Answers to the mock bar examination (COMMERCIAL LAW

REVIEW)

1. Trademark, copyright, patents differ?

- The subject matter
o Trademark visible signs capable of distinguishing the goods from
others.
o Copyright right over literary and artistic works
o Patent technical solution of a problem in any field of human
activity, which is new and involves an inventive step and is
industrially applicable.
- Requirement of registration
o Trademark and patent needs to be registered first before filing an
infringement rights while copyrights need not to be registered first
before claiming infringement rights.
- CASE
- Pearl & Dean v. Shoemart GR 148222, 15 August 2003
- Facts:
- Pearl & Dean is a corporation engaged in the manufacture of advertising
display units (Poster Ads) referred as light boxes. It acquired a Certificate
of Copyright Registration over the illuminated display units, and acquired
trademark for Poster Ads. Pearl & Dean negotiated with Shoemart for
the lease and installation of the light boxes in Shoemart Malls. After Pearl
& Beans contract was rescinded, exact copies of its light b oxes were
installed in various SM malls (fabricated by Metro Industrial Services, and
later EYD Rainbow Advertising Corp.) Pearl & Dean sent a letter to
Shoemart and its sister company. North EDSA Marketing, to cease using
the light boxes and to remove them from the malls, and demanded the
discontinued use of the trade mark Poster Ads. Unsatisfied with the
compliance of its demands, Pearl & Dean sued. The trial court ruled in
favor of Pearl & Dean, while the appellate court reversed the decision of
the trial court.
-

Issue: Whether pearl & Deans copyright registration for its light boxes and
the trademark registration of Poster Ads preclude Shoemart and North
Edsa Marketing from using the same.
Held: No. Pearl & Dean secured its copyright under the classification class
o work. This being so, its protection extended only to the technical
drawings and not to the light box itself. Pearl & Dean cannot exclude
others from the manufacture, sale and/or commercial use over the light
boxes on the sole basis of its copyright, certificate over the technical
drawings. It cannot be the intention of the law that the right of exclusivity
would be granted for a longer time (so years in copyright, and 17 years in
patent) through the simplified procedure of copyright registration with the

National Library, without the rigor of defending the patentability of its

invention before the IPO and the public. On the other hand, there has
been no evidence that Pearl & Deans use of Poster Ads was distinctive
or well known. Poster Ads was too generic a name to identify it to a
specific company or entity. Poster Ads was generic and incapable of
being used as a trademark because it was used in the field of poster
advertising, the very business engaged by earl & Dean. Furthermore, Pearl
& Deans exclusive right to the use of Poster Ads is limited to what is
written in its certificate of registration. Shoemart, et. al. cannot be held
liable for the infringement of the trademark.
2. Is registration of patent essential for pursuing infringement of
patent?
- YES! Patent infringement.
- Case
- G.R. No. 118708. February 2, 1998.] CRESER PRECISION SYSTEMS,
INC., petitioner, vs. COURT OF APPEALS AND
FLORO INTERNATIONAL CORP., respondents.
-

Petitioners claim:
It is Cresers contention that it can file, under Section 42 of the Patent Law
(R.A. 165), an action for infringement not as a patentee but as an entity in
possession of a right, title or interest in and to the patented invention. It
advances the theory that while the absence of a patent may prevent one
from lawfully suing another for infringement of said patent, such absence
does not bar the first true and actual inventor of the patented invention
from suing another who was granted a patent in a suit for declaratory or
injunctive relief recognized under American patent laws. This remedy,
petitioner points out, may be likened to a civil action for infringement
under Section 42 of the Philippine Patent Law.

Respondents claim:
Private
respondent
Floro International
submitted
its
memorandum alleging that petitioner has no cause of action to file a
complaint for infringement against it since Creser has no patent for the
aerial fuze which it claims to have invented; that petitioner's available
remedy is to file a petition for cancellation of patent before the Bureau of
Patents; that private respondent as the patent holder cannot be stripped
of its property right over the patented aerial fuze consisting of the
exclusive right to manufacture, use and sell the same and that it stands to
suffer irreparable damage and injury if it is enjoined from the exercise of
its property rights over its patent.

