Commercial Law Case Digests - HernandoBar2023

SEPTEMBAR 2023
Chair's
Cases
Commercial 20
Law 23
Digest of cases penned by

Associate Justice Ramon #HernanDoIt

Paul Hernando #Hernandonuts
SEPTEMBAR 2023
BAR OPERATIONS: HERNANDO

SIBLINGS EDITION
ACKNOWLEDGMENT
Special thanks to the following contributors:
CPALawyer2023 Bonana
ML Kimu
Quagmire4 Abonjoc
Heidz18 Zeeya
Nashmera HabeasCorpus
January Zzzzzz123456

Jhoanna

"Always remember, chance favors the #HernanDoIt

prepared one." - J.Hernando #Hernandonuts
All the best to all Bar 2023 takers.
TABLE OF CONTENTS
Topics Page
I. Business Organizations
B. Corporations
1. Corporate Juridical Entity
c) Doctrine of Piercing the Corporate Veil
● MARIA LEA JANE I. GESOLGON VS. CYBERONE PH.,

1
INC. G.R. No. 210741, October 14, 2020
7. Corporate Powers
d) Power to Increase or Decrease Capital Stock or

Incur, Create, Increase Bonded Indebtedness
● METROPLEX BERHAD VS. SINOPHIL CORPORATION 4

G.R. No. 208281, June 28, 2021
m) Ultra Vires Doctrine
● AGRO FOOD AND PROCESSING CORP. VS. VITARICH 8

CORPORATION G.R. No. 217454, January 11, 2021
9. Board or Directors and Trustees
j) Solidary Liabilities for Damages; and

k) Personal Liabilities
● EDUARDO ATIENZA VS. GOLDEN RAM ENGINEERING 10

SUPPLIES & EQUIPMENT CORPORATION G.R. No.
205405, June 28, 2021
10. Other Corporations
f) Foreign Corporations
(1) Bases of Authority Over Foreign

Corporations
(b) Doctrine of “Doing Business”
● MAGNA READY MIX CONCRETE

CORPORATION VS. ANDERSEN 13
BJORNSTAD KANE JACOBS, INC. G.R.
No. 196158, January 20, 2021
(3) Personality to Sue
● MAGNA READY MIX CONCRETE 16

CORPORATION VS. ANDERSEN BJORNSTAD
KANE JACOBS, INC. G.R. No. 196158, January 20,
2021
II. Banking Laws
B. General Banking Law of 2000 (R.A. No. 8791)
1. Diligence Required of Banks
● THE REAL BANK (A THRIFT BANK), INC. VS. DALMACIO 19

CRUZ MANINGAS G.R. No. 211837, March 16, 2022
6. Stipulation on Interests
● ARAKOR CONSTRUCTION AND DEVELOPMENT 21

CORPORATION VS. TERESITA G. STA. MARIA G.R. No. 215006,
January 11, 2021
C. Secrecy of Bank Deposits (R.A. No. 1405, as amended, and

R.A. No. 6426, as amended)
1. Purpose; and
4. Exceptions from Coverage
● THE REAL BANK (A THRIFT BANK), INC. VS. DALMACIO 23

CRUZ MANINGAS G.R. No. 211837, March 16, 2022
III. Insurance Law
B. Basic Concepts
3. Classes of Insurance
b) Fire
● MULTI-WARE MANUFACTURING CORPORATION VS.
CIBELES INSURANCE CORPORATION G.R. No. 230528, 25
February 1, 2021
g) Compulsory Motor Vehicle Liability Insurance
● MALAYAN INSURANCE COMPANY, INC. VS. 27

STRONGHOLD INSURANCE COMPANY, INC. G.R. No.
203060, June 28, 2021
IV. Transportation Law
B. Common Carriers
1. Diligence Required of Common Carriers
● KLM ROYAL DUTCH AIRLINES VS. DR. JOSE M. TIONGCO G.R. 29

No. 212136, October 04, 2021
V. Intellectual Property Code (R.A. No. 8293)
B. Trademarks
● KOLIN ELECTRONICS CO., INC. VS. TAIWAN KOLIN CORP. LTD. G.R. 31
No. 221347, December 1, 2021
Case Digests
J. Hernando - Commercial Law
I.B.4.b. Doctrine of Piercing the Corporate Veil
MARIA LEA JANE I. GESOLGON vs. CYBERONE PH., INC.

G.R. No. 210741, October 14, 2020
By: quagmire4
DOCTRINE:
The doctrine of piercing the corporate veil applies only in three basic instances, namely:
1. when the separate distinct corporate personality defeats public convenience, as
when the corporate fiction is used as a vehicle for the evasion of an existing
obligation;
2. in fraud cases, or when the corporate entity is used to justify a wrong, protect a
fraud, or defend a crime; or
3. is used in alter ego cases, i.e., where a corporation is essentially a farce, since it is a
mere alter ego or business conduit of a person, or where the corporation is so
organized and control led and its affairs conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another corporation.
FACTS:
Gesolgon and Santos alleged that they were hired by Mikrut as part-time home-based remote
Customer Service Representatives of CyberOne Pty. Ltd. (CyberOne AU), an Australian
company. Thereafter, they became full time and permanent employees of CyberOne AU and
were eventually promoted as Supervisors.
Sometime in October 2009, Mikrut, the Chief Executive Officer (CEO) of both CyberOne AU
and CyberOne PH, asked petitioners, together with Juson, to become dummy directors and/or
incorporators of CyberOne PH to which petitioners agreed. As a result, petitioners were
promoted as Managers and were given increases in their salaries. The salary increases were made
to appear as paid for by CyberOne PH.
However, in the payroll for November 16 to 30, 2010, Mikrut reduced petitioners' salaries from
P50,000.00 to P36,000.00, of which P26,000.00 was paid by CyberOne AU while the remaining
P10,000.00 was paid by CyberOne PH. Aside from the decrease in their salaries, petitioners were
only given P20,000.00 each as 13th month pay for the year 2010.
Sometime in March 2011, Mikrut made petitioners choose one from three options: (a) to take an
indefinite furlough and be placed in a manpower pool to be recalled in case there is an available
position; (b) to stay with CyberOne AU but with an entry level position as home-based Customer
Service Representative; or (c) to tender their irrevocable resignation. Petitioners alleged that they
were constrained to pick the first option in order to save their jobs.
Commercial Law_HernandoBAR2023 Page 1 of 36

Case Digests
In April 2011, petitioners received P13,000.00 each as their last salary.
On the other hand, CyberOne PH, Mikrut and Juson denied that any employer-employee
relationship existed between petitioners and CyberOne PH. They insisted that petitioners were
incorporators or directors and not regular employees of CyberOne PH. They claimed that
petitioners were employees of CyberOne AU and that the NLRC had no jurisdiction over
CyberOne AU because it is a foreign corporation not doing business in the Philippines.
The NLRC noted that CyberOne AU is doing business in the Philippines due to its participation
in the management, supervision or control of CyberOne PH which is indicative of a continuity of
commercial dealings or arrangements. Thus, the doctrine of piercing the corporate veil must be
applied as to it.
ISSUE:
Whether or not the doctrine piercing the corporate veil can be applied in this case.
RULING:
No, the application of the doctrine of piercing the corporate veil is unwarranted in the
present case.
While it is true that CyberOne AU owns majority of the shares of CyberOne PH, this,
nonetheless, does not warrant the conclusion that CyberOne PH is a mere conduit of CyberOne
AU.
First, no evidence was presented to prove that CyberOne PH was organized for the purpose of
defeating public convenience or evading an existing obligation. Second, petitioners failed to
allege any fraudulent acts committed by CyberOne PH in order to justify a wrong, protect a
fraud, or defend a crime. Lastly, the mere fact that CyberOne PH's major stockholders are
CyberOne AU and respondent Mikrut does not prove that CyberOne PH was organized and
controlled and its affairs conducted in a manner that made it merely an instrumentality, agency,
conduit or adjunct of CyberOne AU. In order to disregard the separate corporate personality of a
corporation, the wrongdoing must be clearly and convincingly established.
Moreover, petitioners failed to prove that CyberOne AU and Mikrut, acting as the Managing
Director of both corporations, had absolute control over CyberOne PH. Even granting that
CyberOne AU and Mikrut exercised a certain degree of control over the finances, policies and
practices of CyberOne PH, such control does not necessarily warrant piercing the veil of
corporate fiction since there was not a single proof that CyberOne PH was formed to defraud
petitioners or that CyberOne PH was guilty of bad faith or fraud.

Case Digests
Hence, the doctrine of piercing the corporate veil cannot be applied in the instant case. This
means that CyberOne AU cannot be considered as doing business in the Philippines through its
local subsidiary CyberOne PH. This means as well that CyberOne AU is to be classified as a
non-resident corporation not doing business in the Philippines.

