212 SCRA 448 Mercantile Law Negotiable Instruments Law Negotiable Instruments in General Bearer Instrument

Certificate of Time Deposit

In 1982, Angel de la Cruz obtained certificates of time deposit (CTDs) from Security Bank and Trust Company for the
formers deposit with the said bank amounting to P1,120,000.00. The said CTDs are couched in the following manner:
This is to Certify that B E A R E R has deposited in this Bank the sum of _______ Pesos, Philippine Currency, repayable
to said depositor _____ days. after date, upon presentation and surrender of this certificate, with interest at the rate
of ___ % per cent per annum.
Angel de la Cruz subsequently delivered the CTDs to Caltex in connection with the purchase of fuel products from
Caltex.
In March 1982, Angel de la Cruz advised Security Bank that he lost the CTDs. He executed an affidavit of loss and
submitted it to the bank. The bank then issued another set of CTDs. In the same month, Angel de la Cruz acquired a
loan of P875,000.00 and he used his time deposits as collateral.
In November 1982, a representative from Caltex went to Security Bank to present the CTDs (delivered by de la Cruz)
for verification. Caltex advised Security Bank that de la Cruz delivered Caltex the CTDs as security for purchases he
made with the latter. Security Bank refused to accept the CTDs and instead required Caltex to present documents
proving the agreement made by de la Cruz with Caltex. Caltex however failed to produce said documents.
In April 1983, de la Cruz loan with Security bank matured and no payment was made by de la Cruz. Security Bank
eventually set-off the time deposit to pay off the loan.
Caltex sued Security Bank to compel the bank to pay off the CTDs. Security Bank argued that the CTDs are not
negotiable instruments even though the word bearer is written on their face because the word bearer contained
therein refer to depositor and only the depositor can encash the CTDs and no one else.
ISSUE: Whether or not the certificates of time deposit are negotiable.
HELD: Yes. The CTDs indicate that they are payable to the bearer; that there is an implication that the depositor is the
bearer but as to who the depositor is, no one knows. It does not say on its face that the depositor is Angel de la Cruz. If
it was really the intention of respondent bank to pay the amount to Angel de la Cruz only, it could have with facility so
expressed that fact in clear and categorical terms in the documents, instead of having the word BEARER stamped on
the space provided for the name of the depositor in each CTD. On the wordings of the documents, therefore, the
amounts deposited are repayable to whoever may be the bearer thereof.
Thus, de la Cruz is the depositor insofar as the bank is concerned, but obviously other parties not privy to the
transaction between them would not be in a position to know that the depositor is not the bearer stated in the CTDs.
However, Caltex may not encash the CTDs because although the CTDs are bearer instruments, a valid negotiation
thereof for the true purpose and agreement between Caltex and De la Cruz, requires both delivery and indorsement.
As discerned from the testimony of Caltex representative, the CTDs were delivered to them by de la Cruz merely for
guarantee or security and not as payment.

Transportation Digest: LRTA v. Navidad (2003)

G.R. No. 145804 February 6, 2003
Lessons Applicable: Actionable Document (transportation)
Laws Cited: Art. 1755,Art. 1756,Art. 1759,Art. 1763
FACTS:

October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad (Nicanor) entered the EDSA LRT station after purchasing
a token.
o While Nicanor was standing at the platform near the LRT tracks, the guard Junelito Escartin approached
him.

Due to misunderstanding, they had a fist fight

Nicanor fell on the tracks and killed instantaneously upon being hit by a moving train operated
by Rodolfo Roman
December 8, 1994: The widow of Nicanor, along with her children, filed a complaint for damages against
Escartin, Roman, LRTA, Metro Transit Org. Inc. and Prudent (agency of security guards) for the death of her
husband.
o LRTA and Roman filed a counter-claim against Nicanor and a cross-claim against Escartin and Prudent

Prudent: denied liability averred that it had exercised due diligence in the selection and
surpervision of its security guards

LRTA and Roman: presented evidence

Prudent and Escartin: demurrer contending that Navidad had failed to prove that Escartin was
negligent in his assigned task
RTC: In favour of widow and against Prudent and Escartin, complaint against LRT and Roman were dismissed
for lack of merit
CA: reversed by exonerating Prudent and held LRTA and Roman liable
o

ISSUE: W/N LRTA and Roman should be liable according to the contract of carriage
HELD: NO. Affirmed with Modification: (a) nominal damages is DELETED (CANNOT co-exist w/ compensatory damages)
(b) Roman is absolved.

