) re'over !rom either or both insran'e 'ompanies% 9hat happens to the P70 $ debt o! < to )% Answer:

a1 ) 'annot re'over !rom 5'me Insran'e )o. nless the poli'y otherwise provides, where a mortgagor o! property e!!e'ts insran'e in his own name providing that the loss shall be payable to the mortgagee, the insran'e is deemed to be pon the interest o! the mortgagor. 5ny a't o! the mortgagor prior to the loss whi'h wold otherwise avoid the insran'e will have the same e!!e't. 5part !rom the storing o! the in!lammable materials, the a't o! the ownermortgagor, 7>1. In this 'ase, -eta Ins. )o. will be'ome entitled to 'olle't P+ $ !rom ?0H that de to the sperior #ality and widespread se o! its prod'ts by the pbli', the same are well known to 6ilipino 'onsmers nder the tradename “Prin'e $an!a'tring Indstries, In'.” and trademark “Prin'e”H that long a!ter the 'ommen'ement o! the se o! plainti!!=s trademark and tradename in the Philippines, de!endant began man!a'tring and selling ball bearings nder the trademark “Prin'e” and tradename “Prin'e Indstries, )o.”H that de!endant has registered with the Philippine Patent ?> and had bilt p enormos goodwill. 5'ting on the petition, the Patent K+. (he loan agreement was signed in $anila and the parties even had it notaried by a notary pbli'. a1 Is the stiplation !or payment in 5meri'an dollars en!or'eable% 23plain. b1 Foes the obligation to pay sbsist% 23plain. Answer:

a1 (he stiplation !or payment in 5meri'an dollars is not en!or'eable. (hat is de'lared nll and void and o! no e!!e't by the law. b1 (he obligation to pay, however, sbsists. 9hat the law spe'i!i' ally prohibits is payment in 'rren'y other than legal tender. It does not de!eat a 'reditor=s 'laim !or payment, whi'h shall be dis'harged in 'rren'y whi'h is legal tender in the Philippines, at the 'rrent rate o! e3'hange at the time o! payment. >. In a 'omplaint !or damages, Zebra )orp oration allege that its president, 5nton $olina, s!!ered mental angish, so'ial hmiliation and serios an3iety as a reslt o! the tortos a'ts o! K/ Ealant with 5lp ha Insran'e )o., In'. !or own damage, the!t and thirdparty liability e!!e'tive 5gst *7, 7>K/ to 5gst *0, 7>K+. K+ the 'ar was broght to “)ar &pe'ialist”, a well known ato repair shop !or general 'he'kp. K+, while in the 'stody o! the said shop, the 'ar was taken by one o! the employees o! the shop and driven to a hideot in $ontalban, "ial. 9hile travelling along a narrow street, the 'ar smashed into a parked gravel and sand tr'k and it s!!ered an e3tensive damage. "ey !iled a 'laim !or total loss with 5lpha, bt the 'laim was denied. "ey then sed 5lpha to 'olle't on the poli'y.

"le on the said 'ase stating the legal basis in spport o! yor de'ision. Answer:

(he insrer is liable. (he 'ontra't o! insran'e shall be interpreted, in 'ase o! dobt, in !avor o! the insred "ey -atista, who is entrsting his 'ar and key to the shop ownerH its employees are presmed to have insred=s -atista1 permission. (he the!t 'lase applies, sin'e the a!oresaid a't o! the employees o! the shop owner is within the arti'le on the!t o! the "evised Penal )ode. 7D. 2dardo 6ernande applie d !or and was issed Poli'y o. 0AAA by 5tlas Li!e Insran 'e )orporation on a wholeli!e plan !or P*00,000. 5lthogh he was married to )lara, with whom he had + legitimate 'hildren, he designated his 'ommonlaw wi!e, Fiana )r, as his revo'able bene!i'iary in the poli'y, and re!erred to Fiana in his appli'ation and poli'y, as his wi!e. + years therea!ter, he died. Fiana immediately !iled her 'laim !or the pro'eeds o! the poli'y as the designated bene!i'iary. )lara also !iled her 'laim as legal wi!e. (he insran'e 'ompany !iled a petition !or Interpleader be!ore the "() o! "ial to determine who shold be entitled to the pro'eeds o! the poli'y. I! yo were the Gdge, how wold yo de'ide the said interpleader a'tion% 23plain. Answer:

I! I were the Gdge, I wold de'ide that the legal wi!e, )lara, be entitled to the pro'eeds o! insran'e taken by 2dardo 6ernande who named his 'ommonlaw wi!e, Fiana, as his revo'able bene!i'iary, at the time they were gilty o! 'on'binage. In that 'ase, the designation o! Fiana is void, being prohibited by the ew )ivil )ode 5rt. AD> and *07*1. (he gilt o! 2dardo and Fiana !or 'on'binage may be proved by mere preponderan'e o! eviden'e in the same a'tion and there is no need !or a 'riminal 'onvi'tion !or 'on'binage. 7/. Fon $ariano was able to se're a !avorable Gdgment against estor Pe !or re'overy o! sm o! money and the said Gdgment had be'ome !inal and e3e'tor. Fon $ariano was in!ormed by someone that estor Pe might have a sieable savings deposit with Xena )ommer'ial -ank, o! whi'h Fon $ariano was a sto'kholder, with 7 share registered in his name. Immediately, he rshed to the -ank and demanded !rom the -ank $anager that he be shown the bank re'ords to see i! estor Pe really had s'h savings deposit. 9hen the -ank $anager re!sed'orporate and invoked ".5. o. 7/0+, Fon $ariano 'ited his right as a sto'kholder to inspe't re'ords. a1 Is the stand o! the -ank $anager legally tenable% 23plain. b1 9hat remedy is available to Fon $ariano% 23plain. Answer:

a1 Yes, the stand o! the -ank $anager o! Xena )ommer'ial -ank, o! whi'h Fon $ariano is a sto'kholder, with 7 share, is legally tenable. 5lthogh as a general rle in the )orporation )ode, a sto'kholder may inspe't the books o! a 'orporation, yet it is sbGe't to a spe'ial law, like ".5. o. 7/0+, whi'h operates as e3'eption to the general rle, and shall be stri'tly 'onstred. (he 'ase o! Fon $ariano does not !all nder any o! the e3'eptions.

b1 (he only remedy o! Fon $ari ano, his Gdgm ent !or a sm o! mon ey against estor Pe being already !inal and e3e'tor, is to ask the 'ort to re#ire the 'ashier o! the said bank to in!orm the 'ort whether or not estor Pe has a deposit in the bank !or prposes o! garnishment, to insre satis!a'tion o! the Gdgment. 7+. -ohol $ining )orporation is ?0J 6ilipinoowned and /0J )anadianowned. 5s provided in its 5rti'les o! In'orporation and -yLaws, its -oard o! Fire'tors is 'omposed o! > members. Fring the last annal sto'kholders meeting held on $ay D7, three o! the nine ele'ted dire'tors were )anadian 'itiens. @an de la )r together with two other 6ilipino sto'kholders petitioned the &2) to dis#ali!y the said three )anadians and to enGoin them !rom dis'harging their !n'tions as dire'tors, on the gronds that 71 aliens 'annot parti'ipate in any 'apa'ity in a nationalied indstry, like miningH and *1 the e3ploitation o! natral resor'es is reserved nder the )onstittion to 6ilipino 'itiens. 9ill the petition prosper% Answer:

(he petit ion will not prosp er. (he ele't ions o! aliens as members o! the board o! dire'tors or governing body o! 'orporations or asso'iations, engaging in partially nationalieda'tivities, are allowed by law, in proportion to their allowable parti'ipation or share in the 'apital o! s'h entities, like mining or development o! natral resor'es, in whi'h the !oreigners may even own /0J o! the 'apital. 7?. 5't o. 7>+?, more poplarl y known as (he Insolven' y Law, deals with 71 sspension o! payments, *1 volntary insolven'y and D1 involntary insolven'y. -rie!ly dis'ss the said sbGe'ts and otline the pro'edre that will have to be ndertaken in 'onne'tion therewith. Answer:

