ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

A SURVEY OF RECENT SUPREME COURT

DECISIONS IN COMMERCIAL LAW

CompiledBy:Prof.EricksonH.Balmes

METROBANKvs.BOARDOFTRUSTEESofRIVERSIDEMILLSCORPORATION,G.R.176959,Sept.
8,2010CorporationLaw

Facts:

In 1973, RMC established a Provident and Retirement Plan (Plan) for its regular employees.
Paragraph13ofthePlanlikewiseprovidedthatInnoeventshallanypartoftheassetsof
theFundrevertto[RMC]beforeallliabilitiesofthePlanhavebeensatisfied.RMCPRFentered
into an investment agreement with PhilBank (now MetroBank). However, 9 years after RM
closed,andPhilBank(MetroBank)haddecidedtoapplytheremainingtrustassetsheldbyitin
thenameofRMCPRFagainstpartoftheoutstandingobligationsofRMCcontrarytoPar.13of
the Plan. Respondents sought to nullify the reversion and application of the proceeds of the
FundtotheoutstandingobligationofRMCtopetitionerbank.

In1998,theBoardofRMCissuedaresolutiondeclaringthefundstobelongtoRMCPRF.

RTCandCAruledtonullifythereversionandapplicationoftheproceedsoftheFund.

PhilBankcontendsthatthecessationofRMCsoperationsendednotonlytheBoardmembers
employmentinRMC,butalsotheirtenureasmembersoftheRMCPRFBoardofTrustees.

Issue:

WhetherornottheproceedsoftheRMCPRFmaybeappliedtosatisfyRMCsdebttoPhilbank
(MetroBank).

Held:

NO.

UnderSection122oftheCorporationCode,adissolvedcorporationshallneverthelesscontinue
asabodycorporateforthree(3)yearsforthepurposeofprosecutinganddefendingsuitsbyor
againstitandenablingittosettleandcloseitsaffairs,todisposeandconveyitspropertyandto
distribute its assets, but not for the purpose of continuing the business for which it was
established. Within those three (3) years, the corporation may appoint a trustee or receiver
who shall carry out the said purposes beyond the three (3)year windingup period. Thus, a

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

trusteeofadissolvedcorporationmaycommenceasuitwhichcanproceedtofinaljudgment
evenbeyondthethree(3)yearperiodofliquidation.

In the same manner, during and beyond the three (3)year windingup period of RMC, the
BoardofTrusteesofRMCPRFmaydonomorethansettleandclosetheaffairsoftheFund.The
Boardretainsitsauthoritytoactonbehalfofitsmembers,albeit,inalimitedcapacity.Itmay
commencesuitsonbehalfofitsmembersbutnotcontinuemanagingtheFundforpurposesof
maximizing profits. Here, the Boards act of issuing the Resolution authorizing petitioner to
releasetheFundtoitsbeneficiariesisstillpartoftheliquidationprocess,thatis,satisfactionof
theliabilitiesofthePlan,anddoesnotamounttodoingbusiness.Hence,itwasproperlywithin
theBoardspowertopromulgate.

AIRFRANCEvs.GILLEGO,G.R.No.165266,December15,2010TransportationLaw

Facts:

Respondent Bonifacio H. Gillego, then incumbent Congressman of the Second District of

Sorsogon and Chairman of the House of Representatives Committee on Civil, Political and
Human Rights, was invited to participate as one of the keynote speakers at the 89th Inter
Parliamentary ConferenceSymposium on Parliament Guardian of Human Rights to be held in
Budapest,HungaryandTokyo,JapanfromMay19to22,1993.

On May 16, 1993, respondent left Manila on board petitioner Air Frances aircraft bound for
Paris,France.HearrivedinParisearlymorningofMay17,1993(5:00a.m.).Whilewaitingat
theDeGaulleInternationalAirportforhisconnectingflighttoBudapestscheduledat3:15p.m.
that same day, respondent learned that petitioner had another aircraft bound for Budapest
with an earlier departure time (10:00 a.m.) than his scheduled flight. He then went to
petitionerscounterattheairportandmadearrangementsforthechangeinhisbooking.

However, upon arriving in Budapest, respondent was unable to locate his luggage at the
claiming section. He sought assistance from petitioners counter at the airport where
petitioners representative verified from their computer that he had indeed a checkedin
luggage. He was advised to just wait for his luggage at his hotel and that petitioners
representatives would take charge of delivering the same to him that same day. But said
luggage was never delivered by petitioners representatives despite followup inquiries by
respondent.

UponhisreturntothePhilippines,respondentslawyerimmediatelywrotepetitionersStation
Manager complaining about the lost luggage and the resulting damages he suffered while in
Budapest. Respondent claimed that his single luggage contained his personal effects such as
clothes,toiletries,medicinesforhishypertension,andthespeecheshehadprepared,including
thenotesandreferencematerialsheneededfortheconference.

