#HernanDoItBar2023 #ParaSaBARyan
THAT IN ALL THINGS, GOD MAY BE GLORIFIED
SBCA CENTRALIZED BAR OPERATIONS
#HernanDoItBar2023 #ParaSaBARyan
THAT IN ALL THINGS, GOD MAY BE GLORIFIED
SBCA CENTRALIZED BAR OPERATIONS
#HernanDoItBar2023 #ParaSaBARyan
THAT IN ALL THINGS, GOD MAY BE GLORIFIED
SBCA CENTRALIZED BAR OPERATIONS
This work is the intellectual property of the SAN BEDA COLLEGE
ALABANG SCHOOL OF LAW and SAN BEDA COLLEGE ALABANG
CENTRALIZED BAR OPERATIONS 2023. It is intended solely for the
use of the individuals to which it is addressed – the Bedan
community.
Publication, reproduction, dissemination, and distribution, or
copying of the document without the prior consent of the SAN BEDA
COLLEGE ALABANG SCHOOL OF LAW CENTRALIZED BAR
OPERATIONS ACADEMICS COMMITTEE 2023 is strictly prohibited.
Material includes both cases penned by Justice Hernando and recent
landmark cases decided by the Supreme Court.
COPYRIGHT © 2023
SAN BEDA COLLEGE ALABANG SCHOOL OF LAW
SAN BEDA COLLEGE ALABANG SCHOOL OF LAW CENTRALIZED BAR OPERATIONS 2023
ALL RIGHTS RESERVED BY THE AUTHORS.
#HernanDoItBar2023 #ParaSaBARyan
THAT IN ALL THINGS, GOD MAY BE GLORIFIED
SBCA CENTRALIZED BAR OPERATIONS
CASE DIGESTS
BUSINESS ORGANIZATIONS
CORPORATIONS
Board of Directors and Trustees: Business Judgment Rule
Metroplex Berhad v. Sinophil Corp
Dissolution and Liquidation: By Management Committee or Rehabilitation Receiver
Deutsche Bank AG London v. Kormansinc, Inc.
Other Corporations: Foreign Corporations
Magna Ready Mix Concrete Corp v. Andersen Bjornstad Kane Jacobs, Inc.
BANKING LAWS
NEW CENTRAL BANK ACT (R.A. NO. 7653, AS AMENDED BY R.A. NO. 11211)
The Bangko Sentral Ng Pilipinas And Banks In Distress: Receivership
Banco Filipino Savings and Mortgage Bank v. Bangko Sentral ng Pilipinas.
INSURANCE
BASIC CONCEPTS: CLASSES OF INSURANCE
Fire Insurance
Multi-Ware Manufacturing v. Cibeles Insurance
Compulsory Motor Vehicle Liability Insurance
Malayan Insurance Co., Inc. v. Stronghold Insurance Co., Inc
INTELLECTUAL PROPERTY
Trademarks: Rights Conferred by Registration
Kolin Electronics Co., Inc. v. Taiwan Kolin Corp. LTD
Unfair Competition
Kho v. Summerville General Merchandising
#HernanDoItBar2023 #ParaSaBARyan
THAT IN ALL THINGS, GOD MAY BE GLORIFIED
SBCA CENTRALIZED BAR OPERATIONS
1
4
6
8
11
13
15
17
CASE DOCTRINES
Metroplex Berhad v. Sinophil Corp
Board of Directors and Trustees: Business judgment Rule
Deutsche Bank AG London v. Kormansinc, Inc.
Dissolution and Liquidation: By Management Committee or Rehabilitation
Receiver
Magna Ready Mix Concrete Corp v. Andersen Bjornstad Kane Jacobs, Inc.
Other Corporations: Foreign Corporations
Banco Filipino Savings and Mortgage Bank v. Bangko Sentral ng Pilipinas
The Bangko Sentral Ng Pilipinas And Banks In Distress: Receivership
Multi-Ware Manufacturing v. Cibeles Insurance
Fire Insurance
Malayan Insurance Co., Inc. v. Stronghold Insurance Co., Inc
Compulsory Motor Vehicle Liability Insurance
Kolin Electronics Co., Inc. v. Taiwan Kolin Corp. Ltd
Rights Conferred by Trademark Registration
Kho v. Summerville General Merchandising
Unfair Competition
#HernanDoItBar2023 #ParaSaBARyan
THAT IN ALL THINGS, GOD MAY BE GLORIFIED
SBCA CENTRALIZED BAR OPERATIONS
20
21
21
22
23
23
24
25
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
caseS
CORPORATION LAW
Business Organizations: Corporations
BOARD
OF
DIRECTORS
AND
TRUSTEES: BUSINESS JUDGMENT RULE
METROPLEX BERHAD V. SINOPHIL CORP
HERNANDO, J.
BOARD
GR No. 208281 June 28, 2021
OF DIRECTORS AND TRUSTEES: BUSINESS JUDGMENT RULE
DOCTRINE
Decreasing a corporation's authorized capital stock, which is an amendment of the
corporation's Articles of Incorporation, is a decision that only the stockholders and the
directors can make, considering that they are the contracting parties thereto. For third
persons or parties outside the corporation like the SEC to interfere to the decrease of the
capital stock without reasonable ground is a violation of the "business judgment rule"
which states that:
Contracts intra vires entered into by the board of directors are binding
upon the corporation and courts will not interfere unless such contracts are so
unconscionable and oppressive as to amount to wanton destruction to the rights of
the minority, as when plaintiffs aver that the defendants (members of the board),
have concluded a transaction among themselves as will result in serious injury to
the plaintiffs stockholders.
Courts and other tribunals are wont to override the business judgment of the
board mainly because, courts are not in the business of business, and the laissez faire rule
or the free enterprise system prevailing in our social and economic set-up dictates that it
is better for the State and its organs to leave business to the businessmen; especially so,
when courts are ill-equipped to make business decisions. More importantly, the social
contract in the corporate family to decide the course of the corporate business has been
vested in the board and not with the courts.
The "business judgment rule" simply means that "the SEC and the courts are barred
from intruding into business judgments of corporations, when the same are made in good
faith."
FACTS
In August 1998, Sinophil entered into a Share Swap Agreement (Swap Agreement)
with Metroplex and Paxell where Metroplex and Paxell would transfer 40% of their
shareholdings in Legend International Resorts Limited (Legend) for a combined 35.5%
1
stake in Sinophil. However, Sinophil and Belle alleged that the Swap Agreement was
entered into in March 1997.