Case Digests
I.B.7.d. Power to Increase or Decrease Capital Stock or Incur, Create,

Increase Bonded Indebtedness
METROPLEX BERHAD vs. SINOPHIL CORPORATION

G.R. No. 208281, June 28, 2021
By: heidz18
DOCTRINES:
1. Section 38 of the Corporation Code clearly lists down the requirements for a
corporation to decrease its capital stock.
A corporation can only decrease its capital stock if the following are present:
a. Approval by a majority vote of the board of directors;
b. Written notice of the proposed diminution of the capital stock, and of the
time and place of a stockholders' meeting duly called for the purpose,
addressed to each stockholder at his place of residence;
c. 2/3 of the outstanding capital stock voting favorably at the said stockholders'
meeting;
d. Certificate in duplicate, signed by majority of the directors and
countersigned by the chairman and secretary of the stockholders' meeting
stating that legal requirements have been complied with;
e. Prior approval of the SEC; and
f. Effects do not prejudice the rights of corporate creditors.
2. Pursuant to Section 38, the scope of the SEC's determination of the legality of the
decrease in authorized capital stock is confined only to the determination of whether
the corporation submitted the requisite authentic documents to support the
diminution. Simply, the SEC's function here is purely administrative in nature.
3. SEC is not vested by law with any power to interpret contracts and interfere in the
determination of the rights between and among a corporation's stockholders.
Neither can the SEC adjudicate on the contractual relations among these same
stockholders.
4. The "business judgment rule" simply means that “the SEC and the courts are
barred from intruding into business judgments of corporations, when the same are
made in good faith.”
5. For third persons or parties outside the corporation like the SEC to interfere to the
decrease of the capital stock without reasonable ground is a violation of the
"business judgment rule" which states that:

Case Digests
[C]ontracts intra vires entered into by the board of directors are binding upon the
corporation and courts will not interfere unless such contracts are so
unconscionable and oppressive as to amount to wanton destruction to the rights of
the minority, as when plaintiffs aver that the defendants (members of the board),
have concluded a transaction among themselves as will result in serious injury to the
plaintiffs stockholders.
FACTS:
In August 1998, Sinophil entered into a Share Swap Agreement (Swap Agreement) with
Metroplex and Paxell. Under the Swap Agreement, Metroplex and Paxell would transfer 40% of
their shareholdings in Legend International Resorts Limited (Legend) for a combined 35.5%
stake in Sinophil.
Sinophil and Belle executed a Memorandum of Agreement (Unwinding Agreement) with

Metroplex and Paxell rescinding the 1998 Swap Agreement. After the execution of the
Unwinding Agreement, Metroplex and Paxell were unable to return 1.87 billion of the Sinophil
shares while another two billion Sinophil shares remained pledged by Metroplex in favor of
International Exchange Bank and Asian Bank.
The shareholders of Sinophil voted for the reduction of Sinophil's authorized capital stock.
On March 28, 2006, the CRMD and the CFD approved the first amendment of the Articles of
Incorporation of Sinophil, reducing its authorized capital stock by 1.87 billion shares. The
following day, the approval of the reduction of Sinophil's authorized capital stock was disclosed
to the Philippine Stock Exchange, Inc. (PSE).
The shareholders of Sinophil again approved the proposal of the Board of Directors to reduce its
authorized capital stock by another one billion shares.
The CRMD and the CFD approved the second amendment of the Articles of Incorporation of
Sinophil which further reduced its authorized capital stock by one billion shares. On June 30,
2008, the approval of the reduction of Sinophil's authorized capital stock was likewise disclosed
to the PSE.
Petitioners Yaw Chee Cheow (Yaw), Metroplex and Paxell filed a Petition for Review Ad
Cautelam Ex Abundanti before the SEC assailing the approval by the CRMD and the CFD of the
amendments by Sinophil of its Articles of Incorporation.

The SEC found that the decrease in capital stock complied with the requirements imposed by the
Corporation Code, particularly Section 38. It held that the equal or unequal reduction of a
corporation's capital stock is a matter solely between the stockholders and cannot be enjoined
either by the courts or the creditors. Moreover, the SEC found no basis to grant the prayer for the
issuance of a cease and desist order. Petitioners failed to raise valid grounds for its issuance.

Case Digests
The Commission held that a cease and desist order could not be ultimately issued because the
grave and irreparable danger to the investing public that petitioners fear is not present in the case.
On appeal, the CA upheld the findings of the SEC in toto.
ISSUES:
1. Whether or not the decrease in respondent Sinophil's capital stock was legal and the
public respondent SEC's approval thereof was proper.
RULING:
YES, the decrease in respondent Sinophil's capital stock was legal and that the public
respondent SEC's approval thereof was proper.
The list of requirements under Section 38 is altogether different from the list of legal
requirements presented by petitioners. In short, petitioners plainly did not comply with the law.
The Court agrees with the appellate court when it held that there is no validity nor legal basis to
the allegation that prior approval of all the stockholders is required for the reduction in capital
stock.
Here, a judicious perusal of the records of the case reveals that Sinophil submitted to the SEC the
following documents in support of its application for the decrease of its authorized capital stock
and in full compliance with the requirements laid down under Section 38:
1. Certificate of Decrease of Capital Stock;

2. Director's Certificate;
3. Amended Articles of Incorporation;
4. Audited Financial Statements as of the last fiscal year stamped and received by the
Bureau of Internal Revenue and the SEC (as of December 31, 2004 and 2007);
5. Long Form Audit Report of the Audited Financial Statements (as of December 31, 2004
and 2007);
6. List of Creditors (Schedule of Liabilities as of December 31, 2004 and 2007), as certified
by the Accountant;
7. Written consent of Creditors;
8. Notice of Decrease of Capital; and
9. Affidavits of Publication of the Notice of Decrease of Capital.
Three stockholders' meeting were likewise held on February 18, 2002, June 3, 2005 and June 21,
2007 where the stockholders voted for the reduction of the corporation's authorized capital stock.
2. Whether or not the SEC has the ministerial duty to approve the decrease of a
corporation's authorized capital stock.

Case Digests
YES, SEC only has the ministerial duty to approve the decrease of a corporation's
authorized capital stock.
After a corporation faithfully complies with the requirements laid down in Section 38, the SEC
has nothing more to do other than approve the same.
Ppetitioners' allegation that it is the SEC that should determine the parties' rights under the
contracts executed, particularly the Swap Agreement, the Unwinding Agreement, and the general
proxy, has no basis. To stress, the SEC's only function here was to determine the corporation's
compliance with the formal requirements under Section 38 of Corporation Code.


Case Digests
I.B.7.m. Ultra Vires Doctrine
AGRO FOOD AND PROCESSING CORP. vs. VITARICH CORPORATION

G.R. No. 217454, January 11, 2021
By: nashmera
DOCTRINE:
The doctrine of apparent authority is determined by the acts of the principal and not by the
acts of the agent. As applied to corporations, it provides that “a corporation is estopped
from denying the officer’s authority if it knowingly permits such officer to act within the
scope of an apparent authority, and it holds him out to the public as possessing the power
to do those acts.”
It bears stressing that the existence of apparent authority may be ascertained not only
through the "general manner in which the corporation holds out an officer or agent as
having the apparent authority to act in general", but also through the corporation's
"acquiescence in his acts of a particular nature, with actual or constructive knowledge
thereof, whether within or beyond the scope of his ordinary powers".
“When a corporation intentionally or negligently clothes its officer with apparent authority
to act in its behalf, it is estopped from denying its officer's apparent authority as to
innocent third parties who dealt with this officer in good faith.”
FACTS:
On October 5, 1995, Agro and Vitarich simultaneously executed two agreements: first, a
Memorandum of Agreement (MOA) under which Vitarich offered to buy Agro's chicken
dressing plant located in Bulacan; and second, a Toll Agreement under which Agro agreed to
dress the chickens supplied by Vitarich for a toll fee.
Pursuant to the MOA, Vitarich paid P20 million as deposit to Agro and was given a period of
forty-five (45) days within which to evaluate the dressing plant facilities. At the end of the
period, Vitarich formally made its offer to purchase, but Agro did not accept the offer. Thus,
Agro needed to return the P20 million deposit.
More than two (2) years later, Vitarich filed a complaint for sum of money with damages against
Agro before the RTC alleging that Agro was liable for the following amounts: first,
P4,770,916.82 plus interest, representing the balance from the P20 million deposit, and second,
P4,322,032.36 plus interest, representing the balance on the sale of live broiler chickens to Agro.

