Recoletos Notes: CORPORATION CODE (2004-1990)

COMMERCIAL LAW COMMITTEE
CHAIRMAN: Paul Edgar Malapote VICE-CHAIRMAN: Rafael Vincent Floranda MEMBERS: R. Arleen Alvarez, Halimah Balenti,
Sandra han, Mignon hri! u, Ederlita de "uzman, "enevie de la ruz, Ma. Victoria Pa#a$al, %ame& Villa
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
CENTRALIZED BAR OPERATIONS 2006
Commercial Law
C O R P O R A T I O N C O D E (2004 1990)
Specific Tpic !e"# A$%e& '(e$)i* N(+,e# C"$e - Dc)#i*e
orporate (ife .//0 1.2 A corporation &hall e!i&t for a period not e!ceeding fift# 34/5 #ear& from the
date of incorporation unle&& &ooner di&&olved or unle&& &aid period i& e!tended.
6pon the e!piration of the period fi!ed in the article& of incorporation in the
a2&ence of compliance $ith the legal re7ui&ite& for the e!ten&ion of the period,
the corporation cea&e& to e!i&t and i& di&&olved ipso facto. (PNB vs. CFI, Rizal;
!" SCRA "#$
*erivative Suit .//0 1.a A derivative &uit ha& 2een the principal defen&e of the minorit# &hareholder
again&t a2u&e& 2# the ma8orit#. ,t i& a remed# de&igned 2# e7uit# for tho&e
&ituation& $here the management, through fraud, neglect of dut#, or other cau&e,
decline& to ta9e the proper and nece&&ar# &tep& to a&&ert the corporation:& right&.
(Co%&a't (P)ils*, I%c. vs. SEC; +", SCRA -.$
;<<= ;>.. )he /o%a fi01 o$ner&hip 2# a &toc9holder of &toc9 in hi& o$n right &uffice&
to inve&t him $ith &tanding to 2ring a derivative action for the 2enefit of the
corporation. )he num2er of hi& &hare& i& immaterial &ince he i& not &uing in hi&
o$n 2ehalf, or for the protection or vindication of hi& o$n particular right, or the
redre&& of a $rong committed again&t him, individuall#, 2ut in 2ehalf and for the
2enefit of the corporation. (Sa% Mi231l Co'po'atio% vs. 4a)%; +-5 SCRA ##-$
*octrine of Piercing the Veil of orporate .//; ;/ )he circum&tance& of the ca&e at 2ar $here? 3a5 + corporation o$ned all the
;
2006 BAR OPS EXECUTIVE COMMITTEE
6VER-A77 CHAIRMAN: A22on (oong@ 6VER-A77 VICE-CHAIRMAN: )ri&tan Ba2iera, Edgar Martho@ VC SECRE8ARIA8: Sa&7uia Ra2ara@ VCACA9EMICS: (eama# 'rencio@
VCE:8ERNA7: Rheme %a2ido@ VC;A<S = MEANS: "ian Palad@ >?RISPR?9ENCE ANA7<S8S: %ig& *omingo, atherine ampo&ano@ P67I8ICA7 A(ad# %a# "utierrez@ 7AB6RBr#&tal Em2ido@
CIVI7 A%ohn )iam&on@ 8A:A8I6N-+oel 'rtega@ C6MMERCIA7BPaul Edgar Malapote@ CRIMINA7 A#nthia orpuz@ REME9IA7 A%eniffer Felipe@ 7EPEBFrela Pancho
RECOLETOS NOTES
Commercial Law
Fiction out&tanding &toc9& of % corporation@ 325 the 2oard of director& of + corporation
$a& con&tituted in &uch a $a# to ena2le it to actuall# direct and manage the other
corporation:& affair& 2# ma9ing the &ame officer& of the 2oard for 2oth
companie&@ 3c5 + corporation financed the operation& of the other@ 3d5 +
corporation treated the other emplo#ee& a& it& o$n@ 3e5 ompen&ation $a& given
to 2oard mem2er& of corporation, $ho $ere al&o 2oard mem2er& and or
emplo#ee& of + indicate that % $a& onl# a department of +@ and 3f5 the office& of
2oth corporation& $ere located in the &ame compound. All lead to the conclu&ion
that % corporation i& merel# an ad8unct, 2u&ine&& conduit or alter ego of +
corporation and that the fiction of &eparate and di&tinct corporate entitie& &hould
2e di&regarded. (Co&&issio%1' of I%t1'%al R1v1%31 vs. No'to%; ++ SCRA -+#$
;<<; 0 )he &eparate and di&tinct per&onalit# of the corporation ma# 2e di&regarded,
or the veil of corporate fiction pierced, in ca&e& $here it i& u&ed a& cloa9 or cover
fraud or illegalit#, or to $or9 an in8u&tice, or $here nece&&ar# to achieve e7uit# or
$hen nece&&ar# for the protection of creditor&. (8a% Boo% B11 = Co., I%c. vs.
>a'1%cio; +5. SCRA !@$
)o di&regard the &eparate 8uridical per&onalit# of a corporation, the $rong
doing mu&t 2e clearl# and convincingl# e&ta2li&hed. (91l Rosa'io vs. N7RC; +,-
SCRA ---$
*i&7ualification of competitor director .//; ;; A director &tand& in fiduciar# relation to the competition and it& &toc9holder&.
)he di&7ualification of a competition from 2eing elected to the 2oard of director&
i& a rea&ona2le e!erci&e of corporate authorit#.
-here t$o corporation& are competitive in a &u2&tantial &en&e, it $ould &eem
impro2a2le, if not impo&&i2le, for the director, if he $ere to di&charge effectivel#
hi& dut#, to &ati&f# hi& lo#alt# to 2oth corporation& and place the performance of
hi& corporate dutie& a2ove per&onal concern&.
.
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
Another rea&on for upholding a 2#Bla$ provi&ion that for2id& a competitor to
2e elected a& corporate director are the la$& prohi2iting cartel&.(AoBo%2C1i vs.
SEC; ," SCRA ..5$
)ran&fer of Stoc9 ertificate& ;<<> 1.. ,n order for a tran&fer of &toc9 certificate to 2e effective, the certificate mu&t
2e properl# i%0o's10 and that title to &uch certificate of &toc9 i& ve&ted in the
tran&feree 2# the deliver# of the 03lD i%0o's10 certificate of &toc9.(Razo% vs. IAC;
!- SCRA .#$
orporate Propertie& ;<<> C.; Propertie& regi&tered in the name of the corporation are o$ned 2# it a& an
entit# &eparate and di&tinct from it& mem2er&. -hile &hare& of &toc9 con&titute
per&onal propert#, the# do not repre&ent propert# of the corporation. )he
corporation ha& propert# of it& o$n $hich con&i&t& chiefl# of real e&tate. A &hare
of &toc9 onl# t#pifie& an ali7uot part of the corporation:& propert#, or the right to
&hare in it& proceed& to that e!tent $hen di&tri2uted according to la$ and e7uit#,
2ut it& holder i& not the o$ner of an# part of the capital of the corporation. +or i&
he entitled to the po&&e&&ion of an# definite portion of it& propert# or a&&et&. )he
&toc9holder i& not a coBo$ner or tenant in common of the corporate propert#.
