Vector Shipping vs.

American Home Assurance

G.R. No. 159213. July 03, 2013

Parties:
Vector Shipping Corp. operator of M/T Vector / Petitioner
Francisco Soriano registered owner of M/T Vector / Petitioner
Sulpicio Lines, Inc. owner and operator of M/V Doa Paz
American Home Assurance domestic insurance corporation / Respondent

Facts: On September 30, 1987, Caltex entered into a contract of affreightment with Vector for the transport
of Caltexs petroleum cargo through the M/T Vector. Caltex insured the petroleum cargo with respondent
American Home Assurance for P7,455,421.08 under a Marine Open Policy. In the evening of December 20,
1987, the M/T Vector and the M/V Doa Paz, the latter a vessel owned and operated by Sulpicio Lines, Inc.,
collided in the open sea near Dumali Point in Tablas Strait, located between the Provinces of Marinduque and
Oriental Mindoro. The collision led to the sinking of both vessels. The entire petroleum cargo of Caltex on
board the M/T Vector perished. On July 12, 1988, respondent American Home Assurance indemnified Caltex
for the loss of the petroleum cargo in the full amount of P7,455,421.08.

On March 5, 1992, respondent filed a complaint against Vector, Soriano, and Sulpicio Lines, Inc. to recover
the full amount of P7,455,421.08 it paid to Caltex in the RTC. The RTC however, dismissed the complaint on
the ground that the action which is based on quasi-delict has already prescribed. The action must be
commenced within 4 years from the day the quasi-delict occurred. The tort complained of in this case
occurred on 20 December 1987. The action arising therefrom would under the law prescribe, unless
interrupted, on 20 December 1991.

Respondent appealed to the CA and reversed the ruling of the RTC. Although thereby absolving Sulpicio
Lines, Inc. of any liability to respondent, the CA held Vector and Soriano jointly and severally liable to
respondent for the reimbursement of the amount of P7,455,421.08 paid to Caltex. The CA explained that
The resolution of this case is primarily anchored on the determination of what kind of relationship existed
between Caltex and M/V Dona Paz and between Caltex and M/T Vector for purposes of applying the laws on
prescription. It ruled that the relationship that existed between Caltex and M/V Dona Paz is that of a quasi-
delict while that between Caltex and M/T Vector is culpa contractual based on a Contract of Affreightment or
a Charter party. Under Article 1144 of the New Civil Code, actions based on written contract must be
brought within 10 years from the time the right of action accrued. A passenger of a ship, or his heirs, can
bring an action based on culpa contractual within a period of 10 years because the ticket issued for the
transportation is by itself a complete written contract.

Issue: 1. What is the nature of the cause of action of the Respondent.

2. Whether the cause of action of the Respondent was already barred by prescription.

Ruling:

1. Civil Law; Prescription; The following actions must be brought within ten years from the time the cause
of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; and (3) Upon a
judgment.We concur with the CAs ruling that respondents action did not yet prescribe. The legal
provision governing this case was not Article 1146 of the Civil Code, but Article 1144 of the Civil Code, which
states: Article 1144. The following actions must be brought within ten years from the time the cause of
action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment.
We need to clarify, however, that we cannot adopt the CAs characterization of the cause of action as based
on the contract of affreightment between Caltex and Vector, with the breach of contract being the failure of
Vector to make the M/T Vector seaworthy, as to make this action come under Article 1144 (1), supra.
Instead, we find and hold that that the present action was not upon a written contract, but
upon an obligation created by law. Hence, it came under Article 1144 (2) of the Civil Code. This
 is be-cause the subrogation of respondent to the rights of Caltex as the insured was by virtue
of the express provision of law embodied in Article 2207 of the Civil Code.

