ADVENT CAPITAL AND FINANCE CORPORATION,

- versus
NICASIO I. ALCANTARA and EDITHA I. ALCANTARA, Respondents.
G.R. No. 183050, January 25, 2012
Abad, J.
Facts:
Petitioner Advent Capital and Finance Corporation (Advent Capital) was put
under rehabilitation to which Atty. Danilo L. Concepcion was named by the court as
rehabilitation receiver. Upon audit of Advent Capitals books, Atty. Concepcion found
that respondents Nicasio and Editha Alcantara (collectively, the Alcantaras) owed Advent
Capital P27,398,026.59, representing trust fees that it supposedly earned for managing
their several trust accounts.
Upon this finding, Atty. Concepcion requested Belson Securities, Inc. (Belson) to
deliver to him, as Advent Capitals rehabilitation receiver, the P7,635,597.50 in cash
dividends that Belson held under the Alcantaras Trust Account 95-013. Atty.
Concepcion claimed that the dividends, as trust fees, formed part of Advent Capitals
assets. Belson refused, however, citing the Alcantaras objections as well as the absence
of an appropriate order from the rehabilitation court.
Due to such refusal by Belson, Atty. Concepcion filed a motion with the
rehabilitation court to order the former to deliver the money it holds in favor of the
Alcantaras. Atty. Concepcion argued that as rehabilitation receiver, he had the duty to
take custody and control of Advent Capitals assets, such as the sum of money that
Belson held on behalf of Advent Capitals Trust Department. The Alcantaras, on the other
hand argued that petitioner could not claim any right or interest in the dividends
generated by their investments since Advent Capital merely held these in trust for the
Alcantaras, the trustors-beneficiaries. Atty. Concepcions motion was granted by the
rehabilitation court, thus, Belson turned over the subject dividends to him.
The Alcantaras then sought the annulment of such order with the Court of appeals.
CA rendered a decision, granting the petition and directing Atty. Concepcion to account
for the dividends and deliver them to the Alcantaras. The CA ruled that the Alcantaras
owned those dividends. They did not form part of Advent Capitals assets as
contemplated under the Interim Rules of Procedure on Corporate Rehabilitation (Interim
Rules).
Issue:
WON the cash dividends held by Belson and claimed by both the Alcantaras and
Advent Capital constitute corporate assets of the latter that the rehabilitation court may,
upon motion, require to be conveyed to the rehabilitation receiver for his disposition.
Ruling:
The Cash dividends held by Belson does not form part of petitioners corporate
assets.

True, under the trust agreement between petitioner and respondent, petitioner
Advent Capital, could automatically deduct its management fees from the Alcantaras
portfolio that they entrusted to it. Paragraph 9 of the Trust Agreement provides that
Advent Capital could automatically deduct its trust fees from the Alcantaras portfolio,
at the end of each calendar quarter.
However, in the case at bar, Advent Capital did not allege that Belson had already
deducted the management fees owing to it from the Alcantaras portfolio at the end of
each calendar quarter. Advent Capital did not exercise its right to cause the automatic
deduction at the end of every quarter of its supposed management fee when it had full
control of the dividends. That was its fault. For their part, the Alcantaras had the right
to presume that Advent Capital had deducted its fees in the manner stated in the
contract. The burden of proving that the fees were not in fact collected lies with Advent
Capital.
Further, Advent Capital or its rehabilitation receiver cannot unilaterally
decide to apply the entire amount of cash dividends retroactively to cover the
accumulated trust fees. Advent Capital merely managed in trust for the benefit of the
Alcantaras the latters portfolio, which under Paragraph 2 of the Trust Agreement,
includes not only the principal but also its income or proceeds. The trust property is only
fictitiously attributed by law to the trustee to the extent that the rights and powers vested
in a nominal owner shall be used by him on behalf of the real owner.
The real owner of the trust property is the trustor-beneficiary. In this case,
the trustors-beneficiaries are the Alcantaras. Thus, Advent Capital could not
dispose of the Alcantaras portfolio on its own. The income and principal of the
portfolio could only be withdrawn upon the Alcantaras written instruction or order
to Advent Capital. The latter could not also assign or encumber the portfolio or its
income without the written consent of the Alcantaras. All these are stipulated in the
Trust Agreement.
Advent Capital must file a separate action for collection to recover the trust fees
that it allegedly earned. Having failed to collect the trust fees at the end of each
calendar quarter as stated in the contract, all it had against the Alcantaras was a claim
for payment which is a proper subject for an ordinary action for collection. It cannot
enforce its money claim by simply filing a motion in the rehabilitation case for delivery
of money belonging to the Alcantaras but in the possession of a third party.
Rehabilitation proceedings are summary and non-adversarial in nature, and do
not contemplate adjudication of claims that must be threshed out in ordinary court
proceedings. Adversarial proceedings similar to that in ordinary courts are inconsistent
with the commercial nature of a rehabilitation case. The latter must be resolved quickly
and expeditiously for the sake of the corporate debtor, its creditors and other interested
parties. Thus, the Interim Rules incorporate the concept of prohibited pleadings,
affidavit evidence in lieu of oral testimony, clarificatory hearings instead of the traditional

