Balmes a Survey of Recent Supreme Court Decisions in Commercial Law (1)

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A SURVEY OF RECENT SUPREME COURT DECISIONS IN COMMERCIAL LAW

CompiledBy:Prof.EricksonH.Balmes

METROBANKvs.BOARDOFTRUSTEESofRIVERSIDEMILLSCORPORATION,G.R.176959,Sept.8,2010CorporationLawFacts:In 1973,RMC established a Provident andRetirement Plan (Plan) for its regular employees.Paragraph13ofthePlan likewiseprovidedthat InnoeventshallanypartoftheassetsoftheFundrevertto[RMC]beforeallliabilitiesofthePlanhavebeensatisfied.RMCPRFenteredinto an investment agreementwith PhilBank (nowMetroBank).However, 9 years after RMclosed,andPhilBank(MetroBank)haddecidedtoapplytheremainingtrustassetsheldbyitinthenameofRMCPRFagainstpartoftheoutstandingobligationsofRMCcontrarytoPar.13ofthePlan.Respondents sought tonullify the reversionandapplicationof theproceedsof theFundtotheoutstandingobligationofRMCtopetitionerbank.In1998,theBoardofRMCissuedaresolutiondeclaringthefundstobelongtoRMCPRF.RTCandCAruledtonullifythereversionandapplicationoftheproceedsoftheFund.PhilBankcontendsthatthecessationofRMCsoperationsendednotonlytheBoardmembersemploymentinRMC,butalsotheirtenureasmembersoftheRMCPRFBoardofTrustees.Issue:WhetherornottheproceedsoftheRMCPRFmaybeappliedtosatisfyRMCsdebttoPhilbank(MetroBank).Held:NO.UnderSection122oftheCorporationCode,adissolvedcorporationshallneverthelesscontinueasabodycorporateforthree(3)yearsforthepurposeofprosecutinganddefendingsuitsbyoragainstitandenablingittosettleandcloseitsaffairs,todisposeandconveyitspropertyandtodistribute its assets, but not for the purpose of continuing the business for which it wasestablished. Within those three (3)years, thecorporationmayappointa trusteeor receiverwho shallcarryout the saidpurposesbeyond the three (3)yearwindingupperiod. Thus,a

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trusteeofadissolvedcorporationmaycommenceasuitwhichcanproceedtofinal judgmentevenbeyondthethree(3)yearperiodofliquidation.In the samemanner, during and beyond the three (3)yearwindingup period of RMC, theBoardofTrusteesofRMCPRFmaydonomorethansettleandclosetheaffairsoftheFund.TheBoardretainsitsauthoritytoactonbehalfofitsmembers,albeit,inalimitedcapacity.ItmaycommencesuitsonbehalfofitsmembersbutnotcontinuemanagingtheFundforpurposesofmaximizingprofits. Here, theBoards actof issuing theResolution authorizingpetitioner toreleasetheFundtoitsbeneficiariesisstillpartoftheliquidationprocess,thatis,satisfactionoftheliabilitiesofthePlan,anddoesnotamounttodoingbusiness.Hence,itwasproperlywithintheBoardspowertopromulgate.AIRFRANCEvs.GILLEGO,G.R.No.165266,December15,2010TransportationLawFacts:Respondent Bonifacio H. Gillego, then incumbent Congressman of the Second District ofSorsogon and Chairman of the House of Representatives Committee on Civil, Political andHuman Rights,was invited to participate as one of the keynote speakers at the 89th InterParliamentaryConferenceSymposiumonParliamentGuardianofHumanRights tobeheld inBudapest,HungaryandTokyo,JapanfromMay19to22,1993.OnMay16,1993, respondent leftManilaonboardpetitionerAirFrancesaircraftbound forParis,France.HearrivedinParisearlymorningofMay17,1993(5:00a.m.).WhilewaitingattheDeGaulleInternationalAirportforhisconnectingflighttoBudapestscheduledat3:15p.m.that sameday, respondent learned thatpetitionerhad another aircraftbound forBudapestwith an earlier departure time (10:00 a.m.) than his scheduled flight. He then went topetitionerscounterattheairportandmadearrangementsforthechangeinhisbooking.However, upon arriving in Budapest, respondent was unable to locate his luggage at theclaiming section. He sought assistance from petitioners counter at the airport wherepetitioners representative verified from their computer that he had indeed a checkedinluggage. He was advised to just wait for his luggage at his hotel and that petitionersrepresentativeswould take charge of delivering the same to him that same day. But saidluggage was never delivered by petitioners representatives despite followup inquiries byrespondent.UponhisreturntothePhilippines,respondentslawyerimmediatelywrotepetitionersStationManagercomplainingabout the lost luggageand the resultingdamageshe sufferedwhile inBudapest. Respondentclaimed thathissingle luggagecontainedhispersonaleffectssuchasclothes,toiletries,medicinesforhishypertension,andthespeecheshehadprepared,includingthenotesandreferencematerialsheneededfortheconference.



