MERCANTILELAW

GOLDENNOTES2011
UNIVERSITYOFSANTOTOMAS
FACULTYOFCIVILLAW
MANILA

AcademicYear20112012
CIVILLAWSTUDENTCOUNCIL

LesterJohnA.Lomeda
WilfredoT.Bonilla,Jr.
RaissaS.Saipudin
BernadetteFaustineC.Balao
MarcMikhaeleJ.Santos
VictorLorenzoL.Villanuea

President
VicePresident
Secretary
Treasurer
Auditor
PublicRelationsOfficer

TEAM:BAROPS2011

DianeCamillaR.Borja
CarloArtemusV.Diaz
MaryGraceL.Javier
RonnRobbyD.Rosales
MarkArthurM.Catabona
AngeliP.Albaa
VicenteO.PlatonIII
KimverlyA.Ong

Chairperson
ViceChairperson
Secretary
LogisticsCommitteeHead
Asst.LogisticsCommitteeHead
FinanceCommitteeHead
HotelAccommodationsHead
Asst.HotelAccommodationsHead

The UST GOLDEN NOTES is a student-edited work of the University

of Santo Tomas, Faculty of Civil Law. It is updated annually.
Communications regarding the NOTES should be addressed to the
Academics Committee of the Team: Bar-Ops.
ADDRESS:

TEL. NO.:

Team Bar-Ops
Academics Committee
Faculty of Civil Law
University of Santo Tomas
Espaa, Manila 1008
(02) 731-4027
(02) 4061611 loc. 8578

2011ACADEMICSCOMMITTEE

LesterJayAlanE.FloresII
KarenJoyG.Sabugo
JohnHenryC.Mendoza
JeanelleC.Lee
TheenaC.Martinez
EarlLouieM.Masacayan

Chairperson
ViceChairforAcademics
ViceChairforAcademics
ViceChairforAdministrationandFinance
ViceChairforLayoutandDesign
ViceChairforLayoutandDesign

MERCANTILELAWCOMMITTEE

EarlLouieM.Masacayan

KimverlyA.Ong

JoannaMayD.G.Peada
Ma.ElisaJonalynA.Barquez

AngeliR.Carpio

AntonetteT.Comia
AlbanRobertLorenzoF.DeAlban

JoebenT.DeJesus

ChrisJarkAceM.Mao

AnnaMarieP.Obieta

RubyAnneB.Pascua
FlorAngelaT.Sabaupan
GianFrancesNicoleC.Vilches

MercantileLawCommitteeHead
Asst.MercantileLawCommitteeHead
Asst.MercantileLawCommitteeHead
Member
Member
Member
Member
Member
Member
Member
Member
Member
Member

ADVISER

Atty.AmadoE.Tayag

FACULTYOFCIVILLAW
UNIVERSITYOFSANTOTOMAS
AcademicYear20112012

ACADEMICOFFICIALS

Atty.NILOT.DIVINA
Dean

Rev.Fr.ISIDROC.ABAO,O.P.
Regent

Atty.MARIANJOANNEK.COPUA
FacultySecretary

Atty.ELGINMICHAELC.PEREZ
LegalCounsel
USTChiefJusticeRobertoConcepcionLegalAidClinic

JudgePHILIPA.AGUINALDO
SWDBCoordinator

LENYG.GADIANA,RGC
GuidanceCounselor


Ourdeepestappreciationtoour
Mentors&Inspiration

DeanNiloT.Divina
DeanAmadoL.Dimayuga
JudgeNoliC.Diaz
Atty.IrvinJosephM.Fabella
Atty.JacintoD.Jimenez
Atty.AlbertR.Palacios
Atty.GabrielT.Robeniol
Atty.RodolfoP.Soriano
Atty.AmadoT.Tayag

For activating our magnets of curiosity, knowledge and

wisdom and helping us understand the intricate
sphere of Mercantile Law.

AcademicsCommittee2011

DISCLAIMER

Theriskofuse,nonuseandmisuseof
thismaterialshallbebornesolely
bytheuser.

