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RECENT JURISPRUDENCE IN COMMERCIAL LAW

1. IGLESIA FILIPINA INDEPENDIENTE vs. HEIRS of BERNARDINO TAEZA [G.R. No.

17997. F!"#$%#& '( )*1+., PERALTA, J

FACTS-Iglesia Filipina Independiente (IFI, for brevity), a dly registered religios !orporation, "as t#e

o"ner of a par!el of land des!ribed as Lot $%&$, !ontaining an area of $1,'$ sare *eters, sitated atRy (no" Leonarda), Tgegarao, +agayan, and !overed by riginal +ertifi!ate of Title -o. P%/.

T#e said lot is sbdivided as follo"s0 Lot -os. $%&$A, $%&$, $%&$+, and $%&$2.

et"een 1/3$ and 1/34, t#e IFI, t#rog# its t#en 5pre*e is#op Rev. 6a!ario 7a, sold Lot $%&$2,

"it# an area of 1&,''' sare *eters, to one ienvenido de 78*an.

n Febrary &, 1/3%, Lot -os. $%&$A and $%&$, "it# a total area of 1',''' sare *eters, "ere

li9e"ise sold by Rev. 6a!ario 7a, in #is !apa!ity as t#e 5pre*e is#op of IFI, to t#e defendant

ernardino Tae8a, for t#e a*ont of P1'','''.'', t#rog# install*ent, "it# *ortgage to se!re t#e

pay*ent of t#e balan!e. 5bseently, t#e defendant allegedly !o*pleted t#e pay*ents.

Petitioner *aintains t#at t#ere "as no !onsent to t#e !ontra!t of sale as 5pre*e is#op Rev. 7a #ad no

at#ority to give s!# !onsent. It e*p#asi8ed t#at Arti!le I: (a) of t#eir +anons provides t#at ;All real

properties of t#e +#r!# lo!ated or sitated in s!# paris# !an be disposed of only "it# t#e approval and

!onfor*ity of t#e lay*en

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T#is !ase !learly falls nder t#e !ategory of nenfor!eable !ontra!ts *entioned in Arti!le 14'$, paragrap#

(1) of t#e +ivil +ode, "#i!# provides, t#s0

Art. 14'$. T#e follo"ing !ontra!ts are nenfor!eable, nless t#ey are ratified0

(1) T#ose entered into in t#e na*e of anot#er person by one "#o #as been given no at#ority or legal

representation, or "#o #as a!ted beyond #is po"ers=

C. SECURITIES AND ECHANGE COMMISSION vs. OUDINE SANTOS [G.R. No. 19+).

M%#/0 19( )*1+.,

FACTS0 efore s is anot#er !ationary tale of an invest*ent arrange*ent "#i!#, at t#e otset, appeared

good, nraveling n#appily as a deal toogoodtobetre. 5o*eti*e in C''3, yet anot#er invest*ent

s!a* "as eBposed "it# t#e disappearan!e of its pri*ary perpetrator, 6i!#ael .D. Lie" (Lie"), a self

styled finan!ial gr and +#air*an of t#e oard of 2ire!tors of Perfor*an!e Invest*ent Prod!ts

+orporation (PIP+:I), a foreign !orporation registered in t#e ritis# :irgin Islands.

To do bsiness in t#e P#ilippines, PIP+:I in!orporated #erein as P#ilippine International Planning

+enter +orporation (PIP+ +orporation). e!ase t#e #ead of PIP+ +orporation #ad gone *issing and

"it# it t#e *onies and invest*ent of a signifi!ant n*ber of investors, t#e 5E+ "as flooded "it#!o*plaints fro* t#irtyone ($1) individals against PIP+ +orporation, its dire!tors, offi!ers, e*ployees,

agents and bro9ers for alleged violation of !ertain provisions of t#e 5e!rities Reglation +ode, in!lding

5e!tion C t#ereof. 5antos "as !#arged in t#e !o*plaints in #er !apa!ity as invest*ent !onsltant of PIP+

+orporation, "#o spposedly ind!ed private !o*plainants Lisa 6er!edes P. Loren8o (Loren8o) and

Ri!9y Albino P. 5y (5y), to invest t#eir *onies in PIP+ +orporation.

T#e !o**on re!ital in t#e $1 !o*plaints is t#at0

. . . 2e to t#e ind!e*ents and soli!itations of t#e PIP+ !orporation

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5#ares belonging to !orporations or partners#ips at least %' of t#e !apital of "#i!# is o"ned by Filipino

!iti8ens s#all be !onsidered as of P#ilippine nationality, bt if t#e per!entage of Filipino o"ners#ip in t#e

!orporation or partners#ip is less t#an %', only t#e n*ber of s#ares !orresponding to s!# per!entage

s#all be !onted as of P#ilippine nationality. T#s, if 1'',''' s#ares are registered in t#e na*e of a

!orporation or partners#ip at least %' of t#e !apital sto!9 or !apital, respe!tively, of "#i!# belong to

Filipino !iti8ens, all of t#e s#ares s#all be re!orded as o"ned by Filipinos. t if less t#an %', or say,

&' of t#e !apital sto!9 or !apital of t#e !orporation or partners#ip, respe!tively, belongs to Filipino

!iti8ens, only &',''' s#ares s#all be !onted as o"ned by Filipinos and t#e ot#er &',''' s#all be re!orded

as belonging to aliens.

