Topic: Board members; criminal liability for illegal trading of

petroleum products.
Arnel U. Ty, et al. vs.
National Bureau of Investigation Supervising Agent Marvin E.
De Jemil,et al.,
G.R. No. 182147, December 15, 2010
FACTS:
ISSUE:
HELD: Sec.4ofBP33,asamended,providesforthepenaltiesandpersonswhoarecriminally
liable,thus:

Sec.4.Penalties.Anypersonwhocommitsanyacthereinprohibitedshall,uponconviction,
bepunishedwithafineofnotlessthantwentythousandpesos(P20,000)butnotmorethanfifty
thousandpesos(P50,000),orimprisonmentofatleasttwo(2)yearsbutnotmorethanfive(5)
years,orboth,inthediscretionofthecourt.Incasesofsecondandsubsequentconvictionunder
thisAct,thepenaltyshallbebothfineandimprisonmentasprovidedherein.Furthermore,the
petroleum and/or petroleum products, subject matter of the illegal trading, adulteration,
shortselling, hoarding,overpricingor misuse,shall beforfeitedinfavoroftheGovernment:
Provided,Thatifthepetroleumand/orpetroleumproductshavealreadybeendeliveredandpaid
for,theoffendedpartyshallbeindemnifiedtwicetheamountpaid,andifthesellerwhohasnot
yet delivered has beenfullypaid, the price receivedshall be returnedtothe buyer withan
additionalamountequivalenttosuchprice;
andinaddition,iftheoffenderisanoilcompany,marketer,distributor,refiller,dealer,sub
dealerandotherretailoutlets,orhauler,thecancellationofhislicense.
TrialsofcasesarisingfromthisActshallbeterminatedwithinthirty(30)daysafterarraignment.
Whentheoffenderisacorporation,partnership,orotherjuridicalperson,thepresident,the
generalmanager,managingpartner,orsuchotherofficerchargedwiththemanagementofthe
businessaffairsthereof,oremployeeresponsiblefortheviolationshallbecriminallyliable;in
casetheoffenderisanalien,heshallbesubjecttodeportationafterservingthesentence.
Iftheoffenderisagovernmentofficialoremployee,heshallbeperpetuallydisqualifiedfrom
office.(Emphasissupplied.)
Relyingonthethirdparagraphoftheabovestatutoryproviso,petitionersarguethattheycannot
beheldliableforanyperceivedviolationsofBP33,asamended,sincetheyaremeredirectorsof
Omniwhoarenotinchargeofthemanagementofitsbusinessaffairs.Reasoningthatcriminal
liabilityispersonal,liabilityattachestoapersonfromhispersonalactoromissionbutnotfrom
thecriminalactornegligenceofanother.SinceSec.4ofBP33,asamended,clearlyprovidesand
enumerateswhoarecriminallyliable,whichdonotincludemembersoftheboardofdirectorsof
acorporation,petitioners,asmeremembersoftheboardofdirectorswhoarenotinchargeof

