Case Brief: Standard Oil vs. Jaramillo



JOAQUIN JARAMILLO, as register of deeds of the City of Manila, respondent.

G.R. No. L-20329 March 16, 1923

On November 27, 1922, Gervasia de la Rosa, Vda. de Vera, was the lessee of a parcel of land situated in the City of Manila and owner of the house of strong materials built thereon, upon which date she executed a document in the form of a chattel mortgage to convey to the Standard Oil. Co. by way of mortgage both the leasehold interest in said lot and the building to which it stands After said document had been duly acknowledged and delivered, it was then presented to Joaquin Jaramillo, Register of Deeds of the City of Manila, for the purpose of having the same recorded. Upon examination of the instrument, the Jaramillo was of the opinion that it was not chattel mortgage, for the reason that the interest therein mortgaged did not appear to be personal property, within the meaning of the Chattel Mortgage Law, and registration was refused on this ground only.

Whether or not the deed may be registered in the chattel mortgage registry?

Yes it may be registered. The duties of a register of deeds in respect to the registration of chattel mortgages are purely of a ministerial character, and he is clothed with no judicial or quasi-judicial power to determine the nature of the property, whether real or personal, which is the subject of the mortgage. Generally speaking, he should accept the qualification of the property adapted by the person who presents the instrument for registration and should place the instrument on record, upon payment of the proper fee, leaving the effects of registration to be determined by the court if such question should arise for legal determination.The efficacy of the act of recording a chattel mortgage consists in the fact that registration operates as constructive notice of the existence of the contract, and the legal effects of the instrument must be discovered in the document itself, in relation with the fact of notice. Registration adds nothing to the instrument, considered as a source of title, and affects nobody’s rights except as a species of constructive notice.


Case Brief: Prudential Bank vs. Panis

PRUDENTIAL BANK, petitioner,
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of First Instance of Zambales and Olongapo City; FERNANDO MAGCALE & TEODULA BALUYUT-MAGCALE, respondents.
G.R. No. L-50008 August 31, 1987

Spouses Magcale secured a loan from Prudential Bank. As security, respondent’s spouses executed a real estate mortgage, their residential building as security. Since the respondents was not able to fulfil their obligation, the security was extrajudiciaily foreclosed and was eventually sold in a public auction. Hence this case, to assail the validity of the mortgage and to recover the foreclosed land.
Whether or not a real estate mortgage can be instituted on the building of a land belonging to another
While it is true that a mortgage of land necessarily includes in the absence of  stipulation  of  the  improvements  thereon,  buildings,  still  a  building  in itself may be mortgaged by itself apart from the land on which it is built.  Such a mortgage would still be considered as a REM for the building would still be considered as immovable property even if dealt with separately and apart from the land.  The original mortgage on the building and right to occupancy of the land was  executed  before  the  issuance  of  the  sales  patent  and  before  the government  was  divested  of  title  to  the  land.    Under  the  foregoing,  it  is evident  that  the  mortgage  executed  by  private  respondent  on  his  own building was a valid mortgage.

Case Brief: Leung Yee vs. Frank Strong

LEUNG YEE, plaintiff-appellant,
G.R. No. L-11658 February 15, 1918

Leung Yee’s company bought cleaning equipment from the defendant machinery company. As payment, it executed a chattel mortgage in favour of the defendant on its building in which the machinery was installed. This mortgage made no reference as to the land from where the property was located. Since the plaintiff’s company, was not able to pay, the building together with the equipment attached to it was foreclosed and the respondent was able to possess the property. Hence, this action by the plaintiff to recover possession of the building.

Issue: Whether or not the building can be classified as a real property, so as to subject it to a real estate mortgage

The disputed building was considered by the court as Real property.
The mere fact that the parties seem to have dealt with it separately and apart from the land would change its character as real property. Hence, such mortgage would still be a real estate mortgage for the building that served as a security and the executed chattel mortgage and its consequences cannot be said to have any legal effect.

