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Mercantile Law Bar Q&A
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SUGGESTED ANSWERS TO THE 2014 BAR EXAMINATION QUESTIONS IN MERCANTILE LAW
I')and' I')and' 5B)8 5B)8 $!e$ $!e$ ''e ''ed d -% Baby n t!e am"nt "& :00*000.00. U/"n /#e'entment &"# /a%ment* t!e BI $!e$ +a' d'!"n"#ed -e$a'e Baby's a$$"nt &#"m +!$! t +a' d#a+ d#a+n n !a' !a' -een -een $)"' $)"'ed ed.. T" #e/) #e/)a$ a$ee t!e t!e d'!"n"#ed d'!"n"#ed $!e$* $!e$* Bong nd"#'ed a $#"''ed De(e)"/ment Ban "& t!e !)//ne' 5DB8 $!;$ ''ed a)'" -% Baby -% Baby &"# :00*000.00. A,an* t!e $!e$ +a' d'!"n"#ed -e$a'e "& n'&&$ent &nd'. Ben &nd'. Ben 'ed Bong 'ed Bong and Baby and Baby "n t!e d'!"n"#ed BI $!e$. Bong nte#/"'ed t!e de&en'e t!at t!e BI $!e$ +a' +a' d'$ d'$!a !a##,ed ,ed -% n"(a n"(att"n +!en +!en Ben a$$e $$e/ted t!e $#"'' "''ed DB $!e$ a' #e/)a$ #e/)a$eme ement nt &"# t!e BI $!e$. $!e$. Bong $ted Se$t"n 11< "& t!e Ne,"ta-)e In't#ment' La+ La+ +!$ +!$! ! /#"( /#"(d de' e' t!at t!at a ne," ne,"t taa-)e )e n't#ment ' d'$!a#,ed =-% an% "t!e# a$t +!$! +)) d'$!a#,e a 'm/)e $"nt#a$t &"# t!e t!e /a%m /a%ment ent "& m"ne% m"ne%.> .> I' Bong $"##e$t 5478
I. Carlo and Bianca met n t!e La B"#a$a% &e't(te'. Immedate)%* t!e% &e)) n )"(e +t! ea$! "t!e# and ,"t ma##ed '""n a&te#. T!e% !a(e -een $"!a-tn, -)''&))% a' !'-and and +&e* -t t!e% dd n"t !a(e an% "&&'/#n,. A' t!e %ea#' /a''ed -%* Carlo de$ded t" tae "t an n'#an$e "n Bianca's "n Bianca's )&e )&e &"# 1*000*0 1*000*000.0 00.00 0 +t! +t! !m (Carlo (Carlo)) a' '")e -ene&$a#%* ,(en t!at !e dd n"t !a(e a 'tea 'tead% d% '"# '"#$e $e "& n$" n$"me me and and !e a)+a a)+a%' %' de/e de/ende nded d "n Bianca -"t! em"t"na))% and &nan$a))%. &nan$a))%. D#n, t!e te#m "& t!e n'#an$e* Bianca ded "& +!at a//e //ea#ed t" -e a m%'te#"' $a'e '" t!at Carlo mmedate)% #ee'ted &"# an at"/'% t" -e $"nd$ted. It +a' e'ta-)'!ed t!at Bianca t!at Bianca ded ded "& a nat#a) $a'e. M"#e t!an t!at* t +a' a)'" e'ta-)'!ed t!at Bianca t!at Bianca +a' a t#an',ende# a)) a)"n, 3 a &a$t nn"+n t" Carlo. Can Carlo $)am t!e n'#an$e -ene&t 5678
SUGGESTED ANSWER9 is not correct. His claim that Bong is the 2I chec% as dischared b! no$ation no$ation hen hen Ben Ben accepted the crossed 32 chec% chec% as replac replaceme ement nt for the 2I chec% is unmeritorious. Ben' Ben's acceptance of the 32 chec%, hich replaced the dishonored 2I chec%, did not result in no$ation as there as as no e4pre e4press ss aree areemen mentt to establ establish ish that hat Bong as alread! dischared from his his liab liabil ilit it! ! to pa! Ben the amount amount of 2500,000.00 as pa!ment for the 500 bas of rice rice.. 6o$a 6o$ati tion on is ne$e ne$err pres presum umed ed.. #her #h eree must must be an e4pr e4press ess inten intentio tion n to no$ate. In fact, hen the 32 chec% as deli$e li$erred to Ben, Ben, the same as also indo indors rsed ed b! Bong hich hich sho shoss Bong 's 's recon rec onitio ition n of the e4istin e4istin obliati obliation on to Ben to pa! pa! 2-1, 2-1,00 000.0 0.00 0 sub7ec sub7ectt of the the replaced 2I chec%. /oreo$er, en's acceptance of the 32 chec% did not result in an! incompatibilit!, since the to chec%s8 2I and 32 chec%s8 ere precisel! for the
SUGGESTED ANSWER9 Yes, Carlo can claim the insurance bene benefi fit. t. He had had insu insura rabl blee inte intere rest st on Bianca's Bianca's life under Section 10(b] of the Insurance Code as the problem states that Carlo Carlo “ala!s “ala!s depended depended on Bianca Bianca both emotion ionall! ll! and fin financ anciall! all!." ." #he insurable insurable interest upon the life of another another under the aforesaid pro$ision pro$ision need not be based on %inship &or leal obliation to i$e i$e suppor supportt (see (see l$en l$endia dia,, The Law of Insurance Insurance in the Philippines, Philippines, 1)*+ ed., p. - /artin, Comm Commen enta tari ries es and and Jurisprudence Jurisprudence on the Philippine Philippine Commercial Commercial Laws, $ol. -, 1)+* ed., p. -1 . #he fact that their marriae ma! be $oid is irrele$ant. II. Bong -",!t :00 -a,' "& #$e &#"m Ben Ben &"# &"# :00 :00*00 *000. 0.00. 00. A' /a%m /a%ment ent** Bong nd"# nd"#'e 'ed d t" Ben a Ban "& t!e !)//ne
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purpose of pa!in the amount of 2-1,000.00, i.e., the credit obtained from the purchase of the 500 bas of rice from Ben. Indeed, there as no substantial chane in the ob7ect or principal condition of the obliation of Bong as the indorser of the chec% to pa! the amount of 2-1,000.00. It ould appear that Ben accepted the 32 chec% to i$e Bong the chance to pa! his obliation. (Salazar . J. !. Brothers "ar#eting Corporation, 9.:. 1;1))+, dated
full credit hether the! a$e an! anser or not. In an! case, the Suggested $nswer is (a ma7orit! $ote of the oard of 3irectors and authoriAed b! the $ote of the stoc%holders representin at least to8 thirds of the outstandin capital stoc% Sec. 1-, @:I.
I. DC ' a nt "+ne# "& Medici Condominium )"$ated n a', Ct%. On Se/tem-e# * 2011* Medici Condominium Corp. 5Med$8 demanded &#"m DC /a%ment &"# a))e,ed n/ad a''"$at"n de' and a''e''ment' am"ntn, t" )<6*000.00. DC d'/ted t!e $)am* 'a%n, t!at !e /ad a)) de' a' '!"+n -% t!e &a$t t!at !e +a' /#e("')% e)e$ted a' D#e$t"# and #e'dent "& Medici. Medici, "n t!e "t!e# !and* $)amed t!at DC's "-),at"n +a' a $a##% "(e# "& !' "-),at"n' t" t!e $"nd"mnm de(e)"/e#* Medici C"n't#$t"n C"#/"#at"n. C"n'eent)%* DC +a' /#e(ented &#"m ee#$'n, !' #,!t t" ("te and -e ("ted &"# d#n, t!e 2011 e)e$t"n "& MediciF' B"a#d "& D#e$t"#'. T!' /#"m/ted DC t" &)e a $"m/)ant &"# dama,e' -e&"#e t!e S/e$a) C"mme#$a) C"#t "& a', Ct%. Medici &)ed a m"t"n t" d'm'' "n t!e ,#"nd t!at t!e $"#t !a' n" @#'d$t"n "(e# t!e nt#a $"#/"#ate d'/te +!$! t!e H"'n, and Land U'e Re,)at"#% B"a#d (H!RB) !a' e$)'(e @#'d$t"n "(e#. I' Medici $"##e$t 5478
III. Unde# t!e ?nan$a) Re!a-)tat"n and In'")(en$% A$t (FRIA), t!e &)n, "& a /ett"n &"# (")nta#% #e!a-)tat"n m't -e a//#"(ed -%9 5178 5A8 a ma@"#t% ("te "& t!e B"a#d "& D#e$t"#' and at!"#ed -% t!e ("te "& t!e 't"$!")de#' #e/#e'entn, at )ea't a ma@"#t% "& t!e "t'tandn, $a/ta) 't"$ 5B8 a ma@"#t% ("te "& t!e B"a#d "& D#e$t"#' and at!"#ed -% t!e ("te "& t!e 't"$!")de#' #e/#e'entn, at )ea't t+"t!#d' "& t!e "t'tandn, $a/ta) 't"$ 5C8 t+"t!#d' ("te "& t!e B"a#d "& D#e$t"#' and at!"#ed -% t!e ("te "& t!e 't"$!")de#' #e/#e'entn, at )ea't a ma@"#t% "& t!e "t'tandn, $a/ta) 't"$ 5D8 t+"t!#d' ("te "& t!e B"a#d "& D#e$t"#' and at!"#ed -% t!e ("te "& t!e 't"$!")de#' #e/#e'entn, at )ea't t+"t!#d' "& t!e "t'tandn, $a/ta) 't"$.
