COMMON TERMS IN COMMERCIAL
LAW another, signed by the person
Accomodation Party – a person
who has signed the instrument as
maker, drawer, acceptor or
indorser without receiving value
therefor, and for the purpose of
lending his name to some other
person (Sec. 29, NIL).
Allusion – impact between a
moving vessel and a stationary one
(1958 Bar).
Appraisal Right – right of a
stockholder, who dissents from a
fundamental or extraordinary
corporate action, to demand
payment of the fair value of his
shares (Sec. 81, Corporation Code
[CC]).
Authorized Capital – stated
amount in the articles of
incorporation representing the
maximum amount the corporation
can collect from its stockholders on
account of the stocks issued to
them (1964 Bar).
Authorized Driver Clause – an
authorized driver must not only be
permitted to drive by the insured
but also allowed by law and
regulations (Stokes vs. Malayan,
127 SCRA 766).
Average – an extraordinary or
accidental expense incurred during
the voyage in order to preserve the
cargo, the vessel or both, and all
damages or deterioration suffered
by the vessel from departure to the
port of destination, and to the
cargo from the port of loading to
the port of consignment (1961
Bar).
Bareboat or Demise Charter –
entire control and management is
given to the charterer (Ouano vs.
CA, 211 SCRA 740).
Bill of Exchange – an
unconditional order in writing
addressed by one person to
giving it, requiring the person to
whom it is addressed to pay on
demand or at a fixed or
determinable future time a sum
certain in money to order or to
bearer (2002 Bar).
Bill of Lading – written
acknowledgment of the receipt of
goods and an agreement to
transport and to deliver them at a
specified place to a person named
therein or on his order (1998 Bar).
Bill in Set – one composed of
several parts, each part being
numbered and containing a
reference to the other parts, the
whole of the parts constituting but
one bill (Sec. 178, NIL).
Blank Indorsement – one which
does not specify the name of the
indorsee, and usually consists of
the indorser’s signature, and
nothing else, found at the back of
the instrument (1948 Bar).
Bond – a certificate of
indebtedness issued by the
corporation for money borrowed
from the public in general (1956
Bar).
Bulk Sales – one where the sale,
transfer or disposition is other than
in the ordinary course; when the
sale is of all or substantially all of
the business; and when the sale is
of all or substantially all of the
fixtures and equipment (1958 Bar).
Business Judgment Rule –
judgments and decisions of the
corporation, made by its
management body, the board of
directors, should not be interfered
with, even by the courts unless
such acts are so oppressive and
unconscionable as to amount to a
wanton destruction of the rights of
the minority (1989 Bar).
Capital Stock – amount of money
stated in the articles of
incorporation to be subscribed and
paid in (1964 Bar).
Cash Dividend – any dividend
other than from the unissued
shares of the corporation (1989
Bar).
Cash to Carry – requires payment
of the premium before the contract
of insurance can be valid and
binding (2003 Bar).
Cashier’s Check – a primary
obligation of the issuing bank and
accepted in advance by its mere
issuance, and is regarded
substantially to be as good as the
money it represents (Tan vs. CA,
239 SCRA 310).
Casualty Insurance – one
covering loss or liability arising
from accident or mishap, excluding
certain types of loss which by law
or custom are considered as falling
exclusively within the scope of
other types of insurance such as
fire or marine (Sec. 174, IC).
Certificate of Stock – a tangible
evidence of ownership of shares of
stock (Republic vs. Estate of Menzi,
476 SCRA 20).
Certification of Check – an
agreement by the bank against
whom a check is drawn that the
check will be paid when presented
for payment (Wachtel vs. Rosen,
221 N.Y. Supp. 710).
Charter Party – 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 (Caltex vs.
Sulpicio, 315 SCRA 709).
Check – a bill of exchange drawn
on a bank payable on demand
(2002 Bar).
Clean Bill of Lading – a bill of
lading which has no notation of any
defect or damage in the goods
(Lorenzo vs. Chubb, 431 SCRA
266).
