its subrogatory right.

The subrogation receipt, by itself, is sufficient to establish not

only the relationship of herein private respondent as insurer and Caltex, as the assured
COMMERCIAL LAW shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the
insurance claim. The right of subrogation accrues simply upon payment by the
2018 Bar Operations Research Committee insurance company of the insurance claim.

Same; Appeals; Factual findings of the Court of Appeals (CA) affirming

those of the Regional Trial Court (RTC) are conclusive and binding,
Asian Terminals, Inc. vs. Malayan Insurance Co., Inc. 647 SCRA 111 , April
exceptions.— Only questions of law are allowed in petitions for review on certiorari
under Rule 45 of the Rules of Court. Thus, it is not our duty “to review, examine, and
04, 2011
evaluate or weigh all over again the probative value of the evidence presented,”
Syllabi Class : Mercantile Law|Carriage of Goods by Sea Act
especially where the findings of both the trial court and the appellate court coincide on
(COGSA)|Insurance Law|Evidence
the matter. As we have often said, factual findings of the CA affirming those of the RTC
are conclusive and binding, except in the following cases: “(1) when the inference made
Remedial Law; Pre-trial; The determination of issues during the pre-trial
is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of
conference bars the consideration of other questions, whether during trial
discretion; (3) when the findings are grounded entirely on speculations, surmises or
or on appeal; Parties must disclose during pre-trial all issues they intend to
conjectures; (4) when the judgment of the [CA] is based on misapprehension of facts;
raise during the trial, except those involving privileged or impeaching
(5) when the [CA], in making its findings, went beyond the issues of the case and the
matters.— This was never raised as an issue before the RTC. In fact, it is not among
same is contrary to the admissions of both appellant and appellee; (6) when the
the issues agreed upon by the parties to be resolved during the pre-trial. As we have
findings of fact are conclusions without citation of specific evidence on which they are
said, “the determination of issues during the pre-trial conference bars the consideration
based; (7) when the [CA] manifestly overlooked certain relevant facts not disputed by
of other questions, whether during trial or on appeal.” Thus, “[t]he parties must
the parties and which, if properly considered, would justify a different conclusion; and
disclose during pre-trial all issues they intend to raise during the trial, except those
(8) when the findings of fact of the [CA] are premised on the absence of evidence and
involving privileged or impeaching matters. x x x The basis of the rule is simple.
are contradicted by the evidence on record.”
Petitioners are bound by the delimitation of the issues during the pre-trial because they
themselves agreed to the same.”
Harpoon Marine Services, Inc. vs. Francisco 644 SCRA 394 , March 02, 2011
Same; Same; Same; The Management Contract entered into by petitioner Syllabi Class : Corporation Law|Obligations
and the Philippine Ports Authority (PPA) is clearly not among the matters
which the courts can take judicial notice of.—The Management Contract entered
into by petitioner and the PPA is clearly not among the matters which the courts can Labor Law; Illegal Dismissals; Abandonment; The employee’s deliberate and
take judicial notice of. It cannot be considered an official act of the executive unjustified refusal to resume his employment without any intention of
department. The PPA, which was created by virtue of Presidential Decree No. 857, as returning should be established and proven by the employer.—Jurisprudence
amended, is a government-owned and controlled corporation in charge of
provides for two essential requirements for abandonment of work to exist. The “failure
administering the ports in the country. Obviously, the PPA was only performing a
to report for work or absence without valid or justifiable reason” and “clear intention
proprietary function when it entered into a Management Contract with petitioner. As
such, judicial notice cannot be applied. to sever the employer-employee relationship x x x manifested by some overt acts”
should both concur. Further, the employee’s deliberate and unjustified refusal to
Mercantile Law; Carriage of Goods by Sea Act (COGSA); Insurance resume his employment without any intention of returning should be established and
Law; Evidence; The presentation in evidence of the marine insurance policy proven by the employer.
is not indispensable before the insurer may recover from the common carrier
the insured value of the lost cargo in the exercise of its subrogatory right.— Corporation Law; Obligations; Obligations incurred by corporate officers are
Besides, non-presentation of the insurance contract or policy is not necessarily fatal. In not theirs but the direct accountabilities of the corporation they represent.—
Delsan Transport Lines, Inc. v. Court of Appeals, 369 SCRA 24 (2001), we ruled that: As held in the case of MAM Realty Development Corporation v. National Labor Relations
Anent the second issue, it is our view and so hold that the presentation in evidence of Commission, 244 SCRA 717 (1995), “obligations incurred by [corporate officers], acting
the marine insurance policy is not indispensable in this case before the insurer may as such corporate agents, are not theirs but the direct accountabilities of the
recover from the common carrier the insured value of the lost cargo in the exercise of

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corporation they represent.” As such, they should not be generally held jointly and
solidarily liable with the corporation.