SUGGESTED ANSWER9 "edici is correct. Bsin the relationship test and the nature of the contro$ers! test, it is indubitable that the contro$ers! in$ol$es intra8corporate issues. #he facts of the problem indicate that there as a dispute as to the liabilit! of %C for condominium dues, as ell as the riht of %C to to $ote and be $oted for durin the -011 election of "edici 's oard of 3irectors. ccordinl!, 7urisdiction is ith the Special
RECOMMENDATION9 #his /C= is outside the co$erae of the -01 /ercantile >a ar ?4amination as the -01 S!llabus for /ercantile >a prepared b! the Supreme Court did not include the @:I. It is recommended that all e4aminees be i$en
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#em-#'ement "& t!e (a)e "& t!e )"'t (e!$)e nde# t!e n'#an$e /")$%. "ac# #e &'ed t" /a% $)amn, t!at t!e#e ' n" t!e&t a' e'' ,a(e $ila% )a+&) /"''e''"n "& t!e $a#. I' "ac# $"##e$t 5478
Commercial Court of 2asi Cit!, not ith the Housin and >and Bse :eulator! oard ("edical Plaza "a#ati Condominium Corp. . Cullen, 9.:. 1+11*, 6o$ember 11, -015. . A $"#/"#at"n "#,aned nde# t!e C"#/"#at"n C"de $"mmen$e' t" !a(e $"#/"#ate e'ten$e and @#d$a) /e#'"na)t% and ' deemed n$"#/"#ated9 5178
SUGGESTED ANSWER9 Jac# Insurance is not correct. &ic Silat as merel! i$en ph!sical possession of the car. He did not ha$e 7uridical possession o$er the same. It is also apparent that the ta%in b! Silat of the car of Jess is ithout the consent or authotit! of the latter. #hus, the act of Silat in depri$in Jess of his car, soon after the transfer of ph!sical possession of the same to him, constitutes theft under the insurance polic! that is compensable. (Paramount Insurance . Spouses &emondeulaz, 9.:. 1;5;;5, 6o$ember -+, -01-.
5A8 &#"m t!e date t!e a//)$at"n &"# n$"#/"#at"n ' &)ed +t! t!e Se$#te' and E$!an,e C"mm''"n 5SEC8 5B8 &#"m t!e date t!e SEC ''e' a $e#t&$ate "& n$"#/"#at"n nde# t' "&&$a) 'ea) 5C8 t!#t% 5:08 da%' a&te# t!e date t!e a//)$at"n &"# n$"#/"#at"n ' &)ed +t! t!e SEC 5D8 t!#t% 5:08 da%' a&te# t!e date t!e SEC ''e' a $e#t&$ate "& n$"#/"#at"n nde# t' "&&$a) 'ea)
II. "inggy +ent t" &luer !niersi%y (&!) n Ge#man% &"# !' d"$t"#ate de,#ee (*.D.). He $"m/)eted !' de,#ee +t! t!e !,!e't !"n"#' n t!e '!"#te't tme. W!en !e $ame -a$* !e de$ded t" 'et/ !' "+n ,#adate '$!"") n !' !"met"+n n am-"an,a. A&te# 'een, &#ee )e,a) ad($e &#"m !' !,!&)%n, )a+%e#&#end'* !e )ea#ned t!at t!e !)//ne' &"))"+' t!e te##t"#a)t% /#n$/)e n t#adema# )a+* i.e., t#adema# #,!t' a#e a$#ed t!#",! (a)d #e,'t#at"n n a$$"#dan$e +t! t!e )a+. ?"#t!+t!* "inggy named !' '$!"") t!e )+e# G#adate S$!"") "& B'ne'' "& Mndana" and mmedate)% 'e$#ed #e,'t#at"n +t! t!e B#ea "& T#adema#'. &! dd n"t )e t!e nat!"#ed 'e "& t' name -% t' t"/ a)mn' n" )e''. &! '",!t %"# !e)/. W!at ad($e $an %" ,(e &!+ 5478
SUGGESTED ANSWER9 5 from the date the S?C issues a certificate of incorporation under its official seal Sec. 1), Corporation Code. I. On Ma% 2;* 2014* "ess n'#ed +t! "ac# Insurance ("ac#) !' 2014 T"%"ta C"#"))a 'edan nde# a $"m/#e!en'(e m"t"# (e!$)e n'#an$e /")$% &"# "ne %ea#. On )% I* 2014* "ess' $a# +a' n)a+&))% taen. Hen$e* !e mmedate)% #e/"#ted t!e t!e&t t" t!e T#a&&$ Mana,ement C"mmand 5TMC8 "& t!e !)//ne Nat"na) ")$e 5N8* +!$! made "ess a$$"m/)'! a $"m/)ant '!eet a' /a#t "& t' /#"$ed#e. In t!e $"m/)ant '!eet* "ess a))e,ed t!at a $e#tan Ric $ila% ($ila%) t"" /"''e''"n "& t!e '-@e$t (e!$)e t" add a$$e''"#e' and m/#"(ement' t!e#e"n. H"+e(e#* $ila% &a)ed t" #et#n t!e '-@e$t (e!$)e +t!n t!e a,#eed :da% /e#"d. A' a #e')t* "ess n"t&ed "ac# "& !' $)am &"#
SUGGESTED ANSWER9 I can ad$ise ' to file a petition to cancel the reistration of the name Dluer 9raduate School of usiness of
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5B8 Ind't#a) L&e In'#an$e 5C8 M"t"# e!$)e La-)t% In'#an$e 5D8 L&e In'#an$e
/indanao (D9S/ ith the ureau of #rademar%s. #he petition could be anchored on the folloin factsE Dluer Bni$ersit! is the oner of the m1me Diuer. Jingg) reistered the trademar% in bad faith. He came to %no of the trademar% because he ent to Dluer Bni$ersit! in 9erman! for his doctorate deree. DB is the oner of the name Dluer and has the sole riht to reister the same. @orein mar%s that are not reistered are still accorded protection aainst infrinement andFor unfair competition under the 2aris Con$ention for the 2rotection of Industrial 2ropert!. oth the 2hilippines and 9erman! are sinatories to the 2aris Con$ention. Bnder the said Con$ention, the trademar% of a national or sinator! to the 2aris Con$ention is entitled to its protection in other countries that are also sinatories to the Con$ention ithout need of reisterin the trademar%. #he petition could also be based on the fact, if it ere pro$en b! ' , that Dluer is a ell8%non mar% and entitled to protection as ' and D9S/ belon to the same class of ser$ices, i.e., Class 1 (education and entertainment. ' must also pro$e that a competent authorit! of the 2hilippines has desinated Dluer to be ell %non internationall! and in the 2hilippines. @inall!, the petition could also be based on the fact, if it ere pro$en b! ' , that Dluer is a trade name that ' has adopted and used before its use and reistration b! . Jingg). (*cole de Cuisine "anille +Cordon Bleu of the 2hilippinesG, Inc. . &enaud Cointreau Cie and Le Cordon Bleu Int-l., B.., 9.:. 1++50, une , -015.
