MY COMPREHENSIVE REVIEWER IN MERCANTILE LAW

A. NUMBERS DECODED

1 year – The prescriptive period to file and process claim under the Compulsory Motor Vehicle Liability
Insurance is within 1 year from denial of the claim.

2 years- years contestability period in Insurance Law

2/3 [approval of the majority of the board and concurrence of the stockholders representing 2/3 of

the OCS is necessary in the corp.’s power of denial of pre-emptive right, power to increase or decrease
capital stock ; power to declare stock dividends; investing corporate funds in a business listed under the
secondary purposes in the corporation’s AOI.

2/3 [ Acquisition of a business opportunity which should belong to the corporation, thereby acquiring
profits which should belong to the corporation could be ratified by a vote representing at least 2/3 of
the OCS.

24 hrs. [ A consignee who found the goods seriously damaged should give notice to the carrier within
24 hours.

3days [Under COGSA, if the damage is NOT APPARENT, the claim with the carrier should be filed within
3days from date of delivery.

50 $ [Under COGSA, the liability of the carriers of goods to be shipped from a foreign port in the
absence of a shippers’ declaration is US$ 50.

50 years [Copyright’s duration in case of literary works and derivative works would be during the
lifetime of the creator and for 50 years after his death.

6 months [ The insurer is not liable for the loss if a claim for compulsory motor vehicle liability
insurance is filed more than six ( 6) months from the date of the accident.

75 % [ there is total loss when that vessel is abandoned and damaged to the extent of 75% of its value;

70%-30% [In the case of a corporation that is engaged in PUBLIC TRANSPORTATION, it should
comply with the 70%-30% Foreign Equity Participation Rule under the Constitution.

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100% [ Mass Media’s equity, both voting and non-voting must be owned by Filipinos 100%

10 % [ In no case shall the total yearly COMPENSATION of director exceeds 10% of the net income
before income tax during the preceding year.

100,000 [ Insurance claim disputes of P 100,000. and below fall under the concurrent jurisdiction of
the Insurance Commissioner and the civil courts.

B. REPEATED QUESTIONS
1. The extraordinary diligence of a common carrier in the transportation of passengers
means to transport as safely as human care and foresight can provide.
2. Arrastre services refers to the stacking of the cargoes on the pier and re handling the same
on board the truck of the custom broker.
3. Demurrage is the sum fixed in a charter party as remuneration or compensation to ship
owner for the detention of his vessel beyond the number of days allowed by the charter
party for loading and unloading.
4. A charter party may or may not be a common carrier.
5. A Charter Party may transform a common carrier into a Private Charter when a charter
party is a demise charter.
6. A carrier is a private carrier if it is an exclusive hauler for the shipper
7. In the law on transportation the nature of relationship between the consignee and the
arrastre operator is that of a depositor ( consignee ) and warehouseman ( arrastre ).
8. The law that governs a passenger and an airline is the Warsaw Convention as the primary
law and Civil Code as the suppletory law.
9. Deviation of a ship captain who is in good faith is proper deviation.
10. The act of a member of the crew or second mate to hold in captive the ship captain and
thereafter change course is called MUTINY.
11. In corporation law, the foundation of the primary doctrine of “ strong juridical personality ”
is the RIGHT OF SUCCESSION.
12. Right of succession is an attribute of corporation wherein it has the continuity of corporate
life during its term of existence stated in the AOI, independent from that of its stockholders
or members.

