Banking Law a trust license.

It is separately incorporated entity

so that INSURANCE firms or MUTUAL FUND
By Atty. Mary Reyes. companies can now establish a trust entity.

 Investors money is not covered by PDIC; while
Banking deposits in bank is covered upto 500k.
 General Banking Law
 New Central Bank Example of entities with trust authority:
 Secrecy of bank act 1. universal & commercial banks with trust
departments (trust license is automatically
 PDIC
instituted)
2. Thrift bank – must apply for trust license
3. Non-bank financial intermediaries
General Banking Law (RA 8791) 4. Trust Corporations
Banks are entities engage in lending of funds.
Must be a stock corp (only par value share)
Funds must come from public:”deposit of more
than 20 or more person. Non-bank financial institutions other than
bank that offer financial services, but do not
hold banking licenses and cannot accept
deposits. Ex. BPI capital corp/ BDO capital
Bank Lending corp Quasi-bank and investment corp/ First Metro Investment
Fund is Fund is Sourced from
Corp.
sourced from sourced from deposit
public their own substitute:
deposits capital or not Ex: issuance/
(deposit of more than 19 endorsement/ Nature of Banking
more than 20 persons Debt Banking is fiduciary in nature!
persons) instrument/
Promissory  Diligence required:
notes.. etc.. “Requires high standard of integrity
and performance; highest degree
Trust of diligence expected.”
A stock corp/person duly authorized by monetary  It is required to exercise utmost diligence
board to engage in trust business. in handling of deposits; highest degree of
diligence. (higher than of a good father of a
Trust business – to hold/administer in trust or
family)
deposit for the benefit of other.
 Banks are expected to exercise also the
 law prohibits integrating properties & funds of highest degree of diligence in selection and
all other business of the bank with those of the supervision of their employee
trust business
 Special rules on strike and lockouts
 Prudent man Rule: that the trust entity is - If unsettled after 7 calendar days, BSP
acting in capacity and familiar with such matters, shall report to DOLE Sec. who may
would exercise in the conduct of a like character assume jurisdiction; or certify to NLRC for
and similar aims. (diligence required) compulsory arbitration; President may
also assume jurisdiction.
 Stand-alone trust corp: an entity which
basically performs functions of a trust department
of a BANK or NON-BANK financial institutions with
Leonen Bar: Banks cannot hide under the defense Sariling test ko pano mo malalaman if need
that a sale was made on an as-is-where-is basis, as ng investigation or not ung bank.
this stipulation cam only encompass physical Need investigation Not need investigation
features that are readily perceptible by an ordinary If may suspicion If walang suspicion, na
person possessing on specialized skills. kahit na mag
Ung case na to, ung bako wrongly advertises the
investigate hindi
area of the property acquired thru foreclosure. Sabi madidiscover ng bank
ni leonen they are grossly negligent duon, the bank ung flaw sa title.
is practically acting in bad faith! Any sale made on In both cases, Bank is mortgagee in good
this account is voidable for casual fraud. faith!

Doctrine of Mortgagee in good faith Next is diba usually kapag naforeclose na ng bank
ung property, ginagawa nila sila din ang bibili
Grule: The mortgage contract is deemed minsan. Anu tawag sakanila if napurcahse nila ung
valid if the mortgagee relied in good faith on property sa auction after foreclosure, tawag sakanila
what appears on the face of the CERTIFICATE is Innocent purchaser for value na.
of TITLE.
Banks Employees
Exception: Where the mortgagee is a BANK! GRule:
- A higher standard is imposed before “Banks are expected to exercise also the
it is considered a mortgagee in good highest degree of diligence in selection
faith! (Banks is impressed with public and supervision of their employee”
interest!)
 Bank’s liability as obligor is not merely
Note: banks cannot simply rely on the title vicarious but PRIMARY! Wherein the defense
alone, but must further investigate the of exercise of due diligence in selection and
property to ensure the genuineness of the supervision of its employees is of no
title. moment.
Thus, the bank is expected to transact with  Confidence in the baking system, which
the standards imposed to them which is the includes RELIANCE on BANK MANAGERS, is
HIGHEST DEGREE of CARE! Utmost Diligence! vital in the economic life of our society. So
thus:
Exception to the Exception: Unless an - Unauthorized act of the bank’s
investigation would not be necessary manager is the bank’s liability!
because of the circumstances. - They must rely on a complete
document, failure to make such
Leonen Bar: But if ung situation is that inquiry or complete document and
mahirap mahanap talaga ung flaw! That even releases a deposit is their liability.
the bank investigate the property, hindi nila
madidiscover ung anomaly, or anything that 
arouse suspicion… sabi ni leonen, the bank
should not be liable! Thus, this is an
exception to the exception. So circumstantial
pala to talaga.
 Classification of Banks:  Islamic Banks – no interest! Bawal sa
Universal Banks: Quoran, meron sila profit sharing.
Power to engage in investment as investment Financial allied Non-financial allied
house and the power to invest in allied and non- undertakings undertakings:
allied enterprises. Total investment in equities of
allied and non-allied enterprises shall not exceed a. leasing companies Warehousing
50% of bank’s net worth; and shall not exceed including leasing of stalls Storage companies
25% of the company’s net worth. and spaces in a commercial Safety deposit box
establishment. Mutual funds
An investment house – is an enterprise engage in b. Banks HMOs
the underwriting of securities for other corp, loan c. Insurance companies – Building and home
create separate or invest development
syndication, financial packaging (investment
d. investment house Insurance
banking) – they help corp to raised money either e. Holding company whose Agencies/brokerage
by debt or stock offering. investment are confined to
Allied Non-allied equities of allied and/or
non-allied undertakings for
May own upto 100% of Not exceed 35% of the
universal banks.
only one Universal or total equity and voting
commercial bank stock.

Commercial Banks:
May invest only in the equities of Allied
enterprises.
Non-allied undertaking of universal banks
 Those which to NOT REQUIRE prior BSP
 Total investment in equities of allied
approval
enterprise shall not exceed 35% of net-worth - Enterprises engaged in physical
of the allied bank. productive agriculture , mining,
manufacturing, public utilities,
 Acquisition is subject to prior MB approval construction, wholesale trade & social
services
 They can own upto 100% equity of thrift or - Industrial parks/ development
rural bank, and non-financial allied enterprise. - Commercial complex arising with
connection with gov’t privatization
 A publicly listed universal bank may own upto program
100% of the voting stock of only ONE other - Etc. as MB may provide
universal bank.
 Those which REQUIRE prior BSP approval
 May engage in quasi-banking activities. - Other non-allied undertakings
Other kind of BANKS: Capitalization:
 Thrift banks – composed of savings and  UB:
mortgage banks, may accept saving and time Head office only 3B; upto 10 branch 6B; upto
deposits 11-100 branch 15B; more than 100, 20B
 CB:
 Rural banks – to promote rural Head office only 2B; upto 10 branch 4B; upto
development; may accept savings & time 11-100 branch 10B; more than 100, 15B
deposit; current (checking) accounts need  Thift:
prior approval with MB Head office only 1B in MM to 2B for those with
head office in NCR with more than 50 branches.
 Cooperative banks – same function as
Rural banks, but for the benefit of the coop.
 As to who can be directors? the contract of simple loan.

Public officers can be directors of rural bank; Failure of the bank to return the money deposited
allowed in other banks if incidental to financial will ONLY give rise to CIVIL LIABILITY! Plus
assistance provided by the gov’t or GOCC to the MANDAMUS does not lie to enforce its
bank. performance.

As to incorporators  The bank has the tight to compensation; it can

Incorporators of banks are natural persons; set off the deposits with the debts of the
Except: rural banks w/c can be establish by depositor that are due and demandable
cooperatives and corp primarily organized to hold
equity in RBs.
Kind of Deposit:
As to foreign equity:
 Saving account – interest bearing deposit
Rural bank and Thrift - Foreign banks can own up  Demand deposits – checking account (usually
to 60% of voting shares not earn interest)
 Negotiable order of withdrawal (NOW)
Local banks – foreigners can own 100% accounts – interest bearing deposit combined
of local banks. (RA 10641) with check feature.
 time deposit – accounts with fixed term not
less than 30 days
Function of Banks  Foreign currency deposits – pwede dito
Deposit function numbered account lang. (anonymous accounts
Loan function are prohibited generally)
Custody  Joint account – maybe subject to survivorship
agreement.
Prohibited:
- it can’t outsource INHERENT banking functions!
- directly invest in insurance business LIMITATIONS OF DEPOSITS:
Unclaimed Balance Act (Act 3936)
1. Deposit function:
Makes it obligatory on every bank to report
Bank deposits are not contract of deposits but of to the Treasurer of the Philippines (who will
SIMPLE LOAN! in turn inform the SOL GEN) of deposits that
have been touched for 10 years.
Bank is debtor while the depositor is the creditor.
Thus,  Escheat proceeding of unclaimed accounts –
proper publication will be made! And if no
 Bank can make use of the deposited money, claimant will be escheated and will go to the
and they are not being held in trust for safe Treasurer of the PH to the credit of the Republic
keeping. to be used and appropriated by the Congress.

 Bank officers cannot be held liable for estafa if

they authorized the use of the money deposited
2. LOAN FUNCTION
by the depositors. Single Borrower’s Limit

Why? Because once you deposited the money to There is a limit where the Bank can loan to a
the Bank! The bank now have the ownership of SINGLE PERSON. – not exceed 25% of Bank’s
the money deposited and they use the money on net worth.
their own bank operations. Ownership of the  Amount can be increased by 10% more
money deposited was transmitted at perfection of provided there is additional security to the loan.
DOSRI
Rules regarding stockholdings
1. Borrower is Directors, Officers, or any  Banks shall issue par value stocks ONLY!
Stockholder of a Bank (and Related Interest)
As to loan collateral:
2. He contracts a Loan from a) his Bank; b)  Value of collateral shall not exceed 75% of the
subsidiary bank; c) from a bank which has appraised value of the real property plus 60% of
controlling proportion of shares owned by the the appraised value of the improvement OR 75%
same interest owning controlling proportion of of the appraised value of the Chattel.
the shares of his bank.
Ratio of net-worth to total risk assets
3. The Loan amount exceed 5% of the capital and  Asset of the bank is weight according to risk!
surplus of lending bank OR max amount - Banks must comply with the min. ratio
permitted by law, whichever is lower.
This is a PENAL (CRIMINAL) Violation if not
met. Escalation clause / Floating interest rates

Pwede ang DOSRI if this requisite is complied:  Floating interest rates – refer to the variable
- Account should be upon written approval of interest rate stated on a market-based reference
all the directors of the bank; excluding the
rates agreed upon by the parties.
debtor DOSRI
- Shall be made upon terms not less favorable - Not fix interest; base sa market-based
to the bank than those offered to other (Arms reference not by the discretion of bank
Length Rule – hindi ka pwede ifavor porket -
director ka)  Escalation Clauses – stipulations which allow
- Resolution shall be entered in record and for the increase (AS WELL AS MANDATORY
copy of which shall be transmitted to BSP DECREASE) of the original fixed rates.
- DOSRI shall waived his secrecy of deposits of - A Fixed rate that maybe increased!
whatever nature in all banks in the PH - Remember: Escalation clause is NOT
- Accounts will be subject to examination but VALID per se, there must be
info obtained be strictly confidential and corresponding DE-ESCALATION CLAUSE.
maybe used by examiners only in connect -AND- the rates must be left alone to the
with supervisory/examination responsibility parties not to the MB, because of
or by BSP in appropriate legal action it has
principle of Mutuality of Contracts diba!
initiated involving the deposit account.

Note: Mapa-Floating or Escalation with

ESTAFA x DOSRI Deescalation clause rate yan! Dapat both parties
 Elements of abuse of confidence, deceit, fraud consented! Hindi pwede Unilateral or isa lang
or false pretense and damages, which are gumawa ng decision sa rates. Again because of
essential to the prosecution for ESTAFA, are NOT the principle of mutuality of contracts (contracts
elements of a DOSRI violation. must be mutually agreed upon)

Exposure Limit Cases:

 Agreement must be in writing and signed,
 Upon approval of MB, total outstanding loans phone calls advising of the prevailing interest
to DOSRI shall not exceed 15% of total loan rates would not suffice.
portfolio of the bank or net worth, whichever is  In floating interest rate, it must be based on
lower the market-based reference! And must be agreed
upon by debtor and creditor! To preserve the
 Total unsecured loans to said DOSRI shall not mutuality of contracts.
exceed 30% of the aggregate ceiling OR the
outstanding loans, whichever is lower Note: if the Floating or Escalation clause interest
rate is VOID, the interest rate that will be
 observed will be the LEGAL interest rate.
Reasonable connection/Rational basis test: There
Constitutional Prohibition on lending must be legitimate government interest and that
Art 7: Sec. 16 – “ no loan, guaranty, ot other forms of there is a reasonable connection between it and the
financial accommodation for any business purpose may means employed to achieve it.
be granted, directly or indirectly by any GOCC or
financial institution to the President, VP, members of
Thus, there is a legitimate government interest in
the Cabinet, Congress, the Supreme Court, and
Constitutional Commissions, the Ombudsman, or to any the protection of the banking industry and a
firm or entity which they have controlling interest legitimate government interest in the protection of
during their tenure” foreclosed residential properties owned by natural
persons. The Shortened period of redemption for
Foreclosure of Mortgage juridical entities may be considered to be the
 Right of Redemption reasonable means for the protection of both these
interest (Zomer Dev’t vs. CA) – A Leonen Case!
1. In case of JUDICIAL FORECLOSURE
Mortgagor (natural person or juridical)|Morgagee Bank  Note also: one year redemption period is only
Redemption is within one yr after the registration directory and can be extended by the agreement of
of certificate of sale by the buyer to the RD. the parties.