Notes: May a foreign corporation, which is not licensed to do business in the Philippines, sue or be sued before the Philippine courts?


Q: May a foreign corporation, which is not licensed to do business in the Philippines, sue or be sued before the Philippine courts?

Let’s discuss.

First and foremost, Sec. 123 of the Corporation Code defines what a foreign corporation is (although it is not quite accurate). Simply put, a foreign corporation is one formed, organized, and existing under any laws other than those of the Philippines. Jurisprudence has provided for several tests to determine as to whether or not the entity can be considered as “foreign corporation”.

If, however, they want to conduct business in the Philippines, they have to secure a license from the Securities and Exchange Commission (SEC). The subsequent provisions of the Corporation Code indicate how it is done. It bears noting that several statutory requirements must be complied with before they can conduct business in our country, such as the required number of shares belonging to foreigner/Filipinos, appointment of resident agents, and the likes. The salient laws include RA 7042 (Foreign Investments Act), RA 8762 (Retail Trade Liberalization Act), EO 184 (Tenth Foreign Negative Investment List), and BP 68 (Corporation Code). Even the 1987 Constitution and Omnibus Investments Code may come in handy.

After complying with the requirements, SEC will then issue a license to such corporation and it can start transacting business in the Philippines from there. It is worthy to mention that the license does not really serve to bar a foreign corporation from performing isolated or single acts. Its purpose is really to make it amenable to suits in the Philippine courts. Otherwise stated, the grant of license allows the foreign corporation to sue and be sued before the Philippine tribunals.

Now, what would happen if the foreign corporation transacts business in the Philippines without a license?

First, its officers may be penalized under Sec. 144 of the Corporation Code, which provides for imprisonment (30 days to 5 years) and payment of fine.

Moreover, it cannot sue before the Philippine courts, but it can be sued for any causes of action arising from any sources of obligation. In plain view, as far as the judicial flow is concerned, a corporation which stands as an aggrieved party gets the short end of the stick because in the grand scheme of things, it cannot claim. As amply stated by the Supreme Court in the case of Universal Shipping vs. IAC, “It is not the lack of required license but doing business without a license which bars a foreign corporation from access to our courts”.

Are there exceptions to the general rule that a foreign corporation, which has no license, can sue before the Philippine courts?

Yes. In some decisions, the Supreme Court allowed a foreign corporation without a license to sue and file a claim before our domestic courts. To enumerate:

– Cases of isolated transactions with other entities, even if it is done pursuant to the usual business of the corporation. The cases of Western Supply vs. Reyes and Facilities Management vs. Dela Rosa are on point. In line with this, the phrase “doing business” is defined in Sec. 3 of the Foreign Investment Act.
– To protect its trademark, tradename, corporate name, reputation, or goodwill; even in cases of unfair competition. The discussion in the case of Fredco Manufacturing vs. Harvard comes into play. Moreover, it bears noting that the Philippines, along with other States, is a signatory to the Paris Convention which allows such foreign corporations to file a claim here for the protection of their intellectual property rights, without the need of applying for a license.  This explains why in such case, Harvard was able to file a complaint for trademark infringement against Fredco in our domestic courts.
– It is merely defending a suit against it, such as cases of defamation and, as stated earlier, unfair competition. You may refer to the case of Time Inc. vs. Reyes.  The Revised Penal Code may also apply.
– In cases of estoppel, where a party transacted with such corporation knowing fully well of the latter’s lack of capability to conduct business, as mentioned in Rimbunan Hijau vs. Oriental Wood.


Disclaimer: The author merely published his notes from the classroom discussions and recitations. He does not guarantee the full accuracy of the data. If you see any wrong information, please tell and the author will be more than happy to correct it. After all, “false knowledge is more dangerous that outright ignorance”. 

Notes: Nell Doctrine (in relation to Corporation’s Power to Sell or Dispose its Assets)


The 2017 Commercial Law Bar Examination made mention of this:

Under the Nell Doctrine, so called because it was first pronounced by the Supreme Court in the 1965 ruling in Nell v. Pacific Farms, Inc. (15 SCRA 415), the general rule is that where one corporation sells or otherwise transfers all of its assets to another corporation, the latter is not liable for the debts and liabilities of the transferor.