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13. A corporation is an artificial being created by operation of law. The theory behind this
fiction is what is known as Concession Theory.
14. In Corporation Law, the legal consequence flowing from the application of the “ Theory of
Concession “ when applied to corporate power and capacity would be application of the
“ ultra vires act ”.
15. One element that must be present to justify the piercing the veil of corporate fiction is
complete control of finances and of policy and business practices.
16. Based on the Trust Fund Doctrine, the validity and enforceability of the subscription
agreement must be upheld inspite of void provisions and regardless of conditionalities
provided therein to ensure certainty of collecting the subscription amount.
17. A de facto corporation is a corporation that exists for all practical purposes as a
corporation but which has no right to corporate existence against the State.
18. The Government of the Philippines is precluded from holding copyrights except by
assignment, bequest or other transfers.
19. Watered Stocks are stocks that have been issued by the corporation for consideration
reflected as equal to the par or issued value of the shares, when in fact the amount actually
received was less.
20. Discounted Stock-issued for consideration less than their par value.
21. Bonus Stocks are shares of stock that have been issued by the corporation at their par or
issued value of the shares when in fact no consideration was received or paid by the
subscriber with the understanding that he need never pay for them.
22. A corporation may not buy its own stocks when exercising/allowing pre-emptive right. It
may only do so in case of delinquency sales, when collecting indebtedness and when
eliminating fractional shares.
23. Appraisal right is the right to withdraw from the corporation and demand payment of the
fair value of the shares after dissenting from certain corporate acts involving fundamental
changes in corporate structure.
24. As used in the Corporation Code, ‘outstanding capital stock’ means the total shares issued
to subscribers or stockholders, whether or not fully or partially paid as long as there is a
binding subscription agreement except treasury shares.
25. The Board of Directors alone may not declare STOCK DIVIDEND but they may declare cash,
property and script dividends.
26. A Vice-President is not a corporate officer. Corporate officers are the President, Secretary
and Treasurer.
27. Unlike suspension of payments under Insolvency Law, suspension of payments under FRIA
Law is applicable only to individual debtor.

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28. Suspension of Payments is a legal scheme whereby a debtor, who has sufficient assets but
who may be unable to meet his obligations as and when they fall due, may petition for
more time within which to settle such obligations.
29. In Corporation Law, the application of the principle of “ Centralized Management ” has
brought about the jurisprudential doctrine of Business Judgment Rule.
30. Foreign corporation doing business in the Philippines needs license to sue before the
Philippine courts on an isolated transaction.

31. Grandfather Rule in Corporation Law means that corporate stockholdings would be traced
from the nationality of the stockholders of investor corporations in determining, in turn, the
nationality of the investee corporation.
32. To deny the right to inspect over business secrets or confidential matters is based on the
principle that the right to inspect should be for a legitimate purpose that is protective of
the interests of the corporation.
33. In a corporate setting, the ‘shares of stock’ represent ownership of interest of the
stockholder over the corporate enterprise.

34. In the case of a corporation that is engaged in PUBLIC TRANSPORTATION, it should comply
with the 70%-30% Foreign Equity Participation Rule under the Constitution.
35. Works are protected by the sole fact of their creation irrespective of their mode or form of
expression, as well as their content quality and purpose.
36. Copyright in a work of architecture includes the right to control the erection of a building
which reproduces the whole work.
37. To prove copyright infringement , the complainant must prove access, substantial similarity
and improper appropriation.
38. The copyright is distinct from the property in the material object subject to it.
Consequently , the transfer or assignment of the sole copy of the work does not imply the
transfer or assignment of the copyright.
39. A retransmission of the original work into a different medium is presumptively unfair.
40. With respect to intellectual creations, letters and other private communications would be
owned by the person to whom such letters are addressed and delivered.

41. Concealment of a disease is a ground for the rescission of an insurance contract whether
intentional or unintentional.
42. The insurer is not liable for the loss if a claim for compulsory motor vehicle liability
insurance is filed more than six ( 6) months from the date of the accident.
43. An Irrevocable Letter of Credit refers to the obligation assumed by the opening bank while
a Confirmed Letter of Credit refers to the obligation assumed by the correspondent bank.

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44. Quasi-banks are entities engaged in the borrowing of funds through the issuance,
endorsement, or assignment with recourse or acceptance of deposit substitutes for
purposes of relending or purchasing of receivables and other obligations.