-
Mercantile Law
Jeff Davids notes
I. LETTERS OF CREDIT
A. Definition
- A letter of credit is a written instrument whereby the writer
requests or
authorizes the addressee to pay money or deliver goods to a
third person and
assumes responsibility for payment of debt therefore to the
addressee (Transfield
Phils vs. Luzon Hydro Corp 443 Scra 307)
- Nature the letter of credit has evolved as the ubiquitous and
most important
device in international trade. A creation of commerce and
businessmen the letter
of credit is unique in the number of parties involved and its
supranational
character. (Transfield Phils vs Luzon Hydro Corp, supra)
B. Parties to a Letter of Credit
- There would be at least 3 parties to a letter of credit.
- Arrangement:
Buyer (Applicant) one who procures the letter of credit
Issuing Bank one who issues the letter of credit and undertakes
to pay
seller upon receipt of the draft and proper documents of
title
Seller (Beneficiary) one who ships the goods to buyer and
delivers the
documents of title to the bank along with the draft.
(Bank of America vs CA 228 Scra 357 (1993))
- Rights and Obligations of Parties
Obligations of Applicant (Buyer)
Reimbursement of issuing bank upon receipt of documents of
title
Oligations of Issuing Bank
Letters of credit constitute the primary obligation, and not
merely an
accessory contract, of the issuing bank separate from the
underlying
contract it may support.
Protect importers interest by paying letters of credit only
upon
surrender of documents that strictly conform to the terms of
the
letter of credit.
Obligations of the Seller
Submission of documents of title to the correspondent bank
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Ask the bank to honor the credit
C. Basic Principles of Letters of Credit
1. Doctrine of Independence
-engagement of issuing bank is to pay seller-beneficiary of the
credit once the
draft and the required documents are presented to it. It assures
the seller
that prompt payment is to be made, independent of any breach of
the main
contract and precludes the issuing bank from determining whether
the main
contract is actually accomplished or not. (Transfield Phils Inc.
vs Luzon Hydro
Corp, supra)
2. Fraud Exception Principle
-Fraud is an exception to the independence principle,
untruthfulness of a
certificate accompanying a demand for payment under a standby
credit may
qualify as fraud sufficient to support an injunction against
payment. The
remedy against fraudulent abuse should not be granted
unless:
a. there is clear proof of fraud
b. fraud constitutes fraudulent abuse of independent purpose of
the
letter of credit and not only of fraud of the main agreement
c. irreparable injury might follow if injunction is not granted
or the
recovery of damages would be seriously damaged
(Transfield Phils Inc vs Luzon Hydro Corp, supra)
3. Doctrine of Strict Compliance
-documents tendered must conform strictly to the terms of the
letters of
credit, a correspondent bank which departs from what has been
stipulated
under the letter of credit as where it acts upon and accepts a
fault tender acts
on its own risks and it may not therefore recover from the buyer
or the
issuing bank, as the case may be, the money thus paid to the
beneficiary
seller. (Feati Bank vs CA 196 Scra 576)
II. TRUST RECEIPTS LAW
A. Definition/Concept of Trust Receipt Transaction
- Definition
A trust receipt is a commercial document whereby the bank
releases the
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goods in the possession of the entrustee but retains ownership
thereof
while the entrustree shall sell the goods and apply the proceeds
for the full
payment of his liabilities with the bank
- Concept
It is a security arrangement to which a bank acquires ownership
pf the
imported personal property (Garcia vs CA 258 Scra 446)
1. Loan/Security Feature
PART II
C. Obligation and Liability of the Entrustee
1. Payment/Delivery of Proceeds of Sale on Disposition of Goods,
Documents or
Instruments
- a trust receipt transaction imposes upon the entrustee the
obligation to deliver to
the entruster the price of the sale, or if the merchandise is
not sold, to return the
same to the entruster, and a violation of any of these
undertakings constitutes estafa
defined under Art. 315(1)(b) of the Revised Penal Code, as
proved by Sec. 13 of PD
115
(Gonzales vs. HSBC, 537 SCRA 255)
2. Return of Goods, Documents of Proceeds of the Sale or
Disposition of Goods,
Documents or Instruments in case of non-sale
- failure of the entrustee to turn over the sale proceeds, or to
return said goods if
they were not disposed of in accordance with the terms of the
trust receipt, shall be
punishable as estafa under Art. 315 (1) of the Revised Penal
Code, without need of
proving intent to defraud.
(Colinares vs. Cort of Appeals, 339 SCRA 609)
3. Liability for loss of goods, documents or instruments
- it is the entrustee that bears the risk of loss
4. Penal sanction if offender is a Corporation
- under PD 115, performance of the act is an obligation directly
imposed by law on
the Corporation, and consequently, since a corporation can only
act through its
-
officers, then the responsible office must necessarily be the
ones criminally liable
(Sia vs. Court of Appeals, 121 SCRA 655)
D. Remedies Available
- Entruster has the discretion to cancel the trust and take
possession of the goods or
seeks any third party action/claim or a separate civil action
which it deems best to
protect its rights, at any time upon default or failure of the
entrustee to comply with
any of the terms and conditions of the trust agreement
(South City Homes, Inc. vs. BA Finance Corp., 371 SCRA 603)
1. Entrustee always bound to pay loan
since trust receipts agreements are merely security for the loan
agreement,
the full-turnover of the goods subject of the trust receipts
does not suffice to
divest debtors of their obligations to pay the principal amount
of the loan.
Sec. 7, PD 115 expressly provides for it.
2. Entruster may file estafa charges against entrustee
SECRECY OF BANK DEPOSITS
1. Purpose
- RA 1405 has two allied purposes: (a) to discourage private
hoarding and (b) at the
same time encourage the people to deposit their money in banking
institutions so
that it may be utilized by way of authorized loans and thereby
assist in economic
development
(BSB Group, Inc. vs. Go, 612 SCRA 596)
2. Prohibited Acts
- Prohibition on disclosure
the act declares unlawful for any official or employee of a
banking
institution to disclose to any information concerning bank
accounts
exceptions:
(1) upon the debtors written permission
(2) in cases of impeachment
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(3) upon a competent courts order in cases of bribery of, or
dereliction of duty by public officials or;
(4) in cases where money deposited or invested is the
subject
matter o f litigation
Other exceptions
a. Anti- Graft and Corrupt Practices Act
requirements:
there must be a pending case before a court of competent
jurisdiction
the account must be clearly identified
inspection should be limited to the subject matter of the
pending case
before the court of competent jurisdiction
the bank personnel and account holder must be present and
notified during
the inspection
b. Monetary Board Authority
MB orders revelation when there is danger of bank fraud
When independent auditors audit banks
c. Under the 1997 NIRC
- Sec. 6(F) of the 1997 NIRC (RA 8424) authorizes the BIR
commissioner to inquire
into bank deposit accounts of:
a) a decedent to determine his gross estate
b) any taxpayer who has filed an application for compromise of
his tax liability,
which application shall include a written waiver of his
privilege under the
Secrecy of Ban Deposit Act or other general or special laws.
