Commercial Law Review - Study Guide 1

Commercial Law Review - Study Guide (1)
John Arnold L. Marbella

Law 4C
A. Law on Transportation
1. According to Article 1732 of the New Civil Code provides that common carriers are persons,
corporations, firms or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, sea and air, for compensation, offering their services to
the public.
3. Article 1744 of the NCC provides that a stipulation between the common carrier and the
shipper/owner limiting the liability of the former for the loss, destruction or deterioration of the
goods to a degree lower than extraordinary diligence shall be valid provided it follows the
requirements set forth.
8. According to Article 1759 of the NCC, common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the former’s employees. Common carriers are
also responsible for injuries suffered by a passenger on account of the willful acts or negligence of
the other passengers, if the common carrier’s employees through the exercise of the diligence of a
good father of a family could have prevented or stopped the act or omission. (Article 1763)
14. Article 366 of the Code of Commerce provides the prescriptive period for filing a claim in court. If
the damage is apparent, the claim should be filed immediately. If the damage is not apparent, the
claim should be filed within 24 hours from delivery.
17. The Doctrine of Limited Liability means that the liability of the shipowner is limited to the value
of the vessel, earned freightage and proceeds of the insurance, if any. The term “No vessel, no
liability expresses in a nutshell the limited liability rule. The general rule is that if the ship is totally
lost, the liability is extinguished. If the ship or part thereof still exists, the shipowner can escape
liability by abandoning the vessel, its appurtenances and its freight.
25. The Carriage of Goods by Sea Act is applied in international shipping.

26. Under the COGSA, it is provided that if the damage is apparent, the claim should be filed
immediately but if the damage is not apparent, the claim should be filed within 3 days from delivery.
In filing a court case, the prescriptive period is one year. The period starts after the delivery of the
goods or the date the goods should have been delivered. It does not apply to conversions or
misdeliveries.
28. Certificate of Public Convenience is distinct from Certificate of Public Convenience and Necessity.
The former is any authorization to operate public service issued by the Public Service Commission
for which no franchise, either municipal or legislative, is required by law. The latter requires a
franchise issued by the legislative department.
32. Under this system the driver is engaged to drive the owner/operator’s unit and pays the latter a
fee commonly called boundary for the use of the unit. Whatever he earned in excess of that amount
is his income. The features which characterize, the "boundary system" – namely, the fact that the
driver does not receive a fixed wage but gets only the excess of the amount of fares collected by him
over the amount he pays to the jeep- owner, and that the gasoline consumed by the jeep is for the
account of the driver – are not sufficient to withdraw, the relationship between them from that of
the employer and employee.
34. The Warsaw Convention is applicable to international transportation by air.
B. Banking Law
3. Sec. 3 of R.A. 7653 (New Central Bank Act) states the objectives and functions of the BSP. The
primary objective of the BSP is to maintain price stability conducive to a balance and sustainable
growth of the economy; and also to promote and maintain monetary stability and the convertibility
of the peso. The BSP’s functions are the following: (1) to provide policy directions in the areas of
money, banking and credit; (2) to supervise over the operations of banks and (3) regulate the
operations of finance companies, non-bank financial institutions performing quasi-banking functions
and institutions performing similar functions.
6. Banks are entities engaged in the lending of funds obtained in the form of deposits from the
public.
18. The BSP extends financial assistance to banking institution in the form of fully secured liquidity
(emergency) loans as a temporary remedial measure to help solvent banks overcome their liquidity
problems arising from causes beyond their control.
30. Sec. 4 of the Truth in Lending Act provides for the needed details that the lender is required to
disclose to the borrower, to wit: (1) the cash price or delivered price of the property or service to be
acquired; (2) the amounts, if any, to be credited as down payment and/or trade-in; (3) the difference
between the amounts set forth under clauses (1) and (2); (4) the charges, individually itemized, which
are paid or to be paid by such person in connection with the transaction but which are not incident to
the extension of credit; (5) the total amount to be financed; (6) the finance charge expressed in terms of
pesos and centavos; and (7) the percentage that the finance bears to the total amount to be financed
expressed as a simple annual rate on the outstanding unpaid balance of the obligation.
32. The following kinds of deposits are covered under PDIC Act:
a. by deposit type:
 Savings
 Special Savings
 Demand/Checking
 Negotiable Order of Withdrawal
 Certificate of Time Deposit
b. by deposit account
 Single Account
 Joint Account
 Account “By”, “In Trust For” or “For the Account of” another person
c. by currency:
 Philippine peso
 Foreign currencies considered as part of BSP’s international reserves
C. Securities
1. Securities are shares, participation or interests in a corporation or in a commercial enterprise or
profit-making venture and evidenced by a certificate, contract, instrument, whether written or
electronic in character.
2.
3. Sec. 5 of the Corporation Code provides for the powers and functions of the Commission:
Section 5. Powers and Functions of the Commission.– 5.1. The commission