Omnisbusinessaffairs,maintainthattheycannotbeheldliableforanyperceivedviolationsof
BP33,asamended.Tobolstertheirposition,theyattesttobeingfulltimeemployeesofvarious
firmsasshownbytheCertificatesofEmployment[71]theysubmittedtendingtoshowthatthey
areneitherinvolvedinthedaytodaybusinessofOmninormanagingit.Consequently,they
positthatevenifBP33,asamended,hadbeenviolatedbyOmnitheycannotbeheldcriminally
liablethereofnotbeinginanywayconnectedwiththecommissionoftheallegedviolations,and,
consequently,thecriminalcomplaintsfiledagainstthembasedsolelyontheirbeingmembersof
theboardofdirectorsaspertheGISsubmittedbyOmnitoSECaregrosslydiscriminatory.
Onthispoint,weagreewithpetitionersexceptastopetitionerArnelU.Tywhoisindisputably
thePresidentofOmni.
ItmaybenotedthatSec.4aboveenumeratesthepersonswhomaybeheldliableforviolationsof
thelaw,viz:(1)thepresident,(2)generalmanager,(3)managingpartner,(4)suchotherofficer
chargedwiththemanagementofthebusinessaffairsofthecorporationorjuridicalentity,or(5)
the employee responsible for such violation. A common thread of the first four enumerated
officersisthefactthattheymanagethebusinessaffairsofthecorporationorjuridicalentity.In
short, they are operating officers of a business concern, while the last in the list is self
explanatory.
It is undisputed that petitioners are members of the board of directors of Omni at the time
pertinent.Therecanbenoquibblethattheenumerationofpersonswhomaybeheldliablefor
corporateviolatorsofBP33,asamended,excludesthemembersoftheboardofdirectors.This
standstoreasonfortheboardofdirectorsofacorporationisgenerallyapolicymakingbody.
Evenifthecorporatepowersofacorporationarereposedintheboardofdirectorsunderthefirst
paragraphofSec.23oftheCorporationCode,itisofcommonknowledgeandpracticethatthe
boardofdirectorsisnotdirectlyengagedorchargedwiththerunningoftherecurringbusiness
affairs of the corporation. Depending on the powers granted to them by the Articles of
Incorporation,themembersoftheboardgenerallydonotconcernthemselveswiththedaytoday
affairs of the corporation, except those corporate officers who are charged with running the
business of the corporationand areconcomitantlymembers of the board, like the President.
Section25oftheCorporationCoderequiresthepresidentofacorporationtobealsoamemberof
theboardofdirectors.
Thus,theapplicationofthelegalmaximexpressiouniusestexclusioalterius,whichmeansthe
mention of one thing implies the exclusion of another thing not mentioned. If a statute
enumerates the thing upon which it is to operate, everything else must necessarily and by
implicationbeexcludedfromitsoperationandeffect.Thefourthofficerintheenumeratedlistis
thecatchallsuchotherofficerchargedwiththemanagementofthebusinessaffairsofthe
corporationorjuridicalentitywhichisafactualissuewhichmustbeallegedandsupportedby
evidence.

Topic: Carriage of Goods by Sea; liability of carrier.

Unsworth Transportation International (Phils.), Inc. vs. Court of

Appeals and Pioneer Insurance and Surety Corporation,
G.R. No. 166250, July 26, 2010.
FACTS:
ISSUE:
HELD: It is to be noted that the Civil Code does not limit the liability of
the common carrier to a fixed amount per package. In all matters not
regulated by the Civil Code, the rights and obligations of common
carriers are governed by the Code of Commerce and special laws.
Thus, the COGSA supplements the Civil Code by establishing a
provision limiting the carriers liability in the absence of a shippers
declaration of a higher value in the bill of lading.
Notes:
Freight forwarder; bill of lading. A bill of lading is a written
acknowledgement of the receipt of goods and an agreement to
transport and to deliver them at a specified place to a person named
or on his or her order. It operates both as a receipt and as a contract. It
is a receipt for the goods shipped and a contract to transport and
deliver the same as therein stipulated. As a receipt, it recites the date
and place of shipment, describes the goods as to quantity, weight,
dimensions, identification marks, condition, quality, and value. As a
contract, it names the contracting parties, which include the
consignee; fixes the route, destination, and freight rate or charges; and
stipulates the rights and obligations assumed by the parties.
Freight forwarder; definition. The term freight forwarder refers to
a firm holding itself out to the general public (other than as a pipeline,
rail, motor, or water carrier) to provide transportation of property for
compensation and, in the ordinary course of its business, (1) to
assemble and consolidate, or to provide for assembling and
consolidating, shipments, and to perform or provide for break-bulk and
distribution operations of the shipments; (2) to assume responsibility
for the transportation of goods from the place of receipt to the place of
destination; and (3) to use for any part of the transportation a carrier
subject to the federal law pertaining to common carriers.
Freight forwarder; liability. A freight forwarders liability is limited
to damages arising from its own negligence, including negligence in
choosing the carrier; however, where the forwarder contracts to deliver
goods to their destination instead of merely arranging for their
transportation, it becomes liable as a common carrier for loss or
damage to goods. A freight forwarder assumes the responsibility of a

carrier, which actually executes the transport, even though the

forwarder does not carry the merchandise itself.