Case Digests
Agro disputed the computation made by Vitarich. It argued that the amount of P4,770,916.82
was inaccurate as it was based on the alleged verbal amendments to the toll fees, which
amendments were not binding on Agro as they were entered into by Vitarich and Agro's Finance
Manager, Chito del Castillo (del Castillo), which allegedly had no authority to amend the
original Toll Agreement from Agro's board of directors.
The trial court held that the amendments did not bind Agro considering the lack of any signature
or conforme to the documentary evidence presented by Vitarich. The appellate court held that the
verbal amendments to the toll fees were valid and obligatory on Agro, pursuant to the principle
that contracts are obligatory in whatever form they may have been entered into. Further, the
appellate court applied the doctrine of apparent authority in arriving at the conclusion that del
Castillo was clothed with authority by Agro's board of directors in concurring and implementing
the amendments.
ISSUE:
Whether or not the Court of Appeals committed a reversible error of law when it applied the
doctrine of apparent authority.
RULING:
No, the Court of Appeals’ application of the doctrine of apparent authority is

well-supported by the law and the evidence.
Del Castillo had apparent authority to implement the verbal amendments to the parties'
agreement
Upon evaluating the evidence presented by Vitarich, the conduct by which Agro clothed del
Castillo with authority is evident on the following: first, in over a span of two (2) years, with
over eighty nine (89) billings and three (3) instances of amendments, Agro never contested the
amended toll fees; second, even after receipt of several demand letters from Vitarich, Agro never
made an issue of the amended toll fees, and only raised the same in its Answer; and third, Agro
accepted the benefits arising from the amendments through the extension of the period for its
payment of the P20 million deposit (brought about by the decrease in the percentage of billings
to be deducted from the P20 million deposit), not to mention Agro's corresponding increase in
profits due to the increase or amendment in the price of gallantina (type of chicken supplied by
Agro) in the third amendment.
Here, it is easy to see that Agro, reasonably appearing to have knowledge of the amendments,
acquiesced to the same. Indeed, Agro never contested nor protested the amendments; on the
contrary, it even accepted the benefits arising therefrom.

Case Digests
I.B.9.j. Solidary Liabilities for Damages
EDUARDO ATIENZA vs. GOLDEN RAM ENGINEERING SUPPLIES & EQUIPMENT

CORPORATION
G.R. No. 205405, June 28, 2021
By: January
DOCTRINES:
1. "There is solidary liability when the obligation expressly so states, when the law so
provides, or when the nature of the obligation so requires. Settled is the rule that a
director or officer shall only be personally liable for the obligations of the
corporation, if the following conditions concur: (1) the complainant alleged in the
complaint that the director or officer assented to patently unlawful acts of the
corporation, or that the officer was guilty of gross negligence or bad faith; and (2)
the complainant clearly and convincingly proved such unlawful acts, negligence or
bad faith."
2. Basic is the principle that a corporation is vested by law with a personality separate
and distinct from that of each person composing or representing it. Equally
fundamental is the general rule that corporate officers cannot be held personally
liable for the consequences of their acts, for as long as these are for and in behalf of
the corporation, within the scope of their authority and in good faith. The separate
corporate personality is a shield against the personal liability of corporate officers,
whose acts are properly attributed to the corporation.
3. Personal liability of a corporate director, trustee or officer along (although not

necessarily) with the corporation may so validly attach, as a rule, only when:
a. He assents to a patently unlawful act of the corporation, or (b) for bad faith
or gross negligence in directing its affairs, or (c) for conflict of interest,
resulting in damages to the corporation, its stockholders or other persons;
b. He consents to the issuance of watered stocks or who, having knowledge
thereof, does not forthwith file with the corporate secretary his written
objection thereto;
c. He agrees to hold himself personally and solidarity liable with the
corporation; or
d. He is made, by a specific provision of law, to personally answer for his
corporate action

Case Digests
FACTS:
[Petitioner] Eduardo Atienza was engaged in the business of operating MV Ace I, a passenger
vessel plying the Batangas-Mindoro route. [Respondent] Golden Ram Engineering Supplies and
Equipment Corporation [GRESEC] is a dealer and distributor of engines and heavy equipment.
Its President and Manager is [respondent] Bartolome T. Torres.
Asserting his claim for damages arising from breach of warranty, Atienza filed a Complaint,
averring, inter alia, that Torres offered for sale two vessel engines amounting to P3.5 Million
Pesos to be installed in MV Ace I.
On 24 August 1993, Atienza bought the two vessel engines from GRESEC and as proof of his
purchase, he was issued a Proforma Invoice which stated therein the warranty period.
Atienza forthwith paid the amount of P2.5 Million Pesos, after which the two engines were
delivered and commissioned by GRESEC sometime in March 1994.
On 26 September 1994, the engine on the right side of MV Ace I suffered a major dysfunction,
the diagnosis of which revealed that the connecting rod had split resulting in engine stuck up.
Atienza immediately reported the incident to GRESEC which sent a certain Engineer R. R.
Torres (Engr. Torres), its Sales and Service Engineer, to inspect and determine the extent of the
damage. Engr. Torres, respondent Bartolome's son, confirmed that the "defect was inherent being
attributable to factory defect".
Thereafter, Atienza made pleas for the replacement of the engine but his entreaties fell on deaf
ears. Inevitably, he suffered losses for failure to operate since 26 September 1994. On 28 October
1994, Atienza wrote GRESEC a Demand Letter offering two alternatives for the company - one,
replace the engine or reimburse him for the losses he had incurred, or two, retrieve the two
engines and refund the cost with interest plus payment for losses. However, GRESEC paid no
heed to his demand prompting him to lodge a Complaint for damages.
It is not controverted that the starboard engine broke down six months from the time it was
commissioned. This means that it was well within the 12-month period under the warranty.
The RTC and the CA uniformly found respondent GRESEC liable to petitioner Atienza for
breach of warranty in the sale of two vessel engines installed in Atienza's passenger vessel, MV
Ace I, and ordered GRESEC to pay Atienza damages. However, the appellate court diverged
from the RTC's ruling and absolved respondent Bartolome Torres (Torres), President and
Manager of GRESEC, from solidary liability with the respondent corporation, and deleted the
awards of moral damages, attorney's fees, and costs of suit. The appellate court exculpated
Bartolome from solidary liability with GRESEC as the latter is a separate juridical personality.

Case Digests
ISSUE:
Whether or not respondents' denial of Atienza's warranty claim for the defective vessel engines
was done in bad faith as to hold Bartolome solidarily liable with GRESEC for the payment of
actual and moral damages, attorney's fees and costs of suit.
RULING:
Yes, respondents' denial of Atienza's warranty claim for the defective vessel engines was
done in bad faith as to hold Bartolome solidarily liable with GRESEC.
The Pro-Forma Invoice for which Atienza affixed his signature is in the nature of a contract of
adhesion. Being a contract of adhesion, the said provision in the Pro-Forma Invoice must be
strictly construed against respondents, the party which prepared the agreement.
The bad faith of respondents in refusing to repair and subsequently replace a defective engine
which already underperformed during sea trial and began malfunctioning six (6) months after its
commissioning has been clearly established. Respondents' uncaring attitude towards fixing the
engine which relates to MV Ace I's seaworthiness amounts to bad faith. Thus, the RTC's grant of
moral damages, attorney's fees and costs of suit has sufficient basis.
Atienza established sufficient and specific evidence to show that Bartolome had acted in bad
faith or gross negligence in the sale of the defective vessel engine and the delivery and
installation of demo units instead of a new engine which Atienza paid for.
Hence, Respondents Golden Ram Engineering Supplies and Equipment Corporation and
Bartolome T. Torres are DECLARED SOLIDARILY LIABLE to petitioner Eduardo Atienza.

Case Digests
I.B.12.f.1.b. Doctrine of “Doing Business”
MAGNA READY MIX CONCRETE CORPORATION vs. ANDERSEN BJORNSTAD

KANE JACOBS, INC.
G.R. No. 196158, January 20, 2021
By: Bonana
DOCTRINES:
1. Two tests to determine whether a foreign corporation is doing business in the

Philippines: substance test and continuity test.
Substance test pertains to whether the foreign corporation is continuing the body of
the business or enterprise for which it was organized or whether it has substantially
retired from it and turned it over to another.
Continuity test implies a continuity of commercial dealings and arrangements, and

contemplates, to that extent, the performance of acts or works or the exercise of
some of the functions normally incident to, and in the progressive prosecution of, the
purpose and object of its organization.
The number of transactions entered into is not determinative whether a foreign

corporation is doing business in the Philippines; the intention to continue the body
of its business prevails. The number or quantity is merely evidence of such intention.
A single act or transaction may then be considered as doing business when a
corporation performs acts for which it was created or exercises some of the
functions for which it was organized.
2. Isolated transaction has a definite and fixed meaning. It is a transaction or series of

transactions set apart from the common business of a foreign enterprise in the sense
that there is no intention to engage in a progressive pursuit of the purpose and
object of the business organization. It depends upon the nature and character of the
transactions.
3. A single act may be considered as either doing business or an isolated transaction

depending on its nature.
It may be considered as doing business if it implies a continuity of commercial

dealings and contemplates the performance of acts or the exercise of functions
normally incidental to and in the progressive pursuit of its purpose.