d. Anti-Money Laundering Act of 2001
e. Revised PDIC Charter
-Rep. 9576, in revising the PDIC Charter, provided that,
notwithstanding the
provisions of the Secrecy of Bank Deposit Act, PDIC or BSP may
inquire into or
examine deposit accounts and all information related [to bank
deposits] in case there
is a finding of unsafe or unsound banking practice.
f. Exchange of Information on Tax Matters Act
3. Deposits Covered
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under the act, all deposits of whatever nature with banks or
banking
institutions, including investments in bonds issued by the
Government, and
its political subdivisions and instrumentalities
FCDUs
4. Garnishment of Deposits
1) FCDUs FCDU accounts are exempt from attachment, garnishment,
or any other
order or process of any court, legislative body, government
agency, or any
administrative body whatsoever.
ANTI-MONEY LAUNDERING ACT (RA No. 9160, as amended by RA
9194)
1. Policy of the Law
(a) protect and preserve integrity and confidentiality of bank
accounts, to
ensure that the Philippines shall not be used as a site for
unlawful money laundering
activities; and
(b) pursue States foreign policy to extend cooperation in
transnational
investigations and prosecutions on money laundering
activities.
AMLA seeks to prevent money-laundering activities for providing
more
transparency in the Philippine financial system
2. Covered Institutions
(a) Banks and other entities, their subsidiaries and affiliates,
supervised/regulated by
BSP;
(b) Insurance companies and other entities supervised/regulated
by the Insurance
Commission
(c) SEC supervised/regulated:
Securities dealers, brokers, salesmen, investment houses, and
other entities
managing securities or rendering services as investment agents,
advisor or
consultants;
Mutual funds, closed-end investment companies, common trust
funds, pre
need companies, and other similar entities;
Foreign exchange corporations, money changers, money payment
centers,
remittance, and transfer companies, and other similar entities;
and
Other entities administering/dealing in currency, commodities or
financial
derivatives based thereon, valuable objects, cash substitutes
and other
similar monetary instruments or property
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3. Obligations of Covered Institutions
a) Establish and record, maintain a system of verifying the true
identities of clients
b) Keep records for five (5) years
c) Repeat covered transactions and suspicious transactions to
AMLC within five (%)
working days from occurrence, which thereby shall not be a
violation of Secrecy of
Bank Deposit Act, FCDU Law, and the General Banking Law of
2000
d) They are prohibited from allowing clients to open anonymous
accounts, accounts
under fictitious names, and all other similar accounts.
EXCEPT: NUMBERED ACCTS. ALLOWED, EXCEPT FOR CHECKING
ACCOUNTS
e) BSP may conduct annual testing of banking institutions solely
limited to the
determination of the existence and true identity of the owners
of such accounts
4. Covered Transactions
a) Threshold Transactions transaction in cash or other
equivalent monetary
instrument in excess of P500,000.00 within one banking day
b) Suspicious Transactions Transaction with Covered Institutions
regardless of
the amount involved, where any of the following circumstances
exist:
1) no underlying legal or trade obligation, purpose or economic
justification
2) client is not properly identified
3) amount involved not commensurate with clients business or
financial
capacity
4) based on all known circumstances, it may be perceived by
client s transaction
is structured in order to avoid being subject of reporting
requirements
5) any circumstance relating to transaction observed to deviate
from clients
profile and/or clients past transactions with covered
institution
6) transaction is in any way related to an unlawful activity or
offense under the
act that is about to be, is being or has been committed; or
7) Similar or analogous transactions
6. When Money Laundering Committed
- a money laundering crime is committed when the proceeds of an
unlawful activity
are transacted to make them appear to have originated from
legitimate sources, by
the following acts:
a) Transacting or attempting to transact, with monetary
instrument or property,
knowing it represents/involves/relates to proceeds of any
unlawful activity
b) Facilitating money laundering referred to item a above by
knowingly or
failing to perform an act, or
c) Failing to disclose or file report with AMLC of any monetary
instrument or
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property as required under the law.
7. Unlawful Activities or Predicate Crimes
- Acts or omissions or combination or series thereof, involving
or having relation to
the following:
1. Kidnapping for Ransom
2. Drug Trafficking
3. Graft and Corrupt Practices
4. Plunder
5. Rubbery and Extortion
6. Jueteng and Masiao
7. Piracy on the High Seas
8. Qualified Theft
9. Swindling
10. Smuggling
11. Violations of E-Commerce Act
12. Hijacking, destructive arson and murder, including acts of
terrorism against
non-combatant persons and similar targets
13. Fraudulent practices under the Sec. Reg. Code 2000
14. Felonies or offenses of similar nature punishable under the
penal laws of
other countries
* There can be separate convictions for the money laundering
offense and unlawful
activity constituting it
* But unlawful activity shall be given precedence over money
laundering charge
without prejudice to freezing and other remedies provided by the
act.
8. Anti-Money Laundering Council (AMLC)
- Composition BSP Governor, as AMLC Chairman
- Insurance Commission Chairman
- SEC Chairman
9. Freezing of Money Instrument or Property
- The original power of the AMLC to freeze accounts has been
deleted under RA 9194.
