15. ASIA BREWERY, INC. (ABI) AND CHARLIE S. GO v.

EQUITABLE PCI BANK

G. R. No. 190432, April 25, 2017;

Note: Remedial Case talaga siya, the court did not rule sa Commercial Aspect

FACTS: ABI and Go filed a case against Equitable PCI Bank (now BDO, Unibank) for the value
of the 10 checks and 16 demand drafts that was fraudulently encashed despite being a crossed
check in violation of BDO’s warranty as the last endorser who warrants that the instrument is
genuine and in all respects what it purports to be. The total value of which amounts to
P3,785,257.38. In its defense, BDO raised the defense that petitioners has no cause of action
against them and that Go never became the holder or owner of the instruments due to
nondelivery. It claims that the instruments were only enforceable against the drawers of the
checks and the purchasers of the demand drafts, and not against it as a mere “presentor bank,”
because the nondelivery to Go was analogous to payment to a wrong party.

ISSUE: Whether petitioners has a cause of action against BDO

HELD: Yes. A cause of action has three elements: 1) the legal right of the plaintiff; 2) the
correlative obligation of the defendant not to violate the right; and 3) the act or omission of the
defendant in violation of that legal right. In the case at bar, petitioners alleged in their Complaint
as follows: 1) They have a legal right to be paid for the value of the instruments. Respondent has
a correlative obligation to pay, having guaranteed all prior endorsements and 3) Respondent
refused to pay despite demand.

In Aquino v. Quiazon, we held that if the allegations in a complaint furnish sufficient basis on which
the suit may be maintained, the complaint should not be dismissed regardless of the defenses
that may be raised by the defendants. An affirmative defense, raising the ground that there is no
cause of action as against the defendants poses a question of fact that should be resolved after
the conduct of the trial on the merits. The case is remanded to the trial court for further
proceedings.

Page 1 of 14
 16. DUTCH MOVERS, INC., CESAR LEE and YOLANDA LEE v. EDILBERTO LEQUIN,
CHRISTOPHER R. SALVADOR, REYNALDO L. SINGSING, and RAFFY B.
MASCARDO
G.R. No. 210032, April 25, 2017;

FACTS: As an offshoot of their illegal dismissal case where respondents secured a Writ of
execution against petitioners, they discovered that DMI no longer operates. Nonetheless,
respondents insisted that petitioners continue to work at Toyota Alabang, which they own and
operate; that DMI did not file any notice of business closure; and the creation and operation of
DMI was attended with fraud making it convenient for petitioners to evade their legal obligations
to them. Hence, respondents prays that petitioners be held personally liable with DMI. In its
defense, petitioners alleged that they only lent their names to assist in incorporating DMI and that
they never participated in the management and operations of DMI.

ISSUE: Whether petitioners should be held personally liable

HELD: Yes. In this case, the veil of corporate fiction must be pierced and accordingly, petitioners
should be held personally liable because the peculiarity of the situation shows that they controlled
DMI; they actively participated in its operation such that DMI existed not as a separate entity but
only as business conduit of petitioners. They made it appear to have no mind of its own, and used
DMI as shield in evading legal liabilities. Clearly, petitioners should be held liable as they resorted
to such scheme to countermand labor laws by causing the incorporation of DMI but without any
indication that they were part thereof.

Page 2 of 14
 17. CALIFORNIA MANUFACTURING COMPANY, INC. (CMCI)
v. ADVANCED TECHNOLOGY SYSTEM, INC.,
G.R. No. 202454, April 25, 2017;

FACTS: ATSI filed a Sum of Money case against CMCI to collect unpaid rentals it leased from
the former representing a Prodopak machine which was used to pack CMCI’s products. In its
defense, CMCI alleged that ATSI and Processing Partners and Packaging Corporation (PPPC)
are one and the same entity, wherein CMCI had already advanced a P4 million mobilization fund
to PPPC which it promised to offset against the rentals of the Prodopak machine. CMCI argued
that legal compensation had set in and that ATSI was even liable for the balance of PPPC’s
unpaid obligation after deducting the rentals. The RTC found for ATSI and ruled that legal
compensation did not apply because PPPC had a separate legal personality from its individual
stockholders and ATSI. The CA likewise affirmed. Hence this petition.