2. Insurance Law; Right of Subrogation; The right of subrogation is not dependent upon, nor does it
grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment of
the insurance claim by the insurer.The juridical situation arising under Article 2207 of the Civil Code is well
explained in Pan Malayan Insurance Corporation v. Court of Appeals, 184 SCRA 54 (1990), as follows:
Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured property
is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer,
upon payment to the assured, will be subrogated to the rights of the assured to recover from the wrongdoer
to the extent that the insurer has been obligated to pay. Payment by the insurer to the assured
operates as an equitable assignment to the former of all remedies which the latter may have
against the third party whose negligence or wrongful act caused the loss. The right of
subrogation is not dependent upon, nor does it grow out of, any privity of contract or upon
written assignment of claim. It accrues simply upon payment of the insurance claim by the
insurer
City Trust Banking Corporation vs. Carlos Romulo N. Cruz
G.R. No. 157049, August 11, 2010

Parties:
City Trust Banking Corporation Petitioner
Carlos Romulo N. Cruz Respondent

Facts: Respondent Carlos Romulo N. Cruz, an architect and businessman, maintained savings and checking accounts
at the petitioners Loyola Heights Branch. The savings account was considered closed due to the oversight committed
by one of the latters tellers. The closure resulted in the extreme embarrassment of the respondent, for checks that
he had issued could not be honored although his savings account was sufficiently funded and the accounts were
maintained under the petitioners check-o-matic arrangement.

Unmoved by the petitioners apologies and the adjustment made on his accounts by its employees, the respondent
sued in the RTC to claim damages from the petitioner. After trial, the RTC ruled in the respondents favor, and
ordered the petitioner to pay him P100,000.00 as moral damages, P20,000.00 as exemplary damage,
and P20,0000.00 as attorneys fees. The RTC found that the petitioner had failed to properly supervise its teller; and
that the petitioners negligence had made the respondent suffer serious anxiety, embarrassment and humiliation,
entitling him to damages.

Petitioner then appealed to the CA which affirmed the decision of the lower court, explaining that he erroneous
closure of the respondents account would not have been committed in the first place if the petitioner had not been
careless in supervising its employees. According to the CA, the fiduciary relationship and the extent of diligence that
is to be expected from a banking institution, like herein appellant Citytrust, in handling the accounts of its depositors
cannot be relaxed behind the shadow of an employee whether or not he/she is new on the job. Moreover, the CA
said that the negligence of the petitioners personnel was the proximate cause that had set in motion the events
leading to the damage caused to the respondent; hence, the RTC correctly opined that while a bank is not expected
to be infallible, it must bear the blame for not discovering the mistake of its teller for lack of proper supervision.

Issue: Whether the showing of excusable negligence and good faith on the part of the bank would negate the
awarding of moral and exemplary damages and attorneys fees.

Ruling:

1. Banks and Banking; A banking institution has the direct obligation to supervise very closely the
employees handling its depositors accounts, and should always be mindful of the fiduciary nature of its
relationship with the depositorssuch relationship requires it and its employees to record accurately every
single transaction, and as promptly as possible, considering that the depositors accounts should always
reflect the amounts of money the depositors could dispose of as they saw fit, confident that, as a bank, it
would deliver the amounts to whomever they directed.The petitioner, being a banking institution, had the
direct obligation to supervise very closely the employees handling its depositors accounts, and should
always be mindful of the fiduciary nature of its relationship with the depositors. Such relationship required it
and its employees to record accurately every single transaction, and as promptly as possible, considering
that the depositors accounts should always reflect the amounts of money the depositors could dispose of as
they saw fit, confident that, as a bank, it would deliver the amounts to whomever they directed. If it fell
short of that obligation, it should bear the responsibility for the consequences to the depositors, who, like
the respondent, suffered particular embarrassment and disturbed peace of mind from the negligence in the
handling of the accounts.

