GRADUATING

ANTALAN, CHARIS
1. Insurance Law (PD 612, as amended by RA 10607)
1. Mitsubishi Motors Philippines Salaried Employees Union (MMPSEU) v.
Mitsubishi Motors Philippines Corporation, G.R. No. 175773, June 17, 2013
2. Ma. Lourdes S. Florendo v. Philam Plans Inc., G.R. No. 186983, February 22,
2012
3. Malayan Insurance Co., Inc., v. Philippine First Insurance Co., Inc. and
Reputable Forwarder Services, Inc., G.R. No. 184300, July 11, 2012
4. First Lepanto-Taisho Insurance Corporation v. Chevron Philippines, Inc., G.R.
No. 177839, January 18, 2012
5. Jaime T. Gaisano v. Development Insurance and Surety Corporation, G.R. No.
190702, February 27, 2017
6. Alpha Insurance and Surety Co. v. Arsenia Sonia Castor G.R. No. 198174,
September 2, 2013
7. Oriental Assurance Corporation v. Ong, G.R. No. 189524, October 11, 2017
8. Manulife Philippines, Inc. v. Ybañez, G. R. No. 204736, November 28, 2016
9. Manila Bankers Life Insurance Corporation v. Cresencia P. Aban, G.R. No.
175666, July 29, 2013
10. Malayan Insurance Co v. Alberto, G.R. No. 194320, February 1, 2012

1.
Mitsubishi Motors Philippines Salaried Employees Union (MMPSEU)
v. Mitsubishi Motors Philippines Corporation

G.R. No. 175773, June 17, 2013

Facts:
The parties’ CBA provides for the hospitalization insurance benefits for the covered
dependents. On separate occasions, three members of MMPSEU, namely, Calida, Oabel and
Martin, filed claims for reimbursement of hospitalization expenses of their dependents. MMPC
paid only a portion of their hospitalization insurance claims, not the full amount. MMPC denied
the claims contending that double insurance would result if the said employees would receive
from the company the full amount of hospitalization expenses despite having already received
payment of portions thereof from other health insurance providers.

MMPSEU alleged that there is nothing in the CBA which prohibits an employee from obtaining
other insurance or declares that medical expenses can be reimbursed only upon presentation
of original official receipts. It stressed that the hospitalization benefits should be computed
based on the formula indicated in the CBA without deducting the benefits derived from other
insurance providers. Besides, if reduction is permitted, MMPC would be unjustly benefited from
the monthly premium contributed by the employees through salary deduction.

On the other hand, MMPC argued that the reimbursement of the entire amounts being claimed
by the covered employees, including those already paid by other insurance companies, would
constitute double indemnity or double insurance, which is circumscribed under the Insurance
Code. Moreover, a contract of insurance is a contract of indemnity and the employees cannot
be allowed to profit from their dependents’ loss.

Issue:
Whether or not recovery from both the CBA and other insurance companies is allowed under
the parties' CBA and not prohibited by law nor by jurisprudence

Ruling:
No. The conditions set forth in the CBA provision indicate an intention to limit MMPC’s liability
only to actual expenses incurred by the employees’ dependents, that is, excluding the amounts
paid by dependents’ other health insurance provider. The condition that payment should be
direct to the hospital and doctor implies that MMPC is only liable to pay medical expenses
actually shouldered by the employees’ dependents. It follows that MMPC’s liability is limited,
that is, it does not include the amounts paid by other health insurance providers. This condition
is obviously intended to thwart not only fraudulent claims but also double claims for the same
loss of the dependents of covered employees.

The contention that MMPC will unjustly profit from the premiums the employees contribute
through monthly salary deductions is unmeritorious. A claim for unjust enrichment fails when
the person who will benefit has a valid claim to such benefit. To allow reimbursement of
amounts paid under other insurance policies shall constitute double recovery which is not
sanctioned by law. Being in the nature of a non-life insurance contract and essentially a
contract of indemnity, the CBA provision obligates MMPC to indemnify the covered employees’
medical expenses incurred by their dependents but only up to the extent of the expenses
actually incurred. This is consistent with the principle of indemnity which proscribes the insured
from recovering greater than the loss.

WHEREFORE, the Petition is DENIED. The Decision dated March 31, 2006 and Resolution
dated December 5, 2006 of the Court of Appeals in CA-G.R. SP No. 75630, are AFFIRMED.
SO ORDERED.

2.
Ma. Lourdes S. Florendo
v. Philam Plans Inc.

G.R. No. 186983, February 22, 2012

Facts:
Manuel Florendo filed an application for comprehensive pension plan with respondent Philam
Plans, Inc. Manuel signed the application and left to Perla the task of supplying the information
needed in the application. Eleven months later or on September 15, 1998, Manuel died of
blood poisoning. Subsequently, Lourdes filed a claim with Philam Plans for the payment of the
benefits under her husband’s plan. Because Manuel died before his pension plan matured and
his wife was to get only the benefits of his life insurance, Philam Plans forwarded her claim to
Philam Life. On May 3, 1999 Philam Plans wrote Lourdes a letter,12 declining her claim.
Philam Life found that Manuel was on maintenance medicine for his heart and had an
implanted pacemaker. Further, he suffered from diabetes mellitus and was taking insulin.

Issues:
1. Whether or not the CA erred in finding Manuel guilty of concealing his illness when he kept
blank and did not answer questions in his pension plan application regarding the ailments
he suffered from
2. Whether or not the CA erred in holding that Manuel was bound by the failure of
respondents Perla and Ma. Celeste to declare the condition of Manuel’s health in the
pension plan application; and
3. Whether or not the CA erred in finding that Philam Plans’ approval of Manuel’s pension
plan application and acceptance of his premium payments precluded it from denying
Lourdes’ claim.

Ruling:
1. No. Since Philam Plans waived medical examination for Manuel, it had to rely largely on his
stating the truth regarding his health in his application. When Manuel signed the pension plan
application, he adopted as his own the written representations and declarations embodied in it.
It is clear from these representations that he concealed his chronic heart ailment and diabetes
from Philam Plans. Since Manuel signed the application without filling in the details regarding
his continuing treatments for heart condition and diabetes, the assumption is that he has never
been treated for the said illnesses in the last five years preceding his application.

2. No. Assuming that it was Perla who filled up the application form, Manuel is still bound by
what it contains since he certified that he authorized her action. Philam Plans had every right
to act on the faith of that certification.

3. Yes. The above incontestability clause precludes the insurer from disowning liability under
the policy it issued on the ground of concealment or misrepresentation regarding the health of
the insured after a year of its issuance. Since Manuel died on the eleventh month following the
issuance of his plan, the one year incontestability period has not yet set in. Consequently,
Philam Plans was not barred from questioning Lourdes’ entitlement to the benefits of her
husband’s pension plan.

3.
Malayan Insurance Co., Inc.,
v. Philippine First Insurance Co., Inc. and Reputable Forwarder Services, Inc.,
G.R. No. 184300, July 11, 2012

Facts:
Wyeth procured Marine Policy No. MAR 13797 (Marine Policy) from respondent Philippines
First Insurance Co., Inc. (Philippines First) to secure its interest over its own products.

The contract also required Reputable to secure an insurance policy on Wyeth’s goods. Thus,
on February 11, 1994, Reputable signed a Special Risk Insurance Policy (SR Policy) with
petitioner Malayan for the amount of P1,000,000.00.

The truck carrying Wyeth’s products was hijacked by about 10 armed men.

Philippines First, after due investigation and adjustment, and pursuant to the Marine Policy,
paid Wyeth P2,133,257.00 as indemnity. Philippines First then demanded reimbursement from
Reputable, having been subrogated to the rights of Wyeth by virtue of the payment.

Subsequently, Reputable impleaded Malayan as third-party defendant in an effort to collect the

amount covered in the SR Policy.
Issue:
1. Whether or not the RTC and CA erred in rendering "nugatory" Sections 5 and Section 12 of
the SR Policy
2. Whether or not Reputable should be held solidarily liable with Malayan for the amount of
P998,000.00 due to Philippines First.

Ruling:
1. No. To rule that Sec. 12 operates even in the absence of double insurance would work
injustice to Reputable which, despite paying premiums for a P1,000,000.00 insurance
coverage, would not be entitled to recover said amount for the simple reason that the same
property is covered by another insurance policy, a policy to which it was not a party to and
much less, from which it did not stand to benefit. Plainly, this unfair situation could not have
been the intention of both Reputable and Malayan in signing the insurance contract in
question.

Clearly, both Sections 5 and 12 presuppose the existence of a double insurance. The pivotal
question that now arises is whether there is double insurance in this case such that either
Section 5 or Section 12 of the SR Policy may be applied.

In the present case, while it is true that the Marine Policy and the SR Policy were both issued
over the same subject matter, i.e. goods belonging to Wyeth, and both covered the same peril
insured against, it is, however, beyond cavil that the said policies were issued to two different
persons or entities. It is undisputed that Wyeth is the recognized insured of Philippines First
under its Marine Policy, while Reputable is the recognized insured of Malayan under the SR
Policy.

2. No. There is solidary liability only when the obligation expressly so states, when the law so
provides or when the nature of the obligation so requires.

4.
First Lepanto-Taisho Insurance Corporation
v. Chevron Philippines, Inc.

G.R. No. 177839, January 18, 2012

Facts:
Fumitechniks, represented by Ma. Lourdes Apostol, had applied for and was issued Surety
Bond by petitioner for the amount of ₱15,700,000.00. As stated in the attached rider, the bond
was in compliance with the requirement for the grant of a credit line with the respondent "to
guarantee payment/remittance of the cost of fuel products withdrawn within the stipulated time
in accordance with the terms and conditions of the agreement." Fumitechniks defaulted on its
obligation.
The check dated December 14, 2001 it issued to respondent in the amount of ₱11,461,773.10,
when presented for payment, was dishonored for reason of "Account Closed." In a letter dated
February 6, 2002, respondent notified petitioner of Fumitechniks’ unpaid purchases in the total
amount of ₱15,084,030.30. On April 9, 2002, respondent formally demanded from petitioner
the payment of its claim under the surety bond. However, petitioner reiterated its position that
without the basic contract subject of the bond, it cannot act on respondent’s claim; petitioner
also contested the amount of Fumitechniks’ supposed obligation
Issue:
Whether or not a surety is liable to the creditor in the absence of a written contract with the
principal.
Ruling:
No. Section 175 of the Insurance Code defines a suretyship as a contract or agreement
whereby a party, called the surety, guarantees the performance by another party, called the
principal or obligor, of an obligation or undertaking in favor of a third party, called the obligee.
The extent of a surety’s liability is determined by the language of the suretyship contract or
bond itself. It cannot be extended by implication, beyond the terms of the contract.
Respondent is charged with notice of the specified form of the agreement or at least the
disclosure of basic terms and conditions of its distributorship and credit agreements with its
client Fumitechniks after its acceptance of the bond delivered by the latter. However, it never
made any effort to relay those terms and conditions of its contract with Fumitechniks upon the
commencement of its transactions with said client, which obligations are covered by the surety
bond issued by petitioner. Contrary to respondent’s assertion, there is no indication in the
records that petitioner had actual knowledge of its alleged business practice of not having
written contracts with distributors; and even assuming petitioner was aware of such practice,
the bond issued to Fumitechniks and accepted by respondent specifically referred to a "written
agreement."

5.
Jaime T. Gaisano
v. Development Insurance and Surety Corporation

G.R. No. 190702, February 27, 2017

Facts:
Respondent issued a comprehensive commercial vehicle policy to petitioner in the amount of
₱1,500,000.00 over the vehicle for a period of one year. Petitioner immediately processed the
payments and issued a Far East Bank check payable to Trans-Pacific on the same day.
However, nobody from Trans-Pacific picked up the check that day (September 27) because its
president and general manager, Rolando Herradura, was celebrating his birthday.

Trans-Pacific informed Noah's Ark that its messenger would get the check the next day,
September 28. In the evening of September 27, 1996, while under the official custody of
Noah's Ark marketing manager Achilles Pacquing (Pacquing) as a service company vehicle,
the vehicle was stolen in the vicinity of SM Megamall at Ortigas, Mandaluyong City. Oblivious
of the incident, Trans-Pacific picked up the check the next day, September 28. On October 1,
1996, Pacquing informed petitioner of the vehicle's loss.

Thereafter, petitioner reported the loss and filed a claim with respondent for the insurance
proceeds of ₱1,500,000.00. After investigation, respondent denied petitioner's claim on the
ground that there was no insurance contract.19 Petitioner, through counsel, sent a final
demand on July 7, 1997. Respondent, however, refused to pay the insurance proceeds or
return the premium paid on the vehicle.

Issue:
Whether or not there is a binding insurance contract between petitioner and respondent.

Ruling:
No. Here, there is no dispute that the check was delivered to and was accepted by
respondent's agent, Trans-Pacific, only on September 28, 1996. No payment of premium had
thus been made at the time of the loss of the vehicle on September 27, 1996. While petitioner
claims that Trans-Pacific was informed that the check was ready for pick-up on September 27,
1996, the notice of the availability of the check, by itself, does not produce the effect of
payment of the premium. Trans-Pacific could not be considered in delay in accepting the check
because when it informed petitioner that it will only be able to pick-up the check the next day,
petitioner did not protest to this, but instead allowed Trans-Pacific to do so. Thus, at the time of
loss, there was no payment of premium yet to make the insurance policy effective.

6.
Alpha Insurance and Surety Co.
v. Arsenia Sonia Castor

G.R. No. 198174, September 2, 2013

Facts:
On February 21, 2007, respondent entered into a contract of insurance with petitioner,
involving her motor vehicle. The contract of insurance obligates the petitioner to pay the
respondent the amount of Six Hundred Thirty Thousand Pesos (₱630,000.00) in case of loss
or damage to said vehicle during the period covered, which is from February 26, 2007 to
February 26, 2008. On April 16, 2007, at about 9:00 a.m., respondent instructed her driver,
Jose Joel Salazar Lanuza (Lanuza), to bring the above-described vehicle to a nearby auto-
shop for a tune-up.

However, Lanuza no longer returned the motor vehicle to respondent and despite diligent
efforts to locate the same, said efforts proved futile. In a letter dated July 5, 2007, petitioner
denied the insurance claim of respondent, stating among others, thus: Upon verification of the
documents submitted, particularly the Police Report and your Affidavit, which states that the
culprit, who stole the Insure[d] unit, is employed with you.

Issue:
Whether or not the loss of respondent’s vehicle is excluded under the insurance policy.

Ruling:
No. The insurance contract provides that "the Company shall not be liable to pay for: xxx Any
malicious damage caused by the Insured, any member of his family or by a person in the
Insured’s service" xxx In denying respondent’s claim, petitioner takes exception by arguing that
the word "damage," under paragraph 4 of "Exceptions to Section III," means loss due to injury
or harm to person, property or reputation, and should be construed to cover malicious "loss" as
in "theft."

Thus, it asserts that the loss of respondent’s vehicle as a result of it being stolen by the latter’s
driver is excluded from the policy. We do not agree. Ruling in favor of respondent, the RTC of
Quezon City scrupulously elaborated that theft perpetrated by the driver of the insured is not
an exception to the coverage from the insurance policy, since Section III thereof did not qualify
as to who would commit the theft. Adverse to petitioner’s claim, the words "loss" and "damage"
mean different things in common ordinary usage. The word "loss" refers to the act or fact of
losing, or failure to keep possession, while the word "damage" means deterioration or injury to
property.
7.
Oriental Assurance Corporation
v. Ong

G.R. No. 189524, October 11, 2017

Facts:
JEA Steel Industries, Inc. (JEA Steel) imported from South Korea 72 aluminum-zinc-alloy-
coated steel sheets in coils. Upon arrival of the vessel at the Manila South Harbor on June 10,
2002, the 72 coils were discharged and stored in Pier 9 under the custody of the arrastre
contractor, Asian Terminals, Inc. (Asian Terminals). The coils were loaded on the trucks of
Manuel Ong (Ong) and delivered to JEA Steel's plant in Barangay Lapidario, Trece Martirez.
Eleven of these coils ''were found to be in damaged condition, dented or their normal round
shape deformed." JEA Steel filed a claim with Oriental for the value of the 11 damaged coils,
pursuant to Marine Insurance Policy No. OAC/M-12292.

Oriental paid JEA Steel the sum of ₱521,530.16 and subsequently demanded indemnity from
Ong and Asian Terminals (respondents), but they refused to pay. Asian Terminals argued that
Oriental's claim was barred for the latter's failure to file a notice of claim within the 15-day
period provided in the Gate Pass and in Article VII, Section 7.01 of the Contract for Cargo
Handling Services (Management Contract) between the Philippine Ports Authority and Asian
Terminals.

Issue:
Whether or not Oriental's claim was barred for the latter's failure to file a notice of claim within
the 15-day period.

Ruling:
Yes. This Court held that the provisions of a gate pass or of an arrastre management contract
are binding on an insurer-subrogee even if the latter is not a party to it. The fact that Oriental is
not a party to the Gate Pass and the Management Contract does not mean that it cannot be
bound by their provisions. Oriental is subrogated to the rights of the consignee simply upon its
payment of the insurance claim.

As subrogee, petitioner merely stepped into the shoes of the consignee and may only exercise
those rights that the consignee may have against the wrongdoer who caused the damage. "It
can recover only the amount that is recoverable by the assured."56 And since the right of
action of the consignee is subject to a precedent condition stipulated in the Gate Pass, which
includes by reference the terms of the Management Contract, necessarily a suit by the insurer
is subject to the same precedent condition.

8.
Manulife Philippines, Inc.
v. Ybañez

G. R. No. 204736, November 28, 2016

Facts:
It is alleged in the Complaint that Insurance Policy Nos. 6066517-18 and 6300532-69 (subject
insurance policies) which Manulife issued both in favor of Dr. Gumersindo Solidum Ybañez
(insured), were void due to concealment or misrepresentation of material facts in the latter's
applications for life insurance, particularly the forms entitled Non-Medical Evidence dated
August 28, 2002 (NME), Medical Evidence Exam dated September 10, 2002 (MEE), and the
Declaration of Insurability in the Application for Life Insurance (DOI) dated July 9, 2003; that on
November 17, 2003, when one of the subject insurance policies had been in force for only one
year and three months, while the other for only four months, the insured died; that on
December 10, 2003, Hermenegilda, now widow to the said insured, filed a Claimant's
Statement-Death Claim with respect to the subject insurance policies.

Issue:
Whether or not the CA committed any reversible error in affirming the RTC Decision dismissing
Manulife's Complaint for rescission of insurance contracts for failure to prove concealment on
the part of the insured.

Ruling:
No. This Court must defer to the findings of fact of the RTC – as affirmed or confirmed by the
CA – that Manulife’s Complaint for rescission of the insurance policies in question was totally
bereft of factual and legal bases because it had utterly failed to prove that the insured had
committed the alleged misrepresentation/s or concealment/s of material facts imputed against
him.

The RTC correctly held that the CDH’s medical records that might have established the
insured’s purported misrepresentation/s or concealment/s was inadmissible for being hearsay,
given the fact that Manulife failed to present the physician or any responsible official of the
CDH who could confirm or attest to the due execution and authenticity of the alleged medical
records.

Manulife had utterly failed to prove by convincing evidence that it had been beguiled, inveigled,
or cajoled into selling the insurance to the insured who purportedly with malice and deceit
passed himself off as thoroughly sound and healthy, and thus a fit and proper applicant for life
insurance. Manulife's sole witness gave no evidence at all relative to the particulars of the
purported concealment or misrepresentation allegedly perpetrated by the insured.

In fact, Victoriano merely perfunctorily identified the documentary exhibits adduced by

Manulife; she never testified in regard to the circumstances attending the execution of these
documentary exhibits much less in regard to its contents.

9.
Manila Bankers Life Insurance Corporation
v. Cresencia P. Aban

G.R. No. 175666, July 29, 2013

Facts:
On July 3, 1993, Delia Sotero (Sotero) took out a life insurance policy from Manila Bankers Life
Insurance Corporation (Bankers Life), designating respondent Cresencia P. Aban (Aban), her
niece, as her beneficiary. Petitioner issued Insurance Policy No. 747411 (the policy), with a
face value of ₱100,000.00, in Sotero’s favor on August 30, 1993, after the requisite medical
examination and payment of the insurance premium.

On April 10, 1996, when the insurance policy had been in force for more than two years and
seven months, Sotero died. Respondent filed a claim for the insurance proceeds on July 9,
1996. Petitioner conducted an investigation into the claim, and came out with the following
findings: 1. Sotero did not personally apply for insurance coverage, as she was illiterate; 2.
Sotero was sickly since 1990; 3. Sotero did not have the financial capability to pay the
insurance premiums on Insurance Policy No. 747411; 4. Sotero did not sign the July 3, 1993
application for insurance; and 5. Respondent was the one who filed the insurance application,
and x x x designated herself as the beneficiary. For the above reasons, petitioner denied
respondent’s claim on April 16, 1997 and refunded the premiums paid on the policy.

Issue:
Whether or not the insurance contract is valid

Ruling:
Yes. The Court will not depart from the trial and appellate courts’ finding that it was Sotero who
obtained the insurance for herself, designating respondent as her beneficiary. While petitioner
insists that its independent investigation on the claim reveals that it was respondent, posing as
Sotero, who obtained the insurance, this claim is no longer feasible in the wake of the courts’
finding that it was Sotero who obtained the insurance for herself. This finding of fact binds the
Court. Section 48 serves a noble purpose, as it regulates the actions of both the insurer and
the insured.

Under the provision, an insurer is given two years – from the effectivity of a life insurance
contract and while the insured is alive – to discover or prove that the policy is void ab initio or is
rescindible by reason of the fraudulent concealment or misrepresentation of the insured or his
agent. After the two-year period lapses, or when the insured dies within the period, the insurer
must make good on the policy, even though the policy was obtained by fraud, concealment, or
misrepresentation.

This is not to say that insurance fraud must be rewarded, but that insurers who recklessly and
indiscriminately solicit and obtain business must be penalized, for such recklessness and lack
of discrimination ultimately work to the detriment of bona fide takers of insurance and the
public in general. Section 48 regulates both the actions of the insurers and prospective takers
of life insurance. It gives insurers enough time to inquire whether the policy was obtained by
fraud, concealment, or misrepresentation; on the other hand, it forewarns scheming individuals
that their attempts at insurance fraud would be timely uncovered – thus deterring them from
venturing into such nefarious enterprise.

At the same time, legitimate policy holders are absolutely protected from unwarranted denial of
their claims or delay in the collection of insurance proceeds occasioned by allegations of fraud,
concealment, or misrepresentation by insurers, claims which may no longer be set up after the
two-year period expires as ordained under the law.

10.
Malayan Insurance Co
v. Alberto

G.R. No. 194320, February 1, 2012

Facts:
Malayan Insurance issued Car Insurance Policy No. PV-025-00220 in favor of First Malayan
Leasing and Finance Corporation (the assured), insuring a Mitsubishi Galant against third
party liability, own damage and theft, among others. Having insured the vehicle against such
risks, Malayan paid the damages sustained due to a vehicular accident by the assured
amounting to PhP 700,000. Maintaining that it has been subrogated to the rights and interests
of the assured by operation of law upon its payment to the latter, Malayan Insurance sent
several demand letters to respondents Rodelio Alberto (Alberto) and Enrico Alberto Reyes
(Reyes), the registered owner and the driver, respectively, of the Fuzo Cargo Truck, requiring
them to pay the amount it had paid to the assured.

When respondents refused to settle their liability, Malayan Insurance was constrained to file a
complaint for damages for gross negligence against respondents.

Issue:
Whether or not Malayan Insurance must be subrogated to the rights of the assured

Ruling:
Yes. It is not disputed that the insurance company, indeed, paid PhP 700,000 to the assured,
then there is a valid subrogation in the case at bar. As explained in Keppel Cebu Shipyard, Inc.
v. Pioneer Insurance and Surety Corporation: Subrogation is the substitution of one person by
another with reference to a lawful claim or right, so that he who is substituted succeeds to the
rights of the other in relation to a debt or claim, including its remedies or securities.

The principle covers a situation wherein an insurer has paid a loss under an insurance policy is
entitled to all the rights and remedies belonging to the insured against a third party with respect
to any loss covered by the policy. It contemplates full substitution such that it places the party
subrogated in the shoes of the creditor, and he may use all means that the creditor could
employ to enforce payment. We have held that payment by the insurer to the insured operates
as an equitable assignment to the insurer of all the remedies that the insured may have
against the third party whose negligence or wrongful act caused the loss. The right of
subrogation is not dependent upon, nor does it grow out of, any privity of contract. It accrues
simply upon payment by the insurance company of the insurance claim.

The doctrine of subrogation has its roots in equity. It is designed to promote and to accomplish
justice; and is the mode that equity adopts to compel the ultimate payment of a debt by one
who, in justice, equity, and good conscience, ought to pay.

2. Transportation Law
1. Spouses Teodoro and Nanette Perena v. Spouses Teresita Philippine Nicolas
and L. Zarate, National Railways and the Court of Appeals, G.R. 157917,
August 29, 2012
2. Keihin-Everett Forwarding Co., Inc. v. Tokio Marine Malayan Insurance Co., Inc.
and Sunfreight Forwarders and Customs Brokerage, Inc., G.R. No. 212107,
October 28, 2019
3. Cacho v. Manahan, G.R. No. 203081, January 17, 2018
4. Alfredo Manay Jr. v. Cebu Air, Inc., G.R. No. 210621, April 04, 2016
5. Alfredo Ramons v. China Southern Airlines Co. Ltd., G.R. No. 213418,
September 21, 2016
6. Jose Sanico and Vicente Castro v. Werherlina P. Colipano, G.R. No. 209969,
September 27, 2017
7. Nedlloyd Lijnen B.V. Rotterdam and the East Asiatic Co., LTD. v. Glow Laks
Enterprises, LTD., G.R. No. 156330, November 19, 2014
 8. Mariano C. Mendoza and Elvira Lim v. Spouses Leonora J. Gomez and Gabriel
V. Gomez, G.R. No. 160110, June 18, 2014
9. Pioneer insurance and Surety Corporation v. APL Co., Pte. Ltd., G.R. No.
226345, August 2, 2017
10. Rebultan v. Spouses Daganta, G.R. No. 197908, July 4, 2018
11. Land Transportation Franchising and Regulatory Board v. Valenzuela, G.R. No.
242860, March 11, 2019

1.
Spouses Teodoro and Nanette Perena
v. Spouses Teresita Philippine Nicolas and L. Zarate, National Railways and the Court of
Appeals
G.R. 157917, August 29, 2012

Facts:
The Pereñas were engaged in the business of transporting students from their respective
residences in Parañaque City to Don Bosco in Pasong Tamo, Makati City, and back. In June
1996, the Zarates contracted the Pereñas to transport Aaron to and from Don Bosco.

At about the time the van was to traverse the railroad crossing, a train, operated by Alano, was
in the vicinity of the Magallanes Interchange travelling northbound. As the train neared the
railroad crossing, Alfaro (driver of the van owned by the Pereñas) drove the van eastward
across the railroad tracks, closely tailing a large passenger bus.

The train hit the rear end of the van, and the impact threw nine of the 12 students in the rear,
including Aaron, out of the van. Aaron landed in the path of the train, which dragged his body
and severed his head, instantaneously killing him.

The Zarates’ claim against the Pereñas was upon breach of the contract of carriage for the
safe transport of Aaron. The Pereñas’ defense was that they exercised the diligence of a good
father of the family in the selection and supervision of Alfaro, the van driver.

Issue:
Whether or not the Pereñas are liable as common carriers in this case.

Ruling:
Yes. The Pereñas operated as a common carrier; and that their standard of care was
extraordinary diligence, not the ordinary diligence of a good father of a family.

Although in this jurisdiction the operator of a school bus service has been usually regarded as
a private carrier, primarily because he only caters to some individuals, and his operation is
neither open to the indefinite public nor for public use, the exact nature of the operation of a
school bus service has not been finally settled. This is the occasion to lay the matter to rest.

As all the foregoing indicate, the true test for a common carrier is not the quantity or extent of
the business actually transacted, or the number and character of the conveyances used in the
activity, but whether the undertaking is a part of the activity engaged in by the carrier that he
has held out to the general public as his business or occupation.

Despite catering to a limited clientèle, the Pereñas operated as a common carrier because
they held themselves out as a ready transportation indiscriminately to the students of a
particular school living within or near where they operated the service and for a fee.

The Pereñas, acting as a common carrier, were already presumed to be negligent at the time
of the accident because death had occurred to their passenger.

The driver was entirely negligent when he traversed the railroad tracks at a point not allowed
for a motorist’s crossing and when he disregarded the foresight of harm to his passengers by
overtaking the bus on the left side as to leave himself blind to the approach of the oncoming
train.

WHEREFORE, we DENY the petition for review on certiorari; AFFIRM the decision
promulgated on November 13, 2002; and ORDER the petitioners to pay the costs of suit.

SO ORDERED.

2.
Keihin-Everett Forwarding Co., Inc.
v. Tokio Marine Malayan Insurance Co., Inc. and Sunfreight Forwarders and Customs
Brokerage, Inc.,

G.R. No. 212107, October 28, 2019

Ruling:
In 2005, Honda Trading ordered 80 bundles of Aluminum Alloy Ingots from PT Molten. PT
Molten loaded the goods in two container vans which were, in turn, received in Jakarta,
Indonesia by Nippon Express Co., Ltd. for shipment to Manila.

Honda Trading also engaged the services of petitioner Keihin-Everett to clear and withdraw the
cargo from the pier and to transport and deliver the same to its warehouse.

Meanwhile, petitioner Keihin-Everett had an Accreditation Agreement with respondent

Sunfreight Forwarders whereby the latter undertook to render common carrier services for the
former and to transport inland goods within the Philippines.

On November 8, 2005, the shipment was caused to be released from the pier by petitioner
Keihin-Everett and turned over to respondent Sunfreight Forwarders for delivery to Honda
Trading.

En route to the latter's warehouse, the truck carrying the containers was hijacked. As a
consequence, Honda Trading suffered losses in the total amount of P2,121,917.04,
representing the value of the lost 40 bundles of Aluminum Alloy Ingots.

Claiming to have paid Honda Trading's insurance claim for the loss it suffered, respondent
Tokio Marine commenced the instant suit on October 10, 2006 with the filing of its complaint
for damages against petitioner Keihin-Everett. Respondent Tokio Marine maintained that it had
been subrogated to all the rights and causes of action pertaining to Honda Trading.

Served with summons, petitioner Keihin-Everett denied liability for the lost shipment on the
ground that the loss thereof occurred while the same was in the possession of respondent
Sunfreight Forwarders.
Issue:
Whether or not petitioner Keihin-Everett is liable to respondent Tokio Marine.

Ruling:
Yes. Keihin-Everett's arguments will be resolved in seriatim.

1. Keihin-Everett insisted that Tokio Marine is not the insurer but TMNFIC, hence, it argued
that Tokio Marine has no right to institute the present action. As it pointed out, the Insurance
Policy shows in its face that Honda Trading procured the insurance from TMNFIC and not from
Tokio Marine.

While this assertion is true, Insurance Policy No. 83-00143689 itself expressly made Tokio
Marine as the party liable to pay the insurance claim of Honda Trading pursuant to the Agency
Agreement entered into by and between Tokio Marine and TMNFIC.

2. Since the insurance claim for the loss sustained by the insured shipment was paid by Tokio
Marine as proven by the Subrogation Receipt – showing the amount paid and the acceptance
made by Honda Trading, it is inevitable that it is entitled, as a matter of course, to exercise its
legal right to subrogation as provided under Article 2207.

It must be stressed that the Subrogation Receipt only proves the fact of payment. This fact of
payment grants Tokio Marine subrogatory right which enables it to exercise legal remedies that
would otherwise be available to Honda Trading as owner of the hijacked cargoes as against
the common carrier (Keihin-Everett). In other words, the right of subrogation accrues simply
upon payment by the insurance company of the insurance claim.

3. Keihin-Everett maintained that at the time when the cargoes were lost, it was already in the
custody of Sunfreight Forwarders. Notwithstanding that the cargoes were in the possession of
Sunfreight Forwarders when they were hijacked, Keihin-Everett is not absolved from its liability
as a common carrier. Keihin-Everett seems to have overlooked that it was the one whose
services were engaged by Honda Trading to clear and withdraw the cargoes from the pier and
to transport and deliver the same to its warehouse.

In turn, Keihin-Everett accredited Sunfreight Forwarders to render common carrier service for it
by transporting inland goods. As correctly held by the CA, there was no privity of contract
between Honda Trading (to whose rights Tokio Marine was subrogated) and Sunfreight
Forwarders. Hence, Keihin-Everett, as the common carrier, remained responsible to Honda
Trading for the lost cargoes.