Case Digests
Contrarily, it may be considered as an isolated transaction if it is different from or

not related to the common business of the foreign corporation in the sense that there
is no objective to increasingly pursue its purpose or object. And as stated, a license
is not required if the foreign corporation is suing on an isolated transaction.
FACTS:
Respondent Andersen is a corporation organized under the laws of the State of Washington,
United States of America. It filed a complaint for collection of a sum of money and damages
against Petitioner Magna, a domestic corporation. In its complaint, Andersen alleged that it was
neither doing business in the Philippines nor licensed to do business herein. Moreover, it averred
that it was suing on an isolated transaction.
Allegedly, Magna ordered a form design and drawing development for its project of a precast
plan and P/C double tee design from Andersen. It issued a purchase order dated October 21,
1996 and they executed an Agreement for Professional Services dated November 29, 1996.
Thereafter, in February 1997, Magna asked Andersen to prepare a preliminary design for its
Ecocentrum Garage Project which the latter delivered. Andersen averred that Magna made
partial payments but despite repeated demands to pay, it left an unpaid balance amounting to
US$60,786.59.
In response, Magna denied that Andersen rendered any inspection or consultation services for it.
It claimed that the complaint had no basis because the alleged contract was executed after the
services had been performed.
During the trial, Magna filed a Motion to Dismiss with Motion to Cancel Hearing alleging that
Andersen had no legal capacity to sue.
The RTC denied the Motion to Dismiss on the ground of estoppel. It ruled that Magna was
estopped from challenging Andersen’s personality after it acknowledged that it entered a contract
with it. After trial, the RTC ruled in favor of Andersen although it did not grant a complete relief
of the amount prayed for.
The CA ruled in favor of Andersen but modified the award.
ISSUES:
1. Whether or not Andersen was doing business in the Philippines.
RULING:
Yes, Andersen was doing business in the Philippines.
Here, Andersen’s act of entering into a contract with Magna did not fall under the category of
isolated transactions.

Case Digests
Their contract clearly showed that it was to render professional services for a fee. These
professional services included the following: (1) providing master plant site layout and plant
design; (2) providing plant operation procedures and organization matrix; (3) providing plant
management and production staff training; (4) providing plant construction and operation
start-up services; and (5) providing consultation services for developing a precast plant
program.73 It is clear then that ANDERSEN, in entering into that contract with MAGNA, was
performing acts that were in progressive pursuit of its business purpose, which, as found by the
RTC, involved consultation and design services.
Though it was a single transaction, Andersen's act of entering into a contract with Magna
constitutes doing business in the Philippines.
In entering into the contract, it performed acts which were in progressive pursuit of its business
purpose which involved consultation and design services. It cannot be considered as an isolated
transaction, although it was a single transaction, because the very act was related to its specific
business purpose.
2. Whether or not Andersen’s contract with Magna was an isolated transaction.
No, Andersen’s transaction with Magna was not an isolated transaction.
It cannot be considered as an isolated transaction because the act is related to Andersen's specific
business purpose.

Case Digests
I.B.12.f.3. Personality to Sue
MAGNA READY MIX CONCRETE CORPORATION VS. ANDERSEN BJORNSTAD

KANE JACOBS, INC.
G.R. No. 196158, January 20, 2021
By: Bonana
DOCTRINES:
1. Sec. 133 of the Corporation Code (now Sec. 150) provides that a foreign corporation
that conducts business in the Philippines must first secure a license for it to be
allowed to initiate or intervene in any court or administrative agency in the
Philippines. A corporation has legal status only in the state that granted it
personality. Hence, a foreign corporation has no personality in the Philippines,
much less legal capacity to file a case, unless it procures a license as provided by law.
As an exception, a foreign corporation may sue without a license on the basis of an

isolated transaction.
2. The doctrine of estoppel states that the other contracting party may no longer
challenge the foreign corporation's personality after acknowledging the same by
entering into a contract with it. This principle is applied in order to "prevent a
person (or another corporation) contracting with a foreign corporation from later
taking advantage of its noncompliance with the statutes, chiefly in cases where such
person has received the benefits of the contract.
3. A foreign corporation doing business in the Philippines may sue in Philippine

Courts although not authorized to do business here against a Philippine citizen or
entity who had contracted with and benefited by said corporation. To put it in
another way, a party is estopped to challenge the personality of a corporation after
having acknowledged the same by entering into a contract with it. And the doctrine
of estoppel to deny corporate existence applies to a foreign as well as to domestic
corporations. One who has dealt with a corporation of foreign origin as a corporate
entity is estopped to deny its corporate existence and capacity. The principle will be
applied to prevent a person contracting with a foreign corporation from later taking
advantage of its noncompliance with the statutes chiefly in cases where such person
has received the benefits of the contract.

Case Digests
The rule is deeply rooted in the time-honored axiom of commodum ex injuria sua
non habere debet -no person ought to derive any advantage of his own wrong. This
is as it should be for as mandated by law, "every person must in the exercise of his
rights and in the performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith."
FACTS:
Respondent Andersen is a corporation organized under the laws of the State of Washington,
United States of America. It filed a complaint for collection of a sum of money and damages
against Petitioner Magna, a domestic corporation. In its complaint, Andersen alleged that it was
neither doing business in the Philippines nor licensed to do business herein. Moreover, it averred
that it was suing on an isolated transaction.
Allegedly, Magna ordered a form design and drawing development for its project of a precast
plan and P/C double tee design from Andersen. It issued a purchase order dated October 21,
1996 and they executed an Agreement for Professional Services dated November 29, 1996.
Thereafter, in February 1997, Magna asked Andersen to prepare a preliminary design for its
Ecocentrum Garage Project which the latter delivered. Andersen averred that Magna made
partial payments but despite repeated demands to pay, it left an unpaid balance amounting to
US$60,786.59.
In response, Magna denied that Andersen rendered any inspection or consultation services for it.
It claimed that the complaint had no basis because the alleged contract was executed after the
services had been performed.
During the trial, Magna filed a Motion to Dismiss with Motion to Cancel Hearing alleging that
Andersen had no legal capacity to sue.
The RTC denied the Motion to Dismiss on the ground of estoppel. It ruled that Magna was
estopped from challenging Andersen’s personality after it acknowledged that it entered a contract
with it. After trial, the RTC ruled in favor of Andersen although it did not grant a complete relief
of the amount prayed for.
The CA ruled in favor of Andersen but modified the award.
ISSUE:
Whether or not Andersen has legal capacity to sue in the Philippines.
RULING:
No, Andersen has no legal capacity to sue for doing business in the Philippines without
procuring the necessary license. It is not suing on an isolated transaction on the basis of the
contract it entered into with Magna.

Case Digests
However, Magna is already estopped from challenging Andersen's legal capacity to sue
when it entered into a contract with it.
By virtue of the doctrine of estoppel, a party cannot take undue advantage by challenging the
foreign corporation's personality or legal capacity to sue when the former already acknowledged
the same by entering into a contract with the latter and derived benefits therefrom.
In this case, MAGNA is already estopped from challenging ANDERSEN's legal capacity to sue
due to its prior dealing with the latter, that is, entering into a contract with it. As ruled by the
courts below, there was a perfected and binding contract between the parties. By such contract,
MAGNA effectively acknowledged ANDERSEN's personality. MAGNA's allegation that it only
discovered during the trial that ANDERSEN was doing business in the Philippines without a
license, is therefore irrelevant. Moreover, MAGNA had already benefited from the contract
because as found by the lower and appellate courts, ANDERSEN indeed rendered services to
MAGNA pursuant to their contract and even prior thereto.

Case Digests
II.B.4. Diligence Required of Banks
THE REAL BANK (A THRIFT BANK), INC. vs. DALMACIO CRUZ MANINGAS
G.R. No. 211837, March 16, 2022
By: kimu
DOCTRINE:
The banking industry is imbued with public interest; banks are thus expected to always
observe the highest degree of care and diligence in their transactions.
Negligence is the omission to do something which a reasonable human, guided by those

considerations that ordinarily regulate the conduct of human affairs, would do, or doing of
something which a prudent and reasonable human would not do. It is a question of fact
that should be resolved on a case-by-case basis. It is not presumed and it must be proven
by the party that alleges.
FACTS:
Maningas is a Filipino-British national who was living in London, England at the time material
to this case. He maintained a savings account and a checking account with Metrobank
Greenhills. Maningas issued the checks as payment to Rosaria for a parcel of land he (Maningas)
purchased. Notably, however, Maningas wrote the name BIENVINIDO ROSARIA as payee of
the two checks. Maningas inquired if the checks were received; Rosaria informed him that the
checks did not arrive. But when Maningas checked his account balance, he discovered that the
amount of the checks was already deducted. He then clarified with Metrobank and learned that
the checks were paid when a person named BIENVINIDO ROSARIA used the checks in
opening an account with Real Bank in its Bacoor, Cavite branch. Thereafter, the full amount was
withdrawn.
It was alleged that the person who represented himself as BIENVINIDO ROSARIA was referred
by a retired manager of the Real Bank branch for the opening of an account. Maningas alerted
Metrobank of the alleged forgeries; so Metrobank attempted to return the checks to Real Bank on
the ground of "forged endorsement," but to no avail. Maningas thus sent an electronic mail to
Real Bank, informing it that the checks were paid to an impostor, however, the same was also
ignored. This resulted to the filing of Maningas' complaint who contended that both banks were
negligent in allowing the unauthorized withdrawal of the amount despite the forged indorsements
of the checks.

