I.

Letters of Credit
A. Definition and Nature of Letter of Credit B. Parties to a Letter of Credit
1. Rights and Obligations of Parties C. Basic Principles of Letter of Credit
1. Doctrine of Independence2. Fraud Exception Principle3. Doctrine of Strict
Compliance
II. Trust Receipts Law
A. Definition/Concept of a Trust Receipt Transaction1. Loan/Security Feature2.
Ownership of the Goods, Documents and Instruments under a Trust Receipt
B. Rights of the Entruster
1. Validity of the Security Interest as Against the Creditors of the Entrustee/Innocent
Purchasers for Value
C. Obligation and Liability of the Entrustee
1. Payment/Delivery of Proceeds of Sale or Disposition of Goods, Documents or
Instruments
2. Return of Goods, Documents or Instruments in Case of Sale 3. Liability for Loss of
Goods, Documents or Instruments4. Penal Sanction if Offender is a Corporation
D. Remedies Available C. Warehousemans Lien
III. Negotiable Instruments Law
A. Forms and Interpretation1. Requisites of Negotiability2. Kinds of Negotiable
Instruments
2014 Bar Examination Coverage 2 Mercantile Law
B. Completion and Delivery1. Insertion of Date2. Completion of Blanks3. Incomplete
and Undelivered Instruments 4. Complete but Undelivered Instruments
C. Signature1. Signing in Trade Name2. Signature of Agent3. Indorsement by Minor
or Corporation 4. Forgery
D. ConsiderationE. Accommodation Party F. Negotiation
1. Distinguished from Assignment 2. Modes of Negotiation3. Kinds of Indorsements
G. Rights of the Holder1. Holder in Due Course2. Defenses Against the Holder
H. Liabilities of Parties 1. Maker
2. Drawer3. Acceptor 4. Indorser 5. Warranties
I. Presentment for Payment1. Necessity of Presentment for Payment2. Parties to
Whom Presentment for Payment Should Be Made 3. Dispensation with Presentment
for Payment4. Dishonor by Non-Payment
J. Notice of Dishonor1. Parties to Be Notified2. Parties Who May Give Notice and
Dishonor
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3. Effect of Notice4. Form of Notice5. Waiver6. Dispensation with Notice7. Effect of
Failure to Give Notice
K. Discharge of Negotiable Instrument1. Discharge of Negotiable Instrument2.
Discharge of Parties Secondarily Liable3. Right of Party Who Discharged Instrument
4. Renunciation by Holder

L. Material Alteration 1. Concept

2. Effect of Material Alteration M. Acceptance
1. Definition2. Manner3. Time for Acceptance4. Rules Governing Acceptance
N. Presentment for Acceptance1. Time/Place/Manner of Presentment 2. Effect of
Failure to Make Presentment 3. Dishonor by Non-Acceptance
O. Promissory Notes P. Checks
1. Definition2. Kinds3. Presentment for Payment
a. Timeb. Effect of Delay
IV. Insurance Code
A. Concept of InsuranceB. Elements of an Insurance Contract
2014 Bar Examination Coverage 4 Mercantile Law
C. Characteristics/Nature of Insurance Contracts D. Classes
1. Marine2. Fire3. Casualty 4. Suretyship 5. Life
6. Compulsory Motor Vehicle Liability Insurance E. Insurable Interest
1. In Life/Health2. In Property3. Double Insurance and Over Insurance4. Multiple or
Several Interests on Same Property
F. Perfection of the Contract of Insurance 1. Offer and Acceptance/Consensual
a. Delay in Acceptance
b. Delivery of Policy2. Premium Payment3. Non-Default Options in Life Insurance4.
Reinstatement of a Lapsed Policy of Life Insurance 5. Refund of Premiums
G. Rescission of Insurance Contracts 1. Concealment2. Misrepresentation/Omissions
3. Breach of Warranties
H. Claims Settlement and Subrogation 1. Notice and Proof of Loss2. Guidelines on
Claims Settlement
a. Unfair Claims Settlement; Sanctions b. Prescription of Actionc. Subrogation

V. Transportation Laws
A. Common Carriers- is a person, corporation, firm or association, engaged in the
business of carrying or transporting passengers or goods or both, by land, air or
water, for compensation offering their services to the public. (Art. 1732, Civil Code)
1. Diligence Required of Common Carriers
EXTRAORDINARY DILIGENCE requires rendering service with the
greatest skill and foresight to avoid damage and destruction to the
goods entrusted for carriage and delivery.

