BAR REMINDERS Atty. Maria Zarah R. Villanueva-Castro INSURANCE What is an All-Risk oli!

y" An All-Risk Policy insures against all causes of conceivable loss or damage except when otherwise excluded or when the loss or damage was due to fraud or intentional misconduct committed by the insured. The policy covers all losses during the voyage whether or not arising from a marine peril. (New World International Development [Phils.], Inc. v. Nyk-Fil apan !hippin" #orp., et al.$New World International Development[Phils.], Inc. v. !ea%oard-&astern Ins'rance #o., Inc., (.). Nos. *+*,-.$*+,/,*, 0'"'st /,, /1**2 Is non-#resentation o$ the #oli!y $atal to an insuran!e !lai%" Non-presentation of the insurance contract or policy is not necessarily fatal. n !elsan Transport "ines# nc. v. $ourt of Appeals# the $ourt stated that the presentation of the insurance policy was not fatal because the loss of the cargo undoubtedly occurred while on board the petitioner%s vessel. And even though it was not offered in evidence# it still can be considered by the court as long as they have been properly identified by testimony duly recorded and they have themselves been incorporated in the records of the case. (0sian 3erminals, Inc. v. 4alayan Ins'rance, #o., Inc., (.). No. *+*,1-, 0pril ,, /1**2 E&#lain the nature o$ Suretyshi#. A contract of suretyship is an agreement whereby a party called the surety# guarantees the performance by another party# called the principal or obligor# of an obligation or undertaking in favor of another party called the obligee. &y its very nature# under the laws regulating suretyship# the liability of the surety is 'oint and several but is limited to the amount of the bond# and its terms are determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obligor and the obligee. Although the contract of suretyship is# in essence# secondary only to a valid principal obligation# the surety%s liability to the creditor is direct# primary# and absolute( he becomes liable for the debt and duty of another although he possesses no direct or personal interest over the obligations nor does he receive any benefit therefrom. (American Home Insurance co. of New York V. F.F. Cruz & Co., Inc., G.R. No. 17 !"#, Au$us% 1&, "&11' NE'()IAB*E INS)RUMEN)S E&#lain the #resu%#tion o$ !onsi+eration in ne,otia-le instru%ents. )nder the Negotiable nstruments "aw# it is presumed that every party to an instrument ac*uires the same for a consideration or for value. t devolved upon the party who claims that there is no consideration to present convincing evidence to overthrow the presumption and prove that the checks were in fact issued without valuable consideration. ((n$r. )ose (. Ca*anan +. Nor%, -%ar In%erna%iona. /ra+e., Inc. G.R. No. 17"!0 , 1c%o2er 0, "&11' Who is an a!!o%%o+ation #arty" What is his lia-ility to the hol+er" An accommodation party is one who meets all the three re*uisites# vi+, -./ he must be a party to the instrument# signing as maker# drawer# acceptor# or indorser( -0/ he must not receive value therefor( and -1/ he must sign for the purpose of lending his name or credit to some other person. An accommodation party lends his name to enable the accommodated party to obtain credit or to raise money( he receives no part of the consideration for the instrument but assumes liability to the other party2ies thereto. The accommodation party is liable on the instrument to a holder for value even though the holder# at the time of taking the instrument# knew him or her to be merely an accommodation party# as if the contract was not for accommodation. ((use2io Gonza.es +. 3,i.i44ine Commercia. & In%erna%iona. 5ank, e% a.., G.R. No. 16&"07, Fe2ruar* "7, "&11'

)RANS (R)A)I(N Does the a!.uittal o$ the +river in the !ri%inal !ase $or re!kless i%#ru+en!e e&!use the !arrier $ro% lia-ility" No. The action for the recovery of damages arising from breach of contract of carriage is an independent civil action arising from contract which is separate and distinct from the criminal action for reckless imprudence resulting in homicide against the driver by reason of the same incident. 3ence# regardless of the driver%s ac*uittal or conviction in said criminal case# same has no bearing in the resolution of the case for damages. (Heirs of )ose 8arcia. 9. 1c,oa, name.*: Ru2* 5. 1c,oa, e% a.. +. G & - /rans4or% Cor4ora%ion ; G & - /ran4or% Cor4ora%ion +. Heirs of )ose 8arcia. 9. 1c,oa, name.*: Ru2* 5. 1c,oa, e% a.., G.R. Nos. 17&&71;17&1"0, 8arc, !, "&11' E&#lain the Re,istere+ (/ner Rule. n accordance with the law on compulsory motor vehicle registration# with respect to the public and third persons# the registered owner of a motor vehicle is directly and primarily responsible for the conse*uences of its operation regardless of who the actual vehicle owner might be. 4ell-settled is the rule that the registered owner of the vehicle is liable for *uasi-delicts resulting from its use. Thus# even if the vehicle has already been sold# leased# or transferred to another person at the time the vehicle figured in an accident# the registered vehicle owner would still be liable for damages caused by the accident. The sale# transfer or lease of the vehicle# which is not registered with the "and Transportation 5ffice# will not bind third persons aggrieved in an accident involving the vehicle. (F(5 <easin$ an= Finance Cor4ora%ion (now 53I <easin$ Cor4.' +. -4s. -er$io 3. 