In the interim, Metroplex pledged two billion of its Sinophil shares with Union Bank
and Asian Bank to secure the loans Legend with the said banks.
On August 23, 2001, Sinophil and Belle executed a Memorandum of Agreement
(Unwinding Agreement) with Metroplex and Paxell rescinding the 1998 Swap Agreement.
After the execution of the Unwinding Agreement, Metroplex and Paxell were unable to
return 1.87 billion of the Sinophil shares while another two billion Sinophil shares
remained pledged by Metroplex in favor of the International Exchange Bank and Asian
Bank.
On February 18, 2002 and June 3, 2005, the shareholders of Sinophil voted for the
reduction of Sinophil's authorized capital stock.
On March 28, 2006, the CRMD and the CFD approved the first amendment of the
Articles of Incorporation of Sinophil, reducing its authorized capital stock. The following
day, or on March 29, 2006, the approval of the reduction of Sinophil's authorized capital
stock was disclosed to the Philippine Stock Exchange, Inc. (PSE).
On June 21, 2007, the shareholders of Sinophil again approved the proposal of the
Board of Directors to reduce its authorized capital stock by another one billion shares.
On June 24, 2008, the CRMD and the CFD approved the second amendment of the
Articles of Incorporation of Sinophil which further reduced its authorized capital stock by
one billion shares. On June 30, 2008, the approval of the reduction of Sinophil's
authorized capital stock was likewise disclosed to the PSE.
On July 21, 2008, Yaw Chee Cheow (Yaw), Metroplex, and Paxell filed a Petition for
Review Ad Cautelam Ex Abundanti before the SEC assailing the approval by the CRMD and
the CFD of the amendments by Sinophil of its Articles of Incorporation.
The SEC found that the decrease in capital stock complied with the requirements
imposed by the Corporation Code, particularly Section 38. It held that the equal or
unequal reduction of a corporation's capital stock is a matter solely between the
stockholders and cannot be enjoined either by the courts or the creditors. Moreover, the
SEC found no basis to grant the prayer for the issuance of a cease and desist order.
Petitioners failed to raise valid grounds for its issuance. The Commission held that a cease
and desist order could not be ultimately issued because the grave and irreparable danger
to the investing public that petitioners fear is not present in the case.
Aggrieved, petitioners appealed before the CA. The CA issued a Resolution denying
the petitioners' motion for reconsideration for lack of merit as all the issues raised were a
mere rehash of the arguments already passed upon.
2
ISSUE
Is the decrease in the capital stock of Sinophil valid?
HELD
Yes, the appellate court is correct in finding that the decrease in respondent
Sinophil's capital stock was legal and that the public respondent SEC's approval thereof
was proper.
Section 38 of the Corporation Code clearly lists the requirements for a corporation
to decrease its capital stock.
Yaw, Metroplex, and Paxell have been asserting from the beginning that Sinophil
failed to comply with the following legal requirements for a decrease in its authorized
capital stock: (a) notice and hearing; (b) approval of all stockholders; (c) legitimate
business purposes; and (d) approval of all creditors.
Section 38 of the Corporation Code is clear. A corporation can only decrease its
capital stock if the following are present:
1. Approval by a majority vote of the board of directors;
2. Written notice of the proposed diminution of the capital stock, and of the
time and place of a stockholders' meeting duly called for the purpose,
addressed to each stockholder at his place of residence
3. 2/3 of the outstanding capital stock voting favorably at the said
stockholders' meeting duly;
4. Certificate in duplicate, signed by majority of the directors and
countersigned by the chairman and secretary of the stockholders' meeting
stating that legal requirements have been complied with;
5. Prior approval of the SEC; and
6. Effects do not prejudice the rights of corporate creditors.
The list of requirements under Section 38 is altogether different from the list of
legal requirements presented by petitioners. In short, petitioners plainly did not comply
with the law.
Disclosure of corporate actions to the stock exchange is intended to apprise the
investing public of the condition and planned corporate actions of the listed corporation,
thereby providing investors with sufficient, relevant and material information as to the
nature of the investment vehicle and the relationship of the risks and returns associated
with it. The corporation's simple act of disclosing the decrease and delisting to the PSE
was more than enough notice to the investing public. There was nothing in the
corporation's act that resulted in grave or irreparable injury or prejudice to the investing
public.
WHEREFORE, the Petition for Review on Certiorari with Application for the
Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction is DENIED.
3
Business Organizations: Corporations
DISSOLUTION
AND
LIQUIDATION: BY MANAGEMENT COMMITTEE
REHABILITATION RECEIVER
OR
DEUTSCHE BANK AG LONDON V. KORMANSINC, INC.
HERNANDO, J.
DISSOLUTION
AND
GR No. 201700 April 18, 2022
LIQUIDATION: BY MANAGEMENT COMMITTEE OR REHABILITATION RECEIVER
DOCTRINE
In view of the successful rehabilitation of Vitarich, and the termination of the
rehabilitation proceedings, as well as the discharge of the rehabilitation receiver from his
duties, this Court holds that the instant petitions are now moot and, accordingly, their
dismissal are in order.
FACTS
Vitarich, respondent, is engaged in the poultry industry. In the course of its
operations,it incurred several credit and financing facilities from various creditors.
Vitarich then entered into a Mortgage Trust Indenture (MTI) with several of its
bank-creditors, with the Philippine Commercial International Bank (PCIB) being appointed
as trustee. The MTI was executed to secure the repayment of certain loans by Vitarich,
and in the MTI several properties of Vitarich were mortgaged in favor of the trustee. Later
on, Vitarich could no longer pay its obligations and filed a Petition for Corporate
Rehabilitation with the Regional Trial Court (RTC) and a Receiver was appointed. Among
the listed creditors were Metrobank and Deutsche Bank, petitioners. Kormasinc,
petitioner, was the successor-in-interest of the Rizal Commercial Banking Corporation
(RCBC), brought the promissory notes that was issued to it by RCBC, which was issued to
the latter by Vitarich. A meeting was held between Vitarich’s creditors to discuss the
appointment of a new MTI trustee which was opposed by Kormasinc. Kormansic asserted
that the appointment of an MTI trustee was unnecessary since its duties were redundant
to that of the appointed receiver. As a result, Kormasinc was no longer invited by the
other creditors to the subsequent meetings. This prompted Kormasinc to file a motion
with the RTC for the Rehabilitation Receiver to take possession, custody and control of
the MTI properties.