TABLE OF CONTENTS
SYLLABUS FOR 2011 BAR EXAMINATIONS
MERCANTILE LAW
November 13, 2011
(Second Sunday, Afternoon)

A.LettersofCredit...1
I.Definition/Concept. 1
II.Governinglaws.. 1
III.Natureofletterofcredit. 1
IV.Partiestoaletterofcredit... 2
A.Rightsandobligationsofparties.. 2
V.BasicPrinciplesofletterofcredit.... 4
A.Doctrineofindependence.... 4
B.Fraudexceptionprinciple.. 4
C.Doctrineofstrictcompliance... 4

B.WarehouseReceiptsLaw...5
I.NatureandFunctionsofaWarehouseReceipt... 5
A.Towhomdelivered 6
B.Kinds. 6
c.DistinctionbetweenaNegotiableInstrumentandaNegotiableWarehouseReceipt.... 7
D.Rightsofaholderofanegotiablewarehousereceiptasagainstatransfereeofanon
negotiablewarehousereceipt........ 7
II.DutiesofaWarehouseman... 8
III.WarehousemansLien 10

C.TrustReceiptsLaw12
I.Definition/ConceptofaTrustReceiptTransaction 12
A.Loan/securityfeature. 12
B.Ownershipofthegoods,documentsandinstrumentsunderatrustreceipt 12
II.RightsoftheEntruster.. 12
A.Validityofthesecurityinterestasagainstthecreditorsoftheentrustee/innocentpurchasers
forvalue. 13
III.ObligationsandLiabilityoftheEntrustee 13
A.Payment/Deliveryofproceedsofsaleordispositionofgoods,documentsorinstruments 13
B.Returnofgoods,documentsorinstrumentsincaseofsale 13
C.Liabilityforlossofgoods,documentsorinstruments. 14
D.Penalsanctionifoffenderisacorporation 14
IV.Remediesavailable. 14

D.NegotiableInstrumentsLaw 16
I.FormsandInterpretation 16
A.RequisitesofNegotiability. 16
B.Kindsofnegotiableinstrument.. 16
II.Completionanddelivery.. 16
A.Insertionofdate. 16
B.Completionofblanks. 17
C.Incompletebutdeliveredinstruments.... 17
D.Incompleteandundeliveredinstruments 18
E.Completebutundeliveredinstruments 18
F.CompleteandDeliveredinstruments.........................................................................................19
III.Rulesofinterpretation.. 19
IV.Signature 19
A.Signingintradename 20
B.Signatureofagent 20
C.Indorsementbyminororcorporation 20
D.Forgery 20
V.Consideration 23
VI.Accomodationparty 24
VII.Negotiation25

TABLE OF CONTENTS
A.Distinguishedfromassignment. 25
B.Modesofnegotiation 26
VIII.RightsoftheHolder 28
A.HolderinDueCourse. 28
B.DefensesagainsttheHolder. 30
IX.LiabilitiesofParties..31
A.Maker... 31
B.Drawer.. 32
C.Acceptor.. 32
D.Indorser 32
E.Warranties. 34
X.PresentmentforPayment.. 34
A.Necessityofpresentmentforpayment 34
B.Partiestowhompresentmentforpaymentshouldbemade 35
C.Dispensationwithpresentmentforpayment 36
D.Dishonorbynonpayment. 36
XI.NoticeofDishonor 36
A.Partiestobenotified. 36
B.Partieswhomaygivenoticeofdishonour. 37
C.Effectofnotice 37
D.Formofnotice 37
E.Waiver. 37
F.Dispensationwithnotice 38
G.Effectoffailuretogivenotice 38
XII.DischargeofNegotiableInstrument 39
A.Dischargeofnegotiableinstrument 39
B.Dischargeofpartiessecondarilyliable 39
C.Rightofpartywhodischargedinstrument 40
D.Renunciationbyholder 40
XIII.Materialalteration 40
A.Concept 40
B.Effectofmaterialalteration. 41
XIV.Acceptance 41
A.Definition 41
B.Manner 41
C.Timeforacceptance 42
D.Rulesgoverningacceptance. 42
XV.PresentmentforAcceptance 42
A.Time/place/mannerofpresentment 43
B.Effectoffailuretomakepresentment 43
C.Dishonorbynonacceptance 43
XVI.PromissoryNotes44
XVII.Checks44
A.Definition 44
B.Kinds 44
C.Presentmentforpayment 45
(1)time.. 45
(2)effectofdelay 45