Real vs. Sangu Philippines, Inc. 640 SCRA 67 , January 19, 2011
Syllabi Class : Corporation Law|Illegal Dismissals|Due Process|The twin
requirements of notice and hearing constitute the essential elements of due
process
Corporation Law; Intra-Corporate Controversies; Jurisdiction; The fact that
the parties involved are the stockholders and the corporation does not
necessarily place the dispute within the ambit of the jurisdiction of the SEC
(now the Regional Trial Court); The better policy to be followed in
determining jurisdiction over a case should be to consider concurrent factors
such as the status or relationship of the parties or the nature of the question
that is subject of their controversy.— It is worthy to note, however, that before
the promulgation of the Tabang case, the Court provided in Mainland Construction Co.,
Inc. v. Movilla, 250 SCRA 290 (1995), a “better policy” in determining which between
the Securities and Exchange Commission (SEC) and the Labor Arbiter has jurisdiction
over termination disputes, or similarly, whether they are intra-corporate or not, viz.:
The fact that the parties involved in the controversy are all stockholders or that the
parties involved are the stockholders and the corporation does not necessarily place
the dispute within the ambit of the jurisdiction of the SEC (now the Regional Trial
Court). The better policy to be followed in determining jurisdiction over a case should
be to consider concurrent factors such as the status or relationship of the parties or
the nature of the question that is subject of their controversy. In the absence of any
one of these factors, the SEC will not have jurisdiction. Furthermore, it does not
necessarily follow that every conflict between the corporation and its stockholders
would involve such corporate matters as only SEC (now the Regional Trial Court) can
resolve in the exercise of its adjudicatory or quasi-judicial powers.
Same; Same; Same; Not all conflicts between the stockholders and the
corporation are classified as intra-corporate.—Guided by this recent
jurisprudence, we thus find no merit in respondents’ contention that the fact alone that
petitioner is a stockholder and director of respondent corporation automatically
classifies this case as an intra-corporate controversy. To reiterate, not all conflicts
between the stockholders and the corporation are classified as intra-corporate. There
are other factors to consider in determining whether the dispute involves corporate
matters as to consider them as intra-corporate controversies.
Same; Same; Same; Words and Phrases; ‘Corporate Officers’ in the context
of Presidential Decree No. 902-A are those officers of the corporation who
are given that character by the Corporation Code or by the corporation’s by-
laws; A corporation may have such other officers as may be provided for by
its by-laws like, but not limited to, the vice-president, cashier, auditor or
general manager.—“ ‘Corporate officers’ in the context of Presidential Decree No.
902-A are those officers of the corporation who are given that character by the
Corporation Code or by the corporation’s by-laws. There are three specific officers
whom a corporation must have under Section 25 of the Corporation Code. These are
the president, secretary and the treasurer. The number of officers is not limited to
these three. A corporation may have such other officers as may be provided for by its
by-laws like, but not limited to, the vice-president, cashier, auditor or general manager.
The number of corporate officers is thus limited by law and by the corporation’s by-
laws.”
Same; Same; Same; This case is not intra-corporate but rather, it is a
termination dispute and, consequently, falls under the jurisdiction of the
Labor Arbiter pursuant to Section 217 of the Labor Code.—With the elements
of intra-corporate controversy being absent in this case, we thus hold that petitioner’s
complaint for illegal dismissal against respondents is not intra-corporate. Rather, it is a
termination dispute and, consequently, falls under the jurisdiction of the Labor Arbiter
pursuant to Section 217 of the Labor Code.
Same; Illegal Dismissals; In an illegal dismissal case, the onus probandi rests
on the employer to prove that the dismissal of an employee is for a valid
cause.—“In an illegal dismissal case, the onus probandi rests on the employer to prove
that [the] dismissal of an employee is for a valid cause.” Here, as correctly observed
by the Labor Arbiter, respondents failed to produce any convincing proof to support
the grounds for which they terminated petitioner.
Same; Same; Due Process; The twin requirements of notice and hearing
constitute the essential elements of due process; The law requires the
employer to furnish the employee sought to be dismissed with two written
notices before termination of employment can be legally effected; This
procedure is mandatory and its absence taints the dismissal with illegality.—
Petitioner’s dismissal was effected without due process of law. “The twin requirements
of notice and hearing constitute the essential elements of due process. The law requires
the employer to furnish the employee sought to be dismissed with two written notices
before termination of employment can be legally effected: (1) a written notice apprising
the employee of the particular acts or omissions for which his dismissal is sought in
order to afford him an opportunity to be heard and to defend himself with the
assistance of counsel, if he desires, and (2) a subsequent notice informing the
employee of the employer’s decision to dismiss him. This procedure is mandatory and
its absence taints the dismissal with illegality.” Since in this case, petitioner’s dismissal
was effected through a board resolution and all that petitioner received was a letter
informing him of the board’s decision to terminate him, the abovementioned procedure
was clearly not complied with.
