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Distinguish insurable interest in property insurance from insurable interest in life insurance. i. In Property insurance, the expectation of benefit must have a legal basis. In life insurance, the expectation of benefit to be derived from continued existence of a life need not have any legal basis. ii. In PI, the actual value of the interest therein is the limit of the insurance that can validly be placed thereon. In LI, there is no limit to the amount of insurance that may be taken upon life. iii. In PI, the beneficiary must have insurable interest over the thing insured, while in a LI obtained by the beneficiary, the latter is not required to have insurable interest over the life of the insured. iv. In PI, insurable interest must exist when the insurance take effect and when the loss occurs but need not exist in the meantime. In LI, it is enough that insurable interest exists at the time when the contract is made but it need not exist at the time of loss. a. I,II and III b. II, III and IV c. I,II,III and IV d. I, II and IV Renato was issued a life insurance policy on Jan. 2, 1990. He did not mention the fact that 3 years prior to the issuance of his life insurance policy, he had been seeing a doctor about his heart ailment. On March 1, 1992, Renato died of kidney failure. May the heirs file a claim on the proceeds of the life insurance policy? d. Yes. More than 2 years had elapsed when Renato, the insured, had died and the incontestability clause applies against the insurer. Within the meaning of NIL, which of the following statements, when included in a negotiable instrument, renders the instrument to non-negotiable: C. A promissory note that is payable in 4 installments in the amount of P100,000 per instalment. C makes a promissory note payable to bearer and delivers the same to P. Then P indorsed it Payable to X by signing on it. X later transferred and delivered the same to N. However, C subsequently dishonoured the note. Can N rightfully claim against C? Select the best answer. C. Yes, bec. N is a holder who has the right to enforce the instrument against the maker C. M prepared a promissory note payable to the order of A, but merely left it on his table without his signature. T stole the instrument, forged the signature of M and delivered the same to A. Later, A indorsed the note to B, who, in turn, indorsed the same to C. C then indorsed the promissory note to D, the present holder. 1. Can D claim against M? D. D cannot claim against M bec. there is no right to enforce payment on the promissory note with a forged signature that has avoided the instrument. 2. If D decides to claim against C only, which of the following defences could C use that DOES NOT contravene the warranties under their indorsements? C. that since the signature is forged, then the signature is wholly inoperative, and therefore, no right to enforce payment thereon accrues to favor D. Who may redeem the foreclosed REM under an extrajudicial foreclosure proceedings? C. The debtor From among the following persons, who shall NOT own the rights to the patent of an invention? B. to the employer over the invention of the employee not in the course of the employees regular duties Which work below can be the subject of a copyright: A. An article contribution of a journalist published and printed in a daily media of general circulation that the winner of the recent big boxing event was a Filipino by name of Monty Bachao In the determination of infringement of Trademarks: I. Fraudulent intent is necessary II. Registration is not a prerequisite III. Fraudulent intent is unnecessary IV. Registration is a prerequisite D. III and IV A chattel mortgage cannot be constituted on: B. Like or substituted properties A has several accounts with a bank as follows: I. A checking account for P300K II. A Safety deposit box account containing P200K III. A Time deposit of P200K IV. A special and/or account with B on TD of P100K

XI-A From the letters below, select the best answer as to which of As bank accounts is/are not covered or insured by the PDIC: C. II

From the letters below, select the best answer as to the total amount that A can recover from the PDIC: D. P600,000 from I, III and IV XII. Which of the following statements below is not a requisite for the parties to stipulate that the diligence to be exercised by the common carrier be less than the extraordinary diligence: D. That it is fairly and freely agreed upon Select the statement below that is not an element of Arrival under stress principle for vessels: A. Lack of seaworthiness of the vessel Which device is not considered a practice on manipulation of security prices under the SRC? A. Derivatives Deviation or the departure of a vessel from the course of the voyage or an unreasonable delay in pursuing a voyage is proper whenE. It is caused by some peril of the ship Select from the following transactions over securities