I.
DOCTRINES PENNED BY
JUSTICE LEONEN
Pryce Corporation vs. China
Banking Corporation, G.R. No.
172302, Feb. 18, 2014
"SERIOUS SITUATIONS" TEST1
- suspension of claims is counted
only upon the appointment of a
rehabilitation receiver, and certain
situations serious in nature must be
shown to exist before one is
appointed.
- Otherwise, when such
circumstances are not obtaining or
when the SEC finds no such
imminent danger of losing the
corporate assets, a management
committee or rehabilitation receiver
need not be appointed and
suspension of actions for claims
may not be ordered by the SEC.
- prior to the effectivity of the Interim
Rules
Section 6 of the Interim Rules
- states explicitly that if the court
finds the petition to be sufficient in
form and substance, it shall, not
later than five (5) days from the
filing of the petition, issue an
Order:
o (a) appointing a call a hearing when it is not
Rehabilitation Receiver and
fixing his bond;
o (b) staying enforcement of all
claims
- Nowhere in the Interim Rules does
it require a comprehensive
discussion in the stay order on the
court's findings of sufficiency in
form and substance.
The stay order and appointment of a
rehabilitation receiver is an
extraordinary, preliminary, ex parte
remedy.
- The effectivity period of a stay order
is only "from the date of its
1
1999 Rizal Commercial Banking Corp. v. Intermediate
Appellate Court
issuance until dismissal of the
petition or termination of the
rehabilitation proceedings.
- It is not a final disposition of the
case.
Interlocutory order
- one that "does not finally dispose of
the case, and does not end the
Court's task of adjudicating the
parties' contentions and
determining their rights and
liabilities as regards each other, but
obviously indicates that other things
remain to be done by the Court.
- not covered by the requirement
under the Constitution that a
decision must include a discussion
of the facts and laws on which it is
based.
NOTE: Neither does the Interim Rules
require a hearing before the issuance
of a stay order. What it requires is an
initial hearing before it can give due
course to or dismiss a petition.
Interim Rules (of Procedure on
Corporate Rehabilitation)
- does not require the holding of a
hearing before the issuance of a
stay order,
- neither does it prohibit the holding
of one.
- trial court has ample discretion to
confident that the allegations in the
petition are sufficient in form and
substance, for so long as this
hearing is held within the 5-day
period from the filing of the petition
- the period within which a stay
order may issue as provided in the
Interim Rules.
Aboitiz Equity Ventures, Inc. vs.
Chiongbian, G.R. No. 197530, July 9,
2014,
Corporation
- has a personality separate and distinct
from that of its individual stockholders.
- Thus, a stockholder does not
automatically assume the liabilities of
1
 the corporation of which he is a
stockholder.
PRINCIPLE OF LIMITED LIABILITY:
protection from liability for shareholders; the
corporate debt or credit is not the debt or
credit of the stockholder
People's Trans-East Asia Insurance
Corporation vs. Doctors of New
Millennium Holdings, Inc., G.R. No.
172404, August 13, 2014,
The obligations of the surety to the
principal under the surety bond are
different from the obligations of the
contractor to the client under the
principal contract.
ESSENCE OF A SURETY AGREEMENT
The surety guarantees the performance of
the contractor’s obligations.
Upon the contractor’s default, its client may
demand against the surety bond even if
there was no privity of contract between
them.
A suretyship consists of 2 different
contracts:
(1) the surety contract and
(2) the principal contract which it
guarantees.
A surety is released from its obligation
when there is a material alteration of the
contract in connection with which the bond
is given,
e.g., change which imposes:
o a new obligation on the
promising party
o or which takes away some
obligation already imposed,
o or one which changes the
legal effect of the original
contract and not merely its
form.
NOTE: A surety, however, is not released
by a change in the contract which does not
have the effect of making its obligation
more onerous.
For an obligation may be extinguished by
another which substitutes the same, the old
and new obligation be in every point
incompatible with each other.
Novation of a contract is never
presumed. In the absence of an express
agreement, novation takes place only
when the old and the new obligations
are incompatible on every point.
Alfredo L. Villamor Jr. vs. John
S. Umale, G.R. No 172843,
September 24, 2014,
CA: no power to appoint a receiver
or management committee
RTC: Original and exclusive
jurisdiction to hear and decide
 intra-corporate controversies,
 incidents of such controversies
such as applications for the
appointment of receivers or
management committees.
The court making the appointment
controls and supervises the appointed
receiver or management committee.
Gerardo Lanuza Jr. vs. BF
Corporation, G.R. No. 174938,
October 1, 2014
CORPORATION - artificial entity
created by fiction of law (can only
exercise its rights and powers through
its directors, officers, or agents, who
are all natural persons)
 not a person, naturally, BUT THE
LAW gives it a distinct personality
and treats it as such
 The law vests in corporations
rights, powers, and attributes as if
they were natural persons with
physical existence and capabilities
to act on their own.
 they have the power to sue and
enter into transactions or contracts
 Individual with a personality that is
distinct and separate from other
persons including its stockholders,
officers, directors, representatives,
and other juridical entities.
Consequence of a corporation’s
separate personality
 consent by a corporation through
its representatives is not consent
of the representative, personally.
 Obligations, incurred through
2
 official acts of its representatives,
are its own.
 A stockholder, director, or
representative does not become
a party to a contract
 corporation’s representatives are
generally not bound by the terms
of the contract executed by the
corporation.
GR: A representative who did not
personally bind himself to an
arbitration agreement cannot be forced
to participate in arbitration proceedings
made pursuant to an agreement
entered into by the corporation.
XPN: if there are allegations of bad
faith or malice in their acts
representing the corporation.
Duty of courts or tribunals: to determine
if these persons and the corporation
should be treated as one. Thus, they
should be made to participate in the
arbitration proceedings
PIERCING THE CORPORATE VEIL
WHEN WARRANTED
1. The separate personality of a
corporation is used as
 a means to perpetrate fraud or
an illegal act,
 or as a vehicle for the evasion of
an existing obligation,
 the circumvention of statutes,
 or to confuse legitimate issues.
2. Alter ego cases:
 where a corporation is merely a
farce since it is a mere alter ego
or business conduit of a person
 where the corporation is so
organized and controlled and its
affairs are so conducted as to
make it merely an
instrumentality, agency, conduit
or adjunct of another corporation.
EFFECT WHEN THE CORPORATE
VEIL IS PIERCED
 the corporation and persons are
treated as one person (e.g.,
directors and officers); shared
liability
Instances when directors, trustees,
or officers may become liable for
corporate acts:
1. Directors or trustees who
willfully and knowingly vote for
or assent to patently unlawful
acts of the corporation or
2. guilty of gross negligence or
bad faith in directing the
affairs of the corporation or
3. acquire any personal or
pecuniary interest in conflict
with their duty as such directors
or trustees (liable as a trustee
for the corporation and must
account for the profits which
otherwise would have accrued
to the corporation)
LIABILITY: solidarity liable with it for all
damages suffered by the corporation,
its stockholders or members, and other
persons
Solidary liability with the corporation will
also attach in the following instances:
When a director or officer:
1. consented to the issuance of
watered stocks or who, having
knowledge thereof, did not
forthwith file with the corporate
secretary his written objection
2. has contractually agreed or
stipulated to hold himself
personally and solidarily liable
with the corporation; and
3. is made, by specific provision of
law, personally liable for his
corporate action
Home Guaranty Corporation vs. La
Savoie Development Corporation,
G.R. No. 168616, January 28, 2015,
TRUST is the legal relationship
between one person having an
equitable ownership in property and
another person owning the legal title to
such property.
 The equitable ownership entitles
3
 the former to the performance of
certain duties and the exercise of
certain powers by the latter.