Case Digests
The RTC ruled in favor of Maningas, finding Real Bank to be negligent as a collecting bank and
last indorser. This was further affirmed by the CA. The CA held that the act of presentment to the
drawee bank connotes that the collecting bank had done its duty with respect to the genuineness
and validity of the checks. Therefore, Real Bank cannot escape liability and it cannot set up the
defense of forgery.
ISSUE:
Whether or not Real Bank is liable to return the amount of the checks to respondent Maningas.
RULING:
Yes, Real Bank is liable to return the amount of the checks to respondent Maningas.
Real Bank's own negligence, as found by the CA and the RTC, contributed to the improper
payment when it failed to detect the impostor in opening the account.
Real Bank should have detected the irregularities in the documents of the impostor and prevented
the unauthorized payment had it exercised extraordinary diligence.
Real Bank insists that Maningas was grossly negligent in misspelling the name of Rosaria in the
two checks and in sending the checks by registered mail from London to the Philippines.98 Real
Bank argues that these acts of gross negligence preclude Maningas from raising the defense of
"forgery or want of authority;" thus, he should not be allowed to recover the amount of the
checks.
The Court agrees with the CA that Maningas was not negligent at that time. The RTC and the
CA did not rule that Maningas was negligent on the issuance of the checks. As the CA duly
noted, the contention that Maningas was negligent is not supported by evidence. The RTC also
stated that "Real Bank did not offer any proof to countervail the claim of Maningas that it was
sheer inadvertence on his part" in misspelling the name of Rosaria. In other words, Real Bank
failed to overcome the presumption that Maningas is not negligent in issuing the checks. Thus,
the Court finds no reason to disturb these findings of fact by the RTC and CA. After all, this
Court is not a trier of facts; and, the instant case does not fall under any of the exceptions laid by
jurisprudence. Maningas can therefore set up the defense of want of authority

Case Digests
II.B.6. Stipulation on Interests
ARAKOR CONSTRUCTION AND DEVELOPMENT CORPORATION vs. TERESITA

G. STA. MARIA
G.R. No. 215006, January 11, 2021
By: Abonjoc
DOCTRINE:
In the absence of an express stipulation as to the rate of interest that would govern the
parties, the rate of legal interest for loans or forbearance of any money, goods or credits
and the rate allowed in judgments shall no longer be twelve percent (12%) per annum —
but will now be six percent (6%) per annum effective July 1, 2013.
FACTS:
The Spouses Fernando Gaddi, Sr. (Fernando Sr.) and Felicidad Nicdao Gaddi (Felicidad)
(collectively Spouses Gaddi) owned the five contested parcels of land.
Felicidad died intestate on November 18, 1985, and was survived by Fernando Sr. and her eight
children. Felicidad's heirs inventoried her properties but they did not initiate its partition; thus,
the parcels of land remained in the name of the Spouses Gaddi.
On February 7, 1996, Fernando Sr. passed away, followed by the death of Efren (one of the heirs
of Felicidad) on May 8, 1998. After that, Atty. Legaspi, the president of petitioner Arakor
Construction and Development Corporation (Arakor), informed the Gaddis that their parents had
already sold the contested five parcels of land to Arakor for P400,000.00 as evidenced by two
undated Deeds of Absolute Sale and that the titles to the properties have already been transferred
to Arakor's name.
Thus, the Gaddis filed a Complaint for Annulment of Deed[s] of Absolute Sale and Transfer
Certificates of Title against Arakor. They alleged that the two contracts of sale were forged and
the conveyance of the properties was fraudulent since Felicidad could not have signed the
documents and given her consent thereon since she has been dead for seven years before the
alleged execution of the said contracts.
Arakor denied employing fraud. It contended that the Deeds of Absolute Sale were already
signed and notarized when Fernando Sr. and Efren delivered them to the office of Atty. Legaspi
on September 8, 1992. Atty. Legaspi also disclaimed any knowledge about the death of
Felicidad.

Case Digests
The RTC declared the Deeds of Absolute Sale as void for being fictitious because Felicidad had
already passed away when the documents were executed. Additionally, it ruled that Arakor,
represented by Atty. Legaspi, was not a buyer in good faith. It thus ordered the Gaddis to return
to Arakor the amount of P400,000.00 with interest at 6% per annum from the time of the filing of
the complaint until the finality of this Decision and 12% per annum thereafter until full payment,
chargeable to Fernando Sr.'s estate.
The CA affirmed the RTC's ruling that the Deeds of Absolute Sale were null and void for being
simulated and forged.
ISSUE:
In the absence of stipulation as to the rate of interest what would govern the parties?
RULING:
It should be noted, nonetheless, that the new rate could only be applied prospectively and not
retroactively. Consequently, the twelve percent (12%) per annum legal interest shall apply only
until June 30, 2013. Come July 1, 2013, the new rate of six percent (6%) per annum shall be the
prevailing rate of interest when applicable.
Based on the foregoing, the amount of P400,000.00 shall be subject to interest at the rate of
twelve percent (12%) per annum from the date of the filing of the Complaint or on July 20, 1998
until June 30, 2013, and thereafter, six percent (6%) per annum from July 1, 2013 until finality of
this judgment. Moreover, once the judgment in this case becomes final and executory, the
monetary awards shall be subject to legal interest at the rate of six percent (6%) per annum from
such finality until its satisfaction.

Case Digests
II.C.1. Purpose and II.C.4. Exceptions from Coverage
THE REAL BANK (A THRIFT BANK), INC. vs. DALMACIO CRUZ MANINGAS
G.R. No. 211837, March 16, 2022
By: kimu
DOCTRINE:
RA 1405 is enacted to help encourage the public to deposit their money in banking
institutions so that it may be used on loans and eventually assist in the economic
development of the country. The law protects deposits of whatever nature from
examination and inquiry, subject to certain exceptions.
The Court noted that inquiry will be allowed if the money deposited in the account is itself
the subject matter of litigation. The Court elaborated that the subject matter of the action
should be deduced from the indictment and not from the evidence sought to be admitted.
For civil cases, the subject matter should be deduced from the allegations in the complaint,
and not from the evidence sought to be admitted. For inquiry to be allowed, the subject
matter should be the actual money itself, not the mere money equivalent of the checks.
FACTS:
Maningas is a Filipino-British national who was living in London, England at the time material
to this case. He maintained a savings account and a checking account with Metrobank
Greenhills. Maningas issued the checks as payment to Rosaria for a parcel of land he (Maningas)
purchased. Notably, however, Maningas wrote the name BIENVINIDO ROSARIA as payee of
the two checks. Maningas inquired if the checks were received; Rosaria informed him that the
checks did not arrive. But when Maningas checked his account balance, he discovered that the
amount of the checks was already deducted. He then clarified with Metrobank and learned that
the checks were paid when a person named BIENVINIDO ROSARIA used the checks in
opening an account with Real Bank in its Bacoor, Cavite branch. Thereafter, the full amount was
withdrawn.
It was alleged that the person who represented himself as BIENVINIDO ROSARIA was referred
by a retired manager of the Real Bank branch for the opening of an account. Maningas alerted
Metrobank of the alleged forgeries; so Metrobank attempted to return the checks to Real Bank on
the ground of "forged endorsement," but to no avail. Maningas thus sent an electronic mail to
Real Bank, informing it that the checks were paid to an impostor, however, the same was also
ignored. This resulted to the filing of Maningas' complaint who contended that both banks were
negligent in allowing the unauthorized withdrawal of the amount despite the forged indorsements
of the checks.

Case Digests
The RTC ruled in favor of Maningas, finding Real Bank to be negligent as a collecting bank and
last indorser. This was further affirmed by the CA. The CA held that the act of presentment to the
drawee bank connotes that the collecting bank had done its duty with respect to the genuineness
and validity of the checks. Therefore, Real Bank cannot escape liability and it cannot set up the
defense of forgery.
Real Bank also contended that Republic Act No. (RA) 1405, the law on secrecy of bank deposits,
was violated when the RTC ordered the production of records pertaining to the deposit account
of one BIENVINIDO ROSARIA. The CA held that there was no violation because that account
was the subject of the instant litigation.
ISSUE:
Whether or not there is a violation of the law on secrecy of bank deposits.
RULING:
Yes, there is a violation of the law on the secrecy of bank deposits.
Relevant to this case is the exception where the money deposited or invested is the subject matter
of the litigation.
In this case, it is clear that Maningas seeks to recover the money that was deposited and encashed
by the impostor in Real Bank. Maningas' action, however, was directed against the banks, and
not against the impostor who opened an account with Real Bank. Thus, it is apparent that
Maningas is seeking to recover the mere money equivalent of the checks erroneously paid by the
banks, and not the money itself that is already long gone in the hands of the impostor. For this
reason, the money deposited is not the subject matter of the litigation. The exception provided in
the law is not present in this case, thus, the inquiry ordered by the RTC is improper.
After all, "[s]hould there be doubts in upholding the absolutely confidential nature of bank
deposits against affirming the authority to inquire into such accounts, then such doubts must be
resolved in favor of the former."