2. Same; The failure of a bank to exercise diligence and meticulousness warrants its liability for exemplary
damages and for reasonable attorneys fees.The CA properly affirmed the RTCs award of exemplary
damages and attorneys fees. It is never overemphasized that the public always relies on a banks
profession of diligence and meticulousness in rendering irreproachable service. Its failure to exercise
diligence and meticulousness warranted its liability for exemplary damages and for reasonable attorneys
fees.
Insigne vs. Abra Valley Colleges Inc.
G.R. No. 204089, July 29, 2015

Parties:
Grace Borgona Insigne et. al Petitioners
Abra Valley Colleges Inc. and Francis Borgona Respondent

Facts: Petitioners Grace Borgona Insigne et. al are siblings of the full blood while Respondent Francis Borgona is their
older half-blood brother. Their father Pedro Borgona was the founder and president and majority stockholder of Abra
Valley Colleges, Inc. After Pedros death he was succeeded by his son Francis Borgona as president of Abra Valley.

On March 26, 2002, the petitioners filed a complaint (with application for preliminary injunction) and damages in
the RTC against Abra Valley, praying among others, that the RTC direct Abra Valley to allow them to inspect its
corporate books and records and the minutes of meetings and to provide them with its financial statements.

Due to Abra Valleys failure to file its responsive pleading within the reglementary period the RTC rendered judgment
ordering Abra Valley to allow the petitioners to inspect its corporate books and records and minutes of meetings
pursuant to Sec. 74 of the Corporation Code, to furnish petitioners its financial statements at their expense pursuant
to Sec. 75 of the Corporation Code, and to pay petitioners the amount of Php 2,000.00 as attorneys fees.

Abra Valley filed a motion for reconsideration with the RTC but it denied the same. They appealed to the CA which
remanded the case to the RTC and ordered it to admit Abra Valleys answer despite it being belatedly filed.

The petitioners amended their complaint to implead Francis Borgona as an additional defendant, both in his personal
capacity and as the president of Abra Valley. The amended complaint also alleged that the petitioners were bona fide
stockholders of Abra Valley, attaching copies of stock certificates indorsed in their favor on the dorsal portion by the
original holders thereof.

Abra Valley and Francis Borgona filed their answers raising the following special and affirmative defenses,
that inasmuch as the originals of the certificates of stock filed are still in the name of the original owners, it is the
conclusion that the transfers, if any are not yet recorded and registered with the corporation. The RTC then ordered
the petitioners to present their stock certificates under their name. The petitioners presented a compliance and
manifestation attaching a certification issued by the corporate secretary stating that as per record of the stock and
transfer books of Abra Valley they are stock holders.

The RTC dismissed the case on the ground that the petitioners did not submit a stock certificate under their name
but only a certification of the corporate secretary, hence there exist a failure on the part of the petitioner to comply
with the order of the court under Rule 17 of the Rules of Court. The petitioners appealed to the CA which affirmed
the decision of the RTC.

Issue: Whether petitioners were bona fide stockholders of Abra Valley.

Ruling:

1. Mercantile Law; Corporations; Stock Certificates; The certificate is not stock in the corporation but is
merely evidence of the holders interest and status in the corporation, his ownership of the share
represented thereby, but is not in law the equivalent of such ownership.A stock certificate is prima
facie evidence that the holder is a shareholder of the corporation, but the possession of the certificate
is not the sole determining factor of ones stock ownership. A certificate of stock is merely: x x x the
paper representative or tangible evidence of the stock itself and of the various interests therein. The
certificate is not stock in the corporation but is merely evidence of the holders interest and
status in the corporation, his ownership of the share represented thereby, but is not in law the
equivalent of such ownership. It expresses the contract between the corporation and the stockholder,
but it is not essential to the existence of a share in stock or the creation of the relation of shareholder to the
corporation.
 2. Same; Same; Board of Directors; Estoppel; Considering that Section 23 of the Corporation Code requires
every director to be the holder of at least one (1) share of capital stock of the corporation of which he is a
director, the respondents would not have then allowed any of the petitioners to be elected to sit in the
Board of Directors as members unless they believed that the petitioners so elected were not disqualified for
lack of stock ownership.Considering that Section 23 of the Corporation Code requires every director to be
the holder of at least one share of capital stock of the corporation of which he is a director, the respondents
would not have then allowed any of the petitioners to be elected to sit in the Board of Directors as members
unless they believed that the petitioners so elected were not disqualified for lack of stock ownership. Neither
did the respondents thereafter assail their acts as Board Directors. Conformably with the doctrine of
estoppel, the respondents could no longer deny the petitioners status as stockholders of Abra Valley. The
application of the doctrine of estoppel, which is based on public policy, fair dealing, good faith and justice, is
only appropriate because the purpose of the doctrine is to forbid one from speaking against his own act,
representations, or commitments to the injury of another to whom he directed such act, representations, or
commitments, and who reasonably relied thereon. The doctrine springs from equitable principles and the
equities in the case, and is designed to aid the law in the administration of justice where without its aid
injustice might result. The Court has applied the doctrine wherever and whenever special circumstances of
the case so demanded.