E.InsuranceCode46
I.ConceptofInsurance 46
II.ElementsofanInsuranceContract 46
III.Characteristics/NatureofInsuranceContracts 46
IV.Classes47
A.Marine.. 47
B.Fire 57
C.Casualty 58
D.Suretyship.. 60
E.Life 61
f.CompulsoryMotorVehicleLiabilityInsurance62
V.InsurableInterest.. 64
A.InLife/Health 65

TABLE OF CONTENTS
B.InProperty 66
C.DoubleInsuranceandOverInsurance... 67
D.MultipleorSeveralInterestsonSameProperty...... 69
VI.PerfectionoftheContractofInsurance..... 69
A.OfferandAcceptance/ Consensuality.69
(1)Delayinacceptance.... 70
(2)DeliveryofPolicy...... 70
B.PremiumPayment..... 70
C.NonDefaultOptionsinLifeInsurance..... 72
D.ReinstatementofaLapsedPolicyofLifeInsurance.... 73
E.RefundofPremiums.. 74
VI.RescissionofInsuranceContracts....74
A.Concealment... 74
B.Misrepresentation/Omissions.. 76
C.BreachofWarranties......................................................................... 78
VIII.ClaimsSettlementandSubrogation... 80
A.NoticeandProofofLoss. 80
B.GuidelinesonClaimsSettlement.. 81
(1)UnfairClaimsSettlement;Sanctions 81
(2)PrescriptionofAction.... 82
(3)Subrogation.. 82

F.TransportationLaw..84
I.CommonCarriers 84
A.DiligenceRequiredofCommonCarriers84
B.LiabilitiesofCommonCarriers 84
II.Vigilanceovergoods.. 85
A.ExemptingCauses 85
(1)RequirementofAbsenceofNegligence 87
(2)AbsenceofDelay 87
(3)Duediligencetopreventorlessentheloss 87
B.Contributorynegligence.. 87
C.Durationofliability87
(1)Deliveryofgoodstocommoncarrier 87
(2)Actualorconstructivedelivery. 88
(3)Temporaryunloadingorstorage. 88
D.Stipulationforlimitationofliability. 88
(1)Voidstipulations. 89
(2)Limitationofliabilitytofixedamount. 89
(3)Limitationofliabilityinabsenceofdeclarationofgreatervalue.. 89
E.Liabilityforbaggageofpassengers. 89
(1)Checkedinbaggage. 89
(2)Baggageinpossessionofpassengers 89
III.SafetyofPassengers 90
A.Voidstipulations 90
B.Durationofliability 90
(1)WaitingforcarrierorBoardingofcarrier 90
(2)Arrivalatdestination 90
C.Liabilityforactsofothers 91
(1)Employees 91
(2)Otherpassengersandstrangers.. 91
D.Extentofliabilityfordamages 92
IV.BillofLading 93
A.Threefoldcharacter 93
B.Deliveryofgoods..................................................................................................................... 93
(1)Periodfordelivery 93
(2)Deliverywithoutsurrenderofbilloflading 94
(3)Refusalofconsigneetotakedelivery 94
C.Periodforfilingclaims 94
D.Periodforfilingactions 94
V.MaritimeCommerce. 95
A.CharterParties.. 95