(BoD1'-RoEas vs. CA; ++ SCRA #-!$
(ia2ilit# of Pre&identDhairman of the
orporation
;<<> C.. A contract &igned 2# the Pre&ident and Board of hairman $ithout authorit#
from the Board of *irector& i& void. (<ao 4a Si% 8'a0i%2 vs. CA; !" SCAR -5.$
<.. )he pre&ident of a corporation cannot 2e held &olidaril# lia2le per&onall# $ith
corporation a2&ent evidence of maliciou& act& of the former. (EPA Co%st'3ctio%
Co., I%c. vs. CA; +! SCRA .!$
6npaid Su2&cription ;<<0 ;0.. An o2ligation ari&ing from nonBpa#ment of &toc9 &u2&cription& to a
corporation cannot 2e off&et again&t a mone# claim of an emplo#ee again&t the
emplo#er. (Apo0aca vs. N7RC; +- SCRA ##$
Share& of Stoc9 ;<<; =.2 -hen a corporation i&&ue& &toc9 dividend&, it &ho$& that the corporation:&
=
RECOLETOS NOTES
Commercial Law
accumulated profit& have 2een capitalized in&tead of di&tri2uted to the
&toc9holder& or retained a& &urplu& availa2le for di&tri2ution, in mone# or 9ind,
&hould opportunit# offer. Far from 2eing realization of profit& for the &toc9holder,
it tend& rather to po&tpone &aid realization, in that the fund repre&ented 2# the ne$
&toc9 ha& 2een tran&ferred from &urplu& to a&&et& and no longer availa2le for
actual di&tri2ution. )hu&, it i& apparent that &toc9 dividend& are i&&ued onl# to
&toc9holder&. )he# are the onl# one& $ho have a right to a proportional &hare in
that part of the &urplu& $hich i& declared a& dividend&. (Ni1lso% = Co., I%c. vs.
71pa%to Co%soli0at10 Mi%i%2 Co&pa%D; 5 SCRA @#!$
)ru&t Fund *octrine ;<<; ;< )he re7uirement of unre&tricted retained earning& to cover the &hare& i& 2a&ed
on the tru&t fund doctrine $hich mean& that the capital &toc9, propert# and other
a&&et& of a corporation are regarded a& e7uit# in tru&t for the pa#ment of corporate
creditor&. )he rea&on i& that creditor& of a corporation are preferred over the
&toc9holder& in the di&tri2ution of corporate a&&et&. (Bo&a% E%vi'o%&1%tal 91vFt.
Co'p. vs. CA; +5- SCRA @#!$
0
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
I N T E L L E C T . A L P R O P E R T ! (2004 1990)
,nfringement v&. 6nfair ompetition ;<<> ;4.; )he follo$ing are the di&tinction& 2et$een infringement of trademar9 and
unfair competition? 3;5 infringement of trademar9 i& the unauthorized u&e of a
trademar9, $herea& unfair competition i& the pa&&ing of one:& good& a& tho&e of
another@ 3.5 in infringement of trademar9 fraudulent, intent i& unnece&&ar#,
$herea& in unfair competition, fraudulent intent i& e&&ential@ 3=5 in infringement of
trademar9, the prior regi&tration of the trademar9 i& a prere7ui&ite to the action,
$herea& in unfair competition, regi&tration in not nece&&ar#. (91l Mo%t1 Co'p. vs.
CA; +,+ SCRA #+!$
)e&t of *ominanc# ;<<> ;4.. ,nfringement i& determined 2# the Ete&t of dominanc#F rather than 2#
difference& or variation& in the detail& of one trademar9 and of another. Similarit#
in &ize, form and color, $hile relevant, i& not conclu&ive. ,f the competing
trademar9 contain& the main or e&&ential or dominant feature& of another, and
confu&ion and deception i& li9el# to re&ult, infringement ta9e& place. *uplication
or imitation i& not nece&&ar#@ nor it i& nece&&ar# that the infringing la2el &hould
&ugge&t an effort to imitate. )he 7ue&tion at i&&ue in ca&e& of infringement of
trademar9& i& $hether the u&e of the mar9& involved $ould 2e li9el# to ca3s1
co%f3sio% o' &istaB1s i% t)1 &i%0 of t)1 p3/lic o' 01c1iv1 p3'c)as1's.
)he te&t i& &imilarit# or Ere&em2lance 2et$een the t$o trademar9& &uch a&
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RECOLETOS NOTES
Commercial Law
$ould 2e li9el# to cau&e one mar9 to 2e mi&ta9en for the otherF. )he te&t i&
E&imilarit# in the dominant feature& of the trademar9&.G (Asia B'1C1'D I%c. vs.
CA; # SCRA #.-$
6nfair ompetition ;<<> ;4.= A per&on $ho ha& identified in the pu2lic the good& he manufacture& or deal&
in hi& 2u&ine&& or &ervice& from tho&e of other&, $hether or not a right in the
good$ill of the &aid good&, 2u&ine&&, or &ervice& &o identified, $hich $ill 2e
protected in the &ame manner a& other propert# right&. ,t denominate& a& Eunfair
competitionF Ean# act&F calculated to re&ult in the pa&&ing off of other good& Efor
tho&e of the one having e&ta2li&hed &uch good$ill.F (Co%v1's1 R3//1' Co'p. vs.
>aci%to R3//1' a%0 Plastics Co., I%c.; "- SCRA +@,$
Pu2lic Performance ;<<0 ;C.. Mu&ic provided 2# a com2o in a re&taurant con&titute& pu2lic performance for
profit $ithin the meaning of the op#right (a$. (Filipi%o Soci1tD of Co&pos1's,
A3t)o's a%0 P3/lis)1's, I%c. vs. 8a%, +#, SCRA #5+$
)rademar9 ;<<0 ./ )he protective mantle of the )rademar9 (a$ e!tend& onl# to the good& u&ed
2# the fir&t u&er a& &pecified in the certificate of regi&tration. (Fa/1'21, I%c. vs.
IAC, +@ SCRA .+5$
Patenta2ilit# ;<<. ;4 )he validit# of the patent i&&ue& 2# the Philippine Patent 'ffice in favor of
the private re&pondent and the 7ue&tion over the inventivene&&, novelt# and
u&efulne&& of the improved proce&& therein &pecified and de&cri2ed are matter&
$hich are 2etter determined 2# the Philippine Patent 'ffice.
-here improvement in tile ma9ing i& inventive and different from old
proce&& of tile ma9ing, improvement i& patenta2le. (A23as vs. 91 71o%; +++
SCRA .,$
-hen a patent i&&ued to the plaintiff $a& dul# regi&tered in the Bureau of
ommerce and ,ndu&tr# of the Philippine ,&land&, and $hich $a& introduced in
evidence 2# plaintiff, and $a& in due for, the patent i& prima facie evidence of it&
>
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
correctne&& and validit#, and the 2urden then &hift to the defendant to overcome
thi& legal pre&umption.