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OnJuly13,1993,respondentfiledacomplaintfordamagesagainstthepetitionerallegingthatby reason of its negligence and breach of obligation to transport and deliver his luggage,respondentsuffered inconvenience,seriousanxiety,physicalsufferingandsleeplessnights. Itwas furtheralleged thatdue to thephysical,mentalandemotional strain resulting from theloss of his luggage, aggravated by the fact that he failed to take his regular medication,respondenthadtobetakentoamedicalclinicinTokyo,Japanforemergencytreatment.Petitioner filed its answer admitting that respondent was issued tickets for the flightsmentioned,hissubsequentrequesttobetransferredtoanotherflightwhileattheParisairportand the lossofhischeckedin luggageuponarrivalatBudapest,which luggagehasnotbeenretrievedtodateandtherespondentsrepeatedfollowupsignored.However,astotherestofrespondentsallegations,petitionersaidithasnoknowledgeandinformationsufficienttoforma belief as to their truth. As special and affirmative defense, petitioner contended that itsliabilityfor lostcheckedinbaggage isgovernedbytheWarsawConventionfortheUnificationofCertainRulesRelatingto InternationalCarriagewhichprovidesthatpetitioners liabilityforlost or delayed registered baggage of respondent is limited to 250 francs per kilogram orUS$20.00,whichconstitutes liquidateddamagesandhencerespondent isnotentitled toanyfurtherdamage.The trial court found there was gross negligence on the part of petitioner which failed toretrieverespondentscheckedin luggageup to the timeof the filingof thecomplaintandasadmitted in itsanswer, ignoredrespondentsrepeatedfollowups. It likewisefoundpetitionerguiltyofwillfulmisconductas itpersistentlydisregardedtherightsofrespondentwhowasnoordinaryindividualbutahighgovernmentofficial.Astotheapplicabilityofthelimitedliabilityfor lost baggage under the Warsaw Convention, the trial court rejected the argument ofpetitionercitingthecaseofAlitaliav.IntermediateAppellateCourtPetitionerappealedtotheCA,whichaffirmedthetrialcourtsdecision.Issue:WHETHERORNOTTHERE ISNOLEGALANDFACTUALBASISTOTHEFINDINGSOFTHETRIALCOURTANDTHECOURTOFAPPEALSTHATPETITIONERSACTIONSWEREATTENDEDBYGROSSNEGLIGENCE, BAD FAITH AND WILLFUL MISCONDUCT AND THAT IT ACTED IN A WANTON,FRAUDULENT,RECKLESS,OPPRESSIVEORMALEVOLENTMANNER,TOJUSTIFYTHEAWARDOFMORALANDEXEMPLARYDAMAGES.Held:YES.Abusiness intended to serve the travellingpublicprimarily,a contractof carriage is imbuedwithpublic interest. The law governing common carriers consequently imposes anexactingstandard. Article 1735 of the Civil Code provides that in case of lost or damaged goods,



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commoncarriersarepresumedtohavebeenatfaultortohaveactednegligently,unlesstheyprovethattheyobservedextraordinarydiligenceasrequiredbyArticle1733.Thus,inanactionbasedonabreachofcontractofcarriage,theaggrievedpartydoesnothavetoprovethatthecommoncarrierwasatfaultorwasnegligent.Allthathehastoproveistheexistenceofthecontractandthefactofitsnonperformancebythecarrier.Thatrespondentscheckedinluggagewasnotfounduponarrivalathisdestinationandwasnotreturnedtohimuntilabouttwoyearslaterisnotdisputed.Theactionfiledbytherespondentis founded on such breach of the contract of carriage with petitioner who offered nosatisfactoryexplanationfortheunreasonabledelayinthedeliveryofrespondentsbaggage.Thepresumptionofnegligencewasnotovercomebythepetitionerandhence its liability forthedelaywassufficientlyestablished.Afteracarefulreview,wefindthatpetitionerisliableformoraldamages.Wehold that the trialandappellatecourtsdidnoterr in finding thatpetitioneracted inbadfaithinrepeatedlyignoringrespondentsfollowupcalls.TheallegedentriesinthePIRdeservescantconsideration,asthesehavenotbeenproperlyidentifiedorauthenticatedbytheairlinestation representative inBudapestwho initiatedand inputed the saidentries. Furthermore,thisCourtcannotaccepttheconvenientexcusegivenbypetitionerthatrespondentshouldbefaultedinallegedlynotgivinghishoteladdressandtelephonenumber.Itisdifficulttobelievethatrespondent,whohadjustlosthissingleluggagecontainingallhisnecessitiesforhisstayina foreign land and his reference materials for a speaking engagement, would not give aninformationsovitalsuchashishoteladdressandcontactnumbertotheairlinecounterwherehe had promptly and frantically filed his complaint. And even assuming arguendo that hisPhilippineaddressandcontactnumberweretheonlydetailsrespondenthadprovidedforthePIR,stilltherewasnoexplanationastowhypetitionernevercommunicatedwithrespondentsconcerning his lost baggage long after respondent had already returned to the Philippines.Whilethemissing luggagewaseventuallyrecovered, itwasreturnedtorespondentonlyafterthetrialofthiscase.While respondent failed to cite any act of discourtesy, discrimination or rudeness bypetitioners employees, this did notmake his loss andmoral suffering insignificant and lessdeserving of compensation. In repeatedly ignoring respondents inquiries, petitionersemployees exhibited an indifferent attitude without due regard for the inconvenience andanxietyheexperiencedafterrealizingthathis luggagewasmissing. Petitionerwasthusguiltyofbadfaith inbreachingitscontractofcarriagewiththerespondent,whichentitlesthelattertotheawardofmoraldamages.However,weagreewithpetitionerthatthesumofP1,000,000.00awardedbythetrialcourtisexcessiveandnotproportionate to the lossorsuffering inflictedon thepassengerunder thecircumstances. Whereas in this case the air carrier failed to act timely on the passengers



