2nd Half Cases-Rulings Only

INSURANCE LAW
Introduction
1. White Gold Marine Services vs. Pioneer Insurance, et al. 464 SCRA 448, G.R. No. 154514. July 28, 2005
ISSUE:
Whether or not Steamship Mutual is a Protection and Indemnity Club engaged in the
insurance business in the Philippines
HELD:
Insurance contract is a contract of indemnity. In it, one undertakes for a consideration
to indemnify another against loss, damage or liability arising from an unknown or contingent
event. A mutual insurance company is a cooperative enterprise where the members are
both the insurer and insured. In it, the members all contribute, by a system of premiums or
assessments, to the creation of a fund from which all losses and liabilities are paid, and
where the profits are divided among themselves, in proportion to their interest.
A P & I Club is “a form of insurance against third party liability, where the third party is
anyone other than the P & I Club and the members.” By definition then, Steamship Mutual
as a P & I Club is a mutual insurance association engaged in the marine insurance business.
Since a contract of insurance involves public interest, regulation by the State is necessary.
Thus, to continue doing business here, Steamship Mutual or through its agent Pioneer, must
secure a license from the Insurance Commission.
2. Philamcare Health Systems Inc. vs. CA, 379 SCRA 356, G.R. No. 125678, March 18, 2002
ISSUE:
Whether a health care agreement is an insurance contract.
HELD:
Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement
whereby one undertakes for a consideration to indemnify another against loss, damage or
liability arising from an unknown or contingent event. An insurance contract exists where the
following elements concur:
i) The insured has an insurable interest;
ii) The insured is subject to a risk of loss by the happening of the designated peril;
iii) The insurer assumes the risk;
iv) Such assumption of risk is part of a general scheme to distribute actual losses
among a large group of persons bearing a similar risk; and
v) In consideration of the insurer’s promise, the insured pays a premium.
In the case at bar, the insurable interest of respondent’s husband in obtaining the health
care agreement was his own health. The health care agreement was in the nature of non-
life insurance, which is primarily a contract of indemnity. Once the member incurs hospital,
medical or any other expense arising from sickness, injury or other stipulated contingent, the
health care provider must pay for the same to the extent agreed upon under the contract.
3. Gulf Resorts Inc. vs. Philippine Charter Insurance Corp. 458 SCRA 550, G.R. No. 156167, May 16, 2005
Each of the provisions of the insurance policy must be interpreted in consonance with
each other. All its parts are reflective of the true intent of the parties. The policy cannot be
construed piecemeal. A reading of the policy including riders and clauses taken all together
show that the intention of the parties is to extend the earthquake shock clause only to the
two swimming pools. The evidence presented to the trial court readily showed that only the
Juicy Digest – Commercial Law Review 2015-2016 - Page 1 of 39

swimming pools are intended to be covered by the earthquake shock clause. Aside from
this, no premiums were paid for other properties in consideration for the earthquake shock
clause other than for the two swimming pools in violation of Sec 77 of the ICP.
4. Eternal Gardens vs. Phil. American 551 SCRA 1, G.R. No. 166245, April 9, 2008
An examination of the provision of the POLICY under effective date of benefit, would
show ambiguity between its two sentences. The first sentence appears to state that the
insurance coverage of the clients of Eternal already became effective upon contracting a
loan with Eternal while the second sentence appears to require Philamlife to approve the
insurance contract before the same can become effective.
An insurance contract is a contract of adhesion which must be construed liberally in
favor of the insured and strictly against the insurer in order to safeguard the latter’s interest.
Contract of Insurance
5. Enriquez vs. Sun Life Insurance of Canada, 41 PHIL 269, G.R. No. L-15895, November 29, 1920
The heirs may recover the premium because no contract of insurance was perfected
in this case. Article 1319 of the Civil Code provides that acceptance of an offer by letter
does not bind the offeror except from the time it came to his knowledge. In this case, Herrer
did not receive the letter of acceptance, hence the contract was never perfected and the
obligation of the insurer which was supposed to be covered by the premium did not
materialize. Consequently, the insurer is bound to return the consideration that it received
from the insured.
6. Great Pacific Life Assurance Co. vs. CA, 89 SCRA 543, G.R. No. L-31845, April 30, 1979
ISSUE:
Whether the binding deposit receipt constituted a temporary contract of the life
insurance?
HELD:
The binding deposit receipt in question is merely an acknowledgment, on behalf of
the company, that the latter's branch office had received from the applicant the insurance
premium and had accepted the application subject for processing by the insurance
company; and that the latter will either approve or reject the same on the basis of whether
or not the applicant is “insurable on standard rates." Since petitioner Pacific Life
disapproved the insurance application of respondent Ngo Hing, the binding deposit receipt
in question had never become in force at any time. In life insurance, a "binding slip" or
"binding receipt" does not insure by itself.
Insurable Interest
7. Spouses Cha vs. CA, 277 SCRA 690, G.R. No. 124520, August 18, 1997
A non-life insurance policy such as the fire insurance policy taken by petitioner-spouses
over their merchandise is primarily a contract of indemnity. Insurable interest in the property
insured must exist at the time the insurance takes effect and at the time the loss occurs. CKS
cannot, under the Insurance Code, be validly a beneficiary of the fire insurance policy taken
by the petitioner-spouses over their merchandise. This insurable interest over said

merchandise remains with the insured, the Cha spouses. The automatic assignment of the
policy to CKS under the provision of the lease contract previously quoted is void for being
contrary to law and/or public policy.
8. Geagonia vs. CA, 241 SCRA 152, G.R. No. 114427, February 6, 1995
Section 75 of the Insurance Code provides that "[a] policy may declare that a
violation of specified provisions thereof shall avoid it, otherwise the breach of an immaterial
provision does not avoid the policy." It is commonly known as the additional or "other
insurance" clause and has been upheld as valid and as a warranty that no other insurance
exists. Its violation would thus avoid the policy. However, in order to constitute a violation,
the other insurance must be upon same subject matter, the same interest therein, and the
same risk. Thus, double insurance exists where the same person is insured by several insurers
separately in respect of the same subject and interest.
As to a mortgaged property, the mortgagor and the mortgagee have each an
independent insurable interest therein and both interests may be one policy, or each may
take out a separate policy covering his interest, either at the same or at separate times. A
mortgagor may, however, take out insurance for the benefit of the mortgagee, which is the
usual practice. The mortgagee may be made the beneficial payee in several ways. He may
become the assignee of the policy with the consent of the insurer; or the mere pledgee
without such consent; or the original policy may contain a mortgage clause; or a rider
making the policy payable to the mortgagee "as his interest may appear" may be attached;
or a "standard mortgage clause," containing a collateral independent contract between
the mortgagee and insurer, may be attached; or the policy, though by its terms payable
absolutely to the mortgagor, may have been procured by a mortgagor under a contract
duty to insure for the mortgagee's benefit, in which case the mortgagee acquires an
equitable lien upon the proceeds.
In the case at bar, the fire insurance policies issued by the PFIC contain a simple loss
payable clause, not a standard mortgage clause. Consequently, the insurable interests of
the mortgagor Geagonia and the mortgagee Tesing Textiles on the mortgaged property
(stock trading of dry goods )are distinct and separate. Since the two policies of the PFIC do
not cover the same interest as that covered by the policy of Country Bankers Insurance
Corporation, no double insurance exists. The non-disclosure then of the former policies was
not fatal to the petitioner's right to recover on the private respondent's policy.
9. Gaisano Cagayan, Inc. vs. Ins Co of North America, 490 SCRA 286, G.R. No. 147839, June 8, 2006
ISSUE:
Who bears the risk of loss?
HELD:
IMC and LSPI. A vendor or seller retains an insurable interest in the property until full payment
of the value of the delivered goods. Unlike the civil law concept of res perit domino, where
ownership is the basis for consideration of who bears the risk of loss, in property insurance,
one’s interest is not determined by concept of title, but whether insured has substantial
economic interest in the property.

Devices For Ascertaining And Controlling Risk And Loss
10. Great Pacific Life Assurance vs. CA, 316 SCRA 678, G.R. No. 113899, October 13, 1999
The fraudulent intent on the part of the insured must be established to entitle the
insurer to rescind the contract. Misrepresentation as a defense of the insurer to avoid liability
is an affirmative defense and the duty to establish such defense by satisfactory and
convincing evidence rests upon the insurer. In the case at bar, the petitioner failed to clearly
and satisfactorily establish its defense, and is therefore liable to pay the proceeds of the
insurance.
11. Sun Life of Canada vs. CA & Bacani, 245 SCRA 268, CA, G.R. No. 105135, June 22, 1995
ISSUE:
Whether or not the concealment of such material fact, despite it not being the cause
of death of the insured, is sufficient to render the insurance contract voidable
HELD:
YES. Section 26 of the Insurance Code is explicit in requiring a party to a contract of
insurance to communicate to the other, in good faith, all facts within his knowledge which
are material to the contract and as to which he makes no warranty, and which the other
has no means of ascertaining. Anent the finding that the facts concealed had no bearing to
the cause of death of the insured, it is well settled that the insured need not die of the
disease he had failed to disclose to the insurer. It is sufficient that his non-disclosure misled the
insurer in forming his estimates of the risks of the proposed insurance policy or in making
inquiries.
12. Philamcare Health Systems Inc. vs. CA, 379 SCRA 356, G.R. No. 125678, March 18, 2002
Failure of the insured to disclose information largely depends on opinion rather than
fact, especially coming from respondent's husband who was not a medical doctor. Where
matters of opinion or judgment are called for, answers made in good faith and without
intent to deceive will not avoid a policy even though they are untrue. Thus the fraudulent
intent on the part of the insured must be established to warrant rescission of the insurance
contract. Concealment as a defense for the health care provider or insurer to avoid liability
is an affirmative defense and the duty to establish such defense rests upon the provider or
insurer.
13. Vda de Canilang vs. CA, 223 SCRA 443, G.R. No. 92492, June 17, 1993
The information which Jaime Canilang failed to disclose was material to the ability of
Great Pacific to estimate the probable risk he presented as a subject of life insurance. Had
Canilang disclosed his visits to his doctor, the diagnosis made and medicines prescribed by
such doctor, in the insurance application, it may be reasonably assumed that Great Pacific
would have made further inquiries and would have probably refused to issue a non-medical
insurance policy or, at the very least, required a higher premium for the same coverage. The
materiality of the information withheld by Great Pacific did not depend upon the state of
mind of Jaime Canilang. A man’s state of mind or subjective belief is not capable of proof in
our judicial process, except through proof of external acts or failure to act from which
inferences as to his subjective belief may be reasonably drawn. Neither does materiality
depend upon the actual or physical events which ensure. Materiality relates rather to the
“probable and reasonable influence of the facts” upon the party to whom the
communication should have been made, in assessing the risk involved in making or omitting

to make further inquiries and in accepting the application for insurance; that “probable and
reasonable influence of the facts” concealed must, of course, be determined objectively,
by the judge ultimately.
14. Tan vs. CA, 174 SCRA 403, G.R. No. 48049, June 29, 1989
The policy was in forced for a period of less than 2 years. The insurer therefore, is not
yet barred from proving that the policy is void ab initio by reason of misrepresentation.
Incontestability clause is not applicable.
15. Prudential Guarantee vs. Trans-Asia Shipping Lines 491 SCRA 411, G.R. No. 151890, June 20, 2006
It is generally accepted that warranty is a statement or promise set forth in the policy, or
by reference incorporated therein, the untruth or non-fulfillment of which in any respect, and
without reference to whether the insurer was in fact prejudiced by such untruth or non-
fulfillment, renders the policy voidable by the insurer. However, it is similarly indubitable that
for the breach of a warranty to avoid a policy, the same must be duly shown by the party
alleging the same. We cannot sustain an allegation that is unfounded. Consequently,
PRUDENTIAL, not having shown that TRANS-ASIA breached the warranty condition, CLASSED
AND CLASS MAINTAINED, it remains that TRANS-ASIA must be allowed to recover its rightful
claims on the policy.
16. Florendo v. Philam Plans, 666 SCRA 618, G.R. No. 186983, February 22, 2012
ISSUE:
Whether Florendo is guilty of concealing his illness when he kept blank and did not
answer questions in his pension plan application and whether Philam Plan’s approval of
Florendo’s pension plan application and acceptance of his premium payments precluded it
from denying Lourde’s claim.
HELD:
In signing the application without filling in the details regarding his continuing
treatments for heart condition and diabetes, the assumption is that he has never been
treated for the said illnesses in the last five years preceding his application. Since Philam
Plans waived medical examination for Florendo, it had to rely largely on his stating the truth
regarding his health in his application. It is clear from these representations that there was
concealment.
The insurance plan contains an incontestability clause, which precludes the insurer
from disowning liability under the policy it issued on the ground of concealment or
misrepresentation regarding the health of the insured after a year of its issuance. Since
Florendo died on the eleventh month following the issuance of his plan, the one-year
incontestability period has not yet set in. Consequently, Philam Plans was not barred from
questioning Lourdes entitlement to the benefits of her husbands pension plan.
The Policy of Insurance
17. Pacific Timber Export Corporation vs. CA, 112 SCRA 199, G.R. No. L-38613, February 25, 1982
ISSUE: Whether the cover note was void for lack of consideration.
HELD:
No. The fact that no separate premium was paid for the cover notes does not militate
against the validity of PTEC’s contract. No separate premium is required for cover notes.

