Professional Documents
Culture Documents
I. Letters of Credit
A notifying or advising bank does not incur any liability arising from
a fraudulent letter of credit as its obligation is limited only to
informing the beneficiary of the existence of the letter of credit.
Such notifying bank does not warrant the genuineness of the letter
of credit but is bound only to check its apparent authenticity. (Bank
of America vs. Court of Appeals, 228 SCRA 357 (1993))
The issuing bank is not liable for damages even if the shipment did
not conform to the specifications of the applicant. Under the
“independence principle”, the obligation of the issuing bank to pay
the beneficiary arises once the latter is able to submit the stipulated
documents under the letter of credit. Hence, the bank is not liable
for damages even if the shipment did not conform to the
specifications of the applicant. (Land Bank of the Philippines
vs. Monet’s Export and Manufacturing Corp., 453 SCRA 173
(2005))
Where the trial court rendered a decision finding the buyer solely
liable to pay the seller and omitted by inadvertence to insert in its
decision the phrase “ without prejudice to the decision that will be
made against the issuing bank “ , the bank can not evade
responsibility based on this ground. The seller who is entitled to
draw on the credit line of the buyer from a bank against the
presentation of sales invoices and official receipts of the purchases
and who obtained a court judgment solely against the buyer even
though the suit is against the bank and the buyer may still enforce
the liability of the same bank under a letter of credit issued to
secure the credit line. The so-called "independence principle" in a
letter of credit assures the seller or the beneficiary of prompt
payment independent of any breach of the main contract and
precludes the issuing bank from determining whether the main
contract is actually accomplished or not. Philippine National
Bank vs. San Miguel Corporation. No. 186063, January 15,
2014.
2. Fraud Exception Principle
1. Loan/Security Feature
Under the Trust Receipts Law, the loss of the goods subject of the
trust receipt regardless of the cause and period or time it occurred,
does not extinguish the civil obligation of the entrustee. Hence, the
fact that the entrustee attempted to make a tender of goods to the
bank and as a consequence of the latter’s refusal, the goods were
stored in the entrustee’s warehouse and thereafter gutted by fire,
the liability of the entrustee still subsists; the principle of res perit
domino will not apply to the bank which holds only a security of
interest over the goods. (Rosario Textile Mills Corp. vs. Home
Bankers Savings and Trust Company, 462 SCRA 88 (2005))
The fact that the officer who signed the trust receipt on behalf of
the entrustee-corporation signed in his official capacity without
receiving the goods as he had never taken possession of such nor
committing dishonesty and abuse of confidence in transacting with
the entrustor, is immaterial. The law specifically makes the
director, officer, employee or any person responsible criminally
liable precisely for the reason that a corporation, being a juridical
entity, cannot be the subject of the penalty of imprisonment.
(Alfredo Ching vs. Secretary of Justice, 481 SCRA 609
(2006))
D. Remedies Available
After the infomation is filed in court, compromise of the estafa case
arising from violation of the Trust Receipts Law will not amount to
novation and will not extinguish the criminal liability of the accused.
(Ong vs. Court of Appeals, 124 SCRA 578 (1983))
When the entrustee defaults on his obligation, the entruster has the
discretion to avail of remedies which it deems best to protect its
right. The law uses the word “may” in granting to the entruster the
right to cancel the trust and take possession of the goods; hence,
the option is given to the entruster. (South City Homes, Inc. vs.
BA Finance Corporation, 371 SCRA 603 (2001))
E. Warehouseman’s Lien
1. Requisites of Negotiability
Without the words "or order or "to the order of", the instrument is
payable only to the person designated therein and is therefore non-
negotiable. Any subsequent purchaser thereof will not enjoy the
advantages of being a holder of a negotiable instrument, but will
merely "step into the shoes" of the person designated in the
instrument and will thus be open to all defenses available against
the latter. (Juanita Salas vs. Hon. Court of Appeals and First
Finance & Leasing Corporation, G.R. No. 76788 January 22,
1990)
1. Insertion of Date
2. Completion of Blanks
C. Signature
2. Signature of Agent
4. Forgery
Even if the bank performed with utmost diligence, the drawer whose
signature was forged may still recover from the bank as long as he
or she is not precluded from setting up the defense of forgery. After
all, Section 23 of the Negotiable Instruments Law plainly states that
no right to enforce the payment of a check can arise out of a forged
signature. Since the drawer is not precluded by negligence from
setting up the forgery, the general rule should apply. (Samsung
Construction Company Philippines, Inc. vs. Far East Bank
and Trust Company and Court Of Appeals, G.R. NO. 129015,
August 13, 2004)
D. Consideration
E. Accommodation Party
When the checks are dishonored for lack of funds, the party who
indorsed those checks as accommodation endorser is liable for the
payment of the checks. (People vs. Maniego, 148 SCRA 30,
1987)
F. Negotiation
2. Modes of Negotiation
3. Kinds of Indorsements
A holder in due course holds the instrument free from any defect of
title of prior parties, and free from defenses available to prior
parties among themselves, and may enforce payment of the
instrument for the full amount thereof. This being so, petitioner
cannot set up against respondent the defense of nullity of the
contract of sale between her and VMS. (Juanita Salas vs. Hon.
Court of Appeals and First Finance & Leasing Corporation,
G.R. No. 76788 January 22, 1990)
H. Liabilities of Parties
1. Maker
2. Drawer
In the case of DAUD, the depositor has, on its face, sufficient funds
in his account, although it is not available yet at the time the check
was drawn, whereas in DAIF, the depositor lacks sufficient funds in
his account to pay the check. Moreover, DAUD does not expose the
drawer to possible prosecution for estafa and violation of BP 22,
while DAIF subjects the depositor to liability for such offenses.
(Bank of the Philippine Islands vs. Reynald R. Suarez, G.R.
No. 167750, March 15, 2010)
3. Acceptor
4. Indorser
5. Warranties
The subject checks were accepted for deposit by the Bank for the
account of Sayson although they were crossed checks and the
payee was not Sayson but Melissa’s RTW. The Bank stamped
thereon its guarantee that "all prior endorsements and/or lack of
endorsements (were) guaranteed." By such deliberate and positive
act, the Bank had for all legal intents and purposes treated the said
checks as negotiable instruments and, accordingly, assumed the
warranty of the endorser. (Associated Bank and Conrado Cruz,
vs. Hon. Court of Appeals, and Merle V. Reyes, doing
business under the name and style "Melissa’s RTW," G.R.
No. 89802, May 7, 1992)
J. Notice of Dishonor
1. Parties to Be Notified
3. Effect of Notice
In the case of DAUD, the depositor has, on its face, sufficient funds
in his account, although it is not available yet at the time the check
was drawn, whereas in DAIF, the depositor lacks sufficient funds in
his account to pay the check. Moreover, DAUD does not expose the
drawer to possible prosecution for estafa and violation of BP 22,
while DAIF subjects the depositor to liability for such offenses.
(Bank of the Philippine Islands vs. Reynald R. Suarez, G.R.
No. 167750, March 15, 2010)
4. Form of Notice
5. Waiver
4. Renunciation by Holder
L. Material Alteration
1. Concept
M. Acceptance
1. Definition
2. Manner
1. Time/Place/Manner of Presentment
3. Dishonor by Non-Acceptance
O. Promissory Notes
P. Checks
1. Definition
2. Kinds
The effects of crossing a check are: (1) that the check may not be
encashed but only deposited in the bank; (2) that the check may be
negotiated only once –– to one who has an account with a bank; and
(3) that the act of crossing the check serves as a warning to the
holder that the check has been issued for a definite purpose so that
he must inquire if he has received the check pursuant to that
purpose. (State Investment House vs. IAC, 175 SCRA 310,
1989)
Tendering a check on the last day of the grace period to pay the
purchase price is not valid and a seller has a right to cancel the
contract. A check, be it a manager’s check or ordinary check, is not
legal tender, and an offer of a check in payment of a debt is not a
valid tender of payment and may be refused by the creditor.
(Bishop of Malolos vs. Intermediate Appellate Court, G.R.
No. 72110, November 16, 1990)
A check may be used for the exercise of the right of redemption, the
same being a right and not an obligation. (Fortunado vs. Court of
Appeals, 196 SCRA 26, 1991)
A check does not constitute legal tender, but once the creditor
accepted a fully funded check to settle an obligation, he is estopped
from later on denouncing the efficacy of such tender of payment. By
accepting the tendered check and converting it into money, the
creditor is presumed to have accepted it as payment and to hold
otherwise would be inequitable and unfair to the obligor. (Far East
Bank & Trust Company vs. Diaz Realty, Inc., G.R. No. 138588,
August 23, 2001)
A stale check is one which has not been presented for payment
within a reasonable time after its issue. It is valueless and,
therefore, should not be paid. (International Corporate Bank vs.
Sps. Francis S. Gueco and Ma. Luz E. Gueco, G.R. No.
141968, February 12, 2001)
a. Time
b. Effect of Delay
A. Concept of Insurance
The only persons entitled to claim the insurance proceeds are either
the insured, if still alive; or the beneficiary, if the insured is already
deceased, upon the maturation of the policy. The exception to this
rule is a situation where the insurance contract was intended to
benefit third persons who are not parties to the same in the form of
favorable stipulations or indemnity. In such a case, third parties may
directly sue and claim from the insurer. Because no legal
proscription exists in naming as beneficiaries the children of illicit
relationships by the insured, the shares of Eva in the insurance
proceeds, whether forfeited by the court in view of the prohibition
on donations under Article 739 of the Civil Code or by the insurers
themselves for reasons based on the insurance contracts, must be
awarded to the said illegitimate children, the designated
beneficiaries, to the exclusion of heirs. (Heirs Of Loreto c.
Maramag vs. Eva Verna De Guzman Maramag, et al., G.R.