KINDS
University of Mindanao vs.
1. Express trust
Bangko Sentral ng Pilipinas, G.R.
 created by the direct and positive
No. 194964-65, January 11, 2016,
acts of the parties, e.g. writing or
deed or will or by words evidencing Corporations
an intention to create a trust.  artificial entities granted legal
 No particular words are required personalities upon their creation by
for the creation of an express their incorporators in accordance
trust, it being sufficient that a with law.
trust is clearly intended.  they have no inherent powers.
 Third persons dealing with
2. Implied trusts
corporations cannot assume that
 deductible from the nature of the
corporations have powers. It is up
transaction as matters of intent or
to those persons dealing with
 superinduced on the transaction by
corporations to determine their
operation of law as matters of
competence as expressly defined
equity, independently of the
by the law and their articles of
particular intention of the parties.
incorporation.
 Implied trusts are either:
a. resulting trust GR: Corporate acts that are outside
b. constructive trust those express definitions under the law
or articles of incorporation or those
RESULTING TRUST CONSTRUCTIVE
“committed outside the object for which
TRUST
a corporation is created” are ultra
based on the equitable created by the vires.
doctrine construction
 valuable of equity in
consideration and order to XPN: acts are necessary and
not legal title satisfy the incidental to carry out a corporation’s
determines the demands of purposes, and to the exercise of
equitable title or justice and powers conferred by the Corporation
interest and are prevent
Code and under a corporation’s
presumed always unjust
to have been enrichment. articles of incorporation.
contemplated by
the parties Corporate interests are separate from
arise from the nature arise the personal interests of the natural
or circumstances of contrary to persons that comprise corporations.
the consideration intention  Corporations are given separate
involved in a against one
transaction whereby personalities to allow natural
who, by
one person thereby fraud, duress
persons to balance the risks of
becomes invested with or abuse of business as they accumulate
legal title but is confidence, capital.
obligated in equity to obtains or
hold his legal title for
 limited competence as a means to
holds the
the benefit of another protect the public from fraudulent
legal right to
property acts that may be committed using
which he the separate juridical personality
ought not, in given to corporations.
equity and
good PIERCING OF THE CORPORATE
conscience,
VEIL
to hold
 Corporate veil is pierced when the

4
 separate personality of
corporation is being used to
perpetrate fraud, illegalities, and
injustices.
 Piercing the corporate veil is
warranted when “[the separate
personality of a corporation] is used
as a means to perpetrate fraud or
an illegal act, or as a vehicle for the
evasion of an existing obligation,
the circumvention of statutes, or to
confuse legitimate issues.”2
 It is also warranted in alter ego
cases “where a corporation is
merely a farce since it is a mere
alter ego or business conduit of a
person, or where the corporation is
so organized and controlled and its
affairs are so conducted as to make
it merely an instrumentality,
agency, conduit or adjunct of
another corporation.”
DOCTRINE OF APPARENT
AUTHORITY
 does not go into the question of the
corporation's competence or power
to do a particular act.
 It involves the question of whether
the officer has the power or is
clothed with the appearance of
having the power to act for the
corporation.
 NOTE: A finding that there is
apparent authority is not the
same as a finding that the
corporate act in question is
within the corporation's limited
powers.
The rule on apparent authority is based
on the PRINCIPLE OF ESTOPPEL.
 A corporation is estopped by its
silence and acts of recognition
because we recognize that there is
information asymmetry between
third persons who have little to no
information as to what happens
during corporate meetings, and the
corporate officers, directors, and
representatives who are insiders to
corporate affairs.
2
In Lanuza, Jr. v. BF Corporation, 737
SCRA 275 (2014):
the
Marcelino M. Florete Jr. vs.
Rogelio M. Florete, January 20,
2016, G.R. No. 174909
A stockholder may suffer from a
wrong done to or involving a
corporation, but this does not vest
in the aggrieved stockholder a
sweeping license to sue in his or
her own capacity.
derivative suit,
 remedy when the object of the
wrong done is the corporation itself
or "the whole body of its stock and
property without any severance or
distribution among individual
holders”
 Stockholder's remedy from a
wrong done to or involving a
corporation
VIVA Shipping Lines vs. Keppel
Philippines Mining, G.R. No,
177382, February 17, 2016,
Corporate rehabilitation
 remedy for corporations,
partnerships, and associations
“who [foresee] the impossibility of
meeting [their] debts when they
respectively fall due.”
 Rationale: to resuscitate
businesses in financial distress
 The corporation receives
assistance from the court and a
disinterested rehabilitation receiver
to balance the interest to recover
and continue ordinary business, all
the while attending to the interest of
its creditors to be paid equitably.
 These interests are also referred to
as the rehabilitative and the
equitable purposes of corporate
rehabilitation.
NOTE: A corporation under
rehabilitation continues with its
corporate life and activities to achieve
solvency
5
 Solvency - a state where the Both cannot be undertaken at the
businesses’ liabilities are less than its same time.
assets.
Stability – results when there is CORPORATE REHABILITATION
assurance to the investing public that  traces its roots to Act No. 1956,
obligations will be reasonably paid otherwise known as the
Insolvency Law of 1909.
REHABILITATION LIQUIDATION  Under the Insolvency Law:
corporations have corporations - a debtor in possession of
to maintain their preserve their sufficient properties to cover
assets to continue assets in order all its debts but foresees the
business to sell them. impossibility of meeting them
operations. when they fall due may file
Without these a petition before the court to
 Not only is it a assets, be declared in a state of
humane and business suspension of payments.
equitable operations are - This allows time for the
relief, it effectively debtor to organize its affairs
encourages discontinued. in order to achieve a state
efficiency and where it can comply with its
maximizes Proceeds of obligations.
welfare in the the sale -
economy. distributed FINANCIAL REHABILITATION AND
equitably INSOLVENCY ACT OF 2010 (FRIA)
among  the prevailing law and procedure
creditors for corporate rehabilitation
 provides procedures for the
Surplus - different types of rehabilitation and
divided or liquidation proceedings.
losses are  issued by this court on August 27,
reallocated 2013
means to allows the
temper the corporation to E.I. Dupont de Nemours and
effect of a wind up its Co. vs. Emma C. Francisco,
business affairs and G.R. No. 174379, August 31, 2016,
downturn equitably
experienced distribute its
for whatever assets among PATENT
reason. its creditors.  granted to provide rights and
protection to the inventor after an
NOTE: When diametrically invention is disclosed to the public.
rehabilitation opposed to  seeks to restrain and prevent
will not result rehabilitation. unauthorized persons from unjustly
in a better profiting from a protected invention.
present value
recovery for NOTE: Ideas not covered by a patent
the creditors, are free for the public to use and
the more exploit.
appropriate
remedy is
LIQUIDATION
.

6

ABS-CBN Corporation vs.
Felipe Gozon, G.R. No. 195956,
March 11, 2015
Intellectual Property Code is malum
prohibitum and prescribes a strict
liability for copyright infringement.
Not a defense against copyright
infringement
1. Good faith,
2. lack of knowledge of the
copyright, or
3. lack of intent to infringe
Copyright is subject to the rules
of fair use and will be judged on a
case-to-case basis.
 Finding probable cause
includes a determination of the
defendant's active
participation, particularly when
the corporate veil is pierced in
cases involving a
corporation's criminal liability.
Securities and Exchange
Commission v Subic Bay Golf
and Country Club, G.R. No.
179047, March 11, 2015
Intra-corporate controversies are
now under the jurisdiction of RTC
designated as commercial courts.
(previously under the SEC’s
jurisdiction)
NOTE: transfer of jurisdiction to the
trial courts does not oust the
Securities and Exchange
Commission of its jurisdiction to
determine if administrative rules
and regulations were violated.
Issue of refund
 both intra-corporate and civil in
nature
 RTC’s jurisdiction
Metropolitan Bank and Trust
Company vs. S.F. Naguiat
Enterprises, G.R. No. 178407,
March 18, 2015,
Act No. 1956 (The Insolvency
Law)
 impliedly requires a secured
creditor to ask the permission of
the insolvent court before said
creditor can foreclose the
mortgaged property.
 It follows that the insolvency
court has exclusive
jurisdiction to deal with the
property of the insolvent.
After the mortgagor-debtor has
been declared insolvent and the
insolvency court has acquired
control of his estate, a mortgagee
may not, without the permission
of the insolvency court, institute
proceedings to enforce its lien.
Pioneer Insurance Surety
Corporation vs. Morning Star
Travel & Tours, G.R. No.
198436, July 8, 2015,
BAD FAITH IS NEVER PRESUMED
Piercing the corporate veil in order to
hold corporate officers personally
liable for the corporation's debts
requires that "the bad faith or
wrongdoing of the director must be
established clearly and convincingly.
Celso F. Pascual Sr. vs.
Caniogan Credit and
Development Cooperative, G.R.
No. 172980, July 22, 2015
An appeal of the outright dismissal
of a petition for certiorari against an
interlocutory of a lower court
becomes moot and academic:
 where, during its pendency,
judgment on the merits has been
rendered in the main case and
has become final and executory.
Jurisdiction of the REGULAR
COURTS, not of the Labor Arbiter
 intra-cooperative dispute
between two officers on one
hand and the Board of Directors
on the other
Lorenzo Shipping Corporation vs.
7
 National Power Corporation, G.R. G.R. No. 189509, November 23,
No. 181683, October 7, 2015 2015

