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2017 Mercantile Bar Q&A

AUGUST 31, 2018



Absolute Timber Co. (ATC) has been engaged in the logging business in lsabela. To secure one of its
shipments of logs to be transported by Andok Shipping Co., ATC purchased a marine policy with an “all
risks” provision. Because of a strong typhoon then hitting Northern Luzon, the vessel sank and the
shipment of logs was totally lost. ATC filed its claim, but the insurer denied the claim on several grounds,
namely: (1) the vessel had not been seaworthy; (2) the vessel’s crew had lacked sufficient training; (3) the
improper loading of the logs on only one side of the vessel had led to the tilting of the ship to that side
during the stormy voyage; and (4) the extremely bad weather had been a fortuitous event.

ATC now seeks your legal advice to know if its claim was sustainable. What is your advice? Explain your
answer. (3%)


I would advise ATC that its claim was sustainable.

An all-risk provision in a marine policy insures against all causes of conceivable loss or damage, except if
the loss or damage is due to the insured’s fraudulent or intentional act.

Here, ATC obtained a marine policy with an all risk provision, which insures against all the grounds cited
by the insurer.

Hence, ATC’s claim was sustainable.


The newly restored Ford Mustang muscle car was just released from the car restoration shop to its owner,
Seth, an avid sportsman. Given his passion for sailing, he needed to go to a round-the-world voyage with
his crew on his brand-new 180-meter yacht. Hearing about his coming voyage, Sean, his bosom friend,
asked Seth if he could borrow the car for his next roadshow. Sean, who had been in the business of
holding motor shows and promotions, proposed to display the restored car of Seth in major cities of the
country. Seth agreed and lent the Ford Mustang to Sean. Seth further expressly allowed Sean to use the
car even for his own purposes on special occasions during his absence from the country. Seth and Sean
then went together to Bayad Agad Insurance Co. (BAIC) to get separate policies for the car in their
respective names.


such that the person will derive pecuniary benefit or advantage from the preservation of the subject matter insured and will suffer pecuniary loss or damage from its destruction. II. Insular Life) (b) Do Seth and Sean have separate insurable interests? Explain Briefly your answer(3%) SUGGESTED ANSWER: Yes. (Lalican v. or liability in respect thereof. A. whereas Sean’s insurable interest is his interest as bailee of the vehicle and his liability in case of damage or loss to it. where he has a relation or connection with or concern in it. (a) What is insurable interest? (2%) SUGGESTED ANSWER: Insurable interest is that interest which a person is deemed to have in the subject matter insured.” (Insurance Code. The existence of an insurable interest gives a person the legal right to insure the subject matter of the policy of insurance. Sec. whether real or personal. Seth and Sean have separate insurable interests. Insurable interest in property is “[e]very interest in property. of such nature that a contemplated peril might directly damnify the insured. or injury by the happening of the event insured against. or any relation thereto. 2 . Seth and Sean have separate insurable interests.SAIC consults you as its lawyer on whether separate policies could be issued to Seth and Sean in respect of the same car. termination. 13) Seth’s insurable interest is his interest as the owner of the vehicle. Hence.

Peter. Morgan demanded that Dennis pay the value of the stolen equipment. Anilao and other parts of Batangas experienced power outage. unidentified thieves destroyed the padlocks of the establishment of Dennis. (4%) SUGGESTED ANSWER: No. and insisted that the cause of the loss was a fortuitous event or force majeure. Batangas.Morgan. his client in a child custody case. They executed a trust receipt agreement. and carted off the equipment inside. pending their disposition. received a lot of diving and other water sports equipment as payment of his professional fees by Dennis. Magnus and Charles upon payment by the latter of valuable consideration for the warehouse receipts. Before the sports equipment could be sold. Inc. Paul and Mary covering certain goods deposited by the latter with the former. Paul and Mary then negotiated and endorsed the warehouse receipts to Cyrus. the defense of Dennis that the loss is due to force majeure may not be set up in a trust receipts transaction since the entrustee is liable for the loss. Taking advantage of the total darkness. Safe Warehouse. loss of goods which are the subject of a trust receipt. B. Magnus and Charles were not aware 3 . Cyrus. irrespective of whether or not it was due to the fault or negligence of the entrustee. Dennis owned a diving and water sports dealership in Anilao. a lawyer. the justification of Dennis is not warranted. but the latter refused on the ground that he also had suffered from the effects of the typhoon. Is the justification of Dennis warranted? Explain your answer. a strong typhoon hit Batangas. Under Section 10 of the Trust Receipts Law. shall not extinguish his obligation to the entruster for the value thereof. Here. Morgan decided to name Dennis as entrustee because he did not have any experience in selling such specialized sports equipment. with Morgan as entruster and Dennis as entrustee. (Safe) issued on various dates negotiable warehouse receipts to Peter. the justification of Dennis is not warranted. Hence. whether or not he was at fault or negligent.