No. 181132, June 5, 2009)
D. Classes
1. Marine
The evidence shows that the loss of the cargo was due to the perils
of the ship; that the sinking of the barge was due to improper
loading of the logs on one side so that the barge was tilting on one
side and for that it did not navigate on even keel; that it was no
longer seaworthy that was why it developed leak. A loss which, in
the ordinary course of events, results from the natural and
inevitable action of the sea, from the ordinary wear and tear of the
ship, or from the negligent failure of the ship's owner to provide the
vessel with proper equipment to convey the cargo under ordinary
conditions, is not a peril of the sea but such a loss is rather due to
what has been aptly called the 'peril of the ship.' The insurer
undertakes to insure against perils of the sea and similar perils, not
against perils of the ship. (Isabela Roque, doing business under
the name and style of Isabela Roque Timber Enterprises, et
al., vs. The Intermediate Appellate Court, et al., G.R. No. L-
66935, November 11, 1985)
2. Fire
3. Casualty
4. Suretyship
The surety bond must be read in its entirety and together with the
contract between NPC and the contractors. The provisions must be
construed together to arrive at their true meaning. Certain
stipulations cannot be segregated and then made to control. In the
case at bar, it cannot be denied that the breach of contract in this
case, that is, the abandonment of the unfinished work of the
transmission line of the NPC by the contractor FEEI was within the
effective date of the contract and the surety bond. Such
abandonment gave rise to the continuing liability of the bond as
provided for in the contract which is deemed incorporated in the
surety bond executed for its completion. (National Power
Corporation vs. Court of Appeals, et al., G.R. No. L-43706,
November 14, 1986)
Section 177 of the Insurance Code states that the surety is entitled
to payment of the premium as soon as the contract of suretyship or
bond is perfected and delivered to the obligor. No contract of
suretyship or bonding shall be valid and binding unless and until the
premium therefor has been paid, except where the obligee has
accepted the bond, in which case the bond becomes valid and
enforceable irrespective of whether or not the premium has been
paid by the obligor to the surety. A continuing bond, as in this case
where there is no fixed expiration date, may be canceled only by
the obligee, which is the NFA, by the Insurance Commissioner, and
by the court. By law and by the specific contract involved in this
case, the effectivity of the bond required for the obtention of a
license to engage in the business of receiving rice for storage is
determined not alone by the payment of premiums but principally
by the Administrator of the NFA. (Country Bankers Insurance
Corporation vs. Antonio Lagman, G.R. No. 165487, July 13,
2011)
5. Life
From a reading Section 378, the following rules on claims under the
“no fault indemnity” provision, where proof of fault or negligence is
not necessary for payment of any claim for death or injury to a
passenger or a third party, are established: 1.) A claim may be
made against one motor vehicle only. 2.) If the victim is an occupant
of a vehicle, the claim shall lie against the insurer of the vehicle in
which he is riding, mounting or dismounting from. 3.) In any other
case (i.e. if the victim is not an occupant of a vehicle), the claim
shall lie against the insurer of the directly offending vehicle. 4.) In
all cases, the right of the party paying the claim to recover against
the owner of the vehicle responsible for the accident shall be
maintained. (Perla Compania De Seguros, Inc., vs. Hon.
Constante A. Ancheta, Presiding Judge of the Court of First
Instance of Camarines Norte, Branch III, et al., G.R. No. L-
49699, August 8, 1988)
E. Insurable Interest
1. In Life/Health
Every person has an insurable interest in the life and health of: 1.)
Himself, or his spouse and of his children; 2.) Any person: (a) on
whom he depends wholly or in part for education or support, or in
whom he has a pecuniary interest; (b) under legal obligation to him
for the payment of money, respecting property or service, of which
death or illness might delay or prevent the performance; and (c)
upon whom whose life any estate or interest vested in him depends.
(Philamcare Health System vs. Court of Appeals, 379 SCRA
356, 2002)
2. In Property
a. Delay in Acceptance
b. Delivery of Policy
2. Premium Payment
It is obvious from both the Insurance Act and the stipulation of the
parties that time is of the essence in respect of the payment of the
insurance premium so that if it is not paid the contract does not
take effect unless there is still another stipulation to the contrary. In
the instant case, Arce was given a grace period to pay the premium
but the period having expired with no payment made, he cannot
insist that Capital is nonetheless obligated to him. (Pedro Arce vs.
Capital Insurance & Surety Co., Inc., G.R. No. L-28501,
September 30, 1982)
Under Section 77 of the Insurance Code, the remedy for the non-
payment of premiums is to put an end to and render the insurance
policy not binding. The non-payment of premium does not merely
suspend but puts an end to an insurance contract since the time of
the payment is peculiarly of the essence of the contract. Unless
premium is paid, an insurance contract does not take effect. Since
admittedly the premiums have not been paid, the policies issued
have lapsed. The insurance coverage did not go into effect or did
not continue and the obligation of Philamgen as insurer ceased.
(Arturo Valenzuela, et al. vs. Court Of Appeals, et al., G.R.
No. 83122, October 19, 1990)
Section 177 of the Insurance Code states that the surety is entitled
to payment of the premium as soon as the contract of suretyship or
bond is perfected and delivered to the obligor. No contract of
suretyship or bonding shall be valid and binding unless and until the
premium therefor has been paid, except where the obligee has
accepted the bond, in which case the bond becomes valid and
enforceable irrespective of whether or not the premium has been
paid by the obligor to the surety. (Philippine Pryce Assurance
Corporation vs. Court Of Appeals, et al., G.R. No. 107062,
February 21, 1994)
The age of the insured was not concealed to the insurance company
for her application for insurance coverage which was on a printed
form furnished by Manila Bankers and which contained very few
items of information clearly indicated her age of the time of filing
the same to be almost 65 years of age. Despite such information
which could hardly be overlooked in the application form, Manila
Bankers received her payment of premium and issued the
corresponding certificate of insurance without question. As there
was sufficient time (45 days) for the Manila Bankers to process the
application and issue notice that the applicant was over 60 years of
age and thereby cancel the policy on that ground if it was minded to
do so, Manila Bankers’ failure to act, is therefore either attributable
to its willingness to waive such disqualification; or, through the
negligence or to the incompetence of its employees for which it has
only itself to blame. (Regina Edillon vs. Manila Bankers Life
Insurance, et al., G.R. No. L-34200, September 30, 1982)
5. Refund of Premiums
Great Pacific should have informed Cortez of the deadline for paying
the first premium before or at least upon delivery of the policy to
him, so he could have complied with what was needful and would
not have been misled into believing that his life and his family were
protected by the policy, when actually they were not. And, if the
premium paid by Cortez was unacceptable for being late, it was the
company's duty to return it. By accepting his premiums without
giving him the corresponding protection, Great Pacific acted in bad
faith and since his policy was in fact inoperative or ineffectual from
the beginning, the company was never at risk, hence, it is not
entitled to keep the premium. (Great Pacific Life Insurance
Corporation vs. Court of Appeals, et al., G.R. No. L-57308,
April 23, 1990)
a. Concealment
b. Misrepresentation/Omissions
c. Breach of Warranties
There is absolutely nothing in the law which mandates that the two
periods prescribed in Section 384 of the Insurance Code—that is,
the six-month period for filing the notice of claim and the one-year
period for bringing an action or suit must always concur. On the
contrary, it is very clear that the one-year period is only required “in
proper cases.” The one-year period should instead be counted from
the date of rejection by the insurer as this is the time when the
cause of action accrues. Since in the case at hand, there has yet
been no accrual of cause of action, prescription has not yet set in.
This is because, before such final rejection, there was no real
necessity for bringing suit. (Summit Guaranty And Insurance
Company, Inc. vs. Hon. Jose C. De Guzman, in his capacity as
Presiding Judge of Branch III, CFI of Tarlac, et al., G.R. No. L-
50997, June 30, 1987)
In case the claim was denied by the insurer but the insured filed a
petition for reconsideration, the prescriptive period should be
counted from the date the claim was denied at the first instance by
the insurance company and not from the denial of the
reconsideration (Sun Life Office, Ltd. vs. Court of Appeals, GR.
No. 89741, Mar 13, 1991)
Where the delay in bringing the suit against the insurance company
was not caused by the insured or its subrogee but by the insurance
company itself, it is unfair to penalize the insured or its subrogee by
dismissing its action against the insurance company on the ground
of prescription. To prevent the insurance company from evading its
responsibility to the insured through this clever scheme, and to
protect the insuring public against similar acts by other insurance
companies, the one-year period under Section 384 should be
counted not from the date of the accident but from the date of the
rejection of the claim by the insurer. It is only from the rejection of
the claim by the insurer that the insured’s cause of action accrued
since a cause of action does not accrue until the party obligated
refuse, expressly or impliedly, to comply with its duty. (Country
Bankers Insurance Corp., vs. The Travellers Insurance and
Surety Corp., et al., G.R. No. 82509, August 16, 1989)
c. Subrogation
The proximate cause of the sinking of the vessel was her condition
of unseaworthiness arising from her having been top-heavy when
she departed from the Port of Zamboanga. Since the vessel was
unseaworthy with reference to the cargo, there was therefore a
breach of warranty of seaworthiness that rendered the assured not
entitled to the payment of its claim under the policy. Hence, when
PhilAmGen paid the claim of the bottling firm there was in effect a
“voluntary payment” and no right of subrogation accrued in its
favor. In other words, when PhilAmGen paid it did so at its own risk.
(The Philippine American General Insurance Company, Inc.,
vs. Court of Appeals, et al., G.R. No. 116940, June 11, 199)
St. Paul, as insurer, after paying the claim of the insured for
damages under the insurance, is subrogated merely to the rights of
the assured. As subrogee, it can recover only the amount that is
recoverable by the latter. Since the right of the assured, in case of
loss or damage to the goods, is limited or restricted by the
provisions in the bill of lading, a suit by the insurer as subrogee
necessarily is subject to like limitations and restrictions. (St. Paul
Fire & Marine Insurance Co. vs. Macondray & Co., Inc., et al.,
G.R. No. L-27796, March 25, 1976)
The insurer, upon happening of the risk "insured" against and after
payment to the insured, is subrogated to the rights and cause of
action of the latter. As such, the insurer has the right to seek
reimbursement for all the expenses paid. However, in a contract of
carriage involving the shipment of knock-down auto parts of Nissan
motor vehicles which were allegedly lost and destroyed, the insurer
was not properly subrogated because of the non-presentation of any
marine insurance policy. The submission of a marine risk note
instead of the insurance policy doesn't satisfy the requirement for
subrogation. The marine risk note is not an insurance policy. It is
only an acknowledgment or declaration of the insurer confirming
the specific shipment covered by its marine open policy, the
evaluation of the cargo and the chargeable premium. (Eastern
Shipping Lines, Inc. vs. Prudential Guarantee and
Assurance, Inc., G.R. No. 174116, September 11, 2009)
V. Transportation Laws
I. Transportation Laws
A. Common Carriers
Under Article 1733 of the Civil Code, common carriers from the nature
of their business and for reasons of public policy are bound to observe
extraordinary diligence in the vigilance over the goods and for the
safety of passengers transported by them according to all
circumstances of each case. Thus, under Article 1735 of the same
Code, in all cases other than those mentioned in Article 1734 thereof,
the common carrier shall be presumed to have been at fault or to
have acted negligently, unless it proves that it has observed the
extraordinary diligence required by law. More importantly, common
carriers cannot limit their liability for injury or loss of goods where
such injury or loss was caused by its own negligence. Otherwise
stated, the law on averages under the Code of Commerce cannot be
applied in determining liability where there is negligence. (American
Home Assurance Company vs. The Court of Appeals, G.R. No.
