Bar Exam Questions in Mercantile Law 75-89

8/18/2019 Bar Exam Questions in Mercantile Law 75-89

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1975 BAR EXAMINATION

I. X makes a promissory note payable to bearer, and delivers the same to Y. Y indorses itto Z in this manner: “Pay to Z, sgd. Y”. Later, Z withot indorsing the promissory notetrans!ers and delivers the same to ". the note is sbse#ently dishonored by X. $ay "hold X liable%

Answer :Yes, " may hold X liable. &in'e the instrment 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 meredelivery. (he trans!er and delivery to " by Z, there!ore 'onstitted 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''eptpayment be'ase it is made in legal tender. 6or denominations !rom 70 'entavos to onepeso, 'oins shall be legal tender p to P+0.00.

Note: )oins are legal tender only p to 'ertain amont. 6or denominations !rom P7.00and 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 theinstrment was negotiated to 8, a holder !or vale. 5t the time 8 took the instrment, heknew 5 to be only an a''ommodation party. 9hen the promissory note was not paid,

and 8 dis'overed $ to be withot !nds, he sed 5. 5 pleads in de!ense the !a't that hehad indorsed the instrment withot re'eiving vale there!or, and the !rther !a't that 8knew at the time he took the instrment that 5 had not re'eived any vale or 'onsideration o! any kind !or his indorsement. Is 5 liable% "easons.

Answer:

5ssming that there has been de presentment and noti'e o! dishonor, 5 is liableto 8. 4nder the egotiable Instrments Law, an a''ommodation party shall be liable to aholder !or vale althogh the latter may have known that he was merely ana''ommodation party. La'k or absen'e o! 'onsideration is not de!ense available to ana''ommodation party.

I;. 5 postal money order was re'eived by a bookstore as part o! its sales re'eipts, and waslater deposited with a bank. (he bank 'leared the money order with the -rea o! Posts,and re'eived its vale o! P*00.00. abot !ive months later, the $anila Post


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egotiable Instrments Law, the bookstore mst be properly redressed or indemni!ied."le on the bookstore=s 'ontention, with reasons.

Answer:

5 postal money order as sally issed is not a negotiable instrment be'ase itimposes 'onditions on the obligation to pay. (here!ore, the egotiable Instrments Law

is not appli'able. 5ny de!ense o! the Post o!!i'e against the pr'hase is available againstany sbse#ent party, althogh the latter may be in good !aith. (hs, the bookstore=s'ontention is ntenable.

5ssming however that the postal money order in this 'ase is egotiableInstrment Law, absen'e or !ailre o! 'onsideration is a de!ense available only againstholders not in de 'orse. (here!ore, the Post

in 'ase o! a rebilding1, one!i!th 7B+1 o! the hose was destroyed by !ire. 5s nothingillegal abot the 'ontra't, how m'h, i! any, 'an @ose s''ess!lly re'over !rom theInsran'e )ompany% "eason.

Answer :I! the !ire poli'y is a valued one, then @ose 'an re'over 7B+ o! P+0,000.00. i.e.,

P70,000.00. 4nder the Insran'e )ode, the valation in a valed poli'y is 'on'lsivebetween the parties in the absen'e o! !rad. &o @ose 'annot 'laim that sin'e his hosewas worth P700,00.00 at the time o! the loss, he shold be able to re'over P*0,000.00a'tal vale o! lossC7B+ o! P700,00.001

I! the poli'y is an open poli'y then nder the Iaw, appraisal o! loss is made a!ter

the !ire. &in'e the hose was worth P700,00.00 at s'h time, then the loss o! @ose isP*0,000.00 and he 'an re'over this amont nder s'h an open poli'y.

;I. In a 'orse o! a volntary bo3ing 'ontent, - who had an a''ident insran'e poli'y, slidand slipped, enabling his opponent bo3er to hit him with a blow that threw him to theropes, hitting his head against the 'anvass, 'asing -=s evental death. (here is nothingin the insran'e 'ontra't appertaining to bo3ing. Is the Insran'e )ompany liable%"easons.

Answer :(he insrer is liable be'ase the death in this 'ase was an a''ident within the

meaning o! the poli'y. It was an a''ident be'ase the insred did not e3pe't to die byentering s'h 'ontest. 8is slipping was a''idental and this 'ased him to hit his headagainst the 'anvass, leading to his death.

;II. In a nonmedi'al insran'e 'ontra't one where the 'ompany waives medi'ale3amination1 the insred !ailed to dis'lose that she had on'e been operated on,althogh the in!ormation on this matter was spposed to have been spplied the'ompany. 9ithin the proper period, may the Insran'e )ompany have the 'ontra'tres'inded% "easons.


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Answer :Yes, the Insran'e )ompany 'an res'ind the 'ontra't on the grond o!

misrepresentation or 'on'ealment o! material !a't. (he !a't o! the insred=s operation ismaterial to the insrer, who may have re!sed to isse the li!e poli'y had it known o! s'h !a't. (his is even more tre in a nonmedi'al insran'e where no medi'al e3am is

made and the in!ormation given by the insred 'on'erning his past health and diseasesis a very important !a'tor whi'h the insrer takes into 'onsideration in de'iding to issethe poli'y.

;III. I! a shipper, withot 'hanging the pla'e o! delivery 'hanges the 'onsignment or 'onsignee o! the goods a!ter said goods had been delivered to the 'arrier1, nder what'ondition will the 'arrier be re#ired to 'omply with the new orders o! the shipper%

Answer :I! the shipper shold 'hange the 'onsignee o! the goods, withot 'hanging their

destination, the 'arrier shall 'omply with the new order provided the shipper retrns to

the 'arrier the bill o! lading, and a new one is issed showing the novation o! the'ontra't. 5ll e3penses !or the 'hange mst be paid by the shipper.

IX. 4nder what 'onditions, i! any, may a ship 'aptain borrow on bottomry !or his owntransa'tions%

Answer :(he 'aptain may borrow on bottomry !or his own transa'tions on the portion o!

the vessel he owns, provided no money has been previosly borrowed on the wholevessel, and there is no other lien or obligation 'hargeable against the vessel. 8e mststate his interest in the vessel.

X. 4nder the provisions o! &e'tion D o! the )arriage o! Eoods by &ea 5't, noti'e mst begiven o! loss or damage to the goods. 9ithin what period mst noti'e be given, i! theloss or damage is not apparent% Foes the term “loss” in this 5't 'over delivery to thewrong person% 23plain.

Answer :oti'e o! loss mst be given within three days !rom the delivery o! the goods, i!

the loss is not apparent.(he &preme )ort has held in one 'ase that “loss” nder this 5't does not

'over misdelivery or delivery to the wrong person.

XI. I! the 'argo o! a vessel is saved entirely by another vessel, who in the latter vessel willbe entitled to salvage reward%

Answer :I! the 'argo o! a vessel is saved entirely by another vessel, the salvage reward

shall be divide between the owner, the 'aptain, and the remainder o! the 'rew o! the


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latter vessel, so as to give the owner a hal!, the 'aptain a !orth, and all the remainder o! the 'rew the other !orth, in the absen'e o! an agreement to the 'ontrary.

XII. 5!ter sbs'ribing to D,000 shares o! 'orporate sto'k with a par vale o! P700 ea'h, asto'kholder paid !or 7,000 shares or a total sm o! P700,000.00 he then asked !or the

issan'e to him o! 'erti!i'ate o! sto'k !or the P7,000 paidp shares so that he may havevoting rights bt the 'orporation re!sed. In the trial 'ort, the Gdge resolved the 'aseagainst the sto'kholder, rling thatC“in the absen'e o! spe'ial agreement to the'ontrary, a sbs'riber !or a 'ertain nmber o! shares o! sto'k does not, pon payment o! onethird o! the sbs'ription pri'e, be'ome entitled to the issan'e o! 'erti!i'ates !or onethird o! the nmber o! shares sbs'ribed !orH the sbs'riber=s right 'onsists only ine#ity entitling him to a 'erti!i'ate pon payment o! the remaining portion o! thesbs'ription pri'e.” )omment on the said rling, with reasons.

Answer : 5lthogh the general rle is as stated by the trial 'ort, the &preme )ort held

in the 'ase o! Baltazar v. Lingayen Gulf Eectric Power Co. that the sto'kholder was

entitled to the issan'e o! 'erti!i'ates o! sto'k !or the 7000 shares paid by him. (he 'ort'onsidered the !a't that it was the pra'ti'e o! this 'orporation to isse 'erti!i'ates o! sto'k partially paid sbs'riptions by applying the payment, not pro rata to ea'h share,bt as 'onsideration !or whole shares. (he 'ase there!ore !ell nder the e3'eption in theFua Cun v. Summer 'ase: “In the absen'e o! an agreement to the 'ontrary.”

)ommenting on the Fua Cun rling, I wold say that it is sond be'ase asto'kholder will !eel bond to pay !or all his sbs'ription, lest all his shares be de'lareddelin#ent i! he !ails to pay. Prorating the payment means that not one o! his shares is!lly paid, and any !ailre on his part to pay when demanded will render all his sharesdelin#ent.


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dismiss the sit on the grond that a mere sto'kholder is not allowed to #estion theappointments be'ase they were 'orporate a'ts. &hold the 'ase be dismissed%

Answer :(he 'ase shold not be dismissed. 5lthogh as a general rle, it is only the board

o! dire'tors and not a mere sto'kholder who 'an a't on behal! o! the 'orporation in

#estioning the validity o! 'orporate a'ts, where the dire'tors themselves are thepersons responsible !or the a't #estioned and 'an ths not be e3pe'ted to nlli!y it, asto'kholder 'an bring a derivative sit on behal! o! the 'orporation. It wold be !tile !or him to ask the board to bring the sit and sin'e there is no other remedy, the derivativesit is re'ognied. (he sto'kholder in this 'ase !alls s#arely within this rle andthere!ore, the 'ase shold not be dismissed.

XI;. I! a 'orporate lawyer who is at the same time the administrative manager o! the'orporation, enters into a 'ompromise agreement in 'ort so that a 'ase involving the'orporation 'old be settled, wold the 'orporation itsel! be bond by s'h 'ompromiseagreement% "easons.

Answer :(he 'orporation is not bond by the 'ompromise agreement.


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Answer :8e 'an only obtain P70,000 as a matter o! right, by way o! garantee. 4nder the

Philippine Feposit Insran'e 5't, the ma3imm amont 'overed by insran'e isP70,000. 5nd by e3press provision o! law, this in'ldes all kinds o! depositsCsavings'rrent as well as time depositsCin the name o! or !or the bene!it o! one person.

