POINTERS SESSION

SPECCOM /
INSURANCE /
TRANSPORTATION
Judge M.I. AMEROL - MACUMBAL
TAKE NOTE OF BAR Q’S
WITH THIS FORMAT:
I.

Your friend Yarra asks you to go shopping with her.

She tries on a neon dress that she saw her favorite celebrity
wear on Instagram and is hell-bent on buying it so she can
wear it at a Christmas party.

a. Does your friend Yarra look good in the bright neon

dress? Why or why not?
b. If not, how will you tell her that she does not look good in
the dress without making her feel hurt?
LETTER OF CREDIT
a letter of credit is a written instrument whereby the writer
requests or authorizes the addressee to pay money or deliver
goods to a third person and assumes responsibility for payment of
debt therefor to the addressee.
3 TRANSACTIONS IN A LETTER OF CREDIT TRANSACTION
The first transaction, which constitutes the underlying transaction
in a letter of credit, is a contract of sale between the buyer and the
seller.
The second transaction is the issuance of a letter of credit
between the buyer and the issuing bank.
The third transaction takes place between the seller and the
issuing bank. The issuing bank issues the letter of credit for the
benefit of the seller.
LETTER OF CREDIT;
COMMERCIAL
LETTER OF CREDIT; STANDBY
LETTER OF CREDIT;
INDEPENDENCE
PRINCIPLE
CONTRACTS INVOLVED IN A LETTER OF CREDIT ARRANGEMENT ARE
TO BE MAINTAINED IN A STATE OF PERPETUAL SEPARATION.
Banks deal only with documents and not with goods, services or
obligations to which they relate.
Except: Fraud Exception Principle – if the fraud deals with the
documents themselves which were presented to the bank.
BPI V. DE RENY FABRICS
Buyer received colored chalk instead of dyes. Still, buyer was
made to pay the bank.
FEATI BANK V. CA
Seller delivered the logs as agreed. However, in the letter of
credit, it is required that the seller should present a document from the
buyer saying the goods were received. The buyer refused to do so.
Thus, the bank is justified in refusing to pay the seller.
LETTER OF CREDIT/ TRUST
RECEIPT TRANSACTION
Under a letter of credit-trust receipt arrangement, a bank extends
a loan covered by a letter of credit, with the trust receipt as a
security for the loan. The transaction involves a loan feature
represented by a letter of credit, and a security feature which is in
the covering trust receipt which secures an indebtedness.
TRUST RECEIPT
TRANSACTION
The ENTRUSTER, who owns or holds absolute title or security interests over
certain specified goods, documents or instruments, releases the same
to the possession of the ENTRUSTEE
upon the latter's execution of a signed document called a "trust receipt"
wherein the entrustee binds himself to
hold the designated goods, etc in trust for the entruster and to sell or
otherwise dispose of the goods, documents or instruments
with the obligation:
- to turn over to the entruster the proceeds thereof to the extent of
the amount owing to the entruster or as appears in the trust receipt;
or
- to turn over the goods, etc. themselves if they are unsold or not
otherwise disposed of
TRUST RECEIPT; COLINARES
V. COURT OF APPEALS
10.30.79, Colinares obtained several tiles for construction project
10.31.79. Colinares applied for LOC/TR covering the goods.
Colinares failed to pay.
IS COLINARES LIABLE FOR ESTAFA UNDER PD 115?
NO.
There are two possible situations in a trust receipt transaction. The
first is covered by the provision which refers to money received
under the obligation involving the duty to deliver the money
(entregarla) to the owner of the merchandise sold. The second is
covered by the provision which refers to merchandise received under
the obligation to return it (devolvera) to the owner
The situation in this case belies what normally obtains in a pure trust
receipt transaction where goods are owned by the bank and only