Lastly, it bears to stress that the hijacking of the goods is not considered a fortuitous event or a
force majeure. Nevertheless, a common carrier may absolve itself of liability for a resulting loss
caused by robbery or hijacked if it is proven that the robbery or hijacking was attended by
grave or irresistible threat, violence or force. In this case, Keihin-Everett failed to prove the
existence of the aforementioned instances.

3.
Cacho
v. Manahan

G.R. No. 203081, January 17, 2018

Facts:
On 30 June 1999 a vehicular accident occurred along the national highway at Pogo, Alaminos,
Pangasinan, near the Embarcadero Bridge. At around 5:00 A.M. on the said date, Cacho was
driving a Nissan Sentra with Plate No. UAM 778 from Alaminos, Pangasinan to Bani,
Pangasinan, when it collided with a Dagupan Bus, with Plate No. AVD 548, traversing on the
opposite lane. The car had already crossed the bridge when it collided with the bus which was
just about to enter the bridge.

The collision caused heavy damage to the front of the bus, the total wreckage of the Nissan
Sentra, Cacho's instant death, and multiple injuries to three (3) passengers inside the car. The
complaint alleged that Cacho's car was hit by the bus because the latter swerved to the left
lane as it tried to avoid a pile of boulders placed on the shoulder of the road.

These boulders were negligently placed by De Vera Construction contracted by the local
government to do some work on the Embarcadero Bridge. Dagupan Bus, the owner and
operator of the bus, and Manahan, the bus driver, jointly filed their answer with counterclaim
and cross-claims.

They claimed that it was Cacho who drove fast coming from the bridge and bumped into the
bus that was on full stop; and that Cacho had to swerve to the left because there were
boulders of rocks scattered on his lane. In their cross-claims, Dagupan Bus and Manahan
argued that the proximate cause of the accident was because of De Vera Construction's
negligence for leaving the boulders of rocks on both shoulders of the national highway.

Issue:
Whether or not Dagupan Bus is liable

Ruling:
Yes. We agree with the trial court that his testimony duly established the fact that Manahan
was driving the bus at a high speed before they entered the bridge. This unbiased piece of
evidence alone supports the RTC's conclusion that there was negligence on the part of
Manahan.

Absent any showing that the calibration of the credibility of the witness was flawed, we are
bound by this assessment. We simply cannot adopt the CA's position that the bus was on full
stop upon entering the bridge as this is based on speculation and contrary to evidence. Borne
by the record, the impact of the collision resulted in the car being thrown about ninety (90)
degrees counter-clockwise to the opposite lane before resting perpendicular to the road. The
resulting position of the vehicle after the collision is incompatible with the conclusion that the
bus was at full stop. Negligence on the part of Manahan was also established by the
photographs showing that he occupied Cacho's lane.

Moreover, we can also say that Manahan was legally presumed negligent under Article 2185
of the Civil Code, which provides: "unless there is proof to the contrary, it is presumed that a
person driving a motor vehicle has been negligent if at the time of the mishap, he was [in
violation of] any traffic regulation." Based on the place and time of the accident, Manahan was
actually violating a traffic rule found in R.A. No. 4136, otherwise known as the Land
Transportation and Traffic Code.

4.
Alfredo Manay Jr.
v. Cebu Air, Inc.

G.R. No. 210621, April 04, 2016

Facts:
On June 13, 2008, Carlos S. Jose (Jose) purchased 20 Cebu Pacific round-trip tickets from
Manila to Palawan for himself and on behalf of his relatives and friends.

Jose alleged that he specified to "Alou," the Cebu Pacific ticketing agent, that his preferred
date and time of departure from Manila to Palawan should be on July 20, 2008 at 0820 and
that his preferred date and time for their flight back to Manila should be on July 22, 2008 at
1615.

On the afternoon of July 22, 2008, the group proceeded to the airport for their flight back to
Manila. During the processing of their boarding passes, they were informed by Cebu Pacific
personnel that nine (9) of them could not be admitted because their tickets were for the 1005
flight earlier that day.

They were left with no other option but to rebook their tickets. They then learned that their
return tickets had been purchased as part of the promo sales of the airline, and the cost to
rebook the flight would be P7,000.00 more expensive than the promo tickets. The sum of the
new tickets amounted to P65,000.00.

Eventually, they pooled enough cash to be able to buy tickets for five (5) of their companions.
The other four (4) were left behind in Palawan and had to spend the night at an inn, incurring
additional expenses.

Cebu Pacific stated that according to its records, Jose was given a full recap and was made
aware of the flight restriction of promo tickets,"which included [the] promo fare being non-
refundable." Cebu Pacific essentially denied all the allegations in the Complaint and insisted
that Jose was given a full recap of the tickets. It also argued that Jose had possession of the
tickets 37 days before the scheduled flight; hence, he had sufficient time and opportunity to
check the flight information and itinerary.

Issue:
Whether or not CebuPac is liable in this case

Ruling:
No. Ticketing, as the act of issuing the contract of carriage, is necessarily included in the
exercise of extraordinary diligence. Once a plane ticket is issued, the common carrier binds
itself to deliver the passenger safely on the date and time stated in the ticket.

In this case, both parties stipulated that the flight schedule stated on the nine (9) disputed
tickets was the 10:05 a.m. flight of July 22, 2008. According to the contract of carriage,
respondent's obligation as a common carrier was to transport nine (9) of the petitioners safely
on the 10:05 a.m. flight of July 22, 2008.

Petitioners, however, argue that respondent was negligent in the issuance of the contract of
carriage since the contract did not embody their intention. They insist that the nine (9) disputed
tickets should have been scheduled for the 4:15 p.m. flight of July 22, 2008.
The only evidence petitioners have in order to prove their true intent of having the entire group
on the 4:15 p.m. flight is petitioner Jose's self-serving testimony that the airline failed to recap
the last page of the tickets to him. They have neither shown nor introduced any other evidence
before the Metropolitan Trial Court, Regional Trial Court, Court of Appeals, or this Court.

Even assuming that the ticketing agent encoded the incorrect flight information, it is incumbent
upon the purchaser of the tickets to at least check if all the information is correct before making
the purchase. Once the ticket is paid for and printed, the purchaser is presumed to have
agreed to all its terms and conditions.

Petitioners' flight information was not written in fine print. It was clearly stated on the left portion
of the ticket above the passengers' names. If petitioners had exercised even the slightest bit of
prudence, they would have been able to remedy any erroneous booking.

This is not the first time that this Court has explained that an air passenger has the correlative
duty to exercise ordinary care in the conduct of his or her affairs.

5.
Alfredo Ramons
v. China Southern Airlines Co. Ltd.,

G.R. No. 213418, September 21, 2016

Facts:
On 7 August 2003, petitioners purchased five China Southern Airlines roundtrip plane tickets
from Active Travel Agency for $985.00. It is provided in their itineraries that petitioners will be
leaving Manila on 8 August 2003 at 0900H and will be leaving Xiamen on 12 August 2003 at
1920H. On their way back to the Manila, however, petitioners were prevented from taking their
designated flight despite the fact that earlier that day an agent from Active Tours informed
them that their bookings for China Southern Airlines 1920H flight are confirmed.

The refusal came after petitioners already checked in all their baggages and were given the
corresponding claim stubs and after they had paid the terminal fees. According to the airlines'
agent with whom they spoke at the airport, petitioners were merely chance passengers but
they may be allowed to join the flight if they are willing to pay an additional 500 Renminbi
(RMB) per person. When petitioners refused to defray the additional cost, their baggages were
offloaded from the plane and China Southern Airlines 1920H flight then left Xiamen
International Airport without them. Because they have business commitments waiting for them
in Manila, petitioners were constrained to rent a car that took them to Chuan Chio Station
where they boarded the train to Hongkong. Upon reaching Hong Kong, petitioners purchased
new plane tickets from Philippine Airlines (PAL) that flew them back to Manila.

Issue:
Whether or not China Southern Airlines is liable in this case

Ruling:
Yes. When an airline issues a ticket to a passenger confirmed on a particular flight, on a
certain date, a contract of carriage arises, and the passenger has every right to expect that he
would fly on that flight and on that date. In an action based on a breach of contract of carriage,
the aggrieved party does not have to prove that the common carrier was at fault or was
negligent. All he has to prove is the existence of the contract and the fact of its non-
performance by the carrier, through the latter's failure to carry the passenger to its destination.
The airlines' claim that petitioners do not have confirmed reservations cannot be given
credence by the Court. The petitioners were issued two-way tickets with itineraries indicating
the date and time of their return flight to Manila.

These are binding contracts of carriage. China Southern Airlines allowed petitioners to check
in their luggage and issued the necessary claim stubs showing that they were part of the flight.
It was only after petitioners went through all the required check-in procedures that they were
informed by the airlines that they were merely chance passengers. We find that the airline
company acted in bad faith in insolently bumping petitioners off the flight after they have
completed all the pre-departure routine.

6.
Jose Sanico and Vicente Castro
v. Werherlina P. Colipano,

G.R. No. 209969, September 27, 2017

Facts:
Colipano claimed that at 4:00 P.M. more or less of December 25, 1993, Christmas Day, she
and her daughter were; paying passengers in the jeepney operated by Sanico, which was
driven by Castro. Colipano claimed she was made to sit on an empty beer case at the edge of
the rear entrance/exit of the jeepney with her sleeping child on her lap. And, at an uphill incline
in the road to Natimao-an, Carmen, Cebu, the jeepney slid backwards because it did not have
the power to reach the top. Colipano pushed both her feet against the step board to prevent
herself and her child from being thrown out of the exit, but because the step board was wet,
her left foot slipped and got crushed between the step board and a coconut tree which the
jeepney bumped, causing the jeepney to stop its backward movement.

Colipano's leg was badly injured and was eventually amputated. In their answer, Sanico and
Castro admitted that Colipano's leg was crushed and amputated but claimed that it was
Colipano's fault that her leg was crushed. They admitted that the jeepney slid backwards
because the jeepney lost power. The conductor then instructed everyone not to panic but
Colipano tried to disembark and her foot got caught in between the step board and the coconut
tree. Sanico claimed that he paid for all the hospital and medical expenses of Colipano, and
that Colipano eventually freely and voluntarily executed an Affidavit of Desistance and Release
of Claim.

Issue:
Whether or not Sanico and Castro breached the contract of carriage with Colipano.

Ruling:
Only Sanico breached the contract of carriage. Here, it is beyond dispute that Colipano was
injured while she was a passenger in the jeepney owned and operated by Sanico that was
being driven by Castro. Both the CA and RTC found Sanico and Castro jointly and severally
liable. This, however, is erroneous because only Sanico was the party to the contract of
carriage with Colipano.

In case of death of or injury to their passengers, Article 1756 of the Civil Code provides that
common carriers are presumed to have been at fault or negligent, and this presumption can be
overcome only by proof of the extraordinary diligence exercised to ensure the safety of the
passengers. Being an operator and owner of a common carrier, Sanico was required to
observe extraordinary diligence in safely transporting Colipano.

When Colipano's leg was injured while she was a passenger in Sanico's jeepney, the
presumption of fault or negligence on Sanico's part arose and he had the burden to prove that
he exercised the extraordinary diligence required of him. He failed to do this.

The CA also correctly held that the defense of engine failure, instead of exonerating Sanico,
only aggravated his already precarious position. The engine failure "hinted lack of regular
check and maintenance to ensure that the engine is at its best, considering that the jeepney
regularly passes through a mountainous area." Sanico's attempt to evade liability by arguing
that he exercised extraordinary diligence when he hired; Castro, who was allegedly an
experienced and time-tested driver, whom he had even accompanied on a test-drive and in
whom he was personally convinced of the driving skills, are not enough to exonerate him from
liability - because the liability of common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and supervision of their
employees.

7.
Nedlloyd Lijnen B.V. Rotterdam and the East Asiatic Co., LTD.
v. Glow Laks Enterprises, LTD.,

G.R. No. 156330, November 19, 2014

Facts:
On or about 14 September 1987, respondent loaded on board M/S Scandutch at the Port of
Manila a total 343 cartoons of garments, complete and in good order for pre-carriage to the
Port of Hong Kong. By an unfortunate turn ofevents, however, unauthorized persons managed
to forge the covering bills of lading and on the basis of the falsified documents, the ports
authority released the goods.

On 16 July 1988, respondent filed a formal claim with Nedlloyd for the recovery of the amount
of US$53,640.00 representing the invoice value of the shipment but to no avail. In disclaiming
liability for the misdelivery of the shipments, petitioners asserted in their Answer that they were
never remiss in their obligation as a common carrier and the goods were discharged in good
order and condition into the custody of the National Ports Authority of Panama in accordance
with the Panamanian law.

They averred that they cannot be faulted for the release of the goods to unauthorized persons,
their extraordinary responsibility as a common carrier having ceased at the time the
possession of the goods were turned over to the possession of the port authorities.

Issue:
Whether or not petitioners are liable in this case

Ruling:
Yes. Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility
of the common carrier begins from the time the goods are delivered to the carrier. This
responsibility remains in full force and effect even when they are temporarily unloaded or
stored in transit, unless the shipper or owner exercises the right of stop page in transitu, and
terminates only after the lapse of a reasonable time for the acceptance, of the goods by the
consignee or such other person entitled to receive them. In this case, there is no dispute that
the custody of the goods was never turned over to the consignee or his agents but was lost
into the hands of unauthorized persons who secured possession thereof on the strength of
falsified documents. The loss or the misdelivery of the goods in the instant case gave rise to
the presumption that the common carrier is at fault or negligent.

8.
Mariano C. Mendoza and Elvira Lim
v. Spouses Leonora J. Gomez and Gabriel V. Gomez,

G.R. No. 160110, June 18, 2014

Facts:
On 7 March 1997, an Isuzu Elf truck, owned by respondent Leonora (Leonora) and driven by
Perez, was hit by a Mayamy Transportation bus. At around 5:30 a.m., the Isuzu truck, coming
from Katipunan Road and heading towards E. Rodriguez, Sr. Avenue, was travelling along the
downward portion of Boni Serrano Avenue when, upon reaching the corner of Riviera Street,
fronting St. Ignatius Village, its left front portion was hit by the Mayamy bus. According to PO1
Rosales, the Mayamy bus, while traversing the opposite lane, intruded on the lane occupied by
the Isuzu truck.

For their part, petitioners capitalized on the issue of ownership of the bus in question.
Respondents argued that although the registered owner was Lim, the actual owner of the bus
was SPO1 Cirilo Enriquez (Enriquez), who had the bus attached with Mayamy Transportation
Company (Mayamy Transport) under the so-called "kabit system."

Issue:
Whether or not Lim, as the registered owner of the bus, or Enriquez as the actual owner, is
liable

Ruling:
Yes. Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business of industry. The first question to address, then, is whether or not
Mendoza’s negligence was duly proven. As found by the RTC, and affirmed by the CA,
Mendoza, the driver, was negligent in driving the subject Mayamy bus, as demonstrated by the
fact that, at the time of the collision, the bus intruded on the lane intended for the Isuzu truck.

Having encroached on the opposite lane, Mendoza was clearly in violation of traffic laws. In the
case at bar, who is deemed as Mendoza’s employer? Is it Enriquez, the actual owner of the
bus or Lim, the registered owner of the bus? We held that the registered owner is deemed the
employer of the negligent driver, and is thus vicariously liable under Article 2176, in relation to
Article 2180, of the Civil Code.

Citing Equitable Leasing Corporation v. Suyom, the Court ruled that in so far as third persons
are concerned, the registered owner of the motor vehicle is the employer of the negligent
driver, and the actual employer is considered merely as an agent of such owner. Thus,
whether there is an employer-employee relationship between the registered owner and the
driver is irrelevant in determining the liability of the registered owner who the law holds
primarily and directly responsible for any accident, injury or death caused by the operation of
the vehicle in the streets and highways.

9.
Pioneer insurance and Surety Corporation
v. APL Co., Pte. Ltd.,

G.R. No. 226345, August 2, 2017

Facts:
On January 13, 2012, the shipper, Chillies Export House Limited, turned over to respondent
APL Co. Pte. Ltd. (APL) 250 bags of chili pepper for transport from the port of Chennai, India,
to Manila. In turn, BSFIL Technologies, Inc. (BSFIL), as consignee, insured the cargo with
petitioner Pioneer Insurance and Surety Corporation (Pioneer Insurance).

On February 2, 2012, the shipment arrived at the port of Manila and was temporarily stored at
North Harbor, Manila. On February 6, 2012, the bags of chili were withdrawn and delivered to
BSFIL. Upon receipt thereof, it discovered that 76 bags were wet and heavily infested with
molds. The shipment was declared unfit for human consumption and was eventually declared
as a total loss. Having been subrogated to all the rights and cause of action of BSFIL, Pioneer
Insurance sought payment from APL, but the latter refused.

Issue:
Whether or not the one year prescriptive period under COGSA is applicable in this case

Ruling:
Yes. Pioneer Insurance insists the action, which was filed on February 1, 2013, was within the
one year prescriptive period under the COGSA after BSFIL received the goods on February 6,
2012. It argues that the nine-month period provided under the Bill of Lading was inapplicable
because the Bill of Lading itself states that in the event that such time period is found to be
contrary to any law compulsorily applicable, then the period prescribed by such law shall then
apply. After a closer persual of the the Bill of Lading, the Court finds that its provisions are
clear and unequivocal leaving no room for interpretation.

In the Bill of Lading, it was categorically stated that the carrier shall in any event be discharged
from all liability whatsoever in respect of the goods, unless suit is brought in the proper forum
within nine (9) months after delivery of the goods or the date when they should have been
delivered. The same, however, is qualified in that when the said nine-month period is contrary
to any law compulsory applicable, the period prescribed by the said law shall apply. The
present case involves lost or damaged cargo. It has long been settled that in case of loss or
damage of cargoes, the one-year prescriptive period under the COOSA applies.

10.

Rebultan
v. Spouses Daganta,

G.R. No. 197908, July 4, 2018

Facts:
On May 3, 1999, at about 6:30 in the morning, along the National Highway in Barangay
Mabanglit, Cabangan, Zambales, Cecilio Rebultan, Sr. (Rebultan, Sr.) and his driver, Jaime
Lomotos (Lomotos), were on board a Kia Ceres, on their way to report for work in the
Department of Environment and Natural Resources (DENR) in Masinloc, Zambales when they
figured in a vehicular accident with an Isuzu-powered passenger jeepney driven by Willie
Viloria (Viloria). The powerful impact resulted in serious physical injuries to Rebultan, Sr. and
Lomotos, as well as physical damage to both vehicles. Rebultan, Sr., who was 60 years old at
that time, later died from his injuries.

Issue:
Whether or not Viloria was negligent in driving the jeepney at the time of the collision.

Ruling:
Both drivers are liable. It is apparent that it is the Kia Ceres which had the right of way. The
jeepney driver making a turn on the left had the duty of yielding to the vehicle on his right, the
approaching Kia Ceres driven by Lomotos. Similarly with Vehicle A in Caminos, Jr., the
jeepney does not have the right of way. Nevertheless, we still find Lomotos negligent. Similar
to Caminos, Jr., records show that Lomotos drove the Kia Ceres at an unlawful speed. Traffic
Accident Report No. 99002 supports that Lomotos was guilty of "overspeeding," and his error
is listed as driving "too fast."

This was corroborated by respondents' witness, Ronald Vivero, who relayed that the Kia Ceres
was approaching fast and that it made a loud screech due to its break which indicated the high
speed at which it approached the intersection. Thus, we affirm the CA's conclusion that
Lomotos was negligent at the time of the collision. We find, however, that Viloria's negligence
contributed to the accident. Records support the claim that Viloria, while driving the jeepney,
was also committing a traffic violation.

As found by the RTC, Viloria's admission that he did not look to his right and continuously
drove, despite being required by law to give way, confirms that he is negligent in making a
turn. The concurring negligence of Lomotos, as the driver of the Kia Ceres wherein Rebultan,
Sr. was the passenger, does not foreclose the latter's heirs from recovering damages from
Viloria. As early as 1933, in Junio v. Manila Railroad Co., we already clarified that the
contributory negligence of drivers does not bar the passengers or their heirs from recovering
damages from those who were at fault.

11.
Land Transportation Franchising and Regulatory Board
v. Valenzuela,

G.R. No. 242860, March 11, 2019

Facts:
On May 8, 2015, the Department of Transportation and Communications (DOTC), the
predecessor of DOTr, issued Department Order No. (DO) 2015-11, amending DO 97-1097,
which set the standard classifications for public transport conveyances to be used as basis for
the issuance of a Certificate of Public Convenience (CPC) for public utility vehicles (PUVs). In
recognition of technological innovations which allowed for the proliferation of new ways of
delivering and offering public transportation, the DOTC, through DO 2015-11, created two (2)
new classifications, namely, Transportation Network Companies (TNC) and Transportation
Network Vehicle Service (TNVS). In its issuances, the LTFRB declared that a TNC is treated
as a transport provider. whose accountability commences from the acceptance by its TNVS
while online. On the other hand, the accountability of the TNVS, as a common carrier, attaches
from the time the TNVS is online and offers its services to the riding public.

Meanwhile, on May 26, 2016, DBDOYC registered its business with the Securities and
Exchange Commission (SEC), and subsequently, in December 2016, launched "Angkas".
Cognizant of the foregoing, the LTFRB issued a press release on January 27, 2017 informing
the riding public that DBDOYC, which is considered as a TNC, cannot legally operate.
DBDOYC posits that its accredited bikers are private carriers as they do not hold out their
services generally to the public because they cannot just be hailed on the street as they only
contract via the Angkas online front.

Issue:
Whether or not Angkas is a public transportation provider

Ruling:
Yes. As the Court observes, the genius behind the Angkas app is that it removes the
inconvenience of having to physically hail for public transportation by creating a virtual system
wherein practically the same activity may now be done at the tip of one's fingers. The fact that
its drivers are not physically hailed on the street does not automatically render Angkas-
accredited drivers as private carriers. When they put themselves online, their services are
bound for indiscriminate public consumption.

Moreover, based on the way the app works, it appears that there is really no contractual
discretion between the Angkas bikers and would-be passengers because the app
automatically pairs them up based on algorithmic procedures. Whether or not the parties once
paired with each other have the choice to freely accept, reject, or modify the terms of their
engagement based solely on their discretion is a matter which appears to have not yet been
traversed in the proceedings below. Verily, the absence of any true choice on these material
contractual points apparently contradicts the postulation that the Angkas app merely facilitates
a purely private arrangement between the biker and his passenger.

3. Revised Corporation Law (RA 11232)

1. Commissioner of Customs v. Oilink International Corporation, G.R. No. 161759,
July 2, 2014
2. Teng v. SEC, GR No. 184332, Feb 17, 2016
3. Mervic Realty Inc v. China Banking Corporation, G.R. No. 193748, February 3
2016
4. Guy v. Guy, G.R. No. 184068, April 19, 2016
5. Wilson Gamboa v. Finance Secretary Margarito Teves, et. al., G.R. No. 176579,
October 9, 2012
6. Zuellig Freight and Cargo Systems v. NLRC, et al., G.R. No. 157900, July 22,
2013
7. Hacienda Cataywa/Manuel Villanueva, et al. v. Rosario Lorezo, G.R. No.
179640, March 18, 2015
8. UCPB v. Planters Products, Inc., et al., G.R. No. 179015, June 13, 2012
9. Funa v. Manila Economic and Cultural Office and COA, G.R. No. 193462,
February 4, 201
 10. Palm Avenue Holding Co. Inc v. Sandiganbayan, G.R. No. 173082, August 6,
2014

1.
Commissioner of Customs
v. Oilink International Corporation,

G.R. No. 161759, July 2, 2014

Facts:
On January 11, 1996, Oilink was incorporated for the primary purpose of manufacturing,
importing, exporting, buying, selling or dealing in oil and gas, and their refinements and by-
products at wholesale and retail of petroleum. URC and Oilink had interlocking directors when
Oilink started its business. On March 4, 1998, Oscar Brillo, the District Collector of the Port of
Manila, formally demanded that URC pay the taxes and duties on its oil imports that had
arrived.

On July 2, 1999, Commissioner Tan made a final demand for the total liability of
₱138,060,200.49 upon URC and Oilink. Also on July 8, 1999, Oilink formally protested the
assessment on the ground that it was not the party liable for the assessed deficiency taxes.

Issue:
Whether or not the Commissioner of Customs could lawfully pierce the veil of corporate fiction
in order to treat Oilink as the mere alter ego of URC

Ruling:
No. There was no ground to pierce the veil of corporate existence. A corporation, upon coming
into existence, is invested by law with a personality separate and distinct from those of the
persons composing it as well as from any other legal entity to which it may be related.

Indeed, the doctrine of piercing the corporate veil has no application here because the
Commissioner of Customs did not establish that Oilink had been set up to avoid the payment
of taxes or duties, or for purposes that would defeat public convenience, justify wrong, protect
fraud, defend crime, confuse legitimate legal or judicial issues, perpetrate deception or
otherwise circumvent the law. It is also noteworthy that from the outset the Commissioner of
Customs sought to collect the deficiency taxes and duties from URC, and that it was only on
July 2, 1999 when the Commissioner of Customs sent the demand letter to both URC and
Oilink.

That was revealing, because the failure of the Commissioner of Customs to pursue the
remedies against Oilink from the outset manifested that its belated pursuit of Oilink was only
an afterthought.

2.
Teng
v. Securities and Exchange Commission

GR No. 184332, Feb 17, 2016

Facts:
Respondent Ting Ping purchased multiple shares of different stockholders of TCL.

Upon Teng Ching's death in 1989, his son Henry Teng (Henry) took over the management of
TCL. To protect his shareholdings with TCL, Ting Ping on August 31, 1989 requested TCL's
Corporate Secretary, herein petitioner Teng, to enter the transfer in the Stock and Transfer
Book of TCL for the proper recording of his acquisition.

TCL and Teng, however, refused despite repeated demands. Because of their refusal, Ting
Ping filed a petition for mandamus with the SEC against TCL and Teng.

Issue:
Whether or not the surrender of the certificates of stock is a requisite before registration of the
transfer may be made in the corporate books and for the issuance of new certificates in its
stead

Ruling:
No. A certificate of stock is a written instrument signed by the proper officer of a corporation
stating or acknowledging that the person named in the document is the owner of a designated
number of shares of its stock. It is prima facie evidence that the holder is a shareholder of a
corporation.

It is the delivery of the certificate, coupled with the endorsement by the owner or his duly
authorized representative that is the operative act of transfer of shares from the original owner
to the transferee.

Respondent Ting Ping Lay was able to establish prima facie ownership over the shares of
stocks in question, through deeds of transfer of shares of stock of TCL Corporation. Petitioners
could not repudiate these documents. Hence, the transfer of shares to him must be recorded
on the corporation's stock and transfer book.

In the case at bench, Ting Ping manifested from the start his intention to surrender the subject
certificates of stock to facilitate the registration of the transfer and for the issuance of new
certificates in his name. It would be sacrificing substantial justice if the Court were to grant the
petition simply because Ting Ping is yet to surrender the subject certificates for cancellation
instead of ordering in this case such surrender and cancellation, and the issuance of new ones
in his name.

3.
Mervic Realty Inc
v. China Banking Corporation,

G.R. No. 193748, February 3 2016

Facts:
On October 16, 2006, Mervic Realty, Inc. and Viccy Realty, Inc. (the petitioners) jointly filed a
petition for the declaration of state of suspension of payments with a proposed rehabilitation
plan. They disclosed that their common president is Mario Siochi and that a majority of their
stockholders and officers are members of the Siochi family. The respondent China Banking
Corporation (China Bank), a creditor of the petitioners, opposed the rehabilitation petition. It
argued that the petitioners are separate entities and should have filed separate petitions even
if the majority of their common stockholders and officers belong to the Siochi family; that the
assets of one corporation cannot be considered the assets of the other; that their financial
conditions are not the same; that they have different creditors; that their obligations vary; and
that the feasibility of rehabilitation for one corporation may not necessarily be true for the other.

Issue:
Whether or not the petitioners, which are close family corporations, can jointly file the petition
for rehabilitation under the Interim Rules

Ruling:
No. The rules in effect at the time the rehabilitation petition was filed were the Interim Rules.
The Interim Rules took effect on December 15, 2000, and did not allow the joint or
consolidated filing of rehabilitation petitions. In the present case, the dispute’s concern is not
only whether the petitioners could jointly file the rehabilitation petition (which the Court
disallowed in Asiatrust), but also whether the rehabilitation petition was filed in the proper
venue. Notwithstanding our ruling in Asiatrust, the petitioners beg the Court to liberally apply
the Interim Rules.

As mentioned, they also invoke the 2008 Rules which allow a group of companies to file a joint
rehabilitation petition. In short, the petitioners ask the Court to apply a rule that did not exist
when they filed the rehabilitation petition.

We find no legal basis to retroactively apply the 2008 Rules. In the present case, the
rehabilitation court conducted the initial hearing on January 22, 2007, and approved the
rehabilitation plan on April 15, 2008 – long before the effectivity of the 2008 Rules on January
16, 2009. Clearly, the 2008 Rules cannot be retroactively applied to the rehabilitation petition
filed by the petitioners.

4.
Guy
v. Guy,

G.R. No. 184068, April 19, 2016

Facts:
Petitioner Simny G. Guy (Simny) is a stockholder of record and member of the board of
directors of the corporation. Respondents are also GCI stockholders of record who were
allegedly elected as new directors. On 10 September 2004, Paulino Delfin Pe and Benjamin
Lim (stockholders of record of GCI) informed petitioner that they had received a notice dated
31 August 2004 calling for the holding of a special stockholders' meeting. Fifteen days after the
stockholders' meeting, petitioner received the aforementioned notice. Petitioner, for himself
and on behalf of GCI and Grace Guy Cheu (Cheu), filed a Complaint against respondents
before the RTC of Manila for the nullification of stockholders' meeting.

Issue:
Whether or not the special stockholders' meeting held on 7 September 2004 was void for lack
of due notice

Ruling:
No. xxx Provided, however, That at least one (1) week written notice shall be sent to all
stockholders or members, unless otherwise provided in the by-laws. xxx Under the by-laws of
GCI, the notice of meeting shall be mailed not less than five (5) days prior to the date set for
the special meeting. Clearly, respondents are only mandated to notify petitioner by depositing
in the mail the notice of the stockholders' special meeting, with postage or cost of transmission
provided and the name and address of the stockholder properly specified. As found by both
the RTC to the CA, petitioner admitted that the notice of the special stockholders' meeting was
sent to him through registered mail by respondents on 2 September 2004.

5.
Wilson Gamboa
v. Finance Secretary Margarito Teves, et. al.,

G.R. No. 176579, October 9, 2012

Facts:
General Telephone and Electronics Corporation, sold 26 percent of the outstanding common
shares of PLDT to Philippine Telecommunications Investment Corporation. In 1977, Prime
Holdings, Inc. (PHI) became the owner of 111,415 shares of stock of PTIC. The 111,415 PTIC
shares, which represent about 46.125 percent of the outstanding capital stock of PTIC, were
later declared by this Court to be owned by the Republic of the Philippines. In 1999, First
Pacific acquired the remaining 54 percent of the outstanding capital stock of PTIC.

On 20 November 2006, the Inter-Agency Privatization Council (IPC) of the Philippine

Government through a public bidding sold the same shares to Parallax Venture who won with
a bid of P25.6 billion or US$510 million. First Pacific announced that it would exercise its right
of first refusal as a PTIC stockholder and buy the 111,415 PTIC shares by matching the bid
price of Parallax. On 14 February 2007, First Pacific, through its subsidiary, MPAH, entered
into a Conditional Sale and Purchase Agreement of the 111,415 PTIC shares, or 46.125
percent of the outstanding capital stock of PTIC, with the Philippine Government. Since PTIC
is a stockholder of PLDT, the sale by the Philippine Government of 46.125 percent of PTIC
shares is actually an indirect sale of 12 million shares or about 6.3 percent of the outstanding
common shares of PLDT.

With the sale, First Pacific common shareholdings in PLDT increased from 30.7 percent to 37
percent, thereby increasing the common shareholdings of foreigners in PLDT to about 81.47
percent. This, according to petitioner, violates Section 11, Article XII of the 1987 Philippine
Constitution which limits foreign ownership of the capital of a public utility to not more than 40
percent.

Issue:
Whether or not the term "capital" in Section 11, Article XII of the Constitution refer to the total
common shares only of PLDT, a public utility

Ruling:
Yes. The term "capital" in Section 11, Article XII of the Constitution refers only to shares of
stock entitled to vote in the election of directors, and thus in the present case only to common
shares, and not to the total outstanding capital stock comprising both common and non-voting
preferred shares. One of the rights of a stockholder is the right to participate in the control or
management of the corporation. This is exercised through his vote in the election of directors
because it is the board of directors that controls or manages the corporation.

In the absence of provisions in the articles of incorporation denying voting rights to preferred
shares, preferred shares have the same voting rights as common shares. However, preferred
shareholders are often excluded from any control, that is, deprived of the right to vote in the
election of directors and on other matters, on the theory that the preferred shareholders are
merely investors in the corporation for income in the same manner as bondholders.

