UPDATES ON COMMERCIAL LAW

BAR 2017
by: Judge Ella Dumlao-Escalante

TRANSPORTATION LAW

MANAY, JR. v. CEBU AIR, INC.

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

Jose (with Manay as one of the passengers) purchased 20 Cebu Pacific round-trip tickets from Manila to
Palawan for himself and on behalf of his relatives and friends. He made the purchase at Cebu Pacific's branch office
in Robinsons Galleria.

Jose alleged that he specified to the Cebu Pacific ticketing agent, that his preferred date and time of
departure from Manila to Palawan should be on July 20, 2008 at 8:20 a.m. and that his preferred date and time
for their flight back to Manila should be on July 22, 2008 at 4:15 p.m. He paid, and tickets were issued. The Cebu
Pac agent printed the tickets which consisted of three (3) pages, and recapped only the first page to him. Since the
first page contained the details he specified to Alou, he no longer read the other pages of the flight information.

On July 20, 2008, Jose and his 19 companions boarded the 0820 Cebu Pacific flight to Palawan and had an
enjoyable stay.

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 morning flight earlier that day. Jose informed the ground
personnel that he personally purchased the tickets and specifically instructed the ticketing agent that all 20 of them
should be on the 4:15 p.m. flight to Manila.

Upon reading the tickets, they learned that Cebu Pac was correct. So they rebooked and paid again. Are the
passengers entitled to damages?

NO. The Air Passenger Bill of Right mandates that the airline must inform the passenger in writing of all
the conditions and restrictions in the contract of carriage. Purchase of the contract of carriage binds the passenger
and imposes reciprocal obligations on both the airline and the passenger. The airline must exercise extraordinary
diligence in the fulfillment of the terms and conditions of the contract of carriage. The passenger, however, has the
correlative obligation to exercise ordinary diligence in the conduct of his or her affairs.

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.
PASSENGER NOT ENTITLED TO DAMAGES.

Pereñas v. Zarate, 679 SCRA 208, 29 August 2012

Are school bus operators common carriers?

Aaron Zarate was a high school Don Bosco student. Operator – Pereñas- operator.

School bus. Running late, so school bus detoured through a narrow path underneath the Magallanes
Interchange. At the time, the narrow path was marked by piles of construction materials and parked passenger
jeepneys, and the railroad crossing in the narrow path had no railroad warning signs, or watchmen, or other
responsible persons manning the crossing. In fact, the bamboo barandilla was up, leaving the railroad crossing
open to traversing motorists. The bus driver did not see the train as his view was blocked by another vehicle. The
train hit the bus, all passengers were thrown out. Aaron's was dragged by the train, and his head was severed.

The parents sued the operator of the school bus insisting that as a common carrier, it is liable for damages.

The operator of a school bus is a common carrier because he holds himself out indiscriminately as ready to
transport students of a particular school living within or near the area where he operates the service, and for a fee.
DESPITE HAVING A LIMITED CLIENTELE;
 PNR – jointly and solidarily liable with the school bus

SULPICIO LINES, INC. vs. NAPOLEON SESANTE

G.R. NO. 172682, July 27, 2016

Water transportation; Is vessel liable even if the sinking was due to force majuere?

In 1998, M/V Princess of the Orient sank near Fortune Island in Batangas. Of the 388 recorded passengers,
150 were lost. Napoleon Sesante, then a member of the Philippine National Police (PNP) and a lawyer, was one of
the passengers who survived the sinking. He sued the petitioner for breach of contract and damages alleging that
Sulpicio Lines committed bad faith in allowing the vessel to sail despite the storm signal. In its defense, the
petitioner insisted on the seaworthiness of the M/V Princess of the Orient due to its having been cleared to sail
from the Port of Manila by the proper authorities; that the sinking had been due to force majeure.

Should damages be awarded?

YES. The trial court is not required to make an express finding of the common carrier's fault or negligence.
The presumption of negligence applies so long as there is evidence showing that: (a) a contract exists between the
passenger and the common carrier; and (b) the injury or death took place during the existence of such contract.