2. Extra-judicial foreclosure  Further note: Pending action to annul the

foreclosure sale does not toll the running of the 1-
a. Mortgagor (natural person)|Morgagee Bank year period of redemption under Act 3135
Redemption is within one yr after the registration
of certificate of sale by the buyer to the RD.  Non-compliance with the publication requirement
of notice of sale – Auction sale will be void!
b. Mortgagor (juridical)|Morgagee Bank - Extrajudicial foreclosure requires that
Act 3135 – extrajudicial foreclosure of mortgagor
notice of sale shall be posted for not less
juridical person and mortgagee bank: Mortgagor
than 20 days in at least 3 public places of
has the right to redeem until but not after the
the municipality or city where the property
registration of the Cert of foreclosure sale with RD
which in no case shall be more than 3 months is situated, and if the property is worth
after foreclosure whichever is earlier. more than 300pesos, such notice shall also
be published once a week for at least 3
Leonen Bar: in extrajudicial foreclosure of banks. consecutive weeks in a newspaper of
The issue is that there is unfair classification of general circulation in the city or
natural and juridical as to redemption period which municipality.
makes it in violation of equal protection clause: - Substantial error or omission of material
Leonen said --- The difference in the treatment of information will render the notice
Juridical and natural person was based on the nature insufficient and will vitiate the sale.
of the properties foreclosed.
property is property is used for industrial  Possession – Purchaser at action sale whether in
used as or commercial purpose Judicial or extrajudicial foreclosure shall have right to
residence enter upon and take possession of such property
the period must In which shorter term is deemed immediately after the date of the confirmation of
be liberal which necessary to reduce the period the auction sale and administer the same
is one year uncertainty in the ownership of If
the, property and enable the
 Injunction and bond – Petition in court to enjoin
banks to dispose sooner of these
acquired assets. THIS IS TO or restrain foreclosure proceeding shall be given due
ENSURE THE SOLVENCY AND course upon filing of bond
LIQUIDITY OF BANKS!
 Banks can participate in the Foreclosure sale! But FIT and PROPER RULE:
how about foreign banks? Yes! they can participate - MD may prescribed rules providing the
and win in the bid. But they will ONLY have the qualifications of the individuals elected
power to actual possession of the property not or appointed bank directors or officers
and to disqualify those found unfit after
exceeding 5 years from actual possession excluding
due notice
redemption period. Provided, that in no event shall
tittle to the property be transferred to such foreign
bank. Dividends
- Exception: Foreign banks can own  Dividend declaration is prohibited in the ff:
condominium properties as provided for - If bank committed a major violation
under the existing laws. determined by BSP
- Clearing account with BSP is overdrawn
- It is deficient in the required liquidity
floor for gov’t deposit for 5 or more
Foreign ownership of domestic banks consecutive days |OR| Bank does not
 Foreign banks are not subject now to 40% comply with liquidity standard/ratio
limitation under GBL (they can now own 100% of
Universal and Commercial banks)
Regulations to maintain liquidity &
 Foreign INDIVIDUALS and NON-BANK corps security
may own or control only up to 40% of voting MB shall prescribe minimum ratio –net worth of
stocks of a domestic bank banks to total risk assets which may include
contingent accounts (Sec. 34)
 Non- Filipinos can now own up to 60% of voting
stocks of Rural and Thrift banks Law imposes limits on loans, credit
 Non- Filipinos can only own up to 40% of accommodation, and guarantees that may be
Commercial Bank extended by banks
DOSRI
Directors and Officers of a Bank  Restrictions on value of collateral Loans
 two of the directors shall be independent  MB may provide restrictions on unsecured
directors; in case of merged or consolidated loans (Sec. 41)
banks, max number of directors is 21(twenty one) MB may prescribed maturities and other terms
and condition for various loans and
Under BSP, at least 20% but not less than 2 accommodation (Sec. 43)
members of the BOD shall be independent  Law provides restrictions on dividend
directors; in case of Rural banks at least 1 declarations (Sec. 57)

 Independent director – person other than an Ownership of real property

officer or employee of the banks, its subsidiaries,  Bank can own real property necessary to
or affiliates or related interests. conduct its business, however, total investment in
such real estate and improvements, must not
 Non-Filipino can become members of BOD exceed 50% of combined capital accounts (Net
worth)
 No appointive elective public official shall at
the same time serve as officer of any private bank  Equity investments of bank in other
(except where such service is incident to financial corporation engage primarily in real estate is
assistance provided by the gov’t or GOCC to the considered part of bank’s total investment in real
bank estate.
 Interlocking Officership is generally prohibited.
 Banks may acquire, hold or convey real - Bank is unable to pay liabilities as they become due
in ordinary course of business (insolvent)
property when a) conveyed to satisfy debts; b)
- Bank has insufficient unrealizable assets, as
mortgage to in good faith as security for debts; c) determined by BSP, to meet liabilities.
purchased by bank at sales under judgement, - Bank cannot continue in business without involving
decress, mortages, or trust deeds. probable losses to its depositors or creditors
- Bank has willfully violated cease and desist order
that has become final, involving acts or transactions
 In these cases, real property must be disposed amounting to fraud or dissipation of assets
within 5 years or as prescribed by MB. After said
period, bank may continue to hold property for its  Duties of Receiver:
own use provided investment should not be more
than 50% of combined capital accounts (Sec. 22) 1. Administer all banks operation

 The closed bank may be sue and be sued only

Limits on real estate loans thru its receiver-PDIC. Any action filed by the
close bank without its receiver maybe dismissed.
 Universal/commercial banks – real estate loans
shall not exceed 20% of the total loan portfolio,
2. Exercise general powers of a receiver under
net of interbank loans
Rules of Court
Not included in the computation are:
- Individual for purposes of financing the
3. may deposit or place funds of institutions in
improvements non-speculative investments
- Loans to land developers/construction 4. Determine not later than 90 days from take
companies for Low-cost residential properties over whether the bank may be rehabilitated or
- Loans for collateralized by non-risk assets otherwise place in condition to resume business
- Loans for construction of public infrastructure 5. shall not, with exception of administrative
expenses, pay or commit and act involving
Bank under distress transfer or disposition of assets of institution
 Conservatorship - MB may appoint conservator
when it finds a bank in state of continuing inability  When a receiver is in charge, it is equivalent to
or unwillingness to maintain a condition of injunction (prohibition) to restrain bank officers
Liquidity. Conservatorship shall not exceed ONE from intermeddling with the property of the bank
year! in ANY WAY!
 Because properties of the Bank will become in
Powers of conservator: custodia legis (under the courts custody).
- Takes charge of assets, liabilities, & Properties of the bank are under control of the
management court.
- Reorganized management of the bank Thus, properties are exempt from any
- Collect all dues to the bank garnishment, levy, attachment, execution!
- Exercise all powers necessary to restore
viability
Liquidation: If PDIC-receiver determines that the Bank
Note: Conservator cannot repudiate perfected
can no longer be rehabilitated or permitted to resume
transaction (violate of impairment clause) business with safety of the depositors and the general
public, the MB shall notify in writing the BOD of its
Further note: Conservator is ONLY limited to acts findings and direct the receiver to proceed with the
of ADMINISTRATION! Hence, he can’t revoke a LIQUIDATION of the institution. PDIC- receiver now
contract of sale of property acquired by the bank then shall file ex parte with the RTC and without
even though the price agreed upon is no longer requirement of prior notice or any other action, a
reflective of the fair market value of the property. petition for assistance in the liquidation, pursuant to
liquidation plan of the PDIC-receiver for general
application to all closed banks. In quasi-banks, the
 Receivership – PDIC as the statutory receiver liquidation shall be adopted by the MB.
of the bank, may be appointed, whenever, upon
report of the head of the supervising and Upon acquiring jurisdiction, court shall upon motion if
examining department the MB finds: the receiver offer due notice, adjudicate claims against
the institution, assist the enforcement of individual
liabilities if stockholders, directors and officers, and
decide on the other issues as may be material to
implement the liquidation plan adopted.

Finality of MB Actions
New Central Bank Act
 The actions of MB under sec 29 and 30 shall be By Atty. Mary Reyes.
final and executory, and may not be restrained or 
set aside by the court except on petition of
Certiorari on the ground that the action was in
excess of jurisdiction or with such grave abuse of Constitutional Basis: Art 12. Sec 20
discretion as to amount to lack or excess of
jurisdiction.  The primary objective of BSP is to maintain price
stability conducive to balance and sustainable growth
of the economy and employment. It shall also promote
Close now, hear later scheme RULE and maintain monetary stability and the convertibility
 no prior hearing is required to appoint a of the PESO
 MB shall determine the exchange rate policy of the
receiver and close the bank; It is enough that
Country
judicial review is provided (Rule 65, petition for  Authority to buy and sell gold in any form, buy and
certiorari to be filed by the stockholders sell foreign notes and coins, engage in forex
representing majority of the stock) transactions, engage in open market purchases and
sales of securities to achieve price stability.
 Power and authority of MB to close banks and  Maintain international reserves to maintain
liquidate them when public interest requires is international stability and convertibility of the Phil
exercise of police power by the State but may not peso.
be exercised arbitrarily or unreasonably.

 BSP is the lender of last resort. To ensure

Liquidation the stability of banking system. BSP performs
 Once a bank that is placed under Liquidation, this mandate by extending discounts, loans,
shall not in no case be reopened and permitted to and advances to banking institutions
resume banking business
experiencing temporary liquidation
 Close banks by MB shall no longer be
problems.
rehabilitated and shall proceed immediately to
Liquidation
Transportation Law offering their service to
the public.
desire his or its
services, undertakes,
By Atty. Mary Reyes by special
 agreement in a
particular instance
Definition only, to transport
- A contract whereby a person. goods or persons from
Natural or juridical obligates one place to another
himself to transport persons or either gratuitously or
for hire.
goods, or both, from one place to - Without that special
another, by land, water or air, for agreement, there is no
a price or consideration. private carrier.
Engage himself to the Engage himself ONLY
Kinds: Carriage of Passenger or good public thru a special
agreement with private
individual to carry for
As to manner of transporting hire
1. Common carrier Bound to carry for all Not Bound to carry for
2. Private Carrier all, except stipulated
Subject to regulation as Not regulated as public
public service service
Parties:
Bound to EXERCISE Bound to EXERCISE
1. Common carrier or Private carrier EXTRAORDINARY ORDINARY DILIGENCE
-and- passenger – carriage of Diligence of a good father of a
passenger family.
2. Shipper/carrier (common or private) – Cannot stipulate that it Can validly stipulate for
carriage of goods is exempt from liability such.
for the negligence of its
agents or employees,
Driver of the carrier such stipulation is void.

Consignee  Test
The test of common carrier IS the carriage of goods
Arrastre operator or passengers, provided it has space for all who opt
to avail themselves of its transportation for a fee.
What is their liability in case of death or (National Steel Corp vs CA)
injury to passenger/ loss damage,
deterioration of goods in case of goods?  There is no distinction between:
- one whose principal business activity is the
Common Carrier Private Carrier carrying of person or goods or both, and
Art 1731 ncc Sps Perena vs Sps one who does such carrying only as ancillary
- Common carrier are Nicolas activity or sideline (De guzman vs CA)
persons, firms or - Private carrier so one - those offering transportation service on a
association engaged in who without making regular or scheduled basis and one offering
the business of carrying the activity a vocation, such service on occasional, episodic, or
or transporting or without holding unscheduled basis.
passengers or goods or himself or itself out to - Those carriers who services in general
both, by land, water or the public as ready to public and those who offers services or
air, for compensation, act for all who may
 solicit business only from a narrow segment All public utility vehicles are common carriers
of the general population (limited clientele) but not all common carriers are public
- Civil code does not distinguish as to the utilities.
means of transporting, as long as it is by
land, water and air. Thus, ung case ng THUS, as long as you conduct or engage in
pipeline na nag tratansfer nung petrolume
transporting persons or goods from one place
from point A to B is considered a common
to another, for consideration, even one time
carrier.
engagement only, you are considered a
 CC (civil code) does not provide the mode of
common carrier.
transportation, so pwede kahit ano, motorized
or not motorized. By bike (de-pedal), to habal
PASSENGER & COMMON CARRIER
habal (motorized bike), to automotive car… etc.
 Does not need to have Tickets, common  Meaning of passenger: One who travels in a
route, maintains terminals, etc. public conveyance by virtue of contract, express
 A person or entity is a common carrier and or implied, with the carrier subject to the
has the obligation of a common carrier under payment of fare or an equivalent thereof.
the civil code even if he did not secure a Cert of
Convenience. - Even if the you are being carried
 The carrier can also be a carrier even if the gratuitously or under a reduced fare.
operator does not own the vehicle or vessel Art. 1758 CC. provides that when a
that he she operates or has to actually hire one. passenger is carried gratuitously, a
Thus, kahit nag sub-contract/leases ng sasakyan stipulation limiting the common
lang ung carriage of goods to other entity, he carrier’s liability for negligence is valid.
may be considered a common carrier.

Public Utilities Common Carriers CARRIAGE OF GOODS

Are privately When one who devotes is  Shipper: person who delivers the goods to
owned and properly to use in which the carrier for transportation and who pays the
operated the public has an interest, consideration or on whose behalf payment is
businesses he, in effect grants to the made.
whose services public for the common  Consignee: person whom goods are
are essential to good, to the extent of the
delivered. The consignee maybe the shipper or
the general interest he has thus
third person who is not actually a party to the
public created.
contract of carriage.
Required to CPC (Certificate of
secure a Convenience) is not a - Now, even the consignee is not bound
license from requisite for the incurring to the contract of carriage, he maybe
the Gov’t of liability under the NCC bound BY THE STIPULATIONS of the BILL
before they provision on common of LADING by reason of:
can operate carriers. o Relationship of agency between consignee
and shipper/consignor
o Unequivocal acceptance of the bill of lading
The Liability arises the delivered to the consignee with full
moment the person/firm knowledge of its contents
o It avails the stipulation pour autrui as when
acts as a common carrier,
consignee, a third person, demands the
even without CPC or delivery of the goods / cargoes shipped.
franchise.
 with certainty that the relation of shipper and
carrier has been established.
 When does Contract of Carriage begin? - By the act of delivery of goods, that is, when
the goods are unconditionally placed in the
LAND – it begins from the moment one puts possession and control of the carrier, and upon
himself in the care of the carrier, or directly their receipt by the carrier for transportation,
under such control, with the bona-fide intention the contract of carriage is perfected
of becoming a passenger, and is accepted as
such by the carrier. -The Liability of the carrier as common carrier
As where he makes a contract of transportation begins with the actual delivery of the goods for
and presents himself at the proper place and in transportation, and not merely with the formal
a proper manner to be transported. – Thus, execution of a receipt or bill of lading; the
assuming Nueca intended to be a passenger, he issuance of a bill of lading is not necessary to
was never accepted as such by MRC as he did complete delivery and acceptance.
not present himself at the proper place and in
a proper manner to be transported. (Nueca vs. Different Cases:
The Manila Railroad Company)  Operator of beach resort
- The beach resort accepts client by virtue
of a tour-package contracts that included
SC explained that once a public vehicle stops, it
ferry services. It rules that the packages
is in effect making a CONTINUING OFFER to it offers which include the ferry services,
passengers, it is the DUTY of the bus driver to may be availed of anyone who can afford
stop their conveyances for a reasonable length to pay the same. These services is a
of time in order to afford passengers an service available to public!
opportunity to safely board and enter, and they  Freight Forwarder
are liable for injuries suffered by boarding - Where the forwarder contracts a 3 rd
party to deliver goods to their
passengers resulting from sudden starting up of
destination instead of merely
the carrier. ( Dangwa Transpot v. CA)
arranging for their transportation it
becomes liable as a common carrier
AIR – if established that the passenger had for loss or damage of goods. A freight
CHECKED IN at the departure counter, passed forwarder assumes the responsibility
through customs and immigration, boarded the of a carrier, which actually executes
shuttle bus and proceeded to the ramp of the the transport, even thou the
aircraft and that his baggage had already been forwarder does not carry the
loaded in the aircraft to be flown with the merchandise itself. The relationship
passenger to his destination. There was between the shipper/consignee and
contract of carriage between Lapuz & KAL had freight forwarder maybe one of
already been perfected when he was summarily agency.
prevented from boarding the aircraft (Korea  Customs Broker
- If there business has transport
Airlines vs CA)
business. They offer to transport
goods to the customer or consignee.
GOODS:
OR they leases or SUB-CONTARCTS
- Whenever the CONTROL and POSSESSION of the service. They become a common
goods passes to the carrier and nothing remains carrier.
to be done by the shipper, then it can be said  Barge operators (lighterage)
 - Barge operators are the ones who passengers with drivers using their
haul or transport the goods from the personal vehicles. IT IS A TRANSPORT
pier to the vessel (the principal PROVIDER whose ACCOUNTABILITY
carrier) Vis-à-vis. Barge are common commences from the ACCEPTANCE
carriers! by TNVS while online.
 Travel Agency
- It is not a common carrier. It is only TNC is not a COMMON CARRIER – but it is
limited to making TRAVEL still accountable, but not as a common
ARRANGEMENTS. However, kung carrier
same yan nung sa Resort hotel sa
taas, ung meron silang services nag - TNVS – a public utility vehicle
ooffer ng transport service, aune di accredited with a TNC which is
common carrier din sila diba. granted authority or franchise by the
 Towage LTFRB to run a public transport
- Towing ng vessel (parang sa kotse service. The drivers are considered
may tow) independent contractors who
- Towage is not a contract of carriage. provide the transportation services
It does not carry... it only tows. directly to the public.
 Arrastre Operator
- It handles the cargo deposited on the Note: the accountability of a TVNS as a
wharf or between the establishment common carrier attaches from the moment
of the consignee or shipper. They the TNVS is online and offers services to the
custodian of the goods and turn over riding public.
to the party entitled to their
possession. When these TVNS put themselves online,
- It is a public utility, but it is only AKIN their services are made publicly available. –
to common carrier. But also, they are (LTFRB vs Valenzuela, 2019 / case of
to exercise extra-ordinary diligence. ANGKAS APP)

 Stevedoring  Effect of Charter Party

- Handling of cargo in the holds of the - A charter party may transform a COMMON carrier
vessel of between the ship’s tackle into PRIVATE carrier if BAREBOAT charter. Here it is
and the holds of the vessel. The the charter which mans the vessel with the master,
responsibility of the stevedore ends crew and has control of the navigation. CHARTERER
upon the loading and stowing of the becomes the OWNER of the VOYAGE or service
cargo in the vessel. stipulated.
- They are not considered as common
carrier. It is not akin to a Note: it is not applicable if the Charter party is a
warehouseman for it does not store Contract of Affreightment like voyage charter or a
goods for profit. time charter. Here the control over the crew and
 TNC and Transportation network vehicle voyage remains with the ship owner. In voyage
service (TNVS) charter, the carrier is answerable to the loss of the
goods received for transportation
- TNC is an organization that provides
pre-arrange transportation services 2 types of CHARTER
for compensation using an internet- Demise or Bareboat Contact of Affreightment
Charter
based technology app for digital
Ship owner lent the Involves use of shipping
platform technology to connect
 WHOLE vessel. Making space on vessel lent by - There is STIKE of employees.
the it a PRIVATE lease. the owner in part or as a
whole, to carry goods for
others
Sometime, the demise The Ship owner retains
DELAY
charter might allow the possession of the ship as Rules:
shipowner to furnish a owner of the voyage. The Carriage of goods:
master and crew to man charterer is free from
1. Art 1740 NCC – If common carrier incurs delay in
the vessel but under the liability to 3rd person in
charterer’s direction so respect of the ship. transporting the goods, a natural disaster SHALL NOT FREE
that they become the such carrier from RESPONSIBILITY.
employees of the
charterer 2. Art 1747 NCC – If the common carrier, WITHOUT JUST
Two kinds: CAUSE, delays the transportation of the goods, OR
1. time charter – lent for a changes the stipulated or usual route, the contract
fixed period of time limiting the common carrier’s liability cannot be availed
2. Voyage charter – lent of in case of the loss, destruction, or deterioration of the
for a particular voyage goods.