Case Digests
III.A.3.b. Fire
MULTI-WARE MANUFACTURING CORPORATION vs. CIBELES INSURANCE

CORPORATION
G.R. No. 230528, February 1, 2021
By: zeeya
DOCTRINES:
1. Where the insurance policy specifies as a condition the disclosure of existing

co-insurers, non-disclosure thereof is a violation that entitles the insurer to avoid the
policy. This condition is common in fire insurance policies and is known as the
"other insurance clause".
2. The rationale behind the incorporation of "other insurance" clause in fire policies is
to prevent over-insurance and thus avert the perpetration of fraud. When a
property owner obtains insurance policies from two or more insurers in a total
amount that exceeds the property's value, the insured may have an inducement to
destroy the property for the purpose of collecting the insurance. The public as well
as the insurer is interested in preventing a situation in which a fire would be
profitable to the insured.
FACTS:
Petitioner Multi-Ware Manufacturing Corporation (Multi-Ware) is a domestic corporation

engaged in the manufacture of various plastic products.
Petitioner took out Fire Policy Insurance from respondent Western Guaranty Corporation
(Western Guaranty). The properties insured were the pieces of machinery and equipment, tools,
spare parts and accessories stored at Buildings 1 and 2, PTA Compound, No. 26 Isidro Francisco
Street, Malinta, Valenzuela, Metro Manila.
Petitioner secured another fire insurance policy, this time from respondent Cibeles Insurance
Corporation (Cibeles Insurance) covering the pieces of machinery and equipment, tools, spare
parts and accessories excluding mould, and stocks of manufactured goods and/or goods still in
process, raw materials and supplies found in the PTA Central Warehouse Compound, Building 1,
No. 26 Isidro Francisco Street, Brgy. Vicente Reales, Dalandan, Valenzuela, Metro Manila.

Case Digests
Subsequently, petitioner obtained from Prudential Guarantee Corp. (Prudential Guarantee) Fire
Insurance Policy covering the same machinery and equipment located at Building 1, PTA
Compound, No. 26 Francisco St., Malinta, Valenzuela, Metro Manila.
On April 21, 2000, a fire broke out in the PTA Compound causing damage and loss on the
properties of petitioner covered by the fire insurance policies. Consequently, petitioner filed
insurance claims with respondents Cibeles Insurance and Western Guaranty, but these were
denied on the ground of Multi-Ware' s violation of Policy Condition Nos. 3, on non-disclosure of
co-insurance; 15, on fraudulent claims; and 21, on arson.
ISSUE:
Whether or not petitioner violated Policy Condition No. 3 or the "other insurance clause"
uniformly contained in the subject insurance contracts resulting to avoidance of the said policies.
RULING:
Yes, petitioner violated Policy Condition No. 3 or the "other insurance clause" uniformly
contained in the subject insurance contracts resulting to avoidance of the said policies.
It is apparent that Policy Condition No. 3, or the "other insurance clause", was violated since
petitioner failed to notify the insurers of the fire insurance policies it procured from the different
insurers covering the same subject and interest. Petitioner utterly failed to disprove the RTC's
reasonable conclusion that the machinery and equipment covered by all the fire insurance
policies were identical considering that all these properties were located in the same building
inside the PTA Compound. It is significant to note that aside from its bare allegations, petitioner
did not adduce adequate proof to show that the buildings and/or warehouses referred to in each
of the policies pertain to distinct and separate structures inside the PTA Compound.
Since the policy procured by petitioner from Cibeles Insurance covered the same subject and
interest as that covered by the policies issued by Western Guaranty and Prudential Guarantee, the
existence of other insurance policies referred to under Policy Condition No. 3 is undeniable. The
non-disclosure of these policies to the insurers was fatal to petitioner's right to recover on the
insurance policies.

Case Digests
III.A.3.g. Compulsory Motor Vehicle Liability Insurance
MALAYAN INSURANCE COMPANY, INC. vs. STRONGHOLD INSURANCE

COMPANY, INC.
G.R. No. 203060, June 28, 2021
By: HabeasCorpus
DOCTRINE:
The purpose of CMVLI is to provide compensation for the death or bodily injuries suffered
by innocent third parties or passengers as a result of the negligent operation and use of
motor vehicles. The victims or their dependents are assured of immediate financial
assistance, regardless of the financial capacity of motor vehicle owners.
FACTS:
Pablo obtained a Compulsory Third Party Liability (CTPL) insurance for his vehicle from
Stronghold with a limit of P100,000.00, which contained a schedule of indemnities. Insurance
Memorandum Circular No. 4-200611 (IMC No. 4-2006) is the most recent issuance at that time
that sets the limits of third-party liability and indemnities in settlement of claims under
compulsory motor vehicle liability insurance (CMVLI) policies.
Pablo also obtained an Excess Cover for Third Party Bodily and Death Liability from Malayan
for the same vehicle. The amount of the excess coverage is P200,000.00.
During the effectivity of the two policies, Pablo, while driving the insured vehicle, sideswiped a
pedestrian who sustained injuries and was brought to the hospital for treatment. Pablo claimed
that he incurred hospital and medical expenses in the amount of P100,318.08 for the treatment of
the pedestrian. As a result, he filed third party liability claims for reimbursement with both
Stronghold and Malayan.
Stronghold computed its liability based on the schedule of indemnities provided in the CTPL
insurance policy and arrived at the amount of P29,000.00. The excess of P71,318.08 was not
covered or in excess of the limits in the schedule of indemnities and should be shouldered by
Malayan.
Pablo sought the assistance of the IC through a letter.
IC Ruling: Stronghold should pay Pablo the amount of P100K, and Malayan should pay Pablo
the remaining amount of P318.08. Stronghold appealed to the CA.
CA Ruling: Stronghold should pay Pablo P42,714.83; Malayan should pay Pablo P57,603.25.

Case Digests
ISSUE:
What is the extent of liability of Stronghold pursuant to the insurance policy it issued?
RULING:
The Schedule of Indemnities does not purport to restrict the kinds of damages that may be
awarded against the insurance company once liability has arisen, and the requisites for each kind
of damages are present. The schedule is not an enumeration of the specific kinds of damages that
may be awarded. It was merely meant to set limits to the amounts the movant would be liable for
in cases of death, bodily injuries of, professional services rendered to traffic accident victims,
and not necessarily exclude claims against the insurance policy for other kinds of damages.
The limit of liability with regard to the items listed in the Schedule of Indemnities is the
amount provided therein; the limit of liability with regard to other kinds of damages not
listed in the same Schedule of Indemnities is the total amount of insurance coverage. It then
follows that the amounts in excess of the limits of liability in the schedule for items listed therein
are not covered by the total coverage. Such excess is already for the personal account of the
insured or an excess coverage provider. This interpretation upholds the purpose of indicating
limits of liability on the specific injuries listed in the schedule.