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predicament caused by its employees mistake and more than ordinary inadvertence orinattention, and thepassenger failed to show any actofarrogance,discourtesyor rudenesscommitted by the air carriers employees, the amounts of P200,000.00, P50,000.00 andP30,000.00asmoraldamages,exemplarydamagesandattorneysfeeswouldbesufficientandjustified.BANK OF THE PHILIPPINE ISLANDS vs. SHEMBERG BIOTECH CORPORATION and BENSONDAKAY,G.R.No.162291,August11,2010BankingLawsFacts:RespondentShembergBiotechCorporation(SBC),adomesticcorporationwhichmanufacturescarrageenan from seaweeds, filed a petition for the approval of its rehabilitation plan andappointment of a rehabilitation receiver before the RTC. The RTC issued a stay order, andpetitionerBankofthePhilippineIslands(BPI)fileditsoppositiontoSBCspetition.After initial hearings, the RTC issued the assailed October 12, 2001 Order which gave duecourse to SBCs petition; referred the rehabilitation plan to the Rehabilitation Receiver forevaluation; ordered the Rehabilitation Receiver to submit his recommendation; recalled theappointment of the first Rehabilitation Receiver; and appointed Atty. Pio Y. Go as newRehabilitationReceiver.TheRTCfoundthatSBCcompliedwiththeconditionsnecessarytogiveduecourse to itspetition for rehabilitation. TheRTCwasalsosatisfiedof themeritofSBCspetitionandnotedthatSBCsbusinessappearsviablesince ithasamarketfor itsproduct. Asufficientbreathingspell,accordingtotheRTC,mayhelpSBCsettleitsdebts.TheRTCfurthersaidthat itwillreflectonthe issueraisedbySBCscreditorsthattherehabilitationplan isnotfeasible,uponsubmissionbytheRehabilitationReceiverofhisrecommendation.Consequently,BPIfiledapetitionforcertiorari,prohibitionandmandamusbeforetheCA.In itsassaileddecision, theCAdismissed thepetition. TheCA ruled that theRTCsDecisiondatedApril22,2002inCivilCaseNo.CEB26481SRC,whichapprovedwithmodificationSBCsrehabilitationplan,renderedthepetitionmoot.TheCAalsoruledthattheissuesraisedagainstthe rehabilitationplan shouldbe raised inBPIs appeal from the saidRTCDecision. TheCAfoundthattheRTCdidnotcommitanerrororgraveabuseofdiscretioninissuingtheOctober12,2001andDecember26,2001Orders.BPIlamentsthattheCAfocuseditsdiscussionontheproceduralmatters,i.e.,ontheproprietyofthepetitionforcertiorari,ratherthanonthesubstantialandjurisdictionalissuesraised.BPIalsocontendsthattherehabilitationplandoesnotrequireinfusionofnewcapitalfromitsguarantorsandsuretiesandthatforcingcreditorstotransformtheirdebttoequityamountsto taking private property without just compensation and due process of law. BPI furthercontends that the RTC exercised its rehabilitation power whimsically, arbitrarily anddespotically by eliminating penalties and reducing interests amounting to millions. Such