Kormasinc averred that it is the function of the Receiver, under the rules of
corporate rehabilitation, to take possession, custody and control of the properties.
Metrobank and Deutsche Bank argued that the Receiver may only take actual
possession of the properties, not the documents of ownership or titles.
4
The RTC agreed with Metrobank and Deutsche Bank and denied Kormasic’s motion.
This was, however, reversed by the Court of Appeals. Vitarich, however, successfully
exited rehabilitation afterwards which also resulted in the discharge of the rehabilitation
receiver from his duties.
ISSUE
May the Receiver be given priority over the possession of the MTI properties over
the MTI trustee?
HELD
No. In view of the successful rehabilitation of Vitarich, and the termination of the
rehabilitation proceedings, as well as the discharge of the rehabilitation receiver from his
duties, this Court holds that the instant petitions are now moot and, accordingly, their
dismissal are in order.
The rehabilitation court’s September 16, 2016 Order which terminated Vitarich’s
rehabilitation proceedings effectively put an end to the judicial controversy between the
parties.
5
Other Corporations: Foreign Corporations
FOREIGN CORPORATION/DOCTRINE
OF
ESTOPPEL
MAGNA READY MIX CONCRETE CORPORATION V. ANDERSEN BJORNSTAD KANE JACOBS,
INC.
HERNANDO, J.
GR No. 196158 January 20, 2021
FOREIGN CORPORATION/DOCTRINE OF ESTOPPEL
DOCTRINE
The doctrine of estoppel states that the other contracting party may no longer
challenge the foreign corporation’s personality after acknowledging the same by entering
into a contract with it. By virtue of the doctrine of estoppel, a party cannot take undue
advantage by challenging the foreign corporation’s personality or legal capacity to sue
when the former already acknowledged the same by entering into a contract with the
latter and deriving benefits therefrom.
A foreign corporation doing business in the Philippines may sue in Philippine Courts
although not authorized to do business here against a Philippine citizen or entity who had
contracted with and benefited by said corporation. And the doctrine of estoppel to deny
corporate existence applies to a foreign as well as to domestic corporations.
FACTS
MAGNA is a corporation organized and existing under the laws of the Philippines.
ANDERSEN is a corporation organized and existing under the laws of the State of
Washington, United States of America. In 1996, Magna ordered from Andersen the form
design and drawing development for its project on the development of a precast plant
and PC double tee design. In this connection, Magna issued a purchase order. The parties
also executed an Agreement for Professional Services which provided that Magna would
compensate Andersen for the performance of services described therein. In February
1997, Magna asked Andersen to prepare a preliminary design for its Ecocentrum Garage
Project, and pursuant to this, Andersen delivered the designs.
Magna made partial payments, but left an unpaid balance in the amount of US$
60,786.59, pertaining to: (a) precast plant inspection and consultation; (b) P/C double tee
form design and andplant development design; and (c) Ecocentrum Garage preliminary
design for bidding. Andersen made repeated demands for Magna to pay but to no avail,
hence the filing of the complaint. One of the contentions of Magna was that Andersen was
doing business in the Philippines but without the necessary license. Hence, it filed the
motion to dismiss alleging that Andersen has no legal capacity to sue.
The RTC denied Magna’s motion to dismiss on the ground that it was already
estopped from challenging Andersen’s personality after having acknowledged the same by
6
virtue of its entering into a contract with it. The CA ruled that there was a perfected and
binding contract between the parties and MAGNA is estopped from questioning the
existence of the contract due to judicial admission.
ISSUE
Did Andersen have legal capacity to sue in the Philippines?
HELD
No, but Magna is already estopped from challenging Andersen’s legal capacity to
sue.
A foreign corporation that conducts business in the Philippines must first secure a
license for it to be allowed to initiate or intervene in any action in any court or
administrative agency in the Philippines. A corporation has legal status only in the state
that granted it personality. Hence, a foreign corporation has no personality in the
Philippines, much less legal capacity to file a case, unless it procures a license as provided
by law. As an exception, a foreign corporation may sue without a license on the basis of
an isolated transaction, which means that it is different from or not related to the
common business of the foreign corporation in the sense that there is no objective to
increasingly pursue its purpose or object. In the instant case, Andersen’s act of entering
into a contract with Magna does NOT fall into the category of isolated transactions. The
contract clearly shows that Andersen was performing acts that were in progressive pursuit
of its business purpose, which involved consultation and design services. It cannot be an
isolated transaction because the act is related to Andersen’s specific business purpose.
Thus, in doing business without a license, Andersen had no legal capacity to sue in the
Philippines.
HOWEVER, the Court agrees that Magna is already estopped from challenging
Andersen’s legal capacity to sue. The doctrine of estoppel states that the other
contracting party may no longer challenge the foreign corporation’s personality after
acknowledging the same by entering into a contract with it. By virtue of the doctrine of
estoppel, a party cannot take undue advantage by challenging the foreign corporation’s
personality or legal capacity to sue when the former already acknowledged the same by
entering into a contract with the latter and deriving benefits therefrom. In this case,
Magna is already estopped from challenging Andersen’s legal capacity to sue due to its
prior dealing with it. There was a perfected and binding contract between the parties. By
such contract, Magna effectively acknowledged Anderson’s personality. Moreover, Magna
had already benefited from the contract because Andersen indeed rendered services to
Magna pursuant to their contract and even prior thereto.
7
BANKING
New Central Bank Act (R.A. No. 7653, as amended by R.A. No. 11211)
THE BANGKO SENTRAL NG PILIPINAS AND BANKS IN DISTRESS:
RECEIVERSHIP
BANCO FILIPINO SAVINGS
AND
MORTGAGE BANK V. BANGKO SENTRAL
HERNANDO, J.
NG
PILIPINAS
GR No. 200642 April 26, 2021
NEW CENTRAL BANK ACT - RECEIVERSHIP
DOCTRINE
The PDIC shall be designated as receiver and it shall proceed with the takeover
and liquidation of the closed bank. PDIC is authorized to perform several functions in its
behalf, including bringing suits to enforce liabilities to or recoveries of the closed banks,
hiring or retaining private counsels as may be necessary, and exercising such other powers
as are inherent and necessary for the effective discharge of the duties of the corporation
as a receiver. In contrast, the powers and functions of the directors, officers, and
stockholders of a closed bank under receivership are deemed suspended upon takeover by
the PDIC.
