2019 BAR EXAMINATIONS

COMMERCIAL LAW UPDATES

I. LETTERS OF CREDIT AND TRUST RECEIPTS

II. NEGOTIABLE INSTRUMENTS LAW

A. BDO Unibank, Inc. vs. Lao, 827 SCRA 481

1. The Supreme Court (SC) agrees with the appellate court that in
cases of unauthorized payment of checks to a person other than
the payee named therein, the drawee bank may be held liable to
the drawer. The drawee bank, in turn, may seek reimbursement
from the collecting bank for the amount of the check.
2. The liability of the collecting bank is anchored on its guarantees
as the last endorser of the check. Under Section 66 of the
Negotiable Instruments Law, an endorser warrants “that the
instrument is genuine and in all respects what it purports to be;
that he has good title to it; that all prior parties had capacity to
contract; and that the instrument is at the time of his
endorsement valid and subsisting.
3. Jurisprudence dictates that the effects of crossing a check are:
(1) that the check may not be encashed but only deposited in the
bank; (2) that the check may be negotiated only once— to one
who has an account with a bank; and (3) that the act of crossing
the check serves as a warning to the holder that the check has
been issued for a definite purpose so that he must inquire if he
has received the check pursuant to that purpose.
4. In Associated Bank v. Court of Appeals, 208 SCRA 465 (1992),
the person who suffered the loss as a result of the unauthorized
encashment of crossed checks was allowed to recover the loss
directly from the negligent bank despite the latter’s contention of
lack of privity of contract.
5. A peculiar circumstance in Associated Bank v. Court of Appeals
(Associated Bank), 208 SCRA 465 (1992), is the fact that the
drawer companies, which should have been directly liable to the
aggrieved payee, were not impleaded as parties in the suit.
B. Evangelista vs. Screenex, Inc., 845 SCRA 131
1. A check is a negotiable instrument— written and signed by a
drawer containing an unconditional order to pay on demand a
sum certain in money.
2. A check therefore is subject to prescription of actions upon a
written contract.
3. The failure to encash the checks within a reasonable time after
issue, or more than ten (10) years in this instance, not only
results in the checks becoming stale but also in the obligation to
pay being deemed fulfilled by operation of law.
III. INSURANCE

A. Steamship Mutual Underwriting Association (Bermuda)

Limited vs. Sulpicio Lines, Inc., 840 SCRA 203
1. Title VI, Section 49 of Presidential Decree (PD) No. 612 or the
Insurance Code defines an insurance policy as “the written
instrument in which a contract of insurance is set forth.”
2. When the text of a contract is explicit and leaves no doubt as to
its intention, the court may not read into it any other intention that
would contradict its plain import.

B. Gaisano vs. Development Insurance and Surety Corporation,

818 SCRA 603
1. The general rule in insurance laws is that unless the premium is
paid, the insurance policy is not valid and binding.
2. The notice of the availability of the check, by itself, does not
produce the effect of payment of the premium.
3. Notwithstanding any agreement to the contrary, no policy or
contract of insurance issued by an insurance company is valid
and binding unless and until the premium thereof has been paid.

C. Oriental Assurance Corporation vs. Ong, 842 SCRA 337

1. In Government Service System v. Manila Railroad Company, 1
SCRA 553(1961), the Supreme Court (SC) held that the
provisions of a gate pass or of an arrastre management contract
are binding on an insurer-subrogee even if the latter is not a party
to it.
2. As subrogee, petitioner merely stepped into the shoes of the
consignee and may only exercise those rights that the congsinee
may have against the wrongdoer who caused the damage.
3. The Supreme Court (SC) has ruled that the purpose of the time
limitation for filing claims is “to appraise the arraste operator of
the existence of a claim and enable it to check on the validity of
the claimant’s demand while the facts are still fresh for
recollection of the persons who took part in the undertaking and
the pertinent papers are still available,”
D. Equitable Insurances Corporation vs. Transmodal
International, Inc., 834 SCRA 581
1. Subrogation is the substitution of one person in the place of
another with reference to a lawful claim or right, so that he who
is substituted succeeds to the rights of the other in relation to a
debt or claim, including its remedies or securities.
2. The payment by the insurer to the insured operates as an
equitable assignment to the insurer of all the remedies which the
insured may have against the third party whose negligence or
wrongful act caused the loss.
IV. TRANSPORTATION