18. ATI vs First Lepanto-Taisho Insurance Corp, 726 SCRA 415, G.R. No. 185964, June 16, 2014
ISSUE:
Whether the presentation of insurance policy is indispensable in proving the right of
FIRST LEPANTO to be subrogated to the right of the consignee.
HELD:
The non-presentation of the insurance contract is not fatal to FIRST LEPANTO’s right to
collect reimbursement as the subrogee of GASI. As a general rule, the marine insurance
policy needs to be presented in evidence before the insurer may recover the insured value
of the lost/damaged cargo in the exercise of its subrogatory right. Nevertheless, the rule is
not inflexible. In certain instances, the Court has admitted exceptions by declaring that a
marine insurance policy is dispensable evidence in reimbursement claims instituted by the
insurer because the loss of the cargo undoubtedly occurred while on board the petitioner’s
vessel.
With ATI’s liability having been positively established, to strictly require the presentation
of the insurance contract will run counter to the principle of equity upon which the doctrine
of subrogation is premised. Subrogation is designed to promote and to accomplish justice
and is the mode which equity adopts to compel the ultimate payment of a debt by one
who in justice, equity and good conscience ought to pay.
Premium
19. Makati Tuscany Condominium Corp. vs. CA, 215 SCRA 462, GR. No. 95546, November 6, 1992
ISSUE:
Whether payment by installment of the premiums due on an insurance policy
invalidates the contract of insurance, in view of Sec. 77 of the Insurance Code and entitles
the insured for the refund of premium.
HELD:
The subject policies are valid even if the premiums were paid on installments. While the
import of Section 77 is that prepayment of premiums is strictly required as a condition to the
validity of the contract, the request to make installment payments duly approved by the
insurer, would NOT prevent the entire contract of insurance from going into effect despite
payment and acceptance of the initial premium or first installment. Section 78 of the
Insurance Code in effect allows waiver by the insurer of the condition of prepayment by
making an acknowledgment in the insurance policy of receipt of premium as conclusive
evidence of payment so far as to make the policy binding despite the fact that premium is
actually unpaid. It appearing from the peculiar circumstances that the parties actually
intended to make three (3) insurance contracts valid, effective and binding, Tuscany may
not be allowed to renege on its obligation to pay the balance of the premium after the
expiration of the whole term of the third policy. Where the risk is entire and the contract is
indivisible, the insured is not entitled to a refund of the premiums paid if the insurer was
exposed to the risk insured for any period, however brief or momentary.
20. UCPB General Insurance vs. Masagana Telamart, 356 SCRA 307, G.R. No. 137172, June 15, 1999
Issue:
Whether the fire insurance policies issued by UCPB to Masagana had been extended
or renewed by an implied credit arrangement though actual payment of premium was
tendered on a later date and after the occurrence of the risk insured against.

Held:
No. An insurance policy, other than life, issued originally or on renewal, is not valid and
binding until actual payment of the premium. Any agreement to the contrary is void. The
parties may not agree expressly or impliedly on the extension of credit or time to pay the
premium and consider the policy binding before actual payment
21. UCPB General Insurance vs. Masagana Telemart, R E S O L U T I O N, 356 SCRA 307, G.R. No. 137172, April 4, 2001
Issue:
Whether Section 77 of the Insurance Code must be strictly applied to UCPB's
advantage despite its practice of granting a 60- to 90-day credit term for the payment of
premiums.
Held:
It would be unjust and inequitable if recovery on the policy would not be permitted
against UCPB which had consistently granted a 60- to 90-day credit term for the payment of
premiums despite its full awareness of Section 77. Estoppel bars it from taking refuge under
said Section, since Masagana relied in good faith on such practice.
Note that the SC reversed its earlier decision dated June 15 1999 in the same case
which sustained the insurer’s position. In a way, this case laid down the 5 exceptions to the
rule that the policy is not valid and binding unless the premiums have been paid(Sec. 77).
These exceptions are as follows:
i. When the grace period provision applies in case of a life or industrial life policy
(Sec. 77)
ii. When there is an acknowledgment in the policy or receipt that the premium has
been made (Sec 78)
iii. When there is an agreement that the premium shall be payable on installment
(Makati Tuscany Condominium Corporation vs. CA - G.R. No. 95546, November
6, 1992)
iv. When there is a credit extension (Makati Tuscany Condominium Corporation vs.
CA - G.R. No. 95546, November 6, 1992)
v. When the equitable doctrine of estoppel applies. (Settled for the first time in this
case)
Persons entitled to recover on the policy and conditions to recovery
22. Bonifacio Bros. Inc. vs. Mora, 20 SCRA 261, G.R. No. L-20853, May 29, 1967
Contracts take effect only between the parties thereto, except in some specific
instances provided by law where the contract contains some stipulation in favor of a third
person which is known as a stipulation pour autrui or a provision in favor of a third person not
a party to the contract. Under this doctrine, a third person is allowed to avail himself of a
benefit granted to him by the terms of the contract, provided that the contracting parties
have clearly and deliberately conferred a favor upon such person. Consequently, a third
person, not a party to the contract, has no action against the parties thereto, and cannot
generally demand the enforcement of the same.
23. The Insular Life Assurance vs. Ebrado, 80 SCRA 181, G.R. No. L-44059, October 28, 1977
ISSUE:
Whether or not a common-law wife named as beneficiary in the life insurance policy
of a legally married man claim the proceeds thereof in case of death of the latter.
HELD:
A common-law wife named as a beneficiary in the life insurance policy of a legally
married man cannot claim the proceeds thereof in case the death of the latter. When not
otherwise specifically provided for by the Insurance Law, the contract of life insurance is
governed by the general rules of the civil law regulating contracts. And under Article 2012 of
the same Code, “any person who is forbidden from receiving any donation under Article 739
cannot be named beneficiary of a life insurance policy by the person who cannot make a
donation to him. Common-law spouses are, definitely, barred from receiving donations from
each other. “In essence, a life insurance policy is no different from a civil donation insofar as
the beneficiary is concerned. Both are founded upon the same consideration: liberality. A
beneficiary is like a donee, because the premiums of the policy which the insured pays out
of liberality, the beneficiary will receive the proceeds or profits of said insurance.”
24. Vda. de Consuegra vs. GSIS, 37 SCRA 315, G.R. No. L-28093, January 30, 1971
ISSUE:
Whether the beneficiaries named in the life insurance should automatically be
considered the beneficiaries to receive the retirement insurance benefits when the insured
failed to designate the beneficiaries in his retirement insurance.
HELD:
The insured in a life insurance may designate any person as beneficiary unless
disqualified to be so under the provisions of the Civil Code.And in the absence of any
beneficiary named in the life insurance policy, the proceeds of the insurance will go to the
estate of the insured. Retirement insurance on the other hand, is primarily intended for the
benefit of the employee. The beneficiary of the retirement insurance can only claim the
proceeds of the retirement insurance if the employee dies before retirement. If the
employee failed or overlooked to state the beneficiary of his retirement insurance, the
retirement benefits will accrue to his estate and will be given to his legal heirs in accordance
with law, as in the case of a life insurance if no beneficiary is named in the insurance policy.
The proceeds of the retirement insurance of the late Jose Consuegra should be
divided equally between his first living wife Rosario Diaz, on the one hand, and his second
wife Basilia Berdin and his children by her, on the other. Although the second marriage can
be presumed to be void ab initio as it was celebrated while the first marriage was still
subsisting, still there is need for judicial declaration of such nullity. And inasmuch as the
conjugal partnership formed by the second marriage was dissolved before judicial
declaration of its nullity, "the only just and equitable solution in this case would be to
recognize the right of the second wife to her share of one-half in the property acquired by
her and her husband and consider the other half as pertaining to the conjugal partnership of
the first marriage."
Asian Terminals, Inc. v. Malayan Insurance, Co., Inc., 647 SCRA 111, G.R. No. 171406, April 4, 2011
ISSUE:
Whether the non-presentation of the insurance contract or policy is fatal to
respondent’s cause of action.
HELD:

Non-presentation of the insurance contract or policy is not fatal in the instant case.
The presentation in evidence of the marine insurance policy is not indispensable before the
insurer may recover from the common carrier the insured value of the lost cargo in the
exercise of its subrogatory right when the coverage of the insurance contract or policy was
not disputed. The right of subrogation accrues simply upon payment by the insurance
company of the insurance claim.
Although ATI objected to the admission of the Subrogation Receipt in its Comment to
respondent’s formal offer of evidence on the ground that respondent failed to present the
insurance contract or policy, a perusal of petitioner’s Answer and Pre-Trial Brief shows that
petitioner never questioned respondent’s right to subrogation, nor did it dispute the
coverage of the insurance contract or policy. Since there was no issue regarding the validity
of the insurance contract or policy, or any provision thereof, respondent had no reason to
present the insurance contract or policy as evidence during the trial.
Marine Insurance
25. Roque vs. IAC, 139 SCRA 596, G.R. No. L-66935, November 11, 1985
The term "cargo" can be the subject of marine insurance and that once it is so made,
the implied warranty of seaworthiness immediately attaches to whoever is insuring the cargo
whether he be the shipowner or not. In marine cases, the risks insured against are "perils of
the sea". The term 'perils of the sea' extends only to losses caused by sea damage, or by the
violence of the elements, and does not embrace all losses happening at sea. In the present
case the entrance of the sea water into the ship's hold through the defective pipe was not
due to any accident, which happened during the voyage, but to the failure of the ship's
owner properly to repair a defect of the existence of which he was apprised. The loss was
therefore more analogous to that which directly results from simple unseaworthiness than to
that which results from the perils of the sea.
Since the law provides for an implied warranty of seaworthiness in every contract of
ordinary marine insurance, it becomes the obligation of a cargo owner to look for a reliable
common carrier, which keeps its vessels in seaworthy condition. By parity of reasoning the
insurer is not liable.
26. Oriental Assurance Corporation vs. CA, 200 SCRA 459, G.R. No. 94052, August 9, 1991
ISSUE:
Whether or not Oriental Assurance can be held liable under its marine insurance policy
based on the theory of a divisible contract of insurance and, consequently, a constructive
total loss.
HELD:
The terms of the contract constitute the measure of the insurer liability and
compliance therewith is a condition precedent to the insured's right to recovery from the
insurer. The fact that the logs were loaded on two different barges did not make the
contract several and divisible as to the items insured. The logs on the two barges were not
separately valued or separately insured. Only one premium was paid for the entire shipment,
making for only one cause or consideration. The insurance contract must, therefore, be
considered indivisible.
The insurer's liability was for "total loss only." A total loss may be either actual or
constructive. Section 130, Insurance Code provides that an actual total loss is caused by:

