DAY 3 (AM) Mercantile Law Flashcards
I
Yeti Export Corporation (YEC), thru its President, negotiated for Yahoo Bank of Manila {YBM) to issue a letter of credit to course the importation of electronic parts from China to be sold and distributed to various electronic manufacturing companies in Manila. YBM issued the letter of credit and forwarded it to its correspondent bank, Yunan Bank (YB) of Beijing, to notify the Chinese exporters to submit the bill of lading in the name of YBM covering the goods to be exported to Manila and to pay the Chinese exporters the purchase price upon verification of the authenticity of the shipping documents.
The electronic parts arrived in the Port of Manila, and YBM released them to the custody of YEC as an entrustee under a trust receipt. When YEC unpacked the imported parts in its warehouse, it found that they were not only of inferior quality but also did not fit the descriptions contained in the bill of lading. YEC refused to pay YBM the amount owed under the trust receipt. YBM thereafter commenced the following:
(a) Civil suit to hold YB liable for failure to ensure that the electronic parts loaded for exportation in China corresponded with those described in the bill of lading.
Is there any merit in the case against YB?
I
Yeti Export Corporation (YEC), thru its President, negotiated for Yahoo Bank of Manila {YBM) to issue a letter of credit to course the importation of electronic parts from China to be sold and distributed to various electronic manufacturing companies in Manila. YBM issued the letter of credit and forwarded it to its correspondent bank, Yunan Bank (YB) of Beijing, to notify the Chinese exporters to submit the bill of lading in the name of YBM covering the goods to be exported to Manila and to pay the Chinese exporters the purchase price upon verification of the authenticity of the shipping documents.
The electronic parts arrived in the Port of Manila, and YBM released them to the custody of YEC as an entrustee under a trust receipt. When YEC unpacked the imported parts in its warehouse, it found that they were not only of inferior quality but also did not fit the descriptions contained in the bill of lading. YEC refused to pay YBM the amount owed under the trust receipt. YBM thereafter commenced the following:
(b) Criminal suit against YEC and its President for estafa, and sought the payment of the amount covered in the trust receipt. The defense of the YEC President is that he cannot be held liable for a transaction of the corporation, of which he only acted as an officer, and that it is YEC as the principal that should be held liable under the trust receipt, which was entered into in the name of YEC and pursuant to YEC’s corporate purposes. He cited as his legal ground the “Doctrine of Separate Juridical Personality.”
Is the President’s contention meritorious?
II
Yolanda executed and signed a promissory note with all the requisites for negotiability being present, except for the amount which was left blank. She kept the promissory note in her desk and decided to place the amount at a later date. The indicated payee, Yohann, managed to obtain the promissory note from Yolanda’s desk and filled out the amount for the sum of PhP 10 million, which was the amount actually lent by him to Yolanda, but excluding the agreed interest. Yohann later endorsed and delivered the check to Yvette, under circumstances that would constitute the latter to be a holder in due course.
(a) May Yvette hold Yolanda liable on the note?
II
Yolanda executed and signed a promissory note with all the requisites for negotiability being present, except for the amount which was left blank. She kept the promissory note in her desk and decided to place the amount at a later date. The indicated payee, Yohann, managed to obtain the promissory note from Yolanda’s desk and filled out the amount for the sum of PhP 10 million, which was the amount actually lent by him to Yolanda, but excluding the agreed interest. Yohann later endorsed and delivered the check to Yvette, under circumstances that would constitute the latter to be a holder in due course.
(b) Would your answer be the same if the promissory note was actually completed by Yolanda (including the amount of PhP 10 million), but stolen from her desk by Yohann? Can Yvette enforce the note against Yolanda?
III
On November 23, 2017, Yas Ysmael (Ysmael) loaned the amount of PhP 5 million to Yarn & Thread Corporation (YTC), through its President, Ylmas Yektas (Yektas), which loan was evidenced by a Promissory Note (PN), which reads as follows:
Date: _______
Within one year from date hereof, I promise to pay to the order of YAS YSMAEL, the sum of PhP 5 million with interest at 120% per annum.
YARN & THREAD Corporation
By:
(Sgd.)