Common shares cannot be deprived of the right to vote in any corporate meeting, and any
provision in the articles of incorporation restricting the right of common shareholders to vote is
invalid. Considering that common shares have voting rights which translate to control, as
opposed to preferred shares which usually have no voting rights, the term "capital" in Section
11, Article XII of the Constitution refers only to common shares.

However, if the preferred shares also have the right to vote in the election of directors, then the
term "capital" shall include such preferred shares because the right to participate in the control
or management of the corporation is exercised through the right to vote in the election of
directors. In short, the term "capital" in Section 11, Article XII of the Constitution refers only to
shares of stock that can vote in the election of directors.

This interpretation is consistent with the intent of the framers of the Constitution to place in the
hands of Filipino citizens the control and management of public utilities. Thus, 60 percent of
the "capital" assumes, or should result in, "controlling interest" in the corporation and thus in
the present case, only to common shares, and not to the total outstanding capital stock
(common and non-voting preferred shares).

6.
Zuellig Freight and Cargo Systems
v. NLRC, et al.,

G.R. No. 157900, July 22, 2013

Facts:
San Miguel brought a complaint for unfair labor practice, illegal dismissal, non-payment of
salaries and moral damages against petitioner, formerly known as Zeta Brokerage
Corporation. He alleged that he had been a checker/customs representative of Zeta since
December 16, 1985; that in January 1994, he and other employees of Zeta were informed that
Zeta would cease operations, and that all affected employees, including him, would be
separated. San Miguel contended that the amendments of the articles of incorporation of Zeta
were for the purpose of changing the corporate name, broadening the primary functions, and
increasing the capital stock; and that such amendments could not mean that Zeta had been
thereby dissolved.

Issue:
Whether or not the closure of the business operation of Zeta had not been bona fide, thereby
resulting in the illegal dismissal of San Miguel.

Ruling:
Yes. 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. For sure, the Corporation Code defined and delineated the different modes of
dissolving a corporation, and amendment of the articles of incorporation was not one of such
modes. The effect of the change of name was not a change of the corporate being. Zeta and
petitioner remained one and the same corporation. The change of name did not give petitioner
the license to terminate employees of Zeta like San Miguel without just or authorized cause.

The situation was not similar to that of an enterprise buying the business of another company
where the purchasing company had no obligation to rehire terminated employees of the latter.
Petitioner, despite its new name, was the mere continuation of Zeta's corporate being, and still
held the obligation to honor all of Zeta's obligations, one of which was to respect San Miguel's
security of tenure. The dismissal of San Miguel from employment on the pretext that petitioner,
being a different corporation, had no obligation to accept him as its employee, was illegal and
ineffectual.

7.
Hacienda Cataywa/Manuel Villanueva, et al.
v. Rosario Lorezo,

G.R. No. 179640, March 18, 2015

Facts:
On October 22, 2002, respondent Rosario Lorezo received, upon inquiry, a letter from the
Social Security System (SSS) Western Visayas Group informing her that she cannot avail of
their retirement benefits since per their record she has only paid 16 months. She was also
informed that their investigation of her alleged employment under employer Hda. Cataywa
could not be confirmed because Manuel Villanueva was permanently residing in Manila and
Joemarie Villanueva denied having managed the farm.

She alleged that she was employed as laborer in Hda. Cataywa managed by Jose Marie
Villanueva in 1970 but was reported to the SSS only in 1978. She alleged that SSS
contributions were deducted from her wages from 1970 to 1995, but not all were remitted to
the SSS which, subsequently, caused the rejection of her claim. She also impleaded Talisay
Farms, Inc. by virtue of its Investment Agreement with Mancy and Sons Enterprises. She also
prayed that the veil of corporate fiction be pierced since she alleged that Mancy and Sons
Enterprises and Manuel and Jose Marie Villanueva are one and the same.

Issue:
Whether or not the doctrine of piercing the veil of corporate fiction should be applied in this
case

Ruling:
No. A reading of the records would reveal that petitioners failed to dispute the allegation that
the respondent performed hacienda work. Based on the foregoing facts and evidence on
record, petitioners are liable for delinquent contributions. It being proven by sufficient evidence
that respondent started working for the hacienda in 1970, it follows that petitioners are liable
for deficiency in the SSS contributions.
The Court has expressed the language of piercing doctrine when applied to alter ego cases, as
follows: Where the stock of a corporation is owned by one person whereby the corporation
functions only for the benefit of such individual owner, the corporation and the individual should
be deemed the same

This Court agrees with the petitioners that there is no need to pierce the corporate veil.
Respondent failed to substantiate her claim that Mancy and Sons Enterprises, Inc. and Manuel
and Jose Marie Villanueva are one and the same. She based her claim on the SSS form
wherein Manuel Villanueva appeared as employer.

However, this does not prove, in any way, that the corporation is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to
confuse the legitimate issues, warranting that its separate and distinct personality be set aside.
Also, it was not alleged nor proven that Mancy and Sons Enterprises, Inc. functions only for the
benefit of Manuel Villanueva, thus, one cannot be an alter ego of the other.

8.
UCPB
v. Planters Products, Inc., et al.,

G.R. No. 179015, June 13, 2012

Facts:
Respondent Planters Products, Incorporated (PPI), a fertilizer manufacturer, entered into an
arrangement with respondent Janet Layson for the delivery of fertilizers to her, payable from
the proceeds of the loan that petitioner United Coconut Planters Bank (UCPB) extended to her.
Subsequently, Layson executed a third document "Letter Guarantee by the Dealer," stating
that she binds herself to pay PPI the face value of the pagares in case UCPB did not pay the
same at maturity. But contrary to her undertakings, on the following day, February 12, 1980,
Layson withdrew with branch manager Grey’s connivance the ₱200,000.00 loan that UCPB
granted her.

On April 28, 1980 PPI presented the documents of the financed transactions to UCPB for
collection. But the bank denied the claim on the ground that it neither authorized the
transactions nor the execution of the documents which were not part of its usual banking
transactions. UCPB claimed that branch manager Grey exceeded his authority in guaranteeing
payment of Layson’s purchases on credit.

Issue:
Whether or not UCPB is bound by Grey’s undertaking on its behalf to deliver to PPI the
proceeds of the bank’s loan to Layson in payment of the fertilizers she bought.

Ruling:
No. True, a corporation like UCPB is liable to innocent third persons where it knowingly permits
its officer, or any other agent, to perform acts within the scope of his general or apparent
authority, holding him out to the public as possessing power to do those acts. But, here, it is
plain from the guarantee Grey executed that he was acting for himself, not in representation of
UCPB. UCPB cannot be bound by Grey’s above undertaking since he appears to have made it
in his personal capacity.
He signed it under his own name, not in UCPB’s name or as its branch manager. Indeed, the
wordings of the undertaking do not at all make any allusion to UCPB. UCPB also adduced
evidence that Grey lent Layson that ₱200,000.00 without proper authorization from the bank.
The authority the bank gave him for unilaterally extending unsecured loans has a ceiling of
₱10,000.00 only. Grey needed under UCPB’s Revised Branch Lending Authority the
unanimous approval of the Branch Credit Committee, of which he was only a member, before
he can grant a higher loan of the kind.

9.
Funa
v. Manila Economic and Cultural Office and COA,

G.R. No. 193462, February 4, 201

Facts:
Despite ending their diplomatic ties, the people of Taiwan and of the Philippines maintained an
unofficial relationship facilitated by the offices of the Taipei Economic and Cultural Office, for
the former, and the MECO, for the latter. On 23 August 2010, petitioner sent a letter to the
COA requesting for a "copy of the latest financial and audit report" of the MECO invoking, for
that purpose, his "constitutional right to information on matters of public concern." The
petitioner made the request on the belief that the MECO, being under the "operational
supervision" of the Department of Trade and Industry (DTI), is a government owned and
controlled corporation (GOCC) and thus subject to the audit jurisdiction of the COA. Assistant
Commissioner Naranjo revealed that the MECO was "not among the agencies audited by any
of the three Clusters of the Corporate Government Sector.

Issue:
Whether or not the MECO is a GOCC

Ruling:
No. The MECO is not a GOCC or government instrumentality. GOCCs, therefore, are "stock or
non-stock" corporations "vested with functions relating to public needs" that are "owned by the
Government directly or through its instrumentalities." By definition, three attributes thus make
an entity a GOCC: first, its organization as stock or non-stock corporation; second, the public
character of its function; and third, government ownership over the same. Possession of all
three attributes is necessary to deem an entity a GOCC.

In this case, there is not much dispute that the MECO possesses the first and second
attributes. It is the third attribute, which the MECO lacks. The MECO Is Not Owned or
Controlled by the Government Organization as a non-stock corporation and the mere
performance of functions with a public aspect, however, are not by themselves sufficient to
consider the MECO as a GOCC. In order to qualify as a GOCC, a corporation must also, if not
more importantly, be owned by the government.

The government owns a stock or non-stock corporation if it has controlling interest in the
corporation. In a stock corporation, the controlling interest of the government is assured by its
ownership of at least fifty-one percent (51%) of the corporate capital stock. In a non-stock
corporation, like the MECO, jurisprudence teaches that the controlling interest of the
government is affirmed when "at least majority of the members are government officials
holding such membership by appointment or designation" or there is otherwise "substantial
participation of the government in the selection" of the corporation’s governing board. The fact
of the incorporation of the MECO under the Corporation Code is key.

The MECO was correct in postulating that, as a corporation organized under the Corporation
Code, it is governed by the appropriate provisions of the said code, its articles of incorporation
and its by-laws.

10.
Palm Avenue Holding Co. Inc
v. Sandiganbayan,

G.R. No. 173082, August 6, 2014

Facts:

4. Securities Regulation Code (RA 8799)

1. Securities and Exchange Commission, v. CJH Development Corporation, G.R. No.
210316, November 28, 2016
2. Primanila Plans, Inc. v. Securities and Exchange Commission, G.R. No. 193791,
August 6, 2014
3. SEC vs Santos, GR no. 195542, March 19, 2014
4. Securities and Exchange Commission v. Subic Bay Golf and Country Club, Inc. G.R.
No. 179047, March 11, 2015
5. Jose M. Roy III v. Chairperson Teresita Herbosa, G.R. No. 207246, November 22,
2016
6. Pua v. Citibank, G.R. No. 1980064, September 16, 2013
7. SEC v. Prosperity.Com, Inc., G.R. No. 164197, January 25, 2012
8. Concorde Condominium v. Baculio, G.R. No. 203678, February 17, 2016
9. SEC v. CA and Omico, Co., G.R. No. 187702, October 22, 2014
10. Benedicto-Munoz v. Cacho-Olivares, G.R. No. 179121, November 9, 2015
1.
Securities and Exchange Commission
v. CJH Development Corporation

G.R. No. 210316, November 28, 2016

Facts:
Respondent CJHDC entered into a Lease Agreement with the Bases Conversion and
Development Authority (BCDA) for the development of a 247-hectare property within the John
Hay Special Economic Zone in Baguio City. Subsequently, CJHDC came up with a
development plan of constructing two condotels which it named as "The Manor" and "The
Suites". BCDA acquired information regarding CJHDC and CJHSC's scheme of selling "The
Manor" and "The Suites" units through "leaseback" or "money-back" terms.

BCDA requested the SEC to conduct an investigation into the operations of CJHDC and
CJHSC on the belief that the "leaseback" or "money-back" arrangements they are offering to
the public is, in essence, investment contracts which are considered as securities under
Republic Act No. 8799, otherwise known as the Securities Regulation Code (SRC).
On May 16, 2012, the SEC EPD filed a Motion for Issuance of Cease and Desist Order with
the SEC En Banc praying that CJHDC and CJHSC to immediately cease and desist "from
further engaging in activities of selling and/or offering for sale investment contracts covering
the condotel units on "leaseback" and/or "money-back" arrangements until the requisite
registration statement is duly filed with and approved by the Commission and the
corresponding permit to offer/sell securities is issued.

Issue:
Whether or not the sale of "The Manor" or "The Suites" units to the general public under the
"leaseback" or "money-back" scheme is a form of investment contract or sale of securities.

Ruling:
Yes. As such they need to register.

The SEC arrived at a preliminary finding that respondents are engaged in the business of
selling securities without the proper registration issued by the Commission. Based on this initial
finding, respondents' act of selling unregistered securities would necessarily operate as a fraud
on investors as it deceives the investing public by making it appear that respondents have
authority to deal on such securities.

As correctly cited by the SEC, Section 8.1 of the SRC clearly states that securities shall not be
sold or offered for sale or distribution within the Philippines without a registration statement
duly filed with and approved by the SEC and that prior to such sale, information on the
securities, in such form and with such substance as the SEC may prescribe, shall be made
available to each prospective buyer. The Court agrees with the SEC that the purpose of this
provision is to afford the public protection from investing in worthless securities.

2.
Primanila Plans, Inc.
v. Securities and Exchange Commission

G.R. No. 193791, August 6, 2014

Facts:
Primanila was registered with the SEC on October 17, 1988 and was issued Certificate of
Registration No. 156350. Primanila then operated as a pre-needcompany and maintained a
business office in Makati City. On April 9, 2008, the SEC was prompted to issue the subject
cease and desist order after an investigation conducted by the SEC’s Compliance and
Enforcement Department (CED) on Primanila yielded that Primanila's website was offering a
pension plan product called Primasa Plan. From these findings, the SEC declared that
Primanila committed a flagrant violation of Republic Act No. 8799, otherwise known as The
Securities Regulation Code (SRC). Feeling aggrieved, Primanila filed a Motion for
Reconsideration/Lift Cease and Desist Order, arguing that it was denied due process as the
order was released without any prior issuance by the SEC of a notice or formal charge that
could have allowed the company to defend itself. Primanila further argued that it was neither
selling nor collecting premium payments for the product Primasa plans.

Issues:

Whether or not Primanila was accorded due process notwithstanding the SEC’s immediate
issuance of the cease and desist order.
Whether or not Primanila violated Sec. 16 of SRC which barred the sale or offer for sale to the
public of a pre-need product except in accordance with SEC rules and regulations.

Ruling:
1. Yes. The Court held that a cease and desist order may be issued by the SEC motu
proprio, it being unnecessary that it results from a verified complaint from an aggrieved
party. There is good reason for this provision, as any delay in the restraint of acts that
yield such results can only generate further injury to the public that the SEC is obliged to
protect.

A cease and desist order may only be issued by the Commission after proper investigation
or verification, and upon showing that the acts sought to be restrained could result in injury
or fraud to the investing public. Without doubt, these requisites were duly satisfied by the
SEC prior to its issuance of the subject cease and desist order.

The SEC was not mandated to allow Primanila to participate in the investigation
conducted by the Commission prior to the cease and desist order’s issuance. Given the
circumstances, it was sufficient for the satisfaction of the demands of due process that the
company was amply apprised of the results of the SEC investigation, and then given the
reasonable opportunity to present its defense. Primanila was able to do this via its motion
to reconsider and lift the cease and desist order.

2. Yes. The Court held that Primanila clearly violated Section 16 of the SRC which states
that “no person shall sell or offer for sale to the public any pre-need plan except in
accordance with rules and regulations which the Commission shall prescribe.

Such rules shall regulate the sale of pre-need plans by, among other things, requiring the
registration of pre-need plans, licensing persons involved in the sale of pre-need plans,
requiring disclosures to prospective plan holders, prescribing advertising guidelines,
providing for uniform plans, imposing capital, bonding and other financial responsibility,
and establishing trust funds for the payment of benefits under such plans.”

In the instant case, this substantial evidence is derived from the results of the SEC
investigation on Primanila’s activities. Specifically on the product Primasa plans, the SEC
ascertained that there were detailed instructions on Primanila’s website as to how
interested persons could apply for a plan, together with the manner by which premium
payments therefor could be effected. A money deposit by CED to Primanila’s Metrobank
account indicated in the advertisement confirmed that the bank account was active. There
could be no better conclusion from the foregoing circumstances that Primanila was
engaged inthe sale or, at the very least, an offer for sale to the public of the Primasa
plans. The offer for Primasa was direct and its reach was even expansive, especially as it
utilized its website as a medium and visits to it were, as could be expected, from
prospective clients.

3.
Securities and Exchange Commission
v. Santos

GR no. 195542, March 19, 2014

Facts:
Sometime in 2007, yet another investment scam was exposed with the disappearance of its
primary perpetrator, Liew, a self- styled financial guru and Chairman of PIPC Corporation.
Because the head of PIPC Corporation had gone missing and with it the monies and
investment of a significant number of investors, the SEC was flooded with complaints from
thirty-one (31) individuals against PIPC Corporation. The scam was masked by a supposed
offshore foreign currency trading scheme promising that the principal or capital infused will be
guaranteed or fully protected. Coupled with this full guarantee for the principal is the prospect
of profits at an annual rate of 12 to 18%.

Official SEC documents would show that while PIPC Corp. is indeed registered with the SEC,
it having engaged in the solicitation and sale of securities was contrary to the purpose for
which it was established which is only to act as a financial research. Santos was charged in
the complaints in her capacity as investment consultant of PIPC Corporation, who supposedly
induced private complainants to invest their monies in PIPC Corporation.

Santos’ defense consisted in: (1) denying participation in the conspiracy and fraud perpetrated
against the investor-complainants of PIPC Corporation, specifically Sy and Lorenzo; (2)
claiming that she was initially and merely an employee of, and subsequently an independent
information provider for, PIPC Corporation; (3) her not having received any money from Sy and
Lorenzo, the two having, in actuality, directly invested their money in PIPC-BVI; and (4) on the
whole, PIPC-BVI as the other party in the investment contracts signed by Sy and Lorenzo, thus
the only corporation liable to Sy and Lorenzo and the other complainants.

Issue:
Whether or not respondent Santos acted as agent of PIPC Corp. or had enticed Luisa
Mercedes P. Lorenzo or Ricky Albino P. Sy to buy PIPC Corp. or PIPC-BVI’s investment
products.

Ruling:
Yes. While Santos was not a signatory to the contracts on Sy’s or Lorenzo’s investments,
Santos procured the sale of these unregistered securities to the two (2) complainants by
providing information on the investment products being offered for sale by PIPC Corporation
and/or PIPC-BVI and convincing them to invest therein.
No matter Santos’ strenuous objections, it is apparent that she connected the probable
investors, Sy and Lorenzo, to PIPC Corporation and/or PIPC-BVI, acting as an ostensible
agent of the latter on the viability of PIPC Corporation as an investment company. At each
point of Sy’s and Lorenzo’s investment, Santos’ participation thereon, even if not shown strictly
on paper, was prima facie established. In all of the documents presented by Santos, she never
alleged or pointed out that she did not receive extra consideration for her simply providing
information to Sy and Lorenzo about PIPC Corporation and/or PIPC-BVI. Santos only claims
that the monies invested by Sy and Lorenzo did not pass through her hands.
In short, Santos did not present in evidence her salaries as a supposed "mere clerical
employee or information provider" of PIPC-BVI. What is palpable from the foregoing is that Sy
and Lorenzo did not go directly to Liew or any of PIPC Corporation’s and/or PIPC-BVI’s
principal officers before making their investment or renewing their prior investment.
However, undeniably, Santos actively recruited and referred possible investors to PIPC
Corporation and/or PIPC-BVI and acted as the go-between on behalf of PIPC Corporation
and/or PIPC-BVI. At bottom, the exculpation of Santos cannot be preliminarily established
simply by asserting that she did not sign the investment contracts, as the facts alleged in this
case constitute fraud perpetrated on the public. Especially so because the absence of Santos’
signature in the contract is, likewise, indicative of a scheme to circumvent and evade liability
should the pyramid fall apart.

4.
Securities and Exchange Commission
v. Subic Bay Golf and Country Club, Inc.

G.R. No. 179047, March 11, 2015

Facts:
On May 25, 1995, SBMA and UIG entered into a Lease and Development Agreement. Under
the agreement, SBMA agreed to lease the golf course to UIG. UIG agreed to "develop,
manage and maintain the golf course and other related facilities within the complex". Later,
UIGDC succeeded to the interests of UIG on the golf course development. UIGDC executed a
Deed of Assignment in favor of SBGCCI.

Under the Deed of Assignment, UIGDC assigned all its rights and interests in the golf course.
Complainants Filart and Villareal informed the Securities and Exchange Commission that they
had been asking UIGDC for the refund of their payment for their SBGCCI shares because of
the failure of UIGDC and SBGCCI to deliver their promise. In their Comment, SBGCCI and
UIGDC averred that they had already substantially complied with their commitment to provide
the members a world-class golf and country club.

Issue:
1. Whether or not the case involved an intracorporate dispute 2. Whether or not SEC can order
the refund of the purchase price.

Ruling:
Yes. The case involved an intracorporate dispute and therefore within RTC's jurisdiction.
Jurisdiction over intra-corporate disputes and all other cases enumerated in Section 5 of
Presidential Decree No. 902-A had already been transferred to designated Regional Trial
Courts. Hence, actions pertaining to intra-corporate disputes should be filed directly before
designated Regional Trial Courts. Intra-corporate disputes brought before other courts or
tribunals are dismissible for lack of jurisdiction.

For a dispute to be "intra-corporate," it must satisfy the relationship and nature of controversy
tests. The relationship test requires that the dispute be between a
corporation/partnership/association and the public; a corporation/partnership/association and
the state regarding the entity's franchise, permit, or license to operate; a
corporation/partnership/association and its stockholders, partners, members, or officers; and
among stockholders, partners, or associates of the entity. The nature of the controversy test
requires that the action involves the enforcement of corporate rights and obligations.

This case is an intra-corporate dispute, over which the Regional Trial Court has jurisdiction. It
involves a dispute between the corporation, SBGCCI, and its shareholders, Villareal and Filart.
This case also involves corporate rights and obligations. The nature of the action — whether it
involves corporate rights and obligations — is determined by the allegations and reliefs in the
complaint. However, even though the Complaint filed before the Securities and Exchange
Commission contains allegations that are intra-corporate in nature, it does not necessarily oust
the Securities and Exchange Commission of its regulatory and administrative jurisdiction to
determine and act if there were administrative violations committed.

Thus, when Villareal and Filart alleged in their letter-complaint that SBGCCI and UIGDC
committed misrepresentations in the sale of their shares, nothing prevented the Securities and
Exchange Commission from taking cognizance of it to determine if SBGCCI and UIGDC
committed administrative violations and were liable under the Securities Regulation Code. 2.
No. The Securities and Exchange Commission's regulatory power does not include the
authority to order the refund of the purchase price of Villareal's and Filart's shares in the golf
club. The issue of refund is intra-corporate or civil in nature and within the jurisdiction of the
RTC.

5.
Jose M. Roy III
v. Chairperson Teresita Herbosa

G.R. No. 207246, November 22, 2016

Facts:
On June 28, 2011, the Court issued the Gamboa Decision, and ruled that the term "capital" in
Section 11, Article XII of the 1987 Constitution refers only to shares of stock entitled to vote in
the election of directors, and thus in the present case only to common shares, and not to the
total outstanding capital stock (common and non-voting preferred shares). xxx On May 20,
2013, the SEC, through respondent Chairperson Teresita J. Herbosa, issued SEC-MC No. 8.

On June 10, 2013, petitioner Roy, as a lawyer and taxpayer, filed the Petition, assailing the
validity of SEC-MC No. 8 for not conforming to the letter and spirit of the Gamboa Decision and
Resolution and for having been issued by the SEC with grave abuse of discretion. Petitioner
Roy also questions the ruling of the SEC that respondent Philippine Long Distance Telephone
Company ("PLDT") is compliant with the constitutional rule on foreign ownership.

Issue:

1. Whether or not the SEC gravely abused its discretion in issuing SEC-MC No. 8 in light of the
Gamboa Decision and Gamboa Resolution 2. Whether or not the SEC gravely abused its
discretion in ruling that PLDT is compliant with the constitutional limitation on foreign
ownership.

Ruling:
No. The Court holds that, even if the resolution of the procedural issues were conceded in
favor of petitioners, the petitions, being anchored on Rule 65, must nonetheless fail because
the SEC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction
when it issued SEC-MC No. 8. To the contrary, the Court finds SEC-MC No. 8 to have been
issued in fealty to the Gamboa Decision and Resolution. Section 2 of SEC-MC No. 8 clearly
incorporates the Voting Control Test or the controlling interest requirement. In fact, Section 2
goes beyond requiring a 60-40 ratio in favor of Filipino nationals in the voting stocks; it
moreover requires the 60-40 percentage ownership in the total number of outstanding shares
of stock, whether voting or not.
The SEC formulated SEC-MC No. 8 to adhere to the Court's unambiguous pronouncement
that "[f]ull beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60
percent of the voting rights is required." Clearly, SEC-MC No. 8 cannot be said to have been
issued with grave abuse of discretion. While SEC-MC No. 8 does not expressly mention the
Beneficial Ownership Test or full beneficial ownership of stocks requirement in the FIA, this will
not, as it does not, render it invalid meaning, it does not follow that the SEC will not apply this
test in determining whether the shares claimed to be owned by Philippine nationals are
Filipino, i.e., are held by them by mere title or in full beneficial ownership. 2.

At the outset, the Court disposes of the second issue for being without merit. In its
Consolidated Comment dated September 13, 2013, the SEC already clarified that it "has not
yet issued a definitive ruling anent PLDT's compliance with the limitation on foreign ownership
imposed under the Constitution and relevant laws [and i]n fact, a careful perusal of x x x SEC-
MC No. 8 readily reveals that all existing covered corporations which are non-compliant with
Section 2 thereof were given a period of one (1) year from the effectivity of the same within
which to comply with said ownership requirement. x x x."

Thus, in the absence of a definitive ruling by the SEC on PLDT's compliance with the capital
requirement pursuant to the Gamboa Decision and Resolution, any question relative to the
inexistent ruling is premature.

6.
Pua
v. Citibank

G.R. No. 1980064, September 16, 2013

Facts:
On December 2, 2002, petitioners filed before the RTC a Complaint for declaration of nullity of
contract and sums of money with damages against respondent. Yau, Vice-President of
Citibank Hongkong, came to the Philippines to sell securities to Jose. They averred that Yau
required Jose to open an account with Citibank Hongkong as it is one of the conditions for the
sale of the aforementioned securities. After opening such account, Yau offered and sold to
petitioners numerous securities issued by various public limited companies established in
Jersey, Channel I sands.

The offer, sale, and signing of the subscription agreements of said securities were all made
and perfected at Citibank Binondo in the presence of its officers and employees. Later on,
petitioners discovered that the securities sold to them were not registered with the SEC and
that the terms and conditions covering the subscription were not likewise submitted to the SEC
for evaluation, approval, and registration.

For its part, respondent filed a motion to dismiss alleging, inter alia, that petitioners’ complaint
should be dismissed outright for violation of the doctrine of primary jurisdiction. It pointed out
that the merits of the case would largely depend on the issue of whether or not there was a
violation of the SRC, in particular, whether or not there was a sale of unregistered securities. In
this regard, respondent contended that the SRC conferred upon the SEC jurisdiction to
investigate compliance with its provisions and thus, petitioners’ complaint should be first filed
with the SEC and not directly before the RTC.

Issue:
Whether or not petitioners’ action falls within the primary jurisdiction of the SEC.

Ruling:
No. Cases falling under Section 57of the SRC, which pertain to civil liabilities arising from
violations of the requirements for offers to sell or the sale of securities, as well as other civil
suits under Sections 56, 58, 59, 60, and 61 of the SRC shall be exclusively brought before the
regional trial courts.

Civil suits falling under the SRC are under the exclusive original jurisdiction of the regional trial
courts and hence, need not be first filed before the SEC, unlike criminal cases wherein the
latter body exercises primary jurisdiction. All told, petitioners' filing of a civil suit against
respondent for purported violations of the SRC was properly filed directly before the RTC.

7.
Securities and Exchange Commission
v. Prosperity.Com, Inc.

G.R. No. 164197, January 25, 2012

Facts:
Prosperity.Com, Inc. (PCI) sold computer software and hosted websites without providing
internet service. To make a profit, PCI devised a scheme in which, for the price of US$234.00
(subsequently increased to US$294), a buyer could acquire from it an internet website of a 15-
Mega Byte (MB) capacity. At the same time, by referring to PCI his own down-line buyers, a
first-time buyer could earn commissions, interest in real estate in the Philippines and in the
United States, and insurance coverage worth ₱50,000.00.

To benefit from this scheme, a PCI buyer must enlist and sponsor at least two other buyers as
his own down-lines. These second tier of buyers could in turn build up their own down-lines.
For each pair of down-lines, the buyer-sponsor received a US$92.00 commission. But referrals
in a day by the buyer-sponsor should not exceed 16 since the commissions due from excess
referrals inure to PCI, not to the buyer-sponsor. Apparently, PCI patterned its scheme from that
of Golconda Ventures, Inc. (GVI), which company stopped operations after the Securities and
Exchange Commission (SEC) issued a cease and desist order (CDO) against it. As it later on
turned out, the same persons who ran the affairs of GVI directed PCI’s actual operations.

Issue:
Whether or not PCI’s scheme constitutes an investment contract that requires registration
under R.A. 8799.

Ruling:
No. The Securities Regulation Code treats investment contracts as "securities" that have to be
registered with the SEC before they can be distributed and sold. An investment contract is a
contract, transaction, or scheme where a person invests his money in a common enterprise
and is led to expect profits primarily from the efforts of others.

The United States Supreme Court held in Securities and Exchange Commission v. W.J.
Howey Co. that, for an investment contract to exist, the following elements, referred to as the
Howey test must concur: (1) a contract, transaction, or scheme; (2) an investment of money;
(3) investment is made in a common enterprise; (4) expectation of profits; and (5) profits
arising primarily from the efforts of others.
Here, PCI’s clients do not make such investments. They buy a product of some value to them:
an Internet website of a 15-MB capacity. The client can use this website to enable people to
have internet access to what he has to offer to them, say, some skin cream. The buyers of the
website do not invest money in PCI that it could use for running some business that would
generate profits for the investors. The price of US$234.00 is what the buyer pays for the use of
the website, a tangible asset that PCI creates, using its computer facilities and technical skills.

Actually, PCI appears to be engaged in network marketing, a scheme adopted by companies

for getting people to buy their products outside the usual retail system where products are
bought from the store’s shelf. Under this scheme, adopted by most health product distributors,
the buyer can become a down-line seller. The latter earns commissions from purchases made
by new buyers whom he refers to the person who sold the product to him. The network goes
down the line where the orders to buy come.

The commissions, interest in real estate, and insurance coverage worth ₱50,000.00 are
incentives to down-line sellers to bring in other customers. These can hardly be regarded as
profits from investment of money under the Howey test.

8.
Concorde Condominium
v. Baculio

G.R. No. 203678, February 17, 2016

Facts:
A petition for Injunction against respondents was to enjoin respondents from misrepresenting
to the public, as well as to private and government offices/agencies, that they are the owners
of the disputed lots and Concorde Condominium Building, and from pushing for the demolition
of the building which they do not even own. Respondents filed an Urgent Motion to Re-Raffle
dated April 25, 2012, claiming that it is a regular court, not a Special Commercial Court, which
has jurisdiction over the case.

Respondents claimed that the petition seeks to restrain or compel certain individuals and
government officials to stop doing or performing particular acts, and that there is no showing
that the case involves a matter embraced in Section 5 of Presidential Decree (P.D.) No. 902-A,
which enumerates the cases over which the SEC [now the RTC acting as Special Commercial
Court pursuant to Republic Act (R.A.) No. 8799] exercises exclusive jurisdiction. The RTC
dismissed the case for lack of jurisdiction.

Issue:
Whether Branch 149 of the Makati RTC, a designated Special Commercial Court, erred in
dismissing the petition for injunction with damages for lack of jurisdiction over the subject
matter.

Ruling:
Yes. Jurisdiction of the SEC over intra-corporate cases was transferred to Courts of general
jurisdiction or the appropriate Regional Trial Court when R.A. No. 8799 took effect on August
8, 2000. In GD Express Worldwide N. V., et al. v. Court of Appeals (4th Div.) et al, the Court
stressed that Special Commercial Courts are still considered courts of general jurisdiction
which have the power to hear and decide cases of all nature, whether civil, criminal or special
proceedings. As a basic premise, let it be emphasized that a court's acquisition of jurisdiction
over a particular case's subject matter is different from incidents pertaining to the exercise of
its jurisdiction. Jurisdiction over the subject matter of a case is conferred by law, whereas a
court's exercise of jurisdiction, unless provided by the law itself, is governed by the Rules of
Court or by the orders issued from time to time by the Court.

The matter of whether the RTC resolves an issue in the exercise of its general jurisdiction or of
its limited jurisdiction as a special court is only a matter of procedure and has nothing to do
with the question of jurisdiction. Having clearly settled that as courts of general jurisdiction, the
designated Special Commercial Courts and the regular RTCs are both conferred by law the
power to hear and decide civil cases in which the subject of the litigation is incapable of
pecuniary estimation, such as an action for injunction.