SUGGESTED ANSWER9 (C (/otor Jehicle >iabilit! Insurance 6oteE #he correct term to use in (C is compulsor! motor $ehicle liabilit! insurance (Chapter JI, Insurance Code rather than motor $ehicle liabilit! insurance. IX. On ?e-#a#% 21* 201:* Barrac# ente#ed nt" a $"nt#a$t "& n'#an$e +t! Ma%ino Insurance Company (Ma%ino) n(")(n, a m"t"# (e!$)e. T!e /")$% "-),ate' Marino t" /a% Barrac# t!e am"nt "& S Hnd#ed T!"'and e'"' 5;00*000.008 n $a'e "& )"'' "# dama,e t" 'ad (e!$)e d#n, t!e /e#"d $"(e#ed* +!$! ' &#"m ?e-#a#% 2;* 201: t" ?e-#a#% 2;* 2014. On A/#) 1;* 201:* at a-"t <900 a.m.* Barrac# n't#$ted !' d#(e#* "", t" -#n, t!e m"t"# (e!$)e t" a nea#-% at"'!"/ &"# tne/. H"+e(e#* "" n" )"n,e# #et#ned and de'/te d),ent e&&"#t' t" )"$ate t!e 'ad (e!$)e* t!e e&&"#t' /#"(ed &t)e. Re')tant)%* Barrac# /#"m/t)% n"t&ed Ma%ino "& t!e 'ad )"'' and demanded /a%ment "& t!e n'#an$e /#"$eed' "& ;00*000.00. In a )ette# dated )% 6* 201:. Ma%ino dened t!e $)am* #ea'"nn, a' 'tated n t!e $"nt#a$t t!at Jt!e $"m/an% '!a)) n"t -e )a-)e &"# an% ma)$"' dama,e $a'ed -% t!e n'#ed* an% mem-e# "& !' &am)% "# -% a /e#'"n n t!e n'#edF' 'e#($e. I' Ma%ino $"##e$t n den%n, t!e $)am 5478 SUGGESTED ANSWER9 "atino Insurance is not correct in den!in the claim. #he loss of the motor $ehicle is not e4cluded under the insurance polic! as the loss as due to theft, not malicious damae. #he
III. A' a #)e* an n'#an$e $"nt#a$t ' $"n'en'a) and (")nta#%. T!e e$e/t"n ' n t!e $a'e "&9 5178 5A8 In)and Ma#ne In '#an$e
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!")de#' &)ed an O//"'t"n and M"t"n t" E$)de )an!")de#' &#"m Sta% O#de# "n t!e ,#"nd t!at /)an!")de#' a#e n"t $#edt"#' a' t!e% 5/)an!")de#'8 !a(e a t#'t #e)at"n'!/ +t! A. A#e t!e /)an!")de#' $"##e$t 5478
malicious damae clause under the polic! is not applicable but rather the theft" clause. #hus, the pro$ision under the polic! that the compan! shall not be liable for an! malicious damae caused b! the insured, an! member of his famil! or b! a person in the insured's ser$ice is not applicable. ($lpha Insurance and Suret) Co. . Castor, 9.:. 1)+1;, September -, -005.
RECOMMENDATION9 #he /C= is outside the co$erae of the -01 /ercantile >a ar ?4amination as the -01 S!llabus for /ercantile >a prepared b! the Supreme Court does not include the Supreme Court :ules of 2rocedure on Corporate :ehabilitation. It is recommended that all e4aminees be i$en full credit hether the! a$e an! anser or not. In an! case, the Suggested $nswer is that the plan holders are not correct. Section * of the Supreme Court Interim :ules of 2rocedure on Corporate :ehabilitation of -000 (hich as amended and replaced b! the :ules of 2rocedure on Corporate :ehabilitation of -00) do not pro$ide that a claim a risin from a pre8need contract is an e4ception to the poer of the trial court to sta! enforcement of all claims if the court finds the petition for rehabilitation to be sufficient in form and substance. ($/rera, et al. . Barza, et al., 9.:. 1;1*+1, September 11, -00).
X. A /e#'"n ' 'ad t" !a(e an n'#a-)e nte#e't n t!e '-@e$t matte# n'#ed +!e#e !e !a' a #e)at"n "# $"nne$t"n +t!* "# $"n$e#n n t t!at !e +)) de#(e /e$na#% -ene&t "# ad(anta,e &#"m t' /#e'e#(at"n. W!$! am"n, t!e &"))"+n, '-@e$t matte#' ' n"t $"n'de#ed n'#a-)e 5178 5A8 A /a#tne# n a &#m "n t' &t#e /#"&t' 5B8 A ,ene#a) $#edt"# "n de-t"#F' /#"/e#t% 5C8 A @d,ment $#edt"# "n de-t"#F' /#"/e#t% 5D8 A m"#t,a,e $#edt"# "n de-t"#F' m"#t,a,ed /#"/e#t% SUGGESTED ANSWER9 ( (a eneral creditor on debtor's propert! XI. A Assurance (A) +a' n$"#/"#ated n 1
XII. T" $"n'ttte a "#m &"# t!e t#an'a$t"n "& $"#/"#ate -'ne''* "n)% a ma@"#t% "& t!e nm-e# "& B"a#d "& D#e$t"#' ' #e#ed9 5178 5A8 a' &ed -% t!e $"#/"#ate -%)a+' 5B8 a' &ed n t!e a#t$)e' "& n$"#/"#at"n 5C8 a$ta))% 'e#(n, n t!e -"a#d 5D8 a$ta))% 'e#(n, n t!e -"a#d -t $"n'tttn, a "#m SUGGESTED ANSWER9 ( (as fi4ed in the articles of incorporation Sec. -, Corporation Code.
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not properl! created and, therefore, its acts are in$alid. Section 5 of the Corporation Code reKuires that at least three members of an ?4ecuti$e Committee be directors of the corporation. In the problem, onl! /ember Sarah > (ho is a director as she is the 2resident and /ember uan :iles (ho is clearl! identified in the problem as a director are directors of Soei Corporation. /ember ane > is not identified as a director. s the ?4ecuti$e Committee in the problem as not properl! created it could not act at all as the minimum Kuorum ould be three. s stated earlier, the ?4ecuti$e Committee lac%s one Kualified member. If the ?4ecuti$e Committee ere properl! oraniAed and a Kuorum ere present, all the actions ta%en b! the ?4ecuti$e Committee in the problem, e4cept the declaration of 2l0.00 per share cash di$idend, ould ha$e been $alid. #he distribution of cash di$idends to the shareholders ma! not be deleated b! the oard of 3irectors to the ?4ecuti$e Committee pursuant to Section 5 of the Corporation Code.
RECOMMENDATION9 If the e4aminee ansers (as fi4ed b! the corporate b!8las, the e4aminee should be i$en full credit. #he reKuired Kuorum for a meetin of the oard of 3irectors, under eneral corporate practice, is indicated in the !8las and not in the rticles of Incorporation. #his practice is supported b! the fact that both Sections 1 (Contents of articles on incorporation and 1 (@orm of articles on incorporation of the Corporation Code (particularl!, Section 1 do not reKuire mention of the Kuorum at meetins of the oard in the rticles of Incorporation. XIII. #'ant t" t' B%La+'* $oei Corpora%ion's B"a#d "& D#e$t"#' $#eated an -ecu%ie Commi%%ee t" mana,e t!e a&&a#' "& t!e $"#/"#at"n n -et+een -"a#d meetn,'. T!e B"a#d "& D#e$t"#' a//"nted t!e &"))"+n, mem-e#' "& t!e -ecu%ie Commi%%ee/ t!e #e'dent* Sa#a! L t!e $e #e'dent* ane L and* a t!#d mem-e# &#"m t!e -"a#d* an R)e'. On De$em-e# 1* 201:* t!e -ecu%ie Commi%%ee, +t! Sa#a! L and ane L /#e'ent* met and de$ded "n t!e &"))"+n, matte#'9 1. #$!a'e "& a de)(e#% (an &"# 'e n t!e $"#/"#at"nF' #eta) -'ne'' 2. De$)a#at"n and a//#"(a) "& t!e 1:t! m"nt! -"n' :. #$!a'e "& an "&&$e $"nd"mnm nt at t!e ?"#t and 4. De$)a#at"n "& 10.00 /e# '!a#e $a'! d(dend.