Ylmas Yektas
Yektas was the controlling stockholder of YTC at the time the PN was issued. As security for the payment of the PN, Yektas issued and delivered to Ysmael a postdated personal check covering the face value of the PN drawn from his account with Yellow Bell Bank and Trust Company. The proceeds of the loan under the PN were used by YTC as working capital.
A year later, Ysmael inserted the date of “November 23, 2017” on the date section of the PN, and made a formal demand upon YTC, through Yektas, to pay the note, but which was refused on the ground that Yektas was no longer the President and controlling shareholder of YTC. By this time, all the shares of YTC had already been sold to a new group of investors. Ysmael deposited the personal check issued by Yektas which was dishonored. He then filed a collection suit against YTC and Yektas including the accrued interest.
The defendants raised the following defense in the collection suit. Rule on the merit of the defense.
(a) A PN issued with a blank date is one that is not payable on demand or on a fixed or determinable future time, and therefore the insertion of the date constituted material alteration that nullified it, so that no cause of action arose.
III
On November 23, 2017, Yas Ysmael (Ysmael) loaned the amount of PhP 5 million to Yarn & Thread Corporation (YTC), through its President, Ylmas Yektas (Yektas), which loan was evidenced by a Promissory Note (PN), which reads as follows:
Date: _______
Within one year from date hereof, I promise to pay to the order of YAS YSMAEL, the sum of PhP 5 million with interest at 120% per annum.
YARN & THREAD Corporation
By:
(Sgd.)
Ylmas Yektas
Yektas was the controlling stockholder of YTC at the time the PN was issued. As security for the payment of the PN, Yektas issued and delivered to Ysmael a postdated personal check covering the face value of the PN drawn from his account with Yellow Bell Bank and Trust Company. The proceeds of the loan under the PN were used by YTC as working capital.
A year later, Ysmael inserted the date of “November 23, 2017” on the date section of the PN, and made a formal demand upon YTC, through Yektas, to pay the note, but which was refused on the ground that Yektas was no longer the President and controlling shareholder of YTC. By this time, all the shares of YTC had already been sold to a new group of investors. Ysmael deposited the personal check issued by Yektas which was dishonored. He then filed a collection suit against YTC and Yektas including the accrued interest.
The defendants raised the following defense in the collection suit. Rule on the merit of the defense.
(b) Yektas cannot be made liable on the PN since he signed in his capacity as President of YTC, which fact was known to Ysmael although not indicated on the PN.
III
On November 23, 2017, Yas Ysmael (Ysmael) loaned the amount of PhP 5 million to Yarn & Thread Corporation (YTC), through its President, Ylmas Yektas (Yektas), which loan was evidenced by a Promissory Note (PN), which reads as follows:
Date: _______
Within one year from date hereof, I promise to pay to the order of YAS YSMAEL, the sum of PhP 5 million with interest at 120% per annum.
YARN & THREAD Corporation
By:
(Sgd.)
Ylmas Yektas
Yektas was the controlling stockholder of YTC at the time the PN was issued. As security for the payment of the PN, Yektas issued and delivered to Ysmael a postdated personal check covering the face value of the PN drawn from his account with Yellow Bell Bank and Trust Company. The proceeds of the loan under the PN were used by YTC as working capital.
A year later, Ysmael inserted the date of “November 23, 2017” on the date section of the PN, and made a formal demand upon YTC, through Yektas, to pay the note, but which was refused on the ground that Yektas was no longer the President and controlling shareholder of YTC. By this time, all the shares of YTC had already been sold to a new group of investors. Ysmael deposited the personal check issued by Yektas which was dishonored. He then filed a collection suit against YTC and Yektas including the accrued interest.
The defendants raised the following defense in the collection suit. Rule on the merit of the defense.
(c) Yektas signed the PN merely as an accommodation to YTC. As he received no consideration for the PN, it is void for lack of consideration.
III
On November 23, 2017, Yas Ysmael (Ysmael) loaned the amount of PhP 5 million to Yarn & Thread Corporation (YTC), through its President, Ylmas Yektas (Yektas), which loan was evidenced by a Promissory Note (PN), which reads as follows:
Date: _______
Within one year from date hereof, I promise to pay to the order of YAS YSMAEL, the sum of PhP 5 million with interest at 120% per annum.
