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SPECIAL COMMERCIAL LAWS

Syllabus
Atty. Gene Abot
7-9PM Friday

I. Securities Regulation Code (R.A. 8799)


A. State policy
People vs. Vicente T. Fernandez and Joaquin Trinidad, G.R. No. L-45655, June
15, 1938.
Pedro R. Palting vs. San Jose Petroleum, Inc., G.R. No. L-14441, Dec. 17,
1966.
B. Powers and functions of the SEC
Abacus Securities Corp. vs. Ruben U, Ampil, G.R. No. 160016, Feb 27, 2006.
1. Regulatory
Pilipinas Loan Company, Inc. vs. SEC and Filipinas Pawnshop, Inc., G.R. No.
104720, Apr 4, 2001.
Industrial Refractories Corp. of the Phils. vs. CA, SEC and Refractories Corp.
of the Phils, G.R. No. 122174, Oct 3, 2002.
Phil. Assn. of Stock Transfer & Registry Agencies, Inc. vs. CA, et al., G.R. No.
137321, Oct 15, 2007
2. Adjudicative
Erlinda Bildner vs. Justice Vicente Q. Roxas, A.M. OCA I.P.I. No. 07-108-CAJ,
Jun 12, 2008.
Unlad Resources Devt. Corp., et al. vs. Renato Dragon, et al., G.R. No.
149338, Jul 28, 2008.
Maria Luisa Park Assn.., Inc., vs. Samantha and Pia Almendras, G.R. No.
171763, Jun 5, 2009.
Malayan Insurance Company, Inc. vs. Victorias Milling, Co., Inc., G.R. No.
167768, Apr 17, 2009.
PAL Inc., vs CA and Sabine Koschinger, G.R. No. 150592, Jan 20, 2009.
Union Glass & Container Corp. vs. SEC and Carolina Hofilea, G.R. No. L64013, Nov 28, 1983.
Florencio Orendain, vs. BF Homes, Inc., G.R. No. 146313, Oct 31, 2006
Oscar Reyes vs. Zenith Insurance Corp., G.R. No. 165744, Aug 11, 2008.
C. Securities required to be registered
SEC vs. Prosperity. Com, Inc., G.R. No. 164197, January 25, 2012.
Power Homes Unlimited Corp. vs. SEC and Noel Manero, G.R. No. 164182,
Feb 26, 2008.
1. Exempt securities

Unionbank vs. SEC, G.R. No. 138949, Jun 6, 2001.


People vs Elvira Petralba, et al., G.R. No. 137512, Sept 27, 2004.
2. Exempt transactions
Manuel V. Baviera vs.Esperranza Paglinawan, et al, Feb 8, 2007, G.R. No
168380.
Nestle Philippines, Inc. vs. CA and SEC, Nov 13, 1991, G.R. No. 86738.
D. Procedure for registration of securities
E. Prohibitions on fraud, manipulation and insider trading
1.
2.
3.
4.

Manipulation of security prices


Short sales
Fraudulent transactions
Insider trading

SEC vs. Interport Resources Corp., et al., Oct 6, 2008, G.R. No. 135808
F. Protection of investors
1. Tender offer rule
Cemco Holdings, Inc., vs. National Life Insurance Company of the Philippines,
Inc., G.R. No. 171815, Aug 7, 2007.
2. Rules on proxy solicitation
GSIS vs. CA, et al., G.R. No. 183905, Apr 16, 2009.
3. Disclosure rule
SEC vs. Interport Resources Corp., et al., Oct 6, 2008, G.R. No. 135808
G. Civil liability
1. PRESIDENTIAL DECREE NO. 902-A

SEC REORGANIZATION ACT

2. REPUBLIC ACT No. 10142 AN ACT PROVIDING FOR THE REHABILITATION OR


LIQUIDATION OF FINANCIALLY DISTRESSED ENTERPRISES AND INDIVIDUALS
"Financial Rehabilitation and Insolvency Act (FRIA) of 2010"
3. SC Rules of Procedure on Corporate Rehabilitation (SC A.M. No. 00-8-10-SC)

II. Letters of Credit


A. Definition/concept
B. Governing laws
C. Nature of letter of credit
Prudential Bank vs. IAC, G.R. 74886, December 8, 1992;
Bank of America vs. CA, G.R. No. 105395, December 10, 1993;

Lee, et al. vs. CA and Philippine Bank of Communications, G.R. 117913,


February 1, 2002.
D. Parties to a letter of credit
1. Rights and obligations of parties
E. Basic principles of letter of credit
1. Doctrine of independence
BPI vs. De Reny Fabric Industries, G.R. L-248211, October 16,1970.

