Insurance Company of North America, petitioner, v. Asian Terminals, Inc., respondent

Facts:

The trial court dismissed petitioner’s complaint for actual damages on the ground of

prescription under the Carriage of Goods by Sea Act. Thus, an action was instituted to review the

RTC’s decision.

On November 2002, Macro-Lite Corporation shipped to San Miguel Corporation, through

M/V DIMI P vessel, 185 packages (or 231,000 sheets) of electrolytic tin free steel, complete and in

good order condition and covered by Bill of Lading. The shipment had a declared value of US

$169,850.35 and was insured with petitioner against all risks under its marine policy.

The carrying vessel arrived at the port of Manila and when the shipment was discharged

therefrom, it was noted than 7 packages were damaged and in bad order. The shipment was then

turned over to the custody of respondent (as arrastre operator) for storage and safekeeping

pending its withdrawal by the consignee’s authorized customs broker, which was later withdrawn

by the customs broker from custody of the respondent.

An examination report was written and showed that an additional 5 packages were found to

be damaged and in bad order.

Consignee, San Miguel Corporation, filed separate claims against respondent and petitioner

for the damage of 11,200 sheets of electrolytic tin free steel. Petitioner, as insurer of the cargo,

paid the consignee the amount of Php 431,592.14 for the damage caused to the shipment.

Thereafter, petitioner formally demanded reparation against respondent and as respondent failed

to satisfy its demand, petitioner filed an action for damages with the RTC.

The trial court dismissed the complaint because it was already barred by the statute of

limitations. It held that COGSA, embodied in CA 65, applies to this case since the goods were

shipped from a foreign port to the Philippines. Under the said law, particularly paragraph 4, Section

3(6), the shipper has the right to bring a suit within one year after the delivery of the goods or the

date when the goods should have been delivered.

Issue:

Whether or not, the one-year prescriptive period for filing a suit under the COGSA applies to

this action.

Decision:

The COGSA (Public Act No. 521 of the 74th US Congress) was accepted to be made applicable

to all contracts for the carriage of goods by sea to and from the Philippine ports in foreign trade by

virtue of CA 65. The term “carriage of goods” covers the period from the time when the goods are

loaded to the time when they are discharged from the ship; thus, it can be inferred that the period

of time when the goods have been discharged from the ship and given to the custody of the arrastre

operator is not covered by the COGSA.

The prescriptive period for filing an action for the loss or damage of the goods under the

COGSA is found in paragraph 6, Section 3. It states that “in any event, the carrier and the ship shall

be discharged from all liability in respect of loss or damage unless suit is brought within one year

after delivery of the goods or the date when the goods should have been delivered. Provided, that

if a notice of loss or damage, either apparent or concealed, is not given as provided for in this

section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year

after the delivery of the goods or the date when the goods should have been delivered.”

However, the COGSA does not mention that an arrastre operator may invoke the

prescriptive period of 1 year; hence, it does not cover the arrastre operator.

Steelcase, Inc., petitioner, v. Design International Selections, Inc., respondent

Facts:

Petitioner Steelcase, Inc. is a foreign corporation existing under the laws of Michigan, USA

and engaged in the manufacture of office furniture with dealers worldwide. Design International

Selections, Inc. (DISI) is a corporation existing under Philippine Laws and engaged in the furniture

business, including the distribution of furniture.

Steelcase and DISI orally entered into a dealership agreement whereby Steelcase granted

DISI the right to market, sell, distribute, install and service its products to end-user customers within

the Philippines. The business relationship continued smoothly until it was terminated after the

agreement was breach in 1999.

Steelcase filed a complaint for sum of money against DISI alleging that DISI had an unpaid

account of US $600 thousand. It also prayed that DISI be ordered to pay actual or compensatory

damages, exemplary damages, attorney’s fees and costs of suit. Meanwhile, DISI alleged that the

complaint failed to state a cause of action and to contain the required allegations on Steelcase’s

capacity to sue in the Philippines despite that Steelcase was doing business in the Philippines

without the required license to do so, and that the complaint should be dismissed because of

Steelcase’s lack of legal capacity to sue in Philippine courts.

The RTC dismissed Steelcase’s complaint. It has likewise concluded that Steelcase was

“doing business” in the Philippines as contemplated by RA 7042 (The Foreign Investments Act of

1991) and since it did not have the license to do business in the country, it was barred from seeking

redress from Philippine courts until it obtained the requisite license to do so. The CA affirmed the

ruling of the RTC.