YARN & THREAD Corporation
By:
(Sgd.)
Ylmas Yektas
Yektas was the controlling stockholder of YTC at the time the PN was issued. As security for the payment of the PN, Yektas issued and delivered to Ysmael a postdated personal check covering the face value of the PN drawn from his account with Yellow Bell Bank and Trust Company. The proceeds of the loan under the PN were used by YTC as working capital.
A year later, Ysmael inserted the date of “November 23, 2017” on the date section of the PN, and made a formal demand upon YTC, through Yektas, to pay the note, but which was refused on the ground that Yektas was no longer the President and controlling shareholder of YTC. By this time, all the shares of YTC had already been sold to a new group of investors. Ysmael deposited the personal check issued by Yektas which was dishonored. He then filed a collection suit against YTC and Yektas including the accrued interest.
The defendants raised the following defense in the collection suit. Rule on the merit of the defense.
(d) YTC, now owned by new owners, cannot be held liable on the PN since it was entered into by its former owner and President, which act the new Board of Directors did not ratify.
III
On November 23, 2017, Yas Ysmael (Ysmael) loaned the amount of PhP 5 million to Yarn & Thread Corporation (YTC), through its President, Ylmas Yektas (Yektas), which loan was evidenced by a Promissory Note (PN), which reads as follows:
Date: _______
Within one year from date hereof, I promise to pay to the order of YAS YSMAEL, the sum of PhP 5 million with interest at 120% per annum.
YARN & THREAD Corporation
By:
(Sgd.)
Ylmas Yektas
Yektas was the controlling stockholder of YTC at the time the PN was issued. As security for the payment of the PN, Yektas issued and delivered to Ysmael a postdated personal check covering the face value of the PN drawn from his account with Yellow Bell Bank and Trust Company. The proceeds of the loan under the PN were used by YTC as working capital.
A year later, Ysmael inserted the date of “November 23, 2017” on the date section of the PN, and made a formal demand upon YTC, through Yektas, to pay the note, but which was refused on the ground that Yektas was no longer the President and controlling shareholder of YTC. By this time, all the shares of YTC had already been sold to a new group of investors. Ysmael deposited the personal check issued by Yektas which was dishonored. He then filed a collection suit against YTC and Yektas including the accrued interest.
The defendants raised the following defense in the collection suit. Rule on the merit of the defense.
(e) The PN .is void for being in violation of the Usury Law seeking interest at an unconscionable rate of 120% p.a.
IV
Ysidro, a paying passenger, was on board Bus No. 904 owned and operated by Yatco Transportation Company (Yatco). He boarded the bus at Munoz, Nueva Ecija with Manila as his final destination. He was seated on the first row, window seat on the left side of the bus. As the bus was negotiating the national highway in front of the public market of Gerona, Tarlac, the bus came to a full stop because of the traffic. The driver of the bus took this opportunity to check on the tires of the bus and to relieve himself. As he was alighting from the bus to do these, an unidentified man standing along the highway hurled a huge rock at the left side of the bus and hit Ysidro between his eyes. He lost consciousness and immediately the driver, with the conductor, drove the bus to bring him to the nearest hospital. He expired before the bus could reach the hospital.
Ysidro’s wife and children brought a civil action to collect damages from Yatco, alleging that as a common carrier, it was required to exercise extraordinary diligence in ensuring the safety of its passengers. They contended that, in case of injuries and/or death on the part of any of its passengers, the common carrier is presumed to be at fault. In its defense, Yatco alleged that it is not an absolute insurer of its passengers and that Ysidro’s death was not due to any defect in the means of transport or method of transporting passengers, or the negligent acts of its employees. Since the accident was due to the fault of a stranger over whom the common carrier had no control, or of which it did not have any prior knowledge to be able to prevent it, the cause of Ysidro’s death should be considered a fortuitous event and not the liability of the common carrier.
(a) Is a common carrier presumed to be at fault whenever there is death or injury to its passengers, regardless of the cause of death or injury?