released to the importer in trust subsequent to the grant of the loan.
NG V. PEOPLE, 173905,
23 APRIL 2010
Anthony Ng is engaged in the business of building and fabricating
telecommunication towers. He applied for a credit line of PhP
3,000,000 with Asiatrust Development Bank, Inc.
Prior to the approval of the loan, Anthony Ng informed Asiatrust
that the proceeds would be used for purchasing construction
materials necessary for the completion of several steel towers he
was commissioned to build by several telecommunication
companies.
Asiatrust approved the loan but required Anthony Ng to sign a
trust receipt agreement.
When Anthony Ng failed to pay the loan, Asiatrust filed a criminal
case for Estafa in relation to PD 115 or the Trust Receipts Law.
NG V. PEOPLE, 173905,
23 APRIL 2010
Anthony Ng was ACQUITTED of estafa.
The Trust Receipts Law was created to "to aid in financing
importers and retail dealers who do not have sufficient funds or
resources to finance the importation or purchase of merchandise,
and who may not be able to acquire credit except through
utilization, as collateral, of the merchandise imported or
purchased."
Since Asiatrust knew that Anthony Ng was neither an importer nor
retail dealer, it should have known that the said agreement could
not possibly apply to petitioner.
(PREVAILING DOCTRINE; IGNORE PREVIOUS CASES, I.E.
ALLIED BANK V. ORDONEZ AND SIMILAR CASES)
POINTS TO RECALL:
1. Failure of the entrustee to comply with entregarla or
devolvera is penalized as estafa under the Revised Penal
Code;
2. Acquittal of the entrustee in the criminal charge does not
mean absolution from civil liaiblity arising from the trust
receipts agreement
3. Although entrustee may not be the owner, anyone who
acquires goods from the entrustee acquires ownership
4. Although entrustee is not the owner, he bears the risk of
loss.
BANKING
LAWS
RA 7653; BANGKO
SENTRAL NG PILIPINAS
1. Bangko Sentral ng Pilipinas (BSP) is the central monetary
authority.
1. Provides policy directions in money, banking, and credit
--- inflation rate and interest rates are inversely proportional. If
inflation is increasing, the BSP MB will increase interest rates
to try to lower the inflation rate.
2. Supervision over the operations of banks
2. Powers and functions of the BSP is exercised by the
Monetary Board
3. Legal Tender Power – remember notes; coins (P1,5,10 legal
tender up to P1,000.00; smaller coins of legal tender up to
P100.00)
RA 7653
1. Bangko Sentral shall have supervision over, and conduct
periodic or special examinations of banking institutions and
quasi-banks, including subsidiaries (more than 50% of voting
stock owned by a bank) and affiiliates (50% or less)
1. G.R. No restraining order or injunction to restrain
examination, UNLESS convincing proof
that examination is plainly arbitrary and made in bad faith
2. Power to place under conservatorship
3. Power to close bank and place under liquidation (no more
90-day receivership – RA 10846)
4. Actions of Monetary Board to place bank under
conservatorship and liquidation is final and executory.
REMEDY: Petition for certiorari, within 10 days from
receipt of Order
RA 7653; CLOSE NOW
HEAR LATER
The "close now, hear later" doctrine has already been justified
as a measure for the protection of the public interest. Swift action
is called for on the part of the BSP when it finds that a bank is in
dire straits. Unless adequate and determined efforts are taken by
the government against distressed and mismanaged banks,
public faith in the banking system is certain to deteriorate to the
prejudice of the national economy itself, not to mention the losses
suffered by the bank depositors, creditors, and stockholders, who
all deserve the protection of the government.
VIVAS V. MB, 191424, 8/7/2013
RA 10846; BANKS IN DISTRESS