Close Corporation – one whose
articles of incorporation provide
that the corporation’s issued stock
shall be held by not more than
twenty persons, subject to
restrictions on transfer, and not list
in any stock exchange or make any
public offering (Sec. 96, CC).
Co-insurance – the percentage in
the value of the insured property
which the insured himself assumes
or undertakes to act as insurer to
the extent of the deficiency in the
insurance of the insured property
(1994 Bar).
Cognition Theory – the
acceptance is considered to
effectively bind the offeror only
from the time it came to his
knowledge (1997 Bar).
Collision – the impact of two
vessels, both of which are moving
(1958 Bar).
Commercial Law – branch of
private law which regulates the
juridical relations arising from
commercial acts (1956 Bar)
Commercial Transactions –
those contained in the Code of
Commerce and all others of
analogous character (2003 Bar).
Common Share – one entitling the
holder to proportionate rights in
voting, dividends and assets in
liquidation, along with other
common stockholders (1961 Bar).
Concealment in Insurance
Contracts – neglect to
communicate that which a party
knows and ought to communicate
to the other party (1948 Bar).
Concession Theory – a group of
persons wanting to create a
corporation will have to execute
documents and comply with
requirements set by the state
before it acquires a corporate
personality (1972 Bar).
Condominium Corporation – a
private corporation organized for
the construction of a building with
complete living or office units
which it sells, creating therein full
ownership for the buyers of the
units thus sold, and a co-ownership
over the land and other portions of
the building used in common by
the unit buyers (1967 Bar).
Conservator – appointed to take
charge of the assets, liabilities, and
the management of a bank or a
quasi-bank in a state of continuing
inability, or unwillingness to
maintain a condition of liquidity
deemed adequate to protect the
interest of depositors and creditors
(2006 Bar).
Consolidation – a new corporation
is created, and the consolidating
corporations are extinguished
(Black’s Law Dictionary).
Continuity Test – implies a
continuity of commercial dealings
and arrangements, and
contemplates, to that extent, the
performance of acts or works or the
exercise of some of the functions
normally incident to, and in the
progressive prosecution of, the
purpose and object of its
organization (Agilent vs.
Integrated, 427 SCRA 593).
Control Test – The nationality of a
corporation will depend on the
nationality of the stockholders
having the controlling interest
(1998 Bar).
Copyright – an intangible
incorporeal right to certain literary,
scholarly, scientific and artistic
productions granted by the statute
to the author of the work, and
giving him, his heirs and assigns
copyright or economic rights (1965
Bar).
Corporate Opportunity Doctrine
– if the director acquired for himself
a business opportunity that should
belong to the corporation, he must
account to the corporation for all
profits he obtained, unless his act
was ratified by at least two-thirds
of the stockholders (Sec. 34, CC).
Corporation – an artificial being
created by operation of law having
the right of succession, and the
powers, attributes and properties
expressly authorized by law and
incident to its existence (Sec. 2,
CC).
Corporation “Going Private” –
one which restricts equity
investment in the corporation
within the organization itself or its
existing subject structure (1986
Bar).
Corporation “Going Public” –
one which decides to list its shares
in the stock exchanges (1986 Bar).
Corporation by Estoppel – a
group of persons who assume to
act as a corporation knowing it to
be without authority to do so (Sec.
21, CC).
Corporation by Prescription – a
body which though not lawfully
organized as a corporation, has
been recognized by immemorial
usage as a corporation, with rights
and duties maintainable at law
(1964 Bar).
Corporation Sole – one formed
for the purpose of administering
and managing, as trustee, the
affairs, property and temporalities
of any religious denomination, sect
or church (Sec. 110, CC).
Crossed Check – one which in
addition to the usual contents of an
ordinary check contains also the
name of a certain banker or
business entity through whom it
must be presented for payment
(2005 Bar).
De Facto Corporation – one
created through a bona fide
attempt to incorporate under
existing laws in good faith,
although defectively formed (Sec.
20, CC).
