Set 2

1. Q: May a member of the MILF or its breakaway group, the Abu Sayyaf, be insured
with a company licensed to do business under the Insurance Code of the
Philippines? Explain. (2000 BAR)

A: YES. A member of the MILF or the Abu Sayyaf may be insured with a
company licensed to do business under the Insurance Code of the Philippines. What
is prohibited to be insured is a public enemy. A public enemy is a citizen or national
of a country with which the Philippines is at war. Such member of the MILF or the
Abu Sayyaf is not a citizen or national of another country, but of the Philippines.

2. Q: 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 roundthe-world voyage with his crew on his brandnew 180-
meter yacht. Hearing about his coming voyage, Sean, his bosom friend, asked Seth if
he could borrow the car for his net 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. BAIC consults you as its lawyer on whether separate policies could
be issued to Seth and Sean in respect of the same car. Do Seth and Sean have separate
insurable interests? Explain briefly your answer. (2017 BAR)

A: YES. Seth and Sean have separate insurable interests. Seth’s insurable
interest is his legal and and/or equitable interest over the vehicle as an owner while
Sean’s insurable interest is the safety of the vehicle which may become the basis of
liability in case of loss or damage to the vehicle. (Malayan Insurance vs. Philippine
First Insurance Co., 676 SCRA 268)

3. Q: M/V Pearly Shells, passenger and cargo vessel, was insured for P40,000,000.00
against “constructive total loss.” Due to a typhoon, it sank near Palawan. Luckily,
there was no casualties, only injured passengers. The shipowner sent a notice of
abandonment of his interest over the vessel to the insurance company which then
hired professionals to afloat the vessel for P900,000.00. When refloated, the vessel
needed repairs estimated at P2,000,000.00. The insurance company refused to pay the
claim of the shipowner, stating that there was “no constructive total loss.”

a. Was there “constructive total loss” to entitle the shipowner to recover from the
insurance company? Explain.
b. Was it proper for the shipowner to send a notice of abandonment to the insurance
company? Explain. c. When does double insurance exist?
d. What is the nature of liability of the several insurers in double insurance? (2005
BAR)

A: a. NO. A constructive total loss is one which gives the insured the right to
abandon (Sec. 131, ICP). Abandonment of the thing insured may be availed of if the
loss is more than three-fourths of its value or the expense to recover it from peril (Sec
139, ICP). In this case, the constructive loss claimed by the shipowner pertains to the
vessel. The expenses for refloating and estimated repairs did not amount to three-
fourths of the value of the vessel, hence, there is no constructive total loss to speak of.

b. NO. The case did not qualify as one for total constructive loss. Deduced
from the facts of the case, the loss incurred during the peril did not amount to three-
fourths of its value. As provided in Sec. 139, abandonment may be availed of if the
loss is more than three-fourths of its value or the expense to recover it from peril.

c. Sec. 93 of the Insurance Code provides that double insurance exists where
the same person is insured by several insurers separately, in respect to the same
subject and interest.

d. In double insurance, the insurers are considered as co-insurers. Each one is

bound to contribute ratably to the loss in proportion to the amount for which he is
liable under his contract. This is known as the “principle of contribution” or
“contribution clause.” [Sec. 94 (e)]

4. Q: On May 13, 1996, PAM, Inc. obtained a P15M fire insurance policy from Ilocano
Insurance covering its machineries and equipment effective for 1 year or until May
14, 1997. The policy expressly stated that the insured properties were located at
“Sanyo Precision Phils. Building, Phase III, Lots 4 and 6, Block 15, PEZA, Rosario
Cavite.”

Before its expiration, the policy was renewed on “as is” basis for another year until
May 13, 1998. The subject properties were later transferred to Pace Factory also in
PEZA. On October 12, 1997, during the effectivity of the renewed policy, a fire broke
out at the Pace Factory which totally burned the insured properties. The policy
forbade the removal of the insured properties unless sanctioned by Ilocano.
Condition 9(c) of the policy provides that “the insurance ceases to attach as regards
the property affected unless the insured, before the occurrence of any loss or damage,
obtains the sanction of the company signified by endorsement upon the policy xxx (c)
if the property insured is removed to any building or place other than in that which
is herein stated to be insured.”
PAM claims that it has substantially complied with notifying Ilocano for the
insurance coverage. Is Ilocano liable under the policy? (2014 BAR)

A: NO. Ilocano is not liable under the policy. With the transfer of the location
of the subject properties, without notice and without the insurer’s consent after the
renewal of the policy, the insured clearly committed concealment, misrepresentation
and a breach of material warranty. The Insurance Code provides that a neglect to
communicate that which a party knows and ought to communicate is called
concealment. Concealment entitles the injured party to rescind a contract of
insurance in case of an alteration in the use or condition of the thing insured. An
alteration in the use or condition of a thing insured from that to which it is limited by
the policy made without the consent of the insurer, by means within the control of
the insured, and increasing the risks, entitles the insurer to rescind the contract of fire
insurance.