T#e first part of paragrap# 3, 2J pinion -o. 'C', stating ;s#ares belonging to !orporations or

partners#ips at least %' of t#e !apital of "#i!# is o"ned by Filipino !iti8ens s#all be !onsidered as of

P#ilippine nationality,; pertains to t#e !ontrol test or t#e liberal rle. n t#e ot#er #and, t#e se!ond part of

t#e 2J pinion "#i!# provides, ;if t#e per!entage of t#e Filipino o"ners#ip in t#e !orporation or

partners#ip is less t#an %', only t#e n*ber of s#ares !orresponding to s!# per!entage s#all be !onted

as P#ilippine nationality,; pertains to t#e stri!ter, *ore stringent grandfat#er rle.

T#e pertinent provision nder 5e!. $ of t#e FIA provides0

5E+TI- $. 2efinitions. ? As sed in t#is A!t0

a.) T#e ter* P#ilippine national s#all *ean a !iti8en of t#e P#ilippines= or a do*esti! partners#ip or

asso!iation "#olly o"ned by t#e !iti8ens of t#e P#ilippines= a !orporation organi8ed nder t#e la"s of t#e

P#ilippines of "#i!# at least siBty per!ent (%') of t#e !apital sto!9 otstanding and entitled to vote is

"#olly o"ned by Filipinos or a trstee of fnds for pension or ot#er e*ployee retire*ent or separation

benefits, "#ere t#e trstee is a P#ilippine national and at least siBty per!ent (%') of t#e fnd "ill a!!re

to t#e benefit of P#ilippine nationals0 Provided, T#at "ere a !orporation and its nonFilipino sto!9#olders

o"n sto!9s in a 5e!rities and EB!#ange +o**ission (5E+) registered enterprise, at least siBty per!ent

(%') of t#e !apital sto!9 otstanding and entitled to vote of ea!# of bot# !orporations *st be o"ned

and #eld by !iti8ens of t#e P#ilippines and at least siBty per!ent (%') of t#e *e*bers of t#e oard of

2ire!tors, in order t#at t#e !orporation s#all be !onsidered a P#ilippine national. (e*p#asis spplied)

;+orporate layering; is ad*ittedly allo"ed by t#e FIA= bt if it is sed to !ir!*vent t#e +onstittion and

pertinent la"s, t#en it be!o*es illegal.

It is apparent t#at it is t#e intention of t#e fra*ers of t#e +onstittion to apply t#e grandfat#er rle in

!ases "#ere !orporate layering is present. Ele*entary in stattory !onstr!tion is "#en t#ere is !onfli!t

bet"een t#e +onstittion and a statte, t#e +onstittion "ill prevail. In t#is instan!e, spe!ifi!ally

pertaining to t#e provisions nder Art. II of t#e +onstittion on -ational E!ono*y and Patri*ony, 5e!.

$ of t#e FIA "ill #ave no pla!e of appli!ation. As de!reed by t#e #onorable fra*ers of or +onstittion,

t#e grandfat#er rle prevails and *st be applied.

T#e assertion of petitioners t#at ;dobt; only eBists "#en t#e sto!9#oldings are less t#an %' fails to!onvin!e t#is +ort. 2J pinion -o. C', "#i!# petitioners oted in t#eir petition, only *ade an

eBa*ple of an instan!e "#ere ;dobt; as to t#e o"ners#ip of t#e !orporation eBists. It "old be ldi!ros

to li*it t#e appli!ation of t#e said "ord only to t#e instan!es "#ere t#e sto!9#oldings of nonFilipino

sto!9#olders are *ore t#an 4' of t#e total sto!9#oldings in a !orporation. T#e !orporations interested in

!ir!*venting or la"s "old !learly strive to #ave ;%' Filipino "ners#ip; at fa!e vale. It "old be

senseless for t#ese applying !orporations to state in t#eir respe!tive arti!les of in!orporation t#at t#ey

WARRIOR NOTES by: Atty. Bernz Amago IV

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#ave less t#an %' Filipino sto!9#olders sin!e t#e appli!ations "ill be denied instantly. T#s, varios

!orporate s!#e*es and layerings are tili8ed to !ir!*vent t#e appli!ation of t#e +onstittion.

bviosly, t#e instant !ase presents a sitation "#i!# eB#ibits a s!#e*e e*ployed by sto!9#olders to

!ir!*vent t#e la", !reating a !lod of dobt in t#e +ort#en in t#e *ind of

t#e +ort t#ere is dobt, based on t#e attendant fa!ts and !ir!*stan!es of t#e !ase, in t#e %'4' Filipino

eity o"ners#ip in t#e !orporation, t#en it *ay apply t#e ;grandfat#er rle.;

4. MEDICAL PLAZA MAATI CONDOMINIUM CORPORATION vs. ROBERT H. CULLEN

[G.R. No. 151+1. Nov!:"!# 11( )*1'., PERALTA

FACTS0 Respondent Robert . +llen pr!#ased fro* 6LI !ondo*ini* Hnit -o. 1C'1 of t#e

6edi!al Pla8a 6a9ati !overed by +ondo*ini* +ertifi!ate of Title -o. 4&' of t#e Register of 2eeds

of 6a9ati. 5aid title "as later !an!elled and +ondo*ini* +ertifi!ate of Title -o. %4C1 "as issed int#e na*e of respondent.