Law and jurisprudence dictate that a common carrier, both from the nature of its business and for reasons of
public policy, is burdened with the duty off exercising utmost diligence in ensuring the safety of passengers

Civil Code:
o Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the
circumstances
o Art. 1756. In case of death or injuries to passengers, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755
o Art. 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or wilful acts of the formers employees, although such employees may have acted beyond
the scope of their authority or in violation of the orders of the common carriers
This liability of the common carriers does NOT cease upon proof that they
Exercised all the diligence of a good father of a family in the selection and
supervision of their employees
Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful
acts or negligence of other passengers or of strangers, if the common carriers employees through the
exercise of the diligence of a good father of a family could have prevented or stopped the act or
omission.
Carriers presumed to be at fault or been negligent and by simple proof of injury, the passenger is relieaved of
the duty to still establish the fault or negligence of the carrier or of its employees and the burden shifts upon
the carrier to prove that the injury is due to an unforeseen event or to force majeure
Where it hires its own employees or avail itself of the services of an outsider or an independent firm to
undertake the task, the common carrier is NOT relieved of its responsibilities under the contract of carriage
GR: Prudent can be liable only for tort under Art. 2176 and related provisions in conjunction with Art. 2180 of
the Civil Code. (Tort may arise even under a contract, where tort [quasi-delict liability] is that which breaches
the contract)
o EX: if employers liability is negligence or fault on the part of the employee, employer can be made
liable on the basis of the presumption juris tantum that the employer failed to exercise diligentissimi
patris families in the selection and supervision of its employees.
o EX to the EX: Upon showing due diligence in the selection and supervision of the employee
Factual finding of the CA: NO link bet. Prudent and the death of Nicanor for the reason that the negligence of
Escartin was NOT proven
NO showing that Roman himself is guilty of any culpable act or omission, he must also be absolved from
liability
o Contractual tie bet. LRT and Nicanor is NOT itself a juridical relation bet. Nicanor and Roman

Roman can be liable only for his own fault or negligence

o

309 SCRA 72 Business Organization Corporation Law Piercing the Veil of Corporate Fiction (Upside Down)

In 1985, Francisco Motors Corporation (FMC) sued Atty. Gregorio Manuel to recover from a him a sum of money
in the amount of P23,000.00+. Said amount was allegedly owed to them by Manuel for the purchase of a jeep
body plus repairs thereto. Manuel filed a counterclaim in the amount of P50,000.00. In his counterclaim,
Manuel alleged that he was the Assistant Legal Officer for FMC; that the Francisco Family, owners of FMC,
engaged his services for the intestate estate proceedings of one Benita Trinidad; that he was not paid for his
legal services; that he is filing the counterclaim against FMC because said corporation was merely a conduit of
the Francisco Family. The trial court as well as the Court of Appeals granted Manuels counterclaim on the
ground that the legal fees were owed by the incorporators of FMC (an application of the doctrine of piercing
the veil of corporation fiction in a reversed manner).

ISSUE: Whether or not the doctrine of piercing the veil of corporate fiction was properly used by the Court of
Appeals.

HELD: No. In the first place, the doctrine is to be used in disregarding corporate fiction and making the
incorporators liable in appropriate circumstances. In the case at bar, the doctrine is applied upside down where
the corporation is held liable for the personal obligations of the incorporators such was uncalled for and
erroneous. It must be noted that that Atty. Manuels legal services were secured by the Francisco Family to
represent them in the intestate proceedings over Benita Trinidads estate. The indebtedness was incurred by
the Francisco Family in their separate and personal capacity. These estate proceedings did not involve any
business of FMC. The proper remedy is for Manuel to sue the concerned members of the Francisco Family in
their individual capacity.

LEVI STRAUSS (PHILS.), INC.,

vs
TONY LIM,
December 4, 2008
Facts:
Petitioner Levi Strauss (Phils.), Inc. Is a duly-registered domestic corporation. It is a wholly-owned subsidiary of Levi
Strauss & Co.(LS & Co.) A Delaware,USA company. In 1972, LS & Co. Granted petitioner a non-exclusive license to use
its registered trademarks and tradenames for the manufacture and sale of various garment products, primarily pants,
jackets, and shirts, in the Philippines. Presently, it is the onlycompany that has authority to manufacture,
distribute, and sell products bearing the LEVIS trademarks or to use such trademarks inthe
Philippines. These trademarks are registered in over 130 countries, including the Philippines, and were
fi rst used in commerce inthe Philippines in 1946.S o m e t i m e i n 1 9 9 5 , p e t i t i o n e r l o d g e d a c o m p l a i n t
b e f o r e t h e I n t e r- A g e n c y C o m m i t t e e o n I n t e l l e c t u a l P r o p e r t y R i g h t s , alleging that a certain
establishment owned by respondent Tony Lim, doing business under the name Vogue Traders Clothing Company,
wasengaged in the manufacture, sale, and distribution of products similar to those of petitioner and under the brand
name LIVES, and was grantedthe filing of an information against respondent. Respondent then filed his own motion
for reconsideration of the Bello resolution, the DOJ thenordered the dismissal of the complaint.. Dissatisfied with the
DOJ rulings, petitioner sought recourse with the CA via a petition for review under Rule 43 of the 1997 Rules of
Civil Procedure. On October 17, 2003, the appellate court affi rmed the dismissal of the unfair
competitioncomplaint. The CA pointed out that to determine the likelihood of confusion, mistake or deception, all
relevant factors and circumstances should be taken into consideration, such as the circumstances under which the
goods are sold, the class of purchasers, and the actual occurrence or absence of confusion.Thus, the existence of some
similarities between LIVES jeans and LEVIS garments would not ipso facto equate to fraudulentintent on the part of
respondent. The CA noted that respondent used affirmative and precautionary distinguishing features in his products
for differentiation. The appellate court considered the spelling and pronunciation of the marks; the difference in the
designs of the back pockets; thedissimilarity between the carton tickets; and the pricing and sale of petitioners
products in upscale exclusive specialty shops. The CA alsodisregarded the theory of post-sale confusion propounded by
petitioner, relying instead on the view that the probability of deception must bedetermined at the point of sale.
Issues:
Petitioner submits that the CA committed the following errors:
I.
The court of appeals gravely erred in ruling that actual confusion is necessary to sustain a charge of
unfair competition, and that there must be direct evidence or proof of intent to deceive the public.
II.
The court of appeals gravely erred in ruling that respondents lives jeans do not unfairly compete with levis jeans
and/or that there is no possibility that the former will be confused for the latter, considering that respondents
lives jeans blatantly copy or colorably imitate no less than six (6) trademarks of levis jeans.
Ruling:

Generally, unfair competition consists in employing deception or any other means contrary to good faith by which any
person shall pass off the goods manufactured by him or in which he deals, or his business, or services for those of the
one having established goodwill, or committing any acts calculated to produce such result. The elements of unfair
competition under Article 189(1) of the Revised Penal Code are:(a) That the offender gives his goods the general
appearance of the goods of another manufacturer or dealer;(b) That the general appearance is shown in the (1) goods
themselves, or in the (2) wrapping of their packages, or in the(3) device or words therein, or in (4) any other feature of
their appearance;(c) That the offender offers to sell or sells those goods or gives other persons a chance or opportunity
to do the samewith a like purpose; and(d) That there is actual intent to deceive the public or defraud a competitor.All
these elements must be proven. In finding that probable cause for unfair competition does not exist, the investigating
prosecutor and Secretaries Guingona and Cuevas arrived at the same conclusion that there is insufficient evidence to
prove all the elements of the crime thatwould allow them to secure a conviction. Secretary Guingona discounted the
element of actual intent to deceive by taking into consideration thedifferences in spelling, meaning, and phonetics
between LIVES and LEVIS, as well as the fact that respondent had registered his ownmark. While it is true that
there may be unfair competition even if the competing mark is registered in the Intellectual Property Office, it isequally
true that the same may show
prima facie
good faith. Indeed, registration does not negate unfair competition where the goods are packedor offered for sale and
passed off as those of complainant. However, the marks registration, coupled with the stark differences between
thecompeting marks, negate the existence of actual intent to deceive, in this particular case.Petitioner argues that the
element of intent to deceive may be inferred from the similarity of the goods or their appearance. Theargument is
specious on two fronts.
First
, where the similarity in the appearance of the goods as packed and offered for sale is so
striking,
intentto deceive may be inferred. However, as found by the investigating prosecutor and the DOJ
Secretaries, striking similarity between the competing goods is not present.
Second
, the confusing similarity of the goods was precisely in issue during the preliminary investigation. Ass u c h , t h e
el em e nt of inten t to dec eive coul d not ari s e wi thout the
i n v e s t i g a t i n g p r o s e c u t o r s o r t h e D O J Secretarys finding that such confusing similarity
exists. Since confusing similarity was not found, the element of fraud or deception could not be inferred.We cannot
sustain Secretary Bellos opinion that to establish probable cause, it is enough that the respondent gave to his
product thegeneral appearance of the product of petitioner. It bears stresing that that is only one element of unfair
competition. All others must be shown toexist. More importantly, the likelihood of confusion exists not only if there is
confusing similarity. It should also be likely to cause confusion or mistake or deceive purchasers. Thus, the CA correctly
ruled that the mere fact that some resemblance can be pointed out between the marks used

PEOPLE VS. SANTIAGO

No. 27972
October 31, 1927

FACTS:
On November 23, 1926, herein appellant Felipe Santiago raped Felicita Masilang, his wifes niece, in an
uninhabited place across a river in Gapan, Nueva Ecija. After the deed, he took her to the house of his brother, Agaton
Satiago, who in turn fetched a protestant minister who there and then officiated the ceremony of their marriage. After
having given money by Felipe, Felicita proceeded home to her father and told what had just occurred.
ISSUE:
Whether or not the marriage executed by the protestant minister is of legal effect.
HELD:
The marriage ceremony was a mere ruse by which the appellant hoped to escape from the criminal
consequence of his act. It shows that he had no bona fide intention of making her his wife and the ceremony cannot
be considered binding on her because of duress. The marriage was therefore void for lack of essential consent, and it
supplies no impediment to the prosecution of the wrongdoer.