Note: (he term “insred deposits” means the amont de to any bona !ide depositor !or legitimate deposits in an insred bank net o! any obligation o! the depositor to theinsred bank as o! the date o! the 'losre bt not to e3'eed P+00,000. &e'./ g1, "5>D0*1

X;II. - borrowed in a written instrment !rom ), a !riend, the sm o! P7,000 with a diamondring given in pledge as se'rity !or the debt. 8ow m'h is the ma3imm interest per annm that ) 'an 'harge - !or the loan o! money% "eason.

Answer :(he ma3imm interest per annm 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 4sry Law has been legally none3istent prsant to )- )ir'lar >0+H hen'e,interest 'an now be as lender and borrower may agree pon.

X;III. 5 negotiable warehose re'eipts was indorsed by X in !avor o! Y presents the re'eipt to9, the warehose man, bt 9 re!ses to trn over the goods to Y, wold X be liable%9old yor answer be the same i! the goods are a'tally given bt they trn ot to ben!it !or the parti'lar prpose intended% 23plain.

Answer :

X is not liable to Y i! 9 shold re!se to trn over the goods to Y. an indorser o! anegotiable warehose re'eipt does not warrant that the warehoseman will per!orm hisobligation.

8owever, s'h an indorser makes some warranties, among whi'h is that thegoods are mer'hantable and !it !or the parti'lar prpose intended. (here!ore, X woldbe liable to Y i! 9 delivers the good bt s'h goods are !ond n!it !or the parti'lar prpose intended.

Alternative Answer : 5n indorser o! a negotiable, X is not liable to Y i! 9 shold re!se to trn over the

goods to Y. 5n indorser o! a negotiable warehose re'eipt is only liable !or brea'h o! hiswarranties whi'h does not in'lde this parti'lar 'ase. I! the goods are a'tally given by

the warehose man to Y, bt said goods trn ot to be n!it !or the parti'lar prposeintended, X will not be liable to Y, in as m'h as there is a warranty on the part o! Xregarding this matter in whi'h the goods trn ot to be n!it !or the parti'lar prposeintended. 5lthogh there is s'h a warranty in the law regarding goods, yet that warrantyapplies e3'lsively to a 'ase where the warranty wold be present i! the goods weredire'tly sold withot any warehose re'eipt.


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XIX. I! today a person is granted a 'opyright !or a book, !or how long will the 'opyright bevalid% I! said person ses a psedonym, how wold this a!!e't the length o! the'opyright%

Answer : 5 'opyright endres dring the li!etime o! the 'reator and !or +0 years a!ter his

death.In 'ase he ses psedonym, the 'opyright shall last ntil the end o! +0 years

!ollowing the date o! the !irst pbli'ation o! the work.

XX. 9hom does the assignee in solven'y representCthe debtor, the 'reditors, the 'ort,et'% )an said assignee in insolven'y take possession o! the assets o! the 'onGgalpartnership%

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 'ort

whi'h has 'ontrol over him. Provision o! the )ivil )ode **DK states that: &o long as the'onGgal partnership or absolte 'ommnity sbsists, its property shall not be among theassets to be taken possession o! by the assignee !or the payment o! the insolventdebtor=s obligation, e3'ept inso!ar as the latter have redonded to the bene!it o! !amily. I! it is the hsband who is insolvent, the administration o! the 'onGgal partnership or absolte 'ommnity may, by order o! the 'ort, be trans!erred to the wi!e or to a thirdperson other than the assignee.


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Ia. )an a 'orporation validly 'hange its 'orporate name nder its general power to amendits arti'les o! in'orporation%Foes a 'hange in the name o! a 'orporation reslt in its dissoltion% 23plain yor

answer.

Answer :Yes, a 'orporation may validly 'hange its name nder its general 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 noreason why a 'orporation 'annot 'hange its name as long as it !ollows the pro'edrelaid down by law.

(he 'hange in name does not reslt in its dissoltion, sin'e there is no 'hange inits being. @st as a natral person does not 'ease to e3ist de to 'hange o! name, so isthe 'orporate e3isten'e not a!!e'ted by a 'hange in 'orporate name.

Ib. 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 grond 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 Grisdi'tion in the

'orse o! any investigation it may 'onsider ne'essary !or the en!or'ement o! the)orporation Law. It 'an do this even on its own initiative, and ths it shold not matter whether the 'omplainant is a sto'kholder or not.

IIa Pedro "eyes applied !or !ire insran'e on his hose. In his appli'ation, it was asked the!ollowing #estion: “Is the hose insred with another Insran'e )ompany% I! so, !or how m'h%” 8is answer was “o”. (he !a't, however, is that the hose had beeninsred 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 hose, and spread to thehose o! Pedro "eyes whi'h was 'ompletely brned. Femand !or payment having beenre!sed by the insrer, Pedro "eyes !iled a 'omplaint. $ay he re'over% "eason.

Answer :o, Pedro "eyes may not re'over. 8e was gilty o! 'on'ealment or

misrepresentation o! a material !a't. (he !a't o! the e3isten'e o! the other insran'e ismaterial be'ase had he answered trth!lly, the insrer wold probably have 'harged

him higher premim, or wold have made !rther in#iries, or wold have imposed someother 'onditions in the poli'y to prote't its interest. (he e3isten'e o! a large amont o! insran'e in'reases the moral haard or the temptation to 'ommit arson. )on'ealmento! a material !a't is a grond !or res'ission and is a valid de!ense o! an insrer in ana'tion based on the poli'y.

IIb 5 insred his hose against loss by !ire !or P700,000.00. (he poli'y provides that theinsrer shall be liable “i! the property insred shall be damaged or destroyed by !ire a!ter payment o! premim, at anytime !rom, !rom @ne 7+, 7>A? to @ne 7+, 7>AA.” (he poli'y


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was delivered to 5 on @ne 7/, 7>A?. Instead o! paying the premim in 'ash, 5 issed apromissory note dated @ne 7+, 7>A?, !or the amont o! premim, payable within D0days. (he note was a''epted. , 7>A?, the property insred was brned. (heinsrer re!sed to pay on the grond that the premim had not been paid, and the notedid not have the e!!e't o! payment as its vale had not been realied at the time thehose was brned. Fe'ide with reasons.

Answer :&in'e the 'ase given took pla'e a!ter the e!!e'tivity o! the Insran'e )ode, it

mst be governed by its provisions. &e'tion AA thereo! provides: “otwithstanding anyagreement to the 'ontrary, no poli'y or 'ontra't o! insran'e issed by an insran'e'ompany is valid and binding nless and ntil the premim thereo! has been paid”)onsidering that this 'ited provision repla'es &e'tion A* o! old Insran'e 5't e3presslypermitting the granting o! 'redit e3tension, the only 'on'lsion is that the lawmakingpower intended by the amendment to disallow any agreement postponing payment o! premim, in'lding a grant o! 'redit e3tension. (he issan'e o! a promissory notepostpones payment by granting 'redit e3tension. (here!ore, the insrer is not liablender this e3press provision o! the new Insran'e )ode. (he 'ase o! Capital Insurance

Surety Co. v. Plastic Era Co whi'h held that a''eptan'e o! a promissory note'onstittes waiver o! the stiplation that the insrer will be liable only a!ter the paymento! premim and that in the absen'e o! stiplation as to mode o! payment, a promissorynote 'onstittes payment, took pla'e be!ore the Insran'e )ode 'ame into e!!e't andwas based on &e'tion A* o! the old Insran'e 5't. It 'an there!ore not be madeappli'able to the given 'ase.

IIIa. $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 $artel and )o., whi'h in trn depositedthe 'he'k in its 'rrent a''ont with the P-. (he 'he'k was 'leared in de 'orse, and$anila -ank paid P- the amont o! the 'he'k. (wenty days later, it was dis'overed

that the signatre o! Fae, In'. was !orged. P- paid $anila -ank and noti!ied $arteland )o. that it had debited its a''ont with the 'orresponding amont. 9ho, as between$artel and )o. and P-, shold bear the loss%

Answer :$artel and )o. shold bear the loss !or two reasons. 6irst, in depositing the

'he'k in its a''ont with the P-, it mst have indorsed the 'he'k to the P-. 5ssming that the endorsement was a general one, $artel as endorser warranted thatthe instrment is genine, and valid and sbsisting at the time o! his endorsement. It isthere!ore liable !or brea'h o! its warranties. &e'ond, by depositing the 'he'k with theP-, as between it and the P-, the latter merely be'ame a 'olle'ting agent o! $artel.

5ny liability arising ot 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 (

IIIb. 5 pr'hased some mer'handise !rom - !or P7,000.00. ot having any 'ash, 5 o!!ered topay 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 vale !or indorsing the 'he'k, a''epted it.4pon matrity, - 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 Xliable to -% "easons.


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Answer :Yes, X is liable to -. X, as a''ommodation indorser, is liable to a holder !or vale

althogh the latter may know that he is a mere a''ommodation party. - is a holder !or vale. X as indorser agreed to pay shold the 'he'k be dishonored pon depresentment, 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! pbli' 'onvenien'e tooperate +0 provin'ial bses, plying between Ilo'os orte and $anila passing throgh"ial 5vene 23tension then right on Foroteo @ose. -e'ase o! tra!!i' 'ongestionbetween the hors o! A and > o='lo'k in the morning, and / to K o='lo'k in the evening, amni'ipal ordinan'e was passed prohibiting provin'ial bses !rom entering $anila onthose hors bt allowing them to se one shttle bs !or every + bses. 5 'hallenged thevalidity o! the ordinan'e, on the grond that it in!ringes on his 'erti!i'ate o! pbli''onvenien'e, and that he had a'#ired a vested right to enter $anila at anytime o! theday, thr a!orementioned rote. Fe'ide with reasons.

Answer :(he ordinan'e is valid. 4nder its 'harter, the )ity o! $anila has the power to

reglate the se o! its streets. (his 'harter is a spe'ial law and there!ore prevails over the Pbli' &ervi'e 5't. )onse#ently, the power o! the -


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mortgagor resides or where the property is sitated. oti'e o! the time, pla'e andprpose o! the sale shold be given in a''ordan'e with law.

