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Commercial LawReviewerCompiled by Rehne Gibb N. Larena | University of San CarlosTABLE OF CONTENTSInsurance Law 2Pre-Need Law 21Transportation Law 24Partnership 42Corporation Law 57Securities Regulation Code 9 9Banking Laws 110The New Central Bank Act 110 Law on Secrecy of Bank Deposits 116 General ...

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 CommercialL  aw  Reviewer  

Compiled by Rehne Gibb N. Larena | University of San Carlos



Commercial Law

For the 2020/21 #BestBarEver

REVIEWER



TABLEO  FC  ONTENTS  

InsuranceLaw

2

Pre-NeedL  aw

2  1

TransportationLaw

2  4

Partnership

4  2

CorporationLaw

5  7

SecuritiesR  egulationCode BankingLaws

110

Law on Secrecy of Bank Deposits

116

General Banking Act

117

Philippine Deposit Insurance Corporation Act

123

129

Law on Patents

131

Law on Trademark

137

Law on Copyright

SecuredTransactions Personal Property Securities Act

146

1  53 153

Philippine Competition Act

191

Premium payment

InsuranceL  aw 

Non-default options in life insurance

RANo10607| TheInsuranceC  ode

Refund of premiums Rescission 

Concepto  fI nsurance 

Incontestability Clause

Principle of Indemnity

Devices to Ascertain and Control Risks

Parties

Concealment

Policy

Representation

Elementso  fanI nsuranceContract 

Warranty

Risk

Conditions

CharacteristicsandNatureofI nsuranceC  ontracts  ClassesofI nsurance 

Exception, Exclusion, or Exemption ClaimsS  ettlementa  ndS  ubrogation 

Life

Loss and Notice of Loss

Marine

Rules

Fire

Guidelines on claims settlement

Casualty

Subrogation

Compulsory Motor Vehicle Liability

BusinessofI nsurance

Suretyship

InsuranceCommissionanditsP  owers

157 159

Microinsurance

Surety

161

Bancassurance

Letters of Credit

162

Compulsory insurance coverage for agency-hired workers

165

VariableC  ontracts 

Truth in Lending Act

165

InsurableI nterest 

Anti-Money Laundering Act

166

Foreign Investments Act

171

Insolvency Laws

172 173

Reinstatement of a lapsed policy of life insurance

CONTENTS 

Guaranty

Financial Rehabilitation and Insolvency Act

Perfection  Offer and acceptance/consensuality

Real Estate Mortgage Law

SpecialLaws

Multiple or several interests on same property

186

99 1  10

The New Central Bank Act

IntellectualP  ropertyLaw

Data Privacy Act

Concept of Insurance

In Life Insurance

Deinition.—A contracto  finsuranceis an agreement whereby 1.

one undertakes for a consideration 

2.

to indemnifyanother

In Property Insurance

3.

againstl oss, damage or liability

Double Insurance

4.

arising from an unknowno  rc ontingente  vent.

Overinsurance Reinsurance



Based on the Lectures of Attys. Amago, Pandi and Capanas, Books of Aquino, Sundiang, Miravite, De Leon 

by RGL

2 of 200



Commercial Law

For the 2020/21 #BestBarEver

REVIEWER



For regulatory purposes, a contractofsuretyship shall be deemed to be an insurance contract ONLY if made by a surety who is doing an insurance business. Doingo  rt ransactinganinsurancebusinessshall include: 1) Making or proposing to make, as i nsurer, any insurance contract; 2) Making or proposing to make, as s urety, any contract of suretyship a  savocationand notasm erelyincidentalto any other legitimate business or activity of the surety; 3) Doing any kind of business, including a reinsurance business; 4) Doing or proposing to do any business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of the Insurance Code. Insuranceis a contract whereby 1.

One party called the insurerundertakes for a consideration

2.

To pay another party called the insured, or his beneiciary,

3.

Upon the happening of the perilinsured against,

4.

Whereby the insured or his beneiciary suffers losso  r damage or is exposed to liability.

The TESTto determine whether a contract is one of insurance is whenever  t he a  ssumption o  f risk a  nd the  nd indemniication of l oss is t he principal object a purposeo  f the contract.

indemnity — once the member incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingent, the health care provider must pay for the same to the extent agreed upon under the contract (FortuneMedicarev.Amorin 2014)

1) Insurable interest is indispensable;