ISSUE: Whether legal compensation had set in

HELD: No. Any piercing of the corporate veil must be done with caution. It must be certain that
the corporate fiction was misused to such an extent that injustice, fraud, or crime was committed
against another, in disregard of rights. CMCI’s alter ego theory rests on the alleged interlocking
boards of directors and stock ownership of the two corporations. However, Mere ownership by a
single stockholder of even all or nearly all of the capital stocks of a corporation, by itself, is not
sufficient ground to disregard the corporate veil. The instrumentality or control test of the alter ego
doctrine requires not mere majority or complete stock control, but complete domination of
finances, policy and business practice with respect to the transaction in question. The corporate
entity must be shown to have no separate mind, will, or existence of its own at the time of the
transaction. The uncertainty in the supposed debt of PPPC to CMCI negates the latter’s invocation
of legal compensation as justification for its nonpayment of the rentals for the subject Prodopak
machine it leased with ATSI.

Page 3 of 14
 18. SPOUSES CARBONELL v. METROPOLITAN BANK and TRUST COMPANY,
G.R. No. 178467, April 26, 2017;

FACTS: Petitioners filed a damages case against Metrobank, alleging that they had experienced
emotional shock, mental anguish, public ridicule, humiliation, insults and embarrassment during
their trip to Thailand because of Metrobank’s release to them of five US$100 bills that later on
turned out to be counterfeit. In its defense, Metrobank stressed that it could not absolutely
guarantee the genuineness of each and every foreign currency note that passed through its
system and that it had exercised the diligence required in dealing with foreign currency notes and
in the selection and supervision of its employees.

ISSUE: Whether Metrobank exercised the required diligence being a bank imbued with public
interest.

HELD: Yes. Metrobank had exercised the diligence required by law in observing the standard
operating procedure, in taking the necessary pre cautions for handling the US dollar bills in
question. Also, it is significant that the BSP certified that the falsity of the US dollar notes in
question, which were “near perfect genuine notes,” could be detected only with extreme difficulty
even with the exercise of due diligence. Gross negligence connotes want of care in the
performance of one’s duties. Being neither guilty of negligence nor remiss in its exercise of the
degree of diligence required by law or the nature of its obligation as a banking institution, the latter
was not liable for damages. Given the situation being one of damnum absque injuria, petitioners
could not be compensated for the damage sustained.

Page 4 of 14
 19. LOADSTAR SHIPPING COMPANY, INCORPORATED and LOADSTAR
INTERNATIONAL SHIPPING COMPANY, INCORPORATED v. MALAYAN
INSURANCE COMPANY, INCORPORATED,
G.R. No. 185565 (Resolution), April 26, 2017;

FACTS: Malayan which was subrogated to the rights of Philippine Associated Smelting and
Refining Corporation (PASAR) who claimed the insurance proceeds for the copper concentrates
which was damaged by seawater filed an action for recovery of the amount of damaged goods
against Loadstar, the common carrier alleged to be negligent. Loadstar denied liability and alleged
among others that Malayan seemingly paid PASAR in haste and even in the absence of proof of
actual loss. On the contrary, Malayan asserted that it should be subrogated to the rights of the
insured and that it is not even necessary to present the insurance policy because subrogation is
a matter of equity.

ISSUE: Whether Malayan is entitled to the amount claimed

HELD: Yes, but only to the extent of (6%) of the sum being claimed by Malayan less the residual
value of the copper concentrates sold in public auction. Actual damages are not presumed; it
cannot be anchored on mere surmises, speculations or conjectures. Malayan was not able to
prove the pecuniary loss suffered by PASAR for which the latter was indemnified. This is in line
with the principle that a subrogee steps into the shoes of the insured and can recover only if the
insured likewise could have recovered. However, the Court deems it proper to award nominal
damages to Malayan. This is in recognition of the breach of contract of carriage committed by
Loadstar. “So long as there is a violation of the right of the plaintiff — whether based on law,
contract or other sources of obligations — an award of nominal damages is proper.

Page 5 of 14
 20. EMERALD GARMENT MANUFACTURING CORPORATION
v. H.D. LEE COMPANY, INC.,
G.R. No. 210693, June 7, 2017;

FACTS: H.D. Lee filed before the IPO an application for the registration of the trademark, “LEE &
OGIVE CURVE DESIGN” It claimed that the said mark was first used in the Philippines on outer
clothing categorized under Class 25, which includes jeans, casual pants, etc. A Declaration of
Actual Use of the mark was filed and the application was likewise published. Emerald opposed
the application contending that it will violate the exclusive use of its marks. The IPO’s Director of
the Bureau of Legal Affairs denied H.D. Lee’s application which the IPO’s DG reversed. The CA
affirmed the IPO’s DG’s decision and held that H.D. Lee has substantially complied with the
procedural requirements in filing before the IPO a petition for registration of the mark.

