2012 syllabi mercantile law

7/31/2019 2012 Syllabi Mercantile Law

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SYLLABUS FOR THE 20 12 BAR EXAMI NATI ONS

MERCANTI LE LAW

I . Lett ers of Credit

A. Definition/concept

B. Governing laws

C. Nature of letter of credit

D. Parties to a letter of credit

1. Rights and obligations of parties

E. Basic principles of letter of credit1. Doctrine of independence2. Fraud exception principle3. Doctrine of strict compliance

I I . Warehouse Receipts Law

A. Nature and functions of a warehouse receipt

1. To whom delivered2. Kinds3. Distinction between a negotiable instrument and a negotiable warehouse receipt4. Rights of a holder of a negotiable warehouse receipt as against a transferee of a non-negotiable warehouse receipt

B. Duties of a warehouseman

C. Warehousemans lien

I I I . Trust Receipts Law

A. Definition/concept of a trust receipt transaction1. Loan/security feature2. Ownership of the goods, documents and instruments under a trust receipt

B. Rights of the entruster1. Validity of the security interest as against the creditors of the entrustee/innocentpurchasers for value

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C. Obligations and liability of the entrustee1. Payment/delivery of proceeds of sale or disposition of goods, documents or instruments2. Return of goods, documents or instruments in case of sale

3. Liability for loss of goods, documents or instruments4. Penal sanction if offender is a corporation

D. Remedies available

I V. Negotiable I nstrum ents Law

A. Forms and interpretation1. Requisites of negotiability2. Kinds of negotiable instrument

B. Completion and delivery1. Insertion of date2. Completion of blanks3. Incomplete and undelivered instruments4. Complete but undelivered instruments

C. Rules of interpretation

D. Signature1. Signing in trade name2. Signature of agent

3. Indorsement by minor or corporation4. Forgery

E. Consideration

F. Accommodation party

G. Negotiation1. Distinguished from assignment2. Modes of negotiation3. Kinds of indorsement

H. Rights of the holder1. Holder in due course2. Defenses against the holder

I. Liabilities of parties1. Maker2. Drawer




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3. Acceptor4. Indorser5. Warranties

J. Presentment for payment1. Necessity of presentment for payment2. Parties to whom presentment for payment should be made3. Dispensation with presentment for payment4. Dishonor by non-payment

K. Notice of dishonor1. Parties to be notified2. Parties who may give notice of dishonor3. Effect of notice4. Form of notice

5. Waiver6. Dispensation with notice7. Effect of failure to give notice

l. Discharge of negotiable instrument1. Discharge of negotiable instrument2. Discharge of parties secondarily liable3. Right of party who discharged instrument4. Renunciation by holder

M. Material alteration1. Concept

2. Effect of material alteration

N. Acceptance1. Definition2. Manner3. Time for acceptance4. Rules governing acceptance

O. Presentment for acceptance1. Time/place/manner of presentment2. Effect of failure to make presentment

3. Dishonor by non-acceptance

P. Promissory notes

Q. Checks1. Definition2. Kinds3. Presentment for payment




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a) Timeb) Effect of delay

V. I nsurance Code

A. Concept of insurance

B. Elements of an insurance contract

C. Characteristics/nature of insurance contracts

D. Classes1. Marine2. Fire

3. Casualty4. Suretyship5. Life6. Compulsory motor vehicle liability insurance

E. Insurable interest1. In life/health2. In property3. Double insurance and over insurance4. Multiple or several interests on same property

F. Perfection of the contract of insurance

1. Offer and acceptance/consensuala) Delay in acceptanceb) Delivery of policy

2. Premium payment3. Non-default options in life insurance4. Reinstatement of a lapsed policy of life insurance5. Refund of premiums

G. Rescission of insurance contracts1. Concealment2. Misrepresentation/omissions

3. Breach of warranties

H. Claims settlement and subrogation1. Notice and proof of loss2. Guidelines on claims settlement

a) Unfair claims settlement; sanctionsb) Prescription of actionc) Subrogation




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VI. Transport ation Law

A. Common carriers1. Diligence required of common carriers2. Liabilities of common carriers

B. Vigilance over goods1. Exempting causes

a) Requirement of absence of negligenceb) Absence of delayc) Due diligence to prevent or lessen the loss

2. Contributory negligence3. Duration of liability

a) Delivery of goods to common carrierb) Actual or constructive deliveryc) Temporary unloading or storage

4. Stipulation for limitation of liabilitya) Void stipulationsb) Limitation of liability to fixed amountc) Limitation of liability in absence of declaration of greater value