2) The value of the interest destroyed or damaged is generally the measure of indemnity; MutualI nsuranceC  ompanies.A mutual insurance company is a cooperative enterprise where the membersareb oth theinsurer 3) Co-insurance clause in marine insurance; and andi nsured. In it, the members all contribute, by a system of 4) Subrogation in property insurance. premiums or assessments, to the creation of a fund from which all losses and liabilities are paid, and where the proits are divided Parties among themselves, in proportion to their interest. The insureris the party who promises to pay in case of loss. Additionally, mutual insurance associations, or clubs, provide three No insurance company shall transact any insurance business in the types of coverage, namely, protection and indemnity,  warrisks, andd  efensecosts. Philippines until after it shall have obtained a  certiicate o  f authorityfrom the Commissioner. Mutual I nsurance C  ompanies l ike P  &I Clubs a  re c onsidered insurers. A protection a  nd i ndemnity c lub, is an association It shall expire on the last day of December, three (3) years following its date of issuance, and shall be renewableeveryt hree(3)years composed of shipowners generally formed for the speciic purpose of providing insurance cover against third-party liabilities of its thereafter, subject to the company's continuing compliance. members. (SteamshipMutualUnderwritingAssociation(Bermuda) The insuredis either Ltd.v.S ulpicioLines2017 Leonen,J ) 1. The ownerof the policy whose life or property is insured; Proitn  otm  aterial—  A  bsence of PROFIT does NOT negate the existence of an insurance contract. Here, the insured and the owner of the policy is one and the same.

Principle of Indemnity

The real purpose of the contract is, in case of loss, to place the insured in the same situation in which he was before the loss.

GR:

Applying the "principalobjectandpurposetest," a corporation, such as an HMO, whether or not organized for proit, whose main object is to provide the members of a group with health services, is EXC: NOT engaged in the insurance business. (Philippine H  ealth Care Providersv.C  IR2008) However, it does not follow that the contract that is entered into is not insurance; then  atureofthecontractwillbeexaminedona case-to-case b  asis. Thus, a health care agreement may be construed as a non-life insurance if it is primarily a contract of

Manifestations — The fact that an insurance contract is a contractof indemnity is manifested in the following:

2.

Here, the owner of the policy is called the assured, while the person whose life is insured is the insured. 

The insured should not collect more than the actual cash value of the loss. This principle is meant to prevent the insured from proiting from insurance and to reduce moral hazard.

Iftheo wnerdies, the policy automatically vests in the insured, unlessotherwise provided for in the policy.

Accepted exceptions are: 1) Life i nsurance, because the amount paid by the insurer can never be equal to the life that is being insured; 2) Valuedpolicies under which the insurer will pay the

One who took out the insurance over the life of persons in whom he has insurable interest.

A third person is the beneiciarywhose favor the insurance was taken by the insured and who will receive the proceeds of the insurance. GR:

Designation of beneiciary is REVOCABLE.

EXC:

Unless, expresslydesignated as IRREVOCABLE.

value ixed in the policy regardless of the actual cash value in case of total loss.



Based on the Lectures of Attys. Amago, Pandi and Capanas, Books of Aquino, Sundiang, Miravite, De Leon 

by RGL

3 of 200



Commercial Law

For the 2020/21 #BestBarEver

REVIEWER



Thus, an irrevocable beneiciary has VESTED rights over the policy. If a beneiciary is disqualiied: 1.

Forfeited share shall pass on to otherbeneiciaries;

2.

If there are no other beneiciaries, or that they are also DQed, look at the policyc ontract;

3.

If the contract is silent, proceeds go to the estate of the insured.

Groundsf orD  Q 

Namedperilpolicy— the risks insured against are speciied; Allr iskp  olicy— all risks of accidental nature are covered. g) The periodduring which the insurance is to continue.

Covernotes may be issued to bind insurance temporarilyp ending the issuance of the policy for a period of 60dayswhich mayb eextended or renewed with the w  rittenapprovalof the Commissioner. Requisites are: 1) It shall be issued or renewed only upon prior approval of the Commissioner;

1) Those made between persons who were guilty of adultery or concubinage at the time of donation; Conviction,notnecessary. 

2) It shall be valid and binding not more than 60 days from date of its issuance;

2) Those made between persons found guilty of the same criminal offense, in consideration thereof;

3) It may be cancelled by either party upon prior notice to the other of at least 7 days;

3) Those made to a public oficer or his wife, descendants and ascendants, by reason of his ofice.

4) The policy should be issued within 60 days after the issuance of the cover note; and 5) The 60-day period may be extended upon written approval of the Commissioner.

Policy A policy of insurance must specify: a) The partiesbetween whom the contract is made; b) The amountto be insured except in the cases of open or running policies; May stipulate an Automatic I ncrease C  lause, wherein the coverage is automatically increased to a higher amount if the insured reaches a certain age. c) The premium, or if the insurance is of a character where the exact premium is only determinable upon the termination of the contract, a statement of the basis and rates upon which the inal premium is to be determined; d) The propertyo  r lifeinsured; e) The interesto  f the insured in property insured, if he is not the absolute owner thereof; f)

NB:

T  his is dispensed with upon the certiication of the president, VP or general manager of the insurer that the risk involved, the values of such risks and premium therefor have not as yet been determined or established, and the extension or renewal is not contrary to or not for the purpose of violating the IC.