XI. On Se/tem-e# 26* 201:* Danny Marcial (Danny) /#"$#ed an n'#an$e "n !' )&e +t! a &a$e (a)e "& 6*000*000.00 &#"m R0 Insurance Company 5RN8* +t! !' +&e ina Marcial (ina) a' '")e -ene&$a#%. On t!e 'ame da%* Danny ''ed an ndated $!e$ t" R0 &"# t!e &)) am"nt "& t!e /#emm. On O$t"-e# 1* 201:* R0 ''ed t!e /")$% $"(e#n, Danny's )&e n'#an$e. On O$t"-e# 6* 201:* Danny met a t#a,$ a$$dent and ded. ina $)amed t!e n'#an$e -ene&t* -t R0 +a' $ t" den% t!e $)am -e$a'e at t!e tme "& Danny's deat!* t!e $!e$ +a' n"t %et en$a'!ed and t!e#e&"#e t!e /#emm #emaned n/ad. I' R0 $"##e$t W)) %"# an'+e# -e t!e 'ame & t!e $!e$ ' dated O$t"-e# 16* 201: 5478
A#e t!e a$t"n' "& t!e -ecu%ie Commi%%ee (a)d 5478 SUGGESTED ANSWER9 ll the actions ta%en b! the ?4ecuti$e Committee in the problem are not $alid. #he ?4ecuti$e Committee as
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(See the case of "ala)an Insurance Co., Inc. s. $rnaldo, et al., 9.:. >8*;+5,
SUGGESTED ANSWERS9 To the first 0uestion (Is &1 correct23 :6 Insurance is not correct. #he facts of the case sho that 3ann! procured insurance on his life on September -, -015, ith his ife #ina as beneficiar!, and that on the same da!, i.e., September -, -015, he issued an undated chec% to :6 for the full amount of the premium. Since the undated chec% as issued to :6 on September -, -015, it ill be considered dated as of the same da!, i.e., September -, -015 pursuant to Section 1; (c of the 6eotiable Instruments >a. #he facts also sho that :6 Insurance issued the polic! on 3ann!'s life on
X. A, B, C* D, and - +e#e mem-e#' "& t!e 122341225 Board o6 Direc%ors "& ?L
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C"#/"#at"n. At t!e e)e$t"n &"# t!e 12254 1227 Board o6 Direc%ors, n"t "ne "& t!em +a' e)e$ted. T!e% &)ed n $"#t a de#(at(e 't "n -e!a)& "& F Corpora%ion a,an't t!e ne+)%e)e$ted mem-e#' "& t!e B"a#d "& D#e$t"#'. T!e% e't"ned t!e (a)dt% "& t!e e)e$t"n a' t +a' a))e,ed)% ma##ed -% )a$ "& "#m* and /#a%ed &"# t!e n))&$at"n "& t!e 'ad e)e$t"n. T!e 12254 1227 Board o6 Direc%ors m"(ed t" d'm'' t!e $"m/)ant -e$a'e t!e de#(at(e 't ' n"t /#"/e#. De$de. 5478
n"ted t!at 26*000 '!eet' +e#e dama,ed and n -ad "#de#. T!e ent#e '!/ment +a' t#ned "(e# t" t!e $'t"d% "& AI, t!e a##a't#e "/e#at"#* "n ana#% 21* 2011 &"# 't"#a,e and 'a&eee/n,* /endn, t' +t!d#a+a) -% t!e $"n',neeF' at!"#ed $'t"m' -#"e#* R8M. On ana#% 2; and 2<* 2011* t!e '-@e$t '!/ment +a' +t!d#a+n -% R8M &#"m t!e $'t"d% "& AI. On ana#% 2<* 2011* /#"# t" t!e +t!d#a+a) "& t!e )a't -at$! "& t!e '!/ment* a @"nt n'/e$t"n "& t!e $a#," +a' $"nd$ted /e# t!e Ree't &"# Bad O#de# S#(e% (RB9) dated ana#% 2K* 2011. T!e eamnat"n #e/"#t '!"+ed t!at :0*000 '!eet' "& 'tee) +e#e dama,ed and n -ad "#de#. 0A Insurance /ad Corpora%ion t!e am"nt "& :0*000*000.00 &"# t!e :0*000 '!eet' t!at +e#e dama,ed* a' '!"+n n t!e S-#",at"n Re$e/t dated ana#% 1:* 201:. T!e#ea&te#* 0A Insurance demanded #e/a#at"n a,an't AI &"# t!e ,""d' dama,ed n t' $'t"d%* n t!e am"nt "& 6*000*00.00. AI #e&'ed t" /a% $)amn, t!at t!e $)am +a' a)#ead% -a##ed -% t!e 'tatte "& )mtat"n'. A" a))e,ed t!at t!e Ca##a,e "& G""d' -% Sea A$t 5COGSA8 a//)e' n t!' $a'e 'n$e t!e ,""d' +e#e '!//ed &#"m a &"#e,n /"#t t" t!e !)//ne'. NA In'#an$e $)am' t!at t!e C9:$A d"e' n"t a//)%* 'n$e ATI ' n"t a '!//e# "# $a##e#. W!" ' $"##e$t 5678
SUGGESTED ANSWER9 #he position ta%en b! the -008 -00 oard of 3irectors is correct. #he deri$ati$e suit is not proper. #he members of the -0058-00 oard of 3irectors of @>2 Corporation are the in7ured parties, not @>2 Corporation, as their rihts to $ote and to be $oted upon ere directl! affected b! the election of the ne set of directors. (Legaspi Towers <;;, Inc., et al. . "uer, et al., 9.:. 1;0;+5, une 1+, -01-. XI. In nte))e$ta) /#"/e#t% $a'e'* &#ad)ent ntent ' n"t an e)ement "& t!e $a'e "& a$t"n e$e/t n $a'e' n(")(n,9 5178 5A8 t#adema# n&#n,ement 5B8 $"/%#,!t n&#n,ement 5C8 /atent n&#n,ement 5D8 n&a# $"m/ett"n
SUGGESTED ANSWER9 (3 (unfair competition
SUGGESTED ANSWER9 6 Insurance is correct. #he Carriae of 9ood b! Sea ct (ct 6o. -1 applies onl! to carriers or ships. carrier, under Section 1(a of the C<9S, includes the oner or th charterer ho enters into a contract of carriae ith a shipper, hile a ship is defined under Section l(d as an! $essel used for the carriae of oods b! sea . #he C<9S does not appl! to #I
XII. On De$em-e# 1* 2010* &ore A Corpora%ion '!//ed &#"m S"t! "#ea t" Corpora%ion n Man)a '"me :00*000 '!eet' "& !,!,#ade '/e$a) 'tee). T!e '!/ment +a' n'#ed a,an't a)) #'' -% 0A Insurance (0A). T!e $a##%n, (e''e) a##(ed at t!e "#t "& Man)a "n ana#% 10* 2011. W!en t!e '!/ment +a' d'$!a#,ed* t +a'
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Unde# t!e &"#e,"n, $#$m'tan$e'* +!$! ' t!e /#"/e# te't t" -e a//)ed 3 Holis%ic or Dominancy es%+ De$de. 5478
as it is neither a carrier nor a ship, much less a shipper. It is simpl! an arrastre operator. /oreo$er, the C<9S does not .mention that an arrastre opera tor ma! in$o%e the prescripti$e period of one' !ear hence, it does not co$er the arrastre operator. (Insurance Co. of 1orth $merica . $sian Terminals, Inc., 9.:. 1+0;+, @ebruar! 1, -01- Insurance Co. of 1orth $merica . Phil. Ports Terminal, 9.:. >8*-0, ul! 1+, 1).
