September 2012 Philippine Supreme Court Decisions on Commercial Law

Here are select September 2012 rulings of the Supreme Court of the Philippines on commercial law:

Corporate officers; liability for employee’s money claim.  In the absence of bad faith, a corporate officer cannot be held liable for the money claims of an employee. Bad faith must be establiscged clearly and convincingly as the same is never presumed. Misamis Oriental II Electric Service Cooperative (MORESCO II) vs. Virgilio M. Cagalawan. G.R. No. 175170. September 5, 2012.

Intra-corporate controversy; fraud.  It is essential for the complaint to show on its face what are claimed to be the fraudulent corporate acts if the complainant wishes to invoke the court’s special commercial jurisdiction. This is because fraud in intra-corporate controversies must be based on “devises and schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, or members of any corporation, partnership, or association,” as stated under Rule 1, Section 1 (a)(1) of the Interim Rules. The act of fraud or misrepresentation complained of becomes a criterion in determining whether the complaint on its face has merits, or within the jurisdiction of special commercial court, or merely a nuisance suit. Simny G. Guy, Geraldine G. Guy, Gladys G. Yao and the Heirs of the late Grace G. Cheu vs. Gilbert Guy/Simny G. Guy, Geraldine G. Guy, Gladys G. Yao and the heirs of the late Grace G. Cheu vs. The Hon. Ofelia C. Calo, in her capacity as Presiding Judge of the RTC-Mandaluyong City-Branch 211 and Gilbert Guy G.R. No. 189486/G.R. No. 189699. September 5, 2012

Stock certificate; endorsement.  In Santamaria v. Hongkong and Shanghai Banking Corp., this Court held that when a stock certificate is endorsed in blank by the owner thereof, it constitutes what is termed as “street certificate,” so that upon its face, the holder is entitled to demand its transfer into his name from the issuing corporation. Such certificate is deemed quasi-negotiable, and as such the transferee thereof is justified in believing that it belongs to the holder and transferor.

While there is a contrary ruling, as an exception to the general rule enunciated above, what the Court held in Neugene Marketing Inc., et al., v CA, where stock certificates endorsed in blank were stolen from the possession of the beneficial owners thereof constraining this Court to declare the transfer void for lack of delivery and want of value, the same cannot apply to Gilbert because the stock certificates which Gilbert endorsed in blank were in the undisturbed possession of his parents who were the beneficial owners thereof and who themselves as such owners caused the transfer in their names. Simny G. Guy, Geraldine G. Guy, Gladys G. Yao and the Heirs of the late Grace G. Cheu vs. Gilbert Guy/Simny G. Guy, Geraldine G. Guy, Gladys G. Yao and the heirs of the late Grace G. Cheu vs. The Hon. Ofelia C. Calo, in her capacity as Presiding Judge of the RTC-Mandaluyong City-Branch 211 and Gilbert Guy G.R. No. 189486/G.R. No. 189699. September 5, 2012

(Hector thanks Rommel D. Lumagui for his assistance to Lexoterica.)

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