5a*.on an= 8ari%ess Vi..ena 5a*.on, e% a.., G.R. No. 1617!6, )une "!, "&11' What is the #ur#ose o$ the Re,istere+ (/ner Rule" Can the re,istere+ o/ner eva+e res#onsi-ility -y #rovin, the a!tual o/ner0o#erator o$ the vehi!le at the ti%e o$ the in!i+ent" 4ere a registered owner is allowed to evade responsibility by proving who the supposed transferee or owner is# it would be easy for him# by collusion with others or otherwise# to escape said responsibility and transfer the same to an indefinite person# or to one who possesses no property with which to respond financially for the damage or in'ury done. A victim of recklessness on the public highways is usually without means to discover or identify the person actually causing the in'ury or damage. 3e has no means other than by recourse to the registration in the 6otor 7ehicles 5ffice to determine who the owner is. The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. (1ri> 8e%ro <easin$ an= Finance Cor4ora%ion ?Former.* Conso.i=a%e= 1ri> <easin$ an= Finance@ +. 8inors: Aennis, 8*.ene, 8e.anie an= 8arikris, A.. surname= 8an$a.inao * Aizon, e% a.. -onn* <i an= An%onio Ae.os -an%os +. 8inors: Aennis, 8*.ene, 8e.anie an= 8arikris, A.. -urname= 8an$a.inao Y Aizon, e% a.., G.R. No. 17 &6! an= G.R. No. 17 "##, )anuar* "0, "&1"' Can a $ran!hise issue+ to a #u-li! utility -e e&!lusive" The .819# .8:1 and .8;: $onstitutions expressly and clearly prohibit the creation of franchises that are exclusive in character. The President# $ongress and the $ourt cannot create indirectly franchises that are exclusive in character by allowing the &oard of !irectors of a water district and the "ocal 4ater )tilities Administration to create franchises that are exclusive in character. <ection =: P! No. .8;# as amended# allows the &oard of !irectors of "a Trinidad 4ater !istrict and "ocal 4ater )tilities Administration to create franchises that are exclusive in character. $learly# <ection =: is patently unconstitutional. (/awan$ 8u.%iB3ur4ose Coo4era%i+e +. <a /rini=a= Ca%er Ais%ric%, G.R. No. 1## 71, 8arc, "", "&11' C(R (RA)I(N *AW Is the Boy S!outs o$ the hili##ines a #u-li! !or#oration" As presently constituted# the &oy <couts of the Philippines still remains an instrumentality of the national government. t is a public corporation created by law for a public purpose# attached to the !>$< pursuant to its $harter and the Administrative $ode of .8;:. t is not a private corporation which is re*uired to be owned or controlled by the government and be economically viable to 'ustify its existence under a special law. Thus# the test of economic viability clearly does not apply to public corporations dealing with governmental functions# to which category the &<P belongs. (5o* -cou%s of %,e 3,i.i44ines +. Commission on Au=i%, G.R. No. 177171, )une 7, "&11' What +oes the ter% 1!a#ital2 in Se!tion 334 Arti!le 5II o$ the Constitution %ean"

The term ?capital@ in <ection ..# Article A of the $onstitution refers only to shares of stock entitled to vote in the election of directors# and thus in this case only to common shares# and not to the total outstanding capital stock comprising both common and non-voting preferred shares. ndisputably# one of the rights of a stockholder is the right to participate in the control or management of the corporation. This is exercised through his vote in the election of directors because it is the board of directors that controls or manages the corporation. $onsidering that common shares have voting rights which translate to control# as opposed to preferred shares which usually have no voting rights# the term ?capital@ in <ection ..# Article A of the $onstitution refers only to common shares. 3owever# if the preferred shares also have the right to vote in the election of directors# then the term ?capital@ shall include such preferred shares because the right to participate in the control or management of the corporation is exercised through the right to vote in the election of directors. This interpretation is consistent with the intent of the framers of the $onstitution to place in the hands of Bilipino citi+ens the control and management of public utilities. (Note5 0s o6 0pril /1*/, the 4otion 6or )econsideration o6 this case is still pendin" %e6ore the !'preme #o'rt2 (Ci.son 3. Gam2oa +. Finance -ecre%ar* 8ar$ari%o 5. /e+es, e% a..D 3a2.i%o V. -ani=a=, e% a.., 3e%i%ionersBinBin%er+en%ion , G.R. No. 17#07!, )une "6, "&11' E&#lain the )rust 6un+ Do!trine" What is the e&tent o$ the +o!trine" The trust fund doctrine enunciates a rule that the property of a corporation is a trust fund for the payment of creditors. As between the corporation itself and its creditors it is a simple debtor# and as between its creditors and stockholders its assets are in e*uity a fund for the payment of its debts. t is established doctrine that subscriptions to the capital of a corporation constitute a fund to which creditors have a right to look for satisfaction of their claims and that the assignee in insolvency can maintain an action upon any unpaid stock subscription in order to reali+e assets for the payment of its debts. The trust fund doctrine is not limited to reaching the stockholder%s unpaid subscriptions. )he s!o#e o$ the +o!trine /hen the !or#oration is insolvent en!o%#asses not only the !a#ital sto!k4 -ut also other #ro#erty an+ assets ,enerally re,ar+e+ in e.uity as a trust $un+ $or the #ay%ent o$ !or#orate +e-ts. All assets and property belonging to the corporation held in trust for the benefit of creditors that were distributed or in the possession of the stockholders# regardless of full payment of their subscriptions# may be reached by the creditor in satisfaction of its claim. Also# under the trust fund doctrine# a corporation has no legal capacity to release an original subscriber to its capital stock from the obligation of paying for his shares# in whole or in part# without a valuable consideration# or fraudulently# to the pre'udice of creditors. The creditor is allowed to maintain an action upon any unpaid subscriptions and thereby steps into the shoes of the corporation for the satisfaction of its debt. (Aonnina C. Ha..e* +. 