1. No more 90 day receivership. Once a bank is closed, it

will immediately undergo liquidation.
2. The PDIC is the immediately deemed the receiver of a
closed bank.
3. The PDIC, upon examination that a bank commits unsafe
or unsound practices, can do the following:
1. Issue a Cease and Desist Order for the bank to correct
“errors”
2. If bank fails to comply, PDIC can terminate the insured
status of a bank (depositors insured only until 180 days).

1. A bank can be placed under “Resolution” voluntarily or

involuntarily by PDIC with BSP. (early intervention in
problem banks)
RA 10846; BANKS IN
DISTRESS
1. Insured deposits of depositors are no longer net of
obligation (i.e. If a depositor has 200K deposit in XYZ
Bank Marawi branch, and 300K in XYZ Iligan City branch,
but has a loan of 100K in XYZ Bank Iligan City Branch,
insured deposit is 200K+300K=500K. The loan of 100K is
not deducted from insured deposits).
2. Status of insured deposit is elevated from ordinary credit
to ordinary preferred credit.
INSURED DEPOSITS – Excludes trust accounts (compare with
RA 1405, Secrecy of Bank deposits which includes trust accounts)
GENERAL BANKING LAW
1. BANKS – entities (should be a stock corporation) engaged in
the lending of funds obtained in the form of deposits from the
public (20 persons or more).
2. Because funds are from the public, it is subject to heavy and
close supervision by the BSP. Banking is fiduciary in nature
and requires the highest standard of integrity and
performance.
Land Bank v. Onate, GR 192371, del Castillo case
Onate maintained trust accounts with Land Bank. Land
Bank claimed that P4M was inadvertently miscredited and
deposited to its trust account. Onate refused, asserting that his
funds come from legitimate sources. Land Bank cannot prove its
assertion to the satisfaction of the court.
HELD: A bank who mismanages the trust account of its client
cannot benefit from the inaccuracies of the reports resulting
therefrom. The bank must record every single transaction
accurately, down to the last centavo.
GENERAL BANKING
LAW
1. Universal Bank (can invest in non-allied) vs. Commercial Bank
(only allied activities)
2. Basic functions of a bank: deposit function and loan function
3. DEPOSIT – But note that the contract between the bank and the
depositor is one of simple loan. Thus, a bank can make use of
the money deposited.
1. “In every case, the depositor expects the bank to treat his
account with the utmost fidelity, whether such account
consists only of a few hundred pesos or of millions.”
2. KYC – know your customer; anonymous accounts are
prohibited.
3. PDIC; Secrecy of Bank Deposits; subject to AMLA Rules
4. Types of deposits: demand deposit, savings, time deposit;
foreign currency deposits
GENERAL BANKING LAW
LOAN FUNCTION:
1. Bank should ascertain capacity of borrower to pay;
(collaterals: example, loanable amount should not be more
than 75% of appraised value of real property or chattel)
2. Single Borrowers Limit
1. – a single borrower can borrower up to a total of 25% of
networth of the bank; may be increased to an additional
10% of networth if adequately secured by readily
marketable securities
3. Restrictions on borrowings of Directors, Officers,
Stockholders, related interests (DOSRI LIMITS)
1. Procedural requirement –
2. Arms length rule
3. Reportorial requirement
4. aggregate and individual ceilings
GENERAL BANKING LAW
FORECLOSURE OF MORTGAGE:
1. Redemption Period
1. natural persons – 1 year from date of registration,
whether judicial or extrajudicial
2. Juridical persons – 3 months, if extrajudicial
2. Right to Possess within redemption period? –
PURCHASER (not the mortgagor)
SECRECY OF BANK DEPOSITS
ALL DEPOSITS OF WHATEVER NATURE (includes trust
accounts – Ejercito v. Sandiganbayan ) WITH BANKS OR
BANKING INSTITUTIONS IN THE PHILS INCLUDING
INVESTMENTS IN BONDS ISSUED BY THE GOVERNMENT OF
THE PHILS ARE CONSIDERED ABSOLUTELY CONFIDENTIAL
AND MAY NOT BE EXAMINED, INQUIRED, OR LOOKED INTO
BY ANY PERSON, GOVT OFFICIAL, BUREAU OR OFFICE:
EXCEPTIONS:
1. Written consent of depositor
2. Impeachment cases
3. Order of competent court in cases of bribery or dereliction of