Derivative Suit – instituted by a
stockholder in behalf of the
corporation wherein he holds stock
in order to protect or vindicate
corporate rights, whenever the
officials of the corporation refuse to
sue or are the ones to be sued, or
hold control of the corporation
(Gamboa vs. Victoriano, 90 SCRA
40).
Deviation – a departure of the
vessel from the course of the
voyage insured, or an
unreasonable delay in pursuing the
voyage, or the commencement of
an entirely different voyage (Sec.
123, IC).
Discharge of Instrument –
release of all parties, whether
primary or secondary, from the
obligations arising thereunder
(Young vs. Carr, 26 [2d] 555).
Dividend – unrestricted retained
earnings set apart from the general
mass of the funds of the
corporation and distributed among
the stockholders in proportion to
their shares or interest in the
corporation, in the form of cash,
property or stocks (Sec. 43, CC).
Domiciliary Test – the nationality
of the corporation is that of the
country where it is incorporated
(1998 Bar).
Dominancy Test – requires that if
the competing trademark contains
the main or essential features of
another and confusion and
deception is likely to result,
infringement takes place (Asia
Brewery vs. CA, 224 SCRA 437).
Double Insurance – exists where
the same person is insured by two
or more insurers separately with
respect to the same subject matter
and interest (Sec. 93, IC).
Eleemosynary Corporation –
non-religious corporation organized
for charitable purposes (1967 Bar).
Equivalents, Doctrine of –
infringement also occurs when a
device appropriate a prior
invention by incorporating its
innovative concept and, albeit with
some modifications and change,
performs substantially the same
function in substantially the same
way to achieve substantially the
same result (Godines vs. CA, 226
SCRA 338).
Exempt Transactions – those
that do not require registration
either because the law itself
exempts them therefrom or the
Securities and Exchange
Commission finds that the
enforcement of the registration
requirement is not necessary in the
public interest and for the
protection of investors by reason of
the amount involved or the limited
character of the public offering
(1989 Bar).
Fire Insurance – includes
insurance against fire, lightning,
windstorm, tornado or earthquake
and other allied risks, when such
risks are covered by extension to
fire insurance policies or under
separate policies (Sec. 167, IC).
First to File Rule – if two or more
persons have made an invention
separately and independently of
each other, the right shall belong
to applicant who has the earliest
filing date or earliest priority date
(Sec. 29, Intellectual Property Code
[IPC]).

Fit and Proper Rule – The
Monetary Board prescribes, passes
upon and reviews the qualifications
and disqualifications of individuals
elected or appointed as bank
directors or officers to maintain the
quality of bank management and
to afford better protection to
depositors and the public (Sec. 16,
General Banking Law of 2000
[GBL]).
Floor Trader – is a professional
trader in securities who acts for
himself and not for the account of
others, hence, receives no
commission at all (1961 Bar).
Foreign Bill – one that is not both
drawn and payable within the
Philippines (Sec. 129, NIL).
Foreign Corporation – one
formed, organized or existing
under any laws other than those of
the Philippines and whose laws
allow Filipino citizens and
corporations to do business in its
own country or state (Sec. 123,
CC).
Founder’s Share – provided in
the articles of incorporation and
may be given certain rights and
privileges not enjoyed by the
owners of other stocks (Sec. 7, CC).
Freightage – the benefits 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 (Sec.
102, IC).
General Indorser – engages that
if the instrument is dishonored and
the necessary proceedings for its
dishonor are duly taken, he will pay
the amount thereof to the holder
(Section 66, NIL).
General or Gross Average – all
damages and expenses which are
deliberately caused in order to
save the vessel its cargo, or both at
the same time, from a real and
known risk (Philippine Home vs.
CA, 257 SCRA 468).
Government Deregulation – the
relaxation or removal of regulatory
constraints on firms or individuals,
with a view to promoting
competition and market-oriented
approaches toward pricing, output,
entry, and other related economic
decisions (2004 Bar).
Holder for Value – one who has
given a valuable consideration for
the instrument issued or
negotiated to him (Sec. 26, NIL).