Steelcase contends that it is DISI is an independent distributor of Steelcase products and not

an agent or conduit of Steelcase. Moreover, DISI is acting as Steelcase’s appointed local distributor,

and is transacting business in its own name and for its own account.

Issue:

Whether or not Steelcase had been “doing business” in the Philippines without a license

Decision:

The phrase “doing business” is clearly defined in Section 3(d) of RA 7042 (Foreign

Investments Act of 1991) which states that “the phrase ‘doing business’ shall include soliciting

orders, service contracts, opening offices, whether called ‘liaison’ offices or branches; appointing

representatives or distributors domiciled in the Philippines… totalling 180 days or more;

participating in the management, supervision or control of any domestic business, firm, entity or

corporation in the Philippines; and any other act or acts that imply a continuity of commercial

dealings or arrangements, and contemplate 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,

commercial gain or of the purpose and object of the business organization.” The second sentence

of Section 3(d) states that “the phrase ‘doing business’ shall not be deemed to include mere

investment as a shareholder by a foreign entity in domestic corporations duly registered to do

business… nor appointing a representative or distributor domiciled in the Philippines which

transacts business in its own name and for its own account.”

On such account, the appointment of a distributor in the Philippines is not sufficient to

constitute “doing business” unless it is under the full control of the foreign corporation.

Steelcase, therefore, is foreign corporation not doing business in the Philippines by its act of

appointing a distributor falls under one of the exceptions under RA 7042.

Far East Bank and Trust Company (now Bank of the Philippine Islands), petitioner, v. Tentmakers

Group, Inc., Gregoria Pilares Santos and Rhoel P. Santos, respondents

Facts:

The signatures of respondents, Gregoria Pilares Santos (President) and Rhoel P. Santos

(Treasurer) of Tentmakers Group Inc. (TGI) appeared on 3 promissory notes for loans contracted

with the petitioner.

Petitioner, after a futile demand, filed a complaint before the RTC for the payment of the

principal of the promissory notes which amounted to a total of Php 887,613.37 inclusive of interest,

penalty charges and attorney’s fees.

The RTC rendered a decision in favour of the petitioner. However, this was reversed by the

CA on the ground, among others, that there were no collaterals to ensure the payment of the loans

and, in the conferment of such unsecured loans, the bank manager also failed to comply with the

guidelines set forth under the Manual fo Regulation for Banks when it approved and released the

subject loans to Gregoria and Rhoel.

Petitioner contends that the evidence on record showed its compliance with the banking

rules and regulations through board resolutions issued by TGI fully authorizing Gregoria and Rhoel

to transact business with it.

Issue:

Whether or not petitioner did not comply with the guidelines under the Manual of

Regulation for Banks.

Decision:

Far East Bank and Trust Company failed to show a document evidencing that Gregoria and

Rhoel or TGI received the proceeds of the 3 promissory notes. Moreover, petitioner violated the

rules and regulations of the BSP by its failure to strictly follow the guidelines in the conferment of

unsecured loans set forth under the Manual or Regulations for Banks.

Section X319.1 of the Manual of Regulation for Banks states that “before granting credit

accommodations against personal security, banks must exercise proper caution by ascertaining that

the borrowers, co-makers, endorsers, sureties and/or guarantors possess good credit standing and

are financially capable of fulfilling their commitments to the bank.” To show proof of financial

capacity of borrower, Section X319.2 provides that other than the “personal information sheet

about the borrower, banks shall require that an application for a credit accommodation against

personal security be accompanied by a copy of the latest income tax returns of the borrower and his

co-maker duly stamped as received by the BIR and if the credit accommodation exceeds Php

500,000.00, a copy of the borrower’s balance sheet duly certified by an Independent Certified Public

Accountant and in case he is engaged in business, also a copy of the profit and loss statement duly

certified by a CPA.”

Metropolitan Cebu Water District, petitioner, v. Mactan Rock Industries, Inc., respondent

Facts:

Petitioner Metropolitan Cebu Water District (MCWD) is a government-owned and controlled

corporation created pursuant to PD 198, and is mandated to supply water within its service area.

Respondent Metro Rock Industries, Inc. (MRII) is a domestic corporation.

MCWD entered into a water supply contract with MRII wherein it was agreed that MRII would

supply MCWD with potable water in accordance with WHO standard or the Philippine national

standard, with a minimum guaranteed annual volume.

Six years later, MRII filed a complaint against MCWD with the Construction Industry

Arbitration Commission (CIAC). It sought the reformation of Clause 17 of the water supply contract

(Price Escalation/De-Escalation Clause), payment of the unpaid price escalation/adjustment and the

payment of unpaid variation/extra work order and interest/cost of money up to December 2003.