4 . and insisted that such claim was the liability of Peter. weighing. Safe refused because its warehouseman’s claim must first be paid. and Charles. and advertisements of sale. Safe’s refusal to surrender the goods is legally justified. Here. Paul and Mary. (b) Is Safe’s refusal to surrender the goods to Cyrus. coopering and other charges and expenses in relation to such goods. Magnus and Charles legally justified? Explain your answer. Hence. Safe’s warehouseman’s lien is not yet satisfied by the claimants. (2) all lawful claims for money advanced.of. and (3) all reasonable charges and expenses for notice. (3%) SUGGESTED ANSWER: Yes. nor were they parties to any irregularity or infirmity affecting the title or the face of the warehouse receipts. until satisfaction of its lien. Under Section 31 of the Warehouse Receipts law. On due dates of the warehouse receipts. Magnus and Charles demanded that Safe surrender the goods to them. warehouseman’s claim or lien is one which a warehouseman has over the goods deposited or proceeds thereof in his hands. interest. and for sale of the goods where default had been made in satisfying the warehouseman’s lien. a warehouseman having a lien valid against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied. Cyrus. labor. Magnus. insurance. Magnus and Charles refused to pay. Safe can validly refuse to deliver the goods to Cyrus. transportation. Cyrus. (a) What is a warehouseman’s claim? (3%) SUGGESTED ANSWER: Under Section 27 of the Warehouse Receipts law. In includes: (i) all lawful charges for storage and preservation of the goods.

Other members of Matteo’s family held the major positions in DRI. Inc. garnished Matteo’s bank accounts. Here. 5 . A. for the control of a smaller realty company with vast landholdings. Matteo was also the President and Chairman of the Board of Directors. (DRI) was engaged in realty development. the court sheriff who had just passed his Credit Transactions subject in law school. and levied his real properties. The trial court also happened to be the rehabilitation court. another realty developer. (4%) SUGGESTED ANSWER: No. the garnishment and levy of Matteo’s assets are not lawful and proper. the garnishment and levy of Matteo’s assets to answer for a money judgment rendered against DRI are not lawful and proper. Hence. Meantime. DRI. (D&E). Inc. filed a petition for voluntary rehabilitation. A corporation has a separate and distinct personality from its stockholders and officers. The writ of execution was issued. D&E moved in the trial court for the issuance of a writ of execution. which has a separate and distinct personality from Matteo. the money judgment was not rendered Matteo but against DRI. Trying to beat the consequences of rehabilitation proceedings. The family of Matteo owned 100% of the capital stock of DRI. Serving the writ of execution. Data Realty.. Merto.III. including his house and lot in Makati. DRI and D&E engaged in an expensive litigation that eventually led to a money judgment being rendered in favor of D&E. facing inability to pay its liabilities as they fall due but still holding substantial assets. Are the garnishment and levy of Matteo’s assets lawful and proper? Explain your answer. Because of a nasty takeover fight with D&E Realty Co.

Excellent. (b) the right to inspect is exercised during reasonable hours on a business day. Ultimately. took over control and ownership of Excellent. Inc. 6 . a local conglomerate. Sid thus became a minority stockholder and a minority member of the Board of Directors. Sid used to be the majority stockholder and President of Excellent Corporation (Excellent). Sid became a fiscalizer of sorts. State under what conditions may Sid properly assert his right to inspect the books and other corporate records of Excellent.B. became the monopoly when Meridian’s own beverage business was merged with Excellent’s. Left out and ignored by the management. it brought along its team of officers. Explain your answer. saying that his right as a minority stockholder has been much reduced. and (c) the stockholder has not improperly used the information secured in a previous examination. (Meridian). The management refused to comply.. thereby making Excellent virtually the only beverage manufacturer in the country. IV. Sid demanded the inspection of the books and other corporate records of Excellent. When Meridian Co. questioning during the Board meetings the direction being pursued by Excellent’s officers. being the leading beverage manufacturer in the country. (3%) SUGGESTED ANSWER: Sid may assert his right to inspect Excellent’s books and corporate records under the following conditions: (a) the purpose of the inspection is legitimate.

