DAY 3 (AM) Mercantile Law Flashcards
I
What does “doing business in the Philippines” under the Foreign Investments Act of 1991 mean?
II
Jason is the proud owner of a newly-built house worth Php 5 million. As a protection against any possible loss or damage to his house, Jason applied for a fire insurance policy thereon with Shure Insurance Corporation (Shure) on October 11, 2016 and paid the premium in cash. It took the company a week to approve Jason’s application. On October 18, 2016, Shure mailed the approved policy to Jason which the latter received five (5) days later. However, Jason’s house had been razed by fire which transpired a day before his receipt of the approved policy. Jason filed a written claim with Shure under the insurance policy. Shure prays for the denial of the claim on the ground that the theory of cognition applies to contracts of insurance.
Decide Jason’s claim with reasons.
III
ABC Appliances Corporation (ABC) is a domestic corporation engaged in the production and sale of televisions and other appliances. YYY Engineers, a Taiwanese company, is the manufacturer of televisions and other appliances from whom ABC actually purchases appliances. From 2000, when ABC started doing business with YYY, it has been using the mark “TTubes” in the Philippines for the television units that were bought from YYY. In 2015, YYY filed a trademark application for “TTubes.” Later, ABC also filed its application. Both claim the right over the trademark “TTubes” for television products. YYY relies on the principle of “first to file” while ABC involves the “doctrine of prior use.”
[a] Does the fact that YYY filed its application ahead of ABC mean that YYY has the prior right over the trademark? Explain briefly.
III
ABC Appliances Corporation (ABC) is a domestic corporation engaged in the production and sale of televisions and other appliances. YYY Engineers, a Taiwanese company, is the manufacturer of televisions and other appliances from whom ABC actually purchases appliances. From 2000, when ABC started doing business with YYY, it has been using the mark “TTubes” in the Philippines for the television units that were bought from YYY. In 2015, YYY filed a trademark application for “TTubes.” Later, ABC also filed its application. Both claim the right over the trademark “TTubes” for television products. YYY relies on the principle of “first to file” while ABC involves the “doctrine of prior use.”
[b] Does the prior registration also mean a conclusive assumption that YYY Engineers is in fact the owner of the trademark “TTubes?” Briefly explain your answer.
IV
X’s “MINI-ME” burgers are bestsellers in the country. Its “MINI-ME” logo, which bears the color blue, is a registered mark and has been so since the year 2010. Y, a competitor ofX, has her own burger which she named “ME-TOO” and her logo thereon is printed in bluish-green. When X sued Y for trademark infringement, the trial court ruled in favor of the plaintiff by applying the Holistic Test. The court held that Y infringed on X’s mark since the dissimilarities between the two marks are too trifling and frivolous such that Y’s “ME-TOO,” when compared to X’s “MINI-ME,” will likely cause confusion among consumers.
Is the application of the Holistic Test correct?
V
MS Brewery Corporation (MS) is a manufacturer and distributor of the popular beer “MS Lite.” It faces stiff competition from BA Brewery Corporation (BA) whose sales of its own beer product, “BA Lighter,” has soared to new heights. Meanwhile, sales of the “MS Lite” decreased considerably. The distribution and marketing personnel of MS later discovered that BA has stored thousands of empty bottles of “MS Lite” manufactured by MS in one of its warehouses. MS filed a suit for unfair competition against BA before the Regional Trial Court (RTC). Finding a connection between the dwindling sales of MS and the increased sales of BA, the RTC ruled that BA resorted to acts of unfair competition to the detriment of MS.
Is the RTC correct? Explain.
VI
Nautica Shipping Lines (Nautica) bought a second hand passenger ship from Japan. It modified the design of the bulkhead of the deck of the ship to accommodate more passengers. The ship sunk with its passengers in Tablas Strait due to heavy rains brought by the monsoon. The heirs of the passengers sued Nautica for its liability as a common carrier based on the reconfiguration of the bulkhead which may have compromised the stability of the ship. Nautica raised the defense that the monsoon is a fortuitous event and, at most, its liability is prescribed by the Limited Liability Rule.
Decide with reasons.
VII
A railroad track of the Philippine National Railway (PNR) is located near a busy intersection of Puyat Avenue and Osmefia Highway. One afternoon, the intersection was heavily congested, as usual. Juan, the driver of a public utility jeepney (PUJ), drove onto the railroad tracks but could go no farther because of the heavy traffic at the intersection. After the jeepney stopped right on the railroad track, it was hit and overturned by a PNR train, resulting in the death of Kim, a passenger of the PUJ, and injuries to Juan and his other passengers. Juan, the injured passengers and Kim’s family sued the PNR for damages for its negligence. It was established that the steel pole barrier before the track was broken, and that the PNR had the last clear chance of avoiding the accident. On the other hand, the PNR raised the defense that the track is for the exclusive use of the train and that motorists are aware that it is negligence per se to stop their vehicles on the tracks.