Applying the relationship test and the nature of the controversy test in determining whether a
dispute constitutes an intra-corporate controversy, the Court agrees with Branch 149 that Civil
Case No. 12-309 for injunction with damages is an ordinary civil case, and not an intra-
corporate controversy. A careful review of the allegations in the petition for injunction with
damages indicates no intra-corporate relations exists between the opposing parties, namely
(1) petitioner condominium corporation, by itself and comprising all its unit owners, on the one
hand, and (2) respondent New PP1 Corporation which Baculio claims to be the owner of the
subject properties, together with the respondents Building Official and City Fire Marshal of
Makati City, the Regional Director of the Bureau of Fire Protection, and the private security
agency, on the other hand.

Clearly, as the suit between petitioner and respondents neither arises from an intra-corporate
relationship nor does it pertain to the enforcement of their correlative rights and obligations
under the Corporation Code, and the internal and intra-corporate regulatory rules of the
corporation, Branch 149 correctly found that the subject matter of the petition is in the nature of
an ordinary civil action. Here, no clear and convincing evidence is shown to overturn the legal
presumption that official duty has been regularly performed when the Clerk of Court of the
Makati RTC docketed the petition for injunction with damages as an ordinary civil case -not as
a commercial case - and, consequently, raffled it among all branches of the same RTC, and
eventually assigned it to Branch 149.

To recall, the designation of the said branch as a Special Commercial Court by no means
diminished its power as a court of general jurisdiction to hear and decide cases of all nature,
whether civil, criminal or special proceedings. There is no question, therefore, that the Makati
RTC, Branch 149 erred in dismissing the petition for injunction with damages, which is clearly
an ordinary civil case. As a court of general jurisdiction, it still has jurisdiction over the subject
matter thereof. In view of the above discussion, the Court finds no necessity to delve into the
other contentions raised by the parties, as they should be properly addressed by the Makati
RTC, Branch 149 which has jurisdiction over the subject matter of the petition for injunction
with damages.

9.
Securities and Exchange Commission
v. Court of Appeals and Omico, Co.

G.R. No. 187702, October 22, 2014

Facts:
Omico scheduled its annual stockholders’ meeting on 3 November 2008. It set the deadline for
submission of proxies on 23 October 2008 and the validation of proxies on 25 October 2008.
Astra objected to the validation of the proxies issued in favor of Tommy Kin Hing, representing
about 38% of the outstanding capital stock of Omico. Astra also objected to the inclusion of the
proxies issued in favor of Tommy Kin Hing and/or Martin Buncio, representing about 2% of the
outstanding capital stock of Omico. Astra maintained that the proxy issuers, who were brokers,
did not obtain the required express written authorization of their clients when they issued the
proxies in favor of Tommy Kin Hing.

In so doing, the issuers were allegedly in violation of SRC Rules. Furthermore, the proxies
issued in favor of Tia exceeded, thereby giving rise to the presumption of solicitation thereof
under said rules. Tommy Kin Hing did not also comply with the rules on proxy solicitation, in
violation of the SRC. Despite the objections of Astra, Omico’s Board of Inspectors declared
that the proxies issued in favor of Tommy Kin Hing were valid. On 27 October 2008, Astra filed
a Complaint before the Securities and Exchange Commission (SEC) praying for the
invalidation of the proxies. Astra also prayed for the issuance of a cease and desist order
(CDO) enjoining the holding of Omico’s annual stockholders’ meeting until the SEC had
resolved the issues pertaining to the validation of proxies.

Issue:
Whether or not SEC has jurisdiction over controversies arising from the validation of proxies
for the election of the directors of a corporation.

Ruling:
No. The Court held that when proxies are solicited in relation to the election of corporate
directors, the resulting controversy, even if it ostensibly raised the violation of the SEC rules on
proxy solicitation, should be properly seen as an election controversy within the original and
exclusive jurisdiction of the trial courts by virtue of Section 5.2 of the SRC. Hence, the
jurisdiction is still with the Special Commercial Courts.

The conferment of original and exclusive jurisdiction on the regular courts over such
controversies in the election of corporate directors must be seen as intended to confine to one
body the adjudication of all related claims and controversy arising from the election of such
directors. For that reason, the aforequoted Section 2, Rule 6 of the Interim Rules broadly
defines the term "election contest" as encompassing all plausible incidents arising from the
election ofcorporate directors, including: (1) any controversy or dispute involving title or claim
to any elective office in a stock or nonstock corporation, (2) the validation of proxies, (3) the
manner and validity of elections and (4) the qualifications of candidates, including the
proclamation of winners. If all matters anteceding the holding of such election which affectits
manner and conduct, such as the proxy solicitation process, are deemed within the original
and exclusive jurisdiction of the SEC, then the prospect of overlapping and competing
jurisdictions between that body and the regular courts becomes frighteningly real.

From the language of Section 5 (c) of Presidential Decree No. 902-A, it is indubitable that
controversies as to the qualification of voting shares, or the validity of votes cast in favor of a
candidate for election to the board of directors are properly cognizable and adjudicable by the
regular courts exercising original and exclusive jurisdiction over election cases. An election
contest covers any controversy or dispute involving the validation of proxies, in general.

Thus, it can only refer to all the beneficial purposes that validation of proxies can bring about
when made in connection with a forthcoming election of directors. Thus, there is no point in
making distinctions between who has jurisdiction before and who has jurisdiction after the
election of directors, as all controversies related thereto – whether before, during or after –
shall be passed upon by regular courts as provided by law.

10.
Benedicto-Munoz
v. Cacho-Olivares

G.R. No. 179121, November 9, 2015

Facts:
The controversy arose from the Complaint for Damages and Revocation of Registration and
License of Broker, Dealer and Salesman filed by respondents with the SEC on August 20,
1997. Respondents claimed that Cuaycong, a salesman in securities, had engaged in
fraudulent and deceitful activities with the complicity and knowledge of the defendant stock
market brokerage firms, and the other individual defendants resulting in the loss of
respondents' investments.

In a Joint Manifestation with Motion dated July 12, 2001, the Cuaycong brothers and the
respondents manifested to the RTC of Pasig that they had amicably settled their differences
and entered into a Compromise Agreement. Respondents agreed to drop the Cuaycong
brothers as defendants in Civil Case No. 01-0059 in consideration of the payment of Php
7,040,645.22. The RTC of Pasig approved the Compromise Agreement in its July 17, 2001
Decision.

Issue:
Whether or not the dismissal of the case as against the cuaycong brothers benefits the other
defendants in Civil Case No. 02-1049.

Ruling:
Yes. The Original Complaint and the Amended and Supplemental Complaint allege the same
essential cause of action against the Cuaycong brothers and the petitioners-that is, stock
market fraud committed by Cuaycong principally through misappropriation, with the complicity
and indispensable cooperation of the defendant stock market brokerage firms and the
individual defendants.
The Amended and Supplemental Complaint failed to allege "different and separable acts"
committed by the remaining defendants independent of the acts and omissions of Cuaycong.
Under both the Original Complaint and the Amended and Supplemental Complaint, Cuaycong
was the central actor in the series of wrongdoings that led to the loss of investments of the
respondents, while the defendants' alleged action or inaction made such wrongdoings
possible.

Since the Cuaycong brothers and the petitioners, as indispensable parties, had played various
interconnected roles that led to the singular injury and loss of the respondents, their liabilities
cannot be separately determined.

5. The New Central Bank Act (RA 7653, as amended by RA 11211)

1. Cu v. Small Business Guarantee and Finance Corp., G.R. No. 211222, August 7, 2017
2. So v. Philippine Deposit Insurance Corp., G.R. No. 230020, March 19, 2018
3. Alfeo D. Vivas, v. Monetary Board and PDIC, G.R. No. 191424, August 7, 2013
 4. Bangko Sentral ng Pilipinas v. Banco Filipino Savings and Mortgage Bank, G.R. Nos.
178696 & 192607, July 30, 2018
5. Apex Bancrights Holdings, Inc. v. BSP, G.R. No. 214866, October 2, 2017
6. Spouses Poon v. Prime Savings Bank, G.R. No. 183794, June 13, 2016
7. Bangko Sentral ng Pilipinas v. Legaspi; G.R. No. 205966, March 2, 2016
8. Vivas v. The Monetary Board; G.R. No. 191424, August 7, 2013
9. Banco Filipino Savings and Mortgage Bank v. Bangko Sentral ng Pilipinas, G.R. No.
200678, June 4, 2018

1.
Cu
v. Small Business Guarantee and Finance Corp.

G.R. No. 211222, August 7, 2017

Facts:
On August 31, 2007, an "Omnibus Credit Line Agreement" was executed, whereby G7 Bank
was initially granted credit line by SB Corp. for re-lending to qualified MSMEs as sub-
borrowers. The Board of Directors of G7 Bank authorized any two of its officers, namely Fidel
L. Cu, Allan S. Cu, Lucia C. Pascual and Norma B. Cueto, as signatories to loan documents,
including postdated checks. Subsequently, various drawdowns were made from the line and
each drawdown was covered by a promissory note, amortization schedule and postdated
check.

On July 31, 2008, Bangko Sentral ng Pilipinas (BSP) placed G7 Bank under receivership by
the Philippine Deposit Insurance Corporation (PDIC). Consequently, PDIC closed all of G7
Bank's deposit accounts with other banks, including its checking account with the Land Bank of
the Philippines (LBP) against which the disputed checks were issued. Upon maturity of the
subject postdated checks in October 2008, SB Corp. deposited the same to its account with
the LBP Makati branch but all of them were dishonored for reason of "Account Closed". SB
Corp. filed the corresponding case for BP 22.

Issue:
Whether or not the dismissal of the criminal case against Cu is in order.

Ruling:
Yes. Here, the subject postdated checks were deposited by SB Corp. in October 2008, and
dishonored for reason of "Account Closed," after the closure of G7 Bank and after the PDIC,
through its Deputy Receiver, had taken over G7 Bank, its premises, assets and records on
August 1, 2008 and had issued a cease and desist order against the members of the Board of
Directors and officers of G7 Bank and closed all its deposit accounts with other banks,
including its checking account with the LBP against which the five disputed checks were
issued.

At the time SB Corp. presented the subject checks for deposit/encashment in October 2008, it
had no right to demand payment because the underlying obligation was not yet due and
demandable from Cu and he could not be held liable for the civil obligations of G7 Bank
covered by the subject dishonored checks on account of the Monetary Board's closure of G7
Bank and the takeover thereof by PDIC. Even payment of interest on G7 Bank's loan ceased
upon its closure.
Moreover, as of the time of presentment of the checks, there was yet no determination of the
exact amount that SB Corp. was entitled to recover from G7 Banks. SB Corp. knew at the time
it deposited in October 2008 the subject postdated checks that G7 Bank was already under
receivership and PDIC had already taken over the bank by virtue of the Monetary Board's
closure thereof. SB Corp. acted in clear bad faith because with G7 Bank's closure and PDIC
taking over its assets and closing all of its deposit and checking accounts, including that with
LBP, there was no way that Cu or any officer of the bank could fund the said checks. Stated
otherwise, it was legally impossible for Cu to fund those checks on the dates indicated therein,
which were all past G7 Bank's closure because all the bank accounts of G7 Bank were closed
by PDIC.

2.
So
v. Philippine Deposit Insurance Corp.

G.R. No. 230020, March 19, 2018

Facts:
Petitioner opened an account with the Cooperative Rural Bank Bulacan (CRBB) on April 17,
2013, amounting to P300,000. On the same year, however, petitioner learned that CRBB
closed its operations and was placed under Philippine Deposit Insurance Corporation's
(PDIC's) receivership. This prompted petitioner, together with other depositors, to file an
insurance claim with the PDIC on November 8, 2013. Upon investigation, the PDIC found that
petitioner's account originated from and was funded by the proceeds of a terminated SISA
(mother account), jointly owned by a certain Reyes family. Thus, based on the determination
that petitioner's account was among the product of the splitting of the said mother account
which is prohibited by law, PDIC denied petitioner's claim for payment of deposit insurance.

Issue:
Whether or not RTC has jurisdiction over a petition for certiorari filed under Rule 65, assailing
the PDIC's denial of a deposit insurance claim?

Ruling:
No. PDIC has the duty and authority to determine the validity of and grant or deny deposit
insurance claims. Section 16(a) of its Charter, as amended, provides that PDIC shall
commence the determination of insured deposits due the depositors of a closed bank upon its
actual take over of the closed bank. As stated in Section 4(f) of its Charter, as amended,
PDIC's action, such as denying a deposit insurance claim, is considered as final and executory
and may be reviewed by the court only through a petition for certiorari on the ground of grave
abuse of discretion.

The legislative intent in creating the PDIC as a quasi-judicial agency is clearly manifest.
Indeed, PDIC exercises judicial discretion and judgment in determining whether a claimant is
entitled to a deposit insurance claim, which determination results from its investigation of facts
and weighing of evidence presented before it. Clearly, a petition for certiorari, questioning the
PDIC's denial of a deposit insurance claim should be filed before the CA, not the RTC.

3.
Alfeo D. Vivas
v. Monetary Board and PDIC
G.R. No. 191424, August 7, 2013

Facts:
The Rural Bank of Faire, Incorporated (RBFI) corporate life expired on May 31, 2005.1
Notwithstanding, petitioner Alfeo D. Vivas (Vivas) and his principals acquired the controlling
interest in RBFI sometime in January 2006. At the initiative of Vivas and the new management
team, an internal audit was conducted on RBFI and results thereof highlighted the dismal
operation of the rural bank. On December 8, 2006, the Bangko Sentral ng Pilipinas (BSP)
issued the Certificate of Authority extending the corporate life of RBFI for another fifty (50)
years. The BSP also approved the change of its corporate name to EuroCredit Community
Bank, Incorporated, as well as the increase in the number of the members of its BOD, from five
(5) to eleven (11).

Through its letter, dated September 30, 2008, the BSP furnished ECBI with a copy of the
Report of Examination (ROE) as of December 31, 2007. In addition, the BSP directed the
bank’s BOD and senior management to: infuse fresh capital; 2] book the amount of P28.563
million representing unbooked valuation reserves on classified loans and other risks assets on
or before October 31, 2008; and 3] take appropriate action necessary to address the
violations/exceptions noted in the examination. Vivas moved for a reconsideration of
Resolution No. 1255 on the grounds of non-observance of due process and arbitrariness. The
ISD II, on several instances, had invited the BOD of ECBI to discuss matters pertaining to the
placement of the bank under PCA framework and other supervisory concerns before making
the appropriate recommendations to the MB.

The proposed meeting, however, did not materialize due to postponements sought by Vivas. In
view of ECBI’s refusal to comply with the required examination, the MB issued Resolution No.
726, dated May 14, 2009, imposing monetary penalty/fine on ECBI, and referred the matter to
the Office of the Special Investigation (OSI) for the filing of appropriate legal action. Assailing
MB Resolution No. 276, Vivas filed this petition for prohibition before this Court, ascribing
grave abuse of discretion to the MB for prohibiting ECBI from continuing its banking business
and for placing it under receivership.

Issue:
Whether or not the petition for prohibition should prosper Whether or not grave abuse of
discretion can be attributed to the MB for the issuance of the assailed Resolution No. 276.

Ruling:
1. No. To begin with, Vivas availed of the wrong remedy. The MB issued Resolution No. 276,
dated March 4, 2010, in the exercise of its power under R.A. No. 7653. Under Section 30
thereof, any act of the MB placing a bank under conservatorship, receivership or liquidation
may not be restrained or set aside except on a petition for certiorari. Pertinent portions of R.A.
7653 read: Section 30. – x x x x. The actions of the Monetary Board taken under this section or
under Section 29 of this Act shall be final and executory, and may not be restrained or set
aside by the court except on petition for certiorari on the ground that the action taken was in
excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of
jurisdiction. The petition for certiorari may only be filed by the stockholders of record
representing the majority of the capital stock within ten (10) days from receipt by the board of
directors of the institution of the order directing receivership, liquidation or conservatorship.
Moreover, even if treated as a petition for certiorari, the petition should have been filed with the
CA and not the SC.
2. No. The Court, in several cases, upheld the power of the MB to take over banks without
need for prior hearing. It is not necessary inasmuch as the law entrusts to the MB the
appreciation and determination of whether any or all of the statutory grounds for the closure
and receivership of the erring bank are present. The MB, under R.A. No. 7653, has been
invested with more power of closure and placement of a bank under receivership for
insolvency or illiquidity, or because the bank’s continuance in business would probably result in
the loss to depositors or creditors.

4.
Bangko Sentral ng Pilipinas
v. Banco Filipino Savings and Mortgage Bank

G.R. Nos. 178696 & 192607, July 30, 2018

Facts:
In Monetary Board Resolution No. 955 dated July 27, 1984, however, the CB-MB placed
BFSMB under conservatorship of one Basilio Estanislao. Eventually, pursuant to another
resolution, MB Resolution No. 75 dated January 25, 1985, the CB-MB ordered the closure of
BFSMB on the ground that the latter was found to be "insolvent and that its continuance in
business would involve probable loss to its depositors and creditors.

Thus, on July 1, 1994, BFSMB reopened and resumed business under the comptrollership of
the BSP. On July 14, 2004, BFSMB filed Petition for Revival of Judgment to enforce the
Decision of the Court in G.R. No. 70054 that became final and executory on February 4, 1992.
Said petition was filed against the CB-MB, represented by the CB- BOL, and the BSP-MB.
BSP-MB and CB-BOL separately moved to dismiss the petition. The RTC denied the motions
to dismiss. Aggrieved, BSP-MB and CB-BOL went to the Court of Appeals via separate
petitions for certiorari.

The CA dismissed BSP-MB’s petition for certiorari. However, another Division of the CA
granted CB-BOL’s petition and ordered the dismissal of BFSMB's Petition for Revival of
Judgment.BFSMB insists that the passage of RA No. 7653 tolled the period of prescription
because it rendered theenforceability of the judgment sought to be revived uncertain, i.e.,
when the enforceability of a final judgment becomes uncertain, the period for such purpose is
tolled and prescription does not operate. Further, it assertsthat the partial performance by BSP
of the subject judgment obligation further tolled the prescriptive period.

Issue:
1. Whether or not the passage of RA No. 7653 tolled the period of prescription
2. Whether or not, absent prescription, BFSMB‘s petition for revival of judgment must be
dismissed.

Ruling:
1. NO. First of all, contrary to BF's proposal, there was no vacuum created with the
passage of R.A.7653 that would render BF uncertain as against whom it can enforce its
rights. All powers, dutiesand functions vested by law in the Central Bank of the
Philippines were deemed transferred tothe BSP. The law provides that all references to
the Central Bank of the Philippines in any law or special charters shall be deemed to
refer to the BSP. Further, R.A. 7653 states that any asset orliability of the Central Bank
not transferred to the Bangko Sentral shall be retained andadministered, disposed of
 and liquidated by the Central Bank itself which shall continue to existas the CB Board
of Liquidators or CB-BOL.
In other words, the entities where the assets andliabilities of the Central Bank have
been transferred are readily identifiable. There is, thus, noreason for BF to use, as an
excuse for its delay to file an action to revive judgment, the creationof the BSP as the
new central monetary authority. It is apparent that there has been merelytransfer of
interest between the two entities, with the organization made more efficient by
thecreation of a body known as the CB-BOL. And worth noting is the fact that when
BFSMB finally filed the petition for revival of judgment in2004, it filed it against both the
BSP-MB and CB-BOL. BFSMB could have done the same andfiled the action against
both entities anytime within the ten year prescriptive period if it was reallyunsure which
of the two to go against.

2. YES. The judgment obligation had already been extinguished through performance.
Thus, what this Court obliged CB-MB to do was: (1) to reorganize, and (2) to reopen
BFSMB.Such reorganization and reopening, however, were imposed with conditions, to
wit: (1) that theybe done under the comptrollership of the CB-MB; and (2) the
reorganization of BFSMB should bedone under conditions to be prescribed by the CB-
MB. Note further, that the comptrollership andimposition of certain conditions by CBMB
were to be accomplished within a period, i.e., "until suchtime that petitioner bank can
continue in business with safety to its creditors, depositors and thegeneral public." But
most importantly, nothing in the dispositive of the subject decision specifiedand
enumerated how CB-MB was to reorganize BFSMB, or what conditions would be
imposed infurtherance thereof.

On this point, We agree with BSP-MB that, "the reliefs prayed for by BFSMB cannot be
mandatedby judicial compulsion through a mere revival of judgment considering that
they lie within thediscretion of the BSP-MB taking into account sound banking
principles." Verily, nothing changedwith the enactment of Republic Act No. 7653. BSP,
the independent central monetary authority established by the law, is still given
sufficient independence and latitude to carry out its mandate. It is evident that the
judgment obligation imposed by the Decision in G.R. No. 70054 had already been
extinguished through its performance - BFSMB had been reopened and reorganized
underthe comptrollership of the BSP -MB, which comptrollership lasted until January
20, 2000, upon the agreement of BSP-MB and BFSMB to implement the Memorandum
of Agreement dated December 20, 1999.

5.
Apex Bancrights Holdings, Inc.
v. Bangko Sentral ng Pilipinas

G.R. No. 214866, October 2, 2017

Facts:
EIB entered into a three-way merger with Urban Bank, Inc. (UBI) and Urbancorp Investments,
Inc. (UII) in an attempt to rehabilitate UBI which was then under receivership. EIB failed to
comply with the BSP's capital requirements, causing EIB's stockholders to commence the
process of selling the bank. On April 26, 2012, the BSP, through the Monetary Board, issued
Resolution No. 686 prohibiting EIB from doing business in the Philippines and placing it under
the receivership of PDIC, in accordance with Section 30 of Republic Act No. (RA) 7653. On
April 1, 2013, PDIC informed BSP that EIB can hardly be rehabilitated. Based on PDIC's report
that EIB was insolvent, the Monetary Board passed Resolution No. 571 on April 4, 2013
directing PDIC to proceed with the liquidation of EIB.

Issue:
Whether or not the CA correctly ruled that the Monetary Board did not gravely abuse its
discretion in issuing Resolution No. 571 which directed the PDIC to proceed with the
liquidation of EIB.

Ruling:
No. As correctly held by the CA, nothing in Section 30 of RA 7653 requires the BSP, through
the Monetary Board, to make an· independent determination of whether a bank may still be
rehabilitated or not. As expressly stated in the afore-cited provision, once the receiver
determines that rehabilitation is no longer feasible, the Monetary Board is simply obligated to:
(a) notify in writing the bank's board of directors of the same; and (b) direct the PDIC to
proceed with liquidation.

In sum, the Monetary Board's issuance of Resolution No. 571 ordering the liquidation of EIB
cannot be considered to be tainted with grave abuse of discretion as it was amply supported
by the factual circumstances at hand and made in accordance with prevailing law and
jurisprudence. To note, the "actions of the Monetary Board in proceedings on insolvency are
explicitly declared by law to be 'final and executory.' They may not be set aside, or restrained,
or enjoined by the courts, except upon 'convincing proof that the action is plainly arbitrary and
made in bad faith," which is absent in this case.

6.
Spouses Poon
v. Prime Savings Bank

G.R. No. 183794, June 13, 2016

Facts:
Petitioners owned a commercial building in Naga City, which they used for their bakery
business. On 3 November 2006, Matilde Poon and respondent executed a 10-year Contract of
Lease over the building for the latter's use as its branch office in Naga City.

Barely three years later, however, the BSP placed respondent under the receivership of the
Philippine Deposit Insurance Corporation (PDIC) by virtue of BSP Monetary Board Resolution
No. 22.

The BSP eventually ordered respondent's liquidation under Monetary Board Resolution No.
664.

On 12 May 2000, respondent vacated the leased premises and surrendered them to
petitioners. Subsequently, the PDIC issued petitioners a demand letter asking for the return of
the unused advance rental amounting to P3,480,000 on the ground that paragraph 24 of the
lease agreement had become inoperative, because respondent's closure constituted force
majeure.

Paragraph 24 of the lease contract provides that all advanced rentals shall be forfeited in favor
of the lessor.
Petitioners, however, refused the PDIC's demand. Consequently, respondent sued petitioners
before the RTC of Naga City for a partial rescission of contract and/or recovery of a sum of
money.

Issue:
Whether or not the closure of respondent's business was a fortuitous or an unforeseen event
that rendered the lease agreement functus officio.

Ruling:
No. There is no indication or allegation that the BSP's action in this case was tainted with
arbitrariness or bad faith. Instead, its decision to place respondent under receivership and
liquidation proceedings was pursuant to Section 30 of Republic Act No. 7653.

Respondent was partly accountable for the closure of its banking business. It cannot be said,
then, that the closure of its business was independent of its will.

The period during which the bank cannot do business due to insolvency is not a fortuitous
event, unless it is shown that the government's action to place a bank under receivership or
liquidation proceedings is tainted with arbitrariness, or that the regulatory body has acted
without jurisdiction.

7.
Bangko Sentral ng Pilipinas
v. Legaspi

G.R. No. 205966, March 2, 2016

Facts:
Petitioner BSP filed a Complaint for annulment of title, revocation of certificate and damages
(with application for TRO/writ of preliminary injunction) against respondents. Thereafter, the
RTC, on May 13, 2008, issued an Order mandating the issuance of preliminary injunction,
enjoining defendants from pursuing the construction, development and/or operation of a
dumpsite or landfill in the property subject of the complaint.

Herein respondent Legaspi filed a Motion to Dismiss dated August 15, 2008 alleging that the
RTC did not acquire jurisdiction over the person of the petitioner BSP because the suit is
unauthorized by petitioner BSP itself and that the counsel representing petitioner BSP is not
authorized and thus cannot bind the same petitioner. In opposing the Motion to Dismiss,
petitioner BSP argued that the complaint was filed pursuant to Monetary Board Resolution No.
8865, dated June 17, 2004, and that the complaint was verified by Geraldine Alag, Director of
Asset Management of the BSP, who stated that she was authorized by Monetary Board
Resolutions No. 805 dated June 17, 2008 and 1005 dated July 29, 2005. Petitioner BSP
further claimed that it is not precluded from being represented by a private counsel of its own
choice.

Issue:
Whether or not BSP lawfully engaged the services of the counsel.

Ruling:
Yes. Under Republic Act No. 7653, or the New Central Bank Act, the BSP Governor is
authorized to represent the Bangko Sentral, either personally or through counsel, including
private counsel, as may be authorized by the Monetary Board, in any legal proceedings, action
or specialized legal studies. Under the same law, the BSP Governor may also delegate his
power to represent the BSP to other officers upon his own responsibility.

It is significant to note that neither the Governor or General Counsel nor the Monetary Board of
BSP has come out to disown the authority given for the filing of the instant suit and for the
engagement of the services of BSP's counsel of record in this case. In cases involving the
BSP, the Monetary Board may authorize the BSP Governor to represent it personally or
through a counsel, even a private counsel, and the authority to represent the BSP may be
delegated to any of its officers.

8.
Vivas
v. The Monetary Board

G.R. No. 191424, August 7, 2013

Facts:
The Rural Bank of Faire, Incorporated (RBFI) corporate life expired on May 31, 2005.1
Notwithstanding, petitioner Alfeo D. Vivas (Vivas) and his principals acquired the controlling
interest in RBFI sometime in January 2006. At the initiative of Vivas and the new management
team, an internal audit was conducted on RBFI and results thereof highlighted the dismal
operation of the rural bank.

On December 8, 2006, the Bangko Sentral ng Pilipinas (BSP) issued the Certificate of
Authority extending the corporate life of RBFI for another fifty (50) years. The BSP also
approved the change of its corporate name to EuroCredit Community Bank, Incorporated, as
well as the increase in the number of the members of its BOD, from five (5) to eleven (11).

Through its letter, dated September 30, 2008, the BSP furnished ECBI with a copy of the
Report of Examination (ROE) as of December 31, 2007. In addition, the BSP directed the
bank’s BOD and senior management to: infuse fresh capital; 2] book the amount of P28.563
million representing unbooked valuation reserves on classified loans and other risks assets on
or before October 31, 2008; and 3] take appropriate action necessary to address the
violations/exceptions noted in the examination.

Vivas moved for a reconsideration of Resolution No. 1255 on the grounds of non-observance
of due process and arbitrariness. The ISD II, on several instances, had invited the BOD of
ECBI to discuss matters pertaining to the placement of the bank under PCA framework and
other supervisory concerns before making the appropriate recommendations to the MB. The
proposed meeting, however, did not materialize due to postponements sought by Vivas.

In view of ECBI’s refusal to comply with the required examination, the MB issued Resolution
No. 726, dated May 14, 2009, imposing monetary penalty/fine on ECBI, and referred the
matter to the Office of the Special Investigation (OSI) for the filing of appropriate legal action.
Assailing MB Resolution No. 276, Vivas filed this petition for prohibition before this Court,
ascribing grave abuse of discretion to the MB for prohibiting ECBI from continuing its banking
business and for placing it under receivership.

Issue:
Whether or not the petition for prohibition should prosper

Whether or not grave abuse of discretion can be attributed to the MB for the issuance of the
assailed Resolution No. 276.

Ruling:
1. No. To begin with, Vivas availed of the wrong remedy. The MB issued Resolution No. 276,
dated March 4, 2010, in the exercise of its power under R.A. No. 7653. Under Section 30
thereof, any act of the MB placing a bank under conservatorship, receivership or liquidation
may not be restrained or set aside except on a petition for certiorari. Pertinent portions of R.A.
7653 read:

Section 30. –

x x x x.

The actions of the Monetary Board taken under this section or under Section 29 of this Act
shall be final and executory, and may not be restrained or set aside by the court except on
petition for certiorari on the ground that the action taken was in excess of jurisdiction or with
such grave abuse of discretion as to amount to lack or excess of jurisdiction. The petition for
certiorari may only be filed by the stockholders of record representing the majority of the
capital stock within ten (10) days from receipt by the board of directors of the institution of the
order directing receivership, liquidation or conservatorship.

Moreover, even if treated as a petition for certiorari, the petition should have been filed with the
CA and not the SC.

2. No. The Court, in several cases, upheld the power of the MB to take over banks without
need for prior hearing. It is not necessary inasmuch as the law entrusts to the MB the
appreciation and determination of whether any or all of the statutory grounds for the closure
and receivership of the erring bank are present. The MB, under R.A. No. 7653, has been
invested with more power of closure and placement of a bank under receivership for
insolvency or illiquidity, or because the bank’s continuance in business would probably result in
the loss to depositors or creditors.

9.
Banco Filipino Savings and Mortgage Bank
v. Bangko Sentral ng Pilipinas

G.R. No. 200678, June 4, 2018

Facts:
On October 20, 2010, Banco Filipino filed a Petition For Certiorari and Mandamus with prayer
for issuance of a temporary restraining order and writ of preliminary injunction. It assailed the
alleged "arbitrary, capricious and illegal acts" of Bangko Sentral and of the Monetary Board in
coercing Banco Filipino to withdraw all its present suits in exchange of the approval of its
Business Plan. In particular, Banco Filipino alleged that Bangko Sentral and the Monetary
Board committed grave abuse of discretion in imposing an additional condition in Resolution
No. 1668 requiring it to withdraw its cases and waive all future cases since it was
unconstitutional and contrary to public policy. It prayed that a writ of mandamus be issued to
compel Bangko Sentral and the Monetary Board to approve and implement its business plan
and release its Financial Assistance and Regulatory Reliefs package.

Petitioner points out that there was nothing in the Philippine Deposit Insurance Corporation
Charter or in Republic Act No. 7653 that precludes its Board of Directors from suing on its
behalf. It adds that there was an obvious conflict of interest in requiring it to seek Philippine
Deposit Insurance Corporation's authority to file the case considering that Philippine Deposit
Insurance Corporation was under the control of herein respondent Monetary Board.

Issue:
Whether or not petitioner Banco Filipino, as a closed bank under receivership, could file this
Petition for Review without joining its statutory receiver, the Philippine Deposit Insurance
Corporation, as a party to the case.

Ruling:
No. A closed bank under receivership can only sue or be sued through its receiver, the
Philippine Deposit Insurance Corporation.

The relationship between the Philippine Deposit Insurance Corporation and a closed bank is
fiduciary in nature. Section 30 of Republic Act No. 7653 directs the receiver of a closed bank to
"immediately gather and take charge of all the assets and liabilities of the institution" and
"administer the same for the benefit of its creditors."

Thus, Republic Act No. 7653 provides that the receiver shall also "in the name of the
institution, and with the assistance of counsel as [it] may retain, institute such actions as may
be necessary to collect and recover accounts and assets of, or defend any action against, the
institution.

As fiduciary of the insolvent bank, Philippine Deposit Insurance Corporation conserves and
manages the assets of the bank to prevent the assets' dissipation. This includes the power to
bring and defend any action that threatens to dissipate the closed bank's assets.