(4%) SUGGESTED ANSWER: No. a stay or suspension order does not apply to any criminal action against the officers and directors of a debtor. was charged along with other company officials with several counts of estafa in connection with the non-remittance of SSS premiums the company had collected from its employees. The court. Here. (a) What is a commencement order. A commencement order includes a stay or suspension order. a Director and the CEO of Parisian Hotel Co. Parisian filed a petition for rehabilitation. Procopio and the other officers facing the criminal charges moved to suspend the proceedings in the estafa cases. finding the petition to be sufficient in form and substance. the criminal action is excepted from the application of the stay or suspension order. Inc. Under Section 18 of the FRIA. (b) Suppose you are the trial judge. 7 . A. (Parisian). (4%) SUGGESTED ANSWER: A commencement order is an order issued by the rehabilitation court after finding the petition for rehabilitation sufficient in form and substance. will you grant the motion to suspend of Procopio.? Explain your answer. Citing the commencement order.Procopio. issued a commencement order together with a stay or suspension order. which suspends all actions and enforcement of judgments or any provisional remedies against the debtor and prohibits the debtor from disposing of his assets or paying any outstanding liabilities (Sections 15 and 16 of the FRIA. the action is one for estafa. a criminal action. Hence. and what is the effect of its issuance? Explain your answer. et al. V. During the pendency of the cases. against Parisian’s director and officers. I will not grant the motion to suspend the proceedings in the estafa case..

The Board of Directors approved the merger and takeover. Inc. strongly opposed the merger and takeover. the major stockholder of Santorini. Santorini Corporation (Santorini) was in dire straits. B. (4%) SUGGESTED ANSWER: The exceptions to the Nell Doctrine are as follows: (a) when the buyer assumes the liabilities of the seller. Explain your answer. Erica. Pacific Farms. (b) when the sale amounts to a merger or consolidation of the buyer and seller. (15 SCRA 415). However. The matter of the merger and takeover by Proficient was included in the agenda of the next meeting of Santorini’s Board of Directors. and (d) when there is a business enterprise transfer. the latter is not liable for the debts and liabilities of the transferor.Under the Nell Doctrine. the general rule is that where one corporation sells or otherwise transfers all of its assets to another corporation. owing to Erica’s serious illness that required her to seek urgent medical treatment and care in Singapore. (c) when the sale is entered into fraudulently or in bad faith. Santorini had been in the red for a number of years owing to its recurring business losses and reverses. the leading company in their line of business. State the exceptions to the Nell Doctrine. At the time of the meeting. Erica seeks your legal advice regarding her right as a stockholder opposed to the corporate action. she failed to attend the meeting and was consequently unable to cast her vote. In order to firm up its financial standing. so called because it was first pronounced by the Supreme Court in the 1965 ruling in Nell v. it agreed to entertain the merger and takeover offer of Proficient Corporation (Proficient). (4%) SUGGESTED ANSWER: 8 .

(ii) the required approval must be entered upon the record of the bank and a copy of such entry shall be submitted to the BSP. When the loan application was about to be approved and the proceeds released. (4%) SUGGESTED ANSWER: 9 . the restrictions imposed by law on DOSRI transactions are as follows: (i) there should be a written approval of the majority of the directors of a bank. issued postdated checks. Othello. and submitted all other requirements prescribed by Lucky. stockholders or their related interests (DOSRI). Othello applied for a loan of PSO Million with Lucky. Samito is the President and a Director of Lucky Bank (Lucky}. When required. Thus. a commercial bank holding its main office in Makati. BG Company. (iii) the loans must not exceed the DOSRI borrower’s unencumbered deposits and the book value of the paid up shares. he made the necessary arrangements to guarantee the loan. in addition to the real estate mortgage. excluding the director concerned. Othello executed a joint and solidary suretyship. His brother. wrote to the Board of Directors and the management of Lucky questioning the loan on the ground of conflict of interest due to Samito and Othello being brothers. (b) Is BG Company’s opposition based on conflict of interest and violation of the restrictions on DOSRI transactions legally and factually correct? Explain your answer.I will advise Erica that she may exercise her appraisal rights as a dissenting stockholder. citing the legal restriction against bank exposure of directors. a dissenting stockholder may exercise her appraisal rights demand payment of the fair value of her shares when there is a merger of consolidation. Othello followed the ordinary banking procedures in all the stages of the processing of his application. NOTE: It is also required that the DOSRI borrower waive the secrecy of his deposits in all Philippine banks. Under Section 81 of the Corporation Code. C. owned a big fishing business based in Malabon. officers. (a) What are the three restrictions imposed by law on DOSRI transactions? (4%) SUGGESTED ANSWER: Under Section 36 of the General Banking Law. a keen competitor of Othello in the fishing industry.