3rin%we.. Inc., G.R. No. 1070 !, 8a* 7&, "&112 Who o/ns the shares #ur!hase+ /ith the use o$ !o!onut levy $un+s" t is fairly established that the coconut levy funds are special public funds. $onse*uently# any property purchased by means of the coconut levy funds should likewise be treated as public funds or public property# sub'ect to burdens and restrictions attached by law to such property. &eing government properties# they are accordingly owned by the Covernment# for the coconut industry pursuant to existing laws. (3,i.i44ine Coconu% 3ro=ucers Fe=era%ion, Inc. ?C1C1F(A@, e% a.. Vs. Re4u2.ic of %,e 3,i.i44ines, res4on=en%D Ci$2er%o (. /ana=a, e% a.., In%er+enors;Aani.o -. Ersua Vs. Re4u2.ic of %,e 3,i.i44ines, G.R. Nos. 177607B06;1761!7, )anuar* " , "&1"' When %ay the Boar+ !reate a++itional #ositions $or !or#orate o$$i!e" Though the board of directors may create appointive positions other than the positions of corporate officers# the persons occupying such positions cannot be viewed as corporate officers under <ection 09 of the $orporation $ode. )nless and until the corporationDs by-laws is amended for the inclusion of Ceneral 6anager in the list of its corporate officers# such position cannot be considered as a corporate office within the realm of <ection 09 of the $orporation $ode. (8arc, II 8arke%in$, Inc. an= <uci.a V. )oson +. A.fre=o 8. )oson, G.R. No. 171!!7, Aecem2er 1", "&11' What %akes a !ontroversy intra-!or#orate" To reiterate# not all conflicts between the stockholders and the corporation are classified as intracorporate. 5ther factors such as the status or relationship of the parties and the nature of the

*uestion that is the sub'ect of the controversy must be considered in determining whether the dispute involves corporate matters so as to regard them as intra-corporate controversies. (8arc, II 8arke%in$, Inc. an= <uci.a V. )oson +. A.fre=o 8. )oson , G.R. No. 171!!7, Aecem2er 1", "&11' When is an o$$i!er #ersonally lia-le $or the +is%issal o$ an e%#loyee" >ven if the company has a valid cause for dismissing an employee due to cessation of business operations# however# if the latterDs dismissal was done abruptly and where he was not given the re*uired one-month prior written notice that the company will already cease its business operations# bad faith is clearly present on the part of the responsible officers. (8arc, II 8arke%in$, Inc. an= <uci.a V. )oson +. A.fre=o 8. )oson, G.R. No. 171!!7, Aecem2er 1", "&11' When is the o$$i!er +ee%e+ to have a!te+ in -a+ $aith" 4hen an officer modified the initial result of the technical evaluation of the computers by imposing an irrelevant grading system that was intended to favor one of the bidders# after the bids had been opened# he is deemed to have acted in bad faith. P! .==9 states that expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor. (Can=e.ario <. Verzosa, )r. +. Gui..ermo N. CaraFue, e% a.., G.R. No. 107676, 8arc, 6, "&11' A la/yer entere+ his a##earan!e a!!o%#anie+ -y the !o%#any7s +ire!tor an+ ,eneral %ana,er /ho hi%sel$ atten+e+ several !ourt hearin,s4 an+ sent a letter to the R)C askin, $or the status o$ the !ase. )here is no -oar+ resolution $or the re#resentations %a+e -e$ore the !ourt. Is the !o%#any -oun+ -y the re#resentations o$ the la/yer" A corporation may be held in estoppel from denying as against innocent third persons the authority of its officers or agents who have been clothed by it with ostensible or apparent authority. ts lawyer may not have been armed with a board resolution# but the appearance of the director and general manager made the parties assume that the company had knowledge of its lawyer%s actions and# thus# clothed the latter with apparent authority such that the parties were made to believe that the proper person and entity to address was such lawyer. A##arent authority4 or /hat is so%eti%es re$erre+ to as the 8hol+in, out8 theory4 or +o!trine o$ ostensi-le a,en!y4 i%#oses lia-ility4 not as the result o$ the reality o$ a !ontra!tual relationshi#4 -ut rather -e!ause o$ the a!tions o$ a #rin!i#al or an e%#loyer in so%eho/ %islea+in, the #u-li! into -elievin, that the relationshi# or the authority e&ists. This is especially true since the company never repudiated the authority of its lawyer when all the motions# pleadings and court orders were sent not to the office of the latter but to the office of the company# who in turn# would forward all of the same to the lawyer. (8e$an -u$ar Cor4ora%ion +. Re$iona. /ria. Cour% of I.oi.o, 5r. #6, Auman$as, I.oi.oD New Fron%ier -u$ar Cor4., e% a.., G.R. No. 17&70", )une 1, "&11' 9o/ shoul+ the Rules on Cor#oration Reha-ilitation -e !onstrue+" The $ourt promulgated the Rules in order to provide a remedy for summary and non-adversarial rehabilitation proceedings of distressed but viable corporations. These Rules are to be construed liberally to obtain for the parties a 'ust# expeditious# and inexpensive disposition of the case. Rehabilitation proceedings in our 'urisdiction have e*uitable and rehabilitative purposes. They attempt to provide for the efficient and e*uitable distribution of an insolvent debtor%s remaining assets to its creditors( and to provide debtors with a ?fresh start@ by relieving them of the weight of their outstanding debts and permitting them to reorgani+e their affairs. The purpose of rehabilitation proceedings is to enable the company to gain a new "ease on life and thereby allow creditors to be paid their claims from its earnings. The determination of the true and correct amount due a creditor is important in assessing whether the company may be successfully rehabilitated. t is thus necessary that the creditor be given the opportunity to be heard by the rehabilitation court. 