2. Fraud exception principle


Transfield Philippines, Inc. vs. Luzon Hydro Corporation, et al., G.R. 146717,
November 22,2004.

3. Doctrine of strict compliance


Feati Bank vs. CA, G.R. No. 94209, April 30, 1991.
III. Warehouse Receipts Law
A. Nature and functions of a warehouse receipt
1. To whom delivered
2. Kinds
3. Distinction between a negotiable instrument and a negotiable warehouse
receipt
Receipt does not comply with Warehouse Receipts Act
Gonzales vs. Go Tiong, G.R. L-11776, August 30, 1958.
4. Rights of a holder of a negotiable warehouse receipt as against a
transferee of a nonnegotiable warehouse receipt
B. Duties of a warehouseman
C. Warehousemans lien
PNB vs. Judge Benito C. Se, Jr., et al., G.R. 119231, April 18, 1996.
IV. Trust Receipts Law
A. Definition/concept of a trust receipt transaction
Transaction a simple loan, not a trust receipt transaction
Colinares, et al. vs. CA, et al., G.R. 90828, September 5, 2000.
Transaction not a trust receipt transaction but a simple loan
Ng vs. People, G.R. 173905, April 23, 2010.
Bipartite transaction deemed covered by trust receipts law
Robles vs. CA, G.R. 59640, July 15, 1991.
1. Loan/security feature
Trust receipts law deemed to cover capital goods
Allied Banking vs. Ordoez, G.R. 82495, December 10, 1990.

2. Ownership of the goods, documents and instruments under a trust receipt


B. Rights of the entruster
1. Validity of the security interest as against the creditors of the
entrustee/innocent
purchasers for value
C. Obligations and liability of the entrustee
Entrustee has no authority to mortgage goods covered by trust receipts
DBP vs. Prudential Bank, G.R. 143772, November 22, 2005.
1. Payment/delivery of proceeds of sale or disposition of goods, documents or
instruments
2. Return of goods, documents or instruments in case of sale
3. Liability for loss of goods, documents or instruments
Liability of entrustee not extinguished by return of goods to entruster
Vintola vs. IBAA, G.R. 73271, May 29, 1987.
Violation of trust receipts law offense against public order, not against
property
People vs. Nitafan, G.R. 81559-60, April 6, 1992.
4. Penal sanction if offender is a corporation
D. Remedies available
Prosecution for estafa under Article 315 of the Revised Penal Code
People vs. Cuevo, G.R. L-27607, May 7, 1981.
Acquittal in criminal case for estafa under Section 13 of PD 115 does not
extinguish civil
liability arising from breach of trust receipts contract
Tupaz IV, et al. vs. CA and BPI, G.R. 145578, November 18, 2005.
V. The Chattel Mortgage Law (Act 1508 in rel. to Arts. 1484, 1485, 2140
and 2141 of the Civil Code)
1. Essential requisites
Chattel mortgage over house built on another persons land
Tumalad, et al. vs. Vicencio, et al., G.R. L-30173, September 30,1971.

2. Formal requisites
3. Registration
Chattel mortgage on house not binding on third persons not parties to
contract
Piansay, et al. vs. David, et al., G.R. L-19468. October 30, 1964.
4. After-acquired property
Torres, et al. vs. Limjap, G.R. 34385, September 21, 1931.
5. After-incurred obligation
Acme Shoe, et al. vs. CA, et al., G.R. 103576, August 22, 1996.