TABLE OF CONTENTS
(1)Bareboat/DemiseCharter 95
(1)TimeCharter..................... 95
(3)Voyage/TripCharter. 95
B.LiabilityofShipownersandShippingAgents 96
(1)Liabilityforactsofcaptain.. 96
(2)Exceptionstolimitedliability... 98
C.AccidentsandDamagesinMaritimeCommerce 99
(1)GeneralAverage. 99
(2)Collisions.. 100
D.CarriageofGoodsbySeaAct 102
(1)Application. 102
(2)NoticeofLossorDamage 102
(3)PeriodofPrescription 102
(4)Limitationofliability 103
VI.PublicServiceAct 103
A.DefinitionofPublicUtility 103
B.Necessityforcertificateofpublicconvenience 104
(1)Requisites. 104
(a)Citizenship 104
(b)Promotionofpublicinterests 104
(c)Financialcapability 104
(2)Prioroperatorrule 105
(a)Meaning 105
(b)Exceptions 105
(c)Ruinouscompetition 105
C.Fixingofrate 105
(1)Rateofreturn 105
(2)Exclusionofincometaxasexpense 106
D.Unlawfularrangements 106
(1)Boundarysystem 106
(2)Kabitsystem. 106
E.Approvalofsale,encumbranceorleaseofproperty 107
VII.TheWarsawConvention 107
A.Applicability107
B.Limitationofliability 107
(1)Liabilitytopassengers. 107
(2)Liabilityforcheckedbaggage 107
(3)Liabilityforhandcarriedbaggage108
C.WillfulMisconduct 108

G.CorporationLaw 109
I.TheCorporationCode 109
A.Corporation,defined 110
B.Classificationofcorporations.. 110
C.Nationalityofcorporations 112
(1)Controltest 112
(2)Grandfatherrule. 112
D.Corporatejuridicalpersonality 112
(1)Doctrineofseparatejuridicalpersonality 112
(a)Liabilityfortortandcrimes 113
(b)Recoveryofdamages..113
(2)Doctrineofpiercingthecorporateveil 113
(a)Groundsforapplicationofdoctrine 114
(b)Testindeterminingapplicability 114
E.Capitalstructure 114
(1)Numberandqualificationsofincorporators 115
(2)Minimumcapitalstockandsubscriptionrequirements.. 115
(3)Corporateterm 115
(4)Classificationofshares 116
F.Incorporationandorganization.. 119
(1)Promoter. 119
(a)Liabilityofpromoter 119

TABLE OF CONTENTS
(b)Liabilityofcorporationforpromoterscontracts. 119
(2)Subscriptioncontract.. 119
(3)Preincorporationsubscriptionagreements.. 119
(4)Considerationforstocks 120
(5)ArticlesofIncorporation 120
(a)Contents 121
(b)Nonamendableitems 121
(6)Corporatenamelimitationsonuseofcorporatename..122
(7)RegistrationandissuanceofCertificateofIncorporation. 123
(8)Electionofdirectorsortrustees.. 123
(9)AdoptionofByLaws... 124
(a)Requisitesofvalidbylaws 124
(b)Bindingeffects124
(c)Amendments. 125
G.Corporatepowers 126
(1)Generalpowers,theoryofgeneralcapacity 126
(2)Specificpowers,theoryofspecificcapacity 127
(a)Powertoextendorshortencorporateterm 127
(b)Powertoincreaseordecreasecapitalstockorincur,create,increase
bondedindebtedness 127
(c)Powertodenypreemptiverights 129
(d)Powertosellordisposeofcorporateassets130
(e)Powertoacquireownshares 130
(f)Powertoinvestcorporatefundsinanothercorporationorbusiness 131
(g)Powertodeclaredividends 131
(h)Powertoenterintomanagementcontract 133
(i)Ultraviresacts 133
i.Applicabilityofultraviresdoctrine.. 133
ii.Consequencesofultraviresacts.. 134
(j)Doctrineofindividualityofsubscription 134
(k)Doctrineofequalityofshares. 134
(l)Trustfunddoctrine.. 134
(3)Howexercised.. 134
(a)Bytheshareholders. 134
(b)BytheBoardofDirectors..135
(c)BytheOfficers.. 135
H.Stockholdersandmembers.. 135
(1)Fundamentalrightsofastockholder 135
(2)Participationinmanagement 135
(a)Proxy 135
(b)Votingtrust. 136
(c)Caseswhenstockholdersactionisrequired. 138
i.Byamajorityvote 138
ii.Byatwothirdsvote 138
iii.Bycumulativevoting... 138
(3)Proprietaryrights 138
(a)Righttodividends.. 138
(b)Rightofappraisal..... 138
(c)Righttoinspect..139
(d)Preemptiveright.... 139
(e)Righttovote.. 139
(4)Remedialrights.. 139
(a)Individualsuit 140
(b)Representativesuit.. 140
(c)Derivativesuit 130
(5)Obligationofastockholder 140
(6)Meetings 141
(a)Regularorspecial. 141
i.Whenandwhere 141
ii.Notice 141
(b)Whocallsthemeetings 141
(c)Quorum 141