duty of public officials; also PD 3019
4. Where the money deposited is the subject matter of litigation
(note BSB Group v. Go case)
SECRECY OF BANK DEPOSITS
BSB GROUP V GO
Information charges that accused “took cash money in the
amount of P1.5M belonging to BSB Group”. The prosecution
presented a representative of the bank to show that accused,
while a cashier of the BSB Group, was able to run away with the
checks issued to the company of the customers, endorse, and
credit it to her personal deposit account with the bank.
Accused moved to suppress, invoking secrecy of bank deposits.
The prosecution argued saying that the cash in the deposit
account constitutes the “subject matter of litigation.”
HELD: The subject matter is to be determined from the
Information that charges respondent, not from the evidence.
The Information makes no allegation that connecting the deposit
account to the checks deposited, and to the cash amount
allegedly taken from the private complainant. Thus, the testimony
is barred by the bank secrecy rule.
ANTI MONEY-LAUNDERING ACT
1. MONEY LAUNDERING –
1. BASICALLY, it is a crime committed by any person who,
knowing that any monetary instrument or property
represents, involves, or relates to the proceeds of any
unlawful activity (predicate offense), transacts, disposes,
moves, acquires, possess, or uses said money or property.
2. But aside from this basic definition, there is an expanded
definition of money laundering.
3. attempt or conspiring to commit is itself considered money
laundering
4. Only Aiding or abetting money laundering is considering
money laundering
5. Failure to perform an act which results to money laundering
= money laundering
6. Failure of a covered entity/person to report a
covered/suspicious transaction = money laundering
2. PREDICATE OFFENSES (not all concealment of monetary
instument = money laundering. i.e., hiding money from spouse is
not money laundering)
AMLA
PREVENTION OF MONEY LAUNDERING THROUGH
REPORTING OF COVERED AND SUSPICIOUS
TRANSACTIONS
1. COVERED TRANSACTIONS.
1. G.R. in excess of 500K in 1 banking day (for jewelry
dealers, in excess of 1M)
2. SUSPICIOUS TRANSACTIONS
1. Less than 500K, but amount is not commensurate with
financial capacity of client (KYC Rule)
3. COVERED ENTITIES
1. Includes casinos (RA 10927; but covered transaction is a
single casino transaction in excess of 5 Million Pesos or
its equivalent)
AMLA; REP V. BOLANTE (GR
186717, 4.16.2017)
BANK INQUIRY ORDER
Upon the enactment of R.A. 10167 on 18 June 2012, Section 11
of R.A. 9160 was further amended to allow the AMLC to file an ex
parte application for an order allowing an inquiry into bank
deposits and investments.
General Rule
AMLA may inquire into any particular deposit, including related
accounts, upon order of any competent court (Court of Appeals)
based on an ex parte application
AMLA; BANK INQUIRY ORDER
Exceptions:
Court order is not required, meaning to say, the AMLA can inquire into bank
accounts, when probable cause exists that the related accounts are related to
the following unlawful activities:
1. Kidnapping for ransom under Article 267 of Act No. 3815, otherwise
known as the Revised Penal Code, as amended;
2. Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No.
9165, otherwise known as the Comprehensive Dangerous Drugs Act of
2002;
3. Hijacking and other violations under Republic Act No. 6235; destructive
arson and murder, as defined under the Revised Penal Code, as amended;
4. Felonies or offenses of a nature similar to those mentioned in Section
3(i) (1), (2) and (12) of the AMLA which are punishable under the penal laws
of other countries;
5. Terrorism and conspiracy to commit terrorism as defined and
penalized under Republic Act No. 9372; and
6. Financing of terrorism under Section 4 and offenses punishable under
Sections 5, 6, 7 and 8 of Republic Act No. 10168, otherwise known as the
Terrorism Financing Prevention and Suppression Act of 2012.
AMLA; FREEZE ORDER
FREEZE ORDER
Court of Appeals issues the Freeze Order, upon petition of AMLC
Maximum allowable extension up to 6 months only. If there is no
case filed against the person, the freeze order is ipso facto lifted