State the exceptions to the Nell Doctrine. (4%)

The answer, as provided by the Supreme Court in such case, is:

Generally where one corporation sells or otherwise transfers all of its assets to another corporation, the latter is not liable for the debts and liabilities of the transferor, except: (1) where the purchaser expressly or impliedly agrees to assume such debts; (2) where the transaction amounts to a consolidation or merger of the corporations; (3) where the purchasing corporation is merely a continuation of the selling corporation; and (4) where the transaction is entered into fraudulently in order to escape liability for such debts.

Background of the case:

Nell Co. filed a civil case against Insular Farms, Inc. for a sum of money plus interest, attorney’s fees, and costs. A writ of execution was issued by the court, but was returned unsatisfied, stating that Insular Farms had no leviable property. Thereafter, Nell Co. filed another action against Pacific Farms, Inc. for the collection of the same amount, upon the theory that the latter is the alter ego of Insular Farms. Nell Co. supported its claim by alleging that Pacific Farms had purchased all or substantially all of the shares, as well as the real and personal properties, of Insular Farms.

The record shows that, on March 21, 1958, Pacific Farms purchased 1,000 shares of stock of Insular Farms for P285,126.99; that, thereupon, Pacific Farms sold said shares of stock to certain individuals, who forthwith reorganized said corporation; and that the board of directors thereof, as reorganized, then caused its assets, including its leasehold rights over a public land in Bolinao, Pangasinan, to be sold to Pacific Farms for P10,000.00.

The Supreme Court held that such facts do not prove that Pacific Farms is the alter ego of Insular Farms. There was neither proof nor allegation that Pacific Farms had expressly or impliedly agreed to assume the debt of Insular Farms, or that the Pacific Farms was a continuation of Insular Farms, or that the sale of either the shares of stock or the assets of Insular Farms to the Pacific Farms had been entered into fraudulently, in order to escape liability for the debt of the Insular Farms.

In fact, such sales took place months before the rendition of the judgment in the previous case, and a month before the filing of the present case.  Moreover, Pacific Farms purchased the shares as the highest bidder at an auction sale held at the instance of the bank, to which the shares were originally pledged as a security for an obligation of Insular Farms.

Neither was it claimed that these transactions have resulted in the consolidation or merger of the Insular Farms and Pacific Farms.  On the contrary, Nell Co’s theory to the effect that Pacific Farms was an alter ego of the Insular Farms negated such consolidation or merger, for a corporation cannot be its own alter ego.

The case is generally related to the power of a corporation to sell or dispose its assets, as provided in Sec. 40 of the Corporation Code.  In essence, it can be also related with the Doctrine of Piercing of Corporate Veil.

Notes: Torts in relation to Remedial Law


Jurisprudence is rich with cases tackling Quasi-Delicts (Art. 2176, Civil Code) in relation to the Rules of Court.  The salient topics that the author was able to jot down on his notes are as follows:

In Casupanan vs. Laroya, the defendant filed a criminal case for reckless imprudence resulting in damage to property, while the plaintiffs filed a civil action for damages based on Art. 2176 of the Civil Code.  The Supreme Court held that although the two actions arose from the same act or omission, they stem from different causes of action, which are culpa criminal and culpa aquiliana respectively.  Hence, there is no forum shopping because the law and the rules expressly allow the filing of a separate civil action which can proceed independently of the criminal action.   Sec. 1, par. 6, Rule 111 of the 2000 Rules on Criminal Procedure is on point:

SECTION 1. Institution of criminal and civil actions. (a) x x x.

No counterclaim, cross-claim or third-party complaint may be filed by the accused in the criminal case, but any cause of action which could have been the subject thereof may be litigated in a separate civil action. (Emphasis supplied)

The same case tackled the differences between the 1985 Rules and the 2000 Rules.  This is very important.  Even the author was a bit confused when he read the older cases, as the mechanics were very different back then.