94149, 5 May 1992)
Article 1736 of the Civil Code imposes upon common carriers the duty
to observe extraordinary diligence from the moment the goods are
unconditionally placed in their possession "until the same are
delivered, actually or constructively, by the carrier to the consignee
or to the person who has a right to receive them. However, in the bills
of lading issued for the cargoes in question, the parties agreed to
limit the responsibility of the carrier for the loss or damage by
inserting a stipulation stating that the carrier shall not be responsible
for loss or damage to shipments billed 'owner's risk' unless such loss
or damage is due to negligence of carrier. Since such stipulation is
valid, and there is nothing therein that is contrary to law, morals or
public policy, the absence of negligence on the part of its employees
exempt the carrier from liability for loss of goods due to fire.
(Amparo C. Servando, Clara Uy Bico vs. Philippine Steam
Navigation Co., G.R. No. L-36481-2, 23 October 1982)
When a bus hit a tree and house due to the fast and reckless driving of
the bus driver resulting in injury to one of its passengers, the bus
owner is liable and such liability does not cease even upon proof that
he exercised all the diligence of a good father of family in the selection
and supervision of its employees. R Transport Corporation vs.
Pante, GR No. 162104, September 15, 2009
In dealing with vehicles registered under the Public Service Law, the
public has the right to assume that the registered owner is the actual
or lawful owner thereof. It would be very difficult and often impossible
as a practical matter, for members of the general public to enforce
the rights of action that they may have for injuries inflicted by the
vehicles being negligently operated if they should be required to
prove who the actual owner is. (Ma. Luisa Benedicto vs. Hon.
Intermediate Appellate Court, G.R. No. 70876, 19 July 1990)
The principle of last clear chance only applies in a suit between the
owners and drivers of two colliding vehicles. It does not arise where a
passenger demands responsibility from the carrier to enforce its
contractual obligations, for it would be inequitable to exempt the
negligent driver and its owner on the ground that the other driver was
likewise guilty of negligence. (William Tiu, doing business under
the name and style of “D’ Rough Riders,” vs. Pedro A.
Arriesgado, G.R. No. 138060, 1 September 2004)
Spouses Vazquez had every right to decline the upgrade and insist on
the Business Class accommodation they had booked for and which
was designated in their boarding passes. They clearly waived their
priority or preference when they asked that other passengers be
given the upgrade. It should not have been imposed on them over
their vehement objection. By insisting on the upgrade, Cathay
breached its contract of carriage with Spouses Vazquez. (Cathay
Pacific Airways, Ltd., vs. Spouses Daniel Vazquez And Maria
Luisa Madrigal Vazquez, G.R. No. 150843, March 14, 2003)
1. Exempting Causes
b. Absence of Delay
Petitioner's late delivery of the baggage for eleven (11) days was not
motivated by ill will or bad faith. In fact, it immediately coordinated
with its Central Baggage Services to trace private respondent's
suitcase and succeeded in finding it. Under the circumstances,
considering that petitioner's actuation was not attendant with bad
faith, the award of moral damages is unfair. (Philippine Air Lines
vs. Florante Miano, G.R. No. 106664, March 8, 1995).
The rule is that if the improper packing or, in this case, the defect/s in
the container, is/are known to the carrier or his employees or
apparent upon ordinary observation, but he nevertheless accepts the
same without protest or exception notwithstanding such condition, he
is not relieved of liability for damage resulting therefrom. In this case,
Calvo accepted the cargo without exception despite the apparent
defects in some of the container vans. Hence, for failure of Calvo to
prove that she exercised extraordinary diligence in the carriage of
goods in this case or that she is exempt from liability, the
presumption of negligence as provided under Art. 1735 holds.
(Virgines Calvo doing business under the name and style
Transorient Container Terminal Services, Inc. vs. Ucpb General
Insurance Co., Inc., G.R. No. 148496, 19 March 2002)
While it may be true that the tire that blew-up was still good because
the grooves of the tire were still visible, this fact alone does not make
the explosion of the tire a fortuitous event. No evidence was
presented to show that the accident was due to adverse road
conditions or that precautions were taken by the Camoro to
compensate for any conditions liable to cause accidents. The sudden
blowing-up, therefore, could have been caused by too much air
pressure injected into the tire coupled by the fact that the jeepney
was overloaded and speeding at the time of the accident. (Roberto
Juntilla vs. Clemente Fontanar, G.R. No. L-45637, 31 May
1985)
Immediately before the collision, Llamoso was actually violating the
following traffic rules and regulations. Thus, a legal presumption
arose that Llamoso was negligent, a presumption KBL was unable to
overthrow. (Kapalaran Bus Line vs. Angel Coronado, G.R. No.
85331, 25 August 1989)
2. Contributory Negligence
3. Duration of Liability
The receipt of goods by the carrier has been said to lie at the
foundation of the contract to carry and deliver, and if actually no
goods are received there can be no such contract. The liability and
responsibility of the carrier under a contract for the carriage of goods
commence on their actual delivery to, or receipt by, the carrier or an
authorized agent and delivery to a lighter in charge of a vessel for
shipment on the vessel, where it is the custom to deliver in that way,
is a good delivery and binds the vessel receiving the freight, the
liability commencing at the time of delivery to the lighter and,
similarly, where there is a contract to carry goods from one port to
another, and they cannot be loaded directly on the vessel and lighters
are sent by the vessel to bring the goods to it, the lighters are for the
time its substitutes, so that the bill of landing is applicable to the
goods as soon as they are placed on the lighters. (Compañia
Maritima vs. Insurance Company of North America, G.R. No. L-
18965, October 30, 1964)
a. Void Stipulations
a. Checked-In Baggage
C. Safety of Passengers
1. Void Stipulations
2. Duration of Liability
b. Arrival at Destination
Anacleto Viana was still a passenger at the time of the incident. When
the accident occurred, the victim was in the act of unloading his
cargoes, which he had every right to do, from Aboitiz's vessel. A
carrier is duty bound not only to bring its passengers safely to their
destination but also to afford them a reasonable time to claim their
baggage. (Aboitiz Shipping Corporation vs. Hon. Court of
Appeals, Eleventh Division, G.R. No. 884458, 6 November
1989)
a. Employees
Article 1764 in relation to Article 2206 of the Civil Code, holds the
common carrier in breach of its contract of carriage that results in the
death of a passenger liable to pay the following: (1) indemnity for
death, (2) indemnity for loss of earning capacity, and (3) moral
damages. (Victory Liner, Inc. vs. Rosalito Gammad, G.R. No.
159636, November 25, 2004)
The Civil Code, in Article 1764 thereof, expressly makes Article 2206
applicable "to the death of a passenger caused by the breach of
contract by a common carrier." Accordingly, a common carrier is
liable for actual or compensatory damages under Article 2206 in
relation to Article 1764 of the Civil Code for deaths of its passengers
caused by the breach of the contract of transportation. (Sulpicio
Lines, Inc. vs. The Honorable Court of Appeals, G.R. No.
113578, 14 July 1995)
Under Article 1764 and Article 2206 (1) of the Civil Code, the award of
damages for death is computed on the basis of the life expectancy of
the deceased, not of his beneficiary. (Philippine Airlines, Inc. vs.
Hon. Court of Appeals, G.R. No. 54470. May 8, 1990)
Article 2220 of the Civil Code says that moral damages may be
awarded in “breaches of contract where the defendant acted
fraudulently or in bad faith.” So, proof of infringement of an
agreement by a party, standing alone, will not justify an award of
moral damages. There must, in addition, as the law points out, be
competent evidence of fraud of bad faith by that party. If the plaintiff,
for instance, fails to take the witness stand and testify as to his social
humiliation, wounded feelings, anxiety, etc., moral damages cannot
be recovered. The rules applies, of course, to common carriers. (Pan
American World Airways, Inc. vs. Intermediate Appellate
Court, G.R. No. 68988. June 21, 1990)
D. Bill of Lading
The bill of lading defines the rights and liabilities of the parties in
reference to the contract of carriage. Stipulations therein are valid
and binding in the absence of any showing that the same are contrary
to law, morals, customs, public order and public policy. Where the
terms of the contract are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of the stipulations shall
control. In light of the foregoing, there can be no question about the
validity and enforceability of Stipulation No. 7 in the bill of lading. The
twenty-four hour requirement under the said stipulation is, by
agreement of the contracting parties, a sine qua non for the accrual
of the right of action to recover damages against the carrier.
(Provident Insurance Corp., vs. Court of Appeals, G.R. No.
118030, January 15, 2004)
1. Three-Fold Character
A bill of lading serves two functions: First, it is a receipt for the goods
shipped; Second, it is a contract by which three parties, namely, the
shipper, the carrier, and the consignee undertake specific
responsibilities and assume stipulated obligations. A bill of lading
delivered and accepted constitutes the contract of carriage even
though not signed, because the acceptance of a paper containing the
terms of a proposed contract generally constitutes an acceptance of
the contract and of all its terms and conditions of which the acceptor
has actual or constructive notice (Keng Hua Paper Products Co.,
Inc. vs. Court of Appeals, 286 SCRA 257, 1998).
2. Delivery of Goods
a. Period of Delivery
In order that the condition therein provided in Article 366 of the Code
of Commerce may be demanded there should be a consignment of
goods, through a common carrier, by a consignor in one place to a
consignee in another place. And said article provides that the claim
for damages must be made "within twenty-four hours following the
receipt of the merchandise" by the consignee from the carrier. In
other words, there must be delivery of the merchandise by the carrier
to the consignee at the place of destination. In the instant case, the
consignor is the branch office of Lee Teh & Co., Inc., at Catarman,
Samar, which placed the cargo on board the ship Jupiter, and the
consignee, its main office at Manila. The cargo never reached Manila,
its destination, nor was it ever delivered to the consignee, the office
of the shipper in Manila, because the ship ran aground upon entering
Laoang Bay, Samar on the same day of the shipment. Such being the
case, it follows that the aforesaid article 366 does not have
application because the cargo was never received by the consignee.