FACTS
On December 11, 1991, the Court has declared void the order of respondent
Bangko Sentral ng Pilipinas’(BSP) Monetary Board (MB) of closure and receivership of
petitioner Banco Filipino Savings and Mortgage Bank (Banco Filipino), wherein the former
has also been directed to reorganize the latter to allow it resume business under the
comptrollership of both BSP and MB. In line with this, Resolution No. 427 was issued by
the MB which allowed Banco Filipino to resume business. However, in 2002, Banco Filipino
suffered heavy withdrawal resulting in them seeking financial assistance from BSP.
During the pendency of the Petition for Revival of Judgement with the RTC to
compel BSP to approve its business plan, the two entered into negotiations wherein Banco
Filipino filed a Proposal for Settlement before the RTC to settle the issues between the
parties. In its 8th Revised Business Plan to BSP for evaluation, Banco Filipino requested,
among others, a P25 million income enhancement loan. After a series of revision, the BSP,
in its Resolution No. 1668 granted the request for the financial assistance of P25 million,
along with some terms and conditions, which included the withdrawal or dismissal with
prejudice to all pending cases filed by Banco Filipino against BSP and its officials,
execution of necessary quitclaims and commitments to be given by Banco Filipino’s
principal stockholders not to revive or refile similar cases in the future. Banco Filipino did
not accept the condition of withdrawal of cases. The parties failed to reach a mutually
acceptable settlement.
8
Banco Filipino filed a Petition for Certiorari and Mandamus with prayer for issuance
of temporary restraining order (TRO) and (WPI) against BSP and MB, alleging that the
latter committed grave abuse of discretion in requiring it to withdraw its cases and waive
all future claims as a condition to the approval of the business plan and prayed to declare
the condition void and to issue TRO and WPI, which was granted. The CA reversed and set
aside such RTC decision.
On March 17, 2011, in the Monetary Board Resolution No. 372.A, after having
determined inability of Banco Filipino to continue operating with safety to its depositors
and creditors, the MB prohibited the bank from doing business in the Philippines, placing
it under receivership and designating the Philippine Deposit Insurance Corporation (PDIC)
as its receiver. Banco Filipino thereafter assailed MB Resolution 372.A via a petition for
certiorari and mandamus with the CA. The CA initially granted the petition, but granted
the Motion for Reconsideration filed by BSP. Banco Filipino assails such CA Resolution via
Petition for Review on Certiorari.
ISSUE
Was the Petition filed by Banco Filipino assailing the MB Resolution No. 372-A valid?
HELD
No, the Petition is not valid.
Section 12 (a), R.A. 3591, as amended by Section 25, RA No. 10846 provides that
whenever a bank is ordered closed by the MB, the PDIC shall be designated as receiver
and it shall proceed with the takeover and liquidation of the closed bank in accordance
with this Act. For this purpose, banks closed by the MB shall no longer be rehabilitated. In
effect, as provided by Section 30 of the New Central Bank Act, the PDIC shall immediately
gather and take charge of all the assets and liabilities of the bank, administer the same
for the benefit of its creditors, and exercise the general powers of a receiver under the
Revised Rules of Court. Section 10 (c), R.A. 9302 amending Section 9-A, R.A. No. 3591,
authorizes PDIC to perform several functions in its behalf, including bringing suits to
enforce liabilities to or recoveries of the closed banks, hiring or retaining private counsels
as may be necessary, and exercising such other powers as are inherent and necessary for
the effective discharge of the duties of the corporation as a receiver. In contrast, the
powers and functions of the directors, officers, and stockholders of a closed bank under
receivership are deemed suspended upon takeover by the PDIC.
In the case of Balayan Bay Rural Bank, Inc. v. National Livelihood Development
Corp, it was held that PDIC, as the fiduciary of the properties of a closed bank, may
prosecute or defend the case by or against the said bank as a representative party while
the bank will remain as the real party in interest, and that actions should be brought for
or against the closed bank through the statutory receiver. The mandatory inclusion of the
PDIC as a representative party is grounded on its statutory role as the fiduciary of the
closed bank which, under the New Central Bank Act, is authorized to conserve the latter's
property for the benefit of its creditors. If a complaint is filed by one who claims to
9
represent a party as plaintiff but who, in fact, is not authorized to do so, such a
complaint is not deemed filed and the court does not acquire jurisdiction over the
complaint. The Court further held that a bank under receivership can only sue or be sued
through its receiver, the PDIC. Thus, a petition filed on behalf of a bank under
receivership that is neither filed through nor authorized PDIC must be dismissed for want
of jurisdiction.
In the case at bar, Banco Filipino was placed under the receivership of PDIC on
March 17, 2011 under MB Resolution No. 372.A. A review of the Petition and court records
do not indicate any authority from the PDIC, Banco Filipino’s statutory receiver, for the
filing of the Petition. In fact, the verification and certification of forum shopping
submitted by petitioner were likewise signed by executive vice presidents whose
purported authority sprang from the BOD and which, in turn, could not have validly
authorized the said individuals to file the suit on behalf of Banco Filipino in line with
Section 10 (b) of RA 9302.
Therefore, the Petition should not be deemed filed and this Court did not acquire
jurisdiction over the instant case.
10
Insurance
Basic Concepts: Classes of Insurance
FIRE
MULTI-WARE
INSURANCE
MANUFACTURING V.
CIBELES INSURANCE
HERNANDO, J.
GR No. 230528 February 1, 2021
OTHER INSURANCE CLAUSE
DOCTRINE
Where the insurance policy specifies as a condition the disclosure of existing
co-insurers, non-disclosure thereof is a violation that entitles the insurer to avoid the
policy. This condition is common in fire insurance policies and is known as the "other
insurance clause."
The rationale behind the incorporation of "other insurance" clause in fire policies is
to prevent over-insurance and thus avert the perpetration of fraud. When a property
owner obtains insurance policies from two or more insurers in a total amount that
exceeds the property's value, the insured may have an inducement to destroy the
property for the purpose of collecting the insurance. The public as well as the insurer is
interested in preventing a situation in which a fire would be profitable to the insured.
FACTS
Multi-Ware Manufacturing (Multi-Ware), petitioner, is a manufacturer of various
plastic products. Multi-Ware took out a fire insurance policy with Western Guaranty
(Western), respondent, for its pieces of machinery and equipment. Multi-Ware also
procured another two fire insurance policies, this time from Cibeles Insurance (Cibeles),
respondent, and Prudential Guaranty, covering the same pieces of machinery and
equipment. A fire broke out at Multi-Ware’s compound damaging the properties covered
by the insurance policies. Multi-Ware filed fire insurance claims with Western and Cibeles,
but the claims were denied.
