2014 BAR EXAMINATIONS EXAMINATIONS COMMERCIAL LAW
October 19, 2014
8:00 A.M.- 12:00 N.N. INSTRUCTIONS
1. This Questionnaire contains FOUT!!N "14# $a%es inc&u'in% these (nstructions $a%es. )hec* the nu+ber o $a%es an' the $a%e nu+bers n u+bers at the u$$er ri%ht han' corner o each $a%e o this Questionnaire Q uestionnaire an' +a*e sure it has the correct nu+ber o $a%es an' their $ro$er nu+bers. There are T!NT-N(N! T!NT-N(N! "29# !ssa/ an' Mu&ti$&e )hoice Questions "M)Qs# to be ansere' ithin four (4) hours. The essa/ $ortion contains uestions that are euia&ent to not less than less than 803 o the ho&e ea+ination, hi&e the M)Q $ortion contains uestions euia&ent to not more than more than 203. 2. ea' each uestion er/ careu&&/ an' rite /our ansers in /our 5ar !a+ination Noteboo* in the same order the questions are posed. rite posed. rite /our ansers on&/ on the ront,not the bac*, $a%e o eer/ sheet in /our Noteboo*. Note e&& the a&&ocate' $ercenta%e $oints or e ach nu+ber, uestion, or sub-uestion. (n /our ansers, use the nu+berin% s/ste+ in the uestionnaire. ( the sheets $roi'e' in /our !a+ination Noteboo* are not suicient or /our ansers, use the bac* $a%e o eer/ sheet o /our !a+ination Noteboo*, startin% at the bac* $a%e o the irst sheet an' the bac* o the succee'in% sheets thereater. 6. Anser the !ssa/ uestions legibly, clearly, and concisely. 7tart concisely. 7tart each nu+ber on a se$arate $a%e. An anser to a sub-uestion un'er the sa+e nu+ber +a/ be ritten continuous&/ on the sa+e $a%e an' the i++e'iate&/ succee'in% $a%es unti& co+$&ete'. our our anser shou&' 'e+onstrate /our abi&it/ to ana&/e the acts $resente' b/ the uestion, to se&ect the +ateria& ro+ the i++ateria& acts, an' to 'iscern the $oints u $on hich the uestion turns. (t shou&' sho /our *no&e'%e an' un'erstan'in% o the $ertinent $rinci$&es an' theories o &a ino&e' an' their ua&iications an' &i+itations. (t shou&' 'e+onstrate /our abi&it/ to a $$&/ the &a to the %ien acts, an' to reason &o%ica&&/ in a &a/er-&i*e +anner to a soun' conc&usion ro+ the %ien $re+ises. A +ere es es or No anser ithout an/ corres$on'in% corres$on'in% e$&anation or 'iscussion i&& not be %ien %ien an/ cre'it. Thus, a&a/s briefly but but u&&/ e$&ain /our ansers a nsers a&thou%h the uestion 'oes not e$ress&/ as* or an e$&anation. At the sa+e ti+e, re+e+ber that a co+$&ete e$&anation 'oes not reuire that /ou o&unteer inor+ation or 'iscuss &e%a& 'octrines that are not n ecessar/ or $ertinent to the so&ution to the $rob&e+. ou ou 'o not nee' to re-rite or re $eat the uestion in /our Noteboo*. 4. M)Qs are to be ansere' b/ ritin% in /our Noteboo* the ca$ita& & etter A, 5, ), or corres$on'in% to /our chosen anser. There is on&/ one correct anser to eer/ M)Q; choose the 5!7T anser ro+ a+on% the oere' choices. <. Ma*e sure /ou 'o not rite your name or name or an/ extraneous note/s or note/s or distinctive marking/s on marking/s on /our Noteboo* that can sere as an i'enti/in% +ar*=s "such as na+es that are not in the %ien uestions, $ra/ers, or $riate notes to the !a+iner#. ritin%, &eain% or +a*in% an/ 'istin%uishin% or i' enti/in% +ar* in the ea+ Noteboo* is consi'ere' cheatin% an' can 'isua&i/ /ou or the 5ar ea+inations.