A Master’s designation as the

Corporate rehabilitation
commander of a vessel is long-
settled.  special proceeding which seeks
“Master” and “Captain” are to establish the "inability of the
3
synonymous terms : “The name of corporate debtor to pay its debts
captain or master is given, according to when they fall due so that a
the kind of vessel, to the person in rehabilitation plan, containing the
charge of it. formula for the successful
recovery of the corporation, may
“Master” be approved in the end."
 “The first denomination is applied  There is no relief sought for "an
to those who govern vessels that injury caused by another party."
navigate the high seas or ships of  one of the remedies that a
large dimensions and importance, financially stressed company can
although they be engaged in the opt for to raise itself from
coastwise trade. insolvency
 allows a court-supervised
 “Masters are those who command
process to rejuvenate a
smaller ships engaged exclusively
corporation.
in the coastwise trade.
E.I. Dupont de Nemours and Co.
 “For the purposes of maritime vs. Francisco, G.R. No. 174379,
August 31, 2016
commerce, the words ‘captain’ and
‘master’ have the same meaning;
both being the chiefs or Grant of Patents
commanders of ships.” o A patent is granted to provide
rights and protection to the
inventor after an invention is
Republic of the Philippines vs. disclosed to the public.
Virgilio M. Tatlonghari, G.R. o to restrain and prevent
No. 170458, November 23, 2015, unauthorized persons from
unjustly profiting from a
The notation "in trust for" or "for protected invention.
escrow" that comes with deposited o to provide protection to any
funds inventor from any patent
 indicates that the deposit is for infringement
the benefit of a 3rd party.
Intellectual Property Code now states
When Pantranco was under that all patent applications must be
sequestration, it remained to be a published in the Intellectual Property
private corporation, and its funds Office Gazette
also remained to be private. o any interested party may
 it does not follow that inspect all documents
Pantranco's funds were submitted to the Intellectual
converted into public funds by Property Office.
the mere fact that its conservator o The patent application is only
was a government agency. confidential before its
publication.
Metropolitan Bank & Trust
RIGHT OF PRIORITY
Company vs. G & P Builders,
o given to any patent applicant
3
Yu Con v. Ipil, 41 Phil. 770 (1916), of General who has previously applied for a
Review of Legislation and Jurisprudence
8
 patent in a country that grants
the same privilege to Filipinos.
o only relevant when there are two
or more conflicting patent
applications on the same
invention.
RIGHHTS OF A PATENT HOLDER
 Once an invention is disclosed
to the public, only the patent
holder has the exclusive right to
manufacture, utilize, and market
the invention.
 a patent holder has the right to
“to restrain, prohibit and prevent”
any unauthorized person or
entity from manufacturing,
selling, or importing any product
derived from the patent
o BUT any interested third
party “may inspect the
complete description,
claims, and drawings of
the patent.”
 The grant of a patent provides
protection to the patent holder
from the indiscriminate use of
the invention.
o After the publication of
the patent, any person
may examine the
invention and develop it
into something further
than what the original
patent holder may have
envisioned.
 A patent holder of inventions
relating to food or medicine
does not enjoy absolute
monopoly over the patent.
Republic Act No. 165 & Intellectual
Property Code
o provide for compulsory
licensing
Compulsory licensing
o defined in the Intellectual
Property Code as the “grant
a license to exploit a
patented invention, even
without the agreement of
the patent owner.”
 The patent holder’s proprietary
right over the patent only lasts
for three (3) years from the
grant of the patent, after which
any person may be allowed to
manufacture, use, or sell the
invention subject to the payment
of royalties.
Philippine Associated Smelting
And Refining Corporation, v.
Pablito O. Lim, G.R. No. 172948,
October 5, 2016,
Right to Inspect the Corporate
Records
The stockholder's right of inspection
of the corporation's books and
records is based upon their
ownership of the assets and
property of the corporation.
 an incident of ownership of the
corporate property, whether this
ownership or interest be termed:
a. equitable ownership,
b. beneficial ownership, or
c. quasi-ownership.
 This right is predicated upon the
necessity of self-protection.
 the inspection has to be germane to
the petitioner's interest as a
stockholder, and has to be proper
and lawful in character and not
inimical to the interest of the
corporation.
The Philippine Geothermal, Inc.
Employees Union vs. Unocal
Philippines, Inc.,
G.R. No. 190187, September 28,
2016
Merger and Consolidation
 The merger of a corporation with
another does not operate to dismiss
the employees of the corporation
absorbed by the surviving
corporation.
 This is in keeping with the
constitutional policy protecting the
9
 rights of labor. 4. The surviving or the
 The employment of the absorbed consolidated corporation shall
employees subsists. thereupon and thereafter
possess:
 These absorbed employees are not
entitled to separation pay on a. all the rights, privileges,
account of such merger in the immunities and franchises
absence of any other ground for its of each of the constituent
award. corporations; and
b. all property, real or
The Philippine Geothermal, Inc. personal, and all
Employees Union v. Unocal receivables due on
Philippines, Inc., G.R. No. 190187, whatever account,
September 28, 2016, including subscriptions to
shares and other choses in
MERGER action, and all and every
 consolidation of two or more other interest of, or
corporations, which results in one or belonging to, or due to
more corporations being absorbed each constituent
into one surviving corporation. corporation,
 The separate existence of the - shall be taken and deemed to be
absorbed corporation ceases, and transferred to and vested in such
the surviving corporation “retains its surviving or consolidated
identity and takes over the rights, corporation without further act or
privileges, franchises, properties, deed; and
claims, liabilities and obligations of
the absorbed corporation” 5. The surviving or the
consolidated corporation shall
EFFECTS OF MERGER: be responsible and liable for:
a. all the liabilities and
1. The constituent corporations obligations of each of the
shall become a single constituent corporations in
corporation which: the same manner as if such
a. in case of merger: shall be surviving or consolidated
the surviving corporation corporation had itself
designated in the plan of incurred such liabilities or
merger; obligations;
b. in case of consolidation: b. and any claim, action or
shall be the consolidated proceeding pending by or
corporation designated in against any of such
the plan of consolidation; constituent corporations
may be prosecuted by or
2. The separate existence of the against the surviving or
constituent corporations shall consolidated corporation,
cease, except that of the as the case may be.
surviving or the consolidated
corporation; NOTE:
 Neither the rights of creditors nor
3. The surviving or the any lien upon the property of any
consolidated corporation shall of such constituent corporations
possess all the rights, privileges, shall be impaired by such merger
immunities and powers and shall or consolidation.
be subject to all the duties and
 The surviving corporation
liabilities of a corporation
automatically assumes the
organized under this Code;
employment contracts of the