Issue:
Whether Creser can file an action for infringement being not as patentee
Ruling:

NO. Section 42 of R.A. 165, otherwise known as the Patent Law, explicitly
provides:

Sec. 42. Civil action for infringement. Any patentee, or anyone possessing
any right, title or interest in and to the patented invention, whose rights
have been infringed, may bring a civil action before the proper Court of
First Instance (now Regional Trial court), to recover from the infringer
damages sustained by reason of the infringement and to secure an
injunction for the protection of his right. . . .

Under the aforequoted law, only the patentee or his successors-in-interest

may file an action for infringement. The phrase "anyone possessing any
right, title or interest in and to the patented invention
" upon which petitioner maintains its present suit, refers only to the
patentee's successors-in-interest, assignees or grantees since actions for
infringement of patent may be brought in the name of the person or
persons interested, whether as patentee, assignees, or as grantees, of the
exclusive right
Petitioner admits it has no patent over its aerial fuze.
Therefore, it has no legal basis or cause of action to institute the petition
for injunction and damages arising from the alleged infringement by
private respondent.

3. Check drawn against Pigue and payable to the order of Yang and Chow was
deposited to Porki Bank (collecting bank) with the lone indorsement of Yang.
Yang was able to get the proceeds of the check after it was cleared by Pigue
bank.
a. Was the check properly indorsed?
- No. we must apply the general rule. Sec. 41. Where an instrument is
payable to the order of two or more payees or indorsees who are not
partners, all must indorse unless the one indorsing has authority to
indorse for the others.
- METROPOLITAN BANK AND TRUST COMPANY vs. BA FINANCE
CORPORATION and MALAYAN INSURANCE CO., INC. G.R. No.
179952. December 4, 2009.
-

FACTS:
Lamberto Bitanga obtained from respondent BA Finance Corporation a
loan, to secure which, he mortgaged his car to respondent BA Finance.
Bitanga had the mortgaged car insured by respondent Malayan Insurance.
The car was stolen. On Bitangas claim, Malayan Insurance issued a check
payable to the order of "B.A. Finance Corporation and Lamberto Bitanga",
drawn against China. The check was crossed with the notation "For
Deposit Payees Account Only." Without the indorsement or authority of
his co-payee BA Finance, Bitanga deposited the check to his account with
the Asianbank, now merged with herein petitioner Metrobank. Bitanga
subsequently withdrew the entire proceeds of the check. In
the meantime, Bitangas loan became past due, but despite demands, he
failed to settle it. BA Finance eventually learned of the loss of the car and

of Malayan Insurances issuance of a crossed check payable to it and

Bitanga, and of Bitangas depositing it in his account at Asianbank and
withdrawing the entire proceeds thereof. BA Finance thereupon demanded
the payment of the value of the check from Asianbank but to no avail,
prompting it to file a complaint before the RTC for sum of money and
damages against Asianbank and Bitanga, alleging that, inter alia, it is
entitled to the entire proceeds of the check. The trial court, holding that
Asianbank was negligent in allowing Bitanga to deposit the check to his
account and to withdraw the proceeds thereof, without his co-payee BA
Finance having either indorsed it or authorized him to indorse it in its
behalf, found Asianbank and Bitanga jointly and severally liable to BA
Finance following Section 41 of the Negotiable Instruments Law. The
appellate court, affirming the trial courts decision, held that BA Finance
has a cause of action against [it] even if the subject check had not been
delivered to BA Finance by the issuer itself. Hence, the present Petition for
Review on Certiorari filed by Metrobank to which Asianbank was, as earlier
stated, merged, faulting the appellate court.
-

ISSUE: WON the petitioner is liable for the full value of the check?