A. Fernando vs. Northwest Airlines, Inc., 817 SCRA 233

1. Article 1733 of the New Civil Code provides that common
carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each
case.
2. In requiring compliance with the standard of extraordinary
diligence, a standard which is, in fact, that of the highest possible
degree of diligence, from common carriers and in creating a
presumption of negligence against them, the law seeks to
compel them to control their employees, to tame their reckless
instincts and to force them to take adequate care of human
beings and their property.

B. Sanico vs. Colapano, 841 SCRA 141

1. Since the cause of action is based on a breach of a contract of
carriage, the liablity of Sanico is direct as the contract as between
him and Colipano. Castro, being merely the driver of Sanico’s
jeepney, cannot be made liable as he is not a party to the contract
of carriage.
2. Specific to a contract of carriage, the Civil Code requires common
carries to observe extraordinary diligence is safety transporting
their passengers.
3. In case of death of or injury to their passenger, Article 1765 of the
Civil Code provides that common carries are presumed to have
been at fault of negligent, and this presumption can be over-
come only by proof of the extraordinary diligence exercised to
ensure the safety of the passengers.
4. The only defenses available to common carries are (1) proof that
they observed extraordinary diligence as prescribed in Article
1756, and (2) following Article 1174, of the Civil Code, proof that
the injury or death was brought about by an event which “ could
not be foreseen, or which, though foreseen, were inevitable, “ or
a fortuitous event.
 5. The Civil Code requires extraordinary diligence from common
carries because the nature of their business requires the public
to put their safety and lives in the hands of these carries.
6. To uphold waivers taken from injured passengers who have no
knowledge of their entitlement under the law and the extent of
liability of common carries would indeed dilute the extraordinary
diligence required form common carries, and contravene a public
policy reflected in the Civil Code.
7. Under Artcle 2210 of Civil Code “ [i]nterest may, in the discretion
of the Supreme Court (SC), be allowed upon damages awarded
for breach of contract.

C. Loadstar Shipping Company, Incorporated vs. Malayan

Insurance Company, Incorporated, 825 SCRA 14
1. The Supreme Court (SC) reiterates the principle that actual
damages are not presumed; it cannot be anchored on mere
surmises, speculations or conjectures.
2. As common carriers, the petitioners are bound to observe
extraordinary diligence in their vigilance over the goods they
transport, as required by the nature of their business and for
reasons of public policy.
3. So long as there is a violation of the right of the plaintiff—whether
based on law, contract or other sources of obligations —an
award of nominal damages is proper.
4. Nominal damages are recoverable where a legal right is
technically violated and must be vindicated against an invasion
that has produced no actual present loss of any kind or where
there has been a breach of contract and no substantial injury or
actual damages whatsoever have been or can be shown.
5. While it is true that the contamination of the copper concentrates
cannot be considered as total loss on the part of Philippine
Associated Smelting and Refining Corporation (PASAR), this
does not exclude the fact that the subject cargo obtained
damage.
 6. Article 1735 of the Civil Code provides that, in all cases other
than those mentioned under Article 1734 thereof, if the goods are
lost, destroyed or deteriorated, common carriers are presumed
to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as required in
Article 1733.
7. Petitioners’ wanton attitude was shown by the fact that they
deployed a clearly overaged ship and that they failed to make
sure that the ship’s hatches were watertight or properly secured
during voyage.