Under the FRIA.No. (5%) SUGGESTED ANSWER: I will advise Hortencio to file a petition for rehabilitation under the FRIA. NOTE: The UP Law Center also suggested filing a petition for suspension of payments. 10 . a second-degree relative of the former. the principal supplier of the merchandise sold in his store. while generally in the black. the owner of a sole proprietorship may file a petition for rehabilitation to restore him to a condition of successful operation and solvency. Nonetheless. Because of the economic downturn. officer or stockholder within the first degree of affinity or consanguinity. However. he incurred huge financial liabilities. VI. Here. restrictions on DOSRI transactions include only the ascendants or descendants of a director. now faces a situation where he is unable to pay his liabilities as they fall due in the ordinary course of business. Hortencio owned a modest grocery business in Laguna. A. What will you advise him to do to resolve his dire financial condition? Explain your answer. His main creditor was Puresilver Company (Puresilver). BG Company’s opposition is not legally and factually correct. Hortencio. he executed a real estate mortgage with a dragnet clause involving his family’s assets worth several millions of pesos. the legal restrictions on DOSRI transactions do not apply. Under the General Banking Law. this petition will NOT prevent a creditor from foreclosing the mortgage since secured creditors are not covered by an order for suspension of payments. To secure his credit with Puresilver. Samito is the brother of Othello. He remained afloat only because of the properties inherited from his parents who had both come from landed families in Laguna. Hence. B.

His main job was being an IT consultant at Futurex Co. When she heard the musical works of Virtucio. she purchased a CD of his works. She copied the CD and sent the second copy to her Music instructions for the class to listen to the CD and analyze the works of Virtucio. engaged in a sideline business of creating computer programs for selected clients on a per project basis and for servicing basic computer problems of his friends and family members. Voluntary liquidation is the remedy available to debtors whose properties are not sufficient to cover their debts. What legal recourse remained available to Wyatt? Explain your answer. 11 .Wyatt. A. Pascuala did not infringe on Virtucio’s copyright. Here. he had far more liabilities than his entire assets. Because of his ill-advised investments in the stock market and the fraud perpetrated against him by his trusted confidante. a local computer company. (5%) SUGGESTED ANSWER: I would advise Wyatt to file a petition for voluntary liquidation. Virtucio was a composer of llocano songs who has been quite popular in the llocos Region. an internet entrepreneur. VII. that is. Wyatt was already drowning in debt. Pascuala is a professor of music in a local university with special focus on indigenous music.. Wyatt has more liabilities than assets. his recourse is to file a petition for voluntary liquidation. Hence. Did Pascuala thereby infringe Virtucio’s copyright? Explain your answer. (4%) SUGGESTED ANSWER: No.

Because of the sudden prevalence of AIDS cases in Metro Manila and other urban areas. (4%) SUGGESTED ANSWER: I would advise the DOH to file a petition for compulsory license with the Director of Legal Affairs of the Intellectual Property Office. refused. the Department of Health (DOH) asked Super Biology for a license to produce and sell the AIDS medicine to the public at a substantially lower price. Super Biology. Once granted. including the distribution of a limited number of copies for classroom use. Being the sole manufacturer. A compulsory license would allow the government to exploit the patented medicine even without the agreement of the patent owner on the ground of public interest. A. health. the DOH may then produce and sell the AIDS medicines for a cheaper price subject to payment of reasonable royalties to Super Biology. Super Biology Corporation (Super Biology) invented and patented a miracle medicine for the cure of AIDS.There is no infringement of copyright when there is fair use of the copyrighted work for teaching. citing the huge costs and expenses incurred for research and development. in particular. VIII. B. Pascula’s reproduction of the limited number of CD was for the fair use of teaching and classroom use. discuss how you will resolve the matter. Pascuala did not infringe on Virtucio’s copyright. Thus. Super Biology sold the medicine at an exorbitant price. Assuming you are asked your opinion as the legal consultant of the DOH. In this case. 12 .