that is not exempt from registration with the SEC prior to its sale to the public in the Phils. A. A sale of shares of stocks of a corporation under receivership by the rehabilitation receiver pursuant to a rehabilitation plan The 3 basic contracts in a transaction involving a Letter of Credit are distinct and independent, and the undertakings of each respective party are neither subject to claims and defences, now affected by the breach in the others. This defense can be set up or invoked by: D. Seller An insurer is not liable: D. Loss where the excepted peril is the proximate cause An invention that is new but not industrially applicable and does not involve an inventive step qualifies: A. To be registered as an industrial design A is employed as chemist in a pharmaceutical corp. who combined the existing products of the corporation called Viagra with a local plant called Malunggay, and produced a new medication called Via-unggay. When A tried to register the via-unggay for patent, A discovered that S, a security guard of the same company, had previously filed for patent application of a medicine that contained the same formula called Viag-gay, which S experimented on independently from A during his night shifts work duty. Who has the right to the patent of the new medicine by selecting the best answer below: B. S has the right to the patent bec.of the First-to-File rule that favors S O deposited goods with W, a warehouseman, who issued a negotiable warehouse receipt to O. O then negotiated the warehouse receipt to P, a purchaser in good faith and for value. It had turned out that O stole the goods from RO, the real owner, which information W had now been notified. W delivered the goods to RO upon the latters demand who did not surrender any warehouse receipt for the goods. Is W liable to P for the alleged misdelivery of the goods? C. Yes, bec.the warehouseman undertakes to deliver the goods to the order of the person to whom the possession of the receipt when it takes the form that it may be negotiated by delivery Which of the following claims does NOT constitute the lien of the warehouseman? C. The surrender of the warehouse receipt Select the best answer from below that does NOT correctly reflect the distinction between the standby letter of credit from a commercial letter of credit. B. Commercial letters of credit are used in non-sale settings whereas standby letters of credit are used in sale settings A. How do you characterize the legal relationship between a commercial bank and its safety deposit box client? (2%) The relationship between a bank and its depositors is that of creditor and debtor. Under Art.1980 of the Civil Code, fixed, savings and current deposits of money in banks and similar institutions shall be governed by the provisions on simple loans. Thus, the failure of the bank to honor the deposit is a failure to pay its obligation as a debtor and not a breach of trust arising from a depositarys failure to return the subject matter of the deposit. (Serrano v. Central Bank) C. Is a stipulation in the contract for the use of a safety deposit box relieving the bank of liability in connection with the use thereof valid? (2%)

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It may not necessarily be valid at all times. As a rule, Art. 1306 of the Civil Code provides that the parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. Accordingly, the depositary would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay or contravention of the tenor of the agreement. Hence, any stipulation exempting the depositary from any liability arising from the loss of the thing deposited on account of fraud, negligence or delay would be void for being contrary to law and public policy. D. Differentiate bank deposits from deposit substitutes. (2%) Bank deposits are demand deposits, savings deposits, negotiable order of withdrawal account, time deposits, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. Deposit Substitute is an alternative form of obtaining funds from the public, other than deposits, through the issuance, endorsement, or acceptance of debt instruments for the borrowers own accounts, for the purpose of relending or purchasing of receivables and other obligations. These instruments may include, but need not be limited to, bankers acceptance, promissory notes, participations, certificates of assignment and similar instruments with recourse, and repurchase agreements. [Sec.95, RA 7653 (BSP Law)] Andante Realty, a marketing company that promotes and facilitates sales of real property through leverage marketing, solicits investors who are required to be a Business Center Owner (BCO) by paying an enrolment fee of $250. The BCO is then entitled to recruit two other investors who pay $250 each. The BCO receives $90 from the $250 paid by each of his recruits and is credited a certain amount for payments made by investors through the initial efforts of his Business