IV
Ysidro, a paying passenger, was on board Bus No. 904 owned and operated by Yatco Transportation Company (Yatco). He boarded the bus at Munoz, Nueva Ecija with Manila as his final destination. He was seated on the first row, window seat on the left side of the bus. As the bus was negotiating the national highway in front of the public market of Gerona, Tarlac, the bus came to a full stop because of the traffic. The driver of the bus took this opportunity to check on the tires of the bus and to relieve himself. As he was alighting from the bus to do these, an unidentified man standing along the highway hurled a huge rock at the left side of the bus and hit Ysidro between his eyes. He lost consciousness and immediately the driver, with the conductor, drove the bus to bring him to the nearest hospital. He expired before the bus could reach the hospital.
Ysidro’s wife and children brought a civil action to collect damages from Yatco, alleging that as a common carrier, it was required to exercise extraordinary diligence in ensuring the safety of its passengers. They contended that, in case of injuries and/or death on the part of any of its passengers, the common carrier is presumed to be at fault. In its defense, Yatco alleged that it is not an absolute insurer of its passengers and that Ysidro’s death was not due to any defect in the means of transport or method of transporting passengers, or the negligent acts of its employees. Since the accident was due to the fault of a stranger over whom the common carrier had no control, or of which it did not have any prior knowledge to be able to prevent it, the cause of Ysidro’s death should be considered a fortuitous event and not the liability of the common carrier.
(b) What kind of diligence is required of common carriers like Yatco for the protection of its passengers?
IV
Ysidro, a paying passenger, was on board Bus No. 904 owned and operated by Yatco Transportation Company (Yatco). He boarded the bus at Munoz, Nueva Ecija with Manila as his final destination. He was seated on the first row, window seat on the left side of the bus. As the bus was negotiating the national highway in front of the public market of Gerona, Tarlac, the bus came to a full stop because of the traffic. The driver of the bus took this opportunity to check on the tires of the bus and to relieve himself. As he was alighting from the bus to do these, an unidentified man standing along the highway hurled a huge rock at the left side of the bus and hit Ysidro between his eyes. He lost consciousness and immediately the driver, with the conductor, drove the bus to bring him to the nearest hospital. He expired before the bus could reach the hospital.
Ysidro’s wife and children brought a civil action to collect damages from Yatco, alleging that as a common carrier, it was required to exercise extraordinary diligence in ensuring the safety of its passengers. They contended that, in case of injuries and/or death on the part of any of its passengers, the common carrier is presumed to be at fault. In its defense, Yatco alleged that it is not an absolute insurer of its passengers and that Ysidro’s death was not due to any defect in the means of transport or method of transporting passengers, or the negligent acts of its employees. Since the accident was due to the fault of a stranger over whom the common carrier had no control, or of which it did not have any prior knowledge to be able to prevent it, the cause of Ysidro’s death should be considered a fortuitous event and not the liability of the common carrier.
(c) Will your answer be the same as your answer in (b) above, if the assailant was another paying passenger who boarded the bus and deliberately stabbed Ysidro to death?
V
Yellow Fin Tuna Corporation (Yellow Fin), a domestic corporation, applied for a credit facility in the amount of PhP 50 million with Yengzi Financial Corporation (YFC). The application was approved and the Credit Agreement was signed and took effect. Ysko and Yuan, Yellow Fin Chairman and President, respectively, executed a Continuing Suretyship Agreement in favor of YFC wherein they guaranteed the due and full payment and performance of Yellow Fin’s guarantee obligations under the credit facility. YFC soon discovered material inconsistencies in the financial statements given by Yellow Fin, drawing YFC to conclude that Yellow Fin committed misrepresentation. Under the Credit Agreement, any misrepresentation by Yellow Fin or its sureties will constitute an event of default. YFC thus called an event of default and filed a complaint for sum of money against Yellow Fin, Ysko, and Yuan. Immediately thereafter, Yellow Fin filed a petition for rehabilitation. The court suspended the proceedings in YFC’s complaint until the rehabilitation court disposed of the petition for rehabilitation. YFC posits that the suspension of the proceedings should only be with respect to Yellow Fin but not with respect to Ysko and Yuan.
Is YFC correct?