2. Liabilities of Common Carriers

Statutory obligation of Common Carrier

Art. 1733 Common carries, from the nature of their business
and for reasons of public policy, are bound to observe

extraordinary diligence in the vigilance over the goods and for

the safety of the passengers transported by them, according to
all circumstances of each case.
Art. 1755 of Civil Code
Over passengers
1. To carry passengers safely as far as human care and
foresight can provide.
2. Using the diligence of a very cautious person
3. With due regard for all circumstances
Art. 1744 of Civil Code
Over goods
Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the
same is due to the following causes:
1. Flood, storm, earthquake, lightning, or other natural
disaster or calamity;
2. Act of public enemy in war, whether international or
civil
3. Act or omission of the shipper or owner of the
goods
4. The character of the goods or defects in the
packing or in the containers.
5. Order or act of competent public authority.

Presumption of Negligence (Art. 1755, Civil Code)

1. To passengers passenger died or was injured
2. To goods transported goods were lost or damaged

Unless this statutory presumption is rebutted, the Court need not even
make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome by
evidence that carrier exercised EXTRAORDINARY diligence.
B. Vigilance over Goods
1. Exempting Causes
A) Storm, Earthquake, Lightning, Flood (SELF) or other Natural DISASTER or
CALAMITY (oNaDCa)
Conditions:
1. Proximate cause
2. Exercise of diligence to prevent or minimize the loss before, during
or after the SELF oNaDCa
3. No Delay
B) Act of Public Enemy at in war, (whether international or civil)
Conditions:
1. Proximate cause
2. Exercise of diligence to prevent or minimize the loss before, during
or after the war

3. No Delay
C) Act of omission of Shipper or owner of goods
Conditions:

1. Proximate cause exempting

2. Contributory Negligence mitigating
3. Protest when defect is visible
D) Character of the goods of Defect in packaging/container
Conditions:
1. Due diligence to prevent or forestall loss
2. Protest when defect is visible
E) Order or Act of Competent Authority
Conditions:
1. Authority with power to issue order

2. Contributory Negligence
Article 1741.
If the shipper or owner merely contributed to the loss,
destruction or deterioration of the goods, the proximate cause thereof being
the negligence of the common carrier, the latter shall be liable in damages,
which however, shall be equitable reduced.
Exception:
In Collision and Allision cases, where parties are liable for their own
damage.
3. Duration of Liability
Art. 1736 The extraordinary responsibility of the common carrier lasts from
the time the are unconditionally placed in the possession of and received by
the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has a
right to receive them, without prejudice to the provisions of Article 1738
(goods stored in warehouse of common carrier)
Extraordinary responsibility extends even:

Temporarily unloaded or stored in transit

Exception: shipper exercises Stoppage in Transitu

Stored in carriers warehouse

Condition: Until consignee is advised of arrival and had
the opportunity to remove or dispose of them.

Actual or Constructive Delivery

Delivery of goods to acknowledged importer, though not the

person indicated in the bill of lading, would be proper.

Carrier not liable when goods delivered to port of destination

and delivered to a bonded warehouse. At this point, carrier
merely becomes the AGENT of the consignee and ceases to be
liable as carrier for loss or damage of goods.

Delivery to customs authorities is not delivery to consignee as

provided in Art. 1736 of Civil Code, because such goods are still
in the hands of the government and the owner has no dominion
over them.

4. Stipulation for Limitation of Liability

4.1
4.2
4.3

Must be in writing
Supported by valuable consideration other than the service rendered
by the common carrier
Reasonable, just and not contrary to public policy

a. Void Stipulations
1. Unreasonable
2. Unjust
3. Contrary to public policy i.e.,

a)

No liability carrier not liable at all for the negligent acts

of its crew and employees

b)

Limited Liability regardless of the value of cargo,

maximum liability of owner will be for example, P500.
Exception: Applicable only to common carrier not to a
common carrier acting as a private carrier under the terms
of the charter party, since in a contract of private carriage,
parties may validly stipulate this limited liability.

b. Limitation of Liability to Fixed Amount

Void by reason of public policy, see b) of 3 (a)
c. Limitation of Liability in Absence of Declaration of Greater Value
Qualified Liability carrier fixes a maximum liability in the even
shipper does not declare any value or a value up to a certain amount.
Should shipper declare a higher value, and willing to pay higher
freightage the carrier shall accordingly be liable for greater damage. In
effect, carrier becomes an insurer for higher insurance.