In such event, the burden shifts to the common carrier to prove its observance of extraordinary diligence,
and that an unforeseen event or force majeure had caused the injury. However, for a common carrier to be
absolved from liability in case of force majeure, it is not enough that the accident was caused by a fortuitous event.
The common carrier must still prove that it did not contribute to the occurrence of the incident due to its own or its
employees' negligence.

It is true that there was force majeure. There were big waves 7-8 meters high. But it was also established
that the sinking was due to high speed of the vessel and the faulty manuever of the captain of the ship. -
NEGLIGENCE

CATHAY PACIFIC AIRWAYS, LTD. v. SPOUSES ARNULFO and EVELYN FUENTEBELLA

G. R. No. 188283, July 20, 2016,

Congressman; downgrading of seats

Congressman Fuentebuella travelled with his wife, Evelyn, to Sydney Austrailia along with other members
of Congress on an official business trip. They purchased business class tickets, but later the Fuentebellas upgraded
their tickets to First Class.

Cathay Pacific admitted that first class tickets were purchased, but according to the carrier, the tickets were
“waitlisted.” The spouses lined up in the First Class counter, but they were given business class boarding passes.
They did not notice this until they were denied entry into the first class lounge. Cong. Fuentebella demanded entry
into the lounge, and the issuance of first class boarding passes, but the ground staff was discourteous. The other
congressmen were able to travel first class.

DAMAGES?

YES. The aggrieved party does not have to prove that the common carrier was at fault or was negligent; all
that he has to prove is the existence of the contract and the fact of its nonperformance by the carrier. In this case,
both the trial and appellate courts found that respondents were entitled to First Class accommodations under the
contract of carriage, and that petitioner failed to perform its obligation.

However, the award of P5 million as moral damages is excessive, considering that the highest amount ever
awarded by this Court for moral damages in cases involving airlines is P500,000. As said in Air France v. Gillego,
"the mere fact that respondent was a Congressman should not result in an automatic increase in
the moral and exemplary damages." Upon the facts established, the amount of P500,000 as moral damages
is reasonable to obviate the moral suffering that respondents have undergone. With regard to exemplary damages,
jurisprudence shows that P50,000 is sufficient to deter similar acts of bad faith attributable to airline
representatives.

MENDOZA vs. GOMEZ

G.R. No. 160110, June 18, 2014
Address: Unit 2, 4th Floor, España Place Building, 1139 Adelina Street corner España Boulevard 2
Sampaloc, Manila (Beside UST near Morayta Street)
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 Kabit system

A truck was hit by Mayamy Bus, Gomez was injured. The registered owner of Mayamy Bus was Mendoza.
The driver of the bus eluded arrest, so Gomez sued Mendoza. She however claimed that she may be the registered
owner, but the real owner was SPO1 Cirilo Enriquez, who had the bus attached with Mayamy Transportation
Company under the so-called "kabit system."

WHO IS LIABLE? REGISTERED OWNER OR REAL OWNER?

REGISTERED OWNER. In case of collision of motor vehicles, the person whose name appears in the
certificate of registration shall be considered the employer of the person driving the vehicle and shall be directly
and primarily liable with the driver under the principle of vicarious liability. The registered owner cannot elude
liability by claiming that she is not the true owner of the bus. The rule is founded on public policy. The main aim of
motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or injury is
caused by the vehicles on the public highways, responsibility therefore can be fixed on a definite individual, the
registered owner.

NEGOTIABLE INSTRUMENTS LAW

HSBC v. CIR
G.R. Nos. 166018 & 167728, 04 June 2014

HSBC’s investor-clients maintain Philippine peso and/or foreign currency accounts, which are managed by
HSBC through instructions given through electronic messages. The said instructions are standard forms known in
the banking industry as SWIFT, or “Society for Worldwide Interbank Financial Telecommunication.” In
purchasing shares of stock and other investment in securities, the investor-clients would send electronic messages
from abroad instructing HSBC to debit their local or foreign currency accounts and to pay the purchase price
therefor upon receipt of the securities.

CIR imposed doc. Stamp tax insisting that the electronic messages are bills of exchange. Is it?