Topic: Intracorporatedispute;illegaldismissalcase.
Raul C. Cosare v. Broadcom Asia, Inc., et al.,
G.R. No. 201298, February 5, 2014.
FACTS:
ISSUE:
HELD: As regards the issue of jurisdiction, the Court has determined
that contrary to the ruling of the Court of Appeals (CA), it is the labor
arbiter (LA), and not the regular courts, which has the original
jurisdiction over the subject controversy. An intra-corporate
controversy, which falls within the jurisdiction of regular courts, has
been regarded in its broad sense to pertain to disputes that involve
any of the following relationships: (1) between the corporation,
partnership or association and the public; (2) between the corporation,
partnership or association and the state in so far as its franchise,
permit or license to operate is concerned; (3) between the corporation,
partnership or association and its stockholders, partners, members or
officers; and (4) among the stockholders, partners or associates,
themselves.
Settled jurisprudence, however, qualifies that when the dispute
involves a charge of illegal dismissal, the action may fall under the
jurisdiction of the LAs upon whose jurisdiction, as a rule, falls
termination disputes and claims for damages arising from employeremployee relations as provided in Article 217 of the Labor Code.
Consistent with this jurisprudence, the mere fact that Cosare was a
stockholder and an officer of Broadcomat the time the subject
controversy developed failed to necessarily make the case an intracorporate dispute.
In Matling Industrial and Commercial Corporation v. Coros, the Court
distinguished between a regular employee and a corporate officer
for purposes of establishing the true nature of a dispute or complaint
for illegal dismissal and determining which body has jurisdiction over
it. Succinctly, it was explained that [t]he determination of whether
the dismissed officer was a regular employee or corporate officer
unravels the conundrum of whether a complaint for illegal dismissal is

cognizable by the LA or by the RTC. In case of the regular employee,

the LA has jurisdiction; otherwise, the RTC exercises the legal authority
to adjudicate.
Applying the foregoing to the present case, the LA had the original
jurisdiction over the complaint for illegal dismissal because Cosare,
although an officer of Broadcom for being its AVP for Sales, was not a
corporate officer as the term is defined by law.
NOTE:
There are two circumstances which must concur in order for an
individual to be considered a corporate officer, as against an ordinary
employee or officer, namely: (1) the creation of the position is under
the corporations charter or by-laws; and (2) the election of the officer
is by the directors or stockholders. It is only when the officer claiming
to have been illegally dismissed is classified as such corporate officer
that the issue is deemed an intra-corporate dispute which falls within
the jurisdiction of the trial courts.
Topic: Corporations; doctrine of apparent authority.
Advance Paper Corporation and George Haw, in his capacity as
President of Advance Paper Corporation v. Arma Traders
Corporation, Manuel Ting, et al.,
G.R. No. 176897, December 11, 2013
FACTS:
ISSUE:
HELD: The doctrine of apparent authority provides that a corporation
will be estopped from denying the agents authority if it knowingly
permits one of its officers or any other agent to act within the scope of
an apparent authority, and it holds him out to the public as possessing
the power to do those acts. The doctrine of apparent authority does
not apply if the principal did not commit any acts or conduct which a
third party knew and relied upon in good faith as a result of the
exercise of reasonable prudence. Moreover, the agents acts or
conduct must have produced a change of position to the third partys
detriment.
Corporations; doctrine of apparent authority.
In Peoples Aircargo and Warehousing Co., Inc. v. Court of Appeals, we
ruled that the doctrine of apparent authority is applied when the
petitioner, through its president Antonio Punsalan Jr., entered into the
First Contract without first securing board approval. Despite such lack
of board approval, petitioner did not object to or repudiate said
contract, thus clothing its president with the power to bind the