SUGGESTED ANSWER9 Considerin the facts i$en and the aruments of the parties, the dominanc! test is the proper test to appl!. #hus, the appropriation and use of the letter S b! Inter82acific on its rubber shoes constitutes an infrinement of the trademar% of S%echers. #he essential element of infrinement under the Intellectual 2ropert! Code is that the infrinin mar% is li%el! to cause confusion. In determinin similarit! and li%elihood of confusion, 7urisprudence has de$eloped testsOthe 3ominanc! #est and the Holistic or #otalit! #est. #he 3ominanc! #est focuses on the similarit! of the pre$alent or dominant features of the competin trademar%s that miht cause confusion, mista%e, and deception in the mind of the purchasin public. 3uplication or imitation is not necessar! neither is it reKuired that the mar% souht to be reistered suest an effort to imitate. 9i$en more consideration are the aural and $isual impressions created b! the mar%s on the bu!ers of oods, i$in little eiht to factors li%e prices, Kualit!, sales outlets, and mar%et sements. In contrast, the Holistic or #otalit! #est necessitates a consideration of the entiret! of the mar%s as applied to the products, includin the labels and pac%ain, in determinin confusin similarit!. #he discernin e!e of the obser$er must focus not onl! on the predominant ords, but also on the other features appearin on both labels so that the obser$er ma! dra conclusion on hether one is confusinl! similar to the other. :elati$e to the Kuestion on confusion of mar%s and trade names,
XIII. $#ec*ers Corpora%ion 'ed In%er4 aci6ic &"# t#adema# n&#n,ement* $)amn, t!at In%er4aci6ic 'ed $#ec*ers' #e,'te#ed ;$< )"," ma# "n In%eraci6ic's '!"e /#"d$t' +t!"t t' $"n'ent. Se$!e#' !a' #e,'te#ed t!e t#adema# JSECHERSJ and t!e t#adema# JSJ 5+t! an "(a) de',n8 +t! t!e Inte))e$ta) #"/e#t% O&&$e (I9). In t' $"m/)ant* $#ec*ers /"nt' "t t!e &"))"+n, 'm)a#te'9 t!e $")"# '$!eme "& t!e -)e* +!te and ,#a% t)ed -% $#ec*ers. E(en t!e de',n and J+a(e)eJ /atte#n "& t!e md'")e and "te# '")e "& In%er4aci6ic's '!"e' a#e (e#% 'm)a# t" Se$!e#'F '!"e'* & n"t ea$t /atte#n' t!e#e"&J. On t!e 'de "& In%eraci6icF' '!"e'* nea# t!e //e# /a#t* a//ea#' t!e 't%)ed JS> /)a$ed n t!e ea$t )"$at"n a' t!at "& t!e 't%)ed JSJ t!e $#ec*ers '!"e'. On t"/ "& t!e Jt"n,eJ "& -"t! '!"e'* a//ea#' t!e 't%)ed JSJ n /#a$t$a))% t!e 'ame )"$at"n and 'e. In t' de&en'e* In%er4aci6ic $)am' t!at nde# t!e Holis%ic es%, t!e &"))"+n, d''m)a#te' a#e /#e'ent9 t!e ma# JSJ &"nd n St#"n, '!"e' ' n"t en$)"'ed n an J"(a) de',nJ t!e +"#d JSt#"n,J ' $"n'/$"')% /)a$ed at t!e -a$'de and n'")e' t!e !an, ta,' )a-e)' atta$!ed t" t!e '!"e' -ea# t!e +"#d JSt#"n,J &"# In%eraci6ic and JSe$!e#' U.S.A.J &"# $#ec*ers= and* St#"n, '!"e' a#e m"de't)% /#$ed $"m/a#ed t" t!e $"'t' "& Se$!e#' '!"e'.
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:ue%>e de$ded t" n$"#/"#ate !' -'ne'' n Bn"nd"* Man)a. He a'ed !' +&e and t!#ee 5:8 $!)d#en t" a$t a' n$"#/"#at"#' +t! "ne 5)8 '!a#e "& 't"$ ea$!* +!)e !e "+ned <<<.<<; '!a#e' "& t!e 1*000*000 '!a#e' "& t!e $a/ta) 't"$. 5;78 5A8 A''mn, a)) "t!e# #e#ement' a#e met* '!")d t!e Se$#te' and E$!an,e C"mm''"n 5SEC8 a$$e/t "# #e@e$t t!e A#t$)e' "& In$"#/"#at"n W!% 5B8 Ben, t!e $"nt#") &#ea and m$#"mana,e# t!at !e '* :ue%>e a'ed %" 3 !' a'tte )e,a) ad('e# 3 & !e $an 'e#(e a' C!a#man "& t!e B"a#d "& D#e$t"#'* a' #e'dent* and a' Gene#a) Mana,e# "& t!e $"#/"#at"n* a)) at t!e 'ame tme. )ea'e ad('e :ue%>e. 5C8 A''mn, t!e $"#/"#at"n !a' -een /#"/e#)% #e,'te#ed* ma% t!e A#t$)e' "& In$"#/"#at"n n"+ -e amended t" #ed$e t!e nm-e# "& d#e$t"#' t" t+" 528 3 :ue%>e and !' i6e 3 t" #e&)e$t t!e #ea) "+ne#' "& t!e '!a#e' "& 't"$
7urisprudence has noted to (- t!pes of confusion, iz.= (1 confusion of oods (product confusion, here the ordinaril! prudent purchaser ould be induced to purchase one product in the belief that he as purchasin the other and (- confusion of business (source or oriin confusion, here, althouh the oods of the parties are diffcrent, the product, the mar% of hich reistration is applied for b! one part!, is such as miht reasonabl! be assumed to oriinate ith the reistrant of an earlier product, and the public ould then be decei$ed either into that belief or into the belief that there is some connection beteen the to parties, thouh ine4istent. ppl!in the 3ominanc! #est to the problem, e find that the use of the st!liAed S b! Inter82acific in its Stron rubber shoes infrines on the mar% alread! reistered b! S%echers ith the I2<. Lhile it is undisputed that st!liAed S of S%echers is ithin an o$al desin, the dominant feature of the trademar% is the st!liAed S,'' as it is precisel! the st!liAed ''S hich catches the e!e of the purchaser. #hus, e$en if Inter82acific did not use an o$al desin, the mere fact that it used the same st!liAed S, the same bein the dominant feature of the trademar% of S%echers, alread! constitutes infrinement under the 3ominanc! #est. (S#echers, .S.$., Inc. . Inter P acific Industrial Trading Corp., et al., 9.:. 1*5-1 , 6o$ember 50, -00* Ndecision reconsiderin and settin aside the oriinal decision in the case].
SUGGESTED ANSWERS9 ( #he Securities and ?4chane Commission (S?C should re7ect the rticles of incorporation.
XIX. :ue%>e and !' i6e !a(e t!#ee 5:8 $!)d#en9 0eymar, 26* +!" ' n"+ -a'ed n R" de ane#"* B#a) Mueller, 2:* +!" !a' m,#ated t" Mn$!* Ge#man% and "ames, 21* +!" #e'de' n B","ta* C")"m-a. 0eymar and Mueller !a(e 'n$e #en"n$ed t!e# !)//ne $ten'!/ n &a("# "& t!e# $"nt#% "& #e'den$e. Nea#n, 0 %ea#' ")d*
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(C #he rticles of Incorporation ma! not be amended to reduce the number of directors to to. Bnder Section 1 of the Corporation Code, the number of directors shall not be less than fi$e.
remo$al of the insured propert! to an! buildin or place reKuired the consent of Ilocano. n! transfer effected b! 2/, Inc. ithout Ilocano's consent (as is the case here ould free the latter from an! liabilit!. ("ala)an Insurance Compan), Inc. . P$PC7, Ltd., 9.:. -00;+, uust ;, -015.