ou can use the uestionnaire or notes /ou +a/ ish=nee' to rite 'urin% the ea+ination. YOU CAN BRING HOME THIS QUESTIONNAIRE OR HAND IT TOGETHER WITH YOUR NOTEBOOK
>. (O7AO M. ?!A@TA )hair+an 2014 5ar !a+inations (. )ar&o an' 5ianca +et in the @a 5oraca/ estiities. (++e'iate&/, the/ e&& in &oe ith each other an' %ot +arrie' soon ater. The/ hae been cohabitin% b&issu&&/ as husban' an' ie, but the/ 'i' not hae an/ os$rin%. As the /ears $asse' b/, )ar&o 'eci'e' to ta*e out an insurance on 5iancas&ie or ?1,000,000.00 ith hi+ ")ar&o# as so&e beneiciar/, %ien that he 'i' not hae a stea'/ source o inco+e an' he a&a/s 'e$en'e' on 5ianca both e+otiona&&/ an' inancia&&/. urin% the ter+ o the insurance, 5ianca 'ie' o hat a$$eare' to bea +/sterious cause so that )ar&o i++e'iate&/ reueste' or an auto$s/ tobe con'ucte'. (t as estab&ishe' that 5ianca 'ie' o a natura& cause. More than that, it as a&so estab&ishe' that 5ianca as a trans%en'er a&& a&on% B a act un*non to )ar&o. )an )ar&o c&ai+ the insurance beneitC "<3# ((. 5on% bou%ht 600 ba%s o rice ro+ 5en or ?600,000.00. As $a/+ent, 5on% in'orse' to 5ena 5an* o the ?hi&i$$ine (s&an's "5?(# chec* issue' b/ 5ab/ in the a+ount o ?600,000.00. U$on $resent+ent or $a/+ent, the 5?( chec* as 'ishonore' because 5ab/s account ro+ hich it as 'ran has been c&ose'. To re$&ace the 'ishonore' chec*, 5on% in'orse' a crosse' ee&o$+ent 5an* o the ?hi&i$$ines "5?# chec* issue' a&so b/ 5ab/ or ?600,000.00. A%ain, the chec* as 'ishonore' because o insuicient un's. 5en sue' 5on% an' 5ab/ on the 'ishonore' 5?( chec*. 5on% inter$ose' the 'eense that the 5?( chec* as 'ischar%e' b/ noation hen 5en acce$te' the crosse' 5? chec* as re$&ace+ent or the 5?( chec*. 5on% cite' 7ection 119 o the Ne%otiab&e (nstru+ents @a hich $roi'es that a ne%otiab&e instru+ent is 'ischar%e' b/ an/ other act hich i&& 'ischar%e a si+$&e contractor the $a/+ent o +one/. (s 5on% correctC "43# (((. Un'er the Financia& ehabi&itation an' (nso&enc/ Act "F(A#, the i&in% o a $etition or o&untar/ rehabi&itation +ust be a$$roe' b/: "13# "A# a +aDorit/ ote o the 5oar' o irectors an' authorie' b/ the ote o the stoc*ho&'ers re$resentin% at &east a +aDorit/ o the outstan'in% ca$ita& stoc* "5# a +aDorit/ ote o the 5oar' o irectors an' authorie' b/ the ote o the stoc*ho&'ers re$resentin% at &east to-thir's o the outstan'in% ca$ita& stoc* ")# to-thir's ote o the 5oar' o irectors an' authorie' b/ the ote o the stoc*ho&'ers re$resentin% at &east a +aDorit/ o the outstan'in% ca$ita& stoc* "# to-thir's ote o the 5oar' o irectors an' authorie' b/ the ote o the stoc*ho&'ers re$resentin% at &east to-thir's o the outstan'in% ca$ita& stoc* (E. ) is a unit oner o Me'ici )on'o+iniu+ &ocate' in ?asi% )it/. On 7e$te+ber , 2011, Me'ici )on'o+iniu+ )or$. "Me'ici# 'e+an'e' ro+ ) $a/+ent or a&&e%e' un$ai' association 'ues an'
assess+ents a+ountin% to?19<,000.00. ) 'is$ute' the c&ai+, sa/in% that he $ai' a&& 'ues as shon b/ the act that he as $reious&/ e&ecte' as irector an' ?resi'ent o Me'ici. Me'ici, on the other han', c&ai+e' that )s ob&i%ation as a carr/-oer o his ob&i %ations to the con'o+iniu+ 'ee&o$er, Me'ici )onstruction )or$oration. )onseuent&/, )as $reente' ro+ eercisin% his ri%ht to ote an' be ote' or 'urin% the 2011 e&ection o Me'icis 5oar' o irectors. This $ro+$te' ) to i&e a co+$&aint or 'a+a%es beore the 7$ecia& )o++ercia& )ourt o ?asi% )it/. Me'ici i&e' a +otion to 'is+iss on the %roun' that the court has no Duris'iction oer the intra-cor$orate 'is$ute hich the Gousin% an' @an' Use e%u&ator/ 5oar' "G@U5# has ec&usie Duris'iction oer. (s Me'ici correctC "43# E. A cor$oration or%anie' un'er the )or$oration )o'e co++ences to hae cor$orate eistence an' Duri'ica& $ersona&it/ an' is 'ee+e' incor$orate': "13# "A# ro+ the 'ate the a$$&ication or i ncor$oration is i&e' ith the 7ecurities an' !chan%e )o++ission "7!)