approach of receiving evidence, and the grant of authority to the court to decide the case,
or any incident, on the basis of affidavits and documentary evidence.
Here, Advent Capitals claim is disputed and requires a full trial on the merits.
It must be resolved in a separate action where the Alcantaras claim and defenses may
also be presented and heard. Advent Capital cannot say that the filing of a separate
action would defeat the purpose of corporate rehabilitation.

(By: TORRES, ALJEANE F.)

PHILIPPINE COMMERCIAL INTERNATIONAL BANK (formerly INSULAR

BANK OF ASIA AND AMERICA), petitioner, vs. COURT OF APPEALS and FORD
PHILIPPINES, INC. and CITIBANK, N.A., respondents.
G.R. No. 121413, January 29, 2001
Quisumbing, J.
Facts:
These consolidated petitions involve several fraudulently negotiated checks. The
original actions a quo were instituted by Ford Philippines to recover from the drawee
bank, CITIBANK, N.A. (Citibank) and collecting bank, Philippine Commercial
International Bank (PCIBank) [formerly Insular Bank of Asia and America], the value of
several checks payable to the Commissioner of Internal Revenue, which were embezzled
allegedly by an organized syndicate.
Ford Philippines drew a Citibank check in the amount of P4,746,114.41 in favor
of the Commissioner of the Internal Revenue (CIR). The check represents Fords tax
payment for the third quarter of 1977. On the face of the check was written Payees
account only which means that the check cannot be encashed and can only be deposited
with the CIRs savings account (which is with Metrobank). The said check was however
presented to PCIB and PCIB accepted the same. PCIB then indorsed the check for
clearing to Citibank. Citibank cleared the check and paid PCIB P4,746,114.41. CIR later
informed Ford that it never received the tax payment.
Subsequently, the NBI, after their investigation, found that Citibank Check No.
SN-04867 was recalled by Godofredo Rivera, the General Ledger Accountant of Ford. He
purportedly needed to hold back the check because there was an error in the computation
of the tax due to the Bureau of Internal Revenue (BIR). With Rivera's instruction,
PCIBank replaced the check with two of its own Manager's Checks (MCs). Alleged
members of a syndicate later deposited the two MCs with the Pacific Banking
Corporation.
In G.R. No. 128604, Ford drew two checks in the amounts of P5,851,706.37 and
P6,311,591.73 respectively. Both checks are again for tax payments. Both checks are for
Payees account only or for the CIRs bank savings account only with Metrobank.
Again, these checks never reached the CIR.
In an investigation, it was found that these checks were embezzled by the same
syndicate to which Rivera was a member. It was established that an employee of PCIB,
also a member of the syndicate, created a PCIB account under a fictitious name upon
which the two checks, through high end manipulation, were deposited. PCIB unwittingly
endorsed the checks to Citibank which the latter cleared.
Issue:
WON the injured party, Ford, is guilty of the "imputed contributory negligence"
that would defeat its claim for reimbursement, bearing in mind that its employees,
Godofredo Rivera and Alexis Marindo, were among the members of the syndicate.

