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MIRAVITE
Chapter I Introductory Chapter p1
Chapter II Letters of Credit p4
Chapter III Trust Receipts Law p23
Chapter IV Negotiable Instruments Law p40
Chapter V Insurance Code p182
I. Laws Governing Insurance p182
A. Principal Law
B. Supplementary Laws
II. Nature of Insurance p183
A. Concepts Defined
1. Contract of Insurance
 Elements
 Contract of Adhesion
 Construction
 Test to determine if a contract is an insurance contract p184
2. Doing or Transacting an Insurance Business p184
 Mutual Insurance Company/Association
 HMOs vs Insurance Companies p186
B. Characteristics of Insurance Contract p 188
 Aleatory
 Voluntary
 Executory
 Synallagmatic
 Compensatory
 It is a contract of perfect good faith for both parties
 Personal
1. Aleatory p 189
2. Voluntary, as a General Rule
3. Uberrima Fides (Perfect Good Faith) Contract p190
4. Personal p191
C. Classes Of Insurance
D. What May Be Insured Against p192
1. A Future Contingent Event Resulting In Loss Or Damage
2. A Past Unknown Event Resulting In Loss Or Damage
3. Contingent Liability p193
E. Parties to an Insurance Contract p194
1. The Insurer
2. The Insured
a. Minors
b. Married Woman p195
c. Public Enemy
3. The Beneficiary
a. A beneficiary of one who insures his own life p196
1. Exceptions to the general rule – Persons disqualified as beneficiaries p197
2. Vested Right of beneficiary p198
3. Irrevocable designation p199
4. Distribution of proceeds of policy if premiums paid from salaries p200
a. When a specified person is beneficiary
b. Where the Estate of the Insured is the beneficiary p201
c. Beneficiary of Life Insurance on the life of another person p202
d. Beneficiary of Property Insurance
F. Insurable Interest
1. Insurable Interest Defined
2. Insurable Interest in Life p203
a. Defined
b. Insurable Interest in one’s life p204
c. Insurable Interest in the life of others
d. Purpose of Insurable Interest in the life of others p206
e. When Insurable Interest should exist
f. Insurable Interest in Life Insurance and in Property Insurance Compared p207
3. Insurable Interest in Property p208
a. What it consists of
b. Examples p209
c. When it must exist p213
d. Amount of insurance p215
e. Insurable Interest in Mortgaged Properties p216
 Right of a Mortgagee as a Beneficiary of Insurance Policies with subsequent
endorsements and delivery p218
f. Change of Interest in Property Insured p221
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III. Devices to Delimit Subject Matter of Insurance p223

A. Concealment
1. Defined
2. Requisites
3. Test of Materiality
4. Consequences of Concealment p227
 Conditions for Rescission
a. Exceptions p229
1. Incontestability Clause
2. Certain Concealments in Marine Insurance
B. Representation p230
1. Defined
2. Classes
3. Differentiated from Warranty
4. Test of Materiality p231
5. Consequences of Misrepresentation p233
a. Incontestability Clause p234
 The 2 year period is not shortened by the death of the insured within that
period
 Rationale p236
 “during the lifetime” p237
b. Misrepresentation by Collusion with Insurer’s Agent p238
C. Warranty
1. Defined
2. Classes
a. Express Warranty p239
b. Implied Warranty
3. Effect of Breach of Warranty
4. Construction of Warranties p241
IV Policy of Insurance
A. Policy Defined
1. Form
2. Cover Notes p242
B. Contents of the Policy p243
1. A policy contains among others the following
2. Contractual Limitations prevail over Statutory Ones
3. How Ambiguity Settled
4. Particular Stipulations Interpreted p245
5. Effectivity of Policy p246
a. General Rule
b. Exceptions p247
1. Life and Industrial Life Policy
2. Written Acknowledgment of the Receipt of Premium by Insurer
3. Payment in Installments/ Partial Payment of the Premium p248
4. Credit Extension for Payment of Premium p250
5. Estoppel
6. Cancellation and Renewal of Non-Life Policies p252
C. 3 Kinds of Policies in Non-Life Insurance
D. Premium p255
1. Premium Defined
2. Duty to pay Premium
a. Non-payment due to War p257
3. Return of Premiums
a. Rescission for Breach of Warranty p258
V. Double Insurance and Reinsurance
A. Double Insurance
1. Defined/Requisites
2. Differentiated from Reinsurance p259
3. Effect of Double Insurance
 Collateral Source Rule
B. Reinsurance p261
1. Defined
2. Distinguished from Co-Insurance p262
3. Distinguished from Reinsurance Treaty
4. Right of Reinsurer p263
VI. Loss
A. Terms Defined
1. Loss
2. Proximate Cause
B. Loss for which Insurer is Liable p264
C. Loss for which Insurer is NOT Liable p265
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D. Prerequisite to Recovery for Loss in Insurance Against Fire