(New Zealand Insurance Co., Ltd., vs. Adriano Choa Joy, Etc.,
G.R. No. L-7311, September 30, 1955)
In this jurisdiction, the filing of a claim with the carrier within the time
limitation therefor actually constitutes a condition precedent to the
accrual of a right of action against a carrier for loss of or damage to
the goods. The shipper or consignee must allege and prove the
fulfillment of the condition. If it fails to do so, no right of action
against the carrier can accrue in favor of the former. The
aforementioned requirement is a reasonable condition precedent; it
does not constitute a limitation of action. The requirement of giving
notice of loss of or injury to the goods is not an empty formalism. The
fundamental reasons for such a stipulation are (1) to inform the
carrier that the cargo has been damaged, and that it is being charged
with liability therefor; and (2) to give it an opportunity to examine the
nature and extent of the injury. “This protects the carrier by affording
it an opportunity to make an investigation of a claim while the matter
is fresh and easily investigated so as to safeguard itself from false
and fraudulent claims.” (Federal Express Corporation vs. American
Home Assurance Company, G.R. No. 150094, August 18, 2004)
E. Maritime Commerce
1. Charter Parties
a. Bareboat/Demise Charter
b. Time Charter
Where the agreement executed by the parties was a time charter where the
possession and control of the barge was retained by the owner, the latter is,
therefore, a common carrier legally charged with extraordinary diligence in
the vigilance over the goods transported by him. The sinking of the vessel
created a presumption of negligence and/or unseaworthiness which the
barge owner failed to overcome and gave rise to his liability for the charterer
lost cargo despite the latter’s failure to insure the same. Oceaneering
Contractrors (Phils), Inc. v. Nestor Barreto, doing business as NNB
Lighterage , GR No. 184215, February 9, 2011
c. Voyage/Trip Charter
The real and hypothecary nature of maritime law simply means that
the liability of the carrier in connection with losses related to maritime
contract is confined to the vessel, which is hypothecated for such
obligations or which stands as the guaranty for their settlement. The
only time the Limited Liability Rule does not apply is when there is an
actual finding of negligence on the part of the vessel owner or agent.
(Aboitiz Shipping Corporation vs. General Accident Fire and
Life Assurance Corporation Ltd., 217 SCRA 359, 1993)
The Charterer cannot use the said Rule because the it does not
completely and absolutely step into the shoes of the shipowner or even
the ship agent because there remains conflicting rights between the
former and the real shipowner as derived from their charter
agreement. Therefore, even if the contract is for a bareboat or demise
charter where possession, free administration and even navigation are
temporarily surrendered to the charterer, dominion over the vessel
remains with the shipowner. Ergo, the charterer or the sub-charterer,
whose rights cannot rise above that of the former, can never set up the
Limited Liability Rule against the very owner of the vessel. Dela Torre
vs. Court of Appeals, GR No. 160088, July 13, 2011
a. General Average
b. Collisions
a. Application
It is to be noted that the Civil Code does not of itself limit the liability
of the common carrier to a fixed amount per package although the
Code expressly permits a stipulation limiting such liability. Thus, the
COGSA which is suppletory to the provisions of the Civil Code, steps
in and supplements the Code by establishing a statutory provision
limiting the carrier's liability in the absence of a declaration of a
higher value of the goods by the shipper in the bill of lading. The
provisions of the Carriage of Goods by.Sea Act on limited liability are
as much a part of a bill of lading as though physically in it and as
much a part thereof as though placed therein by agreement of the
parties. (Eastern Shipping Lines, Inc., vs. Intermediate
Appellate Court, G.R. No. L-69044 May 29, 1987)
COGSA provides that the notice of claim need not be given if the
state of the goods, at the time of their receipt, has been the subject
of a joint inspection or survey. As stated earlier, prior to unloading the
cargo, an Inspection Report as to the condition of the goods was
prepared and signed by representatives of both parties. Moreover,
failure to file a notice of claim within three days will not bar recovery
if it is nonetheless filed within one year. This one-year prescriptive
period also applies to the shipper, the consignee, the insurer of the
goods or any legal holder of the bill of lading. (Belgian Overseas
Chartering and Shipping N.V. vs. Philippine First Insurance
Co., Inc., G.R. No. 143133, June 5, 2002)
In any event the carrier and the ship shall be discharged from all liability
in respect of loss or damage unless suit is brought within one year after
delivery of the goods or the date when the goods should have been
delivered: Provided, That if a notice of loss or damage, either apparent or
concealed, is not given as provided for in this section, that fact shall not
affect or prejudice the right of the shipper to bring suit within one year
after the delivery of the goods or the date when the goods should have
been delivered. Asian Terminals Inc., v. Philam Insurance Co. G.R.
NO. 181262 , July 24, 2013
c. Period of Prescription
The one-year period within which the consignee should sue the
carrier is computed from "the delivery of the goods or the date when
the goods should have been delivered". The sensible and practical
interpretation is that delivery within the meaning of section 3(6) of
the Carriage of Goods by Sea Law means delivery to the arrastre
operator. That delivery is evidenced by tally sheets which show
whether the goods were landed in good order or in bad order, a fact
which the consignee or shipper can easily ascertain through the
customs broker. To use as basis for computing the one-year period the
delivery to the consignee would be unrealistic and might generate
confusion between the loss or damage sustained by the goods while
in the carrier's custody and the loss or damage caused to the goods
while in the arrastre operator's possession. (Union Carbide
Philippines, Inc. vs. Manila Railroad Co., G.R. No. L-27798,
June 15, 1977)
Section 3(6) of the Carriage of Goods by Sea Act states that the
carrier and the ship shall be discharged from all liability for loss or
damage to the goods if no suit is filed within one year after delivery of
the goods or the date when they should have been delivered. Under
this provision, only the carrier's liability is extinguished if no suit is
brought within one year. But the liability of the insurer is not
extinguished because the insurer's liability is based not on the
contract of carriage but on the contract of insurance. A close reading
of the law reveals that the Carriage of Goods by Sea Act governs the
relationship between the carrier on the one hand and the shipper, the
consignee and/or the insurer on the other hand. It defines the
obligations of the carrier under the contract of carriage. It does not,
however, affect the relationship between the shipper and the insurer.
The latter case is governed by the Insurance Code. The Filipino
Merchants case is different from the case at bar. In Filipino Merchants,
it was the insurer which filed a claim against the carrier for
reimbursement of the amount it paid to the shipper. In the case at
bar, it was the shipper which filed a claim against the insurer. The
basis of the shipper's claim is the "all risks" insurance policies issued
by private respondents to petitioner Mayer. The ruling in Filipino
Merchants should apply only to suits against the carrier filed either by
the shipper, the consignee or the insurer. When the court said in
Filipino Merchants that Section 3(6) of the Carriage of Goods by Sea
Act applies to the insurer, it meant that the insurer, like the shipper,
may no longer file a claim against the carrier beyond the one-year
period provided in the law. But it does not mean that the shipper may
no longer file a claim against the insurer because the basis of the
insurer's liability is the insurance contract. An insurance contract is a
contract whereby one party, for a consideration known as the
premium, agrees to indemnify another for loss or damage which he
may suffer from a specified peril. (Mayer Steel Pipe Corporation
vs. Court of Appeals, G.R. No. 124050 June 19, 1997)
The general provisions of the new Civil Code (Art. 1155 providing for
the interruption of the prescriptive period) cannot be made to apply in
a case under COGSA, as such application would have the effect of
extending the one-year period of prescription fixed in the law. It is
desirable that matters affecting transportation of goods by sea be
decided in as short a time as possible; the application of the
provisions of Article 1155 of the new Civil Code would unnecessarily
extend the period and permit delays in the settlement of questions
affecting transportation, contrary to the clear intent and purpose of
the law. (Dole Philippines, Inc. vs. Maritime Company of the
Philippines, G.R. No. L-61352 February 27, 1987)
Notwithstanding the fact that the case was filed beyond the one-year
prescriptive period provided under the COGSA, the suit ( against the
insurer ) will not be dismissed of the delay was not due the claimant’s
fault. Had the insurer processed and examined the claim promptly, the
claimant or the insurer itself, as subrogee, could have taken the judicial
action on time. By making an unreasonable demand for an itemized list
of damages which caused delay, the insurer should bear the loss with
interest, New World International Development Corporation vs
NYK-FilJapan Shipping Corporation, GR No. 171468, August 24,
2011
The term “ carriage of goods “ covers the period from the time when the
goods are loaded to the time when they are discharged from the ship;
thus, it can be inferred that the period of time when the goods have been
discharged from the ship and given to the custody of the arrastre
operator is not covered by the COGSA. Under the COGSA, the carrier and
the ship may put up the defense of prescription if the action for damages
is not brought within one year after delivery of the goods or the date
when the goods should have been delivered. However, the COGSA does
not mention than an arrastre operator may invoke the prescriptive
period; hence, it does not cover the arrastre operator. The arrastre
operator’s responsibility and liability for losses and damages are set forth
in the contract for cargo handling services executed between the
Philippine Ports Authority and Marina Port Services. Insurance
Company of North America vs. Asian Terminals, Inc. GR No.
