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A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly
authorized by law or incident to its existence. Generally, it cannot commit felonies punishable under the Revised Penal Code for corporations are
incapable of the requisite intent to commit these crimes. It cannot commit crimes that are punishable under special laws because crimes are personal in
nature requiring personal performance of overt acts. Also, the penalty of imprisonment cannot be imposed. Further, a corporation cannot be awarded
moral damages.
Components
1. Incorporators - those mentioned in the articles of incorporation as originally forming and composing the corporation, having signed the articles and
acknowledged the same before the notary public. a. They must be natural persons; b. At least five (5) but not more than fifteen (15); c. They must be of
Legal Age; d. Majority must be residents of the Philippines; and e. Each must own or subscribe to at leat one share. 2. Corporators - All the
stockholders and members of a corporation including the incorporators who are still stockholders. 3. Stockholders - Corporators in a stock corporation
4. Members - Corporators in a non-stock corporation 5. Directors and Trustees - The Board of Directors is the governing body in a stock corporation
while the Board of Trustees is the governing body in a non-stock corporation. 6. Corporate Officers - They are the officers who are identified as such in
the Corporation Code, the Articles of Incorporation or the Bylaws of the corporation. 7. Promoter - A self-constituted organizer who finds an enterprise
or venture and helps to attract investors, forms a corporation and launches it in business, all with a view to promotion profits.
Subscribers Party that signs a memorandum of association of a new firm and pledges to buy the number of shares written against its name.
Stocks The stock of a corporation constitutes the equity stake of its owners. It represents the residual assets of the company that would be due
to stockholders after discharge of all senior claims such as secured and unsecured debt. Stockholders' equity cannot be withdrawn from the company in
a way that is intended to be detrimental to the company's creditors.
Stockholders An individual, group, or organization that holds one or more shares in a company, and in whose name the share certificate is issued.
Also called shareholder.
Kinds of corporation
1. As to organizers: a. Public by State only; and b. Private by private persons alone or with the State. 2. As to functions: a. Public government
of a portion of the State; and b. Private usually for profit-making functions. 3. As to governing law: a. Public Special Laws and Local Government
Code; and b. Private Law on Private Corporations. 4. As to legal status: a. De jure corporation Corporation organized in accordance with
requirements of law; b. De facto corporation Corporation where there exists a flaw in its incorporation. 5. As to existence of stocks: a. Stock
corporation Corporation in which capital stock is divided into shares and is authorized to distribute to holders thereof of such shares dividends or
allotments of the surplus profits on the basis of the shares held. b. Non-stock corporation Corporation which does not issue stocks and does not
distribute dividends to their members.
Kinds of shares
1. Common Shares A basic class of stock ordinarily and usually issued without extraordinary rights or privileges and entitles the shareholder to a pro
rata division of profits.
2. Founders Shares Given rights and privileges not enjoyed by owners of other stocks; exclusive right to vote/be voted in the election of directors
shall not exceed 5 years (note: within this period, common shares are deprived of their voting rights)
3. Preferred Shares Issued only with par value; given preference in distribution of assets in liquidation and in payment of dividends and other
preferences stated in the articles of incorporation; may be deprived of voting rights.
4. Redeemable Shares Expressly provided in articles; have to be purchased/taken up upon expiration of period of said shares purchased whether or
not there is unrestricted retained earnings; may be deprived of voting rights.
5. Treasury Stocks stocks previously issued and fully paid for and reacquired by the corporation through lawful means (purchase, donation, etc.); not
entitled to vote and no dividends could be declared thereon as corporations cannot declare dividends to itself.
Piercing the veil of corporate fiction means that while the corporation cannot be generally held liable for acts or liabilities of its stockholders or
members, and vice versa because a corporation has a personality separate and distinct from its members or stockholders, however, the corporate
existence is disregarded under this doctrine when the corporation is formed or used for illegitimate purposes, particularly, as a shield to perpetuate
fraud, defeat public convenience, justify wrong, evade a just and valid obligation or defend a crime.
BILL OF EXCHANGE (1) An unconditional order in writing (2) Addressed by one person to another (3) Signed by the person giving it (4) Requiring the
person to whom it is addressed to pay on demand or at a fixed or determinable future time (5) A sum certain in money to order or to bearer
KINDS OF BILLS OF EXCHANGE
(1) Draft used synonymously with bill of exchange although it normally refers to a bill of exchange used in documentary exchange like letters of credit
transactions.