Holder in Due Course – one who
has taken the instrument under the
conditions enumerated in Section
52 of the Negotiable Instruments
Law (Please refer to Sec. 52, NIL).
Incontestability Clause –
precludes the insurer from raising
the defenses of false
representations or concealment of
material facts insofar as health and
previous diseases are concerned if
the insurance has been in force for
at least two years during the
insured’s lifetime (Tan vs. CA, 174
SCRA 403).
Incorporator – stockholders or
members mentioned in the articles
of incorporation as originally
forming and composing the
corporation and who are
signatories thereof (Sec. 5, CC).
Indorsement – the writing of the
name of the indorser on the
instrument with the intent either to
transfer the title to the same, or to
strengthen the security of the
holder by assuming a contingent
liability for its future payment, or
both (Norton, op. cit., 4th ed.).
Industrial Design – any
composition of lines or colors or
any three-dimensional form,
whether or not associated with
lines or colors, provided that such
composition or form gives a special
appearance to and can serve as
pattern for an industrial product or
handicraft (Sec. 112, IPC).
Infringement – use by the others
without the registrant’s consent of
a reproduction or colorable
imitation of his trademark,
tradename or service mark with
the purpose of causing to mislead
or misleading the public that such
goods or services are those of the
registrant (Asia vs. CA, 224 SCRA
437).
Inland Bill – one which is, or on its
face purports to be, both drawn
and payable within the Philippines
(Sec. 129, NIL).
Inscrutable Fault Doctrine –
Where fault is established but it
cannot be determined which of the
two vessels were at fault, both
shall be deemed to have been at
fault (1997 Bar).
Instrumentality Rule or Alter-
Ego Doctrine – separate
personality of a corporation may be
disregarded when the corporation
is the mere alter ego or business
conduit of a person (Lipat vs. PBC,
402 SCRA 339).
Insurable Interest – every
interest in property, whether real
or personal, or any relation thereto,
or liability in respect thereof, of
such nature that a contemplated
peril might directly damnify the
insured (Sec. 13, IC).
Insurable Interest in Life – one
which a person has in his life, or
the interest which he may have in
the lives of other persons (1) on
whom he depends wholly or in part
for education or support, (2) under
legal obligation to him to pay
money, to deliver property, or to
render service, (3) upon whose life
any estate or interest vested in him
depends (1966 Bar).
Insurable Interest in Property –
every interest in property whether
real or personal, or any relation
thereto, or liability in respect
thereof, of such a nature that the
contemplated peril might directly
cause damage to the insured
(1951 Bar).
Insurance Contract – an
agreement whereby one
undertakes for a consideration to
indemnify another against loss,
damage, or liability arising from an
unknown or contingent event
(Philamcare vs. CA, 379 SCRA
356).
Insurance Premium –
consideration paid an insurer for
undertaking to indemnify the
insured against a specified peril
(Gulf vs. Philippine Charter, 458
SCRA 550).
Intra-corporate Controversy – a
dispute between a stockholder and
the corporation of which he is a
stockholder, or between a
stockholder and another
stockholder of the same
corporation, where the subject of
the dispute or controversy arose
out of such relationship (Sunset
View Condominium Corp. vs.
Campos, 104 SCRA 303).
Irregular Indorser – not a party
to the instrument, but places his
signature thereon in blank prior to
delivery to add credit thereto and
becomes liable as an indorser
(2005 Bar).
Joint Account – a transaction of
merchants where other merchants
agree to contribute the amount of
capital agreed upon, and
participating in the favorable or
unfavorable results thereof in the
proportion they may determine
(2000 Bar).
“Kabit” System – an
arrangement whereby a person
who has been granted a certificate
of public convenience allows
another who owns a motor vehicle
to operate under his certificate for
a fee or a percentage of his
earnings (Lim vs. CA, 373 SCRA
394).
Letter of Credit – a request by
one bank to another bank to
advance or to give money to a
third person on the basis of the
letter and on the credit of the
person issuing it (7 Am. Jur. 917).