Issue:

Whether or not the Construction Industry Arbitration Commission has jurisdiction over

disputes arising from a water supply contract.

Decision:

The court finds in the affirmative.

The Construction Industry Arbitration Commission was created under EO 1008 (Creating an

Arbitration Machinery for the Philippine Construction Industry), in recognition of the need to

establish an arbitral machinery that would expeditiously settle construction industry disputes.

Under Section 4 of EO 1008, “CIAC shall have original and exclusive jurisdiction over disputes arising

from, or connected with, contracts entered into by parties involved in construction in the

Philippines, whether the disputes arise before or after the completion of the contract, or after the

abandonment or breach thereof… Excluded from the coverage of this law are disputes arising from

employer-employee relationships which shall continue to be covered by the Labor Code of the

Philippines.”

The text of Section 4 of EO 1008 is broad enough to cover any dispute arising from, or

connected with, construction contracts, whether these involve mere contractual money claims or

execution of the works. Unless specifically excluded, all incidents and matters relating to

construction contracts are deemed to be within the jurisdiction of the CIAC.

Moreover, the parties characterized the water supply contract as one involving construction,

as its arbitration clause specifically refers disputes, controversies or claims arising out of or relating

to the Contract or the breach, termination or validity thereof.

Ace Navigation Co. Inc., petitioner v. FGU Insurance Corporation and Pioneer Insurance and

Surety Corporation, respondents

Facts:

Cardia Limited shipped on board the vessel M/V Pakarti Tiga at Shanghai Port, China, 8260

metric tons (or 165,200 bags) of Grey Portland Cement to be discharged at the Port of Manila and

delivered to its consignee, Heindrich Trading Corp. The subject shipment was insured with

respondents FGU Insurance Corp. and Pioneer Insurance and Surety Corp. against all risks for the

amount of Php 18,048,421.00. Regency Express Lines S.A., chartered by Sky International, Inc.

having entered into a contract with Shinwa Kaiun Kaisha Ltd. to which the subject vessel was

chartered by the owner Pakarti Tata, was the one which directy dealt with Heindrich and

accordingly issued Clean Bill of Lading No. SM-1.

The vessel arrived at the Port of Manila and the shipment was discharged. Upon inspection

by Heindrich and Ace Navigation Co. Inc, agent of Cardia Limited, it was found that out of the

165,200 bags of cement, 43,905 bags were in bad order and condition. The respondents, unable to

collect the sustained damages from Cardia Limited and Regency Express Lines S.A., each paid

Heindrich separately totalling to Php 711,727.34 and became subrated to all the rights and causes

of action accruing to Heindrich.

Respondents filed a complaint for damages. Ace Navigation Co. Inc. claimed it was not a real

party-in-interest from whom the respondents can demand compensation. The respondents

maintain that Ace Navigation Co. Inc is a ship agent and not a mere agent of Cardia, as found by

both the CA and the RTC.

Issue:

Whether or not Ace Navigation Co. Inc. be held liable for damages sought by FGU Insurance

Corporation and Pioneer Insurance and Surety Corporation.

Decision:

Article 586 of the Code of Commerce provides that “the shipowner and the ship agent shall

be civilly liable for the acts of the captain and for the obligations contracted by the latter to repair,

equip and provision the vessel, provided the creditor proves the amount claimed was invested

therein. By ship agent is understood the person entrusted with the provisioning of a vessel, or who

represents her in the port in which she may be found.”

Due to the above provision, the Court disagreed with respondents’ contention. Thus, Ace

Navigation Co. Inc. cannot be held liable for damages sought by the respondents.

Asiatrust Development Bank, petitioner v. Carmelo H. Tuble, respondent

Facts:

Carmelo Tube, who served as the vice-president of Asiatrust Development Bank, availed

himself of the car incentive plan and loan privileges offered by the bank. He was also entitled to the

bank’s Senior Managers Deferred Incentive Plan (DIP). He acquired a Nissan Vanette through the

company’s incentive plan. The arrangement was made to appear as a lease agreement requiring

only the payment of monthly rentals. Accordingly, the lease would be terminated in case of

employee’s resignation or retirement prior to full payment of the price. Meanwhile, as for the

loans, he obtained 3 separate loans.