# "5# ro+ the 'ate the 7!) issues a certiicate o incor$oration un'er its oicia& sea& ")# thirt/ "60# 'a/s ater the 'ate the a$$&ication or incor$oration is i&e' ith the 7!) "# thirt/ "60# 'a/s ater the 'atethe 7!) issues a certiicate o incor$oration un'er its oicia& sea& E(. On Ma/ 2H, 2014, >ess insure' ith >ac* (nsurance ">ac*# his 2014 To/ota )oro&&a se'an un'er a co+$rehensie +otor ehic&e insurance $o&ic/ or one /ear. On >u&/ 1, 2014, >ess car as un&au&&/ ta*en. Gence, he i++e'iate&/ re$orte' the thet to the Traic Mana%e+ent )o++an' "TM)# o the ?hi&i$$ine Nationa& ?o&ice "?N?#, hich +a'e >ess acco+$&ish a co+$&aint she et as $art o its $roce'ure. (n the co+$&aint sheet, >ess a&&e%e' that a certain ic 7i&at"7i&at# too* $ossession o the subDect ehic&e to a'' accessories an' i+$roe+ents thereon. Goeer, 7i&at ai&e' to return the subDect ehic&e ithin the a%ree' 6-'a/ $erio'. As a resu&t, >ess notiie' >ac* o his c&ai+ or rei+burse+ent o the a&ue o the &ost ehic&e un'er the insurance $o&ic/. >ac* reuse' to $a/ c&ai+in% that there is no thet as >ess %ae 7i&at &au& $ossession o the car. (s >ac* correctC "43# E((. >in%%/ ent to I&uer Uniersit/"IU# in Jer+an/ or his 'octorate 'e%ree "?h..#. Ge co+$&ete' his 'e%ree ith the hi%hest honors in the shortest ti+e. hen he ca+e bac*, he 'eci'e' to set-u$ his on %ra'uate schoo& in his ho+eton in Ka+boan%a. Ater see*in% ree &e%a& a'ice ro+ his hi%h-&/in% &a/er-rien's, he &earne' that the ?hi&i$$ines o&&os the territoria&it/ $rinci$&e in tra'e+ar* &a, i.e., tra'e+ar* ri%hts are acuire' throu%h a&i' re%istration in accor'ance ith the &a. Forth ith, >in%%/ na+e' his schoo& the I&uer Jra'uate 7choo& o 5usiness o Min'anao an' i++e'iate&/ secure' re%istration ith the 5ureau o Tra'e+ar*s. IU 'i' not &i*e the unauthorie' use o its na+e b/ its to$ a&u+nus no &ess. IU sou%ht /our he&$. hat a'ice can /ou %ie IUC "43# E(((. As a ru&e, an insurance contract is consensua& an' o&untar/. The ece$tion is in the case o: "13# "A# (n&an' Marine (nsurance
"5# (n'ustria& @ie (nsurance ")# Motor Eehic&e @iabi&it/ (nsurance "# @ie (nsurance (L. On Februar/ 21, 2016, 5arrac* entere' into a contract o insurance ith Matino (nsurance )o+$an/ "Matino# ino&in% a +otor ehic&e. The $o&ic/ ob&i%ates Matino to $a/ 5arrac* the a+ount o 7i Gun're' Thousan' ?esos "?H00,000.00# in case o &oss or 'a+a%e to sai' ehic&e 'urin% the $erio' coere', hich is ro+ Februar/ 2H, 2016 to Februar/ 2H, 2014. On A$ri& 1H, 2016, at about 9:00 a.+., 5arrac* instructe' his 'rier, >>, to brin% the +otor ehic&e to a near b/ auto sho$ or tune-u$. Goeer, >>no &on%er returne' an' 'es$ite 'i&i%ent eorts to &ocate the sai' ehic&e, the eorts $roe' uti&e. esu&tant&/, 5arrac* $ro+$t&/ notiie' Matino o the sai' &oss an' 'e+an'e' $a/+ent o the insurance $rocee's o ?H00,000.00. (n a &etter 'ate' >u&/ <, 2016. Matino 'enie' the c&ai+, reasonin% as state' in the contract that the co+$an/ sha&& not be &iab&e or an/ +a&icious 'a+a%e cause' b/ the insure', an/ +e+ber o his a+i&/ or b/ a $erson in the insure's serice. (s Matino correct in 'en/in% the c&ai+C "43# L. A $erson is sai' to hae an insurab&e interest in the subDect +atter insure' here he has a re&ation or connection ith, or concern in it that he i&& 'erie $ecuniar/ beneit or a'anta%e ro+ its $reseration. hich a+on% the o&&oin% subDect +atters is not consi'ere' insurab&eC "13# "A# A $artner in a ir+ on its uture $roits "5# A %enera& cre'itor on 'ebtors $ro$ert/ ")# A Du'%+ent cre'itor on 'ebtors $ro$ert/ "# A +ort%a%e cre'itor on 'ebtors +ort%a%e' $ro$ert/ L(. ?A Assurance "?A# as incor$orate' in 1980 toen%a%e in the sa&e o $re-nee' e'ucationa& $&ans. (t so&' o$en-en'e' e'ucationa& $&ans hich %uarantee' the $a/+ent o tuition an' other ees to $&anho&'ers irres$ectie o the cost at the ti+e o aai&+ent. (ta&so en%a%e' in the sa&e o ie' a&ue $&ans hich %uarantee' the $a/+ent o a $re-'eter+ine' a+ount to $&anho& 'ers. (n 1982, ?Aas a+on% the countr/s to$ cor$orations. Goeer, it subseuent&/ suere' inancia& 'iicu&ties. On 7e$te+ber 8, 200<, ?A i&e' a ?etition or )or$orate ehabi&itation beore the e%iona& Tria& )ourt "T)# o Ma*ati )it/. On October 1, 200<, ten "10# $&an ho&'ers i&e' an O$$osition an' Motion to !c&u'e ?&anho&'ers ro+ 7ta/ Or'er on the %roun' that $&anho&'ers are not cre'itors as the/ "$&anho&'ers# hae a trust re&ationshi$ ith ?A. Are the $&anho&'ers correctC "43# L((. To constitute a uoru+ or the transaction o cor$orate business, on&/ a +aDorit/ o the nu+ber o 5oar' o