No. The electronic messages are not signed by the investor-clients as supposed drawers of a bill of
exchange; they do not contain an unconditional order to pay a sum certain in money as the payment is supposed to
come from a specific fund or account of the investor-clients; and, they are not payable to order or bearer but to a
specifically designated third party. Thus, the electronic messages are not bills of exchange. As there was no bill of
exchange or order for the payment drawn abroad and made payable here in the Philippines, there could have been
no acceptance or payment that may give rise to the imposition of the DST under Section 181 of the Tax Code.

MARQUEZ v. ELISAN CREDIT CORPORATION

G.R. No. 194642, April 6, 2015

loans and prom notes

Marquez obtained a P53,000.00 loan from Elisan, covered by a promissory note which provides for
payment of interest and penalty. He also mortgaged his motor vehicle. Then, Marquez obtained a second loan for
P55,000.00. On maturity, failed to pay in full. Months after maturity, Marquez was able to pay P56,000.00, an
amount greater than the original amount of the loan. Despite this, Elisan still foreclosed the mortgaged saying that
it imposed the interest and penalty so Marquez still owed Elisan a sum of money. Marquez denies that he
stipulated upon and consented to the interest, penalty and attorney's fees because he purportedly signed the
promissory note in blank. This allegation deserves scant consideration.

The promissory notes securing the first and second loan contained exactly the same terms and conditions,
except for the date and amount of principal. Marquez knew of such terms and conditions even assuming that the
entries on the interest and penalty charges were in blank when he signed the promissory note. He is an engineer by
profession so he should read documents before signing.

Ting Ting Pua vs. Spouses Tiong and Teng

G.R. No. 198660, October 23, 2013

Check is evidence of obligation

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Sampaloc, Manila (Beside UST near Morayta Street)
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 Spouses Tiong and Teng obtained loan from Ting Ting Pua on different occasions, and issued 17 checks, which
were all dishonored for DAIF. When sued for payment, spouses insisted they did not obtain loan, as they were
business partners with Ting Ting Pua.

May a check prove a loan transaction?

YES. A check, the entries of which are in writing, could prove a loan transaction

A check constitutes an evidence of indebtedness and is a veritable proof of an obligation. Under Section 24
of the Negotiable Instruments Law, “Every negotiable instrument is deemed prima facie to have been issued for a
valuable consideration; and every person whose signature appears thereon to have become a party for value.”

Checks completed and delivered to a person by another are sufficient by themselves to prove the existence
of the loan obligation obtained by the latter from the former.

ALVIN PATRIMONIO vs. NAPOLEON GUTIERREZ AND OCTAVIO MARASIGAN III G.R. No.
187769, June 4, 2014

Patrimonio and Nap are business partners: Slam Dunk – mini concerts and shows related to basketball.
Patrimonio pre-signed checks with instruction.

Nap was in need of money so he took out a loan with Marasigan, who knew of the arrangement between
Patrimonio and Nap. But Nap told Octavio the money was for Patrimonio who was then building a house. Nap
used the checks signed by Patrimonio.

Checks bounced. Marasigan sued Patrimonio.

Under Sec. 14, NIL, if the maker or drawer delivers a pre-signed blank paper to another person for the
purpose of converting it into a negotiable instrument, that person is deemed to have prima facie authority to fill it
up.

To collect payment, it must be filed up strictly in accordance with the authority given and within a
reasonable time.

SEC. 14 is a personal defense. Meaning, a holder not a HIDC may not be able to collect payment if
Incomplete but Delivered Instrument is raised as a defense.

Is Marasigan a HIDC?

NO.

Section 52(c) of the NIL states that a holder in due course is one who takes the instrument "in good faith
and for value." Acquisition in good faith means taking without knowledge or notice of equities of any sort which
could be set up against a prior holder of the instrument. It means that he does not have any knowledge of fact
which would render it dishonest for him to take a negotiable paper.

In this case, after having been found out that the blanks were not filled up in accordance with the authority
the Patrimonio gave, Marasigan has no right to enforce payment against Patrimonio, thus, the latter cannot be
obliged to pay the face value of the check.

RCBC SAVINGS BANK versus - NOEL M. ODRADA,

G.R. No. 219037,October 19, 2016

MANAGER'S CHECKS

Lim purchased a second hand Montero from Odrada. Loan financed by RCBC. Manager's check as
payment. Later, there were issues with the roadworthiness of the Montero so Lim called Odrada and told him not
to deposit the check. Lim also instructed RCBC not to honor the check. Despite notice, Odrada deposited the
check. Dishonored. Sued Lim and RCBC.