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

OnJuly13,1993,respondentfiledacomplaintfordamagesagainstthepetitionerallegingthat
by reason of its negligence and breach of obligation to transport and deliver his luggage,
respondent suffered inconvenience, serious anxiety, physical suffering and sleepless nights. It
was further alleged that due to the physical, mental and emotional strain resulting from the
loss 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 flights
mentioned,hissubsequentrequesttobetransferredtoanotherflightwhileattheParisairport
and the loss of his checkedin luggage upon arrival at Budapest, which luggage has not been
retrievedtodateandtherespondentsrepeatedfollowupsignored.However,astotherestof
respondentsallegations,petitionersaidithasnoknowledgeandinformationsufficienttoform
a belief as to their truth. As special and affirmative defense, petitioner contended that its
liabilityforlostcheckedinbaggageisgovernedbytheWarsawConventionfortheUnification
ofCertainRulesRelatingtoInternationalCarriagewhichprovidesthatpetitionersliabilityfor
lost or delayed registered baggage of respondent is limited to 250 francs per kilogram or
US$20.00, which constitutes liquidated damages and hence respondent is not entitled to any
furtherdamage.

The trial court found there was gross negligence on the part of petitioner which failed to
retrieve respondents checkedinluggage up to the time of the filing of the complaint and as
admittedinitsanswer,ignoredrespondentsrepeatedfollowups.Itlikewisefoundpetitioner
guiltyofwillfulmisconductasitpersistentlydisregardedtherightsofrespondentwhowasno
ordinaryindividualbutahighgovernmentofficial.Astotheapplicabilityofthelimitedliability
for lost baggage under the Warsaw Convention, the trial court rejected the argument of
petitionercitingthecaseofAlitaliav.IntermediateAppellateCourt

PetitionerappealedtotheCA,whichaffirmedthetrialcourtsdecision.

Issue:

WHETHER OR NOT THERE IS NO LEGAL AND FACTUAL BASIS TO THE FINDINGS OF THE TRIAL
COURTANDTHECOURTOFAPPEALSTHATPETITIONERSACTIONSWEREATTENDEDBYGROSS
NEGLIGENCE, BAD FAITH AND WILLFUL MISCONDUCT AND THAT IT ACTED IN A WANTON,
FRAUDULENT,RECKLESS,OPPRESSIVEORMALEVOLENTMANNER,TOJUSTIFYTHEAWARDOF
MORALANDEXEMPLARYDAMAGES.

Held:

YES.

A business intended to serve the travelling public primarily, a contract of carriage is imbued
with public interest. The law governing common carriers consequently imposes an exacting
standard. Article 1735 of the Civil Code provides that in case of lost or damaged goods,
3

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

commoncarriersarepresumedtohavebeenatfaultortohaveactednegligently,unlessthey
provethattheyobservedextraordinarydiligenceasrequiredbyArticle1733.Thus,inanaction
basedonabreachofcontractofcarriage,theaggrievedpartydoesnothavetoprovethatthe
commoncarrierwasatfaultorwasnegligent.

Allthathehastoproveistheexistenceofthecontractandthefactofitsnonperformanceby
thecarrier.

Thatrespondentscheckedinluggagewasnotfounduponarrivalathisdestinationandwasnot
returnedtohimuntilabouttwoyearslaterisnotdisputed.Theactionfiledbytherespondent
is founded on such breach of the contract of carriage with petitioner who offered no
satisfactoryexplanationfortheunreasonabledelayinthedeliveryofrespondentsbaggage.
Thepresumptionofnegligencewasnotovercomebythepetitionerandhenceitsliabilityfor
thedelaywassufficientlyestablished.

Afteracarefulreview,wefindthatpetitionerisliableformoraldamages.

We hold that the trialand appellate courts did not err in finding that petitioneractedin bad
faithinrepeatedlyignoringrespondentsfollowupcalls.TheallegedentriesinthePIRdeserve
scantconsideration,asthesehavenotbeenproperlyidentifiedorauthenticatedbytheairline
station representative in Budapest who initiated and inputed the said entries. Furthermore,
thisCourtcannotaccepttheconvenientexcusegivenbypetitionerthatrespondentshouldbe
faultedinallegedlynotgivinghishoteladdressandtelephonenumber.Itisdifficulttobelieve
thatrespondent,whohadjustlosthissingleluggagecontainingallhisnecessitiesforhisstayin
a foreign land and his reference materials for a speaking engagement, would not give an
informationsovitalsuchashishoteladdressandcontactnumbertotheairlinecounterwhere
he had promptly and frantically filed his complaint. And even assuming arguendo that his
Philippineaddressandcontactnumberweretheonlydetailsrespondenthadprovidedforthe
PIR,stilltherewasnoexplanationastowhypetitionernevercommunicatedwithrespondents
concerning his lost baggage long after respondent had already returned to the Philippines.
Whilethemissingluggagewaseventuallyrecovered,itwasreturnedtorespondentonlyafter
thetrialofthiscase.