In the 1985 Rules, Art. 19-32 (intentional torts), Art. 2176, and civil liability ex delicto were deemed instituted with the filing of criminal action.  The provisions of the law as to the waiver, reservation, and prior institution of civil action apply to those three.

In the 2000 Rules, only the civil liability ex delicto is deemed instituted and is affected by the provisions on waiver, reservation, and prior institution of civil action.  For all the other actions based on Art. 2176 and Art. 19-32, they are now independent civil actions which are not affected by the provisions on reservation and waiver.  Otherwise stated, there is no need to make a reservation for such civil action.

Do note that as per the current rules, a separate civil action must be filed before the prosecution presents its evidence.  Waiver of civil action may be filed anytime.  And in case of prior institution of civil action, the subsequent filing of criminal action will suspend the civil action.

Take note of Sec. 2, Rule 111, of the 2000 Rules on Criminal Procedure as well:

Section 2. When separate civil action is suspended. — After the criminal action has been commenced, the separate civil action arising therefrom cannot be instituted until final judgment has been entered in the criminal action.

If the criminal action is filed after the said civil action has already been instituted, the latter shall be suspended in whatever stage it may be found before judgment on the merits. The suspension shall last until final judgment is rendered in the criminal action. Nevertheless, before judgment on the merits is rendered in the civil action, the same may, upon motion of the offended party, be consolidated with the criminal action in the court trying the criminal action. In case of consolidation, the evidence already adduced in the civil action shall be deemed automatically reproduced in the criminal action without prejudice to the right of the prosecution to cross-examine the witnesses presented by the offended party in the criminal case and of the parties to present additional evidence. The consolidated criminal and civil actions shall be tried and decided jointly.

During the pendency of the criminal action, the running of the period of prescription of the civil action which cannot be instituted separately or whose proceeding has been suspended shall be tolled. (n)

The extinction of the penal action does not carry with it extinction of the civil action. However, the civil action based on delict shall be deemed extinguished if there is a finding in a final judgment in the criminal action that the act or omission from which the civil liability may arise did not exist.

Such consolidation of civil and criminal action applies only if the civil case is instituted prior to the criminal case.  Its main effect is that the evidence is automatically duplicated, although such filing must be done before the case is finished. This provision will not apply if you reserve the right to institute a separate civil action.

Finally, the conclusion of the Supreme Court in the same case is as follows:

Under Section 1 of the present Rule 111, the independent civil action in Articles 32, 33, 34 and 2176 of the Civil Code is not deemed instituted with the criminal action but may be filed separately by the offended party even without reservation. The commencement of the criminal action does not suspend the prosecution of the independent civil action under these articles of the Civil Code. The suspension in Section 2 of the present Rule 111 refers only to the civil action arising from the crime, if such civil action is reserved or filed before the commencement of the criminal action.

Thus, the offended party can file two separate suits for the same act or omission. The first a criminal case where the civil action to recover civil liability ex-delicto is deemed instituted, and the other a civil case for quasi-delict – without violating the rule on non-forum shopping. The two cases can proceed simultaneously and independently of each other. The commencement or prosecution of the criminal action will not suspend the civil action for quasi-delict. The only limitation is that the offended party cannot recover damages twice for the same act or omission of the defendant. In most cases, the offended party will have no reason to file a second civil action since he cannot recover damages twice for the same act or omission of the accused. In some instances, the accused may be insolvent, necessitating the filing of another case against his employer or guardians.

Similarly, the accused can file a civil action for quasi-delict for the same act or omission he is accused of in the criminal case. This is expressly allowed in paragraph 6, Section 1 of the present Rule 111 which states that the counterclaim of the accused may be litigated in a separate civil action. This is only fair for two reasons. First, the accused is prohibited from setting up any counterclaim in the civil aspect that is deemed instituted in the criminal case. The accused is therefore forced to litigate separately his counterclaim against the offended party. If the accused does not file a separate civil action for quasi-delict, the prescriptive period may set in since the period continues to run until the civil action for quasi-delict is filed.