180784, February 15, 2012
d. Limitation of Liability
1. Applicability
2. Limitation of Liability
a. Liability to Passengers
While the Warsaw Convention has the force and effect of law in the
Philippines, being a treaty commitment by the government and as a
signatory thereto, the same does not operate as an exclusive
enumeration of the instances when a carrier shall be liable for breach
of contract or as an absolute limit of the extent of liability, nor does it
preclude the operation of the Civil Code or other pertinent laws. The
acceptance in due course by PAL of Mejia’s cargo as packed and its
advice against the need for declaration of its actual value operated as
an assurance to Mejia that in fact there was no need for such a
declaration. Mejia can hardly be faulted for relying on the
representations of PAL’s own personnel. In other words, Mejia could
and would have complied with the conditions stated in the air waybill,
i.e., declaration of a higher value and payment of supplemental
transportation charges, entitling her to recovery of damages beyond
the stipulated limit of US$20 per kilogram of cargo in the event of loss
or damage, had she not been effectively prevented from doing so
upon the advice of PAL’s personnel for reasons best known to
themselves. Even if the claim for damages was conditioned on the
timely filing of a formal claim, under Article 1186 of the Civil Code
that condition was deemed fulfilled, considering that the collective
action of PAL’s personnel in tossing around the claim and leaving it
unresolved for an indefinite period of time was tantamount to
“voluntarily preventing its fulfillment.” On grounds of equity, the filing
of the baggage freight claim, which sufficiently informed PAL of the
damage sustained by private respondent’s cargo, constituted
substantial compliance with the requirement in the contract for the
filing of a formal claim. (Philippine Airlines Inc. vs. Court of
Appeals, G.R. No. 119706, March 14, 1996)
A. Corporation
1. Definition
If the title over the land where the Hidden Valley Springs Resort is
located is registered in the name of the corporation, the heirs of a
stockholder who occupy houses built at the expense of the
corporation cannot claim ownership over said properties. A
stockholder is not the owner of any part of the capital of the
corporation and is not entitled to the possession of any definite
portion of its property or assets. (Rebecca Boyer-Roxas and
Guillermo Roxas vs. Hon. Court of Appeals and Heirs of
Eugenia V. Roxas, Inc., G.R. No. 100866, July 14, 1992)
B. Classes of Corporations
Where there is no third person involved and the conflict arises only
among those assuming the form of a corporation, who therefore
know that it has not been registered, there is no corporation by
estoppel. (Reynaldo M. Lozano vs. Hon. Eliezer R. De los
Santos, Presiding Judge, RTC, Br. 58, Angeles City; and
Antonio Anda, G.R. No. 125221, June 19, 1997)
C. Nationality of Corporations
2. Control Test
The fact that the religious organization has no capital stock does not
suffice to escape the Constitutional inhibition, since it is admitted
that its members are of foreign nationality. The purpose of the sixty
per centum requirement is obviously to ensure that corporations or
associations allowed to acquire agricultural land or to exploit natural
resources shall be controlled by Filipinos; and the spirit of the
Constitution demands that in the absence of capital stock, the
controlling membership should be composed of Filipino citizens.
(Register of Deeds vs. Ung Sui Si Temple, G.R. No. L-6776,
May 21, 1955)
3. Grandfather Rule
In order for the Court to hold the officer of the corporation personally
liable alone for the debts of the corporation and thus pierce the veil of
corporate fiction, the Court has required that the bad faith of the
officer must first be established clearly and convincingly. Petitioner,
however, has failed to include any submission pertaining to any
wrongdoing of the general manager. Necessarily, it would be unjust to
hold the latter personally liable. Moreso, if the general manager was
never impleaded as a party to the case. Mercy Vda. de Roxas,
represented by Arlene C. Roxas-Cruz, in her capacity as
substitute appellant-petitioner v. Our Lady's Foundation, Inc.
G.R. No. 182378, March 6, 2013.
The fact that an employee of the corporation was made to resign and
not allowed to enter the workplace does not necessarily indicate bad
faith on the part of the employer corporation if a sufficient ground
existed for the latter to actually proceed with the termination. ABBOT
LABORATORIES VS. ALCARAZ, G.R. No. 192571, July 23, 2013
The fact that the businesses of private respondent and Acrylic are
related, that some of the employees of the private respondent are
the same persons manning and providing for auxilliary services to
the units of Acrylic, and that the physical plants, offices and
facilities are situated in the same compound, it is the Court’s
considered opinion that these facts are not sufficient to justify the
piercing of the corporate veil of Acrylic. Hence, the Acrylic not being
an extension or expansion of private respondent, the rank-and-file
employees working at Acrylic should not be recognized as part of,
and/or within the scope of the petitioner, as the bargaining
representative of private respondent. (Indophil Textile Mill
Workers Union-PTGWO vs. Voluntary Arbitrator Teodorico P.
Calica and Indophil Textile Mills, Inc., G.R. No. 96490,
February 3, 1992)
The doctrine of piercing the corporate veil applies only in three (3)
basic areas, namely: 1) defeat of public convenience as when the
corporate fiction is used as a vehicle for the evasion of an existing
obligation; 2) fraud cases or when the corporate entity is used to
justify a wrong, protect fraud, or defend a crime; or 3) alter ego
cases, where a corporation is merely a farce since it is a mere alter
ego or business conduit of a person, or where the corporation is so
organized and controlled and its affairs are so conducted as to make
it merely an instrumentality, agency, conduit or adjunct of another
corporation.
The second prong is the "fraud" test. This test requires that the parent
corporation’s conduct in using the subsidiary corporation be unjust,
fraudulent or wrongful. It examines the relationship of the plaintiff to
the corporation. It recognizes that piercing is appropriate only if the
parent corporation uses the subsidiary in a way that harms the plaintiff
creditor. As such, it requires a showing of "an element of injustice or
fundamental unfairness."
The third prong is the "harm" test. This test requires the plaintiff to
show that the defendant’s control, exerted in a fraudulent, illegal or
otherwise unfair manner toward it, caused the harm suffered. A causal
connection between the fraudulent conduct committed through the
instrumentality of the subsidiary and the injury suffered or the damage
incurred by the plaintiff should be established. The plaintiff must prove
that, unless the corporate veil is pierced, it will have been treated
unjustly by the defendant’s exercise of control and improper use of the
corporate form and, thereby, suffer damages. Development Bank of
the Philippines vs. Hydro Resources Contractors Corporation,
GR. No. 167603, March 13, 2013
1. Promoter
a. Liability of Promoter
b. Liability of Corporation for Promoter’s Contracts
The mere change in the corporate name is not considered under the
law as the creation of a new corporation; hence, the renamed
corporation remains liable for the illegal dismissal of its employee
separated under that guise. Verily, the amendments of the articles
of incorporation of Zeta to change the corporate name to Zuellig
Freight and Cargo Systems, Inc. did not produce the dissolution of
the former as a corporation. (Zuellig Freight and Cargo
Systemsvs. National Labor Relations Commission, et al.,
G.R. No. 157900, July 22, 2013)
4. Corporate Term
The submission of the Board that the value of the assets of Asturias
Sugar Central, Inc. transferred to MSCI, as well as the loans or
advances made by MTII to MSCI should have been taken into
consideration in computing the paid-up capital of MSCI is
unmeritorious, at best, and betrays the Board's sheer lack of grasp
of a basic concept in Corporation Law, at worst. Not all funds or
assets received by the corporation can be considered paid-up
capital, for this term has a technical signification in Corporation Law
which is the portion of the authorized capital stock of the
corporation, subscribed and then actually paid up. (MSCI-NACUSIP
Local Chapter vs. National Wages and Productivity
Commission and Monomer Sugar Central, Inc., G.R. No.
125198, March 3, 1997)
6. Articles of Incorporation
b. Contents
The venue in this case was improperly laid because the principal
office of Hyatt as stated in the Articles of Incorporation is in Makati
but the case was filed in Mandaluyong where Hyatt transferred its
operations. Since the principal place of business of a corporation
determines its residence or domicile, then the place indicated in
petitioner’s articles of incorporation becomes controlling in
determining the venue for the filing of a case. (Hyatt Elevators
and Escalators Corporation vs. Goldstar Elevators Phils.,
Inc., G.R. No. 161026, October 24, 2005)
c. Amendment
d. Non-Amendable Items
7. Registration and Issuance of Certificate of Incorporation
8. Adoption of By-Laws
Every corporation has the inherent power to adopt by-laws 'for its
internal government, and to regulate the conduct and prescribe the
rights and duties of its members towards itself and among
themselves in reference to the management of its affairs. Under
section 21 of the Corporation Law, a corporation may prescribe in its
by-laws the qualifications, duties and compensation of directors,
officers and employees. (John Gokongwei, Jr. vs. Securities and
Exchange Commission, et al., G.R. No. L-45911, April 11,
1979)
Since the SEC will grant a license only when the foreign corporation
has complied with all the requirements of law, it follows that when it
decides to issue such license, it is satisfied that the applicant's by-
laws, among the other documents, meet the legal requirements.
Therefore, petitioner bank's by-laws, though originating from a
foreign jurisdiction, are valid and effective in the Philippines.
(Citibank, N.A. vs. Hon. Segundino G. Chua, et al., G.R. No.
102300, March 17, 1993)
c. Binding Effects
d. Amendment or Revision
F. Corporate Powers
The following officers may sign the verification and certification against
non-forum shopping on behalf of the corporation even in the absence
of board resolution,
The general rule is that a corporation can only exercise its powers and
transact its business through its board of directors and through its
officers and agents when authorized by a board resolution or its
bylaws. The power of a corporation to sue and be sued is exercised by
the board of directors. The physical acts of the corporation, like the
signing of documents, can be performed only by natural persons duly
authorized for the purpose by corporate bylaws or by a specific act of
the board. Absent the said board resolution, a petition may not be
given due course. Esguerra vs. Holcim Philippines G.R. No.
182571, September 2, 2013
In a complaint for nullification of mortgage and foreclosure with
damages against the mortgagee-bank, the plaintiff can not compel the
officers of the bank to appear and testify as plaintiff’s initial witnesses
unless written interrogatories are first served upon the bank officers.
This is in line with the Rules of Court provision that calling the adverse
party to the witness stand is not allowed unless written interrogatories
are first served upon the latter. This is because the officers of a
corporation are considered adverse parties as well in a case against
the corporation itself based on the principle that corporations act only
through their officers and duly authorized agents. Spouses
Afulugencia vs. Metropolitan Bank and Trust Co. G.R. No.
185145, February 05, 2014
The act of issuing the checks was well within the ambit of a valid
corporate act, for it was for securing a loan to finance the activities
of the corporation, hence, not an ultra vires act. (Atrium
Management Corporation vs. Court of Appeals, et al., G.R.
No. 109491, February 28, 2001)
3. How Exercised
a. By the Shareholders
b. By the Board of Directors
c. By the Officers
When the practice of the corporation has been to allow its general
manager to negotiate and execute contracts in its copra trading
activities for and in behalf of the corporation without prior board
approval, the board itself, by its acts and through acquiescence,
practically laid aside the by-law requirement of prior approval.