Ico vs. Systems Technology Institute, Inc. 729 SCRA 439 , July 09, 2014
Syllabi Class : Liability of Corporate Officers
2|Page
Remedial Law; Civil Procedure; Appeals; Courts; Supreme Court; As a rule,
the Supreme Court (SC) is not a trier of facts, and thus the findings of fact
of the National Labor Relations Commission (NLRC) and Court of Appeals
(CA) are final and conclusive and will not be reviewed on appeal. However,
there are well-recognized exceptions to the rule.—As a rule, this Court is not a
trier of facts, and thus the findings of fact of the NLRC and CA are final and conclusive
and will not be reviewed on appeal. However, there are well-recognized exceptions to
the rule, such as when its judgment is based on a misapprehension of facts or relevant
facts not disputed by the parties were overlooked which, if properly considered, would
justify a different conclusion. Petitioner’s case falls under these exceptions.
Labor Law; Termination of Employment; Constructive Dismissal; Transfer of
Employees; In cases of a transfer of an employee, the rule is settled that the
employer is charged with the burden of proving that its conduct and action
are for valid and legitimate grounds such as genuine business necessity and
that the transfer is not unreasonable, inconvenient or prejudicial to the
employee. If the employer cannot overcome this burden of proof, the
employee’s transfer shall be tantamount to unlawful constructive
dismissal.—From the May 18 conversation alone, it can be seen that petitioner’s fate
in STI was a foregone conclusion. She was threatened to accept her fate or else she
would find herself without work, either through dismissal or forced resignation.
Evidently, she became the subject of an illegal constructive dismissal in the guise of a
transfer. The supposed audit conducted from May 28, 2004 up to June 10, 2004 by
STI’s Corporate Auditor/Audit Advisory Group was a mere afterthought, as it was
apparent that as early as May 18, 2004, petitioner has been found guilty of whatever
transgressions she was being charged with, founded or unfounded. The same is true
with respect to her preventive suspension; it was imposed with malice and bad faith,
and calculated to harass her further, if not trick her into believing that respondents
were properly addressing her case. Needless to say, all proceedings and actions taken
in regard to petitioner’s employment and case, beginning on May 18, 2004, were all
but a farce, done or carried out in bad faith, with the objective of harassing and
humiliating her, all in the fervent hope that she would fold up and quit. Constructive
dismissal exists where there is cessation of work because ‘continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank
or a diminution in pay’ and other benefits. Aptly called a dismissal in disguise or an act
amounting to dismissal but made to appear as if it were not, constructive dismissal
may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it could foreclose
any choice by him except to forego his continued employment. In cases of a transfer
of an employee, the rule is settled that the employer is charged with the burden of
proving that its conduct and action are for valid and legitimate grounds such as genuine
business necessity and that the transfer is not unreasonable, inconvenient or prejudicial
to the employee. If the employer cannot overcome this burden of proof, the employee’s
transfer shall be tantamount to unlawful constructive dismissal.
Liability of Corporate Officers; To hold a director or officer personally liable
for corporate obligations, two requisites must concur: (1) it must be 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) there must be proof that the officer acted in bad faith.—A
corporation, as a juridical entity, may act only through its directors, officers and
employees. Obligations incurred as a result of the directors’ and officers’ acts as
corporate agents, are not their personal liability but the direct responsibility of the
corporation they represent. As a rule, they are only solidarily liable with the corporation
for the illegal termination of services of employees if they acted with malice or bad
faith. To hold a director or officer personally liable for corporate obligations, two
requisites must concur: (1) it must be 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) there must be proof that the officer
acted in bad faith.
Mof Company, Inc. Vs. Shin Yang Brokerage Corporation, G.R. No. 172822.
December 18, 2009.
Syllabi Class :
Bills of Lading; While the bill of lading is oftentimes drawn up by the
shipper/consignor and the carrier without the intervention of the consignee,
the latter can be bound by the stipulations of the bill of lading when a) there
is a relation of agency between the shipper or consignor and the consignee
or b) when the consignee demands fulfillment of the stipulation of the bill of
lading which was drawn up in its favor.—The bill of lading is oftentimes drawn up
by the shipper/consignor and the carrier without the intervention of the consignee.
However, the latter can be bound by the stipulations of the bill of lading when a) there
is a relation of agency between the shipper or consignor and the consignee or b) when
the consignee demands fulfillment of the stipulation of the bill of lading which was
drawn up in its favor. In Keng Hua Paper Products Co., Inc. v. Court of Appeals, 90
Phil. 836 (1952) we held that once the bill of lading is received by the consignee who
does not object to any terms or stipulations contained therein, it constitutes as an
acceptance of the contract and of all of its terms and conditions, of which the acceptor
has actual or constructive notice. x x x In sum, a consignee, although not a signatory
to the contract of carriage between the shipper and the carrier, becomes a party to the
contract by reason of either a) the relationship of agency between the consignee and
the shipper/ consignor; b) the unequivocal acceptance of the bill of lading delivered to
the consignee, with full knowledge of its contents or c) availment of the stipulation
pour autrui, i.e., when the consignee, a third person, demands before the carrier the
fulfillment of the stipulation made by the consignor/shipper in the consignee’s favor,
specifically the delivery of the goods/cargoes shipped.