corporation. Inasmuch as a corporate president is often given general

supervision and control over corporate operations, the strict rule that
said officer has no inherent power to act for the corporation is slowly
giving way to the realization that such officer has certain limited
powers in the transaction of the usual and ordinary business of the
corporation.
In the absence of a charter or bylaw provision to the contrary, the
president is presumed to have the authority to act within the domain of
the general objectives of its business and within the scope of his or her
usual duties.
Topic: Dissolution; continuation of business.
Vitaliano N. Aguirre II and Fidel N. Aguirre II and Fidel N. Aguirre vs.
FQB+, Inc., Nathaniel D. Bocobo, Priscila Bocobo and Antonio De Villa,
G.R. No. 170770. January 9, 2013
HELD: Section 122 of the Corporation Code prohibits a dissolved
corporation from continuing its business, but allows it to continue with
a limited personality in order to settle and close its affairs, including its
complete liquidation. Thus:
Sec. 122. Corporate liquidation. Every corporation whose charter
expires by its own limitation or is annulled by forfeiture or otherwise,
or whose corporate existence for other purposes is terminated in any
other manner, shall nevertheless be continued as a body corporate for
three (3) years after the time when it would have been so dissolved,
for the purpose of prosecuting and defending suits by or against it and
enabling it to settle and close its affairs, to dispose of and convey its
property and to distribute its assets, but not for the purpose of
continuing the business for which it was established. (emphasis
supplied)
The Court fails to find in the prayers any intention to continue the
corporate business of FQB+7. The Complaint does not seek to enter
into contracts, issue new stocks, acquire properties, execute business
transactions, etc. Its aim is not to continue the corporate business, but
to determine and vindicate an alleged stockholders right to the return
of his stockholdings and to participate in the election of directors, and
a corporations right to remove usurpers and strangers from its affairs.
The Court fails to see how the resolution of these issues can be said to
continue the business of FQB+7.

Dissolution; board of directors.

A corporations board of directors is not rendered functus officio by its
dissolution. Since Section 122 allows a corporation to continue its
existence for a limited purpose, necessarily there must be a board that
will continue acting for and on behalf of the dissolved corporation for
that purpose. In fact, Section 122 authorizes the dissolved
corporations board of directors to conduct its liquidation within three
years from its dissolution. Jurisprudence has even recognized the
boards authority to act as trustee for persons in interest beyond the
said three-year period. Thus, the determination of which group is the
bona fide or rightful board of the dissolved corporation will still provide
practical relief to the parties involved.
Dissolution; effect on property rights.
A partys stockholdings in a corporation, whether existing or dissolved,
is a property right which he may vindicate against another party who
has deprived him thereof. The corporations dissolution does not
extinguish such property right. Section 145 of the Corporation Code
ensures the protection of this right, thus:
Sec. 145. Amendment or repeal. No right or remedy in favor of or
against any corporation, its stockholders, members, directors,
trustees, or officers, nor any liability incurred by any such
corporation, stockholders, members, directors, trustees, or officers,
shall be removed or impaired either by the subsequent dissolution of
said corporation or by any subsequent amendment or repeal of this
Code or of any part thereof. (Emphasis supplied.)
Topic: FRIA;retroactiveapplication.
Situs Development Corporation, et al. vs. Asia Trust Bank, et
al,
G.R. No. 180036, January 16, 2013
FACTS:
ISSUE:
HELD: Sec. 146 of the FRIA, which makes it applicable to all further
proceedings in insolvency, suspension of payments and rehabilitation
cases x x x except to the extent that in the opinion of the court their
application would not be feasible or would work injustice, still
presupposes a prospective application. The wording of the law clearly
shows that it is applicable to all further proceedings. In no way could it
be made retrospectively applicable to the Stay Order issued by the
rehabilitation court back in 2002.

At the time of the issuance of the Stay Order, the rules in force were
the 2000 Interim Rules of Procedure on Corporate Rehabilitation (the
Interim Rules). Under those rules, one of the effects of a Stay Order
is the stay of the enforcement of all claims, whether for money or
otherwise and whether such enforcement is by court action or
otherwise, against the debtor, its guarantors and sureties not solidarily
liable with the debtor. Nowhere in the Interim Rules is the
rehabilitation court authorized to suspend foreclosure proceedings
against properties of third-party mortgagors. In fact, we have expressly
ruled in Pacific Wide Realty and Development Corp. v. Puerto Azul
Land, Inc. that the issuance of a Stay Order cannot suspend the
foreclosure of accommodation mortgages. Whether or not the
properties subject of the third-party mortgage are used by the debtor
corporation or are necessary for its operation is of no moment, as the
Interim Rules do not make a distinction. To repeat, when the Stay Order
was issued, the rehabilitation court was only empowered to suspend
claims against the debtor, its guarantors, and sureties not solidarily
liable with the debtor. Thus, it was beyond the jurisdiction of the
rehabilitation court to suspend foreclosure proceedings against
properties of third-party mortgagors.
Topic: Insurancecontracts;healthcareagreement.
Fortune Medicare, Inc. v. David Robert U. Amorin,
G.R. No. 195872, March 12, 2014.
For purposes of determining the liability of a health care provider to
its members, jurisprudence holds that a health care agreement is in
the nature of non-life insurance, which is primarily a contract of
indemnity. Once the member incurs hospital, medical or any other
expense arising from sickness, injury or other stipulated contingent,
the health care provider must pay for the same to the extent agreed
upon under the contract. .
Insurance contracts; interpretation. In Philamcare Health Systems,
Inc. v. CA, we ruled that a health care agreement is in the nature of a
non-life insurance. It is an established rule in insurance contracts that
when their terms contain limitations on liability, they should be
construed strictly against the insurer. These are contracts of adhesion
the terms of which must be interpreted and enforced stringently
against the insurer which prepared the contract. This doctrine is
equally applicable to health care agreements.
Topic: Insurance; collateral source rule.

