X

Define the following terms:

a) Trust fund doctrine (5%)

SUGGESTED ANSWER

The trust fund doctrine provides that subscriptions to the

capital stock of a corporation constitute a fund to which the creditors
have a right to look for the satisfaction of their claims [Ong v. Tiu,
401 SCRA 1 (2003)]. The scope of the doctrine when the corporation
is insolvent encompasses not only the capital stock, but also other
property and assets generally regarded in equity as a trust fund for the
payment of corporate debts [Halley v. Printwell, Inc., G.R. No.
157549, May 30, 2011].

(b) Unfair competition (5%)

SUGGESTED ANSWER

Unfair competition is the passing 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. Passing off takes place where a person, by
imitative devices on the general appearance of the goods, misleads
prospective purchasers into buying his merchandise under the
impression that they are buying that of his competitors [Republic Gas
Corporation v. Petron Corporation, G.R. No. 194062, June 17,
2013].

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 XI
Mr. Rowan Whitethorn filed a case captioned as "Injunction with Prayer for Status
Quo Order, Temporary Restraining Order and Damages" against Adarlan
Corporation to prohibit the latter from selling shares which Mr. Rowan Whitethorn
purportedly bought from Adarlan Corporation. Mr. Rowan Whitethorn alleged that
the subscription for the said shares was already partly paid by him, but the subject
shares were nonetheless being offered for sale by Adarlan Corporation to the
corporation's other stockholders.

Is the case filed by Mr. Rowan Whitethorn against Adarlan

Corporation considered an intra-corporate dispute? Explain. (10%)

SUGGESTED ANSWER
No. The case is not considered an intra-corporate dispute.

To determine if a case involves an intra-corporate controversy,

the Supreme Court has consistently applied two tests: the
relationship test and the nature of the controversy test. Under the
relationship test, an intra-corporate controversy arises when the
conflict is "between the corporation, partnership or association and
its stockholders, partners, members or officers". The nature of the
controversy test examines the controversy in relation to the
"enforcement of the parties' correlative rights and obligations under
the Revised Corporation Code and the internal and intra-corporate
regulatory rules of the corporation.”

In the present case, it is not yet certain that Mr. Y is a

stockholder of San Miguel Corporation. Thus, the first test is not
present. Even assuming that the parties are stockholders of the
corporation and as such, satisfy the relationship test, the dispute is
not rooted in the existence of intra-corporate relationship. The
action for injunction to stop the sale of shares does not pertain to
the enforcement of the parties’ rights and obligations under the
Revised Corporation Code.

Considering that it cannot be determined that a conflict arose

"between the corporation, partnership or association and its

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stockholders, partners, members or officers," then the case cannot
be considered as an intra-corporate dispute.

(Roberto San Jose, et. al. vs. Jose Ma. Ozamiz, G.R. No. 190590,
July 12, 2017)

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 XII
Sybil Vane is from Indonesia. She studies nursing at the University of San Jose-
Recoletos (USJ-R). She learned that the same foreign books prescribed in USJ-R
are 40-50% cheaper in Indonesia. So she ordered 50 copies of each book for
herself and her classmates and sold the books at 20% less than the price in the
Philippines. Vikas Publishing House Pvt. Ltd., the exclusive licensed publisher of
the books in the Philippines, sued Sybil Vane for copyright infringement.

Decide. (10%)

SUGGESTED ANSWER

Sybil Vane may be held liable for infringement of

copyright.

Section 180 of the Intellectual Property Code (IPC)

provides that the assignee of the copyright is entitled to all the rights
and remedies which the assignor had with respect to the copyright.

Vikas Publishing House Pvt. Ltd., the exclusive licensed

publisher, as the assignee, is entitled, within the scope of the license,
to all the rights and remedies that the licensor has with respect to the
copyright.

Moreover, the importation by Sybil Vane of 50 copies of

each foreign book prescribed in USJ-R and selling them locally at 20
less than their respective prices in the Philippines is subject to the
doctrine of fair use set out in Sec. 185.1 of the IPC. The factors to be
considered in determining whether the use made of a work is fair use
shall include:

a. The purpose and character of the use, including whether such

use is of a commercial nature or is for non-profit educational
purposes;
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in relation to
the copyrighted work as a whole;

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 d. The effect of the use upon the potential market for or value of
the copyrighted work.

Applying the above-listed factors to the problem, Sybil

Vane’s importation of the books and their sale local clearly show the
unfairness of her use of the books, particularly the adverse effect of
her price discounting on the business of Vikas Publishing House.

Thus, Sybil Vane may be held liable for infringement of

copyright.

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