Professional Documents
Culture Documents
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12. a. b. c. d. 13.
Merger and Consolidation subject to BOI requirements for the issuance of certificate: When merger and consolidation result in ownership and control of non-Filipino nationals over more than 40% of the capital of a consolidated corporation. 14. SEC License issued upon compliance with the following requirements: a. proof of compliance with principle of reciprocity b. BOI certificate c. Applicant for license gives required information articles of incorporation by-laws names and addresses of resident agents principal place of business in the Philippines d. proof of solvency e. deposit acceptable securities to protect future creditors
3. amount interest
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insurable
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General Rule: A change of interest in any part of a thing insured unaccompanied by a corresponding change in 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. Exceptions: a. In case of life, health, and accident insurance b. when the change in interest results after the occurrence of an injury which results in a loss c. a change of interest in one or more several distinct things, separately insured by one policy d. a change in the interest by will or succession on the death of the insured (interest passes to the heirs) e. a transfer of interest by one of several partners, joint owners in common who are jointly insured to the others (even though it has been agreed that the insurance shall seize upon the alienation of the thing insured) Revocation of Beneficiaries General Rule: Insurance contracts are revocable. Exception: Any person who is forbidden to receive any donation under Article 739 of the Civil Code cannot be named beneficiary of a life insurance policy by the person who cannot make the donation to him. The following donations shall be void: a. those made between persons who were guilty of adultery or concubinage at the time of the donation; b. those made by persons found guilty of the same criminal offense, in consideration thereof; c. those made to a public officer or his wife, descendants, ascendants, by reason of his office. Other Pertinent Provisions on Revocation: (a) The termination of a subsequent marriage shall allow the innocent spouse to revoke the designation of the other spouse who acted in bad faith
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Concealment - a neglect to communicate that which the party knows or ought to communicate General Rule: The insured is not required to communicate the nature (or kind) or the amount of his insurable interest in the life or property insured to the insurer. Exception: a. When the insurer makes inquiry from the insured of the nature or amount of the latters insurable interest, whether in life or property insurance; b. insurance policy must specify the interest of the insured in the property insured, if he is not the absolute owner thereof. A concealment, whether intentional or not, entitles the injured party to rescind a contract of insurance. Requisites: (a) the party concealing must have knowledge of the facts concealed; (b) the facts concealed must be material to the risk; (c) the party is duty bound to disclose such fact to the other; (d) the party concealing makes no warranty as to the facts concealed; (e) the other party has no other means of ascertaining the facts concealed. Note: An insured need not die of the very disease he failed to reveal to the insurer. It is sufficient that the non-revelation has misled the insurer in forming his estimate of the disadvantages of the proposed policy or in making his inquiries in order to entitle the insurance company to avoid the contract. Note: The insured is under an obligation to disclose not only such material facts as are known to him, but also those known to his agent where: a. it was the duty of the agent to acquire and communicate information of the facts in question; b. it was possible for the agent, in the exercise of reasonable diligence, to have made the communication before the making of the insurance contract. Failure on the part of the insured to disclose such facts known to his agent, or wholly due to the fault of the agent, will avoid the policy, despite the good faith of the insured.