Qualified liability appearing on the ticket even if passenger did

not sign it.

Qualified liability clause not applicable when carrier is negligent

5. Liability for Baggage of Passengers

a. Checked-In Baggage

Required to observe EoD in the vigilance over the goods,

according to all circumstances of each case.

Exempt from liability if loss, destruction, or deterioration of goods

is due to causes under Art. 1734

There is presumption of negligence if goods were lost or destroyed

A stipulation that the common carriers liability is limited to the

value of the goods appearing in the bill of lading, unless shipper
declares a greater value, is binding.

The law of the country to which the goods are to be transported

shall govern the liability of the common carrier fro their loss,
destruction or deterioration.

b. Baggage in Possession of Passengers responsibility of Hotel-keepers shall

be applicable, as stated in Art. 1998 and 2000 to 2003.
-

Carrier liable for loss or damage of baggage if it failed to

exercise due diligence in preventing the loss or damage.

C. Safety of Passengers
1. Void Stipulations
Article 1757 the responsibility of common carriers for the safety of
passengers cannot be dispensed with or lessened by stipulations, by the
posting of notices, by statements on tickets, or otherwise.
Exception: in gratuitous carriage, stipulation to limit liability may be
valid but not for willful act or gross negligence.
2. Duration of Liability
a. Waiting for Carrier or Boarding of Carrier
Commencement: when a person offers to be transported placing
himself in the care and control of the common carrier who accepts him
as such passenger.
b. Arrival at Destination
Termination: when the passenger from the vehicle at the place of
destination and has reasonable opportunity to leave the common
carriers premises.
3. Liability for Acts of Others
a. Employees
Article 1759 Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carrier.
The liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees.
b. Other Passengers and Strangers
Art. 17636 A common carrier is responsible for injuries suffered by a
passenger on account of the willful acts or negligence of other passengers or
of strangers, if the common carriers employees through the exercise of the
diligence of a good father of a family could have prevented or stopped
the act or omission.

4. Extent of Liability for Damages

D. Bill of Lading
1. Three-Fold Character
a) RECEIPT for the goods shipped;
b) CONTRACT where the shipper, carrier and consignee undertake
specific responsibilities and assume stipulated obligations;
c) LEGAL EVIDENCE of the contract between the shipper and carrier.
Note: Not indispensable in the contract of carriage. Contract arise the
moment shipper delivers goods to carrier who agrees to carry them.
-

The Code does not demand delivery of BL as a necessary

requisite for transportation contract. Parties however where
given the right to mutually demand from each other, delivery of
the BL.

Note: Proof in the absence of BL may be determined by legal proofs which

each of the parties may present in accordance with the general provisions
established in the code of commerce.
Note: Instance when carrier is justified not to deliver goods for non
presentation of the BL? if it was issued to the ORDER OF SHIPPER

2. Delivery of Goods
The carrier must deliver the goods in the same condition and
quantity in which they were received according to the bill of lading.
a. Period of Delivery
Fixed in the BL deliver within the time fixed
Not fixed in the BL deliver in the first shipment of same or similar goods

b. Delivery without Surrender of Bill of Lading

If consignee cannot return the bill of lading upon receipt of the
merchandise due to loss or any other cause, he must give the carrier a
RECEIPT for the goods delivered, which will produce the same effect as
the return of the BL.
c. Refusal of Consignee to Take Delivery
Carrier must give consignor NOTICE, within a reasonable time, of
consignees failure or refusal to accept the goods. The shipper will then
give directive to carrier whether to DEPOSIT the goods with the court,
to HOLD the goods, or to RETURN the goods.
The legal effect of DEPOSIT with the courts is DELIVERY by carrier to
consignee.
3. Period for Filing Claims

Apparent immediately give notice to the carrier without paying

freight charges.
Note: Payment of freight charges means condonation effectively
foreclosing ones claim for damage.
Non-apparent within 24 hours from delivery.
4. Period for Filing Actions
For damage to goods delivered:
1 year from delivery of goods or denial of claim
Note: A claim is a condition precedent to a right of action for damages
on goods delivered by the carrier. On the other hand, a claim is not a
condition precedent to an independent action which must be filed
within 6 years when there is NO WRITTEN CONTRACT or 10 days if
there is a WRITTEN CONTRACT.
For transportation charges:
30 days (Art. 2242 (9) of Civil Code) from delivery, otherwise, the
carrier shall have no further right of action than that corresponding to
him as an ordinary creditor.
E. Maritime Commerce
1.