3. Mercantile Law; Corporations; Stockholders; A person becomes a stockholder of a corporation by

acquiring a share through either purchase or subscription.A person becomes a stockholder of a
corporation by acquiring a share through either purchase or subscription. Here, the petitioners acquired
their shares in Abra Valley: (1) by subscribing to 36 shares each from Abra Valleys authorized and unissued
capital stock; and (2) by purchasing the shareholdings of existing stockholders, as borne out by the latters
indorsement on the stock certificates.

Note:

Remedial Law; Evidence; Burden of Proof; Preponderance of Evidence; In civil cases, the party having
the burden of proof must establish his case by a preponderance of evidence, or evidence that is more convincing to
the court as worthy of belief than that which is offered in opposition thereto.In civil cases, the party having the
burden of proof must establish his case by a preponderance of evidence, or evidence that is more convincing to the
court as worthy of belief than that which is offered in opposition thereto. Thus, the party, whether the plaintiff or the
defendant, who asserts the affirmative of an issue bears the onus to prove his assertion in order to obtain a
favorable judgment. From the plaintiff the burden to prove his positive assertions never parts. Yet, for the defendant,
an affirmative defense is one that is not a denial of an essential ingredient in the plaintiffs cause of action, but rather
one that, if established, will be a good defense i.e., an avoidance of the claim.

Actions; Dismissal of Actions; Dismissal of the action can be grossly oppressive if it is based on noncompliance
with the most trivial order of the court considering that the dismissal equates to an adjudication upon the merits,
unless otherwise declared by the court.The dismissal of Special Civil Action Case No. 2070 on June 28, 2010 on
the basis that the documents presented are not Stock Certificates as boldly announced by the plaintiffs counsel,
hence, plaintiffs failed to comply with the order of the Court dated March 8, 2010 was unwarranted and
unreasonable. Although Section 3, Rule 17 of the Rules of Court expressly empowers the trial court to dismiss the
complaint motu proprio or upon motion of the defendant if, for no justifiable cause, the plaintiff fails to comply with
any order of the court, the power to dismiss is not to wield indiscriminately, but only when the noncompliance
constitutes a willful violation of an order of consequence to the action. Dismissal of the action can be grossly
oppressive if it is based on noncompliance with the most trivial order of the court considering that the dismissal
equates to an adjudication upon the merits, unless otherwise declared by the court. A line of demarcation must be
drawn between an order whose noncompliance impacts on the case, and an order whose noncompliance causes little
effect on the case. For example, the noncompliance of an order to the plaintiff to amend his complaint to implead an
indispensable party as defendant should be sanctioned with dismissal with prejudice unless the noncompliance was
upon justifiable cause, like such party not within the jurisdiction of the court.

Remedial Law; Civil Procedure; Modes of Discovery; Production or Inspection of Documents; The rules of
discovery, including Section 1, Rule 27 of the Rules of Court governing the production or inspection of any
designated documents, papers, books, accounts, letters, photographs, objects or tangible things not privileged, which
contain or constitute evidence material to any matter involved in the action and which are in the other partys
possession, custody or control, are to be accorded broad and liberal interpretation.The rules of discovery, including
Section 1, Rule 27 of the Rules of Court governing the production or inspection of any designated documents,
papers, books, accounts, letters, photographs, objects or tangible things not privileged, which contain or constitute
evidence material to any matter involved in the action and which are in the other partys possession, custody or
control, are to be accorded broad and liberal interpretation.