10
 absorbed corporation, such that
the absorbed corporation’s
employees become part of the
manpower complement of the
surviving corporation.4
Merger is not one of the
circumstances where the employees
may claim separation pay.
The only instances where separation
pay may be awarded:
a. reduction in workforce as a result
of redundancy;
b. retrenchment or installation of
labor-saving devices; or
c. closure and cessation of
operations.
REDUNDANCY
 for purposes of our Labor Code,
exists where the services of an
employee are in excess of what is
reasonably demanded by the actual
requirements of the enterprise.
 a position is redundant where it is
superfluous, and superfluity of a
position or positions may be the
outcome of a number of factors,
such as:
- over hiring of workers,
- decreased volume of
business, or
- dropping of a particular
product line or service
activity previously
manufactured or undertaken
by the enterprise.
 The employer has no legal
obligation to keep in its payroll more
employees than are necessary for
the operation of its business.
RETRENCHMENT
 reduction of personnel to save on
costs on salaries and wages due to
a considerable decline in the
volume of business.
CESSATION AND CLOSURE OF
BUSINESS
 contemplates the stopping of
business operations of the
4
Bank of the Philippine Islands v. BPI Employees
Union-Davao Chapter-Federation of Unions in BPI
Unibank, 658 SCRA 828 (2011),
employer whether on the
employer’s prerogative or on
account of severe business losses.
Divina Palao v. Florentino III
International, Inc., G.R. No.
186967, January 18, 2017,
Administrative bodies are not bound
by the technical niceties of law and
procedure and the rules obtaining in
courts of law.
 Administrative tribunals
exercising quasi-judicial powers
are unfettered by the rigidity of
certain procedural requirements,
subject to the observance of
fundamental and essential
requirements of due process in
justiciable cases presented
before them.
 In administrative proceedings,
technical rules of procedure and
evidence are not strictly applied
 Administrative due process
cannot be fully equated with
due process in its strict judicial
sense.
Technical rules of procedure should be
rules enjoined to facilitate the orderly
administration of justice.
 The liberality in the application of
rules of procedure may not be
invoked if it will result in the wanton
disregard of the rules or cause
needless delay in the administration
of justice.
Metropolitan Bank And Trust
Company, v. Liberty Corrugated
Boxes Manufacturing Corporation,
G.R. No. 184317, January 25, 2017
A corporation with debts that have
already matured may still file a petition
for rehabilitation under the Interim Rules
of Procedure on Corporation
Rehabilitation.
A corporation that may seek
corporate rehabilitation is
characterized not by its debt but by
11
its capacity to pay this debt.
REHABILITATION
 process of restoring "the debtor 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 more if the
corporation continues as a going
concern that if it is immediately
liquidated."
 It 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.
Commissioner Of Internal
Revenue Vs. San Miguel
Corporation, G.R. No.
205045/205723, January 25, 2017,
Intellectual Property Rights
 A registered trademark
owner has the right to
prevent others from the
use of the same mark
(brand) for identical
goods or services.
Trademark Infringement;
Unfair Competition
 The use of an identical
or colorable imitation of
a registered trademark
by a person for the same
goods or services or
closely related goods or
services of another party
constitutes infringement.
 there is an attempt to get
a free on the reputation
and selling power of
another manufacturer by
passing of one's goods
as identical or produced
by the same
manufacturer as those
carrying the other mark
(brand).
Pilipinas Shell Petroleum
Corporation, v. Royal Ferry
Services, Inc., G.R. No. 188146,
February 1, 2017
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.
 But, 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.
Jose M. Roy III v. Chairperson
Teresita Herbosa, The Securities
And Exchange Commission, and
Philippine Long Distance
Telephone Co., G.R. No. 207246,
April 18, 2017
FULL BENEFICIAL OWNERSHIP
(FIA-IRR)5 provides:
 For stocks to be deemed owned
and held by Philippine citizens or
Philippine nationals, mere legal title
is not enough to meet the required
Filipino equity.
 Full beneficial ownership of the
stocks, coupled with appropriate
voting rights is essential.
 Thus, stocks, the voting rights of
which have been assigned or
transferred to aliens cannot be
considered held by Philippine
citizens or Philippine nationals.
"BENEFICIAL OWNER" OR
"BENEFICIAL OWNERSHIP"
(SRC-IRR)6 provides:
 Any person who, directly or
indirectly, through any:
- contract,
- arrangement,
- understanding,
5
Implementing Rules and Regulations of the Foreign
Investments Act of 1991
6
Implementing Rules and Regulations of the Securities
Regulation Code
12
 - relationship or otherwise,
 has or shares voting power
(power to vote or direct the voting of
such security)
 and/or investment returns or
power (power to dispose of, or
direct the disposition of such
security)
Filipino is the "beneficial owner" of
that "specific stock" when he has:
 VOTING POWER of the "specific
stock"
o can vote the stock or
direct another to vote for
him
 INVESTMENT POWER over the
"specific stock
o he can dispose of the
stock or direct another to
dispose of it for him
 OR BOTH
SPECIFIC STOCK
 part of the 60% Filipino ownership
requirement under the Constitution.
 The right to the dividends, jus
fruendi - a right emanating from
ownership of that "specific stock"
necessarily accrues to its Filipino
"beneficial owner."
 " Dividend declaration is dictated by
the corporation's unrestricted
retained earnings.
Anthony De Silva Cruz v. People
Of The Philippines, G.R. No.
210266, June 7, 2017
The possession and use of a
counterfeit credit card is considered
access device fraud and is
punishable by law.
 To successfully sustain a conviction
for possession and use of a
counterfeit access device, t he
corpus delicti of the crime is not
merely the access device, but also
any evidence that proves that it is
counterfeit.
Credit card
 "any card, plate, coupon book, or
other credit device existing for the
purpose of obtaining money, goods,
property, labor or services or
anything of value on credit,"
 it is considered an access device.
Counterfeit access device
 "any access device that is
counterfeit, fictitious, altered, or
forged, or an identifiable component
of an access device or counterfeit
access device.
Under Section 9(a) and (e) of Republic
Act No. 8484
 the possession and use of an
access device is not illegal.
 what is prohibited is the possession
and use of a counterfeit access
device.
Bro. Bernard Oca v. Laurita
Custodio, G.R. No. 199825, July
26, 2017,
Intra-Corporate Controversies
 In intra-corporate controversies, all
orders of the trial court are
immediately executory
XPN: the awards for moral
damages, exemplary damages and
attorney’s fees, if any.
 No appeal or petition taken
therefrom shall stay the
enforcement or implementation of
the decision or order
XPN: restrained by an appellate
court.
 Interlocutory orders shall not be
subject to appeal.
 Questioning the trial court orders
does not stay its enforcement or
implementation.
 Decisions of the Board of Trustees
are not subject to the control of just
one (1) person.
- While a board member may
protest, the majority of the
board may overrule him or
13
 her. enforcement of any of the rights of the
, creditors.
Securities And Exchange
Commission, v. Price Richardson The test in evaluating the economic
Corporation, Consuelo Velarde- feasibility of the plan:8
Albert, and Gordon Resnick, G.R.  thorough examination and analysis
No. 197032, July 26, 2017 of the distressed corporation's
financial data must be conducted
Doctrine of separate juridical  Rehabilitation is feasible: If
personality the results show that there is a
To be held criminally liable for the acts real opportunity to rehabilitate
of a corporation, there must be a the corporation in view of the
showing that its officers, directors, assumptions made and financial
and shareholders actively goals stated in the proposed
participated in or had the power to rehabilitation plan
prevent the wrongful act.
 Rehabilitation would not be
feasible: no reasonable
Land Bank of the Philippines v. probability that the distressed
Fastech Synergy Philippines, Inc. corporation could be revived and
(Formerly First Asia System that liquidation would, in fact,
Technology, Inc.) et., al., G.R. No. better subserve the interests of
206150, August 9, 2017, its stakeholders
o rehabilitation court may
Rehabilitation7 convert the
 restoration of the debtor to a proceedings into one
condition of successful operation for liquidation.
and solvency, if it is shown that its
continuance of operation is SPECIFIC CHARACTERISTICS OF
economically feasible and its AN ECONOMICALLY FEASIBLE
creditors can recover by way of the REHABILITATION PLAN:
present value of payments  As suggested by Professor
projected in the plan, more if the Stephanie V. Gomez of UP College
debtor continues as a going of Law
concern than if it is immediately a. The debtor has assets that
liquidated. can generate more cash if
used in its daily operations
than if sold.
 basic issues in rehabilitation b. Liquidity issues can be
proceedings concern the viability addressed by a
and desirability of continuing the practicable business plan
business operations of the that will generate enough
distressed corporation, all with a cash to sustain daily
view of effectively restoring it to a operations.
state of solvency or to its former c. The debtor has a definite
healthy financial condition through source of financing for the
the adoption of a rehabilitation plan. proper and full
implementation of a
NOTE: The remedy of rehabilitation
Rehabilitation Plan that is
should be denied to corporations that do
anchored on realistic
not qualify under the Rules. Neither
assumptions and goals.
should it be allowed to corporations
whose sole purpose is to delay the Note: A corporation's assets may be
7
Republic Act No. 10142, otherwise known as the
8
"Financial Rehabilitation and Insolvency Act of 2010" Bank of the Philippine Islands v. Sarabia Manor
(FRIA), Hotel Corporation (Bank of the Philippine Islands),
14
more than its current liabilities, but
some assets may be in the form of land
or capital equipment, such as
machinery or vessels.
CHARACTERISTICS OF A August 9, 2017, \
REHABILITATION PLAN THAT IS
INFEASIBLE:
 the absence of a sound and
workable business plan;
 baseless and unexplained
assumptions, targets and goals;
 speculative capital infusion or
complete lack thereof for the
execution of the business plan;
 cash flow cannot sustain daily
operations; and
 negative net worth and the assets
are near full depreciation or fully
depreciated.
PRESENT VALUE RECOVERY
 The Financial and Rehabilitation
and Insolvency Act of 2010
emphasizes on rehabilitation that
provides for better present value
recovery for its creditors.
 This acknowledges that, in order to
pave way for rehabilitation, the
creditor will not be paid by the
debtor when the credit falls due.
 The court may order a suspension
of payments to set a rehabilitation
plan in motion; in the meantime, the
creditor remains unpaid.
 Present value of the credit takes
into account the interest that the
amount of money would have
earned if the creditor were paid on
time.
The remedy of rehabilitation should be
denied to corporations whose
insolvency appears to be irreversible
and whose sole purpose is to delay the
enforcement of any of the rights of the
creditors, which is rendered obvious
by:
(a) the absence of a sound and
workable business plan;
(b) baseless and unexplained
assumptions, targets, and goals; and
(c) speculative capital infusion or
complete lack thereof for the execution
of the business plan, as in this case.
Lydia Lao Et., Al, v. Yao Bio Lim
And Philip King, G.R. No. 201306,
Authority of the Securities and
Exchange Commission
 Petitioners cannot unilaterally
disobey or disregard the Orders
of the Securities and Exchange
Commission and of the RTC
despite their own views of the
correctness or propriety thereof.
 When judicial or quasi-judicial
tribunals speak, what they
decree must be obeyed; what
they ordain must be followed.
 A dissatisfied party may ask for
reconsideration and, if denied,
may go on to higher tribunal.
 As long as the orders stand
unmodified, however, they must,
even if susceptible to well-
founded doubts on jurisdictional
grounds, be faithfully complied
with.
Arturo C. Calubad v. Ricarcen
Development Corporation, G.R.
No. 202364, August 30, 2017
THE BOARD OF DIRECTORS OR
TRUSTEES
 elected from among the holders of
stocks, or where there is no stock,
from among the members of the
corporation, who shall hold office
for one (1) year until their
successors are elected and
qualified.
 They may validly delegate its
functions and powers to its
officers or agents.
 The authority to bind the
corporation is derived from:
1. law,
2. its corporate bylaws, or
3. directly from the board
of directors,
a. either expressly or
b. impliedly by:
o habit,
o custom or
15
 o acquiescen
ce in the
general
course of
business.
Belo Medical Group, Inc., v. Jose
L. Santos And Victoria G. Belo,
G.R. No. 185894, August 30, 2017,