Life Insurance – insurance on
human lives and insurance
appertaining thereto or connected
therewith (Sec. 179, IC).
Limited Liability Doctrine – the
liability of the shipowner arising
from the operation of a ship is
confined to the vessel, equipment,
and freight, or insurance, if any, so
that if the shipowner abandoned
the ship, equipment, and freight,
his liability is extinguished (1999
Bar).
Loan on Bottomry – one made by
the ship owner or ship agent
guaranteed by the vessel itself,
and repayable on arrival of the
vessel at destination (1961 Bar).
Loan on Respondentia – one
taken on security of the cargo
laden on a vessel, and repayable
on the safe arrival of the cargo at
destination (1961 Bar).
Manager’s Check – one drawn by
the bank’s manager upon the bank
itself (International vs. Gueco, 351
SCRA 516).
Manifestation Theory – the
contract is perfected at the
moment when the acceptance is
declared or made by the offeree.
(1997 Bar).
Marine Insurance – one which
includes those enumerated under
Section 99(1)(a)(b)(c)(d) of the
Insurance Code (Please refer to
said provision).
Maritime Protest – sworn
statement made within 24 hours
after a collision in which the
circumstances thereof are declared
before a competent authority at
the point of accident or the first
port of arrival if in the Philippines
or the Philippine consul in a foreign
country (Art. 385, Code of
Commerce).
Mark – any visible sign capable of
distinguishing the goods
(trademark) or services (service
mark) of an enterprise and shall
include a stamped or marked
container of goods (Sec. 121, IPC).
Material Alteration of
Instrument – one which changes
the items which are required to be
stated under Section 1 of the
Negotiable Instruments Law (PNB
vs. CA, 256 SCRA 491).
Merger – one corporation absorbs
the other and remains in existence
while the other is dissolved
(Black’s Law Dictionary).
Money Market – market of
dealing in standardized short-term
credit instrument involving large
amounts where lenders and
borrowers do not deal directly with
each other but through a middle
man or dealer in the open market
(Sebreno vs. CA, 240 SCRA 606).
Mortgagee in Good Faith
Doctrine – Even if the mortgagor
is not the owner of the mortgaged
property, the mortgage contract
and any foreclosure sale arising
therefrom are given effect by
reason of public policy (Llanto vs.
Alzona, 450 SCRA 288).
Motor Vehicle Liability
Insurance – insurance against
passenger and third-party liability
for death or bodily injuries and
damage to property arising from
motor vehicle accidents (Sec. 373,
IC).
Mutual Life Insurance
Corporation – a cooperative
enterprise where the members are
both the insurer and the insured
(White Gold Marine Services vs.
Pioneer Insurance, 464 SCRA 448).
Negotiable Instrument – one
that complies with Section 1 of the
Negotiable Instruments Law
(Please refer to Sec. 1, NIL).
Negotiable Warehouse Receipt
– a warehouse receipt which
expressly states that the goods are
deliverable to bearer or to the
order of a person specified therein
(1953 Bar).
Negotiation – transfer of a
negotiable instrument from one
person to another in such a manner
as to constitute the transferee the
holder thereof (Sec. 30, NIL).
No-Fault Indemnity Clause – any
claim for death or injury of any
passenger or third party shall be
paid without the necessity of
proving fault or negligence of any
kind (1994 Bar).
Non-Stock Corporation – one
which does not have capital stock
and where no part of its income is
distributable as dividends to its
members, trustees, or officers
(Sec. 87, CC).
Non-Exempt Securities – those
which may be offered for sale or
otherwise disposed of to the
general public by registration with
the SEC done by the filing by the
issuer, dealer or underwriter of an
application complying with the
provisions of the Code (1988 Bar).
Notice of Dishonor – bringing,
either verbally or in 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 has not been paid and
the party notified is expected to
pay it (Martin vs. Brown, 75 Ala.
442).
Open Policy – value of the thing
insured is not agreed upon, but is
left to be ascertained at the time of
loss (1953 Bar).