71 &euisites for Suspension of Payments .CPetition !or sspension o! payments shall be made nder the !ollowing re#isites: a1 Petition to be !iled by a debtor: a.71 propertyo!tomeeting 'over allthem his debts a.*1 Possessing 6oreseeing s!!i'ient the impossibility when they respe'tively !all de, and a.D1 Petitioning that he be de'lared in the state o! sspension o! payments. Petition need not be veri!ied1 b1

Fo'ments to a''ompany the petition: b.71 ;eri!ied s'hedle b.*1 ;eri!ied inventory b.D1 (he proposed agreement he re#ested o! his 'reditors

'1 ;ene: )ort o! 6irst Instan'e o! the provin'e or 'ity in whi'h the debtor has r esided !or ? months ne3t pre'eding the !iling o! s'h petition.

*1 &euisites for 6oluntary Insolvency C;olntary insolven'y shall be institted nder the !ollowing re#isites: a1 Petition: (o be !iled by an insolvent debtor, a.71 K+, 2liabe th Fia had D separate deposit a''onts in her name with the same bank, namely: P*00,000 in time depositH P700,000 in 'rrent depositH and P+0,000 in savings deposit. 4nder the PFI) law, how m'h, i! any, 'old she re'over !rom ea'h o! the D separate a''onts% 23plain. Answer:

4nder the PFI) law, 2liabeth Fia, althogh having D separate deposit a''onts in her name, totaling PD+0,000, in the . (he vessel $B; &weet Per'e ptions, 'ommanded by Oapitan, its 'aptain, was nloading goods at a private whar! in aval, Leyte, when the ship bmped the whar! o! the pier 'asing it to 'ollapse into the sea. It trned ot that Oapitan !ailed to drop the vessel=s bow an'hors and to !asten the vessel property to the pier. (he vessel was pshed by the 'ombined a'tion ! the 'rrents in the -iliran Island &trait and the sal sothwest monsoon winds o! the season. 5s a reslt, Pantalan, the owner o! the whar!, lost not only the whar! bt also the goods that had Gst been nloaded on the pier pending their delivery to him. Pantalan sed both the owner o! the $B; &weet Per'eptions and kapitan !or the loss o! the

'argoes and the destr'tion o! the whar! o! the pier. (he vessel=s owner, who is in $anila, states that he e3er'ised de diligen'e in the sele'tion and spervision o! Oapitan. )an the vessel=s owner and kapitan be held liable !or the loss o! the whar! and the 'argoes% 23plain. Answer:

(he vessel=s owner is not liable !or the loss o! or damage to the whar! bt he 'an be held liable !or the loss o! the 'argo. (he 'ase o! a'tion on the loss o! or damage to the whar! is one o! culpa acuillana where de diligen'e in the sele'tion and spervision o! employees is a valid de!ense against liability. (hat de!ense, however, is not available !or the loss o! the 'argo sin'e the 'as e o! a'tion is one o! culpa contractual the goods had not yet been delivered to the 'onsignee1. 70. $amhnan was invited by his !rien ds to inves t in 5delantado )orporation, a newly organied !irm engaged in money market and !inan'ing operations. -e'ase o! his heavy investments, $amhnan be'ame the !irm=s Presi dent and, as s'h, pr'hased a big nmber o! 'ompters, typewriters and other e#ipment !rom (aktak )orporation on installment basis. 5delantado )orporation paid the down payment and (aktak )orporation issed the 'orresponding re'eipt. (o his 'hagrin, $amhnan dis'overed that the arti'les o! in'orporation had not been !iled by his !riends at that late date so he hrriedly attended to the matter. o sooner had the 'erti!i'ate o! in'orporation been issed by the &2) three months later when 5delantado )orporation be'ame bankrpt. 4pon being sed by (aktak )orporation in his personal 'apa'ity, $amhnan raised among his de!enses the do'trines o! de !a'to 'orporation and 'orporation by estoppels. )an the two de!enses be validly raised by $amhnan% 23plain. Answer:

either the do'trine o! de !a'to 'orporation nor the do'trine o! 'orporation by estoppels is appli'able or o! relevan'e. 5n atta'k against a de !a'to 'orporation may be raised only by the &tate. In the 'ase o! a 'orporation by estoppels, rights or de!enses are established in !avor o! persons with whom the 'orporation deals bt not in !avor o! those who represent themselves as s'h 'orporation where none e3ists. $amhnan, instead, may raise the de!ense that personal liability ona'ts the part o! o!!i'ers and dire'tors o! a 'orporation is in'rred only in 'ases o! patently illegal 'ommitted or 'onsented to by them, bad !aith or gross negligen'e on their part and in 'on!li't o! interst sitations, not one o! whi'h is involved in the problems. 77. 9ithot going into nne'essar y details, dis'ss the legal 'onse#en'es o! a 'reditor=s !ailre to 'omply with the (rth in Lending 5't, in'lding the e!!e' t on the valid ity or en!or'eability o! the 'ontra't or transa'tion involved. Answer:

(he !ailre o! a 'reditor to 'omply with the (rth in Lending 5't wold reslt in the debtor being allowed to re'over the interest payment !rom the 'reditor bt the validity o! the 'ontra't or transa'tion itsel! is not adversely a!!e'ted.

7*. K+, $atatag )orporati on amassed sbstantial pro!its in a highly l'rative transa'tion. &ome minority sto'kholders, however, did not want to 'ompli'ate their in'ome ta3 problems !or 7>K+ and re!sed to a''ept the 'ash dividends. (hey also !iled sit to 'ompel the other sto'kholders to retrn to $atatag )orporation the money re'eived as dividends. ot one o! the sto'kholders who !ormed the maGority Goined in the sit sin'e they were happy with the money they re'eived. a1 9ill the a'tion prosper% 23plain. b1 5s one o! its de!enses in 'ort, the boar d o! Fire'tors raised the “bsi ness Gdgment rle”. 9hat is the bsiness Gdgme nt rle and does it have any relevan'e to this 'ase% 23plain. Answer:

a1 (wo alternative answers are s ggested: i. (he a'tion will prosper. 5 'ash dividend based on reappraisal vale is improper. Fividends may only be de'lared !rom srpls pro!it !rom operations. ii.

(he a'tion will not prosper. (he !a't that, shortly a!ter the de' laration o! 'as h dividends, the 'orporation had earned sbstantial pro!its assming that the amont thereo! wold be s!!i'ient to 'over the dividend de'larat ion1 dring the same month wold be s!!i'ient to 're the de!e't. 5 violation o! the trst !nd do'trine, whi'h is the rationale o! the legal re#irement on dividend de'laration, is not void per se and it is, there!ore, ss'eptible to 'rative events in ltimate reslts.

b1 (he bsiness Gdgment rle wold allow the board o! dire'tors to e3er'ise absolte bt sond dis'retion on matters they are athoried to 'onsider and a't pon. In the de'laration o! dividends, the rle has relevan'e !or it lies pon the -oard=s dis'retion when to de'lare dividends, as well as the 'lass and e3tent thereo!. 7D. (he widow o! a !ormer President 'ommi ssioned $atalino to write a biography o! her late hsband !or a !ee. 4pon 'ompletion o! the work, the widow paid $atalino the agreed pri'e. (he wasnot 'opyrighted (he widow, however, 'hanged her mind pon reading the bookbiography and de'ided to have it pblished. a1 )an the President=s widow sell the property withot the 'onsent o! $atalino% 23plain. b1 )an the President=s widow trans!er the 'opyright withot the 'onsent o! $atalino% Answer:

a1 (he President=s widow 'an sell the property withot the 'onsent o! $atalino. (he widow was the owner o! the work that was done by $atalino prsant to their agreement. b1 &in'e the 'opyright is likewise owned by the wid ow, the trans!er thereo! may be e!!e'ted even withot the 'onsent o! $atalino. KA, Y died in a motor a''ident. &hortly therea!ter, X !iled his insran'e 'laim. &hold the insrer pay% "easons. Answer:

(he insrer is not obliged to pay. 6riendship alone is not the insrable interest 'ontemplated in li!e insran'e. Insrable interest in the li!e o! others other than one=s own li!e, sposes or 'hildren1 is merely to the e3tent o! the pe'niary interest in that li!e. 5ssming that s'h pe'niary interest e3ist, an insrer wold be liable despite 'on'ealment or misrepresentation i! the insran'e had been in e!!e't !or more than * years in'ontestability 'lase1. A. (here was a severe typhoon when the vesse l $B; 6ort na 'ollided with $B; &er te. It is 'on'eded that the typhoon was a maGor 'ase o! the 'ollision, althogh there was a strong possibility that it 'old have avoided i! the 'aptain o! $B; 6ortna was not asleep at the time o! the 'ollision. 9ho shold bear the damages to the vessels and their 'argoes% Answer:

4nder the do'trine o! ins'rtable !alt, neither o! the 'arriers may go a!ter the other. (he shippers may 'laim damages against the shipowners and the 'aptains o! both vessels, having been both negligent. (heir liability is solidary. (he shipowners have the right to re'over damages !rom the master o! the vessels who were both gilty o! negligen'e. (he presen'e o! a typhoon in the area had in !a't warranted a greater degree o! alertness on their part. K. Philip $ari'io shipped a bo3 o! 'ig arettes to a dealer in aga )it y throgh -i'ol -s )ompany --)1. 9hen the bs rea'hed L'ena )ity, the bs developed engine troble.

(he driver broght the bs to a repair shop in L'ena where he was in!ormed by the me'hani' that an e3tensive repair was ne'essary, whi'h wold take at least * days. 9hile the bs was in the repair shop, (yphoon )oring lashed Meon Provin'e. (he 'argoes inside the bs, in'lding $ari'io=s 'igarettes, got wet and were totally spoiled. $ari'io sed --) !or damage to his 'argoes. Fe'ide. Answer:

(he --) is liable !or damages to the 'argoes lost by $ari'io. 5 natral disaster wold relieve liability i! it is the pro3imate and only 'ase o! the damage. (he 'arrier itsel!, in this 'ase, had been negligent. (he presmption o! negligen'e in 'lpa 'ontra'tal is not over'ome by engine troble whi'h does not pre'lde its having been de to the !alt o! the 'ommon 'arrier. (he !a't that an e3tensive repair work was ne'essary whi'h, in !a't, took * days to 'omplete somehow Gsti!ies an impression that the engine troble 'old have been dete'ted, i! not already known, well be!ore the a'tal breakdown. >. Fring the ele'tions last $ay, 5-, a 'ongressional 'andidate in $arind#e, 'hartered the heli'opter owned by Lode $ining )orporation L$)1 !or se in the ele'tion 'ampaign. 5paid L$) the same rate normally 'harged by 'ompanies reglarly engaged in the plane 'hartering bsiness. In the 'harter agreement between L$) and 5-, L$) e3pressly dis'laimed any responsibility !or the a'ts or omissions o! its pilot or !or the de!e'tive 'ondition o! the plane=s engine. (he heli'opter 'rashed killing 5-. Investigations dis'losed that pilot error was the 'ase o! the a''ident. L$) now 'onslts yo on its possible liability !or 5-=s death in the light o! the above !indings. 8ow wold yo reply to L$)=s #ery% Answer:

I wold reply to L$)=s #ery as !ollows: L$) may not be held liable !or the death o! 5-. 5 stiplation with a private 'arrier that wold dis'laim responsibility !or simple negligen'e o! the 'arrier=s employees is a valid stiplation. &'h a stiplation, however, will not hold in 'ases o! liability !or gross negligen'e or bad !aith. 70. $artin ove shipped an e3pensive video e#ipment to a !riend in )eb. $artin had boght the e#ipment !rom 8ong Oong !or 4.&. +,000. (he e#ipment was shipped throgh $B& LapLap nder a bill o! lading whi'h 'ontained the !ollowing provision in big bold letters: “(he limit o! the 'arrier=s liability !or any loss or damage to 'argo shall be P*00 regardless o! the a'tal vale o! s'h 'argo, whether de'lared by shipper or otherwise.” (he 'argo was totally damaged be!ore rea'hing )eb. $artin ove 'laimed !or the vale o! his 'argo +,000 or abot P700,0001 instead o! Gst P*00 as per the limitation on the bill o! lading. Is there any legal basis !or ove=s 'laim%

Answer:

(here is legal basis !or the 'laim o! $artin ove. (he stiplation limiting the 'arrier=s liability p to a 'ertain amont “regardless o! the a'tal vale o! s'h 'argo, whether de'lared by its shipper or otherwise,” is violative o! the re#irement o! the “)ivil )ode that s'h limiting stiplations shold be !airly and !reely agreed pon 5rts. 7A/>7A+0 )ivil )ode1. 5 stiplation that denies to the shipper the right to de'lare the a'tal vale o! his 'argoes and to re'over, in 'ase o! loss or damage, on the basis wold be invalid 77. (ars )orporation ()1 'ommen' ed operation in 7>K+. Fring that year ()=s loss !rom operations amonted to P+00,000. In 7>K?, () re'oped all its losses in 7>K+, registering a net a!ter ta3 pro!it o! P+00,000. In the same year, the management o! the 'ompany dis'overed that a par'el o! land srcinally a'#ired in 7>K+ !or PD00,000 had at least dobled in vale and a''ordingly the -oard o! Fire'tors o! (), with the 'on!ormity o! the e3ternal aditors and ba'ked p by a valation report o! a reptable appraiser, re'ognied a revalation or appraisal srpls o! PD00,000. $ay the -oard o! Fire'tors o! () de'lare a 'ash dividend ot o! this srpls% 23plain. Answer:

(he -oard o! Fire'tors 'annot de'lare 'ash dividends ot o! the revalation or appraisal srpls that may !l'tate !rom time to time. Fividends 'an only be de'lared !rom srpls pro!its arising !rom its operations. 7*. (he sto'kholders o! People Power , In'. PPI1 approved the !ollow ing two resoltions in a spe'ial sto'kholder=s meeting: i1 "esoltion in'reasing the athoried 'apital sto'k o! PPI, and ii1 "esoltion athoriing the -oard o! Fire'tors to isse !or 'ash payment the new shares !rom the proposed 'apital sto'k in'rease in !avor o! otside investors who are non sto'kholders. (he !oregoing resoltions were approved by sto'kholders representing >>J o! the total otstanding 'apital sto'k. (he sole dissenter was @ose 2strada who owned the rest 7J o! the sto'k. a1 5re the resoltions binding on the 'or porations and its sto'kholders, in'lding 2strada, the dissenting sto'kholder% b1 9hat remedies, i! any, are available to 2strada% Answer:

a1 (he board resoltions i1 in'reasing the athoried 'apital sto'k o! PPI, and ii1 athoriing the -oard to isse new shares !rom that in'rease o! 'apital sto'k in !avor o! otside investors is binding on the sto'kholders sin'e the said resoltions were approved by the sto'kholders representing at least *BD o! the total otstanding 'apital sto'k. b1 2strada, the dissenting sto'kholder, may avail himsel! o! the appr aisal rights by 'laiming that sin'e the resoltions appear to !avor otside investors, as against in'mbent sto'kholders, on the in'rease in 'apital sto'k, he may demand the payment o! the appraised vale o! his shares.

