Saturday, March 13, 2010

Libel jurisprudence

See my posts on libel at FOO Law and Economics.

Thursday, July 23, 2009

Amnesty instead of cha cha

Please see my post at FOO Law and Economics for a primer on the law on pardon and amnesty.

Sunday, July 19, 2009

Pilot testing - update

Due process seems an even more powerful argument to demand a proper pilot testing before full nationwide automation. The wonder is why Comelec wants to go with unseeming haste towards a potential disaster. See my post at FOO Law and Economics.

Tuesday, June 16, 2009

Comic reviewer on insurance and criminal law (arson)

This is from a humor site called

This is supposedly a TRUE news story. I have my doubts, but you decide....

A lawyer in Charlotte, NC purchased a box of very rare and expensive cigars, then insured them against fire among other things. Within a month, having smoked his entire stockpile of these great cigars and without yet having made even his first premium payment on the policy, the lawyer filed a claim with the insurance company.

In his claim, the lawyer stated the cigars were lost "in a series of small fires." The insurance company refused to pay, citing the obvious reason: that the man had consumed the cigars in the normal fashion. The lawyer sued....and won! In delivering the ruling the judge agreed with the insurance company that the claim was frivolous. The judge stated nevertheless, that the lawyer held a policy from the company in which it had warranted that the cigars were insurable and also guaranteed that it would insure them against fire, without defining what is considered to be "unacceptable fire," and was obligated to pay the claim. Rather than endure lengthy and costly appeal process, the insurance company accepted the ruling and paid $15,000.00 to the lawyer for his loss of the rare cigars lost in the "fires."

But... After the lawyer cashed the check, the insurance company had him arrested on 24 counts of ARSON! With his own insurance claim and testimony from the previous case used against him, the lawyer was convicted of intentionally burning his insured property and was sentenced to 24 months in jail and a $24,000.00 fine.

Sunday, June 7, 2009

The curious case of Manuel L. Quezon III

See my post at FOO Law and Economics. It seems that recantation is not an adequate legal remedy. But it works in the ecclesiastical sphere!

Monday, March 30, 2009

Can the PDIC resist paying all claims on deposit insurance?

In the case of certain failed rural banks, it seems the answer is yes, when the claimant is a "bad-faith" depositor. See my post at FOO Law and Economics.

Friday, March 27, 2009

How to think about and for a bar exam

Simplify, simplify.. Memorize but not too much. Keep your logic skills alive. You will survive..

First, get two dictionaries. Black's and a standard Philippine law dictionary. You need them to have legal concepts down "cold" for the bar exam.

Second, approach each bar subject as a collection of topics. For example, political law includes such topics as due process, presumption of innocence, the political question, separation of powers, etc. Your notes will probably come to something like 50 topics per bar subject.

Third, within each topic, outline your thinking on three levels: concepts, doctrines, and rules. Concepts have to be complete. Doctrines have to be those important enough to be mentioned in the textbook and bar reviewer you use. Rules are based on statutes and cases. You don't have to remember a particular rule if it can be derived from concept and doctrine.

Rules based on unusual cases have to be remembered. An example of an unusual case is Obrecido, on how the Supreme Court decided to interpret the rule on divorce obtained by an alien against his Filipino spouse. It is unusual because it goes against a simplistic reading of the Family Code, but is consistent with the over-arching principle of the Civil Code (Art. 10 on how right and justice prevail when the court interprets a statute).

A good guess is that each topic contains up to 10 concepts, 5 doctrines, and 30 legal rules.

Because of overlap across topics, the number of concepts per bar subject may be about 200, doctrines about 40, and rules about 700. These constitute a core minimum of "knowledge elements" numbering about 1,000 that have to be on "instant recall" for the exam for one who will get a grade of at least 75%.

Fourth, knowing all the above is not enough. You should also know how to write out the essay answer. This is not a memory-dependent skill.

The usual approach is to break any question down as an "issue spotter," and to draft out an answer using IRAC (issue, rule, analysis, and conclusion). It seems that in the Philippines, the order of a good bar exam answer is somewhat different: CIRA. This is because a typical question asks the examinee to "decide" a hypothetical case based on an actual Supreme Court decision. Thus, the first part is a Yes/No/I qualify. The second part states the legal issue or issues that the court should decide (this is the hardest, but when "spotted" it ensures a correct answer). The third part cites the legal rules that apply (the "codals" or the case law).

The last part is the analysis. It cannot be taught or memorized, except when the question is "on all fours" with an actual case. But it is a matter of logic -- how the rules apply to the facts. Here, one should think fast but not too fast. Thinking too slowly or "over-thinking" is usually fatal because it means you do not have the necessary concept, doctrine, and/or rule "on the ready" for making out an answer.

Each examinee memorizes and thinks in his own idiosyncratic way. But the three-part (concept, doctrine, rule) breakdown of the memorized elements, and the individualized execution of IRAC are universally necessary components of thinking for a bar exam.

Friday, March 20, 2009

Parent-subsidiary rules - Corporation Code

POSSIBLE BAR QUESTION (This question is prompted by developments relating to AIG and its subsidiaries in the Philippines, such as PhilAm Life, an insurance company).

Facts: A parent corporation P is in financial difficulty.  It has a subsidiary S that is in good financial condition.  

(a) Is it legal for the subsidiary to lend to the parent? It seems this would be legal if the transaction is allowed by the corporate purposes of S (after all P and S have separate corporate personalities).  It is probably not among the corporate purposes of S to “bail out” its parent P, but investment of funds of S in a “secondary purpose” is allowed, if provided for in the corporate charter of S.  Of course the transaction is likely barred by the rules that require the subsidiary to maintain adequate capital under banking or insurance laws.  Thus, regulation of the insurance and banking industries is an argument to support the idea that the Philippine subsidiaries of AIG are safe.  But this argument may be weakened if the regulatory framework has loopholes that would allow AIG access to the liquidity of its subsidiaries.

If S lends to P, and P goes bankrupt, S can suffer since it is a creditor of P. 

If P lends to S, and this causes P to become insolvent, the lending could be attacked as a transaction in fraud of creditors of P.  In short, the ability of P to “support” S is obviously weakened when P is in financial difficulty, and creditors of S would be more careful dealing with S.  In this case, potential customers of S may go to a competitor knowing that the parent P is in trouble. There is a view on the working of the insurance industry in the US that customers of an AIG subsidiary there would have some incentives to switch to another insurance company, particularly if the customer chooses an insurer on the basis of the financial strength of its parent company. (Maybe this is because it is either possible or practiced that the parent is a reinsurer for the subsidiary.) 

Thus, it seems generally that the financial condition of S is to some (unclear) extent potentially or actually affected by the financial problems of P.

(b) If the parent is insolvent, what is the effect on the subsidiary? None, because insolvency of a stockholder (P) does not affect the corporation (S), unless P owes money to S.  But if S owes P, and P goes under, the creditors of P may demand that P “call” its loans to S, which could trigger a liquidity problem for S (thereby affecting the creditors or customers of S).  More likely, perhaps, as discussed in (a) above, the business of S may be affected by “reputational” considerations, since the parent is usually there to give the public some assurance that the subsidiary is in good shape.  After all, the normal event is for the parent to be financially stronger than the subsidiary. 

(c) If the parent is an insurance company, and the subsidiary is a bank, will the answer to (b) be the same? It seems yes, subject to the safety net given by special laws as discussed in (a) above.