3ence# even if belated filed# opposition or comment to rehabilitation should be accepted. (Asia /rus% Ae+e.o4men% 5ank +. Firs% Aikka Ae+e.o4men%, Inc. an= Eni+ac Ae+e.o4men%, Inc., G.R. No. 17!006, )une 1, "&11' Where shoul+ a #etition $or !or#orate reha-ilitation -e $ile+" Petitions for rehabilitation pursuant to these Rules shall be filed in the Regional Trial $ourt having 'urisdiction over the territory where the debtor%s principal office is located. (Asia /rus% Ae+e.o4men% 5ank +. Firs% Aikka Ae+e.o4men%, Inc. an= Eni+ac Ae+e.o4men%, Inc. , G.R. No. 17!006, )une 1, "&11'

When a !o%#any has se!ure+ a sus#ension or+er4 is $ore!losure o$ #ro#erties -elon,in, to its sto!khol+ers0o$$i!ers /hi!h /ere %ort,a,e+ to se!ure the +e-t o$ the !o%#any also sus#en+e+" N5. These properties are not under the purview of the <>$ <uspension 5rder. P! 8E0-A vested the <>$ with 'urisdiction on petitions for suspension of payments only on corporations# partnerships and associations( not on individual persons. Private individuals and their privately owned properties cannot be placed under the 'urisdiction of the <>$ in a petition for suspension of payments. The <>$ has no 'urisdiction over private individuals relative to any petition for suspension of payments# whether the private individual is a petitioner or a co-petitioner. The <>$%s ?'urisdiction is limited only to corporations and corporate assets(@ it has no 'urisdiction over the properties of private individuals or natural persons# even if they are the corporation%s officers or sureties. (-amue. E. <ee, e% a.. +. 5an$kok 5ank 3u2.ic Com4an*, <imi%e=, G.R. No. 1777 !, Fe2ruar* !, "&11' s the rehabilitation plan an indispensable re*uirement in a corporate rehabilitation caseF The rehabilitation plan is an indispensable re*uirement in corporate rehabilitation proceedings. <ection 9 of the Rules enumerates the essential re*uisites of a rehabilitation plan, The rehabilitation plan shall include -a/ the desired business targets or goals and the duration and coverage of the rehabilitation( -b/ the terms and conditions of such rehabilitation which shall include the manner of its implementation# giving due regard to the interests of secured creditors( -c/ the material financial commitments to support the rehabilitation plan( -d/ the means for the execution of the rehabilitation plan# which may include conversion of the debts or any portion thereof to e*uity# restructuring of the debts# dacion en pago# or sale of assets or of the controlling interest( -e/ a li*uidation analysis that estimates the proportion of the claims that the creditors and shareholders would receive if the debtor%s properties were li*uidated( and -f/ such other relevant information to enable a reasonable investor to make an informed decision on the feasibility of the rehabilitation plan. Bailure to include a li*uidation analysis is fatal to the rehabilitation plan. (-ioc,i Fis,er* (n%er4rises, Inc., e% a.. +. 5ank of %,e 3,i.i44ine Is.an=s, G.R. No. 1!767", 1c%o2er 1!, "&11' Can a !or#orate o$$i!er :+uly authori;e+ -y the Boar+ o$ Dire!tors< $ile a suit to re!over an unla/$ully +etaine+ !or#orate #ro#erty +es#ite the !or#oration7s #en+in, reha-ilitation" The rehabilitation receiver is tasked only to monitor the successful implementation of the rehabilitation plan. There is nothing in the concept of corporate rehabilitation that would ipso facto deprive the &oard of !irectors and corporate officers of a debtor corporation# of control such that it can no longer enforce its right to recover its property from an errant lessee. The rules enumerate the prohibited corporate actions and transactions during the pendency of the rehabilitation proceedings but none of which touch on the debtor corporation%s right to sue. The implication therefore is that our concept of rehabilitation does not restrict this particular power# save for the caveat that all its actions are monitored closely by the receiver# who can seek an annulment of any prohibited or anomalous transaction or agreement entered into by the officers of the debtor corporation. (<eonar=o -. Ema.e (=ecease=', re4resen%e= 2* C.arissa Vic%oria, e% a.. a.. surname= Ema.e Vs. A-5 Rea.%* Cor4., G.R. No. 1611"#, )une 10, "&11' Are sureties o$ the +e-tor !or#oration a$$e!te+ -y the Stay (r+er" The Rules of Procedure of $orporate Rehabilitation provides that a stay order does not apply to sureties who are solidarily liable with the debtor. ( )A3R< Ae+e.o4men% Cor4., e% a.. +. -ecuri%* 5ank Cor4ora%ion, G.R. No. 1!