3|Page
Same; Burden of Proof; Basic is the rule in evidence that the burden of proof
lies upon him who asserts it, not upon him who denies, since, by the nature
of things, he who denies a fact cannot produce any proof of it.—In the instant
case, Shin Yang consistently denied in all of its pleadings that it authorized Halla
Trading, Co. to ship the goods on its behalf; or that it got hold of the bill of lading
covering the shipment or that it demanded the release of the cargo. Basic is the rule
in evidence that the burden of proof lies upon him who asserts it, not upon him who
denies, since, by the nature of things, he who denies a fact cannot produce any proof
of it. Thus, MOF has the burden to controvert all these denials, it being insistent that
Shin Yang asserted itself as the consignee and the one that caused the shipment of the
goods to the Philippines.
Same; Same; In civil cases, the party having the burden of proof must
establish his case by preponderance of evidence, which means evidence
which is of greater weight, or more convincing than that which is offered in
opposition to it.—In civil cases, the party having the burden of proof must establish
his case by preponderance of evidence, which means evidence which is of greater
weight, or more convincing than that which is offered in opposition to it. Here, MOF
failed to meet the required quantum of proof. Other than presenting the bill of lading,
which, at most, proves that the carrier acknowledged receipt of the subject cargo from
the shipper and that the consignee named is to shoulder the freightage, MOF has not
adduced any other credible evidence to strengthen its cause of action. It did not even
present any witness in support of its allegation that it was Shin Yang which furnished
all the details indicated in the bill of lading and that Shin Yang consented to shoulder
the shipment costs. There is also nothing in the records which would indicate that Shin
Yang was an agent of Halla Trading Co. or that it exercised any act that would bind it
as a named consignee. Thus, the CA correctly dismissed the suit for failure of petitioner
to establish its cause against respondent.
Vicmar Development Corporation vs. Elarcosa 777 SCRA 238 , December
09, 2015
Syllabi Class : Corporations ; Piercing the Veil of Corporate Fiction ;
Corporations; Piercing The Veil Of Corporate Fiction; Where It Appears That
Business Enterprises Are Owned, Conducted And Controlled By The Same
Parties, Law And Equity Will Disregard The Legal Fiction That These
Corporations Are Distinct Entities And Shall Treat Them As One—Where it
appears that business enterprises are owned, conducted and controlled by the same
parties, law and equity will disregard the legal fiction that these corporations are distinct
entities and shall treat them as one. This is in order to protect the rights of third
persons, as in this case, to safeguard the rights of respondents.
Marina Port Services, Inc. vs. American Home Assurance Corporation 766
SCRA 408 , August 12, 2015
Syllabi Class : Mercantile Law ; Common Carriers ; Shipper’s Load and
Count ;
Mercantile Law; Common Carriers; Shipper’s Load And Count; Marina Port
Services, Inc. (Mpsi) Cannot Just The Same Be Held Liable For The Missing
Bags Of Flour Since The Consigned Goods Were Shipped Under “Shipper’s
Load And Count” Arrangement. This Means That The Shipper Was Solely
Responsible For The Loading Of The Container, While The Carrier Was
Oblivious To The Contents Of The Shipment. Protection Against Pilferage Of
The Shipment Was The Consignee’s Lookout.—MPSI cannot just the same be
held liable for the missing bags of flour since the consigned goods were shipped under
“Shipper’s Load and Count” arrangement. “This means that the shipper was solely
responsible for the loading of the container, while the carrier was oblivious to the
contents of the shipment. Protection against pilferage of the shipment was the
consignee’s lookout. The arrastre operator was, like any ordinary depositary, duty-
bound to take good care of the goods received from the vessel and to turn the same
over to the party entitled to their possession, subject to such qualifications as may have
validly been imposed in the contract between the parties. The arrastre operator was
not required to verify the contents of the container received and to compare them with
those declared by the shipper because, as earlier stated, the cargo was at the shipper’s
load and count. The arrastre operator was expected to deliver to the consignee only
the container received from the carrier.”
Mercantile Law; Common Carriers; Warehouse Receipts Act; Arrastre
Operators; An Arrastre Operator Should Adhere To The Same Degree Of
Diligence As That Legally Expected Of A Warehouseman Or A Common
Carrier As Set Forth In Section 3[B] Of The Warehouse Receipts Act And
Article 1733 Of The Civil Code.—The relationship between an arrastre operator and
a consignee is similar to that between a warehouseman and a depositor, or to that
between a common carrier and the consignee and/or the owner of the shipped goods.