A bank which has been ordered closed by the Bangko Sentral ng Pilipinas (Bangko Sentral) is
placed under the receivership of the Philippine Deposit Insurance Corporation. As a
consequence of the receivership, the closed bank may sue and be sued only through its
receiver, the Philippine Deposit Insurance Corporation. Any action filed by the closed bank
without its receiver may be dismissed.

6. Secrecy of bank deposits (RA 1405, as amended, and RA 6426, as amended)

1. Dona Adela Export International Inc., v. Trade and Investment Development
Corporation and the Bank of the Philippine Islands, G.R. No. 201931, February
11, 2015
2. Rizal Commercial Banking Corporation vs. Hi-Tri Development Corporation,
G.R. No. 192413, June 13, 2012 672 SCRA 514
3. Sibayan v. Alda, G.R. No. 233395, January 17, 2018
4. Intestate Estate of Pacioles v. Pacioles, Jr., G.R. No. 214415, October 15, 2018
 5. Estrada v Sandiganbayan, G.R. No. 217682, July 17, 2018
6. Ong Bun v. Bank of the Philippine Islands, G.R. No. 212362, March 14, 2018
7. Citystate v. Tobias, G.R. No. 227990, March 7, 2018
8. PSBank vs. Senate Impeachment Court G.R. No. 200238, February 9, 2012
9. BSB Group, Inc. vs. Sally Go, G.R. No. 168644, February 16, 2010
10. GSIS v. Court of Appeals G.R. No. 189206, June 8, 2011

1.
Dona Adela Export International Inc.,
v. Trade and Investment Development Corporation and the Bank of the Philippine
Islands,

G.R. No. 201931, February 11, 2015

Facts:
On August 23, 2006, petitioner filed a Petition for Voluntary Insolvency. On May 26, 2011,
petitioner, through its President Epifanio C. Ramos, Jr., and Technology Resource Center
(TRC) entered into a Dacion En Pago by Compromise Agreement wherein petitioner agreed to
transfer a 351-square meter parcel of land in favor of TRC in full payment of petitioner’s
obligation. The agreement bears the conformity of Atty. Gonzales as receiver. On November
15, 2011, the RTC rendered the assailed Decision approving the Dacion En Pago by
Compromise Agreement and the Joint Motion to Approve Agreement.

Petitioner filed a motion for partial reconsideration and claimed that TIDCORP and BPI’s
agreement imposes on it several obligations such as payment of expenses and taxes and
waiver of confidentiality of its bank deposits but it is not a party and signatory to the said
agreement.

Issue:
Whether or not the petitioner is bound by the provision in the BPI-TIDCORP Joint Motion to
Approve Agreement that petitioner shall waive its rights to confidentiality of its bank deposits
under R.A. No. 1405, as amended, otherwise known as the Law on Secrecy of Bank Deposits
and R.A. No. 8791, otherwise known as The General Banking Law of 2000.

Ruling:
No. In this case, the Joint Motion to Approve Agreement was executed by BPI and TIDCORP
only. There was no written consent given by petitioner or its representative, Epifanio Ramos,
Jr., that petitioner is waiving the confidentiality of its bank deposits.

The provision on the waiver of the confidentiality of petitioner’s bank deposits was merely
inserted in the agreement. It is clear therefore that petitioner is not bound by the said provision
since it was without the express consent of petitioner who was not a party and signatory to the
said agreement. Neither can petitioner be deemed to have given its permission by failure to
interpose its objection during the proceedings.

It is an elementary rule that the existence of a waiver must be positively demonstrated since a
waiver by implication is not normally countenanced. The norm is that a waiver must not only be
voluntary, but must have been made knowingly, intelligently, and with sufficient awareness of
the relevant circumstances and likely consequences. There is no showing that Atty. Gonzales
signified her conformity to the waiver of confidentiality of petitioner’s bank deposits.
2.
Rizal Commercial Banking Corporation
v. Hi-Tri Development Corporation,

G.R. No. 192413, June 13, 2012 672 SCRA 514

Facts:
The lots owned by Luz Bakunawa and her husband Manuel were sequestered by the
Presidential Commission on Good Government. Sometime in 1990, Teresita Millan, through
her representative, Jerry Montemayor, offered to buy said lots with the promise that she will
take care of clearing whatever preliminary obstacles there may be to effect a "completion of
the sale". However, for one reason or another, Millan was not able to clear said obstacles.

As a result, the Spouses Bakunawa rescinded the sale and offered to return to Millan her
downpayment. However, Millan refused to accept back the downpayment. Consequently, the
Spouses Bakunawa, through their company, the Hi-Tri, took out on October 28, 1991, a
Manager’s Check from RCBC-Ermita payable to Millan’s company Rosmil c/o Teresita Millan
and used this as one of their basis for a complaint against Millan and Montemayor.

On January 31, 2003, during the pendency of the abovementioned case and without the
knowledge of Hi-Tri and Spouses Bakunawa, RCBC reported the credit existing in favor of
Rosmil to the Bureau of Treasury as among its "unclaimed balances". On April 30, 2008,
Spouses Bakunawa settled amicably their dispute with Rosmil and Millan. Manuel Bakunawa,
inquired from RCBC-Ermita the availability of the Manager’s Check. Hi-Tri and Spouses
Bakunawa were however dismayed when they were informed that the amount was already
subject of the escheat proceedings before the RTC.

Issue:
Whether or not the allocated funds may be escheated in favor of the Republic

Ruling:
No. We find sufficient grounds to affirm the CA on the exclusion of the funds allocated for the
payment of the Manager’s Check in the escheat proceedings.

Escheat proceedings refer to the judicial process in which the state, by virtue of its sovereignty,
steps in and claims abandoned, left vacant, or unclaimed property, without there being an
interested person having a legal claim thereto.

We emphasize that escheat is not a proceeding to penalize depositors for failing to deposit to
or withdraw from their accounts. It is a proceeding whereby the state compels the surrender to
it of unclaimed deposit balances when there is substantial ground for a belief that they have
been abandoned, forgotten, or without an owner. As it is obvious from their foregoing actions
that they have not abandoned their claim over the fund, we rule that the allocated deposit,
subject of the Manager’s Check, should be excluded from the escheat proceedings.

We reiterate our pronouncement that the objective of escheat proceedings is state forfeiture of
unclaimed balances. We further note that there is nothing in the records that would show that
the OSG appealed the assailed CA judgments. We take this failure to appeal as an indication
of disinterest in pursuing the escheat proceedings in favor of the Republic.
3.
Sibayan
v. Alda,

G.R. No. 233395, January 17, 2018

Facts:
Elizabeth charged Norlina, who was then the Assistant Manager and Marketing Officer of
Banco De OroUnibank, Inc. (BDO) San Fernando, La Union Branch, with unauthorized
deduction of her BDO Savings Account with Account Number 0970097875, as well as for
failure to post certain check deposits to the said account.

As for Norlina's defense, she argued that the charges were only meant to harass her and BDO
as the latter previously filed a criminal case against Elizabeth, Ruby, and their cohorts, for
theft, estafa, and violation of Republic Act No. 8484, otherwise known as the Access Devise
Regulation Act of 1998.

Norlina also filed a Motion for Production of Documents18 praying that UCPB and BPI be
ordered to produce and allow the inspection and copying or photographing of the Statements
of Account pertaining to UCPB Account No. 2351047157 and BPI Account No. 85890237923,
respectively, alleging that Ruby is the legal and beneficial owner of both accounts.

Issue:
Whether or not petitioner Sibayan is entitled to the production of bank documents

Ruling:
No. The denial of the motion for production of bank documents pertaining to 1) UCPB Account
No. 2351047157 and 2) BPI Account No. 8589023792335 is justified as the bank accounts
sought to be examined are privileged. Section 2 of Republic Act No. 1405, otherwise known as
The Law on Secrecy of Bank Deposit.

Records show that the account holder or depositor of UCPB Account No. 2351047157 is
Ferdinand Oriente while the account holder or depositor of BPI Account No. 85890237923 is
Jovelyn Oriente. Perforce, the documents executed by Ruby purportedly granting BDO access
to the foregoing accounts do not equate to Ferdinand and Jovelyn's permissions. Based on
this alone, the denial for Norlina to gain access to these bank accounts is warranted.

4.
Intestate Estate of Pacioles
v. Pacioles, Jr.,

G.R. No. 214415, October 15, 2018

Facts:
Upon the death of Miguelita Ching Pacioles (Miguelita), she left several real properties, stock
investments, bank deposits and interests. On August 20, 1992, Emilio filed a petition for the
settlement of Miguelita's estate with prayer for his appointment as its regular administrator.
Among the properties left by Miguelita and included in the inventory of her estate were her two
dollar accounts with the Bank of the Philippine Islands (BPI)-San Francisco Del Monte (SFDM)
Branch (subject BPI account), the subject matter of the instant case.

However, said dollar accounts were closed and consolidated into a single account
(consolidated account) which is Account No. 003248-2799-14 under the names of Emilio and
Miguela Chuatoco or Emmanuel upon their written request addressed to the bank. On
September 30, 2011, Emilio filed a motion to allow him to withdraw money from the subject
BPI account to defray the cost of property taxes due on the real properties of Miguelita's
estate.

Issue:
Whether or not the order of release of funds from a joint foreign currency deposit account
without securing the consent of a co-depositor is proper.

Ruling:
No. The rule on foreign currency deposits is embodied in Section 8 of Republic Act No. 6426,
also known as the Foreign Currency Deposit Act of the Philippines. It is apparent that in
ordering the branch manager or any representative of BPI to release the money contained in a
foreign currency deposit account, the intestate court committed a violation of the law, which
expressly provides that all foreign currency deposits as defined by applicable laws are not
subject to any form of attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body. In an "and" joint account, as
in this case, the depositors are joint creditors of the bank and the signatures of all depositors
are necessary to allow withdrawal.

5.
Estrada
v Sandiganbayan,

G.R. No. 217682, July 17, 2018

Facts:
On September 11, 2013, several whistleblowers revealed the details of the Pork Barrel Scam
that involved the misuse or illegal diversion by certain legislators of their allocations from the
Priority Development Assistance Fund (PDAF) in connivance with Janet Lim Napoles. Acting
on the criminal complaints, the Office of the Ombudsman requested the Anti-Money
Laundering Council (AMLC) on October 11, 2013 to conduct a financial investigation of the
bank accounts of the petitioners and others. In the process of inquiring into Estrada's accounts,
the AMLC discovered that Estrada had transferred substantial sums of money to the accounts
of his wife, co-petitioner Ma. Presentacion Vitug Ejercito (Ejercito), on the dates relevant to the
Pork Barrel Scam. Considering that the transfers lacked apparent legal or economic
justifications, the AMLC concluded that the accounts were linked to a predicate crime of
plunder.

Hence, the AMLC filed in the CA a supplemental ex parte application for the bank inquiry to be
conducted on Ejercito's accounts, among others. On August 15, 2014, the CA granted the
supplemental ex parte application.

Issue:
1. Whether or not section 11 of R.A. No. 9160, as amended, violate the constitutionally
mandated right to due process and right to privacy?
2. Whether or not the ex parte application for a bank inquiry order provided for in Section 11 of
R.A. No. 9160, as amended, be applied retroactively.

Ruling:
1. No. The petitioners' assailing herein the constitutionality of Section 11 of R.A. No. 9160, as
amended, constitutes a collateral attack against such legal provision. A collateral attack
against a presumably valid law like R.A. No. 9160 is not permissible. Unless a law or rule is
annulled by a direct proceeding, the legal presumption of its validity stands. The
constitutionality of Section 11 of R.A. No. 9160, as amended, has been dealt with and upheld
in Subido, where we ruled that the AMLC's ex parte application for the bank inquiry order
based on Section 11 of R.A. No. 9160, as amended by R.A. No. 10167, did not violate
substantive due process because the physical seizure of the targeted corporeal property was
not contemplated by the law.

2. Yes. The AMLC's inquiry and examination into bank accounts are not undertaken
whimsically based on its investigative discretion. The AMLC and the CA are respectively
required to ascertain the existence of probable cause before any bank inquiry order is issued.
Section 11 of R.A. 9160, even with the allowance of an ex parte application therefor, cannot be
categorized as authorizing the issuance of a general warrant.

6.
Ong Bun
v. Bank of the Philippine Islands,

G.R. No. 212362, March 14, 2018

Facts:
In 1989, Ma. Lourdes Ong, the wife of petitioner, purchased the following three (3) silver
custodian certificates (CC) in the Spouses' name from the Far East Bank & Trust Company
(FEBTC). Thereafter, FEBTC merged with BPI after about eleven years since the said CCs
were purchased. After the death of Ma. Lourdes Ong in December 2002, petitioner discovered
that the three CCs bought from FEBTC were still in the safety vault of his deceased wife and
were not surrendered to FEBTC.

BPI informed the petitioner that upon its merger with FEBTC in 2000, there were no Silver
Certificates of Deposit outstanding, which meant that the certificates were fully paid on their
respective participation's maturity dates which did not go beyond 1991. After about three years
from his discovery of the certificates, petitioner filed a complaint for collection of sum of money
and damages against BPI.

Issue:
Whether or not the possession of petitioner of the same CCs prove an outstanding deposit

Ruling:
Yes. The CA therefore, erred in suggesting that the possession of petitioner of the same CCs
does not prove an outstanding deposit because the latter are not the certificates of deposit
themselves. What proves the deposits of the petitioner are the Silver Certificates of Deposits
that have been admitted by the Trust Investments Group of the FEBTC to be in its custody as
clearly shown by the wordings used in the subject CCs.
There was no proof or evidence that petitioner or his late wife withdrew the said Silver
Certificates of Deposit. When the existence of a debt is fully established by the evidence
contained in the record, the burden of proving that it has been extinguished by payment
devolves upon the debtor who offers such defense to the claim of the creditor.

The CA further ruled that the surrender of the CCs is not required for the withdrawal of he
certificates of deposit themselves or for the payment of the Silver Certificates of Deposit,
hence, even if the holder has in his possession the said custodian certificates, this does not
ipso facto mean that he is an unpaid depositor of the bank. Such conclusion is illogical
because the very wordings contained in the CCs would suggest otherwise.

7.
Citystate
v. Tobias,

G.R. No. 227990, March 7, 2018

Facts:
Rolando Robles was promoted as manager for Citystate Savings Bank's Baliuag, Bulacan
branch. Robles persuaded Tobias to open an account with the petitioner, and thereafter to
place her money in some high interest rate mechanism, to which the latter yielded. Tobias was
later offered by Robles to sign-up in petitioner's back-to-back scheme which is supposedly
offered only to petitioner's most valued clients. Lured by the attractive offer, Tobias signed the
pertinent documents without reading its contents and invested a total of Php 1,800,000.00 to
petitioner through Robles.

Later, Tobias became sickly, thus she included her daughter and herein respondent Shellidie
Valdez (hereinafter referred to as Valdez), as co-depositor in her accounts with the petitioner.
In 2005, Robles failed to remit to respondents the interest as scheduled. Respondents tried to
reach Robles but he can no longer be found. On January 8, 2007, respondents filed a
Complaint for sum of money and damages. against Robles and the petitioner.

Issue:
Whether or not Robles and the bank are solidarily liable

Ruling:
Yes. The business of banking is one imbued with public interest. As such, banking institutions
are obliged to exercise the highest degree of diligence as well as high standards of integrity
and performance in all its transactions. In this light, respondents cannot be blamed for
believing that Robles has the authority to transact for and on behalf of the petitioner and for
relying upon the representations made by him.

After all, Robles as branch manager is recognized "within his field and as to third persons as
the general agent and is in general charge of the corporation, with apparent authority
commensurate with the ordinary business entrusted him and the usual course and conduct
thereof”.

8.
PSBank
v. Senate Impeachment Court

G.R. No. 200238, February 9, 2012

Facts:

9.
BSB Group, Inc.
v. Sally Go,

G.R. No. 168644, February 16, 2010

Facts:
Ricardo Bangayan is the President of petitioner, the BSB Group. Respondent Sally Go is
Bangayan’s wife and was employed in the company as a cashier. The petitioner filed a
complaint for qualified theft against respondent. Petitioner allege that several checks
representing the aggregate amount of ₱ 1,534,135.50 issued by the company’s customers in
payment of their obligation were, instead of being turned over to the company’s coffers,
indorsed by respondent who deposited the same to her personal banking account maintained
at Security Bank. During the trial, the prosecution was able to present in court the testimony of
Elenita Marasigan, the representative of Security Bank.
Issue:
Whether or not the testimony of Marasigan regarding respondent’s bank deposits is violative of
the absolutely confidential nature of bank deposits and, hence, excluded by operation of R.A.
No. 1405
Ruling:
Yes. It comes clear that the admission of testimonial and documentary evidence relative to
respondent’s Security Bank account serves no other purpose than to establish the existence of
such account, its nature and the amount kept in it. It constitutes an attempt by the prosecution
at an impermissible inquiry into a bank deposit account the privacy and confidentiality of which
is protected by law. On this score alone, the objection posed by respondent in her motion to
suppress should have indeed put an end to the controversy at the very first instance it was
raised before the trial court.
In sum, we hold that the testimony of Marasigan on the particulars of respondent’s supposed
bank account with Security Bank and the documentary evidence represented by the checks
adduced in support thereof, are not only incompetent for being excluded by operation of R.A.
No. 1405. They are likewise irrelevant to the case, inasmuch as they do not appear to have
any logical and reasonable connection to the prosecution of respondent for qualified theft. We
find full merit in and affirm respondent’s objection to the evidence of the prosecution. The
Court of Appeals was, therefore, correct in reversing the assailed orders of the trial court.
A final note. In any given jurisdiction where the right of privacy extends its scope to include an
individual’s financial privacy rights and personal financial matters, there is an intermediate or
heightened scrutiny given by courts and legislators to laws infringing such rights. Should there
be doubts in upholding the absolutely confidential nature of bank deposits against affirming the
authority to inquire into such accounts, then such doubts must be resolved in favor of the
former. This attitude persists unless congress lifts its finger to reverse the general state policy
respecting the absolutely confidential nature of bank deposits.

10.
GSIS
v. Court of Appeals

G.R. No. 189206, June 8, 2011

Facts:
The controversy originated from a surety agreement by which Domsat obtained a surety bond
from GSIS to secure the payment of the loan from the Banks. When Domsat failed to pay the
loan, GSIS refused to comply with its obligation reasoning that Domsat did not use the loan
proceeds for the payment of rental for the satellite. GSIS alleged that Domsat, with Westmont
Bank as the conduit, transferred the U.S. $11 Million loan proceeds from the Industrial Bank of
Korea to Citibank New York account of Westmont Bank and from there to the Binondo Branch
of Westmont Bank. The Banks filed a complaint before the RTC of Makati against Domsat and
GSIS. The subject of this petition for certiorari is the Decision of the Court of Appeals in CA-
G.R. SP No. 8264 allowing the quashal by the Regional Trial Court (RTC) of Makati of a
subpoena for the production of bank ledger.

Issue:
Whether or not respondent judge capriciously and arbitrarily ignored Section 2 of the Foreign
Currency Deposit Act (RA 6426) in ruling in his Orders dated September 1 and December 30,
2003 that the US$11,000,000.00 deposit in the account of respondent Domsat in Westmont
Bank is covered by the secrecy of bank deposit.

Ruling:
No. Section 8 of Republic Act No. 6426, which was enacted in 1974, and amended by
Presidential Decree No. 1035 and later by Presidential Decree No. 1246, provides: Section 8.
Secrecy of Foreign Currency Deposits. – All foreign currency deposits authorized under this
Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits
authorized under Presidential Decree No. 1034, are hereby declared as and considered of an
absolutely confidential nature and, except upon the written permission of the depositor, in no
instance shall foreign currency deposits be examined, inquired or looked into by any person,
government official, bureau or office whether judicial or administrative or legislative or any
other entity whether public or private; Provided, however, That said foreign currency deposits
shall be exempt from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever. (As amended by
PD No. 1035, and further amended by PD No. 1246, prom. Nov. 21, 1977.) Applying Section 8
of Republic Act No. 6426, absent the written permission from Domsat, Westmont Bank cannot
be legally compelled to disclose the bank deposits of Domsat, otherwise, it might expose itself
to criminal liability under the same act.

The basis for the application of subpoena is to prove that the loan intended for Domsat by the
Banks and guaranteed by GSIS, was diverted to a purpose other than that stated in the surety
bond. The Banks, however, argue that GSIS is in fact liable to them for the proper applications
of the loan proceeds and not vice-versa. We are however not prepared to rule on the merits of
this case lest we pre-empt the findings of the lower courts on the matter. The appellate court
maintained that the judge may, in the exercise of his sound discretion, grant the second motion
for reconsideration despite its being pro forma. The appellate court correctly relied on
precedents where this Court set aside technicality in favor of substantive justice. Furthermore,
the appellate court accurately pointed out that petitioner did not assail the defect of lack of
notice in its opposition to the second motion of reconsideration, thus it can be considered a
waiver of the defect.
7. General Banking Law of 2000 (RA 8791)
1. Philippine National Bank v. Pablo V. Raymundo, G.R. No. 208672, December 7,
2016
2. Anna Marie L. Gumabon v. Philippine National Bank, G.R. No. 202514, July 25,
2016
3. Dra. Mercedes Oliver v. Philippine Savings bank and Lilia Castro, G.R. No.
214567, April 04, 2016
4. Land Bank of the Philippines vs. Emmanuel Oñate, G.R. No. 192371, January
15, 2014
5. White Marketing Development Corporation, v. Grandwood Furniture and
Woodwork, Inc., G.R. No. 222407, November 23, 2016
6. Banco Filipino Savings and Mortgage Bank v. Bangko Sentral ng Pilipinas, G.R.
No. 200678, June 4, 2018
7. Apex Bancrights Holdings, Inc. v. Bangko Sentral ng Pilipinas, G.R. No.
214866, October 2, 2017
8. Subido, Pagente, Certeza, Mendoza and Binay Law Offices v. Court of Appeals,
G.R. No. 216914, December 6, 2016
9. Philippine National Bank v. Juan F. Vila, G.R. No. 213241, August 1, 2016
10. Dominador Apique v. Evangeline Fahnenstitch, G.R. No. 205705, August 5,
2015

1.
Philippine National Bank
v. Pablo V. Raymundo,

G.R. No. 208672, December 7, 2016

Facts:
On July 30, 1993, accused-appellee Pablo V. Raymundo, then Department Manager of PNB
San Pedro Branch, approved for deposit a foreign draft check to Merry May Juan in the
opening of the latter's checking account with PNB San Pedro Branch. Ms. Juan drew six (6)
PNB Checks which were approved for payment on the same day by Raymundo, without
waiting for the foreign draft check to be cleared by the PNB Foreign Currency Clearing Unit.

PNB received a telex message from BTCNY that the foreign draft check was dishonored for
being fraudulent. For irregularly approving the payment of the six (6) checks issued by Ms.
Juan, without waiting for the foreign draft check to be cleared, Raymundo, as then Department
Manager of PNB San Pedro Branch, was administratively charged by PNB.

Issue:
Whether or not Raymundo is liable

Ruling:
Yes. Raymundo's gross negligence is apparent in approving the payment of six (6) checks
negotiated by Ms. Juan on August 3, 1993 and August 5, 1993, without waiting for the foreign
draft check intended to fund the peso checking account she opened on July 30, 1993, to be
cleared by the PNB Foreign Currency Clearing Unit.
Since their business and industry are imbued with public interest, banks are required to
exercise extraordinary diligence, which is more than that of a Roman pater familias or a good
father of a family, in handling their transactions.

A bank's disregard of its own banking policy amounts to gross negligence, which is described
as "negligence characterized by the want of even slight care, acting or omitting to act in a
situation where there is duty to act, not inadvertently but willfully and unintentionally with a
conscious indifference to consequences insofar as other persons may be affected”.

2.
Anna Marie L. Gumabon
v. Philippine National Bank,

G.R. No. 202514, July 25, 2016

Facts:
The case stemmed from the PNB’s refusal to release Anna Marie’s money in a consolidated
savings account and in two foreign exchange time deposits. Anna Marie, together with her
mother Angeles and her siblings Anna Elena and Santiago, (the Gumabons) deposited with
the PNB Delta Branch $10,945.28 and $16,830.91. PNB sent letters to Anna Marie to inform
her that the PNB refused to honor its obligation under FXCTD Nos. 993902 and 993992, and
that the PNB withheld the release of the balance of ₱250,741.82 in the consolidated savings
account.

According to the PNB, Anna Marie pre-terminated, withdrew and/or debited sums against her
deposits. As to the two FXCTDs, Anna Marie contended that the PNB’s refusal to pay her time
deposits is contrary to law.The PNB cannot claim that the bank deposits have been paid since
the certificates of the time deposits are still with Anna Marie.

Issue:
Whether or not Anna Marie is entitled to the payment of the following amounts: (a) $10,058.01
or the outstanding balance under FXCTD No. 993902; (b) $20,244.42 for FXCTD No. 993992;
(c) ₱250,741.82 for SA No. 6121200; and (3) Damages.

Ruling:
Yes. PNB failed to establish the fact of payment to Anna Marie in FXCTD Nos. 993902 and
993992, and SA No. 6121200. The PNB’s failure to give a justifiable reason for the absence of
the original documents and to maintain a record of Anna Marie’s transactions only shows the
PNB’s dismal failure to fulfill its fiduciary duty to Anna Marie.

PNB is liable for Anna Marie’s claims since it failed to prove that it had already been
discharged from its obligation. PNB is liable for damages because although the bank’s
employees are the ones negligent, a bank is primarily liable for the employees’ acts because
banks are expected to exercise the highest degree of diligence in the selection and supervision
of their employees.

3.
Dra. Mercedes Oliver
v. Philippine Savings bank and Lilia Castro,
G.R. No. 214567, April 04, 2016

Facts:
Oliver alleged that sometime in 1997, she made an initial deposit of P12 million into her
PSBank account. Castro convinced her to loan out her deposit as financing for the approved
loans of bank borrowers who were waiting for the actual release of their loan proceeds. Under
this arrangement, Castro would first show the approved loan documents to Oliver.

Thereafter, Castro would withdraw the amount needed from Oliver’s account. Upon the actual
release of the loan by PSBank to the borrower, Castro would then charge the rate of 4% a
month from the loan proceeds as interim or bridge financing interest. Together with the interest
income, the principal amount previously withdrawn from Oliver’s bank account would be
deposited back to her account.

When Castro showed her the passbook sometime in late January or early February 1995, she
noticed several erasures and superimpositions therein. She became very suspicious of the
many erasures pertaining to the December 1998 entries so she requested a copy of her
transaction history register from PSBank. Transaction history register, however, showed
several transactions on these very same dates including the crediting of P4.5 million and the
debiting of P7 million on December 21, 1998. On July 14, 1999, a final demand letter was sent
to Oliver by PSBank, requiring her to pay the unpaid loans.

Issues:
1. Whether or not Oliver is liable for the loan reflecting in his passbook
2. Whether or not Castro and PNB is liable for the withdrawal amounting to 7 million pesos

Ruling:
1. Yes. There was an implied agency between Oliver and Castro thus the loans were properly
acquired. In this case, Oliver and Castro had a business agreement.

2. Yes. However, although it was proven that Oliver authorized the loans, in the aggregate
amount of P5,888,149.33, there was nothing in the records which proved that she also allowed
the withdrawal of P7 million from her bank account. Verily, Castro, as agent of Oliver and as
branch manager of PS Bank, utterly failed to secure the authorization of Oliver to withdraw
such substantial amount.

As a standard banking practice intended precisely to prevent unauthorized and fraudulent

withdrawals, a bank manager must verify with the client-depositor to authenticate and confirm
that he or she has validly authorized such withdrawal. Aside from Castro, PSBank must also
be held liable because it failed to exercise utmost diligence in the improper withdrawal of the
P7 million from Oliver’s bank account.

4.
Land Bank of the Philippines
vs. Emmanuel Oñate,

G.R. No. 192371, January 15, 2014

Facts:
Oñate opened and maintained seven trust accounts with Land Bank. Each trust account was
covered by an Investment Management Account (IMA) with Full Discretion and has a
corresponding passbook where deposits and withdrawals were recorded. Land Bank
demanded from Oñate the return of P4 million it claimed to have been inadvertently deposited
to Trust Account No. 01-125 as his additional funds but actually represents the total amount of
the checks issued to Land Bank by its corporate borrowers as payment for their pre-terminated
loans. Oñate refused.
On June 21, 1991, Land Bank unilaterally applied the outstanding balance in all of Oñate's
trust accounts against his resulting indebtedness by reason of the "miscrediting" of funds.
Issue:
Whether or not setoff was without legal and factual bases
Ruling:
Yes. Land Bank failed to prove that the "miscredited" funds came from the proceeds of the pre-
terminated loans of its corporate borrowers. As a bank and custodian of records, Land Bank
could have easily produced documents showing that its borrowers pre-terminated their loans,
the checks they issued as payment for such loans, and the deposit slips used in depositing
those checks. But it did not. As a consequence of its failure to prove the source of the claimed
"miscredited" funds, Land Bank had no right to debit the total amount of P1,471,416.52 and
must, therefore, restore the same. Land Bank was remiss in performing its duties under the
IMAs and as a banking institution.

5.
White Marketing Development Corporation,
v. Grandwood Furniture and Woodwork, Inc.,

G.R. No. 222407, November 23, 2016

Facts:
Respondent Grandwood Furniture & Woodwork, Inc. (Grandwood) obtained a loan in the
amount of ₱40,000,000.00 from Metropolitan Bank and Trust Company. Metrobank eventually
sold its rights and interests over the loan and mortgage contract to Asia Recovery Corporation
(ARC). The latter then assigned the same rights and interests to Cameron Granville 3 Asset
Management, Inc. After Grandwood failed to pay the loan which already amounted to
₱68,941,239.46, CGAM3 initiated extrajudicial foreclosure proceedings of the real estate
mortgage. During the September 17, 2013 Auction Sale, petitioner White Marketing
Development Corporation (White Marketing) was declared the highest bidder and a certificate
of sale was issued in its favor.

On November 21, 2013, White Marketing received a letter from the sheriff informing it that
Grandwood intended to redeem the foreclosed property. In response, White Marketing sent a
letter informing the sheriff that Grandwood no longer had the right to redeem. Petitioner White
Marketing insisted that Grandwood's right of redemption had lapsed because, under the
mortgage contract, the parties agreed that the same would be governed by R.A. No. 8791. It
argued that because the parties voluntarily stipulated on the governing law, the same was
binding on them. White Marketing asserted that when Metrobank assigned its rights, its
assignees acquired whatever rights the former had under the Real Estate Mortgage.

Issue:
Whether or not Sec. 47 of the General Banking Law is applicable in this case
Ruling:
Yes. The mortgage between Grandwood and Metrobank, as the original mortgagee, was
subject to the provisions of Section 47 of R.A. No. 8791. Section 47 provides that when a
property of a juridical person is sold pursuant to an extrajudicial foreclosure, it "shall have the
right to redeem the property in accordance with this provision until, but not after, the
registration of the Certificate of foreclosure sale with the applicable Register of Deeds which in
no case shall be more than three (3) months after foreclosure, whichever is earlier."

Applied in the present case, Grandwood had three months from the foreclosure or before the
certificate of foreclosure sale was registered to redeem the foreclosed property. This holds true
even when Metrobank ceased to be the mortgagee in view of its assignment to ARC of its
credit, because the latter acquired all the rights of the former under the mortgage contract-
including the shorter redemption period. The shorter redemption period should also redound to
the benefit of White Marketing as the highest bidder in the foreclosure sale as it stepped into
the shoes of the assignee-mortgagee.

6.
Banco Filipino Savings and Mortgage Bank
v. Bangko Sentral ng Pilipinas,

G.R. No. 200678, June 4, 2018

Facts:
On October 20, 2010, Banco Filipino filed a Petition For Certiorari and Mandamus with prayer
for issuance of a temporary restraining order and writ of preliminary injunction. It assailed the
alleged "arbitrary, capricious and illegal acts" of Bangko Sentral and of the Monetary Board in
coercing Banco Filipino to withdraw all its present suits in exchange of the approval of its
Business Plan. In particular, Banco Filipino alleged that Bangko Sentral and the Monetary
Board committed grave abuse of discretion in imposing an additional condition in Resolution
No. 1668 requiring it to withdraw its cases and waive all future cases since it was
unconstitutional and contrary to public policy. It prayed that a writ of mandamus be issued to
compel Bangko Sentral and the Monetary Board to approve and implement its business plan
and release its Financial Assistance and Regulatory Reliefs package.

Petitioner points out that there was nothing in the Philippine Deposit Insurance Corporation
Charter or in Republic Act No. 7653 that precludes its Board of Directors from suing on its
behalf. It adds that there was an obvious conflict of interest in requiring it to seek Philippine
Deposit Insurance Corporation's authority to file the case considering that Philippine Deposit
Insurance Corporation was under the control of herein respondent Monetary Board.

