Topic: Securities Regulation Code

7. [G.R. No. 195542, March 19, 2014]

SECURITIES AND EXCHANGE COMMISSION v. OUDINE SANTOS.

Facts:
An investment scam was exposed in 2007 with the disappearance of its principal
wrongdoer, Michael H.K. Liew, Chairman of the Board of Directors of Performance
Investment Products Corporation which is a foreign corporation but is ncorporated here
in the Philippines as Philippine International Planning Center Corporation (PIPC
Corporation).After his disappearance the SEC was flooded with complaints against PIPC
Corporation, its directors, officers, employees, agents and brokers including the
respondent herein, Oudine Santos, for alleged violation of the Securities Regulation Code
specifically Section 28 thereof. Having such complaints, sometime in 2006, an
investigation was undertaken by the Compliance and Enforcement Division of the SEC
on PIPC Corporation and found out that as per its Articles of Incorporation, PIPC
Corporation was authorized to act only as a research arm of their foreign clients. It was
also relayed by complainants–investors that PIPC Corporation is depicting itself to have
legitimacy and stability and so they deduced that it was clothed with the authority to solicit,
offer, and sell securities. Hence, the DOJ Panel filed a complaint for fraud and deception
committed by the officers and agents of PIPC Corporation, and on such basis indicted the
respondents including Santos for violation of Sec. 28 of SRC for engaging in the business
of selling or offering for sale securities without the necessary registration from SEC.

Issue: Whether or not Santos violated Sec. 28 of SRC, which punishes an unregistered
broker or dealer who engages in the business of buying or selling securities.

Ruling:

The Supreme Court ruled that PIPC Corporation and/or PIPC-BVI was found to
be: (1) an issuer of securities without the necessary registration or license from the SEC,
and (2) engaged in the business of buying and selling securities and also held that Santos
is liable for violating Section 28 of the SRC.
The elements for violation of Sec. 28 of the Securities Regulation Code are: (a)
engaging in the business of buying or selling securities in the Philippines as a broker or
dealer; or (b) acting as a salesman; or (c) acting as an associated person of any broker
or dealer, unless registered as such with the SEC. Santos in denying culpability claims
that she was a mere clerical employee of PIPC Corporation and/or PIPC–BVI and was
never an agent or salesman who actually solicited the sale of or sold unregistered
securities issued by PIPC Corporation and/or PIPC–BVI. However, while not being a
signatory to the contracts on certain peoples’ investment such as Sy or Lorenzo, she
procured the sale of these unregistered securities to the two (2) complainants by providing
information on the investment products being offered for sale by PIPC Corporation and/or
PIPC–BVI and convincing them to invest therein. Clearly, the act of Santos in procuring
the sale of unregistered securities fall within the ambit of Section 28 of the Securities
Code, and thus, she is liable for her violations.
Topic: Securities Regulation Code

8. [G.R. No. 135808, October 6, 2008]

SECURITIES AND EXCHANGE COMMISSION v. INTERPORT RESOURCES
CORPORATION, et.al.

Facts:

The operation of a 102 megawatt gas turbine power generating barge in exchange
for the 55% of the expanded capital stock of the Interport Resources Corporation (IRC)
was approved by the Board of Directors of IRC through a Memorandum of Agreement
with Ganda Holdings Berhad (GHB) where IRC acquired the entire capital stock of Ganda
Energy Holdings Incorporated (GEHI), and where IRC would acquire 67% of the entire
capital of the Philippine Racing Club. The Securities and Exchange Commission (SEC)
received reports that the IRC failed to make timely public disclosures of its negotiations
with GHB and that some of its directors heavily traded IRC shares utilizing this material
insider information.
For this reason, the SEC required the directors to appear before the SEC to explain
the alleged failure to disclose material information as required by the Rules on Disclosure
of Material Facts, and later on issued an order finding that the IRC violated the Rules in
connection with the then Old Securities Act when it failed to make timely disclosures of
its negotiations with GHB and that the directors of IRC entered into transactions involving
IRC shares in violation of the Revised Securities Act.
Respondents questioned the authority of the SEC to investigate on said matter
since according to P.D. 902-A, jurisdiction upon the matter was conferred upon the
Prosecution and Enforcement Department (PED) of the SEC – however, this issue was
moot since pending the disposition of the case, the Securities Regulation Code was
passed, effectively repealing P.D. 902-A and abolishing the PED.
On appeal, the Court of Appeals stated that since there are no rules and
regulations implementing the rules regarding disclosure, insider trading or any of the
provisions of the Revised Securities Act, the SEC has no statutory authority to file any
suit against respondents and was therefore prohibited from taking cognizance or initiating
any action against the respondents for the alleged violations of the Revised Securities
Act.

Issue: Whether or not the SEC has authority to file suit against respondents for violations
of the Revised Securities Act, specifically Sec. 30 (Insider’s Duty to Disclose when
Trading).

Ruling:
Yes. The insider's misuse of nonpublic and undisclosed information is the
gravamen of illegal conduct under the SRC. The intent of the law is the protection of
investors against fraud, committed when an insider, using secret information, takes
advantage of an uninformed investor. Insiders are obligated to disclose material
information to the other party or abstain from trading the shares of his corporation, and
this duty to disclose or abstain is based on two factors: first, the existence of a relationship
giving access, directly or indirectly, to information intended to be available only for a
corporate purpose and not for the personal benefit of anyone; and second, the inherent
unfairness involved when a party takes advantage of such information knowing it is
unavailable to those with whom he is dealing.
The term “insiders” now includes persons whose relationship or former relationship to the
issuer gives or gave them access to a fact of special significance about the issuer or the
security that is not generally available, and one who learns such a fact from an insider
knowing that the person from whom he learns the fact is such an insider. Insiders have
the duty to disclose material facts which are known to them by virtue of their position but
which are not known to persons with whom they deal and which, if known, would affect
their investment judgment.

Under the law, what is required to be disclosed is a fact of special significance which may
be-
a) a material fact which would be likely, on being made generally available, to affect
the market price of a security to a significant extent, or
b) one which a reasonable person would consider especially important in
determining his course of action with regard to the shares of stock.
Topic: Securities Regulation Code

9. [G.R. No. 191995, August 3, 2011]

PHILIPPINE VETERANS BANK v. JUSTINA CALLANGAN

Facts:

The Philippines Veterans Banks was ordered by the Securities and Exchange
Commission (SEC) to comply with the reportorial requirements as mandated by the
Securities and Regulations Code (SRC) upon a finding that the said bank qualified as a
public company. The Bank responded by explaining that it should not be considered a
public company because it is a private company whose shares of stock are available only
to a limited class or sector, i.e., to World War II veterans, and not to the general public.
Director Callangan, the Director of the Corporate Finance, Department of the SEC,
rejected the Banks explanation and assessed it a total penalty of One Million Nine
Hundred Thirty-Seven Thousand Two Hundred Sixty-Two and 80/100 Pesos
(P1,937,262.80) for failing to comply with the SRC reportorial requirements from 2001 to
2003.

Issue: Whether or not The Philippine Veterans Banks is a public company having the
burden of complying with the reportorial requirements as ordered by the SEC.