shall act with transparency and shall have the powers and functions provided
by this code, Presidential Decree No. 902-A, the Corporation Code, the
Investment Houses law, the Financing Company Act and other existing laws.
Pursuant thereto the Commission shall have, among others, the following
powers and functions:
(a) Have jurisdiction and supervision over all corporations, partnership
or associations who are the grantees of primary franchises and/or a
license or a permit issued by the Government;
(b) Formulate policies and recommendations on issues concerning the
securities market, advise Congress and other government agencies on
all aspect of the securities market and propose legislation and
amendments thereto;
(c) Approve, reject, suspend, revoke or require amendments to
registration statements, and registration and licensing applications;
(d) Regulate, investigate or supervise the activities of persons to ensure
compliance;
(e) Supervise, monitor, suspend or take over the activities of
exchanges, clearing agencies and other SROs;
(f) Impose sanctions for the violation of laws and rules, regulations and
orders, and issued pursuant thereto;
(g) Prepare, approve, amend or repeal rules, regulations and orders,
and issue opinions and provide guidance on and supervise compliance
with such rules, regulation and orders;
(h) Enlist the aid and support of and/or deputized any and all
enforcement agencies of the Government, civil or military as well as any
private institution, corporation, firm, association or person in the
implementation of its powers and function under its Code;
(i) Issue cease and desist orders to prevent fraud or injury to the
investing public;
(j) Punish for the contempt of the Commission, both direct and indirect,
in accordance with the pertinent provisions of and penalties prescribed
by the Rules of Court;
(k) Compel the officers of any registered corporation or association to
call meetings of stockholders or members thereof under its supervision;
(l) Issue subpoena duces tecum and summon witnesses to appear in
any proceedings of the Commission and in appropriate cases, order the
examination, search and seizure of all documents, papers, files and
records, tax returns and books of accounts of any entity or person under
investigation as may be necessary for the proper disposition of the
cases before it, subject to the provisions of existing laws;
(m) Suspend, or revoke, after proper notice and hearing the franchise or
certificate of registration of corporations, partnership or associations,
upon any of the grounds provided by law; and
👎 Exercise such other powers as may be provided by law as well as
those which may be implied from, or which are necessary or incidental
to the carrying out of, the express powers granted the Commission to
achieve the objectives and purposes of these laws.
6. "Insider trading" refers generally to buying or selling a security, in breach of a fiduciary duty or other
relationship of trust and confidence, while in possession of material, nonpublic information about the
security. Insider trading violations may also include "tipping" such information, securities trading by the
person "tipped," and securities trading by those who misappropriate such information.
The scope of insider trading violations can be wide reaching. The Securities and Exchange Commission
(the "SEC") has brought insider trading cases against corporate officers, directors, and employees who
traded the corporation’s securities after learning of significant, confidential corporate developments;
friends, business associates, family members, and other "tippees" of such officers, directors, and
employees who traded the securities after receiving such information; employees of law, banking,
brokerage, and printing firms who were given such information in order to provide services to the
corporation whose securities they traded; government employees who learned of such information
because of their employment by the government; and other persons who misappropriated, and took
advantage of, confidential information from their employers.
Consequently, an "insider" can include officers, directors, major stockholders and employees of an entity
whose securities are publicly traded. In general, an insider must not trade for personal gain in the
securities of that entity if that person possesses material, nonpublic information about the entity. In
addition, an insider who is aware of material, nonpublic information must not disclose such information
to family, friends, business or social acquaintances, employees or independent contractors of the entity
(unless such employees or independent contractors have a position within the entity giving them a clear
right and need to know), and other third parties. An insider is responsible for assuring that his or her
family members comply with insider trading laws. An insider may make trades in the market or discuss
material information only after the material information has been made public.

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Commercial Law Review - Study Guide (1)

John Arnold L. Marbella

25. The Carriage of Goods by Sea Act is applied in international shipping.

34. The Warsaw Convention is applicable to international transportation by air.

Section 5. Powers and Functions of the Commission.– 5.1. The commission

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