Settled jurisprudence has it that 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 without
formal authorization of the board of directors. (The Board of
Liquidators, representing the Government of the Republic of
the Philippines vs.Heirs of Maximo M. Kalaw, Juan Bocar,
Estate of the deceased Casimiro Garcia, and Leonor
Moll,G.R. No. L-18805, August 14, 1967)
When a bank, by its acts and failure to act, has clearly clothed its
manager with apparent authority to sell an acquired asset in the
normal course of business, it is legally obliged to confirm the
transaction by issuing a board resolution to enable the buyers to
register the property in their names. It has a duty to perform
necessary and lawful acts to enable the other parties to enjoy all
benefits of the contract which it had authorized. (Rural Bank Of
Milaor (Camarines Sur) vs. Francisca Ocfemia, Rowena
Barrogo, Marife O. Niño, FelicisimoOcfemia, Renato Ocfemia
Jr., and Winston Ocfemia, G.R. No. 137686, February 8,
2000)
If a corporation consciously lets one of its officers, or any other
agent, to act within the scope of an apparent authority, it will be
estopped from denying such officer’s authority. Since the records
show that Calo, who was an Account Officer, was the one assigned
to transact on petitioner’s behalf respecting the loan transactions
and arrangements of Inland as well as those of Hanil-Gonzales and
Abrantes, it is presumed that he had authority to sign for the bank
in the Deed of Assignment.(Westmont Bank (formerly
Associated Citizens Bank and now United Overseas Bank,
Phils.) And The Provincial Sheriff of Rizal vs. Inland
Construction and Development Corp., G.R. No. 123650,
March 23, 2009)
Both under the old and the new Corporation Codes there is no
dispute as to the most immediate effect of a voting trust agreement
on the status of a stockholder who is a party to its execution — from
legal titleholder or owner of the shares subject of the voting trust
agreement, he becomes the equitable or beneficial owner. Any
director who executes a voting trust agreement over all his shares
ceases to be a stockholder of record in the books of the corporation
and therefore ceases to be a director.(Ramon C. Lee and Antonio
DM. Lacdao vs. the Hon. Court of Appeals, Sacoba
Manufacturing Corp., Pablo Gonzales, Jr. and Thomas
Gonzales, G.R. No. 93695, 4 February 1992)
4. Elections
5. Removal
6. Filling of Vacancies
7. Compensation
The rule is still that the doctrine of piercing the corporate veil
applies only when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud, or defend crime. Neither
Article 212[e] nor Article 273 (now 272) of the Labor Code expressly
makes any corporate officer personally liable for the debts of the
corporation.(Antonio C. Carag vs. National Labor Relations
Commission, et al., G.R. No. 147590, April 2, 2007)
To hold the general manager personally liable alone for the debts of
the corporation and thus pierce the veil of corporate fiction, it is
required that the bad faith of the officer be established clearly and
convincingly. Petitioner, however, has failed to include any
submission pertaining to any wrongdoing of the general manager.
Necessarily, it would be unjust to hold the latter personally liable.
(Mercy Vda. de Roxas vs. Our Lady's Foundation, Inc., G.R.
No. 182378, March 6, 2013)
Although joint and solidary liability for money claims and damages
against a corporation attaches to its corporate directors and officers
under R.A. 8042, it is not automatic. To make them jointly and
solidarily liable, there must be a finding that they were remiss in
directing the affairs of the corporation, resulting in the conduct of
illegal activities. Absent any findings regarding the same, the
corporate directors and officers cannot be held liable for the
obligation of the corporation against the judgment debtor.
(Elizabeth M. Gaguivs. Simeon Dejeroand TeodoroPermejo,
G.R. No. 196036, October 23, 2013)
11. Contracts
c. Management Contracts
13. Meetings
a. Regular or Special
i. When and Where
ii. Notice
b. Who Presides
c. Quorum
d. Rule on Abstention
2. Participation in Management
a. Proxy
b. Voting Trust
c. Cases When Stockholders’ Action is Required
i. By a Majority Vote
ii. By a Two-Thirds Vote
iii. By Cumulative Voting
3. Proprietary Rights
a. Right to Dividends
b. Right of Appraisal
In order to give rise to any obligation to pay on the part of the
corporation, the dissenting stockholder should first make a valid
demand that the corporation refused to pay despite having
unrestricted retained earnings. Otherwise, the corporation could not be
said to be guilty of any actionable omission that could sustain the
action to collect. The collection suit filed by the dissenting stockholder
to enforce payment of the fair value of his shares is premature if at
the time of demand for payment, the corporation had no surplus profit.
The fact that the Corporation subsequent to the demand for payment
and during the pendency of the collection case posted surplus profit
did not cure the prematurity of the cause of action. Turner vs.
Lorenzo Shipping Corporation, G.R. No. 157479, November 24,
2010
c. Right to Inspect
d. Pre-Emptive Right
Even if pre-emptive right does not exist either because the issue
comes within the exceptions in Section 39 of the Corporation Code
or because it is denied in the articles of incorporation, an issue of
shares may still be objectionable if the directors acted in breach of
trust and their primary purpose is to perpetuate or shift control of
the corporation or to “ freeze out” the minority interest. The
issuance of unissued shares out of the original authorized capital
stock pursuant to a rehabilitation plan the propriety and validity of
which was on question by the minority stockholders and
subsequently disapproved by the court amounts to unlawful dilution
of the minority shareholdings. Majority of Stockholders of Ruby
Industrial Corporation vs Lim, GR No. 165887, June 6, 2011
e. Right to Vote
f. Right to Dividends
4. Remedial Rights
a. Individual Suit
b. Representative Suit
c. Derivative Suit
A suit to enforce pre-emptive right in a corporation is not a
derivative suit because it was not filed for the benefit of the
coporation. The petitioner was suing on her own behalf, and was
merely praying that she be allowed to subscribe to the additional
issuances of stocks in proportion to her shareholdings to enable her
to preserve her percentage of ownership in the corporation. (Gilda
C. Lim, Wilhelmina V. Joven and Ditas A. Lerios, vs. Patricia
Lim-Yu, in her capacity as a minority stockholder of Limpan
Investment Corporation, G.R. No. 138343, February 19,
2001)
The bare claim that the complaint is a derivative suit will not suffice
to confer jurisdiction on the RTC (as a special commercial court) if
he cannot comply with the requisites for the existence of a
derivative suit. These requisites are: a.) the party bringing suit
should be a shareholder during the time of the act or transaction
complained of, the number of shares not being material; b.) the
party has tried to exhaust intra-corporate remedies, i.e., has made a
demand on the board of directors for the appropriate relief, but the
latter has failed or refused to heed his plea; andc.) the cause of
action actually devolves on the corporation; the wrongdoing or harm
having been or being caused to the corporation and not to the
particular stockholder bringing the suit.(Oscar C. Reyes vs. Hon.
Regional Trial Court of Makati, Branch 142, Zenith Insurance
Corporation, and Rodrigo C. Reyes, G.R. No. 165744, 11
August 2008)
5. Obligation of a Stockholder
6. Meetings
a. Regular or Special
i. When and Where
ii. Notice
b. Who Calls the Meetings
c. Quorum
I. Capital Structure
1. Subscription Agreements
3. Shares of Stock
a. Nature of Stock
Under the two-tiered test, the government, thru PCGG, may vote
sequestered shares if there is a prima facie evidence that the shares
are ill-gotten and there is imminent danger of dissipation of assets while
the case is pending. However, the two- tiered test contemplates a
situation where the registered stockholders were in control and had
been dissipating company assets and the PCGG wanted to vote the
sequestered shares to save the company. It does not apply when the
PCGG had voted the shares and is in control of the sequestered
corporation . Africa vs. Hon. Sandiganbayan , G.R. Nos.
172222/G.R. No. 174493/ G.R. No. 184636, November 11, 2013
Since the law does not prescribe a period for registration of shares in
the books of the corporation, the action to enforce the right to have it
done does not begin until a demand for it had been made and was
refused. Africa vs. Hon. Sandiganbayan, ibid.
b. Subscription Agreements
i. Definition
ii. Liability of Directors for Watered Stocks
iii. Trust Fund Doctrine for Liability for Watered Stocks
5. Certificate of Stock
a. Nature of the Certificate
b. Uncertificated Shares
c. Negotiability
i. Requirements for Valid Transfer of Stocks
a. Contents
1. Modes of Dissolution
a. Voluntary
b. Involuntary
2. Methods of Liquidation
The executed releases, waivers and quitclaims are valid and binding
upon the parties notwithstanding the fact that these documents
were signed six years after the Corporation’s revocation of the
Certificate of Incorporation. These documents are thus proof that
the employees had received their claims from their employer-
corporation in whose favor the release and quitclaim were issued.
The revocation of the corporation does not mean the termination of
its liabilities to these employees. Section 122 of the Corporation
Code provides for a three-year winding up period for a corporation
whose charter is annulled by forfeiture or otherwise to continue as a
body corporate for the purpose, among others, of settling and
closing its affairs As such, these liabilities are obligations of the
dissolved corporation and not of the corporation who contracted the
services of the dissolved corporation. Vigilla vs. Philippine
College of Criminology, GR No. 200094, June 10, 2013
K. Other Corporations
1. Close Corporations
e. Pre-Emptive Right
f. Amendment of Articles of Incorporation
g. Deadlocks
2. Non-Stock Corporations
a. Definition
b. Purposes
c. Treatment of Profits
d. Distribution of Assets upon Dissolution
4. Foreign Corporations
c. Personality to Sue
There are two types of corporate acquisitions: asset sales and stock
sales. In asset sales, the corporate entity sells all or substantially all of
its assets to another entity. In stock sales, the individual or corporate
shareholders sell a controlling block of stock to new or existing
shareholders.
In asset sales, the rule is that the seller in good faith is authorized to
dismiss the affected employees, but is liable for the payment of
separation pay under the law. The buyer in good faith, on the other
hand, is not obliged to absorb the employees affected by the sale, nor
is it liable for the payment of their claims. The most that it may do, for
reasons of public policy and social justice, is to give preference to the
qualified separated personnel of the selling firm.
