COMMERCIAL LAW 1

1. LCL obtained a loan from Far East Similarly, the real estate taxes that
Bank, which was later acquired by the BPI paid must be included as
BPI. The loan was subject to an part of the redemption price. As
interest rate of 17% per annum and held by the Court, any unpaid real
was secured by a real estate estate tax is chargeable against the
mortgage on LCL’s condominium taxable person who had actual, or
units. When LCL failed to pay, BPI beneficial use and possession of the
foreclosed the said units and property regardless of whether he
effected the transfer of titles in its or she is the owner. Here, LCL
name. BPI then claimed that the retained the use and control of the
redemption price should be subject mortgaged properties and must be
to the annual 17% interest rate held liable for real estate taxes. To
based on the loan contract plus the impose the taxes upon BPI which is
real estate taxes it paid when they neither the owner nor the beneficial
consolidated the title under BPI, user of the properties would not
while the RTC held that the annual only be contrary to law but also
6% legal interest rate should apply unjust. (BPI v. LCL Capital, Inc., GR
and the real estate taxes should not No. 243396, September 14, 2021,
be included since BPI consolidated J. M. Lopez)
the titles before the expiration of
the redemption period. 2. When LBHI, an American
Corporation, filed for bankruptcy,
Q: Should the 17% annual MBTI and SCB filed a petition for
interest rate as per the loan corporate rehabilitation of PI Two,
contract apply? Should the real LBHI’s Philippine affiliate as the
estate taxes be included? latter’s creditors. During the
pendency of the rehabilitation
ANSWER proceedings, MRM acquired an
Yes. Sec 78 of RA 337 or the indirect equity interest in PI Two. In
General Banking Act shall govern in the meantime, a disagreement
cases where the mortgagee is a between PI Two and SCB arose in
bank, and not the Rules of Court. the rehabilitation proceedings. PI
Applying the same pertaining to Two alleged that SCB concealed its
extrajudicial foreclosure, the possession of the collaterals, as well
redemption price must consist of as the status of its claim in the US
the following: (1) the principal bankruptcy case. Subsequently,
obligation or the amount due under SCB was ordered to surrender,
the mortgage deed; (2) interest at release and transfer portion of the
the rate specified in the Pledge collaterals being held by it
mortgage; (3) expenses of under the Pledge Agreement unto
foreclosure, i.e., Judicial PI Two, by motion from MRM. Such
Commission, Publication Fee, and order was reversed by the CA,
Sheriffs Fee; and (4) other which prompted MRM to seek
expenses as a result of the custody reinstatement of the order from the
of the property less the income SC. However, while the case was
received. Hence, the 17% annual pending SCB, LHBI, and LCPI, one
interest rate should apply. of LHBI’s affiliates, entered into a
Stipulation Agreement and Order

AUSL BOC OMNIBUS NOTES 2024

 COMMERCIAL LAW 2

which gave way to the allowance of the resort's store. Pedro receives
SCB 's Guarantee Claim in the allowance while Maricel receives
bankruptcy proceedings, and to the payment for managing the store
approval of an agreed payment and commission on the rentals
plan in favor of SCB. Consequently, collected from cottages and rest
SCB New York received partial house. In July 2008, Emmarck
informed them of the beach's lease,
payments from LBHI. In exchange
ending their employment. They
to this arrangement, SCB agreed to
filed a complaint for illegal
release the collaterals in favor of dismissal. Emmarck claimed Pedro
LCPI. MRM, however, insists on the and Maricel were industrial
surrender of the pledged collaterals partners, citing Pedro's partnership
to PI Two. in a fishpond business, an
arrangement that Emmarck
Q: Should the pledge inherited from his mother. He
collaterals be released to PI provided cottages and a store for
two instead of LCPI? their livelihood, stating they
received allowances and
ANSWER commissions. Emmarck asserted no
control over their work since he left
No. As held by the Court, a case or
the entire business operations to
issue is considered moot and
them. Labor Arbiter dismissed the
academic when it ceases to present complaint due to failure to prove
a justiciable controversy by virtue of that they were Emmarck’s
supervening events, so that an employees but NLRC applied the
adjudication of the case or a four-fold test and favored Emmarck
declaration on the issue would be of and Maricel.
no practical value or use. Courts
generally decline jurisdiction over Q: Are Pedro and Maricel
such case or dismiss it on the employees or industrial
ground of mootness. This is partners of Emmarck?
because the judgment will not serve
any useful purpose or have any Answer
Pedro and Maricel are employees of
practical legal effect because, in the
Emmarck.
nature of things, it cannot be
enforced. Here, the issue on the The existence of a partnership is
surrender of the collaterals was established when two or more
mooted when the sale or transfer of persons agree to contribute money,
the pledged collaterals to LCPI property, or industry to a common
pursuant to the Stipulation, fund and intend to divide the profits
Agreement and Order, was among themselves. On the other
approved, as there is no more hand, an employment relationship
collateral in SCB 's possession to is determined by factors such as the
surrender. (MRM Asset Holdings 2, selection and engagement of the
Inc. v. Standard Chartered Bank, employee, payment of wages,
GR No. 202761, February 10, 2021, power of dismissal, and employer's
control over the employee's
J. M. Lopez)
conduct. The crucial element is the
employer's control over the means
3. Pedro worked as Ralco Beach's and methods of accomplishing the
caretaker, while Maricel managed work, not just the end result.

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 COMMERCIAL LAW 3

Q:Did IM Electronics’ cause of

In this case, no evidence proves a action already prescribe?
partnership between Pedro,
Maricel, and Emmarck. Merely Answer
receiving profit shares does not Yes, IM Electronics’ cause of action
establish a partnership if received had prescribed because the
as wages. They were engaged for
complaint was filed beyond the 12-
specific roles, compensated
month prescriptive period.
through allowances and
commissions, and terminated by
Emmarck. Emmarck's control over Jurisprudence provides that,
their conduct further confirms their contracts of insurance must be
employee status. Lastly, Emmarck's construed according to the sense
control over their conduct was and meaning of the terms which the
evident in his delegation of full parties themselves have used. If
responsibility for the resort's the provisions are clear and
operations to Pedro and Maricel, unambiguous, they must be taken
granting them significant autonomy and understood in their plain,
in executing their duties. (DUSOL ordinary and popular sense.
VS. LAZO, G.R. 200555, JANUARY
20, 2021, J. M.V. LOPEZ)
IM received the notice of claim
4. X Insurance issued a policy in favor rejection on February 24, 2010, but
the complaint was filed only on April
of IM Electronics, insuring all
properties against all risks of 11, 2011, which is beyond the 12-
month prescriptive period.
physical loss, destruction, or
damage, including fire, for a period (INTEGRATED MICRO
2009-2010. In 2009, a fire broke
ELECTRONICS, INC. VS.
out at IM's building, causing
STANDARD INSURANCE CO., INC.,
damage to its production G.R. NO. 210302, AUGUST 27,
equipment and machinery. IM filed
2020, J. LOPEZ)
a claim for indemnity from X
Insurance but was rejected on
February 24, 2010, on the grounds
that the cause of the loss was an
excluded peril. IM filed for
reconsideration but was rejected on
April 12, 2010. Almost a year later,
on April 11, 2011, IM filed a
complaint for specific performance
and damages against X Insurance.
X Insurance filed a motion to
dismiss citing prescription, as the
cause of action also prescribed
because the complaint was filed
beyond the 12-month period from
the rejection of the claim as
stipulated in the contract.

AUSL BOC OMNIBUS NOTES 2024