Under the current version, the Court of Appeals may issue a
Freeze Order only:
a) upon ex-parte application of AMLC;
b) after determination that probable cause exists that any way
related to an
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unlawful activity
* It shall be effective immediately, and for a period of 20 days
unless extended by the
Court
10. Authority to Inquire into Bank Deposits
- AMLC may seek court order: to inquire into or examinee a
particular deposit or
investment with a banking or non-bank financial institution
- AMLC on its own: and no account is required, in cases
involving: (a) kidnapping for
ransom; (b) drug trafficking or (c) terrorism
* BASIS OF ORDER: UPON PROBABLE CAUSE THAT THE DEPOSITS OR
INVESTMENTS
ARE IN ANY WAY RELATED TO AN UNLAWFUL ACTIVITY OR
MONEY-LAUNDERING
OFFENSE
THERE CAN BE NO EXAMINATION OF DEPOSITS OR INVESTMENTS MADE
PRIOR THE
ACTS EFFECTIVITY
MEMORIZE THE FOLLOWING PROVISIONS:
NIL
- Sec. 1
61
66
29
49 242-243
52 138-144
08 100
Insurance Code
- Sec. 2 10 14 93 77 60-61 64 32
3 11 19 20 82 52 26 94
10 relate this to Art. 739 of the Civil Code
93 double insurance
* Elements of Insurance
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1) insured possesses insurable interest capable of pecuniary
estimation
2) insured is a subject to a risk of loss upon the happening of
the designated peril
3) the insured assumes the risk of loss
4) the assumption of risk is part of a general scheme to
distribute actual losses
among a large group or substantial number of persons bearing a
similar risk
5) the insured pays a premium
Requisites for double insurance
1) person insured is the same
2) there ate two or more insurers insuring separately
Implied warranties in Marine Insurance:
1) Seaworthiness at inception of insurance
2) Ship will not deviate from the agreed voyage, unless
deviation is proper
3) Ship will not engage in illegal venture
4) Ship will carry requisite does of nationality of the ship or
cargo
5) Presence of insurable interest
Corporation Code
- Sec. 2 5 10 16 36 31 42 83 22 104
123 23 19 18 23 81 82 76 96 105
Attribute of a Corporation
1) Artificial being with separate distinct personality
2) Created by operation of law
3) Has the right of succession
4) Has the powers and attributes conferred by law or incident to
its existence
464 3800------- October 7
85 800
3,132.54 37,590.46
MONICA HSBC
General Powers of the Corporation Sec. 36
1) Sue and be sued in its Corporate name
2) Succession
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3) Accept and use a Corporation Seal
4) Amend its articles of incorporation
5) Accept-amend or repeal by-laws
6) Deal in real and personal property
RA 7653
The New Central Bank Act
Sec. 15 powers
RA 8791
General Banking Act of 2000
Kinds of Banks:
1) Universal Bank are bans which can exercise the powers of an
investment
house and invest in non-allied enterprises. Has the highest
capitalization
requirement.
2) Commercial Bank banks that cannot exercise the powers of an
investment
house nor invest in non-allied enterprises. It has a lower
capitalization
requirement than universal universal banks.
3) Thrift Bank composed of: a) Savings and mortgage banks; b)
Stock savings;
c) Private development banks governed by the Thrift Banks
Act
4) Rural Banks are banks for rural development. They are
mandated to
ensure that credit is available and readily accessible in the
rural areas on
reasonable terms. Governed by the Rural Banks Act of 1992. These
bans
must be wholly owned by Filipinos
5) Cooperative Banks are banks whose majority shares are owned
by
cooperatives primarily to provide financial and credit services
to
cooperatives
6) Islamic Banks are banks whose business dealings are subject
to the basic
rules of Islamic Sharia
PART III
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MERCANTILE LAW
NEGOTIABLE INSTRUMENTS
Functions of Negotiable Instruments:
Negotiable instruments are meant to be substitutes for money
and
thereby increase the purchasing media in circulation.
Principal Features of Negotiable Instruments:
1. Negotiability
- only an instrument qualifying as a negotiable instrument may
be
negotiated by:
a) endorsement coupled with delivery
b) delivery alone where instrument is in bearer form.
2. Accumulation of secondary contracts
- they are transferred from one person to another, as to allow
a
transferee to have a better title than the transferor.
Specific Instruments covered:
1. Promissory note maker *The holder in
due course is the person
2. Bill of exchange primarily
protected by the NIL.
3. Check
Formal Requisites of Negotiable Instruments:
1. It must be in writing;
2. It must be signed by the maker or drawer;
3. It must contain an unconditional promise or order to pay a
sum certain
in money;
4. It must be payable on demand, or at a fixed determinable
future time.
5. It must be payable to order or to bearer;
6. Where it is a bill of exchange, drawee must be named or
otherwise
indicated therein with reasonable certainty.
A negotiable document of title
- Warehouse receipts
- Symbolic or constructive delivery
- It is a substitute for goods
drawer
1, 23, 52 warranties of an
endorser
MEMORIZE
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Memory aid for requisites of negotiability:
1. It must be in writing signed by a maker or drawer;
2. It must contain an unconditional promise or order to pay a
sum certain
in money;
3. It must be payable on demand, or at a fixed or determinable
future time;
4. Must be payable to order or to bearer;
5. Where the instrument is addressed to a drawee, he must be
named or
otherwise indicated therein with reasonable certainty.1
Promissory Note
- An unconditional promise in writing made by one person to
another,
signed by the maker, engaging to pay on demand, or at a fixed
or
determinable future time, a sum certain in money to order or
to
bearer.
Bill of Exchange
- An unconditional order in writing addressed by one person
to
another, signed by the person giving it, requiring the person to
whom
it is addressed to pay on demand or at a fixed determinable
future
time a sum certain in money to order or to bearer.
*A negotiable instrument is a real contract; it is deliverable
as it is
perfected only upon delivery. (delivery is required)
Complete but undelivered
- is a defense available only against parties to the fraud but
cannot be
used against a holder in due course.
Incomplete but undelivered
- is a personal defense which cannot be used against a holder in
due
course.
Incomplete and undelivered
- a real defense that can be availed of against a holder on due
course.
1 #5 applies only to bills of exchange.
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Forgery of Signature (Sec. 23)
If the signature of the person below is forged:
1. Drawer
a) Drawer vs. Drawee Drawer wins because the proximate
cause is the
negligence of the bank who is
supposed to know the
signature of its own depositor.
b) Drawee vs. Depositary Bank Drawee wins, depositary bank
is liable for warranties of an indorser.
2. Payee
a) Drawee vs. Drawer Drawer wins Section 23.
3. Indorser
a) Drawee vs. Drawer Drawer wins Section 23.
Warranties of an Indorser:
- Genuineness and due execution of the instrument.
- Authenticity of signature
- A guaranty on the solvency of the drawer (necessity of notice
of
dishonor)
Alteration or Intercalation
*Parties before the alteration shall only be liable for the
original amount
(unaltered amount)
*Parties after the alteration shall be liable for the whole
amount (altered
amount) due to their warranties as indorser.
Holder in Due Course Section 52
1. That it is complete and regular upon its face;
2. That he became the holder of it before it was overdue, and
without
notice that it has been previously dishonored, if such was the
fact;
3. That he took it in good faith and for value;
4. That at the time it was negotiated to him, he had no notice
of any
infirmity in the instrument or defect in the title of the person
negotiating
it.
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Research:
- Real defenses available even against holder in due course?