TABLE OF CONTENTS
(d)Minutesofmeetings... 141
I.Boardofdirectorsandtrustees 142
(1)Repositoryofcorporatepowers 142
(2)Tenure,qualificationsanddisqualificationsofdirectors 143
(3)Elections 143
(a)Cumulativevoting 143
(b)Quorum 143
(4)Removal 144
(5)Fillingofvacancies 144
(6)Compensation 144
(7)Disloyalty 145
(8)Businessjudgmentrule 145
(9)Solidaryliabilitiesfordamages 145
(10)Liabilityforwateredstocks 146
(11)Personalliabilities 146
(12)Responsibilityforcrimes 146
(13)Specialfactdoctrine. 146
(14)Insideinformation. 147
(15)Contracts.. 147
(a)Byselfdealingdirectorswiththecorporation. 147
(b)Betweencorporationswithinterlockingdirectors............................... 147
(16)Executivecommittee... 147
(a)Creation 147
(b)Limitationsonitspowers 148
(17)Meetings.. 148
(a)Regularorspecial.. 148
i.Whenandwhere... 148
ii.Notice 148
(b)Whopresides 148
(c)Quorum. 148
(d)Ruleonabstention 149
J.Capitalaffairs 149
(1)Certificateofstock 149
(A)Natureofthecertificate 149
(B)Uncertificatedshares 149
(c)Negotiability.. 150
i.Requirementsforvalidtransferofstocks. 150
(D)Issuance.. 151
i.Fullpayment 151
ii.Paymentprorata 151
(E)Stockandtransferbook 151
i.Contents 151
ii.Whomaymakevalidentries 152
(F)Lostordestroyedcertificates 152
(G)Situsofthesharesofstock 153
(2)Wateredstocks 153
(A)Definition 153
(B)Liabilityofdirectorsforwateredstocks 154
(C)Trustfunddoctrineforliabilityforwateredstocks 154
(3)Paymentofbalanceofsubscription.. 154
(A)Callbyboardofdirectors. 154
(B)Noticerequirement..155
(4)Saleofdelinquentshares 155
(A)Effectofdelinquency156
(B)Callbyresolutionoftheboardofdirectors 156
(C)Noticeofsale.. 156
(D)Auctionsale 156
(5)Alienationofshares.. 157
(A)Allowablerestrictionsonthesaleofshares 157
(B)Saleofpartiallypaidshares 157
(C)Saleofaportionofsharesnotfullypaid.158
(D)Saleofallofsharesnotfullypaid.158

