June 2013 Philippine Supreme Court Decisions on Commercial Law

Here are select June 2013 rulings of the Supreme Court of the Philippines on commercial law:

Corporation; derivative suit. A derivative suit is an action brought by a stockholder on behalf  of  the  corporation  to  enforce  corporate  rights  against  the corporation’s directors, officers or other insiders. Under Sections 23 and 36 of the Corporation Code, the directors or officers, as provided under the by-laws, have the right to decide whether or not a corporation should sue. Since these directors or officers will never be willing to sue themselves, or impugn their wrongful or fraudulent decisions, stockholders are permitted by law to bring an action in the name of the corporation to hold these directors and officers accountable. In derivative suits, the real party in interest is the corporation, while the stockholder is a mere nominal party.  Juanito Ang, for and in behalf of Sunrise Marketing (Bacolod), Inc. v. Sps. Roberto and Rachel Ang, G.R. No. 201675, June 19, 2013.

Corporation; shares of stock. In a sale of shares of stock, physical delivery of a stock certificate is one of the essential requisites for the transfer of ownership of the stocks purchased.

Here, FEGDI clearly failed to deliver the stock certificates, representing the shares of stock purchased by Vertex, within  a reasonable time from the point the shares should have been delivered.  This was a substantial breach of their contract that entitles Vertex the right to rescind the sale under Article 1191 of the Civil Code.  It is not entirely  correct to say that a sale had already been consummated as Vertex already  enjoyed the rights a shareholder can exercise.  The enjoyment of these rights cannot suffice where the law, by its express terms, requires a specific form to transfer ownership.  Fil-Estate Gold and Development, Inc., et al. v. Vertex Sales and Trading, Inc., G.R. No. 202079, June 10, 2013.

Insurance; collateral source rule. As part of American personal injury  law, the collateral source rule was originally applied to tort cases wherein the defendant is prevented from benefiting from the plaintiff’s receipt of money from other sources. Under this rule, if an injured person receives compensation for his injuries from  a source wholly  independent of the tortfeasor, the payment should not be deducted from the damages which he would otherwise collect from the tortfeasor. In a recent Decision by the Illinois Supreme Court, the rule has been described as “an established exception to the general rule that damages in negligence actions must be compensatory.”  The Court went on to explain that although the rule appears to allow a double recovery, the collateral source will have a lien or subrogation right to prevent such a double recovery.

The collateral source rule applies in order to place the responsibility for losses on the party causing them. Its application is justified so that “the wrongdoer should not benefit from the expenditures made by the injured party or take advantage of contracts or other relations that may exist between the injured party and third persons.” Thus, it finds no application to cases involving no-fault insurances under which the insured is  indemnified for losses by insurance companies, regardless of who was at fault in the incident generating the losses. Here, it is clear that MMPC is a no-fault insurer.  Hence, it cannot be obliged to pay the hospitalization expenses of the dependents of its employees which had already been paid by separate health insurance providers of said dependents.  Mitsubishi Motors Philippines Salaried Employees Union v. Mitsubishi Motors Philippines Corporation, G.R. No. 175773, June 17, 2013.

Trademarks. Under the Paris Convention, the Philippines is obligated to assure nationals of the signatory-countries that they are afforded an effective protection against violation of their intellectual property rights in the Philippines in the same way that their own countries are obligated to accord similar protection to Philippine nationals. “Thus, under Philippine law, a trade name of a national of a State that is a party to the Paris Convention, whether or not the trade name forms part of a trademark, is protected “without the obligation of filing or registration.’”

The present law on trademarks, Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines, as amended, has already dispensed with the requirement of prior actual use at the time of registration. Thus, there is more reason to allow the registration of the subject mark under the name of Cointreau as its true and lawful owner. Ecole De Cuisine Manille (Cordon Bleu of the Philippines), Inc. v. Renaud Cointreau & CIE and Le Condron Bleu Int’l., B.V., G.R. No. 185830, June 5, 2013.

(Hector thanks Carlos Manuel S. Prado for his assistance to Lexoterica.)