E. Payment of Claims
1. Life Insurance
a. Where Insured Outlives Maturity Due
b. Where Policy Matures by Insured’s Death p266
2. Property Insurance p267
a. If amount of loss determined by agreement or by arbitration
b. If ascertainment of loss not made within 60 days
 Suit must be brought within 1 year after rejection
3. Right of Beneficiary to be paid Directly by Insurer p269
4. Right of Subrogation of Insurer who pays
 Gen Rule, Exceptions p273
5. Liability of Insurance Company for Delay in Payment of Insurance Proceeds p276
VII. Particular Instances
A. Marine Insurance
1. Coverage of Marine Insurance p277
a. Insurance against Loss or Damage to
b. Marine Protection and Indemnity Insurance p278
2. Special Marine Insurance Contracts p281
a. Insurance Against All Risks
b. Inchamaree Clause
3. Insurable Interest in Marine Insurance p282
4. Concealment
a. Defined
b. Effect of Concealment
c. Concealed Matters not Violating the Contract but frees Insurer if Loss Due to Concealed Matter p283
5. Warranties
a. Classes in Marine Insurance
 4 Instances When Deviation Proper
b. Meaning of Seaworthiness/ Cargoworthiness p284
6. Loss p286
a. Total
1. Actual Total
2. Constructive Total
b. Partial
B. Fire Insurance p289
1. Defined
2. Alteration in Use or Condition
a. Alteration Resulting in Rescission
b. Alteration NOT Resulting in Rescission p290
3. Measure of Indemnity
4. Other Insurance Clause
C. Casualty Insurance p291
1. Defined
2. Examples p292
3. Compulsory Motor Vehicle Liability (as amended by PD 1814)
a. Method of Coverage
b. Vehicles Covered p293
c. Non-Fault Clause
 Rules p294
1. Period of Filing Claim and Action to Recover Damages p297
2. Applicability p298
3. Expired Driver’s License as Affecting Recovery p299
4. Effect of Insurance Paid to Injured Passenger p301
d. Comprehensive Motor Vehicle Insurance
D. Suretyship p303
1. Defined
2. Nature of Surety’s Undertaking p305
3. Effectivity p307
E. Life Insurance
1. Defined
2. Kinds
a. Ordinary Life, General Life or Old Line Policy
b. Limited Payment Policy
c. Endowment Policy
d. Term Insurance
e. Industrial Life Insurance p308
f. Variable Contract
3. Amount of Insurance
4. The Beneficiary
5. The Assignee
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6. Effect of Death of insured Through: p309

a. Suicide
b. Death at the Hands of the Law p310
c. Killing of Insured by Beneficiary
 Exceptions p311
F. Group Insurance
 Mortgage Redemption Insurance p312
 2011 to 2016 Bar Examinations in Commercial Law p313