3. Art 370 C.Commerce – If there is a PERIOD FIXED for

 Governing laws the delivery of goods, it must be made within such time,
and for failure to do so, carrier shall pay the indemnity
Within: Art. 177 NCC - Civil Code, Code of Commerce
stipulated in the bill of lading. If no indemnity stipulated
and by Special laws.
and delay exceeds the time fixed in the bill of lading,
carrier shall be liable for damages which the delay may
Without: Art. 1753 NCC – the law of the country have caused
which the goods are to be transported shall govern
the liability of the common carrier for their loss, What is no fixed date? Delivery should be made within
destruction or deterioration. (LAW OF REASONABLE TIME. The expectation of arrival shall be
DESTINATION) indicated in the Bill of lading.
Carriage from:
4. Art 371 C. Commerce – in case of delay through the
Foreign port to RP port RP port to Foreign port fault of carrier, consignee may leave goods with carrier.
NCC, code of Law of destination Art. When this abandonment takes place, carrier shall pay full
commerce and COGSA 1753 NCC. value of the goods as if they have been lost or mislaid;
as suppletory applies to overland and marine transport.

Overland – NCC and code of commerce

Air Transport – NCC, Code of Commerce, Carriage of passenger:
Warsaw Convention (for international carriage) Carrier shall be liable when vessel or vehicle is
unreasonably delayed.
OBLIGATIONS OF COMMON CARRIER
In case a voyage already began should be
When can a common carrier refuse to accept interrupted, the passenger shall be obliged to pay
passengers or cargo? If: fare in proportion to the distance covered, without
- Goods are dangerous, injurious to right to recover for losses and damages if
health, unfit for transportation, interruption is due to fortuitous event or force
majeure, but with a right to indemnity if interruption
acceptance would result in overloading,
should have been caused by the captain exclusively.
goods will be exposed to untoward
danger, and goods will be expose to For water voyage: Marina Circular 2018-07 provides
disease and failure to tender goods in that in case of delay of the voyage ATTRIBUTABLE to
time. the OPERATOR, a passenger should be offered the
option to request a refund of the ticket price or of UNSUAL PRUDENCE and CIRCUMSPECTION use for
revalidation of the ticket if the delay be more than 3 securing and preserving their own property rights.
hours. Part of it is DUTY to ENSURE that shipments are
The operator shall provide, free of charge, the received by none but “the person who has the right
passengers waiting for their rescheduled trip with to receive them”
meals, accommodation, free transport should the
delay be more than 8 but not exceeding 24hours. BAR LEONEN: Aleson Shipping Lines vs CGU

For air transport: Bill of rights of Passenger under Candano Shipping (M/V Romeo vessel) entered into
DOTC-DTI joint AO 2012 a time charter agreement with Apo cement. On its
way out of the pier, MV Romeo collided with MV
Aleson owned by Aleson shipping. As a result MV
DUTY OF EXERCISE EXTRAORDINARY Romeo sank and the cements of Apo is loss.
DILIGENCE Apo cement with an insurance with CGU, grants the
Extraordinary diligence:
Insurance and CGU Insurance upon its subrogation
1. Transport of passenger
rights files a case against Candano shipping and
Aleson Shipping claiming actual damages.
Art 1755 NCC - common carrier is bound to
carry the passenger as far as HUMAN CARE Note that upon subrogation of CGU, they cannot sue
Aleson shipping based on contract of carriage
and FORESIGHT can provide, using the
because it is not a party to the contract of carriage.
UTMOST DILIGENCE of a VERY CAUTIOUS Thus, the availment of the presumption of exercise
person, with due regard for all the of extraordinary diligence is at no case. This is in fact
circumstances a case of maritime tort of which diligence of a good
- Extraordinary diligence is also owned to 3rd father.
persons.
This case also summarized the liability of a common
BREACH of DUTY by the CAPTAIN/ DRIVER/ of exercising carrier as follows:
extraordinary diligence is ground for indemnity.
Is bus operator has the duty to inspect the baggage of its 1. common carriers are bound to observe
passengers? SC said that passenger shall be responsible in extraordinary diligence over the goods they
regard to their common safety. It is PRESSUMED that a
transport, according to all the circumstances of each
passenger will not take with him anything dangerous to
case.
the lives and limbs of his and his co-passenger.
2. loss, destruction, or deterioration of the insured
2. Transport of goods goods, common carriers are responsible, unless thay
can prove that such loss, destruction or
Extraordinary diligence – to know and to follow the deterioration was brought about by among others,
required precaution for avoiding damage to, or “flood, storm, earthquake, lightning, or other natural
destruction of the goods entrusted to it for safe disaster or calamity” and;
carriage and delivery. It requires common carries to 3. In all other cases not specified under Art 1734
render services with the GREATEST SKILL and NCC, common carriers are presumed to have been at
FORESIGHT and to use all the REASONABLE MEANS fault or to have acted negligently, unless they
to ASCERTAIN the NATURE and CHARACTERISTICS observe extraordinary diligence.
of goods tendered for shipment, and to exercise due
care in the handling and stowage, including such Art 1734 NCC – Exception to responsibility of loss,
methods as their nature requires. destruction or deterioration of goods. (EXCLUSIVE)
BAR LEONEN – extraordinary diligence is that
extreme measure of care and caution which person
1. Flood, storm, earthquake, lightning, or other
Fire may not be considered a natural disaster or
natural disaster or calamity
calamity. This must so as it arises almost
2. WAR (act of public enemy), whether International invariably from some act of man or by human
or civil means. It does not fall within the category of act
3. Act or omission of the shipper or owner of the of God unless caused by lighting or by other
goods natural disaster or calamity. It may even be
4. The character of the goods or defects in the caused by the actual fault or privity of the carrier.
packaging or in the containers
5. Order or act of competent public authority Even if fire were to be considered natural disaster
within the meaning of Art 1734, it is required
Note: The NATURAL DISTATER must have been the under Art 1739 that the natural disaster must be
PROXIMATE and ONLY CAUSE of the loss. AND he the proximate and only cause of the loss and the
MUST exercise due diligence to prevent or minimize carrier has exercised due diligence to prevent or
minimize the loss.
loss before, during, and after the occurrence of the
natural disaster.
Explosion of New tire not fortuitous event

FORTUITOUS EVENTS There are human factors involved in the situation.

It is settled that an accident caused either by
No person shall be responsible for those events defects in the automobile or through the
which could not be foreseen, or which, through negligence of its driver is not caso fortuito.
foreseen, were inevitable. (Art 1174 NCC)
HOWEVER, Skidding (nadulas sa road) on greasy
Fortuitous events are not limited to natural or slippery roads without fault on account of the
calamities, but may involve human intervention manner of handling the car. maybe unforeseen
(armed invasion, attacks of bandits, governmental event, Skidding means partial or complete loss of
prohibition and robbery). They may be by nature or control of the car under circumstances not
by acts of man. necessarily implying negligence. It may occur
without fault.
FORTUITOUS EVENT CASES Order of mayor:
Is hijacking a fortuitous event? Theft or robbery Order or act of competent public authority, is an
is NOT considered a fortuitous event or force exemption. BUT it must be within his AUTHORITY.
majeure. But a robbery attended by “GRAVE or If he orders an act outside of his authority, it is
IRRESISTABLE threat, violence, or force” is a not considered an exemption.
fortuitous event that absolves the common
carrier from liability. Here the hijacking was not In Pilapil v CA, carrier was not made liable for its
attended by force or intimidation. failure to install window grills on its buses to
In this case, hijacking-robbery was a force protect passengers from injuries caused by rocks
majeure. The hijackers do not board an airplane hurled at the bus by lawless elements. Here,
through a blatant display of firepower and violent injury was not foreseeable.
fury. Firearms, hand grenades, dynamite, and
explosives are introduced into the airplane In fortune Express v CA, it was ruled that seizure
surreptitiously and with the UTMOST cunning and of passenger bus by armed men are not fortuitous
stealth. PAL was not negligent so as to overcome event and does not excuse the carrier from
the force majeure nature of the hijacking. liability where there was already a report from
(Quisumbing vs CA) police agents that a certain group will attach the
buses and the carrier did not take steps to
Thus, Robbery or hijacking must be attended by safeguard the lives and properties of its
“GRAVE or IRRESISTABLE THREAT, VIOLENCE, or passengers.
FORCE” to be a fortuitous event.
CONCLUSION:
FIRE not a NATURAL CALAMITY The common carrier must prove that there is a
 FORTUITOUS EVENT -AND- Must prove to exercise
DUE DILIGENCE to PREVENT or MINIMIZE LOSS.

PRESUMPTION OF NEGLIGENCE
As to passenger: in case of death or injuries of
passengers, common carries are presumed to be at
fault or to have acted negligently, unless they proved
that they exercise extraordinary diligence (Art 1756
NCC)

As to goods: If goods are lost, destroyed, or

deteriorated, common carries are presumed to have
been at fault or to have acted negligently, unless
they proved that they exercise extraordinary
diligence (Art 1735 NCC)
Contributory Negligence: the crew, reserving the right of action against guilty
A. by the SHIPPER/owner of goods party.
It is the CARRIER’s IMPLIED DUTY to transport
Rule: the contributory negligence of the Owner of passengers safely. The common carriers are liable
the goods will be a MITIGATING to the liability of to the acts of their employees. Accordingly, it is the
the Common carrier’s Negligence. carrier’s STRICT obligation to select its drivers and
similar employees with due regard not only to their
B. by the Passenger technical competence and physical ability, but also
to their total personality, including their patterns of
Rule: The passenger must observe the diligence of behavior, moral fiber, and social attitude. (Maranan
a good father of a family to avoid injury to himself
v Perez)
(Art 1761 NCC); the contributory negligence of the
passenger will be a MITIGATING to the liability of
the Common carrier’s Negligence. Acts of STANGERS or Co-passengers:
A common carrier is responsible for injuries by a
Defense against liability passenger on the account of the willful acts or
While theft or robbery of goods without grave or negligence of other passengers or of strangers, if the
irresistible threat, violence, or force is not common carrier’s employees through the exercise
considered a fortuitous event, a common carrier of diligence of a good father of a family could have
may absolve itself from liability for a resulting loss: prevented or stopped the act or omission. (Art 1763
NCC)
1. If it proves that it exercised extraordinary
diligence in transporting and safekeeping the goods REMEMBER: The law does not make the common
carrier an INSURER of the ABSOLUTE SAFETY of its
2. if there is a stipulation with the shipper/ goods passenger. If the common carrier exercises the
owner to limit its liability to a degree less than required diligence of a good father of a family in
extraordinary diligence. relation to its responsibilities as Common carrier.
BUT! A stipulation diminishing or dispensing with its
liability for acts committed by thieves or robbers When does the DUTY END?
who do not act with grave or irresistible threat,
violence, force is void for being contrary to public Passenger:
policy. The relation of carrier and passenger does not cease
at the moment the passenger alights or step off from
Acts of Employees of the common carrier the vehicle but it continues until the passenger has a
RESONABLE TIME or OPPORTUNITY to leave the
Common carriers are liable for the death or injuries carrier’s premises. What is reasonable will depend
to passengers through negligence or willful acts of on the situation.
the former’s employees, although such employees
may have acted beyond the scope of authority or in Thus, that Reasonable time comes with the
violation of the orders of the common carriers. passenger completely getting off his baggage in the
carrier’s vehicle.
This liability of common carries does not cease upon
proof of exercise of diligence of good father of a Goods:
family in selection and supervision of their The relationship or responsibility of the common
employees. carrier LAST from the moment the GOODS are
UNCONDITIONALLY placed in the POSSESSION of and
The captain of shall be liable to ship owner and the received by the carrier for transportation until the
latter to 3rd persons for all the thefts committed by same are delivered, actually or constructively, by the
carrier to the consignee, or to the person who has
right to receive them.
 Thus, if a truck was parked askew and was hit by an
The duty remains, when they are temporarily overspeeding passenger bus, the operator cannot
unloaded or stored in transit, unless the shipper or invoke the doctrine of last clear chance of claim that
owner has made use od the right of STOPPAGE IN the truck driver has the last clear chance of avoiding
TRANSITU. (Art 1737 NCC) the injury, in the case filed by a passenger of the bus
who was injured.
Stoppage in transit – the owner of goods has made
use of the RIGHT of STOPPGE in TRANSIT. This right Doctrine of proximate cause
of unpaid seller to resume possession of the goods It is immaterial that the proximate cause of the
at any time while the goods are in transit. This right collision between the jeepney and the truck was the
is available if the buyer of the goods is or becomes negligence of the truck driver. The Doctrine of
insolvent, the unpaid seller has parted with proximate cause is applicable only in actions of
possession of the goods, and the goods are still in quasi-delict, not in actions involving breach of
transit. The legal effect, the contract of carriage is contract.
terminated. And the carrier becomes ordinary
bailee. Stipulation limiting or reducing liability

Also, the duty continues to be operative even during As to passengers:

the time the goods are stored in a warehouse of the Duty of extraordinary diligence cannot be dispense
carrier at the place of destination, until the with. However, if the passenger is carried
consignee has been advised of the arrival of the GRATUITOUSLY, a stipulation limiting the common
goods and has had reasonable opportunity carrier’s liability for negligence is valid. BUT not for
thereafter to remove them or otherwise dispose of acts or gross negligence. Note that the reduction of
them (Art 1738 NCC) fare does not justify any limitation of the common
carrier’s liability.
ACTUAL or CONTRUCTIVE delivery
As to goods:
- When the consignee is the AGENT of the Art 1744 NCC : Stipulation limiting liability shall be
SHIPPER or owner of goods. valid, provided that:

Doctrine of avoidable consequences: 1. In writing, signed by the shipper or owner

2. Supported by a valuable consideration
If the injury to the passenger has been proximately
other than the service rendered by the
caused by his own negligence, the carrier cannot be
common carrier
held liable when the accident occurred not due to
3. Reasonable, just and not contrary to public
the negligence of the defendant but to
policy.
circumstances beyond his control.
The agreement must be reasonable and just under
the circumstances, and has been fairly and freely
The passenger is supposed to exercise diligence of a
agreed upon.
good father of a family.

Doctrine of last clear chance

When both parties involved in the accident were
both negligent, the negligence of the party will not
be considered the proximate cause if the other party
has the last clear chance of avoiding the injury.