D. Darines vs. Quiñones, 834 SCRA 212

1. In an action for breach of contract, moral damages may be
recovered only when a) death of a passenger results; or b) the
carrier was guilty of fraud and bad faith even if death does not
result.
2. There being neither allegation nor proof that respondents acted
in fraud or in bad faith in performing their duties arising from their
contract or carriage, they are then not liable for moral damages.
3. Since petitioners are not entitled to either moral, temperate,
liquidated, or compensatory damages, then their claim for
exemplary damages is bereft of merit.
V. CORPORATION LAW (to be covered by pre-week lecture)

VI. SECURITIES REGULATION CODE

VII. BANKING

A. Cristino Edna Carbonell, Petitioners, vs. Metropolitan Bank

and Trust Company, 825 SCRA 1
1. The General Banking Act of 2000 demands of banks the highest
standards of integrity and performance
2. The relationship existing between the petitioners and the
respondent that resulted from a contract of loan was that of a
creditor-debtor.

B. Ong Bun vs. Bank of the Philippine Islands, 859 SCRA 80

1. Banks, their business being impressed with public interest, are
expected to exercise more care and prudence than private
individuals in their dealings.

C. Prudential Bank (now Bank of the Philippine Islands) vs.

Rapanot, 814 SCRA 334
1. Banks are required to exercise the highest degree of diligence in
the conduct of their affairs.
2. The Bank’s failure to exercise the diligence required of it
constitutes negligence, and negates its assertion that it is a
mortgagee in good faith.
3. In the course of its everyday dealings, the Bank has surely been
made aware of the approval and notice requirements under
Section 18 of Presidential Decree (PD) No. 957.
D. Land Bank of the Philippines vs. Musni, 818 SCRA 442
1. The Supreme Court (SC) held in Heirs of Gregorio Lopez v.
Development Bank of the Philippines, 741 SCRA 153 (2014):
The rule on “innocent purchasers or [mortgagees] for value” is
applied more strictly when the purchaser or the mortgagee is a
bank. Banks are expected to exercise higher degree of diligence
in their dealings, including those involving lands.

E. Citystate Savings Bank vs. Tobias, 858 SCRA 63

1. The contract between the bank and its depositor is governed by
the provisions of the Civil Code on simple loan or mutuum, with
the bank as the debtor and the depositor as the creditor.
2. It is without question that when the action against the bank is
premised on breach of contractual obligations, a bank’s liability
as debtor is not merely vicarious but primary, in that the defense
of exercise of due diligence in the selection and supervision of its
employees is not available.
3. The existence of apparent or implied authority is measured by
previous acts that have been ratified or approved or where the
accruing benefits have been accepted by the principal.
4. Robles as branch manager is recognized within his field and as
to third persons as the general agent and is in general charge of
the corporation, with apparent authority commensurate with the
ordinary business entrusted him and the usual course and
conduct thereof.
5. Citystate Savings Bank’s (CSB’s) liability in this case is direct,
and proceeds not from the principle of agency under Article 1911,
but from the breach of its contracts of loan with Tobias.
6. When the wrongful actions of the bank’s officers’ and/or
employees’ result in the violation of the terms and conditions of
the bank’s contract with its client, the basis of the bank’s liability
to its client remains based, as it should, on contractual breach.
7. It is elementary that those who, in the performance of their
obligations, are guilty of negligence, and those who in any
manner contravene the tenor thereof, are liable for damages.
8. Under Section 56 of the General Banking Act, any act or omission
on the part of the bank which results in material loss or damage
to its depositors constitutes the conduct of business in an unsafe
or unsound manner.
F. Hongkong Bank Independent Labor Union (HBILU) vs.
Hongkong and Shanghai Banking Corporation Limited, 857
SCRA 1
1. Hongkong and Shanghai Banking Corporation Limited (HSBC),
being a bank, is statutorily required to conduct a credit check on
all of its borrowers, even though it be made under a loan
accommodation scheme, applying Section 40 of Republic Act No.
(RA) 8791 (General Banking Law of 2000).
2. Republic Act (RA) No. 8791 only intended to cover loans by third
persons and those extended to directors, officers, stockholders
and their related interests.
3. View that the diligence required of banks is at its highest standard
in all aspects — from granting loan applications to the hiring and
supervision of its employees.
4. View that a bank’s management prerogative is limited by the
Bangko Sentral’s policies and regulations, which are issued to
protect public interests and to maintain trust and confidence in
banks.