(c) Yes, he may 'olle't the de!i'ien'y sin'e the 'hattel is given only as se'rity and notas payment o! the debt. (he provision o! the )ivil )ode barring de!i'ien'y Gdgmentsin 'ase o! pledge is not appli'able to 'hattel mortgage, whi'h is governed by aspe'ial law. either is it a sale by installments. Garrido v. *uazon, */ &)"5 A*A1

;b. 5 e3e'ted a 'hattel mortgage on 'ertain personal properties in !avor o! - to se're adebt. (he 'hattel properties were atta'hed by ), knowing that said properties had beenmortgaged to -. 5s between - and ) who has a better right to the properties% "eason.

Answer :) has a better right to the properties. (he )hattel $ortgage Law e3pressly

provides that an nregistered 'hattel mortgage is not valid against any person."egistration is essential !or the validity o! the 'hattel mortgage.

;Ia. 9hile do'king his vessel, “(ars”, the master, thr negligen'e, damaged the whar! and

the mer'handise loaded on the de'k. (he owner o! the whar! and the damagedmer'handise sed the owner o! the vessel and the master o! the vessel !or the damage.

Mestions:71 9hat is the basis o! the liability o! the owner o! the vessel with respe't to the damage

to the whar!%*1 9ith respe't to the damage to the mer'handise%D1 Foes the de!ense o! e3er'ise o! diligen'e o! a good !ather o! a !amily lie% "eason.

Answer :71 (he basis o! the liability o! the shipowner with respe't to the damaged whar! is tort.

(here was damage de to negligen'e withot any pree3isting 'ontra'tal relations

between the parties.*1 (he basis o! the liability with respe't to the mer'handise on de'k is the 'ontra't o!

'arriage. (here was a brea'h o! 'ontra't be'ase the goods were not 'arried sa!elyto their destination de to the negligen'e o! the master.

D1 (he de!ense o! e3er'ise o! the diligen'e o! a good !ather o! a !amily will lie in 'ase o! tort bt not in 'ase o! 'ontra't. In the latter, s'h de!ense is not available be'asethe 'ontra't was to 'arry the goods sa!ely and nless loss is de to 'aso !ortito or !or'e maGere, there is a brea'h o! 'ontra't. (he de diligen'e o! the shipowner isagainst his employee, the master.

;Ib. In all the transa'tions between X and Y it is so stiplated that payment o! the domesti'

obligations shall be made in e#ivalent pesos at the rate o! e3'hange o! the 5meri'andollar at the time o! payment. Is the stiplation valid% "eason.

Answer :o, the stiplation is not valid. -y e3press provisions o! &e'tion 7 o! ".5. o.

+*>, any stiplation in an obligation 'ontra'ted in the Philippines whi'h obliges paymentin Philippine 'rren'y is de'lared against pbli' poli'y and is nll and void.


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;IIa. $ay the !ollowing be de'lared insolvernt%71 $arried womanH*1 PartnershipHD1 Insane person23plain yor answer.

Answer :71 Yes, a married woman may be de'lared insolvent in respe't to her own debts.*1 4nder the Insolven'y Law, a partnership may be de'lared insolvent, either in a

volntary or involntary insolven'y pro'eeding.D1 5n insane person 'an be de'lared insolvent in involntary pro'eedings as long as

his interests are prote'ted by a dly appointed gardian. 8e 'annot however !ile apetition !or volntary insolven'y be'ase he la'ks legal 'apa'ity to a't.

;IIb. 5 broght an a'tion against - !or sm o! money. &bse#ently - was de'lared insolventin an insolven'y pro'eeding. Yo are a 'reditor o! -, what shold yo do in 'onne'tionwith the a'tion broght by 5 against - to prote't yor interest% "easons.

Answer :I wold !ile an appli'ation !or the sspension o! the pro'eedings o! the 'ase

broght by 5 against -, sin'e the 'laim is nse'red. &e'tion 7K, Insolven'y Law1

;IIIa. 71 9hat is an n'laimed balan'e within the meaning o! the 4n'laimed -alan'e Law%*1 9hat is the dty o! the bank with respe't to the n'laimed balan'es%D1 In general, what shold the government do with respe't to the n'laimed balan'es%

Answer :(he 4n'laimed -alan'es Law was e3'lded !rom the s'ope o! the e3amination#estions, by e3press statement in the 'ir'lar sent to all deans.1

;IIIb. the )ity 6is'al o! $anila re#ired the $anila -anking )orporation to prod'e at ahearing the re'ords o! bank deposits o! 5l!redo &antos. (he $anila -anking )orporationre!sed, alleging that dis'losre o! bank deposits is prohibited by ".5. o. 7/0+.(hreatened with prose'tion, the )orporation !iled an a'tion !or de'latory Gdgment. $aythe 'ort 'ompel the $anila -anking )orporation to dis'lose the bank deposits o!

5l!redo &antos%

Answer :4nder the law, all deposits with banks are absoltely '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 'ort in 'ases o! bribery,

dereli'tion o! dty o! pbli' o!!i'ials, or in 'ases where the money deposited is thesbGe't matter o! litigation. 4nless the 'ase o! 5l!redo &antos 'omes nder one o! thesee3'eptions, the 'ort 'annot 'ompel the $anila -anking )orp., to dis'lose his bankdeposits. &e'tion *, ".5. 7/0+1

IXa. X applies !or registration in his !avor the tradename “Loving )are” !or a hair dye on thegrond that he has been sing said tradename !or almost D years be!ore !iling hisappli'ation. Y opposes the appli'ation on the grond that he has been sing the


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tradename “Loving )are” with the same design !or hair pomade whi'h is registered in hisname sin'e 7>?D. X replied that althogh the said trademark was registered in Y=s nameit was however, !or a di!!erent arti'le. )an X=s appli'ation be sstained% "easons.

Answer :X=s appli'ation 'annot be sstained. 5lthogh the trademark he applied !or is !or

a di!!erent arti'le, hair dye and hair pomade are both preparations !or hair grooming, andthe se o! the same mark !or both is likely to 'on!se or de'eive pr'hasers as to theorigin and sor'e o! the goods.

IXb. Is a letter o! 'redit a 'ommer'ial transa'tion% 23plain yor answer. Is it governed by theIL% "eason.

Answer :Yes, it is a 'ommer'ial transa'tion be'ase it is 'overed by the )ode o!

)ommer'e, and a''ompanies a 'ommer'ial transa'tion. It is not a negotiable instrmentbe'ase it is not !or a sm 'ertain in money and is not payable to order or to bearer btis issed in the name o! a spe'i!ied person.

Xa. In a 'ase where three persons 'laim the right to possession o! 'ertain goods stored in awarehose, what shold the warehoseman do%

Answer :8e shold re#ire the 'laimants to interplead, either in an a'tion broght against

him !or nondelivery or in an original sit broght by him. &e'tion 7A, 9arehose"e'eipts Law1.

Xb. 9hen may a warehoseman be liable !or any loss or inGry to the goods stored in his

warehose althogh he is not negligent%

5nswer:8e may be liable in the !ollowing 'ases:71 9here he has e3pressly agreed to be liable !or any loss even where he is not

negligentH or *1 I! the warehoseman has violated the 'ontra't, like when he agrees to store the

goods in a parti'lar pla'e and stores them in another pla'eH or D1 9here the loss takes pla'e a!ter the warehoseman 'onverted the goods.


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Ia. $aria, ** years o! age, wi!e o! @aime, wants to embark in the prod'tion and e3port o! handi'ra!ts with a 'apital o! P*00,000.00 and name the bsiness “$aria=s 8ose o! 8andi'ra!ts”. $ay $aria law!lly engage in 'ommer'e and pt the 8ose o! 8andi'ra!ts%

Answer :Yes, $aria may law!lly engage in 'ommer'e and pt p the 8ose o!

8andi'ra!ts. 5lthogh, at !irst glan'e, it wold seem that her hsband=s athoriationappearing in a pbli' instrment is ne'essary, prsant to &e'tion ? o! the )ode o! )ommer'e whi'h states that: “5 married woman having rea'hed *7 years o! age, mayengage in 'ommer'e with her hsband=s athoriation appearing in a pbli' instrmentwhi'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'ts 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 inbsiness. 8owever, the hsband may obGe't, provided:

a. 8is in'ome is s!!i'ient !or the !amily, a''ording to its so'ial standing, andb. 8is opposition is !onded on serios and valid gronds.

In 'ase o! disagreement on this #estion, the parents and grandparents as wellas the !amily 'onsel, i! any, shall be 'onslted. I! no agreement is still arrived at, the'ort will de'ide whatever may be proper and in the best interest o! the !amily.D. “5rt. 77D. (he hsband mst be Goined in all sits by or against the wi!e, e3'ept:

3 3 3K1 I! the litigation is in'idental to the pro!ession o''pation or bsiness in whi'hshe is engaged.”

Ib. $ay @aime, $aria=s hsband, interpose any obGe'tion, and on what gronds%

Answer :Yes, @aime may interpose obGe'tions, bt only on the gronds provided by 5rt. 77

o! the )ivil )ode. 5''ording to 5rt. 77A o! the ew )ivil )ode: “(he wi!e may e3er'iseany pro!ession or o''pation or engage in bsiness. 8owever, the hsband 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 !onded on serios and valid gronds.

I'. (he bsiness !ailed and reslted in losses. I! @aime volntarily 'onsented to $aria=sbsiness a'tivity, what properties shall answer !or her obligations%

Answer :@aime, having volntarily 'onsented to $aria=s bsiness a'tivity, her paraphernal

properties, as well as those o! their 'onGgal partnership or absolte 'ommnity, shall beliable !or the losses reslting !rom the !ailre o! $aria=s bsiness.


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Id. I! @aime opposed the bsiness ventre, what properties are liable%

5nswer:I! @aime has obGe'ted to his wi!e=s engagement in bsiness and his obGe'tion,

being based on serios and valid gronds andBor on the s!!i'ien'y o! his in'ome !or the

!amily a''ording to its so'ial standing, has been Gdi'ially pheld by the 'ort, then only$aria=s paraphernal properties will be liable, and not those o! their 'onGgal partnershipor absolte 'ommnity, e3'ept inso!ar as her obligations have redonded to the bene!ito! the !amily, and to that e3tent only.

II. Pedro writes ot a 'he'k !or P7,000.00 in !avor o! @ose or order against his 'rrenta''ont with -ank o! 5meri'a. @an steals the 'he'k, erases the name o! @ose andsperimposes his own name. @an deposits the 'he'k at )itibank and a!ter 'learing,@an withdraws the amont and abs'onds. 4pon dis'overy by Pedro o! the materialalteration, he lodged a 'omplaint at the -ank o! 5meri'a, who debited the amont toPedro. -ank o! 5meri'a demands reimbrsement !or )itibank whi'h re!ses on the

grond 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. 4ndisptedly, it is liable to Pedro

drawer1 !or the amont o! the 'he'k, !or the simple reason that his order on the 'he'kwas to pay “@ose or order,” and @ose or his order” was not paid. -arring a 'ase o! notorios negligen'e on his part, Pedro has a right to be 'redited or reimbrsed !or theamont taken !rom his a''ont.