TYPES OF INTRA-CORPORATE
RELATIONSHIPS9:
[a] between the corporation, partnership
or association and the public;
[b] between the corporation,
partnership or association and its
stockholders, partners, members, or
officers;
[c] between the corporation,
partnership or association and the
state in so far as its franchise, permit
or license to operate is concerned; and
[d] among the stockholders, partners or
associates themselves.

THE "RELATIONSHIP TEST

 For as long as any of these intra-
corporate relationships exist
between the parties, the
controversy would be characterized
as intra-corporate.

Nature of Controversy Test

 DMRC Enterprises v. Este del Sol
Mountain Reserve, Inc. employed
what would later be called as the
"nature of controversy test."
 another means to determine if the
dispute should be considered as
intra-corporate.

NOTE: This Court now uses both the

relationship test and the nature of the
controversy test to determine if an
intra-corporate controversy is present.

9
Union Glass & Container Corporation v. Securities
and Exchange Commission
16
 Milagros P. Enriquez Vs. The
Citigroup, Inc v. Citystate Savings
Mercantile Insurance Co. Inc., G.R.
Bank, Inc., G.R. No. 205409, June
210950, August 15, 2018,
13, 2018,
SuretyMilagros P. Enriquez v. The
The law on trademarks and Mercantile Insurance Co. Inc., G.R.
tradenames is based on the 210950, August 15, 2018,
principle of business integrity and
common justice. Surety
 it encourages fair trade in every A surety bond remains effective
way and aims to foster, and not to until the action or proceeding is
hamper, competition, no one, finally decided, resolved, or
especially a trader, is justified in terminated, regardless of whether
damaging or jeopardizing another's the applicant fails to renew the
business by fraud, deceit, trickery or bond.
unfair methods of any sort.  The applicant will be liable to the
surety for any payment the surety
DOMINANCY TEST makes on the bond, but only up to
 focuses on the similarity of the the amount of this bond.
prevalent features of the
This condition is deemed incorporated
competing trademarks that
in the contract between the applicant
might cause confusion and
and the surety, regardless of whether
deception, thus constituting
they failed to expressly state it.
infringement.
 If the competing trademark
BERMUDA vs. Sulpicio Lines Inc.,
contains the main, essential,
GR. No. 196072/208603,
and dominant features of
September 20, 2017,
another, and confusion or
deception is likely to result, Private corporation’s verification
infringement occurs. and certification
 Exact duplication or - may be signed, for and on
imitation is not required. behalf of this corporation, by
 The question is whether the a specifically authorized
use of the marks involved is person, including its
likely to cause confusion or retained counsel, who has
mistake in the mind of the personal knowledge of the
public or to deceive facts required to be
consumers. established by the
documents.
HOLISTIC TEST - Physical acts, like the signing
 entails a consideration of the of documents, can be
entirety of the marks as applied performed only by natural
to the products, including the persons duly authorized for
labels and packaging, in the purpose by:
determining confusing similarity. 1. corporate
 focus not only on the bylaws or
predominant 2. by a specific act
words but also on the other of the board of
features appearing on both directors.
marks in order that the observer
may draw his conclusion  A certification not signed by a
whether one is confusingly duly authorized person renders
similar to the other the petition subject to dismissal.
 The lack of or defect in the
certification is not generally
17
 curable by its subsequent contract,
submission or correction. o amount insured,
o XPN: Court exercised o premium,
leniency due to the o property or life insured,
presence of special o risks insured against, and
circumstances or o period of insurance.
compelling reasons
o The subsequent NOTE: There is nothing in the law that
submission of proof of prohibits the parties from agreeing to
authority of the party other terms and conditions that would
signing the certification on govern their relationship, in which case
behalf of the corporation the general rules of the Civil Code
was considered as regulating contracts will apply.
substantial compliance
with the rules and the
petition was given due
Office of the Ombudsman v.
course.
Antonio Z. De Guzman, G.R. No.
197886, October 04, 2017,
Rules on forum shopping
- designed to promote and
Powers of the Philippine Postal
facilitate the orderly
Corporation (Republic Act No. 7354)
administration of justice
- exercised by the Board of
- not to be interpreted with
Directors, with the President
“absolute literalness” as to
appointing all seven (7)
subvert the procedural rules’
members and “with the
ultimate objective of
Postmaster General as one
achieving substantial justice
of the members to represent
as expeditiously as possible.
the government
Insurance policy10
shareholdings.”
- “the written instrument in
which a contract of insurance
Postmaster General
is set forth.” S
- manages the Philippine
- the policy, which is required
Postal Corporation
to be in printed form, “may
- has the power to sign
contain blank spaces; and
contracts on behalf of the
any word, phrase, clause,
corporation as “authorized
mark, sign, symbol,
and approved by the Board
signature, number, or word
[of Directors].”
necessary to complete the
contract of insurance shall be
Valid corporate acts
written on the blank spaces.”
- those that have “the vote of
- Any rider, clause, warranty,
at least a majority of the
or endorsement attached
members present at a
and referred to in the policy
meeting at which there is a
by its descriptive title or
quorum.”
name is considered part of
- To determine the Board of
this policy or contract of
Directors’ action:
insurance and binds the
insured. a. Resort to minutes taken
after the conduct of the
Information that must be stated in the board meeting.
policy: b. If no minutes, the
o the parties in the insurance transcript may be
resorted.
10
Title VI, Section 49 of Presidential Decree No. 612
or the Insurance Code NOTE:
18
  For a corporate act of the
Philippine Postal Corporation
to be valid, it must have the
vote of at least a majority of
the members in a meeting
where there is a quorum.
 A contract entered into by
corporate officers who exceed
their authority generally does
not bind the corporation
except when the contract is
ratified by the Board of
Director.
Oriental Assurance Corporation, v.
Manuel Ong, G.R. No. 189524,
October 11, 2017,
Doctrine: By availing himself of the
services of the arrastre operator and
taking delivery therefrom in
pursuance of a permit and a pass
issued by the latter, which were
"subject to all the terms and conditions"
of said management contract,
including, inter alia, the requirement
thereof that "a claim is filed with the
Company within 15 days from the date
of arrival of the goods", the consignee -
and, hence, the insurer, or plaintiff
herein, as successor to the rights of
the consignee - became bound by the
provisions of said contract. The second
assignment of error is, therefore,
untenable.
PRINCIPLE OF SUBROGATION
 Article 2207 of the Civil Code
 If the insured property is destroyed
or damaged through the fault or
negligence of a party other than
the assured, then the insurer, upon
payment to the assured, will be
subrogated to the rights of the
assured to recover from the
wrongdoer to the extent that the
insurer has been obligated to pay.
 Payment by the insurer to the
assured operates as an equitable
assignment to the former of all
remedies which the latter may have
against the third party whose
negligence or wrongful act caused
the loss,
 not dependent upon, nor does it
grow out of, any privity of contract
or upon written assignment of
claim. It accrues simply upon
payment of the insurance claim by
the insurer.
 Subrogee merely stepped into the
shoes of the consignee and may
only exercise those rights that the
consignee may have against the
wrongdoer. "It can recover only the
amount that is recoverable by the
assured."
Visayan Electric Company, Inc. v.
Emilio G. Alfeche, G.R. No. 209910,
November 29, 2017
Public Utilities
An electric distribution company
is a public utility presumed to
have the necessary expertise
and resources to enable a safe
and effective installation of its
facilities.
 Absent an indication of
fault or negligence by
other actors, it is
exclusively liable for
fires and other