Issue:
Whether or not petitioner Banco Filipino, as a closed bank under receivership, could file this
Petition for Review without joining its statutory receiver, the Philippine Deposit Insurance
Corporation, as a party to the case.

Ruling:
No. A closed bank under receivership can only sue or be sued through its receiver, the
Philippine Deposit Insurance Corporation.

The relationship between the Philippine Deposit Insurance Corporation and a closed bank is
fiduciary in nature. Section 30 of Republic Act No. 7653 directs the receiver of a closed bank to
"immediately gather and take charge of all the assets and liabilities of the institution" and
"administer the same for the benefit of its creditors."

Thus, Republic Act No. 7653 provides that the receiver shall also "in the name of the
institution, and with the assistance of counsel as [it] may retain, institute such actions as may
be necessary to collect and recover accounts and assets of, or defend any action against, the
institution.

As fiduciary of the insolvent bank, Philippine Deposit Insurance Corporation conserves and
manages the assets of the bank to prevent the assets' dissipation. This includes the power to
bring and defend any action that threatens to dissipate the closed bank's assets.

A bank which has been ordered closed by the Bangko Sentral ng Pilipinas (Bangko Sentral) is
placed under the receivership of the Philippine Deposit Insurance Corporation. As a
consequence of the receivership, the closed bank may sue and be sued only through its
receiver, the Philippine Deposit Insurance Corporation. Any action filed by the closed bank
without its receiver may be dismissed.

7.
Apex Bancrights Holdings, Inc.
v. Bangko Sentral ng Pilipinas,

G.R. No. 214866, October 2, 2017

Facts:
EIB entered into a three-way merger with Urban Bank, Inc. (UBI) and Urbancorp Investments,
Inc. (UII) in an attempt to rehabilitate UBI which was then under receivership. EIB failed to
comply with the BSP's capital requirements, causing EIB's stockholders to commence the
process of selling the bank. On April 26, 2012, the BSP, through the Monetary Board, issued
Resolution No. 686 prohibiting EIB from doing business in the Philippines and placing it under
the receivership of PDIC, in accordance with Section 30 of Republic Act No. (RA) 7653.
On April 1, 2013, PDIC informed BSP that EIB can hardly be rehabilitated. Based on PDIC's
report that EIB was insolvent, the Monetary Board passed Resolution No. 571 on April 4, 2013
directing PDIC to proceed with the liquidation of EIB.
Issue:
Whether or not the CA correctly ruled that the Monetary Board did not gravely abuse its
discretion in issuing Resolution No. 571 which directed the PDIC to proceed with the
liquidation of EIB.
Ruling:
No. As correctly held by the CA, nothing in Section 30 of RA 7653 requires the BSP, through
the Monetary Board, to make an· independent determination of whether a bank may still be
rehabilitated or not. As expressly stated in the afore-cited provision, once the receiver
determines that rehabilitation is no longer feasible, the Monetary Board is simply obligated to:
(a) notify in writing the bank's board of directors of the same; and (b) direct the PDIC to
proceed with liquidation. In sum, the Monetary Board's issuance of Resolution No. 571
ordering the liquidation of EIB cannot be considered to be tainted with grave abuse of
discretion as it was amply supported by the factual circumstances at hand and made in
accordance with prevailing law and jurisprudence.
To note, the "actions of the Monetary Board in proceedings on insolvency are explicitly
declared by law to be 'final and executory.' They may not be set aside, or restrained, or
enjoined by the courts, except upon 'convincing proof that the action is plainly arbitrary and
made in bad faith," which is absent in this case.

8.
Subido, Pagente, Certeza, Mendoza and Binay Law Offices
v. Court of Appeals,

G.R. No. 216914, December 6, 2016

Facts:
8 March 2015, the Manila Times published an article entitled, "CA orders probe of Binay's
assets" reporting that the appellate court had issued a Resolution granting the ex-parte
application of the AMLC to examine the bank accounts of Subido Pagente Certeza Mendoza &
Binay Law Firm or SPCMB. SPCMB undertook direct resort to this Court via this petition for
certiorari and prohibition. In their Comment, the AMLC, through the Office of the Solicitor
General (OSG), points out a supposed jurisdictional defect of the instant petition, i.e., SPCMB
failed to implead the House of Representatives which enacted the AMLA and its amendments.

In all, the OSG argues for the dismissal of the present petition, highlighting that the AMLC's
inquiry into bank deposits does not violate due process nor the right to privacy. In their Reply,
SPCMB maintains that the ex-parte proceedings authorizing inquiry of the AMLC into certain
bank deposits and investments is unconstitutional, violating its rights to due process and
privacy.

Issue:
Whether or not Section 11 of AMLA violates due process

Ruling:
No. As presently worded, Section 11 of the AMLA has three elements: (1) ex-parte application
by the AMLC; (2) determination of probable cause by the CA; and (3) exception of court order
in cases involving unlawful activities defined in Sections 3(i)(1), (2), and (12). Succinctly,
Section 11 of the AMLA providing for ex-parte application and inquiry by the AMLC into certain
bank deposits and investments does not violate substantive due process, there being no
physical seizure of property involved at that stage.

Plainly, the AMLC's investigation of money laundering offenses and its determination of
possible money laundering offenses, specifically its inquiry into certain bank accounts allowed
by court order, does not transform it into an investigative body exercising quasi-judicial powers.
Hence, Section 11 of the AMLA, authorizing a bank inquiry court order, cannot be said to
violate SPCMB's constitutional right to procedural due process.

9.
Philippine National Bank
v. Juan F. Vila,
G.R. No. 213241, August 1, 2016

Facts:
Spouses Reynaldo Comista and Erlinda Gamboa Comista (Spouses Comista) obtained a loan
from Traders Royal Bank (Traders Bank). For failure of the Spouses Comista to make good of
their loan obligation after it has become due, Traders Bank foreclosed the mortgage
constituted on the security of the loan. Respondent Juan F. Vila (Vila) was declared as the
highest bidder. Despite the lapse of the redemption period and the fact of issuance of a
Certificate of Final Sale to Vila, the Spouses Comista were nonetheless allowed to buy back
the subject property by tendering the amount of ₱50,000.00. Vila filed an action for nullification
of redemption which was granted but was the sheriff was unable to enforce.

Upon investigation it was found out that during the interregnum the Spouses Comista were
able to secure a loan from the PNB in the amount of ₱532,000.00 using the same property
subject of litigation as security. Eventually, the Spouses Comista defaulted in the payment of
their loan obligation with the PNB prompting the latter to foreclose the property offered as
security. The bank emerged as the highest bidder. PNB to consolidate its ownership over the
subject property. To refute the allegations of Vila, PNB pounded that it was a mortgagee in
good faith.

Issue:
Whether or not PNB is a mortgagee in good faith

Ruling:
No. The PNB failed to observe the exacting standards required of banking institutions which
are behooved by statutes and jurisprudence to exercise greater care and prudence before
entering into a mortgage contract. No credible proof on the records could substantiate the
claim of PNB that a physical inspection of the property was conducted. We agree with both the
RTC and CA that if in fact it were true that ocular inspection was conducted, a suspicion could
have been raised as to the real status of the property. By failing to uncover a crucial fact that
the mortgagors were not the possessors of the subject property, We could not lend credence
to the claim of the bank that an ocular inspection of the property was conducted. What further
tramples upon PNB' s claim is the fact that, as shown on the records, it was Vila who was
religiously paying the taxes. The failure of the mortgagee to take precautionary steps would
mean negligence on his part and would thereby preclude it from invoking that it is a mortgagee
in good faith.

10.
Dominador Apique
v. Evangeline Fahnenstitch,

G.R. No. 205705, August 5, 2015

Facts:
As Evangeline was always in Germany, she opened a joint savings account on January 18,
1999 with Dominador at Banco de Oro. On February 11, 2002, Dominador withdrew the
amount of P980,000.00 from the subject account and, thereafter, deposited the money to his
own savings account. Evangeline demanded the return of the amount withdrawn from the joint
account, but to no avail. Hence, she filed a complaint.

Issue:
Whether or not Evangeline is entitled to the return of the amount of P980,000.00 Dominador
withdrew from their joint savings account with EPCIB, plus legal interest thereon

Ruling:
Yes. The common banking practice is that regardless of who puts the money into the account,
each of the named account holder has an undivided right to the entire balance, and any of
them may deposit and/or withdraw, partially or wholly, the funds without the need or consent of
the other, during their lifetime. Nevertheless, as between the account holders, their right
against each other may depend on what they have agreed upon, and the purpose for which
the account was opened and how it will be operated.

Under the foregoing circumstances, Dominador's right to obtain funds from the subject account
was, thus, conditioned on the necessity of funds for Evangeline's projects. Admittedly, at the
time he withdrew the amount of P980,000.00 from the subject account, there was no project
being undertaken for Evangeline.

8. Philippine Deposit Insurance Corporation Act (RA 3591, as amended)

1. Linsangan v. PDIC, G.R. No. 228807, February 11, 2019
2. So v. Philippine Deposit Insurance Corporation, G.R. No. 230020, March 19,
2018
3. Spouses Chugani v. PDIC, G.R. No. 230037, March 19, 2018
4. Philippine Deposit Insurance Corporation v. Citibank, N.A., G.R. No. 170290,
April 11, 2012
5. Apex Bancrights Holdings, Inc. v. Bangko Sentral ng Pilipinas, G.R. No.
214866, October 2, 2017
6. Allan S. Cu vs. Small Business Guarantee And Finance Corporation, G.R. No.
211222, August 7, 2017
7. Philippine Deposit Insurance Corporation v. Bureau of Internal Revenue, G.R.
No. 172892, June 13, 2013
8. Philippine Deposit Insurance Corporation v. Citibank and Bank of America, G.R.
No. 170290, April 11, 2012
9. Philippine Deposit Insurance Corporation v. Manu Gidwani G.R. No. 234616,
June 20, 2018
10. Philippine Deposit Insurance Corporation v. Phil. Countryside Rural Bank, G.R.
No. 176438, January 24, 2011
11. Dionisio-Castillo v. Philippine Deposit Insurance Corporation G.R. No. 243872,
June 17, 2019

1.
Linsangan
v. PDIC,

G.R. No. 228807, February 11, 2019

Facts:
Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) ordered the closure of the
Cooperative Rural Bank of Bulacan, Inc. (CRRBI). Petitioner filed a claim for payment of
deposit insurance for his Special Incentive Savings Account (SISA). Upon investigation, PDIC
found that petitioner's account originated from the account of "Cornelio Linsangan or Ligaya
Linsangan" (source account) with an opening balance of P1,531,993.42. On December 13,
2012, the source account was closed and its balance of P1,544,081.48 was transferred and
distributed to four accounts. PDIC discovered that petitioner is not a qualified relative of
Cornelio and Ligaya. Consequently, petitioner's account was consolidated with the other
legitimate deposits of Cornelio and Ligaya for purposes of computing the insurable deposit.
PDIC considered the source account holders Cornelio and Ligaya as the real owners of the
four resulting accounts. Thus, they were only entitled to the maximum deposit insurance of
P500,000.00.

Issue:
Whether or not petitioner is entitled to the amount deposited in his account

Ruling:
No. In deposit splitting, there is a presumption that the transferees have no beneficial
ownership considering that the source account, which exceeded the maximum deposit
insurance coverage, was split into two or more accounts within 120 days immediately
preceding bank closure. On the other hand, in cases wherein the transfer into two or more
accounts occurred before the 120-day period, the PDIC does not discount the possibility that
there may have been a transfer for valid consideration, but in the absence of transfer
documents found in the records of the bank at the time of closure, the presumption arises that
the source account remained with the transferor.

Consequently, even if the transfer into different accounts was not made within 120 days
immediately preceding bank closure, the grant of deposit insurance to an account found to
have originated from another deposit is not automatic because the transferee still has to prove
that the transfer was for a valid consideration through documents kept in the custody of the
bank. Even assuming that Cornelio donated the amount contained in the subject savings
account to petitioner, not one document evidencing the alleged donation is in the custody or
possession of the bank upon takeover by PDIC. Thus, the PDIC properly relied on the records
of the bank which showed that Cornelio's accounts remained in his name and for his account.

2.
So
v. Philippine Deposit Insurance Corporation,

G.R. No. 230020, March 19, 2018

Facts:
Petitioner opened an account with the Cooperative Rural Bank Bulacan (CRBB) on April 17,
2013, amounting to P300,000. On the same year, however, petitioner learned that CRBB
closed its operations and was placed under Philippine Deposit Insurance Corporation's
(PDIC's) receivership. This prompted petitioner, together with other depositors, to file an
insurance claim with the PDIC on November 8, 2013. Upon investigation, the PDIC found that
petitioner's account originated from and was funded by the proceeds of a terminated SISA
(mother account), jointly owned by a certain Reyes family. Thus, based on the determination
that petitioner's account was among the product of the splitting of the said mother account
which is prohibited by law, PDIC denied petitioner's claim for payment of deposit insurance.

Issue:
Whether or not RTC has jurisdiction over a petition for certiorari filed under Rule 65, assailing
the PDIC's denial of a deposit insurance claim?

Ruling:
No. PDIC has the duty and authority to determine the validity of and grant or deny deposit
insurance claims. Section 16(a) of its Charter, as amended, provides that PDIC shall
commence the determination of insured deposits due the depositors of a closed bank upon its
actual take over of the closed bank. As stated in Section 4(f) of its Charter, as amended,
PDIC's action, such as denying a deposit insurance claim, is considered as final and executory
and may be reviewed by the court only through a petition for certiorari on the ground of grave
abuse of discretion. The legislative intent in creating the PDIC as a quasi-judicial agency is
clearly manifest.

Indeed, PDIC exercises judicial discretion and judgment in determining whether a claimant is
entitled to a deposit insurance claim, which determination results from its investigation of facts
and weighing of evidence presented before it. Clearly, a petition for certiorari, questioning the
PDIC's denial of a deposit insurance claim should be filed before the CA, not the RTC.

3.
Spouses Chugani
v. PDIC,

G.R. No. 230037, March 19, 2018

Facts:
Petitioners, upon the invitation of Raymundo Garan (Garan), the President of Rural Bank of
Mawab (Davao), Inc., (RBMI), signified their intention to open Time Deposits with RBMI.
Sometime in September 2011, petitioners came to know that the Monetary Board of the
Bangko Sentral ng Pilipinas placed RBMI under receivership and thereafter closed the latter.
Petitioners, then filed claims for insurance of their time deposits.

Respondent Philippine Deposit Insurance Corporation (PDIC) denied the claims on the
following grounds: 1.) based on bank records submitted by RBMI, petitioners' deposit accounts
are not part of RBMI's outstanding deposit liabilities; 2.) the time deposits of petitioners are
fraudulent and their CTDs were not duly issued by RBMI, but were mere replicas of unissued
CTD's in the inventory submitted by RBMI to PDIC; and 3.) the amounts purportedly deposited
by the petitioners were credited to the personal account of Garan, hence, they could not be
construed as valid liabilities of RBMI.

Hence, petitioners filed a Petition for Certiorari under Rule 65 of the Rules of Court with the
Regional Trial Court (RTC).

Issue:
Whether or not the CA is correct in ruling that the RTC has no jurisdiction over the Petitions for
Certiorari filed by the petitioners

Ruling:
Yes. The PDIC has the power to prepare and issue rules and regulations to effectively
discharge its responsibilities. The power of the PDIC as to whether it will deny or grant the
claim for deposit insurance based on its rules and regulations partakes of a quasi-judicial
function.

Also, the fact that decisions of the PDIC as to deposit insurance shall be final and executory,
such that it can only be set aside by a petition for certiorari evinces the intention of the
Congress to make PDIC as a quasi-judicial agency. Consistent with Section 4,18 Rule 65, the
CA has the jurisdiction to rule on the alleged grave abuse of discretion of the PDIC.

Therefore, the CA is correct when it held that the RTC has no jurisdiction over the Petitions for
Certiorari filed by the petitioners questioning the PDIC's denial of their claim for deposit
insurance. Nevertheless, any question as to where the petition for certiorari should be filed to
question PDIC's decision on claims for deposit insurance has been put to rest by R.A. No.
10846. Section 7 therein provides: x x x x "The actions of the Corporation taken under Section
5(g) shall be final and executory, and may only be restrained or set aside by the Court of
Appeals, upon appropriate petition for certiorari on the ground that the action was taken in
excess of jurisdiction or with such grave abuse of discretion as to amount to a lack or excess
of jurisdiction.

The petition for certiorari may only be filed within thirty (30) days from notice of denial of claim
for deposit insurance." As it now stands, the remedy to question the decisions of the PDIC is
through a Petition for Certiorari under Rule 65 and filed before the CA.

4.
Philippine Deposit Insurance Corporation
v. Citibank, N.A.,

G.R. No. 170290, April 11, 2012

Facts:
PDIC conducted an examination of the books of account of Citibank. It discovered that
Citibank, in the course of its banking business, from September 30, 1974 to June 30, 1977,
received from its head office and other foreign branches a total of ₱11,923,163,908.00 in
dollars. As such, in a letter dated March 16, 1978, PDIC assessed Citibank for deficiency in the
sum of ₱1,595,081.96. Similarly, sometime in 1979, PDIC examined the books of accounts of
BA which revealed that from September 30, 1976 to June 30, 1978, BA received from its head
office and its other foreign branches a total of ₱629,311,869.10 in dollars.

PDIC wrote to BA on October 9, 1979, seeking the remittance of ₱109,264.83 representing

deficiency premium assessments for dollar deposits. In their petitions, Citibank and BA sought
a declaratory judgment stating that the money placements they received from their head office
and other foreign branches were not deposits and did not give rise to insurable deposit
liabilities under Sections 3 and 4 of R.A. No. 3591 (the PDIC Charter) and, as a consequence,
the deficiency assessments made by PDIC were improper and erroneous. PDIC argues that
the head offices of Citibank and BA and their individual foreign branches are separate and
independent entities.

Issue:
Whether or not the money placements they received from their head office and other foreign
branches were not deposits and did not give rise to insurable deposit liabilities under Sections
3 and 4 of R.A. No. 3591

Ruling:
No. The Court agrees with the CA ruling that there is nothing in the definition of a "bank" and a
"banking institution" in Section 3(b) of the PDIC Charter which explicitly states that the head
office of a foreign bank and its other branches are separate and distinct from their Philippine
branches. It is clear that the head office of a bank and its branches are considered as one
under the eyes of the law. While branches are treated as separate business units for
commercial and financial reporting purposes, in the end, the head office remains responsible
and answerable for the liabilities of its branches which are under its supervision and control.

As such, it is unreasonable for PDIC to require the respondents, Citibank and BA, to insure the
money placements made by their home office and other branches. Deposit insurance is
superfluous and entirely unnecessary when, as in this case, the institution holding the funds
and the one which made the placements are one and the same legal entity.

5.
Apex Bancrights Holdings, Inc.
v. Bangko Sentral ng Pilipinas,

G.R. No. 214866, October 2, 2017

Facts:
EIB entered into a three-way merger with Urban Bank, Inc. (UBI) and Urbancorp Investments,
Inc. (UII) in an attempt to rehabilitate UBI which was then under receivership. EIB failed to
comply with the BSP's capital requirements, causing EIB's stockholders to commence the
process of selling the bank. On April 26, 2012, the BSP, through the Monetary Board, issued
Resolution No. 686 prohibiting EIB from doing business in the Philippines and placing it under
the receivership of PDIC, in accordance with Section 30 of Republic Act No. (RA) 7653. On
April 1, 2013, PDIC informed BSP that EIB can hardly be rehabilitated. Based on PDIC's report
that EIB was insolvent, the Monetary Board passed Resolution No. 571 on April 4, 2013
directing PDIC to proceed with the liquidation of EIB.

Issue:
Whether or not the CA correctly ruled that the Monetary Board did not gravely abuse its
discretion in issuing Resolution No. 571 which directed the PDIC to proceed with the
liquidation of EIB.

Ruling:
No. As correctly held by the CA, nothing in Section 30 of RA 7653 requires the BSP, through
the Monetary Board, to make an· independent determination of whether a bank may still be
rehabilitated or not. As expressly stated in the afore-cited provision, once the receiver
determines that rehabilitation is no longer feasible, the Monetary Board is simply obligated to:
(a) notify in writing the bank's board of directors of the same; and (b) direct the PDIC to
proceed with liquidation.

In sum, the Monetary Board's issuance of Resolution No. 571 ordering the liquidation of EIB
cannot be considered to be tainted with grave abuse of discretion as it was amply supported
by the factual circumstances at hand and made in accordance with prevailing law and
jurisprudence. To note, the "actions of the Monetary Board in proceedings on insolvency are
explicitly declared by law to be 'final and executory.' They may not be set aside, or restrained,
or enjoined by the courts, except upon 'convincing proof that the action is plainly arbitrary and
made in bad faith," which is absent in this case.

6.
Allan S. Cu
v. Small Business Guarantee And Finance Corporation,

G.R. No. 211222, August 7, 2017

Facts:
On August 31, 2007, an "Omnibus Credit Line Agreement" was executed, whereby G7 Bank
was initially granted credit line by SB Corp. for re-lending to qualified MSMEs as sub-
borrowers. The Board of Directors of G7 Bank authorized any two of its officers, namely Fidel
L. Cu, Allan S. Cu, Lucia C. Pascual and Norma B. Cueto, as signatories to loan documents,
including postdated checks. Subsequently, various drawdowns were made from the line and
each drawdown was covered by a promissory note, amortization schedule and postdated
check. On July 31, 2008, Bangko Sentral ng Pilipinas (BSP) placed G7 Bank under
receivership by the Philippine Deposit Insurance Corporation (PDIC).

Consequently, PDIC closed all of G7 Bank's deposit accounts with other banks, including its
checking account with the Land Bank of the Philippines (LBP) against which the disputed
checks were issued. Upon maturity of the subject postdated checks in October 2008, SB Corp.
deposited the same to its account with the LBP Makati branch but all of them were dishonored
for reason of "Account Closed". SB Corp. filed the corresponding case for BP 22.

Issue:
Whether or not the dismissal of the criminal case against Cu is in order

Ruling:
Yes. Here, the subject postdated checks were deposited by SB Corp. in October 2008, and
dishonored for reason of "Account Closed," after the closure of G7 Bank and after the PDIC,
through its Deputy Receiver, had taken over G7 Bank, its premises, assets and records on
August 1, 2008 and had issued a cease and desist order against the members of the Board of
Directors and officers of G7 Bank and closed all its deposit accounts with other banks,
including its checking account with the LBP against which the five disputed checks were
issued.

At the time SB Corp. presented the subject checks for deposit/encashment in October 2008, it
had no right to demand payment because the underlying obligation was not yet due and
demandable from Cu and he could not be held liable for the civil obligations of G7 Bank
covered by the subject dishonored checks on account of the Monetary Board's closure of G7
Bank and the takeover thereof by PDIC. Even payment of interest on G7 Bank's loan ceased
upon its closure.

Moreover, as of the time of presentment of the checks, there was yet no determination of the
exact amount that SB Corp. was entitled to recover from G7 Banks. SB Corp. knew at the time
it deposited in October 2008 the subject postdated checks that G7 Bank was already under
receivership and PDIC had already taken over the bank by virtue of the Monetary Board's
closure thereof. SB Corp. acted in clear bad faith because with G7 Bank's closure and PDIC
taking over its assets and closing all of its deposit and checking accounts, including that with
LBP, there was no way that Cu or any officer of the bank could fund the said checks. Stated
otherwise, it was legally impossible for Cu to fund those checks on the dates indicated therein,
which were all past G7 Bank's closure because all the bank accounts of G7 Bank were closed
by PDIC.
7.
Philippine Deposit Insurance Corporation
v. Bureau of Internal Revenue,

G.R. No. 172892, June 13, 2013

Facts:
PDIC conducted an evaluation of RBTI’s financial condition and determined that RBTI
remained insolvent. Thus, the Monetary Board issued Resolution No. 675 dated June 6, 1997
directing PDIC to proceed with the liquidation of RBTI. The Bureau of Internal Revenue (BIR)
intervened as one of the creditors of RBTI. The BIR prayed that the proceedings be suspended
until PDIC has secured a tax clearance.

Issue:
Whether or not banks under liquidation by PDIC are covered by Section 52(C) of the Tax Code
of 1997.

Ruling:
No. Section 52(C) of the Tax Code of 1997 is not applicable to banks ordered placed under
liquidation by the Monetary Board, and a tax clearance is not a prerequisite to the approval of
the project of distribution of the assets of a bank under liquidation by the PDIC. First, Section
52(C) of the Tax Code of 1997 pertains only to a regulation of the relationship between the
SEC and the BIR with respect to corporations contemplating dissolution or reorganization.

On the other hand, banks under liquidation by the PDIC as ordered by the Monetary Board
constitute a special case governed by the special rules and procedures provided under Section
30 of the New Central Bank Act, which does not require that a tax clearance be secured from
the BIR. Second, only a final tax return is required to satisfy the interest of the BIR in the
liquidation of a closed bank, which is the determination of the tax liabilities of a bank under
liquidation by the PDIC. Third, it is not for this Court to fill in any gap, whether perceived or
evident, in current statutes and regulations as to the relations among the BIR, as tax collector
of the National Government; the BSP, as regulator of the banks; and the PDIC, as the receiver
and liquidator of banks ordered closed by the BSP.

8.
Philippine Deposit Insurance Corporation
v. Citibank and Bank of America,

G.R. No. 170290, April 11, 2012

Facts:

9.
Philippine Deposit Insurance Corporation
v. Manu Gidwani

G.R. No. 234616, June 20, 2018

Facts:
10.
Philippine Deposit Insurance Corporation
v. Phil. Countryside Rural Bank,

G.R. No. 176438, January 24, 2011

Facts:
On March 9, 2005, the PDIC Board adopted a resolution approving the conduct of an
investigation, on the basis of the Reports of Examination of the Bangko Sentral ng Pilipinas
(BSP) on ten (10) banks, four (4) of which are respondents. According to PDIC, in the course
of its investigation, PCRBI was found to have granted loans to certain individuals, which were
settled by way of dacion of properties. These properties, however, had already been previously
foreclosed and consolidated under the names of PRBI, BEAI and RBCI. PRBI and BEAI
refused entry to their bank premises and access to their records and documents by the PDIC
Investigation Team, upon advice of their respective counsels.

Issue:
Whether or not prior approval of the monetary board of the BSP is necessary before the PDIC
may conduct an investigation of respondent banks

Ruling:
No. After an evaluation of the respective positions of the parties, the Court is of the view that
the Monetary Board approval is not required for PDIC to conduct an investigation on the
Banks. The practical justification for not requiring the Monetary Board approval to conduct an
investigation of banks is the administrative hurdles and paperwork it entails, and the
correspondent time to complete those additional steps or requirements.

As in other types of investigation, time is always of essence, and it is prudent to expedite the
proceedings if an accurate conclusion is to be arrived at, as an investigation is only as precise
as the evidence on which it is based. The promptness with which such evidence is gathered is
always of utmost importance because evidence, documentary evidence in particular, is
remarkably fungible. A PDIC investigation is conducted to "determine[e] whether the
allegations in a complaint or findings in a final report of examination may properly be the
subject of an administrative, criminal or civil action."

In other words, an investigation is based on reports of examination and an examination is

conducted with prior Monetary Board approval. Therefore, it would be unnecessary to secure a
separate approval for the conduct of an investigation. Such would merely prolong the process
and provide unscrupulous individuals the opportunity to cover their tracks.

11.
Dionisio-Castillo
v. Philippine Deposit Insurance Corporation

G.R. No. 243872, June 17, 2019

Facts:

9. Intellectual Property Code (RA 8293) Patents, Trademarks & Copyrights

 1. E.I. Dupont de Nemours and Co. v. Francisco, G.R. No. 174379, August 31,
2016
2. Forientrans Manufacturing Corp v. Davidoff, G.R. No. 197482, March 6, 2017
3. Sison Olano v. Lim Eng Co., G.R. No. 195835, March 14, 2016
4. Seri Samboonsakdikul v. Oralane, G.R. No. 188996, February 1, 2017
5. Wilton Dy v. Koninklijike Philips Electronics, G.R. No. 186088, March 22, 2017
6. UFC Phil. v. Bario Fiesta, G.R. No. 198889, January 20, 2016
7. Taiwan Kolin Corporation, LTD. v. Kolin Electronics Co., Inc.,G.R. No. 209843,
March 25, 2015
8. Emerald Garment Manufacturing Corporation v. H.D. Lee Company, Inc., G.R.
No. 210693, June 7, 2017
9. Mang Inasal Philippines, Inc. v. IFP Manufacturing Corporation, G.R. No.
221717, June 19, 2017
10. Caterpillar, Inc. v. Manolo P. Samson, G.R. No. 205972 and G.R. No. 164352,
November 9, 2016

1.
E.I. Dupont de Nemours and Co.
v. Francisco,

G.R. No. 174379, August 31, 2016

Facts:
On July 10, 1987, E.I. Dupont Nemours filed Philippine Patent Application. The application was
for Angiotensin II Receptor Blocking Imidazole (losartan), an invention related to the treatment
of hypertension and congestive heart failure.

In its Petition for Revival, E.I. Dupont Nemours argued that its former counsel, Atty. Mapili, did
not inform it about the abandonment of the application, and it was not aware that Atty. Mapili
had already died. On April 18, 2002, the Director of Patents denied the Petition for Revival for
having been filed out of time.

Issues:
1. Whether or not the Court of Appeals erred in denying petitioner's appeal for the revival of its
patent application on the grounds that (a) petitioner committed inexcusable negligence in the
prosecution of its patent application; and (b) third-party rights and the public interest would be
prejudiced by the appeal;

2. Whether or not Schuartz applies to this case in that the negligence of a patent applicant's
counsel binds the applicant; and

Ruling:
1. No. Even assuming that the four (4)-month period could be extended, petitioner was
inexcussably negligent in the prosecution of its patent application.

Petitioner's resident agent, Atty. Mapili, was undoubtedly negligent in failing to respond to the
Office Action sent by the Bureau of Patents, Trademarks, and Technology Transfer on June
19, 1988. Because of his negligence, petitioner's patent application was declared abandoned.
He was again negligent when he failed to revive the abandoned application within four (4)
months from the date of abandonment.
2. Yes. "A lawyer's fidelity to the cause of his client requires him to be ever mindful of the
responsibilities that should be expected of him. A lawyer shall not neglect a legal matter
entrusted to him." In the instant case, petitioners' patent attorneys not only failed to take notice
of the notices of abandonment, but they failed to revive the application within the four-month
period, as provided in the rules of practice in patent cases. These applications are deemed
forfeited upon the lapse of such period.

2.
Forientrans Manufacturing Corp
v. Davidoff,

G.R. No. 197482, March 6, 2017

Facts:
BPI reported to respondents that "there were counterfeit Davidoff and JTI products or
deceivingly similar to Davidoff and JTI registered trademarks, being manufactured and stored"
in FMC' s warehouses. During their separate raids, the CIDG teams seized several boxes
containing raw tobacco, cigarettes, cigarette packs, and cigarette reams bearing the name
DAGETA and DAGETA International. They also secured machineries, receptacles, other
paraphernalia, sales invoices and official receipts.

Issue:
Whether or not the CA erred in ruling that Secretary Gonzalez committed grave abuse of
discretion in finding no probable cause to charge petitioners with trademark infringement and
false designation of origin.

Ruling:
No. The essential element of infringement is that the infringing mark is likely to cause
confusion. In this case, the complaint-affidavit for the Davidoff infringement case alleged
confusing similarity between the cigarette packs of the authentic Davidoff cigarette and the
sample Dageta cigarette pack seized during the search of FMC's premises. Davidoff (Exhibit 1)
Octagonal designed pack Black and red covering Silver coloring of the tear tape and printing
"Made in Germany by Reemtsman under license of Davidoff & CIE SA, Geneva"
Manufacturing Code imprinted on the base of the pack Writing at the back says: "These
carefully selected tobaccos have been skillfully blended to assure your pleasure" with the
signature of Zino Davidoff Dageta (Exhibit 2) Octagonal designed pack Black and red covering
Silver coloring of the tear tape and printing "Made m Germany under license of DAGETA &
Tobacco LT" Manufacturing Code imprinted on the base of the pack Writing at the back says:
"These specifically selected tobaccos have been professionally blended to ensure highest
quality" with Chinese letters underneath the name Dageta.

3.
Sison Olano
v. Lim Eng Co.,

G.R. No. 195835, March 14, 2016

Facts:
Sometime in 2002, LEC was invited by the architects of the Manansala Project (Project), a
high-end residential building in Rockwell Center, Makati City, to submit design/drawings and
specifications for interior and exterior hatch doors. LEC complied by submitting on July 16,
2002, shop plans/drawings, including the diskette therefor, embodying the designs and
specifications required for the metal hatch doors. After a series of consultations and revisions,
the final shop plans/drawings were submitted by LEC on January 15, 2004 and thereafter
copied and transferred to the title block of Ski-First Balfour Joint Venture (SKI-FB), the
Project's contractor, and then stamped approved for construction.