This doctrine cannot be applied against a passenger.

Invalid stipulations: Art 1745 NCC AIR TRANSPORT
1. That goods are transported at the risk of the
shipper/owner of goods;
Warsaw Convention: LIMITED LIABILITY!
2. that common carrier will not be liable for ANY loss,
destruction, or deterioration of the goods;
A. Carriage of passengers – 250k Francs
3. that common carrier need not observe any diligence in
Exception:
the custody of the goods;
1. By special contract, carrier may agree to a
4. that common carrier shall exercise a degree of diligence
higher value.
less than that of a good father of a family, or of a man of
ordinary prudence.
Limit of liability is not applicable in case of:
5. that common carrier shall not be responsible for the
1. Willful misconduct
acts of omission of his or its employees
2. gross negligence
6. its liability for acts done by thieves, robbers, who act
3. absence of baggage check
with grace or irresistible threat, violence or force, is
4. there was a waiver on the part of the carrier
dispensed with
5. carrier is estopped.
7. not liable for the defective condition of the car/vessel or
6. Absence of ticket – accepts passenger without ticket.
airplane.
Thus, airplane shall be liable to UNLIMITED LIABILITY!
Limitation on the liability stated in the bill of lading:
The carrier is not liable to the goods that is under Liability for baggage of passengers:
valued. He is only liable only to the value stated in Baggage in custody of Baggage in custody of
the bill of lading. passenger carrier
Responsibility of hotel Extraordinary diligence
Valid Stipulation: keepers shall apply. applies
Carrier are responsible
A provision in a contract of carriage requiring the for the baggage as
filing of a formal claim within a specified period is depositary.
valid.
Registered OWNER RULE:
In a contact of private carriage, the parties may The registered owner is liable for any damages
validly stipulate that responsibility for the cargo rest caused by the negligent operation of the vehicle
solely on the charterer, exempting the ship owner although the same was already sold or conveyed to
from liability for loss of or damage to the cargo another person at the time of the accident, subject
caused even by the negligence of the ship captain. to his right of recourse against the transferee or the
buyer. The registered owner is SOLIDARILY liable for
Unlike common carrier, private carriage does not the injuries and damage caused by the negligence of
involve the general public. he driver.

Waiver Applies in actions of beach of contact of carriage and

quasi-delict. 3rd party complaint against the
The waiver is valid. But it must be couched in clear transferee may be appropriate in cases filed by the
and unequivocal terms which leaves no doubt as the injured passenger against the registered owner, who
intention of a person to give up a right or benefit has the right to be reimbursed. BUT will not apply if
which legally pertains to him. the vehicle has been stolen.

Contract of Adhesion KABIT SYSTEM: arrangement where a person

granted by a certificate of public convenience allows
The ticket is a contract of adhesion. Even if it is not other person to operate under his license for fee or
signed. But he gives consent he is bound with it. percentage earnings. Here, the registered owner of
the franchise is liable SOLIDARILY to the person who
uses the license. The Registred OWNER of the deteriorated. Breach
Franchise will be the PRIMARILY liable. through negligence is
presumed.
BOUNDARY SYSTEM:
Thus, the burden of
Owner of the carrier is liable, he cannot exempt proving a defense lies
with the common
himself on the ground that the carrier has been
carrier
leased only.
The employer’s The Carrier who may
recourse is that be compelled to pay
QUASI-DELICT: “whoever pays for the damages for loss or
Remember that a single action can give rise to two damage caused by his damage to goods or
causes of action; one with quasi-delict or tort and dependents or passengers has the
one is thru contract. employees may recover right of recourse
from the latter what he against the employee
Art 2184. In motor vehicle mishaps, the owner is has paid or delivered in who committed the
solidarily liable with his driver, if the former, who satisfaction of the claim negligent, intentional
was in the vehicle, could have by the use of diligence – Art 2181 NCC or fraudulent act.
prevented the misfortune. If the owner is not in the Right of Right of
motor vehicle, the provisions of art 2180 shall apply. Reimbursement reimbursement

Art 2180. The obligation imposed by Art 2176 is

demandable not only for one’s own act or omission Warsaw Convention (Limits of liability)
but also for those of persons for whom one is
responsible. Employers shall be liable for damages This will only apply in the ABSENSE of NEGLIGENT,
caused by their employees acting within the scope of INTERNTIONAL, or WILLFUL FRAUDULENT ACT of the
their assigned task. This responsibility shall cease employees. Thus, Passenger can sue based on
when the person prove that they observe all the breach of contract of carriage and limits based on
diligence of a good father of a family to prevent warsaw convention will no longer applies.
damages.
If there was bad faith, malice, gross negligence,
By Quasi-Delict (tort): By Contract: culpa gross misconduct, then the limits of liability do not
culpa aquillana contractual apply. The Air carrier will be liable for damages
Employees are No direct liability, there under the CIVIL CODE:
Solidarily liable with being no privy of
employer contract with the - The passenger can also recover loss or
passenger/shipper impairment of earning capacity in cases of
temporary or permanent personal injury.
Here the employer can Due diligence in - Moral damages 1) passenger dies 2)
raise the defense of selection and common carrier is guilty of fraud or bad
that it exercises due supervision of faith, malice.
diligence of a good employee is not a
father in selection and defense
BAD FAITH? – means a breach of duty of a known
supervision of its
duty through some motive or interest or ill will. Self-
employees.
enrichment of fraternal interest and personal ill will
Liable as an employer is Liable as a
PRIMARY, DIRECT and CONTRACTING PARTY may have been the motive of defendant, but it is
SOLIDARY under NCC malice nevertheless.
Negligence is presumed
when there is lost,
destroyed, or
Action of breach of contract: PRESCRIPTION Notice of claim is a CONDITION PRECEDENT!
And must be availed before one can go to court.
Overland transportation and coastwise
shipping: Assuming that you file a notice but the carrier
Period to file legal action is 10 years if there is failed to pay indemnity, under warsaw, 2 years
written contract from the time the right of from arrival at the destination, or from the date
action accrues. – Art 1144-45 NCC of aircraft ought to have arrived or from date on
which transportation stopped. A complaint for
1ST Action is to file NOTICE of CLAIM: quasi-delict can still be filed even if the filing is
If NOT apparent If apparent beyond the prescriptive period provided for
Within 24 hours from receipt Claim for under WC so long as it is within the prescriptive
of the merchandise, the claim damage must period of 4 years under the Civil Code.
may be brought against the be filed
carrier for damages or immediately
Note: while COGSA provides that the carrier is
average found upon opening
the packages if the damages is DISCHARGED from liability for loss or damage to the
not apparent cargo unless the suit is brought within 1 year after
the delivery of the goods or the date when the
goods should have been delivered, JURISPRUDENCE
recognizes the validity of an agreement between the
Not applicable to misdelivery or failure to make
carrier and the shipper/consignee EXTENDING the 1
delivery.
yr period to file a claim.

PERIOD MAYBE MODIFIED by AGREEMENT of CONTRACT OF CARRIAGE is not a FORMAL

PARTIES in BILLING. CONTRACT. Thus, a bill of lading or ticket not
necessary for the perfection of contract of carriage.
Action for damages must be filed within 1 year And obligation of the carrier to exercise
after delivery of the goods or the date when the extraordinary diligence in transporting goods or
goods should have been delivered (Discharge of passengers is PRESENT even absence of BILL OF
LADING or TICKET.
the goods to the arrastre operator, not
consignee; not applicable to conversion or
misdelivery) BILL OF LADING
- An instrument in writing, signed by a carrier
or his agent, describing the freight so as to
For damages arising from delay or late delivery,
identify it, stating the name of the
the applicable period is 10yrs;
consignor, the terms of the contract of
In collision, 1 year not from the date of collision carriage, and agreeing or directing that the
but when the goods should have been freight be delivered to the order or assigns
of a specified person at a specified place.
delivered, had the cargo been saved; can be
- It comprehends all forms of transportation,
extended by agreement of the parties.
whether by sea or land, and includes
How about air transport – notice of complaint receipts for cargo transported like freight
must be filed within 3 days from the receipt of tickets of bus companies.
the baggage and 7 days in case of goods.
Nature of Bill of lading? (Aleson shipping v CGU
In case of delay, 14 days after the baggage was – LEONEN BAR CASE) - What is Clean bill of
placed at the disposal of the passenger. lading? – It is one with NO NOTATION OF ANY
 DEFECT or DAMAGE in the GOODS. It constitute In all cases, the shipper may exercise the right
PRIMA FACIE evidence of the RECEIPT by the of ABONDONMENT by notifying the carrier.
carrier of the goods as therein described. OWNERSHIP over damaged goods passes to the
carrier who must pay shipper the market value
In maritime transport – a bill of lading is issued
of the value of the goods at point of
by a common carrier as a CONTRACT/RECEIPT/
and SYMBOL of GOODS covered by it. This is the
destination.
so called 3-fold character of a bill of lading.
Thus, when there is UNREASONABLE DELAY and
other grounds enumerated above, the
Is the consignee required to surrender the bill of
CONSIGNEE/OWNER can exercise the RIGHT of
lading upon receiving the goods?
ABANDONMENT.
- The law allowed the carrier to release the
goods to consignee even without the Shipper’s Load and Count/Demurrage
latter’s surrender of bill of lading.
Shipper’s load and count – a stipulation in the bill of
The general rule is that upon receipt of the goods, lading that the shipper has the sole responsibility for
the consignee surrender the bill of lading to the the quantity, description and condition of the
carrier and their respective obligations are cargoes shipped in the container vans. Under this
considered cancelled. Two Exceptions: If the bill of agreement, the contents are not required to be
lading gets lost or for other cause. In either case, the checked and inventoried by the carrier at the port of
consignee must issue a receipt to the carrier upon loading. As such, the carrier cannot be held
the release of the goods, Such receipt shall produce responsible for any discrepancy if the description in
the same effect as the surrender of the bill of lading. the bill of lading is different from the actual contents
of the container.
Non-surrender of the original bill of lading does not - The carrier’s duty is ONLY TO TRANSPORT
violate the carrier’s duty of extraordinary diligence. and DELIVER the containers in the same
condition as when the carrier received and
accepted them
Refusal of consignee to take
Demurrage – a stipulation period within which to
delivery:
load and unload the cargo. This period is called LAY
Valid grounds:
DAYS. Demurrage are in effect damages recovered
1. When a part of the goods transported for breach of the implied obligation to load or
are delivered and the consignee is able unload the cargo.
to prove that he cannot make use of
the part without the others (Art 365 CC)
2. If the cargo consist of liquid and they
have leaked out, nothing remaining in
the containers but ¼ of their contents,
on account of inherent defect of cargo
(art 687 CC)
3. If the goods are damaged and such
damaged renders the goods useless for
the particular purpose for which they
are to be used (art 365 CC)
4. When there is delay on the account of
the carrier.
 MARITIME COMMERCE Art 837 C.Commerce – The civil liablity incurred by
the shipowners in the case prescribed in this section,
Affairs and business of the sea, to ships, their crews shall be understood as limited to the value of the
and navigation, and to marine conveyance of vessel with all its appurtenances and the freightage
persons and property. served during the voyage.

Vessels, any interest thereto, as well as conveyances, When applicable?

transfers or mortgages thereof are registered with
MARINA. Unregistered transfer shall not effect 3rd 1. In case of civil liability for indemnities in
persons but binding on the parties. favor of third person which arise from the
conduct of the captain in the care of goods
A Philippine flag vessel or watercraft is one that which the vessel carried. Art 587 CC
registered under Philippine laws. It entitles the 2. Civil liability arising from collision Art 837
vessel to protection of authorities and flag of the CC
Philippines in all ports and on the high seas. 3. Unpaid wages of the captain and the crew if
the vessel and its cargo are totally lost by
Doctrine of LIMITED LIABILITY – which limits the reason of capture or shipwreck art 643 cc
liability of the shipowner to the value of the vessel,
earned freightage, and proceeds of the insurance, if When a vessel collides to another and it is totally
any. “No vessel, No Liability” loss. The shipowner who is CIVILLY LIABLE is not
liable na by reason of the total loss of the ship.
The total destruction of the vessel extinguishes
maritime lien because there is no longer RES to The right of a vessel owner or agent under this rue
which it can attach. This doctrine is based on the real is AKIN to those rights of shareholders to limited
and HYPOTHECARY nature of maritime law. liability under corporation code.

Thus, if the vessel is loss, the ship owner is no longer - In both insolvency of a corporation and the
liable. There is no freightage to be collected. sinking of a vessel, the claimants or
creditors are limited in their recovery to the
Bottomry loan, the vessel is a collateral. The remaining value of the accessible assets. In
destruction of the vessel will extinguished the loan. the case of an insolvent corporation, these
are residual assets of the corporation left
Art 587 C.Commerce – The ship agent shall also be over from its operations. Incase of the lost
civilly liable for the indemnities in favor of 3 rd person vessel these are the insurance proceeds and
which may arise from the conduct of the captain in pending freightage for the particular
the care of the goods which he loaded on the vessel, voyage.
but he may exempt himself therefrom by
abandoning the vessel with all the equipment and When not applicable?
the freight it may have earned during the voyage.
1. When the injury or death of a passenger is due to
Art 590 C.Commerce – The co-owners of the vessel the fault of the shipowner, or the concurring
shall be civilly liable in the proportion of interest in negligence of the shipowner and the captain. (if
the common funds for the result of the acts the negligence of the captain or crew can be tranced to
captain referred in art 587. Each co-owner may the fact that they are really incompetent, the limited
exempt himself from the liability by the liability rule cannot be invoked because the
ABANDONMENT, before a notary, of the part of the shipowner may be deemed negligent; Civil code
vessel belonging to him provisions on common carriers will apply.
2. When the vessel is insured (to the extent of the
insurance proceeds)
3. in Workmen’s compensation act claims.

Note: the limited liability rule does not apply if the

JASON CLAUSE
carrier failed to overcome the presumption of
A provision which states that in case of maritime accident
negligence. The first exception, when shipowner is
for which the shipowner is not responsible by law,
negligent, applies. contract or otherwise, the cargo shippers, consignees or
owners shall contribute with the shipowner in GENERAL
Persons Involved in the maritime commerce AVERAGE.

Ship agent – entrusted with the provisioning and CLAUSE PARAMOUNT

representing the vessel in the part in which it maybe A provision which states that COGSA shall apply, even
found. He is SOLIDARILY liable though the transportation is domestic, subject to the
extent that if any term of the bill of lading is repugnant to
the COGSA or applicable law, then to the extent thereof,
Captain – He is SOLIDARILY liable with the SHIP
the provision of the bill of lading is void.
OWNER.
Cases when ship owner/agent liable for damages AVERAGES
Extraordinary or accidental EXPENSES which may be
caused by CAPTAIN:
incurred during the voyage in order to preserve the vessel,
cargo, or both, -and- any damages or deterioration which
1. Damages suffered by vessel and its cargo by reason of
vessel may suffer from the time it puts to sea from part of
want of skill or negligence on his part
departure until it cast anchor in the port of destination as
2. Thefts committed by crew, reserving his right of action well as those suffered by merchandise from the time they
against guilty person. are loaded in the port of shipment until they are loaded.