Over-the-Counter Markets –
markets made or created for the
purchase and sale of securities
other than on a security exchange
(1989 Bar).
Paid-Up Capital – the actual
amount of money paid, or property
delivered to the corporation on
account of the subscription of a
stockholder (1964 Bar).
Patent – an exclusive right
acquired over an invention to sell,
use and make the same whether
for commerce or industry (1958
Bar).
Piercing the Veil of Corporate
Fiction Doctrine – the legal fiction
that a corporation is an entity with
a juridical personality separate and
distinct from its members or
stockholders may be disregarded
and the corporation will be
considered as a mere association
of persons, such that liability will
attach directly to the officers and
the stockholders (Umali vs. CA, 189
SCRA 529).
Policy – written instrument in
which a contract of insurance is set
forth (Sec. 48, IC).
Preferred Share – one issued
entitling the holder to a preference
in dividends, and/or assets in
liquidation, with generally no
voting rights (1961 Bar).
Prior Operator Rule – allows and
existing franchise operator to
invoke preferential right to render
public service within the authorized
territory as long a he does so
satisfactorily and economically
(1986 Bar).
Private Corporation – one
formed for some private purpose,
benefit or end (2004 Bar).
Privatization – transfer of
ownership and control by the
government of assets, firms and
operations in an industry to private
investors (2004 Bar).
Procuration – the act by which a
principal gives power to another to
act in his place as he could himself
(Fink vs. Scott, 143 S.E. 305).
Promissory Note – an
unconditional promise in writing
made by one person to another,
signed by the maker, engaging to
pay on demand or at a fixed or
determinable future time, a sum
certain in money to order or bearer
(2002 Bar).
Protest – the formal instrument
executed usually by a notary public
or other competent person
certifying that the facts necessary
to the dishonor of the instrument
by non-acceptance or non-payment
have taken place (Norton, op. cit.,
pp. 517-518).
Public Corporation – one formed
for the government of a portion of
the state for the general good or
welfare (2004 Bar).
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 (JG Summit vs.
CA, 412 SCRA 10).
Qualified Indorsement – a
constitutes the indorser a mere
assignor of the title to the
instrument (Sec. 38, NIL).
Quasi-Bank – entities engaged in
borrowing of funds through
issuance, endorsement or
assignment with resource or
acceptance of deposit substitutes
(Sec. 95, New Central Bank Act).
Reacquirer – a holder who
negotiates an instrument and then
subsequently reacquires it (Sec.
50, NIL).
Receiver – appointed to manage a
bank or quasi-bank that is unable
to pay its liabilities in the ordinary
course of business, or has
insufficient realizable assets to
meet its liabilities, or cannot
continue business without probable
losses to its depositors or creditors
(2006 Bar).
Redeemable Share – issued by
the corporation when expressly
provided in the articles of
incorporation and purchased or
taken up upon the expiration of a
fixed period, regardless of the
existence of unrestricted retained
earnings (Sec. 8, CC).
Referee in Case of Need –
person named by the drawee or
indorser as the one to whom the
holder may resort in case the bill is
dishonored (Sec. 131, NIL).
Reinsurance – contract of
indemnity one insurer makes with
another to protect the first insurer
from a risk it has already assumed
(Philippine American vs. Auditor,
22 SCRA 135).
Running Policy – one which
contemplates successive
insurances and which provides that
the subject of the policy may from
time to time be defined (1953 Bar).
Secondary Meaning Doctrine –
long time exclusive and
continuous use of a mark or name
which is unregistrable for being
geographical, descriptive or a
surname, such that the mark or
name has lost its primary meaning
and it becomes associated in the
public mind with particular goods,
entitles the user to have said name
or mark registered (1958 Bar).
Securities – Shares, participation
or interests in a corporation or in a
commercial enterprise or profit-
making venture and evidenced by
a certificate, contract, instrument,
whether written or electronic in
character (Sec 3.1, R.A. 8799).