While respondent failed to cite any act of discourtesy, discrimination or rudeness by

petitioners employees, this did not make his loss and moral suffering insignificant and less
deserving of compensation. In repeatedly ignoring respondents inquiries, petitioners
employees exhibited an indifferent attitude without due regard for the inconvenience and
anxietyheexperiencedafterrealizingthathisluggagewasmissing.Petitionerwasthusguilty
ofbadfaithinbreachingitscontractofcarriagewiththerespondent,whichentitlesthelatter
totheawardofmoraldamages.

However,weagreewithpetitionerthatthesumofP1,000,000.00awardedbythetrialcourtis
excessive and not proportionate to the loss or suffering inflicted on the passenger under the
circumstances. Whereas in this case the air carrier failed to act timely on the passengers
4

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

predicament caused by its employees mistake and more than ordinary inadvertence or
inattention, and the passenger failed to show any act of arrogance, discourtesy or rudeness
committed by the air carriers employees, the amounts of P200,000.00, P50,000.00 and
P30,000.00asmoraldamages,exemplarydamagesandattorneysfeeswouldbesufficientand
justified.

BANK OF THE PHILIPPINE ISLANDS vs. SHEMBERG BIOTECH CORPORATION and BENSON
DAKAY,G.R.No.162291,August11,2010BankingLaws

Facts:

RespondentShembergBiotechCorporation(SBC),adomesticcorporationwhichmanufactures
carrageenan from seaweeds, filed a petition for the approval of its rehabilitation plan and
appointment of a rehabilitation receiver before the RTC. The RTC issued a stay order, and
petitionerBankofthePhilippineIslands(BPI)fileditsoppositiontoSBCspetition.

After initial hearings, the RTC issued the assailed October 12, 2001 Order which gave due
course to SBCs petition; referred the rehabilitation plan to the Rehabilitation Receiver for
evaluation; ordered the Rehabilitation Receiver to submit his recommendation; recalled the
appointment of the first Rehabilitation Receiver; and appointed Atty. Pio Y. Go as new
RehabilitationReceiver.TheRTCfoundthatSBCcompliedwiththeconditionsnecessarytogive
due course to its petition for rehabilitation. The RTC was also satisfied of the merit of SBCs
petitionandnotedthatSBCsbusinessappearsviablesinceithasamarketforitsproduct.A
sufficientbreathingspell,accordingtotheRTC,mayhelpSBCsettleitsdebts.TheRTCfurther
saidthatitwillreflectontheissueraisedbySBCscreditorsthattherehabilitationplanisnot
feasible,uponsubmissionbytheRehabilitationReceiverofhisrecommendation.

Consequently,BPIfiledapetitionforcertiorari,prohibitionandmandamusbeforetheCA.

In its assailed decision, the CA dismissed the petition. The CA ruled that the RTCs Decision
datedApril22,2002inCivilCaseNo.CEB26481SRC,whichapprovedwithmodificationSBCs
rehabilitationplan,renderedthepetitionmoot.TheCAalsoruledthattheissuesraisedagainst
the rehabilitation plan should be raised in BPIs appeal from the said RTC Decision. The CA
foundthattheRTCdidnotcommitanerrororgraveabuseofdiscretioninissuingtheOctober
12,2001andDecember26,2001Orders.

BPIlamentsthattheCAfocuseditsdiscussionontheproceduralmatters,i.e.,onthepropriety
ofthepetitionforcertiorari,ratherthanonthesubstantialandjurisdictionalissuesraised.

BPIalsocontendsthattherehabilitationplandoesnotrequireinfusionofnewcapitalfromits
guarantorsandsuretiesandthatforcingcreditorstotransformtheirdebttoequityamounts
to taking private property without just compensation and due process of law. BPI further
contends that the RTC exercised its rehabilitation power whimsically, arbitrarily and
despotically by eliminating penalties and reducing interests amounting to millions. Such
5

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

exerciseofpower,BPIcontends,alsoamountstotakingofpropertywithoutjustcompensation
anddueprocessoflawthatcouldnotbejustifiedunderthepolicepower.BPIaddsthatthe
Interim Rules of Corporate Recovery is unconstitutional insofar as it alters or modifies and
expands the existing law on rehabilitation contrary to the principle that rules of procedure
cannotmodifyoraffectsubstantiverights.

Issue:

IstheInterimRulesofProcedureonCorporateRehabilitationunconstitutional?

Held:

TheInterimRulesofProcedureonCorporateRehabilitationisconstitutional.