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Neither party to the insurance contract is bound to communicate information on the following matters except in answer to the inquiries of the other: a. those of which the other knows; b. that which, in the exercise of ordinary care, the other ought to know and of which the former has no reason to suppose his ignorance, i.e. political situation, general usages of trade; c. those of which the other waives communication;
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Representation It is a factual statement made by the insured at the time of, or prior to, the issuance of the policy, to give information to the insurer and otherwise induce him to enter into the insurance contract. It may be made orally or in writing. It may be made at the time of, or before, the issuance of the policy. It may be altered or withdrawn before the insurance is effected, but not afterwards. A representation cannot qualify an express provision in a contract of insurance but it may qualify an implied warranty. A representation as to the future is to be deemed a promise unless it appears that it was merely a statement of belief or an expectation. (must be susceptible of present, actual knowledge) The statement of an erroneous opinion, belief or information, or of an unfulfilled intention, will not avoid the contract of insurance, unless fraudulent. Right to rescind because of false representation: a. must be exercised previous to the commencement of an action on the contract (the action referred to is that to collect a claim on the contract) b. misrepresentation, whether intentional or not, gives the right to rescind Incontestable Clause: After a policy of life insurance made payable on the death of the insured shall have been in force during the lifetime of the insured for a period of 2 years from the date of its issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindable by reason of the fraudulent concealment or misrepresentation of the insured or his agent. Exceptions: (a) absence of insurable risk (b) cause of loss is an unexpected risk (c) fraud (d) non-payment of premium (e) violation of conditions relating to naval or military services (f) failure to comply with conditions subsequent to the occurrence of the loss 17. Warranties: General Rule: Non-performance of a promissory warranty avoids a contract of insurance. Exceptions: a. when before the time for performance of the promissory warranty, a loss insured against occurs;
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Warranty part of the insurance contract always written on the policy conclusively presumed material must be strictly complied with made by the insured
Note: If there is a breach of warranty, even if the cause of the loss is a different risk, the insurer is entitled to rescind the contract of insurance. Breach must refer to a material warranty, whether intentional or not. 18. Policy What is a Rider? It is an additional provision in a policy not part of the body of the printed form. Cover Note: written memorandum of the most important terms of a preliminary contract of insurance, intended to give temporary protection pending the investigation of the risk by the insurer, or until the issuance of a formal policy. General Rule: Cover notes bind insurer temporarily pending the issuance of the policy. Exception: Where it is merely an acknowledgment on behalf of the company that the latters branch office had received from the applicant the insurance premium and accepted the application subject for processing by the insurance company and that the latter will either approve or reject the same. Kinds of Policies: a. Open - the value of the thing insured is not agreed upon, but is left to be ascertained at the time of the loss b. Valued - expresses on its face an agreement that the thing insured shall be valued at a specific sum c. Running - contemplates successive insurance which provides that the object of the policy may be from time to time defined especially as to the subject of insurance by additional statements or endorsements Note: If an amount is written on the face of an open policy, it is merely a determination of the maximum limit of recovery and not as the value of the policy. Open Policy value of property upon loss value of property is to be ascertained upon loss Valued Policy no need for proof of value of property upon loss value of property upon loss is conclusively stipulated to a specified amount
Category what needs to be proven in order to be able to claim determining value of loss
Period for commencing an action against the policy: Within 1 year from the time the cause of action accrues, i.e., from the time of rejection of the claim by the insurer. Any condition, stipulation, or agreement limiting the time to less than 1 year is void. Grounds for Cancellation of a Policy by the Insurer: For Policies Other than Life: (1) prior notice of the cancellation to insured
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The Code prohibits double insurance without the consent of the insurer. Liability of Insurer:
= liability of insurer
Reinsurance: A process by which an insurer procures a third person to insure him against loss or liability by reason of such original insurance. The original insured cannot recover from this insurance unless there is a specific grant, or assignment of, the reinsurance contract in favor of the insured, or a manifest intention of the contracting parties to the reinsurance contract to favor the insured. General Rule: The insurer who obtains reinsurance must communicate: a. all the representations of the original insured; and b. all the knowledge and information he possesses, whether previously or subsequently acquired which are material to the risk Exception: under automatic reinsurance treaties 1. 2. 3. 4. 5. Double Insurance insurer remains the insurer subject matter is property the same interest and risk are insured insured has to give his consent insured is the party in interest in all contracts
1. 2. 3. 4. 5.