irectors is reuire': "13# "A# as ie' b/ the cor$orate b/-&as "5# as ie' in the artic&es o incor$oration ")# actua&&/ serin% in the boar' "# actua&&/ serin% in the boar' but constitutin% a uoru+ L(((. ?ursuant to its 5/-@as, 7oei )or$orations 5oar' o irectors create' an !ecutie )o++ittee to +ana%e the aairs o the cor$oration in beteen boar' +eetin%s. The 5oar' o irectors a$$ointe' the o&&oin% +e+bers o the !ecutie )o++ittee: the ?resi'ent, 7arah @; the Eice ?resi'ent, >ane @; an', a thir' +e+ber ro+ the boar', >uan i&es. On ece+ber 1, 2016, the !ecutie )o++ittee, ith 7arah @ an' >ane @ $resent, +et an' 'eci'e' on the o&&oin% +atters: 1. ?urchase o a 'e&ier/ an or use in the cor$orations retai& business; 2. ec&aration an' a$$roa& o the 1 6th +onth bonus; 6. ?urchase o an oice con'o+iniu+ unit at the Fort; an' 4. ec&aration o ?10.00 $er share cash 'ii'en'. Are the actions o the !ecutie )o++ittee a&i'C "43# L(E. On 7e$te+ber 2<, 2016, ann/ Marcia& "ann/# $rocure' a n insurance on his &ie ith a ace a&ue o?<,000,000.00 ro+ N (nsurance )o+$an/ "N#, ith his ie Tina Marcia&"Tina# as so&e beneiciar/. On the sa+e 'a/, ann/ issue' an un'ate' chec* to N or the u&& a+ount o the $re+iu+. On October 1, 2016, N issue' the $o&ic/ coerin% ann/s &ie insurance. On October <, 2016, ann/+et a tra%ic acci'ent an' 'ie'. Tina c&ai+e' the insurance beneit, but N as uic* to 'en/ the c&ai+ because at the ti+e o ann/s 'eath, the chec* as not /et encashe' an' thereore the $re+iu+ re+aine' un$ai'. (s N correctC i&& /our anser be the sa+e i the chec* is 'ate' October 1<, 2016C "43# LE. A, 5, ), , an' !ere +e+bers o the 2006-2004 5oar' o irectors o F@? )or$oration. At the e&ection or the 2004-200< 5oar' o irectors, not one o the+ as e&ecte'. The/ i&e' in court a 'eriatie suit on beha& o F@? )or$oration a%ainst the ne&/-e&ecte' +e+bers o the 5oar' o irectors. The/ uestione' the a&i'it/ o the e&ection as it as a&&e%e'&/ +arre' b/ &ac* o uoru+, an' $ra/e' or the nu&&iication o the sai' e&ection. The 2004-200< 5oar' o irectors+oe' to 'is+iss the co+$&aint because the 'eriatie suit is not $ro$er. eci'e. "43# LE(. (n inte&&ectua& $ro$ert/ cases, rau'u&ent intent is not an e&e+ent o the cause o action ece$t in cases
ino&in%: "13# "A# tra'e+ar* inrin%e+ent "5# co$/ri%ht inrin%e+ent ")# $atent inrin%e+ent "# unair co+$etition LE((. On ece+ber 1, 2010, Iore A )or$orationshi$$e' ro+ 7outh Iorea to @T )or$oration in Mani&a so+e 600,000 sheets o hi%h-%ra'e s$ecia& stee&. The shi$+ent as insure' a%ainst a&& ris*s b/ NA (nsurance"NA#. The carr/in% esse& arrie' at the ?orto Mani&a on >anuar/ 10, 2011. hen the shi$+ent as 'ischar%e', it as note' that 2<,000 sheets ere 'a+a%e' an' in ba' or'er. The entire shi$+ent as turne' oer to the custo'/ o AT(, the arrastre o$erator, on >anuar/ 21, 2011 or stora%e an' sae*ee$in%, $en'in% its ith'raa& b/ the consi%nees a uthorie' custo+s bro*er, EM. On >anuar/ 2H an' 29, 2011, the subDect shi$+ent as ith'ran b/ EM ro+ the custo'/ o AT(. On >anuar/ 29, 2011, $rior to the ith'raa& o the &ast batch o the shi$+ent, a Doint ins$ection o the car%o as con'ucte' $er the euest or 5a' Or'er 7ure/ "5O# 'ate' >anuar/ 28, 2011. The ea+ination re$ort shoe' that 60,000 sheets o stee& ere 'a+a%e' an' in ba' or'er. NA (nsurance $ai' @T )or$orationthe a+ount o ?60,000,000.00 or the 60,000 sheets that ere 'a+a%e', as shon in the 7ubro%ation ecei$t 'ate' >anuar/ 16, 2016. Thereater, NA (nsurance 'e+an'e' re$aration a%ainst AT( or the %oo's 'a+a%e' in its custo'/, in the a+ount o ?