An improvement cannot appropriate the 2a&ic patent of another, and that the
improver $ithout licen&e i& an infringer and ma# 2e &ued a& &uch. 3Fran9 and
"ohn v&. Benito@ 4; Phil 1;=5
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RECOLETOS NOTES
Commercial Law
I N S . R A N C E L A W (2004 1990)
Accident .//0 ;/.2 *eath or in8ur# doe& not re&ult from accident or accidental mean& $ithin the
term& of an accident polic# if it i& the natural re&ult of the in&uredH& voluntar# act,
unaccompanied 2# an#thing unfore&een e!cept the death or in8ur#. )here i& no
accident $hen a deli2erate act i& performed unle&& &ome additional, une!pected,
independent, and unfore&een happening occur& $hich produce& or 2ring& a2out
the re&ult of in8ur# or death. ,n other $ord&, $here the death or in8ur# i& not the
natural or pro2a2le re&ult of the in&uredH& voluntar# act, or if &omething
unfore&een occur& in the doing of the act $hich produce& the in8ur#, the re&ulting
death i& $ithin the protection of the policie& in&uring again&t death or in8ur# from
accident. (Fi%&a% A1%1'al Ass3'a%c1 Co'p. vs. CA, +. SCRA #!.$
;<</ = -here the participation of the in&ured in the 2o!ing conte&t $a& voluntar#,
2ut the in8ur# $a& &u&tained $hen he &lid, giving occa&ion to the infliction 2# hi&
opponent of the 2lo$ that thre$ him to the rope& of the ring and $ithout thi&
unfortunate incident, perhap& he could not have received that 2lo$ in the head and
$ould not have died, and hi& death ma# 2e regarded a& accidental, although
2o!ing i& attended $ith &ome ri&9& of e!ternal in8urie&. (91 la C'3z vs. Capital
I%s3'a%c1 = S3'1tD Co., I%c., +- SCRA @@"$
oncealment ;<<> 0.; Section .> of the ,n&urance ode i& e!plicit in re7uiring a part# to a contract
C
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
of in&urance to communicate to the other, in good faith, all fact& $ithin hi&
9no$ledge $hich are material to the contract and a& to $hich he ma9e& no
$arrant#, and $hich the other ha& no mean& of a&certaining. Said &ection
provide&? GA neglect to communicate that $hich a part# 9no$& and ought to
communicate, i& called concealment.G
Matter& relating to the health of the in&ured are material and relevant to the
approval and i&&uance of the life in&urance polic# a& the&e definitel# affect the
in&urerH& action on the application. (S3%lif1 Ass3'a%c1 Co&pa%D of Ca%a0a vs.
CA, #@ SCRA 5,$
;<<= ./.; ,n&ured i& &pecificall# re7uired to di&clo&e to the in&urer an# other in&urance
and it& particular& $hich he ma# have effected on the &ame &u28ect matter. (N1C
7if1 E%t1'p'is1s vs. CA, !- SCRA 55"$
)otal (o&& ;<<> 0.. ,n ca&e of total lo&& in Marine ,n&urance, the a&&ured i& entitled to recover
from the under$riter the $hole amount of hi& &u2&cription. -here the cargo 2#
the proce&& of decompo&ition or other chemical agenc# no longer remain& the
&ame 9ind of thing& a& 2efore, an actual lo&& ha& 2een &uffered. (Pa% MalaDa%
I%s3'a%c1 Co'p. vs. CA, !+ SCRA .,$
;<<. = )he log& having 2een in&ured a& one in&epara2le unit, the correct 2a&i& for
determining the e!i&tence of con&tructive total lo&& i& the totalit# of the &hipment
of log&. (6'i1%tal Ass3'a%c1 Co'p. vs. CA, !! SCRA #@"$
Pre&cription of laim& ;<<> 4.; )he condition contained in an in&urance polic# that claim& mu&t 2e pre&ented
$ithin one #ear after re8ection i& not merel# a procedural re7uirement 2ut an
important mater e&&ential to a prompt &ettlement of claim& again&t in&urance
companie& a& it demand& that in&urance &uit& 2e 2rought 2# the in&ured $hile the
evidence a& to the origin and cau&e of de&truction have not #et appeared.
)he right of the in&ured to the pa#ment of hi& lo&& accrue& from the
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RECOLETOS NOTES
Commercial Law
happening of the lo&&. Ho$ever, the cau&e of action in an in&urance contract doe&
not accrue until the in&uredH& claim i& finall# re8ected 2# the in&urer. )hi& i&
2ecau&e 2efore &uch final re8ection, there i& no real nece&&it# for 2ringing &uit.
(S3% I%s3'a%c1 6ffic1 7t0. vs. CA, +"@ SCRA +".$
(ia2ilit# of ,n&urer ;<<> 4...a ,f an in&urance polic# in&ure& directl# again&t lia2ilit#, the in&urerH& lia2ilit#
accrue& immediatel# upon occurrence of the in8ur#, and $ill not depend on the
recover# of 8udgment 2# the in8ured part# again&t the in&ured. (S)1'&a% S)af1'
vs. >3021, R8C 6lo%2apo CitD, +5- SCRA .,5$
4...2 -hile it i& true that $here the in&urance contract provide& for indemnit#
again&t lia2ilit# to third per&on&, &uch third per&on& can directl# &ue the in&urer,
ho$ever, the direct lia2ilit# of the in&urer under indemnit# contract& again&t third
part# lia2ilit# doe& not mean that the in&urer can 2e held &olidaril# lia2le $ith the
in&ured andDor the other partie& found at fault. )he lia2ilit# of the in&urer i& 2a&ed
on contract@ that of the in&ured i& 2a&ed on tort. (MalaDa% I%s3'a%c1 Co. vs. CA,
+5@ SCRA @.5; V0a. 01 Ma2la%a vs. Co%solacio%, + SCRA 5,$
;<<= ;/ )here i& nothing in the polic# that relieve& the in&urer of the re&pon&i2ilit# to
pa# the indemnit# agreed upon if the in&ured i& &ho$n to have contri2uted to hi&
o$n accident. (S3% I%s3'a%c1 6ffic1, 7t0. vs. CA, ++ SCRA @@#$
Relea&e of laim ;<<0 C.;, C.. Should the in&ured, after receiving pa#ment from the in&urer, relea&e the
$rongdoer $ho cau&ed the lo&&, the in&urer lo&e& hi& right& again&t the latter. But
in &uch a ca&e, the in&urer $ill 2e entitled to recover from the in&ured $hatever it
ha& paid to the latter, unle&& the relea&e $a& made $ith the con&ent of the in&urer.