Reinsurance insurer becomes the insured subject matter is the insured risk or liability different risks and interests of insured there must be consent of original one who is original insured has no interest in the contract of reinsurance which is independent of the original contract of insurance
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Marine Insurance: insures against perils of the sea, not of the ship Perils of the Ship not covered by marine insurance damage or losses resulting from: 1. natural and inevitable action of the sea 2. ordinary wear and tear of a ship, or 3. negligent failure of the ship owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions
Perils of the Sea covered by marine insurance denote nature accidents peculiar to the sea which do not happen by intervention of man nor are to be prevented by human prudence
Owner of the Ship has Insurable Interest: a. in the ship even if it has been chartered by one who promises to pay him in value in case of loss (insurer is liable for what insured cannot recover from the charterer), even when hypothecated by bottomry (only the excess of its value over the amount secured by bottomry) and b. in the 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
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No Fault Indemnity Clause: The insurance company shall pay any claim for death or bodily injuries sustained by a passenger or 3 rd party without the necessity of proving fault or negligence of any kind subject to certain conditions. This does not apply to property damage. 26. Suretyship - an agreement whereby the surety guarantees the performance of the principal or obligor of an obligation or undertaking in favor of a 3 rd party called the obligee Life Insurance: an insurance in human life and insurance appertaining thereto or connected therewith may be payable: a. on the death of the insured b. on his surviving a specified period c. otherwise, contingently on the continuance or cessation of life (b and c refer to endowment or annuities) Uses and Common Kinds of Life Insurance: a. Whole Life or Ordinary Policies - here, the insured agrees to pay annual, semi-annual or quarterly premiums while he lives. The insurer agrees to pay the face value of the policy upon the death of the insured. b. Limited Payment Life Policy - premiums paid only for a specified period of years. c. Term Policy - insurers liability arises only upon the death of the insured within the agreed term as period. If the latter survives the period, the contract terminates and the insurer is not liable d. Endowment Policy - insurer agrees to pay a certain sum to the insured if the latter outlives a designated period; if he dies before that time, the proceeds are paid to the beneficiary
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3. Warehouse Receipt - written acknowledgment by a warehouseman that he has received and holds certain goods therein described in store for the person to whom it is issued. 4. Non-negotiable Receipt - receipt deliverable to a specified person. 5. Negotiable Receipt - receipt deliverable to order or to bearer. 6. Essential Terms which MUST be embodied in a Warehouse Receipt: a. location of the warehouse b. date of the issue of the receipt c. consecutive number of the receipt d. statement whether the goods received will be delivered to bearer, or a specified person, or his order e. rate of storage charges f. description of the goods or packages containing them for identification purposes g. signature of the warehouseman h. statement of the amount of advances made and of liabilities incurred for which the warehouseman claims as lien 7. Effect of omission of any of the essential terms: a. The validity of the warehouse receipt is not affected. b. The warehouseman shall be held liable for damages to those injured by his omission.
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21. Effect of Co-mingling of Goods: a. The different owners become co-owners of the whole mass. b. The warehouseman shall be severally liable to each depositor for the care and redelivery of his share of such mass to the same extent and under the same circumstances as if the goods had been kept separate. 22. Remedies of a Creditor: (the debtor being the owner of the negotiable receipt) Creditors of the depositors, before negotiation, may protect themselves by obtaining a writ of preliminary injunction and serve the same on the depositor before he has a chance to negotiate the receipt. Once enjoined, there will be no longer a danger that a 3rd person will be prejudiced so the goods may now be attached, levied upon, or that the vendors lien or the right of stoppage in transit be exercised. 23. Warehousemans Lien Extent of Warehousemans Lien: A warehouseman shall have a lien on goods deposited or on the proceeds thereof in his hands for:
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How do we negotiate a receipt deliverable to bearer? There is no need to indorse for negotiation. Physical delivery of the instrument will suffice. But if the instrument is indorsed specially, the bearer character of the receipt is destroyed and for further negotiation, there will be a need for indorsement. Who may negotiate warehouse receipts? a. the owner of the receipt, or b. the person to whom possession of the receipt was entrusted to by the owner Rights acquired by a person to whom the receipt has been negotiated: a. the title of the person negotiating the receipt over the goods covered by the receipt b. the title of the person (depositor or owner) to whose order by the terms of the receipt the goods were to be delivered c. the direct obligation of the warehouseman to hold possession of the goods for him, as if the warehouseman directly contracted with him May non negotiable receipts be negotiated? No, even if the receipt is indorsed, the transferee acquires no additional right. That is why they are called non negotiable receipts. But they may be transferred or assigned by delivery. Rights of a person to whom a non negotiable receipt has been transferred: a. the title to the goods as against the transferor b. the right to notify the warehouseman of the transfer thereof and