&1&7, )une #, "&11' Does the stay or+er a##ly to #en+in, !ri%inal !ases a,ainst the o$$i!ers o$ the !or#oration" The rehabilitation of the corporation is not a legal ground for the extinction of its officers% criminal liabilities. There is no reason why criminal proceedings should be suspended during corporate rehabilitation# more so# since the prime purpose of the criminal action is to punish the offender in order to deter him and others from committing the same or similar offense# to isolate him from society# reform and rehabilitate him or# in general# to maintain social order. t would be absurd for one who has engaged in criminal conduct could escape punishment by the mere filing of a petition for rehabilitation by the corporation of which he is an officer. The prosecution of the officers of the corporation has no bearing on the pending rehabilitation of the corporation# especially since they are charged in their individual capacities. ()ose 8arce. 3an.i.io, e% a.. +. Re$iona. /ria. Cour%, e%c., 3eo4.e of %,e 3,i.i44ines an= -ocia. -ecuri%* -*s%em , G.R. No. 1776 #, Fe2ruar* ", "&11' Is e&e!ution o$ =u+,%ent a,ainst the !or#oration also !overe+ -y a stay or+er" All pending actions# including the execution of the 'udgment against the corporation# should be suspended pending termination of the rehabilitation proceedings. Gurisprudence is settled that the

suspension of proceedings referred to in the law uniformly applies to ?all actions for claims@ filed against a corporation# partnership or association under management or receivership# without distinction# except only those expenses incurred in the ordinary course of business. (0"ripino 7. 4olina v. Paci6ic Plans, Inc., (.). No. *-8,+-, 0'"'st *8, /1**2 A sto!khol+er +e%an+s a!!ountin, o$ asso!iation +ues $ro% a !on+o%iniu% !or#oration. Is this intra-!or#orate in nature" Will $ore!losure sale #revent su!h sto!khol+er $ro% .uestionin, the assess%ents" Hes# this case involves an intra-corporate dispute. Gust because the property has already been sold extra-'udicially does not mean that the *uestioned assessments have now become legal and valid or that they have become immaterial. n fact# the validity of the foreclosure depends on the legality of the assessments and the issue must be determined by the court if only to insure that the owner was not deprived of her property without having been heard. (C,a%eu =e 5aie Con=ominium Cor4. +. -4s. Ra*mon= an= 8a. Rosario 8oreno, G.R. No. 16#"71, Fe2ruar* "7, "&11' 4hat is the applicable term of office of the trustees of an educational stock corporationF <ection .E; of the $orporation $ode determines the membership and number of trustees in an educational corporation. The second paragraph of the provision# although setting the term of the members of the &oard of Trustees at five years# contains a proviso expressly sub'ecting the duration to what is otherwise provided in the articles of incorporation or by-laws of the educational corporation. 3ence# if the by-laws of such corporation provide for a term of two years# such term shall prevail. t follows that the officers appointed by the trustees should also serve for the same term. (3e%roni.o ). 5ara*u$a +. A=+en%is% Eni+ersi%* of %,e 3,i.i44ines, e% a.. , G.R. No. 1#6&&6, Au$us% 17, "&11' Are e%#loy%ent !ontra!ts auto%ati!ally assu%e+ -y the survivin, !or#oration in a %er,er4 even in the a-sen!e o$ an e&#ress sti#ulation in the arti!les o$ %er,er or the %er,er #lan" Hes but only after the <>$ has approved the merger. 3owever# nothing in this Resolution shall impair the right of an employer to terminate the employment of the absorbed employees for a lawful or authori+ed cause or the right of such an employee to resign# retire or otherwise sever his employment# whether before or after the merger# sub'ect to existing contractual obligations. (5ank of %,e 3,i.i44ine Is.an=s +. 53I (m4.o*ees EnionBAa+ao C,a4%erBFe=era%ion of Enions in 53I Eni2ank, G.R. No. 1# 7&1, 1c%o2er 1!, "&11' SECURI)IES RE'U*A)I(N C(DE What is a #u-li! !o%#any un+er the Se!urities Re,ulation Co+e" Is this li%ite+ to !o%#anies /hose shares o$ sto!k are #u-li!ly liste+" <ubsections .:.. and .:.0 of the <R$ and Rule 1-./-m/ of the Amended mplementing Rules and Regulations of the <R$# it is clear that a Ipublic company#I as contemplated by the <R$# is not limited to a company whose shares of stock are publicly listed( even companies whose shares are offered only to a specific group of people# are considered a public company# provided they meet the re*uirements enumerated in the <R$ such as existence of -i/ assets exceeding P9E#EEE#EEE.EE and -ii/ 189#88; shareholders. (3,i.i44ine Ve%erans 5ank +. )us%ina Ca..an$an, e%c. an=;or %,e -ecuri%ies an= (>c,an$e Commission, G.R. No. 1!1!!0, Au$us% &7, "&11' What is an invest%ent !ontra!t" An investment contract is a contract# transaction# or scheme where a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others. The )nited <tates <upreme $ourt held in <ecurities and >xchange $ommission v. 4.G. 3owey $o. that# for an investment contract to exist# the following elements# referred to as the 3owey test must concur, -./ a contract# transaction# or scheme( -0/ an investment of money( -1/ investment is made in a common enterprise( -=/ expectation of profits( and -9/ profits arising primarily from the efforts of others. <ale of internet website does not fall under investment contract as the buyers do not invest money in the company that it could use for running some business that would generate profits for the investors. (-ecuri%ies an= (>c,an$e Commission +. 3ros4eri%*.Com Inc., G.R. No. 1# 1!7, )anuar* "0, "&1"' BAN>IN' In /hat !urren!y shoul+ #ay%ent o$ an o-li,ation -e +is!har,e+" What rate o$ e&!han,e shoul+ -e $ollo/e+ $or the #ay%ent o$ an o-li,ation"