n 5epte*ber 1/, C''C, petitioner, t#rog# its !orporate se!retary, 2r. Jose 7iovanni E. 2i*ayga,

de*anded fro* respondent pay*ent for alleged npaid asso!iation des and assess*ents a*onting to

P14&,&%3.4C. Respondent dispted t#is de*and !lai*ing t#at #e #ad been religiosly paying #is des

s#o"n by t#e fa!t t#at #e "as previosly ele!ted president and dire!tor of petitioner. Petitioner, on t#e

ot#er #and, !lai*ed t#at respondent

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An intra!orporate !ontroversy is one "#i!# pertains to any of t#e follo"ing relations#ips0 (1) bet"een

t#e !orporation, partners#ip or asso!iation and t#e pbli!= (C) bet"een t#e !orporation, partners#ip or

asso!iation and t#e 5tate insofar as its fran!#ise, per*it or li!ense to operate is !on!erned= ($) bet"een

t#e !orporation, partners#ip or asso!iation and its sto!9#olders, partners, *e*bers or offi!ers= and (4)

a*ong t#e sto!9#olders, partners or asso!iates t#e*selves. T#s, nder t#e relations#ip test, t#e eBisten!e

of any of t#e above intra!orporate relations *a9es t#e !ase intra!orporate.

Hnder t#e natre of t#e !ontroversy test, ;t#e !ontroversy *st not only be rooted in t#e eBisten!e of an

intra!orporate relations#ip, bt *st as "ell pertain to t#e enfor!e*ent of t#e parties< !orrelative rig#ts

and obligations nder t#e +orporation +ode and t#e internal and intra!orporate reglatory rles of t#e

!orporation.; In ot#er "ords, @risdi!tion s#old be deter*ined by !onsidering bot# t#e relations#ip of t#e

parties as "ell as t#e natre of t#e estion involved.

Applying t#e t"o tests, "e find and so #old t#at t#e !ase involves intra!orporate !ontroversy. It

obviosly arose fro* t#e intra!orporate relations bet"een t#e parties, and t#e estions involved pertain

to t#eir rig#ts and obligations nder t#e +orporation +ode and *atters relating to t#e reglation of t#e

!orporation.

Ad*ittedly, petitioner is a !ondo*ini* !orporation dly organi8ed and eBisting nder P#ilippine la"s,!#arged "it# t#e *anage*ent of t#e 6edi!al Pla8a 6a9ati. Respondent, on t#e ot#er #and, is t#e

registered o"ner of Hnit -o. 1C'1 and is t#s a sto!9#olderG*e*ber of t#e !ondo*ini* !orporation.

+learly, t#ere is an intra!orporate relations#ip bet"een t#e !orporation and a sto!9#olderG*e*ber.

T#e natre of t#e a!tion is deter*ined by t#e body rat#er t#an t#e title of t#e !o*plaint. T#og#

deno*inated as an a!tion for da*ages, an eBa*ination of t#e allegations *ade by respondent in #is

!o*plaint s#o"s t#at t#e !ase prin!ipally d"ells on t#e propriety of t#e assess*ent *ade by petitioner

against respondent as "ell as t#e validity of petitioner

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BBB BBB BBB

b) +ontroversies arising ot of intra!orporate or partners#ip relations, bet"een and a*ong

sto!9#olders, *e*bers or asso!iates= bet"een any or all of t#e* and t#e !orporation, partners#ip or

asso!iation of "#i!# t#ey are sto!9#olders, *e*bers, or asso!iates, respe!tively= and bet"een s!#

!orporation, partners#ip or asso!iation and t#e 5tate insofar as it !on!erns t#eir individal fran!#ise or

rig#t to eBist as s!# entity= and

!) +ontroversies in t#e ele!tion or appoint*ent of dire!tors, trstees, offi!ers, or *anagers of s!#

!orporations, partners#ips, or asso!iations. C/ !ITAa2

To be sre, t#is a!tion parta9es of t#e natre of an intra!orporate !ontroversy, t#e @risdi!tion over "#i!#

pertains to t#e 5E+. Prsant to 5e!tion &.C of Repbli! A!t -o. 3//, ot#er"ise 9no"n as t#e 5e!rities

Reglation +ode, t#e @risdi!tion of t#e 5E+ over all !ases en*erated nder 5e!tion & of Presidential

2e!ree -o. /'CA #as been transferred to RT+s designated by t#is +ort as 5pe!ial +o**er!ial +orts.

>#ile t#e +A *ay be !orre!t t#at t#e RT+ #as @risdi!tion, t#e !ase s#old #ave been filed not "it# t#e

reglar !ort bt "it# t#e bran!# of t#e RT+ designated as a spe!ial !o**er!ial !ort. +onsidering t#at

t#e RT+ of 6a9ati +ity, ran!# & "as not designated as a spe!ial !o**er!ial !ort, it "as not vested

"it# @risdi!tion over !ases previosly !ogni8able by t#e 5E+. $1. T#e +A, t#erefore, gravely erred inre*anding t#e !ase to t#e RT+ for frt#er pro!eedings.

T#s, t#e intra!orporate dispte bet"een petitioner and respondent is still "it#in t#e @risdi!tion of t#e

RT+ sitting as a spe!ial !o**er!ial !ort and not t#e LHR. T#e do!trine laid do"n by t#e +ort in

+#atea de aie +ondo*ini* +orporation v. 6oreno "#i!# in trn !ited >a!9 >a!9 +ondo*ini*

+orporation, et al. v. +A $% is still a good la".