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exerciseofpower,BPIcontends,alsoamountstotakingofpropertywithoutjustcompensationanddueprocessof lawthatcouldnotbe justifiedunderthepolicepower. BPIaddsthattheInterim Rules of Corporate Recovery is unconstitutional insofar as it alters ormodifies andexpands the existing law on rehabilitation contrary to the principle that rules of procedurecannotmodifyoraffectsubstantiverights.Issue:IstheInterimRulesofProcedureonCorporateRehabilitationunconstitutional?Held:TheInterimRulesofProcedureonCorporateRehabilitationisconstitutional.On the question of the constitutionality of the Interim Rules of Procedure on CorporateRehabilitation,BPI failed in itsburdenof clearly andunequivocallyproving its assertion. Itsfailuretosoprovedefeatsthechallenge.WeevennotethatBPIitselfopposesitsownstandbyinvoking Section 27,Rule 4 of the Interim Rules to support its prayer that the rehabilitationproceedingsbedeclaredterminated. BPIalso impliedly invokedthe InterimRulesbeforetheCA inseekingamodifiedrehabilitationplanconsideringthatSBCspetitionforapprovalof itsrehabilitationplanhadbeenfiledundertheInterimRules.Inaddition, the challengeon the constitutionalityof the InterimRules isanew andbelatedtheorythatweshouldnotevenentertain.ItwasnotraisedbeforetheCA.Wellsettledistherule that issues not previously ventilated cannot be raised for the first time on appeal.Relatedly, the constitutionalquestionwasnot raisedat theearliestopportunity. The rule isthatwhen issues of constitutionality are raised, the Court can exercise its power of judicialreview only if the following requisites are present: (1) the existence of an actual andappropriatecase;(2)apersonalandsubstantial interestofthepartyraisingtheconstitutionalquestion;(3)theexerciseofjudicialreviewispleadedattheearliestpossibleopportunity;and(4)theconstitutionalquestionisthelismotaofthecase.We cannot grant BPIs prayer that the petition for rehabilitation be ordered dismissed andterminated.Todismissthepetitionforrehabilitationwouldbetoreverseimproperlythefinalcourseofthatpetition:thepetitionwasgrantedbytheRTC;theRTCdecisionwasaffirmedwithfinality;andtherehabilitationplanisnowbeingimplemented.AndwhiletheInterimRulesandthenewRulesofProcedureonCorporateRehabilitationcontainprovisionsonterminationofthe corporate rehabilitationproceedings,neither theRTCnor theCA ruledon thispoint. Infact, BPI did not ask the CA to terminate the rehabilitation proceedings. Aside from beinganothernewissue,itsresolutioninvolvesfactualmatterssuchas:(1)whethertherewasfailuretoachievethedesiredtargetsorgoalsassetforthintherehabilitationplan;(2)whethertherewas failure of the debtor (SBC) to perform its obligations under the plan; (3) whether therehabilitation planmay no longer be implemented in accordancewith its terms, conditions,



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restrictions or assumptions; or (4) whether there was successful implementation of therehabilitationplan.Wearenotatlibertytoconsiderthesefactualmattersforthefirsttime.RCJBUSLINES,INCORPORATEDvs.STANDARDINSURANCECOMPANY,INCORPORATED,G.R.No.193629,August17,2011TransportationLawFacts:On01December2000,respondentStandardInsuranceCo.,Inc.(STANDARD)filedanamendedcomplaintagainstthepetitionersFlorBolaMangobaandRCJBusLines,Inc.(docketedasCivilCaseNo.153566CVbeforetheMetropolitanTrialCourtofManila,Branch29).Saidamendedcomplaintalleged,amongothers:On June19,1994along theNationalHighwayatBrgy.Amlang,Rosario,LaUnion,defendantFlorB.Mangobawhiledriving [sic]anRCJHINOBLUERIBBONPASSENGERBUSbearingPlateNo.NYG363 ina recklessand imprudentmanner,bumpedandhita1991MitsubishiLancerGLXbearingPlateNo.TAJ796.ThesubjectMitsubishiLancerwhich isownedbyRodeleneValentinowas insuredfor lossanddamage with plaintiff [Standard Insurance Co. Inc.] for P450,000.00, a photocopy of theinsurancepolicyisattachedheretoandmadeanintegralparthereofasAnnexB.DefendantRCJBusLines, Inc. is the registeredownerof thePassengerBusbearingPlateNo.NYG363whiledefendantFlorMangobawasthedriverofthesubjectPassengerBuswhentheaccidenttookplace.Asadirectandproximatecauseofthevehicularaccident,theMitsubishiLancerwasextensivelydamaged,thecostsofrepairsofwhichwerebornebytheplaintiff[StandardInsuranceCo.Inc.]atacostofP162,151.22.By virtue of the insurance contract, plaintiff [Standard Insurance Co. Inc.] paid RodeleneValentinotheamountofP162,151.22fortherepairoftheMitsubishiLancercar.Afterplaintiff [Standard InsuranceCo. Inc.]has compliedwith itsobligationunder thepolicymentioned above,plaintiffs assured executed inplaintiffs favor aReleaseofClaim therebysubrogatingthelattertoallhisrightsofrecoveryonallclaims,demandsandrightsofactiononaccount of loss, damage or injury as a consequence of the accident from any person liabletherefore.Despitedemands,defendantshave failedand refusedand stillcontinue to failand refuse toreimburse plaintiff the sum of P162,151.22. A photocopy of the demand letter is attachedheretoandmadeanintegralparthereofasAnnexC.