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GENERAL BONDED WAREHOUSE LAW Any warehouseman receiving commodities for (a) storage; (b) milling; (c) comingling must: a. obtain prior license from the Bureau of Commerce b. file a bond in an amount equivalent to 33 1/3 % of the capacity of the warehouse against which bond depositors may sue directly c. open to the public, no discrimination allowed d. liable for double market value should he accept goods in excess of the capacity of warehouse if goods are damaged or destroyed Note: for palay and corn license, a bond with the National Grains Authority is required; also an insurance cover is required. Uniform Currency Law 1. Obligations Null and Void a. obligations payable in gold/foreign currency b. obligations payable in Philippine currency but measured in gold/foreign currency 2. Exempt Transactions a. government to government transactions or with international banking institutions b. transactions affecting high priority economic projects c. forward exchange transactions between banks d. import and export and other international banking, financial, investment and industrial transactions 3. Merchants and Commercial Transactions Classes of Investments: a. Permitted - one allowed without need of prior authority from the Philippine Government. If registered status, invest up to extent as not to affect its registered status. If enterprise not registered, investment not to exceed 40%. b. Permissible - invest in excess of 40% in unregistered enterprise but with prior approval of BOI c. Pioneer Area - (a) involves manufacturing, processing, production of product not produced at all/produced in non-commercial scale; (b) uses a design, scheme, formula that is new and untried in the Phils.; (c) agricultural activities/services essential to the attainment of food sufficiency; (d) produces non-conventional fuels/utilizes non-conventional sources of energy (all others are non-pioneer) 4. Absolutely Disqualified to become Merchants a. serving penalty of civil interdiction b. insolvent c. absolutely disqualified by special laws 5. Relatively Disqualified a. judicial and prosecuting officials in active service
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6. Books a Merchant must keep a. book of inventories and balances, statement of assets, liabilities and capital b. journal of day to day operations c. ledger for classifying accounts d. copying book for letters and telegrams; if juridical person, include book of minutes and stock and transfer book 7. Probative Value of Merchants Book a. evidence against merchants themselves b. in case of conflicts between 2 books - that which s properly kept prevails c. if one keeps books and the other does not and cannot explain why, the former prevails d. if both books are properly kept and there is a conflict, other proofs can be resorted to 8. Commercial Contracts by Correspondence are perfected from the moment the offeree accepts the offer, even before knowledge of said acceptance by the offeror. This does not apply to deposit, guaranty, sales, loan, agency, partnership. 9. Joint Account Partnership - business arrangement whereby 2 or more persons interest themselves in the business of another by making contributions thereto and participating in the results thereof a. only one member is ostensible, others are silent b. no common name c. only ostensible partners can sue/be sued d. no juridical personality
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Loan on Bottomry - made by shipowner/ship agent guaranteed by vessel itself, repayable upon arrival at destination Loan In Respondentia - taken on security of the cargo repayable upon the safe arrival at cargo destination Accidents and Damages in Maritime Commerce: Averages Arrivals Under Stress Collisions Shipwrecks
15. Average: a. all extraordinary or accidental expenses which may be incurred during the voyage for the preservation of the vessel or cargo or both b. all damages or deterioration which the vessel may suffer from the time it puts to sea at the port of departure until it casts anchor at the port of destination, and those suffered by the merchandise from the time they are loaded in the port of shipment until they are unloaded in the port of their consignment 16. Simple Average - expenses/damages caused to the vessel/cargo not inured to common benefit and profit of all the persons interested in the vessel and her cargo; borne by respective owners
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General Average - expenses/damages deliberately caused in order to save the vessel, its cargo or both from a real and known risk Requisites: a. deliberately incurred b. intended to save vessel and cargo or both
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Difference between Towage and Salvage: Salvage Towage crew of salvaging ship is entitled to salvage, crew of the towing ship does not have any and can look to the salvaged vessel for its interest or rights with the remuneration share pursuant to the contract salvor takes possession and may retain tower has no possessory lien; only an action possession until he is paid for recovery of sum of money court has power to reduce the amount of court has no power to change amount in remuneration if unconscionable towage even if unconscionable CARRIAGE OF GOODS BY SEA ACT 1. When Applicable: a. contracts for the carriage of goods b. by sea c. to and from Philippine ports d. in foreign trade 2. Notice of Loss or damage must be given in writing to the carrier or his agent at the port of discharge or at the time of the removal of the goods into the custody of the person entitled to delivery. If the loss or damage is not apparent, the notice must be given within 3 days of delivery. However, the carrier shall be discharged from all liability in respect of loss or damage of goods unless suit is brought within 1 year after delivery of the goods or the date when the goods should have been delivered. Notice of loss, if not given, that fact shall not affect or prejudice the right of the shipper to bring suit within the 1 year prescriptive period. WARSAW