Ruling:
Section 17 of the SRC provides that reportorial requirements, such as, annual
report and other periodical reports are to be complied by;

“an issuer with assets of at least Fifty million pesos (P50,000,000.00) or

such other amount as the Commission shall prescribe, and having two
hundred (200) or more holders each holding at least one hundred (100)
shares of a class of its equity securities xxx”

Moreover, in Rule 3(1)(m) of the Amended Implementing Rules and Regulations

of the SRC, a public company is defined as any corporation with a class of equity
securities listed on an Exchange or with assets in excess of Fifty Million
Pesos (P50,000,000.00) and having two hundred (200) or more holders, at least two
hundred (200) of which are holding at least one hundred (100) shares of a class of its
equity securities.

From these provisions, it is clear that a public company, as contemplated by the

SRC, is not limited to a company whose shares of stock are publicly listed; even
companies like the Bank, whose shares are offered only to a specific group of people, are
considered a public company, provided they meet the requirements enumerated
above. The records establish, and the Bank does not dispute, that the Bank has assets
exceeding P50,000,000.00 and has 395,998 shareholders. It is thus considered a public
company that must comply with the reportorial requirements set forth in Section 17.1 of
the SRC.
Topic: Banking Laws

25. [G.R. No. 107303, February 23, 1995]

EMMANUEL C. OÑATE and ECON HOLDINGS CORPORATION, Petitioners, v. HON.
ZEUS C. ABROGAR, and SUN LIFE ASSURANCE COMPANY, Respondents.

Facts:
Sun Life filed a complaint for a sum of money with a prayer for the immediate
issuance of a writ of attachment against petitioners to which the Respondent Judge Zeus
Abrogar in this case had granted and issued.
Petitioners maintain that, in accordance with prior decisions of this Court, the
attachment of their properties was void because the trial court had not at that time
acquired jurisdiction over them and that the subsequent service of summons on them did
not cure the invalidity of the levy. They further contend that the examination of the books
and ledgers of the Bank of the Philippine Islands (BPI), the Philippine National Bank
(PNB) and the Urban Bank was a "fishing expedition" which the trial court should not have
authorized because petitioner Emmanuel C. Oñate, whose accounts were examined, was
not a signatory to any of the documents evidencing the transaction between Sun Life
Assurance of Canada (Sun Life).

Issue: Whether or not the Respondent Judge erred in issuing the writ of attachment.

Ruling:
No, the Respondent Judge did not err in issuing the writ of attachment.

It is clear from the provision of Section 10, Rule 57 Rules of Court (ROC) that
notice need only be given to the garnishee, but the person who is holding property or
credits belonging to the defendant. The provision does not require that notice be furnished
the defendant himself, except when there is a need to examine said defendant “for the
purpose of giving information respecting his property.

Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No. 1405,
(Bank Deposits Secrecy Law) for Section 2 therefor provides an exception “in cases
where the money deposited or invested is the subject matter of the litigation.”

The examination of the bank records is not a fishing expedition, but rather a
method by which Sun Life could trace the proceeds of the check it paid to petitioners.
Topic: Banking Laws

26. [G.R. No. 128996. February 15, 2002]

CARMEN LL. INTENGAN et.al., v. COURT OF APPEALS, et.al.

Facts:
On September 21, 1993, Citibank filed a complaint for violation of section 31 in
relation to section 144 of the Corporation Code against two (2) of its officers, Dante L.
Santos and Marilou Genuino.
The complaint was attached with the affidavit of Vic Lim, VP of Citibank, who was
then instructed by the higher management of the bank to investigate the
anomalous/highly irregular activities of the said officers. As evidence, Lim annexed bank
records purporting to establish the deception practiced by Santos and Genuino. Some of
the documents pertained to the dollar deposits of petitioners Carmen Ll. Intengan,
Rosario Ll. Neri, and Rita P. Brawner. In turn, private respondent Joven Reyes, vice-
president/business manager of the Global Consumer Banking Group of Citibank, admits
to having authorized Lim to state the names of the clients involved and to attach the
pertinent bank records, including those of petitioners. Petitioners aver that respondents
violated RA 1405 (Bank Secrecy Law).

Issue: Whether or not Respondents are liable for violation of Secrecy of Bank Deposits
Act, RA 1405.

Ruling:
No, the respondents are not liable for violation of Secrecy of Bank Deposits Act, RA 1405.

The accounts in question are U.S. dollar deposits and so the applicable law is not
Republic Act No. 1405, but Republic Act (R.A.) No. 6426, known as the “Foreign Currency
Deposit Act of the Philippines,” section 8 of which provides:
Sec. 8. All foreign currency deposits authorized under this Act, as well as
foreign currency deposits authorized under PD. No. 1034, are hereby
declared as and considered of an absolutely confidential nature and, except
upon the written permission of the depositor, in no instance shall such
foreign currency deposits be examined, inquired or looked into by any
person, government official bureau or office whether judicial or
administrative or legislative or any other entity whether public or private xxx.

Thus, under R.A. No. 6426 there is only a single exception to the secrecy of foreign
currency deposits, that is, disclosure is allowed only upon the written permission of the
depositor. Private respondents Lim and Reyes admitted that they had disclosed details
of petitioners’ dollar deposits without the letter’s written permission. It does not matter if
that such disclosure was necessary to establish Citibank’s case against Dante L. Santos
and Marilou Genuino. Lim’s act of disclosing details of petitioners’ bank records regarding
their foreign currency deposits, with the authority of Reyes, would appear to belong to
that species of criminal acts punishable by special laws, called malum prohibitum.
Topic: Banking Laws

27. [G.R. No. 71479, October 18, 1990]

MELLON BANK, N.A. v. HON. CELSO L. MAGSINO.

Facts:
Dolores Ventosa requested the transfer of $1,000 from the First National Bank of
Moundsville, West Virginia, U.S.A. to Victoria Javier in Manila through the Prudential
Bank, and to effectuate the transfer, the First National Bank requested the petitioner,
Mellon Bank, which mistakenly indicated in its wire sent to Manufacturers Hanover Bank,
a correspondent of Prudential Bank the amount transferred as "US$1,000,000.00" instead
of US$1,000.00. Immediately, Victoria Javier and her husband, Melchor Javier, Jr., made
withdrawals from the account, deposited them in several banks only to withdraw them
later in an apparent plan to conceal, "launder" and dissipate the erroneously sent amount,
and also bought properties in the USA owned by Honorio Poblador, to which the spouses
bought without even having seen the property.

Mellon Bank filed a complaint in the Superior Court of California, County of Kern,
against Javier spouses’ to impose constructive trust of the property they’ve purchased
from the money mistakenly and erroneously transferred to their account and also filed in
the Court of First Instance of Rizal, Branch X, a complaint against the Javier spouses,
Honorio Poblador, etc to recover the amount they received for the sale of the 160-acre
lot in California City. Because the amounts were already deposited in different names and
accounts, Mellon Bank then subpoenaed certain witnesses to testify of the transfer of
money to different accounts, however the testimonies of these witnesses were objected
to by the defense on the grounds of res inter alios acta, immateriality, irrelevancy and
confidentiality and then moved to strike off the testimonies from the record of the case in
violation of Republic Act No. 1405 the Secrecy of Bank Deposits.

Issue: Whether or not an account deposit which is relevant and material to the resolution
of the case may be covered under R.A. No. 1405.

Ruling:
Private respondents' protestations that to allow the questioned testimonies to
remain on record would be in violation of the provisions of Republic Act No. 1405 on the
secrecy of bank deposits, is unfounded. Section 2 of said law allows the disclosure of
bank deposits in cases where the money deposited is the subject matter of the litigation.