5. Liability for baggage of passengersa) Checked-in baggageb) Baggage in possession of passengers

C. Safety of passengers

1. Void stipulations2. Duration of liability

a) Waiting for carrier or boarding of carrierb) Arrival at destination

3. Liability for acts of othersa) Employeesb) Other passengers and strangers

4. Extent of liability for damages

D. Bill of lading1. Three-fold character

2. Delivery of goodsa) Period for deliveryb) Delivery without surrender of bill of ladingc) Refusal of consignee to take delivery

3. Period for filing claims4. Period for filing actions

E. Maritime commerce




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1. Charter partiesa) Bareboat/demise charterb) Time charterc) Voyage/trip charter

2. Liability of ship owners and shipping agentsa) Liability for acts of captainb) Exceptions to limited liability

3. Accidents and damages in maritime commercea) General averageb) Collisions

4. Carriage of Goods by Sea Acta) Applicationb) Notice of loss or damagec) Period of prescriptiond) Limitation of liability

F. Public Service Act1. Definition of public utility2. Necessity for certificate of public convenience

a) Requisites(i) Citizenship(ii) Promotion of public interests(iii) Financial capability

b) Prior operator rule(i) Meaning(ii) Exceptions(iii) Ruinous competition

3. Fixing of ratea) Rate of returnb) Exclusion of income tax as expense

4. Unlawful arrangementsa) Boundary systemb) Kabitsystem

5. Approval of sale, encumbrance or lease of property

G. The Warsaw Convention1. Applicability

2. Limitation of liability

a) Liability to passengersb) Liability for checked baggagec) Liability for hand-carried baggage

3. Willful misconduct

VI I . The Corpor ati on Code




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A. Corporation, defined

B. Classification of corporations

C. Nationality of corporations1. Control test2. Grandfather rule

D. Corporate juridical personality1. Doctrine of separate juridical personality

a) Liability for tort and crimesb) Recovery of damages

2. Doctrine of piercing the corporate veila) Grounds for application of doctrineb) Test in determining applicability

E. Capital structure1. Number and qualifications of incorporators2. Minimum capital stock and subscription requirements3. Corporate term4. Classification of shares

F. Incorporation and organization1. Promoter

a) Liability of promoterb) Liability of corporation for promoters contracts

2. Subscription contract

3. Pre-incorporation subscription agreements4. Consideration for stocks5. Articles of incorporation

a) Contentsb) Non-amendable items

6. Corporate name -- limitations on use of corporate name7. Registration and issuance of certificate of incorporation8. Election of directors or trustees9. Adoption of by-laws

a) Requisites of valid by-lawsb) Binding effects

c) Amendments

G. Corporate powers1. General powers, theory of general capacity2. Specific powers, theory of specific capacity

a) Power to extend or shorten corporate termb) Power to increase or decrease capital stock or incur, create, increase bondedindebtedness




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c) Power to deny pre-emptive rightsd) Power to sell or dispose of corporate assetse) Power to acquire own sharesf) Power to invest corporate funds in another corporation or business

g) Power to declare dividendsh) Power to enter into management contracti) Ultra vires acts

(i) Applicability of ultra vires doctrine(ii) Consequences of ultra vires acts

j) Doctrine of individuality of subscriptionk) Doctrine of equality of sharesl) Trust fund doctrine

3. How exerciseda) By the shareholdersb) By the board of directors

c) By the officers

H. Stockholders and members1. Fundamental rights of a stockholder2. Participation in management

a) Proxyb) Voting trustc) Cases when stockholders action is required

(i) By a majority vote(ii) By a two-thirds vote(iii) By cumulative voting

3. Proprietary rights

a) Right to dividendsb) Right of appraisalc) Right to inspectd) Pre-emptive righte) Right to votef) Right to dividends

4. Remedial rightsa) Individual suitb) Representative suitc) Derivative suit

5. Obligation of a stockholder

6. Meetingsa) Regular or special(i) When and where(ii) Notice

b) Who calls the meetingsc) Quorumd) Minutes of meetings




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I. Board of directors and trustees1. Repository of corporate powers2. Tenure, qualifications and disqualifications of directors3. Elections

a) Cumulative votingb) Quorum

4. Removal5. Filling of vacancies6. Compensation7. Disloyalty8. Business judgment rule9. Solidary liabilities for damages10. Liability for watered stocks11. Personal liabilities12. Responsibility for crimes

13. Special fact doctrine14. Inside information15. Contracts

a) By self-dealing directors with the corporationb) Between corporations with interlocking directors

16. Executive committeea) Creationb) Limitations on its powers

17. Meetingsa) Regular or special

(i) When and where(ii) Notice

b) Who presidesc) Quorumd) Rule on abstention

J. Capital affairs1. Certificate of stock

a) Nature of the certificateb) Uncertificated sharesc) Negotiability

(i) Requirements for valid transfer of stocksd) Issuance

(i) Full payment

(ii) Payment pro-ratae) Stock and transfer book(i) Contents(ii) Who may make valid entries

f) Lost or destroyed certificatesg) Situs of the shares of stock

2. Watered stocksa) Definition




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b) Liability of directors for watered stocksc) Trust fund doctrine for liability for watered stocks

