July 2012 Philippine Supreme Court Decisions on Commercial Law

Here are select July 2012 rulings of the Supreme Court of the Philippines on commercial law:

Banks; diligence required. FEBTC should have been more circumspect in dealing with its clients.  It cannot be over emphasized that the banking business is impressed with public interest. Of paramount importance is the trust and confidence of the public in general in the banking industry. Consequently, the diligence required of banks is more than that of a Roman pater familias or a good father of a family. The highest degree of diligence is expected. In handling loan transactions, banks are under obligation to ensure compliance by the clients with all the documentary requirements pertaining to the approval and release of the loan applications.  For failure of its branch manager to exercise the requisite diligence in abiding by the MORB and the banking rules and practices, FEBTC was negligent in the selection and supervision of its employees. Far East Bank and Trust Company (now Bank of the Philippine Islands) vs. Tentmakers Group, Inc., Gregoria Pilares Santos and Rhoel P. Santos, G.R. No. 171050, July 4, 2012.

Carriage of Goods by Sea Act; prescription. The COGSA is the applicable law  for all contracts for carriage of goods by sea to and from Philippine ports in foreign trade; it is thus the law that the Court shall consider in  the present case since the cargo was transported from Brazil to the Philippines.

Under Section 3(6) of the COGSA, the carrier is discharged from liability for loss or damage to the cargo “unless the suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.” Jurisprudence, however, recognized the validity of an agreement between the carrier and the shipper/consignee extending the one-year period to file a claim. Benjamin Cua (Cua Hian Tek) vs. Wallem Philippines Shipping, Inc. and Advance Shipping Corporation, G.R. No. 171337. July 11, 2012.

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June 2012 Philippine Supreme Court Decisions on Commercial Law

Here are select June 2012 rulings of the Supreme Court of the Philippines on commercial law:

Banks; diligence required.  Republic Act No. 8971, or the General Banking Law of 2000, recognizes the vital role of banks in providing an environment conducive to the sustained development of the national economy and the fiduciary nature of banking; thus, the law requires banks to have high standards of integrity and performance. The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family. In the case at bar, petitioner itself was negligent in the conduct of its business when it extended unsecured loans to the debtors. Worse, it was in serious breach of its duty as the trustee of the MTI. It was not able to protect the interests of the parties and was even instrumental in violating the terms of the MTI, to the detriment of the parties thereto. Thus, petitioner has only itself to blame for being left with insufficient recourse against petitioner under the assailed MTI. Metropolitan Bank and Trust Company vs. Centro Development Corp., et al., G.R. No. 180974, June 13, 2012.

Corporation; corporate approval for appointment of trustee.  Reading carefully the Secretary’s Certificate, it is clear that the main purpose of the directors’ Resolution was to appoint petitioner as the new trustee of the previously executed and amended MTI. Going through the original and the revised MTI, we find no substantial amendments to the provisions of the contract. We agree with petitioner that the act of appointing a new trustee of the MTI was a regular business transaction. The appointment necessitated only a decision of at least a majority of the directors present at the meeting in which there was a quorum, pursuant to Section 25 of the Corporation Code.  Metropolitan Bank and Trust Company vs. Centro Development Corp., et al., G.R. No. 180974, June 13, 2012.

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May 2009 Philippine Supreme Court Decisions on Civil Law

Here are selected May 2009 decisions of the Supreme Court on civil law.

Contracts;  force majeure.  The matter of fortuitous events is governed by Art. 1174 of the Civil Code which provides that except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable. The elements of a fortuitous event are: (a) the cause of the unforeseen and unexpected occurrence, must have been independent of human will; (b) the event that constituted the caso fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid; (c) the occurrence must have been such as to render it impossible for the debtors to fulfill their obligation in a normal manner, and; (d) the obligor must have been free from any participation in the aggravation of the resulting injury to the creditor.

A fortuitous event may either be an act of God, or natural occurrences such as floods or typhoons, or an act of man such as riots, strikes or wars. However, when the loss is found to be partly the result of a person’s participation–whether by active intervention, neglect or failure to act—the whole occurrence is humanized and removed from the rules applicable to a fortuitous event. Asset Privitization Trust vs. T.J. EnterprisesG.R. No. 167195,  May 8, 2009.

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