XX. On Ma% 1:* 1<<;* AM, Inc. "-taned a 16*000*000.00 &#e n'#an$e /")$% &#"m Ilocano Insurance $"(e#n, t' ma$!ne#e' and e/ment e&&e$t(e &"# "ne 518 %ea# "# nt) Ma% 14* 1<<. T!e /")$% e/#e'')% 'tated t!at t!e n'#ed /#"/e#te' +e#e )"$ated at JSan%" #e$'"n !)'. B)dn,* !a'e III* L"t' 4 and ;* B)"$ 16* EA* R"'a#"* Ca(te.J Be&"#e t' e/#at"n* t!e /")$% +a' #ene+ed "n Ja' 'J -a'' &"# an"t!e# %ea# "# nt) Ma% 1:* 1<
XXI. On )% :* 1<<:* Delia $o%ero 5S"te#"8 t"" "t a )&e n'#an$e /")$% &#"m Ilocos Ban#ers i6e insurance Corpora%ion (Ilocos i6e) de',natn, Creencia Aban (Aban), !e# ne$e* a' !e# -ene&$a#%. Ilocos i6e ''ed ")$% N". 4* +t! a &a$e (a)e "& 100*000.00* n $o%ero's &a("# "n A,'t :0* 1<<:* a&te# t!e #e'te med$a) eamnat"n and /a%ment "& t!e /#emm. On A/#) 10* 1<<;* $o%ero ded. Aban &)ed a $)am &"# t!e n'#an$e /#"$eed' "n )% <* 1<<;. Ilocos i6e $"nd$ted an n(e't,at"n nt" t!e $)am and $ame "t +t! t!e &"))"+n, &ndn,'9 1. $o%ero dd n"t /e#'"na))% a//)% &"# n'#an$e $"(e#a,e* a' '!e +a' ))te#ate. 2. $o%ero +a' '$)% 'n$e 1<<0. :. $o%ero dd n"t !a(e t!e &nan$a) $a/a-)t% t" /a% t!e /#emm "n t!e /")$%. 4. $o%ero dd n"t ',n t!e a//)$at"n &"# n'#an$e. 6. A*an +a' t!e "ne +!" &)ed t!e n'#an$e a//)$at"n and de',nated !e#'e)& a' t!e -ene&$a#%. ?"# t!e a-"(e #ea'"n' and $)amn, &#ad* Ilocos i6e dened Aban's $)am "n A/#) 1;* 1<<* -t #e&nded t!e /#emm /ad "n t!e /")$%. 5;78
SUGGESTED ANSWER9 Ilocano Insurance is not liable under the polic!. ! the clear and e4press condition in the reneed polic!, the
5A8 Ma% $o%ero (a)d)% de',nate !e# ne$e a' -ene&$a#%
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5B8 Ma% t!e n$"nte'ta-)t% /e#"d 'et n e(en n $a'e' "& &#ad a' a))e,ed n t!' $a'e 5C8 I' Aban entt)ed t" $)am t!e /#"$eed' nde# t!e /")$%
holders are absolutel! protected from unarranted denial of their claims or dela! in the collection of insurance proceeds occasioned b! alleations of fraud, concealment, or misrepresentation b! insurers, claims hich ma! no loner be set up after the to8!ear period e4pires as ordained under the la. #hus, the self8reulatin feature of Section + lies in the fact that both the insurer and the insured are i$en the assurance that an! dishonest scheme to obtain life insurance ould be e4posed, and attempts at undul! den!in a claim ould be struc% don. >ife insurance policies that pass the statutor! to8!ear period are essentiall! treated as leitimate and be!ond Kuestion, and the indi$iduals ho ield them are made secure b! the thouht that the! ill be paid promptl! upon claim. In this manner, Section + contributes to the stabilit! of the insurance industr!. Section + pre$ents a situation here the insurer %noinl! continues to accept annual premium pa!ments on life insurance, onl! to later on den! a claim on the polic! on specious claims of fraudulent concealment and misrepresentation, such as hat obtains in the instant case. #hus, instead of conductin at the first instance an in$estiation into the circumstances
SUGGESTED ANSWERS9 ( Yes, Sotero ma! $alidl! desinate her niece as beneficiar!. #he same is not prohibited under the Insurance Code or an! other la pertinent to the problem. ( Yes, the incontestabilit! period applies e$en in cases of fraud as claimed in this problem. 6ote that the findins are those of the insurer and these ere made in an in$estiation conducted unilaterall! b! the insurer more than 5 !ears after the polic! as ta%en out b! Sotero. #hese findins ma! $er! ell be dismissed as self8 ser$in considerin the incontestabilit! clause set out in Section + of the Insurance Code. Section + reulates both the actions of the insurers and prospecti$e ta%ers of life insurance. It i$es insurers enouh time to inKuire hether the polic! as obtained b! fraud, concealment, or misrepresentation on the other hand, it forearns schemin indi$iduals that their attempts at insurance fraud ould be timel! unco$eredPthus deterrin them from $enturin into such nefarious enterprise. t the same time, leitimate polic!
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surroundin the issuance of the insurance polic! hich ould ha$e timel! e4posed the supposed flas and irreularities attendin it as it no professes, Ilocos >ife appears to ha$e turned a blind e!e and opted instead to continue collectin the premiums on the polic!. @or nearl! three !ears, petitioner collected the premiums and de$oted the same to its on profit. It cannot no den! the claim hen it is called to account. Section + must be applied to it ith full force and effect. Insurers ma! not be alloed to dela! the pa!ment of claims b! filin fri$olous cases in court, hopin that the ine$itable ma! be put off for !ears P or e$en decades P b! the pendenc! of these unnecessar! court cases. In the meantime, the! benefit from collectin the interest andFor returns on both the premiums pre$iousl! paid b! the insured and the insurance proceeds hich should otherise o to their beneficiaries. #he business of insurance is a hihl! reulated commercial acti$it! in the countr!, and is imbued ith public interest. n insurance contract is a contract of adhesion that must be construed liberall! in fa$or of the insured and strictl! aainst the insurer in order to safeuard the NformerQs] interest. ("anila Ban#ers Life Insurance Corp. $. $/an, 9.:. 1;***, ul! -), -015
(C Yes, ban is entitled to claim the proceeds under the polic! as beneficiar! for the same reasons adduced in ( abo$e.
XXII. aul :eorge ua (ua) &)ed a $"m/)ant &"# a 'm "& m"ne% a,an't t!e '/"'e' Beni%o and Caroline "ames ($pouses "ames). In t!e $"m/)ant* ua /#a%ed t!at t!e de&endant' /a% ua t!e am"nt "& K*600*000.00* $"(e#ed -% a $!e$. ua a''e#t' t!at de&endant' "+ed !m a 'm "& m"ne% +a% -a$ n 1
BAR OPERATIONS 2015
13
#SJVBAROPS2015
Mercantile Law Bar Q&A
#UPLawEvening
$!e$ n t!e am"nt "& 1*020*000.00 +!$! +a' '-'eent)% d'!"n"#ed /"n /#e'entment de t" JSt"/ a%ment.J ura ''ed t!e $!e$ -e$a'e !e# '"n* Freddie, att#a$ted -% a !,e d'$"nt "& 220*000.00* /#$!a'ed a ?"t"n B)a#d 42 &#"m Fo%on. T!e te#m "& t!e t#an'a$t"n +a' Ca'!"nDe)(e#% and n" d"+n/a%ment +a' #e#ed. T!e $a# +a' de)(e#ed "n Ma% 14* 1<<* -t Freddie &a)ed t" /a% /"n de)(e#%. De'/te n"n/a%ment* Freddie t"" /"''e''"n "& t!e (e!$)e. ura +a' e(enta))% a$tted "& t!e $!a#,e "& (")atn, B.. 22 -t +a' &"nd $())% )a-)e &"# t!e am"nt "& t!e $!e$ /)' )e,a) nte#e't. ura a//ea)ed t!e de$'"n a' #e,a#d' t!e $() )a-)t%* $)amn, t!at t!e#e +a' n" /#(t% "& $"nt#a$t -et+een Fo%on and ura. N" $() )a-)t% $")d -e ad@d,ed a,an't !e# -e$a'e "& !e# a$tta) &#"m t!e $#mna) $!a#,e. It +a' Freddie +!" +a' $())% )a-)e t" Fo%on, ura $)amed. ura added t!at '!e $")d n"t -e an a$$"mm"dat"n /a#t% et!e# -e$a'e '!e "n)% $ame n a&te# Freddie &a)ed t" /a% t!e /#$!a'e /#$e* "# ' 5;8 m"nt!' a&te# t!e ee$t"n "& t!e $"nt#a$t -et+een Fo%on and ?#edde. He# )a-)t% +a' )mted t" !e# a$t "& ''n, a +"#t!)e'' $!e$* -t -% !e# a$tta) n t!e $#mna) $!a#,e* t!e#e +a' n" m"#e -a'' &"# !e# t" -e !e)d $())% )a-)e t" Fo%on. ura's a$t "& ''n, t!e '-@e$t $!e$ dd n"t* -% t'e)&* a''me t!e "-),at"n "& Freddie t" Fo%on "# at"mat$a))% mae !e# a /a#t% t" t!e $"nt#a$t. I' ura )a-)e 5678