G. Poole-Blunden vs. Union Bank of the Philippines, 847 SCRA

146
1. Banks assume a degree of prudence and diligence higher than
that of a good father of a family, because their business is
imbued with public interest and is inherently fiduciary.
2. In the same way that banks are “presumed to be familiar with the
rules on land registration,” given that they are in the business of
extending loans secured by real estate mortgage, banks are also
expected to exercise the highest degree of diligence.
3. Whether it was unaware of the unit’s actual interior area; or, knew
of it, but wrongly thought that its area should include common
spaces, utmost diligence in investigating the Unit offered as
security before accepting it. This negligence is so inexcusable; it
is tantamount to bad faith.
4. By awarding exemplary damages to petitioner, this case shall
serve as an example and warning to banks to observe the
requisite case and diligence in all their affairs.
H. Sibayan vs. Alda, 852 SCRA 102
1. The denial of the motion for production of the bank documents
pertaining to 1) United Coconut Planters Bank (UCPB) Account
No. 2351047157 and 2) Bank of the Philippine Islands (BPI)
Account No. 85890237923 is justified as the bank account
sought to be examined are privileged..

I. Lagman vs. Medialdea, 829 SCRA 1

1. Under the Human Security Act (Republic Act [RA] No. 9372), only
upon a written order of the Court of Appeals (CA) may there be
an examination and gathering of any relevant information on the
deposits, placements, trust accounts, assets, and records in a
bank or financial institution of a person charged with or suspected
of the crime of terrorism or conspiracy to commit terrorism; or of
a judicially declared and outlawed terrorist organization,
association, or group of persons; or of a member of such judicially
declared and outlawed organization, association, or group of
persons.

J. Apex Bancrights Holdings, Inc. vs. Bangko Sentral ng

Pilipinas, 841 SCRA 436
1. Section 30 of Republic Act (R) No. 7653 provides for the
proceedings in the receivership and liquidation of banks and
quasibanks.
2. It is settled that “[t]he power and authority of the Monetary Board
to close banks and liquidate them thereafter when public interest
so requires is an execise of the police power of the State.”
3. Nothing in Section 30 Republic Act (RA) No. 7653 requires the
Banko Sentral ng Pilipinas (BSP), Through the Monetary Board,
to make an independent determination of whether a bank may
still be rehabilitated of whether a bank may still be rehabilitated
or not.
4. The “actions of the Monetary Board in proceedings on insolvency
are explicity declared by law to be final and executory’. They may
not be set aside, or restrained, or enjoined by the courts, except
upon convincing proof that the action is plainly arbitrary and
made in bad faith.”
K. Cu vs. Small Business Guarantee and Finance Corporation,
834 SCRA 515
1. When a bank is ordered closed by the Monetary Board, Philippine
Deposit Insurance Corporation (PDIC) is designated as the
receiver which shall then proceed with the takeover and
liquidation of the closed bank.
2. The petition for assistance in the liquidation of a closed bank is a
special proceeding for the liquidation of a closed bank and
includes the declaration of the concomitant rights of its creditors
and the order of payment of their valid claims in the disposition
of assets.

L. So vs. Philippine Deposit Insurance Corporation, 859 SCRA

478
1. On June 22, 1963, Philippine Deposit Insurance Corporation
(PDIC) was created under Republic Act (RA) No. 3591 as an
insurer of deposits in all banks entitled to the benefits of
insurance under the said Act to promote and safeguard the
interests of the depositing public.
2. The legislative intent in creating the Philippine Deposit Insurance
Corporation (PDIC) as a quasi-judicial agency is clearly manifest.
Indeed, PDIC exercises judicial discretion and judgment in
determining whether a claimant is entitled to a deposit insurance
claim, which determination results from its investigation of facts
and weighing of evidence presented before it.
3. A petition for certiorari, questioning the Philippine Deposit
Insurance Corporation’s (PDIC’s) denial of a deposit insurance
claim should be filed before the Court of Appeals (CA), not the
Regional Trial Court (RTC).