(Ma%ila Ma)o2a%D Ma%3fact3'i%2 Co'p. vs. CA, +@# SCRA 5@!$
,nconte&ta2ilit# lau&e ;<<0
;<<;
<
1
)he &oBcalled Ginconte&ta2ilit# clau&eG provide& the in&urer from rai&ing the
defen&e of fal&e repre&entation or concealment of material fact& in&ofar a& health
and previou& di&ea&e& are concerned if the in&urance ha& 2een in force for at lea&t
;/
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t$o #ear& during the in&uredH& lifetime. )he phra&e Gduring the lifetimeG found in
Section 0C &impl# mean& that the polic# i& no longer con&idered in force after the
in&ured ha& died. (8a% vs. CA, +-# SCRA #!.$
)heft lau&e ;<<= ;;.; -here a car i& admittedl#, unla$full#, and $rongfull# ta9en $ithout the
o$nerH& con&ent or 9no$ledge, &uch ta9ing con&titute& theft, and therefore, it i& the
GtheftG clau&e, and not the Gauthorized driverG clau&e, that &hould appl#. (P1'la
Co&pa%ia 01 S123'os, I%c. vs. CA, !, SCRA #,-$
Authorized *river lau&e ;<<; C )he driver of the in&ured motor vehicle at the time of the accident $hich $a&
the in&ured him&elf $a& the Gauthorized driverG under the polic#.
)he re7uirement that the driver 2e permitted in accordance $ith the la$ and
the regulation& to drive the motor vehicle and i& not 7ualified from driving the
vehicle 2# order of a court or 2# rea&on of enactment or regulation applie& onl#
$hen the driver i& driving on the in&uredH& order or permi&&ion. (Pal1'&o vs.
PD'a&i0 I%s3'a%c1 Co., I%c., +5+ SCRA 5--; P1za vs. AliBpala, +5! SCRA .+$
,n&ura2le ,ntere&t ;<<; < Perfected contract of &ale even $ithout deliver# ve&t& in the vendee, an
e7uita2le title, an e!i&ting intere&t over the good& &ufficient to 2e &u28ect of
in&urance. (Filipi%o M1'c)a%ts I%s3'a%c1 Co., I%c. vs. CA, +-" SCRA 5."$
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S E C . R I T I E S A N D C A P I T A L M A R / E T (2004 1990)
%uri&diction of SE ;<<> ;;.; ,n intraBcorporate matter& concerning the election or appointment of officer&
of a corporation, Section 4, P* </.BA &pecificall# provide&? ESec.4. ,n addition to
the regulator# and ad8udicative function& of the Securitie& and E!change
ommi&&ion over corporation&, partner&hip& and other form& of a&&ociation&
regi&tered $ith it a& e!pre&&l# granted under e!i&ting la$& and decree&, it &hall
have original and e!clu&ive 8uri&diction to hear and decide ca&e& involving? !!!
!!! !!! 3c5 ontrover&ie& in the election or appointment& of director&, tru&tee&,
officer&, or manager& of &uch corporation&, partner&hip& or a&&ociation&. (Espi%o
vs. N7RC; #! SCRA @$
;<<; ;<.2 )he refu&al of the corporate &ecretar# to perform hi& mini&terial dut# to
record the tran&fer& of the corporation:& controlling &hare& of &toc9 i& an intraB
corporate di&pute. *i&pute& involving controver&ie& 2et$een and among
&toc9holder& fall $ithin the original and e!clu&ive 8uri&diction of the SE. (A/1Go
vs. 91 la C'3z; +#" SCRA 5@#$ (Riv1'a vs. Flo'1%0o; +## SCRA 5#.$
,ntraBorporate ontrover&# ;<<> ;;.. 6nder Section 4 of P* </.BA, a& amended 2# P* ;>4=, the SE ha& original
and e!clu&ive 8uri&diction to hear and decide ca&e& involving? !!! !!! !!! 325
controver&ie& ari&ing out of intraBcorporate or partner&hip relation&, 2et$een and
among &toc9holder&, mem2er& or a&&ociate&@ 2et$een an# or all of them and the
;.
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corporation, partner&hip, or a&&ociation of $hich the# are &toc9holder&, mem2er&
of a&&ociate&, re&pectivel#@ and 2et$een &uch corporation&, partner&hip or
a&&ociation and the &tate in&ofar a& it concern& their individual franchi&e or right to
e!i&t a& &uch entit#.
An intraBcorporate controver&# i& one $hich ari&e& 2et$een a &toc9holder and
the corporation. )here i& no di&tinction, 7ualification, nor an# e!emption
$hat&oever. (SEC vs. CA; !+ SCRA +#$
;=
RECOLETOS NOTES
Commercial Law
N E 0 O T I A B L E I N S T R . M E N T S L AW (2004 1990)
ro&& hec9 ;<<> ;.0 ,n order to pre&erve the credit $orthine&& of chec9&, 8uri&prudence ha&
pronounced that cro&&ing of a chec9 &hould have the follo$ing effect&? 3a5 the
chec9 ma# not 2e enca&hed 2ut onl# depo&ited in the 2an9@ 325 the chec9 ma# 2e
negotiated onl# once A to one $ho ha& an account $ith a 2an9@ 3c5 and the act of
cro&&ing the chec9 &erve& a& $arning to the holder that the chec9 ha& 2een i&&ued
for a definite purpo&e &o that he mu&t in7uire if he ha& received the chec9
pur&uant to that purpo&e, other$i&e, he i& not a holder in due cour&e. (Bataa%
Ci2a' a%0 Ci2a'1tt1 Facto'D, I%c. vs. CA; .! SCRA 5#.$
Holder in *ue our&e ;<<> ..; ro&&ing of chec9& &hould put the holder on in7uir# and upon him devolve&
the dut# to a&certain the indor&er:& title to the chec9 or the nature of hi&
po&&e&&ion. Failing in thi& re&pect, the holder i& declared guilt# of gro&&
negligence amounting to legal a2&ence of good faith, contrar# to Sec. 4. 3c5 of the
+egotia2le ,n&trument& (a$, and a& &uch the con&en&u& of authorit# to the effect&
that the holder of the chec9 i& not a holder in due cour&e. (Bataa% Ci2a' a%0
Ci2a'1tt1 Facto'D, I%c. vs. CA; .! SCRA 5#.$
;<<; ;.2 A holder in due cour&e i& a holder $ho ha& ta9en the in&trument under the
follo$ing condition&? 3a5 that it i& complete and regular upon it& face@ 325 that he
2ecame the holder of it 2efore it $a& overdue, and $ithout notice that it had 2een
;0
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
previou&l# di&honored, if &uch $a& the fact@ 3c5 that he too9 it in good faith and
for value@ 3d5 that at the time it $a& negotiated to him, he had no notice of an#
infirmit# in the in&trument or defect in the title of the per&on negotiating it. Sec.