Thus, an arrastre operator should adhere to the same degree of diligence as that legally
expected of a warehouseman or a common carrier as set forth in Section 3[b] of the
Warehouse Receipts [Act] and Article 1733 of the Civil Code. As custodian of the
shipment discharged from the vessel, the arrastre operator must take good care of the
same and turn it over to the party entitled to its possession.
Same; Same; Same; Same; In Case Of Claim For Loss Filed By A Consignee
Or The Insurer As Subrogee, It Is The Arrastre Operator That Carries The
Burden Of Proving Compliance With The Obligation To Deliver The Goods To
The Appropriate Party.—In case of claim for loss filed by a consignee or the insurer
as subrogee, it is the arrastre operator that carries the burden of proving compliance
with the obligation to deliver the goods to the appropriate party. It must show that the
4|Page
losses were not due to its negligence or that of its employees. It must establish that it
observed the required diligence in handling the shipment. Otherwise, it shall be
presumed that the loss was due to its fault. In the same manner, an arrastre operator
shall be liable for damages if the seal and lock of the goods deposited and delivered to
it as closed and sealed, be broken through its fault. Such fault on the part of the arrastre
operator is likewise presumed unless there is proof to the contrary.
Same; Same; Same; Same; As Held In International Container Terminal
Services, Inc. V. Prudential Guarantee & Assurance Co., Inc., 320 Scra 244
(1999), The Signature Of The Consignee’s Representative On The Gate Pass
Is Evidence Of Receipt Of The Shipment In Good Order And Condition.—As
Held In International Container Terminal Services, Inc. v. Prudential Guarantee &
Assurance Co., Inc., 320 SCRA 244 (1999), the signature of the consignee’s
representative on the gate pass is evidence of receipt of the shipment in good order
and condition. Also, that MPSI delivered the subject shipment to MSC’s representative
in good and complete condition and with lock and seals intact is established by the
testimonies of MPSI’s employees who were directly involved in the processing of the
subject shipment. Mr. Ponciano De Leon testified that as MPSI’s delivery checker, he
personally examined the subject container vans and issued the corresponding gate
passes that were, in turn, countersigned by the consignee’s representative. MPSI’s
other witness, Chief Claims Officer Sergio Icasiano (Icasiano), testified that the broker,
as the consignee’s representative, neither registered any complaints nor requested for
an inspection.
Manila Bankers Life Insurance Corporation, Petitioner, Vs. Cresencia P.
Aban, 702 Scra 417, July 29, 2013
Syllabi Class: Insurance Law|Insurance Business|Contract Of Adhesion
Same; Same; Contract Of Adhesion; An Insurance Contract Is A Contract Of
Adhesion Which Must Be Construed Liberally In Favor Of The Insured And
Strictly Against The Insurer In Order To Safeguard The Former’s
Interest.―Insurers May Not Be Allowed To Delay The Payment Of Claims By
Filing Frivolous Cases In Court, Hoping That The Inevitable May Be Put Off
For Years— or even decades — by the pendency of these unnecessary court cases.
In the meantime, they benefit from collecting the interest and/or returns on both the
premiums previously paid by the insured and the insurance proceeds which should
otherwise go to their beneficiaries. The business of insurance is a highly regulated
commercial activity in the country, and is imbued with public interest. “[A]n insurance
contract is a contract of adhesion which must be construed liberally in favor of the
insured and strictly against the insurer in order to safeguard the [former’s] interest.”
Same; Incontestability Clause; An Insurer Is Given Two Years— from the
effectivity of a life insurance contract and while the insured is alive — to discover or
prove that the policy is void ab initio or is rescindible by reason of the fraudulent
concealment or misrepresentation of the insured or his agent.―Section 48 serves a
noble purpose, as it regulates the actions of both the insurer and the insured. Under
the provision, an insurer is given two years – from the effectivity of a life insurance
contract and while the insured is alive — to discover or prove that the policy is void ab
initio or is rescindible by reason of the fraudulent concealment or misrepresentation of
the insured or his agent. After the two-year period lapses, or when the insured dies
within the period, the insurer must make good on the policy, even though the policy
was obtained by fraud, concealment, or misrepresentation. This is not to say that
insurance fraud must be rewarded, but that insurers who recklessly and indiscriminately
solicit and obtain business must be penalized, for such recklessness and lack of
discrimination ultimately work to the detriment of bona fide takers of insurance and
the public in general.