PETITION FOR CIVIL FORFEITURE

Filed by the AMLC, before any RTC of the Judicial Region where
monetary instrument/property is located
SECURITIES REGULATION CODE
BLUE SKY LAW – regulates the offering and sale of securities to
protect the public from fraudulent or overly speculative
investments.
-- The law aims to protect the public by the registration of
securities, brokers, dealers, exchanges, and to impose penalties
for non-registration and for selling unregistered securities.
HOWEY TEST –
for an investment contract to exist, the following elements,
referred to as the Howey test must concur: (1) a contract,
transaction, or scheme; (2) an investment of money; (3)
investment is made in a common enterprise; (4) expectation of
profits; and (5) profits arising primarily from the efforts of others.
SECURITIES REGULATION CODE
• Take note of transactions exempt from registration (EXEMPT
TRANSACTIONS i.e., isolated transctions, sale to “qualified
buyers”, judicial sale, stock dividend, sale to own stockholders,
conversion, etc)
• And securities exempt from registration (EXEMPT
SECURITIES, i.e., issued by the government, issued by a
bank, etc) .
• PROTECTION OF SHAREHOLDERS INTEREST:
• PROHIBITION AGAINST MANIPULATIVE PRACTICES
• TENDER OFFER RULE – offer by the acquiring person to
stockholders of a public company to tender their shares on
the term specified in the offer
• PROHIBITION AGAINST INSIDER TRADING –
• Issuer  Issuer itself, director, govt employee, person
whose relationship to the issuer gives access to material
non-public information
INTELLECTUAL PROPERTY CODE;
(11) PEARL & DEAN CASE
P&D invented advertising light boxes. P&D filed a copyright claim
with the National Library. The advertising light boxes were
marketed under the trademark Poster Ads.
Then, P&D entered into a contract with SM for the use of the light
boxes. SM reneged on the contract and made its own light boxes
instead, using the invention of P&D as a pattern. Can P&D sue
for copyright infringement? What about patent infringement? What
about trademark infringement?
IP; PEARL & DEAN CASE
Trademark, copyright and patents are different intellectual
property rights that cannot be interchanged with one another. A
trademark is any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall
include a stamped or marked container of goods. In relation
thereto, a trade name means the name or designation identifying
or distinguishing an enterprise. Meanwhile, the scope of a
copyright is confined to literary and artistic works which are
original intellectual creations in the literary and artistic domain
protected from the moment of their creation. Patentable
inventions, on the other hand, refer to any technical solution of a
problem in any field of human activity which is new, involves an
inventive step and is industrially applicable.
IPLAW; PEARL AND DEAN
No copyright infringement.
P & D secured its copyright under the classification class O work.
This being so, petitioners copyright protection extended only to
the technical drawings and not to the light box itself because the
latter was not at all in the category of prints, pictorial illustrations,
advertising copies, labels, tags and box wraps.
No patent infringement.
No patent, no protection.
No trademark infringement.
Trademark registration extends only to those specified in the
certificate.
POINTERS: INTELLECTUAL PROP
• Intellectual property rights are different from the physical property
created through the intellectual property. (I own a book, but the
copyright of the book is retained by the author.)
• Copyright is subject to automatic protection from the moment of
creation (submission to national library is not required for
copyright protection). Trademark and patent needs to be
registered to be protected.
• Unfair competition does not cover every unfair act committed in
the course of business; covers only acts characterized by
deception in the passing off of goods as those of another. (Coca
Cola bottles hoarding case)
• PATENT: 20 years protection. NEW (not part of prior art),
INVENTIVE STEP (test of non-obviousness – Utility Model only, if
not present), INDUSTRIALLY APPLICABLE
• Doctrine of equivalents
• Doctrine of divisional applications
• Compulsory licensing
POINTERS; IP LAW
• TRADEMARK. Prior use not required.
• Test to determine infringement: Dominancy Test.
• Ordinary intelligent buyer rule. Taiwan Kolin v. Kolin Electronics
– aircon and electronics
POINTERS: IP LAW
Ordinary intelligent buyer rule – ketchup vs. lechon sauce
POINTERS: IP LAW
• COPYRIGHT – life plus 50 years after death
• It need not be fixed into a medium. Thus, choreographic works
are also copyrightable.
• Derivative works ((dramatization or collections of original
works) are in themselves copyrightable
• Mere idea, procedures, method of operations are not
copyrightable
• G.R. Author has right to reproduce, sell, display work, and
prohibit others from doing similar acts.
• Exceptions: Fair Use Doctrine (purpose and character of use,
nature of copyrighted work, amount and substantiality of the
work used, effect of the use on the potential market).
• Other uses that do not constitute infringement (performance
free of charge for a charitable institution, for educational
purposes, etc.)
FINANCIAL REHABILITATION AND
INSOLVENCY ACT OF 2010
I. Suspension of Payments
– by an individual debtor, who have sufficient assets to cover
liabilities, but foresees difficulty in paying them as they fall due.
-- file a verified petition
-RTC of the province or city which he resides for 6 months
prior to the filing of his petition