ISSUE: Whether H.D. Lee’s application for trademark registration should be allowed

HELD: No. The court finds that to allow the registration of H.D. Lee’s mark is to allow the
registrability of the confusingly similar mark. It held that Emerald had already established with
finality its rights over the registration of the marks “DOUBLE CURVE LINES” and “DOUBLE
REVERSIBLE WAVE LINE” as against H.D. Lee’s “OGIVE CURVE DESIGN.

Page 6 of 14
 21. ALEJANDRO D.C. ROQUE v. PEOPLE of the PHILIPPINES,
G.R. No. 211108, June 7, 2017;

FACTS: Ongjoco, a member of Barangay Mulawin Tricycle Operators and Drivers Association,
Inc. (BMTODA), a corporation, filed an Affidavit-Complaint against Roque, President, and
Singson, Corporate Secretary, for violation of Section 74 in relation to Section 144 of the
Corporation Code because of their refusal to furnish him copies of the Association’s documents
pursuant to Ongjoco’s right to examine company records. The RTC found for Roque and ruled
that said association failed to prove its existence as a corporation. Hence, a violation under the
Corporation Code cannot be made. This was reversed by the CA which found that BMTODA is a
duly registered corporation.

ISSUE: Whether BMTODA is a duly registered corporation.

HELD: Yes. While it appears that the registration of BMTODA as a corporation with the SEC was
revoked on September 30, 2003, the letter-request of Ongjoco to Singson was actually received
when BMTODA had regained its active status. The revocation of a corporation’s Certificate of
Registration does not automatically warrant the extinction of the corporation itself such that its
rights and liabilities are likewise altogether extinguished. The termination of the life of a juridical
entity does not, by itself, cause the extinction or diminution of the rights and liabilities of such
entity nor those of its owners and creditors. Thus, the revocation of BMTODA’s registration does
not automatically strip off Ongjoco of his right to examine pertinent documents and records
relating to such association. Therefore, Roque’s denial is unquestionably considered as a
violation under the Corporation Code.

Page 7 of 14
 22. BDO UNIBANK, INC. v. ENGR. SELWYN LAO
G.R. No. 227005, June 19, 2017

FACTS: Lao filed a complaint for collection of a sum of money against BDO for the two crossed
check it issued to Everlink representing payment for the HCG sanitary wares. The latter failed to
comply with his obligation. In its defense, BDO asserted that it had no obligation to ascertain the
owner of the account/s to which the checks were deposited and that the subject checks were
properly negotiated and paid in accordance with the instruction of Lao in crossing them as they
were deposited to the account of the payee Everlink with Union Bank, which then presented them
for payment with BDO. The RTC ruled for BDO but ordered Union Bank to pay Lao. The CA
affirmed the RTC’s decision with modification by ordering BDO to likewise pay the value of the
checks in issue, hence, this appeal.

ISSUE: Whether BDO is liable for the value of the checks in issue

HELD: Yes, but as an exception to the rule on Sequence of Recovery, Union Bank is found to be
ultimately liable. The payment by BDO was in violation of Lao’s instruction because the same was
not issued in favor of Everlink, the payee. Nevertheless, by stamping at the back of the subject
check the phrase “all prior endorsements and/or lack of it guaranteed,” Union Bank had, for all
intents and purposes treated the check as a negotiable instrument and, accordingly, assumed the
warranty of an endorser. Thus, Union Bank cannot now deny liability after the aforesaid warranty
turned out to be false. Union Bank was clearly negligent when it allowed the check to be presented
by, and deposited in the account of New Wave, despite knowledge that it was not the payee
named therein. Further, it could not have escaped its attention that the subject checks were
crossed checks.

Page 8 of 14
 23. MANG INASAL PHILIPPINES, INC. v. IFP MANUFACTURING CORPORATION,
G.R. No. 221717, June 19, 2017

FACTS: IFP a local manufacturer of snacks and beverages filed with the Intellectual Property
Office (IPO) an application for the registration of the “OK Hotdog Inasal mark” which it intends to
use on one of its curl snacks. The application was opposed by Mang Inasal owner of the “Mang
Inasal mark” which it uses for its chain of restaurants. It contends that the registration is prohibited
as the marks share similarities — both as to their appearance and as to the goods or services
that they represent — which tend to suggest a false connection or association and would likely
cause confusion on the part of the public. The IPO-BLA, the IPO-DG and the CA dismissed Mang
Inasal’s petition. Hence, this appeal.