&. JOSE U. PUA %34 BENJAMIN HANBEN U. PUA vs. CITIBAN( N.A. [G.R. No. 15**+.

S!6;!:"!# 1( )*1'.,

FACTS-n 2e!e*ber C, C''C, petitioners filed before t#e RT+ a +o*plaint for de!laration of nllity of

!ontra!t and s*s of *oney "it# da*ages against respondent, do!9eted as +ivil +ase -o. 1/11&/. In

t#eir !o*plaint, petitioners alleged t#at t#ey #ad been depositors of +itiban9 inondo ran!# (+itiban9

inondo) sin!e 1//%. 5o*eti*e in 1///, 7ada Ang, +itiban9 inondo

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"#et#er or not t#ere "as a sale of nregistered se!rities. In t#is regard, respondent !ontended t#at t#e

5R+ !onferred pon t#e 5E+ @risdi!tion to investigate !o*plian!e "it# its provisions and t#s,

petitioners< !o*plaint s#old be first filed "it# t#e 5E+ and not dire!tly before t#e RT+.

Petitioners opposed respondent

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In a letter dated Jly &, C''3, petitioner denied t#e insran!e !lai* of respondent, stating a*ong ot#ers,

t#s0

Hpon verifi!ation of t#e do!*ents sb*itted, parti!larly t#e Poli!e Report and yor Affidavit, "#i!#

states t#at t#e !lprit, "#o stole t#e Insred nit, is e*ployed "it# yo. >e "old li9e to invite yo on

t#e provision of t#e Poli!y nder EB!eptions to 5e!tionIII, "#i!# "e ote0

1.) T#e +o*pany s#all not be liable for0

BBB BBB BBB

(4) Any *ali!ios da*age !ased by t#e Insred, any *e*ber of #is fa*ily or by ;A PER5- I-

TE I-5HRE2

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insred is adopted.; T#e defendant "old arge t#at if t#e person e*ployed by t#e insred "old !o**it

t#e t#eft and t#e insrer "old be #eld liable, t#en t#is "old reslt to an absrd sitation "#ere t#e

insrer "old also be #eld liable if t#e insred "old !o**it t#e t#eft. T#is arg*ent is !ertainly fla"ed.

f !orse, if t#e t#eft "old be !o**itted by t#e insred #i*self, t#e sa*e "old be an eB!eption to t#e

!overage sin!e in t#at !ase t#ere "old be frad on t#e part of t#e insred or brea!# of *aterial "arranty

nder 5e!tion %/ of t#e Insran!e +ode.

6oreover, !ontra!ts of insran!e, li9e ot#er !ontra!ts, are to be !onstred a!!ording to t#e sense and

*eaning of t#e ter*s "#i!# t#e parties t#e*selves #ave sed. If s!# ter*s are !lear and na*bigos,

t#ey *st be ta9en and nderstood in t#eir plain, ordinary and poplar sense. A!!ordingly, in interpreting

t#e eB!lsions in an insran!e !ontra!t, t#e ter*s sed spe!ifying t#e eB!lded !lasses t#erein are to be

given t#eir *eaning as nderstood in !o**on spee!#.

Frt#er, t#e +A aptly rled t#at ;*ali!ios da*age,; as provided for in t#e sb@e!t poli!y as one of t#e

eB!eptions fro* !overage, is t#e da*age t#at is t#e dire!t reslt fro* t#e deliberate or "illfl a!t of t#e

insred, *e*bers of #is fa*ily, and any person in t#e insred#en t#e intended restr!tring of t#e loan did not

*ateriali8e, 6etroban9 sent anot#er de*and letter dated !tober 11, C''1. As t#e de*ands fell on deafears, 6etroban9, t#rog# its representative, >innie 6. :illaneva, filed t#e instant !ri*inal !o*plaints

against petitioner.

For #is defense, "#ile ad*itting signing t#e trst re!eipts, petitioner arged t#at said trst re!eipts "ere

de*anded by 6etroban9 as additional se!rity for t#e loans eBtended to 5per*aB for t#e pr!#ase of

!onstr!tion eip*ent and *aterials. In spport of t#is arg*ent, petitioner presented as "itness,

Pris!ila Alfonso, "#o testified t#at t#e !onstr!tion *aterials !overed by t#e trst re!eipts "ere delivered

WARRIOR NOTES by: Atty. Bernz Amago IV

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"ay before petitioner signed t#e !orresponding trst re!eipts. Frt#er, petitioner arged t#at 6etroban9

9ne" all along t#at t#e !onstr!tion *aterials sb@e!t of t#e trst re!eipts "ere not intended for resale bt

for personal se of 5per*aB relating to its !onstr!tion bsiness.