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ot o! its !nds, and 'annot ordinarily 'harge the amont so paid to the a''ont o! thedepositor whose name was !orged.

I;. "olando intending to by a 'ar, saw an old !riend, "oger, who is an agent to sell the 'ar belonging to Felgado )lini'. 5!ter negotiation, "olando de'ided to by the said 'ar. 8e

drew pon re#est o! "oger a 'rossed 'he'k !or P?00.00 payable to Felgado )lini' aseviden'e o! his good !aith, bt whi'h will merely be shown to Felgado )lini' by "oger who re'eived the 'he'k. (he 'he'k wold then be retrned when "oger brings the 'ar and its registration 'erti!i'ate !or "olando=s inspe'tion.

6or !ailre o! "oger to bring the 'ar and its 'erti!i'ate o! registration, and retrn the'he'k, "olando issed a “stop payment order” to the drawee bank. In the meantime,"oger paid the 'he'k to Felgado )lini' !or the hospital bill o! his wi!e and was givenP7+K.*+ as 'hange. Felgado )lini' !iled sit against "olando to re'over the vale o! the'he'k. $ay Felgado )lini' be 'onsidered a holder in de 'orse, hen'e, entitled tore'over% Fe'ide with reasons.

Answer :Felgado )lini' may not be 'onsidered a holder in de 'orse, hen'e, not entitled

to re'over. It is not dispted that Felgado )lini' was not aware o! the 'ir'mstan'ender whi'h the 'he'k was delivered to "oger. -t the 'ir'mstan'esCs'h as the !a'tthat "olando had no relation with itH that the amont o! the 'he'k did not 'orresponde3a'tly with the obligation o! "oger to the 'lini'H and that the 'he'k is a 'rossed 'he'k,whi'h means that the 'he'k 'old only be deposited bt 'old not be 'onverted into'ashCshold have pt the 'lini' to in#iry as to why=s and where!ore=s o! thepossession o! the 'he'k by "oger, and why he sed it to pay his a''onts. It waspayee=s dty to as'ertain !rom "oger what the natre o! the latter=s title to the 'he'k wasor the natre o! his possession. 8aving !ailed in this respe't, Felgado )lini' was gilty o! gross negle't amonting to the legal absen'e o! good !aith, and it may not be

'onsidered as a holder o! the 'he'k in good !aith. (he rle that a possessor o! theinstrment is a prima !a'ie a holder in de 'orse does not apply be'ase there was ade!e't in the title o! the holder "oger1 be'ase the instrment is not payable to him or tobearer.

;a. 5 owns a hose worth P+00,000.00. 8e insred t against !ire !or P*+0,000.00 !or theperiod !rom @anary 7, 7>AA to @anary 7, 7>AK. 5t the instan'e o! -, who is a Gdgment'reditor o! 5, the said hose was levied pon by the &heri!! and sold at pbli' a'tion on$ar'h 7+, 7>AA. It was adGdi'ated to - !or P7+0,000.00 at the a'tion sale. - insredthe hose against !ire !or P7+0,000.00 !or the period !rom $ar'h 7?, 7>AA to $ar'h 7?,7>AK. (he hose was a''identally brned on 5pril 7, 7>AA. $ay 5 re'over nder his

poli'y% Eive reasons.

Answer : 5 'an re'over nder his poli'y. 5 Gdgment debtor whose property has been

seied on e3e'tion has an insrable interest therein ntil the right to redeem or havethe same set aside has been lost. Inasm'h as the right o! 5 to redeem has not e3pired,the 7* months time a!ter the sale having not elapsed be!ore the loss o''rred, 5 has aninsrable interest in the hose at the time o! loss.


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;b. $ay - re'over nder his poli'y% Eive reasons.

Answer :- 'an re'over pon his poli'y be'ase as pr'haser at a Gdi'ial sale he has an

insrable interest in the property to the e3tent o! the amont !or whi'h he insred it note3'eeding his interest in the property.

;I. 5, an agent o! li!e insran'e 'ompany X, ind'ed - who has been s!!ering !romadvan'e tber'losis to apply !or P70,000.00 li!e insran'e whi'h - did and he -1re#ested 5 to !ill the appli'ation !orm. (hr the 'onnivan'e o! the physi'ian, it wasmade to appear in the appli'ation that - is in good health and the P70,000.00 li!einsran'e poli'y was issed by X to -. I! - dies o! tber'losis, may his bene!i'iariesre'over%

Answer :It depends. (he insrer is bond when its agent writes a !alse answer into the

appli'ation withot the knowledge o! the insred, in whi'h 'ase his insred1

bene!i'iaries may re'over, bt a 'ollsion between the agent and the insred inmisrepresenting the !a'ts will vitiate the poli'yH ths, in the instant 'ase, i! 5 obtained!rom - a 'orre't and trth!l answer to interrogatories 'ontained in the appli'ation btwithot the knowledge o! - !iled in !alse answer and thr the 'onnivan'e with the'ompany physi'ian, it was made to appear that - is in good health, the insrer 'annotassert the !alsity o! s'h answers as a de!ense to liability on the poli'y.

;IIa. @ose, driving his own 'ar together with his wi!e $aria, were on their way home !rom their respe'tive o!!i'es when a 'ar driven by Pedro hit them !rom behind whi'h was in trn hitby a gasoline tanker driven by $ario, 'asing the 'ar o! @ose to trntrtle, ths,reslting in the death o! $aria. 5ll motor vehi'les being insred, @ose !iled his 'laim !or

the death o! $aria against the “< 654L(” Insran'e, &e'tion DAK o! the Insran'e)ode.

9ill @ose=s 'laim !or the death o! $aria against insrers o! said three motor vehi'lesprosper and p to what amont% "easons.

Answer : @ose=s 'laim !or the death o! $aria against the insrer o! said three motor vehi'les will not prosper. 5''ording to &e'tion DAK o! the Insran'e )ode, “5ny 'laim !or death or inGry to any passenger or thirdparty prsant to the provisions o! this 'hapter shall be paid withot ne'essity o! proving !alt or negligen'e o! any kindH Provided, that!or prposes o! this se'tion.

3 3 3 3iii1 )laim may be made against one motor vehi'le only. In the 'ase o! an o''panto! a vehi'le, 'laim shall lie against the insrer o! the vehi'le in whi'h the o''pant isriding, monting or dismonting !rom. )learly, in the instant 'ase, the


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@ose may 'laim only p to an amont not e3'eeding P+,000.00 prsant to par. i1,&e'tion DAK o! the Insran'e )ode whi'h provides that “the total indemnity in respe't toany one person shall not e3'eed P+,000.00.”

;IIb. I! @ose in'ldes in the 'laim damage !or his 'ar, will the 'laim prosper% 9hy%

Answer :@ose=s 'laim !or damages !or his 'ar will not prosper. 5s may be 'learly gleaned

!rom &e'tion DAK o! the Insran'e )ode on


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dire'tions and towards ea'h other, sddenly 'ollided at a 'ertain point o! the passagewhi'h reslted in the sinking o! 6&7>0, together with all its 'argoes, part o! whi'hbelonged to (anya, who was a paying passenger and "a!ael, who was a shipper.

(anya and "a!ael broght an a'tion in 'ort to re'over !or their losses and !or damagesarising !rom the 'ollision.

9ere they nder obligation to !ile a maritime protest !or a s''ess!l maintenan'e o! thea'tion% 9hy%

Answer :o, (anya and "a!ael are not nder obligation to !ile maritime protest. 5rt. KD+ o!

the )ode o! )ommer'e states that “the a'tion !or re'overy o! damages and lossesarising !rom 'ollisions 'annot be admitted withot a previos protest or de'larationpresented by the 'aptain within */ hors be!ore the 'ompetent athority o! the pointwhere the 'ollision took pla'e, or o! the !irst port o! arrival.” (here!ore, a marine protestis re#ired to be made by the master o! the vessel not by the passenger or shipper.

IXb. 23plain a maritime protest.

Answer :$aritime ProtestCa written statement by the master o! vessel, attested by a

proper Gdi'ial o!!i'er or a notary, to the e!!e't that damage s!!ered by the ship or her voyage was 'ased by storms or other perils o! the sea, withot any negligen'e or mis'ond't on his part.

Xa. A7, then Pbli' &ervi'e )ommission in -) )ase o. A0D/>? madepermanent and e!!e'tive immediately the provisional in'rease o! rates by PLF(

previosly so athoried on the grond among others, that pbli' interest wold beserved thereby.

Pending appeal to the &preme )ort o! -) )ase o. A0D/>?, PLF( !iled on 6ebrary*A, 7>AD with the -oard o! )ommni'ations s''essor to the Pbli' &ervi'e)ommission1 another appli'ation !or an a'rosstheboard in'rease o! /0J o! its presentathoried rates do'keted as -) )ase o. AD077.

AD, the -oard o! )ommni'ations issed an


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&e'. DD, Pbli' &ervi'e 5't1, as amended, provided a new 'ase is !iled there!ore nder separate do'ket in the Pbli' &ervi'e )ommission. (he 7>AD -) )ase o. AD077 isnew and separate !rom the 7>A0 -) )ase o. A0D/>?.

Xb. $ay the order or de'ision o! said -oard on rates be stayed by a petition !or 'ertiorari in

the &preme )ort% 9hy%Answer :

(he order or de'ision o! the -oard !or Pbli' &ervi'e )ommission and now the-oard o! )ommni'ations 'annot be stayed by the instittion o! a petition !or 'ertiorari,or other spe'ial remedies in the &preme )ort, nless the &preme )ort shall sodire't. Gonzales v. Pu'lic Service Commission, ?7 &)"5 +0/1

XIa 5bot K:00 pm o! $ar'h *0, 7>A/, X as 'aptain o! the $; )hristina, re'eived an &.

Fid the servi'e rendered by X to Y 'onstitte “salvage” or “towage”% 9hy%

Answer :(he 'ir'mstan'e all show that there was no marine peril, and the vessel was not

a #asidereli't, as to warrant a valid salvage 'laim !or the towing o! the vessel. X=sservi'e to Y 'an be 'onsidered as a #asi'ontra't o! “towage” be'ase in 'onsenting toX=s o!!er to tow the vessel, Y thereby impliedly entered into a Gridi'al relation o! “towage”with the owner o! the towing vessel, 'aptained by X.