3. Payment of balance of subscriptiona) Call by board of directors

b) Notice requirement4. Sale of delinquent shares

a) Effect of delinquencyb) Call by resolution of the board of directorsc) Notice of saled) Auction sale

5. Alienation of sharesa) Allowable restrictions on the sale of sharesb) Sale of partially paid sharesc) Sale of a portion of shares not fully paidd) Sale of all of shares not fully paid

e) Sale of fully paid sharesf) Requisites of a valid transferg) Involuntary dealings

K. Dissolution and liquidation1. Modes of dissolution

a) Voluntary(i) Where no creditors are affected(ii) Where creditors are affected(iii) By shortening of corporate term

b) Involuntary(i) By expiration of corporate term

(ii) Failure to organize and commence business within 2 years fromincorporation(iii) Legislative dissolution(iv) Dissolution by the SEC on grounds under existing laws

2. Methods of liquidationa) By the corporation itselfb) Conveyance to a trustee within a 3-year periodc) By management committee or rehabilitation receiverd) Liquidation after three years

L. Other corporations

1. Close corporationsa) Characteristics of a close corporationb) Validity of restrictions on transfer of sharesc) Issuance or transfer of stock in breach of qualifying conditionsd) When board meeting is unnecessary or improperly helde) Pre-emptive rightf) Amendment of articles of incorporationg) Deadlocks




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2. Non-stock corporationsa) Definitionb) Purposesc) Treatment of profits

d) Distribution of assets upon dissolution3. Religious corporations

a) Corporation sole(i) Nationality(ii) Religious societies

4. Foreign corporationsa) Bases of authority over foreign corporations

(i) Consent(ii) Doctrine of doing business (relate to definition under the ForeignInvestments Act, R.A. 7042)

b) Necessity of a license to do business

(i) Requisites for issuance of a license(ii) Resident agentc) Personality to sued) Suability of foreign corporationse) Instances when unlicensed foreign corporations may be allowed to sueisolated transactionsf) Grounds for revocation of license

M. Merger and consolidation1. Definition and concept2. Constituent vs. Consolidated corporation3. Plan of merger or consolidation

4. Articles of merger or consolidation5. Procedure6. Effectivity7. Limitations8. Effects

VI I I . Securit ies Regulat ion Code (R.A. 8799 )

A. State policy (purpose)

B. Powers and functions of the SEC1. Regulatory2. Adjudicative

C. Securities required to be registered1. Exempt securities2. Exempt transactions




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D. Procedure for registration of securities

E. Prohibitions on fraud, manipulation and insider trading1. Manipulation of security prices

2. Short sales3. Fraudulent transactions4. Insider trading

F. Protection of investors1. Tender offer rule2. Rules on proxy solicitation3. Disclosure rule

G. Civil liability

I X. Banking Laws

A. The New Central Bank Act (R.A. 7653)1. State policies2. Creation of the Bangko Sentral ng Pilipinas (BSP)3. Responsibility and primary objective4. Monetary board - powers and functions5. How the BSP handles banks in distress

a) Conservatorshipb) Closurec) Receivership

d) Liquidation6. How the BSP handles exchange crisis

a) Legal tender powerb) Rate of exchange

B. Law on Secrecy of Bank Deposits (R.A. 1405, as amended)1. Purpose2. Prohibited acts3. Deposits covered4. Exceptions5. Garnishment of deposits, including foreign deposits

6. Penalties for violation

C. General Banking Act (R.A. 8791)1. Definition and classification of banks2. Distinction of banks from quasi-banks and trust entities3. Bank powers and liabilities

a) Corporate powersb) Banking and incidental powers




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4. Diligence required of banks - relevant jurisprudence5. Nature of bank funds and bank deposits6. Stipulation on interests7. Grant of loans and security requirements

a) Ratio of net worth to total risk assetsb) Single borrowers limitc) Restrictions on bank exposure to DOSRI (directors, officers, stockholders andtheir related interests)

8. Penalties for violationsa) Fine, imprisonmentb) Suspension or removal of director or officerc) Dissolution of bank

D. Philippine Deposit Insurance Corporation Act1. Basic policy

2. Concept of insured deposits3. Liability to depositorsa) Deposit liabilities required to be insured with PDICb) Commencement of liabilityc) Deposit accounts not entitled to paymentd) Extent of liabilitye) Determination of insured depositsf) Calculation of liability

(i) Per depositor, per capacity rule(ii) Joint accounts(iii) Mode of payment(iv) Effect of payment of insured deposit

(v) Payments of insured deposits as preferred credit under Art. 2244, CivilCode(vi) Failure to settle claim of insured depositor(vii) Failure of depositor to claim insured deposits

(a) Examination of banks and deposit accounts(b) Prohibition against splitting of deposits(c) Prohibition against issuances of TROs, etc.