(2) Inland and foreign bill an Inland bill is a bill which is, or on its face purports to be, both drawn and payable within the Philippines. Any other bill is a
foreign bill.
(3) Time draft draft that is payable at a fixed date.
(4) Sight or demand draft payable when the holder presents it for payment.
(5) Trade acceptance used in contracts of sale where the seller as drawer orders the buyer (as drawee) to pay a sum certain to the same seller (payee).
(6) Bankers acceptance a time draft across the face which the drawee has written the word accepted. (Sundiang and Aquino)
(7) Check - A bill of exchange drawn on a bank payable on demand (Sec. 185). It is the most common form of bill of exchange.
NOTICE OF DISHONOR in Negotiable Instruments
Sec. 89. To whom notice of dishonor must be given. - Except as herein otherwise provided, when a negotiable instrument has
been dishonored by non-acceptance or non-payment, notice of dishonor must be given to the drawer and to each indorser, and any
drawer or indorser to whom such notice is not given is discharged.
MEANING OF NOTICE - By notice of dishonor is meant bringing either verbally or by writing, to the knowledge of the drawer or indorser of an
instrument, the fact that a specified negotiable instrument, upon proper proceedings taken, has not been accepted or hasnt been paid, and that the
party notified is expected to paid it
NECESSITY AND PURPOSE OF NOTICE - When an instrument is dishonored by NON-ACCEPTANCE or NON-PAYMENT,
dishonor must be given to persons secondarily liable, as the case may be. Otherwise, such parties are discharged
notice
of
such
Notice given by holder or his agent to party or parties secondarily liable that the instrument was dishonored by: (1) Non-acceptance by
the drawee of a bill; or (2) Non-payment by the acceptor of a bill; or (3) Non-payment by the maker of a note Requisites: (1) Given by holder or his
agent, or by any party who may be compelled by the holder to pay (2) Given to secondary party or his agent (3) Given within the periods provided by
law (4) Given at the proper place
PARTIES TO BE NOTIFIED
(1) Non-acceptance (bill) to persons secondarily liable, namely, the drawer and indorsers as the case may be
(2) Non-payment (both bill and note) to indorsers Note: Notice must be given to persons secondarily liable. Otherwise, such parties are discharged.
Notice may be given to the party himself or to his agent. When given Notice may be given as soon as the instrument is dishonoured.
PARTIES WHO MAY GIVE NOTICE OF DISHONOR - The notice may be given by or on behalf of the holder, or by or on behalf of any party to the
instrument who might be compelled to pay it to the holder, and who, upon taking it up, would have a right to reimbursement from the party to whom the
notice is given.
Who should give: (1) Holder (2) Agent or representative of holder. (3) Any party who may be compelled to pay like indorsers. (4) Agent of any party
who may be compelled.
EFFECT OF NOTICE - Notice of dishonor is required to charge parties secondarily liable. Upon valid notice of dishonor, immediate right of recourse
against the indorser arises. It is as if the indorser becomes primarily liable in the sense that the holder need not claim payment from the person primarily
liable.
FORM OF NOTICE - The notice may be: (1) In writing; or (2) Merely oral The notice may be given in any terms which: (1) Sufficiently identify the
instrument; and (2) Indicate that it has been dishonored by non-acceptance or non-payment It may in all cases be given by delivering it personally or
through the mails
Insurance definition A contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage
or liability arising from an unknown or contingent event. DEFINITION - (1) A contract of indemnity (2) Wherein one undertakes for a consideration (3) To
indemnify another against loss, damage, or liability (4) Arising from an unknown or contingent event.
Insurable interest - DEFINITION
An insurable interest is that interest which the law requires the owner of an insurance policy to have in the person or thing insured, the absence of which
renders the contract void. In general, an insurable interest is that interest which a person is deemed to have in the subject matter insured, where he has
a relation or connection with or concern in it, such that the person will derive pecuniary benefit or advantage from the preservation of the subject matter
insured and will suffer pecuniary loss or damage from its destruction, termination, or injury by the happening of the event insured against. The existence
of an insurable interest gives a person the legal right to insure the subject matter of the policy of insurance. An insurable interest is one of the most
basic and essential requirements in an insurance contract. As such, it may not be waived by stipulation. The insurable interest need not always be
pecuniary in nature.