6. Right of junior mortgagee


No recourse against additional mortgaged property
(a) Residential house and lot - Levy Hermanos vs. PacificCommercial, et al., G.R.
L-47784, April 18, 1941;
(b) Parcel of land mortgaged by 3rd party - Cruz, et al.vs. Filipinas Investment,
G.R. L-24772, May 27, 1968.
7. Foreclosure procedure
8. Redemption
9. Claim for deficiency
Right of unpaid seller under Article 1484, Civil Code, alternative not
cumulative
Spouses Rosario vs. PCI Leasing and Finance, Inc., G.R. 139233, November
11,2005.
a) General rule
b) Exception
c) Article 1484
Specific performance
Southern Motors vs. Moscoso, G.R. L-14475, May 30, 1961.
Right of recourse against seller/assignor
Filipinas Investment vs. Vitug, G.R. L-25951, June 30, 1969.
Only actual sale of mortgaged chattel bars foreclosing creditor from
recovering unpaid balance
Magna Financial Services Group, Inc. vs. Colarina, G.R. 168736, December 9,
2005.
VI. Real Estate Mortgage Law (Act 3135, as amended by R.A. 4118)
1. Concept definition
Mortgage invalid if mortgagor not the property owner; doctrine of mortgagee
in good
faith not applicable
Erena vs. Querrer-Kauffman, G.R. 165853, June 22, 2006.
Bank not mortgagee in good faith
PNB vs. Corpuz, G.R. 180945, February 12, 2010.
Foreclosure of mortgage arising out of a settlement of estate not covered by
Act 3135
PNB vs. CA, et al., G.R. 121597, June 29, 2001.
2. Remedies available to mortgagee upon default of the mortgagor
Remedies available to mortgagee alternative, not successive or cumulative
Caltex Phils. Vs. IAC, et al., G.R. 74730, August 25, 1989;
Bank of America NT & SA vs. American Realty Corp., et al., G.R. 133876,
December 29, 1999;
Suico Rattan & Buri Interiors, Inc., et al. vs. CA,et al., G.R. 138145, June 15,
2006.

Options of foreclosure, collection suit, and BP 22 case


Spouses Yap vs. First e-Bank, G.R. 169889, September 29, 2009.
Action for foreclosure of mortgage prescribes after 10 years from the time the
right of action accrues, i.e., when the mortgagor defaults in the payment of
his obligation
Cando vs. Spouses Olazo, G.R. 160741, March 22, 2007.
3. Need for special power of attorney
4. Authority to foreclose extrajudicially
5. Procedure
a) Where to file
b) Where to sell
c) Posting requirement
d) Publication requirement
(i) Sufficiency of newspaper publication
A newspaper of general circulation must be available to the public in
general and not only to a select few chosen by the publisher
MetropolitanBank vs. Penafiel, G.R.173976, February 27, 2009
Accreditation of newspapers
China Banking vs. Spouses Martir, G.R. 184252, September 11, 2009.
Newspaper of general circulation
Perez, et al. vs. Perez, et al., G.R. 143768, March 28, 2005.
Accreditation as a newspaper of general circulation
China Banking Corporation vs. Spouses Martir, G.R. 184252,
September 11,2009.
Waiver by parties of posting and publication requirements void
PNB vs. Nepomuceno Productions, Inc., et al., G.R. 139479,December
27, 2002
Ouano vs. CA, et al., G.R. 129279, March 4, 2003.
Publication of notice of foreclosure sale more than sufficient
compliance with the posting of notice requirement of the law
Olizon vs. CA, G.R. G.R. No. 107075, September 1, 1994.
Foreclosure void if sale does not take place on date specified in
published notice
DBP vs. Aguirre and CA, G.R. 144877, September 7, 2001.
(ii) Need for republication in case of postponement
Republication of notice of sale
DBP vs. CA and Emerald Resorts Hotel, G.R. 125838, June 10, 2003.
(iii) Personal notice to the mortgagor when and when not needed
Failure to abide by stipulated personal notice renders foreclosure
proceedings void
Global Holiday Ownership Corporation vs. Metropolitan Bank, G.R.
184081, June 19, 2009.
e) Public Auction and Sale of foreclosed property