but Prosperous Bank refuses the demand. she had a dependable jeweller appraise the necklace. a suspected drug trafficker based in Naga City.000. Here. she pawned the necklace for ₱2. were related to money laundering. Prosperous Bank is a domestic bank with head office in Makati. She decided not to turn over the purse to the airport management. NOTE: Money laundering requires the proceeds to come from qualified theft and NOT simple theft. Inside the purse was a very valuable diamond-studded necklace. The AMLC had probable cause that his deposits and investments in various banks. including Prosperous Bank. in coordination with the counterpart group from the PDEA and the NBI. and instead to keep it. Given that her appropriation of the necklace was theft.000. To test the appraisal. 13 . Flora may not be prosecuted for money laundering. Promptly. (4%) SUGGESTED ANSWER: Flora may not be prosecuted for money laundering. Money laundering is a crime whereby the proceeds of a predicate unlawful activity are transacted making it appear that they originated from legitimate sources. On her return from her travels. gathered ample evidence establishing Lorenzo’s unlawful drug activities. the AMLC now transmits to Prosperous Bank a formal demand to allow its agents to examine the banking transactions of Lorenzo. Accordingly. Flora is guilty of theft. The intelligence group of the AMLC. Hence.000.000. Metro Bank reported the transaction to the Anti-Money Laundering Council (AMLC). It handles the banking requirements of thousands of clients. and the latter told her that the necklace was easily worth at least ₱5. a frequent traveller. The AMLC initiated a discreet investigation of the financial transactions of Lorenzo.00 in the open market.Flora.00. may Flora be successfully prosecuted for money laundering? Explain briefly your answer. found a purse concealed between the cushions of a large sofa inside the VIP lounge in NAIA while she was waiting for her flight to be called. B. which is not one of the unlawful crimes from which money laundering could arise. She then deposited the entire amount in her checking account with Metro Bank.

(4%) SUGGESTED ANSWER: SUGGESTED ANSWER 1: No. (4%) SUGGESTED ANSWER: Prosperous Bank’s refusal is not justified. his friend. Felix then caused the deposit of the check in his account with Solar Bank.000 pesos only. Good Bank may not claim reimbursement from Alfred. Prosperous Bank’s refusal is not justified. as payment for an electronic gadget. Seeing such stamp of the collecting bank. However. 14 . and forged Cesar’s indorsement by way of a blank indorsement in favor of Felix. May Good Bank claim reimbursement from Alfred? Explain your answer.Is Prosperous Bank’s refusal justified? Explain your answer. Solar Bank stamped “all previous indorsements guaranteed” on the check.000.000. which require no court order. Good Bank paid the amount of ₱91.00. a holder in due course may only be paid for the original tenor of an altered check. a known jeweler.000. Hence. Cesar misplaced the check. The check was drawn against Alfred’s account with Good Bank. Here.00 to Benjamin. A.000 originally stated in the check. a dormmate of Cesar. IX. The AMLA may inquire into bank deposits when there is probable cause that the deposits are related to any of the unlawful activity listed under the AMLA. Under the Negotiable Instruments Law. Here. found the check. except for the 1. there is probable cause that the deposits came from activities in violation of the Comprehensive Dangerous Drugs Act. As collecting bank. Dexter.00 on the check. altered its amount to ₱91. Alfred issued a check for ₱1. the original tenor of the check is for 1. Benjamin then indorsed the check specially in favor of Cesar.