Case Digests
IV.A.1. Diligence Required of Common Carriers
KLM ROYAL DUTCH AIRLINES vs. DR. JOSE M. TIONGCO

G.R. No. 212136, October 04, 2021
By: zzzzzz123456
DOCTRINE:
A contract of carriage is one whereby a certain person or association of persons obligate

themselves to transport persons, things, or goods from one place to another for a fixed
price. Under Article 1732 of the Civil Code, a common carrier refers to "persons,
corporations, firms, or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation, offering their services
to the public.
The nature of the business which involves the transportation of persons or goods makes a
contract of carriage imbued with public interest. It is therefore bound to observe not just
the due diligence of a good father of a family but that of "extraordinary" care in the
vigilance over the goods as required under Article 1733 of the Civil Code.
Considering that a contract of carriage is vested with public interest, a common carrier is
presumed to have been at fault or to have acted negligently in case of lost or damaged
goods unless they prove that they observed extraordinary diligence. Hence, in an action
based on a breach of contract of carriage, the aggrieved party does not need to prove that
the common carrier was at fault or was negligent. He or she is only required to prove the
existence of the contract and its non-performance by the carrier.
FACTS:
On October 1998, Respondent was invited by the United Nations - World Health Organization
(UN-WHO) to be a keynote speaker in the 20th Anniversary of Alma-Ata Declaration to be held
in Almaty, Kazakhstan from November 27-28, 1998. Hence, respondent booked a trip from
Manila to Almaty.
The main carrier of respondent was KLM Royal Dutch Airlines, Lufthansa was his intermediate
carrier, while Singapore airline was his first carrier and due to some circumstances, Turkish
airline became his last carrier. During his trip, respondent had with him one hand carry bag, and
one checked-in suitcase containing a copy of his speech, resource materials, clothing for the
event, and other personal items.
Below was his travel itinerary:

(a) From Manila to Singapore via Singapore Airline;
(b) From Singapore to Amsterdam via KLM Airline;

Case Digests
(c) From Amsterdam to Frankfurt via KLM Airline; and

(d) From Frankfurt to Almaty via Lufthansa Airline.
However, as his flight from Frankfurt departed from Amsterdam 45 minutes late, respondent
missed his next flight to Almaty. Upon arrival in Frankfurt, respondent sought help from a KLM
airline employee regarding his missed flight, checked-in luggage, and his speaking engagement.
The KLM employee assured him that his checked-in luggage will be with him for the next flight
arranged via Lufthansa and Turkish Airline. The new itinerary of respondent was then: (a) From
Frankfurt to Instanbul via Lufthansa Airline; and (b) From Istanbul to Almaty via Turkish
Airline.
Upon arriving in Almaty and even after going back to Manila, the checked-in luggage of
respondent could not be found, this caused respondent to attend his speaking engagement poorly
dressed without any visual aid and resource material.
After three months from arrival in the Philippines, and still his luggage was not returned,
respondent wrote Singapore Airlines, KLM and Lufthansa, demanding for compensation for his
lost luggage and the inconvenience he suffered. None of the airline compensated respondent and
all denied liability. Hence, respondent was constrained to file a case against the airlines for
damages.
RTC ruled that KLM is solely liable for the damages suffered by Dr. Tiongco on account of his
lost suitcase. KLM failed to exercise extraordinary care in handling the suitcase of Dr. Tiongco
when it wrongfully transferred it to Lufthansa flight no. LH10381 instead of LH3346, Dr.
Tiongco's flight to Almaty. KLM also failed to immediately inquire about what happened to the
suitcase after Dr. Tiongco informed its personnel.
CA agreed with the trial court on KLM's liability for breach of contract of carriage. However, it
modified the awards of damages for being excessive.
ISSUE:
Whether or not KLM is liable for breach of contract of carriage.
RULING:
Yes, KLM is liable for breach of contract of carriage.
In this case, KLM and Dr. Tiongco entered a contract of carriage. Dr. Tiongco purchased tickets
from the airline for his trip to Almaty, Kazakhstan. KLM, however, breached its contract with Dr.
Tiongco when it failed to deliver his checked-in suitcase at the designated place and time. The
suitcase contained his clothing for the conference where he was a guest speaker, a copy of his
speech, and his resource materials. Worse, Dr. Tiongco's suitcase was never returned to him even
after he arrived in Manila from Almaty. Thus, KLM's liability for the lost suitcase was
sufficiently established as it failed to overcome the presumption of negligence.

Case Digests
V. B. Trademarks
KOLIN ELECTRONICS CO., INC. vs. TAIWAN KOLIN CORP. LTD.

G.R. No. 221347, December 1, 2021
By: jhoanna
DOCTRINES:
1. The purpose of a trademark is to point out distinctly the origin or ownership of the
goods or services to which it is affixed; to secure to him, who has been instrumental
in bringing into the market a superior article of merchandise, the fruit of his
industry and skill; to assure the public that they are procuring the genuine article;
to prevent fraud and imposition; and to protect the manufacturer against
substitution and sale of an inferior and different article as his product. In today's
internet-wired market where the online sale and purchase of goods and services is
commonplace, domain names not only serve to identify an address on the internet
which leads to a website, but also perform the function of trademarks in the
traditional modes of business.
2. Sections 7.1 and 7.3 of the Inter Partes Regulations are clear - the submission of
documents and other requirements attached to the petition and opposition shall be
filed with the Bureau in their original or, in the case of public documents, certified
copies thereof. Otherwise, the petition or opposition shall be dismissed outright.
3. A certificate of registration of a mark is prima facie evidence of the validity of the

registration, the registrant's ownership of the mark, and of the registrant's exclusive
right to use the same in connection with the goods or services and those that are
related thereto specified in the certificate.
The said presumption may be challenged and rebutted when an adverse party, in
the appropriate action, can show that the certificate of registration is not reflective
of ownership of the holder, such as when:
a. the first registrant has acquired ownership of the mark through registration
but subsequently lost the same due to non-use or abandonment (e.g., failure
to file the Declaration of Actual Use);
b. the registration was done in bad faith;
c. the mark itself becomes generic;

Case Digests
d. the mark was registered contrary to the IP Code (e.g., when a generic mark
was successfully registered for some reason); or
e. the registered mark is being used by, or with the permission of, the registrant
so as to misrepresent the source of the goods or services on or in connection
with which the mark is used.
4. The use of a registered mark representing the owner’s goods or services by means of
an interactive website may constitute proof of actual use that is sufficient to
maintain the registration of the same.
5. To protect the goodwill and reputation of their business and products in the online
sphere, it is but logical for companies to register their trademarks in the form of
domain names under the IP Code. In fine, the owner of a registered trademark,
absent any legal obstacle or compelling reason to the contrary, should be allowed to
register, in its favor, a domain name containing its registered trademark as a
dominant feature.
6. While the protection afforded to a registered trademark extends to market areas

that are the normal potential expansion of its business, such protection must not
infringe on the rights of another trademark owner with a registered mark in its
favor.
7. Section 147 of the IP Code provides that the owner of a registered mark shall have
the exclusive right to prevent all third parties not having the owner's consent from
using in the course of trade identical or similar signs for goods or services which are
identical or similar to those in respect of which the trademark is registered, where
such would result in a likelihood of confusion.
FACTS:
KECI is a domestic corporation engaged in the manufacture, assembly, and marketing of various
electronic products since 1989 and is the registered owner of the "KOLIN" trademark for goods
and services under Classes 9 and 35 of the International Classification of Goods and Services for
the Purposes of Registrations of Marks (Nice Classification).
Taiwan Kolin, represented herein by Kolin Philippines International Inc. (KPII), is a corporation
duly organized and existing under the laws of Taiwan and engaged in the home appliance
business, particularly in the manufacture, sale and distribution of television sets, air conditioners,
washing machines, showcase refrigerators, rice cookers and other similar appliances and

Case Digests
electrical products. Taiwan Kolin has been using the KOLIN trademark for its home appliances
since 1976. Since 1996, Taiwan Kolin's products under the KOLIN brand have been made
available in the Philippines. Taiwan Kolin is the registered owner of the trademark KOLIN for
several goods and services, including registrations under Classes 11 and 21 of the Nice
Classification.
On May 29, 2007, KECI filed a trademark application for registration of the "KOLIN" mark
under Class 35 of the Nice Classification for use in the business of manufacturing, assembling,
importing, and selling electronic equipment or apparatus. Taiwan Kolin and KPII did not oppose
the said registration, and the mark was registered on December 22, 2008.
On August 16, 2007, KECI filed Trademark Application for the mark "www.kolin.ph" under
Class 35 for use in the business of manufacturing, assembling, importing, and selling electronic
equipment or apparatus. The application was published in the IPO e-Gazette on January 11,
2008, and Taiwan Kolin was given four months or until May 10, 2008 to file an opposition
thereto.
On May 12, 2008, Taiwan Kolin filed an Opposition to the said application.
The Bureau of Legal Affairs (BLA) dismissed Taiwan Kolin's Opposition. Thus, Taiwan Kolin
filed an appeal with the IPO Director-General, reiterating its arguments in opposing the
registration of "www.kolin.ph".
The IPO Director General denied Taiwan Kolin's appeal. In so ruling, the IPO Director General
opined that the BLA correctly dismissed Taiwan Kolin' s Opposition in view of its failure to
attach the original documents, as required under the Inter Partes Regulations. The Director
General stressed that the Inter Partes Regulations must be followed since these are indispensable
to the prevention of needless delays and the orderly and speedy discharge of business, and may
be relaxed only for the most persuasive of reasons. Noting that the case involves the ownership
of "KOLIN' which is the main feature of KECI's trademark application, the IPO Director General
emphasized that KECI is already the registered owner of the "KOLIN' mark in Class 35 for the
business of manufacturing, importing, assembling, or selling electronic equipment or apparatus
which breezed through registration without Taiwan Kolin or any of its subsidiaries opposing the
same. Thus, Taiwan Kolin is estopped from assailing KECI's rights that come with the
registration of KECI's "KOLIN' mark in Class 35.
Thus, the IPO Director General clarified that the registration of "www.kolin.ph" in favor of
KECI is limited to the services covered by KECI' s trademark application, which is for use on the
business of manufacturing, importing, assembling or selling electronic equipment or apparatus
falling under Class 35 of the Nice Classification.