Separate Juridical Personality –
a corporation has a personality
separate and distinct from that of
its stockholders or members, and
the officers that represent it (LBP
vs. CA, 364 SCRA 375).
Short Sale – any sale of a security
which the seller does not own or
any sale which is consummated by
the delivery of a security borrowed
by, or for the account of the seller
(PSE Rules and Regulations).
Shortswing – a transaction where
a person buys securities and sells
or disposes of the same within a
period of six (6) months (1994
Bar).
Stock – represents the actual
property of a corporation (1964
Bar).
Stock Dividend – one declared
and paid out from the unissued
shares of the corporation (1989
Bar).
Stock Corporation – one that has
capital stock divided into shares
and is authorized to distribute to
the holders of such shares
dividends or allotments of the
surplus profits on the basis of the
shares held (Sec. 3, CC).
Street Certificate – stock
certificate endorsed by the
registered holder in blank and upon
its face, the transferee is entitled
to demand its transfer into his
name from the issuing corporation
(1971 Bar).
Subscribed Capital – capital
stock or a portion of it, issued by
the corporation to its stockholders,
paid for, or promised to be paid by
the latter (1964 Bar).
Substance Test – whether the
foreign corporation is continuing
the body of the business or
enterprise for which it was
organized or whether it has
substantially retired from it and
turned it over to another (2002
Bar).
Supercargo – a person specially
employed by the owner of a cargo
to take charge of the merchandise
which has been shipped, to sell it
to the best advantage, and to
purchase returning cargoes and to
receive freight, as he may be
authorized (http://legal-
dictionary.the
freedictionary.com/Supercargo).
Surety Bond – a security put up
by a surety or insurance company
in behalf of a principal to guarantee
the performance by such a
principal of some act or
undertaking (2004 Bar).
Tender Offer – publicly
announced intention of a person
acting alone or in concert with
other persons to acquire equity
securities of a public company
(2002 Bar).
Tradename – name or designation
identifying or distinguishing an
enterprise (Sec. 121, IPC).
Treasury Share – one which has
been issued and fully paid for, but
subsequently reacquired by the
issuing corporation by purchase,
redemption, donation or through
some other lawful means (Sec. 9,
CC).
Trust Fund Doctrine – the capital
stock, properties and other assets
of a corporation are regarded as
equity in trust for the payment of
corporate creditors (Boman
Environmental vs. CA, 167 SCRA
540).
Trust Receipt – a written or
printed document signed by the
entrustee in favor of the entruster
containing terms and conditions
substantially complying with the
provisions of the Trust Receipts
Law, whereby the bank as
entruster releases he goods to the
possession of the entrustee but
retains ownership thereof while the
entrustee may sell the goods and
apply the proceeds for the full
payment of his liability to the bank
(Section 3(j), Trust Receipts Law).
whom the document is issued
(1967 Bar).
Wash Sale – takes place by
creating a false or misleading
appearance of active trading in any
listed security traded in any listed
security traded in an Exchange by
effecting any transaction in such
security which involves no change
in the beneficial ownership (1961
Bar).
Watered Stock – one issued for a
consideration less than its par or
issued value or for a consideration
in any form other than cash, valued
in excess of its fair value (Sec. 65,
CC).

Ultra Vires Act – act done by a

corporation outside the express
and implied powers vested in it by
its charter and by the law (1949
Bar).

Valued Policy – one in which a

definite valuation is, by the
agreement of both parties, put
upon the subject matter of the
insurance and written on the face
of the policy (1953 Bar).

Voting Trust – an arrangement in

writing and notarized, whereby one
or more stockholders transfer their
shares of stock to a trustee, who
thereby acquires the right to vote
and other rights pertaining to the
shares, for a period not exceeding
five (5) years at any one time, and
in return trust certificates are given
to the shareholders, these
certificates being transferrable, like
stock certificates are, subject,
however, to the trust agreement
(1985 Bar).

Warehouse Receipt – a written

acknowledgment by a
warehouseman that he has
received and holds certain goods in
his warehouse for the person to