XIb. $ay X re'over !rom Y 'ompensation !or s'h servi'e% 9hy%

Answer :

o. 9here the 'ontra't 'reated is one o! towage, only the owner o! the towingvessel, to the e3'lsion o! the 'rew o! said vessel, may be entitled to 'ompensation.Barios v. Carlos ). Go *$ong Co., A &)"5 +D+1

XIIa. $ )orporation is a Philippine )orporation engaged in deep sea !ishing. Its operationreslted in losses. -e'ase o! the npro!itable operations in deep sea !ishing, the)orporation wants to engage in general 'onstr'tion bsiness, one o! its se'ondaryprpose.


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Fis'ss brie!ly ho the 'orporation may validly engage in the 'onstr'tion bsiness.

Answer :In order that $ )orporation may validly engage in the 'onstr'tion bsiness and

thereby invest its !nds therein the !ollowing re#isites mst be 'omplied with, to wit:

(here mst be a meeting 'alled !or the prpose, noti'e o! whi'h shall be given toall o! the sto'kholders on re'ord whether or not they shall be entitled to vote thereat. Insaid meeting the board o! dire'tors o! the 'orporation mst be athoried to engage ins'h bsiness in a resoltion by the a!!irmative vote o! sto'kholders holding shares inthe 'orporation entitling them to e3er'ise at least *BD o! the voting power on s'h aproposal at the said sto'kholder=s meeting.

XIIb. 9hat are the rights o! the minority sto'kholders who do not want to divert the )orporate!nds into a se'ondary prpose%

Answer :

(he appraisal right may be e3er'ised by any sto'kholder who shall have votedagainst the proposed 'orporate a'tion, by making written demand on the 'orporationwithin D0 days a!ter the date on whi'h the vote was taken !or payment o! the !air vale o! his shares: Provided, that !ailre to make the demand within s'h period shall bedeemed a waiver o! the appraisal right. I! the proposed 'orporate a'tion is implementedor a!!e'ted, the 'orporation shall pay to s'h sto'kholder, pon srrender o! the'erti!i'ateBs o! sto'k representing his shares, the !air vale thereo! as o! the day prior tothe date the vote was taken, e3'lding any appre'iation or depre'iation in anti'ipation o! s'h 'orporate a'tion.

I! within a period o! ?0 days !rom the date the 'orporate a'tion was approved bythe sto'kholders, the withdrawing sto'kholder and the 'orporation 'annot agree on the!air vale o! the shares, it shall be determined and appraised by D disinterested persons,

one o! whom shall be named by the sto'kholder, another by the 'orporation, and thethird by the two ths 'hosen. (he !indings o! the maGority o! the appraisers shall be !inal,and their award shall be paid by the 'orporation within D0 days a!ter s'h award ismade: Provided, that no payment shall be made to any dissenting sto'kholder nless the'orporation has nrestri'ted retained earnings in its books to 'over s'h payment: andProvided, !rther, that pon payment by the 'orporation o! the agreed awarded pri'e, thesto'kholder shall !orthwith trans!er his shares to the 'orporation. &e'. K*, )orporation)ode1

XIII. X sbs'ribed to A00 shares o! sto'k in a single sbs'ription to a 'orporation bt paidonly !or /00 shares, !or whi'h he was issed !lly paid 'erti!i'ates !or /00 shares.

Is he entitled to vote the paid p shares notwithstanding the !a't that he has not paid theremaining D00 shares% 23plain.

Answer :Yes. In this regard &e'tion ?/ o! the )orporation )ode provides that “o

'erti!i'ate o! sto'k shall be issed to a sbs'riber ntil the !ll amont o! his sbs'riptiontogether with interest and e3penses in 'ase o! delin#ent shares1, i! any is de, hasbeen paid. 5s may readily be seen, the said provision re#ires as a 'ondition be!ore a


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shareholder 'an vote his shares, that his !ll sbs'ription be paid in the 'ase o! the nopar vale sto'kH and in 'ase o! sto'k 'orporation with par vale as in the present 'ase1,the sto'kholder 'an vote the shares !lly paid by him only, irrespe'tive o! the npaiddelin#ent shares. Baltazar v. Lingayen Guild Electric Power Co.% Inc., 7/ &)"5 +**1

XI;. 5, as owner o! a 'ertain nmber o! shares o! sto'k in X )orporation, entered into avoting trst agreement with -. on the basis o! the voting trst agreement, - annon'edhis desire to rn !or a seat in the -oard o! Fire'tors o! X )orporation. ), another sto'kholder, obGe'ted and #estioned the eligibility o! - to be a dire'tor o! X )orporation.

Is )=s 'ontention 'orre't% 9hy%

Answer :)=s 'ontention is 'orre't. (he voting trst involves a m'h more 'omplete

srrender o! all legal rights and remedies by the shareholders than any other 'ontroldevi'e. -y it, the bene!i'ial owner 'eases to be re'ognied as a shareholder o! re'ordand may be deprived not only o! any right any right to vote !or dire'tors, bt also o! any

right to inspe'tionH noti'e or in!ormation as against the 'orporation or any voi'e inmaking most !ndamental 'hanges, s'h as mergers and 'onsolidation, sales o! entireassets, in'rease and red'tion o! 'apital and by law and 'harter amendments whi'hmay adversely a!!e't him.

;irtally 'easing to be re'ognied as a shareholder o! re'ord, - is there!oreineligible to be a dire'tor o! X )orporation. In this 'onne'tion &e'. *D o! the )orporation)ode states: “2very dire'tor mst own at least 7 share o! the 'apital sto'k o! the'orporation o! whi'h he is a dire'tor, whi'h share shall stand in his name on the books o! the 'orporation. 5ny dire'tor who 'eases to be the owner o! at least 7 share o! the'apital sto'k o! the 'orporation o! whi'h he is a dire'tor shall thereby 'ease to be adire'tor. 3 3 3”

X;. (he Feposit Insran'e Law insres deposits p to P70,000.00 per depositor. X hasthree separate deposits in a single bank, namely, P7+,000.00C&avings FepositHP7+,000.00C)rrent Feposit 'he'king a''ont1. Later on, the bank ran into !inan'ialtroble and was ordered by the )entral -ank to 'lose and li#idate.

8ow m'h may X re'over% 5nswer with reasons.

Answer :X may re'over only p to P70,000.00. 5''ording to &e'. D!1 o! the Feposit

Insran'e )orporation 5't the term “deposit” means the npaid balan'e o! money or its

e#ivalent re'eived by a bank in the sal 'orse o! bsiness and !or whi'h it has givenor is obliged to give 'redit to a 'ommer'ial, 'he'king, savings, time or thri!t a''ont or whi'h is eviden'ed by its 'erti!i'ate o! deposit, and trst !nds held by s'h bank 3 3 3.“(he !a't there!ore that X has savings, time, and 'rrent deposits in the same bank isimmaterial. (hey all 'ame nder the same heading o! deposit”

In &e'. Dg1 o! the same 5't, the term “insred deposit” is de!ined as the netamont de to any depositor !or deposits in an insred bank a!ter ded'ting o!!set1 lessany part thereo! o! whi'h is in e3'ess o! P70,000.00 3 3 3.” Likewise, &e'. 70a1 thereo!,


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inso!ar as pertinent provides: “(hat the ma3imm amont o! the insred deposit o! anydepositor shall be P70,000.00”. 2vidently, irrespe'tive o! kinds o! deposits o! a parti'lar depositor and the total amont 'orresponding to the same, he is entitled to re'over onlyp to P70,000.00 in 'ase o! 'losre and li#idation o! the bank.

X;I. 5 boght some goods !rom a Fepartment &tore and paid with his personal 'he'k. 9henthe Fepartment &tore deposited the 'he'k o! 5, the bank dishonored it.


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'. Yes. (he 'reditor is entitled to a de!i'ien'y Gdgment in a 'hattel mortgage 'ontra't.4nder &e'. 7/ o! the )hattel $ortgage Law, it 'an be in!erred that i! the pri'e o! thesale o! the thing mortgage is less than the amont o! the prin'ipal obligation ana'tion may still be maintained by the 'reditor against the debtor !or the de!i'ien'y.(he only e3'eption to this rle is that whi'h is provided !or in 5rt 7/K/ D1 o! the )ivil)ode. 5''ording to this provision, shold the vendee !ail to pay two or more

installments, the vendor may !ore'lose the 'hattel mortgage, bt he shall not have!rther a'tion against the vendee to re'over any npaid balan'e o! the pri'e. )'lazav. Ignacio, L77/?D, $ay *D, 7>+K and Garrido v. *uason. L*DA?K, 5gst *D, 7>?K1

X;IIII. 5 warehoseman having in his possession 'ertain goods, !or whi'h he has issed anegotiable re'eipt, re'eives a 'ort order o! garnishment prsant to an atta'hmentdire'ting him to sell said goods. Fisregarding the order, he delivers them to a thirdperson who prod'es the warehose re'eipt. Is the warehoseman liable to theatta'hing 'reditor !or the vale o! the goods% 9hy%

Answer :

Yes, the warehoseman is liable. 5''ording to &e'.70 o! the 9arehose"e'eipts Law, inso!ar as pertinent, “3 3 3, and thogh he delivered the goods asathoried by sbdivisions b1 and '1 o! &e'tion >1 he shall be so liable, i! prior to s'hdelivery he had either:

a1 -een re#ested, by or on behal! o! the person law!lly entitled to a right o! propertyor possession in the goods, not to make s'h delivery, or

b1 8old in!ormation that the delivery abot to be made was to one not law!lly entitled tothe possession o! the goods.

(he delivery o! the goods by a warehoseman to the depositor a!ter re'eiving noti'eo! the adverse 'laim or title o! a third person renders the warehoseman liable !or

'onversion i! s'h 'laim or title is good.

In the instant 'ase, his re'eipt o! a noti'e o! garnishment shold have s!!i'ientlywarned him that there is an adverse 'laim on the goods, and when, notwithstandings'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 pblished a story e3a'tly similar to an npblished 'opyrighted story o! 5. 5ses X !or in!ringement o! )opyright. It was, however, 'on'lsively proven that X wasnot 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, withot the 'onsent o! owner o! the 'opyright, o! anything the sole right to whi'h is 'on!erred by the statte on the owner o! the 'opyright.