Ridersare modiications in life insurance; while Endorsementsare for property and liability insurance. If they are not part of the original printed form, they are still binding provided that:

Reasonable E  xpectation Doctrine dictates that the language of the policy is interpreted to give effect to the reasonable expectation of the insured. Kindso  fP  ropertyI nsurancePolicy  §60. An openpolicy is one in which the value of the thing insured is not agreed upon, and the amount of the insurance merely represents the insurer's maximum liability. The value of such thing insured shall be ascertained at the time of the loss. §61. A valuedp  olicy is one which expresses on its face an agreement that the thing insured shall be valued at a speciic sum. §62. A running policy is one which contemplates successive insurances, and which provides that the object of the policy may be from time to time deined, especially as to the subjects of insurance, by additional statements or indorsements. RequisitesforCancellation  1) Priorn  oticeto insured; 2) Based on the occurrenceAFTEReffective date of the policy of one or more of these grounds: a) Nonpaymentof premium; b) Conviction of a crime arising out of acts increasing the hazard insured against; c) Discovery of fraudor material misrepresentation;

1) It is attached to the policy;

d) Discovery of willful or reckless acts o  r omissions increasing the hazard insured against;

2) Its descriptive title or name is mentioned and written on the blank spaces provided in the policy.

e) Physicalchanges in the property insured which result in the property becoming uninsurable;

3) If not applied for by the insured or owner, it is countersigned by the insured.

f)

The risksinsured against;

Discovery of otheri nsurance coverage that makes the total insurance in excess of the value of the property insured; or



Based on the Lectures of Attys. Amago, Pandi and Capanas, Books of Aquino, Sundiang, Miravite, De Leon 

by RGL

4 of 200



Commercial Law

For the 2020/21 #BestBarEver

REVIEWER



g) A determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of the IC. 3) Notice must be in writing, mailed or delivered to insured or his authorized broker; 4) Notice must state the grounds relied upon and upon request of insured, to furnish facts on which the cancellation is based.

1.

There must be a large n  umber o  f homogenous e  xposure units;

7) UberrimaeFidae—  one of perfect good faith. Parties must avoid material concealment or misrepresentations.

2.

The loss must be accidentaland unintentional;

8) Executory andC  onditional— executory to the insurer

3.

The loss must be determinableand measurable;

4.

The loss should NOTbe catastrophic; Nevertheless, trivial losses are NOT insurable. Deminimisnon curatl ex. 

TransferofPolicy  1) Life i nsurance — may be transferred WITHOUT consent of insurer; 2) Propertyi nsurance — needs consent of insurer; otherwise, the policy is suspended, but not avoided.

Elements of an Insurance Contract

and subject to conditions, principal of which is the happening of the event insured against. GeneralB  eneits  1) It gives peace of mind;

5.

The chanceof loss must be calculable; and

2) It keeps families and businesses together;

6.

The premiummust be economically feasible.

3) It increases marginal utility of assets because it serves as intermediary between those who have small need for a minor amount of capital and those who have great needs for immediate use of large sums to meet losses suffered;

AssumptionofRisk— The insurer promises to pay the insured if the risk insured against occurs.

Characteristics and Nature of Insurance Contracts

4) It facilitates credit transactions; 5) It stimulates savings;

a) The insured has an insurablei nterest; b) The insured is subject to a r iskoflossby the happening of the designated peril; c) The insurer assumest her isk; d) Such assumption of risk is part of a general s cheme t o distribute actual losses among a large group of persons bearing a similar risk; and e) In consideration of the insurer’s promise, the insured pays a premium.

Risk 1.

Any contingentor unknowne vent, whether past or future, Uncertaintyis a feature in insurance contracts. Past e vents that may be insured is peculiar to marine insurance. 

2.

Which mayd amnify a person having an insurable interest, or createal iabilityagainst him.

Insurance contracts are:

6) It provides investment capital;

1) ContractofA  dhesion; 2) Risk-DistributingDevice;  3) Aleatory—the obligation of the insurer to pay arises only upon the happening of an event, which is uncertain, or is to occur at an indeterminate time. What the insured will pay is not equal to what he will receive in case of loss. But it is somehow commutativeb  ecause the equivalent of what the insured paid for is the promise of the insurer to indemnify in case of loss. 4) Unilateral — u  pon payment of the premium, there is only one party who has the obligation, the insurer’s obligation to pay the proceeds of insurance in case of loss. 5) Personal—Each party enters into the contract in view of the character, credit, and conduct of the other. 6) Consensual—perfected by mere consent.

7) It provides incentive to business or individuals because they are relieved of fortuitous losses; and 8) It helps in loss prevention.

Classes of Insurance Life Is insurance on human lives and insurance appertaining thereto or connected therewith. Every contract or undertaking for the payment of annuities including contracts for the payment of lump sums under a retirementprogram where a life  insurancecompanym anages or a  cts a  s a   t rustee for such retirement program shall be considered a life insurance contract.

GR:

Not a contract of indemnity. The measure of indemnity is the sumixedin the policy. It is therefore a valuedpolicy.

Further, the risk must be INSURABLE, wherein: 

Based on the Lectures of Attys. Amago, Pandi and Capanas, Books of Aquino, Sundiang, Miravite, De Leon 

by RGL

5 of 200



Commercial Law

For the 2020/21 #BestBarEver

REVIEWER



EXC:

Unless the interest of a person insured is susceptibleofexact pecuniarymeasurement, ...