7D. (he propo sed 5mended -ylaws o! )X( In'., a 'orporation liste d in the $akat i &to'k 23'hange, 'ontain the !ollowing provisions: a1 (hat the holders o! a maGority o! the otstanding 'apital sto'k may ele't all the members o! the -oard o! Fire'torsH b1 (hat no o!!i'er o! the 'orporation shall be re#ired to be a sto'kholderH '1 (hat the dire' tors= bonses shall be e#iv alent to 70J o! gross revenes in any given yearH d1 (hat a 'andidate !or dire'tor mst own at least 7,000 sharesH e1 (hat meetings o! the -oard o! Fire'tors need not be held in the prin'ipal o!!i'e and may even be held otside the 'ontry. 5s )orporate &e'retary o! )X(, yo are asked to 'omment on the validity o! the above proposed amendments. Answer:

5s )orporate &e'retary o! )X(, I wold give the !ollowing 'omments on the #estion o! validity o! the varios proposed amendments to the -ylaws, as !ollows: a1 (he minority sto'kholders may not be deprived o! their right to vote in ele'ting the members o! the board o! dire'torsH hen'e, the proposed amendment wold be invalid. b1 (he President shold be a dire' tor who sho ld ths own at least one sha re o! sto' k. (here!ore, the sggested amendment wold be invalid nless the President is e3'lded !rom the proposed amendment. '1 (he dire'tor=s bonses total 'ompensation1 'annot e3'eed 70J o! net in'omeH a''ordingly, the proposed amendment !i3ing the dire'tors= bonses to 70J o! gross venes in any given year wold be invalid. d1 9hile the -ylaws may provide additional #ali!i'ations !or dire'tors s'h #ali!i'ations mst not be nreasonable. 5 #ali!i'ation re#iring a dire'tor to own at least 7,000 shares, in my view, wold be nreasonable and a denial o! the right o! representation by the minority shareholders in the -oard o! Fire'tors. e1 (he meetings o! the -oard o! Fire'tors, nlike those o! the sto'kholders, may be held otside thebe PhilippinesH a''ordingly, the proposed amendment to the bylaws on the matter 'an valid. 7/. , Grisdi'tion now also lies with the $etropolitan, $() and $)() i! the amont involved does not e3'eed P*0,000. 7A. )aptain 8ook, the ship 'aptain o! $.;. Peter Pan, overloaded the $.;. Peter Pan, as a 'onse#en'e o! whi'h the vessel sank in the middle o! the &l &ea, and nothing whatsoever was re'overed. (he owners o! the 'argo and the heirs o! the three passengers o! the vessel !iled an a'tion !or damages in the amont o! P+00,000 against $r. 9endy, the owner. a1 9ill the a'tion prosper% "easons. b1 23plain a maritime protest. 9hen and where shold it be !iled% Answer:

a1 (he total loss or the law!l abandonment o! the vessel pre'ldes !rther liability on the part o! the shipowner, e3'ept to the e3tent o! earned !reightage or pro'eeds o! insran'e, i! any, !or the loss o! 'argo arising !rom the “'ond't o! the 'aptain in the 'are o! goods”. (his right o!only abandonment likewise applies to 'ollisions and shipwre'k bt in the latter 'ase !or npaid wages. 5''ordingly, the a'tion !iled by the owners o! the lost 'argo, absent any remaining vale o! the vessel, earned !reightage or insran'e pro'eeds, may not prosper. (he a'tion !iled by the heirs o! the de'eased passengers may, however, prosper sin'e, e3'ept in 'ollisions, the shipowners are not granted the right o! abandonment. b1 5 maritime protest is a sworn statement stating the 'ir'mstan'es o! 'ollision whi'h mst be presented within */ hors be!ore the 'ompetent athority o! the port nearest to where the 'ollision had taken pla'e or the !irst port o! arrival or, i! it o''rs in a !oreign 'ontry, the Philippine 'onslar representative. 5n a'tion to re'over losses and damages arising !rom 'ollisions 'annot be admitted i! s'h protest, however, will not preGdi'e s'h a'tion by owners o! 'argo who were not on board the vessel or who were not in a 'ondition to make known their wishes.