4., +,(. (Salas vs. CA; +,+ SCRA "-$
*i&charge of ,n&trument ;<<> ... )hat the po&tBdated chec9& $ere merel# i&&ued a& &ecurit# i& not a ground for
the di&charge of the in&trument a& again&t a holder in due cour&e. For, the onl#
ground& are tho&e outlined in Sec. ;;< of the +egotia2le ,n&trument& (a$.
)he intentional cancellation contemplated under par. , Sec. ;;< i& that the
cancellation effected 2# de&tro#ing the in&trument either 2# tearing it up, 2urning
it, or $riting the $ord EcancelledF on the in&trument.
)he dra$ing and negotiation of a chec9 have certain effect& a&ide from the
tran&fer of title or the incurring of lia2ilit# in regard to the in&trument 2# the
tran&feror. )he holder $ho ta9e& the negotiated paper ma9e& a contract $ith the
partie& on the face of the in&trument. )here i& an implied repre&entation that fund&
or credit are availa2le for the pa#ment of the in&trument in the 2an9 upon $hich it
i& dra$n. on&e7uentl#, the $ithdra$al of the mone# from the dra$ee 2an9 to
avoid lia2ilit# on the chec9& cannot pre8udice the right& of holder& in due cour&e.
(Stat1 I%v1st&1%t vs. CA; +- SCRA .$
Accommodation Part# ;<<> =.; An accommodation part# in a loan agreement i& primaril# and
unconditionall# lia2le thereon and cannot e!cu&e it&elf a& &uch 2# the fact that the
creditor e!tended the time for pa#ment $ithout it& 9no$ledge or con&ent.
(P'301%cio vs CA; +#. SCRA -$
;<<; 4.a, 4.2 )he provi&ion of the +egotia2le ,n&trument& (a$ $hich hold& an
accommodation part# lia2le on the in&trument to a holder for value, although &uch
holder at the time of ta9ing the in&trument 9ne$ him to 2e onl# an
accommodation part#, doe& not include nor appl# to corporation& $hich are
;4
RECOLETOS NOTES
Commercial Law
accommodation partie&. )hi& i& 2ecau&e the i&&ue or indor&ement of negotia2le
paper 2# a corporation $ithout con&ideration and for the accommodation of
another i& 3lt'a vi'1s. Hence, one $ho ha& ta9en the in&trument $ith 9no$ledge
of the accommodation nature thereof cannot recover again&t a corporation $here
it i& onl# an accommodation part#. ,f the form of the in&trument, or the nature of
the tran&action, i& &uch a& to charge the indor&ee $ith 9no$ledge that the i&&ue or
indor&ement of the in&trument 2# the corporation i& for the accommodation of
another, he cannot recover again&t the corporation thereon.
orporate officer& have no po$er to e!ecute for mere accommodation a
negotia2le in&trument of the corporation for their individual de2t& or tran&action&
ari&ing from or in relation to matter& in $hich the corporation ha& no legitimate
concern. Since &uch accommodation paper cannot thu& 2e forced again&t the
corporation , e&peciall# &ince it i& not involved in an# a&pect of the corporate
2u&ine&& or operation&, the ine&capa2le conclu&ion in la$ and in logic i& that the
&ignatorie& thereof &hall 2e per&onall# lia2le therefor, a& $ell a& the con&e7uence&
ari&ing from their act& in connection there$ith. (C'isolo2o->os1 vs. CA, +--
SCRA @"#$
Pre&entment for Pa#ment D .0BHour
learing Hou&e Rule
;<<> =.. )he entral Ban9, in accordance $ith it& ruleBma9ing authorit# i&&ued the
.0Bhour clearing hou&e rule. -hatever remed# the plaintiff ha& $ould lie not
again&t the defendant 2an9 2ut a& again&t the part# re&pon&i2le for changing the
name of the pa#ee. ,t& failure to call the attention of defendant 2an9 a& to &uch
alteration until the lap&e of .1 da#& $ould, in the light of the a2ove entral Ban9
ircular, negate $hatever right it ma# have had again&t defendant 2an9. (Ho%2
4o%2 a%0 S)a%2)ai Ba%Bi%2 Co'p. vs. P1opl1Fs R1p3/lic Ba%B a%0 8'3st Co., .@
SCRA +#!$
;>
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
)he .0Bhour clearing hou&e rule i& a valid rule applica2le to commercial
2an9&. ,t i& true that $hen an endor&ement i& forged, the collecting 2an9 or la&t
endor&er, a& a general rule 2ear& the lo&&. But the un7ualified endor&ement of the
collecting 2an9 on the chec9 &hould 2e read together $ith the .0Bhour regulation
on clearing hou&e operation. )hu&, $hen the dra$ee 2an9 fail& to return a forged
or altered chec9 to the collecting 2an9 $ithin the .0Bhour clearing period, the
collecting 2an9 i& a2&olved from lia2ilit#. (R1p3/lic Ba%B vs. CA; +"5 SCRA +!!$
Holder not in due cour&e ;<<0 =.= )he +egotia2le ,n&trument& (a$ doe& not provide that holder $ho i& not a
holder in due cour&e ma# not in an# ca&e recover on the in&trument. )he onl#
di&advantage of a holder $ho i& not in due cour&e i& that the negotia2le in&trument
i& &u28ect to defen&e& a& if it $ere nonBnegotia2le. (Stat1 I%v1st&1%t Ho3s1 vs.
IAC; +-@ SCRA .+!$
Pre&entment for Pa#ment ;<<0 0.. -here the in&trument i& not pa#a2le on demand, pre&entment mu&t 2e made
on the da# it fall& due. -here it i& pa#a2le on demand, pre&entment mu&t 2e made
$ithin a rea&ona2le time after i&&ue, e!cept that it in the ca&e of a 2ill of
e!change, pre&entment for pa#ment $ill 2e &ufficient if made $ithin a rea&ona2le
time after the la&t negotiation thereof.
Rea&ona2le time ha& 2een defined a& &o much time a& i& nece&&ar# under the
circum&tance& for a rea&ona2le prudent and diligent man to do, convenientl#,
$hat the contract or dut# re7uire& &hould 2e done, having a regard for the right&
and po&&i2ilit# of lo&&, if an#, to the other part#. (Fa' East R1altD I%v1st&1%t I%c.
vs. CA; +55 SCRA @5$
(etter& of redit ;<<= C.;, C.. ,t i& &ettled rule in commercial tran&action& involving letter& of credit that the
document& tendered mu&t &trictl# conform to the term& of the letter of credit. )he
tender of document& 2# the 2eneficiar# mu&t include all document& re7uired 2#
the letter. A corre&pondent 2an9 $hich depart& from ha& 2een &tipulated under the
;1
RECOLETOS NOTES
Commercial Law
letter of credit, a& $hen it accept& a fault# tender, act& on it& o$n ri&9 and it ma#
not thereafter 2e a2le to recover from the 2u#er or the i&&uing 2an9, a& the ca&e
ma# 2e, the mone# thu& paid to the 2eneficiar#. )hu&, the rule of &trict
compliance.