Aguirre II vs. FQB+7, Inc. 688 SCRA 242 , January 09, 2013
Syllabi Class : Corporation Law|Intra-corporate Controversies|Regional
Trial Courts|Jurisdiction|Republic Act No. 8799
Corporation Law; Dissolution Of Corporations; Section 122 Of The
Corporation Code Prohibits A Dissolved Corporation From Continuing Its
Business, But Allows It To Continue With A Limited Personality In Order To
Settle And Close Its Affairs, Including Its Complete Liquidation.—Section 122
of the Corporation Code prohibits a dissolved corporation from continuing its business,
but allows it to continue with a limited personality in order to settle and close its affairs,
including its complete liquidation, thus: Sec. 122. Corporate liquidation.—Every
corporation whose charter expires by its own limitation or is annulled by forfeiture or
otherwise, or whose corporate existence for other purposes is terminated in any other
manner, shall nevertheless be continued as a body corporate for three (3) years after
the time when it would have been so dissolved, for the purpose of prosecuting and
defending suits by or against it and enabling it to settle and close its affairs, to dispose
of and convey its property and to distribute its assets, but not for the purpose of
continuing the business for which it was established.
Same; Same; A Corporation’s Board Of Directors Is Not Rendered Functus
Officio By Its Dissolution. Since Section 122 Allows A Corporation To
Continue Its Existence For A Limited Purpose, Necessarily There Must Be A
Board That Will Continue Acting For And On Behalf Of The Dissolved
Corporation For That Purpose.—Neither are these issues mooted by the dissolution
of the corporation. A corporation’s board of directors is not rendered functus officio by
its dissolution. Since Section 122 allows a corporation to continue its existence for a
limited purpose, necessarily there must be a board that will continue acting for and on
behalf of the dissolved corporation for that purpose. In fact, Section 122 authorizes the
dissolved corporation’s board of directors to conduct its liquidation within three years
from its dissolution. Jurisprudence has even recognized the board’s authority to act as
trustee for persons in interest beyond the said three-year period. Thus, the
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determination of which group is the bona fide or rightful board of the dissolved
corporation will still provide practical relief to the parties involved.
SAME; INTRA-CORPORATE CONTROVERSIES; REGIONAL TRIAL
COURTS; JURISDICTION; REPUBLIC ACT NO. 8799 CONFERRED
JURISDICTION OVER INTRA-CORPORATE CONTROVERSIES ON COURTS OF
GENERAL JURISDICTION OR REGIONAL TRIAL COURTS (RTCS), TO BE
DESIGNATED BY THE SUPREME COURT.—Jurisdiction over the subject matter is
conferred by law. R.A. No. 8799 conferred jurisdiction over intra-corporate
controversies on courts of general jurisdiction or RTCs, to be designated by the
Supreme Court. Thus, as long as the nature of the controversy is intra-corporate, the
designated RTCs have the authority to exercise jurisdiction over such cases.
Same; Same; Same; Same; Republic Act No. 8799; So Long As The Dispute
Is Intra-Corporate, The Regional Trial Court, Acting As A Special Commercial
Court, Has Jurisdiction Over It.—To be considered as an intra-corporate dispute,
the case: (a) must arise out of intra-corporate or partnership relations, and (b) the
nature of the question subject of the controversy must be such that it is intrinsically
connected with the regulation of the corporation or the enforcement of the parties’
rights and obligations under the Corporation Code and the internal regulatory rules of
the corporation. So long as these two criteria are satisfied, the dispute is intra-corporate
and the RTC, acting as a special commercial court, has jurisdiction over it.
Metropolitan Bank and Trust Company, The vs. Rosales 713 SCRA 75 ,
January 13, 2014
Syllabi Class : Civil Law|Damages|Exemplary Damages|Banks and
Banking
Mercantile Law; Banks And Banking; Hold Out Orders; The “Hold Out” Clause
Applies Only If There Is A Valid And Existing Obligation Arising From Any Of
The Sources Of Obligation Enumerated In Article 1157 Of The Civil Code, To
Wit: Law, Contracts, Quasi-Contracts, Delict, And Quasi-Delict.—Petitioner’s
reliance on the “Hold Out” clause in the Application and Agreement for Deposit Account
is misplaced. The “Hold Out” clause applies only if there is a valid and existing obligation
arising from any of the sources of obligation enumerated in Article 1157 of the Civil
Code, to wit: law, contracts, quasicontracts, delict, and quasi-delict. In this case,
petitioner failed to show that respondents have an obligation to it under any law,
contract, quasi-contract, delict, or quasi-delict. And although a criminal case was filed
by petitioner against respondent Rosales, this is not enough reason for petitioner to
issue a “Hold Out” order as the case is still pending and no final judgment of conviction
has been rendered against respondent Rosales. In fact, it is significant to note that at
the time petitioner issued the “Hold Out” order, the criminal complaint had not yet been
filed. Thus, considering that respondent Rosales is not liable under any of the five
sources of obligation, there was no legal basis for petitioner to issue the “Hold Out”
order. Accordingly, we agree with the findings of the RTC and the CA that the “Hold
Out” clause does not apply in the instant case. In view of the foregoing, we find that
petitioner is guilty of breach of contract when it unjustifiably refused to release
respondents’ deposit despite demand. Having breached its contract with respondents,
petitioner is liable for damages.