LEC was thereafter subcontracted by SKI-FB, to manufacture and install interior and exterior
hatch doors for the 7th to 22nd floors of the Project based on the final shop plans/drawings.
Sometime thereafter, LEC learned that Metrotech was also subcontracted to install interior and
exterior hatch doors for the Project's 23rd to 41st floors. On June 24, 2004, LEC demanded
Metrotech to cease from infringing its intellectual property rights. Metrotech, however, insisted
that no copyright infringement was committed because the hatch doors it manufactured were
patterned in accordance with the drawings provided by SKI-FB.

Issue:
Whether or not there is copyright infringement in this case

Ruling:
No. The respondent failed to substantiate the alleged reproduction of the drawings/sketches of
hatch doors copyrighted under Certificate of Registration Nos. 1-2004-13 and 1-2004-14.
There is no proof that the respondents reprinted the copyrighted sketches/drawings of LEC's
hatch doors. The raid conducted by the NBI on Metrotech's premises yielded no copies or
reproduction of LEC's copyrighted sketches/drawings of hatch doors. What were discovered
instead were finished and unfinished hatch doors. Certificate of Registration Nos. 1-2004-13
and 1-2004-14 pertain to class work "I" under Section 172 of R.A. No. 8293 which covers
"illustrations, maps, plans, sketches, charts and three-dimensional works relative to
geography, topography, architecture or science."

As such, LEC's copyright protection there under covered only the hatch door
sketches/drawings and not the actual hatch door they depict. Since the hatch doors cannot be
considered as either illustrations, maps, plans, sketches, charts and three-dimensional works
relative to geography, topography, architecture or science, to be properly classified as a
copyrightable class "I" work, what was copyrighted were their sketches/drawings only, and not
the actual hatch doors themselves. To constitute infringement, the usurper must have copied
or appropriated the original work of an author or copyright proprietor, absent copying; there
can be no infringement of copyright.

4.
Seri Samboonsakdikul
v. Oralane,

G.R. No. 188996, February 1, 2017

Facts:
On September 23, 2003, petitioner Seri Somboonsakdikul (petitioner) filed an application for
registration of the mark LOLANE with the IPO for goods classified under Class 3 (personal
care products) of the International Classification of Goods and Services for the Purposes of the
Registration of Marks (International Classification of Goods). Orlane S.A. (respondent) filed an
opposition to petitioner's application, on the ground that the mark LOLANE was similar to
ORLANE in presentation, general appearance and pronunciation, and thus would amount to
an infringement of its mark.

Petitioner denied that the LOLANE mark was confusingly similar to the mark ORLANE. He
averred that he was the lawful owner of the mark LOLANE which he has used for various
personal care products sold worldwide.

Issue:
Whether or not there is confusing similarity between ORLANE and LOLANE which would bar
the registration of LOLANE before the IPO.

Ruling:
No. There is no colorable imitation between the marks LOLANE and ORLANE which would
lead to any likelihood of confusion to the ordinary purchasers. A trademark is defined under
Section 121.1 of RA 8293 as any visible sign capable of distinguishing the goods. It is
susceptible to registration if it is crafted fancifully or arbitrarily and is capable of identifying and
distinguishing the goods of one manufacturer or seller from those of another. In determining
the likelihood of confusion, the Court must consider: [a] the resemblance between the
trademarks; [b] the similarity of the goods to which the trademarks are attached; [c] the likely
effect on the purchaser and [d] the registrant's express or implied consent and other fair and
equitable considerations.

In determining colorable imitation, we have used either the dominancy test or the holistic or
totality test. The dominancy test considers the similarity of the prevalent or dominant features
of the competing trademarks that might cause confusion, mistake, and deception in the mind of
the purchasing public. More consideration is given on the aural and visual impressions created
by the marks on the buyers of goods, giving little weight to factors like process, quality, sales
outlets, and market segments. On the other hand, the holistic test considers the entirety of the
marks as applied to the products, including the labels and packaging, in determining confusing
similarity. The focus is not only on the predominant words but also on the other features
appearing on the labels. Based on the distinct visual and aural differences between LOLANE
and ORLANE, we find that there is no confusing similarity between the two marks.

5.
Wilton Dy
v. Koninklijike Philips Electronics,

G.R. No. 186088, March 22, 2017

Facts:
On 12 April 2000, petitioner PHILITES filed a trademark application covering its fluorescent
bulb, incandescent light, starter and ballast. After publication, respondent Koninklijke Philips
Electronics, N .V. ("PHILIPS") filed a Verified Notice of Opposition. On 8 August 2006,
petitioner filed a Verified Answer, stating that its PHILITES & LETTER P DEVICE trademark
and respondent's PHILIPS have vast dissimilarities in terms of spelling, sound and meaning.

Issue:
Whether or not the mark applied for by petitioner is identical or confusingly similar with that of
respondent.

Ruling:
Yes. On one hand, the dominancy test focuses on "the similarity of the prevalent or dominant
features of the competing trademarks that might cause confusion, mistake, and deception in
the mind of the purchasing public.

On the other hand, the holistic or totality test necessitates a "consideration of the entirety of
the marks as applied to the products, including the labels and packaging, in determining
confusing similarity. Applying the dominancy test to this case requires us to look only at the
mark submitted by petitioner in its application, while we give importance to the aural and visual
impressions the mark is likely to create in the minds of the buyers. We agree with the findings
of the CA that the mark "PHILITES" bears an uncanny resemblance or confusing similarity with
respondent's mark "PHILIPS". The confusing similarity becomes even more prominent when
we examine the entirety of the marks used by petitioner and respondent, including the way the
products are packaged.

6.
UFC Phil.
v. Bario Fiesta,

G.R. No. 198889, January 20, 2016

Facts:
On April 4, 2002, respondent filed Application No. 4-2002-002757 for the mark "PAPA BOY &
DEVICE" for goods under Class 30, specifically for "lechon sauce". On December 11, 2006,
petitioner filed with the IPO-BLA a Verified Notice of Opposition. In its verified opposition
before the IPO, petitioner contended that "PAPA BOY & DEVICE" is confusingly similar with its
"PAPA" marks inasmuch as the former incorporates the term "PAP A," which is the dominant
feature of petitioner's "PAPA" marks. Petitioner averred that respondent's use of "PAPA BOY &
DEVICE" mark for its lechon sauce product, if allowed, would likely lead the consuming public
to believe that said lechon sauce product originates from or is authorized by petitioner, and
that the "PAPA BOY & DEVICE" mark is a variation or derivative of petitioner's "PAPA" marks.
Petitioner argued that this was especially true considering that petitioner's ketchup product and
respondent's lechon sauce product are related articles that fall under the same Class 30.

Issue:
Whether or not the court a quo erred in holding that there is no likelihood of confusion between
the contending marks given that the "PAPA BOY & DEVICE" mark is used on lechon sauce, as
opposed to ketchup products.

Ruling:
Yes. The scope of protection afforded to registered trademark owners is not limited to
protection from. infringers with identical goods. The scope of protection extends to protection
from infringers with related goods, and to market areas that are the normal expansion of
business of the registered trademark owners. The registered trademark owner may use his
mark on the same or similar products, in different segments of the market, and at different
price levels depending on variations of the products for specific segments of the market. The
Court has recognized that the registered trademark owner enjoys protection in product and
market areas that are the normal potential expansion of his business. A scrutiny of petitioner's
and respondent's respective marks would show that the IPO-BLA and the IPO Director
General correctly found the word "PAPA" as the dominant feature of petitioner's mark "PAPA
KETSARAP." Contrary to respondent's contention, "KETSARAP" cannot be the dominant
feature of the mark as it is merely descriptive of the product.

Furthermore, it is the "PAPA" mark that has been in commercial use for decades and has
established awareness and goodwill among consumers. We agree that respondent's mark
cannot be registered. Respondent's mark is related to a product, lechon sauce, an everyday
all-purpose condiment and sauce, that is not subjected to great scrutiny and care by the casual
purchaser, who knows from regular visits to the grocery store under what aisle to find it, in
which bottle it is contained, and approximately how much it costs. Since petitioner's product,
catsup, is also a household product found on the same grocery aisle, in similar packaging, the
public could think that petitioner had expanded its product mix to include lechon sauce, and
that the "PAPA BOY" lechon sauce is now part of the "PAPA" family of sauces, which is not
unlikely considering the nature of business that petitioner is in.

Thus, if allowed. registration, confusion of business may set in, and petitioner's hard-earned
goodwill may be associated to the newer product introduced by respondent, all because of the
use of the dominant feature of petitioner's mark on respondent's mark, which is the word
"PAPA.”

7.
Taiwan Kolin Corporation, LTD.
v. Kolin Electronics Co., Inc.,

G.R. No. 209843, March 25, 2015

Facts:
On February 29, 1996, Taiwan Kolin filed with the Intellectual Property Office (IPO), then
Bureau of Patents, Trademarks, and Technology Transfer, a trademark application, docketed
as Application No. 4-1996-106310, for the use of "KOLIN" on a combination of goods,
including colored televisions, refrigerators, window-type and split-type air conditioners, electric
fans and water dispensers. Said goods allegedly fall under Classes 9, 11, and 21 of the Nice
Classification (NCL). On July 13, 2006, respondent Kolin Electronics Co., Inc. (Kolin
Electronics) opposed petitioner’s revived application, docketed as Inter Partes Case No. 14-
2006-00096. As argued, the mark Taiwan Kolin seeks to register is identical, if not confusingly
similar, with its "KOLIN" mark registered on November 23, 2003, covering the following
products under Class 9 of the NCL: automatic voltage regulator, converter, recharger, stereo
booster, AC-DC regulated power supply, step-down transformer, and PA amplified AC-DC.

Issue:
Whether or not petitioner is entitled to its trademark registration of "KOLIN" over its specific
goods of television sets and DVD players

Ruling:
Yes. As mentioned, the classification of the products under the NCL is merely part and parcel
of the factors to be considered in ascertaining whether the goods are related. It is not sufficient
to state that the goods involved herein are electronic products under Class 9 in order to
establish relatedness between the goods, for this only accounts for one of many
considerations enumerated in Mighty Corporation.

Clearly then, it was erroneous for respondent to assume over the CA to conclude that all
electronic products are related and that the coverage of one electronic product necessarily
precludes the registration of a similar mark over another. In this digital age wherein electronic
products have not only diversified by leaps and bounds, and are geared towards
interoperability, it is difficult to assert readily, as respondent simplistically did, that all devices
that require plugging into sockets are necessarily related goods.

It bears to stress at this point that the list of products included in Class 941 can be sub-
categorized into five (5) classifications, namely: (1) apparatus and instruments for scientific or
research purposes, (2) information technology and audiovisual equipment, (3) apparatus and
devices for controlling the distribution and use of electricity, (4) optical apparatus and
instruments, and (5) safety equipment. From this sub-classification, it becomes apparent that
petitioner’s products, i.e., televisions and DVD players, belong to audio visiual equipment,
while that of respondent, consisting of automatic voltage regulator, converter, recharger, stereo
booster, AC-DC regulated power supply, step-down transformer, and PA amplified AC-DC,
generally fall under devices for controlling the distribution and use of electricity.

8.
Emerald Garment Manufacturing Corporation
v. H.D. Lee Company, Inc.,

G.R. No. 210693, June 7, 2017

Facts:
On December 21, 2001, H.D. Lee filed before the IPO an application for the registration of the
trademark, "LEE & OGIVE CURVE DESIGN." Emerald opposed H.D. Lee's application; hence,
Inter Partes Case No. 14-2007-00054 arose. Emerald argued that the approval of the
application will violate the exclusive use of its marks, "DOUBLE REVERSIBLE WA VE LINE,"
and "DOUBLE CURVE LINES," which it has been using on a line of clothing apparel since
1973 and 1980. Refuting Emerald's opposition, H.D. Lee insisted that it is the owner and prior
user of"LEE & OGIVE CURVE DESIGN." H.D. Lee maintained that it initially used the said
mark on Febniary 18, 1946, and registered the same in the United States of America (USA) on
April 10, 1984 under Registration No. 1,273,602. The mark has been commercially advertised
and used all over the world as well.

Issue:
Whether or not Emerald had prior actual use in the Philippines of the mark "DOUBLE
REVERSIBLE WAVE LINE (Back Pocket Design)" since October of 1973.

Ruling:
Yes. The Court had adjudged that Emerald had prior actual use in the Philippines of the mark
"DOUBLE REVERSIBLE WAVE LINE (Back Pocket Design)" since October of 1973. In Inter
Partes Case No. 3498, the IPO DG had ruled that Emerald started using the mark "DOUBLE
CURVE LINES' on January 8, 1980. On the other hand, H.D. Lee initially sold in the
Philippines garments with the mark "OGIVE CURVE DEVICE' only in 1996, and filed an
application for the said mark in the USA on November 9, 1981.
The Court needs to stress that in G.R. No. 195415 and Inter Partes Case No. 3498 before the
IPO, Emerald had already established with finality its rights over the registration of the marks
"DOUBLE CURVE LINES' and "DOUBLE REVERSIBLE WAVE LINE' as against H.D. Lee's
"OGIVE CURVE DESIGN." As a final note, the courts are reminded to be constantly vigilant in
extending their judicial gaze to cases related to the matters submitted for their resolution as to
ensure against judicial confusion and any seeming conflict in the judiciary 's decisions.

9.
Mang Inasal Philippines, Inc.
v. IFP Manufacturing Corporation,

G.R. No. 221717, June 19, 2017

Facts:
On May 26, 2011, respondent filed with the Intellectual Property Office (IPO) an application for
the registration of the mark "OK Hotdog Inasal Cheese Hotdog Flavor Mark" (OK Hotdog
Inasal mark) in connection with goods under Class 30 of the Nice Classification.

The application of respondent was opposed by petitioner Mang Inasal Philippines, Inc.
Petitioner averred that the OK Hotdog Inasal mark and the Mang Inasal mark share
similarities-both as to their appearance and as to the goods or services that they represent
which tend to suggest a false connection or association between the said marks and, in that
regard, would likely cause confusion on the part of the public.

Issue:
Whether or not OK Hotdog Inasal mark is confusingly similar to the Mang Inasal mark

Ruling:
Yes. The OK Hotdog Inasal Mark Is Similar to the Mang Inasal Mark The first condition of the
proscription requires resemblance or similarity between a prospective mark and an earlier
mark. Similarity does not mean absolute identity of marks. Similarity does not mean absolute
identity of marks. To be regarded as similar to an earlier mark, it is enough that a prospective
mark be a colorable imitation of the former. Colorable imitation denotes such likeness in form,
content, words, sound, meaning, special arrangement or general appearance of one mark with
respect to another as would likely mislead an average buyer in the ordinary course of
purchase. In determining whether there is similarity or colorable imitation between two marks,
authorities employ either the dominancy test or the holistic test. There are currently no fixed
rules as to which of the two tests can be applied in any given case. However, recent case law
on trademark seems to indicate an overwhelming judicial preference towards applying the
dominancy test. Given the foregoing premises, and applying the dominancy test, we hold that
the OK Hotdog Inasal mark is a colorable imitation of the Mang Inasal mark. First. The fact that
the conflicting marks have exactly the same dominant element is key. It is undisputed that the
OK Hotdog Inasal mark copied and adopted as one of its dominant features the "INASAL"
element of the Mang Inasal mark.

10.
Caterpillar, Inc.
v. Manolo P. Samson,
G.R. No. 205972 and G.R. No. 164352, November 9, 2016

Facts:
Caterpillar is a foreign corporation engaged in the manufacture and distribution of footwear,
clothing and related items, among others. Its products are known for six core trademarks,
namely, "CATERPILLAR", "CAT" "CATERPILLAR & DESIGN" "CAT AND DESIGN",
"WALKING MACHINES" and "TRACK-TYPE TRACTOR & DESIGN (Core Marks), all of which
are alleged as internationally known. On the other hand, Samson, doing business under the
names and styles of Itti Shoes Corporation, Kolm's Manufacturing Corporation and Caterpillar
Boutique and General Merchandise, is the proprietor of various retail outlets in the Philippines
selling footwear, bags, clothing, and related items under the trademark "CATERPILLAR",
registered in 1997 under Trademark Registration No. 64705 issued by the Intellectual Property
Office (IPO).

Caterpillar filed against Samson several criminal complaints for unfair competition. In the
meanwhile, in August 2002, upon receiving the information that Samson and his affiliate
entities continuously sold and distributed products bearing Caterpillar's Core Marks without
Caterpillar's consent, the latter requested the assistance of the Regional Intelligence and
Investigation Division of the National Region Public Police (RIID-NCRPO) for the conduct of an
investigation.

Issue:
Whether or not there is unfair competition in this case

Ruling:
No. It appears from the records that respondent started marketing his (class 25) products
bearing the trademark Caterpillar as early as 1992. In 1994, respondent caused the
registration of the trademark "Caterpillar With A Triangle Device Beneath The Letter [A]" with
the Intellectual Property Office. Sometime on June 16, 1997, the IPO issued Certificate of
Registration No. 64705 which appears to be valid for twenty (20) years, or up to June 16,
2017. Upon the strength of this registration, respondent continued with his business of
marketing shoes, slippers, sandals, boots and similar Class 25 items bearing his registered
trademark "Caterpillar".

Under the law, respondent's operative act of registering his Caterpillar trademark and the
concomitant approval/issuance by the governmental entity concerned, conferred upon him the
exclusive right to use said trademark unless otherwise declared illegal. There being no
evidence to controvert the fact that respondent's Certificate of Registration No. 64705 covering
Caterpillar trademark was fraudulently or illegally obtained, it necessarily follows that its
subsequent use and/or being passed on to the public militates malice or fraudulent intent on
the part of respondent. Otherwise stated and from the facts obtaining, presumption of
regularity lies, both from the standpoint of registration and use/passing on of the assailed
Caterpillar products. Complainant's argument that respondent may still be held liable for unfair
competition by reason of his having passed on five (5) other Caterpillar products like "Cat",
"Caterpillar", "Cat and Design", "Walking Machines" and "Track-Type Tractor Design" is
equally difficult to sustain. As may be gleaned from the records, respondent has been engaged
in the sale and distribution of Caterpillar products since 1992 leading to the establishment of
numerous marketing outlets.

As such, it would be difficult to assail the presumption that respondent has already established
goodwill insofar as his registered Caterpillar products are concerned. On the other hand,
complainant's registration of the other Caterpillar products appears to have been caused only
in 1995. In this premise, respondent may be considered as prior user, while the latter, a
subsequent one. Jurisprudence dictates that prior user of the trademark by one, will controvert
the claim by a subsequent one.

10. Anti-Money Laundering Act (RA 9160, as amended)

1. Subido Pagente Certeza Mendoza and Binay Law Offices v. CA, G.R. No.
216914, December 6, 2016
2. Ligot v. Republic, G.R. No. 176944, March 6, 2013
3. Republic of the Philippines v. Bolante, G.R. No. 186717, April 17, 2017
4. Estrada v. Sandiganbayan, G.R. No. 217682, July 17, 2018
5. Republic of the Philippines v Judge Eugenio, G.R. No. 174629, February 14,
2008
6. Republic of the Philippines v. Glasgow Credit, G.R. No. 170281, January 18,
2008

1.
Subido Pagente Certeza Mendoza and Binay Law Offices
v. Court of Appeals

G.R. No. 216914, December 6, 2016

Facts:
8 March 2015, the Manila Times published an article entitled, "CA orders probe of Binay's
assets" reporting that the appellate court had issued a Resolution granting the ex-parte
application of the AMLC to examine the bank accounts of Subido Pagente Certeza Mendoza &
Binay Law Firm or SPCMB. SPCMB undertook direct resort to this Court via this petition for
certiorari and prohibition.
In their Comment, the AMLC, through the Office of the Solicitor General (OSG), points out a
supposed jurisdictional defect of the instant petition, i.e., SPCMB failed to implead the House
of Representatives which enacted the AMLA and its amendments. In all, the OSG argues for
the dismissal of the present petition, highlighting that the AMLC's inquiry into bank deposits
does not violate due process nor the right to privacy. In their Reply, SPCMB maintains that the
ex-parte proceedings authorizing inquiry of the AMLC into certain bank deposits and
investments is unconstitutional, violating its rights to due process and privacy.
Issue:
Whether or not Section 11 of AMLA violates due process
Ruling:
No. As presently worded, Section 11 of the AMLA has three elements: (1) ex-parte application
by the AMLC; (2) determination of probable cause by the CA; and (3) exception of court order
in cases involving unlawful activities defined in Sections 3(i)(1), (2), and (12). Succinctly,
Section 11 of the AMLA providing for ex-parte application and inquiry by the AMLC into certain
bank deposits and investments does not violate substantive due process, there being no
physical seizure of property involved at that stage.
Plainly, the AMLC's investigation of money laundering offenses and its determination of
possible money laundering offenses, specifically its inquiry into certain bank accounts allowed
by court order, does not transform it into an investigative body exercising quasi-judicial powers.
Hence, Section 11 of the AMLA, authorizing a bank inquiry court order, cannot be said to
violate SPCMB's constitutional right to procedural due process.

2.
Ligot
v. Republic of the Philippines,

G.R. No. 176944, March 6, 2013

Facts:
On April 5, 2005, the Ombudsman for the Military and Other Law Enforcement Officers issued
a resolution holding that probable cause exists that Lt. Gen. Ligot violated Section 8, in relation
to Section 11, of RA No. 6713, as well as Article 183 of the Revised Penal Code. On May 25,
2005, the AMLC issued Resolution No. 52, Series of 2005, directing the Executive Director of
the AMLC Secretariat to file an application for a freeze order against the properties of Lt. Gen.
Ligot and the members of his family with the CA.
On June 27, 2005, the Republic of the Philippines (Republic), represented by the Anti-Money
Laundering Council (AMLC), filed an Urgent Ex-Parte Application for the issuance of a freeze
order with the CA against certain monetary instruments and properties of the petitioners.
The appellate court granted the application in its July 5, 2005 resolution, ruling that probable
cause existed that an unlawful activity and/or money laundering offense had been committed
by Lt. Gen. Ligot and his family, including Yambao, and that the properties sought to be frozen
are related to the unlawful activity or money laundering offense. Accordingly, the CA issued a
freeze order against the Ligots’ and Yambao’s various bank accounts, web accounts and
vehicles, valid for a period of 20 days from the date of issuance. On July 26, 2005, the
Republic filed an Urgent Motion for Extension of Effectivity of Freeze Order. CA granted the
motion in its September 20, 2005 resolution, extending the freeze order until after all the
appropriate proceedings and/or investigations have been terminated. On January 31, 2006,
the Ligots filed a motion for reconsideration of the CA’s January 4, 2006 resolution, insisting
that the freeze order should be lifted considering: (a) no predicate crime has been proven to
support the freeze order’s issuance; (b) the freeze order expired six months after it was issued
on July 5, 2005; and (c) the freeze order is provisional in character and not intended to
supplant a case for money laundering.
Issues:
1. Whether or not the 6-month extension period under the Rule in Civil Forfeiture Cases is
applicable in this case
2. Whether or not probable cause exists to support the issuance of a freeze order
3. Whether or not a freeze order may be issued for an indefinite period
Ruling:
1. Yes. Since the Ligots’ motion for reconsideration was still pending resolution at the time the
Rule in Civil Forfeiture Cases came into effect on December 15, 2005, the Rule
unquestionably applies to the present case.
2. Yes. Based on Section 10 of AMLA, there are only two requisites for the issuance of a
freeze order: (1) the application ex parte by the AMLC and (2) the determination of probable
cause by the CA. The probable cause required for the issuance of a freeze order differs from
the probable cause required for the institution of a criminal action. In other words, in resolving
the issue of whether probable cause exists, the CA’s statutorily-guided determination’s focus is
not on the probable commission of an unlawful activity (or money laundering) that the Office of
the Ombudsman has already determined to exist, but on whether the bank accounts, assets,
or other monetary instruments sought to be frozen are in any way related to any of the illegal
activities enumerated under RA No. 9160, as amended.
3. No. As correctly noted by the petitioners, a freeze order is meant to have a temporary effect;
it was never intended to supplant or replace the actual forfeiture cases where the provisional
remedy - which means, the remedy is an adjunct of or an incident to the main action – of
asking for the issuance of an asset preservation order from the court where the petition is filed
is precisely available. For emphasis, a freeze order is both a preservatory and preemptive
remedy. Thus, as a rule, the effectivity of a freeze order may be extended by the CA for a
period not exceeding six months.

3.
Republic of the Philippines
v. Bolante,

G.R. No. 186717, April 17, 2017

Facts:
In April 2005, the Philippine National Bank (PNB) submitted to the Anti-Money Laundering
Council (AMLC) a series of suspicious transaction reports involving the accounts of Livelihood
Corporation (LIVECOR), Molugan Foundation (Molugan), and Assembly of Gracious
Samaritans, Inc. The transactions were reported '"suspicious" because they had no underlying
legal or trade obligation, purpose or economic justification; nor were they commensurate to the
business or financial capacity of Molugan and AGS.
The AMLC issued Resolution No. 75 finding probable cause to believe that the accounts of
LIVECOR, Molugan and AGS - the subjects of the suspicious transaction reports submitted by
PNB - were related to what became known as the "fertilizer fund scam." Thus, the AMLC
authorized the filing of a petition for the issuance of an order allowing an inquiry into the six
accounts. The CA issued a freeze order effective for 20 days.
Issue:
Whether or not the RTC committed grave abuse of discretion in ruling that there exists no
probable cause to ailow an inquiry into the total of 76 deposits and investments of
respondents.
Ruling:
No. In the issuance of a bank inquiry order, the power to determine the existence of probable
cause is lodged in the trial court. The court receiving the application for inquiry order cannot
simply take the AMLC's word that probable cause exists that the deposits or investments are
related to an unlawful activity. We find no reason to conclude that the R TC determined the
existence of probable cause, or lack thereof, in an arbitrary and whimsical manner.
To repeat, the application for the issuance of a bank inquiry order was supported by only two
pieces of evidence: Senate Committee Report No. 54 and the testimony of witness Thelma
Espina. With the resources available to the AMLC, coupled with a bank inquiry order granted
15 months before Eugenio was even pro mu I gated, the AMLC should have been able to
obtain more evidence establishing a more substantive link tying Bolante and the fertilizer fund
scam to LIVECOR. It did not help that the AMLC failed to include in its application for a bank
inquiry order in AMLC SP Case No. 06-003 LIVECOR's PNB account as indicated in the
suspicious transaction reports.

4.
Estrada
v. Sandiganbayan,

G.R. No. 217682, July 17, 2018

Facts:
On September 11, 2013, several whistleblowers revealed the details of the Pork Barrel Scam
that involved the misuse or illegal diversion by certain legislators of their allocations from the
Priority Development Assistance Fund (PDAF) in connivance with Janet Lim Napoles
(Napoles), the whistleblowers' former employer.

Meanwhile, the AMLC, determining that Estrada's accounts were probably related to the
charge of plunder and the violation of R.A. No. 3019 charged against him and others,
authorized its secretariat to file in the Court of Appeals (CA) an ex parte application for bank
inquiry pursuant to R.A. No. 9160, as amended.

In the resolution promulgated on May 28, 2014, the CA granted the ex parte application.

The results of the AMLC's bank inquiry into Estrada's accounts were contained in the so-called
Inquiry Report on the Bank Transactions Related to the Alleged Involvement of Senator Jose
"Jinggoy" P. Ejercito Estrada in the PDAF Scam (Inquiry Report). On January 23, 2015,
Estrada filed the motion to suppress.

Issue:
Whether or not section 11 of R.A. No. 9160, as amended, violate the constitutionally mandated
right to due process and right to privacy

Ruling:
No. It is relevant to remind, however, that the constitutionality of Section 11 of R.A. No. 9160,
as amended, has been dealt with and upheld in Subido, where we ruled that the AMLC's ex
parte application for the bank inquiry order based on Section 11 of R.A. No. 9160, as amended
by R.A. No. 10167, did not violate substantive due process because the physical seizure of the
targeted corporeal property was not contemplated by the law.

We clarify that the AMLC, in investigating probable money laundering activities, does not
exercise quasi-judicial powers, but merely acts as an investigatory body with the sole power of
investigation similar to the functions of the National Bureau of Investigation (NBI). Hence, the
ex parte application for the bank inquiry order cannot be said to violate any person's
constitutional right to procedural due process.

5.
Republic of the Philippines
v. Judge Eugenio,

G.R. No. 174629, February 14, 2008

Facts:
A series of investigations concerning the award of the NAIA 3 contracts to PIATCO were
undertaken by the Ombudsman and the Compliance and Investigation Staff (CIS) of petitioner
Anti-Money Laundering Council (AMLC).
The search on the financial transactions of certain individuals involved in the award, including
respondent Pantaleon Alvarez (Alvarez) who had been the Chairman of the PBAC Technical
Committee, NAIA-IPT3 Project. By this time, Alvarez had already been charged by the
Ombudsman with violation of Section 3(j) of R.A. No. 3019. The search revealed that Alvarez
maintained eight (8) bank accounts with six (6) different banks.

On 27 June 2005, the AMLC issued Resolution No. 75, Series of 2005, whereby the Council
resolved to authorize the Executive Director of the AMLC "to sign and verify an application to
inquire into and/or examine the [deposits] or investments of Pantaleon Alvarez, et al.

Thereafter, on 4 July 2005, the Makati RTC rendered an Order (Makati RTC bank inquiry
order) granting the AMLC the authority to inquire and examine the subject bank accounts of
Alvarez et al.

Alvarez filed an Urgent Motion to Stay Enforcement of Order. Alvarez alleged that he
fortuitously learned of the bank inquiry order, which was issued following an ex parte
application, and he argued that nothing in R.A. No. 9160 authorized the AMLC to seek the
authority to inquire into bank accounts ex parte.

Issue:
Whether or not an application for an order authorizing inquiry into or examination of bank
accounts or investments under Section 11 of the AMLA ex-parte in nature

Ruling:
No. AMLA does not contemplate ex parte proceedings in applications for bank inquiry orders is
confirmed by the present implementing rules and regulations of the AMLA, promulgated upon
the passage of R.A. No. 9194. With respect to freeze orders under Section 10, the
implementing rules do expressly provide that the applications for freeze orders be filed ex
parte, but no similar clearance is granted in the case of inquiry orders under Section 11. These
implementing rules were promulgated by the Bangko Sentral ng Pilipinas, the Insurance
Commission and the Securities and Exchange Commission, and if it was the true belief of
these institutions that inquiry orders could be issued ex parte similar to freeze orders, language
to that effect would have been incorporated in the said Rules. This is stressed not because the
implementing rules could authorize ex parte applications for inquiry orders despite the absence
of statutory basis, but rather because the framers of the law had no intention to allow such ex
parte applications.

Of course, Section 11 also allows the AMLC to inquire into bank accounts without having to
obtain a judicial order in cases where there is probable cause that the deposits or investments
are related to kidnapping for ransom, certain violations of the Comprehensive Dangerous
Drugs Act of 2002, hijacking and other violations under R.A. No. 6235, destructive arson and
murder. Since such special circumstances do not apply in this case, there is no need for us to
pass comment on this proviso. Suffice it to say, the proviso contemplates a situation distinct
from that which presently confronts us, and for purposes of the succeeding discussion, our
reference to Section 11 of the AMLA excludes said proviso.

6.
Republic of the Philippines
v. Glasgow Credit,
G.R. No. 170281, January 18, 2008

Facts:
On July 18, 2003, the Republic filed a complaint in the RTC Manila for civil forfeiture of assets
against the bank deposits in account number CA-005-10-000121-5 maintained by Glasgow in
CSBI. On August 12, 2005, the OSG received a copy of Glasgow’s "Motion to Dismiss (By
Way of Special Appearance)" dated August 11, 2005. It alleged that (1) the court had no
jurisdiction over its person as summons had not yet been served on it; (2) the complaint was
premature and stated no cause of action as there was still no conviction for estafa or other
criminal violations implicating Glasgow and (3) there was failure to prosecute on the part of the
Republic.
The Republic opposed Glasgow’s motion to dismiss. It contended that its suit was an action
quasi in rem where jurisdiction over the person of the defendant was not a prerequisite to
confer jurisdiction on the court. It asserted that prior conviction for unlawful activity was not a
precondition to the filing of a civil forfeiture case and that its complaint alleged ultimate facts
sufficient to establish a cause of action. It denied that it failed to prosecute the case.