HELD: Yes. Affirming the decision of the CA, the SC held that Section 41 of
the
Negotiable Instruments Law provides: Where an instrument is payable to
the order of two or more payees or indorsees who are not partners, all
must indorse unless the one indorsing has authority to indorse for the
others. Bitanga alone endorsed the crossed check, and petitioner allowed
the deposit and release of the proceeds thereof, despite the absence of
authority of Bitangas co-payee BA Finance to endorse it on its behalf. The
payment of an instrument over a missing indorsement is the equivalent of
payment on a forged indorsement or an unauthorized indorsement in itself
in the case of joint payees. Clearly, petitioner, through its employee, was
negligent when it allowed the deposit of the crossed check, despite the
lone endorsement of Bitanga, ostensibly ignoring the fact that the check
did not, it bears repeating, carry the indorsement of BA Finance.

b. Who will generally suffer the loss.

o The collecting bank. All prior endorsements guaranteed thus
assures the warranties of a general indorser.
4. Ika signed a promissory note for P100,000 and delivered it to Uni, to whose
order it was made payable. Kani found the note and indorsed it to himself by
forging Unis signature. Kani then indorsed it to Ebi.
a. What defenses, if any, are availale to Ika?
o Want of delivery (personal defense)
o Forgery (real defense)
b. Would these defenses apply if the note is payable to bearer?

With respect to forgery, no signature or indorsement is necessary,

so no forgery may be availed of as a defense. In bearer instrument,
mere delivery suffices. In this case, want of delivery is also not
applicable, because Ebi is, under the law, presumed as a holder in
due course, no personal defense may overcome li

5. Congee, entrustee under a trust receipt, returned the goods to the entruster
as she was not able to sell the goods. Congee now claims that her obligation
to the entrusted has been extinguished. Is this correct?
o No. A Trust Receipt is a security arrangement, the bank acquires
security interest thus the return did not accord full satisfaction of
the debtor because he still has outstanding obligation.
6. Refer to the question.
o Rule on adhesion. Is a contract between two parties, where the
terms and conditions of the contract are set by one of the parties,
and the other party has little or no ability to negotiate more
favorable terms and is thus placed in a "take it or leave it" position.
o Construed in favor of the insured.
o Case
- Eternal vs. PhilAm Life Gr. No. 166245 April 9, 2008
-

FACTS:
December 10, 1980: Philippine American Life Insurance Company
(Philamlife) entered into an agreement denominated as Creditor Group
Life Policy No. P-19202 with Eternal Gardens Memorial Park Corporation
(Eternal) Under the policy (renewable annually), the clients of Eternal who
purchased burial lots from it on installment basis would be insured by
Philamlife amount of insurance coverage depended upon the existing
balance Eternal complied by submitting a letter dated December 29,
1982, a list of insurable balances of its lot buyers for October 1982 which
includes John Chuang which was stamped as received by Philam Life
August 2, 1984, Chuang died with a balance of 100,000 php April 25,
1986: Philamlife had not furnished Eternal with any reply on its insurance
claim so its demanded its claim According to Philam Life, since
the application was submitted only on November 15, 1984, after his
death, Mr. John Uy Chuang was not covered under the Policy since
his application was not approved. Moreover, the acceptance of
the premiums are only in trust for and not a sign of approval.

RTC: favored Eternal

CA: Reversed RTC

ISSUE: W/N Philam's inaction or non-approval meant the perfection of the

insurance contract.
HELD: YES. CA reversed and was construed in favor of the insured and in
favor of the effectivity of the insurance contract. Upon a partys purchase
of a memorial lot on installment from Eternal, an insurance contract
covering the lot purchaser is created and the same is effective, valid, and