Case Digests
The Court of Appeals affirmed the findings of the IPO Director General.
ISSUES:
1. Whether or not Taiwan Kolin's failure to submit the original supporting documents in its
Opposition against KECI's application for registration of "www.kolin.ph" warranted the
outright dismissal of its Opposition.
RULING:
Yes, Taiwan Kolin's opposition was properly dismissed by the BLA. While the Inter Partes
Regulations may be relaxed for meritorious cases and for compelling reasons, the relaxation of
the rules is not warranted in the case at bench.
It is undisputed that Taiwan Kolin failed to attach the originals or certified true copies of the
supporting documents to its Opposition, which is required by the Inter Partes Regulations. The
BLA was therefore correct in dismissing the opposition outright. Read in its entirety, the Inter
Partes Regulations only allow the submission of additional original documentary exhibits if the
original or certified true copies of the exhibits were initially filed with the Notice of Opposition.
Like all rules, they are required to be followed except only for the most persuasive of reasons
when they may be relaxed to relieve a litigant of an injustice not commensurate with the degree
of his thoughtlessness in not complying with the procedure prescribed. To merit liberality,
petitioners must show reasonable cause justifying their noncompliance with the rules and must
convince the Court that the outright dismissal of the petition would defeat the administration of
substantive justice, which petitioners in this case failed to do.
Indeed, the relaxation of procedural rules in the interest of justice was never intended to be a
license for erring litigants to violate the rules with impunity. It applies only to proper cases of
demonstrable merit and under justifiable causes and circumstances, none of which are present in
this case.
2. Whether or not KECI has the right to register and use the mark "www.kolin.ph"
consistent with its exclusive right to use the "KOLIN" mark in relation to the
goods/services covered by Class 35.
Yes, KECI has the right to register and use the mark "www.kolin.ph".

Case Digests
KECI was already declared the first and prior user of the "KOLIN" mark in the Philippines and
thus the owner of the "KOLIN' mark under RA 166, in a final and executory decision rendered
by the CA. In connection thereto, Section 236 of the IP Code states that nothing in the IP Code
shall impair the rights of the enforcement of marks acquired in good faith prior to the effective
date of said law.
KECI, having been issued Certificate of Registration No. 4-2007-005421, is the registered owner
of the "KOLIN" mark under Class 35. This certificate of registration vests KECI the exclusive
right to use the "KOLIN' mark in relation to the services covered by the registration. Unless and
until the said registration of KECI is nullified or cancelled through the proper proceeding, the
rights emanating from the said registration should be respected.
Having been granted the right to exclusively use the "KOLIN" mark for the business of
manufacturing, importing, assembling, or selling electronic equipment or apparatus, KECI's
application for registration of its domain name containing the "KOLIN' mark for the same goods
and services as its Class 35 registration for "KOLIN' is merely an exercise of its right under its
Class 35 registration. In today's internet-wired market, selling electronic equipment or apparatus
will ideally involve the registration of a domain name to establish an online presence.
Indeed, to preclude KECI from safeguarding its right to protect the name of its domain name
containing its registered mark would unduly limit the scope of selling and antiquate the concept
in relation to the current times.
3. Whether or not the IPO Director General erred in ruling that (a) Taiwan Kolin's
applications and registrations for the "KOLIN mark" refer to goods and services that are
not related to KECI's trademark application for "www.kolin.ph"; and that (b) the
registration of "www.kolin.ph" in favor of KECI is limited to the services covered by
KECI's trademark application.
Taiwan Kolin's rights are limited to the stylization and design of KOLIN which is a design
mark, in contrast to KECI who has exclusive protection over the words, letters, or numbers
themselves of KOLIN in the same type of goods and services over which it has registration.
It is worth stressing that the crux of the controversy before the Supreme Court - and the subject
matter of the CA and the lower tribunals' decisions - is KECI's application to register
"www.kolin.ph" as a service mark under Class 35; it does not involve the validity of other
existing registrations.

Case Digests
The proper remedy for KECI's concern that it will be damaged by Taiwan Kolin's existing
registrations in Classes 11 and 21 is to file a petition to cancel the latter's registrations with the
BLA, or to raise the matter before any pending case filed by Taiwan Kolin to enforce its rights
under the said registrations under Section 151 of the IP Code.
In the meantime, just as KECI's registration for KOLIN under Class 35 was successfully
registered and is presumed valid unless otherwise shown in an appropriate action, Taiwan Kolin's
registrations in Classes 11 and 21 remain valid and subsisting for as long as they have not been
cancelled by the IPO or the courts in the proper action. These registrations remain to be prima
facie evidence of Taiwan Kolin's ownership of the design mark KOLIN, and of the registrant's
exclusive right to use the specific stylization and design of the said mark in connection with the
goods, business or services specified in the certificate. Said right remains enforceable during the
certificates' effectivity and prior to their cancellation.

Commercial Law Case Digests - HernandoBar2023

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Commercial Law Case Digests - HernandoBar2023

Uploaded by

Copyright:

Available Formats

SEPTEMBAR 2023

Associate Justice Ramon #HernanDoIt

BAR OPERATIONS: HERNANDO

"Always remember, chance favors the #HernanDoIt

1. Corporate Juridical Entity

c) Doctrine of Piercing the Corporate Veil

● MARIA LEA JANE I. GESOLGON VS. CYBERONE PH.,

d) Power to Increase or Decrease Capital Stock or

● METROPLEX BERHAD VS. SINOPHIL CORPORATION 4

m) Ultra Vires Doctrine

● AGRO FOOD AND PROCESSING CORP. VS. VITARICH 8

9. Board or Directors and Trustees

j) Solidary Liabilities for Damages; and

● EDUARDO ATIENZA VS. GOLDEN RAM ENGINEERING 10

10. Other Corporations

(1) Bases of Authority Over Foreign

● MAGNA READY MIX CONCRETE

(3) Personality to Sue

● MAGNA READY MIX CONCRETE 16

II. Banking Laws

B. General Banking Law of 2000 (R.A. No. 8791)

1. Diligence Required of Banks

● THE REAL BANK (A THRIFT BANK), INC. VS. DALMACIO 19

● ARAKOR CONSTRUCTION AND DEVELOPMENT 21

C. Secrecy of Bank Deposits (R.A. No. 1405, as amended, and

● THE REAL BANK (A THRIFT BANK), INC. VS. DALMACIO 23

III. Insurance Law

● MALAYAN INSURANCE COMPANY, INC. VS. 27

IV. Transportation Law

1. Diligence Required of Common Carriers

● KLM ROYAL DUTCH AIRLINES VS. DR. JOSE M. TIONGCO G.R. 29

V. Intellectual Property Code (R.A. No. 8293)

I.B.4.b. Doctrine of Piercing the Corporate Veil

MARIA LEA JANE I. GESOLGON vs. CYBERONE PH., INC.

Commercial Law_HernandoBAR2023 Page 1 of 36

In April 2011, petitioners received P13,000.00 each as their last salary.

Commercial Law_HernandoBAR2023 Page 2 of 36

Commercial Law_HernandoBAR2023 Page 3 of 36

I.B.7.d. Power to Increase or Decrease Capital Stock or Incur, Create,

METROPLEX BERHAD vs. SINOPHIL CORPORATION

Commercial Law_HernandoBAR2023 Page 4 of 36

Sinophil and Belle executed a Memorandum of Agreement (Unwinding Agreement) with

Commercial Law_HernandoBAR2023 Page 5 of 36

On appeal, the CA upheld the findings of the SEC in toto.

1. Certificate of Decrease of Capital Stock;

Commercial Law_HernandoBAR2023 Page 6 of 36

Commercial Law_HernandoBAR2023 Page 7 of 36

I.B.7.m. Ultra Vires Doctrine

AGRO FOOD AND PROCESSING CORP. vs. VITARICH CORPORATION

Commercial Law_HernandoBAR2023 Page 8 of 36

No, the Court of Appeals’ application of the doctrine of apparent authority is

Commercial Law_HernandoBAR2023 Page 9 of 36

I.B.9.j. Solidary Liabilities for Damages

EDUARDO ATIENZA vs. GOLDEN RAM ENGINEERING SUPPLIES & EQUIPMENT

3. Personal liability of a corporate director, trustee or officer along (although not

Commercial Law_HernandoBAR2023 Page 10 of 36

Commercial Law_HernandoBAR2023 Page 11 of 36

Commercial Law_HernandoBAR2023 Page 12 of 36

I.B.12.f.1.b. Doctrine of “Doing Business”

MAGNA READY MIX CONCRETE CORPORATION vs. ANDERSEN BJORNSTAD

1. Two tests to determine whether a foreign corporation is doing business in the

Continuity test implies a continuity of commercial dealings and arrangements, and