It is Multi-Ware’s position that it did not violate the policies when it failed to
disclose to both Cibeles and Western the existence of the other policies.
However, Cibeles and Western contend that Multi-Ware’s failure to disclose the
existence of other fire insurances over the same properties constituted a violation of the
“other insurance’ clause of their policies.
The Regional Trial Court (RTC) ruled in favor of Western and Cibeles and dismissed
Multi-Ware’s complaint. This ruling of the RTC was affirmed by the Court of Appeals.
11
ISSUE
Was there a violation of the “other insurance” clause?
HELD
Yes. Policy Condition No. 3 is clear that it obligates petitioner, as insured, to notify
the insurer of any insurance effected to cover the insured items which involve any of its
property or stocks in trade, goods in process and/or inventories and that non-disclosure
by the insured of other insurance policies obtained covering these items would result in
the forfeiture of all the benefits under the policy. To be regarded as a violation of Policy
Condition No. 3, the other existing but undisclosed policies must be upon the same matter
and with the same interest and risk.
The records of this case show that petitioner obtained fire insurance policies from
Cibeles Insurance simultaneously with Western Guaranty and Prudential Guarantee
covering the same matter and the same risk, i.e., the policies uniformly cover fire losses
of petitioner's machinery and equipment. Although Policy Condition No. 3 does not
specifically state "machinery and equipment" as among the subject of disclosure, it is
apparent that the disclosure extends to pieces of machinery and equipment as well since
Policy Condition No. 3 speaks of disclosure of other insurance obtained covering "any of
the property."
12
COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE
MALAYAN INSURANCE CO., INC. V. STRONGHOLD INSURANCE CO., INC
HERNANDO, J.
GR No. 203060 June 28, 2021
COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE
DOCTRINE
The purpose of CMVLI is to provide compensation for the death or bodily injuries
suffered by innocent third parties or passengers as a result of the negligent operation and
use of motor vehicles. The victims or their dependents are assured of immediate financial
assistance, regardless of the financial capacity of motor vehicle owners.
FACTS
Pablo purchased a Compulsory Third Party Liability (CTPL) insurance policy from
Stronghold for his recently purchased 2007 Mitsubishi Adventure GLX Diesel Wagon. The
policy is in force from January 16, 2007 to January 16, 2010. Pablo also obtained an
Excess Cover for Third Party Bodily and Death Liability from Malayan for the same vehicle.
The limit of the CPTL insurance coverage is P100,000.00 while the excess coverage is
P200,000.00.
During the effectivity of the two policies, Pablo, while driving the insured vehicle,
sideswiped a six-year-old pedestrian who sustained bodily injuries and was brought to the
hospital for treatment. Pablo asserted that the care of the pedestrian cost him
P100,318.08 in hospital and medical fees. He thus submitted third party liability claims to
Stronghold and Malayan for payment.
The IC ruled in favor of Malayan. It ordered Stronghold to pay Pablo the amount of
P100,000.00, and Malayan to pay the amount of only P318.08.The IC applied the case of
Western Guaranty Corporation v. Court of Appeals (Western Guaranty), and ruled that
"the enumerations of bodily injuries provided for in the Schedule of Indemnities in the
policy and the corresponding amount of reimbursement provided therein would not serve
as a limitation on the amount to be recovered x x x as long as the amount claimed would
not exceed the amount of insurance coverage and the expenses were incurred for the
hospitalization and medication of the victim’s injury." It further ruled that the schedule
of indemnities in Stronghold's policy is contrary to Western Guaranty.
While the appellate court reversed and set aside the orders of the IC, and ordered
Stronghold and Malayan to reimburse Pablo the amounts of P42,714.83 and P57,603.25,
respectively. It ruled that Western Guaranty is applicable to the instant case, hence,
Stronghold can be held liable for any and all kinds of damages necessary to discharge the
liability of the insured to a third-party accident victim.
13
ISSUE
Is the extent of Stronghold’s liability pursuant to the insurance policy it issued
equal to the amount of Malayan’s liability, which is not covered by Stronghold’s policy?
HELD
YES. The purpose of CMVLI is to provide compensation for the death or bodily
injuries suffered by innocent third parties or passengers as a result of the negligent
operation and use of motor vehicles.The victims or their dependents are assured of
immediate financial assistance, regardless of the financial capacity of motor vehicle
owners.
In Western Guaranty, a pedestrian was hit by a passenger bus that was insured with
Western Guaranty Corporation. The policy provided that the company's liability in cases of
death, injury, or damage to property of any party shall not exceed the limits of liability
set forth, and that the payment per victim in any one accident shall not exceed the limits
indicated in the Schedule of Indemnities provided for excluding additional medical or
burial expenses that might have been incurred. The pedestrian filed a complaint for
damages against the bus company, which in turn filed a third-party complaint against
petitioner therein. The Regional Trial Court ruled in favor of the pedestrian and ordered
the payment of actual damages, compensation for loss of earning capacity, moral
damages, and attorney's fees. On appeal, the CA affirmed the trial court's ruling in its
entirety. Petitioner therein further appealed to this Court and contended that as the
schedule therein limits the amount payable for certain kinds of expenses, that schedule
should be read as excluding liability for any other type of expense or damage or loss even
though actually sustained or incurred by the third-party victim.||
Western Guaranty clarifies the applicability of the limits provided in the Schedule
of Indemnities to injuries listed therein and allows claims for other kinds of damages not
otherwise indicated in the schedule against CMVLI policy providers, as long as liability is
established and the requisites for the kind of damages claimed are present.
Stronghold's liability with regard to injuries provided in its policy's Schedule of
Indemnities is subject to the limits provided therein. Any excess will not be for its
account, and will be for the account of the excess coverage provider — Malayan in this
case. As found by the CA, Stronghold is liable in the amount of P42,714.83; Malayan, on
the other hand, is liable in the amount of P57,603.25.
14
Intellectual Property Code (R.A. No. 8293)
Trademarks
RIGHTS CONFERRED
BY
REGISTRATION
KOLIN ELECTRONICS CO., INC. V. TAIWAN KOLIN CORP. LTD
HERNANDO, J.