Same; Same; Same; Banks And Banking; The Supreme Court Finds That
Petitioner Indeed Acted In A Wanton, Fraudulent, Reckless, Oppressive Or
Malevolent Manner When It Refused To Release The Deposits Of
Respondents Without Any Legal Basis; A Bank Must “Treat The Accounts Of
Its Depositors With Meticulous Care And Always To Have In Mind The
Fiduciary Nature Of Its Relationship With Them.” For Failing To Do This, An
Award Of Exemplary Damages Is Justified To Set An Example .—In this case,
we find that petitioner indeed acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner when it refused to release the deposits of respondents without any
legal basis. We need not belabor the fact that the banking industry is impressed with
public interest. As such, “the highest degree of diligence is expected, and high
standards of integrity and performance are even required of it.” It must therefore “treat
the accounts of its depositors with meticulous care and always to have in mind the 77
fiduciary nature of its relationship with them.” For failing to do this, an award of
exemplary damages is justified to set an example.
Mitsubishi Motors Philippines Salaried Employees Union (MMPSEU) vs.
Mitsubishi Motors Philippines Corporation 698 SCRA 599 , June 17, 2013
Syllabi Class : Civil Law|Unjust Enrichment
Insurance Law; Collateral Source Rule; As part of American personal injury
law, the collateral source rule was originally applied to tort cases wherein
the defendant is prevented from benefitting from the plaintiff’s receipt of
money from other sources. Under this rule, if an injured person receives
compensation for his injuries from a source wholly independent of the
tortfeasor, the payment should not be deducted from the damages which he
would otherwise collect from the tortfeasor.―As part of American personal injury
law, the collateral source rule was originally applied to tort cases wherein the defendant
is prevented from benefitting from the plaintiff’s receipt of money from other sources.
Under this rule, if an injured person receives compensation for his injuries from a source
wholly independent of the tortfeasor, the payment should not be deducted from the
damages which he would otherwise collect from the tortfeasor. In a recent Decision by
the Illinois Supreme Court, the rule has been described as “an established exception to
the general rule that damages in negligence actions must be compensatory.” The Court
went on to explain that although the rule appears to allow a double recovery, the
collateral source will have a lien or subrogation right to prevent such a double recovery.
In Mitchell v. Haldar, 883 A.2d 32, 37-38 (Del. 2005), the collateral source rule was
rationalized by the Supreme Court of Delaware: The collateral source rule is ‘predicated
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on the theory that a tortfeasor has no interest in, and therefore no right to benefit from
monies received by the injured person from sources unconnected with the defendant.’
According to the collateral source rule, ‘a tortfeasor has no right to any mitigation of
damages because of payments or compensation received by the injured person from
an independent source.’ The rationale for the collateral source rule is based upon the
quasi-punitive nature of tort law liability. It has been explained as follows: The collateral
source rule is designed to strike a balance between two competing principles of tort
law: (1) a plaintiff is entitled to compensation sufficient to make him whole, but no
more; and (2) a defendant is liable for all damages that proximately result from his
wrong. A plaintiff who receives a double recovery for a single tort enjoys a windfall; a
defendant who escapes, in whole or in part, liability for his wrong enjoys a windfall.
Because the law must sanction one windfall and deny the other, it favors the victim of
the wrong rather than the wrongdoer. Thus, the tortfeasor is required to bear the cost
for the full value of his or her negligent conduct even if it results in a windfall for the
innocent plaintiff. (Citations omitted) As seen, the collateral source rule applies in order
to place the responsibility for losses on the party causing them. Its application is
justified so that “the wrongdoer should not benefit from the expenditures made by the
injured party or take advantage of contracts or other relations that may exist between
the injured party and third persons.” Thus, it finds no application to cases involving no-
fault insurances under which the insured is indemnified for losses by insurance
companies, regardless of who was at fault in the incident generating the losses. Here,
it is clear that MMPC is a no-fault insurer. Hence, it cannot be obliged to pay the
hospitalization expenses of the dependents of its employees which had already been
paid by separate health insurance providers of said dependents.