(a) A total destruction of the thing insured;
(b) The irretrievable loss of the thing by sinking, or by being broken up;
(c) Any damage to the thing which renders it valueless to the owner for the purpose
for which he held it; or
(d) Any other event, which effectively deprives the owner of the possession, at the
port of destination, of the thing insured.
While a constructive total loss is one, which gives to a person insured a right to abandon,
under Section 139 of the Insurance Code to wit:
(a) If more than three-fourths thereof in value is actually lost, or would have to be
expended to recover it from the peril;
(b) If it is injured to such an extent as to reduce its value more than three-fourths;
Since the cost of the lost logs does not exceed 75% of the value of all the loaded logs,
the shipment can not be said to have sustained a constructive total loss under Section
139(a) of the Insurance Code. In the absence of either actual or constructive total loss,
there can be no recovery by the insured Panama against the insurer, Oriental Assurance.
Casualty Insurance
27. Finman General Assurance Co. vs. CA, 213 SCRA 493, G.R. No. 100970, September 2, 1992
Contracts of insurance are to be construed liberally in favor of the insured and strictly
against the insurer. Thus ambiguity in the words of an insurance contract should be
interpreted in favor of its beneficiary. The terms "accident" and "accidental" as used in
insurance contracts have not acquired any technical meaning, and are construed by the
courts in their ordinary and common acceptation. Thus, the terms have been taken to mean
that which happen by chance or fortuitously, without intention and design, and which is
unexpected, unusual, and unforeseen. Where the death or injury is not the natural or
probable result of the insured's voluntary act, or if something unforeseen occurs in the doing
of the act which produces the injury, the resulting death is within the protection of the
policies insuring against death or injury from accident. In the case at bar, it cannot be
pretended that Carlie Surposa died in the course of an assault or murder as a result of his
voluntary act considering the very nature of these crimes. Neither can it be said that where
was a capricious desire on the part of the accused to expose his life to danger considering
that he was just going home after attending a festival. Furthermore, the personal accident
insurance policy involved herein specifically enumerated only ten (10) circumstances
wherein no liability attaches to petitioner insurance company for any injury, disability or loss
suffered by the insured as a result of any of the stimulated causes. The principle of " expresso
unius exclusio alterius" — the mention of one thing implies the exclusion of another thing — is
therefore applicable in the instant case since murder and assault, not having been expressly
included in the enumeration of the circumstances that would negate liability in said
insurance policy cannot be considered by implication to discharge the petitioner insurance
company from liability for, any injury, disability or loss suffered by the insured. Thus, the failure
of the petitioner insurance company to include death resulting from murder or assault
among the prohibited risks leads inevitably to the conclusion that it did not intend to limit or
exempt itself from liability for such death.
28. Sun Insurance Office Ltd. vs. CA, 211 SCRA 554, G.R. No. 92383 July 17, 1992

The words "accident" and "accidental" have never acquired any technical signification in
law, and when used in an insurance contract are to be construed and considered
according to the ordinary understanding and common usage and speech of people
generally. In-substance, the courts have practically agreed that the words "accident" and
"accidental" mean that which happens by chance or fortuitously, without intention or
design, and which is unexpected, unusual, and unforeseen. Lim was unquestionably
negligent and that negligence cost him his own life. But it should not prevent his widow from
recovering from the insurance policy he obtained precisely against accident. There is
nothing in the policy that relieves the insurer of the responsibility to pay the indemnity agreed
upon if the insured is shown to have contributed to his own accident. Indeed, most
accidents are caused by negligence. It bears noting that insurance contracts are as a rule
supposed to be interpreted liberally in favor of the assured. There is no reason to deviate
from this rule, especially in view of the circumstances of this case as above analyzed.
29. Biagtan vs. The Insular Life Assurance Co., Ltd., 44 SCRA 58, G.R. No. L-25579, March 29, 1972
ISSUE:
Whether the wounds received by the insured at the hands of the robbers were
inflicted intentionally.
HELD:
It cannot be denied that the act itself of inflicting the injuries was intentional, whether
the robbers had the intent to kill or merely to scare the victim or to ward off any defense he
might offer. It should be noted that the exception in the accidental benefit clause invoked
by the appellant does not speak of the purpose — whether homicidal or not — of a third
party in causing the injuries, but only of the fact that such injuries have been "intentionally"
inflicted — this obviously to distinguish them from injuries which, although received at the
hands of a third party, are purely accidental. “Intentional" as used in an accident policy
excepting intentional injuries inflicted by the insured or any other person, etc., implies the
exercise of the reasoning faculties, consciousness and volition. Where a provision of the
policy excludes intentional injury, it is the intention of the person inflicting the injury that is
controlling. If the injuries suffered by the insured clearly resulted from the intentional act of a
third person the insurer is relieved from liability as stipulated.
Compulsory Motor Vehicle Liability Insurance
30. Vda. de Maglana vs. Hon. Consolacion, 212 SCRA 218, G.R. No. 60506, August 6, 1992
While it is true that where the insurance contract provides for indemnity against liability
to third persons, such third persons can directly sue the insurer, however, the direct liability of
the insurer under indemnity contracts against third party liability does not mean that the
insurer can be held solidarily liable with the insured and/or the other parties found at fault.
The liability of the insurer is based on contract; that of the insured is based on tort.
31. Tiu vs. Arriesgado, 437 SCRA 426, GR No. 138060, September 1, 2004
ISSUE:
In third party liability insurance, would it be possible for a third party to sue the insurer
and could the insurer be made solidarily liable with the insured?
HELD:

The victim may proceed directly against the insurer for indemnity, the third party
liability is only up to the extent of the insurance policy and those required by law. The nature
of Compulsory Motor Vehicle Liability Insurance is such that it is primarily intended to provide
compensation for the death or bodily injuries suffered by innocent third parties or passengers
as a result of the negligent operation and use of motor vehicles. The victims and/or their
dependents are assured of immediate financial assistance, regardless of the financial
capacity of motor vehicle owners.
While it is true that where the insurance contract provides for indemnity against liability
to third persons, and such persons can directly sue the insurer, the direct liability of the insurer
under indemnity contracts against third party liability does not mean that the insurer can be
held liable in solidum with the insured and/or the other parties found at fault. For the liability
of the insurer is based on contract; that of the insured carrier or vehicle owner is based on
tort.
Claims Settlement
32. Tio Khe Chio vs. CA, 202 SCRA 119, G.R. No. 76101-02, September 30, 1991
ISSUE:
What is the legal rate of interest to be imposed in actions for damages arising from
unpaid insurance claims?
HELD:
Sections 243 and 244 of the Insurance Code apply only when the court finds an
unreasonable delay or refusal in the payment of the claims. In the case at bar, the Court
made no finding that there was an unjustified refusal or withholding of payment on
petitioner's claim. If there is no unreasonable or unjustified delay or refusal of settling the
claim of the insured, the interest is 6% per annum from the time of the demand. The legal
rate of 12% does not apply because an insurance claim is not a loan or forbearance of
money.
33. Finman General Assurance Corporation v. CA, 361 SCRA 514, G.R. No. 138737, July 12, 2001
Under Section 244, a prima facie evidence of unreasonable delay in payment of the
claim is created by the failure of the insurer to pay the claim within the time fixed in both
Sections 243 and 244. Furthermore, the policy itself obliges petitioner to pay the insurance
claim within thirty days after proof of loss and ascertainment of the loss made in an
agreement between private respondent and petitioner. For its failure to do so, the CA and
the trial court rightfully directed petitioner to pay, inter alia, 24% interest per annum in
accordance with the above quoted provisions.
As regards to the submission of documents to prove loss, substantial, not strict as urged
by petitioner, compliance with the requirements will always be deemed sufficient.
34. Prudential Guarantee vs. Trans-Asia Shipping Lines, Inc., 491 SCRA 411, G.R. No. 151890, June 20, 2006
ISSUE:
Whether delay must be accompanied with bad faith for it to be called unreasonable.
HELD:
Section 244 does not require a showing of bad faith in order that attorney’s fees be
granted. A prima facie evidence of unreasonable delay in payment of the claim is created
by failure of the insurer to pay the claim within the time fixed in both Sections 242 and 243 of

the Insurance Code. This will entitle the assured to collect interest on the proceeds of the
policy for the duration of the delay at the rate of twice the ceiling prescribed by the
Monetary Board (MB). The double interest referred to in Sec 243 can only be interpreted to
mean 24% or double the legal interest of 12% prescribed by the MB.
In the case at bar, as established in Section 244, by reason of the delay and the
consequent filing of the suit by the insured, the insurers shall be adjudged to pay damages,
which shall consist of attorney’s fees and other expenses incurred by the insured.
TRANSPORTATION LAW
PRELIMINARY CONSIDERATIONS
35. National Development Company vs. CA, 164 SCRA 593, G.R. No. L-49407, August 19, 1988
ISSUE:
Which laws govern loss or destruction of goods due to collision of vessels outside
Philippine waters?
HELD:
Art. 1753 of the Civil Code provides that the law of the country to which the goods are
to be transported governs the liability of the common carrier in case of their loss, destruction
or deterioration” Since the goods in question are transported from San Francisco, California
and Tokyo, Japan to the Philippines and that they were lost due to a collision which was
found to have been caused by the negligence or fault of both captains of the colliding
vessels the laws of the Philippines will apply.
Application of the Civil Code, the Code of Commerce and the Carriage of Goods by
Sea Act to the loss of goods destined for the Philippines:
1. For cargoes transported from a foreign port to the Philippines, the liability of the carrier
is governed primarily by the Civil Code on common carriers and in all matters not
regulated by said Code, the Code of Commerce and special laws shall govern(Art.
1766, Civil Code). The Carriage of Goods by Sea Act, a special law, is thus merely
suppletory to both codes.
2. Under the Civil Code, the carriers are bound to exercise extraordinary diligence in the
vigilance over the goods (Art. 1733) and in all cases not mentioned in Article 1734, the
carrier is presumed to have been at fault in the loss of cargoes (Art.1735). These rules
also apply to foreign trade where the Philippines is the port of destination (reiterated in
Maritime Company of the Phils. vs. CA, 171 SCRA 61)
3. In collisions particularly, Articles 826 to 839 of the Code of Commerce hold the
shipowners liablefor the fault or negligence of their personnel and provide that where
the fault in the collision is imputable to both vessels, each carrier shall suffer its own loss
or damage but both shall be solidarily liable to shippers for the loss of or damage to
cargoes.
4. The above provisions of the two codes subordinate the Carriage of Goods by Sea Act
(seeSection 1, COGSA) providing in Section 4(2) thereof that the carrier is not
responsible for loss or damageresulting from the “act, neglect or default of the master,
mariner, pilot or the servants of the carrier inthe navigation or in the management of
the ship.”
36. Tatad vs. Sec. Garcia, 243 SCRA 436, G.R. No. 114222, April 6, 1995

ISSUE:
Whether or not an owner and lessor of the facilities used by a public utility constitute a
public utility?
HELD:
What private respondent owns are the rail tracks, rolling stocks, rail stations, terminals
and the power plant, not a public utility. While a franchise is needed to operate these
facilities to serve the public, they do not themselves constitute a public utility. What
constitutes a public utility is not their ownership but their use to serve the public.
The Constitution, in no uncertain terms, requires a franchise for the operation of a
public utility. However, it does not require a franchise before one can own the facilities
needed to operate a public utility so long as it does not operate them to serve the public. In
law, there is a clear distinction between the “operation” of a public utility and the ownership
of the facilities and the equipment used to serve the public.
37. Radio Communication of the Phils, Inc. vs NTC, 150 SCRA 450, G.R. No. L-68729, May 29, 1987
Issue:
Whether or not a grantee of a legislative franchise to operate a radio company, is
required to secure a certificate of public convenience and necessity before it can validly
operate.
Held:
RCPI cannot install and operate radio telephone services on the basis of its legislative
franchise alone. In the words of R.A. No. 2036 itself, an act granting RCPI’s franchise,
approval of the then Secretary of Public Works and Communications was a precondition
before RCPI could put up radio stations in areas where it desires to operate. No certificate of
public convenience and necessity appears to have been secured by RCPI from NTC when
such certificate, was required by the applicable public utility regulations.
GENERAL CONCEPTS
38. Crisostomo vs. CA, 409 SCRA 528, G.R. No. 138334, August 25, 2003
ISSUE:
Whether a travel agency is a common carrier which required by law to exercise
extraordinary diligence in the fulfillment of its obligation.
HELD:
A contract of carriage or transportation is one whereby a certain person or association
of persons obligate themselves to transport persons, things, or news from one place to
another for a fixed price. It is obvious from the definition that respondent is not an entity
engaged in the business of transporting either passengers or goods and is therefore, neither
a private nor a common carrier. Caravan Travel did not undertake to transport Crisostomo
from one place to another since its covenant with its customers is simply to make travel
arrangements in their behalf. Its services as a travel agency include procuring tickets and
facilitating travel permits or visas as well as booking customers for tours.
39. De Guzman vs. CA, 168 SCRA 612, G.R. No. L-47822, December 22, 1988