On the question of the constitutionality of the Interim Rules of Procedure on Corporate

Rehabilitation, BPI failed in its burden of clearly and unequivocally proving its assertion. Its
failuretosoprovedefeatsthechallenge.WeevennotethatBPIitselfopposesitsownstandby
invoking Section 27,Rule 4 of the Interim Rules to support its prayer that the rehabilitation
proceedingsbedeclaredterminated.BPIalsoimpliedlyinvokedtheInterimRulesbeforethe
CAinseekingamodifiedrehabilitationplanconsideringthatSBCspetitionforapprovalofits
rehabilitationplanhadbeenfiledundertheInterimRules.

In addition, the challenge on the constitutionality of the Interim Rules is a new and belated
theorythatweshouldnotevenentertain.ItwasnotraisedbeforetheCA.Wellsettledisthe
rule that issues not previously ventilated cannot be raised for the first time on appeal.
Relatedly, the constitutional question was not raised at the earliest opportunity. The rule is
that when issues of constitutionality are raised, the Court can exercise its power of judicial
review only if the following requisites are present: (1) the existence of an actual and
appropriatecase;(2)apersonalandsubstantialinterestofthepartyraisingtheconstitutional
question;(3)theexerciseofjudicialreviewispleadedattheearliestpossibleopportunity;and
(4)theconstitutionalquestionisthelismotaofthecase.

We cannot grant BPIs prayer that the petition for rehabilitation be ordered dismissed and
terminated.Todismissthepetitionforrehabilitationwouldbetoreverseimproperlythefinal
courseofthatpetition:thepetitionwasgrantedbytheRTC;theRTCdecisionwasaffirmedwith
finality;andtherehabilitationplanisnowbeingimplemented.AndwhiletheInterimRulesand
thenewRulesofProcedureonCorporateRehabilitationcontainprovisionsonterminationof
the corporate rehabilitation proceedings, neither the RTC nor the CA ruled on this point. In
fact, BPI did not ask the CA to terminate the rehabilitation proceedings. Aside from being
anothernewissue,itsresolutioninvolvesfactualmatterssuchas:(1)whethertherewasfailure
toachievethedesiredtargetsorgoalsassetforthintherehabilitationplan;(2)whetherthere
was failure of the debtor (SBC) to perform its obligations under the plan; (3) whether the
rehabilitation plan may no longer be implemented in accordance with its terms, conditions,
6

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

restrictions or assumptions; or (4) whether there was successful implementation of the

rehabilitationplan.Wearenotatlibertytoconsiderthesefactualmattersforthefirsttime.

RCJBUSLINES,INCORPORATEDvs.STANDARDINSURANCECOMPANY,INCORPORATED,G.R.
No.193629,August17,2011TransportationLaw

Facts:

On01December2000,respondentStandardInsuranceCo.,Inc.(STANDARD)filedanamended
complaintagainstthepetitionersFlorBolaMangobaandRCJBusLines,Inc.(docketedasCivil
CaseNo.153566CVbeforetheMetropolitanTrialCourtofManila,Branch29).Saidamended
complaintalleged,amongothers:

On June 19, 1994 along the National Highway at Brgy. Amlang, Rosario, La Union, defendant
Flor B. Mangoba while driving [sic] an RCJ HINO BLUE RIBBON PASSENGER BUS bearing Plate
No. NYG363 in a reckless and imprudent manner, bumped and hit a 1991 Mitsubishi Lancer
GLXbearingPlateNo.TAJ796.

ThesubjectMitsubishiLancerwhichisownedbyRodeleneValentinowasinsuredforlossand
damage with plaintiff [Standard Insurance Co. Inc.] for P450,000.00, a photocopy of the
insurancepolicyisattachedheretoandmadeanintegralparthereofasAnnexB.

Defendant RCJ Bus Lines, Inc. is the registered owner of the Passenger Bus bearing Plate No.
NYG363whiledefendantFlorMangobawasthedriverofthesubjectPassengerBuswhenthe
accidenttookplace.

Asadirectandproximatecauseofthevehicularaccident,theMitsubishiLancerwasextensively
damaged,thecostsofrepairsofwhichwerebornebytheplaintiff[StandardInsuranceCo.Inc.]
atacostofP162,151.22.

By virtue of the insurance contract, plaintiff [Standard Insurance Co. Inc.] paid Rodelene
ValentinotheamountofP162,151.22fortherepairoftheMitsubishiLancercar.

After plaintiff [Standard Insurance Co. Inc.] has complied with its obligation under the policy
mentioned above, plaintiffs assured executed in plaintiffs favor a Release of Claim thereby
subrogatingthelattertoallhisrightsofrecoveryonallclaims,demandsandrightsofactionon
account of loss, damage or injury as a consequence of the accident from any person liable
therefore.

