CASES PENNED BY JUSTICE LUCAS BERSAMIN 2009-2017

CASE TITLE PHILIPPINE BANK OF COMMUNICATIONS vs. BASIC POLYPRINTERS

AND PACKAGING CORPORATION
CITATION G.R. No. 187581
PROMULGATION
October 20, 2014
DATE
DIGEST BY YATCO, NATHANIEL
TOPIC COVERED COMMERCIAL LAW; FRIA

DOCTRINE: The purpose of rehabilitation proceedings is to enable the company to gain

new lease on life and thereby allows creditors to be paid their claims from its earnings.
Rehabilitation contemplates a continuance of corporate life and activities in an effort
to restore and reinstate the financially distressed corporation to its former position of
successful operation and solvency. This is in consonance with the States objective to
promote a wider and more meaningful equitable distribution of wealth to protect
investments and the public.

FACTS:
Basic Polyprinters, along with the eight other corporations belonging to the Limtong
Group of Companies filed a joint petition for suspension of payments with approval of
the proposed rehabilitation in the RTC. The RTC issued a stay order, and eventually
approved the rehabilitation plan, but the CA reversed the RTC and directed the
petitioning corporations to file their individual petitions for suspension of payments and
rehabilitation in the appropriate courts.

Accordingly, Basic Polyprinters brought its individual petition, averring therein that: (a) its
business since incorporation had been very viable and financially profitable; (b) it had
obtained loans from various banks, and had owed accounts payable to various
creditors; (c) the Asian currency crisis, devaluation of the Philippine peso, and the
current state of affairs of the Philippine economy; (d) its operations would be hampered
and would render rehabilitation difficult should its creditors enforce their claims through
legal actions, including foreclosure proceedings; (e) included in its overall Rehabilitation
Program was the full payment of its outstanding loans in favor of petitioner PBCOM,
RCBC, Land Bank, EPCI Bank and AUB. After the initial hearing and evaluation of the
comments and opposition of the creditors, including PBCOM, the RTC gave due course
to the petition and referred it to the rehabilitation receiver for evaluation and
recommendation. Subsequently, the RTC issued an order approving the rehabilitation
plan. PBCOM appealed to the CA in due course. CA affirmed the RTC decision. And
now this petition. The petitioner contends that the sole issue in corporate rehabilitation is
one of liquidity; hence, the petitioning corporation should have sufficient assets to
cover all its indebtedness because it only foresees the impossibility of paying the
indebtedness falling due. It claims that rehabilitation became inappropriate because
Basic Polyprinters was insolvent due to its assets being inadequate to cover the
outstanding obligations. Also, it argues that Basic Polyprinters did not present any
material financial commitment in the rehabilitation plan, thereby violating Section 5,
Rule 4 of the Interim Rules, the rule applicable at the time of the filing of the petition for
rehabilitation.

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ISSUE:
1. Whether or not liquidity is an issue in a petition for rehabilitation
2. Whether or not material financial commitment is required in a rehabilitation plan

RULING:
1. NO. Liquidity is not an issue in a petition for rehabilitation.
Under the Interim Rules, rehabilitation is the process of restoring the debtor to a
position of successful operation and solvency, if it is shown that its continuance of
operation is economically feasible and its creditors can recover by way of the
present value of payments projected in the plan more if the corporation
continues as a going concern that if it is immediately liquidated. It
contemplates a continuance of corporate life and activities in an effort to
restore and reinstate the corporation to its former position of successful operation
and solvency.

Two-pronged purpose of rehabilitation proceedings

a. Equitable purpose: To efficiently and equitably distribute the assets of the
insolvent debtor to its creditors; and
b. Rehabilitative purpose: To provide the debtor with a fresh start

On the one hand, they attempt to provide for the efficient and equitable
distribution of an insolvent debtors remaining assets to its creditors; and on the
other, to provide debtors with a fresh start by relieving them of the weight of
their outstanding debts and permitting them to reorganize their affairs. The
purpose of rehabilitation proceedings is to enable the company to gain a new
lease on life and thereby allow creditors to be paid their claims from its earnings.
Consequently, the basic issues in rehabilitation proceedings concern the viability
and desirability of continuing the business operations of the petitioning
corporation. The determination of such issues was to be carried out by the court-
appointed rehabilitation receiver. Moreover, Republic Act No. 10142 (FRIA of
2010), a law that is applicable hereto, has defined a corporate debtor as a
corporation duly organized and existing under Philippine laws that has become
insolvent. The term insolvent is defined in said law as the financial condition of
a debtor that is generally unable to pay its or his liabilities as they fall due in the
ordinary course of business or has liabilities that are greater than its or his assets.
As such, the contention that rehabilitation becomes inappropriate because of
the perceived insolvency of Basic Polyprinters was incorrect.