Article 1732 makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as an ancillary
activity. It also carefully avoids making any distinction between a person or enterprise
offering transportation service on a regular or scheduled basis and one offering such service
on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the "general public," and one who offers services or
solicits business only from a narrow segment of the general population. Thus, Cendana is
properly characterized as a common carrier even though he merely "back-hauled" goods
for other merchants from Manila to Pangasinan, although such backhauling was done on a
periodic or occasional rather than regular or scheduled manner, and even though private
respondent's principal occupation was not the carriage of goods for others. There is no
dispute that private respondent Cendana charged his customers a fee for hauling their
goods; that fee frequently fell below commercial freight rates is not relevant here. A
certificate of public convenience is not a requisite for the incurring of liability under the Civil
Code provisions governing common carriers.
In this circumstance, we hold that the occurrence of the loss must reasonably be
regarded as quite beyond the control of the common carrier and properly regarded as a
fortuitous event. It is necessary to recall that even common carriers are not made absolute
insurers against all risks of travel and of transport of goods, and are not held liable foracts or
event which cannot be foreseen or are inevitable, provided that they shall have complied
with the rigorous standard of extraordinary diligence.
40. First Phil. Industrial Corp. vs. CA, 300 SCRA 661, G.R. No. 125948, December 29, 1998
Issue:
Whether a pipeline business is included in the term “common carrier” so as to entitle
FPIC to the exemption
Held:
Article 1732 of the Civil Code defines a "common carrier" as "any 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 their services to the public."
The test for determining whether a party is a common carrier of goods is:
(1) He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation of goods
for person generally as a business and not as a casual occupation;
(2) He must undertake to carry goods of the kind to which his business is confined;
(3) He must undertake to carry by the method by which his business is conducted and over
his established roads; and
(4) The transportation must be for hire.
Based on the above definitions and requirements, there is no doubt that FPIC is a
common carrier. It is engaged in the business of transporting or carrying goods, i.e.
petroleum products, for hire as a public employment. It undertakes to carry for all persons
indifferently, that is, to all persons who choose to employ its services, and transports the
goods by land and for compensation. The fact that petitioner has a limited clientele does
not exclude it from the definition of a common carrier.
41. Erezo vs. Jepte, 102 Phil. 103, G.R. No. L-9605, September 30, 1957
The registered owner of a certificate of public convenience is liable to the public for
the injuries or damages suffered by passengers or third persons caused by the operation of
said vehicle, even though the same had been transferred to a third person. The principle
upon which this doctrine is based is that in dealing with vehicles registered under the Public
Service Law, the public has the right to assume or presume that the registered owner is the
actual owner thereof, for it would be difficult for the public to enforce the actions that they
may have for injuries caused to them by the vehicles being negligently operated if the
public should be required to prove who the actual owner is. Under the same principle the
registered owner of any vehicle, even if not used for a public service, should primarily be
responsible to the public or to third persons for injuries caused the latter while the vehicle is
being driven on the highways or streets.
42. Lim vs. CA, G.R. No. 125817, January 16, 2002
The thrust of the law in enjoining the kabit system is not so much as to penalize the
parties but to identify the person upon whom responsibility may be fixed in case of an
accident with the end view of protecting the riding public. The policy therefore loses its
force if the public at large is not deceived, much less involved.
In the present case it is at once apparent that the evil sought to be prevented in
enjoining the kabit system does not exist. On the contrary, it was private respondent
Gonzales himself who had been wronged and was seeking compensation for the damage
done to him. Thus, the private respondent has the right to proceed against petitioners for the
damage caused on his passenger jeepney as well as on his business.
43. Lita Enterprises vs. IAC, 129 SCRA 79, G.R. No. 64693, April 27, 1984
ISSUE:
WON suit can be maintained arising from a violation of illegal contract.
HELD:
Kabit system, whereby a person who has been granted a certificate of convenience
allows another person who owns motors vehicles to operate under such franchise for a fee, is
contrary to public policy and, therefore, void and inexistent under Article 1409 of the Civil
Code. Having entered into an illegal contract, neither can seek relief from the courts, and
each must bear the consequences of his acts.
44. Teja Marketing vs. IAC, 148 SCRA 347, G.R. No. L-65510, March 9, 1987
Unquestionably, the parties herein operated under an arrangement, commonly
known as the "kabit system". Although not out rightly penalized as a criminal offense, the
kabit system is invariably recognized as being contrary to public policy and, therefore, void
and in existent under Article 1409 of the Civil Code. It is a fundamental principle that the
court will not aid either party to enforce an illegal contract, but will leave both where it finds
then. Upon this premise it would be error to accord the parties relief from their predicament.
The defect of inexistence of a contract is permanent and cannot be cured by
ratification or by prescription. The mere lapse of time cannot give efficacy to contracts that
are null and void.
45. Nostradamus Villanueva vs. Domingo, 438 SCRA 485, G.R. No. 144274, September 20, 2004
ISSUE:
Whether a registered owner of a vehicle may be held liable for damages arising from
an accident involving the said vehicle.
HELD:
The registered owner of any vehicle, even if not used for a public service, should be
primarily responsible to the public or third persons while the vehicle is being driven on the
streets.
Registered owner is primarily and solidarily liable with driver under the KABIT SYSTEM.
Kabit system is contrary to public policy; therefore, void and inexistent.
46. Spouses Hernandez et al vs. Spouses Dolor et al, 435 SCRA 668, G.R. No. 160286, July 30, 2004
ISSUE:
W/N the owner of the vehicle is solidarily liable with the driver.
HELD:
For the purpose of imputing liability, employer-employee relationship exist between
the owner and the driver although the latter may pay rental by way of boundary. To sustain
the petitioners’ contention that they should be excused from liability because they are
merely lessors will be a flagrant disregard of our public service law which imputes liability
upon registered owner of the subject vehicle. To sustain the contention of the petitioner will
put the public at the mercy of irresponsible and reckless drivers.
OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF CARRIAGE OF GOODS
47. Macam vs. CA, 313 SCRA 77, G.R. No. 125524, August 25, 1999
The extraordinary responsibility of common carriers last until actual or constructive
delivery of the cargo to the consignee or his agent. Pakistan was indicated as consignee
and GPC was the notify party. However, in the export invoice, GPC was clearly named as
buyer or importer. Petitioner referred to GPC as such in his demand letter to respondent and
his complaint before the court. This premise brings into conclusion that the deliveries of the
cargo to GPC as buyer or importer is in conformity with Art. 1736 of the Civil Code. Therefore,
there was a valid delivery.
48. Servando vs. Phil. Steam Navigation, 117 SCRA 832, G.R. No. L-36481-2, October 23, 1982
The burning of the customs warehouse was an extraordinary event which happened
independently of the will of PSN. PSN could not have foreseen the event. Where fortuitous
event or force majeure is the immediate and proximate cause of the loss, the obligor is
exempt from liability for non-performance. This is true only because there is nothing in the
record to show that PSN, incurred in delay in the performance of its obligation nor can PSN or
its employees be charged with negligence.
49. Edgar Cokaliong Shipping Lines vs. UCPB Ge Ins Co, 404 SCRA 706, G.R. No. 146018, June 25, 2003

Having originated from an unchecked crack in the fuel oil service tank, the fire could
not have been caused by force majeure. Broadly speaking, force majeure generally applies
to a natural accident, such as that caused by a lightning, an earthquake, a tempest or a
public enemy. Hence, fire is not considered a natural disaster or calamity.
50. Eastern Shipping Lines vs. IAC, 150 SCRA 463, G.R. Nos. L-69044 and L-71478, May 29, 1987
ISSUE:
Is fire considered a natural disaster?
HELD:
No. This must be so as it arises almost invariably from some act of man or by human
means. It does not fall within the category of an act of God unless caused by lightning or by
other natural disaster or calamity. It may even be caused by the actual fault or privity of the
carrier
51. Ganzon vs. CA, 161 SCRA 646, G.R. No. L-48757, May 30, 1988
The intervention of the municipal officials was not In any case, of a character that
would render impossible the fulfillment by the carrier of its obligation. The petitioner was not
duty bound to obey the illegal order to dump into the sea the scrap iron. Moreover, there is
absence of sufficient proof that the issuance of the same order was attended with such
force or intimidation as to completely overpower the will of the petitioner's employees. The
mere difficulty in the fullfilment of the obligation is not considered force majeure. We agree
with the private respondent that the scraps could have been properly unloaded at the
shore, so that after the dispute with the local officials concerned was settled, the scraps
could then be delivered in accordance with the contract of carriage.
OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF CARRIAGE OF PASSENGERS
52. Aboitiz Shipping Corporation vs. CA, 179 SCRA 95, G.R. No. 84458, November 6, 1989
The rule is that the relation of carrier and passenger continues until the passenger has
been landed at the port of destination and has left the vessel owner’s dock or premises.
Once created, the relationship will not ordinarily terminate until the passenger has, after
reaching his destination, safely alighted from the carrier’s conveyance or had a reasonable
opportunity to leave the carrier’s premises. All persons who remain on the premises
reasonable time after leaving the conveyance are to be deemed passengers, and what is a
reasonable time or a reasonable delay within this rule is to be determined from all the
circumstances, and includes a reasonable time to see after his baggage and prepare for his
departure. The carrier-passenger relationship is not terminated merely by the fact that the
person transported has been carried to his destination if, for example, such person remains in
the carrier’s premises to claim his baggage. The reasonableness of the time should be made
to depend on the attending circumstances of the case, such as the kind of common carrier,
the nature of its business, the customs of the place, and so forth, and therefore precludes a
consideration of the time element per se without taking into account such other factors.
Where a passenger dies or is injured, the common carrier is presumed to have been at fault
or to have acted negligently. This gives rise to an action for breach of contract where all that

is required of plaintiff is to prove the existence of the contract of carriage and its non-
performance by the carrier, that is, the failure of the carrier to carry the passenger safely to
his destination, which, in the instant case, necessarily includes its failure to safeguard its
passenger with extraordinary diligence while such relation subsists.
53. Dangwa Transportation vs. CA, 202 SCRA 574, G.R. No. 95582, October 7, 1991
ISSUE:
Whether the victim is considered a passenger by stepping and standing on the
platform of the bus.
HELD:
The victim was considered a passenger by stepping and standing on the platform of
the bus. The duty which the carrier owes to its patrons extends to persons boarding the
carrier as well as those alighting therefrom. While the carrier is not in motion there is no
necessity for a person who wants to ride the same to signal his intention to board. A public
utility bus, once it stops, is in effect making a continuous offer to bus riders.
54. LRT vs. Navidad, 397 SCRA 75, G.R. No. 145804, February 6, 2003
ISSUE:
Whether the victim is considered a passenger by being on the platform.
HELD:
Navidad is a passenger because he entered the LRT station after having purchased a
token and he fell while he was on the platform waiting for a train. Thus, he was where he
was supposed to be with the intention of boarding a train.
55. La Mallorca vs CA, 17 SCRA 739, G.R. No. L-20761, July 27, 1966
There is a breach of duty to exercise extra ordinary diligence with respect to the 4 year
old child and the carrier is liable as a consequence. The presence of passengers near the
bus was not unreasonable and they were, therefore, to be considered still as passengers of
the carrier, entitled to the protection under their contract.
56. Japan Airlines vs. CA, G.R. No. 118664, August 7, 1998
ISSUE:
Whether JAL, as a common carrier has the obligation to shoulder the hotel and meal
expenses of its stranded passengers until they have reached their final destination, even if
the delay were caused by “force majeure.”
HELD:
When JAL was prevented from resuming its flight to Manila due to the effects of Mt.
Pinatubo eruption, whatever losses or damages in the form of hotel and meal expenses the
stranded passengers incurred, cannot be charged to JAL. To hold JAL, in the absence of
bad faith or negligence, liable for the amenities of its stranded passengers by reason of a
fortuitous event is too much of a burden to assume. Furthermore, it has been held that airline
passengers must take such risks incident to the mode of travel. In this regard, adverse
weather conditions or extreme climatic changes are some of the perils involved in air travel,
the consequences of which the passenger must assume or expect. After all, common
carriers are not the insurer of all risks.
57. Pilapil vs. CA, 180 SCRA 546, G.R. No. 52159, December 22, 1989
There is no showing that any such incident previously happened so as to impose an
obligation on the part of the personnel of the bus company to warn the passengers and to
take the necessary precaution. Such hurling of a stone constitutes fortuitous event in this
case. The bus company is not an insurer of the absolute safety of its passengers.
58. Maranan vs. Perez, 20 SCRA 412, G.R. No. L-22272, June 26, 1967
The basis of the carrier's liability for assaults on passengers committed by its drivers rests
on the principle that it is the carrier's implied duty to transport the passenger safely. As
between the carrier and the passenger, the former must bear the risk of wrongful acts or
negligence of the carrier's employees against passengers, since it, and not the passengers,
has power to select and remove them.
59. Singapore Airlines vs. Andion Fernandez, 417 SCRA 474, G.R. No. 142305, December 10, 2003
When an airline issues a ticket to a passenger, confirmed for a particular flight on a
certain date, a contract of carriage arises. The passenger has every right to expect that he
be transported on that flight and on that date. If he does not, then the carrier opens itself to
a suit for a breach of contract of carriage. In an action for breach of contract of carriage,
the aggrieved party does not have to prove that the common carrier was at fault or was
negligent. All that is necessary to prove is the existence of the contract and the fact of its
non-performance by the carrier.
60. Bachelor Express vs. CA, 188 SCRA 216, G.R. No. 85691, July 31, 1990
ISSUE:
Whether a common carrier be made liable for damages arising from acts of third
persons over whom they have no control or supervision.
Held:
While the sudden stabbing by a passenger of another passenger inside the bus may
be considered as force majeure as to absolved the carrier from liability, the carrier must
prove that it was not at fault or negligent causing the injuries.
It was shown that the bus’s door is not properly kept in that the mere push makes it
opens easily causing some of the passengers fell during the commotion and despite of the
panic inside the bus caused by the stabbing, the conductor failed to blow his whistle to
signal the driver to stop and the driver continued driving unminding the commotion going
on. Clearly the carriers employees failed to exercise the extra ordinary diligence in
preventing or minimizing the injuries during and after the incident. The carrier failed to rebut
the presumption of being at fault or acted negligently.
61. De Gillaco vs. Manila Railroad Company, G.R. No. L-8034, November 18, 1955