TABLE OF CONTENTS
(E)Saleoffullypaidshares. 158
(F)Requisitesofavalidtransfer.. 158
(G)Involuntarydealings 158
K.Dissolutionandliquidation..158
(1)Modesofdissolution 158
(A)Voluntary 158
i.Wherenocreditorsareaffected. 158
ii.Wherecreditorsareaffected 159
iii.Byshorteningofcorporateterm. 159
(B)Involuntary. 159
i.Byexpirationofcorporateterm 159
ii.Failuretoorganizeandcommencebusinesswithin2years
fromincorporation 159
iii.Legislativedissolution 159
iv.DissolutionbytheSECongroundsunderexistinglaws159
(2)Methodsofliquidation.. 160
(a)Bythecorporationitself.. 160
(b)Conveyancetoatrusteewithina3yearperiod.. 160
(c)Bymanagementcommitteeorrehabilitationreceiver 161
(d)Liquidationafterthreeyears 161
l.Othercorporations 161
(1)Closecorporations 161
(A)Characteristicsofaclosecorporation 162
(B)Validityofrestrictionsontransferofshares 162
(C)Issuanceortransferofstockinbreachofqualifyingconditions.. 162
(D)Whenboardmeetingisunnecessaryorimproperlyheld..162
(E)Preemptiveright 163
(F)Amendmentofarticlesofincorporation 163
(G)Deadlocks 163
(2)Nonstockcorporations. 163
(A)Definition 163
(B)Purposes 163
(C)Treatmentofprofits 164
(D)Distributionofassetsupondissolution. 164
(3)Religiouscorporations 164
(A)Corporationsole 164
i.Nationality 164
ii.Religioussocieties 165
(4)Foreigncorporations 166
(A)Basesofauthorityoverforeigncorporations 166
i.Consent 166
ii.Doctrineof"doingbusiness"(relatetodefinitionunderthe
ForeignInvestmentsAct,RA7042) 166
(B)Necessityofalicensetodobusiness 168
i.Requisitesforissuanceofalicense.. 168
ii.Residentagent.. 169
(C)Personalitytosue. 169
(D)Suabilityofforeigncorporations 169
(E)Instanceswhenunlicensedforeigncorporationsmaybeallowedtosue
Isolatedtransactions 170
(F)Groundsforrevocationoflicense170
M.Mergerandconsolidation..170
(1)Definitionandconcept 170
(2)Constituentv.consolidatedcorporation 170
(3)Planofmergerorconsolidation.. 171
(4)Articlesofmergerorconsolidation.. 171
(5)Procedure. 171
(6)Effectivity. 172
(7)Limitations.. 172
(8)Effects.... 172

H.SecuritiesRegulationCode(RA8799)173

TABLE OF CONTENTS
I.Statepolicy(purpose).. 173
II.PowersandfunctionsoftheSEC. 173
A.Regulatory 173
B.Adjudicative. 173
III.Securitiesrequiredtoberegistered. 174
A.Exemptsecurities 174
B.Exempttransactions. 175
IV.Procedureforregistrationofsecurities 175
V.Prohibitionsonfraud,manipulationandinsidertrading178
A.Manipulationofsecurityprices.. 178
B.Shortsales.. 178
C.Fraudulenttransactions 178
D.Insidertrading 178
VI.Protectionofinvestors.. 179
A.Tenderofferrule 179
B.Rulesonproxysolicitation. 180
C.Disclosurerule. 181
VII.Civilliability. 181

I.BankingLaws.184
I.TheNewCentralBankAct(RA7653). 184
A.Statepolicies. 184
B.CreationoftheBangkoSentralngPilipinas(BSP).. 184
C.Responsibilityandprimaryobjective.. 184
D.MonetaryBoardPowersandfunctions 185
E.HowtheBSPhandlesbanksindistress 185
(1)Conservatorship 185
(2)Closure 186
(3)Receivership 186
(4)Liquidation.. 187
F.HowtheBSPhandlesexchangecrisis.. 188
(1)Legaltenderpower 188
(2)Rateofexchange. 188
II.LawonSecrecyofBankDeposits(RA1405,asamended) 189
A.Purpose 189
B.Prohibitedacts 189
C.Depositscovered.. 189
D.Exceptions. 190
E.Garnishmentofdeposits,includingforeigndeposits.. 191
F.Penaltiesforviolation 191
III.GeneralBankingAct(RA8791). 192
A.Definitionandclassificationofbanks 192
B.Distinctionofbanksfromquasibanksandtrustentities. 192
C.Bankpowersandliabilities 193
(1)Corporatepowers. 193
(2)Bankingandincidentalpowers. 194
D.Diligencerequiredofbanksrelevantjurisprudence. 194
E.Natureofbankfundsandbankdeposits.. 195
F.Stipulationoninterests. 196
G.Grantofloansandsecurityrequirements.. 197
(1)Ratioofnetworthtototalriskassets197
(2)Singleborrowerslimit 197
(3)RestrictionsonbankexposuretoDOSRI(directors,officers,stockholdersand
theirrelatedinterests) 198
H.Penaltiesforviolations 198
(1)Fine,imprisonment 198
(2)Suspensionorremovalofdirectororofficer199
(3)Dissolutionofbank 199
IV.PhilippineDepositInsuranceCorporationAct 199
A.Basicpolicy 199
B.Conceptofinsureddeposits 199
C.Liabilitytodepositors. 199