Ruling:
It appears that although the employees of Ford initiated the transactions
attributable to an organized syndicate, in our view, their actions were not the proximate
cause of encashing the checks payable to the CIR. The degree of Ford's negligence, if
any, could not be characterized as the proximate cause of the injury to the parties. As
defined, proximate cause is that which, in the natural and continuous sequence, unbroken
by any efficient, intervening cause produces the injury and without the result would not
have occurred.
Mere fact that the forgery was committed by a drawer-payor's confidential
employee or agent, who by virtue of his position had unusual facilities for perpertrating
the fraud and imposing the forged paper upon the bank, does not entitle the bank to shift
the loss to the drawer-payor, in the absence of some circumstance raising estoppel against
the drawer. This rule likewise applies to the checks fraudulently negotiated or diverted by
the confidential employees who hold them in their possession.
In this case, there was no evidence presented confirming the conscious
particiapation of PCIBank in the embezzlement. As a general rule, however, a banking
corporation is liable for the wrongful or tortuous acts and declarations of its officers
or agents within the course and scope of their employment. A bank will be held
liable for the negligence of its officers or agents when acting within the course and
scope of their employment. It may be liable for the tortuous acts of its officers even
as regards that species of tort of which malice is an essential element. In this case, we
find a situation where the PCIBank appears also to be the victim of the scheme hatched
by a syndicate in which its own management employees had participated.
On the other hand, Citibank must likewise answer for the damages incurred by
Ford on Citibank Checks Numbers SN 10597 and 16508, because of the contractual
relationship existing between the two. Citibank, as the drawee bank breached its
contractual obligation with Ford and such degree of culpability contributed to the damage
caused to the latter. Citibank should have scrutinized Citibank Check Numbers SN 10597
and 16508 before paying the amount of the proceeds thereof to the collecting bank of the
BIR. One thing is clear from the record: the clearing stamps at the back of Citibank
Check Nos. SN 10597 and 16508 do not bear any initials. Citibank failed to notice and
verify the absence of the clearing stamps. Had this been duly examined, the switching of
the worthless checks to Citibank Check Nos. 10597 and 16508 would have been
discovered in time. For this reason, Citibank had indeed failed to perform what was
incumbent upon it, which is to ensure that the amount of the checks should be paid only
to its designated payee. The fact that the drawee bank did not discover the irregularity
seasonably, in our view, consitutes negligence in carrying out the bank's duty to its
depositors. The point is that as a business affected with public interest and because of the
nature of its functions, the bank is under obligation to treat the accounts of its depositors
with meticulous care, always having in mind the fiduciary nature of their relationship.

Finally, we also find that Ford is not completely blameless in its failure to detect
the fraud. Failure on the part of the depositor to examine its passbook, statements of
account, and cancelled checks and to give notice within a reasonable time (or as required
by statute) of any discrepancy which it may in the exercise of due care and diligence find
therein, serves to mitigate the banks' liability by reducing the award of interest from
twelve percent (12%) to six percent (6%) per annum. As provided in Article 1172 of the
Civil Code of the Philippines, respondibility arising from negligence in the performance
of every kind of obligation is also demandable, but such liability may be regulated by the
courts, according to the circumstances. In quasi-delicts, the contributory negligence of the
plaintiff shall reduce the damages that he may recover.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in
CA-G.R. CV No. 25017 are AFFIRMED. PCIBank, now, formerly as Insular Bank of
Asia and America, id declared solely responsible for the loss of the proceeds of Citibank
Check No SN 04867 in the amount P4,746,114.41. However, the Decision and Resolution
of the Court of Appeals in CA-G.R. No. 28430 are MODIFIED as follows: PCIBank and
Citibank are adjudged liable for and must share the loss, (concerning the proceeds of
Citibank Check Numbers SN 10597 and 16508 totalling P12,163,298.10) on a fifty-fifty
ratio, and each bank is ORDERED to pay Ford Philippines Inc. P6,081,649.05, with six
percent (6%) interest thereon, from the date the complaint was filed until full payment of
said amount.

(By: TORRES, ALJEANE F.)