Chapter VI Transportation Law p329

I. Preliminary Concepts
A. Transportation Defined
1. When Commercial
B. Classes
1. According to Object Carried
2. According to Mode of Travel
C. Parties to Contract
D. Laws Applicable p330
1. Land Transportation
2. Transportation by Sea
3. Air Transportation p332
 Based on Tort vs based on Contract p334
a. International Flights/ Warsaw Convention p474 (Chapter X)
I. Applicability
o Important p475
o Venue of Actions p477
II. Limitation of Liability p478
A. Liability to Passengers
B. Liability for Baggage p481
III. Willful Misconduct p484
b. Domestic Commercial Airlines p335
1. In Carriage of Goods p336
II. Common Carrier
A. Defined p337
 Carrier
 Private Carrier
 Extraordinary Diligence p339
 Duration
 Presumption of Negligence p340
B. Differentiated from Private Carrier p341
 Negligence p344
1. Status of a Driver Under “Boundary System” Arrangement p347
2. Registered Vehicle Already Sold p348
C. Diligence Required of Common Carriers p350
1. Transportation of Goods
o Notice of Loss p353
a. Exceptions to the Presumption of Fault or Negligence p354
 Elements to constitute fortuitous event p355
b. Liability for Failure to Observe Extraordinary Diligence p356
2. In Carriage of Passengers p362
a. Degree of Diligence Required
b. Examples of Failure to Observe Extraordinary Diligence p365
c. Obligation Extends to Employees p370
 Vicarious Liability
d. Presumption of Fault or Negligence p372
 Proximate Cause p374
 Requisites of Doctrine of Res Ipsa Loquitur to apply p376
1. When Presumption Rebutted
 Doctrine of Last Clear Chance p379
 Emergency Rule
e. Duration of Exercise of Extraordinary Diligence p382
f. Liability for Assaults of Employees p383
 Respondeat Superior
g. Liability for Acts of Strangers p387
h. Liability if Driver of Other Vehicle Negligent p390
i. Liability of Unregistered Owner of Public Utility Vehicle
 Kabit System p391
j. Liability of Common Law Wife of Registered Owner p393
k. Liability of a Common Carrier Without a Certificate of Public Convenience
l. Extent of Liability for Damages p394
1. Actual and Consequential Damages
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2. Moral Damages p396

3. Exemplary Damages p399
4. Attorney’s Fees and Interest
5. Liability of Insurer of Common Carrier
m. Other Available Remedies p400
 Quasi Delict p401
 2011 to 2016 Bar Examinations in Commercial Law p402

Chapter VII Bill of Lading p408

I. Defined
II. Three-fold Character
 Charter Party p411
 Contents of Bill of Lading and Number of Copies thereof p414
 FAS (Free Alongside Ship): The seller must deliver the goods alongside a ship, designated by the buyer.
Upon delivering the goods alongside the ship, the risks and costs are transferred. The seller must arrange
the clearance of goods. P420
 FOB (Free On Board): The seller must arrange for the goods to be loaded onto a ship, designated by the
buyer. When the goods are loaded, the risks and costs will be transferred.
 CFR (Cost And Freight): The seller must pay the costs for delivering the goods to its destination. The risk
however is transferred upon loading the goods on the ship and insurance is not included.
 CIF (Cost, Insurance And Freight): This is similar to CFR except insurance here is included and must be paid
by the seller.
III. Delivery of Goods p421
A. Period of Delivery p422
B. Delivery without surrender of Bill of Lading p423
C. Refusal of Consignee to take Delivery
IV. Period of Filing Claims p424
 Misdelivery – 10 years CC; Loss or Damaged Cargo – 1 year COGSA p426
 Arrastre Operator
V. Period of Filing Actions
 2011 to 2016 Bar Examinations in Commercial Law p426