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Asaconsequence,plaintiff[StandardInsuranceCo.Inc.]hasbeencompelledtoresorttocourtactionandtherebyhiretheservicesofcounselaswellas incurexpensesof litigationforallofwhichitshouldbeindemnifiedbythedefendantintheamountofatleastP30,000.00.Inorderthatitmayserveasadeterrentforothersandbywayofexampleforthepublicgood,defendants should be adjudged to pay plaintiff [Standard Insurance Co. Inc.] exemplarydamagesintheamountofP20,000.00.Issue:WhethertheCourtofAppealserroneouslydisregardedthepointthatpetitionerRCJsdefenseof extraordinary diligence in the selection and supervision of its driver was made as analternativedefense?Held:Thepetitionhasnomerit.Weseenoreasontooverturnthefindingsofthe lowercourts.Weaffirmtherulingoftheappellatecourt.RCJsLiabilityRCJ argues that itsdefenseof extraordinarydiligence in the selection and supervisionof itsemployeesisamerealternativedefense.RCJsinitialclaimwasthatStandardscomplaintfailedtostateacauseofactionagainstRCJ.StandardmayholdRCJliablefortworeasons,bothofwhichrelyuponfactsuncontrovertedbyRCJ.One,RCJ is the registeredownerof thebusdrivenbyMangoba.Two,RCJ isMangobasemployer.Standards allegation in its amended complaint that RCJ is the registered owner of thepassengerbuswithplatenumberNYG363wassufficienttostateacauseofactionagainstRCJ.The registered owner of a vehicle should be primarily responsible to the public for injuriescausedwhilethevehicleisinuse.Themainaimofmotorvehicleregistrationistoidentifytheownersothatifanyaccidenthappens,orthatanydamageorinjuryiscausedbythevehicleonthepublichighways,responsibilitythereforcanbefixedonadefiniteindividual,theregisteredowner.Moreover,initseffortstoextricateitselffromliability,RCJprofferedthedefenseoftheexerciseof thediligenceofagood fatherofa family.TheMeTCcharacterizedRCJsdefenseagainstnegligenceinthismanner:To repel the idea of negligence, defendant [RCJ] bus companys operationsmanager at theLaoagCityTerminalwaspresentedon thewitnessstandon January5,2000 in regard to thecompanys seminars and dialogues with respect to its employees, and the absence of anyrecordofavehicularaccidentinvolvingthecodefendantdriver[Mangoba].Asthelastwitnessofdefendant [RCJ]buscompany,NoelOalog,busconductorwhowasallegedlyseatedtothe



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rightsideofthebusdriverduringtheincident,waspresentedonMarch22,2000.Heconfirmedondirectexaminationandcrossexaminationthatitwasdefendantsbus,thenrunningat6075[kph]andatadistanceof10meters,whichbumpedaMitsubishiLancerwithouta tail light.According to him, the incident occurred when the driver of the Toyota Corolla,which wasahead of the Lancer, stepped on the brakes due to the pile of gravel and sand in sight(Subsequenttotheprofferofexhibits,andindefaultofanyrebuttal,thepartiesweredirectedtofiletheMemorandawithinthirtydaysfromMarch23,2000.RCJ,bypresentingwitnessestotestifyonitsexerciseofdiligenceofagoodfatherofafamilyintheselectionandsupervisionofitsbusdrivers,admittedthatMangobaisitsemployee.Article2180oftheCivilCode,inrelationtoArticle2176,makestheemployervicariously liablefortheactsof itsemployees.Whentheemployee causesdamagedue tohisownnegligencewhileperforminghisownduties, therearisesthejuristantumpresumptionthattheemployerisnegligent,rebuttableonlybyproofofobservance of the diligence of a good father of a family. For failure to rebut such legalpresumption of negligence in the selection and supervision of employees, the employer islikewise responsible for damages, the basis of the liability being the relationship of paterfamiliasorontheemployersownnegligence.Mangoba,pertestimonyofhisconductor,wastenmeters away from theMitsubishi Lancer before the collision andwas driving 60 to 75kilometersperhourwhenthespeedlimitwas50kilometersperhour.ThepresumptionunderArticle2185oftheCivilCodewasthusprovenTrue:Mangoba,asdriverofthebuswhichcollidedwiththeMitsubishiLancer,wasnegligentsinceheviolateda traffic regulationat the timeof themishap.Weseeno reason todepart from thefindingsoftheMeTC,RTCandappellatecourtthatMangobawasnegligent.TISONvs.SpousesPOMASIN,G.R.No.173180,August24,2011TransportationLawFacts:Two vehicles, a tractortrailer and a jitney, figured in a vehicular mishap along MaharlikaHighway inBarangayAgos,Polangui,Albay last12August1994.LaarniPomasin (Laarni)wasdriving the jitney towards the direction of Legaspi City while the tractortrailer, driven byClaudioJabon(Jabon),wastraversingtheoppositelanegoingtowardsNagaCity.Gregorio Pomasin (Gregorio), Laarnis father, was on board the jitney and seated on thepassengers side. He testified that while the jitney was passing through a curve goingdownward,hesawatractortrailercomingfromtheoppositedirectionandencroachingonthejitneyslane.Thejitneywashitbythetractortraileranditwasdraggedfurthercausingdeathandinjuriestoitspassengers.Ontheotherhand,Jabonrecountedthatwhilehewasdrivingthetractortrailer,henoticedajitneyontheoppositelanefallingofftheshoulderoftheroad.Thereafter,itbeganrunninginazigzag manner and heading towards the direction of the truck. To avoid collision, Jabon