Charter Parties
Charter Party is a contract by which an entire ship or some principal part
thereof is let by the owner to another person for a specified time or use.
a. Bareboat/Demise Charter It involves the transfer of full possession
and control of the vessel for the period covered by the contract.
Charterer has the right to use the vessel and carry whatever cargo it
chooses, while maintaining the vessel.
Note: Charterer liable in case of damage. Acts as private carrier
b. Time Charter Contract to use the vessel for a particular period of time,
the charterer having the right to direct the movements of the vessel but
the owner retains possession of the vessel. (Contract of affreightment)
Note: Ship owner acts as common carrier and is therefore liable in case
of damage.
c. Voyage/Trip Charter - Contract to hire the vessel for one or a series of
voyages.
Note: Ship owner acts as common carrier and is therefore liable in case
of damage.

2. Liability of Ship Owners and Shipping Agents

a. Liability for Acts of Captain
SO and SA liable from Civil liability for:
-

Acts of captain

Contracts for repair, equip and provisioning of vessel

Indemnities to third person for captains conduct in the care of
goods and safety of passengers

For Damages:
-

Collision by reason of fault or negligence of captain or ships

complement.

Note: for Obligations incurred for was used for the benefit of the vessel,
even if captain exceeds his powers and privileges SO and SA are liable.
Note: for lawful acts that are beneficial to vessel, may be enforced
against SO and SA provided captain did not exceed authority
Note: for unlawful acts, the SO and SAs liability is limited to the vessel
and cannot extend further.
b. Exceptions to Limited Liability
Doctrine of Limited liability liability of shipowner is confined to that
which he is entitled to abandon the vessel with all her equipment and
freights earned during the voyage and if they are lost, it suffices for his
discharge. (NO SHIP NO LIABILITY)
-

This exemplifies the real and hypothecary nature of maritime

law, which is to offset against innumerable hazards and perils in
sea voyages and to encourage ship building in maritime
commerce.
Exceptions to doctrine of LL:
1.
2.
3.
4.
5.
6.
7.

Vessel was not abandoned (salvage)

Vessel was insured
Vessel is unseaworthy
Voyage is not maritime but only in river or gulf
Injury/damage due to shipowners fault
Claims under workmens compensation
Expenses for equipping, repairing or provisioning of vessel before
loss of ship.

3. Accidents and Damages in Maritime Commerce

a. General Average EXPENSE and DAMAGES deliberately caused in order to
save the vessel, its cargo or both from a real known risk.
Simple Average EXPENSES and DAMAGES caused to vessel or cargo that
does not inure to common benefit and profit of all the persons interested in
the vessel and her cargo. Note: borne by respective owners.
b. Collisions The impact of two vehicles both of which are moving
Allision the striking of a moving vessel against one that is stationary.
Liabilities in cases of collision
1. Culpable Fault due to fault, negligence or lack of skill of the
captain or compliments of the vessel. SHIPOWNER LIABLE
2. Fortuitous each vessel and its cargoes shall bear its OWN
DAMAGE

3. Inscrutable Fault if it cannot be established whos at fault, OWN

DAMAGE for vessel, but SOLIDARILY LIABLE for losses and damages
to cargoes.
Note: Last clear chance Doctrine does not apply in maritime law.
4. Carriage of Goods by Sea Act

a. Application
Requisites for application
1)
2)
3)
4)

Contract for carriage of goods

By sea
To and from the Philippine ports
In foreign trade

Exception: Paramount Clause a clause which attracts the application of

another law to govern the rights and obligations of the parties. Thus, parties
can freely stipulate that COGSA will apply to the contract of carriage and not
the civil code or code of commerce.
c. Notice of Loss or Damage
Apparent notice to carrier or agent at the port of discharge or at the
time of the removal of the goods.
Non-Apparent notice to carrier or agent within 3 days from delivery.
Note: No notice is required if the state of the goods at the time of delivery
had been subject to JOINT SURVEY INSPECTION.
d. Period of Prescription

Whether notice is filed or not, 1 year from the time the goods
were delivered or should have been delivered.