Inasmuch as Civil Case No. 26899 is aimed at recovering the amount converted
by the Javiers for their own benefit, necessarily, an inquiry into the whereabouts of the
illegally acquired amount extends to whatever is concealed by being held or recorded in
the name of persons other than the one responsible for the illegal acquisition.
Topic: Banking Laws

28. [G.R. Nos. 157294-95, November 30, 2006]

JOSEPH VICTOR G. EJERCITO v. SANDIGANBAYAN
and the PEOPLE OF THE PHILIPPINES.

Facts:
In the criminal case of People v. Estrada, et al., the Special Prosecution Panel filed
on January 20, 2003 before the Sandiganbayan a Request for Issuance of Subpoena
Duces Tecum for the issuance of a subpoena directing the President of Export and
Industry Bank (EIB, formerly Urban Bank) or his/her authorized representative to produce
the Trust Fund Account No. 858, and Savings Account No. 0116-17345-9 owned by
petitioner, during the hearings scheduled on January 22 and 27, 2003

The Special Prosecution Panel also filed on January 20, 2003, a Request for
Issuance of Subpoena Duces Tecum/Ad Testificandum directed to the authorized
representative of Equitable-PCI Bank to produce statements of account pertaining to
certain accounts in the name of Jose Velarde and to testify thereon.

The Sandiganbayan granted both requests by Resolution of January 21, 2003 and
subpoenas were accordingly issued. Petitioner, on the other hand, unassisted by counsel,
filed on January 28, 2003 a Motion to Quash Subpoena Duces Tecum/Ad Testificandum
praying that the subpoenas previously issued to the President of the EIB dated January
21 and January 24, 2003 be quashed on the account that the disclosure is illegal and the
prosecution in the case may not be allowed to make use of the information.

Issues:
1. Whether petitioners Trust Account No. 858 is covered by the term deposit as used
in R.A. 1405;
2. Whether petitioners Trust Account No. 858 and Savings Account No. 0116-
17345-9 are excepted from the protection of R.A. 1405; and
3. Whether the extremely-detailed information contained in the Special Prosecution
Panels requests for subpoena was obtained through a prior illegal disclosure of
petitioner’s bank accounts, in violation of the fruit of the poisonous tree doctrine.

Ruling:

1. On the issue of whether Trust Fund Account No. 858 is a deposit under R.A. 1405,
the Supreme Court stressed that “if the money deposited under an account may
be used by banks for authorized loans to third persons, then such account,
regardless of whether it creates a creditor-debtor relationship between the
depositor and the bank, falls under the category of accounts which the law
precisely seeks to protect for the purpose of boosting the economic development
of the country.” Trust Account No. 858 is, without doubt, one such account because
the Trust Agreement between petitioner and Urban Bank provides that the trust
 account covers deposit, placement or investment of funds by Urban Bank for and
in behalf of petitioner. To hold that this type of account is not protected by R.A.
1405 would encourage private hoarding of funds that could otherwise be invested
by banks in other ventures, contrary to the policy behind the law.

2. Petitioner contends that since plunder is neither bribery nor dereliction of duty, his
accounts are not excepted from the protection of R.A. 1405, however, Philippine
National Bank v. Gancayco holds otherwise:

“Cases of unexplained wealth are similar to cases of bribery or

dereliction of duty and no reason is seen why these two classes
of cases cannot be excepted from the rule making bank deposits
confidential.The policy as to one cannot be different from the
policy as to the other. This policy expresses the notion that a
public office is a public trust and any person who enters upon
its discharge does so with the full knowledge that his life, so far
as relevant to his duty, is open to public scrutiny”.

Undoubtedly, cases for plunder involve unexplained wealth and this is evident
in Section 2 of R.A. No. 7080. Moreover, an examination of the overt or criminal
acts as described in Section 1(d) of R.A. No. 7080 would make the similarity
between plunder and bribery even more pronounced since bribery is essentially
included among these criminal acts. Hence, the accounts are covered by R.A.
1405.

3. Petitioners attempt to make the exclusionary rule applicable to the instant case
fails considering that R.A. 1405 nowhere provides that an unlawful examination of
bank accounts shall render the evidence obtained therefrom inadmissible in
evidence. Section 5 of R.A. 1405 only states that any violation of this law will
subject the offender upon conviction, to an imprisonment of not more than five
years or a fine of not more than twenty thousand pesos or both, in the discretion
of the court.
Even assuming arguendo that the exclusionary rule applies in principle to
cases involving R.A. 1405, the Court finds no reason to apply the same in this
particular case. Clearly, the fruit of the poisonous tree doctrine presupposes a
violation of law. If there was no violation of R.A. 1405 in the instant case, then
there would be no poisonous tree to begin with, and, thus, no reason to apply
the doctrine.
Topic: Banking Laws

29. [G.R. No. 135882, June 27, 2001]

LOURDEZ T. MARQUEZ v. HON. ANIANO A. DESIERTO.

Facts:
Lourdez Marquez, branch manager of Union Bank Julia Vargas, received an
Order from Ombudsman to produce several bank documents for purposes of inspection
in-camera to which she later on, agreed to. The order is based on a pending investigation
at the Office of the Ombudsman against Amado Lagdameo, et. al. for violation of R.A.
No. 3019, Sec. 3 (e) and (g) relative to the Joint Venture Agreement between the Public
Estates Authority and AMARI. Petitioner wanted to be clarified first as to how she would
comply with the orders without her breaking any law, particularly RA. No. 1405.

Issue: Whether the in-camera inspection orders are allowed as an exception to the bank
secrecy law.

Ruling:
No, the in-camera inspection orders are not allowed as an exception to R.A.
1405. The law provides for certain circumstances before an in camera inspection may be
allowed, and these are as follows:
a. there must be a pending case before a court of competent jurisdiction;
b. the account must be clearly identified, the inspection limited to the subject matter
of the pending case before the court of competent jurisdiction; and
c. the bank personnel and the account holder must be notified to be present during
the inspection, and such inspection may cover only the account identified in the
pending case.

In the case at bar, there is yet no pending litigation before any court of competent
authority for what is existing is an investigation by the Office of the Ombudsman, which
only means that what the office of the ombudsman would wish to do is to fish for additional
evidence to formally charge Amado Lagdameo, et. al., with the Sandiganbayan.

It is worthy to note that zones of privacy are recognized and protected in our laws
and it punishes as actionable torts several acts for meddling and prying into the privacy
of another, and also holds public officer or employee or any private individual liable for
damages for any violation of the rights and liberties of another person, and recognizes
the privacy of letters and other private communications. Hence, the in-camera inspections
cannot be made.
Topic: Banking Laws

30. [G.R. No. 84526 January 28, 1991]

PHILIPPINE COMMERCIAL & INDUSTRIAL BANK and JOSE HENARES v. THE
HON. COURT OF APPEALS and MARINDUQUE MINING AND INDUSTRIAL
CORPORATION.