ISSUE->#et#er or not petitioner is liable for Estafa nder Art. $1&, par. 1 (b) of t#e RP+ in relation to

P2 11&, even if it "as sffi!iently proved t#at t#e entrster (6etroban9) 9ne" before#and t#at t#e goods

(!onstr!tion *aterials) sb@e!t of t#e trst re!eipts "ere never intended to be sold bt only for se in t#eentrstee#at !onstittes a trst re!eipts transa!tion. ? A trst re!eipt transa!tion, "it#in t#e

*eaning of t#is 2e!ree, is any transa!tion by and bet"een a person referred to in t#is 2e!ree as t#e

entrster, and anot#er person referred to in t#is 2e!ree as entrstee, "#ereby t#e entrster, "#o o"ns or

#olds absolte title or se!rity interests over !ertain spe!ified goods, do!*ents or instr*ents, releases

t#e sa*e to t#e possession of t#e entrstee pon t#e latter

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T#ere are, t#erefore, t"o obligations in a trst re!eipt transa!tion0 t#e first refers to *oney re!eived nder

t#e obligation involving t#e dty to trn it over (entregarla) to t#e o"ner of t#e *er!#andise sold, "#ile

t#e se!ond refers to t#e *er!#andise re!eived nder t#e obligation to ;retrn; it (devolvera) to t#e o"ner.

A violation of any of t#ese nderta9ings !onstittes Estafa defined nder Art. $1&, par. 1 (b) of t#e RP+,

as provided in 5e!. 1$ of P2 11&.

-onet#eless, "#en bot# parties enter into an agree*ent 9no"ing flly "ell t#at t#e retrn of t#e goodssb@e!t of t#e trst re!eipt is not possible even "it#ot any falt on t#e part of t#e trstee, it is not a trst

re!eipt transa!tion penali8ed nder 5e!. 1$ of P2 11& in relation to Art. $1&, par. 1 (b) of t#e RP+, as t#e

only obligation a!tally agreed pon by t#e parties "old be t#e retrn of t#e pro!eeds of t#e sale

transa!tion. T#is transa!tion be!o*es a *ere loan, "#ere t#e borro"er is obligated to pay t#e ban9 t#e

a*ont spent for t#e pr!#ase of t#e goods.

A trst re!eipt is !onsidered a se!rity transa!tion intended to aid in finan!ing i*porters and retail

dealers "#o do not #ave sffi!ient fnds or resor!es to finan!e t#e i*portation or pr!#ase of

*er!#andise, and "#o *ay not be able to a!ire !redit eB!ept t#rog# tili8ation, as !ollateral, of t#e

*er!#andise i*ported or pr!#ased. 5i*ilarly, A*eri!an Jrisprden!e de*onstrates t#at trst re!eipt

transa!tions al"ays refer to a *et#od of ;finan!ing i*portations or finan!ing sales.; T#e prin!iple is of

!orse not li*ited in its appli!ation to finan!ing i*portations, sin!e t#e prin!iple is eally appli!able to

do*esti! transa!tions. Regardless of "#et#er t#e transa!tion is foreign or do*esti!, it is i*portant to note

t#at t#e transa!tions dis!ssed in relation to trst re!eipts *ainly involved sales.

T#e pra!ti!e of ban9s of *a9ing borro"ers sign trst re!eipts to fa!ilitate !olle!tion of loans and pla!e

t#e* nder t#e t#reats of !ri*inal prose!tion s#old t#ey be nable to pay it *ay be n@st and

ineitable, if not repre#ensible. 5!# agree*ents are !ontra!ts of ad#esion "#i!# borro"ers #ave no

option bt to sign lest t#eir loan be disapproved. T#e resort to t#is s!#e*e leaves poor and #apless

borro"ers at t#e *er!y of ban9s, and is prone to *isinterpretation . . . .

Hnfortnately, "#at #appened in +olinares is eBa!tly t#e sitation in t#e instant !ase. T#is repre#ensible

ban9 pra!ti!e des!ribed in +olinares s#old be stopped and dis!oraged. For t#is +ort to give life to t#e

!onstittional provision of noni*prison*ent for nonpay*ent of debts, it is i*perative t#at petitioner bea!itted of t#e !ri*e of Estafa nder Art. $1&, par. 1 (b) of t#e RP+, in relation to P2 11&.

. MALA

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In a letter, dated 2e!e*ber 1&, 1//3, 6alayan denied t#e !lai* pon t#e grond t#at, at t#e ti*e of t#e

loss, t#e insred *a!#ineries and eip*ent "ere transferred by PAP +o. to a lo!ation different fro* t#at

indi!ated in t#e poli!y. 5pe!ifi!ally, t#at t#e insred *a!#ineries "ere transferred in 5epte*ber 1//%

fro* t#e 5anyo ilding to t#e Pa!e Pa!ifi! ldg., Lot 14, lo!9 14, P#ase III, PEOA, Rosario, +avite

(Pa!e Pa!ifi!). +ontesting t#e denial, PAP +o. arged t#at 6alayan !annot avoid liability as it "as

infor*ed of t#e transfer by R++, t#e party dtybond to relay s!# infor*ation. o"ever, 6alayan

reiterated its denial of PAP +o.#at PAP did to prove t#at 6alayan "as notified "as to s#o" t#at it relayed t#e fa!t of transfer to

R++, t#e entity "#i!# *ade t#e referral and t#e na*ed benefi!iary in t#e poli!y. 6alayan and R++

*ig#t #ave been sister !o*panies, bt s!# fa!t did not *a9e one an agent of t#e ot#er. T#e fa!t t#at

R++ referred PAP to 6alayan did not !lot#e it "it# at#ority to represent and bind t#e said insran!e

!o*pany. After t#e referral, PAP dealt dire!tly "it# 6alayan.