Chapter VIII Maritime Commerce p428

I. Merchant Vessel
A. Defined
B. Major Participants in Maritime Commerce
1. Ship Owner
2. Ship Agent
a. Civil Liability of Ship Agent and/or Owner
b. Limited Liability or the Hypothecary Rule p431
 Exceptions p434
c. Liabilities of Ship Agent and Ship Owner for Acts Done by the Captain to Passengers
and Cargoes, making them Solidarily Liable to the Latter p438
C. Charter Party p439
1. Defined
2. Nature
3. Classes p440
a. Bareboat or Demise Charter
b. Voyage Charter p442
4. Rights and Obligations of Ship Owner or Ship Agent p443
5. Rights and Obligations of Charterer
6. Rescission of Charter Party p445
a. At request of Charterer
b. At Ship Owner’s Request
c. Fortuitous Cases p446
D. Accidents and Damages in Maritime Commerce
1. Averages
a. Defined
b. Classes
1. Particular or Simple Average p447
2. Gross or General Average p448
c. Proof and Liquidation p454
1. Where Made
2. How Done
2. Collisions
a. Terms Defined
b. Zones of Time in the Collision of Vessels
c. Rules as to Liability p455
1. One Vessel at Fault
2. Both Vessels at Fault p456
3. Fault Undeterminable p457
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4. Collision due to fortuitous event p458

5. Collision of a Moving Vessel against a stationary OBJECT
d. Prerequisite to Recovery (Maritime Protest – when and where filed)
 2011 to 2016 Bar Examinations in Commercial Law p460
Chapter IX Carriage Of Goods By Sea Act p461
I. Application
II. Notice of Loss or Damage
III. Period of Prescription p464
IV. Limitation of Liability p469
Chapter X Warsaw Convention p474 (see Chapter VI for discussion)
Chapter XI Corporation Code p486
I. The Corporation Code of the Philippines
II. Nature
A. Defined
B. Attributes p491
1. In General
2. Particular Attributes
a. Distinct Personality
 Principle of Limited Liability p493
 When personal liability attaches
 Ratification p494
 Bar Question and Answer (Memorize) p495
 2 types of corporate acquisitions p497
 Juridical Person NOT entitled to Moral Damages
1. Doctrine of Piercing the Veil of Corporate Fiction p502
o 3 instances when doctrine is applied p503
o 3 test to determine applicability of alter ego doctrine
a. When Applied p506
b. When NOT Applied p510
c. Consequences if Veil is Pierced p515
b. Perpetual Succession p515
 Bar Question and Answer p516
c. Use of Corporate Name
C. Nationality of Corporations p518
1. Place of Incorporation Test
2. Control Test
3. Grandfather Rule
D. Classes of Corporation p521
1. Government Owned and/or Controlled Corporations p522
 Test to determine whether GOCC or Private p523
 General vs Special Franchise p524
 Corporation going private vs going public p525
2. Private Corporations p526
1. Stock Corporations
a. Par Value Stock Corporation
b. NO Par Value Stock Corporation
2. Non Stock Corporation p527
3. Aggregate and Sole
4. Ecclesiastical and Lay
5. Domestic and Foreign p528
6. De Jure, De Facto, By Estoppel, By Prescription
a. De Jure Corporation
b. De Facto Corporation
 Bar Question and Answer p529
c. Corporation by Estoppel p531
 Bar Question and Answer p534
d. Corporation by Prescription p534
7. Quasi – Public and Quasi Corporation p535
a. Quasi-Public Corporation
b. Quasi Corporation
8. Condominium Corporation
E. Components of a Corporation p536
1. Incorporators
2. Corporators p537
 Bar Question & Answer p537
3. Stockholders and Members
4. Promoter
5. Board of Directors p538
 Intra-corporate controversy p540
 Bar Question and Answer p542
a. Qualification of Directors p541
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b. Number p544
c. Liability of Directors
 Bar Question & Answer p 550
 Doctrine of Corporate Opportunity p551
d. Compensation of Directors p552
6. The Executive Committee p553
7. Officers
a. The President p556
b. The Treasurer p558
c. The Secretary
III. Capital Structure of Stock Corporations p559
A. Important Concepts Defined
1. Capital Stock
2. Capital p560
3. Share of Stock
B. Prerequisite to Incorporation
1. Capital Stock
2. Subscribed Capital p563
a. Trust Fund Doctrine
 3 instances allowing distribution of corporate capital p564
 Restricted/ Unrestricted Retained Earnings
 Authorized Capital Stock
3. Paid up Capital p568
C. Increase or Decrease of Capital Stock p570
 Outstanding Capital Stock
1. Required Vote
2. Procedure
D. Classes of Shares p573
1. Statutory Classification
a. Voting and Non-Voting Shares
1. Voting Shares
a. Founder’s Shares
2. Non-Voting Shares p574
a. Preferred Shares
1. Common Shares vs Preferred Shares/ Doctrine of Equality of Shares
b. Redeemable Shares p575
c. Treasury Stocks p576
d. Voting Rights Exercisable by Owners of Non-Voting Shares p577
b. Par Value and No-Par Value Shares
2. Other Classifications p578
a. Promotion Stock
b. Escrow Stock
c. Over-issued Stock p579
d. Watered Stock
E. Issue and Transfer of Shares
1. Issue of Stocks
a. Modes of Issue
b. Consideration
 Street Certificate p581
2. Preemptive Right of Stockholders
3. Issuance of Certificate of Stock p584
a. Nature of Certificate of Stock
 Minimum requirements for valid transfer of stocks p585
b. Formalities for Issuance p587
c. Right of Stockholder to a Certificate
d. Lost and Stolen Certificates p589
4. Transfer of Shares p591
a. Nature of Right p592
b. Manner of Transfer p595
 Bar Question & Answer p597
5. Pledge or Mortgage of Shares
a. Pledge of Shares
b. Chattel Mortgage of Shares
6. Collection of Unpaid Subscription p599
a. Methods
b. Call, Delinquency and Sale at Auction p600
 Bar Question & Answer p601
7. Reacquisition of Corporation of its Stock p603
 Appraisal Right
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IV. Incorporation and Organization p603