TABLE OF CONTENTS
(1)DepositliabilitiesrequiredtobeinsuredwithPDIC..... 199
(2)Commencementofliability. 200
(3)Depositaccountsnotentitledtopayment 200
(4)Extentofliability. 200
(5)Determinationofinsureddeposits. 200
(6)Calculationofliability. 201
(a)Perdepositor,percapacityrule.... 200
(b)Jointaccounts.. 201
(c)Modeofpayment.. 201
(d)Effectofpaymentofinsureddeposit 201
(e)PaymentsofinsureddepositsaspreferredcreditunderArt.2244,
CivilCode201
(f)Failuretosettleclaimofinsureddepositor202
(g)Failureofdepositortoclaiminsureddeposits202
i.Examinationofbanksanddepositaccounts.. 202
ii.Prohibitionagainstsplittingofdeposits 203
iii.ProhibitionagainstissuancesofTROs,etc. 203

J.IntellectualPropertyLaw(excludingImplementingRulesandRegulations)204
I.IntellectualPropertyRightsingeneral 204
A.Intellectualpropertyrights 204
b.Differencesbetweencopyrights,trademarksandpatent 204
C.Technologytransferarrangements.. 204
II.Patents.. 204
A.Patentableinventions.. 205
B.Nonpatentableinventions 206
C.Ownershipofapatent 207
(1)Righttoapatent 207
(2)Firsttofilerule 207
(3)InventionscreatedpursuanttoaCommission208
(4)Rightofpriority 208
D.Groundsforcancellationofapatent 209
E.Remedyofthetrueandactualinventor.. 209
F.Rightsconferredbyapatent 210
G.Limitationsofpatentrights 210
(1)Prioruser.. 210
(2)Usebythegovernment.. 210
H.Patentinfringement.. 211
(1)Testsinpatentinfringement. 211
(a)Literalinfringement.. 211
(b)Doctrineofequivalents. 211
(2)Civilandcriminalaction. 212
(3)Prescriptiveperiod. 212
(4)Defensesinactionforinfringement. 213
I.Licensing 213
(1)Voluntary 213
(2)Compulsory... 213
J.Assignmentandtransmissionofrights.. 214
III.Trademarks.. 215
A.Definitionsofmarks,collectivemarks,tradenames 215
B.Acquisitionofownershipofmark. 216
C.Acquisitionofownershipoftradename 216
D.Nonregistrablemarks 217
E.Prioruseofmarkasarequirement 217
F.Teststodetermineconfusingsimilaritybetweenmarks.... 218
(1)Dominancytest 218
(2)Holistictest 218
G.Wellknownmarks 219
H.Rightsconferredbyregistration 219
I.Usebythirdpartiesofnames,etc.similartoregisteredmark....... 219
J.Infringementandremedies 219
(1)Trademarkinfringement. 219

TABLE OF CONTENTS
(2)Damages. 220
(3)RequirementofNotice.. 220
K.Unfaircompetition.. 221
L.Tradenamesorbusinessnames 222
M.Collectivemarks. 222
N.Criminalpenaltiesforinfringement,unfaircompetition,falsedesignationoforigin,and
falsedescriptionormisrepresentation 223
IV.Copyrights. 223
A.Basicprinciples,Secs.172.2,175,and181 224
B.Copyrightableworks 224
(1)Originalworks. 224
(2)Derivativeworks. 224
C.Noncopyrightableworks... 225

D.Rightsofcopyrightowner. 226
E.Rulesonownershipofcopyright.. 229
F.Limitationsoncopyright. 231
(1)Doctrineoffairuse 233
(2)Copyrightinfringement.. 234
(a)Remedies.. 235
(b)Criminalpenalties 235