Mitsubishi Motors Philippines Salaried Employees Union v.

Mitsubishi Motors Philippines Corporation,
G.R. No. 175773, June 17, 2013.
FACTS:
ISSUE:
HELD: As part of American personal injury law, the collateral source
rule was originally applied to tort cases wherein the defendant is
prevented from benefiting from the plaintiffs receipt of money from
other sources. Under this rule, if an injured person receives
compensation for his injuries from a source wholly independent of the
tortfeasor, the payment should not be deducted from the damages
which he would otherwise collect from the tortfeasor. In a recent
Decision by the Illinois Supreme Court, the rule has been described as
an established exception to the general rule that damages in
negligence actions must be compensatory. The Court went on to
explain that although the rule appears to allow a double recovery, the
collateral source will have a lien or subrogation right to prevent such a
double recovery.
The collateral source rule applies in order to place the responsibility for
losses on the party causing them. Its application is justified so that
the wrongdoer should not benefit from the expenditures made by the
injured party or take advantage of contracts or other relations that may
exist between the injured party and third persons. Thus, it finds no
application to cases involving no-fault insurances under which the
insured is indemnified for losses by insurance companies, regardless of
who was at fault in the incident generating the losses. Here, it is clear
that MMPC is a no-fault insurer. Hence, it cannot be obliged to pay the
hospitalization expenses of the dependents of its employees which had
already been paid by separate health insurance providers of said
dependents.
Topic: Receivership; power of Monetary Board.
Alfeo D. Vivas, on his behalf and on behalf of the Shareholders
or Eurocredit Community Bank v. The Monetary Board of the
Bangko Sentral ng Pilipinas and the Philippine Deposit
Insurance Corporation,
G.R. No. 191424, August 7, 2013
The Monetary Board (MB) may forbid a bank from doing business and
place it under receivership without prior notice and hearing.

It must be emphasized that R.A .No. 7653 is a later law and under said
act, the power of the MB over banks, including rural banks, was
increased and expanded. The Court, in several cases, upheld the power
of the MB to take over banks without need for prior hearing. It is not
necessary inasmuch as the law entrusts to the MB the appreciation and
determination of whether any or all of the statutory grounds for the
closure and receivership of the erring bank are present. The MB, under
R.A. No. 7653, has been invested with more power of closure and
placement of a bank under receivership for insolvency or illiquidity, or
because the banks continuance in business would probably result in
the loss to depositors or creditors.
Accordingly, the MB can immediately implement its resolution
prohibiting a banking institution to do business in the Philippines and,
thereafter, appoint the PDIC as receiver. The procedure for the
involuntary closure of a bank is summary and expeditious in nature.
Such action of the MB shall be final and executory, but may be later
subjected to a judicial scrutiny via a petition for certiorari to be filed by
the stockholders of record of the bank representing a majority of the
capital stock. Obviously, this procedure is designed to protect the
interest of all concerned, that is, the depositors, creditors and
stockholders, the bank itself and the general public. The protection
afforded public interest warrants the exercise of a summary closure.
Topic: Rehabilitation; property covered by rehabilitation.
Advent Capital and Finance Corporation vs.
Nicasio I. Alcantara and Editha I. Alcantara,
G.R. No. 183050, January 25, 2012
FACTS:
ISSUE:
HELD: Cash dividends held by Belson and claimed by both the
Alcantaras and Advent Capital does not constitute corporate assets of
the latter that the rehabilitation court may, upon motion, require to be
conveyed to the rehabilitation receiver for his disposition.
Advent Capital asserts that the cash dividends in Belsons possession
formed part of its assets based on paragraph 9 of its Trust Agreement
with the Alcantaras.
According to Advent Capital, it could automatically deduct its
management fees from the Alcantaras portfolio that they entrusted to
it. Paragraph 9 of the Trust Agreement provides that Advent Capital
could automatically deduct its trust fees from the Alcantaras portfolio,
at the end of each calendar quarter, with the corresponding duty to