ords, a chec% functions more than a promissor! note since it not onl! contains an underta%in to pa! an amount of mone! but is an order addressed to a ban% and parta%es of a representation that the draer has funds on deposit aainst hich the chec% is dran, sufficient to ensure pa!ment upon its presentation to the ban%. chec%, the entries of hich are in ritin, could pro$e a loan transaction. #hus, under the 6eotiable Instruments >a, e$er! neotiable instrument is deemed prima .facie to ha$e been issued for a $aluable consideration, and e$er! person hose sinature appears thereon to ha$e become a part! for $alue. (Pua . Spouses Benito Tiong, 9.:. 1)+**0,
XXIII. W!at ("te ' needed t" $"n'de# e(e#% de$'"n t" -e a (a)d $"#/"#ate a$t 5178 5A8 a ma@"#t% "& t!e d#e$t"#' /#e'ent at t!e meetn, 5B8 t+"t!#d' "& t!e d#e$t"#' /#e'ent at t!e meetn, 5C8 a ma@"#t% "& t!e d#e$t"#' /#e'ent at t!e meetn, at +!$! t!e#e ' a "#m 5D8 t+"t!#d' "& t!e d#e$t"#' /#e'ent at t!e meetn, at +!$! t!e#e ' a "#m SUGGESTED ANSWER9 (C (a ma7orit! of the directors present at the meetin at hich there is a Kuorum Sec. -, Corporation Code
SUGGESTED ANSWER9 2ura is liable to @oton /otors because it sold a car to her son and as a holder for $alue of the chec% issued in its fa$or b! 2ura. n! person criminall! liable for felon! is also ci$ill! liable. #hus, her acKuittal in the criminal chare does not carr! ith it e4tinction of her ci$il liabilit! unless the e4tinction proceeds from a declaration in a final 7udment
XXI. A $#mna) $"m/)ant &"# (")at"n "& B.. 22 +a' &)ed -% Fo%on Mo%ors (Fo%on), an entt% en,a,ed n t!e -'ne'' "& $a# dea)e#'!/* a,an't ura Felipe (ura) +t! t!e O&&$e "& t!e Ct% #"'e$t"# "& Qe"n Ct%. T!e O&&$e &"nd /#"-a-)e $a'e t" nd$t ura and &)ed an n&"#mat"n -e&"#e t!e Met#"/")tan T#a) C"#t (MeC) "& Qe"n Ct%* &"# !e# ''an$e "& a /"'tdated
BAR OPERATIONS 2015
14
#SJVBAROPS2015
Mercantile Law Bar Q&A
#UPLawEvening
an a)te# e,"* t!e#e ' n" need &"# a &ndn, "& &#ad "# ))e,a)t% -e&"#e t!e d"$t#ne "& /e#$n, t!e (e) "& $"#/"#ate &$t"n $an -e a//)ed. T!e RC #at"$nated t!at -en, "ne and t!e 'ame entt% n t!e e%e' "& t!e )a+* t!e 'e#($e "& 'mm"n' /"n D4$ecuri%ies !a' -e't"+ed @#'d$t"n "(e# -"t! t!e /a#ent and +!"))%"+ned '-'da#%. I' t!e RC $"##e$t 5478
that the fact from hich the ci$il miht arise did not e4ist. (People . "aniego, 9.:. >850)10, @ebruar! -;, 1)+;. /ore specificall!, 2ura is liable as an accommodation part!. Bnder Section -) of the 6eotiable Instruments >a, an accommodation part! is one ho has sined the instrument as ma%er, draer, acceptor, or indorser, ithout recei$in $alue therefor, and for the purpose of lendin his name to some other person. Such a person is liable on the instrument to a holder for $alue, notithstandin such holder, at the time of ta%in the instrument, %ne him to be onl! an accommodation part!. 2ura's liabilit! e4isted althouh 2ura issued the chec% after the deli$er! of the car. Bnder Section - of the 6eotiable Instruments >a, an antecedent or pre8e4istin debt constitutes $alue and is deemed such hether the instrument is pa!able on demand or at a future time.
SUGGESTED ANSWER9 #he :#C is not correct. s @ is a separate entit! and as ne$er made a part! to the case, the 7udment souht to be enforced aainst 38Securities cannot be made aainst its parent compan!, @. 2iercin the corporate $eil based on the alter eo theor! reKuires the concurrence of three elementsE (1 control of the corporation b! the stoc%holder or parent corporation, (- fraud or fundamental unfairness imposed on the plaintiff, and (5 harm or damae caused to the plaintiff b! the fraudulent or unfair act of the corporation. #he absence of all these elements in the problem pre$ents the piercin of the corporate $eil. #he absence of an! one of these elements pre$ents piercin the corporate $eil. In appl!in the instrumentalit! or alter eo doctrine, the courts are concerned ith realit! and not form, ith ho the corporation operated and the indi$idual defendant's relationship to that operation. Hence, all three elements should concur for the alter eo doctrine to be applicable. /ere onership b! a sinle stoc%holder or b! another corporation of all or nearl! all of the capital stoc% of a corporation is not of itself sufficient round for disreardin the separate corporate personalit!. 6either is the e4istence of interloc%in directors, corporate officers and shareholders enouh 7ustification to pierce the $eil of corporate fiction in the
XX. In an a$t"n &"# $"))e$t"n "& a 'm "& m"ne%* t!e Re,"na) T#a) C"#t (RC) "& Maat Ct% ''ed a de$'"n &ndn, D4 $ecuri%ies. Inc. )a-)e t" Re*ouse Corpora%ion &"# 10*000*000.00. S-'eent)%* t!e +#t "& ee$t"n +a' ''ed -t #et#ned n'at'&ed -e$a'e D4 $ecuri%ies !ad n" m"#e a''et' t" 'at'&% t!e @d,ment. Re*ouse m"(ed &"# an A)a' W#t "& Ee$t"n a,an't Fair6ield Ban# (FB), t!e /a#ent $"m/an% "& D4$ecuri%ies. FB "//"'ed t!e m"t"n "n t!e ,#"nd' t!at t ' a 'e/a#ate entt% and t!at t +a' ne(e# made a /a#t% t" t!e $a'e. T!e RC ,#anted t!e m"t"n and ''ed t!e A)a' W#t "& Ee$t"n. In t' Re'")t"n* t!e RC #e)ed "n t!e &"))"+n, &a$t'9 4<<*<<6 "t "& t!e 600*000 "t'tandn, '!a#e' "# 't"$' "& D4$ecuri%ies a#e "+ned -% FB= FB !ad a$ta) n"+)ed,e "& t!e '-@e$t matte# "& )t,at"n a' t!e )a+%e#' +!" #e/#e'ented DSe$#te' a#e a)'" t!e )a+%e#' "& FB. A'
BAR OPERATIONS 2015
15
#SJVBAROPS2015
Mercantile Law Bar Q&A
#UPLawEvening
t!'* a Sta% O#de# +a' ''ed -% t!e RC "n O$t"-e# 2* 200:. On t!e "t!e# !and* 0B $a'ed t!e #e$"#dn, "& t!e S!e#&&F' Ce#t&$ate "& Sa)e "n De$em-e# :* 200: +t! t!e Re,'te# "& Deed' "& Ca-anatan Ct%. 0B ee$ted an A&&da(t "& C"n'")dat"n "& O+ne#'!/ and !ad t!e 'ame ann"tated "n t!e tt)e "& DM. C"n'eent)%* t!e Re,'te# "& Deed' $an$e))ed DM's tt)e and ''ed a ne+ tt)e n t!e name "& NB "n De$em-e# 10* 200:. 0B a)'" &)ed "n Ma#$! 1* 2004 an Ea#te ett"n &"# I''an$e "& W#t "& "''e''"n -e&"#e t!e RC "& Ca-anatan Ct%. A&te# !ea#n,* t!e RC ''ed "n Se/tem-e# ;* 2004 an O#de# d#e$tn, t!e I''an$e "& t!e W#t "& "''e''"n* +!$! +a' ''ed "n O$t"-e# 4* 2004. DM $)am' t!at a)) '-'eent a$t"n' /e#tann, t" t!e Ca-anatan /#"/e#t% '!")d !a(e -een !e)d n a-e%an$e a&te# t!e Sta% O#de# +a' ''ed -% t!e #e!a-)tat"n $"#t. I' DM $"##e$t 5478
absence of fraud or other public polic! considerations. #o 7ustif! treatin the sole stoc%holder or holdin compan! as responsible, it is not enouh that the subsidiar! is so oraniAed and controlled as to ma%e it merel! an instrumentalit!, conduit or ad7unct of its stoc%holders. It must further appear that to reconiAe their separate entities ould aid in the consummation of a ron. Control, b! itself, does not mean that the controlled corporation is a mere instrumentalit! or a business conduit of the mother compan!. ?$en control o$er the financial and operational concerns of a subsidiar! compan! does not b! itself call for disreardin its corporate fiction. #here must be a perpetuation of fraud behind the control or at least a fraudulent or illeal purpose behind the control in order to 7ustif! piercin the $eil of corporate fiction. Such fraudulent intent is lac%in in this case. (Pacific &ehouse Corporation . C$, et al., 9.:. 1))*+;, /arch -, -01.
RECOMMENDATION9 #his problem is outside the co$erae .of the -01 /ercantile >a ar ?4amination as the -01 S!llabus for /ercantile >a prepared b! the Supreme Court does not include the Supreme Court :ules of 2rocedure on Corporate :ehabilitation. It is recommended that all e4aminees be i$en full credit hether the! a$e an! anser or not. In an! case, the Suggested $nswer is that 3/2 is not correct. Since the foreclosure of 3/2's mortae and the issuance of the certificate of sale in 6's fa$or ere done prior to the appointment of a :ehabilitation :ecei$er and the Sta!