- What are personal defenses available only against the
participants
of the fraud?
- Who is an accommodation party?
- Who is an irregular indorser?
One who signs without indicating at what capacity he is signing
before the
issuance of the negotiable instrument.
- Who is a qualified indorser?
- When is a negotiable instrument discharged?
o Payment or maturity
o Upon a restrictive indorsement
- Different kind of indorsement
*If the instrument is payable to a fictitious person it is
payable to bearer.
Holder in Due Course (Sec. 52)
- A holder who has taken the instrument under the following
conditions:
a) Complete and regular upon its face
b) That he became holder of it before it was overdue and
without
notice that it had been previously dishonored
c) That he took it in good faith and for value
d) At the time it was negotiated to him, he had no notice of
any
infirmity in the instrument or defect in the title of the
person
negotiating it.
*Every holder of a negotiable instrument is deemed to be prima
facie a
holder in due course.
The title of a person to the instrument is defective in two
ways:
a) In its acquisition
- The tile of a person is defective if he acquired the
instrument by
fraud, duress or force and fear, or other unlawful means, or for
an illegal
consideration.
b) In its negotiation
-
Not a good defense against a holder in due
course Good against a holder not in due course
- If he negotiates the instrument in breach of faith or
under
circumstances as to amount to fraud.
Rights of a Holder in Due Course
a) May sue in his own name
b) He may receive payment and payment to him in due course
discharges the instrument.
c) He holds the instrument free from any defect of title of
prior parties
and free from defenses available to prior parties themselves
d) He may enforce payment of the instrument for the full
amount
thereof against all parties liable thereon
Personal Defenses
- those that arise in the course of the life of the instrument
emanating
from the conduct of circumstances surrounding its acquisition by
a
party thereto.
Examples of Personal Defenses:
a) complete but undelivered instrument
b) incomplete but delivered instrument
c) acquisition of instrument
Examples of Real Defenses:
a) Incomplete and undelivered instruments
b) Forgery
c) Minority
Warranties of a Maker
a) He will pay the promissory note according to its tenor.
b) He admits the existence of the payor.
c) Admits the payee has the capacity to indorse.
Warranties of a Drawer
a) Existence of the payee and his then capacity to indorse
b) Engages that upon due presentment that the bill will be
accepted or
paid, or both according to its tenor.
-
c) If dishonored by non-acceptance or non-payment he will pay
the holder
of the bill or to any subsequent indorser who was compelled to
pay it,
provided the necessary proceedings on dishonor were duly
taken.
Securities Regulation Code
R.A. 8799
- enacted to protect the public from unscrupulous promoters, who
stake no
business or venture claims without basis and sells shares or
interests to
investors who are left holding certificate representing nothing
more than a
claim to a square of the blue sky.
- securities transactions are impressed with public interest and
are thus
subject to public regulation.
Protects the public from unsound, fraudulent and worthless
securities by:
1. Requiring through a process of registration, issuers of
securities, to
furnish the public with full and accurate disclosure of all
material facts
concerning the issuer and its securities, so that the public may
make a
reasonable business judgment whether or not to invest.
2. Limiting margin and borrowing requirements to prevent
undue
speculations.
3. Punishing those who manipulatev the market and from
misrepresentations, manipulations and fraudulent practices
covering
securities.
*It is self-executory does not require an issuance of
implementing rules
from SEC to be valid.
Regulatory Control Covered
*Regulation of Securities
*Registration of Market Participants
*Mechanism to ensure sound market
*Expanded SEC powers as market regulation
Securities and Exchange Commission
*A collegial body
- composed of a chairman and 4 commissioners
- no longer has a quasi-judicial function
- must be natural born citizens, majority of whom are lawye rs
including
the Chairman
-
- Presence of 3 commissioners shall constitute a quorum.
Registration of Securities
a) Debt instruments
b) Equity instruments
c) Investment instruments
d) Derivatives
e) Trust instruments
f) Other instruments as may in the future be determined by the
SEC
General Rule of Registration:
Securities shall not be sold or offered for sale or distribution
within the
Philippines:
a) Without registration statement duly filed with and approved
by the SEC
b) Prior to such sale, information on the securities in such
form and with
such substance as SEC may prescribe, shall be made available to
each
prospective purchaser
Folowing securities may be sold without need of
registration:
a) Exempt securities
1. Issued by or guaranteed by the government or its agents;
2. Issued or guaranteed by the government of any country with
which
the Philippines has diplomatic relations;
3. Issued by the receiver or by the trustee in a bankruptcy
duly
approved by an adjudicatory body;
4. Those involving a bank (except its own shares);
5. Those involving sales or transfers under the supervision
and
regulation of OIC, HLURB, BIR.
Tender Offer
- A publicly announced intention by a person acting alone or
in
consent with other person to acquire equity securities of a
public
company among others. It affords such minority stckholders
the
opportunity to withdraw or exit from the company under
reasonable
terms.
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INSURANCE
- Definition
- Characteristics
- Rules on Premiums
- Insurable interest in life/property
- Designation of beneficiary
- Constructive total loss
- Administrative provisions
- Fire insurance
- Third party liability
- No-fault insurance
*Warehouse Receipts Law
*Civil Code Provisions Book V
*Financial Rehabilitation and Insolvency Act
Insurance a contract whereby the insurer undertakes for a
consideration
to indemnify against loss, damage or liability arising from an
unknown or
contingent event.
Characteristics:
a) Aleatory There is an element of risk. An aleatory contract is
one where
the obligation depends upon the concurrence of an uncertain
event (fire
insurance), or one certain to happen but in an indeterminate
time.
b) Contract of indemnity there is an exchange for value,
particularly in
property insurance.
c) Onerous there is valuable consideration (premium)
d) Bilateral both parties are bound to do something.
-
e) Formal insurance contracts are formal and real (not
consensual) in
nature because a policy needs to be issued and premium paid.
Insurance contracts are to be construed liberally in favor of
the insured
and strictly against the insurer, being a contract of
adhesion.
Premium an insurance premium is the consideration paid an
insurer for
undertaking to indemnify the insured against a specified
peril.min fire,
casualty and marine insurance, the premium becomes payable as a
debt
as soon as the risk attaches.
Payment of Premium by Check insurer is liable if the payment
is
acknowledged by a
receipt of premium.
Non-payment of premium non-payment of premiums does not
merely suspend but
puts an end to an
insurance contract since time of payment
is peculiarly the essence of
the contract.
Partial Payment of Premium partial payment of premium would
not
make the
insurance
coverage effective.