T#e +ort agrees "it# 6alayan t#at t#e transfer to t#e Pa!e Fa!tory eBposed t#e properties to a #a8ardos

environ*ent and negatively affe!ted t#e fire rating stated in t#e rene"al poli!y. T#e in!rease in tariff rate

fro* '.44/ to '.%&3 pt t#e sb@e!t properties at a greater ris9 of loss. 5!# in!rease in ris9 "old

ne!essarily entail an in!rease in t#e pre*i* pay*ent on t#e fire poli!y.

WARRIOR NOTES by: Atty. Bernz Amago IV

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It !an also be said t#at "it# t#e transfer of t#e lo!ation of t#e sb@e!t properties, "it#ot noti!e and

"it#ot 6alayan

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"it# t#e !toff date of 2e!e*ber $1, C''3. 5#ortly after t#e !o*pletion of t#e general eBa*ination, an

eBit !onferen!e "as #eld on 6ar!# C3, C'' at t#e 5P dring "#i!# t#e 5P offi!ials and eBa*iners

apprised :ivas, t#e +#air*an and President of E+I, as "ell as t#e ot#er ban9 offi!ers and *e*bers of

its 2, of t#e advan!e findings noted dring t#e said eBa*ination. T#e E+I sb*itted its !o**ents

on 5P#et#er or not t#e 5P !o**itted grave abse of dis!retion a*onting to eB!ess of @risdi!tion.

RULING-T#e petition *st fail.

To begin "it#, :ivas availed of t#e "rong re*edy. T#e 6 issed Resoltion -o. C3%, dated 6ar!# 4,

C'1', in t#e eBer!ise of its po"er nder R.A. -o. 3%&$. Hnder 5e!tion $' t#ereof, any a!t of t#e 6

WARRIOR NOTES by: Atty. Bernz Amago IV

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pla!ing a ban9 nder !onservators#ip, re!eivers#ip or liidation *ay not be restrained or set aside eB!ept

on a petition for !ertiorari.

7ranting t#at a petition for pro#ibition is allo"ed, it is already an ineffe!tive re*edy nder t#e

!ir!*stan!es obtaining. As a rle, t#e proper fn!tion of a "rit of pro#ibition is to prevent t#e doing of

an a!t "#i!# is abot to be done. It is not intended to provide a re*edy for a!ts already a!!o*plis#ed.

Even if treated as a petition for !ertiorari, t#e petition s#old #ave been filed "it# t#e +A. 5e!tion 4 of

Rle %& provides t#at if it involves t#e a!ts or o*issions of a asi@di!ial agen!y, nless ot#er"ise

provided by la" or t#ese Rles, t#e petition s#all be filed in and !ogni8able only by t#e +ort of Appeals.

T#at t#e 6 is a asi@di!ial agen!y "as already settled and reiterated in t#e !ase of an9 of

+o**er!e v. Planters 2evelop*ent an9 and ang9o 5entral -g Pilipinas.

Even in t#e absen!e of s!# provision, t#e petition is also dis*issible be!ase it si*ply ignored t#e

do!trine of #ierar!#y of !orts.

In any event, no grave abse of dis!retion !an be attribted to t#e 6 for t#e issan!e of t#e assailed

Resoltion -o. C3%.

:ivas insists t#at t#e !ir!*stan!es of t#e !ase "arrant t#e appli!ation of 5e!tion 11 of R.A. -o. 3$&$.T#e t#rst of :ivas< arg*ent is t#at E+I did not !o**it any finan!ial frad and, #en!e, its pla!e*ent

nder re!eivers#ip "as n"arranted and i*proper. e asserts t#at, instead, t#e 5P s#old #ave ta9en

over t#e *anage*ent of E+I and eBtended loans to t#e finan!ially distrained ban9 prsant to 5e!tions

11 and 14 of R.A. -o. 3$&$ be!ase t#e 5P

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itself, not to *ention t#e losses sffered by t#e ban9 depositors, !reditors, and sto!9#olders, "#o all

deserve t#e prote!tion of t#e govern*ent.

T#e do!trine is fonded on pra!ti!al and legal !onsiderations to obviate n"arranted dissipation of t#e

ban9

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n April 1', 1//%, "#en t#e insran!e poli!y #ad been in for!e for *ore t#an t"o years and seven

*ont#s, 5otero died. Respondent filed a !lai* for t#e insran!e pro!eeds on Jly /, 1//%. Petitioner

!ond!ted an investigation into t#e !lai*, and !a*e ot "it# t#e follo"ing findings0

1. 5otero did not personally apply for insran!e !overage, as s#e "as illiterate=

C. 5otero "as si!9ly sin!e 1//'=

$. 5otero did not #ave t#e finan!ial !apability to pay t#e insran!e pre*i*s on Insran!e Poli!y

-o. 343411=

4. 5otero did not sign t#e Jly $, 1//$ appli!ation for insran!e=

&. Respondent "as t#e one "#o filed t#e insran!e appli!ation, and . . . designated #erself as t#e

benefi!iary.

For t#e above reasons, petitioner denied respondent#et#er or not t#e poli!y "as obtained by frad, !on!eal*ent andGor *isrepresentation nder

t#e Insran!e +ode, "#i!# t#s renders it voidable nder Arti!le 1$/' of t#e +ivil +ode.

RULING-T#e +ort "ill not depart fro* t#e trial and appellate !orts< finding t#at it "as 5otero "#o

obtained t#e insran!e for #erself, designating respondent as #er benefi!iary. ot# !orts are in a!!ord in

t#is respe!t, and t#e +ort is loat# to distrb t#is.