Payments of monetary obligations# sub'ect to certain exceptions# shall be discharged in the currency which is the legal tender in the Philippines. &ut since R.A. No. 908 does not provide for the rate of exchange for the payment of foreign currency obligations incurred after its enactment# the $ourt held in a number of cases that the rate of exchange for the conversion in the peso e*uivalent should be the prevailing rate at the time of payment. (Commissioner of Cus%oms +. A$f,a Incor4ora%e=, G.R. No. 167 "0, 8arc, "6, "&11' When is there an i%#ro#er +is!losure o$ -ank a!!ount +etails" A mere discussion of his functions as an account officer of the bank and identification of a person as the one who had guaranteed the payment or obligations of the importers under a <urety Agreement do not constitute actual disclosure of the confidential information described in <ection 0 of the &ank <ecrecy Act. (Ricar=o 5. 5an$a*an +. Riza. Commercia. 5ankin$ Cor4ora%ion an= 3,i.i4 -aria, G.R. No. 1 !1!7, A4ri. , "&11' What is the +e,ree o$ +ili,en!e re.uire+ o$ -anks in the !on+u!t o$ their -usiness" ndeed# the business of banking is impressed with public interest and great reliance is made on the bank%s sworn profession of diligence and meticulousness in giving irreproachable service. "ike a common carrier whose business is imbued with public interest# a bank should exercise extraordinary diligence to negate its liability to the depositor. n this instance# a bank was sorely remiss in the diligence re*uired in treating with its client if the latter has not been properly notified of the delin*uencies of the loan and the process of terminating his credit. 3ad the re*uired diligence been observed# dishonor of the check would have been avoided. ((use2io Gonza.es +. 3,i.i44ine Commercia. & In%erna%iona. 5ank, e% a.. , G.R. No. 16&"07, Fe2ruar* "7, "&11' What is the +ili,en!e re.uire+ o$ -anks in han+lin, real estate %ort,a,e" The general rule that a mortgagee need not look beyond the title does not apply to banks and other financial institutions as greater care and due diligence is re*uired of them. mbued with public interest# they ?are expected to be more cautious than ordinary individuals.@ Thus# before approving a loan# the standard practice for banks and other financial institutions is to conduct an ocular inspection of the property offered to be mortgaged and verify the genuineness of the title to determine the real owner or owners thereof. Bailure to do so makes them mortgagees in bad faith. This re*uires the bank to further check the actual occupants of the sub'ect property and verify their status therein.(Arman=o V. A.ano (=ecease=', su2s%i%u%e= 2* (.ena A.anoB/orres +. 3.an%erGs Ae+e.o4men% 5ank, as successorBinBin%eres% of 8aun.a= -a+in$s an= <oa= Associa%ion, Inc., G.R. No. 171#"6, )une 17, "&11' A bank dealing in real property has the duty to observe due diligence to ascertain the existence and condition of the realty as well as the validity and integrity of the documents bearing on the realty. ts duty included the responsibility of dispatching its competent and experience representatives to the realty to assess its actual location and condition# and of investigating who was its real owner. (8e%ro4o.i%an 5ank an= /rus% Co. (8e%ro2ank', re4resen%e= 2* Rose..a A. -an%ia$o +. An%onio 1. /o2ias III, G.R. No. 17776&, )anuar* "0, "&1"' What is a !erti$i!ate o$ +e#osit" A certificate of deposit is defined as ?a written acknowledgment by a bank or banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the depositor# to the order of the depositor# or to some other person or his order# whereby the relation of debtor and creditor between the bank and the depositor is created.@ A document to be considered a certificate of deposit need not be in a specific form. Thus# a passbook issued by a bank *ualifies as a certificate of deposit drawing interest because it is considered a written acknowledgement by a bank that it has accepted a deposit of a sum of money from a depositor. (3ru=en%ia. 5ank +. Commissioner of In%erna. Re+enue, G.R. No. 16&7!&, )u.* "7, "&11' Can a -ank unilaterally in!rease interest rate on a loan" No. The unilateral determination and imposition of the increased rates is violative of the principle of mutuality of contracts under Article .1E; of the $ivil $ode# which provides that ?JtKhe contract must bind both contracting parties( its validity or compliance cannot be left to the will of one of them.@ 3ence# where the Promissory Note shows that the increase or decrease of interest rates hinges solely on the discretion of petitioner and does not re*uire the conformity of the maker before a new interest rate could be enforced# mutuality rule is violated. Any contract which appears to be heavily weighed in favor of one of the parties so as to lead to an unconscionable result# thus