<,000,00.00. AT( reuse' to $a/ c&ai+in% that the c&ai+ as a&rea'/ barre' b/ the statute o &i+itations. AT( a&&e%e' that the )arria%e o Joo's b/ 7ea Act ")OJ7A# a$$&ies in this case since the %oo's ere shi$$e' ro+ a orei%n $ort to the ?hi&i$$ines. NA (nsurance c&ai+s that the )OJ7A 'oes not a$$&/, since AT(is not a shi$$er or carrier. ho is correctC "<3# LE(((. 7*echers )or$oration sue' (nter-?aciic or tra'e+ar* inrin%e+ent, c&ai+in% that (nter-?aciicuse' 7*echers re%istere' 7 &o%o +ar* on (nter-?aciics shoe $ro'ucts ithout its consent. 7*echers has re%istere' the tra'e+ar* 7I!)G!7 an' the tra'e+ar* 7 "ith an oa& 'esi%n# ith the (nte&&ectua& ?ro$ert/ Oice "(?O#. (n its co+$&aint, 7*echers $oints out the o&&oin% si+i&arities: the co&or sche+e o the b&ue, hite an' %ra/ uti&ie' b/ 7*echers. !en the 'esi%n an' ae-&i*e $attern o the +i'-so&e an' outer so&e o (nter ?aciics shoes are er/ si+i&ar to 7*echers shoes, i not eact $atterns thereo. On the si' e o (nter-?aciics shoes, near the u$$er $art, a$$ears the st/&ie' 7 $&ace' in the eact &ocation as that o the st/&ie' 7 the 7*echers shoes. On to$ o the ton%ue o both shoes, a$$ears the st/&ie' 7 in $ractica&&/ the sa+e &ocation an' sie. (n its 'eense, (nter-?aciic c&ai+s that un'er the Go&istic Test, the o&&oin% 'issi+i&arities are $resent: the +ar* 7 oun' in 7tron% shoes is not e nc&ose' in an oa& 'esi%n; the or' 7tron% is cons$icuous&/ $&ace' at the bac*si'e an' inso&es; the han% ta%s &abe&s attache' to the shoes bear the or' 7tron% or (nter?aciic an' 7*echers U.7.A. or 7*echers; an', 7tron% shoes are +o'est&/ $rice' co+$are' to the costs o 7*echers shoes. Un'er the ore%oin% circu+stances, hich is the $ro$er test to be a$$&ie' B Go&istic or o+inanc/ TestC
eci'e. "43# L(L. Juete an' his ie hae three "6# chi&'ren: Ne/+ar, 2<, ho is no base' in io 'e >aneiro, 5rai&; Mue&ter, 26, ho has +i%rate' to Munich, Jer+an/; an' >a+es, 21, ho resi'es in 5o%ota, )o&o+bia. Ne/+ar an' Mue&ter hae since renounce' their ?hi&i$$ine citienshi$ in aor o their countr/ o resi'ence. Nearin% 0 /ears o&', Juete 'eci'e' to incor$orate his business in 5inon'o, Mani&a. Ge as*e' his ie an' three "6# chi&'ren to act as incor$orators ith one "1# share o stoc* each, hi&e he one' 999,99H shares o the 1,000,000 shares o the ca$ita& stoc*. "H3# "A# Assu+in% a&& other reuire+ents are +et, shou&' the 7ecurities an' !chan%e )o++ission "7!)# acce$t or reDect the Artic&es o (ncor$orationC h/C "5# 5ein% the contro& rea* an' +icro-+ana%er that he is, Juete as*e' /ou B his astute &e%a& a'iser B i he can sere as )hair+an o the 5oar' o irectors, as ?resi'ent, an' as Jenera& Mana%er o the cor$oration, a&& at the sa+e ti+e. ?&ease a'ise Juete. ")# Assu+in% the cor$oration has been$ro$er&/ re%istere', +a/ the Artic&es o (ncor$oration no bea+en'e' to re'uce the nu+ber o 'irectors to to "2# B Juete an' his ieB to re&ect the rea& oners o the shares o stoc*C LL. On Ma/ 16, 199H, ?AM, (nc. obtaine' a ?1<,000,000.00 ire insurance $o&ic/ ro+ (&ocano (nsurance coerin% its +achineries an' eui$+ent eectie or one "1# /earor unti& Ma/ 14, 199. The $o&ic/ e$ress&/ state' that the insure' $ro$erties ere &ocate' at 7an/o ?recision ?hi&s. 5ui&'in%, ?hase (((, @ots 4 an' H, 5&oc* 1<, ?!KA, osario, )aite. 5eore its e$iration, the $o&ic/ as renee' on as is basis or another /ear or unti& Ma/ 16, 1998. The subDect $ro$erties ere &ater transerre' to ?ace Factor/ a&so in ?!KA. On October 1 2, 199, 'urin% the eectiit/ o the renee' $o&ic/, a ire bro*e out at the ?ace Factor/ hich tota&&/ burne' the insure' $ro$erties. The $o&ic/ orba'e the re+oa& o the insure' $ro$erties un&ess sanctione' b/ (&ocano. )on'ition 9"c# o the $o&ic/ $roi'es that the insurance