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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 toan a'tion !or in!ringement. (he athor=s property is absolte when per!e'ted by'opyright, and the intent o! prpose o! an invasion is nowhere made an e3'se !or it.

XXI. -asilio invents and se'res registration o! patent o! a minithreshing ma'hine whi'h heman!a'tres. "dy, his employee, assisted him in the a'tal making o! the ma'hine.Later, a!ter resigning !rom his employment with -asilio, "dy boght tools ande#ipments to man!a'tre similar minithreshing ma'hine whi'h he sold !or his ownbene!it.

9hat legal steps will yo take i! yo were hired as 'onsel o! -asilio to prote't hisrights%

Answer : 5s 'onsel !or -asilio, I will institte the !ollowing steps:

“9ithin / years !rom the 'ommission o! a'ts o! in!ringement, I will bring a 'ivila'tion !or in!ringement o! patent be!ore the proper 'ort to re'over !rom the in!ringer damages sstained by reason o! the in!ringement. In the same 'ivil a'tion I will se'rean inGn'tion to enGoin the in!ringer !rom the se o! s'h patented invention.”

“I! a!ter a !inal Gdgment is rendered by the )ort against the in!ringer, herepeated the in!ringement, I will again institte a 'ivil a'tion !or damages with a prayer !or the issan'e o! a writ o! inGn'tion, as well as 'riminal a'tion !or repetition o! in!ringement.”


Ia. 5 signed a blank 'he'k whi'h he inadvertently le!t on his desk at his 2s'olta


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as payee. - then endorsed the 'he'k in the payee=s name and passed the 'he'k to )Htherea!ter ) passed it to FH then F to 2, and 2 to 6.

71 )an 6 en!or'e the instrment against 5% 23plain.*1 &ppose that 6 is a holder in de 'orse, what will be yor answer% 23plain.D1 )an 6 en!or'e the instrment against -% 5gainst )% Eive reasons.

Answer :71 o. 5n in'omplete instrment o! 51 whi'h has not been delivered, it will not, i!

'ompleted and negotiated withot athority by -1, be a valid 'ontra't in the hands o! any holder 61, as against any person 51 whose signatre was pla'ed thereonbe!ore delivery.

*1 o also, !or the same reason as indi'ated above. (he law says “in the hands o! anyholder”, meaning, whether a holder in de 'orse or not.

D1 Yes, i! 6 'an en!or'e the said instrment against -, the thie! who, having no goodtitle on the instrment, endorsed it in an assmed !i'titios1 name, thereby making abrea'h o! his warranty.6 may not en!or'e the instrment against ), nless there had been de

presentment, and dishonor, o! the instrment, and noti'e o! dishonor given to ).

Ib. 5 ind'es - by !rad to make a promissory note payable on demand to the order o! 5 inthe sm o! P+,000.00.71 )an 5 !ile an a'tion s''ess!lly against the maker - !or the amont o! the note%*1 Eoing !rther, 5 trans!ers the note to ) who pays P+,000.00 there!ore and a'#ires

the note nder 'ir'mstan'es that make ) a holder in de 'orse. )an ) !ile ana'tion s''ess!lly against -, the maker o! the note, !or the amont o! the note%23plain.

D1 9hat de!enseBs 'an - interpose% "easons.

Answer :71 o. - may raise the de!ense o! absen'e o! 'onsideration against 5 who is not a

holder in de 'orse.*1 Yes. ) 'an !ile an a'tion s''ess!lly against -, sin'e ) is a holder in de 'orse,

against whom absen'e o! 'onsideration is not a de!ense.D1 5s against 5, being not a holder in de 'orse, all de!enses, real or absolte and

personal or e#ities, may be interposed by -. -t as against ), being a hoder in de'orse only real or absolte de!enses 'an be interposed.

IIa. X, a natralied 6ilipino and owner o! a retail gro'ery store, takes * )hinese employeeson monthly salary basisCnamely, Y as pr'haser and Z as salesman. (heir !n'tions

have nothing to do with the management or 'ontrol o! the bsiness. (he $inistry o! (rade #estioned the employment o! Y and Z by X. Fe'ide. Eive yor reasons.

Answer :Yes, the $inistry o! (rade may #estion the employment o! Y and Z )hinese1 by

X, in the latter=s retail gro'ery store. (he "etail trade Law is 'omplemented by the 5ntiFmmy Law, and there!ore the employment o! a person who is not a 6ilipino 'itien,


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even in a minor or non'ontrol position in retail bsiness, is prohibited. -ing v. "ernaez ,L7+K+>, $ar'h D7, 7>?*1

IIb. 5 !inal de'ision promlgated by the )ort o! 5ppeals a!!irmed the payment by $ Line,In'. o! the overtime 'ompensation to its +0 employees in the amont o! P7+0,000.00.

(he 'ase was remanded by the )6I, -ohol, so that the )ompany may present eviden'eo! overtime 'ompensation already paid by it to said +0 employees. (he -ohol 'ort setthe 'ase !or hearing, bt the same was postponed several times on motions o! the)ompany. $eanwhile, said )ompany !iled a petition !or volntary insolven'y in )6I,)eb. (he s'hedle 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 bya !inal de'ision o! the )ort o! 5ppeals to pay overtime 'ompensation, were not in'ldedin the &hedle. 5!ter adGdi'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 theinsolven'y pro'eedings. Fe'ide with reasons.

Answer :

Yes, the motion o! the +0 employees to dismiss the volntary insolven'ypro'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 prpose !or whi'h the Insolven'y Law was ena'ted. (henonin'lsion o! its said +0 employees in the s'hedle 'ompletely vitiated the insolven'ypro'eedings. See In re Estate of +indanao +otor Line% Inc., +A &)"5 >K1

IIIa. A+, a !ire poli'y, insring a bilding and its 'ontents, was delivered

to the insred 'ompany. -y agreement, it was allowed to pay the premim within D0days. A?, it paid the premim by means o! a 'he'k postdated @anary7?, 7>A?. (he 'he'k was deposited by the insran'e 'ompany only on 6ebrary *0, btthe 'he'k bon'ed, althogh @anary 7>, the insred has a s!!i'ient bank balan'e.


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Answer :Yes, the insran'e 'ompany 'an 'an'el the poli'y !or nonpayment o! the

premim. (he new Insran'e )ode provides that notwithstanding any agreement to'ontrary, no poli'y or 'ontra't o! insran'e is valid and binding nless and ntil thepremim thereo! has been paid.

I;a. 5 heli'opter o! 5-) )o. 'ollided with XYZ=s tramway steel 'ables in its logging area in&rigao reslting in the destr'tion o! the heli'opter and death o! two pilots. 5-) )o.insred at its e3pense the heli'opter and death o! two pilots. 5-) )o. insred at itse3pense the heli'opter !or PK0,000.00 and the two pilots li!e insran'e1 !or P+0,000.00ea'h, and as a reslt o! the 'rash, the insrer paid 5-) )o. a total indemnity o! P7K0,000.00. evertheless, 5-) )o sstained additional damages o! abotP700,000.00 whi'h were not 'overed by insran'e.

71 5-) )o. sed XYZ to re'over not only the additional damages, bt also theP7K0,000 whi'h was already 'ompensated by the insrer. Fe'ide. Eive reasons.

*1 9hat rightBre'orse, i! any, has the insrer in order to be reimbrsed !or the amont

it paid to 5-) )o% Eive reasons.

Answer :71 5-) )o may bring the a'tion against XYZ !or its 'laim !or the additional damages

not 'overed by insran'e, bt not !or the P7K0,000 'overed by the insran'e. I! aproperty is insred and the owner re'eived indemnity !rom the insrer, the latter isdeemed sbrogated to the rights o! the insred against the wrongdoer, and i! theamont paid by the insrer does not !lly 'over the loss, then the aggrieved party isthe one entitled to re'over the de!i'ien'y.

*1 (he insrer is deemed sbrogated to the rights o! 5-) )o against XYZ to the e3tento! PK0,000 insran'e paid !or the heli'opter only, bt not !or the li!e insran'e o! thetwo dead pilots, sin'e sbrogation in the ew )ivil )ode re!ers only to property, and

not to the li!e insran'e. P$ilippine )ir Lines% Inc. v. "erald Lum'er Co., E.". L77/>A, 5gst 7?, 7>+AH for 'ot$ / and 0 answers.1

I;b. Pablo 2sparadon, a dlyli'ensed ship 'aptain o! the $B; Fon @ose was drnk while hewas on dty as s'h, and while $B; Fon @ose was sailing !rom $anila to the ;isayas.

5s a 'onse#en'e thereo!, the $B; Fon @ose rammed another vessel near )orreigidor,'asing both vessel to sink 'ompletely and ths be'ome total losses. (he 'argo ownerso! both snken vessels sed the owner o! the $B; Fon @ose !or their losses.

Is the shipowner o! $B; Fon @ose liable% 23plain yor answer.

Answer :o. the shipowner o! $B; Fon @ose is not liable. (he 'ivil liability o! the

shipowner o! a vessel, in maritime 'ollision whi'h is 'ased by the !alt o! the 'aptain,as in this problem being drnk1, is merely 'oe3istent with his interest in the vessel $B;Fon @ose1, s'h that the total loss thereo!, reslts in the e3tin'tion o! s'h liability.1rrutia Co. v. Baco &iver Plantation Co., *? Phil. D?*: Guan v. Cia +aritime &)1, DK


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;a. In the plane ti'ket stb o! 5ir $anila In'. 5$I1, there appears a statement that theliability “i! any loss or damage o! 'he'ked baggage or !or delay in the delivery thereo!” o! the 5$I “is limited to its vale and nless the passenger de'lares I advan'e a higher valation and pays an additional 'harge there!ore, the vale shall be 'on'lsivelydeemed not to e3'eed P700 !or ea'h ti'ket.” 5 passenger whose baggage was lost intransit !rom $anila to )eb sed !or a higher amont, i.e. P+,000. $ay 5$I s''ess!lly

'laim that the above statement pre'ldes the plainti!! !rom asking more than P700%Fe'ide. Eive reasons !or yor answer.