Decide the case and explain.
VIII
In 2015, Total Bank (Total) proposed to sell to Royal Bank (Royal) its banking business for P 10 billion consisting of specified assets and liabilities. The parties reached an eventual agreement, which they termed as “Purchase and Assumption (P & A) Agreement,” in which Royal would acquire Total’s specified assets and liabilities, excluding contingent claims, with the further stipulation that it should be approved by the Bangko Sentral ng Pilipinas (BSP). BSP imposed the condition that Total should place in escrow Pl billion to cover for contingent claims against it. Total complied. After securing the approval of the BSP, the two banks signed the agreement. BSP thereafter issued a circular advising all bank and non-bank intermediaries that effective January 1, 2016, “the banking activities of Total Bank and Royal Bank have been consolidated and the latter has carried out their operations since then.”
[a] Was there a merger and consolidation of the two banks in point of the Corporation Code? Explain.
VIII
In 2015, Total Bank (Total) proposed to sell to Royal Bank (Royal) its banking business for P 10 billion consisting of specified assets and liabilities. The parties reached an eventual agreement, which they termed as “Purchase and Assumption (P & A) Agreement,” in which Royal would acquire Total’s specified assets and liabilities, excluding contingent claims, with the further stipulation that it should be approved by the Bangko Sentral ng Pilipinas (BSP). BSP imposed the condition that Total should place in escrow Pl billion to cover for contingent claims against it. Total complied. After securing the approval of the BSP, the two banks signed the agreement. BSP thereafter issued a circular advising all bank and non-bank intermediaries that effective January 1, 2016, “the banking activities of Total Bank and Royal Bank have been consolidated and the latter has carried out their operations since then.”
[b] What is meant by a de facto merger? Discuss.
IX
X insured his life for P20 million. X, plays golf and regularly exercises everyday, hence is considered in good health. He did not know, however, that his frequent headache is really caused by his being hypertensive. In his application form for a life insurance for himself, he did not put a check to the question if he is suffering from hypertension, believing that because of his active lifestyle, being hypertensive is a remote possibility. While playing golf one day, X collapsed at the fairway and was declared dead on arrival at the hospital. His death certificate stated that X suffered a massive heart attack.
[a] Will the beneficiary of X be entitled to the proceeds of the life insurance under the circumstances, despite the non-disclosure that he is hypertensive at the time of application?
IX
X insured his life for P20 million. X, plays golf and regularly exercises everyday, hence is considered in good health. He did not know, however, that his frequent headache is really caused by his being hypertensive. In his application form for a life insurance for himself, he did not put a check to the question if he is suffering from hypertension, believing that because of his active lifestyle, being hypertensive is a remote possibility. While playing golf one day, X collapsed at the fairway and was declared dead on arrival at the hospital. His death certificate stated that X suffered a massive heart attack.
[b] If X died in an accident instead of a heart attack, would the fact of X’s failure to disclose that he is hypertensive be considered as material information?
X
After securing a Pl million loan from B, A drew in B’s favor a bill of exchange with C as drawee. The bill reads: “October 1, 2016. Pay to the order of B the sum of P1 million. To: C (drawee). Signed, A.” A then delivered the bill to B who, however, lost it. It turned out that it was stolen by D, B’s brother. D lost no time in forging B’s signature and negotiated it to E who acquired it for value and in good faith.
May E recover on the bill from C, the drawee? Explain.
XI
Royal Links Golf Club obtained a loan from a bank which is secured by a mortgage on a titled lot where holes 1, 2, 3 and 4 are located. The bank informed the Board of Directors (Board) that if the arrearages are not paid within thirty (30) days, it will extra-judicially foreclose the mortgage. The Board decided to offer to the members 200 proprietary membership shares, which are treasury shares, at the price of P175,000.00 per share even when the current market value is P200,000.00.
In behalf and for the benefit of the corporation, Peter, a stockholder, filed a derivative suit against the members of the Board for breach of trust for selling the shares at P25,000.00, lower than its market value, and asked for the nullification of the sales and the removal of the board members. Peter claims the Club incurred a loss of PS million. The Board presented the defense that in its honest belief any delay in the payment of the arrearages will be prejudicial to the Club as the mortgage on its assets will be foreclosed and the sale at a lower price is the best solution to the problem.
Decide the suit and explain.
XII
X owns 10,000 shares in Z Telecoms Corp. As he is in immediate need of money, he offered to sell all his shares to his friend, Y, at a bargain price. Upon receipt of the purchase price from Y, X proceeded to indorse in blank the certificates of shares and delivered these to Y. The latter then went to the corporate secretary of Z Telecoms Corp. and requested the transfer of the shares in his name. The corporate secretary refused since X merely indorsed the certificates in blank to Y. According to the corporate secretary, the certificates should have been specifically indorsed to the purchaser, Y.
Was the corporate secretary justified in declining Y’s request? Discuss.