ceases to attach as re%ar's the $ro$ert/ aecte' un&ess the insure', beore the occurrence o an/ &oss or 'a+a%e, obtains the sanction o the co+$an/ si%niie' b/ en'orse+ent u$on the $o&ic/ "c# i the $ro$ert/ insure' is re+oe' to an/ bui&'in% or $&ace other than in that hich is herein state' to be insure'. ?AM c&ai+s that it has substantia&&/ co+$&ie' ith noti/in% (&ocano throu%h its sister co+$an/, the 5), hich, in act, reerre' ?AM to (&ocano or the insurance coera%e. (s (&ocano &iab&e un'er the $o&ic/C "43# LL(. On >u&/ 6, 1996, e&ia 7otero "7otero# too* out a &ie insurance $o&ic/ ro+ (&ocos 5an*ers @ie (nsurance )or$oration "(&ocos @ie# 'esi%natin% )reencia Aban"Aban#, her niece, as her beneiciar/. (&ocos @ie issue' ?o&ic/ No. 4, ith a ace a&ue o ?100,000.00, in 7oteros aor on Au%ust 60, 1996, ater the reuisite +e'ica& ea+ination an' $a/+ent o the $re+iu+. On A$ri& 10, 199H, 7otero 'ie'. Aban i&e' a c&ai+ or the insurance $rocee's on >u&/ 9, 199H. (&ocos @ie con'ucte' an inesti%ation into the c&ai+ an' ca+e out iththe o&&oin% in'in%s: 1. 7otero'i' not $ersona&&/ a$$&/ or insurance coera%e, as she as i&&iterate.
2. 7oteroas sic*&/ since 1990. 6. 7otero'i' not hae the inancia& ca$abi&it/ to $a/ the $re+iu+ on the $o&ic/. 4. 7otero'i' not si%n the a$$&ication or insurance. <. Aban as the one ho i&e' the insurance a$$&ication an' 'esi%nate' herse& as the beneiciar/. For the aboe reasons an' c&ai+in% rau', (&ocos @ie 'enie' Abans c&ai+ on A$ri& 1H, 199, but reun'e' the $re+iu+ $ai' on the $o&ic/. "H3# "A# Ma/ 7otero a&i'&/ 'esi%nate her niece as beneiciar/C "5# Ma/ the incontestabi&it/ $erio' set in een in cases o rau' as a&&e%e' in this caseC ")# (s Aban entit&e' to c&ai+ the $rocee's un'er the $o&ic/C LL((. ?au& Jeor%e ?ua "?ua# i&e' a co+$&aint or a su+ o +one/ a%ai nst the s$ouses 5enito an' )aro&ine >a+es "7$ouses >a+es#. (n the co+$&aint, ?ua $ra/e' that the 'een'ants $a/ ?ua the a+ount o ?8,<00,000.00, coere' b/ a chec*. ?ua asserts that 'een'ants oe' hi+ a su+ o +one/ a/ bac* in 1988 or hich the 7$ouses >a+es %ae hi+ seera& chec*s. These chec*s, hoeer, ha' a&& been 'ishonore' an' ?ua has not been $ai' the a+ount o the &oan $&us the a%ree' interest. (n 199H, the 7$ouses >a+es a$$roache' ?ua to %et the co+$utation o their &iabi&it/ inc&u'in% the 23 co+$oun'e' interest. Ater bar%ainin% to &oer the a+ount o their &iabi&it/, the 7$ouses >a+es %ae ?uaa $ost'ate' chec* bearin% the 'iscounte' a+ount o ?8,<00,000.00. @i*e the 1988 chec*s, the 'raee ban* &i*eise 'ishonore' this chec*. To $roe his a&&e%ations, ?ua sub+itte' the ori%ina& co$ies o the 1 chec*s issue' b/ )aro&ine in 1988 an' the chec* issue' in 199H, Mani&a trust )hec* No. <0. The 7$ouses >a+es, on the other han', co+$&ete&/ 'enie' the eistence o the 'ebt assertin% that the/ ha' neer a$$roache' ?ua to borro +one/ in 1988 or in 199H. The/ assert, instea', that ?ua is si+$&/ actin% at the instance o his sister, @i&ian, to i&e a a&se char%e a%ainst the+ usin% a chec* &et to un' a %a+b&in% business $reious&/ o$erate' b/ @i&ian an' )aro&ine. eci'e. "<3# LL(((. hat ote is nee'e' to consi'er eer/ 'ecision to be a a&i' cor$orate actC "13# "A# a +aDorit/ o the 'irectors $resent at the +eetin% "5# to-thir's o the 'irectors $resent at the +eetin% ")# a +aDorit/ o the 'irectors $resent at the +eetin% at hich there is a uoru+ "# to-thir's o the 'irectors $resent at the +eetin% at hich there is a uoru+ LL(E. A cri+ina& co+$&aint or io&ation o 5.?. 22 as i&e' b/ Foton Motors "Foton#, an entit/ en%a%e' in the business o car 'ea&ershi$, a%ainst ?ura Fe&i$e "?ura# ith the Oice o the )it/ ?rosecutor o Queon )it/. The Oice oun' $robab&e cause to in'ict ?ura an' i&e' an inor+ation beore the Metro$o&itan Tria& )ourt "MeT)# o Queon )it/, or her issuance o a $ost'ate' chec* in the a+ount o ?1,020,000.00 hich as subseuent&/ 'ishonore' u$on $resent+ent 'ue to 7to$ ?a/+ent.