VI
Shortly after Yin and Yang were wed, they each took out separate life insurance policies on their lives, and mutually designated one another as sole beneficiary. Both life insurance policies provided for a double indemnity clause, the cost for which was added to the premium rate. During the last 10 years of their marriage, the spouses had faithfully paid for the annual premiums over the life policies from both their salaries. Unfortunately, Yin fell in love with his officemate, Vessel, and they carried on an affair. After two years, their relationship bore them a daughter named Vinsel. Without the knowledge of Yang, Yin changed the designation of the beneficiary to an “irrevocable designation” of Vinsel and Vessel jointly. When Yang learned of the affair, she was so despondent that, having chanced upon Yin and Vessel on a date, she rammed them down with the car she was driving, resulting in Vin’s death and Vessel’s complete loss of mobilization. Yang was sued for parricide, and while the case was pending, she filed a claim on the proceeds of the life insurance of Yin as irrevocable beneficiary, or at least his legal heir, and opposed the claims on behalf of Vessel and her daughter Vinsel. Yang claimed that her designation as beneficiary in Vin’s life insurance policy was irrevocable, in the nature of one “coupled with interest,” since it was made in accordance with their mutual agreement to designate one another as sole beneficiary in their respective life policies. She also claimed that the beneficiary designation of Vessel and the illegitimate minor child Vinsel was void being the product of an illicit relationship, and therefore without “insurable interest.”
(a) Is Yang correct in saying that her designation as beneficiary was irrevocable?
VI
Shortly after Yin and Yang were wed, they each took out separate life insurance policies on their lives, and mutually designated one another as sole beneficiary. Both life insurance policies provided for a double indemnity clause, the cost for which was added to the premium rate. During the last 10 years of their marriage, the spouses had faithfully paid for the annual premiums over the life policies from both their salaries. Unfortunately, Yin fell in love with his officemate, Vessel, and they carried on an affair. After two years, their relationship bore them a daughter named Vinsel. Without the knowledge of Yang, Yin changed the designation of the beneficiary to an “irrevocable designation” of Vinsel and Vessel jointly. When Yang learned of the affair, she was so despondent that, having chanced upon Yin and Vessel on a date, she rammed them down with the car she was driving, resulting in Vin’s death and Vessel’s complete loss of mobilization. Yang was sued for parricide, and while the case was pending, she filed a claim on the proceeds of the life insurance of Yin as irrevocable beneficiary, or at least his legal heir, and opposed the claims on behalf of Vessel and her daughter Vinsel. Yang claimed that her designation as beneficiary in Vin’s life insurance policy was irrevocable, in the nature of one “coupled with interest,” since it was made in accordance with their mutual agreement to designate one another as sole beneficiary in their respective life policies. She also claimed that the beneficiary designation of Vessel and the illegitimate minor child Vinsel was void being the product of an illicit relationship, and therefore without “insurable interest.”
(b) Do Vessel and Vinsel have “insurable interest” on the life of Yin?
VII
Yelp Pictures Inc. (Yelp Pictures), a movie production company based in California, USA, entered into a contract with Yehey Movies Inc., a Filipino movie production and distribution company which is registered in the Philippines under the Securities Regulation Code (SRC) and listed in the Philippine Stock Exchange Inc. (PSE), for the exclusive distribution in the Philippines of movies produced in the USA by Yelp Pictures. Yehey Movies is currently owned 85% by Yavic Yamson, and the balance, by the public in the Philippines. For purposes of entering into the contract, suing for breach of such contract, and prosecuting unauthorized showing of movies produced by Yelp Pictures, it appointed Atty. Yson, a local lawyer, as its attorney-in-fact.
Simultaneously with the execution of the film distribution agreement, Yehey Movies also granted Yelp Pictures an option to acquire up to 40% of the total outstanding capital stock in Yehey Movies post-exercise of the option, at the option price of PhP .01 per number of shares covered by the option, exercisable within a period of one (1) year from the date of the grant, at the exercise price of PhP 100 per share. Once exercised, Yelp Pictures was granted the right to nominate two (2) directors to the Board of Yehey Movies, and Yavic Yamson agreed to vote all his shares for the election of directors to be nominated by Yelp Pictures.
(a) May the acts of entering into the film distribution contract, the subsequent execution and performance of the terms of the contract in the Philippines, and the appointment of Atty. Yson, be considered as act of “doing business” in the Philippines that will require Yelp Pictures to register as a foreign corporation and obtain a license to do business in the Philippines?