Philippine National Bank, Vs. Spouses Cheah Chee Chong And Ofelia
Camacho Cheah, G.R. Nos. 170865 & 170892 April 25, 2012
Syllabi Class: Civil Law|Contributory Negligence
Same; Same; A Bank Is Expected To Be An Expert In Banking Procedures
And It Has The Necessary Means To Ascertain Whether A Check, Local Or
Foreign, Is Sufficiently Funded.—It bears stressing that “the diligence required of
banks is more than that of a Roman pater familias or a good father of a family. The
highest degree of diligence is expected.” PNB miserably failed to do its duty of
exercising extraordinary diligence and reasonable business prudence. The disregard of
its own banking policy amounts to gross negligence, which the law defines as
“negligence characterized by the want of even slight care, acting or omitting to act in
a situation where there is duty to act, not inadvertently but wilfully and intentionally
with a conscious indifference to consequences in so far as other persons may be
affected.” With regard to collection or encashment of checks, suffice it to say that the
law imposes on the collecting bank the duty to scrutinize diligently the checks deposited
with it for the purpose of determining their genuineness and regularity. “The collecting
bank, being primarily engaged in banking, holds itself out to the public as the expert
on this field, and the law thus holds it to a high standard of conduct.” A bank is expected
to be an expert in banking procedures and it has the necessary means to ascertain
whether a check, local or foreign, is sufficiently funded.
Banks And Banking; Checks; The Payment Of The Amounts Of Checks
Without Previously Clearing Them With The Drawee Bank Especially So
Where The Drawee Bank Is A Foreign Bank And The Amounts Involved Were
Large Is Contrary To Normal Or Ordinary Banking Practice.—This Court already
held that the payment of the amounts of checks without previously clearing them with
the drawee bank especially so where the drawee bank is a foreign bank and the
amounts involved were large is contrary to normal or ordinary banking practice. Also,
in Associated Bank v. Tan, 446 SCRA 282 (2004), wherein the bank allowed the
withdrawal of the value of a check prior to its clearing, we said that “[b]efore the check
shall have been cleared for deposit, the collecting bank can only ‘assume’ at its own
risk x xx that the check would be cleared and paid out.” The delay in the receipt by
PNB Buendia Branch of the November 13, 1992 SWIFT message notifying it of the
dishonor of the subject check is of no moment, because had PNB Buendia Branch
waited for the expiration of the clearing period and had never released during that time
the proceeds of the check, it would have already been duly notified of its dishonor.
Clearly, PNB’s disregard of its preventive and protective measure against the possibility
of being victimized by bad checks had brought upon itself the injury of losing a
significant amount of money.
Continental Cement Corporation vs. Asea Brown Boveri, Inc. 659 SCRA
137 , October 17, 2011
Syllabi Class : Corporation Law
Corporation Law; A Corporation Has A Personality Separate And Distinct
From The Persons Composing Or Representing It; Hence, Personal Liability
Attaches Only In Exceptional Cases, Such As When The Director, Trustee, Or
Officer Is Guilty Of Bad Faith Or Gross Negligence In Directing The Affairs Of
The Corporation.—Respondent Eriksson, however, cannot be made jointly and
severally liable for the penalties. There is no showing that respondent Eriksson directed
or participated in the repair of the Kiln Drive Motor or that he is guilty of bad faith or
gross negligence in directing the affairs of respondent ABB. It is a basic principle that
a corporation has a personality separate and distinct from the persons composing or
representing it; hence, personal liability attaches only in exceptional cases, such as
when the director, trustee, or officer is guilty of bad faith or gross negligence in
directing the affairs of the corporation.
Philippine National Bankvs. F.F. Cruz And Co., Inc., G.R. No. 173259, July
25, 2011
Syllabi Class : Banks And Banking|Negligence
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Banks And Banking: Negligence; Where The Bank’s Negligence Is The
Proximate Cause Of The Loss And The Depositor Is Guilty Of Contributory
Negligence, We Allocated The Damages Between The Bank And The
Depositor On A 60-40 Ratio.—Given the foregoing, we find no reversible error in
the findings of the appellate court that PNB was negligent in the handling of FFCCI’s
combo account, specifically, with respect to PNB’s failure to detect the forgeries in the
subject applications for manager’s check which could have prevented the loss. As we
have often ruled, the banking business is impressed with public trust. A higher degree
of diligence is imposed on banks relative to the handling of their affairs than that of an
ordinary business enterprise. Thus, the degree of responsibility, care and
trustworthiness expected of their officials and employees is far greater than those of
ordinary officers and employees in other enterprises. In the case at bar, PNB failed to
meet the high standard of diligence required by the circumstances to prevent the fraud.
In Philippine Bank of Commerce v. Court of Appeals, 269 SCRA 695 (1997), and The
Consolidated Bank & Trust Corporation v. Court of Appeals, 410 SCRA 562 (2003),
where the bank’s negligence is the proximate cause of the loss and the depositor is
guilty of contributory negligence, we allocated the damages between the bank and the
depositor on a 60-40 ratio. We apply the same ruling in this case considering that, as
shown above, PNB’s negligence is the proximate cause of the loss while the issue as to
FFCCI’s contributory negligence has been settled with finality in G.R. No. 173278. Thus,
the appellate court properly adjudged PNB to bear the greater part of the loss
consistent with these rulings.

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