?ura issue' the chec* because her son, Fre''ie, attracte' b/ a hu%e 'iscount o ?220,000.00, $urchase' a Foton 5&iar' 42 ro+ Foton. The ter+ o the transaction as )ash-on-e&ier/ an' no 'on$a/+ent as reuire'. The car as 'e&iere' on Ma/ 14, 199, but Fre''ie ai&e' to $a/ u$on 'e&ier/. es$ite non$a/+ent, Fre''ie too* $ossession o the ehic&e. ?ura as eentua&&/ acuitte' o the char%e o io&atin% 5.?. 22 but as oun' cii&&/ &iab&e or the a+ount o the chec* $&us &e%a& interest. ?ura a$$ea&e' the 'ecision as re%ar's the cii& &iabi&it/, c&ai+in% that there as no $riit/ o contract beteen Foton an' ?ura. No cii& &iabi&it/ cou&' be a'Du'%e' a%ainst her because o her acuitta& ro+ the cri+ina& char%e. (t as Fre''ie ho as cii&&/ &iab&e to Foton, ?ura c&ai+e'. ?ura a''e' that she cou&' not be an acco++o'ation $art/ either because she on&/ ca+e in ater Fre''ie ai&e' to $a/ the $urchase $rice, or si "H# +onths ater the eecution o the contract beteen Foton an' Fre''ie. Ger &iabi&it/ as &i+ite' to her act o issuin% a orth&ess chec*, but b/ her acuitta& in the cri+ina& char%e, there as no +ore basis or her to be he&' cii&&/ &iab&e to Foton. ?uras act o issuin% the subDect chec* 'i' no t, b/ itse&, assu+e the ob&i%ation o Fre''ie to Foton or auto+atica&&/ +a*e her a $art/ to the contract. (s ?ura &iab&eC "<3# LLE. (n an action or co&&ection o a su+ o +one/, the e%iona& Tria& )ourt "T)# o Ma*ati )it/ issue' a 'ecision in'in% -7ecurities, (nc. &iab&e to ehouse )or$oration or ?10,000,000.00. 7ubseuent&/, the rit o eecution as issue' but returne' unsatisie' because -7ecurities ha' no +ore assets to satis/ the Du'%+ent. ehouse +oe' or an A&ias rit o !ecution a%ainst Fairie&' 5an* "F5#, the $arent co+$an/ o -7ecurities. F5 o$$ose' the +otion on the %roun's that it is a se$arate entit/ an' that it as neer +a'e a $art/ to the case. The T) %rante' the +otion an' issue' the A&ias rit o !ecution. (n its eso&ution, the T) re&ie' on the o&&oin% acts: 499,99< out o the <00,000 outstan'in% shares o stoc*s o -7ecurities are one' b/ F5; F5 ha' actua& *no&e'%e o the subDect +atter o &iti%ation as the &a/ers ho re$resente' 7ecurities are a&so the &a/ers o F5. As an a&ter e%o, there is no nee' or a in'in% o rau' or i&&e%a&it/ beore the 'octrine o $iercin% the ei& o cor$orate iction can be a$$&ie'. The T) ratiocinate' that bein% one an' the sa+e entit/ in the e/es o the &a, the serice o su++ons u$on -7ecurities has bestoe' Duris'iction oer both the $arent an' ho&&/-one' subsi'iar/. (s the T) correctC "43# LLE(. M? )or$oration "M?# obtaine' a &oan o ?20 +i&&ion ro+ Nationa& 5an* "N5# secure' b/ a rea& estate +ort%a%e oer a H6,680-suare-+eter &an' situate' in )abanatuan )it/. ue to the Asian !cono+ic )risis, M? e$erience' &iui'it/ $rob&e+s 'isenab&in% it ro+ $a/in% its &oan on ti+e. For that reason, N5 sou%ht the etra Du'icia& orec&osure o the sai' +ort%a%e b/ i&in% a $etition or sa&e on >une 60, 2006. On 7e$te+ber 4, 2006, the +ort%a%e' $ro$ert/ as so&' at $ub&ic auction, hich as eentua&&/ aar'e' to N5as the hi%hest bi''er. That sa+e 'a/, the 7heri eecute' a )ertiicate o 7a&e in aor o N5. On October 21, 2006, M? i&e' a ?etition or ehabi&itation beore the e%iona& Tria& )ourt "T)#. ?ursuant to this, a 7ta/ Or'er as issue' b/ the T) on October 2, 2006. On the other han', N5 cause' the recor'in% o the 7heris )ertiicate o 7a&e on ece+ber 6, 2006 ith the e%ister o ee's o )abanatuan )it/. N5 eecute' an Ai'ait o )onso&i'ation o Onershi$ an' ha' the sa+e annotate' on the tit&e o M?. )onseuent&/, the e%ister o ee's cance&&e' M?s tit&e an' issue' a ne tit&e in the na+e o N5 on ece+ber 10, 2006. N5 a&so i&e' on March 1, 2004 an !