binding until terminated by Philamlife by disapproving the

insurance application. Moreover, the mere inaction of the insurer on the
insurance application must not work to prejudice the insured. The
termination of the insurance contract by the insurer must be explicit and
unambiguous.
7. A. In what cases is the policy binding even if premium is unpaid?
o Sec. 77 Insurance. An insurer is entitled to payment of the premium
as soon as the thing insured is exposed to the peril insured against.
Notwithstanding any agreement to the contrary, no policy or
contract of insurance issued by an insurance company is valid and
binding unless and until the premium thereof has been paid, except
in the case of a life or an industrial life policy whenever the grace
period provision applies, or whenever under the broker and agency
agreements with duly licensed intermediaries, a ninety (90)-day
credit extension is given. No credit extension to a duly licensed
intermediary should exceed ninety (90) days from date of issuance
of the policy.
o Cash and Carry Rule. Insurance policy shall not be binding except
upon payment of premium. The exception is the abovementioned
provision.
B. refer to the question.
- No. Parties being in pari delicto. No remedies for both being in bad
faith. For one to claim damages, he must come in court with clean
hands. The court will leave them as they are.
CASE:
Makati Tuscany Condominium Corporation v CA (Insurance)
FACTS:
Sometime in early 1982, private respondent American Home Assurance Co. (AHAC),
represented by American International Underwriters (Phils.), Inc., issued in favor of
petitioner Makati Tuscany Condominium Corporation (TUSCANY) Insurance Policy
No. AH-CPP-9210452 on the latter's building and premises, for a period beginning 1
March 1982 and ending 1 March 1983, with a total premium of P466,103.05. The
premium was paid on installments on 12 March 1982, 20 May 1982, 21 June 1982
and 16 November 1982, all of which were accepted by private
respondent. Successive renewals of the policies were made in the same manner. On
1984, the policy was again renewed and petitioner made two installment payments,
both accepted by private respondent, the first on 6 February 1984 for P52,000.00
and the second, on 6 June 1984 for P100,000.00. Thereafter, petitioner refused to
pay
the
balance
of
the
premium.
Private respondent filed an action to recover the unpaid balance of P314,103.05 for
Insurance Policy. Petitioner explained that it discontinued the payment of premiums
because the policy did not contain a credit clause in its favor. Petitioner further
claimed that the policy was never binding and valid, and no risk attached to the
policy. It then pleaded a counterclaim for P152,000.00 for the premiums already
paid for 1984-85, and in its answer with amended counterclaim, sought the refund
of P924,206.10 representing the premium payments for 1982-85.

DECISION OF LOWER COURTS:

(1) Trial Court: dismissed the complaint and counterclaim
(2) CA: ordering herein petitioner to pay the balance of the premiums due
ISSUE:
Whether payment by installment of the premiums due on an insurance policy
invalidates the contract of insurance, in view of Sec. 77 of P.D. 612, otherwise
known as the Insurance Code, as amended, which provides:
Sec. 77. An insurer is entitled to the payment of the premium as soon as the thing is
exposed to the peril insured against. Notwithstanding any agreement to the
contrary, no policy or contract of insurance issued by an insurance company is valid
and binding unless and until the premium thereof has been paid, except in the case
of a life or an industrial life policy whenever the grace period provision applies.
RULING:
No, the contract remains valid even if the premiums were paid on installments.
Certainly, basic principles of equity and fairness would not allow the insurer to
continue collecting and accepting the premiums, although paid on installments, and
later deny liability on the lame excuse that the premiums were not prepared in full.
At the very least, both parties should be deemed in estoppel to question the
arrangement they have voluntarily accepted. Moreover, as correctly observed by
the appellate court, 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. The obligation to
pay premiums when due is ordinarily as indivisible obligation to pay the entire
premium.
8. Are trust accounts also protected under the Bank Secrecy Law (RA
1405)?
o Yes. Although, trust accounts, strictly speaking are not deposits, the
law is broad enough to cover such accounts, not limited to
depositor, depositary or creditor or debtor, also trustee and trustor,
to discourage private holdings, for such account/ money be properly
utilized by the bank in boosting the economic growth.
o Case
- Joseph Victor Ejercito vs. Sandiganbayan G.R. Nos. 157294-95
- FACTS:
- The Office of the Ombudsman requested the Sandiganbayan to issue
subpoena duces tecum against the Urban Bank relative to the case
against President Joseph Estrada. Ms. Dela Paz, receiver of the Urban
Bank, furnished the Office of the Ombudsman certified copies of manager
checks detailed in the subpoena duces tecum. TheSandiganbayan granted
the same. However, Ejercito claims that the subpoenas issued by the
Sandiganbayan are invalid and may not be enforced because the
information found therein, given their extremely detailed character and
could only have been obtained by the Special Prosecution Panel through
an illegal disclosure by the bank officials. Ejercito thus contended that,
following the fruit of the poisonous tree doctrine, the subpoenas must be