Misdelivery 10 years for breach of written contract; and 4

years for quasi delict.

Note: 1 year prescriptive period applies to shipper against insurer otherwise

what is prohibited directly can be done indirectly.
Note: 1 year period interrupted by filing of case in court, or when there is
contrary agreement between the parties.
Note:
d. Limitation of Liability

F. The Warsaw Convention

1. Applicability
2. Limitation of Liability

a. Liability to Passengers
b. Liability for Checked Baggage
c. Liability for Handcarried Baggage
3. Willful Misconduct

VI. The Corporation Code

A. Corporation
1. Definition
2. Attributes of the Corporation
B. Classes of CorporationsC. Nationality of Corporations
1. Place of Incorporation Test 2. Control Test3. Grandfather Rule
D. Corporate Juridical Personality1. Doctrine of Separate Juridical Personality
a. Liability for Torts and Crimes
b. Recovery of Moral Damages2. Doctrine of Piercing the Corporate Veil
a. Grounds for Application of Doctrine
b. Test in Determining Applicability E. Incorporation and Organization
1. Promotera. Liability of Promoterb. Liability of Corporation for Promoters Contracts
2. Number and Qualifications of Incorporators3. Corporate Name Limitations on
Use of Corporate Name 4. Corporate Term5. Minimum Capital Stock and
Subscription Requirements6. Articles of Incorporation
a. Nature and Function of Articles b. Contentsc. Amendmentd. Non-Amenable Items
7. Registration and Issuance of Certificate of Incorporation 8. Adoption of By-Laws
a. Nature and Functions of By-Laws b. Requisites of Valid By-Lawsc. Binding Effectsd.
Amendment or Revision
F. Corporate Powers1. General Powers, Theory of General Capacity
2014 Bar Examination Coverage 8 Mercantile Law
2. Specific Powers, Theory of Specific Capacity
a. Power to Extend or Shorten Corporate Term
b. Power to Increase or Decrease Capital Stock or Incur, Create, Increase Bonded
Indebtedness
c. Power to Deny Pre-Emptive Rightsd. Power to Sell or Dispose of Corporate Assets
e. Power to Acquire Own Sharesf. Power to Invest Corporate Funds in Another
Corporation or Business g. Power to Declare Dividendsh. Power to Enter Into
Management Contracti. Ultra Vires Acts
i. Applicability of Ultra Vires Doctrine
ii. Consequences of Ultra Vires Acts 3. How Exercised
a. By the Shareholdersb. By the Board of Directors c. By the Officers
4. Trust Fund DoctrineG. Board of Directors and Trustees
1. Doctrine of Centralized Management2. Business Judgment Rule3. Tenure,
Qualifications and Disqualifications of Directors or Trustees 4. Elections

a. Cumulative Voting/Straight Voting

b. Quorum 5. Removal
6. Filling of Vacancies7. Compensation8. Fiduciaries Duties and Liability Rules 9.
Responsibility for Crimes10. Inside Information11. Contracts
a. By Self-Dealing Directors with the Corporationb. Between Corporations with
Interlocking Directors
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c. Management Contracts 12. Executive Committee13. Meetings
a. Regular or Speciali. When and Where ii. Notice
b. Who Presidesc. Quorumd. Rule on Abstention
H. Stockholders and Members1. Rights of a Stockholder and Members
a. Doctrine of Equality of Shares 2. Participation in Management
a. Proxyb. Voting Trustc. Cases When Stockholders Action is Required
i. By a Majority Voteii. By a Two-Thirds Vote iii. By Cumulative Voting
3. Proprietary Rightsa. Right to Dividendsb. Right of Appraisalc. Right to Inspectd.
Pre-Emptive Righte. Right to Votef. Right to Dividendsg. Right of First Refusal
4. Remedial Rightsa. Individual Suitb. Representative Suit c. Derivative Suit
5. Obligation of a Stockholder
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6. Meetingsa. Regular or Special
i. When and Where
ii. Noticeb. Who Calls the Meetings c. Quorumd. Minutes of the Meetings
I. Capital Structure1. Subscription Agreements 2. Consideration for Stocks 3. Shares
of Stock
a. Nature of Stockb. Subscription Agreementsc. Consideration for Shares of Stock d.
Watered Stock
i. Definitionii. Liability of Directors for Watered Stocksiii. Trust Fund Doctrine for
Liability for Watered Stocks
e. Situs of the Shares of Stock
f. Classes of Shares of Stock4. Payment of Balance of Subscription
a. Call by Board of Directors b. Notice Requirementc. Sale of Delinquent Shares
i. Effect of Delinquencyii. Call by Resolution of the Board of Directors iii. Notice of
Saleiv. Auction Sale and the Highest Bidder
5. Certificate of Stocka. Nature of the Certificate b. Uncertificated Sharesc.
Negotiability
i. Requirements for Valid Transfer of Stocks
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d. Issuancei. Full Payment