Sale at public action need not be conducted the whole day from 9:00
a.m. until 4:00 p.m. of the scheduled auction day as provided in
Section 4 of Act 3135
PNB vs. Spouses Cabatingan, et al., G.R. 167058, July 9, 2008
Two bidders not required for valid auction sale
Spouses Certeza, et al. vs. Philippine Savings Bank, G.R. 190078,
March 5, 2010.
Inadequacy of bid price
Valmonte, et al. vs. CA, et al., G.R. L-41621, February 18, 1999.
6. Possession by purchaser of foreclosed property
7. Remedy of debtor if foreclosure is not proper
Options of creditor where loan is secured by a mortgage and a check
Spouses Yap vs. First e-Bank, G.R. 169889, September 29, 2009. -same
8. Redemption
Right of redemption distinguished from equity of redemption
Huerta Alba Resort vs. CA, et al., G.R. 128567, September 1, 2000.
Redemption price to be paid by accommodation mortgagors
Belo vs. PNB, et al., G.R. 134330, March 1, 2001.
a) Who may redeem
b) Amount of redemption price
c) Period for redemption
Nature of redemption period
Sps. Landrito, Jr. et al. Jr., vs. CA, et al., G.R. 133079, August 9, 2005.
One-year redemption period computed from registration date of certificate of
foreclosure sale
Reyes vs. Noblejas, et al., G.R. L-23691, November 25, 1967.
Extension of 1-year redemption period
Lazo vs. Republic Surety, G.R. L-27365, January 30, 1970;
Ibaan Rural Bank vs. CA, et al., G.R. 123817, December 17, 1999.
Preserving right of redemption beyond redemption period
Hi-Yield Realty vs. CA, et al., G.R. 138978, September 12, 2002.
Redemption allowed notwithstanding lapse of period of redemption
Spouses Castro vs. Tan, et al.. G.R. 168940, November 24, 2009.
d) Effect of pendency of action for annulment of sale
Action to annul foreclosure sale does not suspend period of redemption
Metropolitan Bank vs. Spouses Tan, et al., G.R. 178449, October 17, 2008
Case for judicial redemption not filed in good faith but for the purpose of
stretching the period of redemption indefinitely
Tolentino vs. CA, et al., G.R. 171354, March 7, 2007.
Actual and simultaneous tender of payment must accompany statement of
intention to redeem
Heirs of Quisumbing vs. PNB, et al., G.R. 178242, January 20, 2009.

9. Writ of possession
a) Ministerial duty of the court
Issuance of writ of possession
a. Samson, et al. vs. Rivera, et al., G.R. 154355, May 20, 2004;
b. DBP vs. Spouses Gatal, G.R. 138567, March 4, 2005.
b) Enforcement against third parties
c) Pendency of action for annulment of sale
Posting of bond not necessary if writ of possession applied for after
ownership has vested on the creditor-mortgagee
Metropolitan Bank and Trust Company vs. Spouses Bance, G.R. 167280,
April 30, 2008.
Exception to the rule that issuance of writ of possession ministerial and
may be done ex parte
China Banking Corporation vs. Spouses Lozada, G.R. 164919, July 4, 2008
Non-return by mortgagee of the surplus from the proceeds of the
foreclosure sale
Metropolitan Bank vs. Lamb Construction, G.R. 170906, November 27,
2009
Petition for issuance of writ of possession is neither a complaint nor an
initiatory pleading
Metropolitan Bank vs. Abad Santos, et al., G.R. 157867, December 15,
2009.
Ex parte petition for issuance of possessory writ under Section 7 of Act
3135 is not the judicial process contemplated under Article 433 of the
Civil Code
DBP vs. Prime Neighborhood Assn., G.R. 175728 & 178914. May 8,2009.
10. Annulment of sale
VII. Truth in Lending Act (R.A. 3765)
1. Purpose
Heirs of Zoilo and Primitiva Espiritu vs. Sps. Maximo and Paz Landrito, G.R.
No. 169617, Apr 4 , 2007.
2. Obligation of creditors to person to whom credit is extended
UCPB, vs Sps. Samuel and Odette Beluos, G.R. No. 159912, Aug 17, 2007,
3. Covered and excluded transactions
4. Consequences of non-compliance with obligation
BPI vs. Sps. Norman and Angelina Yu and TUANSON BUILDERS CORP., G.R.
No. 184122, Jan 20, 2010
VIII. Anti-money Laundering Law (R.A. 9160, as amended by R.A. 9194)
1.
2.
3.
4.

Policy of the law


Covered institutions
Obligations of covered institutions
Covered transactions

AMLC vs. GLASGOW CREDIT AND COLLECTION SERVICES, INC. and


CITYSTATE SAVINGS BANK, INC.G. R. No. 170281, Jan 18, 2008.
5. Suspicious transactions
6. When is money laundering committed
7. Unlawful activities or predicate crimes
8. Anti-money laundering council
9. Functions
10. Freezing of monetary instrument or property
11. Authority to inquire into bank deposits
AMLC, vs. PANTALEON ALVAREZ and LILIA CHENG, G.R. No.174629, Feb 14,
2008.
IX. Foreign Investments Act (R.A. 7042)
1. Policy of the law
2. Definition of terms
a) Foreign investment
b) Doing business in the Philippines
MR HOLDINGS, LTD., vs. SHERIFF CARLOS P. BAJAR, et al., G.R. No. 138104,
Apr 11, 2002.

3.
4.
5.
6.

c) Export enterprise
d) Domestic market enterprise
Registration of investments of non-Philippine nationals
Foreign investments in export enterprises
Foreign investments in domestic market enterprises
Foreign investment negative list