M. Chugani vs. Philippine Deposit Insurance Corporation, 859

SCRA 488
1. The Philippine Deposit Insurance Corporation (PDIC) was
created by Republic Act (RA) No. 3591 on June 22, 1963 as an
insurer of deposits in all banks entitled to the benefits of
insurance under the PDIC Charter to promote and safeguard the
interests of the depositing public by way of providing permanent
and continuing insurance coverage of all insured deposits.
2. Rule 65, the Court of Appeals (CA) has the jurisdiction to rule on
the alleged grave abuse of discretion of the Philippine Deposit
Insurance Corporation (PDIC).
3. Section 2(d) of Philippine Deposit Insurance Corporation (PDIC)
Regulatory Issuance No. 2011-02 states that for deposit to be
considered as legitimate, it should be 1) received by a bank as a
deposit in the usual course of business; 2) recorded in the books
of the bank as such; 3) opened in accordance with established
forms and requirements of the Bangko Sentral ng Pilipinas (BSP)
and/or the PDIC.
VIII. INTELLECTUAL PROPERTY CODE

A. Juan vs. Juan, 837 SCRA 613

1. Under Section 121.1 of republic ACT (RA) No. 8293, “mark” is
defined as any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall
include a stamped or marked container of goods.
2. “Copyright,” “Trade or Service Name,” Defined.

B. Somboonsakdikul vs. Orlane S.A., 816 SCRA 404

1. A trademark is defined under Section 121.1 of Republic Act (RA)
No. 8293 as any visible sign capable of distinguishing the goods.
2. In determining colorable imitation, we have used either the
dominancy test or the holistic or totality test.

C. Commissioner of Internal Revenue vs. San Miguel Corporation,

815 SCRA 563
1. The use of an identical or colorable imitation of a registered
trademark by a person for the same goods or services or closely
related goods or services of another party constitutes
infringement.

D. Forietrans Manufacturing Corp. vs. Davidoff Et. Cie SA, 819

SCRA 191
1. The essential element of infringement is that the infringing mark
is likely to cause confusion.

E. Societe des Produits, Nestle, S.A vs. Puregold Price Club, Inc.,
839 SCRA 177
1. A trademark is any distinctive word, name, symbol, emblem, sign,
or device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt by
others.
2. The dominancy test focuses on the similarity of the prevalent
features of the competing trademarks that might cause confusion
and deception.
 3. The holistic test entails a consideration of the entirely of the marks
as applied to the products, including the labels and packaging, in
determining confusing similarity.
4. Following Section 123, paragraph (h) of Republic Act (RA) No.
8293 which prohibits exclusive registration of generic marks, the
work “COFFEE” cannot be exclusively appropriated by either
Nestle of Puregold since it is generic of descriptive of the goods
they seek to identify.
5. The Supreme Court sustains the findings of the Bureau of Legal
Affairs- Intellectual Property Office (BLA-IPO) and office of the
Director General of the Intellectual Property Office (ODG-IPO)
that the likelihood of confusion between Nestle product and
Puregolds product does not exist and upholds the registration of
Puregolds mark.