ISNT IT THAT MANAGER'S CHECKS ARE TREATED AS GOOD AS CASH?

While a manager's check is automatically accepted, a holder other than a holder in due course is still
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subject to defenses.

The drawee bank of a manager's check may interpose personal defenses of the purchaser of the manager's
check if the holder is not a holder in due course. ODRADA had notice. In short, the purchaser of a manager's check
may validly countermand payment to a holder who is not a holder in due course. Accordingly, the drawee bank
may refuse to pay the manager's check by interposing a personal defense of the purchaser.

The mere issuance of a manager's check creates a privity of contract between the holder and the
drawee bank, the latter primarily binding itself to pay according to the tenor of its acceptance. The drawee bank, as a
result, has the unconditional obligation to pay a manager's check to a holder in due course irrespective of any available
personal defenses. However, while this Court has consistently held that a manager's check is automatically
accepted, a holder other than a holder in due course is still subject to defenses.

METROBANK vs. WILFRED N. CHIOK

G.R. No. 172652 November 26, 2014
NO FACTS

MANAGER'S CHECKS ; CASHIER'S CHECKS

The accepted banking practice is that such checks are as good as cash.

The legal effects of a manager’s check and a cashier’s check are the same. A manager’s check, like a
cashier’s check, is an order of the bank to pay, drawn upon itself, committing in effect its total resources, integrity,
and honor behind its issuance. By its peculiar character and general use in commerce, a manager’s check or a
cashier’s check is regarded substantially to be as good as the money it represents.

BUT Manager’s and cashier’s checks are still the subject of clearing to ensure that the same have not been
materially altered or otherwise completely counterfeited. SO NOT PRE-CLEARED.
BUT PRE-ACCEPTED by the mere issuance thereof by the bank, which is both its drawer and drawee.
Thus, while manager’s and cashier’s checks are still subject to clearing, they cannot be countermanded for being
drawn against a closed account, for being drawn against insufficient funds, or for similar reasons such as a
condition not appearing on the face of the check.

However, in view of the peculiar circumstances of the case at bench, We are constrained to set aside the
foregoing concepts and principles in favor of the exercise of the right to rescind a contract upon the failure of
consideration thereof.

RIVERA v. SPOUSES CHUA

G.R. No. 184458, January 14, 2015
citing Nacar v. Gallery Frames, G.R. No. 189871, 13 August 2013

BSP Circular No. 799; beginning 1 July 2013 = 6%

At the time interest accrued from 1 January 1996, the date of default under the Promissory Note, the then
prevailing rate of legal interest was 12% per annum under Central Bank (CB) Circular No. 416 in cases involving
the loan or forbearance of money. Thus, the legal interest accruing from the Promissory Note is 12% per annum
from the date of default on 1 January 1996.

However, the 12% per annum rate of legal interest is only applicable until 30 June 2013, before the advent
and effectivity of Bangko Sentral ng Pilipinas (BSP) Circular No. 799, Series of 2013 reducing the rate of legal
interest to 6% per annum. Pursuant to our ruling in Nacar v. Gallery Frames, BSP Circular No. 799 is
prospectively applied from 1 July 2013. In short, the applicable rate of legal interest from 1 January 1996, the date
when Rivera defaulted, to date when this Decision becomes final and executor is divided into two periods reflecting
two rates of legal interest: (1) 12% per annum from 1 January 1996 to 30 June 2013; and (2) 6% per annum FROM
1 July 2013 to date when this Decision becomes final and executory.

INSURANCE LAW

ALPHA INSURANCE AND SURETY CO. vs. ARSENIA SONIA CASTOR G.R. No. 198174, September
02, 2013

Castor insured her Toyota Revo against loss or damage with Alpha. Unfortunately, the car was stolen by her
driver. Alpha denied the insurance claim on the ground that the insurance policy provides that: The Company shall
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Sampaloc, Manila (Beside UST near Morayta Street)
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not be liable for any malicious damage caused by the Insured, any member of his family or by “A PERSON IN THE
INSURED’S SERVICE. Castor insists the policy also provided: The insurance company, subject to the limits of
liability, is obligated to indemnify the insured against theft.