Expansion of Exceptions to Sec. 77
a. General Rule Credit Accommodation on Premium
- Credit extensions are no longer allowed.
b. When payment of premium by instalments valid: Estoppel
- There are only 2 statutory exceptions to the requirement of
payment
of the entire premium as a prerequisite to the validity of
the
insurance contract:
-
i. In case of insurance coverage related to life or industrial
life
(health) insurance when a grace period applies;
ii. When the insurer makes a written acknowledgment of
receipt
of premium, this acknowledgment being declared by law to be
then conclusive evidence of premium/payment.
iii. The exception provided for in Phoenix and Makati Tuscany
(if
the insurer accepted all the instalment payment with intent
to
honor policy).
c. When full payment of premium expressly stipulated as
condition
precedent
-not similar to the Phoenix ruling since prepayment is made a
specific
stipulation in the insurance contract.
d. Credit accommodation now a clear exception
- When the insurance company has by practice renewed the
fire
insurance over the years, under a clear credit term arrangement
on
the payment of premium and the loss occurred during the
credit
period, and such payment was accepted by the insurer.
Insurable Interest in Life Insurance
- A life insurance policy is a valued policy. Unless the
interest of a
person insured is susceptible of exact pecuniary
measurement.
- Every person has an insurable interest in the life and health
of:
a. Himself, or his spouse and of his children;
b. Any person:
On whom he depends wholly or in part for education or
support, or in whom he has a pecuniary interest;
Under legal obligation to him for the payment of money,
respecting property or service, of which death or illness
might
delay or prevent the performance; and
Must exist at the time of
perfection of contract.
-
Upon whom whose life any estate or interest vested in him
depends.
Insurable interest is one of the most basic and essential
requirements
in an insurance
contract. It is determined by whether a person will suffer
pecuniary loss or
damage from its destruction and will suffer.
Insurable Interest in Property Insurance
- Required to exist only at the time of perfection of the
contract and
the time of loss.
Exceptions to the requirement of insurable interest:
a. Insuring two different properties in one policy
b. Succession
c. Co-owners of insured property
d. Co-insurance clause
Beneficiaries
General Rule : Insured may designate anyone he wishes as
beneficiary.
Exceptions:
1. Husband cannot designate his concubine as a beneficiary.
2. Cannot designate a public official by reason of the latters
public
office.
*The right to designate a beneficiary means the right to change
the
beneficiary anytime.
General Rule: The designation of a beneficiary is
revocable.
Exception: if there is an express stipulation that it is
irrevocable.
Its existence gives a person the legal right to insure
the subject matter of the policy insurance.
-
Importance of Beneficiary Designation:
a) Taxation if the designation is revocable then it is subject
to estate tax.
if the designation is irrevocable, then it is not subject to
estate
tax.
b) Disinheritance if revocable, then can be removed as
beneficiary.
if irrevocable, then cannot be removed as beneficiary.
c) Cash surrender value if revocable, can borrow cash from
value
without
consent of beneficiary.
if irrevocable, cannot borrow
from value without consent of
beneficiary, the latter must consent to the borrowing.
Constructive Total Loss
- When insured exercised the right to abandonment. This may
be
exercised when the property insured suffers a damage from a
marine peril of at least if insured merely notified insurer of
his
exercise of right of abandonment, immediately ownership over
damaged property passes to insurer once it pays the insured as
if
there were actual loss.
Requisites:
1) Damage from marine peril
2) Damage caused was of the value of the item insured
3) Insured abandons the insured item and informs insurer of
the
abandonment.
Administrative Provisions:
The Insurance Commission has the authority to regulate the
business
of insurance and quasi-judicial power over claims and
complaints
involving any loss, damage, or liability for which an insurer
may be
answerable under any kind of policy or contract of
insurance.
In line with its administrative authority the Insurance
Commission:
1) Revokes the certificate of authority of the insurance
company; and
-
2) Removal of its officers and directors for violation of the
Insurance
Code.
Fire Insurance an example of a non-life insurance.
It is essentially a contract of indemnity. The insurance
company will not be liable for more than the value of property
destroyed
even if the face value is more than the value of the property
insured.
a. Open Policy value appears in the policy only for the purpose
of fixing
the amount of premium and the maximum liability of the insurer.
In case
of loss, the insured must prove 2 things:
Value of the property at the time of loss
Loss was due to peril insured against
b. Valued Policy parties agree in advance how much is the value
of the
property at the time of loss. Insured only prove that loss was
due to peril
insured against.
c. Running Policy also known as successive insurance, it is used
to
cover the contents of a store which periodically change, so that
the
policy continues to cover the replacements of the stock in store
as the
same are sold.
Third Party Liability
- No car may be registered or its registration renewed without
a
certificate of cover showing TPL insurance (Secs. 373 to 389).
TPL
is the only compulsory insurance coverage under the
insurance
code.
*Insurers liability under TPL accrues immediately upon
occurrence of
injury or event upon which the liability depends, and does not
depend on
the recovery of judgment by the injured party against the
insured.
no fault clause when in a motor accident the following
circumstances
are present:
Claim for physical injuries
Does not exceed Php 5,000.00
There is a police report
-
There is a medical certificate
*Insurer must pay as there is no defense, even if insured was
negligent.
Marine Insurance
- By definition, the term marine insurance includes vessels,
crafts,
cargo, profits, papers, bottomry, respondentice all exposed
to
perils of the sea, transit or while awaiting or transhipment
including
war risk, marine builders risk and floaters risk.
CORPORATION LAW
A corporation is an artificial being created by operation of law
having
the right of succession, and the powers, attributes and
properties
expressly authorized by law or incidental to its existence.
Four Attributes of a Corporation:
1. An artificial being. (Capacity to contract and transact
business)
2. Created by operation of law (Creature of the Law)
3. With right of succession (Strong juridical personality)
4. Has powers, attributes and properties expressly authorized by
law or
incident to its existence (A creature of limited powers)
Theories on Corporate Existence and Powers:
a) Theory of Concession
- A corporation will have no rights and privileges of a higher
priority
than that of its creator and cannot legitimately refuse to
yield
obedience to acts of its state organs (Tayag vs. Benguet
Consolidated Inc.).
b) Theory of Corporate Business Enterprise or Economic Unit
- Under this theory the Supreme Court has upon a corporation
not
merely as an artificial being, but more as an aggregation of
persons
doing business, or an underlying economic unit called the
business
enterprise.
*This is the underlying theory of many of the cases where the
Supreme
Court applies the doctrine of piercing the veil of corporate
fiction, the de
-
facto corporation and corporation by estoppel doctrines.