F. Mang Inasal Philippines, Inc. vs. IFP Manufacturing

Corporation, 827 SCRA 461
1. A mark that is similar to a registered mark or a mark with an
earlier filing or priority date (earlier mark) and which is likely to
cause confusion on the part of the public cannot be registered
with the Intellectual Property Office (IPO).
2. Confusion, in either of its forms, is only possible when the goods
or services covered by allegedly similar marks are identical,
similar or related in some manner.
3. To be regarded as similar to an earlier mark, it is enough that a
prospective mark be a colorable imitation of the former.
4. In determining whether there is similarity or colorable imitation
between two (2) marks, authorities employ either the dominancy
test or the holistic test.
5. While there can be no quibble that the curl snack product for
which the registration of the OK Hotdog Inasal mark is sought
cannot be considered as identical or similar to the restaurant
services represented by the Mang Inasal mark, there is ample
reason to conclude that the said product and services may
nonetheless be regarded as related to each other.
6. It is the fact that the underlying goods and services of both marks
deal with inasal and inasal-flavored products which ultimately
fixes the relations between such goods and services.
G. W Land Holdings, Inc. vs. Starwood Hotels and Resorts
Worldwide, Inc., 847 SCRA 403
1. The protection of trademarks as intellectual property is intended
not only to preserve the goodwill and reputation of the business
established on the goods or services bearing the mark through
actual use over a period of time, but also to safeguard the public
as consumers against confusion on these goods or services.
2. In Berris Agricultural Co., Inc. v. Abyadang, 633 SCRA 196
(2010), the Supreme Court (SC) explained that “[t]he ownership
of a trademark is acquired by its registration and its actual use
by the manufacturer or distributor of the goods made available to
the purchasing public.
3. The actual use of the mark representing the goods or services
introduced and transacted in commerce over a period of time
creates that goodwill which the law seeks to protect.
4. In Mirpuri v. CA, 318 SCRA 516 (1999), the Supreme Court (SC)
noted that “[a]dvertising on the Net and cybershopping are
turning the Internet into a commercial marketplace.
5. The facilities and avenues present in the Internet are, in fact,
more prominent nowadays as they conveniently cater to the
modern-day consumer who desires to procure goods or services
at any place and at any time, through the simple click of a mouse,
or the tap of a screen.
6. The mere exhibition of goods or services over the Internet,
without more, is not enough to constitute actual use. To reiterate,
the “use” contemplated by law is genuine use— that is, a bona
fide kind of use tending towards a commercial transaction in the
ordinary course of trade.—The mere exhibition of goods or
services over the Internet, without more, is not enough to
constitute actual use. To reiterate, the “use” contemplated by law
is genuine use — that is, a bona fide kind of use tending towards
a commercial transaction in the ordinary course of trade.
7. A hotel’s website has now become an integral element of a hotel
business.
8. Mere use of a mark on a website which can be accessed
anywhere in the world will not automatically mean that the mark
has been used in the ordinary course of trade of a particular
country.
 9. Starwood’s use of the “W” mark for reservation services through
its website constitutes use of the mark which is already sufficient
to protect its registration under the entire subject classification
from nonuse cancellation.

H. Dy vs. Koninklijke Philips Electronics, N.V., 821 SCRA 241

1. A trademark is “any distinctive word, name, symbol, emblem,
sign, or device, or any combination thereof, adopted and used by
a manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt by
others.”
2. As the Supreme Court (SC) have said in Fredco Manufacturing
Corporation v. Harvard University, 650 SCRA 232 (2011),
“[i]ndeed, Section 123.1(e) of Republic Act (RA) No. 8293 now
categorically states that ‘a mark which is considered by the
competent authority of the Philippines to be well-known
internationally and in the Philippines, whether or not it is
registered here,’ cannot be registered by another in the
Philippines.”
3. The dominancy test focuses on the similarity of the prevalent or
dominant features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the purchasing
public. Duplication or imitation is not necessary; neither is it
required that the mark sought to be registered suggests an effort
to imitate.
4. The holistic or totality test necessitates a consideration of the
entirety of the marks as applied to the products, including the
labels and packaging, in determining confusing similarity.
5. Applying the dominancy test to this case requires us to look only
at the mark submitted by petitioner in its application, while we
give importance to the aural and visual impressions the mark is
likely to create in the minds of the buyers; In using the holistic
test, we find that there is a confusing similarity between the
registered marks PHILIPS and PHILITES, and note that the mark
petitioner seeks to register is vastly different from that which it
actually uses in the packaging of its products.
IX. ANTI-MONEY LAUNDERING ACT