3. Losses, fines, confiscations imposed on the account of

Simple or particular General or gross average
violation of customs, police, health, and navigation laws average
and regulations All expenses and Includes all damages and
4. Losses and damages caused by MUTINIES on board damages caused to the expenses deliberately
vessel or cargo has not caused by master of vessel
vessel or by reason of faults committed by crew in the
inured to the COMMON or upon his authority, in
service and defense of the same, if he does not prove that
BENEFIT and PROFIT of order to save vessel, cargo,
he made timey use of all his authority to prevent or avoid
all persons interested in or both. From real and
them the vessel and cargo. known risk.
5. caused by misused of powers. / deviation without
consent Suffered by and borne Must be borne equally by all
alone by owner of the interests concerned.
cargo or vessel as case
IF CAPTAIN EXCEEDS his POWERS and PRIVILEGES inherent
maybe
in his position or those which may have been conferred
Requisite:
upon him, SHIP OWNER or AGENT is not LIABLE 1. There is a common
danger
However, if the amount claimed were used for the benefit 2. for the common safety,
of the vessel, then the shipowner or agent is liable. part of the vessel or cargo or
both is sacrificed
CIVIL LIABILITIES OF SHIP OWNER or AGENT: deliberately
3. from the expenses or
1. Damages suffered by a 3rd person for tort committed by damages caused follows
the captain successful saving of the
2. Contracts entered for provisioning and repair of vessel vessel and cargo
4. expenses or damages
3. Indemnities in favor to 3rd persons arising from the
should have been incurred
conduct of the captain for the care of goods
after taking proper legal
4. Damage in case of collision due to fault or negligence or
steps and authority
want of skill of the Captain 5. It must not be caused by
5. Damages for the acts of the Captain.
 any fault of the party asking
the contribution. RULES ON COLLISION OF VESSELS
Grule: the owner of the vessel at FAULT shall be liable for
There must be first a hearing before a general average will the losses or damages.
be distributed.
What if both ships are at fault? – each vessel shall suffer its
Jettison – to lighten the vessel. Cargo is dump in the sea. own losses in their ships. But with regards with the
cargoes, both vessels shall be jointly and severally liable.
In order that the goods jettisoned may be included in the
gross average and the owners entitled to indemnity, the What if it can’t be determine who is at fault? – each vessel
cargo’s existence on board must be proven by means of shall also suffer its own losses and both will also be liable
bill of lading. As for those belonging to the vessel, by solidarily for the losses and damages on the cargoes. This
means of the inventory prepared before the departure. – is the Doctrine of Inscrutable fault.
Art 816 C.Commerce. - This solidarity precludes a common carrier
operating a vessel from interposing a defense of
Insurers of the vessel, the freightage, or the cargo shall be due diligence against it by a shipper of the other
obliged to pay for indemnification of the gross average. – colliding vessel as distinguished from the
Art 859 C.Commerce ordinary rule in liabilities for tort or culpa
aquiliana.
If the person interested in the cargo, being on board the
vessel, have not been heard during the deliberation, they What if because of FORTUITOUS event? – Both vessels
shall not contribute to the gross average, their shares shall bear its own damage.
being chargeable against the CAPTAIN, unless the urgency
of the case should be such that the time necessary for What if fault of a 3rd vessel? – the 3rd vessel shall be liable.
previous deliberations was wanting. Art 813 C.Commerce
If a vessel which is properly anchored and moored collides
COLLISION AND ALLISION with those nearby by reason of storm or other cause of
force majeure, the vessel run into shall suffer its own
Collision – contact of two moving vehicles. damage or expense.
Allision – Only one moving vehicle while the other is
stationary. Doctrine of ERROR in EXTREMIS!

In maritime collision, a MARITIME PROTEST is REQUIRED. There are 3 divisions of time an zone in collision:

Maritime protest- written statement by the CAPTAIN of a First zone – time up to moment when the risk of collision
vessel or any authorized officer, attested by proper notary, begins
to the effect that damages have been suffered by the ship.
Second zone – time between moment when risk of
PROTEST - Art 835 C.Commerce – “the action for recovery collision brings up to the moment it becomes practical
of losses and damages arising from collisions cannot be certainty
admitted if a protest of declaration is not presented within
24 hours before the competent authority of the point Third zone – time when collision is certain up to the time
where the collision took place, or that of the first part of of impact.
arrival of the vessel, if in RP territory, and to the consul of
the RP if it occurred in a foreign country. Here, if the vessel having the right of way suddenly
changes its course during the 3rd zone. In an effort to avoid
But under Art 836, with respect to damages caused to an imminent collision due to the fault of another vessel,
persons or to the cargo, the absence of PROTEST may not such act may be said to be done in EXREMIS, and even if
prejudice persons interested who were not on board or wrong cannot create responsibility on the part of the said
not in the a condition to make known their wishes. vessel with the right of way. (Urritia v Baco River
Plantation)
The requirement of protest within 24 hours does not apply
to small boats engage in river and bay traffic or inland Doctrine of negligence and last clear chance is NOT
navigation. It applies only to ship and sea-going vessels. APPLICABLE in collision cases. Because, if there is a
collision, and it is imputable to both vessels, each one shall
suffer its own damage and both are solidarily liable to the
cargoes.
 COGSA – CARRIAGE OF GOODS BE SEA ACT

Notice of loss or damages must be filed within 3 days of

delivery (if damage is not apparent). Failure to file within
such period will not bar recovery if a suit is nonetheless
filed within one year from the delivery of the goods or
from the date when the goods should have been
delivered.

If damage is apparent, notice must be immediately file.

Limit of liability – 500 dollars per package, unless there is a

stipulation for higher liability,

WARSAW CONVENTION

Only applies in INTERNATIONAL TRANSPORTATION

BY AIR! Departure and destination is within the
territory of two country or 3 country.

PUBLIC SERVICE ACT CA 146

By Atty. REYES
 publication and sale without permission of the
Intellectual Property Law AUTHOR.
By Atty. Zarah Castro What happen has manufactured! Hindi kasama ung
manufacturing of the instrument sa COPY RIGHT
Intellectual Property code. infringement.

2. TRADEMARK infringement?
Intellectual property right SEPARATE from the
- Exclusive right daw ung logo nila sa display ng
OUTPUT
advertising diplay unit or ung instrument of ads, ung
- The transfer or assignment of IP will not
lightbox ba. Now sabi ng SC, wala naman daw
necessarily constitute a conveyance of the
nakalagay na exclusive un, because the certificate of
thing it covers, nor would a conveyance of
registration does not make him exclusive user of the
the latter imply the transfer or assignment
logo sa display box. Clear and exclusive enumeration
of the intellectual property right. –
lang ang nakalagay sa Cert of registration kung saan
Distilleria v CA 1996
niya pwede magamit ung logo niya at hindi kasama
ung interjection ng logo niya duon sa light box.
COMPONENTS:
Patents
3. as to Patent, is there an infringement?
Copyright and relative rights
- For patent infringement to be applicable there
Trade marks and service marks
must be a letters of PATENT or grant issued by the
IPO. Here, there is none.
Others:
Geographic Indications
Layout Designs (topographies) of integrated circuits COPYRIGHT
Protection of Undisclosed Information An exclusive right to publish and reproduce, or to
Industrial design sell, or license or exploit, a literary, artistic or other
works of mind.
BASIC FUNCTION OF THE IPO
Creator is: Author, Writer, Producer, Cartoonist,
- Examine application for GRANTS of LETTERS of painter etc…
PATENT for inventions and register utility models
- Examine application for registration of marks, Right at the moment of creation; thus, there is no
geographic indications, integrated circuit and alike. need for registration of the copyright for it to have
- Register technological transfer arrangements; protection of law.
settle disputes related thereto.
Expression of an idea is the one protected not the
Pearl and dean v SM 2003 – Meron daw silang COPY idea itself.
RIGHT sa isang light box, an advertisement
instrument, kung saan ilalagay mo ung poster mo at Works Covered:
sa gabi iiluminate nung light box ung ads mo. Then Original Derivative
one day Nakita ng pearl and dean na nireplicate ito Output is original The output is derived
ng SM hahaha! GG diba… then after that they sue from the existing work
SM.
OWNERSHIP:
ISSUES: 1. Author
1. Is there a COPY RIGHT infringement? 2. Joint ownership
- No. Because there is only copy right infringement 3. created during employment:
– the employer shall have the right of the copyright;
when there is a UNAUTHORIZED reproduction,
except if there is agreement that the output
- if the output is foreign to the nature of the work of the
employee. Rule is that copyright stays with the employee, 1. Economic rights (remuneration)
even he used the resources of his employer. - rental, first public distribution, public display
performance, other communication to the public.
4. Commissioned work – output belong to the one who
commissioned. But the copyright still belongs to the First pubic distribution – the first transfer is the only
creator. However, it will depend on the agreement. right and control of the author. Thus, subsequent
transfer or sale of the work that is not within the
5. audio visuals – 178.5 IPC – the copyright belong to the
rights of the author.
producer, the author of the scenario, the composer of the
music, the film director, and the author of the work so
adapted. However, subject tot contrary or other 2. Resale right
stipulations among creators, the producer shall exercise - in every sale or lease of an original work of
the copyright to an extent required for the exhibit of the PAINTING or SCULPTURE or of the original
work in any manner, except for the right to collect manuscript of a writer or composer, SUBSUQUENT
performing license fees for the performance of musical to the first disposition thereof by the author, the
compositions, with or without words, which are author or his heirs shall have an INALIENABLE right
incorporated into the work.
to participate in the gross proceeds of the sale or
lease to the extent of 5%. The right shall exist during
6, Letters and other private communications – the writer
has the copyright. The one who get the letter will be the
the lifetime of the author and for 50 years after his
owner but it does not have the copyright, it still belongs death (“droit De Suite) or so-called art proceeds
with the writer. right.

7. Even Anonymous and Pseudonymous are protected 3. MORAL RIGHTS (connection)

- attribution of authorship (perpetual, non-
assignable), right to be acknowledge as the original
DEPOSIT OF COPIES of the WORK author.
National Library and the Supreme Court
- At any time during the substance of the
4. Right to TRANSFER
copyright, register and deposit with them, by - assignment in whole or in part
personal delivery or registered mail, 2 complete - submission of literary/artistic work to a newspaper,
copies or reproductions of the work magazine or periodical for publication – single
- But only field of law shall be deposited with the publication.
Supreme Court
- Such registration and deposit is NOT a Condition - Copyright is not deemed assigned or
of a copy right protection; because copyright is licensed in whole in part, UNLESS there is a
conferred at the moment of creation.
WRITTEN INDICATION of such intention.
Thus, in commissioned work, the one who
Derivative works:
commission only owns the material work, not the
- Derive from pre-existing work.
COPYRIGHT of the work. Unless otherwise
- Output is selection, arrangement, and
stipulated.
overall presentation.
- It is protected as a new work, but shall not
Work of Architecture – copyright in a work of
affect the force of any subsisting copyright
architecture shall include the right to control the
upon the original output.
erection of any building which reproduces the whole
or a substantial part of the work either in its original
Ex. Translations, movie that is derive from a novel,
form or in any forms recognizably derived from the
COMPILATION of works pertain on common subject,
original. BUT, shall not include the right to control
collection of scholarly or artistic works.
the reconstruction or rehabilitation in the same style

RIGHTS OF THE AUTHOR

as the original of a building to which that copyright 7. conversion of copyright material into different
relates. (186 IP) format EXCLUSIVELY for use of BLIND, VISUALLY
IMPAIRED and READING IMPAIRED person.
TERM OF PROTECTION: (213 IP) - to be made on a non-profit basis and shall
LIFETIME + 50 years indicate the copyright owner and the date of the
In case of JOINT AUTHORSHIP – lifetime of the original publication.
surviving author, plus 50 years
In case of Anonymous/Pseudonymous works – 50
years from publication if published OR 50 years from
creation if unpublished. ABS vs Gozon (GMA) – Leonen case

GMA is made liable, the mere act of broadcasting

Sound/image recordings – 50 yrs from the end of the
without the authority from the owner of the
year when recording took place
broadcast gives rise to the probability that a crime
was committed under the IPC.
Broadcast – 20 years from actual broadcast
As to the broadcaster, Dela Pena-Rees and
Manalastas, they are directly liable for copyright
INFRINGEMENT: COPYRIGHT infringement of ABS news footage to warrant
piercing the corporate veil.
Copying alone is not what is prohibited. The copying
must produce injurious effect. As to the BOF of GMA, they are not directly the one
who infringes. Thus, even constructively, they are
Injurious consist – without consent or consideration, not liable.
one produces the work of another for commercial
use.
TRADEMARKS
Thus, if walang makita ang court na injury, the court There must be a registration in the IPO!
will exonerate the infringer from liability. ACQUIRED THRU REGISTRATION

NO INFRINGEMENT: Duration of protection is 10 years, renewable.

1. Private performance, private/personal use and Visible sign capable of distinguishing goods or
free of charge. service of an enterprise.

2. Charitable/religious even if public or for fee. Function: - distinction, origin, quality, advertising.
3. DOCTINE OF FAIR USE! – for criticism, comment,
- To protect the manufacturer against
news reporting, teaching including limited number of
substitution and sale of an inferior and
copies for classroom use, scholarly, research, and
different article as his product
similar purposes is not an infringement of copy rights
- To assure the public that they are procuring
(Sec 185 IP)
the GENUINE article; to prevent fraud and
imposition
4. Library and reprographic reproduction
- To point out distinctly the origin or
5. Reproduction of computer programs
ownership of the goods
- for back up purposes
6. Works of PUBLIC DOMAIN!
CERTIFICATE OF REGISTARTION
- Prima Facie evidence that registration is valid.
- shows ownership of the mark
- provides exclusive right to use the same in 2. Such use must result in the
connection with the goods or services provided DISTINCTIVENESS of the mark insofar as the
therein goods or the products are concerned
3. Proof of SUBSTANTIALLY EXCLUSIVE and
Cannot be registered: CONTINUOUS Commercial use for 5 yrs
- immoral, scandalous and deceptive marks. before the date on which the claim of the
- Flag or coat of arms; insignia of the Philippines distinctiveness is made.
- Name, portrait or signature identifying a living
individual (except by written consent) or that of a
deceased President, during the lifetime of the
widow, if any, except by written consent of the DOCTRINES:
widow.
HOLISTIC TEST; Totality Rule
- Any mark identical with a registered mark in - Overall appearance of the logo or the trademark
respect of same goods or services, closely related that the courts may take into consideration
goods, nearly resembles a mark to cause confusion.
- Entirety of the marks as applied to the
- Well known marks, known internationally products, including labels and packaging,
and focuses not on the predominant words
- Trademark dilution (Levi Strauss v Clinton Apparel but also on the other features appearing on
2005) If the junior product affects the marketability the both labels to determine whether one is
of the SENIOR product. Then the mark cannot be confusingly similar to the other as to misled
registered. the ordinary purchaser.

Test of dominancy
- Misleading as to nature, quality, character, origin
- Prominent or the main features of the contested
- Generic Terms, etc. – while one can put the trade mark will be the core basis of the courts
generic term in their logo, the limitation is that determination as to whether or not the Junior user’s
senior user cannot prevent other enterprises to use trademark is registrable.
it also.
- Focuses on the SIMILARITY of DOMINANT
Rule of Secondary Meaning: Person in whose favor FEATURES of the competing trademarks
the secondary meaning is acquired. They will have that might cause confusion in the mind of
the exclusive use to such term. But for it to legally the purchaser and gives more consideration
kick in, It must prove that it must using it for so long to the aural and visual impressions created
with the exclusion of others. In lyceum case, aspect by the marks on the buyers of the good,
of exclusivity does not proven (lyceum v CA) giving weight to factors like prices, quality,
sales outlets, and market segments.
In St.Francis Square case, SC said that St.Francis is a
geographic term. A geographically descriptive term Related goods principle:
that designates geographical location and would A) The business (and its location) to which the
tend to be regarded by buyers as descriptive of the goods belong;
geographic location of origin of goods or services. B) The class of product to which the goods
belong
For SECONDARY MEANING to be used: C) Product quantity, quality, or size, including
1. The secondary meaning must arisen as a the nature of the package, wrapper or
result of SUBSTANTIAL COMMERCIAL USE container
of a mark in the PH D) The nature as well as the cost of the article
 E) Descriptive properties, physical attributes or including preparatory steps necessary to carry out
essential characteristics with reference to the sale.
their form, composition, texture or quality
F) The purpose of the goods NO DEFINITEVE RULE
G) Whether the article is bought for immediate - In infringement to trademark cases in the
consumption, that is, day-to-day household PH particularly in ascertaining whether one
items trademark is confusing similar to or is
H) Fields of manufacture colorable imitation of another trademark,
I) The conditions under which the article is THERE IS NO SET OF RULES, each case must
usually purchased be decided on its own MERITS.
J) The channels of trade through which the - There must be comprehensive examination.
goods flow, how they are distributed,
marketed, displayed and sold.
(Mighty Corporation v EJ Gallo Winery)
CASES:
TWO TYPES OF CONFUSION: PAPA case
Use of PAPA word in UFC’s ketchup and PAPA BOY
1. Confusion of goods lechon sauce of Bario fiesta. SC said there is a
- ordinarily prudent purchaser would be induced to likelihood of confusion. Thus, confusion of business
purchase one product in the belief that he was may set in. All because of the DOMINANT feature of
purchasing the other. UFC’s word PAPA.