CONVENTION 1. When Applicable: a. international transport by air b. transport of persons, baggage, or goods 2. Liabilities under the Convention: a. damage sustained in the event of the death or wounding of a passenger taking place on board the aircraft or in the course of any of the operations of embarking or disembarking b. loss or damage to any check baggage or goods sustained during the transport by air c. delay in the transport by air of passengers, baggage, or goods Enumeration of causes of action as above stated is not an exclusive list. (Northwest Airlines vs. Cancer) 3. Meaning of Transport by Air - period during which the baggage or goods are in charge of the carrier, whether in an airport or on board an aircraft, or in the case of landing outside an airport, in any place whatsoever 4. Action for damages must be brought at the option of the plaintiff, either: a. before the court of the domicile of the carrier; b. court of principal place of business of carrier;
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protest within 3 days from receipt within 7 days from receipt within 21 days from receipt PUBLIC SERVICE ACT
1. Every person that may own, operate, manage, control in the Philippines, for hire/compensation with general/limited clientele whether permanent, occasional, accidental, and done for a general business purpose any common carrier, shipyard, electric light, heat and power and public utility. 2. Public Utility - business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service. 3. Prior Operator Rule - before permitting a new operator to invade the territory of another already established, the prior operator must be given an opportunity to extend its service to meet the public needs in the matter of transportation. 4. Prior Applicant Rule - presupposes a situation where two interested persons apply for a CPC in the same community over which no person has yet been granted a CPC to operate. If both applicants equal, then the applicant who applied first will be given the CPC. 5. Distinctions between CPCs and CPCNs Certificate of Public Convenience Certificate of Public Convenience and
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Preferred Cumulative Participating Share of Stock - share entitling its holder to preference in the payment of dividends ahead of common stockholders and to be paid the dividends ahead of common stockholders and to be paid the dividends due for prior years and to participate further with common stockholders in dividend declarations Promotion Stock for Services Rendered Prior to Incorporation Escrow Stock stock deposited with a 3rd person to be delivered to stockholder/assignor after complying with certain conditions - usually payment of full subscription price Over-issued Stock - stock issued in excess of authorized capital stock; null and void Watered Stock - stock issued gratuitously, money/property less than par value, services less than par value, dividends where no surplus profits exist Certificate of Stock - written acknowledgment by the corporation of the stockholders interest in the corporation. It is the personal property and may be mortgaged/pledged. Transfer binds the corporation when it is recorded in the corporate books. A stockholder who does not pay his subscription is not entitled to the issue of a stock certificate. The total par value of the stocks subscribed by him should first be paid. Chattel mortgage of shares registered with the Registrar of Deeds need not be registered in corporate books to bind third parties because corporate books only cover absolute transfers. But the pledgee/mortgagee may not have voting rights unless stated in the contract and registered in the corporate name. Methods of Collection of Unpaid Subscription call, delinquency and sale at public auction of delinquent shares ordinary civil action collection from cash dividends and other amounts due to stockholders if allowed by by-laws/agreed to by him A corporation can reacquire stocks in the following cases: eliminate fractional shares corporate indebtedness arising from unpaid subscriptions purchase delinquent shares exercise of appraisal right stockholders
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18. Right of Appraisal a. amending articles, changing, restricting, enlarging rights/extending, shortening corporate life b. sale/disposition of all/substantially all of corporate assets c. merger and consolidation d. investment of funds in another corporation/for a different purpose 19. a. b. c. d. Grounds for Rejection of Registration not in prescribed form purpose illegal, inimical treasurers affidavit false non-compliance with required Filipino stock ownership
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Where similar acts have been approved by the directors as a matter of general practice, custom and policy, the general manager may bind the company even without formal authorization of the board of directors
28. Powers of stockholders: a. a direct participation in management - where his vote is needed to approve certain corporate actions b. indirect participation in management to vote or remove directors c. proprietary rights d. remedial rights 29. Voting Trust Agreement - an agreement between a group of stockholders and trustee for a term not exceeding 5 years in which control over the stocks is lodged in the trustee. The purpose is for controlling the voting. a. in writing, notarized and filed with the SEC and the corporation b. period not exceeding 5 years c. cannot be entered into to circumvent the laws against monopolies, illegal combinations in restraint of trade in fraud Cumulative Voting - the number of votes that a shareholders number of shares multiplied by the number of directors may give all said votes to one candidate or he may distribute them as he may deem fit. Cumulative voting is a matter of right in a stock corporation. In a non-stock corporation, it cannot be utilized unless allowed by the by-laws/articles The power of removal of directors that may be exercised with or without cause cannot apply to the director representing the minority shareholders. He may only be removed with cause.