Which of the two provisions must prevail? Interpretation of contract. Always in favor of insured (if
ambiguous terms)

Contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the
terms which the parties themselves have used. If such terms are clear and unambiguous, they must be taken and
understood in their plain, ordinary and popular sense. Accordingly, in interpreting the exclusions in an insurance
contract, the terms used specifying the excluded classes therein are to be given their meaning as understood in
common speech.

A contract of insurance is a contract of adhesion. So, when the terms of the insurance contract contain
limitations on liability, courts should construe them in such a way as to preclude the insurer from non-compliance
with the obligation.

Theft perpetrated by a driver of the insured is not an exception to the coverage from the insurance policy
subject of this case. Thus, there being no categorical declaration of exception, the same must be covered. As
correctly pointed out by the plaintiff, “(A)n insurance contract should be interpreted as to carry out the purpose for
which the parties entered into the contract which is to insure against risks of loss or damage to the goods. Such
interpretation should result from the natural and reasonable meaning of language in the policy.

Where restrictive provisions are open to two interpretations, that which is most favorable to the insured is
adopted.

INCONTESTABILITY CLAUSE

MANILA BANKERS LIFE INSURANCE CORPORATION vs. CRESENCIA P. ABAN

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

Sotero took out a life insurance policy from Manila Bankers Life Insurance Corporation (Bankers Life),
designating Aban (Aban), her niece, as beneficiary. Policy issued 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. Aban claimed proceeds but denied due to fraud, concealment and/or misrepresentation which renders
it voidable. Sotero had no means to pay, Aban is an insurance agent and named herself as beneficiary.

Should payment be given to ABAn? YES.

The "Incontestability Clause" under Section 48 of the Insurance Code provides that 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.

After a policy of life insurance made payable on the death of the insured shall have been in force during the
lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement, the insurer
cannot 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.

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.

The insurer is deemed to have the necessary facilities to discover such fraudulent concealment or
misrepresentation within a period of two (2) years. It is not fair for the insurer to collect the premiums as long as
the insured is still alive, only to raise the issue of fraudulent concealment or misrepresentation when the insured
dies in order to defeat the right of the beneficiary to recover under the policy.

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 At least two (2) years from the issuance of the policy or its last reinstatement, the beneficiary is given the
stability to recover under the policy when the insured dies. The provision also makes clear when the two-year
period should commence in case the policy should lapse and is reinstated, that is, from the date of the last
reinstatement.

INCONTESTABILITY CLAUSE

Insular Life Assurance v. Khu gr No. 195276 April 18, 2016

Art. 48, IC, The date of last reinstatement pertains to the date that the insurer approved the application for
reinstatement.

Sunlife of Canada (Philippines), Inc. v. Sibya, et. al.

G.R. No. 211212, 08 June 2016, Reyes, J:

After the two-year period from the effectivity of a life insurance contract lapses, or when the
insured dies within said period, the insurer must make good on the policy, even though the policy was
obtained by fraud, concealment, or misrepresentation.

----

Paramount Insurance V. Spouses Remondeulaz

Gr 173773, November 28 2012

THEFT CLAUSE

Remondeulaz insured his car against loss or damage. Later, he brought it to the repair shop for auto-detailing. The
agreement was to return it within 3 days, but it was not returned by the shop owner. Claim denied by insurer
because car was not lost, it was entrusted to a third person/shop owner.

THEFT?

YES.

When one takes the motor vehicle of another without the latter’s consent even if the motor vehicle is later
returned, there is theft – there being intent to gain as the use of the thing unlawfully taken constitutes gain. Also,
in Malayan Insurance Co., Inc. v. Court of Appeals, this Court held that the taking of a vehicle by another person
without the permission or authority from the owner thereof is sufficient to place it within the ambit of the word
theft as contemplated in the policy, and is therefore, compensable.

The shop owner's act of depriving Remondeulaz their motor vehicle at, or soon after the transfer of physical
possession of the movable property, constitutes theft under the insurance policy, which is compensable.