2. Confusion of ORIGIN (confusion of business) METRO case

- The goods of the parties are different, the ABS-CBN denied the registration of the trademark
defendant’s product is such as might reasonably be METRO. SC said the same is sound, spelling,
assumed to originate with the plaintiff, and the meaning, overall commercial impression, covers
public would then be deceived either into that belief substantially the same goods and flows through the
or into the belief that there is some connection same channel of trade. The dominant feature
between the plaintiff and the defendant which, in “METRO”” are used in goods which are classified as
fact, do not exist. magazine, it requires no stretch of imagination that a
likelihood of confusion may occur.
Collective Marks
- Are signs which is distinguish the origin, Trademark Unfair Competition
material, mode of manufacturer or other Infringement
common characteristics, quality control, Trademark Passing off of one’s
REGISTARTION is an goods as those of
standards, processing, of goods or services
essential element, so another
of different enterprises using the collective
you can file for
mark. INFRINGEMENT. Gives his goods
- They carry an umbrella or many products. GENERAL
Ex. Nestle products Absence of registration, APPREARANCE of the
you can’t hold them goods of his
TRADEMARK INFRINGEMENT accountable. COMPETITOR with the
a) use in commerce any REPRODUCTION, intention of
COUNTERFIET, COPY, or COLORABLE IMITATION of a DECEIVEING the public
registered mark or the same container or a that the goods are
those of his competitor.
DOMINANT feature thereof in connection with the
Fraudulent intent not Fraudulent intent is
sale, offering for sale, distribution, even the mere
necessary necessary
advertising of the goods, and USE of the goods,
Prior registration is Registration is not
 required required SC said there is no like hood of confusion as the only
predominant word is the word “CITY”. Using
In the case of Greenstone products, there is unfair dominance test, the Citystate’s mark is the golden
competition. The products were package in bottles lion head while the CitiGroup is an Arc between two
IDENTICAL to that of the original, thereby giving rise i.
to the presumption of fraudulent intent. CO v Yeung
Cointreau Case
Birkenstock Case Foreign marks which are not registered are still
It applied with IPO for TM registration, it was accorded protection against infringement and or
suspended because of the shoe town’s Birkenstock unfair competition pursuant to PARIS CONVENTION.
and device trademark. Birkenstock apply for
cancellation the registration of Shoe town because it In this case, Cointeau has been using the mark in
has no DAU - Declaration of Actual Use, but shoe France since 1895, prior to Ecole’s averred first use
town said it is using the trademark for 16 years. SC of the same in the Philippines in 1948, of which the
said shoe town abandon the trademark for failure to latter if fully aware. Ecole has no certificate of
file DAU and Birkenstock showed ownership of the registration but only a PENDING application.
TMs
GEOGRAPHIC INDICATION
Thus, Declaration of ACTUAL USE is important in
- In order to function as geographic
registration, for the goods made available to the
indication, a sign must identify as
purchasing public.
originating from a given place.
Note that, again, ownership of trademark is acquired - Allowed as a mark/collective mark
through registration AND its actual use for the
goods made available to the purchasing public. Skechers v Strong
“S” symbol by STRONG robber shoes infringes on the
Birkenstock was able to proof that it was using the
registered Skechers trademark. SC ruled Strong
trademark since 1774. Plus, Birkenstock TM is a
infringers Skechers. The features and overall design
HIGHLY DISTICT MARK.
are so similar and alike that confusion is highly likely.

SHARK Case
Levis Case
Caralde TM for shark & logo, for shoes and slippers.
501 jeans, ung Levis strauss sa lining sa waist ng
Opposed by great white sharks, they said they own
jeans. The LS jeans tailoring is visually different from
the white shark, which is used for apparel. They said
the trademark LEVI STRAUSS & CO. on the patch of
it is to cause confusion. SC is not satisfied, it said that
original jeans under the trade,mark LEVIs 501. The
apart from its commercial utility the benchmark of
word LS could not be confused as derivative from
trademark registrability is DISTINCTIVENESS.
LEVI STRAUSS by virtues of the LS being connect to
the word TAILORING, thereby openly suggesting that
A generic figure, as that of a shark in this case, if
the jeans bearing the trademark LS JEANS
employed and designed in a DISTINCTIVE manner,
TAILORING came or were bought from the tailoring
can be a registrable trademark device, subject to the
shops of DIAZ, not from the malls
provision of IP code.
It was held that there in no confusing similarity.
PATENT
CITI vs CITY case – Leonen case Protection is 20 years! – nonrenewable.
Citystate Savings Bank, Inc (CityState) applied for Patent applies to any TECHNICAL SOLUTION of a
registration of its trademark “City cash with Golden problem in any field of human activity which is NEW,
lion’s head”. Citigroup bank said it is confusing as the INVOLVES an INVENTIVE STEP and is INDUSTRIALLY
CityCash logo is similar to CitiGroup’s CITI LOGOS. APPLICABLE.
1. NEW – novel, no prior art, or disclosure And the whole contents of an earlier published
2. INVENTIVE STEP – Not obvious to the person Philippine application or application with earlier
skilled in the art; can not readily depict by any priority date of a different inventor.
person.
3. INDUSTRIALLY APPLICABLE – Useful, beneficial,
and that it can be produced and used. Non-prejudicial disclosure
Novelty of invention is not prejudiced by a disclosure
NOT PATENTABLE: made during the 12 month period preceding the
- Discoveries, scientific theories, filing if made by the a)inventor b) patent officer c) 3rd
mathematical methods party obtained the information from the inventor
- Schemes, rules, & methods of performing Thus, this is a grace period of filing of patent if there
mental acts, playing games or doing is a disclosure to the public, before it will be a PRIOR
business, and programs for computers ART.
- Anything contrary to pubic order/morality
- Methods for treatment of the RIGHT TO PATENT
human/animal body by surgery or therapy - Patent right belong to the inventor, his
and diagnostic methods heirs, or assigns. When 2 or more persons
- Plant varieties/ animal breeds/ biological have jointly made an invention, the right to
processes for animal or plant production patent shall belong to them jointly (28 IP)
- Aesthetic creations (Sec 22 IP) - Inventions Created pursuant to a
COMMISSION – the person who
commissions the work shall own the patent,
FIRST TO FILE RULE unless otherwise stipulated. (20 IP)
If Two or more persons have made the
invention separately and independently of PATENT IMPLICATIONS
- Protection against indiscriminate use
each other. PATENT GOES to the applicant with
- But its mandatory publication also has the
the EARLIEST FILING DATE or, EARLIEST
correlative effect of bringing new ideas into
PRIORITY DATE. (Sec. 29 IP) the public consciousness. AFTER
publication, any person may examine the
Patent Disclosure Encouraged invention and develop it into something
The primary purpose of the patent system is not the FURTHER than what the original patent
reward of the individual but the advancement of the holder may have envisioned.
arts and sciences. - After the lapse of 20 years, the invention
becomes part of the public domain and is
The function of patent is to add to the sum of useful free for the public to use.
knowledge and one of the purposes of the patent
system is to encourage dissemination of information RIGHTS AFTER PUBLICATION
concerning the discoveries and inventions. (Manzano Applicant has all the rights of a patentee against any
v CA) person who infringes his right, as if a patent has
been granted for that invention:
NOVELTY - Actual knowledge of infringer that the
- An invention shall not be considered new if invention that he was using was the subject
it forms part of a PRIOR ART matter of a published application; or
- Received written notice that the invention
PRIOR ART – everything which has been made that he was using was the subject matter of
available to the public ANYWHERE IN THE a published application being identified in
WORLD, before the filing date or the priority the said notice by its serial number.
date of the application claiming the invention
BUT, the action may not be filed UNTIL AFTER the - In the event the TTA shall provide for
grant of a PATENT on the published application and arbitration, the procedure of the Arbitration
within 4 years from the commission of the acts of the Arbitration Law of the Philippines or
complained of (46 IP) Arbitration Rules of the United Nations
Commission on International Trade Law
REVIVAL OF ABANDONED PATENT (UNICITRAL) or the Rules of Commerce (ICC)
An abandoned patent application may only be shall apply and the venue of arbitration
revived within 4 months from the date of shall be the Philippines or any neutral
abandonment. COUNT is from the MAILING of country; and
NOTICE (not receipt)
- The Philippine taxes on all payments
RIGHT OF PRIORITY ON PATENT relating to the technology transfer
(LEONEN CASE) E.I Dupont de Nemours and CO. v arrangement shall be borne by the licensor.
Francisco 2016)

USE BY GOVERNMENT
Under sec 31 IPC, a right of PRIORTY is given to any
COMPULSORY LICENSING – grant of license to
PATENT applicant who has previously applied for a
exploit a patented invention, even without the
patent in a country that grants the same privilege to
agreement of the patent owner.
Filipinos.

It must be justified that it is For: public interest

- You will enjoy priority, even you filed
(safety, nutrition, health), Judicial order ( anti-
outside the PH, if you are first to file
competitive use), drugs and medicines (national
anywhere in the world, where there is
emergency; demand is not met) like gov’t will tap
reciprocity!!!
other manufacturers to produce your invented
medicine for the public use.
Right of priority given to a patent applicant is only
relevant when there ae two or more conflicting
patent application on the same invention. PATENT INFRINGEMENT

Right of priority does not automatically grant letter Copy of the Patent
of patent to an applicant, possession of right of
priority does not confer any property rights on the Doctrine of equivalence – performs the same way,
applicant in the absence of an actual patent. same result, kahit na iniba mo ung ibang parts or
substance. (SUBTLE WAY OF COPYING THE WORK)
- An infringement occurs when a device
VOLUNTARY LICENSING or TECHNOLOGY TRANSFER appropriates a prior invention by
AGREEMENT incorporating its innovative concept and,
despite some modification and charge,
Mandatory provision: (this must be written in the performs substantially the same function in
agreement) substantially the same way to achieve the
- PH laws to govern in the event of litigation same substantial result. (Godiness v CA)
- Venue shall be the proper courts where the - The doctrine of equivalents thus requires
licensee has its principal office satisfaction of the function means and
- Continued access to improvements in result test, the patentee having the burden
techniques and processes related to the to show that all three components of such
technology shall be made available during equivalency test are met
the period of the TECHNOLOGY TRANSFER
AGREEMENT (TTA)
 UTILITY MODELS TERM of PROTECTION – 5 years form date of filing,
renewable for not more than 2 consecutive period.
Any useful machine, implement, tool, product,
Max is 15 years.
composition, process, improvement or part of the
same, which does not possess the quality of an
invention, but which is of practical utility, novelty
and newness. Referred to as PETTY INTEGRATED CIRCUITS (10 YRS)
PATENTS/INNOVATION PATENTS. Means a product, in its final form, or an intermediate
- Utility models is an industrial property right form, in which the elements, at least one of the
that grants an invention “SMALL” or “LESS which is an active element and some or all of the
COMPLEX” protection than a patent, for a interconnections are integrally formed in and/or on
limited period of time. a piece of material, and which is intended to
- They represent an improvement on PERFORM AND ELECTRONIC FUCNTION. (112.2 IPC)
something that has already been patented
by the same inventor or by another USED in a large range of products – WATCHES, TV,
washing machine, CAR, PHONES, computers. Etc..
PARALLEL APPLICATIONS
Applicant may not file 2 applications for the same USED in SOPHISTICATED DATA… these chips are used
subject, one for patent and the other for utility for processing of information in a computer, and
model. (111 IPC), whether simultaneously or they keep track of a multitude of functions.
consecutively.
THIS MAKES the PROCESSING of INFROMATION on a
This is like a FORUM SHOPPING, hindi sigurado sa very limited amount of SPACE POSSIBLE.
invention niya if PATENT ba or UTILITY model. So
nagapply ka ng PATENT and UTILITY model. The
remedy is apply for one only, IPO has a conversion
rule naman, if your Utility model is a Patent pala sabi
ng IPO then you convert nalang vis-à-vis.

INVENTION UTILITY MODEL

(INNOVATION)
Undergoes NO longer undergoes
SUBSTANTIVE substantive
EXAMINITATION examination
(technological progress
is smaller)
20 years if ONLY 7 YEARS from
PROTECTION for date date of FILING
of FILING

INDUSTRIAL DESIGN (5 YRS)

Is any composition of lines or colors or any 3
dimensional form, whether or not associated with
lines of colors; such composition or forms gives a
special appearance to and can serve as pattern for
an industrial product or handicraft.
 Capitalization:
- Min. capitalization is 5,000 has been
deleted
- No min. subscription or paid-up
required na.
- Treasurer’s affidavit no longer required,
but Treasurer must sign the Articles of
UPDATES ON REVISE Incorporation
CORPORATION LAW - Minimum subscription of 25% and paid
up of 25% of subscribed are still
By Atty. Ranada required upon application for increase

in authorized capital stock
- Shares of stock in another corporation
I. Revise Corporation Code and “other generally accepted form of
consideration” now accepted as
consideration for stock, subject to
A. New compliance:
approval by the SEC (Sec.61 Corpo
code)
Incorporators:
- May be NATURAL or JUDRIDICAL
Corporate Status:
(Partnership, Associations, or
o Non-use of corporate charter: 5yrs,
Corporations)
otherwise revoked.
- No residency required
o Continuous operation: 2yrs, otherwise
- At least 1 but not more than 15
revoked.
- Licensed professionals and professional
o Delinquent: 2 yrs, to resume operation
partnership are allowed to form a
otherwise revoked.
corporation only if allowed under
special laws

Corporate Term: B. Governance:

- All corporations now have a PERPETUAL
TERM of EXISTENCE Directors & Trustees:
- If the corporation elects to retain its - No minimum number of directors
term, it will have to notify the SEC in - No residency requirement for directors
the form prescribed (appraisal right - Directors must still own at least 1 share,
applicable) trustee must be a member
- Corporations with expired term may - Corporations vested with public interest
apply for REVIVAL of its corporate are required to have Independent
existence (except banks, pre-need, Directors constituting at least 20% of
insurance, NSSLAs, pawnshops, money the board
service, and financial intermediaries - Directors shall have a term of 1 year,
without the necessary endorsement of trustees shall have a term not
their regulatory agencies) exceeding 3 years
 - Voting through remote communication Who: Position may be temporarily filled from
or in Absentia is now accepted among the officers, with unanimous vote of the
remaining directors
Corporate Officers: Scope: Actions limited to the Emergency
- President – must be a director situations
- Treasurer – must be a resident
Report: Notify SEC within 3 days from the
- Corporate secretary – must be a
creation of emergency board
citizen and resident
Compensation:
- Compliance officer – only if the
- Directors/ trustees shall not participate in
corporation vested with public the determination of their own
interest compensation
- Other officers provided in the By- - Corporations vested with public interest
laws shall submit to SH and the SEC an annual
report on the total compensation of EACH
Disqualification and Removal of Directors: director.