A passenger is entitled to protection from personal violence by the carrier or its agents
or employees, since the contract of transportation obligates the carrier to transport a
passenger safely to his destination. But under the law of the case, this responsibility extends
only to those that the carrier could foresee or avoid through the exercise of the degree of
care and diligence required of it.
The act of guard Devesa in shooting passenger Gillaco was entirely unforeseeable by
the Manila Railroad Co. The latter had no means to ascertain or anticipate that the two
would meet, nor could it reasonably foresee every personal rancor that might exist between
each one of its many employees and any one of the thousands of eventual passengers
riding in its trains. The shooting in question was therefore “caso fortuito” within the definition
of article 1105 of the old Civil Code, being both unforeseeable and inevitable under the
given circumstances; and pursuant to established doctrine, the resulting breach of Manila
Railroad’s contract of safe carriage with the late Tomas Gillaco was excused thereby.
62. Mapa vs. CA, 275 SCRA 286, G.R. No. 122308 , July 8, 1997
Article I (2) of the Warsaw Convention provides that a contract is one of international
transportation only if according to the contract made by the parties, the place of departure
and the place of destination, whether or not there be a break in the transportation or a
transshipment, are situated either within the territories of two High Contracting Parties, or
within the territory of a single High Contracting Party, if there is an agreed stopping place
within a territory subject to the sovereignty, mandate or authority of another power, even
though that power is not a party to this convention.
On the basis alone of the provisions therein, it is obvious that the place of departure
and the place of destination are all in the territory of the United States, or of a single High
Contracting Party. The contracts, therefore, cannot come within the purview of the first
category of international transportation. Neither can it be under the second category since
there was NO agreed stopping place within a territory subject to the sovereignty, mandate,
or authority of another power.
OBLIGATIONS OF THE SHIPPER, CONSIGNEE AND PASSENGER
63. Isaac vs. A.L. Ammen Transportation, 101 Phil 1046, G.R. No. L-9671, August 23, 1957
ISSUE:
Whether the negligence of the passenger relieves the common carrier from liability.
HELD:
The driver of the bus has done what a prudent man could have done to avoid the
collision and this relieves the transport company from liability under the law. However,
contributory negligence cannot relieve the carrier of its liability but will only entitle it to a
reduction of the amount of damage caused. It is the prevailing rule that it is negligence per
se for a passenger on a railroad voluntarily or inadvertently to protrude his arm, hand, elbow,
or any other part of his body through the window of a moving car beyond the outer edge of
the window or outer surface of the car, so as to come in contact with objects or obstacles
near the track, and that no recovery can be had for an injury which but for such negligence
would not have been sustained.

64. Compania Maritima vs. CA, 164 SCRA 685, G.R. No. L-31379, August 29, 1988
ISSUE:
Whether misdeclaration as to weight excuses common carrier from liability
HELD:
Concepcion’s act of furnishing Compania Maritima with an inaccurate weight of the
pay loader cannot successfully be used as an excuse by the latter to avoid liability to the
damage thus caused, said act constitutes a contributory circumstance to the damage
caused on the pay loader, which mitigates the liability for damages of the latter, as the
same could have been avoided had the latter utilized the “jumbo” lifting apparatus which
has a capacity of lifting 20 to 25tons of heavy cargoes. It is a fact known to the Chief Officer
of MV Cebu that the pay loader was loaded aboard the MV Cebu at the Manila North
Harbor by means of a terminal crane. Even if Compania Maritima chose not to take the
necessary precaution to avoid damage by checking the correct weight of the payl oader,
extraordinary care and diligence compel the use of the “jumbo” lifting apparatus as the
most prudent course for Compania Maritima.
65. PNR vs. CA, 139 SCRA 87, G.R. No. L-55347, October 4, 1985
PNR has all the powers, the characteristics and attributes of a corporation under the
Corporation Law. There can be no question then that the PNR may sue and be sued and
may be subjected to court processes just like any other corporation.
PNR has the obligation to transport its passengers to their destinations and to observe
extraordinary diligence in doing so. Death or any injury suffered by any of its passengers
gives rise to the presumption that it was negligent in the performance of its obligation under
the contract of carriage. Thus, the petitioner failed to overthrow such presumption of
negligence with clear and convincing evidence. While PNR failed to exercise extraordinary
diligence as required by law, it appears that the deceased was chargeable with
contributory negligence.
EXTRAORDINARY DILIGENCE
66. Standard Vacuum Oil vs. Luzon Stevedoring, 98 Phil 817, G.R. No. L-5203, April 1, 1956
The fact that the tugboat was a surplus property, has not been dry-docked, and was
not provided with the requisite equipment to make it seaworthy, shows that defendant did
not use reasonable diligence in putting the tugboat in such a condition as would make its
use safe for operation. It being a surplus property, a dry-dock inspection was a must to put
the tugboat in a sea going condition. It may also be true , as contended, that the deficiency
in the equipment was due to the fact that no such equipment was available at the time, but
this did not justify defendant in putting such tugboat in business even if unequipped merely
to make a profit. The employment of its crew to perform functions beyond its competence
and qualifications is not only risky but against the law and if a mishap is caused, as in this
case, one cannot but surmise that such incompetence has something to do with the
mishap. The fact that the tugboat had undertaken several trips before with practically the
same crew without any untoward consequence, cannot furnish any justification for

continuing in its employ a deficient or incompetent personnel contrary to law and the
regulations of the Bureau of Customs.
Generally, seaworthiness is that strength, durability and engineering skill made a part
of a ship's construction and continued maintenance, together with a competent and
sufficient crew, which would withstand the vicissitudes and dangers of the elements which
might reasonably be expected or encountered during her voyage without loss or damage
to her particular cargo. While the breaking of the idler may be due to an accident, or to
something unexpected, the cause of the disaster which resulted in the loss of the gasoline
can only be attributed to the negligence or lack of precaution to avert it on the part of
defendant by undertaking a trip that is not well equipped and properly manned by a
competent personnel. The loss of the gasoline certainly cannot be said to be due to force
majeure or unforeseen event but to the failure of defendant to extend adequate and
proper help.
67. Planters Products, Inc. vs. CA, 226 SCRA 476, G.R. No. 101503, Sept. 15, 1993
In an action for recovery of damages against a common carrier on the goods
shipped, the shipper or consignee should first prove the fact of shipment and its consequent
loss or damage while the same was in the possession, actual or constructive, of the carrier.
Thereafter, the burden of proof shifts to respondent to prove that he has exercised
extraordinary diligence required by law or that the loss, damage or deterioration of the
cargo was due to fortuitous event, or some other circumstances inconsistent with its liability.
the presumption of negligence on the part of the respondent carrier has been efficaciously
overcome by the showing of extraordinary zeal and assiduity exercised by the carrier in the
care of the cargo. Respondent carrier has sufficiently proved the inherent character of the
goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its
packaging which further contributed to the loss. On the other hand, no proof was adduced
by the petitioner showing that the carrier was remise in the exercise of due diligence in order
to minimize the loss or damage to the goods it carried.
68. Brinas vs. People of the Phils., 125 SCRA 68, G.R. No. L-30309, November 25, 1983
Issue:
Whether it was negligence per se for the victim to go to the door of the coach while
the train was still in motion and that it was this negligence that was the proximate cause of
their deaths.
Held:
The premature announcement prompted the two victims to stand and proceed to the
nearest exit. Without said announcement, the victims would have been safely seated in their
respective seats when the train jerked and picked up speed. The proximate cause of the
death of the victims was the premature and erroneous announcement of Brinas. Any
negligence of the victims was at most contributory and does not exculpate the accused
from criminal liability.
69. BLTB vs. IAC, 167 SCRA 379, G.R. Nos. 74387-90, November 14, 1988

The common carrier's liability for the death of or injuries to its passengers is based on its
contractual obligation to carry its passengers safely to their destination. They are presumed
to have acted negligently unless they prove that they have observed extaordinary
diligence. In the case at bar, the appellants acted negligently.
70. Nocum vs. Laguna Tayabas Bus Company, 30 SCRA 69, G.R. No. L-23733, Oct. 31, 1969
In overland transportation, the common carrier is not bound nor empowered to make
an examination on the contents of packages or bags, particularly those hand carried by
passengers.
71. Vda. De Abeto vs. PAL, 115 SCRA 489, G.R. No. L-28692, July 30, 1982
The weather during that time was clear and the pilot was supposed to cross airway
"Amber I", the designated route which was Iloilo-Romblon-Manila, instead he made a straight
flight to Manila in violation of air traffic rules. Since there’s no satisfactory explanation by PAL
with regard to the accident, then the presumption is it is at fault.
72. Japan Airlines vs. Michael Asuncion et al, 449 SCRA 544, G.R. No. 161730, January 28, 2005
JAL is not liable and did not breach its contract of carriage with the petitioners. While it
may be true that JAL are required to appraise their clients with all the necessary travel
documents to obtain a shore pass, this duty does not extend to verification as to whether or
not the information/entries in these travel documents are correct.
BILL OF LADING AND OTHER FORMALITIES
73. HE Heacock Company vs. Macondray, 42 Phil 205, G.R. No. L-16598 October 3, 1921
ISSUE:
May a common carrier, by stipulations inserted in the bill of lading, limit its liability for
the loss of or damage to the cargo to an agreed valuation of the latter?
HELD:
A limitation of liability based upon an agreed value to obtain a lower rate does not
conflict with any sound principle of public policy; and it is not conformable to plain principles
of justice that a shipper may understate value in order to reduce the rate and then recover
a larger value in case of loss. The clauses of the bill of lading here in question are not
contrary to public order. Article 1255 of the Civil Code provides that "the contracting parties
may establish any agreements, terms and conditions they may deem advisable, provided
they are not contrary to law, morals or public order." Said clauses of the bill of lading are,
therefore, valid and binding upon the parties thereto.
74. Ong Yiu vs. CA, 91 SCRA 223, G.R. No. L-40597, June 29, 1979
ISSUE:
Whether the stipulation at the back of the ticket may operate so as to limit the liability
of the common carrier.
HELD:

While it may be true that petitioner had not signed the plane ticket, he is nevertheless
bound by the provisions thereof. Such provisions have been held to be a part of the contract
of carriage, and valid and binding upon the passenger regardless of the latter's lack of
knowledge or assent to the regulation. It is what is known as a contract of "adhesion", in
regards which it has been said that contracts of adhesion wherein one party imposes a
readymade form of contract on the other, as the plane ticket in the case at bar, are
contracts not entirely prohibited. The one who adheres to the contract is in reality free to
reject it entirely; if he adheres, he gives his consent. Considering, therefore, that petitioner
had failed to declare a higher value for his baggage, he cannot be permitted a recovery in
excess of P100.00.
75. Sea-Land Service vs. IAC, 153 SCRA 552, G.R. No. 75118, August 31 1987
Issue:
Whether or not the consignee of seaborne freight is bound by stipulations in the
covering bill of lading limiting to a fixed amount the liability of the carrier for loss or damage
to the cargo where its value is not declared in the bill.
HELD:
The validity and binding effect of the liability limitation clause in the bill of lading are
fully sustainable on the basis alone of Civil Code provisions. That said stipulation is just and
reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit to
liability only if a greater value is not declared for the shipment in the bill of lading. The
reasonable character of such stipulation is implicit in it giving the shipper or owner the option
of avoiding accrual of liability limitation by the simple and surely far from onerous expedient
of declaring the nature and value of the shipment in the bill of lading. And since the shipper
here has not been heard to complaint of having been "rushed," imposed upon or deceived
in any significant way into agreeing to ship the cargo under a bill of lading carrying such a
stipulation, there is simply no ground for assuming that its agreement thereto was not as the
law would require, freely and fairly sought and given.
76. Northwest Airlines vs. Cuenca, 14 SCRA 1063, G.R. No. L-22425, 31 August 1965
It is true that said ticket was marked "W/L," but respondent Cuenca's attention was not
called thereto. Much less was he advised that "W/L" meant "wait listed." Upon the other
hand, having paid the first class fare in full and having been given first class accommodation
as he took petitioner's plane in Manila, respondent was entitled to believe that this was a
confirmation of his first class reservation and that he would keep the same until his ultimate
destination, Tokyo.
77. Alitalia vs. IAC, 192 SCRA 9, G.R. No. 71929, December 4, 1990
The Warsaw Convention provides that an air carrier is made liable for damages when:
(1) the death, wounding or other bodily injury of a passenger if the accident causing it took
place on board the aircraft or in the course of its operations of embarking or disembarking;
(2) the destruction or loss of, or damage to, any registered luggage or goods, if the
occurrence causing it took place during the carriage by air"; and (3) delay in the
transportation by air of passengers, luggage or goods. However, the claim for damages may

be brought subject to limitations provided in the said convention. Thus, Alitalia is liable to
pay Dr. Pablo for damages.
78. China Airlines vs. Daniel Chiok, 407 SCRA 432, G.R. No. 152122, July 30, 2003
The contract of air transportation was between petitioner and respondent, with the
former endorsing to PAL the Hong Kong-to-Manila segment of the journey. Such contract of
carriage has always been treated in this jurisdiction as a single operation. For reasons of
public interest and policy, the ticket-issuing airline acts as principal in a contract of carriage
and is thus liable for the acts and the omissions of any errant carrier to which it may have
endorsed any sector of the entire, continuous trip.
79. Santos III vs. Northwest Airlines, 210 SCRA 256, G.R. No. 101538, June 23, 1992
NOA argued that Philippine courts have no jurisdiction over the matter pursuant to
Article 28(1) of the Warsaw Convention, which provides that complaints against international
carriers can only be instituted in:
1. the court of the domicile of the carrier
2. the court of its principal place of business
3. the court where it has a place of business through which the contract had been made
4. the court of the place of destination
ISSUE:
Whether or not Manila is the place of destination and thus giving the Philippine courts
jurisdiction over the matter.
HELD:
The contract is a single undivided operation, beginning with the place of departure
and ending with the ultimate destination. An intermediate place where the carriage may be
broken is not regarded as a "place of destination." The place of destination, within the
meaning of the Warsaw Convention, is determined by the terms of the contract of carriage
or, specifically in this case, the ticket between the passenger and the carrier. Examination of
the petitioner's ticket shows that his ultimate destination is San Francisco. Although the date
of the return flight was left open, the contract of carriage between the parties indicates that
NOA was bound to transport the petitioner to San Francisco from Manila. Manila should
therefore be considered merely an agreed stopping place and not the destination.
The Supreme Court cannot rule over the matter for the SC is bound by the provisions of
the Warsaw Convention which was ratified by the Senate. Until & unless there would be
amendment to the Warsaw Convention, the only remedy for Santos III is to sue in any of the
place indicated in the Convention such as in San Francisco, USA.
ACTIONS IN CASE OF BREACH OF CONTRACT OF CARRIAGE
80. Fabre vs. CA, 259 SCRA 426, G.R. No. 111127, July 26, 1996
ISSUE:
Whether owners and driver of the bus, may be made to respond jointly and severally
to private respondent.

HELD:
An award for damages can be sustained either on the theory of quasi delict or culpa
aquiliana or on the theory of breach of contract of carriage or culpa contractual, for
although the relation of passenger and carrier is “contractual both in origin and nature,”
nevertheless “the act that breaks the contract may be also a tort.” Private respondents in
this case and her co-plaintiffs did not stake out their claim against the carrier and the driver
exclusively on one theory, much less on that of breach of contract alone. Thus, the carrier
and the driver are jointly and severally liable because their separate and distinct acts
concurred to produce the same injury.
81. Mitsui vs. CA, 287 SCRA 366, G.R. No. 119571, March 11, 1998
Deterioration of goods due to delay in their transportation constitutes "loss" or
"damage" within the meaning of Sec. 3(6) of COGSA. However, the question before the trial
court is not the particular sense of “damages” as it refers to the physical loss or damage of a
shipper’s goods as specifically covered by §3(6) of COGSA but petitioner’s potential liability
for the damages it has caused in the general sense and, as such, the matter is governed by
the Civil Code, the Code of Commerce and COGSA, for the breach of its contract of
carriage with private respondent. Thus, the question of prescription of action is governed not
by the COGSA but by Art. 1144 of the Civil Code which provides for a prescriptive period of
ten years.
82. Fil Merchants vs. Alejandro, 145 SCRA 42, G.R. No. L-54140, October 14, 1986
ISSUE:
Does the one-year prescriptive period within which to file a case against the carrier
also apply to a claim filed by an insurer who stands as a subrogee to the insured?
HELD:
Yes, it includes the insurer of goods. Also, whether the insurer files a third party
complaint or maintains an independent action is of no moment.
83. Mayer Steel Pipe Corp. vs. CA, 274 SCRA 432, G.R. No. 124050, June 19, 1997
Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship
shall be discharged from all liability for loss or damage to the goods if no suit is filed within
one year after delivery of the goods or the date when they should have been delivered.
Under this provision, only the carrier’s liability is extinguished if no suit is brought within one
year. But the liability of the insurer is not extinguished because the insurer’s liability is based
not on the contract of carriage but on the contract of insurance. The Carriage of Goods by
Sea Act governs the relationship between the carrier on the one hand and the shipper, the
consignee and/or the insurer on the other hand. It defines the obligations of the carrier under
the contract of carriage. It does not, however, affect the relationship between the shipper
and the insurer. The latter case is governed by the Insurance Code.

84. Dole Phils. vs. Maritime Company of the Phils. 148 SCRA 118, G.R. No. L-61352, February 27, 1987
ISSUE:
Whether or not Article 1155 of the Civil Code providing that the prescription of actions
is interrupted by the making of an extrajudicial written demand by the creditor is applicable
to actions brought under the Carriage of Goods by Sea Act.
HELD:
In a case governed by the Carriage of Goods by Sea Act, the general provisions of
the Code of Civil Procedure on prescription should not be made to apply. Similarly, we now
hold that in such a case the general provisions of the new Civil Code cannot be made to
apply, as such application would have the effect of extending the one-year period of
prescription fixed in the law. It is desirable that matters affecting transportation of goods by
sea be decided in as short a time as possible; the application of the provisions of Article 1155
of the new Civil Code would unnecessarily extend the period and permit delays in the
settlement of questions affecting transportation, contrary to the clear intent and purpose of
the law.
MARITIME LAW
85. Aboitiz Shipping Corp vs. Gen Accident Fire & Life, 217 SCRA 359, G.R. No. 100446, 21 Jan 1993
The real and hypothecary nature of maritime law simply means that the liability of the
carrier in connection with losses related to maritime contracts is confined to the vessel, which
is hypothecated for such obligations or which stands as the guaranty for their settlement. The
liability of the vessel owner and agent arising from the operation of such vessel were
confined to the vessel itself, its equipment, freight and insurance, if any, which limitation
served to induce capitalist into effectively wagering their resources against consideration of
the large attainable in the trade. Its application has been well-nigh constricted to cover only
liability for injuries to third parties (Art. 587), acts of the captain (Art. 590) and collisions (Art.
837). The only time the Limited Liability Rule does not apply is when there is an actual finding
of negligence on the part of the vessel owner or agent. In the case at bar, since the cause
of the sinking of the vessel was because of unseaworthiness due to the failure of the crew
and the master to exercise extraordinary diligence, and that there appears to have been no
evidence presented sufficient to form a conclusion that petitioner shipowner itself was
negligent, therefore the Limited Liability Rule applies.
86. Chua Yek Hong vs. IAC, 166 SCRA 183, G.R. No. L-74811, December 14, 1988
The Appellate Court Decision mentions only the ship captain as having been negligent in
the performance of his duties and there is nothing in the records showing negligence upon
the shipagent. Since the exception to the limited liability rule (Article 587, Code of
Commerce) to apply, the loss must be due to the fault of the shipowner, or to the concurring
negligence of the shipowner and the captain, the liability of the private respondents for the
loss of the cargo must be deemed to have been extinguished.

87. Monarch Insurance vs. CA, 333 SCRA 71, G.R. No. 92735, 95, June 8, 2000
ISSUE:
Whether the application of limited liability rule in maritime law stays the execution of
the judgments for full indemnification of the losses suffered by the petitioners as a result of
the sinking of the M/V P. Aboitiz.
HELD:
In the rule on limited liability, that claimants be treated as "creditors in an insolvent
corporation whose assets are not enough to satisfy the totality of claims against it. There is,
therefore, a need to collate all claims preparatory to their satisfaction from the insurance
proceeds on the vessel M/V P. Aboitiz and its pending freightage at the time of its loss. No
claimant can be given precedence over the others by the simple expedience of having
completed its action earlier than the rest. Thus, execution of judgment in earlier completed
cases, even those already final and executory must be stayed pending completion of all
cases occasioned by the subject sinking. Then and only then can all such claims be
simultaneously settled, either completely or pro-rata should the insurance proceeds and
freightage be not enough to satisfy all claims.
88. Abueg vs. San Diego, 77 Phil. 730, G.R. No. L-773-75, December 17, 1946
ISSUE:
Whether the liability of the ship owner is extinguished by the total loss of the ship?
HELD:
The provisions of the Code of Commerce invoked by appellant have no room in the
application of the Workmen's Compensation Act which seeks to improve, and aims at the
amelioration of, the condition of laborers and employees. It is not the liability for the damage
or loss of the cargo or injury to, or death of, a passenger by or through the misconduct of the
captain or master of the ship; nor the liability for the loss of the ship as result of collision; nor
the responsibility for wages of the crew, but a liability created by a statute to compensate
employees and laborers in cases of injury received by or inflicted upon them, while engaged
in the performance of their work or employment. Such compensation has nothing to do with
the provisions of the Code of Commerce regarding maritime commerce. It is an item in the
cost of production which must be included in the budget of any well managed industry.
89. Luzon Stevedoring vs. CA, 156 SCRA 169, G.R. No. L-58897, December 3, 1987
In case of collision, abandonment of the vessel is necessary in order to limit the liability
of the shipowner or the agent to the value of the vessel, its appurtenances and freightage
earned in the voyage in accordance with Art.837 of the Code of Commerce. The only
instance where such abandonment is dispensed with is when the vessel was entirely lost.
However, if the injury or damage is caused by the shipowner's fault as where he engages the
services of an inexperienced and unlicensed captain or engineer, he cannot avail of the
provisions of Article 837 of the Code by abandoning the vessel. He is personally liable for the
damages arising thereby.
There is no question that the action arose from a collision and the fault is laid at the
doorstep of LSCO "Cavite" of petitioner. Undeniably petitioner has not abandoned the
vessel. Hence petitioner cannot invoke the benefit of the provisions of Article 837 of the

Code of Commerce to limit its liability to the value of the vessel, all the appurtenances and
freightage earned during the voyage.
90. Yangco vs. Laserna, 73 Phil. 330, G.R. No. L-47447-47449, October 29, 1941
ISSUE:
May the ship owner or agent, notwithstanding the total loss of the vessel as a result of
the negligence of its captain, be properly held liable in damages for the consequent death
of its passengers?
HELD:
Article 587 of the Code of Commerce apears to deal only with the limited liability of
shipowners or agents for damages arising from the misconduct of the captain in the care of
the goods which the vessel carries, but this is a mere deficiency of language and in no way
indicates the true extent of such liability. Notwithstanding the language of the afore-quoted
provision, the benefit of limited liability therein provided for, applies in all cases wherein the
shipowner or agent may properly be held liable for the negligent or illicit acts of the captain.
If the ship owner or agent may in any way be held civilly liable at all for injury to or
death of passengers arising from the negligence of the captain in cases of collisions or
shipwrecks, his liability is merely co-extensive with his interest in the vessel such that a total
loss thereof results in its extinction. He may exempt himself therefrom by abandoning the
vessel with all her equipment and the freight he may have earned during the voyage.
91. Yu Con vs. Ipil, 41 Phil. 770, G.R. No. 10195, December 29, 1916
ISSUE:
Whether the ship owner be also made liable for the loss of the money?
HELD:
In maritime commerce, the shippers and passengers in making contracts with the
captain do so through the confidence they have in the shipowner who appointed him; they
presume that the owner made a most careful investigation before appointing him, and,
above all, they themselves are unable to make such an investigation, and even though they
should do so, they could not obtain complete security, inasmuch as the shipowner can,
whenever he sees fit, appoint another captain instead. Thus, it is only proper that the
shipowner should be made liable.
92. Inter-Orient Maritime Enterprises vs. NLRC, 125 SCRA 268, G.R. No. 115286, August 11, 1994
A ship’s captain must be accorded a reasonable measure of discretionary authority to
decide what the safety of the ship and of its crew and cargo specifically requires on a
stipulated ocean voyage. Captain Tayong's decision to wait 7 hours in Singapore for the
delivery on board the Oceanic Mindoro of the requisitioned supplies needed for the
welding-repair, on board the ship, of the turbo-charger and the economizer equipment of
the vessel, did not constitute a legal basis for the summary dismissal of Captain Tayong.