*Private Corporations cannot be created by specific legislative
acts.
1. Separate Juridical Personality
- Piercing the veil of corporate fiction
Grounds:
a) To defeat public convenience
b) To defend crime, protect fraud, justify wrong
c) Alter ego doctrine
2. Fiduciary Duties of Directors and Officers
1. obedience ultra vires doctrine
2. diligence best business judgment rule
as long as the directors have acted with good faith and
without
malice then no matter how disastrous directors cannot be held
personally
liable.
3. loyalty Doctrine of Corporate Opportunity
Loyalty
- Director/stockholder cannot infringe upon the same business as
the
corporation
- If found to be violating the Doctrine of corporate opportunity
guilty
party must account for the profits and will be liable for
damages.
Authorized Capital Stock 100
Subscribed 25
Paid up 25
Pre-emptive Rights
Corporate officers are not
personally liable for corporate acts.
Exceptions:
1. Ultra Vires Acts acts beyond the
scope of powers and functions.
May bind the corporation if:
There is estoppel
If there is ratification
(Acceptance of benefits)
2. JSS
3. Criminal and tortious acts
Mnemonics
dive-due
-
When not available:
1. May be provided in the articles of incorporation
2. if issuance was in consideration of past services
3. if shares are issued in exchange for property
Right of First Refusal
- may be provided in the articles of incorporation
or stockholders agreement cannot be in by-laws
- shares must first be offered to existing stockholders, if more
than
one agrees to purchase it is to be allocated pro-rata. If no
takers
then it may be sold to outsiders
- if in a closed corporation the right of first refusal is
mandatory! (even
if not provided in the articles of
incorporation/stockholders
agreement)
- if subsequently there is a reduction in the selling price it
must be
reoffered to existing stockholders before it may be offered
to
outsiders.
No impairment of this is allowed.
Trust Fund Doctrine
- Watered Stock Shares of stock issued not corresponding to
the
capital stock of the corporation
- Appraisal rights of minority stockholders
In case of fundamental changes in capital structure:
extending/shortening of corporate life, merger/consolidation,
investment in
another line of business, declaring stock dividends, increasing
capital
stock.
- Treasury Shares outstanding shares of stock that have been
reacquired by the corporation
Requires 2/3 approval of
stockholders.
-
must have unrestricted retained earnings in order to push
through with purchase
capital of corporation cannot be used to acquire outstanding
shares as it will impair the trust find doctrine.
Section 80 Merger and Consolidation
*There is a transfer of assets between the absorbed
corporation
and the surviving corporation.
*A member of the board of directors may be replaced even if
there
is no stockholders meeting by the vote of the board of directors
the latter
can elect a new member for any vacancy in the board.
Also it is required that the present board must constitute a
quorum.
Cumulative Voting
- a minority board of director who was elected through
cumulative
voting may not be removed in a stockholders meeting except
for
cause.
*Powers and Functions of the corporation are exercised by
the
board of directors.
Cumulative Suit need not include all stockholders; they are
not
indispensable party.
plaintiff is a corporation represented by a stockholder
(even if minority stockholder)
Requisites:
must be a stockholder at the time of questioned transaction
exhaustion of intra-corporate remedy
damages are recoverable for the corporation
*To determine control of a corporation the basis must be the
Before it can be exercised the
corporation must have
unrestricted retained earnings.
-
common shares.
[Gamboa Case]
common shares must be held by 60% Filipino stockholders
*Test for necessity of establishment of GOCC
Test of public welfare
Test of economic viability
*A corporation is entitled to moral damages for besmirched
reputation and
damage to goodwill (generally)
Foreign Investments Act
Sale of all/substantially of assets correlate to Bulk Sales
Law
Public corporations
Mining companies cannot operate as a close
corporation
Public utilities (not more than 20
stockholders)
Educational institution
Stock exchanges
Banks
Self-dealing director (Sec. 32)
- If a director enters into a contract with the corporation and
there is a
need for it be voted upon by the board, the self-dealing
directors
vote cannot be counted, if by his exclusion quorum cannot be
had, it
may be presented to the stockholders 2/3 vote.
Interlocking Director (Sec. 33)
- If a director owns part of another company in which he is also
a
director in case of transactions between the corporations,
the
interlocking director is excluded from the vote of the board
of
directors (same rule as self-dealing directors)
*Close corporations corporations that do not have more than
20
stockholders.
Right of First Refusal mandatory
To lessen opportunity of graft.
-
Pre-emptive Right
- Increase in capital stock
- Opening for subscription the unissued portion of existing
capital
stock
- Disposition of treasury shares
Four Basic Advantages of Corporate Organizations
a) Strong juridical personality
b) Limited liability
c) Centralized management
d) Free transferability of units of ownership
*A corporation shall exist for a period not exceeding 50 years
from the
date of incorporation unless sooner dissolved or unless said
period is
extended.
Considered as incorporated upon issuance by the SEC of a
certificate of incorporation.
Can be extended but must follow below rules
Extension of corporate life cannot be made earlier than
5 years before the end of its original term.
There must be an amendment of the articles of
incorporation, such amendemtn requires the 2/3 votes of the
outstanding
capital stocks.
Incorporators at least 5 but not more than 15 NATURAL
PERSONS,
who must own at least one share of stock in a stock
corporation
majority of whom are residents of the Philippines.
*Capital refers to the value of the property or assets of a
corporation.
Minimum Capital Stock Required of Stock Corporations:
At least 25% of the total authorized capital stock must be
subscribed;
then 25% of the total subscribed stock must be paid up. Paid
up
capital shouls not be less than P5,000.00.
Doctrine of Centralized Management
-
*All corporate powers and prerogatives are vested in the board
of
directors
a) The resolution, contracts and transactions of the board,
cannot
be overturned or set aside by the stockholders or members
and
not even by the courts under the principle that the business
of
the corporation has been left to the hands of the board.
b) Directors and duly auhtorized officers cannot be held
personally
liable for acts or contracts done with the exercise of their
business judgment.
Exception:
When the Corporation Code expressly provides otherwise;
When the directors or officers acted with fraud, gorss
negligence or in bad faith;
When the directors or officers acted aginst the corporation
in
a conflict of interest situation.
In case of mismanagement or abuse of powers, the remedies
are:
a) Receivership
b) Injunction if the act has not yet been done
c) Dissolution if abuse amounts to a ground for quo warranto but
the
Solicitor General refuses to act.
Corporate Officers
Immediately after their election, the directors of a corporation
must
formally organize by the lection of:
a) President who shall be a director.
b) Treasurer who may or may not be a director.
c) Secretary must be a resident and Filipino citizen.
d) Such other officers as may be provided for in the
By-Laws.