SEC shall, motu propio or upon verified

Dealings of Directors/Trustees or Officers
complaint, and after due notice and hearing,
order the removal of disqualified or whose
with the corporation:
disqualification arose is discovered after an
election. - Contacts between corporation and its
directors, trustees, officers or their
spouses and relatives within 4th degree of
Filling up of Vacancies in the Board of
consanguinity or affinity are VIODABLE,
Directors:
unless certain conditions are met
- For Corporation vested with public
o Expiration of term: SH shall elect interest, one of these conditions is that
replacement no later than the day of material contracts must be approved by
expiration 2/3 of the entire membership of the board
o Removal by SH: SH may elect the with at least majority of the independent
replacement on the same day the meeting directors voting to approve the material
authorizing the removal contact
o All other cases: Remaining directors
constituting a quorum shall elect the *Material contract – defined as 10% of the
replacement director not later than 45 company’s total assets
days from time of vacancy
Stockholder’s meeting:
Creation of Emergency Board:
Annual Meetings: As fixed in the By-laws OR
Purpose: Absence of quorum due to vacancy after April 15 of every year, as determined by
and action is required to prevent grave, the Board
substantial and irreparable loss or damage to
the corporation. Notices: may now be sent via electronic mail, &
at least 21 days prior to the meeting
Waivers of notices: general waivers not - Prohibition of Foreign corporations from
allowed; attendance to the meeting not donating to any political party/candidate or
considered waiver if the purpose of objecting to aid in partisan political activity
the agenda where the meeting was not lawfully
called or convened o Extension/shorten Corporate Term (Sec 36)
- Sending of notices can be done
Venue: Metro-Manila/Cebu/Davao and other
electronically, provided that it is
metropolitan areas are considered a city or
allowed by the By-laws or with consent
municipality
of the SHs
New requirement: Appraisal and performance
report of the board, director or trustee o Increase/Decrease Capital Stock; Incur,
compensation report, directors disclosure on Create, Increase Bonded Indebtedness (Sec
self-dealing and RPTs 37)
Right to vote: exercised though remote - With prior approval of the Philippine
communication or in absentia, if allowed by Competition Commission, where
laws applicable
- Sworn Statement by the Treasurer
Corpo vested w/ Public Interest: stockholders Showing that the 25-25% rule was
have the right to vote in absensia regardless of complied with
any provisions in the by laws
o Sale or Other disposition of Assets (Sec 39)
Board Meetings: - Compliance with the rules under the
Notice: At least 2 days prior unless the By-laws Philippine Competition act
otherwise provides - Computation is based on the net asset
- Adopted SEC rules on attendance of value of the properties and assets as
directors through remote can be seen in the corporation’s latest
communications financial statement

Quorum: Majority of Directors

Board Decision: Majority of directors D. New Types of Corporations
constituting a quorum
Election of officers: Majority of ALL the 1. Includes: (FINANCIAL CORPS & with
members of the board VESTED with PUBLIC INTEREST)
- Corporations covered by SEC 17.2 of SRC
Presiding Officer: Chairman
- Banks and quasi-banks, NSSLAs, pawnshops,
corporations engaged in money service
business, pre-needs, trust and insurance
C. Powers of the Corporation and other financial intermediaries
- Corporation engage in business vested with
o Corporate Powers and Capacity (Sec 25)
public interest similar to above, as
- The corporation can enter into a
determined by SEC
partnership and joint ventures

Other Requirements:
 - 20% of the board must be composed of qualification, remark or adverse
independent directors remark made by the auditor
- SH have the right to vote in absentia, o Disclosure on all self-dealings and
regardless of any provisions in the by RPTs entered into between the OPC
laws and the single stockholder
- Must submit annual report of total o Other reports as may be required by
compensation of each of the SEC
directors/trustees - An ordinary corporation may be converted
- Must elect compliance officer to an OPC and vice versa.
- Material contracts involving directors,
E. Other revisions:
officers, spouses and 4th degree
relatives must be approved by at least
2/3 vote of the entire membership of Philippine Competition Commission
the board, with at least a majority of (approval/intervention)
the independent directors voting to - Increase or decrease in capital stock
approved the material contract (sec 37)
- Must submit annually a director or - Incurring, creating or decreasing any
trustee appraisal or performance report bonded indebtedness (sec 37)
and the standards or criteria used to - Sale or disposition of assets (sec 39)
assess each director or trustee
Stocks & Stockholders
2. ONE PERSON CORPORATION (OPC) - Additional consideration for share of
stock; provision for uncertificated or
- May be formed by a natural person, trust, or scripless form
an estate.
- No minimum capital stocks Corporate Books & Records
- Not required to have By-laws
- List is provided
- The sole stockholder shall also be the sole
- Inspection subject to intellectual
director and president
property code
- The sole stockholder may not be the
- Summary investigation of SEC
corporate secretary
- Re AFS if total/liabilities is less than
- If he is also the Treasurer, he must give a
600k submit Balance sheet signed by
bond to SEC, in the amount to be determined
the President and Treasurer
by SEC, renewable every 2 years
- Sole stockholder must provide name of Merger
nominee and alternate nominee in the AOI of
the OPC, as well as their authority in - Notices similar to regular/special
managing the affairs of the OPC meeting
- Required Reports for OPCs - Additional financial information
o AFS audited by independent CPA for required in merger
OPCs with total assets and liabilities in - Applicability of Philippine Competition
excess of 600k act
o Report containing explanations made Appraisal Right
by the President for every
 - Additional ground: Sec 41 on the D. Involuntary Dissolution – additional grounds
investment of corporate funds for any
purpose other than primary purpose
Foreign Corporations
A. Security Deposits
Non stock Corp
B. Resident Agent
- Trustees of non-stock corporations
vested with public interest are required
to be members (sec 91)
- Staggered terms of trustees has been Reportorial Requirements
deleted Corporation vested with public interest are
- Proxies list should be updated at least
required to also submit:
20 days prior to the election
A. Directors/trustee compensation report;
Educational Corporations and
- Endorsement no longer required B. Appraisal performance report together
with the criteria used by the corporations
DISSOLUTION via Criminal Act
A. Finding that corporation procured its
Offences
corporation thru FRAUD Offense Who is Liable?
B. Finding by FINAL JUDGEMENT Contempt for failure to comply Any person who
- Created for purpose of committing, with SEC order – sec 157 fails to comply
concealing or aiding commission of Despite knowledge of existence Directors,
Securities violation, SMUGGLING, Tax of ground for disqualification trustees or
Evasion, Money Laundering, or Graft under sec 26, willfully holds office Officers
or willfully conceals such
and Corruption
disqualification – sec 160
- Committed the same above and its Willful certification of Any person who
stockholders knew of the same incomplete, inaccurate, false or certifies
- Repeatedly and knowingly tolerated the misleading statements or reports
commission of graft and corrupt – sec 162
practices or other fraudulent or illegal Collusion with independent Director or
auditor – sec 163 representatives
acts by its Directors, trustees, officers or
Obtaining Corporate registration Any person
employees.
thru fraud responsible for
Note: Assets of dissolved corporation under the
par 2, shall upon petition of the SEC, be Incorporation
fortified in favor of the National Gov’t Fraudulent conduct of business The Corporation
Acting as intermediary for graft & The Corporation
Ordinary Dissolution corrupt practices – sec 166
Appointing an intermediary who The Corporation
A. Creditors not affected – 20 days; engages in graft & corrupt
documentary requirements practices for corp’s benefit &
B. Creditors affected – effectivity date of the interest – sec 167
dissolution Failure to sanction, report, or file Directors,
the appropriate action with trustees or
C. Shortening of Term – effectivity date of
proper agancies or toleration of Officers
dissolution the Graff & corrupt practices act
 – sec 168 7. Other instruments as may in the future be
Rtaliation against whistleblower Any persons determined by the Commission.
Aiders and abettors, and anyone Any persons
who abets, counsels, commands, Investment Contracts (SRC Rule 26.3.5 par4)
induces or causes any violation of
the code shall be punished by a A contract, transaction or scheme whereby a
FINE – sec 172 person invests his money in a common
enterprise and is led to expect profits primarily
through the efforts of others. It is presumed to
exist when a person seeks to use the money or
Allegations of GRAFT & CORRUPT Practices property of other person on the promise of
profits.
- Finding that any Directors, officers,
employees, agents or representatives, Howey test (328 U.S 293 - 1946)
corporations’ failure to install:
A contact or scheme for placing of capital or
laying out of money in a way intended to secure
a) Safeguards for transparent and lawful
income or profit from its employment.
delivery of services; and
b) Policies, code of ethics, and procedures Power Homes Unlimited Corp. v SEC ( GR.
against graft and corrupt are PRIMA 1641182, Feb 2008)
FACIE of corporate liability under sec 166
In order to be a security, the investment
contract should have the following elements:

1. An investment of money
II. Securities Regulation Code
2. In common enterprise
3. With expectations of profit
Securities (SRC Rule 3.1.20) 4. Primarily from the efforts of others
1. Shares of stock, bonds, government Manipulative Devices
securities, commercial papers, debentures, 1. Marking the close
notes, evidence of indebtedness, asset- - Buying and selling securities at the close of
backed securities. the market in an effort to alter the closing
2. Investment contracts, certificate of interest price of the security.
or participation in a profit-sharing 2. Painting the Tape
agreement, certificate of deposit for future - Engaging in a series of transactions in
subscription securities that are reported publicly to give
3. Fractional undivided interest in OIL, GAS, or the impression of activity or price
other mineral rights
movement in a security.
4. Derivatives like options and warrants
3. Squeezing the Float
5. Certificate of assignments, certificate of
- Taking advantage of a shortage of securities
participation, trust certificates, voting trust
in the market by controlling the demand
certificate or similar instruments
side and exploiting the market congestion
6. Propriety or non-propriety membership
during such shortage in a way as to create
certificates in corporations
artificial prices
4. Hype and dump
- Engaging in buying activity at increasingly - Any person who has material and non-
higher prices and then selling securities in public information which, if disclosed,
the market at the higher prices or vice versa would cause the undue advantage in
5. Boiler Room Operation the market.
- The use of high-pressure sales tactics to sell
stocks to clients who are “cold called” i.e. Who is an insider?
called randomly, most likely after being - The issuer
picked out of a phone directory (ex. wolf of - A director or officer or a person
Wall street) controlling the issuer
Insider Trading - A person whose relationship or former
relationship to the issuer gives or gave
General Rule: It shall be unlawful for an insider him access to material information
to sell or buy a security of the issuer, while in about the issuer or the security that is
possession of MATERIAL INFORMATION with not generally available to the public
respect to the issuer or the security is not - A government employee, or director, or
generally available to the public. officer of an exchange, clearing agency
and/or self-regulatory organization who
Exceptions: has access to material information
- The insider proves that the information about an issuer or a security that not
was not gained from such relationship generally available to the public
- If the other party selling to or buying - A person who learns such information
from the insider (or his agent) is by a communication from any of the
identified, the insider proves: foregoing insider
o That he disclosed the
information to the other party; Beneficial Owner
or Any person who, directly, or indirectly, through
o That he had reason to believe any contract, arrangement, understanding,
that the other party otherwise relationship or otherwise, has or shares voting
is also in possession of the power (which includes the power to vote or
information direct the voting of such security) and/or
investment returns or power (which includes
Material Non-Public Information the power to disposed of, or direct the
- It has not been generally disclosed to disposition of such security); provided, that a
the public and would likely affect the person shall be deemed to have an indirect
market price of the security after being beneficial ownership interest in any security
disseminated to the public and the which is:
lapse of a reasonable time for the - Held by members of his immediate
market to absorb the information family sharing the same household
- Would be considered by a reasonable - Held by a partnership in which he is a
person important under the general partner
circumstances in determining his course - Held by a corporation in which he is a
of action whether to buy, sell or hold controlling shareholder
the security. - Subject to any contract, arrangement or
understanding which gives him VOTING
Insider
 power or INVESTMENT POWER with 2. Control also exist even when an entity
respect to such security. owns ½ or less of the voting power of
another entity when:
o There is power over more than
½ of the voting rights by virtue
of an agreement
o There is power to direct or
govern the financial and
operating policies of the entity
under a statute or agreement
III. The Philippine Competition o There is power to appoint or
Act remove the majority of the
members of the board of
directors or equivalent
Acquisition
governing body
The purchase or transfer of securities or assets,
o There is power to cast the
through contract or other means, for the
purpose of obtaining control by: majority votes at meetings of
1. One Entity of the whole or part of the board of directors or
another equivalent governing body
2. Two or more entities over another o There exists ownership over or
3. One or more entities over one or more the right to use all or a
entities significant part of the asses of
the entity
o There exist rights or contract
Control
which confer decisive influence
The ability to substantially influence or direct
on the decision of the entity
the actions or decision of an entity whether by
contract, agency or otherwise
Merger
Dominant Position The joining of 2 or more entities into an
A position of economic strength that an entity existing entity or to form a new entity,
holds which makes it capable of controlling the including joint ventures.
relevant market independently from any or a
combination of the following: Competitors, Ultimate Parent Company
customers, suppliers or consumers The juridical entity that, directly or
indirectly controls a party to the
What constitutes control? transaction, and is not controlled by any
1. Control is presumed to exist when the other entity.
parent owns directly or indirectly,
through subsidiaries, more than ½ of Prohibited Mergers and acquisitions
the voting power of an entity, unless in
Those that substantially prevent, restrict, or
exceptional circumstances, it can clearly
lessen competition in the Philippines in the
be demonstrated that such ownership
relevant market or in the market for goods
does not constitute control
or service.
 services, buyers or sellers, or any
Exceptions: other means.
- The concentration has brought about or
is likely to bring about gains in  Agreements other than those specified in a and
efficiencies that are greater than the b of this section, which have the object or
effects of any limitation on competition effect of substantially preventing, restricting,
that result or are likely to result from or lessening competition shall be prohibited.
the merger or acquisition agreement; or
- A party to the merger or acquisition
agreement is faced with actual or
imminent financial failure, and the Abuse of Dominant Position
agreement represents the least anti- Conduct that would substantially prevent,
competitive arrangement among the restrict, or lessen competition, including:
known alternative uses for the failing
1. Selling goods or services below cost with the object of driving
entity’s assets.
competition out of the relevant market. Provided, that in the
Commission’s evaluation of this fact, it shall consider whether
Prohibited acts such entity or entities has no such object and that the price
established was in good faith to meet or compete with the lower
1. Anti-Competitive Agreements price of a competitor in the same market selling the same or
2. Abuse of Dominant Power comparable product or service of like quality.

2. Imposing barriers to entry or committing acts that prevent

Anti-Competitive agreements competitors from growing within the market in an anti-
competitive manner, except those that develop in the market as a
A. The ff arrangements, between or among result of or arising from a superior product or process, business
competitors, are per se prohibited: acumen, or legal rights laws.