II. REHABILITATION
A. Court supervised
A. VOLUNTARY – Owner (sole proprietorship), majority of
partners, majority vote of BOD + 2/3 OCS. – File with RTC
(special commercial Court) with jurisdiction over principal
office of debtor
FRIA
II. REHABILITATION (liabilities are more than the assets)
A. COURT SUPERVISED
2. INVOLUNTARY – Creditor/group of creditors with an
aggregate claim of at least 1M, or at least 25% subscribed capital
stock, whichever is higher
B. PRE-NEGOTIATED – insolvent debtor, approved by debtor
with at least 2/3 total liabilities including secured creditors holding
more than 50% total secured claim, and unsecured holding more
than 50% unsecured claim
C. OUT-OF-COURT /INFORMAL RESTRUCTURING
- debtor, plus 67% secured, 75% unsecured, 85% total liabilities.
FRIA
LIQUIDATION
A. VOLUNTARY – insolvent debtor; individual debtor with at
least 500K debt who does not have sufficient assets to cover
liabilities
B. INVOLUNTARY
A. Insolvent debtor – 1 or more creditors with total claim at
least 500K
B. Sole proprietor, partnership, corporation – 3 or more
creditors, aggregate claim at least 1M, or at least 25%
subscribed CS, whichever is higher
FRIA
• If the court finds the petition meritorious, it will issue a
COMMENCEMENT ORDER, which shall include a STAY
ORDER suspending all actions or proceedings, including
employees claims, taxes. Etc.
• Is a letter of credit transaction also suspended by a
Commencement Order? NO. Transaction is solidary in
nature. Solidary claims are not suspended by the Stay
Order.
• CRAMDOWN RULE – The court can confirm the Rehabilitation
Plan despite rejection by the Creditors (requisites, i.e., the plan
complies with requirements, if the rehab preceiver
recommends confirmation, shareholders lose controlling
interest)
• STANDSTILL PERIOD – Not exceeding 120 days. Agreement
is approved by more than 50% total liabilities, publication, 
CRAM DOWN EFFECT
INSURANCE
POINTERS
PARTIES: Insurer; Insured; Beneficiary
OBJECT: Insurance of a risk insured against
CAUSE: Premium
Insurable interest –pecuniary interest in the preservation of the thing and a
pecuniary loss in its destruction. Otherwise it is a wagering contract.

Who can be an Insured?

As to Life/Health
You can insure your own life.
How about another’s life and health?
Section 10.
• Boyfriend? No, unless he supports you for education or support
• Employee? Yes, pecuniary interest.
• Child who is no longer minor? Yes. Law does not distinguish.
• Spouse legally separated? Yes, the law does not distinguish.
POINTERS
Insurable Interest As to Property
• property
• any interest therein (co-owner)
• liability in respect thereof (mortgagee)
• inchoate interest founded on an existing interest (insurance
of corporate assets by a shareholder)
• expectancy coupled with an existing interest (expected
profits; expected eggs from a chicken)
Mortgagor insures the stocks. Mortgagee also insures the
stocks. The stocks were razed in a fire. The insurer of the
mortgagor declines to pay because of the existence of
insurance contract by mortgagee. Correct?
No. The mortgagor and mortgagee have different insurable interests.
POINTERS: INSURANCE
PREMIUMS:
G.R. Cash and carry rule (Not valid until actual payment)
Exception:
• In case of life and industrial life whenever grace period applies
• Acknowledgment that premium had already been paid
• Parties have agreed to installment, partial payment already
made
• Credit term was already agreed upon
POLICY:
Cover notes shall be valid and binding not more than 60 days
from date of issuance
Riders are not valid unless descriptive title mentioned in the
policy
POINTERS: INSURANCE
INCONTESTABILITY CLAUSE
Purpose (Aban case)
Section 48 serves a noble purpose, as it regulates the actions of both
the insurer and the insured. Under the provision, an insurer is given two
years – from the effectivity of a life insurance contract and while the
insured is alive – to discover or prove that the policy is void ab initio or
is rescindible by reason of the fraudulent concealment or
misrepresentation of the insured or his agent. After the two-year period
lapses, or when the insured dies within the period, the insurer must
make good on the policy, even though the policy was obtained by fraud,
concealment, or misrepresentation.

Insular Life Assurance v. Khu (2016, del Castillo case) -- unclear. SC said
that reinstatement should be from the point insurer agreed and paid
premiums on Dec 27, 1999. Khu Died on 22 September 2001, within the 2
year period.
but the letter of acceptance signed by Felipe shows that the insurance is
effective on 22 June 1999; Endorsement effective 22 June 1999)
POINTERS: INSURANCE
Co-insurance clause:
• a property insurance provision that penalizes
the insured's loss recovery if the limit of insurance purchased
by the insured is not at least equal to a specified percentage
(commonly 80 percent) of the value of the insured property
• Implied in marine insurance.
No fault clause in Compulsory motor vehicle liability
insurance (up to 15K)