MALAYAN INSURANCE COMPANY, INC. vs. PAP CO., LTD. (PHILIPPINE BRANCH)
G.R. No. 200784. August 7, 2013

ALTERATION – FIRE INSURANCE

Several equipment of PAP Co. were insured against fire. The contract states that the equipment shall be
stored in a building where old computer parts owned by PAP are stored. During the effectivity of the contract, the
equipment subject of the insurance were transferred to another building which was factory for repacking of
silicone sealant.

Fire razed the building, equipment burned.

Insured cannot collect.

An alteration in the use or condition of a thing insured from that to which it is limited by the policy made
without the consent of the insurer, by means within the control of the insured, and increasing the risks, entitles an
insurer to rescind a contract of fire insurance.

Manulife Philippines v. Ybanez

G.R. No. 204736, November 28, 2016,
Address: Unit 2, 4th Floor, España Place Building, 1139 Adelina Street corner España Boulevard 7
Sampaloc, Manila (Beside UST near Morayta Street)
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 Who is the best witness who should have testified?

The insurer filed an action for rescission of an insurance contract against the insured for supposed
misrepresentation by the insured of her real state of health. The claim is largely based on the insured’s alleged
failure to disclose her confinement at the CDH hospital and the records pertaining thereto. During trial, the
insured presented its sole witness, the Senior Manager of its Claims and Settlements Department, whose testimony
chiefly involved identifying the CDH records, among others. Will this testimony suffice to rescind the contract?

No.

Who is the best witness who should have testified?

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. Of course, the mere mechanical
act of identifying these documentary exhibits, without the testimonies of the actual participating
parties thereto, adds up to nothing. These documentary exhibits did not automatically validate or explain
themselves. "The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind
the contract. Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the duty
to establish such defense by satisfactory and convincing evidence rests upon the insurer." For failure of Manulife to
prove intent to defraud on the part of the insured, it cannot validly sue for rescission of insurance contracts.

H.H. HOLLERO CONSTRUCTION, INC. vs. GOVERNMENT SERVICE INSURANCE SYSTEM and
POOL OF MACHINERY INSURERS
G.R. No. 152334, September 24, 2014

GSIS and Hollero Construction entered into a Project Agreement whereby the latter undertook the
development of a GSIS housing project known as Modesta Village Section B.

Hollero obligated itself to insure the Project, including all the improvements, under a Contractors’ All Risks
(CAR) Insurance which it also obtained with with the GSIS General Insurance Department. The policy provided
that all claims must be filed without in the reglementary period of 1 year.

3 thypoons hit the country causing considerable damage to the project. Hollero filed claim with GSIS on
April 26, 1990. GSIS rejected the claim on June 1990. GSIS stated in its letter that Hollero did not suffer any loss
but Hollero may “dispute its findings.”

September 1991 – Hollero filed suit in Court.

PRESCRIBED? YES. DEFENSE of Hollero - “may dispute its findings” Because of that phrase, Hollero
insists that GSIS did not categorically deny its claim.

The prescriptive period for the insured’s action for indemnity should be reckoned from the "final rejection"
of the claim. "Final rejection" simply means denial by the insurer of the claims of the insured and not the rejection
or denial by the insurer of the insured’s motion or request for reconsideration.

The letter may have stated “Hollero may dispute the findings of GSIS” but the said letter was also
categorical in denying Hollero's claim because according to GSIS, no loss was suffered by Hollero that may
compensable under the policy.

STRONGHOLD INSURANCE CO., INC. v. PAMANA ISLAND RESORT HOTEL AND MARINA CLUB,
INC.
G.R. No. 174838, June 01, 2016
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 Given the provisions of the Insurance Code, which is a special law, the applicable rate of interest shall be
that imposed in a loan or forbearance of money as imposed by the Bangko Sentral ng Pilipinas (BSP), even
irrespective of the nature of insurer's liability. In the past years, this rate was at 12% per annum. However, in light
of Circular No. 799 issued by the BSP on June 21, 2013 decreasing interest on loans or forbearance of money, the
CA's declared rate of 12% per annum shall be reduced to 6% per annum from the time of the circular's effectivity on
July 1, 2013. The Court explained in Nacar Gallery Frames that the new rate imposed under the circular could only
be applied prospectively, and not retroactively.