2. Yes. Material financial commitment is significant in a rehabilitation plan.

A material financial commitment becomes significant in gauging the resolve,
determination, earnestness and good faith of the distressed corporation in
financing the proposed rehabilitation plan. This commitment may include the
voluntary undertakings of the stockholders or the would-be investors of
the debtor-corporation indicating their readiness, willingness and ability to
contribute funds or property to guarantee the continued successful operation of
the debtor corporation during the period of rehabilitation.

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However, the Court held that Basic Polyprinters commitment was insufficient for
the following reasons:

The commitment to add P10,000,000.00 working capital appeared to be

doubtful considering that the insurance claim from which said working capital
would be sourced had already been written-off by Basic Polyprinterss affiliate,
Wonder Book Corporation.

The conversion of all deposits for future subscriptions to common stock and the
treatment of all payables to officers and stockholders as trade payables was
hardly constituting material financial commitments. Such conversion of cash
advances to trade payables was, in fact, a mere re-classification of the liability
entry and had no effect on the shareholders deficit.

Basic Polyprinterss rehabilitation plan likewise failed to offer any proposal on

how it intended to address the low demands for their products and the effect of
direct competition from stores like SM, Gaisano, Robinsons, and other malls.

Basic Polyprinterss proposal to enter into the dacion en pagoto create a source
of fresh capital was not feasible because the object thereof would not be its
own property but one belonging to its affiliate, TOL Realty and Development
Corporation, a corporation also undergoing rehabilitation.

Hence, the Court held that the rehabilitation plan for Basic Polyprinters is
unilateral and detrimental to its creditors and the public.

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 CASES PENNED BY JUSTICE LUCAS BERSAMIN 2009-2017

CASE TITLE TERELAY INVESTMENT AND DEVELOPMENT CORPORATION vs. CECILIA

TERESITA J. YULO
CITATION G.R. No. 160924
PROMULGATION
August 5, 2015
DATE
DIGEST BY Espino, Carla Divina
TOPIC COVERED Section 74 and 75 of the Corporation Code

DOCTRINE: The Corporation Code has granted to all stockholders the right to inspect
the corporate books and records, and in so doing has not required any specific
amount of interest for the exercise of the right to inspect.

FACTS:
Respondent Cecilia Yulo, asserting her right as a stockholder, wrote a letter
addressed to petitioner Terelay Investment and Development Corporation (TERELAY)
requesting that she be allowed to examine its books and records on September 17,
1999 at 1:30 o'clock in the afternoon at the latter's office on the 25th floor, Citibank
Tower, Makati City. In its reply-letter, TERELAY denied the request for inspection and
instead demanded that she show proof that she was a bona fide stockholder. Cecilia
Yulo again sent another letter clarifying that her request for examination of the
corporate records was for the purpose of inquiring into the financial condition of
TERELAY and the conduct of its affairs by the principal officers. The following day,
Cecilia Yulo received a faxed letter from TERELAY's counsel advising her not to continue
with the inspection in order to avoid trouble. Cecilia Yulo thus filed with the Securities
and Exchange Commission, a Petition for Issuance of a Writ of Mandamus with prayer
for Damages against TERELAY. In her petition, she prayed that judgment be rendered
ordering TERELAY to allow her to inspect its corporate records, books of account and
other financial records; to pay her actual damages representing attorney's fees and
litigation expenses. Following the enactment of Republic Act No. 8799 (The Securities
Regulation Code), the case was transferred from the Securities and Exchange
Commission to the RTC. The RTC, which the CA affirmed, rendered its judgment
granting the application of Yulo for inspection of corporate records pursuant to Rule 7
of the Interim Rules in relation to Section 74 and 75 of the Corporation Code.

ISSUE:
Whether or not Cecilia Yulo is a stockholder and therefore, has the right to inspect the
corporate books and records

RULING:
Yes. Cecilia Yulo has the right to be fully informed of TERELAY's corporate
condition and the manner its affairs are being managed.

TERELAY points out that Yulos name as incorporator, stockholder and director in
the Articles of Incorporation and Amendments were unsigned; that she did not pay for
the five shares appearing in the Amended Articles of Incorporation and General
Information Sheet of TERELAY; that she did not subscribe to the shares; that she has

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neither been in possession of nor seen the certificate of stock covering the five shares of
stock; that the donation of the five shares claimed by her was null and void for failure to
comply with the requisites of a donation under Art. 748 of the Civil Code; and that there
was no acceptance of the donation by her as donee. TERELAY further contends that
Cecilia Yulo's purpose in inspecting the books was to inquire into its financial condition
and the conduct of its affairs by the principal officers which are not sufficient and valid
reasons. Therefore, the presumption of good faith cannot be accorded her.

