DEFINITIONA 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.

Components1. 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; ande. 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 corporation4. Members - Corporators in a non-stock corporation5. 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.

SubscribersPartythatsignsamemorandum of associationof a new firm andpledgestobuythe number ofshareswritten against its name.

Stocks Thestock(alsocapital stock) of acorporationconstitutes theequitystake of its owners. It represents the residual assets of the company that would be due tostockholdersafter 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 Stockholders' equity cannot be withdrawn from the company in a way that is intended to be detrimental to the company's creditors.

StockholdersAnindividual,group, ororganizationthatholdsone or moresharesin acompany, and in whose name the sharecertificateis issued. Alsocalledshareholder.

Kinds of corporation1. 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 shares1. 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 InstrumentsSec. 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 NOTICEBy 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 NOTICEWhen an instrument is dishonored by NON-ACCEPTANCE or NON-PAYMENT, notice of such dishonor must be given to persons secondarily liable, as the case may be. Otherwise, such parties are discharged

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.

When not necessary to give to drawer Notice of dishonor is not required to be given to the drawer in any of the following cases: (1) Drawer and drawee are the same; (2) Drawee is a fictitious person or not having the capacity to contract; (3) Drawer is the person to whom the instrument is presented for payment; (4) The drawer has no right to expect or require that the drawee or acceptor swill honor the instrument; (5) Where the drawer has countermanded payment (Sec. 114)

When not necessary to give to Indorser Notice of dishonor is not required to be given to an indorser in the following cases: (1) Drawee is a fictitious person or does not have the capacity to contract, and indorser was aware of that fact at the time he indorsed the instrument; (2) Indorser is the person to whom the instrument is presented for payment; (3) Instrument was made or accepted for his accommodation. (Sec. 115) Who will benefit If given by or on behalf of the holder (Sec. 92): (1) All subsequent holders (2) All prior parties (as to holder) who have a right of recourse against the party to whom it is given. If given by the indorser (Sec. 93): (1) Holder (2) All parties subsequent to the party to whom notice is given. 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 (Sec. 90): (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 (Sec. 96) 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 definitionA 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 (Sec. 2, par.1) 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.

Insurable InterestSECTION 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 librarySECTION 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 InsuranceSECTION 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 ClauseInsurance 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 policy2.Payable on the death of the insured3. 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 reinstatementNote:Theperiodof2yearsmaybe shortened but it cannot be extended by stipulation.

Differences between a Common Carrier and a Private Carrier: Common Carrier 1. (Availability) Holds himself out in common, that is, to all persons who choose to employ him, as ready to carry for hire2. (Binding Effect) Bound to carry all who offer and tender reasonable compensation for carrying them3. (Diligence required) Extraordinary diligenceis required4. (Governing law) (1) Civil Code (2) Code of Commerce and special laws: If not regulated by the Civil Code, rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws (Art.1766 Civil Code). (3) Law of the country to which the goods are to be transported, IF regarding liability for loss, destruction, or deterioration of goods5. (Regulation) A public service, therefore subject to regulation6. person, corporation, firm, association engaged in the business of carrying or transporting passengers, goods or both, by land, water, air, for compensation, offering services to the public; Private Carrier1. Agrees in some special case with some private individual to carry for hire2. Not bound to carry for any reason, such goods as it is accustomed to carry, unless it enters into a special agreement to do so3. Requires only Ordinary diligence4. Obligation and contracts5. Not subject to regulation as a common carrier6. is not engaged in the business of carrying for the public

Extraordinary diligence (1) Rendering service with the greatest skill and utmost foresight (Agbayani) (2) Carrying passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances (Art 1755) (3) Does not require common carriers to exercise all the care, skill, and diligence of which the human mind can conceive. Nor such as will free the transportation of passengers from all possible perils. Note: A common carrier is not an insurer of the safety of the passengers and is not absolutely and at all events to carry them safely and without injury REASONS Nature of business of common carriers and the exigencies of public policy

Diligence vs Extra diligenceExtraordinary diligence - As applied to the preservation of property, the term "extraordinary diligence" means that extreme care and caution which very prudent and thoughtful persons use in securing and preserving their own property.Extraordinary diligence means that it is more than the diligence of the good father of a family in the transport or custody of goods. It is taking good care or custody of the goods beyond those of others.Ordinary diligence or common diligence is the diligence that a person of average prudence would exercise in handling his/her own property like that at issue. As applied to the preservation of property, the term "ordinary diligence" means that care which every prudent man takes of his own property of a similar nature.

Stoppage in transituRightof the unpaidsellerto stop thedelivery(and regainpossession) ofgoods in transitto thebuyerwho has been declared bankrupt orinsolvent. If this right is not exercised in time, thegoodson delivery become part of theestateof the buyer and may be sold topayoff thesecured creditors.

AMLAAnti-Money Laundering Act (R.A. No. 9160, as amended by R.A. No. 9194)

DEFINITION Money laundering is a crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources. (Sec. 4, RA 9160)

POLICY OF THE LAW It is the policy of the State to protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. Consistent with its foreign policy, the State shall extend cooperation in transnational investigations and prosecutions of persons involved in money laundering activities whenever committed. (Sec. 2, RA 9160)

COVERED INSTITUTIONS (1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP); (2) Insurance companies and all other institutions supervised or regulated by the Insurance Commission; and (3) (i) securities dealers, brokers, salesmen, investment houses and other similar entities managing securities or rendering services as investment agent, advisor, or consultant, (ii) mutual funds, close and investment companies, common trust funds, pre-need companies and other similar entities, (iii) foreign exchange corporations, money changers, money payment, remittance, and transfer companies and other similar entities, and (iv) other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or regulated by Securities and Exchange Commission. (Sec. 3[a], RA 9160)

OBLIGATIONS OF COVERED INSTITUTIONS

CUSTOMER IDENTIFICATION Covered institutions shall establish and record the true identity of its clients based on official documents. They shall maintain a system of verifying the true identity of their clients and, in case of corporate clients, require a system of verifying their legal existence and organizational structure, as well as the authority and identification of all persons purporting to act on their behalf.