Facts:
The instant case originated from an action filed by a group of laborers for the
payment of backwages against the private respondent in which the said National Labor
Relations Commission issued a writ of execution directing the Deputy Sheriff of Negros
Occidental to enforce the judgment. Thereafter, the Sheriff prepared on his own a Notice
of Garnishment addressed to six (6) banks, one of which being the petitioner herein,
directing the bank concerned to immediately issue a check in the name of the Deputy
Provincial Sheriff of Negros Occidental in an amount equivalent to the amount of the
garnishment and that proper receipt would be issued therefor.
Incidentally, the house lawyer of the private respondent, Atty. Rexes V. Alejano,
requested the withholding of any release of the deposit of the private respondent with the
petitioner bank but petitioner Henares issued a debit memo to the sheriff for the full
balance of the private respondent's account with the petitioner bank and thereafter, he
issued a manager's check. The private respondent filed a complaint against the
petitioners and Damian Rojas, the Deputy Provincial Sheriff alleging that the former's
current deposit with the petitioner bank was levied upon, garnished, and with undue haste
unlawfully allowed to be withdrawn, and notwithstanding the alleged unauthorized
disclosure of the said current deposit and unlawful release thereof, the latter have failed
and refused to restore the amount of the former's account despite repeated demands.

Issue: Whether or not petitioners violated Republic Act No. 1405, otherwise known as
the Secrecy of Bank Deposits Act, when they allowed the sheriff to garnish the deposit of
private respondent.

Ruling:
No, the court find no violation whatsoever by the petitioners of Republic Act No.
1405, otherwise known as the Secrecy of Bank Deposits Act. The prohibition against
examination of or inquiry into a bank deposit under Republic Act 1405 does not preclude
its being garnished to insure satisfaction of a judgment.
Indeed there is no real inquiry in such a case, and if existence of the deposit is
disclosed the disclosure is purely incidental to the execution process. It is hard to conceive
that it was ever within the intention of Congress to enable debtors to evade payment of
their just debts, even if ordered by the Court, through the expedient of converting their
assets into cash and depositing the same in a bank.
Since there is no evidence that the petitioners themselves divulged the information
that the private respondent had an account with the petitioner bank and it is undisputed
that the said account was properly the object of the notice of garnishment and writ of
execution carried out by the deputy sheriff, a duly authorized officer of the court, we
cannot therefore hold the petitioners liable under R.A. 1405.
Topic: Banking Laws

31. [G.R. No. 94723, August 21, 1997]

KAREN E. SALVACION, minor, thru parents FEDERICO N. SALVACION, JR., and
EVELINA E. SALVACION v. CENTRAL BANK OF THE PHILIPPINES, CHINA
BANKING CORPORATION and GREG BARTELLI.

Facts:
Karen E. Salvacion, then 12 years old, was coaxed and lured by private
respondent Greg Bartelli to go with him in his apartment, where she was detained for four
days and was raped 10. Aside from the criminal case for serious illegal detention and 4
counts of rape filed by the Makati investigating fiscal, the petitioner along with her parents,
file in Regional Trial Court (RTC) a civil case for damages with preliminary attachment
against Bartelli, which the court then granted.
A notice of garnishment was served to China Banking Corporation, where the
dollar account of the private respondent was deposited, but respondent bank invoked
Republic Act No. 1405 as its answer to the notice of garnishment served on it and later
on invoked Section 113 of Central Bank Circular No. 960, to the effect that the dollar
deposits of defendant Greg Bartelli are exempt from attachment, garnishment, or any
other order or process or process of any court, legislative body, government agency or
any administrative body.
On March 29, 1990, after hearing the case ex-parte, the court rendered judgment
in favor of petitioners, Petitioners tried to execute on Bartelli’s dollar deposit.

Issue: Whether or not Section 113 of Central Bank Circular No. 960 and Section 8 of
Republic Act No. 6426, as amended by PD 1246, otherwise known as the Foreign
Currency Deposit Act is applicable to a foreign transient.

Ruling:
No, the provisions of Section 113 of Central Bank Circular No. 960 and PD No.
1246, insofar as it amends Section 8 of Republic Act No. 6426, is inapplicable to this case
because of its peculiar circumstances.
The Supreme Court stressed that although the Offshore Banking System and the
Foreign Currency Deposit System were designed to draw deposits from foreign lenders
and investors and, subsequently, to give the latter protection, the foreign currency deposit
made by a transient or a tourist is not the kind of deposit encouraged by PD Nos. 1034
and 1035 and given incentives and protection by said laws because such depositor stays
only for a few days in the country and, therefore, will maintain his deposit in the bank only
for a short time. Considering that Bartelli is just a tourist or a transient, he is not entitled
to the protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against
attachment, garnishment or other court processes. The Supreme Court held further that
to rule that the questioned Section 113 of Central Bank Circular No. 960 is applicable to
a foreign transient, injustice would result especially to a citizen aggrieved by a foreign
guest like accused Greg Bartelli, and would therefore negate Article 10 of the New Civil
Code which provides that “in case of doubt in the interpretation or application of laws, it
is presumed that the lawmaking body intended right and justice to prevail. “
Topic: Mortgage

4. [G.R. No. 183058: April 3, 2013]

SPOUSES TOLOSA v. UNITED COCONUT PLANTERS BANK.

Facts:

Spouses Tolosa entered into a Credit Agreement with respondent United Coconut
Planters Bank (UCPB) which was secured by a real estate mortgage over four properties.
For failure of the Spouses Tolosa to pay their principal obligation, UCPB foreclosed the
mortgage on the aforesaid realties and filed a petition for the extra-judicial sale thereof,
and, was later on sold at a public auction where UCPB tendered the highest bid. For
failure of the Spouses Tolosa to exercise their right of redemption within the prescribed
one-year period, UCPB went on to consolidate its ownership over the subject realties on
22 January 2001. UCPB then filed an ex-parte petition for issuance of a writ of possession
to which the Spouses Tolosa countered by filing their Opposition, and calling the RTC's
attention to the pendency of the complaint for declaration of nullity of promissory notes,
foreclosure of mortgage and certificate of sale as well as accounting and damages which
they instituted against UCPB. Claiming that there was prima facie showing of invalidity of
their mortgage obligation, the foreclosure of the mortgage and the sale of their properties,
the Spouses Tolosa prayed that the issuance of the writ of possession be held in
abeyance and that UCPB's petition therefor be consolidated with Civil Case No. 6180,
which the RTC granted.

Issue: Whether or not the RTC is correct in holding in abeyance the issuance of the writ
of possession pending the decision in the action annulling the mortgage obligation and
foreclosure sale.

Ruling:

The issuance of the writ of possession is a ministerial function in the exercise of

which trial courts are not granted any discretion since the judge to whom the application
for writ of possession is filed need not look into the validity of the mortgage or the manner
of its foreclosure and it has been ruled that the ministerial duty of the trial court does not
become discretionary upon the filing of a complaint questioning the mortgage contract or
foreclosure proceeding. After the consolidation of title in the buyer’s name for failure of
the mortgagor to redeem the property, entitlement to the writ of possession becomes a
matter of right. The right of possession becomes absolute because the basis thereof is
the purchaser’s ownership of the property and regardless of the pendency of such suit,
the purchaser remains entitled to a writ of possession, without prejudice, of course, to the
eventual outcome of the pending annulment case. Otherwise stated, the issuance of the
writ of possession remains the ministerial duty of the RTC until the issues raised in the
annulment case are, once and for all, decided by a court of competent jurisdiction. Any
question regarding the validity of the extrajudicial foreclosure sale and the resulting
cancellation of the writ may, likewise, be determined in a subsequent proceeding.
Topic: Mortgage

5. [G.R. NO. 200667 : March 11, 2013]

RURAL BANK OF STA. BARBARA (ILOILO), INC. v. GERRY CENTENO.