Despite demands, defendants have failed and refused and still continue to fail and refuse to
reimburse plaintiff the sum of P162,151.22. A photocopy of the demand letter is attached
heretoandmadeanintegralparthereofasAnnexC.

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Asaconsequence,plaintiff[StandardInsuranceCo.Inc.]hasbeencompelledtoresorttocourt
actionandtherebyhiretheservicesofcounselaswellasincurexpensesoflitigationforallof
whichitshouldbeindemnifiedbythedefendantintheamountofatleastP30,000.00.

Inorderthatitmayserveasadeterrentforothersandbywayofexampleforthepublicgood,
defendants should be adjudged to pay plaintiff [Standard Insurance Co. Inc.] exemplary
damagesintheamountofP20,000.00.

Issue:

WhethertheCourtofAppealserroneouslydisregardedthepointthatpetitionerRCJsdefense
of extraordinary diligence in the selection and supervision of its driver was made as an
alternativedefense?

Held:

Thepetitionhasnomerit.Weseenoreasontooverturnthefindingsofthelowercourts.We
affirmtherulingoftheappellatecourt.

RCJsLiability

RCJ argues that its defense of extraordinary diligence in the selection and supervision of its
employeesisamerealternativedefense.RCJsinitialclaimwasthatStandardscomplaintfailed
tostateacauseofactionagainstRCJ.

StandardmayholdRCJliablefortworeasons,bothofwhichrelyuponfactsuncontrovertedby
RCJ. One, RCJ is the registered owner of the bus driven by Mangoba. Two, RCJ is Mangobas
employer.

Standards allegation in its amended complaint that RCJ is the registered owner of the
passengerbuswithplatenumberNYG363wassufficienttostateacauseofactionagainstRCJ.
The registered owner of a vehicle should be primarily responsible to the public for injuries
causedwhilethevehicleisinuse.Themainaimofmotorvehicleregistrationistoidentifythe
ownersothatifanyaccidenthappens,orthatanydamageorinjuryiscausedbythevehicleon
thepublichighways,responsibilitythereforcanbefixedonadefiniteindividual,theregistered
owner.Moreover,initseffortstoextricateitselffromliability,RCJprofferedthedefenseofthe
exercise of the diligence of a good father of a family. The MeTC characterized RCJs defense
againstnegligenceinthismanner:

To repel the idea of negligence, defendant [RCJ] bus companys operations manager at the
Laoag City Terminal was presented on the witness stand on January 5, 2000 in regard to the
companys seminars and dialogues with respect to its employees, and the absence of any
recordofavehicularaccidentinvolvingthecodefendantdriver[Mangoba].Asthelastwitness
ofdefendant[RCJ]buscompany,NoelOalog,busconductorwhowasallegedlyseatedtothe
8

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

rightsideofthebusdriverduringtheincident,waspresentedonMarch22,2000.Heconfirmed
ondirectexaminationandcrossexaminationthatitwasdefendantsbus,thenrunningat6075
[kph] and at a distance of 10 meters, which bumped a Mitsubishi Lancer without a tail light.
According to him, the incident occurred when the driver of the Toyota Corolla, which was
ahead of the Lancer, stepped on the brakes due to the pile of gravel and sand in sight
(Subsequenttotheprofferofexhibits,andindefaultofanyrebuttal,thepartiesweredirected
tofiletheMemorandawithinthirtydaysfromMarch23,2000.RCJ,bypresentingwitnessesto
testifyonitsexerciseofdiligenceofagoodfatherofafamilyintheselectionandsupervisionof
itsbusdrivers,admittedthatMangobaisitsemployee.Article2180oftheCivilCode,inrelation
toArticle2176,makestheemployervicariouslyliablefortheactsofitsemployees.Whenthe
employee causes damage due to his own negligence while performing his own duties, there
arisesthejuristantumpresumptionthattheemployerisnegligent,rebuttableonlybyproofof
observance of the diligence of a good father of a family. For failure to rebut such legal
presumption of negligence in the selection and supervision of employees, the employer is
likewise responsible for damages, the basis of the liability being the relationship of pater
familiasorontheemployersownnegligence.Mangoba,pertestimonyofhisconductor,was
ten meters away from the Mitsubishi Lancer before the collision and was driving 60 to 75
kilometersperhourwhenthespeedlimitwas50kilometersperhour.Thepresumptionunder
Article2185oftheCivilCodewasthusproven

True:

Mangoba,asdriverofthebuswhichcollidedwiththeMitsubishiLancer,wasnegligentsincehe
violated a traffic regulation at the time of the mishap. We see no reason to depart from the
findingsoftheMeTC,RTCandappellatecourtthatMangobawasnegligent.