ii. Payment Pro-Ratae. Lost or Destroyed Certificates
6. Stock and Transfer Book a. Contents
b. Who May Make Valid Entries7. Disposition and Encumbrance of Shares
a. Allowable Restrictions on the Sale of Shares b. Sale of Partially Paid Sharesc. Sale
of a Portion of Shares Not Fully Paidd. Sale of All of Shares Not Fully Paid
e. Sale of Fully Paid Sharesf. Requisites of a Valid Transferg. Involuntary Dealings
with Shares
J. Dissolution and Liquidation 1. Modes of Dissolution
a. Voluntaryi. Where No Creditors Are Affected ii. Where Creditors Are Affectediii. By
Shortening of Corporate Term
b. Involuntary
i. By Expiration of Corporate Term
ii. Failure to Organize and Commence Business Within 2 Years from Incorporation
iii. Legislative Dissolution
iv. Dissolution by the SEC on Grounds under Existing Laws 2. Methods of Liquidation
a. By the Corporation Itselfb. Conveyance to a Trustee within a Three-Year Period c.
By Management Committee or Rehabilitation Receiver d. Liquidation after Three
Years
2014 Bar Examination Coverage 12 Mercantile Law
K. Other Corporations1. Close Corporations
a. Characteristics of a Close Corporationb. Validity of Restrictions on Transfer of
Sharesc. Issuance or Transfer of Stock in Breach of Qualifying Conditions d. When
Board Meeting is Unnecessary or Improperly Helde. Pre-Emptive Rightf. Amendment
of Articles of Incorporationg. Deadlocks
2. Non-Stock Corporations a. Definition
b. Purposesc. Treatment of Profitsd. Distribution of Assets upon Dissolution
3. Religious Corporations - Exclude 4. Foreign Corporations
a. Bases of Authority over Foreign Corporations i. Consent
ii. Doctrine of Doing Business (related to definition under the Foreign Investments
Act, R.A. No. 7042)
b. Necessity of a License to Do Business i. Requisites for Issuance of a License ii.
Resident Agent
c. Personality to Sue
d. Suability of Foreign Corporations
e. Instances When Unlicensed Foreign Corporations May Be Allowed to Sue Isolated
Transactions
f. Grounds for Revocation of License L. Mergers and Consolidations
1. Definition and Concept2. Constituent vs. Consolidated Corporation 3. Plan of
Merger or Consolidation4. Articles of Merger or Consolidation5. Procedure
2014 Bar Examination Coverage 13 Mercantile Law