G.R. No. 221347 & 221360-61 December 1, 2021
INTELLECTUAL PROPERTY; CERTIFICATE OF REGISTRATION OF
A
MARK
DOCTRINE
It is settled that a certificate of registration of a mark is prima facie evidence of
the validity of the registration, the registrant’s ownership of the mark, and of the
registrant’s exclusive right to use the same in connection with the goods or services and
those that are related thereto specified in the certificate.
FACTS
On May 29, 2007, KECI filed a trademark application for registration of the
“KOLIN” mark under Class 35 of the Nice Classification for use in the business of
manufacturing, assembling, importing, and selling electronic equipment or apparatus.
Taiwan Kolin and KPII did not oppose the said registration, and the mark was registered on
December 22, 2008. On August 16, 2007, KECI filed Trademark Application No.
20-2007-000009 for the mark “www.kolin.ph” under Class 35 for the use in the business of
manufacturing, assembling, importing, and selling electronic equipment or apparatus. The
application was published in the IPO e-Gazette on January 11, 2008, and Taiwan Kolin was
given four months or until May 10, 2008 to file an opposition.
On May 12, 2008, Taiwan Kolin filed an Opposition to the said application on the
following grounds: (1) the application proscribes the registration of a mark identical with
a registered mark belonging to a different proprietor with an earlier filing or priority
date; (2) the registration of “www.kolin.ph”will cause grave and irreparable injury to
Taiwan Kolin’s goodwill, reputation, and business using the KOLIN brand; (3) the
trademark violates the IRR; and (4) that “www.kolin.ph” does not function as a mark. The
Bureau of Legal Affairs dismissed Taiwan Kolin’s Opposition and its decision was affirmed
by the IPO Director-General. The IPO Director General emphasized that KECI is already
the registered owner of the “KOLIN” mark in Class 35 which breezed through registration
without Taiwan Kolin or any of its subsidiaries opposing the same. Thus, Taiwan Kolin is
estopped from assailing KECI’s rights that come with the registration. Moreover, the IPO
Director-General also clarified that the registration of “www.kolin.ph” in favor of KECI is
limited to the services covered by the KECI’s trademark application. The Court of Appeals
affirmed this decision.
15
ISSUE
1. Does KECI have the right to register and use the mark “www.kolin.ph”
consistent with its exclusive right to use the “KOLIN” mark in relation to
the goods/services covered by Class 35?; and
2. Did the IPO Director General err in ruling that (a) Taiwan Kolin’s
applications and registrations for the “KOLIN” mark refer to goods and
services that are not related to KECI’s trademark application for
“www.kolin.ph”; and that (b) the registration of “www.kolin.ph” in favor of
KECI is limited to the services covered by KECI’s trademark application?
HELD
1. Yes. KECI was already declared the first and prior user of the “KOLIN” mark in
the Philippines and thus the owner of it under RA 166. In connection to this, Section 236
of the IP Code states that nothing in the IP Code shall impair the rights of the
enforcement of marks acquired in good faith prior to the effective date of the law. It is
settled that a certificate of registration of a mark is prima facie evidence of the validity
of the registration, the registrant’s ownership of the mark, and of the registrant’s
exclusive right to use the same in connection with the goods or services and those that
are related thereto specified in the certificate. The presumption may be challenged and
rebutted when an adverse party can show that the certificate of registration is not
reflective of ownership of the holder, such as: (1) the first registrant has acquired
ownership of the mark through registration but subsequently lost the same due to non-use
or abandonment; (2) the registration was done in bad faith; (3) the mark itself becomes
generic; (4) the mark was registered contrary to the IP Code; or (5) the registered mark is
being used by, or with the permission of, the registrant so as to misrepresent the source
of the goods or services on or in connection with which the mark is used. Unless and until
the said registration of KECI is nullified or canceled through the proper proceeding, the
rights emanating from the said registration should be respected. Furthermore, the owner
of a registered trademark should be allowed to register in its favor, a domain name
containing its registered trademark as a dominant feature. KECI’s application register and
use the mark “www.kolin.ph” as its domain name and platform to sell its products in the
internet is merely in exercise of and consistent with its exclusive right to use the “KOLIN”
mark and such exercise is entitled to protection whether it is through an online or a
physical market – and whether it is printed on product packaging or included in the
domain name of its website.
2. Yes. KECI’s rights from its existing trademark registration for “KOLIN” do extend
to product and market areas that are the normal potential expansion of its business, and
goods and services and those in respect of which the trademark is registered where such
use would result in a likelihood of confusion. Section 147 of the IP Code provides that the
owner of a registered mark shall have the exclusive right to prevent all third parties not
having the owner’s consent from using in the course of trade identical or similar signs for
goods or services which are identical or similar to those in respect of which the trademark
is registered, where such would result in a likelihood of confusion. The Court holds that
the protection afforded to a trademark with regard to goods and services in market areas
16
that are the normal potential expansion of the trademark owner’s business must not
infringe on the rights of another trademark owner with a registered mark in its favor.
Unfair Competition
RIGHTS CONFERRED
BY
REGISTRATION
KHO V. SUMMERVILLE GENERAL MERCHANDISING
HERNANDO, J.
GR No. 213400 August 4, 2021
UNFAIR COMPETITION
DOCTRINE
The essential elements of an action for unfair competition are: (1) confusing
similarity in the general appearance of the goods, and (2) intent to deceive the public and
defraud a competitor. The confusing similarity may or may not result from similarity in
the marks, but may result from other external factors in the packaging or presentation of
the goods.
FACTS
Petitioners Elidad Kho (Elidad) and Violeta Kho (Violeta) were charged with Unfair
Competition by respondent Summerville General Merchandising & Co., Inc. (Summerville)
before the City Prosecutor's Office of Manila.
Petitioners were then engaged in a business known as KEC Cosmetic Laboratory,
and were alleged to be in an unfair competition.
The Summerville General Merchandising and Co. (Summerville) which is engaged,
among others, in the importation and distribution of facial cream products with the
trademark known as Chin Chun Su.
Petitioners are charged that they willfully, unlawfully, knowingly and jointly
sell/dispose and/or cause to be sold/disposed to the public facial cream products using
tools, implements and equipment in its production, labelling and distribution, which give
and depict the general appearance of the Chin Chun Su facial cream products and likely
influence the purchasers to believe that the same are those of the said Summerville.
ISSUE
Does unfair competition exist?