Facts:
Spouses Gregorio and Rosario Centeno were the previous owners of the subject
lots which they mortgaged in favor of petitioner Rural Bank of Sta. Barbara (Iloilo), Inc. as
security for a P1,753.65 loan. Sps. Centeno, however, defaulted on the loan, prompting
petitioner to cause the extrajudicial foreclosure of the said mortgage and later on sold to
petitioner Rural Bank of Sta. Barbara being the highest bidder at the auction sale. Sps.
Centeno failed to redeem the subject lots within the one (1) year redemption period,
however, they still continued with the possession and cultivation of the aforesaid
properties and later on, when respondent Gerry Centeno, son of Sps. Centeno, took over
the cultivation of the same, the land was thereafter sold to him.
On March 19, 1998, petitioner filed a petition for the issuance of a writ of
possession before the RTC, claiming entitlement to the said writ by virtue of the Final
Deed of Sale covering the subject lots too which the respondent opposed asserting that
he purchased and has, in fact, been in actual, open and exclusive possession of the same
properties for at least fifteen (15) years. He further averred that the foreclosure sale was
null and void owing to the forged signatures in the real estate mortgage. Moreover, he
claims that petitioner's rights over the subject lots had already prescribed.

Issue: Whether or not petitioner is entitled to a writ of possession over the subject lots.

Ruling:
Yes. It is well-established that after consolidation of title in the purchaser's name
for failure of the mortgagor to redeem the property, the purchaser's right to possession
ripens into the absolute right of a confirmed owner. At that point, the issuance of a writ of
possession, upon proper application and proof of title, to a purchaser in an extrajudicial
foreclosure sale becomes merely a ministerial function, unless it appears that the property
is in possession of a third party claiming a right adverse to that of the mortgagor.

In this case, respondent acquired the subject lots from his parents, Sps. Centeno,
on March 14, 1988 after they were purchased by petitioner and its Certificate of Sale at
Public Auction was registered with the Register of Deeds of Iloilo City in 1971, and with
that, it cannot therefore be disputed that respondent is a mere successor-in-interest of
Sps. Centeno. Consequently, he cannot be deemed as a "third party who is actually
holding the property adversely to the judgment obligor" under legal contemplation. Hence,
the RTC had the ministerial duty to issue as it did issue the said writ in petitioner's favor.
Topic: Intellectual Property

22. [G.R. No. 169504, March 3, 2010]

COFFEE PARTNERS V. SAN FRANCISCO COFFEE & ROASTERY

Facts:
The petitioner holds a business in maintaining coffee shops in the Philippines
carrying the trademark “San Francisco Coffee” which is similar to the trade name of the
business of the respondent engaged in the wholesale and retail sale of coffee that was
registered in SEC in May 1995 as “San Francisco Coffee & Roastery, Inc.”
When respondent learned that petitioner will open a coffee shop in Libis, Q.C. they
sent a letter to the petitioner demanding them to stop using the name “San Francisco
Coffee” as it causes confusion to the minds of the public, and a complaint was also filed
by respondents before the Bureau of Legal Affairs of the Intellectual Property Office for
infringement and unfair competition with claims for damages.
Petitioners contend that there are distinct differences in the appearance of their
trademark and that respondent abandoned the use of their trademark when it joined
venture with Boyd Coffee USA.
The Bureau of Legal Affairs of the IPO held that petitioner’s trademark infringed
on the respondent’s trade name as it registered its business name first with the DTI in
1995 while petitioner only registered its trademark in 2001, and also ruled that the
respondent did not abandon the use of its trade name upon its joint venture with Boyd
Coffee USA since in order for abandonment to exist it must be permanent, intentional and
voluntary.

Issue:
Whether or not petitioner’s use of respondent’s trademark constitutes infringement.

Ruling:
Yes, petitioner’s use of respondent’s trademark constitutes infringement.

RA 8293, which took effect on 1 January 1998, has dispensed with the registration
requirement and so, it is the likelihood of confusion that is the gravamen of infringement.

Applying the dominancy test or the holistic test, petitioner’s “SAN FRANCISCO
COFFEE” trademark is a clear infringement of respondent’s “SAN FRANCISCO COFFEE
& ROASTERY, INC.” trade name since the descriptive words “SAN FRANCISCO
COFFEE” are precisely the dominant features of respondent’s trade name.
The likelihood of confusion is higher in cases where the business of one
corporation is the same or substantially the same as that of another corporation such as
in this case the petitioner and respondent are both engaged in the same business of
selling coffee, whether wholesale or retail. Hence, the consuming public will likely be
confused as to the source of the coffee being sold at petitioner’s coffee shops.
Topic: Intellectual Property

23. [GR No. 169440, November 23, 2011]

GEMMA ONG V. PEOPLE OF THE PHILIPPINES

Facts:
On September 2003, the Regional Trial Court of Manila convicted Gemma Ong
for infringement under Sec. 155 in relation to Sec. 170 of Republic Act. No. 8293 or the
Intellectual Property Code. This decision was assailed based on facts established that
Gemma Ong was engaged in the distribution, sale and offering for sale of counterfeit
Marlboro cigarettes which caused confusion and deception to public and without permit
or authority from the Telengtan Brothers and Sons Inc., the exclusive manufacturer of
Malboro cigarette in the Philippines and from the Philip Morris Products, Inc. (PMPI) which
is the registered owner and proprietor of the MARLBORO trademark. The decision of the
RTC Manila was affirmed by the Court of Appeals and hence this appeal by certiorari by
Gemma Ong praying that the decision of RTC and CA to be set aside and reverse.

Issue:
Whether or not Gemma Ong is guilty beyond reasonable doubt of Infringement under the
Intellectual Property Code.

Ruling:
In McDonald’s Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger,
Inc., Supreme Court held that to establish trademark infringement, the following elements
must be shown:
(1) the validity of plaintiff’s mark;
(2) the plaintiff’s ownership of the mark; and
(3) the use of the mark or its colorable imitation by the alleged infringer results in
"likelihood of confusion."
Of these, it is the element of likelihood of confusion that is the gravamen of
trademark infringement. Anent the element of confusion, both the RTC and the Court of
Appeals have correctly held that the counterfeit cigarettes seized from Gemma’s
possession were intended to confuse and deceive the public as to the origin of the
cigarettes intended to be sold, as they not only bore PMPI’s mark, but they were also
packaged almost exactly as PMPI’s products. The prosecution was able to establish that
the trademark "Marlboro" was not only valid for being neither generic nor descriptive, it
was also exclusively owned by PMPI, as evidenced by the certificates of registration
issued by the Intellectual Property Office of the Department of Trade and Industry.
Topic: Intellectual Property

24. [G.R. No. 194062, June 17, 2013]

REPUBLIC GAS CORPORATION (REGASCO), ET. AL. V. PETRON
CORPORATION, ET. AL.,

Facts:
Petron is the registered owner in the Philippines of the trademarks GASUL and
GASUL cylinders used for its LGP products and it is the sole entity in the Philippines
authorized to allow re-fillers and distributors to refill, use, sell, and distribute GASUL LPG
containers, products and its trademarks.
Pilipinas Shell, on the other hand, is the authorized user in the Philippines of the
tradename, trademarks, symbols or designs of its principal, Shell International Petroleum
Company Limited, including the marks SHELLANE and SHELL device in connection with
the production, sale and distribution of SHELLANE LPGs and it is the only corporation in
the Philippines authorized to allow re-fillers and distributors to refill, use, sell and distribute
SHELLANE LGP containers and products. Republic Gas Corporation ("REGASCO"), an
entity duly licensed to engage in, conduct and carry on, the business of refilling, buying,
selling, distributing and marketing at wholesale and retail of Liquefied Petroleum Gas
("LPG"). LPG Dealers Associations received reports that certain entities were engaged
in the unauthorized re-filling, sale and distribution of LPG cylinders bearing the registered
tradenames and trademarks of the petitioners. The investigation showed that several
persons and/or establishments, including REGASCO, were suspected of having violated
provisions of B.P. 33 and the surveillance revealed that REGASCO LPG Refilling Plant
in Malabon was engaged in the refilling and sale of LPG cylinders bearing the registered
marks of the petitioners without authority from the latter.