*Any two or more positions may be held concurrently by the same
person
except that no one shall act as President and Secretary or as
President
and
Treasurer at the same time Corporate officers are elected by
a
majority
of all members of the board.
-
Types of Ultra Vires Act
1. Those which are outside of the express, implied, or
incidental powers of
the corporation.
2. Those which are effected by corporate representatives who act
without
authority (even if contract is within the
express/implied/incidental
powers of the corporation they represent)
3. Those which are contrary to laws or public policy.
Ultra vires acts performed by the corporation in excess of its
corporate
powers are ultra vires and are generally binding on the
corporation.
1. What is a corporation?
- A corporation is an artificial being created by operation of
law, having
the right of succession, and the powers, attributes and
properties
expressly authorized by law or incident to its existence.
2. Separate Corporate Juridical Personality
- A corporation has a personality that is separate and distinct
from its
individual stockholders or members. Being an officer or
stockholder
of a corporation does not make ones property also that of
the
corporation and vice versa. This separate and distinct
personality is,
however, merely a function in law for conveyance and to
promote
the ends of justice.
3. What is the Ultra Vires doctrine?
- This is the doctrine which provides that an act performed by
the
corporation which is in excess of its corporate powers are ultra
vires,
which are generally not binding on the corporation.
4. What is pre-emptive right?
- A preemptive right is the shareholders right to subscribe to
all
issues or disposition of shares of any class in proportion to
his
present stockholdings, the purpose bein to enable the
shareholder
to retain his proportinate control in the corporation and to
retain his
equity in the retained earnings, and also in the net assets in
the
event of dissolution.
5. Appraisal Right
-
- An appraisal right may be exercised by minority stockholders
or
stockholders who dissented from the following transactions:
1. Extend or shorten corporate term;
2. Restriction of rights and privileges of shares through
the
amendment of the articles of incorporation;
3. Sale of all or substantially of all corporate assets
4. Equity investment in non-primary purpose business
enterprise
5. Merger or consolidation
Derivative Suit Requirements:
- That the person filing the derivative suit was a stockholder
or
member at the time the acts or transactions subject to the
action
occurred and at the time the action was filed.
- That he has exerted all efforts to exhaust all remedies
available
under the articles of incorporation, by-laws, etc.
- No appraisal rights are available for the acts or acts
complained of;
and
- The suit is not nuisance or harassment suit.
Proxies
- Are grants of authority by a stockholder to another
stockholder to
allowa the latter to vote in all meetings of stockholders. It is
generally
good only for one meeting but by express stipulation it is
possible to
extend it for several meetings provided it not longer than 5
years.
Warehouse Receipts Act
Warehouseman one who receives and stores goods of another
for
compensation
*Even if the deposits were made free does not detract from
the
applicability of the law.
Nature and Functions of Warehouse Receipts
- It is a document of title and has the following functions:
1. Proof of the possession or control of the goods described
therein;
2. Authorizing or purporting to authorize the possession of
the
warehouse receipt to transfer or receive either by indorsement
or
by delivery, of the goods represented by such receipt.
-
Warehouse Lien:
General Rule: By issuing the receipt the warehouseman is
estopped from
setting up any title or right to the possesion of the goods
except when it
pertains to the enforcement of his lien.
However: the warehouseman has a lien on goods deposited on
the
proceeds thereof in his hands for all lawful changes and
fees.
Obligation of Warehouseman
- Under Sec. 8 of the Warehouse Receipts Act the warehouseman
is
obliged to: deliver the goods upon demand by either the holder
of
the receipt or by the depositor; when demand accompanied by:
a) An offer to satisfy warehousemans lien;
b) An offer to surrender the duly endorsed negotiable
receipt
c) A readiness to sign an acknowledgment of delivery, when such
is
requested by the warehouseman.
TRANSPORTATION LAW
Common Carriers
- A person, corporation, firm or association engaged in the
business
of conveying or transporting passengers or goods or both, by
land,
water or air for compensation offering their services to the
public.
Arrastre
- It is the handling of cargo departed on the wharf or between
the
establishment of the consignee or shipper and the ships tackle.
It
has technical meaning and mainly refers to overseas trade.
Common Carrier
- Open to the public
- For compensation
-
Contract of Carriage
- Fiduciary duty of diligence for the safety of the passenger or
cargo
- In case of injury or damage there is presumptive proof of
negligence
which can be overturned by proof of the exercise of
extraordinary
diligence by the common carrier.
- A commercial contract
Cargo bill of lading
Passenger ticket
Liability of Carriers
- Extraordinary diligence
- If baggage is entrusted to passenger or the agent of the
passenger
then liability shall be that of an innkeeper.
Injuries caused by a passenger
Injuries caused by employees of common carrier
Injuries caused by a third party
Causes of Action Arising out of a Negligent Act:
- Culpa contractual it is the cause of action for the breach of
the
carrier of the contract of carriage: the obligation of the
carrier to
convey passengers safely to the point of destination.
- Culpa aquiliana it is the cause of action for the damage
caused by
the carriers negligent acts.
- Culpa criminal it is the cause of action that arise upon
the
commission of a crime by the carrier.
Two (2) Aspects of a Contract of Carriage
a) Contract to carry contract to carry at some future time.
b) Contract of carriage actual carriage is required.
Contract of carriage ends:
- The pasenger has been landed at the port of destination and
has left
the owners dock or premises, the reasonable time is to be
determined from the circumstances. (Aboitiz Shipping vs. Court
of
Appeals)
-
*The common carrier is obliged to carry the passengers safely as
far
as human care and foresight could provide, using the utmost
diligence of
a very cautious person, with due regard for all the
circumstances (Art.
1755, Civil Code).
Maritime Transportation if no claim is filed then action
cannot proper
*Damage is apparent claim must be made upon arrival
*Damage is not apparent claim must be made within 24 hours
Prescription Period
- If under a bill of lading 10 years
- If under an oral contract
COGSA (Carriage of Goods by Sea Act)
- Prescriptive Perios is 1 year prospective
Arrival of lost cargo claim will prosper even if claim is not
file ASAP
Need to be filed within 1 year!
*Liability of owner is limited to value of vessel or proceeds of
insurance.
Real and Hypothecary Nature of Liability of Shipowner
Exceptions: Where the vessel is insured in Workmens
Compensation
claims where injury was due to negligence of shipowner or master
and
shipowner concurrently.
*New Ruling
- The negligence of the ship captain is the negligence of
the
shipowner liable for all damages arising out of the tortious
acts of
employee.