TISONvs.SpousesPOMASIN,G.R.No.173180,August24,2011TransportationLaw

Facts:

Two vehicles, a tractortrailer and a jitney, figured in a vehicular mishap along Maharlika
Highway in Barangay Agos, Polangui, Albay last 12 August 1994. Laarni Pomasin (Laarni) was
driving the jitney towards the direction of Legaspi City while the tractortrailer, driven by
ClaudioJabon(Jabon),wastraversingtheoppositelanegoingtowardsNagaCity.

Gregorio Pomasin (Gregorio), Laarnis father, was on board the jitney and seated on the
passengers side. He testified that while the jitney was passing through a curve going
downward,hesawatractortrailercomingfromtheoppositedirectionandencroachingonthe
jitneyslane.Thejitneywashitbythetractortraileranditwasdraggedfurthercausingdeath
andinjuriestoitspassengers.

Ontheotherhand,Jabonrecountedthatwhilehewasdrivingthetractortrailer,henoticeda
jitneyontheoppositelanefallingofftheshoulderoftheroad.Thereafter,itbeganrunningina
zigzag manner and heading towards the direction of the truck. To avoid collision, Jabon
9

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

immediately swerved the tractortrailer to the right where it hit a tree and sacks of palay.
Unfortunately,thejitneystillhittheleftfenderofthetractortrailerbeforeitwasthrownafew
metersaway.Thetractortrailerwaslikewisedamaged.

MultipledeathandinjuriestothoseinthejitneyresultedOn14November1994,respondents
filed a complaint for damages against petitioners before the Regional Trial Court (RTC) of
Antipolo. They alleged that the proximate cause of the accident was the negligence,
imprudence and carelessness of petitioners. Respondents prayed for indemnification for the
heirsofthosewhoperishedintheaccidentatP50,000.00each;P500,000.00forhospitalization,
medicalandburialexpenses;P350,000.00forcontinuoushospitalizationandmedicalexpenses
of Spouses Pomasin; P1,000,000.00 as moral damages; P250,000.00 as exemplary damages;
P30,000.00 for loss of income of Cynthia; P100,000.00 as attorneys fees plus P1,000.00 per
courtappearance;P50,000.00forlitigationexpenses;andcostofsuitOn7February2000,the
Regional Trial Court rendered judgment in favor of petitioners dismissing the complaint for
damages. The trial court considered the testimony of Jabon regarding the incident more
convincing and reliable than that of Gregorios, a mere passenger, whose observation and
attention to the road is not as focused as that of the driver. The trial court concluded that
Laarnicausedthecollisionofthejitneyandthetractortrailer.Thetrialcourtlikewiseupheld
theAffidavitofDesistanceashavingbeenexecutedwiththetacitconsentofrespondents.

TheCourtofAppealsdisagreedwiththetrialcourtandruledthattherecklessdrivingofJabon
causedthevehicularcollision.Insupportofsuchfinding,theCourtofAppealsreliedheavilyon
Gregorios testimony that Jabon was driving the tractortrailer downward too fast and it
encroachedthelaneofthejitney.Basedonthegravityoftheimpactandthedamagecaused
tothejitneyresultinginthedeathofsomepassengers,theCourtofAppealsinferredthatJabon
mustbespeeding.TheappellatecourtnotedthattherestrictioninJabonsdriverslicensewas
violated,thus,givingrisetothepresumptionthathewasnegligentatthetimeoftheaccident.
Tisonwaslikewiseheldliablefordamagesforhisfailuretoproveduediligenceinsupervising
Jabon after he was hired as driver of the truck. Finally, the appellate court disregarded the
Affidavit of Desistance executed by Cynthia because the latter had no written power of
attorney from respondents and that she was so confused at the time when she signed the
affidavitthatshedidnotreaditscontent.

Issue:

Whoisthenegligentpartyorthepartyatfault?

Held:

Clearly,thenegligenceofGregoriosdaughter,Laarniwastheproximatecauseoftheaccident.

We did not lose sight of the fact that at the time of the incident, Jabon was prohibited from
drivingthetruckduetotherestrictionimposedonhisdriverslicense,i.e.,restrictioncode 2
and 3. As a matter of fact, Jabon even asked the Land Transportation Office to reinstate his
10

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

articulatedlicensecontainingrestrictioncode8whichwouldallowhimtodriveatractortrailer.
TheCourtofAppealsconcludedtherefromthatJabonwasviolatingatrafficregulationatthe
timeofthecollision.