ISSUE: Whether OK Hotdog Inasal mark is confusingly similar to the Mang Inasal mark

HELD: Yes. The OK Hotdog Inasal mark is a colorable imitation of the Mang Inasal mark. The
fact that the conflicting marks have exactly the same dominant element is key. The differences
between the two marks are trumped by the overall impression created by their similarity. The
goods for which the registration of the OK Hotdog Inasal mark is sought are related to the services
being represented by the Mang Inasal mark. All in all, the OK Hotdog Inasal mark is similar to the
Mang Inasal mark, an earlier mark and that it pertains to goods that are related to the services
represented by such earlier mark. Petitioner was, therefore, correct. The OK Hotdog Inasal mark
is not entitled to be registered as its use will likely deceive or cause confusion on the part of the
public and, thus, also likely to infringe the Mang Inasal mark. The law, in instances such as this,
must come to the succor of the owner of the earlier mark.

Page 9 of 14
 24. ROMMEL M. ZAMBRANO, et. Al v.
PHILIPPINE CARPET MANUFACTURING CORPORATION, et. Al.
G.R. No. 224099, June 21, 2017

FACTS: Petitioners, employees of PH Carpet filed an illegal dismissal case on the belief that the
closure of PH Carpet was a mere pretense to transfer its operations to its wholly-owned and
controlled corporation, Pacific Carpet Manufacturing Corporation (Pacific Carpet). In its defense,
PH Carpet asserts that it permanently closed and totally ceased its operations because there had
been a steady decline in the demand for its products. The LA dismissed the petition which the
NLRC affirmed. The CA likewise dismissed the petition and opined that the petitioners’ claim was
unfounded because mere ownership by a single stockholder or by another corporation of all or
nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the
separate corporate personality.

ISSUE: Whether Pacific Carpet has a personality separate and distinct from PH Carpet

HELD: Yes. Mere ownership by a single stockholder or by another corporation of all or nearly all
of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate
corporate personality. Also, the “existence of interlocking directors, corporate officers and
shareholders is not enough justification to pierce the veil of corporate fiction in the absence of
fraud or other public policy considerations. Likewise, settled is the rule that “where one corporation
sells or otherwise transfers all its assets to another corporation for value, the latter is not, by that
fact alone, liable for the debts and liabilities of the transferor. The corporate mask may be removed
or the corporate veil pierced when the corporation is just an alter ego of a person or of another
corporation. For reasons of public policy and in the interest of justice, the corporate veil will
justifiably be impaled only when it becomes a shield for fraud, illegality or inequity committed
against third persons.

Page 10 of 14
 25. LUIS JUAN VIRATA v. ALEJANDRO NG WEE,
G.R. Nos. 220926, 221058, 221109, 221135 & 221218, July 5, 2017;

FACTS: Wee made money placements in Wincorp for which it shall be matched with a borrower
on the pretense of Wincorp that such investment is secured and shall earn high interest rates.
Wee was matched with Power Merge who was granted a P2.5 Billion credit line. Despite repeated
demands, Wee was not able to collect on the loan obligations. Thereafter, Wee filed acollection
suit against pertirioners. In its defense, both Wincorp and Power Merge asserts that the complaint
lacks cause of action. The RTC ruled in favor of Wee which the CA affirmed. The CA found that
both perpetrated an elaborate scheme of fraud to inveigle Wee into investing funds. Wee would
not have placed his investments in the “sans recourse” transactions had he not been deceived
into believing that Power Merge is financially capable of paying the returns on his investments.
The CA also sustained the trial court’s application of the doctrine on the piercing of the corporate
veil, and also held that under Sec. 31 of the Corporation Code, corporate officers can be held
liable for having assented to patently unlawful corporate acts, and for having acted in gross
negligence and/or bad faith in management.

ISSUE: Whether it is proper to pierce the veil of corporate fiction

HELD: Yes, Virata is liable for the obligations of Power Merge. As a fundamental principle, a
corporation is an entity separate and distinct from its stockholders and from other corporations to
which it may be connected. But, this separate and distinct personality of a corporation is merely
a fiction created by law for convenience and to promote justice. Thus, when the notion of separate
juridical personality is used (1) to defeat public convenience, justify wrong, protect fraud or defend
crime; (2) as a device to defeat the labor laws; or (3) when the corporation is merely an adjunct,
a business conduit or an alter ego of another corporation, this separate personality of the
corporation may be disregarded or the veil of corporate fiction pierced. The circumstances of
Power Merge clearly present an alter ego case that warrants the piercing of the corporate veil.