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immediately swerved the tractortrailer to the rightwhere it hit a tree and sacks of palay.Unfortunately,thejitneystillhittheleftfenderofthetractortrailerbeforeitwasthrownafewmetersaway.Thetractortrailerwaslikewisedamaged.MultipledeathandinjuriestothoseinthejitneyresultedOn14November1994,respondentsfiled a complaint for damages against petitioners before the Regional Trial Court (RTC) ofAntipolo. They alleged that the proximate cause of the accident was the negligence,imprudenceandcarelessnessofpetitioners. Respondentsprayed for indemnification for theheirsofthosewhoperishedintheaccidentatP50,000.00each;P500,000.00forhospitalization,medicalandburialexpenses;P350,000.00forcontinuoushospitalizationandmedicalexpensesof Spouses Pomasin; P1,000,000.00 asmoral damages; P250,000.00 as exemplary damages;P30,000.00 for lossof incomeofCynthia;P100,000.00 as attorneys feesplusP1,000.00percourtappearance;P50,000.00forlitigationexpenses;andcostofsuitOn7February2000,theRegional Trial Court rendered judgment in favor of petitioners dismissing the complaint fordamages. The trial court considered the testimony of Jabon regarding the incident moreconvincing and reliable than that of Gregorios, a mere passenger, whose observation andattention to the road isnotas focusedas thatof thedriver. The trial court concluded thatLaarnicausedthecollisionofthe jitneyandthetractortrailer. Thetrialcourt likewiseupheldtheAffidavitofDesistanceashavingbeenexecutedwiththetacitconsentofrespondents.TheCourtofAppealsdisagreedwiththetrialcourtandruledthattherecklessdrivingofJaboncausedthevehicularcollision.Insupportofsuchfinding,theCourtofAppealsreliedheavilyonGregorios testimony that Jabon was driving the tractortrailer downward too fast and itencroachedthelaneofthejitney.Basedonthegravityoftheimpactandthedamagecausedtothejitneyresultinginthedeathofsomepassengers,theCourtofAppealsinferredthatJabonmustbespeeding.TheappellatecourtnotedthattherestrictioninJabonsdriverslicensewasviolated,thus,givingrisetothepresumptionthathewasnegligentatthetimeoftheaccident.Tisonwas likewiseheld liablefordamagesforhisfailuretoproveduediligence insupervisingJabonafterhewashiredasdriverof the truck. Finally, theappellate courtdisregarded theAffidavit of Desistance executed by Cynthia because the latter had no written power ofattorney from respondents and that shewas so confused at the timewhen she signed theaffidavitthatshedidnotreaditscontent.Issue:Whoisthenegligentpartyorthepartyatfault?Held:Clearly,thenegligenceofGregoriosdaughter,Laarniwastheproximatecauseoftheaccident.Wedidnot losesightof the fact thatat the timeof the incident, Jabonwasprohibited fromdrivingthetruckduetotherestriction imposedonhisdrivers license, i.e.,restrictioncode2and3. Asamatterof fact, Jabonevenasked theLandTransportationOffice to reinstatehis