Drivingwithoutaproperlicenseisaviolationoftrafficregulation.UnderArticle2185ofthe
CivilCode,thelegalpresumptionofnegligencearisesifatthetimeofthemishap,apersonwas
violatinganytrafficregulation.However,inSanitarySteamLaundry,Inc.v.CourtofAppeals,
weheldthatacausalconnectionmustexistbetweentheinjuryreceivedandtheviolationof
the traffic regulation. It must be proven that the violation of the traffic regulation was the
proximateorlegalcauseoftheinjuryorthatitsubstantiallycontributedthereto.Negligence,
consisting in whole or in part, of violation of law, like any other negligence, is without legal
consequenceunlessitisacontributingcauseoftheinjury.Likewisecontrollingisourrulingin
Aonuevov.CourtofAppealswherewereiteratedthatnegligenceperse,arisingfromthemere
violationofatrafficstatute,neednotbesufficientinitselfinestablishingliabilityfordamages.
In the instant case, no causal connection was established between the tractortrailer drivers
restrictionsonhislicensetothevehicularcollision.Furthermore,Jabonwasabletosufficiently
explainthattheLandTransportationOfficemerelyerredinnotincludingrestrictioncode8in
hislicense.

PetitionerspresentedtheAffidavitofDesistanceexecutedbyCynthiatoexoneratethemfrom
any liability. An affidavit of desistance is usually frowned upon by courts. Little or no
persuasive value is often attached to a desistance. The subject affidavit does not deserve a
second look more so that it appears that Cynthia was not armed with a special power of
attorneytoenterintoasettlementwithpetitioners.Atanyrate,itisanexerciseoffutilityto
delveintotheeffectsoftheaffidavitofdesistanceexecutedbyoneoftherespondentssinceit
hasalreadybeenestablishedthatpetitionersarenotnegligent.

NEWWORLDINTERNATIONALDEVELOPMENTINC.vs.NYKFILJAPANSHIPPINGCORP.,DMT
Corporation, Advatech Industries, Inc., LEP International Philippines, Inc., LEP Profit
International, Inc., Marina Port Services, Inc. and Serbros Carrier Corporation, and
SEABOARDEASTERNINSURANCECO.,INC.,G.R.No.171468,August24,2011Tansportation
Law/InsuranceLaw

Facts:

NewWorldInternationalDevelopment(Phils.),Inc.(NewWorld)boughtfromDMTCorporation
(DMT)throughitsagent,AdvatechIndustries,Inc.(Advatech)threeemergencygenerator.DMT
shippedthegeneratorsetsbytruckuntilitwasloadedonS/SCaliforniaLunaV59,ownedand
operatedbyNYKFilJapanShippingCorporation(NYK)fordeliverytopetitionerNewWorldin
Manila.NYKissuedabilloflading,declaringthatitreceivedthegoodsingoodcondition.

NYKunloadedtheshipmentinHongKongandtransshippedittoS/SACXRubyV/72thatitalso
owned and operated. On its journey to Manila, however, ACX Ruby encountered typhoon
KadiangwhosecaptainfiledaseaprotestonarrivalattheManilaSouthHarboronOctober5,
11

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

1993 respecting the loss and damage that the goods on board his vessel suffered. All 3
generatorswerefoundtobedamagedandbeyondrepairandsoNewWorldfiledaclaimwith
its insurer Seaboard. Seaboard required New World to submit to it an itemized list of the
damaged units, parts, and accessories, with corresponding values, for the processing of the
claim.NewWorlddidnotcomplybecausesuchrequirementwasntinthecontract.4daysafter
thelapseoftheoneyearperiodtoclaimundertheCOGSA,NewWorldfiledacaseforspecific
performance.

RTC:

ComplaintlapsedunderCOGSA,Seaboardsdenialofclaimisvalidduetononcompliancewith
requirement,thusprejudicingSeaboardsrighttorecoverfromNYK.

CA:

AffirdmedRTConMR.

Issue:

WhetherornotNewWorldcanstillrecoverfromSeaboard?

Held:

YES.

In the ordinary course, if Seaboard had processed that claim and paid the same, Seaboard
wouldhavebeensubrogatedtopetitionerNewWorldsrighttorecoverfromNYK.Anditcould
have then filed the suit as a subrogee. But, as discussed above, Seaboard made an
unreasonable demand on February 14, 1994 for an itemized list of the damaged units, parts,
andaccessories,withcorrespondingvalueswhenitappearedsettledthatNewWorldslosswas
totalandwhentheinsurancepolicydidnotrequiretheproductionofsuchalistintheeventof
aclaim.Besides,whenpetitionerNewWorlddeclinedtocomplywiththedemandforthelist,
Seaboard against whom a formal claim was pending should not have remained obstinate in
refusingtoprocessthatclaim.Itshouldhaveexaminedthesame,founditunsubstantiatedby
documents if that were the case, and formally rejected it. That would have at least given
petitionerNewWorldaclearsignalthatitneededtopromptlyfileitssuitdirectlyagainstNYK
andtheothers.Ultimately,thefaultforthedelayedcourtsuitcouldbebroughttoSeaboards
doorstep.Section