XXI. DM Corpora%ion (DM) "-taned a )"an "& 20 m))"n &#"m 0a%ional Ban# (0B) 'e$#ed -% a #ea) e'tate m"#t,a,e "(e# a ;:*:K0'a#emete# )and 'tated n Ca-anatan Ct%. De t" t!e A'an E$"n"m$ C#''* DM e/e#en$ed )dt% /#"-)em' d'ena-)n, t &#"m /a%n, t' )"an "n tme. ?"# t!at #ea'"n* 0B '",!t t!e et#a@d$a) &"#e$)"'#e "& t!e 'ad m"#t,a,e -% &)n, a /ett"n &"# 'a)e "n ne :0* 200:. On Se/tem-e# 4* 200:* t!e m"#t,a,ed /#"/e#t% +a' '")d at /-)$ a$t"n* +!$! +a' e(enta))% a+a#ded t" 0B a' t!e !,!e't -dde#. T!at 'ame da%* t!e S!e#&& ee$ted a Ce#t&$ate "& Sa)e n &a("# "& 0B. On O$t"-e# 21* 200:* DM &)ed a ett"n &"# Re!a-)tat"n -e&"#e t!e Re,"na) T#a) C"#t (RC). #'ant t"
BAR OPERATIONS 2015
16
#SJVBAROPS2015
Mercantile Law Bar Q&A
#UPLawEvening
)a-)e t!e#e&"#. I& %" a#e t!e @d,e* !"+ +)) %" de$de t!e $a'e 5478
absolute oner of the propert! and it as ithin its riht to as% for the consolidation of title and the issuance of ne title in its name as a conseKuence of onership thus, it is entitled to the possession and en7o!ment of the propert!. (*0uita/le PCI Ban#, Inc. . %1> &ealt) and %eelopment Corporation, 9.:. 1*+*;-, uust +, -010.
SUGGESTED ANSWER9 I ill decide the case in fa$or of ?>2 Insurance. ?$en if C9/, Inc. is not pri$! to the contract beteen @C> Corp. and ?>2 Insurance, it is still liable for the loss of the sub7ect caro. rticle --0; of the Ci$il Code states that if the plaintiff's propert! has been insured and he has recei$ed indemnit! from the insurance compan! for in7ur! or loss arisin out of the ron or breach of contract complained of, the insurance compan! shall be subroated to the rihts of the insured aainst the ron8doer or the person ho has $iolated the contract, hich in this case is C9/. Since ?>2 Insurance is subroated to the rihts of @C> Corp. to the e4tent of the amount it paid to the latter under the marine insurance contract, it has the riht to see% reimbursement from C9/, Inc. for breach of contract andFor tort (Loadmasters Customs Serices, Inc. . >lodel Bro#erage Corporation and & R B Insurance Corporation, 9.:. 6o. 1;)*, anuar! 10, -011.
XXII. - Insurance, Inc. ''ed Ma#ne ")$% N". KKK n &a("# "& FC Corp. t" n'#e t!e '!/ment "& 1:2 -nd)e' "& e)e$t#$ $"//e# $at!"de' a,an't a)) #''. S-'eent)%* t!e $a#,"e' +e#e '!//ed "n -"a#d t!e (e''e) ;M?8 Menc*u; &#"m Le%te t" e# 10* N"#t! Ha#-"#* Man)a. U/"n a##(a)* FC Corp. en,a,ed t!e 'e#($e' "& C:M, Inc. &"# t!e #e)ea'e and +t!d#a+a) "& t!e $a#,"e' &#"m t!e /e# and t!e '-'eent de)(e#% t" t' +a#e!"'e'/)ant' n a)ene)a Ct%. T!e ,""d' +e#e )"aded "n -"a#d t+e)(e 5128 t#$' "+ned -% C:M, Inc., d#(en -% t' em/)"%ed d#(e#' and a$$"m/aned -% t' em/)"%ed t#$ !e)/e#'. O& t!e t+e)(e 5128 t#$' en rou%e t" a)ene)a Ct%* "n)% e)e(en 5118 #ea$!ed t!e de'tnat"n. One 5)8 t#$* )"aded +t! e)e(en 5118 -nd)e' "& $"//e# $at!"de'* &a)ed t" de)(e# t' $a#,". Be$a'e "& t!' n$dent* FC Corp. &)ed +t! - Insurance, Inc. a $)am &"# n'#an$e ndemnt% n t!e am"nt "& )*600*000.00. A&te# t!e #e'te n(e't,at"n and ad@'tment* - Insurance, Inc. /ad FC Corp. t!e am"nt "& 1*:60*000.00 a' n'#an$e ndemnt%. - Insurance, Inc., t!e#ea&te#* &)ed a $"m/)ant &"# dama,e' a,an't C:M, Inc. -e&"#e t!e Re,"na) T#a) C"#t (RC), 'een, #em-#'ement "& t!e am"nt t !ad /ad t" FC Corp. &"# t!e )"'' "& t!e '-@e$t $a#,". C:M, Inc. dened t!e $)am "n t!e -a'' t!at t ' n"t /#(% t" t!e $"nt#a$t ente#ed nt" -% and -et+een FC Corp. and - Insurance. Inc., and !en$e* t ' n"t
XXIII. W!$! "& t!e &"))"+n, n't#ment' ' ne,"ta-)e & a)) t!e "t!e# #e#ement' "& ne,"ta-)t% a#e met 5178 5A8 A /#"m''"#% n"te +t! /#"m'e t" /a% "t "& t!e U.S. D"))a# a$$"nt "& t!e mae# n X Ban 5B8 A /#"m''"#% n"te +!$! de',nate' t!e U.S. D"))a# $##en$% n +!$! /a%ment ' t" -e made 5C8 A /#"m''"#% n"te +!$! $"ntan' n addt"n a /#"m'e t" /ant t!e /"#t#at "& t!e -ea#e# 5D8 A /#"m''"#% n"te made /a%a-)e t" t!e "#de# "& "'e C# "# "'e&a C#
BAR OPERATIONS 2015
17
#SJVBAROPS2015
Mercantile Law Bar Q&A
#UPLawEvening
(c
#he amount and substantialit! of the portion used in relation to the cop!rihted or% as a hole and (d #he effect of the use upon the potential mar%et for or $alue of the cop!rihted or%.
SUGGESTED ANSWER9 (a promissor! note hich desinates the B.S. 3ollar currenc! in hich pa!ment is to he made or 3 (a promissor! note made pa!able to the order of ose CruA or osefa CruA. XXIX. && ' &#"m Ban,"* T!a)and. S!e 'tde' med$ne n t!e "nt&$a) Un(e#'t% "& Sant" T"ma' (!$). S!e )ea#ned t!at t!e 'ame &"#e,n -""' /#e'$#-ed n !$ a#e 40607 $!ea/e# n Ban,". S" '!e "#de#ed 60 $"/e' "& ea$! -"" &"# !e#'e)& and !e# $)a''mate' and '")d t!e -""' at 207 )e'' t!an t!e /#$e n t!e !)//ne'. @@, t!e e$)'(e )$en'ed /-)'!e# "& t!e -""' n t!e !)//ne'* 'ed && &"# $"/%#,!t n&#n,ement. De$de. 5478
ppl!in the abo$e8listed factors to the problem, DD's importation of the boo%s and their sale locall! clearl! sho the unfairness of her use of the boo%s, particularl! the ad$erse effect of her price discountin on the business of .
SUGGESTED ANSWER9 DD is liable for infrinement of cop!riht. , as e4clusi$e licensed publisher, is entitled, ithin the scope of the license, to all the rihts and remedies that the licensor has ith respect to the cop!riht (Sec. 1+0, Intellectual 2ropert! Code, as amended b! :epublic ct 6o. 105;-. #he importation b! DD of 0 copies of each forein boo% prescribed in BS# and sellin them locall! at -0T less than their respecti$e prices in the 2hilippines is sub7ect to the doctrine of fair use set out in Section 1+.1 of the Intellectual 2ropert! Code. #he factors to be considered in determinin hether the use made of a or% is fair use shall includeE (a #he purpose and character of the use, includin hether such use is of a commercial nature or is for non8profit educational purposes (b #he nature of the cop!rihted or%
BAR OPERATIONS 2015
18