Warsaw Convention
-
*Maximum liability is 500 USD with maximum number of 4
baggage.
*Unless a higher valuation is declared and the appropriate fees
are
paid.
*This is not a limitation in liability if the actions are based
on tortious
actions; damages are also proper.
Constructive Total Loss
- Subject to abandonment of vessel by shipowner and insurer
must
pay the full amount of insurance.
Warranties of
- Vessel of shipowner
- Voyage shall not ndeviate except on conditions allowed by
law
- Warranty of neutrality
- Possession of necessary documents
- Presence of insurable interest
Charter Party
Contract of Affreightment
- Shipowner remains liable as common carrier.
Demise Charter/ Bareboat Charter
- Charterer is considered as owner pro hac vice and can be held
liable
for negligence
- Owner hands exclusively command over vessel over to the
charterer.
*Leading Case
188 SCRA 387 (1990) [Aboitiz Case]
GR 156798 May 2, 2006 [Aboitiz vs. Gen. India]
Limited liability cannot be applied where shipowner is
presumed
negligent.
Insurable Interest in Non-Life Insurance
-
- Insurable interest must exist in theb same person both at
the
perfection of the contract as well as at the time of loss. In
betwee,
the effect of insurable interest loss is merely to suspend the
policy
(Sec.19)
- Contingent interest without any existing interest is not
insurable
interest (Sec.16)
*Creditor has an insurable interest on the life of the
debtor.
*Creditor must have an existing interest over property sought to
be
insured to be considered to have insurable interest.
Mortgagor and mortgagee have separate and distinct insurable
interests in the same mortgaged property, such that each one of
them
may insure the property for his own benefit. In case of loss
of
insured mortgaged property there will be legal subrogation.
Wherein the insurer will become the new creditor of
mortgagor.
Exceptions to requiremtn of insurable interest:
a) Insuring two different properties in one policy
b) Succession (testate or intestate)
c) Co-owners of insured property
*When there is partial loss, and there is under insurance, under
Standard
Policy Stipulation there will be co-insurance this must be
expressly stipulated if not insurer is liable for full amount of
loss.
Subrogation substitution of one person in the place of another
with
reference to a lawful claim or right so that he who is
substituted succeeds
to the rights of the other in relation to adebt or claim
including its remedies
or securities.
contemplates full substitution such that it places the party
subrogated in the shoes of the creditor.
Compulsory Motor Car Insurance (TPL)
- The only mandatory insurance coverage under the insurance
code.
Marine Insurance
Main Warranty: Seaworthiness fit to perform service, properly
laden,
properly equipped and
-
properly manned.
Warranties in Marine Insurance
- Defined as a stipulation, either expressed or implied, forming
part of
the policy as to some fact, condition or circumstance relating
to risk.
Insurable Interest in Marine Insurance
a) Shipowner on the vessel eventhough the latter is under a
charter party
b) Charterer
c) If there is concurrence of bottomry loan and insurance covers
excess of
the value of the vessel over the bottomry loan.
d) Freightage
e) Profits
*All Risk Marine Insurance
- an all risk marine insurance policy covers all kinds of loss
other than
those due to the willfull and fraudulent act of the insured.
Co-insurance in Marine Insurance
Insured shall bear part of the loss when property is insured for
less than
the value it really has.
When there is partial loss, there will always be co-insurance
even if there
is full coverage.
When there is partial loss, under Standard Policy Stipulation,
and there
was under insurance.
Deviation unjustified deviation will bar recovery in a marine
policy
1. Caused by circumstances beyond the control of vessel
2. To comply with a warranty
3. In good faith to avoid a peril
4. In good faith to save a human life or another vessel
Concealment when insured had knowledge of facts material to the
risk,
and good faith and fair dealing require him to reveal them, and
he
Deviation is proper
and may allow for
recovery
-
fails to do so.
Representation a statement incidental to the contract of
insurance
relative
to some fact having reference thereto and upon the faith of
which
the
contract is entered into.
Similarities of concealment and representation:
Both take place before the contract is entered into
Both give rise to the same remedy: discovery of the
concealment or misrepresentation before loss or death will
entitle the insurer to cancel the policy.
They apply to both life and non-life insurance.
Exceptions: If after 2 years from issuance of policy, the
company fails to
discover concealment or misrepresentation, any discovery after
the 2-year
period cannot be a ground for cancelling or refusing to pay.
[incontestability clause] 2 years from perfection
2
years from reinstallment
Losses
1. Actual Loss
2. Constructive Total Loss when insured exercises the right
of
abandonment when a property suffers a damage from a marine peril
of
at least .
3. Partial Loss carries with it co-insurance; owner shall bear
part of the
loss.
Over insurance when insured insures the same property for an
amount
greater than the value of the property with the same insurance
company.
*In case of loss, insurer is bound to pay only to the extent of
the property
lost. The insured may recover the amount of premium
corresponding to
the excess in value of the property.
-
Double Insurance where ther is over insurance with two or
more
companies covering the same property, same insurable interest
and same
risk.
Effects of Double Insurance:
1. Insured can recover, before or after loss, from both insurers
the excess
premium he has paid.
2. In case of loss insurers are liable severally to the extent
of their
coverage. The insured can recover from any of them or all of
them to
the extent of his loss.
GENERAL BANKING LAW RA 8791
- Universal Banks
- Commercial Banks
- Thrift Banks
Savings and Mortgage Bank
Stock Savings and Loans Associations
Privatev Development Bank
- Rural Banks
- Cooperative Banks
- Islamic Banks
Banks
- An entity engaged in the lending of funds obtained in the form
of
deposit.
It has the following qualities:
1. It is impressed with public interest;
2. Its fiduciary obligation, binds it to the highest degree of
diligence;
3. GFIs are covered by the highest degree of fiduciary
obligations;
4. Highest degree of diligence does not cover transactions
outside
bank deposits
Bulk Sales Law
-
- Primary objective of BSL is to compel the seller in bulk
execute and
deliver a verified list of his creditors to his buyer, and
notice of the
intended sale to be sent in advance to his creditors.
Transactions covered:
1. Any sale, transfer, mortgage or assignments of:
a) A stock of goods, wares, merchandise, provisions or
materials otherwise than in the normal or ordinary course of
trade and regular prosecution of business of seller,
mortgagor,
transferor or assignor;
b) All or substantially all of business or trade therefor
conducted
by the seller, mortgagor, transferor or assignor;
c) All or substantially or of fixtures and equipment used in
and
about business of seller, mortgagor, transferor or assignor.
* * *