A. Republic vs. Bolante, 822 SCRA 526

1. Upon the enactment of Republic Act (RA) No. 10167 on 18 June
2012, Section 11 of RA No. 9160 was further amended to allow the
Anti-Money Laundering Council (AMLC) to file an ex parte
application for an order allowing an inquiry into bank deposits and
investments.
2. As the Anti-Money Laundering Council (AMLC) does not exercise
quasi-judicial functions, its inquiry by court order into bank deposits
or investments cannot be said to violate any person’s constitutional
right to procedural due process.
3. As regards the purported violation of the right to privacy, the
Supreme Court (SC) recalled the pronouncement in Republic v.
Eugenio, Jr., 545 SCRA 384 (2008), that the source of the right to
privacy governing bank deposits is statutory, not constitutional. The
legislature may validly carve out exceptions to the rule on the
secrecy of bank deposits, and one such legislation is Section 11 of
Republic Act (RA) No. 9160.
4. Rule 10.2 of the Revised Rules and Regulations Implementing
Republic Act (RA) No. 9160, as Amended by RA No. 9194, defined
probable cause as “such facts and circumstances which would lead
a reasonably discreet, prudent or cautious man to believe that an
unlawful activity and/or a money laundering offense is about to be,
is being or has been committed and that the account or any
monetary instrument or property subject thereof sought to be
frozen is in any way related to said unlawful activity and/or money
laundering offense.”
5. For the trial court to issue a bank inquiry order, it is necessary for
the Anti-Money Laundering Council (AMLC) to be able to show
specific facts and circumstances that provide a link between an
unlawful activity or a money laundering offense, on the one hand,
and the account or monetary instrument or property sought to be
examined on the other hand.
X. ELECTRONIC COMMERCE ACT

XI. DATA PRIVACY ACT

XII. FINANCIAL REHABILITATION, INSOLVENCY, LIQUIDATION

AND SUSPENSION OF PAYMENTS

A. Metropolitan Bank and Trust Company vs. Liberty Corrugated

Boxes Manufacturing Corporation, 815 SCRA 458
1. A corporation that may seek corporate rehabilitation is
characterized not by its debt but by its capacity to pay this debt.
2. The opportunity to rehabilitate the affairs of an economic entity,
regardless of the status of its debts, redounds to the benefit of its
creditors, owners, and to the economy in general.
3. Rule 4, Section 1 of the Interim Rules does not specify what kind
of debtor may seek rehabilitation. The provision allows creditors
holding twenty-five percent (25%) of the debtor corporation’s
total liabilities to petition for the corporation’s rehabilitation.
4. Respondent, as a debtor corporation, may file for rehabilitation
despite having defaulted on its obligations to petitioner.

B. Dela Torre vs. Primetown Property Group, Inc., 855 SCRA 494
1. Corporate rehabilitation contemplates a continuance of
corporate life and activities in an effort to restore and reinstate
the corporation to its former position of successful operation and
solvency, the purpose being to enable the company to gain a
new lease on life and allow its creditors to be paid their claims
out of its earnings.
2. If the Regional Trial Court (RTC) finds the petition to be sufficient
in form and substance, it shall issue, not later than five (5) days
from the filing of the petition, an Order.
3. While respondent is undergoing rehabilitation, the enforcement
of all claims against it is stayed.
C. Allied Banking Corporation vs. Equitable PCI Bank, Inc., 858
SCRA 627
1. The rehabilitation proceedings shall be deemed to have
commenced from the date of filing of the petition, which is also
termed the commencement date.
2. When a petition for rehabilitation is filed and subsequently
granted by the court, its purpose will be defeated if the debtors
are still allowed to arbitrarily dispose of their property and pay
their liabilities, outside of the ordinary course of business and
what is allowed by the court, after the filing of the said petition.
3. The immediate effectivity of the stay order means that the
Regional Trial Court (RTC), through an order commencing
rehabilitation and staying claims against the debtor,
acknowledges that the debtor requires rehabilitation immediately
and therefore it can not only prohibit but also nullify acts made
after its effectivity, when such acts are violative of the stay order,
to prevent any irreparable detriment to the debtor’s successful
restoration.
4. Anent the alleged impairment of contract, basic is the principle
that the law is deemed written into every contract, such that while
a contract is the law between the parties, the provisions of
positive law which regulate contracts shall limit and govern their
relations.
5. Rehabilitation proceedings are considered in rem. In rem actions
are against the thing itself and they are binding upon the whole
world, unlike in personam actions, which are against a person on
the basis of his personal liability.
6. Under both the Rehabilitation Rules and the Interim Rules,
publication of the notice of the commencement of rehabilitation
proceedings is the operative act which vests the court with
jurisdiction over all affected parties.