241 of the Insurance Code provides that no insurance company doing business in the
Philippines shall refuse without just cause to pay or settle claims arising under coverages
providedbyitspolicies.And,underSection243,theinsurerhas30daysafterproofoflossis
received and ascertainment of the loss or damage within which to pay the claim. If such
ascertainment is not had within 60 days from receipt of evidence of loss, the insurer has 90
12

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

days to pay or settle the claim. And, in case the insurer refuses or fails to pay within the
prescribedtime,theinsuredshallbeentitledtointerestontheproceedsofthepolicyforthe
durationof delayattherateoftwicetheceilingprescribedbytheMonetaryBoard.Notably,
SeaboardalreadyincurreddelaywhenitfailedtosettlepetitionerNewWorldsclaimasSection
243required.UnderSection244,aprimafacieevidenceofunreasonabledelayinpaymentof
theclaimiscreatedbythefailureoftheinsurertopaytheclaimwithinthetimefixedinSection
243.

NORTH BULACAN CORPORATION v. PHILIPPINE BANK OF COMMUNICATIONS G.R. No.

183140,August2,2010CorporationLaw

Facts:

PetitionerNorthBulacanCorporation(NBC)isengagedinthebusinessofdevelopinglowand
mediumcost housing projects. Respondent Philippine Bank of Communications (PBCom)
offeredtofinancethewholeprojectofNBCandimmediatelyprovideitaloanfacility.Relying
onPBComscommitment,NBCacceptedthebanksoffer.

NBC executed a deed of assignment, assigning to PBCom its rights and interests over all
paymentsthatmaybedueitfromthePagIBIG.

After a time, however, PBCom discontinued its financial support to NBC reportedly because
BangkoSentralngPilipinas(BSP)hadissuedaceaseanddesistorderagainstthebank.Whenit
becameapparentthatPBComhadnointentionofcomplyingwithitscommitment,NBCsought
help from Cocolife and Land Bank which expressed their intention to finance the project by
takingoutNBC'sloanfromPBCom.Butthelatterrefusedtheoffer,insistingonthesupposed
BSPceaseanddesistorder.NBCsconstructioneventuallystoppedforlackoffunds.

NBC filed a petition for corporate rehabilitation with the Mandaluyong Regional Trial Court
(RTC).Itfiledwiththecourtamanifestationandurgentmotionsa)toorderPBComtorelease
12TransferCertificatesofTitleoffinishedhousingunits,b)toorderPagIBIGtoissueLettersof
GuarantytoPBComrepresentingthetakeoutvalueofthefinishedunits,andc)toallowNBCto
usetheproceedstomakeemergencyrepairsandrestorationworks.TheRTCissuedanorder
givingduecoursetoNBCspetitionforrehabilitation.

PBCom challenges the RTCs order alleging that NBC violated several rules on corporate
rehabilitationandthatithadnotmettherequirementsforthegrantofthepetitioninvolved.
Amongtherulesallegedtohavebeenviolatedisaruleonprohibitedpleadingsonmotionfor
extension in filing the required rehabilitation plan, which NBC did in this case. Petitioner
countershowever,thatitdidnotviolatedtherulesonpetitionforrehabilitationbecausesuch
rulesallowsextensionundercertaincircumstances.

13

www.chanroblesbar.com : www.chanroblesbar.com.ph

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Issue:

WhetherornottheRTCcorrectlygaveduecourseNBCsactionforcorporaterehabilitation?

Held:

NO, the Court held that the RTC erred in giving due course to petitioners action. The RTC
utterly disregarded the Rules on Corporate Rehabilitation in the guise of liberal construction
andgrantedthepetitionforrehabilitationbasedoninsufficientevidence.

The NBC inventory did not mention the condition of its listed assets. It merely enumerated
certain real properties and their respective sizes and market values. The RTC should have
dismissedthepetitionasithadnotapprovedanyrehabilitationplanwithintheperiodspecified
bylaw.Further,underthecircumstances,NBCstotaldebtswouldballoontoP560,841,213.54,
exclusiveofinterests,penalties,andothercharges.Obviously,itscontinuedoperationwould
no longer be viable. The Court holds that the RTC should have ruled on the creditors
objections instead of merely treating them as premature. The RTC of course claims that the
rehabilitationplanwouldstillhavetobereferredtothereceiverforstudyandevaluation.But
there would be no need to go that far when the petitioning corporation declined to comply
withthesimplerulesofrehabilitation,whenthedocumentationofitsassetswereinadequate,
andwhenthecreditorsoppositionofferedinsurmountablebasisforshelvingtheentireeffort.

WhenIamatmyWeakest,MyLord,MyGod,MySaviour,
ProtectorandRockIsatHisSTRONGEST!

AllRightsReserved
BatangasCityandManila
January14,2012

14

www.chanroblesbar.com : www.chanroblesbar.com.ph