HELD
Yes, there is probable cause to charge with unfair competition. The essential
elements of an action for unfair competition are: (1) confusing similarity in the general
17
appearance of the goods, and (2) intent to deceive the public and defraud a competitor.
The confusing similarity may or may not result from similarity in the marks, but may
result from other external factors in the packaging or presentation of the goods.
Likelihood of confusion of goods or business is a relative concept, to be determined only
according to peculiar circumstances of each case. The element of intent to deceive and to
defraud may be inferred from the similarity of the appearance of the goods as offered for
sale to the public.
Here, petitioners' product which is a medicated facial cream sold to the public is
contained in the same pink oval-shaped container which had the mark "Chin Chun Su," as
that of respondent. While petitioners indicated in their product the manufacturer's name,
the same does not change the fact that it is confusingly similar to respondent's product in
the eyes of the public. As aptly found by the appellate court, an ordinary purchaser would
not normally inquire about the manufacturer of the product.
Petitioners' product and that solely distributed by respondent are similar in the
following respects "1. both are medicated facial creams; 2. both are contained in pink,
oval-shaped containers; and 3. both contain the trademark "Chin Chun Su" x x x. The
similarities far outweigh the differences. The general appearance of (petitioners') product
is confusingly similar to (respondent)."
Verily, the acts complained of against petitioners constituted the offense of Unfair
Competition and probable cause exists to hold them for trial, contrary to the findings of
RTC.
18
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
COMMERCIAL LAW
doctrines
COMMERCIAL LAW
CORPORATIONS
Board of Directors and Trustees: Business Judgment Rules
METROPLEX BERHAD V. SINOPHIL CORP
G.R. NO. 208281 | JUNE 28, 2021
SECTION 38, CORP. CODE / BUSINESS JUDGMENT RULE
SUMMARY & DOCTRINE
Shareholders of Sinophil amended their AOI twice due to its reduction of Sinophil’s
authorized capital stock. Yaw, Metroplex and Paxell filed a Petition for Review Ad
Cautelam Ex Abundanti before the SEC assailing the approval by the CRMD and the CFD of
the amendments by Sinophil of its Articles of Incorporation.
DOCTRINE: Decreasing a corporation's authorized capital stock, which is an
amendment of the corporation's Articles of Incorporation, is a decision that only the
stockholders and the directors can make, considering that they are the contracting parties
thereto. For third persons or parties outside the corporation like the SEC to interfere to
the decrease of the capital stock without reasonable ground is a violation of the "business
judgment rule" which states that: Contracts intra vires entered into by the board of
directors are binding upon the corporation and courts will not interfere unless such
contracts are so unconscionable and oppressive as to amount to wanton destruction to the
rights of the minority, as when plaintiffs aver that the defendants (members of the
board), have concluded a transaction among themselves as will result in serious injury to
the plaintiffs stockholders.
Courts and other tribunals are wont to override the business judgment of the
board mainly because, courts are not in the business of business, and the laissez faire rule
or the free enterprise system prevailing in our social and economic set-up dictates that it
is better for the State and its organs to leave business to the businessmen; especially so,
when courts are ill-equipped to make business decisions. More importantly, the social
contract in the corporate family to decide the course of the corporate business has been
vested in the board and not with the courts.
The "business judgment rule" simply means that "the SEC and the courts are barred
from intruding into business judgments of corporations, when the same are made in good
faith."
20
Dissolution and Liquidation: By Management Committee or Rehabilitation
Receiver
DEUTSCHE BANK AG LONDON V. KORMANSINC, INC.
GR NO. 201700 | APRIL 18, 2022
DISSOLUTION AND LIQUIDATION - BY MANAGEMENT COMMITTEE
OR
REHABILITATION RECEIVER
SUMMARY & DOCTRINE
Vitarich filed for corporate rehabilitation and one of its creditors argued that the
Receiver should have possession of the properties under a Mortgage Trust Indenture
Agreement (MTI). However, before the Court could decide on the merits of the case,
Vitarich successfully exited rehabilitation.
DOCTRINE: In view of the successful rehabilitation of Vitarich, and the termination
of the rehabilitation proceedings, as well as the discharge of the rehabilitation receiver
from his duties, this Court holds that the instant petitions are now moot and, accordingly,
their dismissal are in order.
NOTE
Although the facts of the case pertains to Financial Rehabilitation and Insolvency,
the Court did not give the topic any substance in the ruling as the case was already moot
and academic.
Foreign Corporations
MAGNA READY MIX CONCRETE CORPORATION V. ANDERSEN BJORNSTAD
KANE JACOBS, INC.
GR NO. 196158 | JANUARY 20, 2021
FOREIGN CORPORATIONS: PERSONALITY
TO SUE,
DOCTRINE
OF
ESTOPPEL
SUMMARY & DOCTRINE
MAGNA is a corporation organized and existing under the laws of the Philippines;
and ANDERSEN is a corporation organized and existing under the laws of the State of
Washington, United States of America. In 1996, Magna ordered from Andersen the form
design and drawing development for its project on the development of a precast plant
and PC double tee design. In this connection, Magna issued a purchase order. The parties
also executed an Agreement for Professional Services which provided that Magna would
compensate Andersen for the performance of services described therein. Andersen made
repeated demands for Magna to pay but to no avail, hence the filing of the complaint.
DOCTRINE: The doctrine of estoppel states that the other contracting party may
no longer challenge the foreign corporation’s personality after acknowledging the same by
entering into a contract with it. By virtue of the doctrine of estoppel, a party cannot take
21
undue advantage by challenging the foreign corporation’s personality or legal capacity to
sue when the former already acknowledged the same by entering into a contract with the
latter and derived benefits therefrom.
NOTE
A foreign corporation doing business in the Philippines may sue in Philippine Courts
although not authorized to do business here against a Philippine citizen or entity who had
contracted with and benefited by said corporation. And the doctrine of estoppel to deny
corporate existence applies to a foreign as well as to domestic corporations.
BANKING
New Central Bank Act (R.A. No. 7653, as amended by R.A. No. 11211)
BANCO FILIPINO SAVINGS
MORTGAGE BANK V. BANGKO SENTRAL
NG PILIPINAS
GR NO. 200642 |APRIL 26, 2021
AND
NEW CENTRAL BANK ACT - RECEIVERSHIP
SUMMARY & DOCTRINE
In this case, petitioner Banco Filipino was placed under the receivership of PDIC
under MB Resolution No. 372.A by respondent Bangko Sentral ng Pilipinas. Banco Filipino
then filed a Petition for Review on Certiorari. In dismissing the petition, the Court ruled
that PDIC, designated as receiver which shall proceed with the takeover and liquidation of
the closed bank, it is authorized to bring suits to enforce liabilities to or recoveries of the
closed banks, hiring or retaining private counsels as may be necessary, and exercising such
other powers as are inherent and necessary for the effective discharge of the duties of
the corporation as a receiver. In the case at bar, the Petition and court records do not
indicate any authority from the PDIC, Banco Filipino’s statutory receiver, for the filing of
the Petition.