K.SpecialLaws.236
I.TheChattelMortgageLaw(Act1508inrel.toArts.1484,1485,2140and2141oftheCivilCode) 236
A.Essentialrequisites236
B.Formalrequisites.. 236
C.Registration,whenandwhere. 236
D.Afteracquiredproperty.. 236
E.Afterincurredobligation. 236
F.Rightofjuniormortgagee 237
G.Foreclosureprocedure 237
H.Redemption. 237
I.Claimfordeficiency 237
(1)Generalrule 237
(2)Exception.. 237
(3)Article1484. 237
II.RealEstateMortgageLaw(Act3135,asamendedbyRA4118).. 238
A.Coverage. 238
B.Remediesavailabletomortgageeupondefaultofthemortgagor.238
C.Needforspecialpowerofattorney. 238
D.Authoritytoforecloseextrajudicially. 238
E.Procedure.. 239
(1)Wheretofile. 239
(2)Wheretosell.... 239
(3)Postingrequirement... 239
(4)Publicationrequirement.. 239
(a)Sufficiencyofnewspaperpublication.. 239
(b)Needforrepublicationincaseofpostponement.240
(c)Personalnoticetothemortgagorwhenandwhennotneeded.240
F.Possessionbypurchaserofforeclosedproperty. 240
G.Remedyofdebtorifforeclosureisnotproper. 240
H.Redemption.. 240
(1)Whomayredeem 240
(2)AmountofRedemptionprice.240
(3)Periodforredemption. 240
(4)Effectofpendencyofactionforannulmentofsale 241
I.Writofpossession. 241
(1)Ministerialdutyofthecourt 241
(2)Enforcementagainstthirdparties 241
(3)Pendencyofactionforannulmentofsale 241
J.Annulmentofsale. 241
III.TruthinLendingAct(RA3765) 242
A.Purpose. 242

TABLE OF CONTENTS
B.Obligationofcreditorstopersontowhomcreditisextended. 242
C.Coveredandexcludedtransactions. 242
D.Consequencesofnoncompliancewithobligation.. 242
IV.AntiMoneyLaunderingLaw(RA9160,asamendedbyRA9194).243
A.Policyofthelaw. 243
B.Coveredinstitutions 243
C.Obligationsofcoveredinstitutions.. 243
D.Coveredtransactions. 243
E.Suspicioustransactions. 243
F.Whenismoneylaunderingcommitted.. 244
G.Unlawfulactivitiesorpredicatecrimes 244
H.AntiMoneyLaunderingCouncil(AMLC).. 244
I.Functions245
J.Freezingofmonetaryinstrumentorproperty 245
K.Authoritytoinquireintobankdeposits. 245
V.ForeignInvestmentsAct(RA7042).. 246
A.Policyofthelaw. 246
B.Definitionofterms.. 246
(1)Foreigninvestment.. 246
(2)"Doingbusiness"inthePhilippines 246
(3)Exportenterprise 247
(4)Domesticmarketenterprise 247
C.RegistrationofInvestmentofNonPhilippineNationals......................................................... 248
D.Foreigninvestmentsinexportenterprises. 248
E.Foreigninvestmentsindomesticmarketenterprises. 248
F.ForeignInvestmentNegativeList.. 248

Appendices. 250
AppendixA:NegotiableWarehouseReceiptandNonNegotiableWarehouseReceipt. 250
AppendixB:Liabilitiesofthosesecondarilyliable........................................................................................ 251
AppendixC:MarineandLifeInsurance.........................................................................................................252
AppendixD:CorporationandPartnership.................................................................................................... 253
AppendixE:VoteRequirementforCorporateActs...................................................................................... 254
AppendixF:Conservatorship,ReceivershipandLiquidation........................................................................ 255
AppendixG:UniversalBank,CommercialBankandThriftBank...................................................................256
AppendixH:NationalizedandSeminationalizedBusinesses.......................................................................257

Index............. 258

Bibliography......... 262