The provisions of existing laws to the contrary notwithstanding, anonymous accounts, accounts under fictitious names, and all other similar accounts shall be absolutely prohibited. Peso and foreign currency nonchecking numbered accounts shall be allowed. The BSP may conduct annual testing solely limited to the determination of the existence and true identity of the owners of such accounts. RECORD KEEPING All records of all transactions of covered institutions shall bemaintained and safely stored for five (5) years from the dates of transactions. With respect to closed accounts, the records on customer identification, account files and businesscorrespondence, shall be preserved and safely stored for at least five (5) years from the dates when they were closed.

REPORTING OF COVERED AND SUSPICIOUS TRANSACTIONS Covered institutions shall report to the AMLC all covered transactions and suspicious transactions within five (5) working days from occurrence thereof, unless the Supervising Authority prescribes a longer period notexceeding ten (10) working days.

Should a transaction be determined to be both a covered transaction and a suspicious transaction, the covered institution shall be required to report the same as a suspicious transaction.

When reporting covered or suspicious transactions to the AMLC, covered institutions and their officers and employees [,representatives, agents, advisors, consultants or associates] shall not be deemed to have violated Republic Act No. 1405, as amended, Republic Act No. 6426, as amended, Republic Act No. 8791 and other similar laws, but are prohibited from communicating, directly or indirectly, in any manner or by any means, to any person, the fact that a covered or suspicious transaction report was made, the contents thereof, or any other information in relation thereto. In case of violation thereof, the concerned officer and employee [, representative, agent, advisor, consultant or associate] of the covered institution shall be criminally liable. However, no administrative, criminal or civil proceedings, shall lie against any person for having made a covered or suspicious transaction report in the regular performance of his duties in good faith, whether or not such reporting results in any criminal prosecution under this Act or any other law. When reporting covered or suspicious transactions to the AMLC, covered institutions and their officers and employees [,representatives, agents, advisors, consultants or associates] are prohibited from communicating directly or indirectly, in any manner or by any means, to any person or entity, the media, the fact that a covered or suspicious transaction report was made, the contents thereof, or any other information in relation thereto. Neither may such reporting be published or aired in any manner or form by the mass media, electronic mail, or other similar devices. In case of violation thereof, the concerned officer and employee [, representative, agent, advisor, consultant or associate] of the covered institution and media shall be held criminally liable.(Sec. 9, RA 9160)

COVERED TRANSACTIONS 'Covered transaction' is a transaction in cash or other equivalent monetary instrument involving a total amount in excess of Five hundred thousand pesos (P500,000.00) within one (1) banking day. (Sec. 3[b], RA 9160)

SUSPICIOUS TRANSACTIONS 'Suspicious transaction' are transactions with covered institutions, regardless of the amounts involved, where any of the following circumstances exist: (1) there is no underlying legal or trade obligation, purpose or economic justification; (2) the client is not properly identified; (3) the amount involved is not commensurate with the business or financial capacity of the client; (4) taking into account all known circumstances, it may be perceived that the clients transaction is structured in order to avoid being the subject of reporting requirements under the Act; (5) any circumstance relating to the transaction which is observed to deviate from the profile of the client and/or the clients past transactions with the covered institution; (6) the transaction is in any way related to an unlawful activity or offense under this Act that is about to be, is being or has been committed; or (7) any transaction that is similar or analogous to any of the foregoing. (Sec. 3[b-1], RA 9160 as amended)

WHEN IS MONEY LAUNDERING COMMITTED Money laundering is a crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources. It is committed by the following: (1) Any person knowing that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity, transacts or attempts to transact said monetary instrument or property. (2) Any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity, performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to in paragraph (a) above. (3) Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so. (Sec. 4, RA 9160)

UNLAWFUL ACTIVITIES OR PREDICATE CRIMES Unlawful activity' refers to any act or omission or series or combination thereof involving or having direct relation to the following: (1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal Code, as amended; (2) Sections 4, 5, 6, 8, 9, 10, 12, 13, 14, 15, and 16 of Republic Act No. 9165, otherwise known as the Comprehensive Dangerous Drugs Act of 2002; (3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended; otherwise known as the AntiGraft and Corrupt Practices Act; (4) Plunder under Republic Act No. 7080, as amended;(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal Code, as amended; (6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602; (7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential Decree No. 532; (8) Qualified theft under Article 310 of the Revised Penal Code, as amended; (9) Swindling under Article 315 of the Revised Penal Code, as amended; (10) Smuggling under Republic Act Nos. 455 and 1937; (11) Violations under Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000; (12) Hijacking and other violations under Republic Act No. 6235; destructive arson and murder, as defined under the Revised Penal Code, as amended, including those perpetrated by terrorists against non-combatant persons and similar targets; (13) Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the Securities Regulation Code of 2000; (14) Felonies or offenses of a similar nature that is punishable under the penal laws of other countries. (Sec. 3[i], RA 9160) n 3(i) hereof;