When he resigned, he was given the option to either return the vehicle without any further

obligation or retain the unit and pay its remaining book value. His obligations, aside from the

purchase or return of the vehicle, are the Php 100,000.00 as consumption loan, Php 421,800.00 as

real estate loan and Php 16,250 as salary loan. On the other hand, the petitioner owed Tuble his

pro-rata share in the DIP, which was to be issued after the bank had given the resigned employee’s

clearance, and Php 25,797.35 representing his final salary and corresponding 13th month pay.

Tuble claimed that since he and the bank were debtors and creditors of each other, the

offsetting of loans could legally take place. However, the bank sent him a demand letter obliging

him to pay his debts and to return the vehicle. As for the real estate loan, a petition for extra-

judicial foreclosure was filed but was redeemed by Tuble for Php 1,318,401.91. After payment of

such amount, Tuble questioned how the foreclosure basis of Php 421,800.00 ballooned to Php

1,318,401.91 in a matter of 1 year. The petitioner contends that the redemption price included the

18% annual interest.

Issue:

Whether or not the 18% annual interest on the bid price was proper.

Decision:

Stated in the General Banking Law, in the event of judicial or extrajudicial foreclosure of any

mortgage on real estate that is used as security for an obligation to any bank, banking institutions or

credit institutions, the mortgagor can redeem the property by paying the amount fixed by the court

in the order of execution, with interest at the rate specified in the mortgage.

Park Hotel, J’s Playhouse Burgos Corp., Inc., and/or Gregg Harbutt, General Manager, Atty.

Roberto Enriquez, President, and Bill Percy, petitioners v. Manolo Soriano, Lester Gonzales, and

Yolanda Badilla, respondents

Facts:

Petitioner Park Hotel is a corporation engaged in the hotel business with Gregg Harbutt and

Bill Percy as General Manager and owner, respectively. Together with Atty. Roberto Enriquez, the

three are also officers and stockholders of Burgos Corporation, a sister company of Park Hotel.

Manolo Soriano was hired by Park Hotel as Maintenance Electrician and then transferred to Burgos

two years later. Lester Gonzales was employed by Burgos as doorman and later promoted as

supervisor. Yolanda Badilla was a bartender of J’s Playhouse operated by Burgos.

The respondents were dismissed from work for allegedly stealing company properties. As

such, they filed complaints before the Labor Arbiter. The petitioners alleged that aside from the

charge of theft, Soriano and Gonzales have violated various company rules and regulations

contained in several memoranda issued to them. The Labor Arbiter ruled in favor of the

respondents, affirmed by the NLRC after appeal by petitioners. The CA, when the matter was

elevated to them, also ruled that petitioners failed to observe the mandatory requirements

provided by law in the conduct of termination respondents.

Issue:

Whether or not Park Hotel be held solidarily liable with Burgos, Percy and Harbutt.

Decision:

The Court rules that before a corporation can be held accountable for the corporate

liabilities of another, the veil of corporate fiction must first be pierced. A corporation is an artificial

being invested by law with a personality separate and distinct from that of its stockholders and from

that of other corporations to which it may be connected. To disregard the separate juridical

personality of a corporation, the wrongdoing must be established clearly and convincingly and

cannot be presumed.

Respondents utterly failed to prove by competent evidence that Park Hotel was a mere

instrumentality, agency, conduit or adjunct of Burgos, or that its separate corporate veil had been

used to cover any fraud or illegality committed by Burgos against the respondents. Accordingly,

Park Hotel and Burgos cannot be considered as one and the same entity and Park Hotel cannot be

held solidary liable with Burgos.

However, corporate officers may be deemed solidarily liable with the corporation for the

termination of employees if they acted with malice or bad faith. Section 31 of the Corporation Code

makes a director personally liable if he is guilty, among others, of gross negligence or bad faith in

directing the affairs of the corporation. Thus, Percy and Harbutt, having acted in bad faith in

directing the affairs of Burgos, are jointly and severally liable for respondents’ dismissal.

Bank of Commerce, petitioner v. Planters Development Bank and Bangko Sentral ng Pilipinas,

respondents/Bangko Sentral ng Pilipinas, petitioner v. Planters Development Bank, respondent

Facts:

For the 1st set of CB bills, Rizal Commercial Banking Corporation (RCBC) was the registered

owner of 7 Central Bank (CB) bills with a total face value of Php 70 million, which were eventually

sold to Bank of Commerce (BOC), which, in turn, sold these CB bills to Planters Development Bank

(PDB) as evidenced by a “Detached Assignment.” A week later, PDB sold to the BOC Treasury Bills

worth Php 70 million as evidenced by a Trading Order and Confirmation of Sale.