5nswer:o. 5$I may not s''ess!lly 'laim that the plainti!! was pre'lded !rom asking

more than P700 !or ea'h ti'ket. (he liability o! a 'ommon 'arrier may by 'ontra't belimited to a !i3ed amont, bt said agreement mst be in writing and signed by theshipper or owner o! the goods, besides the other re#irements o! the law, bt saidre#irements have not been shown to have been met by the 'arrier, 5$I. S$ewaran v.P$ilippine )irlines, L*00>>, @ly A, 7>??1

;b. -e'ase o! spillage o! the ri'e dring the trip !rom Favao to $anila de to the bad'ondition o! the sa'ks, there was a shortage in the ri'e delivered by the Provident LinesIn'. to the 'onsignee XYZ Import and 23port )orporation. (he 'arrier a''epted theshipment, knowing that the sa'ks had holes and some had broken strings. 9hen sed,Provident Lines, In'. alleged that the loss was 'ased by the spillage o! the ri'e ona''ont o! the de!e'tive 'ondition o! the sa'ks, at the time it re'eived the shipment, andthere!ore, it 'annot be held liable. Fe'ide. Eive reasons.

Answer :(he maritime 'arrier is liable. 9here the !a't o! improper pa'king is known to the

'arrier or its servants, or apparent pon ordinary observations, bt the 'arrier a''eptsthe goods nothwithstading s'h 'onditions, it is not relieved o! liability !or loss or inGry

reslting there!rom. Sout$ern Lines% Inc. v. Court of )ppeals, / &)"5 *+>1

;Ia. (he plainti!!, as sbrogee o! the 'onsignee, sed the de!endant, a 'ontra'tor andoperator o! arrastre servi'e in the port o! $anila, !or its !ailre to deliver one 'ase o! mer'handise 'onsisting o! ele'troni' spare parts shipped !rom 2rope whi'h it re'eived!rom the 'arrier. (he a'tion was broght within the period o! / years, bt a!ter the lapseo! 7 year, !rom the date the goods shold have been delivered. Invoking the provisionso! the )arriage o! Eoods by &ea 5't, the lower 'ort dismissed the 'omplaint on thegrond that it was !iled a!ter 7 year !rom the time that the 'ase o! a'tion a''red.

9as the lower 'ort Gsti!ied in dismissing the 'omplaint% 9hy%

Answer :“-


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'erti!i'ate o! in'orporation !or XYZ, In' 'old be issed, 8, who 'laims to be the owner o! said real estate property, !iled an a'tion against XYZ, In'. !or re'overy o! possessiono! the same.

9ill 8 sit prosper% 9hy%

Answer :o. 8=s sit will not prosper. &in'e the in'orporation papers o! XYZ, In'. were still

pending be!ore the &2) !or approval, said XYZ In'. has not yet been registered, and,there!ore, it has yet no Gridi'al personality in order to have the power to se or be sedin any 'ort. "all v. Picio, K? Phil. ?0D1

;IIa. 5-) Investment )orp is engaged in the pr'hase o! a''onts re'eivables or spe'i!i'ally,installment papers o! pr'hasers o! 'ars and tr'k. 5s a sor'e o! its !nding, 5-)investment )orp sells its bonds !rom time to time to the pbli'. (he pro'eeds o! the saleo! its bonds are tilied by the 5-) Investment )orp in its !inan'ing operations.


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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 rle o! “pier'ing the veil o! 'orporate!i'tion”. It is very obvios that 2 &teel )orporation seeks the prote'tive shield o! a'orporate !i'tion whose veil in the present 'ase 'old, and shold, be pier'ed as it was

deliberately designed to evade the !inan'ial obligation o! ) steel and ail )o. In'., to itsemployees. Claparols v. Court of Industrial &elations, ?+ &))"5 ?7D1

;IIIb. Petitioner is a 'orporation sole organied and e3isting in a''ordan'e with PhilippineLaws, with $sgr. (rdea, in a )anadian 'itien, as a'tal 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 ownedor 'ontrolled by 6ilipino 'itiens.9as the a'tion o! the "egister o! Feeds 'orre't% Eive reasons !or yor answer%

Answer :

o. the a'tion o! the "egister o! Feeds was not 'orre't. (he re#irement o! atleast ?0J o! 6ilipino 'apital was never intended to apply to 'orporations sole, be'ase:71 )orporation sole is 'omposed o! only personH*1 (he 'orporation sole is only the administrator and not the owner o! the temporalitiesHD1 &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.". LK/+7, Fe'ember *0, 7>+A1.

IXa. X )o. was an operator o! 'stoms bonded warehose. -y virte o! a !orged permit todeliver imported goods, prportedly issed by the -rea o! )stoms, 5 was able toobtain delivery o! 700 bales o! 'otton worth P?0,000 !rom X )o. Fe to wrong delivery, X

)o. !iled against 5 a 'omplaint !or re'overy o! the vale o! the 'otton and damages. 9illthe sit prosper% Fe'ide and give reasons.

Answer :o. the sit will not prosper. X )o. had yet no 'ase o! a'tion against 5, sin'e the

real parties interested in the bales o! 'otton who were the depositor, 'onsignee, or shipper with respe't to bales o! 'otton, and the )ommissioners o! )stoms and Internal"evene with respe't to the dties and ta3es1 have not yet sed X )o. !or damages or !or re'overy o! the bales o! 'otton or the 'orresponding dties and ta3es. Consolidated *erminals% Inc. v. )rte3 ,evelopment Co.% Inc. ?D &)"5 /?1

IXb. (o garantee the payment o! his obligation, the de!endant 5 mortgaged to the plainti!! -his sgar, then stored in a warehose in &an 6ernando, Pampanga athoriing saidplainti!! -1 to sell the sgar in 'ase he 51 !ailed to pay. Fring the initial days o! martialrle in late 7>A*, all o! 5=s sgar were brned or looted in the warehose. Plainti!! - sedde!endant 5 !or payment o! the obligation.71 9ill the sit prosper% 23plain.*1 9ho shall bear the loss o! the mortgaged sgar% Eive reasons.

Answer :


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71 Yes. -=s sit will prosper. (he mortgagee, -, a!ter the loss o! the sgar in awarehose, 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 sgar. (he mortgagee, notbeing the owner o! the mortgaged sgar, does not s!!er the loss. &aid goods are to

be regarded as lost on a''ont o! the real owner, the mortgagor. +artinez v.P$ilipiine 4ational Ban# , L/0K0, &ept. *7, 7>+D1

Xa. (he trademark L*,000.00, ths leaving a balan'e o! P?0,000.00. (he obligationgaranteed is !rther se'red by a deed o! 'hattel mortgage on the tr'ks e3e'ted byXYZ (ransit )o., in !avor o! -$) $otors )o. (o 'olle't the balan'e o! P?0,000.00, -$)$otors )o. later !iled an a'tion against XYZ (ransit )o. with )6I, $anila to !ore'lose the'hattel mortgage. (he sit reslted in the sale o! the tr'ks at pbli' a'tion in theamont o! P+0,000.00.

5, the real estate mortgagor, !iled an a'tion !or the 'an'ellation o! the real estatemortgage abovementioned.9ill the a'tion prosper% Eive reasons.

Answer :

Yes. 5=s a'tion !or the 'an'ellation o! the real estate mortgage will prosper. (herle is to the e!!e't that the !ore'losre o! the 'hattel mortgage on the thing sold, bars!rther re'overy by the vendor o! any npaid balan'e o! the pri'e. 5ny agreement to the'ontrary is void. 5=s real estate mortgage is invalid, being a !lagrant 'ir'mvention o! theprohibition o! the law.


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Ia. 5 makes a promissory note payable to bearer and delivers it to -. In trn, - negotiates itby mere delivery to ), who indorses it spe'ially to F. F negotiates it by spe'ialindorsement to 2, who negotiates it to 6 my delivery. 5 did not pay. (o whom are -, ), F,and 2 liable% 23plain yor answer.


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Answer :-, ), F, and 2 are not liable. - and 2 being negotiators by mere delivery are not

liable nless they made a brea'h o! their warranties, and it appeared that they had not.


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X shold pay the -ank o! 5meri'a at the rate o! the !ran' prevailing on $ay D0,7>AK, the date when the -ank o! 5meri'a=s 'orrespondent bank in Paris, 6ran'e, paidthe letter o! 'redit to the e3port 'ompany in 6ren'h 6ran', the letter o! 'redit having been'onsmmated at that time. Belman Cia.% Incorprada v. Central Ban# of t$e P$ilippines ,L707>+, ov. *>, 7>+K1

IIIa. (he agent in Favao o! the insred “5” was employed to ship “5”=s 'opra to $anila and to'ommni'ate the shipment to the byer “5” in $anila. (he said agent wrote the owner o! the 'opra annon'ing the sailing o! the ship, bt !ailed to state that the ship had rn agrond, whi'h !a't he already knew be!ore annon'ing the sailing. “5,” the byer o! the'opra, in all good !aith, took ot a marine insran'e on the 'opra. (he 'opra was badlydamaged and was a total loss. )an the insred re'over on the poli'y% "eason.

Answer :(he insred may not re'over on the poli'y, sin'e the sbGe't matter o! the marine

insran'e at the time o! 'ontra'ting the insran'e was already lost. 5n interest inproperty insred mst e3ist when the insran'e takes e!!e't and when the loss o''rs.

IIIb. 5 !ire insran'e poli'y in !avor o! the insred 'ontained a stiplation that the insredshall give noti'e to the 'ompany o! any insran'es already e!!e'ted or whi'h maysbse#ently be e!!e'ted, 'overing the property insred and that nless s'h noti'e begiven be!ore the o''rren'e o! any loss, all bene!its shall be !or!eited. (he !a'e o! thepoli'y bore the annotation “)oinsran'e de'lared.” (he things insred were brned. Ittrned ot that several insran'es were obtained on the same goods !or the same term.(he insrer re!sed to pay on the grond o! 'on'ealment. $ay the insred re'over%"eason.

Answer :Yes, the insred may re'over sin'e there is no 'on'ealment. (he !a'e o! the

poli'y bore already the annotation, “)oinsran'e de'lared” whi'h is a noti'e to theinsrer as to the e3isten'e o! other insran'e 'ontra'ts on the property insred. Een.Insran'e N &rety )orporation v. g 8a, L7/DAD, @an. D0, 7>?01

I;a. $arine insran'e was se'red pon goods on board a ship whi'h departed !rom$adagas'ar to $anila, withot any dis'losre to the insrer o! the !a't that the ship hadbeen reported at Lloyd o! London as seen at sea, deep in water and leaky. (his reporttrned ot later to be wrong be'ase the ship was at no time dring the voyage leaky or in troble, bt was lost throgh another insred risk. (he insrer re!ses to pay theinsred, 'laiming 'on'ealment. (he insred 'onters that the !a't not dis'losed waserroneos and did not in'rease the risk and there!ore immaterial. Fe'ide the dispte

with reasons.