A. Contents of Articles of Incorporation
1. Stock Corporations p604
2. Non-stock Corporations p605
3. Conversion from Stock to Non-stock and Vice-versa p606
B. Documents Accompanying the Articles p607
1. Grounds for Rejection or Disapproval by SEC of Articles or Amendments p608
C. Issue of Certificate of Incorporation
1. Visitorial Power
D. Election of the Board and Adoption of the By-Laws p609
E. Amendment of Articles and By-Laws p613
1. Procedure
2. Legal Effect of Change of Corporate Name p614
3. Date of Effectivity of Amendment p615
F. Merger and Consolidation of Corporations p616
1. Defined
2. Procedure for Merger or Consolidation p618
3. Effects of Merger or Consolidation
G. Corporate Books and Records p621
1. Books Required to be Kept p622
a. Book of Minutes
b. Books of Accounts p623
c. Stock and Transfer Book p624
2. Probative Value of Corporate Records and Books p625
3. Inspection of Books p626
4. Right to Financial Statements p630
V. Corporate Powers and Liabilities
A. Theories on Corporate Powers
B. Classes of Corporate Powers
C. How Corporate Powers Exercised p633
1. By the Board p634
2. Acts Needing Stockholder’s Vote or Intervention p646
a. Vote of Stockholders Holding Majority of Outstanding Capital Stock
b. Vote of Stockholders Holding 2/3 of Subscribed Capital Stock p647
3. The Executive Committee p648
D. Special Corporate Powers
1. Eminent Domain
a. Use of Private Property
2. Franchises p649
3. Investment in Other Corporations for Purposes Other Than Those Stated in Articles
E. Special Limitations on Corporate Powers p650
F. Ultra Vires Acts p651
1. By the Corporation itself
a. Settled Rules
2. By the Corporate Officers p654
a. Effect when there is NO Ratification p655
G. Constitutional Rights of Corporations p656
H. Corporate Liabilities
1. Contractual
a. Venue p657
b. Jurisdiction p658
A. Requirement of Certificate of Non-Forum Shopping from Corporations p662
2. For Torts p666
3. For Crimes
a. Who shall be held liable
VI. Rights of Stockholders p668
A. In General