The fact that there was a change in the composition of its shareholders
did not affect the employer-employee relationship between the
employees and the corporation, because an equity transfer affects
neither the existence nor the liabilities of a corporation. Thus, the
corporation continued to be the employer of the corporation’s
employees notwithstanding the equity change in the corporation. This
outcome is in line with the rule that a corporation has a personality
separate and distinct from that of its individual shareholders or
members, such that a change in the composition of its shareholders or
members would not affect its corporate liabilities.
In this case, the corporate officers and directors who induced the
employees to resign with the assurance that they would be rehired by
the new management are personally liable to the employees who were
not actually rehired. However, the officer who did not participate in
the termination of employment and persons who participated in the
unlawful termination of employment but are not directors and officers
of the corporation are not personally liable. SME BANK INC, vs.
GASPAR, G.R. No. 186641, October 8, 2013
5. Procedure
6. Effectivity
7. Limitations
8. Effects
It is more in keeping with the dictates of social justice and the State
policy of according full protection to labor to deem employment
contracts as automatically assumed by the surviving corporation in
a merger, even in the absence of an express stipulation in the
articles of merger or the merger plan. By upholding the automatic
assumption of the non-surviving corporation’s existing employment
contracts by the surviving corporation in a merger, the Court
strengthens judicial protection of the right to security of tenure of
employees affected by a merger and avoids confusion regarding the
status of their various benefits which were among the chief
objections of our dissenting colleagues. (Bank of the Philippine
Islands vs. BPI Employees Union-Davao Chapter-Federation
Of Unions In Bpi Unibank, G.R. No. 164301, October 19,
2011)
1. Exempt Securities
2. Exempt Transactions
The trading contract signed by the parties is a contract for the sale
of products for future delivery, in which either seller or buyer may
elect to make or demand delivery of goods agreed to be bought and
sold, but where no such delivery is actually made. The written
trading contract in question is not illegal but the transaction
between the parties purportedly to implement the contract is in the
nature of a gambling agreement; it is not buying and selling and is
illegal as against public policy. (Onapal Philippines
Commodities, Inc. vs. Court of Appeals, G.R. No. 90707,
February 1, 1993)
2. Short Sales
3. Fraudulent Transactions
4. Insider Trading
E. Protection of Investors
3. Disclosure Rule
F. Civil Liability
Civil suits falling under the SRC (like liability for selling unregistered
securities ) are under the exclusive original jurisdiction of the RTC
and hence, need not be first filed before the SEC, unlike criminal
cases wherein the latter body exercises primary jurisdiction. (Jose
U. Pua vs. Citibank, N. A. G.R. No. 180064, September 16,
2013)
1. State Policies
a. Conservatorship
The Monetary Board, upon finding that the bank failed to put up the
required capital to restore its solvency, prohibited a bank from doing
business and instructed the Acting Superintendent of Banks to take
charge of the assets of the bank. When by reason of this
prohibition, only a portion of the loan approved by the bank was
released to its debtor, it also follows that the bank, in exercising its
right to foreclose the real estate mortgage, can only foreclose up to
the extent of the amount it released. (Central Bank of the
Philippines vs. Court of Appeals, G.R. No. L-45710 October 3,
1985)
b. Closure
The Central Bank Act vests authority upon the Central Bank and
Monetary Board to take charge and administer the monetary and
banking system of the country and this authority includes the power
to examine and determine the financial condition of banks for
purposes provided for by law, such as for the purpose of closure on
the ground of insolvency stated in Section 29 of the Central Bank
Act. Nonetheless, the authority given must not be exercised
arbitrarily such as to prematurely conclude that a bank is insolvent
if the basis for such conclusion is lacking and insufficient. (Banco
Filipino Savings and Mortgage Bank vs. Central Bank, G.R.
No. 70054, December 11, 1991)
Under the “close now, hear later” principle, the BSP can impose the
sanction of closure upon a bank even without prior notice and
hearing, which is grounded on practical and legal considerations to
prevent unwarranted dissipation of the bank’s assets and as a valid
exercise of police power to protect the depositors, creditors,
stockholders, and the general public. The remedy of the closed
bank is a subsequent one, which will determine whether the closure
of the bank was attended by grave abuse of discretion. (BSP
Monetary Board vs. Hon. Antonio-Valenzuela, G.R. No.
184778, October 2, 2009)
c. Receivership
The Monetary Board, upon finding that the bank failed to put up the
required capital to restore its solvency, prohibited a bank from doing
business and instructed the Acting Superintendent of Banks to take
charge of the assets of the bank. When by reason of this
prohibition, only a portion of the loan approved by the bank was
released to its debtor, it also follows that the bank, in exercising its
right to foreclose the real estate mortgage, can only foreclose up to
the extent of the amount it released. (Central Bank of the
Philippines vs. Court of Appeals, G.R. No. L-45710, October
3, 1985)
The Monetary Board may forbid a bank from doing business and
place it under receivership without prior notice and hearing it the
MB finds that a bank: (a) is unable to pay its liabilities as they
become due in the ordinary course of business; (b) has insufficient
realizable assets to meet liabilities; (c) cannot continue in business
without involving probable losses to its depositors and creditors;
and (d) has willfully violated a cease and desist order of the
Monetary Board for acts or transactions which are considered
unsafe and unsound banking practices and other acts or
transactions constituting fraud or dissipation of the assets of the
institution. (Alfeo D. Vivas, vs. Monetary Board and PDIC, G.R.
No. 191424, August 7, 2013)
d. Liquidation
Resolutions of the Monetary Board with regard to handling banks in
distress such as appointing a receiver to take charge of the bank's
assets and liabilities; or determining whether the banking
institutions may be rehabilitated, or should be liquidated and
appointing a liquidator towards this end are by law final and
executory. Nonetheless, the same may be set aside by the court
upon proof that the action is plainly arbitrary and made in bad faith,
which may be asserted as an affirmative defense or a counterclaim
in the proceeding for assistance in liquidation. (Apollo M. Salud
vs. Central Bank of the Philippines, G.R. No. L-17620, August
19, 1986)
The rule that all claims against a bank must be filed in the
liquidation proceedings does not apply to actions filed by the bank
itself for the preservation of its assets and protection of its property,
such as a petition for the issuance of a Writ of Possession instituted
by the bank itself. Moreover, a bank ordered closed by the Monetary
Board retains its personality which can sue and be sued through its
liquidator. (Domingo Manalo vs. Court of Appeals, G.R. No.
141297, October 8, 2001)
1. Purpose
R.A. No. 1405 hopes to discourage private hoarding and at the same
time encourages the people to deposit their money in banking
institutions, so that it may be utilized by way of authorized loans
and thereby assist in economic development. The absolute
confidentiality rule in R.A. No. 1405 actually aims to give protection
from unwarranted inquiry or investigation if the purpose of such
inquiry or investigation is merely to determine the existence and
nature, as well as the amount of the deposit in any given bank
account. (BSB Group, Inc. vs. Sally Go, G.R. No. 168644,
February 16, 2010)
2. Prohibited Acts
3. Deposits Covered
4. Exceptions
One of the exceptions under R.A. No. 1405 is when a court order is
issued for the disclosure of bank deposits in a case where the
money deposited is the subject matter of litigation. When the
subject matter is the money the bank transmitted by mistake, an
inquiry to the whereabouts of the amount extends to whatever
concealed by being held or recorded in the name of the persons
other than the one responsible for the illegal acquisition. (Mellon
Bank, N.A. vs. Magsino, G.R. No. 71479, October 18, 1990)
One of the exceptions under R.A. 1405 is when the inquiry into the
bank deposits is premised on the fact that the money deposited in
the account is itself the subject of the action. Such is not the case
when the respondent was charged with qualified theft and when the
attempt of inquiry serves no other purpose but to establish the
existence of such account, its nature and the amount kept in it.
(BSB Group, Inc. vs. Sally Go, G.R. No. 168644, February 16,
2010)
In case the bank complies with the provisions of the law and the
unclaimed balances are eventually escheated to the Republic, the
bank shall not thereafter be liable to any person for the same.
However, when the manager’s check was never negotiated or
presented for payment to the bank, the procurer of the check
retained ownership of the funds; hence, proper notice should have
been given to the latter for compliance with the law. (Rizal
Commercial Banking Corporation vs. Hi-Tri Development
Corporation, 672 SCRA 514 (2012))
R.A. No. 8791 or the General Banking Law of 2000 provided that banks
shall refer to entities engaged in the lending of funds obtained in the form
of deposits. Financial intermediaries, on the other hand, are defined as
persons or entities whose principal functions include the lending, investing
or placement of funds or evidences of indebtedness or equity deposited
with them, acquired by them, or otherwise coursed through them, either
for their own account or for the account of others; pawnshops fall under
this category. (First Planters Pawnshop, Inc. vs. Commissioner of
Internal Revenue, G.R. No. 174134, July 30, 2008)
a. Corporate Powers
When the bank teller has failed to return the passbook to its owner
or to the authorized representative of the depositor, the bank is
presumed to have failed to exercise and observe a higher degree of
diligence required of it, which makes it liable for the damage done
to the depositor. However, the bank’s liability can be mitigated by
the depositor’s contributory negligence when the latter allowed a
signed withdrawal slip to fall into the hands of an unauthorized
person. (Consolidated Bank and Trust Corporation vs. Court
of Appeals, G.R. No. 138569, September 11, 2003)
When the drawee bank pays a person other than the payee named
on the check, it does not comply with the terms of the check and
violates its duty to charge the drawer’s accounts only for properly
payable items. In disregarding established banking rules and
regulations, the bank was clearly negligent, thus, should be made
liable. (Bank of America, NT and SA vs. Associated Citizens
Bank, G.R. No. 141018, May 21, 2009)
6. Stipulation on Interests
A banking institution which has been declared insolvent and
subsequently ordered closed by the Central Bank of the Philippines
cannot be held liable to pay interest on bank deposits which
accrued during the period when the bank is actually closed and non-
operational. However, the bank is still liable for the interest on bank
deposits which accrued up to the date of its closure. (Fidelity
Savings and Mortgage Bank vs. Hon. Pedro Cenzon, G.R. No.
L-46208, April 5, 1990)
B. Patents
1. Patentable Inventions
2. Non-Patentable Inventions
3. Ownership of a Patent
a. Right to a Patent
b. First-to-File Rule
c. Inventions Created Pursuant to a Commission
d. Right of Priority
The validity of the patent issued by the Philippine Patent Office and
the question over the inventiveness, novelty and usefulness of the
improved model of the LPG burner are matters which are better
determined by the Patent Office. There is a presumption that the
Philippine Patent Office has correctly determined the patentability of
the model and such action must not be interfered with in the
absence of competent evidence to the contrary. (Manzano vs.