B. VAN ZUIDEN BROS., LTD., Petitioner, -versus- GTVL MANUFACTURING

INDUSTRIES, INC., Respondent.
G.R. No. 147905, May 28, 2007
Carpio, J.
Facts:
Petitioner is a corporation incorporated under the laws of Hong Kong. It alleged
that it is not engaged in doing business in the Philippines thus it did not find the need to
apply for a license. It is engaged in the importation and exportation of several products,
including lace products.
Herein respondent have made purchases from petitioner. The procedure for these
purchases, as per the instructions of GTVL, was that ZUIDEN delivers the products
purchased by GTVL, to a certain Hong Kong corporation, known as Kenzar Ltd.
(KENZAR), and the products are then considered as sold, upon receipt by KENZAR of
the goods purchased by GTVL. Insofar as ZUIDEN is concerned, upon delivery of the
goods to KENZAR in Hong Kong, the transaction is concluded; and GTVL became
obligated to pay the agreed purchase price.
From October 31, 1994 up to the present, GTVL has failed and refused to pay the
agreed purchase price for several deliveries ordered by it and delivered by ZUIDEN
which totaled to U.S.$32,088.02. This occurrence prompted petitioner to file a collection
suit against respondent. The trial court dismissed the complaint on the ground that
petitioner had no capacity to sue as it was doing business in the Philippines without
securing the required license. This was affirmed by the CA.
Issue:
WON petitioner, an unlicensed foreign corporation, has legal capacity to sue
before Philippine courts. The resolution of this issue depends on whether petitioner is
doing business in the Philippines.
Ruling:
Yes, petitioner has legal capacity to sue and file the collection suit against herein
respondent.
Section 133 of the Corporation Code provides:
Doing business without license. No foreign corporation transacting business in the
Philippines without a license, or its successors or assigns, shall be permitted to maintain or
intervene in any action, suit or proceeding in any court or administrative agency of the
Philippines; but such corporation may be sued or proceeded against before Philippine courts or
administrative tribunals on any valid cause of action recognized under Philippine laws.

The law is clear. An unlicensed foreign corporation doing business in the

Philippines cannot sue before Philippine courts. On the other hand, an unlicensed

foreign corporation NOT DOING BUSINESS IN THE PHILIPPINES can sue

before Philippine courts.
Under Section 3(d) of Republic Act No. 7042 (RA 7042) or The Foreign
Investments Act of 1991, the phrase doing business includes:
x x x soliciting orders, service contracts, opening offices, whether called liaison offices or branches;
appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in
the country for a period or periods totalling one hundred eighty (180) days or more; participating in the
management, supervision or control of any domestic business, firm, entity or corporation in the Philippines;
and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate
to that extent the performance of acts or works, or the exercise of some of the functions normally incident
to, and in progressive prosecution of, commercial gain or of the purpose and object of the business
organization: Provided, however, That the phrase doing business shall not be deemed to include mere
investment as a shareholder by a foreign entity in domestic corporations duly registered to do business,
and/or the exercise of rights as such investor; nor having a nominee director or officer to represent its
interests in such corporation; nor appointing a representative or distributor domiciled in the Philippines
which transacts business in its own name and for its own account.

The series of transactions between petitioner and respondent cannot be classified

as doing business in the Philippines under Section 3(d) of RA 7042. An essential
condition to be considered as doing business in the Philippines is the actual
performance of specific commercial acts within the territory of the Philippines for the
plain reason that the Philippines has no jurisdiction over commercial acts performed
in foreign territories. Here, there is no showing that petitioner performed within the
Philippine territory the specific acts of doing business mentioned in Section 3(d) of RA
7042. Petitioner did not also open an office here in the Philippines, appoint a
representative or distributor, or manage, supervise or control a local business. While
petitioner and respondent entered into a series of transactions implying a continuity of
commercial dealings, the perfection and consummation of these transactions were done
outside the Philippines.
We also find no single activity which petitioner performed here in the Philippines
pursuant to its purpose and object as a business organization. Moreover, petitioners
desire to do business within the Philippines is not discernible from the allegations of the
complaint or from its attachments. Therefore, there is no basis for ruling that petitioner
is doing business in the Philippines.
In Eriks, respondent therein alleged the existence of a distributorship
agreement between him and the foreign corporation. If duly established, such
distributorship agreement could support respondents claim that petitioner was indeed
doing business in the Philippines. Here, there is no such or similar agreement between
petitioner and respondent.
The mere act of exporting from ones own country, without doing any
specific commercial act within the territory of the importing country, cannot be
deemed as doing business in the importing country. The importing country does not
acquire jurisdiction over the foreign exporter who has not performed any specific