SECTION 11. Every person has an insurable interest in the life and health. (a) Of himself; (b) Of any person on whom he depends wholly or in
part for education or support; (c) Of any person under a legal obligation to him for the payment of money, or respecting property or services, of which
death or illness might delay or prevent the performance; and (d) Of any person upon whose life any estate or interest vested in him depends.
SECTION 12. Every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such a nature that a
contemplated peril might directly damnify the insured, is an insurable interest.
SECTION 13. An insurable interest in property may consist in: (a) An existing interest; (b) An inchoate interest founded on an existing interest; or
(c) An expectancy, coupled with an existing interest in that out of which the expectancy arises.
SECTION 14. A carrier or depository of any kind has an insurable interest in a thing held by him as such, to the extent of his liability but not to exceed
the value thereof.
SECTION 15. A mere contingent or expectant interest in anything, not founded on an actual right to the thing, nor upon any valid contract for it, is not
insurable.
SECTION 16. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss or injury thereof.
SECTION 17. The sole object of insurance is the indemnity of the insured, and if he has no insurable interest the contract is void.
SECTION 18. An interest insured must exist when the insurance takes effect, and when the loss occurs, but need not exist in the meantime.
SECTION 19. Except in the cases specified in the next four sections, and in the cases of life, accident, and health insurance, a change of interest in any
part of a thing insured unaccompanied by a corresponding change of interest in the insurance, suspends the insurance to an equivalent extent, until the
interest in the thing and the interest in the insurance are vested in the same person. robles virtual law library
SECTION 20. A change of interest in a thing insured, after the occurrence of an injury which results in a loss, does not affect the right of the insured to
indemnify for the loss.
SECTION 21. A change of interest in one or more of several distinct things, separately insured by one policy, does not avoid the insurance as to the
others.
SECTION 22. A change of interest, by will or succession, on the death of the insured, does not avoid an insurance; and his interest in the insurance
passes to the person taking his interest in the thing insured.
SECTION 23. A transfer of interest by one of several partners, joint owners, or owners in common, who are jointly insured, to the others, does not avoid
an insurance, even though it has been agreed that the insurance shall cease upon an alienation of the thing insured.
SECTION 24. Every stipulation in a policy of insurance for the payment of loss whether the person insured has or has not any interest in the subject
matter of the insurance except in the cases provided for in section one hundred and sixty-six or that the policy shall be received as proof of such
interest, and every policy executed by way of gaming or wagering, is void.
Marine Insurance
SECTION 92. Marine insurance is an insurance against risks connected with navigation, to which a ship, cargo, freightage, profits, or other insurable
interest in movable property, may be exposed during a certain voyage or a fixed period of time.
SECTION 93. The owner of a ship has in all cases an insurable interest in it, even when it has been chartered by one who covenants to pay him its value
in case of loss: Provided, That in this case the insurer shall be liable for only that part of the of the loss which the insured cannot recover from the
charterer.
SECTION 94. The insurable interest of the owner of a ship hypothecated by bottomry is only the excess of its value over the amount secured by
bottomry.
SECTION 95. Freightage, in the sense of a policy of marine insurances signifies all the benefit derived by the owner, either from the chartering of the
ship or its employment for the carriage of his own goods or those of others.
SECTION 96. The owner of a ship has an insurable interest in expected freightage which according to the ordinary and probable course of things he
would have earned but for the intervention of a peril insured against or other peril incident to the voyage.
SECTION 97. The interest mentioned in the last section exists, in the case of a charter party, when the ship has broken ground on the chartered voyage,
and if a price is to be paid for the carriage of goods when they are actually on board, or there is some contract for putting them on board, and both ship
and goods are ready for the specified voyage.
SECTION 98. One who has an interest in the thing from which profits are expected to proceed, has an insurable interest in the profits.
SECTION 99. The charterer of a ship has an insurable interest in it, to the extent that he is liable to be damnified by its loss.
Incontestability Clause
Insurance policy that precludes the insurer from alleging that the policy, after it has been in effect for a stated period (typically two or three years), is
void because of misrepresentations made by the insured in the application for it. An incontestability clause prevents an insurer from denying benefits on
the ground of Misrepresentation in the application. The clause applies only when the policy has been in effect for a specified period of time. This time
period, the contestability period, is usually two or three years.
Requisites: 1.Life insurance policy 2.Payable on the death of the insured 3. It has been in force during thelifetime of the insured for a periodof at least
two years from the dateof its issue or of its last reinstatement; Note: The period of 2 years may be shortened but it cannot be extended by stipulation.