Second, the accused, who is presumed innocent, has a right to invoke Article 2177 of the Civil Code, in the same way that the offended party can avail of this remedy which is independent of the criminal action. To disallow the accused from filing a separate civil action for quasi-delict, while refusing to recognize his counterclaim in the criminal case, is to deny him due process of law, access to the courts, and equal protection of the law.

Thus, the civil action based on quasi-delict filed separately by Casupanan and Capitulo is proper. The order of dismissal by the MCTC of Civil Case No. 2089 on the ground of forum-shopping is erroneous.

This, in effect, made the earlier SC decisions inapplicable anymore (e.g. People vs. Amistad, People vs. Navoa, People vs. Badeo, and People vs. Bayotas).  Bear that in mind, as these can confuse or mislead the reader.

Lastly, the author would like to include the following cases related to the subject matter at hand:

In Virata vs. Ochoa:

The aggrieved party may file criminal action or civil damages.  Although it is important to note that you can only recover once, whichever is higher.

Acquittal in a criminal case is not a bar for recovery of civil damages arising out of other sources.

There is no identity of causes of action between a crime and a quasi-delict.

In Occena vs. Icamina, the Supreme Court held that:

The judgment of conviction in a criminal case does not bar appealing the civil aspect of the case.

Two kinds of appeal may be had in conviction:  a) accused may appeal the criminal and civil aspect of the case; or, b) complainant may appeal only the civil aspect of the case if award of damages is refused or unsatisfactory.

Active participation in criminal action does not equate to waiver of right to appeal.

In Jarantilla vs. CA:

Failure of the trial court to make any pronouncement as to civil liability amounts to reservation.  Hence, party may still appeal for the civil aspect of the case.

In Park vs. Choi:

In criminal cases, you can file a demurrer to evidence after the prosecution rested its case.  If the court grants the same, the court may enter a partial judgement, dismissing the criminal case on one hand, and remanding the civil aspect to the lower courts on the other.

In Salazar vs. People, the court held the following:

The acquittal of the accused does not prevent a judgment against him on the civil aspect of the case where (a) the acquittal is based on reasonable doubt as only preponderance of evidence is required; (b) where the court declared that the liability of the accused is only civil; (c) where the civil liability of the accused does not arise from or is not based upon the crime of which the accused was acquitted. Moreover, the civil action based on the delict is extinguished if there is a finding in the final judgment in the criminal action that the act or omission from which the civil liability may arise did not exist or where the accused did not commit the acts or omission imputed to him.

If the accused is acquitted on reasonable doubt but the court renders judgment on the civil aspect of the criminal case, the prosecution cannot appeal from the judgment of acquittal as it would place the accused in double jeopardy. However, the aggrieved party, the offended party or the accused or both may appeal from the judgment on the civil aspect of the case within the period therefor.

After the prosecution has rested its case, the accused has the option either to (a) file a demurrer to evidence with or without leave of court under Section 23, Rule 119 of the Revised Rules of Criminal Procedure, or to (b) adduce his evidence unless he waives the same.


Disclaimer:  The author merely published his notes from the classroom discussions and recitations.  He does not guarantee the full accuracy of the data.  If you see any wrong information, please tell and the author will be more than happy to correct it.  After all, “false knowledge is more dangerous that outright ignorance”.

Case Brief: Inchausti & Co vs. Cromwell

INCHAUSTI & CO., Plaintiff-Appellant,
ELLIS CROMWELL, Collector of Internal Revenue, Defendant-Appellee.
G.R. No. 6584. October 16, 1911.