Issue: Whether or not probable cause exists to hold petitioners liable for the crimes of
trademark infringement and unfair competition.

Ruling:
Yes, the mere unauthorized use of a container bearing a registered trademark in
connection with the sale, distribution or advertising of goods or services which is likely to
cause confusion, mistake or deception among the buyers or consumers can be
considered as trademark infringement. Petitioners have actually committed trademark
infringement when they refilled, without the respondents’ consent, the LPG containers
bearing the registered marks of the respondents. As noted by respondents, petitioners’
acts will inevitably confuse the consuming public, since they have no way of knowing that
the gas contained in the LPG tanks bearing respondents’ marks is in reality not the latter’s
LPG product after the same had been illegally refilled. The public will then be led to
believe that petitioners are authorized re-fillers and distributors of respondents’ LPG
products, considering that they are accepting empty containers of respondents and
refilling them for resale. More so, by refilling and selling LPG cylinders bearing their
registered marks, petitioners are selling goods by giving them the general appearance of
goods of another manufacturer.
Topic: Intellectual Property

25. [G.R. No. 143993, August 18, 2004]

MCDONALD’S CORPORATION V. L.C. BIG MAK BURGER, INC.,

Facts:
Petitioner McDonald's Corporation ("McDonald's") is a US corporation that
operates a global chain of fast-food restaurants, with Petitioner McGeorge Food
Industries ("McGeorge"), as the Philippine franchisee and which owns the "Big Mac" mark
for its "double-decker hamburger sandwich" with the US Trademark Registry on 16
October 1979. Respondent L.C. Big Mak Burger, Inc. is a domestic corporation which
operates fast-food outlets and snack vans in Metro Manila and nearby provinces and
which, on its menu includes hamburger sandwiches and other food items.
On 21 October 1988, respondent corporation applied with the PBPTT for the
registration of the "Big Mak" mark for its hamburger sandwiches, which was opposed by
McDonald's. McDonald's also informed LC Big Mak chairman of its exclusive right to the
"Big Mac" mark and requested him to desist from using the "Big Mac" mark or any similar
mark. Having received no reply, petitioners sued L.C. Big Mak Burger, Inc. and its
directors before Makati RTC Branch 137 ("RTC"), for trademark infringement and unfair
competition.

Issues:
1. Whether or not respondent corporation is liable for trademark infringement.
2. Whether or not respondents committed Unfair Competition.

Ruling:

1. Yes, respondent L.C. Big Mak Burger, Inc. is liable for trademark infringement.

To establish trademark infringement, the following elements must be shown: (1) the
validity of plaintiff's mark; (2) the plaintiff's ownership of the mark; and (3) the use of the
mark or its colorable imitation by the alleged infringer results in "likelihood of confusion"
and, of these, it is the element of likelihood of confusion that is the gravamen of trademark
infringement.
Section 22 covers two types of confusion arising from the use of similar or colorable
imitation marks, namely, confusion of goods (confusion in which the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was purchasing
the other) and confusion of business (though the goods of the parties are different, the
defendant's product is such as might reasonably be assumed to originate with the plaintiff,
and the public would then be deceived either into that belief or into the belief that there is
some connection between the plaintiff and defendant which, in fact, does not exist).
There is confusion of goods in this case since respondents used the "Big Mak" mark
on the same goods, i.e. hamburger sandwiches, that petitioners' "Big Mac" mark is used
and, there is also confusion of business due to Respondents' use of the "Big Mak" mark
in the sale of hamburgers, the same business that petitioners are engaged in, also results
in confusion of business.
 Furthermore, in determining likelihood of confusion, the SC has relied on the
dominancy test and in in this case, respondents' use of the "Big Mak" mark results in
likelihood of confusion since aurally the two marks are the same, with the first word of
both marks phonetically the same, and the second word of both marks also phonetically
the same and also usually, the two marks have both two words and six letters, with the
first word of both marks having the same letters and the second word having the same
first two letters. Lastly, since Section 22 only requires the less stringent standard of
"likelihood of confusion," Petitioners' failure to present proof of actual confusion does not
negate their claim of trademark infringement.

2. Yes, respondent committed unfair competition.

Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:

Any person who will employ deception or any other means contrary to good faith
by which he shall pass off the goods manufactured by him or in which he deals, or
his business, or services for those of the one having established such goodwill, or
who shall commit any acts calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.

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.
In the case at bar, respondent applied on their plastic wrappers and bags almost
the same words that petitioners use on their styrofoam box. Further, respondents' goods
are hamburgers which are also the goods of petitioners and, there is actually no notice to
the public that the "Big Mak" hamburgers are products of "L.C. Big Mak Burger, Inc." This
clearly shows respondents' intent to deceive the public.
Topic: Intellectual Property

26. [G.R. No. 154491, November 14, 2008]

COCA- COLA BOTTLERS PHILIPPINES, INC. (CCBPI), NAGA PLANT
V. QUINTIN GOMEZ, ET, AL.,

Facts:
Petitioner Coca-Cola applied for a search warrant against Pepsi for hoarding
empty Coke bottles in Pepsi’s yard, an act allegedly penalized as unfair competition under
the Intellectual Property Code (IP Code). MTC issued the search warrants and the local
police seized the goods. Later, a complaint against respondents was filed for violation of
the IP Code. Respondent contended that the hoarding of empty Coke bottles did not
involve fraud and deceit for them to be liable for unfair competition. MTC upheld the
validity of the warrants. RTC voided the warrant for lack of probable cause of the
commission of unfair competition.

Issue: Whether or not Pepsi’s possession of several empty coke bottles constitute as
“hoarding” which is punishable under the IP Code.
Ruling:
As culled from the petitioner’s allegation, it calls the Court to decide for the liability
of Pepsi when it is “hoarding” some coke bottles, and based the liability on an alleged
violation by the respondent of Section 168 of the IP Code. However, reading the
provisions altogether, and applying the principles of statutory construction, the court
concludes that the "hoarding" - as defined and charged by the petitioner - does not fall
within the coverage of the IP Code and of Section 168 in particular since;
1. The act of hoarding does not relate to any patent, trademark, trade name or
service mark that the respondents have invaded, intruded into or used without
proper authority from the petitioner, nor are the respondents alleged to be
fraudulently "passing off" their products or services as those of the petitioner.
2. The respondents are not also alleged to be undertaking any representation or
misrepresentation that would confuse or tend to confuse the goods of the petitioner
with those of the respondents, or vice versa.
What in fact the petitioner alleges is an act foreign to the Code, to the concepts it
embodies and to the acts it regulates; as alleged, hoarding inflicts unfairness by seeking
to limit the opposition's sales by depriving it of the bottles it can use for these sales.
Based on the foregoing, we conclude that the RTC correctly ruled that the
petitioner's search warrant should properly be quashed for the petitioner's failure to show
that the acts imputed to the respondents do not violate the cited offense.
Topic: Intellectual Property