quashed. Moreover, the extremely-detailed information obtained by the

Ombudsman from the bank officials concerned during a previous
investigation of the charges against him, such inquiry into his bank
accounts would itself be illegal.
ISSUE:
Whether or not subpoena duces tecum/ad testificandum may be issued to
order the production of statement of bank accounts even before a case for
plunder is filed in court
HELD:
The Supreme Court held that plunder is analogous to bribery, and
therefore, the exception to R.A. 1405 must also apply to cases of plunder.
The court also reiterated the ruling in Marquez v. Desierto that before an
in camera inspection may be allowed there must be a pending case before
a court of competent jurisdiction. Further, the account must be clearly
identified, the inspection limited to the subject matter of pending case
before the court of competent jurisdiction. As no plunder case against
then President Estrada had yet been filed before a court of competent
jurisdiction at the time the Ombudsman conducted an investigation, he
concludes that the information about his bank accounts were acquired
illegally, hence, it may not be lawfully used to facilitate a subsequent
inquiry into the same bank accounts. Thus, his attempt to make the
exclusionary rule applicable to the instant case fails. The high Court,
however, rejected the arguments of the petitioner Ejercito that the bank
accounts which where demanded from certain banks even before the case
was filed before the proper court is inadmissible in evidence being fruits of
poisonous tree. This is because the Ombudsman issued the subpoenas
bearing on the bank accounts of Ejercito about four months before
Marquez was promulgated on June 27, 2001. While judicial interpretations
of statutes, such as that made in Marquez with respect to R.A. No. 6770 or
the Ombudsman Act of 1989, are deemed part of the statute as of the
date it was originally passed, the rule is not absolute. Thus, the Court
referred to the teaching of Columbia Pictures Inc., v. Court of Appeals,
that: It is consequently clear that a judicial interpretation becomes a part
of the law as of the date that law was originally passed, subject only to the
qualification that when a doctrine of this Court is overruled and a different
view is adopted, and more so when there is a reversal thereof, the new
doctrine should be applied prospectively and should not apply to parties
who relied on the old doctrine and acted in good faith.

9. Issue is whether there is doing business in the Philippines.

o Qualify answer. It is considered doing business if the local company
engages the operation for the account and within the control of the
foreign
corporation,
if
not,
considered
as
independent
distributorship.
- Can it sue?

It can be sued but cannot sue here in the Philippines because it has
no license and juridical personality.

10.Regarding unclaimed balances if subjected to escheat proceedings.

- Mere issuance of a managers check, even good as cash, does not
automatically serve as payment to the payee, no delivery has taken place,
hence the check still belongs to the spouses.
- Notice in this case is necessary before escheat proceedings can be held.
- Case
- RCBC vs. Hi-Tri Development Corp. and Luz R. Bakunawa, G.R. No.
192413, June 13, 2012
- Facts:
- Millan paid the spouses Bakunawa P1,019,514.29 as down payment for
the purchase of six (6) lots with the Spouses Bakunawa giving Millan the
Owners Copies of TCTs of said lots.
- Due to some obstacles, the sale did not push through; so Spouses
Bakunawa rescinded the sale and offered to return to Millan her down.
However, Millan refused to accept back the down payment. Consequently,
the Spouses Bakunawa, through their company, Hi-Tri took out on October
28, 1991, a Managers Check from RCBC-Ermita in the amount
of P 1,019,514.29, payable to Millans company Rosmil and used this as
one of their basis for a complaint against Millan.
- The Spouses Bakunawa retained custody of RCBC Managers Check and
refrained from cancelling or negotiating it. Millan was also informed that
the Managers Check was available for her withdrawal, she being the
payee.
- On January 31, 2003, without the knowledge of Spouses Bakunawa, RCBC
reported the "P 1,019,514.29-credit existing in favor of Rosmil to the
Bureau of Treasury as among its "unclaimed balances" as of January 31,
2003. On December 14, 2006, the Republic, through the Office of the
Solicitor General (OSG), filed with the RTC the action for Escheat.
- On April 30, 2008, Spouses Bakunawa settled amicably their dispute with
Millan. Spouses Bakunawa tried to recover the P1,019,514.29 under
Managers Check but they were informed that the amount was already
subject of the escheat proceedings before the RTC.
- The trial court ordered the deposit of the escheated balances with the
Treasurer and credited in favor of the Republic. Respondents claim that
they were not able to participate in the trial, as they were not informed of
the ongoing escheat proceedings. Later motion for reconsideration was
denied.
- CA reversed the RTC ruling. CA pronounced that RTC Clerk of Court failed
to issue individual notices directed to all persons claiming interest in the
unclaimed balances. CA held that the Decision and Order of the RTC were
void for want of jurisdiction.
- Issue:

Whether or not the allocated funds may be escheated in favor of the

Republic
Held:
There are sufficient grounds to affirm the CA on the exclusion of the funds
allocated for the payment of the Managers Check in the escheat
proceedings.
An ordinary check refers to a bill of exchange drawn by a depositor
(drawer) on a bank (drawee), requesting the latter to pay a person named
therein (payee) or to the order of the payee or to the bearer, a named
sum of money. The issuance of the check does not of itself operate as an
assignment of any part of the funds in the bank to the credit of the
drawer. Here, the bank becomes liable only after it accepts or certifies the
check. After the check is accepted for payment, the bank would then debit
the amount to be paid to the holder of the check from the account of the
depositor-drawer.
There are checks of a special type called managers or cashiers checks.
These are bills of exchange drawn by the banks manager or cashier, in
the name of the bank, against the bank itself. Typically, a managers or a
cashiers check is procured from the bank by allocating a particular
amount of funds to be debited from the depositors account or by directly
paying or depositing to the bank the value of the check to be drawn. Since
the bank issues the check in its name, with itself as the drawee, the check
is deemed accepted in advance. Ordinarily, the check becomes the
primary obligation of the issuing bank and constitutes its written promise
to pay upon demand.
Nevertheless, the mere issuance of a managers check does not ipso facto
work as an automatic transfer of funds to the account of the payee. In
case the procurer of the managers or cashiers check retains custody of
the instrument, does not tender it to the intended payee, or fails to make
an effective delivery, we find the following provision on undelivered
instruments under the Negotiable Instruments Law applicable:
Sec. 16. Delivery; when effectual; when presumed. Every contract on a
negotiable instrument is incomplete and revocable until delivery of the
instrument for the purpose of giving effect thereto. As between immediate
parties and as regards a remote party other than a holder in due course,
the delivery, in order to be effectual, must be made either by or under the
authority of the party making, drawing, accepting, or indorsing, as the
case may be; and, in such case, the delivery may be shown to have been
conditional, or for a special purpose only, and not for the purpose of
transferring the property in the instrument. But where the instrument is in
the hands of a holder in due course, a valid delivery thereof by all parties
prior to him so as to make them liable to him is conclusively presumed.
And where the instrument is no longer in the possession of a party whose

signature appears thereon, a valid and intentional delivery by him is

presumed until the contrary is proved.
Petitioner acknowledges that the Managers Check was procured by
respondents, and that the amount to be paid for the check would be
sourced from the deposit account of Hi-Tri. When Rosmil did not accept the
Managers Check offered by respondents, the latter retained custody of
the instrument instead of cancelling it. As the Managers Check neither
went to the hands of Rosmil nor was it further negotiated to other
persons, the instrument remained undelivered. Petitioner does not dispute
the fact that respondents retained custody of the instrument.
Since there was no delivery, presentment of the check to the bank for
payment did not occur. An order to debit the account of respondents was
never made. In fact, petitioner confirms that the Managers Check was
never negotiated or presented for payment to its Ermita Branch, and that
the allocated fund is still held by the bank. As a result, the assigned fund
is deemed to remain part of the account of Hi-Tri, which procured the
Managers Check. The doctrine that the deposit represented by a
managers check automatically passes to the payee is inapplicable,
because the instrument although accepted in advance remains
undelivered. Hence, respondents should have been informed that the
deposit had been left inactive for more than 10 years, and that it may be
subjected to escheat proceedings if left unclaimed.

11.Regarding incontestability clause.