CORPORATION LAW

MACASAET vs. FRANCISCO R. CO, JR.

G.R. No. 156759, June 5, 2013

DID YOU KNOW THAT ABANTE TONITE IS NOT INCORPORATED?

A retired police officer sued Abante Tonite, its publisher Macasaet and other officers. Sheriff tried to serve
the summons but all the officers/defendants were out. Sheriff resorted to substituted service.

The officers of Abante Tonite moved for the dismissal of the case on the ground of lack of jurisdiction over
their persons. They insisted that the summons should have been served personally on each of them. Also, Abante
Tonite according to the officers is not incorporated so it should be dropped as a party to the suit.

May Abante Tonite be sued even if it is not incorporated?

YES. The non-incorporation of AbanteTonite was of no consequence for, otherwise, anyone who suffers
damage from the publication of the articles in the pages of its tabloids would be left without recourse.

Corporation by estoppel results when a corporation represented itself to the reading public as such despite
its not being incorporated. It is founded on principles of equity and is designed to prevent injustice and unfairness.

PIERCING CORPORATE VEIL

JOSE EMMANUEL P. GUILLERMO v. CRISANTO P. USON G.R. No. 198967, March 07, 2016

iLLEGAL DISMISSAL CASE. Officers not impleaded in the case, only the corporation. Final judgment
against corporation, unsatisfied. Uson filed Motion to Hold Directors and Officers liable?

Allowed?

YES.

The veil of corporate fiction can be pierced, and responsible corporate directors and officers or even a
separate but related corporation, may be impleaded and held answerable solidarily in a labor case, even after final
judgment and on execution, so long as it is established that such persons have deliberately used the corporate
vehicle to unjustly evade the judgment obligation, or have resorted to fraud, bad faith or malice..

Guillermo as President and General Manager of the company FIRED Uson. He also received the summons
to the case, and who also subsequently and without justifiable cause refused to receive all notices and orders of the
Labor Arbiter that followed. Bad faith.

Republic Of The Philippines v. Mega Pacific Esolutions, Inc.

G.R. No. 184666, June 27, 2016

For the 2004 elections, the COMELEC attempted to implement the automated election
system. Mega Pacific eSolutions, Inc. (MPEI), as lead company, purportedly formed a joint venture - known
as the Mega Pacific Consortium (MPC) won in the bidding and Comelec awarded the automation project
to MPC.

Later, the SC in another case – declared as void the aforesaid contract because MPEI was declared as
disqualified to bid. The Republic sought to recover the payments made to MPC. Republic wanted to implead the
officers of MPEI, the latter objected since it was MPEI which entered into contract with Comelec.

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 May the officers be impleaded?

YES. MPEI had perpetrated a scheme against COMELEC to secure the automation contract. MPEI was
created 11 days before the bidding. The officers must be held liable. Pierce corporate fiction.

 Erson Ang Lee Doing Business As "SUPER Lamination Services," Versus - Samahang
Manggagawa Ng Super Lamination (SMSLSNAFLU-KMU)
G.R. No. 193816, First Division, November 21, 2016

The Court has time and again disregarded separate juridical personalities under the doctrine of piercing the
corporate veil where a separate legal entity is used to defeat public convenience, justify wrong, protect fraud, or
defend crime, among other grounds.

Anna Teng v. Securities And Exchange Commission (SEC) And Ting Ping Lay, G.R. No. 184332,
February 17, 2016

Ting Ping purchased SHARES of stock of TCL Sales Corporation (TCL) from different shareholders. Later,
he requested TCL to record his acquisition and to issue new certificates of stock in his favor. TCL refused on the
ground that the previous stockholders from whom Ting Ping purchased his stocks have not yet returned their
Certificates.

JUSTIFIED? YES.

The surrender of the original certificate of stock is necessary before the issuance of a new one so that the
old certificate may be cancelled.

A corporation is not bound and cannot be required to issue a new certificate unless the original certificate is
produced and surrendered. Surrender and cancellation of the old certificates serve to protect not only the
corporation but the legitimate shareholder and the public as well, as it ensures that there is only one document
covering a particular share of stock.