Microsoft Corporation vs. Rolando D. Manansala

G.R. No. 166391, October 21, 2015

Parties:

Microsoft Corporation Petitioner

Rolando D. Manansala Respondent

Facts: Petitioner (Microsoft Corporation) is the copyright and trademark owner of all rights relating to all versions and
editions of Microsoft software (computer programs). While Private Respondent-Rolando Manansala is doing business
under the name of DATAMAN TRADING COMPANY and/or COMIC ALLEY.

Private Respondent Manansala, without authority from petitioner, was engaged in distributing and selling Microsoft
computer software programs.

On November 3, 1997 a Private investigator accompanied by an agent from the NBI was able to purchase six (6) CD-
ROMs containing various computer programs belonging to petitioner. As a result of the test-purchase, the agent from
the NBI applied for a search warrant to search the premises of the private respondent.

Subsequently a search warrant was issued and served on the private respondent and yielded several illegal copies of
Microsoft programs. Petitioner then filed an Affidavit-Complaint in the DOJ based on the results of the search and
seizure operation conducted on private respondent's premises. The State Prosecutor dismissed the charge against
private respondent for violation of Section 29 P.D. 49 because there was no evidence that the private respondent
was the one who really printed or copied the products of complainant for sale in his store, although he sells the
same.

Petitioner then appealed to the CA which affirmed the dismissal of the DOJ.

Issue: Whether the act of printing or copying is an essential element for copyright infringement.

Whether the dismissal made by the DOJ is proper.

Ruling:

1. Mercantile Law; Copyright Infringement; The CA erred in its reading and interpretation of Section 5 of
Presidential Decree No. 49. Under the rules on syntax, the conjunctive word "and" denotes a "joinder or
union" of words, phrases, or clause; it is different from the disjunctive word "or" that signals disassociation
or independence.

The conjunctive "and" should not be taken in its ordinary acceptation, but should be construed like the
disjunctive "or" if the literal interpretation of the law would pervert or obscure the legislative intent. To
accept the CA's reading and interpretation is to accept absurd results because the violations listed in Section
5(a) of Presidential Decree No. 49 - "To print, reprint, publish, copy, distribute, multiply, sell, and make
photographs, photo-engravings, and pictorial illustrations of the works" cannot be carried out on all of the
classes of works enumerated in Section 2 of Presidential Decree No. 49, viz.:

(N) Computer programs;

Presidential Decree No. 49 thereby already acknowledged the existence of computer programs as works or
creations protected by copyright. To hold, as the CA incorrectly did, that the legislative intent was to require
that the computer programs be first photographed, photo-engraved, or pictorially illustrated as a condition
for the commission of copyright infringement invites ridicule. Such interpretation of Section 5(a) of
 Presidential Decree No. 49 defied logic and common sense because it focused on terms like "copy,"
"multiply," and "sell," but blatantly ignored terms like "photographs," "photo-engravings," and "pictorial
illustrations." Had the CA taken the latter words into proper account, it would have quickly seen the
absurdity of its interpretation.

The mere sale of the illicit copies of the software programs was enough by itself to show the
existence of probable cause for copyright infringement. There was no need for the petitioner to
still prove who copied, replicated or reproduced the software programs.

2. Remedial Law; Probable Cause; Although the general rule is that the determination of the existence of
probable cause by the public prosecutor is not to be judicially scrutinized because it is an executive function,
an exception exists when the determination is tainted with grave abuse of discretion. Bearing this in mind,
we hold that the DOJ committed grave abuse of discretion in sustaining the public prosecutor's dismissal of
the charge of copyright infringement under Section 29 of Presidential Decree No. 49 on the ground of lack
of evidence because the public prosecutor thereby flagrantly disregarded the existence of acts sufficient to
engender the well-founded belief that the crime of copyright infringement had been committed, and that
the respondent was probably guilty thereof.