1. Restricting competition as to price, or 3. Making transaction subject to acceptance by the other parties
components thereof, or other terms of other obligations which, by their nature or according to
of trade commercial usage, have no connection with the transaction;

2. Fixing the price at an auction or in any 4. Setting prices or other terms or conditions that discriminate
form of bidding, including cover unreasonably between customers or sellers of the same goods or
services, where such customer or sellers are contemporaneously
bidding, bid suppression, bid rotation
trading on similar terms and condition, where the effect may be
and market allocation, and other lessen competition substantially; Provided that the following shall
analogous practices of bid be considered permissible price differentials:

manipulation I. Socialized pricing for the less fortunate sector of

the economy;
B. The ff arrangements, between or among II. Price differentials which reasonably or
approximately reflect differences in the cost of
competitors, which have the object or manufacture, sale, or delivery resulting from
effect of substantially preventing, differing methods, technical conditions, or
quantities in which the goods or services are sold
restricting, or lessening competition shall or delivered to the buyers or sellers
be prohibited: III. Price differential or terms of sale offered in
1. Setting, limiting, or controlling response to the competitive price of payments,
services, or changes in the facilities furnished by
production, markets, technical a competitor
development, or investment IV. Price changes in response to changing market
conditions, marketability of goods or service or
2. Dividing or sharing the market,
volume
whether by volume of sales or
purchases, territory, type of goods or
5. Imposing restrictions on the lease or contracts for sale or trade
of goods or services concerning where, to whom, or in what forms
goods or services may be sold or traded, such as:

I. Fixing prices;
II. II. Giving preferential discounts;
III. III. or rebate upon such price, or imposing
conditions not to deal with competing entities,
where the object or effect of the restrictions is to
prevent, restrict or lessen competition
substantially, provided that nothing contained in
Act shall be prohibited or rendered unlawful:

IV. Financial Rehabilitation &

Insolvency Act (FRIA)
Threshold for compulsory notification

1. Amount exceeds PHP 6 Billion What is Rehabilitation?

2. Value of Transaction (‘size of - Define as the RESTORATION of the debtor
to a condition of successful operation and
transaction’) exceeds 2.4 Billion Php of
solvency, if it shown that its continuance of
the proposed M/A
operation is economically feasible and its
3. Where an entity has already exceed the creditors can recover by way of the present
35% threshold for an acquisition of value of payments projected in the plan,
voting shares, or the 35% threshold for more if the debtor continues as a going
an acquisition of an interest in a non- concern than if it is immediately liquidated.
corporate entity, another notification - Rehabilitation assumes that the corporation
will be required if the same entity will has been operational but for some reason
exceed 50% threshold after making a like economic crisis or mismanagement had
become distressed or insolvent (that is
further acquisition of either voting
generally unable to pay its debts as they fall
shares or an interest in a non-corporate
due in ordinary course of business or has
entity liability that are greater than its assets.
4. In a notifiable JV transaction subject to
the size of the transaction Thus, the basic issue in rehabilitation
proceedings concern the VIABILITY and
Basis for notification DESIREABILITY of continuing the business
operations of the distressed corporation, all
1. Preliminary Agreement – if a binding with a view of effectively restoring it to a state
preliminary agreement provides for of solvency or to its former healthy financial
such successive transactions or condition through the adoption of a
acquisitions of parts rehabilitation plan.
2. When the parties execute the
agreement relating to the last What are the actions suspended covered
transaction – if there is no binding by STAY ORDER during rehabilitation?
preliminary agreement and, when taken
together with the preceding 1. Suspend all actions or proceedings, in court
transactions, satisfies the thresholds or otherwise, for the enforcement of claims
under compulsory notification against the debtor
2. suspend all actions to enforce any judgment, The court may approve a rehabilitation plan
attachment or other provisional remedies over the opposition of creditors, holding a
against the debtor majority of the total liabilities of the debtor if, in
3. Prohibit the debtor from selling, its judgement, the rehabilitation of the debtor is
encumbering, transferring or disposing in any feasible and the opposition of the creditors is
manner any of its properties except in the manifestly unreasonable. Such prerogative was
ordinary course of business carried over in the Rehabilitation Rules.
4. Prohibit the debtor from making any
payment of its liabilities outstanding as of the This provision, which is currently incorporated
commencement date except as may be in the FRIA, is necessary to curb the majority
provided therein cerditors’s natural tendency to dictate their
own terms and conditions to the rehabilitation,
What is Suspension of payments, and its absent due regard to the greater long-term
Exceptions? benefit of all stakeholders.

Upon motion filed by the individual debtor, the Otherwise stated, IT FORCES THE CREDITORS to
court may issue an order suspending any ACCEPT the TERMS and CONDITIONS of the
pending execution against the individual REHABILTATION PLAN, preferring the long-term
debtor, provided that properties held as viability over the immediate but incomplete
security by secured creditors shall not be the recovery.
subject of such suspension order.
What is Technical and Supervening
The suspension order shall lapse when 3 Insolvency?
months shall have passed without the proposed
agreement being accepted by the creditors or Technical Insolvency is the inability of the petitioning
as soon as such agreement is denied. corporation to pay although temporarily, for a
period longer than one year from the filing of the
petition.
What is the Principle of Equality of Equity?
Supervening Insolvency is when, if at any time during
Under the principle of equality of equity, during the pendency of the proceedings, the petitioner has
the rehabilitation receivership, the assets are become or is shown to be insolvent, whether actual
held in trust for the equal benefit of all or technical, or it has violated any of the conditions
creditors to preclude one from obtaining an of the suspension order or has failed to make
advantage or preference over the another by payments on its obligations on accordance with the
the expediency of an attachment, execution or approved Repayment Schedule. The Special
otherwise. When a corporation threatened by Commercial Courts shall terminate the proceedings
and dismiss the petition. Instead of termination the
bankruptcy is taken over by a receiver, all the
proceedings, however, the Special commercial
creditors stand on equal footing.
courts may upon motion, treat the petition as one
for rehabilitation of the debtor.
What is the Cram Down power of the
Court? Voluntary and Involuntary Liquidation
Voluntary – an insolvent debtor may apply for Nature of a Corporation Created by Special
liquidation by filing a petition for liquidation Law
with the court. RA 7227 recognizes as a body corporate with the
attribute of perpetual succession and vested with
the powers of a corporation and vests the BCDA
Involuntary – 3 or more creditors the aggregate
with the power, among others, to succeed in its
of whose claims is at least 1 million pesos or at corporate name, to sue and be sued in such
least 25% of the subscribed capital stock or corporate name and to adapt, alter and use a
partner’s contribution of the debtors by filing a corporate seal which can be judicially noticed,
petition for liquidation of the debtor with the these provisions do not make the BCDA a
court. corporation, either a stock or nonstock as defined
under the Corporation Code as well as the
Revised Corporation Code – they merely endow
the BCDA with all or full corporate powers so that
it can enjoy operational autonomy, and, since its
capitalization provision, cannot qualify the BCDA
as a stock or nonstock corporation, then it is an
INSTRUMENTALITY under the introductory
provisions of the administrative code as well as
V. Leonen Cases Government Instrumentality with Corporate
Powers.

Authority of Corporate Officer to sign The BCDA’s status as a mere trustee of the CAB
Verification & Certificate of non-forum lands is made obvious by the fact that under the
shopping law creating it, its executive head cannot even
An individual cannot exercise any corporate sign the deed of conveyance on behalf of the
power pertaining to a corporation without Republic and ONLY the President of the Republic
authority from its board of directors. Physical acts is authorized to sign such deed of conveyance,
of the corporation, like signing of documents, can which is a recognition that the property being
be performed only by natural persons duly disposed of belongs tot the Republic.
authorized for the purpose. Consequently,
verifications and certifications against forum Republic v. Heirs of Bernabe
shopping purportedly signed in behalf of the
corporation but without the requisite board Delegation of power to the board of Directors
resolution authorizing the same are defective.
The rule is of course settled that “ although an
Here, although the PHC did not expressly officer or agent acts without, or in excess of, his
authorized Dr. Manzo to sign the Petition’s actual authority if he acts within the scope of an
verification and certificate of non-forum shopping APPARENT AUTHORITY with which the
in its behalf, Dr. Manzano, as officer-in-charge corporation has clothed him by holding him out or
Executive Director of the PHC, is indubitably in a permitting him to appear as having such
position to verify the truthfulness of the authority, the corporation is bound thereby in
allegations in the petition. favor of the person who deals with him in good
faith in reliance on such apparent authority, as
Thus, High officers of the Corporation can sign where an officer is allowed to exercise as
the certification and verification without the particular authority with respect to the business,
submission of the board’s resolution. or a particular branch of its continuously and
publicly, for considerable time.”
Philippine Heart Center v Local Gov’t of Q.C
Apparent authority is ascertained through:
 1. The general manner by which the an agent, his or her acts, as long as they are
corporation holds out an order or within his or her apparent authority, bind the
agent as having power to act or, in principal. However, the principal’s liability is
other words, the apparent authority limited to 3rd persons who are reasonably led to
believe that the agent was authorized to act for
with which it clothes him to act in
the principal due to the principal’s conduct.
general, or
2. The acquiescence in his act of a
Calubad v Ricarcen Development
particular nature, with actual or
Corporation
constructive knowledge thereof,
whether within or without the scope
Receivership
of his ordinary powers
A closed bank under receivership can only be sued
or sue through its receiver (PDIC).

TERP Construction Corporation v BANCO The relationship between the PDIC and a close
Filipino Savings & Mortgage Bank bank is fiduciary in nature. Section 30 of RA 7653
Delegation of Powers to the Board of Directors directs the receiver of a closed bank to
The general principles of agency govern the “immediately gather and take charge of all the
relationship between a corporation and its assets and liabilities of the institution and
representative. Art 1317 NCC similarly provides administer the same for the benefit of its
that the principal must delegate the necessary creditors
authority before anyone can act on his or her
behalf. The law likewise grants the receiver “the general
powers of a receiver under the Revise Rules of
Nonetheless, law and jurisprudence recognize Court”. A receiver shall have the power to bring
actual authority and apparent authority as two and defend, in such capacity, actions in his own
types of authorities conferred upon a corporate name. Thus, the receiver also “in the name of the
officer or agent in dealing with 3rd persons. institution, and with the assistance of counsel as
may retain, institute such actions as may be
Actual authority can either be express or implied. necessary to collect and recover accounts and
Express actual authority refers to the power assets of the closed bank and to institute for or
delegated to the agent by the corporation, while defense any action against it, only the receiver m
an agent’s implied authority can be measured by in it fiduciary capacity, may sue and be sued on
his or her prior acts which have been ratified by behalf of the closed bank.
the corporation or whose benefits have been
accepted by the corporation. When the petitioner was placed under
receivership, the powers of the Board of Directors
It can be ascertained through: and Officers were suspended. Thus, its Board of
Directors could not have a validly authorized
1. The general manner by which the Executive Vice President to file the suit on hi
corporation holds out an order or agent behalf.
as having power to act or, in other
words, the apparent authority with Banco Filipino v Banko Sentral
which it clothes him to act in general, or
2. The acquiescence in his act of a
particular nature, with actual or
Limitation of Right of Inspection
constructive knowledge thereof, whether Good faith and legitimate purpose are presumed.
within or without the scope of his It is the duty of the corporation to allege and
ordinary powers prove with sufficient evidence the facts that give
rise to a claim of bad faith as the existence of an
The doctrine of apparent authority provides that illegitimate purpose.
even if no actual authority has been conferred on The confidentiality of business transactions is not
a magical incantation that will defeat the request
of a SH to inspect the records. Although it is true A separate corporate personality shields
that the business is entitled to the protection of corporate officers acting in good faith and within
its trade secretes and other intellectual property scope of authority from personal liability except
rights, facts must be pleaded to convince the for situations enumerated by law and
court that a specific SH’s request for inspection, jurisprudence.
under certain conditions, would violate the
corporation’s own legal right. Piercing the corporate veil in order to hold
corporate officers personally liable for the
Furthermore, the discomfort caused to the corporation’s debt requires that “the bad faith or
management of a corporation when a request for wrongdoing of the director must be established
inspection is claimed is part of the regular matters clearly and convincingly as bad faith is never
that a business wanting to ensure good presumed
governance must endure. The range between
discomfort and vexation is a broad one, which Pioneer Insurance v Morning Star
may tend to be located in the personalities of
those involved.
Pasar v Lim

Reciprocal Obligations of Passenger and Derivative Suits

Airlines A derivative suit is an action filed by stockholder
Purchase of the contract of carriage binds the to enforce a corporate action. It is an exception to
passenger and imposes reciprocal obligations on the general rule that the corporation’s power to
both airline and the passenger. The airline must sue is exercised by the board of Directors or
exercise extraordinary diligence in the fulfillment Trustees.
of the terms and conditions of the contract of
carriage. The passenger, however, has the The fifth requisite for filing derivative suits, while
correlative obligation to exercise ordinary not included in the enumeration, is implied in the
diligence in the conduct of his or her affairs. 1st par of Rule 8, sec 1 of the interim rules: The
action brought by the stockholder or member
Manay v Cebu Air. Inc must be “In the name od the corporation or
association” this requirement has already been
settled in jurisprudence.
Piercing the Veil
Whether the doctrine of piercing the corporate Villamor v. Umale
veil applies to hold the individual respondent
solidarily liable with respondent Morning Star
Travel and Tours, Inc. to pay the award in favor of
Serious Situations Test
the petitioner Pioneer Insurance & Surety Corp. Serious situations test provides that the
suspension of claims is counted only upon the
The corporate legal structure draws its “economic appointment of a rehabilitation receiver, and
superiority” from key features such as separate certain situations serious in nature must be
corporate personality. Unlike other business shown to exist before one is appointed.
associations such as partnerships, the corporate
framework encourages investment by allowing These situations are rather serious in nature,
even small capital contributors to be part of a big requiring the appointment of a management
business endeavor made possible by the committee or a receiver to preserve the existing
aggregation of their capital funds. The consequent asset and property of the corporation in order to
limited liability feature, since corporate assets will protect the interest of its investors and creditors.
answer for corporate debts, also proves attractive
for investors. However, this legal structure should Otherwise, when such circumstance are not
not be abused. obtaining or when the SEC finds no such imminent
 danger of losing the corporate assets, a be registered with SEC and the conditions
management committee or rehabilitation receiver imposed by it should be complied with.
need not be appointed and suspension of actions
for claims may not be ordered by the SEC when
the SEC does not deem it necessary to appoint a Partnership and joint ventures
receiver or to create a management committee, it If a business consortium between two or more
may assumed, that there are sufficient assets to persons from a partnership, such joint venture
sustain the rehabilitation plan, and that the shall be governed by the law on partnership.
creditors and investors are amply protected.
A corporation cannot enter into a partnership
Pryce Corporation v China Bank
but it can enter into a joint venture.

JM Tuason & Co., Inc. v Bolanos

Through a corporation has no power to enter
into partnership, it may nevertheless enter into
joint venture with another where the nature of
the joint venture is in line with the business
authorized by its charter.
VI. COMPARATIVE MATRIX
Note: That corporations must only enter into
joint ventures in accordance with their purpose
CORPORATION or authority.
- For profit or non profit
- Exist in perpetuity unless its Articles of Auback v Sanitary Wares Manufacturing
Inc otherwise provide. Corporation
Joint Venture
- Single Transaction A joint venture has no precise legal definition
- Temporary in nature but has been generally meant to be an
Partnership organization formed for a temporary purpose. It
- For General Business is hardly distingusishabel from a partnership
- Has some degree of continuity because both have elements of community of
interest, sharing of losses and profits, and
mutual right of control
Corporation and joint ventures
Santiago v Spouses Garcia
Two or more corporations may enter into a
By the contract of partnership 2 or more
joint venture through a contract or agreement if
persons contribute money, property, or
the nature of the venture is in line with the
industry to a common fund, with the intention
business authorized by their charters, which
of dividing the profits among themselves.
contract/agreement need not be registered
Partnership is essentially a result of an
with SEC as long as the consortium will not
agreement or a contract, either express or
result in the formation of a new partnership or
implied, oral or written, between 2 or more
corporation.
persons. Here, there was neither allegation nor
proof that merian and edna agreed to enter
Should the consortium result in the formation
of a corporation or partnership, the same has to
into partnership for purpose of carrying out the the receipt by a person of a share of the profits of a
lending business. business is a prima facie evidence that he is a
partner in the business, but no such inference shall
be drawn if such profits were received in payment of
There was likewise no agreement for the
wages of an employee or rent to a land lord, In
sharing of profit, only that Merian expects to
addition, the sharing of gross returns does not it self
receive remittance of monthly interest from the establish a partnership…
amount she invested. At any rate, the receipt by
a person of a share of profits, or of a payment
of a contingent amount in case of profits
earned, is not conclusive evidence of
partnership. Art 1769 NCC – the sharing of gross
returns does not of it self establish a
partnership, whether or not the person sharing
them have a joint or common right or interest
in any property from which the returns are
derived.

Villamor and Victolero Construction v Sogo

Realty & dev’t Corp.
Except when authorized by the other parties or
unless they have abandoned their business, one or
more, but less than all the partners, have no
authority to submit a partnership claim or liability to
arbitration. The general ule is that powers not
specifically delegated in a partnership agreement are
presumed to be withheld. According to the appellate
court, while Lawrence is VVCC’s estimation and
marketing manager, it still remains that he is not a
partner in said partnership. The fact that he is the
husband of Rheena Villamor, one of the partners, is
of no moment as it not gives him personality as a
partner.

Thus, since VVCC was represented by one without

capacity to enter into a binding arbitration, and in
the absence of an arbitration clause in their
Construction agreement, the CA rule that the CIAC
had no jurisdiction over the issues brought before it.

Dusol v Laza
The best evidence to prove partnership is the
contract of Articles of Partnership. Nevertheless, in
its absence its existence can be establish by the
circumstantial evidence under the art 1769 NCC “