BANKING LAWS

 Land Bank Of The Philippines v. Narciso L. Kho G.R. No. 205839; Ma. Lorena Flores And
Alexander Cruz vs. Narciso L. Kho G.R. No. 205840, July 7, 2016

MISCREDITING OF AMOUNT IN ACCOUNTS. Oñate opened and maintained seven trust accounts with
Land Bank. LANDBANK demanded return of P4M – miscrediting. Onate refused saying his funds came from
legitimate sources.

LANDBANK lost.

A bank who mismanages the trust accounts of its client cannot benefit from the inaccuracies of the reports
resulting therefrom. It cannot impute the consequence of its negligence to the client. The bank must record every
single transaction accurately, down to the last centavo and as promptly as possible. This has to be done if the account is
to reflect at any given time the amount of money the depositor can dispose of as he sees fit, confident that the bank
will deliver it as and to whomever he directs.

Intellectual Property Code of the Philippines

JURISDICTION RA No. 8293 (Intellectual Property Code of the Philippines).

Sec. 170 of RA No. 8293 provides the penalty for violation of the aforesaid provisions:

Independent of the civil and administrative sanctions imposed by law, a criminal

penalty of imprisonment from two (2) years to five (5) years and a fine ranging from
Fifty thousand pesos (P50,000) to Two hundred thousand pesos(P200,000), shall be
imposed on any person who is found guilty of committing any of the acts mentioned in
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 Section 155, Section 168 and Subsection 169.1.

However, albeit the penalty of imprisonment is within the purview of the first level court, it is settled that
violations of RA No. 8293 fall within the jurisdiction of the Regional Trial Court, duly designated as Special
Commercial Court. This has been settled in the cases of Samson v. Daway1 and Samson v. Cabanos.2

 UFC Philippines, Inc. (NOW Merged With Nutri-Asia, Inc., With Nutri-Asia, Inc. As The
Surviving Entity) V. Fiesta Barrio Manufacturing Corporation G.R. No. 198889, January 20,
2016

Respondent Fiesta Barrio applied for registration of the mark “PAPA BOY” for lechon sauces.

UFC opposed saying it has a product known as “PAPA BANANA KETCHUP.”

May the mark be registered?

No. THE consuming public would be confused.

Respondent had an infinite field of words and combinations of words to choose from to coin a mark for its
lechon sauce.

ABS CBN v. GOZON March 11, 2015

ABS had a live footage of the arrival/ homecoming of OFW and Iraqi militant hostage victim Angelo dela
Cruz. It allowed Reuters to air the footages it had taken earlier under a special embargo agreement. GMA-7
subscribes to Reuters and it received a live video feed coverage of Angelo dela Cruz’ arrival from them. Thereafter,
it carried the live newsfeed in its program “Flash Report” together with its live broadcast.

ABS CBN sued for infringement.

Channel 7 liable. News or the event itself is not copyrightable. However, an event can be captured and
presented in a specific medium. News coverage in television involves framing shots, using images, graphics, and
sound effects. It involves creative process and originality. Television news footage is an expression of the news.
News as expressed in a video footage is entitled to copyright protection.

ANTI-MONEY LAUNDERING LAW

 Subido Pagente Certeza Mendoza And Binay Law Offices, Versus - The Court Of Appeals
G.R. No. 216914 December 6, 2016

In 2015, a year before the 2016 presidential elections, reports abound on the supposed disproportionate
wealth of then Vice President Jejomar Binay and the rest of his family, some of whom were likewise elected public
officers. The Office of the Ombudsman and the Senate conducted investigations and inquiries thereon.

A news report came out in Manila Times that the AMLC asked the CA to allow it to look into the law office
linked to the Binay family, the Subido Pagente Certeza Mendoza & Binay Law Firm, where the Vice President's
daughter Abigail was a former partner.

Petitioner questioned this saying it was deprived of due process, and the AMLC cannot asked the CA to look
into its account, ex parte.

EX PARTE ALLOWED?

YES. This is not yet freezing account. No violation of due process. It is after the freeze order is issued that
the bank owner may question the seizure.

1 G.R. Nos. 160054-55, 21 July 2004.

2 G.R. No. 161693, 28 June 2005.
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