-?arte ?etition or (ssuance o rit o ?ossession beore the T) o )abanatuan )it/. Ater hearin%, the T) issue' on 7e$te+ber H, 2004 an Or'er 'irectin% the (ssuance o the rit o ?ossession, hich as issue' on October 4, 2004. M? c&ai+s that a&& subseuent actions $ertainin% to the )abanatuan $ro$ert/ shou&' hae been he&' in
abe/ance ater the 7ta/ Or'er as issue' b/ the rehabi&itation court. (s M? correctC "43# LLE((. !@? (nsurance, (nc. issue' Marine ?o&ic/ No. 888 in aor o F)@ )or$. to insure the shi$+ent o 162 bun'&es o e&ectric co$$er catho'es a%ainst a&& ris*s. 7ubseuent&/, the car%oes ere shi$$e' on boar' the esse& M=E Menchu ro+ @e/te to ?ier 10, North Garbor, Mani&a. U$on arria&, F)@ )or$. en%a%e' the serices o )JM, (nc. or the re&ease an' ith'raa& o the car%oes ro+ the $ier an' the subseuent 'e&ier/ to its arehouses=$&ants in Ea&enue&a )it/. The %oo's ere &oa'e' on boar' te&e "12# truc*s one' b/ )JM, (nc., 'rien b/ its e+$&o/e' 'riers an' acco+$anie' b/ its e+$&o/e' truc* he&$ers. O the te&e "12# truc*s en routeto Ea&enue&a )it/, on&/ e&een "11# reache' the 'estination. One "1# truc*, &oa'e' ith e&een "11# bun'&es o co$$er catho'es, ai&e' to 'e&ier its car%o. 5ecause o this inci'ent, F)@ )or$. i&e' ith !@? (nsurance, (nc. a c&ai+ or insurance in'e+nit/ in the a+ount o ?1,<00,000.00. Ater the reuisite inesti%ation an' a'Dust+ent, !@? (nsurance, (nc. $ai' F)@ )or$. the a+ount o ?1,6<0,000.00 as insurance in'e+nit/. !@? (nsurance, (nc., thereater, i&e' a co+$&aint or 'a+a%es a%ainst )JM, (nc. beore the e%iona& Tria& )ourt "T)#, see*in% rei+burse+ent o the a+ount it ha' $ai' to F)@ )or$. or the &oss o the subDect car%o. )JM, (nc. 'enie' the c&ai+ on the basis that it is not $ri/ to the contract entere' into b/ an' beteen F)@ )or$. an' !@? (nsurance, (nc., an' hence, it is not &ia b&e thereor. ( /ou are the Du'%e, ho i&& /ou 'eci'e the caseC "43# LLE(((. hich o the o&&oin% instru+ents is ne%otiab&e i a&& the other reuire+ents o ne%otiabi&it/ are +etC "13# "A# A $ro+issor/ note ith $ro+ise to $a/ out o the U.7. o&&ar account o the +a*er in LK 5an* "5# A $ro+issor/ note hich 'esi%nates the U.7. o&&ar currenc/ in hich $a/+ent is to be +a'e ")# A $ro+issor/ note hich contains in a''ition a $ro+ise to $aint the $ortrait o the bearer "# A $ro+issor/ note +a'e $a/ab&e to the or'er o >ose )ru or >osea )ru LL(L. IIis ro+ 5an%*o*, Thai&an'. 7he stu'ies +e'icine in the ?ontiica& Uniersit/ o 7anto To+as "U7T#. 7he &earne' that the sa+e orei%n boo*s $rescribe' in U7T are 40-<03 chea$er in 5an%*o*. 7o she or'ere' <0 co$ies o each boo* or herse& an' her c&ass+ates an' so&' the boo*s at 203 &ess than the $rice in the ?hi&i$$ines. LL, the ec&usie &icense' $ub&isher o the boo*s in the ?hi&i$$ines, sue' II or co$/ri%ht inrin%e+ent. eci'e. "43#