93. Far Eastern Shipping vs. CA, 297 SCRA 30, G.R. No. 130068, October 01, 1998
ISSUE:
Whether the master of the vessel be held liable in compulsory pilotage?
HELD:
While in exercising his functions, a pilot is in sole command of the ship and supersedes
the master for the time being in the command and navigation of the ship, the master does
not surrender his vessel to the pilot and the pilot is not the master. There are occasions when
the master may and should interfere and even displace the pilot, as when the pilot is
obviously incompetent or intoxicated.
Based on Capt. Kavankov’s testimony, he never sensed any danger even when the
anchor didn’t hold and they were approaching the dock too fast. He blindly trusted the
pilot. This is negligence on his part. He was right beside the pilot during the docking, so he
could see and hear everything that the pilot was seeing and hearing. The master’s
negligence translates to unseaworthiness of the vessel, and in turn means negligence on the
part of FESC.
94. Planters Products vs. CA, 226 SCRA 476, G.R. No. 101503, Sept. 15, 1993
ISSUE:
Whether a common carrier becomes a private carrier by reason of a charter-party.
HELD:
By the terms of which the whole vessel is let to the charterer which transfers to him its
entire command and possession and consequential control over navigation, including the
master and the crew who are his servants. The charterer is treated as owner pro hac vice of
the vessel. In such a case, a common carrier becomes a private carrier. In case of loss,
destruction or deterioration of the goods, common carriers are presumed to have been at
fault or to have acted negligently, and the burden of proving otherwise rests on them. On
the contrary, no such presumption applies to private carriers, for whosoever alleges damage
to or deterioration of the goods carried has the onus of proving that the cause was the
negligence of the carrier.
95. Macondray vs. Provident Ins Corp, 445 SCRA 644, G.R. No. 154305, December 9, 2004
Although petitioner is not an agent of Trade & Transport, it can still be the ship agent of
the vessel M/V Trade Carrier. A ship agent is the person entrusted with provisioning or
representing the vessel in the port in which it may be found. Hence, whether acting as agent
of the owner of the vessel or as agent of the charterer, petitioner will be considered as the
ship agent and may be held liable as such, as long as the latter is the one that provisions or
represents the vessel.
Macondray was appointed as local agent of the vessel, which duty includes
arrangement for the entrance and clearance of the vessel. Petitioner’s employees were
present at the port of destination one day before the arrival of the vessel, where they stayed
until it departed. They were also present during the actual discharging of the cargo. These
acts all point to the conclusion that it was the entity that represented the vessel at the port of
destination and was the ship agent within the meaning and context of Article 586 of the
Code of Commerce.

BANKING LAWS
DEPOSIT FUNCTION
96. BPI vs FIRST METRO INVESTMENT CORP, 429 SCRA 30, G.R. No. 132390, December 8, 2004
ISSUE:
Whether the withdrawal of deposit before maturity date changes the nature of time
deposit to one of demand deposit.
HELD:
Time deposit is defined as one the payment of which cannot legally be required within
such a specified number of days while demand deposits are all those liabilities of the Bangko
Sentral and of other banks which are denominated in Philippine currency and are subject to
payment in legal tender upon demand by the presentation of (depositors) checks. While it
may be true that barely one month and seven days from the date of deposit, FMIC
demanded the withdrawal of the whole amount in its account through the issuance of a
check payable to itself, the same was made as a result of the fraudulent and unauthorized
transfer by BPI FB of its P80 million deposit to Tevesteco’s savings account. Certainly, such
was a normal reaction of respondent as a depositor to BPI FB’s failure in its fiduciary duty to
treat its account with the highest degree of care. Under this circumstance, the withdrawal
of deposit by respondent FMIC before the one-year maturity date did not change the
nature of its time deposit to one of demand deposit.
97. Vitug vs. Court of Appeals, G.R. No. 82027, March 29, 1990
ISSUE:
Whether a bank deposit with survivorship agreement consisting of conjugal funds
changes its nature to exclusive property when one of the contracting parties dies.
HELD:
Survivorship agreement is a contract that impose a mere obligation with a term, the
term being death. Such agreements are permitted under Art 2012 of the Civil Code, an
aleatory contract. But although the survivorship agreement is per se not contrary to law, its
operation or effect may be violative of the law. For instance, if it be shown in a given case
that such agreement is a mere cloak to hide an inofficious donation, to transfer property in
fraud of creditors, or to defeat the legitime of a forced heir, it may be assailed and annulled
upon such grounds.
In the case at bar, there is no demonstration that the survivorship agreement had
been executed for such unlawful purposes, or in order to frustrate our laws on wills,
donations, and conjugal partnership. Mrs. Vitug having predeceased her husband, the
latter has acquired upon her death a vested right over the amounts under savings account
of the Bank of America. Being the separate property of petitioner, it forms no more part of
the estate of the deceased.
98. Intengan vs. Court of Appeals, 377 SCRA 63, G.R. No. 128996, February 15, 2002
ISSUE:
Whether the disclosure of the bank deposit in a case filed by a bank against its officers
falls under the last exception of R.A. No. 1405.
HELD:
The finest legal minds in the country - from the parties’ respective counsel, the
Provincial Prosecutor, the Department of Justice, the Solicitor General, and the Court of
Appeals - all appear to have overlooked a single fact which dictates the outcome of the
entire controversy. A circumspect review of the record shows us the reason. (Dollar account
ang pinag-uusapan, tapos lahat sila naka-focus sa RA 1405. Tuwang tuwa lang kasi ako
kung pano nireprimand ng SC yung mga “legal minds”)
The accounts in question are U.S. dollar deposits; consequently, the applicable law is not
Republic Act No. 1405 but Republic Act (RA) No. 6426, known as the "Foreign Currency
Deposit Act of the Philippines." Under R.A. No. 6426 there is only a single exception to the
secrecy of foreign currency deposits, that is, disclosure is allowed only upon the written
permission of the depositor. A case for violation of Republic Act No. 6426 should have been
the proper case brought against private respondents. Lim’s act of disclosing details of
petitioners’ bank records regarding their foreign currency deposits would appear to belong
to that species of criminal acts punishable by special laws, called malum prohibitum.
However, prescription has already set in because the filing of the information in the case at
bar for alleged violation of Republic Act No. 1405 did not have the effect of tolling the
prescriptive period. For it is the filing of the complaint or information corresponding to the
correct offense which produces that effect.
99. China Bank vs. Ortega, 49 SCRA 355, G.R. No. L-34964, January 31, 1973
ISSUE:
Whether or not a banking institution may validly refuse to comply with a court process
garnishing the bank deposit of a judgment debtor, by invoking the provisions of the Bank
Secrecy Law.
HELD:
The prohibition against examination of or inquiry into a bank deposit under Republic
Act 1405 does not preclude its being garnished to insure satisfaction of a judgment. Indeed
there is no real inquiry in such a case, and if the existence of the deposit is disclosed the
disclosure is purely incidental to the execution process.
100. Salvacion vs. Central Bank, 278 SCRA 27, G.R. No. 94723, August 21, 1997
ISSUE:
Should Section 113 of Central Bank Circular No. 960 and Section 8 of R.A. 6426, as
amended by P.D. 1246, otherwise known as the Foreign Currency Deposit Act be made
applicable to a foreign transient?
HELD:
The provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as it
amends Section 8 of R.A. No. 6426 are held to be INAPPLICABLE to this case because of its
peculiar circumstances.
In case of doubt in the interpretation or application of laws, it is presumed that the
lawmaking body intended right and justice to prevail. When the statute is silent or
ambiguous, this is one of those fundamental solutions that would respond to the vehement
urge of conscience. It would be unthinkable, that the questioned Section 113 of Central
Bank No. 960 would be used as a device by accused Greg Bartelli for wrongdoing, and in so
doing, acquitting the guilty at the expense of the innocent. This situation calls for fairness
against legal tyranny. We definitely cannot have both ways and rest in the belief that we
have served the ends of justice.

101. Ejercito vs. Sandiganbayan, 509 SCRA 190, G.R. Nos. 157294-95, November 30, 2006
ISSUE:
Whether petitioner’s Trust Account No. 858 is covered by the term "deposit" as used in
R.A. 1405 and whether the case of Plunder be excepted from the rule making bank deposits
confidential.
HELD:
The term "deposits" used on RA 1405 is to be understood broadly and not limited only
to accounts which give rise to a creditor-debtor relationship between the depositor and the
bank. If the money deposited under an account may be used by banks for authorized loans
to third persons, then such account, regardless of whether it creates a creditor-debtor
relationship between the depositor and the bank, falls under the category of accounts
which the law precisely seeks to protect for the purpose of boosting the economic
development of the country.
The crime of bribery and the overt acts constitutive of plunder are crimes committed by
public officers, and in either case the noble idea that "a public office is a public trust and
any person who enters upon its discharge does so with the full knowledge that his life, so far
as relevant to his duty, is open to public scrutiny" applies with equal force. Plunder being
thus analogous to bribery, the exception to R.A. 1405 applicable in cases of bribery must also
apply to cases of plunder.
102. People vs. Ejercito Estrada, G.R. Nos. 164368-69, April 2, 2009
ISSUE:
Whether or not trust account is covered by the term deposit as used in RA 1405.
HELD:
The nature of the transaction on which the indictment rests, affords Estrada a
reasonable expectation of privacy, as the alleged criminal act related to the opening of a
trust account – a transaction that R.A. No. 1405 considers absolutely confidential in nature.
We previously stated, in Ejercito v. Sandiganbayan, that An examination of the law shows
that the term "deposits" used therein is to be understood broadly and not limited only to
accounts which give rise to a creditor-debtor relationship between the depositor and the
bank.
If the money deposited under an account may be used by bank for authorized loans
to third persons, then such account, regardless of whether it creates a creditor-debtor
relationship between the depositor and the bank, falls under the category of accounts
which the law precisely seeks to protect for the purpose of boosting the economic
development of the country.
R.A. 1405 is broad enough to cover Trust Account. We have consistently ruled that
bank deposits under R.A. No. 1405 (the Secrecy of Bank Deposits Law) are statutorily
protected or recognized zones of privacy. Given the private nature of Estrada’s act of
signing the documents as "Jose Velarde" related to the opening of the trust account, the
People cannot claim that there was already a public use of alias when the bank officers, his
Chief of Staff with whom he shared matters of the highest and strictest confidence, and his
lawyer-friend witnessed the signing.

103. Marquez vs Desierto, 359 SCRA 772, G.R. No. 135882, June 27, 2001
ISSUE:
Whether the order of the Ombudsman to have an in camera inspection of the
questioned account is allowed as an exception to the law on secrecy of bank deposits (R.A.
No.1405)
HELD:
An examination of the secrecy of bank deposits law (R.A. No.1405) would reveal the
following exceptions:
1. Where the depositor consents in writing;
2. Impeachment case;
3. By court order in bribery or dereliction of duty cases against public officials;
4. Deposit is subject of litigation;
5. Sec. 8, R.A. No.3019, in cases of unexplained wealth as held in the case of PNB vs.
Gancayco.
Before an in camera inspection may be allowed,

1. there must be a pending case before a court of competent jurisdiction.
2. Further, the account must be clearly identified,
3. the inspection limited to the subject matter of the pending case before the court of
competent jurisdiction.
4. The bank personnel and the account holder must be notified to be present during the
inspection, and
5. such inspection may cover only the account identified in the pending case.
Before an in camera inspection may be allowed, there must be a pending case before a
court of competent jurisdiction. In the case at bar, there is yet no pending litigation before
any court of competent authority. What is existing is an investigation by the Office of the
Ombudsman. In short, what the office of the ombudsman would wish to do is to fish for
additional evidence to formally charge Amado Lagdameo, et. al., with the Sandiganbayan.
Clearly, there was no pending case in court which would warrant the opening of the bank
account for inspection.
LOAN FUNCTION OF BANKS
104. Soriano vs. People of the Phils., 591 SCRA 244, G.R. No. 159517-18, June 30, 2009
ISSUE:
Whether the filing of Estafa bars the filing of violation of DOSRI rules or vice versa.
HELD:
Jurisprudence teems with pronouncements that a single act or incident might offend
two or more entirely distinct and unrelated provisions of law. A DOSRI violation consists in the
failure to observe and comply with procedural, reportorial or ceiling requirements prescribed
by law in the grant of a loan to a director, officer, stockholder and other related interests in
the bank. The elements of abuse of confidence, deceit, fraud or false pretenses, and
damage, which are essential to the prosecution for estafa, are not elements of a DOSRI
violation. The filing of several charges against Soriano was, therefore, proper.