Double insurance vs. reinsurance

Proximate cause vs. immediate cause; excepted peril
Right of subrogation by insurance company as soon as
insurer pays the insured
TRANSPOR
TATION
 TRANSPO; MANAY V. CEBU AIR;
GR NO. 210621, 4/4/16
FACTS
Carlos S. Jose (Jose) purchased 20 Cebu Pacific round-trip tickets from
Manila to Palawan for himself and his friends. He made the purchase at
Cebu Pacific's branch office in Robinsons Galleria. Jose specified to
"Alou," the Cebu Pacific ticketing agent, his preferred date and time of
departure from Manila to Palawan, and vice versa. After paying for the
tickets, Alou printed the tickets, which consisted of three (3) pages, and
recapped only the first page to him. Since the first page contained the
details he specified to Alou, he no longer read the other pages of the
flight information.
Then, Jose and his 19 companions boarded the Cebu Pacific flight to
Palawan and had an enjoyable three day stay. In the afternoon of the
third day, the group proceeded to the airport for their flight back to
Manila, as stated in the recap. During the processing of their boarding
passes, they were informed by Cebu Pacific personnel that nine (9) of
them could not be admitted because their tickets were for the 1005 (or
10:05 a.m.) flight earlier that day.
MANAY V. CEBU AIR
Jose informed the ground personnel that he personally purchased
the tickets and specifically instructed the ticketing agent that all 20
of them should be on the 4:15 p.m. flight to Manila.
Upon checking the tickets, they learned that only the first two (2)
pages had the schedule Jose specified, but the rest were
scheduled on the morning flight. They were left with no other
option but to rebook their tickets for the next day, which was
P7,000 more expensive than the promo tickets. Jose paid for the
rebooking fee.
Jose sued Cebu Pacific for the cost of the rebooking and their
accommodation expenses.
IS CEBU PACIFIC LIABLE?
MANAY V. CEBU AIR
RULING
Cebu Pacific is not liable.
The Air Passenger Bill of Rights mandates that the airline must
inform the passenger in writing of all the conditions and
restrictions in the contract of carriage. Purchase of the contract of
carriage binds the passenger and imposes reciprocal obligations
on both the airline and the passenger. The airline must exercise
extraordinary diligence in the fulfillment of the terms and
conditions of the contract of carriage. The passenger, however,
has the correlative obligation to exercise ordinary diligence
in the conduct of his or her affairs.
(NOTE: The obligation of the airline to exercise extraordinary
diligence commences upon the issuance of the contract of
carriage. Ticket, as the act of issuing the contract of carriage, is
necessarily included in the exercise of extraordinary diligence.)
BILL OF LADING; DBI V. AIR SEA
TRANSPORT INC (ASTI);
GR 184513; 3/9/16
DBI (Phils) will send to Ambiente (US) 223 cartons of assorted
wooden items.
Ambiente designated ASTI/ACCLI as forwarding agent that will
ship out its order from the Phils to US. DBI retained possession
of the original bills of lading pending payment of the goods.
Without the knowledge of DBI, ASTI/ACCLI delivered shipment
without receiving payment.
Ambiente failed to pay DBI. DBI sued the carrier ASTI/ACCLI
carrier for payment of goods because it released the goods to the
buyer without demanding for the Bill of Lading. ASTI/ACCLI
claims that this is a simple case of nonpayment by the buyer, and
as such, it should not be held liable.
IS ASTI, THE COMMON CARRIER, LIABLE?
BILL OF LADING; DBI V. AIR SEA
TRANSPORT INC (ASTI);
GR 184513; 3/9/16
RULING
• A bill of lading (BOL) is defined as "a written acknowledgment
of the receipt of goods and an agreement to transport and to
deliver them at a specified place to a person named or on his
order.”
• Non-surrender of original BOL does not violate the carrier’s
duty of extraordinary diligence over the goods. Article 353 of
the Code of Commerce gives alternatives. If BOL lost or other
cause, consignee must issue a receipt to the carrier upon the
release of goods, such receipt shall produce the same effect
as the surrender of BOL.
• Civil Code provisions on extraordinary diligence of common
carriers (presumption of fault) is not applicable, because there
is no loss, destruction, or deterioration of the goods.
THREE-FOLD CHARACTER OF
BILL OF LADING
(1) Receipt for the goods shipped.
(2) Evidence of the terms of the contract of
carriage
(3) Document of title to the goods specified
in the Bill of Lading
TRANSPO; TRAVEL & TOURS ADVISERS
INC V. CRUZ;
GR NO. 199282, 3/14/16

Passenger bus travelled in the same direction as a jeepney. The

bus bumped the rear portion of the jeepney causing it to ram into
an acacia tree which resulted to the death of a passenger who
was clinging at the back of the jeepney. The jeepney driver veered
out of its route and was overloaded with passengers.
WHO IS/ARE LIABLE FOR THE DEATH OF THE
PASSENGER?
TRANSPO; TRAVEL & TOURS
ADVISERS INC V. CRUZ; GR NO.
199282, 3/14/16
RULING
Proximate cause is the negligence of the petitioner’s bus driver, with
contributory negligence by the driver and the owner of the jeepney.
The drivers of vehicles who bump the rear of another vehicle are
presumed to be the cause of the accident, unless contradicted by
other evidence. The driver of the rear vehicle has full control of the
situation as he is in a position to observe the vehicle in front of him.
The driver of the jeepney is guilty of contributory negligence,
because it veered out of the authorized route.