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articulatedlicensecontainingrestrictioncode8whichwouldallowhimtodriveatractortrailer.TheCourtofAppealsconcludedtherefromthatJabonwasviolatingatrafficregulationatthetimeofthecollision.Drivingwithoutaproper license isaviolationoftrafficregulation. UnderArticle2185oftheCivilCode,thelegalpresumptionofnegligencearisesifatthetimeofthemishap,apersonwasviolatinganytrafficregulation. However, inSanitarySteamLaundry, Inc.v.CourtofAppeals,weheldthatacausalconnectionmustexistbetweenthe injuryreceivedandtheviolationofthe traffic regulation. Itmustbeproven that the violationof the traffic regulationwas theproximateor legalcauseofthe injuryorthat itsubstantiallycontributedthereto. Negligence,consisting inwholeor inpart,of violationof law, likeanyothernegligence, iswithout legalconsequenceunlessitisacontributingcauseoftheinjury.LikewisecontrollingisourrulinginAonuevov.CourtofAppealswherewereiteratedthatnegligenceperse,arisingfromthemereviolationofatrafficstatute,neednotbesufficientinitselfinestablishingliabilityfordamages.In the instantcase,nocausalconnectionwasestablishedbetween the tractortrailerdriversrestrictionsonhislicensetothevehicularcollision.Furthermore,JabonwasabletosufficientlyexplainthattheLandTransportationOfficemerelyerred innot includingrestrictioncode8 inhislicense.PetitionerspresentedtheAffidavitofDesistanceexecutedbyCynthiatoexoneratethemfromany liability. An affidavit of desistance is usually frowned upon by courts. Little or nopersuasivevalue isoftenattached toadesistance. The subjectaffidavitdoesnotdeserveasecond look more so that it appears that Cynthia was not armed with a special power ofattorneytoenter intoasettlementwithpetitioners. Atanyrate,it isanexerciseoffutilitytodelveintotheeffectsoftheaffidavitofdesistanceexecutedbyoneoftherespondentssinceithasalreadybeenestablishedthatpetitionersarenotnegligent.NEWWORLDINTERNATIONALDEVELOPMENTINC.vs.NYKFILJAPANSHIPPINGCORP.,DMTCorporation, Advatech Industries, Inc., LEP International Philippines, Inc., LEP ProfitInternational, Inc., Marina Port Services, Inc. and Serbros Carrier Corporation, andSEABOARDEASTERNINSURANCECO.,INC.,G.R.No.171468,August24,2011TansportationLaw/InsuranceLawFacts:NewWorldInternationalDevelopment(Phils.),Inc.(NewWorld)boughtfromDMTCorporation(DMT)throughitsagent,AdvatechIndustries,Inc.(Advatech)threeemergencygenerator.DMTshippedthegeneratorsetsbytruckuntilitwasloadedonS/SCaliforniaLunaV59,ownedandoperatedbyNYKFilJapanShippingCorporation(NYK)fordeliverytopetitionerNewWorld inManila.NYKissuedabilloflading,declaringthatitreceivedthegoodsingoodcondition.NYKunloadedtheshipmentinHongKongandtransshippedittoS/SACXRubyV/72thatitalsoowned and operated. On its journey toManila, however, ACX Ruby encountered typhoonKadiangwhosecaptainfiledaseaprotestonarrivalattheManilaSouthHarboronOctober5,



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1993 respecting the loss and damage that the goods on board his vessel suffered. All 3generatorswerefoundtobedamagedandbeyondrepairandsoNewWorldfiledaclaimwithits insurer Seaboard. Seaboard required New World to submit to it an itemized list of thedamaged units, parts, and accessories,with corresponding values, for the processing of theclaim.NewWorlddidnotcomplybecausesuchrequirementwasntinthecontract.4daysafterthelapseoftheoneyearperiodtoclaimundertheCOGSA,NewWorldfiledacaseforspecificperformance.RTC:ComplaintlapsedunderCOGSA,Seaboardsdenialofclaimisvalidduetononcompliancewithrequirement,thusprejudicingSeaboardsrighttorecoverfromNYK.CA:AffirdmedRTConMR.Issue:WhetherornotNewWorldcanstillrecoverfromSeaboard?Held:YES.In the ordinary course, if Seaboard had processed that claim and paid the same, SeaboardwouldhavebeensubrogatedtopetitionerNewWorldsrighttorecoverfromNYK.Anditcouldhave then filed the suit as a subrogee. But, as discussed above, Seaboard made anunreasonabledemandonFebruary14,1994 foran itemized listof thedamagedunits,parts,andaccessories,withcorrespondingvalueswhenitappearedsettledthatNewWorldslosswastotalandwhentheinsurancepolicydidnotrequiretheproductionofsuchalistintheeventofaclaim.Besides,whenpetitionerNewWorlddeclinedtocomplywiththedemandforthelist,Seaboard againstwhom a formal claimwaspending shouldnothave remainedobstinate inrefusingtoprocessthatclaim.Itshouldhaveexaminedthesame,founditunsubstantiatedbydocuments if thatwere the case, and formally rejected it. Thatwould have at least givenpetitionerNewWorldaclearsignalthatitneededtopromptlyfileitssuitdirectlyagainstNYKandtheothers.Ultimately,thefaultforthedelayedcourtsuitcouldbebroughttoSeaboardsdoorstep.Section241 of the Insurance Code provides that no insurance company doing business in thePhilippines shall refuse without just cause to pay or settle claims arising under coveragesprovidedby itspolicies. And,underSection243,the insurerhas30daysafterproofof loss isreceived and ascertainment of the loss or damage within which to pay the claim. If suchascertainment isnothadwithin60days from receiptofevidenceof loss, the insurerhas90