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Derivative Suit - brought by a stockholder for and in behalf of the corporation to protect/vindicate corporate rights after he has exhausted intra-corporate remedies Requisites: a. cause of action in favor of the corporation b. refusal of corporation to sue c. injury to the corporation Although corporations dissolved have 3 years to wind up, they can convey their properties to a trustee who can continue the suit beyond the 3 year period. The lawyer who handled the case in the trial court may be considered as trustee for the dissolved corporation with respect to the matter in litigation only even if no appointment was extended to him. (Selano vs. CA) In a case filed before dissolution, it may continue even beyond the 3 year period until final determination of litigation. Otherwise, the corporation in liquidation would lose what justly belongs to them/be exempt from payment of obligations because of a technicality.
37. Foreign Corporations a. Doing Business - continuity of commercial dealings incident to prosecution of purpose and object of the organization. Isolated, occasional or casual transactions do not amount to engaging in business. But where the isolated act is not incidental/casual but indicates the foreign corporations intention to do other business, said single act constitutes engaging in business in the Philippines b. Instances when unlicensed foreign corporations can sue: (1) isolated transactions (2) action to protect good name, goodwill, and reputation of a foreign corporation (3) contracts provide that Phil. Courts will be venue to controversies (4) license subsequently granted enables foreign corporation to sue on contracts executed before the grant of the license (5) recovery of misdelivered property (6) where the unlicensed foreign corporation has a domestic corporation 38. Religious Corporations a. Corporation Sole - special form of corporation; associated with the clergy and consists of 1 person only and his successors; incorporated by law giving them legal capacity and advantage b. Close Corporations - one whose articles provide that its shares shall not be held by more than 20 persons; its issued stock shall be subject to one or more restrictions on transfer and shall not be listed in any stock exchange/make public offering
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11. Grounds for Compulsory Licensing: a. national emergency or other circumstances of extreme urgency b. where public interest, national security, health or the development of other vital sectors of the national economy as determined by the appropriate agency of the government so requires c. where a judicial or administrative body has determined that the manner of exploitation by the owner of the patent or his licensee is anti-competitive d. in case of public non-commercial use of the patent by the patentee, without satisfactory reason e. if not being worked in the Philippines on a commercial scale 12. In case of Compulsory Licensing of Patents involving Semi-conductor Technology, the license may be granted only in case of public non-commercial use
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Affidavit of Good Faith - where the parties severally swear that the mortgage is made for the purpose of securing the obligation specified and for no other purpose and that the same is a just and valid obligation and not one entered into for fraud - property given in CM must be described to enable the parties or any other person after reasonable inquiry and investigation to identify it 12. Future property may not be covered by CM but when such property is a: a. renewal of, or in substitution for goods on hand when the mortgage was executed, or b. purchased with proceeds (not of your own money) of said goods, said property may be covered by CM 13. Criminal Acts - removal of chattel to another city or province without written consent of mortgagee, selling property already pledged, or mortgaged without written consent of mortgagee
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