commercial act within the territory of the importing country. Without jurisdiction over
the foreign exporter, the importing country cannot compel the foreign exporter to secure a
license to do business in the importing country.
To be doing or transacting business in the Philippines for purposes of Section
133 of the Corporation Code, the foreign corporation must actually transact business in
the Philippines, that is, perform specific business transactions within the Philippine
territory on a continuing basis in its own name and for its own account. Actual
transaction of business within the Philippine territory is an essential requisite for
the Philippines to acquire jurisdiction over a foreign corporation and thus require
the foreign corporation to secure a Philippine business license. If a foreign
corporation does not transact such kind of business in the Philippines, even if it
exports its products to the Philippines, the Philippines has no jurisdiction to require
such foreign corporation to secure a Philippine business license.
Considering that petitioner is not doing business in the Philippines, it does not
need a license in order to initiate and maintain a collection suit against respondent
for the unpaid balance of respondents purchases.

(By: TORRES, ALJEANE F.)

VIVIAN T. RAMIREZ, ET AL. vs. MAR FISHING CO., INC,. ET AL.,

G.R. No. 168208, June 13, 2012
Sereno, J.:
Facts:
Respondent Mar Fishing Co., Inc. (Mar Fishing), engaged in the business of
fishing and canning of tuna, sold its principal assets to co-respondent Miramar Fishing
Co., Inc. (Miramar) through public bidding. In view of that transfer, Mar Fishing issued a
Memorandum dated 23 October 2001 informing all its workers that the company would
cease to operate by the end of the month.
Thereafter, Mar Fishings labor union, Mar Fishing Workers Union NFL and
Miramar entered into a Memorandum of Agreement. [5] The Agreement provided that the
acquiring company, Miramar, shall absorb Mar Fishings regular rank and file employees
whose performance was satisfactory, without loss of seniority rights and privileges
previously enjoyed.
The agreement did not materialized, thus , petitioners filed Complaints for illegal
dismissal with money claims before the Arbitration Branch of the National Labor
Relations Commission (NLRC). LA ordered Mar Fishing Company, Inc., through its
president, treasurer, manager or other proper officer or representative, to pay the
complainants their respective separation pay.
The NLRC pierced the veil of corporate fiction and ruled that Mar Fishing and
Miramar were one and the same entity, since their officers were the same. Hence, both
companies were ordered to solidarily pay the monetary claims. On reconsideration, the
NLRC modified its ruling by imposing liability only on Mar Fishing.
Issue:
WON the NLRC erred in NOT applying the doctrine of piercing the veil of
corporate fiction in the case at bar and hold Mar Fishing and Miramar solidarily liable.
Ruling:
No. The NLRC was correct in not considering Mar Fishing and Miramar one and
the same entity.
This Court sustains the ruling of the LA as affirmed by the NLRC that Miramar
and Mar Fishing are separate and distinct entities, based on the marked differences in
their stock ownership. Also, the fact that Mar Fishings officers remained as such in
Miramar does not by itself warrant a conclusion that the two companies are one and
the same. As this Court held in Sesbreo v. Court of Appeals, the mere showing that the
corporations had a common director sitting in all the boards without more does not
authorize disregarding their separate juridical personalities.
Neither can the veil of corporate fiction between the two companies be pierced by
the rest of petitioners submissions, namely, the alleged take-over by Miramar of Mar

Fishings operations and the evident similarity of their businesses. At this point, it bears
emphasizing that since piercing the veil of corporate fiction is frowned upon, those
who seek to pierce the veil must clearly establish that the separate and distinct
personalities of the corporations are set up to justify a wrong, protect a fraud, or
perpetrate a deception. This, unfortunately, petitioners have failed to do.
Having been found by the trial courts to be a separate entity, Mar Fishing and
not Miramar is required to compensate petitioners. Indeed, the back wages and
retirement pay earned from the former employer cannot be filed against the new owners
or operators of an enterprise.
IN VIEW THEREOF, the assailed 19 March 2004 and 12 May 2005 Resolutions
of the Court of Appeals in CA-GR SP NO. 82651 are AFFIRMED. Hence, the 04 July
2005 Petition for Review filed by petitioners is hereby denied for lack of merit.

(By: TORRES, ALJEANE F.)