,n an irrevoca2le letter of credit, the i&&uing 2an9 ma# not, $ithout the
con&ent of the 2eneficiar# and the applicant, revo9e hi& underta9ing under the
letter. (F1ati Ba%B a%0 8'3st Co&pa%D vs. CA; +"5 SCRA.@-5$
;C
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
T R A N S P O R T A T I O N L A W (2004 1990)
Specific Tpic

!e"# A$%e& '(e$)i* N(+,e# C"$e - Dc)#i*e
(ia2ilit# of arrier .//0 ;.a )he ivil ode provi&ion& on common carrier& &hould not appl# $here the
common carrier i& not acting a& &uch 2ut a& a private carrier. A common carrier
underta9ing to carr# a &pecial cargo or chartered to a &pecial per&on onl#, 2ecome&
private carrier. A& a private carrier, a &tipulation e!empting the o$ner from
lia2ilit# for the negligence of it& agent i& valid.
)he &tipulation in the charter part# a2&olving the o$ner from lia2ilit# for lo&&
due to the negligence of it& agent $ould 2e void onl# if the &trict pu2lic polic#
governing common carrier& i& applied. Such polic# ha& no force $here the pu2lic
at large i& not involved, a& in the ca&e of a &hip totall# chartered for the u&e of a
&ingle part#. )he &tipulation e!empting the o$ner from lia2ilit# for the negligence
of it& agent i& not again&t pu2lic polic# and i& deemed valid. (Ho&1 I%s3'a%c1
Co., vs. A&1'ica% St1a&s)ip A21%ci1s, I%c.; . SCRA @#$
;<<>
;<<;
;0.;.2
;>
6nder Art. ;1043>5, +, a common carrier i& held re&pon&i2le A and $ill
not 2e allo$ed to dive&t or to dimini&h &uch re&pon&i2ilit# A even for act& of
&tranger& li9e thieve& or ro22er&, 1Ec1pt $here &uch thieve& or ro22er& in fact
acted E$ith grave or irre&i&ti2le threat, violence or force.F (91 A3z&a% vs. CA;
;<
RECOLETOS NOTES
Commercial Law
+5, SCRA 5+$
(o&& .//0 ;.2 E(o&&F refer& to the deterioration or di&appearance of good&. E(o&&F
contemplate& merel# a &ituation $here no deliver# at all $a& made 2# the &hipper
of the good& 2ecau&e the &ame had peri&hed gone out of commerce, or di&appeared
in &uch a $a# that their e!i&tence i& un9no$n or the# cannot 2e recovered. (Mits3i
6.S.4. 7i%1s 7t0. vs. CA; ,- SCRA .55$
ommon arrier ;<<>,

;<<;
;0.;.a.
;>
Article ;1=., +. ommon carrier& are per&on&, corporation&, firm& or
a&&ociation& engaged in the 2u&ine&& of carr#ing or tran&porting pa&&enger& or
good& or 2oth, 2# land, $ater, or air for compen&ation, offering their &ervice& to
the pu2lic. )he a2ove article ma9e& no di&tinction 2et$een one $ho&e p'i%cipal
2u&ine&& activit# i& the carr#ing of per&on& or good& or 2oth, and one $ho doe&
&uch carr#ing onl# a& an a%cilla'D activit#. Article ;1=. al&o carefull# avoid&
ma9ing an# di&tinction 2et$een a per&on or enterpri&e offering tran&portation
&ervice on a '123la' o' sc)103l10 /asis and one offering &uch &ervice on an
occasio%al, 1piso0ic, o' 3%sc)103l10 /asis. +either doe& Article ;1=. di&tingui&h
2et$een a carrier offering it& &ervice& to the E21%1'al p3/licF i.e. the general
communit# or population, and one $ho offer& &ervice& or &olicit& 2u&ine&& onl#
from a narro$ s12&1%t of the general population. (91 A3z&a% vs. CA; +5, SCRA
5+$
ontract of arriage ;<<> ;0.. )he victim in the ca&e at 2ar, 2# &tepping and &tanding on the platform of the
2u&, i& alread# con&idered a pa&&enger and i& entitled to all the right& and
protection pertaining to &uch a contractual relation. Hence, the dut# $hich the
carrier of pa&&enger& o$e& to it& patron& e!tend& to per&on& 2oarding the car& a&
$ell a& to tho&e alighting therefrom. ommon carrier&, from the nature of their
2u&ine&& and for rea&on& of pu2lic polic#, are 2ound to o2&erve e!traordinar#
diligence for the &afet# of the pa&&enger& tran&ported 2# them, according to all the
./
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
circum&tance& of each ca&e. (9a%2Ca 8'a%spo'tatio% Co., I%c. vs. CA; ! SCRA
@"#$
(imited (ia2ilit# Rule ;<<0 ;;.. ,n ordinar# circum&tance&, a ve&&el di&charge& her dut# to another 2# a
faithful and literal o2&ervance of the Rule& of +avigation, and &he cannot 2e held
at fault for &o doing even though a different cour&e $ould have prevented the
colli&ion. )hi& rule, ho$ever, i& not to 2e applied $here it i& apparent, that her
captain $a& guilt# of negligence or of a $ant of &eaman&hip in not perceiving the
nece&&it# for, or in &o acting a& to create &uch nece&&it# for, a departure from the
rule and acting accordingl#. (M1c1%as vs. CA; +,! SCRA ,.$
)ran&hipment ;<<= ;0.; )ran&hipment, in maritime la$, i& defined a& Gthe act of ta9ing cargo out of
one &hip and loading it in another,F or Ethe tran&fer of good& from the ve&&el
&tipulated in the contract of affreightment to another ve&&el 2efore the place of
de&tination named in the contract ha& 2een reached,F or Ethe tran&fer for further
tran&portation from one &hip or conve#ance to another.F (Ma21lla% Mft2.
Ma'B1ti%2 Co'p. vs. CA; !+ SCRA +!$
Bill of (ading ;<<= ;0.. A Bill of (ading operate& 2oth a& a receipt and a& a contract. ,t i& a receipt for
the good& &hipped and a contract to tran&port and deliver the &ame a& therein
&tipulated. Being a contract, it i& the la$ 2et$een the partie& $ho are 2ound 2# it&
term& and condition& provided that the&e are not contrar# to la$, moral&, good
cu&tom&, pu2lic order and pu2lic polic#. (Ma21lla% Mft2. Ma'B1ti%2 Co'p. vs.