It is well-settled that the ownership of shares of stock gives stockholders the right
under the law to be protected from possible mismanagement by its officers. This right is
predicated upon self-preservation. The records disclose that the corporate documents
submitted, which include the Articles of Incorporation and the Amended Articles of
Incorporation, as well as the General Information Sheets and the Quarterly Reports all
bear the signatures of the proper parties and their authorized custodians. The signature
of respondent under the name Cecilia J. Yulo appears in the Articles of Incorporation of
TERELAY. Likewise, her signatures under the name Cecilia Y. Blancaflor appear in the
Amended Articles of Incorporation where she signed as Director and Corporate
Secretary of TERELAY. The General Information Sheets from December 31, 1977 up to
February 20, 2002 all exhibited that she was recognized as director and corporate
secretary, and that she had subscribed to five (5) shares of stock. The quarterly reports
do not show otherwise.

Verily, respondent has presented enough evidence that she is a stockholder of

TERELAY. The corporate documents presented support her claim that she is a registered
stockholder in TERELAY's stock and transfer book thus giving her the right, under Section
74 par. 2 and Section 75 of the Philippine Corporation Law, to inspect TERELAY's books,
records, and financial statements. Further, a careful review of the records would show
that in the Preliminary Conference Order, dated May 16, 2000, of the SEC Hearing
Officer, both parties represented by their respective counsels, agreed on the fact that
respondent was "registered as a stockholder in petitioner's stock and transfer book
subject to the qualifications in the Answer." The records failed to disclose any objection
by TERELAY. In any case, TERELAY did not adduce sufficient proof that Cecilia Yulo was
in bad faith or had an ulterior motive in demanding her right under the law.

The petitioner's submission that the respondent's "insignificant holding" of only

.001% of the petitioner's stockholding did not justify the granting of her application for
inspection of the corporate books and records is also unwarranted. The Corporation
Code has granted to all stockholders the right to inspect the corporate books and
records, and in so doing has not required any specific amount of interest for the
exercise of the right to inspect. Ubi lex non distinguit nee nos distinguere debemos.
When the law has made no distinction, we ought not to recognize any distinction.

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 CASES PENNED BY JUSTICE LUCAS BERSAMIN 2009-2017

CASE TITLE MICROSOFT CORPORATION vs ROLANDO D. MANANSALA and/or

MEL MANANSALA, doing business as DATAMAN TRADING COMPANY
and/or COMIC ALLEY
CITATION GR No. 166391
PROMULGATION
October 21, 2015
DATE
DIGEST BY Dizon, Jenine Andrea
TOPIC COVERED Intellectual Property

DOCTRINE: The gravamen of copyright infringement is not merely the authorized

manufacturing of intellectual works but rather the unauthorized performance of any of
the acts covered by Sec. 5. Accordingly, the commission of any of the acts mentioned
in Sec. 5 of PD 49 without copyright owners consent constituted actionable copyright
infringement.

FACTS:
Petitioner Microsoft Corporation is the copyright and trademark owner of all rights
relating to all versions and editions of Microsoft software (computer programs).

Private respondent Rolando Manansala is doing business under the name of Dataman
Trading Company and/or Comic Alley. Manansala, without authority from petitioner,
was engaged in distributing and selling Microsoft computer software programs.

Sacriz, a private investigator, accompanied by an agent from the NBI was able to
purchase 6 CD-ROMs containing various computer programs belonging to petitioner.
As a result of the test-purchase, the agent from the NBI applied for a search warrant to
search the premises of the private respondent, which was later issued and served and
yielded several illegal copies of Microsoft programs.

Petitioner filed an Affidavit-Complaint in the DOJ based on the result of the search and
seizure operation.

However, in a resolution, private respondent State Prosecutor dismissed the charge

against private respondent Manansala for violation of Sec. 29, PD 49, stating that there
is no proof that respondent was the one who really printed or copied the products of
complainant for sale in his store.

Petitioner insists that printing or copying was not essential in the commission of the crime
of copyright infringement under Sec. 29 of PD 49.

ISSUE:
Whether or not the mere selling of pirated computer software constituted copyright
infringement.

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RULING:
YES.

Sec. 5 of PD 49 specifically defined copyright as an exclusive right in the following

manner:
A. To print, reprint, publish, copy, distribute, multiply, sell and make photographs,
photo-engravings and pictorial illustrations of the works;
B. To make any translation or other version or extracts or arrangements or
adaptations thereof; to dramatize it if it be a non-dramatic work; to convert it
into a non-dramatic work if it be a drama; to complete or execute if it be a
model or design;
C. To exhibit, perform, represent, produce, or reproduce, the work in any manner or
by any method whatever for profit or otherwise; it not reproduced in copies for
sale, to sell any manuscript or any record whatsoever thereof;
D. To make any other use or disposition of the work consistent with the laws of the
land.

The gravamen of copyright infringement is not merely the authorized manufacturing of

intellectual works but rather the unauthorized performance of any of the acts covered
by Sec. 5. Accordingly, the commission of any of the acts mentioned in Sec. 5 of PD 49
without copyright owners consent constituted actionable copyright infringement.

In this case, the mere sale of the illicit copies of the software programs was enough by
itself to show the existence of probable cause for copyright infringement. There was no
need for the petitioner to still prove who copied, replicated or reproduced the software
programs.

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