6. Effectivity 7. Limitations 8. Effects

VII. Securities Regulation Code (R.A. No. 8799)
A. State Policy, PurposeB. Securities Required to Be Registered
1. Exempt Securities
2. Exempt TransactionsC. Procedure for Registration of SecuritiesD. Prohibitions on
Fraud, Manipulation and Insider Trading
1. Manipulation of Security Prices 2. Short Sales3. Fraudulent Transactions4. Insider
Trading
E. Protection of Investors1. Tender Offer Rule2. Rules on Proxy Solicitation 3.
Disclosure Rule
F. Civil Liability
VIII. Banking Laws
A. The New Central Bank Act (R.A. No. 7653)1. State Policies2. Creation of the
Bangko Sentral ng Pilipinas (BSP) 3. Responsibility and Primary Objective4.
Monetary BoardPowers and Functions5. How the BSP Handles Banks in Distress
a. Conservatorship b. Closurec. Receivershipd. Liquidation
6. How the BSP Handles Exchange Crisis
2014 Bar Examination Coverage 14 Mercantile Law
a. Legal Tender Power
b. Rate of ExchangeB. Law on Secrecy of Bank Deposits (R.A. No. 1405, as
amended)
1. Purpose2. Prohibited Acts3. Deposits Covered4. Exceptions5. Garnishment of
Deposits, including Foreign Deposits
C. General Banking Law of 2000 (R.A. No. 8791)1. Definition and Classification of
Banks2. Distinction of Banks from Quasi-Banks and Trust Entities 3. Bank Powers
and Liabilities
a. Corporate Powers
b. Banking and Incidental Powers4. Diligence Required of Banks Relevant
Jurisprudence 5. Nature of Bank Funds and Bank Deposits6. Stipulation on Interests
7. Grant of Loans and Security Requirements
a. Ratio of Net Worth to Total Risk Assets
b. Single Borrowers Limit
c. Restrictions on Bank Exposure to DOSRI (Directors, Officers, Stockholders and
their Related Interests)
IX. Intellectual Property Code (Exclude Implementing Rules & Regulations)
A. Intellectual Property Rights in General1. Intellectual Property Rights2. Differences
between Copyrights, Trademarks and Patent 3. Technology Transfer Arrangements
B. Patents1. Patentable Inventions2. Non-Patentable Inventions 3. Ownership of a
Patent
a. Right to a Patent
2014 Bar Examination Coverage 15 Mercantile Law
b. First-to-File Rulec. Inventions Created Pursuant to a Commission d. Right of
Priority

4. Grounds for Cancellation of a Patent5. Remedy of the True and Actual Inventor 6.
Rights Conferred by a Patent7. Limitations of Patent Rights
a. Prior User
b. Use by the Government 8. Patent Infringement
a. Tests in Patent Infringement i. Literal Infringementii. Doctrine of Equivalents
b. Defenses in Action for Infringement 9. Licensing
a. Voluntary
b. Compulsory10. Assignment and Transmission of Rights
C. Trademarks1. Definition of Marks, Collective Marks, Trade Names2. Acquisition of
Ownership of Mark3. Acquisition of Ownership of Trade Name4. Non-Registrable
Marks5. Prior Use of Mark as a Requirement6. Tests to Determine Confusing
Similarity between Marks
a. Dominancy Test
b. Holistic Test7. Well-Known Marks8. Rights Conferred by Registration9. Use by
Third Parties of Names, etc. Similar to Registered Mark 10. Infringement and
Remedies
a. Trademark Infringement b. Damages
2014 Bar Examination Coverage 16 Mercantile Law
c. Requirement of Notice11. Unfair Competition12. Trade Names or Business Names
13. Collective Marks
D. Copyrights1. Basic Principles, Sections 172.2, 175 and 181 2. Copyrightable
Works
a. Original Works
b. Derivative Works3. Non-Copyrightable Works4. Rights of Copyright Owner5. Rules
on Ownership of Copyright 6. Limitations on Copyright
a. Doctrine of Fair Use
b. Copyright InfringementE. Rules of Procedure for Intellectual Property Rights Cases
(A.M. No. 10-3-10-SC)
X. Special Laws
A. The Chattel Mortgage Law and Real Estate Mortgage Law (Excluded and made
a part of Civil Law coverage)
B. Anti-Money Laundering Act (R.A. No. 9160, as amended by R.A. No. 9194) 1.
Policy of the Law2. Covered Institutions3. Obligations of Covered Institutions
4. Covered Transactions5. Suspicious Transactions6. When Is Money Laundering
Committed7. Unlawful Activities or Predicate Crimes8. Anti-Money Laundering
Council9. Functions10. Freezing of Monetary Instrument or Property 11. Authority to
Inquire Into Bank Deposits
2014 Bar Examination Coverage 17 Mercantile Law
C. Foreign Investments Act (R.A. No. 7042) 1. Policy of the Law2. Definition of Terms
a. Foreign Investmentb. Doing Business in the Philippines c. Export Enterprised.
Domestic Market Enterprise
3. Registration of Investments on Non-Philippine Nationals 4. Foreign Investments in
Export Enterprise5. Foreign Investments in Domestic Market Enterprise6. Foreign
Investment Negative List