Inc. (4%) SUGGESTED ANSWER: Yasmin cannot anymore encash the check since it has become stale. Wisconsin Transportation Co.Hence. California house. Here. Good Bank may be reimbursed for only 1. Florencio. being a boyhood friend of the bus driver. a Filipina socialite who frequently travelled locally and internationally. already penniless after spending all of his money on beer the night before. In 2006. Aurelio purchased a ticket for himself. Because of her frequent travels. A check which is not encashed within 6 months from issuance becomes stale. in 2017.00 drawn against Wells Fargo Bank with offices in San Francisco.000 pesos. Discuss and explain the rights of Yaasmin on the check. Hence. it has been more than 10 years from the issuance of the check. an American temporarily residing in Cebu City. It was only 11 years later on. the drawer. Yasmin should request Donald.. Yaasmin misplaced the check. Jerome and Florencio rode on the same WTC bus from Manila bound for Mindoro. just stole a ride in the bus by hiding in the on-board toilet of the bus. 15 . X. Three friends. Rhodora negotiated the check and delivered it to Yaasmin.000. when she found the check inside a diary kept in her vault in her Hollywood. Jerome. to issue a new check for the same amount. (WTC) owned and operated an inter-island de luxe bus service plying the Manila-Batangas-Mindoro route. Donald. was allowed a free ride by agreeing to sit during the trip on a stool placed in the aisle. namely: Aurelio. California. B. issued to Rhodora a check for $50.

As to Jerome.During the trip. WTC is also presumed negligent in case of injury. As to Florencio. (a) A conviction under the Trust Receipts Law shall bar a prosecution for estafa under the Revised Penal Code. WTC is presumed negligent in case of injury to him pursuant to their contract of common carriage. (b) The term capital in relation to public utilities under Sec. However. the bus collided with another bus coming from the opposite direction. notwithstanding the fact that Jerome rode the bus gratuitously. The three friends all suffered serious physical injuries. (2%) SUGGESTED ANSWER: 16 . WTC is not liable for his injuries since there is no contract between it and Florencio. if any. who merely stole a ride in the bus. Art. (2%) SUGGESTED ANSWER: True. in favor of Aurelio. (4%) SUGGESTED ANSWER: As to Aurelio. XII of the 1987 Constitution refers to the total outstanding capital stock comprising both common and non-voting preferred shares. Violation of the trust receipts law already constitutes estafa. TRUE or FALSE – Explain briefly your answer. XI. 11. unless WTC can show that it exercised extraordinary diligence in the carriage of its passengers. Jerome and Florencio? Explain your answer. WTC needs only to prove that it exercised ordinary diligence. another prosecution for estafa violates the accused’s constitutional right against double jeopardy. What are WTC’s liabilities. Hence.

See Roy v Herbosa. 17 . (2%) SUGGESTED ANSWER: TRUE. (d) News reports are not copyrightable.FALSE For purposes of determining compliance with the constitutional or statutory ownership. may also be raised against a holder in due course. (2%) SUGGESTED ANSWER: FALSE. New reports are copyrightable since only news of the day are not copyrightable. as a real defense. Forgery. (c) Forgery is a real defense but may only be raised against a holder not in due course. XII. whether or not entitled to vote. (2%) SUGGESTED ANSWER: FALSE. and (b) the total number of outstanding shares of stock. (e) The law on life insurance prohibits double insurance. the required percentage of Filipino ownership shall be applied to both the total number of outstanding shares of stock entitled to vote in the election of directors. The prohibition on double insurance applies only to property insurance.

and offered its services to the general public. entered into a contract with Onassis whereby Go-Green would operate with its own crew the MN Dolphin. since Go-Green took possession and control of the vessel by hiring its own crew. The rough seas led to serious physical injuries to some of the guests. (3%) SUGGESTED ANSWER: Go-Green. Go-Green and not Onassis is liable to the passengers. In a bareboat or demise charter. the contract between Go-Green and Onassis is one for bareboat or demise charter. an NGO affiliated with Greenpeace. Go-Green Asia (Go-Green). While on its way to Palawan carrying Go-Green’s invited guests who were international and local observers desirous of checking certain environmental concerns in the area. Here. Explain briefly your answer. Inc. an ocean-going passenger vessel of Onassis. and not Onassis. is liable to the passengers for the injuries they sustained. In line with its vision and mission to protect the environment.Onassis Shipping. Hence. Discuss the liabilities of Onassis and Go-Green to the passengers of the M/V Dolphin. – NOTHING FOLLOWS – 18 . (Onassis) operated passenger vessels and cargo trucks. the MN Dolphin encountered high waves and strong winds caused by a typhoon in the West Philippine Sea. the charterer is liable for any injury to the passengers since it is given possession and control of the vessel.