27. [G.R. No. 165306, September 20, 2005]

MANLY SPORTWEAR MANUFACTURING, INC. V. DADODETTE ENTERPRISES
AND/OR HERMES SPORTS CENTER

Facts:
On March 17, 2003, RTC- Quezon City, Branch 83 issued a search warrant against
Dadodette Enterprises and/or Hermes Sports Center after finding reasonable grounds
that respondents violated Sections 172 and 217 of Republic Act (RA) No. 8293.
Respondents then moved to quash and annul the search warrant claiming that the
sporting goods manufactured by and/or registered in the name MANLY are ordinary
hence, not among the classes protected under Sec. 172 of RA 8293. On June 10, 2003
the trial court granted the motion to quash and declared the search warrant issued as null
and void. MANLY filed a motion for reconsideration on August 11, 2003, but was later on
denied for lack of merit. After denial of the motion for reconsideration, MANLY filed a
petition for review of certiorari in the Court of Appeals but was later on denied.

Issue: Whether or not the copyrighted products of MANLY are original creations subject
to the protection of RA 8293.

Ruling:
No, although the copyright certificates issued in favor of MANLY constitute a prima
facie evidence of validity and ownership, the presumption of validity is not created when
a sufficient proof or evidence exist that may cast a doubt on the copyright validity. In the
case at bar, validity and originality will not be presumed since the copyrighted products
of MANLY are not original creations considering that these products are readily available
in the market under various brands and also, no copyright accrues in favor of MANLY
despite the issuance of the copyright certificate this purely serves as a notice of recording
and registration of the work and is not a conclusive proof of copyright ownership as
provided in Sec. 2, Rule 7 of the Copyrights Safeguards and Regulations.

At most, the certificates of registration and deposit issued by the National Library
and the Supreme Court Library serve merely as a notice of recording and registration of
the work but do not confer any right or title upon the registered copyright owner or
automatically put his work under the protective mantle of the copyright law. It is not a
conclusive proof of copyright ownership. As it is, non-registration and deposit of the work
within the prescribed period only makes the copyright owner liable to pay a fine.
Topic: Intellectual Property

28. [G.R. No. 108946 January 28, 1999]

FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC. vs.
HONORABLE FRANKLIN DRILON, et.al.

Facts:
Petitioner BJ Productions, Inc. (BJPI) is the holder/grantee of the dating game
show on TV entitled “Rhoda and Me” which was registered in 1971 while respondent
Gabriel Zosa is the President and General Manager of IXL production which produces
the show “It’s a Date”.
While watching television, the petitioner saw the show “It’s a date” and wrote a
letter to private respondent informing Zosa that BJPI had a copyright to Rhoda and Me
and demanding that IXL discontinue airing it. In the letter of reply by respondent he
apologized to the petitioner and requested a meeting to discuss possible amicable
settlement on the matter; however, IXL continue to air the program “It’s a date” prompting
petitioner Joaquin to send a second letter on July 25, 1991 in which he reiterated his
demand and warned that, if IXL did not comply, he would endorse the matter to his
attorneys for proper legal action.
Upon complaint of petitioners, an information for violation of P.D. No. 49 was filed
against private respondent Zosa in the Regional Trial Court of Quezon City where it was
docketed as Criminal Case No. 92-27854 and assigned to Branch 104 thereof. Zosa
sought a review before the Department of Justice wherein the Secretary of Justice moved
for the dismissal of the case due to the failure of petitioner to present the master tape of
the show in order to establish the existence of probable cause to prove infringement.

Issues:

1. Whether or not public respondent violated the copyright law in airing their show
“It’s a date”.
2. Whether or not the presentation of the master tape is essential in order to establish
the existence of probable cause to prove infringement.

Ruling:

1. The format or mechanics of a television show is not included in the list of protected
works, and for this reason, the protection afforded by the law cannot be extended
to cover them. Copyright, in the strict sense of the term, is purely a statutory right
- a new or independent right granted by the statute, and not simply a pre-existing
right regulated by the statute. Being a statutory grant, the rights are only such as
the statute confers, and may be obtained and enjoyed only with respect to the
subjects and by the persons and on terms and conditions specified in the statute.

P.D. No. 49, in enumerating what are subject to copyright, refers to finished works
and not to concepts and does not extend to an idea, procedure, process, system,
method of operation, concept, principle, or discovery, regardless of the form in
 which it is described, explained, illustrated, or embodied in such work. BJPI's
copyright covers audio-visual recordings of each episode of Rhoda and Me and
does not extend to the general concept or format of its dating game show.

2. The essence of a copyright infringement is the similarity or at least substantial

similarity of the purported pirated works to the copyrighted work and so, the
applicant must present to the court the copyrighted films to compare them with the
purchased evidence of the video tapes allegedly pirated to determine whether the
latter is an unauthorized reproduction of the former. This linkage of the copyrighted
films to the pirated films must be established to satisfy the requirements of
probable cause. Mere allegations as to the existence of the copyrighted films
cannot serve as basis for the issuance of a search warrant.

This ruling was qualified in the later case of Columbia Pictures, Inc. v. Court of
Appeals in which it was held:

In fine, the supposed pronunciamento in said case regarding the necessity

for the presentation of the master tapes of the copyrighted films for the
validity of search warrants should at most be understood to merely serve as
a guidepost in determining the existence of probable cause in copyright
infringement cases where there is doubt as to the true nexus between the
master tape and the printed copies.

An objective and careful reading of the decision in said case could lead to no other
conclusion than that said directive was hardly intended to be a sweeping and
inflexible requirement in all or similar copyright infringement cases.
Topic: Intellectual Property

29. [G.R. Nos. 175769-70, January 19, 2009]

ABS-CBN BROADCASTING CORPORATION v. PHILIPPINE MULTI-MEDIA
SYSTEM, INC.,

Facts:
Philippine Multi-Media System, Inc. (PMSI), operator of Dream Broadcsating
System, delivers a digital direct-to-home (DTH) television satellite to its subscribers all
over the Philippines, was granted a legislative franchise under Republic Act 8630 and
was given a Provisional Authority by the National Telecommunications Commission
(NTC) to install, operate and maintain a nationwide DTH satellite service. When it
commenced operations, it offered as part of its program line-up, together with other paid
premium program channels, ABS-CBN Channels 2 and 23, NBN, Channel 4, ABC,
Channel 5, GMA, Channel 7, RPN, Channel 9, and IBC, Channel 13, pursuant to
Memorandum Circular 4-08-88 which mandated all cable television system operators,
operating within the Grade “A” and “B” CONTOURS to carry out the television signals of
the authorized television broadcast stations.
ABS-CBN Broadcasting Corporation (ABS-CBN), a licensed television and radio
broadcasting network, demanded PMSI to cease and desist from “rebroadcasting”
Channels 2 and 23 to which PMSI contended in its reply that the “rebroadcasting” was in
accordance with the authority granted by NTC under its obligations under NTC MC 4-08-
88.Negotiations were ensued between the parties in an effort to reach a settlement;
however, the same was terminated by ABS-CBN allegedly due to PMSI’s inability to
ensure the prevention of illegal “retransmission” and further “rebroadcast” of its signals,
as well as the adverse effect of the rebroadcasts on the business operations of its regional
television stations.
ABS-CBN filed with the Intellectual Property Rights Office (IPO) a complaint for
“Violation of Laws Involving Property Rights, with Prayer for the Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction” alleging that PMSI’s unauthorized
rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights and copyright.