7K. $r. ;illa, a !ran'hise holde r and the registered owner o! a tr'k !or hire, enter ed into a lease 'ontra't with $rs. &antos !or the lease by the latter o! said tr'k. (he lease 'ontra't was not broght to the knowledge o! the Land (ransportation, 6ran'hising, and "eglatory -oard and was there!ore not approved by the Land (ransportation, 6ran'hising, and "eglatory -oard. KK, X was killed on the o''asion o! a robbery in their hose. 9hile pro'essing the 'laim o! X=s bene!i'iary, Phoeni3 !ond ot that X was not an eligible employee as de!ined in the grop poli'y sin'e he has not been employed D0 hors a week by $anpower. Phoeni3 re!sed to pay. $ay X=s bene!i'iary invoke the in'ontestability 'lase against Phoeni3% "easons. Answer:

71 (he re!sal o! Meens to pay is Gst i!ied. (he da mage is not 'overed by the pol i'y whi'h only insres “against all dire't loss and damage by !ire.” (he damage being 'laimed by X was 'ased by intense heat and great volmes o! smoke and soot and not dire'tly by !ire. (he stiplation in the poli'y is paramont, not being 'ontrary to law. *1 (he bene!i'iary o! X may validly invoke the in'ontestability 'lase. I! the in'ontestability 'lase 'an apply even to 'ases o! intentional 'on'ealment and misrepresentation, there no 'ogent !or!illed denying s'h appli'ation where the insred had notwold beenbe gilty thereo!.reason 9hen X ot the 'ard 'ontaining the printed 'lase “I re#est the insran'e !or whi'h I may be'ome eligible nder said Erop Poli'y”, it behooved the insrer to look into the #ali!i'ations o! X whether he 'an ths be 'overed or not by the grop li!e insran'e poli'y. In issing the 'erti!i'ate o! 'overage to X, Phoeni3 may, in !a't, be said to have waived the D0hor per week re#irement. +. 71 9hat is the test to determine whether an instrment is negotiable or not% *1 X boght a Geep !rom "eliable $otors )ompany !or a 'onsideration o! P+0,000. 8e paid P*+,000 in 'ash and e3e'ted the !ollowing promissory note on the balan'e:

&eptember 7, 7>K> I promise to pay the sm o! P*+,000 to "eliable $otors )ompany on or be!ore Fe'ember D7, 7>K>. &gd. X 5t the bottom o! the note, X wrote in his own handwriting the !ollowing: “I will not sell the Geep ntil I shall have paid it in !ll.” Is the note negotiable% "easons. Answer:

71 In determining whether an instrment is negotiable or not, the sole test is whether or not the re#isites o! negotiability e3pressed in &e'. 7 o! the IL are met on the !a'e o! the instrment itsel!. (he intrinsi' validity o! the instrment is o! no moment. 2ven the a''eptan'e or nona''eptan'e by the drawee o! the instrment wold be irrelevant. *1 (he promissory note is not negotiable sin'e the same is payable to "eliable $otors merely and not “to order or to bearer” or words o! similar import. ?. 71 X make s a promissory note !or P+0 0 payable to 5, a minor, to help him by s' hool books. 5 indorses the note to - who, in trn, indorses the note to ). ) knows 5=s minority. I! ) ses X on the note, 'an X set p the de!ense o! minority and la'k o! 'onsideration% *1 5dam makes a note payable to -ert or order. -ert indorses the note to )ora. Foglas steals the note and indorses it to 2lvin by !orging )ora=s signatre. 2lvin then indorses the note to 6eli3 who is not aware o! the !orgery. 9hat is the right o! 6eli3 against 5dam, -ert, )ora, Foglas and 2lvin% Answer:

71 (he promissory note not bein g payable to order or to bearer , is not a negotiable instrment. 5''ordingly, the trans!eree merely steps into the shoes o! the trans!eror and, being merely a s''essorininterest, has no right greater than that o! the trans!eror. X may ths set p against ) the possible de!enses o! minority and la'k o! 'onsideration. *1