- Generally 2 years but can be shortened by agreement of parties.
- Case
- G.R. No. 186983
February 22, 2012
- MA. LOURDES S. FLORENDO, Petitioner,
vs.
PHILAM PLANS, INC., PERLA ABCEDE MA. CELESTE
ABCEDE, Respondents.
- FACTS:
- Manuel Florendo filed an application for comprehensive pension plan with
respondent Philam Plans, Inc. (Philam Plans) Manuel signed the application
and left to Perla the task of supplying the information needed in the
application. Respondent Ma. Celeste Abcede, Perlas daughter, signed the
application as sales counselor. Philam Plans issued Pension Plan
Agreement to Manuel, with petitioner Ma. Lourdes S. Florendo, his wife, as
beneficiary. In time, Manuel paid his quarterly premiums. Eleven months
later, Manuel died of blood poisoning. Subsequently, Lourdes filed a claim
with Philam Plans for the payment of the benefits under her husbands
plan but Philam Plans declined her claim prompting her to file the present
action against the pension plan company before the Regional Trial Court
(RTC) of Quezon City and ruled in favor of Ma. Lourdes. However, the Court
of Appeals then reversed the RTC decision. Hence this appeal.

ISSUE:
Whether or not Ma. Lourdes could claim benefits as the beneficiary of her
husband under the insurance plan despite consideration that her husband
Manuel concealed the true condition of his health.
RULING:
The Supreme Court answers this to the negative and the AFFIRMED in its
entirety the decision of the Court of Appeals.
The comprehensive pension plan that Philam Plans issued contains a oneyear incontestability period. It states:
VIII. INCONTESTABILITY
After this Agreement has remained in force for one (1) year, we can no
longer contest for health reasons any claim for insurance under this
Agreement, except for the reason that installment has not been paid
(lapsed), or that you are not insurable at the time you bought this pension
program by reason of age. If this Agreement lapses but is reinstated
afterwards, the one (1) year contestability period shall start again on the
date of approval of your request for reinstatement.
The above incontestability clause 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 Manuel 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.

12.Yes. Considered as common carrier despite the fact that the clients are
limited. Common carrier definition.
CASE : Sps. Perea vs. Sps. Zarate
G.R. No. 157917, August 29, 2012
FACTS:
Sps. Zarate, parents of Aaron Zarate, engaged the services of Sps. Perea for the
adequate and safe transportation carriage of the former spouses son from their
residence to his school. During the effectivity of the contract of carriage, Aaron
Zarate died in connection with a vehicular/train collision which occurred while Aaron
was riding the contracted carrier. At the time of the said collision, there were no
safety warning signs and railings at the site commonly used for railroad crossing.
The site of the collision was not intended by the railroad operator for railroad
crossing at the time of the collision. PNR refused to acknowledge any liability for
the collision. In Sps. Pereas defense, they adduces evidence to show that they had
exercised the diligence of a good father of a family in the selection and supervision
of Alfaro, the driver, by making sure that Alfaro had been issued a drivers license

and had not been involved in any vehicular accident prior to the collision. The RTC
ruled in favor of Sps. Zarate and held the Pereas and PNR jointly and severally
liable for the death of Aaron plus damages. The CA upheld the award for the loss of
Aarons earning capacity, plus damages, and the award for Attorneys fees was
deleted. Hence, this petition.
ISSUE:
WON the Pereas and PNR are jointly and severally liable for damages.
HELD:
YES. The defense of the Pereas that they exercised the diligence of a good father
of a family has no merit because they operated as common carriers and that their
standard of care was extraordinary diligence, not the ordinary diligence of a good
father of a family. The Pereas, acting as a common carrier, were already presumed
to be negligent at the time of the accident because death had occurred to their
passenger. The presumption for negligence, being a presumption of law, laid the
burden of evidence on their shoulders to establish that they had not been negligent.
There is no question that the Pereas did not overturn the presumption of their
negligence by credible evidence. Their defense of having observed the diligence of
a good father of a family in the selection and supervision of their driver was not
legally sufficient. PNR was also found guilty of negligence because it did not ensure
the safety of others through the placing of crossbars, signal lights, warning signs,
and other permanent safety barriers to prevent vehicles or pedestrians from
crossing there. Hence, the Pereas and PNR should jointly and severally be liable
for the death of Aaron Zarate.
13.Negotiability of the instrument.
a. Validly negotiated? No. because the instrument does not bearing
negotiable words to bearer or order
b. Did Ramen acquired credit? Yes by virtue of assignment but not by
negotiation.
14.Regarding condition precedent in COGSA. Qualified answer.
15.3 fold character of Bill of Lading.
a. Receipt, contract, document of title.
16.Doctrine of Last Clear Chance.

17.Exempt securities.