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days to pay or settle the claim. And, in case the insurer refuses or fails to paywithin theprescribedtime,the insuredshallbeentitledto interestontheproceedsofthepolicyforthedurationofdelayattherateoftwicetheceilingprescribedbytheMonetaryBoard.Notably,SeaboardalreadyincurreddelaywhenitfailedtosettlepetitionerNewWorldsclaimasSection243required.UnderSection244,aprimafacieevidenceofunreasonabledelayinpaymentoftheclaimiscreatedbythefailureoftheinsurertopaytheclaimwithinthetimefixedinSection243.NORTH BULACAN CORPORATION v. PHILIPPINE BANK OF COMMUNICATIONS G.R. No.183140,August2,2010CorporationLawFacts:PetitionerNorthBulacanCorporation (NBC) isengaged inthebusinessofdeveloping lowandmediumcost housing projects. Respondent Philippine Bank of Communications (PBCom)offeredtofinancethewholeprojectofNBCand immediatelyprovide ita loanfacility.RelyingonPBComscommitment,NBCacceptedthebanksoffer.NBC executed a deed of assignment, assigning to PBCom its rights and interests over allpaymentsthatmaybedueitfromthePagIBIG.After a time,however,PBComdiscontinued its financial support toNBC reportedlybecauseBangkoSentralngPilipinas(BSP)hadissuedaceaseanddesistorderagainstthebank. When itbecameapparentthatPBComhadnointentionofcomplyingwithitscommitment,NBCsoughthelp fromCocolife and LandBankwhichexpressed their intention to finance theprojectbytakingoutNBC'sloanfromPBCom.Butthelatterrefusedtheoffer,insistingonthesupposedBSPceaseanddesistorder.NBCsconstructioneventuallystoppedforlackoffunds.NBC filed a petition for corporate rehabilitationwith theMandaluyong Regional Trial Court(RTC).Itfiledwiththecourtamanifestationandurgentmotionsa)toorderPBComtorelease12TransferCertificatesofTitleoffinishedhousingunits,b)toorderPagIBIGtoissueLettersofGuarantytoPBComrepresentingthetakeoutvalueofthefinishedunits,andc)toallowNBCtousetheproceedstomakeemergencyrepairsandrestorationworks.TheRTC issuedanordergivingduecoursetoNBCspetitionforrehabilitation.PBCom challenges the RTCs order alleging that NBC violated several rules on corporaterehabilitationandthat ithadnotmettherequirementsforthegrantofthepetition involved.Amongtherulesallegedtohavebeenviolatedisaruleonprohibitedpleadingsonmotionforextension in filing the required rehabilitation plan, which NBC did in this case. Petitionercountershowever,thatitdidnotviolatedtherulesonpetitionforrehabilitationbecausesuchrulesallowsextensionundercertaincircumstances.



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Issue:WhetherornottheRTCcorrectlygaveduecourseNBCsactionforcorporaterehabilitation?Held:NO, the Court held that the RTC erred in giving due course to petitioners action. The RTCutterlydisregarded theRulesonCorporateRehabilitation in theguiseof liberal constructionandgrantedthepetitionforrehabilitationbasedoninsufficientevidence.TheNBC inventorydidnotmention the conditionof its listedassets. Itmerelyenumeratedcertain real properties and their respective sizes and market values. The RTC should havedismissedthepetitionasithadnotapprovedanyrehabilitationplanwithintheperiodspecifiedbylaw.Further,underthecircumstances,NBCstotaldebtswouldballoontoP560,841,213.54,exclusiveof interests,penalties,andothercharges. Obviously, itscontinuedoperationwouldno longer be viable. The Court holds that the RTC should have ruled on the creditorsobjections insteadofmerely treating themaspremature. TheRTCofcourseclaims that therehabilitationplanwouldstillhavetobereferredtothereceiverforstudyandevaluation.Buttherewouldbenoneed togo that farwhen thepetitioning corporationdeclined to complywiththesimplerulesofrehabilitation,whenthedocumentationofitsassetswereinadequate,andwhenthecreditorsoppositionofferedinsurmountablebasisforshelvingtheentireeffort.

WhenIamatmyWeakest,MyLord,MyGod,MySaviour,ProtectorandRockIsatHisSTRONGEST!

AllRightsReservedBatangasCityandManilaJanuary14,2012



Documents

Balmes a Survey of Recent Supreme Court Decisions in Commercial Law (1)