partaking of the nature of a contract of adhesion# is void. (3,i.i44ine -a+in$s 5ank +. -4s. A.fre=o 8. Cas%i..o an= (.iza2e%, C. Cas%i..o, e% a..G.R. No. 1!7176, 8a* 7&, "&11' What i$ the #arties have a,ree+ that the interest rate %ay -e in!rease+ -ase+ on the #revailin, %arket rate" Is this allo/e+" The $ourt has previously upheld as valid the proviso in loans that the interest rate would be made to depend on the prevailing market rate. <uch provision does not signify unilateral and automatic increase in the interest. t simply means that the bank may ad'ust the interest according to the prevailing market rate. This may result to either an increase or a decrease in the interest. (<o%%o Res%auran% Cor4ora%ion +. 53I Fami.* -a+in$s 5ank, Inc., G.R. No. 177"#&, 8arc, 7&, "&11' Is ?@A #er annu% interest rate un!ons!iona-le" )nconscionable rates are those which will either enslave their borrowers or lead to a hemorrhaging of their assets. The $ourt declared that the 0=L per annum interest rate is not to be considered unconscionable# consistent with 'urisprudence previously rendering the same rate valid. 6oreover# considering that the mortgage agreement was freely entered into by both parties# the same is the law between them and they are bound to comply with the provisions contained therein. (-4ouses Ne.son an= 8*ra Vi..anue+a +. /,e Cour% of A44ea.s, e% a.., G.R. No. 1#7 77, Au$us% "", "&11' Does the *an+ Bank have the #o/er to /rite-o$$ loans thou,h this is not !lear in its !harter" 4hile the power to write-off is not expressly granted in the charter of the "and &ank# it can be logically implied# however# from the "and &ankDs authority to exercise the general powers vested in banking institutions as provided in the Ceneral &anking Act -Republic Act 11:/. The clear intendment of its charter is for the "and &ank to be for the exercise of those express powers is clothed not only with the express powers granted to it# but also with those implied# incidental and necessary . (Ru2en Re*na, e% a.. +. Commission on Au=i%, G.R. No. 1#7"1!, Fe2ruar* 6, "&11' Is /ritin,-o$$ a loan e.uivalent to !on+onation" 4riting-off a loan does not e*uate to a condonation or release of a debt by the creditor. t is not one of the legal grounds for extinguishing an obligation under the $ivil $ode. t is not a compromise of liability. Neither is it a condonation# since in condonation gratuity on the part of the obligee and acceptance by the obligor are re*uired. n making the write-off# only the creditor takes action by removing the uncollectible account from its books even without the approval or participation of the debtor. It is %erely an a!!ountin, strate,y that !an hel# a !o%#any %aintain a %ore a!!urate inventory o$ the /orth o$ its !urrent assets. n general banking practice# the write-off method is used when an account is determined to be uncollectible and an uncollectible expense is recorded in the books of account. f in the future# the debt appears to be collectible# as when the debtor becomes solvent# then the books will be ad'usted to reflect the amount to be collected as an asset. n turn# income will be credited by the same amount of increase in the accounts receivable. Thus# the employees% obligation to pay exists despite the write-off. (Ru2en Re*na, e% a.. +. Commission on Au=i%, G.R. No. 1#7"1!, Fe2ruar* 6, "&11' IN)E**EC)UA* R( ER)B Ske!hers USA has re,istere+ the tra+e%ark 1Ske!hers2 an+ the tra+e%ark 1S2 :/ith an oval +esi,n< /ith the I (. ursuant to a sear!h /arrant. More than C4DDD #airs o$ shoes -earin, the 1S2 lo,o /ere sei;e+. Res#on+ents %ove+ to .uash the sear!h /arrant ar,uin, that there /as no !on$usin, si%ilarity -et/een #etitioner7s 1Ske!hers2 ru--er shoes an+ its 1Stron,2 ru--er shoes. R)C a##lyin, the 9olisti! )est or+ere+ the .uashin, o$ the /arrant /hi!h /as a$$ir%e+ -y the CA. R)C note+ the $ollo/in, +i$$eren!esE 3< the %ark 1S2 is not en!lose+ in an oval +esi,nF ?< the han, ta,s an+ la-els -ears the /or+ 1Stron,2 $or res#on+ent an+ 1Ske!hers USA2 $or #etitionerF G< Stron, Shoes are %o+estly #ri!e+ !o%#are+ to Ske!hers Shoes. De!i+e. nfringement exists. Applying the !ominancy test# even if respondents did not use an oval design# the mere fact that it used the same styli+ed ?<@ -same font and si+e of the lettering/ the same being the dominant feature of petitioner%s trademark constitutes infringement. Applying the 3olistic Test# the dissimilarities between the shoes are too trifling and frivolous that it is indubitable that respondent%s products will cause confusion and mistakes in the eyes of the public. Respondent%s shoes may not be an exact replica of the petitioner%s shoes# but the features and overall design are so similar and alike that confusion is highly likely. Registered trademark owner any use its mark on the same or similar products# in different segments of the market# and at different price levels depending on variations of the products for specific segments of the market. The purchasing public might be mistaken in thinking that petitioner had ventured into a lower market segment which scenario is plausible especially since

both petitioner and respondent manufacture rubber shoes. (!kechers, 9.!.0., Inc. v. Inter Paci6ic Ind'strial 3radin" #orp., et al., (.). No. *-,:/*, 4arch /:, /1**2 Is a!tual sale o$ the !ounter$eit ,oo+s essential to tra+e%ark in$rin,e%ent" )nder the P $ode# preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion# or to cause mistake# or to deceive -<ec. .99../ and to reproduce# counterfeit# copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction# counterfeit# copy or colorable imitation to labels# signs# prints# packages# wrappers# receptacles or advertisements intended to be used in commerce -<ec. .99.0/ are acts of infringement regardless of whether there is actual sale of goods or services using the infringing material. ((emma ;n" a.k.a. 4a. 3heresa (emma #atac'tan v. People o6 the Philippines, (.). No. *-<,,1, Novem%er /:, /1**2 'ENERA* B(NDED WARE9(USE AC) What is a Continuin, Bon+" A continuing bond is one that has no fixed expiration date and may be cancelled only by the oblige# by the nsurance $ommission and by the court. (#o'ntry =ankers Ins'rance #orporation v. 0ntonio >a"man, (.). No. *-8,.