X. I ntellectual Propert y Law ( excluding implem enting rules and regulations)

A. Intellectual property rights in general1. Intellectual property rights2. Differences between copyrights, trademarks and patent3. Technology transfer arrangements

B. Patents1. Patentable inventions2. Non-patentable inventions




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3. Ownership of a patenta) Right to a patentb) First-to-file rulec) Inventions created pursuant to a commission

d) Right of priority4. Grounds for cancellation of a patent5. Remedy of the true and actual inventor6. Rights conferred by a patent7. Limitations of patent rights

a) Prior userb) Use by the government

8. Patent infringementa) Tests in patent infringement

(i) Literal infringement(ii) Doctrine of equivalents

b) Civil and criminal actionc) Prescriptive periodd) Defenses in action for infringement

9. Licensinga) Voluntaryb) Compulsory

10. Assignment and transmission of rights

C. Trademarks1. Definitions of marks, collective marks, trade names2. Acquisition of ownership of mark3. Acquisition of ownership of trade name

4. Non-registrable marks5. Prior use of mark as a requirement6. Tests to determine confusing similarity between marks

a) Dominancy testb) Holistic test

7. Well-known marks8. Rights conferred by registration9. Use by third parties of names, etc. similar to registered mark10. Infringement and remedies

a) Trademark infringementb) Damages

c) Requirement of notice11. Unfair competition12. Trade names or business names13. Collective marks14. Criminal penalties for infringement, unfair competition, false designation of origin, and

false description or misrepresentation

D. Copyrights




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1. Basic principles, Secs. 172.2, 175, and 1812. Copyrightable works

a) Original worksb) Derivative works

3. Non-copyrightable works4. Rights of copyright owner5. Rules on ownership of copyright6. Limitations on copyright

a) Doctrine of fair useb) Copyright infringement

(i) Remedies(ii) Criminal penalties

XI . Special Law s

A. The Chattel Mortgage Law (Act 1508 in rel. to Arts. 1484, 1485, 2140 and 2141 of the Civil Code)1. Essential requisites2. Formal requisites3. Registration, when and where4. After-acquired property5. After-incurred obligation6. Right of junior mortgagee7. Foreclosure procedure8. Redemption9. Claim for deficiency

a) General rule

b) Exceptionc) Article 1484

B. Real Estate Mortgage Law (Act 3135, as amended by R.A. 4118)1. Coverage2. Remedies available to mortgagee upon default of the mortgagor3. Need for special power of attorney4. Authority to foreclose extrajudicially5. Procedure

a) Where to fileb) Where to sell

c) Posting requirementd) Publication requirement(i) Sufficiency of newspaper publication(ii) Need for republication in case of postponement(iii) Personal notice to the mortgagor when and when not needed

6. Possession by purchaser of foreclosed property7. Remedy of debtor if foreclosure is not proper8. Redemption




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a) Who may redeemb) Amount of redemption pricec) Period for redemptiond) Effect of pendency of action for annulment of sale

9. Writ of possessiona) Ministerial duty of the courtb) Enforcement against third partiesc) Pendency of action for annulment of sale

10. Annulment of sale

C. Truth in Lending Act (R.A. 3765)1. Purpose2. Obligation of creditors to person to whom credit is extended3. Covered and excluded transactions4. Consequences of non-compliance with obligation

D. Anti-money Laundering Law (R.A. 9160, as amended by R.A. 9194)1. Policy of the law2. Covered institutions3. Obligations of covered institutions4. Covered transactions5. Suspicious transactions6. When is money laundering committed7. Unlawful activities or predicate crimes8. Anti-money laundering council9. Functions10. Freezing of monetary instrument or property

11. Authority to inquire into bank deposits

E. Foreign Investments Act (R.A. 7042)1. Policy of the law2. Definition of terms

a) Foreign investmentb) Doing business in the Philippinesc) Export enterprised) Domestic market enterprise

3. Registration of investments of non-Philippine nationals4. Foreign investments in export enterprises

5. Foreign investments in domestic market enterprises6. Foreign investment negative list

I NCLUDE: Pertinent Supreme Court decisions promulgated up to January 31, 2012.

I mportant note: This bar coverage description is not intended and should not be usedby law schools as a syllabus or course outline in the covered subjects. It has been




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drawn up for the limited purpose of ensuring that candidates reviewing for the barexaminations are guided on what basic and minimum amounts of laws, doctrines, andprinciples they need to know and be able to use correctly before they can be licensed topractice law. More is required for excellent and distinguished work as members of the

Bar.


2012 syllabi mercantile law

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