5e!tion 4 serves a noble prpose, as it reglates t#e a!tions of bot# t#e insrer and t#e insred. T#s, t#e

selfreglating featre of 5e!tion 4 lies in t#e fa!t t#at bot# t#e insrer and t#e insred are given t#e

assran!e t#at any dis#onest s!#e*e to obtain life insran!e "old be eBposed, and atte*pts at ndly

denying a !lai* "old be str!9 do"n. Life insran!e poli!ies t#at pass t#e stattory t"oyear period are

essentially treated as legiti*ate and beyond estion, and t#e individals "#o "ield t#e* are *ade

se!re by t#e t#og#t t#at t#ey "ill be paid pro*ptly pon !lai*. In t#is *anner, 5e!tion 4 !ontribtes

to t#e stability of t#e insran!e indstry.

5e!tion 4 prevents a sitation "#ere t#e insrer 9no"ingly !ontines to a!!ept annal pre*i*

pay*ents on life insran!e, only to later on deny a !lai* on t#e poli!y on spe!ios !lai*s of fradlent

!on!eal*ent and *isrepresentation, s!# as "#at obtains in t#e instant !ase. T#s, instead of !ond!ting

at t#e first instan!e an investigation into t#e !ir!*stan!es srronding t#e issan!e of Insran!e Poli!y

-o. 343411 "#i!# "old #ave ti*ely eBposed t#e spposed fla"s and irreglarities attending it as it no"

professes, petitioner appears to #ave trned a blind eye and opted instead to !ontine !olle!ting t#e

pre*i*s on t#e poli!y. For nearly t#ree years, petitioner !olle!ted t#e pre*i*s and devoted t#e sa*e to

its o"n profit. It !annot no" deny t#e !lai* "#en it is !alled to a!!ont. 5e!tion 4 *st be applied to it

"it# fll for!e and effe!t.

T#e +ort t#erefore agrees flly "it# t#e appellate !ort

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T#e prpose of t#e la" is to give prote!tion to t#e insred or #is benefi!iary by li*iting t#e res!inding of

t#e !ontra!t of insran!e on t#e grond of fradlent !on!eal*ent or *isrepresentation to a period of only

t"o (C) years fro* t#e issan!e of t#e poli!y or its last reinstate*ent.

11.ASIAN TERMINALS( INC. >ATI? vs. PHILAM INSURANCE CO.( INC. >3o@ C0%#;s

P08663!s I3s$#%3/!( I3/.? [G.R. No. 1511'. J$8& )+( )*1'.,

PHILAM INSURANCE CO.( INC. >3o@ C0%#;s P08663!s I3s$#%3/!( I3/.? vs. WESTWIND

SHIPPING CORPORATION %34 ASIAN TERMINALS( INC.( [G.R. No. 151)). J$8& )+( )*1'.,

WESTWIND SHIPPING CORPORATION vs. PHILAM INSURANCE CO.( INC. >3o@ C0%#;s

P08663!s I3s$#%3/!( I3/.? %34 ASIAN TERMINALS( INC. >ATI? [G.R. No. 151'19. J$8& )+(

)*1'.,

FACTS-n April 1&, 1//&, -i!#i*en +orporation s#ipped to Hniversal 6otors +orporation (Hniversal

6otors) C1/ pa!9ages !ontaining 1C' nits of brand ne" -issan Pi!9p Tr!9 2oble +ab 4BC *odel,

"it#ot engine, tires and batteries, on board t#e vessel 5G5 ;+alayan Iris; fro* Japan to 6anila. T#e

s#ip*ent, "#i!# #ad a de!lared vale of H51,$% or PC/,4'',''', "as insred "it# P#ila* against all

ris9s nder 6arine Poli!y -o. 3'''%3134.

T#e !arrying vessel arrived at t#e port of 6anila on April C', 1//&, and "#en t#e s#ip*ent "as nloaded

by t#e staff of ATI, it "as fond t#at t#e pa!9age *ar9ed as '$C4&4CDG1 "as in bad order. T#e Trn

ver 5rvey of ad rder +argoes % dated April C1, 1//& identified t"o pa!9ages, labeled '$C4&4CDG1

and '$GC$3G3+DGC, as being dented and bro9en. T#ereafter, t#e !argoes "ere stored for te*porary

safe9eeping inside +F5 >are#ose in Pier -o. &.

n 6ay 11, 1//&, t#e s#ip*ent "as "it#dra"n by R.F. Revilla +sto*s ro9erage, In!., t#e at#ori8ed

bro9er of Hniversal 6otors, and delivered to t#e latterR "as deeply dented on t#e bffle plate "#ile siB Fra*e Asse*bly "it#

s# "ere defor*ed and *isaligned. "ing to t#e eBtent of t#e da*age to said !argoes, Hniversal

6otors de!lared t#e* a total loss.

n Agst 4, 1//&, Hniversal 6otors filed a for*al !lai* for da*ages in t#e a*ont of P%4$,/%$.4

against >est"ind, ATI and R.F. Revilla +sto*s ro9erage, In!. >#en Hniversal 6otors< de*ands

re*ained n#eeded, it sog#t reparation fro* and "as !o*pensated in t#e s* of P%$$,/&3.1& by

P#ila*. A!!ordingly, Hniversal 6otors issed a 5brogation Re!eipt 1C dated -ove*ber 1&, 1//& in

favor of P#ila*.

n Janary 1, 1//%, P#ila*, as sbrogee of Hniversal 6otors, filed a +o*plaint for da*ages against

>est"ind, ATI and R.F. Revilla +sto*s ro9erage, In!. before t#e RT+ of 6a9ati +ity, ran!# 14.