CA; !+ SCRA +!$
;<<. 4 A& a receipt, a 2ill of lading recite& the place and date of &hipment, de&cri2e&
the good& a& to 7uantit#, $eight, dimen&ion&, identification, mar9&, condition,
7ualit#, and value. ,n the a2&ence of contrar# in&truction& or at lea&t 9no$ledge of
other fact&, the carrier i& not ordinaril# e!pected to deliver the good& to an
unnamed or un9no$n part#. (East1'% S)ippi%2 7i%1s, I%c. vs. CA; +"! SCRA @+$
.;
RECOLETOS NOTES
Commercial Law
ontract of Adhe&ion ;<<= ;4 ontract& of Adhe&ion $herein one part# impo&e& a read# made form of
contract on the other, a& the plane tic9et, are contract& not entirel# prohi2ited. )he
one $ho adhere& to the contract i& in realit# free to re8ect it entirel#@ if he adhere&,
he give& hi& con&ent. (Pa% A&1'ica% ;o'l0 Ai'CaDs, I%c. vs. Rapa0as; !" SCRA
5-$
ertificate of Pu2lic onvenience ;<<. > ertificate of pu2lic convenience could not 2e &old $hen the &u28ect of teh
certificate $a& no longer operational. (Co)o& vs. CA, +,, SCRA -+"$
Pre&cription ;<<. <.a -ritten e!traB8udicial demand 2# the creditor doe& not toll the running of the
one #ear pre&criptive period. (9ol1 P)ilippi%1s, I%c. vs. Ma'iti&1 Co. of t)1
P)ils.; +#, SCRA ++,$
<.2 Action for damage& for mi&deliver# of cargo 2# an oceanBgoing ve&&el i& not
oneB#ear, 2ut ;/ #ear& from date cau&e of action accrued. (A%2 vs. Co&pa%ia
Ma'iti&a; +.. SCRA 5!!$
*emi&e D Bare2oat harter ;<<; ;4.2 ,n a demi&e or 2are 2oat charter, the charterer i& treated a& o$ner p'o )ac vic1
of the ve&&el, the charterer a&&uming in large mea&ure the cu&tomar# right& and
lia2ilitie& of the &hipo$ner in relation to third per&on& $ho have dealt $ith him or
$ith the ve&&el. ,n &uch ca&e, the Ma&ter of the ve&&el i& the agent of the charterer
and not of the &hipo$ner. )he charterer or o$ner p'o )ac vic1, and %ot the general
o$ner of the ve&&el, i& held lia2le for the e!pen&e& of the vo#age including the
$age& of the &eamen. (7ito%G3a S)ippi%2 Co&pa%D, I%c. vs. Natio%al S1a&1%
Boa'0; +-5 SCRA +,"$
4a/it SDst1& ;<</ ;; -here a 8eepne# i& regi&tered in the name of an authorized pu2lic utilit#
operator 2ut i& actuall# o$ned 2# another 3a &o called EIa2itF operator5, and the
&ame 2umped &ome2od# thru the negligence of it& driver, &uch a 8eepne# can 2e
&old at pu2lic auction to &ati&f# the a$ard. 3Santo& v&. Si2ug@ ;/0 SRA 4./5
..
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
0 E N E R A L B A N / I N 0 L A W S (2004 1990)
*epo&it Bo!e& .//0 4.a A contract for the rent of a &afet# depo&it 2o! i& not an ordinar# contract of
lea&e 2ut a &pecial 9ind of depo&it.
)he depo&itar#:& re&pon&i2ilit# for the &afe9eeping of the o28ect& depo&ited in
the ca&e at 2ar i& governed 2# )itle ,, Boo9 ,V of the ivil ode. Accordingl#, the
depo&itar# $ould 2e lia2le if, in performing it& o2ligation, it i& found guilt# of
fraud, negligence, dela# or contravention of the tenor of the agreement. ,n the
a2&ence of an# &tipulation pre&cri2ing the degree of diligence re7uired, that of a
good father of a famil# i& to 2e o2&erved. Hence, an# &tipulation e!empting the
depo&itar# from an# lia2ilit# ari&ing form the lo&& of the thing depo&ited on
account of fraud, negligence or dela# $ould 2e void for 2eing contrar# to la$ and
pu2lic polic#. (CA A2'o-I%03st'ial 91v1lop&1%t Co'p. vs. CS; +" SCRA #5$
ontract for the u&e of &afet# depo&it 2o! i& a &pecial 9ind of depo&it and the
relation&hip 2et$een the partie& thereto, $ith re&pect to the content& of the 2o!, i&
that of a 2ailor and 2ailee, the 2ailment 2eing for hire and mutual 2enefit.
ondition& in a E(ea&e AgreementF covering a &afet# depo&it 2o! $hich
e!empt the 2an9 from an# lia2ilit# for damage, lo&& or de&truction of the content&
thereof ari&ing from it& o$n or it& agent:& fraud, negligence or dela# are
.=
RECOLETOS NOTES
Commercial Law
con&idered null and void, for 2eing contrar# to la$ and pu2lic polic#. (Sia vs. CA;
SCRA #$
Secrec# of Ban9 *epo&it& .//0
;<<0
4.2
;1
,n7uir# into illegall# ac7uired propert# e!tend& to ca&e& $here &uch propert#
i& concealed 2# 2eing held or recorded in the name of other per&on&. (Ba%co
Filipi%o Savi%2s a%0 Mo't2a21 Ba%B vs. P3'isi&a; +5+ SCRA @-5$ (PNB vs.
Aa%caDco; +@ SCRA "+$
.//0 C.a 6nder RA ;0/4, the prohi2ition again&t e!amination of or in7uir# into a 2an9
depo&it doe& not preclude it& 2eing garni&hed to in&ure &ati&faction of a 8udgment.
(C)i%a Ba%Bi%2 Co'po'atio% vs. 6't12a; #" SCRA .@@$
;<<. ;. RA ;0/4 allo$& the di&clo&ure of 2an9 depo&it& in ca&e& $here the mone#
depo&ited i& the &u28ect matter of the litigation. (M1llo% Ba%B, N.A. vs. Ma2si%o;
+"! SCRA 5..$
+egligence ;<<. ;; )he prime dut# of a 2an9 i& to a&certain the genuinene&& of the &ignature of
the dra$er or depo&itor on the chec9 2eing enca&hed. ,t i& e!pected to u&e
rea&ona2le 2u&ine&& prudence in accepting and ca&hing a chec9 pre&ented to it.
(PNB vs. H3i&po; +@, SCRA @,$
.0
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
S P E C I A L C O M M E R C I A L L A W S (2004 1990)
Mortgage ;<<> ;> )he vendor of per&onal propert# &old on the in&tallment 2a&i& i& precluded ,
after foreclo&ing the chattel mortgage on the thing &old, from having a recour&e
again&t the additional &ecurit# put up 2# a third part# to guarantee the purcha&er:&
performance of hi& o2ligation on the theor# that to &u&tain the &ame $ould
overloo9 the fact that if the guarantor &hould 2e compelled to pa# the 2alance of
the purcha&e price, &aid guarantor $ill in turn 2e entitled to recover $hat he ha&
paid for the de2torBvendee, and ultimatel# it $ill 2e the latter $ho $ill 2e made to
2ear the pa#ment of the 2alance of the price, de&pite the earlier foreclo&ure of the
chattel mortgage given 2# him, there2# indirectl# &u2verting the protection given
the latter. (Ri0a0 vs. Filipi%as I%v1st&1%t a%0 Fi%a%c1 Co'p.; +! SCRA #5$
;<<. ;= *ation in pa#ment re7uire& deliver# and tran&mi&&ion of o$ner&hip of a thing
o$ned 2# the de2tor to the creditor a& an accepted e7uivalent of the performance
of the o2ligation. -here there i& no &uch tran&fer of o$ner&hip in favor of the
creditor, there i& no dation in pa#ment. (PNB vs. Pi%10a;+"- SCRA +$
;<<; ..a ,n ca&e of 2reach of o2ligation, re&ci&&ion i& not a principal action 2ut a
&u2&idiar# one availa2le onl# in the a2&ence of an# other legal remed#.