For the 2nd set of CB bills, RCBC sold 2 CB bills with a total face value of Php 20 million to the

PDB and delivered to PDB the corresponding Detached Assignment. PDB delivered to Bancap the 2

CB bills which in turn sold the CB bills to Al-Amanah Islamic Investment Bank of the Philippines,

which also sold it to the BOC.

Upon learning of the transfers involving the CB Bills, the PDB informed the officer-in-charge

of the BSP’s Government Securities Deparment of the PDB’s claim over these CB bills, based on the

Detached Assignments in its possession. The requests of PDB were denied by the officer-in-charge

which prompted the petitioner to file an action so as to compel the BSP to determine the party

legally entitled to the proceeds of the subject CB bills.

Issue:

Whether or not the Bangko Sentral ng Pilipinas has jurisdiction in determining the party

legally entitled to the proceeds of the CB bills.

Decision:

Under the New Central Bank Act (RA 7653), the BSP is given the responsibility of providing

policy directions in the areas of money, banking and credit; it is given the primary objective of

maintaining price stability, conducive to a balanced and sustainable growth of the economy and of

promoting and maintaining monetary stability and convertibility of the peso. Moreover, the

Constitution expressly grants the BSP the power of supervision over the operation of banks.

While RA 7653 empowers the BSP to conduct administrative hearings and render judgment

for or against an entity under its supervisory and regulatory powers, the grant of quasi-judicial

authority to the BSP cannot possibly extend to situation which do not call for the exercise by the

BSP of its supervisory or regulatory functions over entities within its jurisdiction.

The fact alone that the parties involved are banking institutions does not necessarily call for

the exercise by the BSP of its quasi-judicial powers under the law.

Great White Shark Enterprises, Inc, petitioner, v. Danilo M. Caralde, Jr., respondent

Facts:

Caralde field before the Bureau of Legal Affairs (BLA) of the IPO a trademark application

seeking to register the mark “SHARK & LOGO” for his manufactured goods under Class 25, such as

slippers, shoes and sandals. Petitioner Great White Shark Enterprises, Inc. opposed the application

claiming to be the owner of the mark consisting of a representation of a shark in color known as

“Greg Norman Logo.”

Great White Shark’s trademark application was granted and it was issued Certificate of

Registration for clothing, headgear and footwear. The BLA rejected Caralde’s application, which was

later affirmed by the IPO Director General.

On petition for review however, the CA reversed and set aside the decision of the IPO and

directed it to grant Caralde’s application for registration of the mark “SHARK & LOGO.”

Issue:

Whether or not Caralde be held liable for trademark infringement.

Decision:

Section 123.1(d) of the Intellectual Property Code provides that a mark cannot be registered

if it is identical with a registered mark belonging to a different proprietor with an earlier filing or

priority date, with respect to the same or closely related goods or services or has a near

resemblance to such mark as to likely deceive or cause confusion.

The Court finds no confusing similarity between the subject marks.

Express Investments III Private Ltd. and Export Development Canada, petitioner, v. Dayan

Telecommunications, Inc., et.al, respondents/In Re: Corporate Rehabilitation of Dayan

Telecommunications pursuant to the Interim Rules of Procedure on Corporate

Rehabilitation,et.al, petitioners, v. Dayan Telecommunications, respondent/In Re:Corporate

Rehabilitation of Bayan Telecommunciations, Inc. pursuant to the Interim Rules of Procedure on

Corporate Rehabilitation, et.al, petitioners, v. Dayan Telecommunications, Inc., respondents/The

Bank of New York, petitioner, v. Bayan Telecommunications, Inc., respondent

Facts:

Bayantel is a duly organized domestic corporation engaged in the business of providing

telecommunication services. On various dates, it entered into several credit agreements.

Foreseeing the impossibility of further meeting its obligations, Bayantel sent a proposal for the

restructuring of its debts to the bank creditors and holders of notes. To facilitate the negotiations

between Bayantel and its creditors, an informal steering committee was formed.

The rehabilitation court held the creditors of Bayantel, whether secured or unsecured,

should be treated equally and on the same footing.

Issue:

Whether or not the Rehabilitation Court has jurisdiction over the case at bar.

Decision:

RA 8799 (Securities Exchange Code) transferred to the RTCs the jurisdiction of the SEC over

petitions of corporations, partnerships or associations to be declared in the state of suspension of

payments in cases where the corporation, partnership or association possesses property to cover all

its debts but foresees the impossibility of meeting them when they respectively fall due or in cases

where it has no sufficient assets to cover its liabilities, but is under the management of a

rehabilitation receiver or a management committee.