Issues:
1. Whether or not PMSI violated the Laws on Property Rights.
2. Whether or not the issuance MC 4-08-88 by the NTC is a valid exercise of the
police power of the State.

Ruling:
1. No, PMSI did not violate the Laws on Property Rights because it is not engaged in
rebroadcasting Channels 2 and 23.

Rebroadcasting has been defined as “the simultaneous broadcasting by

one broadcasting organization of the broadcast of another broadcasting
organization” and also “the transmission by wireless means for the public reception
of sounds or of images or of representations thereof; such transmission by satellite
 is also ‘broadcasting’ where the means for decrypting are provided to the public by
the broadcasting organization or with its consent.”
PMSI is only engaged in the carrying of signals of ABS-CBN coming from
ABS-CBN and transmitting signal and it is not the origin nor does it claim to be the
origin of the programs broadcasted by the ABS-CBN, and, it did not make and
transmit on its own but merely carried the existing signals of the ABS-CBN. When
PMSI subscribers view ABS-CBN’s programs in Channels 2 and 23, they know
that the origin thereof was the ABS-CBN.Therefore, the retransmission of ABS-
CBN’s signals by PMSI – which functions essentially as a cable television – does
not constitute rebroadcasting in violation of the former’s intellectual property rights
under the IP Code.

2. YES. The law on copyright is not absolute.

The carriage of ABS-CBN’s signals by virtue of the must-carry rule in

Memorandum Circular No. 04-08-88 is under the direction and control of the
government though the NTC which is vested with exclusive jurisdiction to
supervise, regulate and control telecommunications and broadcast
services/facilities in the Philippines. The imposition of the must-carry rule is within
the NTC’s power to promulgate rules and regulations, as public safety and interest
may require, to encourage a larger and more effective use of communications,
radio and television broadcasting facilities, and to maintain effective competition
among private entities in these activities whenever the Commission finds it
reasonably feasible.
The must carry rule is a valid exercise of the police power of the State as it
favors both broadcasting organizations and the public and prevents cable
television companies from excluding broadcasting organization especially in those
places not reached by signal. Also, the rule prevents cable television companies
from depriving viewers in far-flung areas the enjoyment of programs available to
city viewers.
Topic: Letters of Credit

7.[G.R. No. 185590, December 03, 2014]

METROBANK V. LEY CONSTRUCTION AND DEVELOPMENT CORPORATION

Facts:
On July 5, 1995, respondent Wilfred N. Chiok (Chiok) bought US$1,022,288.50
dollars from Gonzalo B. Nuguid (Nuguid) where Chiok deposited the three manager’s
checks (Asian Bank MC Nos. 025935 and 025939, and Metrobank CC No. 003380), with
an aggregate value of ₱26,068,350.00 in Nuguid’s account with petitioner Bank of the
Philippine Islands (BPI). Nuguid, however, failed to deliver the dollar equivalent of the
three checks as agreed upon, prompting Chiok to request that payment on the three
checks be stopped. On the following day, July 6, 1995, Chiok filed a Complaint for
damages with application for ex parte restraining order and/or preliminary injunction with
the Regional Trial Court (RTC) of Quezon City against the spouses Gonzalo and
Marinella Nuguid, and the depositary banks, Asian Bank and Metrobank. On July 25,
1995, the RTC issued an Order directing the issuance of a writ of preliminary prohibitory
injunction. When checks were presented for payment, Asian Bank refused to honor MC
Nos. 025935 and 025939 in deference to the TRO.

Issue: Whether or not payment of manager’s and cashier’s checks are subject to the
condition that the payee thereof should comply with his obligations to the purchaser of
the checks.

Ruling:
No. A manager’s check, like a cashier’s check, is an order of the bank to pay,
drawn upon itself, committing in effect its total resources, integrity, and honor behind its
issuance. By its peculiar character and general use in commerce, a manager’s check or
a cashier’s check is regarded substantially to be as good as the money it represents.
While manager’s and cashier’s checks are still subject to clearing, they cannot be
countermanded for being drawn against a closed account, for being drawn against
insufficient funds, or for similar reasons such as a condition not appearing on the face of
the check. Long standing and accepted banking practices do not countenance the
countermanding of manager’s and cashier’s checks on the basis of a mere allegation of
failure of the payee to comply with its obligations towards the purchaser. Therefore, when
Nuguid failed to deliver the agreed amount to Chiok, the latter had a cause of action
against Nuguid to ask for the rescission of their contract; but, Chiok did not have a cause
of action against Metrobank and Global Bank that would allow him to rescind the contracts
of sale of the manager’s or cashier’s checks, which would have resulted in the crediting
of the amounts thereof back to his accounts.
Topic: Intellectual Property

8. [35 SCRA 253 (1970)]

BANK OF THE PHILIPPINE ISLANDS V. DE RENY FABRIC INDUSTRIES, INC.

Facts:
De Reny Fabric Industries, Inc., a Philippine corporation through its co-defendants-
appellants as officers of the corporation who bound themselves to be solidary liable with
the corporation, applied to the Bank of the Philippine islands for irrevocable commercial
letters of credit which was later on approved to cover the purchase by the corporation of
goods described under the letters of applications as "dyestuffs of various colors" from,
J.B. Distributing Company as its American supplier. The Bank issued irrevocable
commercial letters of credit addressed to its correspondent banks in the United States,
with an instruction to notify the beneficiary thereof, the J.B. Distributing Company that
they have been authorized to negotiate the latter's sight drafts, if accompanied, upon
presentation, by a full set of negotiable clean "on board" ocean bills of lading covering the
dyestuffs of various colors appearing in the Letters of Credits.
Upon compliance thereto by J.B. Distributing Company, the latter was paid the
full value of the drafts and thereafter, all the documents covered under the letter of credits
were forwarded to the Bank of the Philippine Islands. De Reny Fabric Industries, Inc.
made partial payments to the Bank, however, it subsequently discontinued the payments
because it learned from the result of a chemical test conducted by the National Science
Development Board, that the goods that arrived in Manila were colored chalks instead of
dyestuffs. Defendants-appellants argued that it was the duty of the foreign correspondent
banks of the Bank of the Philippine Islands to insure that the goods shipped under the
Letters of Credits conformed with the item appearing therein, thus, having failed to
perform this duty, no claim for recoupment against the defendants-appellants can be had.

Issue: Whether or not De Reny fabrics is liable under the letter of Credit.

Ruling:
Yes, De Reny is liable under the letters of Credit.
It was uncontrovertibly proven by the Bank during the trial that banks, in providing
financing in international business transactions such as those entered into by the
appellants, do not deal with the property to be exported or shipped to the importer, but
deal only with documents. The existence of a custom in international banking and
financing circles negating any duty on the part of a bank to verify whether what has been
described in letters of credits or drafts or shipping documents actually tallies with what
was loaded aboard ship, having been positively proven as a fact, the appellants are bound
by this established usage. Banks are not required to investigate if the contract underlying
the letter of credit has been fulfilled or not because in a transaction involving letter of
credit, banks deal only with documents and not with goods.
Thee appellants have agreed under the terms of their Commercial Letter of Credit
Agreements with the Bank, and having done so, the appellants have, therefore, no
recourse but to comply with their covenant.