damages caused by its
haphazardly installed
posts and wires.
 As the holder of a
public franchise, it is to
be presumed that it has
the necessary
resources and
expertise to enable a
safe and effective
installation of its
facilities.
Proximate cause - “that cause
which, in natural and continuous
sequence, unbroken by any
efficient intervening cause,
produces the injury and without
which the result would not have
occurred.”
Joseph Harry Walter Poole-
Blunden v. Union Bank of the
Philippines, G.R. No. 205838,
19
 November 29, 2017
Diligence Required of Banks
The fiduciary nature of banking
requires banks to assume a degree
of diligence higher than that of a
good father of a family.
 Section 2 of RA 8791 prescribes
the statutory diligence required
from banks — that banks must
observe “high standards of integrity
and performance” in servicing their
depositors.
Voidable Sale for causal fraud.
A bank that wrongly advertises the
area of a property acquired through
foreclosure because it failed to
dutifully ascertain the property's
specifications is grossly negligent as
to practically be in bad faith in
offering that property to prospective
buyers.
 In actions to void such sales,
banks cannot hide under the
defense that a sale was made
on an as-is-where-is basis.
 As-is-where-is stipulations can
only encompass physical
features that are readily
perceptible by an ordinary
person possessing no
specialized skills.
Manila Electric Company v.
Nordec Philippines, G.R. No.
196116, April 18, 2018,
A distribution utility is mandated to
strictly comply with the legal
requisites before disconnecting an
electric supply due to the serious
consequences this disconnection
may have on the consumer.
Ridjo doctrine
- the public utility has the
imperative duty to make a
reasonable and proper
inspection of its apparatus and
equipment to ensure that they
do not malfunction.
- Its failure to discover the defect,
if any, considering the length of
time, amounts to inexcusable
negligence
The use of the words "defect" and
"defective"
- does not restrict the application
of the doctrine to cases of
"mechanical defects" in the
installed electric meters.
 A more plausible interpretation
is to apply the rule on
negligence whether
the defect is inherent, intentional or
unintentional, which therefore
covers tampering, mechanical
defects and mistakes in the
computation of the consumers'
billing.
Banco Filipino vs. Bangko Sentral
ng Pilipinas, G.R. No. 200678,
June 4, 2018, (R.A. 7653)
Consequence of receivership
 the closed bank may sue and be
sued only through its receiver
 Any action filed by the closed bank
without its receiver may be
dismissed.
RIGHTS AND DUTIES OF A RECEIVER
Section 30 of Republic Act No. 7653
 directs the receiver of a closed bank
to:
a. “immediately gather and take
charge of all the assets and
liabilities of the institution”
b. “administer the same for the
benefit of its creditors.”
Revised Rules of Court
 “general powers of a receiver”
 Under Rule 59, Section 6 of the
Rules of Court,
- “a receiver shall have the
power to bring and defend, in
such capacity, actions in his
[or her] own name.”
Republic Act No. 7653
o receiver shall also “in the name
of the institution, and with the
assistance of counsel as [it] may
retain, institute such actions as
20
 may be necessary to collect and
recover accounts and assets of,
or defend any action against, the
institution.”
Belina Cancio and Jeremy
Pampolina v. Performance Foreign
Exchange Corporation, G.R. No.
182307, June 6, 2018,
Foreign currency exchange trading
or forex trading
 the speculative trade of foreign
currency for the sole purpose of
gaining profit from the change in
prices.
Forex market
 "global, decentralized," and
essentially "an over-the-counter
(OTC) market where the different
currency trading locations around
the globe electronically form a
unified, interconnected market
entity."
 may have overlapping time zones
 Foreign currency, due to its
decentralized nature, may be traded
in different financial markets.
Participants in a forex market
1. banks,
2. hedge funds,
3. investment firms, and
4. individual retail traders
Individual retail traders
 often make use of brokers: "serve
as an agent of the customer in the
broader [foreign currency
exchange] market, by seeking the
best price in the market for a retail
order and dealing on behalf of the
retail customer."
 rely on leverage trading: where
traders can open margin accounts
with a financial broker or agent to
make use of that broker or agent's
credit line to engage in trade.
MARGIN ACCOUNT
 an account where the broker-dealer
lends money to the trader to
purchase currency, using the same
purchased currency as collateral.
 Returns will be proportional to the
amount deposited.
LEVERAGE
 determined by the amount that the
trader is required to deposit.
 This system allows the trader to
control more money in the market
than what was originally deposited.
PIP
 smallest unit of price movement in
the exchange rate of a currency
pair.
 The goal of every trader in foreign
currency exchange is to earn pips.
BROKER
 one who is engaged, for others, on
a commission, negotiating contracts
relative to property with the custody
of which he has no concern;
 the negotiator between other
parties. never acting in his own
name, but in the name of those who
employed him;
 he is strictly a middleman and for
some purposes the agent of both parties
Federal Express Corporation vs.
Luwalhati R. Antonio, G.R. No.
199455, June 27, 2018
The duty of common carriers to
observe extraordinary diligence in
shipping goods does not terminate
until delivery to the consignee or
to the specific person authorized
to receive the shipped goods.
 FAILURE TO DELIVER TO THE
PERSON AUTHORIZED TO
RECEIVE THE GOODS IS
TANTAMOUNT TO LOSS OF
THE GOODS, thereby
engendering the common
carrier's liability for loss.
Ambiguities in contracts of carriage,
which are contracts of adhesion,
must be interpreted against the
21
 common carrier that prepared these
contracts.
Federal Express Corporation v.
Luwalhati R. Antonino and Eliza
Bettina Ricasa Antonino, G.R. No.
199455, June 27, 2018,
The responsibility of common carriers
to exercise extraordinary diligence lasts
from the time the goods are
unconditionally placed in their
possession until they are delivered "to
the consignee, or to the person who
has a right to receive them."
 duty to ensure that shipments are
received by none but "the person
who has a right to receive them."
 Common carriers must ascertain
the identity of the recipient.
 Failing to deliver shipment to the
designated recipient amounts to
a failure to deliver. The shipment
shall then be considered lost,
and liability for this loss ensues.
The Insular Assurance Co., LTD vs.
The Heirs of Jose H. Alvarez
October 3, 2018
Proof of fraudulent intent
NEEDED: cases of rescission due to
false representations.
NOT NEEDED: in cases of rescission
due to concealment
When an abundance of available
documentary evidence can be referenced
to
demonstrate a design to defraud,
presenting a singular document with an
erroneous
entry does not qualify as clear and
convincing proof of fraudulent intent.
“Misrepresentation” as a defense of the
insurer to avoid liability is an ‘affirmative’
defense.
The duty to establish such a defense by
satisfactory and convincing evidence
rests upon the defendant.
Cezar Yatco Real Estate Services,
Inc. vs. Bel-Air Village Association,
Inc., G.R. No. 211780, November 21,
2018
PROXY
 is a form of agency created in
instances when a person is unable
to personally cast his or her vote;
hence, the act of voting is delegated
to another person.
 Section 89 of Batas Pambansa Blg.
6811 recognizes a member’s right to
vote by proxy.
 Stockholders and members may
vote in person or by proxy in all
meetings of stockholders or
members.
Requirements:
- a proxy shall be in writing,
- signed by the member, and
- filed with the corporate
secretary before the
scheduled meeting
NOTE:
 Unless otherwise provided in the
proxy, it shall be valid only for
the meeting for which it is
intended.
 No proxy shall be valid and
effective for a period longer than
five (5) years at any one time.
 However, the Corporation Code
also empowers the members to
provide for their own proxy
requirements in their bylaws.
Spouses Ranier Jose M. Yulo vs.
BPI, G.R. No. 217044, January 16,
2019
When issuing a pre-screened or pre-
approved credit card, the credit card
provider must prove that its client
read and consented to the terms and
conditions governing the credit
card's use.
Failure to prove consent means