submit to the Alcantaras a quarterly accounting report within 20 days

after.
But the problem is that the trust fees that Advent Capitals receiver
was claiming were for past quarters. Based on the stipulation, these
should have been deducted as they became due. As it happened, at
the time Advent Capital made its move to collect its supposed
management fees, it neither had possession nor control of the money
it wanted to apply to its claim. Belson, a third party, held the money in
the Alcantaras names. Whether it should deliver the same to Advent
Capital or to the Alcantaras is not clear. What is clear is that the issue
as to who should get the same has been seriously contested.
The real owner of the trust property is the trustor-beneficiary. In this
case, the trustors-beneficiaries are the Alcantaras. Thus, Advent
Capital could not dispose of the Alcantaras portfolio on its own. The
income and principal of the portfolio could only be withdrawn upon the
Alcantaras written instruction or order to Advent Capital. The latter
could not also assign or encumber the portfolio or its income without
the written consent of the Alcantara. All these are stipulated in the
Trust Agreement.
Topic: Trust receipt transaction; definition.
Hur Tin Yang v. People of the Philippines,
G.R. No. 195117, August 14, 2013
HELD: A trust receipt transaction is one where the entrustee has the
obligation to deliver to the entruster the price of the sale, or if the
merchandise is not sold, to return the merchandise to the entruster.
There are, therefore, two obligations in a trust receipt transaction: the
first refers to money received under the obligation involving the duty
to turn it over (entregarla) to the owner of the merchandise sold, while
the second refers to the merchandise received under the obligation to
return it (devolvera) to the owner.
Trust receipts. distinguished from loan. When both parties enter
into an agreement knowing fully well that the return of the goods
subject of the trust receipt is not possible even without any fault on the
part of the trustee, it is not a trust receipt transaction penalized under
Sec. 13 of PD 115 in relation to Art. 315, par. 1(b) of the RPC, as the
only obligation actually agreed upon by the parties would be the return
of the proceeds of the sale transaction. This transaction becomes a
mere loan, where the borrower is obligated to pay the bank the amount
spent for the purchase of the goods.

Topic: Truth in Lending Act; disclosure of financial charges in

the promissory note.
Bank of the Philippines Islands, Inc. vs. Sps. Norman and
Angelina Yu, et al.,
G.R. No. 184122, January 20, 2010

Both the RTC and CA decisions cited BPIs alleged violation of the Truth
in Lending Act and the ruling of the Court in New Sampaguita Builders
Construction, Inc. v. Philippine National Bank to justify their deletion of
the penalty charges.
In this case, although BPI failed to state the penalty charges in the
disclosure statement, the promissory note that the Yus signed, on the
same date as the disclosure statement, contained a penalty clause
that said: I/We jointly and severally, promise to further pay a late
payment charge on any overdue amount herein at the rate of 3% per
month. The promissory note is an acknowledgment of a debt and
commitment to repay it on the date and under the conditions that the
parties agreed on. It is a valid contract absent proof of acts which
might have vitiated consent.
The question is whether or not the reference to the penalty charges in
the promissory note constitutes substantial compliance with the
disclosure requirement of the Truth in Lending Act. The Court has
affirmed that financial charges are amply disclosed if stated in the
promissory note in the case of Development Bank of the Philippines v.
Arcilla, Jr. The Court there said, Under Circular 158 of the Central
Bank, the lender is required to include the information required by R.A.
3765 in the contract covering the credit transaction or any other
document to be acknowledged and signed by the borrower. In addition,
the contract or document shall specify additional charges, if any, which
will be collected in case certain stipulations in the contract are not met
by the debtor. In this case, the promissory notes signed by the Yus
contained data, including penalty charges, required by the Truth in
Lending Act. They cannot avoid liability based on a rigid interpretation
of the Truth in Lending Act that contravenes its goal.