.4
RECOLETOS NOTES
Commercial Law
Foreclo&ure here i& not onl# a remed# accorded 2# la$, 2ut i& a &pecific provi&ion
found in the contract 2et$een the partie&. (S3'ia vs. IAC; +@+ SCRA 55+$
-here a de2t i& &ecured 2# a mortgage and there i& a default in pa#ment on
the part of the mortgagor, the mortgagee ha& a choice of one of t$o remedie&, 2ut
he cannot have 2oth. )he mortgagee ma#? 3;5 foreclo&e the mortgage@ or 3.5 file
an ordinar# action to collect the de2t. (Calt1E P)ilippi%1s, I%c. vs. IAC; +-5 SCRA
-#+$
..2 )he increa&e of a mortgage &ecurit# 2ecome& a ne$ mortgage $here the
original mortgage doe& not contain an# &tipulation in regard to the increa&e of the
mortgage credit, and, even if it doe&, &aid increa&e $ould ta9e effect onl# from the
date of the increa&e. A mortgage $hich contain& a &tipulation in regard to future
increa&e& of credit $ill ta9e effect from the date the &ame are made and not from
the date of the original mortgage. (B1l2ia% Cat)olic Missio%a'i1s vs. Ma2alla%1s
P'1ss; #" P)il 5#-$
Retail )rade ;<<> ;... 6nder P* 1;0 $hich amended RA ;;C/, other$i&e 9no$n a& the Retail
)rade +ationalization (a$, &ale& of ru22er product& 2# the "ood#ear )ire and
Ru22er o. of the Philippine&, (td., to all t#pe& of cu&tomer& e!cept it& &ale& to it&
emplo#ee& and officer&, i& not covered 2# &aid la$. (Aoo0D1a' 8i'1 = R3//1' Co.
of t)1 P)ils., 7t0. vs. R1D1s, S'.; +. SCRA -.$
;<<0 4.= Since Sanvar, a dome&tic corporation $holl# o$ned or controlled 2# Filipino
citizen&, i& not an alter ego of eternit#, it follo$& that RA 4;C= $hich 2ar& alien&
and alien o$ned or controlled corporation& from participating in 2idding& to
&uppl# the government or it& in&trumentalitie& $ith material&, e7uipment, good&
and commoditie&, a& $ell a& the AntiBdumm# Act, and the Retail )rade
+ationalization Act, cannot 2e invo9ed again&t Sanvar. (As/1stos I%t12'at10
Ma%3fact3'i%2, I%c. vs. P1'alta; +@@ SCRA +.$
.>
RE'(E)'S *E MA+,(A SH''( 'F (A-
RECOLETOS NOTES
Commercial Law
;<<= 1.; A corporation manufacturing and &elling ru22er product& to dealer&, to the
government, pu2lic utilitie&, agricultural enterpri&e&, logging, mining, and
e!ploration firm&, a&&em2l# plant& $ho 2u# in 2ul9, and to it& officer& and
emplo#ee& i& not engaged in the retail 2u&ine&& under RA ;;C/ a& amended 2# P*
1;0, e!cept a& to it& &ale& of ru22er product & to it& emplo#ee&. (BF Aoo0'ic)
P)ilippi%1s, I%c. vs. R1D1s S'.; ++ SCRA .5.$
;<<; ;;.2 For a &ale to 2e con&idered a& retail, the follo$ing element& &hould concur?
3;5 the &eller &hould 2e ha2ituall# engaged in &elling@ 3.5 the &ale mu&t 2e direct to
the general pu2lic@ and 3=5 the o28ect of the &ale i& limited to merchandi&e,
commoditie& or good& for con&umption.
on&umer good& ma#2e defined a& Egood& $hich are u&ed or 2rought for u&e
primaril# for per&onal, famil#, or hou&ehold purpo&e&. Such good& are not
intended for re&ale or further u&e in the production of other product&F. (Ma's&a%
=Co., I%c. vs. Fi'st Coco%3t C1%t'al Co., I%c.; +5 SCRA !5
,n&olvenc# ;<<> ;1 Attachment& di&&olved are tho&e levied $ithin one 3;5 month ne!t preceding
the commencement of the in&olvenc# proceeding& and 8udgment& vacated and &et
a&ide are 8udgment& entered in an# action filed $ithin thirt# 3=/5 da#&
immediatel# prior to the commencement of the in&olvenc# proceeding&. (Ra0iola-
8os)i/a P)il., I%c. vs. IAC, 1t.al., +"" SCRA .-., >3lD +,, +""+$
Pu2lic Service D 6tilit# ;<<0 ;. Meralco:& right to di&connect the electric &ervice of a delin7uent cu&tomer i&
an a2&olute one, &u28ect onl# to the re7uirement that the cu&tomer 2e given a
$ritten notice of di&connection 0C hour& in a advance. (C1%iza vs. CA; +, SCRA
."!$
;<<= ;..;, ;... )he po$er& conferred 2# la$ upon the Pu2lic Service ommi&&ion $ere not
de&igned to den# or &uper&ede the regulator# po$er of local government& over
motor traffic in &treet& &u28ect to their control. (7a2&a% vs. CitD of Ma%ila; +-
.1
RECOLETOS NOTES
Commercial Law
SCRA @-"$
;<<= ;=.;.a -hile the $ord& Eun&afe, inade7uate and improper ma# 2e 2road enough to
cover a lot of thing&, the# mu&t 2e interpreted in con&onance $ith &pecificall#
enacted, among other thing&, to protect the pu2lic again&t unrea&ona2le charge&
and poor inefficient &ervice and to &ecure ade7uate &u&tained &ervice for the pu2lic
at the lea&t po&&i2le co&t&. (Ma%za%al vs. A3s1Go; +5# SCRA .5$
;<<= ;=.. -hile a& a rule, a pioneer operator &hould 2e given the preference to cover
the re7uired unit& $hen e!pan&ion i& needed, &uch cannot favor him $here he had
completel# failed to compl# $ith the re7uirement to regi&ter and operate the
additional unit& for more than = #ear& thu& giving the impre&&ion that he ha&
completel# a2andoned the &erviced in&ofar a& the unit& in 7ue&tion are concerned.
(Halili vs. H1'as; ! SCRA -5"$
.C

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COMMERCIAL LAW COMMITTEE

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