that the client cannot be bound
by the provisions of the terms
11
Corporation Code of the Philippines,
22
and conditions, despite admitted
use of the credit card.
Bangko Sentral ng Pilipinas vs.
Spouses Ledesma, G.R. No.
211176/211583, February 6,
2019,
Sugar Restitution Fund
In cases where the loan records which
will serve as the basis for computing
the excess payments of the sugar
producer are no longer available:
 the lending bank shall immediately
notify the BSP.
 BSP shall then direct the claimant
sugar producer to submit
documents in his possession which
are acceptable to COA to
substantiate his claim.
 Such documents shall be submitted
by the sugar producer to the lending
bank within sixty (60) calendar days
from receipt of notification from the
BSP.
Metro Bottled Water Corp. vs.
Andrada Construction and
Development Corp. Inc.,
G.R. No. 202430, March 6, 2019,
Generally, judicial review of arbitral
awards is permitted only on very
narrow grounds.
Republic Act No. 876, or the Arbitration
Law
 does not allow an arbitral award to
be revisited without a showing of
specified conditions, which must be
proven affirmatively by the party
seeking its review.
The Special Rules of Court on
Alternative Dispute Resolution
 implementing the Alternative
Dispute Resolution Act of 2004
 mandate that arbitral awards will not
be vacated "merely on the ground
that the arbitral tribunal committed
errors of fact, or of law, or of fact
and law, as the court cannot
substitute its judgment for that of
the arbitral tribunal."
 Parties are even "precluded from
filing an appeal or a petition for
certiorari questioning the merits of
an arbitral award."
Annie Tan vs. Great Harvest
Enterprises, Inc., G.R. No.
220400, March 20, 2019,
Liability of Common Carriers
Common carriers are obligated to
exercise extraordinary diligence over
the goods entrusted to their care.
 This is due to the nature of their
business, with the public policy
behind it geared toward achieving
allocative efficiency and minimizing
the inherently inequitable dynamics
between the parties to the
transaction.
Annie Tan vs. Great Harvest
Enterprises, Inc., G.R. No. 220400,
March 20, 2019
Common carriers are obligated to
exercise extraordinary diligence
over the goods entrusted to their
care.
 This is due to the nature of their
business, with the public policy
behind it geared toward:
o achieving allocative
efficiency and
o minimizing the inherently
inequitable dynamics
between the parties to the
transaction.
Jaka Investments Corp. vs.
Urdaneta Village
Association Inc., G.R.
No. 204187/206606,
April 1, 2019,
Intra-association Controversies
 fall under the jurisdiction of the
Housing and Land Use
Regulatory Board, the government
agency with the technical expertise
on the matter.
23
 To determine if this case falls under the
agency’s jurisdiction, it is necessary
to examine whether the controversy
arose “from any of the following
intra-corporate relations:
(1) between and among members of
the association;
(2) between any and/or all of them and
the association of which they are
members; and
(3) between the association and the
state insofar as the controversy
concerns its right to exist as a
corporate entity.”
Adelaido Oriondo vs. Commission
on Audit, G.R. No. 211293, June 4,
2019,
Audit jurisdiction of Commission on
Audit
 A corporation, whether with or
without an original charter, is under
the audit jurisdiction of the
Commission on Audit so long as
the government owns or has
controlling interest in it.
even extends to non-governmental
entities that receive subsidy or
equity from or through the
government.
Terp Construction Corp. vs. Banco
Filipino Savings and Mortgage
Bank, G.R. No. 221771, Sept. 18,
2019,
A corporation's repeated payment of an
allegedly unauthorized obligation
contracted by one (1) of its officers
effectively ratifies that corporate
officer's allegedly unauthorized act.
The authority of the board of directors
to delegate its corporate powers may
either be:
 ACTUAL;
o Express actual authority -
corporate powers expressly
delegated by the board of
directors. Implied actual
authority,
o Implied actual authority - can
be measured by his or her
prior acts which have been
ratified by the corporation or
whose benefits have been
accepted by the corporation."
 APPARENT
APPARENT AUTHORITY IS
ASCERTAINED THROUGH:
(1) the general manner by which the
corporation holds out an officer
or agent as having power to act
(the apparent authority with
which it clothes him to act in
general) or
(2) the acquiescence in his acts of a
particular nature, with actual or
constructive knowledge thereof,
whether within or without the
scope of his ordinary powers.
,
Bagong Repormang Samahan ng
mga Tsuper at Operator sa Rotang
Pasig Quiapo via Palengke San
Joaquin Ikot, Inc. vs. City of
Mandaluyong, G.R. No. 218593,
June 15, 2020
Certificate of Public Convenience
- does not vest property rights to its
holder to conduct business along
the route covered in it.
 This privilege is subject to
compliance with local traffic
regulations, because the Land
Transportation Franchising and
Regulatory Board's authority to
issue such certificates is only
supplemental to the right of local
governments to control and regulate
traffic in their localities.
Philippine Savings Bank vs. Maria
Cecilia Sakata, G.R. No. 229450,
June 17, 2020,
Banking institutions are imbued with
public interest, and the trust and
confidence of the public to them are of
paramount importance.
 Banks are expected to exercise the
highest degree of diligence, and
high standards of integrity and
performance.
24
 treat the accounts of its depositors
with meticulous care, always having
in mind the fiduciary nature of their
relationship
Prime duty of a bank: to ascertain the
genuineness of the signature of the
drawer or the depositor on the
check being encashed, with
reasonable business prudence.
BEING NEGLIGENT IN FAILING TO
DETECT THE FORGERY, THE BANK
BEARS THE LOSS.
 a bank is bound to know the
signatures of its customers;
 and if it pays a forged check, it must
be considered as making the
payment out of its own funds
 It cannot ordinarily charge the
amount so paid to the account of
the depositor whose name was
forged."
National Federation of Hog
Farmers, Inc., Represented by Mr.
Daniel P. Javellana, et., al vs.
Board of Investments et., al, G.R.
No. 205835, June 23, 2020,
BOARD OF GOVERNORS
 was bestowed exclusively the
quasi-judicial power to assess and
approve applications for registration
 has expertise over which industries
need the added boost of
investments and its in-depth
knowledge on the requirements for
registration.
 it drafted the rules and regulations
implementing Executive Order No.
226.
DOCTRINE OF PRIMARY
ADMINISTRATIVE JURISDICTION
 jurisdiction over the approval of
applications for registration lies
exclusively with the Board of
Investments, subject to appeal to
the Office of the President
"SELF-RELIANT AND
INDEPENDENT NATIONAL
ECONOMY"
 does not necessarily rule out the
entry of foreign investments, goods
and services.
 contemplates neither "economic
seclusion" nor "mendicancy in the
international community”.
 While it does not encourage their
unlimited entry into the country, it
does not prohibit them either. In
fact, it allows an exchange on the
basis of equality and reciprocity,
frowning only on foreign competition
that is unfair.
Section 10, Article XII of the 1987
Constitution
 gives Congress the discretion to
reserve to Filipinos certain areas of
investments upon the
recommendation of the NEDA and
when the national interest requires.
 It can enact laws allowing the entry
of foreigners into certain industries
not reserved by the Constitution to
Filipino citizens.
Julie Parcon-Song vs. Lilia B.
Parcon, G.R. No. 199582, July 7,
2020,
GR: If the certificate of title indicates
nothing that will raise concern, and the
mortgagee is unaware of any defect in
the title or any other problematic
circumstance surrounding the property,
the mortgagee is not required to further
investigate.
Rationale: public's interest in
sustaining the certificate of title's
indefeasibility "as evidence of the
lawful ownership of the land or of
any encumbrance" on it.
 The doctrine protecting
mortgagees and innocent
purchasers in good faith
emanates from the social
interest embedded in the
legal concept granting
indefeasibility of titles.
 The burden of discovery of
25
 invalid transactions relating
to the property covered by a
title .. appearing
regular on its face is shifted
from the third party relying on
the title to the co-owners or
the predecessors of the title
holder.