(Note also that the owners are vicariously liable, under culpa
aquiliana. If under culpa contractual, the owners are primarily
liable).
COGSA; EASTERN SHIPPING LINES V.
BPI/MS INSURANCE CORP; GR 182864
In Japan, Sumitomo Corporation shipped on board ESLI’s vessel
M/V “Eastern Venus 22” 22 coils of various Steel Sheet in good
order and condition for transportation to and delivery at the port of
Manila, Philippines in favor of Calamba Steel located in Laguna
as evidenced by a Bill of Lading.
The shipment arrived in Manila in an unknown condition and
turned over to the arrastre operator, ATI, for safekeeping. Upon
withdrawal of the shipment by Calamba Steel, it was found out
that part of the shipment was damaged.
Calamba Steel sued the common carrier ESLI and ATI, the
arrastre operator, for damages.
In its defense, ESLI is saying that its liability is limited to US$500
per package under the COGSA. Is ESLI’s liability limited?
COGSA; EASTERN SHIPPING
LINES V. BPI/MS INSURANCE
CORP; GR 182864
RULING: ESLI’s liability is not limited.
The New Civil Code provides that a stipulation limiting a common
carrier’s liability to the value of the goods appearing in the bill of
lading is binding, unless the shipper or owner declares a greater
value.
COGSA, on the other hand, provides under Section 4, Subsection 5
that an amount recoverable in case of loss or damage shall not
exceed US$500.00 per package or per customary freight unless the
nature and value of such goods have been declared by the
shipper before shipment and inserted in the bill of lading.
Here, the Bill of Lading made reference to the invoice, which
“contains the itemized list of goods shipped to a buyer, stating
quantities, prices, shipping charges,” and other details which may
contain numerous sheets. This is sufficient compliance.
MARITIME COMMERCE; UNKNOWN OWNER
OF M/V CHINA JOY V. ATI, GR NO. 195661,
11 MARCH 2015
The cargo ship M/V “China Joy” (the Vessel) arrived at the Mariveles
Grain Terminal Wharf, operated by plaintiff [ATI]. The Vessel carried soybean
meal that had been shipped by ContiQuincyBunge L.L.C[.]
(ContiQuincyBunge), an exporter of soybean meal and related products, in
favor of several consignees in the Philippines.
Under the Charter Party Agreement over M/V “China Joy,” ContiQuincyBunge
represented itself as the Charterer of the Vessel, with San Miguel Foods, Inc.
as Co-Charterer, and defendant [Samsun] represented itself as the Agent of
the Shipowners.
ATI used an Unloader to unload the soybean meal. But then, the unloading
operations were suddenly halted when the head of the unloader hit a foreign
metal object in the middle of the soybean meal, which caused damage to the
unloader of ATI.
ATI sued the ship agent of the vessel and the consignees. The ship agent
argued that, under the Charter Party Agreement, the loading and unloading of
the cargo, as well as any damages that may be incurred, is the responsibility
of the charterer. Is the ship agent correct?
MARITIME COMMERCE; UNKNOWN OWNER
OF M/V CHINA JOY V. ATI, GR NO. 195661, 11
MARCH 2015
RULING
No, because ATI is not bound by the Charter Party Agreement.
There is likewise no contract of carriage between ATI, on one hand, and the
shipowner on the other. It likewise bears stressing that the subject of the
complaint, from which the instant petition arose, is not the damage caused to
the cargo, but to the equipment of an arrastre operator.
• NOTE: The functions of an arrastre operator involve the handling of cargo
deposited on the wharf or between the establishment of the consignee or
shipper and the ship’s tackle. Being the custodian of the goods
discharged from a vessel, an arrastre operator’s duty is to take good care
of the goods and to turn them over to the party entitled to their
possession.”
• “The legal relationship between an arrastre operator and a consignee is
akin to that between a warehouseman and a depositor. As to both the
nature of the functions and the place of their performance, an arrastre
operator’s services are clearly not maritime in character.