105. BPI vs. Sps. Yu, 610 SCRA 412, G.R. No. 184122, January 20, 2010
ISSUE:
Whether or not the reference to the penalty charges in the promissory note constitutes
substantial compliance with the disclosure requirement of the Truth in Lending Act.
HELD:
The lender may provide for a penalty clause so long as the amount or rate of the
charge and the conditions under which it is to be paid are disclosed to the borrower before
he enters into the credit agreement. The case of Consolidated Bank and Trust Corporation
v. Court of Appeals declared valid the penalty charges that were stipulated in the
promissory notes. In this case, the promissory notes signed by the Yus contained data,
including penalty charges, required by the Truth in Lending Act. They cannot avoid liability
based on a rigid interpretation of the Truth in Lending Act that contravenes its goal.
Nonetheless, the courts have authority to reduce penalty charges when these are
unreasonable and iniquitous.
106. DBP vs. Arcilla, 462 SCRA 599, G.R. No. 161397, June 30, 2005
ISSUE:
Whether the contract of loan between Arcilla and the bank be rendered invalid due
to non-compliance with the disclosure requirement of the Truth in Lending Act.
HELD:
Under Circular 158 of the Central Bank, the lender is required to include the
information required by R.A. 3765 in the contract covering the credit transaction or any other
document to be acknowledged and signed by the borrower. In addition, the contract or
document shall specify additional charges, if any, which will be collected in case certain
stipulations in the contract are not met by the debtor. If the borrower is not duly informed of
the data required by the law prior to the consummation of the availment or drawdown, the
lender will have no right to collect such charge or increases thereof, even if stipulated in the
promissory note. However, such failure shall not affect the validity or enforceability of any
contract or transaction.
In the present case, DBP failed to disclose the requisite information in the disclosure
statement form authorized by the Central Bank, but did so in the loan transaction
documents between it and Arcilla. There is no evidence on record that DBP sought to collect
or collected any interest, penalty or other charges, from Arcilla other than those disclosed in
the said deeds/documents. Thus, there was a substantial compliance with the disclosure
requirement and even if there was none, the contract of loan remain valid.
BANK REGULATIONS
107. Tala Realty Corp. vs. Banco Filipino, 584 SCRA 64, G.R. Nos. 130088, 131469, 155171, 155201, 166608, April 7, 2009
Where the purchase is made in violation of an existing statute and in evasion of its
express provision, no trust can result in favor of the party who is guilty of the fraud. The Bank
was well aware of the limitations on its real estate holdings under the General Banking Act
and that its "warehousing agreement" with Tala was a scheme to circumvent the limitation.
This agreement which the Bank claims to be an implied trust is contrary to law. While the sale
and lease of the subject property genuine and binding upon the parties, we cannot enforce
the implied trust even assuming the parties intended to create it. The Bank and Tala are in
pari delicto, thus, no affirmative relief should be given to one against the other. The Bank
should not be allowed to dispute the sale of its lands to Tala nor should Tala be allowed to
further collect rent from the Bank. The clean hands doctrine will not allow the creation nor
the use of a juridical relation such as a trust to subvert, directly or indirectly, the law.
BANKS IN DISTRESS
108. Central Bank vs. Court of Appeals, 220 SCRA 536, G.R. No. 76118, March 30, 1993
ISSUE:
May a Monetary Board resolution placing a private bank under receivership be
annulled on the ground of lack of prior notice and hearing?
HELD:
An appeal to a procedural process cannot just outweight the evil sought to be
prevented. The absence of notice and hearing is not a valid ground to annul a Monetary
Board resolution placing a bank under receivership. It cannot be deemed acts of
arbitrariness and bad faith. Thus, an MB resolution placing a bank under receivership, or
conservatorship for that matter, may only be annulled after a determination has been made
by the trial court that its issuance was tainted with arbitrariness and bad faith. This "close
now and hear later" scheme is grounded on practical and legal considerations to prevent
unwarranted dissipation of the bank's assets and as a valid exercise of police power to
protect the depositors, creditors, stockholders and the general public.
109. Cudiamat vs. Batangas Savings, G.R. No. 182403 March 9, 2010
As a general rule, if there is a judicial liquidation of an insolvent bank, all claims against
the bank should be filed in the liquidation proceeding. However, general rule should not be
applied if to order the aggrieved party to refile or relitigate its case before the litigation court
would be "an exercise in futility."
In the present case, Cudiamat was 78 years old at the time the petition was filed and
is a resident of Ozamis City. To compel him to appear and relitigate the case in the
liquidation court-Nasugbu RTC when the issues to be raised before it are the same as those
already exhaustively passed upon and decided by the Balayan RTC would be superfluous.
110. Lipana vs. Development Bank of Rizal, 154 SCRA 257, G.R. No. 73884, September 24, 1987
ISSUE:
Whether receivership may stay execution of judgment that has already become final
and executory.
HELD:
Yes. The rule that once a decision becomes final and executory, it is the ministerial
duty of the court to order its execution, admits of certain exceptions as in cases of special
and exceptional nature where it becomes imperative in the higher interest of justice to direct
the suspension of its execution, whenever it is necessary to accomplish the aims of justice, or
when certain facts and circumstances transpired after the judgment became final which
could render the execution of the judgment unjust.
In the instant case, the stay of the execution of judgment is warranted by the fact that
respondent bank was placed under receivership. To execute the judgment would unduly
deplete the assets of respondent bank to the obvious prejudice of other depositors and
creditors, since, after the Monetary Board has declared that a bank is insolvent and has
ordered it to cease operations, the Board becomes the trustee of its assets for the equal
benefit of all the creditors, including depositors. The assets of the insolvent banking institution
are held in trust for the equal benefit of all creditors, and after its insolvency, one cannot
obtain an advantage or a preference over another by an attachment, execution or
otherwise.
111. Sps. Larrobis, Jr. vs. Philippine Veterans Bank, G.R. No. 135706. October 1, 2004
ISSUE:
Whether foreclosure of real estate mortgage is interrupted if the mortgagee bank is
placed under receivership and liquidation because of the Monetary board’s probition from
doing business during receivership and liquidation proceedings
HELD:
While it is true that foreclosure falls within the broad definition of "doing business," it
should not be considered included, however, in the acts prohibited whenever banks are
"prohibited from doing business" during receivership and liquidation proceedings. The
purpose of receivership proceedings is to receive collectibles and preserve the assets of the
bank in substitution of its former management, and prevent the dissipation of its assets to the
detriment of the creditors of the bank. When a bank is prohibited from continuing to do
business by the Central Bank and a receiver is appointed for such bank, that bank would not
be able to do new business. However, the receiver of the bank is in fact obliged to collect
debts owing to the bank, which debts form part of the assets of the bank. The receiver must
assemble the assets and pay the obligation of the bank under receivership, and take steps
to prevent dissipation of such assets. Accordingly, the receiver of the bank is obliged to
collect pre-existing debts due to the bank, and in connection therewith, to foreclose
mortgages securing such debts. Thus, the period within which respondent bank was placed
under receivership and liquidation proceedings does not constitute a fortuitous event which
interrupted the prescriptive period of 10 years in bringing the action to foreclose.
112. Fidelity Savings Bank vs. Cenzon, 184 SCRA 141, G.R. No. L-46208, April 5, 1990
ISSUE:
Whether or not an insolvent bank may be adjudged to pay interest on unpaid deposits
even after its closure by the Central Bank by reason of insolvency.
HELD:
A banking institution which has been declared insolvent and subsequently ordered
closed by the Central Bank of the Philippines cannot be held liable to pay interest on bank
deposits which accrued during the period when the bank is actually closed and non-
operational. What enables a bank to pay stipulated interest on money deposited with it is
that thru the other aspects of its operation it is able to generate funds to cover the payment
of such interest. Unless a bank can lend money, engage in international transactions,
acquire foreclosed mortgaged properties or their proceeds and generally engage in other
banking and financing activities from which it can derive income, it is inconceivable how it
can carry on as a depository obligated to pay stipulated interest. Conventional wisdom
dictates this inexorable fair and just conclusion.
113. In Re: Petition for Assistance in the Liquidation of Rural Bank of Bokod, 511 SCRA 123,
G.R. No. 158261, December 18, 2006
ISSUE:
Whether a bank ordered closed and placed under receivership by the Monetary
Board of the BSP still needs to secure a tax clearance certificate from the BIR before the
liquidation court approves the project of distribution of the assets of the bank.

HELD:
Section 30 of the New Central Bank Act lays down the proceedings for receivership
and liquidation of a bank. The said provision is silent as regards the securing of a tax
clearance from the BIR. The omission, nonetheless, cannot compel this Court to apply by
analogy the tax clearance requirement of the SEC, as stated in Section 52(C) of the Tax
Code of 1997 and BIR-SEC Regulations No. 1, since, again, the dissolution of a corporation by
the SEC is a totally different proceeding from the receivership and liquidation of a bank by
the BSP. It should be noted that there are substantial differences in the procedure for
involuntary dissolution and liquidation of a corporation under the Corporation Code, and
that of a banking corporation under the New Central Bank Act, so that the requirements in
one cannot simply be imposed in the other.
114. First Philippine International Bank vs CA, 252 SCRA 259, G.R. No. 115849, January 24, 1996
ISSUE:
May the conservator have unilateral power to repudiate the authority of the bank officers and/or to
revoke the said contract?
HELD:
While admittedly, the Central Bank law gives vast and far-reaching powers to the
conservator of a bank, it must be pointed out that such powers must be related to the
preservation of the assets of the bank, the reorganization of the management thereof and
the restoration of its viability. Such powers, enormous and extensive as they are, cannot
extend to the post-facto repudiation of perfected transactions, otherwise they would infringe
against the non-impairment clause of the Constitution. Therefore, Section 28-A merely gives
the conservator power to revoke contracts that are, under existing law, deemed to be
defective — i.e., void, voidable, unenforceable or rescissible. Hence, the conservator merely
takes the place of a bank's board of directors. What the said board cannot do — such as
repudiating a contract validly entered into under the doctrine of implied authority — the
conservator cannot do either. Ineluctably, his power is not unilateral and he cannot simply
repudiate valid obligations of the Bank.
115. Vivas vs The Monetary Board, G.R. No. 191424, August 7, 2013
ISSUE:
Whether prior notice and hearing is required before a bank be placed under receivership.
HELD:
The MB, if circumstances warrant it, may forbid a bank from doing business and place
it under receivership without prior notice and hearing. Accordingly, the MB can immediately
implement its resolution prohibiting a banking institution to do business in the Philippines and,
thereafter, appoint the PDIC as receiver. The procedure for the involuntary closure of a bank
is summary and expeditious in nature. Such action of the MB shall be final and executory, but
may be later subjected to a judicial scrutiny via a petition for certiorari to be filed by the
stockholders of record of the bank representing a majority of the capital stock. Obviously,
this procedure is designed to protect the interest of all concerned, that is, the depositors,
creditors and stockholders, the bank itself and the general public. The protection afforded
public interest warrants the exercise of a summary closure. This doctrine of "close now, hear
later," was justified as a measure for the protection of the public interest.
It is worthy of note that Vivas availed of the wrong remedy - prohibition. Under Section
30 of R.A. No. 7653, any act of the MB placing a bank under conservatorship, receivership or
liquidation may not be restrained or set aside except on a petition for certiorari.

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INSURANCE LAW

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The Policy of Insurance

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Persons entitled to recover on the policy and conditions to recovery

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Compulsory Motor Vehicle Liability Insurance

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OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF CARRIAGE OF GOODS

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OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF CARRIAGE OF PASSENGERS

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OBLIGATIONS OF THE SHIPPER, CONSIGNEE AND PASSENGER

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BILL OF LADING AND OTHER FORMALITIES

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ACTIONS IN CASE OF BREACH OF CONTRACT OF CARRIAGE

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Before an in camera inspection may be allowed,

LOAN FUNCTION OF BANKS

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