Inchausti & Co. is engaged in the business of buying and selling at wholesale hemp, both for its own account and on commission. The operation of of baling hemp is designated among merchants by the word ‘prensaje.’ Inchausti, in all its sales of hemp, quoted the price to the buyer at so much per picul, no mention being made of baling. The company in accordance with the custom mentioned in paragraph V hereof, collected and received, under the denomination of ‘prensaje,’ from purchasers of hemp sold by the said firm for its own account, in addition to the price expressly agreed upon for the said hemp, sums aggregating P380,124.35 and collected for the account of the owners of hemp sold by the plaintiff firm in Manila on commission, and under the said denomination of ‘prensaje,’ in addition to the price expressly agreed upon for said hemp, sums aggregating P31,080. Inchausti has always paid to Ellis Cromwell, in the office of the Collector of Internal Revenue the tax collectible upon the selling price expressly agreed upon for all hemp sold but has not, until compelled to do so, paid the said tax upon sums received from the purchaser of such hemp under the denomination of ‘prensaje.’ Ellis Cromwell, in his capacity as Collector of Internal Revenue, made demand in writing upon the plaintiff firm for the payment within the period of five (5) days of the sum of P1,370.68, the amount collected from purchasers of hemp under the denomination of ‘prensaje.’ Inchausti paid for such demand under protest but Cromwell still refuses to return such amount.

The contention of the defendant was that the said charge made under the denomination of “prensaje” is in truth and in fact a part of the gross value of the hemp sold and of its actual selling price, and that therefore the tax imposed by section 139 of Act No. 1189 lawfully accrued on said sums, that the collection thereof was lawfully and properly made and that therefore the plaintiff is not entitled to recover back said sum or any part thereof; and that the defendant should have judgment against plaintiff for his costs.

1. Whether the price for the contract of sale should include the charge made under the denomination of “prensaje”
2. Whether there exists a contract of sale.


The Supreme Court stated that there can be no question that, if the value of the hemp were not augmented to the amount of P1.75 per bale by said operation, the purchaser would not pay that sum. If one buys a bale of hemp at a stipulated price of P20, well knowing that there is an agreement on his part, express or implied, to pay an additional amount of P1.75 for that bale, he considers the bale of hemp worth P21.75. It is agreed, as we have before stated, that hemp is sold in bales. Therefore, baling is performed before the sale. The purchaser of hemp owes to the seller nothing whatever by reason of their contract except the value of the hemp delivered. That value, that sum which the purchaser pays to the vendee, is the true selling price of the hemp, and every item which enters into such price is a part of such selling price. By force of the custom prevailing among hemp dealers in the Philippine Islands, a purchaser of hemp in the market, unless he expressly stipulates that it shall be delivered to him in loose form, obligates himself to purchase and pay for baled hemp. Whether or not such agreement is express or implied, whether it is actual or tacit, it has the same force. After such an agreement has once been made by the purchaser, he has no right to insist thereafter that the seller shall furnish him with unbaled hemp. It is undoubted that the vendees, in the sales referred to in the case at bar, would have had no right, after having made their contracts, to insist on the delivery of loose hemp with the purpose in view themselves to perform the baling and thus save 75 centavos per bale. It is unquestioned that the seller, the plaintiff, would have stood upon his original contract of sale, that is, the obligation to deliver baled hemp, and would have forced his vendees to accept baled hemp, he himself retaining among his own profits those which accrued from the process of baling. The Court stated that the distinction between a contract of sale and one for work, labor, and materials, is tested by the inquiry whether the thing transferred is one not in existence and which would never have existed but for the order of the party desiring to acquire it, or a thing which would have existed and been the subject of sale to some other person, even if the order had not been given. Further, when a person stipulates for the future sale of articles which he is habitually making, and which at the time are not made or finished, it is essentially a contract of sale and not a contract for labor. It is otherwise where the article would not have been made but for the agreement; and where the article ordered by the purchase is exactly such as the vendor makes and keeps on hand for sale to anyone, and no change or modification of it is made at the vendee’s request, it is a contract of sale even though it be entirely made after and in consequence of the vendee’s order for it. Furthermore, the Court defined “price.” The word “price” signifies the sum stipulated as the equivalent of the thing sold and also every incident taken into consideration f or the fixing of the price put to the debit of the vendee and agreed to by him.