+, 'ly *:, /1**2 C9A))E* M(R)'A'E What is the e$$e!t o$ an unnotari;e+ Chattel Mort,a,e" An unnotari+ed $hattel 6ortgage does not bind third parties. 3owever# the lender can still sue the borrower for payment.(9nion =ank o6 the Philippines v. 0lain 'niat, et al., (.). No. *+*8-<, 0'"'st 1*, /1**2 REA* ES)A)E M(R)'A'E Can the !re+itor sue the +e-tor $or #ay%ent an+ at the sa%e ti%e4 $ore!lose the %ort,a,e se!urity" The rule is that a mortgage-creditor has a single cause of action against a mortgagor-debtor# that is# to recover the debt. The mortgage-creditor has the option of either filing a personal action for collection of sum of money or instituting a real action to foreclose on the mortgage security. An election of the first bars recourse to the second# otherwise there would be multiplicity of suits in which the debtor would be tossed from one venue to another depending on the location of the mortgaged properties and the residence of the parties. The two remedies are alternative and each remedy is complete by itself. f the mortgagee opts to foreclose the real estate mortgage# he waives the action for the collection of the debt# and vice versa. (0rt'ro !arte Flores v. !ps. &nrico >. >indo, r. and &dna #. >indo, (.) No. *.:<.,, 0pril *:, /1**2 Where is the #ro#er venue o$ e&tra-=u+i!ial $ore!losure o$ real estate %ort,a,e" The extra'udicial foreclosure sale of a real estate mortgage is governed by Act No. 1.19# as amended by Act No. =..;# hence# the city or municipality where the property is located. The stipulation of the parties as the venue of actions cannot prevail. (!ps. ?ermes P. ;choa and 0raceli D. ;choa v. #hina =ankin" #orporation, (.). No. *</.++, 4arch /:, /1**2 It is -ein, alle,e+ -y the %ort,a,or that the e&tra=u+i!ial $ore!losure sale +i+ not !o%#ly /ith the $or%al re.uire%ents o$ A!t G3GH4 s#e!i$i!ally thatE 3< the sheri$$ $aile+ to #ost the noti!e o$ sale in the #re%ises o$ the %ort,a,e+ #ro#erty an+ the #la!e /here the au!tion /as !on+u!te+ an+ other !ons#i!uous #u-li! #la!es /here the #ro#erty is lo!ate+F an+ ?< the ne/s#a#er /here the noti!e o$ sale /as #u-lishe+4 /as not a ne/s#a#er o$ ,eneral !ir!ulation. Shoul+ this -e u#hel+" The $ourt has ruled in previous cases that foreclosure proceedings en'oy the presumption of regularity and that the mortgagor who alleges absence of a re*uisite has the burden of proving such fact. f based alone on these allegations# the presumption cannot be destroyed. (!ps. 7ictor ;n" and (race 3i' ;n" v. Premier Development =ank, et al.(.). No. *8<-*8, Fe%r'ary <, /1**2 I$ there is a +e$i!ien!y arisin, $ro% $ore!losure o$ real estate %ort,a,e4 !an the %ort,a,ee still !olle!t the +e$i!ien!y" I$ he !an4 /ithin /hat #erio+" t is settled that if Ithe proceeds of the sale are insufficient to cover the debt in an extra'udicial foreclosure of mortgage# the mortgagee is entitled to claim the deficiency from the debtor. 4hile Act No. 1.19# as amended# does not discuss the mortgagee%s right to recover the deficiency# neither does

it contain any provision expressly or impliedly prohibiting recovery. f the legislature had intended to deny the creditor the right to sue for any deficiency resulting from the foreclosure of a security given to guarantee an obligation# the law would expressly so provide. Absent such a provision in Act No. 1.19# as amended# the creditor is not precluded from taking action to recover any unpaid balance on the principal obligation simply because he chose to extra'udicially foreclose the real estate mortgage. (=PI Family !avin"s =ank, Inc. v. 4a. 0rlyn 3. 0venido @ Paci6ico 0venido, (.). No. *+8.*-, Decem%er +, /1**2 A mortgage action prescribes after ten years from the time the right of action accrued. (Philippine &Aport and Forei"n >oad ('arantee #orporation [now 3rade and Investment Development #orporation o6 the Philippines] v. 0mal"amated 4ana"ement and Development #orporation, et al., (.). No. *+++/<, !eptem%er /., /1**] What is the #erio+ to re+ee% a real #ro#erty /hi!h /as e&tra=u+i!ally $ore!lose+" <ection M of Act No. 1.19 provides for the redemption of an extra-'udicially foreclosed property within a one-year period.(=PI Family !avin"s =ank, Inc. v. 4a. 0rlyn 3. 0venido @ Paci6ico 0venido, (.). No. *+8.*-, Decem%er +, /1**2 Un+er /hat !on+ition is the hi,hest -i++er entitle+ to a /rit o$ #ossession +urin, the re+e%#tion #erio+" !uring the period of redemption# the highest bidder is entitled to a writ of possession upon depositing the approved bond.(!po'ses Fernando and 0n"elina &dralin v. Philippine 7eterans =ank, (.). No. *-.8/:, 4arch <, /1**2 When %ay a /rit o$ #ossession un+er A!t G3GH -e issue+ to the /innin, -i++er" When +oes it -e!o%e %inisterial to the !ourt" t may be issued in an extra'udicial foreclosure of a real estate mortgage under <ection : of Act 1.19# as amended by Act =..;# either ./ within the one-year redemption period# upon the filing of a bond# or 0/ after the lapse of the redemption period# without need of a bond or of a separate and independent action. (7iola #ahili" and 0ntonio (. !inel, r. v. ?on. &'staB'io (. 3erencio, et al., (.) No. *-,,+1, Novem%er /., /1**2 After the consolidation of titles in the buyer%s name# for failure of the mortgagor to redeem# entitlement to a writ of possession becomes a matter of right. As the confirmed owner# the purchaser%s right to possession becomes absolute. There is even no need for him to post a bond# and it is the ministerial duty of the courts to issue the same upon proper application and proof of title. (i2i='