XPN: When the mortgagee is a bank, a

higher standard is imposed before it is
considered a mortgagee in good faith.
Banks cannot simply rely on the title
alone, but must further investigate the
property to ensure the genuineness of
the title.
II. CORPORATION LAW by Dean
Aristeo R. Cruz
Number/s incorporators in a private
corporation incorporated under the
Revised Corporation Code:
a. Minimum: 1 for a One Person
Corporation (OPC)
b. Maximum: 15

CORPORATIONS WITH
REGISTRATIONS WITH THE PRIOR
EFFECTIVITY OF THE RCC
 shall also have perpetual
existence,
 the Corporation, in a stockholders’
meeting may also elect to retain its
specific corporate term

A partnership and/or another

corporation may now be an
incorporator in a private corporation
in the Philippines.
 “ any person, partnership,
association or corporation, singly or
jointly with others xxx may organize
a corporation for any lawful
purpose or purposes.” (Section 10,
RCC).

“IDENTICAL OR DECEPTIVELY OR
CONFUSINGLY SIMILAR” TEST
 under the RCC, the test for not
allowing the use of corporate name
is that it is not distinguishable from
another corporate name which is
reserved or registered for use of
another corporation.

Minimum qualification of a
director/trustee

26
 that he/she must own at least one reasonably be perceived to
(1) share. (Sec. 22 RCC). materially interfere with the
 NB: that majority of exercise of independent judgment
directors/trustees must be in carrying out the responsibility as
residents of the Philippines have director. (Sec. 22, RCC).
been removed.
The RCC requires the election
The following are disqualified from being of independent directors for
a director, trustee or officer of any corporation vested with public
corporation if, within five (5) years prior interest who should constitute at
to the election or appointment as such, least twenty percent (20%) of
the person was: such board.

(a) Convicted by final Under the RCC, the following

judgment: corporations are vested with public
interest; to wit:
1. Of an offense
punishable by a) Corporations covered
imprisonment for a by RA 8799:
period exceeding six • namely those whose
(6) years; securities are registered
2. Violation of the RCC with the SEC,
(RA 11232); • corporations listed with
3. Violation of the an exchange or with
Securities Regulation
assets of at least Fifty
Code (RA 8799)
Million pesos
(P50,000,000.00) AND
(b) Found administratively
liable for any offense • having two hundred
involving fraudulent acts; (200) or more holders of
and shares, each holding at
least one hundred (100)
(c) By a foreign court or shares of a class of its
equivalent foreign equity shares;
regulatory authority for
acts, violations or b)
misconduct similar to  Banks and quasi-banks,
those enumerated above.  NSSLAs (non stock
(Sec. 26 RCC). savings and loans
NOTE: The foregoing is without associations),
prejudice to qualifications or  pawnshops,
other disqualifications, which the  corporations engaged in
SEC, the primary regulatory money service business,
agency or the Philippine  preneed,
Competitive Commission may  trust and insurance
impose in its promotion of good companies and
corporate governance or as a  other financial
sanction in its administrative intermediaries; and
proceedings.

INDEPENDENT DIRECTOR c) Other corporations engaged in

 is a person who, apart from the business vested with public
shareholdings and fees received interest similar to the above,
from the corporation, is • as may be determined by
independent of management and the SEC,
free from any business or other • after taking into account
relationship which could, or relevant factors which
27
 are germane to the
objective and purpose of
requiring the election of
an independent director,
such as the:
o extent of the
minority ownership,
o type of financial
products or
securities issued or
offered to investors,
o public interest
involved in the
nature and business
operations, and
other analogous
factors. (Sec. 22
RCC).
One Person Corporation (OPC)
 is a corporation with a single
stockholder; provided that only a
natural person, trust, or an estate
may form a OPC.
NOTE: Banks, quasi-banks, preneed,
trust, insurance, public and public listed
companies and non-chartered
government owned and controlled
corporations may not incorporate as
OPC.
RULE: A natural person who is licensed
to exercise a profession may not
organize a OPC for the purpose of
exercising such profession except as
otherwise provided under special laws.
A OPC shall not be required to have
a minimum authorized capital stock
except as provided by special law.
(Secs. 115-117, RCC).
In addition to the functions designated
by the One Person Corporation, the
Corporate Secretary shall:
1. Be responsible for maintaining
the minutes book and/or records
of the corporation;
2. Notify the nominee or alternate
nominee of the death or
incapacity of the single
stockholder, which notice shall be
given no later than five (5) days
from such occurrence;
3. Notify the Commission of the
death of the single stockholder
within five (5) days from such
occurrence and stating in the
notice the names, residence
addresses, and contact details of
all known legal heirs; and
4. Call the nominee or alternate
nominee and the known legal
heirs to a meeting and advise the
legal heirs with regard to, among
others, the election of a new
director, amendment of the
articles of incorporation, and
other ancillary and/or
consequential matters. (Sec. 123
RCC).
The single stockholder may not
be appointed as the corporate
secretary. (Sec. 122 RCC).
WHISTLEBLOWER
 is a person, usually an employee,
who exposes information or activity
within a private, public or
government organization that is
deemed illegal, illicit, unsafe, or a
waste, fraud, or abuse of
taxpayers’ funds.
 provides truthful information
relating to the commission or
possible commission of any
offense or violation under the
Code.
Any person who, knowingly and with
intent to retaliate, commits acts
detrimental to a whistleblower such as
interfering with the lawful employment or
livelihood of the whistleblower, shall at
the discretion of the court, be punished
with a fine ranging from P100,000 to
P1,000,000. (Sec. 169, RCC).
SEC SHALL EXERCISE VISITORIAL
POWERS OVER ALL
CORPORATIONS
d) which powers include the:
• examinations and
inspections of records,
• regulations and
28
 supervision of activities,
• enforcement of
compliance and
imposition of sanctions
in accordance with the
Code. (Sec. 178 RCC).
personality juridical
personality
NOTE: “The partnership has a juridical
personality separate and distinct from
that of each of the partners, even in the
case of failure to comply with the
requirements of Art. 1772, first
paragraph of the Civil Code.”

GR: A partnership to be valid and

enforceable, maybe constituted in
any form. XPNs: where immovables or
real rights are contributed it must in a
public instrument.
 There must be an inventory, duly
III. LAW ON PARTNERSHIP signed by the partners and
attached to the public
PARTNERSHIP - by the contract of instrument. Otherwise, the
partnership, 2 or more persons bind partnership is void. (Arts. 1771
themselves to contribute money, property
or industry to a common fund, with the and 1773 NCC).
intention of dividing the profits among  If the capital of the partnership is
themselves three thousand pesos or more, it
must appear in a public
A corporation may enter into a instrument and registered with
partnership contract in the the SEC to be valid and
Philippines. enforceable.
 Under Section 35 of the Revised
Corporation Code (RA 11232), a PARTERNSHIP
corporation has the power to enter  “A partnership begins from the
into a contract of partnership with moment of the execution of the
natural and juridical persons. contract, unless it is otherwise
 A power that was not present stipulated.” (Art. 1784 NCC).
under the old Corporation Code  Consensual contract
(BP68).  Its registration with the SEC is
not essential to give it a
PARTNERSHIP JOINT juridical personality.
VENTURE  The life and birth of a
an understanding When two or partnership is predicated on
amongst its partners more entities the mutual desire and consent
for a common goal come together to
of the partners.
and has a separate an understanding
status which is more for a specific
permanent in nature. action or purpose PARTNERSHIP AT WILL
 “When a partnership for a fixed term
 when that or particular undertaking is
purpose is continued after the termination of
completed such term or particular undertaking
the joint without any express agreement, the
venture rights and obligations and duties of
shall come the partners remain the same as
to an end as they were at such termination so far
it is as is consistent with a partnership at
temporary in will.
nature
has distinct juridical has no distinct PRIMA FACIE EVIDENCE OF A
29
CONTINUATION OF THE
PARTNERSHIP 3. His right to participate in the
 A continuation of a business by the management of the
partners or such of them as partnership. (Art. 1810 NCC).
habitually acted therein during the
term, without any settlement or
liquidation of the partnership affairs

DOCTRINE OF DELECTUS
PERSONAE
 Delectus personae (latin: choice of
the person).
 right of partners to exercise their
choice and preference as to the
admission or any new members to
the partnership, and as to the
persons to be so admitted, if any
 applied to show that partners have
the right to select their co-partners
and that no set of partners can take
another person into the
partnership,
 without the consent of each of the DISSOLUTION WINDING TERMINATION
partners. (Art. 1804 NCC). OF A UP
PARTNERSHI
P
PROPERTY RIGHTS OF A PARTNER
refers to the process of is that point in
change in the settling time that
1. His right in specific relations partnership when all
partnership property. between the business or partnership
A and B are partners, partners in a affairs after affairs are
each contributed a car partnership dissolution. completely
caused by any wound up and
to the partnership. partner finally settled.
For a
The ceasing to be partnership, It signifies the
two cars are specific associated in there is no end of the
the carrying definite partnership.
partnership properties. on the (Art. 1828
period
This right is not business. provided by NCC).
assignable; not law and is
subject to support. therefore
indefinite.
The partner is a co-
owner with other
Note:
partners of the winding up
specific partnership period in
property. corporation
is only for a
maximum of
2. His interest in the partnership. three (3)
years as
The partner’s share of
provided in
the profits and losses the RCC.
are a partner’s interest
in the partnership.
This is without
mentioning any
particular or specific
property. This is
assignable and
subject to support.
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