5. Q: Define a common carrier. (1996 BAR)

A: A common carrier is a person, corporation, firm or association engaged in

the business of carrying or transporting passengers or goods or both, by land, water
or air for compensation, offering its services to the public.

6. Q: Are common carriers liable for injuries to passengers even if they have observed
ordinary diligence and care? Explain. (2015 BAR)

A: YES, common carriers are liable to injuries to passengers even if the carriers
observed ordinary diligence and care because the obligation imposed upon them by
law is to exercise extra-ordinary diligence. Common carriers are bound to carry the
passengers safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons with a due regard for all the circumstances.
(Article 1755 of the Civil Code)

7. Q: Nelson owned and controlled the Sonnel Construction Company. Acting for the
company, Nelson contracted the construction of a building. Without first installing a
protective net atop the sidewalks adjoining the construction site, the company
proceeded with the construction work. One day, a heavy piece of lumber fell from
the building. It smashed a taxicab which at that time had gone offroad and onto the
sidewalk in order to avoid the traffic. The taxicab passengers died as a result.

a. Assume that the company had no more account and property in its name. As
counsel for the heirs of the victim, whom will you sue for damages, and what theory
will you adopt?
b. If you were the counsel for Sonnel Construction, how would you defend you
client? What would be your theory?
c. Could the heirs hold the taxicab owner and driver liable? Explain. (2008 BAR)
 A: a. I will sue Nelson as owner of Sonnel Corporation invoking the Doctrine
of piercing the veil of corporate fiction. As a general rule, the liability of a
corporation is separate and distinct from the person composing it. However, when
the veil of corporate fiction is used as a shield to perpetrate fraud, to defeat public
convenience, or to avoid a clear legal obligation, this fiction shall be disregarded and
the individuals composing it will be treated identically.

In the case at bar, Sonnel was negligent in not installing a protective net atop
the sidewalk before the beginning of the construction work. Since the company had
no more account and property in its name, the heirs can rightfully pursue the claim
against the owner instead. The doctrine of separate personality cannot be invoked to
avoid liability, much more when it is used to perpetuate an injustice.

b. I shall raise the affirmative defense of contributory negligence. The

proximate cause of death is the violation of the taxi driver of traffic rules and
regulations when it drove offroad to avoid heavy traffic. The lumber that fell from
the building was only the immediate cause of death of the victims. I will further
substantiate my defense by invoking the principle that my client, Sonnel
Construction, had exercised due diligence in the selection and supervision of its
employees.

c. YES. Both taxicab owner and driver may be held liable based on breach of
contract of carriage and negligence in the selection and supervision of employees for
quasi- delict. The driver can be held criminally liable for reckless imprudence
resulting to homicide. He can also be held liable for damages under quasi-delict as
provided in Article 2180— an employer may be held solidarily liable for the
negligent act of his employee. Hence, in this case, the taxicab owner is exempted
from liability while the taxicab driver is liable solely and personally for criminal
prosecution.

8. Q: X, an 80-year-old epileptic, boarded the S/S Tamaraw in Manila going to

Mindoro. To disembark, the passengers have to walk thru a gang plant. While
negotiating the gang plank, X slipped and fell into the waters. X was saved from
drowning, brought to a hospital but after a month died from pneumonia. Except for
X, all the passengers were able to walk thru the gang plank. What is the liability of
the owner of S/S Tamaraw? (1989 BAR)

A: The owner of S/S Tamaraw is liable for the death of X in failing to exercise
utmost diligence in the safety of passengers. Evidently, the carrier did not take the
necessary precautions in ensuring the safety of passengers in the boarding of and
disembarking from the vessel. Unless shown to the contrary, a common carrier is
presumed to have been negligent in cases of death or injury to its passengers. Since X
has not completely disembarked yet, the obligation of the shipowner to exercise
utmost diligence still then subsisted and he can still be held.

9. Q: What are the three (3) requisites of patentability under the Intellectual Property
Code? (2019 BAR)

A: The requisites of patentability are novelty, inventive step and industrial

applicability.

1. Novelty - An invention shall not be considered new if it forms part of a prior

art. Prior art shall consist of: Everything which has been made available to the public
anywhere in the world, before the filing date or the priority date of the application
claiming the invention; and The whole contents of a published application for a
patent, utility model, or industrial design registration, filed or effective in the
Philippines, with a filing or priority date that is earlier than the filing or priority date
of the application.
2. Inventive Step - An invention involves an inventive step if, having regard to
prior art, it is not obvious to a person skilled in the art at the time of the filing date or
priority date of the application claiming the invention.
3. Industrial Applicability - An invention that can be produced and used in
any industry shall be industrially applicable.

10. Q: What is the doctrine of equivalents? (2015 BAR)

A: Under the doctrine of equivalents, infringement of patent occurs when a

device appropriates a prior invention by incorporating its innovative concept and
albeit with some modifications and change performs the same function in
substantially the same way to achieve the same result. (Godines v. CA, 226 SCRA
338)