ISSUES0 (1) as P#ila*#o bet"een >est"ind and ATI s#old be

#eld liable for t#e da*aged !argoesM and ($) >#at is t#e eBtent of t#eir liabilityM

RULING- Subrogation

>e #ave #eld t#at pay*ent by t#e insrer to t#e insred operates as an eitable assign*ent to t#e insrer

of all t#e re*edies t#at t#e insred *ay #ave against t#e t#ird party "#ose negligen!e or "rongfl a!t

!ased t#e loss. T#e rig#t of sbrogation is not dependent pon, nor does it gro" ot of, any privity of

!ontra!t. It a!!res si*ply pon pay*ent by t#e insran!e !o*pany of t#e insran!e !lai*. T#e do!trine

of sbrogation #as its roots in eity. It is designed to pro*ote and a!!o*plis# @sti!e= and is t#e *ode

WARRIOR NOTES by: Atty. Bernz Amago IV

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validity of t#e !lai*s "#ile fa!ts are still fres# in t#e *inds of t#e persons "#o too9 part in t#e

transa!tion and do!*ents are still available. ere, Hniversal 6otors filed a reest for bad order srvey

on 6ay 1C, 1//&, even before all t#e pa!9ages !old be nloaded to its "are#ose.

6oreover, paragrap# (%), 5e!tion $ of t#e +75A !learly states t#at failre to !o*ply "it# t#e noti!e

reire*ent s#all not affe!t or pre@di!e t#e rig#t of t#e s#ipper to bring sit "it#in one year after

delivery of t#e goods. Petitioner P#ila*, as sbrogee of Hniversal 6otors, filed t#e +o*plaint forda*ages on Janary 1, 1//%, @st eig#t *ont#s after all t#e pa!9ages "ere delivered to its possession on

6ay 13, 1//&. Evidently, petitioner P#ila*est"ind and ATI "as seasonably

filed.

W0o "!;@!!3 W!s;@34 %34 ATI s0o$84 "! 8%"8! fo# ;0! 4%:%=! ;o ;0! /%#=o

It is ndispted t#at 5teel +ase -o. '$C4&4CDG1 "as partly torn and !r*pled on one side "#ile it "as

being nloaded fro* t#e !arrying vessel. T#e da*age to said !ontainer "as noted in t#e ad rder +argo

Re!eipt dated April C', 1//& and Trn ver 5rvey of ad rder +argoes dated April C1, 1//&. T#e Trn

ver 5rvey of ad rder +argoes indi!ates t#at said steel !ase "as not opened at t#e ti*e of srvey and

"as a!!epted by t#e arrastre in good order. 6ean"#ile, t#e ad rder +argo Re!eipt bore a notation

;.. not yet tGover to ATI.; n t#e basis of t#ese do!*ents, petitioner ATI !lai*s t#at t#e !ontents of5teel +ase -o. '$C4&4CDG1 "ere da*aged "#ile in t#e !stody of petitioner >est"ind.

>e agree.

+o**on !arriers, fro* t#e natre of t#eir bsiness and for reasons of pbli! poli!y, are bond to observe

eBtraordinary diligen!e in t#e vigilan!e over t#e goods transported by t#e*. 5b@e!t to !ertain eB!eptions

en*erated nder Arti!le 13$4 of t#e +ivil +ode, !o**on !arriers are responsible for t#e loss,

destr!tion, or deterioration of t#e goods. T#e eBtraordinary responsibility of t#e !o**on !arrier lasts

fro* t#e ti*e t#e goods are n!onditionally pla!ed in t#e possession of, and re!eived by t#e !arrier for

transportation ntil t#e sa*e are delivered, a!tally or !onstr!tively, by t#e !arrier to t#e !onsignee, or to

t#e person "#o #as a rig#t to re!eive t#e*.

It observed t#at "#ile t#e staff of ATI ndertoo9 t#e p#ysi!al nloading of t#e !argoes fro* t#e !arrying

vessel, >est"indest"ind and ATI, bt only for t#e da*age to one Fra*e

ABle 5b "it#ot Lo"er. Hpon a !arefl revie" of t#e re!ords, t#e +ort finds no reason to deviate fro*

t#e finding t#at petitioners >est"ind and ATI are !on!rrently a!!ontable for t#e da*age to t#e !ontent

of 5teel +ase -o. '$C4&4CDG1.

5e!tion C of t#e +75A provides t#at nder every !ontra!t of !arriage of goods by t#e sea, t#e !arrier in

relation to t#e loading, #andling, sto"age, !arriage, !stody, !are and dis!#arge of s!# goods, s#all be

sb@e!t to t#e responsibilities and liabilities and entitled to t#e rig#ts and i**nities set fort# in t#e A!t.

5e!tion $ (C) t#ereof t#en states t#at a*ong t#e !arrier

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T#is is not to say, #o"ever, t#at petitioner ATI is "it#ot liability for t#e da*aged !argo.

T#e fn!tions of an arrastre operator involve t#e #andling of !argo deposited on t#e "#arf or bet"een t#e

establis#*ent of t#e !onsignee or s#ipper and t#e s#ip