ISSUE:
Whether or not the complaint for civil forfeiture was correctly dismissed on grounds of improper
venue, insufficiency in form and substance and failure to prosecute.
RULING:
No. The trial court was a proper venue. On November 15, 2005, this Court issued A.M. No. 05-
11-04-SC, the Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation, and Freezing
of Monetary Instrument, Property, or Proceeds Representing, Involving, or Relating to an
Unlawful Activity or Money Laundering Offense under RA 9160, as amended (Rule of
Procedure in Cases of Civil Forfeiture). The order dismissing the Republic’s complaint for civil
forfeiture of Glasgow’s account in CSBI has not yet attained finality on account of the
pendency of this appeal.
Thus, the Rule of Procedure in Cases of Civil Forfeiture applies to the Republic’s complaint.
Section 3, Title II (Civil Forfeiture in the Regional Trial Court) of the Rule of Procedure in
Cases of Civil Forfeiture provides: Sec. 3. Venue of cases cognizable by the regional trial
court. – A petition for civil forfeiture shall be filed in any regional trial court of the judicial region
where the monetary instrument, property or proceeds representing, involving, or relating to an
unlawful activity or to a money laundering offense are located; xxx Under Section 3, Title II of
the Rule of Procedure in Cases of Civil Forfeiture, therefore, the venue of civil forfeiture cases
is any RTC of the judicial region where the monetary instrument, property or proceeds
representing, involving, or relating to an unlawful activity or to a money laundering offense are
located. Pasig City, where the account sought to be forfeited in this case is situated, is within
the National Capital Judicial Region (NCJR). Clearly, the complaint for civil forfeiture of the
account may be filed in any RTC of the NCJR. Since the RTC Manila is one of the RTCs of the
NCJR, it was a proper venue of the Republic’s complaint for civil forfeiture of Glasgow’s
account.

11. Electronic Commerce Act (RA 8792)

1. Disini v Sec of Justice, G.R. No. 203335, April 22, 2014
2. Capalla v COMELEC, G.R. No. 201112, June 13, 2012
3. Nogales v. People of the Philippines, G.R. No. 191080, November 21, 2011
4. Luis Marcos P. Laurel v. Hon. Zeus C. Abrogar, G.R. No. 155076, February 27,
2006
5. Emmanuel Aznar v. CitiBank N.A., G.R. No. 164273, March 28, 2007
 6. Rustan Ang y Pascua v. CA and Irish Sagud, G.R. No. 182835, April 20, 2010
7. Expertravel and Tours Inc. v. CA and Korean Airlines, G.R. No. 152392, may
26, 2005
8. Ellery March Torres v. PAGCOR, G.R. No. 193531, December 4, 2011
9. MCC Industrial Sales Corp v. Ssangyong Corporation, G.R. No. 170633,
October 17, 2007
10. Vinzons-Chato v. HRET, G.R. No. 199149, January 22, 2013
11. NAPOCOR v. Hon. Codilla, Jr. G.R. No. 170491, April 4, 2007

1.
Ellery March Torres
v. PAGCOR,

G.R. No. 193531, December 4, 2011

Facts:
Petitioner was a Slot Machine Operations Supervisor (SMOS) of respondent Philippine
Amusement and Gaming Corporation (PAGCOR). On the basis of an alleged intelligence
report of padding of the Credit Meter Readings (CMR) of the slot machines at PAGCOR-Hyatt
Manila, then Casino Filipino-Hyatt (CF Hyatt), which involved the slot machine and internal
security personnel of respondent PAGCOR, and in connivance with slot machine customers,
respondent PAGCOR's Corporate Investigation Unit (CIU) allegedly conducted an investigation
to verify the veracity of such report.

The CA then concluded that PAGCOR's decision which was contained in a letter dated August
4, 2007 dismissing petitioner from the service had already attained finality since there was no
motion for reconsideration filed by petitioner in the manner and within the period provided for
under the Revised Uniform Rules on the Administrative Cases in the Civil Service.

The threshold issue for resolution is whether the CA erred when it affirmed the CSC's
dismissal of the appeal for being filed beyond the reglementary period.

Petitioner contends that he filed his letter reconsideration of his dismissal on August 13, 2007,
which was within the 15-day period for filing the same; and that he did so by means of a
facsimile transmission sent to the PAGCOR's Office of the Board of Directors. He claims that
the sending of documents thru electronic data message, which includes facsimile, is
sanctioned under Republic Act No. 8792, the Electronic Commerce Act of 2000. Petitioner
further contends that since his letter reconsideration was not acted upon by PAGCOR, he then
filed his complaint before the CSC.

Issue:
Whether or not a facsimile transmission is considered an electronic evidence under the
Electronic Commerce Act and may toll the prescriptive period for appeal in this case

Ruling:
Yes. Sections 37, 38, 39, and 43 of the Revised Uniform Rules on Administrative Cases in the
Civil Service are applicable to this case.

Clearly, a motion for reconsideration may either be filed by mail or personal delivery.

Even assuming arguendo that petitioner indeed submitted a letter reconsideration which he
claims was sent through a facsimile transmission, such letter reconsideration did not toll the
period to appeal. The mode used by petitioner in filing his reconsideration is not sanctioned by
the Uniform Rules on Administrative Cases in the Civil Service.

Moreover, a facsimile transmission is not considered as an electronic evidence under the

Electronic Commerce Act.

In MCC Industrial Sales Corporation v. Ssangyong Corporation,19 We determined the

question of whether the original facsimile transmissions are "electronic data messages" or
"electronic documents" within the context of the Electronic Commerce Act, and We said:

We, therefore, conclude that the terms "electronic data message" and "electronic document,"
as defined under the Electronic Commerce Act of 2000, do not include a facsimile
transmission. Accordingly, a facsimile transmission cannot be considered as electronic
evidence. It is not the functional equivalent of an original under the Best Evidence Rule and is
not admissible as electronic evidence.

2.
MCC Industrial Sales Corp
v. Ssangyong Corporation,

G.R. No. 170633, October 17, 2007

Facts:
One of the suppliers of the petitioner is the responded, an international trading company with
head office in Seoul, South Korea and regional headquarters in Makati City, Philippines. The
two corporations conducted business through telephone calls and facsimile or telecopy
transmissions. Respondent would send the pro forma invoices containing the details of the
steel product order to petitioner; if the latter conforms thereto, its representative affixes his
signature on the faxed copy and sends it back to the respondent, again by fax. Respondent
filed a civil action for damages due to breach of contract against petitioner before the Regional
Trial Court of Makati City.

In its complaint, respondent alleged that defendants breached their contract when they
refused to open the letter of credit in the amount of US$170,000.00 for the remaining 100MT of
steel under Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2. After
respondent rested its case, petitioner filed a Demurrer to Evidence alleging that respondent
failed to present the original copies of the pro forma invoices on which the civil action was
based. Petitioner contends that the photocopies of the pro forma invoices presented by
respondent Ssangyong to prove the perfection of their supposed contract of sale are
inadmissible in evidence and do not fall within the ambit of R.A. No. 8792, because the law
merely admits as the best evidence the original fax transmittal. On the other hand, respondent
posits that, from a reading of the law and the Rules on Electronic Evidence, the original
facsimile transmittal of the pro forma invoice is admissible in evidence since it is an electronic
document and, therefore, the best evidence under the law and the Rules. Respondent further
claims that the photocopies of these fax transmittals (specifically ST2-POSTS0401-1 and ST2-
POSTS0401-2) are admissible under the Rules on Evidence because the respondent
sufficiently explained the non-production of the original fax transmittals.

Issue:
Whether the print-out and/or photocopies of facsimile transmissions are electronic evidence
and admissible as such

Ruling:
No. When the Senate consequently voted to adopt the term "electronic data message," it was
consonant with the explanation of Senator Miriam Defensor-Santiago that it would not apply "to
telexes or faxes, except computer-generated faxes, unlike the United Nations model law on
electronic commerce."

In explaining the term "electronic record" patterned after the E-Commerce Law of Canada,
Senator Defensor-Santiago had in mind the term "electronic data message." This term then,
while maintaining part of the UNCITRAL Model Law's terminology of "data message," has
assumed a different context, this time, consonant with the term "electronic record" in the law of
Canada. It accounts for the addition of the word "electronic" and the deletion of the phrase "but
not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy."

There is no question then that when Congress formulated the term "electronic data message,"
it intended the same meaning as the term "electronic record" in the Canada law. This
construction of the term "electronic data message," which excludes telexes or faxes, except
computer-generated faxes, is in harmony with the Electronic Commerce Law's focus on
"paperless" communications and the "functional equivalent approach" that it espouses. In fact,
the deliberations of the Legislature are replete with discussions on paperless and digital
transactions. Facsimile transmissions are not, in this sense, "paperless," but verily are paper-
based.

We, therefore, conclude that the terms "electronic data message" and "electronic document,"
as defined under the Electronic Commerce Act of 2000, do not include a facsimile
transmission. Accordingly, a facsimile transmission cannot be considered as electronic
evidence. It is not the functional equivalent of an original under the Best Evidence Rule and is
not admissible as electronic evidence. Since a facsimile transmission is not an "electronic data
message" or an "electronic document," and cannot be considered as electronic evidence by
the Court, with greater reason is a photocopy of such a fax transmission not electronic
evidence.

12. Financial Rehabilitation, Insolvency, Liquidation and Suspension of Payments (RA

10142, FR Rules [A.M. No. 12-12-11-SC], and FLSP Rules [A.M. No.15-04-06-SC])
1. Bustos v. Millan Shoes, G.R. No. 185024, April 24, 2017
2. Viva Shipping Lines, Inc. v. Keppel Philippines Marine, G.R. No. 177382,
February 17, 2016
3. Metropolitan Bank and Trust Co. v. Liberty Corrugated Boxes Manufacturing
Corp. G.R. No. 184317, January 25, 2017
4. Metrobank v. Fortuna Paper Mill, G.R. No. 190800, November 7, 2018
5. Pilipinas Shell v. Royal Ferry, G.R. No. 188146, February 1, 2017
6. Puerto Azul v. Export Industry Bank, GR. 213020, March 20, 2017
7. Philippine Asset Growth Two v. Fastech, GR. 206528, June 28, 2016
8. Victorio-Aquino v. Pacific Plans, Inc., G.R. No. 193108, December 10, 2014
9. Home Guaranty Corp. v. La Savoie Development Corp., G.R. No. 168616,
January 28, 2015
10. BPI v. Sarabia Manor Hotel Corporation, G.R. No. 175844, July 29, 2013
 11. Wonder Book Corporation v. PB Com, G.R. No. 187316, July 16, 2012

1.
Bustos
v. Millan Shoes,

G.R. No. 185024, April 24, 2017

Facts:
Spouses Fernando and Amelia Cruz owned a lot which the City Government of Marikina levied
for nonpayment of real estate taxes. On 14 October 2004, the City Treasurer of Marikina
auctioned off the property, with petitioner Joselito Hernand M. Bustos emerging 'as the winning
bidder. Meanwhile, notices of lis pendens were annotated on TCT No. N-126668 on 9
February 2005.

These markings indicated that SEC Corp. Case No. 036-04, which was filed before the RTC
and involved the rehabilitation proceedings for MSI, covered the subject property and included
it in the Stay Order issued by the RTC dated 25 October 2004. On 26 September 2006,
petitioner moved for the exclusion of the subject property from the Stay Order. He claimed that
the lot belonged to Spouses Cruz who were mere stockholders and officers of MSL He further
argued that since he had won the bidding of the property on 14 October 2004, or before the
annotation of the title on 9 February 2005, the auctioned property could no longer be part of
the Stay Order.

Issue:
Whether or not the CA correctly considered the properties of Spouses Cruz answerable for the
obligations of MSI.

Ruling:
No. In finding the subject property answerable for the obligations of MSI, the CA characterized
respondent spouses as stockholders of a close corporation who, as such, are liable for its
debts. This conclusion is baseless. To be considered a close corporation, an entity must abide
by the requirements laid out in Section 96 of the Corporation Code, which reads: Sec. 96.

Definition and applicability of Title. - A close corporation, within the meaning of this Code, is
one whose articles of incorporation provide that: (1) All the corporation's issued stock of all
classes, exclusive of treasury shares, shall be held of record by not more than a specified
number of persons, not exceeding twenty (20); (2) all the issued stock of all classes shall be
subject to one or more specified restrictions on transfer permitted by this Title; and (3) The
corporation shall not list in any stock exchange or make any public offering of any of its stock
of any class. Notwithstanding the foregoing, a corporation shall not be deemed a close
corporation when at least two-thirds (2/3) of its voting stock or voting rights is owned or
controlled by another corporation which is not a close corporation within the meaning of this
Code.x x x

Here, neither the CA nor the R TC showed its basis for finding that MSI is a close corporation.
The courts a quo did not at all refer to the Articles of Incorporation of MSI. The Petition
submitted by respondent in the rehabilitation proceedings before the RTC did not even include
those Articles of Incorporation among its attachments.
2.
Viva Shipping Lines, Inc.
v. Keppel Philippines Marine,

G.R. No. 177382, February 17, 2016

Facts:
On October 4, 2005, Viva Shipping Lines, Inc. (Viva Shipping Lines) filed a Petition for
Corporate Rehabilitation before the Regional Trial Court of Lucena City. According to Viva
Shipping Lines, the devaluation of the Philippine peso, increased competition, and
mismanagement of its businesses made it difficult to pay its debts as they became due. In the
Order dated October 30, 2006,36 the Regional Trial Court lifted the stay order and dismissed
Viva Shipping Lines’ Amended Petition for failure to show the company’s viability and the
feasibility of rehabilitation.

The Regional Trial Court found that Viva Shipping Lines’ assets all appeared to be non-
performing. Further, it noted that Viva Shipping Lines failed to show any evidence of consent to
sell real properties belonging to its sister company. Aggrieved, Viva Shipping Lines filed a
Petition for Review under Rule 43 of the Rules of Court before the Court of Appeals.

Issue:
Whether or not Corporate Rehabilation of Viva is proper in this case

Ruling:
No. Corporate rehabilitation is a remedy for corporations, partnerships, and associations "who
[foresee] the impossibility of meeting [their] debts when they respectively fall due. The rationale
in corporate rehabilitation is to resuscitate businesses in financial distress because "assets . . .
are often more valuable when so maintained than they would be when liquidated. Clearly then,
there are instances when corporate rehabilitation can no longer be achieved. When
rehabilitation will not result in a better present value recovery for the creditors, the more
appropriate remedy is liquidation.

The controversy in this case arose from petitioner’s failure to comply with appellate procedural
rules in corporate rehabilitation cases. Petitioner admitted its failure to comply with the rules. It
begs the indulgence of the court to give due course to its Petition based on their belated
compliance with some of these procedural rules and the policy on the liberal construction of
procedural rules. This court cannot exercise its equity jurisdiction and allow petitioner to
circumvent the requirement to implead its creditors as respondents. Tolerance of such failure
will not only be unfair to the creditors, it is contrary to the goals of corporate rehabilitation, and
will invalidate the cardinal principle of due process of law. The failure of petitioner to implead
its creditors as respondents cannot be cured by serving copies of the Petition on its creditors.

3.
Metropolitan Bank and Trust Co.
v. Liberty Corrugated Boxes Manufacturing Corp.

G.R. No. 184317, January 25, 2017

Facts:
Liberty obtained various credit accommodations and loan facilities from petitioner Metropolitan
Bank and Trust Company (Metrobank) amounting to ₱19,940,000.00. To secure its loans,
Liberty mortgaged to Metrobank 12 lots in Valenzuela City. Liberty defaulted on the loans. On
June 21, 2007, Liberty filed a Petition for corporate rehabilitation. In its December 21, 2007
Order, the Regional Trial Court approved the rehabilitation plan. The trial court found that
Liberty was capable of being rehabilitated and that the rehabilitation plan was feasible and
viable. Metrobank appealed to the Court of Appeals.

Issue:
Whether or not respondent, as a debtor in default, is qualified to file a petition for rehabilitation
under Presidential Decree No. 902-A and Rule 4, Section 1 of the Interim Rules

Ruling:
Yes. A corporation that may seek corporate rehabilitation is characterized not by its debt but by
its capacity to pay this debt. Where the law does not distinguish, neither should this Court.
Because the definition under the Interim Rules is encompassing, there should be no distinction
whether a claim has matured or otherwise.

As correctly pointed out by respondent, a creditor may possibly petition for the debtor's
rehabilitation for default on debts already owed. Rule 4, Section 1 of the Interim Rules does not
specify what kind of debtor may seek rehabilitation. The provision allows creditors holding 25%
of the debtor corporation's total liabilities to petition for the corporation's rehabilitation. While
the corporation is undergoing rehabilitation, all claims, regardless of nature, are suspended
from enforcement. However, once the corporation has successfully rehabilitated or finally
liquidated, the enforcement of these secured claims takes precedence.

4.
Metrobank
v. Fortuna Paper Mill,

G.R. No. 190800, November 7, 2018

Facts:
The credit accommodations and loan facilities extended by MBTC to Fortuna principally
amounted to Php 259,981,915.33. In order to secure these obligations, Fortuna mortgaged to
MBTC its real and movable properties as well as several pieces of realty owned by several
sister companies. Instead of paying the overdue obligations to MBTC, Fortuna filed on June
21, 2007 a Petition for Corporate Rehabilitation (Rehabilitation Petition) with the RTC of
Malabon, Branch 74. Despite opposition, the Rehabilitation Petition was given due course in
an Order dated September 20, 2007. The RTC thus referred the same to Atty. Teston for the
latter's evaluation and recommendations.

Issue:
Whether or not the CA erred in affirming the Rehabilitation Plan approved by the RTC.

Ruling:
No. Rehabilitation refers to the restoration of the debtor to a condition of successful operation
and solvency, if it is shown that its continuance of operation is economically feasible and its
creditors can recover by way of the present value of payments projected in the plan, more if
the debtor continues as a going concern than if it is immediately liquidated. Section 1, Rule 4
of the Interim Rules on the Procedure on Corporate Rehabilitation provides for the
qualifications of a corporation to file a petition for corporate rehabilitation, to wit: Sec. 1. Who
May Petition. - Any debtor who foresees the impossibility of meeting its debts when they
respectively fall due, or any creditor or creditors holding at least twenty-five percent (25%) of
the debtor's total liabilities, may petition the proper Regional Trial Court to have the debtor
placed under rehabilitation.

A plain reading of the provision shows that the Interim Rules does not make any distinction
between a corporation which is already in debt and a corporation which foresees the possibility
of debt, or which would eventually yet surely fall into the same, but may at present be free from
any financial liability.

This Court need not distinguish whether the claim has already matured or not. What is
essential in case of rehabilitation is the inability of the debtor corporation to pay its dues as
they fall due. In the case herein, accepting MBTC's proposition that debtor companies already
in default are unqualified to file a petition for corporate rehabilitation not only contradicts the
purpose of the law, as stated, but also advocates a limiting bar that is not found under the
pertinent provisions.

A better and more sound interpretation adheres to the very purpose of corporate rehabilitation,
which is to allow the debtor-corporation to be restored "to a position of successful operation
and solvency, if it is shown that its continuance of operation is economically feasible and its
creditors can recover by way of the present value of payments projected in the plan.”

5.
Pilipinas Shell
v. Royal Ferry,

G.R. No. 188146, February 1, 2017

Facts:
Royal Ferry Services Inc. (Royal Ferry) is a corporation duly organized and existing under
Philippine law. According to its Articles of Incorporation, Royal Ferry's principal place of
business is located at 2521 A. Bonifacio Street, Bangkal, Makati City. However, it currently
holds office at Room 203, BF Condominium Building, Andres Soriano comer Solano Streets,
Intramuros, Manila. On August 28, 2005, Royal Ferry filed a verified Petition for Voluntary
Insolvency before the Regional Trial Court of Manila. On December 23, 2005, Pilipinas Shell
Petroleum Corporation (Pilipinas Shell) filed before the Regional Trial Court of Manila a Formal
Notice of Claim and a Motion to Dismiss. In its Motion to Dismiss, Pilipinas Shell alleged that
the Petition was filed in the wrong venue.

Issue:
Whether or not the Petition for Insolvency was properly filed.

Ruling:
Yes. The Petition for Insolvency was properly filed before the Regional Trial Court of Manila.
The venue for a petition for voluntary insolvency proceeding under the Insolvency Law is the
Court of First Instance of the province or city where the insolvent debtor resides. A corporation
is considered a resident of the place where its principal office is located as stated in its Articles
of Incorporation. However, when it is uncontroverted that the insolvent corporation abandoned
the old principal office, the corporation is considered a resident of the city where its actual
principal office is currently found.

To determine the venue of an insolvency proceeding, the residence of a corporation should be

the actual place where its principal office has been located for six (6) months before the filing
of the petition. If there is a conflict between the place stated in the articles of incorporation and
the physical location of the corporation's main office, the actual place of business should
control. Requiring a corporation to go back to a place it has abandoned just to file a case is the
very definition of inconvenience. There is no reason why an insolvent corporation should be
forced to exert whatever meager resources it has to litigate in a city it has already left.

6.
Puerto Azul
v. Export Industry Bank,

GR. 213020, March 20, 2017

Petitioner Puerto Azul Land, Inc. (PALI) is the owner and developer of the Puerto Azul
Complex in Ternate, Cavite. PALI's business problems started when the Philippine Stock
Exchange rejected the listing of its shares in its initial public offering, which drove away
potential investors and real estate buyers from the business venture. On September 14, 2004,
PALI filed a Petition for suspension of payments and rehabilitation with the RTC of Manila
entitled "In the Matter of the Corporate Rehabilitation/Suspension of Payments of Puerto Azul
Land, Inc.," the case was docketed as Civil Case No. 04-110914 and raffled to Branch 24 of
the said RTC. On September 17, 2004, the rehabilitation court, after finding that the petition
was sufficient in form and substance, issued a Stay Order. In the meantime, the properties
covered by TCT No. T-133164 were levied upon by the Treasurer's Office of Pasay City for
non-payment of realty taxes. On April 12, 2005, PALI filed an Urgent Motion for a status quo
order, praying that the Stay Order be maintained, and that the enforcement of the claim of
Pasay City be held in abeyance. On December 13, 2005, the rehabilitation court rendered a
Decision approving PALI' s petition for suspension of payments and rehabilitation.

Issue:
Whether or not the Executive Judge gravely abused her discretion, amounting to lack or
excess of jurisdiction, when she issued the June 30, 2014 Order, releasing in favor of PBB-
Trust the entire bid amount of ₱570,000,000.00, despite the presence of a genuine dispute on
the amount due the foreclosing mortgagee-assignee as a consequence of the approved
rehabilitation plan and the subsequent sale by EIB to P ACWIDE

Ruling:
Yes. Notwithstanding the conflicting claims between TUI and PBB-Trust which must be
resolved first before the courts of proper jurisdiction, the Executive Judge reversed her April
24, 2014 Order and released the entire ₱570,000,000.00 bid price of SMDC in favor of PBB-
Trust. Aside from inviting doubt, if not suspicion, the assailed June 30, 2014 Order of the
Executive Judge smacks of grave abuse of discretion, so patent and gross as to amount to an
evasion of positive duty or virtual refusal to perform the duty enjoined by, or to act at all in
contemplation of the law. There is, likewise, no merit in private respondents' claim that it is the
ministerial duty of the Executive Judge to release the proceeds of the extrajudicial foreclosure
sale to PBB-Trust, pursuant to Section 4, Rule 68 of the Rules of Court.
Contrary to private respondents' claim, it is not part of the Executive Judge's ministerial
supervisory authority to order the release of proceeds of the entire bid price to a person other
than the one foreclosing the mortgage, i.e., EIB, which is already closed. Moreover, the
Executive Judge gravely abused her discretion in releasing SMDC's entire bid price of
₱570,000,000.00 in favor of PBB-Trust, despite the fact that PBB-Trust failed to pay the
correct filing fees for PALI's outstanding account, inclusive of interest, penalties and other
incidental expenses, amounting to ₱l ,778,609,000.00 as of December 3, 2013.

7.
Philippine Asset Growth Two
v. Fastech,

GR. 206528, June 28, 2016

Facts:
On April 8, 2011, respondents filed a verified Joint Petitions for corporate rehabilitation
(rehabilitation petition) before the RTC-Makati, with prayer for the issuance of a Stay or
Suspension Order. Among the common creditors listed in the rehabilitation petition was PDB,
which had earlier filed a petition for extra judicial foreclosure of mortgage over the two (2)
parcels of land. The foreclosure sale was held on April 13, 2011, with PDB emerging as the
highest bidder. On April 19, 2011, the RTC-Makati issued a Commencement Order with Stay
Order, and appointed Atty. Rosario S. Bernaldo as Rehabilitation Receiver. The creditors had
filed their respective comments and/or oppositions to the revised Rehabilitation Plan.

Issue:
Whether or not the Rehabilitation Plan is feasible

Ruling:
No. Case law explains that corporate rehabilitation contemplates a continuance of corporate
life and activities in an effort to restore and reinstate the corporation to its former position of
successful operation and solvency, the purpose being to enable the company to gain a new
lease on life and allow its creditors to be paid their claims out of its earnings. In the present
case, however, the Rehabilitation Plan failed to comply with the minimum requirements, i.e.:
(a) material financial commitments to support the rehabilitation plan; and (b) a proper
liquidation analysis, under Section 18, Rule 3 of the 2008 Rules of Procedure on Corporate
Rehabilitation (Rules), which Rules were in force at the time respondents' rehabilitation petition
was filed on April 8, 2011. A material financial commitment becomes significant in gauging the
resolve, determination, earnestness, and good faith of the distressed corporation in financing
the proposed rehabilitation plan.

This commitment may include the voluntary undertakings of the stockholders or the would-be
investors of the debtor-corporation indicating their readiness, willingness, and ability to
contribute funds or property to guarantee the continued successful operation of the debtor-
corporation during the period of rehabilitation. In this case, respondents' Chief Operating
Officer, Primo D. Mateo, Jr. averred that respondents will not require the infusion of additional
capital as he, instead, proposed to have all accrued penalties, charges, and interests waived,
and a reduced interest rate prospectively applied to all respondents' obligations, in addition to
the implementation of a two (2)-year grace period.
Thus, there appears to be no concrete plan to build on respondents' beleaguered financial
position through substantial investments as the plan for rehabilitation appears to be pegged
merely on financial reprieves. Respondents likewise failed to include any liquidation analysis in
their Rehabilitation Plan.

The total liquidation assets and the estimated liquidation return to the creditors, as well as the
fair market value vis-a-vis the forced liquidation value of the fixed assets were not shown. As
such, the Court could not ascertain if the petitioning debtor's creditors can recover by way of
the present value of payments projected in the plan, more if the debtor continues as a going
concern than if it is immediately liquidated. This is a crucial factor in a corporate rehabilitation
case, which the CA, unfortunately, failed to address.

8.
Victorio-Aquino
v. Pacific Plans, Inc.,

G.R. No. 193108, December 10, 2014

Facts:
On April 7, 2005, foreseeing the impossibility of meeting its obligations to the availing
planholders as they fall due, respondent filed a Petition for Corporate Rehabilitation with the
Regional Trial Court (Rehabilitation Court), praying that it be placed under rehabilitation and
suspension of payments. The creditors/oppositors did not oppose/comment on the
Rehabilitation Receiver’s ARP, although the Parents Enabling Parents Coalition, Inc. (PEPCI)
filed with the CA, a Petition for Certiorari with Application for a TRO/Writ of Preliminary
Injunction dated February 10, 2006.

Nevertheless, respondent commenced with the implementation of its ARP in coordination with,
and with clearance from, the Rehabilitation Receiver. Petitioner questioned the approval of the
MRP before the CA on September 26, 2008. It likewise prayed for the issuance of a TRO and
a writ of preliminary injunction to stay the execution of the Resolution dated July 28, 2008.

Issue:
Whether or not the Court of Appeals rendered a decision contrary to law and not in accord with
the applicable decisions of the Supreme Court when it sustained the Rehabilitation Court’s
approval of the Modified Rehabilitation Plan

Ruling:
No. In approving the rehabilitation plan, the court shall ensure that the rights of the secured
creditors are not impaired. The court shall also issue the necessary orders or processes for its
immediate and successful implementation. The Rehabilitation Rules allow the modification and
alteration of the rehabilitation plan precisely because ofconditions that may supervene or affect
the implementation thereof subsequent to its approval.

In the case at bar, to force through with the tuition support would surely jeopardize the
implementation of the ARP in the long-run since it would not be feasible to keep on liquidating
the NAPOCOR Bonds. We confirm that there is a substantial likelihood for respondent to be
successfully rehabilitated considering that its business remains viable and is operating on a
going-concern premise. We find nothing onerous in the terms of PALI's rehabilitation plan. The
Interim Rules on Corporate Rehabilitation provides for means of execution of the rehabilitation
plan, which may include, among others, the conversion of the debts or any portion thereof to
equity, restructuring of the debts, dacion en pago, or sale of assets or of the controlling
interest.

9.
Home Guaranty Corp.
v. La Savoie Development Corp.,

G.R. No. 168616, January 28, 2015

Facts:
La Savoie found itself unable to pay its obligations to its creditors. Thus, on April 25, 2003, La
Savoie filed before the Regional Trial Court, Makati City a "petition for the declaration of state
of suspension of payments with approval of proposed rehabilitation plan". Regional Trial Court
Judge Estela Perlas-Bernabe issued the Stay Order dated June 4, 2003 staying the
enforcement of all claims against La Savoie. Following the issuance of the June 4, 2003 Stay
Order, La Savoie's creditors filed their Comments and/or Oppositions. What is notable,
however, is what transpired in the interim.

Sometime between La Savoie's filing of its Appellant's Brief and Home Guaranty Corporation's
filing of its Appellee's Brief, Home Guaranty Corporation approved and processed the call that
was made, prior to the commencement of rehabilitation proceedings, on its guaranty and
proceeded to pay the holders of LSDC certificates a total amount of P128.5 million as
redemption value. In consideration of this and pursuant to Section 13.2 of the Contract of
Guaranty, Planters Development Bank executed in favor of Home Guaranty Corporation a
Deed of Assignment and Conveyance in which Planters Development Bank "absolutely
assign[ed], transferred[ed], convey[ed] and deliver[ed] to the HGC, its successor and assigns
the possession and ownership over the entire Asset Pool Project.

Issue:
Whether or not the properties comprising the Asset Pool should be excluded from the
proceedings on La Savoie Development Corporation's Petition for Rehabilitation.

Ruling:
Yes. Home Guaranty Corporation asserts that the execution of this Deed effectively removed
the properties comprising the Asset Pool from the dominion of La Savoie and, thus, beyond the
reach of La Savoie's rehabilitation proceedings. La Savoie contends that this transfer was
ineffectual as the Stay Order was in effect at the time of the execution of the Deed and as
affirming Home Guaranty Corporation's ownership is supposedly tantamount to giving it undue
preference as a creditor.

The October 1, 2003 Order, lifting the restrictions on the payment of claims against La Savoie,
remained in effect. La Savoie's creditors were then free to enforce their claims. Conversely, La
Savoie and "its guarantors and sureties not solidarity liable with it" were no longer restrained
from effecting payment. The Stay Order was lifted and that this lifting remained in force and
was not restrained.

10.
BPI
v. Sarabia Manor Hotel Corporation,

G.R. No. 175844, July 29, 2013

Facts:
In 1997, Sarabia obtained a ₱150,000,000.00 special loan package from Far East Bank and
Trust Company (FEBTC) in order to finance the construction of a five-storey hotel building
(New Building) for the purpose of expanding its hotel business. By virtue of a merger, Bank of
the Philippine Islands (BPI) assumed all of FEBTC’s rights against Sarabia. Largely because of
the delayed completion of the New Building, Sarabia incurred various cash flow problems.

Thus, despite the fact that it had more assets than liabilities at that time, it, nevertheless, filed,
on July 26, 2002, a Petition for corporate rehabilitation (rehabilitation petition) with prayer for
the issuance of a stay order before the RTC as it foresaw the impossibility to meet its maturing
obligations to its creditors when they fall due. After several hearings, the RTC gave due course
to the rehabilitation petition and referred Sarabia’s proposed rehabilitation plan to the Receiver
for evaluation.

Issue:
Whether or not the CA correctly affirmed Sarabia’s rehabilitation plan as approved by the RTC,
with the modification on the reinstatement of the surety obligations of Sarabia’s stockholders.

Ruling:
Yes. Sarabia has the financial capability to undergo rehabilitation. Based on the Receiver’s
Report, Sarabia’s financial history shows that it has the inherent capacity to generate funds to
repay its loan obligations if applied through the proper financial framework. The Receiver’s
examination and analysis of Sarabia’s financial data reveals that the latter’s business is not
only an on-going but also a growing concern. Despite its financial constraints, Sarabia likewise
continues to be profitable with its hotelier business as its operations have not been disrupted.
Sarabia has the ability to have sustainable profits over a long period of time.

The projected sustainability of its business, as mapped out in the approved rehabilitation plan,
makes Sarabia’s rehabilitation a more viable option to satisfy the interests of its stakeholders in
the long run as compared to its immediate liquidation. Also, the interests of Sarabia’s creditors
are well-protected. As correctly perceived by the CA, adequate safeguards are found under the
approved rehabilitation plan. Therefore, based on the above-stated reasons, the Court finds
Sarabia’s rehabilitation to be feasible.