DOCTRINE: The PDIC shall be designated as receiver and it shall proceed with the
takeover and liquidation of the closed bank. PDIC is authorized to perform several
functions in its behalf, including bringing suits to enforce liabilities to or recoveries of the
closed banks, hiring or retaining private counsels as may be necessary, and exercising such
other powers as are inherent and necessary for the effective discharge of the duties of
the corporation as a receiver. In contrast, the powers and functions of the directors,
officers, and stockholders of a closed bank under receivership are deemed suspended
upon takeover by the PDIC.
NOTE
A closed bank under receivership can only sue or be sued through its receiver, the
PDIC.
22
INSURANCE
Classes of Insurance: Fire Insurance
MULTI-WARE MANUFACTURING V. CIBELES INSURANCE
G.R. NO. 230528 |FEBRUARY 01, 2021
SOCIAL LEGISLATION; COMPREHENSIVE AGRARIAN REFORM LAW; TENANTS
AS PARTIES IN A PARTITION
CASE
SUMMARY & DOCTRINE
Multi-Ware procured three Fire Insurance Policies over the same properties without
informing the other insurers the existence of the other similar policies. As such, when a
fire broke out, gutting Multi-Ware’s properties, the claims were denied.
DOCTRINE: Where the insurance policy specifies as a condition the disclosure of
existing co-insurers, non-disclosure thereof is a violation that entitles the insurer to avoid
the policy. This condition is common in fire insurance policies and is known as the "other
insurance clause."
Compulsory Motor Vehicle Liability Insurance
MALAYAN INSURANCE CO., INC. V. STRONGHOLD INSURANCE CO., INC
G.R. NO. 203060 | JUNE 28, 2021
INSURANCE/ COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE
SUMMARY & DOCTRINE
Pablo purchased a Compulsory Third Party Liability (CTPL) insurance policy from
Stronghold for his recently purchased 2007 Mitsubishi Adventure GLX Diesel Wagon. Pablo
sideswiped a six-year-old pedestrian while operating the insured vehicle during the time
that the two policies were in force. The pedestrian suffered injuries and was taken to the
hospital for treatment. Pablo asserted that the care of the pedestrian cost him
P100,318.08 in hospital and medical fees. He thus submitted third party liability claims to
Stronghold and Malayan for payment
DOCTRINE: The purpose of CMVLI is to provide compensation for the death or
bodily injuries suffered by innocent third parties or passengers as a result of the negligent
operation and use of motor vehicles. The victims or their dependents are assured of
immediate financial assistance, regardless of the financial capacity of motor vehicle
owners.
NOTE
23
Western Guaranty clarifies the applicability of the limits provided in the Schedule
of Indemnities to injuries listed therein and allows claims for other kinds of damages not
otherwise indicated in the schedule against CMVLI policy providers, as long as liability is
established and the requisites for the kind of damages claimed are present.
INTELLECTUAL PROPERTY CODE (R.A. No. 8293)
Trademarks: Right conferred by Registration
KOLIN ELECTRONICS CO., INC. V. TAIWAN KOLIN CORP. LTD
G.R. NOS. 221347 & 221360-61 | DECEMBER 1, 2021
ACQUISITION
OF
OWNERSHIP
OF
MARK
SUMMARY & DOCTRINE
On May 29, 2007, KECI filed a trademark application for registration of the
“KOLIN” mark under Class 35 of the Nice Classification for use in the business of
manufacturing, assembling, importing, and selling electronic equipment or apparatus. And
on August 16, 2007, KECI filed Trademark Application No. 20-2007-000009 for the mark
“www.kolin.ph” under Class 35 for the use in the business of manufacturing, assembling,
importing, and selling electronic equipment or apparatus.Taiwan Kolin filed an Opposition
to the said application.
DOCTRINE: It is settled that a certificate of registration of a mark is prima facie
evidence of the validity of the registration, the registrant’s ownership of the mark, and of
the registrant’s exclusive right to use the same in connection with the goods or services
and those that are related thereto specified in the certificate. The presumption may be
challenged and rebutted when an adverse party can show that the certificate of
registration is not reflective of ownership of the holder, such as: (1) the first registrant
has acquired ownership of the mark through registration but subsequently lost the same
due to non-use or abandonment; (2) the registration was done in bad faith; (3) the mark
itself becomes generic; (4) the mark was registered contrary to the IP Code; or (5) the
registered mark is being used by, or with the permission of, the registrant so as to
misrepresent the source of the goods or services on or in connection with which the mark
is used.
24
Trademarks: Unfair Competition
KHO V. SUMMERVILLE GENERAL MERCHANDISING
G.R. NO. 213400 | AUGUST 04, 2021
UNFAIR COMPETITION/SECTION 168 (3A)
OF THE INTELLECTUAL
PROPERTY CODE
SUMMARY & DOCTRINE
Petitioners Elidad Kho (Elidad) and Violeta Kho (Violeta) were charged
with Unfair Competition by respondent Summerville General Merchandising &
Co., Inc. (Summerville) before the City Prosecutor's Office of Manila.
Petitioners are charged that they willfully, unlawfully, knowingly and jointly
sell/dispose and/or cause to be sold/disposed to the public facial cream
products using tools, implements and equipment in its production, labeling and
distribution, which give and depict the general appearance of the Chin Chun Su
facial cream products and likely influence the purchasers to believe that the
same are those of the said Summerville.
DOCTRINE: The essential elements of an action for unfair competition
are: (1) confusing similarity in the general appearance of the goods, and (2)
intent to deceive the public and defraud a competitor. The confusing similarity
may or may not result from similarity in the marks, but may result from other
external factors in the packaging or presentation of the goods.
.
NOTE
Likelihood of confusion of goods or business is a relative concept, to be
determined only according to peculiar circumstances of each case. The element of intent
to deceive and to defraud may be inferred from the similarity of the appearance of the
goods as offered for sale to the public.
25