Answer :(he insred may not re'over !rom the insrer. (he in!ormation that the ship in

#estion was seen at sea, deep in water and leaky, althogh erroneos, was material,and its 'on'ealment entitled the insrer to res'ind the 'ontra't o! insran'e.


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I;b. 5 was driving a Geepney registered in the name o! -. (he Geepney, while being drivennegligently by 5, hit and inGred X, so X sed - !or damages. (he de!ense o! - was thathe had sold the Geepney to ) and that X shold se ). "le on -=s de!ense withreasons.

Answer : 5ssming the said Geepney in #estion to be not a 'ommon 'arrier or pbli'

servi'e, and 5 was the driver o! ), the a'tal owner, althogh not yet registered in hisname, then ), and not - the registered owner1, shall be liable to X. 2mployer ) shall beliable !or damages 'ased by his employee a'ting within the s'ope o! his assigned task.5rt. *7K0, )ivil )ode1

;a. 5, in $anila, shipped on board a vessel o! -, 'hairs to be sed in the restarant o! 'onsignee ) in )eb. o date !or delivery or indemnity !or delay was stiplated. (he'hairs, however, were not 'laimed promptly by ) and were shipped by mistake ba'k to$anila, where it was dis'overed and reshipped to )eb. -y the time the 'hairs arrived,

the date o! inagration o! the movie hose passed by and it had to be postponed. )brings a'tion !or damages against -, 'laiming loss o! pro!its dring the )hristmasseason when he e3pe'ted the movie hose 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'ldes the dty not to delay their transportation, so that i! the'arrier is gilty o! delay in the shipment o! the 'argo, 'asing damages to 'onsignee, itwill be liable. *an Liao v. )merican President Lines, LA*K0, @anary *0, 7>+?1

;b. 9hile at sea, the 'aptain o! vessel 5 re'eived distress signals !rom vessel -, and vessel

5 responded and !ond vessel - with engine !ailre and dri!ting o!! 'orse. 4pona''eptan'e by vessel - and towed it sa!ely to port. (here was no grave marine perilbe'ase the sea was smooth and vessel - was !ar !rom the ro'ks. In a sit !or 'ompensation !or towage, who are entitled to re'over, the owner, the 'rew, or both% Eivebrie! 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'lsion o! the'rew o! the said vessel, may be entitled to 'ompensation. (he towage in #estion wasnot salvage o! the vessel -, sin'e there was no marine peril whi'h wold endanger thesaid vessel. Barrios v. Carlos ). Go *$ong Co., L7A7>*, $ar'h D0, 7>?D1

;Ia. 9hen as a reslt o! a s''ess!l salvage, both ship 5 and the 'argo therein are saved,against whom shold the salvage allowan'e be 'harged and in what proportion, i! any%

Answer :(he salvage allowan'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 vale.


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;Ib. 5 bs line=s servi'e between $anila and $alolos is satis!a'tory. 5 new road is openedbetween said points, and a new 'arrier applies !or a 'erti!i'ate o! pbli' 'onvenien'e tooperate a bs line along the new road. (he old bs line opposes, 'laiming that it shold!irst be given an opportnity to e3tend its servi'e. 9hi'h party shold prevail% "eason.

Answer :9here all 'onditions being e#al, priority in the !iling o! the appli'ation !or a

'erti!i'ate o! pbli' 'onvenien'e be'omes an important !a'tor in the granting thereo!H sothe new 'arrier who applies !irst shall prevail. Batangas *ransportation Co.% v. 2rlanes,+* Phil., /++1.

;IIa. 5 sbs'ribed to 700 shares o! sto'k o! 'orporation X with par vale o! P700.00 ea'h,paying P*,+00.00 on his sbs'ription. &bse#ently, 5 asked -, the president o! the'orporation, to release him !rom his sbs'ription. - 'onsented provided that 5 !or!eits tothe '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 assigneenow seeks to 'olle't !rom 5 the npaid balan'e o! his sbs'ription. Fe'ide the disptewith reasons.

Answer :(he assignee o! the insolvent X 'orporation may 'olle't !rom 5 the npaid

balan'e o! his sbs'ription. (he president o! a 'orporation has no legal 'apa'ity torelease as sbs'riber !rom his npaid sbs'ription. (he insolven'y o! X 'orporationmakes all sbs'ription payable on demand withot 'all and re'overable in an a'tioninstitted by the assignee. 6elasco v. Poizat , DA Phil. K0*1

;IIb. In the arti'les o! in'orporation o! ( )orporation, 77 members were named to 'onstittethe board o! dire'tors. (hese 77 ele'ted !rom among themselves a se'retarytreasrer bt did not ele't a president. (he board sed to hold meetings to transa't bsinesswhi'h was done throgh the se'retarytreasrer. In a pro'eeding to !or!eit its 'harter, the#estion was posed as to whether the 'orporation may be 'onsidered to have !ormallyorganied. "esolve the #estion.

Answer :Yes, the ( )orporation may be 'onsidered to have !ormally organied. It

appearing that the 'orporation, !rom the very day o! its !ormation, had its governingboard, whi'h dire'ted its a!!airs, as well as a treasrer and 'lerk, and that, throgh theseinstrmentalities, it a'tally !n'tioned and engaged in the bsiness !or whi'h it was

organied, said 'orporation 'annot be held to have !or!eited its 'harter simply be'ase ithas no president. Perez v. Balamaceda, /0 ?1

;IIIa. -, an alien 'ommer'ial bank doing bsiness in the Philippines was paid by a 6ilipinodebtor, ), who had no other assets, with a pie'e o! land lo'ated in -la'an. In themeantime that there were no byers yet o! the land, - soght to have the land registeredin its name by the "egister o! Feeds o! -la'an. -t the "egister o! Feeds re!sed toregister it on the grond that the said bank, -, is alien owned and there!ore the trans!er


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violates the 'onstittional prohibition o! alien holding o! private agri'ltral land. (hebank, -, 'ontends that "epbli' 5't DDA, the Eeneral -anking 5't, in se'tion *+'1athories 'ommer'ial banks to pr'hase and hold real estate as shall be 'onveyed to itin satis!a'tion o! debts previosly 'ontra'ted in the 'orse o! its dealings. Fe'ide thedispte 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, de to 'onstittional provision that thedisposition, e3ploitation or tiliation o! any o! the natral resor'es o! the Philippines, or to 'orporations or asso'iations at least ?0J o! the 'apital o! whi'h is owned by s'h'itiens. &e'. >, 5rt. XI;, )onstittion o! the Philippines.1

;IIIb. 5, in 8olland, shipped on board a vessel owned by -, +00 'ases 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. Inthe -ill o! Lading, it was stiplated that the vessel is no longer liable !or the 'argo pon

its delivery to the hands o! the 'stoms athorities. (he 'argo 'he'ker o! the arrastre!ond the 'argo to be in good order. 4pon delivery to the 'onsignee, a marine srveyor !ond *0 'ases o! milk missing. ) sed - !or the vale o! the *0 missing 'ases on thegrond that nder the 'ontra't o! 'arriage - was obliged to deliver the 'argo sa!ely tothe 'onsignee and that the stiplation limiting the liability o! the 'arrier is 'ontrary tomorals and pbli' poli'y. - dis'laims liability !or short delivery. Fe'ide the dispte, withreasons.

Answer:

Yes, - may dis'laim liability !or short delivery. (he stiplation is valid be'asenothing therein is 'ontrary to morals or pbli' poli'y, said stiplation being adopted tomitigate the responsibility o! the 'arrier.

IXa. )reditor 5 !iled a'tion !or re'overy o! a sm o! money against debtor -, and se'red apreliminary 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 the motion on the grond that the 'hattel mortgage being in the natre o! a'onditional sale, title passed to him in the meantime and there!ore he is entitled topossession o! the property. Fe'ide the motion and opposition.

Answer : 5=s motion !or disapproval o! )=s third party 'laim may be sstained, be'ase )

was merely a 'hattel mortgagee. )hattel mortgage is merely a se'rity !or a loan anddoes 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 natre o! a 'onditional sale,'annot be sstained. (he old view that a 'hattel mortgage is a 'onditional sale has beene3pressly repdiated by the new )ivil )ode. 5rt. *7/0, )ivil )odeH Serra v. &odriguez%supra1


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IXb. 5, owner o! negotiable warehose re'eipt !or toba''o, sold and indorsed it the re'eipt1to -, with the nderstanding that - wold pay a!ter * days. (herea!ter, - pledged it to )by indorsement, to se're a previos debt to ), who did not know that - had not paid 5.-e!ore - 'old pay 5, - died. 5 now ses ) to re'over the vale o! the npaid re'eipt.Fe'ide the 'ase with brie! reason.

Answer : 5=s a'tion 'annot prosper. (he negotiable warehose re'eipt, being dly indorsed

and negotiated, ) had a per!e't right to a''ept the said warehose re'eipt !rom - inse'rity o! pree3isting debts. &e'. /A, 9arehose re'eipts LawH and &iy )ong -ieng N)o., In'. v. 8ongkong N &hanghai -anking )orp., +? Phils. +>K1.

Xa. AK, 5 'onvened his prin'ipal 'reditors, in'lding -, and in!ormedthem 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 Grisdi'tion to ), a 'lose relative, whoimmediately !iled a'tion in said Grisdi'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. Learningo! the trans!er, F now ses - !or damages. )an F re'over% Eive reasons.

Answer :F may not se - !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

Xb. )ompany X sold its wine nder the brand “"ose” -randy, and it be'ame very poplar.&o, X registered the trademark “"ose” !or its brandy. &bse#ently, )ompany Yman!a'tred bi'y'les and sold it nder the name o! “"ose”. )ompany X now ses

)ompany Y !or violation o! the (rademark Law. "le on the dispte.

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=s trademark “"ose” on bi'y'les wold not likely 'ase 'on!sion on the parto! the bying pbli'.



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7. @an de la )r signs a promissory note payable to Pedro Lim or bearer, and delivers itpersonally to Pedro Lim. (he latter somehow mispla'es the said note and )arlos "os!inds the note lying arond the 'orridor o! the bilding.

)arlos "os endorses the promissory note to @ana -ond, !or vale, by !orging thesignatre 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

instrment, being payable to a person named therein or bearer. It is negotiated by meredelivery, and no need to indorse it to @ana -ond, in order to make the latter a holder.8owever, )arlos "

Documents

Bar Exam Questions in Mercantile Law 75-89