Court of Appeals, G.R. No. 113388, September 5, 1997)
When the language of its claims is clear and distinct, the patentee is
bound thereby and may not claim anything beyond them. the
language of Letter Patent No. 14561 fails to yield anything at all
regarding Albendazole and no extrinsic evidence had been adduced
to prove that Albendazole inheres in petitioner’s patent in spite of
its omission therefrom or that the meaning of the claims of the
patent embraces the same. (Smith Kline Beckman Corporation
vs. Court of Appeals, G.R. No. 126627, August 14, 2003)
The patent law has a three-fold purpose: first, it seeks to foster and
reward invention; second, it promotes disclosure of inventions to
stimulate further innovation and to permit the public to practice the
invention once the patent expires; and third, the stringent
requirements for patent protection seek to ensure that ideas in the
public domain remain there for the free use of the public and it is
only after an exhaustive examination by the patent office that
patent is issued. Not having gone through the arduous examination
for patents, petitioner cannot exclude others from the manufacture,
sale or commercial use of the light boxes on the sole basis of its
copyright certificate over the technical drawings. (Pearl & Dean
(Phil.), Inc. vs. Shoemart, Inc., G.R. No. 148222, August 15,
2003)
A patentee shall have the exclusive right to make, use and sell the
patented machine, article or product, and to use the patented
process for the purpose of industry or commerce, throughout the
territory of the Philippines for the term of the patent; and such
making, using, or selling by any person without the authorization of
the patentee constitutes infringement of the patent. The patentee’s
exclusive rights exist only during the term of the patent, hence,
after the cut-off date, the exclusive rights no longer exist and the
temporary restraining order can no longer be issued in its favor.
(Phil. Pharmawealth, Inc. vs. Pfizer, Inc., G.R. No. 167715,
November 17, 2010)
8. Patent Infringement
i. Literal Infringement
9. Licensing
a. Voluntary
b. Compulsory
C. Trademarks
4. Non-Registrable Marks
Both Berris’ (“D-10 80 WP”) and Abyadang’s mark (“NS D-10 PLUS”)
have “D-10” as a common component, which also happened to be
the dominant feature of Berris’ mark. In applying both the
dominancy test and holistic test, the likelihood of confusion is
present considering the fact that both marks pertain to the same
type of goods; both products use the same type of material for the
packaging and have identical color schemes. Considering these
striking similarities, the buyers of both products, mainly farmers,
may be misled into thinking that “NS D-10 PLUS” could be an
upgraded formulation of the “D-10 80 WP”; hence, Berris properly
opposed Abyadang’s application for registration. (Berris
Agricultural Co., Inc. vs. Norvy Abyadang, G.R. No. 183404,
October 13, 2010)
A resort to either the Dominancy Test or the Holistic Test shows that
colorable imitation exists between respondent's "Gold Toe" and
petitioner's "Gold Top." An examination of the products in question
shows that their dominant features are gold checkered lines against
a predominantly black background and a representation of a sock
with a magnifying glass; in addition, both products use the same
type of lettering; both also include a representation of a man's foot
wearing a sock and the word "linenized" with arrows printed on the
label; lastly, the names of the brands are similar -- "Gold Top" and
"Gold Toe." (Amigo Manufacturing, Inc. vs. Cluett Peabody
Co., Inc., G.R. No. 139300, March 14, 2001)
a. Dominancy Test
Respondents have adopted in "Big Mak" not only the dominant but
also almost all the features of "Big Mac." Applied to the same food
product of hamburgers, with both marks aurally and visually the
same, it will likely result in confusion in the public mind.
(McDonald’s Corporation vs. L.C. Big Mak Burger, Inc., G.R.
No. 143993, August 18, 2004)
b. Holistic Test
7. Well-Known Marks
One who has adopted and used a trademark on his goods does not
prevent the adoption and use of the same trademark by others for
products which are of a different description. The GALLO trademark
registration certificates in the Philippines and in other countries
expressly state that they cover wines only, without any evidence or
indication that registrant Gallo Winery expanded or intended to
expand its business to cigarettes. (Mighty Corporation and La
Campana Fabrica De Tabaco, Inc. vs. E. & J. Gallo Winery and
the Andresons Group, Inc., G.R. No. 154342, July 14, 2004)
Section 147 of R.A. No. 8293 provides for the exclusive right of the
owner of a registered mark to prevent third parties not having the
owner’s consent from using in the course of trade identical or
similar signs or containers for goods or services which are identical
or similar to those in respect of which the trademark is registered
where such use would result in a likelihood of confusion. Berris, as a
prior user and prior registrant, is the owner of the mark “D-10 80
WP”; hence, it has acquired the rights conferred under the law.
(Berris Agricultural Co., Inc. vs. Norvy Abyadang, G.R. No.
183404, October 13, 2010)
a. Trademark Infringement
The question is not whether the two articles are distinguishable by
their label when set side by side but whether the general confusion
made by the article upon the eye of the casual purchaser who is
unsuspicious and off his guard, is such as to likely result in his
confounding it with the original. It is not difficult to see that the
Sunshine label is a colorable imitation of the Del Monte trademark;
the predominant colors used in the Del Monte label are green and
red-orange, the same with Sunshine; the word "catsup" in both
bottles is printed in white and the style of the print/letter is the
same; and although the logo of Sunshine is not a tomato, the figure
nevertheless approximates that of a tomato. (Del Monte
Corporation and Philippine Packing Corporation vs. Court of
Appeals, G.R. No. L-78325, January 25, 1990)
The fact that the words pale pilsen are part of ABI's trademark does
not constitute an infringement of SMC's trademark: SAN MIGUEL
PALE PILSEN, for "pale pilsen" are generic words descriptive of the
color ("pale"), of a type of beer ("pilsen"), which is a light bohemian
beer with a strong hops flavor that originated in the City of Pilsen in
Czechoslovakia and became famous in the Middle Ages. Moreover,
ABI’s use of the steinie bottle, similar but not identical to the SAN
MIGUEL PALE PILSEN bottle, is not unlawful as SMC did not invent
but merely borrowed the steinie bottle from abroad and it has not
claimed neither patent nor trademark protection for that bottle
shape and design. (Asia Brewery, Inc. vs. Court of Appeals and
San Miguel Corporation, G.R. No. 103543, July 5, 1993)
One who has adopted and used a trademark on his goods does not
prevent the adoption and use of the same trademark by others for
products which are of a different description. Assuming arguendo
that "Poster Ads" could validly qualify as a trademark, the failure of
Pearl & Dean to secure a trademark registration for specific use on
the light boxes meant that there could not have been any
trademark infringement since registration was an essential element
thereof. (Pearl & Dean (Phil.), Inc. vs. Shoemart, Inc., G.R.
No. 148222, August 15, 2003)
The Rules on the Issuance of the Search and Seizure in Civil Actions
for Infringement of Intellectual Property Rights are not applicable in
a case where the search warrants were applied in anticipation of
criminal actions for violation of intellectual property rights under RA
8293. Rule 126 of the Revised Rules of Court would apply and a
warrant shall be validly issued upon finding the existence of
probable cause. (Century Chinese Medicine Co., et. al. vs.
People of the Philippines, G.R. No. 188526, November 11,
2013)
b. Damages
c. Requirement of Notice
Unfair competition has been defined as the passing off (or palming
off) or attempting to pass off upon the public of the goods or
business of one person as the goods or business of another with the
end and probable effect of deceiving the public. The mere use of the
LPG cylinders for refilling and reselling, which bear the trademarks
"GASUL" and "SHELLANE" will give the LPGs sold by REGASCO the
general appearance of the products of the petitioners. (Republic
Gas Corporation (REGASCO), et. al. vs. Petron Corporation,
et. al., G.R. No. 194062, June 17, 2013)
12. Trade Names or Business Names
D. Copyrights
2. Copyrightable Works
a. Original Works
b. Derivative Works
3. Non-Copyrightable Works
6. Limitations on Copyright
Under Sec. 184.1 (h), the use made of a work by or under the
direction or control of the Government, by the National Library
or by educational, scientific or professional institutions where
such use is in the public interest and is compatible with fair
use will not constitute copyright infringement. The carriage of
ABS-CBN’s signals by virtue of the must-carry rule is under the
direction and control of the government through the NTC. The
imposition of the must-carry rule is within the NTC’s power to
promulgate rules and regulations, as public safety and
interest may require, to encourage a larger and more effective
use of communications, radio and television broadcasting
facilities, and to maintain effective competition among private
entities in these activities whenever the Commission finds it
reasonably feasible. (ABS-CBN Broadcasting Corporation
vs. Philippine Multi-Media System, Inc., G.R. Nos.
175769-70, January 19, 2009)
For the playing and singing the musical compositions involved, the
combo was paid as independent contractors; it is therefore obvious
that the expenses entailed thereby are either eventually charged in
the price of the food and drinks or to the overall total of additional
income produced by the bigger volume of business which the
entertainment was programmed to attract. Consequently, it is
beyond question that the playing and singing of the combo in
defendant-appellee's restaurant constituted performance for profit
contemplated by the Copyright Law. (Filipino Society of
Composers, Authors and Publishers, Inc. vs. Benjamin Tan,
G.R. No. L-36402, March 16, 1987)
E. Rules of Procedure for Intellectual Property Rights Cases (A.M. No. 10-
3-10-SC)
X. Special Laws
A. The Chattel Mortgage Law and Real Estate Mortgage Law (Excluded
and made a part of Civil Law coverage)
2. Covered Institutions
4. Covered Transactions
5. Suspicious Transactions
2. Definition of Terms
a. Foreign Investment
b. “Doing Business” in the Philippines
Under Sec 3 (d) of the Foreign Investments Act of 1991, the phrase
"doing business" shall include appointing representatives or
distributors domiciled in the Philippines or who in any calendar year
stay in the country for a period or periods totalling one hundred
eighty (180) days or more. Thus, the phrase includes "appointing
representatives or distributors in the Philippines" but not when the
representative or distributor independently transacts business in its
name and for its own account. (Alfred Hahn vs. Court of
Appeals, G.R. No. 113074, January 22, 1997)
c. Export Enterprise
d. Domestic Market Enterprise