Center. Once the accumulated amount reaches $5,000, the same is used as down payment for the real property chosen by the BCO. Does this multilevel marketing scheme constitute an investment contract under the Securities Regulation Code? Define investment contract. (4%) Yes, applying the Howey Test which provides that the scheme must involved 1.) an investment in money 2.) in a common enterprise 3.) with the expectation of profits and 4.) to come solely from the efforts of others. Investment Contract means a contract, transaction , or scheme whereby a person invest his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or third person. Venezia is a famous international fashion chain with outlets in Makati, Ortigas and Manila. It has complied with the minimum capitalization required under Retail Trade Nationalization Act and carries on retail business worth more than $3 million for each of its outlets. As its Manila outlet is not doing very well, it decides to sell all of its business there consisting of remaining inventory, furniture and fixtures and other assets to its competitor. a. Venezias Manila outlet constitutes 1/3 of its total business. Should it comply with the requirements of the Bulk Sales Law? Why or why not? (2%) Yes. Although Venezia is in the business of selling goods and that the sale in one transaction of all the stock of goods could, conceivably, be considered in pursuit of the business, the fact, however, is that all the stock of goods were sold to get out of, not to continue with, the business. Such sale cannot be considered in the ordinary course of trade or business and must, therefore, be subject to the requirements of BSL. b. If instead of selling its Manila outlet, Venezia merely mortgages in assets there, would it need to comply with the requirements of the Bulk Sales Law? (2%) Yes. Even if Venezia merely mortgages its assets in Manila outlet, it is still need to comply to the requirements of the BSL. The law covers any transaction of sale, transfer, mortgage or assignment of stock of goods and all or substantially all, of the business or trade and of the fixtures and equipments used. c. What are the legal consequences of a failure to comply with the requirements of the Bulk Sales Law? (2%) The sale in violation of Bulk Sales Law shall be valid if there are no creditors involved. However, if there creditors affected, the sale shall be void as to them. In such case, the purchaser, whether in good faith or in bad faith, holds the property in trust for seller. Also, purchaser is liable to sellers creditors for properties forming part of bulk and already possessed by him.

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A subscribed to 1M shares valued at P1M in XYZ Co.,Inc. and paid thereon P500K. To date, he has not paid the balance of his subscription. a. May the corporation issue a Certificate of Stock covering P500K shares in its favour? Explain. (2%) As a rule, a subscriber is not entitled to issuance of a certificate of stock until after he has fully paid the subscription. However, at the option of the board of directors, in the absence of any prohibition in the by-laws, the partial payment of a subscriber may either be applied pro-rata to the subscription in which case no certificate of stock shall be issued until the subscription is fully paid, or the partial payment be applied to pay such number of shares that it can cover and then issue the corresponding certificate of stock. b. If the corporation declares cash dividends of P1.00 per share, is A entitled to receive the full amount of P1M as his share of the dividends? Explain. (2%) No, he is not entitled to the full amount of P1M. Cash dividends due on delinquent stock shall first be applied to the unpaid balance on the subscription plus cost and expenses. c. If the corporation declares stock dividends instead, is he entitled thereto? Explain. (2%) Yes, he is entitled to the stock dividends. However, stock dividends are withheld from the delinquent stockholder until his unpaid subscription is fully paid. ALS Co., Inc. elected its 5-man Board of Directors on May 18, 2009, which is the date of the annual meetings as fixed in its ByLaws, where A,B,C,D and E were elected as directors. However, no meeting was held and conducted on May 18, 2010 such that all remained in office in hold-over capacities. On July 1, 2010, A resigned as director. May the remaining members of the Board (B,C,D and E) fill-up the vacancy created by the resignation of A? Explain. (3%) Yes. Any vacancy occurring in the board of directors other than removal or expiration of term may be filled by the vote of at least a majority of the remaining directors or trustees, if still constituting a quorum. Otherwise, said vacancies must be filled by the stockholders in a regular or special meeting called for that purpose. A director or trustee so elected to fill a vacancy shall be elected only for the unexpired term of his predecessor in office.