Page 11 of 14
 26. PIONEER INSURANCE and SURETY CORPORATION v. APL CO., PTE. LTD.
G.R. No. 226345, August 2, 2017;

FACTS: Pioneer, who was subrogated to the rights of BSFIL Technologies, Inc. (BSFIL), shipper,
filed a complaint for damages against APL for the value of the 76 bags of chili pepper found to be
unfit for human consumption due to the improper care thereof. MTC found for Pioneer which the
RTC affirmed. However, the CA reversed the same holding that under Clause 8 of the Bill of
Lading, the carrier shall be absolved from any liability unless a case is filed within nine (9) months
after the delivery of the goods. The CA opined that the nine-month prescriptive period set out in
the Bill of Lading was reasonable and provided a sufficient period of time within which an action
to recover any loss or damage arising from the contract of carriage may be instituted.

ISSUE: Whether Pioneer’s claim is already barred by prescription

HELD: No. The Bill of Lading is clear and unequivocal leaving no room for interpretation. It was
stated that the carrier shall in any event be discharged from all liability whatsoever in respect of
the goods, unless suit is brought in the proper forum within nine (9) months after delivery of the
goods or the date when they should have been delivered. The same, however, is qualified in that
when the said nine-month period is contrary to any law compulsory applicable, the period
prescribed by the said law shall apply. Hence, strictly applying the terms of the Bill of Lading, the
one-year prescriptive period under the COGSA should govern because the present case involves
loss of goods or cargo.

Page 12 of 14
 27. EQUITABLE INSURANCE CORPORATION v. TRANSMODAL INTERNATIONAL,
INC., G.R. No. 223592, August 7, 2017;

FACTS: Equitable who was subrogated to the rights of Sytengco filed a complaint for damages
against Transmodal for the amount of insurance claim paid representing the value of the cartons
of gum Arabic which was damaged due to the latter’s negligent handling. Transmodal denied
liability alleging among others that it exercised the extraordinary diligence required and that claim
was belatedly filed. The RTC found for Equitable, which the CA reversed. The CA held that the
insurance contract was neither attached in the complaint nor offered in evidence for the perusal
and appreciation of the RTC, and what was presented was just the marine risk note.

ISSUE: Whether Transmodal is liable for the amount of the damaged cargo

HELD: Yes. A perusal of the records would show that Equitable is correct in its claim that the
marine insurance policy was offered as evidence and that Transmodal had the opportunity to
examine or to object to its presentation. Therefore, the payment by the insurer to the insured
operates as an equitable assignment to the insurer of all the remedies which the insured may
have against the third party whose negligence or wrongful act caused the loss. The right of
subrogation is not dependent upon, nor does it grow out of any privity of contract or upon payment
by the insurance company of the insurance claim. It accrues simply upon payment by the
insurance company of the insurance claim

Page 13 of 14
 28. CU v. SMALL BUSINESS GUARANTEE AND FINANCE CORP.
G.R. No. 211222, August 7, 2017;

FACTS: Small Business Guarantee (SB Corp) filed a criminal case against Cu and Pascual for
Violation of Batas Pambansa Blg. 22. It asserts that the value of the checks issued to it bounced
as a result of the placement of G7 Bank which petitioners are officers thereof. In its defense, it
alleged that they were precluded from fulfilling their obligation by reason of the placement of the
Bank under receivership. The MTC dismissed the BP 22 case which was affirmed by the RTC.
The CA however reversed the decision and remanded the case back to the MTC. Hence, this
appeal.

ISSUE: Whether petitioners are can be made liable on the amount of the dishonored check

HELD: No. The closure of G7 Bank by the MB, the appointment of PDIC as receiver and its
takeover of G7 Bank, and the filing by PDIC of a petition for assistance in the liquidation of G7
Bank, had the similar effect of suspending or staying the demandability of the loan obligation of
G7 Bank to SB Corp. with the concomitant cessation of the former’s obligation to pay interest.
Hence, at the time SB Corp. presented the subject checks for deposit/encashment, it had no right
to demand payment because the underlying obligation was not yet due and demandable from Cu
and he could not be held liable for the civil obligations of G7 Bank covered by the subject
dishonored checks on account of the MB’s closure of G7 Bank. There was no way that Cu or any
officer of the bank could to pay SB Corp.

Page 14 of 14